EXHIBIT 10.44
SECOND AMENDED AND RESTATED MEZZANINE LOAN AGREEMENT
SECOND AMENDED AND RESTATED MEZZANINE LOAN AGREEMENT
Dated as of June 2, 2000
by and among
HUDSON HOTELS PROPERTIES CORP.,
a New York corporation
▇▇▇▇▇▇ HOTELS CORPORATION,
a New York corporation
(as Borrowers)
and
RHD CAPITAL VENTURES, LLC,
a Delaware limited liability company
(as Mezzanine Lender)
TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS.................................................2
Section 1.1. Definitions..................................................2
ARTICLE II GENERAL TERMS......................................................9
Section 2.1. Mezzanine Loan...............................................9
Section 2.2. Security for the Mezzanine Loan..............................9
Section 2.3. Borrowers' Mezzanine Note....................................9
Section 2.4. Principal and Interest Payments.............................10
Section 2.5. Voluntary Prepayment........................................10
Section 2.6. Application of Payments.....................................10
Section 2.7. Payment of Debt Service, Method and Place of Payment,
Cash Management...........................................11
Section 2.8. Taxes.......................................................11
Section 2.9. Central Cash Management.....................................12
Section 2.10. Security Agreement.......................................14
ARTICLE III CONDITIONS PRECEDENT.............................................16
Section 3.1. Conditions Precedent to the Reduction of the First
Mezzanine Loan...........................................16
Section 3.2 Additional Information......................................16
Section 3.3 Required Supplements........................................16
Section 3.4 Confirmation of Representations and Warranties..............17
Section 3.5. Form of Mezzanine Loan Documents and Related Matters........17
ARTICLE IV REPRESENTATIONS AND WARRANTIES....................................18
Section 4.1. Representations and Warranties of Borrowers.................18
Section 4.2. Survival of Representations and Warranties..................20
ARTICLE V AFFIRMATIVE COVENANTS..............................................20
Section 5.1. Borrowers' Covenants........................................20
ARTICLE VI NEGATIVE COVENANTS................................................24
Section 6.1. Borrowers' Negative Covenants...............................24
ARTICLE VII DEFAULTS.........................................................24
Section 7.1. Event of Default.............................................24
Section 7.2. Remedies.....................................................25
Section 7.3. Remedies Cumulative..........................................26
Section 7.4. Mezzanine Lender's Right to Perform..........................26
ARTICLE VIII MISCELLANEOUS...................................................26
Section 8.1. Survival.....................................................26
Section 8.2. Mezzanine Lender's Discretion................................27
Section 8.3. Governing Law................................................27
Section 8.4. Modification, Waiver in Writing..............................27
Section 8.5. Delay Not a Waiver...........................................27
Section 8.6. Notices......................................................28
SECTION 8.7. TRIAL BY JURY................................................28
Section 8.8. Headings.....................................................28
Section 8.9. Assignment...................................................28
Section 8.10. Severability................................................28
Section 8.11. Preferences.................................................28
Section 8.12. Waiver of Notice............................................29
Section 8.13. Exhibits Incorporated.......................................29
Section 8.14. Offsets, Counterclaims and Defenses.........................29
Section 8.15. No Joint Venture or Partnership.............................29
Section 8.16. Waiver of Marshaling of Assets Defense......................29
Section 8.17. Waiver of Counterclaim......................................29
Section 8.18. Conflict; Construction of Documents.........................30
Section 8.19. Brokers and Financial Advisors..............................30
Section 8.20. Counterparts................................................30
Section 8.21. Estoppel Certificates.......................................30
Section 8.22. Payment of Expenses.........................................30
Section 8.23. Bankruptcy Waiver...........................................30
Section 8.24. Entire Agreement............................................31
Section 8.25. Dissemination of Information................................31
Section 8.26. Limitation of Interest......................................31
Section 8.27. Indemnification.............................................31
Section 8.28. Borrowers' Acknowledgments..................................32
Section 8.29. Payment Instructions........................................32
Section 8.30. Intentionally omitted.......................................32
Section 8.31. Cross Collateralization.....................................32
Exhibit A Operating Expense Certificate
Schedule 1 Liabililties
SECOND AMENDED AND RESTATED MEZZANINE LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED MEZZANINE LOAN AGREEMENT, made as of June 2,
2000, is by and among, RHD CAPITAL VENTURES LLC, a Delaware limited liability
company, having an address at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Manager, Telefax Number (▇▇▇) ▇▇▇-▇▇▇▇
(together, with its successors and assigns, "MEZZANINE LENDER" or "LENDER"),
HUDSON HOTELS PROPERTIES CORP., a New York corporation, with an address of c/▇
▇▇▇▇▇▇ Hotels Corporation, ▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: President, Telefax Number: (▇▇▇) ▇▇▇-▇▇▇▇ ("HHPC") and HUDSON HOTELS
CORPORATION, a New York corporation, with an address of ▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chairman, Telefax
Number: (▇▇▇) ▇▇▇-▇▇▇▇ ("HHC"). HHPC and HHC are referred to herein individually
as "BORROWER" and collectively as "BORROWERS".
RECITALS
WHEREAS, on or about November 27, 1996, Borrowers and Nomura Asset Capital
Corporation ("Nomura") entered into that certain Loan Agreement (the "ORIGINAL
MEZZANINE LOAN AGREEMENT"), pursuant to which Borrowers obtained from Nomura
that certain loan (the "ORIGINAL MEZZANINE LOAN") in the amount of
$17,000,000.00, as evidenced by that certain Promissory Note (the "ORIGINAL
MEZZANINE NOTE") dated as of November 27, 1996 by Borrowers in favor of Nomura,
and secured by those certain loan documents as defined and described in the
Original Mezzanine Loan Agreement;
WHEREAS, on or about October 31, 1997, Borrowers and Nomura entered into that
certain Amended and Restated Mezzanine Loan Agreement (the "FIRST RESTATED
MEZZANINE LOAN AGREEMENT") pursuant to which Borrowers obtained from Nomura an
additional loan (the "ADDITIONAL MEZZANINE LOAN") in the amount of
$18,000,000.00 and consolidated the Additional Mezzanine Loan with the Original
Mezzanine Loan in the total aggregate amount of $35,000,000.00 (as consolidated,
the "FIRST RESTATED MEZZANINE LOAN"), as evidenced by that certain Amended and
Restated Mezzanine Note (the "FIRST RESTATED MEZZANINE NOTE"), dated as of
October 31, 1997 by Borrowers in favor of Nomura, and secured by those certain
loan documents as defined and described in the First Restated Mezzanine Loan
Agreement;
WHEREAS, on April 14, 2000, Mezzanine Lender purchased the First Restated
Mezzanine Loan from Nomura, and Nomura (a) endorsed the First Restated Mezzanine
Note to Mezzanine Lender by Allonge, dated April 14, 2000, and (b) assigned the
First Restated Mezzanine Loan Agreement and the other documents evidencing and
securing the First Restated Mezzanine Loan (collectively, the "FIRST RESTATED
MEZZANINE LOAN DOCUMENTS") to Mezzanine Lender pursuant to a certain Assignment
of Asset Documents, dated as of April 14, 2000, from Nomura to Mezzanine Lender
(the "ASSIGNMENT OF ASSET DOCUMENTS");
WHEREAS, on May 24, 2000, HHC issued to Mezzanine Lender a warrant to purchase
5,000,000 common shares of stock of HHC for a consideration of $1,000,000
pursuant to the terms of a certain Agreement and Warrant to Purchase 5,000,000
Common Shares (the "WARRANT");
WHEREAS, as a condition to purchasing the Warrant from HHC, Mezzanine Lender
required that HHC enter into a certain Put and Call Agreement, dated as of May
24, 2000, with Mezzanine Lender (the "PUT AND CALL AGREEMENT") providing for (a)
an option exercisable by HHC to purchase the Warrant from Mezzanine Lender and
(b) an option exercisable by Mezzanine Lender to require HHC to purchase the
Warrant from Mezzanine Lender on the terms and conditions set forth in the Put
and Call Agreement;
WHEREAS, Borrowers have requested that Mezzanine Lender agree to a reduction in
the outstanding principal amount of the First Restated Mezzanine Loan, as
evidenced by the First Restated Mezzanine Note, from $35,000,000 to $25,000,000
(the "MEZZANINE LOAN AMOUNT");
WHEREAS, Mezzanine Lender is willing to agree to a reduction in the outstanding
principal amount of the First Restated Mezzanine Loan, as evidenced by the First
Restated Mezzanine Note, from $35,000,000 to $25,000,000 (the First Restated
Mezzanine Loan, as so reduced, is hereinafter referred to as the "MEZZANINE
LOAN") in accordance with the terms of a certain Mezzanine Loan Restructuring
Agreement, dated as of the date hereof, by and among Borrowers and Mezzanine
Lender (the "RESTRUCTURING AGREEMENT"), provided that each Borrower joins in the
execution and delivery of (a) the Restructuring Agreement and (b) this
Agreement, which shall establish the terms and conditions of the Mezzanine Loan.
NOW, THEREFORE, in consideration of the premises and the covenants, agreements,
representations and warranties set forth in this Agreement, the parties hereby
covenant, agree, represent and warrant as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Definitions. For all purposes of this Agreement:
(a) the capitalized terms defined in this ARTICLE I have the meanings assigned
to them in this Article I, and include the plural as well as the singular;
(b) all accounting terms have the meanings assigned to them in accordance with
GAAP;
(c) the words "herein", "hereof", and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section, or other subdivision;
(d) Capitalized terms used but not defined herein shall have the meaning
ascribed to such terms in the First Mortgage Loan Agreements (provided, however,
in the event of a conflict between the 1996 First Mortgage Loan Agreement and
the 1997 First Mortgage Loan Agreement, the provisions of the 1997 First
Mortgage Loan Agreement shall control); and
(e) the following terms have the following meanings:
"1996 FIRST MORTGAGE LOAN AGREEMENT" has the meaning set forth in the definition
of "FIRST MORTGAGE LOAN AGREEMENTS".
"1997 FIRST MORTGAGE LOAN AGREEMENT" has the meaning set forth in the definition
of "FIRST MORTGAGE LOAN AGREEMENTS".
"ACCOUNT COLLATERAL" has the meaning provided in SECTION 2.10(A).
"AFFILIATE" of any specified Person means (i) any affiliate of any such
specified Person and (ii) any other Person controlling, controlled by or under
common control with such specified Person. For the purposes of this Agreement,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities or other beneficial
interests, by contract or otherwise; and the terms "controls", "controlling" and
"controlled" have the meanings correlative to the foregoing.
"AGREEMENT" means this Second Amended and Restated Mezzanine Loan Agreement, as
the same may from time to time hereafter be modified, supplemented or amended.
"AMENDMENT TO COLLATERAL DOCUMENTS" means and refers to that certain Amendment
to Collateral Documents, dated as of the Closing Date, by and among Borrowers
and Mezzanine Lender.
"ANNUAL OPERATING BUDGET" means an annual budget for the Operating Expenses of
the Borrowers (broken down on a Borrower by Borrower and a month-by-month basis)
prepared, and submitted by each Borrower to Lender on or before the Closing Date
for the 2000 calendar year and each December 1, for each succeeding calendar
year, all in form and substance reasonably satisfactory to Lender and as
reasonably approved by Lender, as the same shall be amended by Borrowers from
time to time, with Lender's written consent. Lender's approval shall be deemed
given if Lender does not respond to Borrowers' proposed budget within thirty
(30) days of Lender's receipt thereof.
"ASSIGNMENT OF ASSET DOCUMENTS" has the meaning provided in the recitals hereto.
"BORROWER" and "BORROWERS" each has the meaning set forth in the first paragraph
of this Agreement.
"BORROWERS SUB-ACCOUNT" means the Sub-Account of the Mezzanine Cash Collateral
Account Agreement established pursuant to SECTION 2.9.
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"BREACH PERIOD" means, with respect to any Nonpayment Breach, a period of time
equal to the period of time from and after the Payment Date on which the
Nonpayment Breach occurred, through and including the third Payment Date
following the Payment Date on which such Nonpayment Breach has been cured.
"BUSINESS DAY" means any day other than (i) a Saturday or a Sunday, and (ii) a
day on which federally insured depository institutions in New York are
authorized or obligated by law, regulation, governmental decree or executive
order to be closed.
"CLOSING DATE" means the date of this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
"COLLATERAL" means, collectively, all property of any kind whatsoever of either
Borrower including, without limitation, the collateral granted to Lender
pursuant to the Stock Pledge Agreements, the Partner Pledge Agreements, the
Collateral Assignments of Agreements, the Security Agreements, the Mezzanine
Cash Collateral Account Agreement, the Mezzanine Collection Account Agreement
and this Agreement and all Proceeds and products of the foregoing, all whether
now owned or hereafter acquired and all other property in which either Borrower
may now or hereafter have an interest.
"COLLATERAL ASSIGNMENT OF AGREEMENTS" means that certain Collateral Assignment
of Agreements dated as of November 27, 1996, as amended pursuant to that certain
First Amendment to Collateral Assignment dated as of October 31, 1997, given by
a Borrower as assignor, to Nomura, as assignee, as assigned by Nomura to
Mezzanine Lender by the Assignment of Asset Documents, as amended by the
Amendment to Collateral Documents, as the same may hereafter be modified,
amended or supplemented and "COLLATERAL ASSIGNMENTS OF AGREEMENTS" means all of
such agreements collectively.
"CONTINGENT OBLIGATION" means, with respect to any Borrower, any obligation of
such Borrower guaranteeing any indebtedness, leases, dividends or other
obligations ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY obligor")
in any manner, whether directly or indirectly, including, without limitation,
any obligation of such Borrower, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (x) for the purchase or payment of any
such primary obligation or (y) to maintain working capital or equity capital of
the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary obligation
or (iv) otherwise to assure or hold harmless the owner of such primary
obligation against loss in respect thereof. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made (taking into account the non-recourse or limited recourse nature of such
Contingent Obligation, if applicable) or, if not stated or determinable, the
maximum anticipated liability in respect thereof (assuming that such Borrower is
required to perform thereunder) as determined by Mezzanine Lender in good faith
(taking into account the non-recourse or limited recourse nature of such
Contingent Obligation, if applicable).
"CURRENT INTEREST ACCRUAL PERIOD" shall have the meaning set forth in SECTION
2.9(G).
"DEBT SERVICE" means, for any period, the principal, interest payments, Default
Rate interest and Late Charges that accrue or are due and payable in accordance
with the Mezzanine Loan Documents during such period.
"DEFAULT" means the occurrence of any event which, but for the giving of notice
or the passage of time, or both, would be an Event of Default.
"DEFAULT RATE" means the per annum interest rate equal to the lesser of (i) the
Maximum Amount or (ii) the Interest Rate plus two hundred (200) basis points.
"ELIGIBLE ACCOUNT" has the meaning set forth in the Mezzanine Cash Collateral
Account Agreement.
"EQUITY INNS" means Equity Inns Partnership, L.P., a Tennessee limited
partnership.
"EQUITY INNS DEBT" has the meaning set forth in the definition of "PERMITTED
OTHER BORROWINGS".
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"EQUITY INNS SUBORDINATION AGREEMENT" means that certain Confirmation of
Subordination Agreement dated as of October 31, 1997, among ▇▇▇▇▇▇ Hotels
Properties Corp., Nomura and Equity Inns, as junior creditor, as amended by that
certain Amended and Restated Confirmation of Subordination Agreement dated
October 31, 1998, by and among Nomura, ▇▇▇▇▇▇ Hotels Properties Corp. and Equity
Inns, as further amended by that certain Second Amended and Restated
Confirmation of Subordination Agreement dated April 12, 2000, by and among
Equity Inns, Borrowers and Mezzanine Lender.
