Exhibit 10.91
MEZZANINE LOAN AND SECURITY AGREEMENT
(First Mezzanine)
Dated as of January 9, 2006
Between
CNL RESORT SENIOR MEZZ, LP,
as Mezzanine Borrower
and
GERMAN AMERICAN CAPITAL CORPORATION,
as Mezzanine Lender
TABLE OF CONTENTS
Page
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION........................................ 1
Section 1.1 Definitions........................................................ 1
Section 1.2 Principles of Construction........................................ 28
II. GENERAL TERMS.................................................................. 28
Section 2.1 Loan; Disbursement to Mezzanine Borrower.......................... 28
Section 2.2 Interest; Loan Payments; Late Payment Charge...................... 28
Section 2.3 Prepayments....................................................... 30
Section 2.4 Regulatory Change; Taxes.......................................... 33
Section 2.5 Conditions Precedent to Closing................................... 35
III. CASH MANAGEMENT................................................................ 39
Section 3.1 Cash Management................................................... 39
IV. REPRESENTATIONS AND WARRANTIES................................................. 47
Section 4.1 Mezzanine Borrower Representations................................ 47
Section 4.2 Survival of Representations....................................... 55
V. MEZZANINE BORROWER COVENANTS................................................... 56
Section 5.1 Affirmative Covenants............................................. 56
Section 5.2 Negative Covenants................................................ 66
VI. INSURANCE; CASUALTY; CONDEMNATION; RESTORATION................................. 69
Section 6.1 Insurance Coverage Requirements................................... 69
Section 6.2 Condemnation and Insurance Proceeds............................... 70
Section 6.3 Certificates...................................................... 71
VII. INTENTIONALLY DELETED.......................................................... 71
VIII. TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS.................................. 71
Section 8.1 Restrictions on Transfers and Indebtedness......................... 71
Section 8.2 Sale of Building Equipment and Immaterial Transfers and Easements
by Mortgage Borrower.............................................. 73
Section 8.3 Transfers of Interests in Mezzanine Borrower...................... 76
Section 8.4 Loan Assumption................................................... 77
Section 8.5 Notice Required; Legal Opinions................................... 79
Section 8.6 Leases............................................................ 79
IX. INTEREST RATE CAP AGREEMENT.................................................... 81
Section 9.1 Interest Rate Cap Agreement....................................... 81
Section 9.2 Pledge and Collateral Assignment.................................. 81
Section 9.3 Covenants......................................................... 82
Section 9.4 Representations and Warranties.................................... 84
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Section 9.5 Payments........................................................... 85
Section 9.6 Remedies........................................................... 85
Section 9.7 Sales of Rate Cap Collateral (First Mezzanine)..................... 87
Section 9.8 Public Sales Not Possible.......................................... 87
Section 9.9 Receipt of Sale Proceeds........................................... 88
Section 9.10 Extension Interest Rate Cap Agreement (First Mezzanine)........... 88
X. RESERVED....................................................................... 88
XI. BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION......... 88
Section 11.1 Books and Records................................................. 88
Section 11.2 Financial Statements.............................................. 89
XII. ENVIRONMENTAL MATTERS.......................................................... 89
Section 12.1 Representations................................................... 89
Section 12.2 Covenants......................................................... 90
Section 12.3 Environmental Reports............................................. 90
Section 12.4 Environmental Indemnification..................................... 91
Section 12.5 Recourse Nature of Certain Indemnifications....................... 91
XIII. RESERVED....................................................................... 91
XIV. RESERVED....................................................................... 91
XV. ASSIGNMENTS AND PARTICIPATIONS................................................. 91
Section 15.1 Assignment and Acceptance......................................... 91
Section 15.2 Effect of Assignment and Acceptance............................... 92
Section 15.3 Content........................................................... 92
Section 15.4 Register.......................................................... 93
Section 15.5 Substitute Notes.................................................. 93
Section 15.6 Participations.................................................... 94
Section 15.7 Disclosure of Information......................................... 94
Section 15.8 Security Interest in Favor of Federal Reserve Bank................ 94
XVI. RESERVED....................................................................... 94
XVII. DEFAULTS....................................................................... 94
Section 17.1 Event of Default.................................................. 94
Section 17.2 Remedies.......................................................... 99
Section 17.3 Remedies Cumulative; Waivers...................................... 101
Section 17.4 Costs of Collection............................................... 101
Section 17.5 Distribution of Collateral Proceeds............................... 101
XVIII. SPECIAL PROVISIONS............................................................. 102
Section 18.1 Exculpation.................................................. 102
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XIX. MISCELLANEOUS.................................................................. 105
Section 19.1 Survival.......................................................... 105
Section 19.2 Mezzanine Lender's Discretion..................................... 105
Section 19.3 Governing Law..................................................... 106
Section 19.4 Modification, Waiver in Writing................................... 107
Section 19.5 Delay Not a Waiver................................................ 107
Section 19.6 Notices........................................................... 107
Section 19.7 TRIAL BY JURY..................................................... 108
Section 19.8 Headings.......................................................... 109
Section 19.9 Severability...................................................... 109
Section 19.10 Preferences...................................................... 109
Section 19.11 Waiver of Notice................................................. 109
Section 19.12 Expenses; Indemnity.............................................. 109
Section 19.13 Exhibits and Schedules Incorporated.............................. 112
Section 19.14 Offsets, Counterclaims and Defenses.............................. 112
Section 19.15 Liability of Assignees of Mezzanine Lender....................... 112
Section 19.16 No Joint Venture or Partnership; No Third Party Beneficiaries.... 112
Section 19.17 Publicity........................................................ 113
Section 19.18 Waiver of Marshalling of Assets.................................. 113
Section 19.19 Waiver of Counterclaim and other Actions......................... 113
Section 19.20 Conflict; Construction of Documents; Reliance.................... 113
Section 19.21 Prior Agreements................................................. 114
Section 19.22 Counterparts..................................................... 114
Section 19.23 Disclosure....................................................... 114
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EXHIBITS AND SCHEDULES
EXHIBIT A INTENTIONALLY DELETED
EXHIBIT B FORM OF PLEDGE ACKNOWLEDGEMENT
EXHIBIT C SINGLE PURPOSE ENTITY PROVISIONS
EXHIBIT D ENFORCEABILITY OPINION REQUIREMENTS
EXHIBIT E NON-CONSOLIDATION OPINION REQUIREMENTS
EXHIBIT F COUNTERPARTY OPINION REQUIREMENTS
EXHIBIT G FORM OF TENANT ESTOPPEL LETTER
EXHIBIT H BORROWER ORGANIZATIONAL STRUCTURE
EXHIBIT I INTEREST RATE CAP AGREEMENT REQUIREMENTS
EXHIBIT J FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT K INTENTIONALLY DELETED
EXHIBIT L INTENTIONALLY DELETED
EXHIBIT M COUNTERPARTY ACKNOWLEDGMENT
EXHIBIT N INTENTIONALLY DELETED
EXHIBIT O FORM OF INDEPENDENT DIRECTOR CERTIFICATE
EXHIBIT P INTENTIONALLY DELETED
EXHIBIT Q INTENTIONALLY DELETED
EXHIBIT R ARTICLE 8 OPT IN LANGUAGE
SCHEDULE I LITIGATION SCHEDULE
SCHEDULE II INTENTIONALLY DELETED
SCHEDULE III PRE-APPROVED TRANSFEREES
SCHEDULE IV PRE-APPROVED MANAGERS
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MEZZANINE LOAN AND SECURITY AGREEMENT
(First Mezzanine)
THIS MEZZANINE LOAN AND SECURITY AGREEMENT (First Mezzanine), dated
as of January ___, 2006 (as amended, restated, replaced, supplemented or
otherwise modified from time to time, this AGREEMENT), between CNL RESORT SENIOR
MEZZ, LP, a Delaware limited partnership (MEZZANINE BORROWER) having an office
at c/o CNL Hotels & Resorts Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ and GERMAN AMERICAN CAPITAL CORPORATION, a Maryland corporation, having an
address at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (together with its
successors and assigns, MEZZANINE LENDER).
W I T N E S S E T H:
WHEREAS, Mezzanine Borrower desires to obtain the Loan (as
hereinafter defined) from Mezzanine Lender;
WHEREAS, Mezzanine Lender is willing to make the Loan to Mezzanine
Borrower, subject to and in accordance with the terms of this Agreement and the
other Loan Documents (First Mezzanine) (as hereinafter defined).
NOW, THEREFORE, in consideration of the making of the Loan by
Mezzanine Lender and the covenants, agreements, representations and warranties
set forth in this Agreement, the parties hereto hereby covenant, agree,
represent and warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
ACCEPTABLE COUNTERPARTY shall mean a bank or other financial
institution which has (a) either (i) a long-term unsecured debt rating of "A+"
or higher by S&P or (ii) if the long-term unsecured debt rating is "A" or lower
by S&P, a short-term rating of not less than "A-1" from S&P; (b) a long-term
unsecured debt rating of not less than "Aa3" by ▇▇▇▇▇'▇; and (c) if the
counterparty is rated by Fitch, either a long-term unsecured debt rating of not
less than "A" from Fitch or a short-term unsecured debt rating of not less than
"F-1" from Fitch.
ACCEPTABLE MANAGEMENT Agreement shall mean, with respect to each
Property, a new or amended management agreement with the Manager which agreement
(as applicable) shall be upon terms and conditions no less favorable in all
material respects to the Mezzanine Borrower, Affiliate Tenant, and Mezzanine
Lender than those contained in the applicable Management Agreement or any new or
amended management agreement entered into by Mortgage Borrower, Affiliate
Tenant, and/or Manager with respect to the Property in accordance with the terms
of Section 5.2.14 hereof.
ACCEPTABLE MANAGER shall mean (i) the current Manager as of the
Closing Date or any Close Affiliate thereof (ii) at any time after the Closing
Date, the property managers listed under "Acceptable Manager" on SCHEDULE IV
hereto, provided each such property manager continues to be Controlled by
substantially the same Persons Controlling such property manager as of the
Closing Date (or if such Manager is a publicly traded company, such Manager
continues to be publicly traded on an established securities market), (iii) any
other hotel management company that manages a system of at least six (6) hotels
or resorts of a class and quality at least as comparable to the Property (as
reasonably determined by Manager and Affiliate Tenant; provided, however
Affiliate Tenant shall obtain Mortgage Lender's prior approval of such
determination, not to be unreasonably withheld), and containing not fewer than
1,500 hotel rooms (including condominium units under management) in the
aggregate, (iv) any Close Affiliate of any of the foregoing Persons or (v) any
other reputable and experienced professional hotel management company (A) whose
competence, qualifications, and experience in managing properties of a quality
equal to or exceeding the quality of the Property are comparable to, or greater
than that of the current Manager as of the Closing Date, or a Close Affiliate
thereof and (B) with respect to which Mezzanine Lender has consented to in
writing.
ACCOUNT AGREEMENT (MORTGAGE) shall mean the Account and Control
Agreement, dated as of the date hereof, among Mortgage Lender, Mortgage Borrower
and Cash Management Bank (Mortgage).
ACCOUNT AGREEMENT (FIRST MEZZANINE) shall mean the Account and
Control Agreement (First Mezzanine), dated the date hereof, among Mezzanine
Lender, Mezzanine Borrower and Cash Management Bank (First Mezzanine).
ACCOUNT COLLATERAL (FIRST MEZZANINE) shall have the meaning set
forth in Section 3.1.2.
ADDITIONAL MEZZANINE LOAN shall have the meaning set forth in
Section 8.1(b) of the Loan Agreement (Mortgage).
ACKNOWLEDGMENT shall mean the Acknowledgment, dated on or about the
date hereof made by Counterparty, or as applicable, Acceptable Counterparty in
the form of EXHIBIT M.
ADDITIONAL NON-CONSOLIDATION OPINION shall have the meaning set
forth in Section 4.1.20(b).
AFFILIATE shall mean, with respect to any specified Person, any
other Person directly or indirectly Controlling or Controlled by or under direct
or indirect common Control with, or any general partner or managing member in,
such specified Person.
AFFILIATE LEASES shall mean, collectively, (i) with respect to the
Doral Property, that certain Amended and Restated Lease Agreement, dated as of
August 18, 2004, by and between CNL Resort Hotel, LP, CNL Resort Silver
Properties, LP, and CNL Resort Lodging Tenant Corp., (ii) with respect to the
Grand Wailea Property, that certain Amended and Restated Lease Agreement, dated
as of August 18, 2004, by and between CNL Grand Wailea Resort, LP, and CNL
Resort Lodging Tenant Corp., (iii) with respect to the La Quinta Property, (a)
that
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certain Amended and Restated Lease Agreement, dated as of August 18, 2004, by
and between CNL Desert Resort, LP, and CNL Resort Lodging Tenant Corp., and (b)
that certain Amended and Restated Private Golf Courses Lease Agreement, dated as
of August 18, 2004, by and between CNL Desert Resort, LP, and CNL Resort
Ancillary Tenant Corp., (iv) with respect to the Claremont Property, that
certain Amended and Restated Lease Agreement, dated as of August 18, 2004, by
and between CNL Claremont Resort, LP and CNL Resort Lodging Tenant Corp., and
(v) with respect to the Biltmore Property, that certain Amended and Restated
Lease Agreement, dated as of August 18, 2004, by and between CNL Biltmore
Resort, LP and CNL Resort Lodging Tenant Corp.
AFFILIATE TENANT shall mean each of CNL Resort Lodging Tenant Corp.
and CNL Resort Ancillary Tenant Corp., each a Delaware corporation.
AGREEMENT shall mean this Agreement, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
ALLOCATED LOAN AMOUNT shall mean, with respect to (i) the Grand
Wailea Property, $47,885,245.90, (ii) the La Quinta Property, $28,655,737.70,
(iii) the Doral Property, $9,803,278.70 (iv) the Claremont Property,
$3,770,491.80, and (v) the Biltmore Property, $24,885,245.90.
ANTICIPATED FUNDING DATE shall mean March 31, 2006.
