Exhibit 10.12.1
LOAN AGREEMENT
Dated as of January 31, 1995
By and Between
▇▇▇▇▇▇▇▇ MOTEL, INC., a Pennsylvania corporation,
as Borrower
AND
COLUMN FINANCIAL, INC., a Delaware corporation,
as Lender
TABLE OF CONTENTS
Page
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION .............................. 1
Section 1.1 Definitions ........................................... 1
Section 1.2 Principles of Construction ............................ 16
II. GENERAL TERMS ........................................................ 16
Section 2.1 Loan Commitment; Disbursement to Borrower ............. 16
2.1.1 The Loan .............................................. 16
2.1.2 Disbursement to Borrower .............................. 16
2.1.3 The Note .............................................. 17
Section 2.2 Use of Proceeds ....................................... 17
Section 2.3 Loan Repayment and Prepayments; Refinancing Debt
Service Coverage Ratio; Extensions .................... 17
2.3.1 Repayments; Refinancings .............................. 17
2.3.2 Prepayments ........................................... 18
2.3.3 Pro Forma Debt Service Coverage Ratio ................. 18
2.3.4 Extensions ............................................ 18
Section 2.4 Intentionally Deleted ................................. 18
Section 2.5 Interest .............................................. 18
2.5.1 Generally ............................................. 18
2.5.2 Default Rate; Post-Maturity Interest .................. 18
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Page
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Section 2.6 Payments; Computations ................................ 19
2.6.1 Making of Payments .................................... 19
2.6.2 Computations .......................................... 19
2.6.3 Late Payment Charge ................................... 19
2.6.4 Application of Payments ............................... 19
Section 2.7 Central Account; Deposits and Distributions ........... 19
2.7.1 Deposits in Central Account ........................... 19
2.7.2 Establishment of Central Account and Sub-Accounts ..... 20
2.7.3 Funding of Basic Sub-Accounts ......................... 21
2.7.4 Deposits During Operative Period and DSCR Restricted
Period ................................................ 22
2.7.5 Eligible Investments .................................. 23
2.7.6 Interest on Accounts .................................. 23
2.7.7 Payment of Debt Service; Disbursement of Funds in Basic
Sub-Accounts; Excess Property Income................... 24
2.7.8 Payment of Loss Proceeds; Borrower's Right to Release . 32
III. CONDITIONS PRECEDENT ................................................. 34
Section 3.1 Conditions Precedent to Closing ....................... 34
IV. REPRESENTATIONS AND WARRANTIES ....................................... 37
Section 4.1 Borrower's Representations ............................ 37
Section 4.2 Survival of Representations ........................... 47
V. AFFIRMATIVE COVENANTS ................................................ 48
Section 5.1 Borrower's Covenants................................... 48
VI. NEGATIVE COVENANTS ................................................... 56
Section 6.1 Borrower's Negative Covenants ......................... 56
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Page
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VII. SPECIAL PROVISIONS ................................................... 58
Section 7.1 Cooperation ........................................... 58
7.1.1 Cooperation ........................................... 58
7.1.2 Additional Financial Reporting Requirements ........... 59
Section 7.2 Insurance; Casualty and Condemnation................... 59
7.2.1 Insurance ............................................. 59
7.2.2 Casualty and Restoration .............................. 62
7.2.3 Condemnation .......................................... 64
Section 7.3 Required Repairs....................................... 66
Section 7.4 FF&E Replacements ..................................... 67
7.4.1 Performance of FF&E Replacements ...................... 67
7.4.2 Additional Replacements ............................ deleted
7.4.3 Indemnification ....................................... 69
Section 7.5 Inspections ........................................... 69
VIII. DEFAULTS ............................................................ 69
Section 8.1 Event of Default ...................................... 69
Section 8.2 Remedies .............................................. 72
Section 8.3 Remedies Cumulative ................................... 72
IX. MISCELLANEOUS ........................................................ 73
Section 9.1 Survival .............................................. 73
Section 9.2 Lender's Discretion ................................... 73
Section 9.3 Governing Law ......................................... 73
Section 9.4 Modification, Waiver in Writing ....................... 74
Section 9.5 Delay Not a Waiver..................................... 75
Section 9.6 Notices ............................................... 75
Section 9.7 Trial by Jury ......................................... 75
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Page
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Section 9.8 Headings .............................................. 76
Section 9.9 Successors and Assigns; Assignment .................... 76
Section 9.10 Severability .......................................... 76
Section 9.11 Preferences ........................................... 76
Section 9.12 Waiver of Notice ...................................... 76
Section 9.13 Intentionally Deleted ................................. 77
Section 9.14 Expenses; Indemnity ................................... 77
Section 9.15 Exhibits Incorporated ................................. 77
Section 9.16 Offsets, Counterclaims and Defenses ................... 77
Section 9.17 No Joint Venture or Partnership ....................... 78
Section 9.18 Publicity ............................................. 78
Section 9.19 Waiver of Marshalling of Assets ....................... 78
Section 9.20 Waiver of Counterclaim ................................ 79
Section 9.21 Conflict; Construction of Documents ................... 79
Section 9.22 Brokers and Financial Advisors ........................ 79
Section 9.23 Prior Agreements ...................................... 79
Section 9.24 Intentionally Deleted ................................. 80
Section 9.25 Appointment of Servicer ............................... 80
Section 9.26 Exculpation ........................................... 80
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SCHEDULES
Schedule A -- Legal Description
Schedule B -- Intentionally Deleted
Schedule C -- Franchisor and Franchise Agreement
Schedule D -- Intentionally Deleted
Schedule E -- Required Repairs
Schedule F -- FF&E Replacements
Schedule G -- Permits
Schedule H -- Equipment Leases
Schedule I -- Leases
Schedule J -- Form of Operating Statement
Schedule K -- Operations and Maintenance Programs
Schedule L -- Litigation
Schedule M -- Fair Market Value
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of January 31, 1995, by and among
COLUMN FINANCIAL, INC., having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., together with
its successors and assigns, including, without limitation, the Loan Purchaser,
as lender ("Lender"), and ▇▇▇▇▇▇▇▇ Motel, Inc., a Pennsylvania corporation,
having an address at Servico Centre South, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Executive Officer, as borrower ("Borrower").
All capitalized terms used herein shall have the respective meanings
set forth in Section 1 hereof.
W I T N E S S E T H:
WHEREAS, Borrower desire to obtain the Loan from Lender;
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;
WHEREAS, Lender's interest in the Loan may be purchased by the Loan
Purchaser on or after the Closing Date; and
WHEREAS, Borrower consent to the transfer described in the preceding
Recital.
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth in this Agreement, and other good and
valuable consideration, 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:
"Accountant's Certificate" shall have the meaning set forth in
Section 2.7.7(d)(i).
"Accountant's Certificate Default" shall have the meaning set forth
in Section 2.7.7(e) (ii).
"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.
"Agreement" shall mean this Loan Agreement, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Principal Balance" shall mean the outstanding principal balance of
the Loan.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"Annual Operating Budget" shall mean, with respect to the Property,
an annual operating budget, showing all projected items of Revenue and Operating
Expenses, prepared on an accrual basis in accordance with GAAP and certified by
Borrower.
"Assignment of Leases" shall mean that certain first priority
Assignment of Leases, Rents and Revenues, dated as of the date hereof, from
Borrower, as assignor, to Lender, as assignee, with respect to the Property,
assigning to Lender all of Borrower's interest in and to the Leases, the Rents
and the Revenue of the Property as security for the Loan, as such Assignment of
Leases may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
"Assignment of Consulting Agreement" shall mean, that certain first
priority Assignment and Subordination of Management Agreement, dated as of
January 31, 1995 from Borrower and Consultant with respect to the Property,
assigning to Lender all of Borrower's interest in and to the Consulting
Agreement with respect to the Property as security for the Loan and
subordinating, pursuant to its terms, such Consulting Agreement and any Lien or
rights created thereunder to the Lien and to the terms, covenants and provisions
of the Loan Documents, as such Assignment of Consulting Agreement may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Bank" shall mean First National Bank of Chicago and any other
financial institution subsequently selected by Lender.
"Bankruptcy Order" shall mean that certain Order Confirming Debtors'
Plan of Reorganization filed on May 7, 1992 in that certain bankruptcy
proceeding captioned In re Servico, Inc., et al. in the United States Bankruptcy
Court, Southern District of Florida, Miami Division, Case No.
90-36655-BKC-AJC-X.
"Basic Carrying Costs" shall mean (a) with respect to the Property,
the sum of the following costs for the relevant Fiscal Year or payment period:
(i) Impositions with respect to the Property and (ii) insurance premiums for the
Policies with respect to the Property.
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"Basic Carrying Costs Monthly Installment" shall mean an amount
equal to (i) one-twelfth (1/12) of an amount estimated by Lender to be necessary
to pay the Impositions for the Property payable during the next ensuing twelve
(12) months, giving effect to any amount deposited in the Basic Carrying Costs
Sub-Account on the Closing Date and (ii) during any Operative Period, DSCR
Restricted Period and Franchise Restricted Period, one-twelfth (1/12) of an
amount estimated by Lender to be necessary to pay the premiums on the Policies
for the Property due during the next ensuing twelve (12) months for the renewal
of the coverage afforded by the Policies upon the expiration thereof. In the
event any of the Policies is a blanket policy insuring risks other than those
associated with the Property, the amount set forth in (ii) above shall be the
premium that would be payable to continue such policy in effect for just the
Property, as set forth in the Insuror's Letter.
"Basic Carrying Costs Sub-Account" shall mean the sub-account of the
Central Account established and maintained pursuant to Section 2.7.2 to provide
for payment of Basic Carrying Costs for the Property.
"Basic Sub-Accounts" shall have the meaning specified in Section
2.7.2.
"Borrower" shall have the meaning specified in the first Paragraph
hereof. Any reference to "Borrower", "any Borrower" or "the applicable
Borrower", or any similar reference shall be deemed to refer to Borrower.
"Borrower Material Adverse Effect" shall have the meaning specified
in Section 4.1(a).
"Borrower's Accountant" shall mean Ernst & Young or any other
Independent firm of certified public accountants approved by Lender, which
approval shall not be unreasonably withheld or delayed.
"Building Evaluation Resorts" shall mean those certain Building
Evaluation Reports prepared by the Engineer and delivered to Lender in
connection with the Loan.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which national banks in New York are not open for business.
"Capital Expenditures Budget" shall mean, with respect to the
Property, an annual budget, prepared on an accrual basis in accordance with GAAP
and certified by Borrower, showing all proposed capital expenditures.
"Capital Expenditure Sub-Account" shall mean a sub-account of the
Central Account established pursuant to Section 2.7.2 hereof for the purpose of
holding certain Excess Property
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Income during any DSCR Restricted Period or any Franchise Restricted Period.
"Cash Flow Available for Debt Service" shall mean, with respect to
the Property with respect to any period, the excess of (a) the Revenue for such
period, determined on an accrual basis, less (b) the Operating Expenses for the
same period, including, for the purposes of calculating Cash Flow Available for
Debt Service, all FF&E Installments calculated with respect to the Revenues for
such period or, with respect to any period prior to the Closing Date, FF&E
Installments that would have been calculated with respect to such period if this
Agreement had been in effect.
"Casualty" shall have the meaning specified in Section 7.2.2(a).
"Central Account" shall mean such Eligible Account maintained by
Lender at the Bank, in the name of Lender or its successors or assigns (as
secured party), as shall be designated by Lender.
"Certificate" shall mean any certificate evidencing interests in the
Loan issued pursuant to the Trust and Servicing Agreement.
"Certificateholder" shall mean the holder of a Certificate.
"Closing Date" shall mean the date of the closing of the Loan.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
as it may be further amended from time to time, any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
"Collateral Security Documents" shall mean any right, document or
instrument given as security for the Note, including, without limitation, the
Mortgage, the Assignment of Leases and the Assignment of Consulting Agreement,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"Commitment" shall have the meaning specified in Section 2.3.1
hereof.
"Condemnation" shall mean any temporary or permanent taking of all
or any part of any Property, or interest therein or right or use thereof, as a
result of, any proceeding in condemnation or eminent domain.
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"Condemnation Proceeds" shall have the meaning specified in Section
2.7.8(b) hereof.
"Consultant" shall mean Servico Management Corp., a Florida
corporation, and its permitted successors and assigns.
"Consultant Control Change" shall have the meaning specified in
Section 5.1(j).
"Consultant Control Notice" shall have the meaning specified in
Section 5.1(j).
"Consultant's Certifications" shall mean those certifications
required to be delivered by Consultant under Section 5.1(k) (iv).
"Consultant's Notice" shall have the meaning specified in Section
2.7.1.
"Consulting Agreement" shall mean that certain Management Agreement
dated January 1, 1988 between Southfield and Borrower, as assigned to
Consultant.
"Curtailment Reserve Fund Sub-Account" shall mean the sub-account of
the Central Account established and maintained pursuant to Section 2.7.2 hereof
during the Operative Period for the purpose of holding certain Excess Property
Income.
"Debt Service" shall mean, with respect to any particular period of
time, scheduled principal and interest payments under the Note.
"Debt Service Payment Sub-Account" shall mean the sub-account of the
Central Account established and maintained pursuant to Section 2.7.2 hereof for
the purposes of making Debt Service payments.
"Default Rate" shall have the meaning specified in the Note.
"Depositor" shall mean the entity described as such in the Trust and
Servicing Agreement, and its successors and assigns.
"DSCR Determination Date" shall mean each January 1, April 1, July 1
and October 1, commencing on April 1, 1995.
"DSCR Restricted Period" shall have the meaning specified in Section
2.3.3 hereof.
"Due Date" shall mean the first Business Day of each calendar month.
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"Eligible Account" shall mean a segregated account held by and at
the Bank or an account that is either: (a) maintained with a depository
institution or trust company the long-term unsecured debt obligations of which
(or, in the case of a depository institution or trust company that is the
principal subsidiary of a holding company, the long-term unsecured debt
obligations of such holding company) have been rated by the Rating Agency in one
of its two highest rating categories or the short-term commercial paper of which
is rated by the Rating Agency in its highest rating category at the time of any
deposit therein; or (b) a trust account or accounts maintained with a federal or
state chartered depository institution or trust company with trust powers acting
in its fiduciary capacity, provided that any such state chartered institution or
trust company shall be subject to regulations or has established internal
guidelines regarding fiduciary funds on deposit substantially similar to federal
regulation 12 C.F.R. 910 (b). The title of each Eligible Account shall indicate
that funds held therein are held in trust for the uses and purposes set forth
herein.
"Eligible Investments" shall mean any one or more of the following
acquired at a purchase price of not greater than par:
(a) direct obligations of, or obligations fully guaranteed as
to payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States of America;
(b) fully FDIC-insured demand and time deposits; and
(c) interests in money market or common trust funds which as
of the date of acquisition of the interest in such fund has been
approved for investment by trust funds securing obligations rated
AAAm or AAAm-G by Standards & Poor's Ratings Group, Inc. and P-1 by
▇▇▇▇▇'▇ Corporation.
"Engineer" shall mean RKTL Associates, Inc., which is acknowledged
by Lender and Borrower to be an Independent Person, or any other Independent
engineer or engineering firm reasonably approved by Lender.
"Engineering Escrow Sub-Account" shall mean a sub-account of the
Central Account established pursuant to Section 2.7.2 hereof, for the purpose of
holding funds to pay for the Required Repairs.
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"Environmental Consultant" shall mean Environmental Management
Group, Inc. or any other Independent environmental consulting firm reasonably
approved by Lender.
"Environmental Indemnity" shall mean the certain Environmental
Indemnity Agreement of even date herewith, by Borrower in favor of Lender with
respect to environmental conditions on the Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Equipment" shall have the meaning specified in the Mortgage with
respect to the Property.
"Equipment Lease" shall mean a lease or other financing arrangement
with respect to any furniture, fixtures and equipment (including, without
limitation, any motor vehicle) used in the operation of the Property.
"Event of Default" shall have the meaning specified in Section 8.1.
"Excess Property Income" shall mean the amounts available in the
Central Account during any Operative Period, any DSCR Restricted Period or any
Franchise Restricted Period after the allocations under clauses (a) through (e),
inclusive, of Section 2.7.3 have been made.
"FF&E Monthly Installment" shall mean a payment on each Due Date in
an amount equal to the sum of the product for each of the Property of (a) the
Revenue of the Property for the calendar month prior to the calendar month
immediately preceding the Due Date in question and (b) four percent (4.0%).
"FF&E Replacements" shall have the meaning specified in Section
2.7.7(e).
"FF&E Sub-Account" shall mean a sub-account of the Central Account
established pursuant to Section 2.7.2 hereof for the purpose of holding reserves
to fund FF&E Replacements.
"Fiscal Year" shall mean that period beginning on the first Friday
after the last Thursday in December of each year and ending on the last Thursday
in December, which Fiscal Year shall be composed of four (4) quarters composed
of thirteen (13) weeks each.
"Franchise Agreement" shall mean that certain franchise agreement
more specifically identified on Schedule C annexed hereto, and any other
Franchise Agreement entered into by a Borrower with respect to the Property with
the consent of Lender in accordance with the terms hereof.
"Franchise Agreement Letter" shall mean that certain Letter
Agreement by Borrower and Franchisor in favor of Lender,
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with respect to the Property, establishing Lender's rights with respect to the
Franchise Agreement, as such Franchise Agreement Letter may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Franchise Restricted Period" shall have the meaning specified in
Section 6.1(a).
"Franchisor" shall mean, with respect to the Property, which is
subject to a Franchise Agreement, the franchisor with respect thereto, as same
are identified on Schedule C annexed hereto or any replacement franchisor
approved by Lender pursuant to the Assignment of Franchise Agreement.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as of the date of the applicable financial report.
"Governmental Authority" shall mean any court, board, agency,
commission, office or authority of any nature whatsoever for any governmental
▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or otherwise) whether
now or hereafter in existence.
"Impositions" shall mean all real estate and personal property taxes
and all other taxes, levies, assessments and other similar charges, general and
special, ordinary and extraordinary, foreseen and unforeseen, of every kind and
nature whatsoever, which at any time prior to, at or after the execution hereof
may be assessed, levied or imposed by, in each case, a Governmental Authority
upon the Property or the Revenue or the ownership, use, occupancy or enjoyment
thereof, and any interest, costs or penalties with respect to any of the
foregoing, provided that water, sewer and utility charges not be deemed to be an
Imposition.
"Improvements" shall have the meaning specified in the Mortgage with
respect to the Property.
"Indebtedness" shall mean the indebtedness in the original principal
amount set forth in, and evidenced by, the Note, together with all other
obligations and liabilities of Borrower due or to become due to Lender pursuant
to the Note, this Agreement or any other Loan Document, including, without
limitation, all interest thereon and all Yield Maintenance Premiums due in
connection therewith.
"Independent" means, when used with respect to any Person, a Person
who (i) is in fact independent, (ii) does not have any direct financial interest
or any material indirect financial interest in Borrower, or in any Affiliate of
Borrower or any constituent partner, shareholder, member or beneficiary of
Borrower, and (iii) is not connected with Borrower or any Affiliate of Borrower
or any constituent partner, shareholder,
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member or beneficiary of Borrower as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
In each instance where the opinion or certificate of an Independent Person is
required in order to comply with any of the provisions hereof, the opinion or
certificate so supplied shall include a statement that the individual executing
the same has read this definition and that the Person supplying such opinion or
certificate is Independent within the meaning hereof.
"Independent Director" shall have the meaning specified in Section
4.1(dd) (xv).
"Insurance Proceeds" shall have the meaning specified in Section
2.7.8(a).
"Insurance Requirements" shall mean, with respect to the each
Property, all material terms of any insurance policy required pursuant to this
Agreement or the related Loan Documents, all material requirements of the issuer
of any such policy, and all material regulations and then current standards
applicable to or affecting the Property or any part thereof or any use or
condition thereof, which may, at any time, be recommended by the state insurance
commissioner or other state regulatory body, if any, having jurisdiction over
the Property, or such other body exercising similar functions.
"Insuror's Letter" shall mean a letter provided by the issuer of the
Policies setting forth, with respect to any such Policy that is a blanket policy
covering risks other than those associated with the Property, the annual premium
that would be required to keep such Policies in effect for just the Property and
making the statement required pursuant to clause (B) of the final sentence of
Section 7.2.1(c), as such letter shall be updated from time to time as the
amounts of the premiums for the Policies shall change.
"Interest Rate" shall have the meaning specified in the Note.
"Late Payment Charge" shall have the meaning specified in the Note.
"Lease" shall mean any lease, or, to the extent of the interest
therein of Borrower, any sublease or subsublease, letting, license, concession
or other agreement (whether written or oral and whether now or hereafter in
effect) pursuant to which any person is granted a possessory interest in, or
right to use or occupy all or any portion of any space in the Property, and
every modification, amendment or other agreement relating thereto and every
guarantee of the performance and observance of the covenants, conditions and
agreements to be performed and observed thereunder, excluding, however, any
occupancy of hotel rooms by guests in the ordinary course of business.
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"Legal Requirements" shall mean all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities to
which the Property or any part thereof or the construction, use, alteration or
operation thereof, or any part thereof, is subject, including, without
limitations, all zoning, land use, building, and environmental statutes, laws,
codes, resolutions and ordinances, whether now or hereafter enacted and in
force, and all permits, licenses, variances 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 the Property or any part thereof, including, without
limitation, any which may (i) require repairs, modifications or alterations in
or to the Property or any part thereof or (ii) in any way limit the use and
enjoyment thereof.
