EXHIBIT 10.7
EQI FINANCING PARTNERSHIP V, L.P.
(Borrower)
to
GMAC COMMERCIAL MORTGAGE CORPORATION
(Lender)
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LOAN AGREEMENT
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Dated: As of October 20, 2000
DOCUMENT PREPARED BY:
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions...............................................1
ARTICLE II
LOAN TERMS
Section 2.1 The Loan.........................................................14
Section 2.2 Interest Rate....................................................14
Section 2.3 Terms of Payment.................................................14
Section 2.4 Prepayment Defeasance............................................16
Section 2.5 Release of Property..............................................18
Section 2.6 Substitution of Properties.......................................20
Section 2.7 Release of Out-Parcel............................................27
ARTICLE III
SECURITY; RESERVES AND CASH MANAGEMENT
Section 3.1 Security; Establishment of Funds.................................29
Section 3.2 Pledge and Grant of Security Interest............................31
Section 3.3 Disbursement of Funds............................................31
Section 3.4 Intentionally Omitted............................................32
Section 3.5 Cash Management Account..........................................32
Section 3.6 Payments Received Under the Cash Management Agreement............34
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Closing Conditions...............................................34
ARTICLE V
INSURANCE, CONDEMNATION, AND IMPOUNDS
Section 5.1 Insurance; Casualty and Condemnation.............................38
Section 5.2 Condemnation.....................................................42
Section 5.3 Restoration......................................................43
Section 5.4 Impounds.........................................................47
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ARTICLE VI
ENVIRONMENTAL MATTERS
Section 6.1 Certain Definitions..............................................48
Section 6.2 Representations and Warranties on Environmental Matters..........48
Section 6.3 Covenants on Environmental Matters...............................49
Section 6.4 Allocation of Risks and Indemnity................................49
Section 6.5 No Waiver........................................................50
ARTICLE VII
LEASING MATTERS
Section 7.1 Representations and Warranties on Leases.........................50
Section 7.2 Approval Rights..................................................51
Section 7.3 Covenants........................................................51
Section 7.4 Tenant Estoppels.................................................51
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Section 8.1 Organization, Power and Authority................................52
Section 8.2 Validity of Loan Documents.......................................52
Section 8.3 No Conflicts.....................................................52
Section 8.4 Liabilities; Litigation..........................................53
Section 8.5 Taxes and Assessments............................................53
Section 8.6 Other Agreements; Defaults.......................................53
Section 8.7 Title............................................................54
Section 8.8 Compliance with Law..............................................54
Section 8.9 Location of Borrower.............................................55
Section 8.10 ERISA...........................................................55
Section 8.11 Forfeiture......................................................55
Section 8.12 Tax Filings.....................................................55
Section 8.13 Solvency........................................................55
Section 8.14 Full and Accurate Disclosure....................................56
Section 8.15 Flood Zone......................................................56
Section 8.16 Federal Reserve Regulations.....................................56
Section 8.17 Not a Foreign Person............................................57
Section 8.18 Separate Lots...................................................57
Section 8.19 No Prior Assignment.............................................57
Section 8.20 Insurance.......................................................57
Section 8.21 Use of Properties...............................................57
Section 8.22 Certificate of Occupancy; Licenses..............................57
Section 8.23 Physical Condition..............................................57
Section 8.24 Boundaries......................................................58
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Section 8.25 Survey..........................................................58
Section 8.26 Embargoed Person................................................58
Section 8.27 Filing and Recording Taxes......................................58
Section 8.28 Single Purpose Entity/Separateness..............................59
Section 8.29 Franchise Agreement; Hotel Management...........................62
Section 8.30 Operating Lease.................................................63
Section 8.31 Investment Company Act..........................................65
ARTICLE IX
FINANCIAL REPORTING
Section 9.1 Financial Statements.............................................65
Section 9.2 Accounting Principles............................................67
Section 9.3 Other Information; Access........................................67
Section 9.4 Format of Delivery...............................................67
ARTICLE X
COVENANTS
Section 10.1 Due Sale and Encumbrance; Transfers of Interests................68
Section 10.2 Taxes; Utility Charges..........................................68
Section 10.3 Operating Lease.................................................68
Section 10.4 Operation; Maintenance; Inspection..............................68
Section 10.5 Taxes on Security...............................................69
Section 10.6 Legal Existence; Name, Etc......................................69
Section 10.7 Further Assurances..............................................69
Section 10.8 Estoppel Certificates...........................................70
Section 10.9 Notice of Certain Events........................................70
Section 10.10 Indemnification................................................70
Section 10.11 Payment For Labor and Materials................................70
Section 10.12 Alterations....................................................71
Section 10.13 Handicapped Access.............................................71
Section 10.14 Certain Hotel/Franchise Covenants..............................72
Section 10.15 Certain Operating Lease Covenants..............................73
ARTICLE XI
EVENTS OF DEFAULT
Section 11.1 Payments........................................................74
Section 11.2 Insurance.......................................................74
Section 11.3 Single Purpose Entity...........................................74
Section 11.4 Insolvency Opinion..............................................74
Section 11.5 Taxes...........................................................74
Section 11.6 Sale, Encumbrance, Etc..........................................74
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Section 11.7 Representations and Warranties..................................74
Section 11.8 Other Encumbrances..............................................75
Section 11.9 Involuntary Bankruptcy or Other Proceeding......................75
Section 11.10 Voluntary Petitions, etc........................................75
Section 11.11 Covenants.......................................................75
Section 11.12 Operating Lease.................................................75
Section 11.13 Management Agreement and Franchise Agreement....................76
ARTICLE XII
REMEDIES
Section 12.1 Remedies - Insolvency Events.....................................76
Section 12.2 Remedies - Other Events..........................................76
Section 12.3 Lender's Right to Perform the Obligations........................77
Section 12.4 Cross-Default; Cross-Collateralization; Waiver
of Marshalling of Assets.......................................78
ARTICLE XIII
LIMITATIONS ON LIABILITY
Section 13.1 Limitation on Liability..........................................78
Section 13.2 Limitation on Liability of Lender's Officers, Employees, etc.....79
ARTICLE XIV
SECURITIZATION
Section 14.1 Securitization...................................................80
Section 14.2 Securitization Indemnification...................................81
Section 14.3 Servicer.........................................................84
ARTICLE XV
MISCELLANEOUS
Section 15.1 Notices..........................................................84
Section 15.2 Amendment and Waivers............................................85
Section 15.3 Limitation on Interest...........................................85
Section 15.4 Invalid Provisions...............................................86
Section 15.5 Reimbursement of Expenses........................................86
Section 15.6 Approvals; Third Parties; Conditions.............................86
Section 15.7 Lender Not in Control; No Partnership............................87
Section 15.8 Time of the Essence..............................................87
Section 15.9 Successors and Assigns...........................................87
Section 15.10 Renewal, Extension or Rearrangement.............................87
Section 15.11 Waivers.........................................................87
Section 15.12 Cumulative Rights; Joint and Several Liability..................88
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Section 15.13 Singular and Plural.............................................88
Section 15.14 Phrases.........................................................88
Section 15.15 Exhibits and Schedules..........................................88
Section 15.16 Titles of Articles, Sections and Subsections....................88
Section 15.17 Promotional Material............................................88
Section 15.18 Survival........................................................89
Section 15.19 WAIVER OF TRIAL.................................................89
Section 15.20 Waiver of Punitive or Consequential Damages.....................89
Section 15.21 Governing Law...................................................89
Section 15.22 Entire Agreement................................................91
Section 15.23 Counterparts....................................................91
Section 15.24 Brokers and Financial Advisors..................................91
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LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A LEGAL DESCRIPTION OF PROPERTIES
EXHIBIT B FORM OF TRS LEASE
EXHIBIT C FORMS OF FRANCHISE AGREEMENT
EXHIBIT D FORM OF TRS SUBORDINATION AGREEMENT
EXHIBIT E OUT-PARCEL
EXHIBIT F TRS LESSEE ORGANIZATIONAL DOCUMENTS
EXHIBIT G FORM OF TRS NON-CONSOLIDATION OPINION
SCHEDULE I ALLOCATED LOAN AMOUNTS
SCHEDULE II REQUIRED REPAIRS
SCHEDULE III OPERATING LEASES
SCHEDULE IV FRANCHISE AGREEMENTS
SCHEDULE V REPLACEMENT ESCROW FUND REIMBURSEMENT ITEMS
SCHEDULE VI MANAGEMENT AGREEMENTS
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LOAN AGREEMENT
This Loan Agreement (this "Agreement") is entered into as of October
20, 2000, between GMAC COMMERCIAL CAPITAL CORPORATION, a California corporation
("Lender"), and EQI FINANCING PARTNERSHIP V, L.P., a Tennessee limited
partnership ("Borrower").
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions.
As used herein, the following terms have the meanings indicated:
"Access Laws" has the meaning assigned in Section 10.13.
"Accrued Interest" has the meaning assigned in Section 2.3(b).
"Adjusted Rate" has the meaning assigned in Section 2.2.
"Affiliate" means (a) any corporation in which Borrower or any partner,
shareholder, director, officer, member, or manager of Borrower directly or
indirectly owns or controls more than ten percent (10%) of the beneficial
interest, (b) any partnership, joint venture or limited liability company in
which Borrower or any partner, shareholder, director, officer, member, or
manager of Borrower is a partner, joint venturer or member, (c) any trust in
which Borrower or any partner, shareholder, director, officer, member or manager
of Borrower is a trustee or beneficiary, (d) any entity of any type which is
directly or indirectly owned or controlled by Borrower or any partner,
shareholder, director, officer, member or manager of Borrower, (e) any partner,
shareholder, director, officer, member, manager or employee of Borrower, (f) any
Person related by birth, adoption or marriage to any partner, shareholder,
director, officer, member, manager, or employee of Borrower, or (g) any Borrower
Party.
"Agreement" means this Loan Agreement, as amended from time to time.
"Allocable Amount" has the meaning assigned in Section 3.1(b)(iii).
"Allocated Loan Amount" means, for an Individual Property, the amount
set forth on Schedule I attached hereto.
"Annual Budget" means the operating budget, including all planned
capital expenditures, for each of the Properties prepared by Borrower, any of
the Operating Lessees or any of the Managers for the applicable calendar year or
other period.
"Anticipated Payment Date" means November 1, 2010.
"Appraised Value" means with respect to any Individual Property at any
time, the value of such Individual Property, as most recently determined by an
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appraisal, reasonably acceptable to Lender in form and substance, and prepared
by an MAI appraiser reasonably acceptable to the Lender. Such appraisers and
appraisals shall satisfy the requirements of Title XI of the Federal
Institutional Reform, Recovery and Enforcement Act of 1989 and the regulations
promulgated thereunder and under FNMA and FHLMC.
"Approved Annual Budget" has the meaning assigned in Section 2.3(h).
"Assignment of Leases and Rents" means the Assignment of Leases and
Rents, executed by Borrower for the benefit of Lender, and pertaining to leases
of space in each Individual Property and any amendments, modifications,
renewals, substitutions or replacements thereof.
"Award" has the meaning assigned in Section 5.2.
"Bankruptcy Code" means 11 ▇.▇.▇.▇▇. 101 et. seq., as amended from time
to time.
"Bankruptcy Party" has the meaning assigned in Section 11.9.
"Basic Carrying Costs" means, with respect to an Individual Property,
the sum of the following costs of Borrower associated with such Individual
Property for the relevant calendar year or payment period: (i) Taxes with
respect to such Individual Property, and (ii) except as otherwise provided in
Section 5.4 hereof, Insurance Premiums with respect to such Individual Property.
"Borrower Account" has the meaning assigned in Section 3.5(d).
"Borrower Party" means any Joinder Party, any guarantor, any general
partner of Borrower if Borrower is a partnership or a limited partnership, any
general partner in any partnership or limited partnership that is a general
partner of Borrower, any managing member of Borrower if Borrower is a limited
liability company, and any managing member in any limited liability company that
is a managing member of Borrower, at any level.
"Business Day" means a day other than a Saturday, a Sunday, or a legal
holiday on which national banks located in the State of New York are not open
for general banking business.
"Cash Expenses" means, for any period, the operating expenses for the
operation of the Properties as set forth in an Approved Annual Budget, to the
extent that such expenses are actually incurred by Borrower, minus any payments
into the Tax and Insurance Escrow Fund.
"Cash Management Account" has the meaning set forth in Section 3.5(b).
"Cash Management Agreement" has the meaning set forth in Section
3.5(a).
"Casualty Consultant" has the meaning set forth in Section 5.3(b)(iii).
"Casualty Retainage" has the meaning set forth in Section 5.3(b)(iv).
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"Closing Date" means the date the Loan is funded by Lender.
"Code" means the Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
"Condemnation" has the meaning assigned in Section 5.2.
"Condemnation Proceeds" has the meaning assigned in Section 5.3(b).
"Contract Rate" has the meaning assigned in Section 2.2.
"Debt" means the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums (including the Yield Maintenance Premium) due
to Lender in respect of the Loan under the Note, this Agreement, the Mortgages
or any other Loan Document.
"Debt Service" means the aggregate interest, fixed principal, and other
payments due under the Loan, and on any other outstanding permitted Indebtedness
approved by Lender for the period of time for which calculated.
"Debt Service Coverage Ratio" means a ratio for the applicable period
in which:
(a) the numerator is the Net Operating Income for such Properties;
and
(b) the denominator is the aggregate amount of principal and interest
due and payable on the Note or, in the event that a Defeasance Event has
occurred, the Undefeased Note.
The Debt Service Coverage Ratio for the Loan for all of the Properties
as of the Closing Date is 1.81 to 1.0.
"Debt Service Escrow Fund" has the meaning assigned in Section 3.1(c).
"Default Rate" means the lesser of (a) the maximum rate of interest
allowed by applicable law, and (b) five percent (5%) per annum in excess of the
Contract Rate or the Adjusted Rate, whichever is then in effect.
"Defeasance Deposit" means an amount equal to the remaining principal
amount of the Note or the principal amount of the Defeased Note, as applicable,
the Yield Maintenance Premium, any costs and expenses incurred or to be incurred
in the purchase of U.S. Obligations necessary to meet the Scheduled Defeasance
Payments and any revenue, documentary stamp or intangible taxes or any other tax
or charge due in connection with the transfer of the Note or the Defeased Note,
as applicable, the creation of the Defeased Note and the Undefeased Note, if
applicable, or otherwise required to accomplish the agreements of Sections 2.4
and 2.5 hereof.
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"Defeasance Event" has the meaning assigned in Section 2.4(b).
"Defeased Note" has the meaning assigned in Section 2.4(b)(v).
"DSCR Event" means in the event that, as of the last day of any
calendar quarter, the Debt Service Coverage Ratio for the Properties for the
immediately preceding twelve (12) months shall be less than 1.45 to 1.0.
"Eligible Account" shall mean a separate and identifiable account from
all other funds held by the holding institution that is an account or accounts
maintained with a federal or state chartered depository institution or trust
company which complies with the definition of Eligible Institution having a
combined capital and surplus of at least Fifty Million and No/100 Dollars
($50,000,000) and subject to supervision or examination by federal and state
authority. An Eligible Account may not be evidenced by a certificate of deposit,
passbook or other instrument.
"Eligible Institution" shall mean a depository institution or trust
company that satisfies the Rating Criteria.
"Environmental Laws" has the meaning assigned in Section 6.1(a).
"ERISA" has the meaning assigned in Section 8.11(a).
"Event of Default" has the meaning assigned in Article 9.
"Extraordinary Expenses" means an extraordinary operating expense or
capital expense not set forth in an Approved Annual Budget.
"Franchise Agreement" means, with respect to any Individual Property,
that certain franchise agreement more specifically identified on Schedule IV
attached hereto.
"Franchisor" means, with respect to any Individual Property which is
subject to a Franchise Agreement, the franchisor with respect thereto, as same
is identified on Schedule IV attached hereto.
"Funds" means the Required Repair Fund, the Replacement Escrow Fund and
the Debt Service Escrow Fund.
"Governmental Authority" means any court, board, agency, commission,
office or authority of any nature whatsoever for any governmental ▇▇▇▇ (▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or otherwise) whether now or hereafter
in existence.
"Hazardous Materials" has the meaning assigned in Section 6.1(b).
"Hazardous Materials Indemnity Agreement" shall mean that certain
hazardous materials indemnity agreement dated the date hereof by the Borrower
and Indemnitor in favor of Lender.
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"Improvements" shall have the meaning assigned to such term in the
related Mortgage with respect to each Individual Property.
"Indebtedness" means, for any Person, without duplication: (a) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (b) all unfunded amounts under a loan agreement, letter
of credit, or other credit facility for which such Person would be liable, if
such amounts were advanced under the credit facility, (c) all amounts required
to be paid by such Person as a guaranteed payment to partners or a preferred or
special dividend, including any mandatory redemption of shares or interests, (d)
all indebtedness guaranteed by such Person, directly or indirectly, contingent
or otherwise, (e) all obligations under leases that constitute capital leases
for which such Person is liable, and (f) all obligations of such Person under
interest rate swaps, caps, floors, collars and other interest hedge agreements,
in each case whether such Person is liable contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations such Person
otherwise assures a creditor against loss.
"Indemnitor" means, collectively, Equity Inns Partnership, L.P., a
Tennessee limited partnership, Equity Inns Trust, a Maryland real estate
investment trust and Equity Inns, Inc., a Tennessee corporation.
"Independent Director" has the meaning assigned in Section 8.28(p).
"Individual Property" means all of the property, rights, interests and
estates now owned or hereafter acquired by Borrower to each parcel of real
property and the improvements thereon encumbered by a Mortgage, together with
all rights pertaining to such property and improvements, as more particularly
described in the granting clauses of each such Mortgage and referred to therein
as the "Mortgaged Property" or the "Trust Property", as the case may be.
"Insolvency Opinion" has the meaning assigned in Section 8.28(r).
"Insurance Premiums" has the meaning assigned in Section 5.1(b).
"Insurance Proceeds" has the meaning assigned in Section 5.3(b).
"Joinder Party" means the Persons, if any, executing the Joinder
hereto.
"Lease" means all leases, subleases, occupancy agreements, licenses,
concessions, rental contracts and other agreements (written or oral) now or
hereafter existing relating to the use or occupancy of the project located on
the Property, including all Operating Leases, together with all guarantees,
letters of credit and other credit support, modifications, extensions and
renewals thereof, whether before or after the filing by or against Borrower of
any petition of relief under 11 U.S.C. ss. 101 et. seq., and all related
security and other deposits.
"Legal Requirements" means, with respect to each Individual Property,
federal, state, county, municipal and other governmental statutes, laws, rules,
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orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities affecting such Individual Property or any part thereof
or the construction, use, alteration or operation thereof, or any part thereof,
whether now or hereafter enacted and in force, and all permits, licenses
and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Borrower, at any time in force affecting such Individual
Property or any part thereof, including, without limitation, any which may
(i) require repairs, modifications or alterations in or to such Individual
Property or any part thereof, or (ii) any way limit the use and enjoyment
thereof.
"Liabilities" has the meaning assigned in Section 14.2(b).
"Lien" means, with respect to each Individual Property any interest, or
claim thereof, in such Individual Property securing an obligation owed to, or a
claim by, any Person other than the owner of such Individual Property, whether
such interest is based on common law, statute or contract, including, whether
voluntary or involuntary, the lien or security interest arising from a deed of
trust, mortgage, assignment, encumbrance, pledge, security agreement,
conditional sale or trust receipt or a Lease, consignment or bailment for
security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions,
Leases and other title exceptions and encumbrances affecting such Individual
Property.
"Loan" means the loan made by Lender to Borrower under this Agreement
and all other amounts secured by the Loan Documents.
"Loan Documents" means: (a) this Agreement, (b) the Note, (c) the
Mortgages, (d) the Assignments of Leases and Rents, (e) the Hazardous Materials
Indemnity Agreement, (f) Uniform Commercial Code financing statements, (g) the
Subordination, Non-Disturbance and Attornment Agreements, (h) the Manager's
Consent and Subordination of Management Agreements, (i) such assignments of
management agreements, contracts and other rights as may be requested by Lender,
(j) the Cash Management Agreements, (k) all other documents evidencing,
securing, governing or otherwise pertaining to the Loan, and (l) all amendments,
modifications, renewals, substitutions or replacements of any of the foregoing.
"Lockbox Account" has the meaning assigned in Section 3.4(a).
"Lockout Yield Maintenance Premium" means an amount equal to the
greater of (a) one percent (1%) of the outstanding principal amount of the Loan
to be prepaid or satisfied, as applicable, or (b) the Yield Maintenance Premium
that would be required if a Defeasance Event had occurred (whether or not
permitted under this Agreement) in an amount equal to the outstanding principal
amount of the Loan to be satisfied or prepaid, as applicable; plus if the
prepayment of which the Lockout Yield Maintenance Premium is a part is not paid
on a Payment Date, the interest that would have accrued on the Loan through the
next Payment Date.
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"LTV Ratio" means, as of the date such calculation is being made, the
ratio of the outstanding principal balance of the Loan (less the outstanding
principal balance of any Defeased Note) to the Appraised Value of the Properties
then remaining as collateral for the Loan. The LTV Ratio for all of the
Properties as of the Closing Date is fifty-one percent (51%).
"Management Agreement" means, with respect to any Individual Property,
the management agreement, if any, entered into by and between Borrower or an
Operating Lessee, as applicable, and a Manager pursuant to which such Manager is
to provide management and other services with respect to said Individual
Property. The initial Management Agreements in effect as of the date hereof are
identified on Schedule VI attached hereto.
"Management Fee" shall mean an amount equal to no greater than five
percent (5.0%) per annum of Operating Revenues for each Individual Property.
"Manager" means, with respect to any Individual Property which is
subject to a Management Agreement, the property manager with respect thereto, as
the same is identified on Schedule VI attached hereto, or any Qualified Manager.
"Maturity Date" means with respect to each Individual Property, as
applicable, the earliest of (a) November 1, 2025; (b) any earlier date on which
the entire Loan is required to be paid in full, by acceleration or otherwise,
under this Agreement or any of the other Loan Documents; or (c) if the Loan is
not subject to a Securitization on the Anticipated Payment Date, the Anticipated
Payment Date.
"Monthly Debt Service Payment Amount" has the meaning assigned in
Section 2.3(a).
"Moody's" means ▇▇▇▇▇'▇ Investors Services, Inc.
"Mortgage" means with respect to each Individual Property the Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture Filing or the
Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture
Filing, as applicable, dated as of the date hereof, executed by Borrower in
favor of Lender, covering such Individual Property and any amendments,
modifications, renewals, substitutions or replacement thereof.
"Net Operating Income" means the amount obtained by subtracting
Operating Expenses from Operating Revenues as each shall be determined in
accordance with Lender's then current underwriting policies and procedures.
"Net Proceeds" has the meaning assigned in Section 5.3(b).
"Net Proceeds Deficiency" has the meaning assigned in Section
5.3(b)(vi).
"Note" means the Promissory Note of even date, in the stated principal
amount of $36,000,000, executed by Borrower, and payable to the order of Lender
in evidence of the Loan as the same may hereafter be modified, amended,
restated, renewed or replaced and including any Defeased Note and Undefeased
Note that may exist from time to time.
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"Offering Document" has the meaning assigned in Section 14.2(a).
"Operating Expenses" means all reasonable and necessary expenses of
Borrower and any TRS Lessee (not paid by any Operating Lessee pursuant to an
Operating Lease listed on Schedule III attached hereto or any other Operating
Lease with an Operating Lessee that is not an Affiliate of Borrower for so long
as such Operating Lease remains in effect) for operating the Properties in the
ordinary course of business which are paid by Borrower and any TRS Lessee and
which are directly associated with and fairly allocable to the Properties for
the applicable period, including real estate taxes and assessments, insurance
premiums, maintenance costs, management fees and costs not to exceed five
percent (5.0%) of Operating Revenues, accounting, legal, and other professional
fees, fees relating to environmental and net cash flow and audits, and other
expenses incurred by Lender and reimbursed by Borrower under this Agreement and
the other Loan Documents, deposits to the Replacement Escrow Fund or
expenditures in lieu thereof in an aggregate amount of not less than four
percent (4.0%) of Operating Revenues, Tax and Insurance Fund, wages, salaries,
and personnel expenses, but excluding Debt Service, capital expenditures, any of
the foregoing expenses which are paid from deposits to cash reserves previously
included as Operating Expenses, any payment or expense for which Borrower or any
TRS Lessee was or is to be reimbursed from proceeds of the Loan or insurance or
by any third party, and any non-cash charges such as depreciation and
amortization. Any management fee or other expense payable to Borrower or to an
Affiliate of Borrower shall be included as an Operating Expense only with
Lender's prior approval. Operating Expenses shall not include any expenses
(including, without limitation, federal, state or local income taxes or legal
and other professional fees) unrelated to the operation of the Properties.
"Operating Lease" means each lease agreement in effect between Borrower
and an Operating Lessee for the use and operation of an Individual Property and
all amendments, modifications, renewals, substitutions or replacements of such
lease. The initial Operating Leases in effect as of the date hereof are
identified on Schedule III attached hereto.
"Operating Lease Rent" means all rents, revenues, issues, profits,
income and proceeds due or to become due to Borrower under an Operating Lease.
"Operating Lessee" means each lessee under an Operating Lease. The
initial Operating Lessees under the Operating Leases in effect as of the date
hereof are identified on Schedule III attached hereto.
"Operating Revenues" means all gross revenues of Borrower and any TRS
Lessee derived from the Properties or otherwise arising in respect of the
Properties which are properly allocable to the Properties for the applicable
period, including Operating Lease Rent and other Rent, interest and other
receipts from Leases and parking agreements, concession fees and charges and
other miscellaneous operating revenues, but excluding security deposits and
▇▇▇▇▇▇▇ money deposits until they are forfeited by the depositor, advance
rentals until they are earned, and proceeds from a sale or other disposition.
Operating Revenues shall not include
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(i) any condemnation or insurance proceeds, other than the proceeds of any
business interruption or loss of income insurance received by Borrower or any
TRS Lessee, (ii) any proceeds resulting from the sale, exchange, transfer,
financing or refinancing of all or any part of the Properties, (iii) any rent
accrued by Borrower or any TRS Lessee but not received because of any free rent
provisions or other rental concessions in any Lease, (iv) any repayments
received from tenants of principal loaned or advanced to tenants by Borrower or
any TRS Lessee, (v) any payments due pursuant to the terms of any Lease in
connection with the cancellation or termination of a Lease, (vi) investment
income on any reserves or funds not related to the normal operation of the
Properties, including, without limitation, funds allocated to pay for
construction expenses or (vii) any type of income, other than Operating Lease
Rent, that would otherwise be considered Operating Revenues pursuant to the
provisions above but is paid directly by any tenant to a Person or entity other
than Borrower or any TRS Lessee.
"Out-Parcel" means that certain portion of the Individual Property
located in Tampa, Florida specified on Exhibit E attached hereto
"Payment Date" shall mean the first day of each calendar month
commencing on the first day of December, 2000.
"Permitted Encumbrances" means outstanding liens, easements,
restrictions, security interests and other exceptions to title set forth in the
policies of title insurance insuring the liens of the Mortgages, as reviewed and
approved by Lender, together with the liens and security interests in favor of
Lender created by the Loan Documents.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, trustee, estate, limited liability
company, unincorporated organization, real estate investment trust, government
or any agency or political subdivision thereof, or any other form of entity.
"Personalty" shall have the meaning assigned to such term in the
related Mortgage with respect to each Individual Property.
"PIP Noncompliance" means a material noncompliance with, or a default
under, the PIP Requirements by Borrower or any Operating Lessee.
"PIP Requirements" mean, collectively, with respect to any Individual
Property, the obligation of Borrower or any Operating Lessee to comply with any
property improvement program that may be mandated or otherwise required under
any Management Agreement, Franchise Agreement or other applicable licensing
agreement.
"PIP Satisfaction Event" means the delivery to Lender of evidence of
the complete and satisfactory remedying or cure of any PIP Noncompliance.
"Policies" has the meaning assigned in Section 5.1(b).
"Policy" has the meaning assigned in Section 5.1(b).
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"Potential Default" means the occurrence of any event or condition
which, with the giving of notice, the passage of time, or both, would constitute
an Event of Default.