APPLICABLE PRINCIPAL BALANCE RATIO shall mean a fraction, the
numerator of which is the then current Principal Amount and the denominator of
which is the sum of (x) the then current Principal Amount and (y) the then
current "Principal Amount" of the Mortgage Loan, the Mezzanine Loan and each
Junior Mezzanine Loan (as defined in the Loan Agreement (Mortgage) and each
Junior Mezzanine Loan Agreement, as applicable).
APPROVED BANK shall have the meaning set forth in the Account
Agreement (First Mezzanine).
APPROVED SERVICER shall have the meaning set forth in the definition
of "Qualified Transferee."
ASSIGNMENT AND ACCEPTANCE shall mean an assignment and acceptance
entered into by Mezzanine Lender and an assignee, and accepted by Mezzanine
Lender in accordance with Article XV and in substantially the form of EXHIBIT J
or such other form customarily used by Mezzanine Lender in connection with the
participation or syndication of mortgage or mezzanine loans at the time of such
assignment.
ASSIGNMENT OF MANAGEMENT AGREEMENT (FIRST MEZZANINE) shall mean,
collectively, (i) with respect to the Biltmore Property, the Grand Wailea
Property, and the La Quinta Property, that certain Manager's Consent,
Subordination of Management Agreement and Non-disturbance Agreement, dated the
date hereof, among Mezzanine Lender, CNL Resort Lodging Tenant Corp., CNL Resort
Ancillary Tenant Corp., Mezzanine Borrower, and KSL II Management Operations,
LLC, (ii) with respect to the Claremont Property, that certain Manager's
Consent, Subordination of Management Agreement, and Non-disturbance Agreement,
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dated as of the date hereof, among CNL Resort Lodging Tenant Corp., Mezzanine
Borrower, and Interstate Management Company, LLC, and (iii) with respect to the
Doral Property, (a) that certain Consent to Assignment, Agreement, and Estoppel
by and between CNL Resort Hotel, LP, CNL Resort Silver Properties, LP, CNL
Resort Lodging Tenant Corp., Mortgage Lender, each Junior Mezzanine Lender, each
Junior Mezzanine Borrower, Mezzanine Borrower, Mezzanine Lender and Marriott
International, Inc., and (b) that certain Subordination, Non-disturbance and
Attornment Agreement, dated as of the date hereof, by and between CNL Resort
Hotel, LP, CNL Resort Silver Properties, LP, CNL Resort Lodging Tenant Corp.,
Mortgage Lender, each Junior Mezzanine Lender, each Junior Mezzanine Borrower,
Mezzanine Borrower, Mezzanine Lender and Marriott International, Inc., as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
ASSIGNMENT OF MANAGEMENT AGREEMENT (MORTGAGE) shall mean,
collectively, (i) with respect to the Biltmore Property, the Grand Wailea
Property, and the La Quinta Property, that certain Manager's Consent,
Subordination of Management Agreement and Non-disturbance Agreement, dated the
date hereof, among CNL Resort Lodging Tenant Corp., CNL Resort Ancillary Tenant
Corp., CNL Resort Desert Real Estate, Inc., CNL Desert Resort, LP, CNL Grand
Wailea Resort, LP, Mortgage Lender, and KSL II Management Operations, LLC, (ii)
with respect to the Claremont Property, that certain Manager's Consent,
Subordination of Management Agreement, and Non-disturbance Agreement, dated as
of the date hereof, among CNL Resort Lodging Tenant Corp., Mortgage Borrower,
and Interstate Management Company, LLC, and (iii) with respect to the Doral
Property, (a) that certain Consent to Assignment, Agreement, and Estoppel, dated
as of the date hereof, by and between CNL Resort Hotel, LP, CNL Resort Silver
Properties, LP, CNL Resort Lodging Tenant Corp., Mortgage Lender, each Junior
Mezzanine Lender, each Junior Mezzanine Borrower, Mezzanine Borrower, Mezzanine
Lender and Marriott International, Inc., and (b) that certain Subordination,
Non-disturbance and Attornment Agreement, dated as of the date hereof, by and
between CNL Resort Hotel, LP, CNL Resort Silver Properties, LP, CNL Resort
Lodging Tenant Corp., Mortgage Lender, each Junior Mezzanine Lender, each Junior
Mezzanine Borrower, Mezzanine Borrower, Mezzanine Lender and Marriott
International, Inc., as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
ASSIGNMENT OF SUBSIDIARY MANAGEMENT AGREEMENT shall mean (i) with
respect to the La Quinta Property, that certain Subsidiary Manager's Consent and
Subordination of Management Agreement, dated as of the date hereof, by and
between CNL Desert Resort, LP, CNL Resort Desert Real Estate, Inc. and Mortgage
Lender, and (ii) with respect to the Biltmore Property, that certain Subsidiary
Manager's Consent and Subordination of Management Agreement, dated as of the
date hereof, by and between CNL Biltmore Resort, LP, CNL Resort Biltmore Real
Estate, Inc., and Mortgage Lender.
BANKRUPTCY CODE shall mean Title 11, U.S.C.A., as amended from time
to time and any successor statute thereto.
BENEFICIAL when used in the context of beneficial ownership has the
analogous meaning to that specified in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended.
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BEST OF MEZZANINE BORROWER'S KNOWLEDGE, shall mean the actual (as
opposed to imputed or constructive) present knowledge of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
President and C. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Chief Financial Officer, after due inquiry,
and without creating any personal liability on the part of any said individuals.
In the case where the term "Best of Mezzanine Borrower's Knowledge" is used in
the context of representations or warranties of Borrower to be made after the
date hereof, the term shall include the Person or Persons, as applicable, that
occupy the capacities of Chief Financial Officer, and President on the date such
representation or warranty is made to the extent that one or more of such
individuals no longer occupy their current capacities.
BILTMORE PROPERTY means that certain property known as the Arizona
Biltmore Resort and Spa, located in Phoenix, Arizona.
BUDGET shall have the meaning set forth in the Loan Agreement
(Mortgage).
BORROWER PARENTS shall mean each of (i) First Mezzanine General
Partner, (ii) Second Mezzanine Borrower, (iii) Second Mezzanine General Partner,
(iv) Third Mezzanine Borrower, (v) Third Mezzanine General Partner, (vi) Fourth
Mezzanine Borrower, (vii) Fourth Mezzanine General Partner, (viii) Fifth
Mezzanine Borrower, (ix) Fifth Mezzanine General Partner, and (x) until such
time as such entities may be dissolved or merged as set forth herein, (a) Sub
Junior and (b) Sub Junior General Partner.
BORROWER SUBSIDIARY shall mean each of CNL Resort Desert Real
Estate, Inc., and CNL Resort Biltmore Real Estate, Inc., each a Delaware
corporation.
BUILDING EQUIPMENT shall have the meaning set forth in the Security
Instrument.
BUSINESS DAY shall mean any day other than a Saturday, Sunday or any
other day on which national banks in New York, Florida, or in the state in which
Servicer is located are not open for business. When used with respect to an
Interest Determination Date, Business Day shall mean any day on which dealings
in deposits in U.S. Dollars are transacted in the London interbank market.
CAPITAL EXPENDITURES shall mean any amount incurred in respect of
capital items which in accordance with GAAP would not be included in Mortgage
Borrower's annual financial statements for an applicable period as an operating
expense of the Property.
CASH MANAGEMENT BANK (FIRST MEZZANINE) shall mean PNC Bank, National
Association or any successor Approved Bank acting as Cash Management Bank (First
Mezzanine) under the Account Agreement (First Mezzanine) or other financial
institution approved by the Mezzanine Lender.
CASH MANAGEMENT BANK (MORTGAGE) shall have the meaning set forth in
the Loan Agreement (Mortgage).
CASUALTY shall have the meaning provided in the Loan Agreement
(Mortgage).
CDO shall have the meaning provided for in the definition of
"Qualified Transferee."
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CDO ASSET MANAGER with respect to any Securitization Vehicle which
is a CDO, shall mean the entity which is responsible for managing or
administering a Mezzanine Loan as an underlying asset of such Securitization
Vehicle or, if applicable, as an asset of any Intervening Trust Vehicle
(including, without limitation, the right to exercise any consent and control
rights available to the holder of such Mezzanine Loan).
CLAREMONT BORROWER shall mean CNL Claremont Resort, LP, a Delaware
limited partnership.
CLAREMONT PROPERTY shall mean that certain property known as the
Claremont Resort and Spa, located in Oakland and Berkeley, California.
CLEARING BANK shall have the meaning set forth in the Loan Agreement
(Mortgage).
CLOSE AFFILIATE shall mean with respect to any Person (the FIRST
PERSON) any other Person (each, a SECOND PERSON) which is an Affiliate of the
First Person and in respect of which any of the following are true: (a) the
Second Person owns, directly or indirectly, at least 85% of all of the legal,
Beneficial and/or equitable interest in such First Person, (b) the First Person
owns, directly or indirectly, at least 85% of all of the legal, Beneficial
and/or equitable interest in such Second Person, or (c) a third Person owns,
directly or indirectly, at least 85% of all of the legal, Beneficial and/or
equitable interest in both the First Person and the Second Person.
CLOSING DATE shall mean the date of this Agreement set forth in the
first paragraph hereof.
CLOSING DATE NOI shall mean $147,490,034.
CLOSING DATE DSCR shall mean 2.21:1.00.
CNL CORPORATE ENTITIES shall have the meaning set forth in Section
8.1(g).
CNL OP shall mean CNL Hospitality Partners, LP, a Delaware limited
partnership.
CODE shall mean the Internal Revenue Code of 1986, as amended, as it
may be further amended from time to time, and any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
COLLATERAL shall mean collectively (i) all of the Pledged Collateral
and all proceeds thereof, (ii) all Receipts, (iii) any stock certificates or
other certificates, membership interest certificates or instruments evidencing
any of the foregoing property described in clauses (i) and (ii) above, (iv) the
Rate Cap Collateral (First Mezzanine), (v) the Account Collateral (First
Mezzanine) and (vi) all other rights appurtenant to the property described in
clauses (i) through (v) above.
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COLLATERAL ACCOUNTS shall have the meaning set forth in the Loan
Agreement (Mortgage).
COLLATERAL ACCOUNTS (FIRST MEZZANINE) shall have the meaning set
forth in Section 3.1.1.
COLLATERAL ACCOUNTS (JUNIOR MEZZANINE) shall mean the collateral
accounts maintained for the Junior Mezzanine Loans, as set forth in each of the
Junior Mezzanine Loan Agreements.
CONDEMNATION shall have the meaning provided in the Loan Agreement
(Mortgage).
CONTROL shall mean (i) 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
and (ii) the ownership, direct or indirect, of no less than 51% of the voting
securities of such Person, and the terms Controlled, Controlling and Common
Control shall have correlative meanings.
COUNTERPARTY shall mean the counterparty to the Interest Rate Cap
Agreement (First Mezzanine) and any counterparty under a Replacement Interest
Rate Cap Agreement (First Mezzanine) or Extension Interest Rate Cap Agreement
and, if applicable, any credit support provider identified in the Interest Rate
Cap Agreement, Replacement Interest Rate Cap Agreement (First Mezzanine) or
Extension Interest Rate Cap Agreement.
COUNTERPARTY OPINION shall have the meaning set forth in Section
9.3(f).
DEBT shall mean, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services; (b) obligations of such Person as lessee
under leases which should have been or should be, in accordance with GAAP,
recorded as capital leases; (c) current liabilities of such Person in respect of
unfunded vested benefits under plans covered by Title IV of ERISA; (d)
obligations issued for, or liabilities incurred on the account of, such Person;
(e) obligations or liabilities of such Person arising under letters of credit,
credit facilities or other acceptance facilities; (f) obligations of such Person
under any guarantees or other agreement to become secondarily liable for any
obligation of any other Person, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any Lien on any property of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
DEBT SERVICE (FIRST MEZZANINE) shall mean, with respect to any
particular period of time, scheduled interest payments under the Mezzanine Note.
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DEFAULT shall mean the occurrence of any event hereunder or under
any other Loan Document (First Mezzanine) which, but for the giving of notice or
passage of time, or both, would be an Event of Default.
DEFAULT RATE shall have the meaning set forth in the Mezzanine Note.
DISQUALIFIED TRANSFEREE shall mean any Person or Close Affiliate
thereof that, (i) has (within the past five (5) years) defaulted, or is now in
default, beyond any applicable cure period, of its material obligations, under
any material written agreement with Mezzanine Lender, any Affiliate of Mezzanine
Lender, or, unless approved by the Mezzanine Lender, any other financial
institution or other person providing or arranging financing; (ii) has been
convicted in a criminal proceeding for a felony or a crime involving moral
turpitude or that is an organized crime figure or is reputed (as determined by
Mezzanine Lender in its sole discretion) to have substantial business or other
affiliations with an organized crime figure; (iii) has at any time filed a
voluntary petition under the Bankruptcy Code or any other federal or state
bankruptcy or insolvency law; (iv) as to which an involuntary petition (which
was not subsequently dismissed within one hundred twenty (120) days) has at any
time been filed under the Bankruptcy Code or any other federal or state
bankruptcy or insolvency law; (v) has at any time filed an answer consenting to
or acquiescing in any involuntary petition filed against it by any other person
under the Bankruptcy Code or any other federal or state bankruptcy or insolvency
law; (vi) has at any time consented to or acquiesced in or joined in an
application for the appointment of a custodian, receiver, trustee or examiner
for itself or any of its property; (vii) has at any time made an assignment for
the benefit of creditors, or has at any time admitted its insolvency or
inability to pay its debts as they become due; or (viii) has been found by a
court of competent jurisdiction or other governmental authority in a comparable
proceeding to have violated any federal or state securities laws or regulations
promulgated thereunder.
DORAL PROPERTY means collectively that certain property known as The
Doral Golf Resort and Spa, located in Miami, Florida owned by CNL Resort Hotel,
LP and that certain property known as the Silver Course, located in Miami-Dade
County, Florida owned by CNL Resort Silver Properties, LP.
