EXHIBIT 10.1
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LOAN AGREEMENT
Dated as of July 18, 2001
Between
W-BALTIMORE, LLC, ▇▇▇▇▇▇▇ DE SAN ▇▇▇▇
ASSOCIATES, W-ATLANTA, LLC, W-BOSTON, LLC
AND ▇▇▇▇▇▇ REAL ESTATE GROUP JOINT VENTURE
collectively, as Borrower
and
▇▇▇▇▇▇ BROTHERS BANK FSB
as Lender
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TABLE OF CONTENTS
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION................................................................ 1
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Section 1.1 Definitions........................................................................... 1
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II. GENERAL TERMS.......................................................................................... 24
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Section 2.1 Loan Commitment; Disbursement to Maker................................................ 24
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2.1.1 Agreement to Lend and Borrow.......................................................... 24
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2.1.2 Single Disbursement to Maker.......................................................... 24
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2.1.3 The Note, Security Instruments and Loan Documents..................................... 24
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2.1.4 Use of Proceeds....................................................................... 24
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Section 2.2 Interest; Loan Payments; Late Payment Charge; Extension............................... 24
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2.2.1 Interest Generally.................................................................... 24
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2.2.2 Interest Calculation.................................................................. 25
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2.2.3 Eurodollar Rate Unascertainable; Illegality; Increased Costs.......................... 25
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2.2.4 Payment on Maturity Date.............................................................. 27
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2.2.5 Payments after Default................................................................ 27
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2.2.6 Late Payment Charge................................................................... 27
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2.2.7 Usury Savings......................................................................... 27
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2.2.8 Taxes................................................................................. 28
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2.2.9 Extension............................................................................. 29
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Section 2.3 Prepayments........................................................................... 29
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2.3.1 Voluntary Prepayments................................................................. 29
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2.3.2 Mandatory Prepayments................................................................. 30
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2.3.3 Prepayments After Default............................................................. 30
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2.3.4 Making of Payments.................................................................... 30
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Section 2.4 Interest Rate Cap Agreement........................................................... 30
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Section 2.5 Release of Property................................................................... 31
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2.5.1 Release of Individual Property........................................................ 31
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2.5.2 Release on Payment in Full............................................................ 32
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Section 2.6 Substitution of Properties............................................................ 32
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Section 2.7 Out Parcel Releases................................................................... 39
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III. CASH MANAGEMENT........................................................................................ 42
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Section 3.1............................................................................................ 42
Establishment of Accounts........................................................................................ 42
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Section 3.2 Deposits into Lockbox Account......................................................... 42
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Section 3.3 Account Name.......................................................................... 44
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Section 3.4 Eligible Accounts..................................................................... 44
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Section 3.5 Permitted Investments................................................................. 44
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Section 3.6 The Initial Deposits.................................................................. 44
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Section 3.7 Transfer To and Disbursements from the Lockbox Account................................ 45
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Section 3.8 Withdrawals From the Tax Account and the Insurance Premium Account.................... 45
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Section 3.9 Withdrawals from the Replacement Reserve Account...................................... 46
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Section 3.10 Withdrawals from the Debt Service Account............................................. 46
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Section 3.11 Withdrawals from the Ground Rent Account.............................................. 46
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Section 3.12 Withdrawals from the Property Account................................................. 46
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Section 3.13 Sole Dominion and Control............................................................. 46
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Section 3.14 Security Interest..................................................................... 46
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Section 3.15 Rights on Default..................................................................... 46
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Section 3.16 Financing Statement; Further Assurances............................................... 47
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Section 3.17 Borrower's Obligation Not Affected.................................................... 47
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Section 3.18 Payments Received Under this Agreement................................................ 47
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IV. REPRESENTATIONS AND WARRANTIES......................................................................... 47
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Section 4.1 Borrower Representations.............................................................. 47
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4.1.1 Organization.......................................................................... 47
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4.1.2 Proceedings........................................................................... 48
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4.1.3 No Conflicts.......................................................................... 48
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4.1.4 Litigation............................................................................ 48
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4.1.5 Agreements............................................................................ 48
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4.1.6 Solvency.............................................................................. 48
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4.1.7 Full and Accurate Disclosure.......................................................... 49
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4.1.8 No Plan Assets........................................................................ 49
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4.1.9 Compliance............................................................................ 49
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4.1.10 Financial Information................................................................. 50
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4.1.11 Condemnation.......................................................................... 50
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4.1.12 Federal Reserve Regulations........................................................... 50
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4.1.13 Utilities and Public Access........................................................... 50
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4.1.14 Not a Foreign Person.................................................................. 50
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4.1.15 Separate Lots......................................................................... 50
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4.1.16 Assessments........................................................................... 51
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4.1.17 Enforceability........................................................................ 51
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4.1.18 No Prior Assignment................................................................... 51
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4.1.19 Insurance............................................................................. 51
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4.1.20 Use of Property....................................................................... 51
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4.1.21 Certificate of Occupancy; Licenses.................................................... 51
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4.1.22 Flood Zone............................................................................ 51
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4.1.23 Physical Condition.................................................................... 52
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4.1.24 Boundaries............................................................................ 52
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4.1.25 Leases................................................................................ 52
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4.1.26 Survey................................................................................ 53
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4.1.27 Inventory............................................................................. 53
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4.1.28 Filing and Recording Taxes............................................................ 53
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4.1.29 Insolvency Opinion.................................................................... 53
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4.1.30 Management Agreement.................................................................. 53
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4.1.31 Illegal Activity...................................................................... 53
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4.1.32 No Change in Facts or Circumstances; Disclosure....................................... 53
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4.1.33 Investment Company Act................................................................ 54
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4.1.34 Principal Place of Business........................................................... 54
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4.1.35 Single Purpose Entity................................................................. 54
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4.1.36 Business Purposes..................................................................... 58
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4.1.37 Taxes................................................................................. 59
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4.1.38 Forfeiture............................................................................ 59
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4.1.39 Environmental Representations and Warranties.......................................... 59
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4.1.40 Management Agreement.................................................................. 59
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4.1.41 Intentionally Omitted................................................................. 59
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4.1.42 Ground Lease Representations.......................................................... 59
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Section 4.2 Survival of Representations........................................................... 60
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V. BORROWER COVENANTS..................................................................................... 60
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Section 5.1 Affirmative Covenants................................................................. 60
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5.1.1 Existence; Compliance with Legal Requirements......................................... 60
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5.1.2 Taxes and Other Charges.............................................................. 61
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5.1.3 Litigation........................................................................... 62
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5.1.4 Access to Properties................................................................. 62
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5.1.5 Notice of Default.................................................................... 62
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5.1.6 Cooperate in Legal Proceedings....................................................... 62
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5.1.7 Award and Insurance Benefits......................................................... 62
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5.1.8 Further Assurances................................................................... 62
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5.1.9 Mortgage and Intangible Taxes........................................................ 63
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5.1.10 Financial Reporting.................................................................. 63
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5.1.11 Business and Operations.............................................................. 67
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5.1.12 Costs of Enforcement................................................................. 67
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5.1.13 Estoppel Statement................................................................... 67
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5.1.14 Loan Proceeds........................................................................ 68
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5.1.15 Performance by Borrower.............................................................. 68
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5.1.16 Confirmation of Representations...................................................... 68
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5.1.17 Leasing Matters...................................................................... 68
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5.1.18 Management Agreement................................................................. 69
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5.1.19 Environmental Covenants.............................................................. 71
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5.1.20 Alterations.......................................................................... 72
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5.1.21 Intentionally Omitted................................................................ 73
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5.1.22 The Ground Lease..................................................................... 73
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Section 5.2 Negative Covenants................................................................... 74
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5.2.1 Liens................................................................................ 74
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5.2.2 Dissolution.......................................................................... 74
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5.2.3 Change In Business................................................................... 74
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5.2.4 Debt Cancellation.................................................................... 74
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5.2.5 Zoning............................................................................... 74
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5.2.6 No Joint Assessment.................................................................. 75
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5.2.7 Principal Place of Business.......................................................... 75
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5.2.8 ERISA................................................................................ 75
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5.2.9 Affiliate Transactions............................................................... 75
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5.2.10 Assets............................................................................... 75
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5.2.11 Debt................................................................................. 76
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5.2.12 Transfers............................................................................ 76
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VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS................................................... 79
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Section 6.1 Insurance............................................................................ 79
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Section 6.2 Casualty............................................................................. 83
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Section 6.3 Condemnation......................................................................... 83
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Section 6.4 Restoration.......................................................................... 84
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VII. RESERVE FUNDS......................................................................................... 90
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Section 7.1 Required Repair Funds................................................................ 90
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7.1.1 Deposits............................................................................. 90
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7.1.2 Release of Required Repair Funds..................................................... 90
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Section 7.2 Tax and Insurance Escrow Fun......................................................... 91
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Section 7.3 Replacements and Replacement Reserve................................................. 92
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7.3.1 Replacement Reserve Fun.............................................................. 92
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7.3.2 Disbursements from Replacement Reserve Account....................................... 92
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7.3.3 Performance of Replacements.......................................................... 94
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7.3.4 Failure to Make Replacements......................................................... 96
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7.3.5 Balance in the Replacement Reserve Account........................................... 96
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Section 7.4 Intentionally Omitted................................................................. 97
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Section 7.5 Intentionally Omitted................................................................. 97
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Section 7.6 Ground Lease Escrow Fund.............................................................. 97
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Section 7.7 Reserve Funds, Generally.............................................................. 97
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VIII. DEFAULTS............................................................................................... 98
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Section 8.1 Event of Default...................................................................... 98
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Section 8.2 Remedies.............................................................................. 102
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Section 8.3 Remedies Cumulative; Waivers.......................................................... 102
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IX. SPECIAL PROVISIONS..................................................................................... 103
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Section 9.1 Sale of Notes and Securitization...................................................... 103
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Section 9.2 Securitization Indemnification........................................................ 105
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Section 9.3 Servicer.............................................................................. 108
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Section 9.4 Exculpation........................................................................... 108
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Section 9.5 Contributions and Waivers............................................................. 110
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Section 9.6 Intentionally Omitted................................................................. 114
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X. MISCELLANEOUS.......................................................................................... 114
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Section 10.1 Survival.............................................................................. 114
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Section 10.2 Lender's Discretion................................................................... 114
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Section 10.3 Governing Law......................................................................... 114
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Section 10.4 Modification, Waiver in Writing....................................................... 115
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Section 10.5 Delay Not a Waiver.................................................................... 115
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Section 10.6 Notices............................................................................... 115
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Section 10.7 Trial by Jury......................................................................... 116
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Section 10.8 Headings.............................................................................. 117
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Section 10.9 Severability.......................................................................... 117
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Section 10.10 Preferences........................................................................... 117
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Section 10.11 Waiver of Notice...................................................................... 117
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Section 10.12 Remedies of Borrower.................................................................. 117
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Section 10.13 Expenses; Indemnity................................................................... 117
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Section 10.14 Schedules and Exhibits Incorporated................................................... 119
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Section 10.15 Offsets, Counterclaims and Defenses................................................... 119
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Section 10.16 No Joint Venture or Partnership; No Third Party Beneficiaries......................... 119
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Section 10.17 Publicity............................................................................. 119
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Section 10.18 Cross-Default; Cross-Collateralization; Waiver of Marshalling of Assets............... 120
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Section 10.19 Waiver of Counterclaim................................................................ 120
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Section 10.20 Conflict; Construction of Documents; Reliance......................................... 120
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Section 10.21 Brokers and Financial Advisors........................................................ 121
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Section 10.22 Prior Agreements...................................................................... 121
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Section 10.23 Borrower/Maker........................................................................ 121
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Schedule and Exhibits
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SCHEDULE I Properties - Allocated Loan Amounts
SCHEDULE II Rent Roll
SCHEDULE III Required Repairs - Deadlines For Completion
SCHEDULE IV Organizational Chart of Borrower
SCHEDULE V Intentionally Omitted SCHEDULE VI Permitted FF&E Financing
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SCHEDULE VII Monthly Scheduled Amortization Payments
SCHEDULE VIII Litigation Schedule
SCHEDULE IX Borrower Default
SCHEDULE X Condemnations
SCHEDULE XI Special Assessments
SCHEDULE XII Lease Defaults
SCHEDULE XIII Required Lease Work
SCHEDULE XIV Lease Assignments
SCHEDULE XV Public Access
SCHEDULE XVI Insurance Claims
SCHEDULE XVII Addresses
SCHEDULE XVIII Taxes
EXHIBIT A Property Account Agreement
EXHIBIT B Intentionally Omitted
EXHIBIT C Tenant Notice Letter
EXHIBIT D Credit Card Notice Letter
EXHIBIT E Assignment of Interest Rate Cap Agreement
EXHIBIT F Out-Parcel Descriptions
EXHIBIT G Series B Convertible Preferred Stock Holders
EXHIBIT H Approved San ▇▇▇▇ Parking Lease
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LOAN AGREEMENT
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THIS LOAN AGREEMENT, dated as of July 18, 2001 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
"Agreement"), between ▇▇▇▇▇▇ BROTHERS BANK FSB, having an address at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lender") and W-BALTIMORE, LLC, a
Delaware limited liability company, ▇▇▇▇▇▇▇ DE SAN ▇▇▇▇ ASSOCIATES, a New York
general partnership, W-ATLANTA, LLC, a Delaware limited liability company and
W-BOSTON, LLC, a Delaware limited liability company, each having an address at
c/o Wyndham International, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ (individually and collectively, as applicable, the "Maker") and
▇▇▇▇▇▇ REAL ESTATE GROUP JOINT VENTURE, a Texas general partnership having an
address at c/o Wyndham International, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Maryland Guarantor") (Maker and the Maryland Guarantor
shall collectively be referred to herein as "Borrower").
W I T N E S S E T H:
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WHEREAS, Maker desires to obtain the Loan (as hereinafter defined) from
Lender; and
WHEREAS, Lender is willing to make the Loan to Maker, subject to and in
accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).
NOW THEREFORE, in consideration of the making of the Loan by Lender and
the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
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Section 1.1 Definitions. For all purposes of this Agreement, except
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as otherwise expressly required or unless the context clearly indicates a
contrary intent:
"Acceptable Counterparty" means any Counterparty to the Interest Rate
Cap Agreement that has and shall maintain, until the expiration of the
applicable Interest Rate Cap Agreement, a long-term unsecured debt rating of not
less than "AA" (or the equivalent) by the Rating Agencies.
"Account Collateral" shall mean: (i) the Accounts, and all cash,
checks, drafts, certificates and instruments, if any, from time to time
deposited or held in the Accounts from time to time; (ii) any and all amounts
invested in Permitted Investments; (iii) all interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any or all of the
foregoing; and (iv) to the extent not covered by clauses (i) - (iii) above, all
"proceeds" (as defined under the UCC as in effect in the State in which the
Accounts are located) of any or all of the foregoing.
"Accounts" shall mean, collectively, the Property Account, the Tax
Account, the Insurance Premium Account, the Required Repair Account, the
Replacement Reserve Account, the Ground Rent Account, the Debt Service Account,
and the Lockbox Account.
"Accounts Receivable" shall have the meaning set forth in Article I of
the Security Instruments with respect to each Individual Property.
"Acquired Property" shall have the meaning set forth in Section
5.1.10(h)(i).
"Acquired Property Statements" shall have the meaning set forth in
Section 5.1.10(h)(i).
"Additional Insolvency Opinion" shall have the meaning set forth in
Section 4.1.29.
"Adjusted Prime Rate" shall mean an interest rate per annum equal to
the Prime Rate in effect from time to time plus 1% per annum.
"Affiliate" shall mean, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or executive officer of such Person or
of an Affiliate of such Person.
"Affiliated Loans" shall mean a loan made by Lender to an Affiliate of
Borrower or any Guarantor.
"Affiliated Manager" shall mean any managing agent which is an
Affiliate of, or in which Borrower, Principal, or any Guarantor (or its
successor) or any transferee permitted pursuant to the terms of Section 5.2.12
hereof has, directly or indirectly, any legal, beneficial or economic interest.
"Allocated Loan Amount" shall mean, for an Individual Property, the
amount set forth on Schedule I hereto.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"Annual Budget" shall mean the operating budget, including all planned
capital expenditures, for each Individual Property prepared by Borrower for the
applicable Fiscal Year or other period that may be specified herein.
"Applicable Interest Rate" shall mean (A) from and including the date
of this Agreement through the first Payment Date, an interest rate per annum
equal to 5.64%; and (B) from and including the first Payment Date and for each
successive Interest Period through and including the date on which the Debt is
paid in full, an interest rate per annum equal to (I) the Eurodollar Rate or
(II) the Adjusted Prime Rate, if the Loan begins bearing interest at the
Adjusted Prime Rate in accordance with the provisions of Section 2.2.3 hereof.
"Applicable Laws" shall mean all existing and future federal, state,
Commonwealth of Puerto Rico and local laws, orders, ordinances, governmental
rules and regulations and court orders.
"Appraisal" shall mean an appraisal prepared in accordance with the
requirements of FIRREA, prepared by an independent third party appraiser holding
an MAI designation, who is State licensed or State certified if required under
the laws of the State where the applicable Individual Property is located, who
meets the requirements of FIRREA and who is otherwise satisfactory to Lender.
"Approved San ▇▇▇▇ Parking Lease" shall mean that certain Lease with
respect to a portion of the San ▇▇▇▇ Property, which Lease shall be
substantially in the form attached hereto as Exhibit H.
"Assignment of Interest Rate Cap" shall mean that certain Collateral
Assignment of Interest Rate Cap Agreement made by Maker when required by this
Agreement in favor of Lender as security for the Loan, consented to by the
Counterparty, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Assignment of Leases" shall mean, with respect to each Individual
Property, that certain first priority Assignment of Leases and Rents, dated as
of the date hereof, from Borrower, as assignor, to Lender, as assignee,
assigning to Lender all of Borrower's interest in and to the Leases and Rents of
such Individual Property as security for the Loan, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Assignment of Management Agreement" shall mean, with respect to each
Individual Property, that certain Conditional Assignment of Management Agreement
dated the date hereof among Lender, Borrower and Manager (and with respect to
the San ▇▇▇▇ Property only, among Lender, Borrower, Manager and sub-manager), as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
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"Award" shall mean any compensation paid by any Governmental Authority
to (or on behalf of) Borrower in connection with a Condemnation in respect of
all or any part of any Individual Property.
"Bankruptcy Code" shall mean 11 U.S.C. (S) 101 et seq., and the rules
and regulations adopted and promulgated pursuant thereto, as the same may be
amended from time to time.
"Basic Carrying Costs" shall mean, with respect to each Individual
Property, the sum of the following costs associated with such Individual
Property for the relevant Fiscal Year or payment period: (i) Taxes and (ii)
Insurance Premiums and (iii) Ground Rent.
"Borrower" shall have the meaning set forth in the introductory
paragraph hereto, together with its successors and assigns.
"Boston Property" shall mean the Property known as the Wyndham Boston
located in Boston, Massachusetts.
"Breakage Costs" shall have the meaning given to it in Section 2.2.3(d)
hereof.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which national banks in New York, New York are not open for
business.
"Business Party" shall have the meaning set forth in Section
4.1.35(aa).
"Capital Expenditures" shall mean, for any period, the amount expended
for items capitalized under GAAP and the Uniform System of Accounts (including
expenditures for building improvements or major repairs, leasing commissions and
tenant improvements and the acquisition of furniture, fixtures and equipment).
"Casualty" shall have the meaning specified in Section 6.2 hereof.
"Casualty Consultant" shall have the meaning set forth in Section
6.4(b)(iii) hereof.
"Casualty Retainage" shall have the meaning set forth in Section
6.4(b)(iv) hereof.
"Change of Control" shall mean (A) the acquisition, including through
mergers, consolidation or otherwise, by any Person or Group (excluding the
Excluded Group) of direct or indirect beneficial ownership as defined in Rule 13
d-3 under the Exchange Act of more than 50% of (i) the outstanding shares of
common stock of Wyndham or (ii) the total voting power of all classes of capital
stock of Wyndham entitled to vote generally in the election of directors, unless
such Person or Group owned at least 50% of the interests described in clause (i)
or (ii) above in Wyndham prior to such merger or consolidation; or (B) the
election by any Person or Group (other than the Excluded Group) of a sufficient
number of its or their nominees to the Board of Directors of Wyndham such that
such nominees, when added to any existing directors remaining on such Board of
Directors after such election who are affiliates or associates of such Person or
Group, shall constitute a majority of such Board of Directors.
"Closing Date" shall mean the date of the funding of the Loan.
"Code" shall mean the Internal Revenue Code of 1986, as amended, as it
may be further amended from time to time, and any successor statutes thereto,
and all applicable U.S. Department of Treasury regulations issued pursuant
thereto in temporary or final form.
"Collateral" shall mean the Properties, the Accounts, the Reserve
Funds, the Guaranty, the Personal Property, Rents, the Accounts Receivable, the
Account Collateral, the Maryland Guaranty and all other real or personal
property (including any mortgage notes) of Borrower or any Guarantor that is at
any time pledged, mortgaged or otherwise given as security to Lender for the
payment of the Debt under the Security Instruments, this Agreement or any other
Loan Document.
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"Completion Date" shall mean the date that is no later than twelve (12)
months prior to the Maturity Date.
"Condemnation" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
any Individual Property, or any interest therein or right accruing thereto,
including any right of access thereto or any change of grade affecting such
Individual Property or any part thereof.
"Contract Rate" shall mean, at the time of any calculation, an interest
rate constant per annum equal to ten and one-quarter percent (10.25%).
"Counterparty" shall mean the Person which is the issuer of the
Interest Rate Cap Agreement.
"Debt" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums due to Lender in respect of the Loan under the
Note, this Agreement, the Security Instruments or any other Loan Document.
"Debt Service" shall mean, with respect to any particular period of
time, interest payments and all Monthly Scheduled Amortization Payments due
under the Note for such period.
"Debt Service Account" shall have the meaning set forth in Section
3.1(b).
"Debt Service Coverage Ratio" shall mean a ratio in which:
(a) the numerator is the Net Operating Income (excluding interest on
credit accounts) for the 12 full calendar month period preceding the date of
calculation as set forth in the statements required hereunder, without deduction
for (i) actual management fees incurred in connection with the operation of the
Properties, or (ii) amounts paid to the Reserve Funds, less (A) management fees
equal to the greater of (1) assumed management fees of four percent (4%) of
Gross Income from Operations or (2) the actual management fees incurred, (B)
assumed Replacement Reserve Fund contributions equal to the FF&E Factor or (C)
other Reserve Funds; and
(b) the denominator is the aggregate amount of Debt Service which
would be due and payable for such 12 full calendar month period, calculated at
an interest rate constant (said constant includes both interest and
amortization) equal to the Contract Rate.
"Default" shall mean the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would be an Event of Default.
"Default Rate" shall mean, with respect to the Loan, a rate per annum
equal to the lesser of (a) the maximum rate permitted by applicable law, or (b)
five percent (5%) above the Applicable Interest Rate.
"Disclosure Document" shall have the meaning set forth in Section
5.1.10(h) hereof.
"Eligible Account" shall mean a separate and identifiable account from
all other funds held by the holding institution that is either (a) an account or
accounts maintained with a federal or State chartered depository institution or
trust company which complies with the definition of Eligible Institution or (b)
a segregated trust account or accounts maintained with a federal or State
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a State chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R.
ss.9.10(b), having in either case a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal and State
authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"Eligible Institution" shall mean a depository institution or trust
company, (a) the short term unsecured debt obligations or commercial paper of
which are rated at least A-1+ by S&P, P-1 by ▇▇▇▇▇'▇ Investors Service, Inc.
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("Moody's") and F-1+ by Fitch Inc. ("Fitch") in the case of accounts in which
funds are held for 30 days or less, or (b) the long term unsecured debt
obligations of which are rated at least "AA" by Fitch and S&P and "Aa2" by
Moody's in the case of accounts in which funds are held for more than 30 days.
"Emergency Repairs" shall have the meaning set forth in Section 6.4(d).
"Environmental Indemnity" shall mean that certain Environmental
Indemnity Agreement executed by Borrower and Indemnitor in connection with the
Loan for the benefit of Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Environmental Law" shall mean any present and future federal, State
and local laws, statutes, ordinances, rules, regulations, standards, policies
and other governmental directives or requirements, as well as common law, that
apply to Borrower or any Individual Property and relate to Hazardous Materials,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act and the Resource Conservation and Recovery Act.
"Environmental Liens" shall have the meaning set forth in Section
5.1.19 hereof.
"Environmental Reports" shall have the meaning set forth in 4.1.39.
"Equipment" shall have the meaning set forth in Section 5.2.12(f).
"Excluded Group" shall mean those holders of Series B Convertible
Preferred Stock of Wyndham listed on Exhibit G hereto and their Affiliates.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"Eurodollar Rate" shall mean, with respect to any Interest Period, an
interest rate per annum equal to LIBOR plus 1.80% per annum.
"Event of Default" shall have the meaning set forth in Section 8.1(a)
hereof.
"Exchange Act" shall have the meaning set forth in Section
9.2(a) hereof.
"Exchange Act Filing" shall have the meaning set forth
in Section 5.1.10(k).
"Extension Fee" shall mean (i) with respect to the first Extension Term
only, $0.00 and (ii) with respect to the second and third Extension Terms, an
amount equal to one-quarter of one percent (0.25%) of the then outstanding
principal amount of the Loan.
"Extension Notice" shall have the meaning set forth in Section 2.2.9.
"Extension Term" shall have the meaning set forth in Section 2.2.9.
"FF&E Factor" shall mean, for each Individual Property, the sum of (i)
four percent (4%) of Gross Income From Operations for the immediately preceding
twelve month period (excluding Gross Income From Operations attributable to any
income revenue generated by any casino) and (ii) one percent (1%) of Gross
Income From Operations attributable to any revenue generated by any casino for
the immediately preceding twelve month period.
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as the same may be amended from time to time.
- 5 -
"Fiscal Year" shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during the term of the Loan.
"Force Majeure" shall mean the failure of Borrower to perform any
obligation hereunder by reason of any act of God, enemy or hostile government
action, civil commotion, insurrection, sabotage, strikes or lockouts or any
other reason solely due to cause or causes beyond the control of Borrower or any
Affiliate of Borrower.
"Foreign Taxes" shall mean any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority excluding, in the case of Lender or any successor and/or
assign of Lender, net income and franchise taxes imposed on such entity.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as of the date of the applicable financial report.
"Governmental Authority" shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental unit (federal, State, Commonwealth of Puerto Rico, county,
district, municipal, city or otherwise) whether now or hereafter in existence.
"Gross Income from Operations" shall mean all income, computed in
accordance with GAAP and the Uniform System of Accounts, derived by Borrower
from the ownership and operation of the Properties from whatever source,
including, but not limited to, Rents, Accounts Receivable utility charges,
escalations, forfeited security deposits, interest on credit accounts, service
fees or charges, license fees, parking fees, rent concessions or credits, other
required pass-throughs, amounts relating to the operation of any casino
(net-wins), and interest on Reserve Funds, but excluding sales, use and
occupancy or other taxes on receipts required to be accounted for by Borrower to
any Governmental Authority, refunds and uncollectible accounts, sales of
furniture, fixtures and equipment, Insurance Proceeds (other than business
interruption or other loss of income insurance), Awards, rents revenues and
receipts of tenants and concessionaires located at the Properties, unforfeited
security deposits, utility and other similar deposits and any disbursements to
Borrower from the Reserve Funds.
"Ground Lease" shall mean any ground lease which creates Borrower's
leasehold estate in an Individual Property or Substitute Property, as
applicable.
"Ground Lease Escrow Fund" shall have the meaning set forth in Section
7.6 hereof.
"Ground Rent" shall have the meaning set forth in Section 7.6 hereof.
"Ground Rent Account" shall have the meaning set forth in Section
3.1(b)(vi) hereof.
"Group" shall mean any Person or Persons acting together which would
constitute a "group" for purposes of Section 13 (d) of the Exchange Act,
together with all affiliates and associates (as defined in Rule 12 b-2 under the
Exchange Act) thereof.
"Guarantor" shall mean Wyndham International, Inc.
"Guaranty" shall mean that certain guaranty of recourse obligations,
dated as of the date hereof, from Guarantor to Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Hazardous Materials" shall mean petroleum and petroleum products and
compounds containing them, including gasoline, diesel fuel and oil; explosives;
flammable materials; radioactive materials; polychlorinated biphenyls ("PCBs")
and compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is friable; underground or
above-ground storage tanks, whether empty or containing any
- 6 -
substance; any substance the presence of which on an Individual Property is
prohibited by any federal, State or local authority; any substance that requires
special handling; and any other material or substance now or in the future
defined as a "hazardous substance," "hazardous material," "hazardous waste,"
"toxic substance," "toxic pollutant," "contaminant," "pollutant" or other words
of similar import within the meaning of any Environmental Law.
"Improvements" shall have the meaning set forth in Article I of the
related Security Instrument with respect to each Individual Property.
"Indebtedness" of a Person, at a particular date, means the sum
(without duplication) at such date of (a) all indebtedness or liability of such
Person for borrowed money; (b) obligations evidenced by bonds, debentures,
notes, or other similar instruments; (c) obligations for the deferred purchase
price of property or services (including trade obligations); (d) obligations
under letters of credit; (e) all guaranties, endorsements (other than for
collection or deposit in the ordinary course of business) and other contingent
obligations to purchase, to provide funds for payment, to supply funds, to
invest in any Person or entity, or otherwise to assure a creditor against loss;
and (f) obligations secured by any Liens, whether or not the obligations have
been assumed.
"Indemnified Parties" shall mean Lender, any Person or entity who is or
will have been involved in the origination of the Loan, any Person or entity who
is or will have been involved in the servicing of the Loan, any Person or entity
in whose name the encumbrance created by the Security Instruments is or will
have been recorded, Persons and entities who may hold or acquire or will have
held a full or partial interest in the Loan, the holders of any Securities, as
well as custodians, trustees and other fiduciaries who hold or have held a full
or partial interest in the Loan for the benefit of third parties) as well as the
respective directors, officers, shareholders, partners, members, employees,
agents, servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assigns of any and all of the
foregoing (including, but not limited to, any other person or entity who holds
or acquires or will have held a participation or other full or partial interest
in the Loan or the Property, whether during the term of the Loan or as a part of
or following a foreclosure of the Loan and including, but not limited to, any
successors by merger, consolidation or acquisition of all or a substantial
portion of Lender's assets and business), provided, however, that any
indemnification provided for in any of the Loan Documents shall not, directly or
indirectly, extend to the benefit of or be transferred to any transferee or
assignee of any Indemnified Party (other than to the successor or assigns of an
Indemnified Party succeeding to such Indemnified Party's direct or indirect
interest in the Loan) or to any purchaser or future owner of any portion of any
Individual Property, unless such purchaser or owner was previously an
Indemnified Party.
"Indemnitor" shall mean Wyndham International, Inc.
"Indemnity Deed of Trust" shall mean that certain first priority
Indemnity Deed of Trust and Security Agreement executed and delivered by the
Maryland Guarantor as security for the Maryland Guaranty and encumbering the
Maryland Property, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.
"Independent Director" shall have the meaning set forth in Section
4.1.35(aa).
"Individual Property" shall mean each parcel of real property, the
Improvements thereon and all personal property owned by Borrower and encumbered
by a Security Instrument, together with all of Borrower's rights pertaining to
such property and Improvements, as more particularly described in Article I of
each Security Instrument and referred to therein as the "Property", including
any Release Property prior to its release or Substitute Property upon
substitution.
"Insolvency Opinion" shall mean that certain non-consolidation opinion
letter dated the date hereof delivered by Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇,
L.L.P. in connection with the Loan.
"Institutional Lender" shall mean any insurance company, bank, trust
company, savings and loan association, savings bank, bulge bracket investment
bank or similar financial institution.
- 7 -
"Insurance Premium Account" shall have the meaning set forth in Section
3.1(b).
"Insurance Premiums" shall have the meaning set forth in
Section 6.1(b) hereof.
"Insurance Proceeds" shall have the meaning set forth in Section
6.4(b) hereof.
"Interest Period" means, in connection with the calculation of interest
accrued with respect to any specified Payment Date, the period from and
including the tenth (10th) day of the prior calendar month to and including the
ninth (9th) day of the calendar month in which the applicable Payment Date
occurs; provided, however, that with respect to the Payment Date occurring in
August, 2001, the Interest Period shall be the period commencing on the Closing
Date to and including August 9, 2001.
"Interest Rate Cap Agreement" shall mean an Interest Rate Cap Agreement
(together with the confirmation and schedules relating thereto), between the
Counterparty and Borrower obtained by Borrower as and when required pursuant to
Section 2.4 hereof. The Interest Rate Cap Agreement shall be written on the then
current standard ISDA documentation, and shall provide for interest periods and
calculations consistent with the payment terms of this Agreement. After delivery
of a Replacement Interest Rate Cap Agreement to Lender, the term "Interest Rate
Cap Agreement" shall be deemed to mean such Replacement Interest Rate Cap
Agreement.
"Interest Rate Cap Event" shall mean the earlier to occur of (i) the
date on which LIBOR is equal to 7.25% or (ii) notice from Lender that a
Securitization is expected to occur within the next ten (10) days.
"Interest Shortfall" shall have the meaning set forth in Section
2.3.1(b).
"Investor"shall have the meaning set forth in Section 5.1.10(o).
"Leases" shall have the meaning set forth in Article I of the Security
Instrument with respect to each Individual Property.
"Legal Requirements" shall mean, with respect to each Individual
Property, all federal, State, Commonwealth of Puerto Rico, county, municipal and
other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions of Governmental Authorities affecting such
Individual Property or any part thereof, or the zoning, construction, use,
alteration, occupancy or operation thereof, or any part thereof, whether now or
hereafter enacted and in force, and all permits, licenses and authorizations and
regulations relating thereto, and all material covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Borrower, at any time in force affecting such Individual Property or
any part thereof, including, without limitation, any which may (a) require
repairs, modifications or alterations in or to such Individual Property or any
part thereof, or (b) in any way limit the use and enjoyment thereof.
"▇▇▇▇▇▇" shall have the meaning set forth in Section 9.2(b) hereof.
"▇▇▇▇▇▇ Group" shall have the meaning set forth in Section 9.2(b)
hereof.
"Lender" shall have the meaning set forth in the introductory paragraph
hereto, together with its successors and assigns.
"Letter of Credit" shall mean a transferable, clean, irrevocable,
unconditional, standby letter of credit in form, substance and amount reasonably
satisfactory to Lender in its reasonable discretion, issued or confirmed by a
commercial bank with a long term debt obligation rating of AA or better (or a
comparable long term debt obligation rating) as determined by the Rating
Agencies and otherwise satisfactory to Lender in its reasonable discretion (the
"Issuing Bank"). The Letter of Credit shall be payable upon presentation of a
sight draft only to the order of Lender or, upon the transfer of the Loan, to
another party, as the case may be, at a New York City bank; provided, however,
Borrower may provide Lender with a replacement Letter of Credit meeting all of
the requirements hereof in lieu of
- 8 -
Lender transferring the existing Letter of Credit then held by Lender. The
Letter of Credit shall have an initial expiration date of not less than one (1)
year and shall be automatically renewed for successive twelve (12) month periods
for the term of the Loan and shall provide for multiple draws. The Letter of
Credit shall be transferable by Lender and its successors and assigns at a New
York City bank.
"Liabilities" shall have the meaning set forth in Section 9.2(b)
hereof.
"LIBOR" shall mean, with respect to each Interest Period, the rate per
annum equal to the quotient of (a) the rate reported on the date two (2) Working
Days prior to the beginning of such Interest Period as of 11:00 a.m., London,
England time, on Telerate Access Service Page 3750 (British Bankers Association
Settlement Rate) as the London Interbank Offered Rate for U.S. Dollar deposits
having a term equal to the applicable Interest Period and in an amount
comparable to the principal amount of the Loan to be outstanding during such
Interest Period (or, if said Telerate Access Service Page shall cease to be
publicly available, as reported by the Reuters Screen LIBOR Page, and if said
Reuters Screen Page shall cease to be publicly available, then as reported by
any publicly available source of similar market data selected by Lender in
Lender's reasonable discretion, exercised in good faith, that accurately
reflects such London Interbank Offered Rate) divided by (b) a number equal to
1.00 minus the aggregate (without duplication) of the rates (expressed as a
decimal) of reserve requirements applicable to Lender on the date two (2)
Working Days prior to the beginning of such Interest Period (including, without
limitation, basic, supplemental, marginal and emergency reserves) under any
regulations of any Governmental Authority as now and from time to time hereafter
in effect, dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency liabilities" in Regulation D of the
Board of Governors of the Federal Reserve System) maintained by a member bank of
such system.
"Licenses" shall have the meaning set forth in Section 4.1.21 hereof.
"Lien" shall mean, with respect to each Individual Property, any
mortgage, deed of trust, lien, pledge, hypothecation, assignment, security
interest, or any other encumbrance, charge or transfer of, on or affecting
Borrower, the related Individual Property, any portion thereof 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, and
mechanic's, materialmen's and other similar liens and encumbrances.
"Loan" shall mean the loan made by Lender to Maker pursuant to this
Agreement.
"Loan Documents" shall mean, collectively, this Agreement, the Note,
the Security Instruments, the Assignments of Leases, the Environmental
Indemnity, the Pledge Agreement, the Assignment of Management Agreement, the
Guaranty, the Maryland Guaranty, the Indemnity Deed of Trust and all other
documents executed and/or delivered in connection with the Loan.
"Lockbox Account" shall have the meaning set forth in Section 3.1(b)
hereof.
"Lockbox Bank"shall mean any Eligible Institution selected by Lender.
"Lockout Period" shall mean the period commencing on the date hereof
and ending on August 10, 2002.
"Losses" shall mean any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, direct actual damages or losses, costs, expenses, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement of
whatever kind or nature (including, but not limited to, reasonable attorneys'
fees and other costs of defense).
"Management Agreement" shall mean, with respect to any Individual
Property, the management agreement entered into by and between Borrower and
Manager, pursuant to which the Manager is to provide management and other
services with respect to such Individual Property (including, with respect to
the San ▇▇▇▇ Property only, the
- 9 -
service agreement between Manager and Wyndham Management Corporation), or,
if the context requires, the Replacement Management Agreement executed in
accordance with the terms and provisions of this Agreement.
"Manager" shall mean Wyndham Management Corporation (and with respect
to the San ▇▇▇▇ Property only, Wyndham Management Corporation and ▇▇▇▇▇▇▇▇
Hospitality Group Inc.), or, if the context requires, a Qualified Manager who is
managing the Properties in accordance with the terms and provisions of this
Agreement.
"Maryland Guarantor" shall mean ▇▇▇▇▇▇ Real Estate Group Joint Venture,
a Texas general partnership.
"Maryland Guaranty" shall mean that certain Guaranty dated as of the
date hereof given by the Maryland Guarantor to Lender as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Maryland Property" shall mean the Individual Property located in
Baltimore City, Maryland.
"Material Lease" shall mean any Lease (a) demising in excess of 2,500
square feet or (b) for parking operations/facilities.
"Maturity Date" shall mean August 10, 2003 or, if the Maturity Date has
been extended pursuant to Section 2.2.9 hereof, the last day of the applicable
Extension Term, or such other date on which the final payment of principal of
the Note becomes due and payable as therein or herein provided, whether at such
stated maturity date, by declaration of acceleration, or otherwise.
"Maximum Legal Rate" shall mean the maximum nonusurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such
Commonwealth, State or States whose laws are held by any court of competent
jurisdiction to govern the interest rate provisions of the Loan.
"Monthly Debt Service Payment Amount" shall mean the amount of interest
and the Monthly Scheduled Amortization Payment due and payable on each Payment
Date pursuant to the Note and Section 2 hereof.
"Monthly Ground Rent Deposit" shall have the meaning set forth in
Section 7.6 hereof.
"Monthly Insurance Premium Deposit" shall have the meaning set forth in
Section 7.2 hereof.
"Monthly Scheduled Amortization Payments" shall mean the amount of
principal set forth on Schedule VII hereto to be paid on each Payment Date.
"Monthly Tax Deposit" shall have the meaning set forth in Section 7.2
hereof.
"Net Cash Flow" for any period shall mean the amount obtained by
subtracting Operating Expenses and Capital Expenditures for such period from
Gross Income from Operations for such period.
"Net Cash Flow Schedule" shall have the meaning set forth in Section
5.1.10(b) hereof.
"Net Operating Income" means the amount obtained by subtracting
Operating Expenses from Gross Income from Operations.
"Net Proceeds" shall have the meaning set forth in Section 6.4(b)
hereof.
"Net Proceeds Deficiency" shall have the meaning set forth in Section
6.4(b)(vi) hereof.
- 10 -
"Note" shall mean that certain promissory note of even date herewith in
the principal amount of ONE HUNDRED EIGHTY MILLION AND 00/100 DOLLARS
($180,000,000.00) made by Borrower in favor of Lender, as the same may be
amended, restated, replaced, supplemented, severed, split, or otherwise modified
from time to time.
"Obligations" shall have the meaning set forth in Section 9.5(a)
hereof.
"Offering Document Date" shall have the meaning set forth in Section
5.1.10(h)(iv).
"Offering Materials" shall have the meaning set forth in Section
9.2(b).
"Officers' Certificate" shall mean a certificate delivered to Lender by
Borrower which is signed by an authorized senior officer of Principal.
"Operating Expenses" shall mean the total of all expenditures, computed
in accordance with GAAP and the Uniform System of Accounts, of whatever kind
relating to the operation, maintenance and management of the Properties that are
incurred on a regular monthly or other periodic basis, including without
limitation, utilities, ordinary repairs and maintenance, insurance premiums,
license fees, property taxes and assessments, advertising expenses, management
fees, franchise fees, payroll and related taxes, computer processing charges,
operational equipment or other lease payments (including any Ground Rents
payable under any Ground Lease) as permitted hereunder, and other similar costs,
but excluding depreciation, amortization of intangible items, Debt Service,
Capital Expenditures and contributions to the Reserve Funds.
"Other Charges" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining any Individual Property, now or hereafter levied or
assessed or imposed against such Individual Property or any part thereof.
"Out Parcel" shall mean collectively or individually, as applicable,
the parcels of land shown on Exhibit F attached hereto and made a part hereof as
the cross-hatched parcels F-1 and F-2, parcel F-1 containing a building with
thirteen (13) casitas and parcel F-2 containing a parking structure and tennis
courts.
"Out Parcel Release" shall have the meaning set forth in Section 2.7.
"Out Parcel Release Premium" shall mean (i) $2,500,000.00 for an Out
Parcel Release relating to the parcel of land cross-hatched as Exhibit F-1 and
(ii) $0.00 for an Out Parcel Release relating to the parcel of land
cross-hatched as Exhibit F-2.
"Paydown Amount" shall have the meaning set forth in Section 3.2.
"Payment Date" shall mean the tenth (10th) day of each calendar month
during the term of the Loan or, if such day is not a Business Day, the
immediately preceding Business Day.
"Peachtree Property" shall mean the Property known as the Wyndham
Peachtree Conference Center located in Peachtree, Georgia.
"Peachtree Sale" shall mean a sale of the Peachtree Property to a
bona-fide third party pursuant to a written arms-length contract of sale.
"Performance Cure" shall have the meaning set forth in Section 3.2(c).
"Permitted FF&E Financing" shall have the meaning set forth in Section
5.2.12(f).
