EXHIBIT 10.28
LOAN AGREEMENT
Dated as of April 24, 2003
Between
FELCOR/JPM HOTELS, L.L.C.,
as Borrower
and
JPMORGAN CHASE BANK,
as Lender
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION............................................................... 1
SECTION 1.1 Definitions......................................................................... 1
SECTION 1.2 Principles of Construction.......................................................... 26
II. GENERAL TERMS......................................................................................... 26
SECTION 2.1 Loan Commitment; Disbursement to Borrower........................................... 26
2.1.1 Agreement to Lend and Borrow........................................................ 26
2.1.2 Single Disbursement to Borrower..................................................... 27
2.1.3 The Note, Security Instruments and Loan Documents................................... 27
2.1.4 Use of Proceeds..................................................................... 27
SECTION 2.2 Interest; Loan Payments; Late Payment Charge........................................ 27
2.2.1 Payments............................................................................ 27
2.2.2 Interest Calculation................................................................ 28
2.2.3 Eurodollar Rate Unascertainable; Illegality; Increased Costs........................ 28
2.2.4 Payment on Maturity Date............................................................ 30
2.2.5 Payments after Default.............................................................. 30
2.2.6 Late Payment Charge................................................................. 30
2.2.7 Usury Savings....................................................................... 30
2.2.8 Foreign Taxes....................................................................... 31
SECTION 2.3 Prepayments......................................................................... 32
2.3.1 Voluntary Prepayments............................................................... 32
2.3.2 Mandatory Prepayments............................................................... 33
2.3.3 Prepayments After Default........................................................... 33
2.3.4 Making of Payments.................................................................. 33
2.3.5 Application of Prepayments.......................................................... 34
SECTION 2.4 Interest Rate Cap Agreement......................................................... 34
2.5.1 Release of Individual Property...................................................... 36
2.5.2 Release on Payment in Full.......................................................... 37
SECTION 2.6 Substitution of Properties.......................................................... 37
III. CASH MANAGEMENT....................................................................................... 44
SECTION 3.1 Establishment of Accounts........................................................... 44
SECTION 3.2 Deposits into Lockbox Account....................................................... 45
SECTION 3.3 Account Name........................................................................ 46
SECTION 3.4 Eligible Accounts................................................................... 46
SECTION 3.5 Permitted Investments............................................................... 47
SECTION 3.6 The Initial Deposits................................................................ 47
SECTION 3.7 Transfer To and Disbursements from the Lockbox Account.............................. 47
SECTION 3.8 Withdrawals From the Tax Account and the Insurance Premium Account.................. 48
SECTION 3.9 Withdrawals from the Replacement Reserve Account.................................... 49
SECTION 3.10 Withdrawals from the Required Repair Account........................................ 49
SECTION 3.11 Withdrawals from the Debt Service Account........................................... 49
SECTION 3.12 Withdrawals from the Mezzanine Account.............................................. 49
SECTION 3.13 Withdrawals from the Junior Mezzanine Account....................................... 49
SECTION 3.14 Withdrawals from the Ground Rent Account............................................ 49
SECTION 3.15 Withdrawals from the Excess Cash Flow Account....................................... 49
SECTION 3.18 Sole Dominion and Control........................................................... 50
SECTION 3.19 Security Interest................................................................... 50
SECTION 3.20 Rights on Default................................................................... 50
SECTION 3.21 Financing Statement; Further Assurances............................................. 50
SECTION 3.22 Borrower's Obligation Not Affected.................................................. 51
SECTION 3.23 Payments Received Under this Agreement.............................................. 51
IV. REPRESENTATIONS AND WARRANTIES........................................................................ 51
SECTION 4.1 Borrower Representations............................................................ 51
4.1.1 Organization........................................................................ 51
4.1.2 Proceedings......................................................................... 52
4.1.3 No Conflicts........................................................................ 52
4.1.4 Litigation.......................................................................... 53
4.1.5 Agreements.......................................................................... 53
4.1.6 Solvency............................................................................ 53
4.1.7 Full and Accurate Disclosure........................................................ 54
4.1.8 No Plan Assets...................................................................... 54
4.1.9 Compliance.......................................................................... 54
4.1.10 Financial Information............................................................... 55
4.1.11 Condemnation........................................................................ 55
4.1.12 Federal Reserve Regulations......................................................... 55
4.1.13 Utilities and Public Access......................................................... 55
ii
4.1.14 Not a Foreign Person................................................................ 56
4.1.15 Separate Lots....................................................................... 56
4.1.16 Assessments......................................................................... 56
4.1.17 Enforceability...................................................................... 56
4.1.18 No Prior Assignment................................................................. 56
4.1.19 Insurance........................................................................... 56
4.1.20 Use of Property..................................................................... 57
4.1.21 Certificate of Occupancy; Licenses.................................................. 57
4.1.22 Flood Zone.......................................................................... 57
4.1.23 Physical Condition.................................................................. 57
4.1.24 Boundaries.......................................................................... 57
4.1.25 Leases.............................................................................. 58
4.1.26 Survey.............................................................................. 58
4.1.27 Intentionally Omitted............................................................... 58
4.1.28 Filing and Recording Taxes.......................................................... 58
4.1.29 Franchise Agreement................................................................. 59
4.1.30 Management Agreement/Operating Lease................................................ 59
4.1.31 Illegal Activity.................................................................... 59
4.1.32 No Change in Facts or Circumstances; Disclosure..................................... 59
4.1.33 Investment Company Act.............................................................. 59
4.1.34 Principal Place of Business; State of Organization.................................. 60
4.1.35 Single Purpose Entity............................................................... 60
4.1.36 Business Purposes................................................................... 64
4.1.37 Taxes............................................................................... 64
4.1.38 Intentionally Omitted............................................................... 65
4.1.39 Environmental Representations and Warranties........................................ 65
4.1.40 Taxpayer Identification Number...................................................... 65
4.1.41 OFAC................................................................................ 65
4.1.42 Ground Lease Representations........................................................ 65
4.1.43 Deposit Accounts.................................................................... 67
SECTION 4.2 Survival of Representations......................................................... 67
V. BORROWER COVENANTS.................................................................................... 67
SECTION 5.1 Affirmative Covenants............................................................... 67
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5.1.1 Existence; Compliance with Legal Requirements....................................... 68
5.1.2 Taxes and Other Charges............................................................. 69
5.1.3 Litigation.......................................................................... 69
5.1.4 Access to Properties................................................................ 69
5.1.5 Notice of Default................................................................... 69
5.1.6 Cooperate in Legal Proceedings...................................................... 70
5.1.7 Award and Insurance Benefits........................................................ 70
5.1.8 Further Assurances.................................................................. 70
5.1.9 Mortgage and Intangible Taxes....................................................... 70
5.1.10 Financial Reporting................................................................. 71
5.1.11 Business and Operations............................................................. 76
5.1.12 Costs of Enforcement................................................................ 76
5.1.13 Estoppel Statement.................................................................. 76
5.1.14 Loan Proceeds....................................................................... 77
5.1.15 Performance by Borrower............................................................. 77
5.1.16 Confirmation of Representations..................................................... 77
5.1.17 Leasing Matters..................................................................... 78
5.1.18 Management Agreement................................................................ 79
5.1.19 Environmental Covenants............................................................. 81
5.1.20 Alterations......................................................................... 82
5.1.21 Franchise Agreement................................................................. 82
5.1.22 Operating Lease..................................................................... 83
5.1.23 OFAC................................................................................ 83
5.1.25 O&M Program......................................................................... 86
SECTION 5.2 Negative Covenants.................................................................. 86
5.2.1 Liens............................................................................... 86
5.2.2 Dissolution......................................................................... 86
5.2.3 Change In Business.................................................................. 87
5.2.4 Debt Cancellation................................................................... 87
5.2.5 Zoning.............................................................................. 87
5.2.6 No Joint Assessment................................................................. 87
5.2.7 Name, Identity, Structure, or Principal Place of Business........................... 87
5.2.8 ERISA............................................................................... 88
iv
5.2.9 Affiliate Transactions.............................................................. 88
5.2.10 Transfers........................................................................... 88
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS................................................... 90
SECTION 6.1 Insurance........................................................................... 90
SECTION 6.2 Casualty............................................................................ 96
SECTION 6.3 Condemnation........................................................................ 96
SECTION 6.4 Restoration......................................................................... 96
VII. RESERVE FUNDS......................................................................................... 100
SECTION 7.1 Required Repair Funds............................................................... 100
7.1.1 Deposits............................................................................ 100
7.1.2 Release of Required Repair Funds.................................................... 101
SECTION 7.2 Tax and Insurance Escrow Fund....................................................... 102
SECTION 7.3 Replacements and Replacement Reserve................................................ 103
7.3.1 Replacement Reserve Fund............................................................ 103
7.3.2 Disbursements from Replacement Reserve Account...................................... 103
7.3.3 Performance of Replacements......................................................... 104
7.3.4 Failure to Make Replacements........................................................ 106
7.3.5 Balance in the Replacement Reserve Account.......................................... 106
SECTION 7.4 Ground Lease Escrow Fund............................................................ 107
SECTION 7.5 UST Reserve Funds................................................................... 107
SECTION 7.6 Reserve Funds, Generally............................................................ 108
VIII. DEFAULTS.............................................................................................. 109
SECTION 8.1 Event of Default.................................................................... 109
SECTION 8.2 Remedies............................................................................ 113
SECTION 8.3 Remedies Cumulative; Waivers........................................................ 114
IX. SPECIAL PROVISIONS.................................................................................... 114
SECTION 9.2 Securitization Indemnification...................................................... 116
SECTION 9.3 Servicer............................................................................ 118
SECTION 9.4 Exculpation......................................................................... 118
X. MISCELLANEOUS......................................................................................... 121
SECTION 10.1 Survival............................................................................ 121
SECTION 10.2 Lender's Discretion................................................................. 121
SECTION 10.3 Governing Law....................................................................... 121
v
SECTION 10.4 Modification, Waiver in Writing..................................................... 122
SECTION 10.5 Delay Not a Waiver.................................................................. 122
SECTION 10.6 Notices............................................................................. 122
SECTION 10.7 Trial by Jury....................................................................... 123
SECTION 10.8 Headings............................................................................ 124
SECTION 10.9 Severability........................................................................ 124
SECTION 10.10 Preferences......................................................................... 124
SECTION 10.11 Waiver of Notice.................................................................... 124
SECTION 10.12 Remedies of Borrower................................................................ 124
SECTION 10.13 Expenses; Indemnity................................................................. 125
SECTION 10.14 Schedules and Exhibits Incorporated................................................. 126
SECTION 10.15 Offsets, Counterclaims and Defenses................................................. 126
SECTION 10.16 No Joint Venture or Partnership; No Third Party Beneficiaries....................... 127
SECTION 10.17 Publicity........................................................................... 127
SECTION 10.18 Cross-Default; Cross-Collateralization; Waiver of Marshalling of Assets............. 127
SECTION 10.19 Waiver of Counterclaim.............................................................. 128
SECTION 10.20 Conflict; Construction of Documents; Reliance....................................... 128
SECTION 10.21 Brokers and Financial Advisors...................................................... 128
SECTION 10.22 Prior Agreements.................................................................... 129
SECTION 10.23 Counterparts........................................................................ 129
SECTION 10.24 Liability........................................................................... 129
vi
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of April 24, 2003 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
"Agreement"), between JPMORGAN CHASE BANK, a New York banking corporation,
having an address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Lender") and
FELCOR/JPM HOTELS, L.L.C., a Delaware limited liability company, having its
principal place of business at c/o FelCor Lodging Trust Incorporated, ▇▇▇ ▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from
Lender; and
WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).
NOW THEREFORE, in consideration of the making of the Loan by Lender and
the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1. Definitions.
For all purposes of this Agreement, except as otherwise expressly required
or unless the context clearly indicates a contrary intent:
"Acceptable Counterparty" means any Counterparty to the Interest Rate Cap
Agreement that has and shall maintain, until the expiration of the applicable
Interest Rate Cap Agreement, a long-term unsecured debt rating of not less than
"AA-" (or the equivalent) by the Rating Agencies.
"Account Collateral" shall mean: (i) the Accounts, and all Cash, checks,
drafts, certificates and instruments, if any, from time to time deposited or
held in the Accounts from time to time; (ii) any and all amounts invested in
Permitted Investments; (iii) all interest, dividends, Cash, instruments and
other property from time to time received, receivable or otherwise payable in
respect of, or in exchange for, any or all of the foregoing; and (iv) to the
extent not covered by clauses (i) - (iii) above, all "proceeds" (as defined
under the UCC as in effect in the State in which the Accounts are located) of
any or all of the foregoing.
"Accounts" shall mean, collectively, the Property Account, the
Concentration Account, the Tax Account, the Insurance Premium Account, the
Required Repair Account, the Replacement Reserve Account, the Debt Service
Account, the Ground Rent Account, the UST
Reserve Account, the Mezzanine Account, the Junior Mezzanine Account, the Excess
Cash Flow Account and the Lockbox Account.
"Accounts Receivable" shall have the meaning set forth in Article 1 of the
Security Instrument with respect to each Individual Property.
"Acquired Property" shall have the meaning set forth in Section
5.1.10(h)(i) hereof.
"Acquired Property Statements" shall have the meaning set forth in Section
5.1.10(h)(i) hereof.
"Act" shall have the meaning set forth in Section 4.1.35 hereof.
"Adjusted Net Operating Income" means the amount obtained by subtracting
Adjusted Operating Expenses from Gross Income from Operations, provided,
however, Adjusted Net Operating Income shall only include the Properties that
are subject to the Lien of a Security Instrument at the time of such
calculation.
"Adjusted Operating Expenses" shall mean the total of all expenditures,
computed in accordance with GAAP, of whatever kind relating to the operation,
maintenance and management of the Properties that are incurred on a regular
monthly or other periodic basis, including without limitation, utilities,
ordinary repairs and maintenance, insurance premiums, license fees, property
taxes and assessments, advertising expenses, management fees, payroll and
related taxes, computer processing charges, operational equipment or other lease
payments as approved by Lender, and other similar costs, including contributions
to the Replacement Reserve Fund, but excluding depreciation, Debt Service,
Capital Expenditures and contributions to the Reserve Funds (other than the
Replacement Reserve Fund).
"Adjusted Prime Rate" shall mean an interest rate per annum equal to the
Prime Rate in effect from time to time plus one percent (1%).
"Affiliate" shall mean, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by or is under common control
with such Person or is a director or officer of such Person or of an Affiliate
of such Person.
"Affiliated Loans" shall have the meaning set forth in Section 5.1.10(m)
hereof.
"Affiliated Manager" shall mean any property manager which is an Affiliate
of Borrower, any Operating Lessee SPE Entity, Principal, or any Guarantor or
Indemnitor, or in which Borrower, any Operating Lessee SPE Entity, Principal, or
any Guarantor or Indemnitor has, directly or indirectly, any legal, beneficial
or economic equity interest.
"Allocated Loan Amount" shall mean, for an Individual Property, the amount
set forth on Schedule I hereto.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
2
"Annual Budget" shall mean the operating budget, including all planned
capital expenditures, for each Individual Property prepared by Manager and
approved by Borrower for the applicable Fiscal Year or other period.
"Applicable Laws" shall mean all existing and future U.S. federal, state
and local laws, orders, ordinances, governmental rules and regulations and court
orders.
"Applicable Interest Rate" shall mean (A) from and including the date of
this Agreement through the first Payment Date, an interest rate per annum equal
to 2.625%; and (B) from and including the first Payment Date and for each
successive Interest Period through and including the date on which the Debt is
paid in full, an interest rate per annum equal to (I) the Eurodollar Rate or
(II) the Adjusted Prime Rate, if the Loan begins bearing interest at the
Adjusted Prime Rate in accordance with the provisions of Section 2.2.3 hereof.
"Appraisal" shall mean an appraisal prepared in accordance with the
requirements of FIRREA, prepared by an independent third party appraiser holding
an MAI designation, who is State licensed or State certified if required under
the laws of the State where the applicable Individual Property is located, who
meets the requirements of FIRREA and who is otherwise satisfactory to Lender.
"Approved Annual Budget" shall have the meaning set forth in Section
5.1.10(d) hereof.
"Assignment of Interest Rate Cap" shall mean that certain Collateral
Assignment of Interest Rate Cap Agreement made by Borrower to Lender dated as of
the date hereof required by this Agreement as security for the Loan, consented
to by the Counterparty, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Assignment of Leases" shall mean, with respect to each Individual
Property, that certain first priority Assignment of Leases and Rents, dated as
of the date hereof, from Borrower and Operating Lessee, as assignor, to Lender,
as assignee, assigning to Lender all of Borrower's and Operating Lessee's
interest in and to the Leases and Rents of such Individual Property as security
for the Loan, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Assignment of Management Agreement" shall mean, with respect to each
Individual Property that certain Conditional Assignment of Management Agreement
dated the date hereof among Lender, Borrower, Operating Lessee and Manager, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
"Award" shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of any Individual
Property.
"Bankruptcy Code" shall mean Title 11 U.S.C. ss. 101 et seq., and the
regulations adopted and promulgated pursuant thereto (as the same may be amended
from time to time).
"Basic Carrying Costs" shall mean, with respect to each Individual
Property, the sum of the following costs associated with such Individual
Property for the relevant Fiscal Year or payment period: (i) Taxes and (ii)
Insurance Premiums.
3
"Borrower" shall have the meaning set forth in the introductory paragraph
hereto, together with its successors and assigns.
"Breakage Costs" shall have the meaning set forth in Section 2.2.3(d)
hereof.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which national banks in New York, New York are not open for
business.
"Business Party" shall have the meaning set forth in Section 4.1.35(aa)
hereof.
"Capital Expenditures" shall mean, for any period, the amount expended for
items capitalized under GAAP (including, but not limited to, expenditures for
building improvements or major repairs, leasing commissions and tenant
improvements).
"Cash" shall mean coin or currency of the United States of America or
immediately available federal funds, including such fund delivered by wire
transfer.
"Cash Flow Threshold" shall mean $17,900,000.00; provided, however, in
connection with a release and/or substitution of an Individual Property in
accordance with the terms hereof, Cash Flow Threshold shall be recalculated so
as to equal the aggregate of (i) with respect to Individual Properties that were
subject to the Lien of a Security Instrument on the Closing Date eight-five
percent (85%) of the Adjusted Net Operating Income of each such Individual
Property for the twelve (12) month period preceding the Closing Date as
indicated on Schedule XIII attached hereto and made a part hereof and (ii) with
respect to Individual Properties that were not subject to the Lien of a Security
Instrument on the Closing Date, eight-five percent (85%) of the Adjusted Net
Operating Income of each such Individual Property for the most recently
available twelve (12) month period preceding the date of the calculation.
"Casualty" shall have the meaning set forth in Section 6.2 hereof.
"Casualty Consultant" shall have the meaning set forth in Section
6.4(b)(iii) hereof.
"Casualty Retainage" shall have the meaning set forth in Section
6.4(b)(iv) hereof.
"Closing Date" shall mean the date of the funding of the Loan.
"Code" shall mean the Internal Revenue Code of 1986, as amended, as it may
be further amended from time to time, and any successor statutes thereto, and
all applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
"Collateral" shall mean the Properties, the Accounts, the Reserve Funds,
the Personal Property, the Rents, the Account Collateral, and all other real or
personal property of Borrower or any Guarantor that is at any time pledged,
mortgaged or otherwise given as security to Lender for the payment of the Debt
under the Security Instruments, this Agreement or any other Loan Document.
"Concentration Account" shall have the meaning set forth in Section 3.1(a)
hereof.
4
"Condemnation" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
any Individual Property, or any interest therein or right accruing thereto,
including any right of access thereto or any change of grade affecting such
Individual Property or any part thereof.
"Condemnation Proceeds" shall have the meaning set forth in Section 6.4(b)
hereof.
"Control" (and the correlative terms "controlled by" and "controlling")
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of management and policies of the business and affairs of
the entity in question by reason of the ownership of beneficial interests, by
contract or otherwise.
"Counterparty" shall mean JPMorgan Chase Bank or any other Person which is
the issuer of the Interest Rate Cap Agreement.
"Creditors Rights Laws" shall mean with respect to any Person, any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, conservatorship, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to its debts or debtors.
"Debt" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums due to Lender in respect of the Loan under the
Note, this Agreement, the Security Instruments or any other Loan Document,
including, without limitation, all Reserve Fund Deposits.
"Debt Service" shall mean, with respect to any particular period of time,
interest payments and all Scheduled Amortization Payments due under the Note for
such period.
"Debt Service Account" shall have the meaning set forth in Section 3.1
hereof.
"Debt Service Coverage Ratio" shall mean a ratio in which:
(a) the numerator is the Net Operating Income for the most recently
available 12 full calendar month period preceding the date of calculation
as set forth in the financial statements required hereunder, without
deduction for (i) actual management fees incurred in connection with the
operation of the Properties, (ii) actual franchise fees incurred in
connection with the operation of the Properties, or (iii) amounts paid to
the Reserve Funds, less (A) management fees equal to the greater of (1)
assumed management fees of four percent (4%) of Gross Income from
Operations or (2) the actual management fees incurred, (B) the actual
franchise fees incurred and (C) the greater of (1) actual Replacement
Reserve Fund contributions equal to 4% of Gross Income from Operations and
(2) contributions for Replacements required pursuant to the Management
Agreements and the Franchise Agreements; and
(b) the denominator is all the aggregate interest and principal
payments that would be due and payable for such 12 full calendar month
period on the Loan, the Mezzanine Loan and the Junior Mezzanine Loan
assuming a principal and interest constant equal to 10.90%.
5
"Default" shall mean the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would constitute an Event of Default.
"Default Rate" shall mean, with respect to the Loan, a rate per annum
equal to the lesser of (a) the Maximum Legal Rate, or (b) five percent (5%)
above the Applicable Interest Rate.
"Disclosure Document" shall have the meaning set forth in Section 9.2(a)
hereof.
"Dow ▇▇▇▇▇ Market Service Page 3750" means the display designated as page
3750 on the Dow ▇▇▇▇▇ Market Service (formerly Telerate) Page 3750 (or such
other page as may replace page 3750 on that service or such other service as may
be nominated by the British Bankers-Association as the information vendor for
the purposes of displaying British Bankers-Association Interest Settlement Rates
for U.S. dollar deposits).
"Eligible Account" shall mean a separate and identifiable account from all
other funds held by the holding institution that is either (a) an account or
accounts maintained with a federal or State-chartered depository institution or
trust company which complies with the definition of Eligible Institution or (b)
a segregated trust account or accounts maintained with a federal or State
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a State chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R.ss.9.10(b),
having in either case a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal and State authority. An
Eligible Account will not be evidenced by a certificate of deposit, passbook or
other instrument.
"Eligible Institution" shall mean a depository institution or trust
company, insured by the Federal Deposit Insurance Corporation, (a) the short
term unsecured debt obligations or commercial paper of which are rated at least
A-1 by S&P, P-1 by ▇▇▇▇▇'▇ and F-1 by Fitch in the case of accounts in which
funds are held for thirty (30) days or less, or (b) the long term unsecured debt
obligations of which are rated at least AA by Fitch and S&P and Aa2 by ▇▇▇▇▇'▇
in the case of accounts in which funds are held for more than thirty (30) days.
"Environmental Indemnity" shall mean that certain Environmental Indemnity
Agreement executed by Borrower and Indemnitor in connection with the Loan for
the benefit of Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Environmental Law" shall mean any federal, State and local laws,
statutes, ordinances, rules, regulations, standards, policies and other
government directives or requirements, as well as common law, that, at any time,
apply to Borrower and/or Indemnitor or any Property and relate to Hazardous
Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act and the Resource Conservation and
Recovery Act.
"Environmental Liens" shall have the meaning set forth in Section
5.1.19(a) hereof.
"Environmental Reports" shall have the meaning set forth in Section 4.1.39
hereof.
6
"Equipment" shall have the meaning set forth in Section 5.2.10 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"Eurodollar Rate" shall mean, with respect to any Interest Period, an
interest rate per annum equal to LIBOR plus one and one-quarter percent (1.25%)
per annum.
"Event of Default" shall have the meaning set forth in Section 8.1(a)
hereof.
"Excess Cash Flow" shall mean, on each Payment Date, an amount equal to
the difference between (a) all Cash contained in the Concentration Account less
(b) the Monthly Pegged Amount and less (c) the monthly payments deposited
pursuant to Section 3.7(b)(i) - (ix) hereof for such month.
"Excess Cash Flow Account" shall have the set forth in Section 3.1(b)(v)
hereof.
"Excess Cash Flow Application Date" shall mean the first Payment Date
after the date which is twelve (12) calendar months after the occurrence of an
Excess Cash Flow Sweep Event, unless an Excess Cash Flow Sweep Period
Termination has occurred.
"Excess Cash Flow Sweep Event" shall occur when Lender determines that the
Adjusted Net Operating Income for the Properties does not exceed the Cash Flow
Threshold for three (3) consecutive calendar months.
"Excess Cash Flow Sweep Period" shall mean the period commencing upon the
occurrence of a Excess Cash Flow Sweep Event and terminating upon the occurrence
of an Excess Cash Flow Sweep Period Termination.
"Excess Cash Flow Sweep Period Termination" shall mean the delivery by
Borrower of evidence satisfactory to Lender that the Adjusted Net Operating
Income for the Properties exceeds the Cash Flow Threshold for three (3)
consecutive calendar months.
"Exchange Act" shall have the meaning set forth in Section 9.2(a) hereof.
"Exchange Act Filing" shall have the meaning set forth in Section 9.2(a)
hereof.
"Expiring Franchise Agreement Property" shall mean the Individual Property
located in Lexington, Kentucky.
"Expiring Management Agreement Properties" shall mean the Individual
Properties located in (i) Jacksonville, Florida, (ii) Lexington, Kentucky (iii)
Tulsa, Oklahoma and (iv) Dallas, Texas.
"Extension Criteria" shall mean, with respect to each extension of the
Maturity Date as provided herein, (i) no Event of Default has occurred and is
continuing under the Loan, (ii) Borrower sends Lender written request at least
sixty (60) days, but not more than one hundred twenty (120) days, prior to the
expiration of the initial or Extension Term, as applicable, (an
7
"Extension Notice") (iii) Borrower shall obtain and deliver to Lender prior to
exercise of such Extension Term, one or more Replacement Interest Rate Cap
Agreements, which Replacement Interest Rate Cap Agreements shall be effective
commencing on the first day of such Extension Term and shall have a maturity
date not earlier than the Maturity Date, (iv) Borrower pays to Lender the
applicable Extension Fee (v) Lender has determined that the applicable Extension
DSCR Test has been satisfied, (vi) unless a Mezzanine Event of Default has
occurred and is continuing, the Mezzanine Loan is simultaneously extended
pursuant to the terms thereof and (vii) unless a Junior Mezzanine Event of
Default has occurred and is continuing, the Junior Mezzanine Loan is
simultaneously extended pursuant to the terms thereof.
"Extension DSCR Test" shall mean the Debt Service Coverage Ratio (based
upon the Loan only) for the twelve (12) full calendar months immediately
preceding (i) Lender's receipt of the Extension Notice and (ii) the first day of
the applicable Extension Term, for the Properties remaining subject to the Lien
of the Security Instruments shall be equal to or greater (A) with respect to the
first Extension Term, 1.30:1.00 and (B) with respect to the second Extension
Term, 1.35:1.00. The Extension DSCR Test may be obtained by prepaying a portion
of the Loan and no prepayment consideration shall be due in connection
therewith.
"Extension Fee" shall mean a fee equal to (i) with respect to the first
Extension Term, 0.125% of the outstanding principal balance of the Loan at the
time of Lender's receipt of the applicable Extension Notice and (ii) with
respect to the second Extension Term, 0.25% of the outstanding principal balance
of the Loan at the time of Lender's receipt of the applicable Extension Notice.
"FIRREA" shall mean the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as the same may be amended from time to time.
"Fiscal Year" shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during the term of the Loan.
"Fitch" shall mean Fitch, Inc.
"Flood Insurance Act" shall have the meaning set forth in Section
6.1(a)(vii) hereof.
"Florida Properties" shall mean the Individual Properties located in
Tampa, Florida and Jacksonville, Florida.
"Foreign Taxes" shall mean any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority.
"Franchise Agreement" shall mean those certain franchise agreements more
specifically identified on Schedule VII attached hereto.
"Franchisor" shall mean each franchisor with respect to the applicable
Franchise Agreement, as same is identified on Schedule VII attached hereto.
8
"GAAP" shall mean generally accepted accounting principles in the United
States of America as of the date of the applicable financial report.
"Governmental Authority" shall mean any court, board, agency, commission,
office, central bank or other authority of any nature whatsoever for any
governmental unit (federal, State, county, district, municipal, city, country or
otherwise) or quasi-governmental unit whether now or hereafter in existence.
"Gross Income from Operations" shall mean all income, room revenues, food
and beverage revenue, telephone revenue, computed in accordance with GAAP
derived from the ownership and operation of the Properties from whatever source,
including, but not limited to, the Rents, utility charges, service fees or
charges, license fees, parking fees, rent concessions or credits, and other
required pass-throughs, but excluding sales, use and occupancy or other taxes on
receipts required to be accounted for by Borrower or Operating Lessee to any
Governmental Authority, interest on the Reserve Funds, interest on credit
accounts, refunds and uncollectible accounts, sales of furniture, fixtures and
equipment, Insurance Proceeds (other than business interruption or other loss of
income insurance), Awards, payments received under the Interest Rate Cap
Agreement, unforfeited security deposits, utility and other similar deposits,
escalations, forfeited security deposits and any disbursements to Borrower from
the Reserve Funds. Gross income shall not be diminished as a result of the
Security Instruments or the creation of any intervening estate or interest in a
Property or any part thereof.
"Ground Lease" shall mean, individually and collectively, as the context
may require, each ground lease described on Schedule XII attached hereto and
made a part hereof.
"Ground Lease Escrow Fund" shall have the meaning set forth in Section 7.4
hereof.
"Ground Lessor" shall mean the fee owner, as landlord, under each Ground
Lease.
"Ground Rent" shall have the meaning set forth in Section 7.4 hereof.
"Ground Rent Account" shall have the meaning set forth in Section 3.1
hereof.
"Guarantor" shall mean FelCor Lodging Limited Partnership and any other
entity guaranteeing any payment or performance obligation of Borrower.
"Guaranty" shall mean that certain Guaranty of Recourse Obligations of
Borrower, dated as of the date hereof, from Guarantor to Lender, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Hazardous Materials" shall mean petroleum and petroleum products and
compounds containing them, including gasoline, diesel fuel and oil; explosives;
flammable materials; radioactive materials; polychlorinated biphenyls ("PCBs")
and compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any
substance; toxic mold; any substance the presence of which on any Property is
prohibited by any federal, State or local authority; any substance that requires
special handling and/or disposal; and any other material or substance now or in
the future defined as a "hazardous substance,"
9
"hazardous material," "hazardous waste," "toxic substance," "toxic pollutant,"
"contaminant," "pollutant" or other words of similar import within the meaning
of any Environmental Law.
"Hilton Franchised Properties" shall mean the Individual Properties
located at (i) Bloomington, Minnesota, (ii) Dallas, Texas, (iii) Jacksonville,
Florida, (iv) Lexington, Kentucky and (v) Tulsa, Oklahoma.
"Improvements" shall have the meaning set forth in Article 1 of the
related Security Instrument with respect to each Individual Property.
"Indebtedness" of a Person, at a particular date, means the sum (without
duplication) at such date of (a) all indebtedness or liability of such Person
(including, without limitation, amounts for borrowed money); (b) obligations
evidenced by bonds, debentures, notes, or other similar instruments; (c)
obligations for the deferred purchase price of property or services (including
trade obligations); (d) obligations under letters of credit; (e) all guaranties,
endorsements (other than for collection or deposit in the ordinary course of
business) and other contingent obligations to purchase, to provide funds for
payment, to supply funds, to invest in any Person or entity, or otherwise to
assure a creditor against loss; and (f) obligations secured by any Liens,
whether or not the obligations have been assumed.
"Indemnified Liabilities" shall have the meaning set forth in Section
10.13(b) hereof.
"Indemnified Parties" shall mean Lender, any Affiliate of Lender who is or
will have been involved in the origination of the Loan, any Person who is or
will have been involved in the servicing of the Loan, any Person in whose name
the encumbrance created by the Security Instruments is or will have been
recorded, Persons who may hold or acquire or will have held a full or partial
interest in the Loan, the holders of any Securities, as well as custodians,
trustees and other fiduciaries who hold or have held a full or partial interest
in the Loan for the benefit of third parties) as well as the respective
directors, officers, shareholders, partners, members, employees, agents,
servants, representatives, contractors, subcontractors, Affiliates,
subsidiaries, participants, successors and assigns of any and all of the
foregoing (including but not limited to any other Person who holds or acquires
or will have held a participation or other full or partial interest in the Loan
or any Property, whether during the term of the Loan or as a part of or
following a foreclosure of the Loan and including, but not limited to, any
successors by merger, consolidation or acquisition of all or a substantial
portion of Lender's assets and business).
"Indemnitor" shall mean FelCor Lodging Limited Partnership.
"Independent Director" shall have the meaning set forth in Section
4.1.35(aa) hereof.
"Individual Property" shall mean each parcel of real property (including,
without limitation, any interest created pursuant to a Ground Lease), the
Improvements thereon and all Personal Property owned by Borrower, Operating
Lessee and Ground Lessor and encumbered by a Security Instrument, together with
all rights pertaining to such Property and Improvements, as more particularly
described in Article 1 of each Security Instrument and referred to therein as
the "Property", including any Release Property prior to its release or
Substitute Property upon substitution.
10
"Initial Replacement Reserve Monthly Deposit" shall mean $257,300.00.
"Initial Tier" shall have the meaning set forth in Section 6.1(b) hereof.
"Initial Tier Insurer" shall have the meaning set forth in Section 6.1(b)
hereof.
"Insolvency Opinion" shall mean, that certain bankruptcy non-consolidation
opinion letter delivered by counsel for Borrower in connection with the Loan and
approved by Lender or the Rating Agencies, as the case may be.
"Insurance Premium Account" shall have the meaning set forth in Section
3.1 hereof.
"Insurance Premiums" shall have the meaning set forth in Section 6.1(b)
hereof.
"Insurance Proceeds" shall have the meaning set forth in Section 6.4(b)
hereof.
"Interest Period" shall mean the period from the ninth (9th) day of each
month through and including the eighth (8th) day of the following month,
provided that, notwithstanding the foregoing, Lender shall have the one (1) time
right to change the Interest Period by giving notice of such change to Borrower.
"Interest Rate Cap Agreement" shall mean the Interest Rate Cap Agreement
(together with the confirmation and schedules relating thereto), between an
Acceptable Counterparty and Borrower obtained by Borrower and dated as of the
date hereof. The Interest Rate Cap Agreement shall be written on the then
current standard ISDA documentation, and shall provide for interest periods and
calculations consistent with the payment terms of this Agreement. After delivery
of a Replacement Interest Rate Cap Agreement to Lender, the term "Interest Rate
Cap Agreement" shall be deemed to mean such Replacement Interest Rate Cap
Agreement.
"Interest Shortfall" shall have the meaning set forth in Section 2.3.1(b)
hereof.
"Investor" shall have the meaning set forth in Section 5.1.10(g) hereof.
"Jacksonville Property" shall mean the Individual Property located at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
"JPMorgan Chase" shall have the meaning set forth in Section 9.2(b)
hereof.
"JPMorgan Chase Group" shall have the meaning set forth in Section 9.2(b)
hereof.
"Junior Mezzanine Account" shall mean such account as Junior Mezzanine
Lender may from time to time designate by written notice to Lender.
"Junior Mezzanine Borrower" shall mean DJONT/JPM TENANT CO., L.L.C., a
Delaware limited liability company together with its successors and permitted
assigns.
"Junior Mezzanine Event of Default" shall have the meaning ascribed to the
term "Event of Default" in the Junior Mezzanine Loan Agreement.
11
"Junior Mezzanine Lender" shall mean JPMorgan Chase Bank, together with
its successors and permitted assigns.
"Junior Mezzanine Loan" shall mean that certain loan in the original
principal amount of TWENTY FIVE MILLION AND 00/100 DOLLARS ($25,000,000.00) of
even date herewith made by Junior Mezzanine Lender to Junior Mezzanine Borrower.
"Junior Mezzanine Loan Agreement" shall mean that certain Junior Mezzanine
Loan Agreement dated as of the date hereof among Junior Mezzanine Borrower,
Junior Mezzanine Lender and other parties set forth therein, if any.
"Junior Mezzanine Loan Documents" shall have the meaning ascribed to the
term "Loan Documents" in the Junior Mezzanine Loan Agreement.
"Junior Mezzanine Principal" shall have the meaning ascribed to the term
"Principal" in the Junior Mezzanine Loan Agreement.
"Leases" shall have the meaning set forth in Article 1 of the Security
Instrument with respect to each Individual Property, including, without
limitation, the Operating Lease.
"Legal Requirements" shall mean, with respect to each Individual Property,
all federal, State, county, municipal and other governmental statutes, laws,
rules, orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities affecting Borrower, Ground Lessor with respect to the
Florida Properties or any Individual Property or any part thereof, or the
zoning, construction, use, alteration, occupancy or operation thereof, or any
part thereof, whether now or hereafter enacted and in force, and all permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Borrower, at any time in force affecting such Individual
Property or any part thereof, including, without limitation, any which may (a)
require repairs, modifications or alterations in or to such Individual Property
or any part thereof, or (b) in any way limit the use and enjoyment thereof.
"Lender" shall have the meaning set forth in the introductory paragraph
hereto, together with its successors and assigns.
"Liabilities" shall have the meaning set forth in Section 9.2(b) hereof.
"LIBOR" shall mean the rate per annum calculated as set forth below:
(i) With respect to each Interest Period, the rate for deposits in
U.S. Dollars, for a period equal to one month, which appears on the Dow
▇▇▇▇▇ Market Service (formerly Telerate) Page 3750 as of 11:00 a.m.,
London time, on the related LIBOR Determination Date (rounded upwards to
the nearest 1/16 of 1%). If such rate does not appear on Dow ▇▇▇▇▇ Market
Service Page 3750, the rate for that Interest Period shall be determined
on the basis of the rates at which deposits in Dollars are offered by any
four major reference banks in the London interbank market selected by
Lender to provide such bank's offered quotation of such rates at
approximately 11:00 a.m., London time, on the related LIBOR Determination
Date to prime banks in the London interbank market
12
for a period of one month, commencing on the first day of such Interest
Period and in an amount that is representative for a single such
transaction in the relevant market at the relevant time. Lender shall
request the principal London office of any four major reference banks in
the London interbank market selected by Lender to provide a quotation of
such rates, as offered by each such bank. If at least two such quotations
are provided, the rate for that Interest Period shall be the arithmetic
mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that Interest Period shall be the arithmetic mean
of the rates quoted by major banks in New York City selected by Lender, at
approximately 11:00 a.m., New York City time, on the LIBOR Determination
Date with respect to such Interest Period for loans in Dollars to leading
European banks for a period equal to one month, commencing on the first
day of such Interest Period and in an amount that is representative for a
single transaction in the relevant market at the relevant time. Lender
shall determine LIBOR for each Interest Period and the determination of
LIBOR by Lender shall be binding upon Borrower absent manifest error.
(ii) In the event that Lender shall have determined in its
reasonable discretion that none of the methods set forth in the definition
of "LIBOR" herein are available, then Lender shall forthwith give notice
by telephone of such determination, confirmed in writing, to Borrower at
least one (1) day prior to the last day of the related Interest Period. If
such notice is given, LIBOR, commencing with such related Interest Period,
shall be LIBOR in effect for the most recent Interest Period.
"LIBOR Business Day" shall mean any day on which banks are open for
dealing in foreign currency and exchange in London, England.
"LIBOR Determination Date" shall mean (i) with respect to any Interest
Period prior to the Interest Period that commences in the month during which the
Securitization Closing Date occurs, two (2) LIBOR Business Days prior to the
fifteenth (15th) day of the calendar month in which the applicable Interest
Period commences; (ii) with respect to the Interest Period that commences in the
month in which the Securitization Closing Date occurs, the date that is two (2)
LIBOR Business Days prior to the Securitization Closing Date and (iii) with
respect to each Interest Period thereafter, the date that is two (2) LIBOR
Business Days prior to the fifteenth (15th) day of the calendar month in which
such Interest Period commences, provided that, notwithstanding the foregoing,
Lender shall have the one (1) time right to change the LIBOR Determination Date
by giving notice of such change to Borrower.
"Licenses" shall have the meaning set forth in Section 4.1.21 hereof.
"Lien" shall mean, with respect to each Individual Property, any mortgage,
deed of trust, lien, pledge, hypothecation, assignment, security interest, or
any other encumbrance, charge or transfer of, on or affecting Borrower,
Operating Lessee, Ground Lessor with respect to the Florida Properties, the
related Individual Property, any portion thereof or any interest therein,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, the filing of any financing statement, and mechanic's,
materialmen's and other similar liens and encumbrances.
13
"LLC Agreement" shall have the meaning set forth in Section 4.1.35 hereof.