DOWNGRADE shall have the meaning as set forth in Section 9.3(c)
hereof.
DSCR shall mean, with respect to a particular period, the ratio of
Net Operating Income to the aggregate sum of Senior Loan Debt Service and Debt
Service (First Mezzanine) in respect of such period, as computed by Mezzanine
Lender from time to time pursuant to the terms hereof, based on, for the
Mortgage Loan, actual debt service payable under such loan) per annum and, for
the Mezzanine Loan, an assumed loan constant equal to the sum of the Maximum
LIBOR Pay Rate (First Mezzanine) from time to time with respect to the Mezzanine
Loan, and the LIBOR Margin (First Mezzanine) (which constant shall be calculated
at all times using a 30/360 accrual convention). If no such period is specified,
then the period shall be deemed to be the immediately preceding four (4) Fiscal
Quarters.
ELIGIBILITY REQUIREMENTS means, with respect to any Person, that
such Person (i) has total assets (in name or under management) in excess of
$600,000,000 and (except with respect to a pension advisory firm or similar
fiduciary) capital/statutory surplus or shareholder's
8
equity of $250,000,000 and (ii) is regularly engaged in the business of making
or owning commercial real estate loans or operating commercial properties.
ELIGIBLE ACCOUNT has the meaning set forth in the Account Agreement
(First Mezzanine).
ENVIRONMENTAL CERTIFICATE shall have the meaning set forth in
Section 12.2.1.
ENVIRONMENTAL CLAIM shall have the meaning set forth in the Loan
Agreement (Mortgage).
ENVIRONMENTAL EVENT shall have the meaning set forth in Section
12.2.1.
ENVIRONMENTAL INDEMNITY (FIRST MEZZANINE) shall mean the
Environmental Indemnity, dated the date hereof, made by Guarantor in favor of
Mezzanine Lender.
ENVIRONMENTAL LAW shall have the meaning provided in the
Environmental Indemnity (First Mezzanine).
ENVIRONMENTAL REPORTS shall have the meaning set forth in Section
12.1.
ERISA shall mean the United States Employee Retirement Income
Security Act of 1974, as amended from time to time, and the regulations
promulgated and the rulings issued thereunder.
ERISA AFFILIATE shall have the meaning set forth in Section
4.1.9(a).
EVENT OF DEFAULT shall have the meaning set forth in Section
17.1(a).
EXCESS CASH FLOW shall have the meaning set forth in the Loan
Agreement (Mortgage).
EXCULPATED PARTIES shall have the meaning set forth in Section
18.1.1.
EXCUSABLE DELAY shall mean a delay due to acts of god, governmental
restrictions, stays, judgments, orders, decrees, enemy actions, civil commotion,
fire, casualty, strikes, work stoppages, shortages of labor or materials or
other causes beyond the reasonable control of Mezzanine Borrower or Mortgage
Borrower, but Mezzanine Borrower's or Mortgage Borrower's lack of funds in and
of itself shall not be deemed a cause beyond the control of Mezzanine Borrower
or Mortgage Borrower, as applicable.
EXTENSION INTEREST RATE CAP AGREEMENT shall mean, following the
expiration of the then current Interest Rate Cap Agreement (First Mezzanine), an
Interest Rate Cap Agreement or Agreements (together with the confirmations and
schedules relating thereto), each from an Acceptable Counterparty and satisfying
the requirements set forth on EXHIBIT I hereto; provided that, to the extent any
such interest rate cap agreement does not meet the foregoing requirements, an
"Extension Interest Rate Cap Agreement" shall be such interest rate cap
agreement as may be approved by each of the Mezzanine Lender in its sole
discretion).
9
FIFTH MEZZANINE ACCOUNT shall mean (i) if the Fifth Mezzanine Loan
is funded by Fifth Mezzanine Lender on or before the Anticipated Funding Date,
account number 1014253564 at PNC Bank, National Association, or (ii) if the
Fifth Mezzanine Loan is not funded by Fifth Mezzanine Lender on or before the
Anticipated Funding Date, but is funded on or before the Outside Date, an
account to be opened at PNC Bank, National Association in the name of Fifth
Mezzanine Borrower for the benefit of Fifth Mezzanine Lender.
FIFTH MEZZANINE BORROWER shall mean CNL Resort Junior Mezz, LP, a
Delaware limited partnership, together with its respective successors and
assigns as permitted under the Fifth Mezzanine Loan Agreement.
FIFTH MEZZANINE GENERAL PARTNER shall mean CNL Resort Junior Mezz
GP, LLC, a Delaware limited liability company.
FIFTH MEZZANINE LENDER shall mean (i) if the Loan is funded on or
before the Anticipated Funding Date, German American Capital Corporation, a
Maryland corporation, its successors and assigns, or (ii) if the Loan is funded
after the Anticipated Funding Date but prior to the Outside Date, German
American Capital Corporation or any other lender that funds the Fifth Mezzanine
Loan, together with its successors and assigns.
FIFTH MEZZANINE LOAN shall mean (i)that certain loan in the original
principal amount of $100,000,000 which may be funded by Fifth Mezzanine Lender
to Fifth Mezzanine Borrower pursuant to the Fifth Mezzanine Loan Agreement on or
before the Anticipated Funding Date, or (ii) if the Fifth Mezzanine Loan is not
funded by Fifth Mezzanine Lender on or before the Anticipated Funding Date, but
is funded on or before the Outside Date after satisfaction of the Funding
Conditions, the mezzanine loan to Fifth Mezzanine Borrower in an original
principal amount of up to $100,000,000.
FIFTH MEZZANINE LOAN AGREEMENT shall mean, (i) if the Fifth
Mezzanine Loan is funded by Fifth Mezzanine Lender on or before the Anticipated
Funding Date, that certain Fifth Mezzanine Loan and Security Agreement, between
Fifth Mezzanine Borrower and Fifth Mezzanine Lender, or (ii) if the Fifth
Mezzanine Loan is not funded by Fifth Mezzanine Lender on or before the
Anticipated Funding Date, but is funded on or before the Outside Date, a
mezzanine loan and security agreement with respect to the Fifth Mezzanine Loan
between the Fifth Mezzanine Lender and Fifth Mezzanine Borrower.
FIFTH MEZZANINE LOAN DOCUMENTS shall mean, if the Fifth Mezzanine
Loan is funded on or before the Outside Date, the documents evidencing and
securing the Fifth Mezzanine Loan, as any of the foregoing may be modified,
amended, extended, supplemented, restated or replaced from time to time.
FIRST MEZZANINE ACCOUNT shall have the meaning set forth in Section
3.1.1.
FIRST MEZZANINE GENERAL PARTNER shall mean CNL Resort Senior Mezz
GP, LLC, a Delaware limited liability company.
FIRST TIER CNL ENTITIES shall have the meaning set forth in Section
8.1(g).
10
FISCAL QUARTER shall mean each quarter within a Fiscal Year in
accordance with GAAP.
FISCAL YEAR shall mean the period commencing on the Closing Date and
ending on and including December 31 of the calendar year in which the Closing
Date occurs and thereafter each twelve month period commencing on January 1 and
ending on December 31 until the Debt is repaid in full, or such other common
fiscal year of Mezzanine Borrower as Mezzanine Borrower may select from time to
time with the prior consent of Mezzanine Lender, such consent not to be
unreasonably withheld.
FOURTH MEZZANINE BORROWER shall mean CNL Resort Sub Intermediate
Mezz, LP, a Delaware limited partnership, together with its respective
successors and assigns as permitted under the Fourth Mezzanine Loan Agreement.
FOURTH MEZZANINE GENERAL PARTNER shall mean CNL Resort Sub
Intermediate Mezz GP, LLC, a Delaware limited liability company.
FOURTH MEZZANINE LENDER shall mean German American Capital
Corporation, a Maryland corporation, its successors and assigns.
FOURTH MEZZANINE LOAN shall mean that certain $50,000,000 mezzanine
loan from Fourth Mezzanine Lender to Fourth Mezzanine Borrower.
FOURTH MEZZANINE LOAN AGREEMENT shall mean that certain Mezzanine
Loan and Security Agreement (Fourth Mezzanine), dated as of the date hereof,
between Fourth Mezzanine Borrower, as borrower, and Fourth Mezzanine Lender, as
lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
FOURTH MEZZANINE LOAN DOCUMENTS shall mean the "Loan Documents
(Fourth Mezzanine)" as defined in the Fourth Mezzanine Loan Agreement.
FUNDING CONDITIONS shall have the meaning set forth in Section
8.1(b).
GAAP shall mean the generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use
by significant segments of the U.S. accounting profession, to the extent such
principles are applicable to the facts and circumstances on the date of
determination, as appropriately modified by the Uniform System, and as further
modified for purposes of calculating Net Membership Cash Flow.
GENERAL PARTNERS shall mean, collectively, each of Mortgage Borrower
General Partner, First Mezzanine General Partner, Second Mezzanine General
Partner, Third Mezzanine General Partner, Fourth Mezzanine General Partner,
Fifth Mezzanine General Partner, and, until such time as such entity may be
dissolved or merged as set forth herein, Sub Junior General Partner.
11
GOVERNMENTAL AUTHORITY shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
GRAND WAILEA PROPERTY means that certain property known as the Grand
Wailea Resort Hotel and Spa located in Maui, Hawaii.
GUARANTOR shall mean, CNL Hotels & Resorts, Inc., a Maryland
corporation.
HAZARDOUS MATERIALS shall have the meaning provided in the
Environmental Indemnity (First Mezzanine).
HOLDING ACCOUNT shall mean the "Holding Account" and various
sub-accounts to the Holding Account established pursuant to the Loan Agreement
(Mortgage) as in effect on the date hereof.
IMPOSITIONS shall have the meaning set forth in the Loan Agreement
(Mortgage).
INCREASED COSTS shall have the meaning set forth in Section 2.4.1.
INDEBTEDNESS shall mean, at any given time, the Principal Amount,
together with all accrued and unpaid interest thereon and all other obligations
and liabilities due or to become due to Mezzanine Lender pursuant hereto, under
the Mezzanine Note or in accordance with the other Loan Documents (First
Mezzanine) and all other amounts, sums and expenses paid by or payable to
Mezzanine Lender hereunder or pursuant to the Mezzanine Note or the other Loan
Documents (First Mezzanine).
INDEMNIFIED PARTIES shall have the meaning set forth in Section
19.12(b).
INDEPENDENT shall mean, when used with respect to any Person, a
Person who: (i) does not have any direct financial interest or any material
indirect financial interest in Mortgage Borrower, Mezzanine Borrower, any Junior
Mezzanine Borrower, Borrower Parent or in any of their Affiliates, (ii) is not
connected with Mortgage Borrower, Mezzanine Borrower, any Junior Mezzanine
Borrower, Borrower Parent or any of their Affiliates, as an officer, employee,
promoter, underwriter, trustee, partner, member, manager, creditor, director,
supplier, customer or person performing similar functions (other than in
connection with providing Independent Director, Independent Manager, or
Independent Member services to Borrower or any Affiliate of Mezzanine Borrower)
and (iii) is not a member of the immediate family of a Person defined in (i) or
(ii) above.
INDEPENDENT ARCHITECT shall mean an architect, engineer or
construction consultant selected by Mezzanine Borrower, any Junior Mezzanine
Borrower, or Mortgage Borrower, as applicable, which is Independent, licensed to
practice in the State (if an architect) and has at least five (5) years of
applicable experience and which is reasonably acceptable to Mezzanine Lender.
INDEPENDENT DIRECTOR, INDEPENDENT MANAGER, OR INDEPENDENT MEMBER
shall mean a Person who is not and will not be while serving and has never been
(i) a member (other
12
than an Independent Member), manager (other than an Independent Manager),
director, (other than an Independent Director), employee, attorney, or counsel
of Mortgage Borrower, Mezzanine Borrower, Borrower Subsidiary, Affiliate Tenant,
or Borrower Parents (provided that Mortgage Borrower, Mezzanine Borrower,
Borrower Subsidiary, Affiliate Tenant, or Borrower Parents may not have the same
Independent Directors, Independent Managers or Independent Members), (ii) in the
seven (7) years prior to the Closing Date, a customer, supplier or other Person
who derives more than 1% of its purchases or revenues from its activities with
Mortgage Borrower, Borrower Subsidiary, Affiliate Tenant, Borrower Parents, or
their Affiliates (other than in connection with providing Independent Director,
Independent Manager, or Independent Member services to Borrower or any Affiliate
of Borrower), (iii) a direct or indirect legal or beneficial owner in such
entity or any of its Affiliates, (iv) a member of the immediate family of any
member, manager, employee, attorney, customer, supplier or other Person referred
to above, or (v) a person Controlling or under the common Control of anyone
listed in (i) through (iv) above. A Person that otherwise satisfies the
foregoing shall not be disqualified from serving as an Independent Director or
Independent Manager or Independent Member if such individual is at the time of
initial appointment, or at any time while serving as such, is an Independent
Director or Independent Manager or Independent Member, as applicable, of a
Single Purpose Entity affiliated with Mezzanine Borrower, other than the
Mortgage Borrower, Borrower Parents, Affiliate Tenant, and Borrower Subsidiary.
INITIAL LIBOR CAP STRIKE RATE shall mean 6%.
INSURANCE REQUIREMENTS shall have the meaning set forth in the Loan
Agreement (Mortgage).
INTEREST DETERMINATION DATE shall have the meaning set forth in the
Mezzanine Note.
INTEREST PERIOD shall have the meaning set forth in the Mezzanine
Note.
INTEREST RATE CAP AGREEMENT (FIRST MEZZANINE) shall mean an Interest
Rate Agreement or Agreements (together with the confirmation and schedules
relating thereto), or, with Mezzanine Lender's prior written consent (which
shall not be unreasonably withheld or delayed), a swap or other interest rate
hedging instrument, each between a Counterparty and Mezzanine Borrower obtained
by Mezzanine Borrower and collaterally assigned to Mezzanine Lender pursuant to
this Agreement, and each satisfying the requirements set forth in EXHIBIT I and,
in the case of a swap or other interest rate hedging agreement consented to by
Mezzanine Lender, any additional requirements of the Rating Agencies).