"ERISA AFFILIATE" means any corporation or trade or business that is a member of
any group of organizations (i) described in Section 414(b) or (c) of the Code of
which either Borrower is a member, and (ii) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, described in Section 414(m) or (o) of the Code of which either Borrower is
a member.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 7.1.
"EXCESS CASH FLOW" means, with respect to any Payment Date, an amount equal to
the excess of all amounts deposited in the Mezzanine Cash Collateral Account
during the Interest Accrual Period ended in the month in which such Payment Date
occurs over the Operating Expenses approved by Lender for such period pursuant
to SECTION 2.9(F)(I) and 2.9(F)(II) for the same period.
"EXTRA FUNDS" has the meaning set forth in SECTION 2.9.
"FACILITY" and "Facilities" have the meanings set forth in the First Mortgage
Loan Agreements.
"FIRST MORTGAGE LENDER" shall mean individually and collectively, the lenders
under the First Mortgage Loan Agreements.
"FIRST MORTGAGE LOAN AGREEMENTS" means, collectively, (i) that certain Loan
Agreement, dated as of October 31, 1997 (as the same may be amended, modified,
or supplemented, the "1997 FIRST MORTGAGE LOAN AGREEMENT"), between HH
Properties - II, Inc., a New York corporation, as borrower, and Nomura, as
lender, and (ii) that certain Loan Agreement, dated as of November 27, 1996 (as
the same may be amended, modified, or supplemented, the "1996 FIRST MORTGAGE
LOAN AGREEMENT"), between HH Properties - I, Inc., a New York corporation, as
borrower, and Nomura, as lender.
"FIRST MORTGAGE LOAN BORROWERS" means, collectively, HH Properties - II, Inc., a
New York corporation, and HH Properties - I, Inc., a New York corporation, and
"FIRST MORTGAGE LOAN BORROWER" means any one of them.
"FIRST MORTGAGE LOAN DOCUMENTS" means, collectively, the Loan Documents (as
defined in the 1997 First Mortgage Loan Agreement), and the Loan Documents (as
defined in the 1996 First Mortgage Loan Agreement) as any such documents may be
amended, modified or supplemented from time to time.
"FIRST MORTGAGE LOANS" means, collectively, that certain Loan (as defined in the
1997 First Mortgage Loan Agreement) and that certain Loan (as defined in the
1996 First Mortgage Loan Agreement), and "FIRST MORTGAGE LOAN" means any one of
them.
"FIRST MORTGAGE LOANS EXCESS CASH FLOW" means, collectively, the Excess Cash
Flow (as defined in the 1997 First Mortgage Loan Agreement), and the Excess Cash
Flow (as defined in-the 1996 First Mortgage Loan Agreement).
"FISCAL YEAR" means the 12-month period ending on December 31 of each year or
such other fiscal year of a Borrower as such Borrower may select from time to
time with the prior written consent of Mezzanine Lender not to be unreasonably
withheld or delayed; provided that all Borrowers shall have the same Fiscal
Year.
"GOVERNMENTAL AUTHORITY" means any national or federal government, any state,
regional, local or other political subdivision thereof with jurisdiction and any
Person with jurisdiction exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
"GROSS REVENUE" means the total dollar amount of all income and receipts
(including, without limitation, any dividends or distributions received by any
Borrower, any receipts relating to capital contributions or the issuance of
stock) whatsoever of any Borrower.
"HHC" has the meaning set forth in the first paragraph of this Agreement.
4
"HHPC" has the meaning set forth in the first paragraph of this Agreement.
"IMPOSITIONS" means all taxes (including, without limitation, all real estate,
ad valorem, sales (including those imposed on lease rentals), use, single
business, gross receipts, value added, intangible transaction privilege,
privilege, license or similar taxes), assessments, ground rents, water, sewer or
other rents and charges, excises, levies, fees (including, without limitation,
license, permit, inspection, authorization and similar fees), and all other
governmental charges, in each case whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character in respect of
Borrowers or the Collateral (including all interest and penalties thereon),
which at any time prior to, during or in respect of the term hereof may be
assessed or imposed on or in respect of or be a lien upon (i) any Borrower
(including, without limitation, all income, franchise, single business or other
taxes imposed on any Borrower for the privilege of doing business in any
jurisdiction) or Mezzanine Lender or (ii) any Facility, or any other Collateral
or any part thereof. Nothing contained in this Agreement shall be construed to
require either Borrower to pay any tax, assessment, levy or charge imposed on
Mezzanine Lender, in the nature of a franchise, capital levy, estate,
inheritance, succession, income or net revenue tax.
"INDEBTEDNESS" means, at any given time, the Principal Indebtedness, together
with all accrued and unpaid interest thereon and all other obligations and
liabilities due or to become due to Mezzanine Lender pursuant hereto, under the
Mezzanine Note or in accordance with any of the other Mezzanine Loan Documents,
and all other amounts, sums and expenses paid by or payable to Mezzanine Lender
hereunder or pursuant to the Mezzanine Note or any of the other Mezzanine Loan
Documents.
"INDEMNIFIED PARTY" shall have the meaning set forth in SECTION 8.27.
"INSTRUMENTS" means all instruments, chattel paper, documents or other writings
obtained b any Borrower evidencing a right to payment, including, without
limitation, all notes, drafts, acceptances, documents of title, and policies and
certificates of insurance, including but not limited to, liability, hazard,
rental and credit insurance, guarantees and securities, now or hereafter
received by such Borrower or in which such Borrower has or acquires an interest
pertaining to the foregoing. In addition to the foregoing, "INSTRUMENTS" shall
include the meaning such term has in the UCC.
"INTEREST ACCRUAL PERIOD" means each period of time running from and including
the second (2nd) day of a calendar month to and including the first (1st) day of
the following calendar month during the term of the Mezzanine Loan.
"INTEREST RATE" means a fixed rate of interest equal to six and fifty-three
hundredths percent (6.53%) per annum.
"INVESTOR" has the meaning provided in SECTION 8.25.
"LATE CHARGE" means the lesser of (i) five percent (5%) of any unpaid amount and
(ii) the maximum late charge permitted to be charged under the laws of the State
of New York.
"LEASES" means all leases and other agreements or arrangements affecting the use
or occupancy of all or any portion of any property now in effect or hereafter
entered into (including, without limitation, all lettings, subleases, licenses,
concessions, tenancies and other occupancy agreements covering or encumbering
all or any portion of any property), together with any guarantees, supplements,
amendments, modifications, extensions and renewals of the same, and all
additional remainders, reversions, and other rights and estates appurtenant
thereto.
"LEGAL REQUIREMENTS" means all statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities
affecting Borrowers, the Mezzanine Loan Documents, the Collateral or any part
thereof, enacted and in force as of the relevant date, and all Permits and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to either
Borrower, at any time in force affecting the Collateral or any part thereof.
"LIEN" means any mortgage, deed of trust, lien (statutory or other), pledge,
easement, restrictive covenant, hypothecation, assignment, preference, priority,
security interest, or any other encumbrance or charge on or affecting the
Collateral or any part thereof or either Borrower, or any interest therein,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, the filing of any financing statement or similar
instrument under the UCC or comparable law of any other jurisdiction, domestic
or foreign, and mechanic's, materialmen's and other similar liens and
encumbrances.
5
"LIQUIDATION EVENT" means (i) any sale, transfer or other disposition or
liquidation of any property or asset of any kind or any portion thereof, (ii)
any sale, transfer or other disposition or liquidation of any Facility or any
portion thereof (including any foreclosure sale), (iii) any casualty to any
Facility or any property or asset of any kind or any portion thereof, (iv) any
condemnation of any Facility or any property or asset of any kind or any portion
thereof or (v) any refinancing of any Facility or any property or asset of any
kind or any of the First Mortgage Loans.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (i) the business
or the financial position or results of operation of either Borrower, (ii) the
ability of either Borrower to perform, or of Mezzanine Lender to enforce, any of
the Mezzanine Loan Documents or (iii) the value of the Collateral.
"MATURITY DATE" means February 2, 2002 or such earlier date resulting from
acceleration of the Indebtedness by Mezzanine Lender.
"MAXIMUM AMOUNT" means the maximum rate of interest designated by applicable
laws relating to payment of interest and usury.
"MEZZANINE CASH COLLATERAL ACCOUNT" has the meaning set forth in SECTION 2.9(B).
"MEZZANINE CASH COLLATERAL ACCOUNT AGREEMENT" means and refers to that certain
Amended and Restated Mezzanine Cash Collateral Account Agreement, originally
dated as of November 27, 1996 and amended and restated as of October 31, 1997,
by and among, INTER ALIA, LaSalle National Bank, Borrowers and Nomura, as
assigned by Nomura to Mezzanine Lender by the Assignment of Asset Documents, as
amended by the Second Amendment to Mezzanine Cash Collateral Account Agreement,
dated as of the Closing Date, by and among, INTER ALIA, LaSalle National Bank,
Borrowers and Mezzanine Lender, as such agreement may be further modified,
amended, supplemented, or extended in writing.
"MEZZANINE CASH COLLATERAL ACCOUNT BANK" means the bank chosen by Mezzanine
Lender to hold the Mezzanine Cash Collateral Account, or any successor bank
hereafter selected by Mezzanine Lender in accordance with the terms hereof.
"MEZZANINE COLLECTION ACCOUNT" has the meaning provided in SECTION 2.9(A).
"MEZZANINE COLLECTION ACCOUNT AGREEMENT" means and refers to that certain
Amended and Restated Mezzanine Collection Account Agreement, originally dated as
of November 27, 1996 and amended and restated as of October 31, 1997, made by
and among Mezzanine Collection Account Bank, Borrowers and Nomura, as assigned
by Nomura to Mezzanine Lender by the Assignment of Asset Documents, as amended
by Second Amendment to Mezzanine Collection Account Agreement, dated as of the
Closing Date, by and among Mezzanine Collection Account Bank, Borrowers and
Mezzanine Lender, as such agreement may further be amended, modified or
supplemented.
"MEZZANINE COLLECTION ACCOUNT BANK" means the collection Account bank retained
by Borrowers and any successor bank hereafter selected by Borrowers and approved
by Mezzanine Lender in its reasonable discretion.
"MEZZANINE DEBT SERVICE PAYMENT SUB-ACCOUNT" means the Sub-Account of the
Mezzanine Cash Collateral Account relating to the payment of Debt Service and
maintained pursuant to SECTION 2.9.
"MEZZANINE LENDER" has the meaning provided in the first paragraph of this
Agreement.
"MEZZANINE LOAN" has the meaning provided in the recitals hereto.
"MEZZANINE LOAN AMOUNT" has the meaning provided in the recitals hereto.
"MEZZANINE LOAN DOCUMENTS" means, collectively, this Agreement, the Mezzanine
Note, the Stock Pledge Agreements, the Partner Pledge Agreements, the Collateral
Assignments of Agreements, the Security Agreements, the Mezzanine Cash
Collateral Account Agreement, the Mezzanine Collection Account Agreement, the
Equity Inns Subordination Agreement and all other agreements, instruments,
certificates and documents delivered by or on behalf of either Borrower or any
Affiliate to evidence or secure the Mezzanine Loan or otherwise in satisfaction
of the requirements of this Agreement, or the other documents listed above, as
each such agreement, instrument, certificate or document may be amended,
supplemented or modified from time to time.
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"MEZZANINE NOTE" means and refers to the Original Mezzanine Note, as amended
restated and increased by the First Restated Mezzanine Note, as further amended,
restated and reduced by that certain Second Amended and Restated Mezzanine Note,
dated the Closing Date, made by Borrowers jointly and severally, payable to the
order of Mezzanine Lender in the principal amount of $25,000,000, pursuant to
this Agreement as such note may be modified, amended, supplemented, extended or
consolidated in writing, and any note(s) issued in exchange therefor or in
replacement thereof.
"MONEY" means all moneys, cash, rights to deposit or savings accounts, credit
card receipts, rents or other items of legal tender.
"MONTHLY PAYMENT AMOUNT" means (x) commencing on July 2, 2000 and on the 2nd day
of each and every month thereafter to and including June 2, 2001, a constant
monthly payment of principal and interest in the amount of $364,583; (y)
commencing on July 2, 2001 and on the 2nd day of each and every month thereafter
to and including January 2, 2002, a constant monthly payment of principal and
interest in the amount of $541,364; and (z) on the Maturity Date, the entire
unpaid principal amount of the Mezzanine Loan, together with all accrued and
unpaid interest thereon and all other sums payable under the Mezzanine Loan
Documents.
"MULTIEMPLOYER PLAN" means a multiemployer plan defined as such in Section 3(37)
of ERISA to which contributions have been made by either Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"NET LIQUIDATION PROCEEDS" means, (x) with respect to any Liquidation Event
relating to a Facility, all amounts paid to or received by or on behalf of any
First Mortgage Loan Borrower or any Borrower in connection with such Liquidation
Event, including, without limitation, proceeds of any sale, refinancing or other
disposition or liquidation, the amount of any award or payment in connection
with any condemnation or taking by eminent domain, and the amount of any
insurance proceeds paid in connection with any casualty loss, as applicable,
other than, in the case of a casualty loss or condemnation award, amounts
required by the terms of any of the First Mortgage Loan Documents to be applied
to the restoration or repair of the applicable Facility or to the repayment of
any of the First Mortgage Loans, less (i) in the case of a sale, other than a
foreclosure sale pursuant to any of the First Mortgage Loans, such reasonable
and customary costs and expenses of sale (including reasonable attorney's fees
and costs and brokerage commissions) as such costs shall be approved by the
Mezzanine Lender pursuant to the terms hereof, (ii) in the case of a foreclosure
sale, such costs and expenses incurred by the First Mortgage Lender under any of
the First Mortgage Loan Documents as the First Mortgage Lender shall be entitled
to receive reimbursement for under the terms of the First Mortgage Loan
Documents or under applicable law, (iii) in the case of a casualty loss or
condemnation, such costs and expenses of collection of the related insurance
proceeds or condemnation award as such costs shall be approved by the First Mort
acre Lender pursuant to the terms of any of the First Mortgage Loan Documents,
or if a First Mortgage Loan has been paid in full, by the Mezzanine Lender
pursuant to the terms of the Mezzanine Loan Agreement, and (iv) in the case of a
refinancing of the First Mortgage Loan, or any one or more of the Facilities,
such costs and expenses of such refinancing as shall be approved by the
Mezzanine Lender and (y) with respect to any Liquidation Event relating to any
property which is not a Facility, all amounts paid to or received by either
Borrower in connection with such Liquidation Event net of reasonable and
customary costs and expenses of sale relating to indebtedness to the extent
relating to such Liquidation Event.
"NET LIQUIDATION PROCEEDS AFTER DEBT SERVICE" means, (i) with respect to any
Liquidation Event relating to a Facility, the Net Liquidation Proceeds with
respect thereto other than any portion thereof applied to the payment of the
amounts owed to First Mortgage Lender under the terms of any of the First
Mortgage Loan Documents; and (ii) with respect to any Liquidation Event relating
to properties or assets of any kind other than a Facility, the Net Liquidation
Proceeds with respect thereto.
"NONPAYMENT BREACH" means the failure of Borrower to pay to Mezzanine Lender on
any Payment Date an amount equal to the applicable Monthly Payment Amount.
"OFFICER'S CERTIFICATE" means a certificate of a Borrower which is signed by the
corporate officer of such Borrower.