-11-
"Permitted Encumbrances" shall mean, with respect to an Individual
Property, collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policy or marked up final title commitment (including those disclosed
in and insured over thereby) relating to such Individual Property or any part
thereof, (c) Liens, if any, for Taxes imposed by any Governmental Authority not
yet due or delinquent or being contested in good faith and by appropriate
proceedings in accordance with the terms hereof, (d) any and all easements,
licenses, covenants, restrictions or other agreements which may hereafter be
granted by Borrower in accordance with the terms hereof, (e) rights of existing
and future tenants, licensees and concessionaires, as tenants, licensees or
concessionaires only, pursuant to Leases in effect as of the date hereof or
entered into in accordance with the terms hereof, (f) any Lien and security
interest expressly permitted pursuant to Section 4.1.35 hereof, and (g) such
other title and survey exceptions as Lender has approved or may approve in
writing in Lender's sole discretion.
"Permitted Investments" shall mean any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
including those issued by Servicer, the trustee under any Securitization or any
of their respective Affiliates, payable on demand or having a maturity date not
later than the Business Day immediately prior to the first Payment Date
following the date of acquiring such investment and meeting one of the
appropriate standards set forth below:
(i) obligations of, or obligations fully guaranteed as to
payment of principal and interest by, the United States or any agency
or instrumentality thereof provided such obligations are backed by the
full faith and credit of the United States of America including,
without limitation, obligations of: the U.S. Treasury (all direct or
fully guaranteed obligations), the Farmers Home Administration
(certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime
Administration (guaranteed Title XI financing), the Small Business
Administration (guaranteed participation certificates and guaranteed
pool certificates), the U.S. Department of Housing and Urban
Development (local authority bonds) and the Washington Metropolitan
Area Transit Authority (guaranteed transit bonds); provided, however,
that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot
vary or change, (B) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate
of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with
that index, and (D) such investments must not be subject to liquidation
prior to their maturity;
(ii) Federal Housing Administration debentures;
(iii) obligations of the following United States government
sponsored agencies: Federal Home Loan Mortgage Corp. (debt
obligations), the Farm Credit System (consolidated systemwide bonds and
notes), the Federal Home Loan Banks (consolidated debt obligations),
the Federal National Mortgage Association (debt obligations), the
Student Loan Marketing Association (debt obligations), the Financing
Corp. (debt obligations), and the Resolution Funding Corp. (debt
obligations); provided, however, that the investments described in this
clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have
an "r" highlighter affixed to their rating, (C) if such investments
have a variable rate of interest, such interest rate must be tied to a
single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be
subject to liquidation prior to their maturity;
(iv) federal funds, unsecured certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements with
maturities of not more than 365 days of any bank, the short term
obligations of which at all times are rated in the highest short term
rating category by each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency in the highest short term
rating category and otherwise acceptable to each other Rating Agency,
as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned to the Securities
or any class thereof); provided, however, that the investments
described in this clause must (A) have a predetermined fixed dollar of
principal due at maturity that cannot vary or change,
-12-
(B) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index,
and (D) such investments must not be subject to liquidation prior to
their maturity;
(v) fully Federal Deposit Insurance Corporation-insured demand
and time deposits in, or certificates of deposit of, or bankers'
acceptances issued by, any bank or trust company, savings and loan
association or savings bank, the short term obligations of which at
all times are rated in the highest short term rating category by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at
least one Rating Agency in the highest short term rating category and
otherwise acceptable to each other Rating Agency, as confirmed in
writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher,
then current ratings assigned to the Securities or any class thereof);
provided, however, that the investments described in this clause must
(A) have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (B) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, such interest rate must be tied to a single
interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be
subject to liquidation prior to their maturity;
(vi) debt obligations with maturities of not more than 365 days
and at all times rated by each Rating Agency (or, if not rated by all
Rating Agencies, rated by at least one Rating Agency and otherwise
acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities or any class thereof) in
its highest long-term unsecured rating category; provided, however,
that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot
vary or change, (B) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate
of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with
that index, and (D) such investments must not be subject to
liquidation prior to their maturity;
(vii) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on
demand or on a specified date not more than one year after the date of
issuance thereof) with maturities of not more than 365 days and that
at all times is rated by each Rating Agency (or, if not rated by all
Rating Agencies, rated by at least one Rating Agency and otherwise
acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities or any class thereof) in
its highest short-term unsecured debt rating; provided, however, that
the investments described in this clause must (A) have a predetermined
fixed dollar of principal due at maturity that cannot vary or change,
(B) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index,
and (D) such investments must not be subject to liquidation prior to
their maturity;
(viii) units of taxable money market funds or mutual funds, which
funds are regulated investment companies, seek to maintain a constant
net asset value per share and invest solely in obligations backed by
the full faith and credit of the United States, which funds have the
highest rating available from each Rating Agency (or, if not rated by
all Rating Agencies, rated by at least one Rating Agency and otherwise
acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities or any class thereof) for
money market funds or mutual funds; and
(ix) any other security, obligation or investment which has
been approved as a Permitted Investment in writing by (a) Lender and
(b) each Rating Agency, as evidenced by a written confirmation that
the designation of such security, obligation or investment as a
Permitted Investment will not, in and of itself,
-13-
result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities or any
class thereof by such Rating Agency;
provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.
"Person" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any Governmental Authority and any fiduciary acting in such capacity on behalf
of any of the foregoing.
"Personal Property" shall have the meaning set forth in Article I of
the Security Instrument with respect to each Individual Property.
"Physical Conditions Report" shall mean, with respect to each
Individual Property, a structural engineering report prepared by a company
satisfactory to Lender regarding the physical condition of such Individual
Property, satisfactory in form and substance to Lender in its sole discretion,
which report shall, among other things, (a) confirm that such Individual
Property and its use complies, in all material respects, with all applicable
Legal Requirements (including, without limitation, zoning, subdivision and
building laws) and (b) include a copy of the final certificate of occupancy with
respect to all Improvements on such Individual Property.
"Pledge Agreement" shall mean that certain Pledge and Security
Agreement given by W-SAN ▇▇▇▇ HOTEL CORP., a Delaware corporation and W-SAN ▇▇▇▇
HOLDING CORP., a Delaware corporation to Lender.
"Policies" shall have the meaning specified in Section 6.1(b) hereof.
"Prepayment Fee" shall mean an amount equal to (a) three percent (3%)
of the amount of the Loan being prepaid if a prepayment occurs after the date
hereof through and including the sixth (6th) calendar month of the term of the
Loan, (b) two and one-half percent (2.5%) of the amount of the Loan being
prepaid if a prepayment occurs during the seventh (7th) through and including
the twelfth (12th) calendar month of the term of the Loan, (c) one and one-half
percent (1.5%) of the amount of the Loan being prepaid if a prepayment occurs
during the thirteenth (13th) through and including the eighteenth (18th)
calendar month of the term of the Loan and (d) one-half of one percent (0.5%) of
the amount of the Loan being prepaid if a prepayment occurs during the
nineteenth (19th) through and including the twenty-fourth (24th) calendar month
of the term of the Loan.
"Prime Rate" shall mean, on a particular date, the annual rate of
interest publicly announced by Citibank, N.A. in New York, New York, as its base
rate, as such rate shall change from time to time. If Citibank, N.A. ceases to
announce a base rate, Prime Rate shall mean the rate of interest published in
The Wall Street Journal from time to time as the "Prime Rate". If more than one
-----------------------
"Prime Rate" is published in The Wall Street Journal for a day, the average of
-----------------------
such "Prime Rates" shall be used, and such average shall be rounded up to the
nearest one-eighth of one percent (0.125%). If The Wall Street Journal ceases to
-----------------------
publish the "Prime Rate", Lender shall select an equivalent publication that
publishes such "Prime Rate", and if such "Prime Rates" are no longer generally
published or are limited, regulated or administered by a governmental or
quasigovernmental body, then Lender shall select, in its reasonable discretion,
a comparable interest rate index.
"Principal" shall have the meaning specified in Section 4.1.35 hereof.
"Properties" shall mean, collectively, each and every Individual
Property which is subject to the terms of this Agreement.
"Property" shall mean, as the context may require, the Properties or an
Individual Property.
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"Property Account" shall have the meaning specified in Section 3.1(a)
hereof.
"Property Account Bank" shall mean (i) with respect to the Maryland
Property and the Peachtree Property, Bank of America, N.A., (ii) with respect to
the San ▇▇▇▇ Property, Bank of America, N.A. and Scotia Bank de Puerto Rico and
(iii) with respect to the Boston Property, Fleet Bank N.A. provided that such
bank remains an Eligible Institution, and any successor Eligible Institution or
other Eligible Institution or bank selected by Borrower, subject to Lender's
reasonable approval.
"Provided Information" shall have the meaning set forth in Section
9.1(a) hereof.
"Public Company" shall mean a corporation or other Person whose (i)
stock or ownership interests or (ii) depository receipts or their equivalent are
publicly traded on a nationally recognized stock exchange, including, without
limitation, NASDAQ or on the leading recognized stock exchange in Spain,
Germany, Italy, Canada, France, Tokyo, Australia, Singapore, England or Hong
Kong, or in another country which requires companies publicly traded on such
leading exchange to provide public information reasonably comparable to that
required in the United States.
"Puerto Rico Business Day" shall mean any day other than a Saturday,
Sunday or any other day on which national banks in Puerto Rico are not open for
business.
"Qualified Manager" shall mean a reputable and experienced professional
management organization (a) which manages, together with its affiliates, ten
(10) or more first class hotel properties of a type and size similar to the
Property, totaling in the aggregate no less than 3,000 rooms, and (b) prior to
whose employment as manager of the Property (i) prior to the occurrence of a
Securitization (defined below), such employment shall have been reasonably
approved by Lender applying the standards of a reasonably prudent institutional
mortgage lender, and (ii) after the occurrence of a Securitization, Lender shall
have received written confirmation from the Rating Agencies that the employment
of such manager will not result in a downgrade, withdrawal or qualification of
the initial, or if higher, then current ratings of the Securities or any class
thereof.
"Qualified Transferee" shall mean any one of the following entities,
subject to the reasonable determination of Lender that such entity satisfies the
applicable requirements set forth in this definition:
(a) a pension fund, pension trust or pension account that has
total assets of at least $500 million that are managed by an
entity that controls or manages at least $1 billion of real
estate equity assets;
(b) a pension fund advisor that controls or manages at least $1
billion of real estate equity assets immediately prior to
any proposed transfer hereunder;
(c) an insurance company that is subject to supervision by the
insurance commission, or a similar official or agency, of a
State or territory of the United States (including the
District of Columbia), which has a net worth, as of a date
no more than six (6) months prior to the date of the
proposed transfer hereunder, of at least $500 million and
controls real estate equity assets of at least $1 billion
immediately prior to any proposed transfer hereunder;
(d) a corporation organized under the banking or trust company
laws of the United States or any State or territory of the
United States (including the District of Columbia) that has
a combined capital and surplus of at least $500 million and
that immediately prior to a proposed transfer hereunder
controls real estate equity assets of at least $1 billion;
or
(e) any entity (a) with a long-term unsecured debt rating from
the Rating Agencies of at least BBB - (or its equivalent) or
(b) (1) that owns or operates, together with its affiliates,
at least ten (10) first class hotel properties, (2) that has
a net worth as of a date no more than six (6) months prior
to the date of any proposed transfer hereunder of at least
$500 million
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and (3) that controls, together with its Affiliates, real
estate equity assets of at least $1 billion immediately
prior to any proposed transfer hereunder.
"Rating Agencies" shall mean each of S&P, ▇▇▇▇▇'▇, and Fitch Inc., and
any other nationally-recognized statistical rating agency which has been
approved by Lender.
"Registration Statement" shall have the meaning set forth in Section
9.2(b) hereof.
"Related Party" shall mean any direct or indirect member, shareholder,
partner, employee, director, affiliate, executive officer, principal, agent or
representative of Borrower or any successor or assigns of any of the foregoing.
"Release" with respect to any Hazardous Materials means any release,
deposit, discharge, emission, leaking, leaching, spilling, seeping, migrating,
injecting, pumping, pouring, emptying, escaping, dumping, disposing or other
movement of Hazardous Materials.
"Release Premises Transferee" shall have the meaning set forth in
Section 2.7.
"Release Price" shall mean, for each Individual Property, one hundred
twenty-five percent (125%) of the Allocated Loan Amount for such Individual
Property.
"Release Property" shall have the meaning set forth in Section 2.6.
"Remaining Property" shall have the meaning set forth in Section 2.7.
"REMIC Trust" shall mean a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code that holds the Note.
"Rents" shall have the meaning set forth in Article I of the Security
Instrument with respect to each Individual Property.
"Replacement Interest Rate Cap Agreement" means an interest rate cap
agreement from an Acceptable Counterparty with terms substantially identical to
the Interest Rate Cap Agreement.
"Replacement Management Agreement" shall mean, collectively, (a) either
(i) a management agreement with a Qualified Manager substantially in the same
form and substance as the Management Agreement, or (ii) a management agreement
with a Qualified Manager, which management agreement shall be reasonably
acceptable to Lender applying the requirements of prudent mortgage loan lenders
for the management of properties similar in size, scope and value of the
Individual Property by comparable managers in form and substance, provided, with
respect to this subclause (ii), Lender, at its option, may require that Borrower
obtain confirmation from the applicable Rating Agencies that such management
agreement will not result in a downgrade, withdrawal or qualification of the
then current rating of the Securities or any class thereof; and (b) a
conditional assignment of management agreement substantially in the form then
used by Lender (or such other form reasonably acceptable to Lender applying the
requirements of prudent mortgage loan lenders for the management of properties
similar in size, scope and value of the Individual Property by comparable
managers), executed and delivered to Lender by Borrower and such Qualified
Manager at Borrower's expense.
"Replacement Reserve Account" shall have the meaning set forth in
Section 7.3.1 hereof.
"Replacement Reserve Fund" shall have the meaning set forth in Section
7.3.1 hereof.
"Replacement Reserve Deposit" shall mean, with respect to each
Individual Property, the positive number obtained by subtracting (i) the actual
amount spent by Borrower for the immediately preceding twelve (12) month period
for Replacements (such amount actually spent by Borrower hereinafter referred to
as the "Actual Amount") from
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(ii) the product of (a) Gross Income From Operations for the immediately
preceding twelve (12) month period multiplied by (b) the FF&E Factor.
"Replacements" shall have the meaning set forth in Section 7.3.1
hereof.
"Required Ratio" shall mean 1.54 to 1.00.
"Required Repair Account" shall have the meaning set forth in Section
3.1 hereof.
"Required Repair Fund" shall have the meaning set forth in Section
7.1.1 hereof.
"Required Repairs" shall have the meaning set forth in Section 7.1.1
hereof.
"Reserve Fund Deposits" shall mean the amounts to be deposited into the
Reserve Funds for any given month.
"Reserve Funds" shall mean the Tax and Insurance Escrow Fund, the
Replacement Reserve Fund, the Required Repair Fund, the Ground Lease Escrow Fund
or any other escrow fund established by the Loan Documents.
"Restoration" shall mean the repair and restoration of an Individual
Property after a Casualty or Condemnation as nearly as possible to the condition
the Individual Property was in immediately prior to such Casualty or
Condemnation, with such alterations as may be reasonably approved by Lender.
"Restricted Party" shall mean Maker, Principal, Maryland Guarantor,
Indemnitor, any Guarantor, or any Affiliated Manager or any shareholder,
partner, member or non-member manager, or any direct or indirect legal or
beneficial owner of, Borrower, Principal, Indemnitor, any Guarantor, any
Affiliated Manager or any non-member manager.
"S&P" shall mean Standard & Poor's Ratings Group, a division of
▇▇▇▇▇▇-▇▇▇▇, Inc.
"Sale or Pledge" shall mean a voluntary or involuntary sale,
conveyance, transfer or pledge of a legal or beneficial interest.
"San ▇▇▇▇ Property" shall mean the Property known as the Wyndham El San
▇▇▇▇ Hotel & Casino located in Carolina, Puerto Rico.
"Securities" shall have the meaning set forth in Section 9.1 hereof.
"Securitization" shall have the meaning set forth in Section 9.1
hereof.
"Securities Act" shall have the meaning set forth in Section 9.2(a)
hereof.
"Security Agreement" shall mean that certain first priority Security
Agreement executed and delivered by ▇▇▇▇▇▇▇ de San ▇▇▇▇ Associates encumbering
the San ▇▇▇▇ Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Security Deposits" shall have the meaning set forth in Section
5.1.17(c).
"Security Instrument" shall mean, with respect to each Individual
Property except for the Maryland Property and the San ▇▇▇▇ Property, that
certain first priority Mortgage (or Deed of Trust or Deed to Secure Debt, as
applicable) and Security Agreement, executed and delivered by Borrower as
security for the Loan and encumbering such Individual Property, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time and (i) with respect to the Maryland Property, the Indemnity Deed of Trust,
as the same may be amended, restated, replaced, supplemental or otherwise
modified from time to time and (ii) with respect to the San ▇▇▇▇ Property, the
-17-
Security Agreement, as the same may be amended, restated, replaced, supplemental
or otherwise modified from time to time .
"Servicer" shall have the meaning set forth in Section 9.3 hereof.
"Servicing Agreement" shall have the meaning set forth in Section 9.3
hereof.
"▇▇▇▇▇ Conversion" shall the meaning set forth in Section 5.1.20.
"Standard Statements" shall have the meaning set forth in Section
5.1.10(h)(i).
"State" shall mean, with respect to an Individual Property, the State
or Commonwealth in which such Individual Property or any part thereof is
located.
"Strike Rate" shall mean 7.25%.
"Substitute Allocated Loan Amount" shall have the meaning set forth in
Section 2.6(g).
"Substitute Properties" shall have the meaning set forth in Section
2.6.
"Substitute Property" shall have the meaning set forth in Section 2.6.
"Survey" shall mean, with respect to an Individual Property, a survey
prepared by a surveyor licensed in the State where such Individual Property is
located and reasonably satisfactory to Lender and the company or companies
issuing the Title Insurance Policies, and containing a certification of such
surveyor reasonably satisfactory to Lender.
"Tax Account" shall have the meaning set forth in Section 3.1(b).
"Tax and Insurance Escrow Fund" shall have the meaning set forth in
Section 7.2 hereof.
"Taxes" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any Individual Property or part thereof.
"Threshold Amount" shall mean, with respect to each Individual
Property, an amount equal to five percent (5%) of the applicable Allocated Loan
Amount.
"Title Insurance Policy" shall mean, with respect to each Individual
Property, an ALTA mortgagee title insurance policy in the form (reasonably
acceptable to Lender) (or, if an Individual Property is located in a State which
does not permit the issuance of such ALTA policy, such form as shall be
permitted in such State and reasonably acceptable to Lender) issued with respect
to such Individual Property and insuring the lien of the Security Instrument
encumbering such Individual Property.
"Transfer" shall have the meaning set forth in Section 5.2.12(a)
hereof.
"Transferee" shall have the meaning set forth in Section 5.2.12(e)
hereof.
"Triggering Event" shall mean the earliest of (i) the occurrence of an
Event of Default, or (ii) the date on which the Debt Service Coverage Ratio for
the twelve (12) full calendar months immediately preceding the date of
calculation is less than the Required Ratio.
"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the State in which an Individual Property is located.
-18-
"Underwriter Group" shall have the meaning set forth in Section 9.2(b)
hereof.
"Uniform System of Accounts" shall mean the Uniform System of Accounts
for Hotels in effect from time to time as approved by the American Hotel and
Motel Association.
"Working Day" shall mean any day on which dealings in foreign
currencies and exchange are carried on in London, England and in New York, New
York.
"Wyndham" shall mean Wyndham International, Inc.
Section 1.2 Principles of Construction. All references to sections
--------------------------
and schedules are to sections and schedules in or to this Agreement unless
otherwise specified. All uses of the word "including" shall mean "including,
without limitation" unless the context shall indicate otherwise. Unless
otherwise specified, the words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise
specified, all meanings attributed to defined terms herein shall be equally
applicable to both the singular and plural forms of the terms so defined. The
term "Borrower", as used herein, shall individually and collectively, as the
context requires, mean "Maker" in its capacity as the owner of all of the
Properties other than the Maryland Property and "Maryland Guarantor" in its
capacity as the owner of the Maryland Property.
II. GENERAL TERMS
-------------
Section 2.1 Loan Commitment; Disbursement to Maker.
--------------------------------------
2.1.1 Agreement to Lend and Borrow. Subject to and upon the terms and
----------------------------
conditions set forth herein, Lender hereby agrees to make and Maker hereby
agrees to accept the Loan on the Closing Date.
2.1.2 Single Disbursement to Maker. Maker may request and receive only
----------------------------
one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed.
2.1.3 The Note, Security Instruments and Loan Documents. The Loan shall
-------------------------------------------------
be evidenced by the Note and secured by the Security Instruments, the
Assignments of Leases and the other Loan Documents.
2.1.4 Use of Proceeds. Maker shall use the proceeds of the Loan to (a)
---------------
repay and discharge any existing loans relating to the Properties, (b) pay all
past-due Basic Carrying Costs, if any, with respect to the Properties, (c) make
deposits into the Reserve Funds required on the Closing Date in the amounts
provided herein, (d) pay costs and expenses incurred in connection with the
closing of the Loan, as approved by Lender, or (e) fund any working capital
requirements of the Properties. The balance, if any, shall be distributed to
Maker.
Section 2.2 Interest; Loan Payments; Late Payment Charge; Extension.
-------------------------------------------------------
2.2.1 Interest Generally. Interest on the outstanding principal balance
------------------
of the Loan shall accrue from the Closing Date to but excluding the Maturity
Date at the Applicable Interest Rate. Monthly installments of interest only, in
arrears, together with the Monthly Scheduled Amortization Payments, shall be
paid on each Payment Date commencing on September 10, 2001 and on each
subsequent Payment Date thereafter up to and including the Maturity Date.
Interest on the outstanding principal amount of the Loan for the period through
and including August 9, 2001 shall be paid by Maker on the Closing Date. All
amounts due under the Note shall be payable without setoff, counterclaim or any
other deduction whatsoever.
2.2.2 Interest Calculation. Interest on the outstanding principal
--------------------
balance of the Loan shall be calculated by multiplying (a) the actual number of
days elapsed in the period for which the calculation is being made by (b) a
daily rate based on a three hundred sixty (360) day year by (c) the outstanding
principal balance.
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2.2.3 Eurodollar Rate Unascertainable; Illegality; Increased Costs.
------------------------------------------------------------
(a) (i) In the event that Lender shall have determined (which determination
shall be conclusive and binding upon Maker absent manifest error) that by reason
of circumstances affecting the interbank eurodollar market, adequate and
reasonable means do not exist for ascertaining LIBOR, then Lender shall
forthwith give notice by telephone of such determination, confirmed in writing,
to Maker at least one (1) Business Day prior to the last day of the related
Interest Period. If such notice is given, the Loan shall bear interest at the
Adjusted Prime Rate beginning on the first day of the next succeeding Interest
Period.
(ii) If, pursuant to the terms of this Section 2.2.3(a), the Loan is
bearing interest at the Adjusted Prime Rate and Lender shall determine (which
determination shall be conclusive and binding upon Maker absent manifest error)
that the event(s) or circumstance(s) which resulted in such conversion shall no
longer be applicable, Lender shall give notice thereof to Maker by telephone of
such determination, confirmed in writing, to Maker as soon as reasonably
practical, but in no event later than one (1) Business Day prior to the last day
of the then current Interest Period. If such notice is given, the Loan shall
bear interest at the Eurodollar Rate beginning on the first day of the next
succeeding Interest Period. Notwithstanding any provision of this Agreement to
the contrary, in no event shall Maker have the right to elect to have the Loan
bear interest at either the Eurodollar Rate or the Adjusted Prime Rate.
(b) If any requirement of law or any change therein or in the
interpretation or application thereof, shall hereafter make it unlawful for
Lender in good faith to make or maintain the Loan bearing interest at the
Eurodollar Rate, (I) the obligation of Lender hereunder to make the Loan bearing
interest at the Eurodollar Rate shall be canceled forthwith and (II) the Loan
shall automatically bear interest at the Adjusted Prime Rate on the next
succeeding Payment Date or within such earlier period as required by law. Maker
hereby agrees promptly to pay Lender (within fifteen (15) days of Lender's
written demand therefor), any additional amounts necessary to compensate Lender
for any reasonable costs incurred by Lender in making any conversion in
accordance with this Agreement, including, without limitation, any interest or
fees payable by Lender to lenders of funds obtained by it in order to make or
maintain the Loan hereunder. Upon written demand from Maker, Lender shall
demonstrate in reasonable detail the circumstances giving rise to Lender's
determination and the calculation substantiating the Adjusted Prime Rate and any
additional costs incurred by Lender in making the conversion. Lender's written
notice of such costs, as certified to Maker, shall be conclusive absent manifest
error.
(c) In the event that any change in any requirement of law or in the
interpretation or application thereof, or compliance in good faith by Lender
with any request or directive (whether or not having the force of law) hereafter
issued from any central bank or other Governmental Authority:
(I) shall hereafter impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar
requirement against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by,
or other credit extended by, or any other acquisition of
funds by, any office of Lender which is not otherwise
included in the determination of LIBOR hereunder;
(II) shall, if the Loan is then bearing interest at the
Eurodollar Rate, hereafter have the effect of reducing the
rate of return on Lender's capital as a consequence of its
obligations hereunder to a level below that which Lender
could have achieved but for such adoption, change or
compliance (taking into consideration Lender's policies with
respect to capital adequacy) by any amount deemed by Lender
to be material; or
(III) shall, if the Loan is then bearing interest at the
Eurodollar Rate, hereafter impose on Lender any other
condition, the result of which is to increase the cost to
Lender of making, renewing or maintaining loans or
extensions of credit or to reduce any amount receivable
hereunder;
then, in any such case, Maker shall promptly pay Lender (within fifteen (15)
days of Lender's written demand therefor), any additional amounts necessary to
compensate Lender for such additional cost or reduced amount receivable which
Lender deems to be material as reasonably determined by Lender. If Lender
becomes entitled to claim
-20-
any additional amounts pursuant to this Section 2.2.3(c), Lender shall provide
Maker with at least thirty (30) days prior written notice specifying in
reasonable detail the event or circumstance by reason of which it has become so
entitled and the additional amount required to fully compensate Lender for such
additional cost or reduced amount. A certificate as to any additional costs or
amounts payable pursuant to the foregoing sentence submitted by Lender to Maker
shall be conclusive in the absence of manifest error. This provision shall
survive payment of the Note and the satisfaction of all other obligations of
Maker under the Note, this Agreement and the other Loan Documents.
(d) Maker agrees to indemnify Lender and to hold Lender harmless from any
loss or expense which Lender sustains or incurs as a consequence of (I) any
default after the expiration of any applicable notice or grace periods by Maker
in payment of the principal of or interest on the Loan while bearing interest at
the Eurodollar Rate, including, without limitation, any such loss or expense
arising from interest or fees payable by Lender to lenders of funds obtained by
it in order to maintain the Eurodollar Rate, (II) any prepayment (whether
voluntary or mandatory) of the Loan on a day that (A) is not the Payment Date
immediately following the last day of an Interest Period with respect thereto or
(B) is the Payment Date immediately following the last day of an Interest Period
with respect thereto if Maker did not give the prior written notice of such
prepayment required pursuant to the terms of this Agreement, including, without
limitation, such loss or expense arising from interest or fees payable by Lender
to lenders of funds obtained by it in order to maintain the Eurodollar Rate
hereunder and (III) the conversion (for any reason whatsoever, whether voluntary
or involuntary) of the Applicable Interest Rate from the Eurodollar Rate to the
Adjusted Prime Rate with respect to any portion of the outstanding principal
amount of the Loan then bearing interest at the Eurodollar Rate on a date other
than the Payment Date immediately following the last day of an Interest Period,
including, without limitation, such loss or expenses arising from interest or
fees payable by Lender to lenders of funds obtained by it in order to maintain
the Eurodollar Rate hereunder (the amounts referred to in clauses (I), (II) and
(III) are herein referred to collectively as the "Breakage Costs"). This
provision shall survive payment of the Loan in full and the satisfaction of all
other obligations of Maker under this Agreement and the other Loan Documents.
2.2.4 Payment on Maturity Date. Maker shall pay to Lender on the
------------------------
Maturity Date the outstanding principal balance, all accrued and unpaid interest
thereon, and all other amounts due hereunder and under the Note, the Security
Instruments and the other Loan Documents.
2.2.5 Payments after Default. Except as provided in Section 3.18
----------------------
hereof, upon the occurrence and during the continuance of an Event of Default
interest on the outstanding principal balance of the Loan and, to the extent
permitted by law, overdue interest and other amounts due in respect of the Loan,
shall accrue at the Default Rate, calculated from the date such payment was due
without regard to any grace or cure periods contained herein, such amount to be
applied by Lender to the payment of the Debt in such order as Lender shall
determine in its sole discretion, including, without limitation, alternating
applications thereof between interest and principal. Interest at the Default
Rate shall be computed from the occurrence of the Event of Default until the
actual receipt and collection of the Debt (or that portion thereof that is then
due). To the extent permitted by applicable law, interest at the Default Rate
shall be added to the Debt, shall itself accrue interest at the same rate as the
Loan and shall be secured by the Security Instruments. This paragraph shall not
be construed as an agreement or privilege to extend the date of the payment of
the Debt, nor as a waiver of any other right or remedy accruing to Lender by
reason of the occurrence of any Event of Default; and Lender retains its rights
under the Note to accelerate and continue to demand payment of the Debt upon the
happening of any Event of Default.
2.2.6 Late Payment Charge. Except as provided in Section 3.18 hereof,
-------------------
if any Monthly Debt Service Payment Amount is not paid by Maker on the date on
which it is due, Maker shall pay to Lender upon demand an amount equal to the
lesser of five percent (5%) of such unpaid sum or the maximum amount permitted
by applicable law in order to defray the expense incurred by Lender in handling
and processing such delinquent payment and to compensate Lender for the loss of
the use of such delinquent payment. Any such amount shall be secured by the
Security Instruments and the other Loan Documents to the extent permitted by
applicable law.
2.2.7 Usury Savings. This Agreement and the Note are subject to the
-------------
express condition that at no time shall Maker be obligated or required to pay
interest on the principal balance of the Loan at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If, by the terms of this
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Agreement or the other Loan Documents, Maker is at any time required or
obligated to pay interest on the principal balance due hereunder at a rate in
excess of the Maximum Legal Rate, the Applicable Interest Rate or the Default
Rate, as the case may be, shall be deemed to be immediately reduced to the
Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate
shall be deemed to have been payments in reduction of principal and not on
account of the interest due hereunder. All sums paid or agreed to be paid to
Lender for the use, forbearance, or detention of the sums due under the Loan,
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Loan does not
exceed the Maximum Legal Rate of interest from time to time in effect and
applicable to the Loan for so long as the Loan is outstanding.
2.2.8 Taxes. If the Loan is bearing interest at the Eurodollar Rate,
-----
all payments made by Maker hereunder shall be made free and clear of, and
without reduction for or on account of, Foreign Taxes, excluding, in the case of
Lender, taxes measured by its net income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which Lender is organized or any political
subdivision thereof and, in the case of Lender, taxes measured by its overall
net income, and franchise taxes imposed on it, by the jurisdiction of Lender's
applicable lending office or any political subdivision thereof. If any non-
excluded Foreign Taxes are required to be withheld from any amounts payable to
Lender hereunder (and such Foreign Taxes are not a result of activities of
Lender unrelated to the Loan or Maker), the amounts so payable to Lender shall
be increased to the extent necessary to yield to Lender (after payment of all
non-excluded Foreign Taxes) interest or any such other amounts payable hereunder
at the rate or in the amounts specified hereunder. Whenever any non-excluded
Foreign Tax is payable pursuant to applicable law by Maker, Maker shall send to
Lender an original official receipt, if available, or certified copy thereof
showing payment of such non-excluded Foreign Tax. Maker hereby indemnifies
Lender for any incremental taxes, interest or penalties that may become payable
by Lender which may result from any failure by Maker to pay any such non-
excluded Foreign Tax when due to the appropriate taxing authority of which
Lender has used its commercially reasonable efforts to provide Maker with prior
written notice of or any failure by Maker to remit to Lender the required
receipts or other required documentary evidence, provided, however, in the event
that Lender or any successor and/or assign of Lender is not incorporated under
the laws of the United States of America or a state thereof Lender agrees that,
prior to the first date on which any payment is due such entity hereunder, it
will deliver to Maker (i) two duly completed copies of United States Internal
Revenue Service Form W-8BEN or W-8ECI or successor applicable form, as the case
may be, certifying in each case that such entity is entitled to receive payments
under the Note, without deduction or withholding of any United States federal
income taxes, and (ii) an Internal Revenue Service Form W-9 or successor
applicable form, as the case may be, to establish an exemption from United
States backup withholding tax. Each entity required to deliver to Maker a Form
W-8BEN or W-8ECI or Form W-9 pursuant to the preceding sentence further
undertakes to deliver to Maker two further copies of the said letter and W-8BEN
or W-8ECI or Form W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such letter or
form expires (which, in the case of the Form W-8ECI, is the last day of each
U.S. taxable year of the non-U.S. entity) or becomes obsolete or after the
occurrence of any event requiring a change in the most recent letter and form
previously delivered by it to Maker, and such other extensions or renewals
thereof as may reasonably be requested by Maker, certifying in the case of a
Form W-8BEN or W-8ECI that such entity is entitled to receive payments under the
Note without deduction or withholding of any United States federal income taxes,
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such entity from duly completing and delivering any such
letter or form with respect to it and such entity advises Maker that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax, and in the case of a Form W-9, establishing an
exemption from United States backup withholding tax. Notwithstanding the
foregoing, if such entity fails to provide a duly completed Form W-8BEN or W-
8ECI or other applicable form and, under applicable law, in order to avoid
liability for Foreign Taxes, Maker is required to withhold on payments made to
such entity that has failed to provide the applicable form, Maker shall be
entitled to withhold the appropriate amount of Foreign Taxes. In such event,
Maker shall promptly provide to such entity evidence of payment of such Foreign
Taxes to the appropriate taxing authority and shall promptly forward to such
entity any official tax receipts or other documentation with respect to the
payment of the Foreign Taxes as may be issued by the taxing authority.
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2.2.9 Extension. Maker shall have the right to extend the Maturity Date
---------
for three (3) additional periods of twelve (12) months each (each, an "Extension
Term") by giving not less than thirty (30) days and not more than ninety (90)
days written notice (the "Extension Notice") prior to the Maturity Date (as such
Maturity Date may be extended by the first or second Extension Term, as
applicable) to Lender, provided that, with respect to each Extension Term, (i)
no Event of Default has occurred and is continuing and (ii) prior to the
commencement of each Extension Term, Maker shall pay to Lender the applicable
Extension Fee.
Section 2.3 Prepayments.
-----------
2.3.1 Voluntary Prepayments. On any Payment Date, Maker may, at its
---------------------
option, prepay the Loan in whole or in part, upon satisfaction of the following
conditions:
(a) Maker shall provide prior written notice to Lender
specifying the date (the "Prepayment Date") upon which the prepayment is to be
made, which notice shall be delivered to Lender not less than ten (10) Business
Days prior to such payment.
(b) Maker shall pay to Lender, simultaneously with such
prepayment, (i) if the Prepayment Date is not a Payment Date, (A) all interest
on the principal balance of the Note then being prepaid which would have accrued
through the end of the Interest Period then in effect (the "Interest Shortfall")
and (B) all Breakage Costs, if any, and without duplication of sums paid
pursuant to clause (i) with respect to such prepayment, and (ii) the applicable
Prepayment Fee.
(c) Notwithstanding the foregoing, (i) no Prepayment Fee shall
be due in connection with a prepayment in connection with the release of the
Peachtree Property provided (1) no Event of Default shall have occurred and be
continuing, (2) such prepayment is in connection with a Peachtree Sale, (3)
Maker pays to Lender, simultaneously with such prepayment, the Interest
Shortfall, if any, and any other sums then due under the Note, this Agreement,
the Security Instruments or the other Loan Documents, and (4) Maker and Maryland
Guarantor, as applicable, complies with all of the conditions relating to an
Individual Property release, including, without limitation, the terms and
conditions of Section 2.5 herein and (ii) no Prepayment Fee shall be due in
connection with a prepayment by Maker after the occurrence of a Casualty or
Condemnation to any Individual Property provided (1) no Event of Default shall
have occurred and be continuing, (2) the Net Proceeds in connection with such
Casualty or Condemnation have been applied by Lender to pay down the outstanding
principal balance of the Note and (3) Maker pays to Lender simultaneously with
such prepayment, the Interest Shortfall, if any, and any other sums then due
under the Note, this Agreement, the Security Instruments and the other Loan
Documents.
(d) In addition to the foregoing provisions, Maker shall have
the right to obtain a release of the applicable Individual Property in
accordance with the terms of Section 2.5 hereof, but Maker shall not be
obligated to pay a Prepayment Fee in connection therewith in the event that (i)
Lender has elected to apply the Net Proceeds of a Casualty or Condemnation of
the applicable Individual Property towards the reduction of the then outstanding
principal balance of the Note and (ii) no Event of Default has occurred and
shall be continuing under this Agreement, the Note, the Security Instruments or
any of the other Loan Documents.
2.3.2 Mandatory Prepayments. On the next occurring Payment Date
---------------------
following the date on which Maker actually receives any Net Proceeds, if and to
the extent Lender is not obligated to make such Net Proceeds available to Maker
for the restoration of the Property, Maker shall prepay the outstanding
principal balance of the Note in an amount equal to one hundred percent (100%)
of such Net Proceeds. Any partial prepayment under this Section shall be applied
to the last payments of principal due under the Loan but, no Prepayment Fee
shall be due in connection therewith.
2.3.3 Prepayments After Default. If, following an Event of Default,
-------------------------
Lender shall accelerate the Debt and Maker thereafter tenders payment of all or
any part of the Debt, or if all or any portion of the Debt is recovered by
Lender after such Event of Default, such payment may be made only on the next
occurring Payment Date together with
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the payment of interest due and payable on such date together with the
Prepayment Fee and all other sums due and payable under the Note, this Agreement
and the other Loan Documents.
2.3.4 Making of Payments. Each payment by Maker hereunder or under the
------------------
Note shall be made in funds settled through the New York Clearing House
Interbank Payments System or other funds immediately available to Lender by 2:00
p.m., New York City time, on or prior to the date such payment is due, to Lender
by deposit to such account as Lender may designate by written notice to Maker.
Whenever any payment hereunder or under the Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the first
Business Day succeeding such scheduled due date. All payments made by Maker
hereunder or under the Note or the other Loan Documents shall be made
irrespective of, and without any deduction for, any setoff, defense or
counterclaims.
Section 2.4 Interest Rate Cap Agreement. (a) Within five (5)
---------------------------
Business Days after notice from Lender that an Interest Rate Cap Event has
occurred, Maker shall obtain, or cause to be obtained, and shall thereafter
maintain in effect, an Interest Rate Cap Agreement, which shall be coterminous
with the Loan (as the same may be extended) and have a notional amount which
shall not at any time be less than the outstanding principal balance of the Loan
and which shall at all times have a strike rate equal to the Strike Rate. The
Counterparty shall be obligated under the Interest Rate Cap Agreement to make
monthly payments equal to the excess of 1 month LIBOR over the Strike Rate,
calculated on the notional amount. The notional amount of the Interest Rate Cap
Agreement may be reduced from time to time in amounts equal to any prepayment of
the principal of the Loan in accordance with Sections 2.3 and 2.5 hereof.
(b) Maker shall collaterally assign to Lender pursuant to an
Assignment of Interest Rate Cap Agreement substantially in the form annexed
hereto as Exhibit E, all of its right, title and interest to receive any and all
payments under the Interest Rate Cap Agreement (and any related guarantee, if
any) and shall deliver to Lender an executed counterpart of such Interest Rate
Cap Agreement and notify the Counterparty of such collateral assignment (either
in such Interest Rate Cap Agreement or by separate instrument). The Counterparty
shall agree in writing to make all payments it is required to make under the
Interest Rate Cap Agreement directly to Lender or such other entity or account
as directed by Lender. At such time as the Loan is repaid in full, all of
Lender's right, title and interest in the Interest Rate Cap Agreement shall
terminate and Lender shall promptly execute and deliver at Maker's sole cost and
expense, such documents as may be required to evidence Lender's release of the
Interest Rate Cap Agreement and to notify the Counterparty of such release.
(c) Maker shall comply with all of its obligations under the
terms and provisions of the Interest Rate Cap Agreement. All amounts paid by the
Counterparty under the Interest Rate Cap Agreement shall be deposited
immediately into the Lockbox Account or if the Lockbox Account is not then
required to be in effect, into such account as specified by Lender in writing.
Maker shall take all actions reasonably requested by Lender to enforce Lender's
rights under the Interest Rate Cap Agreement in the event of a default by the
Counterparty and shall not waive, amend or otherwise modify any of its rights
thereunder.
(d) In the event of any downgrade, withdrawal or qualification
of the long-term unsecured debt credit rating of the Counterparty below "AA" (or
its equivalent) by the Rating Agencies, Maker shall replace the Interest Rate
Cap Agreement with a Replacement Interest Rate Cap Agreement not later than ten
(10) Business Days following receipt of notice from Lender or Servicer of such
downgrade, withdrawal or qualification.
(e) In the event that Maker fails to purchase and deliver to
Lender the Interest Rate Cap Agreement or any replacement Interest Cap Agreement
as and when required hereunder, Lender may purchase such Interest Rate Cap
Agreement and the cost incurred by Lender in purchasing such Interest Rate Cap
Agreement shall be paid by Maker to Lender with interest thereon at the Default
Rate from the date such cost was incurred by Lender until such cost is paid by
Maker to Lender.
Section 2.5 Release of Property.
-------------------
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2.5.1 Release of Individual Property. Subject to the provisions of
------------------------------
Section 2.3.1(c) hereof relating to the release of the Peachtree Property,
provided no Event of Default shall have occurred and be continuing, Borrower may
obtain the release of an Individual Property from the Lien of the Security
Instrument thereon (and related Loan Documents) and the release of Borrower's
obligations under the Loan Documents with respect to such Individual Property
(other than those expressly stated to survive), provided that such Borrower does
not own any of the other Properties then encumbered by the Lien of the Security
Instruments, but only upon the satisfaction of each of the following conditions:
(a) Borrower shall provide Lender with at least fifteen (15) days
but no more than ninety (90) days prior written notice of its request to obtain
a release of the Individual Property;
(b) Borrower shall make a payment to Lender by a wire transfer of
immediately available federal funds in an amount equal to the Release Price for
the applicable Individual Property, together with (i) all accrued and unpaid
interest on the amount of principal being prepaid, (ii) the Prepayment Fee, if
required pursuant to the terms hereof (provided, however, (y) in connection with
a release only, the Prepayment Fee shall only be calculated on the Allocated
Loan Amount of the Individual Property being released (and not on the Release
Price) and (z) the Net Proceeds of a Casualty or Condemnation applied to the
reduction of the principal balance of the Debt shall be credited against and
reduce the Release Price of the Individual Property that was the subject of said
Casualty or Condemnation), (iii) if such payment is not made on a Payment Date,
the Interest Shortfall with respect to the amount prepaid, (iv) Breakage Costs,
if any, but without duplication of any payment made pursuant to Subsection (iii)
hereof; and (v) all other sums due under this Agreement, the Note or the other
Loan Documents in connection with a partial prepayment;
(c) Borrower shall submit to Lender, not less than thirty (30) days
prior to the date of such release, a release of Lien (and related Loan
Documents) for such Individual Property for execution by Lender. Such release
shall be in a form appropriate in each State in which the Individual Property is
located and that contains standard provisions, if any, protecting the rights of
the releasing lender. In addition, Borrower shall provide all other
documentation Lender reasonably requires to be delivered by Borrower in
connection with such release, together with an Officer's Certificate certifying
that such documentation (i) is in compliance with all Legal Requirements, (ii)
will effect such release in accordance with the terms of this Agreement, and
(iii) will not impair or otherwise adversely affect the Liens, security
interests and other rights of Lender under the Loan Documents not being released
(or as to the parties to the Loan Documents and Properties subject to the Loan
Documents not being released);
(d) After giving effect to such release, the Debt Service Coverage
Ratio for the Properties then remaining subject to the Liens of the Security
Instruments shall be equal to the greater of (i) the Debt Service Coverage Ratio
for the twelve (12) full calendar months immediately preceding the Closing Date,
and (ii) the Debt Service Coverage Ratio for all of the then remaining
Properties (including the Individual Property to be released) for the twelve
(12) full calendar months immediately preceding the release of the Individual
Property;
(e) If the applicable Borrower continues to own an Individual
Property subject to the Lien of a Security Instrument, the Individual Property
to be released shall be conveyed to a Person other than a Borrower or Principal;
and
(f) Payment of all Lender's reasonable costs and expenses, including
due diligence review costs and reasonable counsel fees and disbursements
incurred in connection with the release of the Individual Property from the Lien
of the related Security Instrument and the review and approval of the documents
and information required to be delivered in connection therewith.