INTERVENING TRUST VEHICLE with respect to any Securitization Vehicle
which is a CDO, shall mean a trust vehicle or entity which holds a Mezzanine
Loan as collateral securing (in whole or in part) any obligation or security
held by such Securitization Vehicle as collateral for the CDO.
JUNIOR MEZZANINE BORROWER shall mean the Second Mezzanine Borrower,
the Third Mezzanine Borrower, the Fourth Mezzanine Borrower, and/or Fifth
Mezzanine Borrower, as the context may require.
13
JUNIOR MEZZANINE LENDER shall mean the Second Mezzanine Lender, the
Third Mezzanine Lender, the Fourth Mezzanine Lender, and/or, if funded by Fifth
Mezzanine Lender on or before the Outside Date, the Fifth Mezzanine Lender, as
the context may require, together with its successors and assigns.
JUNIOR MEZZANINE LOAN shall mean the Second Mezzanine Loan, the
Third Mezzanine Loan, the Fourth Mezzanine Loan, and/or, if funded by Fifth
Mezzanine Lender on or before the Outside Date, the Fifth Mezzanine Loan, as the
context may require.
JUNIOR MEZZANINE LOAN AGREEMENT shall mean the Second Mezzanine Loan
Agreement, the Third Mezzanine Loan Agreement, the Fourth Mezzanine Loan
Agreement, and/or, if funded by Fifth Mezzanine Lender on or before the Outside
Date, the Fifth Mezzanine Loan Agreement, as the context may require.
JUNIOR MEZZANINE LOAN DOCUMENTS shall mean, collectively, the Junior
Mezzanine Loan Agreement, the Junior Mezzanine Notes, and all other "Mezzanine
Loan Documents" as defined in each Junior Mezzanine Loan Agreement.
JUNIOR MEZZANINE NOTES shall mean each of the "Mezzanine Notes" as
defined in each Junior Mezzanine Loan Agreement.
LATE PAYMENT CHARGE shall have the meaning set forth in Section
2.2.3.
LA QUINTA PROPERTY means, collectively, that certain property known
as the La Quinta Resort and Club and that certain property known as PGA West,
located in La Quinta, California.
LEASE shall have the meaning set forth in the Loan Agreement
(Mortgage).
LEGAL REQUIREMENTS shall have the meaning set forth in the Loan
Agreement (Mortgage).
LIBOR shall have the meaning set forth in the Mezzanine Note.
LIBOR MARGIN (FIRST MEZZANINE) shall mean "LIBOR Margin" as defined
in the Mezzanine Note.
LIBOR RATE shall have the meaning set forth in the Mezzanine Note.
LIEN shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance or charge
on or affecting Mortgage Borrower, Mezzanine Borrower, the Collateral, the
Property, any portion thereof or any interest therein, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement, and the filing of mechanic's,
materialmen's and other similar liens and encumbrances.
14
LOAN OR MEZZANINE LOAN shall mean that certain mezzanine loan in the
amount of $115,000,000 made by Mezzanine Lender to Mezzanine Borrower pursuant
to this Agreement.
LOAN (MORTGAGE) OR MORTGAGE LOAN shall mean the loan in the amount
of $1,000,000,000 made by Mortgage Lender to Mortgage Borrower pursuant to the
Loan Agreement (Mortgage).
LOAN AGREEMENT (MORTGAGE) shall mean the Loan and Security
Agreement, dated as of the date hereof, between Mortgage Borrower, as borrower
and Mortgage Lender, as lender.
LOAN DOCUMENTS (FIRST MEZZANINE) shall mean, collectively, this
Agreement, the Mezzanine Note, the Account Agreement (First Mezzanine), the
Recourse Guaranty (First Mezzanine), the Environmental Indemnity (First
Mezzanine) and the Pledge and any and all other agreements, instruments or
documents executed by Mezzanine Borrower (or another Person) evidencing,
securing or delivered in connection with the Loan and the transactions
contemplated thereby, including, without limitation, any certificates or
representations delivered by or on behalf of Mezzanine Borrower, any Affiliate
of Mezzanine Borrower, Manager or any Affiliate of Manager (including, without
limitation, any certificates in connection with any legal opinions delivered on
the date hereof).
LOAN DOCUMENTS (MORTGAGE) shall mean, collectively, the Loan
Agreement (Mortgage), the Mortgage Note, the Security Instrument, the Assignment
of Leases, the Trademark Security Agreement (Mortgage), the Environmental
Indemnity (Mortgage), the Assignment of Management Agreement (Mortgage), the
Assignment of Subsidiary Management Agreement (Mortgage), the Account Agreement
(Mortgage), the Recourse Guaranty (Mortgage) and all other documents executed
and/or delivered by Mortgage Borrower in connection with the Loan (Mortgage)
including any certifications or representations delivered by or on behalf of
Mortgage Borrower, any Affiliate of Mortgage Borrower, Manager, or any Affiliate
of the Manager (including, without limitation, any certificates in connection
with any legal opinions delivered on the date hereof).
LOW DSCR PERIOD shall have the meaning set forth in the Loan
Agreement (Mortgage).
MANAGEMENT AGREEMENT shall have the meaning set forth in the Loan
Agreement (Mortgage).
MANAGEMENT CONTROL shall mean, with respect to any direct or
indirect interest in the Mortgage Borrower or the Property (not including
Manager under an Approved Management Agreement), the power and authority to make
and implement or cause to be made and implemented all material decisions with
respect to the operation, management, financing and disposition of the specified
interest.
MANAGEMENT FEE shall mean an amount equal to the monthly property
management fee payable to the Manager pursuant to the terms of the applicable
Management Agreement for base management services.
15
MANAGER shall mean (i) with respect to the La Quinta Property, the
Grand Wailea Property, and the Biltmore Property, KSL II Management Operations,
LLC, a Delaware limited liability company, (ii) with respect to the Claremont
Property, Interstate Management Company, LLC, a Delaware limited liability
company, and (iii) with respect to the Doral Property, Marriott International,
Inc., a Delaware corporation, or any replacement "Manager" appointed in
accordance with Section 5.2.14 hereof.
MANAGER ACCOUNTS shall mean the accounts maintained by Manager in
the name of Mortgage Borrower with respect to the Property and in accordance
with the terms of each Management Agreement.
MATERIAL ADVERSE EFFECT shall mean any event or condition that has a
material adverse effect on (i) the Property taken as a whole, (ii) the use,
operation, or value of the Property, (iii) the business, profits, operations or
financial condition of Mortgage Borrower or Mezzanine Borrower, (iv) the ability
of Mezzanine Borrower to repay the principal and interest of the Loan as it
becomes due or to satisfy any of Mezzanine Borrower's obligations under the Loan
Documents (First Mezzanine), (v) the ability of Mortgage Borrower to repay the
principal and interest of the Loan (Mortgage) as it becomes due or to satisfy
any of Mortgage Borrower's obligations under the Loan Documents (Mortgage), (vi)
the validity or enforceability of any of the Loan Documents (First Mezzanine)
against any party thereto, (vii) the Collateral taken as a whole or (viii) the
priority of the Liens in favor of Mezzanine Lender.
MATERIAL LEASE shall mean any Lease (a) demising a premises within
the Property that is more than 10,000 net rentable square feet or (b) that is
for a term equal to or greater than sixty (60) months.
MATURITY DATE shall have the meaning set forth in the Mezzanine
Note.
MATURITY DATE PAYMENT shall have the meaning set forth in the
Mezzanine Note.
MAXIMUM LEGAL RATE shall mean the maximum non-usurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the indebtedness evidenced by the
Mezzanine Note and as provided for herein or the other Loan Documents (First
Mezzanine), under the laws of such state or states whose laws are held by any
court of competent jurisdiction to govern the interest rate provisions of the
Loan.
MAXIMUM LIBOR PAY RATE (FIRST MEZZANINE) shall mean, (i) the Initial
LIBOR Cap Strike Rate through the termination date of the Interest Rate Cap
Agreement (First Mezzanine) and (ii) during the term of each Extension Interest
Rate Cap Agreement, the lesser of (a) the product of (x) the Initial LIBOR Cap
Strike Rate and (y) a fraction, the numerator of which is trailing twelve month
Net Operating Income as of the termination date of the Interest Rate Cap
Agreement and the denominator of which is Closing Date NOI and (b) 10.50%.
MEZZANINE BORROWER has the meaning set forth in the first paragraph
of this Agreement.
MEZZANINE BORROWER'S ACCOUNT shall mean following account, or such
other account with any Person subsequently identified in a written notice from
Mezzanine Borrower to
16
Mezzanine Lender, which Mezzanine Borrower's Account shall be under the sole
dominion and control of Mezzanine Borrower:
Bank: Bank of America, N.A.
ABA#: 111 000 012
Account Name: CNL Resort Lodging Tenant Corp.
Account Number: 3756266386
Reference: Excess Cash
MEZZANINE DEBT SERVICE RESERVE ACCOUNT shall have the meaning set
forth in Section 3.1.1.
MEZZANINE LENDER shall have the meaning set forth in the first
paragraph of this Agreement.
MEZZANINE LENDER EXPENSES shall mean all reasonable expenses
incurred in connection with the origination of the Loan, including, without
limitation, preparation of the Loan Documents (First Mezzanine), recording fees,
underwriting costs, search fees, and other fees and out of pocket expenses
(including reasonable attorneys' fees and disbursements and other third party
expenses.)
MEZZANINE LENDER MONTHLY DEBT SERVICE NOTICE LETTER shall have the
meaning set forth in Section 3.1.5(e).
MEZZANINE NOTE shall mean that certain Mezzanine Note, dated as of
the date hereof in the principal amount of ONE HUNDRED FIFTEEN MILLION DOLLARS
($115,000,000), made by Mezzanine Borrower in favor of Mezzanine Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
MONETARY DEFAULT shall mean a Default (i) that can be cured with the
payment of money or (ii) arising pursuant to Section 17.1(a)(vi) or (vii).
MORTGAGE BORROWER shall mean, collectively, CNL Resort Hotel, LP,
CNL Resort Silver Properties, LP, CNL Grand Wailea Resort, LP, CNL Claremont
Resort, LP, CNL Biltmore Resort, LP, and CNL Desert Resort, LP, each a Delaware
limited partnership.
MORTGAGE BORROWER GENERAL PARTNER shall mean CNL Resort SPE GP, LLC,
a Delaware limited liability company.
MORTGAGE DEFAULT shall have the meaning ascribed to "Default" in the
Loan Agreement (Mortgage).
MORTGAGE EVENT OF DEFAULT shall have the meaning ascribed to "Event
of Default" in the Loan Agreement (Mortgage).
MORTGAGE LENDER shall mean German American Capital Corporation,
together with its successors and assigns.
17
MORTGAGE LOAN shall mean the loan in the amount of $1,000,000,000
made by Mortgage Lender to Mortgage Borrower pursuant to the Loan Agreement
(Mortgage).
MORTGAGE NOTE shall have the meaning ascribed to "Note" in the Loan
Agreement (Mortgage).
NET EXCESS CASH FLOW shall have the meaning set forth in Section
3.1.5(a).
NET EXCESS CASH FLOW COMMENCEMENT DATE shall have the meaning set
forth in Section 3.1.5(a).
NET MEMBERSHIP CASH FLOW shall mean the net cash flow (whether
positive or negative) consisting of (a) cash received from sales of new club
memberships and conversions of existing club memberships to new club memberships
(including deposits and ongoing dues relating thereto), plus (b) cash principal
payments received on membership notes evidencing the financing of the purchase
of new club memberships or the conversion of existing club memberships, less (c)
cash paid to cancel or recall existing club memberships and refunds of new club
membership sales to the extent not otherwise accounted for in Hotel Revenue or
Operating Expenses in accordance with GAAP (exclusive, however, of refunds
funded out of the Membership Deposit Account).
NET OPERATING INCOME shall mean, for any specified period, the
excess of Operating Income over Operating Expenses for the trailing twelve (12)
month period.
NON-CONSOLIDATION OPINION shall have the meaning provided in Section
2.5.5.
NOTES shall mean, collectively, the Mortgage Note, the Mezzanine
Note, and the Junior Mezzanine Notes.
OBLIGATIONS shall mean, collectively, the Obligations (First
Mezzanine), the Obligations (Junior Mezzanine), and the Obligations (Mortgage).
OBLIGATIONS (FIRST MEZZANINE) shall mean all indebtedness,
obligations and liabilities of Mezzanine Borrower and Guarantor to Mezzanine
Lender, under this Agreement or any of the other Loan Documents (First
Mezzanine) or in respect of the Loan or the Mezzanine Note, or other instrument
at any time evidencing any of the foregoing, whether existing on the date of
this Agreement or arising or incurred hereafter, direct or indirect, joint or
several, absolute or continent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract, operation of law or
otherwise.
OBLIGATIONS (JUNIOR MEZZANINE) shall mean the "Obligations (Second
Mezzanine)," "Obligations (Third Mezzanine)," "Obligations (Fourth Mezzanine),"
and "Obligations (Fifth Mezzanine)," as each is defined in the Junior Mezzanine
Loan Agreement, as applicable.
OBLIGATIONS (MORTGAGE) shall have the meaning ascribed to
"Obligations" in the Loan Agreement (Mortgage).
18
OFAC LIST means the list of specially designated nationals and
blocked persons subject to financial sanctions that is maintained by the U.S.
Treasury Department, Office of Foreign Assets Control and accessible through the
internet website ▇▇▇.▇▇▇▇▇.▇▇▇/▇▇▇▇/▇▇▇▇▇▇.▇▇▇.
OFFICER'S CERTIFICATE shall mean a certificate executed by an
authorized signatory of Mezzanine Borrower that is familiar with the financial
condition of Mezzanine Borrower, the Mortgage Borrower and the operation of the
Property or the particular matter which is the subject of such Officer's
Certificate.
OPERATING EXPENSES shall have the meaning set forth in the Loan
Agreement (Mortgage).
