Exhibit 10.9.1
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LOAN AGREEMENT
between
LOAN SERVICES, INC.
Lender
and
BRECKSVILLE HOSPITALITY, L.P.,
SIOUX CITY HOSPITALITY, L.P. and
1075 HOSPITALITY, L.P.
Borrower
Dated: as of January 17, 1996
Property Location:
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Holiday Inn
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇
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Hilton Hotel
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▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
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Holiday Inn
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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TABLE OF CONTENTS
Section Page
1. DEFINED TERMS ...........................................................1
2. PAYMENT OF DEBT; INCORPORATION OF COVENANTS, CONDITIONS AND AGREEMENTS...6
3. WARRANTY OF TITLE .......................................................6
4. INSURANCE ...............................................................6
5. PAYMENT OF TAXES .......................................................11
6. TAX AND INSURANCE ESCROW FUNDS .........................................11
7. REPLACEMENT RESERVE; REPAIR ESCROW .....................................12
8. CONDEMNATION ...........................................................12
9. LEASES AND RENTS .......................................................14
10. REPRESENTATIONS CONCERNING LOAN .......................................16
11. SINGLE PURPOSE ENTITY; AUTHORIZATION ..................................17
12. MAINTENANCE OF MORTGAGED PROPERTY .....................................19
13. TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY .....................19
14. ESTOPPEL CERTIFICATES; AFFIDAVITS .....................................22
15. CHANGES IN THE LAWS REGARDING TAXATION ................................22
16. NO CREDITS ON ACCOUNT OF THE DEBT .....................................22
17. DOCUMENTARY STAMPS ....................................................22
18. CONTROLLING AGREEMENT .................................................23
19. BOOKS AND RECORDS .....................................................23
20. PERFORMANCE OF OTHER AGREEMENTS .......................................24
21. FURTHER ASSURANCES; RIGHT TO SPLIT THE LOAN ...........................24
22. RECORDING OF MORTGAGE .................................................25
23. REPORTING REQUIREMENTS ................................................25
24. EVENTS OF DEFAULT .....................................................25
25. LATE PAYMENT CHARGE ...................................................27
26. RIGHT TO CURE DEFAULTS ................................................27
27. REMEDIES ..............................................................27
28. RIGHT OF ENTRY ........................................................30
29. SECURITY AGREEMENT ....................................................30
30. ACTIONS AND PROCEEDINGS ...............................................30
31. WAIVER OF SETOFF AND COUNTERCLAIM .....................................31
32. CONTEST OF CERTAIN CLAIMS .............................................31
33. RECOVERY OF SUMS REQUIRED TO BE PAID ..................................32
34. MARSHALLING AND OTHER MATTERS .........................................32
35. HAZARDOUS SUBSTANCES ..................................................33
36. ASBESTOS ..............................................................33
37. ENVIRONMENTAL MONITORING ..............................................34
38. MANAGEMENT OF THE HOTEL ...............................................35
39. HANDICAPPED ACCESS ....................................................36
40. ERISA .................................................................37
41. INDEMNIFICATION .......................................................37
42. NOTICE ................................................................38
43. AUTHORITY .............................................................39
44. WAIVER OF NOTICE ......................................................39
45. REMEDIES OF BORROWER ..................................................39
46. SOLE DISCRETION OF LENDER .............................................39
48. NO ORAL CHANGE ........................................................40
49. LIABILITY .............................................................40
50. INAPPLICABLE PROVISIONS ...............................................40
51. SECTION HEADINGS ......................................................40
52.COUNTERPARTS ...........................................................40
53. CERTAIN DEFINITIONS ...................................................40
54. HOMESTEAD .............................................................41
55. ASSIGNMENTS ...........................................................41
56. SUBMISSION TO JURISDICTION ............................................41
57. AGENT FOR RECEIPT OF PROCESS ..........................................41
58. SERVICE OF PROCESS ....................................................42
59. WAIVER OF JURY TRIAL ..................................................42
60. CHOICE OF LAW .........................................................42
61. RELEASE OF PORTIONS OF THE MORTGAGED PROPERTY .........................42
62. LIMITATIONS ON RECOURSE ...............................................42
LOAN AGREEMENT
This LOAN AGREEMENT dated as of January 17. 1996. between
BRECKSVILLE HOSPITALITY, L.P., an Ohio limited partnership, SIOUX CITY
HOSPITALITY, L.P., an Iowa limited partnership and 1075 HOSPITALITY, L.P., a
Georgia limited partnership, each having its principal place of business at c/o
Servico, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(collectively, "Borrower"), and LOAN SERVICES, INC., a Virginia corporation,
having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("Lender").
W I T N E S S E T H:
WHEREAS, Lender is concurrently herewith making a loan to Borrower
in the original principal amount of $12,910,000.00 (the "Loan") secured by a
mortgage lien on, and security interest in. Borrower's interest in and to the
real and personal property comprising the hotels listed on the attached Schedule
A;
WHEREAS, the Loan is evidenced by a certain Mortgage Note dated the
date hereof made by Borrower in favor of Lender (the "Note") and secured by,
among other things, a certain Mortgage, Deed of Trust, Assignment of Leases and
Rents and Security Agreement dated as of the date hereof and encumbering the
Mortgaged Property (the "Mortgage"; the Note, the Mortgage, this Agreement and
all other documents executed or delivered in connection with the Loan,
collectively, the "Loan Documents"); and
WHEREAS, Lender and Borrower have agreed to enter into this Loan
Agreement to memorialize their understanding regarding their respective rights
and obligations in respect of the Loan.
NOW, THEREFORE, in consideration of the making of the Loan and the
covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereby covenant, agree, represent and warrant as follows:
I. Defined Terms
The following terms shall have the following meanings:
(a) "Access Laws" has the meaning set forth in Section 39 hereof.
(b) "Asbestos" has the meaning set forth in Section 36 hereof.
(c) "Assignment" has the meaning set forth in Section 2 hereof.
(d) "Borrower" has the meaning set forth in the preamble to this
Agreement.
(e) "Collateral" has the meaning set forth in Section 29 hereof.
(f) "Condemnation" has the meaning set forth in Section 8 hereof.
(g) "Debt" means the outstanding principal balance of the Note from
time to time, with all accrued and unpaid interest thereon, and all other sums
now or hereafter due under the Loan Documents.
(h) "Debt Service Coverage Ratio" shall mean the ratio of (i) the
NOI produced by the operation of the Mortgaged Property during the 12 calendar
month period ending one month prior to the month immediately preceding the
calculation to (ii) the payments of principal and interest due under this Loan
Agreement and the Note for the 12 calendar month period immediately following
the calculation.
(i) "Default Rate" means the rate of interest payable from and after
the occurrence of an Event of Default. as more particularly described in the
Note.
(j) "Environmental Agreement" has the meaning set forth in Section 2
hereof.
(k) "Environmental Laws" has the meaning set forth in Section 35
hereof.
(l) "Equipment" means all machinery, furnishings, equipment,
fixtures (including, without limitation, all heating, air conditioning,
plumbing, lighting, communications and elevator fixtures), inventory and
articles of personal property and accessions thereof and renewals, replacements
thereof and substitutions therefor (including, without limitation, beds,
bureaus, chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables,
rugs, carpeting, drapes, draperies, curtains, shades, venetian blinds, screens,
paintings, hangings, pictures, divans, couches, luggage carts, luggage racks,
stools, sofas, chinaware, linens, pillows, blankets, glassware, foodcarts,
cookware, dry cleaning facilities, dining room wagons, keys or other entry
systems, bars, bar fixtures, liquor and other drink dispensers, icemakers,
radios, clock radios, television sets, intercom and paging equipment, electric
and electronic equipment, dictating equipment, private telephone systems,
medical equipment, potted plants, heating, lighting and plumbing fixtures, fire
prevention and extinguishing apparatus, cooling and air-conditioning systems,
elevators, escalators, fittings, plants, apparatus, stoves, ranges,
refrigerators, laundry machines, tools, machinery, engines, dynamos, motors,
boilers, incinerators, switchboards, conduits, compressors, vacuum cleaning
systems, floor cleaning, waxing and polishing equipment, call systems, brackets,
electrical signs, bulbs, bells, fuel, conveyors, cabinets, lockers, shelving,
spotlighting equipment, dishwashers, garbage disposals, washer and dryers),
other customary hotel equipment and other property of every kind and nature,
whether tangible or intangible, whatsoever owned by Borrower, or in which
Borrower has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, and usable in connection
with the present or future operation and occupancy of the Premises and the
Improvements and all building equipment, materials and supplies of any nature
whatsoever owned by Borrower, or in which Borrower has or shall have an
interest, now or hereafter located upon the Premises and the Improvements, or
appurtenant thereto, or usable in connection with the present or future
operation, enjoyment and occupancy of the Premises and the Improvements.
(m) "ERISA" has the meaning set forth in Section 40 hereof.
(n) "Event of Default" has the meaning set forth in Section 24
hereof.
(o) "Expenses" means the aggregate of the following items actually
incurred by Borrower, whether or not paid, during the 12 month period ending one
month prior to the date on which the NOI is to be calculated (except that
capital expenses and reserves set forth in subsection (viii) below shall be
adjusted by Lender to reflect projected adjustments for the subsequent I 2 month
period beginning on the date on which the NOI is to be calculated):
(i) Taxes and Other Charges (but specifically excluding income
tax);
(ii) personal property taxes;
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(iii) management fees of four (4%) percent of the gross income
derived from the operation of the Mortgaged Property and disbursements;
(iv) wages, salaries, pension costs and all fringe and other
employee-related benefits and expenses;
(v) franchise fees and other fees due under the Franchise
Agreement;
(vi) Insurance Premiums;
(vii) the cost of utilities, and all other administrative,
management, ownership, operating, leasing and maintenance expenses
incurred in connection with the operation of the Mortgaged Property;
(viii) the cost of necessary repair-of existing improvements
on the Mortgaged Property with repairs or replacements of like kind and
quality or such kind or quality that is necessary to maintain the
Mortgaged Property to the same standards as competitive properties of
similar size and location to the Mortgaged Property or that are required
under the Franchise Agreement including, without limitation, amounts
payable under the Replacement Agreement;
(ix) the cost of any other maintenance materials, HVAC
repairs, parts and supplies, and equipment; and
(x) all ordinary and customary expenses duly and appropriately
incurred in connection with the use and operation of the Mortgaged
Property but specifically excluding depreciation and other similar
non-cash items, distributions of earnings to members, partners or
shareholders of the entities comprising Borrower and debt service payable
in respect of the Loan and any other indebtedness of Borrower.
(p) "Franchise Agreement" means, collectively, the franchise
Agreements more particularly set forth on Schedule A hereto pursuant to which
Borrower has the right to operate the hotels located on the Mortgaged Property
under the names and/or hotel systems controlled by such franchisors.
(q) "Guarantor" means any guarantor of all or any part of the Debt.
(r) "Hazardous Substances" has the meaning set forth in Section 35
hereof.
(s) "Improvements" means the buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter located on the Premises.
(t) "insurance Premiums" has the meaning set forth in Section 4(d)
hereof.
(u) "Insured Casualty" has the meaning set forth in Section 4(eXii)
hereof.
(v) "Intangibles" means, without limitation, all of Borrower's
right, title and interest in and to all accounts, escrows, documents,
instruments, chattel paper, claims, deposits and general intangibles, as such
terms are defined in the Uniform Commercial Code, and all contract rights,
franchises, books,
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records, appraisals, architects and engineering plans, specifications,
environmental and other reports relating to the Premises, trademarks, trade
names, symbols, permits. licenses, approvals, actions, tenant or guest lists,
correspondence with present and prospective purchasers, tenants, guests and
suppliers, advertising materials and telephone exchange numbers as identified in
such materials, refunds of real estate taxes and assessments and causes of
action which now or hereafter relate to, are derived from or are used in
connection with the Premises, or the use, operation, maintenance, occupancy or
enjoyment thereof or the conduct of any business or activities thereon.
(w) "Leases" means all leases and other agreements affecting the
use, enjoyment or occupancy of the Premises or the Improvements heretofore or
hereafter entered into (including, without limitation, subleases, licenses,
concessions, tenancies and other occupancy agreements covering or encumbering
all or any portion of the Premises), together with any guarantees, supplements,
amendments, modifications, extensions and renewals of any thereof, and all
additional remainders, reversions, and other rights and estates appurtenant
thereto.
(x) "Lender" has the meaning set forth in the preamble to this
Agreement.
(y) "Loan" has the meaning set forth in the recitals of this
Agreement.
(z) "Loan Documents" has the meaning set forth in the recitals of
this Agreement.
(aa) "Loan-to-Value Ratio" means the ratio of: (i) the Debt, plus
all other debt (or other liquidated economic obligations) which are then
outstanding and secured by the Mortgaged Property, to (ii) the appraised value
of the Mortgaged Property as estimated by an appraiser acceptable to Lender.
(bb) "Management Agreement" means, collectively, the Hotel Operating
Agreements more particularly set forth on Schedule A hereto pursuant to which
such managers operate the Mortgaged Property as hotels.
(cc) "Maturity Date" means the Maturity Date (as such term is
defined in the Note).
(dd) "Mortgage" has the meaning set forth in the recitals of this
Agreement.
(cc) "Mortgaged Property" shall mean the Premises, all real and
personal property located on or related to the Premises, including without
limitation, the Collateral, Equipment, Improvements, Intangibles, Rents,
Condemnation awards, insurance proceeds, tradenames, trademarks, servicemarks,
logos, copyrights, goodwill, books and records, all refunds, rebates or credits
in connection with a reduction in real estate taxes and assessments charged
against the Premises as a result of tax certiorari or any applications or
proceedings for reduction, all agreements, contracts, certificates, instruments,
franchises, permits, licenses, plans, specifications and other documents, now or
hereafter entered into, and all proceeds, substitutions and replacements
thereof.
(ff) "NOI" means the gross income derived from the operation of the
Mortgaged Property less Expenses. NOI shall include Rents and such other income,
including any rent loss, business interruption or business income insurance
proceeds, vending or concession income, late fees, forfeited security deposits
and other miscellaneous tenant charges, and Expenses booked during the period
for which the NOI is being calculated, as set forth on operating statements
satisfactory to Lender. NOI shall be calculated on an accrual basis in
accordance with generally accepted accounting principles consistently applied.
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(gg) "Note" has the meaning set forth in the recitals of this
Agreement.
(hh) "O&M Plan" has the meaning set forth in Section 36 hereof.
(ii) "Other Charges" has the meaning set forth in Section 5 hereof.
(jj) "Policies" has the meaning set forth Section 4(d) hereof.
(kk) "Premises" means the real property comprising the Mortgaged
Property, more particularly described on Exhibit A to the Mortgage.
(ll) "Release Conditions" means, immediately following the proposed
release of a portion of the Mortgaged Property as provided herein: (i) the Debt
Service Coverage Ratio with respect to the remaining Mortgaged Property is
projected to be not less than 1.65:1; and (ii) the Loan-to-Value Ratio with
respect to the remaining Mortgaged Property, expressed as a percentage, is not
more than sixty (60%) percent
(mm) "Remedial Work" has the meaning set forth in Section 37 hereof.
(nn) "Rents" means all income, rents, room rates, issues, profits,
revenues (including oil and gas or other mineral royalties and bonuses),
deposits and other benefits from the Mortgaged Property including, without
limitation, all revenues and credit card receipts collected from guest rooms,
restaurants, bars, mini-bars, meeting rooms, banquet rooms and recreational
facilities and otherwise, all receivables, customer obligations, installment
payment obligations and other obligations now existing or hereafter arising or
created out of the sale, lease, sublease, license, concession or other grant of
the right of the possession, use or occupancy of all or any portion of the
Mortgaged Property or personalty located thereon, or rendering of services by
Mortgagor or any operator or manager of the hotel or the commercial space
located in the Improvements or acquired from others including, without
limitation, from the rental of any office space, retail space, commercial space,
guest room or other space, halls, stores or offices, including any deposits
securing reservations of such space (except to the extent such deposits are
required to be returned or refunded to the depositor), exhibit or sales space of
every kind, license, lease, sublease and concession fees and rentals, health
club membership fees, food and beverage wholesale and retail sales, service
charges, net vending machine sales and proceeds, if any, from business
interruption or other loss of income insurance relating to the use, enjoyment or
occupancy of the Mortgaged Property.