"OPERATING EXPENSES" means, for any period, for either Borrower, all reasonable
actual cash expenses of such Borrower during such period, including without
limitation: (1) salaries or wages to officers or personnel including payroll
taxes, payroll benefits, employee insurance (medical, life, workers
compensation, health and accident); (2) all rent, real estate taxes, common area
charges, utilities associated with business property including land held for
development, sub-division, or sale; (3) professional fees for auditing, legal
consultation, consulting management
7
including collection costs; (4) all advertising, marketing or promotional
expenses, costs and supplies including printed and photographic items; (5) all
supplies including, but not limited to, office supplies, cleaning supplies; (6)
insurance costs on business or development property including property
coverages, fire, windstorm, business interruption, casualty, liability,
fidelity, and automobile property and liability; (7) automobile leases and
rentals, travel reimbursements, airline expenses, train, taxi, parking and any
ancillary expenses relating to the above categories; (8) expenses relating to
public entity expenditures including, but not limited to, investor relations
costs, stock transfer and listing costs, SEC and stock exchange maintenance
fees; (9) any expenses required with respect to compliance with any law; (10)
settlement payments or payments required as a result of litigated issues from
any court of law to the extent not covered by insurance; (11) rental payments
under leases for business equipment or property; (12) miscellaneous general
expenses or administrative expenses usual to a hotel management company; (13)
development costs, including, without limitation, engineering, environmental,
architectural, permitting and similar costs; and (14) maintenance costs.
Notwithstanding the foregoing, Operating Expenses shall not include (y)
depreciation or (z) debt service.
"OPERATING EXPENSE CERTIFICATE" means a certificate of the Borrower in the form
attached hereto as EXHIBIT A.
"OPERATING EXPENSE MONTHLY INSTALLMENT" means, with respect to a given Interest
Accrual Period, the amount shown on the Annual Operating Budget for such period.
"OPERATING EXPENSE SUB-ACCOUNT" means the Sub-Account of the Mezzanine Cash
Collateral Account established and maintained pursuant to SECTION 2.9 relating
to the payment of Operating Expenses of Borrowers.
"ORIGINAL MEZZANINE LOAN" shall have the meaning set forth in the recitals
hereof.
"ORIGINAL MEZZANINE LOAN AGREEMENT" shall have the meaning set forth in the
recitals hereof.
"ORIGINAL MEZZANINE NOTE" shall have the meaning set forth in the recitals
hereof.
"PARTNER PLEDGE AGREEMENT" means that certain Partner Pledge Agreement dated as
of November 27, 1996, as amended pursuant to that First Amendment to Partner
Pledge Agreement dated as of October 31, 1997, given by a Borrower as pledgor,
to Nomura, as pledgee, as assigned by Nomura to Mezzanine Lender by the
Assignment of Asset Documents, as amended by the Amendment to Collateral
Documents, as the same may hereafter be modified, amended or supplemented and
"PARTNER PLEDGE AGREEMENTS" means all of such agreements collectively.
"PAYMENT DATE" means the second (2nd) day of each calendar month during the term
of the Mezzanine Loan, provided, however, that for purposes of making payments
hereunder, but not for purposes of calculating interest accrual periods, if the
second (2nd) day of a given month shall not be a Business Day, then the Payment
Date for such month shall be the next succeeding Business Day.
"PAYMENT INSTRUCTIONS" have the meaning set forth in SECTION 8.29.
"PERMITTED OTHER BORROWINGS" means (i) trade payables which are incurred by any
Borrower in the ordinary course of its business which are payable within sixty
(60) days of the date incurred; (ii) amounts owed to Equity Inns pursuant to
that certain promissory note of HHPC dated as of October 31, 1997 in the
original principal amount of $3,884,052.23, as modified by Note Modification
Agreement dated October 30, 1998 and further modified by Note Modification
Agreement dated April 14, 2000, and guaranteed by HHC pursuant to that certain
Guaranty dated as of October 31, 1997 (the "EQUITY INNS DEBT") and (iii) debt
incurred by a wholly owned subsidiary of either Borrower and approved by
Mezzanine Lender in accordance with SECTION 5.1(K).
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association, or any
other entity, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.
"PERMITTED INVESTMENTS" shall have the meaning ascribed to such term in the
Mezzanine Cash Collateral Account Agreement.
"PLAN" means an employee benefit or other plan established or maintained by
either Borrower or any ERISA Affiliate and that is covered by Title IV of ERISA,
other than a Multiemployer Plan.
"PRINCIPAL INDEBTEDNESS" means the principal amount of the entire Mezzanine Loan
outstanding as the same may be increased or decreased from time to time.
8
"PROCEEDS" means all proceeds whether cash or non-cash, movable or immovable,
tangible or intangible, from the Collateral, including, without limitation,
those from the sale, exchange, transfer, collection, loss, damage, disposition,
substitution or replacement of any of the Collateral and all income, gain,
credit, distributions and similar items from or with respect to the Collateral.
In addition to the foregoing, the term "PROCEEDS" shall also include the meaning
as such term has in the UCC.
"PUT AND CALL AGREEMENT" shall have the meaning set forth in the recitals
hereto.
"PUT AND CALL OBLIGATIONS" means, at any given time, all obligations and
liabilities of HHC to Mezzanine Lender under the Put and Call Agreement.
"REQUIRED DEBT SERVICE PAYMENT" means, on any Payment Date, the Debt Service
then due and payable by Borrowers.
"RESTRUCTURING AGREEMENT" shall have the meaning set forth in the recitals
hereto.
"SECRETARY'S CERTIFICATE" means the certificate in form and substance
satisfactory to Mezzanine Lender dated as of the Closing Date.
"SECURITY AGREEMENT" means that certain Security and Pledge Agreement dated as
of November 27, 1996, as amended pursuant to that certain First Amendment to
Security and Pledge Agreement dated as of October 31, 1997 between a Borrower
and Nomura, as assigned by Nomura to Mezzanine Lender by the Assignment of Asset
Documents, as amended by the Amendment to Collateral Documents, as the same may
hereafter be modified, amended or supplemented and "SECURITY AGREEMENTS" means
all of such agreements collectively.
"STOCK PLEDGE AGREEMENT" means that certain Stock Pledge Agreement dated as of
November 27, 1996, as amended, pursuant to that Certain First Amendment to Stock
Pledge Agreement dated as of October 31, 1997 given by a Borrower, as pledgor,
to Nomura, as pledgee, as assigned by Nomura to Mezzanine Lender by the
Assignment of Asset Documents, as amended by the Amendment to Collateral
Documents, as the same may hereafter be modified, amended or supplemented and
"STOCK PLEDGE AGREEMENTS" means all of such agreements collectively.
"SUB-ACCOUNT" shall have the meaning provided in SECTION 2.9(C).
"TRANSACTION COSTS" means all fees, costs, expenses and disbursements paid or
payable by Borrowers relating to the Transactions, including, without
limitation, all fees, costs, expenses and disbursements described in SECTION
8.22.
"TRANSACTIONS" means the transactions contemplated by the Mezzanine Loan
Documents.
"TRANSFER" means any conveyance, transfer, sale, Lease (including any amendment,
extension, modification, waiver or renewal thereof), assignment, mortgage,
pledge, grant of a security interest, or hypothecation, whether by law or
otherwise, of any Collateral including without limitation any transfer of any
direct legal or beneficial interest in ▇▇▇▇▇▇ Hotels Properties Corp. as well as
any transfer of any interest of E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in HHC such that, after such
transfer, E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ would own 80% or less of the amount of stock which
E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ owns in HHC as of the Closing Date.
"UCC" means, with respect to any Collateral, the Uniform Commercial Code in
effect in the jurisdiction in which the relevant Collateral is located.
"WARRANT" shall have the meaning set forth in the recitals hereto.
ARTICLE II
GENERAL TERMS
Section 2.1. Mezzanine Loan.
(a) On the Closing Date, the principal amount of the First Restated Mezzanine
Loan shall be reduced from $35,000,000 to $25,000,000 in accordance with the
terms of the Restructuring Agreement.
(b) The Mezzanine Loan shall be evidenced by the Mezzanine Note.
(c) The Mezzanine Note shall amend and restate in its entirety the First
Restated Mezzanine Note.
9
Section 2.2. Security for the Mezzanine Loan. The Mezzanine Note and
Borrowers' obligations hereunder and under the other Mezzanine Loan Documents
shall be secured by, INTER ALIA, the Collateral Assignment of Agreements, the
Stock Pledge Agreements, the Partner Pledge Agreements, the Security Agreements,
the Mezzanine Cash Collateral Account Agreement, the Mezzanine Collection
Account Agreement and the security interests and Liens granted in this Agreement
and in the other Mezzanine Loan Documents as each may be amended, modified or
supplemented from time to time.
Section 2.3. Borrowers' Mezzanine Note.
(a) Borrowers' obligation to pay the principal of and interest on the Mezzanine
Loan (including Late Charges and Default Rate interest) shall be evidenced by
this Agreement and by the Mezzanine Note, duly executed and delivered by
Borrowers. The Mezzanine Note shall be payable as to principal, interest, Late
Charges and Default Rate interest as specified in this Agreement, with a final
maturity on the Maturity Date. Borrowers shall pay all outstanding Indebtedness
on the Maturity Date.
(b) Mezzanine Lender is hereby authorized, at its sole option, to endorse on a
schedule attached to the Mezzanine Note (or on a continuation of such schedule
attached to the Mezzanine Note and made a part thereof) an appropriate notation
evidencing the date and amount of each payment of principal, interest, Late
Charges and Default Rate interest, in respect thereof, which books and records
shall be made available to Borrowers, at Borrowers' sole cost and expense on
reasonable advance notice, for examination at Mezzanine Lender's offices.
Section 2.4. Principal and Interest Payments.
(a) ACCRUAL OF INTEREST. Interest shall accrue on the outstanding principal
balance of the Mezzanine Note and all other amounts due to Mezzanine Lender
under the Mezzanine Loan Documents at the Interest Rate.
(b) PAYMENT OF PRINCIPAL AND INTEREST.
(i) On the Closing Date, Borrowers shall pay to the
Mezzanine Lender all accrued and unpaid interest on the First Restated Mezzanine
Loan, as evidenced by the First Restated Mezzanine Note, to and including the
Closing Date; and
(ii) On each Payment Date thereafter, Borrowers shall pay to
the Mezzanine Lender the Monthly Payment Amount.
(c) PAYMENT OF LIQUIDATION PROCEEDS. Upon the receipt of any Net Liquidation
Proceeds, the Borrowers shall be required, on the date of receipt thereof, to
apply the related Net Liquidation Proceeds After Debt Service (i) FIRST, to the
prepayment of principal on the Mezzanine Note, together with accrued interest
for the entire Interest Accrual Period in which such prepayment occurs and all
other amounts then due and payable on the Mezzanine Note and (II) SECOND, after
all amounts then due and payable on the Mezzanine Note shall have been paid in
full, to other Indebtedness and (iii) THIRD, after the Indebtedness shall have
been paid and discharged in full, to the Put and Call Obligations. The Borrowers
shall notify the Mezzanine Lender of any Liquidation Event not later than one
Business Day following the first date on which either Borrower has knowledge of
any Liquidation Event.
(d) PAYMENT DATES. Except as provided in PARAGRAPH (b)(i) above, all payments
required to be made pursuant to PARAGRAPHS (a) and (b) above shall be made
beginning on the first Payment Date immediately after the Closing Date.
(e) CALCULATION OF INTEREST. Interest shall accrue on the outstanding principal
balance of the Mezzanine Loan and all other amounts due to Mezzanine Lender
under the Mezzanine Loan Documents commencing upon the Closing Date. Interest
shall be computed on the actual number of days elapsed in each year over a 360
day year.
(f) DEFAULT RATE INTEREST. If an Event of Default has occurred the entire unpaid
amount outstanding hereunder and under the Mezzanine Note will bear interest at
the Default Rate.
(g) LATE CHARGE. If Borrowers fail to make any payment of any sums due under the
Mezzanine Loan Documents after the same is due, Borrowers shall pay a Late
Charge.
(h) MATURITY DATE. On the Maturity Date Borrowers shall pay to Mezzanine Lender
all amounts owing under
10
the Mezzanine Loan Documents, including without limitation, interest, principal,
Late Charges and Default Rate interest. Borrowers hereby acknowledge that the
amortization schedule set forth herein does not provide for the complete
amortization of the Indebtedness, and that on the Maturity Date a substantial
principal balance will be due and owing to Lender.
Section 2.5. Voluntary Prepayment. The Borrowers may at any time prepay
the Mezzanine Loan, in whole but not in part (except pursuant to Section 2.4(c)
hereof), without premium or penalty, upon at least one (1) Business Day's
irrevocable notice to the Mezzanine Lender, specifying the date of prepayment.
If such notice is given, the Borrowers shall make such prepayment, and the
entire unpaid principal balance of the Mezzanine Loan shall be due and payable
on the date specified therein, together with accrued interest to such date on
the amount prepaid and as otherwise required by the terms of the Mezzanine Note.
Section 2.6. Application of Payments.
(a) Prior to the occurrence of an Event of Default or a Nonpayment Breach, all
proceeds of any repayment, including any prepayment (except for any prepayment
or payment made pursuant to SECTION 2.4(C), which shall be applied in accordance
with SECTION 2.4(C)), of the Mezzanine Loan shall be applied to pay: FIRST, any
costs and expenses of Mezzanine Lender, as to which Borrowers have been billed
in writing, including, without limitation, the Mezzanine Lender's reasonable
attorney's fees and disbursements actually arising as a result of such repayment
or reasonably expended by Mezzanine Lender to protect the Collateral; SECOND,
accrued and unpaid interest; THIRD, Principal Indebtedness; and fourth, any
other amounts then due and owing under the Mezzanine Loan Documents. After the
occurrence of an Event of Default, and except as provided in subparagraph (b)
below, all proceeds of repayment, including any payment or recovery on the
Collateral, shall be applied in such order and in such manner as Mezzanine
Lender shall elect in its sole discretion.
(b) During any Breach Period, all proceeds of repayment, including any payment
or recovery on the Collateral shall be applied to pay: FIRST, any costs and
expenses of Mezzanine Lender, as to which Borrowers have been billed in writing,
including, without limitation, the Mezzanine Lender's reasonable attorney's fees
and disbursements actually arising as a result of such repayment or reasonably
expended by Mezzanine Lender to protect the Collateral; SECOND, accrued and
unpaid interest (at the Default Rate) due and unpaid to Mezzanine Lender for
prior Interest Accrual Periods; THIRD, payments of principal due and unpaid to
Mezzanine Lender for prior Interest Accrual Periods; FOURTH, accrued and unpaid
interest (at the Default Rate) for the then current Interest Accrual Period;
FIFTH Principal Indebtedness; and SIXTH, any other amounts then due and owing
under the Mezzanine Loan Documents.
Section 2.7. Payment of Debt Service, Method and Place of Payment, Cash
Management.
(a) Except as otherwise specifically provided herein, all payments
and prepayments under this Agreement and the Mezzanine Note shall be made to
Mezzanine Lender not later than 12:00 noon, New York City time, on the date when
due and shall be made in lawful money of the United States of America in federal
or other immediately available funds to an account specified to Borrowers by
Mezzanine Lender in writing, and any funds received by Mezzanine Lender after
such time, for all purposes hereof, shall be deemed to have been paid on the
next succeeding Business Day.
(b) All payments made by Borrowers hereunder or by Borrowers under the other
Mezzanine Loan Documents, shall be made irrespective of, and without any
deduction for, any set-offs or counterclaims.
(c) Borrowers shall comply with the cash management system set forth in the
Mezzanine Collection Account Agreement and the Mezzanine Cash Collateral Account
Agreement; provided, however, the foregoing agreement shall in no way be
construed as a limitation on Borrowers' obligation to pay as and when due and in
full the Mezzanine Loan in accordance with the terms of this Agreement and the
other Mezzanine Loan Documents.
Section 2.8. Taxes. All payments made by Borrowers under this Agreement
and under the other Mezzanine Loan Documents shall be made free and clear of,
and without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed,
11
levied, collected, withheld or assessed by any Governmental Authority (other
than taxes imposed on the income of Mezzanine Lender).
Section 2.9. Central Cash Management.