"Lender" shall have the meaning specified in the first Paragraph
hereof.
"Lien" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, on or affecting the Property or any portion thereof or Borrower,
or any interest therein, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, any financing statement, and
mechanic's, materialmen's and other similar liens and encumbrances.
"Loan" shall mean the loan, evidenced by the Note, and secured by
the Mortgage and the other Collateral Security Documents, to be made by Lender
to Borrower pursuant hereto.
"Loan Documents" shall mean, collectively, this Agreement, the Note,
the Mortgage, the Environmental Indemnity and the other Collateral Security
Documents and any other document executed or delivered by or on behalf of
Borrower in connection with the Loan.
"Loan Purchaser" shall mean any purchaser of the Loan from the
Lender, such purchaser's designee, the respective successors and/or assigns of
such purchaser or designee and any subsequent holder of the Note.
"Loan Year" shall mean each one (1) year period commencing on the
Closing Date and on each anniversary of the Closing Date.
"Lock-Out Date" shall have the meaning specified in the Note.
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"Long-Term Required Repairs" shall mean those Required Repairs
designated as "long-term" on Schedule E annexed hereto.
"Long-Term Required Repairs Installment" shall mean a payment in the
amount of $39,458.33 to be made by Borrower to Lender on each of the Closing
Date and the first Due Date occurring after each of the first two anniversaries
of the Closing Date, to be deposited in the Engineering Escrow Account, provided
that if the Borrower shall expend funds (other than funds disbursed by Lender
hereunder) in payment of the costs of any Long-Term Required Repair (other than
a Long-Term Required Repair designated as "providing a sprinkler system for the
building" on Schedule E annexed hereto) and shall deliver to Lender reasonably
satisfactory evidence of such payment, together with the contractor's
certification required to be delivered as a condition of disbursement pursuant
to Section 2.7.7(d) (ii) with respect to such Long-Term Required Repair,
Borrower shall, upon reasonable approval of the foregoing by Lender, receive a
credit in the amount of such payment against the amount of the Long-Term
Required Repairs Installment next due, if any, provided that the amount of such
credit together with any disbursements made from the Engineering Escrow
Sub-Account, expressed as a percentage of the costs allocated for such item on
Schedule E, shall not exceed the percentage of the work on such item then
completed.
"Loss Proceeds" shall have the meaning specified in Section 2.7.8(c)
hereof.
"Major Required Repair" shall have the meaning specified in Section
2.7.7 (d).
"Maturity Date" shall mean March 1, 2010, subject to extension as
provided in Section 2.3.4.
"Minor Required Repair" shall have the meaning specified in Section
2.7.7(d)(i).
"Mortgage" shall mean, with respect to the Property, that certain
first priority Mortgage, Security Agreement and Assignment of Leases and Rents
executed and delivered by Borrower Property as security for the Loan and
encumbering the Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Note" shall mean that certain Promissory Note of even date
herewith, made by Borrower in favor of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Officer's Certificate" shall mean a certificate delivered to Lender
by Borrower which is signed by an officer of Borrower who also serves as Chief
Executive Officer, Chief Financial Officer, Treasurer, Controller or Vice
President of Servico, Inc.
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"Operating Expenses" shall mean all ordinary and customary expenses
payable in the ordinary course of operating the Property as a hotel project
(such expenses being determined on an accrual basis for the relevant calculation
period, unless otherwise expressly provided herein) but excluding distributions
to stockholders or partners of Borrower, Debt Service payable by Borrower,
income taxes, non-cash items such as depreciation and any fees payable to the
Consultant in excess of four percent (4%) of Revenue.
"Operations and Maintenance Expense Monthly Installment" shall mean
with respect to each month in a particular year, an amount, as determined by
Lender, equal to the aggregate of one-twelfth (1/12th) of the product for the
Property of (a) 1.05 and (b) the Operating Expenses for the Property in the
immediately preceding Fiscal Year.
"Operations and Maintenance Expense Sub-Account" shall mean a
sub-account of the Central Account established and maintained during any
Operative Period, any DSCR Restricted Period and any Franchise Restricted Period
pursuant to Section 2.7.2 hereof relating to the payment of Operating Expenses.
"Operative Period" shall mean (a) any period during which a monetary
Event of Default shall have occurred and be continuing, (b) if Borrower fails to
provide Lender with a Commitment on or prior to the Refinance Notification Date,
the period commencing on the Refinance Notification Date and ending on the date
the Indebtedness has been paid in full, and (c) if Borrower provides Lender with
a Commitment on or prior to the Refinance Notification Date and the Void
Commitment Date occurs, the period commencing on the Void Commitment Date and
ending on the date the Indebtedness has been paid in full.
"Other Charges" shall have the meaning specified in Section 5.1(b).
"Permits" shall have the meaning specified in Section 4.1(w).
"Permitted Encumbrances" shall mean, with respect to the Property,
(a) the Liens created by the Loan Documents, (b) all Liens, encumbrances and
other matters disclosed in the Title Insurance Policy relating to the Property
or any part thereof or in UCC-11 searches delivered to Lender, (c) Liens for
Impositions not yet due and payable or being contested in good faith and by
appropriate proceedings in accordance with the applicable provisions of the Loan
Documents, (d) Equipment Leases and any conditional sale agreement with respect
to the purchase of any Equipment, provided the same have been or shall be
entered into by Borrower in the ordinary course of business, (e) Liens given by
Borrower to finance capital improvements to the Property as permitted under the
Mortgage, subject to the prior written approval of Lender, in its sole
discretion, which approval shall
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not be granted if such Lien would result in any withdrawal, downgrade or other
adverse effect on any rating of the Certificates issued by the Rating Agency,
(f) other Liens expressly permitted by the terms of the Loan Documents and (g)
such other title and survey exceptions as Lender has approved or may approve in
writing in Lender's sole discretion.
"Person" shall mean any individual, corporation, partnership, joint
venture, 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.
"Policies" shall have the meaning specified in Section 7.2.1(c).
"Premises" shall, with respect to the Property, have the meaning
specified in the granting clause of the Mortgage encumbering the Property.
"Pro Forma Debt Service Coverage Ratio" shall mean, with respect to
any DSCR Determination Date, the ratio of (a) the aggregate Cash Flow Available
for Debt Service for the Property determined on an accrual basis for the twelve
(12) month period ending with the calendar month prior to the calendar month
immediately preceding such DSCR Determination Date to (b) the aggregate amount
of Debt Service scheduled to be due during the twelve (12) month period
immediately following such DSCR Determination Date, assuming, for the purpose of
this calculation, that no payments of principal other than scheduled
amortization payments will be made during such period.
"Property" shall mean the parcel of real property, as more fully
described in Schedule A attached hereto, and the Improvements thereon owned by
Borrower and encumbered by the Mortgage, together with all rights and property
pertaining to such real property and Improvements, as more particularly
described in the granting clauses of the Mortgage and referred to therein as the
"Mortgaged Property".
"Qualified Institutional Lender" shall mean a financial institution
or other lender with a long term credit rating which is not less than investment
grade.
"Rating Agency" shall mean Fitch Investors Service, Inc.
"Recourse Distributions" shall have the meaning specified in Section
9.26.
"Refinance Notification Date" shall have the meaning specified in
Section 2.3.1 hereof.
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"Rents" shall mean, with respect to the Property, all rents, income,
issues, revenues and profits arising from the Leases and renewals thereof.
"Required Repairs" shall mean those repairs, if any, with respect to
the Property specified in Schedule E annexed hereto.
"Required Repairs Installment" shall mean the Long-Term Required
Repairs Installment and the Sprinkler Installment.
"Restoration" shall have the meaning specified in Section 7.2.2(a).
"Revenue" shall mean all Rents and all other revenue of any kind
derived from the Property, all determined on an accrual basis (unless otherwise
indicated) in accordance with GAAP consistently applied, after deducting all
allowances for rebates and adjustments, whether cash or credit, derived directly
or indirectly from any source including, without limitation: rental of rooms;
food and beverage; sales from gift or other shops managed directly by Borrower
or any agent of Borrower; telephone; net vending income (gross vending revenue
reduced by the amount payable to equipment vendors for the use thereof);
commissions; net rentals of cars, bicycles and other items; meeting room
rentals, all net revenue received from any third party concessionaires operating
any concession under any agreement with Borrower or its agents, and other
persons occupying space at the Property and/or rendering services to guests
staying at the Property; and any form of incentive payments or awards received
by Borrower from any source whatsoever which are attributable to the operation
of the Property.
"Securitization Transaction" shall mean the transactions
contemplated by the Trust and Servicing Agreement, including, without
limitation, (a) the assignment and transfer of the Loan and the Loan Documents
to the Depositor, (b) the issuance, sale and rating of the Certificates, and (c)
the assignment and transfer of the Loan and the Loan Documents to the Trustee
for the benefit of the Certificateholders.
"Servicer" shall mean (a) the entity described as such in the Trust
and Servicing Agreement or its successor in interest, or if any successor
servicer is appointed pursuant to the Trust and Servicing Agreement, such
successor servicer or (b) any other entity appointed to service the Loan
pursuant to Section 9.25.
"Short-Term Required Repairs" shall mean any Required Repairs not
designated "long-term" on Schedule E annexed hereto.
"Short-Term Required Repair Deposit" shall mean an amount equal to
the aggregate of one hundred twenty-five percent
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(125%) of the estimated costs of Short-Term Required Repairs for the Property as
set forth on Schedule E annexed hereto.
"Southfield" shall mean Southfield Hotel Group II, a Michigan
limited partnership.
"Sprinkler Installment" shall mean a payment in the amount of
$112,500 to be made by Borrower to Lender on the Closing Date and the first Due
Date occurring after each of the first four anniversaries of the Closing Date,
to be deposited in the Engineering Escrow Account, provided that if Borrower
shall expend any funds (other than amounts disbursed by Lender hereunder) in
payment of any Long-Term Required Repair designated as "providing a sprinkler
system for the building" on Schedule E annexed hereto and shall deliver to
Lender reasonably satisfactory evidence of such payment, together with the
contractor's certification required to be delivered as a condition of
disbursement pursuant to Section 2.7.7(d) (ii) with respect to such Long-Term
Required Repair, Borrower shall, upon reasonable approval of the foregoing by
Lender, receive a credit in the amount of such payment against the amount of the
Sprinkler Installment next due, if any, provided that the amount of such credit
together with any disbursements made, from the Engineering Escrow Sub-Account,
expressed as a percentage of the costs allocated for such item on Schedule E,
shall not exceed the percentage of the work on such item then completed.
"State" shall mean, with respect to the Property, the State or
Commonwealth in which the Property or any part thereof is located.
"Survey" shall mean a survey of the Property prepared by a surveyor,
licensed in the State, in accordance with ALTA standards and satisfactory to
Lender and the company or companies issuing the Title Insurance Policy, and
containing a certification of such surveyor satisfactory to Lender.
"Survey Requirements" shall have the meaning specified in Section
3.1 (c) (iii).
"Term Sheet" shall have the meaning specified in Section 9.23.
"Title Insurance Policy" shall mean, with respect to the Property,
the ALTA extended coverage mortgagee title insurance policy (1970 form B or
other loan policy acceptable to Lender) issued with respect to the Property and
insuring the lien of the Mortgage encumbering the Property and containing such
endorsements and affirmative assurances as Lender shall reasonably require (to
the extent authorized in the State).
"Trust and Servicing Agreement" shall mean any trust and servicing
agreement or pooling and servicing agreement pursuant to which the Loan is
assigned to a Trustee in trust and
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one or more classes of Certificates are issued representing beneficial ownership
interests in the Loan and the other assets of such trust.
"Trustee" shall mean the entity described as such in the Trust and
Servicing Agreement or its successor in interest, or if any successor trustee is
appointed pursuant to the Trust and Servicing Agreement, such successor trustee.
"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the State in which the Property as located.
"Void Commitment Date" shall have the meaning specified in Section
2.3.1 hereof.
"Yield Maintenance Premium" shall have the meaning specified in the
Note.
Section 1.2 Principles of Construction.
All references to sections, schedules and exhibits are to sections,
schedules and exhibits in or to this Agreement unless otherwise specified.
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. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP, as modified herein.
II. GENERAL TERMS
Section 2.1 Loan Commitment: Disbursement to Borrower.
2.1.1 The Loan. Subject to and upon the terms and conditions set
forth herein, Lender hereby agrees to make the Loan to Borrower on the Closing
Date, in the original principal amount set forth in the Note, which Loan shall
mature on the Maturity Date. Borrower hereby agrees to accept the Loan on the
Closing Date, subject to and upon the terms and conditions set forth herein.
2.1.2 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. Borrower shall,
on the Closing Date, receive the Loan, subject to the direction given by
Borrower as to the application of Loan proceeds to pay certain closing costs
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and to fund (i) the Basic Carrying Cost Sub-Account in an amount equal to (a)
the amount necessary to enable Lender to make each payment of Impositions coming
due during the twelve (12) months following the Closing Date on the date each
such payment is due, taking into account the Basic Carrying Costs Monthly
Installments that will be due and payable before each such payment of
Impositions is due plus (b) twice the amount indicated in the Insuror's Letter
as the premium necessary to keep the Policies in effect for one month and (ii)
the Engineering Escrow Sub-Account in an amount equal to (a) the Short-Term
Required Repair Deposit plus (b) the first Long-Term Required Repair Installment
plus (c) the first Sprinkler Installment, in accordance with the provisions of
this Agreement.
2.1.3 The Note. The Loan shall be evidenced by the Note, in the
original principal amount of the Loan. The Note shall bear interest as provided
in such Note, and shall be subject to repayment and prepayment as provided in
Section 2.3. The Note shall be entitled to the benefits of this Agreement and
shall be secured by the Mortgage, the Assignment of Leases and the other
Collateral Security Documents.
Section 2.2 Use of Proceeds.
Borrower shall use the proceeds of the Loan disbursed to it pursuant
to Section 2.1. to (i) repay and discharge any existing loans relating to the
Property, except the Permitted Encumbrances, (ii) pay all past-due Basic
Carrying Costs, if any, in respect of the Property, (iii) fund the Basic
Carrying Costs Sub-Account, as provided in Section 2.1.2, and the Engineering
Escrow Sub-Account and (iv) pay costs and expenses incurred in connection with
the Closing of the Loan, as mutually approved by Lender and Borrower. Any
remaining proceeds of the Loan shall be used for commercial purposes only.
Section 2.3 Loan Repayment and Prepayments; Refinancing; Extensions.
2.3.1 Repayment; Refinancings. Borrower shall repay the Loan in
accordance with the provisions of the Note. Borrower shall deliver to Lender a
written commitment or engagement letter (a "Commitment"), which Commitment shall
set forth specific terms and conditions for the refinancing of the entire
outstanding amount of the Loan from a Qualified Institutional Lender or Lenders
or a nationally recognized investment banking firm or firms on or before that
date which is six (6) months prior to the Maturity Date (the "Refinance
Notification Date"). If Borrower fails to deliver such Commitment prior to the
Refinancing Notification Date or if such Commitment is delivered on or before
the Refinance Notification Date, but lapses, terminates or is otherwise
withdrawn prior to the funding of such Commitment and the use of the proceeds
thereof to pay the entire outstanding amount of the Loan (the date upon which
such Commitment lapses, terminates or is otherwise withdrawn is hereinafter
referred to
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as the "Void Commitment Date"), unless the Indebtedness shall have been paid in
full prior to the Refinance Notification Date or the Void Commitment Date, as
the case may be, an Operative Period shall be in effect and all Excess Property
Income shall be applied by Lender pursuant to Section 2.7.3(f).
2.3.2 Prepayments. The Loan may be prepaid only as provided in the
Note.
2.3.3 Pro Forma Debt Service Coverage Ratio. If on any DSCR
Determination Date, the Pro Forma Debt Service Coverage Ratio, is less than or
equal to 1.2/1.0, then for the period (the "DSCR Restricted Period") commencing
on such DSCR Determination Date and ending on the next DSCR Determination Date
on which the Pro Forma Debt Service Coverage Ratio exceeds 1.2/1.0 all Excess
Property Income for all the Property shall be deposited in the Central Account
and allocated as provided in Section 2.7.3(g), provided that if a DSCR
Restricted Period and an Operative Period shall both be in effect with respect
to any period of time, such period will be deemed an Operative Period for the
purposes of this Agreement.
2.3.4 Extensions. At the request of Borrower, which request must be
made at least one hundred eighty (180) days prior to the Maturity Date, Lender
shall have the option, in its sole discretion, to extend the maturity of the
Loan to the next anniversary of the Maturity Date, provided, however, in no
event shall Lender extend the maturity of the Loan beyond March 1, 2015.
Section 2.4 Intentionally Deleted.
Section 2.5 Interest.
2.5.1 Generally. Borrower shall pay interest at the Interest Rate on
the outstanding principal balance of the Loan on each Due Date.
2.5.2 Default Rate; Post-Maturity Interest. If Borrower shall fail
to make any payment of principal, interest, Yield Maintenance Premiums or any
other amount payable by Borrower under the Note, this Agreement or any other
Loan Documents within the grace period provided with respect to such payment
under Section 8.1 or, if no grace period is provided, on the date on which such
payment is due, whether by acceleration or otherwise, Borrower shall pay
interest at the Default Rate with respect to such amounts and/or with respect to
the entire unpaid principal balance of the Loan as provided in the Note. The
preceding sentence shall not be construed as an agreement or privilege to extend
the date for payment of any such amounts nor as a waiver of any other right or
remedy accruing to Lender by reason of the occurrence of an Event of Default.
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Section 2.6 Payments; Computations.
2.6.1 Making of Payments. Each payment by Borrower hereunder or
under the Note shall be made directly into the Central Account by wire transfer
of immediately available funds to:
The First National Bank of Chicago
Chicago, Illinois
ABA #▇▇▇▇▇▇▇▇▇
Credit Clearing A/C No. BNF=7521-7623/DES
Ref: DLJ/Servico/▇▇▇▇▇▇▇▇
or to such other designated bank or place, or in such other manner, as Payee may
from time to time specify in writing. Whenever any payment hereunder or under
the Note shall be stated to be due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day.
2.6.2 Computations. Interest payable hereunder or under the Note by
Borrower shall be computed on the basis of a 360-day year consisting of twelve
(12) months of thirty (30) days each except that interest due and payable for a
period less than a full month shall be calculated by multiplying the actual
number of days elapsed in such period by a daily rate based on said 360-day
year.
2.6.3 Late Payment Charge. If any principal, interest, Yield
Maintenance Premiums or any other sums due under the Loan Documents is not paid
in full within three (3) Business Days of the date on which it is due, Borrower
shall pay to Lender a Late Payment Charge pursuant to the Note.
2.6.4 Application of Payments. Unless otherwise expressly provided
herein, all payments received on account of the Indebtedness shall be applied,
first, to accrued and unpaid interest, second, to the outstanding principal
balance of the Loan, third, to any Yield Maintenance Premium then due and
payable and thereafter to other amounts payable under the Loan Documents.
Section 2.7 Central Account; Deposits and Distributions.
2.7.1 Deposits in Central Account. (a) On each Due Date, Borrower
shall pay, or cause to be paid, to Lender, by wire transfer directly to the
Central Account as provided in Section 2.6.1 or as otherwise directed by Lender,
(i) the payment of Debt Service then due and payable, together with all Yield
Maintenance Premiums and other amounts payable under the Note, this Agreement
and the other Loan Documents, (ii) the Basic Carrying Costs Monthly Installment,
(iii) the FF&E Monthly Installment, (iv) during any Operative Period, DSCR
Restricted Period or Franchise
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Restricted Period, (A) the Operations and Maintenance Expense Monthly
Installment and (B) all Excess Property Income and (v) if such Due Date is the
first Due Date occurring after each of the first four anniversaries of the
Closing Date, the Required Repairs Installment, all for application as provided
herein.
(b) On each Due Date, Lender shall allocate all funds deposited into
the Central Account to the Debt Service Payment Sub-Account, the Basic Carrying
Costs Sub-Account, the Engineering Escrow Sub-Account (if such Due Date is the
first Due Date occurring after each of the first four anniversaries of the
Closing Date) and the FF&E Sub-Account, in that order, provided that during any
Operative Period, any DSCR Restricted Period or any Franchise Restricted Period,
Lender shall allocate such funds pursuant to Section 2.7.3.
(c) Upon commencement of any Operative Period, any DSCR Restricted
Period or any Franchise Restricted Period, Lender may deliver a Consultant's
Notice to Consultant. Borrower shall cause Consultant, upon receipt by
Consultant of a notice from Lender so directing Consultant (a "Consultant's
Notice") until directed otherwise by Lender, to collect all Revenue (determined
for the purposes of this provision on a cash basis) relating to the Property and
pay over all such Revenue to Lender by wire transfer directly to the Central
Account as provided in Section 2.6.1 or as may be otherwise designated from time
to time by Lender. From and after the day immediately following the date on
which a Consultant's Notice is received, Consultant shall collect all of the
Revenue of the Property and shall deposit such funds, within one (1) Business
Day after receipt thereof, directly into the Central Account. Upon termination
of the applicable Operative Period, DSCR Restricted Period or Franchise
Restricted Period, provided no other such period shall then be in effect, Lender
shall deliver a notice to Consultant directing Consultant that from and after
the date of such notice Consultant shall not be required to collect and pay over
Revenue pursuant to the applicable Consultant's Notice.
