EXHIBIT 10.38
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LOAN AGREEMENT
between
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
Lender
and
W-BROOKFIELD, LLC, DT GLENVIEW, LLC, R-LISLE, LLC, RAD-▇▇▇▇, LLC,
PARSIPPANY, LLC, RAD-▇▇▇▇, LLC, WCHNW, LLC, W-GARDEN ATLANTA, LLC, W-CHARLOTTE,
LLC, and H-MELBOURNE, L.P.
Borrowers
Dated: as of June 28, 1999
Property Locations:
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Wyndham Hotel Northwest Chicago Hilton Inn Radisson ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ One Hilton Court ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Doubletree Guest Suites Radisson Hotel Wyndham Garden
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Radisson Inn Naperville-Lisle Wyndham Garden Brookfield Hilton Inn Melbourne Airport
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Wyndham Garden ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ (@ ▇▇▇▇▇▇▇▇▇)
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Shapiro, Shapses, Block LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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TABLE OF CONTENTS
Section Page
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1. DEFINED TERMS.....................................................1
2. RESTATED NOTE; PAYMENT OF DEBT; INCORPORATION OF COVENANTS........7
3. WARRANTY OF TITLE.................................................8
4. INSURANCE.........................................................9
5. PAYMENT OF TAXES.................................................14
6. TAX AND INSURANCE ESCROW FUND....................................14
7. ANNUAL BUDGET; REPLACEMENT RESERVE; REPAIR ESCROW................15
8. CONDEMNATION.....................................................17
9. LEASES AND RENTS.................................................19
10. REPRESENTATIONS CONCERNING LOAN..................................22
11. SINGLE PURPOSE ENTITY; AUTHORIZATION.............................24
12. MAINTENANCE OF MORTGAGED PROPERTY................................25
13. TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY................26
14. ESTOPPEL CERTIFICATES; AFFIDAVITS................................28
15. CHANGES IN THE LAWS REGARDING TAXATION...........................28
16. NO CREDITS ON ACCOUNT OF THE DEBT................................29
17. DOCUMENTARY STAMPS...............................................29
18. CONTROLLING AGREEMENT............................................29
19. BOOKS AND RECORDS................................................30
20. PERFORMANCE OF OTHER AGREEMENTS..................................31
21. FURTHER ASSURANCES; RIGHT TO SPLIT AND PARTICIPATE
THE LOAN.........................................................31
22. RECORDING OF MORTGAGE............................................32
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23. REPORTING REQUIREMENTS...........................................32
24. EVENTS OF DEFAULT................................................32
25. SERVICING FEES...................................................35
26. RIGHT TO CURE DEFAULTS...........................................35
27. REMEDIES.........................................................35
28. RIGHT OF ENTRY...................................................39
29. SECURITY AGREEMENT...............................................39
30. ACTIONS AND PROCEEDINGS..........................................40
31. WAIVER OF SETOFF AND COUNTERCLAIM................................40
32. CONTEST OF CERTAIN CLAIMS........................................40
33. RECOVERY OF SUMS REQUIRED TO BE PAID.............................41
34. MARSHALLING AND OTHER MATTERS....................................41
35. HAZARDOUS SUBSTANCES.............................................41
36. ASBESTOS.........................................................42
37. ENVIRONMENTAL MONITORING.........................................43
38. MANAGEMENT OF THE HOTELS.........................................44
39. HANDICAPPED ACCESS...............................................46
40. ERISA............................................................46
41. INDEMNIFICATION..................................................47
42. NOTICE...........................................................48
43. AUTHORITY........................................................48
44. WAIVER OF NOTICE.................................................49
45. REMEDIES OF BORROWER.............................................49
46. SOLE DISCRETION OF LENDER........................................49
47. NON-WAIVER.......................................................49
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48. NO ORAL CHANGE...................................................50
49. JOINT AND SEVERAL LIABILITY......................................50
50. INAPPLICABLE PROVISIONS..........................................50
51. SECTION HEADINGS.................................................50
52. COUNTERPARTS.....................................................50
53. CERTAIN DEFINITIONS..............................................50
54. HOMESTEAD........................................................51
55. ASSIGNMENTS......................................................51
56. SUBMISSION TO JURISDICTION.......................................51
57. AGENT FOR RECEIPT OF PROCESS.....................................51
58. SERVICE OF PROCESS...............................................51
59. WAIVER OF JURY TRIAL.............................................52
60. CHOICE OF LAW....................................................52
61. RELEASE OF PORTIONS OF THE MORTGAGED PROPERTY....................52
62. LIMITATIONS ON RECOURSE..........................................53
63. DEBT SERVICE COVERAGE TEST.......................................53
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LOAN AGREEMENT
This LOAN AGREEMENT dated as of June 28, 1999, between W-BROOKFIELD, LLC,
DT GLENVIEW, LLC, R-LISLE, LLC, RAD-▇▇▇▇, LLC, PARSIPPANY, LLC, RAD-▇▇▇▇, LLC,
WCHNW, LLC, W-GARDEN ATLANTA, LLC, W-CHARLOTTE, LLC, each a Delaware limited
liability company, and H-MELBOURNE, L.P., a Delaware limited partnership, each
having its principal place of business at c/o Wyndham International, Inc., ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (collectively, "Borrower"),
and ▇▇▇▇▇▇ BROTHERS HOLDINGS INC., a Delaware corporation with offices at 3
World Financial Center, New York, New York 10285 ("Lender").
W I T N E S S E T H:
WHEREAS, Lender is concurrently herewith making a loan to Borrower in the
original principal amount of $235,000,000.00 (the "Loan") secured by a mortgage,
deed of trust or deed to secure debt lien on, and security interest in,
Borrower's interest in and to the real and personal property comprising the
hotels listed on the attached Schedule A;
WHEREAS, the Loan is evidenced by a certain Mortgage Note dated the date
hereof made by Borrower in favor of Lender (the "Note") and secured by, among
other things, certain mortgage, deed of trust or deed to secure debt instruments
dated as of the date hereof and encumbering the Mortgaged Property
(collectively, the "Mortgage"; the Note, the Mortgage, this Agreement and all
other documents executed or delivered in connection with the Loan, collectively,
the "Loan Documents"); and
WHEREAS, Lender and Borrower have agreed to enter into this Loan Agreement
to memorialize their understanding regarding their respective rights and
obligations in respect of the Loan.
NOW, THEREFORE, in consideration of the making of the Loan and the
covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereby covenant, agree, represent and warrant as follows:
1. Defined Terms
The following terms shall have the following meanings:
(a) "Access Laws" has the meaning set forth in Section 39 hereof.
(b) "Asbestos" has the meaning set forth in Section 36 hereof.
(c) "Assignment" has the meaning set forth in Section 2 hereof.
(d) "Borrower" has the meaning set forth in the preamble to this Agreement.
(e) "Budget" means the budget for the use and application of the Loan and
gross revenues derived from the operation of the Mortgaged Property, including
all expenses thereof, as more particularly set forth in Exhibit A hereto with
respect to the balance of the current
calendar year, and thereafter the annual budget for each subsequent calendar
year for so long as any portion of the Debt remains outstanding.
(f) "Capital Expenses" means all payments for any fixed assets or
improvements, or for replacements, substitutions or additions thereto, that have
a useful life of more than one year and that are required to be capitalized
consistent with accounting methods employed by Borrower for the Mortgaged
Property.
(g) "Capture Event" shall have the meaning set forth in Schedule B hereof.
(h) "Cash Flow Capture" shall have the meaning set forth in Schedule B
hereof.
(i) "Collateral" has the meaning set forth in Section 29 hereof.
(j) "Condemnation" has the meaning set forth in Section 8 hereof.
(k) "Contribution Agreement" means that certain Contribution Agreement
dated as of the date hereof among the entities comprising Borrower.
(l) "Debt" means the outstanding principal balance of the Note from time to
time, with all accrued and unpaid interest thereon, and all other sums now or
hereafter due under the Loan Documents.
(m) "Debt Service Coverage Ratio" shall mean the ratio of: (i) the NOI
produced by the operation of the Mortgaged Property during the 12 calendar month
period immediately preceding the calculation to (ii) the payments of interest
due under this Loan Agreement and the Note for the same 12 calendar month
period.
(n) "Default Rate" means the rate of interest payable from and after the
occurrence of an Event of Default, as more particularly described in the Note;
provided, however, that with respect to an Event of Default of the type
described in Section 24(a) hereof, such rate of interest shall apply from and
after the date on which any such payment is due, without any period of grace or
cure, as more particularly described in the Note.
(o) "Determination Date" shall have the meaning set forth in Schedule B
hereof.
(p) "DSCNOI" shall have the meaning set forth in, Schedule B hereof.
(q) "DSC Quarter" shall have the meaning set forth in Schedule B hereof.
(r) "DSC Ratio" shall have the meaning set forth in Schedule B hereof.
(s) "Environmental Agreement" has the meaning set forth in Section 2
hereof.
(t) "Environmental Laws" has the meaning set forth in Section 35 hereof.
(u) "Environmental Reports" means those reports obtained by or delivered to
Lender regarding the environmental condition of the Mortgaged Property.
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(v) "Equipment" means all machinery, furnishings, equipment, fixtures
(including, without limitation, all heating, air conditioning, plumbing,
lighting, communications and elevator fixtures), inventory and articles of
personal property and accessions thereto and renewals, replacements thereof and
substitutions therefor (including, without limitation, beds, bureaus,
chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables, rugs,
carpeting, drapes, draperies, curtains, shades, venetian blinds, screens,
paintings, hangings, pictures, divans, couches, luggage carts, luggage racks,
stools, sofas, chinaware, linens, pillows, blankets, glassware, foodcarts,
cookware, dry cleaning facilities, dining room wagons, keys or other entry
systems, bars, bar fixtures, liquor and other drink dispensers, icemakers,
radios, clock radios, television sets, intercom and paging equipment, electric
and electronic equipment, dictating equipment, private telephone systems,
medical equipment, potted plants, heating, lighting and plumbing fixtures, fire
prevention and extinguishing apparatus, cooling and air-conditioning systems,
elevators, escalators, fittings, plants, apparatus, stoves, ranges,
refrigerators, laundry machines, tools, machinery, engines, dynamos, motors,
boilers, incinerators, switchboards, conduits, compressors, vacuum cleaning
systems, floor cleaning, waxing and polishing equipment, call systems, brackets,
electrical signs, bulbs, bells, fuel, conveyors, cabinets, lockers, shelving,
spotlighting equipment, dishwashers, garbage disposals, washer and dryers),
other customary hotel equipment and other property of every kind and nature,
whether tangible or intangible, whatsoever owned by Borrower, or in which
Borrower has or shall have an ownership interest, now or hereafter located upon
the Premises and the Improvements, or appurtenant thereto, and usable in
connection with the present or future operation and occupancy of the Premises
and the Improvements and all building equipment, materials and supplies of any
nature whatsoever owned by Borrower, or in which Borrower has or shall have an
ownership interest (but only to the extent of such ownership interest), now or
hereafter located upon the Premises and the Improvements, or appurtenant
thereto, or usable in connection with the present or future operation, enjoyment
and occupancy of the Premises and the Improvements.
(w) "ERISA" has the meaning set forth in Section 40 hereof.
(x) "Event of Default" has the meaning set forth in Section 24 hereof.
(y) "Expenses" means the aggregate of the following items actually paid by
Borrower during the 12 month period ending one month prior to the date on which
the NOI is to be calculated (except that Capital Expenses and reserves set forth
in subsection (viii) below shall be adjusted by Lender in accordance with
Lender's then-prevailing credit standards with respect to such matters to
reflect projected adjustments for the subsequent 12 month period beginning on
the date on which the NOI is to be calculated):
(i) Taxes and Other Charges;
(ii) sales, use and personal property taxes;
(iii) management fees at the rate of the greater of: (A) the actual
management fees charged in respect of management of the Mortgaged Property;
and (B) three (3%) percent of the gross income derived from the operation
of the Mortgaged Property and reimbursement for certain expenses of Manager
in accordance with the Management Agreement;
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(iv) wages, salaries, pension costs and all fringe and other
employee-related benefits and expenses;
(v) franchise fees and other amounts due under the Franchise
Agreement;
(vi) Insurance Premiums;
(vii) the cost of utilities, and all other administrative, management,
ownership, operating, leasing, marketing, repair and maintenance expenses
incurred in connection with the operation of the Mortgaged Property;
(viii) the cost of necessary repair or replacement of existing
improvements on the Mortgaged Property with repairs or replacements of like
kind and quality or such kind or quality that is necessary to maintain the
Mortgaged Property to the same standards as competitive properties of
similar size and location to the Mortgaged Property or that are required
under the Franchise Agreement, together with adequate reserves for the
repair and replacement of capital improvements on the Mortgaged Property;
(ix) the cost of replacement of Equipment with Equipment of like kind
and quality or of such kind or quality that is necessary to maintain the
Mortgaged Property to the same standards as competitive properties of
similar size and location to the Mortgaged Property or that are required
under the Franchise Agreement; and
(x) the cost of any other maintenance materials, HVAC repairs, parts
and supplies, and equipment.
Amounts deposited with Lender to be held in escrow pursuant to the Loan
Documents shall be deemed Expenses only to the extent characterized as such on
Borrower's books, in accordance with Borrower's accrual basis accounting
practices, in respect of the obligation for which it was deposited.
(z) "Franchise Agreement" means, collectively, the franchise agreements set
forth on Schedule A hereto (or such franchise agreements entered into from and
after the date hereof in accordance with the terms hereof) pursuant to which
Borrower has the right to operate the hotels located on the Mortgaged Property
under a name and/or hotel system controlled by such franchisor.
(aa) "Franchisor" means, for each of the individual hotels comprising the
Mortgaged Property, the franchisor under the respective Franchise Agreement.
(bb) "Guarantor" means any guarantor of all or any part of the Debt.
(cc) "Hazardous Substances" has the meaning set forth in Section 35 hereof.
(dd) "Improvements" means the buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter located on the Premises.
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(ee) "Institutional Lender" has the meaning set forth in Section 13(b)
hereof.
(ff) "Insurance Premiums" has the meaning set forth in Section 4(d) hereof.
(gg) "Insured Casualty" has the meaning set forth in Section 4(e)(ii)
hereof.
(hh) "Intangible" means, without limitation, all accounts, escrows,
documents, instruments, chattel paper, claims, deposits and general intangibles,
as such terms are defined in the Uniform Commercial Code, and all contract
rights, franchises, books, records, appraisals, architects and engineering
plans, specifications, environmental and other reports relating to the Premises,
trademarks, trade names, symbols, permits, licenses (to the extent assignable),
approvals, actions, tenant or guest lists, correspondence with present and
prospective purchasers, tenants, guests and suppliers, advertising materials and
telephone exchange numbers as identified in such materials, refunds of real
estate taxes and assessments and causes of action which now or hereafter relate
to, are derived from or are used in connection with the Premises, or the use,
operation, maintenance, occupancy or enjoyment thereof or the conduct of any
business or activities thereon.
(ii) "Leases" means all leases and other agreements affecting the use,
enjoyment or occupancy of the Premises or the Improvements heretofore or
hereafter entered into (including, without limitation, subleases, licenses,
concessions, tenancies and other occupancy agreements covering or encumbering
all or any portion of the Premises), together with any guarantees, supplements,
amendments, modifications, extensions and renewals of any thereof, and all
additional remainders, reversions, and other rights and estates appurtenant
thereto. Arrangements for transient hotel use of guest rooms and meeting
facilities shall not constitute Leases.
(jj) "Lender" has the meaning set forth in the preamble to this Agreement.
(kk) "Loan" has the meaning set forth in the recitals of this Agreement.
(ll) "Loan Documents" has the meaning set forth in the recitals of this
Agreement.
(mm) "Loan-to-Value Ratio" means the ratio of (i) the Debt, plus all other
debt (or other liquidated economic obligations) which are then outstanding and
secured by the Mortgaged Property, to (ii) the appraised value of the Mortgaged
Property as estimated by an appraiser reasonably acceptable to Lender. Any
appraisal for purposes of calculating the Loan-to-Value Ratio shall be performed
in accordance with the then-approved standards under the Financial Institutions
Reform, Recovery and Enforcement Act of 1989, as amended (FIRREA).
(nn) "Lockbox Account" has the meaning set forth in Section 7 hereof.
(oo) "Lockbox Agreement" means that certain Security Agreement and Lockbox
Agreement among Borrower, Lender and Servicer, dated as of the date hereof.
(pp) "Management Agreement" means, collectively, the Management and
Operating Agreements more particularly set forth on Schedule A hereto pursuant
to which the managers identified therein operate the Mortgaged Property as
hotels.
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(qq) "Maturity Date" means the Applicable Maturity Date (as such term is
defined in the Note).
(rr) "Mortgaged Property" shall mean the Premises, all real and personal
property located on or related to the Premises, including without limitation,
the Collateral, Equipment, Improvements, Intangibles, Rents, Condemnation
awards, insurance proceeds, tradenames, trademarks, servicemarks, logos,
copyrights, goodwill, books and records, all refunds, rebates or credits in
connection with a reduction in real estate taxes and assessments charged against
the Premises as a result of tax certiorari or any applications or proceedings
for reduction, all agreements, contracts, certificates, instruments, franchises,
permits, licenses, plans, specifications and other documents, now or hereafter
entered into, and all proceeds, substitutions and replacements thereof.
(ss) "NOI" means, for any period, the Rents and other gross revenues
derived from the operation of the Mortgaged Property for such period, less
Expenses for such period, adjusted as Lender deems reasonably necessary to
reflect the actual net operating income of the Mortgaged Property in accordance
with Lender's then-prevailing credit standards with respect to such matters. NOI
shall include only Rents and such other income, including any rent loss,
business interruption or business income insurance proceeds, vending or
concession income, late fees, forfeited security deposits and other
miscellaneous tenant charges and Expenses characterized as such on Borrower's
books, in accordance with Borrower's accrual basis accounting for the period for
which the NOI is being calculated, as set forth on operating statements
satisfactory to Lender. NOI shall be calculated on an accrual basis in
accordance with generally accepted accounting principles consistently applied,
based on the Uniform System of Accounts.
(tt) "O&M Plan" has the meaning set forth in Section 36 hereof.
(uu) "Other Charges" has the meaning set forth in Section 5 hereof.