"Properties" means, collectively, all of the Individual Properties
which are subject to the terms of this Agreement.
"Pro-Rata Percentage" has the meaning assigned in Section 3.1(b)(i).
"Qualified Manager" means either (i) any of the following professional
management entities, provided that there shall have been no materially adverse
change in any such entity since the Closing Date: Interstate Hotels Corporation,
Prime Hospitality Corporation, Starwood Hotels and Resorts Worldwide, Inc., Bass
PLC, Crestline Hotels and Resorts, Inc., Marriott International, Inc., Meristar
Hotels and Resorts, Inc., RFS, Inc. or Hilton Hotels Corporation; or (ii) in the
reasonable judgement of Lender, a management organization possessing experience
in managing properties similar in size, scope and value of the applicable
Individual Property or Properties, provided that Borrower shall have obtained
prior written confirmation from the applicable Rating Agencies that management
of the Property by such Person will not cause a downgrading, withdrawal or
qualification of the then current rating of the Securities issued pursuant to
the Securitization of any class thereof.
"Rating Agencies" means each of Standard & Poor's, Moody's and Fitch,
Inc., or any other nationally-recognized statistical rating agency which has
been approved by Lender.
"Rating Criteria" with respect to any Person, means the short term
unsecured debt obligations or commercial paper which are rated at least "A-1" by
Standard & Poor's, "P-1" by Moody's and "F-1" by Fitch, Inc. (if rated by Fitch)
in the case of accounts in which funds are held for thirty (30) days or less
(or, in the case of accounts in which funds are held for more than thirty (30)
days, the long term unsecured debt obligations of which are rated at least "AA-"
by Fitch, Inc. and Standard & Poor's and "Aa3" by Moody's).
"Registration Statement" has the meaning assigned in Section 14.2(b).
"REIT" means Equity Inns, Inc., a Tennessee corporation.
"Release Amount" means, for an Individual Property, the product of (a)
the quotient obtained by dividing the original Allocated Loan Amount for such
Individual Property by the sum of the original Allocated Loan Amounts for all
Properties, (b) the outstanding principal balance of the Loan, and (c) one
hundred twenty-five percent (125%).
"Release Date" means the earlier of (i) the date that is two (2) years
from the "startup day" within the meaning of Section 860G(a)(9) of the Code of
the REMIC Trust or (iii) four (4) years from the date hereof.
"REMIC Trust" means a "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code that holds the Note.
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"Rent" means all rents, revenues, issues, profits, income and proceeds
due or to become due from tenants of the Properties, including rentals and all
other payments of any kind under the Operating Leases and other Leases (if any)
for using, leasing, licensing, possessing, operating from, rendering in, selling
or otherwise enjoying the Properties, including, without limitation, all hotel
receipts, revenues and credit card receipts collected from guest rooms,
restaurants, bars, meeting rooms, banquet rooms and recreational facilities, all
receivables, customer obligations, installment payment obligations and other
obligations now existing or hereafter arising or created out of the sale, lease,
sublease, license, concession or other grant of the right of the use and
occupancy of property or rendering of services by Borrower, any Operating Lessee
or any operator or manager of the hotel or the commercial space located in the
Improvements or acquired from others (including, without limitation, from the
rental of any office space, retail space, guest rooms or other space, halls,
stores, and offices, and deposits securing reservations of such space), license,
lease, sublease and concession fees and rentals, health club membership fees,
food and beverage wholesale and retail sales, service charges, vending machine
sales and proceeds, if any, from business interruption or other loss of income
insurance..
"Replacement Escrow Fund" has the meaning assigned in Section
3.1(b)(ii).
"Replacement Escrow Fund Monthly Deposit" has the meaning assigned in
Section 3.1(b)(ii).
"Replacement Management Agreement" means (a) a management agreement
with a Qualified Manager, which management agreement shall be acceptable to
Lender (to be determined within thirty (30) days of submission to Lender of the
form of management agreement) in form and substance in Lender's reasonable
discretion, provided that, such management agreement shall be deemed acceptable
to Lender if Borrower shall have obtained prior confirmation from the applicable
Rating Agencies that such management agreement will not cause a downgrading,
withdrawal or qualification of the then current rating of the securities issued
pursuant to a Securitization; and (b) a manager's consent and subordination of
management agreement executed and delivered to Lender by Borrower and such
Qualified Manager at Borrower's expense, which agreement shall be acceptable to
Lender (to be determined within thirty (30) days of submission of the form of
such agreement) in form and substance in its reasonable discretion, provided
that, such agreement shall be deemed acceptable to Lender if Borrower shall have
obtained prior confirmation from the applicable Rating Agencies that such
agreement will not cause a downgrading, withdrawal or qualification of the then
current rating of the securities issued pursuant to a Securitization.
"Replacements" has the meaning assigned in Section 3.1(b)(i).
"Replacements Budget" has the meaning assigned in Section 3.1(b)(i).
"Required Repair Fund" has the meaning assigned in Section 3.1(a).
"Restoration" means the repair and restoration of an Individual
Property after a casualty or Condemnation as nearly as possible to the condition
the Individual Property was in immediately prior to such casualty or
Condemnation, which such alterations as may be reasonably approved by Lender.
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"Scheduled Defeasance Payments" has the meaning assigned in Section
2.4(c).
"Securities" has the meaning assigned in Section 14.1.
"Securities Act" has the meaning assigned in Section 14.2.
"Securitization" has the meaning assigned in Section 14.1.
"Securitization Information" has the meaning assigned in Section
14.1(a)(iii).
"Security Agreement" has the meaning assigned in Section 2.4(b)(v).
"Servicer" has the meaning assigned in Section 14.3.
"Servicing Agreement" has the meaning assigned in Section 14.3.
"Severed Loan Documents" has the meaning assigned in Section 12.2(c).
"Single Purpose Entity" means a Person (other than an individual, a
government or any agency or political subdivision thereof), which exists solely
for the purpose of owning the Properties (or leasing the Properties pursuant to
Section 8.30), observes corporate, company or partnership formalities, as
applicable, independent of any other Person, and which otherwise complies with
the covenants set forth in Section 8.28.
"Site Assessment" means an environmental engineering report for each
Individual Property prepared at Borrower's expense by an engineer engaged by
Borrower and approved by Lender, and in a manner satisfactory to Lender, based
upon an investigation relating to and making appropriate inquiries concerning
the existence of Hazardous Materials on or about each such Individual Property,
and the past or present discharge, disposal, release or escape of any such
substances, all consistent with ASTM Standard E1527-93 or any successor thereto
published by ASTM and good customary and commercial practice.
"SPC Party" has the meaning assigned in 8.28(o).
"Standard & Poor's" means Standard & Poor's Ratings Group, a division
of The McGraw Hill Companies, Inc.
"Subordination, Non-Disturbance and Attornment Agreement" means,
collectively, each of those certain Subordination, Non-Disturbance and
Attornment Agreements among Lender, Borrower and each Operating Lessee, dated as
of October 20, 2000.
"Substitute Property" has the meaning assigned in Section 2.6(a).
"Substituted Property" has the meaning assigned in Section 2.6(a).
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"Substitute Release Amount" has the meaning assigned in Section 2.6(a).
"Successor Borrower" has the meaning assigned in Section 2.5(c).
"Tax and Insurance Escrow Fund" has the meaning assigned in Section
5.4(a).
"Taxes" has the meaning assigned in Section 10.2.
"Threshold Amount" has the meaning assigned in Section 10.12.
"Treasury Rate" means, as of the Anticipated Payment Date, the yield,
calculated by linear interpolation (rounded to the nearest one-thousandth of one
percent (i.e., 0.001%) of the yields of noncallable United State Treasury
obligations with terms (one longer and one shorter) most nearly approximately
the period from such date of determination to the Maturity Date, as determined
by Lender on the basis of Federal Reserve Statistical Release H.15-Selected
Interest Rates under the heading U.S. Governmental Security/Treasury Constant
Maturities, or other recognized source of financial market information selected
by Lender.
"Trigger Event" means the first to occur, if any, of a DSCR Event, the
occurrence of a PIP Noncompliance or the Anticipated Payment Date.
"Trigger Period" means the period of time during the Loan (a) following
a PIP Noncompliance until the occurrence of a PIP Satisfaction Event, (b)
following a DSCR Event, and (c) following the Anticipated Payment Date, if the
Debt is not paid in full.
"TRS Lease" means an Operating Lease, substantially in the form of
Exhibit B attached hereto, to be entered into between Borrower and TRS Lessee
for the use and operation of any Individual Property.
"TRS Lessee" means the lessee under a TRS Lease, which lessee is an
Affiliate of Borrower and satisfies the requirements of Section 8.30(c).
"TRS Lessee Organizational Documents" means the organizational
documents of TRS Lessee substantially in the form of Exhibit F attached hereto.
"TRS Non-Consolidation Opinion" means a legal non-consolidation opinion
substantially in form and substance as Exhibit G attached hereto, as the same
may be further revised, as reasonably required by Lender, to reflect any changes
in the applicable law or the subject matter thereof as of the date of issuance.
"TRS Subordination Agreement" means a subordination agreement among
Lender, Borrower and TRS Lessee, substantially in the form of Exhibit D attached
hereto.
"Undefeased Note" has the meaning assigned in Section 2.4(b)(v).
"Unrelated Third-Party Provider" has the meaning ascribed in Section
14.2(b).
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"Unrelated Third-Party Report" has the meaning assigned in Section
14.2(b).
"USAH" means the Uniform System of Accounts for Hotels, Ninth Revised
Edition, 1996, as the same may be revised, amended or supplemented.
"U.S. Obligations" means direct non-callable obligations of the United
States of America.
"Yield Maintenance Premium" means the amount (if any) which, when added
to the remaining principal amount of the Note or the principal amount of the
Defeased Note, as applicable, will be sufficient to purchase U.S. Obligations
providing the required Scheduled Defeasance Payments.
ARTICLE II
LOAN TERMS
Section 2.1 The Loan.
Lender agrees to make a Loan of THIRTY-SIX MILLION AND NO/100 DOLLARS
($36,000,000) to Borrower, which shall be funded in one advance and repaid in
accordance with the terms of this Agreement and the Note. Borrower hereby agrees
to accept the Loan on the Closing Date, subject to and upon the terms and
conditions set forth herein.
Section 2.2 Interest Rate.
From the date hereof through but not including the Anticipated Payment
Date, the outstanding principal balance of the Loan shall bear interest at a
rate of interest equal to eight and twenty-five hundredths percent (8.25%) per
annum (the "Contract Rate"). From and after the Anticipated Payment Date through
and including the Maturity Date, the outstanding principal balance of the Loan
shall bear interest at a rate per annum equal to the greater of (i) the Contract
Rate plus two percentage points (2%) or (ii) the Treasury Rate plus two
percentage points (2%); provided, however, if after the Anticipated Payment Date
at any time the Loan is not subject to a Securitization, such Adjusted Rate
shall be increased three percentage points (3%) per annum for so long as the
Loan is not subject to a Securitization (the "Adjusted Rate").
Section 2.3 Terms of Payment.
2.3.1 Interest and Principal. The Loan shall be payable as
follows: (i) payment of interest only on the date hereof for the period from the
date hereof through the last day of the current month (unless the Closing Date
is the first day of a calendar month, in which case no such interest is due);
and (ii) thereafter a constant payment of $283,842.05 (the "Monthly Debt Service
Payment Amount"), on the first day of December, 2000 and on each Payment Date
thereafter; each of such payments, to be applied (A) to the payment of interest
computed at the Contract Rate and (B) the balance applied toward reduction of
the principal sum. The constant payment required hereunder is based upon a
twenty-five (25) year amortization schedule.
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To the extent the Loan is outstanding, from and after the Anticipated
Payment Date interest shall accrue on the unpaid principal balance from time to
time outstanding on the Loan at the Adjusted Rate. Borrower shall continue to
make payments of principal and interest in monthly installments beginning on the
Anticipated Payment Date and on the first day of each calendar month thereafter
up to and including the Maturity Date in an amount equal to the Monthly Debt
Service Payment Amount and, notwithstanding the following provision with respect
to Accrued Interest, the failure to make any such payment as and when due shall
constitute an Event of Default. Each Monthly Debt Service Payment Amount paid
after the Anticipated Payment Date shall be applied to the payment of interest
computed at the Contract Rate with remainder applied to reduce the outstanding
principal balance of the Loan in accordance with Section 2.3(a) above. Interest
accrued at the Adjusted Rate and not paid shall be deferred and added to the
Debt and shall earn interest at the Adjusted Rate to the extent permitted by
applicable law (such accrued interest is hereinafter defined as "Accrued
Interest"). In addition to such payments of principal and interest, from and
after the Anticipated Payment Date, Borrower shall make payments in reduction of
the outstanding principal balance of the Loan and accrued interest in monthly
installments beginning on the Anticipated Payment Date and on the first day of
each calendar month thereafter up to and including the Maturity Date in
accordance with the terms and provisions of Section 3.5 below.
2.3.2 Maturity. On the Maturity Date, Borrower shall pay to
Lender all outstanding principal, accrued and unpaid interest (including Accrued
Interest, if any), default interest, late charges and any and all other amounts
due under the Loan Documents.
2.3.3 Default Rate. Upon the occurrence of an Event of
Default, Lender shall be entitled to receive and Borrower shall pay to Lender
interest on the entire unpaid principal sum and any other amounts due at the
Default Rate. Interest at the Default Rate shall be computed from the occurrence
of the Event of Default until the actual receipt and collection of the Debt (or
that portion thereof that is then due or until such time as Lender shall have
accepted a cure of the Event of Default). Interest at the Default Rate shall be
added to the Debt and shall be secured by the Mortgages. This section, however,
shall not be construed as an agreement or privilege to extend the date of the
payment of the Debt, nor as a waiver of any other right or remedy accruing to
Lender by reason of the occurrence of any Event of Default.
2.3.4 Making of Payments. Each payment by Borrower hereunder
or under the Note shall be made in funds settled through the New York Clearing
House Interbank Payments System or other funds immediately available to Lender
by 11:00 a.m., New York City time, on the date such payment is due, to Lender by
deposit to such account as Lender may designate by written notice to Borrower.
Whenever any payment hereunder or under the Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the first
Business Day thereafter.
2.3.5 Computations. Interest payable hereunder or under the
Note by Borrower shall be computed on the basis of the actual number of days
elapsed and a 360-day year.
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2.3.6 Late Payment Charge. If any principal, interest or any
other sums due under the Loan Documents is not paid by Borrower within five (5)
days of (and including) the date it is due, Borrower shall pay to Lender upon
demand an amount equal to the lesser of five percent (5%) of such unpaid sum or
the maximum amount permitted by applicable law in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment. Any such
amount shall be secured by the Mortgages and the other Loan Documents.
2.3.7 Annual Budget. For the partial year period commencing on
the date hereof, and for each calendar year thereafter, the Borrower shall
submit to Lender an Annual Budget not later than sixty (60) days prior to the
commencement of such period or calendar year in form reasonably satisfactory to
Lender, or for so long as an Operating Lease remains in effect, no later than
five (5) Business Days after a budget is delivered to Borrower by an Operating
Lessee pursuant to the terms of an Operating Lease. The Annual Budget submitted
for the calendar year in which a Trigger Event occurs, and for each calendar
year thereafter during a Trigger Period, shall be subject to Lender's written
approval, which approval shall not be unreasonably withheld (each such Annual
Budget as approved by Lender, an "Approved Annual Budget"). In the event that
Lender objects to a proposed Annual Budget submitted by Borrower or an Operating
Lessee, Lender shall advise Borrower of such objections within thirty (30) days
after receipt thereof (and deliver to such party a reasonably detailed
description of such objections) and Borrower shall promptly revise, or cause
Operating Lessee to revise, such Annual Budget and resubmit the same to Lender.
Lender shall advise Borrower of any objections to such revised Annual Budget
within ten (10) days after receipt thereof (and deliver to Borrower a reasonably
detailed description of such objections) and Borrower shall promptly revise, or
cause Operating Lessee to revise, the same in accordance with the process
described in this subsection until the Lender approves the Annual Budget. Until
such time that Lender approves a proposed Annual Budget, the most recently
Approved Annual Budget shall apply; provided that, such Approved Annual Budget
shall be adjusted to reflect actual increases in real estate taxes, insurance
premiums and utilities expenses.
Section 2.4 Prepayment Defeasance.
2.4.1 Prepayment. Borrower shall repay any outstanding
principal indebtedness of the Loan in full on the Maturity Date, together with
interest thereon to (but excluding) the date of repayment. Other than as set
forth in this Section 2.4, Borrower shall have no right to prepay all or any
portion of the Loan prior to the Anticipated Payment Date. On any scheduled
Payment Date occurring no earlier than ninety (90) days prior to the Anticipated
Payment Date, Borrower may, at its option and upon thirty (30) days prior
written notice from Borrower to Lender, prepay in whole or in part the Debt
without payment of any premium. Any such payment shall be applied to the last
payments of principal and interest due under the Loan. Each voluntary prepayment
after ninety (90) days prior to the Anticipated Payment Date shall be made on a
scheduled Payment Date and include all accrued and unpaid interest up to but not
including such scheduled Payment Date or, if not paid on a scheduled Payment
Date, include interest that would have accrued on such prepayment through the
next regularly scheduled Payment Date. If prior to the Anticipated Payment Date
and following the occurrence of any Event of Default that is continuing,
Borrower shall tender payment of an amount sufficient to satisfy all or any
portion of the Debt, such tender by Borrower shall be deemed to be voluntary and
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may be accepted or rejected by Lender in its sole discretion. If Lender
accepts such tender, Borrower shall pay, in addition to the Debt, the Lockout
Yield Maintenance Premium.
2.4.2 Voluntary Defeasance of the Loan. Provided no Event of
Default exists, at any time after the Release Date and prior to the Anticipated
Payment Date Borrower may voluntarily defease all or any portion of the Loan by
providing Lender with U.S. Obligations that produce payments which replicate the
Scheduled Defeasance Payments (hereinafter, a "Defeasance Event"). Each
Defeasance Event by the Borrower shall be subject to the satisfaction of the
following conditions precedent:
(a) Borrower shall provide not less than thirty (30)
days prior written notice to Lender specifying the Payment Date (the
"Defeasance Date") on which the Defeasance Event is to occur. Such
notice shall indicate the principal amount of the Note to be defeased;
(b) Borrower shall pay to Lender all accrued and
unpaid interest on the principal balance of the Note through but not
including the Defeasance Date. If for any reason the Defeasance Date is
not a Payment Date, the Borrower shall also pay interest that would
have accrued on the Note through the next Payment Date;
(c) Borrower shall pay to Lender all other sums, not
including scheduled interest or principal payments, due under the Note,
this Agreement, the Mortgage, and the other Loan Documents;
(d) Borrower shall pay to Lender the required
Defeasance Deposit for the Defeasance Event;
(e) In the event only a portion of the Loan is the
subject of the Defeasance Event, Borrower shall prepare all necessary
documents to amend and restate the Note and issue two substitute notes,
one note having a principal balance equal to the defeased portion of
the original Note (the "Defeased Note") and the other note having a
principal balance equal to the undefeased portion of the Note (the
"Undefeased Note"). The Defeased Note and Undefeased Note shall have
identical terms as the Note except for the principal balance. A
Defeased Note cannot be the subject of any further Defeasance Event;
(f) Borrower shall execute and deliver a security
agreement, in form and substance satisfactory to Lender, creating a
first priority lien on the Defeasance Deposit and the U.S. Obligations
purchased with the Defeasance Deposit in accordance with this provision
of this Section 2.4 (the "Security Agreement");
(g) Borrower shall deliver an opinion of counsel for
Borrower in form satisfactory to Lender in its reasonable discretion
stating, among other things, that Borrower has legally and validly
transferred and assigned the U.S. Obligations and all obligations,
rights and duties under and to the Note or Defeased Note (as
applicable) to the Successor Borrower, that Lender has a perfected
first priority security interest in the Defeasance Deposit and the U.S.
Obligations delivered by Borrower, and that any REMIC Trust formed
pursuant to a Securitization will not fail to maintain its status as a
"real estate mortgage investment conduit" within the meaning of Section
860D of the Code as a result of such Defeasance Event;
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(h) Borrower shall deliver evidence in writing from
the applicable Rating Agencies to the effect that such release will not
result in a downgrading, withdrawal or qualification of the respective
ratings in effect immediately prior to such Defeasance Event for the
Securities issued in connection with the Securitization which are then
outstanding. If required by the applicable Rating Agencies, the
Borrower shall also deliver or cause to be delivered a
non-consolidation opinion with respect to the Successor Borrower in
form and substance satisfactory to Lender and the applicable Rating
Agencies;
(i) Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this Section 2.4(b) have
been satisfied;
(j) Borrower shall deliver a certificate of a "big
five" or other nationally recognized public accounting firm, acceptable
to Lender certifying that the U.S. Obligations purchased with the
Defeasance Deposit generate monthly amounts equal to or greater than
the required scheduled Defeasance Payments;
(k) Borrower shall deliver such other certificates,
documents or instruments as Lender may reasonably request; and
(l) Borrower shall pay all reasonable costs and
expenses of Lender incurred in connection with the Defeasance Event,
including, without limitation, any costs and expenses associated with a
release of the Lien of the Mortgage as provided in Section 2.5 hereof
as well as reasonable attorneys' fees and expenses.
In connection with each Defeasance Event, Borrower hereby appoints
Lender as its agent and attorney-in-fact for the purpose of using the Defeasance
Deposit to purchase U.S. Obligations which provide payments on or prior to, but
as close as possible to, all successive scheduled payment dates after the
Defeasance Date upon which interest and principal payments are required under
the Note, in the case of a Defeasance Event for the entire outstanding principal
balance of the Loan, or the Defeased Note, in the case of a Defeasance Event for
only a portion of the outstanding principal balance of the Loan, as applicable,
and in amounts equal to the scheduled payments due on such dates under the Note
or the Defeased Note, as applicable, (including without limitation scheduled
payments of principal, interest, servicing fees (if any), the Rating
Surveillance Charge and any other amounts due under the Loan Documents on such
dates) and assuming such Note or Defeased Note is prepaid in full on the
Anticipated Payment Date (the "Scheduled Defeasance Payments"). Borrower,
pursuant to the Security Agreement or other appropriate document, shall
authorize and direct that the payments received from the U.S. Obligations may be
made directly to the Cash Management Account (unless otherwise directed by
Lender) and applied to satisfy the obligations of Borrower under the Note or the
Defeased Note, as applicable. Any portion of the Defeasance Deposit in excess of
the amount necessary to purchase the U.S. Obligations required by this Section
2.4 and satisfy Borrower's obligations under this Section 2.4 and Section 2.5
shall be remitted to Borrower.
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Section 2.5 Release of Property.
Except as set forth in this Section 2.5, no repayment, prepayment or
defeasance of all or any portion of the Note shall cause, give rise to a right
to require, or otherwise result in, the release of the Lien of the Mortgages on
the Properties.
2.5.1 Release of All the Properties. If Borrower has elected
to defease the entire Note and the requirements of Section 2.4 have been
satisfied, all of the Properties shall be released from the Liens of their
respective Mortgages and the U.S. Obligations, pledged pursuant to the Security
Agreement, shall be the sole source of collateral securing the Note.
In connection with the release of the Liens, Borrower shall
submit to Lender, not less than thirty (30) days prior to the Defeasance Date, a
release of Lien (and related Loan Documents) for each Individual Property for
execution by Lender. Such release shall be in a form appropriate in each
jurisdiction in which an Individual Property is located and satisfactory to
Lender in its reasonable discretion. In addition, Borrower shall provide all
other documentation Lender reasonably requires to be delivered by Borrower in
connection with such release, together with an Officer's Certificate certifying
that such documentation (A) is in compliance with all Legal Requirements, and
(B) will effect such releases in accordance with the terms of this Agreement.
2.5.2 Release of Individual Properties. Borrower on one or
more occasions may obtain (i) the individual release of an Individual Property
from the Lien of the Mortgage thereon (and related Loan Documents) and (ii) the
release of Borrower's obligations under the Loan Documents with respect to such
Individual Property (other than those expressly stated to survive including
those set forth in the Hazardous Materials Indemnity Agreement), upon
satisfaction of each of the following conditions:
(a) The principal balance of the Defeased Note shall
equal or exceed the Release Amount for the applicable Individual
Property; provided, however, if the outstanding principal balance of
the Undefeased Note is less than the Release Amount for the Individual
Property to be released, the Defeased Note shall be in an amount equal
to the outstanding principal balance of the Undefeased Note.
(b) The requirements of Section 2.4 (including
Section 2.4(b)(viii)) have been satisfied.
(c) The Individual Property is transferred from
Borrower to another Person and such Person is not the general partner
or managing member of Borrower.
(d) Borrower shall submit to Lender, not less than
thirty (30) days prior to the date of such release, a release of Lien
(and related Loan Documents) for such Individual Property for execution
by Lender. Such release shall be in a form appropriate in each
jurisdiction in which the Individual Property is located and
satisfactory to Lender in its reasonable discretion. In addition,
Borrower shall provide all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release,
together with an Officer's Certificate certifying that such
documentation (a) is in compliance with all Legal Requirements, (b)
will effect such release in accordance with the terms of this
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Agreement, and (c) will not impair or otherwise adversely affect the
Liens, security interests and other rights of Lender under the Loan
Documents not being released (or as to the parties to the Loan
Documents and Properties subject to the Loan Documents not being
released).
(e) After giving effect to such release, the Debt
Service Coverage Ratio for all of the Properties then remaining subject
to the Liens of the Mortgages shall be equal to or greater than the
greater of (a) the Debt Service Coverage Ratio for the twelve (12) full
calendar months as of the Closing Date, and (b) the Debt Service
Coverage Ratio for all of the then remaining Properties (including the
Individual Property to be released) for the twelve (12) full calendar
months immediately preceding the release of the Individual Property.
(f) After giving effect to such release, the LTV
Ratio for all of the Properties then remaining subject to the Liens of
the Mortgages shall be equal to or less than the greater of (a) the LTV
Ratio as of the Closing Date, and (b) the LTV Ratio for all of the then
remaining Properties (including the Individual Property to be released)
for the twelve (12) full calendar months immediately preceding the
release of the Individual Property.
2.5.3 Successor Borrower. In connection with any release of a
Lien under this Section 2.5, Borrower may, or at the request of Lender shall,
establish or designate a successor entity (the "Successor Borrower") which shall
be a single purpose bankruptcy remote entity approved by Lender, and Borrower
shall transfer and assign all obligations, rights and duties under and to the
Note or the Defeased Note, as applicable, together with the pledged U.S.
Obligations to such Successor Borrower. Such Successor Borrower shall assume the
obligations under the Note or the Defeased Note, as applicable, and the Security
Agreement and Borrower shall be relieved of its obligations under such
documents. The Borrower shall pay $1,000 to any such Successor Borrower as
consideration for assuming the obligations under the Note or the Defeased Note,
as applicable, and the Security Agreement. Notwithstanding anything in this
Agreement to the contrary, no other assumption fee shall be payable upon a
transfer of the Note or the Defeased Note, as applicable, in accordance with
this Section 2.5, but Borrower shall pay (i) to the Lender, all reasonable costs
and expenses incurred by Lender, including Lender's reasonable attorneys' fees
and expenses, incurred in connection therewith and (ii) to the Successor
Borrower as additional consideration for assuming the obligations of Borrower,
all amounts reasonably estimated by Lender to be payable by the Successor
Borrower for taxes and other costs and expenses (including, without limitation
franchise and income taxes, if any) of maintaining the existence of the
Successor Borrower through the final maturity date of the Note.
Section 2.6 Substitution of Properties.
Subject to the terms and conditions set forth in this Section 2.6,
Borrower may obtain a release of the Lien of a Mortgage (and the related Loan
Documents) encumbering an Individual Property (individually, a "Substituted
Property" and collectively, the "Substituted Properties") by substituting
therefor another hotel property of like kind and quality acquired by Borrower
(individually, a "Substitute Property" and collectively, the "Substitute
Properties"), provided that the Allocated Loan Amounts of any and all
Substituted Properties in the aggregate comprise no more than twenty-five
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percent (25%) or Nine Million and No/100 Dollars ($9,000,000) of the Allocated
Loan Amounts for all of the Properties, unless Lender shall have otherwise
expressly consented, and provided further that the following conditions
precedent are satisfied:
2.6.1 The Anticipated Payment Date shall have not occurred.
2.6.2 Lender shall have received at least sixty (60) days
prior written notice requesting the substitution and identifying the Substitute
Property and Substituted Property.