2.5.2 Release on Payment in Full. Lender shall, at the expense of
--------------------------
Borrower, upon payment in full of all principal and interest due on the Loan and
all other amounts due and payable under the Loan Documents in accordance with
the terms and provisions of the Note and this Agreement, release the Lien of the
Security Instrument on each Individual Property not theretofore released.
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Section 2.6 Substitution of Properties. Subject to the terms and
--------------------------
conditions set forth in this Section 2.6, after the expiration of the Lockout
Period, Borrower may obtain a release of the Lien of a Security Instrument (and
the related Loan Documents) encumbering an Individual Property (a "Release
Property") by substituting therefor another hotel property of like kind and
quality acquired by Borrower or an Affiliate of Borrower (provided, however, if
the Substitute Property shall be owned by an Affiliate of Borrower said
Affiliate (i) shall assume all the obligation of Borrower under this Agreement,
the Note and the other Loan Documents and (ii) shall become a party to the Note
and the other Loan Documents and shall be bound by the terms and provisions
thereof as if it had executed the Note and the other Loan Documents and shall
have the rights and obligations of Borrower thereunder) (individually, a
"Substitute Property" and collectively, the "Substitute Properties"), provided
that the following conditions precedent are satisfied:
(a) Lender shall have received at least thirty (30) days prior written
notice requesting the substitution and identifying the Substitute Property and
Release Property.
(b) If the applicable Borrower continues to own an Individual Property
subject to the Lien of a Security Instrument, Lender shall have received a copy
of a deed conveying all of Borrower's right, title and interest in and to the
Release Property to a Person other than Borrower or Principal pursuant to an
arms length transaction and a letter from Borrower countersigned by a title
insurance company acknowledging receipt of such deed and agreeing to record such
deed in the real estate records for the county in which the Release Property is
located or in the case of the San ▇▇▇▇ Property, to submit such deed for
recording in the Registry of Property for Carolina, Puerto Rico.
(c) Lender shall have received a current Appraisal, of the Substitute
Property prepared within one hundred eighty (180) days prior to the release and
substitution (i) showing an appraised value equal to or greater than the
appraised value of the Release Property as of the date hereof; and (ii) which
supports an aggregate loan-to-value ratio with respect to the Properties
remaining subject to the lien of the Security Instruments after the substitution
not greater than the ratio equal to the lesser of (A) the aggregate loan-to-
value ratio as of the Closing Date with respect to all of the Properties and (B)
the aggregate loan-to-value ratio with respect to the Properties remaining
subject to the lien of the Security Instruments immediately prior to the date of
the proposed substitution.
(d) Lender shall have received a certificate of Borrower certifying,
together with other evidence that would be satisfactory to a prudent
institutional mortgage lender that, after the substitution of a Substitute
Property and the release of the Release Property, (i) the Debt Service Coverage
Ratio for the twelve (12) full calendar months immediately preceding the date of
the substitution with respect to all Properties remaining subject to the lien of
the Security Instruments after the substitution shall be equal to or greater
than (A) Debt Service Coverage Ratio for the twelve (12) full calendar months
immediately preceding the Closing Date and (B) Debt Service Coverage Ratio for
the twelve (12) full calendar months immediately preceding the substitution
(including the Release Property and excluding the Substitute Property) and (ii)
the Debt Service Coverage Ratio for the twelve (12) months immediately preceding
the substitution with respect to the Substitute Property is equal or greater
than the Debt Service Coverage Ratio for the twelve (12) full calendar months
immediately preceding the Closing Date with respect to the Release Property.
(e) If the Loan is part of a Securitization, Lender shall have received
confirmation in writing from the Rating Agencies to the effect that such
substitution will not result in a withdrawal, qualification or downgrade of the
respective ratings in effect immediately prior to such substitution for the
Securities issued in connection with the Securitization that are then
outstanding. If the Loan is not part of a Securitization, Lender shall have
consented in writing to such substitution, which consent shall be given in
Lender's reasonable discretion applying the requirements of a prudent mortgage
loan lender with respect to real estate collateral of similar size, scope and
value of the Substitute Property.
(f) No Event of Default shall have occurred and be continuing and Borrower
shall be in compliance in all material respects with all terms and conditions
set forth in this Agreement and in each other Loan Document on Borrower's part
to be observed or performed. Lender shall have received a certificate from
Borrower confirming the foregoing, stating that the representations and
warranties of Borrower contained in this Agreement and the other Loan
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Documents are true and correct in all material respects on and as of the date of
the substitution with respect to Borrower, the Properties and the Substitute
Property and containing any other representations and warranties with respect to
Borrower, the Properties, the Substitute Property or the Loan as (i) Lender, if
a Securitization has not occurred, or (ii) the Rating Agencies, if a
Securitization has occurred, may require, unless such certificate would be
inaccurate, such certificate to be in form and substance reasonably satisfactory
to Lender or the Rating Agencies, as applicable.
(g) Borrower shall (A) have executed, acknowledged and delivered to Lender
(I) a Security Instrument, an Assignment of Leases and Rents and two UCC-1
Financing Statements with respect to the Substitute Property, together with a
letter from Borrower countersigned by a title insurance company acknowledging
receipt of such Security Instrument, Assignment of Leases and Rents and UCC-1
Financing Statements and agreeing to record or file, as applicable, such
Security Instrument, Assignment of Leases and Rents and one of the UCC-1
Financing Statements in the real estate records for the county in which the
Substitute Property is located and to file one of the UCC-1 Financing Statements
in the office of the Secretary of State (or other central filing office) of the
State in which the Substitute Property is located, so as to effectively create
upon such recording and filing valid and enforceable first priority Liens upon
the Substitute Property, in favor of Lender (or such other trustee as may be
desired under local law), subject only to the Permitted Encumbrances and such
other Liens as are permitted pursuant to the Loan Documents and (II) an
Environmental Indemnity with respect to the Substitute Property and (B) have
caused the Guarantor to acknowledge and confirm its obligations under the Loan
Documents. The Security Instrument, Assignment of Leases and Rents, UCC-1
Financing Statements and Environmental Indemnity shall be the same in form and
substance as the counterparts of such documents executed and delivered with
respect to the related Release Property subject to modifications reflecting only
the Substitute Property as the Individual Property and such modifications
reflecting the laws of the State in which the Substitute Property is located.
The Security Instrument encumbering the Substitute Property shall secure all
amounts then outstanding under the Note, provided that in the event that the
jurisdiction in which the Substitute Property is located imposes a mortgage
recording, intangibles or similar tax and does not permit the allocation of
indebtedness for the purpose of determining the amount of such tax payable, the
principal amount secured by such Security Instrument shall be equal to one
hundred twenty-five percent (125%) of the Allocated Loan Amount for the
Substitute Property. The amount of the Loan allocated to the Substitute Property
(such amount being hereinafter referred to as the "Substitute Allocated Loan
Amount") shall equal the Allocated Loan Amount of the related Release Property.
(h) Lender shall have received (A) to the extent available, any "tie-in"
or similar endorsement to each title insurance policy insuring the Lien of the
existing Security Instruments as of the date of the substitution with respect to
the title insurance policy insuring the Lien of the Security Instrument with
respect to the Substitute Property and (B) a title insurance policy (or a
marked, signed and redated commitment to issue such title insurance policy)
insuring the Lien of the Security Instrument encumbering the Substitute
Property, issued by the title company that issued the title insurance policies
insuring the Lien of the existing Security Instruments and dated as of the date
of the substitution, with reinsurance and direct access agreements that replace
such agreements issued in connection with the title insurance policy insuring
the Lien of the Security Instrument encumbering the Release Property. The title
insurance policy issued with respect to the Substitute Property shall (1)
provide coverage in the amount of the Substitute Allocated Loan Amount if the
"tie-in" or similar endorsement described above is available or, if such
endorsement is not available, in an amount equal to one hundred twenty-five
percent (125%) of the Substitute Allocated Loan Amount, (2) insure Lender that
the relevant Security Instrument creates a valid first lien on the Substitute
Property encumbered thereby, free and clear of all exceptions from coverage
other than Permitted Encumbrances and standard exceptions and exclusions from
coverage (as modified by the terms of any endorsements), (3) contain such
endorsements and affirmative coverages as are then available and are contained
in the title insurance policies insuring the Liens of the existing Security
Instruments, and (4) name Lender as the insured. Lender also shall have received
copies of paid receipts or other evidence showing that all premiums in respect
of such endorsements and title insurance policies have been paid.
(i) Lender shall have received a current Survey for each Substitute
Property, certified to the title company and Lender and their successors and
assigns, in the same form and having the same content as the certification of
the Survey of the Release Property prepared by a professional land surveyor
licensed in the State in
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which the Substitute Property is located and acceptable to the Rating Agencies
in accordance with the 1999 Minimum Standard Detail Requirements for ALTA/ACSM
Land Title Surveys. Such Survey shall reflect the same legal description
contained in the title insurance policy relating to such Substitute Property and
shall include, among other things, a metes and bounds description of the real
property comprising part of such Substitute Property (unless such real property
has been satisfactorily designated by lot number on a recorded plat). The
surveyor's seal shall be affixed to each Survey and each Survey shall certify
whether or not the surveyed property is located in a "one-hundred-year flood
hazard area."
(j) Lender shall have received valid certificates of insurance indicating
that the requirements for the policies of insurance required for an Individual
Property hereunder have been satisfied with respect to the Substitute Property
and evidence of the payment of all premiums payable for the existing policy
period.
(k) Lender shall have received a Phase I environmental report dated not
more than 180 days prior to the proposed date of substitution and otherwise
acceptable to a prudent institutional mortgage lender and, if recommended under
the Phase I environmental report, a Phase II environmental report that would be
acceptable to a prudent institutional mortgage lender, which conclude that the
Substitute Property does not contain any unacceptable levels of Hazardous
Materials and is not subject to any significant risk of contamination from any
off-site Hazardous Materials.
(l) Borrower shall deliver or cause to be delivered to Lender (A) updates
certified by Borrower of all organizational documentation related to Borrower
and/or the formation, structure, existence, good standing and/or qualification
to do business delivered to Lender on the Closing Date; (B) good standing
certificates, certificates of qualification to do business in the jurisdiction
in which the Substitute Property is located (if required in such jurisdiction);
and (C) resolutions of Borrower authorizing the substitution and any actions
taken in connection with such substitution.
(m) Lender shall have received the following opinions of Borrower's
counsel: (A) an opinion or opinions of counsel admitted to practice under the
laws of the State in which the Substitute Property is located stating that the
Loan Documents delivered with respect to the Substitute Property pursuant to
clause (i) above are valid and enforceable in accordance with their terms,
subject to the laws applicable to creditors' rights and equitable principles,
and that Borrower is qualified to do business and in good standing under the
laws of the jurisdiction where the Substitute Property is located or that
Borrower is not required by applicable law to qualify to do business in such
jurisdiction; (B) an opinion of counsel reasonably acceptable to the Rating
Agencies if the Loan is part of a Securitization, or the Lender if the Loan is
not part of a Securitization, stating that the Loan Documents delivered with
respect to the Substitute Property pursuant to clause (i) above were, among
other things, duly authorized, executed and delivered by Borrower and that the
execution and delivery of such Loan Documents and the performance by Borrower of
its obligations thereunder will not cause a breach of, or a default under, any
agreement, document or instrument to which Borrower is a party or to which it or
its properties are bound; (C) an update of the Insolvency Opinion indicating
that the substitution does not affect the opinions set forth therein; (D) if the
Loan is part of a Securitization, an opinion of counsel reasonably acceptable to
the Rating Agencies that the substitution does not constitute a "significant
modification" of the Loan under Section 1001 of the Code or otherwise cause a
tax to be imposed on a "prohibited transaction" by any REMIC Trust.
(n) Borrower shall (i) have paid, (ii) have escrowed with Lender or (iii)
be contesting in accordance with the terms hereof, all Basic Carrying Costs
relating to each of the Properties and the Substitute Property, including
without limitation, (i) accrued but unpaid insurance premiums relating to each
of the Properties and the Substitute Property, and (ii) currently due and
payable Taxes (including any in arrears) relating to each of the Properties and
the Substitute Property and (iii) currently due and payable maintenance charges
and other impositions relating to each of the Properties and Substitute
Property.
(o) Borrower shall have paid or reimbursed Lender for all reasonable costs
and expenses incurred by Lender (including, without limitation, reasonable
attorneys' fees and disbursements) in connection with the substitution and
Borrower shall have paid all recording charges, filing fees, taxes or other
expenses (including, without limitation,
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mortgage and intangibles taxes and documentary stamp taxes) payable in
connection with the substitution. Borrower shall have paid all costs and
expenses of the Rating Agencies incurred in connection with the substitution.
(p) Lender shall have received annual operating statements and occupancy
statements for the Substitute Property for the most current completed fiscal
year and a current operating statement for the Release Property, each certified
by Borrower to Lender as being true and correct in all material respects and a
certificate from Borrower certifying that there has been no material adverse
change in the financial condition of the Substitute Property since the date of
such operating statements.
(q) Borrower shall have delivered to Lender estoppel certificates from all
tenants under Material Leases at the Substitute Property. All such estoppel
certificates shall be substantially in the form approved by Lender in connection
with the origination of the Loan and shall indicate that (1) the subject lease
is a valid and binding obligation of the tenant thereunder, (2) to the best of
the tenant's knowledge, there are no defaults under such lease on the part of
the landlord or tenant thereunder, (3) the tenant thereunder has no knowledge of
any defense or offset to the payment of rent under such leases, (4) no rent
under such lease has been paid more than one (1) month in advance, (5) the
tenant thereunder has no option under such lease to purchase all or any portion
of the Substitute Property, and (6) all tenant improvement work required under
such lease has been substantially completed and the tenant under such lease is
in actual occupancy of its leased premises. If an estoppel certificate indicates
that all tenant improvement work required under the subject lease has not yet
been completed, Borrower shall, if required by the Rating Agencies, deliver to
Lender financial statements indicating that Borrower has adequate funds to pay
all costs related to such tenant improvement work as required under such lease.
(r) Lender shall have received copies of all tenant leases affecting the
Substitute Property certified by Borrower as being true and correct.
(s) Lender shall have received subordination agreements in the form
approved by Lender in connection with the origination of the Loan (or such other
form approved by Lender, which approval shall not be unreasonably withheld,
conditioned or delayed) with respect to tenants under Material Leases at the
Substitute Property to the extent such Leases for such tenants are not
automatically subordinate (in lien and in terms) pursuant to the terms of the
applicable Leases.
(t) Lender shall have received (A) an endorsement to the title insurance
policy insuring the Lien of the Security Instrument encumbering the Substitute
Property insuring that the Substitute Property constitutes a separate tax lot
or, if such an endorsement is not available in the State in which the Substitute
Property is located, a letter from the title insurance company issuing such
Title Insurance Policy stating that the Substitute Policy constitutes a separate
tax lot or (B) a letter from the appropriate taxing authority stating that the
Substitute Property constitutes a separate tax lot.
(u) Lender shall have received a Physical Conditions Report with respect
to the Substitute Property stating that the Substitute Property and its use
comply in all material respects with all applicable Legal Requirements
(including, without limitation, zoning, subdivision and building laws) and that
the Substitute Property is in good condition and repair and free of damage or
waste.
(v) Lender shall have received evidence which would be satisfactory to a
prudent institutional mortgage lender to the effect that the Substitute Property
and the use thereof are in substantial compliance with all Legal Requirements
and that all material building and operating licenses and permits necessary for
the use and occupancy of the Substitute Property as a hotel including, but not
limited to, current certificates of occupancy, have been obtained and are in
full force and effect.
(w) In the event the Release Property is subject to a Management Agreement
along with one or more additional Properties, Lender shall have received a
certified copy of an amendment to the Management Agreement reflecting the
deletion of the Release Property and the addition of the Substitute Property as
a property managed pursuant thereto and Manager shall have executed and
delivered to Lender an amendment to the Assignment of
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Management Agreement reflecting such amendment to the Management Agreement. In
the event that the Release Property is subject to a Management Agreement
relating only to such Release Property, Lender shall have received a certified
copy of a new Management Agreement for the Substitute Property on substantially
the same terms as the Management Agreement for the Release Property and the
Manager thereunder shall have executed and delivered to Lender an Assignment of
Management Agreement with respect to such new Management Agreement on
substantially the same terms as used in connection with the Release Property or
such other terms as would be reasonably acceptable to a prudent institutional
mortgage loan lender.
(x) Lender shall have received such other approvals, opinions, documents
and information in connection with the substitution as reasonably requested by
the Rating Agencies if the Loan is part of a Securitization, or Lender if the
Loan is not part of a Securitization.
(y) Lender shall have received copies of all contracts and agreements
relating to the leasing and operation of the Substitute Property (other than the
Management Agreement), each of which shall be in a form and substance which
would be reasonably satisfactory to a prudent institutional mortgage lender
together with a certification of Borrower attached to each such contract or
agreement certifying that the attached copy is a true and correct copy of such
contract or agreement and all amendments thereto.
(z) Lender shall have received certified copies of all material consents,
licenses and approvals, if any, required in connection with the substitution of
a Substitute Property, including, without limitation, liquor licenses and
evidence that such consents, licenses and approvals are in full force and
effect.
(aa) Lender shall have received satisfactory (i.e., showing no Liens other
than Permitted Encumbrances) UCC searches, together with tax lien, judgment and
litigation searches with respect to the Substitute Property, Borrower,
Indemnitor and the Guarantor, if applicable, in the State where the Substitute
Property is located and the jurisdictions where each such Person has its
principal place of business.
(bb) Intentionally Omitted.
(cc) Intentionally Omitted.
(dd) Lender shall have received if the Borrower owns a leasehold estate in
the Substitute Property, (i) a certified copy of the Ground Lease for the
Substitute Property, together with all amendments and modifications thereto and
a recorded memorandum thereof, which Ground Lease would be reasonably
satisfactory in all respects to a prudent institutional mortgage lender and
which contains customary leasehold mortgagee provisions and protections, and
which shall provide, among other things, (A) for a remaining term of no less
than the greater of (1) 20 years from the Maturity Date or (2) 10 years from the
end of the scheduled amortization term of the Loan, (B) that the Ground Lease
shall not be terminated until Lender has received notice of a default thereunder
and has had a reasonable opportunity to cure or complete foreclosure, and fails
to do so in a diligent manner, (C) for a new lease on the same terms to the
Lender as tenant if the Ground Lease is terminated for any reason, (D) the non-
merger of fee and leasehold interests, and (E) that insurance proceeds and
condemnation awards (from the fee interest as well as the leasehold interest)
will be applied pursuant to the terms of this Agreement, and (ii) a ground lease
estoppel executed by the fee owner and ground lessor of the Substitute Property,
reasonably acceptable to Lender.
(ee) Borrower shall submit to Lender, not less than fifteen (15) Business
Days prior to the date of such substitution, a release of Lien (and related Loan
Documents) for the Release Property for execution by Lender. Such release shall
be in a form appropriate for the jurisdiction in which the Release Property is
located.
(ff) Borrower shall deliver an Officer's Certificate certifying that the
requirements set forth in this Section 2.6 have been satisfied.
(gg) Upon the satisfaction of the foregoing conditions precedent, Lender
will release its Lien from the Release Property to be released and the
Substitute Property shall be deemed to be an Individual Property for purposes
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of this Agreement and the Substitute Allocated Loan Amount with respect to such
Substitute Property shall be deemed to be the Allocated Loan Amount with respect
to such Substitute Property for all purposes hereunder.
Section 2.7 Out Parcel Releases. Upon the request of Borrower, Lender
-------------------
shall release one or more Out-Parcels from the Lien of the applicable Security
Instrument and execute instruments of release or partial release in duly
recordable form (and in the case of the San ▇▇▇▇ Property, release and endorse
to Borrower any mortgage notes securing the mortgages on the San ▇▇▇▇ Property)
(an "Out-Parcel Release") provided that Borrower shall, at its sole cost and
expense, comply with all of the following terms, conditions and provisions with
respect to such Out-Parcel and requested Out-Parcel Release:
a. at the time of any such Out-Parcel Release, no Event of Default shall
have occurred and be continuing;
b. ingress to and egress from all portions of the applicable Individual
Property of which the Out-Parcel forms a part remaining after the Out-
Parcel Release (the "Remaining Property") shall be over fully
dedicated public roads;
c. Borrower shall have obtained, (i)(x) subdivision, zoning, building and
all other governmental approvals necessary or required so that the
Out-Parcel and the Remaining Property, shall, upon such Out-Parcel
Release, together and separately, satisfy and comply, in all material
respects and so that any immaterial non-compliance does not adversely
affect the lien of the applicable Security Instrument or the value or
utility of the applicable Individual Property as it existed
immediately prior to such release, with all the applicable
subdivision, zoning, building, environmental protection and all other
Applicable Laws, including sewer capacity requirements, or (y) a legal
opinion by counsel reasonably satisfactory to Lender (or such other
evidence as would be reasonably acceptable to a prudent institutional
mortgage loan lender), that the Out-Parcel and the Remaining Property
are each entitled to be used and occupied as of right without
reference to or reliance on the other parcel (except with respect to
easements which have been reasonably approved by Lender in connection
with an Out-Parcel Release applying the standards of a reasonably
prudent institutional mortgage loan lender) and (ii) either a legal
opinion by counsel reasonably satisfactory to Lender stating that, or
an endorsement to the title insurance policy insuring the Lien of the
applicable Security Instrument insuring that, the Out-Parcel has been
designated, assessed and taxed as a separate tax lot independent from
the Remaining Property or such other evidence as would be reasonably
acceptable to a prudent institutional mortgage loan lender;
d. prior to the Out-Parcel Release, Borrower shall prepare and provide to
Lender: subdivision map(s) of all those portions of the Individual
Property which are approved by all Governmental Authorities having
jurisdiction over the Out-Parcel and/or the Remaining Property, whose
approval as to such plans and maps is required; and copies of each and
all proposed easements and cross-easements and mutual or non-exclusive
easements for ingress, egress, access, pedestrian walkways, parking,
traffic flow, utilities and services and utilities shared by the
Remaining Property and the Out-Parcel and the like which may be
required by any Governmental Authority having jurisdiction or which
are necessary or advisable and a survey of the Out Parcel(s) to be
released and of the Remaining Property, in a form, scope and substance
that would be acceptable to a reasonably prudent mortgage lender,
including an accurate legal description of the Out Parcel(s) to be
released;
e. such subdivision map(s) (or other evidence that would be reasonably
acceptable to a prudent institutional mortgage loan lender) shall show
such parking structures and parking layouts as will afford, to the
Improvements located on the Remaining Property the aggregate number of
parking spaces deemed necessary by Lender for the operations of the
Remaining Property, and the number of parking spaces required by the
then applicable zoning requirements for the Remaining Property;
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f. Borrower shall provide Lender with such surveys, drawings, plans,
specifications, proposed easements and consents, certificates and
agreements, such legal opinions from attorneys reasonably acceptable
to Lender and such other evidence as Lender may reasonably request or
require to determine that the foregoing conditions have been
satisfied;
g. all Leases demising any part of the Remaining Property shall remain in
full force and effect and unaffected in any manner which would
constitute a default thereunder as a result of the Out-Parcel Release;
h. all operating agreements affecting all or any part of the Remaining
Property or the Out-Parcel shall remain in full force and effect and
remain otherwise unaffected as a result of the Out-Parcel Release,
except for amendments or modifications of such agreements necessary to
accommodate the Out-Parcel Release, provided such amendments and/or
modifications have been previously approved by Lender in writing,
which approval shall not be unreasonably withheld, conditioned or
delayed;
i. Borrowers shall deliver to Lender evidence reasonably acceptable to
Lender that, other than the applicable Security Instrument, there are
no liens, mortgages, deeds of trust or other security instruments, as
the case may be, encumbering the Individual Property remaining
encumbered by the lien of the applicable Security Instrument,
including the Remaining Property, including without limitation, a
"bring down" or "date down" of the title insurance policies insuring
the lien of the Security Instrument on such Remaining Property;
provided, however, after prior written approval of Lender, which
approval shall not be unreasonably withheld, conditioned or delayed,
the Lien of the Security Instrument on the Remaining Property shall be
subordinated to any easements or access or use agreements created for
the benefit of the Out-Parcel which was the subject of the Out-Parcel
Release, provided said easements and/or agreements (i) are reasonably
necessary for the operation of the Out-Parcel and (ii) do not, in the
aggregate, materially adversely effect (A) the value or operation of
the Remaining Property or (B) Borrower's ability to repay its
obligations hereunder in a timely manner;
j. Borrower shall simultaneously with the Out-Parcel Release transfer
title to the Out-Parcel to a Person other than any Borrower or any
Principal ("Release Premises Transferee") and such Release Premises
Transferee shall assume all obligations and liabilities (other than
those related to the Note, this Agreement or any of the other Loan
Documents) related to the Out-Parcel, if any, from and after the date
of such transfer and such third party Release Premises Transferee
shall erect and operate additional structures whose use is consistent
with the use of the Individual Property;
k. Borrower shall pay all of Lender's reasonable out-of-pocket costs and
expenses (including reasonable counsel fees and disbursements)
incurred in connection with Lender's review of the foregoing items,
the determination of the satisfaction of such conditions and otherwise
incurred in connection with the Out-Parcel Release, but Borrower shall
not be obligated to pay any release fee in connection therewith;
l. Borrower shall pay to Lender the Out-Parcel Release Premium;
m. Borrower delivers to Lender a legal opinion reasonably satisfactory to
Lender from a law firm reasonably acceptable to Lender, stating among
other things, that the tax qualification and status of the REMIC Trust
will not be adversely affected or impaired as a result of the Out-
Parcel Release; and
n. Borrower delivers to Lender any other documents, instruments,
information and approvals that Lender may reasonably request.
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Lender shall release such Out-Parcel from the Lien of the applicable
Security Instrument, promptly after all of the requirements of this Section 2.7
have been satisfied.
All instruments of release shall be in duly recordable form and
contain such covenants, conditions and restrictions and shall reserve such
rights and easements with respect to the Out-Parcel as are necessary to protect
and preserve Lender's interests in the Remaining Property after any such
release.
III. CASH MANAGEMENT
---------------
Section 3.1 Establishment of Accounts.
-------------------------
(a) Borrower shall, simultaneously herewith, (i) establish one or more
accounts (individually and collectively, the "Property Account") with Property
Account Bank into which Borrower shall deposit, or cause to be deposited, all
Gross Income from Operations, and (ii) execute an agreement with Lender and the
Property Account Bank providing for the control of the Property Account
substantially in the form of Exhibit A attached herewith (the "Property Account
Agreement").
(b) In addition, Borrower shall establish accounts with the Lockbox Bank
(the "Lockbox Account"), into which Borrower shall deposit or cause to be
deposited all sums on deposit in the Property Account, in accordance with
Sections 3.2 and 3.6 hereof. The Lockbox Bank shall establish the following
Accounts (which may be book entry sub-accounts) into which Gross Income from
Operations shall be deposited or allocated:
(i) An account with Lockbox Bank into which Borrower shall
deposit, or cause to be deposited, the Monthly Tax Deposit (the "Tax
Account");
(ii) An account with Lockbox Bank into which Borrower shall
deposit, or cause to be deposited, the Monthly Insurance Premium Deposit
(the "Insurance Premium Account");
(iii) An account with Lockbox Bank into which Borrower shall
deposit, or cause to be deposited, the Monthly Debt Service Payment Amount
(the "Debt Service Account");
(iv) An account with Lockbox Bank into which Borrower shall
deposit, or cause to be deposited, the Replacement Reserve Deposit (the
"Replacement Reserve Account");
(v) An account with Lockbox Bank into which Borrower shall
deposit, or cause to be deposited, the Required Repair Fund (the "Required
Repair Account");
(vi) An account with Lockbox Bank into which Borrower shall
deposit, or cause to be deposited, the Monthly Ground Rent Deposit (the
"Ground Rent Account").
Section 3.2 Deposits into Lockbox Account. (a) Borrower represents,
-----------------------------
warrants and covenants that (i) Borrower shall, or shall cause Manager to,
deposit all Gross Income from Operations into the Property Account within one
(1) Business Day (or with respect to the San ▇▇▇▇ Property only, one (1) Puerto
Rico Business Day) of receipt, (ii) Borrower shall instruct the Manager to
deposit all Gross Income from Operations collected by Manager, if any, pursuant
to the Management Agreement into the Property Account within one (1) Business
Day (or with respect to the San ▇▇▇▇ Property only, one (1) Puerto Rico Business
Day) of receipt, (iii) Borrower shall send a notice, substantially in the form
of Exhibit C, to all tenants now or hereafter occupying space at each Individual
Property directing them to pay all rent and other sums due under the lease to
which they are a party into the Property Account, (iv) Borrower will deposit all
Gross Income from Operations it shall receive from the Property, if any, into
the Property Account within one (1) Business Day (or with respect to the San
▇▇▇▇ Property only, one (1) Puerto Rico Business Day) of receipt, (v) Borrower
shall deposit all Accounts Receivable for the Property into the Property Account
within one (1) Business Day (or with respect to the San ▇▇▇▇ Property only, one
(1) Puerto Rico Business Day) of receipt, (vi) Borrower shall send a notice,
substantially in the form of Exhibit D, to all consumer credit/ charge card
organizations or entities which sponsor or administer such cards (including the
American Express Card, the Visa Card and the
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Mastercard) as are accepted for payment at the Property, directing them to pay
all sums due to Borrower (or to Manager, as the case may be), directly to the
Property Account, (vii) there shall be no other accounts maintained by Borrower
or any other Person into which revenues from the ownership and operation of the
Properties are directly deposited, and (viii) neither Borrower nor any other
Person shall open any other such account with respect to the direct deposit of
income in connection with the Properties. Until deposited into the Property
Account, any Rents and other revenues from the Properties held by Borrower shall
be deemed to be Collateral and shall be held in trust by it for the benefit, and
as the property, of Lender and shall not be commingled with any other funds or
property of Borrower.
(b) Borrower represents, warrants and covenants that, (i) Borrower will
continue to deposit all Gross Income from Operations it receives into the
Property Account, (ii) Borrower, or Lender on behalf of Borrower, shall instruct
the Manager to continue to deposit all Gross Income from Operations and all
other sums collected by Manager, if any, pursuant to the Management Agreement
into the Property Account and (iii) immediately upon the occurrence of a
Triggering Event, Borrower, or Lender on behalf of Borrower, shall send notice
to the Property Account Bank indicating that Borrower's rights in the Property
Account have been suspended.
(c) Borrower warrants and covenants that it shall not rescind, withdraw or
change any notices or instructions required to be sent by it pursuant to this
Section 3.2 without Lender's prior written consent, which consent shall not be
unreasonably withheld, delayed or conditioned.
The Triggering Event shall be deemed cured (unless the cause of such
Triggering Event was the occurrence of an Event of Default) on the first monthly
test date on which the Debt Service Coverage Ratio for the twelve (12) full
calendar months immediately preceding the date of calculation is equal to or
greater than the Required Ratio and in connection with such cure Lender shall
send a notice to the Property Account Bank indicating that all of Borrower's
rights in the Property Account have been reinstated. The Required Ratio may be
obtained by, (i) prepaying the Loan (or a portion thereof) subject to the terms
of this Agreement, the Note or any of the other Loan Documents (the amount of
such paydown, the "Paydown Amount"), (ii) posting cash collateral or a Letter of
Credit in the Paydown Amount) or (iii) improved performance of the Properties (a
"Performance Cure"). In the event Borrower has cured the Triggering Event by
posting cash collateral or a Letter of Credit in the Paydown Amount and the
performance of the Properties improve so that the Required Ratio is maintained
without the cash collateral or Letter of Credit, as applicable, Lender shall
promptly return the applicable cash collateral or Letter of Credit to Borrower
upon Borrower's written request therefor. Borrower's right to cure the
Triggering Event shall be limited to two (2) times in each calendar year. In the
event that (i) Borrower posts cash collateral or a Letter of Credit in the
Paydown Amount and a subsequent a Performance Cure occurs and (ii) Borrower does
not request the return of the cash collateral or Letter of Credit as permitted
hereunder, the occurrence of the Performance Cure (and the continued posting of
the applicable cash collateral or Letter of Credit) shall not constitute a
second cure for the purpose of the immediately preceding sentence
Section 3.3 Account Name. (a) The Property Account, the Lockbox Account,
------------
the Tax Account, the Insurance Premium Account, the Replacement Reserve Account,
the Required Repair Account, the Ground Rent Account, and the Debt Service
Account, shall each be in the name of Borrower for the benefit of Lender as
mortgagee.
(b) In the event Lender transfers or assigns the Loan, Property
Account Bank and Lockbox Bank, at Lender's request, shall change the name of
each account to the name of the transferee or assignee. In the event Lender
retains a servicer to service the Loan, Property Account Bank and Lockbox Bank,
at Lender's request, shall change the name of each account to the name of the
servicer, as agent for Lender.
Section 3.4 Eligible Accounts. Borrower, Property Account Bank and
-----------------
Lockbox Bank shall maintain each Account as an Eligible Account.
Section 3.5 Permitted Investments. Sums on deposit in any Account may be
---------------------
invested in Permitted Investments provided (i) such investments are then
regularly offered by Property Account Bank or Lockbox Bank, as the case may be,
for accounts of this size, category and type, (ii) such investments are
permitted by applicable federal, Commonwealth of Puerto Rico, State and local
rules, regulations and laws, (iii) the maturity date of the Permitted Investment
is not later than the date on which sums in the applicable Account are required
for payment of an obligation
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for which such Account was created, and (iv) no Event of Default shall have
occurred and be continuing. Borrower shall have the right to direct Property
Account Bank or Lockbox Bank, as the case may be, to invest sums on deposit in
such Accounts (other than the Property Account and the Lockbox Account) in
Permitted Investments. All income earned from Permitted Investments shall be
property of Borrower. Borrower hereby irrevocably authorizes and directs
Property Account Bank or Lockbox Bank, as the case may be, to hold any income
earned from Permitted Investments as part of the Accounts. Borrower shall be
responsible for payment of any federal, State or local income or other tax
applicable to income earned from Permitted Investments. No other investments of
the sums on deposit in the Accounts shall be permitted except as set forth in
this Section 3.5. Lender shall not be liable for any loss sustained on the
investment of any funds constituting the Reserve Funds or of any funds deposited
in the related Accounts.
Section 3.6 The Initial Deposits.
--------------------
Upon the occurrence of a Triggering Event, Lender shall determine, in
its reasonable discretion, the initial deposit amounts (the "Initial Deposits")
required to be deposited in each of the Tax Account, the Insurance Premium
Account, the Replacement Reserve Account, the Required Repair Account, the
Ground Rent Account and shall notify Borrower of such amounts. Borrower shall
deposit the respective Initial Deposits into each Account.
Section 3.7 Transfer To and Disbursements from the Lockbox Account.
------------------------------------------------------
After the occurrence of a Triggering Event, on each Business Day (or in the case
of the San ▇▇▇▇ Property only, on each Puerto Rico Business Day), Property
Account Bank shall transfer, or Borrower shall transfer or cause to be
transferred, all funds on deposit in the Property Account to the Lockbox
Account.
(a) Lockbox Bank shall withdraw all funds on deposit in the Lockbox
Account on each Business Day of each month,
(b) Lockbox Bank shall disburse the funds in the Lockbox Account in
following order of priority:
(i) First, funds sufficient to pay the Monthly Ground Rent
Deposit shall be deposited in the Ground Rent Account;
(ii) Second, funds sufficient to pay the Monthly Tax Deposit
shall be deposited in the Tax Account;
(iii) Third, funds sufficient to pay the Monthly Insurance Premium
Deposit shall be deposited in the Insurance Premium Account;
(iv) Fourth, funds sufficient to pay the Monthly Debt Service
Payment Amount shall be deposited into the Debt Service Account to be
applied (A) first, to the payment of accrued and unpaid interest computed
at the Applicable Interest Rate; and (B) second to the Monthly Scheduled
Amortization Payment and the reduction of the principal sum;
(v) Fifth, funds sufficient to pay any required Replacement
Reserve Deposit shall be deposited in the Replacement Reserve Account;
(vi) Sixth, funds sufficient to pay any interest accruing at the
Default Rate, and late payment charges, if any, shall be deposited in the
Debt Service Account;
(vii) Seventh, to the payment of Lockbox Bank for fees and
expenses incurred in connection with this Agreement and the accounts
established hereunder; and
(viii) Eighth, provided no Event of Default has occurred and is
continuing, all amounts remaining in the Lockbox Account after deposits for
items (i) through (vii) for the current month and all prior months shall be
disbursed to Borrower in accordance with Borrower's written instructions.
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Section 3.8 Withdrawals From the Tax Account and the Insurance Premium
----------------------------------------------------------
Account. Lender shall have the right to withdraw funds from the Tax Account to
-------
pay Taxes on or before the date Taxes are due and payable. Lender shall have the
right to withdraw funds from the Insurance Premium Account to pay Insurance
Premiums on or before the date Insurance Premiums are due and payable. Lockbox
Bank shall disburse funds from the Tax Account and the Insurance Premium Account
in accordance with Lender's written request therefor on the Business Day
following Lockbox Bank's receipt of such written request.
Section 3.9 Withdrawals from the Replacement Reserve Account. Lender
------------------------------------------------
shall disburse funds on deposit in the Replacement Reserve Account in accordance
with the provisions of Section 7.3 hereof.
Section 3.10 Withdrawals from the Debt Service Account. Lender shall have
-----------------------------------------
the right to withdraw funds from the Debt Service Account to pay the Monthly
Debt Service Payment Amount on or after the date when due, together with any
late payment charges or interest accruing at the Default Rate.
Section 3.11 Withdrawals from the Ground Rent Account. Lender shall have
----------------------------------------
the right to withdraw funds from the Ground Rent Account in accordance with
Section 7.6 hereof.
Section 3.12 Withdrawals from the Property Account. So long as no
-------------------------------------
Triggering Event has occurred and remains uncured, Borrower shall have the right
to withdraw funds from the Property Account; provided, however, after the
occurrence of a Triggering Event, Borrower may withdraw from the Property
Account sums necessary for the operation of the Properties provided (i) such
sums are approved to be spent pursuant to the Annual Budget and (ii) Borrower
has received Lender's prior written consent to each such withdrawal, which
consent shall not be unreasonably withheld, conditioned or delayed.
Section 3.13 Sole Dominion and Control. Borrower acknowledges and agrees
-------------------------
that the Accounts are subject to the sole dominion, control and discretion of
Lender, its authorized agents or designees, including Property Account Bank and
Lockbox Bank, subject to the terms hereof; and Borrower shall have no right of
withdrawal with respect to any Account except with the prior written consent of
Lender or as otherwise provided herein.
Section 3.14 Security Interest. Borrower hereby grants to Lender a first
-----------------
priority security interest in each of the Accounts and the Account Collateral as
additional security for the Debt.
Section 3.15 Rights on Default. Notwithstanding anything to the contrary
-----------------
in this Section, upon the occurrence and during the continuance of an Event of
Default, Lender shall promptly notify Property Account Bank and Lockbox Bank in
writing of such Event of Default and, without notice from Property Account Bank,
Lockbox Bank or Lender, (a) Borrower shall have no further right in respect of
(including, without limitation, the right to instruct Lockbox Bank or Property
Account Bank to transfer from) the Accounts, (b) Lender may direct Property
Account Bank or Lockbox Account to liquidate and transfer any amounts then
invested in Permitted Investments to the Accounts or reinvest such amounts in
other Permitted Investments as Lender may reasonably determine is necessary to
perfect or protect any security interest granted or purported to be granted
hereby or pursuant to the other Loan Documents or to enable Property Account
Bank or Lockbox Account, as agent for Lender, or Lender to exercise and enforce
Lender's rights and remedies hereunder or under any other Loan Document with
respect to any Account or any Account Collateral, and (c) Lender shall have all
rights and remedies with respect to the Accounts and the amounts on deposit
therein and the Account Collateral as described in this Agreement and in the
Security Instruments, in addition to all of the rights and remedies available to
a secured party under the UCC, and, notwithstanding anything to the contrary
contained in this Agreement or in the Security Instruments, may apply the
amounts of such Accounts as Lender determines in its sole discretion including,
but not limited to, payment of the Debt.
Section 3.16 Financing Statement; Further Assurances. Borrower shall
---------------------------------------
execute and deliver to Lender for filing a financing statement or statements
under the UCC in connection with any of the Accounts and the Account Collateral
with respect thereto in the form required to properly perfect Lender's security
interest therein. Borrower agrees that at any time and from time to time, at the
expense of Borrower, Borrower will promptly execute and deliver
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all further instruments and documents, and take all further action, that may be
reasonably necessary or desirable, or that Lender may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby (including, without limitation, any security interest in and to
any Permitted Investments) or to enable Lockbox Bank or Lender to exercise and
enforce its rights and remedies hereunder with respect to any Account or Account
Collateral.
Section 3.17 Borrower's Obligation Not Affected. The insufficiency of
----------------------------------
funds on deposit in the Accounts shall not absolve Borrower of the obligation to
make any payments, as and when due pursuant to this Agreement and the other Loan
Documents, and such obligations shall be separate and independent, and not
conditioned on any event or circumstance whatsoever.
Section 3.18 Payments Received Under this Agreement. Notwithstanding
--------------------------------------
anything to the contrary contained in this Agreement or the other Loan
Documents, and provided no Event of Default has occurred and is continuing,
Borrower's obligations with respect to the monthly payment of Debt Service and
amounts due for the Ground Lease Escrow Fund, Tax and Insurance Escrow Fund,
Replacement Reserve Fund and any other payment reserves established pursuant to
this Agreement or any other Loan Document shall (provided Lender is not
prohibited from withdrawing or applying any funds in the Accounts by operation
of law or otherwise) be deemed satisfied (and no Default or Event of Default
shall result therefrom) to the extent sufficient amounts are deposited in the
Lockbox Account established pursuant to this Agreement to satisfy such
obligations on the dates each such payment is required, regardless of whether
any of such amounts are so applied by Lender.
IV. REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4.1 Borrower Representations. Borrower represents and warrants
------------------------
as of the date hereof that:
4.1.1 Organization. Borrower is duly organized and is validly existing and
------------
in good standing in the jurisdiction in which it is organized, with requisite
power and authority to own its properties and to transact the businesses in
which it is now engaged. Borrower is duly qualified to do business and is in
good standing in each jurisdiction where it is required to be so qualified in
connection with its properties, businesses and operations. Borrower possesses
all rights, licenses, permits and authorizations, governmental or otherwise,
necessary to entitle it to own its properties and to transact the businesses in
which it is now engaged. Attached hereto as Schedule IV is an organizational
chart of Borrower.