(vv) "Policies" has the meaning set forth in Section 4(d) hereof.
(ww) "Premises" means, collectively, the real property comprising the
Mortgaged Property, more particularly described on Exhibit A to each of
instruments comprising the Mortgage.
(xx) "Remedial Work" has the meaning set forth in Section 37 hereof.
(yy) "Rents" means all income, rents, room rates, issues, profits, revenues
(including oil and gas or other mineral royalties and bonuses), deposits and
other benefits from the Mortgaged Property including, without limitation, all
revenues and credit card receipts collected from guest rooms, restaurants, bars,
,mini-bars, meeting rooms, banquet rooms and recreational facilities and
otherwise, 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 possession, use or occupancy of all or any portion of the Mortgaged
Property or personalty located thereon, or rendering of services by Borrower or
any operator or manager of the hotels or the commercial space located in the
Improvements or acquired from others including, without limitation, from the
rental of any office space, retail space, commercial space, guest room or other
space, halls, stores or offices,
6
including any deposits securing reservations of such space, exhibit or sales
space of every kind, 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 relating to the use, enjoyment or
occupancy of the Mortgaged Property. Notwithstanding anything herein to the
contrary, Rents shall not include any: (i) real estate tax credits (or similar
refunds); or (ii) amounts held as security for obligations, in each case which
amounts are to be refunded or applied in the future in the ordinary course of
business in the absence of forfeiture or application in accordance with the
contract terms pursuant to which such amounts are deposited.
(zz) "Repair Agreement" has the meaning set forth in Section 7 hereof.
(aaa) "Repair Escrow" has the meaning set forth in Section 7 hereof.
(bbb) "Replacement Agreement" has the meaning set forth in Section 7
hereof.
(ccc) "Replacement Reserve" has the meaning set forth in Section 7 hereof.
(ddd) "Securities" has the meaning set forth in Section 21 hereof.
(eee) "Servicer" means Lender's servicer, from time to time, of the Loan.
(fff) "Tax and Insurance Escrow Fund" has the meaning set forth in Section
6 hereof.
(ggg) "Taxes" has the meaning set forth in Section 5 hereof.
(hhh) "Total Quarter Debt Service" shall have the meaning set forth in
Schedule B hereof.
(iii) "Uniform Commercial Code" means the Uniform Commercial Code, as
adopted and enacted by the State or States where any of the Mortgaged Property
is located.
(jjj) "Uniform System of Accounts" has the meaning set forth in Section
10(f) hereof.
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Note.
2. Restated Note; Payment of Debt; Incorporation of Covenants
(a) Intentionally omitted.
(b) Intentionally omitted.
(c) Borrower will pay the Debt at the time and in the manner provided in
the Note, the Mortgage and in this Agreement. Payments under the Note and
otherwise in respect of escrows and any other monthly payments required
hereunder and under the Replacement Agreement shall be remitted by Borrower to
Servicer. All such payments made by Borrower shall be applied by Servicer in the
following order of priority:
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(i) first, to fund the Tax and Insurance Escrow Fund;
(ii) next, the balance, if any, to reimburse Lender for any unpaid
costs and expenses incurred by Lender on Borrower's behalf or in the
enforcement of Lender's rights hereunder;
(iii) next, the balance, if any, to the payment of interest due and
payable under the Note;
(iv) next, the balance, if any, to fund the Replacement Reserve to the
extent required under Section 7(b) hereof; and
(v) the balance, if any, to the reduction of the outstanding principal
balance of the Loan.
(d) Anything herein to the contrary notwithstanding, the DSC Ratio of the
Mortgaged Property shall be calculated by Lender within 45 days after the end of
each calendar quarter. As more particularly described in Schedule B hereof, upon
the occurrence of a Capture Event the monies otherwise distributable to Borrower
under subsection (c)(v) of this Section shall instead be paid over to Lender for
application in reduction of the outstanding principal balance of the Loan.
(e) All the covenants, conditions and agreements contained in the Note, the
Mortgage, this Agreement, the Assignment of Leases and Rents dated as of the
date hereof from Borrower to Lender (the "Assignment"), the Environmental
Indemnity Agreement dated as of the date hereof among Lender, Borrower, Wyndham
International, Inc. (the "Environmental Agreement") and the other Loan Documents
are hereby made a part of this Agreement to the same extent and with the same
force and effect as if fully set forth herein.
3. Warranty of Title
Borrower represents and warrants that each entity comprising Borrower has
good and marketable fee simple title to the portion of the Mortgaged Property
owned by it and each has the full power, authority and right to execute, deliver
and perform its obligations under this Agreement and to encumber, mortgage,
give, grant, bargain, sell, alienate, enfeoff, convey, confirm, pledge, assign,
hypothecate and grant a security interest to the extent of its right, title and
interest in and to the portion of the Mortgaged Property held by it and that
each such entity possesses an unencumbered fee estate in the portion of the
Premises and the Improvements owned by it, and that each holds its right, title
and interest in and to the portion of the Mortgaged Property owned by it free
and clear of all liens, encumbrances and charges whatsoever except for those
exceptions accepted by Lender and shown in the title insurance policy insuring
the lien of the Mortgage, and that the Mortgage is and will remain a valid and
enforceable first lien on and security interest in the Mortgaged Property,
subject only to such exceptions and the lien of real estate taxes and
assessments not yet due and payable. Borrower shall forever warrant, defend and
preserve such title and the validity and priority of the lien of the Mortgage
and shall forever warrant and defend such title, validity and priority to Lender
against the claims of all persons whomsoever.
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4. Insurance
(a) Borrower, at its sole cost and expense, will keep the Mortgaged
Property insured during the entire term of this Agreement for the mutual benefit
of Borrower and Lender against loss or damage by fire and against loss or damage
by other risks and hazards covered by a standard extended coverage insurance
policy including, without limitation, riot and civil commotion, vandalism,
malicious mischief, burglary and theft. The insurance policy shall contain
option perils and income loss endorsements and if any of the Improvements or the
use of the Mortgaged Property shall at any time constitute legal non-conforming
structures or uses, a law or ordinance endorsement. Such insurance shall be in
an amount: (i) equal to the lesser of: (A) the original principal amount of the
Loan (in no event less than the minimum amount required to compensate for damage
or loss on a replacement cost basis), and (B) the then full replacement cost of
the Improvements and the Equipment, without deduction for physical depreciation;
provided, however, that such insurance shall be in an amount such that the
insurer would not deem Borrower a co-insurer under such policies. The deductible
in respect of such insurance shall not exceed $250,000.00. Unless such premiums
are deposited in escrow pursuant to Section 6 of this Agreement, the premiums
for the insurance carried in accordance with this Section shall be paid annually
in advance and each policy shall contain the "Replacement Cost Endorsement" with
a waiver of depreciation.
(b) Borrower shall also obtain and maintain during the entire term of this
Agreement, at its sole cost and expense, for the mutual benefit of Borrower and
Lender, the following policies of insurance:
(i) Flood insurance if any part of the Mortgaged Property is currently
or at any time in the future located in an area identified by the Federal
Emergency Management Agency as an area having special flood hazards and in
which flood insurance has been made available under the National Flood
Insurance Act of 1968 (and any amendment or successor act thereto) in an
amount at least equal to the lesser of: (A) the release price for such
portion of the Mortgaged Property specified-on Schedule A hereto; and (B)
the maximum limit of coverage available with respect to the Improvements
and the Equipment under such Act.
(ii) Comprehensive public liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and "Dram shop" or other liquor liability
coverage if alcoholic beverages are sold from or may be consumed at the
Mortgaged Property, and containing minimum limits per occurrence of
$5,000,000.00 for the Premises and the Improvements, except that if the
Mortgaged Property contains a swimming or health club facility, or if any
buildings at the Mortgaged Property contain 6 or more stories, the minimum
limits per occurrence shall be $50,000,000.00 for the Premises and the
Improvements, or such greater amount as may be required under the Franchise
Agreement.
(iii) Rental loss insurance in an amount equal to the aggregate annual
amount of all rents and additional rents payable by all of the tenants
under the Leases (whether or not such Leases are terminable in the event of
a fire or casualty), such rental loss insurance to cover rental losses for
a period of at least one year after the date of the fire or
9
casualty in question. The amount of such rental loss insurance shall be
increased from time to time during the term of this Agreement as and when
new Leases and renewal Leases are entered into in accordance with the terms
of this Agreement, to reflect all increased rent and increased additional
rent payable by all of the tenants under such renewal Leases and all rent
and additional rent payable by all of the tenants under such new Leases.
(iv) Business income insurance: (A) with loss payable to Lender; (B)
covering all risks required to be covered by the insurance provided for in
Section 4(a); (C) containing an extended period of indemnity endorsement
which provides that after the physical loss to the Improvements and all
personal property has been repaired, the continued loss of income will be
insured until such income either returns to the same level it was at prior
to the loss, or the expiration of 12 months from the date of the loss,
whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period; and (D) in an amount equal to the sum of
Expenses and NOI, in each case for the preceding full calendar year. 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) of
this subsection. All insurance proceeds payable to Lender pursuant to this
Section shall be held by Lender and shall be applied to the obligations
secured hereunder from time to time due and payable hereunder and under the
Note; provided, however, that, unless an Event of Default has occurred and
is continuing, proceeds in excess of such obligations shall be released to
Borrower to cover on-going costs of operation of the affected portion of
the Mortgaged Property; provided, further, however, that nothing herein
contained shall be deemed to relieve Borrower of its obligations to pay the
obligations secured hereunder on the respective dates of payment provided
for in the Note except to the extent such amounts are actually and timely
paid out of the proceeds of such business income insurance;
(v) Insurance, in an amount equal to the lesser of $2,000,000, or 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.
(vi) Worker's compensation insurance with respect to any employees of
Borrower, as required by any governmental authority or legal requirement.
(vii) Motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum limits
per occurrence of $5,000,000 or such greater amount as may be required
under the Franchise Agreement.
(viii) A blanket fidelity bond and errors and omissions insurance
coverage insuring against losses resulting from dishonest or fraudulent
acts committed by: (A) Borrower's personnel; and (B) temporary contract
employees or student interns.
(ix) Earthquake insurance (including subsidence) covering the portion
of the Mortgaged Property known as the Radisson Hotel in San Jose,
California.
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(x) Such other insurance as may from time to time be reasonably
required by Lender in order to protect its interests in the Mortgaged
Property or as may be required by the Franchise Agreement. In any event,
such other insurance shall be in amounts and covering such risks as are
consistent with the requirements of similar lenders for like properties in
the vicinity of any such property comprising a portion of the Mortgaged
Property for which such other insurance is being required.
(c) Borrower shall increase the amount of insurance required to be provided
hereunder at the time that each such policy is renewed (but, in any event not
less frequently than once during each 12-month period) by using the ▇.▇. ▇▇▇▇▇
Building Index to determine whether there has been an increase in the
replacement cost of the improvement since the most recent adjustment of any such
policy and, if there has been any such increase, the amount of insurance
required to be provided hereunder shall be adjusted accordingly.
(d) All policies of insurance required pursuant to this Section
(collectively, the "Policies") shall: (i) be issued by an insurer with an "A"
rating or better for claims paying ability by ▇▇▇▇▇'▇ Investors Service, Inc.
and Standard & Poor's Rating Group, or a general policy rating of "A" or better
and a financial class of VIII or better assigned by A.M. Best Company, Inc.;
(ii) contain a standard noncontributory mortgagee clause naming Lender as the
person to which all payments made by such insurance company shall be paid; (iii)
be maintained throughout the term of this Agreement without cost to Lender; (iv)
be assigned and delivered to Lender; (v) contain such provisions as Lender deems
reasonably necessary or appropriate to protect its interest including, without
limitation, endorsements providing that neither Borrower, Lender nor any other
party shall be a co-insurer thereunder, and that Lender shall receive at least
30 days prior written notice of any modification, reduction or cancellation; and
(vi) be satisfactory in form and substance to Lender, and be approved by Lender,
acting reasonably, as to amounts, form, risk coverage, deductible, loss payees
and insureds. Borrower shall pay the premiums for the Policies (the "Insurance
Premiums") as they become due and payable. Not later than 30 days prior to the
expiration date of each of the Policies, Borrower will deliver to Lender
satisfactory evidence of the renewal of each Policy.
(e) If a material portion of the Mortgaged Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty, Borrower shall give
prompt notice thereof to Lender.
(i) In the case of a loss covered by Policies, Lender may settle and
adjust for a reasonable amount any claim with the reasonable consent of
Borrower for losses in excess of $350,000.00 per property comprising a
portion of the Mortgaged Property and shall allow Borrower to adjust losses
aggregating not in excess of $350,000.00. Each of such adjustments shall be
carried out in a commercially reasonable and timely manner, and provided in
any case that Lender shall be, and is hereby, authorized to collect and
receipt for any such insurance proceeds and make such proceeds available to
Borrower for restoration of the Mortgaged Property in accordance with the
terms hereof. The reasonable expenses incurred by Lender in the adjustment
and collection of insurance proceeds shall become part of the Debt, shall
be secured by the Mortgage and shall be reimbursed by Borrower to Lender on
demand.
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(ii) In the event of any insured damage to or destruction of the
Mortgaged Property or any part thereof (an "Insured Casualty") where: (A)
the proceeds of insurance plus any additional funds deposited by Borrower
with Lender are sufficient to enable Borrower to fully restore the
Mortgaged Property; (B) the term of, and proceeds derived from, Borrower's
business interruption insurance (or other similar insurance) are reasonably
anticipated to be sufficient to cover the period that the Mortgaged
Property is undergoing restoration; (C) Lender determines that the
restoration is reasonably capable of being completed, and is actually
completed, at least 6 months prior to the Maturity Date; (D) the
Loan-to-Value Ratio upon completion of restoration is estimated, by an
appraiser acceptable to Lender, acting reasonably, to be no greater than
0.75:1.0; (E) the Franchise Agreement has not been, and cannot be,
terminated as a result of the Insured Casualty (provided, however, Borrower
may, under such circumstances, replace the respective Franchisor with
another franchisor subject to Lender's reasonable approval, it being agreed
that Lender's approval may be reasonably withheld if such proposed
franchisor replacement could reasonably result in any downgrade, withdrawal
or qualification of the current rating of any Securities (or if Securities
have not yet been issued, would reasonably result in any downgrade,
withdrawal or qualification of the anticipated rating thereof)); (F) the
restoration can be completed within 15 months from the date that the
Insured Casualty occurred (subject to force majeure including labor and
material shortages), or within such shorter time period as may be required
by the existing Franchise Agreement or such Franchise Agreement entered
into with a replacement Franchisor permitted pursuant to subsection (E)
hereof; (G) the restoration is permitted or required under the existing
Franchise Agreement or such Franchise Agreement entered into with a
replacement Franchisor permitted pursuant to subsection (E) hereof, and (H)
the Debt Service Coverage Ratio for the 12 calendar month period following
completion is reasonably anticipated to be at least 1.65:1.0, then, if no
Event of Default shall have occurred and be continuing, the proceeds of
insurance shall be applied to pay directly or reimburse Borrower for the
cost of restoring, repairing, replacing or rebuilding the Mortgaged
Property or the part thereof subject to the Insured Casualty, as provided
for below; and Borrower hereby covenants and agrees thereafter promptly to
commence and diligently to prosecute such restoring, repairing, replacing
or rebuilding. NOI for purposes of this calculation shall be NOI for the 12
calendar month period immediately preceding the casualty, unless the
appraiser referenced in clause (D) above estimates that NOI after the
restoration will be more than ten (10%) percent less than NOI for such 12
calendar month period, in which case the Debt Service Coverage Ratio shall
be calculated using the appraiser's estimate of NOI.
(iii) Except as provided above, the proceeds of insurance collected
upon any Insured Casualty shall, at the option of Lender in its sole
discretion, acting reasonably, be applied to the payment of the Debt or
applied to pay directly or reimburse Borrower for the cost of restoring,
repairing, replacing or rebuilding the Mortgaged Property or the part
thereof subject to the Insured Casualty, in the manner set forth below. Any
such application to the Debt shall not be considered a voluntary prepayment
requiring payment of the deferred financing fees provided in the Note,
except that if an Event of Default has occurred, then such application
shall be subject to the deferred financing fees computed in accordance with
the Note, if any. In no case shall any such application reduce or
12
postpone any payments otherwise required pursuant to the Note, other than
the final payment on the Note.
(iv) In the event that proceeds of insurance, if any, shall be made
available to Borrower for the restoring, repairing, replacing or rebuilding
of the Mortgaged Property, Borrower hereby covenants to restore, repair,
replace or rebuild the Mortgaged Property to be, to the extent commercially
feasible and legally possible, of at least equal value and of substantially
the same character as prior to such damage or destruction, all to be
effected in accordance with applicable law and plans and specifications
approved in advance by Lender and otherwise in accordance with the
requirements of the Franchise Agreement, if any; provided, however, that
Borrower shall pay all costs (and if required by Lender, shall deposit the
total thereof with Lender in advance) of such restoring, repairing,
replacing or rebuilding in excess of the net proceeds of insurance made
available pursuant to the terms hereof.
(v) In the event Borrower is entitled to have costs paid directly or
to reimbursement out of insurance proceeds held by Lender, such proceeds
shall be disbursed from time to time upon Lender being furnished with: (A)
evidence reasonably satisfactory to it of the estimated cost of completion
of the restoration, repair, replacement and rebuilding; (B) funds, or, at
Lender's option, assurances reasonably satisfactory to Lender that such
funds are available, sufficient in addition to the proceeds of insurance to
complete the proposed restoration, repair, replacement and rebuilding; and
(C) such architect's certificates, waivers of lien for work previously
performed or contemporaneously funded, contractor's sworn statements, title
insurance endorsements, bonds, plats of survey and such other reasonable
evidences of cost, payment and performance as Lender may reasonably require
and approve. Lender may, in any event, require that all plans and
specifications for such restoration, repair, replacement and rebuilding be
submitted to and approved by Lender prior to commencement of work (which
approval shall not be unreasonably withheld or delayed). No payment made
prior to the final completion of the restoration, repair, replacement and
rebuilding shall exceed ninety (90%) percent of the value of the work
performed from time to time; provided, however, if any contractor or
supplier is performing restoration, repair, replacement or rebuilding work
under a written contract requiring periodic payments or advance deposits,
and Lender has given its prior written approval of such payment
arrangements or advance deposits (if such approval is required to be
obtained), then payment may be made after completion of a discrete and
severable portion of such restoration, repair, replacement or rebuilding
work in accordance with such contract. Funds other than proceeds of
insurance shall be disbursed prior to disbursement of such proceeds, and at
all times the undisbursed balance of such proceeds remaining in Lender's
possession, together with funds deposited for that purpose or available to
the reasonable satisfaction of Lender by or on behalf of Borrower for that
purpose, shall be at least sufficient in the reasonable judgment of Lender
to pay for the cost of completion of the restoration, repair, replacement
or rebuilding, free and clear of all liens and claims of lien. Any surplus
which may remain out of insurance proceeds held by Lender after payment of
such costs of restoration, repair, replacement or rebuilding shall be
delivered to Borrower, provided such restoration was performed
substantially in accordance with the provisions of this Section and
Borrower is not then in default of its obligations under the Loan
Documents.