(oo) "Repair Agreement" has the meaning set forth in Section 7
hereof.
(pp) "Repair Escrow" has the meaning set forth in Section 7 hereof.
(qq) "Replacement Agreement" has the meaning set forth in Section 7
hereof.
(rr) "Replacement Reserve" has the meaning set forth in Section 7
hereof.
(ss) "Securities" has the meaning set forth in Section 21 hereof.
(tt) "Tax and Insurance Escrow Fund" has the meaning set forth in
Section 6 hereof.
(uu) "Taxes" has the meaning set forth in Section 5 hereof.
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(vv) "Uniform Commercial Code" means the Uniform Commercial Code, as
adopted and enacted by the State or States where any of the Mortgaged Property
is located.
Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Note.
2. Payment of Debt: Incorporation of Covenants, Conditions and
Agreements
(a) Payments made by Borrower to Lender under the Note and hereunder
shall be applied by Lender in the following order of priority: (i) first, to
required deposits to the escrows established in accordance herewith for the
payment of Taxes and Other Charges; (ii) next, to required deposits to the
Replacement Reserve as provided in the Replacement Agreement; (iii) next, to
reimburse Lender for any unpaid costs and expenses incurred by Lender on
Borrower's behalf; (iv) next, to accrued and unpaid interest on the Loan; and
(v) last, to the reduction of the principal balance of the Loan; or, upon an
Event of Default, in such other order and priority as Lender shall determine in
its sole discretion.
(b) All the covenants, conditions and agreements contained in the
Note, the Mortgage, this Agreement, the Assignment of Leases and Rents dated as
of the date hereof from Borrower to Lender (the "Assignment"), the Environmental
Indemnity Agreement dated as of the date hereof among Lender, Borrower and
Servico, Inc. (the "Environmental Agreement") and the other Loan Documents are
hereby made a part of this Agreement to the same extent and with the same force
as if fully set forth herein.
3. Warranty of Title
Borrower represents and warrants that Borrower has good, marketable
and insurable fee simple title to the Mortgaged Property (or is the lessee
thereof pursuant to leasing arrangements that have been approved by Lender) and
has the full power, authority and right to execute, deliver and perform its
obligations under this Agreement and to encumber, mortgage, give, grant,
bargain, sell, alienate, enfeoff, convey, confirm, pledge, assign, hypothecate
and grant a security interest in the Mortgaged Property (except with respect to
certain municipal permits and licenses, and certain contracts and franchises the
assignability of which, by their terms or as a matter of law is restricted) and
that Borrower possesses an unencumbered fee estate in the Premises and the
Improvements, and that it owns the Mortgaged Property free and clear of all
liens, encumbrances and charges whatsoever except for those exceptions approved
by Lender and shown in the title insurance policy insuring the lien of the
Mortgage, and that the Mortgage is and will remain a valid and enforceable first
lien on and security interest in the Mortgaged Property, subject only to such
exceptions. Borrower shall forever warrant, defend and preserve such title and
the validity and priority of the lien of the Mortgage and shall forever warrant
and defend such title, validity and priority to Lender against the claims of all
persons whomsoever.
4. Insurance
(a) Borrower, at its sole cost and expense, will keep the Mortgaged
Property insured during the entire term of this Agreement for the mutual benefit
of Borrower and Lender against loss or damage by fire and against loss or damage
by other risks and hazards covered by a standard extended coverage insurance
policy including, without limitation, riot and civil commotion, vandalism,
malicious mischief, burglary and theft. The insurance policy shall contain
option perils and income loss endorsements and if any of the Improvements or the
use of the Mortgaged Property shall at any time constitute legal nonconforming
structures or uses, a law and ordinance endorsement. Such insurance shall be in
an amount: (i) equal to at least the then full replacement cost of the
Improvements and the Equipment, without deduction
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for physical depreciation; and (ii) such that the insurer would not deem
Borrower a co-insurer under such policies. The deductible in respect of such
insurance shall be reasonably satisfactory to Lender. From time to time, upon
Lender's request, Borrower shall promptly furnish Lender with evidence that the
insurance required hereunder is in full force and effect, and that Lender shall
be given not less than 30 days notice of any cancellation of any such required
coverage. Each policy shall contain the "Replacement Cost Endorsement" with a
waiver of depreciation.
(b) Borrower shall also obtain and maintain during the entire term
of this Agreement, at its sole cost and expense, for the mutual benefit of
Borrower and Lender, the following policies of insurance:
(i) Flood insurance if any part of the Mortgaged Property is
currently or at any time in the future located in an area identified by
the Federal Emergency Management Agency as an area having special flood
hazards and in which flood insurance has been made available under the
National Flood Insurance Act of 1968 (and any amendment or successor act
thereto) in an amount at least equal to the lesser of: (A) the outstanding
principal amount of the Note; and (B) the maximum limit of coverage
available with respect to the Improvements and the Equipment under such
Act.
(ii) Comprehensive public liability insurance, including broad
form property damage, blanket contractual and personal injuries (including
death resulting therefrom) coverages and "Dram shop" or other liquor
liability coverage if alcoholic beverages are sold from or may be consumed
at the Mortgaged Property, and containing minimum limits per occurrence of
$5,000,000.00 for the Premises and the Improvements, except that if the
Mortgaged Property contains a swimming or health club facility, or if any
buildings at the Mortgaged Property contain 6 or more stories, the minimum
limits per occurrence shall be $10,000,000.00, or such greater amount as
may be required under the Franchise Agreement.
(iii) Rental loss insurance in an amount equal to the
aggregate annual amount of all rents and additional rents payable by all
of the tenants under the Leases (whether or not such Leases are terminable
in the event of a fire or casualty), such rental loss insurance to cover
rental losses for a period of at least one year after the date of the fire
or casualty in question. The amount of such rental loss insurance shall be
increased from time to time during the term of this Agreement as and when
new Leases and renewal Leases are entered into in accordance with the
terms of this Agreement, to reflect all increased rent and increased
additional rent payable by all of the tenants under such renewal Leases
and all rent and additional rent payable by all of the tenants under such
new Leases.
(iv) Business income insurance: (A) with loss payable to
Lender; (B) covering all risks required to be covered by the insurance
provided for in Section 4(a); (C) containing an extended period of
indemnity endorsement which provides that after the physical loss to the
Improvements and all personal property has been repaired, the continued
loss of income will be insured until such income either returns to the
same level it was at prior to the loss, or the expiration of 12 months
from the date of the loss, whichever first occurs, and notwithstanding
that the policy may expire prior to the end of such period; and (D) in an
amount equal to the sum of Expenses and NOI, in each case for the
preceding full calendar year. The amount of such business income insurance
shall be determined prior to the date hereof and at least once each year
thereafter based on clause (D) of this subsection. All insurance proceeds
payable to Lender pursuant to this Section shall be held by Lender and
shall be applied to the obligations secured hereunder from time to time
due and payable hereunder and under the Note; provided, however, that
after such application to
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Borrower's obligations hereunder Lender shall make available from time to
time upon Borrower's request such amounts as may be reasonably necessary
to operate and maintain the Mortgaged Property; provided further, however
that nothing herein contained shall be deemed to relieve Borrower of its
obligations to pay the obligations secured hereunder on the respective
dates of payment provided for in the Note except to the extent such
amounts are actually and timely paid out of the proceeds of such business
income insurance;
(v) Insurance, in an amount equal to the lesser of $2,000,000,
or the insurable value of the Improvements, against loss or damage from:
(A) leakage of sprinkler systems; and (B) explosion of steam boilers, air
conditioning equipment, high pressure piping, machinery and equipment,
pressure vessels or similar apparatus now or hereafter installed in the
Improvements.
(vi) Worker's compensation insurance with respect to any
employees of Borrower, as required by any governmental authority or legal
requirement.
(vii) Motor vehicle liability coverage for all owned and
non-owned vehicles, including rented and leased vehicles containing
minimum limits per occurrence of $5,000,000 or such greater amount as may
be required under the Franchise Agreement.
(viii) A blanket fidelity bond and errors and omissions
insurance coverage insuring against losses resulting from dishonest or
fraudulent acts committed by: (A) Borrower's personnel; (B) any employees
of outside firms that provided appraisal, legal, data processing, or other
services for Borrower; and (C) temporary contract employees or student
interns.
(ix) Earthquake insurance (including subsidence), if the
Mortgaged Property is located in an earthquake prone region and if
required by Lender.
(x) Such other insurance as may from time to time be
reasonably required by Lender in order to protect its interests in the
Mortgaged Property or as may be required by the Franchise Agreement.
(c) Borrower shall increase the amount of insurance required to be
provided hereunder at the time that each such policy is renewed (but, in any
event not less frequently than once during each 12-month period) by using the
▇.▇. ▇▇▇▇▇ Building Index to determine whether there has been an increase in the
replacement cost of the improvement since the most recent adjustment of any such
policy and, if there has been any such increase, the amount of insurance
required to be provided hereunder shall be adjusted accordingly.
(d) All policies of insurance required pursuant to this Section
(collectively, the "Policies") shall: (i) be issued by an insurer with an
investment grade rating for claims paying ability by ▇▇▇▇▇'▇ Investors Service,
Inc., Standard & Poor's Rating Group, Fitch Investor Service and Duff & ▇▇▇▇▇▇,
Inc., if rated; (ii) contain a standard noncontributory mortgagee clause naming
Lender as the person to which all payments made by such insurance company shall
be paid; (iii) be maintained throughout the term of this Agreement without cost
to Lender, (iv) be assigned and delivered to Lender (or in lieu of such
policies, certificates evidencing such insurance may be delivered to Lender);
(v) contain such provisions as Lender deems reasonably necessary or appropriate
to protect its interest including, without limitation, endorsements providing
that neither Borrower, Lender nor any other party shall be a co-insurer
thereunder, and that Lender shall receive at least 30 days prior written notice
of any modification, reduction or cancellation; and (vi) be reasonably
satisfactory in form and substance to Lender, and be approved by
8
Lender as to amounts, form, risk coverage, deductible, loss payees and insureds.
Borrower shall pay the premiums for the Policies (the "Insurance Premiums") as
they become due and payable. Not later than 10 days prior to the expiration date
of each of the Policies, Borrower will deliver to Lender satisfactory evidence
of the renewal of each Policy.
(e) If the Mortgaged Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty, Borrower shall give prompt notice
thereof to Lender.
(i) In the case of a loss covered by Policies. Lender may
participate in the settlement and adjustment of any claim; provided,
however, that Borrower may adjust losses aggregating not in excess of
$100,000.00 if such adjustment is carried out in a competent and timely
manner, and provided in any case that Lender shall be, and is hereby,
authorized to collect and receipt for any such insurance proceeds. The
expenses incurred by Lender in the adjustment and collection of insurance
proceeds shall become part of the Debt, shall be secured by the Mortgage
and shall be reimbursed by Borrower to Lender on demand.
(ii) In the event of any insured damage to or destruction of
the Mortgaged Property or any part thereof (an "Insured Casualty") the
insurance proceeds in respect of which are less than $100,000.00 such
proceeds shall be paid to Borrower for the cost of restoring, repairing,
replacing or rebuilding the Mortgaged Property or the part thereof subject
to the Insured Casualty, as provided for below; and Borrower hereby
covenants and agrees forthwith to commence and diligently to prosecute
such restoring, repairing, replacing or rebuilding. In the event of an
Insured Casualty the insurance proceeds in respect of which equal or
exceed $100,000.00 where: (A) the proceeds of insurance are sufficient to
enable Borrower to fully restore the Mortgaged Property (or Borrower
deposits with Lender any shortfall or provides evidence that such sums
have been paid toward restoration of the Mortgaged Property); (B) the term
of, and proceeds derived from, Borrower's business interruption insurance
(or other similar insurance) shall be sufficient to fully cover the period
that the Mortgaged Property is undergoing restoration; (C) Lender
determines that the restoration is reasonably capable of being completed,
at least 12 months prior to the Maturity Date; (D) the Loan-to-Value Ratio
upon completion of restoration is estimated, by an appraiser acceptable to
Lender, to be no greater than .6:1.0; (E) the Franchise Agreement has not
been, and cannot be, terminated as a result of the Insured Casualty; (F)
the restoration can be completed within 18 months from the date that the
Insured Casualty occurred, or within such shorter time period as may be
required by the Franchise Agreement; (G) the restoration is permitted or
required under the Franchise Agreement; and (H) the Debt Service Coverage
Ratio upon completion is reasonably anticipated to be at least 1.65:1,
then, if no Event of Default shall have occurred and be continuing, the
proceeds of insurance shall be paid to Borrower for the cost of restoring,
repairing, replacing or rebuilding the Mortgaged Property or the part
thereof subject to the Insured Casualty, as provided for below; and
Borrower hereby covenants and agrees forthwith to commence and diligently
to prosecute such restoring, repairing, replacing or rebuilding. NOI for
purposes of this calculation shall be NOI for the 12 calendar month period
immediately preceding the casualty, unless the appraiser referenced in
clause (D) above estimates that NOI after the restoration will be more
than ten (10%) percent less than NOI for such 12 calendar month period, in
which case the Debt Service Coverage Ratio shall be calculated using the
appraiser's estimate of NOI.
(iii) Except as provided above, the proceeds of insurance
collected upon any Insured Casualty shall, at the option of Lender in its
sole discretion, be applied to the payment of the Debt or paid to Borrower
for the cost of restoring, repairing, replacing or rebuilding the
Mortgaged Property or the part thereof subject to the Insured Casualty, in
the manner set forth below. Any such
9
application to the Debt shall not be considered a voluntary prepayment
requiring payment of the prepayment consideration provided in the Note,
except that if an Event of Default, or an event which, with notice and/or
the passage of time, or both, would constitute an Event of Default, has
occurred, then such application shall be subject to the prepayment
consideration computed in accordance with the Note, if any. In no case
shall any such application reduce or postpone any payments otherwise
required pursuant to the Note, other than the final payment on the Note.
(iv) In the event that proceeds of insurance, if any, shall be
made available to Borrower for the restoring, repairing, replacing or
rebuilding of the Mortgaged Property. Borrower hereby covenants to
restore, repair, replace or rebuild the Mortgaged Property to be of at
least equal value and of substantially the same character as prior to such
damage or destruction, all to be effected in accordance with applicable
law and plans and specifications approved in advance by Lender and
otherwise in accordance with the requirements of the Franchise Agreement.
if any: provided, however, that Borrower shall pay all costs (and if
required by Lender, shall deposit the total thereof with Lender in
advance) of such restoring, repairing, replacing or rebuilding in excess
of the net proceeds of insurance made available pursuant to the terms
hereof.
(v) In the event Borrower is entitled to insurance proceeds
held by Lender, such proceeds shall be disbursed from time to time upon
Lender being furnished with: (A) evidence satisfactory to it of the
estimated cost of completion of the restoration, repair, replacement and
rebuilding; (B) funds, or, at Lender's option, assurances satisfactory to
Lender that such funds are available, sufficient in addition to the
proceeds of insurance to complete the proposed restoration, repair,
replacement and rebuilding; and (C) such architect's certificates, waivers
of lien for work previously performed or contemporaneously funded,
contractor's sworn statements, title insurance endorsements, bonds, plats
of survey and such other evidences of cost, payment and performance as
Lender may reasonably require and approve. Lender may, in any event,
require that all plans and specifications for such restoration, repair,
replacement and rebuilding be submitted to and approved by Lender prior to
commencement of work (which approval shall not be unreasonably withheld).
No payment made prior to the final completion of the restoration, repair,
replacement and rebuilding shall exceed ninety (90%) percent of the value
of the work performed from time to time. Funds other than proceeds of
insurance shall be disbursed prior to disbursement of such proceeds, and
at all times the undisbursed balance of such proceeds remaining in
Lender's possession, together with funds deposited for that purpose or
irrevocably committed to the satisfaction of Lender by or on behalf of
Borrower for that purpose, shall be at least sufficient in the reasonable
judgment of Lender to pay for the cost of completion of the restoration,
repair, replacement or rebuilding, free and clear of all liens and claims
of lien. Any surplus which may remain out of insurance proceeds held by
Lender after payment of such costs of restoration, repair, replacement or
rebuilding shall be delivered to Borrower, provided such restoration was
performed in accordance with the provisions of this Section and Borrower
is not then in default of its obligations under the Loan Documents.