4.1.2 Proceedings. Borrower has taken all necessary action to authorize
-----------
the execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and such other Loan Documents
have been duly executed and delivered by or on behalf of Borrower and constitute
legal, valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject only to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
4.1.3 No Conflicts. The execution, delivery and performance of this
------------
Agreement and the other Loan Documents by Borrower will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, partnership agreement, management agreement or other
material agreement or instrument to which Borrower is a party or by which any of
Borrower's property or assets is subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over Borrower or
any of Borrower's properties or assets, and any consent, approval,
authorization, order, registration or qualification of or with any court or any
such regulatory authority or other governmental agency or body required for the
execution, delivery and performance by Borrower of this Agreement or any other
Loan Documents has been obtained and is in full force and effect.
-37-
4.1.4 Litigation. Except as disclosed on Schedule VIII attached hereto,
----------
there are no actions, suits or proceedings at law or in equity by or before any
Governmental Authority or other agency now pending or, to the best of Borrower's
knowledge, threatened against or affecting Borrower or any Individual Property,
which actions, suits or proceedings, if determined against Borrower or any
Individual Property, could reasonably be expected to materially adversely affect
the condition (financial or otherwise) or business of Borrower or the condition
or ownership of any Individual Property.
4.1.5 Agreements. Borrower is not a party to any agreement or instrument
----------
or subject to any restriction which could reasonably be expected to materially
and adversely affect Borrower or any Individual Property, or Borrower's
business, properties or assets, operations or condition, financial or otherwise.
Except as disclosed on Schedule IX attached hereto, Borrower is not 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 Borrower or any of the Properties
are bound which could reasonably be expected to materially and adversely affect
Borrower or any Individual Property.
4.1.6 Solvency. Borrower (a) has not entered into the transaction or
--------
executed the Note, this Agreement or any other Loan Documents with the actual
intent to hinder, delay or defraud any creditor and (b) received reasonably
equivalent value in exchange for its obligations under such Loan Documents.
Giving effect to the Loan, the fair saleable value of Borrower's assets exceeds
and will, immediately following the making of the Loan, exceed Borrower's total
liabilities, including, without limitation, subordinated, unliquidated, disputed
and contingent liabilities. The fair saleable value of Borrower's assets is and
will, immediately following the making of the Loan, be greater than Borrower's
probable liabilities, including the maximum amount of its contingent liabilities
on its debts as such debts become absolute and matured. Borrower's assets do not
and, immediately following the making of the Loan will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to incur debt and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such debt and liabilities as they mature (taking into account the timing and
amounts of cash to be received by Borrower and the amounts to be payable on or
in respect of obligations of Borrower). Except as expressly disclosed by
Borrower to Lender in writing, no petition in bankruptcy has been filed against
Borrower or any constituent Person in the last seven (7) years, and neither
Borrower nor any constituent Person in the last seven (7) years has ever made an
assignment for the benefit of creditors or taken advantage of any insolvency act
for the benefit of debtors. Neither Borrower nor any of its constituent Persons
are 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 Borrower's assets or property, and Borrower has no knowledge of any
Person contemplating the filing of any such petition against it or such
constituent Persons.
4.1.7 Full and Accurate Disclosure. No statement of fact made by Borrower
----------------------------
in this Agreement or in any of the other Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading. There is no material
fact presently known to Borrower which has not been disclosed to Lender which
materially adversely affects, or could reasonably be expected to materially
adversely affect, any Individual Property or the business, operations or
condition (financial or otherwise) of Borrower, or Guarantor or Indemnitor.
4.1.8 No Plan Assets. Borrower is not an "employee benefit plan," as
--------------
defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of the
assets of Borrower constitutes or will constitute "plan assets" of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101. In addition, (a)
Borrower is not a "governmental plan" within the meaning of Section 3(32) of
ERISA and (b) transactions by or with Borrower are not subject to State statutes
regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or Section
4975 of the Code currently in effect, which prohibit or otherwise restrict the
transactions contemplated by this Agreement.
4.1.9 Compliance. Except as expressly disclosed in the Physical Condition
----------
Reports, Environmental Reports or Surveys, Borrower and the Properties and the
use thereof comply in all material respects with all applicable Legal
Requirements, including, without limitation, all Environmental Laws, building
and zoning ordinances and codes.
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Borrower is not, in any material respect, in default or violation of any order,
writ, injunction, decree or demand of any Governmental Authority. There has not
been committed by Borrower or, to the best of Borrower's knowledge, any other
Person in occupancy of or involved with the operation or use of the Properties
any act or omission affording the federal government or any other Governmental
Authority the right of forfeiture as against any Individual Property or any part
thereof or any monies paid in performance of Borrower's obligations under any of
the Loan Documents.
4.1.10 Financial Information. All financial data, including, without
---------------------
limitation, the statements of cash flow and income and operating expense, that
have been delivered to Lender in respect of the Properties (i) are true,
complete and correct in all material respects, (ii) accurately represent the
financial condition of the Properties as of the date of such reports in all
material respects, and (iii) have been prepared in accordance with GAAP
throughout the periods covered, except as disclosed therein. Except for
Permitted Encumbrances, Borrower does not have any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrower
and reasonably likely to have a materially adverse effect on any Individual
Property or the operation thereof as hotels except as referred to or reflected
in said financial statements. Since the date of such financial statements, there
has been no materially adverse change in the financial condition, operations or
business of Borrower from that set forth in said financial statements.
4.1.11 Condemnation. Except as disclosed on Schedule X attached hereto, no
------------
Condemnation or other similar proceeding has been commenced or, to Borrower's
best knowledge, is threatened or contemplated with respect to all or any portion
of any Individual Property or for the relocation of roadways providing access to
any Individual Property.
4.1.12 Federal Reserve Regulations. No part of the proceeds of the Loan
---------------------------
will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.
4.1.13 Utilities and Public Access. Except as set forth on Schedule XV
---------------------------
attached hereto, each Individual Property has rights of access to public ways
and is served by public water, sewer, sanitary sewer and storm drain facilities
adequate to service such Individual Property for its respective intended uses.
All public utilities necessary for the full use and enjoyment of each Individual
Property are located either in the public right-of-way abutting such Individual
Property (which are connected so as to serve such Individual Property without
passing over other property) or in recorded easements serving such Individual
Property and such easements are set forth in the respective Title Insurance
Policy. All roads necessary for the use of each Individual Property for their
current respective purposes have been completed, are physically open and
dedicated to public use and have been accepted by all Governmental Authorities.
4.1.14 Not a Foreign Person. Borrower is not a "foreign person" within the
--------------------
meaning of (S) 1445(f)(3) of the Code.
4.1.15 Separate Lots. Each Individual Property is comprised of one (1) or
-------------
more parcels which constitute a separate tax lot or lots and does not constitute
a portion of any other tax lot not a part of such Individual Property.
4.1.16 Assessments. Except as disclosed on Schedule XI or in the Title
-----------
Insurance Policy, there are no material pending or, to the best of Borrower's
knowledge, proposed special or other assessments for public improvements or
otherwise affecting any Individual Property, nor, to the best of Borrower's
knowledge, are there any contemplated improvements to any Individual Property
that may result in such special or other assessments.
4.1.17 Enforceability. The Loan Documents are not subject to any right of
--------------
rescission, set-off, counterclaim or defense by Borrower, including the defense
of usury, and Borrower has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto. Each of the Security Instruments
is enforceable in accordance with their respective terms by Lender (or any
subsequent holder thereof), subject to principles of equity and bankruptcy,
insolvency and other laws generally applicable to creditors' rights and the
enforcement of debtors' obligations.
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4.1.18 No Prior Assignment. There are no prior assignments of the Leases or
-------------------
any portion of the Rents due and payable or to become due and payable which are
presently outstanding.
4.1.19 Insurance. Borrower has obtained and has delivered to Lender
---------
certified copies (or other evidence reasonably acceptable to Lender) of all
insurance policies reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement. Except as disclosed on Schedule XVI
attached hereto, no claims have been made under any such policy, and no Person,
including Borrower, has done, by act or omission, anything which would impair
the coverage of any such policy.
4.1.20 Use of Property. Each Individual Property is used exclusively for
---------------
hotel purposes and other appurtenant and related uses, including, without
limitation, with respect to the San ▇▇▇▇ Property only, a casino.
4.1.21 Certificate of Occupancy; Licenses. Except as expressly set forth in
----------------------------------
a Physical Condition Report, Title Insurance Policy or Survey, all material
certifications, permits, licenses and approvals, including without limitation,
certificates of completion and occupancy permits and any applicable liquor,
hospitality and gaming licenses required for the legal use, occupancy and
operation of each Individual Property as a hotel and casino, if applicable
(collectively, the "Licenses"), have been obtained and are in full force and
effect. Borrower has paid in full all fees and other charges related to the
Licenses which are due and payable as of the date hereof, including, without
limitation, the quarterly payments of the casino franchise fee imposed by Act
No. 221 of May 15, 1948 as amended of the Commonwealth of Puerto Rico. Borrower
shall keep and maintain, or cause to be kept and maintained, all Licenses
necessary for the operation of each Individual Property as a hotel and casino,
if applicable, and pay any fees in connection therewith on or prior to the date
they are due, unless the failure to pay such fees would not be reasonably be
expected to have a material adverse effect on Borrower or any Individual
Property. The use being made of each Individual Property is in conformity with
the certificate of occupancy issued for such Individual Property.
4.1.22 Flood Zone. Except as shown on the Survey for each Individual
----------
Property, none of the Improvements on any Individual Property are located in an
area as identified by the Federal Emergency Management Agency as an area having
special flood hazards and, if so located, the flood insurance required pursuant
to Section 6.1(a)(vii) is in full force and effect with respect to each such
Individual Property.
4.1.23 Physical Condition. Except as expressly set forth in a Physical
------------------
Condition Report, each Individual Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components, are in good condition, order
and repair in all material respects; there exists no structural or other
material defects or damages in any Individual Property, whether latent or
otherwise, and Borrower has not received notice from any insurance company or
bonding company of any defects or inadequacies in any Individual Property, or
any part thereof, which would adversely affect the insurability of the same or
cause the imposition of extraordinary premiums or charges thereon or of any
termination or threatened termination of any policy of insurance or bond. Each
Individual Property is free from damage covered by fire or other casualty. All
liquid and solid waste disposal, septic and sewer systems located on each
Individual Property are in a good and safe condition and repair and in
compliance with all Legal Requirements.
4.1.24 Boundaries. Except as expressly set forth in a Physical Condition
----------
Report, all of the Improvements which were included in determining the appraised
value of each Individual Property lie wholly within the boundaries and building
restriction lines of such Individual Property, and no improvements on adjoining
properties encroach upon such Individual Property, and no easements or other
encumbrances upon the applicable Individual Property encroach upon any of the
Improvements, so as to materially affect the value or marketability of the
applicable Individual Property except those which are insured against by the
Title Insurance Policy.
4.1.25 Leases. No Person has any possessory interest in any Individual
------
Property or right to occupy the same except under and pursuant to the provisions
of the Leases. The current Leases are in full force and effect and, except as
disclosed on Schedule XII attached hereto and to the best of Borrower's
knowledge, there are no material defaults
-40-
thereunder by either party and there are no conditions that, with the
passage of time or the giving of notice, or both, would constitute material
defaults thereunder. Except for security deposits required under the respective
Leases, no Rent has been paid more than one (1) month in advance of its due
date. There are no offsets or defenses to the payment of any portion of the
Rents. Except as set forth on Schedule XIII attached hereto, all work to be
performed by Borrower under each Lease has been performed as required and has
been accepted by the applicable tenant, and any payments, free rent, partial
rent, rebate of rent or other payments, credits, allowances or abatements
required to be given by Borrower to any tenant has already been received by such
tenant. There is no prior sale, transfer or assignment, hypothecation or pledge
of any Lease or of the Rents received therein which is presently outstanding.
Except as set forth on Schedule XIV attached hereto, no tenant under any Lease
has assigned its Lease or sublet all or any portion of the premises demised
thereby, no such tenant holds its leased premises under assignment or sublease,
nor does anyone except such tenant and its employees occupy such leased
premises. No tenant under any Lease has a right or option pursuant to such Lease
or otherwise to purchase all or any part of the leased premises or the building
of which the leased premises are a part. Except as otherwise disclosed in a
tenant estoppel certificate delivered to Lender in connection with the Loan, no
tenant under any Lease has any right or option for additional space in the
Improvements. To the best of Borrower's knowledge, no Hazardous Materials have
been disposed, stored or treated by any tenant under any Lease on or about the
leased premises in violation of Environmental Laws nor does Borrower have any
knowledge of any tenant's intention to use its leased premises for any activity
which, directly or indirectly, involves the use, generation, treatment, storage,
disposal or transportation of any Hazardous Materials in violation of
Environmental Laws.
4.1.26 Survey. The Survey for each Individual Property delivered to
------
Lender in connection with this Agreement does not fail to reflect any material
matter known to Borrower affecting such Individual Property or the title
thereto.
4.1.27 Inventory. Borrower is the owner of all of the equipment and
---------
assets at the Properties (other than equipment leased as permitted hereunder)
and shall not lease any equipment or assets other than as permitted hereunder.
4.1.28 Filing and Recording Taxes. All transfer taxes, deed stamps,
--------------------------
documentary stamps, intangible taxes or other amounts in the nature of transfer
taxes required to be paid by any Person under applicable Legal Requirements
currently in effect in connection with the transfer of the Properties to
Borrower have been or will be paid. All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Security Instruments, have been paid.
4.1.29 Insolvency Opinion. All of the assumptions made in the
------------------
Insolvency Opinion, including, but not limited to, any exhibits attached
thereto, are true and correct in all material respects and any assumptions made
in any subsequent non-consolidation opinion required to be delivered in
connection with the Loan Documents (an "Additional Insolvency Opinion"),
including, but not limited to, any exhibits attached thereto, will have been and
shall be true and correct in all material respects.
4.1.30 Management Agreement. The Management Agreement is in full force
--------------------
and effect and there is no default thereunder by any party thereto and no event
has occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder.
4.1.31 Illegal Activity. No portion of any Individual Property has been
----------------
or will be purchased with proceeds of any illegal activity and to the best of
Borrower's knowledge, there are no illegal activities or activities relating to
any controlled substances at any Individual Property.
4.1.32 No Change in Facts or Circumstances; Disclosure. All information
-----------------------------------------------
submitted by Borrower to Lender and in all financial statements, rent rolls,
reports, certificates and other documents submitted in connection with the Loan
or in satisfaction of the terms thereof and all statements of fact made by
Borrower in this Agreement or in any
-41-
other Loan Document, are accurate, complete and correct in all material
respects. There has been no material adverse change in any condition, fact,
circumstance or event that would make any such information inaccurate,
incomplete or otherwise misleading in any material respect or that otherwise
materially and adversely affects or could reasonably be expected to materially
and adversely affect the use, operation or value of the Properties or the
business operations or the financial condition of Borrower. Borrower has
disclosed to Lender all material facts and has not failed to disclose any
material fact that could cause any Provided Information or representation or
warranty made herein to be materially misleading.
4.1.33 Investment Company Act. Borrower is not (a) an "investment
----------------------
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (b) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (c) subject to any
other federal or State law or regulation which purports to restrict or regulate
its ability to borrow money.
4.1.34 Principal Place of Business. Each Borrower's principal place of
---------------------------
business as of the date hereof is the address set forth on Schedule XVII
attached hereto.
4.1.35 Single Purpose Entity. Except as otherwise permitted pursuant to
---------------------
the terms of the Loan Documents, (i) each Maker (other than ▇▇▇▇▇▇▇ de San ▇▇▇▇
Associates) covenants and agrees that it has not and shall not, (ii) each of
▇▇▇▇▇▇▇ de San ▇▇▇▇ Associates and Maryland Guarantor agrees that it shall not,
(iii) each Maker and Maryland Guarantor agrees that its general partner(s), if
such Maker or Maryland Guarantor, as applicable, is a partnership, or its
managing member(s) or single member (other than W-Atlanta Manager Corp. and
W-Boston Manager Corp.), as applicable, if such Maker or Maryland Guarantor, as
applicable, is a limited liability company (in each case, "Other Principals")
has not and shall not and (iv) each Maker and Maryland Guarantor agrees that
W-Atlanta Manager Corp. and W-Boston Manager Corp. (the "Atlanta/Boston
Principals"; together with the Other Principals, individually and collectively
the, "Principal"), shall not:
(a) with respect to each Maker (other than W-Baltimore, LLC)
and Maryland Guarantor, engage in any business or activity other than the
acquisition, development, ownership, operation, leasing, managing and
maintenance of the applicable Properties, and entering into the Loan, and
activities incidental thereto and with respect to each Principal, engage in any
business or activity other than the ownership of its interest in Maker or
Maryland Guarantor, as applicable, and activities incidental thereto including
the management of the applicable Properties; and with respect to W-Baltimore,
LLC, engage in any business or activity other than entering into the Loan and
activities incidental thereto and with respect to its Principal engage in any
business or activity other than the ownership of its interest in W-Baltimore,
LLC and activities incidental thereto;
(b) with respect to each Maker (other than W-Baltimore, LLC)
and Maryland Guarantor, acquire or own any material assets other than (i) the
applicable individual Property, and (ii) such incidental Personal Property as
may be necessary for the operation of the applicable Individual Property and
with respect to each Principal, acquire or own any material asset other than its
interest in the applicable Maker or Maryland Guarantor, as applicable and with
respect to the W-Baltimore, LLC, acquire or own any material assets;
(c) merge into or consolidate with any person or entity or, to
the fullest extent that any of the following may be waived or prohibited under
Applicable Laws, dissolve, terminate or liquidate in whole or in part, transfer
or otherwise dispose of all or substantially all of its assets or change its
legal structure;
(d) (i) fail to observe its organizational formalities or
preserve its existence as an entity duly organized, validly existing and in good
standing (if applicable) under the laws of the jurisdiction of its organization
or formation, and qualification to do business in the State where the Property
is located, if applicable, or (ii) without the prior written consent of Lender,
which consent shall not be unreasonably withheld, conditioned or delayed, amend,
modify, terminate or fail to comply with the provisions of each Borrower's
partnership agreement, articles or certificate of incorporation, articles of
organization or similar organizational documents, as the case may be, or of
Principal's
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partnership agreement, articles of organization or similar organizational
documents, as the case may be, whichever is applicable, except to the extent
that any amendment to a filed certification may be required by Applicable Law;
(e) except for ▇▇▇▇▇▇ Real Estate Group Joint Venture's
ownership of W-Baltimore, LLC, own any subsidiary or make any investment in, any
person or entity without the consent of Lender;
(f) commingle its assets with the assets of any of its
members, general partners, Affiliates, principals or of any other person or
entity, participate in a cash management system with any other entity or person
or fail to use its own separate stationery, telephone number, invoices and
checks;
(g) with respect to each Maker (other than the W-Baltimore,
LLC), incur any debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation other than in connection with the Maryland
Guaranty), other than the Debt, except for (1) trade payables in the ordinary
course of its business of owning and operating the Individual Property or
Properties as applicable, provided that such debt (i) is not evidenced by a
note, (ii) is paid within sixty (60) days of the date incurred (unless the same
are being contested in accordance with the terms hereof), (iii) does not exceed,
in the aggregate, four percent (4%) of the applicable Allocated Loan Amount and
(iv) is payable to trade creditors and in amounts as are normal and reasonable
under the circumstances and (2) Permitted FF&E Financing and with respect to
each Principal, incur any debt secured or unsecured, direct or contingent
(including guaranteeing any obligations) and with respect to the Maryland
Guarantor, incur any debt secured or unsecured, direct or contingent except for
the Maryland Guaranty, Permitted FF&E Financing and trade payables in the
ordinary course of business of owning and operating the Maryland Property,
provided that such debt (A) is not evidenced by a note, (B) is paid within sixty
(60) days of the date incurred, (C) does not exceed four percent (4%) of the
Allocated Loan Amount for the Maryland Property and (D) is payable to trade
creditors and in amounts as are normal and reasonable under the circumstances
with respect to the W-Baltimore, LLC, incur any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation) other than the
Debt, provided, however, the limitations set forth in (ii) and (iii) above and
(B) and (C) above shall not apply to alterations and Restorations made in
accordance or contemplated by the terms of this Agreement;
(h) become insolvent and fail to pay its debts and liabilities
(including, as applicable, shared personnel and overhead expenses) from its
assets as the same shall become due (except for debts and liabilities being
contested by Maker, or Maryland Guarantor, as applicable, in good faith and in
accordance with the terms hereof);
(i) (i) fail to maintain its records (including financial
statements), books of account and bank accounts separate and apart from those of
the members, general partners, principals and affiliates of each Borrower or of
each Principal, as the case may be, the Affiliates of a member, general partner
or principal of each Borrower or of each Principal, as the case may be, and any
other person or entity, (ii) permit its assets or liabilities to be listed as
assets or liabilities on the financial statement of any other entity or person
or (iii) include the assets or liabilities of any other person or entity on its
financial statements except as either of (ii) or (iii) of this Subsection may be
required by GAAP and specifically permitted consolidated financial statements;
provided, however, that any such consolidated financial statement shall contain
a note indicating that its separate assets and liabilities are neither available
to pay the debts of the consolidated entity nor constitute obligations of the
consolidated entity;
(j) enter into any contract or agreement with any member,
general partner, principal or Affiliate of any Maker or Maryland Guarantor or of
any Principal, as the case may be, Guarantor or Indemnitor, or any member,
general partner, principal or affiliate thereof (other than a business
management services agreement with an affiliate of a Maker or Maryland
Guarantor, provided that (i) the manager, or equivalent thereof, under such
agreement holds itself out as an agent of the Maker or Maryland Guarantor, and
(ii) the agreement meets the standards set forth in this subsection (j)
following this parenthetical), except (A) upon terms and conditions that are
commercially reasonable, intrinsically fair and substantially similar to those
that would be available on an arms-length basis with third parties other than
any member, general partner, principal or Affiliate of such Maker or Maryland
Guarantor, or of such Principal, as the case may be, Guarantor or Indemnitor, or
any member, general partner, principal or Affiliate thereof, (B) in connection
with this Agreement and (C) in connection with that certain Lease with El
Conquistador Country Club, Inc. at the San ▇▇▇▇ Property;
-43-
(k) to the fullest extent that the following may be waived or
prohibited by Applicable Law, seek the dissolution or winding up in whole, or in
part, of any Maker or Maryland Guarantor, or of any Principal, as the case may
be;
(l) fail to correct any known misunderstandings regarding the
separate identity of any Maker or Maryland Guarantor, or of Principal, as the
case may be, or any member, general partner, principal or Affiliate thereof or
any other person;
(m) except with respect to the Loan, guarantee or become
obligated for the debts of any other entity or person or hold itself out to be
responsible for the debts of another entity or person;
(n) make any loans or advances to any third party, including
any member, general partner, principal or Affiliate of any Maker or Maryland
Guarantor or of any Principal, as the case may be, or any member, general
partner, principal or Affiliate thereof, and shall not acquire obligations
(except in connection with the Maryland Guaranty) or securities of any member,
general partner, principal or Affiliate of any Maker or Maryland Guarantor, or
any Principal, as the case may be, or any member, general partner, or Affiliate
thereof;
(o) fail to file its own tax returns or be included on the tax
returns of any other person or entity except as required by applicable law;
(p) fail either to hold itself out to the public as a legal
entity separate and distinct from any other entity or person or to conduct its
business solely in its own name or a name franchised or licensed to it by an
entity other than an Affiliate of any Maker or Maryland Guarantor or of any
Principal (except for services rendered and names licensed, franchised or
furnished under business management service agreements with an Affiliate that
complies with the terms hereof, so long as the manager, or equivalent thereof,
under such business management services agreements holds itself out as an agent
of Maker or Maryland Guarantor, as applicable), as the case may be, and not as a
division or part of any other entity in order not (i) to mislead others as to
the identity with which such other party is transacting business, or (ii) except
with respect to the Maryland Guarantor to suggest that any Maker or Maryland
Guarantor or any Principal, as the case may be, is responsible for the debts of
any third party (including any member, general partner, principal or Affiliate
of any Maker or Maryland Guarantor, or of any Principal, as the case may be, or
any member, general partner, principal or Affiliate thereof);
(q) fail to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations;
(r) share any common logo with or hold itself out as or be
considered as a department or division of (i) any general partner, principal,
member or Affiliate of a Maker or Maryland Guarantor or of Principal, as the
case may be, (ii) any Affiliate of a general partner, principal or member of a
Maker or Maryland Guarantor or of a Principal, as the case may be, or (iii) any
other person or entity (except for services rendered and names licensed,
franchised or furnished under business management service agreements with an
Affiliate that complies with the terms hereof, so long as the manager, or
equivalent thereof, under such business management services agreements holds
itself out as an agent of Maker or Maryland Guarantor);
(s) fail to allocate fairly and reasonably any overhead
expenses that are shared with an Affiliate, including paying for office space
and services performed by any employee of an Affiliate;
(t) except with respect to the Maryland Guaranty and as
otherwise expressly permitted hereunder, pledge its assets for the benefit of
any other person or entity, other than with respect to the Loan;
(u) fail to maintain a sufficient number of employees in light
of its contemplated business operations;
-44-
(v) fail to provide in its (i) articles of organization,
certificate of formation and/or operating agreement, as applicable, if it is a
limited liability company, (ii) partnership agreement, if it is a partnership or
(iii) certificate of incorporation, if it is a corporation, that for so long as
the Loan is outstanding pursuant to the Note, this Agreement and the other Loan
Documents, it shall not file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any applicable insolvency,
bankruptcy, liquidation or reorganization statute, or make an assignment for the
benefit of creditors without the affirmative vote of the Independent Director
and of all other general partners/managing members/directors;
(w) fail to hold its assets in its own name;
(x) if any Maker or Maryland Guarantor is a corporation,
fail to consider the interests of its creditors in connection with all corporate
actions to the extent permitted by applicable law;
(y) have any of its obligations guaranteed by an Affiliate,
except for (i) each Borrower's obligations under the Loan Documents, (ii) the
Guaranty of Recourse Obligations of Borrower, (iii) the Environmental Indemnity,
given by Wyndham, (iv) the Maryland Guaranty given by the Maryland Guarantor and
(v) Wyndham's indemnification of the Property Account Bank;
(z) violate or cause to be violated the assumptions made with
respect to Maker, Maryland Guarantor and Principal in the Insolvency Opinion or
any Additional Insolvency Opinion, as applicable;
(aa) with respect to each Principal, fail at any time to have
at least two independent directors (collectively, the "Independent Director")
that each are not and have not been for at least five (5) years: (a)
stockholders, directors (with the exception of serving as the Independent
Director of any Principal or any bankruptcy remote special purpose entity which
is an Affiliate of any Principal or Maker or Maryland Guarantor), officers,
employees, partners, members, attorneys or counsel of Maker, Maryland Guarantor
or of Principal or any Affiliate of either of them; (b) customers (other than as
hotel guests), suppliers or other person who derives more than one percent (1%)
of its profits or revenues (other than any fee paid to such director as
compensation for such director to serve as an Independent Director) from its
activities with any Maker, Maryland Guarantor, any Principal or any Affiliate of
any of them (a "Business Party"); (c) a Person or other entity controlling or
under common control with any such stockholder, partner, member, director,
officer, attorney, counsel or Business Party; or (d) a member of the immediate
family of any such stockholder, director, officer, employee, partner, member,
attorney, counsel or Business Party. (As used herein, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of management, policies or activities of a Person or entity, whether
through ownership of voting securities, by contract or otherwise); or
(bb) with respect to each Principal, permit its board of
directors to take any action which, under the terms of any certificate of
incorporation, by-laws or any voting trust agreement with respect to any common
stock, requires the unanimous vote of one hundred percent (100%) of the members
of the board unless at the time of such action there shall be at least two
members who are Independent Directors.
4.1.36 Business Purposes. The Loan is solely for the business purpose
-----------------
of Maker, and is not for personal, family, household, or agricultural purposes.
4.1.37 Taxes. Except as set for on Schedule XVIII hereto, Borrower,
-----
any Guarantor and any Indemnitor have filed all federal, State, county,
municipal, and city income and other tax returns required to have been filed by
them and have paid all taxes and related liabilities which have become due
pursuant to such returns or pursuant to any assessments received by them (except
for such Taxes if the failure to pay such Taxes would not have a material
adverse effect on Borrower or any of the Properties) . Neither Borrower, any
Guarantor nor any Indemnitor knows of any basis for any additional assessment in
respect of any such taxes and related liabilities for prior years.
4.1.38 Forfeiture. There has not been and shall never be committed
----------
by Borrower or, to the best of Borrower's knowledge, any other person in
occupancy of or involved with the operation or use any of the Properties
-45-
any act or omission affording the federal government or any State or local
government the right of forfeiture as against any of the Properties or any part
thereof or any monies paid in performance of Borrower's obligations under the
Note, this Agreement or the other Loan Documents. Borrower hereby covenants and
agrees not to commit, permit or suffer to exist any act or omission affording
such right of forfeiture.
4.1.39 Environmental Representations and Warranties. Borrower
--------------------------------------------
represents and warrants, based upon an environmental site assessment of each
Individual Property and to the best of Borrower knowledge, that: (a) there are
no Hazardous Materials or underground storage tanks in, on, or under any of the
Properties, except those that are in compliance with Environmental Laws and with
permits issued pursuant thereto (if such permits are required) or fully
disclosed to Lender in writing pursuant to the written reports resulting from
the environmental site assessments of the Properties delivered to Lender (the
"Environmental Reports"); (b) there are no past or present Releases of Hazardous
Materials in violation of any Environmental Law and which would require
remediation by a Governmental Authority in, on, under or from any of the
Properties except as described in the Environmental Reports; (c) there is no
Release of Hazardous Materials migrating to any of the Properties except as
described in the Environmental Reports; (d) there is no past or present
non-compliance with Environmental Laws, or with permits issued pursuant thereto,
in connection with any of the Properties except as described in the
Environmental Reports; (e) Borrower has not received any written notice or other
communication from any Person or entity (including but not limited to a
governmental entity) requiring remediation of Hazardous Materials in, on, under
or from any of the Properties; and (f) Borrower has truthfully and fully
provided to Lender, in writing, any and all information relating to
environmental conditions in, on, under or from any of the Properties known to
Borrower or contained in Borrower's current files and records, including but not
limited to any reports relating to Hazardous Materials in, on, under or
migrating to or from any of the Properties and/or to the environmental condition
of the Properties.
4.1.40 Management Agreement. The Management Agreement is in full force
--------------------
and effect, all fees and other sums due thereunder have been paid in full to
date, and neither Borrower or Manager is in default thereunder.
4.1.41 Intentionally Omitted.
---------------------
4.1.42 Ground Lease Representations. (a) The Ground Lease is in full
----------------------------
force and effect and has not been modified or amended in any manner whatsoever,
(b) there are no defaults under the Ground Lease and no event has occurred which
but for the passage of time, or notice, or both would constitute a default under
the Ground Lease, (c) all rents, additional rents and other sums due and payable
under the Ground Lease have been paid in full, and (d) neither Borrower nor the
landlord under the Ground Lease has commenced any action or given or received
any notice for the purpose of terminating the Ground Lease.
Section 4.2 Survival of Representations. Borrower agrees that all of
---------------------------
the representations and warranties of Borrower set forth in Section 4.1 and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any amount remains owing to Lender under this Agreement or any of the
other Loan Documents by Borrower. All representations, warranties, covenants and
agreements made in this Agreement or in the other Loan Documents by Borrower
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
V. BORROWER COVENANTS
------------------
Section 5.1 Affirmative Covenants. From the date hereof and until
---------------------
payment and performance in full of all obligations of Borrower under the Loan
Documents or the earlier release of the Liens of all Security Instruments
encumbering the Properties (and all related obligations) in accordance with the
terms of this Agreement and the other Loan Documents, Borrower hereby covenants
and agrees with Lender that:
5.1.1 Existence; Compliance with Legal Requirements. Borrower shall do
---------------------------------------------
or cause to be done all things necessary to preserve, renew and keep in full
force and effect its existence, rights, licenses, permits and franchises and
comply in all material respects with all Legal Requirements applicable to it and
the Properties. There shall never be committed by Borrower or any other Person
in occupancy of or involved with the operation or use of the Properties any act
or omission affording the federal government or any State or local government
the right of forfeiture against
-46-
any Individual Property or any part thereof or any monies paid in performance of
Borrower's obligations under any of the Loan Documents. Borrower hereby
covenants and agrees not to commit, permit or suffer to exist any act or
omission affording such right of forfeiture. Borrower shall at all times
maintain, preserve and protect all material franchises and trade names and
preserve all the remainder of its property used or useful in the conduct of its
business and shall keep the Properties in good working order and repair, and
from time to time make, or cause to be made, all reasonably necessary repairs,
renewals, replacements, betterments and improvements thereto, all as more fully
provided in the Security Instruments. Borrower shall keep the Properties insured
at all times by financially sound and reputable insurers, to such extent and
against such risks, and maintain liability and such other insurance, as is more
fully provided in this Agreement. After prior written notice to Lender,
Borrower, at its own expense, may contest by appropriate legal proceeding
promptly initiated and conducted in good faith and with due diligence, the
validity of any Legal Requirement, the applicability of any Legal Requirement to
Borrower or any Individual Property or any alleged violation of any Legal
Requirement, provided that (i) no Event of Default has occurred and remains
uncured; (ii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any material instrument to which Borrower is
subject and shall not constitute a default thereunder and such proceeding shall
be conducted in accordance with all applicable statutes, laws and ordinances;
(iii) no Individual Property nor any part thereof or interest therein will be in
danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower
shall promptly upon final determination thereof comply with any such Legal
Requirement determined to be valid or applicable or cure any violation of any
Legal Requirement; (v) such proceeding shall suspend the enforcement of the
contested Legal Requirement against Borrower or any Individual Property; and
(vi) Borrower shall furnish such security as may be required in the proceeding,
or as may be reasonably requested by Lender, to insure compliance with such
Legal Requirement, together with all interest and penalties payable in
connection therewith. Lender may apply any such security, as necessary to cause
compliance with such Legal Requirement at any time when, in the reasonable
judgment of Lender, the validity, applicability or violation of such Legal
Requirement is finally established or any Individual Property (or any part
thereof or interest therein) shall be in danger of being sold, forfeited,
terminated, cancelled or lost.
5.1.2 Taxes and Other Charges. Subject to Borrower's right to contest
-----------------------
the same in accordance with the terms and conditions of this Section 5.1.2,
Borrower shall pay all Taxes and Other Charges now or hereafter levied or
assessed or imposed against the Properties or any part thereof as the same
become due and payable; provided, however, Borrower's obligation to directly pay
Taxes shall be suspended for so long as Borrower complies with the terms and
provisions of Section 7.2 hereof. Borrower will deliver to Lender receipts for
payment or other evidence satisfactory to Lender that the Taxes and Other
Charges have been so paid or are not then delinquent no later than ten (10) days
prior to the date on which the Taxes and/or Other Charges would otherwise be
delinquent if not paid. Borrower shall furnish to Lender receipts for the
payment of the Taxes and the Other Charges prior to the date the same shall
become delinquent (provided, however, that Borrower is not required to furnish
such receipts for payment of Taxes in the event that such Taxes have been paid
by Lender pursuant to Section 7.2 hereof). Except for Permitted Encumbrances,
Borrower shall not suffer and shall promptly cause to be paid and discharged any
Lien or charge whatsoever which may be or become a Lien or charge against the
Properties, and shall promptly pay for all utility services provided to the
Properties. After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any Taxes or Other Charges (other than the casino franchise
fee imposed by Act No. 221 of May 15, 1948 as amended, of the Commonwealth of
Puerto Rico) or any other Lien or charge that may become a Lien or charge
against an Individual Property, provided that (i) no Event of Default has
occurred and remains uncured; (ii) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any other instrument to which
Borrower is subject and shall not constitute a default thereunder and such
proceeding shall be conducted in accordance with all applicable statutes, laws
and ordinances; (iii) no Individual Property nor any part thereof or interest
therein will be in danger of being sold, forfeited, terminated, cancelled or
lost; (iv) Borrower shall promptly upon final determination thereof pay the
amount of any such Taxes or Other Charges or the amount necessary to discharge
any Lien or satisfy any charge that may become a Lien or charge against an
Individual Property, together with all costs, interest and penalties which may
be payable in connection therewith; (v) such proceeding shall suspend the
collection of such contested Taxes or Other Charges from the applicable
Individual Property; and (vi) Borrower shall furnish such security as may be
required in the proceeding, or as may be reasonably requested by Lender, to
insure the payment of any such Taxes or Other Charges or the amount necessary to
discharge any Lien or satisfy any charge that may become a Lien or charge
against an Individual Property, together with all interest and penalties
-47-
thereon. Lender may pay over any such cash deposit or part thereof held by
Lender to the claimant entitled thereto at any time when, in the reasonable
judgment of Lender, the entitlement of such claimant is finally established or
any Individual Property (or part thereof or interest therein) shall be in danger
of being sold, forfeited, terminated, cancelled or lost or there shall be any
danger of the Lien of any Security Instrument being primed by any related Lien
that is not a Permitted Encumbrance.
5.1.3 Litigation. Borrower shall give prompt written notice to Lender
----------
of any litigation or governmental proceedings pending or threatened against
Borrower which could reasonably be expected to materially adversely affect
Borrower's condition (financial or otherwise) or business or any Individual
Property.
5.1.4 Access to Properties. Borrower shall permit agents,
--------------------
representatives and employees of Lender to inspect the Properties or any part
thereof at reasonable hours upon reasonable advance written notice, subject to
the rights of tenants and guests of the Properties.
5.1.5 Notice of Default. Borrower shall promptly advise Lender of any
-----------------
material adverse change in Borrower's condition, financial or otherwise, or of
the occurrence of any Default or Event of Default of which Borrower has
knowledge.
5.1.6 Cooperate in Legal Proceedings. Borrower shall cooperate fully
------------------------------
with Lender with respect to any proceedings before any court, board or other
Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings.
5.1.7 Award and Insurance Benefits. Subject to the terms hereof,
----------------------------
Borrower shall cooperate with Lender in obtaining for Lender the benefits of any
Awards or Insurance Proceeds lawfully or equitably payable in connection with
any Individual Property, and Lender shall be reimbursed for any reasonable
out-of-pocket expenses incurred in connection therewith (including reasonable
attorneys' fees and disbursements, and the payment by Borrower of the expense of
an appraisal on behalf of Lender in case of Casualty or Condemnation affecting
any Individual Property or any part thereof) out of such Award or Insurance
Proceeds.
5.1.8 Further Assurances. Borrower shall, at Borrower's sole cost and
------------------
expense:
(a) furnish to Lender all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document, certificate, agreement and instrument required to be furnished
by Borrower pursuant to the terms of the Loan Documents or reasonably requested
by Lender in connection therewith;
(b) execute and deliver to Lender such documents, instruments,
certificates, assignments, mortgages, mortgage expansions, mortgage notes and
other writings, and do such other acts necessary or desirable, to evidence,
preserve and/or protect the Collateral at any time securing or intended to
secure the obligations of Borrower under the Loan Documents, as Lender may
reasonably require including, without limitation, the execution of UCC financing
statements, and the execution and delivery of all such writings necessary to
transfer any liquor Licenses and/or the casino Licenses into the name of Lender
or its designee after the occurrence and during the continuance of any Event of
Default; and
(c) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
may reasonably require from time to time.
5.1.9 Mortgage and Intangible Taxes. Borrower shall pay all State,
-----------------------------
county and municipal recording, mortgage, and intangible, and all other taxes
imposed upon the execution and recordation of the Security Instruments and/or
upon the execution and delivery of the Note.
-48-
5.1.10 Financial Reporting. (a) Borrower will keep and maintain or will
-------------------
cause to be kept and maintained on a Fiscal Year basis, in accordance with GAAP
(or such other accounting basis acceptable to Lender), proper and accurate
books, records and accounts reflecting all of the financial affairs of Borrower
and all items of income and expense in connection with the operation on an
individual basis of the Properties. Lender shall have the right from time to
time at all times during normal business hours upon reasonable advance written
notice to examine such books, records and accounts at the office of Borrower or
any other Person maintaining such books, records and accounts and to make such
copies or extracts thereof as Lender shall desire. After the occurrence and
during the continuance of an Event of Default, Borrower shall pay any costs and
expenses incurred by Lender to examine Borrower's accounting records with
respect to the Properties, as Lender shall determine to be necessary or
appropriate in the protection of Lender's interest.
(b) Borrower will furnish to Lender annually, within one hundred and
twenty (120) days following the end of each Fiscal Year of Borrower, a complete
copy of Borrowers' consolidated annual financial statements audited by a "Big
Five" accounting firm or other independent certified public accountant
reasonably acceptable to Lender in accordance with principles of the Uniform
System of Accounts (or such other accounting basis acceptable to Lender)
covering the Properties on a combined basis for such Fiscal Year and containing
statements of profit and loss for Borrowers and the Properties on a combined
basis and a consolidated balance sheet for Borrowers. Such statements shall set
forth the financial condition and the results of operations for the Properties
for such Fiscal Year, and shall include, but not be limited to, amounts
representing annual Net Cash Flow, Net Operating Income, Gross Income from
Operations and Operating Expenses. Borrowers' annual financial statements shall
be accompanied by (i) a comparison of the budgeted income and expenses and the
actual income and expenses for the prior Fiscal Year, (ii) an Officer's
Certificate stating that each such annual financial statement presents fairly
the financial condition and the results of operations of Borrowers and the
Properties being reported upon and has been prepared in accordance with
principles of the Uniform System of Accounts, (iii) an unqualified opinion of a
"Big Five" accounting firm or other independent certified public accountant
reasonably acceptable to Lender, and (iv) a list of tenants, if any, occupying
more than twenty percent (20%) of the total floor area of the Improvements, (v)
a breakdown showing the year in which each Lease then in effect expires and the
percentage of total floor area of the Improvements and the percentage of base
rent with respect to which Leases shall expire in each such year, each such
percentage to be expressed on both a per year and cumulative basis, and (vi) a
schedule audited by such independent certified public accountant reconciling Net
Operating Income to Net Cash Flow (the "Net Cash Flow Schedule"), which shall
itemize all adjustments made to Net Operating Income to arrive at Net Cash Flow
deemed material by such independent certified public accountant. Together with
Borrowers' annual financial statements, Borrower shall furnish to Lender (i) an
Officers' Certificate certifying as of the date thereof whether, to the best of
Borrower's knowledge, there exists an event or circumstance which constitutes a
Default or Event of Default under the Loan Documents executed and delivered by,
or applicable to, Borrower, and if such Default or Event of Default exists, the
nature thereof, the period of time it has existed and the action then being
taken to remedy the same and (ii) a schedule prepared by Borrower, which
schedule shall allocate the components of the consolidated statements to the
applicable Individual Properties.
(c) Borrower will furnish, or cause to be furnished, to Lender on or
before thirty (30) days after the end of each calendar month the following
items, accompanied by an Officers' Certificate stating that, to the best of
Borrower's knowledge, such items are true, correct, accurate, and complete in
all material respects and fairly present the financial condition and results of
the operations of each Individual Property (subject to normal year-end
adjustments) as applicable: (i) a occupancy report for the subject month
including an average daily rate, and any and all franchise inspection reports
received by Borrower during the subject month; (ii) monthly and year-to-date
operating statements (including Capital Expenditures) prepared for each calendar
month, noting Net Operating Income, Gross Income from Operations, and Operating
Expenses (not including any contributions to the Replacement Reserve Fund), and
other information necessary and sufficient to fairly represent the financial
position and results of operation of the Properties during such calendar month,
all in form reasonably satisfactory to Lender; (iii) a calculation reflecting
the annual Debt Service Coverage Ratio for the immediately preceding twelve (12)
month period as of the last day of such month; and (iv) a Net Cash Flow
Schedule. In addition, such Officers' Certificate shall also state that the
representations and warranties of Borrower set forth in Section 4.1.35 are true
and correct in all material respects as of the date of such certificate and,
except as expressly permitted under Section 4.1.35, that there are no trade
payables outstanding for more than sixty (60) days.