13
(f) Borrower shall not carry separate insurance, concurrent in kind or form
or contributing in the event of loss, with any insurance required under this
Section. Notwithstanding the foregoing, Borrower may carry insurance not
required under this Agreement, provided any such insurance affecting the
Mortgaged Property shall be for the mutual benefit of Borrower and Lender, as
their respective interests may appear, and shall be subject to all other
provisions of this Section.
(g) Any insurance coverages required hereunder may be carried under a
blanket policy which covers property other than the Mortgaged Property.
5. Payment of Taxes
Borrower shall pay all taxes, assessments, water rates and sewer rents, now
or hereafter levied, assessed or imposed against the Mortgaged Property or any
part thereof (collectively, the "Taxes") and all ground rents, maintenance
charges, other governmental impositions, and other charges including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Premises, now or hereafter levied, assessed or
imposed against the Mortgaged Property or any part thereof (collectively, the
"Other Charges") prior to delinquency. Borrower will deliver to Lender evidence
satisfactory to Lender that the Taxes and, upon request of Lender, Other Charges
have been so paid, or are not then delinquent, no later than 30 days following
the date on which the Taxes and/or Other Charges would otherwise be delinquent
if not paid; provided, however, that for so long as Lender shall pay Taxes from
funds escrowed by Borrower for such purpose, Borrower shall not be required to
pay or furnish Lender with evidence of such payment. Borrower shall not suffer,
and shall promptly cause to be paid or discharged vis-a-vis bond otherwise in
accordance with Section 32 hereof, any lien or charge whatsoever which has
become a lien or charge against the Mortgaged Property, and shall promptly pay
for all utility services provided to the Mortgaged Property. Borrower shall
furnish to Lender or its designee receipts for the payment of the Taxes, Other
Charges and, upon Lender's request, charges for utility services prior to the
date that such obligations shall become delinquent. Borrower shall be entitled
to contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount of any Taxes or Other Charges.
Notwithstanding the preceding sentence, during the pendency of any such contest
Borrower shall pay or cause to be paid all Taxes and Other Charges as and when
due and payable, or otherwise in accordance with Section 32 hereof.
6. Tax and Insurance Escrow Fund
Borrower shall pay to Lender on the first day of each calendar month: (a)
one-twelfth of an amount which would be sufficient to pay the Taxes payable, or
estimated by Lender to be payable, during the next ensuing 12 months; and (b)
one-twelfth of an amount which would be sufficient to pay the Insurance Premiums
due for the renewal of the coverage afforded by the Policies upon the expiration
thereof (the amounts described in clauses (a) and (b) above, collectively, the
"Tax and Insurance Escrow Fund"); provided, however, that if Borrower insures
any portion of the Mortgaged Property under a blanket policy of insurance, then
the escrow for the Insurance Premiums shall be calculated only upon the portion
of such premiums which cover the Mortgaged Property. The Tax and Insurance
Escrow Fund and the monthly installments of principal and interest payable under
the Note shall be added together and shall be paid as an
14
aggregate sum by Borrower to Lender. Borrower hereby pledges to Lender any and
all monies now or hereafter deposited in the Tax and Insurance Escrow Fund as
additional security for the payment of the Debt. Lender will apply the Tax and
Insurance Escrow Fund to payments of Taxes and Insurance Premiums required to be
made by Borrower pursuant to Sections 4 and 5 hereof. If the amount of the Tax
and Insurance Escrow Fund shall exceed the amounts due for Taxes and Insurance
Premiums pursuant to Sections 4 and 5 hereof, Lender shall, in its discretion,
return any excess to Borrower or credit such excess against future payments to
be made to the Tax and Insurance Escrow Fund. If the Tax and Insurance Escrow
Fund is not sufficient to pay the items set forth in clauses (a) and (b) above,
Borrower shall promptly pay to Lender, upon demand, an amount which Lender shall
reasonably estimate as sufficient to make up the deficiency. Upon the occurrence
and during the continuance of an Event of Default, Lender may apply any sums
then comprising the Tax and Insurance Escrow Fund to the payment of the Debt in
any order in its sole discretion. Until expended or applied as above provided,
any amounts in the Tax and Insurance Escrow Fund shall constitute additional
security for the Debt. To the extent permitted by applicable law, the Tax and
Insurance Escrow Fund shall not constitute a trust fund and may be commingled
with other monies held by Lender. The Tax and Insurance Escrow Fund shall be
held in an interest-bearing account and all interest thereon shall accrue for
Borrower's benefit. Funds on deposit with Lender will be invested, subject to
and in accordance with Lender's customary investment practices, to obtain for
Borrower the highest rate of return, given the amounts available for investment
and timing requirements for access to such funds. Borrower shall receive
quarterly statements of interest earned on the Tax and Insurance Escrow Fund.
7. Annual Budget; Replacement Reserve; Repair Escrow
(a) No later than December 1 of each year Borrower shall submit to Lender,
for Lender's approval, a form of Budget for the 12 calendar months succeeding
the term covered by the last approved Budget. Lender's approval of any proposed
Budget shall not be unreasonably withheld or delayed. If Lender's approval or
disapproval is not given prior to December 31, Borrower shall be deemed to be
authorized to operate the Mortgaged Property in accordance with the most
recently approved Budget with each expense line item increased by five (5%)
percent; provided, however, that if Lender does not affirmatively disapprove
such proposed Budget by January 31, the proposed Budget shall be deemed
approved. In any given calendar year, Borrower may, at its option, reallocate
among and between any line items in the Budget an amount equal to up to 10% of
any surplus in any particular line item reasonably anticipated to be available
once all obligations, projects or uses in respect of such line item have been
completed in accordance with the terms of the Budget.
(b) Lender has this day established an interest-bearing reserve account at
a federally-insured institution (the "Replacement Reserve"), the balance of
which shall be maintained and disbursed in accordance with the Replacement
Reserve Agreement dated as of the date hereof between Borrower and Lender (the
"Replacement Agreement"). For the remaining portion of Borrower's current fiscal
year, Borrower shall deposit $393,100.00 monthly into the Replacement Reserve.
Thereafter, Borrower shall deposit with Lender, on the first day of each
calendar month during any given fiscal year, an amount equal to four (4%)
percent of the gross revenues derived from the Mortgaged Property during the
penultimate calendar month immediately preceding the month in which payment is
due. Borrower hereby pledges to Lender
15
any and all monies now or hereafter deposited in the Replacement Reserve as
additional security for the payment of the Debt. All earnings or interest on the
Replacement Reserve shall be and become part of such Replacement Reserve and
shall be disbursed as provided in the Replacement Agreement and in this Section.
(c) Borrower has this day deposited with Lender, and Lender has this day
established, an interest-bearing escrow account at a federally-insured
institution the sum of $13,800,000.00 (the "Repair Escrow") to be maintained and
disbursed in accordance with the Repair Escrow Agreement dated as of the date
hereof between Borrower and Lender (the "Repair Agreement"). Borrower hereby
pledges to Lender any and all monies now or hereafter deposited in the Repair
Escrow as additional security for the payment of the Debt. All earnings or
interest on the Repair Escrow shall be and become part of such Repair Escrow and
shall be disbursed as provided in the Repair Agreement and in this Section.
(d) At Lender's election, upon the occurrence and during the continuance of
an Event of Default, Borrower shall as soon as is practicable, establish and
shall thereafter maintain the following interest-bearing escrow accounts at a
lending institution designated by Lender (collectively, the "Accounts"), each of
which shall be in Servicer's name (except for the Operating Expense Account,
which shall be in Borrower's name), pledged to Lender pursuant to the Loan
Documents as additional security for the Loan:
(i) Lockbox Account, into which shall be paid directly all gross
revenue derived from operation of the Mortgaged Property (the "Lockbox
Account");
(ii) Operating Expense Account, into which shall be deposited
semi-monthly, pursuant to the Budget, proceeds from the Lockbox Account
sufficient for Borrower to discharge the normal and ordinary day-to-day
general operating expenses of the Mortgaged Property for which a separate
Account has not been established (the "Operating Expense Account");
(iii) Interest Account, into which shall be deposited monthly proceeds
from the Lockbox Account in an amount sufficient to satisfy Borrower's
obligations for the regular and periodic monthly payment of interest on the
outstanding principal balance of the Loan (the "Interest Account");
(iv) Tax and Insurance Escrow Account, into which shall be deposited
monthly, pursuant to the Budget, proceeds from the Lockbox Account in an
amount sufficient to satisfy Borrower's obligations under Section 6 hereof
(the "Tax and Insurance Escrow Account");and
(v) Security Deposits Account, into which shall be deposited all cash
sums held by Borrower as security deposits under tenant leases (the
"Security Deposits Account").
(e) Servicer, as Lender's agent, shall have sole signatory authority with
respect to any and all withdrawals from the Accounts, except for the Operating
Expense Account with respect to which Borrower shall have sole signatory
authority. All such withdrawals shall be made solely in accordance with the
Budget, and by this instrument Borrower does hereby irrevocably
16
authorize and direct Servicer to make all such withdrawals on Borrower's behalf
to satisfy Borrower's obligations hereunder.
8. Condemnation
(a) Borrower shall promptly give Lender written notice of the actual or
threatened commencement of any condemnation or eminent domain proceeding (a
"Condemnation") and shall deliver to Lender copies of any and all papers served
in connection with 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 or payment for such Condemnation and to
make any reasonable compromise or settlement in connection with such proceeding,
subject to the provisions of this Agreement. Notwithstanding any taking by any
public or quasi-public authority through eminent domain or otherwise (including,
without limitation, 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 in the Note, the Mortgage, this Agreement, the
Assignment, the Environmental Agreement and the other Loan Documents, and the
Debt shall not be reduced until any award or payment therefor shall have been
actually received after expenses of collection and applied by Lender to the
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 in the Note.
(b) If the Mortgaged Property shall be the subject of a Condemnation, in
whole or in part, Borrower shall give prompt notice thereof to Lender.
(i) In the case of a Condemnation, Lender may settle and adjust any
claim with the reasonable consent of Borrower for losses in excess of
$350,000.00 per property comprising a portion of the Mortgaged Property and
shall Borrower to adjust losses aggregating not in excess of $350,000.00.
Each of such adjustments shall be carried out in a commercially reasonable
and timely manner, and provided in any case that Lender shall be, and is
hereby, authorized to collect and receipt for any such Condemnation award
or proceeds. The reasonable expenses incurred by Lender in the adjustment
and collection of a Condemnation award or proceeds shall become part of the
Debt, shall be secured by the Mortgage and shall be reimbursed by Borrower
to Lender on demand.
(ii) In the event of any Condemnation affecting all or any portion of
the Mortgaged Property where: (A) the Condemnation award or proceeds plus
any additional funds deposited by Borrower with Lender for this purpose are
sufficient to enable Borrower to fully restore the Mortgaged Property; (B)
the term of, and proceeds derived from, Borrower's business interruption
insurance (or other similar insurance) are reasonably anticipated to be
sufficient to fully cover the period that the Mortgaged Property is
undergoing restoration; (C) Lender determines that the restoration is
reasonably capable of being completed, and is actually completed at least 6
months prior to the Maturity Date; (D) the Loan-to-Value Ratio upon
completion of restoration is estimated, by an appraiser acceptable to
Lender, to be no greater than 0.75:1.0; (E) the Franchise Agreement has not
been, and cannot be, terminated as a result of the Condemnation (provided,
however, Borrower may, under such circumstances, replace the respective
Franchisor with another franchisor subject to Lender's reasonable approval,
it
17
being agreed that Lender's approval may be reasonably withheld if such
proposed franchisor replacement could result in any downgrade, withdrawal
or qualification of the current rating of any Securities (or if Securities
have not yet been issued, would reasonably result in any downgrade,
withdrawal or qualification of the anticipated rating thereof)); (F) the
restoration can be completed within 15 months from the date that the
Condemnation occurred (subject to force majeure including labor and
material shortages), or within such shorter time period as may be required
by the existing Franchise Agreement or such Franchise Agreement entered
into with a replacement Franchisor permitted pursuant to subsection (E)
hereof; (G) the restoration is permitted or required under existing
Franchise Agreement or such Franchise Agreement entered into with a
replacement Franchisor permitted pursuant to subsection (E) hereof; and (H)
the Debt Service Coverage Ratio upon completion is reasonably anticipated
to be at least 1.65:1.0, then, if no Event of Default shall have occurred
and be continuing, the Condemnation award or proceeds shall be applied to
pay directly or reimburse Borrower for the cost of restoring, repairing,
replacing or rebuilding the Mortgaged Property or the part thereof subject
to the Condemnation, as provided for below; and Borrower hereby covenants
and agrees thereafter promptly to commence and diligently to prosecute such
restoring, repairing, replacing or rebuilding. NOI for purposes of this
calculation shall be NOI for the 12 calendar month period immediately
preceding the Condemnation, unless the appraiser referenced in clause (D)
above estimates that NOI after the restoration will be more than ten (10%)
percent less than NOI for such 12 calendar month period, in which case the
Debt Service Coverage Ratio shall be calculated using the appraiser's
estimate of NOI.
(iii) Except as provided above, the award or proceeds collected upon
any Condemnation shall, at the option of Lender in its sole discretion, be
applied to the payment of the Debt or applied to pay directly or reimburse
Borrower for the cost of restoring, repairing, replacing or rebuilding the
Mortgaged Property or the part thereof subject to the Condemnation in the
manner set forth below. Any such application to the Debt shall not be
considered a voluntary prepayment requiring payment of the deferred
financing fees provided in the Note, except that if an Event of Default has
occurred, then such application shall be subject to the deferred financing
fees computed in accordance with the Note, if any. In no case shall any
such application reduce or postpone any payments otherwise required
pursuant to the Note, other than the final payment on the Note.
(iv) In the event that a Condemnation award or proceeds, if any, shall
be made available to Borrower for the restoring, repairing, replacing or
rebuilding of the Mortgaged Property, Borrower hereby covenants to restore,
repair, replace or rebuild the Mortgaged Property to be, to the extent
commercially feasible and legally possible, of at least equal value and of
substantially the same character as prior to such Condemnation, all to be
effected in accordance with applicable law and plans and specifications
approved in advance by Lender; provided, however, that Borrower shall pay
all costs (and if required by Lender, shall deposit the total thereof with
Lender in advance) of such restoring, repairing, replacing or rebuilding in
excess of the net award or proceeds made available pursuant to the terms
hereof.
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(v) In the event Borrower is entitled to reimbursement out of proceeds
held by Lender, such proceeds shall be disbursed from time to time upon
Lender being furnished with: (A) evidence reasonably satisfactory to it of
the estimated cost of completion of the restoration, repair, replacement
and rebuilding; (B) funds, or, at Lender's option, assurances reasonably
satisfactory to Lender that such funds are available, sufficient in
addition to the Condemnation award or proceeds to complete the proposed
restoration, repair, replacement and rebuilding; and (C) such architect's
certificates, waivers of lien for work previously performed or
contemporaneously funded, contractor's sworn statements, title insurance
endorsements, bonds, plats of survey and such other reasonable evidences of
cost, payment and performance as Lender may reasonably require and approve.
Lender may, in any event, require that all plans and specifications for
such restoration, repair, replacement and rebuilding be submitted to and
approved by Lender prior to commencement of work (which approval shall not
be unreasonably withheld or delayed). No payment made prior to the final
completion of the restoration, repair, replacement and rebuilding shall
exceed ninety (90%) percent of the value of the work performed from time to
time; provided, however, if any contractor or supplier is performing
restoration, repair, replacement or rebuilding work under a written
contract requiring periodic payments or advance deposits, and Lender has
given its prior written approval of such payment arrangements or advance
deposits (if such approval is required to be obtained), then payment may be
made after completion of a discrete and severable portion of such
restoration, repair, replacement or rebuilding work in accordance with such
contract. Funds other than the Condemnation award or proceeds shall be
disbursed prior to disbursement of such proceeds, and at all times the
undisbursed balance of such proceeds remaining in Lender's possession,
together with funds deposited for that purpose or available to the
reasonable satisfaction of Lender by or on behalf of Borrower for that
purpose, shall be at least sufficient in the reasonable judgment of Lender
to pay for the cost of completion of the restoration, repair, replacement
or rebuilding, free and clear of all liens and claims of lien. Any surplus
which may remain out of a Condemnation award or proceeds held by Lender
after payment of such costs of restoration, repair, replacement or
rebuilding shall be delivered to Borrower, provided such restoration was
performed substantially in accordance with the provisions of this Section,
and Borrower is not then in default of its obligations under the Loan
Documents.
9. Leases and Rents
(a) In connection with the Loan, Borrower has absolutely and
unconditionally assigned to Lender all of Borrower's right, title and interest
in all current and future Leases and Rents, it being intended by Borrower that
such assignment constitutes a present, absolute assignment and not an assignment
for additional security only. Such assignment to Lender shall not be construed
to bind Lender to the performance of any of the covenants, conditions or
provisions contained in any such Lease or otherwise to impose any obligation
upon Lender. Borrower shall execute and deliver to Lender such additional
instruments, in form and substance reasonably satisfactory to Lender, as may
hereafter be requested by Lender to further evidence and confirm such
assignment. Nevertheless, subject to the terms of this Section, Lender has
granted to Borrower a revocable license to operate and manage the Mortgaged
Property and to collect the Rents. Borrower shall hold the Rents, or a portion
thereof sufficient to discharge all current sums due on the Debt, in trust for
the benefit of Lender for use in the payment of such
19
sums. Upon the occurrence and during the continuance of an Event of Default, the
license granted to Borrower shall automatically be revoked, and Lender shall
immediately be entitled to possession of all Rents, whether or not Lender enters
upon or takes control of the Mortgaged Property. Lender is hereby granted and
assigned by Borrower the right, at its option, upon revocation of the license
granted herein, to enter upon the Mortgaged Property in person, by agent or by
court-appointed receiver to collect the Rents. Any Rents collected after
revocation of the license may be applied toward payment of the Debt in such
priority and proportions as Lender in its discretion shall deem appropriate.