(f) Borrower shall not carry separate insurance, concurrent in kind
or form or contributing in the event of loss, with any insurance required under
this Section. Notwithstanding the foregoing, Borrower may carry insurance not
required under this Agreement, provided any such insurance affecting the
Mortgaged Property shall be for the mutual benefit of Borrower and Lender, as
their respective interests may appear, and shall be subject to all other
provisions of this Section.
10
5. Payment of Taxes
Borrower shall pay all taxes, assessments, water rates and sewer
rents, now or hereafter levied, assessed or imposed against the Mortgaged
Property or any part thereof (collectively, the "Taxes") and all ground rents,
maintenance charges, other governmental impositions, and other charges
including, without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Premises, now or hereafter
levied, assessed or imposed against the Mortgaged Property or any part thereof
(collectively, the "Other Charges") as they become due and payable. Borrower
will deliver to Lender evidence satisfactory to Lender that the Taxes and Other
Charges have been so paid, or are not then delinquent, no later than 30 days
following the date on which the Taxes and/or Other Charges would otherwise be
delinquent if not paid. 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 Mortgaged Property. and shall promptly pay for all
utility services provided to the Mortgaged Property. Borrower shall furnish to
Lender or its designee receipts for the payment of the Taxes prior to the date
the such obligations shall become delinquent. Borrower shall be entitled to
contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount of any Taxes or Other Charges.
Notwithstanding the preceding sentence, during the pendency of any such contest
Borrower shall pay or cause to be paid all Taxes and Other Charges as and when
due and payable, or otherwise in accordance with Section 32 hereof.
6. Tax and Insurance Escrow Fund
(a) Borrower shall pay to Lender on the first day of each calendar
month: (i) one-twelfth of an amount which would be sufficient to pay the Taxes
payable, or estimated by Lender to be payable, during the next ensuing 12
months; and (ii) one-twelfth of an amount which would be sufficient to pay the
Insurance Premiums due for the renewal of the coverage afforded by the Policies
upon the expiration thereof (the amounts described in clauses (i) and (ii)
above, collectively, the "Tax and Insurance Escrow Fund"). The Tax and Insurance
Escrow Fund and the monthly installments of principal and interest payable under
the Note shall be added together and shall be paid as an aggregate sum by
Borrower to Lender. Borrower hereby pledges to Lender any and all monies now or
hereafter deposited in the Tax and Insurance Escrow Fund as additional security
for the payment of the Debt. Lender will apply the Tax and Insurance Escrow Fund
to payments of Taxes and Insurance Premiums required to be made by Borrower
pursuant to Sections 4 and 5 hereof. Provided that sufficient funds are then
available to pay the current Taxes, Lender shall discharge such obligations at
such time as will effect the maximum discount available, if any. If the amount
of the Tax and Insurance Escrow Fund shall exceed the amounts due for Taxes and
Insurance Premiums pursuant to Sections 4 and 5 hereof, Lender shall, in its
discretion, return any excess to Borrower or credit such excess against future
payments to be made to the Tax and Insurance Escrow Fund. If the Tax and
Insurance Escrow Fund is not sufficient to pay the items set forth in clauses
(i) and (ii) above, Borrower shall promptly pay to Lender, upon demand, an
amount which Lender shall estimate as sufficient to make up the deficiency. Upon
the occurrence of an Event of Default, Lender may apply any sums then comprising
the Tax and Insurance Escrow Fund to the payment of the Debt in any order in its
sole discretion. Until expended or applied as above provided, any amounts in the
Tax and Insurance Escrow Fund shall constitute additional security for the Debt.
To the extent permitted by applicable law, the Tax and Insurance Escrow Fund
shall not constitute a trust fund and may be commingled with other monies held
by Lender. No earnings or interest on the Tax and Insurance Escrow Fund shall be
payable to Borrower.
(b) Anything to the contrary contained herein notwithstanding,
Borrower shall be required to make the payments described in clause (ii) of
subsection (a) of this Section only upon Borrower's failure to maintain the
insurance required pursuant to Section 4 hereof or to furnish evidence of
payment as provided in Section 4 hereof.
11
7. Replacement Reserve: Repair Escrow
(a) Lender has this day established an interest bearing reserve
account at a federally insured institution (the "Replacement Reserve"), the
balance of which shall be maintained and disbursed in accordance with the
Replacement Reserve Agreement dated as of the date hereof between Borrower and
Lender (the "Replacement Agreement"). Borrower shall deposit with Lender, on the
first day of each calendar month during any given fiscal year, an amount equal
to one-twelfth of four (4%) percent of the gross income derived from the
Mortgaged Property during the preceding fiscal year. For the remaining portion
of Borrower's current fiscal year, Borrower shall deposit $37,246.00 monthly
into the Replacement Reserve. Notwithstanding anything to the contrary in this
Section, in no event shall the monthly payments in respect of the Replacement
Reserve ever fall below $37,246.00 as more particularly set forth in the
Replacement Agreement. Borrower hereby pledges to Lender any and all monies now
or hereafter deposited in the Replacement Reserve as additional security for the
payment of the Debt. All earnings or interest on the Replacement Reserve, shall
be and become part of such Replacement Reserve and shall be disbursed as
provided in the Replacement Agreement and in this Section.
(b) Borrower has this day deposited with Lender, and Lender has this
day established, an interest bearing escrow account at a federally insured
institution the sum of $1,583,000.00 (the "Repair Escrow") to be maintained and
disbursed in accordance with the Repair Escrow Agreement dated as of the date
hereof between Borrower and Lender (the "Repair Agreement"). Borrower shall
deposit with Lender, on or before August 1, 1996, an additional $1,583,000.00
for deposit by Lender into the Repair Escrow. Borrower hereby pledges to Lender
any and all monies now or hereafter deposited in the Repair Escrow as additional
security for the payment of the Debt. All earnings or interest on the Repair
Escrow shall be and become part of such Repair Escrow and shall be disbursed as
provided in the Repair Agreement and in this Section.
(c) Funds on deposit with Lender shall be invested in direct
obligations of, or obligations fully guaranteed as to payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided that such obligations are backed by the full faith and credit of the
United States of America, and are fully FDIC-insured demand and time deposits.
Lender shall exercise best efforts to direct such investments to obtain for
Borrower the highest rate of return, given the amounts available for investment
and Borrower's timing requirements as communicated to Lender for access to the
funds.
8. Condemnation
(a) Borrower shall promptly give Lender written notice of the actual
or threatened commencement of any condemnation or eminent domain proceeding (a
"Condemnation") and shall deliver to Lender copies of any and all papers served
in connection with such proceedings. Lender is hereby irrevocably appointed as
Borrower's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment for such Condemnation, and to
make any compromise or settlement in connection with such proceeding, subject to
the provisions of this Agreement; provided, however, that Lender shall not
exercise such power of attorney unless and until there occurs an Event of
Default. Notwithstanding any taking by any public or quasi-public authority
through eminent domain or otherwise (including, without limitation, any transfer
made in lieu of or in anticipation of the exercise of such taking), Borrower
shall continue to pay the Debt at the time and in the manner provided for in the
Note, the Mortgage, this Agreement, the Assignment, the Environmental Agreement
and the other Loan Documents, and the Debt shall not be reduced until any award
or payment therefor shall have been actually received after expenses of
collection and applied by Lender to the discharge of the Debt. Lender shall not
12
be limited to the interest paid on the award by the condemning authority but
shall be entitled to receive out of the award interest at the rate or rates
provided in the Note.
(b) If the Mortgaged Property shall be the subject of a
Condemnation, in whole or in part, Borrower shall give prompt notice thereof to
Lender.
(i) In the case of a Condemnation, Lender may participate in
the settlement and adjustment of any claim; provided, however, that
Borrower may adjust losses aggregating not in excess of $100,000.00 if
such adjustment is carried out in a competent and timely manner, and
provided in any case that Lender shall be, and is hereby, authorized to
collect and receipt for any such Condemnation award or proceeds. The
expenses incurred by Lender in the adjustment and collection of a
Condemnation award or proceeds shall become part of the Debt, shall be
secured by the Mortgage and shall be reimbursed by Borrower to Lender on
demand.
(ii) In the event of any Condemnation affecting all or any
portion of the Mortgaged Property the award in respect of which is less
than $100,000.00 such award shall be paid to Borrower for the cost of
restoring, repairing, replacing or rebuilding the Mortgaged Property or
the part thereof subject to the Condemnation, as provided below, and
Borrower hereby covenants and agrees forthwith to commence and diligently
to prosecute such restoring, repairing, replacing or rebuilding. In the
event of any Condemnation affecting all or any portion of the Mortgaged
Property the award in respect of which equals or exceeds $100,000.00
where: (A) the Condemnation award or proceeds are sufficient to enable
Borrower to fully restore the Mortgaged Property (or Borrower deposits
with Lender any shortfall or provides evidence that such sums have been
paid toward restoration of the Mortgaged Property); (B) the term of, and
proceeds derived from, Borrower's business interruption insurance (or
other similar insurance) shall be sufficient to fully cover the period
that the Mortgaged Property is undergoing restoration; (C) Lender
determines that the restoration is reasonably capable of being completed,
at least 12 months prior to the Maturity Date; (D) the Loan-to-Value Ratio
upon completion of restoration is estimated, by an appraiser acceptable to
Lender, to be no greater than .6:1.0; (E) the Franchise Agreement has not
been, and cannot be, terminated as a result of the Condemnation; (F) the
restoration can be completed within 18 months from the date that the
Condemnation occurred, or within such shorter time period as may be
required by the Franchise Agreement; (G) the restoration is permitted or
required under the Franchise Agreement; and (I-I) the Debt Service
Coverage Ratio upon completion is reasonably anticipated to be at least
1.65:1, then, if no Event of Default shall have occurred and be
continuing, the Condemnation award or proceeds shall be paid to Borrower
for the cost of restoring, repairing, replacing or rebuilding the
Mortgaged Property or the part thereof subject to the Condemnation, as
provided for below; and Borrower hereby covenants and agrees forthwith to
commence and diligently to prosecute such restoring, repairing, replacing
or rebuilding. NOI for purposes of this calculation shall be NOI for the
12 calendar month period immediately preceding the Condemnation, unless
the appraiser referenced in clause (D) above estimates that NOI after the
restoration will be more than ten (10%) percent less than NOI for such 12
calendar month period, in which case the Debt Service Coverage Ratio shall
be calculated using the appraiser's estimate of NOI.
(iii) Except as provided above, the award or proceeds
collected upon any Condemnation shall, at the option of Lender in its sole
discretion, be applied to the payment of the Debt or paid to Borrower for
the cost of restoring, repairing, replacing or rebuilding the Mortgaged
Property or the part thereof subject to the Condemnation in the manner set
forth below. Any such application to the Debt shall not be considered a
voluntary prepayment requiring payment of the
13
prepayment consideration provided in the Note, except that if an Event of
Default, or an event which, with notice and/or the passage of time, or
both, would constitute an Event of Default, has occurred, then such
application shall be subject to the prepayment consideration computed in
accordance with the Note, if any. In no case shall any such application
reduce or postpone any payments otherwise required pursuant to the Note,
other than the final payment on the Note.
(iv) In the event that a Condemnation award or proceeds, if
any, shall be made available to Borrower for the restoring, repairing,
replacing or rebuilding of the Mortgaged Property, Borrower hereby
covenants to restore, repair, replace or rebuild the Mortgaged Property to
be of at least equal value and of substantially the same character as
prior to such Condemnation, all to be effected in accordance with
applicable law and plans and specifications approved in advance by Lender;
provided, however, that Borrower shall pay all costs (and if required by
Lender, shall deposit the total thereof with Lender in advance) of such
restoring, repairing, replacing or rebuilding in excess of the net award
or proceeds made available pursuant to the terms hereof.
(v) In the event Borrower is entitled to proceeds held by
Lender, such proceeds shall be disbursed from time to time upon Lender
being furnished with: (A) evidence satisfactory to it of the estimated
cost of completion of the restoration, repair, replacement and rebuilding;
(B) funds, or, at Lender's option, assurances satisfactory to Lender that
such funds are available, sufficient in addition to the Condemnation award
or proceeds to complete the proposed restoration, repair, replacement and
rebuilding; and (C) such architect's certificates, waivers of lien for
work previously performed or contemporaneously funded, contractor's sworn
statements, title insurance endorsements, bonds, plats of survey and such
other evidences of cost, payment and performance as Lender may reasonably
require and approve. Lender may, in any event, require that all plans and
specifications for such restoration, repair, replacement and rebuilding be
submitted to and approved by Lender prior to commencement of work (which
approval shall not be unreasonably withheld). No payment made prior to the
final completion of the restoration, repair, replacement and rebuilding
shall exceed ninety (90%) percent of the value of the work performed from
time to time. Funds other than the Condemnation award or proceeds shall be
disbursed prior to disbursement of such proceeds, and at all times the
undisbursed balance of such proceeds remaining in Lender's possession,
together with funds deposited for that purpose or irrevocably committed to
the satisfaction of Lender by or on behalf of Borrower for that purpose,
shall be at least sufficient in the reasonable judgment of Lender to pay
for the cost of completion of the restoration, repair, replacement or
rebuilding, free and clear of all liens and claims of lien. Any surplus
which may remain out of a Condemnation award or proceeds held by Lender
after payment of such costs of restoration, repair, replacement or
rebuilding shall be delivered to Borrower, provided such restoration was
performed in accordance with the provisions of this Section, and Borrower
is not then in default of its obligations under the Loan Documents.
9. Leases and Rents
(a) In connection with the Loan, Borrower has absolutely and
unconditionally assigned to Lender all of Borrower's right, title and interest
in all current and future Leases and Rents, it being intended by Borrower that
such assignment constitutes a present, absolute assignment and not an assignment
for additional security only. Such assignment to Lender shall not be construed
to bind Lender to the performance of any of the covenants, conditions or
provisions contained in any such Lease or otherwise to impose any obligation
upon Lender. Borrower shall execute and deliver to Lender such additional
instruments, in form and substance reasonably satisfactory to Lender, as may
hereafter be requested by Lender to further evidence and confirm such
assignment. Nevertheless, subject to the terms of this Section,
14
Lender has granted to Borrower a revocable license to operate and manage the
Mortgaged Property and to collect the Rents. Borrower shall hold the Rents, or a
portion thereof sufficient to discharge all current sums due on the Debt, in
trust for the benefit of Lender for use in the payment of such sums. Upon the
occurrence of an Event of Default, the license granted to Borrower shall
automatically be revoked, and Lender shall immediately be entitled to possession
of all Rents, whether or not Lender enters upon or takes control of the
Mortgaged Property. Lender is hereby granted and assigned by Borrower the right,
at its option, upon revocation of the license granted herein, to enter upon the
Mortgaged Property in person, by agent or by court-appointed receiver to collect
the Rents. Any Rents collected after revocation of the license may be applied
toward payment of the Debt in such priority and proportions as Lender in its
discretion shall deem appropriate.
(b) Borrower shall furnish Lender with executed copies of all Leases
for space in excess of 1,000 square feet at any hotel comprising the Mortgaged
Property. All renewals of Leases and all proposed Leases shall provide for
rental rates comparable to existing local market rates and shall be arms-length
transactions. All proposed Leases shall be subject to the prior approval of
Lender except that proposed Leases which: (i) are for less than 1,000 square
feet in the aggregate at each hotel comprising the Mortgaged Property; (ii) are
the result of an arms-length transaction with a bona fide, independent
third-party; (iii) provide for rental rates comparable to existing market rates;
and (iv) do not contain any terms which would materially affect Lender's rights
under the Note, the Mortgage, this Agreement, the Assignment, the Environmental
Agreement or the other Loan Documents, shall not be subject to the prior
approval of Lender. All Leases shall provide that they are subordinate to the
Mortgage and that the lessee agrees to attorn to Lender. Borrower shall: (A)
observe and perform all the obligations imposed upon the lessor under the Leases
and shall not do or permit to be done anything to impair the value of the Leases
as security for the Debt; (B) promptly send to Lender copies of all notices of
default which Borrower shall send or receive thereunder; (C) enforce all of the
terms, covenants and conditions contained in the Lease on the part of the lessee
thereunder to be observed or performed, short of termination thereof; (D) not
collect any Rents more than one month in advance; (E) not execute any other
assignment of the lessor's interest in the Leases or Rents; (F) other than de
minimis non-financial amendments, not alter, modify or change the terms of the
Leases without the prior written consent of Lender (which consent shall not be
unreasonably withheld), or, except if a lessee is in default, cancel or
terminate the Leases or accept a surrender thereof or convey or transfer or
suffer or permit a conveyance or transfer of the Mortgaged Property or of any
interest therein so as to effect a merger of the estates and rights of, or a
termination or diminution of the obligations of, lessees thereunder; provided,
however, that any Lease may be cancelled if at the time of the cancellation
thereof a new Lease is entered into with a bona fide, independent third-party on
substantially the same terms or more favorable terms as the cancelled Lease; (G)
not alter, modify or change the terms of any guaranty of the Leases or cancel or
terminate such guaranty without the prior written consent of Lender, (H) not
consent to any assignment of or subletting under the Leases not in accordance
with their terms, without the prior written consent of Lender; and (I) execute
and deliver at the request of Lender all such further assurances, confirmations
and assignments in connection with the Mortgaged Property as Lender shall from
time to time request. Notwithstanding anything to the contrary contained in
subsection (b) of this Section, the provisions of clauses (B), (C), (F), (G) and
(H) of this subsection (b) shall not apply to any Lease the rentable square
footage of which is for less than 1,000 square feet.