(d) Borrower pledges, assigns and grants a security interest to
Lender in all amounts deposited into the Central Account, as security for
payment of all sums due under the Loan and the performance of all other terms
and covenants of the Loan Documents and this Agreement on Borrower's part to be
paid and performed.
2.7.2 Establishment of Central Account and Sub-Accounts. Lender
shall establish and maintain the Central Account with the Bank, in the name of
Lender, as secured party. The Central Account shall be an Eligible Account and
shall include (a) the Debt Service Payment Sub-Account, (b) the Basic Carrying
Costs Sub-Account, (c) the FF&E Sub-Account, (d) the Engineering Escrow
Sub-Account, (e) the Operations and Maintenance Expense Sub-Account, (f) the
Curtailment Reserve Fund Sub-Account and (g) the Capital Expenditure Sub-Account
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(collectively, the "Basic Sub-Accounts"), to which certain funds shall be
allocated and from which disbursements shall be made pursuant to the terms of
this Agreement. The Central Account and the Basic Sub-Accounts shall be under
the sole dominion and control of Lender. Borrower hereby irrevocably directs and
authorizes Lender to deposit funds into and withdraw funds from the Central
Account and the Basic Sub-Accounts in accordance with the terms and conditions
of this Agreement. Borrower shall have no direct right of withdrawal in respect
of the Central Account or the Basic Sub-Accounts, but shall have the right to
receive disbursements as provided herein. Each transfer of funds to be made
hereunder shall be made only to the extent that funds are on deposit in the
Central Account or the affected Basic Sub-Account and Lender shall have no
responsibility to make additional funds available in the event that funds on
deposit are insufficient.
2.7.3 Funding of Basic Sub-Accounts During Operative Period, DSCR
Restricted Period and Franchise Restricted Period. During any Operative Period,
DSCR Restrictive Period and any Franchise Restricted Period, Lender shall
allocate all funds deposited into the Central Account each day among the Basic
Sub-Accounts in the following priority:
(a) first, to the Basic Carrying Costs Sub-Account, until an
amount equal to the sum of (i) an amount equal to the Basic Carrying Costs
Monthly Installment for any prior month(s), to the extent not previously paid,
plus (ii) an amount equal to the Basic Carrying Cost Monthly Installment due on
the current Due Date, has been allocated to the Basic Carrying Costs
Sub-Account;
(b) second, to the Operations and Maintenance Expense
Sub-Account, until an amount equal to the sum of (i) an amount equal to the
Operations and Maintenance Expense Monthly Installment for any prior month(s),
to the extent not previously paid, plus (ii) an amount equal to the Operations
and Maintenance Expense Monthly Installment due on the current Due Date, has
been allocated to the Operations and Maintenance Expense Sub-Account;
(c) third, to the Debt Service Payment Sub-Account, until an
amount equal to the sum of (i) the amount, if any, deducted therefrom during any
preceding month to pay any amounts due to any other Basic Sub-Account in
accordance with the provisions of this Section 2.7 to the extent not previously
reimbursed by such other Basic Sub-Account to the Debt Service Payment
Sub-Account, plus (ii) an amount equal to the payment of Debt Service for any
prior month(s), to the extent not previously paid, plus (iii) an amount equal to
the payment of Debt Service for the current Due Date (and any other amounts
required to be paid under the Note on such Due Date), has been allocated to the
Debt Service Payment Sub-Account;
(d) fourth, but only if all of the Required Repair
Installments have not yet been paid, to the Engineering
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Escrow Sub-Account, until an amount equal to the sum of (i) the amount, if any,
deducted therefrom during any preceding month to pay any amounts due to any
other Basic Sub-Account in accordance with the provisions of this Section 2.7 to
the extent not previously reimbursed by such other Basic Sub-Account to the
Engineering Escrow Sub-Account, plus (ii) an amount equal to the payment of any
portion of any Required Repairs Installment previously payable, to the extent
not previously paid, plus (iii) an amount equal to the aggregate of the Required
Repairs Installment, if any, payable hereunder on the first Due Date occurring
after the next anniversary of the Closing Date divided by the number of Due
Dates to occur between the date such funds are received and the first Due Date
occurring after the next anniversary of the Closing Date, inclusive;
(e) fifth, to the FF&E Sub-Account, until an amount equal to
the sum of (i) the amount, if any, deducted therefrom during any preceding month
to pay any amounts due to any other Basic Sub-Account in accordance with the
provisions of this Section 2.7 to the extent not previously reimbursed by such
other Basic Sub-Account to the FF&E Sub-Account, plus (ii) an amount equal to
the FF&E Monthly Installment for any prior month(s), to the extent not
previously paid, plus (iii) an amount equal to the FF&E Monthly Installment due
on the current Due Date, has been allocated to the FF&E Sub-Account;
(f) sixth, but only during any Operative Period, to the
Curtailment Reserve Fund Sub-Account to be applied pursuant to Section 2.7.7(g),
unless Lender shall elect, in its sole discretion, to disburse all or any
portion of such funds in payment of any Operating Expenses or any other charges
affecting all or a portion of the Property, upon such terms and conditions as
Lender shall elect; and
(g) seventh, but only during any DSCR Restricted Period or any
Franchise Restricted Period, to the Capital Expenditure Sub-Account, to be
disbursed as provided in Section 2.7.7(f).
2.7.4 Deposits During Operative Period, DSCR Restricted Period and
Franchise Restricted Period. If on any Due Date during any Operative Period,
DSCR Restricted Period or any Franchise Restricted Period, the funds then on
deposit in the Central Account shall be less than the amount of funds which are
required to be deposited therein pursuant to Section 2.7.3(a) through (d) for
such Due Date, Borrower shall be obligated to deposit immediately available
funds (in addition to Revenue) by wire transfer directly into the Central
Account as provided in Section 2.6.1, on such Due Date (subject to the grace
period provided in Section 8.1(a) (i)), in the amount of such deficiency, and
failure to make such deposit shall be an Event of Default hereunder. Lender may
(but shall not be obligated to) withdraw funds from the Debt Service Payment
Sub-Account the Engineering Escrow Sub-Account, the FF&E Sub-Account, the
Curtailment Reserve
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Sub-Account or the Capital Expenditure Sub-Account (in each case to the extent
funds are available in each such Basic Sub-Account) and pay any deficiency in
any other Basic Sub-Account, in such order of priority as Lender determines in
Lender's sole discretion. Lender shall not withdraw or disburse funds from the
Basic Carrying Costs Sub-Account or the Operation and Maintenance Sub-Account
except as expressly provided in Section 2.7.7(b) and (c).
2.7.5 Eligible Investments. Lender shall direct the Bank to invest
and reinvest any balance in the Central Account from time to time in Eligible
Investments, provided that (a) the maturities of the Eligible Investments on
deposit in the Central Account, if fixed, shall, to the extent such dates are
ascertainable, be selected and coordinated to become due not later than the day
before any disbursements from the Central Account and the Basic Sub-Accounts
must be made, (b) all such Eligible Investments shall be held in the name of
Lender (as secured party) and be under the sole dominion and control of Lender,
and (c) no Permitted Investment shall be made unless Lender shall retain a
perfected first priority Lien in such Permitted Investment securing the
Indebtedness and all filings and other actions necessary to ensure the validity,
perfection, and priority of such Lien have been taken and Lender shall have been
provided with an opinion of counsel satisfactory to Lender confirming the
perfection of such Lien in such Eligible Investment. All funds in the Central
Account that are invested in an Eligible Investment shall be deemed to be held
in the Central Account for all purposes of this Agreement and the other Loan
Documents. Neither Lender nor the Bank shall have any liability for any loss in
investments of funds in the Central Account that are invested in Eligible
Investments and no such loss shall affect Borrower's obligation to fund, or
liability for funding, the Central Account, as the case may be. Borrower agrees
that Borrower shall include all such earnings on the Central Account as income
of the Borrower for federal and applicable state tax purposes.
2.7.6 Interest on Accounts. All interest paid or other earnings on
the Eligible Investments made hereunder shall be deposited into the Central
Account and shall be allocated to the Basic Sub-Account which contained the
funds with respect to which such interest was paid or other earnings earned. All
such interest and earnings shall be treated as Revenue. Except during a DSCR
Restricted Period, a Franchise Restricted Period, an Operative Period or any
period when an Event of Default has occurred and is continuing, all such
interest paid or other earnings earned with respect to funds in the Basic
Carrying Costs Sub-Account and the Debt Service Payment Sub-Account shall, after
each anniversary of the Closing Date, at Lender's option, either be paid over to
Borrower or, on notice to Borrower, credited against the amounts payable by
Borrower on the next Due Date. Except for amounts to be paid or credited to
Borrower pursuant to the preceding sentence, all interest paid or earnings
earned with
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respect to funds on deposit in any Basic Sub-Account shall be retained in such
Basic Sub-Account and disbursed pursuant to Section 2.7.7.
2.7.7 Payment of Debt Service; Disbursement of Funds in Basic
Sub-Accounts; Excess Property Income. Transfers and payments from the Central
Account and the Basic Sub-Accounts shall be made in accordance with the
following provisions:
(a) Payment of Debt Service. On each Due Date during the term
of the Loan, Lender shall withdraw from the Debt Service Payment
Sub-Account and apply to the Indebtedness an amount equal to the sum
of all payments of Debt Service and any other amounts payable to
Lender under the Note, this Agreement or the other Loan Documents,
provided that if any such payment of Debt Service or other amounts
is past due, Lender shall make such withdrawal immediately upon
allocation of funds to the Debt Service Payment Sub-Account.
(b) Payment of Basic Carrying Costs. Borrower shall use its
best efforts to cause all notices of the amount and due date of
payments of Basic Carrying Costs to be sent to Lender at least ten
(10) Business Days prior to such due date. Provided that (i) Lender
has received notice of the amount and due date of any payment of
Basic Carrying Costs and (ii) there are sufficient funds available
in the Basic Carrying Costs Sub-Account, Lender shall make such
payment of Basic Carrying Costs directly to the Governmental
Authority or insuror entitled thereto. If the amount in the Basic
Carrying Costs Sub-Account is not sufficient to pay the Basic
Carrying Costs, Borrower shall pay to Lender, within five (5)
Business Days of written notice, an amount which Lender shall
estimate as sufficient to make up the deficiency. Notwithstanding
anything contained herein to the contrary, Borrower may only request
disbursements from the Basic Carrying Costs Sub-Account to pay
premiums on the Policies to the extent of amounts deposited in the
Basic Carrying Costs Sub-Account pursuant to clause (ii) of the
definition of "Basic Carrying Costs Monthly Installment".
Nevertheless, Lender shall also have the right, without Borrower's
request, but not the obligation, to disburse amounts in the Basic
Carrying Costs Sub-Account in payment of premiums for the Policies
if Borrower shall fail to pay the same when due.
(c) Payment of Operating Expenses. (i) Borrower hereby agrees
to pay, or cause to be paid, when due all Operating Expenses with
respect to the Property (whether or not any amounts on deposit in
the Operations and Maintenance Expense Sub-Account shall be
sufficient for such purpose); provided that Borrower may contest any
Operating Expenses which it in good faith disputes, provided that
(A) no Lien shall attach to the Property (except for the Lien of any
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Impositions being contested by Borrower as permitted under the Loan
Documents), (B) Borrower shall have demonstrated to Lender's
reasonable satisfaction that it has established adequate reserves to
provide for payment of such Operating Expense, if ultimately
required, and (C) failure to pay such Operating Expense shall not
have a material adverse effect on the operation of the Property.
Borrower may, not more frequently than twice in any calendar month,
give Lender written notice, at least five (5) Business Days prior to
the due date with respect to any Operating Expenses, requesting that
Lender pay such Operating Expenses on behalf of Borrower on or prior
to the due date thereof, which notice shall be accompanied by (I) an
Officer's Certificate specifying the Operating Expenses for which
payment is requested and certifying that all requested amounts are
properly payable hereunder and (II) evidence reasonably satisfactory
to Lender that all Operating Expenses for which disbursements have
previously been requested have been paid. Provided that (A) Lender
has received the Consultant's Certifications for the most recent
period for which the same are due, and (B) there are sufficient
funds available in the Operations and Maintenance Expense
Sub-Account, Lender shall, as Lender in its sole discretion shall
determine, either make such payments out of such Basic Sub-Account
or disburse funds from such Basic Sub-Account to Borrower or to the
Consultant on behalf of Borrower for the purpose of making payment
of such Operating Expenses within five (5) Business Days of receipt
of the documentation required hereby; provided that if an Event of
Default with respect to any amounts payable under the Loan Documents
shall have occurred and be continuing or the Indebtedness shall have
been accelerated, Lender shall disburse payments of Operating
Expenses only to third parties entitled to payment thereof.
(ii) Notwithstanding anything to the contrary contained
herein, Lender shall not be obligated to make any disbursement from
the Operations and Maintenance Sub-Account to pay Basic Carrying
Costs, Debt Service, the costs of any FF&E Replacements, the costs
of Required Repairs or legal fees in connection with any dispute
arising under any Loan Document or any management or consulting fees
in excess of four percent (4%) of Revenues with respect to the
Property.
(d) Payment of Costs of Required Repairs. (i) Borrower shall
pay all costs in connection with the performance of the Required
Repairs (without regard to the amount of money then available in the
Engineering Escrow Sub-Account). With respect to any Required Repair
for which the cost set forth on Exhibit E annexed hereto is less
than the greater of (A) $75,000 or (B) one and one-half percent
(1.5%) of the initial Principal Balance for the Property (a "Minor
Required Repair"), Borrower may submit one request
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for a disbursement from the Engineering Escrow Sub-Account of the
actual cost of such Required Repair, provided that all requests by
Borrower for disbursements for Minor Required Repairs in any
calendar month shall be submitted simultaneously and each such
request shall be accompanied by an Officer's Certificate specifying
the costs to be paid from such disbursement and certifying that all
requested amounts are properly payable hereunder and that (I) all
costs of Required Repairs for which disbursements have previously
been made hereunder have been paid to the extent due and payable and
(II) any amounts disbursed by Lender for the costs of Required
Repairs that are not yet due and payable have been reserved by
Borrower for payment of such costs. Borrower shall cause Borrower's
Accountant to deliver to Lender, on or before the first day of each
February, May, August and November of each Fiscal Year, commencing
on May 1, 1995, a certificate of Borrower's Accountant (an
"Accountant's Certificate") stating that (A) Borrower's Accountant
has reviewed (I) all Officer's Certificates delivered by Borrower
pursuant to the preceding sentence during the quarter of Borrower's
Fiscal Year last ended, (II) the invoice from the appropriate
contractor or supplier for each expenditure for which an advance
from the Engineering Escrow Sub-Account was requested pursuant to
such Officer's Certificates, (III) the cancelled check written by
Borrower in payment of each such invoice, (IV) all receipts and
other evidence of payment received by Borrower with respect to such
payments and (V) such evidence as Borrower's Accountant, in its
professional judgment, deems necessary to establish that all amounts
requested by Borrower to be disbursed from the Engineering Escrow
Sub-Account during such quarter of the Fiscal Year have in fact been
expended for purposes permitted under this Agreement and (B) all
amounts disbursed by Lender during such quarter of Borrower's Fiscal
Year (I) (x) were in fact expended in payment of amounts payable out
of funds on deposit in the Engineering Escrow Sub-Account under the
terms of this Agreement or (y) have been reserved by Borrower for
payment of such amounts or (II), if any such disbursements were not
used to pay amounts properly payable hereunder or reserved for
future payment of such amounts, specifying the amounts so
misapplied, provided that upon completion of any Minor Required
Repair and payment in full of costs payable in connection therewith,
Borrower shall not be required to account for any excess funds
disbursed from the Engineering Sub-Account in connection with such
Minor Required Repair. If any such Accountant's Certificate shall
indicate that amounts disbursed from the Engineering Escrow
Sub-Account were misapplied, Borrower shall immediately deposit in
the Central Account, for allocation to the Engineering Escrow
Sub-Account, funds equal to the amount so misapplied.
(ii) With respect to any Required Repair for which the cost
set forth on Exhibit E annexed hereto is not
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less than the greater of (A) $75,000 or (B) one and one-half percent
(1.5%) of the initial Principal Balance for the Property (a "Major
Required Repair"), Borrower may from time to time, but not more
frequently than once in any calendar month, request a disbursement
from the Engineering Escrow Account of amounts to pay for the costs
of such Major Required Repair, accompanied by an Officer's
Certificate specifying the costs to be paid from such disbursement
and certifying that all such costs are properly payable hereunder,
provided that (I) prior to commencement of such Major Required
Repair, Borrower shall have submitted to Lender a budget for such
Major Required Repair and a plan detailing the time frames for each
stage of such work, the percentage of the total Major Required
Repair represented by each stage and the percentage of the budget
allocated to each such stage, (II) such request shall be accompanied
by (x) a certification of the Independent contractor setting forth
the percentage of the Major Required Repair then completed and (y)
evidence reasonably satisfactory to Lender that all costs of such
Major Required Repair for which disbursements have previously been
made hereunder have been paid; and (III) Lender shall not be
required to advance any funds from the Engineering Escrow
Sub-Account with respect to any Major Required Repair to the extent
that the aggregate funds advanced for such item, expressed as a
percentage of the costs allocated for such item on Schedule E, would
exceed the percentage of the work on such item then completed.
(iii) Provided that (A) no Event of Default has occurred and
is continuing, (B) Lender has received the Consultant's
Certifications and the Accountant's Certificates for the most recent
period for which the same are due and the conditions set forth in
subparagraphs (i) and (ii) above have been met, Lender shall
disburse to Borrower the funds in the Engineering Escrow Sub-Account
with respect to the Property to pay the costs of the Required
Repairs, up to the amount set forth on Schedule E annexed hereto for
each such Required Repair, subject to Borrower's right to request
disbursement of excess funds pursuant to clause (v) below; provided
that Lender may condition the disbursement of the final twenty-five
percent (25%) of the funds in the Engineering Escrow Sub-Account
with respect to any Major Required Repair upon an inspection by
Lender or its agent, at Borrower's expense, to confirm that such
item has been completed.
(iv) After completion of the Short-Term Required Repairs and
after completion of the Long-Term Required Repairs to the Property,
Borrower shall submit to Lender (A) (I) with respect to Required
Repairs that were not Major Required Repairs, an Officers
Certificate or (II) with respect to any Major Required Repairs, a
certificate from
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the Engineer, stating, in either case, that all Short-Term Required
Repairs or Long-Term Required Repairs, as applicable, have been
completed in good and workmanlike manner and in accordance with all
Legal Requirements, that all Permits necessary for the use or
occupancy of the Property upon completion of such Required Repairs
have been obtained (with copies of all such Permits attached), (B)
at Lender's option, a title search for the Property indicating that
the Property is free from all liens, claims and other encumbrances
not previously approved by Lender, and (C) such other evidence as
Lender shall reasonably request that the Required Repairs to the
Property have been completed and paid for, including, without
limitation, copies of lien waivers.
(v) If, after completion of all Short-Term Required Repairs, a
portion of the funds deposited in the Engineering Escrow Sub-Account
with respect to the Short-Term Required Repairs remains on deposit,
Borrower may submit an Officer's Certificate stating that all
Short-Term Required Repairs with respect to the Property have been
completed in compliance herewith, that all amounts payable in
connection with such Short-Term Required Repairs have been paid and
that Borrower is entitled to receive a disbursement of the remaining
funds on deposit in the Engineering Escrow Sub-Account with respect
to the Short-Term Required Repairs. Lender shall, at Lender's
option, pay such funds remaining in the Engineering Escrow
Sub-Account applicable to the Short-Term Required Repairs to
Borrower or, upon notice to Borrower, apply such amount to the
amounts payable hereunder on the next Due Date.
(vi) If, after completion of all Required Repairs with respect
to the Property, a portion of the funds deposited in the Engineering
Escrow Sub-Account with respect to the Property remains on deposit
and/or any Required Repairs Installments are not yet due and payable
with respect to the Property, Borrower may submit an Officer's
Certificate stating that all Required Repairs with respect to the
Property have been completed in compliance herewith, that all
amounts payable in connection with such Required Repairs have been
paid and that Borrower is entitled to receive a disbursement of the
remaining funds on deposit in the Engineering Escrow Sub-Account
with respect to the Property and/or that any Required Repairs
Installments with respect to the Property not yet due and payable
should be waived. Lender shall, at Lender's option, pay such funds
remaining in the Engineering Escrow Sub-Account applicable to the
Property to Borrower or, upon notice to Borrower, apply such amount
to the amounts payable hereunder on the next Due Date, and any
Required Repairs Installments with respect to the Property not yet
due and payable shall be waived.
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(vii) Upon the occurrence of an Event of Default with respect
to any amounts payable under the Loan Documents or the acceleration
of the Indebtedness, Lender may apply the funds on deposit in the
Engineering Escrow Sub-Account, as Lender in its sole discretion may
determine, either (A) in payment of any costs of Required Repairs or
any other charges affecting all or any portion of the Property or
(B) in payment, in such order as Lender may elect, of the
Indebtedness then due and payable, whether by acceleration or
otherwise; provided, however, that no such application shall be made
by operation of law or otherwise until actually made by Lender as
herein provided.