(b) Borrower shall furnish Lender with executed copies of all Leases. All
renewals of Leases and all proposed Leases shall provide for rental rates
comparable to existing local market rates and shall be arms-length transactions.
All proposed Leases shall be subject to the prior approval of Lender except that
with respect to proposed Leases which:
(i) do not individually or in the aggregate alter the ratio of
office/retail space to hotel space as presently utilized in the Mortgaged
Property;
(ii) are for less than 5,000 rentable square feet in the aggregate at
each hotel comprising the Mortgaged Property;
(iii) provide for minimum terms of not less than two years;
(iv) provide for work letters and other tenant improvement allowances
not in excess of that set forth in the Budget;
(v) do not contain any provision for free rent or rent abatement;
(vi) except as may be required by applicable law, do not contain any
cancellation or termination rights exercisable by the tenant thereunder;
(vii) are the result of an arms-length transaction with a bona fide,
independent third-party;
(viii) provide for rental rates comparable to existing market rates;
and
(ix) do not contain any terms which would materially affect Lender's
rights under the Note, the Mortgage, this Agreement, the Assignment, the
Environmental Agreement or the other Loan Documents,
Lender's approval shall not be unreasonably withheld or delayed. All Leases
shall provide that they are subordinate to the Mortgage and that the lessee
agrees to attorn to Lender. A Lease approved by Lender may also be subject to a
non-disturbance or similar recognition agreement in form and substance
acceptable to Lender, and a tenant's attornment to Lender may be conditioned on
Lender's agreeing to such non-disturbance or recognition. None of the Leases
shall contain any option to purchase, any right of first refusal to purchase or
any other similar provisions which adversely affect title to any property
comprising a portion of the Mortgaged Property, or which might materially and
adversely impair the rights of Lender under the Loan Documents, without the
prior written consent of Lender, which consent shall not be
20
unreasonably withheld, conditioned or delayed. Lender shall not unreasonably
withhold, condition or delay approval of any Lease or the execution of any
subordination and non-disturbance or similar recognition agreement requested by
any tenant to the extent that any such requirement is set forth in such Lease.
Borrower shall: (A) observe and perform in all material respects all the
obligations imposed upon the lessor under the Leases and shall not do or permit
to be done anything to impair the value of the Leases as security for the Debt;
(B) promptly send to Lender copies of all notices of any material default which
Borrower shall send or receive thereunder; (C) to the extent commercially
reasonable, enforce all of the terms, covenants and conditions contained in the
Lease on the part of the lessee thereunder to be observed or performed, short of
termination thereof, (D) not collect any Rents more than one month in advance;
(E) not execute any other assignment of the lessor's interest in the Leases or
Rents; (F) other than de minimis non-financial amendments, not materially alter,
modify or change the terms of the Leases without the prior written consent of
Lender (which consent shall not be unreasonably withheld or delayed), or, except
if a lessee is in default, cancel or terminate the Leases or accept a surrender
thereof or convey or transfer or suffer or permit a conveyance or transfer of
the Mortgaged Property or of any interest therein so as to effect a merger of
the estates and rights of, or a termination or diminution of the obligations of,
lessees thereunder; provided, however, that any Lease may be cancelled if at the
time of the cancellation thereof a new Lease is entered into with a bona fide,
independent third-party on substantially the same terms or more favorable terms
as the cancelled Lease; (G) not materially alter, modify or change the terms of
any guaranty of a Lease or cancel or terminate such guaranty without the prior
written consent of Lender, not to be unreasonably withheld or delayed; (H) not
consent to any assignment of or subletting under the Leases not in accordance
with their terms, without the prior written consent of Lender, not to be
unreasonably withheld or delayed; and (I) execute and deliver at the request of
Lender all such further assurances, confirmations and assignments in connection
with the Mortgaged Property as Lender shall from time to time request.
(c) All security deposits of lessees, whether held in cash or any other
form, shall not be commingled with any other funds of Borrower and, if cash,
shall be deposited by Borrower at such commercial or savings bank or banks as
may be reasonably satisfactory to Lender. Any bond or other instrument which
Borrower is permitted to hold in lieu of cash security deposits under any
applicable legal requirements shall be maintained in full force and effect
unless replaced by cash deposits as hereinabove described, shall be issued by an
institution reasonably satisfactory to Lender, shall, if permitted pursuant to
any legal requirements, name Lender as payee or mortgagee thereunder (or at
Lender's option, be fully assignable to Lender) and shall, in all respects,
comply with any applicable legal requirements and otherwise be reasonably
satisfactory to Lender. Borrower shall, upon request, provide Lender with
evidence reasonably satisfactory to Lender of Borrower's compliance with the
foregoing. Following the occurrence and during the continuance of any Event of
Default, Borrower shall, upon Lender's request, if permitted by any applicable
legal requirements, turn over to Lender the security deposits (and any interest
theretofore earned thereon) with respect to all or any portion of the Mortgaged
Property, to be held by Lender subject to the terms of the Leases.
21
10. Representations Concerning Loan
Borrower represents, warrants and covenants as follows:
(a) The Note, the Mortgage, this Agreement, the Assignment, the
Environmental Agreement and the other Loan Documents are the legal, valid and
binding obligations of Borrower, and are not subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor would the
operation of any of the terms of the Note, the Mortgage, this Agreement, the
Assignment, the Environmental Agreement and the other Loan Documents, or the
exercise of any right thereunder, render the Mortgage unenforceable, in whole or
in part, or subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury.
(b) Except as disclosed to Lender in writing, to the best of Borrower's
knowledge, all certifications, permits, licenses and approvals required for the
legal use, occupancy and operation of portions of the Mortgaged Property as
hotels including, without limitation, any applicable liquor license, certificate
of completion and occupancy permit, have been obtained and are in full force and
effect; provided, however, that notwithstanding the foregoing, Borrower has
valid liquor licenses at each of the properties comprising the Mortgaged
Property where liquor is being served. Nothing herein shall excuse Borrower from
obtaining all such certifications, permits, licenses and approvals required for
the legal use, occupancy and operation of portions of the Mortgaged Property as
hotels. Except as disclosed in the comfort letters from franchisors) with
agreements affecting the Mortgaged Property delivered to Lender on or before the
date hereof, the Mortgaged Property is free of material damage and is in good
repair, and there is no proceeding pending or, to the best of Borrower's
knowledge, threatened for the total or partial condemnation of, or affecting,
the Mortgaged Property.
(c) To the best of Borrower's knowledge, except as disclosed on the title
policies and surveys delivered to Lender in connection with the Loan, all of the
Improvements which were considered in determining the appraised value of the
Mortgaged Property lie wholly within the boundaries and building restriction
lines of the Mortgaged Property, no improvements on adjoining properties
encroach upon the Mortgaged Property, and no easements or other encumbrances
upon the Premises encroach upon any of the Improvements, so as to affect the
value or marketability of the Mortgaged Property. To Borrower's knowledge, the
Mortgaged Property is contiguous to and has access to a physically and legally
open all-weather public street, has all necessary permits and approvals for
ingress and egress, is adequately serviced by public water, sewer systems and
utilities and is on one or more separate tax parcels, all of which are separate
and apart from any other property owned by Borrower or any other person. To
Borrower's knowledge, the Mortgaged Property has all necessary access by public
roads or easements which in each case are not terminable and are not subordinate
to any mortgage other than the Mortgage. To the best of Borrower's knowledge,
all of the Improvements comply with all requirements of applicable building
codes, zoning and subdivision laws and ordinances.
(d) To the best of Borrower's knowledge, the Mortgaged Property is not
subject to any leases, licenses or other use or occupancy agreements other than
the Leases described in the rent roll delivered to Lender in connection with
this Agreement. To Borrower's knowledge, no person has any possessory interest
in the Mortgaged Property or right to occupy any portion
22
thereof except under and pursuant to the provisions of the Leases or transient
hotel guests in the ordinary course of Borrower's business.
(e) The survey of the Mortgaged Property delivered to Lender in connection
with this Agreement has been performed by a duly licensed surveyor or registered
professional engineer in the jurisdiction in which the Mortgaged Property is
situated, and, to the best of Borrower's knowledge, does not fail to reflect any
material matter affecting the Mortgaged Property or the title thereto.
(f) The financial statements heretofore furnished to Lender are, as of the
date specified therein, complete and correct in all material respects and fairly
present the financial condition of Borrower, and are prepared in accordance with
generally accepted accounting principles, or the Uniform System of Accounts for
hotel and motel properties as approved by the American Hotel and Motel
Association (as in effect from time to time, the "Uniform System of Accounts"),
in each case applied on a consistent basis. Borrower does not have on the date
hereof any contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments which in each case are known to Borrower and which, in Borrower's
opinion, are reasonably likely to result in a material adverse effect on the
Mortgaged Property (taken as a whole) or the operation thereof as hotels, except
as referred to or reflected or provided for in the financial statements
heretofore furnished to Lender or as otherwise disclosed to Lender herein. Since
the last date of such financial statements, there has been no material adverse
change in the financial condition, operations or business of Borrower from that
set forth in such financial statements as of the dates thereof.
(g) The Franchise Agreement is in full force and effect and, except as
disclosed in the Franchisor's comfort letter to Lender, there is no default,
breach or violation existing thereunder by any party thereto and, to the best of
Borrower's knowledge, no event (other than payments due but not yet delinquent)
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach or violation by any party
thereunder.
(h) The Management Agreement is in full force and effect and, to Borrower's
knowledge, there is no default, breach or violation existing thereunder by any
party thereto and no event (other than payments due but not yet delinquent)
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach or violation by any party
thereunder.
(i) Neither the execution and delivery of the Loan Documents, Borrower's
performance thereunder, the recordation of the Mortgage, nor the exercise of any
remedies by Lender, will materially adversely affect (A) Borrower's rights under
any agreement comprising part of the Franchise Agreement or any agreement
comprising part of the Management Agreement or (B) the licenses, registrations,
permits, certificates, authorizations and approvals necessary for the operation
of the Mortgaged Property as hotels.
(j) The current Leases are in full force and effect and, to Borrower's
knowledge, there are no material defaults thereunder by either party and there
are no conditions which with the passage of time and/or notice would constitute
defaults thereunder.
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11. Single Purpose Entity; Authorization
Borrower represents and warrants, and covenants for so long as any
obligations secured by the Mortgage remain outstanding, as follows:
(a) Each entity comprising Borrower does not and will not own any asset or
property other than: (i) its respective portion of the property comprising the
Mortgaged Property; and (ii) incidental personal property necessary for the
ownership or operation of the Mortgaged Property.
(b) Each entity comprising Borrower does not and will not engage in any
business other than the ownership, management and operation of its respective
portion of the property comprising the Mortgaged Property, and each entity
comprising Borrower will conduct and operate its business in all material
respects as presently conducted and operated.
(c) Except with respect to the Management Agreement which, in its present
form, is acceptable to Lender, Borrower will not enter into any contract or
agreement with any Guarantor or an affiliate, except upon terms and conditions
that are intrinsically fair and substantially similar to those that would be
available on an arms-length third-party basis.
(d) Borrower has not incurred and will not incur any indebtedness, secured
or unsecured, direct or indirect, absolute or contingent (including guaranteeing
any obligation), other than: (i) the Debt; (ii) trade and operational debt
incurred in the ordinary course of business with trade creditors and in amounts
as are customary and reasonable under the circumstances; (iii) Borrower's
obligations under equipment leases, not to exceed at any one time $150,000.00 in
the aggregate for any single property comprising a portion of the Mortgaged
Property, which obligations are incurred in the ordinary course of business and
pursuant to terms as are customary and reasonable under the circumstances; and
(iv) guarantees of performance under the Franchise Agreement. Except with
Lender's prior written approval in each instance, no indebtedness other than the
Debt is or shall be secured by the Mortgaged Property. Lender's approval shall
be granted or withheld at Lender's sole discretion. In connection with any such
financing approved by Lender, Borrower shall be required to obtain and deliver
to Lender a subordination and standstill agreement from such lender which shall
be in form and substance satisfactory to Lender in its sole discretion. Anything
herein to the contrary notwithstanding, Lender acknowledges that the entities
comprising Borrower have entered into a certain Contribution Agreement dated as
of the date hereof which provides for certain contribution obligations as among
such entities, and Lender approves the arrangements set forth therein.
(e) Except for the use of certain Loan proceeds at closing in connection
with the purchase or redemption of certain beneficial interests in each of the
entities comprising Borrower, Borrower has not made and will not make any loans
or advances to any third party (including any constituent party, any Guarantor
or any affiliate of Borrower, of any constituent party or of any Guarantor),
except in de minimis amounts in the ordinary course of business and of the
character of trade or operational expenses.
(f) Borrower has done or caused to be done, and will do or cause to be
done, all things necessary to preserve its existence, and Borrower will not, nor
will Borrower permit any
24
constituent party or Guarantor, to amend, modify or otherwise change the
partnership certificate, partnership agreement, articles of incorporation and
bylaws, trust or other organizational documents, as the case may be, of Borrower
or such constituent party or Guarantor in a manner which would adversely affect
Borrower's existence as a single purpose entity.
(g) Borrower will maintain books and records and bank accounts separate
from those of its affiliates and any constituent party. Borrower shall not
change the principal place of its business without providing Lender with at
least 30 days prior written notice of such change.
(h) Borrower is and 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, any Guarantor or any affiliate
of any constituent party or Guarantor).
(i) Neither Borrower nor any constituent party will cause or seek the
dissolution or winding up, in whole or in part, of Borrower.
(j) Borrower will not commingle its funds and other assets with those of
any constituent party, any Guarantor, any affiliate of Borrower, of any
constituent party or of any Guarantor, or any other person.
(k) Borrower will not file or consent to the filing of any petition to take
advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or make an assignment for the benefit of creditors.
(l) Borrower does not and will not hold itself out to be responsible for
the debts or obligations of any other person or entity (except as provided in
the Contribution Agreement) or for the decisions or actions respecting the daily
business or affairs of any other person or entity.
(m) Each entity comprising Borrower shall cause its manager to at all times
maintain at least one duly appointed independent member of its Board of
Directors, which member has not been at the time of such individual's
appointment and may not have been at any time during the preceding two years:
(i) a stockholder of, or an officer or an employee of Borrower or any affiliate;
(ii) a customer of or supplier to Borrower or any affiliate; (iii) a person or
other entity controlling any such stockholder, officer, employee, customer or
supplier; or (iv) a member of the immediate family of any such stockholder,
officer, employee, customer or supplier or any other director of Borrower or any
affiliate. As used in this subsection, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such person or entity, whether through ownership of
voting securities by contract or otherwise.
12. Maintenance of Mortgaged Property
Borrower shall cause the Mortgaged Property to be maintained in a good and
safe condition and repair. The Improvements and the Equipment shall not be
removed, demolished or materially altered (except for normal replacement of the
Equipment) without the consent of Lender. Borrower shall promptly comply in all
material respects with all laws, orders and ordinances affecting the Mortgaged
Property, or the use thereof (which consent shall not be unreasonably withheld
or delayed). Borrower shall promptly repair, replace or rebuild any part
25
of the Mortgaged Property which may be destroyed by any casualty, or become
damaged, worn or dilapidated, or which may be affected by any proceeding of the
character referred to in Section 8 hereof, and shall complete and pay for any
structure at any time in the process of construction or repair on the Mortgaged
Property, subject to Borrower's receipt of proceeds for such restoration in
accordance with Section 8 hereof. Except as expressly permitted in writing by
Lender, Borrower shall not initiate, join in, acquiesce in, or consent to any
change in any private restrictive covenant, zoning law or other public or
private restriction limiting or defining the uses which may be made of the
Mortgaged Property or any part thereof. If under applicable zoning provisions
the use of all or any portion of the Mortgaged Property is or shall become a
nonconforming use, Borrower will not cause or permit such nonconforming use to
be discontinued or abandoned without the prior written consent of Lender.
Borrower shall not: (a) change the use of the Mortgaged Property as currently
configured and utilized; (b) permit or suffer to occur any waste on or to the
Mortgaged Property or to any portion thereof; or (c) take any steps whatsoever
to convert the Mortgaged Property, or any portion thereof, to a condominium or
cooperative form of ownership.