"Loan" shall mean the loan made by Lender to Borrower pursuant to this
Agreement and the other Loan Documents.
"Loan Documents" shall mean, collectively, this Agreement, the Note, the
Security Instruments, the Assignments of Leases, the Environmental Indemnity,
the Assignments of Management Agreement, the Guaranty, the Assignment of
Interest Rate Cap Agreement, the Operating Lease Subordination Agreement and all
other documents executed and/or delivered in connection with the Loan.
"Lockbox Account" shall have the meaning set forth in Section 3.1(b)
hereof.
"Lockbox Bank" shall mean any Eligible Institution selected by Lender.
"Lockout Period" shall have the meaning set forth in Section 2.3.1 hereof.
"Losses" shall mean any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, fines, penalties, charges, fees,
expenses, judgments, awards, amounts paid in settlement of whatever kind or
nature (including but not limited to attorneys' fees and other costs of
defense).
"Major Lease" shall mean (i) the Operating Lease, (ii) any Lease for
sit-down restaurant facilities at any Individual Property, (iii) any Lease which
together with all other Leases to the same tenant and to all Affiliates of such
tenant, (A) provides for ten percent (10%) or more of the total gross income for
any Individual Property, (B) covers five percent (5%) or more of the total space
at any Individual Property, in the aggregate, (C) provides for a lease term of
more than ten (10) years including options to renew or (D) is with an Affiliate
of Borrower and (iv) any instrument guaranteeing or providing credit support for
any Major Lease.
"Management Agreement" shall mean, with respect to any Individual
Property, the management agreement entered into by and between Borrower or
Operating Lessee and Manager, pursuant to which the Manager is to provide
management and other services with respect to such Individual Property, or, if
the context requires, the Replacement Management Agreement executed in
accordance with the terms and provisions of this Agreement.
"Manager" shall mean, for each Individual Property, that certain property
manager set forth on Schedule IX or, if the context requires, a Qualified
Manager who is managing the Properties or any Individual Property in accordance
with the terms and provisions of this Agreement.
"Manager Account" shall mean such account as Manager may from time to time
designate by written notice to Lender and the bank maintaining the Concentration
Account.
"Maturity Date" shall mean May 9, 2006, or such other date on which the
final payment of the principal of the Note becomes due and payable as therein or
herein provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise; provided, however, upon
14
compliance with the Extension Criteria, Borrower shall have the right to extend
the Maturity Date for two (2) additional periods of one (1) year each (each, an
"Extension Term").
"Maximum Legal Rate" shall mean the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or in the other Loan Documents, under the laws of such State
or States whose laws are held by any court of competent jurisdiction to govern
the interest rate provisions of the Loan.
"Member" shall have the meaning set forth in Section 4.1.35 hereof.
"Mezzanine Account" shall mean such account as Mezzanine Lender may from
time to time designate by written notice to Lender.
"Mezzanine Borrower" shall mean FelCor/JPM Holdings, L.L.C., together with
its successors and permitted assigns.
"Mezzanine Event of Default" shall have the meaning ascribed to the term
"Event of Default" in the Mezzanine Loan Agreement.
"Mezzanine Lender" shall mean JPMorgan Chase Bank, together with its
successors and permitted assigns.
"Mezzanine Loan" shall mean that certain loan in the original principal
amount of TEN MILLION AND 00/100 DOLLARS ($10,000,000.00) made by Mezzanine
Lender to Mezzanine Borrower, as of the date hereof.
"Mezzanine Loan Agreement" shall mean that certain Mezzanine Loan
Agreement dated as of the date hereof among Mezzanine Borrower, Mezzanine Lender
and other parties set forth therein, if any.
"Mezzanine Loan Documents" shall have the meaning ascribed to the term
"Loan Documents" in the Mezzanine Loan Agreement.
"Mezzanine Principal" shall have the meaning ascribed to the term
"Principal" in the Mezzanine Loan Agreement.
"Monthly Debt Service Payment Amount" shall mean the amount of interest
and the Scheduled Amortization Payment due and payable on each Payment Date,
pursuant to the Note and Section 2.2 hereof.
"Monthly Ground Rent Deposit" shall have the meaning set forth in Section
7.4 hereof.
"Monthly Insurance Premium Deposit" shall have the meaning set forth in
Section 7.2 hereof.
"Monthly Pegged Amount" shall mean an amount, which amount shall be
determined on April 1st of each Fiscal Year, equal to one hundred fifteen
percent (115%) of one-twelfth (1/12)
15
of the annual operating expenses required to be paid during the then current
Fiscal Year by Manager, on behalf of Borrower, in accordance with the Approved
Annual Budget; provided however that such annual operating expenses shall not
include Taxes, Insurance Premiums and incentive management fees. The Monthly
Pegged Amount shall be adjusted based upon the release and/or substitution of
Properties in accordance with the terms hereof.
"Monthly Tax Deposit" shall have the meaning set forth in Section
7.2 hereof.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Net Cash Flow" for any period shall mean the amount obtained by
subtracting Operating Expenses and Capital Expenditures for such period from
Gross Income from Operations for such period.
"Net Cash Flow Schedule" shall have the meaning set forth in
5.1.10(b) hereof.
"Net Operating Income" means the amount obtained by subtracting
Operating Expenses from Gross Income from Operations.
"Net Proceeds" shall have the meaning set forth in Section 6.4(b)
hereof.
"Net Proceeds Deficiency" shall have the meaning set forth in
Section 6.4(b)(vi) hereof.
"Note" shall mean that certain promissory note of even date herewith
in the original principal amount of ONE HUNDRED FIFTEEN MILLION AND 00/100
DOLLARS ($115,000,000.00), made by Borrower in favor of Lender, as the same may
be amended, restated, replaced, extended, renewed, supplemented, severed, split,
or otherwise modified from time to time.
"O&M Program" shall mean, with respect to each Individual Property
listed on Schedule XIV hereof, the asbestos operations and maintenance program
developed by Borrower and approved by Lender, as the same may be amended,
replaced, supplemented or otherwise modified from time to time.
"Obligations" shall mean Borrower's obligation to pay the Debt and
perform its obligations under the Note, this Agreement and the other Loan
Documents.
"Offering Document Date" shall have the meaning set forth in Section
5.1.10(h)(iv) hereof.
"Officers' Certificate" shall mean a certificate delivered to Lender
by Borrower which is signed by a Responsible Officer of Borrower.
"Omaha Property" shall mean the Individual Property located at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
"Open Date" shall have the meaning set forth in Section 2.3.1.(b)
hereof.
16
"Operating Expenses" shall mean the total of all expenditures, computed in
accordance with GAAP, of whatever kind relating to the operation, maintenance
and management of the Properties that are incurred on a regular monthly or other
periodic basis, including without limitation, utilities, ordinary repairs and
maintenance, insurance premiums, license fees, property taxes and assessments,
advertising expenses, management fees, franchise fees, payroll and related
taxes, computer processing charges, operational equipment or other lease
payments as approved by Lender, and other similar costs, but excluding
depreciation, Debt Service, Capital Expenditures and contributions to the
Reserve Funds.
"Operating Lease" shall mean those certain Operating Leases described on
Schedule VIII attached hereto.
"Operating Lease Subordination Agreement" shall mean those certain
Operating Lease Subordination Agreements with respect to the Properties.
"Operating Lessee" shall mean DJONT/JPM Leasing, L.L.C.
"Operating Lessee Principal" shall have the meaning set forth in the
Operating Lease Subordination Agreement.
"Operating Lessee SPE Entities" shall mean individually and collectively,
Operating Lessee and Operating Lessee Principal.
"Operating Lessee Documents" shall mean the Security Instruments, the
Assignments of Leases, the Environmental Indemnity, the Assignment of Management
Agreement, the Operating Lease Subordination Agreement and all other documents
executed and/or delivered by Operating Lessee in connection with the Loan.
"Other Charges" shall mean all personal property taxes, Ground Rents,
maintenance charges, impositions other than Taxes, and any other charges,
including, without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining any Individual Property, now or
hereafter levied or assessed or imposed against such Individual Property or any
part thereof.
"Payment Date" shall mean the ninth (9th) day of each month, or if such
day is not a Business Day, the immediately succeeding Business Day.
Notwithstanding the foregoing, Lender shall have the one (1) time right to
change the Payment Date by giving at least thirty (30) days prior written notice
of such change to Borrower.
"Permitted Encumbrances" shall mean, with respect to an Individual
Property, collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policy relating to such Individual Property or any part thereof, (c)
Liens, if any, for Taxes imposed by any Governmental Authority not yet
delinquent, (d) Liens securing Permitted FF&E Financing. and (e) such other
title and survey exceptions as Lender has approved or may approve in writing in
Lender's sole discretion.
"Permitted FF&E Financing" shall have the meaning set forth in Section
5.2.10 hereof.
17
"Permitted Investments" shall mean any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
including those issued by Servicer, the trustee under any Securitization or any
of their respective Affiliates, payable on demand or having a maturity date not
later than the Business Day immediately prior to the date it is anticipated such
funds will be needed to meet Borrower's obligations hereunder and meeting one of
the appropriate standards set forth below:
(i) obligations of, or obligations fully guaranteed as to payment of
principal and interest by, the United States or any agency or
instrumentality thereof provided such obligations are backed by the full
faith and credit of the United States of America including, without
limitation, obligations of: the U.S. Treasury (all direct or fully
guaranteed obligations), the Farmers Home Administration (certificates of
beneficial ownership), the General Services Administration (participation
certificates), the U.S. Maritime Administration (guaranteed Title XI
financing), the Small Business Administration (guaranteed participation
certificates and guaranteed pool certificates), the U.S. Department of
Housing and Urban Development (local authority bonds) and the Washington
Metropolitan Area Transit Authority (guaranteed transit bonds); provided,
however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary
or change, (B) if rated by S&P, must not have an "r" highlighter affixed
to their rating, (C) if such investments have a variable rate of interest,
such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, and
(D) such investments must not be subject to liquidation prior to their
maturity;
(ii) Federal Housing Administration debentures;
(iii) obligations of the following United States government
sponsored agencies: Federal Home Loan Mortgage Corp. (debt obligations),
the Farm Credit System (consolidated systemwide bonds and notes), the
Federal Home Loan Banks (consolidated debt obligations), the Federal
National Mortgage Association (debt obligations), the Financing Corp.
(debt obligations), and the Resolution Funding Corp. (debt obligations);
provided, however, that the investments described in this clause must (A)
have a predetermined fixed dollar of principal due at maturity that cannot
vary or change, (B) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior
to their maturity;
(iv) federal funds, unsecured certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements with maturities
of not more than 365 days of any bank, the short term obligations of which
at all times are rated in the highest short term rating category by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least
one Rating Agency in the highest short term rating category and otherwise
acceptable to each other Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current
ratings assigned to the Securities); provided, however, that the
investments described in this clause must (A) have a predetermined fixed
dollar
18
of principal due at maturity that cannot vary or change, (B) if rated by
S&P, must not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must be
tied to a single interest rate index plus a fixed spread (if any) and must
move proportionately with that index, and (D) such investments must not be
subject to liquidation prior to their maturity;
(v) fully Federal Deposit Insurance Corporation-insured demand and
time deposits in, or certificates of deposit of, or bankers' acceptances
with maturities of not more than 365 days and issued by, any bank or trust
company, savings and loan association or savings bank, the short term
obligations of which at all times are rated in the highest short term
rating category by each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency in the highest short term
rating category and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself,
result in a downgrade, qualification or withdrawal of the initial, or, if
higher, then current ratings assigned to the Securities); provided,
however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary
or change, (B) if rated by S&P, must not have an "r" highlighter affixed
to their rating, (C) if such investments have a variable rate of interest,
such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, and
(D) such investments must not be subject to liquidation prior to their
maturity;
(vi) debt obligations with maturities of not more than 365 days and
at all times rated by each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency and otherwise acceptable to
each other Rating Agency, as confirmed in writing that such investment
would not, in and of itself, result in a downgrade, qualification or
withdrawal of the initial, or, if higher, then current ratings assigned to
the Securities) in its highest long-term unsecured rating category;
provided, however, that the investments described in this clause must (A)
have a predetermined fixed dollar of principal due at maturity that cannot
vary or change, (B) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior
to their maturity;
(vii) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof)
with maturities of not more than 365 days and that at all times is rated
by each Rating Agency (or, if not rated by all Rating Agencies, rated by
at least one Rating Agency and otherwise acceptable to each other Rating
Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial,
or, if higher, then current ratings assigned to the Securities) in its
highest short-term unsecured debt rating; provided, however, that the
investments described in this clause must (A) have a predetermined fixed
dollar of principal due at maturity that cannot vary or change, (B) if
rated by S&P, must not have an "r" highlighter affixed to their rating,
(C) if such investments have a variable rate of interest, such interest
rate must be tied to a single
19
interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be
subject to liquidation prior to their maturity;
(viii) units of taxable money market funds, with maturities of not
more than 365 days and which funds are regulated investment companies,
seek to maintain a constant net asset value per share and invest solely in
obligations backed by the full faith and credit of the United States,
which funds have the highest rating available from each Rating Agency (or,
if not rated by all Rating Agencies, rated by at least one Rating Agency
and otherwise acceptable to each other Rating Agency, as confirmed in
writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) for money market funds; and
(ix) any other security, obligation or investment which has been
approved as a Permitted Investment in writing by (a) Lender and (b) each
Rating Agency, as evidenced by a written confirmation that the designation
of such security, obligation or investment as a Permitted Investment will
not, in and of itself, result in a downgrade, qualification or withdrawal
of the initial, or, if higher, then current ratings assigned to the
Securities by such Rating Agency;
provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.
"Person" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, State, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"Personal Property" shall have the meaning set forth in Article 1 of the
Security Instrument with respect to each Individual Property.
"Physical Conditions Report" shall mean, with respect to each Individual
Property, a structural engineering report prepared by a company satisfactory to
Lender regarding the physical condition of such Individual Property,
satisfactory in form and substance to Lender in its sole discretion, which
report shall, among other things, (a) confirm that such Individual Property and
its use complies, in all material respects, with all applicable Legal
Requirements (including, without limitation, zoning, subdivision and building
laws) and (b) include a copy of a final certificate of occupancy with respect to
all Improvements on such Individual Property.
"Plan" shall mean an employee benefit plan (as defined in section 3(3) of
ERISA) whether or not subject to ERISA or a plan or other arrangement within the
meaning of section 4975 of the Code.
"Plan Assets" shall mean assets of a Plan within the meaning of section 29
C.F.R. section 2510.3-101 or similar law.
20
"Policies" shall have the meaning set forth in Section 6.1(b) hereof.
"Prepayment Date" shall have the meaning set forth in Section 2.3.1
hereof.
"Prime Rate" shall mean, on a particular date, a rate per annum equal to
the rate of interest published in The Wall Street Journal as the "prime rate",
as in effect on such day, with any change in the prime rate resulting from a
change in said prime rate to be effective as of the date of the relevant change
in said prime rate; provided, however, that if more than one prime rate is
published in The Wall Street Journal for a day, the average of the prime rates
shall be used; provided, further, however, that the Prime Rate (or the average
of the prime rates) will be rounded to the nearest 1/16 of 1% or, if there is no
nearest 1/16 of 1%, to the next higher 1/16 of 1%. In the event that The Wall
Street Journal should cease or temporarily interrupt publication, then the Prime
Rate shall mean the daily average prime rate published in another business
newspaper, or business section of a newspaper, of national standing chosen by
Lender. If The Wall Street Journal resumes publication, the substitute index
will immediately be replaced by the prime rate published in The Wall Street
Journal. In the event that a prime rate is no longer generally published or is
limited, regulated or administered by a governmental or quasi-governmental body,
then Lender shall select a comparable interest rate index which is readily
available to Borrower and verifiable by Borrower but is beyond the control of
Lender. Lender shall give Borrower prompt written notice of its choice of a
substitute index and when the change became effective. Such substitute index
will also be rounded to the nearest 1/16 of 1% or, if there is no nearest 1/16
of 1%, to the next higher 1/16 of 1%. The determination of the Prime Rate by
Lender shall be conclusive and binding absent manifest error.
"Principal" shall have the meaning set forth in Section 4.1.35 hereof,
together with its successors and assigns.
"Prohibited Person" shall mean any Person:
(a) listed in the Annex to, or otherwise subject to the provisions
of, the Executive Order No. 13224 on Terrorist Financing, effective September
24, 2001, and relating to Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (the "Executive
Order");
(b) that is owned or controlled by, or acting for or on behalf of,
any person or entity that is listed to the Annex to, or is otherwise subject to
the provisions of, the Executive Order;
(c) with whom Lender is prohibited from dealing or otherwise
engaging in any transaction by any terrorism or money laundering law, including
the Executive Order;
(d) who commits, threatens or conspires to commit or supports
"terrorism" as defined in the Executive Order;
(e) that is named as a "specially designated national and blocked
person" on the most current list published by the U.S. Treasury Department
Office of Foreign Assets Control at its official website,
▇▇▇▇://▇▇▇.▇▇▇▇▇.▇▇▇.▇▇▇▇/▇▇▇▇▇▇.▇▇▇ or at any replacement website or other
replacement official publication of such list; or
21
(f) who is an Affiliate of or affiliated with a Person listed above.
"Properties" shall mean, collectively, each and every Individual Property
which is subject to the terms of this Agreement.
"Property" shall mean, as the context may require, the Properties or an
Individual Property.
"Property Account" shall have the meaning set forth in Section 3.1(a)
hereof.
"Property Account Agreement" shall have the meaning set forth in Section
3.1(a) hereof.
"Property Account Bank" shall mean, for each Individual Property, that
certain property account bank set forth on Schedule X, provided that such bank
remains an Eligible Institution, and any successor Eligible Institution or other
Eligible Institution selected by Borrower, subject to Lender's approval.
"Provided Information" shall have the meaning set forth in Section 9.1(a)
hereof.
"Qualified Insurer" shall have the meaning set forth in Section 6.1(b)
hereof.
"Qualified Manager" shall mean a reputable and experienced professional
management organization (a) which manages, together with its Affiliates, one
hundred fifty (150) properties of a type, quality and size similar to the
Properties, totaling in the aggregate no less than 30,000 guest rooms and (b)
prior to whose employment as manager of the Properties (i) prior to the
occurrence of a Securitization, such employment shall have been approved by
Lender, which approval shall not be unreasonably withheld or delayed and (ii)
after the occurrence of a Securitization, Lender shall have received written
confirmation from the Rating Agencies that the employment of such manager will
not result in a downgrade, withdrawal or qualification of the initial, or if
higher, then current ratings of the Securities.
"Quality Assurance Reports" shall mean any quality assurance reports of
inspection or compliance from a Franchisor under a Franchise Agreement with
respect to any Individual Property.
"Rating Agencies" shall mean each of S&P, ▇▇▇▇▇'▇, and Fitch, and any
other nationally-recognized statistical rating agency which has been approved by
Lender and has rated the Securities.
"Regulation S-X Reporting Requirements" shall have the meaning set forth
in Section 5.1.10(o) hereof.
"Release" of any Hazardous Materials shall mean any release, deposit,
discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping,
pouring, emptying, escaping, dumping, disposing or other movement of Hazardous
Materials.
"Release Price" shall mean, for each Individual Property, one hundred
twenty-five percent (125%) of the Allocated Loan Amount for such Individual
Property.
22
"Release Property" shall have the meaning set forth in Section 2.6 hereof.
"REMIC Trust" shall mean a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code that holds the Note.
"Renewal Lease" shall have the meaning set forth in Section 5.1.17(a)
hereof.
"Rents" shall have the meaning set forth in Article 1 of the Security
Instrument with respect to each Individual Property.
"Replacement Interest Rate Cap Agreement" means an interest rate cap
agreement from an Acceptable Counterparty with terms identical to the Interest
Rate Cap Agreement.
"Replacement Management Agreement" shall mean, collectively, (a) either
(i) a management agreement with a Qualified Manager substantially in the same
form and substance as the Management Agreement, or (ii) a management agreement
with a Qualified Manager, which management agreement shall be acceptable to
Lender in form and substance, provided, with respect to this subclause (ii),
Lender, at its option, may require that Borrower obtain confirmation from the
applicable Rating Agencies that such management agreement will not result in a
downgrade, withdrawal or qualification of the initial, or if higher, then
current rating of the Securities or any class thereof; and (b) a conditional
assignment of management agreement substantially in the form of the Assignment
of Management Agreement (or such other form acceptable to Lender), executed and
delivered to Lender by Operating Lessee and such Qualified Manager at Borrower's
expense; provided, however, with respect to the Expiring Management Agreement
Properties only, Borrower shall not be required to obtain Lender's consent or
such a confirmation from the Rating Agencies in the event that the Management
Agreements in effect on the date hereof are extended on the same or more
favorable terms to Borrower and/or Operating Lessee, as applicable, prior to the
expiration thereof.
"Replacement Reserve Account" shall have the meaning set forth in Section
3.1(b)(iv) hereof.
"Replacement Reserve Fund" shall have the meaning set forth in Section
7.3.1 hereof.
"Replacement Reserve Monthly Deposit" shall mean the greater of (i) such
amounts as are required under the Franchise Agreements to be reserved for
furniture, fixtures and equipment, (ii) such amounts as are required under the
Management Agreements to be reserved for furniture, fixtures and equipment and
(iii)(1) until the end of the calendar year in which the Closing Date occurs,
the amount of the Initial Replacement Reserve Monthly Deposit, and (2)
thereafter, the quotient obtained by dividing (A) the aggregate Gross Income
from Operations for the Properties still subject to the Lien of a Security
Instrument for the preceding calendar year (as reflected in Borrower's annual
operating statements as approved and accepted by Lender) multiplied by four
percent (4%) by (B) twelve (12). The Replacement Reserve Monthly Deposit shall
be adjusted annually and shall be effective for the Replacement Reserve Monthly
Deposit due on the Payment Date first occurring after the appropriate financial
statements have been delivered to Lender as required herein.
"Replacements" shall have the meaning set forth in Section 7.3.1 hereof.
23
"Required Remediation" shall mean the management, abatement, removal,
storage disposition or any other remedial or corrective action taken in
connection with the underground storage tanks located at the Omaha Property.
"Required Repair Account" shall have the meaning set forth in Section
7.1.1 hereof.
"Required Repair Fund" shall have the meaning set forth in Section 7.1.1
hereof.
"Required Repairs" shall have the meaning set forth in Section 7.1.1
hereof.
"Reserve Fund Deposits" shall mean the amounts to be deposited into the
Reserve Funds for any given month or at any other time as provided in this
Agreement or in the Other Loan Documents.
"Reserve Funds" shall mean the Tax and Insurance Escrow Fund, the
Replacement Reserve Fund, the Required Repair Fund, the UST Reserve Fund, the
Ground Lease Escrow Fund or any other escrow or reserve fund established by the
Loan Documents.
"Responsible Officer" means with respect to a Person, the president, chief
financial officer or treasurer of such Person.
"Restoration" shall mean the repair and restoration of an Individual
Property after a Casualty or Condemnation as nearly as possible to the condition
the Individual Property was in immediately prior to such Casualty or
Condemnation, with such alterations as may be approved by Lender.
"Restricted Party" shall mean Borrower, Principal, Mezzanine Borrower,
Mezzanine Principal, Junior Mezzanine Borrower, Junior Mezzanine Principal, the
Operating Lessee SPE Entities, or any Affiliated Manager or any shareholder,
partner or member or any direct or indirect legal or beneficial owner of,
Borrower, Principal, Mezzanine Borrower, Mezzanine Principal, Junior Mezzanine
Borrower, Junior Mezzanine Principal, the Operating Lessee SPE Entities or any
Affiliated Manager; provided, however, that in no event shall FelCor Lodging
Limited Partnership or FelCor Lodging Trust Incorporated be deemed a Restricted
Party.
"S&P" shall mean Standard & Poor's Ratings Services, a division of
▇▇▇▇▇▇-▇▇▇▇, Inc.
"Sale or Pledge" shall mean a voluntary or involuntary sale, conveyance,
transfer or pledge of a direct or indirect legal or beneficial interest.
"Scheduled Amortization Payments" shall mean the amount of principal set
forth on Schedule VI hereto to be paid on each Payment Date.
"Second Tier" shall have the meaning set forth in Section 6.1(b) hereof.
"Second Tier Insurer" shall have the meaning set forth in Section 6.1(b)
hereof.
"Securities" shall have the meaning set forth in Section 9.1 hereof.
24
"Securitization" shall have the meaning set forth in Section 9.1 hereof.
"Securitization Closing Date" shall mean the date upon which a
Securitization closes.
"Securities Act" shall have the meaning set forth in Section 9.2(a)
hereof.
"Security Deposits" shall have the meaning set forth in Section 5.1.17(e)
hereof.
"Security Instrument" shall mean, with respect to each Individual
Property, that certain first priority Mortgage (or Deed of Trust or Deed to
Secure Debt, as applicable) and Security Agreement, executed and delivered by
Borrower and Operating Lessee as security for the Loan and encumbering such
Individual Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Servicer" shall have the meaning set forth in Section 9.3 hereof.
"Servicing Agreement" shall have the meaning set forth in Section 9.3
hereof.
"Severed Loan Documents" shall have the meaning set forth in Section
8.2(c) hereof.
"Special Member" shall have the meaning set forth in Section 4.1.35
hereof.
"Standard Statement" shall have the meaning set forth in Section
5.1.10(h)(i) hereof.
"State" shall mean, with respect to an Individual Property, the State or
Commonwealth in which such Individual Property or any part thereof is located.
"Strike Rate" shall mean 6.0%.
"Substitute Allocated Loan Amount" shall have the meaning set forth in
Section 2.6(i) hereof.
"Substitute Property" shall have the meaning set forth in Section 2.6
hereof.
"Survey" shall mean, with respect to an Individual Property, a survey
prepared by a surveyor licensed in the State where such Individual Property is
located and satisfactory to Lender and the company or companies issuing the
Title Insurance Policies, and containing a certification of such surveyor
satisfactory to Lender.
"Tax Account" shall have the meaning set forth in Section 3.1 hereof.
"Tax and Insurance Escrow Fund" shall have the meaning set forth in
Section 7.2 hereof.
"Taxes" shall mean all real estate taxes, assessments, water rates or
sewer rents, now or hereafter levied or assessed or imposed against any
Individual Property or part thereof.
"Terrorism Exclusion" shall have the meaning set forth in Section
6.1(a)(x) hereof.
"Terrorism Insurance" shall have the meaning set forth in Section
6.1(a)(x) hereof.
25
"Terrorism Insurance Cap" shall have the meaning set forth in Section
6.1(a)(x) hereof.
"Terrorism Insurance Required Amount" shall have the meaning set forth in
Section 6.1(a)(x) hereof.
"Title Insurance Policy" shall mean, with respect to each Individual
Property, an ALTA mortgagee title insurance policy in a form acceptable to
Lender (or, if an Individual Property is located in a State which does not
permit the issuance of such ALTA policy, such form as shall be permitted in such
State and acceptable to Lender) issued with respect to such Individual Property
and insuring the lien of the Security Instrument encumbering such Individual
Property.
"Transfer" shall have the meaning set forth in Section 5.2.10(a) hereof.
"Triggering Event" shall mean the earlier to occur of: (i) an Event of
Default or (ii) the date the Debt Service Coverage Ratio for the twelve (12)
full calendar months immediately preceding the date of such calculation is not
in excess of 1.15 to 1.00.
"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in the State in which an Individual Property is located.
"Underwriter Group" shall have the meaning set forth in Section 9.2(b)
hereof.
"U.S. Obligations" shall mean direct non-callable obligations of the
United States of America.
"UST Reserve Account" shall have the meaning set forth in Section
3.1(b)(vii) hereof.
"UST Reserve Fund" shall have the meaning set forth in Section 7.5.1
hereof.
SECTION 1.2 Principles of Construction.
All references to sections and schedules are to sections and schedules in
or to this Agreement unless otherwise specified. All uses of the word
"including" shall mean "including, without limitation" unless the context shall
indicate otherwise. Unless otherwise specified, the words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.
II. GENERAL TERMS
SECTION 2.1 Loan Commitment; Disbursement to Borrower.
2.1.1 Agreement to Lend and Borrow.
Subject to and upon the terms and conditions set forth herein, Lender
hereby agrees to make and Borrower hereby agrees to accept the Loan on the
Closing Date.
26
2.1.2 Single Disbursement to Borrower.
Borrower may request and receive only one borrowing hereunder in respect
of the Loan and any amount borrowed and repaid hereunder in respect of the Loan
may not be reborrowed.
2.1.3 The Note, Security Instruments and Loan Documents.
The Loan shall be evidenced by the Note and secured by the Security
Instruments, the Assignments of Leases and the other Loan Documents. Borrower
and Operating Lessee hereby authorize Lender to file a financing statement or
statements under the UCC in connection with the Properties in the form required
to properly perfect Lender's security interest therein.
2.1.4 Use of Proceeds.
Borrower shall use the proceeds of the Loan to (a) repay and discharge any
existing loans relating to the Properties, (b) pay all past-due Basic Carrying
Costs, if any, with respect to the Properties, (c) make deposits into the
Reserve Funds on the Closing Date in the amounts provided herein or in the Other
Loan Documents or (d) pay costs and expenses incurred in connection with the
closing of the Loan, as approved by Lender. The balance, if any, shall be
distributed to Borrower.
SECTION 2.2 Interest; Loan Payments; Late Payment Charge.
2.2.1 Payments.
(a) Interest. Interest on the outstanding principal balance of the Loan
shall accrue from the Closing Date to the end of the Interest Period in which
the Maturity Date occurs at the Applicable Interest Rate. Monthly installments
of interest only shall be paid on each Payment Date commencing on June 9, 2003
and on each subsequent Payment Date thereafter up to and including the Maturity
Date for the Interest Period in which such Payment Date or Maturity Date occurs.
Interest on the outstanding principal amount of the Loan for the period through
and including May 8, 2003 shall be paid by Borrower on the Closing Date. The
outstanding principal balance of the Loan together with all accrued and unpaid
interest thereon shall be due and payable on the Maturity Date (including,
without limitation, all interest that would accrue on the outstanding principal
balance of the Loan through the end of the Interest Period during which the
Maturity Date occurs (even if such period extends beyond the Maturity Date)).
(b) Principal. The Scheduled Amortization Payments shall be paid on June
9, 2003 and on each subsequent Payment Date thereafter.
(c) Excess Cash Flow. Beginning on an Excess Cash Flow Application Date
and on each Payment Date thereafter, payments of Excess Cash Flow shall be
payable in accordance with the provisions of Section 3.13 hereof.
(d) All payments and other amounts due under the Note, this Agreement and
the other Loan Documents shall be made without any setoff, defense or
irrespective of, and without deduction for, counterclaims.
27
2.2.2 Interest Calculation.
Interest on the outstanding principal balance of the Loan shall be
calculated by multiplying (a) the actual number of days elapsed in the period
for which the calculation is being made by (b) a daily rate equal to the
Applicable Interest Rate divided by three hundred sixty (360) by (c) the
outstanding principal balance.
2.2.3 Eurodollar Rate Unascertainable; Illegality; Increased Costs.
(a) (i) In the event that Lender shall have determined (which
determination shall be conclusive and binding upon Borrower absent manifest
error) that by reason of circumstances affecting the interbank eurodollar
market, adequate and reasonable means do not exist for ascertaining LIBOR, then
Lender shall forthwith give notice by telephone of such determination, to
Borrower at least one (1) Business Day prior to the last day of the related
Interest Period, with a written confirmation of such determination promptly
thereafter. If such notice is given, the Loan shall bear interest at the
Adjusted Prime Rate beginning on the first day of the next succeeding Interest
Period. (ii) If, pursuant to the terms of this Section 2.2.3(a), the Loan is
bearing interest at the Adjusted Prime Rate and Lender shall determine (which
determination shall be conclusive and binding upon Borrower absent manifest
error) that the event(s) or circumstance(s) which resulted in such conversion
shall no longer be applicable, Lender shall give notice thereof to Borrower by
telephone of such determination, confirmed in writing, to Borrower as soon as
reasonably practical, but in no event later than one (1) Business Day prior to
the last day of the then current Interest Period. If such notice is given, the
Loan shall bear interest at the Eurodollar Rate beginning on the first day of
the next succeeding Interest Period. Notwithstanding any provision of this
Agreement to the contrary, in no event shall Borrower have the right to elect to
have the Loan bear interest at either the Eurodollar Rate or the Adjusted Prime
Rate.
(b) If any requirement of law or any change therein or in the
interpretation or application thereof, shall hereafter make it unlawful for
Lender in good faith to make or maintain the portion of the Loan bearing
interest at the Eurodollar Rate, (I) the obligation of Lender hereunder to make
the Loan bearing interest at the Eurodollar Rate shall be canceled forthwith and
(II) the Loan shall automatically bear interest at the Adjusted Prime Rate on
the next succeeding Payment Date or within such earlier period as required by
Applicable Law. Borrower hereby agrees promptly to pay Lender (within ten (10)
days of Lender's written demand therefor), any additional amounts necessary to
compensate Lender for any reasonable costs incurred by Lender in making any
conversion in accordance with this Agreement, including, without limitation, any
interest or fees payable by Lender to lenders of funds obtained by it in order
to make or maintain the Loan hereunder. Upon written demand from Borrower,
Lender shall demonstrate in reasonable detail the circumstances giving rise to
Lender's determination and the calculation substantiating the Adjusted Prime
Rate and any additional costs incurred by Lender in making the conversion.
Lender's written notice of such costs, as certified to Borrower, shall be
conclusive absent manifest error.
(c) In the event that any change in any requirement of any Applicable Law
or in the interpretation or application thereof, or compliance in good faith by
Lender with any request or directive (whether or not having the force of law)
hereafter issued from any
28
Governmental Authority, in each such case, which is generally applicable to all
Lenders subject to such Governmental Authority's jurisdiction:
(i) shall hereafter impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, or deposits or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or any other
acquisition of funds by, any U.S. office of Lender which is not otherwise
included in the determination of LIBOR hereunder;
(ii) shall, if the Loan is then bearing interest at the Eurodollar
Rate, hereafter have the effect of reducing the rate of return on Lender's
capital as a consequence of its obligations hereunder to a level below
that which Lender could have achieved but for such adoption, change or
compliance (taking into consideration Lender's policies with respect to
capital adequacy) by any amount deemed by Lender to be material; or
(iii) shall, if the Loan is then bearing interest at the Eurodollar
Rate, hereafter impose on Lender any other condition, the result of which
is to increase the cost to Lender of making, renewing or maintaining loans
or extensions of credit or to reduce any amount receivable hereunder by
any amount deemed by Lender to be material;
then, in any such case, Borrower shall promptly pay Lender (within ten (10) days
of Lender's written demand therefor), any additional amounts necessary to
compensate Lender for such additional cost or reduced amount receivable which
Lender deems to be material. If Lender becomes entitled to claim any additional
amounts pursuant to this Section 2.2.3(c), Lender shall provide Borrower with
written notice specifying in reasonable detail the event or circumstance by
reason of which it has become so entitled and the additional amount required to
fully compensate Lender for such additional cost or reduced amount. A
certificate as to any additional costs or amounts payable pursuant to the
foregoing sentence submitted by Lender to Borrower shall be conclusive absent
manifest error. This provision shall survive payment of the Note and the
satisfaction of all other obligations of Borrower under the Note, this Agreement
and the other Loan Documents.
(c) Borrower agrees to indemnify Lender and to hold Lender harmless from
any loss or expense which Lender sustains or incurs to the extent it is a
consequence of (I) any default by Borrower in payment of the principal of or
interest on the Loan while bearing interest at the Eurodollar Rate, including,
without limitation, any such loss or expense arising from interest or fees
payable by Lender to lenders of funds obtained by it in order to maintain the
Eurodollar Rate, (II) any prepayment (whether voluntary or mandatory) of the
Loan on a day that (A) is not the Payment Date immediately following the last
day of an Interest Period with respect thereto or (B) is the Payment Date
immediately following the last day of an Interest Period with respect thereto if
Borrower did not give the prior written notice of such prepayment required
pursuant to the terms of this Agreement, including, without limitation, such
loss or expense arising from interest or fees payable by Lender to lenders of
funds obtained by it in order to maintain the Eurodollar Rate hereunder and
(III) the conversion (for any reason whatsoever, whether voluntary or
involuntary) of the Applicable Interest Rate from the Eurodollar Rate to the
Adjusted Prime Rate with respect to any portion of the outstanding principal
amount of the Loan then bearing interest at the Eurodollar Rate on a date other
than
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the Payment Date immediately following the last day of an Interest Period,
including, without limitation, such loss or expenses arising from interest or
fees payable by Lender to lenders of funds obtained by it in order to maintain
the Eurodollar Rate hereunder (the amounts referred to in clauses (I), (II) and
(III) are herein referred to collectively as the "Breakage Costs"). This
provision shall survive payment of the Note and the satisfaction of all other
obligations of Borrower under this Agreement and the other Loan Documents.
2.2.4 Payment on Maturity Date.
Borrower shall pay to Lender on (or, to the extent permitted herein
before) the Maturity Date the outstanding principal balance, all accrued and
unpaid interest thereon, and all other amounts due hereunder and under the Note,
the Security Instruments and the other Loan Documents, including, without
limitation, all interest that would accrue on the outstanding principal balance
of the Loan through and including the end of the Interest Period in which the
Maturity Date occurs (even if such Interest Period extends beyond the Maturity
Date).
2.2.5 Payments after Default.
Upon the occurrence and during the continuance of an Event of Default,
interest on the outstanding principal balance of the Loan and, to the extent
permitted by Applicable Law, overdue interest and other amounts due in respect
of the Loan, shall accrue at the Default Rate, calculated from the date such
payment was due without regard to any grace or cure periods contained herein
Interest at the Default Rate shall be computed from the occurrence of the
default until the actual receipt and collection of the Debt (or that portion
thereof that is then due). To the extent permitted by Applicable Law, interest
at the Default Rate shall be added to the Debt, shall itself accrue interest at
the same rate as the Loan and shall be secured by the Security Instruments. This
paragraph shall not be construed as an agreement or privilege to extend the date
of the payment of the Debt, nor as a waiver of any other right or remedy
accruing to Lender by reason of the occurrence of any Event of Default.
2.2.6 Late Payment Charge.
If any principal, interest or any other sums due under the Loan Documents
is not paid by Borrower on the date on which it is due, Borrower shall pay to
Lender upon demand an amount equal to the lesser of five percent (5%) of such
unpaid sum or the maximum amount permitted by Applicable Law in order to defray
the expense incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment. Any such amount shall be secured by the Security Instruments and the
other Loan Documents to the extent permitted by Applicable Law; provided,
however, Borrower shall have the option, not to be exercised more than three (3)
times during the term of the Loan, to not pay the late payment charge
contemplated by this Section 2.2.6 in the event any Monthly Debt Service Payment
Amount is paid within one (1) Business Day after the date the same was due.
2.2.7 Usury Savings.
This Agreement and the Note are subject to the express condition that at
no time shall Borrower be obligated or required to pay interest on the principal
balance of the Loan at a rate in excess of the Maximum Legal Rate. If, by the
terms of this Agreement or the other Loan
30
Documents, Borrower is at any time required or obligated to pay interest on the
principal balance due hereunder at a rate in excess of the Maximum Legal Rate,
the Applicable Interest Rate or the Default Rate, as the case may be, shall be
deemed to be immediately reduced to the Maximum Legal Rate and all previous
payments in excess of the Maximum Legal Rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by Applicable Law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.