2.6.3 Lender shall have received a copy of a deed conveying
all of Borrower's right, title and interest in and to the Substituted Property
to an entity other than Borrower pursuant to an arms length transaction and a
letter from Borrower countersigned by a title insurance company acknowledging
receipt of such deed and agreeing to record such deed in the real estate records
for the county in which the Substituted Property is located.
2.6.4 Lender shall have received a fee in the amount of
one-quarter of one percent (0.25%) of the Allocated Loan Amount for the
Substitute Property.
2.6.5 If the Loan is part of a Securitization, Lender shall
have received an appraisal of the Substitute Property and Substituted Property,
dated no more than sixty (60) days prior to the substitution date, by an
appraiser acceptable to the Rating Agencies.
2.6.6 The fair market value of the Substitute Property is not
less than one hundred five percent (105%) of the greater of (i) the fair market
value of the Substituted Property as of the Closing Date and (ii) the fair
market value of the Substituted Property as of the date immediately preceding
the substitution, which determination shall be made by (A) Lender in its sole
discretion if the Loan is not part of a Securitization and (B) Lender based on
the appraisals delivered pursuant to clause (e) above if the Loan is part of a
Securitization.
2.6.7 After giving effect to the substitution, the Debt
Service Coverage Ratio for the Loan for all of the Properties (excluding the
Substituted Property and including the Substitute Property) is not less than the
Debt Service Coverage Ratio for the Loan for all of the Properties as of the
Closing Date and as of the date immediately preceding the substitution.
2.6.8 The Net Operating Income for the Substitute Property
does not show a downward trend over the three (3) years immediately prior to the
date of substitution.
2.6.9 The Net Operating Income and Debt Service Coverage Ratio
(for the twelve (12) month period immediately preceding the substitution) for
the Substitute Property is greater than one hundred five percent (105%) of the
Net Operating Income and Debt Service Coverage Ratio (for the twelve (12) month
period immediately preceding the substitution) for the Substituted Property.
2.6.10 If the Loan is part of a Securitization, Lender shall
have received confirmation in writing from the Rating Agencies to the effect
that such substitution will not result in a withdrawal, qualification or
downgrade of the respective ratings in effect immediately prior to such
substitution for the Securities issued in connection with the Securitization
that are then outstanding. If the Loan is not part of a Securitization, Lender
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shall have consented in writing to such substitution, which consent shall be
given in Lender's sole discretion and not unreasonably withheld.
2.6.11 No Potential Default or 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
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 of Borrower 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 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 the
Rating Agencies may require, unless such certificate would be inaccurate, such
certificate to be in form and substance satisfactory to the Rating Agencies.
2.6.12 Borrower shall (i) have executed, acknowledged and
delivered to Lender (A) a Mortgage, an Assignment of Leases and Rents 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 Mortgage, Assignment of Leases and Rents and UCC-1
Financing Statements and agreeing to record or file, as applicable, such
Mortgage, Assignment of Leases and Rents 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 Liens upon the Substitute
Property, of the requisite priority, 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 (B) a
Hazardous Materials Indemnity Agreement with respect to the Substitute Property
and (ii) have caused the Joinder Parties to acknowledge and confirm their
respective obligations under the Loan Documents. The Mortgage, Assignment of
Leases and Rents, UCC-1 Financing Statements and Hazardous Materials Indemnity
Agreement shall be the same in form and substance as the counterparts of such
documents executed and delivered with respect to the related Substituted
Property subject to modifications reflecting only the Substitute Property as the
Individual Property that is the subject of such documents and such modifications
reflecting the laws of the state in which the Substitute Property is located as
shall be recommended for similar transactions by the counsel admitted to
practice in such state and delivering the opinion as to the enforceability of
such documents required pursuant to clause (r) below. The Mortgage encumbering
the Substitute Property shall secure all amounts evidenced by 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 Mortgage shall be
equal to one hundred twenty-five percent (125%) of the fair market value of the
Substitute Property. The amount of the Loan allocated to the Substitute Property
(such amount being hereinafter referred to as the "Substitute Release Amount")
shall equal the Release Amount of the related Substituted Property.
2.6.13 Lender shall have received (i) to the extent available
any "tie-in" or similar
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endorsement to each title insurance policy insuring the Lien of an existing
Mortgage as of the date of the substitution with respect to the title insurance
policy insuring the Lien of the Mortgage with respect to the Substitute Property
and (ii) a title insurance policy (or a marked, signed and redated commitment to
issue such title insurance policy) insuring the Lien of the Mortgage encumbering
the Substitute Property, issued by the title company that issued the title
insurance policies insuring the Lien of the existing Mortgages 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 Mortgage encumbering the Substituted Property. The
title insurance policy issued with respect to the Substitute Property shall (A)
provide coverage in the amount of the Substitute Release 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 fifty percent (150%) of the
Substitute Release Amount, (B) insure Lender that the relevant Mortgage creates
a valid first lien on the fee simple interest in 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), (C) contain such endorsements and
affirmative coverages as are then available and are contained in the title
insurance policies insuring the Liens of the existing Mortgages, and (D) 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.
2.6.14 Lender shall have received a current survey for each
Substitute Property, certified to the title company and Lender and their
successors and assigns, in the same form and having the same content as the
certification of the survey of the Substituted 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
1992 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 that the surveyed property
is not located in a "one-hundred-year flood hazard area."
2.6.15 Lender shall have received valid certificates of
insurance indicating that the requirements for the policies of insurance
required for an Individual Property hereunder have been satisfied with respect
to the Substitute Property and evidence of the payment of all premiums payable
for the existing policy period.
2.6.16 Lender shall have received a Phase I environmental
report acceptable to Lender 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 risk of contamination from any off-site Hazardous Materials. If
any such report discloses the presence of any Hazardous Materials or the risk of
contamination from any off-site Hazardous Materials, such report shall include
an estimate of the cost of any related remediation and Borrower shall deposit
with Lender an amount equal to one hundred twenty-five percent (125%) of such
estimated cost, which deposit shall constitute additional security for the Loan
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and shall be released to Borrower upon the delivery to Lender of (i) an update
to such report indicating that there is no longer any Hazardous Materials on the
Substitute Property or any danger of contamination from any off-site Hazardous
Materials that has not been fully remediated and (ii) paid receipts indicating
that the costs of all such remediation work have been paid.
2.6.17 Borrower shall deliver or cause to be delivered to
Lender (i) updates certified by Borrower of all organizational documentation
related to Borrower and/or the formation, structure, existence, good standing
and/or qualification to do business delivered to Lender on the Closing Date;
(ii) 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 (iii) resolutions of Borrower authorizing the
substitution and any actions taken in connection with such substitution.
2.6.18 Lender shall have received the following opinions of
Borrower's counsel: (i) an opinion or opinions of counsel admitted to practice
under the laws of the state in which the Substitute Property is located stating
that the Loan Documents delivered with respect to the Substitute Property
pursuant to clause (l) 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 qualified to do business and in good standing
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; (ii) an opinion of counsel acceptable to the Rating Agencies
if the Loan is part of a Securitization, or the Lender if the Loan is not part
of a Securitization, stating that the Loan Documents delivered with respect to
the Substitute Property pursuant to clause (l) above were 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 breach 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; (iii) an opinion of counsel acceptable to, the Rating Agencies if the
Loan is part of a Securitization, or the Lender if the Loan is not part of a
Securitization, stating that subjecting the Substitute Property to the Lien of
the related Mortgage and the execution and delivery of the related Loan
Documents does not and will not affect or impair the ability of Lender to
enforce its remedies under all of the Loan Documents or to realize the benefits
of the cross- collateralization provided for thereunder; (iv) an update of the
Insolvency Opinion indicating that the substitution does not affect the opinions
set forth therein; (v) an opinion of counsel acceptable to, the Rating Agencies
if the Loan is part of a Securitization, or the Lender if the Loan is not part
of a Securitization, stating that the substitution and the related transactions
are arms length transactions and do not constitute a fraudulent conveyance under
applicable bankruptcy and insolvency laws and (vi) if the Loan is part of a
Securitization, an opinion of counsel acceptable to the Rating Agencies that the
substitution does not constitute a "significant modification" of the Loan under
Section 1001 of the Code or otherwise cause a tax to be imposed on a "prohibited
transaction" by any REMIC Trust.
2.6.19 Borrower or Operating Lessee shall have paid, or
escrowed with Lender, all Basic Carrying Costs relating to each of the
Properties and the Substitute Property, including without limitation, (i)
accrued but unpaid insurance premiums relating to each of the Properties and the
Substitute Property, and (ii) currently due and payable Taxes (including any in
arrears) relating to each of the Properties and the Substitute Property and
(iii) currently due and payable maintenance charges and other impositions
relating to each of the Properties and Substitute Property.
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2.6.20 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 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. Borrower
shall have paid all costs and expenses of the Rating Agencies incurred in
connection with the substitution.
2.6.21 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 Substituted
Property, each certified to Lender as being true and correct and a certificate
from Borrower certifying that there has been no adverse change in the financial
condition of the Substitute Property since the date of such operating
statements.
2.6.22 Borrower shall have delivered to Lender estoppel
certificates from any existing tenants of the Substitute Property (including,
all tenants under operating leases). 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 (i) the subject lease is a valid and binding
obligation of the tenant thereunder, (ii) there are no defaults under such lease
on the part of the landlord or tenant thereunder, (iii) the tenant thereunder
has no defense or offset to the payment of rent under such leases, (iv) no rent
under such lease has been paid more than one (1) month in advance, (v) the
tenant thereunder has no option under such lease to purchase all or any portion
of the Substitute Property, and (vi) all tenant improvement work required under
such lease has been 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, if required by the Rating Agencies, 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.
2.6.23 Lender shall have received copies of all tenant leases
(including any operating leases) affecting the Substitute Property certified by
Borrower as being true and correct.
2.6.24 Lender shall have received (i) TRS Subordination
Agreements with respect to any TRS Leases affecting the Substitute Property and
(ii) subordination agreements in the form approved by Lender in connection with
the origination of the Loan with respect to (A) any Operating Leases that are
not TRS Leases and (B) all other tenants at the Substitute Property.
2.6.25 Lender shall have received (i) an endorsement to the
title insurance policy insuring the Lien of the Mortgage encumbering the
Substitute Property insuring that the Substitute Property constitutes a separate
tax lot or, if such an endorsement is not available in the state in which the
Substitute Property is located, a letter from the title insurance company
issuing such Title Insurance Policy stating that the Substitute Policy
constitutes a separate tax lot or (ii) a letter from the appropriate taxing
authority stating that the Substitute Property constitutes a separate tax lot.
2.6.26 Lender shall have received a Physical Conditions Report
with respect to the Substitute Property stating that the Substitute Property and
its use comply in all material respects
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with all applicable Legal Requirements (including, without limitation, zoning,
subdivision and building laws) and that the Substitute Property is in good
condition and repair and free of damage or waste. If compliance with any Legal
Requirements are not addressed by the Physical Conditions Report, such
compliance shall be confirmed by delivery to Lender of a certificate of an
architect licensed in the state in which the Substitute Property is located, a
letter from the municipality in which such Property is located, a certificate of
a surveyor that is licensed in the state in which the Substitute Property is
located (with respect to zoning and subdivision laws), an ALTA 3.1 zoning
endorsement to the title insurance policy delivered pursuant to clause (m) above
(with respect to zoning laws) or a subdivision endorsement to the title
insurance policy delivered pursuant to clause (m) above (with respect to
subdivision laws). If the Physical Conditions Report recommends that any repairs
be made with respect to the Substitute Property, such Physical Conditions Report
shall include an estimate of the cost of such recommended repairs and Borrower
shall deposit with Lender an amount equal to one hundred twenty-five percent
(125%) of such estimated cost, which deposit shall constitute additional
security for the Loan and shall be released to Borrower upon the delivery to
Lender of (i) an update to such Physical Conditions Report or a letter from the
engineer that prepared such Physical Conditions Report indicating that the
recommended repairs were completed in good and workmanlike manner and (ii) paid
receipts indicating that the costs of all such repairs have been paid.
2.6.27 (i) Lender shall have received a certified copy of an
amendment to the Management Agreement reflecting the deletion of the Substituted
Property and the addition of the Substitute Property as a property managed
pursuant thereto and Manager shall have executed and delivered to Lender an
amendment to the Assignment of Management Agreement reflecting such amendment to
the Management Agreement; or (ii) Lender shall have received a Replacement
Management Agreement.
2.6.28 Lender shall have received a certified copy of the
franchise agreement with respect to the Substitute Property and franchisor shall
have executed and delivered to Lender an estoppel letter in the same form
delivered with respect to the other Properties in connection with the closing of
the Loan.
2.6.29 Lender shall have received such other and further
approvals, opinions, documents and information in connection with the
substitution as requested by the Rating Agencies if the Loan is part of a
Securitization, or the Lender if the Loan is not part of a Securitization.
2.6.30 Lender shall have received copies of all contracts and
agreements relating to the leasing and operation of the Substitute Property
(other than the Management Agreement) together with a certification of Borrower
attached to each such contract or agreement certifying that the attached copy is
a true and correct copy of such contract or agreement and all amendments
thereto.
2.6.31 Borrower shall submit to Lender, not less than thirty
(30) days prior to the date of such substitution, a release of Lien (and related
Loan Documents) for the Substituted Property for execution by Lender. Such
release shall be in a form appropriate for the jurisdiction in which the
Substituted Property is located. Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this Section 2.6 have been
satisfied.
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Upon the satisfaction of the foregoing conditions precedent, Lender
will release its Lien from the Substituted Property to be released and the
Substitute Property shall be deemed to be an Individual Property for purposes of
this Agreement and the Substitute Release Amount with respect to such Substitute
Property shall be deemed to be the Release Amount with respect to such
Substitute Property for all purposes hereunder.
Section 2.7 Release of Out-Parcel.
Borrower may transfer and obtain a release of the Out-Parcel from the
Lien of the Mortgage thereon upon at least thirty (30) days prior written notice
to Lender, provided that such release shall only be granted if the following
conditions have been met or satisfied:
2.7.1 Borrower shall (i) pay Lender a processing fee equal to
$5,000 and (ii) reimburse Lender for any out-of-pocket or third party costs and
expenses it actually incurs arising from the transfer of the Out-Parcel and any
release of the Out-Parcel from the Lien of the Mortgage thereon (including,
without limitation, reasonable attorneys' fees and expenses);
2.7.2 At the time Borrower requests such release and at the
time such release is granted there is no continuing Event of Default;
2.7.3 The Out-Parcel has not been developed, improved or
subject to construction in any manner;
2.7.4 The intended use of such Out-Parcel shall be for
activities consistent or complementary with the use of the Individual Property
and the intended use of the Out-Parcel will not have a material adverse effect
on the value, use, operation or occupancy of the Individual Property;
2.7.5 Upon the transfer and release of the Out-Parcel and
after the completion of the standard approval process for tax lot-splits by the
applicable municipal authority exercising jurisdiction over the Out-Parcel, no
part of the remaining Individual Property shall be part of a tax lot which
includes any portion of the Out-Parcel;
2.7.6 Each applicable municipal authority exercising
jurisdiction over the Out-Parcel shall have approved, as part of its standard
approval process, a lot-split ordinance or other applicable action under local
law dividing the Out-Parcel from the remainder of the Individual Property and
the required procedures or processes necessary for the assignment of separate
tax identification numbers to each shall be initiated concurrently with the
release and transfer of the Out-Parcel;
2.7.7 All requirements under all laws, statutes, rules and
regulations (including, without limitation, all zoning and subdivision laws,
setback requirements, sideline requirements, parking ratio requirements, use
requirements, building and fire code requirements, environmental requirements
and wetlands requirements) applicable to the Individual Property necessary to
accomplish the lot split shall have been fulfilled, and all necessary variances,
if any, shall have been obtained, and evidence thereof has been delivered to
Lender which in form and substance is appropriate for the jurisdiction in which
the Individual Property is located;
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2.7.8 As a result of the lot split, the remaining Individual
Property with all easements appurtenant and other Permitted Encumbrances thereto
will not be in violation of any then applicable law, statute, rule or regulation
(including, without limitation, all zoning and subdivision laws, setback
requirements, sideline requirements, parking ratio requirements, use
requirements, building and fire code requirements, environmental requirements
and wetland requirements) and all necessary variances, if any, shall have been
obtained and evidence thereof has been delivered to Lender which in form and
substance is appropriate for the jurisdiction in which the Individual Property
is located;
2.7.9 Lender shall receive evidence that the single purpose
nature and bankruptcy remoteness of Borrower and its shareholders or partners
following such release have not been adversely affected and are in accordance
with the terms and provisions of this Agreement (which requirement may include a
"bring-down" of the legal non-consolidation opinion previously delivered to
Lender);
2.7.10 Appropriate reciprocal easement agreements for the
benefit and burden of the remaining Individual Property and the Out Parcel
requiring no cost or expense to Borrower regarding the use of common facilities
of such parcels, including, but not limited to, roadways, parking areas,
utilities and community facilities, in a form and substance satisfactory to
Lender and which easements will not materially adversely affect the remaining
Individual Property, shall be declared and recorded, and the remaining
Individual Property and the Out-Parcel shall be in compliance with all
applicable covenants under all easements and property agreements contained in
the Permitted Encumbrances for the Individual Property;
2.7.11 Such easements, rights and uses agreements as shall be
necessary to assure the availability of the use of the improvements to be
constructed on the Out-Parcel as an amenity of the guests, patrons and occupants
of the remaining Individual Property at no additional cost or expense to
Borrower; provided, however, that such guests, patrons and occupants may be
charged for any such use of the Out-Parcel if such charges are no greater than
would be reasonably and customarily charged for the use of a similar or
complementary amenity;
2.7.12 Lender shall have received (A) an appropriate title
policy endorsement to the effect that the release of the Out-Parcel will not
have an adverse affect on the priority of the Lien of the Mortgage on the
remaining Individual Property, and (B) an appropriate title policy endorsement
or other evidence reasonably satisfactory to Lender that there are no new or
additional subordinate Liens on the remaining Individual Property other than
Permitted Encumbrances;
2.7.13 Borrower has delivered an Officer's Certificate to the
effect that the conditions in subsection (a)-(l) hereof have occurred or shall
occur concurrently with the transfer and release of the Out-Parcel; and
2.7.14 Borrower shall execute such documents and instruments
and obtain such opinions of counsel as are typical for similar transactions,
including, if a Securitization shall have occurred, an opinion that the release
of the Out-Parcel will not be a "significant modification" of this Loan within
the meaning of Section 1.1001-3 of the regulations of the United States
Department of the Treasury and that all other requirements applicable, if any,
to a REMIC Trust, have been satisfied or have not otherwise been violated.
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ARTICLE III
SECURITY; RESERVES AND CASH MANAGEMENT
Section 3.1 Security; Establishment of Funds.
The Loan shall be evidenced by the Note of Borrower, in the original
principal amount of the Loan. The Loan shall be secured by the Mortgage creating
a first lien on the Properties, the Assignment of Leases and Rents and the other
Loan Documents. As further security for the Loan, Borrower agrees to establish
the following reserves with Lender, to be held by Lender as security for the
Loan:
3.1.1 Required Repairs Fund. On the date hereof, Borrower
shall deposit with Lender the amount of One Hundred Forty-Five Thousand One
Hundred Sixty-Seven and 50/100 Dollars ($145,167.50) (the "Required Repair
Fund") to perform the required repairs set forth on Schedule II attached hereto
by no later than one hundred twenty (120) days from the Closing Date, unless
otherwse expressly extended by Lender;
3.1.2 Replacement Escrow Fund.
(a) For the partial year period commencing on the
date hereof, and for each calendar year thereafter, Borrower shall
submit to Lender, as part of the Annual Budget required under this
Agreement, a budget for fixtures, furniture and equipment and other
replacements and repairs required to be made to the Properties during
the calendar year (collectively, the "Replacements"). Such Annual
Budget shall provide for Replacements equal to or greater than four
percent (4%) of annual Operating Revenues as calculated both on an
aggregate basis for all of the Properties (the "Replacements Budget")
and on an individual basis for each Individual Property in order to
determine the pro-rata percentage that the Operating Revenues from each
Individual Property bears to the aggregate Operating Revenues from all
of the Properties (the "Pro-Rata Percentage").
(b) Borrower shall deposit with Lender on each
Payment Date an amount equal to one-twelfth of the amount of the
Replacement Budget for the then-current calendar year (the "Replacement
Escrow Fund Monthly Deposit") as security for completion by Borrower of
the Replacements (the "Replacement Escrow Fund"); provided, however,
Borrower shall not be required to make such Replacement Escrow Fund
Monthly Deposit so long as a DSCR Event has not occurred and within
twenty (20) days following the end of each calendar quarter, Borrower
provides Lender with reports of the expenditures made by Borrower for
the Replacements for each Property during such calendar quarter. If the
actual expenditures made by Borrower for the Replacements for all of
the Properties, in the aggregate, is less than the Replacements Budget
for such calendar quarter, Borrower shall deposit an amount equal to
such difference in the Replacement Escrow Fund for disbursement
pursuant to Section 3.3. Notwithstanding the preceding sentence to the
contrary, the amount of any such deposit required to be made by
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Borrower shall be reduced by the amount of any actual expenditure
made by Borrower for any Replacement completed prior to the calendar
quarter in which such Replacement was scheduled to be made pursuant
to the Replacements Budget. In the event Borrower fails to provide
Lender with reasonably satisfactory evidence of the expenditures made
by Borrower for the Replacements during each calendar quarter within
twenty (20) days following the end of such calendar quarter, Borrower
shall deposit an amount equal to one-quarter of the Replacements
Budget in the Replacement Escrow Fund for disbursement pursuant to
Section 3.3.
(c) Within ninety (90) days after the end of the
calendar year 2002 and within ninety (90) days after the end of each
calendar year thereafter, Borrower shall provide Lender with
satisfactory reports of the expenditures made by Borrower for the
Replacements for each Individual Property, which reports shall indicate
that expenditures for each Individual Property made during the
preceding three (3) calendar year period equal an amount no less than
the product of (A) the Pro-Rata Percentage applicable to such
Individual Property and (B) the total expenditures made by Borrower for
the Replacements (including disbursements from the Replacement Escrow
Fund) for all of the Properties during such three (3) year period (such
amount, the "Allocable Amount"); provided, however, solely for purposes
of calculating the Allocable Amount, an amount equal to four percent
(4%) of Operating Revenues for such three (3) year period shall be
applied if such amount is less than the actual amount of the total
expenditures specified in the preceding subclause (B). If the amount
expended by Borrower is less than the Allocable Amount, Borrower shall
deposit an amount equal to any such difference in the Replacement
Escrow Fund for disbursement solely for Replacements for the particular
Individual Property and otherwise in accordance with Section 3.3.
3.1.3 Debt Service Escrow Fund. On the date hereof, Borrower
shall deposit with Lender an amount equal to Seventy-Three Thousand One Hundred
Twelve and 22/100 Dollars ($73,112.22) (said amount so deposited shall
hereinafter be referred to as the "Debt Service Escrow Fund"). Provided no Event
of Default shall have occurred and be continuing, Lender shall release the Debt
Service Escrow Fund to Borrower on the date that is one hundred twenty (120)
days following the date on which the Operating Lessee of the Individual Property
located in Germantown, Tennessee is either (i) a TRS Lessee, or (ii) a Single
Purpose Entity.
Section 3.2 Pledge and Grant of Security Interest.
Borrower hereby pledges to Lender, and grants a security interest in,
any and all monies now or hereafter deposited in the Funds as additional
security for the payment of the Loan. Borrower shall not, without obtaining the
prior written consent of Lender, further pledge, assign or grant any security
interest in the Funds or permit any lien or encumbrance to attached thereto, or
any levy to be made thereon, or any UCC-1 Financing Statements (except those
naming Lender as the secured party) to be filed with respect thereto. The Funds
shall (a) be held in Lender's name and may be commingled with Lender's own funds
at financial institutions selected by Lender in its sole discretion and (b) bear
interest at available money market rates. Any interest earned on the Funds shall
be disbursed or applied in the same manner and subject to the same terms and
conditions as the Funds. All earnings on the Funds shall be added to and become
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part of the Funds and shall be for the benefit of Borrower, subject to Lender's
rights pursuant to this Agreement. Lender shall not be responsible for any
losses resulting from the investment of the Funds or for obtaining any specific
level or percentage of earning on the Funds. Borrower shall be liable for any
income taxes due on the earnings from the Funds. Upon the occurrence of an Event
of Default, Lender may apply any sums then present in the Funds to the payment
of the Loan in any order in its sole discretion. Until expended or applied as
above provided, the Funds shall constitute additional security for the Loan.
Section 3.3 Disbursement of Funds.
3.3.1 Lender may reassess its estimate of the amount necessary
for the Funds from time to time and may adjust the monthly amounts required to
be deposited into the Funds upon thirty (30) days notice to Borrower.
Notwithstanding the foregoing, in the event the Lender shall at any time
increase the Replacement Escrow Fund Monthly Deposit then required, Borrower,
may at its election, request that Lender obtain, at the sole cost, fee and
expense of Borrower, an engineering report commissioned by Lender from an
engineer to be selected by Lender in its reasonable discretion, in which case
the Replacement Escrow Fund Monthly Deposit shall be adjusted by Lender based on
such engineering report, provided that in no event shall the Replacement Escrow
Fund Monthly Deposit be decreased below the applicable amount then required.
3.3.2 Lender shall make disbursements from the Funds as
requested by Borrower, and approved by Lender in its sole discretion, on a
monthly basis in increments of no less than $5,000.00 upon delivery by Borrower
of Lender's standard form of draw request accompanied by copies of paid invoices
for the amounts requested and, if required by Lender, lien waivers and releases
from all parties furnishing materials and/or services in connection with the
requested payment. To the extent Borrower has not provided satisfactory evidence
to Lender in its reasonable discretion in connection with the requested
disbursement, Lender may require an inspection of the Properties at Borrower's
expense prior to making a monthly disbursement in order to verify completion of
replacements and repairs for which reimbursement is sought. Any and all
disbursements from the Replacement Escrow Fund shall be made only with respect
to those Replacements listed on Schedule V attached hereto. Lender shall have no
obligation to release any of the Funds while any Event of Default or Potential
Default then exists. All third party, out-of-pocket costs and expenses incurred
by Lender in the disbursement of any of the Funds shall be paid by Borrower
promptly upon demand.
Section 3.4 Intentionally Omitted.
Section 3.5 Cash Management Account.
3.5.1 Simultaneously with the execution hereof Borrower has
entered into a cash management account agreement among Borrower, Lender and one
or more certain financial institutions (together with any modifications or
amendments thereof, are hereinafter collectively referred to as the "Cash
Management Agreement"), which provide, among other things, that (i) all
Operating Lease Rent shall be deposited in accordance with the Cash Management
Agreement, and (ii) if any TRS Lease is in effect and if any of the Properties
are subject to a Management Agreement and no Operating Lease, all other sums
collected with respect to the Properties and payable to a TRS Lessee or
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Borrower, as applicable, shall be deposited in accordance with the Cash
Management Agreement and that such amounts shall be disbursed in accordance
with Section 3.5 hereof. Borrower shall pay all reasonable costs and expenses
required under the Cash Management Agreement. Upon the occurrence of an Event of
Default, Lender may apply any sums then held pursuant to the Cash Management
Agreement to the payment of the Debt in any order in its sole discretion. Until
expended or applied, amounts held pursuant to the Cash Management Agreement
shall constitute additional security for the Debt.
3.5.2 Borrower shall establish and maintain a segregated
Eligible Account (the "Cash Management Account") to be held by the Servicer in
trust for the benefit of Lender, which Cash Management Account shall be under
the sole dominion and control of Lender, subject to the Cash Management
Agreement. The Cash Management Account shall be entitled GMAC Commercial
Mortgage Corporation, as Lender, to EQI Financing Partnership V, L.P., as
Borrower - Cash Management Agreement." Borrower hereby grants to Lender a first
priority security interest in the Cash Management Account and all deposits at
any time contained therein and the proceeds thereof and will take all actions
necessary to maintain in favor of Lender a perfected first priority security
interest in the Cash Management Account, including, without limitation,
executing and filing UCC-1 Financing Statements and continuations thereof.