(a) MEZZANINE COLLECTION ACCOUNT. Pursuant to the Mezzanine Collection Account
Agreement, the Borrowers have opened and shall maintain at the Mezzanine
Collection Account Bank a trust account (the "MEZZANINE COLLECTION Account"),
and the Mezzanine Collection Account Bank shall not commingle the amounts in
such account with any other amounts held on behalf of any Person except
Borrowers. The Mezzanine Collection Account has been assigned an identification
number by the Mezzanine Collection Account Bank and shall be maintained in the
name "RHD Capital Ventures LLC as Secured Party of ▇▇▇▇▇▇ Hotels Corporation and
▇▇▇▇▇▇ Hotels Properties Corp." No Borrower shall have any right of withdrawal
from the Mezzanine Collection Account. Borrowers shall cause any Person who owes
any item of Gross Revenue to either Borrower to pay such item directly into the
Mezzanine Collection Account. Without in any way limiting Borrowers' obligations
pursuant to the preceding sentence, Borrowers shall deposit all items of Gross
Revenue which are received by Borrowers in violation of the preceding sentence
within one Business Day after receipt thereof directly into the Mezzanine
Collection Account. Any breach of this SECTION 2.9(A) by either Borrower shall
be an Event of Default.
(b) MEZZANINE CASH COLLATERAL ACCOUNT. Pursuant to the Mezzanine Collection
Account Agreement, Borrowers have and will continue to authorize and direct the
Mezzanine Collection Account Bank to transfer on a daily basis all funds
deposited in the Mezzanine Collection Account to that certain Mezzanine Cash
Collateral Account established and maintained at the Mezzanine Cash Collateral
Account Bank pursuant to the Mezzanine Cash Collateral Account Agreement (the
"MEZZANINE CASH COLLATERAL ACCOUNT"). Borrowers also hereby authorize and direct
the Cash Collateral Account Bank, as defined in the First Mortgage Loan
Agreements, to transfer on a daily basis all First Mortgage Loan Excess Cash
Flow to the Mezzanine Cash Collateral Account. The Mezzanine Cash Collateral
Account shall be an Eligible Account which has been established by Mezzanine
Lender in Mezzanine Lender's name. Mezzanine Lender may elect to change the
financial institution at which the Mezzanine Cash Collateral Account shall be
maintained. Mezzanine Lender shall give Borrowers not fewer than thirty (30)
days prior notice of each change. The Mezzanine Cash Collateral Account shall be
under the sole dominion and control of Mezzanine Lender. Borrowers shall have no
right of withdrawal with respect to the Mezzanine Cash Collateral Account.
(c) ESTABLISHMENT OF SUB-ACCOUNTS. The Mezzanine Cash Collateral Account shall
contain an Operating Expense Sub-Account, a Mezzanine Debt Service Payment
Sub-Account and a Borrowers Sub-Account, each of which accounts (individually, a
"Sub-Account" and collectively, the "Sub-Accounts") shall be an Eligible Account
to which certain funds shall be allocated and from which disbursements shall be
made pursuant to the terms of this Mezzanine Loan Agreement.
(d) PERMITTED INVESTMENTS. Upon the written request of Borrowers, which request
may be made once per Interest Accrual Period, Mezzanine Lender shall direct the
Mezzanine Cash Collateral Account Bank to invest and reinvest any balance in the
Mezzanine Cash Collateral Account from time to time in Permitted Investments as
instructed by Borrowers; PROVIDED, HOWEVER, that (i) if Borrowers fail to so
instruct Mezzanine Lender, or if a Default or an Event of Default shall have
occurred, Mezzanine Lender may direct the Mezzanine Cash Collateral Account Bank
to invest and reinvest such balance in Permitted Investments as Mezzanine Lender
shall determine in Mezzanine Lender's sole discretion, (ii) the maturities of
the Permitted Investments on deposit in the Mezzanine Cash Collateral Account
shall, to the extent such dates are ascertainable, be selected and coordinated
to become due not later than the day before any disbursements from the
Sub-Accounts must be made, (iii) all such Permitted Investments shall be held in
the name and be under the sole dominion and control of Mezzanine Lender; (iv) no
Permitted Investment shall be made unless Mezzanine Lender shall retain a
perfected first priority Lien in such Permitted Investment securing the
Indebtedness and all filings and other actions necessary to ensure the validity,
perfection, and priority of such Lien have been taken; (v) Mezzanine Lender
shall only be required to follow the investment instructions which were most
recently received by Mezzanine Lender from Borrowers and both Borrowers shall be
bound by such last received investment instructions; and (vi) any written
request from Borrowers containing investment instructions shall contain an
Officer's Certificate from each Borrower (which may be conclusively relied upon
by Mezzanine Lender and its agents) that any such investments constitute
Permitted Investments. It is the intention of the parties hereto that all
amounts deposited in the Mezzanine Cash Collateral
12
Account (or as much thereof as Mezzanine Lender may arrange to invest) shall at
all times be invested in Permitted Investments. All funds in the Mezzanine Cash
Collateral Account that are invested in a Permitted Investment are deemed to be
held in such Mezzanine Cash Collateral Account for all purposes of this
Agreement and the other Mezzanine Loan Documents. All gain in investments of
funds in the Mezzanine Cash Collateral Account shall be allocated in the same
manner as any other funds in the Mezzanine Cash Collateral Account. Mezzanine
Lender shall have no liability for any loss in investments of funds in the
Mezzanine Cash Collateral Account that are invested in Permitted Investments
(unless invested contrary to Borrowers' request other than after the occurrence
of a Default or an Event of Default) and no such loss shall affect Borrowers'
obligation to fund, or liability for funding, the Mezzanine Cash Collateral
Account and each Sub-Account, as the case may be. Borrowers and Mezzanine Lender
agree that Borrowers shall include all such earnings and losses (other than
those for Mezzanine Lender's account in accordance with the immediately
preceding sentence) on the Mezzanine Cash Collateral Account as income of
Borrowers for federal and applicable state tax purposes.
(e) INTEREST ON ACCOUNTS. All interest paid or other earnings on the Permitted
Investments made hereunder shall be deposited into the Mezzanine Cash Collateral
Account and shall be subject to allocation and distribution like any other
monies deposited therein.
(f) PAYMENT OF OPERATING EXPENSES AND MEZZANINE DEBT SERVICE.
(i) PAYMENT OF OPERATING EXPENSES. Not more frequently than
two times each Interest Accrual Period and provided that no Event of
Default has occurred, Mezzanine Lender shall direct the Mezzanine Cash
Collateral Account Bank to, within five (5) Business Days of Mezzanine
Lender's receipt of an Operating Expense Certificate from Borrowers,
such Operating Expense Certificate to be delivered by Borrowers not
more frequently than two times each Interest Accrual Period, transfer
funds to Borrowers or their designee out of the Operating Expense
Sub-Account to the extent that there are funds available therein in an
amount not to exceed the amount stated in the Operating Expense
Certificate up to the Operating Expense Monthly Installment. Together
with each such Operating Expense Certificate, Borrowers shall furnish
Mezzanine Lender with an Officer's Certificate stating that all
Operating Expenses from previous periods have been paid in full and
that such amounts are then due or have been paid.
(ii) EXTRA FUNDS FOR OPERATING EXPENSES. Not more frequently
than once each Interest Accrual Period and provided that no Event of
Default has occurred, if in a given Interest Accrual Period, the
Borrowers require amounts in excess of the Operating Expense Monthly
Installment ("EXTRA FUNDS"), Borrowers, at the time they deliver the
Operating Expense Certificate, may deliver a written request to
Mezzanine Lender for a disbursement of Extra Funds stating the amount
of such Extra Funds and the purpose for which such amount is intended
with attachments of copies of bills and other documentation as may be
required by Mezzanine Lender to establish that such Operating Expenses
are reasonable and that such amounts are then due or expected to become
due in that month. Mezzanine Lender agrees that it will not withhold
its approval of a disbursement of Extra Funds to pay Operating Expenses
if it determines, in its sole discretion, that such disbursement is
reasonable. Within ten (10) days after Mezzanine Lender's approval,
which approval, if granted by Mezzanine Lender, shall be delivered
within ten (10) Business Days of Mezzanine Lender's receipt of such
request, Mezzanine Lender shall release the funds to Borrowers or their
designee.
(iii) RECONCILIATION. Borrowers shall furnish Mezzanine Lender
monthly, on each Payment Date, a budget variance report reconciling the
Operating Expenses shown on the Annual Operating Budget with requested
disbursements for payment of Operating Expenses pursuant to SECTION
2.9(F).
(iv) PAYMENT OF DEBT SERVICE. At or before 12:00 noon, New
York City time, on each Payment Date during the term of the Mezzanine
Loan, Mezzanine Lender shall transfer to Mezzanine Lender's own account
from the Mezzanine Debt Service Payment Sub-Account an amount equal to
the Required Debt Service Payment for the Payment Date. Borrowers shall
be deemed to have timely made the Required Debt Service Payment
pursuant to SECTION 2.9 regardless of the time Mezzanine Lender makes
such transfer as long as sufficient funds are on deposit in the
Mezzanine Debt Service Payment Sub-Account at 12:00 noon, New York City
time on the applicable Payment Date.
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NOTHING CONTAINED IN THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, ANY ORDER OF
PAYMENT, SHALL IN ANY WAY IMPAIR OR OTHERWISE VITIATE ANY OTHER PROVISIONS OF
THE EQUITY INNS SUBORDINATION AGREEMENT.
(g) MONTHLY FUNDING OF SUB-ACCOUNTS. During each Interest Accrual Period and
except as provided below, during the term of the Mezzanine Loan commencing with
the Interest Accrual Period in which the Closing Date occurs (each, the "CURRENT
INTEREST ACCRUAL PERIOD"), Mezzanine Lender shall allocate all funds then on
deposit in the Mezzanine Cash Collateral Account among the Sub-Accounts as
follows and in the following priority:
(i) FIRST, to the Operating Expense Sub-Account, until an
amount equal to the Operating Expense Monthly Installment for the
Current Interest Accrual Period plus any Extra Funds approved pursuant
to SECTION 2.9(F)(II), has been allocated to the Operating Expense
Sub-Account; and
(ii) SECOND, to the Mezzanine Debt Service Payment
Sub-Account, until an amount equal to the Required Debt Service Payment
for the Payment Date immediately after the Current Interest Accrual
Period has been allocated to the Mezzanine Debt Service Payment
Sub-Account;
(iii) THIRD, provided that (i) no Event of Default has
occurred, (ii) Mezzanine Lender has received all financial information
described in SECTION 5.1(G) for the most recent periods for which the
same are due, and (iii) Borrowers provide to Lender evidence
satisfactory to Lender that all other then due and payable obligations
of Borrowers have been paid in full, including without limitation any
Permitted Other Borrowings, Mezzanine Lender agrees that in each
Current Interest Accrual Period any amounts deposited into or remaining
in the Mezzanine Cash Collateral Account after the minimum amounts set
forth in clauses (i) and (II) above have been satisfied with respect to
the Current Interest Accrual Period and any periods prior thereto shall
be disbursed by Mezzanine Lender on the first Payment Date after the
end of the then Current Interest Accrual Period, at Borrowers' expense,
to such account that Borrowers may request in writing. Mezzanine Lender
and its agents shall not be responsible for monitoring Borrowers' use
of any funds disbursed from the Mezzanine Cash Collateral Account or
any of the Sub-Accounts. Notwithstanding anything in this Agreement to
the contrary, if an Event of Default has occurred and is continuing,
any amounts deposited into or remaining in the Mezzanine Cash
Collateral Account shall be for the account of Mezzanine Lender and may
be withdrawn by Mezzanine Lender to be applied in any manner as
Mezzanine Lender may elect in Mezzanine Lender's sole discretion.
Section 2.10. Security Agreement. (a) PLEDGE OF ACCOUNTS. To secure the
full and punctual payment and performance (y) FIRST of all of the Indebtedness,
and (z) SECOND, after the Indebtedness shall have been paid and discharged in
full, the Put and Call Obligations, each Borrower hereby sells, assigns,
conveys, pledges and transfers to Mezzanine Lender and grants to Mezzanine
Lender a first and continuing security interest in and to, the following
property, whether now owned or existing or hereafter acquired or arising, and
regardless of where located (collectively, the "ACCOUNT COLLATERAL"):
(i) all of such Borrower's right, title and interest in the
Mezzanine Cash Collateral Account (including all Sub-Accounts) and all
Money and Permitted Investments, if any, from time to time deposited or
held in such Mezzanine Cash Collateral Account;
(ii) all of such Borrower's right, title and interest in the
Mezzanine Collection Account and all Money, if any, from time to time
deposited or held in the Mezzanine Collection Account;
(iii) all interest, dividends, Money, Instruments and other
property from time to time received, receivable or otherwise payable in
respect of, or in exchange for, any of the foregoing; and
(iv) to the extent not covered by CLAUSES (I), (II) or (III)
above, all Proceeds and products of any or all of the foregoing',
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(b) COVENANTS. Borrowers covenant that (i) all Gross Revenue shall be deposited
directly into the relevant Mezzanine Collection Account by the applicable
obligor who owes such item of Gross Revenue to such Borrower and (ii) so long as
any portion of the Indebtedness or the Put and Call Obligations is outstanding,
Borrowers shall not open (nor permit any Person to open) any other account for
the collection of Gross Revenue other than such replacement Mezzanine Collection
Account as may be established pursuant to the terms hereof.
(c) INSTRUCTIONS AND AGREEMENTS. Borrowers have delivered to Mezzanine Lender a
fully executed Mezzanine Collection Account Agreement and a fully executed
Mezzanine Cash Collateral Account Agreement. On or before the Closing Date,
Borrowers will submit to the Mezzanine Collection Account Bank that certain
Second Amendment to Collection Account Agreement to be executed by such
Mezzanine Collection Account Bank. On or before the Closing Date, Borrowers and
the Mezzanine Cash Collateral Account Bank will execute and deliver that certain
Second Amendment to Mezzanine Cash Collateral Account Agreement in form and
substance satisfactory to Mezzanine Lender in Mezzanine Lender's sole
discretion. Borrowers agree that prior to the payment in full of the
Indebtedness, the Mezzanine Cash Collateral Account Agreement and the Mezzanine
Collection Account Agreement shall be irrevocable by Borrowers.
(d) FINANCING STATEMENTS; FURTHER ASSURANCES. Borrowers will execute and deliver
to Mezzanine Lender for filing a financing statement or statements in connection
with the Account Collateral in the form required to properly perfect Mezzanine
Lender's security interest in the Account Collateral to the extent that it may
be perfected by such a filing. Borrowers agree that at any time and from time to
time, at the expense of Borrowers, Borrowers shall promptly execute and deliver
all further instruments, and take all further action, that Mezzanine Lender may
request in order to perfect and protect the pledge and security interest granted
or purported to be granted hereby, or to enable Mezzanine Lender to exercise and
enforce Mezzanine Lender's rights and remedies hereunder with respect to, the
Account Collateral.
(e) TRANSFERS AND OTHER LIENS. Borrowers agree that they will not sell or
otherwise dispose of any of the Account Collateral other than pursuant to the
terms hereof and of the other Mezzanine Loan Documents, or create or permit to
exist any Lien upon or with respect to all or any of the Account Collateral,
except for the Lien granted to Mezzanine Lender under this Agreement.
(f) MEZZANINE LENDER'S REASONABLE CARE. Beyond the exercise of reasonable care
in the custody thereof, Mezzanine Lender shall not have any duty as to any
Account Collateral or any income thereon in its possession or control or in the
possession or control of any agents for, or of Mezzanine Lender, or the
preservation of rights against any Person or otherwise with respect thereto.