2.2.8 Foreign Taxes.
If the Loan is bearing interest at the Eurodollar Rate, all payments made
by Borrower hereunder shall be made free and clear of, and without reduction for
or on account of, Foreign Taxes, excluding, in the case of Lender, Foreign Taxes
measured by its net income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which Lender is resident or organized, or any
political subdivision thereof and, in the case of Lender, taxes measured by its
overall net income, and franchise taxes imposed on it, by the jurisdiction of
Lender's lending office or any political subdivision thereof or in which Lender
is resident or engaged in business. If any non-excluded Foreign Taxes are
required to be withheld from any amounts payable to Lender hereunder, the
amounts so payable to Lender shall be increased to the extent necessary to yield
to Lender (after payment of all non-excluded Foreign Taxes) interest or any such
other amounts payable hereunder at the rate or in the amounts specified
hereunder. Whenever any non-excluded Foreign Tax is payable pursuant to
Applicable Law by Borrower, Borrower shall send to Lender an original official
receipt showing payment of such non-excluded Foreign Tax or other evidence of
payment reasonably satisfactory to Lender. Borrower hereby indemnifies Lender
for any incremental taxes, interest or penalties that may become payable by
Lender which may result from any failure by Borrower to pay any such
non-excluded Foreign Tax when due to the appropriate taxing authority or any
failure by Borrower to remit to Lender the required receipts or other required
documentary evidence, provided, however, in the event that Lender or any
successor and/or assign of Lender is not incorporated under the laws of the
United States of America or a state thereof Lender agrees that, prior to the
first date on which any payment is due such entity hereunder, it will deliver to
Borrower (i) two duly completed copies of United States Internal Revenue Service
Form W-8BEN or W-8ECI or successor applicable form, as the case may be,
certifying in each case that such entity is entitled to receive payments under
the Note, without deduction or withholding of any United States federal income
taxes, or (ii) an Internal Revenue Service Form W-9 or successor applicable
form, as the case may be, to establish an exemption from United States backup
withholding tax. Each entity required to deliver to Borrower a Form W-8BEN or
W-8ECI or Form W-9 pursuant to the preceding sentence further undertakes to
deliver to Borrower two further copies of the said letter and W-8BEN or W-8ECI
or Form W-9, or successor applicable forms, or other manner of certification, as
the case may be, on or before the date that any such letter or form expires
(which, in the case of the Form W-8ECI, is the last day of each U.S. taxable
year of the non-U.S. entity) or becomes obsolete or after the occurrence of any
event requiring a change in the most recent letter and form previously delivered
by it to Borrower, and such other extensions or renewals thereof as may
reasonably be
31
requested by Borrower, certifying in the case of a Form W-8BEN or W-8ECI
that such entity is entitled to receive payments under the Note without
deduction or withholding of any United States federal income taxes, unless in
any such case an event (including, without limitation, any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such entity from duly completing and delivering any such letter or form
with respect to it and such entity advises Borrower that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax, and in the case of a Form W-9, establishing an exemption from United
States backup withholding tax. Notwithstanding the foregoing, if such entity
fails to provide a duly completed Form W-8BEN or W-8ECI or other applicable form
and, under Applicable Law, in order to avoid liability for Foreign Taxes,
Borrower is required to withhold on payments made to such entity that has failed
to provide the applicable form, Borrower shall be entitled to withhold the
appropriate amount of Foreign Taxes. In such event, Borrower shall promptly
provide to such entity evidence of payment of such Foreign Taxes to the
appropriate taxing authority and shall promptly forward to such entity any
official tax receipts or other documentation with respect to the payment of the
Foreign Taxes as may be issued by the taxing authority.
SECTION 2.3 Prepayments.
2.3.1 Voluntary Prepayments.
Except as otherwise provided herein, Borrower shall not have the right to
prepay the Loan in whole or in part prior to the Payment Date occurring in
November, ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇ ▇▇▇▇▇▇"). ▇▇ any Payment Date occurring after the
expiration of the Lockout Period, Borrower may, at its option, prepay the Loan
in whole, but not in part, upon satisfaction of the following conditions:
(a) Borrower shall provide prior written notice to Lender specifying the
date (the "Prepayment Date") upon which the prepayment is to be made, which
notice shall be delivered to Lender not less than thirty (30) Business Days
prior to such payment;
(b) Borrower shall pay to Lender, simultaneously with such prepayment, (i)
if such prepayment occurs prior to the Payment Date occurring in May, 2004 (the
"Open Date"), a prepayment premium equal to one percent (1%) of the original
principal amount of the Loan, (ii) all accrued and unpaid interest calculated at
the Applicable Interest Rate on the amount of principal being prepaid through
and including the Prepayment Date together with an amount equal to the interest
that would have accrued at the Applicable Interest Rate on the amount of
principal being prepaid through the end of the Interest Period in which such
prepayment occurs, notwithstanding that such Interest Period extends beyond the
date of prepayment (the "Interest Shortfall"), (iii) Breakage Costs, if any,
without duplication of any sums paid pursuant to the preceding clause (ii); and
(iv) all other sums then due under this Agreement, the Note or the other Loan
Documents;
(c) Mezzanine Borrower simultaneously prepays the Mezzanine Loan in
accordance with the provisions of the Mezzanine Loan Agreement; and
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(d) Junior Mezzanine Borrower simultaneously prepays the Junior Mezzanine
Loan in accordance with the provisions of the Junior Mezzanine Loan Agreement.
This Section 2.3.1 shall not apply to prepayments made in accordance with
the provisions of Section 2.5 hereof.
2.3.2 Mandatory Prepayments.
On the next occurring Payment Date following the date on which Borrower
actually receives any Net Proceeds, if and to the extent Lender is not obligated
to make such Net Proceeds available to Borrower for the Restoration of an
Individual Property, Borrower shall prepay the outstanding principal balance of
the Note in an amount equal to one hundred percent (100%) of such Net Proceeds.
Such prepayment shall be applied, first, to interest on the outstanding
principal balance of the Loan that would have accrued at the Applicable Interest
Rate on the amount prepaid through the end of the Interest Period in which such
prepayment occurs, notwithstanding that such Interest Period extends beyond the
date of prepayment, and then to all other amounts then due to Lender under this
Agreement or any of the other Loan Documents and then to the outstanding
principal balance of the Loan; provided, however, Borrower shall not be
obligated to pay any prepayment premium in connection with such prepayment.
2.3.3 Prepayments After Default.
If, following an uncured Event of Default, Borrower tenders payment of all
or any part of the Debt, or if all or any portion of the Debt is recovered by
Lender after such Event of Default such tender or recovery shall be deemed a
voluntary prepayment by Borrower in violation of the prohibition against
prepayment of the Loan prior to the expiration of the Lockout Period and
Borrower shall pay, in addition to the Debt, (i) all accrued and unpaid interest
calculated at the Applicable Interest Rate on the amount of principal being
prepaid through and including the Prepayment Date together with an amount equal
to the interest that would have accrued at the Applicable Interest Rate on the
amount of principal being prepaid through the end of the Interest Period in
which such prepayment occurs, notwithstanding that such Interest Period extends
beyond the date of prepayment, (ii) if such prepayment occurs prior to the
expiration of the Open Period, a prepayment consideration equal to five percent
(5%) of the amount being prepaid, (iii) the Interest Shortfall, if applicable,
with respect to the amount prepaid, (iv) Breakage Costs, if any, without
duplication of any sums paid pursuant to the preceding clause (iii); and (v) all
other sums due under this Agreement, the Note or the other Loan Documents in
connection with a partial or total prepayment.
2.3.4 Making of Payments.
Each payment by Borrower hereunder or under the Note shall be made in
funds settled through the New York Clearing House Interbank Payments System or
other funds immediately available to Lender by 12:00 p.m., New York City time,
on or prior to the date such payment is due, to Lender by deposit to such
account as Lender may designate by written notice to Borrower. Whenever any
payment hereunder or under the Note shall be stated to be due on a
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day which is not a Business Day, such payment shall be made on the first
Business Day succeeding such scheduled due date.
2.3.5 Application of Prepayments.
All prepayments received pursuant to this Section 2.3 and Section 2.5
shall be applied first, to interest on the outstanding principal balance being
prepaid that accrued through and including the Prepayment Date, second, to
interest on the outstanding principal balance being prepaid that would have
accrued through the end of the Interest Period in which the prepayment occurred,
notwithstanding that such Interest Period extends beyond the date of prepayment,
and third, to the payments of principal due under the Loan in the inverse order
of maturity.
SECTION 2.4 Interest Rate Cap Agreement.
(a) Borrower shall obtain, or cause to be obtained, and shall thereafter
maintain in effect, an Interest Rate Cap Agreement with an Acceptable
Counterparty, which shall be coterminous with the Loan, as the same may be
extended in accordance with the terms hereof, and have a notional amount which
shall not at any time be less than the outstanding principal balance of the Loan
and which shall at all times have a strike rate equal to the Strike Rate. The
Counterparty shall be obligated under the Interest Rate Cap Agreement to make
monthly payments equal to the excess of one (1) month LIBOR over the Strike
Rate, calculated on the notional amount. The notional amount of the Interest
Rate Cap Agreement may be reduced from time to time in amounts equal to any
payment of the principal of the Loan in accordance with the terms hereof.
(b) Borrower shall collaterally assign to Lender pursuant to an Assignment
of Interest Rate Cap Agreement substantially in the form annexed hereto as
Exhibit C, all of its right, title and interest to receive any and all payments
under the Interest Rate Cap Agreement (and any related guarantee, if any) and
shall deliver to Lender an executed counterpart of such Interest Rate Cap
Agreement and notify the Counterparty of such collateral assignment (either in
such Interest Rate Cap Agreement or by separate instrument). The Counterparty
shall agree in writing to make all payments it is required to make under the
Interest Rate Cap Agreement directly to the Lockbox Account or if the Lockbox
Account is not then required to be in effect, into such Account as specified by
Lender. At such time as the Loan is repaid in full, all of Lender's right, title
and interest in the Interest Rate Cap Agreement shall terminate and Lender shall
promptly execute and deliver at Borrower's sole cost and expense, such documents
as may be required to evidence Lender's release of the Interest Rate Cap
Agreement and to notify the Counterparty of such release.
(c) Borrower shall comply with all of its obligations under the terms and
provisions of the Interest Rate Cap Agreement. All amounts paid by the
Counterparty under the Interest Rate Cap Agreement shall be deposited
immediately into the Lockbox Account or if the Lockbox Account is not then
required to be in effect, into such Account as specified by Lender. Borrower
shall take all actions reasonably requested by Lender to enforce Borrower's and
Lender's rights under the Interest Rate Cap Agreement in the event of a default
by the Counterparty and shall not waive, amend or otherwise modify any of its
rights thereunder.
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(d) In the event of any downgrade, withdrawal or qualification of the
rating of the Counterparty below "AA-" (or the equivalent) by the Rating
Agencies, Borrower shall replace the Interest Rate Cap Agreement with a
Replacement Interest Rate Cap Agreement with an Acceptable Counterparty not
later than ten (10) Business Days following receipt of notice from Lender or
Servicer of such downgrade, withdrawal or qualification.
(e) In the event that Borrower fails to purchase and deliver to Lender the
Interest Rate Cap Agreement or any Replacement Interest Cap Agreement as and
when required hereunder, Lender may purchase such Interest Rate Cap Agreement
and the cost incurred by Lender in purchasing such Interest Rate Cap Agreement
shall be paid by Borrower to Lender with interest thereon at the Default Rate
from the date such cost was incurred by Lender until such cost is paid by
Borrower to Lender.
(f) In connection with an Interest Rate Cap Agreement, if requested by
Lender in connection with a Securitization, Borrower shall use commercially
reasonable efforts to obtain and deliver to Lender an opinion of counsel from
counsel for the Counterparty (upon which Lender and its successors and assigns
may rely) which shall provide, in relevant part, that:
(1) the Counterparty is duly organized, validly existing, and in
good standing under the laws of its jurisdiction of incorporation and has the
organizational power and authority to execute and deliver, and to perform its
obligations under, the Interest Rate Cap Agreement;
(2) the execution and delivery of the Interest Rate Cap Agreement by
the Counterparty, and any other agreement which the Counterparty has executed
and delivered pursuant thereto, and the performance of its obligations
thereunder have been and remain duly authorized by all necessary action and do
not contravene any provision of its certificate of incorporation or by-laws (or
equivalent organizational documents) or any law, regulation or contractual
restriction binding on or affecting it or its property;
(3) all consents, authorizations and approvals required for the
execution and delivery by the Counterparty of the Interest Rate Cap Agreement,
and any other agreement which the Counterparty has executed and delivered
pursuant thereto, and the performance of its obligations thereunder have been
obtained and remain in full force and effect, all conditions thereof have been
duly complied with, and no other action by, and no notice to or filing with any
governmental authority or regulatory body is required for such execution,
delivery or performance; and
(4) the Interest Rate Cap Agreement, and any other agreement which
the Counterparty has executed and delivered pursuant thereto, has been duly
executed and delivered by the Counterparty and constitutes the legal, valid and
binding obligation of the Counterparty, enforceable against the Counterparty in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
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SECTION 2.5 Release of Property.
2.5.1 Release of Individual Property.
Provided no Event of Default has occurred and is continuing, after the
expiration of the Lockout Period, Borrower may obtain the release of an
Individual Property from the Lien of the Security Instrument thereon (and
related Loan Documents) and the release of Borrower's obligations under the Loan
Documents with respect to such Individual Property (other than those expressly
stated to survive), but only upon the satisfaction of each of the following
conditions:
(a) Borrower shall provide Lender with at least thirty (30) days but no
more than ninety (90) days prior written notice of its request to obtain a
release of the Individual Property;
(b) Borrower shall have delivered evidence satisfactory to Lender that
(i)(A) Mezzanine Borrower complied with all of the terms and conditions set
forth in Section 2.5.1 of the Mezzanine Loan Agreement with respect to a release
of the security interest corresponding to the release requested pursuant to this
Section 2.5.1 and (B) Mezzanine Lender has granted such release to Mezzanine
Borrower and (ii) Junior Mezzanine Borrower complied with all of the terms and
conditions set forth in Section 2.5.1 of the Junior Mezzanine Loan Agreement
with respect to a release of the security interest corresponding to the release
requested pursuant to this Section 2.5.1 and (B) Junior Mezzanine Lender has
granted such release to Junior Mezzanine Borrower;
(c) Lender shall have received a wire transfer of immediately available
federal funds in an amount equal to the Release Price for the applicable
Individual Property, together with (i) all accrued and unpaid interest
calculated at the Applicable Interest Rate on the amount of principal being
prepaid through and including the Prepayment Date, (ii) if such release occurs
on or prior to the Open Date, a prepayment premium equal to one percent (1%) of
the applicable Release Price, (iii) the Interest Shortfall, if applicable, with
respect to the amount prepaid, (iv) Breakage Costs, if any, without duplication
of any sums paid pursuant to the preceding clause (iii); and (v) all other sums
due under this Agreement, the Note or the other Loan Documents in connection
with a partial prepayment;
(d) Borrower shall submit to Lender, not less than ten (10) days prior to
the date of such release, a release of Lien (and related Loan Documents) for
such Individual Property for execution by Lender. Such release shall be in a
form appropriate in each State in which the Individual Property is located and
shall contain standard provisions, if any, protecting the rights of Lender. In
addition, Borrower shall provide all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release, together
with an Officer's Certificate certifying that (i) such documentation is in
compliance with all applicable Legal Requirements, and (ii) the release will not
impair or otherwise adversely affect the Liens, security interests and other
rights of Lender under the Loan Documents not being released (or as to the
parties to the Loan Documents and Properties subject to the Loan Documents not
being released);
36
(e) After giving effect to such release, Lender shall have determined that
the Debt Service Coverage Ratio for the Properties then remaining subject to the
Lien of a Security Instrument (not including the Individual Property to be
released) (but for the purpose of this calculation only, assuming a Release
Price equal to the Allocated Loan Amount) shall be at least equal to the Debt
Service Coverage Ratio for all of the Properties (including the Individual
Property to be released) for the twelve (12) full calendar months immediately
preceding the release of the Individual Property;
(f) Lender shall have received evidence that the Individual Property to be
released shall be conveyed to a Person other than Borrower or Principal;
(g) In the event the Release Property is subject to an Operating Lease
along with one or more additional Properties, Lender shall have received a
certified copy of an amendment to the Operating Lease reflecting the deletion of
the Individual Property to be released; and
(h) Lender shall have received payment of all Lender's reasonable costs
and expenses, including due diligence review costs and reasonable counsel fees
and disbursements incurred in connection with the release of the Individual
Property from the lien of the related Security Instrument and the review and
approval of the documents and information required to be delivered in connection
therewith.
2.5.2 Release on Payment in Full.
Lender shall, upon the written request and at the expense of Borrower,
upon payment in full of all principal and interest due on the Loan and all other
amounts due and payable under the Loan Documents in accordance with the terms
and provisions of the Note and this Agreement, release the Lien of the Security
Instrument on each Individual Property not theretofore released.
SECTION 2.6 Substitution of Properties.
Subject to the terms of this Section 2.6 after the expiration of the
Lockout Period, Borrower may obtain a release of the Lien of a Security
Instrument (and the related Loan Documents) encumbering an Individual Property
(a "Release Property") by substituting therefor another hotel property of like
kind and quality acquired by Borrower (individually, a "Substitute Property" and
collectively, the "Substitute Properties"), provided that the following
conditions precedent are satisfied:
(a) Borrower shall not have the right to release and substitute (i) more
than one (1) Individual Property in accordance with this Section in any twelve
(12) month period and (ii) any Properties after such time as Borrower has
released and substituted Properties which in the aggregate had an appraised
value of more than thirty-five percent (35%) of the aggregate appraised values
of the Properties subject to the Lien of the Security Instruments as of the
Closing Date.
(b) Lender shall have received at least thirty (30) days prior written
notice requesting the substitution and identifying the Substitute Property and
Release Property.
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(c) If the Borrower continues to own an Individual Property subject to the
Lien of a Security Instrument, Lender shall have received (i) a copy of a deed
conveying all of Borrower's right, title and interest in and to the Release
Property to a Person other than Borrower or Principal pursuant to an arms length
transaction and (ii) a letter from Borrower countersigned by a title insurance
company acknowledging receipt of such deed and agreeing to record such deed in
the real estate records for the county in which the Release Property is located.
(d) Lender shall have received a current Appraisal of (i) the Substitute
Property and (ii) the Release Property, each prepared within sixty (60) days
prior to the release and substitution, showing an appraised value of the
Substitute Property equal to or greater than one hundred percent (100%) of (A)
the appraised value of the Release Property as of the Closing Date and (B) the
appraised value of the Release Property immediately prior to the date of the
proposed substitution.
(e) Intentionally Omitted.
(f) Lender shall have received a certificate of Borrower certifying,
together with other evidence that would be satisfactory to a prudent
institutional mortgage loan lender that, the Debt Service Coverage Ratio for the
twelve (12) months immediately preceding the substitution with respect to the
Substitute Property is equal to or greater than the Debt Service Coverage Ratio
for the twelve (12) full calendar months immediately preceding the date of the
proposed substitution with respect to the Release Property, which Debt Service
Coverage Ratio shall be based upon the Allocated Loan Amounts of the Substitute
Property and the Release Property.
(g) If the Loan is part of a Securitization, Lender shall have received
confirmation in writing from the Rating Agencies to the effect that such release
and substitution will not result in a withdrawal, qualification or downgrade of
the respective ratings in effect immediately prior to such release and
substitution for the Securities issued in connection with the Securitization
that are then outstanding. If the Loan is not part of a Securitization, Lender
shall have consented in writing to such release and substitution, which consent
shall be given in Lender's reasonable discretion applying the requirements of a
prudent institutional mortgage loan lender with respect to real estate
collateral of similar size, scope and value of the Substitute Property.
(h) Unless such event or condition relates solely to the Release Property
and will be fully cured by the release and substitution, no Event of Default
shall have occurred and be continuing and Borrower shall be in compliance in all
material respects with all terms and conditions set forth in this Agreement and
in each other Loan Document on Borrower's part to be observed or performed.
Lender shall have received a certificate from Borrower confirming the foregoing,
stating that the representations and warranties contained in this Agreement and
the other Loan Documents are true and correct in all material respects on and as
of the date of the release and substitution with respect to Borrower, the
Properties and the Substitute Property and containing any other representations
and warranties with respect to Borrower, the Properties, the Substitute Property
or the Loan as (i) Lender, if a Securitization has not occurred, or (ii) the
Rating Agencies, if a Securitization has occurred, may require, unless such
38
certificate would be inaccurate, such certificate to be in form and substance
satisfactory to Lender or the Rating Agencies, as applicable.
(i) Borrower shall (A) have executed, acknowledged and delivered to Lender
(I) a Security Instrument, an Assignment of Leases and Rents and two UCC-1
Financing Statements with respect to the Substitute Property, together with a
letter from Borrower countersigned by a title insurance company acknowledging
receipt of such Security Instrument, Assignment of Leases and Rents and UCC-1
Financing Statements and agreeing to record or file, as applicable, such
Security Instrument, Assignment of Leases and Rents and one of the UCC-1
Financing Statements in the real estate records for the county in which the
Substitute Property is located and to file one of the UCC-1 Financing Statements
in the office of the Secretary of State (or other central filing office) of the
State in which the Substitute Property is located, so as to effectively create
upon such recording and filing valid and enforceable first priority Liens upon
the Substitute Property, in favor of Lender (or such other trustee as may be
desired under local law), subject only to the Permitted Encumbrances and such
other Liens as are permitted pursuant to the Loan Documents and (II) an
Environmental Indemnity with respect to the Substitute Property from Indemnitor
and (B) have caused Guarantor to acknowledge and confirm its obligations under
the Loan Documents. The Security Instrument, Assignment of Leases and Rents,
UCC-1 Financing Statements and Environmental Indemnity shall be the same in form
and substance as the counterparts of such documents executed and delivered with
respect to the related Release Property subject to modifications reflecting only
the Substitute Property as the Individual Property and such modifications
reflecting the laws of the State in which the Substitute Property is located.
The Security Instrument encumbering the Substitute Property shall secure all
amounts then outstanding under the Note, provided that in the event that the
jurisdiction in which the Substitute Property is located imposes a mortgage
recording, intangibles or similar tax and does not permit the allocation of
indebtedness for the purpose of determining the amount of such tax payable, the
principal amount secured by such Security Instrument shall be equal to one
hundred twenty-five percent (125%) of the Allocated Loan Amount for the
Substitute Property. The amount of the Loan allocated to the Substitute Property
(such amount being hereinafter referred to as the "Substitute Allocated Loan
Amount") shall equal the Allocated Loan Amount of the related Release Property.
(j) Lender shall have received (A) to the extent available, any "tie-in"
or similar endorsement, together with a "first loss" endorsement, to each Title
Insurance Policy insuring the Lien of the existing Security Instruments as of
the date of the substitution with respect to the Title Insurance Policy insuring
the Lien of the Security Instrument with respect to the Substitute Property and
(B) a Title Insurance Policy (or a marked, signed and redated commitment to
issue such Title Insurance Policy) insuring the Lien of the Security Instrument
encumbering the Substitute Property, issued by the title company that issued the
Title Insurance Policies insuring the Lien of the existing Security Instruments
and dated as of the date of the substitution, with reinsurance and direct access
agreements that replace such agreements issued in connection with the Title
Insurance Policy insuring the Lien of the Security Instrument encumbering the
Release Property. The Title Insurance Policy issued with respect to the
Substitute Property shall (1) provide coverage in the amount of the Substitute
Allocated Loan Amount if the "tie-in" or similar endorsement described above is
available or, if such endorsement is not available, in an amount equal to one
hundred twenty-five percent
39
(125%) of the Substitute Allocated Loan Amount, together, if available, with
"last dollar endorsement," (2) insure Lender that the relevant Security
Instrument creates a valid first lien on the Substitute Property encumbered
thereby, free and clear of all exceptions from coverage other than Permitted
Encumbrances and standard exceptions and exclusions from coverage (as modified
by the terms of any endorsements), (3) contain such endorsements and affirmative
coverages as are then available and are contained in the Title Insurance
Policies insuring the Liens of the existing Security Instruments, and such other
endorsements or affirmative coverage that a prudent institutional mortgage
lender would require, and (4) name Lender as the insured. Lender also shall have
received copies of paid receipts or other evidence showing that all premiums in
respect of such endorsements and Title Insurance Policies have been paid.
(k) Lender shall have received a current Survey for each Substitute
Property, certified to the title company and Lender and its successors and
assigns, in the same form and having the same content as the certification of
the Survey of the Release Property prepared by a professional land surveyor
licensed in the State in which the Substitute Property is located and acceptable
to the Rating Agencies in accordance with the 1999 Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys. Such Survey shall reflect the
same legal description contained in the Title Insurance Policy relating to such
Substitute Property and shall include, among other things, a metes and bounds
description of the real property comprising part of such Substitute Property
(unless such real property has been satisfactorily designated by lot number on a
recorded plat). The surveyor's seal shall be affixed to each Survey and each
Survey shall certify whether or not the surveyed property is located in a
"one-hundred-year flood hazard area."
(l) Lender shall have received valid certificates of insurance indicating
that the requirements for the policies of insurance required for an Individual
Property hereunder have been satisfied with respect to the Substitute Property
and evidence of the payment of all Insurance Premiums payable for the existing
policy period.
(m) Lender shall have received a Phase I environmental report dated not
more than one hundred eighty (180) days prior to the proposed date of
substitution and otherwise acceptable to a prudent institutional mortgage loan
lender and, if recommended under the Phase I environmental report, a Phase II
environmental report that would be acceptable to a prudent institutional
mortgage loan lender, which conclude that the Substitute Property does not
contain any Hazardous Materials and is not subject to any significant risk of
contamination from any off site Hazardous Materials.
(n) Borrower shall deliver or cause to be delivered to Lender (A) updates
or, if the Substitute Property is to be owned by an Affiliate of Borrower,
originals, in either case certified by Borrower or such Affiliate, as
applicable, of all organizational documentation related to Borrower or such
Affiliate, as applicable, and/or the formation, structure, existence, good
standing and/or qualification to do business delivered to Lender on the Closing
Date; (B) good standing certificates, certificates of qualification to do
business in the jurisdiction in which the Substitute Property is located (if
required in such jurisdiction); and (C) resolutions of Borrower or such
Affiliate, as applicable, authorizing the substitution and any actions taken in
connection with such substitution.
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(o) Lender shall have received the following opinions of Borrower's
counsel: (A) an opinion or opinions of counsel admitted to practice under the
laws of the State in which the Substitute Property is located stating that the
Loan Documents delivered with respect to the Substitute Property pursuant to
clause (i) above are valid and enforceable in accordance with their terms,
subject to the laws applicable to creditors' rights and equitable principles,
and that Borrower is qualified to do business and in good standing under the
laws of the jurisdiction where the Substitute Property is located or that
Borrower is not required by Applicable Law to qualify to do business in such
jurisdiction; (B) an opinion of counsel acceptable to the Rating Agencies if the
Loan is part of a Securitization, or Lender if the Loan is not part of a
Securitization, stating that the Loan Documents delivered with respect to the
Substitute Property pursuant to this Section, among other things, duly
authorized, executed and delivered by Borrower and that the execution and
delivery of such Loan Documents and the performance by Borrower of its
obligations thereunder will not cause a breach of, or a default under, any
agreement, document or instrument to which Borrower is a party or to which it or
its properties are bound; (C) an update of the Insolvency Opinion indicating
that the substitution does not affect the opinions set forth therein; (D) if the
Loan is part of a Securitization, an opinion of counsel acceptable to the Rating
Agencies that the substitution does not constitute a "significant modification"
of the Loan under Section 1001 of the Code or otherwise cause a tax to be
imposed on a "prohibited transaction" by any REMIC Trust.
(p) Borrower shall (i) have paid, (ii) have escrowed with Lender or (iii)
be contesting in accordance with the terms hereof, all Basic Carrying Costs
relating to each of the Properties and the Substitute Property, including
without limitation, (x) accrued but unpaid Insurance Premiums relating to each
of the Properties and the Substitute Property, and (y) currently due and payable
Taxes (including any in arrears) relating to each of the Properties and the
Substitute Property and (z) currently due and payable Other Charges relating to
each of the Properties and Substitute Property.
(q) Borrower shall have paid or reimbursed Lender for all reasonable costs
and expenses incurred by Lender (including, without limitation, reasonable
attorneys' fees and disbursements) in connection with the release and
substitution and Borrower shall have paid all recording charges, filing fees,
taxes or other expenses (including, without limitation, mortgage and intangibles
taxes and documentary stamp taxes) payable in connection with the substitution.
Borrower shall have paid all costs and expenses of the Rating Agencies incurred
in connection with the substitution.
(r) Lender shall have received annual operating statements and occupancy
statements for the Substitute Property for the most current completed fiscal
year and a current operating statement for the Release Property, each certified
by Borrower to Lender as being true and correct in all material respects and a
certificate from Borrower certifying that there has been no material adverse
change in the financial condition of the Substitute Property since the date of
such operating statements.
(s) Upon the request of Lender, Borrower shall have delivered to Lender
estoppel certificates from all tenants under Leases at the Substitute Property.
All such estoppel certificates shall be substantially in the form approved by
Lender in connection with the origination of the Loan and shall indicate that
(1) the subject Lease is a valid and binding
41
obligation of the tenant thereunder, (2) to the best of the tenant's knowledge,
there are no defaults under such Lease on the part of the landlord or tenant
thereunder, (3) the tenant thereunder has no knowledge of any defense or offset
to the payment of rent under such Lease, (4) no rent under such Lease has been
paid more than one (1) month in advance, (5) the tenant thereunder has no option
under such Lease to purchase all or any portion of the Substitute Property, and
(6) all tenant improvement work required under such Lease has been substantially
completed and the tenant under such Lease is in actual occupancy of its leased
premises. If an estoppel certificate indicates that all tenant improvement work
required under the subject Lease has not yet been completed, Borrower shall
deliver to Lender financial statements indicating that Borrower has adequate
funds to pay all costs related to such tenant improvement work as required under
such Lease.
(t) Lender shall have received copies of all Leases affecting the
Substitute Property certified by Borrower as being true and correct.
(u) Upon the request of Lender, Lender shall have received subordination
agreements in the form approved by Lender in connection with the origination of
the Loan (or such other form approved by Lender, which approval shall not be
unreasonably withheld) with respect to tenants under all Leases at the
Substitute Property to the extent such Leases for such tenants are not
automatically subordinate (in lien and in terms) pursuant to the terms of the
applicable Leases.
(v) Lender shall have received (A) an endorsement to the Title Insurance
Policy insuring the Lien of the Security Instrument encumbering the Substitute
Property insuring that the Substitute Property constitutes a separate tax lot
or, if such an endorsement is not available in the State in which the Substitute
Property is located, a letter from the title insurance company issuing such
Title Insurance Policy stating that the Substitute Property constitutes a
separate tax lot or (B) a letter from the appropriate taxing authority stating
that the Substitute Property constitutes a separate tax lot.
(w) Lender shall have received a Physical Conditions Report with respect
to the Substitute Property stating that the Substitute Property and its use
comply in all material respects with all applicable Legal Requirements
(including, without limitation, zoning, subdivision and building laws) and that
the Substitute Property is in good condition and repair and free of damage or
waste or in the event such report indicates the need for immediate or on-going
repairs at the Substitute Property, Lender shall have established a reserve in
the amount of 125% of the estimated cost of completing such immediate or
on-going repairs, provided, however, in no event shall Lender be obligated to
accept a Substitute Property if the physical condition report relating to such
Substitute Property indicates any damage or deficiencies which in Lender's
reasonable judgment create a risk to the safety or well-being to the occupants
of such Substitute Property.
(x) Lender shall have received evidence which would be satisfactory to a
prudent institutional mortgage loan lender to the effect that all material
building and operating licenses and permits necessary for the use and occupancy
of the Substitute Property as a hotel including, but not limited to, current
certificates of occupancy, have been obtained and are in full force and effect.
42
(y) Lender shall have received an Operating Lease (i) in substantially the
form as the Operating Lease in effect on the date hereof or (ii) which would be
satisfactory to a prudent institutional mortgage loan lender encumbering only
the Substitute Property or, in the event the Release Property is subject to a
Operating Lease along with one or more additional Properties, Lender shall have
received a certified copy of an amendment to the Operating Lease reflecting the
deletion of the Release Property and, if appropriate, the addition of the
Substitute Property as a property encumbered pursuant thereto.
(z) In the event the Release Property is subject to a Management Agreement
along with one or more additional Properties, Lender shall have received a
certified copy of an amendment to the Management Agreement reflecting the
deletion of the Release Property and, if appropriate, the addition of the
Substitute Property as a property managed pursuant thereto and Manager shall
have executed and delivered to Lender an amendment to the Assignment of
Management Agreement reflecting such amendment to the Management Agreement. In
the event that the Release Property is subject to a Management Agreement
relating only to such Release Property, Lender shall have received a Replacement
Management Agreement for the Substitute Property and the Manager thereunder
shall have executed and delivered to Lender an Assignment of Management
Agreement with respect to such new Management Agreement on substantially the
same terms as used in connection with the Release Property or such other terms
as would be acceptable to a prudent institutional mortgage loan lender.
(aa) Lender shall have received such other approvals, opinions, documents
and information in connection with the substitution as requested by the Rating
Agencies if the Loan is part of a Securitization, or as reasonably requested by
Lender if the Loan is not part of a Securitization.
(bb) Lender shall have received certified copies of all material contracts
and agreements relating to the leasing and operation of the Substitute Property
(other than the Management Agreement), each of which shall be in a form and
substance which would be satisfactory to a prudent institutional mortgage loan
lender.
(cc) Lender shall have received certified copies of all material consents,
licenses and approvals, if any, required in connection with the substitution of
a Substitute Property, including, without limitation, liquor licenses and
evidence that such consents, licenses and approvals are in full force and
effect.
(dd) Lender shall have received satisfactory (i.e., showing no Liens other
than Permitted Encumbrances) UCC searches, together with tax lien, judgment and
litigation searches with respect to the Substitute Property and Borrower in the
State where the Substitute Property is located and the jurisdictions where each
such Person has its principal place of business.
(ee) Lender shall have received a Franchisor Estoppel and Recognition
Letter from the franchisor under the Franchise Agreement, if any, for the
Substitute Property, in form and substance reasonably satisfactory to a prudent
institutional mortgage loan lender.
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(ff) Lender shall have received certified copies of the most recent
Quality Assurance Reports, if any which shall be reasonably satisfactory to a
prudent institutional mortgage loan lender.
(gg) Borrower shall submit to Lender, not less than ten (10) days prior to
the date of such substitution, a release of Lien (and related Loan Documents)
for the Release Property for execution by Lender. Such release shall be in a
form appropriate for the jurisdiction in which the Release Property is located
and shall contain standard provisions, if any, protecting the rights of the
releasing lender.
(hh) Borrower stall deliver an Officers Certificate certifying that the
requirements set forth in this Section 2.6 have been satisfied.
Upon the satisfaction of the foregoing conditions precedent, Lender will
release its Lien from the Release Property and the Substitute Property shall be
deemed to be an Individual Property for purposes of this Agreement and the
Substitute Allocated Loan Amount with respect to such Substitute Property shall
be deemed to be the Allocated Loan Amount with respect to such Substitute
Property for all purposes hereunder.
All due diligence required to be delivered to Lender in connection with
this Section 2.6 shall be in form, scope and substance which would be
satisfactory to a prudent institutional mortgage loan lender.
III. CASH MANAGEMENT
SECTION 3.1 Establishment of Accounts.
(a) Borrower and Operating Lessee shall, simultaneously herewith, (i)
establish one or more accounts (individually and collectively, the "Property
Account") with one or more Property Account Banks into which Borrower and/or
Operating Lessee shall deposit, or cause to be deposited, all Gross Income from
Operations not already deposited directly into the Concentration Account, (ii)
establish one or more accounts (individually and collectively, the
"Concentration Account") with an Eligible Institution into which Borrower shall
deposit, or cause to be deposited, all of the funds on deposit in the applicable
Property Account and (iii) execute an agreement with Lender and each Property
Account Bank providing for the control of the applicable Property Account and
Concentration Account substantially in the form of Exhibit A attached herewith
(the "Property Account Agreement").
(b) Lender (or Servicer on behalf of Lender) shall, simultaneously
herewith establish an account with the Lockbox Bank (the "Lockbox Account"),
into which, upon the occurrence of a Triggering Event, Borrower and Operating
Lessee shall deposit or cause Manager to deposit all sums on deposit in the
Concentration Account, in accordance with Section 3.2 and Section 3.6 hereof,
establishing the following Accounts (which may be book entry sub-accounts) into
which amounts in the Concentration Account shall be deposited or allocated:
(i) An account with Lockbox Bank into which Borrower shall deposit,
or cause to be deposited, the Monthly Tax Deposit (the "Tax Account");
44
(ii) An account with Lockbox Bank into which Borrower shall deposit,
or cause to be deposited, the Monthly Insurance Premium Deposit, if any
(the "Insurance Premium Account");
(iii) An account with Lockbox Bank into which Borrower shall
deposit, or cause to be deposited, the Monthly Debt Service Payment Amount
(the "Debt Service Account");
(iv) An account with Lockbox Bank into which Borrower shall deposit,
or cause to be deposited, the Replacement Reserve Monthly Deposit (the
"Replacement Reserve Account");
(v) An account with Lockbox Bank into which Borrower shall, during
an Excess Cash Flow Sweep Period, deposit, or cause to be deposited,
Excess Cash Flow (the "Excess Cash Flow Account");
(vi) An account with Lockbox Bank into which Borrower shall deposit,
or cause to be deposited, the Monthly Ground Rent Deposit, if any (the
"Ground Rent Account");
(vii) An account with Lockbox Bank into which Borrower shall
deposit, or cause to be deposited, the UST Reserve Fund (the "UST Reserve
Account").
(viii) The Mezzanine Account into which Borrower shall deposit, or
cause to be deposited, the payments required pursuant to Section
3.7(b)(viii) hereof; and
(ix) The Junior Mezzanine Account into which Borrower shall deposit,
or cause to be deposited, the payments required pursuant to Section
3.7(b)(ix) hereof.
SECTION 3.2 Deposits into Lockbox Account.
(a) Borrower represents, warrants and covenants that (i) Borrower shall,
or shall cause Manager or Operating Lessee to, immediately deposit all Gross
Income from Operations into the applicable Property Account or Concentration
Account, (ii) Borrower or Operating Lessee shall send a notice, substantially in
the form of Exhibit B, to all tenants now or hereafter occupying space at each
Individual Property directing them to pay all Rents and other sums due under the
Lease to which they are a party into the applicable Property Account or
Concentration Account, (iii) Borrower, Operating Lessee or Manager shall
instruct the Franchisor to deposit all Accounts Receivable for the Properties
and all other sums collected by Franchisor pursuant to the Franchise Agreement
into the applicable Property Account or the Concentration Account, (iv)
Borrower, Operating Lessee or Manager shall deliver a notice substantially in
the form of Exhibit D hereto to all credit card companies to pay all Accounts
Receivable directly into the applicable Property Account or the Concentration
Account, (v) Borrower shall deposit, or shall cause the Counterparty to deposit,
all sums paid under the Interest Rate Cap Agreement directly into the
Concentration Account or the Lockbox Account; (vi) other than the Accounts,
there shall be no other accounts maintained by Borrower, Operating Lessee or any
other Person into which revenues from the ownership and operation of the
Properties are deposited, (vii) neither Borrower nor any other Person shall open
any other such account with respect to the deposit of
45
income in connection with the Properties, (viii) on or before May 1st of each
Fiscal Year, Borrower shall provide to Lender evidence reasonably satisfactory
to Lender that Borrower has notified the Eligible Institution(s) maintaining the
Concentration Account(s) of the revised calculation of the Monthly Pegged Amount
and (ix) three (3) Business Days before each Payment Date, Borrower and/or
Operating Lessee shall cause Manager to deposit, or cause to be deposited, all
remaining funds on deposit in the Manager Account into the Concentration
Account. Until deposited into the applicable Property Account, any Gross Income
from Operations from the Properties held by Borrower or Operating Lessee shall
be deemed to be Collateral and shall be held in trust by it for the benefit, and
as the property, of Lender and shall not be commingled with any other funds or
property of Borrower or Operating Lessee.
(a) Borrower, Operating Lessee or Lender on behalf of Borrower or
Operating Lessee, shall direct each Property Account Bank to transfer, on each
Business Day, all funds on deposit in the applicable Property Account to the
Concentration Account and Borrower, Operating Lessee or Lender on behalf of
Borrower or Operating Lessee, shall direct each Eligible Institution maintaining
a Concentration Account to transfer, on each Business Day, all funds on deposit
in the Concentration Account to (i) prior to the occurrence of a Triggering
Event, such account as shall be specified by Borrower and Operating Lessee in
writing and (ii) following the occurrence of a Triggering Event, (I) the Manager
Account until sums equal to the Monthly Pegged Amount have been transferred to
the Manager Account for the then current calendar month and (II) thereafter, the
Lockbox Account.
(b) Borrower and Operating Lessee warrant and covenant that they shall not
rescind, withdraw or change any notices or instructions required to be sent by
it pursuant to this Section 3.2 without Lender's prior written consent.
SECTION 3.3 Account Name.
(a) The Accounts (other than the Manager Account) shall each be in the
name of Borrower for the benefit Lender.
(b) In the event Lender transfers or assigns the Loan, Borrower and
Operating Lessee acknowledge that each Property Account Bank and Lockbox Bank,
at Lender's request, shall change the name of each Account to the name of
Borrower for the benefit of the transferee or assignee. In the event Lender
retains a servicer to service the Loan, Borrower and Operating Lessee
acknowledge that each Property Account Bank and Lockbox Bank, at Lender's
request, shall be rename each account to be in the name of Borrower for the
benefit of the servicer, as agent for Lender.
SECTION 3.4 Eligible Accounts.
Borrower and Operating Lessee shall, and Borrower and Operating Lessee
shall cause each Property Account Bank, Lockbox Account Bank and the Eligible
Institution maintaining the Concentration Account to, maintain each Account as
an Eligible Account.
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SECTION 3.5 Permitted Investments.