Subject to this Agreement and the Cash Management Agreement, Lender and Servicer
shall have the sole right to make withdrawals from the Cash Management Account
and all reasonable costs and expenses for establishing and maintaining the Cash
Management Account shall be paid by Borrower.
3.5.3 Borrower shall deliver written instructions to each
Operating Lessee (that is not a TRS Lessee) to deliver all Operating Lease Rent
received by each such Operating Lessee directly to the Cash Management Account.
Borrower shall deliver written instructions to each Manager of any Individual
Property that is (i) subject to a TRS Lease, or (ii) not subject to an Operating
Lease to deliver all Rents payable to the TRS Lessee or Borrower, as applicable,
received by Manager directly to the Cash Management Account. Borrower shall, and
shall cause each TRS Lessee to, deposit into the Cash Management Account
promptly upon receipt all amounts received by Borrower or the TRS Lessee
constituting Rents.
3.5.4 Provided no Event of Default shall have occurred and be
continuing, and provided no Trigger Event has occurred and no Trigger Period
shall be continuing, then all Funds on deposit on the Cash Management Account
shall be disbursed in accordance with the Cash Management Agreement to the
Borrower Account (as defined in the Cash Management Agreement).
3.5.5 Following the occurrence of a Trigger Event and during
the continuance of a Trigger Period, provided no Event of Default shall have
occurred and be continuing, on the first day of each calendar month (or, if such
day is not a Business Day, on the immediately preceding Business Day) all funds
on deposit in the Cash Management Account shall be applied by Lender to the
payment of the following items in the order indicated:
(a) First, payments to the Tax and Insurance Escrow
Fund in accordance with the terms and conditions of Section 5.4 hereof;
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(b) Second, payment of the Monthly Debt Service
Payment Amount, applied first to the payment of interest computed at
the Contract Rate with the remainder applied to the reduction of the
outstanding principal balance of the Note;
(c) Third, payments to the Replacement Escrow Fund
in accordance with the terms and conditions hereof;
(d) Fourth, payment to the Lender of any other
amounts then due and payable under the Loan Documents (other than
Accrued Interest);
(e) Fifth, on or after the Anticipated Payment Date,
payments for monthly Cash Expenses incurred in accordance with the
related Approved Annual Budget pursuant to a written request for
payment submitted by Borrower to Lender specifying the individual Cash
Expenses in a form acceptable to Lender;
(f) Sixth, on or after the Anticipated Payment Date,
payments for Extraordinary Expenses approved by Lender, if any;
(g) Seventh, on or after the occurrence of a Trigger
Event and during the continuance of a Trigger Period due to PIP
Noncompliance, payments for monthly expenses for PIP Requirements
approved by Lender;
(h) Eighth, on or after the Anticipated Payment
Date, payments to Lender in reduction of the outstanding principal
balance of the Loan;
(i) Ninth, on or after the Anticipated Payment Date,
payments to Lender for Accrued Interest; and
(j) Lastly, payment of any excess amounts to
Borrower.
3.5.6 The insufficiency of funds on deposit in the Cash
Management Account shall not absolve Borrower of the obligation to make any
payments, as and when due pursuant to this Agreement and the other Loan
Documents, and such obligations shall be separate and independent, and not
conditioned on any event or circumstance whatsoever.
3.5.7 All funds on deposit in the Cash Management Account
following the occurrence of an Event of Default may be applied by Lender in such
order and priority as Lender shall determine; provided, however, that any
amounts in excess of amounts necessary to pay the Debt in full shall be released
to Borrower.
Section 3.6 Payments Received Under the Cash Management Agreement.
Notwithstanding anything to the contrary contained in this Agreement or
the other Loan Documents, and provided no Event of Default has occurred and is
continuing, following the occurrence of a Trigger Event, Borrower's obligations
with respect to the monthly payment of principal and interest and amounts due
for the Tax and Insurance Escrow Fund, Required Repair Fund, Replacement Escrow
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Fund and any other payment reserves established pursuant to this Agreement
or any other Loan Document shall be deemed satisfied to the extent sufficient
amounts are deposited in the Cash Management Account established pursuant to
the Cash Management Agreement to satisfy such obligations on the dates each
such payment is required, regardless of whether any of such amounts are so
applied by Lender.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Closing Conditions.
The obligation of Lender to make the Loan hereunder is subject to the
fulfillment by Borrower or waiver by Lender of the following conditions
precedent no later than the Closing Date:
4.1.1 Representations and Warranties; Compliance with
Conditions. The representations and warranties of Borrower contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the Closing Date with the same effect as if made on and as
of such date, and no Potential Default or an 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 its part to be observed or performed.
4.1.2 Loan Agreement and Note. Lender shall have received a
copy of this Agreement and the Note, in each case, duly executed and delivered
on behalf of Borrower.
4.1.3 Delivery of Loan Documents; Title Insurance; Reports;
Leases.
(a) Mortgages, Assignments of Leases, Assignments of
Agreements. Lender shall have received from Borrower fully executed and
acknowledged counterparts of the Mortgages and the Assignments of
Leases relating to each of the Properties and evidence that
counterparts of the Mortgages and Assignments of Leases have been
delivered to the title company for recording, in the reasonable
judgment of Lender, so as to effectively create upon such recording
valid and enforceable Liens upon such Properties, of the requisite
priority, in favor of Lender (or such other trustee as may be required
or desired under local law), subject only to the Permitted Encumbrances
and such other Liens as are permitted pursuant to the Loan Documents.
Lender shall have also received from Borrower fully executed
counterparts of the other Loan Documents.
(b) Title Insurance. Lender shall have received title
insurance policies (or marked title commitments or pro forma policies)
issued by a title company acceptable to Lender and dated as of the
Closing Date, with reinsurance and direct access agreements acceptable
to Lender. Such title insurance policies shall (A) provide coverage in
amounts satisfactory to Lender, (B) insure Lender that the relevant
Mortgage creates a valid lien on Borrower's interest in the Individual
Property encumbered thereby of the requisite priority, free and clear
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of all exceptions from coverage other than Permitted Encumbrances and
standard exceptions and exclusions from coverage (as modified by the
terms of any endorsements), (C) contain such endorsements and
affirmative coverages as Lender may reasonably request, and (D) name
Lender as the insured. The title insurance policies shall be
assignable. Lender also shall have received evidence that all premiums
in respect of such title insurance policies have been paid.
(c) Survey. Lender shall have received a current
title survey for each Individual Property, certified to the title
company and Lender and their successors and assigns, in form and
content satisfactory to Lender and prepared by a professional and
properly licensed land surveyor satisfactory to Lender in accordance
the 1992 Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys. The survey should meet the classification of an "Urban Survey"
and the following additional items from the list of "Optional Survey
Responsibilities and Specifications" (Table A) should be added to each
survey: 2, 3, 4, 6, 7, 8, 9, 10, 11 and 13. Such survey shall reflect
the same legal description contained in the title insurance policies
relating to such Individual Property referred to in clause (ii) above
and shall include, among other things, a metes and bounds description
of the real property comprising part of such Individual Property
reasonably satisfactory to Lender (unless such real property is
designated by lot number pursuant to a recorded plat). The surveyor's
seal shall be affixed to each survey and the surveyor shall provide a
certification for each survey in form and substance acceptable to
Lender.
(d) Insurance. Lender shall have received valid
certificates of insurance for the policies of insurance required
hereunder, satisfactory to Lender in its sole discretion, and evidence
of the payment of all premiums payable for the existing policy period.
(e) Environmental Reports. Lender shall have
received an environmental report in respect of each Individual
Property, in each case satisfactory to Lender.
(f) Zoning. With respect to each Individual Property,
Lender shall have received, at Lender's option, (i) letters or other
evidence with respect to each Individual Property from the appropriate
municipal authorities (or other Persons) concerning applicable zoning
and building laws, (ii) an ALTA 3.1 zoning endorsement for the
applicable title insurance policy, or (iii) a zoning opinion letter, in
substance reasonably satisfactory to Lender.
(g) Encumbrances. Borrower shall have taken or caused
to be taken such actions in such a manner so that Lender has a valid
and perfected Lien of the requisite priority as of the Closing Date
with respect to each Mortgage in the applicable Individual Property,
subject only to applicable Permitted Encumbrances and such other Liens
as are permitted pursuant to the Loan Documents, and Lender shall have
received satisfactory evidence thereof.
4.1.4 Related Documents. Each additional document not
specifically referenced herein, but relating to the transactions contemplated
herein, shall have been duly authorized, executed and delivered by all parties
thereto and Lender shall have received and approved certified copies thereof.
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4.1.5 Delivery of Organizational Documents. On or before the
Closing Date, Borrower shall deliver or cause to be delivered to Lender (i)
copies certified by Borrower of all organizational documentation related to
Borrower and/or the formation, structure, existence, good standing and/or
qualification to do business, as Lender may request in its sole discretion,
including, without limitation, good standing certificates, qualifications to do
business in the appropriate jurisdictions, resolutions authorizing the entering
into of the Loan and incumbency certificates as may be requested by Lender.
4.1.6 Opinions of Borrower's Counsel. Lender shall have
received opinions of Borrower's counsel (i) with respect to non-consolidation,
true sale or true contribution, and fraudulent transfer issues, and (ii) with
respect to due execution, authority, enforceability of the Loan Documents and
such other matters as Lender may require, all such opinions in form, scope and
substance satisfactory to Lender and Lender's counsel in their reasonable
discretion.
4.1.7 Completion of Proceedings. All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated by this Agreement and other Loan Documents and all documents
incidental thereto shall be satisfactory in form and substance to Lender, and
Lender shall have received all such counterpart originals or certified copies of
such documents as Lender may reasonably request.
4.1.8 Payments. All payments, deposits or escrows required to
be made or established by Borrower under this Agreement, the Note and the other
Loan Documents on or before the Closing Date shall have been paid.
4.1.9 Franchisor Estoppel. Lender shall have received an
executed franchisor estoppel letter which shall be in form and substance
satisfactory to Lender from the franchisor under each of the franchise
agreements listed on Schedule IV annexed hereto.
4.1.10 Tenant Estoppels; REA Estoppels. Lender shall have
received an executed tenant estoppel letter, which shall be in form and
substance satisfactory to Lender, from each Operating Lessee and any other
tenant requested by Lender
4.1.11 Budgets. Borrower shall have delivered, and Lender
shall have approved, the Annual Budget for the current calendar year.
4.1.12 Basic Carrying Costs. Borrower shall have paid all
Basic Carrying Costs relating to each of the Properties which are in arrears.
4.1.13 Transaction Costs. Borrower shall have paid or
reimbursed Lender for all title insurance premiums and recording and filing fees
incurred in connection with the origination of the Loan.
4.1.14 Material Adverse Change. There shall have been no
material adverse change in the financial condition or business condition of
Borrower, any Operating Lessee or the Property since the date of the most recent
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financial statements delivered to Lender. The income and expenses of the
Property, the Operating Leases thereof, and all other features of the
transaction shall be as represented to Lender without material adverse change.
Neither Borrower nor any Operating Lessee shall be the subject of any
bankruptcy, reorganization, or insolvency proceeding.
4.1.15 Leases. Lender shall have received copies of all tenant
Leases, certified copies of any tenant Leases as requested by Lender and
certified copies of all ground Leases affecting the Property.
4.1.16 Subordination, Non-Disturbance and Attornment. Lender
shall have received a Subordination, Non-Disturbance and Attornment Agreement
with respect to each Operating Lease.
4.1.17 Tax Lot. Lender shall have received evidence that the
Property constitutes a separate tax lot, which evidence shall be reasonably
satisfactory in form and substance to Lender.
4.1.18 Physical Conditions Reports. Lender shall have received
Physical Conditions Reports with respect to the Property, which reports shall be
reasonably satisfactory in form and substance to Lender.
4.1.19 Management Agreement. Lender shall have received a
certified copy of the Management Agreement, if any, with respect to the Property
which shall be satisfactory in form and substance to Lender.
4.1.20 Appraisal. Lender shall have received an appraisal of
the Property, which shall be satisfactory in form and substance to Lender.
4.1.21 Financial Statements. Lender shall have received a
balance sheet with respect to the Property for the two most recent calendar
years and statements of income and statements of cash flows with respect to the
Property for the three most recent calendar years.
4.1.22 Operating Lease. Lender shall have received a certified
copy of each Operating Lease between Borrower and each Operating Lessee with
respect to the Properties, which shall be reasonably satisfactory in form and
substance to Lender.
4.1.23 Further Documents. Lender or its counsel shall have
received such other and further approvals, opinions, documents and information
as Lender or its counsel may have reasonably requested and the form and content
of all the Loan Documents.
ARTICLE V
INSURANCE, CONDEMNATION, AND IMPOUNDS
Section 5.1 Insurance; Casualty and Condemnation.
5.1.1 Borrower shall obtain and maintain, or cause to be
maintained, insurance for Borrower and each of the Individual Properties
providing at least the following coverages:
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(a) comprehensive all risk insurance on the
Improvements and the Personalty, including contingent liability from
Operation of Building Laws, Demolition Costs and Increased Cost of
Construction Endorsements, in each case (A) in an amount equal to one
hundred percent (100%) of the "Full Replacement Cost," which for
purposes of this Agreement shall mean actual replacement value
(exclusive of costs of excavations, foundations, underground utilities
and footings) with a waiver of depreciation, but the amount shall in no
event be less than the outstanding principal balance of the Loan; (B)
containing an agreed amount endorsement with respect to the
Improvements and Personalty waiving all co- insurance provisions; (C)
providing for no deductible in excess of Ten Thousand and No/100
Dollars ($10,000) for all such insurance coverage; and (D) containing
an "Ordinance or Law Coverage" or "Enforcement" endorsement if any of
the Improvements or the use of the Individual Property shall at any
time constitute legal non-conforming structures or uses. In addition,
Borrower shall obtain: (y) if any portion of the Improvements is
currently or at any time in the future located in a federally
designated "special flood hazard area", flood hazard insurance in an
amount equal to the lesser of (1) the outstanding principal balance of
the Note or (2) the maximum amount of such insurance available under
the National Flood Insurance Act of 1968, the Flood Disaster Protection
Act of 1973 or the National Flood Insurance Reform Act of 1994, as each
may be amended or such greater amount as Lender shall require; and (z)
earthquake insurance in amounts and in form and substance reasonably
satisfactory to Lender in the event the Individual Property is located
in an area with a high degree of seismic activity, provided that the
insurance pursuant to clauses (y) and (z) hereof shall be on terms
consistent with the comprehensive all risk insurance policy required
under this subsection (i).
(b) commercial general liability insurance against
claims for personal injury, bodily injury, death or property damage
occurring upon, in or about the Individual Property, such insurance (A)
to be on the so-called "occurrence" form with a combined limit of not
less than Two Million and No/100 Dollars ($2,000,000) in the aggregate
and One Million and No/100 Dollars ($1,000,000) per occurrence (and, if
on a blanket policy, containing an "Aggregate Per Location"
endorsement); (B) to continue at not less than the aforesaid limit
until required to be changed by Lender in writing by reason of changed
economic conditions making such protection inadequate; and (C) to cover
at least the following hazards: (1) premises and operations; (2)
products and completed operations on an "if any" basis; (3) independent
contractors; (4) blanket contractual liability for all legal contracts;
and (5) contractual liability covering the indemnities contained in the
Mortgages to the extent the same is available;
(c) business income insurance (A) with loss payable
to the applicable Operating Lessee (other than a TRS Lessee); (B)
covering all risks required to be covered by the insurance provided for
in subsection (i) above; (C) containing an extended period of indemnity
endorsement which provides that after the physical loss to the
Improvements and Personalty has been repaired, the continued loss of
income will be insured until (x) the Individual Property is repaired or
replaced and such income returns to the same level it was
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at prior to the loss, (y) if such income has not returned to the same
level it was at prior to the loss, six (6) months following the date on
which the Individual Property is repaired or replaced, or (z) or the
expiration of twelve (12) months from the date that the Individual
Property is repaired or replaced and operations are resumed, whichever
first occurs, and notwithstanding that the policy may expire prior to
the end of such period; (D) in an amount equal to Nine Million One
Hundred Thirty Eight Thousand Three Hundred Six and No/100 Dollars
($9,138,306.00) in the aggregate for all of the Properties (based on
Operating Expenses and NOI for the Properties). The amount of such
business income insurance shall be determined prior to the date hereof
and at least once each year thereafter based on clause (D) above. All
proceeds payable to Lender pursuant to this subsection shall be held by
Lender and shall be applied to the obligations secured by the Loan
Documents from time to time due and payable hereunder and under the
Note; provided, however, that nothing herein contained shall be deemed
to relieve Borrower of its obligations to pay the obligations secured
by the Loan Documents on the respective dates of payment provided for
in the Note and the other Loan Documents except to the extent such
amounts are actually paid out of the proceeds of such business income
insurance;
(d) at all times during which structural
construction, repairs or alterations are being made with respect to the
Improvements, and only if the Individual Property coverage form does
not otherwise apply, (A) owner's contingent or protective liability
insurance covering claims not covered by or under the terms or
provisions of the above mentioned commercial general liability
insurance policy; and (B) the insurance provided for in subsection (i)
above written in a so-called builder's risk completed value form (1) on
a non-reporting basis, (2) against all risks insured against pursuant
to subsection (i) above, (3) including permission to occupy the
Individual Property, and (4) with an agreed amount endorsement waiving
co-insurance provisions;
(e) workers' compensation, subject to the statutory
limits of the state in which the Individual Property is located, and
employer's liability insurance with a limit of at least One Million and
No/100 Dollars ($1,000,000) per accident and per disease per employee,
and One Million and No/100 Dollars ($1,000,000) for disease aggregate
in respect of any work or operations on or about the Individual
Property, or in connection with the Individual Property or its
operation (if applicable);
(f) comprehensive boiler and machinery insurance on
terms consistent with the commercial property insurance policy required
under subsection (i) above in amounts equal to the lesser of Two
Million and No/100 Dollars ($2,000,000) per occurrence or one hundred
percent (100%) of the insurable value of the Improvements, against loss
or damage from: (a) leakage of sprinkler systems; and (b) explosion of
steam boilers, air conditioning equipment, high pressure piping,
machinery and equipment, pressure vessels or similar apparatus, now or
hereafter installed in the Improvements;
(g) umbrella liability insurance in an amount not
less than Fifty Million and No/100 Dollars ($50,000,000) per occurrence
on terms consistent with the commercial general liability insurance
policy required under subsection (ii) above;
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(h) motor vehicle liability coverage for all owned
and non-owned vehicles, including rented and leased vehicles containing
minimum limits per occurrence of One Million and No/100 Dollars
($1,000,000);
(i) so-called "dramshop" insurance or other
liability insurance required in connection with the sale of alcoholic
beverages;
(j) insurance against employee dishonesty in an
amount not less than one (1) month of gross revenue from such
Individual Property with a deductible not greater than Ten Thousand and
No/100 Dollars ($10,000); and
(k) upon sixty (60) days' written notice, such other
reasonable insurance and in such reasonable amounts as Lender from time
to time may reasonably request against such other insurable hazards
which at the time are commonly insured against for property similar to
the Individual Property located in or around the region in which the
Individual Property is located.
5.1.2 All insurance provided for in Section 5.1(a) shall be
obtained under valid and enforceable policies (collectively, the "Policies" or
in the singular, the "Policy"), and shall be subject to the approval of Lender
as to insurance companies, amounts, deductibles, loss payees and insureds. The
Policies shall be issued by financially sound and responsible insurance
companies authorized to do business in the state in which the Property is
located with a rating of "A+XI" or better as established by Best's Rating Guide
and having a claims paying ability rating of "A" or better by at least two (2)
of the Rating Agencies (one of which shall be (i) Standard & Poor's if Standard
& Poor's is rating the Securities issued in the Securitization of which this
Loan is a part, and (ii) Moody's if ▇▇▇▇▇'▇ is rating the Securities issued in
the Securitization of which this Loan is a part). The Policies described in
Section 5.1(a) shall designate Lender as loss payee. Not less than ten (10) days
prior to the expiration dates of the Policies theretofore furnished to Lender,
certificates of insurance evidencing the Policies accompanied by evidence
satisfactory to Lender of payment of the premiums due thereunder (the "Insurance
Premiums"), shall be delivered by Borrower to Lender.
5.1.3 Any blanket insurance Policy shall specifically allocate
to the Individual Property the amount of coverage from time to time required
hereunder and shall otherwise provide the same protection as would a separate
Policy insuring only the Individual Property in compliance with the provisions
of Section 5.1(a), including an acknowledgement that the payment of such
allocation shall continue such Policy as to the Individual Property
notwithstanding any other payment of premiums.
5.1.4 All Policies of insurance provided for or contemplated
by Section 5.1(a), except for the Policy referenced in Section 5.1(a)(v), shall
name Borrower as the insured and Lender as an additional insured, as its
interests may appear, and in the case of property damage, boiler and machinery,
flood and earthquake insurance, shall contain a so-called New York standard non-
contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender.
5.1.5 All Policies of insurance provided for in Section
5.1(a)(v) shall contain clauses or endorsements to the effect that:
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(a) no act or negligence of Borrower, or anyone
acting for Borrower, or of any tenant or other occupant, or failure to
comply with the provisions of any Policy, which might otherwise result
in a forfeiture of the insurance or any part thereof, shall in any way
affect the validity or enforceability of the insurance insofar as
Lender is concerned;
(b) the Policy shall not be materially changed (other
than to increase the coverage provided thereby) or canceled without at
least thirty (30) days' written notice to Lender and any other party
named therein as an additional insured;
(c) each Policy shall provide that the issuers
thereof shall give written notice to Lender if the Policy has not been
renewed fifteen (15) days prior to its expiration; and
(d) Lender shall not be liable for any Insurance
Premiums thereon or subject to any assessments thereunder.
5.1.6 If at any time Lender is not in receipt of written
evidence that all insurance required hereunder is in full force and effect,
Lender shall have the right, upon five (5) days' prior written notice to
Borrower, to take such action as Lender deems necessary to protect its interest
in the Individual Property, including, without limitation, the obtaining of such
insurance coverage as Lender in its sole discretion deems appropriate and all
premiums incurred by Lender in connection with such action or in obtaining such
insurance and keeping it in effect shall be paid by Borrower to Lender upon
demand and until paid shall be secured by the Mortgages and shall bear interest
at the Default Rate.
5.1.7 If the Individual Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty, Borrower shall give
prompt notice of such damage to Lender and shall promptly commence and
diligently prosecute the completion of the Restoration of the Individual
Property and otherwise in accordance with Section 5.1. Borrower shall pay all
costs of such Restoration whether or not such costs are covered by insurance.
Lender may, but shall not be obligated to make proof of loss if not made
promptly by Borrower.
5.1.8 In the event of foreclosure of the Mortgage with respect
to the Individual Property, or other transfer of title to the Individual
Property in extinguishment in whole or in part of the Debt all right, title and
interest of Borrower in and to the Policies that are not blanket Policies then
in force concerning the Individual Property and all proceeds payable thereunder
shall thereupon vest in the purchaser at such foreclosure or Lender or other
transferee in the event of such other transfer of title.
Section 5.2 Condemnation.
Borrower shall promptly give Lender notice of the actual or threatened
commencement of any condemnation or eminent domain proceeding (a "Condemnation")
affecting any of the Individual Properties and shall deliver to Lender copies of
any and all papers served in connection with such proceedings. Lender may
participate in any such proceedings and Borrower shall deliver to Lender
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all instruments required to permit participation in such proceedings. Borrower
shall, at its expense, diligently prosecute any such proceedings, and shall
consult with Lender, its attorneys and experts, and cooperate with them in the
carrying on or defense of any such proceedings. Lender is hereby irrevocably
appointed as Borrower's attorney-in-fact, coupled with an interest, with
exclusive power to collect, receive and retain any Award and to make any
compromise or settlement in connection with any such Condemnation.
Notwithstanding any taking by any public or quasi-public authority through
eminent domain or otherwise (including but not limited to any transfer made in
lieu of or in anticipation of the exercise of such taking), Borrower shall
continue to pay the Debt at the time and in the manner provided for its payment
in the Note and in this Agreement and the Debt shall not be reduced until any
award or payment therefor (an "Award") shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the award interest at the rate or rates provided herein or in the Note.
If an Individual Property or any portion thereof is taken by a condemning
authority, Borrower shall promptly commence and diligently prosecute the
Restoration of the Property and otherwise comply with the provisions of Section
5.3. If an Individual Property is sold, through foreclosure or otherwise, prior
to the receipt by Lender of the Award, Lender shall have the right, whether or
not a deficiency judgment on the Note shall have been sought, recovered or
denied, to receive the Award, or a portion thereof sufficient to pay the Debt.
Section 5.3 Restoration.
The following provisions shall apply in connection with the Restoration
of any Individual Property:
5.3.1 If the Net Proceeds for such Individual Property shall
be less than One Hundred Thousand and No/100 Dollars ($100,000) and the costs of
completing the Restoration for such Individual Property shall be less than One
Hundred Thousand and No/100 Dollars ($100,000), the Net Proceeds will be
disbursed by Lender to Borrower upon receipt, provided that all of the
conditions set forth in Section 5.3(b)(i) are met and Borrower delivers to
Lender a written undertaking to expeditiously commence and to satisfactorily
complete with due diligence the Restoration in accordance with the terms of this
Agreement.
5.3.2 If the Net Proceeds for such Individual Property are
equal to or greater than One Hundred Thousand and No/100 Dollars ($100,000) or
the costs of completing the Restoration for such Individual Property is equal to
or greater than One Hundred Thousand and No/100 Dollars ($100,000) Lender shall
make the Net Proceeds available for the Restoration in accordance with the
provisions of this Section 5.3. The term "Net Proceeds" for purposes of this
Section 5.3 shall mean: (i) the net amount of all insurance proceeds received by
Lender pursuant to Section 5.1 (a)(i), (iv), (vi) and (vii) as a result of such
damage or destruction, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
same ("Insurance Proceeds"), or (ii) the net amount of the Award, after
deduction of its reasonable costs and expenses (including, but not limited to,
reasonable counsel fees), if any, in collecting same ("Condemnation Proceeds"),
whichever the case may be.
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(a) The Net Proceeds shall be made available to
Borrower for Restoration provided that the Net Proceeds are received
prior to the Anticipated Payment Date and each of the following
conditions are met:
(i) no Event of Default shall have occurred
and be continuing;
(ii) (1) in the event the Net Proceeds are
Insurance Proceeds, less than thirty-five percent (35%) of the
total floor area of the Improvements of the Individual
Property that has been damaged, destroyed or rendered unusable
as a result of such fire or other casualty or (2) in the event
the Net Proceeds are Condemnation Proceeds, less than ten
percent (10%) of the land constituting the Individual Property
that is taken, and such land is located along the perimeter or
periphery of the Individual Property, and no portion of the
Improvements is located in such land;
(iii) the Operating Leases shall remain in
full force and effect during and after the completion of the
Restoration, notwithstanding the occurrence of any such fire
or other casualty or taking, whichever the case may be;
(iv) Borrower shall commence the Restoration
as soon as reasonably practicable (but in no event later than
sixty (60) days after such damage or destruction or taking,
whichever the case may be, occurs) and shall diligently pursue
the same to satisfactory completion;
(v) Lender shall be satisfied that any
operating deficits, including all scheduled payments of
principal and interest under the Note, which will be incurred
with respect to the Individual Property as a result of the
occurrence of any such fire or other casualty or taking,
whichever the case may be, will be covered out of (1) the Net
Proceeds, (2) the insurance coverage referred to in Section
5.1(a)(iii), if applicable, or (3) other funds of Borrower;
(vi) Lender shall be satisfied that the
Restoration will be completed on or before the earliest to
occur of (1) six (6) months prior to the Anticipated Payment
Date, (2) the earliest date required for such completion under
the terms of any Operating Lease, (3) such time as may be
required under applicable zoning law, ordinance, rule or
regulation in order to repair and restore the Property to the
condition it was in immediately prior to such fire or other
casualty or to as nearly as possible the condition it was in
immediately prior to such taking, as applicable or (4) the
expiration of the insurance coverage referred to in Section
5.1(a)(iii);
(vii) the Individual Property and the use
thereof after the Restoration will be in compliance with and
permitted under all applicable zoning laws, ordinances, rules
and regulations (including any variances applicable to the
Individual Property prior to such fire or other casualty or
prior to such taking, as applicable) and all necessary
operating or reciprocal easement agreements for the operation
and maintenance of the Property are, or remain, in effect;
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(viii) the Restoration shall be done and
completed by Borrower in an expeditious and diligent fashion
and in compliance with all applicable governmental laws, rules
and regulations (including, without limitation, all applicable
environmental laws);
(ix) such fire or other casualty or taking,
as applicable, does not result in the loss of access to the
Individual Property or the related Improvements;
(x) after giving effect to such Restoration,
the Debt Service Coverage Ratio for all of the Properties
shall be equal to or greater than the Debt Service Coverage
Ratio as of the Closing Date;
(xi) after giving effect to such
Restoration, the LTV Ratio for all of the Properties shall be
equal to or less than the LTV Ratio as of the Closing Date;
and
(xii) Lender shall have determined that the
applicable hotel franchise or license agreement shall not be
terminated with respect to the Individual Property as a result
of such fire or other casualty or taking, but will remain in
full force and effect during and after the completion of the
Restoration of such Individual Property or that an alternative
franchise agreement or commitment therefor acceptable to
Lender from a nationally recognized franchisor of comparable
or better reputation will be secured for the Individual
Property within thirty (30) days of such fire or other
casualty or taking.