(c) All security deposits of lessees in excess $5,000.00, whether
held in cash or any other form, shall not be commingled with any other funds of
Borrower and, if cash, shall be deposited by Borrower at such commercial or
savings bank or banks as may be reasonably satisfactory to Lender. Any bond or
other instrument which Borrower is permitted to hold in lieu of cash security
deposits under any applicable legal requirements shall be maintained in full
force and effect unless replaced by cash deposits as hereinabove described,
shall be issued by an institution reasonably satisfactory to Lender, shall, if
permitted
15
pursuant to any legal requirements, name Lender as payee or mortgagee thereunder
(or at Lender's option, be fully assignable to Lender) and shall, in all
respects, comply with any applicable legal requirements and otherwise be
reasonably satisfactory to Lender. Borrower shall, upon request, provide Lender
with evidence reasonably satisfactory to Lender of Borrower's compliance with
the foregoing. Following the occurrence and during the continuance of any Event
of Default, Borrower shall, upon Lender's request, if permitted by any
applicable legal requirements, turn over to Lender the security deposits (and
any interest theretofore earned thereon) with respect to all or any portion of
the Mortgaged Property, to be held by Lender subject to the terms of the Leases.
10. Representations Concerning Loan
Borrower represents, warrants and covenants as follows:
(a) The Note, the Mortgage, this Agreement, the Assignment, the
Environmental Agreement and the other Loan Documents are the legal, valid and
binding obligations of Borrower, and are not subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor would the
operation of any of the terms of the Note, the Mortgage, this Agreement, the
Assignment, the Environmental Agreement and the other Loan Documents, or the
exercise of any right thereunder, render the Mortgage unenforceable, in whole or
in part, or subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury.
(b) To the best of Borrower's knowledge after due inquiry, all
certifications, permits, licenses and approvals required for the legal use,
occupancy and operation of the Mortgaged Property as a hotel including, without
limitation, any applicable liquor license, certificate of completion and
occupancy permit, have been or will be obtained and are in full force and
effect. The Mortgaged Property is free of material damage and is in good repair,
and there is no proceeding pending or, to the best of Borrower's knowledge,
threatened for the total or partial condemnation of, or affecting, the Mortgaged
Property.
(c) All of the Improvements which were considered in determining the
appraised value of the Mortgaged Property lie wholly within the boundaries and
building restriction lines of the Mortgaged Property, no improvements on
adjoining properties encroach upon the Mortgaged Property except as shown on the
surveys furnished to Lender in connection with the Loan and, except as shown on
such surveys, no easements or other encumbrances upon the Premises encroach upon
any of the Improvements, so as to affect the value or marketability of the
Mortgaged Property. The Mortgaged Property is contiguous to and has access to a
physically and legally open all-weather public street, has all necessary permits
and approvals for ingress and egress, is adequately serviced by public water,
sewer systems and utilities and is on one or more separate tax parcels, all of
which are separate and apart from any other property owned by Borrower or any
other person. The Mortgaged Property has all necessary access by public roads or
easements which in each case are not terminable and are not subordinate to any
mortgage other than the Mortgage. To the best of Borrower's knowledge after due
inquiry, all of the Improvements comply with all requirements of applicable
building codes, zoning and subdivision laws and ordinances.
(d) To the best of Borrower's knowledge after due inquiry, the
Mortgaged Property is not subject to any leases, licenses or other use or
occupancy agreements other than the Leases described in the rent roll delivered
to Lender in connection with this Agreement. No person has any possessory
interest in the Mortgaged Property or right to occupy any portion thereof except
under and pursuant to the provisions of the Leases or transient hotel guests in
the ordinary course of Borrower's business.
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(e) The survey of the Mortgaged Property delivered to Lender in
connection with this Agreement has been performed by a duly licensed surveyor or
registered professional engineer in the jurisdiction in which the Mortgaged
Property is situated, and to the best of Borrower's knowledge after due inquiry,
does not fail to reflect any material matter affecting the Mortgaged Property or
the title thereto.
(f) The financial statements heretofore furnished to Lender are, as
of the date specified therein, complete and correct in all material respects and
fairly present the financial condition of Borrower, and are prepared in
accordance with generally accepted accounting principles, consistently applied.
Borrower does not have on the date hereof any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments which in each case are known
to Borrower and which, in Borrower's opinion, are reasonably likely to result in
a material adverse effect on the Mortgaged Property or the operation thereof as
a hotel, except as referred to or reflected or provided for in the financial
statements heretofore furnished to Lender or as otherwise disclosed to Lender
herein. Since the last date of such financial statements, there has been no
material adverse change in the financial condition, operations or business of
Borrower from that set forth in such financial statements as of the dates
thereof.
(g) The Franchise Agreement is in full force and effect and there is
no default, breach or violation existing thereunder by any party thereto and no
event (other than payments due but not yet delinquent) which, with the passage
of time or with notice and the expiration of any grace or cure period, would
constitute a default, breach or violation by any party thereunder.
(h) The Management Agreement is in full force and effect and there
is no default, breach or violation existing thereunder by any party thereto and
no event (other than payments due but not yet delinquent) which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach or violation by any party thereunder.
(i) Neither the execution and delivery of the Loan Documents,
Borrower's performance thereunder, the recordation of the Mortgage, nor the
exercise of any remedies by Lender, will adversely affect (A) Borrower's rights
under either the Franchise Agreement or the Management Agreement or (B) the
licenses, registrations, permits, certificates, authorizations and approvals
necessary for the operation of the Mortgaged Property as a hotel.
(j) The current Leases are in full force and effect and there are no
defaults thereunder by either party and there are no conditions which with the
passage of time and/or notice would constitute defaults thereunder.
11. Single Purpose Entity: Authorization
Borrower represents and warrants, and covenants for so long as any
obligations secured by the Mortgage remain outstanding, as follows:
(a) Each entity comprising Borrower does not and will not own any
asset or property other than: (i) its respective portion of the property
comprising the Mortgaged Property; and (ii) incidental personal property
necessary for the ownership or operation of the Mortgaged Property.
(b) Each entity comprising Borrower does not and will not engage in
any business other than the ownership, management and operation of its
respective portion of the property comprising the
17
Mortgaged Property, and each entity comprising Borrower will conduct and operate
its business in all material respects as presently conducted and operated.
(c) Except with respect to the Management Agreement which, in its
present form, is acceptable to Lender, Borrower will not enter into any contract
or agreement with any Guarantor or an affiliate, except upon terms and
conditions that are intrinsically fair and substantially similar to those that
would be available on an arms-length third-party basis.
(d) Borrower has not incurred and will not incur any indebtedness,
secured or unsecured, direct or indirect, absolute or contingent
(including-guaranteeing any obligation), other than: (i) the Debt; and (ii)
trade and operational debt incurred in the ordinary course of business with
trade creditors and in amounts as are customary and reasonable under the
circumstances. Except with Lender's prior written approval in each instance, no
indebtedness other than the Debt is or shall be secured by the Mortgaged
Property. Lender's approval shall be granted or withheld at Lender's sole
discretion. Notwithstanding the preceding sentence, Borrower may lease or
purchase on an installment basis, telephone systems, televisions, property
management systems, HVAC units, signage, copy machines, electronic lock systems,
laundry equipment and similar equipment in the ordinary course of its business
so long as: (A) the annual payments for all such equipment for any hotel
comprising the Mortgaged Property does not exceed $20,000; and (B) the Debt
Service Coverage Ratio for any such hotel is not less than 1.65:1.
(e) Borrower has not made and will not make any loans or advances to
any third party (including any constituent party, any Guarantor or any affiliate
of Borrower, of any constituent party or of any Guarantor), except in de minimus
amounts in the ordinary course of business and of the character of trade or
operational expenses.
(f) Borrower has done or caused to be done, and will do or cause to
be done, all things necessary to preserve its existence, and Borrower will not,
nor will Borrower permit any constituent party or Guarantor, to amend, modify or
otherwise change the partnership certificate, partnership agreement, articles of
incorporation and bylaws, trust or other organizational documents, as the case
may be, of Borrower or such constituent party or Guarantor in a manner which
would adversely affect the Borrower's existence as a single purpose entity.
(g) Borrower will maintain books and records and bank accounts
separate from those of its affiliates and any constituent party. Borrower shall
not change the principal place of its business without providing Lender with at
least 30 days prior written notice of such change to Lender.
(h) Borrower is and will be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other entity
(including any affiliate of Borrower, any constituent party, any Guarantor or
any affiliate of any constituent party or Guarantor).
(i) Neither Borrower nor any constituent party will cause or seek
the dissolution or winding up, in whole or in part, of Borrower.
(j) Borrower will not commingle its funds and other assets with
those of any constituent party, any Guarantor, any affiliate of Borrower, of any
constituent party or of any Guarantor, or any other person.
18
(k) Borrower will not file or consent to the filing of any petition
to take advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or make an assignment for the benefit of creditors.
(l) Borrower does not and will not hold itself out to be responsible
for the debts or obligations of any other person.
(m) Borrower shall at all times maintain at least one duly appointed
independent member of the Board of Directors of each of the Boards of Directors
of the constituent Borrower entities, which member has not been at the time of
such individual's appointment and may not have been at any time during the
preceding two years: (i) a stockholder of, or an officer or an employee of, such
constituent Borrower entity; (ii) a customer of or supplier to any constituent
Borrower entity; (iii) a person or other entity controlling any such
stockholder, officer, employee, customer or supplier; or (iv) a member of the
immediate family of any such stockholder, officer, employee, customer or
supplier or any other director of any constituent Borrower entity. As used in
this subsection (m), the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such person or entity, whether through ownership of voting
securities by contract or otherwise. Notwithstanding anything to the contrary
provided herein, such independent director may serve as a member of each of the
Boards of Directors of the constituent Borrower entities and other entities
affiliated with the Servico Entities (as such term is defined in Section 13(d)).
12. Maintenance of Mortgaged Property
Borrower shall cause the Mortgaged Property to be maintained in a
good and safe condition and repair. The Improvements and the Equipment shall not
be removed, demolished or materially altered (except for normal replacement of
the Equipment) without the consent of Lender. Borrower shall promptly comply
with all laws, orders and ordinances affecting the Mortgaged Property, or the
use thereof. Borrower shall promptly repair, replace or rebuild any part of the
Mortgaged Property which may be destroyed by any casualty, or become damaged,
worn or dilapidated, or which may be affected by any proceeding of the character
referred to in Section 8 hereof, and shall complete and pay for any structure at
any time in the process of construction or repair on the Mortgaged Property;
provided, however, that if Lender exercises its right to apply insurance
proceeds other than for repair and restoration, Borrower shall have no
independent obligation to fund the cost thereof. Except as expressly permitted
in writing by Lender, Borrower shall not initiate, join in, acquiesce in, or
consent to any change in any private restrictive covenant, zoning law or other
public or private restriction limiting or defining the uses which may be made of
the Mortgaged Property or any part thereof. If under applicable zoning
provisions the use of all or any portion of the Mortgaged Property is or shall
become a nonconforming use, Borrower will not cause or permit such nonconforming
use to be discontinued or abandoned without the prior written consent of Lender.
Borrower shall not: (a) change the use of the Mortgaged Property as currently
configured and utilized; (b) permit or suffer to occur any waste on or to the
Mortgaged Property or to any portion thereof; or (c) take any steps whatsoever
to convert the Mortgaged Property, or any portion thereof, to a condominium or
cooperative form of ownership.
13. Transfer or Encumbrance of the Mortgaged Property
(a) Borrower acknowledges that Lender has examined and relied on the
creditworthiness and experience of Borrower and its general partners, principals
and (if Borrower is a trust) beneficial owners in owning and operating
properties such as the Mortgaged Property in agreeing to make the loan secured
by the Mortgage, and that Lender will continue to rely on Borrower's ownership
of the Mortgaged Property as a means of maintaining the value of the Mortgaged
Property as security for
19
repayment of the Debt. Borrower acknowledges that Lender has a valid interest in
maintaining the value of the Mortgaged Property so as to ensure that, should
Borrower default in the repayment of the Debt, Lender can recover the Debt by a
sale of the Mortgaged Property. Except as permitted in Section 61 hereof, or
otherwise in accordance with the terms of the Loan Documents, Borrower shall
not, without the prior written consent of Lender, sell, convey, alienate,
mortgage, encumber, pledge or otherwise transfer the Mortgaged Property or any
part thereof, or permit the Mortgaged Property or any part thereof to be sold,
conveyed, alienated, mortgaged, encumbered, pledged or otherwise transferred.
(b) Subject to the express provisions of subsections (d) and (e) of
this Section, a sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this Section shall be deemed to include: (i) an
installment sales agreement wherein Borrower agrees to sell the Mortgaged
Property or any part thereof for a price to be paid in installments; (ii) an
agreement by Borrower leasing all or a substantial part of the Mortgaged
Property for other than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in,
Borrower's right, title and interest in and to any Leases or any- Rents; (iii)
if Borrower, any Guarantor, or any general partner of Borrower or any Guarantor
is a corporation, the voluntary or involuntary sale, conveyance or transfer to
any entity or "controlled group" (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934) which is not affiliated with such corporation
in excess of forty-nine (49%) percent of such corporation's stock or the stock
of any such corporation directly or indirectly controlling such corporation by
operation of law or otherwise or the creation or issuance of new voting stock in
one or a series of transactions by which an aggregate of stock representing more
than forty-nine (49%) percent of any such corporation's total outstanding stock
having the power to vote for the election of directors shall be vested in a
party or controlled group (as defined above) who are not now stockholders; and
(iv) if Borrower, any Guarantor or any general partner of Borrower or any
Guarantor is a limited or general partnership, the transfer of the partnership
interest of any general partner or managing partner, provided, however, that
notwithstanding anything to the contrary provided herein, any general partner or
managing partner may transfer its partnership interests so long as the
principals of Borrower as of the date hereof maintain controlling and voting
ownership of no less than 51% of the beneficial controlling and voting interests
of Borrower.
(c) Except as expressly provided herein to the contrary, Lender may
predicate its decision to grant or withhold consent hereunder on Lender's
satisfaction, in its sole and absolute discretion, with all relevant factors
which shall include, without limitation, the creditworthiness of the proposed
transferee and such proposed transferee's management experience, and upon the
execution of an assumption agreement in form and substance acceptable to Lender,
the payment of an assumption fee equal to one (1%) percent of the then unpaid
principal balance of the Note and the payment of all costs and expenses incurred
by Lender in connection with the assumption including Lender's attorneys' fees.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon Borrower's sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Mortgaged Property without
Lender's consent. This provision shall apply to every sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Mortgaged Property
regardless of whether voluntary or not, or whether or not Lender has consented
to any previous sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Mortgaged Property.