Sums on deposit in any Account other than any Property Account, the
Concentration Account or Lockbox Account may be invested in Permitted
Investments provided (i) such investments are then regularly offered by Lockbox
Bank for accounts of this size, category and type, (ii) such investments are
permitted by Applicable Law, (iii) the maturity date of the Permitted Investment
is not later than the date on which sums in the applicable Account are
anticipated by Lender to be required for payment of an obligation for which such
Account was created, and (iv) no Event of Default shall have occurred and be
continuing. All income earned from Permitted Investments the property of
Borrower. Borrower and Operating Lessee hereby irrevocably authorize and direct
Lockbox Bank, to hold any income earned from Permitted Investments as part of
the Accounts. Borrower shall be responsible for payment of any federal, State or
local income or other tax applicable to income earned from Permitted
Investments. No other investments of the sums on deposit in the Accounts shall
be permitted except as set forth in this Section 3.5. Lender shall not be liable
for any loss sustained on the investment of any funds constituting the Reserve
Funds or of any funds deposited in the related Accounts. Notwithstanding
anything to the contrary contained herein, Borrower acknowledges that the only
Permitted Investment which Lockbox Bank may only offer is an interest bearing
escrow account (bearing interest at a money market rate as determined by Lockbox
Bank)
SECTION 3.6 The Initial Deposits.
Lender shall determine, in its reasonable discretion, the initial deposit
amounts (the "Initial Deposits") required to be deposited in each of the Tax
Account, the Insurance Premium Account, the Replacement Reserve Account, the
Required Repair Account, the UST Reserve Account, the Ground Rent Account and
Borrower shall deposit the respective Initial Deposits into each Account on the
Closing Date.
SECTION 3.7 Transfer To and Disbursements from the Lockbox Account.
(a) Lockbox Bank shall withdraw all funds on deposit in the Lockbox
Account on the date immediately preceding each Payment Date (and if such day is
not a Business Day then the preceding day which is a Business Day).
(b) Lockbox Bank shall disburse the funds in the Lockbox Account in the
following order of priority:
(i) First, funds sufficient to pay the Monthly Ground Rent Deposit
shall be deposited in the Ground Rent Account;
(ii) Second, funds sufficient to pay the Monthly Tax Deposit shall
be deposited in the Tax Account;
(iii) Third, funds sufficient to pay the Monthly Insurance Premium
Deposit, if any, shall be deposited in the Insurance Premium Account;
(iv) Fourth, funds sufficient to pay the Monthly Debt Service
Payment Amount shall be deposited into the Debt Service Account to be
applied (A) first, to the
47
payment of accrued and unpaid interest computed at the Applicable Interest
Rate; and (B) second to the payment of the Scheduled Amortization Payment
and the reduction of the principal sum (if such Scheduled Amortization
Payment is due);
(v) Fifth, funds sufficient to pay the Replacement Reserve Monthly
Deposit shall be deposited in the Replacement Reserve Account;
(vi) Sixth, funds sufficient to pay any interest accruing at the
Default Rate, and late payment charges, if any, shall be deposited in the
Debt Service Account;
(vii) Seventh, to the payment of Lockbox Bank for customary and
reasonable fees and expenses incurred in connection with this Agreement
and the accounts established hereunder;
(viii) Eighth, provided no Event of Default has occurred and is
continuing and until such time as the Mezzanine Loan has been paid in
full, funds sufficient to pay debt service under the Mezzanine Loan and
any other sums then due under the Mezzanine Loan as communicated to Lender
in writing by Mezzanine Lender, shall be deposited into the Mezzanine
Account;
(ix) Ninth, provided no Event of Default has occurred and is
continuing and until such time as the Junior Mezzanine Loan has been paid
in full, funds sufficient to pay debt service under the Junior Mezzanine
Loan and any other sums then due under the Junior Mezzanine Loan as
communicated to Lender in writing by Junior Mezzanine Lender, shall be
deposited into the Junior Mezzanine Account;
(x) Tenth, provided no Event of Default has occurred and is
continuing all amounts remaining in the Lockbox Account after deposits for
items (i) through (ix) for the current month and all prior months shall be
(A) during a Excess Cash Flow Sweep Period, deposited into the Excess Cash
Flow Account and (B) at all other times, disbursed to Borrower.
(c) Lender shall have no duty to confirm, inquire or determine the
accuracy of any notice purporting to be from Mezzanine Lender or Junior
Mezzanine Lender and may rely on any notice it believes in good faith to be
genuine and given by Mezzanine Lender or Junior Mezzanine Lender.
SECTION 3.8 Withdrawals From the Tax Account and the Insurance Premium
Account.
Lender shall have the right to withdraw funds from the Tax Account to pay
Taxes on or before the date Taxes are delinquent. Lender shall have the right to
withdraw funds from the Insurance Premium Account to pay Insurance Premiums on
or before the date Insurance Premiums are due and payable. Lockbox Bank shall
disburse funds from the Tax Account and the Insurance Premium Account in
accordance with Lender's written request therefor on the Business Day following
Lockbox Bank's receipt of such written request.
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SECTION 3.9 Withdrawals from the Replacement Reserve Account.
Lender shall disburse funds on deposit in the Replacement Reserve Account
in accordance with the provisions of Section 7.3 hereof.
SECTION 3.10 Withdrawals from the Required Repair Account.
Lender shall disburse funds on deposit in the Required Repair Account in
accordance with the provisions of Section 7.1 hereof.
SECTION 3.11 Withdrawals from the Debt Service Account.
Lender shall have the right to withdraw funds from the Debt Service
Account to pay the Monthly Debt Service Payment Amount on or after the date when
due, together with any late payment charges or interest accruing at the Default
Rate.
SECTION 3.12 Withdrawals from the Mezzanine Account.
Amounts on deposit in the Mezzanine Account may be applied by Mezzanine
Lender in accordance with the Mezzanine Loan Documents.
SECTION 3.13 Withdrawals from the Junior Mezzanine Account.
Amounts on deposit in the Junior Mezzanine Account may be applied by
Junior Mezzanine Lender in accordance with the Junior Mezzanine Loan Documents.
SECTION 3.14 Withdrawals from the Ground Rent Account
Lender shall have the right to withdraw funds from the Ground Rent Account
in accordance with Section 7.4 hereof.
SECTION 3.15 Withdrawals from the Excess Cash Flow Account.
Lender shall disburse all the funds in the Excess Cash Flow Account to (i)
provided no Mezzanine Event of Default or no Junior Mezzanine Event of Default
has occurred and is continuing, Borrower or (ii) after the occurrence and during
the continuance of either a Mezzanine Event of Default or a Junior Mezzanine
Event of Default, Mezzanine Lender or Junior Mezzanine Lender, as applicable, on
the Payment Date immediately following the occurrence of the Excess Cash Flow
Sweep Period Termination; provided, however, if on an Excess Cash Flow
Application Date and on each Payment Date thereafter, the Excess Cash Flow
Account contains any funds, such funds will be applied to reduce the principal
balance of the Loan and shall be sent to Mezzanine Lender and Junior Mezzanine
Lender to reduce the principal balance of the Mezzanine Loan and the principal
balance of the Junior Mezzanine Loan, pro rata, until such times as the Adjusted
Net Operating Income for the Properties exceeds the Cash Flow Threshold for
three (3) consecutive calendar months. Notwithstanding the foregoing, provided
(a) no Event of Default has occurred and is continuing and (b) Lender has not
received notification of a Mezzanine Event of Default or a Junior Mezzanine
Event of Default, upon Borrower's written request, Lender shall withdraw funds
contained in the Excess
49
Cash Flow Account to be used by Borrower to pay any incentive management fees
which are then due and payable to a Manager pursuant to the applicable
Management Agreement.
SECTION 3.16 Withdrawals from the UST Reserve Account.
Lender shall disburse funds on deposit in the UST Reserve Account in
accordance with the provisions of Section 7.5 hereof.
SECTION 3.17 Sole Dominion and Control.
Borrower and Operating Lessee acknowledge and agree that the Accounts are
subject to the sole dominion, control and discretion of Lender, its authorized
agents or designees, including Property Account Bank and Lockbox Bank, subject
to the terms hereof; and Borrower and Operating Lessee shall have no right of
withdrawal with respect to any Account except with the prior written consent of
Lender or as otherwise provided herein.
SECTION 3.18 Security Interest.
Borrower and Operating Lessee hereby grant to Lender a first priority
security interest in each of the Accounts and the Account Collateral as
additional security for the Debt.
SECTION 3.19 Rights on Default.
Notwithstanding anything to the contrary in this Article 3, upon the
occurrence of an Event of Default, Lender shall promptly notify Property Account
Bank and Lockbox Bank in writing of such Event of Default and, without notice
from Property Account Bank, Lockbox Bank or Lender, (a) Borrower and Operating
Lessee shall have no further right in respect of (including, without limitation,
the right to instruct Lockbox Bank or Property Account Bank to transfer from)
the Accounts, (b) Lender may direct Lockbox Account to liquidate and transfer
any amounts then invested in Permitted Investments to the Accounts or reinvest
such amounts in other Permitted Investments as Lender may reasonably determine
is necessary to perfect or protect any security interest granted or purported to
be granted hereby or pursuant to the other Loan Documents or to enable Lockbox
Bank, as agent for Lender, or Lender to exercise and enforce Lender's rights and
remedies hereunder or under any other Loan Document with respect to any Account
or any Account Collateral, and (c) Lender shall have all rights and remedies
with respect to the Accounts and the amounts on deposit therein and the Account
Collateral as described in this Agreement and in the Security Instruments, in
addition to all of the rights and remedies available to a secured party under
the UCC, and, notwithstanding anything to the contrary contained in this
Agreement or in the Security Instruments, Lender may apply the amounts of such
Accounts as Lender determines in its sole discretion including, but not limited
to, payment of the Debt.
SECTION 3.20 Financing Statement; Further Assurances.
Borrower and Operating Lessee hereby authorize Lender to file, and upon
Lender's request, shall execute and deliver to Lender for filing, a financing
statement or statements under the UCC in connection with any of the Accounts and
the Account Collateral with respect thereto in the form required to properly
perfect Lender's security interest therein. Borrower and
50
Operating Lessee agree that at any time and from time to time, at the expense of
Borrower, Borrower and Operating Lessee will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that Lender may request, in order to perfect and
protect any security interest granted or purported to be granted hereby
(including, without limitation, any security interest in and to any Permitted
Investments) or to enable Lockbox Bank or Lender to exercise and enforce its
rights and remedies hereunder with respect to any Account or Account Collateral.
SECTION 3.21 Borrower's Obligation Not Affected.
The insufficiency of funds on deposit in the Accounts shall not absolve
Borrower of the obligation to make any payments, as and when due pursuant to
this Agreement and the other Loan Documents, and such obligations shall be
separate and independent, and not conditioned on any event or circumstance
whatsoever.
SECTION 3.22 Payments Received Under this Agreement.
Notwithstanding anything to the contrary contained in this Agreement or
the other Loan Documents, and provided no Event of Default has occurred and is
continuing, Borrower's obligations with respect to the monthly payment of Debt
Service and amounts due for the Tax and Insurance Escrow Fund, Required Repair
Fund, Ground Lease Escrow Fund, Replacement Escrow Fund, and any other payment
reserves established pursuant to this Agreement or any other Loan Document shall
(provided Lender is not prohibited from withdrawing or applying any funds in the
Accounts by Applicable Law or otherwise) be deemed satisfied to the extent
sufficient amounts are deposited in the Lockbox Account established pursuant to
this Agreement to satisfy such obligations on the dates each such payment is
required, regardless of whether any of such amounts are so applied by Lender.
IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Borrower Representations.
Borrower represents and warrants as of the Closing Date that:
4.1.1 Organization.
(a) Borrower is duly organized and is validly existing and in good
standing in the jurisdiction in which it is organized, with requisite power and
authority to own the Properties and to transact the businesses in which it is
now engaged. Borrower is duly qualified to do business and is in good standing
in each jurisdiction where it is required to be so qualified in connection with
the Properties, its businesses and operations. Borrower possesses all rights,
licenses, permits and authorizations, governmental or otherwise, necessary to
entitle it to own the Properties and to transact the businesses in which it is
now engaged. Attached hereto as Schedule IV is an organizational chart of
Borrower.
(b) Operating Lessee is duly organized and is validly existing and in good
standing in the jurisdiction in which it is organized, with requisite power and
authority to own the lessee's interest in the Operating Lease and to operate the
Properties and to transact the businesses in
51
which it is now engaged. Operating Lessee is duly qualified to do business and
is in good standing in each jurisdiction where it is required to be so qualified
in connection with the Properties, its businesses and operations. Operating
Lessee possesses all rights, licenses, permits and authorizations, governmental
or otherwise, necessary to entitle it to transact the businesses in which it is
now engaged. Attached hereto as Schedule V is an organizational chart of
Operating Lessee.
4.1.2 Proceedings.
(a) Borrower has taken all necessary action to authorize the execution,
delivery and performance of this Agreement and the other Loan Documents. This
Agreement and the other Loan Documents have been duly executed and delivered by
or on behalf of Borrower and constitute legal, valid and binding obligations of
Borrower enforceable against Borrower in accordance with their respective terms,
subject only to applicable bankruptcy, insolvency and similar laws affecting
rights of creditors generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(b) Operating Lessee has taken all necessary action to authorize the
execution, delivery and performance of the Operating Lessee Documents. The
Operating Lessee Documents have been duly executed and delivered by or on behalf
of Operating Lessee and constitutes the legal, valid and binding obligations of
Operating Lessee enforceable against Operating Lessee in accordance with their
respective terms, subject only to applicable bankruptcy, insolvency and similar
laws affecting rights of creditors generally, and subject, as to enforceability,
to general principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law).
4.1.3 No Conflicts.
(a) The execution, delivery and performance of this Agreement and the
other Loan Documents by Borrower will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any Lien, charge or encumbrance (other than
pursuant to the Loan Documents) upon any of the property or assets of Borrower
pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement,
partnership agreement, management agreement, franchise agreement, or other
agreement or instrument to which Borrower is a party or by which any of
Borrower's property or assets is subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over Borrower or
any of the Properties or any of Borrower's other assets, or any license or other
approval required to operate the Properties, and any consent, approval,
authorization, order, registration or qualification of or with any Governmental
Agency required for the execution, delivery and performance by Borrower of this
Agreement or any other Loan Documents have been obtained and is in full force
and effect.
(b) The execution, delivery and performance of the Operating Lessee
Documents by Operating Lessee will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any ▇▇▇▇,
▇▇
charge or encumbrance (other than pursuant to such Loan Documents) upon any of
the property or assets of Operating Lessee pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, partnership agreement,
management agreement, franchise agreement, or other agreement or instrument to
which Operating Lessee is a party or by which any of Operating Lessee's property
or assets is subject, nor will such action result in any violation of the
provisions of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over Operating Lessee or any of
the Properties or any of Operating Lessee's other assets, or any license or
other approval required to operate the Properties, and any consent, approval,
authorization, order, registration or qualification of or with any Governmental
Agency required for the execution, delivery and performance by Operating Lessee
of the Operating Lessee Documents have been obtained and is in full force and
effect.
4.1.4 Litigation.
There are no actions, suits or proceedings at law or in equity by or
before any Governmental Authority or other agency now pending or threatened
against or affecting Borrower, Operating Lessee or any Individual Property,
which actions, suits or proceedings, if determined against Borrower, Operating
Lessee or any Individual Property, would reasonably be expected to materially
adversely affect the condition (financial or otherwise) or business of Borrower,
Operating Lessee or the condition or ownership of any Individual Property.
4.1.5 Agreements.
Neither Borrower nor Operating Lessee is a party to any agreement or
instrument or subject to any restriction which would reasonably be expected to
materially and adversely affect Borrower, Operating Lessee or any Individual
Property, or Borrower's or Operating Lessee's business, properties or assets,
operations or condition, financial or otherwise. Neither Borrower nor Operating
Lessee is in default in any material respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party or by which Borrower, Operating
Lessee or any of the Properties are bound. Neither Borrower nor Operating Lessee
has material financial obligation under any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which Borrower or Operating
Lessee is a party or by which Borrower or Operating Lessee is a party or by
which Borrower, Operating Lessee or any Property is otherwise bound, other than
(a) obligations incurred in the ordinary course of the operation of the
Properties and (b) obligations under the Loan Documents.
4.1.6 Solvency.
Neither Borrower nor Operating Lessee (a) has entered into the transaction
or executed the Note, this Agreement or any other Loan Documents with the actual
intent to hinder, delay or defraud any creditor and (b) has received reasonably
equivalent value in exchange for its obligations under the Loan Documents.
Giving effect to the Loan, the fair saleable value of Borrower's and Operating
Lessee's assets exceeds and will, immediately following the making of the Loan,
exceed Borrower's and Operating Lessee's total liabilities, including, without
limitation, subordinated, unliquidated, disputed and contingent liabilities.
Borrower's and
53
Operating Lessee's assets do not and, immediately following the making of the
Loan will not, constitute unreasonably small capital to carry out its business
as conducted or as proposed to be conducted. Neither Borrower nor Operating
Lessee intends to incur debt and liabilities (including contingent liabilities
and other commitments) beyond its ability to pay such debt and liabilities as
they mature (taking into account the timing and amounts of cash to be received
by Borrower and Operating Lessee and the amounts to be payable on or in respect
of obligations of Borrower and Operating Lessee). No petition under the
Bankruptcy Code or similar state bankruptcy or insolvency law has been filed
against Borrower, Operating Lessee or any constituent Person in the last seven
(7) years, and neither Borrower, Operating Lessee nor any constituent Person in
the last seven (7) years has ever made an assignment for the benefit of
creditors or taken advantage of any insolvency act for the benefit of debtors.
Neither Borrower, Operating Lessee nor any of its constituent Persons are
contemplating either the filing of a petition by it under the Bankruptcy Code or
similar state bankruptcy or insolvency law or the liquidation of all or a major
portion of Borrower's or Operating Lessee's assets or property, and neither
Borrower nor Operating Lessee has any knowledge of any Person contemplating the
filing of any such petition against it or such constituent Persons.
4.1.7 Full and Accurate Disclosure.
No statement of fact made by Borrower in this Agreement or in any of the
other Loan Documents contains any untrue statement of a material fact or omits
to state any material fact necessary to make statements contained herein or
therein not misleading in any material respects. No statement of fact made by
Operating Lessee in the Operating Lessee Documents contain any untrue statement
of a material fact or omits to state any material fact necessary to make
statements contained herein or therein not misleading in any material respect.
There is no fact presently known to Borrower or Operating Lessee which has not
been disclosed to Lender which materially and adversely affects, or would
reasonably be expected to materially and adversely affect, any Individual
Property or the business, operations or condition (financial or otherwise) of
Borrower or Operating Lessee.
4.1.8 No Plan Assets.
Neither Borrower nor Operating Lessee is, a Plan and none of the assets of
Borrower or Operating Lessee constitute or will constitute "Plan Assets" of one
or more Plans. In addition, (a) neither Borrower nor Operating Lessee is a
"governmental plan" within the meaning of Section 3(32) of ERISA and (b)
transactions by or with Borrower and Operating Lessee are not subject to State
statutes regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or Section
4975 of the Code currently in effect, which prohibit or otherwise restrict the
transactions contemplated by this Agreement.
4.1.9 Compliance.
Borrower, Operating Lessee, Ground Lessor with respect to the Florida
Properties and the Properties and the use thereof comply in all material
respects with all applicable Legal Requirements, including, without limitation,
to the best of Borrower's knowledge, all Environmental Laws, building and zoning
ordinances and codes. Neither Borrower nor
54
Operating Lessee is in default or violation in any material respect of any
order, writ, injunction, decree or demand of any Governmental Authority. There
has not been committed by Borrower, Operating Lessee or any other Person in
occupancy of or involved with the operation or use of the Properties any act or
omission affording the federal government or any other Governmental Authority
the right of forfeiture as against any Individual Property or any part thereof
or any monies paid in performance of Borrower's or Operating Lessee's
obligations under any of the Loan Documents.
4.1.10 Financial Information.
All financial data, including, without limitation, the statements of cash
flow and income and operating expense, that have been delivered to Lender by or
on behalf of Borrower, Operating Lessee and the Properties (i) considered in the
aggregate, are true, complete and correct in all material respects, (ii) fairly
present the financial condition of Borrower, Operating Lessee and the
Properties, as applicable, as of the date of such reports, and (iii) have been
prepared in accordance with GAAP throughout the periods covered, except as
disclosed therein (but subject to normal year-end adjustments). Except for
Permitted Encumbrances, neither Borrower nor Operating Lessee have any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to Borrower or Operating Lessee and reasonably likely to have a
materially adverse effect on any Individual Property or the operation thereof as
hotels except as referred to or reflected in said financial statements. Since
the date of the most recent such financial statements, there has been no
materially adverse change in the financial condition, operations or business of
Borrower or Operating Lessee from that set forth in said financial statements.
4.1.11 Condemnation.
Except as provided on Exhibit E attached hereto, no Condemnation or other
similar proceeding has been commenced or, to the best of Borrower's and
Operating Lessee's knowledge, is threatened or contemplated with respect to all
or any portion of any Individual Property or for the relocation of roadways
providing access to any Individual Property.
4.1.12 Federal Reserve Regulations.
No part of the proceeds of the Loan will be used for the purpose of
purchasing or acquiring any "margin stock" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System or for any other purpose
which would be inconsistent with such Regulation U or any other Regulations of
such Board of Governors, or for any purposes prohibited by Legal Requirements or
by the terms and conditions of this Agreement or the other Loan Documents.
4.1.13 Utilities and Public Access.
Each Individual Property has rights of access to public ways and is served
by public water, sewer, sanitary sewer and storm drain facilities adequate to
service such Individual Property for its respective intended uses. All public
utilities necessary or convenient to the full use and enjoyment of each
Individual Property are located either in the public right-of-way
55
abutting each Individual Property (which are connected so as to serve each
Individual Property without passing over other property) or in recorded
easements serving each Individual Property and such easements are set forth in
and insured by the Title Insurance Policy. All roads necessary for the use of
each Individual Property for their current respective purposes have been
completed, are physically open and except as disclosed on the Surveys, are
dedicated to public use and have been accepted by all Governmental Authorities.
4.1.14 Not a Foreign Person.
Neither Borrower nor Operating Lessee is a "foreign person" within the
meaning of ss.1445(f)(3) of the Code.
4.1.15 Separate Lots.
Each Individual Property is comprised of one (1) or more parcels which
constitute a separate tax lot or lots and does not constitute a portion of any
other tax lot not a part of such Individual Property.
4.1.16 Assessments.
To the best of Borrower's knowledge, there are no pending or proposed
special or other assessments for public improvements or otherwise affecting any
Individual Property, nor are there any contemplated improvements to any
Individual Property that may result in such special or other assessments.
4.1.17 Enforceability.
The Loan Documents are not subject to any right of rescission, set-off,
counterclaim or defense by Borrower or Operating Lessee, including the defense
of usury, and neither Borrower nor Operating Lessee has asserted any right of
rescission, set-off, counterclaim or defense with respect thereto.
4.1.18 No Prior Assignment.
There are no prior assignments of the Leases or any portion of the Rents
due and payable or to become due and payable which are presently outstanding.
4.1.19 Insurance.
Borrower has obtained and has delivered to Lender certified copies of all
insurance policies reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement. To the best of Borrower's knowledge,
no Person, including Borrower and Operating Lessee, has done, by act or
omission, anything which would impair the coverage of any such policy.
56
4.1.20 Use of Property.
Each Individual Property is used exclusively for hotel purposes and other
appurtenant and related uses including but not limited to restaurants and
lounges.
4.1.21 Certificate of Occupancy; Licenses.
All material certifications, permits, licenses and approvals, including
without limitation, certificates of completion and occupancy permits required
for the legal use, occupancy and operation of each Individual Property by
Borrower and Operating Lessee as a hotel (collectively, the "Licenses"), have
been obtained and are in full force and effect and are not subject to
revocation, suspension or forfeiture. Borrower shall keep and maintain all
Licenses necessary for the operation of each Individual Property as a hotel. The
use being made of each Individual Property is in conformity with the certificate
of occupancy issued for such Individual Property.
4.1.22 Flood Zone.
Except as disclosed on the Surveys, none of the Improvements on any
Individual Property are located in an area as identified by the Federal
Emergency Management Agency as an area having special flood hazards and, if so
located, the flood insurance required pursuant to Section 6.1(a)(vii) is in full
force and effect with respect to each such Individual Property.
4.1.23 Physical Condition.
Each Individual Property, including, without limitation, all buildings,
improvements, parking facilities, sidewalks, storm drainage systems, roofs,
plumbing systems, HVAC systems, fire protection systems, electrical systems,
equipment, elevators, exterior sidings and doors, landscaping, irrigation
systems and all structural components, are in good condition, order and repair
in all material respects; there exists no structural or other material defects
or damages in any Individual Property, whether latent or otherwise, and Borrower
and Operating Lessee have not received notice from any insurance company or
bonding company of any defects or inadequacies in any Individual Property, or
any part thereof, which would adversely affect the insurability of the same or
cause the imposition of extraordinary premiums or charges thereon or of any
termination or threatened termination of any policy of insurance or bond. Each
Individual Property is free from damage caused by fire or other casualty. All
liquid and solid waste disposal, septic and sewer systems located on each
Individual Property are, in all material respects, in a good and safe condition
and repair and in compliance with all Legal Requirements.
4.1.24 Boundaries.
Except as disclosed on the Surveys, all of the Improvements which were
included in determining the appraised value of each Individual Property lie
wholly within the boundaries and building restriction lines of such Individual
Property, and no improvements on adjoining properties encroach upon such
Individual Property, and no easements or other encumbrances upon the applicable
Individual Property encroach upon any of the Improvements.
57
4.1.25 Leases.
Borrower is the owner and lessor of landlord's interest in the Operating
Leases. Operating Lessee is the lessor under all other Leases. No Person (other
than hotel guests) has any possessory interest in any Individual Property or
right to occupy the same except under and pursuant to the provisions of the
Leases and Management Agreements. The current Leases are in full force and
effect and, there are no defaults by Borrower or, to the best of Borrower's
knowledge, any tenant under any Lease, and there are no conditions that, with
the passage of time or the giving of notice, or both, would constitute defaults
under any Lease. No Rent has been paid more than one (1) month in advance of its
due date. There are no offsets or defenses to the payment of any portion of the
Rents. All work to be performed by Borrower under each Lease has been performed
as required and has been accepted by the applicable tenant, and any payments,
free rent, partial rent, rebate of rent or other payments, credits, allowances
or abatements required to be given by Borrower to any tenant has already been
received by such tenant. There has been no prior sale, transfer or assignment,
hypothecation or pledge of any Lease or of the Rents received therein which is
still in effect. No tenant under any Lease has sublet all or any portion of the
premises demised thereby, nor does anyone except such tenant and its employees
occupy such leased premises. No tenant under any Lease has a right or option
pursuant to such Lease or otherwise to purchase all or any part of the leased
premises or the building of which the leased premises are a part. Except as set
forth in the Leases, no tenant under any Lease has any right or option for
additional space in the Improvements. To the best of Borrower's knowledge, no
Hazardous Materials have been disposed, stored or treated by any tenant under
any Lease on or about the leased premises nor does Borrower or Operating Lessee
have any knowledge of any tenant's intention to use its leased premises for any
activity which, directly or indirectly, involves the use, generation, treatment,
storage, disposal or transportation of any Hazardous Materials, except those
that are both (i) in compliance with current Environmental Laws and with permits
issued pursuant thereto (if such permits are required), and (ii) either (A) in
amounts not in excess of that necessary to operate, clean, repair and maintain
the applicable Individual Property or each tenant's respective business at such
Individual Property as set forth in their respective Leases, (B) held by a
tenant for sale to the public in its ordinary course of business, or (C) fully
disclosed to and approved by Lender in writing pursuant to the Environmental
Reports.
4.1.26 Survey.
To the best of Borrower's knowledge, the Survey for each Individual
Property delivered to Lender in connection with this Agreement does not fail to
reflect any material matter affecting such Individual Property or the title
thereto.
4.1.27 Intentionally Omitted.
4.1.28 Filing and Recording Taxes.
All transfer taxes, deed stamps, intangible taxes or other amounts in the
nature of transfer taxes required to be paid by any Person under applicable
Legal Requirements currently in effect in connection with the transfer of the
Properties to Borrower have been paid. All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid by any Person
58
under applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Security Instruments, have been paid.
4.1.29 Franchise Agreement.
The Franchise Agreement, if applicable, for each Individual Property is in
full force and effect, all franchise fees, reservation fees, royalties and other
sums due and payable thereunder have been paid in full to date, and neither
Borrower, Operating Lessee nor, to the best of Borrower's knowledge, Franchisor
is in default thereunder.
4.1.30 Management Agreement/Operating Lease.
(a) The Management Agreement for each Individual Property is in full force
and effect and there is no default thereunder by Borrower, Operating Lessee or,
to Borrower's knowledge, Manager thereunder and, to the best of Borrower's
knowledge, no event has occurred that, with the passage of time and/or the
giving of notice would constitute a default thereunder
(b) The Operating Lease for each Individual Property is in full force and
effect and there is no default thereunder by any party thereto and no event has
occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder.
4.1.31 Illegal Activity.
No portion of any Individual Property has been or will be purchased by
Borrower or Operating Lessee with proceeds of any illegal activity and to the
best of Borrower's knowledge, there are no illegal activities or activities
relating to any controlled substances at any Individual Property.
4.1.32 No Change in Facts or Circumstances; Disclosure.
All information submitted by Borrower and Operating Lessee to Lender and
in all financial statements, rent rolls, reports, certificates and other
documents submitted in connection with the Loan or in satisfaction of the terms
thereof and all statements of fact made by Borrower and Operating Lessee in this
Agreement or in any other Loan Document, considered in the aggregate, are
accurate, complete and correct in all material respects. There has been no
material adverse change in any condition, fact, circumstance or event that would
make any such information inaccurate, incomplete or otherwise misleading in any
material respect or that otherwise materially and adversely affects or would
reasonably be expected to materially and adversely affect the use, operation or
value of the Properties or the business operations or the financial condition of
Borrower or Operating Lessee.
4.1.33 Investment Company Act.
Neither Borrower nor Operating Lessee is (a) an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended; (b) a "holding company" or a
"subsidiary company" of a "holding
59
company" or an "affiliate" of either a "holding company" or a "subsidiary
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended; or (c) subject to any other federal or State law or regulation which
purports to restrict or regulate its ability to borrow money.
4.1.34 Principal Place of Business; State of Organization.
Borrower's principal place of business as of the date hereof is the
address set forth in the introductory paragraph of this Agreement. Borrower is
organized under the laws of the State of Delaware and its organizational
identification number is 3643670.
4.1.35 Single Purpose Entity.
Borrower covenants and agrees that its organizational documents shall
provide that it has not, and shall not, and that the organizational documents of
its general partner(s), if Borrower is a partnership, or its managing member(s),
if Borrower is a limited liability company (in each case, "Principal") shall
provide that it has not and shall not:
(a) with respect to Borrower, engage in any business or activity other
than the acquisition, development, ownership, operation, leasing, managing and
maintenance of the Properties, and entering into the Loan, and activities
incidental thereto and with respect to Principal, engage in any business or
activity other than the ownership of its interest in Borrower, and activities
incidental thereto;
(b) with respect to Borrower, acquire or own any material assets other
than (i) the Properties, and (ii) such incidental Personal Property as may be
necessary for the operation of the Individual Property or Properties, as the
case may be and with respect to Principal, acquire or own any material asset
other than its interest in Borrower;
(c) merge into or consolidate with any person or entity or dissolve,
terminate or liquidate in whole or in part, transfer or otherwise dispose of all
or substantially all of its assets or change its legal structure;
(d) (i) fail to observe its organizational formalities or preserve its
existence as an entity duly organized, validly existing and in good standing (if
applicable) under the laws of the jurisdiction of its organization or formation,
and qualification to do business in the State where a Property or Properties is
located, if applicable, or (ii) without the prior written consent of Lender,
amend, modify, terminate or fail to comply with the provisions of Borrower's
Partnership Agreement, Articles of Organization or similar organizational
documents, as the case may be, or of Principal's Certificate of Incorporation,
Articles of Organization or similar organizational documents, as the case may
be, whichever is applicable;
(e) own any subsidiary or make any investment in, any Person without the
prior written consent of Lender;
(f) commingle its assets with the assets of any of its members, general
partners, Affiliates, principals or of any other Person or entity, participate
in a cash management system
60
(other than pursuant to the Management Agreement) with any other entity or
Person or fail to use its own separate stationery, invoices and checks;
(g) with respect to Borrower, incur any debt, secured or unsecured, direct
or contingent (including guaranteeing any obligation), other than (I) Permitted
Encumbrances, (II) the Permitted FF&E Financing and (III) the Debt, except for
trade payables in the ordinary course of its business of owning and operating
the Individual Property or Properties as applicable, provided that such trade
debt (i) is not evidenced by a note, (ii) is paid within sixty (60) days of the
date incurred, (iii) does not exceed, in the aggregate, four percent (4%) of the
outstanding principal balance of the Note and (iv) is payable to trade creditors
and in amounts as are normal and reasonable under the circumstances and with
respect to Principal, incur any debt secured or unsecured, direct or contingent
(including guaranteeing any obligations);
(h) become insolvent and fail to pay its debts and liabilities (including,
as applicable, shared personnel and overhead expenses) from its assets as the
same shall become due;
(i) (i) fail to maintain its records (including financial statements),
books of account and bank accounts separate and apart from those of the members,
general partners, principals and Affiliates of Borrower or of Principal, as the
case may be, the Affiliates of a member, general partner or principal of
Borrower or of Principal, as the case may be, and any other Person, (ii) permit
its assets or liabilities to be listed as assets or liabilities on the financial
statement of any other Person or (iii) include the assets or liabilities of any
other Person on its financial statements; except for consolidated financial
statements which contain a note indicating that Borrower's and Principal's
separate assets and liabilities are neither available to pay the debts of the
consolidated entity nor constitute obligations of the consolidated entity
(j) Other than in connection with the Operating Leases, enter into any
contract or agreement with any member, general partner, principal or Affiliate
of Borrower or of Principal, as the case may be, or any member, general partner,
principal or Affiliate thereof (other than a business management services
agreement with an Affiliate of Borrower, provided that (i) such agreement is
acceptable to Lender, (ii) the manager, or equivalent thereof, under such
agreement holds itself out as an agent of Borrower and (iii) the agreement meets
the standards set forth in this subsection (j) following this parenthetical),
except upon terms and conditions that are commercially reasonable, intrinsically
fair and substantially similar to those that would be available on an
arms-length basis with third parties other than any member, general partner,
principal or Affiliate of Borrower or of Principal, as the case may be, or any
member, general partner, principal or Affiliate thereof;
(k) seek the dissolution or winding up in whole, or in part, of Borrower
or of Principal, as the case may be;
(l) fail to correct any known misunderstandings regarding the separate
identity of Borrower, or of Principal, as the case may be, or any member,
general partner, principal or Affiliate thereof or any other Person;
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(m) other than Borrower's guaranty of Operating Lessee's obligation under
the Management Agreement, guarantee or become obligated for the debts of any
other Person or hold itself out to be responsible for the debts of another
Person;
(n) make any loans or advances to any third party, including any member,
general partner, principal or Affiliate of Borrower or of Principal, as the case
may be, or any member, general partner, principal or Affiliate thereof, and
shall not acquire obligations or securities of any member, general partner,
principal or Affiliate of Borrower or Principal, as the case may be, or any
member, general partner, or Affiliate thereof;
(o) fail to file its own tax returns or be included on the tax returns of
any other Person except as required by Applicable Law;
(p) fail either to hold itself out to the public as a legal entity
separate and distinct from any other Person or to conduct its business solely in
its own name or a name franchised or licensed to it by an entity other than an
Affiliate of Borrower or of Principal, as the case may be, and not as a division
or part of any other entity in order not (i) to mislead others as to the
identity with which such other party is transacting business, or (ii) to suggest
that Borrower or Principal, as the case may be, is responsible for the debts of
any third party (including any member, general partner, principal or Affiliate
of Borrower, or of Principal, as the case may be, or any member, general
partner, principal or Affiliate thereof);
(q) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;
(r) share any common logo (other than a name franchised or licensed to it
by an entity other than an Affiliate of Borrower or of Principal) with or hold
itself out as or be considered as a department or division of (i) any general
partner, principal, member or Affiliate of Borrower or of Principal, as the case
may be, (ii) any Affiliate of a general partner, principal or member of Borrower
or of Principal, as the case may be, or (iii) any other Person;
(s) fail to allocate fairly and reasonably any overhead expenses that are
shared with an Affiliate, including paying for office space and services
performed by any employee of an Affiliate;
(t) pledge its assets for the benefit of any other Person, and (i) with
respect to Borrower, other than with respect to the Loan and (ii) with respect
to Principal, other than with respect to the Mezzanine Loan;
(u) fail to maintain a sufficient number of employees in light of its
contemplated business operations;
(v) fail to provide in its (i) Articles of Organization, Certificate of
Formation and/or Operating Agreement, as applicable, if it is a limited
liability company, (ii) Limited Partnership Agreement, if it is a limited
partnership or (iii) Certificate of Incorporation, if it is a corporation, that
for so long as the Loan is outstanding pursuant to the Note, this Agreement and
the other Loan Documents, it shall not file or consent to the filing of any
petition, either
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voluntary or involuntary, to take advantage of any applicable insolvency,
bankruptcy, liquidation or reorganization statute, or make an assignment for the
benefit of creditors without the affirmative vote of the Independent Director
and of all other general partners/managing members/directors;
(w) fail to hold its assets in its own name;
(x) if Borrower or Principal is a corporation, fail to consider the
interests of its creditors in connection with all corporate actions to the
extent required by Applicable Law;
(y) have any of its obligations guaranteed by an Affiliate;
(z) violate or cause to be violated the assumptions made with respect to
Borrower and Principal in the Insolvency Opinion;
(aa) with respect to Principal, or if Borrower is a single member limited
liability company that complies with the requirements of Section 4.1.35(cc)
below, fail at any time to have at least one independent director/manager (an
"Independent Director") that is not and has not been for at least five (5)
years: (a) a stockholder, director (other than an independent director of an
Affiliate of Borrower), officer, employee, partner, member, attorney or counsel
of Borrower or of Principal or any Affiliate of either of them; (b) a customer,
supplier or other Person who derives its purchases or revenues (other than any
fee paid to such director as compensation for such director to serve as an
Independent Director) from its activities with Borrower, Principal or any
Affiliate of either of them (a "Business Party"); (c) a person or other entity
controlling or under common control with any such stockholder, partner, member,
director, officer, attorney, counsel or Business Party; or (d) a member of the
immediate family of any such stockholder, director, officer, employee, partner,
member, attorney, counsel or Business Party; or
(bb) with respect to Principal, or if Borrower is a single member limited
liability company that complies with the requirements of Section 4.1.35(cc)
below, permit its board of directors/managers to take any action which, under
the terms of any applicable organizational documents, requires the unanimous
vote of one hundred percent (100%) of the members of the board without the vote
of the Independent Director.
(cc) In the event Borrower is a Delaware limited liability company that
does not have a managing member which complies with the requirements for a
Principal under this Section 4.1.35, the limited liability company agreement of
Borrower (the "LLC Agreement") shall provide that (A) upon the occurrence of any
event that causes the last remaining member of Borrower ("Member") to cease to
be the member of Borrower (other than (1) upon an assignment by Member of all of
its limited liability company interest in Borrower and the admission of the
transferee in accordance with the Loan Documents and the LLC Agreement, or (2)
the resignation of Member and the admission of an additional member of Borrower
in accordance with the terms of the Loan Documents and the LLC Agreement), any
person designated by Borrower shall, without any action of any other Person and
simultaneously with the Member ceasing to be the member of Borrower,
automatically be admitted to Borrower ("Special Member") and shall continue
Borrower without dissolution and (B) Special Member
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may not resign from Borrower or transfer its rights as Special Member unless a
successor Special Member has been admitted to Borrower as Special Member in
accordance with requirements of Delaware law. The LLC Agreement shall further
provide that (v) Special Member shall automatically cease to be a member of
Borrower upon the admission to Borrower of a substitute Member, (w) Special
Member shall be a member of Borrower that has no interest in the profits, losses
and capital of Borrower and has no right to receive any distributions of
Borrower assets, (x) pursuant to Section 18-301 of the Delaware Limited
Liability Company Act (the "Act"), Special Member shall not be required to make
any capital contributions to Borrower and shall not receive a limited liability
company interest in Borrower, (y) Special Member, in its capacity as Special
Member, may not bind Borrower and (z) except as required by any mandatory
provision of the Act, Special Member, in its capacity as Special Member, shall
have no right to vote on, approve or otherwise consent to any action by, or
matter relating to, Borrower, including, without limitation, the merger,
consolidation or conversion of Borrower. In order to implement the admission to
Borrower of Special Member, Special Member shall execute a counterpart to the
LLC Agreement. Prior to its admission to Borrower as Special Member, Special
Member shall not be a member of Borrower.
Upon the occurrence of any event that causes the Member to cease to be a
member of Borrower, to the fullest extent permitted by law, the personal
representative of Member shall, within ninety (90) days after the occurrence of
the event that terminated the continued membership of Member in Borrower, agree
in writing (A) to continue Borrower and (B) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute
member of Borrower, effective as of the occurrence of the event that terminated
the continued membership of Member of Borrower in Borrower. Any action initiated
by or brought against Member or Special Member under any Creditors Rights Laws
shall not cause Member or Special Member to cease to be a member of Borrower and
upon the occurrence of such an event, the business of Borrower shall continue
without dissolution. The LLC Agreement shall provide that each of Member and
Special Member waives any right it might have to agree in writing to dissolve
Borrower upon the occurrence of any action initiated by or brought against
Member or Special Member under any Creditors Rights Laws, or the occurrence of
an event that causes Member or Special Member to cease to be a member of
Borrower.