(b) The Net Proceeds shall be held by Lender in an
interest-bearing account and, until disbursed in accordance with the
provisions of this Section 5.3(b), shall constitute additional security
for the Debt and other obligations under the Loan Documents. The Net
Proceeds shall be disbursed by Lender to, or as directed by, Borrower
from time to time during the course of the Restoration, upon receipt of
evidence satisfactory to Lender that (A) all materials installed and
work and labor performed (except to the extent that they are to be paid
for out of the requested disbursement) in connection with the
Restoration have been paid for in full, and (B) there exist no notices
of pendency, stop orders, mechanic's or materialman's liens or notices
of intention to file same, or any other liens or encumbrances of any
nature whatsoever on the Individual Property arising out of the
Restoration which have not either been fully bonded to the satisfaction
of Lender and discharged of record or in the alternative fully insured
to the satisfaction of Lender by the title company issuing the title
insurance policy.
(c) All plans and specifications required in
connection with the Restoration shall be subject to prior review and
acceptance in all respects by Lender and by an independent consulting
engineer selected by Lender (the "Casualty Consultant"). Lender shall
have the use of the plans and specifications and all permits, licenses
and approvals required or obtained in connection with the Restoration.
The identity of the contractors, subcontractors and materialmen engaged
in the Restoration, as well as the contracts under which they have been
engaged, shall be subject to prior review and acceptance by Lender and
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the Casualty Consultant, which acceptance shall not be unreasonably
withheld. All costs and expenses incurred by Lender in connection with
making the Net Proceeds available for the Restoration including,
without limitation, reasonable counsel fees and disbursements and the
Casualty Consultant's fees, shall be paid by Borrower.
(d) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to the
costs actually incurred from time to time for work in place as part of
the Restoration, as certified by the Casualty Consultant, minus the
Casualty Retainage. The term "Casualty Retainage" shall mean an amount
equal to ten percent (10%) of the costs actually incurred for work in
place as part of the Restoration, as certified by the Casualty
Consultant, until the Restoration has been completed. The Casualty
Retainage shall in no event, and notwithstanding anything to the
contrary set forth above in this Section 5.3(b), be less than the
amount actually held back by Borrower from contractors, subcontractors
and materialmen engaged in the Restoration. The Casualty Retainage
shall not be released until the Casualty Consultant certifies to Lender
that the Restoration has been completed in accordance with the
provisions of this Section 5.3(b) and that all approvals necessary for
the re-occupancy and use of the Individual Property have been obtained
from all appropriate governmental and quasi-governmental authorities,
and Lender receives evidence satisfactory to Lender that the costs of
the Restoration have been paid in full or will be paid in full out of
the Casualty Retainage; provided, however, that Lender will release the
portion of the Casualty Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the Restoration as
of the date upon which the Casualty Consultant certifies to Lender that
the contractor, subcontractor or materialman has satisfactorily
completed all work and has supplied all materials in accordance with
the provisions of the contractor's, subcontractor's or materialman's
contract, the contractor, subcontractor or materialman delivers the
lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested
by Lender or by the title company issuing the title insurance policy,
and Lender receives an endorsement to the title insurance policy
insuring the continued priority of the lien of the related Mortgage and
evidence of payment of any premium payable for such endorsement. If
required by Lender, the release of any such portion of the Casualty
Retainage shall be approved by the surety company, if any, which has
issued a payment or performance bond with respect to the contractor,
subcontractor or materialman.
(e) Lender shall not be obligated to make
disbursements of the Net Proceeds more frequently than once every
calendar month.
(f) If at any time the Net Proceeds or the
undisbursed balance thereof shall not, in the reasonable opinion of
Lender in consultation with the Casualty Consultant, be sufficient to
pay in full the balance of the costs which are estimated by the
Casualty Consultant to be incurred in connection with the completion of
the Restoration, Borrower shall deposit the deficiency (the "Net
Proceeds Deficiency") with Lender before any further disbursement of
the Net Proceeds shall be made. The Net Proceeds Deficiency deposited
with Lender shall be held by Lender and shall be disbursed for costs
actually incurred in connection with the Restoration on the same
conditions applicable to the disbursement of the
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Net Proceeds, and until so disbursed pursuant to this Section 5.3(b)
shall constitute additional security for the Debt and other obligations
under the Loan Documents.
(g) The excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency deposited
with Lender after the Casualty Consultant certifies to Lender that the
Restoration has been completed in accordance with the provisions of
this Section 5.1(b), and the receipt by Lender of evidence satisfactory
to Lender that all costs incurred in connection with the Restoration
have been paid in full, shall be remitted by Lender to Borrower,
provided no Event of Default shall have occurred and shall be
continuing under the Note, this Loan Agreement or any of the Other Loan
Documents.
5.3.3 All Net Proceeds not required (i) to be made available
for the Restoration or (ii) to be returned to Borrower as excess Net Proceeds
pursuant to Section 5.1(b)(vii) may be retained and applied by Lender toward the
payment of the Debt whether or not then due and payable in such order, priority
and proportions as Lender in its sole discretion shall deem proper, or, at the
discretion of Lender, the same may be paid, either in whole or in part, to
Borrower for such purposes as Lender shall designate, in its discretion.
Section 5.4 Impounds.
Borrower shall deposit with Lender, monthly, (a) one-twelfth (1/12th)
of the Taxes that Lender estimates will be payable during the next ensuing
twelve (12) months in order to accumulate with Lender sufficient funds to pay
all such Taxes at least thirty (30) days prior to their respective due dates,
and (b) one-twelfth of the Insurance Premiums that Lender estimates will be
payable for the renewal of the coverage afforded by the insurance policies
required by Lender upon the expiration thereof in order to accumulate with
Lender sufficient funds to pay all such Insurance Premiums at least thirty (30)
days prior to expiration (said amounts in (a) and (b) above hereinafter called
the "Tax and Insurance Escrow Fund"). At or before the advance of the Loan,
Borrower shall deposit with Lender a sum of money which together with the
monthly installments will be sufficient to make each of such payments thirty
(30) days prior to the date any delinquency or penalty becomes due with respect
to such payments. Deposits shall be made on the basis of Lender's estimate from
time to time of the charges for the current year (after giving effect to any
reassessment or, at Lender's election, on the basis of the charges for the prior
year, with adjustments when the charges are fixed for the then current year).
All funds so deposited shall be held by Lender, without interest, and may be
commingled with Lender's general funds. Borrower hereby grants to Lender a
security interest in all funds so deposited with Lender for the purpose of
securing the Loan. While an Event of Default exists, the funds deposited may be
applied in payment of the charges for which such funds have been deposited, or
to the payment of the Loan or any other charges affecting the security of
Lender, as Lender may elect, but no such application shall be deemed to have
been made by operation of law or otherwise until actually made by Lender.
Borrower shall furnish Lender with bills for the charges for which such deposits
are required at least thirty (30) days prior to the date on which the charges
first become payable. If at any time the amount on deposit with Lender, together
with amounts to be deposited by Borrower before such charges are payable, is
insufficient to pay such charges, Borrower shall deposit any deficiency with
Lender immediately upon demand. Lender shall pay such charges when the amount on
deposit with Lender is sufficient to pay such charges and Lender has received
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a ▇▇▇▇ for such charges. Notwithstanding the foregoing provisions of this
Section 5.4 and provided that no Event of Default or Trigger Period shall have
occurred and be continuing, Borrower shall not be required to deposit that
portion of the Insurance Premiums in the Tax and Insurance Escrow Fund for any
Individual Property for which the Operating Lessee shall be obligated to pay
such Insurance Premiums; provided that (x) the related Operating Lease has not
expired or terminated and is in full force and effect, and (y) Borrower
continually complies with Section 5.1(f) hereof.
ARTICLE VI
ENVIRONMENTAL MATTERS
Section 6.1 Certain Definitions.
As used herein, the following terms have the meanings indicated:
6.1.1 "Environmental Laws" Any local, state, federal or other
governmental authority, statute, ordinance, code, order, decree, law, rule or
regulation pertaining to or imposing liability or standards of conduct
concerning environmental regulation, contamination or clean-up including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, the Resource Conservation and Recovery Act, as
amended, the Emergency Planning and Community Right-to-Know Act of 1986, as
amended, the Hazardous Substances Transportation Act, as amended, the Solid
Waste Disposal Act, as amended, the Clean Water Act, as amended, the Clean Air
Act, as amended, the Toxic Substances Control Act, as amended, the Safe Drinking
Water Act, as amended, the Occupational Safety and Health Act, as amended, any
state superlien and environmental clean-up statutes and all regulations adopted
in respect of the foregoing laws whether presently in force or coming into being
and/or effectiveness hereafter.
6.1.2 "Hazardous Materials" means (i) petroleum or chemical
products, whether in liquid, solid, or gaseous form, or any fraction or
by-product thereof, (ii) asbestos or asbestos- containing materials, (iii)
polychlorinated biphenyls (pcbs), (iv) radon gas, (v) underground storage tanks,
(vi) any explosive or radioactive substances, (vii) lead or lead-based paint, or
(viii) any other substance, material, waste or mixture which is or shall be
listed, defined, or otherwise determined by any governmental authority to be
hazardous, toxic, dangerous or otherwise regulated, controlled or giving rise to
liability under any Environmental Laws.
Section 6.2 Representations and Warranties on Environmental Matters.
To Borrower's knowledge, except as set forth in the Site Assessment
delivered in connection with the origination of the Loan, (a) no Hazardous
Material is now or was formerly used, stored, generated, manufactured,
installed, treated, discharged, disposed of or otherwise present at or about any
Individual Property or any property adjacent to any Individual Property (except
for cleaning and other products currently used in connection with the routine
maintenance or repair of an Individual Property in full compliance with
Environmental Laws) and no Hazardous Material was removed or transported from
any Individual Property, (b) all permits, licenses, approvals and filings
required by Environmental Laws have been obtained, and the use, operation and
condition of any Individual Property does not, and did not previously, violate
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any Environmental Laws, (c) no civil, criminal or administrative action, suit,
claim, hearing, investigation or proceeding has been brought or been threatened,
nor have any settlements been reached by or with any parties or any liens
imposed in connection with any Individual Property concerning Hazardous
Materials or Environmental Laws; and (d) no underground storage tanks exist on
any part of any Individual Property.
Section 6.3 Covenants on Environmental Matters.
6.3.1 Borrower shall (i) comply strictly and in all respects
with applicable Environmental Laws; (ii) notify Lender immediately upon
Borrower's discovery of any spill, discharge, release or presence of any
Hazardous Material at, upon, under, within, contiguous to or otherwise affecting
any Individual Property; (iii) promptly remove such Hazardous Materials and
remediate any Individual Property in full compliance with Environmental Laws or
as reasonably required by Lender based upon the recommendations and
specifications of an independent environmental consultant approved by Lender;
and (iv) promptly forward to Lender copies of all orders, notices, permits,
applications or other communications and reports in connection with any spill,
discharge, release or the presence of any Hazardous Material or any other
matters relating to the Environmental Laws or any similar laws or regulations,
as they may affect any Individual Property or Borrower.
6.3.2 Borrower shall not cause, shall prohibit any other
Person within the control of Borrower from causing, and shall use prudent,
commercially reasonable efforts to prohibit other Persons (including tenants)
from (i) causing any spill, discharge or release, or the use, storage,
generation, manufacture, installation, or disposal, of any Hazardous Materials
at, upon, under, within or about any Individual Property or the transportation
of any Hazardous Materials to or from any Individual Property (except for
cleaning and other products used in connection with routine maintenance or
repair of any Individual Property in full compliance with Environmental Laws),
(ii) installing any underground storage tanks at any Individual Property, or
(iii) conducting any activity that requires a permit or other authorization
under Environmental Laws.
6.3.3 Borrower shall provide to Lender, promptly upon the
written request of Lender from time to time, a Site Assessment or, if required
by Lender, an update to any existing Site Assessment, to assess the presence or
absence of any Hazardous Materials and the potential costs in connection with
abatement, cleanup or removal of any Hazardous Materials found on, under, at or
within any Individual Property. Borrower shall not pay the cost of any such Site
Assessment or update, unless Lender's request for a Site Assessment is based on
information provided under Section 6.3(a), a reasonable suspicion of Hazardous
Materials at or near any Individual Property, a breach of representations under
Section 6.2, or an Event of Default, in which case any such Site Assessment or
update shall be at Borrower's expense.
Section 6.4 Allocation of Risks and Indemnity.
As between Borrower, Lender and Indemnitor, all risk of loss associated
with non-compliance with Environmental Laws, or with the presence of any
Hazardous Material at, upon, within, contiguous to or otherwise affecting any
Individual Property, shall lie solely with Borrower and
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Indemnitor. Accordingly, Borrower and Indemnitor shall bear all risks and costs
associated with any loss (including any loss in value attributable to Hazardous
Materials), damage or liability therefrom, including all costs of removal of
Hazardous Materials or other remediation required by Lender or by law. Borrower
shall indemnify, defend and hold Lender and its shareholders, directors,
officers, employees and agents harmless from and against all loss, liabilities,
damages, claims, costs and expenses (including reasonable costs of defense and
consultant fees, investigation and laboratory fees, court costs, and other
litigation expenses) arising out of or associated, in any way, with (a) the non-
compliance with Environmental Laws, or (b) the existence of Hazardous Materials
in, on, or about any Individual Property, (c) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or related
to Hazardous Materials; (d) any lawsuit brought or threatened, settlement
reached, or government order relating to such Hazardous Materials, (e) a breach
of any representation, warranty or covenant contained in this Article 6, whether
based in contract, tort, implied or express warranty, strict liability, criminal
or civil statute or common law, or (f) the imposition of any environmental lien
encumbering any Individual Property; provided, however, Borrower shall not be
liable under such indemnification to the extent such loss, liability, damage,
claim, cost or expense results solely from Lender's gross negligence or willful
misconduct. Borrower's obligations under this Section 6.4 shall arise whether or
not any governmental authority has taken or threatened any action in connection
with the presence of any Hazardous Material, and whether or not the existence of
any such Hazardous Material or potential liability on account thereof is
disclosed in the Site Assessment and shall continue notwithstanding the
repayment of the Loan or any transfer or sale of any right, title and interest
in any Individual Property (by foreclosure, deed in lieu of foreclosure or
otherwise). Additionally, if any Hazardous Materials affect or threaten to
affect the Properties, Lender may (but shall not be obligated to) give such
notices and take such actions as it deems reasonably necessary or advisable at
the expense of the Borrower in order to ▇▇▇▇▇ the discharge of any Hazardous
Materials or remove the Hazardous Materials. Any amounts payable to Lender by
reason of the application of this Section 6.4 shall become immediately due and
payable and shall bear interest at the Default Rate from the date loss or damage
is sustained by Lender until paid. The obligations and liabilities of Borrower
under this Section 6.4 shall survive any termination, satisfaction, assignment,
entry of a judgment of foreclosure or delivery of a deed in lieu of foreclosure.
Section 6.5 No Waiver.
Notwithstanding any provision in this Article 6 or elsewhere in the
Loan Documents, or any rights or remedies granted by the Loan Documents, Lender
does not waive and expressly reserves all rights and benefits now or hereafter
accruing to Lender under the "security interest" or "secured creditor" exception
under applicable Environmental Laws, as the same may be amended. No action taken
by Lender pursuant to the Loan Documents shall be deemed or construed to be a
waiver or relinquishment of any such rights or benefits under the "security
interest exception."
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ARTICLE VII
LEASING MATTERS
Section 7.1 Representations and Warranties on Leases.
Borrower represents and warrants to Lender with respect to the Leases
of each Individual Property under which Borrower is the landlord that: (a) the
Leases are valid and in full force and effect; (b) the Leases (including
amendments) are in writing, and there are no oral agreements with respect
thereto; (c) the copies of the Leases delivered to Lender are true and complete;
(d) neither the landlord nor any tenant is in default under any of the Leases;
(e) with the exception of those Operating Leases which shall be replaced with
TRS Leases, Borrower has no knowledge of any notice of termination or default
with respect to any Lease; (f) landlord has not assigned or pledged any of the
Leases, the rents or any interests therein except to Lender; (g) no tenant or
other party has an option or right of first refusal or offer, to purchase all or
any portion of the Individual Property; (h) with the exception of those
Operating Leases which shall be replaced with TRS Leases, no tenant has the
right to terminate its Lease prior to expiration of the stated term of such
Lease; (i) no tenant has prepaid more than one month's rent in advance (except
for bona fide security deposits not in excess of an amount equal to two month's
rent); (j) no tenant under any Lease has any right or option for additional
space; (k) all existing Leases are subordinate to the Mortgage either pursuant
to their terms or a recorded subordination agreement; and (1) no termination
fees are required with respect to any Lease.
Section 7.2 Approval Rights.
Except as otherwise provided in Section 8.30 hereof, all Leases and
other rental arrangements shall in all respects be approved by Lender.
Section 7.3 Covenants.
Borrower (a) shall perform the obligations which Borrower is required
to perform under the Leases; (b) shall enforce the obligations to be performed
by the tenants; (c) shall promptly furnish to Lender any notice of default or
termination received by Borrower from any tenant, and any notice of default or
termination given by Borrower to any tenant; (d) shall not collect any rents for
more than thirty (30) days in advance of the time when the same shall become
due, except for bona fide security deposits not in excess of an amount equal to
two months rent; (e) shall not enter into any ground Lease or master Lease of
any part of the Properties; (f) except as otherwise provided in Section 8.30
hereof, shall not further assign or encumber any Lease; (g) except as otherwise
provided in Section 8.30 hereof, shall not, except with Lender's prior written
consent, cancel or accept surrender or termination of any Lease; and (h) except
as otherwise provided in Section 8.30, shall not modify or amend any Lease,
except with Lender's prior written consent, which consent shall not be
unreasonably withheld. Any action in violation of clauses (e), (f), (g), and (h)
of this Section 7.3 shall be void at the election of Lender.
Section 7.4 Tenant Estoppels.
At Lender's request, Borrower shall obtain and furnish to Lender,
written estoppels in form and substance reasonably satisfactory to Lender,
executed by tenants (including, the Operating Lessees) under Leases in the
Properties and confirming the term, rent, and other provisions and matters
relating to the Leases.
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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Borrower represents, warrants and covenants to Lender that:
Section 8.1 Organization, Power and Authority.
Borrower and each Borrower Party (a) is duly organized, validly
existing and in good standing under the laws of the state of its formation or
existence, (b) is in compliance with all legal requirements applicable to doing
business in the State, and (c) has the necessary governmental approvals to own
and operate the Properties and conduct the business now conducted or to be
conducted thereon. Borrower has the full power, authority and right to execute,
deliver and perform its obligations pursuant to this Loan Agreement and the
other Loan Documents, and to mortgage the Properties pursuant to the terms of
the Mortgage and to keep and observe all of the terms of this Loan Agreement and
the other Loan Documents on Borrower's part to be performed.
Section 8.2 Validity of Loan Documents.
The execution, delivery and performance by Borrower and each Borrower
Party of the Loan Documents: (a) are duly authorized and do not require the
consent or approval of any other party or governmental authority which has not
been obtained; and (b) will not violate any law or result in the imposition of
any lien, charge or encumbrance upon the assets of any such party, except as
contemplated by the Loan Documents. The Loan Documents constitute the legal,
valid and binding obligations of Borrower and each Borrower Party, enforceable
in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, or similar laws generally affecting the enforcement of creditors'
rights and by general principles of equity (regardless of whether enforcement is
sought by proceedings in equity or at law).
Section 8.3 No Conflicts.
The execution, delivery and performance of this Agreement and the other
Loan Documents by Borrower will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance (other than pursuant
to the Loan Documents) upon any of the property or assets of Borrower pursuant
to the terms of any indenture, mortgage, deed of trust, loan agreement,
partnership agreement or other agreement or instrument to which Borrower is a
party or by which any of Borrower's property or assets is subject, nor will such
action result in any violation of the provisions of any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over Borrower or any of Borrower's properties or assets, and any
consent, approval, authorization, order, registration or qualification of or
with any court or any such regulatory authority or other governmental agency or
body required for the execution, delivery and performance by Borrower of this
Agreement or any other Loan Documents has been obtained and is in full force and
effect.
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Section 8.4 Liabilities; Litigation.
8.4.1 All financial data, including, without limitation, the
statements of cash flow and income and operating expense, that have been
delivered by Borrower and each Borrower Party are (i) are true, complete and
correct in all material respects, (ii) accurately represent the financial
condition of the Properties as of the date of such reports, and (iii) to the
extent prepared or audited by an independent certified public accounting firm,
have been prepared in accordance with generally accepted accounting principals
throughout the periods covered, except as disclosed therein. Borrower does not
have any contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to Borrower and reasonably likely to have a
materially adverse effect on the Properties or the operation thereof as hotels,
except as referred to or reflected in said financial statements. Since the date
of the financial statements, there has been no materially adverse change in the
financial condition, operations or business of Borrower from that set forth in
said financial statements. There is no litigation, administrative proceeding,
investigation or other legal action (including any proceeding under any state or
federal bankruptcy or insolvency law) pending or, to the knowledge of Borrower,
threatened, against the Properties, Borrower or any Borrower Party which if
adversely determined could have a material adverse effect on such party, the
Properties or the Loan.
8.4.2 Neither Borrower nor any Borrower Party is contemplating
either the filing of a petition by it under state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of its assets or
property, and neither Borrower nor any Borrower Party has knowledge of any
Person contemplating the filing of any such petition against it.
Section 8.5 Taxes and Assessments.
Each of the Properties is comprised of one or more parcels, each of
which constitutes a separate tax lot and none of which constitutes a portion of
any other tax lot. There are no pending or, to Borrower's best knowledge,
proposed, special or other assessments for public improvements or otherwise
affecting the Properties, nor are there any contemplated improvements to the
Properties that may result in such special or other assessments.
Section 8.6 Other Agreements; Defaults.
Neither Borrower nor any Borrower Party is a party to any agreement or
instrument or subject to any court order, injunction, permit, or restriction
which might adversely affect any of the Properties or the business, operations,
or condition (financial or otherwise) of Borrower or any Borrower Party. Neither
Borrower nor any Borrower Party is in violation of any agreement which violation
would have an adverse effect on any of the Properties, Borrower, or any Borrower
Party or Borrower's or any Borrower Party's business, properties, or assets,
operations or condition, financial or otherwise.
Section 8.7 Title.
Borrower has good, marketable and insurable title to the Properties,
free and clear of all Liens whatsoever except the Permitted Encumbrances, such
other Liens as are permitted pursuant to the
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Loan Documents and the Liens created by the Loan Documents. Each Mortgage
creates (i) a valid, perfected lien on the applicable Individual Property,
subject only to Permitted Encumbrances and the Liens created by the Loan
Documents and (ii) perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases), all in
accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan
Documents and the Liens created by the Loan Documents. There are no claims for
payment for work, labor or materials affecting any of Borrower's Properties
which are or may become a lien prior to, or of equal priority with, the liens
created by the Loan Documents. To the best of Borrower's knowledge, none of the
Permitted Encumbrances, individually or in the aggregate, materially interfere
with the benefits of the security intended to be provided by the Mortgages and
this Loan Agreement, materially and adversely affect the value of any Individual
Property, impair the use or operations of any Individual Property or impair
Borrower's ability to pay its obligations in a timely manner.
Section 8.8 Compliance with Law.
8.8.1 Borrower has, or pursuant to the Operating Lease, has
caused each Operating Lessee to have, all requisite licenses, permits,
franchises, qualifications, certificates of occupancy or other governmental
authorizations to own, Lease and operate each of the Properties and carry on its
business, and, with the exception of the parking deficiency currently existing
at the Individual Property located in Tampa, Florida, each of the Properties is
in compliance with all applicable legal requirements and is free of structural
defects, and all building systems contained therein are in good working order,
subject to ordinary wear and tear. Each of the Properties does not constitute,
in whole or in part, a legally non-conforming use under applicable legal
requirements;
8.8.2 No condemnation has been commenced or, to Borrower's
knowledge, is contemplated with respect to all or any portion of the Properties
or for the relocation of roadways providing access to the Properties; and
8.8.3 Each of the Properties has adequate rights of access to
public ways and is served by adequate water, sewer, sanitary sewer and storm
drain facilities. All public utilities necessary or convenient to the full use
and enjoyment of the Properties are located in the public right- of-way abutting
each of the Properties, and all such utilities are connected so as to serve the
Properties without passing over other property, except to the extent such other
property is subject to a perpetual easement for such utility benefiting each of
the Properties. All roads necessary for the full utilization of each of the
Properties for its current purpose have been completed and dedicated to public
use and accepted by all governmental authorities.
Section 8.9 Location of Borrower.
Borrower's principal place of business and chief executive offices are
located at the address stated in Section 15.1.
Section 8.10 ERISA.
8.10.1 As of the date hereof and throughout the term of the
Loan, (i) Borrower is not and will not be an "employee benefit plan" as defined
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in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which is subject to Title I of ERISA, and (ii) the assets of
Borrower do not and will not constitute "plan assets" of one or more such plans
for purposes of Title I of ERISA; and
8.10.2 As of the date hereof and throughout the term of the
Loan (i) Borrower is not and will not be a "governmental plan" within the
meaning of Section 3(32) of ERISA and (ii) transactions by or with Borrower are
not and will not be subject to state statutes applicable to Borrower regulating
investments of and fiduciary obligations with respect to governmental plans.
Section 8.11 Forfeiture.
There has not been and shall never be committed by Borrower or any
other person in occupancy of or involved with the operation or use of the
Properties any act or omission affording the federal government or any state or
local government the right of forfeiture as against the Properties or any part
thereof or any monies paid in performance of Borrower's obligations under any of
the Loan Documents. Borrower hereby covenants and agrees not to commit, permit
or suffer to exist any act or omission affording such right of forfeiture.
Section 8.12 Tax Filings.
Borrower and each Borrower Party have filed (or have obtained effective
extensions for filing) all federal, state and local tax returns required to be
filed and have paid or made adequate provision for the payment of all federal,
state and local taxes, charges and assessments payable by Borrower and each
Borrower Party, respectively. Borrower and each Borrower Party believe that
their respective tax returns properly reflect the income and taxes of Borrower
and each Borrower Party, respectively, for the periods covered thereby, subject
only to reasonable adjustments required by the Internal Revenue Service or other
applicable tax authority upon audit.
Section 8.13 Solvency.