Mezzanine Lender shall be deemed to have exercised reasonable care in the
custody of the Account Collateral in its possession if the Account Collateral is
accorded treatment substantially equal to that which Mezzanine Lender accords
its own property, it being understood that Mezzanine Lender shall not be liable
or responsible for (i) any loss or damage to any of the Account Collateral, or
for any diminution in value thereof from a loss of, or delay in Mezzanine
Lender's acknowledging receipt of, any wire transfer from the Mezzanine
Collection Account Bank or (ii) any loss, damage or diminution in value by
reason of the act or omission of Mezzanine Lender, or Mezzanine Lender's agents,
employees or bailees, except that nothing set forth herein shall be deemed to
limit Mezzanine Lender's obligation to exercise reasonable care.
(g) MEZZANINE LENDER APPOINTED ATTORNEY-IN-FACT. Each Borrower hereby
irrevocably constitutes and appoints Mezzanine Lender as such Borrower's true
and lawful attorney-in-fact, with full power of substitution, at any time after
the occurrence of an Event of Default to execute, acknowledge and deliver any
instruments and to exercise and enforce every right, power, remedy, option and
privilege of such Borrower with respect to the Account Collateral, and do in the
name, place and stead of such Borrower, all such acts, things and deeds for and
on behalf of and in the name of such Borrower with respect to the Account
Collateral, which such Borrower could or might do or which Mezzanine Lender may
deem necessary or desirable to more fully vest in Mezzanine Lender the rights
and remedies provided for herein with respect to the Account Collateral and to
accomplish the purposes of this Agreement. The foregoing powers of attorney are
irrevocable and coupled with an interest.
(h) CONTINUING SECURITY INTEREST; TERMINATION. This Section shall create a
continuing pledge of and security interest in the Account Collateral and shall
remain in full force and effect until payment in full (i) FIRST of the
Indebtedness and (ii) SECOND, after the Indebtedness shall have been paid and
discharged in full, of the Put and Call Obligations. Upon payment in full of the
Indebtedness and the Put and Call Obligations, Borrowers shall be entitled to
the return, upon their request and at their expense, of such of the Account
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof, and Mezzanine Lender shall execute such instruments and
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documents as may be reasonably requested by Borrowers to evidence such
termination and the release of the pledge and Lien hereof; PROVIDED, HOWEVER,
that Borrowers shall pay on demand all of Mezzanine Lender's expenses in
connection therewith.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to the Reduction of the First
Mezzanine Loan. As a condition precedent to the reduction of the First Restated
Mezzanine Loan in accordance with the terms of the Restructuring Agreement,
Borrowers shall have satisfied each of the following conditions (unless waived
by Mezzanine Lender in accordance with SECTION 8.4) on or before the Closing
Date:
(a) MEZZANINE LOAN DOCUMENTS AND OTHER MATTERS.
i. MEZZANINE LOAN AGREEMENT. Borrowers shall have executed and
delivered to Mezzanine Lender this Agreement.
ii. MEZZANINE NOTE. Borrowers shall have executed and
delivered to Mezzanine Lender the Mezzanine Note.
iii. RESTRUCTURING AGREEMENT. Borrowers shall have executed
and delivered to Mezzanine Lender the Restructuring Agreement.
iv. AMENDMENT TO COLLATERAL DOCUMENTS. Borrowers shall have
executed and delivered to Mezzanine Lender the Amendment to Collateral
Documents.
v. SECOND AMENDMENT TO MEZZANINE COLLECTION ACCOUNT AGREEMENT.
Borrowers and Mezzanine Collection Account Bank shall have executed and
delivered a certain Second Amendment to Mezzanine Collection Account Agreement
to Mezzanine Lender.
vi. SECOND AMENDMENT TO MEZZANINE CASH COLLATERAL ACCOUNT
AGREEMENT. Borrowers, each First Mortgage Loan Borrower and Mezzanine Cash
Collateral Account Bank shall have executed and delivered a certain Second
Amendment to Mezzanine Cash Collateral Account Agreement to Mezzanine Lender.
vii. FINANCING STATEMENTS. Borrowers shall have executed and
delivered to Mezzanine Lender all financing statements required by Mezzanine
Lender as amended as of the date hereof and such financing statements shall have
been irrevocably delivered to a title agent for recordation.
viii. OPINIONS OF COUNSEL. Mezzanine Lender shall have
received from counsel satisfactory to Mezzanine Lender, legal opinions in form
and substance satisfactory to Mezzanine Lender in Mezzanine Lender's sole
discretion. All such legal opinions will be addressed to Mezzanine Lender, dated
as of the Closing Date, and in form and substance satisfactory to Mezzanine
Lender and its counsel. Each Borrower hereby instructs any of the foregoing
counsel, to the extent that such counsel represents either Borrower, to deliver
to Mezzanine Lender such opinions addressed to Mezzanine Lender.
ix. SECRETARY'S CERTIFICATE. Mezzanine Lender shall have
received a Secretary's Certificate with respect to each Borrower.
x. [Reserved]
xi.CONSENTS, LICENSES, APPROVALS. Mezzanine Lender shall have
received copies of all consents, licenses and approvals, if any, required in
connection with the execution, delivery and performance by Borrowers under, and
the validity and enforceability of, the Mezzanine Loan Documents, and such
consents, licenses and approvals shall be in full force and effect.
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xii. ADDITIONAL MATTERS. Mezzanine Lender shall have received
such other Permits, certificates, opinions, documents and instruments relating
to the Mezzanine Loan as may have been requested by Mezzanine Lender and all
other documents and all legal matters in connection with the Mezzanine Loan
shall be satisfactory in form and substance to Mezzanine Lender.
xiii. REPRESENTATIONS AND WARRANTIES. The representations and
warranties herein and in the other Mezzanine Loan Documents shall be true and
correct in all material respects.
xiv. NO INJUNCTION. No law or regulation shall have been
adopted, no order, judgment or decree of any Governmental Authority shall have
been issued, and no litigation shall be pending or threatened, which in the good
faith judgment of Mezzanine Lender would enjoin, prohibit or restrain, or impose
or result in an adverse effect upon the making or repayment of the Mezzanine
Loan or the consummation of the Transactions.
xv. FINANCIAL INFORMATION. Mezzanine Lender shall have
received all financial information relating to the Borrowers and other financial
reports requested by Mezzanine Lender in Mezzanine Lender's sole discretion.
Such financial information shall be (i) prepared by a firm approved by Mezzanine
Lender in Mezzanine Lender's sole discretion, (ii) prepared based on a scope of
work determined by Mezzanine Lender in Mezzanine Lender's sole discretion and
(iii) in form and content acceptable to Mezzanine Lender in Mezzanine Lender's
sole discretion.
xvi. TRANSACTION COSTS. Borrowers shall have paid or caused to
be paid all Transaction Costs.
Section 3.2 Additional Information. Mezzanine Lender shall not reduce
the First Restated Mezzanine Loan unless and until each of the applicable
conditions precedent set forth in SECTION 3.1 is satisfied and until Borrowers
provide any other information reasonably required by Mezzanine Lender.
Section 3.3 Required Supplements. In connection with the Mezzanine
Loan, Borrowers shall execute and/or deliver to Mezzanine Lender all additions,
amendments, modifications and supplements to the items set forth in this ARTICLE
III, including without limitation, amendments, modifications and supplements to
the Mezzanine Note, the Stock Pledge Agreements, the Security Agreements, the
Partner Pledge Agreements, the Collateral Assignments of Agreements, the
Mezzanine Collection Account Agreement and the Mezzanine Cash Collateral Account
Agreement, if reasonably requested by Mezzanine Lender to effectuate the
provisions hereof, and to provide Mezzanine Lender with the full benefit of the
security intended to be provided under the Mezzanine Loan Documents.
Section 3.4 Confirmation of Representations and Warranties. The
reduction of the First Restated Mezzanine Loan shall constitute, without the
necessity of specifically containing a written statement to such effect, a
confirmation, representation and warranty by Borrowers to Mezzanine Lender that
all of the applicable conditions to be satisfied in connection with the
reduction of the First Restated Mezzanine Loan have been satisfied (unless
waived by Mezzanine Lender in accordance with SECTION 8.4,) and that all of the
representations and warranties of Borrowers set forth in the Mezzanine Loan
Documents are true and correct as of the date of the reduction of the First
Restated Mezzanine Loan.
Section 3.5. Form of Mezzanine Loan Documents and Related Matters. The
Mezzanine Loan Documents and all of the certificates, agreements, legal opinions
and other documents and papers referred to in this ARTICLE III, unless otherwise
specified, shall be delivered to Mezzanine Lender, and shall be satisfactory in
form and substance to Mezzanine Lender.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of Borrowers. Each Borrower
represents and warrants that, as of the Closing Date:
(a) ORGANIZATION. Each Borrower (i) is a duly organized and validly existing
corporation in good standing under the laws of the State of its formation, (ii)
has the requisite corporate power and authority to carry on its business as now
being conducted, and (iii) has the requisite corporate power to execute and
deliver, and perform its obligations under, the Mezzanine Loan Documents.
(b) AUTHORIZATION. The execution and delivery by each Borrower of the Mezzanine
Loan Documents to which such Borrower is a party, each Borrower's performance of
its obligations thereunder and the creation of the security interests and Liens
provided for in the Mezzanine Loan Documents (i) have been duly authorized by
all requisite corporate action on the part of each Borrower, (ii) will not
violate any provision of any applicable Legal Requirements, any order of any
court or other Governmental Authority, any organizational document of either
Borrower or any indenture or agreement or other instrument to which either
Borrower is a party or by which either Borrower is bound, (iii) will not be in
conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under, or result in the creation or imposition of any
Lien of any nature whatsoever upon any of the property or assets of either
Borrower pursuant to, any such indenture or agreement or instrument other than
the Lien created in favor of Mezzanine Lender and (iv) have been duly executed
and delivered by each Borrower. Other than those obtained or filed on or prior
to the Closing Date, no Borrower is required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any
Governmental Authority or other agency in connection with or as a condition to
the execution, delivery or performance of the Mezzanine Loan Documents.
(c) ORGANIZATIONAL EXISTENCE.
i. Borrower at all times since its formation has complied, and will
continue to comply, with the provisions of all of its organizational documents,
and the laws of the state in which such Borrower was formed.
ii. All customary formalities regarding the corporate existence of
each Borrower have been observed at all times since its formation and will
ontinue to be observed.
iii. Each Borrower has been at all times since its formation and will
continue to be adequately capitalized in light of the nature of its business.
(d) LITIGATION. Except as set forth in Schedule 3 to the First Restated
Mezzanine Loan Agreement or as otherwise disclosed to Mezzanine Lender, there
are no actions, suits or proceedings at law or in equity by or before any
Governmental Authority or other agency now pending and served or, to the
knowledge of either Borrower, threatened against either Borrower or the
Collateral.
(e) AGREEMENTS. No Borrower is a party to any agreement or instrument or subject
to any restriction which is likely to have a Material Adverse Effect. No
Borrower is in default in any material respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party or by which either Borrower or
the Collateral is bound.
(f) NO BANKRUPTCY FILING. No Borrower is contemplating either the filing of a
petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of either Borrower's assets or property,
and no Borrower has knowledge of any Person contemplating the filing of any such
petition against it.
(g) FULL AND ACCURATE DISCLOSURE. No statement of fact made by or on behalf of
either Borrower in the Mezzanine Loan Documents or in any other document or
certificate delivered to Mezzanine Lender by either Borrower contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading. There is no fact
presently known to either Borrower which has not been disclosed to Mezzanine
Lender which materially adversely affects, nor as far as either Borrower can
18
foresee, might materially adversely affect the business, operations or condition
(financial or otherwise) of Borrowers.
(h) LOCATION OF CHIEF EXECUTIVE OFFICES. The location of Borrowers' principal
place of business and the location of Borrowers' chief executive office is the
address set forth in the first paragraph hereof.
(i) COMPLIANCE. Borrowers and the Collateral comply in all material respects
with all applicable Legal Requirements. No Borrower is in default or violation
of any order, writ, injunction, decree or demand of any Governmental Authority,
the violation of which is reasonably likely to have a Material Adverse Effect.
(j) ERISA. Each Plan and, to the knowledge of each Borrower, each Multiemployer
Plan, is in compliance in all material respects with, and has been administered
in all material respects in compliance with, its terms and the applicable
provisions of ERISA, the Code and any other federal or state law, and no event
or condition has occurred as to which either Borrower would be under an
obligation to furnish a report to Mezzanine Lender hereunder.
(k) SOLVENCY. No Borrower has entered into this Mezzanine Loan Agreement or any
Mezzanine Loan Document with the actual intent to hinder, delay, or defraud any
creditor. Each Borrower has received reasonably equivalent value in exchange for
its obligations under the Mezzanine Loan Documents. Giving effect to the
transactions contemplated hereby, the fair saleable value of each Borrower's
assets exceeds and will, immediately following the execution and delivery of
this Agreement, exceed such Borrower's total liabilities, including, without
limitation, subordinated, unliquidated, or disputed liabilities or Contingent
Obligations. The fair saleable value of each Borrower's assets is and will,
immediately following the execution and delivery of this Agreement, be greater
than such Borrower's probable liabilities, including the maximum amount of its
Contingent Obligations or its debts as such debts become absolute and matured.
No Borrower's assets constitute and, immediately following the execution and
delivery of this Agreement, will not, constitute unreasonably small capital to
carry out its business as conducted or as proposed to be conducted. No Borrower
intends to, and no Borrower believes that it will, incur debts and liabilities
(including, without limitation, Contingent Obligations and other commitments)
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts to be payable on or in respect of obligations of such
Borrower).
(l) NOT FOREIGN PERSON. No Borrower is a "foreign person" within the meaning
of s.1445(f)(3) of the Code.
(m) Intentionally omitted.
(n) INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. No Borrower is
(i) an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended,
(ii) a "holding' company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended, or (iii)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
(o) NO DEFAULTS. No Default or Event of Default exists under or with respect to
any Mezzanine Loan Document.
(p) LABOR MATTERS. No Borrower is a party to any collective bargaining
agreements.
(q) TITLE TO THE COLLATERAL. Each Borrower owns good, indefeasible title to its
portion of the Collateral free and clear of all Liens.
(r) [Reserved]
(s) FINANCIAL INFORMATION. All historical financial data concerning Borrowers
that have been delivered by Borrowers to Mezzanine Lender is true, complete and
correct in all material respects. Since the delivery of such data, except as
otherwise disclosed in writing to Mezzanine Lender, there has been no material
adverse change in the financial position of either Borrower. No Borrower has
incurred any obligation or liability, contingent or otherwise, not reflected in
such financial data which might materially adversely affect its business
operations or the Collateral.
(t) ENFORCEABILITY. The Mezzanine Loan Documents executed by Borrowers in
connection with the Mezzanine Loan are the legal, valid and binding obligations
of Borrowers, enforceable against Borrowers in
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accordance with their terms, subject to bankruptcy, insolvency and other
limitations on creditors' rights generally and to equitable principles. Such
Mezzanine Loan Documents are, as of the Closing Date, not subject to any right
of rescission, set-off, counterclaim or defense by either Borrower, including,
the defense of usury, nor will the operation of any of the terms of the
Mezzanine Note, or any other Mezzanine Loan Documents, or the exercise of any
right thereunder, render the Mezzanine Loan Documents unenforceable against
Borrowers, in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense by either Borrower, including the defense of usury, and
no Borrower has asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.
(u) NO LIABILITIES. Except as set forth on SCHEDULE 1, no Borrower has any
liabilities or obligations including, without limitation, Contingent Obligations
(and including, without limitation, liabilities or obligations in tort, in
contract, at law, in equity, pursuant to a statute or regulation, or otherwise).
(v) CONDUCT OF BUSINESS. No Borrower conducts its business "also known as",
"doing business as" or under any other name.
(w) INDEBTEDNESS. No Borrower nor any Affiliate of any Borrower has any other
indebtedness other than the Indebtedness and the Permitted Other Borrowings.
(x) FIRST PERFECTED SECURITY INTEREST. The Mezzanine Loan Documents create a
valid, first perfected security interest and lien on all property owned by
Borrowers.