13. Transfer or Encumbrance of the Mortgaged Property
(a) Borrower acknowledges that Lender has examined and relied on the
creditworthiness and experience of Borrower and its general partners, principals
and beneficial owners in owning and operating properties such as the Mortgaged
Property in agreeing to make the Loan, and that Lender will continue to rely on
Borrower's ownership of the Mortgaged Property as a means of maintaining the
value of the Mortgaged Property as security for repayment of the Debt. Borrower
acknowledges that Lender has a valid interest in maintaining the value of the
Mortgaged Property so as to ensure that, should Borrower default in the
repayment of the Debt, Lender can recover the Debt by a sale of the Mortgaged
Property. Except as permitted in subsections (b) and (d) of this Section and in
Section 61 hereof, or otherwise in accordance with the terms of the Loan
Documents, Borrower shall not, without the prior written consent of Lender,
sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer the
Mortgaged Property or any part thereof, or permit the Mortgaged Property or any
part thereof to be sold, conveyed, alienated, mortgaged, encumbered, pledged or
otherwise transferred.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this Section shall be deemed to include: (i) an
installment sales agreement wherein Borrower agrees to sell the Mortgaged
Property or any part thereof for a price to be paid in installments; (ii) an
agreement by Borrower leasing all or a substantial part of the Mortgaged
Property for other than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in,
Borrower's right, title and interest in and to any Leases or any Rents; (iii) if
Borrower, any Guarantor, or any general partner or manager of Borrower or any
Guarantor is a corporation, the voluntary or involuntary sale, conveyance or
transfer of such corporation's stock (or the stock of any corporation directly
or indirectly controlling such corporation by operation of law or otherwise) or
the creation or issuance of new stock in one or a series of transactions by
which an aggregate of more than forty-nine (49%) percent of such corporation's
stock shall be vested in a party or parties who are not now stockholders; and
(iv) if Borrower, any Guarantor or any general partner or manager of Borrower or
any Guarantor is a limited or general partnership, joint venture or limited
liability company,
26
the change, removal or resignation of a general partner, managing partner or
joint venturer or the transfer of the partnership interest of any general
partner, managing partner or joint venturer; provided, however, that the direct
or indirect holders of equity interests (whether limited liability company
interests, limited partnership interests, stock or otherwise) in Borrower as of
the date hereof must at all times maintain, directly or indirectly, controlling
and voting ownership of no less than 51% of the beneficial controlling and
voting interests of Borrower. Notwithstanding anything to the contrary provided
herein, pledges, hypothecations and transfers shall be permitted of equity in
any entity holding a direct or indirect equity interest in any entity comprising
Borrower or in holders of equity interests in such entity comprising Borrower
if: (i) such equity is publicly traded; or (ii) such equity is not publicly
traded, then so long as Patriot American Hospitality, Inc., Patriot American
Hospitality Partnership, L.P., Wyndham International, Inc., IHC Realty
Partnership, L.P., or any parent or subsidiary of any of the foregoing,
maintains control of, and holds beneficial ownership interests of not less than
51% of the membership interests in, each entity comprising Borrower
(collectively, "Permitted Transfers"). A foreclosure sale (or transfer in lieu
thereof) of any pledge or hypothecation to The Chase Manhattan Bank, as
collateral agent for syndicate lenders, or another Institutional Lender (as such
term is defined below), which Institutional Lender shall be a then current
holder of a note evidencing a loan to Wyndham International, Inc. or any of its
affiliates (other than Borrower) or the then collateral agent for syndicate
lenders entitled to the benefit of such loan, of equity interests in any such
entity shall be a Permitted Transfer if: (i) Lender is given at least sixty (60)
days prior written notice of the proposed foreclosure sale or transfer in lieu
thereof; (ii) the transferee is a reputable entity or person, creditworthy, with
sufficient financial worth considering any obligations assumed and undertaken
with respect to the Loan, as evidenced by financial statements and other
information reasonably requested by Lender; (iii) the properties comprising the
Mortgaged Property at all times shall continue to be managed by reputable
property managers, experienced in the management of properties similar to those
comprising the Mortgaged Property, that meet the standards for a property
manager set forth in the Loan Documents and otherwise consistent with standards
generally employed by Lender in approving substitution of property managers for
Lender-financed hotels; (iv) if requested, Lender shall have received customary
legal substantive non-consolidation opinions reasonably acceptable to Lender
regarding the entities comprising Borrower (or new entity) and any entity owning
a beneficial interest in an entity comprising Borrower (or new entity) which is
required by the Loan Documents to be a single-purpose, bankruptcy-remote entity,
and any such entity will continue to comply with all requirements set forth in
the Loan Documents regarding such status. For the purpose of this paragraph,
"Institutional Lender" shall mean any insurance company, bank, trust company,
savings and loan association, savings bank, bulge bracket investment bank or
similar financial institution.
(c) Except as may be otherwise expressly provided herein, no sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property, or of any interest therein, shall be permitted during the
term of the Loan without Lender's prior written approval. Lender shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Debt immediately due and
payable upon Borrower's sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Mortgaged Property without Lender's consent. This
provision shall apply to every sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property regardless of whether
voluntary or not, or whether or not Lender has consented to any previous
27
sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property.
(d) Lender's consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property shall not be deemed to
be a waiver of Lender's right to require such consent in the future. Any sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property made in contravention of this Section shall be null and void
and of no force or effect.
(e) Borrower agrees to bear and shall pay or reimburse Lender on demand for
all reasonable expenses (including, without limitation, Lender's out-of-pocket
attorney's fees and disbursements, title search costs and title insurance
endorsement premiums) incurred by Lender in connection with the review, approval
or disapproval, and documentation of any such sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer.
(f) Anything herein to the contrary notwithstanding, transfers and partial
releases of the Mortgaged Property shall be permitted in accordance with the
terms of Section 61 hereof.
14. Estoppel Certificates; Affidavits
(a) Within 10 days after request, Borrower and Lender shall furnish the
other with a statement, duly acknowledged and certified, setting forth: (i) the
amount of the original principal amount of the Note; (ii) the then outstanding
principal balance of the Note; (iii) the rate of interest of the Note; (iv) the
date on which installments of interest and/or principal were last paid; (v) any
offsets or defenses to the payment of the Debt; and (vi) that the Note, the
Mortgage, this Agreement, the Assignment, the Environmental Agreement and the
other Loan Documents are valid, legal and binding obligations, which have not
been modified or if modified, giving particulars of such modification.
(b) Within 10 days after request by Lender, Borrower shall furnish Lender
with a certificate reaffirming all representations and warranties of Borrower
set forth herein and in the other Loan Documents as of the date requested by
Lender or, to the extent of any changes to any such representations and
warranties, so stating such changes.
(c) Borrower shall deliver to Lender upon request, tenant estoppel
certificates from each tenant under a Lease for more than 1,000 square feet in
form and substance reasonably satisfactory to Lender.
15. Changes in the Laws Regarding Taxation
If any law is enacted, adopted or amended after the date of this Agreement
which deducts the Debt from the value of the Mortgaged Property for the purpose
of taxation, or which imposes a tax, either directly or indirectly, on the Debt
or Lender's interest in the Mortgaged Property, Borrower will pay such tax, with
interest and penalties thereon, if any. In the event Lender or its counsel
determines that the payment of such tax or interest and penalties by Borrower
would be unlawful or taxable to Lender or unenforceable or provide the basis for
a defense of usury, then in any such event, Lender shall have the option, by
written notice of not less than 180 days, to declare the Debt immediately due
and payable. Any such payment of the Debt pursuant to this
28
Section shall not be considered a voluntary prepayment requiring payment of the
deferred financing fees provided in the Note, except that if an Event of Default
has occurred, then such payment shall be subject to the deferred financing fees
computed in accordance with the Note, if any. Anything herein to the contrary
notwithstanding, Borrower shall not be liable for any income taxes charged to or
payable by Lender by reason of Lender's ownership of the Loan.
16. No Credits on Account of the Debt
Borrower will not claim, demand or be entitled to any credit or credits on
account of the Debt for any part of the Taxes or Other Charges assessed against
the Mortgaged Property, or any part thereof, and no deduction shall otherwise be
made or claimed from the assessed value of the Mortgaged Property, or any part
thereof, for real estate tax purposes by reason of the Mortgage or the Debt. In
the event such claim, credit or deduction shall be required by law, Lender shall
have the option, by written notice of not less than 90 days, to declare the Debt
immediately due and payable.
17. Documentary Stamps
If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be
affixed to the Note or the Mortgage, or shall impose any other tax or charge on
the same, Borrower will pay for the same, with interest and penalties thereon,
if any.
18. Controlling Agreement
It is expressly stipulated and agreed to be the intent of Borrower and
Lender at all times to comply with applicable state law or applicable United
States federal law (to the extent that it permits Lender to contract for,
charge, take, reserve, or receive a greater amount of interest than under state
law) and that this Section shall control every other covenant and agreement in
this Agreement and the other Loan Documents. If the applicable law (state or
federal) is ever judicially interpreted so as to render usurious any amount
called for under the Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved, or received with respect to the Debt,
or if Lender's exercise of the option to accelerate the maturity of the Note, or
if any prepayment by Borrower results in Borrower having paid any interest in
excess of that permitted by applicable law, then it is Borrower's and Lender's
express intent that all excess amounts theretofore collected by Lender shall be
credited on the principal balance of the Note and all other Debt (or, if the
Note and all other Debt have been or would thereby be paid in full, refunded to
Borrower), and the provisions of the Note and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance or detention
of the Debt shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the Debt
until payment in full so that the rate or amount of interest on account of the
Debt does not exceed the maximum lawful rate from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding. Notwithstanding
anything to the contrary contained herein or in any of the
29
other Loan Documents, it is not the intention of Lender to accelerate the
maturity of any interest that has not accrued at the time of such acceleration
or to collect unearned interest at the time of such acceleration.
19. Books and Records
Borrower will maintain or cause to be maintained full and accurate books of
accounts and other records reflecting the independent operations of each of the
individual hotels comprising the Mortgaged Property. Borrower will furnish, or
cause to be furnished to Lender, within 45 days of the end of each calendar
month, the following items, each certified by an officer of Borrower's general
partner or manager as true, correct and complete as of the end of and for such
period (subject to normal year-end adjustments), and as having been prepared in
accordance with the Uniform System of Accounts, consistently applied: (a) a
written occupancy statement dated as of the last day of the most recently ended
calendar month identifying each of the Leases by the term, space occupied,
rental required to be paid, security deposit paid, any rental concessions, and
identifying any defaults or payment delinquencies thereunder; (b) monthly and
year to date operating statements detailing the total revenues received and
total expenses incurred in connection with the ownership and operation of each
of the individual hotels comprising the Mortgaged Property, including a
comparison of the budgeted income and expenses and the actual income and
expenses for such month and the year to date (which operating information shall
include the hotel located thereon) (such statements shall provide separate
detail of all fixed charges related to the property including: real estate and
business taxes, equipment rental and other personal property leases, ground and
other rental, liability and property insurance and any other fixed charges
related to the operation and ownership of each of the individual hotels); and
(c) a written statement for each hotel dated as of the last day of the most
recently ended month showing the percentage of rooms rented and occupied during
such month and the average daily room rate charged during such month. Upon
request by Lender, Borrower will provide a detailed explanation of any variances
of ten (10%) percent or more between budgeted and actual amounts for such
periods. Borrower shall furnish, within 90 days following the end of each
calendar year, an audited statement of the financial affairs and condition of
each of the individual hotels comprising the Mortgaged Property (and the
Borrower), including a statement of profit and loss and a balance sheet, for the
immediately preceding fiscal year, prepared on a combined basis by a public
accounting firm reasonably acceptable to Lender. Borrower shall deliver to
Lender on or before December 1 of each calendar year an itemized operating
budget and capital expenditure budget for each of the individual hotels
comprising the Mortgaged Property and a management plan for each of the
individual hotels comprising the Mortgaged Property for the next succeeding
calendar year in such detail as Lender may reasonably request. Borrower shall
promptly after receipt deliver to Lender copies of all quality inspection
reports or similar reports or inspection results that are delivered to it by the
Franchisor. At any time and from time to time Borrower shall deliver to Lender
or its agents such other financial data as Lender or its agents shall reasonably
request with respect to Borrower and the ownership, maintenance, use and
operation of each of the individual hotels comprising the Mortgaged Property.
All information required to be furnished to Lender pursuant to this Section
shall be on the form reasonably requested by Lender (which form shall accompany
Lender's request).
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20. Performance of Other Agreements
Borrower shall observe and perform each and every term to be observed or
performed by Borrower pursuant to the terms of any agreement or recorded
instrument affecting or pertaining to the Mortgaged Property.
21. Further Assurances; Right to Split and Participate the Loan
(a) Borrower will, at the cost of Borrower, and without expense to Lender,
do, execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, mortgages, assignments, notices of assignment, Uniform Commercial
Code financing statements or continuation statements, transfers and assurances
as Lender shall, from time to time, require, for the better assuring, conveying,
assigning, transferring, and confirming unto Lender the property and rights
mortgaged, given, granted, bargained, sold, alienated, enfeoffed, conveyed,
confirmed, pledged, assigned and hypothecated or intended now or hereafter so to
be, or which Borrower may be or may hereafter become bound to convey or assign
to Lender, or for carrying out the intention or facilitating the performance of
the terms of this Agreement or for filing, registering or recording the Mortgage
or the other Loan Documents. Borrower, within 10 days after written request
therefor, will execute and deliver and hereby authorizes Lender to execute in
the name of Borrower or without the signature of Borrower to the extent Lender
may lawfully do so, one or more financing statements, chattel mortgages or other
instruments, to evidence more effectively the security interest of Lender in the
Mortgaged Property. Borrower grants to 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 at law and in equity, including
without limitation such rights and remedies available to Lender pursuant to this
Section; provided, however, that so long as Borrower is in compliance with the
terms and conditions of this Agreement, Lender will first seek Borrower's
assistance in exercising and perfecting such rights and remedies.
(b) Lender may sell the loan evidenced by the Note and the Loan Documents
to a party who may pool the Loan with a number of other loans and to have the
holder of such loans grant participations therein or issue one or more classes
of Mortgage Backed, Pass-Through Certificates or other securities evidencing a
beneficial interest in a rated or unrated public offering or private placement
(the "Securities"). The Securities may be rated by one or more national rating
agencies. In this regard, Borrower agrees to make available to Lender all
information concerning its business and operations which Lender reasonably
requests. Lender may share such information with the investment banking firms,
rating agencies, accounting firms, law firms and other third-party advisory
firms involved with the Loan or the Securities. It is understood that the
information provided by Borrower to Lender may ultimately be incorporated into
the offering documents for the Securities and thus such information may be
disclosed to various investors. Lender and all of the aforesaid third-party
advisors and professional firms shall be entitled to rely on the information
supplied by, or on behalf of, Borrower. Lender, at its sole option, may also
elect to split the Loan into two or more loans, each secured by liens on the
Mortgaged Property, and sell, assign, pledge or otherwise hypothecate one or
more of such loans to third parties. Borrower shall cooperate in all such
efforts by executing and delivering all such documents, certificates,
instruments and other things to evidence or confirm Borrower's obligations
hereunder, and in no such event shall the Debt or
31
Borrower's obligations hereunder be increased, or Borrower's rights hereunder be
decreased, as a result thereof, nor shall Borrower be required to incur
additional expense.
(c) Lender shall have the right, at any time in its sole and absolute
discretion, to split and sever the Loan into two or more separate loans, or to
sell participations in the Loan to third parties. Borrower shall execute and
deliver all such instruments, documents and other papers, and do or cause to be
done all such acts and things as Lender may reasonably request in order to
effect such splitter and severance or participation. In no event shall any such
splitter and severance or participation expand or increase Borrower's liability
or obligations hereunder, and Lender shall pay all of Borrower's actual
out-of-pocket expenses and third-party costs (including attorneys fees and
expenses associated therewith). In connection with any participation, Borrower
agrees to make available to Lender all information concerning its business and
operations which Lender reasonably requests and Lender may share such
information and any other information in Lender's possession concerning Borrower
and the Loan with prospective participants and other third-party advisory firms
involved with such activities.
22. Recording of Mortgage
Borrower forthwith upon the execution and delivery of this Agreement and
thereafter, from time to time, will cause the Mortgage, and any security
instrument creating a lien or security interest or evidencing the lien thereof
upon the Mortgaged Property and each instrument of further assurance to be
filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect the lien or security interest thereof upon, and the interest of Lender
in, the Mortgaged Property. Borrower will pay all filing, registration or
recording fees, and all expenses incident to the preparation, execution and
acknowledgment of the Mortgage, any mortgage supplemental thereto, any security
instrument with respect to the Mortgaged Property and any instrument of further
assurance, and all federal, state, county and municipal taxes, duties, imposts,
assessments and charges arising out of or in connection with the execution and
delivery of the Mortgage, any mortgage supplemental thereto, any security
instrument with respect to the Mortgaged Property or any instrument of further
assurance, except where prohibited by law so to do. Borrower shall hold harmless
and indemnify Lender, its successors and assigns, against any liability incurred
by reason of the imposition of any tax on the making and recording of the
Mortgage.
23. Reporting Requirements
Borrower agrees to give prompt notice to Lender of the insolvency or
bankruptcy filing of Borrower or any constituent thereof, or the death,
insolvency or bankruptcy filing of any Guarantor.