The Borrower (a) has not entered into the transaction or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor and
(b) received reasonably equivalent value in exchange for its obligations under
the Loan Documents. Giving effect to the Loan, the fair saleable value of
Borrower's assets exceeds and will, immediately following the making of the
Loan, exceed Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower's assets is and will, immediately following the
making of the Loan, be greater than Borrower's probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured, Borrower's assets do not and, immediately following
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur Indebtedness and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such Indebtedness as they mature (taking into account the timing and amounts
of cash to be received by Borrower and the amounts to be payable on or in
respect of obligations of Borrower). Except as expressly disclosed to Lender in
writing, no petition in bankruptcy has been filed against Borrower, Indemnitor,
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any guarantor or any Borrower Party in the last seven (7) years, and neither
Borrower, Indemnitor, any guarantor or any Borrower Party in the last seven (7)
years has ever made an assignment for the benefit of creditors or taken
advantage of any insolvency act for the benefit of debtors.
Section 8.14 Full and Accurate Disclosure.
All information submitted by Borrower or any Borrower Party to Lender
in connection with the Loan or in satisfaction of the terms thereof and all
statements of fact made by Borrower or any Borrower Party in this Agreement or
in any other Loan Document, are accurate, complete and correct in all material
respects. No statement of fact made by or on behalf of Borrower or any Borrower
Party in this Agreement or in any of the other Loan Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no fact presently known to Borrower which has not been disclosed to Lender
which materially and adversely affects, nor as far as Borrower can foresee,
might materially and adversely affect, the Properties or the business,
operations or condition (financial or otherwise) of Borrower or any Borrower
Party.
Section 8.15 Flood Zone.
No portion of the improvements comprising each of the Properties is
located in an area identified by the Secretary of Housing and Urban Development
or any successor thereto as an area having special flood hazards pursuant to the
National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973
or the National Flood Insurance Act of 1994, as amended, or any successor law,
or, if located within any such area, Borrower has obtained and will maintain the
insurance prescribed in Section 5.1 hereof.
Section 8.16 Federal Reserve Regulations.
No part of the proceeds of the Loan will be used for the purpose of
purchasing or acquiring any "margin stock" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System or for any other purpose
which would be inconsistent with such Regulation U or any other Regulations of
such Board of Governors, or for any purposes prohibited by Legal Requirements or
by the terms and conditions of this Agreement or the other Loan Documents.
Section 8.17 Not a Foreign Person.
Borrower is not a "foreign person" within the meaning of ss. 1445(f)(3)
of the Code.
Section 8.18 Separate Lots.
Each Individual Property is comprised of one (1) or more parcels which
constitutes a separate tax lot and does not constitute a portion of any other
tax lot not a part of such Individual Property.
Section 8.19 No Prior Assignment.
There are no prior assignments of the Leases (including any Operating
Lease) or any portion of the Rents (including Operating Lease Rent) due and
payable or to become due and payable which are presently outstanding.
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Section 8.20 Insurance.
Borrower has obtained and has delivered to Lender certified copies of
all insurance policies reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement. No claims have been made under any
such Policy, and no Person, including Borrower, has done, by act or omission,
anything which would impair the coverage of any such policy.
Section 8.21 Use of Properties.
Each of the Individual Properties is used exclusively for hotel/motel
purposes and other appurtenant and related uses including, but not limited to,
restaurants and lounges.
Section 8.22 Certificate of Occupancy; Licenses.
All certifications, permits, licenses and approvals, including without
limitation, certificates of completion and occupancy permits and any applicable
liquor license required for the legal use, occupancy and operation of each of
the Individual Properties as a hotel (collectively, the "Licenses"), have been
obtained and are in full force and effect. The Borrower shall keep and maintain,
or cause to be kept or maintained, all licenses necessary for the operation of
each of the Individual Properties as a hotel. The use being made of each
Individual Property is in conformity with the certificate of occupancy issued
for such Individual Property.
Section 8.23 Physical Condition.
Each of the Individual Properties, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components, are in good condition, order
and repair in all material respects; there exists no structural or other
material defects or damages in any of the Individual Properties, whether latent
or otherwise, and Borrower has not received notice from any insurance company or
bonding company of any defects or inadequacies in any of the Individual
Properties, or any part thereof, which would adversely affect the insurability
of the same or cause the imposition of extraordinary premiums or charges thereon
or of any termination or threatened termination of any policy of insurance or
bond.
Section 8.24 Boundaries.
All of the improvements which were included in determining the
appraised value of each Individual Property lie wholly within the boundaries and
building restriction lines of such Individual Property, and to the best of
Borrower's knowledge, no improvements on adjoining properties encroach upon such
Individual Property, and to the best of Borrower's knowledge, no easements or
other encumbrances upon the applicable Individual Property encroach upon any of
the improvements, so as to affect the value or marketability of the applicable
Individual Property except those which are insured against by title insurance.
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Section 8.25 Survey.
The Survey for each of the Individual Properties delivered to Lender in
connection with this Agreement has been prepared in accordance with the
provisions of Section 4.1(c)(iii) hereof, and does not fail to reflect any
material matter affecting any of the Properties or the title thereto.
Section 8.26 Embargoed Person.
To the actual knowledge of Borrower as of the date hereof and at all
times throughout the term of the Loan, including after giving effect to any
transfers of interests permitted pursuant to the Loan Documents, (i) none of the
funds or other assets of Borrower, Borrower Party, TRS Lessee or Indemnitor
constitute property of, or are beneficially owned, directly or indirectly, by
any person, entity or government subject to trade restrictions under U.S. law,
including but not limited to, the International Emergency Economic Powers Act,
50 U.S.C. ▇▇.▇▇. 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1
et seq., and any Executive Orders or regulations promulgated thereunder with the
result that the investment in Borrower (whether directly or indirectly) is
prohibited by law or the Loan made by Lender is in violation of law ("Embargoed
Person"); (ii) no Embargoed Person has any interest of any nature whatsoever in
Borrower, Borrower Party, TRS Lessee or Indemnitor with the result that the
investment in Borrower (whether directly or indirectly) is prohibited by law or
the Loan made by Lender is in violation of law; and (iii) none of the funds of
Borrower, Borrower Party, TRS Lessee or Indemnitor have been derived from any
unlawful activity with the result that the investment in Borrower (whether
directly or indirectly) is prohibited by law or the Loan made Lender is in
violation of law.
Section 8.27 Filing and Recording Taxes.
All transfer taxes, deed stamps, intangible taxes or other amounts in
the nature of transfer taxes required to be paid by any Person under applicable
Legal Requirements currently in effect in connection with the transfer of the
Properties to Borrower have been paid. All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Mortgages encumbering the Properties have been paid, and, under current Legal
Requirements, the Mortgages encumbering the Properties are enforceable in
accordance with their respective terms by Lender (or any subsequent holder
thereof).
Section 8.28 Single Purpose Entity/Separateness.
Borrower represents, warrants and covenants as follows:
8.28.1 The purpose for which Borrower is organized shall be
limited solely to (A) owning, holding, selling, leasing, transferring,
exchanging, operating and managing the Properties, (B) entering into the Loan
Agreement with Lender, (C) refinancing the Properties in connection with a
permitted repayment of the Loan and (D) transacting any and all lawful business
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for which Borrower may be organized under its constitutive law that is incident,
necessary and appropriate to accomplish the foregoing. Borrower does not own and
will not own any asset or property other than (i) the Properties, and (ii)
incidental personal property necessary for the ownership or operation of the
Properties.
8.28.2 Borrower will not engage in any business other than the
ownership, management and operation of the Properties and Borrower will conduct
and operate its business as presently conducted and operated.
8.28.3 Borrower will not enter into any contract or agreement
with any Affiliate of Borrower, any constituent party of Borrower, the
guarantors or any Affiliate of any constituent party or guarantor, except upon
terms and conditions that are intrinsically fair and substantially similar to
those that would be available on an arms-length basis with third parties other
than any such party.
8.28.4 Borrower has not incurred and will not incur any
Indebtedness other than (i) the Loan, (ii) trade and operational debt which is
(A) incurred in the ordinary course of business, (B) not more than sixty (60)
days past the date incurred, (C) with trade creditors, (D) in the aggregate, in
an amount less than one percent (1%) of the original principal amount of the
Loan, (E) not evidenced by a note, and (F) paid when due, and (iii) Indebtedness
incurred in the ordinary course of business for the purpose of financing
equipment and other personal property used on the Properties (including
obligations pursuant to equipment leases) in amounts that are normal and
reasonable under the circumstances, provided, that (1) such debt shall be fully
amortizing over a term not to exceed five (5) years (or the term of the related
equipment lease shall not exceed five (5) years), and (2) such debt (which, with
respect to an equipment lease, shall be the annual rents payable thereunder for
the then current calendar year) shall not in the aggregate outstanding at any
one time exceed one percent (1%) of Operating Revenues. No Indebtedness other
than the Loan may be secured (subordinate or pari passu) by the Properties.
8.28.5 Borrower has not made and will not make any loans or
advances to any third party (including any affiliate or constituent party, any
guarantor or any affiliate of any constituent party or guarantor), and shall not
acquire obligations or securities of its affiliates or any constituent party.
8.28.6 Borrower is and will remain solvent and Borrower will
pay its debts and liabilities (including, as applicable, shared personnel and
overhead expenses) from its assets as the same shall become due.
8.28.7 Borrower has done or caused to be done and will do all
things necessary to observe organizational formalities and preserve its
existence, and Borrower will not, nor will Borrower permit any constituent party
or any guarantor to amend, modify or otherwise change the partnership
certificate, partnership agreement, articles of incorporation and bylaws,
operating agreement, trust or other organizational documents of Borrower or such
constituent party or guarantor without the prior written consent of Lender.
8.28.8 Borrower will maintain all of its books, records,
financial statements and bank accounts separate from those of its Affiliates and
any constituent party. Borrower's assets will not be listed as assets on the
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financial statement of any other entity except as required by generally accepted
accounting principles; provided, however, that any such consolidated financial
statement shall contain a note indicating that its separate assets and
liabilities are neither available to pay the debts of the consolidated entity
nor constitute obligations of the consolidated entity. Borrower will file its
own tax returns, except to the extent that it is required to file consolidated
federal income tax returns by law. Borrower shall maintain its books, records,
resolutions and agreements as official records.
8.28.9 Borrower will be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate of Borrower, any constituent party of Borrower, any
guarantor or any Affiliate of any constituent party or guarantor), shall correct
any known misunderstanding regarding its status as a separate entity, shall
conduct business in its own name, shall not identify itself as a division or
part of any other person or entity.
8.28.10 Borrower will 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.
8.28.11 Neither Borrower nor any constituent party will seek
the dissolution, winding up, liquidation, consolidation or merger in whole or in
part, of the Borrower.
8.28.12 Borrower will not commingle the funds and other assets
of Borrower with those of any Affiliate or constituent party, any guarantor, or
any Affiliate of any constituent party or guarantor, or any other person.
8.28.13 Borrower has and will maintain its assets in such a
manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any Affiliate or constituent party,
any guarantor, or any Affiliate of any constituent party or guarantor, or any
other person.
8.28.14 Borrower will not guarantee or become obligated for
the debts of any other entity or person and does not and will not hold itself
out as being responsible for the debts or obligations of any other person.
8.28.15 If Borrower is a limited partnership or a limited
liability company, each general partner or managing member (each, an "SPC
Party") shall be a corporation whose sole asset is its interest in Borrower and
each such SPC Party will at all times comply, and will cause Borrower to comply,
with each of the representations, warranties, and covenants contained in this
Section 8.28 as if such representation, warranty or covenant was made directly
by such SPC Party.
8.28.16 Borrower shall at all times cause there to be at least
two (2) duly appointed members of the board of directors (each an "Independent
Director") of each SPC Party in Borrower reasonably satisfactory to Lender who
shall not have been at the time of such individual's appointment or at any time
while serving as a director of SPC Party, and may not have been at any time
during the preceding five years (i) a shareholder of, or an officer, director,
partner or employee of, Borrower or any of its shareholders, subsidiaries or
affiliates (except for serving as an independent director of (A) any single
purpose corporations serving as general partners of other limited partnerships
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financing hotel properties with Lender or (B) any TRS Lessee), (ii) a customer
of, or supplier to, Borrower or any of its shareholders, subsidiaries or
affiliates, (iii) a person or other entity controlling or under common
control with any such shareholder, partner, supplier or customer, or (iv) a
member of the immediate family of any such shareholder, officer, director,
partner, employee, supplier or customer of Borrower. As used herein, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a person or entity,
whether through ownership of voting securities, by contract or otherwise.
8.28.17 Borrower shall not cause or permit the board of
directors of each SPC Party in Borrower to take any action which, under the
terms of any certificate of incorporation, by-laws or any voting trust agreement
with respect to any common stock, requires the vote of the board of directors of
Borrower and/or any SPC Party in Borrower unless at the time of such action
there shall be at least two members who are Independent Directors.
8.28.18 All of the facts and assumptions set forth in that
certain opinion letter dated as of the Closing Date (the "Insolvency Opinion")
delivered by Hunton & ▇▇▇▇▇▇▇▇ in connection with the Loan are true and correct.
In connection with the foregoing, Borrower hereby covenants and agrees that it
will comply with, or cause the compliance with, (i) all of the facts and
assumptions (whether regarding the Borrower or any other person or entity) set
forth in the Insolvency Opinion, (ii) all the representations and warranties and
covenants in this Section 8.28, and (iii) all the organizational documents of
the Borrower and any SPC Party.
8.28.19 Borrower shall allocate fairly and reasonably any
overhead expenses that are shared with an affiliate, including paying for office
space and services performed by any employee of an affiliate.
8.28.20 The stationery, invoices, and checks utilized by
Borrower or utilized to collect its funds or pay its expenses shall bear its own
name and shall not bear the name of any other entity unless such entity is
clearly designated as being Borrower's agent.
8.28.21 Borrower shall not pledge its assets for the benefit
of any other person or entity, other than with respect to the Loan.
8.28.22 Borrower shall pay the salaries of its own employees
from its own funds.
8.28.23 Borrower shall maintain a sufficient number of
employees in light of its contemplated business operations.
Section 8.29 Franchise Agreement; Hotel Management.
8.29.1 Each Franchise Agreement pursuant to which any
Operating Lessee or Manager has the right to operate the hotel located on each
applicable Individual Property under a name and/or hotel system controlled by
the applicable franchisor, is in full force and effect, and to the best of
Borrower's knowledge, there is no default, breach or violation existing
thereunder by any party thereto and no event has occurred (other than payments
due but not yet delinquent) that, with the passage of time or the giving of
notice, or both, would constitute a default, breach or violation by any party
thereunder.
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8.29.2 All certifications, permits, licenses and approvals,
including, without limitation, certificates of completion and occupancy permits
required for the legal use, occupancy and operation of each Individual Property
as a hotel (collectively, the "Licenses"), have been obtained and are in full
force and effect (including, without limitation, any applicable liquor license).
Borrower shall keep and maintain, or cause the Operating Lessee to keep and
maintain, all licenses necessary for the operation of each Individual Property
as a hotel. Each Individual Property is free of material damage and is in good
repair, and there is no proceeding pending for the total or partial condemnation
of, or affecting, any Individual Property.
8.29.3 Notwithstanding any provision contained herein to the
contrary, in connection with the execution of any Operating Lease with a TRS
Lessee or an Affiliate of an Operating Lessee which is a Single Purpose Entity,
Borrower or the related Operating Lessee may terminate or amend the existing
Franchise Agreement and enter into a new or amended Franchise Agreement with the
related existing Franchisor, which new or amended Franchise Agreement shall be
substantially in the related form attached hereto as Exhibit C, or otherwise
acceptable to Lender in form and substance in Lender's reasonable discretion.
8.29.4 Each Management Agreement listed on Schedule VI
attached hereto is in full force and effect and there is no default, breach or
violation existing thereunder by any party thereto and no event has occurred
(other than payments due but not yet delinquent) that, with the passage of time
or the giving of notice, or both, would constitute a default, breach or
violation by any party thereunder. The fees due under each Management Agreement,
and the terms and provisions of each Management Agreement, are subordinate to
this Agreement and the applicable Mortgage; provided, however, the fees due
under each Management Agreement prior to termination of each such Management
Agreement shall not be subordinated to this Agreement and the applicable
Mortgage if (i) such fees, including any incentive fees, are not in excess of
five percent (5.0%) of Operating Revenues for the applicable Individual Property
and have not accrued for more than sixty (60) days (except in the case of
incentive fees which shall not have accrued for any period of time greater than
one (1) year), (ii) the applicable Manager is not an Affiliate of Borrower,
(iii) neither Lender nor any purchaser at foreclosure or party which accepts a
deed in lieu of foreclosure shall have any obligation regarding the payment of
such fees, and (iv) such fees shall not be a Lien on the applicable Individual
Property. Each Manager shall attorn to Lender. Except as otherwise provided in
this Section 8.29(d), Borrower shall not, and shall not allow any Operating
Lessee to, terminate, cancel, modify, renew or extend any Management Agreement,
or enter into any agreement relating to the management or operation of any
Individual Property with Manager or any other party without the express written
consent of Lender, which consent shall not be unreasonably withheld; provided,
however, with respect to a new manager such consent may be conditioned upon
Borrower delivering evidence in writing from the applicable Rating Agencies to
the effect that such new manager will not result in a downgrade, withdrawal or
qualification of the respective ratings then in effect for any Securities issued
in connection with a Securitization. If at any time Lender consents to the
appointment of a new manager, such new manager and Borrower shall, as a
condition of Lender's consent, execute a Manager's Consent and Subordination of
Management Agreement substantially in the form then used by Lender.
Notwithstanding any provision contained herein to the contrary, Borrower or
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Operating Lessee may terminate a Management Agreement and enter into a
Replacement Management Agreement with a Qualified Manager with respect to any
Individual Property.
8.29.5 Borrower, upon the request of Lender shall, or shall
cause Operating Lessee to, terminate any Manager designated by Lender, without
penalty or fee, if at any time during the Loan (i) such Manager shall become
insolvent or a debtor in any bankruptcy or insolvency proceeding, (ii) there is
a monetary Event of Default or a material non-monetary Event of Default, or
(iii) the Anticipated Payment Date has occurred and the Loan has not been
repaid. The Management Agreement and/or the Manager's Consent and Subordination
of Management Agreements provide that such Manager may be terminated, without
penalty or fee, upon the occurrence of any of the foregoing. At such time as the
Manager may be removed, a Qualified Manager shall assume management of the
Properties pursuant to a Replacement Management Agreement and shall receive a
property management fee not to exceed the then current market rates.
8.29.6 Neither the execution and delivery of the Loan
Documents, Borrower's performance thereunder, nor the exercise of any remedies
by Lender, will adversely affect Borrower's rights under any Operating Lease,
any Franchise Agreement, any Management Agreement, or any of the Licenses.
Section 8.30 Operating Lease.
8.30.1 The Operating Leases are in full force and effect and
there is no material default, breach or violation existing thereunder by
Borrower or to the best of Borrower's knowledge, any other party thereto and no
event has occurred (other than payments due but not yet delinquent) that, with
the passage of time or the giving of notice, or both, would constitute a
default, breach or violation by any party thereunder. The Operating Lease Rent,
and the terms and provisions of the Operating Leases, are subordinate to this
Agreement and the Mortgages.
8.30.2 Neither the execution and delivery of the Loan
Documents, Borrower's performance thereunder, nor the exercise of any remedies
by Lender, will adversely affect Borrower's rights under the Operating Lease or
any of the Licenses.
8.30.3 Notwithstanding anything to the contrary contained
herein, Borrower may enter into a new operating lease with or permit a transfer
of Operating Lessee's interest in the Operating Lease to a TRS Lessee provided
the following criteria are satisfied in Lender's reasonable discretion:
(a) TRS Lessee shall be a "Taxable REIT Subsidiary"
within the meaning of Section 856(l) of the Code;
(b) Rent and other sums due and payable under the
Operating Lease or any new operating lease, as applicable, shall
qualify under Section 856(d)(8) of the Code;
(c) TRS Lessee (A) has entered into a new operating
lease or assumed, amended and restated the Operating Lease, in either
case, on substantially the same terms set
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forth in the TRS Lease; (B) has entered into a TRS Subordination
Agreement; and (C) has entered into a Replacement Management Agreement
with a Qualified Manager that (1) meets the requirements for an
"eligible independent contractor" within the meaning of Section
856(d)(9) of the Code, and (2) provides that: (x) the fees payable
thereunder are subordinate to this Agreement and to the Mortgages,
provided, however, the fees due under each Replacement Management
Agreement prior to termination of each such Replacement Management
Agreement shall not be subordinated to this Agreement and the Mortgages
if (i) such fees, including any incentive fees, are not in excess of
five percent (5.0%) of Operating Revenues for the applicable Individual
Property and have not accrued for more than sixty (60) days (except in
the case of incentive fees which shall not have accrued for any period
of time greater than one (1) year), (ii) the applicable Manager is not
an Affiliate of Borrower, (iii) neither Lender nor any purchaser at
foreclosure or party which accepts a deed in lieu of foreclosure shall
have any obligation regarding the payment of such fees, and (iv) such
fees shall not be a Lien on the applicable Individual Property, and (y)
if there is a continuing Event of Default or if the Anticipated Payment
Date has occurred and the Loan has not been repaid, or, if at any time
during the term of the Loan, the manager thereunder shall become
insolvent or a debtor in any bankruptcy or insolvency proceeding, such
management agreement may be terminated by Lender without penalty or
fee; and
(d) TRS Lessee shall be, for so long as the Loan
shall remain outstanding, (A) organized pursuant to, and in accordance
with, the TRS Lessee Organizational Documents, and (B) in all material
respects, a Single Purpose Entity; and
(e) Lender shall have received a TRS Non-
Consolidation Opinion.
Section 8.31 Investment Company Act.
Borrower is not (a) an "investment company" or a company "controlled"
by an "investment company," within the meaning of the Investment Company Act of
1940, as amended; (b) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of either a "holding company" or a
"subsidiary company" within the mean of the Public Utility Holding Company Act
of 1935, as amended; or (c) subject to any other federal or state law or
regulation which purports to restrict or regulate its ability to borrow money.
ARTICLE IX
FINANCIAL REPORTING
Section 9.1 Financial Statements.
9.1.1 Obligations of Borrower. Borrower will keep and maintain
or will cause to be kept and maintained, in accordance with general accepted
accounting principles and USAH proper and accurate books, records and accounts
reflecting all of the financial affairs of Borrower and Operating Lessee and all
items of income and expense in connection with the operation on an individual
basis of each of the Individual Properties. Lender shall have the right from
time to time at all times during normal business hours to examine such books,
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records and accounts at the office of Borrower, Operating Lessee or other Person
maintaining such books, records and accounts and to make such copies or extracts
thereof as Lender shall desire. After the occurrence of an Event of Default,
Borrower shall pay any costs and expenses incurred by Lender to examine
Borrower's accounting records with respect to the Properties, as Lender shall
determine to be necessary or appropriate in the protection of Lender's interest.
9.1.2 Monthly Reports. Within forty-five (45) days after the
end of each calendar month until such time as a Securitization shall have
occurred, Borrower shall furnish, or cause Operating Lessee to furnish, to
Lender a current (as of the calendar month just ended) balance sheet, a detailed
operating statement (showing monthly activity and year-to-date) stating
Operating Revenues, Operating Expenses, Net Operating Income, and net cash flow
for the calendar month just ended, a report of occupancy for the subject month
including an average daily rate, the percentage of rooms rented and occupied,
and any and all franchise inspection reports received by Borrower or Operating
Lessee during the subject month, and, as requested by Lender, (i) a written
statement setting forth a comparison of budgeted income and expenses and actual
income and expenses for the subject month, and (ii) other documentation
supporting the information disclosed in the most recent financial statements. In
addition, such statement shall also be accompanied by a certificate of the chief
financial officer of Borrower or the general partner of Borrower stating that
the representations and warranties of Borrower set forth in Section 8.28 are
true and correct as of the date of such certificate and that there are no trade
payables outstanding for more than sixty (60) days.
9.1.3 Quarterly Reports. Within sixty (60) days after the end
of the calendar quarter in which a Securitization shall have occurred and within
sixty (60) days after the end of each calendar quarter thereafter, Borrower
shall furnish, or cause Operating Lessee to furnish, to Lender a current (as of
the calendar quarter just ended) balance sheet, a report of occupancy for the
subject quarter, including an average daily rate, the percentage of rooms rented
and occupied, and any all franchise inspection reports received by Borrower or
Operating Lessee during the subject quarter. In addition, within sixty (60) days
after the end of each calendar quarter during the entire term of the Loan,
Borrower shall furnish, or cause Operating Lessee to furnish, to Lender a
detailed operating statement (showing quarterly activity and year-to-date)
stating Operating Revenues, Operating Expenses, Net Operating Income, and
capital expenditures for the calendar quarter just ended. Borrower's quarterly
statements shall be accompanied by (i) a comparison of the budgeted income and
expenses and the actual income and expenses for the prior calendar quarter, (ii)
as requested by Lender, (A) a written statement setting forth any variance of
ten percent (10%) or more between budgeted and actual amounts expended and (B)
other documentation supporting the information disclosed in the most recent
financial statements, and (iii) a certificate executed by the chief financial
officer of Borrower or the general partner of Borrower stating that (A) each
such quarterly statement presents fairly the financial condition and the results
of operations of the Borrower and the Properties being reported upon and has
been prepared in accordance with generally accepted accounting principles and
(B) to the extent not provided pursuant to Section 9.1(b) hereof, the
representations and warranties of Borrower set forth in Section 8.28 are true
and correct as of the date of such certificate and there are no trade payables
outstanding for more than sixty (60) days.
9.1.4 Annual Reports. Within ninety (90) days after the end
of each calendar year, Borrower will furnish or direct to be furnised to Lender
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a complete copy of the consolidated annual financial statements of Borrower and
the REIT, and in the case of the REIT, audited by a "big five" accounting firm
or other independent certified public accountant acceptable to Lender in
accordance with generally accepted accounting principles (which audited REIT
financial statements shall contain a supplemental schedule of Operating
Lease revenues on a property-by-property basis; provided that such supplemental
schedule will not be audited separately). Within ninety (90) days after the
end of each calendar year, Borrower shall furnish or cause the Operating Lessees
to furnish to Lender detailed property-level operating statements (showing
annual activity) stating Operating Revenues, Operating Expenses, Operating
Income and net cash flow for each of the Properties. Such property-level annual
financial statements shall be accompanied by (i) a comparison of the budgeted
income and expenses and the actual income and expenses for the prior calendar
year and (ii) a certificate executed by the chief financial officer of Borrower
or the general partner of Borrower stating that, to the best of such officer's
knowledge, each such annual financial statement presents fairly the financial
condition and the results of operations of the Properties; provided that, with
respect to property-level reports, such annual reports shall be prepared using
the same accounting method used at closing and Borrower agrees to notify Lender
of any material changes in the method used for the preparation of such
property-level reports upon the receipt of notice of such change from the
Operating Lessee. Annual financial statements of the REIT shall be accompanied
by an unqualified opinion of a "big five" accounting firm or other independent
certified public accountant reasonably acceptable to Lender.
9.1.5 Certification; Supporting Documentation. Each such
financial statement shall be in scope and detail reasonably satisfactory to
Lender and certified by the chief financial representative of Borrower or
Operating Lessee, as applicable.
9.1.6 Additional Reports. Borrower shall deliver, or cause
Operating Lessee to deliver, to Lender as soon as reasonably available but in no
event later than thirty (30) days after such items become available to Borrower
or Operating Lessee in final form:
(a) copies of any final engineering or environmental
reports prepared for Borrower or any Operating Lessee with respect to
an Individual Property;
(b) a copy of any notice received by Borrower or
Operating Lessee from any environmental authority having jurisdiction
over an Individual Property with respect to a condition existing or
alleged to exist or emanate from or at an Individual Property;
(c) copies of any financial statements, reports,
certificates, budgets, business plans and capital expenditure plans
required to be delivered to Borrower by any Operating Lessee pursuant
to an Operating Lease.
Section 9.2 Accounting Principles.
All financial statements shall be prepared in accordance with generally
accepted accounting principles in the United States of America as in effect on
the date so indicated and consistently applied (or such other accounting basis
reasonably acceptable for Lender).
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Section 9.3 Other Information; Access.
Borrower shall deliver to Lender such additional information regarding
Borrower, its subsidiaries, its business, any Borrower Party, and any of the
Properties within thirty (30) days after Lender's reasonable request therefor.
Borrower shall permit Lender to examine such records, books and papers of
Borrower which reflect upon its financial condition and the income and expenses
of each of the Properties.