Section 4.2. Survival of Representations and Warranties. Borrowers
agree that (i) all of the representations and warranties of Borrowers set forth
in this Agreement and in the other Mezzanine Loan Documents delivered on the
Closing Date are made as of the Closing Date and (ii) all representations and
warranties made by Borrowers shall survive the delivery of the Mezzanine Note
and continue for so long as any amount remains owing to Mezzanine Lender under
this Agreement, the Mezzanine Note or any of the other Mezzanine Loan Documents.
All representations, warranties, covenants and agreements made in this Agreement
or in the other Mezzanine Loan Documents shall be deemed to have been relied
upon by Mezzanine Lender notwithstanding any investigation heretofore or
hereafter made by Mezzanine Lender or on its behalf.
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1. Borrowers' Covenants. Each Borrower covenants and agrees
that, from the date hereof and until payment in full of the Indebtedness:
(a) EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS; INSURANCE. Each Borrower
shall do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its corporate existence, rights, licenses, Permits and
franchises necessary for the conduct of its business and comply in all respects
with all applicable Legal Requirements applicable to it and the Collateral. Each
Borrower shall notify Mezzanine Lender promptly of any written notice or order
that either Borrower receives from any Governmental Authority relating to either
Borrower's failure to comply with such applicable Legal Requirements. Each
Borrower shall at all times maintain, preserve and protect all franchises and
trade names and preserve all the remainder of its property necessary for the
continued conduct of its business.
(b) LITIGATION. Each Borrower shall give prompt written notice to Mezzanine
Lender of any litigation or governmental proceedings pending or threatened (in
writing) against either Borrower which is reasonably likely to have a Material
Adverse Effect.
(c) NOTICE OF DEFAULT. Each Borrower shall promptly advise Mezzanine Lender of
any material adverse change in either Borrower's condition, financial or
otherwise, or of the occurrence of any Default or Event of Default or any
default under any material obligations of either Borrower including, without
limitation, Permitted Other Borrowings.
(d) COOPERATE IN LEGAL PROCEEDINGS. Each Borrower shall cooperate with Mezzanine
Lender with respect to any proceedings before any Governmental Authority which
may in any way affect the rights of Mezzanine Lender
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hereunder or any rights obtained by Mezzanine Lender under any of the Mezzanine
Loan Documents and, in connection therewith, not prohibit Mezzanine Lender, at
its election, from participating in any such proceedings.
(e) PERFORM MEZZANINE LOAN DOCUMENTS. Each Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions required to be
observed, performed or satisfied by it, and shall pay when due all costs, fees
and expenses required to be paid by it under the Mezzanine Loan Documents
executed and delivered by either Borrower.
(f) FURTHER ASSURANCES. Each Borrower shall, at Borrowers' sole cost and
expense:
i. upon Mezzanine Lender's request therefor given from time to time
after the occurrence of any Default pay for reports of UCC, federal tax lien,
state tax lien, judgment and pending litigation searches with respect to
Borrowers;
ii. furnish to Mezzanine Lender all instruments, documents,
certificates, and agreements, and each and every other document, certificate,
agreement and instrument required to be furnished pursuant to the terms of the
Mezzanine Loan Documents;
iii. execute and deliver to Mezzanine Lender such documents,
instruments, certificates, assignments and other writings, and do such other
acts necessary, to evidence, preserve and/or protect the Collateral at any time
securing, or intended to secure the Mezzanine Note, as Mezzanine Lender may
require in Mezzanine Lender's discretion, including without limitation the
filing of any financing or continuation statements under the UCC with respect to
the Collateral, transferring the Collateral to Mezzanine Lender's possession (if
a security interest in such Collateral can be perfected by possession) and
endorsing to Lender any Collateral which may be evidenced by an instrument; and
iv. do and execute all and such further lawful acts, conveyances and
assurances for the better and more effective carrying out of the intents and
purposes of this Agreement and the other Mezzanine Loan Documents, as Mezzanine
Lender shall require from time to time in its discretion.
(g) FINANCIAL REPORTING. (i) Each Borrower shall furnish or cause to be
furnished to Mezzanine Lender each financial statement that the First Mortgage
Loan Borrowers, as borrowers under the First Mortgage Loan Agreements, are
required to deliver to the lender under the First Mortgage Loan Agreements, and
within the same time constraints placed on such borrower as set forth in the
First Mortgage Loan Agreements. Each Borrower shall supply to the Mezzanine
Lender such additional calculations, statements, data and other information
regarding such Borrower and its assets as the Mezzanine Lender may reasonably
request.
(ii). Each Borrower shall furnish to Mezzanine Lender, promptly but
within ten (10) Business Days after request (or if more than ten (10) Business
Days is reasonably necessary, as soon thereafter as may be reasonably possible),
such further detailed information with respect to the Borrowers' financial
affairs as may be reasonably requested by Mezzanine Lender.
(h) ERISA. Each Borrower shall deliver to Mezzanine Lender as soon as possible,
and in any event within ten days after either Borrower knows or has reason to
believe that any of the events or conditions specified below with respect to any
Plan or Multiemployer Plan has occurred or exists, a statement signed by a
senior financial officer of such Borrower setting forth details respecting such
event or condition and the action, if any, that such Borrower or its ERISA
Affiliate proposes to take with respect thereto (and a copy of any report or
notice required to be filed with or given to PBGC by such Borrower or an ERISA
Affiliate with respect to such event or condition):
(i). any reportable event, as defined in Section 4043(b) of ERISA and
the regulations issued thereunder, with respect to a Plan, as to which PBGC has
not by regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event (provided that a failure
to meet the minimum funding standard of Section 412 of the Code or Section 302
of ERISA, including, without limitation, the failure to make on or before its
due date a required installment under Section 412(m) of the Code or Section
302(e) of ERISA, shall be a reportable event regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code); and any request for a
waiver under Section 412(d) of the Code for any Plan;
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(ii). the distribution under Section 4041 of ERISA of a notice of
intent to terminate any Plan or any action taken by either Borrower or an ERISA
Affiliate to terminate any Plan;
(iii). the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by either Borrower or any ERISA Affiliate of a notice from
a Multiemployer Plan that such action has been taken by PBGC with respect to
such Multiemployer Plan;
(iv). the complete or partial withdrawal from a Multiemployer Plan by
either Borrower or any ERISA Affiliate that results in liability under Section
4201 or 4204 of ERISA (including the obligation to satisfy secondary liability
as a result of a purchaser default) or the receipt by either Borrower or any
ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization
or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA;
(v). the institution of a proceeding by a fiduciary of any
Multiemployer Plan against either Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days;
(vi). the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the loss
of tax-exempt status of the trust of which such Plan is a part if either
Borrower or an ERISA Affiliate fails to timely provide security to the Plan in
accordance with the provisions of said Sections; and
(vii). the imposition of a lien or a security interest in connection
with a Plan.
(i) IMPOSITIONS AND OTHER CLAIMS. Borrowers shall pay and discharge or cause to
be paid and discharged all Impositions, as well as all lawful claims for labor,
materials and supplies or otherwise, which could become a Lien on the
Collateral.
(j) ACQUISITION OF OTHER ASSETS. If any Borrower desires to acquire any other
assets (including, without limitation, additional stock of any First Mortgage
Loan Borrower or stock of any other Affiliate of such Borrower) after the
Closing Date, such Borrower shall notify Mezzanine Lender in writing at least
thirty (30) days in advance and shall obtain Mezzanine Lender's written consent
to such acquisition and, after such consent is obtained and when such asset is
acquired, pledge, assign and grant a first perfected security interest in and to
all such assets as security (i) FIRST for the Mezzanine Loan and (ii) SECOND,
after the Mezzanine Loan shall have been paid in full, for the Put and Call
Obligations, pursuant to such documentation as shall be acceptable to the
Mezzanine Lender in its sole discretion.
(k) NEW PROPERTIES. In the event either Borrower desires to acquire any real
property upon which a Borrower intends to renovate existing improvements or
construct new improvements, such Borrower shall notify Mezzanine Lender in
writing at least five (5) Business Days in advance of such acquisition and shall
establish a new wholly owned subsidiary of such Borrower to acquire such real
property and to incur debt in connection with such acquisition and construction
activities on terms acceptable to Mezzanine Lender; provided, however, that in
no event shall such debt exceed at any time seventy-five percent (75%) of the
cost of the land which has actually been acquired and the portion of the
improvements that have actually been completed, as Mezzanine Lender shall
determine in its sole discretion. All debt incurred by such wholly owned
subsidiary of the relevant Borrower shall be the exclusive obligation of such
subsidiary and no Borrower shall have any obligations or liabilities with
respect to such debt (or any part of it) under any circumstances. Simultaneous
with the creation of any such wholly owned subsidiary, each Borrower shall take
all steps as shall be necessary in Mezzanine Lender's sole discretion to ensure
that Mezzanine Lender obtains a first perfected security interest in the equity
in such wholly owned subsidiary of the relevant Borrower. In addition,
simultaneous with the creation of any such wholly owned subsidiary, the relevant
Borrower shall cause such subsidiary to grant to Mezzanine Lender an enforceable
irrevocable right of first refusal to provide any financing to such subsidiary.
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(l) MANAGEMENT OF FACILITIES.
(i). Each Facility will be managed at all times by a Manager (as
defined in the First Mortgage Loan Agreements) pursuant to a Management
Agreement (as defined in the First Mortgage Loan Agreements). The Manager(s)
will agree that Management Agreements (as defined in the First Mortgage Loan
Agreements) are subject and subordinate in all respects to the Liens of the
applicable First Mortgage Loans. Borrowers shall cause the Management Agreements
to be terminated at the Mezzanine Lender's request and, if the First Mortgage
Loan is outstanding, only upon prior written consent of the applicable First
Mortgage Lender, upon thirty (30) days' prior written notice to the applicable
First Mortgage Loan Borrower and the Manager (i) upon the occurrence and during
the continuance of an Event of Default, (ii) if the Manager commits any act
which would permit termination by the applicable First Mortgage Loan Borrower
under any Management Agreement or (iii) in the event that, as of the last day of
a calendar quarter, the Debt Service Coverage Ratio (as defined in the First
Mortgage Loan Agreements) for the Facilities, computed on the basis of the prior
twelve (12) calendar months, is less than 1.15; PROVIDED, however, that the
Mezzanine Lender shall not have the right to cause the termination of the
Management Agreements upon the occurrence of the event described in CLAUSE (III)
above, if within five (5) days of the Mezzanine Lender's request that the
Management Agreements be terminated, the applicable First Mortgage Loan Borrower
causes a defeasance of the applicable First Mortgage Loan in accordance with and
subject to the terms of Section 2.6 of the applicable First Mortgage Loan
Agreement in an amount sufficient to cause the Debt Service Coverage Ratio for
the relevant Facilities computed on the basis of the prior twelve (12) calendar
months to be greater than or equal to 1.40 (calculated as if such amount was
actually applied to reduce the Principal Indebtedness (as defined in the
applicable First Mortgage Loan Agreement) upon which Debt Service (as defined in
the First Mortgage Loan Agreements) was paid and calculated as if the Principal
Indebtedness (as defined in the applicable First Mortgage Loan Agreement) was
reamortized on a straight-line basis (as if the reduction had occurred) over the
remaining number of months until the Maturity Date (as defined in the applicable
First Mortgage Loan Agreement) of the relevant First Mortgage Loan). In
determining whether to request the termination of the Management Agreements,
Mezzanine Lender shall consider general economic conditions, relative
performance of properties comparable to the relevant Facilities and economic
factors beyond the control of the Manager (such as force majeure) and Mezzanine
Lender shall not request the termination of the Management Agreements pursuant
to CLAUSE (III) if the reduction in the Debt Service Coverage Ratio (as defined
in the applicable First Mortgage Loan Agreement) is due, as determined by
Mezzanine Lender in its sole discretion, primarily to (a) an overall decline in
the hospitality industry in the jurisdictions in which the relevant Facilities
are located such as a decline attributable to the effect of a natural disaster
in such jurisdictions or a similar event or (b) specific economic conditions
affecting the relevant Facilities which are beyond the applicable First Mortgage
Loan Borrower's control, such as the bankruptcy of a major contract customer of
the relevant Facilities and similar events. In the event that a Manager is
terminated pursuant hereto, Borrowers shall cause the relevant First Mortgage
Loan Borrower to immediately seek to appoint a replacement manager acceptable to
Mezzanine Lender in Mezzanine Lender's reasonable discretion and which the
Rating Agencies confirm in writing will not result in a withdrawal, downgrade or
qualification of the then applicable ratings assigned to any securities issued
in any Securitization (as defined in the First Mortgage Loan Agreements), and
Borrowers' failure to obtain such an acceptable manager within 30 days of
Mezzanine Lender's request to terminate the Management Agreements shall
constitute an immediate Event of Default.
(ii) Any successor Manager selected hereunder by the Mezzanine Lender
to serve as Manager shall be a reputable management company having at least
seven (7) years' experience in the management of commercial properties with
similar uses as the Facilities and in the jurisdictions in which the Facilities
are located. Notwithstanding anything to the contrary contained in this
Agreement, in the event that the First Mortgage Lender terminates and replaces
Manager pursuant to the terms of a First Mortgage Loan Agreement, the Mezzanine
Lender shall have no right of approval over the replacement Manager selected by
the First Mortgage Lender for so long as such First Mortgage Loan is
outstanding.
(m) ANNUAL BUDGET. Each Borrower shall submit to Mezzanine Lender an Annual
Operating Budget on or before the date specified in the definition thereof.
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ARTICLE VI
NEGATIVE COVENANTS
Section 6.1. Borrowers' Negative Covenants. Each Borrower covenants and
agrees that, until payment in full of the Indebtedness, it will not do, directly
or indirectly, any of the following unless Mezzanine Lender consents thereto in
writing:
(a) LIENS ON THE COLLATERAL. Incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Lien with respect to the
Collateral except Liens in favor of Mezzanine Lender.
(b) TRANSFER. Except as expressly permitted by or pursuant to this Agreement or
except as otherwise approved by Mezzanine Lender in writing in Mezzanine
Lender's sole discretion, allow any Transfer to occur.
(c) CHANGE IN BUSINESS. Make any material change in the scope or nature of its
business objectives, purposes or operations, or undertake or participate in
activities other than the continuance of its present business or amend or allow
any amendment of its organization documents.
(d) CERTAIN RESTRICTIONS. Enter into any agreement which expressly restricts the
ability of either Borrower to enter into amendments, modifications or waivers of
any of the Mezzanine Loan Documents.
(e) ISSUANCE OF EQUITY INTERESTS. Issue or allow to be created (i) any security
or other instrument which by its terms is convertible into or exercisable or
exchangeable for ownership interests in ▇▇▇▇▇▇ Hotels Properties Corp. or (ii)
any stocks or shares or partnership or membership interests in ▇▇▇▇▇▇ Hotels
Properties Corp., or other ownership interests other than the stocks, shares,
partnership or membership interests and other ownership interests in ▇▇▇▇▇▇
Hotels Properties Corp., which are outstanding or exist on the Closing Date.
(f) PLACE OF BUSINESS. Change its chief executive office or its principal place
of business or place where its books and records are kept without giving
Mezzanine Lender at least thirty (30) days' prior written notice thereof and
promptly providing Mezzanine Lender such information as Mezzanine Lender may
reasonably request in connection therewith.
(g) IDENTITY. Change its name, identity or organizational structure in any
manner which might make any financing or continuation statement filed in
connection herewith seriously misleading within the meaning of section 9-402(7)
of the UCC (or any other then applicable provision of the UCC).
(h) INDEBTEDNESS. Incur or allow any Affiliate to incur any indebtedness other
than the Indebtedness, the Put and Call Obligations and the Permitted Other
Borrowings.