24. Events of Default
The term "Event of Default" as used herein shall mean the occurrence or
happening, at any time and from time to time, of any one or more of the
following:
(a) if any regular monthly payment of interest on the Loan is not paid on
or prior to the 10th day after the date such payment is due, or if the entire
Debt is not paid on or before the
32
Maturity Date, or if any other portion of the Debt is not paid within 10 days
after notice to Borrower that such payment is due;
(b) subject to Borrower's right to contest as provided herein, if any of
the Taxes or Other Charges are not paid prior to delinquency;
(c) if the Policies are not kept in full force and effect or, within 5 days
after notice, Borrower has not delivered notice of renewal;
(d) if Borrower transfers or encumbers any portion of the Mortgaged
Property in violation of the terms of this Agreement;
(e) if any representation or warranty of Borrower, or of any Guarantor,
made herein, in any Loan Document, any guaranty, or in any certificate, report,
financial statement or other instrument or document furnished to Lender shall
have been false or misleading in any material respect when made;
(f) if Borrower or any Guarantor shall make an assignment for the benefit
of creditors, or if Borrower admits in writing its inability to pay its debts as
they become due;
(g) if a receiver, liquidator or trustee of Borrower or of any Guarantor
shall be appointed, or if Borrower or any Guarantor shall be adjudicated a
bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal or state
law, shall be filed by or against, consented to, or acquiesced in by, Borrower
or any Guarantor or if any proceeding for the dissolution or liquidation of
Borrower or of any Guarantor shall be instituted; provided, however, that such
appointment, adjudication, petition or proceeding, if involuntary and not
consented to by Borrower or such Guarantor, shall constitute an Event of Default
only if not being discharged, stayed or dismissed within 120 days;
(h) if Borrower shall be in default under any ground lease or any other
mortgage or security agreement covering any part of the Mortgaged Property,
whether it be superior or junior in lien to the Mortgage, which default
continues beyond applicable notice and grace periods, if any;
(i) subject to Borrower's right to contest as provided herein, if the
Mortgaged Property becomes subject to any mechanic's, materialman's or other
lien, except a lien for real estate taxes and assessments not then delinquent;
(j) intentionally omitted;
(k) intentionally omitted;
(l) intentionally omitted;
(m) if without Lender's prior written consent (which consent shall not be
unreasonably withheld): (i) the manager under any agreement comprising a part of
the Management Agreement (or any succeeding management agreement) resigns or is
removed; (ii) the ownership, management or control of a manager (under any
agreement comprising a part
33
of the Management Agreement) that is an affiliate of Borrower is transferred to
a person or entity other than the general partner or limited liability company
manager of Borrower or a person or entity the transfer to which would constitute
a Permitted Transfer; or (iii) there occurs any default by Borrower under any
agreement comprising a part of the Management Agreement (or any succeeding
management agreement) which continues beyond any applicable notice and cure
period permitting a party to terminate or cancel such agreement, or any material
change in or termination of any agreement comprising a part of the Management
Agreement (or any succeeding management agreement) and, in each case, Borrower
fails to promptly obtain a replacement manager acceptable to the Franchisor and
reasonably acceptable to Lender;
(n) intentionally omitted;
(o) if for more than 30 days after receipt of notice from Lender, Borrower
shall continue to be in default under any term, covenant, or condition of this
Agreement, the Assignment, the Environmental Agreement or any of the other Loan
Documents other than as specified in any of subsections (a) through (n) of this
Section; provided, however, that if the cure of any such default cannot
reasonably be effected within such 30 day period and Borrower shall have
promptly and diligently commenced to cure such default within such 30 day
period, then if such default would, if left uncured, have a material adverse
effect on the Mortgaged Property (or any property comprising a portion of the
Mortgaged Property), the period to cure shall be deemed extended for up to an
additional 90 days from Lender's default notice so long as Borrower diligently
and continuously proceeds to cure such default to Lender's satisfaction;
provided, further, however, that if the cure of any such default cannot
reasonably be effected within such 90 day period and Borrower shall have
promptly and diligently commenced to cure such default within such 90 day
period, then if such default would, if left uncured, is reasonably anticipated
not to have a material adverse effect on the Mortgaged Property (or any property
comprising a portion of the Mortgaged Property), the period to cure shall be
deemed extended for so long as Borrower diligently and continuously proceeds to
cure such default to Lender's satisfaction;
(p) intentionally omitted;
(q) if a default has occurred and continues beyond any applicable notice
and cure period under any agreement comprising a part of the Franchise Agreement
if such default permits a party to terminate or cancel the Franchise Agreement
(provided, however, Borrower may, under such circumstances, replace the
respective Franchisor with another franchisor subject to Lender's reasonable
approval, it being agreed that Lender's approval may be reasonably withheld if
such proposed franchisor replacement could reasonably result in any downgrade,
withdrawal or qualification of the current rating of any Securities (or if
Securities have not yet been issued, would reasonably result in any downgrade,
withdrawal or qualification of the anticipated rating thereof));
(r) if Borrower ceases to operate hotels on any of the individual
properties comprising the Mortgaged Property or terminates such business for any
reason whatsoever (other than temporary cessation in connection with any
renovations to the Mortgaged Property or restoration of the Mortgaged Property
after casualty or condemnation); or
34
(s) if Borrower terminates or cancels any agreement comprising a part of
the Franchise Agreement or operates the Mortgaged Property under the name of any
hotel chain or system other than the respective franchises set forth on Schedule
A hereto, without Lender's prior written consent (provided, however, Borrower
may, under such circumstances, replace the respective Franchisor with another
franchisor subject to Lender's reasonable approval, it being agreed that
Lender's approval may be reasonably withheld if such proposed franchisor
replacement could reasonably result in any downgrade, withdrawal or
qualification of the current rating of any Securities (or if Securities have not
yet been issued, would reasonably result in any downgrade, withdrawal or
qualification of the anticipated rating thereof)).
25. Servicing Fees
Borrower shall pay all fees to the Servicer in respect of servicing the
Loan not to exceed seven basis points of the Loan on an annual basis.
26. Right to Cure Defaults
Upon the occurrence and during the continuance of any Event of Default, or
if Borrower fails to make any payment or to do any act as herein provided,
Lender may, but without any obligation to do so and without releasing Borrower
from any obligation hereunder, take such action as Lender may deem necessary to
protect its security for the Loan. Lender is authorized to enter upon the
Mortgaged Property for such purposes or to appear in, defend, or bring any
action or proceeding to protect its interest in the Mortgaged Property or to
foreclose the Mortgage or collect the Debt, and the cost and expense thereof
(including Lender's attorneys' fees to the extent permitted by law), with
interest at the Default Rate for the period after notice from Lender that such
cost or expense was incurred to the date of payment to Lender, shall constitute
a portion of the Debt, shall be secured by the Mortgage, the Assignment, the
Environmental Agreement and the other Loan Documents and shall be due and
payable to Lender upon demand.
27. Remedies
(a) Upon the occurrence of any Event of Default and during the continuance
thereof beyond any applicable notice and cure periods, Lender may take such
action, without notice or demand (except as may be expressly required by the
Loan Documents or applicable law), as it deems advisable to protect and enforce
its rights against Borrower and in and to the Mortgaged Property by Lender
itself or otherwise including, without limitation, the following actions, each
of which may be pursued concurrently or otherwise, at such time and in such
order as Lender may determine, in its sole discretion, without impairing or
otherwise affecting the other rights and remedies of Lender:
(i) declare the entire Debt to be immediately due and payable;
(ii) institute a proceeding or proceedings, judicial or nonjudicial,
by advertisement or otherwise, for the complete foreclosure of the Mortgage
in which case the Mortgaged Property or any interest therein may be sold
for cash or otherwise to the extent permitted by applicable law in one or
more parcels or in several interests or portions and in any order or
manner;
35
(iii) with or without entry, to the extent permitted and pursuant to
the procedures provided by applicable law, institute proceedings for the
partial foreclosure of the Mortgage for the portion of the Debt then due
and payable, subject to the continuing lien of the Mortgage for the balance
of the Debt not then due;
(iv) sell for cash or otherwise, as may be permitted by applicable
law, the Mortgaged Property or any part thereof and all estate, claim,
demand, right, title and interest of Borrower therein and rights of
redemption thereof, pursuant to the power of sale contained herein or
otherwise, at one or more sales, as an entity or in parcels, at such time
and place, upon such terms and after such notice thereof as may be required
or permitted by law;
(v) subject to the provisions of Section 62 hereof, institute an
action, suit or proceeding in equity for the specific performance of any
covenant, condition or agreement contained herein, in the Assignment, the
Environmental Agreement, the Note or in the other Loan Documents;
(vi) recover judgment on the Note either before, during or after any
proceedings for the enforcement of the Mortgage;
(vii) apply for the appointment of a trustee, receiver, liquidator or
conservator of the Mortgaged Property, without notice and without regard
for the adequacy of the security for the Debt and without regard for the
solvency of Borrower, any Guarantor or of any person, firm or other entity
liable for the payment of the Debt;
(viii) revoke the license granted to Borrower to collect the Rents and
other sums due under the Leases and enforce Lender's interest in the Leases
and Rents and enter into or upon the Mortgaged Property, either personally
or by its agents, nominees or attorneys and dispossess Borrower and its
agents and servants therefrom, and thereupon Lender may to the maximum
extent permitted, or not restricted, under applicable law: (A) use,
operate, manage, control, insure, maintain, repair, restore and otherwise
deal with all and every part of the Mortgaged Property and conduct the
business thereat; (B) complete any construction on the Mortgaged Property
in such manner and form as Lender deems advisable; (C) make alterations,
additions, renewals, replacements and improvements to or on the Mortgaged
Property; (D) exercise all rights and powers of Borrower with respect to
the Mortgaged Property, whether in the name of Borrower or otherwise
including, without limitation, the right to make, cancel, enforce or modify
Leases, obtain and evict tenants, and demand, ▇▇▇ for, collect and receive
all earnings, revenues, rents, issues, profits and other income of the
Mortgaged Property and every part thereof, and (E) apply the receipts from
the Mortgaged Property to the payment of the Debt, after deducting
therefrom all expenses (including Lender's attorneys' fees) incurred in
connection with the aforesaid operations and all amounts necessary to pay
the taxes, assessments insurance and other charges in connection with the
Mortgaged Property, as well as just and reasonable compensation for the
services of Lender, its counsel, agents and employees;
36
(ix) require Borrower to pay monthly in advance to Lender, or any
receiver appointed to collect the Rents, the fair and reasonable rental
value for the use and occupancy of any portion of the Mortgaged Property
occupied by Borrower and require Borrower to vacate and surrender
possession of the Mortgaged Property to Lender or to such receiver and, in
default thereof, evict Borrower by summary proceedings or otherwise; and
(x) subject to the provisions of Section 62 hereof, pursue such other
rights and remedies as may be available at law or in equity or under the
Uniform Commercial Code, including the right to establish a lock box for
all Rents and other receivables of Borrower relating to the Mortgaged
Property.
In the event of a sale, by foreclosure or otherwise, of less than all of the
Mortgaged Property, the Mortgage shall continue as a lien on the remaining
portion of the Mortgaged Property.
(b) The proceeds of any sale made under or by virtue of this Section,
together with any other sums which then may be held by Lender under this
Agreement, whether under the provisions of this Section or otherwise, shall be
applied by Lender to the payment of the Debt in such priority and proportion as
Lender in its sole discretion shall deem proper.
(c) Lender may adjourn from time to time any sale by it to be made under or
by virtue of the Mortgage by announcement at the time and place appointed for
such sale or for such adjourned sale or sales; and, except as otherwise provided
by any applicable provision of law, Lender, without further notice or
publication, may make such sale at the time and place to which such sale shall
be so adjourned.
(d) Upon the completion of any sale or sales pursuant hereto, Lender or an
officer of any court empowered to do so, shall execute and deliver to the
accepted purchaser or purchasers a good and sufficient instrument, or good and
sufficient instruments, conveying, assigning and transferring all of Borrower's
estate, right, title and interest in and to the property and rights sold. Lender
is hereby irrevocably appointed the true and lawful attorney-in-fact of
Borrower, to act in its name and stead (such power of attorney being coupled
with an interest, and irrevocable), to make all necessary conveyances,
assignments, transfers and deliveries of the Mortgaged Property and rights so
sold and for that purpose Lender may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, Borrower hereby ratifying and confirming all that its attorney or
such substitute or substitutes shall lawfully do by virtue hereof. Any sale or
sales made under or by virtue of this Section, whether made under the power of
sale herein granted or under or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale, shall operate to divest all the
estate, right, title, interest, claim and demand whatsoever, whether at law or
in equity, of Borrower in and to the properties and rights so sold, and shall be
a perpetual bar both at law and in equity against Borrower and against any and
all persons claiming or who may claim the same, or any part thereof from,
through or under Borrower.
(e) Upon any sale made under or by virtue of this Section, whether made
under the power of sale herein granted or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, Lender may bid
for and acquire the Mortgaged Property or any
37
part thereof and in lieu of paying cash therefor may make settlement for the
purchase price by crediting upon the Debt the net sales price after deducting
therefrom the expenses of the sale and costs of the action and any other sums
which Lender is authorized to deduct under the Mortgage.
(f) No recovery of any judgment by Lender and no levy of an execution under
any judgment upon the Mortgaged Property or upon any other property of Borrower
shall affect in any manner or to any extent the lien of the Mortgage upon the
Mortgaged Property or any part thereof, or any liens, rights, powers or remedies
of Lender hereunder, but such liens, rights, powers and remedies of Lender shall
continue unimpaired as before.
(g) Lender may terminate or rescind any proceeding or other action brought
in connection with its exercise of the remedies provided in this Section at any
time before the conclusion thereof, as determined in Lender's sole discretion
and without prejudice to Lender.
(h) Lender may resort to any remedies and the security given by the Note,
the Mortgage, this Agreement, the Assignment, the Environmental Agreement or the
other Loan Documents in whole or in part, and in such portions and in such order
as determined by Lender's sole discretion. No such action shall in any way be
considered a waiver of any rights, benefits or remedies evidenced or provided by
the Note, the Mortgage, this Agreement, the Assignment, the Environmental
Agreement or the other Loan Documents. The failure of Lender to exercise any
right, remedy or option provided in the Note, the Mortgage, this Agreement, the
Assignment, the Environmental Agreement or the other Loan Documents shall not be
deemed a waiver of such right, remedy or option or of any covenant or obligation
secured by the Note, the Mortgage, this Agreement, the Assignment, the
Environmental Agreement or the other Loan Documents. No acceptance by Lender of
any payment after the occurrence of any Event of Default and no payment by
Lender of any obligation for which Borrower is liable hereunder shall be deemed
to waive or cure any Event of Default with respect to Borrower, or Borrower's
liability to pay such obligation. No sale of all or any portion of the Mortgaged
Property, no forbearance on the part of Lender, and no extension of time for the
payment of the whole or any portion of the Debt or any other indulgence given by
Lender to Borrower, shall operate to release or in any manner affect the
interest of Lender in the remaining Mortgaged Property or the liability of
Borrower to pay the Debt. No waiver by Lender shall be effective unless it is in
writing and then only to the extent specifically stated.
(i) The interests and rights of Lender under the Note, the Mortgage, this
Agreement, the Assignment, the Environmental Agreement or the other Loan
Documents shall not be impaired by any indulgence, including: (i) any renewal,
extension or modification which Lender may grant with respect to any of the
Debt; (ii) any surrender, compromise, release, renewal, extension, exchange or
substitution which Lender may grant with respect to the Mortgaged Property or
any portion thereof; or (iii) any release or indulgence granted to any maker,
endorser, guarantor or surety of any of the Debt.
(j) Anything herein to the contrary notwithstanding, if any of the
foregoing remedies conflict or are otherwise inconsistent with any remedies
available under the Mortgage (or as a. matter of law in the jurisdiction
governing the Mortgage) then, to the extent permitted as a matter of law in the
jurisdiction in which any such remedy is being sought, such inconsistency shall
be resolved in favor of the interpretation that would grant Lender the broadest
possible remedies.
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(k) Borrower hereby expressly waives and releases to the fullest extent
permitted by law, the pleading of any statute of limitations as a defense to
payment of the Debt or performance of its obligations under any of the Loan
Documents.
28. Right of Entry
Lender and its agents shall have the right to enter and inspect the
Mortgaged Property during normal business hours upon reasonable prior notice.
29. Security Agreement
This Agreement is a "security agreement" within the meaning of the Uniform
Commercial Code. The Mortgaged Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
Borrower in the Mortgaged Property. By executing and delivering this Agreement,
Borrower has granted and hereby grants to Lender, as security for the Debt, a
security interest in the Mortgaged Property to the full extent that the
Mortgaged Property may be subject to the Uniform Commercial Code (such portion
of the Mortgaged Property so subject to the Uniform Commercial Code being called
in this Section the "Collateral"). Borrower hereby agrees with Lender to execute
and deliver to Lender, in form and substance satisfactory to Lender, such
financing statements and such further assurances as Lender may from time to
time, reasonably consider necessary to create, perfect or preserve Lender's
security interest therein granted. The Mortgage shall also constitute a "fixture
filing" for the purposes of the Uniform Commercial Code. All or part of the
Mortgaged Property are or are to become fixtures. If an Event of Default shall
occur and be continuing, Lender, in addition to any other rights and remedies
which it may have, shall have and may exercise immediately and without demand,
any and all rights and remedies granted to a secured party upon default under
the Uniform Commercial Code including, without limitation, the right to take
possession of the Collateral or any part thereof, and to take such other
measures as Lender may deem necessary for the care, protection and preservation
of the Collateral. Upon request or demand of Lender, Borrower shall at its
expense assemble the Collateral and make it available to Lender at a convenient
place acceptable to Lender. Borrower shall pay to Lender on demand any and all
reasonable expenses, including Lender's attorneys' fees incurred or paid by
Lender in protecting the interest in the Collateral and in enforcing the rights
hereunder with respect to the Collateral. Any notice of sale, disposition or
other intended action by Lender with respect to the Collateral sent to Borrower
in accordance with the provisions hereof at least 10 days prior to such action,
shall constitute commercially reasonable notice to Borrower. The proceeds of any
disposition of the Collateral, or any part thereof, may be applied by Lender to
the payment of the Debt in such priority and proportions as Lender in its
discretion shall deem proper. In the event of any change in name, identity or
structure of any Borrower, such Borrower shall notify Lender thereof and
promptly after request shall execute, file and record such Uniform Commercial
Code forms as are necessary to maintain the priority of Lender's lien upon and
security interest in the Collateral, and shall pay all expenses and fees in
connection with the filing and recording thereof. If Lender shall require the
filing or recording of additional Uniform Commercial Code forms or continuation
statements, Borrower shall, promptly after request, execute, file and record
such Uniform Commercial Code forms or continuation statements as Lender shall
deem necessary, and shall pay all expenses and fees in connection with the
filing and recording thereof, it being understood and agreed, however, that no
such additional documents shall increase Borrower's
39
obligations under the Note, the Mortgage, this Agreement, the Assignment, the
Environmental Agreement and the other Loan Documents. Borrower hereby
irrevocably appoints Lender as its attorney-in-fact, coupled with an interest,
to file with the appropriate public office on its behalf any financing or other
statements signed only by Lender, as secured party, in connection with the
Collateral covered by the Mortgage.
30. Actions and Proceedings
If an Event of Default shall occur and be continuing, Lender has the right
to appear in and defend any action or proceeding brought with respect to the
Mortgaged Property and to bring any action or proceeding, in the name and on
behalf of Borrower, which Lender, in its discretion, decides should be brought
to protect its interest in the Mortgaged Property. Lender shall, at its option,
be subrogated to the lien of any mortgage or other security instrument
discharged in whole or in part by the Debt, and any such subrogation rights
shall constitute additional security for the payment of the Debt.
31. Waiver of Setoff and Counterclaim
All amounts due under the Mortgage, the Note and the other Loan Documents
shall be payable without setoff, counterclaim or any deduction whatsoever.
Borrower hereby waives the right to assert a counterclaim (other than mandatory
or compulsory counter-claims) in any action or proceeding brought against it by
Lender, or arising out of or in any way connected with this Agreement, the
Mortgage, the Note, any of the other Loan Documents, or the Debt.