(e) Disbursement from FF&E Sub-Account. (i) Borrower shall pay
the costs of those items listed on Schedule F annexed hereto (the
"FF&E Replacements") (without regard to any amounts on deposit in
the FF&E Sub-Account). Borrower may, not more frequently than once
in any calendar month and not with respect to any requested
disbursement of less than $1,000, give Lender written notice
requesting that Lender pay for the costs of any FF&E Replacements
performed or to be performed in accordance with Section 7.4 hereof,
which notice shall be accompanied by an Officer's Certificate from
Borrower stating (A) the specific FF&E Replacements for which the
disbursement is requested, (B) the quantity -and price of each item
purchased, if the FF&E Replacement includes the purchase or
replacement of specific items, (C) the price of all materials
(grouped by type or category) used or to be used in any FF&E
Replacement other than the purchase or replacement of specific
items, (D) the cost of all contracted labor or other services
applicable to each FF&E Replacement for which such request for
disbursement is made, (E) that all FF&E Replacements have been or
will be made in accordance with all Legal Requirements and (F) that
all costs incurred in connection with the FF&E Replacements subject
to such disbursement are costs payable from the FF&E Sub-Account
pursuant to the terms of this Agreement.
(ii) Borrower shall cause Borrower's Accountant to deliver to
Lender, on or before the first day of each February, May, August and
November of each Fiscal Year, commencing on May 1, 1995, an
Accountant's Certificate stating that (A) Borrower's Accountant has
reviewed (I) all officer's Certificates delivered by Borrower
pursuant to subparagraph (i) above during the quarter of Borrower's
Fiscal Year last ended, (II) the invoice from the appropriate
contractor or supplier for each expenditure for which an advance
from the FF&E Sub-Account was requested pursuant to such Officer's
Certificates, (III) the cancelled check written by Borrower in
payment of each such invoice, (IV) all receipts and other evidence
of payment received by Borrower with respect to such payments and
(V) such evidence as Borrower's Accountant, in its professional
judgment,
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deems necessary to establish that all amounts requested by Borrower
to be disbursed from the FF&E Sub-Account during such quarter of the
Fiscal Year have in fact been expended for purposes permitted under
this Agreement and (B) all amounts disbursed by Lender during such
quarter of Borrower's Fiscal Year were in fact expended in payment
of amounts payable out of funds on deposit in the FF&E Sub-Account
under the terms of this Agreement. If Borrower's Accountant is
unable to deliver the Accountant's Certificate containing the
certifications required under the preceding sentence when due, or if
any Accountant's Certificate contains any incorrect statement
(either occurrence is herein referred to as an "Accountant's
Certificate Default"), thereafter the Officer's Certificate
delivered in connection with any request for a disbursement from the
FF&E Sub-Account shall, in addition to all the other matters
described in clause (i) above, (Y) state that all costs for which
such disbursement is requested have been paid in full by Borrower
and (Z) be accompanied by copies of invoices for all items or
materials purchased and all contracted labor or services provided
and each request shall include copies of lien waivers or other
evidence satisfactory to Lender of payment of all such amounts.
(iii) If (A) the cost of an FF&E Replacement exceeds $10,000
and (B) the contractor performing such FF&E Replacement requires
periodic payments pursuant to terms of a written contract, a copy of
which has been delivered to Lender, a request for disbursement from
the FF&E Sub-Account may be made from time to time to make such
periodic payments when payable under such contract, provided (I) all
other conditions in this Agreement for disbursement have been
satisfied, (II) funds remaining in the FF&E Sub-Account are, in
Lender's judgment, sufficient to complete such FF&E Replacement and
other FF&E Replacements when required, and (III) each contractor or
subcontractor receiving payments under such contract shall have
provided a waiver of lien with respect to amounts which have been
paid to that contractor or subcontractor and, if requested by
Lender, Borrower shall have delivered copies of such lien waivers to
Lender.
(iv) Except for requests for disbursement described in clause
(iii) above, each request for disbursement from the FF&E Sub-Account
shall be made only after completion of the FF&E Replacement for
which disbursement is requested and Borrower, shall make only one
simultaneous submission of such requests in any calendar month.
Borrower shall provide Lender evidence of completion of the FF&E
Replacements subject to such requests satisfactory to Lender in its
reasonable judgment and the Officer's Certificates submitted in
connection with such requests shall state that all costs of the FF&E
Replacements subject thereto have been paid in full.
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(v) Provided that (A) no Event of Default has occurred and is
continuing, (B) Lender has received the Consultant's Certifications
and the Accountant's Certificate for the most recent period for
which the same are due, (C) the requirements set forth in this
clause (e) and Section 7.4 of this Agreement are satisfied and (D)
there are sufficient funds available in the FF&E Sub-Account, Lender
shall disburse to Borrower amounts from the FF&E Sub-Account
necessary to pay the actual costs of the FF&E Replacements, provided
that after the occurrence of an Accountant's Certificate of Default,
such disbursements shall be made only to reimburse Borrower for
actual costs of FF&E Replacements that Borrower has demonstrated
pursuant to subparagraph (ii) above have already been paid and that
are properly payable from the FF&E Sub-Account under this Agreement.
Lender shall not be obligated to make disbursements from the FF&E
Sub-Account to pay, or to reimburse Borrower for, the costs of
routine maintenance to the Property or for costs which are to be
disbursed from the Required Repair Fund.
(vi) Upon the occurrence of an Event of Default with respect
to any amounts payable under the Loan Documents or acceleration of
the Indebtedness, Lender may apply the funds on deposit in the FF&E
Sub-Account, as Lender in its sole discretion may determine, either
(A) in payment of the costs of any FF&E Replacements or other
charges affecting all or any portion of the Property or (B) in
payment, in such order as Lender may elect, of the Indebtedness then
due and payable, whether by acceleration or otherwise, any Yield
Maintenance Premium payable with respect to any portion applied in
reduction of the principal balance of the Loan; provided, however,
that no such application shall be deemed to have been made by
operation of law or otherwise until actually made by Lender as
herein provided.
(f) Disbursement of Funds in Capital Expenditure Sub-Account.
(i) Notwithstanding anything to the contrary contained in the Note,
this Agreement or the other Loan Documents, Lender may elect to (a)
retain the funds on deposit in the Capital Expenditure Sub-Account
as additional collateral to secure repayment of the Indebtedness and
performance of the other obligations of Borrower hereunder or (b)
disburse such funds in payment of the costs and expenses of any
improvement, repair or replacement approved by Lender, in its sole
discretion, to the Property, the cost of which Borrower would be
required to capitalize for federal income tax purposes, provided,
however, that notwithstanding the foregoing, if the Pro Forma Debt
Service Coverage Ratio has been (I) less than or equal to 1.2/1.0 on
two (2) consecutive DSCR Determination Dates, exclusive, with
respect to any DSCR Restricted Period, of the initial DSCR
Determination Date on which the Pro Forma Debt Service Coverage
Ratio fell below 1.2/1.0, Lender may elect to apply
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any funds on deposit in the Capital Expenditure Sub-Account as a
prepayment of the principal balance of the Loan or other amounts
payable in connection therewith, on the next occurring Due Date,
with no Yield Maintenance Payable in connection with such
application, or (II) at least equal to 1.3/1.0 for four (4)
consecutive DSCR Determination Dates, Lender shall, at Lender's
option, either pay over any funds on deposit in the Capital
Expenditure Sub-Account to Borrower or credit such funds, on notice
to Borrower, against the amounts payable by Borrower on the next Due
Date, provided that nothing contained in this clause (II) shall
limit Lenders rights elsewhere in this paragraph (f) (i). If any
Franchise Restricted Period shall terminate prior to the occurrence
of an Event of Default hereunder and no DSCR Restricted Period is
then in effect, Lender shall, at Lender's option, either pay over
any funds on deposit in the Capital Expenditure Sub-Account to
Borrower or credit such funds, on notice to Borrower, against the
amounts payable by Borrower on the next Due Date.
(ii) Borrower may, not more frequently than once in each
calendar month, give Lender written notice requesting that Lender
pay the costs of, or reimburse Borrower for payment of the costs of
any such capital improvement, repair or replacement, together with
an Officer's Certificate from Borrower stating the amounts of
charges for which disbursement is requested and that such charges
are properly payable hereunder, and, if required, satisfactory
evidence of the progress and/or completion of such capital
improvement and the cost thereof, satisfactory evidence that any and
all completed capital improvement, repair or replacement work
complies with Legal Requirements and lien waivers, copies of bills,
invoices and other evidence as may be required by Lender to
establish that the costs of any such capital improvement, repair or
replacement for which reimbursement is requested, or for which
disbursement has been previously made, have been paid by Borrower.
(g) Disbursement of Funds in Curtailment Reserve Fund
Sub-Account. Lender shall apply the funds on deposit in the
Curtailment Reserve Fund Sub-Account as a prepayment of the
principal balance of the Loan, together with any Yield Maintenance
Premium and other amounts payable in connection therewith on the
next occurring Due Date.
2.7.8 Payment of Loss Proceeds: Borrower's Right to Release. (a) In
the event of a Casualty with respect to the Property, Lender and Borrower shall
cause all proceeds under any insurance policy required to be maintained by
Borrower ("Insurance Proceeds") to be paid by the respective insurers directly
into the Central Account, except for Insurance Proceeds relating to Equipment
subject to Equipment Leases that require such insurance proceeds be paid to the
lessor thereunder. Unless
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Lender shall elect or be required to make such Insurance Proceeds available to
Borrower for Restoration pursuant to Section 7.2.2 (a), Lender shall (after
deducting out Lender's cost of recovering such Insurance Proceeds, including,
without limitation, reasonable attorneys' fees) apply such Insurance Proceeds on
the next occurring Due Date as a prepayment of the principal balance of the Loan
in accordance with the terms of the Note. If such Insurance Proceeds are to be
made available for Restoration of the Property, Lender shall hold such funds in
a segregated bank account at the Bank, which, to the extent feasible in the
context of the administration of construction disbursement draw requests, shall
be interest bearing, and shall disburse such funds in accordance with Section
7.2.2(b).
(b) In the event of a Condemnation of the Property, Lender and
Borrower shall cause all of the proceeds in respect of any Condemnation
("Condemnation Proceeds") to be paid directly into the Central Account. Unless
Lender shall elect or be required to make such Condemnation Proceeds available
to Borrower pursuant to Section 7.2.3(a), Lender shall (after deducting out
Lender's cost of recovering such Condemnation Proceeds, including, without
limitation, reasonable attorneys' fees) apply such Condemnation Proceeds on the
next occurring Due Date as a prepayment of the principal balance of the Loan in
accordance with the terms of the Note. If such Condemnation Proceeds are to be
made available to Borrower, Lender shall hold any such funds not immediately
disbursed to Borrower in a segregated bank account at the Bank, which, to the
extent feasible in the context of the purposes for which Lender shall disburse
such funds, shall be interest-bearing, and shall disburse such funds in
accordance with Section 7.2.3(a).
(c) If any Insurance Proceeds or Condemnation Proceeds
(collectively, "Loss Proceeds") are received by Borrower, such Loss Proceeds
shall be received in trust for Lender, shall be segregated from other funds of
Borrower, and shall be forthwith paid into the Central Account, to be applied or
disbursed in accordance with the foregoing.
(d) If Lender shall apply any Loss Proceeds as a prepayment of the
principal balance of the Loan as provided above, Borrower may elect to have the
Property released from the Lien of the Mortgage, notwithstanding anything to the
contrary contained herein, without payment of any Yield Maintenance Premium and
whether or not the Lock-Out Date shall have occurred, provided that (i) (A) the
Loss Proceeds applied by Lender toward payment of the Loan shall be at least
equal to the then current Principal Balance for the Property or (B) Borrower
shall pay to Lender any amount by which the then current Principal Balance for
Property exceeds the amount of Loss Proceeds so applied toward payment of the
Loan.
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III. CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Closing.
The obligation of Lender to make the Loan hereunder is subject to
the fulfillment by Borrower, or waiver by Lender, of the following conditions
precedent no later than the Closing Date:
(a) Representations and Warranties: Compliance with Conditions. The
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the Closing Date, and no event shall have occurred and be continuing that
would constitute, by reason of the execution, delivery and performance of this
Agreement or the other Loan Documents, the grant of the Liens on the Property
contemplated hereby, the making of the Loan, or the consummation of the other
transactions contemplated by this Agreement or the other Loan Documents, a
Default or an Event of Default; 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 its part to be observed or performed.
(b) Loan Agreement. Note and Environmental Agreement. Lender shall
have received an original of this Agreement, the Note and the Environmental
Indemnity in each case duly executed and delivered on behalf of Borrower.
(c) Delivery of Mortgage: Assignment of Leases: Franchise Agreement
Letter and Assignment of Consulting Agreement: Title Insurance: Reports: Leases.
(i) Mortgage, Assignment of Leases, Franchise Agreement Letter
and Assignment of Consulting Agreement. Lender shall have received
from Borrower fully executed and acknowledged counterparts of the
Mortgage, the Assignment of Leases, the Franchise Agreement Letter
and the Assignment of Consulting Agreement relating to the Property
and evidence that counterparts of the Mortgage and Assignment of
Leases for the Property have been delivered to the title company for
recording so as to effectively create upon such recording, in the
reasonable judgment of Lender, valid and enforceable Liens upon the
Property, of the requisite priority, in favor of Lender (or such
other trustee as may be required or desired under local law),
subject only to the Permitted Encumbrances and such other Liens as
are permitted pursuant to the Loan Documents.
(ii) Title Insurance. Lender shall have received the Title
Insurance Policy for the Mortgage, or a marked, re-dated and
recertified title commitment establishing the form of the Title
Insurance Policy and providing title
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insurance effective as of the Closing Date, issued by First American
Title Insurance Company and dated as of the Closing Date, with
endorsements, reinsurance and direct access agreements acceptable to
Lender. Such policy shall (A) provide coverage in amounts
satisfactory to Lender, (B) insure Lender that the Mortgage creates
a valid first priority Lien on the Property, 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), (C) contain such endorsements and
affirmative coverages as Lender may request, and (D) name Lender.
The Title Insurance Policy shall be assignable without charge.
Lender also shall have received evidence that all premiums in
respect of such title policy have been paid.
(iii) Survey. Lender shall have received a current survey of
the Property in form and content satisfactory to Lender, prepared by
a professional and properly licensed land surveyor satisfactory to
Lender in accordance with the 1992 Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Survey (the "Survey
Requirements") and certified to the issuer of the Title Insurance
Policy, Lender and its successors and assigns by a certification in
the form set forth in paragraph 8 of the Survey Requirements. Such
survey shall reflect the same legal description contained in the
Title Insurance Policy relating to the Property referred to in
clause (ii) above and shall meet the requirements of an "Urban
Survey as set forth in the Survey Requirements and shall include
items 1, 2, 3, 4, 6, 7, 8, 9, 10, 11 and 13 set forth on Table A of
the Survey Requirements.
(iv) Insurance. Lender shall have received certified copies of
the Policies required hereby, together with original certificates
issued by the insuror evidencing such Policies, naming Lender as an
additional insured or loss payee, together with evidence
satisfactory to Lender that such policies are in full force and
effect, that all premiums then payable for the existing policy
period have been paid and that such policies may not lapse or be
terminated without at least thirty (30) days notice to Lender.
(v) Environmental Reports. Lender shall have received a Phase
I environmental report and, if indicated, a Phase II environmental
report in respect of the Property, in each case satisfactory to
Lender.
(vi) Zoning. With respect to the Property, Lender shall have
received, at Lender's option, (i) letters or other evidence with
respect to the Property from the appropriate municipal authorities
(or other Persons
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acceptable to Lender) concerning applicable zoning laws, or (ii) a
zoning opinion letter from Borrower's local counsel, in form and
substance satisfactory to Lender.
(vii) Encumbrances. Borrower shall have taken or caused to be
taken such actions to provide Lender, as of the Closing Date, with a
valid, perfected, first priority Lien with respect to the Mortgage
in the Property, subject only to applicable Permitted Encumbrances,
and Lender shall have received satisfactory evidence thereof.
(d) Related Documents. Each additional Loan Document not
specifically referenced herein, but relating to the transactions contemplated
herein, shall have been duly authorized, executed and delivered by all parties
thereto and Lender shall have received and approved certified copies thereof.
(e) Delivery of Organizational Documents. On or before the Closing
Date, Borrower shall deliver or cause to be delivered to Lender copies certified
by Borrower of all organizational documentation related to Borrower and/or its
formation, structure, existence, good standing and/or qualification to do
business, as Lender may request in its sole discretion, including, without
limitation, good standing certificates, qualifications to do business in the
appropriate jurisdictions, resolutions authorizing the entering into of the Loan
and incumbency certificates.
(f) Opinions of Borrower's Counsel. Lender shall have received (i)
opinions of counsel for Borrower with respect to due formation of Borrower, due
authorization, execution and delivery of the Note, this Agreement and the other
Loan Documents and enforceability of the Note, this Agreement and the other Loan
Documents and (ii) opinions of counsel for Borrower (who shall be satisfactory
to Lender), in the State in which the Property is located with respect to (A)
enforceability of the Mortgage, the Assignment of Leases and the other Loan
Documents with respect to the Property located in such State, (B) perfection of
Lender's security interest in the Revenue of the Property, (C) perfection of
Lender's security interest in all liquor licenses, restaurant licenses and hotel
operating licenses with respect to the Property, if permitted under the laws of
such State and (D) adequacy of Permits listed on an affidavit of an officer of
Borrower with respect to the Property, to the knowledge of such counsel, each in
form and substance satisfactory to Lender, dated as of the Closing Date and
addressing such matters as Lender may reasonably request.
(g) Budgets. Borrower shall have delivered the Capital Expenditures
Budget and the Annual Operating Budget for the Property for the prior Fiscal
Year and the current Fiscal Year (on a forecast basis).
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(h) Basic Carrying Costs. Borrower shall have paid all Basic
Carrying Costs relating to the Property which is due and payable through the
Closing Date, including, without limitation, all Impositions relating to
Borrower or the Property, which amounts may be funded with proceeds of the Loan.
(i) Completion of Proceedings. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated by this
Agreement and other Loan Documents shall be reasonably satisfactory in form and
substance to Lender, and Lender shall have received all such counterpart
originals or certified copies of such documents as Lender may reasonably
request.
(j) Evidence of Insurance Premiums. Borrower shall have delivered,
or caused to be delivered, the Insuror's Letter.
IV. REPRESENTATIONS AND WARRANTIES
Section 4.1 Borrower's Representations.
Borrower represents and warrants that:
(a) Organization. Borrower has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its
formation. Borrower and any general partner of any Borrower has requisite
corporate or partnership power and authority to (i) own its properties, (ii)
transact the businesses in which it is now engaged, (iii) execute and deliver
this Agreement, the Note, the Mortgage and the other Loan Documents and (iv)
consummate the transactions contemplated hereby and thereby. Borrower is duly
qualified to do business and is in good standing in the jurisdiction where its
Property is located and in each other jurisdiction where it is required to be so
qualified in connection with the ownership, maintenance, management and
operation of its Property, except where the failure to be so qualified or in
good standing would not have a material adverse effect on the financial
condition or the business of Borrower or the ownership, condition or operation
of its Property (a "Borrower Material Adverse Effect"). Borrower possesses all
rights, licenses, permits and authorizations, governmental or otherwise,
necessary to entitle it to own its properties and to transact the businesses in
which it is now engaged. The sole business of Borrower is the ownership,
management and operation of Individual Property.
(b) Authorization: Enforceability. The execution, delivery and
performance of Borrower's obligations under this Agreement, the Note, the
Mortgage and the other Loan Documents has been duly authorized by all requisite
corporate or partnership action of Borrower, including, where required, the
consent of its partners or shareholders and directors. This
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Agreement, the Note, the Mortgage and such other Loan Documents have been duly
executed and delivered by or on behalf of Borrower and constitute legal, valid
and binding obligations of Borrower enforceable against Borrower in accordance
with their respective terms, subject to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally and to general principles
of equity (regardless of whether enforcement is sought in a proceeding in equity
or at law).
(c) No Conflicts. The execution, delivery and performance of this
Agreement, the Note, the Mortgage 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
(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 or other agreement or instrument to which
Borrower is a party or to which any of Borrower's property or assets is subject,
which conflict, breach, default or imposition of Lien would have a Borrower
Material Adverse Effect, nor will such action result in any violation of the
provisions of any statute or any order, rule or regulation of any Governmental
Authority having jurisdiction over Borrower or Borrower's Property or assets,
and any consent, approval, authorization, order, registration or qualification
of or with any Governmental Authority required for the execution, delivery and
performance by Borrower of this Agreement, the Note, the Mortgage or any other
Loan Documents has been obtained and is in full force and effect.
(d) Litigation. Except as set forth on Schedule L, there are no
actions, suits or proceedings at law or in equity by or before any Governmental
Authority for which service has been made on Borrower or any Affiliate or, to
the knowledge of Borrower, threatened against or affecting Borrower or the
Property, which actions, suits or proceedings are not covered by insurance and,
if determined against Borrower or the Property, would materially adversely
affect the condition (financial or otherwise) or business of such Borrower or
the condition or ownership of the Property.
(e) Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction which would materially adversely affect
Borrower or the Property, or Borrower's business, properties or assets,
operations or condition, financial or otherwise. Borrower is not in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which Borrower or the Property is bound, except for any defaults that would
not have a Borrower Material Adverse Effect.