(i) SUBSIDIARIES. Create any subsidiaries or otherwise acquire equity interests
in any entity without the prior written consent of Mezzanine Lender.
ARTICLE VII
DEFAULTS
Section 7.1. Event of Default. The occurrence of one or more of the
following events shall be an "EVENT OF DEFAULT" hereunder:
(a) (i) the occurrence of a Nonpayment Breach; provided, however, that if on or
before the third Payment Date following the occurrence of such Nonpayment
Breach, Borrowers shall have cured such Nonpayment Breach and paid to Mezzanine
Lender all amounts then due and owing hereunder as of such third Payment Date,
then no Event of Default shall exist, or (ii) if Borrowers fail to pay any other
amounts owing hereunder or under any other Mezzanine Loan Document (including
any amount owing on the Maturity Date) when due;
(b) if Borrowers default in any of their obligations under the Mezzanine Cash
Collateral Agreement, the Equity Inns Debt or any other indebtedness or material
obligation of either Borrower or if any of the terms of or documents evidencing
the Equity Inns Debt, the Equity Inns Subordination Agreement or any other
indebtedness of either Borrower is amended;
(c) the occurrence of any of the events identified elsewhere in the Mezzanine
Loan Documents or the First Mortgage Loan Documents as constituting an "Event of
Default" hereunder or thereunder;
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(d) a Transfer, unless the prior written consent of Mezzanine Lender is obtained
(which consent may be withheld with or without cause in Mezzanine Lender's
discretion);
(e) if any representation or warranty made herein or in any other Mezzanine Loan
Document, or in any report, certificate, financial statement or other
Instrument, agreement or document furnished by either Borrower in connection
with this Agreement, the Mezzanine Note or any other Mezzanine Loan Document
executed and delivered by either Borrower, shall be false in any material
respect as of the date such representation or warranty was made or remade;
(f) if any Borrower or ▇▇▇▇▇▇ Hotels Properties Corp. shareholder makes an
assignment for the benefit of creditors;
(g) if a receiver, liquidator or trustee shall be appointed for any Borrower or
▇▇▇▇▇▇ Hotels Properties Corp. shareholder or if any Borrower or ▇▇▇▇▇▇ Hotels
Properties Corp. shareholder shall be adjudicated as 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 any Borrower or ▇▇▇▇▇▇ Hotels
Properties Corp. shareholder or if any proceeding for the dissolution or
liquidation of any Borrower or ▇▇▇▇▇▇ Hotels Properties Corp. shareholder shall
be instituted; PROVIDED, HOWEVER, that if such appointment, adjudication,
petition or proceeding was involuntary and not consented to by such Borrower or
▇▇▇▇▇▇ Hotels Properties Corp. shareholder upon the same not being discharged,
stayed or dismissed within 90 days; or if any Borrower or ▇▇▇▇▇▇ Hotels
Properties Corp. shareholder shall generally not be paying its debts as they
become due;
(h) if any Borrower attempts to delegate its obligations or assign its rights
under this Agreement, any of the other Mezzanine Loan Documents or any interest
herein or therein; (i) if any provision of any organizational document of any
Borrower is amended or modified in any respect which may adversely affect
Mezzanine Lender, or if any Borrower or any of its shareholders fails to perform
or enforce the provisions of such organizational documents or attempts to
dissolve any Borrower;
(j) if any Borrower fails to give any notice due to Mezzanine Lender under any
Mezzanine Loan Document (a) within two (2) days after such notice was due or (b)
in accordance with the applicable procedural requirements set forth in the
Mezzanine Loan Documents;
(k) if any Borrower shall be in default under any of the other obligations,
agreements, undertakings, terms, covenants, provisions or conditions of this
Agreement or the other Mezzanine Loan Documents, not otherwise referred to in
this SECTION 7.1, for ten (10) days after written notice to Borrowers from
Mezzanine Lender or its successors or assigns, in the case of any default which
can be cured by the payment of a sum of money or for thirty (30) days after
written notice from Mezzanine Lender or its successors or assigns, in the case
of any other default (unless otherwise provided herein or in such other
Mezzanine Loan Document); PROVIDED HOWEVER, that if such non-monetary default
under this SUBPARAGRAPH is susceptible of cure but cannot reasonably be cured
within such thirty (30) day period and provided further that Borrowers shall
have commenced to cure such default within such thirty (30) day period and
thereafter diligently and expeditiously proceeds to cure the same, such thirty
(30) day period shall be extended for such time as is reasonably necessary for
Borrowers in the exercise of due diligence to cure such default, but in no event
shall such period exceed ninety (90) days after the original notice from
Mezzanine Lender; and
(l) if an event or condition specified in SECTION 5.1(H) shall occur or exist
with respect to any Plan or Multiemployer Plan and, as a result of such event or
condition, together with all other such events or conditions, either Borrower or
any ERISA Affiliate shall incur or in the opinion of Mezzanine Lender shall be
reasonably likely to incur a liability to a Plan, a Multiemployer Plan or PBGC
(or any combination of the foregoing) which would constitute, in the
determination of Mezzanine Lender, a Material Adverse Effect.
Section 7.2. Remedies. (a) Upon the occurrence of an Event of Default,
all or any one or more of the rights, powers and other remedies available to
Mezzanine Lender against Borrowers under this Agreement, or any of the other
Mezzanine Loan Documents, or at law or in equity may be exercised by Mezzanine
Lender at any time and from time to time (including, without limitation, the
right to accelerate and declare the outstanding principal amount, unpaid
interest, Default Rate interest and Late Charges and any other amounts owing by
Borrowers to be immediately due and payable), without notice or demand, whether
or not all or any portion of the Indebtedness shall be declared due and payable,
and whether or not Mezzanine Lender shall have commenced any proceeding or other
action for the enforcement of its rights and remedies under any of the Mezzanine
Loan Documents with respect to all or any portion of the Collateral. Any such
actions taken by Mezzanine Lender shall be cumulative and concurrent and may be
pursued independently, singly, successively, together or otherwise, at such time
and in such order as Mezzanine Lender may determine in its sole discretion, to
the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Mezzanine Lender permitted by law, equity or
contract or as set forth herein or in the other Mezzanine Loan Documents.
Notwithstanding anything contained to the contrary herein, the outstanding
principal amount, unpaid interest,
25
Default Rate interest, Late Charges, and any other amounts owing by Borrowers
shall be accelerated and immediately due and payable, without any election by
Mezzanine Lender, upon the occurrence of an Event of Default described in
SECTION 7.1(G) or SECTION 7.1(H).
Section 7.3. Remedies Cumulative. The rights, powers and remedies of
Mezzanine Lender under this Agreement shall be cumulative and not exclusive of
any other right, power or remedy which Mezzanine Lender may have against
Borrowers pursuant to this Agreement or the other Mezzanine Loan Documents
executed by or with respect to Borrowers, or existing at law or in equity or
otherwise. Mezzanine Lender's rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Mezzanine Lender
may determine in Mezzanine Lender's sole discretion. No delay or omission to
exercise any remedy, right or power accruing upon an Event of Default shall
impair any such remedy, right or power or shall be construed as a waiver
thereof, but any such remedy, right or power may be exercised from time to time
and as often as may be deemed expedient. A waiver of any Default or Event of
Default shall not be construed to be a waiver of any subsequent Default or Event
of Default or to impair any remedy, right or power consequent thereon. Any and
all of Mezzanine Lender's rights with respect to the Collateral shall continue
unimpaired, and Borrowers shall be and remain obligated in accordance with the
terms hereof, notwithstanding (i) the release or substitution of Collateral at
any time, or of any rights or interest therein or (ii) any delay, extension of
time, renewal, compromise or other indulgence granted by Mezzanine Lender in the
event of any Default or Event of Default with respect to the Collateral or
otherwise hereunder.
Section 7.4. Mezzanine Lender's Right to Perform. If Borrowers fail to
perform any covenant or obligation contained herein or in any Mezzanine Loan
Document and such failure shall continue for a period of five Business Days
after Borrowers' receipt of written notice thereof, without in any way limiting
SECTION 7.1 hereof, from Mezzanine Lender, Mezzanine Lender may, but shall have
no obligation to, itself perform, or cause performance of, such covenant or
obligation, and the expenses of Mezzanine Lender incurred in connection
therewith shall be payable by Borrowers to Mezzanine Lender upon demand.
Notwithstanding the foregoing, Mezzanine Lender shall have no obligation to send
notice to Borrowers of any such failure.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the execution and delivery of this Agreement and
the execution and delivery by Borrowers to Mezzanine Lender of the Mezzanine
Note, and shall continue in full force and effect so long as any portion of the
Indebtedness is outstanding and unpaid. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All covenants, promises and agreements in
this Agreement contained, by or on behalf of Borrowers, shall inure to the
benefit of the respective successors and assigns of Mezzanine Lender. Nothing in
this Agreement or in any other Mezzanine Loan Document, express or implied,
shall give to any Person other than the parties and the holder(s) of the
Mezzanine Note, and the other Mezzanine Loan Documents, and their legal
representatives, successors and assigns, any benefit or any legal or equitable
right, remedy or claim hereunder.
26
Section 8.2. Mezzanine Lender's Discretion. Whenever pursuant to this
Agreement, Mezzanine Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Mezzanine
Lender, the decision of Mezzanine Lender to approve or disapprove or to decide
whether arrangements or terms are satisfactory or not satisfactory shall (except
as is otherwise specifically herein provided) be in the sole discretion of
Mezzanine Lender.
Section 8.3. Governing Law.
(a) The proceeds of the Mezzanine Note delivered pursuant hereto were disbursed
from New York, which State the parties agree has a substantial relationship to
the parties and to the underlying transaction embodied hereby, and in all
respects, including, without limitation, matters of construction, validity and
performance, this Agreement and the obligations arising hereunder shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts made and performed in such State and any applicable law
of the United States of America. To the fullest extent permitted by law,
Borrowers hereby unconditionally and irrevocably waive any claim to assert that
the law of any other jurisdiction governs this Agreement and the Mezzanine Note,
and this Agreement and the Mezzanine Note shall be governed by and construed in
accordance with the laws of the State of New York pursuant to ss. 5-1401 of the
New York General Obligations Law.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST EITHER BORROWER ARISING OUT OF
OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT
IN MONROE COUNTY, NEW YORK, PURSUANT TO ss. 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND BORROWERS WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
BORROWERS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY SUCH COURT IN ANY
SUIT, ACTION OR PROCEEDING. BORROWERS HEREBY DESIGNATE AND APPOINT ACCELERATED
INFORMATION AND DOCUMENT FILING, INC., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ AS THEIR AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON THEIR BEHALF
SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN ANY FEDERAL OR STATE COURT AND AGREE THAT SERVICE OF PROCESS UPON
SAID AGENT AT SAID ADDRESS (OR AT SUCH OTHER OFFICE AS MAY BE DESIGNATED BY
BORROWERS FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS HEREOF) WITH A COPY TO
BORROWERS AT THEIR PRINCIPAL EXECUTIVE OFFICE, ATTENTION: PRESIDENT AND WRITTEN
NOTICE OF SAID SERVICE OF BORROWERS MAILED OR DELIVERED TO BORROWERS IN THE
MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON BORROWERS, IN ANY SUCH SUIT, ACTION OR PROCEEDING. BORROWERS (1)
SHALL GIVE PROMPT NOTICE TO MEZZANINE LENDER OF ANY CHANGED ADDRESS OF THEIR
AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE
A SUBSTITUTE AUTHORIZED AGENT (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS
FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF
THEIR AUTHORIZED AGENT CEASES TO HAVE AN OFFICE OR IS DISSOLVED WITHOUT LEAVING
A SUCCESSOR.
Section 8.4. Modification, Waiver in Writing. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, the Mezzanine Note or any other Mezzanine Loan Document, or consent
to any departure by Borrowers therefrom, shall in any event be effective unless
the same shall be in a writing, signed by the party against whom enforcement is
sought, and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to or demand on Borrowers shall entitle Borrowers to
any other or future notice or demand in the same, similar or other,
circumstances.
Section 8.5. Delay Not a Waiver. Neither any failure nor any delay on
the part of Mezzanine Lender in insisting upon strict performance of any term,
condition, covenant or agreement, or exercising any right, power, remedy or
privilege hereunder, or under the
27
Mezzanine Note, or of any other Mezzanine Loan Document, or any other instrument
given as security therefor, shall operate as or constitute a waiver thereof, nor
shall a single or partial exercise thereof preclude any other future exercise,
or the exercise of any other right, power, remedy or privilege. In particular,
and not by way of limitation, by accepting payment after the due date of any
amount payable under this Agreement, the Mezzanine Note or any other Mezzanine
Loan Document, Mezzanine Lender shall not be deemed to have waived any right
either to require prompt payment when due of all other amounts due under this
Agreement, the Mezzanine Note or the other Mezzanine Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
Section 8.6. Notices. All notices, consents, approvals and requests
required or permitted hereunder or under any other Mezzanine Loan Document shall
be given in writing and shall be effective for all purposes if hand delivered or
sent by (a) hand delivery, with proof of attempted delivery, (b) certified or
registered United States mail, postage prepaid, (c) expedited prepaid delivery
service, either commercial or United States Postal Service, with proof of
attempted delivery, or (d) by telecopier (with answerback acknowledged) provided
that such telecopied notice must also be delivered by one of the means set forth
in (a), (b) or (c) above, addressed if to Mezzanine Lender at its address set
forth on the first page hereof, and if to Borrowers at their designated address
set forth on the first page hereof, with a copy to the same address, Attention:
▇▇▇▇▇ ▇. ▇▇▇▇, Vice President and Treasurer, with an additional copy to ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Esquire, Boylan, Brown, Code, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇, or at such other
address and person as shall be designated from time to time by any party hereto,
as the case may be, in a written notice to the other parties hereto in the
manner provided for in this Section. A copy of all notices directed to Mezzanine
Lender shall be delivered to ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇. A notice
shall be deemed to have been given: (a) in the case of hand delivery, at the
time of delivery; (b) in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; (c) in the case of
expedited prepaid delivery, upon the first attempted delivery on a Business Day;
or (d) in the case of telecopier, upon receipt of answerback confirmation,
provided that such telecopied notice was also delivered as required in this
Section. A party receiving a notice which does not comply with the technical
requirements for notice under this Section may elect to waive any deficiencies
and treat the notice as having been properly given. Notwithstanding anything
herein to the contrary, notice to one Borrower shall be deemed effective notice
to all Borrowers.
SECTION 8.7. TRIAL BY JURY. BORROWERS AND MEZZANINE LENDER, TO THE
FULLEST EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION OR PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY
ANY PARTY HERETO WITH RESPECT TO THIS AGREEMENT, THE MEZZANINE NOTE OR THE OTHER
MEZZANINE LOAN DOCUMENTS.
Section 8.8. Headings. The Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 8.9. Assignment. Mezzanine Lender shall have the right to
assign in whole or in part this Agreement and/or any of the other Mezzanine Loan
Documents and the obligations hereunder or thereunder to any Person and to
participate all or any portion of the Mezzanine Loan evidenced hereby.
Section 8.10. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 8.11. Preferences. Mezzanine Lender shall have no obligation to
marshal any assets in favor of Borrowers or any other party or
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against or in payment of any or all of the obligations of Borrowers pursuant to
this Agreement, the Mezzanine Note or any other Mezzanine Loan Document.
Mezzanine Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Borrowers to any portion of the
obligations of Borrowers hereunder. To the extent Borrowers make a payment or
payments to Mezzanine Lender for Borrowers' benefit, which payment or proceeds
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or proceeds received, the
obligations hereunder or part thereof intended to be satisfied shall be revived
and continue in full force and effect, as if such payment or proceeds had not
been received by Mezzanine Lender.