(d) Notwithstanding anything contained herein to the contrary, but
subject to the requirements of subsection (1) of this Section, upon any transfer
of capital stock in Servico, Inc., Servico Operations Corp. or Servico
Management Corp. (collectively, the "Servico Entities") resulting in a change of
control thereof, or upon the sale of all or substantially all of the assets of
any of the Servico Entities, in either case provided that Securities have not
been issued, which change of control or sale of assets, as the
20
case may be, in Lender's good faith judgment, would have an adverse effect on
the Loan's ability to support at least a BBB- rating from all of ▇▇▇▇▇'▇
Investors Service, Inc., Standard & Poor's Rating Group, Fitch Investor Service
and Duff & ▇▇▇▇▇▇, Inc. (or other nationally recognized rating agency) (the
"Implied Rating"), Borrower shall upon demand make a prepayment of the principal
amount of the Debt in an amount sufficient, in Lender's good faith judgment, to
restore the Loan's ability to support the Implied Rating, together with any
prepayment consideration payable under the Note. If the Loan's ability to
support the Implied Rating cannot, in Lender's good faith judgment, be restored
by such partial prepayment, the entire Debt, together with any prepayment
consideration payable under the Note, shall become due and payable upon ten days
notice from Lender. A transfer under this subsection (d) shall not constitute a
transfer prohibited under subsection (a) or (b) of this Section or with respect
to which subsections (c) and (h) of this Section shall apply.
(e) Notwithstanding anything contained herein to the contrary, but
subject to the requirements of subsection (f) of this Section, upon any transfer
of capital stock in any of the Servico Entities resulting in a change of control
thereof, or upon the sale of all or substantially all of the assets of any of
the Servico Entities, in either case when Securities have been issued, unless
such of ▇▇▇▇▇'▇ Investors Service, Inc., Standard & Poor's Rating Group, Fitch
Investor Service and Duff & ▇▇▇▇▇▇, Inc. (or other nationally recognized rating
agency) as have rated the Securities confirms in writing that as a result of
such change of control or sale of assets, as the case may be, its then current
rating of the Securities will not be downgraded, withdrawn or adversely
affected, then Borrower shall upon demand make a prepayment of the principal
amount of the Debt in an amount necessary to prevent such downgrade, withdrawal
or other adverse effect, together with any prepayment consideration payable
under the Note. If such downgrade, withdrawal or other adverse effect cannot be
prevented by such partial prepayment, the entire Debt, together with any
prepayment consideration payable under the Note, shall become due and payable
upon ten days notice from Lender. A transfer under this subsection (e) shall not
constitute a transfer prohibited under subsection (a) or (b) of this Section or
with respect to which subsections (c) and (h) of this Section shall apply.
(f) Any transferee of the capital stock of any of the Servico
Entities (which underlying transfer results in a change of control thereof), or
any transferee of all or substantially all of the assets of any of the Servico
Entities, in either case in accordance with subsections (d) and (e) of this
Section, shall satisfy each of the following requirements: (i) such transferee
shall execute an assumption agreement in form and substance reasonably
acceptable to Lender, (ii) such transferee shall have a minimum tangible net
worth of not less than $45 million; and (iii) such transferee shall have a
maximum debt-to-equity ratio of 3.5:1. Borrower shall reimburse Lender for all
of its actual out of pocket expenses and third-party costs (including attorneys
fees and expenses) in connection with such transfer and assumption, in no event
to exceed $50,000 with respect to each such transfer.
(g) Lender's consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property shall not be deemed to
be a waiver of Lender's right to require such consent in the future. Any sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property made in contravention of this Section shall be null and void
and of no force or effect.
(h) Borrower agrees to bear and shall pay or reimburse Lender on
demand for all reasonable expenses (including, without limitation, Lender's
out-of-pocket attorney's fees and disbursements, title search costs and title
insurance endorsement premiums) incurred by Lender in connection with the
review, approval or disapproval, and documentation of any such sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer.
21
(i) Anything herein to the contrary notwithstanding, transfers and
partial releases of the Mortgaged Property shall be permitted in accordance with
the terms of Section 61 hereof.
14. Estoppel Certificates: Affidavits
(a) Within ten (10) days after request, Borrower and Lender shall
furnish the other with a statement, duly acknowledged and certified, setting
forth: (i) the amount of the original principal amount of the Note; (ii) the
then outstanding principal balance of the Note; (iii) the rate of interest of
the Note; (iv) the date on which installments of interest and/or principal were
last paid; (v) any offsets or defenses to the payment of the Debt; and (vi) that
the Note, the Mortgage, this Agreement, the Assignment, the Environmental
Agreement and the other Loan Documents are valid, legal and binding obligations,
which have not been modified or if modified, giving particulars of such
modification; provided, however, that neither Borrower nor Lender shall be
required to provide a statement hereunder more frequently than once in a
calendar quarter.
(b) Within ten (10) days after request by Lender, but in no event
more frequently than once in any 12-month period, Borrower shall furnish Lender
with a certificate reaffirming all representations and warranties of Borrower
set forth herein and in the other Loan Documents as of the date requested by
Lender or, to the extent of any changes to any such representations and
warranties, so stating such changes.
(c) Borrower shall deliver to Lender upon request, tenant estoppel
certificates from each tenant under a Lease for more than 1,000 square feet in
form and substance reasonably satisfactory to Lender; provided, however, that
Borrower shall not be required to deliver such certificates more frequently than
two times in any calendar year.
15. Changes in the Laws Regarding Taxation
If any law is enacted, adopted or amended after the date of this
Agreement which deducts the Debt from the value of the Mortgaged Property for
the purpose of taxation, or which imposes a tax, either directly or indirectly,
on the Debt or Lender's interest in the Mortgaged Property, Borrower will pay
such tax, with interest and penalties thereon, if any. In the event Lender or
its counsel determines that the payment of such tax or interest and penalties by
Borrower would be unlawful or taxable to Lender or unenforceable or provide the
basis for a defense of usury, then in any such event, Lender shall have the
option, by written notice of not less than 180 days, to declare the Debt
immediately due and payable.
16, No Credits on Account of the Debt
Borrower will not claim, demand or be entitled to any credit or
credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Mortgaged Property, or any part thereof, and no deduction
shall otherwise be made or claimed from the assessed value of the Mortgaged
Property, or any part thereof, for real estate tax purposes by reason of the
Mortgage or the Debt. In the event such claim, credit or deduction shall be
required by law, Lender shall have the option, by written notice of not less
than 180 days, to declare the Debt immediately due and payable.
17. Documentary Stamps
If at any time the United States of America, any State thereof or
any subdivision of any such State shall require revenue or other stamps
(including, without limitation, any documentary stamps and
22
mortgage filing privilege tax) to be affixed to the Note or the Mortgage, or
shall impose any other tax or charge on the same, Borrower will pay for the
same, with interest and penalties thereon, if any.
18. Controlling Agreement
It is expressly stipulated and agreed to be the intent of Borrower
and Lender at all times to comply with applicable state law or applicable United
States federal law (to the extent that it permits Lender to contract for,
charge, take, reserve, or receive a greater amount of interest than under state
law) and that this Section shall control every other covenant and agreement in
this Agreement and the other Loan Documents. If the applicable law (state or
federal) is ever judicially interpreted so as to render usurious any amount
called for under the Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved, or received with respect to the Debt,
or if Lender's exercise of the option to accelerate the maturity of the Note, or
if any prepayment by Borrower results in Borrower having paid any interest in
excess of that permitted by applicable law, then it is Borrower's and Lender's
express intent that all excess amounts theretofore collected by Lender shall be
credited on the principal balance of the Note and all other Debt (or, if the
Note and all other Debt have been or would thereby be paid in full, refunded to
Borrower). and the provisions of the Note and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance, or detention
of the Debt shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the Debt
until payment in full so that the rate or amount of interest on account of the
Debt does not exceed the maximum lawful rate from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
it is not the intention of Lender to accelerate the maturity of any interest
that has not accrued at the time of such acceleration or to collect unearned
interest at the time of such acceleration.
19. Books and Records
Borrower will maintain full and accurate books of accounts and other
records reflecting the independent operations of each of the individual hotels
comprising the Mortgaged Property. Borrower will furnish, or cause to be
furnished to Lender, within 30 days of the end of each calendar month, the
following items, each certified by a senior financial officer of Borrower as
true, correct and complete as of the end of and for such period (subject to
normal year-end adjustments), and as having been prepared in accordance with
generally accepted accounting principles, consistently applied: (a) if requested
by Lender, a written occupancy statement dated as of the last day of the most
recently ended calendar quarter identifying each of the Leases by the term,
space occupied, rental required to be paid, security deposit paid, any rental
concessions, and identifying any defaults or payment delinquencies thereunder;
(b) monthly and year to date operating statements detailing the total revenues
received and total expenses incurred in connection with the ownership and
operation of each of the individual hotels comprising the Mortgaged Property,
including a comparison of the budgeted income and expenses and the actual income
and expenses for such month and the year to date (which operating information
shall include the hotel located thereon); and (c) a written statement for each
hotel dated as of the last day of the most recently ended month showing the
percentage of rooms rented and occupied during such month and the average daily
room rate charged during such month. Upon request by Lender, Borrower will
provide a detailed explanation of any variances often (10%) percent or more
between budgeted and actual amounts for such periods. Borrower shall furnish,
within 90 days following the end of each calendar year, a statement of the
financial affairs and condition of each of the individual hotels comprising the
Mortgaged Property, including a statement of profit and loss and a balance sheet
for each of the individual hotels comprising the Mortgaged Property for the
immediately preceding
23
fiscal year, prepared by an independent certified public accountant acceptable
to Lender. Borrower shall deliver to Lender on or before December 31 of each
calendar year an itemized operating budget and capital expenditure budget for
each of the individual hotels comprising the Mortgaged Property and a management
plan for each of the individual hotels comprising the Mortgaged Property for the
next succeeding calendar year in such detail as Lender may reasonably request.
Borrower shall promptly after receipt deliver to Lender copies of all quality
inspection reports or similar reports or inspection results that are delivered
to it by the franchisor. At any time and from time to time Borrower shall
deliver to Lender or its agents such other financial data as Lender or its
agents shall reasonably request with respect to Borrower and the ownership,
maintenance, use and operation of each of the individual hotels comprising the
Mortgaged Property. All information required to be furnished to Lender pursuant
to this Section shall be on the form provided by Lender (which form shall
accompany Lender's request).
20. Performance of Other Agreements
Borrower shall observe and perform each and every term to be
observed or performed by Borrower pursuant to the terms of any material
agreement or recorded instrument affecting or pertaining to the Mortgaged
Property. Nothing herein shall operate in derogation of any obligation of
Borrower under the Loan Documents.
21. Further Assurances: Right to Split the Loan
(a) Borrower will, at the cost of Borrower, and without expense to
Lender, do, execute, acknowledge and deliver all and every such further acts,
deeds, conveyances, mortgages, assignments, notices of assignment, Uniform
Commercial Code financing statements or continuation statements, transfers and
assurances as Lender shall, from time to time, require, for the better assuring,
conveying, assigning, transferring, and confirming unto Lender the property and
rights hereby mortgaged, given, granted, bargained, sold, alienated, enfeoffed,
conveyed, confirmed, pledged, assigned and hypothecated or intended now or
hereafter so to be, or which Borrower may be or may hereafter become bound to
convey or assign to Lender, or for carrying out the intention or facilitating
the performance of the terms of this Agreement or for filing, registering or
recording the Mortgage. Borrower, on demand, will execute and deliver and hereby
authorizes Lender, upon the occurrence of an Event of Default, to execute in
the name of Borrower or without the signature of Borrower to the extent Lender
may lawfully do so, one or more financing statements, chattel mortgages or other
instruments, to evidence more effectively the security interest of Lender in the
Mortgaged Property. Borrower grants to Lender an irrevocable power of attorney
coupled with an interest for the purpose of exercising and perfecting any and
all rights and remedies available to Lender at law and in equity, including
without limitation such rights and remedies available to Lender pursuant to this
Section; provided, however, that so long as Borrower is in compliance with the
terms and conditions of this Agreement, Lender will first seek Borrower's
assistance in exercising and perfecting such rights and remedies.
(b) Borrower acknowledges that Lender intends to sell the loan
evidenced by the Note and the Loan Documents to a party who may pool the Loan
with a number of other loans and to have the holder of such loans grant
participations therein or issue one or more classes of Mortgage Backed,
Pass-Through Certificates or other securities evidencing a beneficial interest
in a rated or unrated public offering or private placement (the "Securities");
provided, however, that nothing herein shall require that Borrower act as issuer
or depositor, or execute any registration statement, offering circular or
memorandum in connection with the offering of Securities. The Securities may be
rated by one or more national rating agencies. In this regard, Borrower agrees
to make available to Lender, at Lender's sole cost and expense, all information
concerning its business and operations which Lender reasonably requests. Lender
may share such information with the investment banking firms, rating agencies,
accounting firms, law firms and other
24
third-party advisory firms involved with the Loan or the Securities. It is
understood that the information provided by Borrower to Lender may ultimately be
incorporated into the offering documents for the Securities and thus such
information may be disclosed to various investors. Anything herein to the
contrary notwithstanding, Borrower shall have no liability by reason of the
offering or issuance of the Securities; provided, however, that nothing herein
shall operate in derogation of any obligation of Borrower under the Loan
Documents.
(c) Lender shall have the right, at any time in its sole and
absolute discretion, to split and sever the Loan into two or more separate
loans. Borrower shall execute and deliver all such instruments, documents and
other papers, and do or cause to be done all such acts and things as Lender may
reasonably request in order to effect such splitter and severance. In no event
shall any such splitter and severance expand or increase Borrower's liability or
obligations hereunder, and Lender shall pay all of Borrower's actual out of
pocket expenses and third-party costs (including attorneys fees and expenses) in
connection with such splitter and severance.
22. Recording of Mortgage
Borrower forthwith upon the execution and delivery of this Agreement
and thereafter, from time to time, will cause the Mortgage, and any security
instrument creating a lien or security interest or evidencing the lien thereof
upon the Mortgaged Property and each instrument of further assurance to be
filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect the lien or security interest thereof upon, and the interest of Lender
in, the Mortgaged Property. Borrower will pay all filing, registration or
recording fees, and all expenses incident to the preparation, execution and
acknowledgment of the Mortgage, any mortgage supplemental thereto, any security
instrument with respect to the Mortgaged Property and any instrument of further
assurance, and all federal, state, county and municipal taxes, duties, imposts,
assessments and charges arising out of or in connection with the execution and
delivery of the Mortgage, any mortgage supplemental thereto, any security
instrument with respect to the Mortgaged Property or any instrument of further
assurance, except where prohibited by law so to do. Borrower shall hold harmless
and indemnify Lender, its successors and assigns, against any liability incurred
by reason of the imposition of any tax on the making and recording of the
Mortgage.
23. Reporting Requirements
Borrower agrees to give prompt notice to Lender of the insolvency or
bankruptcy filing of Borrower or any constituent thereof, or the death,
insolvency or bankruptcy filing of any Guarantor.