OPERATING INCOME shall have the meaning set forth in the Loan
Agreement (Mortgage).
OPINION OF COUNSEL shall mean opinions of counsel of law firm(s)
licensed to practice in Hawaii, California, Arizona, Florida, New York, and
Delaware selected by Mezzanine Borrower and reasonably acceptable to Mezzanine
Lender.
OTHER CHARGES shall mean maintenance charges, impositions other than
Impositions, and any other charges, including, without limitation, vault charges
and license fees for the use of vaults, chutes and similar areas adjoining the
Property, now or hereafter levied or assessed or imposed against the Property or
any part thereof by any Governmental Authority, other than those required to be
paid by a tenant pursuant to its respective Lease.
OTHER TAXES shall have the meaning set forth in Section 2.4.3.
OUTSIDE DATE shall mean January 31, 2010.
PAYMENT DATE shall have the meaning set forth in the Mezzanine Note.
PERMITTED BORROWER TRANSFEREE shall mean any entity (i) that is
experienced in either (a) owning or (b) operating (including acting as asset
manager or otherwise directing professional management of) properties similar to
the Property, (ii) that either (a) has a net worth together with its Close
Affiliates, as of a date no more than six (6) months prior to the date of the
transfer of at least $300 Million (exclusive of the Property), immediately prior
to such transfer, controls, together with its Close Affiliates real estate
equity assets of at least $1 Billion or (b) together with its Close Affiliates
owns or has under management or acts as the exclusive fund manager or investment
advisor, at the time of the transfer, not fewer than 6 luxury resort hotels
(excluding the Property) containing not fewer than 3,000 hotel rooms in the
aggregate and (iii) that is not a Disqualified Transferee.
PERMITTED DEBT shall have the meaning set forth in the Loan
Agreement (Mortgage).
PERMITTED DEBT (FIRST MEZZANINE) shall mean the Mezzanine Note and
other obligations, indebtedness and liabilities specifically provided for in any
Loan Document (First
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Mezzanine) and secured by this Agreement, the Pledge and the other Loan
Documents (First Mezzanine).
PERMITTED ENCUMBRANCES shall have the meaning set forth in the Loan
Agreement (Mortgage).
PERMITTED FUND MANAGER means any Person that on the date of
determination is (i) a nationally-recognized manager of investment funds
investing in debt or equity interests relating to commercial real estate, (ii)
investing through a fund with committed capital of at least $250,000,000 and
(iii) not subject to a bankruptcy proceeding.
PERMITTED INVESTMENTS shall have the meaning set forth in the
Account Agreement (First Mezzanine).
PERMITTED LOAN AMENDMENT shall have the meaning set forth in Section
5.1.18(b).
PERMITTED MEZZANINE TRANSFER shall mean (a) a pledge of direct or
indirect equity interests in Mezzanine Borrower to secure any Junior Mezzanine
Loans, and (b) any foreclosure (or transfer in lieu thereof) in respect of any
Junior Mezzanine Loan, provided that the secured party or the acquirer at
foreclosure (or transfer in lieu thereof), as applicable, (i) shall be a
Qualified Transferee or (ii) shall have received a Rating Confirmation prior to
such foreclosure (or such transfer in lieu of foreclosure), subject in the case
of each of clauses (i) and (ii) to the requirement that the Mezzanine Borrower
deliver to Mezzanine Lender, the Mortgage Lender and the Rating Agencies a
nonconsolidation opinion satisfactory to the Rating Agencies with respect to any
Person having more than a 49% direct or indirect equity interest (either
individually or together with any interests held by an affiliate of such Person)
in Mezzanine Borrower.
PERSON shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
PHYSICAL CONDITIONS REPORT shall mean the structural engineering
report with respect to the Property, (i) prepared by an Independent Architect
(ii) addressed to Mezzanine Lender, (iii) prepared based on a scope of work
determined by Mortgage Lender in Mortgage Lender's reasonable discretion, and
(iv) in form and content acceptable to Mortgage Lender in Mortgage Lender's
reasonable discretion, together with any amendments or supplements thereto.
PLAN shall have the meaning set forth in Section 4.1.9(a).
PLEDGE shall mean that certain Pledge and Security Agreement (First
Mezzanine), dated as of the date hereof, from Mezzanine Borrower to Mezzanine
Lender pledging Mezzanine Borrower's 99.9% direct limited partnership interest
in each Mortgage Borrower (and CNL Resort Hotel, LP's 99.9% direct limited
partnership interest in CNL Resort Silver Properties, LP) and 100% direct
limited liability company interests in Mortgage Borrower General Partner.
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PLEDGED COLLATERAL shall have the meaning set forth in the Pledge.
PRE-APPROVED MANAGER shall mean any entity set forth on SCHEDULE IV
hereof.
PRE-APPROVED TRANSFEREE shall mean any of the entities set forth on
SCHEDULE III hereof, or any Close Affiliates thereof, provided any of the
foregoing entities or their Close Affiliates shall only be a "Pre-approved
Transferee" if (i) such entity continues to be Controlled by substantially the
same Persons Controlling such entity as of the Closing Date or if such
Pre-approved Transferee is a publicly traded company, such Pre-approved
Transferee continues to be publicly traded on an established securities market,
(ii) there has been no material adverse change in the financial condition or
results of operations of such entity since the Closing Date, (iii) such entity
is not a Disqualified Transferee and (iv) if such entity as of the Closing Date
is rated (a) "Investment Grade" there has been no deterioration in such entity's
long-term or short-term credit rating (if any) below BBB since the Closing Date
or (b) below "Investment Grade", there has been no deterioration in such
entity's long-term or short-term credit rating (if any) since the Closing Date.
PREPAYMENT FEE shall mean the "Prepayment Fee" due in accordance
with each of the Loan Documents (First Mezzanine) and the Junior Mezzanine Loan
Documents.
PRINCIPAL AMOUNT shall have the meaning set forth in the Mezzanine
Note.
PROCEEDS shall have the meaning set forth in the Loan Agreement
(Mortgage)
PROHIBITED LOAN AMENDMENT shall have the meaning specified in
Section 5.1.18(b).
PROHIBITED PERSON means any Person identified on the OFAC List or
any other Person with whom a U.S. Person may not conduct business or
transactions by prohibition of Federal law or Executive Order of the President
of the United States or America.
PROPERTY shall have the meaning set forth in the Loan Agreement
(Mortgage).
QUALIFIED TRANSFEREE shall mean one or more of the following:
(i) a real estate investment trust, bank, saving and
loan association, investment bank, insurance company, trust company,
commercial credit corporation, pension plan, pension fund or pension
advisory firm, mutual fund, government entity or plan that satisfies the
Eligibility Requirements;
(ii) an investment company, money management firm or
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, or an institutional "accredited
investor" within the meaning of Regulation D under the Securities Act of
1933, as amended, that satisfies the Eligibility Requirements;
(iii) an institution substantially similar to any of the
foregoing entities described in clauses (i) or (ii) that satisfies the
Eligibility Requirements;
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(iv) any entity Controlled (and only so long as such
entity continues at all times to be Controlled) by any of the entities
described in clauses (i), (ii) or (iii) above;
(v) a Qualified Trustee in connection with (A) a
securitization of, (B) the creation of collateralized debt obligations
(CDO) secured by, or (C) a financing through an "owner trust" of a
Mezzanine Loan (any of the foregoing, a SECURITIZATION VEHICLE), provided
that (1) one or more classes of securities issued by such Securitization
Vehicle is initially rated at least investment grade by each of the Rating
Agencies which assigned a rating to one or more classes of securities
issued in connection with a Securitization (it being understood that with
respect to any Rating Agency that assigned such a rating to the securities
issued by such Securitization Vehicle, a Rating Agency Confirmation will
not be required in connection with a transfer of a Mezzanine Loan to such
Securitization Vehicle); (2) in the case of a Securitization Vehicle that
is not a CDO, the special servicer of such Securitization Vehicle has a
Required Special Servicer Rating (such entity, an APPROVED SERVICER) and
such Approved Servicer is required to service and administer such
Mezzanine Loan in accordance with servicing arrangements for the assets
held by the Securitization Vehicle which require that such Approved
Servicer act in accordance with a servicing standard notwithstanding any
contrary direction or instruction from any other Person; or (3) in the
case of a Securitization Vehicle that is a CDO, the CDO Asset Manager and,
if applicable, each Intervening Trust Vehicle that is not administered and
managed by a CDO Asset Manager which is a Qualified Transferee, are each a
Qualified Transferee under clauses (i),(ii),(iii),(iv) or (vi) of this
definition;
(vi) an investment fund, limited liability company,
limited partnership or general partnership where a Permitted Fund Manager
or an entity that is otherwise a Qualified Transferee under clauses (i),
(ii), (iii) or (iv) of this definition acts as the general partner,
managing member or fund manager and at least 50% of the equity interests
in such investment vehicle are owned, directly or indirectly, by one or
more entities that are otherwise Qualified Transferees under clauses (i),
(ii), (iii) or (iv) of this definition.
QUALIFIED TRUSTEE shall mean (i) a corporation, national bank,
national banking association or a trust company, organized and doing business
under the laws of any state or the United States of America, authorized under
such laws to exercise corporate trust powers and to accept the trust conferred,
having a combined capital and surplus of at least $100,000,000 and subject to
supervision or examination by federal or state authority, (ii) an institution
insured by the Federal Deposit Insurance Corporation or (iii) an institution
whose long-term senior unsecured debt is rated either of the then in effect top
two rating categories of each of the Rating Agencies.
RATE CAP COLLATERAL (FIRST MEZZANINE) shall have the meaning set
forth in Section 9.2.
RATING AGENCIES shall have the meaning set forth in the Loan
Agreement (Mortgage).
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RATING AGENCY CONFIRMATION shall have the meaning set forth in the
Loan Agreement (Mortgage).
RECOURSE GUARANTY (MORTGAGE) shall mean that certain Guaranty of
Recourse Obligations, dated as of the date hereof, by Guarantor in favor of
Mortgage Lender, as the same may be amended, supplemented, restated or otherwise
modified from time to time.
RECOURSE GUARANTY (FIRST MEZZANINE) shall mean that certain Guaranty
of Recourse Obligations of Mezzanine Borrower, dated as of the date hereof, by
Guarantor in favor of Mezzanine Lender, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
REGISTER shall have the meaning set forth in Section 15.4.
REGULATORY CHANGE shall mean any change after the date of this
Agreement in federal, state or foreign laws or regulations or the adoption or
the making, after such date, of any interpretations, directives or requests
applying to Mezzanine Lender, or any Person Controlling Mezzanine Lender or to a
class of banks or companies Controlling banks of or under any federal, state or
foreign laws or regulations (whether or not having the force of law) by any
court or Governmental Authority or monetary authority charged with the
interpretation or administration thereof.
RELEASE AMOUNT shall mean, with respect to (i) the Grand Wailea
Property, 120% of the Grand Wailea Property's Allocated Loan Amount, (ii) the La
Quinta Property, 120% of the La Quinta Property's Allocated Loan Amount, (iii)
the Doral Property, 120% of the Doral Property's Allocated Loan Amount, (iv) the
Claremont Property, 100% of the Property's Allocated Loan Amount, and (v) the
Biltmore Property, 120% of the Biltmore Property's Allocated Loan Amount.
RENTS shall have the meaning set forth in the Loan Agreement
(Mortgage).
REPLACEMENT INTEREST RATE CAP AGREEMENT (FIRST MEZZANINE) shall
mean, in connection with a replacement of an Interest Rate Cap Agreement
following a Downgrade of the Counterparty thereto, an interest rate cap
agreement (together with the confirmation and schedules relating thereto) from
an Acceptable Counterparty and satisfying the requirements set forth on EXHIBIT
I hereto; provided that to the extent any such interest rate cap agreement does
not meet the foregoing requirements a "Replacement Interest Cap Agreement (First
Mezzanine)" shall be such interest rate cap agreement approved in writing by
Mezzanine Lender.
REQUIRED SPECIAL SERVICER RATING shall mean (i) a rating of "CSS1"
in the case of Fitch, (ii) on the S&P list of approved special servicers in the
case of S&P and (iii) in the case of ▇▇▇▇▇'▇, such special servicer is acting as
special servicer in a commercial mortgage loan securitization that was rated by
▇▇▇▇▇'▇ within the twelve (12) month period prior to the date of determination,
and ▇▇▇▇▇'▇ has not downgraded or withdrawn the then-current rating on any class
of commercial mortgage securities or placed any class of commercial mortgage
securities on watch citing the continuation of such special servicer as special
servicer of such commercial mortgage securities as the reason therefor.
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S&P shall mean Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
SECOND MEZZANINE ACCOUNT shall mean account number 1014253521 at PNC
Bank, National Association.
SECOND MEZZANINE BORROWER shall mean CNL Resort Sub Senior Mezz, LP,
a Delaware limited partnership, together with its respective successors and
assigns as permitted under the Second Mezzanine Loan Agreement.
SECOND MEZZANINE GENERAL PARTNER shall mean CNL Resort Sub Senior
Mezz GP, LLC, a Delaware limited liability company.
SECOND MEZZANINE LENDER shall mean German American Capital
Corporation, a Maryland corporation, its successors and assigns.
SECOND MEZZANINE LOAN shall mean that certain $110,000,000 mezzanine
loan from Second Mezzanine Lender to the Second Mezzanine Borrower.
SECOND MEZZANINE LOAN AGREEMENT shall mean that certain Mezzanine
Loan and Security Agreement (Second Mezzanine), dated as of the date hereof,
between Second Mezzanine Borrower, as borrower, and Second Mezzanine Lender, as
lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
SECOND MEZZANINE LOAN DEFAULT NOTICE shall have the meaning ascribed
to "Mezzanine Loan Default Notice" in the Second Mezzanine Loan Agreement.
SECOND MEZZANINE LOAN DEFAULT REVOCATION NOTICE shall have the
meaning ascribed to "Mezzanine Loan Default Revocation Notice" in the Second
Mezzanine Loan Agreement.