4.1.36 Business Purposes.
The Loan is solely for the business purpose of Borrower, and is not for
personal, family, household, or agricultural purposes.
4.1.37 Taxes.
Borrower and Operating Lessee have each filed all federal, State, county,
municipal, and city income and other tax returns required to have been filed by
it and has paid, prior to delinquency thereof, all taxes and related liabilities
which have become due pursuant to such returns or pursuant to any assessments
received by it. Borrower and Operating Lessee know of no basis for any
additional assessment in respect of any such taxes and related liabilities for
prior years.
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4.1.38 Intentionally Omitted.
4.1.39 Environmental Representations and Warranties.
Borrower represents and warrants, except as disclosed on those certain
written reports identified on Schedule XI attached hereto and made a part hereof
(collectively, the "Environmental Report") of each Individual Property that: (a)
there are no Hazardous Materials or underground storage tanks in, on, or under
any of the Properties, except those that are both (i) in compliance with current
Environmental Laws and with permits issued pursuant thereto (if such permits are
required), and (ii) either (A) in amounts not in excess of that necessary to
operate, clean, repair and maintain the applicable Individual Property or each
tenant's respective business at such Individual Property as set forth in their
respective Leases, or (B) held by a tenant for sale to the public in its
ordinary course of business, (b) there are no past, present or threatened
Releases of Hazardous Materials in violation of any Environmental Law and which
would require remediation by a Governmental Authority in, on, under or from any
of the Properties; (c) there is no threat of any Release of Hazardous Materials
migrating to any of the Properties; (d) there is no present or, to Borrower's
knowledge, prior non-compliance with Environmental Laws, or with permits issued
pursuant thereto, in connection with any of the Properties except as described
in the Environmental Reports; (e) Borrower and Operating Lessee do not know of,
and has not received, any written or oral notice or other communication from any
Person (including but not limited to a Governmental Authority) relating to
Hazardous Materials in, on, under or from any of the Properties; and (f)
Borrower and Operating Lessee have truthfully and fully provided to Lender, in
writing, any and all information relating to environmental conditions in, on,
under or from any of the Properties known to Borrower or Operating Lessee or
contained in Borrower's or Operating Lessee's files and records, including but
not limited to any reports relating to Hazardous Materials in, on, under or
migrating to or from any of the Properties and/or to the environmental condition
of the Properties.
4.1.40 Taxpayer Identification Number.
Borrower's United States taxpayer identification number is ▇▇-▇▇▇▇▇▇▇.
4.1.41 OFAC.
Borrower represents and warrants that neither Borrower, Operating Lessee
Guarantor, Indemnitor or any of their respective Affiliates is a Prohibited
Person, and Borrower, Operating Lessee Guarantor, Indemnitor and their
respective Affiliates are in compliance in all material respects with all
applicable orders, rules, regulations and recommendations of The Office of
Foreign Assets Control of the U.S. Department of the Treasury.
4.1.42 Ground Lease Representations.
(a) (i) Each Ground Lease is in full force and effect and has not been
modified or amended in any manner whatsoever, (ii) there are no defaults under
any Ground Lease by Borrower or the landlord thereunder, and no event has
occurred which but for the passage of time, or notice, or both would constitute
a default under such Ground Lease, (iii) all rents, additional rents and other
sums due and payable under each Ground Lease have been paid in
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full, and (iv) neither Borrower nor Ground Lessor under each Ground Lease has
commenced any action or given or received any notice for the purpose of
terminating such Ground Lease;
(b) Each Security Instrument which is secured by Borrower's interest in a
Ground Lease is also secured by the related fee interest in the applicable
Property, and the fee interest is subject and subordinate of record to the
applicable Security Instrument, and such Security Instrument does not by its
terms provide that it will be subordinated to the Lien of any other mortgage or
other Lien upon such fee interest, and upon the occurrence of an Event of
Default, Lender has the right to foreclose or otherwise exercise its rights with
respect to the fee interest within a commercially reasonable time;
(c) The Ground Leases or a memorandum thereof have been duly recorded, the
Ground Leases permit the interest of the lessee thereunder to be encumbered by
the applicable Security Instrument, and there has not been any change in the
terms of the Ground Leases since their recordation. The Ground Leases cannot be
cancelled, terminated, surrendered or amended without the prior written consent
of Lender;
(d) Borrower's interest in the Ground Leases are not subject to any Liens
superior to, or of equal priority with, the applicable Security Instrument;
(e) Borrower's interest in the Ground Leases are assignable upon notice
to, but without the consent of, the lessor thereunder and, in the event that it
is so assigned, it is further assignable upon notice to, but without the need to
obtain the consent of, such lessor;
(f) The Ground Leases require the lessor thereunder to give notice of any
default by Borrower to Lender and the Ground Leases further provide that notice
of termination given under the Ground Leases are not effective against Lender
unless a copy of the notice has been delivered to Lender in the manner described
in the applicable Ground Lease;
(g) Lender is permitted a reasonable opportunity (including, where
necessary, sufficient time to gain possession of the interest of Borrower under
the Ground Leases) to cure any default under the Ground Leases, which is curable
after the receipt of notice of any default before the lessor thereunder may
terminate such Ground Lease;
(h) The Ground Leases have a term which extends not less than twenty (20)
years beyond the Maturity Date;
(i) The Ground Leases require the lessor to enter into a new lease upon
termination of the applicable Ground Lease for any reason, including rejection
of such Ground Lease in a bankruptcy proceeding;
(j) Under the terms of each Ground Lease and the applicable Loan
Documents, taken together, any Net Proceeds will be applied either to the
Restoration of all or part of the Properties, with Lender or a trustee appointed
by Lender having the right to hold and disburse such Net Proceeds as the
Restoration progresses, or to the payment of the outstanding principal balance
of the Loan together with any accrued interest thereon; and
(k) The Ground Leases do not impose restrictions on subletting.
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4.1.43 Deposit Accounts.
(a) This Agreement and the Property Account Agreements create valid and
continuing security interests (as defined in the UCC) in the Property Accounts,
the Lockbox Account and the Concentration Account in favor of Lender, which
security interests are prior to all other Liens and are enforceable as such
against creditors of and purchasers from Borrower;
(b) The Property Accounts, the Lockbox Account and the Concentration
Account each constitute "deposit accounts" within the meaning of the applicable
UCC;
(c) Borrower owns and has good and marketable title to the Property
Accounts, the Lockbox Account and the Concentration Account free and clear of
any Lien or claim of any Person (other than Lender);
(d) Borrower has delivered to Lender fully executed agreements pursuant to
which the banks maintaining the Property Accounts, the Lockbox Account and the
Concentration Account have agreed to comply with all instructions originated by
Lender directing disposition of the funds in such accounts without further
consent by Borrower;
(e) Other than the security interest granted to Lender pursuant to this
Agreement and the Property Account Agreements, Borrower has not pledged,
assigned, or sold, granted a security interest in, or otherwise conveyed any of
the Property Accounts, the Lockbox Account; or the Concentration Account and
(f) The Property Accounts, the Lockbox Account and the Concentration
Account are not in the name of any Person other than Borrower or Lender.
Borrower has not consented to the banks maintaining, the Lockbox Account, the
Property Accounts or the Concentration Account, to comply with instructions of
any Person other than Lender.
SECTION 4.2 Survival of Representations.
Borrower agrees that all of the representations and warranties of Borrower
set forth in Section 4.1 and elsewhere in this Agreement and in the other Loan
Documents shall survive for so long as any amount remains owing to Lender under
this Agreement or any of the other Loan Documents by Borrower. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents by Borrower shall be deemed to have been relied upon
by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.
V. BORROWER COVENANTS
SECTION 5.1 Affirmative Covenants.
From the date hereof and until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Security Instruments encumbering the Properties (and all related
obligations) in accordance with the terms
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of this Agreement and the other Loan Documents, Borrower hereby covenants and
agrees with Lender that:
5.1.1 Existence; Compliance with Legal Requirements.
(a) Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises, and comply, in all material respects, with all
Legal Requirements applicable to it and the Properties. There shall never be
committed by Borrower or any other Person in occupancy of or involved with the
operation or use of the Properties any act or omission affording the federal
government or any State or local government the right of forfeiture against any
Individual Property or any part thereof or any monies paid in performance of
Borrower's obligations under any of the Loan Documents. Borrower hereby
covenants and agrees not to commit, permit or suffer to exist any act or
omission affording such right of forfeiture. Borrower shall, or shall cause
Operating Lessee to, at all times maintain, preserve and protect all franchises
and trade names and preserve all the remainder of its property used or useful in
the conduct of its business and shall keep the Properties in good working order
and repair, and from time to time make, or cause to be made, all reasonably
necessary repairs, renewals, replacements, betterments and improvements thereto,
all as more fully provided in the Security Instruments. Borrower shall keep the
Properties insured at all times by financially sound and reputable insurers, to
such extent and against such risks, and maintain liability and such other
insurance, as is more fully provided in this Agreement. Borrower shall or shall
cause Operating Lessee to operate any Individual Property that is the subject of
any O&M Program in accordance with the terms and provisions thereof in all
material respects.
(b) After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceeding promptly initiated and conducted in
good faith and with due diligence, the validity of any Legal Requirement, the
applicability of any Legal Requirement to Borrower or any Individual Property or
any alleged violation of any Legal Requirement, provided that (i) no Event of
Default has occurred and remains uncured; (ii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any
instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
Applicable Laws; (iii) no Individual Property nor any part thereof or interest
therein will be in danger of being sold, forfeited, terminated, cancelled or
lost; (iv) Borrower shall promptly upon final determination thereof comply with
any such Legal Requirement determined to be valid or applicable or cure any
violation of any Legal Requirement; (v) such proceeding shall suspend the
enforcement of the contested Legal Requirement against Borrower or any
Individual Property; and (vi) Borrower shall furnish such security as may be
required in the proceeding, or as may be reasonably requested by Lender, to
insure compliance with such Legal Requirement, together with all interest and
penalties payable in connection therewith. Lender may apply any such security or
part thereof, as necessary to cause compliance with such Legal Requirement at
any time when, in the judgment of Lender, the validity, applicability or
violation of such Legal Requirement is finally established or any Individual
Property (or any part thereof or interest therein) shall be in danger of being
sold, forfeited, terminated, cancelled or lost.
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5.1.2 Taxes and Other Charges.
Borrower shall pay all Taxes and Other Charges now or hereafter levied or
assessed or imposed against the Properties or any part thereof prior to
delinquency thereof. Borrower shall furnish to Lender receipts, or other
evidence for the payment of the Taxes and the Other Charges prior to the date
the same shall become delinquent (provided, however, that Borrower is not
required to furnish such receipts for payment of Taxes in the event that such
Taxes are being paid by Lender pursuant to Section 7.2 hereof). Borrower shall
not suffer and shall promptly cause to be paid and discharged any Lien or charge
whatsoever which may be or become a Lien or charge against the Properties, and
shall promptly pay for all utility services provided to the Properties. After
prior written notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith and
with due diligence, the amount or validity or application in whole or in part of
any Taxes or Other Charges, provided that (i) no Event of Default has occurred
and remains uncured; (ii) such proceeding shall be permitted under and be
conducted in accordance with the provisions of any other instrument to which
Borrower is subject and shall not constitute a default thereunder and such
proceeding shall be conducted in accordance with all Applicable Laws; (iii) no
Individual Property nor any part thereof or interest therein will be in danger
of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall
promptly upon final determination thereof pay the amount of any such Taxes or
Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith; (v) such proceeding shall suspend the
collection of such contested Taxes or Other Charges from the applicable
Individual Property; and (vi) Borrower shall furnish such security as may be
required in the proceeding, or as may be requested by Lender, to insure the
payment of any such Taxes or Other Charges, together with all interest and
penalties thereon. Lender may apply such security or part thereof held by Lender
at any time when, in the judgment of Lender, the validity or applicability of
such Taxes or Other Charges are established or any Individual Property (or part
thereof or interest therein) shall be in danger of being sold, forfeited,
terminated, cancelled or lost or there shall be any danger of the Lien of any
Security Instrument being primed by any related Lien.
5.1.3 Litigation.
Borrower shall give prompt written notice to Lender of any litigation or
governmental proceedings pending or threatened against Borrower which might
materially adversely affect Borrower's condition (financial or otherwise) or
business or any Individual Property.
5.1.4 Access to Properties.
Borrower shall permit agents, representatives and employees of Lender to
inspect the Properties or any part thereof at reasonable hours upon reasonable
advance notice.
5.1.5 Notice of Default.
Borrower shall promptly advise Lender of any material adverse change in
Borrower's condition, financial or otherwise, or of the occurrence of any
Default or Event of Default of which Borrower has knowledge.
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5.1.6 Cooperate in Legal Proceedings.
Borrower shall cooperate fully with Lender with respect to any proceedings
before any court, board or other Governmental Authority which may in any way
adversely affect the rights of Lender hereunder or any rights obtained by Lender
under any of the other Loan Documents and, in connection therewith, permit
Lender, at its election, to participate in any such proceedings.
5.1.7 Award and Insurance Benefits.
Borrower shall cooperate with Lender in obtaining for Lender the benefits
of any Awards or Insurance Proceeds lawfully or equitably payable in connection
with any Individual Property, and Lender shall be reimbursed for any expenses
incurred in connection therewith (including attorneys' fees and disbursements,
and the payment by Borrower of the expense of an appraisal on behalf of Lender
in case of Casualty or Condemnation affecting any Individual Property or any
part thereof) out of such Award or Insurance Proceeds.
5.1.8 Further Assurances.
Borrower shall, at Borrower's sole cost and expense:
(a) furnish to Lender all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document, certificate, agreement and instrument required to be furnished
by Borrower pursuant to the terms of the Loan Documents or reasonably requested
by Lender in connection therewith;
(b) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require including, without limitation, the
authorization of Lender to execute and/or the execution by Borrower of UCC
financing statements and the execution and delivery of all such writings
necessary to transfer any liquor licenses into the name of Lender or its
designee after the occurrence of any Event of Default; and
(c) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
shall reasonably require from time to time.
5.1.9 Mortgage and Intangible Taxes.
Borrower shall pay (to the extent permitted by Applicable Law) all State,
county and municipal recording, mortgage, intangible, and all other taxes
imposed upon the execution and recordation of the Security Instruments and/or
upon the execution and delivery of the Note.
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5.1.10 Financial Reporting.
(a) Borrower and Operating Lessee will keep and maintain or will cause to
be kept and maintained on a Fiscal Year basis, in accordance with GAAP (or such
other accounting basis acceptable to Lender), proper and accurate books, records
and accounts reflecting all of the financial affairs of Borrower and Operating
Lessee and all items of income and expense in connection with the operation on
an individual basis of the Properties. Lender shall have the right from time to
time at all times during normal business hours upon reasonable notice to examine
such books, records and accounts at the office of Borrower, Operating Lessee or
any other Person maintaining such books, records and accounts and to make such
copies or extracts thereof as Lender shall desire. Upon the occurrence and
during the continuance of an Event of Default, Borrower shall pay any costs and
expenses incurred by Lender to examine Borrower's accounting records with
respect to the Properties, as Lender shall determine to be necessary or
appropriate. All operating and profits and loss statements required pursuant to
this Section 5.1.10 shall be prepared for each Individual Property and for the
Properties taken as a whole. All other statements required pursuant to this
Section 5.1.10 shall be prepared for the Properties taken as a whole.
(b) Borrower will furnish to Lender annually, within ninety (90) days
following the end of each Fiscal Year, a complete copy of (i) Operating Lessee's
annual financial statements audited by a "Big Four" accounting firm or other
independent certified public accountant acceptable to Lender accompanied by a
consolidating schedule reflecting the results of operation of each Property
individually, (ii) Borrower's annual financial statements certified by a
Responsible Officer of Borrower, both in accordance with GAAP (or such other
accounting basis acceptable to Lender) covering the Properties for such Fiscal
Year and containing statements of profit and loss and a balance sheet and (iii)
an operating statement certified by a Responsible Officer of Borrower for each
Individual Property and the Properties taken as a whole which present the
operating results of the Properties in a manner consistent with those operating
statements given by Borrower to Lender in connection with Lender's underwriting
of the Loan, which operating statement shall be in substantially the form
attached hereto as Schedule XV. Such statements referred to in subsection (iii)
above shall set forth the financial condition and the results of operations of
the Properties for such Fiscal Year, and shall include, but not be limited to,
amounts representing annual Net Cash Flow, Net Operating Income, Gross Income
from Operations and Operating Expenses. Borrower's and Operating Lessee's annual
financial statements shall be accompanied by (i) a comparison of the budgeted
income and expenses and the actual income and expenses for the prior Fiscal
Year, (ii) a certificate executed by a Responsible Officer or other appropriate
officer of Borrower, an Operating Lessee SPE Entity or Principal, as applicable,
stating that each such annual financial statement presents fairly the financial
condition and the results of operations of Borrower, Operating Lessee and the
Properties being reported upon and has been prepared in accordance with GAAP,
(iii) with respect to Operating Lessee's financial statements only, an
unqualified opinion of a "Big Four" accounting firm or other independent
certified public accountant reasonably acceptable to Lender and (iv) an annual
occupancy report for such year, including the average daily room rate for such
year. Notwithstanding the foregoing, for calendar year 2003 only, the statements
required pursuant to Section 5.1.10(b)(i) and (ii) hereof shall assume
Borrower's operations commenced on May 1, 2003.
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(c) Borrower will furnish, or cause to be furnished, to Lender on or
before forty-five (45) days after the end of each calendar quarter (or within
thirty (30) days after the end of each calendar month in the case of (ii) below)
the following items, accompanied by a certificate of a Responsible Officer or
other appropriate officer of Borrower or Principal, as applicable, stating that
such items are true, correct, accurate, and complete and fairly present the
results of the operations of Borrower and the Properties: (i) a report of
occupancy for the subject quarter including an average daily rate, and any and
all franchise inspection reports received by Borrower during the subject quarter
accompanied by an Officer's Certificate with respect thereto; (ii) monthly and
year-to-date operating statements (including Capital Expenditures) presented for
each Individual Property and the Properties taken as a whole in a form
consistent with the operating statements delivered by Borrower to Lender in
connection with Lender's underwriting of the Loan) which operating statement
shall be in substantially the form attached hereto as Schedule XV) and prepared
for each calendar monthly, noting Net Operating Income, Gross Income from
Operations, and Operating Expenses (not including any contributions to the
Replacement Reserve Fund), and other information necessary and sufficient to
fairly present the results of operation of the Properties during such calendar
month, and containing a comparison of budgeted income and expenses and the
actual income and expenses, (iii) a detailed explanation of any variances which
are both (I) ten percent (10%) or more and (II) in excess of $20,000 between
budgeted and actual amounts for such periods, all in form satisfactory to
Lender; (iv) a calculation reflecting the annual Debt Service Coverage Ratio for
the immediately preceding twelve (12) month period as of the last day of such
quarter accompanied by an Officer's Certificate with respect thereto and (v) a
▇▇▇▇▇ Travel Research STAR Report or similar market benchmarking service.
(d) Beginning in Fiscal Year 2004 and for each Fiscal Year thereafter, (I)
Borrower shall submit to Lender a preliminary Annual Budget for each Individual
Property not later than thirty (30) days prior to the commencement of such
Fiscal Year and (II) Borrower shall submit to Lender a final proposed Annual
Budget for each Individual Property not later than sixty (60) days after to the
commencement of such Fiscal Year, each in form reasonably satisfactory to
Lender, and shall be subject to Lender's written approval (each such Annual
Budget after it has been approved in writing by Lender shall be hereinafter
referred to as an "Approved Annual Budget"). In the event that Lender objects to
either the preliminary or final proposed Annual Budget submitted by Borrower,
Lender shall advise Borrower of such objections within fifteen (15) days after
receipt respectively thereof (and deliver to Borrower a reasonably detailed
description of such objections) and Borrower shall promptly revise such Annual
Budget and resubmit the same to Lender. Lender shall advise Borrower of any
objections to such revised Annual Budget within ten (10) days after receipt
thereof (and deliver to Borrower a reasonably detailed description of such
objections) and Borrower shall promptly revise the same in accordance with the
process described in this subsection until Lender approves the Annual Budget.
Until such time that Lender approves a proposed Annual Budget, the most recently
Approved Annual Budget shall apply; provided that, such Approved Annual Budget
shall be adjusted to reflect actual increases in Taxes, Insurance Premiums and
utilities expenses. Any such preliminary or final proposed Annual Budget
submitted to Lender for Lender's approval shall be deemed approved if Lender
shall have failed to notify Borrower of its approval or disapproval within
fifteen (15) Business Days following Lender's receipt of Borrower's written
request together with such preliminary or final proposed Annual Budget, as the
case may be, and any and all required information and documentation required
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by Lender to reach a decision, provided, such request to Lender is marked in
bold lettering with the following language: "LENDER'S RESPONSE IS REQUIRED
WITHIN FIFTEEN (15) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE
TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER" and the envelope
containing the request must be marked "PRIORITY".
(e) Borrower shall furnish to Lender, within ten (10) Business Days after
written request such further detailed information with respect to the operation
of the Properties and the financial affairs of Borrower as may be reasonably
requested by Lender.
(f) Any reports, statements or other information required to be delivered
under this Agreement shall be delivered (i) in paper form, (ii) if requested by
Lender, on a diskette or via email, and (iii) if requested by Lender and within
the capabilities of Borrower's data systems without change or modification
thereto, in electronic form and prepared using a Microsoft Excel, Microsoft Word
for Windows or WordPerfect for Windows files (which files may be prepared using
a spreadsheet program and saved as word processing files).
(g) Borrower agrees that Lender may forward to each purchaser, transferee,
assignee, servicer, participant, or investor in all or any portion of the Loan
or any Securities (collectively, the "Investor") or any Rating Agency rating
such participations and/or Securities and each prospective Investor, and any
organization maintaining databases on the underwriting and performance of
commercial mortgage loans, all documents and information which Lender now has or
may hereafter acquire relating to the Debt and to Borrower, any Guarantor, any
Indemnitor and the Properties, whether furnished by Borrower, any Guarantor, any
Indemnitor or otherwise, as Lender determines necessary or desirable. To the
fullest extent permitted by Applicable Laws, Borrower irrevocably waives any and
all rights it may have under any Applicable Laws to prohibit such disclosure,
including, but not limited, to any right of privacy.
(h) If requested by Lender in order to comply with Regulation S-X of the
Securities Act, Borrower shall provide Lender, promptly upon request or within
the time periods set forth in this subsection (h), with the following financial
statements if, at the time a Disclosure Document is being prepared for a
Securitization, it is expected that the principal amount of the Loan together
with any Affiliated Loans at the time of Securitization may, or if the principal
amount of the Loan together with any Affiliated Loans at any time during which
the Loan and any Affiliated Loans are included in a Securitization does, equal
or exceed 20% of the aggregate principal amount of all mortgage loans included
or expected to be included, as applicable, in the Securitization:
(i) A balance sheet with respect to the Properties for the two most
recent fiscal years, meeting the requirements of Section 210.3 01 of
Regulation S-X of the Securities Act and statements of income and
statements of cash flows with respect to the Properties for the three most
recent fiscal years, meeting the requirements of Section 210.3 02 of
Regulation S-X, and, to the extent that such balance sheet is more than
135 days old as of the date of the document in which such financial
statements are included, interim financial statements of the Properties
meeting the requirements of Section 210.3 01 and 210.3 02 of Regulation
S-X (all of such financial statements, collectively, the
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"Standard Statements"); provided, however, that with respect to a Property
(other than properties that are hotels, nursing homes, or other properties
that would be deemed to constitute a business and not real estate under
Regulation S-X or other legal requirements) that has been acquired by
Borrower from an unaffiliated third party (such Property, "Acquired
Property"), as to which the other conditions set forth in Section 210.3 14
of Regulation S-X for provision of financial statements in accordance with
such Section have been met, in lieu of the Standard Statements otherwise
required by this section, Borrower shall instead provide the financial
statements required by such Section 210.3 14 of Regulation S-X ("Acquired
Property Statements").
(ii) Not later than 30 days after the end of each fiscal quarter
following the date hereof, a balance sheet of the Properties as of the end
of such fiscal quarter, meeting the requirements of Section 210.3 01 of
Regulation S-X, and statements of income and statements of cash flows of
the Properties for the period commencing following the last day of the
most recent fiscal year and ending on the date of such balance sheet and
for the corresponding period of the most recent fiscal year, meeting the
requirements of Section 210.3 02 of Regulation S-X (provided, that if for
such corresponding period of the most recent fiscal year Acquired Property
Statements were permitted to be provided hereunder pursuant to subsection
(i) above, Borrower shall instead provide Acquired Property Statements for
such corresponding period).
(iii) Not later than 75 days after the end of each fiscal year
following the date hereof, a balance sheet of the Properties as of the end
of such fiscal year, meeting the requirements of Section 210.3 01 of
Regulation S-X, and statements of income and statements of cash flows of
the Properties for such fiscal year, meeting the requirements of Section
210.3 02 of Regulation S-X.
(iv) Within twenty (20) Business Days after notice from the Lender
in connection with the Securitization of this Loan, such additional
financial statements, such that, as of the date (each an "Offering
Document Date") of each Disclosure Document, Borrower shall have provided
Lender with all financial statements as described in subsection (h)(i)
above; provided that the fiscal year and interim periods for which such
financial statements shall be provided shall be determined as of such
Offering Document Date.
(i) If requested by Lender, Borrower shall provide Lender, promptly upon
request (but in no event later than the time periods set forth in Section
5.1.10(h) hereof), with summaries of the financial statements referred to in
Section 5.1.10(h) hereof if, at the time a Disclosure Document is being prepared
for a Securitization, it is expected that the principal amount of the Loan and
any Affiliated Loans at the time of Securitization may, or if the principal
amount of the Loan and any Affiliated Loans at any time during which the Loan
and any Affiliated Loans are included in a Securitization does, equal or exceed
10% (but is less than 20%) of the aggregate principal amount of all mortgage
loans included or expected to be included, as applicable, in a Securitization.
Such summaries shall meet the requirements for "summarized financial
information," as defined in Section 210.1 02(bb) of Regulation S-X, or such
other requirements as may be determined to be necessary or appropriate by
Lender.
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(j) All financial statements provided by Borrower hereunder pursuant to
Section 5.1.10(h) and (i) hereof shall be prepared in accordance with GAAP, and
shall meet the requirements of Regulation S-X and other applicable legal
requirements. All financial statements referred to in Subsections 5.1.10(h)(i)
and 5.1.10(h)(iii) above shall be audited by independent accountants of Borrower
acceptable to Lender in accordance with Regulation S-X and all other applicable
legal requirements, shall be accompanied by the manually executed report of the
independent accountants thereon, which report shall meet the requirements of
Regulation S-X and all other applicable legal requirements, and shall be further
accompanied by a manually executed written consent of the independent
accountants, in form and substance reasonably acceptable to Lender, to the
inclusion of such financial statements in any Disclosure Document and any
Exchange Act Filing and to the use of the name of such independent accountants
and the reference to such independent accountants as "experts" in any Disclosure
Document and Exchange Act Filing, all of which shall be provided at the same
time as the related financial statements are required to be provided. All
financial statements (audited or unaudited) provided by Borrower under this
Section 5.1.10 shall be certified by a Responsible Officer of Borrower, which
certification shall state that such financial statements meet the requirements
set forth in the first sentence of this Section 5.1.10(j).
(k) If requested by Lender, Borrower shall provide Lender, promptly upon
request, with any other or additional financial statements, or financial,
statistical or operating information, as Lender shall reasonably determine to be
required pursuant to Regulation S-X or any amendment, modification or
replacement thereto or other legal requirements in connection with any
Disclosure Document or any Exchange Act filing in connection with or relating to
a Securitization or as shall otherwise be reasonably requested by the Lender.
(l) In the event Lender reasonably determines, in connection with a
Securitization, that the financial statements required in order to comply with
Regulation S-X or other legal requirements are other than as provided herein,
then notwithstanding the provisions of Section 5.1.10(h), (i) and (j) hereof,
Lender may request, and Borrower shall promptly provide, such combination of
Acquired Property Statement and/or Standard Statements or such other financial
statements as Lender determines to be necessary or appropriate for such
compliance.
(m) The term "Affiliated Loans" shall mean a loan made by Lender to a
parent, subsidiary or such other entity affiliated with Borrower, any Indemnitor
or any Guarantor.
(n) Borrower shall promptly deliver to Lender true, correct an complete
copies of any franchise inspection reports received by Borrower or Operating
Lessee from any Franchisor.
(o) Other than costs and expenses which are otherwise the responsible of
Borrower, Guarantor and/or Indemnitor pursuant to the terms of the Loan
Documents, Borrower shall not be obligated to incur any material cost or expense
in connection with the provisions of Section 5.1.10(h), (i), (j), (k), (l) or
(m) hereof (the "Regulation S-X Reporting Requirements"); provided, however,
Borrower shall be obligated to full comply with the Regulation S-X Reporting
Requirements in the event that Lender reimburses Borrower for any additional
cost or expense incurred by Borrower in connection with such compliance.
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5.1.11 Business and Operations.
Borrower and Operating Lessee will continue to engage in the businesses
presently conducted by them as and to the extent the same are necessary for the
ownership, maintenance, management and operation of the Properties. Borrower and
Operating Lessee will remain in good standing under the laws of each
jurisdiction to the extent required for the ownership, maintenance, management
and operation of the Properties.
5.1.12 Costs of Enforcement.
In the event (a) that any Security Instrument encumbering any Individual
Property is foreclosed in whole or in part or that any such Security Instrument
is put into the hands of an attorney for collection, suit, action or
foreclosure, (b) of the foreclosure of any mortgage prior to or subsequent to
any Security Instrument encumbering any Individual Property in which proceeding
Lender is made a party, or (c) of the bankruptcy, insolvency, rehabilitation or
other similar proceeding in respect of Borrower, Ground Lessor, Operating Lessee
or any of their constituent Persons or an assignment by Borrower, Ground Lessor,
Operating Lessee or any of their constituent Persons for the benefit of its
creditors, Borrower, Ground Lessor, Operating Lessee, their successors or
assigns, shall be chargeable with and agrees to pay all costs of collection and
defense, including attorneys' fees and costs, incurred by Lender, Borrower,
Ground Lessor or Operating Lessee in connection therewith and in connection with
any appellate proceeding or post-judgment action involved therein, together with
all required service or use taxes.
5.1.13 Estoppel Statement.
(a) After written request by Lender, Borrower shall within ten (10)
Business Days furnish Lender with a statement, duly acknowledged and certified,
setting forth (i) the amount of the original principal amount of the Note, (ii)
the unpaid principal amount of the Note, (iii) the Applicable Interest Rate of
the Note, (iv) the date installments of interest and/or principal were last
paid, (v) any offsets or defenses to the payment of the Debt, and (vi) that the
Note, this Agreement, the Security Instruments and the other Loan Documents are
valid, legal and binding obligations and have not been modified or if modified,
giving particulars of such modification.
(a) Borrower shall deliver to Lender upon request, tenant estoppel
certificates from each commercial tenant leasing space at the Properties in form
and substance reasonably satisfactory to Lender.
(b) Borrower shall use commercially reasonable efforts, promptly upon
request of Lender, deliver an estoppel certificate from Franchisor stating that
(i) the Franchise Agreement is in full force and effect and has not been
modified, amended or assigned, (ii) neither Franchisor nor Operating Lessee is
in default under any of the terms, covenants or provisions of the Franchise
Agreement and Franchisor knows of no event which, but for the passage of time or
the giving of notice or both, would constitute an event of default under the
Franchise Agreement, (iii) neither Franchisor nor Operating Lessee has commenced
any action or given or received any notice for the purpose of terminating the
Franchise Agreement and
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(iv) all sums due and payable to Franchisor under the Franchise Agreement
have been paid in full.
(c) Borrower shall, promptly upon request of Lender, deliver to Lender an
estoppel certificate from Operating Lessee stating that (i) the Operating Lease
is in full force and effect and has not been modified, amended or assigned, (ii)
neither Operating Lessee nor Borrower is in default under any of the terms,
covenants or provisions of the Operating Lease and Operating Lessee knows of no
event which, but for the passage of time or the giving of notice or both, would
constitute an event of default under the Operating Lease, (iii) neither
Operating Lessee nor Borrower has commenced any action or given or received any
notice for the purpose of terminating the Operating Lease and (iv) all sums due
and payable under the Operating Lease have been paid in full.
(d) Borrower shall, promptly upon request of Lender, deliver to Lender an
estoppel certificate from each Ground Lessor stating that (i) the applicable
Ground Lease is in full force and effect and has not been modified, amended or
assigned, (ii) neither Ground Lessor nor Borrower is in default under any of the
terms, covenants or provisions of the Ground Lease and Ground Lessor knows of no
event which, but for the passage of time or the giving of notice or both, would
constitute an event of default under the Ground Lease, (iii) neither Ground
Lessor nor Borrower has commenced any action or given or received any notice for
the purpose of terminating the Ground Lease and (iv) all sums due and payable
under the Ground Lease have been paid in full.
5.1.14 Loan Proceeds.
Borrower shall use the proceeds of the Loan received by it on the Closing
Date only for the purposes set forth in Section 2.1.4.
5.1.15 Performance by Borrower.
Borrower shall in a timely manner observe, perform and fulfill each and
every covenant, term and provision of each Loan Document executed and delivered
by, or applicable to, Borrower, and shall not enter into or otherwise suffer or
permit any amendment, waiver, supplement, termination or other modification of
any Loan Document executed and delivered by, or applicable to, Borrower without
the prior written consent of Lender.
5.1.16 Confirmation of Representations.
Borrower shall deliver, in connection with any Securitization, (a) one or
more Officer's Certificates certifying as to the accuracy of all representations
made by Borrower in the Loan Documents as of the date of the closing of such
Securitization in all relevant jurisdictions, and (b) certificates of the
relevant Governmental Authorities in all relevant jurisdictions indicating the
good standing and qualification of Borrower, Principal and the Operating Lessee
SPE Entities as of the date of the closing of such Securitization.
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5.1.17 Leasing Matters.
(a) With respect to any Individual Property, Borrower may (and may allow
Operating Lessee to) enter into a proposed Lease (including the renewal or
extension of an existing Lease (a "Renewal Lease")) without the prior written
consent of Lender, provided such proposed Lease or Renewal Lease (i) provides
for rental rates and terms comparable to existing local market rates and terms
(taking into account the type and quality of the tenant) as of the date such
Lease is executed by Borrower or Operating Lessee (unless, in the case of a
Renewal Lease, the rent payable during such renewal, or a formula or other
method to compute such rent, is provided for in the original Lease), (ii) is an
arms-length transaction with a bona fide, independent third party tenant, (iii)
does not have a material adverse effect on the value or quality of the
applicable Individual Property, (iv) is subject and subordinate to the related
Security Instrument and, upon Lender's reasonable request, the lessee thereunder
agrees to attorn to Lender and (v) is not a Major Lease. All proposed Leases
which do not satisfy the requirements set forth in this Section 5.1.17(a) shall
be subject to the prior approval of Lender, which approval shall not be
unreasonably withheld. At Lender's request, Borrower shall promptly deliver to
Lender copies of all Leases which are entered into pursuant to this Subsection
together with Borrower's certification that it has satisfied all of the
conditions of this Section.
(b) Borrower and/or Operating Lessee, as applicable, (i) shall observe and
perform all the obligations imposed upon the lessor under the Major Leases and
shall not do or permit to be done anything to impair the value of any of the
Major Leases as security for the Debt; (ii) shall promptly send copies to Lender
of all notices of default or other material matters which Borrower or Operating
Lessee shall send or receive with respect to the Major Leases; (iii) shall
enforce all of the material terms, covenants and conditions contained in the
Major Leases upon the part of the tenant thereunder to be observed or performed
(except for termination of a Major Lease which shall require Lender's prior
written approval); (iv) shall not collect any of the Rents more than one (1)
month in advance (except Security Deposits shall not be deemed Rents collected
in advance); (v) shall not execute any other assignment of the lessor's interest
in any of the Leases or the Rents; and (vi) shall not consent to any assignment
of or subletting under any Major Leases not in accordance with their terms,
without the prior written consent of Lender.
(c) Borrower may (and may allow Operating Lessee to), without the consent
of Lender, amend, modify or waive the provisions of any Lease or terminate,
reduce rents under, accept a surrender of space under, or shorten the term of,
any Lease (including any guaranty, letter of credit or other credit support with
respect thereto) provided that such Lease is not a Major Lease and that such
action (taking into account, in the case of a termination, reduction in rent,
surrender of space or shortening of term, the planned alternative use of the
affected space) does not have a material adverse effect on the value of the
applicable Individual Property taken as a whole, and provided that such Lease,
as amended, modified or waived, is otherwise in compliance with the requirements
of this Agreement and any lease subordination agreement binding upon Lender with
respect to such Lease. A termination of a Lease (other than a Major Lease) with
a tenant who is in default beyond applicable notice and grace periods shall not
be considered an action which has a material adverse effect on the value of the
applicable Individual Property taken as a whole. Any amendment, modification,
waiver,
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termination, rent reduction, space surrender or term shortening which does not
satisfy the requirements set forth in this Subsection shall be subject to the
prior written approval of Lender and its counsel, at Borrower's expense. At
Lender's request, Borrower shall promptly deliver to Lender copies of all
Leases, amendments, modifications and waivers which are entered into pursuant to
this Section 5.1.17(c) together with Borrower's certification that it has
satisfied all of the conditions of this Section 5.1.17(c).
(d) Notwithstanding anything contained herein to the contrary, with
respect to any Individual Property, Borrower shall not (and shall not allow
Operating Lessee to), without the prior written consent of Lender, enter into,
materially amend, materially modify, waive any material provisions of,
terminate, reduce rents under, accept a surrender of space under, or shorten the
term of, or renew or extend upon terms and conditions less favorable to
Operating Lessee, any Major Lease or any instrument guaranteeing or providing
credit support for any Major Lease.
(e) To the extent actually received by Lender, Lender shall hold any and
all monies representing security deposits under the Leases (the "Security
Deposits") received by Lender, in accordance with the terms of the respective
Lease, and shall only release the Security Deposits in order to return a
tenant's Security Deposit to such tenant if such tenant is entitled to the
return of the Security Deposit under the terms of the Lease.
5.1.18 Management Agreement.
(a) The Improvements on the Properties are operated under the terms and
conditions of the Management Agreement. In no event shall the base management
fees under the Management Agreement exceed (I) with respect to the Properties
managed by Six Continents Hotels, the sum of (x) five percent (5%) of total room
revenue and (y) two percent (2%) of total revenue; provided, however, Six
Continents Hotels shall not charge any additional franchise fees in connection
with such Properties and (II) with respect to the Properties managed by any
Person other than Six Continents Hotels, four percent (4%) of the gross income
derived from the Property (excluding any incentive management fees which are
subordinate to the Loan). Borrower shall (or shall cause Operating Lessee to)
(i) diligently perform and observe all of the terms, covenants and conditions of
the Management Agreement, on the part of Operating Lessee to be performed and
observed to the end that all things shall be done which are necessary to keep
unimpaired the rights of Operating Lessee under the Management Agreement and
(ii) promptly notify Lender of the giving of any notice by Manager to Operating
Lessee of any default by Operating Lessee in the performance or observance of
any of the terms, covenants or conditions of the Management Agreement on the
part of Operating Lessee to be performed and observed and deliver to Lender a
true copy of each such notice. Neither Borrower nor Operating Lessee shall
surrender the Management Agreement, consent to the assignment by the Manager of
its interest under the Management Agreement, or terminate or cancel the
Management Agreement, or modify, change, supplement, alter or amend the
Management Agreement, in any material respect, either orally or in writing.