Section 9.4 Format of Delivery.
Any reports, statements or other information required to be delivered
under this Agreement shall be delivered (a) in paper form, (b) on a diskette,
and (c) if requested by Lender and within the then-existing capabilities of
Borrower's data systems without change or modification thereto, in electronic
form and prepared using a Microsoft Word for Windows or WordPerfect for Windows
files (which files may be prepared using a spreadsheet program and saved as word
processing files).
ARTICLE X
COVENANTS
Borrower covenants and agrees with Lender as follows:
Section 10.1 Due Sale and Encumbrance; Transfers of Interests.
Without the prior written consent of Lender, neither Borrower nor any
other Person having an ownership or beneficial interest in Borrower shall sell,
transfer, convey, mortgage, pledge, or assign any interest in any of the
Properties or any part thereof or further encumber, alienate, ▇▇▇▇▇ ▇ ▇▇▇▇ or
▇▇▇▇▇ any other interest in any of the Properties or any part thereof, whether
voluntarily or involuntarily, in violation of the covenants and conditions set
forth in the Mortgage.
Section 10.2 Taxes; Utility Charges.
Borrower shall pay before any fine, penalty, interest or cost may be
added thereto, and shall not enter into any agreement to defer, any real estate
taxes and assessments, franchise taxes and charges, and other governmental
charges (the "Taxes") that may become a Lien upon any of the Properties or
become payable during the term of the Loan; provided, however; Borrower may
contest the validity of Taxes so long as (a) Borrower notifies Lender that it
intends to contest such Taxes, (b) Borrower provides Lender with an indemnity,
bond or other security satisfactory to Lender assuring the discharge of
Borrower's obligations for such Taxes, including interest and penalties, (c)
Borrower is diligently contesting the same by appropriate legal proceedings in
good faith and at its own expense and concludes such contest prior to the tenth
(10th) day preceding the earlier to occur of the Maturity Date or the date on
which the Individual Property is scheduled to be sold for non-payment, (d)
Borrower promptly upon final determination thereof pay the amount of any such
Taxes, together with all costs, interest and penalties which may be payable in
connection therewith; and (e) notwithstanding the foregoing, Borrower shall
immediately upon request of Lender pay any
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such Taxes notwithstanding such contest if, in the reasonable opinion of Lender,
any Individual Property or any part thereof or interest therein may be in danger
of being sold, forfeited, foreclosed, terminated, cancelled or lost. Lender may
pay over any cash deposit or part thereof to the claimant entitled thereto at
any time when, in the reasonable judgment of Lender, the entitlement of such
claimant is established. Borrower's compliance with Section 5.4 of this
Agreement relating to impounds for Taxes shall, with respect to payment of such
Taxes, be deemed compliance with this Section 10.2. Borrower shall not suffer or
permit the joint assessment of any of the Properties with any other real
property constituting a separate tax lot or with any other real or personal
property. Borrower shall promptly pay for all utility services provided to each
of the Properties.
Section 10.3 Operating Lease.
Borrower shall hold and maintain, or cause Operating Lessee to hold and
maintain, all necessary licenses, certifications and permits required by law.
Borrower shall fully perform all of its covenants, agreements and obligations
under the Operating Lease.
Section 10.4 Operation; Maintenance; Inspection.
Borrower shall observe and comply, or cause the Operating Lessee to
observe and comply, with all legal requirements applicable to the ownership, use
and operation of each of the Properties. Borrower shall maintain, or cause the
Operating Lessee to maintain, each of the Properties in good condition and
promptly repair any damage or casualty. Borrower shall permit Lender and its
agents, representatives and employees, upon reasonable prior notice to Borrower,
to inspect any of the Properties and conduct such environmental and engineering
studies as Lender may require, provided such inspections and studies do not
materially interfere with the use and operation of the Properties.
Section 10.5 Taxes on Security.
Borrower shall pay all taxes, charges, filing, registration and
recording fees, excises and levies payable with respect to the Note or the Liens
created or secured by the Loan Documents, other than income, franchise and doing
business taxes imposed on Lender. If there shall be enacted any law (a)
deducting the Loan from the value of any of the Properties for the purpose of
taxation, (b) affecting any Lien on the Properties, or (c) changing existing
laws of taxation of mortgages, deeds of trust, security deeds, or debts secured
by real property, or changing the manner of collecting any such taxes, Borrower
shall promptly pay to Lender, on demand, all taxes, costs and charges for which
Lender is or may be liable as a result thereof; however, if such payment would
be prohibited by law or would render the Loan usurious, then instead of
collecting such payment, Lender may declare all amounts owing under the Loan
Documents to be immediately due and payable.
Section 10.6 Legal Existence; Name, Etc.
Borrower and each SPC Party shall preserve and keep in full force and
effect its entity status, franchises, rights and privileges under the laws of
the state of its formation, and all qualifications, licenses and permits
applicable to the ownership, use and operation of the Properties. Neither
Borrower nor any SPC Party shall wind up, liquidate, dissolve, reorganize,
merge, or consolidate with or into, or convey, sell, assign, transfer, Lease, or
otherwise dispose of all or substantially all of its
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assets, or acquire all or substantially all of the assets of the business of any
Person, or permit any subsidiary or Affiliate of Borrower to do so. Borrower
shall not change its name, identity, or organizational structure, or the
location of its chief executive office or principal place of business unless
Borrower (a) shall have obtained the prior written consent of Lender to such
change, and (b) shall have taken all actions necessary or requested by Lender to
file or amend any financing statement or continuation statement to assure
perfection and continuation of perfection of security interests under the Loan
Documents.
Section 10.7 Further Assurances.
Borrower shall promptly (a) cure any known defects in the execution and
delivery of the Loan Documents, and (b) execute and deliver, or cause to be
executed and delivered, all such other documents, agreements and instruments as
Lender may reasonably request to further evidence and more fully describe the
collateral for the Loan, to correct any omissions in the Loan Documents, to
perfect, protect or preserve any liens created under any of the Loan Documents,
or to make any recordings, file any notices, or obtain any consents, as may be
necessary or appropriate in connection therewith. Borrower grants Lender an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Lender
under the Loan Documents, at law and in equity, including without limitation
such rights and remedies available to Lender pursuant to this Section 10.7.
Section 10.8 Estoppel Certificates.
Borrower, within ten (10) days after request, shall furnish to Lender a
written statement, duly acknowledged, setting forth the amount due on the Loan,
the terms of payment of the Loan, the date to which interest has been paid,
whether any offsets or defenses exist against the Loan and, if any are alleged
to exist, the nature thereof in detail, and such other matters as Lender
reasonably may request.
Section 10.9 Notice of Certain Events.
Borrower shall promptly notify Lender of (a) any Potential Default or
Event of Default of which Borrower has knowledge, together with a detailed
statement of the steps being taken to cure such Potential Default or Event of
Default; (b) any notice of default received by Borrower under other obligations
relating to any of the Properties or otherwise material to Borrower's business;
and (c) any threatened or pending legal, judicial or regulatory proceedings,
including any dispute between Borrower and any governmental authority,
materially and adversely affecting Borrower or the Properties.
Section 10.10 Indemnification.
Borrower shall protect, defend, indemnify and save harmless Lender its
shareholders, directors, officers, employees and agents from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses (including without limitation reasonable attorneys' fees and
expenses), imposed upon or incurred by or asserted against Lender by reason of
(a) ownership of the Mortgage, the Properties or any interest therein or receipt
of any rents; (b) any accident, injury to or death of persons or loss of or
damage to property occurring in, on or about any of the
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Properties or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (c) any use, nonuse or
condition in, on or about any of the Properties or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (d) performance of any labor or services or the furnishing of any
materials or other property in respect of any of the Properties or any part
thereof; and (e) the failure of any Person to file timely with the Internal
Revenue Service an accurate Form ▇▇▇▇-▇, ▇▇▇▇▇▇▇▇▇ for Recipients of Proceeds
from Real Estate, Broker and Barter Exchange Transactions, which may be required
in connection with this Agreement, or to supply a copy thereof in a timely
fashion to the recipient of the proceeds of the transaction in connection with
which this Agreement is made. Any amounts payable to Lender by reason of the
application of this section shall become immediately due and payable and shall
bear interest at the Default Rate from the date loss or damage is sustained by
Lender until paid.
Section 10.11 Payment For Labor and Materials.
Borrower will promptly pay when due all bills and costs for labor,
materials, and specifically fabricated materials incurred in connection with any
Individual Property and never permit to exist beyond the due date thereof in
respect of any Individual Property or any part thereof any lien or security
interest, even though inferior to the liens and the security interest hereof,
and in any event never permit to be created or exist in respect of any
Individual Property or any part thereof any other or additional lien or security
interest other than the liens or security interests hereof, except for the
Permitted Encumbrances.
Section 10.12 Alterations.
Borrower shall obtain Lender's prior written consent, which consent
shall not be unreasonably withheld or delayed to any alterations to any
Improvements on any Individual Property that may have a material adverse effect
on Borrower's financial condition, the use, operation or value of any Individual
Property or the Net Operating Income with respect to the Individual Property,
other than alterations performed in connection with the Restoration of the
Individual Property in accordance with the terms and provisions of this
Agreement. If the total unpaid amounts due and payable with respect to
alterations to the Improvements on any Individual Property (other than such
amounts to be paid or reimbursed by tenants under the Leases) shall at any time
exceed Two Hundred Fifty Thousand and No 00/100 Dollars ($250,000) (the
"Threshold Amount"), Borrower shall promptly deliver to Lender as security for
the payment of such amounts and as additional security for Borrower's
obligations under the Loan Documents any of the following: (1) cash, (2) U.S.
Obligations, (3) other securities having a rating acceptable to Lender and that
the applicable Rating Agencies have confirmed in writing will not, in and of
itself, result in a downgrade, withdrawal or qualification of the initial, or,
if higher, then current ratings assigned in connection with any Securitization,
or (4) a completion bond or irrevocable letter of credit (payable on sight draft
only) issued by a financial institution having a rating by Standard & Poor's
Ratings Group of not less than A-1+ if the term of such bond or letter of credit
is no longer than three (3) months or, if such term is in excess of three (3)
months, issued by a financial institution having a rating that is acceptable to
Lender and that the applicable Rating Agencies have confirmed in writing will
not, in and of itself, result in a downgrade, withdrawal or qualification of the
initial, or, if higher, then current ratings assigned in connection with any
Securitization. Such security shall be in an amount equal to the
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excess of the total unpaid amounts with respect to alterations to the
Improvements on the applicable Individual Property (other than such amounts to
be paid or reimbursed by tenants under the Leases) over the Threshold Amount and
may be reduced from time to time by the cost estimated by Lender to terminate
any of the alterations and restore the applicable Individual Property to the
extent necessary to prevent any material adverse effect on the use, operation or
value of the applicable Individual Property or the Net Operating Income with
respect to the Individual Property.
Section 10.13 Handicapped Access.
10.13.1 Borrower agrees that the Properties shall at all times
strictly comply to the extent applicable with the requirements of the Americans
with Disabilities Act of 1990, the Fair Housing Amendments Act of 1988, all
state and local laws and ordinances related to handicapped access and all rules,
regulations, and orders issued pursuant thereto including, without limitation,
the Americans with Disabilities Act Accessibility Guidelines for Buildings and
Facilities (collectively, "Access Laws").
10.13.2 Notwithstanding any provisions set forth herein or in
any other document regarding Lender's approval of alterations of the Properties,
Borrower shall not alter the Properties in any manner which would increase
Borrower's responsibilities for compliance with the applicable Access Laws
without the prior written approval of Lender. The foregoing shall apply to
tenant improvements constructed by Borrower or by any of its tenants. Lender may
condition any such approval upon receipt of a certificate of Access Law
compliance from an architect, engineer, or other person acceptable to Lender.
10.13.3 Borrower agrees to give prompt notice to Lender of the
receipt by Borrower of any complaints related to violation of any Access Laws
and of the commencement of any proceedings or investigations which relate to
compliance with applicable Access Laws.
Section 10.14 Certain Hotel/Franchise Covenants.
Borrower further covenants and agrees with Lender as follows:
10.14.1 Borrower shall cause the hotel located on each
Individual Property to be operated pursuant to the related Franchise Agreement
and, if applicable, the related Management Agreement.
10.14.2 Borrower shall, or shall cause the related Operating
Lessee to:
(a) promptly perform and/or observe all of the
material covenants and agreements required to be performed and observed
by Operating Lessee under the related Franchise Agreement and, if
applicable, the related Management Agreement and do all things
necessary to preserve and to keep unimpaired its material rights
thereunder;
(b) promptly notify Lender of any default under the
related Franchise Agreement or, if applicable, the related Management
Agreement of which Borrower or Operating Lessee (if a TRS Lessee) is
aware;
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(c) promptly deliver to Lender a copy of each
financial statement, business plan, capital expenditures plan, notice,
report and estimate received by Operating Lessee under the Franchise
Agreement or the Management Agreement; and
(d) promptly enforce the performance and observance
of all of the material covenants and agreements required to be
performed and/or observed by the franchisor under the related Franchise
Agreement and, if applicable, the Manager under the related Management
Agreement.
10.14.3 Without Lender's prior consent, Borrower shall not,
and shall not permit any Operating Lessee, to:
(a) except as otherwise provided in Section 8.29,
surrender, terminate or cancel any Franchise Agreement or Management
Agreement;
(b) reduce or consent to the reduction of the term
of any Franchise Agreement or Management Agreement;
(c) increase or consent to the increase of the amount
of any charges under any Franchise Agreement or, except as otherwise
provided in Section 8.29, Management Agreement; or
(d) except as otherwise provided in this Agreement,
otherwise modify, change, supplement, alter or amend, or waive or
release any of the Operating Lessees' rights and remedies under, any
Franchise Agreement or Management Agreement in any material respect.
Section 10.15 Certain Operating Lease Covenants.
Borrower further covenants and agrees with Lender as follows:
10.15.1 Borrower shall enforce each Operating Lease and, if
the Operating Lessee is a TRS Lessee, cause the hotel located on each Individual
Property to be operated pursuant to the related Operating Lease.
10.15.2 Borrower shall:
(a) promptly perform and/or observe all of the
covenants and agreements required to be performed and observed by
Borrower under the Operating Leases and do all things necessary to
preserve and to keep unimpaired its material rights thereunder;
(b) promptly notify Lender of any default under any
Operating Lease of which Borrower is aware;
(c) promptly deliver to Lender a copy of each
financial statement, business plan, capital expenditures plan, notice,
report and estimate received by Borrower under any Operating Lease; and
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(d) promptly enforce the performance and observance
of all of the covenants and agreements required to be performed and/or
observed by the Operating Lessee under any Operating Lease.
10.15.3 Without Lender's prior consent Borrower shall not:
(a) except as otherwise provided in this Agreement,
surrender, terminate or cancel any Operating Lease;
(b) reduce or consent to the reduction of the term
of any Operating Lease;
(c) increase or consent to the increase of the amount
of any charges under any Operating Lease; or
(d) except as otherwise provided in this Agreement,
otherwise modify, change, supplement, alter or amend, or waive or
release any of Borrower's rights and remedies under, the Operating
Leases in any respect.
ARTICLE XI
EVENTS OF DEFAULT
Each of the following shall constitute a default (each, an "Event of
Default") under the Loan:
Section 11.1 Payments.
Borrower's failure to pay any regularly scheduled installment of
principal, interest or other amount due under the Loan Documents within five (5)
days of (and including) the day it is due, or Borrower's failure to pay the Loan
at the Maturity Date, whether by acceleration or otherwise.
Section 11.2 Insurance.
Borrower's failure to maintain insurance as required under Section 5.1
of this Agreement.
Section 11.3 Single Purpose Entity.
If Borrower breaches any of its covenants contained in Section 8.28
hereof.
Section 11.4 Insolvency Opinion.
If any of the assumptions contained in the insolvency opinion, or in
any other "non- consolidation" opinion delivered to Lender in connection with
the Loan, or in any other "non- consolidation" opinion delivered subsequent to
the closing of the Loan, is or shall become untrue in any material respect.
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Section 11.5 Taxes.
If any of the Taxes are not paid when the same are due and payable.
Section 11.6 Sale, Encumbrance, Etc.
The sale, transfer, conveyance, pledge, mortgage or assignment of any
part or all of an Individual Property, or any interest therein, or of any
interest in Borrower, in violation of the terms of the Mortgage or this
Agreement.
Section 11.7 Representations and Warranties.
Any representation or warranty made in any Loan Document proves to be
untrue in any material respect when made or deemed made.
Section 11.8 Other Encumbrances.
Any default under any document or instrument, other than the Loan
Documents, evidencing or creating a Lien on an Individual Property or any part
thereof.
Section 11.9 Involuntary Bankruptcy or Other Proceeding.
Commencement of an involuntary case or other proceeding against
Borrower, any Borrower Party or any other Person having an ownership or security
interest in the Individual Property (each, a "Bankruptcy Party") which seeks
liquidation, reorganization or other relief with respect to it or its debts or
other liabilities under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeks the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any of its property, and such
involuntary case or other proceeding shall remain undismissed or unstayed for a
period of sixty (60) days; or an order for relief against a Bankruptcy Party
shall be entered in any such case under the Bankruptcy Code.
Section 11.10 Voluntary Petitions, etc.
Commencement by a Bankruptcy Party of a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts or other liabilities under any bankruptcy, insolvency or
other similar law or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official for it or any of its property, or consent by
a Bankruptcy Party to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or the making by a Bankruptcy Party of a general
assignment for the benefit of creditors, or the failure by a Bankruptcy Party,
or the admission by a Bankruptcy Party in writing of its inability, to pay its
debts generally as they become due, or any action by a Bankruptcy Party to
authorize or effect any of the foregoing;
Section 11.11 Covenants.
Borrower's failure to perform or observe any of the agreements and
covenants contained in this Agreement or in any of the other Loan Documents and
not specified above in Sections 11.1 to
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11.10, or below in Sections 11.12 or 11.13 and the continuance of such failure
for thirty (30) days after written notice by Lender to Borrower; however,
subject to any shorter period for curing any failure by Borrower as specified in
any of the other Loan Documents, Borrower shall have an additional thirty (30)
days to cure such failure if (a) such failure does not involve the failure to
make payments on a monetary obligation; (b) such failure cannot reasonably be
cured within thirty (30) days; (c) Borrower is diligently undertaking to cure
such default; and (d) Borrower has provided Lender with security reasonably
satisfactory to Lender against any interruption of payment or impairment of
collateral as a result of such continuing failure.
Section 11.12 Operating Lease.
If there is a material default under any Operating Lease beyond any
applicable notice and cure period; if the Operating Lease is amended, modified
or terminated in violation of the terms of this Agreement; or if the Operating
Lessee of the Individual Property located in Germantown, Tennessee is not either
a TRS Lessee, or a Single Purpose Entity by a date no later than March 1, 2001.
Section 11.13 Management Agreement and Franchise Agreement.
If there is a material default by Borrower or Operating Lessee under
any Management Agreement or Franchise Agreement (i) which is not cured by
Borrower within any applicable cure period or (ii) which Borrower is not
enforcing its rights thereunder or under the Operating Lease with respect
thereto; or (b) if any Management Agreement or Franchise Agreement is amended,
modified, terminated or entered into in violation of the terms of this
Agreement.
ARTICLE XII
REMEDIES
Section 12.1 Remedies - Insolvency Events.
Upon the occurrence of any Event of Default described in Section 11.9
or 11.10, all amounts due under the Loan Documents immediately shall become due
and payable, all without written notice and without presentment, demand,
protest, notice of protest or dishonor, notice of intent to accelerate the
maturity thereof, notice of acceleration of the maturity thereof, or any other
notice of default of any kind, all of which are hereby expressly waived by
Borrower.
Section 12.2 Remedies - Other Events.
Except as set forth in Section 12.1 above, while any Event of Default
exists, Lender may (i) declare the entire Loan to be immediately due and payable
without presentment, demand, protest, notice of protest or dishonor, notice of
intent to accelerate the maturity thereof, notice of acceleration of the
maturity thereof, or other notice of default of any kind, all of which are
hereby expressly waived by Borrower, and (ii) exercise all rights and remedies
therefor under the Loan Documents and at law or in equity.
12.2.1 With respect to Borrower and the Properties, nothing
contained herein or in
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any other Loan Document shall be construed as requiring Lender to resort to any
Individual Property for the satisfaction of any of the Debt in preference or
priority to any other Individual Property, and Lender may seek satisfaction out
of all of the Properties or any part thereof, in its absolute discretion in
respect of the Debt. In addition, Lender shall have the right from time to time
to partially foreclose the Mortgages in any manner and for any amounts secured
by the Mortgages then due and payable as determined by Lender in its sole
discretion including, without limitation, the following circumstances: (i) in
the event Borrower defaults beyond any applicable grace period in the payment of
one or more scheduled payments of principal and interest, Lender may foreclose
one or more of the Mortgages to recover such delinquent payments, or (ii) in the
event Lender elects to accelerate less than the entire outstanding principal
balance of the Loan, Lender may foreclose one or more of the Mortgages to
recover so much of the principal balance of the Loan as Lender may accelerate
and such other sums secured by one or more of the Mortgages as Lender may elect.
Notwithstanding one or more partial foreclosures, the Properties shall remain
subject to the Mortgages to secure payment of sums secured by the Mortgages and
not previously recovered.
12.2.2 Lender shall have the right from time to time to sever
the Note and the other Loan Documents into one or more separate notes, mortgages
and other security documents (the "Severed Loan Documents") in such
denominations as Lender shall determine in its sole discretion for purposes of
evidencing and enforcing its rights and remedies provided hereunder. Borrower
shall execute and deliver to Lender from time to time, promptly after the
request of Lender, a severance agreement and such other documents as Lender
shall request in order to effect the severance described in the preceding
sentence, all in form and substance reasonably satisfactory to Lender. Borrower
hereby absolutely and irrevocably appoints Lender as its true and lawful
attorney, coupled with an interest, in its name and stead to make and execute
all documents necessary or desirable to effect the aforesaid severance, Borrower
ratifying all that its said attorney shall do by virtue thereof; provided,
however, Lender shall not make or execute any such documents under such power
until three (3) days after notice has been given to Borrower by Lender of
Lender's intent to exercise its rights under such power. Except as may be
required in connection with a Securitization pursuant to Section 14.1 hereof,
(i) Borrower shall not be obligated to pay any costs or expenses incurred in
connection with the preparation, execution, recording or filing of the Severed
Loan Documents, and (ii) the Severed Loan Documents shall not contain any
representations, warranties or covenants not contained in the Loan Documents and
any such representations and warranties contained in the Severed Loan Documents
will be given by Borrower only as of the Closing Date.
Section 12.3 Lender's Right to Perform the Obligations.
If Borrower shall fail, refuse or neglect to make any payment or
perform any act required by the Loan Documents, then while any Event of Default
exists, and without notice to or demand upon Borrower and without waiving or
releasing any other right, remedy or recourse Lender may have because of such
Event of Default, Lender may (but shall not be obligated to) make such payment
or perform such act for the account of and at the expense of Borrower, and shall
have the right to enter upon the applicable Individual Property for such purpose
and to take all such action thereon and with respect to the applicable
Individual Property as it may deem necessary or appropriate. If Lender shall
elect to pay any sum due with reference to the applicable Individual Property,
Lender may do so in reliance on any ▇▇▇▇, statement or assessment procured from
the appropriate governmental authority
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or other issuer thereof without inquiring into the accuracy or validity thereof.
Similarly, in making any payments to protect the security intended to be created
by the Loan Documents, Lender shall not be bound to inquire into the validity of
any apparent or threatened adverse title, lien, encumbrance, claim or charge
before making an advance for the purpose of preventing or removing the same.
Borrower shall indemnify Lender for all losses, expenses, damages, claims and
causes of action, including reasonable attorneys' fees, incurred or accruing by
reason of any acts performed by Lender pursuant to the provisions of this
Section 12.3; provided, however, that Borrower shall not be liable under such
indemnification to the extent such losses, expenses, damages, claims and causes
of action result substantially and materially from Lender's gross negligence or
willful misconduct. All sums paid by Lender pursuant to this Section 12.3, and
all other sums expended by Lender to which it shall be entitled to be
indemnified, together with interest thereon at the Default Rate from the date of
such payment or expenditure until paid, shall constitute additions to the Loan,
shall be secured by the Loan Documents and shall be paid by Borrower to Lender
upon demand.
Section 12.4 Cross-Default; Cross-Collateralization; Waiver of
Marshalling of Assets.
12.4.1 Borrower acknowledges that Lender has made the Loan to
Borrower upon the security of its collective interest in the Properties and in
reliance upon the aggregate of the Properties taken together being of greater
value as collateral security than the sum of the Properties taken separately.
Borrower agrees that the Mortgages are and will be cross-collateralized and
cross- defaulted with each other so that (i) an Event of Default under any of
the Mortgages shall constitute an Event of Default under each of the other
Mortgages which secure the Note; (ii) an Event of Default under the Note or this
Loan Agreement shall constitute an Event of Default under each Mortgage; and
(iii) each Mortgage shall constitute security for the Note as if a single
blanket lien were placed on all of the Properties as security for the Note.
12.4.2 To the fullest extent permitted by law, Borrower, for
itself and its successors and assigns, waives all rights to a marshalling of the
assets of Borrower, Borrower's partners and others with interests in Borrower,
and of the Properties, or to a sale in inverse order of alienation in the event
of foreclosure of all or any of the Mortgages, and agrees not to assert any
right under any laws pertaining to the marshalling of assets, the sale in
inverse order of alienation, homestead exemption, the administration of estates
of decedents, or any other matters whatsoever to defeat, reduce or affect the
right of Lender under the Loan Documents to a sale of the Properties for the
collection of the Debt without any prior or different resort for collection or
of the right of Lender to the payment of the Debt out of the net proceeds of the
Properties in preference to every other claimant whatsoever. In addition,
Borrower, for itself and its successors and assigns, waives in the event of
foreclosure of any or all of the Mortgages, any equitable right otherwise
available to Borrower which would require the separate sale of the Properties or
require Lender to exhaust its remedies against any Individual Property or any
combination of the Properties before proceeding against any other Individual
Property or combination of Properties; and further in the event of such
foreclosure Borrower does hereby expressly consents to and authorizes, at the
option of Lender, the foreclosure and sale either separately or together of any
combination of the Properties.
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ARTICLE XIII
LIMITATIONS ON LIABILITY
Section 13.1 Limitation on Liability.
Except as provided below, Borrower shall not be personally liable for
amounts due under the Loan Documents. Borrower shall be personally liable to
Lender for any deficiency, loss or damage suffered by Lender because of: (a)
Borrower's commission of a criminal act; (b) the failure to comply with
provisions of the Loan Documents prohibiting the sale, transfer or encumbrance
of an Individual Property, any other collateral, or any direct or indirect
ownership interest in Borrower; (c) the misapplication by Borrower or any
Borrower Party of any funds derived from an Individual Property, including
security deposits, insurance proceeds and condemnation awards; (d) the fraud or
misrepresentation by Borrower or any Borrower Party now or hereafter made in or
in connection with the Loan Documents or the Loan including any statements or
certificates delivered under the Loan Documents; (e) Borrower's collection of
rents more than one (1) month in advance or entering into or modifying Leases,
or receipt of monies by Borrower or any Borrower Party in connection with the
modification of any Leases, in violation of this Agreement or any of the other
Loan Documents; (f) Borrower's failure to apply proceeds of rents or any other
payments in respect of the Leases and other income of an Individual Property or
any other collateral to the costs of maintenance and operation of an Individual
Property and to the payment of taxes, lien claims, insurance premiums, Debt
Service and other amounts due under the Loan Documents; (g) Borrower's
interference with Lender's exercise of rights under the Assignment of Leases and
Rents; (h) Borrower's failure to maintain insurance as required by this
Agreement or to pay any taxes or assessments affecting an Individual Property;
(i) damage or destruction to an Individual Property caused by the intentional
acts or omissions of Borrower, its agents, employees, or contractors; (j)
Borrower's failure to comply with its obligations with respect to environmental
matters under Article 6; (k) Borrower's failure to pay for any loss, liability
or expense (including attorneys' fees) incurred by Lender arising out of any
claim or allegation made by Borrower, its successors or assigns, or any creditor
of Borrower, that this Agreement or the transactions contemplated by the Loan
Documents establishes a joint venture, partnership or other similar arrangement
between Borrower and Lender; (l) any brokerage commission or finder's fees
claimed in connection with the transactions contemplated by the Loan Documents;
(m) Borrower's indemnification of Lender set forth in Section 14.2 hereafter;
(n) Borrower's or any TRS Lessee's failure to comply, or cause compliance, with
any PIP Requirements; or (o) the failure of Borrower or any Borrower Party to
indemnify any Operating Lessee as may be required under the applicable Operating
Lease for amounts incurred or imposed under any Policy in excess of the limits
imposed for deductibles under such Policy pursuant to Section 5.1.