SECOND MEZZANINE LOAN DOCUMENTS shall mean the "Loan Documents
(Second Mezzanine)" as defined in the Second Mezzanine Loan Agreement.
SECURITIZATION shall have the meaning set forth in the Loan
Agreement (Mortgage).
SECURITIZATION VEHICLE shall have the meaning set forth in the
definition of "Qualified Transferee."
SECURITY INSTRUMENT shall have the meaning set forth in the Loan
Agreement (Mortgage).
SENIOR LOAN DEBT SERVICE shall mean "Debt Service" as defined in the
Loan Agreement (Mortgage).
SERVICER shall mean such Person designated in writing with an
address for such Person by Mezzanine Lender, in its sole discretion, to act as
Mezzanine Lender's agent hereunder
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with such powers as are specifically delegated to the Servicer by Mezzanine
Lender, whether pursuant to the terms of this Agreement, the Account Agreement
(First Mezzanine) or otherwise, together with such other powers as are
reasonably incidental thereto.
SINGLE PURPOSE ENTITY shall mean a Person, other than an individual,
which (i) is formed or organized solely for the purpose of owning, holding,
developing, using, operating and financing an ownership interest in the Property
or, with respect to an Affiliate Tenant, its respective business and assets
conducted solely in the manner described in the Non-consolidation Opinion, (ii)
does not engage in any business unrelated to the Property or, with respect to an
Affiliate Tenant, its respective business and assets conducted solely in the
manner described in the Non-consolidation Opinion, and the ownership,
development, use, operation and financing thereof, (iii) does not have any
assets other than those related to its interest in the Property or, with respect
to an Affiliate Tenant, its respective business and assets conducted solely in
the manner described in the Non-consolidation Opinion, or the operation,
management and financing thereof or any indebtedness other than the Permitted
Debt, (iv) maintains its own separate books and records and its own accounts, in
each case which are separate and apart from the books and records and accounts
of any other Person, (v) holds itself out as being a Person, separate and apart
from any other Person, (vi) does not and will not commingle its funds or assets
with those of any other Person, (vii) conducts its own business in its own name;
(viii) maintains separate financial statements, (ix) pays its own liabilities
out of its own funds, (x) observes all partnership, corporate or limited
liability company formalities, as applicable, (xi) pays the salaries of its own
employees, if any, and maintains a sufficient number of employees, if any, in
light of its contemplated business operations, (xii) does not guarantee or
otherwise obligate itself with respect to the debts of any other Person or hold
out its credit as being available to satisfy the obligations of any other
Person, (xiii) does not acquire obligations or securities of its partners,
members or shareholders, (xiv) allocates fairly and reasonably shared expenses,
including, without limitation, any overhead for shared office space, if any,
(xv) uses separate stationary, invoices, and checks, (xvi) maintains an
arms-length relationship with its Affiliates, (xvii) does not pledge its assets
for the benefit of any other Person (other than as permitted under clauses (a)
and (d) of the definition of Permitted Encumbrances) or make any cash loans or
advances to any other Person, (xviii) uses commercially reasonable efforts to
correct any known misunderstanding regarding its separate identity, and (xix)
maintains adequate capital in light of its contemplated business operations. In
addition, if such Person is a partnership, (1) all general partners of such
Person shall be Single Purpose Entities; and (2) if such Person has more than
one general partner, then the organizational documents shall provide that such
Person shall continue (and not dissolve) for so long as a solvent general
partner exists. In addition, if such Person is a corporation, then, at all
times: (a) such Person shall have at least two (2) Independent Directors and (b)
the board of directors of such Person may not take any action requiring the
unanimous affirmative vote of 100% of the members of the board of directors
unless all of the directors, including the Independent Directors, shall have
participated in such vote. In addition, if such Person is a limited liability
company, (a) such Person shall have at least two (2) Independent Managers or
Independent Members, (b) if such Person is managed by a board of managers, the
board of managers of such Person may not take any action requiring the unanimous
affirmative vote of 100% of the members of the board of managers unless all of
the managers, including the Independent Managers, shall have participated in
such vote, (c) if such Person is not managed by a board of managers, the members
of such Person may not take any action requiring the affirmative vote of 100% of
the members of such Person unless all of the
25
members, including the Independent Members, shall have participated in such
vote, (d) each managing member shall be a Single Purpose Entity and (e) its
articles of organization, certificate of formation and/or operating agreement,
as applicable, shall provide that until all of the Indebtedness and Obligations
are paid in full such entity will not dissolve. In addition, the organizational
documents of such Person shall provide that such Person (1) without the
unanimous consent of all of the partners, directors or members, as applicable,
shall not with respect to itself or to any other Person in which it has a direct
or indirect legal or beneficial interest (a) seek or consent to the appointment
of a receiver, liquidator, assignee, trustee, sequestrator, custodian or other
similar official for the benefit of the creditors of such Person or all or any
portion of such Person's properties, or (b) take any action that might cause
such Person to become insolvent, petition or otherwise institute insolvency
proceedings or otherwise seek any relief under any laws relating to the relief
from debts or the protection of debtors generally, (2) will maintain its books,
records, resolutions and agreements as official records, (3) will hold its
assets in its own name, (4) will maintain its financial statements, accounting
records and other organizational documents, books and records separate and apart
from any other Person, (5) will not identify its partners, members or
shareholders, or any Affiliates of any of them as a division or part of it, (6)
will maintain an arms-length relationship with its Affiliates, and (7) will not
enter into or be a party to any transaction with its partners, members,
shareholders, or its Affiliates except in the ordinary course of business and on
terms which are intrinsically fair and are no less favorable to it than would be
obtained in a comparable arms-length transaction with a third party.
Notwithstanding the foregoing, Mezzanine Lender hereby consents to First
Mezzanine General Partner, Second Mezzanine General Partner, Third Mezzanine
General Partner, Fourth Mezzanine General Partner and Fifth Mezzanine General
Partner, each having only one (1) Independent Manager on its board of managers,
and (ii) Mortgage Borrower General Partner and each Affiliate Tenant having the
same two (2) Independent Directors or Independent Managers, as applicable.
SOLE SHAREHOLDER shall mean CNL Resort Recreation, LP, a Delaware
limited partnership.
SPECIAL TAXES shall mean any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, or any liabilities with
respect thereto, including those arising after the date hereof as result of the
adoption of or any change in law, treaty, rule, regulation, guideline or
determination of a Governmental Authority or any change in the interpretation or
application thereof by a Governmental Authority but excluding, in the case of
Mezzanine Lender, such taxes (including income taxes, franchise taxes and branch
profit taxes) as are imposed on or measured by Mezzanine Lender's net income by
the United States of America or any Governmental Authority of the jurisdiction
under the laws under which Mezzanine Lender is organized or maintains a lending
office.
STATE shall mean the State in which the Property or any part thereof
is located.
SUB-ACCOUNT(S) shall have the meaning set forth in Section 3.1.1.
SUB JUNIOR shall mean CNL Resort Sub Junior Mezz, LP, a Delaware
limited partnership.
SUB JUNIOR GENERAL PARTNER shall mean CNL Resort Sub Junior Mezz GP,
LLC, a Delaware limited liability company.
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SUBSIDIARY MANAGEMENT AGREEMENT shall mean, (i) that certain
Rental/Reservation Agreement, dated July 16, 1999, between CNL Resort Desert
Real Estate, Inc. and the CNL Desert Resort, LP and (ii) that certain
Rental/Reservation Agreement by and between CNL Resort Biltmore Real Estate,
Inc. and CNL Biltmore Resort, LP.
SURVIVOR shall have the meaning set forth in Section 8.1(a).
TAKING shall have the meaning set forth in Loan Agreement
(Mortgage).
TENANT shall have the meaning set forth in the Loan Agreement
(Mortgage).
THIRD MEZZANINE BORROWER shall mean CNL Resort Intermediate Mezz,
LP, a Delaware limited partnership, together with its respective successors and
assigns as permitted under the Third Mezzanine Loan Agreement.
THIRD MEZZANINE GENERAL PARTNER shall mean CNL Resort Intermediate
Mezz GP, LLC, a Delaware limited liability company.
THIRD MEZZANINE LOAN shall mean that certain $250,000,000 mezzanine
loan from Third Mezzanine Lender to Third Mezzanine Borrower.
THIRD MEZZANINE LOAN AGREEMENT shall mean that certain Mezzanine
Loan and Security Agreement (Third Mezzanine), dated as of the date hereof,
between Third Mezzanine Borrower, as borrower, and Third Mezzanine Lender, as
lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
THIRD MEZZANINE LOAN DOCUMENTS shall mean the "Loan Documents (Third
Mezzanine)" as defined in the Third Mezzanine Loan Agreement.
TITLE COMPANY shall have the meaning set forth in the Loan Agreement
(Mortgage).
TITLE POLICY (MORTGAGE) shall have the meaning ascribed to "Title
Policy" in the Loan Agreement (Mortgage).
TRANSFER shall mean to, directly or indirectly, sell, assign,
convey, mortgage, transfer, pledge, hypothecate, encumber, grant a security
interest in, exchange or otherwise dispose of any beneficial interest or grant
any option or warrant with respect to, or where used as a noun, a direct or
indirect sale, assignment, conveyance, transfer, pledge or other disposition of
any beneficial interest by any means whatsoever whether voluntary, involuntary,
by operation of law or otherwise.
UCC OR UNIFORM COMMERCIAL CODE shall mean the Uniform Commercial
Code as in effect in the State.
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UNIFORM SYSTEM shall have the meaning set forth in the Loan
Agreement (Mortgage).
SECTION 1.2 PRINCIPLES OF CONSTRUCTION.
All references to sections and schedules are to sections and
schedules in or to this Agreement unless otherwise specified. All accounting
terms not specifically defined herein shall be construed in accordance with GAAP
as modified by the Uniform System. When used herein, the term "financial
statements" shall include the notes and schedules thereto. Unless otherwise
specified herein or therein, all terms defined in this Agreement shall have the
definitions given them in this Agreement when used in any other Loan Document
(First Mezzanine) or in any certificate or other document made or delivered
pursuant thereto. All uses of the word "including" shall mean including, without
limitation unless the context shall indicate otherwise. Unless otherwise
specified, the words hereof, herein and hereunder and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. Unless otherwise specified, all
meanings attributed to defined terms herein shall be equally applicable to both
the singular and plural forms of the terms so defined.
II. GENERAL TERMS
SECTION 2.1 LOAN; DISBURSEMENT TO MEZZANINE BORROWER.
2.1.1 THE LOAN. Subject to and upon the terms and conditions
set forth herein, Mezzanine Lender hereby agrees to make and Mezzanine Borrower
hereby agrees to accept the Loan on the Closing Date.
2.1.2 DISBURSEMENT TO BORROWER. Mezzanine 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.
Mezzanine Borrower acknowledges and agrees that the full proceeds of the Loan
have been disbursed by Mezzanine Lender to Mezzanine Borrower on the Closing
Date.
2.1.3 THE MEZZANINE NOTE, PLEDGE AND LOAN DOCUMENTS. The Loan
shall be evidenced by the Mezzanine Note and secured by the Pledge, this
Agreement and the other Loan Documents (First Mezzanine).
2.1.4 USE OF PROCEEDS. Mezzanine Borrower shall use the
proceeds of the Loan as an equity contribution to Mortgage Borrower to repay and
discharge any existing mortgage loans secured by the Property, to make cash
distributions to its partners, and as may be otherwise set forth on the closing
statement executed by Mezzanine Borrower at closing.
SECTION 2.2 INTEREST; LOAN PAYMENTS; LATE PAYMENT CHARGE.
2.2.1 PAYMENT OF PRINCIPAL AND INTEREST.
(i) Except as set forth in Section 2.2.1(ii), interest
shall accrue on the Principal Amount as set forth in the Mezzanine Note.
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(ii) Upon the occurrence and during the continuance of
an Event of Default and from and after the Maturity Date if the entire
Principal Amount is not repaid on the Maturity Date, interest on the
outstanding principal balance of the Loan and, to the extent permitted by
law, overdue interest and other amounts due in respect of the Loan shall
accrue at the Default Rate calculated from the date such payment was due
without regard to any grace or cure periods contained herein. Interest at
the Default Rate shall be computed from the occurrence of the Event of
Default until the actual receipt and collection of the Indebtedness (or
that portion thereof that is then due). To the extent permitted by
applicable law, interest at the Default Rate shall be added to the
Indebtedness, shall itself accrue interest at the same rate as the Loan
and shall be secured by this Agreement and the Pledge. This paragraph
shall not be construed as an agreement or privilege to extend the date of
the payment of the Indebtedness, nor as a waiver of any other right or
remedy accruing to Mezzanine Lender by reason of the occurrence of any
Event of Default, and Mezzanine Lender retains its rights under the
Mezzanine Note to accelerate and to continue to demand payment of the
Indebtedness upon the happening of any Event of Default.
2.2.2 METHOD AND PLACE OF PAYMENT.
(a) On each Payment Date, Mezzanine Borrower shall pay or
cause to be paid to Mezzanine Lender interest accruing pursuant to the Mezzanine
Note for the entire Interest Period with respect to such Payment Date.
(b) All amounts advanced by Mezzanine Lender pursuant to the
applicable provisions of the Loan Documents (First Mezzanine), other than the
Principal Amount, together with any interest at the Default Rate or other
charges as provided therein, shall be due and payable hereunder as provided in
the Loan Documents (First Mezzanine). In the event any such advance or charge is
not so repaid by Mezzanine Borrower, Mezzanine Lender may, at its option and
upon notice to Mezzanine Borrower, first apply any payments received under the
Mezzanine Note to repay such advances, together with any interest thereon, or
other charges as provided in the Loan Documents (First Mezzanine), and the
balance, if any, shall be applied in payment of any installment of interest or
principal then due and payable.
(c) The Maturity Date Payment shall be due and payable in full
on the Maturity Date.