24. Events of Default
The term "Event of Default" as used herein shall mean the occurrence
or happening, at anytime and from time to time, of any one or more of the
following:
(a) if any portion of the Debt is not paid prior to the tenth (10th)
day after the date such payment is due or if the entire Debt is not paid on or
before the Maturity Date;
(b) subject to Borrower's right to contest as provided herein, if
any of the Taxes are not paid when due and payable, or if any Other Charges are
not paid prior to delinquency;
(c) if the Policies are not kept in full force and effect, or if the
Policies or certificates thereof are not delivered to Lender upon request;
25
(d) if Borrower transfers or encumbers any portion of the Mortgaged
Property in a manner inconsistent with the terms of this Agreement;
(e) if any representation or warranty of Borrower, or of any
Guarantor, made herein, in any Loan Document, any guaranty, or in any
certificate, report, financial statement or other instrument or document
furnished to Lender shall have been false or misleading in any material respect
when made;
(f) if Borrower or any Guarantor shall make an assignment for the
benefit of creditors, or if Borrower shall generally not be paying its debts as
they become due:
(g) if a receiver, liquidator or trustee of Borrower or of any
Guarantor shall be appointed, or if Borrower or any Guarantor shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Borrower or any Guarantor or if any proceeding for the dissolution or
liquidation of Borrower or of any Guarantor shall be instituted; provided,
however, that such appointment, adjudication, petition or proceeding, if
involuntary and not consented to by Borrower or such Guarantor, shall constitute
an Event of Default only if not being discharged, stayed or dismissed within 90
days;
(h) if Borrower shall be in default under any other mortgage or
security agreement covering any part of the Mortgaged Property, whether it be
superior or junior in lien to the Mortgage, which default continues beyond
applicable notice and grace periods, if any;
(i) subject to Borrower's right to contest as provided herein, if
the Mortgaged Property becomes subject to any mechanic's, materialman's or other
lien except a lien for local real estate taxes and assessments not then due and
payable and not bonded or dismissed within 30 days;
(j) if Borrower fails to cure promptly or to proceed diligently and
in accordance with prudent business practices to cure any violations of laws or
ordinances affecting the Mortgaged Property;
(k) except as permitted in this Agreement, the alteration,
improvement, demolition or removal of any of the Improvements without the prior
written consent of Lender;
(l) if there shall occur any damage to the Mortgaged Property in any
manner which is not covered by insurance solely as a result of Borrower's
failure to maintain insurance required in accordance with this Agreement, which
damage is not promptly repaired to Lender's satisfaction at Borrower's cost and
expense;
(m) if without Lender's prior written consent: (i) the manager under
the Management Agreement (or any succeeding management agreement) resigns or is
removed; (ii) except as permitted hereunder, the ownership, management or
control of such manager is transferred to any person or entity; or (iii) there
is any material change in or termination of the Management Agreement (or any
succeeding management agreement);
(n) if without Lender's prior written consent, there is any material
adverse change in the Franchise Agreement (or any succeeding franchise
agreement);
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(o) if for more than 30 days after receipt of notice from Lender,
Borrower shall continue to be in default under any term, covenant, or condition
of this Agreement, the Assignment, the Environmental Agreement or any of the
other Loan Documents other than as specified in any of subsections (a) through
(n) of this Section: provided, however, that if the cure of any such default
cannot reasonably be cured within such 30 day period and Borrower shall have
promptly and diligently commenced to cure such default within such 30 day
period, then the period to cure shall be deemed extended for up to an additional
60 days from Lender's default notice so long as Borrower diligently and
continuously proceeds to cure such default to Lender's satisfaction;
(p) if a default has occurred and continues beyond any applicable
cure period under the Management Agreement if such default permits a party to
terminate or cancel the Management Agreement;
(q) if a default has occurred and continues beyond any applicable
cure period under the Franchise Agreement if such default permits a party to
terminate or cancel the Franchise Agreement, and the franchisor thereunder has
initiated some affirmative action with respect to such default;
(r) if Borrower ceases to operate a hotel on the Mortgaged Property
or terminates such business for any reason whatsoever (other than temporary
cessation in connection with any renovations to the Mortgaged Property or
restoration of the Mortgaged Property after casualty or condemnation); or
(s) if Borrower terminates or cancels the Franchise Agreement or
operates the Mortgaged Property under the name of any hotel chain or system
other than the respective franchises set forth on Schedule A hereto, without
Lender's prior written consent.
25. Late Payment Charge
If any portion of the Debt is not paid prior to the tenth (10th) day
after the date such payment is due or if the entire Debt is not paid on or
before the Maturity Date, Borrower shall pay to Lender upon demand an amount
equal to five (5%) percent of such overdue portion of the Debt, 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, and
such amount shall be secured by the Mortgage, the Assignment, the Environmental
Agreement and the other Loan Documents.
26. Right to Cure Defaults
Upon the occurrence of any Event of Default or, upon notice, if
Borrower fails to make any payment or to do any act as herein provided, Lender
may, but without any obligation to do so and without releasing Borrower from any
obligation hereunder, take such action as Lender may deem necessary to its
security for the Loan. Lender is authorized to enter upon the Mortgaged Property
for such purposes or to appear in, defend, or bring any action or proceeding to
protect its interest in the Mortgaged Property or to foreclose the Mortgage or
collect the Debt, and the cost and expense thereof (including Lender's
attorneys' fees to the extent permitted by law), with interest at the Default
Rate for the period after notice from Lender that such cost or expense was
incurred to the date of payment to Lender, shall constitute a portion of the
Debt, shall be secured by the Mortgage, the Assignment, the Environmental
Agreement and the other Loan Documents and shall be due and payable to Lender
upon demand.
27. Remedies
(a) Upon the occurrence of any Event of Default, Lender may take
such action, without notice or demand, as it deems advisable to protect and
enforce its rights against Borrower and in and to the
27
Mortgaged Property by Lender itself or otherwise including, without limitation,
the following actions, each of which may be pursued concurrently or otherwise,
at such time and in such order as Lender may determine, in its sole discretion,
without impairing or otherwise affecting the other rights and remedies of
Lender:
(i) declare the entire Debt to be immediately due and payable;
(ii) institute a proceeding or proceedings, judicial or
nonjudicial, by advertisement or otherwise, for the complete foreclosure
of the Mortgage in which case the Mortgaged Property or any interest
therein may be sold for cash or otherwise in one or more parcels or in
several interests or portions and in any order or manner;
(iii) with or without entry, to the extent permitted and
pursuant to the procedures provided by applicable law, institute
proceedings for the partial foreclosure of the Mortgage for the portion of
the Debt then due and payable, subject to the continuing lien of the
Mortgage for the balance of the Debt not then due;
(iv) sell for cash or otherwise the Mortgaged Property or any
part thereof and all estate, claim, demand, right, title and interest of
Borrower therein and rights of redemption thereof, pursuant to the power
of sale contained herein or otherwise, at one or more sales, as an entity
or in parcels, at such time and place, upon such terms and after such
notice thereof as may be required or permitted by law;
(v) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement contained
herein, in the Assignment, the Environmental Agreement, the other Loan
Documents or in the Note;
(vi) recover judgment on the Note either before, during or
after any proceedings for the enforcement of the Mortgage; provided,
however, that nothing herein shall expand Lender's recourse as limited
pursuant to Section 8 of the Note;
(vii) apply for the appointment of a trustee, receiver,
liquidator or conservator of the Mortgaged Property, without notice and
without regard for the adequacy of the security for the Debt and without
regard for the solvency of Borrower, any Guarantor or of any person, firm
or other entity liable for the payment of the Debt;
(viii) revoke the license granted to Borrower to collect the
Rents and other sums due under the Leases and enforce Lender's interest in
the Leases and Rents and enter into or upon the Mortgaged Property, either
personally or by its agents, nominees or attorneys and dispossess Borrower
and its agents and servants therefrom, and thereupon Lender may to the
maximum extent permitted, or not restricted, under applicable law: (A)
use, operate, manage, control, insure, maintain, repair, restore and
otherwise deal with all and every part of the Mortgaged Property and
conduct the business thereat; (B) complete any existing or ongoing
construction on the Mortgaged Property in such manner and form as Lender
deems advisable; (C) make alterations, additions, renewals, replacements
and improvements to or on the Mortgaged Property; (D) exercise all rights
and powers of Borrower with respect to the Mortgaged Property, whether in
the name of Borrower or otherwise including, without limitation, the right
to make, cancel, enforce or modify Leases, obtain and evict tenants, and
demand, ▇▇▇ for, collect and receive all earnings, revenues, rents,
issues, profits and other income of the Mortgaged Property and every part
thereof; and (E) apply the
28
receipts from the Mortgaged Property to the payment of the Debt, after
deducting therefrom all expenses (including Lender's attorneys' fees)
incurred in connection with the aforesaid operations and all amounts
necessary to pay the taxes, assessments insurance and other charges in
connection with the Mortgaged Property, as well as just and reasonable
compensation for the services of Lender, its counsel, agents and
employees;
(ix) require Borrower to pay monthly in advance to Lender, or
any receiver appointed to collect the Rents, the fair and reasonable
rental value for the use and occupancy of any portion of the Mortgaged
Property occupied by Borrower and require Borrower to vacate and surrender
possession of the Mortgaged Property o Lender or to such receiver and, in
default thereof, evict Borrower by summary proceedings or otherwise; and
(x) pursue such other rights and remedies as may be available
at law or in equity or under the Uniform Commercial Code, including the
right to establish a lock box for all Rents and other receivables of
Borrower relating to the Mortgaged Property.
In the event of a sale, by foreclosure or otherwise, of less than all of the
Mortgaged Property, the Mortgage shall continue as a lien on the remaining
portion of the Mortgaged Property.
(b) The proceeds of any sale made under or by virtue of this
Section, together with any other sums which then may be held by Lender
under this Agreement, whether under the provisions of this Section or
otherwise, shall be applied by Lender to the payment of the Debt in such
priority and proportion as Lender in its sole discretion shall deem
proper.
(c) Lender may adjourn from time to time any sale by it to be
made under or by virtue of the Mortgage by announcement at the time and
place appointed for such sale or for such adjourned sale or sales; and,
except as otherwise provided by any applicable provision of law, Lender,
without further notice or publication, may make such sale at the time and
place to which such sale shall be so adjourned.
(d) Upon the completion of any sale or sales pursuant hereto,
Lender or an officer of any court empowered to do so, shall execute and
deliver to the accepted purchaser or purchasers a good and sufficient
instrument, or good and sufficient instruments, conveying, assigning and
transferring all estate, right, title and interest in and to the property
and rights sold. Lender is hereby irrevocably appointed the true and
lawful attorney-in-fact of Borrower, to act in its name and stead (such
power of attorney being coupled with an interest, and irrevocable), to
make all necessary conveyances, assignments, transfers and deliveries of
the Mortgaged Property and rights so sold and for that purpose Lender may
execute all necessary instruments of conveyance, assignment and transfer,
and may substitute one or more persons with like power, Borrower hereby
ratifying and confirming all that its attorney or such substitute or
substitutes shall lawfully do by virtue hereof. Any sale or sales made
under or by virtue of this Section, whether made under the power of sale
herein granted or under or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale, shall operate to divest all
the estate, right, title, interest, claim and demand whatsoever, whether
at law or in equity, of Borrower in and to the properties and rights so
sold, and shall be a perpetual bar both at law and in equity against
Borrower and against any and all persons claiming or who may claim the
same, or any part thereof from, through or under Borrower.
(e) Upon any sale made under or by virtue of this Section,
whether made under the power of sale herein granted or under or by virtue
of judicial proceedings or of a judgment or decree of foreclosure and
sale, Lender may bid for and acquire the Mortgaged Property or any part
thereof and in lieu of paying cash therefor may make settlement for the
purchase price by crediting upon the Debt the net sales
29
price after deducting therefrom the expenses of the sale and costs of the action
and any other sums which Lender is authorized to deduct under the Mortgage.
(f) No recovery of any judgment by Lender and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Borrower shall affect in any manner or to any extent the lien of the
Mortgage upon the Mortgaged Property or any part thereof, or any liens, rights,
powers or remedies of Lender hereunder, but such liens, rights, powers and
remedies of Lender shall continue unimpaired as before.
(g) Lender may terminate or rescind by proceeding or other action
brought in connection with its exercise of the remedies provided in this Section
at any time before the conclusion thereof, as determined in Lender's sole
discretion and without prejudice to Lender.
(h) Lender may resort to any remedies and the security given by the
Note, the Mortgage, this Agreement, the Assignment, the Environmental Agreement
or the other Loan Documents in whole or in part, and in such portions and in
such order as determined by Lender's sole discretion. No such action shall in
any way be considered a waiver of any rights, benefits or remedies evidenced or
provided by the Note, the Mortgage, this Agreement, the Assignment, the
Environmental Agreement or the other Loan Documents. The failure of Lender to
exercise any right, remedy or option provided in the Note, the Mortgage, this
Agreement, the Assignment, the Environmental Agreement or the other Loan
Documents shall not be deemed a waiver of such right, remedy or option or of any
covenant or obligation secured by the Note, the Mortgage, this Agreement, the
Assignment, the Environmental Agreement or the other Loan Documents. No
acceptance by Lender of any payment after the occurrence of any Event of Default
and no payment by Lender of any obligation for which Borrower is liable
hereunder shall be deemed to waive or cure any Event of Default with respect to
Borrower, or Borrower's liability to pay such obligation. No sale of all or any
portion of the Mortgaged Property, no forbearance on the part of Lender, and no
extension of time for the payment of the whole or any portion of the Debt or any
other indulgence given by Lender to Borrower, shall operate to release or in any
manner affect the interest of Lender in the remaining Mortgaged Property or the
liability of Borrower to pay the Debt. No waiver by Lender shall be effective
unless it is in writing and then only to the extent specifically stated.
(i) The interests and rights of Lender under the Note, the Mortgage,
this Agreement, the Assignment, the Environmental Agreement or the other Loan
Documents shall not be impaired by any indulgence, including: (i) any renewal,
extension or modification which Lender may grant with respect to any of the
Debt; (ii) any surrender, compromise, release, renewal, extension, exchange or
substitution which Lender may grant with respect to the Mortgaged Property or
any portion thereof; or (iii) any release or indulgence granted to any maker,
endorser, guarantor or surety of any of the Debt.
28. Right of Entry
Lender and its agents shall have the right to enter and inspect the
Mortgaged Property during normal business hours upon reasonable notice. 29.
Security Agreement
This Agreement is a "security agreement" within the meaning of the
Uniform Commercial Code. The Mortgaged Property includes both real and personal
property and all other rights and interests, whether tangible or intangible in
nature, of Borrower in the Mortgaged Property. By executing and delivering this
Agreement, Borrower has granted and thereby grants to Lender, as security for
the Debt, a security interest in the Mortgaged Property to the full extent that
the Mortgaged Property may be subject to
30
the Uniform Commercial Code (such portion of the Mortgaged Property so subject
to the Uniform Commercial Code being called in this Section the "Collateral").
Borrower hereby agrees with Lender to execute and deliver to Lender, in form and
substance satisfactory to Lender, such financing statements and such further
assurances as Lender may from time to time, reasonably consider necessary to
create, perfect or preserve Lender's security interest therein granted. The
Mortgage shall also constitute a "fixture filing" for the purposes of the
Uniform Commercial Code. All or part of the Mortgaged Property are or are to
become fixtures. If an Event of Default shall occur, Lender, in addition to any
other rights and remedies which they may have, shall have and may exercise
immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code including, without
limitation, the right to take possession of the Collateral or any part thereat
and to take such other measures as Lender may deem necessary for the care,
protection and preservation of the Collateral. Upon request or demand of Lender,
Borrower shall at its expense assemble the Collateral and make it available to
Lender at a convenient place acceptable to Lender. If Lender retains counsel to
enforce its rights hereunder and Lender prevails in such action, Borrower shall
pay to Lender on demand any and all expenses, including Lender's attorneys'
fees, incurred or paid by Lender in protecting the interest in the Collateral
and in enforcing the rights hereunder with respect to the Collateral. Any notice
of sale, disposition or other intended action by Lender with respect to the
Collateral sent to Borrower in accordance with the provisions hereof at least 10
days prior to such action, shall constitute commercially reasonable notice to
Borrower. The proceeds of any disposition of the Collateral, or any part
thereof, may be applied by Lender to the payment of the Debt in such priority
and proportions as Lender in its discretion shall deem proper. In the event of
any change in name. identity or structure of any Borrower, such Borrower shall
notice Lender thereof and promptly after request shall execute, file and record
such Uniform Commercial Code forms as are necessary to maintain the priority of
Lender's lien upon and security interest in the Collateral, and shall pay all
expenses and fees in connection with the filing and recording thereof. If Lender
shall require the filing or recording of additional Uniform Commercial Code
forms or continuation statements, Borrower shall, promptly after request,
execute, file and record such Uniform Commercial Code forms or continuation
statements as Lender shall deem necessary, and shall pay all expenses and fees
in connection with the filing and recording thereof, it being understood and
agreed, however, that no such additional documents shall increase Borrower's
obligations under the Note, the Mortgage, this Agreement, the Assignment, the
Environmental Agreement and the other Loan Documents. Borrower hereby
irrevocably appoints Lender as its attorney-in-fact, coupled with an interest,
to file with the appropriate public office on its behalf any financing or other
statements signed only by Lender, as secured party, in connection with the
Collateral covered by the Mortgage.
30. Actions and Proceedings
Lender has the right to appear in and defend any action or
proceeding brought with respect to the Mortgaged Property upon an Event of
Default or in which Borrower fails to appear or defend, and upon an Event of
Default, to bring any action or proceeding, in the name and on behalf of
Borrower, which Lender, in its discretion, decides should be brought to protect
its interest in the Mortgaged Property. Lender shall, at its option, be
subrogated to the lien of any mortgage or other security instrument discharged
in whole or in part by the Debt, and any such subrogation rights shall
constitute additional security for the payment of the Debt.
31. Waiver of Setoff and Counterclaim
All amounts due under the Mortgage, the Note and the other Loan
Documents shall be payable without setoff, counterclaim or any deduction
whatsoever. Borrower hereby waives the right to assert a counterclaim (other
than compulsory counter-claims) in any action or proceeding brought against it
31
by Lender, or arising out of or in any way connected with this Agreement, the
Mortgage, the Note, any of the other Loan Documents, or the Debt.