Section 8.12. Waiver of Notice. Borrowers shall not be entitled to any
notices of any nature whatsoever from Mezzanine Lender except with respect to
matters for which this Agreement or the other Mezzanine Loan Documents
specifically and expressly provide for the giving of notice by Mezzanine Lender
to Borrowers and except with respect to matters for which Borrowers are not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrowers hereby expressly waive the right to receive any notice from
Mezzanine Lender with respect to any matter for which this Agreement or the
other Mezzanine Loan Documents does not specifically and expressly provide for
the giving of notice by Mezzanine Lender to Borrowers.
Section 8.13. Exhibits Incorporated. The information set forth on the
cover, heading and recitals hereof, and the Exhibits attached hereto, are hereby
incorporated herein as a part of this Agreement with the same effect as if set
forth in the body hereof.
Section 8.14. Offsets, Counterclaims and Defenses. Any assignee of
Mezzanine Lender's interest in and to this Agreement, the Mezzanine Note, and
the other Mezzanine Loan Documents shall take the same free and clear of all
offsets, counterclaims or defenses which are unrelated to the Mezzanine Loan,
this Agreement, the Mezzanine Note, and the other Mezzanine Loan Documents which
Borrowers may otherwise have against any assignor, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrowers in any
action or proceeding brought by any such assignee upon this Agreement, the
Mezzanine Note, and other Mezzanine Loan Documents and any such right to
interpose or assert any such unrelated offset, counterclaim or defense in any
such action or proceeding is hereby expressly waived by Borrowers.
Section 8.15. No Joint Venture or Partnership. Borrowers and Mezzanine
Lender intend that the relationship created hereunder be solely that of borrower
and lender. Nothing herein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrowers and Mezzanine
Lender.
Section 8.16. Waiver of Marshaling of Assets Defense. To the fullest
extent that Borrowers may legally do so, Borrowers waive all rights to a
marshaling of the assets of Borrowers, and others with interests in Borrowers,
and of the Collateral, or to a sale in inverse order of alienation in the event
of foreclosure of the interests hereby created, and agree not to assert any
right under any laws pertaining to the marshaling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Mezzanine Lender under the Mezzanine Loan Documents to a sale of the
Collateral for the collection of the Indebtedness without any prior or different
resort for collection, or the right of Mezzanine Lender to the payment of the
Indebtedness in preference to every other claimant whatsoever.
Section 8.17. Waiver of Counterclaim. Borrowers hereby waive the right
to assert a counterclaim, other than compulsory counterclaim, in any action or
proceeding brought against Borrowers by Mezzanine Lender or Mezzanine Lender's
agents.
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Section 8.18. Conflict; Construction of Documents. In the event of any
conflict between the provisions of this Agreement and the provisions of the
Mezzanine Note, or any of the other Mezzanine Loan Documents, the provisions of
this Agreement shall prevail. The parties hereto acknowledge that they were
represented by counsel in connection with the negotiation and drafting of the
Mezzanine Loan Documents and that the Mezzanine Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same.
Section 8.19. Brokers and Financial Advisors. Borrowers and Mezzanine
Lender hereby represent that they have dealt with no financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement. Borrowers hereby agree to
indemnify and hold Mezzanine Lender harmless from and against any and all
claims, liabilities, costs and expenses of any kind in any way relating to or
arising from a claim by any Person, that such Person acted on behalf of
Borrowers in connection with the transactions contemplated herein. The
provisions of this Section shall survive the expiration and termination of this
Agreement and the repayment of the Indebtedness.
Section 8.20. Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
Section 8.21. Estoppel Certificates. Borrowers and Mezzanine Lender
each hereby agree at any time and from time to time upon not less than fifteen
(15) days prior written notice by Borrowers or Mezzanine Lender to execute,
acknowledge and deliver to the party specified in such notice, a statement, in
writing, certifying that this Agreement is unmodified and in full force and
effect (or if there have been modifications, that the same, as modified, is in
full force and effect and stating the modifications hereto), and stating whether
or not, to the knowledge of such certifying party, any Default or Event of
Default has occurred, and, if so, specifying each such Default or Event of
Default; PROVIDED, HOWEVER, that it shall be a condition precedent to Mezzanine
Lender's obligation to deliver the statement pursuant to this Section that
Mezzanine Lender shall have received, together with Borrowers' request for such
statement, an Officer's Certificate stating that no Default or Event of Default
exists as of the date of such certificate (or specifying such Default or Event
of Default).
Section 8.22. Payment of Expenses. Borrowers shall, whether or not the
Transactions are consummated, pay all Transaction Costs, which shall include,
without limitation, reasonable out-of-pocket fees, costs, expenses, and
disbursements of Mezzanine Lender and its attorneys, local counsel, accountants
and other contractors in connection with (i) the negotiation, preparation,
execution and delivery of the Mezzanine Loan Documents and the documents and
instruments referred to therein, (ii) the creation, perfection or protection of
Mezzanine Lender's Liens in the Collateral, (iii) the negotiation, preparation,
execution and delivery of any amendment, waiver or consent relating to any of
the Mezzanine Loan Documents, and (iv) the preservation of rights under and
enforcement of the Mezzanine Loan Documents and the documents and instruments
referred to therein, including any restructuring or rescheduling of the
Indebtedness.
Section 8.23. Bankruptcy Waiver. Borrowers hereby agree that, in
consideration of the recitals and mutual covenants contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, in the event any Borrower shall (i) file with any
bankruptcy court of competent jurisdiction or be the subject of any petition
under Title 11 of the U.S. Code, as amended, (ii) be the subject of any order
for relief issued under Title 11 of the U.S. Code, as amended, (iii) file or be
the subject of any petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future law relating to bankruptcy, insolvency or other relief of
debtors, (iv) have sought or consented to or acquiesced in the appointment of
any trustee, receiver, conservator or liquidator or (v) be the subject of any
order, judgment or decree entered by any court of competent jurisdiction
approving a petition filed against such party for any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future federal or state act or law relating to
bankruptcy, insolvency or other relief for debtors, the automatic stay provided
by the Federal
30
Bankruptcy Code shall be modified and annulled as to Mezzanine Lender, so as to
permit Mezzanine Lender to exercise any and all of its remedies, upon request of
Mezzanine Lender made on notice to Borrowers and any other party in interest but
without the need of further proof or hearing. Borrowers or any Affiliate of
either Borrower shall not contest the enforceability of this Section.
Section 8.24. Entire Agreement. This Agreement, together with the
Exhibits hereto and the other Mezzanine Loan Documents, constitutes the entire
agreement among the parties hereto with respect to the subject matter contained
in this Agreement, the Exhibits hereto and the other Mezzanine Loan Documents
and supersedes all prior agreements, understandings and negotiations between the
parties.
Section 8.25. Dissemination of Information. If Mezzanine Lender
determines at any time to sell, transfer or assign the Mezzanine Note, this
Agreement and any other Mezzanine Loan Document and any or all servicing rights
with respect thereto, or to grant participations therein or issue mortgage
pass-through certificates or other securities evidencing a beneficial interest
in a rated or unrated public offering or private placement, Mezzanine Lender may
forward to each purchaser, transferee, assignee, servicer, participant or
investor in such securities (collectively, the "INVESTOR") or any rating agency
and each prospective Investor, all documents and information which Mezzanine
Lender now has or may hereafter acquire relating to the Mezzanine Loan,
Borrowers, any guarantor, any indemnitor and the Collateral, which shall have
been furnished by Borrowers, any guarantor, any indemnitor, or any party to any
Mezzanine Loan Document, or otherwise furnished in connection with the Mezzanine
Loan, as Mezzanine Lender in its sole discretion determines necessary or
desirable.
Section 8.26. Limitation of Interest. It is the intention of Borrowers
and Mezzanine Lender to conform strictly to applicable usury laws. Accordingly,
if the transactions contemplated hereby would be usurious under applicable law,
then, in that event, notwithstanding anything to the contrary in any Mezzanine
Loan Document, it is agreed as follows: (i) the aggregate of all consideration
which constitutes interest under applicable law that is taken, reserved,
contracted for, charged or received under any Mezzanine Loan Document or
otherwise in connection with the Mezzanine Loan shall under no circumstances
exceed the maximum amount of interest allowed by applicable law, and any excess
shall be credited to principal by Mezzanine Lender (or if the Mezzanine Loan
shall have been paid in full, refunded to Borrowers); and (ii) in the event that
maturity of the Mezzanine Loan is accelerated by reason of an election by
Mezzanine Lender resulting from any default hereunder or otherwise, or in the
event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the maximum amount of interest
allowed by applicable law, and any interest in excess of the maximum amount of
interest allowed by applicable law, if any, provided for in the Mezzanine Loan
Documents or otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore prepaid, shall be credited to
principal (or if the principal portion of the Mezzanine Loan and any other
amounts not constituting interest shall have been paid in full, refunded to
Borrowers).
In determining whether or not the interest paid or payable under any specific
contingency exceeds the maximum amount allowed by applicable law, Mezzanine
Lender shall, to the maximum extent permitted under applicable law (a) exclude
voluntary prepayments and the effects thereof, and (b) amortize, prorate,
allocate and spread, in equal parts, the total amount of interest throughout the
entire contemplated term of the Mezzanine Loan so that the interest rate is
uniform throughout the entire term of the Mezzanine Loan; provided that, if the
Mezzanine Loan is paid and performed in full prior to the end of the full
contemplated term hereof, and if the interest received for the actual period of
existence thereof exceeds the maximum amount allowed by applicable law,
Mezzanine Lender shall refund to Borrowers the amount of such excess, and in
such event, Mezzanine Lender shall not be subject to any penalties provided by
any laws for contracting for, charging or receiving interest in excess of the
maximum amount allowed by applicable law.
Section 8.27. Indemnification. Borrowers shall indemnify and hold
Mezzanine Lender and each of its affiliates (including its officers, directors,
partners, employees and agents and each other person, if any, controlling
Mezzanine Lender or any of its affiliates
31
within the meaning of either Section 15 of the Securities Act of 1933, as
amended, or Section 20 of the Securities Exchange Act of 1934, as amended)
(each, including Mezzanine Lender, an "INDEMNIFIED PARTY") harmless against any
and all losses, claims, damages, costs, expenses (including the fees and
disbursements of outside counsel retained by any such person) or liabilities in
connection with, arising out of or as a result of the transactions and matters
referred to or contemplated by this Agreement except to the extent that it is
finally judicially determined that any such loss, claim, damage, cost, expense
or liability resulted primarily from the gross negligence or bad faith of such
Indemnified Party. In the event that any Indemnified Party becomes involved in
any action, proceeding or investigation in connection with any transaction or
matter referred to or contemplated in this Agreement, Borrowers shall
periodically reimburse any Indemnified Party upon demand therefor in an amount
equal to its reasonable legal and other expenses (including the costs of any
investigation and preparation) incurred in connection therewith to the extent
such legal or other expenses are the subject of indemnification hereunder.
Section 8.28. BORROWERS' ACKNOWLEDGMENTS. Borrowers hereby acknowledge
to and agree with Mezzanine Lender that (i) the scope of Mezzanine Lender's
business is wide and includes, but is not limited to, financing, real estate
financing, investment in real estate and other real estate transactions which
may be viewed as adverse to or competitive with the business of Borrowers or
their Affiliates and (ii) Borrowers have been represented by competent legal
counsel and have consulted with such counsel prior to executing this Mezzanine
Loan Agreement and any of the other Mezzanine Loan Documents.
Section 8.29. Payment Instructions.
(a) Mezzanine Lender or its designee shall have the right to deliver monthly
irrevocable payment instructions ("PAYMENT INSTRUCTIONS"), with copies to the
Borrowers, to the Mezzanine Cash Collateral Account Bank (as defined in the
Mezzanine Cash Collateral Account Agreement), which Payment Instructions shall
authorize and instruct the Mezzanine Cash Collateral Account Bank to cause the
amounts held in the Mezzanine Cash Collateral Account to be disbursed as set
forth in such Payment Instructions, and in the form attached to the Mezzanine
Cash Management Agreement.
(b) The Borrowers agree that the Mezzanine Cash Collateral Account Bank shall be
fully protected in complying with the terms of such Payment Instructions.
(c) The Borrowers hereby agree that, in the event that any First Mortgage Loan
shall have been satisfied prior to the Indebtedness due hereunder being paid, or
in the event any First Mortgage Loan Borrower fails to deposit or cause to be
deposited any First Mortgage Loan Excess Proceeds into the Mezzanine Cash
Collateral Account, the Borrowers shall enter into substitute cash management
agreements with substantially the same terms as the agreements entered into in
connection with such First Mortgage Loan within ten (10) days thereafter. Such
substitute agreements shall provide that all Rents, Money and other items of
Gross Revenue (as defined in the applicable First Mortgage Loan Agreement) shall
be deposited by the relevant First Mortgage Loan Borrower directly into the
Mezzanine Cash Collateral Account for disbursement in accordance with the terms
of the Mezzanine Cash Collateral Account Agreement.
Section 8.30. Intentionally omitted.
Section 8.31. Cross Collateralization. Without limitation to any other
right or remedy provided to Mezzanine Lender in this Agreement or any of the
other Mezzanine Loan Documents, each Borrower covenants and agrees that upon the
occurrence of an Event of Default (i) Mezzanine Lender shall have the right to
pursue all of its rights and remedies in one proceeding, or separately and
independently in separate proceedings which it, as Mezzanine Lender, in its sole
and absolute discretion, shall determine from time to time, (ii) Mezzanine
Lender is not required to either ▇▇▇▇▇▇▇▇ assets, sell Collateral in any inverse
order of alienation, or be subjected to any "one action" or "election of
remedies" law or rule, (iii) the exercise by Mezzanine Lender of any remedies
against any Collateral will not impede Mezzanine Lender from subsequently or
simultaneously exercising remedies against any other Collateral, (iv) all Liens
and other rights, remedies and privileges provided to Mezzanine Lender in this
Agreement and the other Mezzanine
32
Loan Documents or otherwise shall remain in full force and effect until
Mezzanine Lender has exhausted all of its remedies against the Collateral and
all Collateral has been foreclosed, sold and/or otherwise realized upon and (v)
the Collateral shall be security for the performance of all of Borrowers'
obligations hereunder and under the other Mezzanine Loan Documents. Each
Borrower acknowledges and agrees that it shall be jointly and severally liable
for the obligations of the other Borrower under the Mezzanine Loan Documents.
[Signatures on the following pages]
33
IN WITNESS WHEREOF, the parties hereto have caused this Second Amended and
Restated Mezzanine Loan Agreement to be duly executed by their duly authorized
representatives, all as of the day and year first above written.
RHD CAPITAL VENTURES LLC, a Delaware limited
liability company
By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Manager
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
HUDSON HOTELS PROPERTIES CORP., a New York
corporation
By:
-----------------------------------------
Name: E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman
HUDSON HOTELS CORPORATION, a New York
corporation
By:
Name: E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman
EXHIBIT A
Operating Expense Certificate
RHD Capital Ventures LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Second Amended and Restated Mezzanine Loan Agreement (the "MEZZANINE
LOAN AGREEMENT") dated as of June ___, 2000, among ▇▇▇▇▇▇ Hotels Properties
Corp. and ▇▇▇▇▇▇ Hotels Corporation (together, "BORROWERS") and RHD Capital
Ventures LLC (together with its successors and assigns "LENDER")
Ladies and Gentlemen:
This certificate is delivered in accordance with SECTION 2.9(F) of the Mezzanine
Loan Agreement. All capitalized terms not defined herein shall have the meanings
ascribed to them in the Mezzanine Loan Agreement.
Borrower hereby certifies that the Operating Expenses for the Interest Accrual
Period from , to , are Dollars ($ ) and that such
Operating Expenses are equal to or less than the Operating Expenses for such
period set forth on the Operating Budget.
[▇▇▇▇▇▇ Hotels Properties Corp.]
[Hudson Hotels Corporation]
a New York corporation
By:
Name:
Title:
SCHEDULE 1
LIABILITIES