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(f) Title. Borrower has good, legal title in fee to the real
property comprising part of the Property as nominee for Southfield and good
title to the balance of the Property, free and clear of all Liens, restrictions,
covenants, easements and other matters affecting title whatsoever, except the
Permitted Encumbrances. The Mortgage, when properly recorded in the real
property records of the county or parish where the Property is located, and the
other Collateral Security Documents, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, will create
(i) a valid, perfected first priority Lien on the Property, subject only to
Permitted Encumbrances and (ii) perfected security interests in and to, and
perfected collateral assignments of, all personalty (including the Leases) and
other collateral described therein, all in accordance with the terms thereof, in
each case subject only to any applicable Permitted Encumbrances. There are no
outstanding options or rights of first refusal affecting any of the Property.
There are no claims for payment for work, labor or materials affecting the
Property which is or may become a lien prior to, or of equal priority with, the
Liens created by the Loan Documents. All of the Permitted Encumbrances reflected
in the Title Insurance Policy are customary exceptions for commercial mortgage
lending transactions involving properties similar to the Property.
(g) No Bankruptcy Filing. Neither Borrower nor, to the best of
Borrower's knowledge, Southfield is contemplating either the filing of a
petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of Borrower's or Southfield's assets or
property, and Borrower has no knowledge of any Person contemplating the filing
of any such petition against it. Except for the Bankruptcy Order, neither
Borrower nor Southfield is currently the subject of any bankruptcy or similar
proceeding under any state or federal law and the Property is not currently
under the jurisdiction of any bankruptcy court or other court having similar
jurisdiction.
(h) Full and Accurate Disclosure. No statement of fact made by
Borrower in this Agreement or in any of the other Loan Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no material fact presently known to Borrower which has not been disclosed to
Lender which adversely affects, or might reasonably be expected to adversely
affect, the Property or the business, operations or condition (financial or
otherwise) of Borrower.
(i) No Plan Assets. Borrower is not an "employee benefit plan," as
defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of the
assets of Borrower constitutes or will constitute "plan assets" of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101.
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(j) Compliance. Borrower and the Property and the use thereof comply
in all material respects with all applicable Legal Requirements, including,
without limitation, parking requirements. Borrower is not in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority, the violation of which would materially adversely affect the
condition (financial or otherwise) or business of Borrower.
(k) Contracts. There are no material contracts, excluding Leases,
Equipment Leases, Franchise Agreement and cable television contracts affecting
the Property that would be binding upon Lender or its designee after foreclosure
or transfer in lieu of foreclosure of the Property that are not terminable on
one month's notice or less without cause and without penalty or premium.
(l) Financial Information. All financial data of the Borrower,
including, without limitation, the statements of cash flow and income and
operating expense, that have been delivered to Lender (i) are true, complete and
correct in all material respects, (ii) fairly represent the financial condition
of the Property and Borrower as of the date of such reports, and (iii) have been
prepared in accordance with GAAP, consistently applied throughout the periods
covered, except as disclosed therein. As of the date of this Agreement, Borrower
has no material contingent liability, liability for taxes (other than taxes not
yet due and payable) or other unusual or forward commitment. Since June 30,
1994, there has been no material adverse change in the results of operations of
the Property or the assets, liabilities or financial condition of Borrower.
Except as disclosed in such financial statements, Borrower has not incurred any
obligation or liability, contingent or otherwise, which would materially
adversely affect its business operations or the Property.
(m) Condemnation. Neither Borrower nor any Affiliate of Borrower has
received notice of any proceeding with respect to Condemnation, nor, to
Borrower's best knowledge, is any Condemnation contemplated, with respect to all
or any portion of the Property.
(n) 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.
(o) Utilities and Public Access. The Property has rights of access
to public ways and is served by water, gas,
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electric, telephone, sanitary sewer and storm drain facilities adequate to
service the Property for its respective intended use. To the knowledge of
Borrower, except as disclosed in the surveys, all public utilities necessary or
convenient to the full use and enjoyment of the Property is located in the
public right-of-way abutting the Property, and all such utilities are connected
so as to serve the Property without passing over other property. All roads
necessary for access to the Property for its current purpose have been completed
and dedicated to public use and accepted by all Governmental Authorities. No
road providing access to the Property is currently (i) closed or severely
restricted in use or (ii) to the best of Borrower's knowledge, contemplated to
be relocated, closed or severely restricted in use.
(p) Not a Foreign Person. Borrower is not a "foreign person" within
the meaning of 1445(f) (3) of the I.R.C.
(q) Separate Lots. The Property is comprised of one (l) or more
parcels, which constitutes a separate tax lot and does not constitute a portion
of any other tax lot not a part of the Property. The Property is not assessed
jointly with any other real property constituting a separate tax lot or with any
personal property not constituting part of the Property such that the lien of
any taxes which may be levied against such personal property shall be assessed
or levied or charged as a lien on the Property.
(r) Assessments. There are no pending or, to the best of Borrower's
knowledge, proposed special or other assessments for public improvements or
otherwise affecting the Property, except for Permitted Encumbrances, nor, to the
best of Borrower's knowledge, are there any contemplated improvements to any of
the Property that may result in such special or other assessments.
(s) No Defenses. As of the Closing Date, this Agreement, the Note
and the other Loan Documents are not subject to any right of rescission,
set-off, counterclaim or defense by Borrower, including the defense of usury,
and Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.
(t) No Prior Assignment. Lender is the assignee of all Borrower's
interests under the Leases and there are no prior assignments of any of the
Leases or any portion of the Revenue which are presently outstanding.
(u) Insurance. Borrower has obtained and has delivered to Lender the
Policies, or certified copies thereof, together with original certificates
evidencing such Policies, reflecting the insurance coverages, amounts and other
requirements set forth herein, which Policies are in full force and effect and
may not lapse or be terminated without at least
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thirty (30) days notice to Lender or ten (10) days for nonpayment of premiums.
(v) Use of Properties. The Property is used exclusively for hotel
purposes and other appurtenant and related uses.
(w) Certificate of Occupancy: Permits and Licenses. Borrower has
obtained all permits, licenses, approvals and franchises, including, without
limitation, certificates of occupancy, hotel licenses and liquor licenses (the
"Permits"), required by Legal Requirements in order to use and operate the
Property for hotel use as currently operated, except for Permits the failure of
which to so obtain would not have a Borrower Material Adverse Effect. All such
Permits are (i) listed on Schedule G annexed hereto, (ii) have been validly
issued and are in full force and effect and (iii) are issued in or have been
transferred into the name of the Borrower that owns the Property, except as
indicated on Schedule G. Where permitted by Legal Requirements, Borrower has
granted Lender a valid, perfected first priority security interest in all such
Permits. All fees due and payable with respect to each Permit have been paid.
There are no proceedings pending or threatened which may result in the
revocation, suspension or, to the best of Borrower' knowledge, termination of
any Permit. The Property is operated in compliance, in all material respects,
with the related Permits.
(x) Flood Zone. None of the Improvements on the Property are located
in a flood hazard area as defined by the Federal Emergency Management Agency.
(y) Physical Condition. To the best of Borrower' knowledge, except
as disclosed in the Building Evaluation Reports, the Property, including,
without limitation, all buildings, 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 other Improvements thereon are in
operating condition, order and repair in all material respects. To the best of
Borrower' knowledge, except as disclosed in the Building Evaluation Reports,
there exists no structural or other material defect in the Property, whether
latent or otherwise. Neither Borrower nor any Affiliate of Borrower has received
written notice from any insurance company or bonding company of any defects or
inadequacies in any of the Properties, 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.
(z) Solvency. The fair saleable value of Borrower's assets exceeds
and will, immediately following the making of the
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Loan, exceed such Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower's assets is and will, immediately following the
making of the Loan, be greater than Borrower's probable liabilities, including
its contingent liabilities, on its debts as such debts become absolute and
matured. In the good faith judgment of Borrower, Borrower's assets constitute,
and immediately following the making of the Loan will constitute, reasonably
sufficient capital to carry out its business as conducted or as proposed to be
conducted. Borrower does not intend to, or believe that it will, incur debts and
liabilities (including, without limitation, contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature.
(aa) Casualty. The Property has not sustained any material loss or
interference with its operations from fire, explosion, flood or other calamity,
or from any labor dispute or any action, order or decree by any Governmental
Authority.
(bb) Components of Value. The portions of the Property constituting
real property interests have a fair market value as of the date hereof at least
equal to seventy percent (70%) of the original principal balance of the Loan.
The portion of the Property constituting interests in real property has a fair
market value as of the date hereof at least equal to seventy percent (70%) of
the Principal Balance for the Property.
(cc) 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 in connection with the
transfer of the Property to Borrower have been paid. All mortgage, mortgage
recording, stamp, intangible or other similar tax required to be paid by any
Person under applicable Legal Requirements in connection with the execution,
delivery, recordation, filing, registration, perfection or enforcement of any of
the Loan Documents, including, without limitation, the Mortgage encumbering the
Property have been paid, and, under current Legal Requirements, the Mortgage is
enforceable in accordance with its terms by Lender (or any subsequent holder
thereof) against the Property.
(dd) Single-Purpose. Borrower hereby represents and warrants to, and
covenants with, Lender that, as of the date hereof and until such time as the
Indebtedness shall be paid in full, except as otherwise provided herein, in the
other Loan Documents or in the Consulting Agreement, the Borrower, and if
Borrower is a limited partnership, the general partner of Borrower:
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(i) does not own and shall not own any asset other than the Property
or, in the case of a general partner, its interest in Borrower;
(ii) is not engaged and shall not engage in any business other than
those necessary for the ownership, use, management or operation of the such
Individual Property and any transactions entered into in connection with such
business with any Affiliate of Borrower or the general partner, other than any
such transactions embodied in the Loan Documents and the Consulting Agreement,
shall be entered into upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arms-length basis
with third parties other than an Affiliate of Borrower or such general partner;
(iii) has not incurred, created or assumed any currently outstanding
debt, and shall not incur, create or assume any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation), other than the
Indebtedness, trade indebtedness incurred in the ordinary course of the
Borrower's or the general partner's business (including the financing of
insurance premiums) and the Permitted Encumbrances, except as may be otherwise
expressly permitted hereunder;
(iv) has not made any currently outstanding, and shall not make any,
loans or advances to any third party (including any Affiliate of Borrower or
such general partner);
(v) is and shall be solvent and paying its liabilities (including,
as applicable, reasonable allocations of personnel and overhead expenses) from
its assets as the same shall become due;
(vi) has done or caused to be done and shall do or cause to be done
all things necessary to preserve its existence, and shall not, nor shall any
general partner thereof, as applicable, amend, modify or otherwise change its
articles of incorporation or by-laws or partnership agreement, as applicable
without the prior written consent of Lender, in its sole discretion;
(vii) shall observe all corporate or partnership formalities, as
applicable, and conduct and operate its business as presently conducted and
operated;
(viii) shall maintain books and records and bank accounts separate
from those of its Affiliates or any other Person;
(ix) shall maintain a separate business office at the Property;
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(x) shall be, and at all times shall hold itself out to the public
as, a legal entity separate and distinct from any other entity, including any
Affiliate thereof, provided that Borrower may identify its Property as
associated with the applicable Franchisor;
(xi) shall file its own tax returns, if required by the Code;
(xii) shall 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;
(xiii) shall not seek or consent to the liquidation, dissolution or
winding up, in whole or in part, of Borrower or the general partner, nor enter
into any consolidation, merger, joint venture, syndication or other combination;
(xiv) shall not commingle its funds and other assets with those of
any Affiliate or any other Person;
(xv) has caused, and at all times shall cause, there to be at least
one duly appointed member of the board of directors (an "Independent Director")
of Borrower or the general partner who has not been at the time of such
individual's appointment, and may not have been at any time during the preceding
two years (A) a stockholder of, or an officer, director (other than with respect
to such Independent Director's service as director of Borrower or the general
partner) or employee of, Borrower or any of its Affiliates, or the general
partner or any of its Affiliates, (B) a customer or supplier to Borrower or any
of its Affiliates, or to the general partner or any of its Affiliates, (C) a
person or other entity controlling any such stockholder, supplier or customer,
or (D) a member of the immediate family of any such stockholder, officer,
employee, supplier or customer or any other director of Borrower or the general
partner. As used in this subsection (dd), the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise;
(xvi) has not caused, and shall not cause, the board of directors of
Borrower or the general partner to take any action which, under the terms of any
certificate of incorporation, by-laws or any voting trust agreement with respect
to Borrower's common stock, requires the unanimous affirmative vote of one
hundred percent (100%) of the members of the board of directors, unless at the
time of such action there shall be at least one member who is an Independent
Director;
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(xvii) shall comply with the provisions of its articles of
incorporation or by-laws or partnership agreement, as applicable; and
(xviii) shall use separate and distinct invoices and stationery and
checks that indicate, by printed or typed identification, that Borrower is the
entity for which payment is made.
(ee) Enforceability of Franchise and Consulting Agreement. Each of
the Franchise Agreement and the Consulting Agreement have been duly authorized,
executed and delivered or duly assumed by Borrower and constitutes a valid and
legally binding instrument enforceable against Borrower in accordance with its
terms, subject to the effects of bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law).
(ff) Compliance with Franchise Agreement. A true and complete copy
of the Franchise Agreement (including all amendments, agreements, side letters
and other documents relating thereto) has been delivered to Lender and there are
no other documents or agreements between Borrower or any Franchisor with respect
to the Property. All amounts due and payable under the Franchise Agreement
through the Closing Date have been paid, and to Borrower's knowledge, there is
no default by either party under any Franchise Agreement and no event has
occurred and is continuing which, with the passage of time and/or the giving of
notice, would constitute a default or event of default by either party under any
Franchise Agreement, except in any case for defaults that would not have a
Borrower Material Adverse Effect. Any work on the Property required by the
Franchisor under any Franchise Agreement to have been completed prior to the
date hereof has been completed and either (i) has been approved by such
Franchisor or (ii) Borrower knows of no reason why such work should not be
approved. All necessary consents, if any, of any Franchisor to the transactions
contemplated by this Agreement and the other Loan Documents have been obtained.
(gg) Compliance with Consulting Agreement. A true and complete copy
of the Consulting Agreement has been delivered to Lender and there are no other
agreements or documents providing for the management or the supervision of the
Property. All amounts due and payable under the Consulting Agreement as of the
Closing Date have been paid and, to the best of Borrower's knowledge, there is
no default in any material respect by any party under the Consulting Agreement,
and no event has occurred and is continuing which, with the passage of time
and/or the giving of notice, would constitute a default or event of default in
any material respect by any party under the Consulting Agreement.
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(hh) Equipment Leases. True and complete copies of all Equipment
Leases (including all amendments, agreements, side letters and documents
relating thereto) have been delivered to Lender. All Equipment Leases are listed
on Schedule H annexed hereto and, except as set forth on Schedule H, all of such
Equipment Leases are unmodified. All of the Equipment Leases are in full force
and effect and there is no default in any material respect by Borrower
thereunder, nor, to the best knowledge of Borrower, by the lessor or other party
thereunder and, to the best knowledge of Borrower, no event has occurred and is
continuing which, with the passage of time and/or the giving of notice, would
constitute a default or event of default in any material respect under any such
Equipment Leases. Except for items subject to the Equipment Leases, all
furniture, fixtures, equipment and personal property used in connection with the
ownership, operation, management and maintenance of the Property is owned by
Borrower.
(ii) No Encroachments. To the best knowledge of Borrower, except as
disclosed in the Surveys or Title Insurance Policy, all improvements comprising
a portion of the Property lie wholly within the boundary and building
restriction lines of the Property and no improvements on adjoining properties
encroach upon the Property in any respect.
(jj) Leases. Schedule I, annexed hereto, sets forth all Leases
affecting any part of the Properties. All such Leases are in full force and
effect and have not been amended or modified except as set forth on Schedule I.
To the best of Borrower's knowledge, no material default has occurred and is
continuing thereunder.
(kk) Beneficial Interests Encumbered.. Borrower and Borrower as
nominee has full power and authority to execute and deliver a mortgage
encumbering all legal and beneficial interests in the Property without the
consent of, or the execution and delivery of any document by, any third party
that has not been obtained. Upon foreclosure of the related Mortgage on the
Property, Lender or any purchaser at foreclosure would take title free and clear
of any interests of Southfield.
(ll) Bankruptcy Order. Neither Borrower nor any Affiliate of
Borrowers is in default in any material respect under its obligations under the
Bankruptcy Order.
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. All
representations, warranties, covenants and agreements made in
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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. AFFIRMATIVE COVENANTS
Section 5.1 Borrower's 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 Lien of the Mortgage (and all related obligations) from the Property in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower hereby covenants and agrees with Lender that:
(a) Existence: Compliance with Legal Requirements and Insurance
Requirements. Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and corporate franchises and comply with all Legal
Requirements applicable to it and its Property. Borrower shall at all times use
its best efforts to maintain, preserve and protect all its corporate franchises
and trade names and preserve all the remainder of its property used or useful in
the conduct of its business and shall keep its Property, including, without
limitation, all Equipment, in satisfactory working order and repair and in
compliance with all Legal Requirements and Insurance Requirements, and from time
to time make, or cause to be made, all reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto in order to maintain such
Property in compliance with the prevailing standards for a hotel property of
similar age, size, construction and the then applicable franchise affiliation in
the metropolitan area in which such Property is located, all as more fully
provided in the Mortgage.
(b) Impositions and Other Charges. Borrower shall pay all
Impositions, now or hereafter levied or assessed or imposed against its Property
or any part thereof, subject to Lender's obligation to disburse funds from the
Basic Carrying Costs Sub-Account pursuant to Section 2.7.7(b) and shall pay all
water, sewer, maintenance and other charges now or hereafter levied or assessed
or imposed against the Property or any part thereof (the "Other Charges") as
same become due and payable. Borrower shall not suffer, and Borrower shall
promptly cause to be paid and discharged, any Lien whatsoever which may be or
become a lien or charge against the Property other than Permitted Encumbrances,
and shall promptly pay for all utility services provided to its Property.
Borrower shall furnish to Lender or its designee upon request, receipts for the
payment, or other evidence reasonably satisfactory to Lender of payment, of such
Impositions, Other
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Charges and said utility services prior to the date the same shall become
delinquent, except with respect to amounts that Lender is obligated to disburse
pursuant to Section 2.7.7(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 amount or validity or
application in whole or in part of any Impositions or Other Charges, provided
that (i) no Event of Default has occurred and is continuing, (ii) such
proceeding shall suspend the collection of the Impositions or Other Charges from
the Property, (iii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower or the
Property is subject and shall not constitute a default thereunder, and (iv)
Borrower shall have furnished such security as may be required in the
proceeding, or as may be reasonably requested by Lender, to insure the payment
of any such Impositions or Other Charges, together with all interest and
penalties thereon.
(c) 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 its business or its Property.
(d) Access to Premises. Borrower shall permit agents,
representatives and employees of Lender to inspect the Property or any part
thereof at reasonable hours upon reasonable advance notice.
(e) 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.
(f) Cooperate in Legal Proceedings. Borrower shall cooperate fully
with Lender with respect to any proceedings before any Governmental Authority
with respect to Borrower or the Property which may in any way affect the rights
of Lender hereunder or any rights obtained by Lender under any of the other Loan
Documents and, in connection therewith, permit Lender, at its election and at
Borrower' expense, to participate in any such proceedings.
(g) Perform Loan Documents. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions of, and shall pay
when due all costs, fees and expenses to the extent required under the Loan
Documents executed and delivered by, or applicable to, Borrower.
(h) Insurance Benefits. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any proceeds of any insurance lawfully or
equitably payable in connection with its Property, and Lender shall be
reimbursed for any expenses
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incurred in connection therewith (including reasonable attorneys' fees and
disbursements, and the payment by Borrower of the expense of an appraisal on
behalf of Lender if reasonably requested by Lender in case of a fire or other
casualty affecting its Property or any part thereof) out of such insurance
proceeds.
(i) Further Assurances; Supplemental Mortgage Affidavits. (i)
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, and to maintain Lender's
perfected lien upon, and security interest in, the collateral (including,
without limitation, the Central Account and all funds on deposit therein) at any
time securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require; 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.
(ii) As of the date hereof, Borrower represents that it has paid all
state, county and municipal recording and all other taxes imposed upon the
execution and recordation of the Mortgage against the Property.