-49-
(d) For the partial year period commencing on the date hereof, and for
each Fiscal Year thereafter, Borrower shall submit to Lender an Annual Budget
not later than thirty (30) days prior to the commencement of such period or
Fiscal Year in form reasonably satisfactory to Lender (Lender acknowledges that
the Annual Budget for Fiscal Year 2001 is satisfactory to Lender for the purpose
of this Section 5.1.10(d)).
(e) Intentionally Omitted;
(f) Borrower will furnish, or cause to be furnished, an annual
comparison of the budgeted total income and total expenses to the actual total
income and total expenses and an annual occupancy report including an average
daily room rate, within one hundred twenty (120) days after the close of each
Fiscal Year of Borrower;
(g) Borrower shall promptly send to Lender all quality assurance
reports or other reports of inspection delivered by Manager, if any.
(h) If requested by Lender, Borrower shall provide Lender, promptly
upon request, with the following financial statements if, at the time a
preliminary or final prospectus, prospectus supplement, private placement
memorandum, offering circular or other offering document (the "Disclosure
Document") is being prepared for a Securitization, it is expected that the
principal amount of the Loan together with any Affiliated Loans at the time of
Securitization may, or if the principal amount of the Loan together with any
Affiliated Loans at any time during which the Loan and any Affiliated Loans are
included in a Securitization does, equal or exceed 20% of the aggregate
principal amount of all mortgage loans included or expected to be included, as
applicable, in the Securitization:
(i) A balance sheet with respect to each Individual Property
for the two most recent fiscal years, meeting the requirements of Section
210.3-01 of Regulation S-X of the Securities Act and statements of income and
statements of cash flows with respect to each Individual Property for the three
most recent fiscal years, meeting the requirements of Section 210.3-02 of
Regulation S-X, and, to the extent that such balance sheet is more than 135 days
old as of the date of the document in which such financial statements are
included, interim financial statements of each Individual Property meeting the
requirements of Section 210.3-01 and 210.3-02 of Regulation S-X (all of such
financial statements, collectively, the "Standard Statements"); provided,
however, that with respect to each Individual Property (other than properties
that are hotels, nursing homes, or other properties that would be deemed to
constitute a business and not real estate under Regulation S-X or other legal
requirements) that has been acquired by Borrower from an unaffiliated third
party (such Property, "Acquired Property"), as to which the other conditions set
forth in Section 210.3-14 of Regulation S-X for provision of financial
statements in accordance with such Section have been met, in lieu of the
Standard Statements otherwise required by this Section, Borrower shall instead
provide the financial statements required by such Section 210.3-14 of Regulation
S-X ("Acquired Property Statements").
(ii) Not later than thirty (30) days after the end of each
fiscal quarter following the date hereof, a balance sheet of each Individual
Property as of the end of such fiscal quarter, meeting the requirements of
Section 210.3-01 of Regulation S-X, and statements of income and statements of
cash flows of each Individual Property for the period commencing following the
last day of the most recent fiscal year and ending on the date of such balance
sheet and for the corresponding period of the most recent fiscal year, meeting
the requirements of Section 210.3-02 of Regulation S-X (provided, that if for
such corresponding period of the most recent fiscal year Acquired Property
Statements were permitted to be provided hereunder pursuant to subsection (i)
above, Borrower shall instead provide Acquired Property Statements for such
corresponding period).
(iii) Not later than seventy-five (75) days after the end of
each fiscal year following the date hereof, a balance sheet of each Individual
Property as of the end of such fiscal year, meeting the requirements of Section
210.3-01 of Regulation S-X, and statements of income and statements of cash
flows of the each Individual Property for such fiscal year, meeting the
requirements of Section 210.3-02 of Regulation S-X.
(iv) Within ten (10) Business Days after notice from the
Lender in connection with the Securitization of this Loan, such additional
financial statements, such that, as of the date (each an "Offering Document
Date") of each
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Disclosure Document, Borrower shall have provided Lender with all financial
statements as described in subsection (f)(i) above; provided that the fiscal
year and interim periods for which such financial statements shall be provided
shall be determined as of such Offering Document Date.
(i) If requested by Lender, Borrower shall provide Lender, promptly
upon request, with summaries of the financial statements referred to in Section
5.1.10(f) hereof if, at the time a Disclosure Document is being prepared for a
Securitization, it is expected that the principal amount of the Loan and any
Affiliated Loans at the time of Securitization may, or if the principal amount
of the Loan and any Affiliated Loans at any time during which the Loan and any
Affiliated Loans are included in a Securitization does, equal or exceed 10% (but
is less than 20%) of the aggregate principal amount of all mortgage loans
included or expected to be included, as applicable, in a Securitization. Such
summaries shall meet the requirements for "summarized financial information," as
defined in Section 210.1-02(bb) of Regulation S-X, or such other requirements as
may be determined to be necessary or appropriate by Lender.
(j) All financial statements provided by Borrower hereunder pursuant
to Section 5.1.10 (h) and (i) hereof shall be prepared in accordance with GAAP,
and shall meet the requirements of Regulation S-X and other applicable legal
requirements. All financial statements referred to in Subsections 5.1.10(h)(i)
and 5.1.10(h)(iii) above shall be audited by independent accountants of Borrower
reasonably acceptable to Lender in accordance with Regulation S-X and all other
applicable legal requirements, shall be accompanied by the manually executed
report of the independent accountants thereon, which report shall meet the
requirements of Regulation S-X and all other applicable legal requirements, and
shall be further accompanied by a manually executed written consent of the
independent accountants, in form and substance reasonably acceptable to Lender,
to the inclusion of such financial statements in any Disclosure Document and any
Exchange Act Filing (as defined below) and to the use of the name of such
independent accountants and the reference to such independent accountants as
"experts" in any Disclosure Document and Exchange Act Filing, all of which shall
be provided at the same time as the related financial statements are required to
be provided. All financial statements (audited or unaudited) provided by
Borrower under Section 5.1.10(h) and (i) shall be accompanied by an Officer's
Certificate, which shall state that such financial statements meet the
requirements set forth in the first sentence of this Section 5.1.10(j).
(k) If requested by Lender, Borrower shall provide Lender, promptly
upon request, with any other or additional financial statements, or financial,
statistical or operating information, as Lender shall determine to be required
pursuant to Regulation S-X or any amendment, modification or replacement thereto
or other legal requirements in connection with any Disclosure Document or any
filing under or pursuant to the Exchange Act in connection with or relating to a
Securitization (hereinafter an "Exchange Act Filing") or as shall otherwise be
reasonably requested by the Lender.
(l) In the event Lender determines, in connection with a
Securitization, that the financial statements required in order to comply with
Regulation S-X or other legal requirements are other than as provided herein,
then notwithstanding the provisions of Section 5.1.10(h), (i) and (j) hereof,
Lender may request, and Borrower shall promptly provide, such combination of
Acquired Property Statement and/or Standard Statements or such other financial
statements as Lender determines to be necessary or appropriate for such
compliance.
(m) Borrower shall furnish to Lender, within ten (10) Business Days
after request (or as soon thereafter as may be reasonably possible), such
further detailed information with respect to the operation of the Properties and
the financial affairs of Borrower as may be reasonably requested by Lender.
(n) Any reports, statements or other information required to be
delivered under this Agreement shall be delivered (i) in paper form, (ii) on a
diskette (to the extent available with reasonable efforts), and (iii) if
requested by Lender and within the capabilities of Borrower's data systems
without change or modification thereto, in electronic form and prepared using a
Microsoft Word for Windows or WordPerfect for Windows files (which files may be
prepared using a spreadsheet program and saved as word processing files).
(o) Borrower agrees that Lender may forward to each purchaser,
transferee, assignee, servicer, participant, or investor in all or any portion
of the Loan or any Securities (collectively, the "Investor") or any Rating
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Agency rating such participations and/or Securities and each prospective
Investor, and any organization maintaining databases on the underwriting and
performance of commercial mortgage loans, all documents and information which
Lender now has or may hereafter acquire relating to the Debt and to Borrower,
any Guarantor, any Indemnitor and the Properties, whether furnished by Borrower,
any Guarantor, any Indemnitor(s) or otherwise, as Lender determines necessary or
desirable. Borrower irrevocably waives any and all rights it may have under any
Applicable Laws to prohibit such disclosure, including but not limited to any
right of privacy.
5.1.11 Business and Operations. Borrower will continue to engage in
-----------------------
the businesses presently conducted by it as and to the extent the same are
necessary for the ownership, maintenance, management and operation of the
Properties. Borrower will remain in good standing under the laws of each
jurisdiction the extent required for the ownership, maintenance, management and
operation of the Properties.
5.1.12 Costs of Enforcement. In the event (a) that any Security
--------------------
Instrument encumbering any Individual Property is foreclosed in whole or in part
or that any such Security Instrument is put into the hands of an attorney for
collection, suit, action or foreclosure, (b) of the foreclosure of any mortgage
prior to or subsequent to any Security Instrument encumbering any Individual
Property in which proceeding Lender is made a party, or (c) of the bankruptcy,
insolvency, rehabilitation or other similar proceeding in respect of Borrower or
any of its constituent Persons or an assignment by Borrower or any of its
constituent Persons for the benefit of its creditors, Borrower, its successors
or assigns, shall be chargeable with and agrees to pay all reasonable costs of
collection and defense, including reasonable attorneys' fees and costs, incurred
by Lender or Borrower in connection therewith and in connection with any
appellate proceeding or post-judgment action involved therein, together with all
required service or use taxes.
5.1.13 Estoppel Statement. (a) After written request by Lender,
------------------
Borrower shall within fifteen (15) days furnish Lender with a statement, duly
acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Note, (ii) the unpaid principal amount of the Note,
(iii) the Applicable Interest Rate of the Note, (iv) the date installments of
interest and/or principal were last paid, (v) any then known offsets or defenses
to the payment of the Debt, if any, and (vi) that the Note, this Agreement, the
Security Instruments and the other Loan Documents are valid, legal and binding
obligations and have not been modified or if modified, giving particulars of
such modification.
(b) Borrower shall use its best efforts to deliver to Lender upon
request, tenant estoppel certificates from each commercial tenant leasing space
at the Properties in form and substance reasonably satisfactory to Lender.
(c) After written request by Borrower, Lender shall furnish to
Borrower within fifteen (15) days, a statement setting forth (i) the amount of
the original principal amount of the Note, (ii) the unpaid principal amount of
the Note, (iii) the Applicable Interest Rate, (iv) the amount of Reserve Funds
held by Lender, if any, (iv) that the Loan Documents have not been modified (or,
listing such modifications, if applicable), (v) that there are no currently
outstanding notices of Default sent to Borrower (or listing such notices, if
applicable) and (vi) the date the last installment of principal and interest has
been paid.
5.1.14 Loan Proceeds. Maker shall use the proceeds of the Loan
-------------
received by it on the Closing Date only for the purposes set forth in Section
2.1.4.
5.1.15 Performance by Borrower. Borrower shall in a timely manner
-----------------------
observe, perform and fulfill each and every covenant, term and provision of each
Loan Document executed and delivered by, or applicable to, Borrower, and shall
not enter into or otherwise suffer or permit any amendment, waiver, supplement,
termination or other modification of any Loan Document executed and delivered
by, or applicable to, Borrower without the prior written consent of Lender.
5.1.16 Confirmation of Representations. Borrower shall deliver, in
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connection with any Securitization, (a) one or more Officer's Certificates
certifying as to the accuracy of all representations made by Borrower in the
Loan Documents as of the date of the closing of such Securitization in all
relevant jurisdictions (or if any such representations are no longer true,
providing an explanation as to the reason for such untruth), and (b)
certificates of
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the relevant Governmental Authorities in all relevant jurisdictions indicating
the good standing and qualification of Borrower and Principal as of the date of
the Securitization.
5.1.17 Leasing Matters. (a) With respect to any Individual Property,
---------------
Borrower shall not, without the prior written consent of Lender, which consent
shall not be unreasonably withheld, conditioned or delayed, enter into and,
except to the extent required pursuant to the terms of an existing Material
Lease, renew, extend, modify, waive any provisions of, terminate, reduce rents
under, accept a surrender of space thereunder, or shorten the term of, any
Material Lease or any instrument guaranteeing or providing credit support for a
Material Lease; provided, however, Lender's prior written consent shall not be
required for the execution of the Approved San ▇▇▇▇ Parking Lease.
(b) Borrower (i) shall observe and perform all the obligations
imposed upon the lessor under the Material Leases and shall not do or permit to
be done anything to impair the value of any of the Material Leases as security
for the Debt; (ii) shall promptly send copies to Lender of all notices of
default or other material matters which Borrower shall send or receive
thereunder; (iii) shall enforce all of the material terms, covenants and
conditions contained in the Material Leases upon the part of the tenant
thereunder to be observed or performed in a commercially reasonable manner
(except for termination of a Lease which shall require Lender's prior approval,
which approval shall not be unreasonably withheld, conditioned or delayed); (iv)
shall not collect any of the Rents more than one (1) month in advance (except
security deposits shall not be deemed Rents collected in advance); (v) shall not
execute any other assignment of the lessor's interest in any of the Leases or
the Rents; and (vi) shall not consent to any assignment of or subletting under
any Material Leases not in accordance with their terms, without the prior
written consent of Lender, which consent shall not be unreasonably withheld,
conditioned or delayed. Lender shall not unreasonably withheld, condition or
delay approval of the execution of any subordination and non-disturbance or
similar recognition agreement requested by any tenant under a Lease provided (i)
Lender has approved such Lease, which approval shall not be unreasonably
withheld, conditioned or delayed and (ii) such agreement is in form, scope and
substance reasonably acceptable to Lender. To the extent Lender's prior written
approval is required pursuant to this Section 5.1.17, Lender shall have fifteen
(15) calendar days from receipt of written request and any and all reasonably
required information and documentation relating thereto in which to approve or
disapprove such request, provided, such request to Lender is marked in bold
lettering with the following language: "LENDER'S RESPONSE IS REQUIRED WITHIN
FIFTEEN (15) CALENDAR DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A
LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER" and the envelope containing
the request must be marked "PRIORITY". In the event Lender fails to respond to
the information and proposed documentation within such time, Lender's approval
shall be deemed given. Borrower shall be required to provide Lender with such
information and documentation as may be reasonably required by Lender, including
without limitation, lease comparables and other market information. Should
Lender fail to approve any such request, Lender shall give Borrower written
notice setting forth in reasonable detail the basis for such disapproval.
(c) Upon the occurrence and during the continuance of an Event of
Default, to the extent permitted by law, Borrower shall promptly deposit with
Lender any and all monies representing security deposits under the Leases,
whether or not Borrower actually received such monies (the "Security Deposits").
Lender shall hold the Security Deposits in accordance with the terms of the
respective Lease, and shall only release the Security Deposits in order to
return a tenant's Security Deposit to such tenant if such tenant is entitled to
the return of the Security Deposit under the terms of the Lease and is not
otherwise in default under the Lease. To the extent required by Legal
Requirements, Lender shall hold the Security Deposits in an interest bearing
account selected by Lender in its sole discretion. In the event Lender is not
permitted by law to hold the Security Deposits, Borrower shall deposit the
Security Deposits into an Eligible Account.
5.1.18 Management Agreement. (a) The Improvements on the Properties
--------------------
are operated under the terms and conditions of the Management Agreement or
Replacement Management Agreement as applicable. Borrower shall (i) diligently
perform and observe in all material respects all of the terms, covenants and
conditions of the Management Agreement or Replacement Management Agreement, if
applicable, on the part of Borrower to be performed and observed to the end that
all things shall be done which are necessary to keep unimpaired the material
rights of Borrower under the Management Agreement or Replacement Management
Agreement, if applicable and (ii) promptly notify Lender of the giving of any
notice to Borrower of any material default by Borrower in the performance or
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observance of any of the terms, covenants or conditions of the Management
Agreement or Replacement Management Agreement, if applicable on the part of
Borrower to be performed and observed and deliver to Lender a true copy of each
such notice. Borrower shall not surrender the Management Agreement or
Replacement Management Agreement, if applicable, consent to the assignment by
the Manager of its interest under the Management Agreement (except as provided
herein) or Replacement Management Agreement, if applicable, or terminate or
cancel the Management Agreement or Replacement Management Agreement, if
applicable, or modify, change, supplement, alter or amend the Management
Agreement or Replacement Management Agreement, if applicable, in any material
respect, either orally or in writing, without the prior written consent of
Lender, which consent shall not be unreasonably withheld, conditioned or
delayed. Borrower hereby assigns to Lender as further security for the payment
of the Debt and for the performance and observance of the terms, covenants and
conditions of this Agreement, all the rights, privileges and prerogatives of
Borrower to surrender the Management Agreement or Replacement Management
Agreement, if applicable, or to terminate, cancel, modify, change, supplement,
alter or amend the Management Agreement or Replacement Management Agreement, if
applicable, in any respect, and any such surrender of the Management Agreement
or Replacement Management Agreement, if applicable, or termination,
cancellation, modification, change, supplement, alteration or amendment of the
Management Agreement or Replacement Management Agreement, if applicable, without
the prior consent of Lender, which consent shall not be unreasonably withheld,
conditioned or delayed, shall be void and of no force and effect. If Borrower
shall default in the performance or observance of any material term, covenant or
condition of the Management Agreement or Replacement Management Agreement, if
applicable, on the part of Borrower to be performed or observed, then, without
limiting the generality of the other provisions of this Agreement, and without
waiving or releasing Borrower from any of its obligations hereunder, Lender
shall have the right, but shall be under no obligation, to pay any sums and to
perform any act or take any action as may be appropriate to cause all the terms,
covenants and conditions of the Management Agreement or Replacement Management
Agreement, if applicable, on the part of Borrower to be performed or observed to
be promptly performed or observed on behalf of Borrower, to the end that the
rights of Borrower in, to and under the Management Agreement or Replacement
Management Agreement, if applicable, shall be kept unimpaired and free from
default. Lender and any person designated by Lender shall have, and are hereby
granted, the right upon reasonable advance written notice to Borrower to enter
upon the applicable Individual Property at any time and from time to time for
the purpose of taking any such action. If the Manager shall deliver to Lender a
copy of any notice sent to Borrower of material default under the Management
Agreement or Replacement Management Agreement, if applicable, such notice shall
constitute full protection to Lender for any action taken or omitted to be taken
by Lender in good faith, in reliance thereon unless such action constitutes the
willful misconduct or gross negligence of Lender or Lender's agent. Borrower
shall notify Lender if the Manager sub-contracts to a third party any or all of
its management responsibilities under the Management Agreement or Replacement
Management Agreement, if applicable. Borrower shall, from time to time, obtain
from the Manager such certificates of estoppel with respect to compliance by
Borrower with the terms of the Management Agreement or Replacement Management
Agreement, if applicable, as may be reasonably requested by Lender. Borrower
shall exercise each individual option, if any, to extend or renew the term of
the Management Agreement or Replacement Management Agreement, if applicable upon
demand by Lender made at any time within one (1) year of the last day upon which
any such option may be exercised, and Borrower hereby expressly authorizes and
appoints Lender its attorney-in-fact to exercise any such option in the name of
and upon behalf of Borrower, which power of attorney shall be irrevocable and
shall be deemed to be coupled with an interest. Any sums expended by Lender
pursuant to this paragraph shall bear interest at the Default Rate from the date
such cost is incurred to the date of payment to Lender, shall be deemed to
constitute a portion of the Debt, shall be secured by the lien of the Security
Instruments and the other Loan Documents and shall be immediately due and
payable upon demand by Lender therefor.
(b) Without limitation of the foregoing, Borrower, upon the request
of Lender, shall terminate the Management Agreement or Replacement Management
Agreement, if applicable and replace the Manager, without penalty or fee, if at
any time during the Loan: (a) the Manager shall become insolvent or a debtor in
any bankruptcy or insolvency proceeding, (b) provided, the Manager is an
Affiliated Manager, there exists an Event of Default which remains uncured, or
(c) there exists a default beyond all applicable notice and grace periods by
Manager under the Management Agreement or Replacement Management Agreement, if
applicable. At such time as the Manager may be removed, a Qualified Manager
shall assume management of the applicable Individual Property pursuant to a
Replacement Management Agreement.
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5.1.19 Environmental Covenants. Except for conditions that exist on
-----------------------
the date hereof and are expressly disclosed in an Environmental Report, (a)
Borrower covenants and agrees that so long as Borrower owns, manages, is in
possession of, or otherwise controls the operation of the Properties: (i) all
uses and operations on or of the Properties, whether by Borrower or any other
Person or entity, shall be in compliance with all Environmental Laws and permits
issued pursuant thereto; (ii) there shall be no Releases of Hazardous Materials
by Borrower or any Affiliate of Borrower in, on, under or from any of the
Properties and Borrower shall use its commercially reasonable efforts to insure
that there shall be no Releases of Hazardous Materials by any Person other than
Borrower or any Affiliate of Borrower in, on, under or from any of the
Properties; (iii) there shall be no Hazardous Materials in, on, or under any of
the Properties, except those that are in compliance in all material respects
with all Environmental Laws and with permits issued pursuant thereto, if and to
the extent required;(iv) Borrower shall keep the Properties free and clear of
all liens and other encumbrances imposed pursuant to any Environmental Law,
whether due to any act or omission of Borrower or any other person or entity
(the "Environmental Liens"); (v) Borrower shall, at its sole cost and expense,
fully and expeditiously cooperate in all activities pursuant to paragraph (b)
below, including but not limited to providing all relevant information and
making knowledgeable persons available for interviews; (vi) Borrower shall, at
its sole cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with any of the
Properties, pursuant to any reasonable written request of Lender, upon Lender's
reasonable belief that an Individual Property is not in full compliance with all
Environmental Laws, and share with Lender the reports and other results thereof,
and Lender and other Indemnified Parties shall be entitled to rely on such
reports and other results thereof; (vii) Borrower shall, at its sole cost and
expense, comply with all reasonable written requests of Lender to reasonably
effectuate remediation of any Hazardous Materials in, on, under or from any
Individual Property in order to comply with any Environmental Law; (viii)
Borrower shall use its best efforts to not allow any tenant or other user of any
of the Properties to violate any Environmental Law; and (ix) Borrower shall
immediately notify Lender in writing after receipt of written notice of (A) any
material presence or Release or threatened Releases of Hazardous Materials in,
on, under, from or migrating towards any of the Properties; (B) any material
non-compliance with any Environmental Laws related in any way to any of the
Properties; (C) any actual or potential Environmental Lien; (D) any required or
proposed remediation of environmental conditions relating to any of the
Properties; and (E) any written notice or other communication of which Borrower
becomes aware from any source whatsoever (including but not limited to a
governmental entity) relating in any way to the non-compliance of any Hazardous
Materials with all applicable Environmental Laws.
(b) In the event Lender has a reasonable belief that an Individual
Property is not in material compliance with all Environmental Laws, Lender and
any other person or entity designated by Lender, including but not limited to
any representative of a governmental entity, and any environmental consultant,
and any receiver appointed by any court of competent jurisdiction, shall have
the right (subject to the rights of tenants and hotel guests), but not the
obligation, to enter upon any Individual Property at all reasonable times upon
reasonable prior written notice to Borrower to assess any and all aspects of the
environmental condition of any Individual Property and its use, including but
not limited to, conducting any reasonably necessary environmental assessment or
audit (the scope of which shall be determined in Lender's sole and absolute
discretion) and taking samples of soil, groundwater or other water, air, or
building materials, and conducting other invasive testing. Borrower shall
cooperate with and provide reasonable access to Lender and any such person or
entity designated by Lender.
5.1.20 Alterations
-----------
Borrower shall obtain Lender's prior written consent to any material
alterations to any Improvements, which consent shall not be unreasonably
withheld, conditioned or delayed except with respect to alterations that could
reasonably be expected to have a material adverse effect on Borrower's financial
condition, the value of the applicable Individual Property or the annual Net
Operating Income. Notwithstanding the foregoing, provided no Event of Default
has occurred and is continuing, Lender's consent shall not be required in
connection with any alterations that will not have a material adverse effect on
Borrower's financial condition, the value of the applicable Individual Property
or the Net Operating Income of such Individual Property, provided that such
alterations (a) are made in connection with tenant improvement work performed
pursuant to the terms of any Lease executed on or before the date hereof or any
Lease executed after the date hereof which is in compliance with the terms of
this Agreement, (b) are made in connection with tenant improvement work
performed pursuant to the terms and provisions of a Lease and not adversely
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affecting any structural component of any Improvements, any utility or HVAC
system contained in any Improvements or the exterior of any building
constituting a part of any Improvements, (c) relate solely to Equipment, (d)
relate to the conversion of any restaurant at an Individual Property to a
steakhouse operated under the ▇▇▇▇▇ name (a "▇▇▇▇▇ Conversion") provided the
total cost of the ▇▇▇▇▇ Conversion does not exceed $1,500,000.00 or (e) together
with the related costs thereof have been provided for in the Annual Budget which
has been approved by Lender pursuant to the terms hereof and (i) are non-
structural in nature and (ii) are budgeted to cost (including all labor and
materials) less than $500,000.00. To the extent Lender's prior written approval
is required pursuant to this Section 5.1.20, Lender shall have forty-five (45)
calendar days from receipt of written request and any and all reasonably
required information and documentation relating thereto in which to approve or
disapprove such request, provided, such request to Lender is marked in bold
lettering with the following language: "LENDER'S RESPONSE IS REQUIRED WITHIN
FORTY-FIVE (45) CALENDAR DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF
A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER" and the envelope containing
the request must be marked "PRIORITY". In the event Lender fails to respond to
the information and proposed documentation within such time, Lender's approval
shall be deemed given. Borrower shall be required to provide Lender with such
information and documentation as may be reasonably required by Lender. Should
Lender fail to approve any such request, Lender shall give Borrower written
notice setting forth in reasonable detail the basis for such disapproval.
5.1.21 Intentionally Omitted.
---------------------
5.1.22 The Ground Lease. (a) Borrower shall (i) pay all rents,
----------------
additional rents and other sums required to be paid by Borrower, as tenant under
and pursuant to the provisions of the Ground Lease, (ii) diligently perform and
observe all of the terms, covenants and conditions of the Ground Lease on the
part of Borrower, as tenant thereunder, (iii) promptly notify Lender of the
giving of any notice by the landlord under the Ground Lease to Borrower of any
default by Borrower, as tenant thereunder, and deliver to Lender a true copy of
each such notice within five (5) Business Days of receipt and (iv) promptly
notify Lender upon learning of any bankruptcy, reorganization or insolvency of
the landlord under the Ground Lease or of any notice thereof, and deliver to
Lender a true copy of such notice within five (5) Business Days of Borrower's
receipt. Borrower shall not, without the prior consent of Lender, surrender the
leasehold estate created by the Ground Lease or terminate or cancel the Ground
Lease or modify, change, supplement, alter or amend the Ground Lease, in any
material respect, either orally or in writing, and if Borrower shall default in
the performance or observance of any material term, covenant or condition of the
Ground Lease on the part of Borrower, as tenant thereunder, Lender shall have
the right, but shall be under no obligation, to pay any sums and to perform any
act or take any action as may be appropriate to cause all of the terms,
covenants and conditions of the Ground Lease on the part of Borrower to be
performed or observed on behalf of Borrower, to the end that the rights of
Borrower in, to and under the Ground Lease shall be kept unimpaired and free
from default. If the landlord under the Ground Lease shall deliver to Lender a
copy of any notice of default under the Ground Lease, such notice shall
constitute full protection to Lender for any action taken or omitted to be taken
by Lender, in good faith, in reliance thereon, unless Lender's action
constitutes gross negligence or willful misconduct. Borrower shall exercise each
individual option, if any, to extend or renew the term of the Ground Lease upon
demand by Lender made at any time within six (6) months prior to the last day
upon which any such option may be exercised, and Borrower hereby expressly
authorizes and appoints Lender its attorney-in-fact to exercise any such option
in the name of and upon behalf of Borrower, which power of attorney shall be
irrevocable and shall be deemed to be coupled with an interest.
(b) Subleases. Notwithstanding anything contained in the Ground Lease
---------
to the contrary, Borrower shall not further sublet any portion of the related
Individual Property (other than as permitted pursuant to Section 5.1.17 hereof)
without prior written consent of Lender. Each sublease hereafter made shall
provide that, (a) in the event of the termination of the Ground Lease, the lease
shall not terminate or be terminable by the lessee; (b) in the event of any
action for the foreclosure of the Security Instrument with respect to the
related Individual Property, the lease shall not terminate or be terminable by
the subtenant by reason of the termination of the Ground Lease unless the lessee
is specifically named and joined in any such action and unless a judgment is
obtained therein against the lessee; and (c) in the event that the Ground Lease
is terminated as aforesaid, the lessee shall attorn to the lessor under the
Ground Lease or to the purchaser at the sale of the related Individual Property
on such foreclosure, as the case may be. In the event that any portion of such
Individual Property shall be sublet pursuant to the terms of this subsection,
such sublease shall be deemed to be included in the Individual Property.
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Section 5.2 Negative Covenants. From the date hereof until payment and
------------------
performance in full of all obligations of Borrower under the Loan Documents or
the earlier release of the Liens of all Security Instruments encumbering the
Properties in accordance with the terms of this Agreement and the other Loan
Documents, Borrower covenants and agrees with Lender that it will not do,
directly or indirectly, any of the following:
5.2.1 Liens. Borrower shall not create, incur, assume or suffer to
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exist any Lien on any portion of any Individual Property or permit any such
action to be taken, except:
(i) Permitted Encumbrances;
(ii) Liens created by or permitted pursuant to the Loan
Documents; and
(iii) Liens for Taxes or Other Charges not yet due or
delinquent.
5.2.2 Dissolution. Except as otherwise expressly permitted hereunder,
-----------
Borrower shall not (a) engage in any dissolution, liquidation or consolidation
or merger with or into any other business entity, (b) engage in any business
activity not related to the ownership and operation of the Properties, (c)
transfer, lease or sell, in one transaction or any combination of transactions,
the assets or all or substantially all of the properties or assets of Borrower
except to the extent permitted by the Loan Documents, (d) modify, amend, waive
or terminate any material provision of its organizational documents or its
qualification and good standing in any jurisdiction or (e) cause the Principal
to (i) dissolve, wind up or liquidate or take any action, or omit to take an
action, as a result of which the Principal would be dissolved, wound up or
liquidated in whole or in part, or (ii) amend, modify, waive or terminate the
certificate of incorporation or bylaws of the Principal, in each case, without
obtaining the prior written consent of Lender, which consent shall not be
unreasonably withheld, conditioned or delayed.
5.2.3 Change In Business. Borrower shall not enter into any line of
------------------
business other than the ownership and operation of the Properties, or 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.
5.2.4 Debt Cancellation. Borrower shall not cancel or otherwise forgive
-----------------
or release any claim or debt (other than termination of Leases in accordance
herewith) owed to Borrower by any Person, except for adequate consideration and
in the ordinary course of Borrower's business or otherwise if such cancellation,
release or forgiveness is prudent and commercially reasonable.
5.2.5 Zoning. Borrower shall not initiate or consent to any zoning
------
reclassification of any portion of any Individual Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
any Individual Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, without the prior consent of Lender, which consent
shall not be unreasonably withheld, conditioned or delayed.
5.2.6 No Joint Assessment. Borrower shall not suffer, permit or
-------------------
initiate the joint assessment of any Individual Property with (a) any other real
property constituting a tax lot separate from such Individual Property, or (b)
any portion of such Individual Property which may be deemed to constitute
personal property, or any other procedure whereby the Lien of any taxes which
may be levied against such personal property shall be assessed or levied or
charged to such Individual Property.
5.2.7 Principal Place of Business. Borrower shall not change its
---------------------------
principal place of business set forth in Schedule XVIII without first giving
Lender thirty (30) days prior written notice. Borrower shall not change the
place of its organization as set forth in Section 4.1.34 without the consent of
Lender, which consent shall not be unreasonably withheld, conditioned or
delayed. Upon Lender's request, Borrower shall execute and deliver additional
financing statements, security agreements and other instruments which may be
reasonably necessary to effectively
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evidence or perfect Lender's security interest in the Property as a result of
such change of place of business or place of organization.
5.2.8 ERISA. (a) Borrower shall not engage in any transaction which
-----
would cause any obligation, or action taken or to be taken, hereunder (or the
exercise by Lender of any of its rights under the Note, this Agreement or the
other Loan Documents) to be a non-exempt (under a statutory or administrative
class exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (A) Borrower is not
and does not maintain an "employee benefit plan" as defined in Section 3(32) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(3) of ERISA; (B) Borrower is not subject to State statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (C) one or more of the following circumstances is true:
(i) Equity interests in Borrower are publicly offered securities,
within the meaning of 29 C.F.R.(S)(S).2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding class of
equity interests in Borrower are held by "benefit plan investors" within
the meaning of 29 C.F.R.(S)(S).2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R.(S)(S).2510.3-101(c) or
(e).
5.2.9 Affiliate Transactions. Except as expressly provided in Section
----------------------
4.1.35 hereof, Borrower shall not enter into, or be a party to, any transaction
with an Affiliate of Borrower or any of the partners of Borrower except in the
ordinary course of business and on terms which are fully disclosed to Lender in
advance and are no less favorable to Borrower or such Affiliate than would be
obtained in a comparable arm's-length transaction with an unrelated third party.
5.2.10 Assets. Borrower shall not purchase or own any property other than
------
the Properties.
5.2.11 Debt. Borrower shall not create, incur or assume any
----
Indebtedness other than the Debt except to the extent permitted hereby.
5.2.12 Transfers. (a) Except for the transfer of a Release Property as
---------
provided herein, Borrower shall not sell, convey, mortgage, grant, bargain,
encumber, pledge, assign, grant options with respect to, or otherwise transfer
or dispose of (directly or indirectly, voluntarily or involuntarily, by
operation of law or otherwise, and whether or not for consideration or of
record) any Individual Property or any part thereof or any legal or beneficial
interest therein or permit a Sale or Pledge of an interest in any Restricted
Party (collectively, a "Transfer"), other than pursuant to Leases of space in
the Improvements to tenants in accordance with the provisions of Section 5.1.17
hereof, without (i) the prior written consent of Lender and (ii) if a
Securitization has occurred or is pending within thirty (30) days, delivery to
Lender of written confirmation from the Rating Agencies that the Transfer will
not result in the downgrade, withdrawal or qualification of the then current
ratings assigned to any Securities or the proposed rating of any Securities.
(b) A Transfer shall include, but not be limited to: (i) an
installment sales agreement wherein Borrower agrees to sell one or more
Individual Properties or any part thereof for a price to be paid in
installments; (ii) an agreement by Borrower leasing all or a substantial part of
any Individual Property for other than actual occupancy by a space tenant
thereunder or a sale, assignment or other transfer of, or the grant of a
security interest in, Borrower's right, title and interest in and to any Leases
or any Rents; (iii) if a Restricted Party is a corporation, any merger,
consolidation or Sale or Pledge of such corporation's stock or the creation or
issuance of new stock; (iv) if a Restricted Party is a limited or general
partnership or joint venture, any merger or consolidation or the change,
removal,
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resignation or addition of a general partner or the Sale or Pledge of the
partnership interest of any general partner or any profits or proceeds relating
to such partnership interest, or the Sale or Pledge of limited partnership
interests or any profits or proceeds relating to such limited partnership
interests or the creation or issuance of new limited partnership interests; (v)
if a Restricted Party is a limited liability company, any merger or
consolidation or the change, removal, resignation or addition of a managing
member or non-member manager or the Sale or Pledge of the membership interest of
a managing member (or non-member manager) or any profits or proceeds relating to
such membership interest, or the Sale or Pledge of non-managing membership
interests or the creation or issuance of new non-managing membership interests;
or (vi) if a Restricted Party is a trust or nominee trust, any merger,
consolidation or the Sale or Pledge of the legal or beneficial interest in a
Restricted Party or the creation or issuance of new legal or beneficial
interests.
(c) Notwithstanding the provisions of Sections 5.2.12(a) and (b), the
following transfers shall not be deemed to be a Transfer, provided that, after
such Transfer, Maker, Maryland Guarantor and Principal shall continue to comply
with the terms of Section 4.1.35 hereof: (i) a transfer by devise or descent or
by operation of law upon the death of a member, partner or shareholder of a
Restricted Party; (ii) the Sale or Pledge, in one or a series of transactions,
of not more than forty-nine percent (49%) of the stock in a Restricted Party;
provided, however, no such transfers shall result in the change of voting
control in the Restricted Party, and as a condition to each such transfer,
Lender shall receive not less than thirty (30) days prior written notice of such
proposed transfer, (iii) the Sale or Pledge, in one or a series of transactions,
of not more than forty-nine percent (49%) of the limited partnership interests
or non-managing membership interests (as the case may be) in a Restricted Party;
provided, however, as a condition to each such transfer, Lender shall receive
not less than thirty (30) days prior written notice of such proposed transfer,
(iv) transfers, issuances, pledges and redemptions of stock in Wyndham (and its
successors), so long as (A) Wyndham (or any such successor) is (or is controlled
by) a Public Company and (B) the surviving entity is primarily involved in, or
has a significant business line involving, the ownership and operation of real
estate similar to the Properties, (v) the merger or consolidation of Wyndham (or
its successors), provided that the surviving entity of such merger or
consolidation is (or is controlled by) (A) a Public Company and (B) primarily
involved in, or has a significant business line involving, the ownership or
operation of real estate similar to the Properties, (vi) the granting of
easements, cross-easements, agreements, restrictions, reservations and rights in
the ordinary course of business for use, access, water and sewer lines,
telephone and telegraph lines, electric lines or other utilities or for other
similar purposes, provided that no such easements, agreements, restrictions or
rights shall materially impair the utility and/or operation of an Individual
Property or any Maker's ability to repay the Debt as it becomes due and (vii)
transfers of direct or indirect interests in any Borrower or Principal to
Affiliates of Wyndham (or its successors) provided that after such transfers
such Borrower and Principal are controlled, directly or indirectly, by Wyndham
(or its successors). In addition, on a one time basis, Wyndham may merge or
consolidate with a public or private entity in which the surviving entity is not
and is not controlled by a Public Company provided that (a) after such merger,
each Borrower and Principal shall continue to comply with the terms of Section
4.1.35 hereof, (b) such merger or consolidation does not result in a Change of
Control, (c) the surviving entity has a net worth of at least $100,000,000, and
(d) the surviving entity is primarily involved in, or has a significant business
line involving, the ownership and operation of real estate similar to the
Properties. In connection with any transfer or merger permitted under this
Section 5.2.12, Borrower shall deliver an Additional Insolvency Opinion if,
after such transfer or merger, more than 49% of any direct legal or beneficial
interest in Borrower (or in any constituent entity of Borrower that is required
to comply with the terms of Section 4.1.35 hereof) is owned by a new or
successor entity. Such Additional Insolvency Opinion shall be reasonably
acceptable to (a) Lender, prior to a Securitization or (b) the Rating Agencies,
if a Securitization has occurred. Notwithstanding anything to the contrary
contained herein, pledges and hypothecations of indirect equity interests in
Borrower shall be permitted provided (i) Wyndham (or its successor) maintains
control of, and holds beneficial ownership interests of not less than fifty-one
percent (51%) of the membership interests or partnership interests, as
applicable, in, each entity comprising Borrower and (ii) any such pledges or
hypothecations are in connection with that certain Credit Agreement between
Wyndham (or its successors) and The Chase Manhattan Bank dated June 30, 1999, as
amended or another credit agreement with an Institutional Lender, which
Institutional Lender shall be making or holding a loan to Wyndham or its
successor or its Affiliates (other than Borrower or Principal). A foreclosure
sale (or transfer in lieu thereof) of any such pledge or hypothecation to The
Chase Manhattan Bank, or another Institutional Lender as collateral agent for
syndicate lenders or another Institutional Lender, shall be permitted provided
(i) Lender is given at least sixty (60) days prior written notice of the
proposed foreclosure sale or transfer in lieu thereof; (ii) the
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transferee is a reputable entity or person, creditworthy, with sufficient
financial worth considering any obligations assumed and undertaken with respect
to the Loan, as evidenced by financial statements and other information
reasonably requested by Lender; (iii) the Properties at all times shall continue
to be managed by a Qualified Manager; and (iv) and any and all such entities
will comply with all of the requirements set forth in the Note, this Agreement,
the Security Instruments and the other Loan Documents.
(d) Lender shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in order
to declare the Debt immediately due and payable upon a Transfer without Lender's
consent to the extent required hereunder. This provision shall apply to every
Transfer regardless of whether voluntary or not, or whether or not Lender has
consented to any previous Transfer. Notwithstanding anything to the contrary
contained in this Section 5.2.12 in the event any transfer (whether or not such
transfer shall constitute a Transfer) results in any Person owning in excess of
forty-nine percent (49%) of the ownership interest in a Restricted Party,
Borrower shall, prior to such transfer, deliver a substantive non-consolidation
opinion to Lender, which opinion shall be in form, scope and substance
reasonably acceptable in all respects to Lender and the Rating Agencies.
(e) Notwithstanding anything to the contrary contained in this
Section 5.2.12, Lender shall not withhold its consent to a one-time sale,
assignment, or other transfer of all of the Properties provided that (i) Lender
receives sixty (60) days prior written notice of such transfer, (ii) no Event of
Default has occurred and is continuing and (iii) upon the satisfaction (in the
reasonable determination of Lender) of the following matters:
(A) Borrower or Transferee (defined below) shall pay
any and all reasonable out-of-pocket costs incurred
in connection with the transfer (including, without
limitation, Lender's reasonable counsel fees and
disbursements and all recording fees, title
insurance premiums and mortgage and intangible
taxes);
(B) The proposed transferee (the "Transferee") shall be
a special purpose bankruptcy remote entity that
complies with all of the requirements of Section
4.1.35 and is controlled by a Qualified Transferee;
(C) Transferee shall assume all of the obligations of
Borrower under the Note, this Agreement, the
Security Instruments and the other Loan Documents
in a manner reasonably satisfactory to Lender in
all respects, including, without limitation, by
entering into an assumption agreement in form and
substance reasonably satisfactory to Lender and
delivering such legal opinions as Lender may
reasonably require;
(D) The Properties shall be managed by a Qualified
Manager following such transfer;
(E) Intentionally Omitted;
(F) To the extent available in the applicable
jurisdiction, Transferee shall deliver an
endorsement to the existing title policy insuring
the Security Instruments as modified by the
assumption agreement, as a valid first lien on each
Individual Property and naming the Transferee as
owner of the fee or leasehold estate, as
applicable, of each Individual Property, which
endorsement shall insure that as of the recording
of the assumption agreement, each Individual
Property shall not be subject to any additional
exceptions or Liens other than Permitted
Encumbrances; and
(G) Transferee shall deliver to Lender an opinion of
counsel from an independent law firm with respect
to the substantive non-consolidation of Transferee
and its constituent entities (partners, members or
shareholders), which law firm and which opinion
shall be reasonably satisfactory in all respects to
(i) Lender, if a
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Securitization has not occurred, or (ii) Lender and the Rating
Agencies, if a Securitization has occurred.
(f) Notwithstanding anything to the contrary contained in this Section
5.2.12, Lender's consent shall not be required for the financing of personal
property, including, without limitation, furniture, fixtures and equipment owned
or to be purchased by the applicable Maker (other than W-Baltimore, LLC) or
Maryland Guarantor that is used in connection with the operation of the
Properties ("Equipment"), provided Lender has received prior written
notification of such Maker's or Maryland Guarantor's, as applicable, intent to
finance such Equipment, and provided, further, that (i) any such financing is
subject to commercially prudent terms and conditions and at a market rate of
interest, (ii) the Equipment financed is readily replaceable without material
interference or interruption to the operation of the Properties as required
pursuant to the provisions of this Agreement and the Security Instruments and
the other Loan Documents, and (iii) the aggregate principal amount of such
financing for Equipment located on or used in connection with each Individual
Property is at all times less than the amount set forth on Schedule VI attached
hereto and made a part hereof for each such Individual Property ("Permitted FF&E
Financing") and (iv) the financing does not create a lien on any Properties
other than the Equipment financed.