Notwithstanding anything to the contrary in this Agreement, the Note or
any of the Loan Documents, (i) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt secured by the Mortgages or to require that all collateral shall continue
to secure all of the Debt owing to Lender in accordance with the Loan Documents,
and (ii) the Debt shall be fully recourse to Borrower in the event that: (A)
there is a default under Sections 11.9 or 11.10 hereof; (B) Borrower fails to
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obtain Lender's prior written consent to any subordinate financing or other
voluntary lien encumbering any Individual Property; or (C) except as otherwise
permitted under this Agreement, Borrower fails to obtain Lender's prior written
consent to any assignment, transfer, or conveyance of any Individual Property or
any interest therein as required by the Loan Documents.
Section 13.2 Limitation on Liability of Lender's Officers, Employees,
etc.
Any obligation or liability whatsoever of Lender which may arise at any
time under this Agreement or any other Loan Document shall be satisfied, if at
all, out of Lender's interest in the Property only. No such obligation or
liability shall be personally binding upon, nor shall resort for the enforcement
thereof be had to, the property of any of Lender's shareholders, directors,
officers, employees or agents, regardless of whether such obligation or
liability is in the nature of contract, tort or otherwise.
ARTICLE XIV
SECURITIZATION
Section 14.1 Securitization.
14.1.1 At the request of the holder of the Note and, to the
extent not already required to be provided by Borrower under this Agreement,
Borrower shall use reasonable efforts to satisfy the market standards to which
the holder of the Note customarily adheres or which may be reasonably required
in the marketplace or by the Rating Agencies in connection with the sale of the
Note or participation therein or the first successful securitization (such sale
and/or securitization, the "Securitization") of rated single or multi-class
securities (the "Securities") secured by or evidencing ownership interests in
the Note and the Mortgages, including, without limitation, to:
(a) provide such financial and other information
reasonably available with respect to the Properties, the Borrower, the
Operating Lessees and the Managers,
(b) provide budgets relating to the Properties, and
(c) perform or permit or cause to be performed or
permitted such site inspection, appraisals, market studies,
environmental reviews and reports (Phase I's and, if appropriate, Phase
II's), engineering reports and other due diligence investigations of
the Properties, as may be reasonably requested by the holder of the
Note or the Rating Agencies or as may be necessary or appropriate in
connection with the Securitization (the "Securitization Information"),
together, if customary, with appropriate verification and/or consents
of the Securitization Information through letters of auditors or
opinions of counsel of independent attorneys acceptable to the Lender
and the Rating Agencies;
14.1.2 cause counsel to render opinions, which may be relied
upon by the holder of the Note, the Rating Agencies and their respective
counsel, agents and representatives, as to non- consolidation, fraudulent
conveyance, and true sale or any other opinion customary in securitization
transactions with respect to the Properties and Borrower and its Affiliates,
which counsel and opinions shall be reasonably satisfactory to the holder of the
Note and the Rating Agencies;
14.1.3 make such representations and warranties as of the
closing date of the Securitization with respect to the Properties, Borrower, and
the Loan Documents as are customarily provided in securitization transactions
and as may be reasonably requested by the holder of the Note or the Rating
Agencies and consistent with the facts covered by such representations and
warranties as they exist on the date thereof, including the representations and
warranties made in the Loan Documents, to the extent such representations and
warranties are true as of the closing date of the Securitization; and
14.1.4 execute such amendments to the Loan Documents and
organizational documents, enter into a lockbox or similar arrangement with
respect to the Rents and establish and fund such reserve funds (including,
without limitation, reserve funds for deferred maintenance and capital
improvements) as may be requested by the holder of the Note or the Rating
Agencies or otherwise to effect the Securitization, including splitting the Note
into two notes and splitting each Mortgage into two mortgages, including a first
priority mortgage and a second priority mortgage or otherwise as determined by
and acceptable to Lender; provided, however, that Borrower shall not be required
to modify or amend any Loan Document if such modification or amendment would (i)
change the interest rate, the stated maturity or the amortization of principal
set forth in the Note, or (ii) modify or amend any other material economic term
of the Loan.
All reasonable third party costs and expenses incurred by Lender in
connection with Borrower's complying with requests made under this Section 14.1
shall be paid by Lender; provided, that, Borrower shall be responsible for all
costs and expenses incurred by Borrower in complying with such requests,
including, without limitation, third party costs and attorney's fees.
Notwithstanding the foregoing sentence, Lender shall be responsible for the
reasonable attorney's fees incurred by Borrower in connection with Borrower's
compliance under Section 14.1(d).
Section 14.2 Securitization Indemnification.
14.2.1 Borrower understands that certain of the Securitization
Information and the financial reports relating to the Properties may be included
in disclosure documents in connection with the Securitization, including,
without limitation, a prospectus, prospectus supplement or private placement
memorandum (each, an "Offering Document") and may also be included in filings
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or provided or made available to investors or
prospective investors in the Securities, the Rating Agencies, and service
providers relating to the Securitization. In the event that the Offering
Document is required to be revised prior to the sale of all Securities, the
Borrower will cooperate with the holder of the Note in updating the Offering
Document by providing all current information necessary to keep the Offering
Document accurate and complete in all material respects.
14.2.2 Borrower agrees to provide in connection with each of
(i) a preliminary and
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a private placement memorandum or (ii) a preliminary and final prospectus or
prospectus supplement, as applicable, an indemnification certificate (A)
certifying that Borrower has carefully examined such memorandum or prospectus,
as applicable, including without limitation, the sections entitled "Special
Considerations," "Description of the Mortgages," "Description of the Mortgage
Loans and Mortgaged Properties," "The Manager," "The Borrower" and "Certain
Legal Aspects of the Mortgage Loan," and such sections (and any other sections
reasonably requested) do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made, in
the light of the circumstances under which they were made, not misleading, (B)
indemnifying Lender (and for purposes of this Section 14.2, Lender hereunder
shall include its officers and directors), any affiliate of Lender that has
filed or may file the registration statement relating to the securitization (the
"Registration Statement"), each of its directors, each of its officers who have
signed the Registration Statement and each person or entity who controls Lender
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, (collectively, the "Underwriter Group") for any losses, claims,
damages or liabilities (the "Liabilities") to which Lender, or the Underwriter
Group may become subject insofar as the Liabilities arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in such sections or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated in such
sections or necessary in order to make the statements in such sections or in
light of the circumstances under which they were made, not misleading and (C)
agreeing to reimburse Lender and the Underwriter Group for any legal or other
expenses reasonably incurred by Lender in connection with investigating or
defending the Liabilities; provided, however, that Borrower (1) shall be liable
in any such case under clauses (B) or (C) above only to the extent that any such
loss claim, damage or liability arises out of or is based upon any such untrue
statement or omission made therein in reliance upon and in conformity with
written information (subject to clause (2) below) furnished to Lender by or on
behalf of Borrower in connection with the preparation of the memorandum or
prospectus or in connection with the underwriting of the debt, including,
without limitation, financial statements of Borrower, operating statements, rent
rolls, environmental site assessment reports and property condition reports with
respect to the Properties, and (2) shall not be liable for any information
contained in any report or other written information delivered by a third party
not Affiliated with Borrower (an "Unrelated Third-Party Provider," and such
report, an "Unrelated Third-Party Report"), unless, (x) such information is
based on written information delivered by or at the direction of Borrower or its
officers, employees, affiliates or agents to the Unrelated Third-Party Provider,
or (y) at the time such Unrelated Third-Party Report was delivered, Borrower or
any SPC Party knew that such report contained statements of fact that give rise
to the Liabilities in question. This indemnity agreement will be in addition to
any liability which Borrower may otherwise have.
14.2.3 In connection with filings under the Exchange Act,
Borrower agrees to indemnify (i) Lender, and the Underwriter Group for
Liabilities to which Lender, or the Underwriter Group may become subject insofar
as the Liabilities arise out of or are based upon the omission or alleged
omission to state in the Securitization Information or financial reports
relating to the Properties a material fact required to be stated in the
Securitization Information or financial reports relating to the Properties in
order to make the statements in the Securitization Information or financial
reports relating to the Properties, in light of the circumstances under which
they were made not misleading and (ii) reimburse Lender or the Underwriter Group
for any legal or other expenses reasonably incurred by Lender or the Underwriter
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Group in connection with defending or investigating the Liabilities, provided,
however, that Borrower shall be liable in any such case under clauses (i) or
(ii) above only to the extent that any such loss, claim, damage, liability or
expense arises out of any such untrue statement or omission made therein which
Borrower identified to Lender in writing at the time of Borrower's (or its
attorneys) examination of the Offering Document (or drafts thereof).
14.2.4 Promptly after receipt by an indemnified party under
this Section 14.2 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 14.2, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent that
failure to notify causes prejudice to the indemnifying party. In the event that
any action is brought against any indemnified party, and its notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to participate therein and,
to the extent that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. After notice from the indemnifying party to such
indemnified party under this Section 14.2 the indemnifying party shall be
responsible for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there are any legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party to parties. The indemnifying party shall not be
liable for the expenses of more than one separate counsel unless an indemnified
party shall have reasonably concluded that there may be legal defenses available
to it that are different from or additional to those available to another
indemnified party. In no event shall an indemnifying party be liable to an
indemnified party under this Section 14.1 for any losses, claims, damages or
liabilities to which such indemnified party may become subject to the extent the
same arises solely by reason of the gross negligence, illegal acts, fraud or
willful misconduct of such indemnified party.
14.2.5 In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in Section
14.2(b) or (c) is for any reason held to be unenforceable by an indemnified
party in respect of any losses, claims, damages or liabilities (or action in
respect thereof) referred to therein which would otherwise be indemnifiable
under Section 14.2(b) or (c), the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such losses,
claims, damages or liabilities (or action in respect thereof); provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. In determining the amount of contribution to which the
respective parties are entitled, the following factors shall be considered: (i)
Lender's and Borrower's relative knowledge and access to information concerning
the matter with respect to which claim was asserted;
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(ii) the opportunity to correct and prevent any statement or omission; and (iii)
any other equitable considerations appropriate in the circumstances. Lender and
Borrower hereby agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation.
14.2.6 The liabilities and obligations of both Borrower and
Lender under this Section 14.2 shall survive the termination of this Agreement
and the satisfaction and discharge of the Debt.
Section 14.3 Servicer.
At the option of Lender, the Loan may be serviced by a Servicer/Trustee
("Servicer") selected by Lender. Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement ("Servicing Agreement") between
Lender and Servicer. Borrower shall not be responsible for any set-up fees or
any other initial costs relating to or arising under the Servicing Agreement or
for payment of the monthly servicing fee due to Servicer under the Servicing
Agreement.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Notices.
Any notice required or permitted to be given under this Agreement shall
be in writing and either shall be mailed by certified mail, postage prepaid,
return receipt requested, or sent by overnight air courier service, or
personally delivered to a representative of the receiving party, or sent by
telecopy (provided an identical notice is also sent simultaneously by mail,
overnight courier, or personal delivery as otherwise provided in this Section
15.1). All such communications shall be mailed, sent or delivered, addressed to
the party for whom it is intended at its address set forth below.
If to Borrower: EQI Financing Partnership V, L.P.
c/o Equity Inns, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: GMAC Commercial Mortgage Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Servicing - Executive Vice President
With a copy to: Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
-▇▇-
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any communication so addressed and mailed shall be deemed to be given on the
earliest of (a) when actually delivered, (b) on the first Business Day after
deposit with an overnight air courier service, or (c) on the third Business Day
after deposit in the United States mail, postage prepaid, in each case to the
address of the intended addressee, and any communication so delivered in person
shall be deemed to be given when receipted for by, or actually received by
Lender or Borrower, as the case may be. If given by telecopy, a notice shall be
deemed given and received when the telecopy is transmitted to the party's
telecopy number specified above confirmation of complete receipt is received by
the transmitting party during normal business hours or on the next Business Day
if not confirmed during normal business hours. Either party may designate a
change of address by written notice to the other by giving at least ten (10)
days prior written notice of such change of address.
Section 15.2 Amendment and Waivers.
No amendment or waiver of any provision of the Loan Documents shall be
effective unless in writing and signed by the party against whom enforcement is
sought.
Section 15.3 Limitation on Interest.
It is the intention of the parties hereto to conform strictly to
applicable usury laws. Accordingly, all agreements between Borrower and Lender
with respect to the Loan are hereby expressly limited so that in no event,
whether by reason of acceleration of maturity or otherwise, shall the amount
paid or agreed to be paid to Lender or charged by Lender for the use,
forbearance or detention of the money to be lent hereunder or otherwise, exceed
the maximum amount allowed by law. If the Loan would be usurious under
applicable law (including the laws of the State and the laws of the United
States of America), then, notwithstanding anything to the contrary in the Loan
Documents: (a) the aggregate of all consideration which constitutes interest
under applicable law that is contracted for, taken, reserved, charged or
received under the Loan Documents shall under no circumstances exceed the
maximum amount of interest allowed by applicable law, and any excess shall be
credited on the Note by the holder thereof; and (b) if maturity is accelerated
by reason of an election by Lender, or in the event of any prepayment, then any
consideration which constitutes interest may never include more than the maximum
amount allowed by applicable law. In such case, excess interest, if any,
provided for in the Loan Documents or otherwise, to the extent permitted by
applicable law, shall be amortized, prorated, allocated and spread from the date
of advance until payment in full so that the actual rate of interest is uniform
through the term hereof. If such amortization, proration, allocation and
spreading is not permitted under applicable law, then such excess interest shall
be canceled automatically as of the date of such acceleration or prepayment and,
if theretofore paid, shall be credited on the Note. The terms and provisions of
this Section 15.3 shall control and supersede every other provision of the Loan
Documents. The Loan Documents are contracts made under and shall be construed in
accordance with and governed by the laws of the State of New York, except that
if at any time the laws of the United States of America permit Lender to
contract for, take, reserve, charge or receive a higher rate of interest than is
allowed by the laws of the State of New York (whether such federal laws directly
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so provide or refer to the law of any state), then such federal laws shall to
such extent govern as to the rate of interest which Lender may contract for,
take, reserve, charge or receive under the Loan Documents.
Section 15.4 Invalid Provisions.
If any provision of any Loan Document is held to be illegal, invalid or
unenforceable, such provision shall be fully severable; the Loan Documents shall
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part thereof; the remaining provisions thereof shall
remain in full effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance therefrom; and in lieu of such
illegal, invalid or unenforceable provision there shall be added automatically
as a part of such Loan Document a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible to be legal, valid and
enforceable.
Section 15.5 Reimbursement of Expenses.
Borrower shall pay all reasonable expenses incurred by Lender in
connection with the Loan, including reasonable fees and expenses of Lender's
attorneys, environmental, engineering and other consultants, and fees, charges
or taxes for the recording or filing of Loan Documents. Borrower shall pay all
reasonable expenses of Lender in connection with the administration of the Loan,
including audit costs, inspection fees, settlement of condemnation and casualty
awards, premiums for title insurance and endorsements thereto and costs,
expenses and fees of the Rating Agencies for the delivery of recommendations
requested by Borrower in connection with the Loan or otherwise required under
the Loan Documents. Borrower shall, upon request, promptly reimburse Lender for
all amounts expended, advanced or incurred by Lender to collect the Note, or to
enforce the rights of Lender under this Agreement or any other Loan Document, or
to defend or assert the rights and claims of Lender under the Loan Documents or
with respect to the Individual Property (by litigation or other proceedings),
which amounts will include all court costs, attorneys' fees and expenses, fees
of auditors and accountants, and investigation expenses as may be incurred by
Lender in connection with any such matters (whether or not litigation is
instituted), together with interest at the Default Rate on each such amount from
the date of disbursement until the date of reimbursement to Lender, all of which
shall constitute part of the Loan and shall be secured by the Loan Documents.
Section 15.6 Approvals; Third Parties; Conditions.
All approval rights retained or exercised by Lender with respect to
Leases, contracts, plans, studies and other matters are solely to facilitate
Lender's credit underwriting, and shall not be deemed or construed as a
determination that Lender has passed on the adequacy thereof for any other
purpose and may not be relied upon by Borrower or any other Person. This
Agreement is for the sole and exclusive use of Lender and Borrower and may not
be enforced, nor relied upon, by any Person other than Lender and Borrower. All
conditions of the obligations of Lender hereunder, including the obligation to
make advances, are imposed solely and exclusively for the benefit of Lender, its
successors and assigns, and no other Person shall have standing to require
satisfaction of such conditions or be entitled to assume that Lender will refuse
to make advances in the absence of strict compliance with any or all of such
conditions, and no other Person shall, under any circumstances, be deemed to be
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a beneficiary of such conditions, any and all of which may be freely waived
in whole or in part by Lender at any time in Lender's sole discretion.
Section 15.7 Lender Not in Control; No Partnership.
None of the covenants or other provisions contained in this Agreement
shall, or shall be deemed to, give Lender the right or power to exercise control
over the affairs or management of Borrower, the power of Lender being limited to
the rights to exercise the remedies referred to in the Loan Documents. The
relationship between Borrower and Lender is, and at all times shall remain,
solely that of debtor and creditor. No covenant or provision of the Loan
Documents is intended, nor shall it be deemed or construed, to create a
partnership, joint venture, agency or common interest in profits or income
between Lender and Borrower or to create an equity in the Individual Property in
Lender. Lender neither undertakes nor assumes any responsibility or duty to
Borrower or to any other person with respect to the Individual Property or the
Loan, except as expressly provided in the Loan Documents; and notwithstanding
any other provision of the Loan Documents: (a) Lender is not, and shall not be
construed as, a partner, joint venturer, alter ego, manager, controlling person
or other business associate or participant of any kind of Borrower or its
stockholders, members, or partners and Lender does not intend to ever assume
such status; (b) Lender shall in no event be liable for any debts, expenses or
losses incurred or sustained by Borrower; and (c) Lender shall not be deemed
responsible for or a participant in any acts, omissions or decisions of Borrower
or its stockholders, members, or partners. Lender and Borrower disclaim any
intention to create any partnership, joint venture, agency or common interest in
profits or income between Lender and Borrower, or to create an equity in the
Individual Property in Lender, or any sharing of liabilities, losses, costs or
expenses.
Section 15.8 Time of the Essence.
Time is of the essence with respect to this Agreement.
Section 15.9 Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of Lender
and Borrower and their respective successors and assigns of Lender and Borrower,
provided that neither Borrower nor any other Borrower Party shall, without the
prior written consent of Lender, assign any rights, duties or obligations
hereunder.
Section 15.10 Renewal, Extension or Rearrangement.
All provisions of the Loan Documents shall apply with equal effect to
each and all promissory notes and amendments thereof hereinafter executed which
in whole or in part represent a renewal, extension, increase or rearrangement of
the Loan.
Section 15.11 Waivers.
No course of dealing on the part of Lender, its officers, employees,
consultants or agents, nor any failure or delay by Lender with respect to
exercising any right, power or privilege of Lender under any of the Loan
Documents, shall operate as a waiver thereof.
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Section 15.12 Cumulative Rights; Joint and Several Liability.
Rights and remedies of Lender under the Loan Documents shall be
cumulative, and the exercise or partial exercise of any such right or remedy
shall not preclude the exercise of any other right or remedy. If more than one
person or entity has executed this Agreement as "Borrower," the obligations of
all such persons or entities hereunder shall be joint and several.
Section 15.13 Singular and Plural.
Words used in this Agreement and the other Loan Documents in the
singular, where the context so permits, shall be deemed to include the plural
and vice versa. The definitions of words in the singular in this Agreement and
the other Loan Documents shall apply to such words when used in the plural where
the context so permits and vice versa.
Section 15.14 Phrases.
When used in this Agreement and the other Loan Documents, the phrase
"including" shall mean "including, but not limited to," the phrase "satisfactory
to Lender" shall mean "in form and substance satisfactory to Lender in all
respects," the phrase "with Lender's consent" or "with Lender's approval" shall
mean such consent or approval at Lender's discretion, and the phrase "acceptable
to Lender" shall mean "acceptable to Lender at Lender's sole discretion."
Section 15.15 Exhibits and Schedules.
The exhibits and schedules attached to this Agreement are incorporated
herein and shall be considered a part of this Agreement for the purposes stated
herein.
Section 15.16 Titles of Articles, Sections and Subsections.
All titles or headings to articles, sections, subsections or other
divisions of this Agreement and the other Loan Documents or the exhibits hereto
and thereto are only for the convenience of the parties and shall not be
construed to have any effect or meaning with respect to the other content of
such articles, sections, subsections or other divisions, such other content
being controlling as to the agreement between the parties hereto.
Section 15.17 Promotional Material.
Borrower authorizes Lender to issue press releases, advertisements and
other promotional materials in connection with Lender's own promotional and
marketing activities, including in connection with a Securitization, and such
materials may describe the Loan in general terms or in detail and Lender's
participation therein in the Loan. All references to Lender contained in any
press release, advertisement or promotional material issued by Borrower shall be
approved in writing by Lender in advance of issuance.
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Section 15.18 Survival.
All of the representations, warranties, covenants, and indemnities
hereunder (including environmental matters under Article 6), and under the
indemnification provisions of the other Loan Documents shall survive the
repayment in full of the Loan and the release of the liens evidencing or
securing the Loan, and shall survive the transfer (by sale, foreclosure,
conveyance in lieu of foreclosure or otherwise) of any or all right, title and
interest in and to the Individual Property to any party, whether or not an
Affiliate of Borrower.
Section 15.19 WAIVER OF TRIAL.
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
Section 15.20 Waiver of Punitive or Consequential Damages.
Neither Lender nor Borrower shall be responsible or liable to the other
or to any other Person for any punitive, exemplary or consequential damages
which may be alleged as a result of the Loan or the transaction contemplated
hereby, including any breach or other default by any party hereto.
Section 15.21 Governing Law.
(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY
LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF
THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT
REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED
STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION,
PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT
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HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE APPLICABLE INDIVIDUAL
PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED
BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE
CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE
OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED
BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO
ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE
NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇, PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT CT CORPORATION
SERVICE, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ AS ITS AUTHORIZED AGENT TO
ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN
NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID
ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN
THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF
NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS
OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME
DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK
(WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS
FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF
ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS
DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 15.22 Entire Agreement.
This Agreement and the other Loan Documents embody the entire agreement
and understanding between Lender and Borrower and supersede all prior agreements
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and understandings between such parties relating to the subject matter hereof
and thereof. Accordingly, the Loan Documents may not be contradicted by evidence
of prior, contemporaneous, or subsequent oral agreements of the parties. There
are no unwritten oral agreements between the parties.
Section 15.23 Counterparts.
This Agreement may be executed in multiple counterparts, each of which
shall constitute an original, but all of which shall constitute one document.
Section 15.24 Brokers and Financial Advisors.
Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Borrower hereby
agrees to indemnify, defend and hold Lender harmless from and against any and
all claims, liabilities, costs and expenses of any kind (including Lender's
attorneys' fees and expenses) in any way relating to or arising from a claim by
any Person that such Person acted on behalf of Borrower or Lender in connection
with the transactions contemplated herein. The provisions of this Section 15.24
shall survive the expiration and termination of this Agreement and the payment
of the Debt.
[NO FURTHER TEXT ON THIS PAGE]
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EXECUTED as of the date first written above.
LENDER:
GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
Title: Senior Vice President
BORROWER:
EQI FINANCING PARTNERSHIP V, L.P.,
a Tennessee limited partnership
By: EQI Financing Corporation V,
a Tennessee corporation, its general
partner
By:/s/ ▇▇▇▇▇▇ ▇. Silver
--------------------
Name: ▇▇▇▇▇▇ ▇. Silver
Title: President
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JOINDER
By executing this Joinder (the "Joinder"), the undersigned ("Joinder Parties")
jointly and severally guaranty the performance by Borrower of all obligations
and liabilities for which Borrower is personally liable under Section 13.1 of
this Agreement. This Joinder is a guaranty of full and complete payment and
performance and not of collectability.
1. Waivers. To the fullest extent permitted by applicable law, each
Joinder Party waives all rights and defenses of sureties, guarantors,
accommodation parties and/or co-makers and agrees that its obligations under
this Joinder shall be primary, absolute and unconditional, and that its
obligations under this Joinder shall be unaffected by any of such rights or
defenses, including:
(a) the unenforceability of any Loan Document against Borrower and/or
any guarantor or other Joinder Party;
(b) any release or other action or inaction taken by Lender with
respect to the collateral, the Loan, Borrower, any guarantor and/or other
Joinder Party, whether or not the same may impair or destroy any subrogation
rights of any Joinder Party, or constitute a legal or equitable discharge of any
surety or indemnitor;
(c) the existence of any collateral or other security for the Loan, and
any requirement that Lender pursue any of such collateral or other security, or
pursue any remedies it may have against Borrower, any guarantor and/or any other
Joinder Party;
(d) any requirement that Lender provide notice to or obtain a Joinder
Party's consent to any modification, increase, extension or other amendment of
the Loan, including the guaranteed obligations;
(e) any right of subrogation (until payment in full of the Loan,
including the guaranteed obligations, and the expiration of any applicable
preference period and statute of limitations for fraudulent conveyance claims);
(f) any defense based on any statute of limitations;
(g) any payment by Borrower to Lender if such payment is held to be a
preference or fraudulent conveyance under bankruptcy laws or Lender is otherwise
required to refund such payment to Borrower or any other party; and
(h) any voluntary or involuntary bankruptcy, receivership, insolvency,
reorganization or similar proceeding affecting Borrower or any of its assets.
2. Agreements. Each Joinder Party further represents, warrants
and agrees that:
(a) The obligations under this Joinder are enforceable against each
such party and are not subject to any defenses, offsets or counterclaims;
(b) The provisions of this Joinder are for the benefit of Lender
and its successors and assigns;
90
(c) Lender shall have the right to (i) renew, modify, extend or
accelerate the Loan, (ii) pursue some or all of its remedies against Borrower,
any guarantor or any Joinder Party, (iii) add, release or substitute any
collateral for the Loan or party obligated thereunder, and (iv) release
Borrower, any guarantor or any Joinder Party from liability, all without notice
to or consent of any Joinder Party (or other Joinder Party) and without
affecting the obligations of any Joinder Party (or other Joinder Party)
hereunder;
(d) Each Joinder Party covenants and agrees to furnish to Lender,
within ninety (90) days after the end of each calendar year of such Joinder
Party, a current (as of the end of such calendar year) balance sheet of such
Joinder Party, in scope and detail satisfactory to Lender, certified by the
chief financial representative of such Joinder Party and, if required by Lender,
prepared on a review basis and certified by an independent public accountant
satisfactory to Lender; and
(e) To the maximum extent permitted by law, each Joinder Party hereby
knowingly, voluntarily and intentionally waives the right to a trial by jury in
respect of any litigation based hereon. This waiver is a material inducement to
Lender to enter into this Agreement.
This Joinder shall be governed by the laws of the State of New York.
91
Executed as of October 20, 2000.
JOINDER PARTIES: EQUITY INNS, INC., a Tennesse corporation
By: /s/ ▇▇▇▇▇▇ ▇. Silver
--------------------
Name: ▇▇▇▇▇▇ ▇. Silver
Title: President
EQUITY INNS TRUST, a Maryland corporation
By: /s/ ▇▇▇▇▇▇ ▇. Silver
--------------------
Name: ▇▇▇▇▇▇ ▇. Silver
Title: President
EQUITY INNS PARTNERSHIP, a Tennessee
limited partnership
By: Equity Inns Trust, a Maryland Trust, its
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. Silver
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Name: ▇▇▇▇▇▇ ▇. Silver
Title: President