32. Contest of Certain Claims
Notwithstanding the provisions of Sections 5 and 24(i) hereof,
Borrower shall not be in default for failure to pay or discharge Taxes, Other
Charges or a mechanic's or materialman's lien asserted against the Mortgaged
Property if, and so long as: (a) Borrower shall have notified Lender of such
nonpayment and the reasons therefor within 10 days of obtaining knowledge
thereof; (b) Borrower shall diligently and in good faith contest such Taxes.
Other Charges or lien by appropriate legal proceedings which shall operate to
prevent the enforcement or collection thereof and the sale of the Mortgaged
Property or any part thereof, in satisfaction thereof; (c) Borrower shall have
furnished to Lender a cash deposit, or an indemnity bond satisfactory to Lender
with a surety satisfactory to Lender, in the amount of the Taxes, other Charges
or mechanic's or materialman's lien claim, plus a reasonable additional sum to
pay all costs, interest and penalties that may be imposed or incurred in
connection therewith, to assure payment of the matters under contest and to
prevent any sale or forfeiture of the Mortgaged Property or any part thereof
(which sums shall be deposited into an interest-bearing account); (d) Borrower
shall promptly upon final determination thereof pay the amount of any such
Taxes, Other Charges or claim so determined, together with all costs, interest
and penalties which may be payable in connection therewith; and (e) the failure
to pay the Taxes, Other Charges or mechanic's or materialman's lien claim does
not constitute a default under any other deed of trust, mortgage or security
interest covering or affecting any part of the Mortgaged Property.
Notwithstanding the foregoing, Borrower shall immediately upon request of Lender
pay (and if Borrower shall fail so to do, Lender may, but shall not be required
to, pay or cause to be discharged or bonded against) any such Taxes, Other
Charges or claim notwithstanding such contest, if in the opinion of Lender, the
Mortgaged Property or any part thereof or interest therein may be in danger of
being sold, forfeited, foreclosed, terminated, cancelled or lost. Lender may pay
over any such cash deposit or part thereof to the claimant entitled thereto at
any time when, in the judgment of Lender, the entitlement of such claimant is
established.
33. Recovery of Sums Required to Be Paid
Lender shall have the right from time to time to take action to
recover any sum or sums which constitute a part of the Debt as they become due,
without regard to whether or not the balance of the Debt shall be due, and
without prejudice to the right of Lender thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Borrower existing
at the time such earlier action was commenced. Nothing herein shall expand
Lender's recourse as limited pursuant to Section 8 of the Note.
34. Marshalling and Other Matters
Borrower hereby waives, to the extent permitted by law, the benefit
of all appraisement, valuation, stay and extension laws now or hereafter in
force, and all rights of marshalling in the event of any sale hereunder of the
Mortgaged Property or any part thereof or any interest therein. Further; to the
extent permitted by applicable law, Borrower hereby expressly waives any and all
rights of redemption from sale under any order or decree of foreclosure of the
Mortgage on behalf of Borrower, and on behalf of each and every person acquiring
any interest in or title to the Mortgaged Property subsequent to the date of
this Agreement and on behalf of all persons to the extent permitted by
applicable law.
32
35. Hazardous Substances
Borrower hereby represents and warrants to Lender that. to the best
of Borrower's knowledge. after due inquiry and investigation, and except as
disclosed in the environmental audits of the Mortgaged Property furnished to
Lender in connection with the Loan: (a) the Mortgaged Property is not in direct
or indirect violation of any local, state, federal or other governmental
authority, statute, ordinance, code, order, decree, law, rule or regulation
pertaining to or imposing liability or standards of conduct concerning
environmental regulation, contamination or clean-up including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended, the Resource Conservation and Recovery Act, as
amended, and any state super-lien and environmental clean-up statutes
(collectively, "Environmental Laws") (b) the Mortgaged Property is not subject
to any private or governmental lien or judicial or administrative notice or
action relating to hazardous and/or toxic, dangerous and/or regulated,
substances, solvents, wastes, materials, pollutants or contaminants, petroleum,
tremolite, anthlophylie or actinolite or polychlorinated biphenyls (including,
without limitation, any raw materials which include hazardous constituents) and
any other substances, materials or solvents which are included under or
regulated by Environmental Laws (collectively, "Hazardous Substances"); (c) no
Hazardous Substances are or have been, prior to Borrower's acquisition of the
Mortgaged Property, discharged, generated, treated, disposed of or stored on,
incorporated in or removed or transported from the Mortgaged Property other than
in compliance with all Environmental Laws; and (d) no underground storage tanks
exist on any of the Mortgaged Property. So long as Borrower owns or is in
possession of the Mortgaged Property, Borrower shall keep or cause the Mortgaged
Property to be kept free from Hazardous Substances (other than de minimis
quantities of Hazardous Substances that are necessary and lawfully used in the
operation of the Mortgaged Property as a hotel or motel, and which are stored
and disposed of in compliance with all Environmental Laws) and in compliance
with all Environmental Laws, shall promptly notify Lender if Borrower shall
become aware of any Hazardous Substances on the Mortgaged Property and/or if
Borrower shall become aware that the Mortgaged Property is in direct or indirect
violation of any Environmental Laws and Borrower shall remove such Hazardous
Substances and/or cure such violations, as applicable, as required by law,
promptly after Borrower becomes aware of such Hazardous Substances or such
violations, at Borrower's sole expense. Nothing herein shall prevent Borrower
from recovering such expenses from any other party that may be liable for such
removal or cure. Upon Lender's request, at any time and from time to time while
this Agreement is in effect (but in no event more frequently than once in any
three-year period or more frequently if specific facts and circumstances
reasonably dictate, or otherwise at Lender's election but at Lender's expense),
Borrower shall provide at Borrower's sole expense, an inspection or audit of the
Mortgaged Property prepared by a licensed hydrogeologist or licensed
environmental engineer approved by Lender indicating the presence or absence of
Hazardous Substances on the Mortgaged Property. If Borrower fails to provide
such inspection or audit within 30 days after such request, Lender may order
such inspection or audit, and Borrower hereby grants to Lender and its employees
and agents access to the Mortgaged Property and a license to undertake such
inspection or audit. The cost of such inspection or audit shall be paid by
Borrower and added to the principal balance of the sums due under the Note and
the Mortgage and shall bear interest thereafter until paid at the Default Rate.
The obligations and liabilities of Borrower under this Section which relate to
conditions created or arising during Borrower's ownership of the Mortgaged
Property and prior to Lender's taking possession of the Mortgaged Property shall
survive any termination, satisfaction, or assignment of the Mortgage and the
exercise by Lender of any of its rights or remedies thereunder including,
without limitation, the acquisition of the Mortgaged Property by foreclosure or
a conveyance in lieu of foreclosure.
36. Asbestos
(a) Borrower represents and warrants that, to the best of Borrower's
knowledge, after due inquiry and investigation, and except as disclosed in the
environmental audits of the Mortgaged
33
Property furnished to Lender in connection with the Loan, no asbestos or any
substance containing asbestos (collectively, "Asbestos") is located on the
Mortgaged Property. Borrower shall not install in the Mortgaged Property, nor
permit to be installed in the Mortgaged Property, Asbestos and shall remove any
Asbestos promptly upon discovery to the satisfaction of Lender, at Borrower's
sole expense. Upon Lender's request, at any time and from time to time (but in
no event more frequently than once in any three-year period or more frequently
if specific facts and circumstances reasonably dictate, or otherwise at Lender's
election but at Lender's expense), Borrower shall provide, at Borrower's sole
expense, an inspection or audit of the Mortgaged Property prepared by an
engineering or consulting firm approved by Lender, indicating the presence or
absence of Asbestos on the Mortgaged Property. If Borrower fails to provide such
inspection or audit within 30 days after such request, Lender may order such
inspection or audit The cost of such inspection or audit shall be paid by
Borrower and added to the principal balance of the sums due under the Note and
the Mortgage, and shall bear interest thereafter until paid at the Default Rate.
The obligations and liabilities of Borrower under this Section which relate to
conditions created or arising during Borrower's ownership of the Mortgaged
Property and prior to Lender's taking possession of the Mortgaged Property shall
survive any termination, satisfaction, or assignment of the Mortgage and the
exercise by Lender of any of its rights or remedies thereunder, including but
not limited to, the acquisition of the Mortgaged Property by foreclosure or a
conveyance in lieu of foreclosure.
(b) Borrower has developed an operations and maintenance plan (the
"O&M Plan") for the Mortgaged Property with respect to the presence of Asbestos
in the Improvements. Borrower covenants and agrees that it shall comply in all
respects with the terms and conditions of the O&M Plan. Borrower shall not
modify or amend the O&M Plan without Lender's prior written consent unless
required by Environmental Laws. Borrower shall not remove, disturb or
encapsulate or otherwise remediate the Asbestos in the Improvements except in
compliance with all Environmental Laws. If Borrower makes any alterations or
modifications to the Improvements that would disturb or expose any Asbestos in
the Improvements or cause any of such Asbestos to become friable, Borrower shall
remove or encapsulate such Asbestos in compliance with all applicable
Environmental Laws before allowing occupancy of such space or opening such space
to the public.
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37. Environmental Monitoring
Borrower shall give prompt written notices to Lender of: (a) any
proceeding or inquiry by any party with respect to the presence of any Hazardous
Substance on, under, from or about the Mortgaged Property; (b) all claims made
or threatened by any third party against Borrower or the Mortgaged Property
relating to any loss or injury resulting from any Hazardous Substance; and (c)
Borrower's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Mortgaged Property that could cause the
Mortgaged Property to be subject to any investigation or cleanup pursuant to any
Environmental Law. Borrower shall permit Lender to join and participate, as a
party if it so elects, in any legal proceedings or actions initiated with
respect to the Mortgaged Property in connection with any Environmental Law or
Hazardous Substance, and Borrower shall pay all attorneys' fees incurred by
Lender in connection therewith. In the event that any environmental site
assessment report prepared for the Mortgaged Property recommends that an
operations and maintenance plan be implemented for Asbestos or any Hazardous
Substance, Borrower shall cause such operations and maintenance plan to be
prepared and implemented at Borrower's expense upon request of Lender and in
accordance with the recommendation. In the event that any investigation, site
monitoring, containment, cleanup, removal, restoration, or other work of any
kind which is reasonably necessary or desirable under an applicable
Environmental Law ("Remedial Work"), Borrower shall, at its sole cost and
expense, commence and thereafter diligently prosecute to completion all such
Remedial Work within 30 days after written demand by Lender for performance
thereof (or such shorter period of time as may be required under applicable
law).
38. Management of the Hotel
Borrower further covenants and agrees with Lender as follows:
(a) Borrower shall cause the hotel located on the Mortgaged Property
to be operated pursuant to the Franchise Agreement and the Management Agreement.
(b) Borrower shall:
(i) pay all sums required to be paid by Borrower under the
Franchise Agreement and the Management Agreement and promptly perform
and/or observe all of the covenants and agreements required to be
performed and observed by it under the franchise Agreement and the
Management Agreement and do all things necessary to preserve and to keep
unimpaired its material rights thereunder;
(ii) promptly notify Lender of any default under the Franchise
Agreement or the Management Agreement of which it is aware and provide
Lender with copies of any notices delivered in connection therewith;
(iii) promptly deliver to Lender a copy of each financial
statement, business plan, capital expenditures plan, notice, report and
estimate received by it under the Franchise Agreement or the Management
Agreement;
(iv) promptly enforce the performance and observance of all of
the covenants and agreements required to be performed and/or observed by
the franchisor under the Franchise Agreement and the manager under the
Management Agreement;
35
(v) assign to Lender any right it may have to modify the
Franchise Agreement (to the extent such rights are assignable) or the
Management Agreement;
(vi) grant Lender the right, but Lender shall be under no
obligation, upon an Event of Default (or otherwise upon notice from
Lender) to pay any sums and to perform any act or take any action as may
be appropriate to cause all the terms, covenants and conditions of the
Franchise Agreement on the part of Borrower to be performed or observed to
be promptly performed or observed on behalf of Borrower, to the end that
the rights of Borrower in, to and under the Franchise Agreement shall be
kept unimpaired and free from default;
(vii) use its reasonable efforts to obtain, from time to time,
from the franchisor under the Franchise Agreement such certificates of
estoppel with respect to compliance by Borrower with the terms of the
Franchise Agreement as may be requested by Lender; and
(viii) exercise each individual option, if any, to extend or
renew the term of the Franchise Agreement upon demand by Lender made at
any time within one year of the last day upon which any such option may be
exercised, and Borrower hereby expressly authorizes and appoints Lender
its attorney-in-fact to exercise, upon an Event of Default, 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.
Notwithstanding the foregoing. Borrower shall not be required to extend or
renew the Franchise Agreement if Lender consents to Borrower's request to
enter into franchise arrangements with a franchisor other than the
franchisor under the Franchise Agreement.
(c) Borrower shall not, without Lender's prior written consent: (i)
surrender, terminate or cancel the Franchise Agreement or the Management
Agreement; (ii) reduce or consent to the reduction of the term of the
Franchise Agreement or the Management Agreement; (iii) increase or consent
to the increase of the amount of any charges under the Franchise Agreement
or the Management Agreement; (iv) otherwise modify, change, supplement,
alter or amend, or waive or release any of its rights and remedies under
the Franchise Agreement or the Management Agreement in any material
respect; or (v) operate the Mortgaged Property under the name of any hotel
chain or system other than as set forth on Schedule A with respect to each
of the Mortgaged Property.
(d) Except as set forth in the Management Agreement, Borrower shall
not, without Lender's prior written consent, enter into transactions with any
affiliate including, without limitation, any arrangement providing for the
management of the hotel on the Mortgaged Property, the rendering or receipt of
services or the purchase or sale of inventory, except any such transaction in
the ordinary course of business of Borrower if the monetary or business
consideration arising therefrom would be substantially as advantageous to
Borrower as the monetary or business consideration which would obtain in a
comparable transaction with a person not an affiliate of Borrower.
(e) Borrower irrevocably authorizes and directs Franchisor, from and
after an Event of Default, to deliver to Lender: (i) all operating information
concerning the Property submitted by Borrower to Franchisor; (ii) the written
results of all quality assurance inspections of the Property performed by
Franchisor's Quality Assurance Directors; and (iii) such other information that
Lender or Lender's agents may reasonably request, from time to time, including
any information in the possession of Franchisor relating to Borrower not
included in the reports referred to above; provided, however, that in the
absence of an Event of Default Lender shall obtain any such information only
from Borrower.
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39. Handicapped Access
(a) Borrower agrees that the Mortgaged Property shall at all times
strictly comply to the extent applicable with the requirements of the Americans
with Disabilities Act of 1990, all state and local laws and ordinances related
to handicapped access and all rules, regulations, and orders issued pursuant
thereto including, without limitation, the Americans with Disabilities Act
Accessibility Guidelines for Buildings and Facilities (collectively, "Access
Laws").
(b) Notwithstanding any provisions set forth herein or in any other
document regarding Lender's approval of alterations of the Mortgaged Property,
Borrower shall not alter the Mortgaged Property in any manner which would
increase Borrower's responsibilities for compliance with the applicable Access
Laws without the prior written approval of Lender. The foregoing shall apply to
tenant improvements constructed by Borrower or by any of its tenants. Lender may
condition any such approval upon receipt of a certificate of Access Law
compliance from an architect, engineer or other person acceptable to Lender.
(c) Borrower agrees to give prompt notice to Lender of the receipt
by Borrower of any complaints related to violation of any Access Laws and of the
commencement of any proceedings or investigations which relate to compliance
with applicable Access Laws.
40. ERISA
(a) Borrower covenants and agrees that it shall not engage in any
transaction which would cause any obligation, or action taken or to be taken,
hereunder (or the exercise by Lender of any of its rights under the Note, the
Mortgage, this Agreement and the other Loan Documents) to be a non-exempt (under
a statutory or administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974 (or any successor legislation
thereto), as amended ("ERISA").
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of this
Agreement, as requested by Lender in its sole discretion, that: (i) Borrower is
not an "employee benefit plan" as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (ii) Borrower is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and
(iii) one or more of the following circumstances is true:
(A) Equity interests in Borrower are publicly offered securities,
within the meaning of 29 C.F.R. ss. 2510.3-101(b)(2);
(B) Less than 25 percent of each outstanding class of equity
interests in Borrower are held by "benefit plan investors" within the
meaning of 29 C.F.R. ss. 2510.3-101(f)(2); or
(C) Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R. ss. 2510.3-101(c) or
(e) or an investment company registered under The Investment Company Act
of 1940.