Borrower hereby assigns (and Borrower shall cause Operating Lessee to assign) to
Lender as further security for the payment of the Debt and for the performance
and observance of the terms, covenants and conditions of this Agreement, all the
rights, privileges and prerogatives of Borrower and/or Operating Lessee to
surrender the Management Agreement, or to terminate, cancel, modify, change,
supplement, alter or amend the
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Management Agreement, in any material respect, and any such surrender of the
Management Agreement, or termination, cancellation, modification, change,
supplement, alteration or amendment of the Management Agreement in any material
respect, without the prior consent of Lender, shall be void and of no force and
effect. If Operating Lessee shall default in the performance or observance of
any material term, covenant or condition of the Management Agreement on the part
of Operating Lessee to be performed or observed, then, without limiting the
generality of the other provisions of this Agreement, and without waiving or
releasing Borrower from any of its obligations hereunder, Lender shall have the
right, but shall be under no obligation, to pay any sums and to perform any act
or take any action as may be appropriate to cause all the terms, covenants and
conditions of the Management Agreement on the part of Operating Lessee to be
performed or observed to be promptly performed or observed on behalf of
Operating Lessee to the end that the rights of Operating Lessee in, to and under
the Management Agreement shall be kept unimpaired and free from default. Lender
and any Person designated by Lender by written notice to Borrower shall have,
and are hereby granted, the right to enter upon the applicable Individual
Property at any time and from time to time for the purpose of taking any such
action. If the Manager shall deliver to Lender a copy of any notice sent to
Borrower and/or Operating Lessee of default under the Management Agreement, such
notice shall constitute full protection to Lender for any action taken or
omitted to be taken by Lender in good faith, in reliance thereon. Borrower and
Operating Lessee shall not, and shall not permit the Manager to, sub-contract
all or any material portion of its management responsibilities under the
Management Agreement to a third-party without the prior written consent of
Lender, which consent shall not be unreasonably withheld. Borrower shall, from
time to time, cause Operating Lessee to request of Manager and deliver to Lender
upon receipt such certificates of estoppel with respect to compliance by
Operating Lessee with the terms of the Management Agreement as may be reasonably
requested by Lender. Borrower and/or Operating Lessee shall exercise each
individual option, if any, to extend or renew the term of the Management
Agreement to the extent required to continue it in full force and effect until
after the Maturity Date, and Borrower hereby authorizes and appoints (and shall
cause Operating Lessee to authorize and appoint) Lender their attorney-in-fact
to exercise any such option in the name of and upon behalf of Borrower and/or
Operating Lessee, which power of attorney shall be irrevocable and shall be
deemed to be coupled with an interest. Any sums expended by Lender pursuant to
this paragraph (i) shall bear interest at the Default Rate from the date such
cost is incurred to the date of payment to Lender, (ii) shall be deemed to
constitute a portion of the Debt, (iii) shall be secured by the lien of the
Security Instruments and the other Loan Documents and (iv) shall be immediately
due and payable upon demand by Lender therefor.
(a) Without limitation of the foregoing, Borrower shall cause Operating
Lessee, upon the request of Lender and in accordance with the provisions of the
applicable Assignment of Management Agreement, to terminate the Management
Agreement and replace the Manager, without penalty or fee, if at any time during
the Loan: (a) the Manager shall become insolvent or a debtor in any bankruptcy
or insolvency proceeding, (b) there exists an Event of Default or (c) there
exists an event of default by Manager under the Management Agreement. At such
time as the Manager may be removed, provided no Event of Default has occurred, a
Qualified Manager may be selected by Borrower and/or Operating Lessee to assume
management of the applicable Individual Property pursuant to a Replacement
Management Agreement.
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5.1.19 Environmental Covenants.
(a) Borrower covenants and agrees that so long as the Loan is outstanding
(i) all uses and operations on or of the Properties, whether by Borrower or any
other Person, shall be in compliance in all material respects with all
Environmental Laws and permits issued pursuant thereto; (ii) there shall be no
Releases of Hazardous Materials in, on, under or from any of the Properties;
(iii) there shall be no Hazardous Materials in, on, or under any of the
Properties, except those that are both (A) in compliance with all Environmental
Laws and with permits issued pursuant thereto, if and to the extent required,
and (B) (1) in amounts not in excess of that necessary to operate the applicable
Individual Property or (2) fully disclosed to and approved by Lender in writing;
(iv) Borrower shall keep the Properties free and clear of all liens and other
encumbrances imposed pursuant to any Environmental Law, whether due to any act
or omission of Borrower or any other Person (the "Environmental Liens"); (v)
Borrower shall, at its sole cost and expense, fully and expeditiously cooperate
in all activities pursuant to paragraph (b) below, including but not limited to
providing all relevant information and making knowledgeable persons available
for interviews; (vi) Borrower shall, at its sole cost and expense, perform any
environmental site assessment or other investigation of environmental conditions
in connection with any of the Properties, pursuant to any reasonable written
request of Lender, upon Lender's reasonable belief that an Individual Property
is not in full compliance with all Environmental Laws, and share with Lender the
reports and other results thereof, and Lender and other Indemnified Parties
shall be entitled to rely on such reports and other results thereof; (vii)
Borrower shall, at its sole cost and expense, comply with all reasonable written
requests of Lender to (A) reasonably effectuate remediation of any Hazardous
Materials in, on, under or from any Individual Property; and (B) comply with any
Environmental Law; (viii) Borrower shall not allow any tenant or other user of
any of the Properties to violate any Environmental Law; and (ix) Borrower shall
immediately notify Lender in writing after it has become aware of (A) any
presence or Release or threatened Releases of Hazardous Materials in, on, under,
from or migrating towards any of the Properties; (B) any non-compliance with any
Environmental Laws related in any way to any of the Properties; (C) any actual
or potential Environmental Lien; (D) any required or proposed remediation of
environmental conditions relating to any of the Properties; and (E) any written
or oral notice or other communication of which Borrower becomes aware from any
source whatsoever (including but not limited to a Governmental Authority)
relating in any way to Hazardous Materials in connection with the Properties.
(a) Lender and any other Person designated by Lender by written notice to
Borrower, including but not limited to any representative of a Governmental
Authority, and any environmental consultant, and any receiver appointed by any
court of competent jurisdiction, shall have the right, but not the obligation,
to enter upon any Individual Property at all reasonable times to assess any and
all aspects of the environmental condition of any Individual Property and its
use, including but not limited to conducting any environmental assessment or
audit (the scope of which shall be determined in Lender's sole and absolute
discretion) and taking samples of soil, groundwater or other water, air, or
building materials, and conducting other invasive testing. Borrower shall
cooperate with and provide access to Lender and any such Person or entity
designated by Lender by written notice to Borrower.
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5.1.20 Alterations.
Borrower shall obtain Lender's prior written consent to any structural or
other material alterations to any Improvements, which consent shall not be
unreasonably withheld except with respect to alterations that may have a
material adverse effect on Borrower's financial condition, the value of the
related Individual Property or the Net Operating Income thereof.
5.1.21 Franchise Agreement.
(a) Subject to the provisions of Section 5.1.21(b), the Improvements on
the Properties shall be operated under the terms and conditions of the Franchise
Agreements, if applicable. Borrower shall (or shall cause Operating Lessee to)
(i) pay all sums required to be paid by Operating Lessee under the Franchise
Agreement, (ii) diligently perform, observe and enforce all of the terms,
covenants and conditions of the Franchise Agreement on the part of Operating
Lessee to be performed, observed and enforced to the end that all things shall
be done which are necessary to keep unimpaired the rights of Borrower and/or
Operating Lessee under the Franchise Agreement, (iii) promptly notify Lender of
the giving of any notice to Operating Lessee of any default by Operating Lessee
in the performance or observance of any of the terms, covenants or conditions of
the Franchise Agreement on the part of Operating Lessee to be performed and
observed and deliver to Lender a true copy of each such notice, and (iv)
promptly deliver to Lender a copy of each financial statement, business plan,
capital expenditure plan, notice, report and estimate received by it under the
Franchise Agreement. Subject to the provisions of Section 5.1.21(b), Borrower
shall not (and shall cause Operating Lessee to not), without the prior consent
of Lender, surrender the Franchise Agreement or terminate or cancel the
Franchise Agreement or modify, change, supplement, alter or amend the Franchise
Agreement, in any material respect, either orally or in writing, and Borrower
hereby assigns (and Borrower shall cause Operating Lessee to assign) to Lender
as further security for the payment of the Debt and for the performance and
observance of the terms, covenants and conditions of this Agreement, all the
rights, privileges and prerogatives of Borrower and Operating Lessee to
surrender the Franchise Agreement or to terminate, cancel, modify, change,
supplement, alter or amend the Franchise Agreement in any material respect, and
any such surrender of the Franchise Agreement or termination, cancellation,
modification, change, supplement, alteration or amendment of the Franchise
Agreement in any material respect without the prior consent of Lender shall be
void and of no force and effect. If Operating Lessee shall default in the
performance or observance of any material term, covenant or condition of the
Franchise Agreement on the part of Operating Lessee to be performed or observed,
then, without limiting the generality of the other provisions of this Agreement,
and without waiving or releasing Borrower from any of its obligations hereunder,
Lender shall have the right, but shall be under no obligation, to pay any sums
and to perform any act or take any action as may be appropriate to cause all the
terms, covenants and conditions of the Franchise Agreement on the part of
Operating Lessee to be performed or observed to be promptly performed or
observed on behalf of Operating Lessee, to the end that the rights of Operating
Lessee in, to and under the Franchise Agreement shall be kept unimpaired and
free from default. Lender and any Person designated by Lender by written notice
to Borrower shall have, and are hereby granted, the right to enter upon the
Properties at any time and from time to time for the purpose of taking any such
action. If Franchisor shall deliver to Lender a copy of any notice sent to
Borrower and/or Operating Lessee of default
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under the Franchise Agreement, such notice shall constitute full protection to
Lender for any action taken or omitted to be taken by Lender in good faith, in
reliance thereon. Borrower shall, from time to time, use its best efforts to
obtain from Franchisor such certificates of estoppel with respect to compliance
by Operating Lessee with the terms of the Franchise Agreement as may be
requested by Lender. Borrower and/or Operating Lessee shall exercise each
individual option, if any, to extend or renew the term of the Franchise
Agreement to the extent required to continue it in full force and effect until
after the Maturity Date, and Borrower hereby expressly authorizes and appoints
(and Borrower shall cause Operating Lessee to authorize and appoint) Lender as
its attorney-in-fact to exercise any such option in the name of and upon behalf
of Borrower and/or Operating Lessee, which power of attorney shall be
irrevocable and shall be deemed to be coupled with an interest. Any sums
expended by Lender pursuant to this paragraph shall bear interest at the Default
Rate from the date such cost is incurred to the date of payment to Lender, shall
be deemed to constitute a portion of the Debt, shall be secured by the lien of
the Security Instruments and the other Loan Documents and shall be immediately
due and payable upon demand by Lender therefor.
(b) With respect to the Expiring Franchise Agreement Property only,
Borrower shall not be required to obtain Lender's consent or a confirmation from
the Rating Agencies in the event that the Franchise Agreement in effect on the
date hereof is extended on the same or more favorable terms to Borrower and/or
Operating Lessee, as applicable, prior to the expiration thereof.
5.1.22 Operating Lease.
Borrower shall:
(i) promptly perform and/or observe all of the covenants and
agreements required to be performed and observed by it under the Operating Lease
and do all things necessary to preserve and to keep unimpaired its rights
thereunder;
(ii) promptly notify Lender of any event of default under the
Operating Lease;
(iii) promptly enforce the performance and observance of all of the
covenants and agreements required to be performed and/or observed by the
Operating Lessee under the Operating Lease.
5.1.23 OFAC.
At all times throughout the term of the Loan, Borrower, Guarantor,
Indemnitor and their respective Affiliates shall be in compliance in all
material respects with all applicable orders, rules, regulations and
recommendations of The Office of Foreign Assets Control of the U.S. Department
of the Treasury.
5.1.24 The Ground Lease.
(a) With respect to each Ground Lease, Borrower shall (i) pay all rents,
additional rents and other sums required to be paid by Borrower, as tenant under
and pursuant to the provisions of each Ground Lease, (ii) diligently perform and
observe all of the terms, covenants
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and conditions of each Ground Lease on the part of Borrower, as tenant
thereunder, (iii) promptly notify Lender of the giving of any notice by the
landlord under the applicable Ground Lease to Borrower of any default by
Borrower, as tenant thereunder, and deliver to Lender a true copy of each such
notice within five (5) days of receipt and (iv) promptly notify Lender of any
bankruptcy, reorganization or insolvency of the landlord under the applicable
Ground Lease or of any notice thereof, and deliver to Lender a true copy of such
notice within five (5) days of Borrower's receipt. Borrower shall not, without
the prior consent of Lender, surrender the leasehold estate created by the
applicable Ground Lease or terminate or cancel any Ground Lease or modify,
change, supplement, alter, amend or waive any material term of any Ground Lease,
either orally or in writing, and if Borrower shall default in the performance or
observance of any term, covenant or condition of any Ground Lease on the part of
Borrower, as tenant thereunder, and shall fail to cure the same prior to the
expiration of any applicable cure period provided thereunder, Lender shall have
the right, but shall be under no obligation, to pay any sums and to perform any
act or take any action as may be appropriate to cause all of the terms,
covenants and conditions of such Ground Lease on the part of Borrower to be
performed or observed on behalf of Borrower, to the end that the rights of
Borrower in, to and under such Ground Lease shall be kept unimpaired and free
from default. If the landlord under the applicable Ground Lease shall deliver to
Lender a copy of any notice of default under such Ground Lease, such notice
shall constitute full protection to Lender for any action taken or omitted to be
taken by Lender, in good faith, in reliance thereon. Borrower shall exercise
each individual option, if any, to extend or renew the term of each Ground Lease
upon demand by Lender made at any time within one (1) year prior to the last day
upon which any such option may be exercised, and Borrower hereby expressly
authorizes and appoints Lender its attorney-in-fact to exercise any such option
in the name of and upon behalf of Borrower, which power of attorney shall be
irrevocable and shall be deemed to be coupled with an interest.
(b) Subleases. Notwithstanding anything contained in any Ground Lease to
the contrary, Borrower shall not further sublet any portion of the related
Individual Property (other than as permitted pursuant to Section 5.1.17 hereof)
without prior written consent of Lender. Each sublease hereafter made shall
provide that, (a) in the event of the termination of the Ground Lease, the
sublease shall not terminate or be terminable by the lessee thereunder; (b) in
the event of any action for the foreclosure of the Security Instrument with
respect to the related Individual Property, the sublease shall not terminate or
be terminable by the lessee thereunder by reason of the termination of the
Ground Lease unless such lessee is specifically named and joined in any such
action and unless a judgment is obtained therein against such lessee; and (c) in
the event that the Ground Lease is terminated as aforesaid, the lessee under the
sublease shall attorn to the lessor under the Ground Lease or to the purchaser
at the sale of the related Individual Property on such foreclosure, as the case
may be. In the event that any portion of such Individual Property shall be
sublet pursuant to the terms of this subsection, such sublease shall be deemed
to be included in the Individual Property.
(c) Notwithstanding anything to the contrary contained herein with respect
to any Ground Lease:
(i) The Lien of the Security Instruments attach to all of Borrower's
rights and remedies at any time arising under or pursuant to subsection
365(h) of the Bankruptcy
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Code, including, without limitation, all of Borrower's rights, as debtor,
to remain in possession of the related Individual Property which is
subject to a Ground Lease;
(ii) Borrower shall not, without Lender's written consent, elect to
treat a Ground Lease as terminated under subsection 365(h)(1) of the
Bankruptcy Code. Any such election made without Lender's prior written
consent shall be void;
(iii) As security for the Debt, Borrower unconditionally assigns,
transfers and sets over to Lender all of Borrower's claims and rights to
the payment of damages arising from any rejection by any Ground Lessor
under the Bankruptcy Code. Lender and Borrower shall proceed jointly or in
the name of Borrower in respect of any claim, suit, action or proceeding
relating to the rejection of a Ground Lease, including, without
limitation, the right to file and prosecute any proofs of claim,
complaints, motions, applications, notices and other documents in any case
in respect a Ground Lessor under the Bankruptcy Code. This assignment
constitutes a present, irrevocable and unconditional assignment of the
foregoing claims, rights and remedies, and shall continue in effect until
all of the Debt shall have been satisfied and discharged in full. Any
amounts received by Lender or Borrower as damages arising out of the
rejection of a Ground Lease as aforesaid shall be applied to all costs and
expenses of Lender (including, without limitation, reasonable attorneys'
fees and costs) incurred in connection with the exercise of any of its
rights or remedies in accordance with the applicable provisions hereof;
(iv) If pursuant to subsection 365(h) of the Bankruptcy Code,
Borrower seeks to offset, against the rent reserved in a Ground Lease, the
amount of any damages caused by the nonperformance by the applicable
Ground Lessor of any of its obligations thereunder after the rejection by
such Ground Lessor under the Bankruptcy Code, then Borrower shall not
effect any offset of the amounts so objected to by Lender. If Lender has
failed to object as aforesaid within ten (10) days after notice from
Borrower in accordance with the first sentence of this subsection,
Borrower may proceed to offset the amounts set forth in Borrower's notice
to Lender;
(v) In any action, proceeding, motion or notice shall be commenced
or filed in respect of any Ground Lessor of all or any part any Individual
Property subject to a Ground Lease in connection with any case under the
Bankruptcy Code, Lender and Borrower shall cooperatively conduct and
control any such litigation with counsel agreed upon between Borrower and
Lender in connection with such litigation. Borrower shall, upon demand,
pay to Lender all costs and expenses (including reasonable attorneys' fees
and costs) actually paid or actually incurred by Lender in connection with
the cooperative prosecution or conduct of any such proceedings. All such
costs and expenses shall be secured by the Lien of the applicable Security
Instrument; and
(vi) Borrower shall promptly, after obtaining knowledge of such
filing, notify Lender orally of any filing by or against a Ground Lessor
of a petition under the Bankruptcy Code. Borrower shall thereafter
promptly give written notice of such filing to Lender, setting forth any
information available to Borrower as to the date of such filing, the court
in which such petition was filed, and the relief sought in such filing.
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Borrower shall promptly deliver to Lender any and all notices, summons,
pleadings, applications and other documents received by Borrower in
connection with any such petition and any proceedings relating to such
petition.
5.1.25 O&M Program.
With respect to each Individual Property listed on Schedule XIV hereof,
Borrower shall enter into a contract with a licensed industrial hygienist to
develop a fully documented O&M Program which Borrower shall submit within ninety
(90) days of the date hereof to Lender for its approval. Borrower further
covenants and agrees to implement and follow the terms and conditions of such
O&M Program during the term of the Loan, including any extension or renewal
thereof. Lender's requirement that Borrower develop and comply with the O&M
Program shall not be deemed to constitute a waiver or modification of any of
Borrower's covenants and agreements with respect to Hazardous Materials or
Environmental Laws.
5.1.26 Capital Budget
Borrower shall to comply with Borrower's 2003 capital budget in all
material respects (as delivered to Lender in connection with the underwriting of
the Loan), unless otherwise agreed to by Lender.
SECTION 5.2 Negative Covenants.
From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Security Instruments encumbering the Properties in accordance with
the terms of this Agreement and the other Loan Documents, Borrower covenants and
agrees with Lender that it will not do, directly or indirectly, any of the
following:
5.2.1 Liens.
Borrower shall not create, incur, assume or suffer to exist any Lien on
any portion of any Individual Property or permit any such action to be taken,
except for Permitted Encumbrances.
5.2.2 Dissolution.
(a) Borrower shall not (a) engage in any dissolution, liquidation or
consolidation or merger with or into any other business entity, (b) transfer,
lease or sell, in one transaction or any combination of transactions, the assets
or all or substantially all of the properties or assets of Borrower except to
the extent expressly permitted by the Loan Documents, (c) except as expressly
permitted under the Loan Documents, modify, amend, waive or terminate its
organizational documents or its qualification and good standing in any
jurisdiction or (d) cause Principal to (i) dissolve, wind up or liquidate or
take any action, or omit to take an action, as a result of which Principal would
be dissolved, wound up or liquidated in whole or in part, or (ii) except as
expressly permitted under the Loan Documents, amend, modify, waive or terminate
the certificate of incorporation, bylaws or similar organizational documents of
Principal, in each case, without obtaining the prior written consent of Lender,
which consent (with respect to (d)(ii) only) shall not be unreasonably withheld
or delayed..
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(b) Borrower shall not permit Operating Lessee to (a) engage in any
dissolution, liquidation or consolidation or merger with or into any other
business entity, (b) transfer, lease or sell, in one transaction or any
combination of transactions, the assets or all or substantially all of the
properties or assets of Operating Lessee except to the extent expressly
permitted by the Loan Documents, (c) except as expressly permitted under the
Loan Documents, modify, amend, waive or terminate its organizational documents
or its qualification and good standing in any jurisdiction or (d) cause the
Operating Lessee Principal to (i) dissolve, wind up or liquidate or take any
action, or omit to take an action, as a result of which Operating Lessee
Principal would be dissolved, wound up or liquidated in whole or in part, or
(ii) except as expressly permitted under the Loan Documents, amend, modify,
waive or terminate the certificate of incorporation, bylaws or similar
organizational documents of Operating Lessee Principal, in each case, without
obtaining the prior written consent of Lender, which consent (with respect to
(d)(ii) only) shall not be unreasonably withheld or delayed.
5.2.3 Change In Business.
Borrower shall not enter into any line of business other than the
ownership, acquisition, development, operation, leasing and management of the
Properties (including providing services in connection therewith), or make any
material change in the scope or nature of its business objectives, purposes or
operations or undertake or participate in activities other than the continuance
of its present business.
5.2.4 Debt Cancellation.
Borrower shall not cancel or otherwise forgive or release any material
claim or debt (other than termination of Leases in accordance herewith) owed to
Borrower by any Person, except for adequate consideration and in the ordinary
course of Borrower's business.
5.2.5 Zoning.
Borrower shall not initiate or consent to any zoning reclassification of
any portion of any Individual Property or seek any variance under any existing
zoning ordinance or use or permit the use of any portion of any Individual
Property in any manner that could result in such use becoming a non-conforming
use under any zoning ordinance or any other Applicable Law, without the prior
written consent of Lender.
5.2.6 No Joint Assessment.
Borrower shall not suffer, permit or initiate the joint assessment of any
Individual Property with (a) any other real property constituting a tax lot
separate from such Individual Property, or (b) any portion of such Individual
Property which may be deemed to constitute personal property, or any other
procedure whereby the Lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to such Individual
Property.
5.2.7 Name, Identity, Structure, or Principal Place of Business.
Borrower shall not change its name, identity (including its trade name or
names), or principal place of business set forth in the introductory paragraph
of this Agreement, without, in
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each case, first giving Lender thirty (30) days prior written notice. Borrower
shall not change its corporate, partnership or other structure, or the place of
its organization as set forth in Section 4.1.34, without, in each case, the
consent of Lender. Upon Lender's request, Borrower shall execute and deliver
additional financing statements, security agreements and other instruments which
may be necessary to effectively evidence or perfect Lender's security interest
in the Collateral as a result of such change of principal place of business or
place of organization.
5.2.8 ERISA.
(a) During the term of the Loan or of any obligation or right hereunder,
Borrower shall not be a Plan and none of the assets of Borrower shall constitute
Plan Assets.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, and represents and
covenants that (A) Borrower is not and does not maintain an "employee benefit
plan" as defined in Section 3(32) of ERISA, which is subject to Title I of
ERISA, or a "governmental plan" within the meaning of Section 3(3) of ERISA; (B)
Borrower is not subject to State statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (C) one or more of the
following circumstances is true:
(i) Equity interests in Borrower are publicly offered securities, within
the meaning of 29 C.F.R. ss.2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding class of
equity interests in Borrower are held by "benefit plan investors" within the
meaning of 29 C.F.R. ss.2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R. ss.2510.3-101(c) or (e).
5.2.9 Affiliate Transactions.
Borrower shall not enter into, or be a party to, any transaction with an
Affiliate of Borrower, Principal, the Operating Lessee SPE Entities or any of
the partners of Borrower, Principal or the Operating Lessee SPE Entities except
in the ordinary course of business and on terms which are fully disclosed to
Lender in advance and are no less favorable to Borrower or such Affiliate than
would be obtained in a comparable arm's-length transaction with an unrelated
third party.
5.2.10 Transfers.
(a) Neither Borrower nor Operating Lessee shall sell, convey, mortgage,
grant, bargain, encumber, pledge, assign, grant options with respect to, or
otherwise transfer or dispose of (directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, and whether or not for
consideration or of record) any Individual Property or any part thereof or any
legal or beneficial interest therein (other than in connection with a
Condemnation) or permit or suffer a Sale or Pledge of an interest in any
Restricted Party (other than with respect to the Mezzanine Loan and the Junior
Mezzanine Loan) (collectively,
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a "Transfer"), other than pursuant to Leases of space in the Improvements to
tenants in accordance with the provisions of Section 5.1.17 hereof or a release
of an Individual Property in accordance with the provisions of Section 2.5 or
2.6 hereof, without (i) the prior written consent of Lender and (ii) if a
Securitization has occurred, delivery to Lender of written confirmation from the
Rating Agencies that the Transfer will not result in the downgrade, withdrawal
or qualification of the then current ratings assigned to any Securities or the
proposed rating of any Securities.
(b) A Transfer shall include, but not be limited to: (i) an installment
sales agreement wherein Borrower agrees to sell one or more Individual
Properties or any part thereof for a price to be paid in installments; (ii) an
agreement by Borrower leasing all or a substantial part of any Individual
Property for other than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in,
Borrower's right, title and interest in and to any Leases or any Rents; (iii) if
a Restricted Party is a corporation, any merger, consolidation or Sale or Pledge
of such corporation's stock or the creation or issuance of new stock; (iv) if a
Restricted Party is a limited or general partnership or joint venture, any
merger or consolidation or the change, removal, resignation or addition of a
general partner or the Sale or Pledge of the partnership interest of any general
partner or any profits or proceeds relating to such partnership interest, or the
Sale or Pledge of limited partnership interests or any profits or proceeds
relating to such limited partnership interests or the creation or issuance of
new limited partnership interests; (v) if a Restricted Party is a limited
liability company, any merger or consolidation or the change, removal,
resignation or addition of a managing member or non-member manager (or if no
managing member, any member) or the Sale or Pledge (other than in connection
with the Mezzanine Loan and the Junior Mezzanine Loan) of the membership
interest of a managing member (or if no managing member, any member) or any
profits or proceeds relating to such membership interest, or the Sale or Pledge
of non-managing membership interests or the creation or issuance of new
non-managing membership interests; or (vi) if a Restricted Party is a trust or
nominee trust, any merger, consolidation or the Sale or Pledge of the legal or
beneficial interest in a Restricted Party or the creation or issuance of new
legal or beneficial interests.
(c) Notwithstanding the provisions of Sections 5.2.10(a) and (b), the
following transfers shall not be deemed to be a Transfer: (i) a transfer by
devise or descent or by operation of law upon the death of a member, partner or
shareholder of a Restricted Party or a Restricted Party itself; (ii) the Sale or
Pledge, in one or a series of transactions, of not more than forty nine percent
(49%) of the stock in a Restricted Party (other than Borrower, Mezzanine
Borrower or Junior Mezzanine Borrower); provided, however, no such transfers
shall result in the change of voting control in the Restricted Party, and as a
condition to each such transfer, Lender shall receive not less than thirty (30)
days prior written notice of such proposed transfer and (iii) the Sale or
Pledge, in one or a series of transactions, of not more than forty nine percent
(49%) of the limited partnership interests or non managing membership interests
(as the case may be) in a Restricted Party (other than Borrower, Mezzanine
Borrower or Junior Mezzanine Borrower); provided, however, as a condition to
each such transfer, Lender shall receive not less than thirty (30) days prior
written notice of such proposed transfer.
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(d) Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default hereunder in order to declare the
Debt immediately due and payable upon a Transfer in violation of this Section
5.2.2. This provision shall apply to every Transfer regardless of whether
voluntary or not, or whether or not Lender has consented to any previous
Transfer. Notwithstanding anything to the contrary contained in this Section
5.2.10, (a) no transfer (whether or not such transfer shall constitute a
Transfer) shall be made to any Prohibited Person and (b) in the event any
transfer (whether or not such transfer shall constitute a Transfer) results in
any Person owning in excess of forty-nine percent (49%) of the ownership
interest in a Restricted Party, Borrower shall, prior to such transfer, deliver
an updated Insolvency Opinion to Lender, which opinion shall be in form, scope
and substance acceptable in all respects to Lender and the Rating Agencies.
(e) Notwithstanding anything to the contrary contained in this Section
5.2.10, Lender's consent shall not be required for the financing or leasing of
personal property, including, without limitation, furniture, fixtures and
equipment owned or to be purchased by Borrower that is used in connection with
the operation of the any Individual Property ("Equipment"), provided Lender has
received prior written notification of Borrower's intent to finance such
Equipment, and provided, further, that (i) any such financing or leasing is
subject to commercially prudent terms and conditions and at a market rate of
interest, (ii) the Equipment financed or leased is readily replaceable without
material interference or interruption to the operation of any Individual
Property, and (iii) the aggregate principal amount of such financing and leasing
for Equipment located on or used in connection with each Individual Property is
at all times less than $250,000 ("Permitted FF&E Financing") and (iv) the
financing does not create a Lien on any Individual Property other than on the
Equipment financed or leased thereunder.
(f) Notwithstanding anything to the contrary contained in this Section
5.2.10, a transfer of direct or indirect limited partnership interests and/or
non-managing membership interests in a Restricted Party (other than Borrower,
Principal, Mezzanine Borrower, Mezzanine Principal, Junior Mezzanine Borrower,
Junior Mezzanine Principal, the Operating Lessee SPE Entities or any Affiliated
Manager) shall be permitted provided that (i) FelCor Lodging Limited Partnership
shall, at all times, own, directly or indirectly, at least fifty-one percent
(51%) of the equity interests in, and Control, all Restricted Parties and (ii)
FelCor Lodging Trust Incorporated must at all times be the sole general partner
of FelCor Lodging Limited Partnership.
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
SECTION 6.1 Insurance.
(a) Borrower shall obtain and maintain, or cause to be maintained,
Policies for Borrower and the Properties providing at least the following
coverages:
(i) so called "All Risk" or Special Form insurance on the
Improvements and the Personal Property, in each case (ii) in an amount
equal to 100% of the "Full Replacement Cost," which for purposes of this
Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a
waiver of depreciation, (iii) containing an agreed amount endorsement or
its
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equivalent with respect to the Improvements, business income, rent loss
and Personal Property waiving all co-insurance provisions; (iv) providing
for no deductible in excess of $100,000; and (v) providing coverage for
contingent liability from Operation of Building Laws, Demolition Costs and
Increased Cost of Construction Endorsements together with an "Ordinance or
Law Coverage" or "Enforcement" endorsement if any of the Improvements or
the use of each Individual Property shall at any time constitute legal
non-conforming structures or uses. The Full Replacement Cost shall be
redetermined from time to time (but not more frequently than once in any
twenty-four (24) calendar months) at the request of Lender by an appraiser
or contractor designated and paid by Borrower and approved by Lender, or
by an engineer or appraiser in the regular employ of the insurer. After
the first appraisal, additional appraisals may be based on construction
cost indices customarily employed in the trade. No omission on the part of
Lender to request any such ascertainment shall relieve Borrower of any of
its obligations under this Subsection;
(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon,
in or about each Individual Property, including "Dram Shop" or other
liquor liability coverage if alcoholic beverages are sold from or may be
consumed at the Individual Property such insurance (A) to be on the
so-called "occurrence" form with a combined single limit of not less than
$5,000,000.00; (B) to continue at not less than the aforesaid limit until
required to be changed by Lender in writing by reason of changed economic
conditions making such protection inadequate; and (C) to cover at least
the following hazards: (1) premises and operations; (2) products and
completed operations on an "if any" basis; (3) independent contractors;
(4) blanket contractual liability for all written and oral contracts; and
(5) contractual liability covering the indemnities contained in Article 10
of the Security Instruments to the extent the same is available;
(iii) business interruption/loss of rents insurance (A) with loss
payable to Lender; (B) covering all risks required to be covered by the
insurance provided for in Section 6.1(a)(i); (C) in an amount equal to
100% of the projected gross income from each Individual Property (on an
actual loss sustained basis) for a period continuing until the Restoration
of the Individual Property is completed; the amount of such business
interruption/loss of rents insurance shall be determined prior to the
Closing Date and at least once each year thereafter based on the greatest
of: (x) Borrower's reasonable estimate of the gross income from each
Individual Property and (y) the highest gross income received during the
term of the Note for any full calendar year prior to the date the amount
of such insurance is being determined, in each case for the succeeding
twenty-four (24) month period and (D) containing an extended period of
indemnity endorsement which provides that after the physical loss to the
Improvements and the Personal Property has been repaired, the continued
loss of income will be insured until such income either returns to the
same level it was at prior to the loss, or the expiration of twelve (12)
months from the date that the applicable Individual Property is repaired
or replaced and operations are resumed, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such
period; All insurance proceeds payable to Lender pursuant to this Section
6.1(a)(iii) shall be held by Lender and shall be applied to the
obligations secured hereunder from time to time due and payable hereunder
and under
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the Note and this Agreement; provided, however, that nothing herein
contained shall be deemed to relieve Borrower of its obligations to pay
the obligations secured hereunder on the respective dates of payment
provided for in the Note and this Agreement except to the extent such
amounts are actually paid out of the proceeds of such business
interruption/loss of rents insurance.
(iv) at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements (A) owner's
contingent or protective liability insurance covering claims not covered
by or under the terms or provisions of the insurance provided for in
Section 6.1(c)(ii); and (B) the insurance provided for in Section
6.1(a)(i) shall be written in a so-called builder's risk completed value
form (1) on a non-reporting basis, (2) against all risks insured against
pursuant to Section 6.1(a)(i), (3) shall include permission to occupy each
Individual Property, and (4) shall contain an agreed amount endorsement
waiving co-insurance provisions; provided, however, the insurance required
pursuant to this Section 6.1(a)(iv) may be obtained by the Manager for the
benefit of Borrower and the applicable Individual Property.
(v) workers' compensation, subject to the statutory limits of the
State in which each Individual Property is located, and employer's
liability insurance with a limit of at least $1,000,000.00 per accident
and per disease per employee, and $1,000,000.00 for disease aggregate in
respect of any work or operations on or about each Individual Property, or
in connection with such Individual Property or its operation (if
applicable);
(vi) comprehensive boiler and machinery insurance covering all
mechanical and electrical equipment and boilers and pressure valves, if
applicable, in amounts as shall be reasonably required by Lender on terms
consistent with the commercial property insurance policy required under
Section 6.1(a)(i);
(vii) if any portion of the Improvements is at any time located in
an area identified by the Secretary of Housing and Urban Development or
any successor thereto as an area having special flood hazards pursuant to
the National Flood Insurance Act of 1968, the Flood Disaster Protection
Act of 1973 or the National Flood Insurance Reform Act of 1994, as each
may be amended, or any successor law (the "Flood Insurance Acts"), flood
hazard insurance of the following types and in the following amounts (A)
coverage under Policies issued pursuant to the Flood Insurance Acts (the
"Flood Insurance Policies") in an amount equal to the maximum limit of
coverage available for the applicable Individual Property under the Flood
Insurance Acts, subject only to customary deductibles under such Policies
and (B) coverage under supplemental private Policies in an amount, which
when added to the coverage provided under the Flood Act Policies with
respect to an Individual Property, is not less than the Allocated Loan
Amount for such Individual Property;
(viii) if required by Lender, earthquake, sinkhole and mine
subsidence insurance in amounts as determined by Lender in its sole
discretion and in form and substance satisfactory to Lender, provided that
the insurance pursuant to this Section 6.1(a)(viii) hereof shall be on
terms consistent with the all risk insurance policy required under Section
6.1(a)(i) hereof;
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(ix) umbrella liability insurance in an amount not less than Two
Hundred Million and No/100 Dollars ($200,000,000.00) per occurrence on
terms consistent with the commercial general liability insurance policy
required under Section 6.1(a)(ii) hereof;
(x) insurance against terrorism, terrorist acts or similar acts of
sabotage ("Terrorism Insurance") pursuant to a (A) blanket insurance
policy with aggregate limits of not less than $50,000,000.00 or (B) a
stand-alone insurance policy covering only the Properties with coverage of
not less than $50,000,000.00, and, in either case with a deductible of not
more than $250,000.00 (the "Terrorism Insurance Required Amount").
Notwithstanding the foregoing sentence, in the event Borrower has obtained
a stand-alone insurance policy pursuant to subsection (B) above, Borrower
shall not be obligated to expend more than $400,000.00 in any fiscal year
on Insurance Premiums for Terrorism Insurance (the "Terrorism Insurance
Cap") and if the cost of the Terrorism Insurance Required Amount exceeds
the Terrorism Insurance Cap, Borrower shall purchase the maximum amount of
Terrorism Insurance available with funds equal to the Terrorism Insurance
Cap; provided, however, in the event it is customary among owners of Class
A hotel properties in the United States to have "All Risk" coverage
without any exclusion (a "Terrorism Exclusion") from coverage under such
Policy for loss or damage incurred as a result of an act of terrorism,
terrorist acts or similar acts of sabotage, Borrower shall (provided the
same does not add any material cost to Borrower's Insurance Premiums)
obtain a Policy without any such Terrorism Exclusion. After the occurrence
of any event which reduces the amount of insurance available under the
Terrorism Insurance required hereunder (whether due to a claim or
otherwise), Borrower shall be obligated to immediately increase the
coverage of such Terrorism Insurance so that at least $50,000,000.00 of
coverage is available thereunder at all times.
(xi) a blanket fidelity bond and errors and omissions insurance
coverage insuring against losses resulting from dishonest or fraudulent
acts committed by (A) Borrower's personnel; (B) any employees of outside
firms that provide appraisal, legal, data processing or other services for
Borrower or (C) temporary contract employees or student interns; provided,
however, the insurance required pursuant to this Section 6.1(a)(xi) may be
obtained by the Manager for the benefit of Borrower and the applicable
Individual Property and
(xii) such other insurance and in such amounts as are required
pursuant to the Franchise Agreement or as Lender from time to time may
reasonably request against such other insurable hazards which at the time
are commonly insured against for property similar to each Individual
Property located in or around the region in which the each Individual
Property is located.
(b) All insurance provided for in Section 6.1(a) hereof shall be obtained
under valid and enforceable policies (the "Policies" or in the singular, the
"Policy"), in such forms and, from time to time after the date hereof, in such
amounts as may be satisfactory to Lender, issued by financially sound and
responsible insurance companies authorized to do business in the State in which
each Individual Property is located and approved by Lender. The initial
$30,000,000 of insurance required pursuant to Section 6.1(a)(i), (iii) and (vi)
hereof (the "Initial Tier") may be with (1) one or more primary insurers having
(or a syndicate of insurers
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through which at least 75% of the coverage (if there are 4 or fewer members of
the syndicate) or at least 60% of the coverage (if there are 5 or more members
of the syndicate) is with carriers having), a claims paying ability rating by
S&P not lower than "AA-" and an A.M. Best rating of at least "A:IX" (a "Initial
Tier Insurer") and (2) the balance of the coverage is with one or more carriers
having a claims paying ability rating by S&P not lower than "BBB-" and an A.M.
Best rating of at least "A:IX"; provided, however, Endurance Specialty
Insurance, Ltd. shall be deemed a Initial Tier Insurer so long as it (x)
maintains an A.M. Best rating of at least "A-:IX" and (y) does not provide in
excess of $2,000,000 of the insurance coverage required pursuant to the Initial
Tier. The remaining portions of the insurance required pursuant to Section
6.1(a)(i), (iii) and (vi) hereof (the "Second Tier") may be with (1) one or more
primary insurers having (or a syndicate of insurers through which at least 75%
of the coverage (if there are 4 or fewer members of the syndicate) or at least
60% of the coverage (if there are 5 or more members of the syndicate) is with
carriers having), a claims paying ability rating by S&P not lower than "A" and
an A.M. Best rating of at least "A-:IX" (a "Second Tier Insurer") and (2) the
balance of the coverage is with one or more carriers having a claims paying
ability rating by S&P not lower than "BBB-" and an A.M. Best rating of at least
"A-:IX"; provided, however, Allied World Assurance Co. shall be deemed a Second
Tier Insurer so long as it (x) maintains an A.M. Best rating of at least "A-:IX"
and (y) does not provide in excess of $4,500,000 of the insurance coverage
required pursuant to the Second Tier. All other insurance companies must have a
claims paying ability/financial strength rating of "A" (or its equivalent) or
better by all of the Rating Agencies and have an A.M. Best rating of "A:IX" or
greater (each such insurer shall be referred to below as a "Qualified Insurer").
Not less than thirty (30) days prior to the expiration dates of the Policies
theretofore furnished to Lender pursuant to Section 6.1(a), Borrower shall
deliver certified copies of the Policies marked "premium paid" or accompanied by
evidence satisfactory to Lender of payment of the premiums due thereunder (the
"Insurance Premiums"). In the event Borrower desires to obtain the insurance
required hereunder from an insurer not meeting the requirements of this Section
6.1(b), Borrower may request, in writing, Lender's approval of such insurer,
which approval may be given or withheld in Lender's sole discretion.
(c) Borrower shall not obtain (i) any umbrella or blanket liability or
casualty Policy unless, in each case, such Policy is at least equal in scope of
coverage as if a "stand-alone" Policy meeting all of the requirement noted above
is provided as such Policy is approved in advance in writing by Lender and
Lender's interest is included therein as provided in this Agreement and such
Policy is issued by a Qualified Insurer, or (ii) separate insurance concurrent
in form or contributing in the event of loss with that required in Section
6.1(a) to be furnished by, or which may be reasonably required to be furnished
by, Borrower. In the event Borrower obtains separate insurance or an umbrella or
a blanket policy, Borrower shall notify Lender of the same and shall cause
certified copies of each Policy to be delivered as required in Section 6.1(a).
Any blanket insurance Policy shall specifically allocate to the Individual
Property the amount of coverage from time to time required hereunder and shall
otherwise provide the same protection as would a separate Policy insuring only
the Individual Property in compliance with the provisions of Section 6.1(a).