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
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Section 6.1 Insurance. (a) Borrower shall obtain and maintain, or cause
---------
to be maintained, Policies for Borrower and the Properties providing at least
the following coverages:
(i) comprehensive all risk insurance on the Improvements and the
Personal Property, in each case (ii) in an amount equal to 100% of the
"Full Replacement Cost," which for purposes of this Agreement shall mean
actual replacement value (exclusive of costs of excavations, foundations,
underground utilities and footings) with a waiver of depreciation, but the
amount shall in no event be less than the outstanding principal balance of
the Note; (iii) containing an agreed amount endorsement with respect to the
Improvements and Personal Property waiving all co-insurance provisions;
(iv) providing for no deductible in excess of $100,000; and (v) providing
coverage for contingent liability from Operation of Building Laws,
Demolition Costs and Increased Cost of Construction Endorsements together
with an "Ordinance or Law Coverage" or "Enforcement" endorsement if any of
the Improvements or the use of each Individual Property shall at any time
constitute legal non-conforming structures or uses. The Full Replacement
Cost shall be redetermined from time to time (but not more frequently than
once in any twenty (24) calendar months) at the request of Lender by an
appraiser or contractor designated and paid by Borrower and approved by
Lender, or by an engineer or appraiser in the regular employ of the
insurer. After the first appraisal, additional appraisals may be based on
construction cost indices customarily employed in the trade. No omission on
the part of Lender to request any such ascertainment shall relieve Borrower
of any of its obligations under this Subsection;
(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in
or about each Individual Property, including "Dram Shop" or other liquor
liability coverage if alcoholic beverages are sold from or may be consumed
at an Individual Property, such insurance (A) to be on the so-called
"occurrence" form with a combined single limit of not less than $15,000,000
(and if in a blanket policy, containing an "Aggregate Per Location"
endorsement); (B) to continue at not less than the aforesaid limit until
required to be changed by Lender in writing by reason of changed economic
conditions making such protection inadequate; and (C) to cover at least the
following hazards: (1) premises and operations; (2) products and completed
operations on an "if any" basis; (3) independent contractors; (4) blanket
contractual liability for all legal contracts; and (5) contractual
liability covering the indemnities contained in Article 10 of the Security
Instruments to the extent the same is available;
(iii) business interruption/loss of rents insurance (A) with loss
payable to Lender; (B) covering all risks required to be covered by the
insurance provided for in Section 6.1(a)(i); (C) in an amount equal to 100%
of the projected gross income from each Individual Property for a period of
twenty four (24) months. The amount of such loss of rents insurance shall
be determined prior to the date hereof and at least once each year
thereafter based on the greatest of: (x) Borrower's reasonable estimate of
the gross income from each
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Individual Property (y) the estimate of gross income set forth in the
Annual Budget; and (z) the highest gross income received during the term of
the Note for any full calendar year prior to the date the amount of such
insurance is being determined, for the succeeding twenty-four month period.
All insurance proceeds payable to Lender pursuant to this Section
6.1(a)(iii) shall be held by Lender and shall be applied to the obligations
secured hereunder from time to time due and payable hereunder and under the
Note and of this Agreement; provided, however, that nothing herein
contained shall be deemed to relieve Borrower of its obligations to pay the
obligations secured hereunder on the respective dates of payment provided
for in this Agreement except to the extent such amounts are actually paid
out of the proceeds of such loss of rents insurance and (D) containing an
extended period of indemnity endorsement which provides that after the
physical loss to the Improvements and the Personal Property has been
repaired, the continued loss of income will be insured until such income
returns to the same level it was prior to the loss, or the expiration of
twenty-four (24) months from the date of the loss, whichever first occurs,
and notwithstanding that the policy may expire prior to the end of such
period. Notwithstanding the foregoing, following the payment of all sums
that are then due and payable under the Note, this Agreement and the other
Loan Documents, Lender shall disburse to Borrower any remaining proceeds
from business interruption insurance obtained under this Section
6.1(a)(iii);
(iv) at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements (A) owner's
contingent or protective liability insurance covering claims not covered by
or under the terms or provisions of the above mentioned commercial general
liability insurance policy; and (B) the insurance provided for in Section
6.1(a)(i) written in a so-called builder's risk completed value form (1) on
a non-reporting basis, (2) against all risks insured against pursuant to
Section 6.1(a)(i), (3) including permission to occupy each Individual
Property, and (4) with an agreed amount endorsement waiving co-insurance
provisions;
(v) workers' compensation, subject to the statutory limits of the
State in which each Individual Property is located, and employer's
liability insurance with a limit of at least $1,000,000 per accident and
per disease per employee, and $1,000,000 for disease aggregate in respect
of any work or operations on or about each Individual Property, or in
connection with such Individual Property or its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if applicable, in
amounts as shall be reasonably required by Lender on terms consistent with
the insurance required under Section 6.1(a)(i) hereof;
(vii) if any portion of the Improvements is at any time located in an
area identified by the Secretary of Housing and Urban Development or any
successor thereto as an area having special flood hazards pursuant to the
National Flood Insurance Act of 1968, the Flood Disaster Protection Act of
1973 or the National Flood Insurance Reform Act of 1994, as each may be
amended, or any successor law (the "Flood Insurance Acts"), flood hazard
insurance in an amount equal to the lesser of (A) the principal balance of
the Note, and (B) the maximum limit of coverage available for the Property
under the Flood Insurance Acts;
(viii) earthquake, sinkhole and mine subsidence insurance, if required
by Lender in amounts equal to one time (1x) the probable maximum loss of
each Individual Property as determined by Lender in its sole discretion and
in form and substance satisfactory to Lender, provided that the insurance
pursuant to this Section 6.1(a)(viii) hereof shall be on terms consistent
with the all risk insurance policy required under Section 6.1(a)(i) hereof;
(ix) umbrella liability insurance in an amount not less than ONE
HUNDRED MILLION AND 00/100 DOLLARS ($100,000,000.00) per occurrence on
terms consistent with the commercial general liability insurance policy
required under Section (ii) above;
(x) a blanket fidelity bond and errors and omissions insurance
coverage insuring against losses resulting from dishonest or fraudulent
acts committed by (A) Borrower's personnel; (B) any employees of outside
firms that provide appraisal, legal, data processing or other services for
Borrower or (C) temporary contract employees or student interns;
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(xi) with respect to the San ▇▇▇▇ Property only, Caribbean wind
storm insurance consistent with the requirements hereof, but providing for
a deductible not greater than two percent (2%) and
(xii) upon sixty (60) days prior written notice, such other
reasonable insurance and in such reasonable amounts as Lender from time to
time may reasonably request against such other insurable hazards which at
the time are commonly insured against for property similar to each
Individual Property located in or around the region in which the each
Individual Property is located.
(b) All insurance provided for in Section 6.1(a) hereof shall be
obtained under valid and enforceable policies (the "Policies" or in the
singular, the "Policy"), in such forms and, from time to time after the date
hereof, in such amounts as may be reasonably satisfactory to Lender, issued by
financially sound and responsible insurance companies authorized to do business
in the State in which each Individual Property is located and approved by
Lender. The insurance companies must have a claims paying ability/financial
strength rating of "AA" (or its equivalent) or better by at least two (2) Rating
Agencies (one of which will be S&P if they are rating the Securities and one of
which shall be Moody's if they are rating the Securities), or if only one Rating
Agency is rating the Securities, then only by such Rating Agency (each such
insurer shall be referred to below as a "Qualified Insurer"). Not less than
thirty (30) days prior to the expiration dates of the Policies theretofore
furnished to Lender pursuant to Section 6.1(a), Borrower shall deliver certified
copies of the Policies marked "premium paid" or accompanied by evidence
satisfactory to Lender of payment of the premiums due thereunder (the "Insurance
Premiums"), provided, however, that in the case of renewal Policies, Borrower
may furnish Lender with binders therefor to be followed by the original Policies
when issued. If Borrower's insurers or reinsurance carriers fail to provide or
maintain such a rating, Borrower may satisfy the ratings requirement of this
Section by providing to Lender a "cut-through" endorsement in form and substance
approved by Lender, which approval shall not be unreasonably withheld,
conditioned or delayed, issued by an insurer with at least an "AA" rating by
S&P.
(c) Except to the extent required pursuant to Section 6.1(a) hereof,
Borrower shall not obtain any umbrella or blanket liability or casualty Policy,
unless such Policy shall specifically allocate to each Individual Property the
amount of coverage required hereunder and shall otherwise provide the same
protection as would a separate Policy insuring only such Individual Property in
compliance with the terms of Section 6.1(a) hereof.
(d) All Policies provided for or contemplated by Section 6.1(a) hereof,
except for the Policy referenced in Section 6.1(a)(v), shall name Borrower as
the insured and Lender as additional insured, as their respective interests may
appear, and in the case of property damage, boiler and machinery, and flood
insurance, shall contain a so-called New York standard non-contributing
mortgagee clause in favor of Lender providing that the loss thereunder shall be
payable to Lender.
(e) All Policies provided for in Section 6.1(a) hereof shall contain
clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for
Borrower, or of any tenant under any Lease or other occupant, or failure to
comply with the provisions of any Policy which might otherwise result in a
forfeiture of the insurance or any part thereof, shall in any way affect
the validity or enforceability of the insurance insofar as Lender is
concerned;
(ii) the Policy shall not be materially changed (other than to
increase the coverage provided thereby) or cancelled without at least 30
days' written notice to Lender and any other party named therein as an
additional insured; and
(iii) each Policy shall provide that the issuers thereof shall give
written notice to Lender if the Policy has not been renewed thirty (30)
days prior to its expiration; and
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(iv) Lender shall not be liable for any Insurance Premiums thereon
or subject to any assessments thereunder.
(f) Upon written request by Lender, Borrower shall furnish to Lender, on
or before thirty (30) days after the close of each of Borrower's fiscal years,
an Officer's Certificate certifying of the amounts of insurance maintained in
compliance herewith, of the risks covered by such insurance and of the insurance
company or companies which carry such insurance and, if requested by Lender,
verification of the adequacy of such insurance by an independent insurance
broker or appraiser acceptable to Lender.
(g) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right to take such action as Lender deems necessary to protect its interest in
the Properties, including, without limitation, the obtaining of such insurance
coverage as Lender in its sole discretion deems appropriate after five (5)
Business Days' written notice to Borrower if prior to the date upon which any
such coverage will lapse or at any time Lender deems necessary (regardless of
prior written notice to Borrower) to avoid a lapse of such coverage. All
expenses incurred by Lender in connection with such action or in obtaining such
insurance and keeping it in effect shall be paid by Borrower to Lender upon
demand and until paid shall be secured by the Security Instruments and shall
bear interest at the Default Rate.
(h) In the event of a foreclosure of any of the Security Instruments, or
other transfer of title to any Individual Property in extinguishment in whole or
in part of the Debt all right, title and interest of Borrower in and to such
policies then in force concerning the Properties (unless such policies are
blanket policies insuring real property in addition to the Properties) and all
proceeds payable thereunder shall thereupon vest in the purchaser at such
foreclosure or Lender or other transferee in the event of such other transfer of
title and such party shall notify the insurer thereof.
Section 6.2 Casualty. If the Individual Property shall be damaged or
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destroyed, in whole or in part, by fire or other casualty (a "Casualty"),
Borrower shall give prompt notice of such damage to Lender and shall promptly
commence and diligently prosecute the completion of the Restoration of the
Individual Property in accordance with Section 6.4. Borrower shall pay all costs
of such Restoration whether or not such costs are covered by insurance. Lender
may, but shall not be obligated to make proof of loss if not made promptly by
Borrower.
Section 6.3 Condemnation. Borrower shall promptly give Lender notice of
------------
the actual or threatened commencement of any proceeding for the Condemnation of
all or any part of any Individual Property and shall deliver to Lender copies of
any and all papers served in connection with such proceedings. Lender may
participate in any such proceedings, and Borrower shall from time to time
deliver to Lender all instruments requested by it to permit such participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in
the carrying on or defense of any such proceedings. Notwithstanding any taking
by any public or quasi-public authority through Condemnation or otherwise
(including, but not limited to, any transfer made in lieu of or in anticipation
of the exercise of such taking), Maker shall continue to pay the Debt at the
time and in the manner provided for its payment in the Note and in this
Agreement and the Debt shall not be reduced until any Award shall have been
actually received and applied by Lender, after the deduction of expenses of
collection, to the reduction or discharge of the Debt in accordance with the
terms of this Agreement. Lender shall not be limited to the interest paid on the
Award by the condemning authority but shall be entitled to receive out of the
Award interest at the rate or rates provided herein or in the Note. If any
Individual Property or any portion thereof is taken by a condemning authority,
Borrower shall promptly commence and diligently prosecute the Restoration of the
applicable Individual Property and otherwise comply with the provisions of
Section 6.4. If any Individual Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the Award, Lender shall have the
right, whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the Award, or a portion thereof sufficient to
pay the Debt. Notwithstanding the foregoing, or any other provision herein to
the contrary, Borrower's obligation to commence and pursue Restoration of an
Individual Property shall not be deemed to obligate Borrower to acquire any
additional land to substitute for any portion of any Individual Property which
may be taken by Condemnation.
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Section 6.4 Restoration. The following provisions shall apply in
-----------
connection with the Restoration of any Individual Property:
(a) In the event that the projected Net Proceeds and the costs of
completing the Restoration are each less than the Threshold Amount, Borrower may
settle and adjust any claim without the consent of Lender and agree with the
insurance company or companies on the amount to be paid upon the loss; provided
that such adjustment is carried out in a competent and timely manner. Provided
that all of the conditions set forth in Subsections (A), (D), (F), (G), (I) and
(J) of Section 6.4(b)(i) hereof are met and Borrower delivers to Lender a
written undertaking to expeditiously commence and satisfactorily complete with
due diligence the Restoration in accordance with the terms herein, Borrower is
hereby authorized to collect and receive any such Insurance Proceeds and apply
them to the costs of the Restoration in accordance with the terms of this
Agreement.
(b) In the event that either the projected Net Proceeds or the costs
of completing the Restoration are either equal to or exceed the Threshold Amount
Borrower may settle and adjust any claim with the prior consent of Lender, which
consent shall not be unreasonably withheld, conditioned or delayed; provided,
however, that (A) if Borrower has not commenced or diligently pursued the claims
process with the applicable insurance company or companies and as a result
thereof, Lender takes over the claims process as provided in Section 6.2, then
Lender may settle and adjust such claims in a reasonable and expeditious manner
and (B) upon the occurrence and during the continuance of an Event of Default,
Lender may settle and adjust any claim without the consent of Borrower. In such
events, Borrower or Lender, as the case may be, may agree with the insurance
company or companies on the amount to be paid on the loss. All reasonable
efforts will be made to ensure that the proceeds of any such policy shall be
paid solely to Lender but, if for any reason Borrower or Wyndham shall also be a
dual payee, then Borrower and/or Wyndham, as applicable, shall endorse and/or
deliver to Lender all such proceeds within three (3) Business Days following
Borrower's and/or Wyndham's, as applicable, receipt thereof, and provided no
Event of Default has occurred and is continuing, Lender shall make the Net
Proceeds available for the Restoration in accordance with this Section 6.4. The
term "Net Proceeds" for purposes of this Section 6.4 shall mean: (i) the net
amount of all insurance proceeds received pursuant to Section 6.1 (a)(i), (iv),
(vi), (vii) and (viii) as a result of such damage or destruction, after
deduction of its reasonable costs and expenses (including, but not limited to,
reasonable counsel fees), if any, in collecting same ("Insurance Proceeds"), or
(ii) the net amount of the Award, after deduction of reasonable costs and
expenses (including, but not limited to, reasonable counsel fees), if any, in
collecting same ("Condemnation Proceeds"), whichever the case may be, plus (in
the case of (i) and (ii) above) any interest or other income earned on the
investment of the Insurance Proceeds or Condemnation Proceeds pursuant to the
terms hereof.
(i) The Net Proceeds shall be made available to Borrower for
Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and be
continuing;
(B) (1) in the event the Net Proceeds are Insurance
Proceeds, less than forty percent (40%) of the total
floor area of the Improvements on the Individual
Property has been materially damaged, destroyed and
rendered unusable for a period of at least thirty (30)
calendar days as a result of such fire or other
casualty or (2) in the event the Net Proceeds are
Condemnation Proceeds, less than ten percent (10%) of
the land constituting the Individual Property is
taken, and such land is located along the perimeter or
periphery of the Individual Property, and no portion
of the Improvements is located on such land;
(C) Intentionally Omitted;
(D) Borrower shall commence the Restoration as soon as
reasonably practicable (but, subject to Force Majeure,
in no event later than thirty (30) days after such
Casualty or Condemnation, whichever the case may be,
occurs) and shall diligently pursue the same to
satisfactory completion (Restoration shall be deemed
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commenced upon Borrower's engagement of an architect
if Borrower elects to do so or, if, in the
commercially reasonable judgement of Lender, an
architect is necessary and the commencing of cleaning
of the applicable Individual Property to effectuate
Restoration);
(E) Lender shall be reasonably satisfied that any
operating deficits, including all scheduled payments
of principal and interest under the Note, which will
be incurred with respect to the Individual Property as
a result of the occurrence of any such Casualty or
Condemnation, whichever the case may be, will be
covered out of (1) the Net Proceeds, (2) the insurance
coverage referred to in Section 6.1(a)(iii), if
applicable, or (3) by other funds of Borrower
including funds reasonably anticipated by Lender to be
generated from the operation of the Properties during
the Restoration;
(F) Lender shall be satisfied that the Restoration will be
substantially completed on or before the earliest to
occur of (1) six (6) months prior to the Maturity
Date, or (2) twelve (12) months after the occurrence
of such fire or other casualty, or (3) the earliest
date required for such completion under the terms of
the Management Agreement or (4) such time as may be
required under applicable zoning law, ordinance, rule
or regulation in order to repair and restore the
applicable Individual Property to the condition it was
in immediately prior to such Casualty or Condemnation
or (5) the expiration of the insurance coverage
referred to in Section 6.1(a)(iii) unless Borrower has
provided Lender with evidence reasonably acceptable to
Lender that Borrower has sufficient funds after the
expiration of such insurance to (1) operate the
Properties in a manner consistent with the manner in
which the Properties were operated immediately prior
to such Casualty or Condemnation and (2) pay all sums
as they become due under the Loan Documents in a
timely manner;
(G) the Individual Property and the use thereof after the
Restoration will be in compliance in all material
respects with and permitted under all applicable
zoning laws, ordinances, rules and regulations;
(H) the Restoration shall be done and completed by
Borrower in an expeditious and diligent fashion and in
compliance with all applicable governmental laws,
rules and regulations (including, without limitation,
all applicable environmental laws) and the terms and
condition of the Management Agreement;
(I) such Casualty or Condemnation, as applicable, does not
result in the permanent loss of access to any material
portion of the Individual Property or the related
Improvements;
(J) Lender shall be reasonably satisfied that the
projected Debt Service Coverage Ratio for the affected
Individual Property for the twelve (12) month period
beginning three (3) months after the completion of the
Restoration, shall be equal to or greater than the
Debt Service Coverage Ratio for such Individual
Property for the twelve (12) full calendar months
immediately prior to the Closing Date;
(K) If the Net Proceeds or the cost of Restoration is
reasonably anticipated by Lender to exceed the
Threshold Amount, Borrower shall deliver, or cause to
be delivered, to Lender a signed reasonably detailed
initial budget containing Borrower*s reasonable
estimates of the cost of completing the Restoration
and shall furnish to Lender no less frequently than
one time each calendar month an updated budget
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prepared by Borrower containing all revisions and
refinements to such budget and the amounts incurred
through the date of such budget. Such initial budget
and all subsequent budgets shall be reasonably
acceptable to Lender;
(L) the Net Proceeds received and reasonably estimated to
be received together with any cash or cash equivalent
(including any Letter of Credit received by Lender)
deposited by Borrower with Lender are sufficient in
Lender's reasonable discretion to cover the cost of
the Restoration and uncompleted Replacements (to the
extent provided in the next sentence). If and to the
extent that the Restoration includes Replacements
which were included in the Annual Budget for the year
in which the Casualty occurred or which were or would
reasonably be expected to be included in the Annual
Budget for the immediately following year in which the
Casualty occurred, then Borrower shall be given a
credit for having made the actual expenditures for
such Replacements as and when such expenditures are
made during the course of Restoration; and
(M) the Management Agreement in effect as of the date of
the occurrence of such fire or other casualty or
taking, whichever the case may be, shall (1) remain in
full force and effect during the Restoration and shall
not otherwise terminate as a result of the fire, other
casualty or the Restoration or (2) if terminated,
shall have been replaced with a Replacement Management
Agreement with a Qualified Manager, prior to the
opening or reopening of the applicable Individual
Property or any portion thereof for business with the
public.
(ii) The Net Proceeds shall be held by Lender in an interest-
bearing Eligible Account (provided, however, Borrower may instruct Lender
to invest the Net Proceeds in Permitted Investments, provided, that all
risks relating thereto shall be borne solely by Borrower) and, until
disbursed in accordance with the provisions of this Section 6.4(b), shall
constitute additional security for the Debt and other obligations under the
Loan Documents. The Net Proceeds shall be disbursed by Lender to, or as
directed by, Borrower from time to time during the course of the
Restoration, upon receipt of evidence satisfactory to Lender that (A) all
materials installed and work and labor performed (except to the extent that
they are to be paid for out of the requested disbursement) in connection
with the Restoration have been paid for in full, and (B) there exist no
notices of pendency, stop orders, mechanic's or materialman's liens or
notices of intention to file same, or any other liens or encumbrances of
any nature whatsoever (except for Liens being contested in good faith in
accordance with the terms hereof) on the Individual Property which have not
either been fully bonded to the satisfaction of Lender and discharged of
record or in the alternative fully insured to the satisfaction of Lender by
the title company issuing the Title Insurance Policy.
(iii) All plans and specifications (to the extent reasonably
required by Borrower) required in connection with a Restoration reasonably
anticipated by Lender to cost in excess of $1,000,000.00 shall be subject
to prior review and acceptance in all respects by Lender (which acceptance
shall not be unreasonably withheld, conditioned or delayed) and by an
independent consulting engineer selected by Lender and reasonably
acceptable to Borrower (the "Casualty Consultant"). Borrower may require
the Casualty Consultant to execute reasonably requested confidentiality
agreements with respect to Borrower's confidential non-public information
provided such agreements are customarily given for similarly situated
properties. Lender shall have the use of the plans and specifications and
all permits, licenses and approvals required or obtained in connection with
the Restoration. The identity of the contractors, subcontractors and
materialmen providing work and/or materials in excess of $500,000.00 in
connection with a Restoration, as well as the contracts under which they
have been engaged, shall be subject to prior review and acceptance by
Lender and the Casualty Consultant, such acceptance mot to be unreasonably
withheld, conditioned or delayed. All reasonable out-of-pocket costs and
expenses incurred by Lender in connection with making the Net Proceeds
available for the Restoration including, without limitation, reasonable
counsel fees and disbursements and the Casualty Consultant's fees, shall be
paid by Borrower.
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(iv) In no event shall Lender be obligated to make disbursements
of the Net Proceeds in excess of an amount equal to the costs actually
incurred from time to time for work in place as part of the Restoration, as
certified by the Casualty Consultant, minus the Casualty Retainage. The
term "Casualty Retainage" shall mean an amount equal to ten percent (10%)
of the costs actually incurred for work in place as part of the
Restoration, as certified by the Casualty Consultant, until the Restoration
has been completed; provided, however, to the extent that retainer fees and
other advances paid or payable to contractors, consultants and/or engineers
constitute an approved loss by the applicable insurance company or
companies and Insurance Proceeds have been received with respect to such
fees, provided no Event of Default shall have occurred and be continuing,
Lender will permit such amounts to be paid or reimbursed to Borrower from
the Net Proceeds to the extent such Insurance Proceeds have actually been
received by Lender, without any such Casualty Retainage. The Casualty
Retainage shall in no event, and notwithstanding anything to the contrary
set forth above in this Section 6.4(b), be less than the amount actually
held back by Borrower from contractors, subcontractors and materialmen
engaged in the Restoration. The Casualty Retainage shall not be released
until the Casualty Consultant certifies to Lender that the Restoration has
been completed in accordance with the provisions of this Section 6.4(b) and
that all approvals necessary for the re-occupancy and use of the Individual
Property have been obtained from all appropriate governmental and quasi-
governmental authorities, and Lender receives evidence reasonably
satisfactory to Lender that the costs of the Restoration have been paid in
full or will be paid in full out of the Casualty Retainage; provided,
however, that Lender will release the portion of the Casualty Retainage
being held with respect to any contractor, subcontractor or materialman
engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or
materialman has satisfactorily completed all work and has supplied all
materials in accordance with the provisions of the contractor's,
subcontractor's or materialman's contract, the contractor, subcontractor or
materialman delivers the lien waivers and evidence of payment in full of
(subject to receipt of the applicable Casualty Retainage) all sums due to
the contractor, subcontractor or materialman as may be reasonably requested
by Lender or by the title company issuing the Title Insurance Policy for
the related Individual Property, and Lender, upon its reasonable request,
receives an endorsement to such Title Insurance Policy insuring the
continued priority of the Lien of the related Security Instrument and
evidence of payment of any premium payable for such endorsement. If
required by Lender, the release of any such portion of the Casualty
Retainage shall be approved by the surety company, if any, which has issued
a payment or performance bond with respect to the contractor, subcontractor
or materialman.
(v) Lender shall not be obligated to make disbursements of the
Net Proceeds more frequently than (a) once every seven (7) calendar days
during the first (30) calendar days following a Casualty, (b) once every
fourteen (14) calendar days during the next one hundred eighty (180)
calendar days and (c) once every thirty (30) calendar days thereafter.
(vi) If at any time the Net Proceeds (including a reasonable
estimate of the amount to be received as Restoration progresses) or the
undisbursed balance thereof shall not, in the reasonable opinion of Lender
in consultation with the Casualty Consultant, be sufficient to pay in full
the balance of the costs which are estimated by the Casualty Consultant to
be incurred in connection with the completion of the Restoration based upon
the then current budget for the Restoration, Borrower shall deposit the
amount of the deficiency (the "Net Proceeds Deficiency") with Lender (which
deposit may be made in the form of a Letter of Credit) before any further
disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency
deposited with Lender shall be held by Lender and shall be disbursed for
costs actually incurred in connection with the Restoration on the same
conditions applicable to the disbursement of the Net Proceeds, and until so
disbursed pursuant to this Section 6.4(b) shall constitute additional
security for the Debt and other obligations under the Loan Documents.
(vii) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after
the Casualty Consultant certifies to Lender that the Restoration has been
substantially completed in accordance with the provisions of this Section
6.4(b), and
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the receipt by Lender of evidence reasonably satisfactory to Lender
that all costs incurred in connection with the Restoration have been
paid in full, shall be remitted by Lender to Borrower, provided no
Event of Default shall have occurred and shall be continuing.
(c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 6.4(b)(vii) may be retained and applied by Lender toward the payment
of either (or both) (1) any then outstanding portion of the Debt or (2) the
principal balance of the Debt whether or not then due and payable, in either
case in such order, priority and proportions as Lender in its sole discretion
shall deem proper, or, at the discretion of Lender, the same may be paid, either
in whole or in part, to Borrower for such purposes as Lender shall approve, in
its discretion. If Lender shall receive and retain Net Proceeds, the Lien of the
Security Instruments shall be reduced only by the amount thereof received and
retained by Lender and actually applied by Lender in reduction of the Debt.
(d) Notwithstanding the provisions of this Section 6.4 to the
contrary, a portion of the Net Proceeds not to exceed $2,500,000.00 shall be
made available to Borrower after receipt thereof by Lender or Borrower, as
applicable, to pay or reimburse Borrower for any immediate and necessary repairs
or other work required (i) to protect the health or safety of any hotel guest or
any of Borrower's employees or agents or (ii) to allow the applicable Individual
Property to operate as a hotel (collectively, the "Emergency Repairs") provided
(A) Lender has approved such Emergency Repairs in writing, which approval shall
not be unreasonably withheld, conditioned or delayed and (B) the Emergency
Repairs are (1) substantially completed and paid for within ten (10) calendar
days after the occurrence of the Casualty and (2) completed in a good and
▇▇▇▇▇▇▇ like manner and in compliance with all Applicable Laws.
VII. RESERVE FUNDS
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Section 7.1 Required Repair Funds.
---------------------
7.1.1 Deposits. Borrower shall perform the repairs at the Properties,
--------
as more particularly set forth on Schedule III hereto (such repairs hereinafter
referred to as "Required Repairs"). Borrower shall complete the Required Repairs
on or before the required deadline for each repair as set forth on Schedule III,
subject to such extensions as required due to Force Majeure. It shall be an
Event of Default under this Agreement if (a) Borrower does not complete the
Required Repairs at each Individual Property by the required deadline for each
repair as set forth on Schedule III, or (b) Borrower does not satisfy each
condition contained in Section 7.1.2 hereof in all material respects. Upon the
occurrence of such an Event of Default, Lender, at its option, may withdraw all
Required Repair Funds from the Required Repair Account and Lender may apply such
funds either to completion of the Required Repairs at one or more of the
Properties or toward payment of the Debt in such order, proportion and priority
as Lender may determine in its sole discretion. Lender's right to withdraw and
apply Required Repair Funds shall be in addition to all other rights and
remedies provided to Lender under this Agreement and the other Loan Documents.
If Borrower does not complete the Required Repairs on or before the required
deadline for each repair, Borrower shall deposit with Lender, immediately upon
request by Lender, an amount for each Individual Property equal to 125% of the
cost of any remaining or incomplete Required Repair for each such Individual
Property (collectively, the "Required Deposit"). Amounts so deposited with
Lender shall be held by Lender in accordance with Section 7.7 hereof. Amounts so
deposited shall hereinafter be referred to as Borrower's "Required Repair Fund."
Notwithstanding the foregoing, in lieu of depositing the Required Deposit,
Borrower shall have the option of delivering to Lender a Letter of Credit in the
amount of the Required Deposit.
7.1.2 Release of Required Repair Funds. Provided Borrower has
--------------------------------
deposited funds in the Required Repair Fund, Lender shall disburse to Borrower
the Required Repair Funds from the Required Repair Account from time to time
upon satisfaction by Borrower of each of the following conditions: (a) Borrower
shall submit a written request for payment to Lender at least fifteen (15) days
prior to the date on which Borrower requests such payment be made and specifies
the Required Repairs to be paid, (b) on the date such request is received by
Lender and on the date such payment is to be made, no Event of Default shall
exist and remain uncured, (c) Lender shall have received an Officers'
Certificate (i) stating that all Required Repairs at the applicable Individual
Property to be funded by the requested disbursement have been completed in good
and workmanlike manner (or any materials to be reimbursed by the
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requested disbursement are on site at the Individual Property or in a bonded
warehouse reasonably acceptable to Lender and are properly secured or have been
installed in the Individual Property) and in accordance with all Legal
Requirements and Environmental Laws, such certificate to be accompanied by a
copy of any license, permit or other approval by any Governmental Authority
required to commence and/or complete such Required Repairs, (ii) identifying
each Person that supplied materials or labor in connection with the Required
Repairs performed at such Individual Property with respect to the reimbursement
to be funded by the requested disbursement, and (iii) stating that each such
Person has been paid in full all sums then due upon such disbursement, such
Officers' Certificate to be accompanied by lien waivers or other evidence of
payment reasonably satisfactory to Lender, (d) at Lender's option, a title
search for such Individual Property indicating that such Individual Property is
free from all liens, claims and other encumbrances not previously approved by
Lender, and (e) Lender shall have received such other evidence as Lender shall
reasonably request that the Required Repairs at such Individual Property to be
funded by the requested disbursement (or any materials to be reimbursed by the
requested disbursement are on site at the Individual Property or in a bonded
warehouse reasonably acceptable to Lender and are properly secured or have been
installed in the Individual Property) have been completed and are paid for upon
such disbursement to Borrower. Lender shall not be required to make
disbursements from the Required Repair Account with respect to any Individual
Property unless such requested disbursement is in an amount greater than $25,000
(or a lesser amount if the total amount in the Required Repair Account is less
than $25,000, in which case only one disbursement of the amount remaining in the
account shall be made). Provided no Event of Default has occurred and is
continuing, any funds remaining in the Required Repairs Account after completion
of all Required Repairs and the delivery of evidence thereof in accordance with
the terms and conditions of this Agreement will be disbursed to Borrower.
Section 7.2 Tax and Insurance Escrow Fund. Borrower shall pay to
-----------------------------
Lender on each Payment Date (a) one-twelfth of the Taxes (the "Monthly Tax
Deposit") that Lender estimates will be payable during the next ensuing twelve
(12) months in order to accumulate with Lender sufficient funds to pay all such
Taxes at least thirty (30) days prior to their respective due dates, and (b)
one-twelfth of the Insurance Premiums (the "Monthly Insurance Premium Deposit")
that Lender estimates will be payable for the renewal of the coverage afforded
by the Policies, with respect to, and allocable to the Properties upon the
expiration thereof in order to accumulate with Lender sufficient funds to pay
all such Insurance Premiums at least thirty (30) days prior to the expiration of
the Policies (said amounts in (a) and (b) above hereinafter called the "Tax and
Insurance Escrow Fund"). The Tax and Insurance Escrow Fund and the payments of
interest or principal or both, payable pursuant to the Note and this Agreement,
shall be added together and shall be paid as an aggregate sum by Borrower to
Lender. Lender will apply the Tax and Insurance Escrow Fund to payments of Taxes
and Insurance Premiums required to be made by Borrower pursuant to Section 5.1.2
and 6.1 hereof. In making any payment relating to the Tax and Insurance Escrow
Fund, Lender may do so according to any ▇▇▇▇, statement or estimate procured
from the appropriate public office (with respect to Taxes) or insurer or agent
(with respect to Insurance Premiums), without inquiry into the accuracy of such
▇▇▇▇, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof, provided, however, Borrower
shall have the right to contest the same in good faith and in accordance with
the terms hereof. If the amount of the Tax and Insurance Escrow Fund shall
exceed the amounts due for Taxes and Insurance Premiums pursuant to Section
5.1.2 and 6.1 hereof, Lender shall, in its sole discretion, return any excess to
Borrower or credit such excess against future payments to be made to the Tax and
Insurance Escrow Fund. Any amount remaining in the Tax and Insurance Escrow Fund
after the Debt has been paid in full shall be returned to Borrower. In
allocating such excess, Lender may deal with the Person shown on the records of
Lender to be the owner of the Properties. If at any time Lender reasonably
determines that the Tax and Insurance Escrow Fund is not or will not be
sufficient to pay Taxes and Insurance Premiums by the dates set forth in (a) and
(b) above, Lender shall notify Borrower of such determination and Borrower shall
increase its monthly payments to Lender by the amount that Lender estimates is
sufficient to make up the deficiency at least thirty (30) days prior to
delinquency of the Taxes and/or thirty (30) days prior to expiration of the
Policies, as the case may be. Notwithstanding the foregoing, in lieu of making
the Monthly Insurance Premium Deposit, Borrower shall have the option of (i)
delivering to Lender a Letter of Credit in an amount equal to twenty-five
percent (25%) of the estimated annual Insurance Premium, as the same is
calculated each year during the term of the Loan or (ii) providing evidence
reasonably satisfactory to Lender that the liability or casualty Policy
maintained by Borrower covering the Properties shall constitute an approved
blanket or umbrella Policy pursuant to terms hereof. Amounts deposited with
Lender in the Tax and Insurance Escrow Fund shall be held by Lender in
accordance with the terms of Section 7.7 hereof.
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Section 7.3 Replacements and Replacement Reserve.
------------------------------------
7.3.1 Replacement Reserve Fund. With respect to each Individual
------------------------
Property, Borrower shall pay to Lender on the first Payment Date of each
calendar quarter the Replacement Reserve Deposit for replacements and repairs
required to be made to the Properties during the calendar year (collectively,
the "Replacements"). Amounts so deposited shall hereinafter be referred to as
Borrower's "Replacement Reserve Fund" and the account in which such amounts are
held shall hereinafter be referred to as Borrower's "Replacement Reserve
Account". In the event an Individual Property is released from the Lien of its
related Security Instrument in accordance with Section 2.4 or 2.6 hereof, any
amount held in the Replacement Reserve Account and allocated for such Individual
Property shall be retained by Lender and credited toward the future Replacement
Reserves Quarterly Deposits required by Lender hereunder for the Individual
Properties remaining subject to the Lien of the Security Instruments. Borrower
covenants and agrees to provide Lender evidence, reasonably acceptable to
Lender, within thirty (30) days of the start of each calendar quarter, of the
Actual Amount for the immediately preceding twelve (12) month period.
Notwithstanding the foregoing, in lieu of depositing the Replacement Reserve
Deposit, Borrower may deliver to Lender one (1) or more Letters of Credit each
in the amount of the required Replacement Reserve Deposit.
7.3.2 Disbursements from Replacement Reserve Account. (a) Provided that
----------------------------------------------
(i) the Replacement Reserve contains cash and (ii) no Triggering Event shall
have occurred and be continuing, Lender shall make disbursements from the
Replacement Reserve Account to pay or reimburse Borrower only for the costs of
the Replacements. Lender shall not be obligated to make disbursements from the
Replacement Reserve Account to pay or reimburse Borrower for the costs of
routine maintenance to an Individual Property, for replacement of inventory or
for costs which are to be reimbursed from the Required Repair Fund.
(b) Lender shall, upon written request from Borrower and
satisfaction of the requirements set forth in this Section 7.3.2, disburse to
Borrower amounts from the Replacement Reserve Account necessary to pay or
reimburse Borrower for the actual approved costs and Replacements upon
completion of such Replacements (or, upon partial completion in the case of
Replacements made pursuant to Section 7.3.2(e)) as reasonably determined by
Lender. In no event shall Lender be obligated to disburse funds from the
Replacement Reserve Account if a Default or an Event of Default has occurred and
is continuing.
(c) Each request for disbursement from the Replacement Reserve
Account shall be in a form reasonably specified or approved by Lender and shall
specify (i) the specific Replacements for which the disbursement is requested,
(ii) the quantity and price of each item purchased or to be purchased, if the
Replacement includes the purchase or replacement of specific items, (iii) the
price of all materials (grouped by type or category) used in any Replacement
other than the purchase or replacement of specific items, and (iv) the cost of
all contracted labor or other services applicable to each Replacement for which
the disbursement is requested. With each request Borrower shall deliver an
Officer's Certificate certifying that all Replacements subject to prior
requests, have been made in accordance with all applicable Legal Requirements of
any Governmental Authority having jurisdiction over the applicable Individual
Property to which the Replacements are being provided. Each request for
disbursement shall include copies of invoices for all items or materials
purchased or to be purchased and all contracted labor or services provided or to
be provided and each request shall include waivers of lien and evidence of
payment from each contractor, as applicable, previously receiving payment out of
any prior such request. Except as provided in Section 7.3.2(e), each request for
disbursement from the Replacement Reserve Account shall be made only after
completion of the Replacement for which disbursement is requested. Borrower
shall provide Lender evidence of completion or partial completion, as
applicable, satisfactory to Lender in its reasonable judgment.
(d) Borrower shall pay all invoices in connection with the
Replacements with respect to each request for disbursement (i) prior to
submitting such request for disbursement from the Replacement Reserve Account,
(ii) with the funds received from the applicable disbursement from the
Replacement Reserve Account or, (iii) at the request of Borrower, Lender will
issue joint checks, payable to Borrower and the contractor, supplier,
materialman, mechanic, subcontractor or other party to whom payment is due in
connection with a Replacement. In the case of payments made by joint check,
Lender may require a waiver of lien from each Person receiving payment prior to
Lender's disbursement
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from the Replacement Reserve Account. In addition, as a condition to any
disbursement, Lender may require Borrower to obtain lien waivers from each
contractor, supplier, materialman, mechanic or subcontractor who receives
payment in an amount equal to or greater than $50,000 for completion of its work
or delivery of its materials. Any lien waiver delivered hereunder shall conform
to the requirements of applicable law and shall cover all work performed and
materials supplied (including equipment and fixtures) for the applicable
Individual Property by that contractor, supplier, subcontractor, mechanic or
materialman through the date covered by the current payment or reimbursement
request (or, in the event that payment to such contractor, supplier,
subcontractor, mechanic or materialmen is to be made by a joint check, the
release of lien shall be effective through the date covered by the previous
release of funds request).
(e) If (i) the cost of a Replacement exceeds $50,000, (ii) the
contractor performing such Replacement requires periodic payments pursuant to
terms of a written contract, and (iii) Lender has approved in writing in advance
such periodic payments, a request for payment or reimbursement from the
Replacement Reserve Account may be made after completion of a portion of the
work under such contract, provided (A) such contract requires payment upon
completion of such portion of the work, (B) the materials for which the request
is made are on site at the applicable Individual Property and are properly
secured or have been installed in such Individual Property (or if stored at a
place other than the applicable Individual Property, are secured in a manner
reasonably acceptable to Lender), (C) all other conditions in this Agreement for
disbursement have been satisfied, (D) funds remaining in the Replacement Reserve
Account together with other funds or assurances reasonably satisfactory to
Lender deposited with Lender and available for such Replacements are, in
Lender's reasonable judgment, sufficient to complete such Replacement and other
Replacements when required, and (E) if required by Lender, each contractor or
subcontractor receiving payments under such contract shall provide a waiver of
lien with respect to amounts which have been paid to that contractor or
subcontractor.
(f) Borrower shall not make a request for disbursement from the
Replacement Reserve Account more frequently than once in any calendar month and
(except in connection with the final disbursement) the total cost of all
Replacements in any request shall not be less than $25,000.00.
7.3.3 Performance of Replacements. (a) Borrower shall make Replacements
---------------------------
when required in order to keep each Individual Property in condition and repair
consistent with other first class, full service hotels in the same market
segment in the metropolitan area in which the respective Individual Property is
located, and to keep each Individual Property or any portion thereof from
deteriorating. Borrower shall complete all Replacements in a good and
workmanlike manner as soon as practicable following the commencement of making
each such Replacement.
(b) In connection with Replacements for which payments or
reimbursements are requested from the Replacement Reserve Account, Lender
reserves the right, at its option, to approve each contract or work order with
materialmen, mechanics, suppliers, subcontractors, contractors or other parties
providing labor or materials in connection with the Replacements in the event
amounts payable under such contract or work order exceed $100,000. Upon Lender's
request, Borrower shall assign such contract or subcontract to Lender.
(c) Upon the occurrence and during the continuance of an Event of
Default, Lender shall have the option to withhold disbursement from the
Replacement Reserve Account for any unsatisfactory Replacement and to proceed
under existing contracts or to contract with third parties to complete such
Replacement and to apply the Replacement Reserve Fund toward the labor and
materials necessary to complete such Replacement, without providing any prior
notice to Borrower and to exercise any and all other remedies available to
Lender upon an Event of Default hereunder.
(d) In order to facilitate Lender's completion or making of the
Replacements pursuant to Section 7.3.3(c) above, Borrower grants Lender the
right to enter onto any Individual Property upon prior written notice to
Borrower and subject to the rights of tenants and hotel guests and perform any
and all work and labor necessary to complete or make the Replacements and/or
employ watchmen to protect such Individual Property from damage. All sums so
expended by Lender, to the extent not from the Replacement Reserve Fund, shall
be deemed to have been advanced under the Loan to Borrower and secured by the
Security Instruments. For this purpose Borrower constitutes and appoints Lender
its true and lawful attorney-in-fact with full power of substitution to complete
or undertake the
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Replacements in the name of Borrower. Such power of attorney shall be deemed to
be a power coupled with an interest and cannot be revoked, provided, however,
Lender shall not exercise such power of attorney until the earlier of (i) the
occurrence and continuance of an Event of Default or (ii) ten (10) days after
Lender notifies Borrower of its intention to exercise such power of attorney.