41. Indemnification
(a) In addition to any other indemnifications provided herein, in
the Assignment, the Environmental Agreement or in the other Loan Documents,
Borrower shall protect, defend, indemnify and save harmless Lender from and
against all liabilities, obligations, claims, demands, damages, penalties,
causes of action, losses, fines, costs and expenses (including, without
limitation, out-of-pocket attorneys'
37
fees and expenses), imposed upon or incurred by or asserted against Lender by
reason of: (1) ownership of the Mortgage. the Mortgaged Property or any interest
therein or receipt of any Rents; (ii) any accident, injury to or death of
persons or loss of or damage to property occurring in, on or about the Mortgaged
Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (iii) any use, nonuse or
condition in, on or about the Mortgaged Property or any part thereof or on
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (iv) any failure on the part of Borrower to perform or comply with any
of the terms of this Agreement; (v) performance of any labor or services or the
furnishing of any materials or other property in respect of the Mortgaged
Property or any part thereof; (vi) the presence disposal, escape, seepage.
leakage, spillage. discharge, emission, release, or threatened release of any
`Hazardous Substance or Asbestos on, from, or affecting the Mortgaged Property
or any other property; (vii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to such Hazardous
Substance or Asbestos; (viii) any lawsuit brought or threatened, settlement
reached, or government order relating to such Hazardous Substance or Asbestos;
(ix) any violation of the Environmental Laws, which are based upon or in any way
related to such Hazardous Substance or Asbestos including, without limitation,
the costs and expenses of any remedial action, out-of-pocket attorney's and
consultant's fees, investigation and laboratory fees, court costs, and
litigation expenses; (x) any failure of the Mortgaged Property to comply with
any Access Laws; (xi) any representation or warranty made in the Note, the
Mortgage, this Agreement, the Environmental Agreement or the other Loan
Documents being false or misleading in any material respect, or otherwise in any
respect if made willfully or knowingly, as of the date such representation or
warranty was made; (xii) any claim by brokers, finders or similar persons
claiming to be entitled to a commission in connection with any Lease or other
transaction involving the Mortgaged Property or any part thereof under any legal
requirement or any liability asserted against Lender with respect thereto; and
(xiii) the claims of any lessee of all or any portion of the Mortgaged Property
or any person acting through or under any lessee or otherwise arising under or
as a consequence of any Lease. Any amounts payable to Lender by reason of the
application of this Section shall be immediately due and payable, shall be
secured by the Mortgage and shall bear interest at the Default Rate from the
date loss or damage is sustained by Lender until paid. The obligations and
liabilities of Borrower under this Section shall survive any termination,
satisfaction or assignment of this Agreement or the entry of a judgment of
foreclosure, sale of the Mortgaged Property by nonjudicial foreclosure sale, or
delivery of a deed in lieu of foreclosure. The indemnification provided for
herein shall not apply to liabilities, obligations, claims, demands, damages,
penalties, causes of action, losses, fines, costs and expenses imposed upon or
incurred by or asserted against Lender by reason of Lender's willful acts or
Lender's gross negligence or for any matters arising from a state of facts first
coming into existence after Lender's succession to possession of the Mortgaged
Property.
(b) Any indemnitee making a claim for indemnification hereunder
shall notify Borrower of the claim in writing promptly after receiving written
notice of any action, lawsuit, proceedings, investigation or other claim against
it describing the claim, the amount thereof (if known and quantifiable) and the
basis thereof.
(c) Borrower shall be entitled to participate in the defense of the
action, lawsuit, proceeding, investigation or other claim giving rise to such
claim of indemnification at its expense and at its option and shall be entitled
to appoint counsel in such defense with such counsel reasonably acceptable to
Lender.
(d) Lender shall be entitled to participate in the defense of such
claim and to employ counsel of its choice for such purpose, the fees and
expenses of such separate counsel to be borne by Lender. Borrower shall obtain
the prior written consent of Lender (not to be unreasonably withheld) before
entering into any settlement of a claim or ceasing to defend such claim, if
pursuant to or as a result of such
38
settlement or cessation, injunction or other equitable relief will be imposed
against Lender or if such settlement does not expressly unconditionally release
Lender from all liabilities and obligations with respect to such claim.
(e) In the event Borrower elects not to participate in the defense
of such claim Lender shall have the right to control the defense of such claim
and make any compromise or settlement thereof, which in the sole judgment of
Lender is exercised in a commercially reasonable manner, which shall be binding
upon Borrower following Borrower's receipt of notice of such settlement and
Borrower's consent to such settlement, which shall not be unreasonably withheld.
42. Notice
Any notice, demand, statement, request or consent made hereunder
shall be in writing and shall be deemed given on the next business day if sent
by Federal Express or other reputable overnight courier and designated for next
business day delivery, or on the third day following the day such notice is
deposited with the United States postal service first class certified mail,
return receipt requested, addressed to the address, as set forth above, of the
party to whom such notice is to be given, or to such other address or additional
party as Borrower or Lender, as the case may be, shall in like manner designate
in writing.
43. Authority
Borrower represents and warrants that: (a) it has full power,
authority and right to execute, deliver and perform its obligations pursuant to
this Agreement, and to mortgage, give, grant, bargain, sell, alien, enfeoff,
convey, confirm, warrant, pledge, hypothecate and assign the Mortgaged Property
pursuant to the terms hereof and to keep and observe all of the terms of this
Agreement on Borrower's part to be performed; and (b) Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
1986, as amended, and the related Treasury Department regulations, including
temporary regulations. Lender represents and warrants that it has full power,
authority and right to execute, deliver and perform its obligations pursuant to
this Agreement.
44. Waiver of Notice
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which this Agreement
specifically and expressly provides for the giving of notice by Lender to
Borrower and except with respect to matters for which Lender is required by
applicable law to give notice, and Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which this
Agreement does not specifically and expressly provide for the giving of notice
by Lender to Borrower.
45. Remedies of Borrower
In the event that a claim or adjudication is made that Lender has
acted unreasonably or has unreasonably delayed acting in any case where by law
or under the Note, the Mortgage, this Agreement, the Assignment, the
Environmental Agreement or the other Loan Documents, it has an obligation to act
reasonably or promptly, Lender shall not be liable for any monetary damages, and
Borrower's remedies shall be limited to specific performance, injunctive relief
or declaratory judgment.
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46. Sole Discretion of Lender
Wherever pursuant to this Agreement Lender exercises any right given
to it to approve or disapprove, or any arrangement or term is to be satisfactory
to Lender, the decision of Lender to approve or disapprove or to decide that
arrangements or terms are satisfactory or not satisfactory shall be in the sole
discretion of Lender and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.
47. Non-Waiver
The failure of Lender to insist upon strict performance of any term
hereof shall not be deemed to be a waiver of any term of this Agreement.
Borrower shall not be relieved of Borrower's obligations hereunder by reason of:
(a) the failure of Lender to comply with any request of Borrower or any
Guarantor to take any action to foreclose the Mortgage or otherwise to enforce
any of the provisions hereof or of the Note, the Assignment, the Environmental
Agreement or the other Loan Documents; (b) the release, regardless of
consideration, of the whole or any part of the Mortgaged Property, or of any
person liable for the Debt or any portion thereof; or (c) any agreement or
stipulation by Lender extending the time of payment or otherwise modifying or
supplementing the terms of the Note, the Mortgage, this Agreement, the
Assignment, the Environmental Agreement or the other Loan Documents. Lender may
resort for the payment of the Debt to any other security held by Lender in such
order and manner as Lender, in its discretion, may elect. Lender may take action
to recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Lender thereafter to foreclosure the Mortgage.
The rights and remedies of Lender under this Agreement shall be separate,
distinct and cumulative and none shall be given effect to the exclusion of the
others. No act of Lender shall be construed as an election to proceed under any
one provision herein to the exclusion of any other provision. Lender shall not
be limited exclusively to the rights and remedies herein stated but shall be
entitled to every right and remedy now or hereafter afforded at law or in
equity.
48. No Oral Change
This Agreement, and any provisions hereof, may not be modified,
amended, waived, extended, changed, discharged or terminated orally or by any
act or failure to act on the part of Borrower or Lender, but only by an
agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.
49. Liability
If Borrower consists of more than one person, the obligations and
liabilities of each such person hereunder shall be joint and several, and any
reference to the "Mortgaged Property" shall refer to the each of the individual
hotels comprising the Mortgaged Property, and to all of such hotels,
collectively, as the context may require. Subject to the provisions hereof
requiring Lender's consent to any transfer of the Mortgaged Property, this
Agreement shall be binding upon and inure to the benefit of Borrower and Lender
and their respective successors and assigns forever.
50. Inapplicable Provisions
If any term, covenant or condition of the Note, the Mortgage or this
Agreement is held to be invalid, illegal or unenforceable in any respect, the
Note, the Mortgage and this Agreement shall be construed without such provision.
40
51. Section Headings
The headings and captions of the various Sections of this Agreement
are for convenience of reference only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions hereof.
52. Counterparts
This Agreement may be executed in any number of counterparts and
each such duplicate original shall be deemed to be an original.
53. Certain Definitions
Unless the context clearly indicates a contrary intent or unless
otherwise specifically provided herein, words used in this Agreement may be used
interchangeably in singular or plural form and the word "Borrower" shall mean
"each Borrower, and each constituent party of Borrower, individually, as the
context may require, and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein", the word "Lender" shall
mean "Lender and any subsequent holder of the Note", the word "Debt" shall mean
"the Note and any other evidence of indebtedness secured by the Mortgage", the
word "person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority and any other
entity, and the words "Mortgaged Property" shall include any portion of the
Mortgaged Property and any interest therein, and shall refer to each and every
property comprising the Mortgaged Property, as the context may require, and the
words "attorneys' fees" shall include any and all attorneys' fees, paralegal and
law clerk fees including, without limitation, fees at the pretrial, trial and
appellate levels incurred or paid by Lender in protecting its interest in the
Mortgaged Property and Collateral and enforcing its rights hereunder. Whenever
the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
54. Homestead
Borrower hereby waives and renounces all homestead and exemption
rights provided by the constitution and the laws of the United States and of any
state, in and to the Premises as against the collection of the Debt, or any part
thereof.
55. Assignments
Lender shall have the right to assign or transfer its rights under
this Agreement without limitation. Any assignee or transferee shall be entitled
to all the benefits afforded Lender under this Agreement. In no event shall any
such assignment release Lender from its obligations hereunder.
56. SUBMISSION TO JURISDICTION
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY OHIO,
IOWA or GEORGIA STATE OR FEDERAL COURT SITTING IN SUMMIT COUNTY, OHIO or
WOODBURY COUNTY, IOWA or RICHMOND COUNTY, GEORGIA OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. LENDER MAY, AT ITS SOLE
DISCRETION, ELECT THE STATE OF OHIO, SUMMIT COUNTY, THE STATE OF IOWA, WOODBURY
COUNTY or THE ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ OF
AMERICA, FEDERAL
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ HAVING JURISDICTION OVER SUMMIT, WOODBURY or RICHMOND COUNTY, AS
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING. BORROWER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE TO SUCH VENUE AS BEING AN INCONVENIENT FORUM.
57. Agent for Receipt of Process
Borrower hereby irrevocably appoints ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.A. with an address at Museum Tower, Suite 2200, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Atnn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., as its
authorized agent to accept and acknowledge, on behalf of Borrower, service of
any and all process which may be served in any suit, action or proceeding of the
nature referred to in Section 56 hereof in any State or Federal court within
Summit, Woodbury or Richmond County. If such agent shall cease so to act,
Borrower shall irrevocably designate and appoint without delay another such
agent satisfactory to Lender, and shall promptly deliver to Lender written
evidence of such other agent's acceptance of such appointment.
58. Service of Process
To the extent permitted by applicable law, process in any suit,
action or proceeding of the nature referred to in Section 56 hereof may be
served: (a) by registered or certified mail, postage prepaid, to Borrower at the
address set forth above or to such other address of which Borrower shall have
given Lender written notice; or (b) if Borrower shall not have made an
appearance within 21 days after service in accordance with clause (a) of this
Section, by hand delivery to the agent identified in Section 57 hereof, or such
successor agent as shall have been identified in accordance with Section 57
hereof. Nothing in this Section shall affect the Lender's right to serve process
in any manner permitted by law, or limit Lender's right to bring proceedings
against Borrower in the courts of any other jurisdiction.
59. WAIVER OF JURY TRIAL
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE NOTE,
THE MORTGAGE, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO
FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER BY BORROWER.
60. CHOICE OF LAW
THIS LOAN AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO
PURSUANT TO TILE LAWS OF TILE COMMONWEALTH OF VIRGINIA AND SHALL IN ALL RESPECTS
BE GOVERNED, CONSTRUED, APPLIED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
SUCH JURISDICTION.
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61. Release of Portions of the Mortgaged Property
(a) Any one or more individual hotels that comprises a portion of
the Mortgaged Property may be released from the lien of the Mortgage provided
that, in each instance: (i) no Event of Default shall have occurred and be
continuing; (ii) the Release Conditions are satisfied; (iii) Borrower pays to.
Lender the applicable release price set forth on Schedule A with respect to such
hotel, together with all other sums then due and payable in respect of the Loan
(including, without limitation, the prepayment consideration payable under the
Note, and interest, late fees, costs and expenses payable in accordance
herewith); and (iv) Borrower shall deliver to Lender a current title search with
respect to the remaining Mortgaged Property showing no liens or other
encumbrances other than as permitted hereunder or to which Lender shall have
consented. In order to confirm or effect such release, Lender shall execute one
or more instruments, in recordable form, evidencing such release and the release
of the constituent Borrower party from liability in respect of the Loan.
(b) Nothing herein shall obligate Borrower to repay principal in
excess of the Loan.
62. Limitations on Recourse
Anything herein to the contrary notwithstanding, Lender's recourse
upon the occurrence of an Event of Default hereunder is limited pursuant to the
express provisions of the Note.
43
IN WITNESS WHEREOF, Borrower and Lender have executed this
instrument as of the day and year first above written.
BORROWER:
BRECKSVILLE HOSPITALITY, L.P.
By: Brecksville Hospitality, Inc.
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
SIOUX CITY HOSPITALITY, L.P.
By: Fourth Street Hospitality, Inc.
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
1075 HOSPITALITY, L.P.
By: Stevens Creek Hospitality, Inc.
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
LENDER:
LOAN SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
[Acknowledgment]
44
STATE OF FLORIDA )
: ss.:
COUNTY OF DADE )
On January 17, 1996, before me, a notary public, duly commissioned,
qualified and acting. personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Notary Public
[SEAL]
My Commission Expires
-----------------------
STATE OF FLORIDA )
: ss.:
COUNTY OF DADE )
On January 17, 1996, before me, a notary public, duly commissioned,
qualified and acting, personally appeared ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Notary Public
[SEAL]
My Commission Expires
-----------------------
STATE OF FLORIDA )
: ss.:
COUNTY OF DADE )
SCHEDULE A
List of Mortgaged Properties
--------------------------------------------------------------------------------------------------------------------------------
Name/Address Franchise Agreement Franchisor Management Manager Release Price
Agreement
--------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Holiday Inn Change of Holiday Inns Hotel Operating Servico $3,812,500.00
4742 Brecksville Ownership Agreement dated Franchising, Inc. Agreement dated Management Corp.
Richfield, Ohio as of the date hereof. as of the date
hereof.
--------------------------------------------------------------------------------------------------------------------------------
Hilton Hotel License Agreement dated Hilton Inns, Inc. Hotel Operating Servico $7,362,500.00
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ December 20, 1994, as Agreement dated Management Corp.
Sioux City, Iowa amended and assigned by as of the date
Assignment and Assumption hereof.
of, and Amendment to,
License Agreement dated
as of the date hereof.
--------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Holiday Inn Change of Holiday Inns Hotel Operating Servico $4,962,500.00
1075 ▇▇▇▇▇▇ Creek Ownership Agreement dated Franchising, Inc. Agreement dated Management Corp.
Augusta, Georgia as of the date hereof. as of the date
hereof.
--------------------------------------------------------------------------------------------------------------------------------