(j) Management of Mortgaged Property. Borrower covenants and agrees
with Lender that (i) its Property will be managed at all times by the Consultant
pursuant to the Consulting Agreement, (ii) immediately upon the occurrence of a
fifty percent (50%) or more change in control of the Consultant (a "Consultant
Control Change"), Borrower will promptly give Lender notice thereof (a
"Consultant Control Notice") and (iii) any Consulting Agreement may be
terminated by Lender (A) For Cause (as defined below) at any time, (B) at any
time after the occurrence and during the continuance of an Event of Default with
respect to any amounts payable hereunder or under the Note, the Mortgage or the
other Loan Documents, (C) upon commencement of any foreclosure proceeding with
respect to the Property and (D) after any Consultant Control Change with respect
to the
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applicable Consultant if the Rating Agency has failed to confirm, after written
request, in writing that as a result of such Consultant Control Change the then
current rating of the Certificates will not be downgraded, withdrawn or
otherwise adversely affected. Upon such termination, a substitute managing agent
shall be appointed by Borrower, subject to Lender's approval, in Lender's sole
discretion, for the Property. As used in this subsection (j), the term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of Consultant, whether through
ownership of voting securities, by contract or otherwise, and the term "For
Cause" means on account of Consultant's gross negligence, willful misconduct or
fraud or Consultant's default beyond the expiration of any applicable notice or
grace period in the performance of its obligations under the applicable
Consulting Agreement. The Consulting Agreements shall be subject and subordinate
in all respects to the Lien and to the terms, covenants and provisions of the
Mortgage and the other Loan Documents in accordance with those certain
Assignments of Consulting Agreements, dated as of the date hereof. Provided no
Event of Default has occurred and is then continuing hereunder, Consultant shall
be entitled to collect fees under the Consulting Agreement, provided that any
such fees in excess of four percent (4%) of Revenues shall not be paid or
collected unless all amounts then payable under the Loan Documents shall have
been paid in full and Operating Expenses are being paid consistent with
Borrower's practices in effect as of the Closing Date and Borrower shall not
reasonably expect future Revenue to be insufficient to pay Operating Expenses
accrued or thereafter accruing. Borrower further covenants and agrees that
Borrower shall require the Consultant to maintain at all times during the term
of the Loan worker's compensation insurance as required by Governmental
Authorities. Borrower shall perform its obligations under the Consulting
Agreements.
(k) Financial Reporting.
(i) Borrower will keep and maintain or will cause to be kept and
maintained on a Fiscal Year basis, in accordance with GAAP, proper and accurate
books, records and accounts reflecting all of the financial affairs of Borrower
and all items of income and expense in connection with the operation on an
individual basis of the Property and in connection with any services or
Equipment provided in connection with the operation thereof, whether such income
or expense be realized by Borrower or by any other Person whatsoever, excepting
lessees unrelated to and unaffiliated with Borrower who have leased from
Borrower portions of the Property for the purpose of occupying the same. 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 or other Person maintaining such books, records and accounts and to
make such copies or extracts thereof as Lender shall desire. After the
occurrence of an Event of Default, Borrower shall pay any
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reasonable costs and expenses incurred by Lender in connection with such
examination.
(ii) Borrower will furnish to Lender annually (with a copy to the
Rating Agency), within one hundred twenty (120) days following the end of each
Fiscal Year of Borrower, a certified complete copy of the financial statement of
Borrower, prepared on a combined basis, audited by Borrower's Accountant in
accordance with GAAP covering on a combined basis the operation of the Property
for such Fiscal Year and containing a statement of Revenues and Operating
Expenses, a statement of assets and liabilities and a statement of Borrower's
equity. Together with Borrower's annual combined financial statement, Borrower
shall furnish to Lender an unaudited operating statement for the Property,
accompanied by an Officer's Certificate representing as of the date thereof (A)
that the annual operating statement accurately represents the operation of the
related Property, in accordance with GAAP consistently applied and (B) whether
there exists an event or circumstance which constitutes a default or Event of
Default under the Loan Documents executed and delivered by, or applicable to
Borrower, and if such default or Event of Default exists, the nature thereof,
the period of time it has existed and the action then being taken to remedy the
same.
(iii) Borrower shall timely file any and all required reports with
the Securities and Exchange Commission, required to be filed pursuant to the
Securities Exchange Act of 1934, as amended.
(iv) Borrower will furnish, or cause to be furnished, to Lender
monthly (with a copy to the Rating Agency), within twenty (20) days following
the end of each month, both (A) a true, complete and correct cash flow statement
with respect to the Property on an individual basis in form reasonably
acceptable to Lender showing (I) all cash receipts of any kind whatsoever and
all cash payments and disbursements for such month, and (II) year-to-date
summaries of such cash receipts, payments and disbursements, (III) all Revenue
and Operating Expenses for such month and (IV) all Revenue and Operating
Expenses for the preceding twelve (12) full calendar months and (B) an
operations statement with respect to the Property prepared on an accrual basis,
in the form of Schedule J annexed hereto, showing the operations of the Property
for the preceding twelve (12) full calendar months and (C) a balance sheet for
Borrower, together with a certification of the applicable Consultant (a
"Consultant's Certification") stating that, in all material respects, (a) each
such cash flow statement and operating statement is true, complete and correct
and (b) all Operating Expenses with respect to the Property which have accrued
as of the last day of the month preceding the delivery of such cash flow
statement have been fully paid or otherwise provided for by or on behalf of
Borrower.
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(v) Borrower shall furnish to Lender (with a copy to the Rating
Agency), within fourteen (14) days after request, such further detailed
information with respect to the operation of the Property and the financial
affairs of Borrower as may be reasonably requested by Lender.
(vi) Lender shall have the right to audit, at Lender's expense,
Borrower's books and records to determine Revenue and Operating Expenses for the
Property; provided, however, that if such audit reveals a misstatement of
Revenue or Operating Expenses in any financial statement submitted by or on
behalf of Borrower by more than five percent (5%) of such amount for the period
which is the subject of such audit, Borrower shall reimburse Lender on demand
for the cost of such audit.
(l) Business and Operations. Borrower will continue to engage in the
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of its Property.
Borrower will qualify to do business and will remain in good standing under the
laws of each jurisdiction as and to the extent the same are required for the
ownership, maintenance, management and operation of its Property.
(m) Title to the Property. Borrower will warrant and defend (i) the
title to the Property and every part thereof, subject only to the Permitted
Encumbrances, and (ii) the validity and priority of the Liens of the Mortgage
and the Assignment of Leases on the Property, subject only to the Permitted
Encumbrances, in each case against the claims of all Persons whomsoever.
Borrower shall reimburse Lender for any losses, costs, damages or expenses
(including reasonable attorneys' fees and court costs) incurred by Lender if an
interest in the Property, other than as permitted hereunder, is claimed by
another Person.
(n) Costs of Enforcement. In the event (i) that the Mortgage is
foreclosed in whole or in part or is put into the hands of an attorney for
collection, suit, action or foreclosure, (ii) of the foreclosure of any other
mortgage encumbering any of the Property in which proceeding Lender is made a
party, or (iii) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of Borrower or an assignment by Borrower for the benefit
of its creditors, Borrower, its successors or assigns, shall be chargeable with
and agree to pay all costs of collection and defense, including attorneys' fees
in connection therewith and in connection with any appellate proceeding or
post-judgment action involved therein, which shall be due and payable hereunder
together with all required service or use taxes.
(o) Estoppel Statement. Borrower, within ten (10) days after request
from Lender, shall from time to time furnish to Lender a statement, duly
acknowledged and certified by
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Borrower, setting forth (i) the amount then owing by Borrower in respect of the
Indebtedness, (ii) the date through which interest on the Loan has been paid,
and (iii) any offsets, counterclaims, credits or defenses to the payment of
Borrower's obligations under the Loan Documents and acknowledging that this
Agreement and the other Loan Documents executed and delivered by, or applicable
to, Borrower are legal, valid and binding obligations of Borrower and have not
been modified or, if modified, giving the particulars of such modification.
Lender, within ten (10) days after a request by Borrower, shall from time to
time, but not more frequently than four (4) times in any calendar year, furnish
to Borrower a statement, duly acknowledged and certified by Lender, setting
forth (A) the amount then owing by Borrower with respect to the Indebtedness,
(B) the date through which Interest on the Loan has been paid and (C) that, to
the best of Lender's knowledge, no default has occurred hereunder, and
acknowledging that this Agreement and the other Loan Documents have not been
modified, or if modified, giving the particulars of such modification.
(p) Loan Proceeds. The proceeds of the Loan shall be used only for
the purposes set forth in Section 2.2.
(q) Permits. Borrower shall comply, and cause its Property to be
operated in compliance, in all material respects, with all Permits and shall
extend or renew any Permit that may expire.
(r) Annual Operating Budget and Capital Expenditures Budget.
Borrower shall prepare and deliver to Lender, not less than fifteen (15)
Business Days prior to the commencement of each Fiscal Year of Borrower, (i) an
Annual Operating Budget with respect to the Property for such ensuing Fiscal
Year, and (ii) a Capital Expenditures Budget with respect to the Property for
such ensuing Fiscal Year.
(s) Confirmation of Representations. In addition to and not in
limitation of the covenants and agreements of Borrower contained in Section 7.1,
Borrower shall deliver, in connection with any Securitization Transaction, 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 Transaction or specifying any changes in the
accuracy of such representations.
(t) No Joint Assessment. Borrower shall not suffer, permit or
initiate the joint assessment of the Property (i) with any other real property
constituting a tax lot separate from the Property, and (ii) with any other
personal property, whereby the lien of any taxes which may be levied against
such other personal property shall be assessed or levied or charged to the
Property.
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(u) Leasing Matters. Any Lease with respect to the Property that
covers more than one thousand (1,000) rentable square feet shall be written on a
form of lease which has been approved by Lender, which approval shall not be
unreasonably withheld. Upon request, Borrower shall furnish Lender with executed
copies of all Leases. All proposed Leases or renewals of existing leases entered
into after the Closing Date shall be on commercially reasonable terms and shall
not contain any terms which would materially affect Lender's' rights under the
Loan Documents. All Leases executed after the date hereof shall be subordinate
to the Mortgage encumbering the Property. Borrower (i) shall observe and perform
the obligations imposed upon the lessor under the Leases in a commercially
reasonable manner; (ii) shall enforce, and may amend or terminate, the terms,
covenants and conditions contained in the Leases upon the part of the lessee
thereunder to be observed or performed in a commercially reasonable manner;
(iii) shall not collect any of the rents more than one (l) month in advance
(other than security deposits); (iv) shall not execute any other assignment of
lessor's interest in the Leases or the Revenue (except as contemplated by the
Loan Documents); (v) shall not alter, modify or change the terms of the Leases
in a manner inconsistent within the provisions of the Loan Documents; and (vi)
shall execute and deliver at the request of Lender all such further assurances,
confirmations and assignments in connection with the Leases as Lender shall from
time to time require.
(v) Financing Statements. Borrower shall, promptly upon Lender's
request, at Borrower's sole cost and expense, timely file or refile, or cause to
be filed or refiled, all continuations and any assignments of any of the Uniform
Commercial Code Financing Statements filed in connection with the Loan, as
appropriate, in the appropriate recording or filing offices, such that Lender
will continue to have a valid and perfected first priority lien on the
collateral subject to such financing statements.
(w) Equipment Leases. Borrower shall observe and perform or cause to
be observed or performed all of its obligations under all Equipment Leases and
replace any expired Equipment Leases with similar agreements as necessary to
maintain the operating standards of its Property.
(x) Franchise Inspection Reports. Borrower shall deliver to Lender,
or cause the Consultant to deliver to Lender, a copy of each inspection report
of any Franchisor with respect to the Property within five (5) Business Days
after Borrower's or Consultant's receipt thereof.
(y) Compliance with Franchise Agreement. Borrower shall operate its
Property as a hotel open for business under the Franchise Agreement, and shall
perform all of its obligations under the Franchise Agreement.
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(z) Operations and Maintenance Programs. The Borrower that owns the
Property referred to on Schedule K annexed hereto shall cause such Property to
be operated and maintained in all material respects in accordance with those
certain operations and maintenance programs, approved by the Environmental
Consultant, listed on Schedule K and shall deliver an Officer's Certificate to
Lender within thirty (30) days of the Closing Date stating that such Borrower
has instructed the relevant employees at the Property in compliance with such
operations and maintenance program.
(aa) Insuror's Letter. Borrower shall deliver an updated Insuror's
Letter within ten (10) Business Days of any change in the premiums payable with
respect to the Policies.
VI. NEGATIVE COVENANTS
Section 6.1 Borrower's 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 the Mortgage (and all related obligations) from the Property in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower covenants and agrees with Lender that none of them will do, directly or
indirectly, any of the following:
(a) Operation of Property. Borrower shall not, without the prior
consent of Lender, which consent shall not be unreasonably withheld or delayed,
amend, modify, terminate or extend, or consent to an assignment of Franchisor's
or Consultant's rights under, any Franchise Agreement or Consulting Agreement
relating to the Property or otherwise replace Franchisor or Consultant of the
Property or enter into any other management or franchise agreements with respect
to the Property. Notwithstanding the foregoing, if the Franchise Agreement shall
expire or be terminated, other than any termination by Borrower or on account of
Borrower's default thereunder, Borrower shall enter into a new Franchise
Agreement, in form and substance reasonably satisfactory to Lender. During any
Franchise Restricted Period, all Excess Property Income for the Property shall
be deposited in the Central Account and allocated as provided in Section
2.7.3(g), provided that if a Franchise Restricted Period and a DSCR Restricted
Period shall both be in effect with respect to any period of time, such period
will be deemed a DSCR Restricted Period for the purposes of this Agreement and
if a Franchise Restricted Period and an Operative Period shall both be in effect
with respect to any period of time, such period of time shall be deemed an
Operative Period for the purposes of this Agreement. A "Franchise Restricted
Period" shall mean any period of time during which the Franchise Agreement shall
have been expired or been terminated, other than
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a termination by Borrower or on account of Borrower's default thereunder, and
shall not have been replaced by a new Franchise Agreement pursuant to this
subsection. It shall be an Event of Default hereunder if any Franchise
Restricted Period shall continue for more than ninety (90) days.
(b) Liens. Borrower shall not, without the prior written consent of
Lender, create, incur, assume or suffer to exist any Lien on any portion of the
Property or permit any such action to be taken, except:
(i) Permitted Encumbrances; or
(ii) Liens for Impositions or Other Charges not yet due or which are
being contested in compliance with Section 5.1(b)
(c) Dissolution. Borrower shall not dissolve, terminate, liquidate,
merge with or consolidate into another Person
(d) Chance In Business. Borrower shall not enter into any line of
business other than the ownership and operation of its Property, 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.
(e) Debt Cancellation. Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
(f) Affiliate Transactions. Borrower shall not enter into, or be a
party to, any transaction with an Affiliate of Borrower or of any partner of
Borrower except (a) under the Consulting Agreement, (b) 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 or (c) as may
be otherwise expressly provided for hereunder.
(g) Zoning. Borrower shall not initiate or consent to any zoning
reclassification of all or any portion of its Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
the Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, without the prior consent of Lender.
(h) Assets. Borrower shall not purchase or own any properties other
than its Property.
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(i) Debt. Borrower shall not create, incur or assume any debt other
than the Indebtedness and other than unsecured, short-term trade indebtedness
incurred in the ordinary course of operating its Property (including financing
of insurance premiums) and Permitted Encumbrances.
(j) Misapplication of Funds. Borrower shall not, or permit any
Consultant to, (i) distribute any Revenue to any Borrower or any partners or
shareholders thereof either (A) in violation of the provisions of Section 2.7
hereof or (B) unless true and correct Consultant's Certifications as referred to
in Section 5.1(k) (iv) shall have been delivered for the most recent period for
which the same are due, or (ii) misappropriate any security deposit made under
any Lease or portion thereof.
(k) Southfield Partnership Agreement. ▇▇▇▇▇▇▇▇ Motel, Inc. shall
not, without the prior written consent of Lender, in Lender's sole discretion,
consent to any modification, amendment, extension or termination of that certain
Third Amended and Restated Agreement of Limited Partnership of Southfield Hotel
Group II dated January 30, 1995 by S.A.I. Corp., ▇▇▇▇▇▇▇▇ Motel, Inc. and
Southfield Associated Group nor consent, or authorize Southfield to engage in
any business not authorized under such agreement.
VII. SPECIAL PROVISIONS
Section 7.1 Cooperation.
7.1.1 Cooperation. (a) Lender intends to make the Loan pursuant to
and in accordance with the Loan Documents and the Loan Purchaser intends to
purchase the Loan, in each case, prior to effecting any Securitization
Transaction. Borrower shall, at Lender's cost and expense, including, without
limitation, reasonable legal fees, cooperate in good faith with the Lender, the
Loan Purchaser, any Servicer and the Securities and Exchange Commission in
effecting such Securitization Transaction, including obtaining Franchise
Agreement Letters for the benefit of the Loan Purchaser, and shall cooperate in
good faith to implement all requirements imposed by the Rating Agency or any
rating agencies including, without limitation, changes to the Loan and the Loan
Documents occasioned by the Securitization Transaction and all additional
conditions imposed by such rating agencies in connection with any rating of the
Certificates, including, without limitation, delivery of opinions of counsel
acceptable to such Rating Agencies and addressing such matters as such Rating
Agencies may reasonably require; provided, however, that Borrower shall not act
as a Depositor or issuer in connection with a Securitization Transaction or be
required to acquiesce in respect of material modifications to the Loan or the
Loan Documents, including, without limitation, any modifications (whether
material or not) relating to (i) the interest rate
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payable in respect of the Loan, (ii) the Maturity Date, (iii) the amortization
of the Loan, (iv) the calculation of Yield Maintenance Premiums or the instances
in which such Yield Maintenance Premiums are applicable, (v) the limitations on
recourse set forth in the Loan Documents, (vi) the conditions for release of an
Individual Property set forth in Section 2.4 or (vii) the Cash Management
Agreement.
(b) The Loan Purchaser, at its election, may determine to resell the
Loan or retain title to the Loan instead of implementing the Securitization
Transaction. In such event, Borrower shall cooperate in good faith with the Loan
Purchaser in connection with effecting any such resale or retention of the Loan.
7.1.2 Additional Financial Reporting Reaquirements.
Borrower hereby agrees that Borrower shall, at Borrowers' cost and
expense, execute and deliver all documentation and statistical information as
may be reasonably requested by Lender and take all action deemed reasonably
necessary or desirable by Lender, in both cases for the implementation of the
Securitization Transaction(s) including, without limitation, delivery of (i)
audited financial statements fulfilling Securities and Exchange Commission
requirements as to form, content and period covered, (ii) consents of experts
fulfilling Securities and Exchange Commission requirements, (iii) other matters
as may be customary for offerings of securities similar to the Certificates,
(iv) the satisfaction of all reasonable Rating Agency requirements with respect
to documentation and statistical information and (v) all ongoing periodic
reporting requirements under the Securities Exchange Act of 1934, as amended,
arising out of the registration of the Certificates.
Section 7.2 Insurance: Casualty and Condemnation.
7.2.1 Insurance. (a) Borrower, at its sole cost and expense, shall
keep the Property insured during the entire term of the Loan for the mutual
benefit of such Borrower and Lender on an "All Risk" basis, including without
limitation, insurance against loss or damage by fire and against loss or damage
by other risks and hazards covered by a standard extended coverage policy,
including, but not limited to, riot and civil commotion, vandalism, malicious
mischief, burglary and theft. Such insurance shall be in an amount (i) equal to
the then full replacement cost of the Improvements (exclusive of footings and
foundations) and Equipment, without deduction for physical depreciation, and
(ii) such that the insurer would not deem Borrower a co-insurer under said
policies, provided that if such coverage is provided under a blanket policy,
such coverage may be provided through a "loss limit" policy in the amount of not
less
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than $100,000,000 per occurrence and not in the aggregate (which amount may be
increased, in Lender's reasonable discretion, if the number of properties
covered by such blanket policy is increased after the Closing Date). The
policies of insurance carried in accordance with this Section shall be paid
monthly or quarterly in advance and, unless such policies shall be blanket
policies pursuant to the preceding sentence, shall contain the "Replacement Cost
Endorsement" with a waiver of depreciation.
(b) Borrower, at its sole cost and expense, for the mutual benefit
of Borrower and Lender, shall also obtain and maintain, or cause to be
maintained, during the entire term of the Loan the following policies of
insurance with respect to the Property:
(i) flood insurance if any part of the Property is located in an
area identified by the Federal Emergency Management Agency as an area having
special flood hazards and in which flood insurance has been made available under
the National Flood Insurance Act of 1968 (and any amendment or successor act
thereto) in an amount at least equal to the lesser of the Principal Balance
attributable to such Individual Property or the maximum limit of coverage
available with respect to the Improvements and Equipment under said Act,
whichever is less;
(ii) comprehensive public liability insurance in the amount of
$5,000,000 or such additional amount reasonably requested by Lender, including
broad form property damage, blanket contractual and personal injuries (including
death resulting therefrom) coverages;
(iii) business interruption insurance in an amount not less than the
Revenues projected by Lender for the Property for a period of twenty-four (24)
months at one hundred percent (100%) occupancy, provided that notwithstanding
the foregoing, if the hazard insurance under paragraph (a) above is provided
under a "loss limit" blanket policy as permitted thereunder, such business
interruption insurance may be included in such policy, provided that such
insurance shall provide coverage for the Property for the actual loss of Cash
Flow Available for Debt Service for the Property sustained due to the suspension
of operations during the period of the restoration of operations and continuing
normal Operating Expenses incurred during such period. The term "period of
restoration" as used in this subparagraph means the period of time (a) from the
date of the applicable Casualty until the date on which the Restoration of the
Property, if prosecuted with reasonable diligence, should be completed and (b)
from the date on which the Restoration of the Property is technically completed
until the earlier of (I) the date on which the business operations and condition
of the Property should be restored to their status prior to such Casualty, if
pursued with reasonable diligence, and (II) the date which is sixty (60)
consecutive days after the actual completion of the Restoration;
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(iv) insurance against loss or damage from leakage of sprinklers or
explosion of steam boilers, air conditioning equipment, high pressure piping,
machinery and equipment, pressure vessels or similar apparatus now or hereafter
installed on the Property;
(v) Worker's compensation insurance with respect to any employees of
Borrower or of Consultant employed at the Property, as required by Governmental
Authorities, or Legal Requirements; and
(vi) such other or additional insurance as may from time to time be
reasonably required by Lender.