Borrower empowers said attorney-in-fact as follows: (i) to use any funds in the
Replacement Reserve Account for the purpose of making or completing the
Replacements; (ii) to make such additions, changes and corrections to the
Replacements as shall be reasonably necessary or desirable to complete the
Replacements; (iii) to employ such contractors, subcontractors, agents,
architects and inspectors as shall be reasonably required for such purposes;
(iv) to pay, settle or compromise all existing bills and claims which are or may
become Liens against any Individual Property, or as may be necessary or
desirable for the completion of the Replacements, or for clearance of title; (v)
to execute all applications and certificates in the name of Borrower which may
be required by any of the contract documents; (vi) to prosecute and defend all
actions or proceedings in connection with any Individual Property or the
rehabilitation and repair of any Individual Property; and (vii) to do any and
every act which Borrower might do in its own behalf to fulfill the terms of this
Agreement.
(e) Nothing in this Section 7.3.3 shall: (i) make Lender responsible
for making or completing the Replacements; (ii) require Lender to expend funds
in addition to the Replacement Reserve Fund to make or complete any Replacement;
(iii) obligate Lender to proceed with the Replacements; or (iv) obligate Lender
to demand from Borrower additional sums to make or complete any Replacement.
(f) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) or third parties making Replacements pursuant to this Section 7.3.3
to enter onto each Individual Property during normal business hours and upon
prior written notice (subject to the rights of tenants under their Leases) to
inspect the progress of any Replacements and all materials being used in
connection therewith, to examine all plans and shop drawings relating to such
Replacements which are or may be kept at each Individual Property, and to
complete any Replacements made pursuant to this Section 7.3.3. Borrower shall
cause all contractors and subcontractors to cooperate with Lender or Lender's
representatives or such other persons described above in connection with
inspections described in this Section 7.3.3(f) or the completion of Replacements
pursuant to this Section 7.3.3.
(g) Lender may require an inspection of an Individual Property at
Borrower's expense prior to making a monthly disbursement in excess of $100,000
from the Replacement Reserve Account in order to verify completion of the
Replacements for which payment or reimbursement is sought. Lender may require
that such inspection be conducted by an appropriate independent qualified
professional selected by Lender and/or may require a copy of a certificate of
completion by an independent qualified professional acceptable to Lender prior
to the disbursement of any amounts from the Replacement Reserve Account.
Borrower shall pay the expense of the inspection as required hereunder, whether
such inspection is conducted by Lender or by an independent qualified
professional.
(h) The Replacements and all materials, equipment, fixtures, or any
other item comprising a part of any Replacement shall be constructed, installed
or completed, as applicable, free and clear of all mechanic's, materialmen's or
other liens (except for Permitted Encumbrances).
(i) Before each disbursement from the Replacement Reserve Account in
excess of $100,000.00, Lender may require Borrower to provide Lender with a
search of title to the applicable Individual Property effective to the date of
the disbursement, which search shows that no mechanic's or materialmen's liens
or other liens of any nature (other than Liens being contested in good faith in
accordance with the terms hereof) have been placed against the applicable
Individual Property since the date of recordation of the related Security
Instrument and that title to such Individual Property is free and clear of all
Liens (other than the lien of the related Security Instrument and any other
Liens previously approved in writing by Lender, if any, or Permitted
Encumbrances).
(j) All Replacements shall comply with all applicable Legal
Requirements of all Governmental Authorities having jurisdiction over the
applicable Individual Property and applicable insurance requirements including,
without limitation, applicable building codes, special use permits,
environmental regulations, and requirements of insurance underwriters.
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(k) In addition to any insurance required under the Loan Documents,
Borrower shall provide or cause to be provided workmen's compensation insurance,
builder's risk, and public liability insurance and other insurance to the extent
required under applicable law in connection with a particular Replacement to the
extent not already provided by Borrower's existing insurance coverage. All such
policies shall be in form and amount reasonably satisfactory to Lender. All such
policies which can be endorsed with standard mortgagee clauses making loss
payable to Lender or its assigns shall be so endorsed. Certified copies of such
policies shall be delivered to Lender.
7.3.4 Failure to Make Replacements. (a) It shall be an Event of Default
----------------------------
under this Agreement if Borrower fails to comply with any provision of this
Section 7.3 and such failure is not cured within thirty (30) days after notice
from Lender. Upon the occurrence and during the continuance of such an Event of
Default, Lender may use the Replacement Reserve Fund (or any portion thereof)
for any purpose, including but not limited to completion of the Replacements as
provided in Sections 7.3.3(c) and (d), or for any other repair or replacement to
any Individual Property or toward payment of the Debt in such order, proportion
and priority as Lender may determine in its sole discretion. Lender's right to
withdraw and apply the Replacement Reserve Funds shall be in addition to all
other rights and remedies provided to Lender under this Agreement and the other
Loan Documents.
(b) Nothing in this Agreement shall obligate Lender to apply all or any
portion of the Replacement Reserve Fund on account of an Event of Default to
payment of the Debt or in any specific order or priority.
7.3.5 Balance in the Replacement Reserve Account. The insufficiency of
------------------------------------------
any balance in the Replacement Reserve Account shall not relieve Borrower from
its obligation to fulfill all preservation and maintenance covenants in the Loan
Documents.
Section 7.4 Intentionally Omitted.
---------------------
Section 7.5 Intentionally Omitted.
---------------------
Section 7.6 Ground Lease Escrow Fund.
------------------------
Borrower shall pay to Lender, together with the scheduled payment
of interest under the Loan each month, an amount (the "Monthly Ground Rent
Deposit") that is estimated by Lender to be due and payable by Borrower under
the Ground Lease for all rent and any and all other charges (the "Ground Rent")
which may be due by Borrower under the Ground Lease in order to accumulate with
Lender sufficient funds to pay all sums payable under the Ground Lease at least
ten (10) Business Days prior to the dates due (said amounts, hereinafter called
the "Ground Lease Escrow Fund"). The Ground Lease Escrow Fund is for the purpose
of paying all sums due under the Ground Lease. Upon Borrower's failure to pay
any rent or other charges due under the Ground Lease after the receipt of any
notice and the expiration of any cure period available to Borrower pursuant to
the Ground Lease, Lender may, in its discretion, apply any amounts held in the
Ground Lease Escrow Fund to the payment of such rent or other charges; provided
however, that the provisions of this Section 7.6 shall not be deemed to create
any obligation on the part of Lender to pay any such rent or other charges from
amounts on deposit in the Ground Lease Escrow Fund. Notwithstanding the
foregoing, in lieu of depositing the Monthly Ground Rent Deposit, Borrower shall
have the option of delivering to Lender a Letter of Credit equal to twenty-five
percent (25%) of the annual Ground Rent due under the Ground Lease, as
calculated each year during the term of the Loan. Such deposit may be increased
by Lender in the amount Lender deems is necessary in its reasonable discretion
based on any increases in the rent due under the Ground Lease.
Section 7.7 Reserve Funds, Generally.
------------------------
7.7.1 Borrower grants to Lender a first-priority perfected security
interest in each of the Reserve Funds and the related Accounts and any and all
monies now or hereafter deposited in each Reserve Fund and related Account as
additional security for payment of the Debt. Until expended or applied in
accordance herewith, the Reserve Funds and the related Accounts shall constitute
additional security for the Debt.
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7.7.2 Upon the occurrence and during the continuance of an Event of
Default, Lender may, in addition to any and all other rights and remedies
available to Lender, apply any sums then present in any or all of the Reserve
Funds to the payment of the Debt in any order in its sole discretion.
7.7.3 The Reserve Funds shall not constitute trust funds, shall be held
in a segregated account and shall be held at the Lockbox Bank.
7.7.4 The Reserve Funds shall be held in interest bearing accounts and
all earnings or interest on a Reserve Fund shall be added to and become a part
of such Reserve Fund and shall be disbursed in the same manner as other monies
deposited in such Reserve Fund.
7.7.5 Borrower shall not, without obtaining the prior written consent
of Lender, further pledge, assign or grant any security interest in any Reserve
Fund or related Account or the monies deposited therein or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to be
filed with respect thereto.
7.7.6 Borrower shall indemnify Lender and hold Lender harmless from and
against any and all actions, suits, claims, demands, liabilities, losses, actual
direct damages, obligations and costs and expenses (including litigation costs
and reasonable attorneys fees and expenses) arising from or in any way connected
with the Reserve Funds or the related Accounts or the performance of the
obligations for which the Reserve Funds or the related Accounts were
established, except to the extent caused by Lender's or its agent's or
employee's gross negligence or willful misconduct. Borrower shall assign to
Lender all rights and claims Borrower may have against all persons or entities
supplying labor, materials or other services which are to be paid from or
secured by the Reserve Funds or the related Accounts; provided, however, that
Lender may not pursue any such right or claim unless an Event of Default has
occurred and remains uncured.
VIII. DEFAULTS
Section 8.1 Event of Default. hereunder (an "Event of Default"):
----------------
(a) Each of the following events shall constitute an event of default
(i) if any portion of the Debt (other than the payments due on
the Maturity Date) is not paid within two (2) Business Days of the date
the same is due and payable or if the amounts due on the Maturity Date
are not paid on or prior to the Maturity Date;
(ii) if any of the Taxes or Other Charges are not paid on or
before the date when the same are due and payable;
(iii) if the Policies are not kept in full force and effect, or
if certified copies of the Policies are not delivered to Lender upon
request if required pursuant to the terms hereof;
(iv) except as expressly permitted hereunder, if any Borrower
transfers or encumbers any portion of the Properties without Lender's
prior written consent or otherwise violates the provisions of Section
5.2.12 hereof or Article 7 of the Security Instruments;
(v) if any representation or warranty made by any Borrower,
Principal, Indemnitor or Guarantor herein or in any other Loan
Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished to Lender shall have been
false or misleading in any material respect as of the date the
representation or warranty was made;
(vi) if any Borrower, Principal, Indemnitor or any guarantor
under any guaranty issued in connection with the Loan, including,
without limitation, the Maryland Guaranty, shall make an assignment for
the benefit of creditors;
- 75 -
(vii) if a receiver, liquidator or trustee shall be appointed
for any Borrower, Principal, Indemnitor or any guarantor under any
guarantee issued in connection with the Loan, including, without
limitation, the Maryland Guaranty, or if any Borrower, Principal,
Indemnitor or such guarantor shall be adjudicated a bankrupt or
insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal
or State law, shall be filed by or against, consented to, or
acquiesced in by, any Borrower, Principal, Indemnitor or such
guarantor, or if any proceeding for the dissolution or liquidation of
any Borrower, Principal, Indemnitor or such guarantor shall be
instituted; provided, however, if such appointment, adjudication,
petition or proceeding was involuntary and not consented to by any
Borrower, Principal, Indemnitor or such guarantor, upon the same not
being discharged, stayed or dismissed within ninety (90) days;
(viii) if any Borrower attempts to assign its rights under this
Agreement or any of the other Loan Documents or any interest herein or
therein in contravention of the Loan Documents;
(ix) if any Borrower breaches any of its respective negative
covenants contained in Section 5.2 in any material respect or any
covenant contained in Section 5.1.10 hereof;
(x) with respect to any term, covenant or provision set forth
herein or in any other Loan Document which specifically contains a
notice requirement or grace period, if any Borrower shall be in
default under such term, covenant or condition after the giving of
such notice or the expiration of such grace period;
(xi) if any of the assumptions contained in the Insolvency
Opinion or in any other "non-consolidation" opinion delivered to
Lender in connection with the Loan, or in the Additional Insolvency
Opinion or in any other "non-consolidation" opinion delivered
subsequent to the closing of the Loan, is or shall become untrue in
any material respect;
(xii) if a material default has occurred and continues beyond
any applicable cure period under the Management Agreement (or any
Replacement Management Agreement) if such default permits the Manager
thereunder to terminate or cancel the Management Agreement (or any
Replacement Management Agreement);
(xiii) if any Borrower or any Principal violates or does not
comply with any of the provisions of Section 4.1.35 hereof, including,
but not limited to, if any Borrower or any Principal shall fail to
comply with the provisions of its operating agreement, articles or
certificate of incorporation, partnership agreement or any other
governing documents;
(xiv) subject to Borrower's right to contest the same in
accordance with the terms hereof, if any Individual Property becomes
subject to any mechanic's, materialman's or other lien other than a
Permitted Encumbrance or a lien for local real estate taxes and
assessments not then due and payable and the lien shall remain
undischarged of record (by payment, bonding or otherwise) for a period
of thirty (30) days;
(xv) subject to Borrower's right to contest the same in
accordance with the terms hereof, if any federal tax lien or State or
local income tax lien is filed against any Borrower, any member or
general partner of Borrower, any Guarantor, any Indemnitor or any
Individual Property and same is not discharged of record within forty-
five (45) days after same is filed;
(xvi) (A) any Borrower fails to timely provide Lender with the
written certification and evidence referred to in Section 5.2.8
hereof, or (B) any Borrower consummates a transaction which would
cause the Security Instruments or Lender's exercise of its rights
under the Security Instruments, the Note, this Agreement or the other
Loan Documents to constitute a nonexempt prohibited transaction under
ERISA or result in a violation of a State statute regulating
governmental plans, subjecting Lender to liability for a violation of
ERISA or a State statute;
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(xvii) if any Borrower shall fail to deliver to Lender, within
fifteen (15) days after request by Lender, the estoppel certificates
required pursuant to the terms of Section 5.1.13 hereof;
(xviii) if any default occurs under any guaranty or indemnity
executed in connection herewith (including, without limitation, the
Guaranty, the Environmental Indemnity and the Maryland Guaranty) and
such default continues after the expiration of applicable grace
periods, if any;
(xix) if any Borrower shall be in default beyond applicable
notice and grace periods under any other mortgage, deed of trust, deed
to secure debt or other security agreement covering any part of any
Individual Property whether it be superior or junior in lien to the
related Security Instrument;
(xx) if any Maker is required to maintain an Interest Rate Cap
Agreement and (i) the Interest Rate Cap Agreement is terminated for
any reason by Maker or the Counterparty, or (ii) the Counterparty
defaults in the performance of its monetary obligations under the
Interest Rate Cap Agreement or (iii) the rating of the Counterparty is
subject to any downgrade, withdrawal or qualification by an Rating
Agency, and Maker does not within fifteen (15) days (A) replace the
terminated Interest Rate Cap Agreement with a Replacement Interest
Rate Cap Agreement in accordance with Section 2.4 hereof, and (B)
deliver to Lender, in form and substance reasonably satisfactory to
Lender (y) an Assignment of Interest Rate Cap and (z) a recognition
letter from the Counterparty thereto acknowledging the assignment of
the Replacement Interest Rate Cap Agreement;
(xxi) if any Borrower shall fail to pay the Ground Rent or any
additional rent or other charge mentioned in or made payable by the
Ground Lease when said rent or other charge is due and payable (after
the expiration of any applicable notice and cure period provided
therein);
(xxii) if the leasehold estate created by the Ground Lease shall
be surrendered or if the Ground Lease shall cease to be in full force
and effect or the Ground Lease shall be terminated or cancelled for
any reason or under any circumstances whatsoever, or if any of the
terms, covenants or conditions of the Ground Lease shall in any manner
be modified, changed, supplemented, altered, or amended without the
consent of Lender;
(xxiii) if there shall occur any default by any Borrower, as
tenant under the Ground Lease, in the observance or performance of any
term, covenant or condition of the Ground Lease on the part of
Borrower to be observed or performed and said default is not cured
prior to the expiration of any applicable grace and notice periods
therein provided, or if the leasehold estate created by the Ground
Lease shall be surrendered or the Ground Lease shall be terminated or
canceled for any reason or under any circumstances whatsoever, or if
any of the terms, covenants or conditions of the Ground Lease shall in
any manner be modified, changed, supplemented, altered, or amended
without the consent of Lender; or
(xxiv) Intentionally Omitted;
(xxv) if any Borrower ceases to operate a hotel on the Property
or terminates such business for any reason whatsoever (other than
temporary cessation in connection with Force Majeure or any
renovations to the Property or restoration of the Property after
Casualty or Condemnation);
(xxvi) if any Borrower operates the Property under the name of
any hotel chain or system other than Wyndham, or the name of the hotel
chain or system of a public or private entity into which Wyndham
merged or consolidated or by which Wyndham is acquired in a transfer
permitted under Section 5.2.12 hereof, without Lender's prior written
consent; or
(xxvii) if any Borrower shall continue to be in Default under any
of the other terms, covenants or conditions of this Agreement not
specified in subsections (i) to (xxvi) above, for ten (10) days after
notice
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to Borrower from Lender, in the case of any Default which can be cured
by the payment of a sum of money, or for thirty (30) days after notice
from Lender in the case of any other Default; provided, however, that
if such non-monetary Default is susceptible of cure but cannot
reasonably be cured within such 30-day period and provided further
that Borrower shall have commenced to cure such Default within such
30-day period and thereafter diligently and expeditiously proceeds to
cure the same, such 30-day period shall be extended for such time as
is reasonably necessary for Borrower in the exercise of due diligence
to cure such Default, such additional period not to exceed ninety (90)
days; or
(xxviii) if there shall be default under any of the other Loan
Documents beyond any applicable cure periods contained in such
documents, whether as to any Borrower or any Individual Property, or
if any other such event shall occur or condition shall exist, if the
effect of such event or condition is to accelerate the maturity of any
portion of the Debt or to permit Lender to accelerate the maturity of
all or any portion of the Debt;
(b) Upon the occurrence and during the continuance of an Event of
Default (other than an Event of Default described in clauses (vi), (vii) or
(viii) above) and at any time thereafter, in addition to any other rights or
remedies available to it pursuant to this Agreement and the other Loan Documents
or at law or in equity, Lender may take such action, without notice or demand,
that Lender deems advisable to protect and enforce its rights against Borrower
and in and to all or any Individual Property, including, without limitation,
declaring the Debt to be immediately due and payable, and Lender may enforce or
avail itself of any or all rights or remedies provided in the Loan Documents
against Borrower and any or all of the Properties, including, without
limitation, all rights or remedies available at law or in equity; and upon any
Event of Default described in clauses (vi), (vii) or (viii) above, the Debt and
all other obligations of Borrower hereunder and under the other Loan Documents
shall immediately and automatically become due and payable, without notice or
demand, and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.
Section 8.2 Remedies. (a) Upon the occurrence and during the
--------
continuance of an Event of Default, all or any one or more of the rights,
powers, privileges and other remedies available to Lender against Borrower under
this Agreement or any of the other Loan Documents executed and delivered by, or
applicable to, Borrower or at law or in equity may be exercised by Lender at any
time and from time to time, whether or not all or any of the Debt shall be
declared due and payable, and whether or not Lender shall have commenced any
foreclosure proceeding or other action for the enforcement of its rights and
remedies under any of the Loan Documents with respect to all or any Individual
Property or any other Collateral. Any such actions taken by Lender shall be
cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as 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 Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents. Without limiting the generality of the foregoing, Borrower agrees
that if an Event of Default is continuing, to the extent permitted by Applicable
Law, (i) Lender is not subject to any "one action" or "election of remedies" law
or rule, and (ii) all liens and other rights, remedies or privileges provided to
Lender shall remain in full force and effect until Lender has exhausted all of
its remedies against the Properties and the other Collateral and each Security
Instrument has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.
(b) With respect to Borrower and the Properties, nothing contained
herein or in any other Loan Document shall be construed as requiring Lender to
resort to any Individual Property or Collateral for the satisfaction of any of
the Debt in preference or priority to any other Individual Property or
Collateral, and Lender may seek satisfaction out of all of the Properties or all
of the Collateral or any part thereof, in its absolute discretion in respect of
the Debt. In addition, to the extent permitted by Applicable Law, Lender shall
have the right from time to time to partially foreclose the Security Instruments
in any manner and for any amounts secured by the Security Instruments then due
and payable as determined by Lender in its sole discretion including, without
limitation, the following circumstances: (i) in the event Borrower defaults
beyond any applicable grace period in the payment of one or more scheduled
payments of principal and interest, Lender may foreclose one or more of the
Security Instruments to recover such delinquent payments, or (ii) in the event
Lender elects to accelerate less than the entire outstanding principal
- 78 -
balance of the Loan, Lender may foreclose one or more of the Security
Instruments to recover so much of the principal balance of the Loan as Lender
may accelerate and such other sums secured by one or more of the Security
Instruments as Lender may elect. Notwithstanding one or more partial
foreclosures, the Properties shall remain subject to the Security Instruments to
secure payment of sums secured by the Security Instruments and not previously
recovered.
Section 8.3 Remedies Cumulative; Waivers. The rights, powers and
----------------------------
remedies of Lender under this Agreement shall be cumulative and not exclusive of
any other right, power or remedy which Lender may have against Borrower pursuant
to this Agreement or the other Loan Documents, or existing at law or in equity
or otherwise. Lender's rights, powers and remedies may be pursued singularly,
concurrently or otherwise, at such time and in such order as Lender may
determine in 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 one or more Defaults or Events of Default with
respect to Borrower shall not be construed to be a waiver of any subsequent
Default or Event of Default by Borrower or to impair any remedy, right or power
consequent thereon.
IX. SPECIAL PROVISIONS
------------------
Section 9.1 Sale of Notes and Securitization.
--------------------------------
Lender may, at any time, sell, transfer or assign the Note,
this Agreement, the Security Instruments and the other Loan Documents, and any
or all servicing rights with respect thereto, or grant participations therein or
issue mortgage pass-through certificates or other securities (the "Securities")
evidencing a beneficial interest in a rated or unrated public offering or
private placement (a "Securitization"). At the request of the holder of the Note
and, to the extent not already required to be provided by Borrower under this
Agreement, Borrower shall, at Borrower's expense (subject to the limitations set
forth below), use reasonable efforts to satisfy the market standards to which
the holder of the Note customarily adheres or which may be reasonably required
in the marketplace or by the Rating Agencies in connection with a Securitization
or the sale of the Note or the participations or Securities, including, without
limitation, to:
(a) (i) provide such financial and other information with
respect to the Properties, Borrower and the Manager,
(ii) provide budgets relating to the Properties and
(iii) to perform or permit or cause to be performed or
permitted, at Lender's expense, such site inspection,
appraisals, market studies, environmental reviews and
reports (Phase I's and, if appropriate, Phase II's),
engineering reports and other due diligence
investigations of the Properties, as may be reasonably
requested by the holder of the Note or the Rating
Agencies or as may be necessary or appropriate in
connection with the Securitization (the "Provided
Information"), provided, however Phase II reports and
other invasive testing may not be performed at any
Individual Property unless Borrower has received
evidence of insurance for any Person performing such
testing, together, if customary, with appropriate
verification and/or consents of the Provided
Information through letters of auditors or opinions of
counsel of independent attorneys acceptable to Lender
and the Rating Agencies;
(b) if required by the Rating Agencies, deliver (i)
revised opinions of counsel as to non-consolidation,
due execution and enforceability with respect to the
Properties, Borrower, Guarantor, Indemnitor, Principal
and their respective Affiliates and the Loan
Documents, and (ii) revised organizational documents
as they relate to the single purpose bankruptcy
remoteness of Borrower and/or Principal, (provided,
however, no such revisions to Borrower's or
Principal's organizational documents shall have a
material adverse effect on Borrower and/or Principal,
as applicable) which counsel, opinions and
organizational documents shall be shall be
satisfactory to Lender and the Rating Agencies;
(c) if required by the Rating Agencies, deliver such
additional tenant estoppel letters, subordination
agreements or other agreements from parties to
agreements that affect the
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Properties, which estoppel letters, subordination agreements
or other agreements shall be satisfactory to Lender and the
Rating Agencies.
(d) execute such amendments to the Loan Documents and
organizational documents, as may be requested by the holder of
the Note or the Rating Agencies or otherwise to effect the
Securitization; provided, however, that Borrower shall not be
required to modify or amend any organizational document or
Loan Document if such modification or amendment would (except
for modifications and amendments required to be made pursuant
to Section (e) below,) (i) change the interest rate, the
stated maturity or the amortization of principal set forth in
the Note, or (ii) modify or amend any other material economic
or material non-economic term of the organizational documents
or Loan Documents.
(e) if Lender elects, in its sole discretion, prior to or upon a
Securitization, to split the Loan into two or more parts, or
the Note into multiple component notes or tranches which may
have different interest rates, amortization payments,
principal amounts and maturities, Borrower agrees to cooperate
with Lender in connection with the foregoing and to execute
the required modifications and amendments to the Note, this
Agreement and the Loan Documents and to provide opinions
necessary to effectuate the same; provided, however Borrower
shall not be required to modify or amend any Loan Documents if
(i) the initial weighted average interest rate of such split
notes would be greater than the Applicable Interest Rate
immediately preceding such loan split or (ii) such
modification or amendment would (a) change the Maturity Date
or Monthly Scheduled Amortization Payment or (b) modify or
amend any other material economic or material non-economic
term of the Loan Documents, provided, that, notwithstanding
the provisions below, Borrower shall not be responsible for
the payment of any title insurance premiums required by Lender
in connection with the foregoing, but Borrower shall be
responsible for all other cost and expenses (subject to the
limitations set forth below) in complying with this Section
9.1(e).
(f) make such representations and warranties as of the closing
date of the Securitization with respect to the Properties,
Borrower, and the Loan Documents as are customarily provided
in securitization transactions and as may be reasonably
requested by the holder of the Note or the Rating Agencies and
consistent with the facts covered by such representations and
warranties as they exist on the date thereof, including the
representations and warranties made in the Loan Documents; and
(g) supply to Lender such documentation, financial statements and
reports in form and substance required for Lender to comply
with Regulation S-X of the federal securities law.
All reasonable third party costs and expenses incurred by Lender in
connection with Borrower's complying with requests made under this Section 9.1
shall be paid by Borrower; provided, however, other than with respect to (i)
items which Borrower, Principal, Wyndham and/or any Affiliate of any of the
foregoing are otherwise required to deliver pursuant to the terms of the Loan
Documents, (ii) the cost of agreed upon procedures and the cost of a wind storm
analysis, if required by Lender and (iii) legal counsel employed by Borrower,
Principal, Wyndham and/or any Affiliate of any of the foregoing, such costs and
expenses shall not exceed $20,000.00 in the aggregate.
Section 9.2 Securitization Indemnification.
------------------------------
(a) Borrower understands that certain of the Provided Information may
be included in disclosure documents in connection with the Securitization,
including, without limitation, a prospectus, prospectus supplement or private
placement memorandum (each, a "Disclosure Document") and may also be included in
filings with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), or the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), or provided or made available to
investors or prospective investors in the Securities, the Rating Agencies, and
service providers relating to the Securitization.
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In the event that the Disclosure Document is required to be revised prior to the
sale of all Securities, Borrower will cooperate with the holder of the Note in
updating the Disclosure Document by providing all current information necessary
to keep the Disclosure Document accurate and complete in all material respects.
(b) Borrower agrees to provide in connection with each of (i) a
preliminary and a final private placement memorandum or (ii) a preliminary and
final prospectus or prospectus supplement, as applicable (collectively, the
"Offering Materials"), an indemnification certificate (A) certifying that
Borrower has carefully examined such memorandum or prospectus, as applicable,
including without limitation, the sections entitled "Special Considerations,"
"Description of the Mortgages," "Description of the Mortgage Loans and Mortgaged
Property," "The Manager," "The Borrower" and "Certain Legal Aspects of the
Mortgage Loan," and such sections (and any other sections reasonably requested
to the extent the same relate to the Loan, the Loan Documents, Borrower,
Guarantor, Indemnitor, Principal or an Affiliate of any of the foregoing) do not
(and with respect to any portion of the Offering Materials prepared in reliance
on the reports of third-parties, to the best of Borrower's knowledge, do not)
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading, (B) indemnifying
Lender (and for purposes of this Section 9.2, Lender hereunder shall include its
officers and directors), the Affiliate of ▇▇▇▇▇▇ Brothers Inc. ("▇▇▇▇▇▇") that
has filed the registration statement, if any, relating to the securitization
(the "Registration Statement"), each of its directors, each of its officers who
have signed the Registration Statement and each Person or entity who controls
the Affiliate within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act (collectively, the "▇▇▇▇▇▇ Group"), and ▇▇▇▇▇▇, each of
its directors and each Person who controls ▇▇▇▇▇▇ within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act (collectively, the
"Underwriter Group") for any losses, claims, damages or liabilities
(collectively, the "Liabilities") to which Lender, the ▇▇▇▇▇▇ Group or the
Underwriter Group may become subject insofar as the Liabilities arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in such sections (other than such statement or misstatement made
in Borrower's good faith reliance upon the reports of third parties that do not
to the best of Borrower's knowledge, contain any untrue statement or
misstatement or a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading) or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated in such sections or necessary in order to
make the statements in such sections or in light of the circumstances under
which they were made, not misleading and (C) agreeing to reimburse Lender, the
▇▇▇▇▇▇ Group and the Underwriter Group for any legal or other out-of-pocket
expenses reasonably incurred by Lender and ▇▇▇▇▇▇ in connection with
investigating or defending the Liabilities; provided, however, that Borrower
will be liable in any such case under clauses (B) or (C) above only to the
extent that any such loss claim, damage or liability arises out of or is based
upon any such untrue statement or omission made therein in reliance upon and in
conformity with information furnished to Lender by or on behalf of Borrower in
connection with the preparation of the memorandum or prospectus or in connection
with the underwriting of the debt, including, without limitation, financial
statements of Borrower, operating statements, rent rolls, environmental site
assessment reports and property condition reports with respect to the Property
but excluding any projections made in good faith by Borrower; and provided that
this Section 9.2 shall not apply to any loss, claim, damage or liability to the
extent arising out of any untrue statement, misstatement or omission or alleged
untrue statement, misstatement or omission made in reliance upon and in
connection with written information furnished to Borrower by Lender, any member
of the ▇▇▇▇▇▇ Group or any member of the Underwriter Group expressly for use in
the Offering Materials unless Borrower, Principal or Indemnitor fails to correct
any such untrue statement, misstatement or omission with respect to Borrower,
Principal or Indemnitor that is known to Borrower, Principal or Indemnitor or
that, with the exercise of customary reasonable efforts, should be known to
Borrower, Principal or Indemnitor. The foregoing indemnity with respect to any
untrue statement or misstatement contained in, or omission from, preliminary
Offering Materials shall not inure to the benefit of any member of the ▇▇▇▇▇▇
Group or the Underwriting Group (or any person controlling such ▇▇▇▇▇▇ Group or
Underwriting Group) from whom the Person asserting any such loss, liability,
claim, damage or expense purchased any of the securities which are the subject
thereof if Borrower shall sustain the burden of proving that any such loss,
liability, claim, damage or expense resulted from the fact that such Person was
not provided with a copy of the final Offering Materials at or prior to the
written confirmation of the sale of such securities to such Person and the loss,
liability, claim, damage or expense resulted from an untrue statement or
misstatement contained in, or omission from, the preliminary Offering Materials
that was corrected in the final Offering Materials. This indemnity agreement
will be in addition to any liability which Borrower
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may otherwise have. Moreover, the indemnification provided for in Clauses (B)
and (C) above shall be effective whether or not an indemnification certificate
described in (A) above is provided and shall be applicable based on information
previously provided by Borrower or its Affiliates if Borrower does not provide
the indemnification certificate.
(c) In connection with filings under the Exchange Act, Borrower agrees
to indemnify (i) Lender, the ▇▇▇▇▇▇ Group and the Underwriter Group for
Liabilities to which Lender, the ▇▇▇▇▇▇ Group or the Underwriter Group may
become subject insofar as the Liabilities arise out of or are based upon the
omission or alleged omission to state in the Provided Information a material
fact required to be stated in the Provided Information in order to make the
statements in the Provided Information, in light of the circumstances under
which they were made not misleading (other than any such statement, misstatement
or omission made in reliance upon the reports of third parties that do not, to
the best of Borrower's knowledge, contain any untrue statement or misstatement
of a material fact or omit to state a material fact necessary in order to make
the statements made, in light of the circumstances under which they were made,
not misleading) and (ii) reimburse Lender, the ▇▇▇▇▇▇ Group or the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the ▇▇▇▇▇▇
Group or the Underwriter Group in connection with defending or investigating the
Liabilities. The foregoing indemnity shall not apply with respect to any
Liabilities that arise out of or are based upon any untrue statement,
misstatement or omission or any alleged untrue statement, misstatement or
omission to state in the Provided Information a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading, if such
untrue statement, misstatement or omission or alleged untrue statement,
misstatement or omission related to statements or information that do not
accurately reflect Provided Information or any corrections or updates to
Provided Information which were provided prior to the delivery of the final
Offering Materials to investors and neither Borrower, Principal nor Indemnitor
has been given reasonable opportunity to review the proposed filing under the
Exchange Act and to correct such untrue statement, misstatement or omission. In
no event shall the indemnification, contribution or reimbursement obligations of
Borrower under this Section 9.2 apply to any filings made under the Exchange Act
after the initial filings, if any, are made.
(d) Promptly after receipt by an indemnified party under this Section
9.2 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 9.2, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party.
After notice from the indemnifying party to such indemnified party under this
Section 9.2 the indemnifying party shall not be responsible for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there are any legal defenses available to it and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party to
parties. The Indemnified Person shall have the right to employ separate counsel
in any such action and to participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless: (i) the employment thereof has been specifically authorized by Borrower
in writing; or (ii) in such claims or action there is, in the reasonable opinion
of independent counsel, a conflict concerning any material issue between the
position of Borrower and such Indemnified Person, in which case if such
Indemnified Person notifies Borrower in writing that it elects to employ
separate counsel at the expense of Borrower, then such counsel shall have the
right to assume the defense of such action on behalf of such Indemnified Person;
provided, however, that unless, in the reasonable opinion of independent
counsel, an actual or potential conflict exists between two or more Indemnified
Persons, Borrower shall not be required to pay the fees and disbursements of
more than one separate counsel for all Indemnified Persons.
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Nothing set forth herein is intended to or shall impair the right of any
Indemnified Person to retain separate counsel at its own expense.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreements provided for in Section 9.2(b)
or (c) is or are for any reason held to be unenforceable by an indemnified party
in respect of any losses, claims, damages or liabilities (or action in respect
thereof) referred to therein which would otherwise be indemnifiable under
Section 9.2(b) or (c), the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages or liabilities (or action in respect thereof); provided, however, that
no Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) ▇▇▇▇▇▇'▇ and Borrower's relative
knowledge and access to information concerning the matter with respect to which
claim was asserted; (ii) the opportunity to correct and prevent any statement or
omission; and (iii) any other equitable considerations appropriate in the
circumstances. Lender and Borrower hereby agree that it would not be equitable
if the amount of such contribution were determined by pro rata or per capita
allocation.
(f) The liabilities and obligations of both Borrower and Lender under
this Section 9.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.
Section 9.3 Servicer.
--------
At the option of Lender, the Loan may be serviced by a
servicer/trustee (the "Servicer") selected by Lender and Lender may delegate all
or any portion of its responsibilities under this Agreement and the other Loan
Documents to the Servicer pursuant to a servicing agreement (the "Servicing
Agreement") between Lender and Servicer.
Section 9.4 Exculpation. (a) Except as otherwise provided herein,
-----------
Lender shall not enforce the liability and obligation of Borrower to perform and
observe the representations, warranties and obligations contained in the Note,
this Agreement, the Security Instruments or the other Loan Documents by any
action or proceeding wherein a money judgment shall be sought against Borrower,
except that Lender may bring a foreclosure action, action for specific
performance or other appropriate action or proceeding to enable Lender to
enforce and realize upon its interest in the Note, this Agreement, the Security
Instruments, the other Loan Documents, and the interest in the Properties, the
Rents, the Collateral and any other collateral given to Lender pursuant to the
Note, this Agreement, the Security Instruments or the other Loan Documents;
provided, however, that any judgment in any such action or proceeding shall be
enforceable against Borrower only to the extent of Borrower's interest in the
Properties, in the Rent, the Collateral and in any other collateral given to
Lender. In no event shall any Related Party have any personal liability for the
payment of the indebtedness or any other sum due hereunder, under the Note, the
Security Instruments or the other Loan Documents, or for the performance or
observance of any other obligation of Borrower other than pursuant to a written
instrument executed by such Related Party specifically providing for such
liability. Lender, by accepting the Note, this Agreement and the Security
Instruments, agrees that it shall not, except as otherwise provided herein ▇▇▇
for, seek or demand any deficiency judgment against Borrower and/or any Related
Party in any such action or proceeding, under or by reason of or under or in
connection with the Note, this Agreement, the other Loan Documents or the
Security Instruments. The provisions of this Section shall not, however, (i)
constitute a waiver, release or impairment of any obligation evidenced or
secured by the Note, this Agreement, the other Loan Documents or the Security
Instruments; (ii) impair the right of Lender to name Borrower as a party
defendant in any action or suit for judicial foreclosure and sale under the
Security Instruments; (iii) affect the validity or enforceability of any
indemnity (including, without limitation, the Environmental Indemnity and the
Maryland Guaranty), guaranty, master lease or similar instrument made in
connection with the Note, this Agreement, the Security Instruments, or the other
Loan Documents; (iv) impair the right of Lender to obtain the appointment of a
receiver; (v) impair the enforcement of the Assignment of Leases; (vi) impair
the right of Lender to enforce the provisions of Sections 4.1.8, 4.1.28, 5.1.9
and 5.2.8 of this Agreement; or (vii) impair the right of Lender to obtain a
deficiency judgment or other judgment on the Note against Borrower if necessary
to preserve or enforce its rights and remedies against any Collateral, including
any insurance proceeds or condemnation awards to which Lender would otherwise be
entitled under this Agreement or the
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Security Instruments; provided however, Lender shall only enforce such judgment
against such Collateral, including the insurance proceeds and/or condemnation
awards, as applicable.
(b) Notwithstanding the provisions of this Section 9.4 to the contrary,
Borrower shall be personally liable to Lender for the direct, actual Losses it
incurs due to: (i) fraud or intentional misrepresentation by any Borrower or any
other person or entity in connection with the execution and the delivery of the
Note, this Agreement, the Security Instruments or the other Loan Documents; (ii)
any Borrower's intentional misapplication or misappropriation of Rents received
by Borrower after the occurrence of an Event of Default; (iii) any Borrower's
intentional misapplication or misappropriation of tenant security deposits or
Rents collected more than one (1) month in advance; (iv) the intentional
misapplication or the misappropriation of Insurance Proceeds or Awards; (v) any
Borrower's failure to pay Taxes, Other Charges, Ground Rent, charges for labor
or materials or other charges that can create liens on any of the Properties
(except to the extent that sums sufficient to pay such amounts have been
deposited in the Lockbox Account or are otherwise in escrow with Lender pursuant
to the terms of this Agreement) but only to the extent that the Properties Net
Operating Income available to Borrower was sufficient to permit Borrower to pay
the same when due; (vi) any Borrower's failure to return or to reimburse Lender
for all Personal Property taken from any of the Properties by or on behalf of
Borrower after the occurrence of an Event of Default and in violation of the
terms of this Agreement and the Security Instruments and not replaced with
Personal Property of the same utility and of the same or greater value; (vii)
any act of actual intentional waste or arson by any Borrower, any principal,
affiliate or general partner thereof or by any Indemnitor or Guarantor which is
not attributable to a lack of sufficient Net Operating Income available to
Borrower from the Properties to perform all of Borrower's or such affiliate's
obligations under the Note, this Agreement, the Security Instruments or the
other Loan Documents; (viii) any fees or commissions paid by any Borrower to any
principal, affiliate or general partner of Borrower, Indemnitor or Guarantor in
violation of the terms of the Note, this Agreement, the Security Instruments or
the other Loan Documents; (ix) any Borrower's failure to comply with the
provisions of Sections 4.1.39 and 5.1.19 hereof; or (x) if any Individual
Property or any part thereof shall become an asset in an involuntary bankruptcy
or insolvency proceeding commenced by any Person (other than Lender) and
Borrower fails to use its commercially reasonable efforts to obtain a dismissal
of such proceedings.
(c) Notwithstanding the foregoing, the agreement of Lender not to
pursue recourse liability as set forth in Subsection (a) above SHALL BECOME NULL
AND VOID and shall be of no further force and effect as to Borrower (but not to
any Related Party other than pursuant to a written instrument executed by such
Related Party specifically providing for such liability) (i) in the event of any
Borrower's wilful default to provide a report or information under Section
5.1.10(b), (c), (f), (h), (i), (j), (k) and (l), but a failure to provide such
reports and information shall not be deemed willful if such failure is the
result of good faith error and is cured within ten (10) Business Days after
notice is delivered to Borrower, provided, however, that if (x) Borrower is
prevented by an unaffiliated third party from delivering such information, and
(y) Borrower uses reasonable efforts (including the reasonable expenditure of
money) to obtain such information, then such failure shall not be deemed willful
so long as Borrower continuously endeavors in good faith to obtain the required
financial reports and information and delivers same to Lender as soon as it
becomes available to Borrower, (ii) in the event of a default under Section
4.1.35 of this Agreement such that either (A) such failure was considered by a
court as a factor in the court's finding for a consolidation of the assets of
Borrower with the assets of another person or entity or (B) as a result thereof,
Lender suffers any material damage, cost, liability, or expense (including
reasonable attorneys' fees and disbursements, whether or not litigation has
commenced); provided, however, that in the absence of an actual consolidation,
recourse may be had against Borrower only to the extent of Losses for its
failure to comply with the provisions of Section 4.1.35 or, (iii) in the event
of a default under Section 5.2.12 of this Agreement; (iv) if any Individual
Property or any part thereof shall become an asset in a voluntary bankruptcy or
insolvency proceeding or (v) if the first full Monthly Debt Service Payment
Amount is not paid when due.
(d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provision of
the Bankruptcy Code to file a claim for the full amount of the indebtedness
secured by the Security Instruments or to require that all collateral shall
continue to secure all of the indebtedness owing to Lender in accordance with
the Note, this Agreement, the Security Instruments and the other Loan Documents.
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Section 9.5 Contributions and Waivers.
-------------------------
(a) As a result of the transactions contemplated by this Agreement,
each Borrower will benefit, directly and indirectly, from each Borrower's
obligation to pay the Debt and perform its obligations under the Note, this
Agreement and the other Loan Documents (the "Obligations") and in consideration
therefor desire to enter into an allocation and contribution agreement among
themselves as set forth in this Section 9.5 to allocate such benefits among
themselves and to provide a fair and equitable agreement to make contributions
among each of the Borrowers in the event any payment is made by any individual
Borrower hereunder to the Lender (such payment being referred to herein as a
"Contribution," and for purposes of this Section 9.5, includes any exercise of
recourse by the Lender against any Collateral of a Borrower and application of
proceeds of such Collateral in satisfaction of such Borrower's obligations, to
the Lender under the Loan Documents).
(b) Each Borrower shall be liable hereunder with respect to the
Obligations only for such total maximum amount (if any) that would not render
its Obligations hereunder or under any of the Loan Documents subject to
avoidance under Section 548 of the Bankruptcy Code or any comparable provisions
of any State law.
(c) In order to provide for a fair and equitable contribution among the
Borrowers in the event that any Contribution is made by an individual Borrower
(a "Funding Borrower"), such Funding Borrower shall be entitled to a
reimbursement Contribution ("Reimbursement Contribution") from all other
Borrowers for all payments, damages and expenses incurred by that Funding
Borrower in discharging any of the Obligations, in the manner and to the extent
set forth in this Section 9.5. The amount of any Reimbursement Contribution
hereunder shall be equal to the payment made by the Funding Borrower to the
Lender or any other beneficiary pursuant to this Agreement and shall be
determined as of the date on which such payment is made.