2.2.3 LATE PAYMENT CHARGE. If any interest payment due under
the Loan Documents (First Mezzanine) is not paid by Mezzanine Borrower within
five (5) days after the date on which it is due (or, if such fifth (5th) day is
not a Business Day, then the Business Day immediately following such day)
Mezzanine Borrower shall pay to Mezzanine Lender upon demand an amount equal to
the lesser of three percent (3%) of such unpaid sum or the Maximum Legal Rate
(the LATE PAYMENT CHARGE) in order to defray the expense incurred by Mezzanine
Lender in handling and processing such delinquent payment and to compensate
Mezzanine Lender for the loss of the use of such delinquent payment. Any such
amount shall be secured by this Agreement, the Pledge and the other Loan
Documents (First Mezzanine) to the extent permitted by applicable law. Mezzanine
Borrower acknowledges and agrees that the five day grace period with respect to
the applicability of the Late Payment Charge (i) shall only apply to
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Mezzanine Borrower's first failure to make a monthly interest payment in any
calendar year and (ii) shall not constitute a payment grace period and shall in
no way limit Mezzanine Lender's rights under Article XVII.
2.2.4 USURY SAVINGS. This Agreement and the Mezzanine Note are
subject to the express condition that at no time shall Mezzanine Borrower be
obligated or required to pay interest on the Principal Amount of the Loan at a
rate which could subject Mezzanine Lender to either civil or criminal liability
as a result of being in excess of the Maximum Legal Rate. If, by the terms of
this Agreement or the other Loan Documents (First Mezzanine), Mezzanine Borrower
is at any time required or obligated to pay interest on the Principal Amount due
under the Mezzanine Note at a rate in excess of the Maximum Legal Rate, then the
LIBOR Rate or the Default Rate, as the case may be, shall be deemed to be
immediately reduced to the Maximum Legal Rate and all previous payments in
excess of the Maximum Legal Rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due under the
Mezzanine Note. All sums paid or agreed to be paid to Mezzanine Lender for the
use, forbearance, or detention of the sums due under the Loan, shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of the Loan until payment in full so that
the rate or amount of interest on account of the Loan does not exceed the
Maximum Legal Rate of interest from time to time in effect and applicable to the
Loan for so long as the Loan is outstanding.
SECTION 2.3 PREPAYMENTS. No prepayments of the Indebtedness shall be
permitted except as set forth in Section 2.3.1 hereof and Section 4 of the
Mezzanine Note.
2.3.1 MANDATORY PREPAYMENT.
(a) Except as described in Section 2.3.1(b) below and subject
to Article VIII herein and Section 2.3.4 and Section 2.3.5 of the Loan Agreement
(Mortgage), Mezzanine Borrower shall repay the Mezzanine Note, in full, together
with the Prepayment Fee (if applicable) in accordance with Section 4(b) (if
applicable) of the Mezzanine Note upon the occurrence of any of the following
events:
(i) if any Property is Transferred;
(ii) if all or any portion of the Mortgage Borrower's
interest in the Property is Transferred;
(iii) if all or any portion of the Mezzanine Borrower's
interest in the Mortgage Borrower is Transferred;
(iv) if a Transfer or series of Transfers of any direct
or indirect ownership interests in the Mezzanine Borrower or the Property
shall occur which either individually or in the aggregate with all such
Transfers violates the requirements of Article VIII; or
(v) if the Loan (Mortgage) is repaid, refinanced or
defeased in full.
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(b) If there shall occur a casualty or Taking in respect of
the Property and as a result thereof the Loan (Mortgage) is prepaid in whole or
in part, then, to the extent that there shall be excess proceeds or awards
available following the application of the proceeds or awards to reconstruct or
repair the Property or to the payment of all or any portion of the Loan
(Mortgage) pursuant to the terms of the Loan Documents (Mortgage) (EXCESS
PROCEEDS), Mezzanine Borrower shall repay the Mezzanine Note, or a portion
thereof, in the amount of such available Excess Proceeds. All Excess Proceeds
shall be deposited directly into the First Mezzanine Account.
2.3.2 PREPAYMENTS AFTER EVENT OF DEFAULT. If, following an
Event of Default, Mezzanine Lender shall accelerate the Indebtedness and
Mezzanine Borrower thereafter tenders payment of all or any part of the
Indebtedness, or if all or any portion of the Indebtedness is recovered by
Mezzanine Lender after such Event of Default, (a) such payment may be made only
on the next occurring Payment Date together with all unpaid interest thereon as
calculated through the end of the Interest Period during which such Payment Date
occurs (even if such period extends beyond such Payment Date and calculated as
if such payment had not been made on such Payment Date), and all other fees and
sums payable hereunder or under the Loan Documents (First Mezzanine), including
without limitation, interest that has accrued at the Default Rate and any Late
Payment Charges), (b) such payment shall be deemed a voluntary prepayment by
Mezzanine Borrower, and (c) Mezzanine Borrower shall pay, in addition to the
Indebtedness, an amount equal to the Prepayment Fee.
2.3.3 RELEASE OF COLLATERAL. Mezzanine Lender shall, upon the
written request and at the reasonable expense of Mezzanine Borrower, upon
payment in full of the Principal Amount and interest on the Loan and all other
amounts due and payable under the Loan Documents (First Mezzanine) in accordance
with the terms and provisions of the Mezzanine Note and this Agreement, release
the Lien of (i) this Agreement upon the Account Collateral (First Mezzanine) and
the Rate Cap Collateral (First Mezzanine) and (ii) the Pledge on the Collateral
or assign it, in whole or in part, to a new lender. In such event, Mezzanine
Borrower shall submit to Mezzanine Lender, on a date prior to the date of such
release or assignment sufficient to provide a reasonable period for review
thereof, a release of lien or assignment of lien, as applicable, for such
Collateral for execution by Mezzanine Lender. Such release or assignment, as
applicable, shall be in a form satisfactory to Mezzanine Lender in its
reasonable discretion. In addition, Mezzanine Borrower shall provide all other
documentation Mezzanine Lender reasonably requires to be delivered by Mezzanine
Borrower in connection with such release or assignment, as applicable.
2.3.4 RELEASE OF INDIVIDUAL PROPERTIES. On one or more
occasions, subject to satisfaction of each of the conditions set forth in
paragraphs (a) through (f) below, Mezzanine Borrower shall be permitted to
prepay a portion of the Loan and to cause Mortgage Borrower to defease a portion
of the Mortgage Loan and to obtain the release of any Property or Properties
from the Lien of the Security Instrument thereon and related Loan Documents
(Mortgage) pursuant to and in accordance with Section 2.3.4 of the Loan
Agreement (Mortgage), provided:
(a) (i) Mezzanine Borrower shall have paid the greater of (1)
the Release Amount for the applicable Property or Properties being released and
(2) the amount
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required to satisfy the conditions under Section 2.3.4(c) and (e) (together with
the Prepayment Fee, if applicable) for such Property or Properties in connection
with such prepayment of the Mezzanine Loan, (ii) Mortgage Borrower shall have
defeased the Mortgage Loan and each Junior Mezzanine Borrower shall have prepaid
each of the Junior Mezzanine Loans by the applicable "release amount" that is
required to be repaid with respect to the Mortgage Loan and each of the Junior
Mezzanine Loans pursuant to the Loan Agreement (Mortgage) and the Junior
Mezzanine Loan Agreements in connection with the transfer of the applicable
individual Property or Properties in connection with such prepayment.
(b) Mezzanine Borrower shall submit to Mezzanine Lender not
less than fifteen (15) days prior notice to Mezzanine Lender of such prepayment;
(c) After giving effect to such release (and to any voluntary
prepayment of principal that Mortgage Borrower, Mezzanine Borrower, and/or
Junior Mezzanine Borrower may elect to make in excess of the Release Amount in
order to satisfy the standard described in this Section 2.3.4(c)), the DSCR as
of the date of the proposed release (which must be a Business Day), for all of
the Properties then remaining subject to the Liens of the Security Instrument
shall not be less than the greater of (A) the Closing Date DSCR and (B) the DSCR
for the Properties subject to the Lien of the Security Instrument immediately
prior to the release in question.
(d) No Event of Default shall exist on the date the prepayment
is made.
(e) Provided the DSCR after giving effect to the release is
not less than the DSCR immediately prior to release, Borrower shall not be
obligated to prepay the Loan by more than the product of (x) 100% of the net
sales proceeds received from a bona-fide third party purchaser in connection
with a sale and a permitted release of an individual Property or group of
Properties in order to satisfy the requirements of Section 2.3.4(c) and (y) the
Applicable Principal Balance Ratio. Notwithstanding the foregoing, in no event
shall the principal amount of the Loan prepaid be less than the applicable
Release Amount with respect to an individual Property or group of Properties, as
applicable.
2.3.5 RELEASE OF CLAREMONT PROPERTY. From and after the
Closing Date, and subject to satisfaction of each of the conditions set forth in
paragraphs (a) and (b) below, and in addition to Borrower's option to defease
the principal amounts allocated to the Claremont Property in accordance with
Section 2.3.4 of the Loan Agreement (Mortgage), Mezzanine Borrower may cause
Mortgage Borrower to obtain (i) the release of the Claremont Property from the
Lien of the Security Instrument thereon and related Loan Documents (Mortgage),
(ii) the release of the obligations of the Claremont Borrower under the Loan
Documents (Mortgage) (except with respect to any obligations or liabilities that
relate solely to the Claremont Property and which pursuant to the terms of the
Loan Documents (Mortgage) are expressly stated to survive any such release or
payment of the Loan) and (iii) the remittance to Mortgage Borrower of any
amounts held in any Collateral Accounts specifically relating to, or otherwise
equitably allocable to, the Claremont Property:
(a) Mortgage Borrower shall have paid the Yield Maintenance
Premium (as defined in the Loan Agreement (Mortgage) to Mortgage Lender for the
Claremont
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Property in connection with the prepayment of the Mortgage Loan, (ii) Mezzanine
Borrower shall have paid to Mezzanine Lender the Release Amount applicable to
the Claremont Property (in which case the Prepayment Fee shall be inapplicable
to such repayment), and (iii) each of the other Mezzanine Borrowers shall have
paid to each other Mezzanine Lender the applicable "release amount" that is
required to be repaid with respect to a release of the Claremont Property.
(b) Mezzanine Borrower shall submit to Mezzanine Lender not
less than fifteen (15) days prior to the date of such release (which must be on
a Business Day) a copy of the Release Instruments (as defined in the Loan
Agreement (Mortgage) together with an Officer's Certificate certifying that (i)
the Release Instruments are in compliance with all Legal Requirements, (ii) the
release to be effected will not violate the terms of this Agreement or the Loan
Agreement (Mortgage), (iii) the release to be effected will not impair or
otherwise adversely affect the Lien of the Security Instrument, the security
interests and other rights of Mortgage Lender under the Loan Documents
(Mortgage) not being released (or as to the parties to the Loan Documents
(Mortgage) and Properties subject to the Loan Documents (Mortgage) not being
released), (iv) Mortgage Borrower General Partner has withdrawn and been
replaced as the general partner of the Claremont Borrower.
SECTION 2.4 REGULATORY CHANGE; TAXES.
2.4.1 INCREASED COSTS. If, as a result of any Regulatory
Change or compliance of Mezzanine Lender therewith, the basis of taxation of
payments to Mezzanine Lender or any company Controlling Mezzanine Lender of the
principal of or interest on the Loan is changed or Mezzanine Lender or the
company Controlling Mezzanine Lender shall be subject to (i) any tax, duty,
charge or withholding of any kind with respect to this Agreement (excluding
federal taxation of the overall net income of Mezzanine Lender or the company
Controlling Mezzanine Lender); or (ii) any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities, of Mezzanine Lender or any company
Controlling Mezzanine Lender is imposed, modified or deemed applicable; or (iii)
any other condition affecting loans to borrowers subject to LIBOR-based interest
rates is imposed on Mezzanine Lender or any company Controlling Mezzanine Lender
and Mezzanine Lender determines that, by reason thereof, the cost to Mezzanine
Lender or any company Controlling Mezzanine Lender of making, maintaining or
extending the Loan to Mezzanine Borrower is increased, or any amount receivable
by Mezzanine Lender or any company Controlling Mezzanine Lender hereunder in
respect of any portion of the Loan to Mezzanine Borrower is reduced, in each
case by an amount deemed by Mezzanine Lender in good faith to be material (such
increases in cost and reductions in amounts receivable being herein called
INCREASED COSTS), then Mezzanine Lender shall provide notice thereof to
Mezzanine Borrower and Mezzanine Borrower agrees that it will pay to Mezzanine
Lender upon Mezzanine Lender's written request such additional amount or amounts
as will compensate Mezzanine Lender or any company Controlling Mezzanine Lender
for such Increased Costs to the extent Mezzanine Lender determines that such
Increased Costs are allocable to the Loan and provided that Mezzanine Lender is
generally exercising rights similar to those set forth in this Section 2.4.1
against other borrowers similarly situated to Mezzanine Borrower. Mezzanine
Lender will notify Mezzanine Borrower of any event occurring after the date
hereof which will entitle Mezzanine Lender to compensation pursuant to this
Section 2.4.1 as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation;
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provided, however, that, if Mezzanine Lender fails to deliver a notice within 90
days after the date on which an officer of Mezzanine Lender responsible for
overseeing this Agreement knows or has reason to know of its right to additional
compensation under this Section 2.4.1, Mezzanine Lender shall only be entitled
to additional compensation for any such Increased Costs incurred from and after
the date that is 90 days prior to the date Mezzanine Borrower received such
notice. If Mezzanine Lender requests compensation under this Section 2.4.1,
Mezzanine Borrower may, by notice to Mezzanine Lender, require that Mezzanine
Lender furnish to Mezzanine Borrower a statement setting forth the basis for
requesting such compensation and the method for determining the amount thereof,
and a description as to why Section 2.4.1 is not applicable.