32. Contest of Certain Claims
Notwithstanding the provisions of Sections 5 and 24(i) hereof or any other
Loan Document provision, Borrower shall not be in default for failure to pay or
discharge Taxes, Other Charges or a mechanic's, materialman's or other lien
asserted against the Mortgaged Property if, and so long as: (a) Borrower shall
have notified Lender of such nonpayment and the reasons therefor within a
reasonable period after obtaining knowledge thereof; (b) Borrower shall
diligently and in good faith contest, or cause to be contested, such Taxes,
Other Charges or lien by appropriate legal proceedings which shall operate to
prevent the enforcement or collection thereof and the sale of the Mortgaged
Property or any part thereof, in satisfaction thereof; (c) Borrower shall have
furnished to Lender a cash deposit, or an indemnity bond reasonably satisfactory
to Lender with a surety reasonably satisfactory to Lender, or title insurance
satisfactory to Lender with a title insurance company reasonably satisfactory to
Lender, in the amount of the Taxes, Other Charges or mechanic's or materialman's
lien claim, plus a reasonable additional sum to pay all costs, interest and
penalties that may be imposed or incurred in connection therewith, to assure
payment of the matters under contest and to prevent any sale or forfeiture of
the Mortgaged Property or any part thereof, (d) Borrower shall promptly upon
final determination thereof pay, or cause to be paid, the amount of any such
Taxes, Other Charges or claim so determined, together with all costs, interest
and penalties which may be payable in connection therewith; and (e) the failure
to pay the Taxes, Other Charges or mechanic's, materialman's or other lien claim
does not constitute a default under any other deed of trust, mortgage or
security interest covering or affecting any part of the Mortgaged Property.
Notwithstanding the foregoing, Borrower shall promptly upon request of Lender
pay (and if
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Borrower shall fail so to do, Lender may, but shall not be required to, pay or
cause to be discharged or bonded against) any such Taxes, Other Charges or claim
notwithstanding such contest, if in the opinion of Lender, the Mortgaged
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
such cash deposit or part thereof to the claimant entitled thereto at any time
when, in the judgment of Lender, the entitlement of such claimant is
established.
33. Recovery of Sums Required to Be Paid
Subject to the provisions of Section 62 hereof, Lender shall have the right
from time to time to take action to recover any sum or sums which constitute a
part of the Debt as they become due, without regard to whether or not the
balance of the Debt shall be due, and without prejudice to the right of Lender
thereafter to bring an action of foreclosure, or any other action, for a default
or defaults by Borrower existing at the time such earlier action was commenced.
34. Marshalling and Other Matters
Borrower hereby waives, to the extent permitted by law, the benefit of all
appraisement, valuation, stay, extension, reinstatement and redemption laws now
or hereafter in force, and all rights of marshalling in the event of any sale
hereunder of the Mortgaged Property or any part thereof or any interest therein.
Borrower hereby expressly waives any and all rights of redemption from sale
under any order or decree of foreclosure of the Mortgage on behalf of Borrower,
and on behalf of each and every person acquiring any interest in or title to the
Mortgaged Property subsequent to the date of this Agreement and on behalf of all
persons to the extent permitted by applicable law.
35. Hazardous Substances
Borrower hereby represents and warrants to Lender that, to the best of
Borrower's knowledge after due inquiry and investigation, except as disclosed in
the Environmental Reports: (a) the Mortgaged Property is not in direct or
indirect material violation of 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, and any
state super-lien and environmental clean-up statutes (collectively,
"Environmental Laws"); (b) the Mortgaged Property is not subject to any private
or governmental lien or judicial or administrative notice or action relating to
hazardous and/or toxic, dangerous and/or regulated, substances, solvents,
wastes, materials, pollutants or contaminants, petroleum, tremolite,
anthlophylie or actinolite or polychlorinated biphenyls (including, without
limitation, any raw materials which include hazardous constituents) and any
other substances, materials or solvents which are included under or regulated by
Environmental Laws (collectively, "Hazardous Substances"); (c) no Hazardous
Substances are or have been, prior to Borrower's acquisition of the Mortgaged
Property, discharged, generated, treated, disposed of or stored on, incorporated
in or removed or transported from the Mortgaged Property other than in
compliance with all Environmental Laws; and (d) no underground storage tanks
exist on any of the Mortgaged Property. So long as
41
Borrower owns or is in possession of the Mortgaged Property, Borrower shall keep
or cause the Mortgaged Property to be kept free from Hazardous Substances (other
than de minimis quantities of Hazardous Substances that are necessary and
lawfully used in the operation of the Mortgaged Property as a hotel or motel,
and which are stored and disposed of in compliance with all Environmental Laws)
and in compliance with all Environmental Laws, shall promptly notify Lender if
Borrower shall become aware of any Hazardous Substances on the Mortgaged
Property and/or if Borrower shall become aware that the Mortgaged Property is in
direct or indirect violation of any Environmental Laws and Borrower shall remove
such Hazardous Substances and/or cure such violations, as applicable, as
required by law, promptly after Borrower becomes aware of such Hazardous
Substances or such violations, at Borrower's sole expense. Borrower shall have
the right to contest any Environmental Law (as such term is defined in the
Environmental Agreement) as provided in the Environmental Agreement, subject to
any and all conditions to the exercise of such right contained therein. Nothing
herein shall prevent Borrower from recovering such expenses from any other party
that may be liable for such removal or cure. Upon Lender's request, at any time
and from time to time while this Agreement is in effect (but in no event more
frequently than once in any three-year period or more frequently if specific
facts and circumstances reasonably dictate, or otherwise at Lender's election
but at Lender's expense), Borrower shall provide at Borrower's sole expense, an
inspection or audit of the Mortgaged Property prepared by a licensed
hydrogeologist or licensed environmental engineer approved by Lender indicating
the presence or absence of Hazardous Substances on the Mortgaged Property. If
Borrower fails to provide such inspection or audit within 30 days after such
request, Lender may order such inspection or audit, and Borrower hereby grants
to Lender and its employees and agents access to the Mortgaged Property and a
license to undertake such inspection or audit. The cost of such inspection or
audit shall be paid by Borrower and, if not so paid, shall be added to the
principal balance of the sums due under the Note and the Mortgage and shall bear
interest thereafter until paid at the Default Rate. The obligations and
liabilities of Borrower under this Section shall survive any termination,
satisfaction, or assignment of the Mortgage and the exercise by Lender of any of
its rights or remedies thereunder including, without limitation, the acquisition
of the Mortgaged Property by foreclosure or a conveyance in lieu of foreclosure.
Notwithstanding anything herein to the contrary, Borrower shall have no
liability under this Section with respect to: (i) any acts or omissions which
occur from and after the conveyance of the Mortgaged Property to Lender, or its
designee, by foreclosure, deed in lieu of foreclosure or similar transaction, or
the discharge, by satisfaction or assignment of the Mortgage; or (ii) any
matters which arise by reason of the acts or omissions of Lender or any of
successors, assigns or designees.
36. Asbestos
(a) Borrower hereby represents and warrants to Lender that, to the best of
Borrower's knowledge, except as disclosed in the Environmental Reports, no
asbestos or any substance containing asbestos (collectively, "Asbestos") is
located on the Mortgaged Property. Borrower shall not install in the Mortgaged
Property, nor permit to be installed in the Mortgaged Property, Asbestos and
shall remove (if, and to the extent, required by, and in accordance with,
applicable Environmental Laws) any Asbestos promptly upon discovery to the
satisfaction of Lender, at Borrower's sole expense. Upon Lender's request, at
any time and from time to time (but in no event more frequently than once in any
three-year period or more frequently if specific facts and circumstances
reasonably dictate, or otherwise at Lender's election but at Lender's expense),
42
Borrower shall provide, at Borrower's sole expense, an inspection or audit of
the Mortgaged Property prepared by an engineering or consulting firm approved by
Lender, indicating the presence or absence of Asbestos on the Mortgaged
Property. If Borrower fails to provide such inspection or audit within 30 days
after such request, Lender may order such inspection or audit. The cost of such
inspection or audit shall be paid by Borrower and added to the principal balance
of the sums due under the Note and the Mortgage, and shall bear interest
thereafter until paid at the Default Rate. The obligations and liabilities of
Borrower under this Section shall survive any termination, satisfaction, or
assignment of the Mortgage and the exercise by Lender of any of its rights or
remedies thereunder, including but not limited to, the acquisition of the
Mortgaged Property by foreclosure or a conveyance in lieu of foreclosure.
(b) Borrower shall, subject to Lender's reasonable approval, develop an
operations and maintenance plan for the Mortgaged Property with respect to the
presence of Asbestos in the Improvements (the "O&M Plan"). Borrower shall comply
in all respects with the terms and conditions of the O&M Plan. Unless required
by Environmental Laws, Borrower shall not modify or amend the O&M Plan without
Lender's prior written consent.
(c) Borrower shall not remove, disturb, encapsulate or otherwise remediate
the Asbestos in the Improvements except in compliance with the O&M Plan and all
Environmental Laws. If Borrower makes any alterations or modifications to the
Improvements that would disturb or expose any Asbestos in the Improvements or
cause any of such Asbestos to become friable, Borrower shall remove or
encapsulate such Asbestos in compliance with all applicable Environmental Laws
before allowing occupancy of such space or opening such space to the public.
37. Environmental Monitoring
Borrower shall give prompt written notice to Lender of: (a) any
governmental proceeding or inquiry with respect to the presence of any Hazardous
Substance on, under, from or about the Mortgaged Property; (b) all written
claims made by any third party against Borrower or the Mortgaged Property
relating to any material loss or injury resulting from any Hazardous Substance;
and (c) Borrower's actual discovery of any occurrence or condition on any real
property adjoining or in the vicinity of the Mortgaged Property that could
reasonably be expected to cause the Mortgaged Property to be subject to any
investigation or cleanup pursuant to any Environmental Law. Borrower shall
permit Lender to join and participate, as a party if it so elects, in any legal
proceedings or actions initiated with respect to the Mortgaged Property in
connection with any Environmental Law or Hazardous Substance, and Borrower shall
pay all attorneys' fees incurred by Lender in connection therewith. In the event
that any environmental site assessment report prepared for the Mortgaged
Property recommends that an operations and maintenance plan be implemented for
Asbestos or any Hazardous Substance, Borrower shall cause such operations and
maintenance plan to be prepared and implemented at Borrower's expense upon
request of Lender and in accordance with the recommendation. In the event that
any investigation, site monitoring, containment, cleanup, removal, restoration,
or other work of any kind which is reasonably necessary or desirable under an
applicable Environmental Law ("Remedial Work"), Borrower shall, at its sole cost
and expense, commence and thereafter diligently prosecute to completion all such
Remedial Work within 120 days after written demand
43
by Lender for performance thereof (or such shorter period of time as may be
required under applicable law).
38. Management of the Hotels
Borrower further covenants and agrees with Lender as follows:
(a) Borrower shall cause the hotels located on the Mortgaged Property to be
operated pursuant to the Franchise Agreement and the Management Agreement, and
any renewals or replacements thereof approved by Lender. In the case of the
Management Agreement, Lender's approval of any such renewals or replacements
shall not be unreasonably withheld. With respect to the property comprising a
portion of the Mortgaged Property known as the Hilton Inn and located at One
Hilton Court, Parsippany, New Jersey, upon the expiration by its terms of the
current Management Agreement affecting such premises, Lender consents to the
execution by Borrower of a replacement Management Agreement with Patriot
American Hospitality Management Company on terms identical to the existing
Management Agreement with managers that are affiliates of Borrower, provided,
that management by Patriot American Hospitality Management Company is not
prohibited by the Franchise Agreement and that Patriot American Hospitality
Management Company executes a Consent, Subordination and Recognition Agreement
(Management Agreement) on terms identical to that executed by managers that are
affiliates of Borrower.
(b) Borrower shall:
(i) pay or cause to be paid all sums required to be paid by Borrower
under the Franchise Agreement and the Management Agreement and promptly
perform and/or observe in all material respects all of the covenants and
agreements required to be performed and observed by it under any agreement
comprising a part of the Franchise Agreement and any agreement comprising a
part of the Management Agreement and do all things reasonably necessary to
preserve and to keep unimpaired its material rights thereunder;
(ii) promptly notify Lender of any default under any agreement
comprising a part of the Franchise Agreement or any agreement comprising a
part of the Management Agreement of which it has received, or been given,
notice and provide Lender with copies of any notices delivered in
connection therewith;
(iii) promptly deliver to Lender a copy of each financial statement,
business plan, capital expenditures plan, notice, report and estimate
received by it under any agreement comprising a part of the Franchise
Agreement or any agreement comprising a part of the Management Agreement;
(iv) exercise commercially reasonable efforts promptly to enforce the
performance and observance of all of the material covenants and agreements
required to be performed and/or observed by the franchisor under any
agreement comprising a part of the Franchise Agreement and the manager
under any agreement comprising a part of the Management Agreement;
44
(v) intentionally omitted;
(vi) grant Lender the right, but Lender shall be under no obligation,
to pay any sums and to perform any act or take any action as may be
appropriate to cause all the terms, covenants and conditions of the
Franchise Agreement on the part of Borrower to be performed or observed to
be promptly performed or observed on behalf of Borrower, to the end that
the rights of Borrower in, to and under any agreement comprising a part of
the Franchise Agreement shall be kept unimpaired and free from default;
(vii) use its reasonable efforts to obtain, from time to time, from
the franchisor under the Franchise Agreement such comfort letters or
certificates of estoppel with respect to compliance by Borrower with the
terms of the Franchise Agreement as may be requested by Lender; and
(viii) exercise each individual option, if any, to extend or renew the
term of any agreement comprising a part of the Franchise Agreement upon
demand by Lender made at any time within one year of the last day upon
which any such option may be exercised, and Borrower hereby expressly
authorizes and appoints Lender its attorney-in-fact to exercise any such
option in the name of and upon behalf of Borrower, which power of attorney
shall be irrevocable and shall be deemed to be coupled with an interest.
(c) Borrower shall not, without Lender's prior written consent: (i)
surrender, terminate or cancel any agreement comprising a part of the Franchise
Agreement or any agreement comprising a part of the Management Agreement; (ii)
reduce or consent to the reduction of the term of any agreement comprising a
part of the Franchise Agreement or any agreement comprising a part of the
Management Agreement; (iii) except pursuant to existing terms of the Franchise
Agreement and the Management Agreement, increase or consent to the increase of
the amount of any charges under the Franchise Agreement or the Management
Agreement; (iv) otherwise materially modify, change, supplement, alter or amend,
or waive or release any of its rights and remedies under any agreement
comprising a part of the Franchise Agreement or any agreement comprising a part
of the Management Agreement in any material respect; or (v) operate the
Mortgaged Property under the name of any hotel chain or system other than as set
forth on Schedule A with respect to each hotel comprising the Mortgaged
Property; provided, however, Borrower may, under such circumstances, replace the
respective Franchisor with another franchisor subject to Lender's reasonable
approval, it being agreed that Lender's approval may be reasonably withheld if
such proposed franchisor replacement could reasonably result in any downgrade,
withdrawal or qualification of the current rating of any Securities (or if
Securities have not yet been issued, would reasonably result in any downgrade,
withdrawal or qualification of the anticipated rating thereof). Anything herein
to the contrary notwithstanding, without Lender's prior written consent Borrower
shall not enter into any franchise arrangements or substitute management
arrangements affecting any portion of the Mortgaged Property currently operated
as a Wyndham hotel, the terms of which shall be subject to Lender's approval in
its sole discretion.
(d) Except pursuant to existing terms of the Franchise Agreement and the
Management Agreement, Borrower shall not, without Lender's prior written
consent, enter into transactions with any affiliate including, without
limitation, any arrangement providing for the
45
management of the hotels on the Mortgaged Property, the rendering or receipt of
services or the purchase or sale of inventory, except any such transaction in
the ordinary course of business of Borrower if the monetary or business
consideration arising therefrom would be substantially as advantageous to
Borrower as the monetary or business consideration which would obtain in a
comparable transaction with a person not an affiliate of Borrower.
(e) Borrower irrevocably authorizes and directs Franchisor to deliver to
Lender: (i) all operating information concerning the Property submitted by
Borrower to Franchisor; (ii) the written results of all quality assurance
inspections of the Property performed by Franchisor's Quality Assurance
Directors; and (iii) such other information that Lender or Lender's agents may
reasonably request, from time to time, including any information in the
possession of Franchisor relating to Borrower not included in the reports
referred to above.
39. Handicapped Access
(a) Borrower agrees that the Mortgaged Property shall at all times use
commercially reasonable efforts to comply to the extent applicable with the
requirements of the Americans with Disabilities Act of 1990, 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"). Nothing herein shall be construed to require
Borrower to comply with Access Laws with respect to any single property
comprising a portion of the Mortgaged Property that is otherwise "grandfathered"
under applicable law.
(b) Notwithstanding any provisions set forth herein or in any other
document regarding Lender's approval of alterations of the Mortgaged Property,
Borrower shall not alter the Mortgaged Property 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.
Notwithstanding anything herein to the contrary, any permitted approved
alteration or improvement which necessarily or incidentally increases Borrower's
responsibilities for compliance with the applicable Access Laws shall not form
the basis of a default hereunder.
(c) 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.
40. ERISA
(a) Borrower covenants and agrees that it shall not engage in any
transaction which would cause any obligation, or action taken or to be taken,
hereunder (or the exercise by Lender of any of its rights under the Note, the
Mortgage, this Agreement and the other Loan Documents) to be a non-exempt (under
a statutory or administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974 (or any successor legislation
thereto), as amended ("ERISA").
46
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of this
Agreement, as requested by Lender in its sole discretion, that: (i) Borrower is
not an "employee benefit plan" as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(32) of ERISA; (ii) Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (iii) one or more of the following circumstances is true:
(A) Equity interests in Borrower are publicly offered securities,
within the meaning of 29 C.F.R.(S) 2510.3-101(b)(2);
(B) Less than 25 percent of each outstanding class of equity interests
in Borrower are held by "benefit plan investors" within the meaning of 29
C.F.R.(S) 2510.3-101(f)(2); or
(C) Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R.(S) 2510.3-101(c) or (e)
or an investment company registered under The Investment Company Act of
1940.