Notwithstanding Lender's approval of any umbrella or blanket liability or
casualty Policy hereunder, Lender reserves the right, in its sole discretion, to
require Borrower to obtain a separate Policy in compliance with this Section
6.1.
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(d) All Policies provided for or contemplated by Section 6.1(a) hereof,
except for the Policy referenced in Section 6.1(a)(v), shall name Lender and
Borrower as the insured or additional insured, as their respective interests may
appear, and in the case of property damage, boiler and machinery, and flood
insurance, shall contain a so-called New York standard non-contributing
mortgagee clause in favor of Lender providing that the loss thereunder shall be
payable to Lender.
(e) All Policies provided for in Section 6.1(a) hereof shall contain
clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for Borrower,
or failure to comply with the provisions of any Policy which might
otherwise result in a forfeiture of the insurance or any part thereof,
shall in any way affect the validity or enforceability of the insurance
insofar as Lender is concerned;
(ii) the Policy shall not be materially changed (other than to
increase the coverage provided thereby) or cancelled without at least 30
days' written notice to Lender and any other party named therein as an
insured;
(iii) each Policy shall provide that the issuers thereof shall give
written notice to Lender if the Policy has not been renewed thirty (30)
days prior to its expiration; and
(iv) Lender shall not be liable for any Insurance Premiums thereon
or subject to any assessments thereunder.
(f) Borrower shall furnish to Lender, on or before thirty (30) days after
the close of each of Borrower's fiscal years, a statement certified by Borrower
or a duly authorized officer of Borrower of the amounts of insurance maintained
in compliance herewith, of the risks covered by such insurance and of the
insurance company or companies which carry such insurance and, if requested by
Lender, verification of the adequacy of such insurance by an independent
insurance broker or appraiser acceptable to Lender.
(g) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, with prior notice to Borrower, to take such action as Lender deems
necessary to protect its interest in the Properties, including, without
limitation, the obtaining of such insurance coverage as Lender in its sole
discretion deems appropriate, and all expenses incurred by Lender in connection
with such action or in obtaining such insurance and keeping it in effect shall
be paid by Borrower to Lender upon demand and until paid shall be secured by the
Security Instruments and shall bear interest at the Default Rate.
(h) In the event of a foreclosure of any of the Security Instruments, or
other transfer of title to any Individual Property in extinguishment in whole or
in part of the Debt all right, title and interest of Borrower in and to the
Policies then in force and all proceeds payable thereunder shall thereupon vest
in the purchaser at such foreclosure or Lender or other transferee in the event
of such other transfer of title.
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SECTION 6.2 Casualty.
If an Individual Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty (a "Casualty"), Borrower shall give prompt
notice of such damage to Lender and shall promptly commence and diligently
prosecute the completion of the Restoration of the Individual Property as nearly
as possible to the condition the Individual Property was in immediately prior to
such Casualty, with such alterations as may be reasonably approved by Lender and
otherwise in accordance with Section 6.4. Borrower shall pay all costs of such
Restoration whether or not such costs are covered by insurance. Lender may, but
shall not be obligated to make proof of loss if not made promptly by Borrower.
SECTION 6.3 Condemnation.
Borrower shall promptly give Lender notice of the actual or threatened
commencement of any proceeding for the Condemnation of all or any part of any
Individual Property and shall deliver to Lender copies of any and all papers
served in connection with such proceedings. Lender may participate in any such
proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including, but not
limited to, any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the Award interest at the rate or rates provided herein or in the Note.
If any Individual Property or any portion thereof is taken by a condemning
authority, Borrower shall, promptly commence and diligently prosecute the
Restoration of the applicable Individual Property and otherwise comply with the
provisions of Section 6.4. If any Individual Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender
shall have the right, whether or not a deficiency judgment on the Note shall
have been sought, recovered or denied, to receive the Award, or a portion
thereof sufficient to pay the Debt.
SECTION 6.4 Restoration.
The following provisions shall apply in connection with the Restoration of
any Individual Property:
(a) If the Net Proceeds shall be less than Two Hundred Fifty Thousand and
00/100 Dollars ($250,000.00) and the costs of completing the Restoration shall
be less than Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00), the
Net Proceeds will be disbursed by Lender to Borrower upon receipt, provided that
all of the conditions set forth in Section 6.4(b)(i) are met and Borrower
delivers to Lender a written undertaking to expeditiously commence and to
satisfactorily complete with due diligence the Restoration in accordance with
the terms of this Agreement.
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(b) If the Net Proceeds are equal to or greater than Two Hundred Fifty
Thousand and 00/100 Dollars ($250,000.00) or the costs of completing the
Restoration is equal to or greater than Two Hundred Fifty Thousand and 00/100
Dollars ($250,000.00) Lender shall make the Net Proceeds available for the
Restoration in accordance with the provisions of this Section 6.4. The term "Net
Proceeds" shall mean: (i) the net amount of all insurance proceeds received by
Lender pursuant to Section 6.1(a)(i), (iv), (vi), (vii) and (viii) as a result
of such damage or destruction, after deduction of its reasonable costs and
expenses (including, but not limited to, reasonable counsel fees), if any, in
collecting same ("Insurance Proceeds"), or (ii) the net amount of the Award,
after deduction of its reasonable costs and expenses (including, but not limited
to, reasonable counsel fees), if any, in collecting same ("Condemnation
Proceeds"), whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower for
Restoration provided that each of the following conditions are met:
(A) no Default or Event of Default (unless caused solely by
the Condemnation or Casualty) shall have occurred and be continuing;
(B) (1) in the event the Net Proceeds are Insurance Proceeds,
less than thirty percent (30%) of the total floor area of the
Improvements on the Individual Property has been damaged, destroyed
or rendered unusable as a result of such Casualty or (2) in the
event the Net Proceeds are Condemnation Proceeds, less than ten
percent (10%) of the land constituting the Individual Property is
taken, and such land is located along the perimeter or periphery of
the Individual Property, and no portion of the Improvements is
located on such land;
(C) The Operating Lease shall remain in full force and effect
during and after the completion of the Restoration;
(D) Borrower shall commence the Restoration as soon as
reasonably practicable (but in no event later than thirty (30) days
after such Casualty or Condemnation, whichever the case may be,
occurs) and shall diligently pursue the same to satisfactory
completion in compliance with all Applicable Laws, including,
without limitation, all applicable Environmental Laws and in
accordance with the terms and conditions of the Franchise Agreement;
(E) Lender shall be satisfied that any operating deficits,
including all scheduled payments of principal and interest under the
Note, which will be incurred with respect to the Individual Property
as a result of the occurrence of any such Casualty or Condemnation,
whichever the case may be, will be covered out of (1) the Net
Proceeds, (2) the insurance coverage referred to in Section
6.1(a)(iii), if applicable, or (3) by other funds of Borrower;
(F) Lender shall be satisfied that the Restoration will be
completed on or before the earliest to occur of (1) six (6) months
prior to the Maturity Date, (2) six (6) months after the occurrence
of such Casualty or Condemnation, or (3) the earliest date required
for such completion under the terms of any Leases which
97
are required in accordance with the provisions of this Section
6.4(b) to remain in effect subsequent to the occurrence of such
Casualty or Condemnation and the completion of the Restoration, or
(4) the date required for such completion pursuant to the Franchise
Agreement, (5) such time as may be required under Applicable Law, in
order to repair and restore the applicable Individual Property to
the condition it was in immediately prior to such Casualty or
Condemnation or (6) the expiration of the insurance coverage
referred to in Section 6.1(a)(iii);
(G) the Individual Property and the use thereof after the
Restoration will be in compliance with and permitted under all
Applicable Laws;
(H) Lender shall be satisfied that the Debt Service Coverage
Ratio for the twelve (12) month period immediately succeeding the
completion of the Restoration shall be equal to or greater than 1.30
to 1;
(I) such Casualty or Condemnation, as applicable, does not
result in the loss of access in any material respect to the
Individual Property or the related Improvements;
(J) Borrower shall deliver, or cause to be delivered, to
Lender a signed detailed budget approved in writing by Borrower's
architect or engineer stating the entire cost of completing the
Restoration, which budget shall be acceptable to Lender;
(K) the Net Proceeds together with any Cash or Cash equivalent
deposited by Borrower with Lender are sufficient in Lender's
discretion to cover the cost of the Restoration;
(L) the Management Agreement in effect as of the date of the
occurrence of such Casualty or Condemnation, whichever the case may
be, shall (1) remain in full force and effect during the Restoration
and shall not otherwise terminate as a result of the Casualty or
Condemnation or the Restoration or (2) if terminated, shall have
been replaced with a Replacement Management Agreement with a
Qualified Manager, prior to the opening or reopening of the
applicable Individual Property or any portion thereof for business
with the public; and
(M) the Franchise Agreement is not terminated as a result of
such Casualty or Condemnation.
(ii) The Net Proceeds shall be held by Lender in an interest-bearing
account and, until disbursed in accordance with the provisions of this
Section 6.4(b), shall constitute additional security for the Debt and
other obligations under the Loan Documents. The Net Proceeds shall be
disbursed by Lender to, or as directed by, Borrower from time to time
during the course of the Restoration, upon receipt of evidence
satisfactory to Lender that (A) all materials installed and work and labor
performed (except to the extent that they are to be paid for out of the
requested disbursement) in connection with the Restoration have been paid
for in full, and (B) there exist no notices of pendency, stop orders,
mechanic's or materialman's liens or notices of
98
intention to file same, or any other Liens or encumbrances of any nature
whatsoever on the Individual Property which have not either been fully
bonded to the satisfaction of Lender and discharged of record or in the
alternative fully insured to the satisfaction of Lender by the title
company issuing the Title Insurance Policy.
(iii) All plans and specifications required in connection with the
Restoration, the cost of which is greater than $250,000.00, shall be
subject to prior review and acceptance in all respects by Lender and by an
independent consulting engineer selected by Lender (the "Casualty
Consultant"). Lender shall have the use of the plans and specifications
and all permits, licenses and approvals required or obtained in connection
with the Restoration. The identity of the contractors, subcontractors and
materialmen engaged in the Restoration the cost of which is greater than
$250,000.00, as well as the contracts under which they have been engaged,
shall be subject to prior review and acceptance by Lender and the Casualty
Consultant. All costs and expenses incurred by Lender in connection with
making the Net Proceeds available for the Restoration including, without
limitation, reasonable counsel fees and disbursements and the Casualty
Consultant's fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make disbursements of
the Net Proceeds in excess of an amount equal to the costs actually
incurred from time to time for work in place as part of the Restoration,
as certified by the Casualty Consultant, minus the Casualty Retainage. The
term "Casualty Retainage" shall mean an amount equal to ten percent (10%),
of the costs actually incurred for work in place as part of the
Restoration, as certified by the Casualty Consultant, until the
Restoration has been completed. The Casualty Retainage shall in no event,
and notwithstanding anything to the contrary set forth above in this
Section 6.4(b), be less than the amount actually held back by Borrower
from contractors, subcontractors and materialmen engaged in the
Restoration. The Casualty Retainage shall not be released until the
Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 6.4(b) and
that all approvals necessary for the re-occupancy and use of the
Individual Property have been obtained from all appropriate Governmental
Authorities, and Lender receives evidence satisfactory to Lender that the
costs of the Restoration have been paid in full or will be paid in full
out of the Casualty Retainage; provided, however, that Lender will release
the portion of the Casualty Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the Restoration as of
the date upon which the Casualty Consultant certifies to Lender that the
contractor, subcontractor or materialman has satisfactorily completed all
work and has supplied all materials in accordance with the provisions of
the contractor's, subcontractor's or materialman's contract, the
contractor, subcontractor or materialman delivers the lien waivers and
evidence of payment in full of all sums due to the contractor,
subcontractor or materialman as may be reasonably requested by Lender or
by the title company issuing the Title Insurance Policy for the related
Individual Property, and Lender receives an endorsement to such Title
Insurance Policy insuring the continued priority of the Lien of the
related Security Instrument and evidence of payment of any premium payable
for such endorsement. If required by Lender, the release of any such
portion of the Casualty Retainage shall be approved by the surety company,
if any, which
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has issued a payment or performance bond with respect to the contractor,
subcontractor or materialman.
(v) Lender shall not be obligated to make disbursements of the Net
Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the opinion of Lender in consultation with the
Casualty Consultant, if any, be sufficient to pay in full the balance of
the costs which are estimated by the Casualty Consultant to be incurred in
connection with the completion of the Restoration, Borrower shall deposit
the deficiency (the "Net Proceeds Deficiency") with Lender before any
further disbursement of the Net Proceeds shall be made. The Net Proceeds
Deficiency deposited with Lender shall be held by Lender and shall be
disbursed for costs actually incurred in connection with the Restoration
on the same conditions applicable to the disbursement of the Net Proceeds,
and until so disbursed pursuant to this Section 6.4(b) shall constitute
additional security for the Debt and other obligations under the Loan
Documents.
(vii) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender
after the Casualty Consultant certifies to Lender that the Restoration has
been completed in accordance with the provisions of this Section 6.4(b),
and the receipt by Lender of evidence satisfactory to Lender that all
costs incurred in connection with the Restoration have been paid in full,
shall be remitted by Lender to Borrower, provided no Event of Default
shall have occurred and shall be continuing under the Note, this Agreement
or any of the other Loan Documents.
(c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 6.4(b)(vii) may be retained and applied by Lender toward the payment
of the Debt whether or not then due and payable in such order, priority and
proportions as Lender in its sole discretion shall deem proper, or, at the
discretion of Lender, the same may be paid, either in whole or in part, to
Borrower for such purposes as Lender shall approve, in its discretion. If Lender
shall receive and retain Net Proceeds, the Lien of the Security Instruments
shall be reduced only by the amount thereof received and retained by Lender and
actually applied by Lender in reduction of the Debt.
VII. RESERVE FUNDS
SECTION 7.1 Required Repair Funds.
7.1.1 Deposits.
On the Closing Date, Borrower shall deposit into an escrow account with
Lender (the "Required Repair Account") the amount for each Individual Property
set forth on such Schedule III hereto to perform the Required Repairs for such
Individual Property. Amounts so deposited with Lender shall be held by Lender in
accordance with Section 7.7 hereof. Amounts so deposited shall hereinafter be
referred to as Borrower's "Required Repair Fund." Borrower shall
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perform the repairs at the Properties, as more particularly set forth on
Schedule III hereto (such repairs hereinafter referred to as "Required
Repairs"). Borrower shall complete the Required Repairs on or before the date
which is three hundred sixty five (365) days from the date hereof. It shall be
an Event of Default under this Agreement if (a) Borrower does not complete the
Required Repairs at each Individual Property within three hundred sixty five
(365) days from the date hereof, or (b) Borrower does not satisfy each condition
contained in Section 7.1.2 hereof. Upon the occurrence of an Event of Default,
Lender, at its option, may withdraw all Required Repair Funds from the Required
Repair Account and Lender may apply such funds either to completion of the
Required Repairs at one or more of the Properties or toward payment of the Debt
in such order, proportion and priority as Lender may determine in its sole
discretion. Lender's right to withdraw and apply Required Repair Funds shall be
in addition to all other rights and remedies provided to Lender under this
Agreement and the other Loan Documents.
7.1.2 Release of Required Repair Funds.
Lender shall disburse to Borrower the Required Repair Funds from the
Required Repair Account from time to time upon satisfaction by Borrower of each
of the following conditions: (a) Borrower shall submit a written request for
payment to Lender at least fifteen (15) days prior to the date on which Borrower
requests such payment be made and specifies the Required Repairs to be paid, (b)
on the date such request is received by Lender and on the date such payment is
to be made, no Event of Default shall exist and remain uncured, (c) Lender shall
have received an Officers' Certificate (i) stating that all Required Repairs at
the applicable Individual Property to be funded by the requested disbursement
have been completed in good and workmanlike manner and, to the best of
Borrower's knowledge, in accordance with all Legal Requirements and
Environmental Laws, such certificate to be accompanied by a copy of any license,
permit or other approval by any Governmental Authority required to commence
and/or complete the Required Repairs, (ii) identifying each Person that supplied
materials or labor in connection with the Required Repairs performed at such
Individual Property with respect to the reimbursement to be funded by the
requested disbursement, and (iii) stating that each such Person has been paid in
full upon such disbursement, such Officers' Certificate to be accompanied by
lien waivers or other evidence of payment satisfactory to Lender, (d) at
Lender's option, a title search for such Individual Property indicating that
such Individual Property is free from all Liens, claims and other encumbrances
not previously approved by Lender, and (e) Lender shall have received such other
evidence as Lender shall reasonably request that the Required Repairs at such
Individual Property to be funded by the requested disbursement have been
completed and are paid for upon such disbursement to Borrower. Lender shall not
be required to make disbursements from the Required Repair Account with respect
to any Individual Property unless such requested disbursement is in an amount
greater than $25,000 (or a lesser amount if the total amount in the Required
Repair Account is less than $25,000, in which case only one disbursement of the
amount remaining in the account shall be made). Lender shall not be obligated to
make disbursements from the Required Repair Account with respect to an
Individual Property in excess of the amount allocated for such Individual
Property as set forth on Schedule III hereof. Upon Lender's receipt of evidence
of completion of all Required Repairs in accordance with the terms hereof, any
remaining Required Repair Funds shall be disbursed to (i) provided no Mezzanine
Event of Default or Junior Mezzanine Event of Default has occurred and is
continuing, Borrower or during an Excess Cash Flow Sweep Period, the Excess Cash
Flow Account or (ii) after the occurrence and during the continuance of a
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Mezzanine Event of Default or Junior Mezzanine Event of Default, Mezzanine
Lender or Junior Mezzanine Lender, as applicable.
SECTION 7.2 Tax and Insurance Escrow Fund.
Borrower shall pay to Lender on each Payment Date (a) one-twelfth of the
Taxes (the "Monthly Tax Deposit") that Lender estimates will be payable during
the next ensuing twelve (12) months in order to accumulate with Lender
sufficient funds to pay all such Taxes at least thirty (30) days prior to their
respective due dates; and (b) at the option of Lender, if the liability or
casualty Policy maintained by Borrower covering the Properties shall not
constitute an approved blanket or umbrella Policy pursuant to Section 6.1(c)
hereof, or Lender shall require Borrower to obtain a separate Policy pursuant to
Section 6.1(c) hereof, one-twelfth of the Insurance Premiums (the "Monthly
Insurance Premium Deposit") that Lender estimates will be payable for the
renewal of the coverage afforded by the Policies upon the expiration thereof in
order to accumulate with Lender sufficient funds to pay all such Insurance
Premiums at least thirty (30) days prior to the expiration of the Policies (said
amounts in (a) and (b) above hereinafter called the "Tax and Insurance Escrow
Fund"). In the event Lender shall elect to collect payments in escrow for
Insurance Premiums pursuant to clause (b) above, Borrower shall pay to Lender an
initial deposit to be determined by Lender, in its sole discretion, to increase
the amounts in the Tax and Insurance Escrow Fund to an amount which, together
with anticipated Monthly Insurance Premium Deposits, shall be sufficient to pay
all Insurance Premiums as they become due. The Tax and Insurance Escrow Fund and
the payments of interest or principal or both, payable pursuant to the Note and
this Agreement, shall be added together and shall be paid as an aggregate sum by
Borrower to Lender. Lender will apply the Tax and Insurance Escrow Fund to
payments of Taxes and Insurance Premiums required to be made by Borrower
pursuant to Section 5.1.2 hereof. In making any payment relating to the Tax and
Insurance Escrow Fund, Lender may do so according to any ▇▇▇▇, statement or
estimate procured from the appropriate public office (with respect to Taxes) or
insurer or agent (with respect to Insurance Premiums), without inquiry into the
accuracy of such ▇▇▇▇, statement or estimate or into the validity of any tax,
assessment, sale, forfeiture, tax lien or title or claim thereof. If the amount
of the Tax and Insurance Escrow Fund shall exceed the amounts due for Taxes and
Insurance Premiums pursuant to Section 5.1.2 hereof, Lender shall, in its sole
discretion, return any excess to Borrower or credit such excess against future
payments to be made to the Tax and Insurance Escrow Fund. In allocating such
excess, Lender may deal with the Person shown on the records of Lender to be the
owner of the Properties. Any amount remaining in the Tax and Insurance Escrow
Fund after the Debt has been paid in full shall be returned to Borrower. If at
any time Lender reasonably determines that the Tax and Insurance Escrow Fund is
not or will not be sufficient to pay Taxes and Insurance Premiums by the dates
set forth in (a) and (b) above, Lender shall notify Borrower of such
determination and Borrower shall increase its monthly payments to Lender by the
amount that Lender estimates is sufficient to make up the deficiency at least
thirty (30) days prior to delinquency of the Taxes and/or thirty (30) days prior
to expiration of the Policies, as the case may be.
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SECTION 7.3 Replacements and Replacement Reserve.
7.3.1 Replacement Reserve Fund.
Borrower shall pay to Lender on each Payment Date, the Replacement Reserve
Monthly Deposit for Capital Expenditures required to be made to the Properties
during the calendar year, as may be necessary to maintain and operate first
class, reputable hotels in the manner and quality of the hotels operated at the
Properties on the date hereof (collectively, the "Replacements"). Amounts so
deposited shall hereinafter be referred to as Borrower's "Replacement Reserve
Fund".
7.3.2 Disbursements from Replacement Reserve Account.
(a) Lender shall make disbursements from the Replacement Reserve Account
to reimburse Borrower only for the costs of the Replacements. Lender shall not
be obligated to make disbursements from the Replacement Reserve Account to
reimburse Borrower for the costs of routine maintenance (other than
Replacements) to an Individual Property or for costs which are to be reimbursed
from the Required Repair Fund.
(b) Lender shall, upon written request from Borrower and satisfaction of
the requirements set forth in this Section 7.3.2, disburse to Borrower amounts
from the Replacement Reserve Account necessary to reimburse Borrower for the
actual costs of Replacements. In no event shall Lender be obligated to disburse
funds from the Replacement Reserve Account if an Event of Default exists.
(c) Each request for disbursement from the Replacement Reserve Account
shall be in a form reasonably acceptable to Lender and shall specify (i) the
specific Replacements for which the disbursement is requested, (ii) the quantity
and price of each item purchased, if the Replacement includes the purchase or
replacement of specific items, (iii) the price of all materials (grouped by type
or category) used in any Replacement other than the purchase or replacement of
specific items, and (iv) the cost of all contracted labor or other services
applicable to each Replacement for which the disbursement is requested. With
each request Borrower shall certify that, to the best of Borrower's knowledge,
all Replacements have been made in accordance with all applicable Legal
Requirements of any Governmental Authority having jurisdiction over the
applicable Individual Property to which the Replacements are being provided.
Upon request of Lender in connection with each request for disbursement in
excess of $200,000, Borrower shall provide Lender with copies of invoices for
amounts in excess of $100,000 for items or materials purchased or contracted
labor or services. Borrower shall provide Lender evidence of completion
satisfactory to Lender in its reasonable judgment.
(d) Borrower shall pay all invoices in connection with the Replacements
with respect to each request for disbursement prior to submitting such request
for disbursement from the Replacement Reserve Account or, at the request of
Borrower, Lender will issue joint checks, payable to Borrower and the
contractor, supplier, materialman, mechanic, subcontractor or other party to
whom payment is due in connection with a Replacement. In the case of payments
made by joint check, Lender may require a waiver of lien from each Person
receiving payment prior to Lender's disbursement from the Replacement Reserve
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Account. In addition, as a condition to any disbursement, Lender may require
Borrower to obtain lien waivers from each contractor, supplier, materialman,
mechanic or subcontractor who receives payment in an amount equal to or greater
than $100,000 for completion of its work or delivery of its materials. Any lien
waiver delivered hereunder shall conform to the requirements of Applicable Law
and shall cover all work performed and materials supplied (including equipment
and fixtures) for the applicable Individual Property by that contractor,
supplier, subcontractor, mechanic or materialman through the date covered by the
current reimbursement request (or, in the event that payment to such contractor,
supplier, subcontractor, mechanic or materialmen is to be made by a joint check,
the release of lien shall be effective through the date covered by the previous
release of funds request).
(e) Borrower shall not make a request for disbursement from the
Replacement Reserve Account more frequently than once in any calendar month and
(except in connection with the final disbursement) the total cost of all
Replacements in any request shall not be less than $25,000.
7.3.3 Performance of Replacements.
(a) Borrower shall make Replacements when required in order to keep each
Individual Property in condition and repair consistent with other first class,
full service hotels in the same market segment and under the same franchisor in
the metropolitan area in which the respective Individual Property is located,
and to keep each Individual Property or any portion thereof from deteriorating.
Borrower shall complete all Replacements in a good and workmanlike manner as
soon as practicable following the commencement of making each such Replacement.
(b) Intentionally Omitted.
(c) Upon the occurrence and during the continuance of an Event of Default,
in the event Lender determines in its reasonable discretion that any Replacement
is not being performed in a workmanlike or timely manner or that any Replacement
has not been completed in a workmanlike or timely manner, Lender shall have the
option, without providing any prior notice to Borrower, to withhold disbursement
for such unsatisfactory Replacement and to proceed under existing contracts or,
upon five (5) Business Days prior written notice to Borrower, to contract with
third parties to complete such Replacement and to apply the Replacement Reserve
Fund toward the labor and materials necessary to complete such Replacement and
to exercise any and all other remedies available to Lender upon an Event of
Default hereunder.
(d) In order to facilitate Lender's completion or making of the
Replacements pursuant to Section 7.3.3(c) above, upon the occurrence and during
the continuance of an Event of Default, Borrower grants Lender the right to
enter onto any Individual Property and perform any and all work and labor
necessary to complete or make the Replacements and/or employ watchmen to protect
such Individual Property from damage. All sums so expended by Lender, to the
extent not from the Replacement Reserve Fund, shall be deemed to have been
advanced under the Loan to Borrower and secured by the Security Instruments. For
this purpose, Borrower constitutes and appoints Lender its true and lawful
attorney-in-fact with
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full power of substitution to complete or undertake the Replacements in the name
of Borrower. Such power of attorney shall be deemed to be a power coupled with
an interest and cannot be revoked. Borrower empowers said attorney-in-fact as
follows: (i) to use any funds in the Replacement Reserve Account for the purpose
of making or completing the Replacements; (ii) to make such additions, changes
and corrections to the Replacements as shall be necessary or desirable to
complete the Replacements; (iii) to employ such contractors, subcontractors,
agents, architects and inspectors as shall be required for such purposes; (iv)
to pay, settle or compromise all existing bills and claims which are or may
become Liens against any Individual Property, or as may be necessary or
desirable for the completion of the Replacements, or for clearance of title; (v)
to execute all applications and certificates in the name of Borrower which may
be required by any of the contract documents; (vi) to prosecute and defend all
actions or proceedings in connection with any Individual Property or the
rehabilitation and repair of any Individual Property; and (vii) to do any and
every act which Borrower might do in its own behalf to fulfill the terms of this
Agreement.
(e) Nothing in this Section 7.3.3 shall: (i) make Lender responsible for
making or completing the Replacements; (ii) require Lender to expend funds in
addition to the Replacement Reserve Fund to make or complete any Replacement;
(iii) obligate Lender to proceed with the Replacements; or (iv) obligate Lender
to demand from Borrower additional sums to make or complete any Replacement.
(f) Borrower shall permit Lender and Lender's agents and representatives
(including, without limitation, Lender's engineer, architect, or inspector) or
third parties making Replacements pursuant to this Section 7.3.3 to enter onto
each Individual Property during normal business hours (subject to the rights of
tenants under their Leases) to inspect the progress of any Replacements and all
materials being used in connection therewith, to examine all plans and shop
drawings relating to such Replacements which are or may be kept at each
Individual Property, and to complete any Replacements made pursuant to this
Section 7.3.3. Borrower shall cause all contractors and subcontractors to
cooperate with Lender or Lender's representatives or such other persons
described above in connection with inspections described in this Section
7.3.3(f) or the completion of Replacements pursuant to this Section 7.3.3.
(g) Upon the occurrence and during the continuance of an Event of Default,
Lender may require an inspection of an Individual Property at Borrower's expense
prior to making a monthly disbursement from the Replacement Reserve Account,
with respect to each Individual Property, in order to verify completion of the
Replacements for which reimbursement is sought. Lender may require that such
inspection be conducted by an appropriate independent qualified professional
selected by Lender and/or may require a copy of a certificate of completion by
an independent qualified professional acceptable to Lender prior to the
disbursement of any amounts from the Replacement Reserve Account. Borrower shall
pay the expense of the inspection as required hereunder, whether such inspection
is conducted by Lender or by an independent qualified professional.
(h) The Replacements and all materials, equipment, fixtures, or any other
item comprising a part of any Replacement shall be constructed, installed or
completed, as applicable, free and clear of all mechanic's, materialmen's or
other Liens.
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(i) Before each disbursement from the Replacement Reserve Account relating
to actual physical work on the Improvements in excess of $200,000 with respect
to each Individual Property, Lender may require Borrower to provide Lender with
a search of title to the applicable Individual Property effective to the date of
the disbursement, which search shows that no mechanic's or materialmen's Liens
or other Liens of any nature have been placed against the applicable Individual
Property since the date of recordation of the related Security Instrument and
that title to such Individual Property is free and clear of all Liens (other
than the Lien of the related Security Instrument and other Permitted
Encumbrances).
(j) All Replacements shall comply with all applicable Legal Requirements
of all Governmental Authorities having jurisdiction over the applicable
Individual Property and applicable insurance requirements including, without
limitation, applicable building codes, special use permits, environmental
regulations, and requirements of insurance underwriters.
(k) In addition to any insurance required under the Loan Documents,
Borrower shall provide or cause to be provided workmen's compensation insurance,
builder's risk, and public liability insurance and other insurance to the extent
required under Applicable Law in connection with a particular Replacement. All
such policies shall be in form and amount reasonably satisfactory to Lender. All
such policies which can be endorsed with standard mortgagee clauses making loss
payable to Lender or its assigns shall be so endorsed. Certified copies of such
policies shall be delivered to Lender
7.3.4 Failure to Make Replacements.
(a) It shall be an Event of Default under this Agreement if Borrower fails
to comply with any provision of this Section 7.3 and such failure is not cured
within thirty (30) days after written notice from Lender. Upon the occurrence of
an Event of Default, Lender may use the Replacement Reserve Fund (or any portion
thereof) for any purpose, including but not limited to completion of the
Replacements as provided in Sections 7.3.3(c) and 7.3.3(d), or for any other
repair or replacement to any Individual Property or toward payment of the Debt
in such order, proportion and priority as Lender may determine in its sole
discretion. Lender's right to withdraw and apply the Replacement Reserve Funds
shall be in addition to all other rights and remedies provided to Lender under
this Agreement and the other Loan Documents.
(b) Nothing in this Agreement shall obligate Lender to apply all or any
portion of the Replacement Reserve Fund on account of an Event of Default to
payment of the Debt or in any specific order or priority.
7.3.5 Balance in the Replacement Reserve Account.
The insufficiency of any balance in the Replacement Reserve Account shall
not relieve Borrower from its obligation to fulfill all preservation and
maintenance covenants in the Loan Documents.
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SECTION 7.4 Ground Lease Escrow Fund.
In the event that the annual Ground Rent due pursuant to a Ground Lease is
in excess of $100.00, Borrower shall pay to Lender on each Payment Date an
amount (the "Monthly Ground Rent Deposit") that is estimated by Lender to be due
and payable by Borrower under the Ground Lease for all rent and any and all
other charges (the "Ground Rent") which may be due by Borrower under the Ground
Lease in order to accumulate with Lender sufficient funds to pay all sums
payable under the Ground Lease at least fifteen (15) Business Days prior to the
dates due (said amounts, hereinafter called the "Ground Lease Escrow Fund"). The
Ground Lease Escrow Fund is for the purpose of paying all sums due under the
Ground Lease. Upon Borrower's failure to pay any Ground Rents pursuant to the
Ground Lease, Lender may, in its discretion, apply any amounts held in the
Ground Lease Escrow Fund to the payment of such Ground Rent; provided however,
that the provisions of this Section 7.4 shall not be deemed to create any
obligation on the part of Lender to pay any such Ground Rent from amounts on
deposit in the Ground Lease Escrow Fund. Such deposit may be increased by Lender
in the amount Lender deems is necessary in its reasonable discretion based on
any increases in the Ground Rent due under the Ground Lease.
SECTION 7.5 UST Reserve Funds.
7.5.1 Deposits.
On the Closing Date, Borrower shall deposit with Lender $62,500.00 to
perform any Required Remediation for the Omaha Property. Amounts so deposited
with Lender shall be held by Lender in accordance with this Section. Amounts so
deposited shall hereinafter be referred to as Borrower's "UST Reserve Fund."
Borrower shall complete such Required Remediation within one hundred eighty
(180) days of the Closing Date. It shall be an Event of Default under this
Agreement if Borrower does not complete the Required Remediation in accordance
with the terms hereof within such one hundred eighty (180) day period. Upon the
occurrence of an Event of Default, Lender, at its option, may withdraw all UST
Reserve Funds from the UST Reserve Account and Lender may apply such funds
either to the completion of the Required Remediation or toward payment of the
Debt in such order, proportion and priority as Lender may determine in its sole
discretion. Lender's right to withdraw and apply UST Reserve Funds shall be in
addition to all other rights and remedies provided to Lender under this
Agreement and the other Loan Documents.
7.5.2 Release of UST Reserve Funds.
Lender shall disburse to Borrower the UST Reserve Funds from the UST
Reserve Account upon satisfaction by Borrower of each of the following
conditions: (a) No Event of Default shall then exist, (b) Borrower shall have
delivered evidence reasonably satisfactory to Lender that the Required
Remediation has been completed in accordance with all applicable Environmental
Laws (including, without limitation, obtaining any necessary permits, licenses,
approvals or letters from the applicable Governmental Authority having
jurisdiction over monitoring and compliance of the Required Remediation
evidencing that the Required Remediation has been completed in accordance with
all applicable Environmental Laws (including a so-called "No Further Action
Letter")), and (c) at Lender's option, a title search for
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such Individual Property indicating that such Individual Property is free from
all environmental Liens, claims and other encumbrances other than the Permitted
Encumbrances. Upon the earlier of (1) Borrower's completion of all Required
Remediation and the satisfaction of all of the requirements set forth in this
Section 7.5.2 with respect to such Required Remediation or (2) payment in full
by Borrower of all sums evidenced by the Note and secured by the Security
Instruments, Lender shall disburse to Borrower all of the UST Reserve Funds.
SECTION 7.6 Reserve Funds, Generally.
(a) Borrower grants to Lender a first-priority perfected security interest
in each of the Reserve Funds and the related Accounts and any and all monies now
or hereafter deposited in each Reserve Fund and related Account as additional
security for payment of the Debt. Until expended or applied in accordance
herewith, the Reserve Funds and the related Accounts shall constitute additional
security for the Debt.
(b) Upon the occurrence of an Event of Default, Lender may, in addition to
any and all other rights and remedies available to Lender, apply any sums then
present in any or all of the Reserve Funds to the payment of the Debt in any
order in its sole discretion.
(c) The Reserve Funds shall not constitute trust funds and may be
commingled with other monies held by Lender.
(d) The Reserve Funds shall be held in interest bearing accounts and all
earnings or interest on a Reserve Fund shall be added to and become a part of
such Reserve Fund and shall be disbursed in the same manner as other monies
deposited in such Reserve Fund, except that earnings or interest on the Tax and
Insurance Escrow Fund shall not be added to or become a part thereof and shall
be the sole property of and shall be paid to Lender.
(e) Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, assign or grant any security interest in any Reserve
Fund or related Account or the monies deposited therein or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to be
filed with respect thereto.
(f) Borrower shall indemnify Lender and hold Lender harmless from and
against any and all actions, suits, claims, demands, liabilities, losses,
damages, obligations and costs and expenses (including litigation costs and
reasonable attorneys fees and expenses) arising from or in any way connected
with the Reserve Funds or the related Accounts or the performance of the
obligations for which the Reserve Funds or the related Accounts were
established, except to the extent arising from the fraud, illegal acts, gross
negligence or willful misconduct of Lender, its agents or employees. Borrower
shall assign to Lender all rights and claims Borrower may have against all
Persons supplying labor, materials or other services which are to be paid from
or secured by the Reserve Funds or the related Accounts; provided, however, that
Lender may not pursue any such right or claim unless an Event of Default has
occurred and remains uncured.
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VIII. DEFAULTS
SECTION 8.1 Event of Default.
(a) Each of the following events shall constitute an event of default
hereunder (an "Event of Default"):
(i) if any portion of the Debt is not paid on or before the date the
same is due and payable;
(ii) if any of the Taxes or Other Charges are not paid on or before
the date when the same are due and payable;
(iii) if the Policies are not kept in full force and effect or if
certified copies of the Policies are not delivered to Lender promptly on
request;
(iv) if a Transfer occurs in violation of the provisions of Section
5.2.10 hereof or Article 7 of the Security Instruments;
(v) if any representation or warranty made by Borrower, an Operating
Lessee SPE Entity, Principal, Ground Lessor, Indemnitor or Guarantor
herein or in any other Loan Document, or in any report, certificate,
financial statement or other instrument, agreement or document furnished
to Lender shall have been false or misleading in any material respect as
of the date the representation or warranty was made;
(vi) if Borrower, an Operating Lessee SPE Entity, Principal, Ground
Lessor, Indemnitor, Guarantor or any other guarantor under any guaranty
issued in connection with the Loan shall make an assignment for the
benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for
Borrower, Principal, an Operating Lessee SPE Entity, Ground Lessor,
Indemnitor, Guarantor or any other guarantor under any guarantee issued in
connection with the Loan or if Borrower, Principal, an Operating Lessee
SPE Entity, Ground Lessor, Indemnitor, Guarantor or such other guarantor
shall be adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to the Bankruptcy Code,
or any similar federal or State law, shall be filed by or against,
consented to, or acquiesced in by, Borrower, Principal, an Operating
Lessee SPE Entity, Ground Lessor, Indemnitor, Guarantor or such other
guarantor, or if any proceeding for the dissolution or liquidation of
Borrower, Principal, an Operating Lessee SPE Entity, Ground Lessor,
Indemnitor, Guarantor or such other guarantor shall be instituted;
provided, however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by Borrower, Principal, an
Operating Lessee SPE Entity, Ground Lessor, Indemnitor, Guarantor or such
other guarantor, upon the same not being discharged, stayed or dismissed
within sixty (60) days;
(viii) if Borrower or Operating Lessee attempts to assign its rights
under this Agreement or any of the other Loan Documents or any interest
herein or therein in contravention of the Loan Documents;
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(ix) other than for with respect to a default which is expressly
contemplated by another subsection of this Section 8.1(a), if Borrower
breaches any of its respective negative covenants contained in Section
5.2;
(x) if Borrower violates or does not comply in any material respect
with any of the provisions of Section 5.1.17 hereof;
(xi) if a (a) default has occurred and continues beyond any
applicable cure period under the Management Agreement (or any Replacement
Management Agreement) if such default permits the Manager thereunder to
terminate or cancel the Management Agreement (or any Replacement
Management Agreement) or (b) any Management Agreement (or Replacement
Management Agreement) expires or otherwise terminates and is not replaced
with a Replacement Management Agreement or (c) if any Individual Property
operates for any time without the Management Agreement or a Replacement
Management Agreement;
(xii) if Borrower or Principal violates or does not comply in all
material respects with the provisions of Section 4.1.35 hereof;
(xiii) if any Individual Property becomes subject to any mechanic's,
materialman's or other Lien other than a Lien for local real estate taxes
and assessments not then due and payable and the Lien shall remain
undischarged of record (by payment, bonding or otherwise) for a period of
sixty (60) days;
(xiv) if any federal tax Lien or state or local income tax Lien is
filed against Borrower, Principal, an Operating Lessee SPE Entity, any
Guarantor, Indemnitor or any Individual Property and same is not
discharged of record within thirty (30) days after same is filed;
(xv) (A) Borrower fails to timely provide Lender with the written
certification and evidence referred to in Section 5.2.8 hereof, (B)
Borrower or Operating Lessee is a Plan or its assets constitute Plan
Asset; or (C) Borrower or Operating Lessee consummates a transaction which
would cause the Security Instruments or Lender's exercise of its rights
under the Security Instruments, the Note, this Agreement or the other Loan
Documents to constitute a nonexempt prohibited transaction under ERISA or
result in a violation of a State statute regulating governmental plans,
subjecting Lender to liability for a violation of ERISA, the Code, a State
statute or other similar law;
(xvi) if Borrower shall fail to deliver to Lender, within fifteen
(15) Business Days after request by Lender, the estoppel certificates
required pursuant to the terms of Section 5.1.13(a) hereof;
(xvii) if any default occurs under any guaranty or indemnity
executed in connection herewith (including, without limitation, the
Guaranty and the Environmental Indemnity) and such default continues after
the expiration of applicable grace periods, if any;
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(xviii) other than in connection with the Permitted FF&E Financing,
if Borrower shall be in default beyond applicable notice and grace periods
under any other mortgage, deed of trust, deed to secure debt or other
security agreement covering any part of any Individual Property whether it
be superior or junior in lien to the related Security Instrument;
(xix) if (i) the Interest Rate Cap Agreement is terminated for any
reason by Borrower or the Counterparty, or (ii) the Counterparty defaults
in the performance of its monetary obligations under the Interest Rate Cap
Agreement or (iii) the rating of the Counterparty is subject to any
downgrade, withdrawal or qualification by an Rating Agency, and Borrower
does not within ten (10) Business Days (A) replace the Interest Rate Cap
Agreement with a Replacement Interest Rate Cap Agreement in accordance
with Section 2.4 hereof, and (B) deliver to Lender, in form and substance
reasonably satisfactory to Lender (x) an Assignment of Interest Rate Cap
(y) a recognition letter from the Counterparty thereto acknowledging the
assignment of the Replacement Interest Rate Cap Agreement and (z) any
other opinions or documents required pursuant to Section 2.4 hereof;
(xx) with respect to any term, covenant or provision set forth
herein which specifically contains a notice requirement or grace period,
if Borrower shall be in default under such term, covenant or condition
after the giving of such notice or the expiration of such grace period;
(xxi) if any default occurs under the Operating Lease Subordination
Agreement, and such default continues after the expiration of applicable
grace or cure periods, if any;
(xxii) if there shall occur any material default under the Operating
Lease, in the observance or performance of any term, covenant or condition
of the Operating Lease to be observed or performed and said default is not
cured following the expiration of any applicable grace and notice periods
therein provided or if the leasehold estate created by the Operating Lease
shall be surrendered or if the Operating Lease shall cease to be in full
force and effect or the Operating Lease shall be terminated or canceled
for any reason or under any circumstances whatsoever, or if any of the
terms, covenants or conditions of the Operating Lease shall in any manner
be modified, changed, supplemented, altered, or amended in any material
respect without the consent of Lender;
(xxiii) if any of the assumptions contained in the Insolvency
Opinion, or in any other "non-consolidation" opinion delivered to Lender
in connection with the Loan, or in any other "non-consolidation" opinion
delivered subsequent to the closing of the Loan, is or shall become untrue
in any material respect;
(xxiv) if (a) a material default has occurred and continues beyond
any applicable cure period under the Franchise Agreement, and such default
permits a party to terminate or cancel the Franchise Agreement or (b) any
Franchise Agreement expires or otherwise terminates and is not replaced
with a replacement Franchise Agreement reasonably acceptable to Lender;
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(xxv) if Borrower ceases to operate a hotel on any Individual
Property or terminates such business for any reason whatsoever (other than
temporary cessation in connection with any renovations to an Individual
Property or restoration of the Individual Property after Casualty or
Condemnation);
(xxvi) if Borrower terminates or cancels the Franchise Agreement,
without Lender's prior written consent;
(xxvii) if Borrower shall fail to pay the Ground Rent or any
additional rent or other charge mentioned in or made payable by the Ground
Lease when said rent or other charge is due and payable after the
expiration of all applicable notice and grace periods contained in such
Ground Lease;
(xxviii) if there shall occur any default by Borrower, as tenant
under the Ground Lease, in the observance or performance of any term,
covenant or condition of the Ground Lease on the part of Borrower to be
observed or performed and said default is not cured following the
expiration of any applicable grace and notice periods therein provided, or
if the leasehold estate created by the Ground Lease shall be surrendered
or if the Ground Lease shall cease to be in full force and effect or the
Ground Lease shall be terminated or canceled for any reason or under any
circumstances whatsoever, or if any of the terms, covenants or conditions
of the Ground Lease shall in any manner be modified, changed,
supplemented, altered, or amended without the consent of Lender;
(xxix) if Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement not specified in
subsections (i) to (xxviii) above, for ten (10) days after written notice
to Borrower from Lender, in the case of any Default which can be cured by
the payment of a sum of money, or for thirty (30) days after written
notice from Lender in the case of any other Default; provided, however,
that if such non-monetary Default is susceptible of cure but cannot
reasonably be cured within such 30-day period and provided further that
Borrower shall have commenced to cure such Default within such thirty (30)
day period and thereafter diligently and expeditiously proceeds to cure
the same, such thirty (30) day period shall be extended for such time as
is reasonably necessary for Borrower in the exercise of due diligence to
cure such Default, such additional period not to exceed sixty (60) days;
or
(xxx) if there shall be default under the Security Instruments or
any of the other Loan Documents beyond any applicable notice and cure
periods contained in such documents, whether as to Borrower or any
Individual Property, or if any other such event shall occur or condition
shall exist, if the effect of such event or condition is to accelerate the
maturity of any portion of the Debt or to permit Lender to accelerate the
maturity of all or any portion of the Debt.