(c) All policies of insurance (the "Policies") required pursuant to
this Section 7.2.1: (i) shall be issued by an insurer rated "A" (or the
equivalent) by the Rating Agency and satisfactory to Lender, (ii) shall contain
the standard New York mortgagee non-contribution clause (or equivalent) naming
Lender as the person to whom all payments made by such insurance company, with
respect to property losses, shall be paid (except with respect to (A) Equipment
subject to an Equipment Lease that requires insurance proceeds to be paid to the
lessor thereunder and (B) provided no Event of Default shall have occurred and
be continuing, refunds of premiums made as a result of policy audits), (iii)
shall be maintained throughout the term of this Agreement without cost to
Lender, (iv) shall contain a waiver of subrogation, (v) shall be delivered to
Lender (or Lender shall receive original certificates of insurance and certified
copies of all Policies), (vi) shall contain such provisions as Lender deems
reasonably necessary or desirable to protect its interest including, without
limitation, endorsements providing that neither Borrower, Lender nor any other
party shall be a co-insurer under said Policies and that Lender shall receive at
least thirty (30) days' prior written notice of any modification or
cancellation, except that Lender shall receive ten (10) days' prior written
notice of any cancellation for non-payment of any premium, and (vii) shall be
reasonably satisfactory to Lender and shall be approved by Lender as to amounts,
form, risk coverage, deductibles, loss payees, and insureds, which approval
shall not be unreasonably withheld or delayed. Borrower shall pay the premiums
for such Policies as the same become due and payable. Not later than ten (10)
days prior to the expiration date of each of the Policies, Borrower will deliver
to Lender satisfactory evidence of the renewal of each of the Policies. The
Policies may be part of a blanket policy only if the provider of such blanket
policy provides Borrower and Lender with a letter confirming that coverage for
the Property will not be cancelled or reduced because of any matter relating to
any property covered thereby.
(d) All insurers shall be authorized to issue insurance in the State
in which the Property is located.
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(e) In the event Borrower fails to provide, maintain, keep in force,
or deliver and furnish to Lender the Policies required hereunder, Lender may
procure such insurance as Lender shall deem appropriate, and Borrower will
reimburse Lender for all premiums paid by Lender promptly upon demand by Lender,
together with interest thereon at the Default Rate from the date of demand. The
amounts advanced by Lender to pay for such insurance, together with such
interest thereon, shall be a part of the Indebtedness and secured by the
Mortgage.
(f) Borrower shall pay, or cause to be paid, all premiums therefor
not later than the date due and shall submit to Lender, within three (3)
Business Days of the date such premium payment is due, other than with respect
to payments disbursed from the Basic Carrying Costs Sub-Account, a copy of each
check written in payment of such premiums or other evidence reasonably
satisfactory to Lender that such premium has been paid, or, if such payment
shall be made by wire transfer, evidence of such transfer reasonably
satisfactory to Lender.
7.2.2 Casualty and Restoration. (a) Borrower shall give prompt
written notice to Lender of any damage to or destruction of all or any portion
of the Property (any such event being herein referred to as a "Casualty").
Provided that Lender shall make Insurance Proceeds available pursuant to Section
7.2.2(b), Borrower shall promptly and diligently restore, replace, rebuild and
repair the Property as nearly as possible to the value and condition of the
Property immediately prior to such Casualty (such restoration, replacement,
rebuilding and repair is herein referred to as the "Restoration"), regardless of
whether Insurance Proceeds shall be payable with respect to such Casualty or
shall be sufficient to pay for the Restoration. The plans and specifications and
Permits for the Restoration shall be submitted to Lender in advance and shall be
reasonably satisfactory to Lender in all respects. The Restoration shall be done
in compliance with all Legal Requirements, and Borrower shall carry builder's
risk insurance satisfactory to Lender in connection with the Restoration.
Lender, its agents and representatives shall have the right to inspect the
Property to monitor the Restoration. All reasonable costs and expenses incurred
by Lender, its agents or representatives in connection with the Restoration,
including, without limitation, counsel fees and engineers fees incurred by
Lender in connection with the review of plans, specifications and Permits and
the monitoring of the Restoration, shall be paid by Borrower. Upon completion of
the Restoration, Borrower shall deliver to Lender an Officer's Certificate (or
if the cost of such Restoration shall exceed $250,000, a certificate of an
Engineer) stating that (A) all materials installed and work and labor performed
in connection with the Restoration have been paid for in full, (B) no mechanics'
or other Liens on the Property arising out of the Restoration exist which have
not been bonded or otherwise discharged of record, (C) the Restoration has been
completed in compliance with the plans and specifications submitted to Lender
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and all Legal Requirements and (D) all Permits required for use of the Property
after the Restoration have been obtained, together with such other evidence of
the foregoing as Lender may request.
(b) Lender may elect to make all or any portion of any Insurance
Proceeds received by Lender pursuant to Section 2.7.8(a) (after deducting out
Lender's cost of obtaining such Insurance Proceeds, including, without
limitation, reasonable attorneys' fees) available to pay the costs of the
Restoration, provided that Lender shall make such Insurance Proceeds (after
deducting Lender's cost as aforesaid) available to pay the costs of the
Restoration if (i) such Insurance Proceeds are paid to Lender prior to February
1, 2007, (ii) (A) the Insurance Proceeds received with respect to any Casualty
(after deducting out such costs) shall not exceed fifty percent (50%) of the
fair market value for the Property as set forth on Schedule M annexed hereto or
(B) such Insurance Proceeds (after deducting out such costs) shall equal or
exceed fifty percent (50%) of such fair market value for the Property and the
ratio of (x) the Cash Flow Available for Debt Service for the Property for the
twelve (12) month period ending with the last day of the last full month prior
to such Casualty for which Lender shall have received financial reports for the
Property pursuant to Section 5.1(k) (iv) to (y) the aggregate amount of payments
of principal and interest that would be payable over the twelve (12) months
following the date of such Casualty in order to amortize the current Principal
Balance for the Property, with interest at the Interest Rate, over the period
from the date of such Casualty to the Maturity Date shall be at least equal to
1.62/1.0, unless, in such case, Borrower shall elect not to perform the
Restoration, (iii) no Default or Event of Default shall have occurred and be
continuing and (iv) Borrower shall have deposited with Lender an amount equal
to the difference between the cost of the Restoration, as reasonably estimated
by Lender, and the amount of Insurance Proceeds to be made available by Lender
to pay such costs. If such Insurance Proceeds are less than $100,000, Lender
shall pay such Insurance Proceeds over to the Borrower in question upon receipt
of an Officer's Certificate stating the costs of such Restoration to which such
Insurance Proceeds shall be applied. If the Insurance Proceeds equal or exceed
$100,000 and are to be made available to pay the costs of the Restoration, such
Insurance Proceeds shall be paid by Lender to, or as directed by, Borrower, less
retainage customary in the area where the Property is located, from time to time
during the course of the Restoration (but not more frequently than once per
calendar month), upon (x) receipt of a written request for such disbursement by
Borrower accompanied by an Officer's Certificate (or if the cost of such
Restoration shall exceed $250,000, a certificate of an Engineer) stating that
(1) all materials installed and work and labor performed to date (except to the
extent they are to be paid for out of the requested payment) in connection with
the Restoration have been paid for in full, and (2) no mechanics' or other Liens
on the Property arising out of
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the Restoration exist which have not been bonded or otherwise discharged or
released, together with such other evidence of the foregoing as Lender may
request, and (y) compliance with such other reasonable conditions as Lender may
from time to time impose.
(c) Any amount of Insurance Proceeds which Lender does not elect, or
is not required, to make available to pay the costs of the Restoration, or which
remains after payment of the costs of any restoration or reconstruction, shall
be applied as provided in Section 2.7.8(a).
7.2.3 Condemnation. (a) Borrower shall promptly give Lender notice
of the actual or threatened commencement of any Condemnation proceeding relating
to the Property and shall deliver to Lender copies of any and all papers served
in connection with such proceedings. Following any Condemnation of less than all
of the Property, provided that Lender shall make Condemnation Proceeds available
pursuant to Section 7.2.3(b), Borrower shall promptly and diligently perform
such restoration and reconstruction of the affected Property as is necessary to
retain, as nearly as possible, the economic value of the Property, regardless of
whether Condemnation Proceeds payable with respect thereto shall be sufficient
to pay for such restoration and reconstruction. The plans and specifications and
Permits for such restoration and reconstruction shall be submitted to Lender in
advance and shall be reasonably satisfactory to Lender in all respects. Such
restoration and reconstruction shall be done in compliance with all Legal
Requirements, and Borrower shall carry builder's risk insurance satisfactory to
Lender in connection therewith. Lender, its agents and representatives shall
have the right to inspect the Property to monitor such restoration and
reconstruction. All reasonable costs and expenses incurred by Lender, its agents
or representatives in connection with such restoration and reconstruction,
including, without limitation, counsel fees and engineers fees incurred by
Lender in connection with the review of plans, specifications and Permits and
the monitoring of such restoration and reconstruction, shall be paid by
Borrower. Upon completion of such restoration and reconstruction, Borrower shall
deliver to Lender an Officer's Certificate (or if the cost of such restoration
and reconstruction shall exceed $250,000, a certificate of an Engineer) stating
that (A) all materials installed and work and labor performed in connection with
such restoration and reconstruction have been paid for in full, (B) no
mechanics' or other Liens on the Property arising out of such restoration and
reconstruction exist which have not been bonded or otherwise discharged of
record, (C) such restoration and reconstruction have been completed in
compliance with the plans and specifications submitted to Lender and all Legal
Requirements and (D) all Permits required for use of the Property after such
restoration and reconstruction have been obtained, together with such other
evidence of the foregoing as Lender may request.
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(b) Any Condemnation Proceeds received by Lender (after deducting
out Lender's costs of obtaining such Condemnation Proceeds, including, without
limitation, reasonable attorneys' fees) may, in Lender's discretion, be either
retained and applied by Lender toward payment of the Loan or, at the discretion
of Lender be disbursed, either in whole or in part, to Borrower for such
purposes and upon such conditions as Lender shall designate, provided that
Lender shall make such Condemnation Proceeds (after deducting Lender's cost as
aforesaid) available to pay the costs of such restoration and reconstruction if
(i) such Condemnation Proceeds (after deducting out such costs) are paid to
Lender prior to February 1, 2007, (ii) (A) the Condemnation Proceeds received
with respect to any Condemnation shall not exceed fifty percent (50%) of the
fair market value for the Property as set forth on Schedule M, or (B) such
Condemnation Proceeds shall equal or exceed fifty percent (50%) of such fair
market value for the Property and the ratio of (x) the Cash Flow Available for
Debt Service for such Individual Property for the twelve (12) month period
ending with the last day of the last full month prior to such Condemnation for
which Lender shall have received financial reports for the Property pursuant to
Section 5.1(k) (iv) to (y) the aggregate amount of payments for principal and
interest that would be payable over the twelve (12) months following the date of
such Condemnation in order to amortize the current Principal Balance for the
Property, with interest at the Interest Rate, over the period from the date of
such Condemnation to the Maturity Date shall be at least equal to 1.62/1.0,
unless in such case Borrower shall elect not to perform such restoration and
construction, (iii) the remainder of the Property is, in Lender's reasonable
judgment, susceptible to being restored or reconstructed to a satisfactory
economic value, (iv) no Default or Event of Default shall have occurred and be
continuing and (v) Borrower shall have deposited with Lender an amount equal to
the difference between the cost of such restoration and reconstruction, as
reasonably estimated by Lender, and the amount of Insurance Proceeds to be made
available by Lender to pay such costs. If such Condemnation Proceeds are less
than $100,000, Lender shall pay such Condemnation Proceeds over to the Borrower
upon receipt of an Officer's Certificate stating the costs of such Restoration
to which such Condemnation Proceeds shall be applied. If the Condemnation
Proceeds equal or exceed $100,000 and are to be made available to pay the costs
of such restoration and reconstruction, such Condemnation Proceeds shall be paid
by Lender to, or as directed by, Borrower, less retainage customary in the area
where the Property is located, from time to time during the course of such
restoration and reconstruction (but not more frequently than once per calendar
month), upon (x) receipt of a written request for such disbursement by the
applicable Borrower accompanied by an Officer's Certificate (or if the cost of
such restoration and reconstruction shall exceed $250,000, a certificate of an
Engineer) stating that (1) all materials installed and work and labor performed
to date (except to the extent they are to be paid for out of the requested
payment) in connection with such
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restoration and reconstruction have been paid for in full, and (2) no mechanics'
or other Liens on the Property arising out of such restoration and
reconstruction exist which have not been bonded or otherwise discharged or
released, together with such other evidence of the foregoing as Lender may
request, and (y) compliance with such other reasonable conditions as Lender may
from time to time impose.
(c) Any amount of Condemnation Proceeds that Lender does not elect,
or is not required, to make available to Borrower, or that remains after payment
of the costs of any restoration or reconstruction, shall be applied as provided
in Section 2.7.8(b).
(d) Notwithstanding any Condemnation (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 Loan at the time and in the manner provided
for its payment in the Note and the Loan shall not be reduced until any
Condemnation Proceeds shall have been actually received and applied by Lender,
after the deduction of expenses of collection as provided above, to the
reduction of the Indebtedness, if permitted hereunder. Lender shall not be
limited to the interest paid on the award by the condemning authority but shall
be entitled to receive out of the award interest at the rate or rates provided
in the Note. If the Property subject to the Condemnation proceeding is sold,
through foreclosure or otherwise, prior to the receipt by Lender of such
Condemnation Proceeds, Lender shall have the right, notwithstanding the
limitations on recourse under the Loan Documents and whether or not a deficiency
judgment on the Note shall have been sought, recovered, denied or available
hereunder, to receive said Condemnation Proceeds, or a portion thereof
sufficient to pay the Indebtedness.
Section 7.3 Required Repairs.
Borrower shall promptly commence and diligently continue the
Required Repairs at the Property, provided that Long-Term Required Repairs shall
be commenced as may be reasonably required to permit the completion thereof by
the dates required pursuant to the following sentence. It shall be an Event of
Default under this Agreement if Borrower does not complete the Short-Term
Required Repairs at the Property by the first (1st) anniversary of the Closing
Date or, with respect to any Long-Term Required Repair by the first to occur of
(a) the fifth (5th) anniversary of the Closing Date or (b) the date by which
such Long-Term Required Repair may be required to be completed pursuant to any
applicable Franchise Agreement.
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Section 7.4 FF&E Replacements.
7.4.1 Performance of FF&E Replacements. (a) Borrower shall make FF&E
Replacements when required by sound hotel management practices in order to keep
the Property in condition and repair consistent with requirements under the
applicable Franchise Agreement and Borrower's standards and practices as of the
Closing Date, but in any event not below prevailing standards for hotel
properties of similar age, size, construction and the then-current franchise
affiliation in the metropolitan area in which the Property is located, and to
keep the Property from deteriorating. Borrower shall complete all FF&E
Replacements in a good and workmanlike manner as soon as practicable following
the commencement of making each such FF&E Replacement.
(b) Upon Lender's request, Borrower shall deliver copies of and
assign to Lender any contract or subcontract relating to such FF&E Replacements.
(c) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) to enter onto the Property, upon reasonable prior notice, during
normal business hours (subject to the rights of tenants under their leases) to
inspect the progress of any FF&E Replacements and all materials being used in
connection therewith and to examine all plans and shop drawings relating to such
FF&E Replacements which are or may be kept at the Property. Borrower shall cause
all contractors and subcontractors to cooperate with Lender and such agents and
representatives in connection with such inspections.
(d) In the event Lender determines, in its reasonable discretion,
that any FF&E Replacement is not being performed in a workmanlike or timely
manner or that any FF&E Replacement has not been completed in a workmanlike
manner and timely manner, Lender may elect to withhold disbursement under
Section 2.7.7 (e) for such unsatisfactory FF&E Replacement and, if Borrower has
failed to remedy any deficiencies in the performance of such FF&E Replacement
within fifteen (15) days after notice thereof by Lender, to proceed under
existing contracts or to contract with third parties to complete such FF&E
Replacement and to apply any funds in the FF&E Sub-Account toward the costs to
complete such FF&E Replacement, upon five (S) Business Days' prior written
notice.
(e) In order to facilitate Lender's making the FF&E Replacements
pursuant to subsection (d) above, Borrower grants Lender the right to enter onto
the Property and perform any and all work and acquire all materials necessary to
complete or make the FF&E Replacements and/or employ watchmen to protect the
Property from damage. All sums so expended by Lender shall be deemed to have
been advanced under the Loan to Borrower and secured by the Mortgage encumbering
the Property. For this
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purpose Borrower constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to complete or undertake the
FF&E Replacements in the name of such Borrower pursuant to subsection (d) above.
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 FF&E Sub-Account for the purpose of making or completing
the FF&E Replacements; (ii) to make such additions, changes and corrections to
the FF&E Replacements as shall be necessary or desirable to complete the FF&E
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 the Property, or as may be necessary or desirable for the completion of
the FF&E Replacements; (v) to execute all applications and certificates in the
name of such Borrower which may be required by any contract documents relating
to such FF&E Replacements; (vi) to prosecute and defend all actions or
proceedings relating to the FF&E Replacements in connection with the Property;
and (vii) to do any and every act which such Borrower might do in its own behalf
to fulfill the terms of this Agreement relating to the FF&E Replacements.
(f) In addition to any other 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 by Legal Requirements in connection with a particular FF&E
Replacement. All such policies shall be in form and amount reasonably
satisfactory to Lender.
(g) All FF&E Replacements shall be constructed. installed or
completed, as applicable, free and clear of all mechanic's, materialman's or
other Liens and in compliance with all Legal Requirements and all Insurance
Requirements.
(h) Nothing in this Section 7.4.1 nor the exercise by Lender of its
rights hereunder shall: (i) require Lender to expend funds in addition to such
funds as may be on deposit from time to time in the FF&E Sub-Account to make or
complete any FF&E Replacements; (ii) obligate Lender to make or complete any
FF&E Replacements; (iii) obligate Lender to demand from Borrowers additional
sums to make or complete any FF&E Replacements; or (iv) be construed as
constituting Lender a "mortgagee in possession" of the Property.
(i) It shall be an Event of Default under this Agreement if Borrower
fails to comply with any provision of this Section 7.4.1 and such failure is not
cured within ten (10) days after notice from Lender or, if such failure is not
reasonably susceptible to cure within such ten (10) day period, if Borrower
shall fail to commence to cure such failure within such ten (10)
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day period or to complete such cure within such longer period, not to exceed
sixty (60) days or, if such cure shall require construction, one hundred eighty
(180) days, except as such 180-day period may be extended to the extent
Borrower's cure of such failure is prevented by fire or other casualty, acts of
God, strike or other labor trouble of general application (but not a labor
dispute directed particularly at Borrower) or similar event (excluding financial
difficulties of Borrower) beyond the control of Borrower, as may be required to
complete the same with reasonable diligence.
7.4.2 Indemnification. Borrower shall indemnify Lender and hold
Lender harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations, costs and expenses (including
litigation costs and reasonable attorneys fees and expenses) arising from or in
any way connected with the performance of the FF&E Replacements, except for any
such actions, suits, claims, demands, liabilities, losses, damages, obligations,
costs and expenses arising solely out of the willful misconduct or gross
negligence of Lender. Borrower shall assign to Lender all rights and claims
Borrower may have against all persons or entities supplying labor or materials
in connection with the FF&E Replacements; provided, however, that Lender may not
pursue any such right or claim unless an Event of Default has occurred and
remains uncured.
Section 7.5 Inspections.
Without limiting any other rights provided to Lender under the Loan
Documents, Lender shall have the right to inspect the Property, at Borrower's
expense (a) once during any DSCR Restricted Period and (b) after receipt of any
report indicating that such Property has failed an inspection by the Franchisor.
VIII. DEFAULTS
Section 8.1 Event of Default.