41. Indemnification
In addition to any other indemnifications provided herein, in the
Assignment, the Environmental Agreement or in the other Loan Documents, Borrower
shall protect, defend, indemnify and save harmless Lender from and against all
liabilities, obligations, claims, demands, damages, penalties, causes of action,
losses, fines, costs and expenses (including, without limitation, out-of-pocket
attorneys' fees and expenses) imposed upon or incurred by or asserted against
Lender by reason of: (a) ownership of the Mortgage, the Mortgaged Property 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 the
Mortgaged Property 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 the Mortgaged Property or any part thereof
or on adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (d) any failure on the part of Borrower to perform or comply
with any of the terms of this Agreement; (e) performance of any labor or
services or the furnishing of any materials or other property in respect of the
Mortgaged Property or any part thereof; (f) the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release, or threatened release
of any Hazardous Substance or Asbestos on, from, or affecting the Mortgaged
Property or any other property; (g) any personal injury (including wrongful
death) or property damage (real or personal) arising out of or related to such
Hazardous Substance or Asbestos; (h) any lawsuit brought or threatened,
settlement reached, or government order relating to such Hazardous Substance or
Asbestos; (i) any violation of the Environmental Laws, which are based upon or
in any way related to such Hazardous Substance or Asbestos including, without
limitation, the costs and expenses of any remedial action, out-of-pocket
attorney's and consultant's fees, investigation and laboratory fees, court
costs, and litigation expenses; (j) any failure of the Mortgaged Property to
comply with any Access Laws; (k) any representation or warranty made in the
Note, the Mortgage, this Agreement, the Environmental Agreement or the other
Loan Documents being false or misleading in any material respect as of the date
such representation or warranty was made;
47
(1) any claim by brokers, finders or similar persons claiming to be entitled to
a commission in connection with any Lease or other transaction involving the
Mortgaged Property or any part thereof under any legal requirement or any
liability asserted against Lender with respect thereto; and (m) the claims of
any lessee of all or any portion of the Mortgaged Property or any person acting
through or under any lessee or otherwise arising under or as a consequence of
any Lease. Notwithstanding the foregoing, Borrower shall not be obligated to
indemnify for the gross negligence or willful misconduct of Lender or anyone
claiming by, through or under Lender. Any amounts payable to Lender by reason of
the application of this Section shall be promptly paid, shall be secured by the
Mortgage 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 shall survive any termination, satisfaction or
assignment of this Agreement or the entry of a judgment of foreclosure, sale of
the Mortgaged Property by nonjudicial foreclosure sale, or delivery of a deed in
lieu of foreclosure. Anything herein to the contrary notwithstanding, the
indemnification in this Section does not extend to actions by Lender or actions
after Lender has taken possession of the Mortgaged Property or has sold the
Mortgaged Property. Wherever in the Loan Documents it is agreed that Lender is
to be indemnified, it is hereby agreed that the indemnifying party may defend
such claims using counsel selected thereby, subject to Lender's approval which
approval shall not be unreasonably withheld or delayed. Lender shall not
compromise or settle any such indemnified claim without the indemnifying party's
approval, which approval shall not be unreasonably withheld or delayed.
42. Notice
Any notice, demand, statement, request or consent made hereunder shall be
in writing and shall be deemed given on the next business day if sent by Federal
Express or other reputable overnight courier and designated for next business
day delivery, addressed to the address, as set forth above, of the party to whom
such notice is to be given, or to such other address or additional party as
Borrower or Lender, as the case may be, shall in like manner designate in
writing. Without affecting the validity of notice to Borrower, a courtesy copy
of any notice, demand, statement, request or consent made hereunder that is sent
to Borrower shall also be simultaneously sent to Akin, Gump, Strauss, ▇▇▇▇▇ &
▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Att'n: ▇▇▇▇
▇. ▇▇▇, Esq.
43. Authority
Borrower represents and warrants that: (a) it has full power, authority and
right to execute, deliver and perform its obligations pursuant to this
Agreement, and to mortgage, give, grant, bargain, sell, alien, enfeoff, convey,
confirm, warrant, pledge, hypothecate and assign the Mortgaged Property pursuant
to the terms hereof and to keep and observe all of the terms of this Agreement
on Borrower's part to be performed; and (b) Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended, and the related Treasury Department regulations, including temporary
regulations. Lender represents and warrants that it has full power, authority
and right to execute, deliver and perform its obligations pursuant to this
Agreement.
48
44. Waiver of Notice
Borrower shall not be entitled to any notices of any nature whatsoever from
Lender except with respect to matters for which this Agreement specifically and
expressly provides for the giving of notice by Lender to Borrower and except
with respect to matters for which Lender is required by applicable law to give
notice, and Borrower hereby expressly waives the right to receive any notice
from Lender with respect to any matter for which this Agreement or applicable
law does not specifically and expressly provide for the giving of notice by
Lender to Borrower.
45. Remedies of Borrower
In the event that a claim or adjudication is made that Lender has acted
unreasonably or has unreasonably delayed acting in any case where by law or
under the Note, the Mortgage, this Agreement, the Assignment, the Environmental
Agreement or the other Loan Documents, it has an obligation to act reasonably or
promptly, Lender shall not be liable for any monetary damages, and Borrower's
remedies shall be limited to injunctive relief or declaratory judgment.
46. Sole Discretion of Lender
Wherever pursuant to this Agreement Lender exercises any right given to it
to approve or disapprove, or any arrangement or term is to be satisfactory to
Lender, the decision of Lender to approve or disapprove or to decide that
arrangements or terms are satisfactory or not satisfactory shall be in the sole
discretion of Lender and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.
47. Non-Waiver
The failure of Lender to insist upon strict performance of any term hereof
shall not be deemed to be a waiver of any term of this Agreement. Borrower shall
not be relieved of Borrower's obligations hereunder by reason of: (a) the
failure of Lender to comply with any request of Borrower or any Guarantor to
take any action to foreclose the Mortgage or otherwise to enforce any of the
provisions hereof or of the Note, the Assignment, the Environmental Agreement or
the other Loan Documents; (b) the release, regardless of consideration, of the
whole or any part of the Mortgaged Property, or of any person liable for the
Debt or any portion thereof; or (c) any agreement or stipulation by Lender
extending the time of payment or otherwise modifying or supplementing the terms
of the Note, the Mortgage, this Agreement, the Assignment, the Environmental
Agreement or the other Loan Documents. Lender may resort for the payment of the
Debt to any other security held by Lender in such order and manner as Lender, in
its discretion, may elect. Lender may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of Lender thereafter to foreclose the Mortgage. The rights and remedies of
Lender under this Agreement shall be separate, distinct and cumulative and none
shall be given effect to the exclusion of the others. No act of Lender shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision. Lender shall not be limited exclusively to the
rights and remedies herein stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.
49
48. No Oral Change
This Agreement, and any provisions hereof, may not be modified, amended,
waived, extended, changed, discharged or terminated orally or by any act or
failure to act on the part of Borrower or Lender, but only by an agreement in
writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
49. Joint and Several Liability
If Borrower consists of more than one person, the obligations and
liabilities of each such person hereunder shall be joint and several, and any
reference to the "Mortgaged Property" shall refer to each of the individual
hotels comprising the Mortgaged Property, and to all of such hotels,
collectively, as the context may require. Subject to the provisions hereof
requiring Lender's consent to any transfer of the Mortgaged Property, this
Agreement shall be binding upon and inure to the benefit of Borrower and Lender
and their respective successors and assigns for so long as any portion of the
Debt remains outstanding.
50. Inapplicable Provisions
If any term, covenant or condition of the Note, the Mortgage, this
Agreement or any other Loan Document is held to be invalid, illegal or
unenforceable in any respect, the Note, the Mortgage, this Agreement and such
other Loan Document shall be construed without such provision.
51. Section Headings
The headings and captions of the various Sections of this Agreement are for
convenience of reference only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions hereof.
52. Counterparts
This Agreement may be executed in any number of counterparts and each such
duplicate original shall be deemed to be an original.
53. Certain Definitions
Unless the context clearly indicates a contrary intent or unless otherwise
specifically provided herein, words used in this Agreement may be used
interchangeably in singular or plural form and the word "Borrower" shall mean
"each Borrower, and each constituent party of Borrower, individually, as the
context may require, and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein", the word "Lender" shall
mean "Lender and any subsequent holder of the Note", the word "Debt" shall mean
"the Note and any other evidence of indebtedness secured by the Mortgage", the
word "person" shall include an individual, corporation, partnership, limited
liability company, trust, unincorporated association, government, governmental
authority and any other entity, and the words "Mortgaged Property" shall include
any portion of the Mortgaged Property and any interest therein, and shall refer
to
50
each and every property comprising a portion of the Mortgaged Property, as the
context may require, and the words "attorneys' fees" shall include any and all
attorneys' fees, paralegal and law clerk fees including, without limitation,
fees at the pretrial, trial and appellate levels incurred or paid by Lender in
protecting its interest in the Mortgaged Property and Collateral and enforcing
its rights hereunder. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa.
54. Homestead
Borrower hereby waives and renounces all homestead and exemption rights
provided by the constitution and the laws of the United States and of any state,
in and to the Premises as against the collection of the Debt, or any part
thereof.
55. Assignments
Lender shall have the right to assign or transfer its rights under this
Agreement without limitation. Any assignee or transferee shall be entitled to
all the benefits afforded Lender under this Agreement.
56. SUBMISSION TO JURISDICTION
TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN
NEW YORK COUNTY, NEW YORK OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT. LENDER MAY, AT ITS SOLE DISCRETION, ELECT THE STATE
OF NEW YORK, NEW YORK COUNTY, OR THE UNITED STATES OF AMERICA, FEDERAL DISTRICT
COURT HAVING JURISDICTION OVER NEW YORK COUNTY, AS THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO SUCH VENUE AS
BEING AN INCONVENIENT FORUM.
57. Agent for Receipt of Process
Borrower hereby irrevocably appoints CT Corporation System, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its authorized agent to accept and acknowledge, on
behalf of Borrower, service of any and all process which may be served in any
suit, action or proceeding of the nature referred to in Section 56 hereof in any
State or Federal court within New York County. If such agent shall cease so to
act, Borrower shall irrevocably designate and appoint without delay another such
agent satisfactory to Lender, and shall promptly deliver to Lender written
evidence of such other agent's acceptance of such appointment.
58. Service of Process
To the extent permitted by applicable law, process in any suit, action or
proceeding of the nature referred to in Section 56 hereof may be served: (a) by
registered or certified mail, postage
51
prepaid, to Borrower at the address set forth above or to such other address of
which Borrower shall have given Lender written notice; or (b) if Borrower shall
not have made an appearance within 21 days after service in accordance with
clause (a) of this Section, by hand delivery to the agent identified in Section
57 hereof, or such successor agent as shall have been identified in accordance
with Section 57 hereof. Nothing in this Section shall affect the Lender's right
to serve process in any manner permitted by law, or limit Lender's right to
bring proceedings against Borrower in the courts of any other jurisdiction.
59. WAIVER OF JURY TRIAL
TO THE EXTENT PERMITTED BY APPLICABLE LAW, 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 NOTE, THE MORTGAGE, THIS AGREEMENT OR THE
OTHER 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 SECTION IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
60. CHOICE OF LAW
THIS LOAN AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT
TO THE LAWS OF THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED,
CONSTRUED, APPLIED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF SUCH
JURISDICTION.
61. Release of Portions of the Mortgaged Property
(a) Any one or more individual hotels that comprises a portion of the
Mortgaged Property may be released from the lien of the Mortgage provided that,
in each instance: (i) no Event of Default shall have occurred and be continuing;
(ii) Borrower pays to Lender the applicable release price set forth on Schedule
A hereto with respect to such property together with all other sums then due and
payable in respect of the Loan (including, without limitation, a prorata portion
of any deferred financing fees payable under the Note and interest, late fees,
costs and expenses payable in accordance herewith); and (iii) Borrower shall
deliver to Lender a current title search with respect to the remaining Mortgaged
Property showing no liens or other encumbrances other than as permitted
hereunder or to which Lender shall have consented. In order to confirm or effect
such release, Lender shall execute one or more instruments, in recordable form,
evidencing such release and the release of the constituent Borrower party from
liability in respect of the Loan.
(b) Any sums paid to Lender in respect of a release under this Section in
excess of the outstanding balance of the Loan allocated to such released
property comprising a portion of the
52
Mortgaged Property (including, without limitation, all interest, deferred
financing fees, costs and expenses) shall be applied by Lender, pari passu, in
reduction of the portion of the outstanding balance of the Loan allocated to
each remaining property comprising a portion of the Mortgaged Property.
62. Limitations on Recourse
Anything herein to the contrary notwithstanding, Lender's recourse upon the
occurrence of an Event of Default hereunder is limited pursuant to the express
provisions of the Note, as though such provisions were set forth in their
entirety herein.
63. Debt Service Coverage Test
The cash flow from the Mortgaged Property is subject to periodic evaluation
and analysis and, under certain circumstances, payment to Lender. The terms of
such evaluation, analysis and payments, if appropriate, are set forth on
Schedule B hereto.
53
IN WITNESS WHEREOF, Borrower and Lender have executed this instrument as of
the day and year first above written.
BORROWER:
W-BROOKFIELD, LLC PARSIPPANY, LLC
By: W-Brookfield Manager Corp. By: Parsippany Manager Corp.
its Manager its Manager
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------- --------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President Vice President
DT GLENVIEW, LLC WCHNW, LLC
By: DT Glenview Manager Corp. By: WCHNW Manager Corp.
its Manager its Manager
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------- --------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President Vice President
R-LISLE, LLC W-GARDEN ATLANTA, LLC
By: R-Lisle Manager Corp. By: W-Garden Atlanta Manager Corp.
its Manager its Manager
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------- --------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President Vice President
RAD-▇▇▇▇, LLC W-CHARLOTTE, LLC
By: Rad-▇▇▇▇ Manager Corp. By: W-Charlotte Manager Corp.
its Manager its Manager
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------- --------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President Vice President
RAD-▇▇▇▇, LLC H-MELBOURNE, L.P.
By: Rad-▇▇▇▇ Manager Corp. By: H-Melbourne GP, LLC
its Manager its general partner
By: H-Melbourne Manager Corp.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ its Manager
--------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
54
LENDER:
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Authorized Signatory
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 1st day of July,
1999, by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as Authorized Signatory of ▇▇▇▇▇▇ BROTHERS HOLDINGS
INC., a Delaware corporation, who is personally known to me or who produced his
driver's license as identification and who did take oath, on behalf of the
corporation.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Notary Public
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 27th day of June,
1999, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Vice President of W-Brookfield Manager Corp.,
manager of W-Brookfield, LLC, a Delaware limited liability company, who is
personally known to me or who produced his driver's license as identification
and who did take oath, on behalf of the corporation, as manager of said limited
liability company.
/s/ ▇▇▇▇▇▇▇ A.C. SMALL
-------------------------------------
Notary Public
Print Name: ▇▇▇▇▇▇▇ A.C. Small
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 27th day of June,
1999, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Vice President of DT Glenview Manager Corp.,
manager of DT Glenview, LLC, a Delaware limited liability company, who is
personally known to me or who produced his driver's license as identification
and who did take oath, on behalf of the corporation, as manager of said limited
liability company.
/s/ ▇▇▇▇▇▇▇ A.C. SMALL
-------------------------------------
Notary Public
Print Name: ▇▇▇▇▇▇▇ A.C. Small
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 27th day of June,
1999, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Vice President of R-Lisle Manager Corp., manager
of R-Lisle, LLC, a Delaware limited liability company, who is personally known
to me or who produced his driver's license as identification and who did take
oath, on behalf of the corporation, as manager of said limited liability
company.
/s/ ▇▇▇▇▇▇▇ A.C. SMALL
-------------------------------------
Notary Public
Print Name: ▇▇▇▇▇▇▇ A.C. Small
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 27th day of June,
1999, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Vice President of Rad-▇▇▇▇ Manager Corp., manager
of Rad-▇▇▇▇, LLC, a Delaware limited liability company, who is personally known
to me or who produced his driver's license as identification and who did take
oath, on behalf of the corporation, as manager of said limited liability
company.
/s/ ▇▇▇▇▇▇▇ A.C. SMALL
-------------------------------------
Notary Public
Print Name: ▇▇▇▇▇▇▇ A.C. Small
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 27th day of June,
1999, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Vice President of Rad-▇▇▇▇ Manager Corp., manager
of Rad-▇▇▇▇, LLC, a Delaware limited liability company, who is personally known
to me or who produced his driver's license as identification and who did take
oath, on behalf of the corporation, as manager of said limited liability
company.
/s/ ▇▇▇▇▇▇▇ A.C. SMALL
-------------------------------------
Notary Public
Print Name: ▇▇▇▇▇▇▇ A.C. Small
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 27th day of June,
1999, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Vice President of Parsippany Manager Corp.,
manager of Parsippany, LLC, a Delaware limited liability company, who is
personally known to me or who produced his driver's license as identification
and who did take oath, on behalf of the corporation, as manager of said limited
liability company.
/s/ ▇▇▇▇▇▇▇ A.C. SMALL
-------------------------------------
Notary Public
Print Name: ▇▇▇▇▇▇▇ A.C. Small
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 27th day of June,
1999, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Vice President of WCHNW Manager Corp., manager of
WCHNW, LLC, a Delaware limited liability company, who is personally known to me
or who produced his driver's license as identification and who did take oath, on
behalf of the corporation, as manager of said limited liability company.
/s/ ▇▇▇▇▇▇▇ A.C. SMALL
-------------------------------------
Notary Public
Print Name: ▇▇▇▇▇▇▇ A.C. Small
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 27th day of June,
1999, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Vice President of W-Garden Atlanta Manager Corp.,
manager of W-Garden Atlanta, LLC, a Delaware limited liability company, who is
personally known to me or who produced his driver's license as identification
and who did take oath, on behalf of the corporation, as manager of said limited
liability company.
/s/ ▇▇▇▇▇▇▇ A.C. SMALL
-------------------------------------
Notary Public
Print Name: ▇▇▇▇▇▇▇ A.C. Small
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 27th day of June,
1999, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Vice President of W-Charlotte Manager Corp.,
manager of W-Charlotte, LLC, a Delaware limited liability company, who is
personally known to me or who produced his driver's license as identification
and who did take oath, on behalf of the corporation, as manager of said limited
liability company.
/s/ ▇▇▇▇▇▇▇ A.C. SMALL
-------------------------------------
Notary Public
Print Name: ▇▇▇▇▇▇▇ A.C. Small
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 27th day of June,
1999, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Vice President of H-Melbourne Manager Corps,
manager of H-Melbourne GP, LLC, a Delaware limited liability company, general
partner of H-Melbourne, L.P., a Delaware limited partnership, who is personally
known to me or who produced his driver's license as identification and who did
take oath, on behalf of the corporation, as manager of said limited liability
company, as general partner of said limited partnership.
/s/ ▇▇▇▇▇▇▇ A.C. SMALL
-------------------------------------
Notary Public
Print Name: ▇▇▇▇▇▇▇ A.C. Small