(b) Upon the occurrence of an Event of Default (other than an Event of
Default described in clauses (vi) or (vii) above) and at any time thereafter, in
addition to any other rights or remedies available to it pursuant to this
Agreement and the other Loan Documents or at law or in equity, Lender may take
such action, without notice or demand, that Lender deems advisable to protect
and enforce its rights against Borrower and in and to all or any Individual
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Property, including, without limitation, declaring the Debt to be immediately
due and payable, and Lender may enforce or avail itself of any or all rights or
remedies provided in the Loan Documents against Borrower and any or all of the
Properties, including, without limitation, all rights or remedies available at
law or in equity; and upon any Event of Default described in clauses (vi) or
(vii) above, the Debt and all other obligations of Borrower hereunder and under
the other Loan Documents shall immediately and automatically become due and
payable, without notice or demand, and Borrower hereby expressly waives any such
notice or demand, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
SECTION 8.2 Remedies.
(a) Upon the occurrence of an Event of Default, all or any one or more of
the rights, powers, privileges and other remedies available to Lender against
Borrower under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower or at law or in equity may be exercised
by Lender at any time and from time to time, whether or not all or any of the
Debt shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to all or any
Individual Property or any other Collateral. Any such actions taken by Lender
shall be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by
Applicable Law, without impairing or otherwise affecting the other rights and
remedies of Lender permitted by Applicable Law, equity or contract or as set
forth herein or in the other Loan Documents. Without limiting the generality of
the foregoing, Borrower agrees that if an Event of Default is continuing (i)
Lender is not subject to any "one action" or "election of remedies" law or rule,
and (ii) all Liens and other rights, remedies or privileges provided to Lender
shall remain in full force and effect until Lender has exhausted all of its
remedies against the Properties and the other Collateral and each Security
Instrument has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.
(b) With respect to Borrower and the Properties, nothing contained herein
or in any other Loan Document shall be construed as requiring Lender to resort
to any Individual Property or Collateral for the satisfaction of any of the Debt
in preference or priority to any other Individual Property or Collateral, and
Lender may seek satisfaction out of all of the Properties or any other
Collateral or any part thereof, in its absolute discretion in respect of the
Debt. In addition, Lender shall have the right from time to time to partially
foreclose the Security Instruments in any manner and for any amounts secured by
the Security Instruments then due and payable as determined by Lender in its
sole discretion including, without limitation, the following circumstances: (i)
in the event Borrower defaults beyond any applicable grace period in the payment
of one or more scheduled payments of principal and interest, Lender may
foreclose one or more of the Security Instruments to recover such delinquent
payments, or (ii) in the event Lender elects to accelerate less than the entire
outstanding principal balance of the Loan, Lender may foreclose one or more of
the Security Instruments to recover so much of the principal balance of the Loan
as Lender may accelerate and such other sums secured by one or more of the
Security Instruments as Lender may elect. Notwithstanding one or more partial
foreclosures, the Properties shall remain subject to the
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Security Instruments to secure payment of sums secured by the Security
Instruments and not previously recovered.
(c) Lender shall have the right, from time to time, to sever the Note and
the other Loan Documents into one or more separate notes, Security Instruments
and other security documents (the "Severed Loan Documents") in such
denominations as Lender shall determine in its sole discretion for purposes of
evidencing and enforcing its rights and remedies provided hereunder. Borrower
shall execute and deliver to Lender from time to time, promptly after the
request of Lender, a severance agreement and such other documents as Lender
shall request in order to effect the severance described in the preceding
sentence, all in form and substance reasonably satisfactory to Lender. Borrower
hereby absolutely and irrevocably appoints Lender as its true and lawful
attorney, coupled with an interest, in its name and stead to make and execute
all documents necessary or desirable to effect the aforesaid severance, Borrower
ratifying all that its said attorney shall do by virtue thereof; provided,
however, Lender shall not make or execute any such documents under such power
until three (3) days after notice has been given to Borrower by Lender of
Lender's intent to exercise its rights under such power. The Severed Loan
Documents shall not contain any representations, warranties or covenants not
contained in the Loan Documents and any such representations and warranties
contained in the Severed Loan Documents will be given by Borrower only as of the
Closing Date.
SECTION 8.3 Remedies Cumulative; Waivers.
The rights, powers and remedies of Lender under this Agreement shall be
cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singularly, concurrently or otherwise, at such time
and in such order as Lender may determine in Lender's sole discretion. No delay
or omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one or more
Defaults or Events of Default with respect to Borrower shall not be construed to
be a waiver of any subsequent Default or Event of Default by Borrower or to
impair any remedy, right or power consequent thereon.
IX. SPECIAL PROVISIONS
SECTION 9.1 Sale of Notes and Securitization
Lender may, at any time, sell, pledge, transfer or assign the Note,
this Agreement, the Security Instruments and the other Loan Documents, and any
or all servicing rights with respect thereto, or grant participations therein or
issue mortgage pass-through certificates or other securities (the "Securities")
evidencing a beneficial interest in a rated or unrated public offering or
private placement (a "Securitization"). At the request of the holder of the Note
and, to the extent not already required to be provided by Borrower under this
Agreement, Borrower (subject to the limitations set forth at the end of this
Section 9.1) shall use its best efforts to satisfy the market standards to which
Lender customarily adheres or which may be reasonably
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required in the marketplace or by the Rating Agencies in connection with a
Securitization or the sale of the Note or the participations or Securities,
including, without limitation, to:
(a) (i) provide such financial and other information with respect to the
Properties, Borrower and the Manager, (ii) provide budgets relating to the
Properties and (iii) permit Lender or Lender's designees to perform or permit or
cause to be performed or permitted such site inspection, appraisals, market
studies, environmental reviews and reports (Phase I's and, if appropriate, Phase
II's), engineering reports and other due diligence investigations of the
Properties, as may be reasonably requested by the holder of the Note or the
Rating Agencies or as may be necessary or appropriate in connection with the
Securitization (the "Provided Information"), together, if customary, with
appropriate verification and/or consents of the Provided Information through
letters of accountants or opinions of counsel of independent attorneys
acceptable to Lender and the Rating Agencies;
(b) if required by the Rating Agencies, deliver (i) a revised Insolvency
Opinion, (ii) revised opinions of counsel as to due execution and enforceability
with respect to the Properties, Borrower, Guarantor, Indemnitor, Principal, the
Operating Lessee SPE Entities and their respective Affiliates and the Loan
Documents, and (iii) revised organizational documents for Borrower, Guarantor,
Indemnitor, Principal the Operating Lessee SPE Entities and their respective
Affiliates (including, without limitation, such revisions as are necessary to
comply with the provisions of Section 4.1.35 hereof), which counsel, opinions
and organizational documents shall be satisfactory to Lender and the Rating
Agencies;
(c) if required by the Rating Agencies, deliver such additional tenant
estoppel letters, subordination agreements or other agreements from parties to
agreements that affect the Properties, reasonably requested by Lender and the
Rating Agencies
(d) execute such amendments to the Loan Documents and organizational
documents as may be reasonably requested by the holder of the Note or the Rating
Agencies or otherwise to effect the Securitization; provided, however, that
Borrower shall not be required to modify or amend any Loan Document if such
modification or amendment would (i) materially increase Borrower's obligations
or out-of-pocket costs related to compliance with this Agreement, (except for
modifications and amendments required to be made pursuant to Section 9.1 (e)
below), (ii) change the interest rate, the stated maturity or the amortization
of principal set forth in the Note or (iii) modify or amend any other economic,
financial or payment term (or otherwise modify or amend in any material respect
any of the terms) of the Loan.
(e) if Lender elects, in its sole discretion, prior to or upon a
Securitization, to split the Loan into two or more parts, or the Note into
multiple component notes or tranches which may have different interest rates,
amortization payments and principal amounts, Borrower agrees to cooperate with
Lender in connection with the foregoing and to execute the required
modifications and amendments to the Note, this Agreement and the Loan Documents
and to provide opinions necessary to effectuate the same. Such Notes or
components may be assigned different interest rates, so long as the initial
weighted average of such interest rates does not exceed the Applicable Interest
Rate and the scheduled amortization payments do not exceed the Scheduled
Amortization Payment; and
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(f) make such representations and warranties as of the closing date of the
Securitization with respect to the Properties, Borrower, and the Loan Documents
as are customarily provided in securitization transactions and as may be
reasonably requested by the holder of the Note or the Rating Agencies and
consistent with the facts covered by such representations and warranties as they
exist on the date thereof, including the representations and warranties made in
the Loan Documents.
Other than costs and expenses which are otherwise the responsible of
Borrower pursuant to the terms of the Loan Documents, in connection with
Borrower's complying with requests made under this Section 9.1, Borrower shall
only be responsible for the payment of (i) Borrower's legal counsel and
accountants and (ii) any internal, administrative or clerical cost and expenses
incurred by Borrower.
SECTION 9.2 Securitization Indemnification.
(a) Borrower understands that certain of the Provided Information may be
included in disclosure documents in connection with the Securitization,
including, without limitation, a prospectus supplement, private placement
memorandum, offering circular or other offering document (each a "Disclosure
Document") and may also be included in filings (an "Exchange Act Filing") with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), or the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), or provided or made available to Investors or
prospective Investors in the Securities, the Rating Agencies, and service
providers relating to the Securitization. In the event that the Disclosure
Document is required to be revised prior to the sale of all Securities, Borrower
will cooperate with the holder of the Note in updating the Disclosure Document
by providing all current information necessary to keep the Disclosure Document
accurate and complete in all material respects.
(b) Borrower agrees to provide in connection with each of (i) a
preliminary and a final private placement memorandum or (ii) a preliminary and
final prospectus or prospectus supplement, as applicable, or (iii) collateral
and structured term sheets or similar materials, an indemnification certificate
(A) certifying that Borrower has carefully examined such memorandum or
prospectus or term sheets, as applicable, including without limitation, the
sections entitled "Special Considerations," "Description of the Mortgages,"
"Description of the Mortgage Loans and Mortgaged Property," "The Manager," "The
Borrower" and "Certain Legal Aspects of the Mortgage Loan," and such sections
(and any other sections reasonably requested) do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading in any material respect, (B) indemnifying Lender (and
for purposes of this Section 9.2, Lender hereunder shall include its officers
and directors), the Affiliate of JPMorgan Chase Bank ("JPMorgan Chase") that has
filed the registration statement relating to the Securitization (the
"Registration Statement"), each of its directors, each of its officers who have
signed the Registration Statement and each Person who controls the Affiliate
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively, the "JPMorgan Chase Group"), and JPMorgan Chase,
each of its directors and each Person who controls JPMorgan Chase within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act
(collectively, the "Underwriter Group")
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for any losses, claims, damages or liabilities (collectively, the "Liabilities")
to which Lender, the JPMorgan Chase Group or the Underwriter Group may become
subject insofar as the Liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in such
sections described in clause (A) above, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated in such sections or necessary in order to make the statements in such
sections or in light of the circumstances under which they were made, not
misleading in any material respect and (C) agreeing to reimburse Lender, the
JPMorgan Chase Group and the Underwriter Group for any legal or other expenses
reasonably incurred by Lender the JPMorgan Chase Group and the Underwriter Group
in connection with investigating or defending the Liabilities; provided,
however, that Borrower will be liable in any such case under clauses (B) or (C)
above only to the extent that any such Liability arises out of or is based upon
any such untrue statement or omission made therein in reliance upon and in
conformity with information furnished to Lender by or on behalf of Borrower in
connection with the preparation of the memorandum or prospectus or in connection
with the underwriting of the debt, including, without limitation, financial
statements of Borrower, operating statements, rent rolls, environmental site
assessment reports and property condition reports with respect to the
Properties. This indemnification will be in addition to any liability which
Borrower may otherwise have. Moreover, the indemnification provided for in
Clauses (B) and (C) above shall be effective whether or not an indemnification
certificate described in (A) above is provided and shall be applicable based on
information previously provided by Borrower or its Affiliates if Borrower does
not provide the indemnification certificate.
(c) In connection with filings under the Exchange Act, Borrower agrees to
indemnify (i) Lender, the JPMorgan Chase Group and the Underwriter Group for
Liabilities to which Lender, the JPMorgan Chase Group or the Underwriter Group
may become subject insofar as the Liabilities arise out of or are based upon the
omission or alleged omission to state in the Provided Information a material
fact required to be stated in the Provided Information in order to make the
statements in the Provided Information, in light of the circumstances under
which they were made not misleading in any material respect and (ii) reimburse
Lender, the JPMorgan Chase Group or the Underwriter Group for any legal or other
expenses reasonably incurred by Lender, the JPMorgan Chase Group or the
Underwriter Group in connection with defending or investigating the Liabilities.
(d) Promptly after receipt by an indemnified party under this Section 9.2
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 9.2, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party.
After notice from the indemnifying party to such indemnified party under this
Section 9.2 the
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indemnifying party shall not be responsible for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there are any legal defenses available to it and/or other indemnified
parties that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party to
parties. The indemnifying party shall not be liable for the expenses of more
than one such separate counsel unless an indemnified party shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to another indemnified party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnifications provided for in Section 9.2(b) or
(c) is or are for any reason held to be unenforceable by an indemnified party in
respect of any Liabilities (or action in respect thereof) referred to therein
which would otherwise be indemnifiable under Section 9.2(b) or (c), the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such Liabilities (or action in respect
thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. In determining the amount of contribution to which
the respective parties are entitled, the following factors shall be considered:
(i) JPMorgan Chase's and Borrower's relative knowledge and access to information
concerning the matter with respect to which claim was asserted; (ii) the
opportunity to correct and prevent any statement or omission; and (iii) any
other equitable considerations appropriate in the circumstances. Lender and
Borrower hereby agree that it would not be equitable if the amount of such
contribution were determined solely by pro rata or per capita allocation.
(f) The liabilities and obligations of both Borrower and Lender under this
Section 9.2 shall survive the termination of this Agreement and the satisfaction
and discharge of the Debt.
SECTION 9.3 Servicer.
At the option of Lender or Agent, the Loan may be serviced by a
servicer/trustee (the "Servicer") selected by Lender or Agent and Lender or
Agent may delegate all or any portion of its responsibilities under this
Agreement and the other Loan Documents to the Servicer pursuant to a servicing
agreement (the "Servicing Agreement") between Lender or Agent and Servicer.
SECTION 9.4 Exculpation.
(a) Except as otherwise provided in this Section 9.4 and comparable
provisions in the Security Instruments or in the other Loan Documents, Lender
shall not enforce the liability and obligation of Borrower or any of Borrower's
Affiliates to perform and observe the obligations contained in this Agreement,
the Note or the Security Instruments by any action or
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proceeding wherein a money judgment shall be sought against Borrower or any of
Borrower's Affiliates, except that Lender may bring a foreclosure action, action
for specific performance or other appropriate action or proceeding to enable
Lender to enforce and realize upon this Agreement, the Note, the Security
Instruments, the other Loan Documents, and the interest in the Properties, the
Rents and any other Collateral created by this Agreement, the Note, the Security
Instruments and the other Loan Documents; provided, however, that any judgment
in any such action or proceeding shall be enforceable against Borrower only to
the extent of Borrower's interest in the Properties, in the Rents and in any
other Collateral. Lender, by accepting this Agreement, the Note and the Security
Instruments, agrees that it shall not, except as otherwise provided in this
Section 9.4 and comparable provisions in the Security Instruments, ▇▇▇ for, seek
or demand any deficiency judgment against Borrower or any of Borrower's
Affiliates in any such action or proceeding, under or by reason of or under or
in connection with this Agreement, the Note, the Security Instruments or the
other Loan Documents. The provisions of this Section shall not, however, (i)
constitute a waiver, release or impairment of any obligation evidenced or
secured by this Agreement, the Note, the Security Instruments or the other Loan
Documents; (ii) impair the right of Lender to name Borrower as a party defendant
in any action or suit for judicial foreclosure and sale under the Security
Instruments; (iii) except as set forth in this Section 9.4, affect the validity
or enforceability of any indemnity (including, without limitation, the
Environmental Indemnity), guaranty (including, without limitation, the
Guaranty), master lease or similar instrument made in connection with this
Agreement, the Note, the Security Instruments, or the other Loan Documents; (iv)
impair the right of Lender to obtain the appointment of a receiver; (v) except
as set forth in this Section 9.4, impair the enforcement of the Assignment of
Leases; (vi) impair the right of Lender to enforce the provisions of Sections
10.2 of the Security Instruments or Sections 4.1.8, 4.1.28, 5.1.9 and 5.2.8
hereof; or (vii) impair the right of Lender to obtain a deficiency judgment or
other judgment on the Note against Borrower to the extent necessary to (A)
preserve or enforce its rights and remedies against any Individual Property or
(B) obtain any Insurance Proceeds or Awards to which Lender would otherwise be
entitled under the terms of this Agreement or the Security Instruments; provided
however, Lender shall only enforce such judgment to the extent of the Insurance
Proceeds and/or Awards.
(b) Notwithstanding the provisions of this Section 9.4 to the contrary,
Borrower shall be personally liable to Lender for the Losses Lender incurs to
the extent due to: (i) fraud or material misrepresentation in connection with
the execution and the delivery of this Agreement, the Note, the Security
Instrument, or the other Loan Documents; (ii) Borrower's or Operating Lessee's
misapplication or misappropriation of Rents received by Borrower or Operating
Lessee after the occurrence of an Event of Default; (iii) Borrower's or
Operating Lessee's misapplication or misappropriation of Security Deposits or
Rents collected more than thirty (30) days in advance; (iv) Borrower's or
Operating Lessee's misapplication or the misappropriation of Insurance Proceeds
or Awards; (v) Borrower's or Operating Lessee's failure to pay Taxes, Other
Charges (except to the extent that sums sufficient to pay such amounts have been
deposited in escrow with Lender pursuant to the terms of Section 7.2 hereof),
charges for labor or materials or other charges that can create Liens on the
Properties; (vi) Borrower's or Operating Lessee's failure to return or to
reimburse Lender for all Personal Property taken from any Properties by or on
behalf of Borrower or Operating Lessee and not replaced with Personal Property
of comparable utility and value; (vii) any act of intentional waste or arson to
the Collateral by Borrower, Principal, the Operating Lessee SPE Entities or
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any Affiliate or thereof or by any Indemnitor or Guarantor; (viii) any fees or
commissions paid by Borrower to Principal, the Operating Lessee SPE Entities or
any Affiliate of Borrower, Principal, the Operating Lessee SPE Entities,
Indemnitor, or Guarantor in violation of the terms of this Agreement, the Note,
the Security Instruments or the other Loan Documents; (ix) Borrower's failure to
comply with the provisions of Sections 4.1.39 and 5.1.19 of this Agreement; (x)
any Loss resulting from a Casualty due to Borrower's failure to obtain the
insurance required pursuant to Section 6.1; (xi) Borrower's default under
Section 5.1.10 hereof (after ten (10) Business Days prior written notice to
Borrower), (xii) if any Ground Lease is modified or terminated other than in
accordance with the terms hereof, (xiii) any Loss resulting from the
Jacksonville Property's failure to comply with applicable zoning ordinances
relating to density or number of hotel rooms and (xiv) any Loss paid to Hilton
Inns, Inc. or any Affiliate thereof (including, without limitation, any
termination or similar fees by, or on behalf of, Operating Lessee) resulting
from a termination of the franchise license agreement(s) relating to the Hilton
Franchised Properties.
(c) Notwithstanding the foregoing, the agreement of Lender not to pursue
recourse liability as set forth in Subsection (a) above SHALL BECOME NULL AND
VOID and shall be of no further force and effect and the obligation to repay the
Debt shall become a personal recourse obligation of Borrower (i) in the event of
Borrower's or Principal's default under Section 4.1.35 hereof or Operating
Lessee's default under Section 12 of the Operating Lease Subordination Agreement
(such that such failure was considered by a court as a factor in the court's
finding for a consolidation of the assets of Borrower, Principal and/or
Operating Lessee with the assets of another Person) or any Transfer in violation
of the provisions of Section 5.2.10 hereof or Article 7 of the Security
Instruments, (ii) if any Individual Property or any part thereof shall become an
asset, or if Borrower, Principal, Ground Lessor, an Operating Lessee SPE Entity,
Mezzanine Borrower, Mezzanine Principal, Junior Mezzanine Borrower or Junior
Mezzanine Principal shall be a debtor, in (A) a voluntary bankruptcy or
insolvency proceeding or (B) an involuntary bankruptcy or insolvency proceeding
commenced by any Person (other than Lender, Mezzanine Lender or Junior Mezzanine
Lender) and, with respect to such involuntary proceeding, Borrower consents or
fails to object to such proceedings) or if Borrower, Principal, Ground Lessor,
an Operating Lessee SPE Entity, Mezzanine Borrower, Mezzanine Principal, Junior
Mezzanine Borrower or Junior Mezzanine Principal has acted in concert with,
colluded or conspired with the party to cause the filing of such involuntary
proceeding or (iii) an Event of Default contemplated by Section 8.1(xi)(b),
8.1(xi)(c) or 8.1(xxiv)(b) hereof has occurred (unless caused by, or at the
request of Lender, Mezzanine Lender or Junior Mezzanine Lender); provided,
however, with respect to this Section 9.4(c)(iii) only, Borrower shall only be
liable on a recourse basis for the Allocated Loan Amounts (plus interest thereon
and costs and expenses relating thereto) of the Individual Properties that were
the cause of such Event of Default.
(d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provision of
the Bankruptcy Code to file a claim against Borrower or Principal for the full
amount of the indebtedness secured by the Security Instruments or to require
that all Collateral shall continue to secure all of the indebtedness owing to
Lender in accordance with this Agreement, the Note, the Security Instruments and
the other Loan Documents.
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X. MISCELLANEOUS
SECTION 10.1 Survival.
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Debt is outstanding and unpaid unless a longer period is expressly
set forth herein or in the other Loan Documents. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender, and all covenants, promises and agreements in this Agreement, by or on
behalf of Lender, shall be binding upon the legal representatives successors and
assigns of Lender.
SECTION 10.2 Lender's Discretion.
Whenever pursuant to this Agreement, Lender exercises any right given to
it to approve or disapprove, or any arrangement or term is to be satisfactory to
Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive.
SECTION 10.3 Governing Law.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT
TO THE LAWS OF THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED,
CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK (OTHER THAN THOSE CONFLICT OF LAW PROVISIONS THAT WOULD DEFER TO THE
SUBSTANTIVE LAWS OF ANOTHER JURISDICTION). WITHOUT IN ANY WAY LIMITING THE
PRECEDING CHOICE OF LAW, THE PARTIES ELECT TO BE GOVERNED BY NEW YORK LAW IN
ACCORDANCE WITH, AND ARE RELYING (AT LEAST IN PART) ON, SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK; PROVIDED HOWEVER, THAT WITH
RESPECT TO THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIENS AND
SECURITY INTERESTS CREATED BY THIS AGREEMENT, THE SECURITY INSTRUMENTS AND THE
OTHER LOAN DOCUMENTS, AND THE DETERMINATION OF DEFICIENCY JUDGMENTS, THE LAWS OF
THE STATE WHERE EACH INDIVIDUAL PROPERTY IS LOCATED SHALL APPLY.
(b) WITH RESPECT TO ANY CLAIM OR ACTION ARISING HEREUNDER OR UNDER THIS
AGREEMENT, THE NOTE, OR THE OTHER LOAN DOCUMENTS, BORROWER (A) IRREVOCABLY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW
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YORK, NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF, AND (B) IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING ON VENUE OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
NOTE OR THE OTHER LOAN DOCUMENTS BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS AGREEMENT, THE NOTE OR
THE OTHER LOAN DOCUMENTS INSTRUMENT WILL BE DEEMED TO PRECLUDE LENDER FROM
BRINGING AN ACTION OR PROCEEDING WITH RESPECT HERETO IN ANY OTHER JURISDICTION.
WITHOUT IN ANY WAY LIMITING THE PRECEDING CONSENTS TO JURISDICTION AND VENUE,
THE PARTIES AGREE TO SUBMIT TO THE JURISDICTION OF SUCH NEW YORK COURTS IN
ACCORDANCE WITH SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK OR ANY CORRESPONDING OR SUCCEEDING PROVISIONS THEREOF.
SECTION 10.4 Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination or waiver of
any provision of this Agreement, the Note, or of any other Loan Document, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.
SECTION 10.5 Delay Not a Waiver.
Neither any failure nor any delay on the part of Lender or Borrower in
insisting upon strict performance of any term, condition, covenant or agreement,
or exercising any right, power, remedy or privilege hereunder, or under the Note
or under any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
SECTION 10.6 Notices.
All notices or other written communications hereunder shall be deemed to
have been properly given (i) upon delivery, if delivered in person or by
facsimile transmission with receipt acknowledged by the recipient thereof and
confirmed by telephone by sender, (ii) one (1) Business Day after having been
deposited for overnight delivery with any reputable overnight
122
courier service, or (iii) three (3) Business Days after having been deposited in
any post office or mail depository regularly maintained by the U.S. Postal
Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If to Borrower: c/o FelCor Lodging Trust Incorporated
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Jenkens & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: JPMorgan Chase Bank
c/o ▇.▇. ▇▇▇▇▇▇ Mortgage Capital, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Loan Servicing
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or addressed as such party may from time to time designate by written notice to
the other parties.
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.
SECTION 10.7 Trial by Jury.
BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY
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BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
BORROWER AND LENDER ARE HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN
ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER AND LENDER, AS
APPLICABLE.
SECTION 10.8 Headings.
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
SECTION 10.9 Severability.
Wherever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under Applicable Law, but if any
provision of this Agreement shall be prohibited by or invalid under Applicable
Law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
SECTION 10.10 Preferences.
Except as otherwise expressly provided herein, Lender shall have the
continuing and exclusive right to apply or reverse and reapply any and all
payments by Borrower to any portion of the obligations of Borrower hereunder. To
the extent Borrower makes a payment or payments to Lender, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, State or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by Lender.
SECTION 10.11 Waiver of Notice.
Borrower shall not be entitled to any notices of any nature whatsoever
from Lender except with respect to matters for which this Agreement or the other
Loan Documents specifically and expressly provide for the giving of notice by
Lender to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.
SECTION 10.12 Remedies of Borrower.
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where
by law or under this Agreement
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or the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower's sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. The parties hereto agree that any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an action
seeking declaratory judgment.
SECTION 10.13 Expenses; Indemnity.
(a) Except as otherwise expressly provided herein, Borrower covenants and
agrees to pay or, if Borrower fails to pay, to reimburse, Lender within five (5)
days of receipt of written notice from Lender for all reasonable costs and
expenses (including reasonable attorneys' fees and disbursements) incurred by
Lender in connection with (i) the preparation, negotiation, execution and
delivery of this Agreement and the other Loan Documents and the consummation of
the transactions contemplated hereby and thereby and all the costs of furnishing
all opinions by counsel for Borrower (including without limitation any opinions
requested by Lender as to any legal matters arising under this Agreement or the
other Loan Documents with respect to the Properties); (ii) Borrower's ongoing
performance of and compliance with Borrower's respective agreements and
covenants contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date, including, without
limitation, confirming compliance with environmental and insurance requirements;
(iii) Lender's ongoing performance and compliance with all agreements and
conditions contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date; (iv) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters requested by Lender; (v) securing Borrower's
compliance with any requests made pursuant to the provisions of this Agreement;
(vi) the filing and recording fees and expenses, title insurance and reasonable
fees and expenses of counsel for providing to Lender all required legal
opinions, and other similar expenses incurred in creating and perfecting the
Liens in favor of Lender pursuant to this Agreement and the other Loan
Documents; (vii) enforcing or preserving any rights, in response to third party
claims or the prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting Borrower, this Agreement,
the other Loan Documents, the Properties, or any other security given for the
Loan; and (viii) enforcing any obligations of or collecting any payments due
from Borrower under this Agreement, the other Loan Documents or with respect to
the Properties or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature of a "work-out"
or of any insolvency or bankruptcy proceedings; provided, however, that Borrower
shall not be liable for the payment of any such costs and expenses to the extent
the same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender. Any cost and expenses due and payable to Lender may be
paid from any amounts in the Lockbox Account.
(b) Borrower shall indemnify, defend and hold harmless Lender from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for Lender in connection
125
with any investigative, administrative or judicial proceeding commenced or
threatened, whether or not Lender shall be designated a party thereto), that may
be imposed on, incurred by, or asserted against Lender in any manner relating to
or arising out of (i) any breach by Borrower of its obligations under, or any
material misrepresentation by Borrower contained in, this Agreement or the other
Loan Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "Indemnified Liabilities"); provided, however, that Borrower
shall not have any obligation to Lender hereunder to the extent that such
Liabilities arise from the gross negligence, illegal acts, fraud or willful
misconduct of Lender. To the extent that the undertaking to indemnify, defend
and hold harmless set forth in the preceding sentence may be unenforceable
because it violates any law or public policy, Borrower shall pay the maximum
portion that it is permitted to pay and satisfy under Applicable Law to the
payment and satisfaction of all Indemnified Liabilities incurred by Lender.
(c) Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless Lender and the Indemnified Parties from and
against any and all losses (including, without limitation, reasonable attorneys'
fees and costs incurred in the investigation, defense, and settlement of losses
incurred in correcting any prohibited transaction or in the sale of a prohibited
loan, and in obtaining any individual prohibited transaction exemption under
ERISA, the Code, any State statute or other similar law that may be required, in
Lender's sole discretion) that Lender may incur, directly or indirectly, as a
result of a default under Sections 4.1.8 or 5.2.8 hereof.
(d) Other than in connection with a Securitization, Borrower covenants and
agrees to pay for or, if Borrower fails to pay, to reimburse Lender for, (i) any
fees and expenses incurred by any Rating Agency in connection with any Rating
Agency review of the Loan, the Loan Documents or any transaction contemplated
thereby or (ii) any consent, approval, waiver or confirmation obtained from such
Rating Agency pursuant to the terms and conditions of this Agreement or any
other Loan Document and Lender shall be entitled to require payment of such fees
and expenses as a condition precedent to the obtaining of any such consent,
approval, waiver or confirmation.
SECTION 10.14 Schedules and Exhibits Incorporated.
The Schedules and Exhibits annexed hereto are hereby incorporated herein
as a part of this Agreement with the same effect as if set forth in the body
hereof.
SECTION 10.15 Offsets, Counterclaims and Defenses.
Any assignee of Lender's interest in and to this Agreement, the Note and
the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to the Loan Documents which
Borrower may otherwise have against any assignor of the Loan Documents, and no
such unrelated counterclaim or defense shall be interposed or asserted by
Borrower in any action or proceeding brought by any such assignee upon such
documents and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by Borrower.
126
SECTION 10.16 No Joint Venture or Partnership; No Third Party
Beneficiaries.
(a) Borrower and Lender intend that the relationships created hereunder
and under the other Loan Documents be solely that of borrower and lender.
Nothing herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Properties other than that of mortgagee,
beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the benefit
of Lender and Borrower and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender and Borrower
(or an Affiliate of either of the foregoing acting on behalf of Borrower or
Lender, as applicable) any right to insist upon or to enforce the performance or
observance of any of the obligations contained herein or therein. All conditions
to the obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
SECTION 10.17 Publicity.
All news releases, publicity or advertising by Borrower or their
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the financing evidenced by the Loan Documents, to
Lender, JPMorgan Chase, or any of their Affiliates shall be subject to the prior
written approval of Lender, which shall not be unreasonably withheld.
Notwithstanding the foregoing, disclosure required by any federal or State
securities laws, rules or regulations, as determined by Borrower's counsel,
shall not be subject to the prior written approval of Lender.
SECTION 10.18 Cross-Default; Cross-Collateralization; Waiver of
Marshalling of Assets.
(a) Borrower acknowledges that Lender has made the Loan to Borrower upon
the security of its collective interest in the Properties and in reliance upon
the aggregate of the Properties taken together being of greater value as
collateral security than the sum of each Individual Property taken separately.
Borrower agrees that the Security Instruments are and will be
cross-collateralized and cross-defaulted with each other so that (i) an Event of
Default under any of the Security Instruments shall constitute an Event of
Default under each of the other Security Instruments which secure the Note; (ii)
an Event of Default under the Note or this Agreement shall constitute an Event
of Default under each Security Instrument; (iii) each Security Instrument shall
constitute security for the Note as if a single blanket lien were placed on all
of the Properties as security for the Note; and (iv) such
cross-collateralization shall in no event be deemed to constitute a fraudulent
conveyance.
(b) To the fullest extent permitted by Applicable Law, Borrower, for
itself and its successors and assigns, waives all rights to a marshalling of the
assets of Borrower, Mezzanine
127
Borrower and of the Properties, or to a sale in inverse order of alienation in
the event of foreclosure of all or any of the Security Instruments, and agrees
not to assert any right under any laws pertaining to the marshalling of assets,
the sale in inverse order of alienation, homestead exemption, the administration
of estates of decedents, or any other matters whatsoever to defeat, reduce or
affect the right of Lender under the Loan Documents to a sale of the Properties
for the collection of the Debt without any prior or different resort for
collection or of the right of Lender to the payment of the Debt out of the net
proceeds of the Properties in preference to every other claimant whatsoever. In
addition, Borrower, for itself and its successors and assigns, waives in the
event of foreclosure of any or all of the Security Instruments, any equitable
right otherwise available to Borrower which would require the separate sale of
the Properties or require Lender to exhaust its remedies against any Individual
Property or any combination of the Properties before proceeding against any
other Individual Property or combination of Properties; and further in the event
of such foreclosure Borrower does hereby expressly consent to and authorize, at
the option of Lender, the foreclosure and sale either separately or together of
any combination of the Properties.
SECTION 10.19 Waiver of Counterclaim.
Borrower hereby waives the right to assert a counterclaim, other than a
compulsory counterclaim, in any action or proceeding brought against it by
Lender or its agents.
SECTION 10.20 Conflict; Construction of Documents; Reliance.
In the event of any conflict between the provisions of this Agreement and
any of the other Loan Documents, the provisions of this Agreement shall control.
The parties hereto acknowledge that they were represented by competent counsel
in connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender's exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.
SECTION 10.21 Brokers and Financial Advisors.
Borrower and Lender hereby represent that they have dealt with no
financial advisors, brokers, underwriters, placement agents, agents or finders
in connection with the transactions contemplated by this Agreement. Borrower
hereby agrees to indemnify, defend and hold Lender harmless from and against any
and all claims, liabilities, costs and expenses of any kind
128
(including Lender's reasonable attorneys' fees and expenses) in any way relating
to or arising from a claim by any Person that such Person acted on behalf of
Borrower in connection with the transactions contemplated herein. The provisions
of this Section 10.21 shall survive the expiration and termination of this
Agreement and the payment of the Debt.
SECTION 10.22 Prior Agreements.
This Agreement and the other Loan Documents contain the entire agreement
of the parties hereto and thereto in respect of the transactions contemplated
hereby and thereby, and all prior agreements among or between such parties,
whether oral or written, between Borrower and/or its Affiliates and Lender are
superseded by the terms of this Agreement and the other Loan Documents.
SECTION 10.23 Counterparts.
This Agreement may be executed in any number of duplicate originals and
each duplicate original shall be deemed to be an original. This Agreement may be
executed in several counterparts, each of which counterparts shall be deemed an
original instrument and all of which together shall constitute a single
Agreement.
SECTION 10.24 Liability.
This Agreement shall be binding upon and inure to the benefit of Borrower
and Lender and their respective successors and assigns forever.
[NO FURTHER TEXT ON THIS PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.
FELCOR/JPM HOTELS, L.L.C.,
a Delaware limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
JPMORGAN CHASE BANK,
a New York banking corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Acknowledged and agreed to with respect to its
obligations set forth in Article 9 hereof:
FELCOR LODGING LIMITED PARTNERSHIP
By: FelCor Lodging Trust Incorporated,
a Maryland Corporation,
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
SCHEDULE I
LOCATION ADDRESS ALLOCATED LOAN AMOUNT
-------- ------- ---------------------
Omaha, Nebraska ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ $5,905.000
Charleston ▇▇▇▇▇, South Carolina ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $17,250,000
San Antonio, Texas ▇▇ ▇▇ ▇▇▇▇ 410 $13,320,000
Tampa, Florida ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ Dr. W $11,557,000
Raleigh/Durham, North Carolina ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $11,557,000
Tulsa, Oklahoma ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ $8,318,000
Jacksonville, Florida ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ $11,845,000
Lexington, Kentucky ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ $13,321,000
Bloomington, Minnesota ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ $9,162,000
Dallas/Fort Worth, Texas ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $12,765,000
REMAINDER OF SCHEDULES AND EXHIBITS INTENTIONALLY OMITTED.