(d) For purposes hereof, the "Benefit Amount" of any individual
Borrower as of any date of determination shall be the net value of the benefits
to such Borrower and its affiliates from extensions of credit made by the Lender
to (a) such Borrower and (b) to the other Borrowers hereunder and the Loan
Documents to the extent such other Borrowers have guaranteed or mortgaged their
Properties to secure the Obligations of such Borrower to the Lender.
(e) Each Borrower shall be liable to a Funding Borrower in an amount
equal to the greater of (A) the (i) ratio of the Benefit Amount of such Borrower
to the total amount of Obligations, multiplied by (ii) the amount of Obligations
paid by such Funding Borrower, or (B) 95% of the excess of the fair saleable
value of the property of such Borrower over the total liabilities of such
Borrower (including the maximum amount reasonably expected to become due in
respect of contingent liabilities) determined as of the date on which the
payment made by a Funding Borrower is deemed made for purposes hereof (giving
effect to all payments made by other Funding Borrowers as of such date in a
manner to maximize the amount of such Contributions).
(f) In the event that at any time there exists more than one Funding
Borrower with respect to any Contribution (in any such case, the "Applicable
Contribution"), then Reimbursement Contributions from other Borrowers pursuant
hereto shall be allocated among such Funding Borrowers in proportion to the
total amount of the Contribution made for or on account of the other Borrowers
by each such Funding Borrower pursuant to the Applicable Contribution. In the
event that at any time any Borrower pays an amount hereunder in excess of the
amount calculated pursuant to this Section 9.5 above, that Borrower shall be
deemed to be a Funding Borrower to the extent of such excess and shall be
entitled to a Reimbursement Contribution from the other Borrowers in accordance
with the provisions of this Section.
(g) The Borrowers acknowledge that the right to Reimbursement
Contribution hereunder shall constitute an asset in favor of the Borrower to
which such Reimbursement Contribution is owing.
(h) No Reimbursement Contribution payments payable by a Borrower
pursuant to the terms of this Section 9.5 shall be paid until all amounts then
due and payable by all of the Borrowers to the Lender, pursuant to the
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terms of the Loan Documents, are paid in full in cash. Nothing contained in this
Section 9.5 shall limit or affect in any way the Obligations of any Borrower to
Lender under this Note or any other Loan Documents.
(i) Each Borrower waives:
(1) any right to require Lender to proceed against any other
Borrower or any other person or to proceed against or exhaust any
security held by Lender at any time or to pursue any other remedy in
Lender's power before proceeding against Borrower;
(2) the defense of the statute of limitations in any action
against any other Borrower or for the collection of any indebtedness or
the performance of any obligation under the Loan;
(3) any defense based upon any legal disability or other
defense of any other Borrower, any guarantor or any other person or by
reason of the cessation or limitation of the liability of any other
Borrower or any guarantor from any cause other than full payment of all
sums payable under the Note, this Agreement and any of the other Loan
Documents;
(4) any defense based upon any lack of authority of the
officers, directors, partners or agents acting or purporting to act on
behalf of any other Borrower or any principal of any other Borrower or
any defect in the formation of any other Borrower or any principal of
any other Borrower;
(5) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in any other respects more burdensome than that of a
principal;
(6) any defense based upon any failure by Lender to obtain
collateral for the indebtedness or failure by the Lender to perfect a
lien on any collateral;
(7) presentment, demand, protest and notice of any kind;
(8) any defense based upon any failure of Lender to give
notice of sale or other disposition of any collateral to any other
Borrower or to any other person or entity or any defect in any notice
that may be given in connection with any sale or disposition of any
collateral;
(9) any defense based upon any failure of Lender to comply
with Applicable Laws in connection with the sale or other disposition
of any collateral, including, without limitation, any failure of Lender
to conduct a commercially reasonable sale or other disposition of any
collateral;
(10) any defense based upon any election by Lender, in any
bankruptcy proceeding, of the application or non-application of Section
1111(b)(2) of the Bankruptcy Code or any successor statute;
(11) any defense based upon any use of cash collateral under
Section 363 of the Bankruptcy Code;
(12) any defense based upon any agreement or stipulation
entered into by Lender with respect to the provision of adequate
protection in any bankruptcy proceeding;
(13) any defense based upon any borrowing or any grant of a
security interest under Section 364 of the Bankruptcy Code;
(14) any defense based upon the avoidance of any security
interest in favor of Lender for any reason;
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(15) any defense based upon any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding, including any discharge of, or bar or stay
against collecting, all or any of the obligations evidenced by the Note
or owing under any of the Loan Documents; and
(16) any defense or benefit based upon the Borrower's, or any
other party's, designation of the portion of any obligation secured by
the applicable Security Instruments to be satisfied by any payment from
any other Borrower or any such party.
(j) Each Borrower waives:
(1) all rights and defenses arising out of an election of
remedies by Lender even though the election of remedies, such as
nonjudicial foreclosure with respect to security for the Loan or any
other amounts owing under the Loan Documents, has destroyed the
Borrower's rights of subrogation and reimbursement against any other
Borrower;
(2) all rights and defenses that Borrower may have because
any of Debt is secured by real property. This means, among other
things: (A) Lender may collect from Borrower without first foreclosing
on any real or personal property collateral pledged by any other
Borrower; (B) If Lender forecloses on any real property collateral
pledged by any other Borrower, (i) the amount of the Debt may be
reduced only by the price for which that collateral is sold at the
foreclosure sale, even if the collateral is worth more than the sale
price, (ii) Lender may collect from Borrower even if any other
Borrower, by foreclosing on the real property collateral, has destroyed
any right Borrower may have to collect from any other Borrower. This is
an unconditional and irrevocable waiver of any rights and defenses
Borrower may have because any of the Debt is secured by real property;
and
(3) any claim or other right which Borrower might now have or
hereafter acquire against any other Borrower or any other person that
arises from the existence or performance of any obligations under the
Note, this Agreement, the Security Instruments or the other Loan
Documents, including, without limitation, any of the following: (a) any
right of subrogation, reimbursement, exoneration, contribution, or
indemnification; or (b) any right to participate in any claim or remedy
of Lender against any other Borrower or any collateral security
therefor, whether or not such claim, remedy or right arises in equity
or under contract, statute or common law.
Section 9.6 Intentionally Omitted.
---------------------
X. MISCELLANEOUS
-------------
Section 10.1 Survival. This Agreement and all covenants,
--------
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the making by Lender of the Loan and the
execution and delivery to Lender of the Note, and shall continue in full force
and effect so long as all or any of the Debt is outstanding and unpaid unless a
longer period is expressly set forth herein or in the other Loan Documents.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the legal representatives, successors and
assigns of such party. All covenants, promises and agreements in this Agreement,
by or on behalf of Borrower, shall inure to the benefit of the legal
representatives, successors and assigns of Lender.
Section 10.2 Lender's Discretion. Whenever pursuant to this
-------------------
Agreement, Lender exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole, but good faith discretion of Lender and shall
be final and conclusive if made in good faith.
Section 10.3 Governing Law.
-------------
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(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO
PURSUANT TO THE LAWS OF THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE
GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS), PROVIDED
HOWEVER, THAT WITH RESPECT TO THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT
OF THE LIENS AND SECURITY INTERESTS CREATED BY THIS AGREEMENT, THE SECURITY
INSTRUMENTS AND THE OTHER LOAN DOCUMENTS, AND THE DETERMINATION OF DEFICIENCY
JUDGMENTS, THE LAWS OF THE STATE WHERE EACH INDIVIDUAL PROPERTY IS LOCATED SHALL
APPLY.
(b) WITH RESPECT TO ANY CLAIM OR ACTION ARISING HEREUNDER OR UNDER THIS
AGREEMENT, THE NOTE, OR THE OTHER LOAN DOCUMENTS, BORROWER (A) IRREVOCABLY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW
YORK, NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF, AND (B) IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING ON VENUE OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
NOTE OR THE OTHER LOAN DOCUMENTS BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS AGREEMENT, THE NOTE OR
THE OTHER LOAN DOCUMENTS INSTRUMENT WILL BE DEEMED TO PRECLUDE LENDER FROM
BRINGING AN ACTION OR PROCEEDING WITH RESPECT HERETO IN ANY OTHER JURISDICTION.
Section 10.4 Modification, Waiver in Writing. No modification,
-------------------------------
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, the Note, or of any other Loan Document, nor consent to any departure
by Borrower 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 Borrower, shall entitle Borrower to any other or future
notice or demand in the same, similar or other circumstances.
Section 10.5 Delay Not a Waiver. Neither any failure nor any delay
------------------
on the part of 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 Note or under any other 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 Note or any
other Loan Document, 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 Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
Section 10.6 Notices. All notices or other written communications
-------
hereunder shall be deemed to have been properly given (i) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged by
the recipient thereof and confirmed by telephone by sender, (ii) one (1)
Business Day (defined below) after having been deposited for overnight delivery
with any reputable overnight courier service, or (iii) three (3) Business Days
after having been deposited in any post office or mail depository regularly
maintained by the U.S. Postal Service and sent by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
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If to Borrower: c/o Wyndham International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇, P.C.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: ▇▇▇▇▇▇ Brothers Bank FSB
c/▇ ▇▇▇▇▇▇ Brothers Holdings Inc.
d/b/a Lehman Capital, a division of
▇▇▇▇▇▇ Brothers Holdings Inc.
Three World Financial Center, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or addressed as such party may from time to time designate by written notice to
the other parties.
Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Section 10.7 Trial by Jury.
-------------
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
Section 10.8 Headings. The Article and/or Section headings and the
--------
Table of Contents in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
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Section 10.9 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 10.10 Preferences. Lender shall have the continuing and
-----------
exclusive right to apply or reverse and reapply any and all payments by Borrower
to any portion of the obligations of Borrower hereunder. To the extent Borrower
makes a payment or payments to Lender, 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 Lender.
Section 10.11 Waiver of Notice. Borrower shall not be entitled to
----------------
any notices of any nature whatsoever from Lender except with respect to matters
for which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Borrower and except with respect
to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement or the other Loan Documents do not specifically and expressly
provide for the giving of notice by Lender to Borrower.
Section 10.12 Remedies of Borrower. In the event that a claim or
--------------------
adjudication is made that Lender or its agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower's sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. The parties hereto agree that any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an action
seeking declaratory judgment.
Section 10.13 Expenses; Indemnity. (a) Except as otherwise
-------------------
expressly provided herein or in any of the other Loan Documents, Borrower
covenants and agrees to pay or, if Borrower fails to pay, to reimburse, Lender
upon receipt of written notice from Lender for all reasonable out-of-pocket
costs and expenses (including reasonable attorneys' fees and disbursements)
incurred by Lender in connection with (i) the preparation, negotiation,
execution and delivery of this Agreement and the other Loan Documents and the
consummation of the transactions contemplated hereby and thereby and all the
costs of furnishing all opinions by counsel for Borrower (including without
limitation any opinions requested by Lender as to any legal matters arising
under this Agreement or the other Loan Documents with respect to the
Properties); (ii) Borrower's ongoing performance of and compliance with
Borrower's respective agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (iii) Lender's ongoing performance and
compliance with all agreements and conditions contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date; (iv) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications to
this Agreement and the other Loan Documents and any other documents or matters
requested by Lender; (v) securing Borrower's compliance with any requests made
pursuant to the provisions of this Agreement; (vi) the filing and recording fees
and expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Liens in favor of Lender pursuant to
this Agreement and the other Loan Documents; (vii) enforcing or preserving any
rights, in response to third party claims or the prosecuting or defending of any
action or proceeding or other litigation, in each case against, under or
affecting Borrower, this Agreement, the other Loan Documents, the Properties, or
any other security given for the Loan; and (viii) enforcing any obligations of
or collecting any payments due from Borrower under this Agreement, the other
Loan Documents or with respect to the Properties or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or of any insolvency or bankruptcy
proceedings; provided, however, that Borrower shall not be liable for the
payment of any
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such costs and expenses to the extent the same arise by reason of the gross
negligence, illegal acts, fraud or willful misconduct of Lender. Any cost and
expenses due and payable to Lender may be paid from any amounts in the Lockbox
Account.
(b) Borrower shall indemnify, defend and hold harmless Lender from and
against any and all direct, actual liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for Lender in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not Lender shall be designated a party thereto), that may be imposed
on, incurred by, or asserted against Lender in any manner relating to or arising
out of (i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "Indemnified Liabilities"); provided, however, that Borrower
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender, its employees or agents. To the extent that the
undertaking to indemnify, defend and hold harmless set forth in the preceding
sentence may be unenforceable because it violates any law or public policy,
Borrower shall pay the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Lender.
(c) Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Lender and the Indemnified Parties from
and against any and all losses (including, without limitation, attorneys' fees
and costs incurred in the investigation, defense, and settlement of losses
incurred in correcting any prohibited transaction or in the sale of a prohibited
loan, and in obtaining any individual prohibited transaction exemption under
ERISA that may be required, in Lender's sole discretion) that Lender may incur,
directly or indirectly, as a result of a default under Sections 4.1.8 or 5.2.8
hereof.
(d) Intentionally Omitted.
Section 10.14 Schedules and Exhibits Incorporated. The Schedules
-----------------------------------
and Exhibits annexed hereto are hereby incorporated herein as a part of this
Agreement with the same effect as if set forth in the body hereof.
Section 10.15 Offsets, Counterclaims and Defenses. Any assignee of
-----------------------------------
Lender's interest in and to this Agreement, the Note and the other Loan
Documents shall take the same free and clear of all offsets, counterclaims or
defenses which are unrelated to such documents which Borrower may otherwise have
against any assignor of such documents, and no such unrelated counterclaim or
defense shall be interposed or asserted by Borrower in any action or proceeding
brought by any such assignee upon such 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 Borrower.
Section 10.16 No Joint Venture or Partnership; No Third Party
-----------------------------------------------
Beneficiaries. (a) Borrower and Lender intend that the relationships created
-------------
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Properties other than that of
mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
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Section 10.17 Publicity. All news releases, publicity or
---------
advertising by Borrower or their Affiliates through any media intended to reach
the general public which refers to the Loan Documents or the financing evidenced
by the Loan Documents, to Lender, Lehman, or any of their Affiliates shall be
subject to the prior written approval of Lender.
Section 10.18 Cross-Default; Cross-Collateralization; Waiver of
-------------------------------------------------
Marshalling of Assets. (a) Borrower acknowledges that Lender has made the Loan
---------------------
to Maker upon the security of its collective interest in the Properties and in
reliance upon the aggregate of the Properties taken together being of greater
value as collateral security than the sum of each Individual Property taken
separately. Borrower agrees that the Security Instruments are and will be
cross-collateralized and cross-defaulted with each other so that (i) an Event of
Default under any of the Security Instruments shall constitute an Event of
Default under each of the other Security Instruments which secure the Note; (ii)
an Event of Default under the Note or this Agreement shall constitute an Event
of Default under each Security Instrument; (iii) each Security Instrument shall
constitute security for the Note as if a single blanket lien were placed on all
of the Properties as security for the Note; and (iv) such cross-
collateralization shall in no event be deemed to constitute a fraudulent
conveyance.
(b) To the fullest extent permitted by law, Borrower, for itself and
its successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower's partners and others with interests in Borrower, and of the
Properties, or to a sale in inverse order of alienation in the event of
foreclosure of all or any of the Security Instruments, and agrees not to assert
any right under any laws pertaining to the marshalling of assets, the sale in
inverse order of alienation, homestead exemption, the administration of estates
of decedents, or any other matters whatsoever to defeat, reduce or affect the
right of Lender under the Loan Documents to a sale of the Properties for the
collection of the Debt without any prior or different resort for collection or
of the right of Lender to the payment of the Debt out of the net proceeds of the
Properties in preference to every other claimant whatsoever. In addition,
Borrower, for itself and its successors and assigns, waives in the event of
foreclosure of any or all of the Security Instruments, any equitable right
otherwise available to Borrower which would require the separate sale of the
Properties or require Lender to exhaust its remedies against any Individual
Property or any combination of the Properties before proceeding against any
other Individual Property or combination of Properties; and further in the event
of such foreclosure Borrower does hereby expressly consents to and authorizes,
at the option of Lender, the foreclosure and sale either separately or together
of any combination of the Properties.
Section 10.19 Waiver of Counterclaim. Borrower hereby waives the
----------------------
right to assert a counterclaim, other than a compulsory counterclaim, in any
action or proceeding brought against it by Lender or its agents, but Borrower
does not waive its right to assert any such claim in a separate action, provided
that such separate action does not prevent the application of payments to the
Debt.
Section 10.20 Conflict; Construction of Documents; Reliance. In the
---------------------------------------------
event of any conflict between the provisions of this Agreement and any of the
other Loan Documents, the provisions of this Agreement shall control. The
parties hereto acknowledge that they were represented by competent counsel in
connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender's exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.
Section 10.21 Brokers and Financial Advisors. Borrower hereby
------------------------------
represents that it has dealt with no financial advisors, brokers, underwriters,
placement agents, agents or finders in connection with the transactions
contemplated by this Agreement. Borrower hereby agrees to indemnify, defend and
hold Lender harmless from and
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against any and all claims, liabilities, costs and expenses of any kind
(including Lender's attorneys' fees and expenses) in any way relating to or
arising from a claim by any Person that such Person acted on behalf of Borrower
or Lender in connection with the transactions contemplated herein. The
provisions of this Section 10.21 shall survive the expiration and termination of
this Agreement and the payment of the Debt.
Section 10.22 Prior Agreements. This Agreement and the other Loan
----------------
Documents contain the entire agreement of the parties hereto and thereto in
respect of the transactions contemplated hereby and thereby, and all prior
agreements among or between such parties, whether oral or written, between
Borrower and/or its Affiliates and Lender are superseded by the terms of this
Agreement and the other Loan Documents.
Section 10.23 Borrower/Maker. In the event that the Maryland
--------------
Guaranty is released as security for the Loan, all references herein to
"Borrower" shall refer solely to "Maker".
[NO FURTHER TEXT ON THIS PAGE]
-93-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.
Maker: ▇▇▇▇▇▇▇ DE SAN ▇▇▇▇ ASSOCIATES, a New
York general partnership
By: W-San ▇▇▇▇ Holding Corp., a
Delaware corporation, its general
partner
By: _________________________
Name:
Title:
By: W-San ▇▇▇▇ Hotel Corp., a Delaware
corporation, its general partner
By: _________________________
Name:
Title:
W-BOSTON, LLC, a Delaware limited
liability company
By: W-Boston Manager Corp., a Delaware
corporation, its manager
By: _________________________
Name:
Title:
W-ATLANTA, LLC, a Delaware limited
liability company
By: W-Atlanta Manager Corp., a Delaware
corporation, its manager
By: _________________________
Name:
Title:
W-BALTIMORE, LLC, a Delaware limited
liability company
By: W-Baltimore Manager Corp., a
Delaware corporation, its manager
By: _________________________
Name:
Title:
Maryland
Guarantor: ▇▇▇▇▇▇ REAL ESTATE GROUP JOINT VENTURE,
a Texas general partnership
By: W-Baltimore Majority GP, LLC, a
Delaware limited liability company,
its general partner
By: W-Baltimore Majority Manager
Corp., a Delaware corporation,
its manager
By: ______________________
Name:
Title:
By: W-Baltimore Minority GP, LLC, a
Delaware limited liability company,
its general partner
By: W-Baltimore Minority Manager
Corp., a Delaware corporation,
its manager
By: ______________________
Name:
Title:
LENDER: ▇▇▇▇▇▇ BROTHERS BANK FSB, a federal
stock savings bank
By: ____________________________
Name:
Title:
SCHEDULE I
----------
--------------------------------------------------------------------------------
Property Allocated Loan Amount
-------- ---------------------
--------------------------------------------------------------------------------
Wyndham Baltimore Inner Harbor $35,271,000.00
--------------------------------------------------------------------------------
Wyndham Boston $45,549,000.00
--------------------------------------------------------------------------------
Wyndham El San ▇▇▇▇ Hotel & Casino $81,988,000.00
--------------------------------------------------------------------------------
Wyndham Peachtree $17,192,000.00
--------------------------------------------------------------------------------
SCHEDULE II
-----------
Rent Roll
SCHEDULE III
------------
--------------------------------------------------------------------------------------------------------------------------------
WYNDHAM PORTFOLIO
DEFERRED MAINTENANCE ITEMS SCHEDULE
--------------------------------------------------------------------------------------------------------------------------------
Year 1 Repairs Year 1 Repairs
--------------------------------------------------------------------------------------------------------------------------------
Property DM/Env/Yr1 Item Cost @100% Cost @125%
--------------------------------------------------------------------------------------------------------------------------------
1 Wyndham Boston Confirmational testing for lead in
Env water should be conducted. 300 375
--------------------------------------------------------------------------------------------------------------------------------
Property Total 300 375
--------------------------------------------------------------------------------------------------------------------------------
Year 1 Repairs Year 1 Repairs
--------------------------------------------------------------------------------------------------------------------------------
Property DM/Env/Yr1 Item Cost @100% Cost @125%
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
2 Wyndham Baltimore DM ADA Accessibility 63860 79825
Inner Harbor
--------------------------------------------------------------------------------------------------------------------------------
DM Repair roof leak near pool 1500 1875
--------------------------------------------------------------------------------------------------------------------------------
Env Review available file information 0 0
From Maryland Dept. of the Environment
re: abandoned on-site UST.
--------------------------------------------------------------------------------------------------------------------------------
Properly dispose of three 55-gal
Env oil/waste oil drums and 30-gal 0 0
container of parts cleaner.
--------------------------------------------------------------------------------------------------------------------------------
Property Total 66610 83262.5
--------------------------------------------------------------------------------------------------------------------------------
Year 1 Repairs Year 1 Repairs
--------------------------------------------------------------------------------------------------------------------------------
Property DM/Env/Yr1 Item Cost @100% Cost @125%
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
3 Wyndham El San ▇▇▇▇
Hotel & Casino DM ADA Accessibility 1550 1937.5
--------------------------------------------------------------------------------------------------------------------------------
Env Develop & implement an Operations and
Maintenance Program for asbestos. 495 618.75
--------------------------------------------------------------------------------------------------------------------------------
Property Total 2045 2556.25
--------------------------------------------------------------------------------------------------------------------------------
Year 1 Repairs Year 1 Repairs
--------------------------------------------------------------------------------------------------------------------------------
Property DM/Env/Yr1 Item Cost @100% Cost @125%
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
4 Wyndham Peachtree DM ADA Accessibility 5350 6687.5
Conference Center
--------------------------------------------------------------------------------------------------------------------------------
DM Repair lathe and plaster stucco
facades around the truck dock 2500 3125
entrance opening
--------------------------------------------------------------------------------------------------------------------------------
DM Hire a professional engineer to
evaluate the condition of the
retention pond on the west side 2500 3125
of the property.
--------------------------------------------------------------------------------------------------------------------------------
Env Review available file information
from the Georgia Environmental
Protection Department related to a 1250 1562.5
an on-site UST removed in 1999
--------------------------------------------------------------------------------------------------------------------------------
Property Total 11600 14500
--------------------------------------------------------------------------------------------------------------------------------
Year 1 Repairs Year 1 Repairs
--------------------------------------------------------------------------------------------------------------------------------
Cost @100% Cost @125%
--------------------------------------------------------------------------------------------------------------------------------
Property Total 80555 100693.75
--------------------------------------------------------------------------------------------------------------------------------
SCHEDULE IV
-----------
Organizational Chart of Borrower
SCHEDULE V
----------
Intentionally Omitted
SCHEDULE VI
-----------
With respect to each Individual Property, two percent (2%) of Gross
Income From Operations.
SCHEDULE VII
------------
Monthly Scheduled Amortization Payments
Amortization Schedule
Per. Amortization
---- ------------
1 154,817.77
2 156,007.01
3 157,205.39
4 158,412.98
5 159,629.84
6 160,856.04
7 162,091.67
8 163,336.79
9 164,591.47
10 165,855.79
11 167,129.82
12 168,413.64
13 169,707.32
14 171,010.94
15 172,324.57
16 173,648.29
17 174,982.19
18 176,326.32
19 177,680.79
20 179,045.65
21 180,421.00
22 181,806.92
23 183,203.48
24 184,610.77
25 186,028.87
26 187,457.86
27 188,897.83
28 190,348.87
29 191,811.04
30 193,284.45
31 194,769.18
32 196,265.31
33 197,772.94
Per. Amortization
---- ------------
34 199,292.14
35 200,823.02
36 202,365.65
37 203,920.14
38 205,486.57
39 207,065.02
40 208,655.61
41 210,258.41
42 211,873.52
43 213,501.05
44 215,141.07
45 216,793.69
46 218,459.00
47 220,137.11
48 221,828.11
49 223,532.10
50 225,249.17
51 226,979.44
52 228,723.00
53 230,479.95
54 232,250.39
55 234,034.44
56 235,832.19
57 237,643.75
58 239,469.23
59 241,308.73
60 243,162.36
SCHEDULE VIII
-------------
Litigation Schedule
SCHEDULE IX
-----------
None
SCHEDULE X
----------
None
SCHEDULE XI
-----------
None
SCHEDULE XII
------------
None
SCHEDULE XIII
-------------
None
SCHEDULE XIV
------------
None
SCHEDULE XV
-----------
None
SCHEDULE XVI
------------
None
SCHEDULE XVII
-------------
Wyndham Baltimore
▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Wyndham Boston
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Wyndham El San ▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Wyndham Peachtree
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
SCHEDULE XVIII
--------------
None
EXHIBIT A
(REVISED BANK OF AMERICA AGREEMENTS - To Be Attached)
(SCOTIA BANK AGREEMENTS - To Be Attached)
(FLEET BANK N.A. AGREEMENTS - to Be Attached)
EXHIBIT B
Intentionally Omitted
EXHIBIT C
LETTER OF INSTRUCTION
__________ __, ____
[Tenants under Leases]
Re: Lease dated __________ between _______________,
as Landlord, and _______________, as Tenant,
concerning premises known as
-----------------------------------------------
Gentlemen:
This letter shall constitute notice to you that the undersigned has
granted a security interest in the captioned lease and all rents, additional
rent and all other monetary obligations to landlord thereunder (collectively,
"Rent") in favor of ▇▇▇▇▇▇ Brothers Bank FSB, a federal stock savings bank, its
successors and assigns, as lender ("Lender"), to secure certain of the
undersigned's obligations to Lender. The undersigned hereby irrevocably
instructs and authorizes you to disregard any and all previous notices sent to
you in connection with Rent and hereafter to deliver by wire transfer of
immediately available funds or by check all Rent as follows:
[Bank's Address]
Account No. ______________
Attention: _______________
ABA# _____________________
The instructions set forth herein are irrevocable and are not subject
to modification in any manner, except that ▇▇▇▇▇▇ Brothers Bank FSB, or any
successor lender so identified by Lender, may by written notice to you rescind
the instructions contained herein.
Sincerely,
[BORROWER]
ACKNOWLEDGMENT AND AGREEMENT
The undersigned acknowledges notice of the security interest of Lender and
hereby confirms that the undersigned has received no notice of any other pledge
or assignment of the Rent and will honor the above instructions.
[Tenant]
By: ______________________________
Dated as of: __________ __, ____
EXHIBIT D
----------, ------
[ADDRESSEE]
Re: Payment Direction Letter for (describe property)
(the "Property")
[VISA/MASTERCARD/AMERICAN EXPRESS/
----------------------------------
DISCOVER] Account No:
----------------------------
To Whom it May Concern:
A new cash management system has been adopted in connection with our
loan from ▇▇▇▇▇▇ Brothers Bank FSB, a federal stock savings bank, its successors
and/or assigns ("Lender"). Consequently, from and after the date of this letter,
all payments due the undersigned should be delivered as follows:
(a) If by check, money order, or its equivalent, please mail such
items to:
________________________
________________________
________________________
Attention:______________
(b) If by wire transfer to:
Payee: __________________________
ABA Routing #: __________________________
For Account: Account #: __________________________
Bank Contact: __________________________
This payment direction may not be rescinded or altered,
except by a written direction signed by the Lender or its agent.
We appreciate your cooperation.
Very truly yours,
[BORROWER]
EXHIBIT E
ASSIGNMENT OF INTEREST RATE CAP AGREEMENT
AND SECURITY AGREEMENT
THIS ASSIGNMENT OF INTEREST RATE CAP AGREEMENT AND SECURITY
AGREEMENT ("Assignment") is made as of the ___ day of ___________, 2001 by
___________________, a _______________________, having an address at c/o Wyndham
International, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
("Borrower") to ▇▇▇▇▇▇ BROTHERS BANK FSB, a federal stock savings bank, having
an address at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lender").
RECITALS:
A. Borrower by its promissory note dated as of July __, 2001
given to Lender (the note together with all extensions, renewals, modifications,
substitutions and amendments thereof shall collectively be referred to as the
"Note") is indebted to Lender in the original principal sum of $180,000,000.00
in lawful money of the United States of America, with interest from the date
thereof at the rates set forth in that certain Loan Agreement dated as of July
__, 2001 (the "Loan Agreement") Note (the indebtedness evidenced by the Note,
together with such interest accrued thereon, shall collectively be referred to
as the "Loan"), principal and interest to be payable in accordance with the
terms and conditions provided in the Loan Agreement.
B. The Loan is secured by, among other things, those four
certain mortgages, deeds of trust, mortgage note pledge agreements, and deeds to
secure debt, as applicable (collectively, the "Security Instruments"), each
dated as of July __, 2001 which grant Lender a first lien on the property
encumbered thereby (the "Property"). All and any of the documents other than the
Note, the Security Instruments, the Loan Agreement and this Assignment now or
hereafter executed by Borrower and/or others and by or in favor of Lender, which
wholly or partially secure or guarantee payment of the Note are referred to as
the "Other Security Documents."
C. Lender requires that Borrower assign to Lender as
additional security for the payment of the Loan and the observance and
performance by Borrower of the terms, covenants and conditions of the Note, the
Loan Agreement, the Security Instruments and the Other Security Documents on the
part of Borrower to be observed and performed, all of Borrower's right, title
and interest in and to all payments to be made to Borrower pursuant to that
certain [Rate Cap Transaction Agreement/Confirmation] in the notional amount of
$_________ dated _________ (the "Cap Agreement") between [_________________]
(the "Cap Seller") and Borrower.
AGREEMENT:
---------
For good and valuable consideration the parties hereto agree
as follows:
1. Assignment of the Cap Agreement.
-------------------------------
(a) As additional collateral security for the Loan and the
observance and performance by Borrower of the terms, covenants and conditions of
the Note, the Security Instrument and the Other Security Documents on the part
of Borrower to be observed or performed, Borrower hereby transfers, sets over
and assigns to Lender all of Borrower's right, title and interest in and to all
payments to be made to Borrower from the Cap Seller pursuant to the Cap
Agreement ("Cap Agreement Payments"). Lender, in its sole and absolute
discretion, may use such Cap Agreement Payments for any purpose, including but
not limited to (i) payment of monthly interest payments due under the Note, (ii)
repayment of any indebtedness secured by the Security Instruments, including but
not limited to principal prepayments and the prepayment consideration due upon a
full or partial prepayment (as applicable); provided, however, that such
application of funds shall not cure or be deemed to cure any Event of Default or
default hereunder; (iii) reimbursement of Lender for all losses or expenses
(including, without limitation, reasonable legal fees) suffered or incurred by
Lender as a result of such Event of Default or default hereunder; or (iv)
payment of any amount expended in exercising any and all rights and remedies
available to Lender at law or in equity or under this Agreement or under the
Note, the Security Instruments or any of the Other Security Documents.
(b) The Cap Seller shall be entitled to conclusively,
without liability, rely, without investigation, on any notice or instructions
(including, without limitation, with respect to the Cap Agreement Payments)
received by the Cap Seller from Lender, or the Lender's successors and/or
assigns.
2. Borrower's Covenants. Borrower hereby covenants with Lender
--------------------
that during the term of this Assignment: (a) Borrower shall fulfill and perform
each and every term, covenant and provision of the Cap Agreement to be fulfilled
or performed by Borrower thereunder, if any, (b) Borrower shall, in the manner
provided for in this Assignment, give prompt notice to Lender of any written
notice received by Borrower under the Cap Agreement, together with a complete
copy of any such notice, and (c) Borrower shall not terminate or amend any of
the terms or provisions of the Cap Agreement, except as may be expressly
permitted pursuant to the terms of the Cap Agreement, without the prior written
consent of Lender, which consent may be given or withheld by Lender in Lender's
reasonable discretion.
3. Governing Law. This Assignment shall be deemed to be
-------------
governed, construed, applied and enforced in accordance with the laws of the
State of New York (without regard to conflicts of law principals) and the
applicable laws of the United States of America.
4. Notices. All notices or other written communications
-------
hereunder shall be deemed to have been properly given and become effective as
provided in the Security Instrument.
Notices to the Cap Seller shall be sent as follows:
______________________
______________________
______________________
Attention: _______
Facsimile No.: _______
5. No Oral Change. This Assignment, and any provisions hereof,
--------------
may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.
6. Liability. If Borrower consists of more than one person, the
---------
obligations and liabilities of each such person hereunder shall be joint and
several. This Assignment shall be binding upon and inure to the benefit of
Borrower and Lender and their respective successors and assigns forever.
7. Inapplicable Provisions. If any term, covenant or condition of
------------------------
this Assignment is held to be invalid, illegal or unenforceable in any respect,
this Assignment shall be construed without such provision.
8. Headings, etc. The headings and captions of various paragraphs of
-------------
this Assignment are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
9. Duplicate Originals; Counterparts. This Assignment may be
---------------------------------
executed in any number of duplicate originals and each duplicate original shall
be deemed to be an original. This Assignment may be executed in several
counterparts, each of which counterparts shall be deemed an original instrument
and all of which together shall constitute a single Assignment. The failure of
any party hereto to execute this Assignment, or any counterpart hereof, shall
not relieve the other signatories from their obligations hereunder.
10. Number and Gender. Whenever the context may require, any pronouns
-----------------
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural and vice
versa.
11. Secondary Market. To the extent permitted in the Security
----------------
Instruments, the Loan Agreement or any other Loan Documents, Lender may sell,
transfer and deliver the Note and assign the Security Instrument, this
Assignment and the Other Security Documents in the secondary mortgage market
whether or not in connection with such sale, Lender may retain or assign
responsibility for servicing the Loan, including the Note, the Security
Instrument, this Assignment and the Other Security Documents, or may delegate
some or all of such responsibility and/or obligations to a servicer including,
but not limited to, any subservicer or master servicer, on behalf of the
Investors (as defined in the Loan Agreement). All references to Lender herein
shall refer to and include any such servicer to the extent applicable.
12. Miscellaneous.
-------------
(a) Wherever pursuant to this Assignment (i) Lender exercises
any right given to it to approve or disapprove, (ii) any arrangement or term is
to be satisfactory to Lender, or (iii) any other decision or determination is to
be made by Lender, the decision of Lender to approve or disapprove, all
decisions that arrangements or terms are satisfactory or not satisfactory and
all
other decisions and determinations made by Lender, shall be in the sole but good
faith discretion of Lender and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.
(b) Wherever pursuant to this Assignment it is provided that
Borrower pay any costs and expenses, such costs and expenses shall include, but
not be limited to, reasonable legal fees and disbursements of Lender.
(c) Nothing herein is intended, and nothing herein shall be
construed, to impose upon the Lender any liability or obligation of the Borrower
under the Cap Agreement.
13. Right to Cure Defaults. In addition to, and in no way limiting
----------------------
other remedies available to Lender under this Assignment, the Note, the Security
Instrument, or the Other Security Documents, if Borrower shall default in the
performance or observance of any term, covenant or condition of the Cap
Agreement on the part of Borrower to be performed or observed, then, without
limiting the generality of the other provisions of this Assignment or the
Security Instrument, and without waiving or releasing Borrower from any of its
obligations hereunder, Lender shall have the right, but shall be under no
obligation, to pay any sums and to perform any act or take any action as may be
appropriate to cause all of the terms, covenants and conditions of the Cap
Agreement on the part of Borrower to be performed or observed or to be promptly
performed or observed on behalf of Borrower, to the end that the rights of
Borrower in, to and under the Cap Agreement shall be kept unimpaired and free
from default. If Lender shall make any payment or perform any act or take action
in accordance with the preceding sentence, Lender will notify Borrower of the
making of any such payment, the performance of any such act, or the taking of
any such action and Borrower shall within ten (10) days after request by Lender,
reimburse Lender for same. Any such payment made or sums expended by Lender on
behalf of Borrower shall be added to the Debt (as defined in the Loan
Agreement).
14. Remedies Cumulative. None of the rights and remedies herein
-------------------
conferred upon or reserved to Lender under this Assignment are intended to be
exclusive of any other rights, and each and every right shall be cumulative and
concurrent, and may be enforced separately, successively or together, and may be
exercised from time to time as often as may be deemed necessary by Lender. In
addition, Lender may exercise any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code.
15. Further Assurances. Borrower shall, at its sole expense, give,
------------------
execute, deliver, file and/or record any financing statement, continuation
statement, notice, instrument, document, agreement or other papers that may be
reasonably necessary or desirable to create, preserve, perfect or validate the
security interest granted pursuant hereto or to enable Lender to exercise and
enforce its rights hereunder with respect to such security interest.
16. Security Agreement. This Assignment is a "security agreement"
within the meaning of the Uniform Commercial Code.
17. Cap Seller Notification Letter. Borrower represents, warrants
------------------------------
and covenants that concurrently with the execution of this Assignment, Borrower
shall send a notice, in the form of Exhibit A attached hereto, to Cap Seller.
---------
18. Borrower Representations and Warranties.
---------------------------------------
(a) Borrower represents and warrants to Lender that (i) a true
and correct copy of the Cap Agreement has been delivered to the Lender and the
Cap Agreement has not been amended or modified in any respect, (ii) Borrower has
all necessary right, power and authority to enter into the Cap Agreement and
perform its obligations thereunder, (iii) Borrower is in compliance with all of
the terms and conditions of the Cap Agreement and has performed all of its
obligations thereunder, (iv) Borrower has all necessary right, power and
authority to make the assignment and grant the security interest herein provided
for, (v) Borrower's interest in the Cap Agreement and Cap Agreement Payments is
free and clear of any liens or claims in favor of any other person, firm or
corporation and (vi) Borrower's only place of business and the only location
where Borrower maintains records relating to accounts or the Cap Agreement is
_____________________________.
(b) Borrower represents and warrants to the Lender that (i) it
will not without Lender's prior written consent, request or direct the Cap
Seller to pay any Cap Agreement Payments to an account other than the Lockbox
Account and (ii) it will not assign, transfer or grant any lien on the Cap
Agreement or Cap Agreement Payments.
(c) The terms and provisions of Section 9.4 of the Loan
Agreement are incorporated herein to the same extent and with the same force as
if fully set forth herein.
[NO FURTHER TEXT ON THIS PAGE]
IN WITNESS WHEREOF the undersigned have executed this Assignment as of
the date first written above.
[BORROWER]
LENDER:
▇▇▇▇▇▇ BROTHERS BANK FSB, a federal
stock savings bank
By: ______________________________
Name:
Title:
EXHIBIT A
---------
[CAP SELLER]
Re: [Rate Cap Transaction Agreement/Confirmation] in the notional
amount of $__________ dated as of ________, 200_ (the "Cap
Agreement") between [______________], as cap seller ("Cap
Seller") and [______________________] ("Borrower")
--------
Gentlemen:
On _______________, 2001, ▇▇▇▇▇▇ Brothers Bank FSB, as lender
("Lender") funded a first mortgage loan (the "Loan") to Borrower, as borrower,
encumbering _________________. This letter shall constitute notice to Cap Seller
that (a) Borrower has granted a security interest in the Cap Agreement in favor
of Lender, to secure certain of Borrower's obligations under the Loan and (b)
Borrower has agreed not to terminate or amend any of the terms or provisions of
the Cap Agreement, except as may be expressly permitted pursuant to the terms of
the Cap Agreement, without the prior written consent of Lender.
Borrower hereby authorizes and directs Cap Seller as of the date
hereof to make all payments due Borrower under the Cap Agreement by wire
transfer to the following account:
[Bank's Address]
Account No. ___________
Attention: ___________
ABA No.: ___________
The instructions set forth herein are not subject to modification or
amendment except by written notice executed by Lender only.
Sincerely,
[BORROWER]
ACKNOWLEDGMENT AND AGREEMENT
Cap Seller acknowledges notice of the security interest of Lender and hereby
confirms that it will honor the above instructions. Furthermore, the Cap Seller
hereby agrees that it shall not amend, modify, or terminate the Cap Agreement,
except as may be expressly permitted pursuant to the terms of the Cap Agreement,
without the prior written consent of Lender.
[CAP SELLER]
By: ______________________________
Name:
Title:
Dated as of: ___________, 200_
EXHIBIT F
Out-Parcels
EXHIBIT G
Apollo Management IV, L.P.
Apollo Real Estate IV, L.P.
Apollo Investment Fund IV, L.P.
Apollo Overseas Partners IV, L.P.
Apollo Advisors IV, L.P.
Apollo Management IV, L.P.
Apollo Real Estate Investment Fund IV, L.P.
Apollo Real Estate Advisors IV, L.P.
AIF/THL PAH LLC
Beacon Capital Partners, L.P.
BCP Voting, as voting for the Beacon Capital Partners Voting Trust, 1,184,967.83
shares; Beacon Capital Partners, Inc.
Beacon Lodging, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇ Equity Fund IV, L.P.
▇▇▇▇▇▇ ▇. ▇▇▇ Foreign Fund IV, L.P.
▇▇▇▇▇▇ ▇. ▇▇▇ Foreign Fund IV-B, L.P.
THL Equity Advisors IV, LLC
▇▇▇▇▇▇ ▇. ▇▇▇ Charitable Investment Limited THL Equity Advisors IV, LLC
▇▇▇▇▇▇ ▇. ▇▇▇ Charitable Investment Limited Partnership
▇▇▇▇▇▇ ▇. ▇▇▇, and the following parties who are employed by or affiliated with
employees of ▇▇▇▇▇▇ ▇. ▇▇▇ Company:
State Street Bank & Trust Company as Trustee of the 1997 ▇▇▇▇▇▇ ▇. ▇▇▇ Nominee
Trust
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
The 1995 Harkins Gift Trust
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ Family Limited Partnership
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇ Family Limited Partnership
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▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ 1988 Irrevocable Trust
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Custodian for ▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇ Equity Associates, L.P.
CMS Co-Investment Subpartnership
CMS Diversified Partners, L.P.
CMS Co-Investment Partners, L.P.
CMS Co-Investment Partners I-Q, L.P.
CMS Co-Investment Associates, L.P.
CMS 1997 Investment Partners, L.P.
CMS/DP Associates, L.P.
MSPS Co-Investment, Inc.
CMS 1997, Inc.
MSPS/DP, Inc.
CMS 1995, Inc.
CKE Associates LLC
The Ovitz Family Limited Partnership
The ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ Revocable Trust
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
PW Hotel I, LLC
▇▇▇▇▇ ▇▇▇▇▇▇ Capital, Inc.
Guayacan Private Equity Fund Limited Partnership
Advent-Morro Equity Partners, Inc.
Venture Management, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Strategic Real Estate Investments I, L.L.C.
Lend Lease Real Estate Investments, Inc.
▇▇▇▇▇ Consulting Group, Inc.
Lend Lease ▇▇▇▇▇ Real Estate Securities, Inc.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
The Bonnybrook Trust
The Franklin Trust
The Dartmouth Trust
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
EXHIBIT H
Approved San ▇▇▇▇ Parking Lease