(a). Each of the following events occurring with respect to
Borrower, or the Property shall constitute an "Event of Default" hereunder:
(i) if Borrower fails to make any payment required to fund the Debt
Service Payment Sub-Account, the Basic Carrying Costs Sub-Account, the FF&E
Sub-Account and, during any Operative Period and any DSCR Restricted Period, the
Operations and Maintenance Expense Sub-Account, in full on any Due Date and such
failure continues for two (2) days, provided that if such grace period shall end
on a day other than a Business Day, such grace period shall be extended to the
next Business Day;
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(ii) if Borrower fails to pay all or any portion of the principal
amount of the Loan on the Maturity Date;
(iii) if Borrower fails to pay any amount (other than amounts that
may be referred to in clauses (i) and (ii) above) payable by Borrower pursuant
to this Agreement or any other Loan Document when due and such failure continues
for five (5) days after Lender delivers written notice thereof to Borrower,
provided that if such grace period shall end on a day other than a Business Day,
such grace period shall be extended to the next Business Day;
(iv) the continuation of any Franchise Restricted Period for ninety
(90) days;
(v) if any representation or warranty made by any Borrower herein or
in any other Loan Document, or in any report, certificate, financial statement
or other instrument, agreement or document furnished by Borrower in connection
with this Agreement or any other Loan Document, shall be misleading in any
material respect as of the date representation or warranty was made and such
misleading respect shall not have been remedied within fifteen (15) days of the
earlier of discovery by Borrower or written notice by Lender;
(vi) if Borrower or any general partner of Borrower shall make an
assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for
Borrower or any general partner of Borrower or if Borrower or any general
partner of Borrower shall be adjudicated a bankrupt or insolvent, or if any
petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Borrower or any general partner of
Borrower, or if any proceeding for the dissolution or liquidation of Borrower or
any general partner of Borrower shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower or such general partner, upon the same not being
discharged, stayed or dismissed within thirty (30) days, or if Borrower or any
general partner of Borrower shall generally not be paying its debts as they
become due;
(viii) if Borrower attempts to (A) assign its respective rights
under this Agreement or any of the other Loan Documents or any interest herein
or therein or (B) transfer the Property or any interest therein in contravention
of the Loan Documents;
(ix) if Borrower breaches any of its covenants contained in Section
6.1 or any covenant contained in Section 4.1(dd) hereof and such breach is not
remedied within five (5)
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days of the earlier of discovery by Borrower or written notice by Lender;
(x) if an Event of Default as defined or described in the Note, the
Mortgage or any of the other Loan Documents occurs, whether as to Borrower or
the Property;
(xi) if Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement or any other Loan
Document, for ten (10) days after written notice from Lender, in the case of any
default which can be cured by the payment of a sum of money, or for thirty (30)
days after notice from Lender in the case of any other default; provided,
however, that if such non-monetary default is susceptible of cure but cannot
reasonably be cured within such 30-day period and provided further that Borrower
shall have commenced to cure such default within such 30-day period and
thereafter diligently and expeditiously proceeds to cure the same, such 30-day
period shall be extended for such time as is reasonably necessary for Borrower
in the exercise of due diligence to cure such default, such additional period
not to exceed sixty (60) days or, if such cure shall require construction, one
hundred eighty (180) days except as such 180-day period may be extended to the
extent Borrower's cure of such default is prevented by fire or other casualty,
acts of God, strike or other labor trouble of general application (but not a
labor dispute directed particularly at Borrower) or similar event (excluding
financial difficulties of Borrower) beyond the control of Borrower, as may be
required to complete the same with reasonable diligence;
(xii) if the Policies required to be procured and maintained by
Borrower are not so procured and maintained in accordance with the terms hereof;
or
(xiii) if Borrower shall fail to complete the Required Repairs as
required under Section 7.3.
(b) Upon the occurrence of an Event of Default (other than an Event
of Default described in clauses (vi), (vii) or (viii) above) and at any time
thereafter the Lender may, 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, take such action, without notice or demand, that Lender deems advisable
to protect and enforce its rights against Borrower and in and to the Property,
including, without limitation, giving notice to Borrower that the Indebtedness
is 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 the
Property, including, without limitation, all rights or remedies available at law
or in equity. Upon any Event of Default described in clauses (vi), (vii) or
(viii) above, the Indebtedness shall immediately and automatically become due
and payable, without notice or demand,
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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 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 Indebtedness 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 the Property. Any such actions taken by Lender
shall be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents.
(b) Intentionally deleted.
Section 8.3 Remedies Cumulative.
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 singly, 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 default or
Event of Default with respect to Borrower shall not be construed to be a waiver
with respect to any subsequent default or Event of Default by Borrower, or to
impair any remedy, right or power consequent thereon.
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IX. MISCELLANEOUS
Section 9.1 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 Indebtedness of Borrower is outstanding and unpaid. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All covenants,
promises and agreements contained in this Agreement shall be binding upon, and
shall inure to the benefit of, Lender, together with its successors and assigns,
and Borrower, together with its permitted successors and assigns.
Section 9.2 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 9.3 Governing Law.
(a) This Agreement was negotiated in the State of New York, and made
by Lender and accepted by Borrower in the State of New York, and the proceeds of
the Note delivered pursuant hereto shall be disbursed from the State of New
York, which State the parties agree has a substantial relationship to the
parties and to the underlying transaction embodied hereby, and in all respects,
including, without limiting the generality of the foregoing, matters of
construction, validity and performance, this Agreement and the obligations
arising hereunder shall be governed by, and construed in accordance with, the
laws of the State of New York applicable to contracts made and performed in such
State and any applicable law of the United States of America, except that at all
times the provisions for the creation, perfection, and enforcement of the liens
and security interests created pursuant hereto and pursuant to the other Loan
Documents shall be governed by and construed according to the law of the State
in which the Property is located, it being understood that, to the fullest
extent permitted by the law of such State, the law of the State of New York
shall govern the validity and the enforceability of all Loan Documents and all
of the Indebtedness or obligations arising hereunder or thereunder.
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To the fullest extent permitted by law, Borrower hereby unconditionally and
irrevocably waives any claim to assert that the law of any other jurisdiction
governs this Agreement and the Note, and this Agreement and the Note shall be
governed by and construed in accordance with the laws of the State of New York
pursuant to Section 5-1401 of the New York General Obligations Law.
(b) Any suit, action or proceeding against Lender or Borrower
arising out of or relating to this Agreement shall be instituted in any federal
or state court in New York, New York, pursuant to Section 5-1402 of the New York
General Obligations Law, or, at Lender's discretion, in the State where the
Property is located, and Borrower waives any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding,
and Borrower hereby irrevocably submits to the jurisdiction of any such court in
any suit, action or proceeding. Borrower does hereby designate and appoint C.T.
Corporation System, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its authorized
agent to accept and acknowledge on its behalf service of any and all process
which may be served in any such suit, action or proceeding in any federal or
state court in New York, New York, and agrees that service of process upon said
agent at said address and written notice of said service of Borrower mailed or
delivered to Borrower in the manner provided herein shall be deemed in every
respect effective service of process upon Borrower's in any such suit, action or
proceeding in the State of New York. Borrower (i) shall give prompt notice to
Lender of any changed address of its authorized agent hereunder, (ii) may at any
time and from time to time designate a substitute authorized agent with an
office in New York, New York (which office shall be designated as the address
for service of process), provided that Borrower shall promptly designate such a
substitute if its authorized agent ceases to have an office in New York, New
York or is dissolved without leaving a successor.
Section 9.4 Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement, or of 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 any 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.
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Section 9.5 Delay Not a Waiver.
Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, 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 date on which the same is due 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 9.6 Notices.
All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested, or (b)
nationally recognized overnight delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, addressed if to Lender
at its address set forth on the first page hereof, and if to Borrower to
Borrower's address set forth on the first page hereof, or at such other address
and person as shall be designated from time to time by any party hereto, as the
case may be, in a written notice to the other parties hereto in the manner
provided for in this Section. A copy of all notices, consents, approvals and
requests directed to Borrower shall be delivered to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.A., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. A notice shall be deemed to
have been given: in the case of hand delivery, at the time of delivery; in the
case of registered or certified mail, when delivered or upon the first attempted
delivery on a Business Day; or in the case of overnight delivery service, when
delivered or upon the first attempted delivery on a Business Day.
Section 9.7 Trial by Jury.
BORROWER, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY
TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH RESPECT TO THIS AGREEMENT, THE
NOTE, OR THE OTHER LOAN DOCUMENTS.
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Section 9.8 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 9.9 Successors and Assigns: Assignment.
This Agreement shall be binding upon and shall inure to the benefit
of each party hereto and their respective permitted successors and assigns.
Lender shall have the right, upon notice to Borrower's to transfer, sell or
assign this Agreement and any of the other Loan Documents and the obligations
hereunder to any Person who purchases or otherwise acquires an interest in the
Loan.
Section 9.10 Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
Section 9.11 Preferences.
Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Borrower to any portion of the
obligations of Borrower hereunder. To the extent Borrower makes a payment or
payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
Section 9.12 Waiver of Notice.
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which (a) this
Agreement or the other Loan Documents specifically and expressly provide for the
giving of notice by Lender to Borrower and (b) Borrower is not, pursuant to
applicable law,
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permitted to waive the giving of notice. To the extent permitted by Applicable
Law, 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 9.13 Intentionally Deleted.
Section 9.14 Expenses; Indemnity.
Borrower covenants and agrees to reimburse Lender upon 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 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
Borrower; (iii) the filing and recording fees and expenses, title insurance and
other similar expenses incurred in creating and perfecting the Liens in favor of
Lender pursuant to this Agreement and the other Loan Documents; (iv) 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 Property, or any other security given for the Loan; and (v) enforcing any
obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Property or in
connection with any refinancing or restructuring of the credit arrangement
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 any
of Lender.
Section 9.15 Exhibits Incorporated.
The Exhibits and Schedules 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 9.16 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
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which Borrower may have against any assignor of such documents that are
unrelated to the Loan, and no such unrelated counterclaim or defense shall be
interposed or asserted by Borrower in any action or proceeding brought by any
such assignee upon such documents and any such right to interpose or assert any
such unrelated offset, counterclaim or defense in any such action or proceeding
is hereby expressly waived by Borrower.
Section 9.17 No Joint Venture or Partnership.
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 Property other than that of mortgagee or
lender.
Section 9.18 Publicity.
All news releases, publicity or advertising by Borrower or its
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the Loan, to the Lender, the Loan Purchaser, the
Depositor, the Servicer or the Trustee shall be subject to the prior written
approval of Lender, provided that Lender shall have no right to prevent Borrower
from making any news releases, filings or statements required by Legal
Requirements.
Section 9.19 Waiver of Marshalling of Assets.
To the fullest extent Borrower may legally do so, Borrower waives
all rights to a marshalling of the assets of such Borrower, such Borrower's
partners, if any, and others with interests in Borrower, and of such Borrower's
Property, or to a sale in inverse order of alienation in the event of
foreclosure of the interests hereby created, 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 Property for the collection
of the Indebtedness without any prior or different resort for collection, or the
right of Lender or any deed of trust trustee to the payment of the Indebtedness
out of the net proceeds of the Property in preference to every other claimant
whatsoever.
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Section 9.20 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, including, without limitation, any Servicer.
Section 9.21 Conflict; Construction of Documents.
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
counsel in connection with the negotiation and drafting 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.
Section 9.22 Brokers and Financial Advisors.
Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement other than the
Blackstone Group L.P. and ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation,
which Borrower will pay pursuant to separate agreements. Borrower and Lender
hereby agree to indemnify and hold the other harmless from and against any and
all claims, liabilities, costs and expenses of any kind in any way relating to
or arising from a claim by any other Person that such Person acted on behalf of
the indemnifying party in connection with the transactions contemplated herein.
The provisions of this Section 9.22 shall survive the expiration and termination
of this Agreement and the repayment of the Indebtedness.
Section 9.23 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, including, without limitation, the Commitment
Letter dated July 19, 1994 between DLJ Mortgage Capital, Inc. and Servico, Inc.,
and those certain supplemental letters dated August 19, 1994 and August 29, 1994
by DLJ Mortgage Capital, Inc. to Servico Hotels & Resorts (together with any
subsequent term sheets, supplemental letters or amendments, the "Term Sheet")
are superseded with respect to the Loan by the terms of this Agreement and the
other Loan Documents, except for the provisions of Schedule I of the Term Sheet,
as the same may be amended, which shall survive the execution and delivery of
this Agreement and the other Loan Documents.
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Section 9.24 Intentionally deleted.
Section 9.25 Appointment of Servicer.
Lender may appoint a Servicer to administer the Loan, which Servicer
shall have the power and authority to exercise all of the rights and remedies of
Lender and to act as agent of Lender hereunder and under the Note, the Mortgage
and the other Loan Documents. Upon receipt of notice of the appointment of
Servicer, Borrower shall recognize Servicer as the agent of Lender and shall
make all payments and deliver all notices as directed by Servicer and accept all
notices from Servicer hereunder.
Section 9.26 Exculpation.
Notwithstanding any provision herein or in any of the Loan Documents
to the contrary, Lender shall not enforce the obligations contained in the Note,
this Agreement or the Mortgage or the other Loan Documents (other than the
Environmental Indemnity) by any action or proceeding wherein a money judgment
shall be sought against Borrower, except that Lender may bring a foreclosure
action, an action for specific performance or any other appropriate action or
proceeding to enable Lender to realize upon the Property, the Revenue and any
other collateral given to Lender to secure Borrower's obligations hereunder,
including, without limitation, any action to obtain a deficiency judgment
against Borrower, provided that such deficiency judgment shall be enforced only
against the Property, the Revenue and such other collateral, except as otherwise
expressly provided hereinafter. The provisions of this paragraph shall not,
however, limit the liability of Borrower for loss, costs or damage arising out
of the following matters: (i) any failure to apply the Revenue of the Property
to pay the operating expenses of the Property or to fulfill the then current
obligations of Borrower under this Agreement, the Note, the Mortgage or any
other Loan Document; (ii) any misapplication of Loss Proceeds, security deposits
or trust funds in violation of applicable law or the provisions of this
Agreement, the Mortgage or any other Loan Document; (iii) any collection of Rent
for more than one month in advance of the time when the same becomes due; (iv)
failure to pay all Impositions prior to the date on which such payments become
delinquent (subject to Lender's obligation to make disbursements from the Basic
Carrying Costs Sub-Account); (v) any willful misrepresentation by Borrower (or
any constituent partner or shareholder of Borrower) in connection with
Borrower's application, negotiation or documentation of the Loan; or (vi) a
fraudulent conveyance or a fraudulent transfer of the Properties or any part
thereof or any other properties or assets of Borrower; (vii) any material
misrepresentation or breach of warranty or covenant made by Borrower under the
Environmental Indemnity. Nothing herein shall be deemed (w) to be a waiver of
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any right which Lender may have under any bankruptcy law of the United States or
of any State in which any part of the Property is located to file a claim for
the full amount of the Loan or to require that the Property and any other
collateral securing the Loan shall continue to secure all of the Indebtedness;
(x) to impair the validity of the Indebtedness; (y) to impair the right of
Lender as mortgagee or secured party to foreclose any Lien or (z) impair the
right of Lender to obtain the Recourse Distributions received by Borrower
including, without limitation, the right to proceed against any constituent
partner or shareholder of Borrower to the extent any such Recourse Distribution
has actually theretofore been distributed to such constituent partner or
shareholder. The provisions of this Section 9.26 shall be inapplicable to
Borrower if any petition for bankruptcy, reorganization or arrangement pursuant
to federal or state law shall be filed by, consented to or acquiesced in by or
with respect to such Borrower or if such Borrower shall institute any proceeding
for the dissolution or liquidation of such Borrower or if such Borrower shall
make an assignment for the benefit of creditors, in which event Lender shall
have recourse against all of the assets of such Borrower and the Recourse
Distributions received by the constituent partners and shareholders of such
Borrower. For purposes of this Section 9.26, the term "Recourse Distributions"
shall mean the Revenue arising from the Property to the extent received by
Borrower (or actually received by any partner or shareholder of Borrower if not
actually received by Borrower) after the occurrence and written notice
(including any Consultant's Notice) of an Event of Default.
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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.
LENDER:
COLUMN FINANCIAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President & COO
BORROWER:
▇▇▇▇▇▇▇▇ MOTEL, INC.,
a Pennsylvania corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
SECOND AMENDMENT OF LOAN AGREEMENT
THIS AMENDMENT OF LOAN AGREEMENT entered into as of this 18th day
of July, 1995 by and between ▇▇▇▇▇▇▇▇ MOTEL, INC., a Pennsylvania corporation
("Borrower") and COLUMN FINANCIAL, INC., a Delaware corporation ("Lender").
W I T N E S S E T H:
WHEREAS, pursuant to a Loan Agreement dated as of January 31, 1995
between Borrower and Lender (as heretofore amended the "Loan Agreement"), Lender
has made a loan in the original principal amount of $3,900,000.00 to Borrower
evidenced by a Promissory Note dated as of January 31, 1995 and secured by
certain security documents, including a Mortgage, Security Agreement and
Assignment of Leases and Rents of the same date recorded on February 7, 1995 in
Official Record Book 14744, page 032 in the Recorder of Deeds at Allegheny
County, Pennsylvania and an Assignment of Leases, Rents and Revenues of the same
date also recorded on February 7, 1995 in Official Record Book 09398, page 597
in the Recorder of Deeds of Allegheny County, Pennsylvania, which Mortgage and
Assignment encumber certain real property located in Allegheny County,
Pennsylvania;
WHEREAS, the Loan Agreement has been amended by that certain
Amendment of Loan Agreement dated as of June 29, 1995 between Borrower and
Lender; and
WHEREAS, the parties wish to correct certain references in the Loan
Agreement to amounts to be deposited into the Engineering Escrow Sub-Account (as
defined in the Loan Agreement);
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and of the mutual covenants herein contained, the parties hereto
agree as follows:
1. The Loan Agreement is hereby amended as follows:
(a) The definition of "Long-Term Required Repairs Installment" in
Section 1.1 is hereby amended by deleting the amount of $39,458.33 and replacing
it with the amount of $41,875.
(b) The definition of "Sprinkler Installment" in Section 1.1 is
hereby amended by deleting the amount of $112,500 and replacing it with the
amount of $67,500.
(c) Schedule E is hereby amended in its entirety to read as set
forth in the form of Schedule E attached hereto.
2. In the event of any conflict or inconsistency between the
provisions of this Second Amendment of Loan Agreement and the provisions of the
Loan Agreement, the provisions of this Second Amendment of Loan Agreement shall
govern.
3. The terms and conditions of the Loan Agreement remain in full
force and effect, without alteration or modification except as expressly
provided herein.
4. This Second Amendment of Loan Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
successors and assigns. The Loan Agreement, as amended by this Second Amendment
of Loan Agreement, may not be further modified or amended except in a written
instrument executed by the parties hereto.
5. This Second Amendment of Loan Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and year first set forth above.
WITNESS: ▇▇▇▇▇▇▇▇ MOTEL, INC.,
a Pennsylvania corporation
/s/ [ILLEGIBLE] By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------- -------------------------------------
Name:
Title: President
WITNESS: COLUMN FINANCIAL, INC.,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------- -------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
SCHEDULE E
REQUIRED REPAIRS
Holiday Inn ▇▇▇▇▇▇▇▇ Road
Architectural Short-Term Long-Term
------------- ---------- ---------
o Replace low roof above public areas $ 75,000
o Clean & recaulk storefront at public areas $ 5,625
o Repair damaged stucco spandrel $ 1,250
o Repave access drive and parking lots
(except lower lot) $ 37,500
o Repair sidewalk at Restaurant and at front lot $ 3,125
o Repair and refinish penthouse $ 4,375
o Replace corner and mullions at restaurant
storefront $ 625
Mechanical, Electrical, Plumbing
--------------------------------
o Provide sprinkler system for building $337,500
o Replace kitchen supply air unit $ 25,000
o Replace electrical panel $ 625
o Install disconnect $ 625
TOTAL $ 28,125 $463,125
AMENDMENT OF LOAN AGREEMENT
THIS AMENDMENT OF LOAN AGREEMENT entered into as of the 29th day of
June, 1995 by and between ▇▇▇▇▇▇▇▇ MOTEL, INC., Pennsylvania corporation
("Borrower") and COLUMN FINANCIAL, INC., a Delaware Corporation ("Lender").
W I T N E S S E T H:
WHEREAS, pursuant to a Loan Agreement dated as of January 31, 1995
between Borrower and Lender the ("Loan Agreement"), Lender has made a loan in
the original principal amount of $3,900,000.00 to Borrower evidenced by a
Promissory Note (the "Note") dated as of January 31, 1995 and secured by certain
security documents, including a Mortgage, Security Agreement and Assignment of
Leases and Rents of the same date recorded on February 7, 1995 in Official
Record Book 14744, page 032 in the Recorder of Deeds of Allegheny County,
Pennsylvania and an Assignment of Leases, Rents and Revenues of the same date
also recorded on February 7, 1995 in Official Record Book 09398, page 597 in the
Recorder of Deeds of Allegheny County, Pennsylvania, which Mortgage and
Assignment encumber certain real property located in Allegheny County,
Pennsylvania; and
WHEREAS, the parties have entered into that certain Amendment of
Promissory Note dated the date hereof, pursuant to which the maturity date of
the Note and other terms thereof were amended.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and of the mutual covenants herein contained, the parties hereto
agree as follows:
1. The Loan Agreement is hereby amended as follows:
(a) The definition of "Maturity Date" in Section 1.1 is hereby
amended in its entirety to read as follows:
"Maturity Date" shall mean March 1, 2005, subject to extension as
provided in Section 2.3.4.
(b) Section 2.3.4 is amended by deleting the date "March 1, 2015"
and substituting therefor the date "March 1, 2010".
2. In the event of any conflict or inconsistency between the
provisions of this Amendment of Loan Agreement and the provisions of the Loan
Agreement, the provisions of this Amendment of Loan Agreement shall govern.
3. The terms and conditions of the Loan Agreement remain in full
force and effect, without alteration or modification except as expressly
provided herein.
4. This agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns. The
Loan Agreement, as amended by this Agreement, may not be further modified or
amended except in a written instrument executed by the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and year first set forth above.
WITNESS: ▇▇▇▇▇▇▇▇ MOTEL, INC.,
a Pennsylvania corporation
[ILLEGIBLE] By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------- -------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President
WITNESS: COLUMN FINANCIAL, INC.,
/s/ ▇▇▇▇ Delle Donne By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------- -------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and General
Counsel
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