2.4.2 SPECIAL TAXES. Mezzanine Borrower shall make all
payments hereunder free and clear of and without deduction for Special Taxes. If
Mezzanine Borrower shall be required by law to deduct any Special Taxes from or
in respect of any sum payable hereunder or under any other Loan Document (First
Mezzanine) to Mezzanine Lender, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.4.2) Mezzanine Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Mezzanine Borrower shall make such deductions, and
(iii) Mezzanine Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
2.4.3 OTHER TAXES. In addition, Mezzanine Borrower agrees to
pay any present or future stamp or documentary taxes or other excise or property
taxes, charges, or similar levies which arise from any payment made hereunder,
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement, the other Loan Documents (First Mezzanine), or the Loan
(hereinafter referred to as OTHER TAXES).
2.4.4 INDEMNITY. Mezzanine Borrower shall indemnify Mezzanine
Lender for the full amount of Special Taxes and Other Taxes (including any
Special Taxes or Other Taxes imposed by any Governmental Authority on amounts
payable under this Section 2.4.4) paid by Mezzanine Lender and any liability
(including penalties, interest, and expenses) arising therefrom or with respect
thereto, whether or not such Special Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within thirty (30) days
after the date Mezzanine Lender makes written demand therefor.
2.4.5 CHANGE OF OFFICE. To the extent that changing the
jurisdiction of Mezzanine Lender's applicable office would have the effect of
minimizing Special Taxes, Other Taxes or Increased Costs, Mezzanine Lender shall
use reasonable efforts to make such a change, provided that same would not
otherwise be disadvantageous to Mezzanine Lender.
2.4.6 SURVIVAL. Without prejudice to the survival of any other
agreement of Mezzanine Borrower hereunder, the agreements and obligations of
Mezzanine Borrower contained in this Section 2.4 shall survive the payment in
full of principal and interest hereunder, and the termination of this Agreement.
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SECTION 2.5 CONDITIONS PRECEDENT TO CLOSING.
The obligation of Mezzanine Lender to make the Loan hereunder is
subject to the fulfillment by, or on behalf of, Mezzanine Borrower or waiver by
Mezzanine Lender of the following conditions precedent no later than the Closing
Date; provided, however, that unless a condition precedent shall expressly
survive the Closing Date pursuant to a separate agreement, by funding the Loan,
Mezzanine Lender shall be deemed to have waived any such conditions not
theretofore fulfilled or satisfied:
2.5.1 REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH
CONDITIONS.
(a) The representations and warranties of Mezzanine Borrower
contained in this Agreement and the other Loan Documents (First Mezzanine) shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as if made on and as of such date, and no Default or Event of
Default shall have occurred and be continuing; and Mezzanine 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 (First Mezzanine) on its part
to be observed or performed; and
(b) The representations and warranties of Mortgage Borrower
contained in the Loan Agreement (Mortgage) and the other Loan Documents
(Mortgage) shall be true and correct in all material respects on and as of the
Closing Date with the same effect as if made on and as of such date, and no
Mortgage Default or Mortgage Event of Default shall have occurred and be
continuing; and Mortgage Borrower and Guarantor shall be in compliance in all
material respects with all terms and conditions set forth in the Loan Agreement
(Mortgage) and in each other Loan Document (Mortgage) on its part to be observed
or performed.
2.5.2 DELIVERY OF LOAN DOCUMENTS (FIRST MEZZANINE); TITLE
POLICY; REPORTS; LEASES.
(a) LOAN DOCUMENTS (FIRST MEZZANINE). Mezzanine Lender shall
have received an original copy of this Agreement, the Mezzanine Note and all of
the other Loan Documents (First Mezzanine), in each case, duly executed (and to
the extent required, acknowledged) and delivered on behalf of Mezzanine Borrower
and any other parties thereto.
(b) CERTIFICATES. Mezzanine Lender shall have received
originals of the Certificates together with a partnership and membership power
(as applicable) endorsed in blank.
(c) UCC FINANCING STATEMENTS. Mezzanine Lender shall have
received evidence that the UCC financing statements relating to the Pledge and
this Agreement have been delivered for filing in the applicable jurisdictions.
(d) INTEREST RATE CAP AGREEMENT (FIRST MEZZANINE). Mezzanine
Lender shall have received the original Interest Rate Cap Agreement (First
Mezzanine) which shall be in form and substance satisfactory to Mezzanine Lender
and a counterpart of the Acknowledgment executed and delivered by the
Counterparty.
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(e) ACCOUNT AGREEMENT (FIRST MEZZANINE). Mezzanine Lender
shall have received the original of the Account Agreement (First Mezzanine)
executed by each of Cash Management Bank (First Mezzanine) and Mezzanine
Borrower.
(f) TITLE INSURANCE.
(i) Mezzanine Lender shall have received a copy of the
Title Policy (Mortgage) or a marked-up and signed commitment having the
force and effect of a title policy, marked "paid" by an authorized
representatives of the Title Company) issued by the Title Company with
respect to the Loan (Mortgage) and dated as of the Closing Date, together
with a copy of the mezzanine loan endorsement to the owner's title
insurance policy obtained by Mortgage Borrower, in favor of Mezzanine
Lender, its successors and assigns, dated as of the Closing Date, and
reinsurance and direct access agreements in form and substance acceptable
to Mezzanine Lender. Mezzanine Lender shall also have received evidence
that all premiums in respect of the Title Policy (Mortgage) have been
paid; and
(ii) Mezzanine Lender shall have received an "Eagle 9"
title policy in favor of Mezzanine Lender, its successors and assigns,
dated as of the Closing Date. Mezzanine Lender also shall have received
evidence that all premiums in respect of the "Eagle 9" title policy have
been paid.
(g) SURVEY. Mezzanine Lender shall have received a current or
recertified Survey for the Property, containing the survey certification
required by the Loan Agreement (Mortgage).
(h) INSURANCE. Mezzanine Lender shall have received valid
certificates of insurance for the policies of insurance required by the Loan
Agreement (Mortgage) naming Mezzanine Lender as an additional insured and
containing a cross liability/severability endorsement, satisfactory to Mezzanine
Lender in its reasonable discretion, and evidence of the payment of all
insurance premiums currently due and payable for the existing policy period.
(i) ENVIRONMENTAL REPORTS. Mezzanine Lender shall have
received an Environmental Report in respect of the Property satisfactory to
Mezzanine Lender.
(j) ZONING. Mezzanine Lender shall have received a copy of the
ALTA 3.1 zoning endorsement (except for the Doral Property for which Mezzanine
Lender shall receive after the date hereof a planning and zoning report) for the
Title Policy (Mortgage).
(k) CERTIFICATE OF OCCUPANCY. Mezzanine Lender shall have
received a copy of the valid certificates of occupancy for the Property
acceptable to Mezzanine Lender or, with respect to all or certain portions of
the Property, evidence satisfactory to Mezzanine Lender that no such
certificates are required.
(l) ENCUMBRANCES. Mezzanine Borrower shall have taken or
caused to be taken such actions in such a manner so that Mezzanine Lender has a
valid and perfected first Lien as of the Closing Date on the Collateral and
Mezzanine Lender shall have received satisfactory evidence thereof.
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(m) INTENTIONALLY DELETED.
(n) ASSIGNMENT OF MANAGEMENT AGREEMENT. Mezzanine Lender shall
have received the original of each Assignment of Management Agreement (First
Mezzanine) executed by each of Mezzanine Borrower and each Manager.
(o) PLEDGE ACKNOWLEDGMENTS. Mezzanine Lender shall have
received an original of the Acknowledgment in the form of EXHIBIT B executed by
each entity the ownership interests of which have been pledged to Mezzanine
Lender as Collateral for the Loan pursuant to the Pledge.
2.5.3 RELATED DOCUMENTS. Each additional 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 Mezzanine Lender shall have received and approved certified copies
thereof.
2.5.4 DELIVERY OF ORGANIZATIONAL DOCUMENTS. On or before the
Closing Date, Mezzanine Borrower shall deliver, or cause to be delivered, to
Mezzanine Lender copies certified by an Officer's Certificate, of all
organizational documentation related to Mortgage Borrower, Affiliate Tenant,
Mezzanine Borrower, Guarantor, General Partner, Borrower Parents, and certain of
their Affiliates as have been requested by Mezzanine Lender and/or the
formation, structure, existence, good standing and/or qualification to do
business of Mortgage Borrower, Affiliate Tenant, Mezzanine Borrower, Guarantor,
Borrower Parents, Borrower Subsidiary, and such Affiliates, as Mezzanine 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 as may be requested by Mezzanine Lender. Each of the organizational
documents of any Single Purpose Entity shall contain provisions having a
substantive effect materially similar to that of the language set forth in
EXHIBIT C. Mezzanine Lender hereby approves the organizational documents
delivered to Mezzanine Borrower pursuant to this Section 2.5.4.
2.5.5 OPINIONS OF MEZZANINE BORROWER'S COUNSEL.
(a) Mezzanine Lender shall have received a Non-Consolidation
Opinion substantially in compliance with the requirements set forth in EXHIBIT E
or in such other form approved by the Mezzanine Lender (the NON-CONSOLIDATION
OPINION).
(b) Mezzanine Lender shall have received the Opinion of
Counsel substantially in compliance with the requirements set forth in EXHIBIT D
or in such other form approved by the Mezzanine Lender.
(c) Mezzanine Lender shall have received from Counterparty the
Counterparty Opinion substantially in compliance with the requirements set forth
in EXHIBIT F or in such other form reasonably approved by the Mezzanine Lender.
2.5.6 BUDGETS. Mezzanine Lender shall have received the Budget
for the Fiscal Year ending on December 31, 2005.
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2.5.7 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 (First Mezzanine) and
all documents incidental thereto shall be satisfactory in form and substance to
Mezzanine Lender, and Mezzanine Lender shall have received all such counterpart
originals or certified copies of such documents as Mezzanine Lender may
reasonably request.
2.5.8 INDEPENDENT DIRECTOR CERTIFICATE. Mezzanine Lender shall
have received an executed Independent Director certificate substantially in the
form attached as Exhibit O.
2.5.9 MATERIAL ADVERSE EFFECT. No event or condition shall
have occurred since the date of Mortgage Borrower's and Mezzanine Borrower's
most recent financial statements previously delivered to Mezzanine Lender which
has or could reasonably be expected to have a Material Adverse Effect. The
Operating Income and Operating Expenses of the Property, and all other features
of the transaction shall be as represented to Mezzanine Lender without material
adverse change. None of Mezzanine Borrower, Junior Mezzanine Borrower, Mortgage
Borrower, Guarantor nor any of their constituent Persons shall be the subject of
any bankruptcy, reorganization, or insolvency proceeding.
2.5.10 LEASES AND RENT ROLL. Mezzanine Lender shall have
received copies of all Material Leases, certified as requested by Mezzanine
Lender. Mezzanine Lender shall have received a certified rent roll of the
Property dated within thirty (30) days prior to the Closing Date.
2.5.11 RESERVED.
2.5.12 TAX LOT. Mezzanine Lender shall have received evidence
that the Property constitutes one (1) or more separate tax lots, which evidence
shall be reasonably satisfactory in form and substance to Mezzanine Lender.
2.5.13 PHYSICAL CONDITIONS REPORT. Mezzanine Lender shall have
received a Physical Conditions Report (or re-certified Physical Conditions
Report) with respect to the Property, which report shall be satisfactory in form
and substance to Mezzanine Lender.
2.5.14 MANAGEMENT AGREEMENT. Mezzanine Lender shall have
received a certified copy of the Management Agreement which shall be
satisfactory in form and substance to Mezzanine Lender.
2.5.15 APPRAISAL. Mezzanine Lender shall have received an
appraisal of the Property, which shall be satisfactory in form and substance to
Mezzanine Lender.
2.5.16 FINANCIAL STATEMENTS. Mezzanine Lender shall have
received certified copies of financial statements with respect to the Property
for the three most recent Fiscal Years, each in form and substance satisfactory
to Mezzanine Lender.
2.5.17 TRANSACTION COSTS. Mezzanine Borrower shall have paid
or reimbursed Mezzanine Lender for all title insurance (or "Eagle 9") premiums,
filing fees, costs of
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reports, appraisals, reasonable fees and costs of Mezzanine Lender's counsel,
and all other third party out-of-pocket expenses incurred in connection with the
origination of the Loan.
2.5.18 FURTHER DOCUMENTS. Mezzanine Lender or its counsel
shall have received such other and further approvals, opinions, documents and
information as Mezzanine Lender or its counsel may have reasonably requested
including the Loan Documents (First Mezzanine) in form and substance
satisfactory to Mezzanine Lender and its counsel.
III. CASH MANAGEMENT
SECTION 3.1 CASH MANAGEMENT.
3.1.1 ESTABLISHMENT OF ACCOUNT. Mezzanine Borrower hereby
confirms that, simultaneously with the execution of this Agreement, pursuant to
the Account Agreement (First Mezzanine), it has established with Cash Management
Bank (First Mezzanine), in the name of Mezzanine Borrower for the benefit of
Mezzanine Lender, as secured party, one (1) segregated account (the FIRST
MEZZANINE ACCOUNT), which has been established as a securities account. The
First Mezzanine Account and the funds deposited therein and securities and other
assets credited thereto shall serve as additional security for the Loan.
Pursuant to the Account Agreement (First Mezzanine), Mezzanine Borrower shall
irrevocably instruct and authorize Cash Management Bank (First Mezzanine) to
disregard any and all orders for withdrawal from the First Mezzanine Account
made by, or at the direction of, Mezzanine Borrower. Mezzanine Borrower agrees
that, prior to the payment in full of the Indebtedness, the terms and conditions
of the Account Agreement (First Mezzanine) shall not be amended or modified
without the prior written consent of Mezzanine Lender (which consent Mezzanine
Lender may grant or withhold in its sole discretion). In recognition of
Mezzanine Lender's security interest in the funds deposited into the First
Mezzanine Account, Mezzanine Borrower shall identify the First Mezzanine Account
with the name of Mezzanine Lender, as secured party. The First Mezzanine Account
shall be named as follows: "CNL Resort Senior Mezz, LP f/b/o German American
Capital Corporation, as secured party, First Mezzanine Account" (Account Number
1014253513). Mezzanine Borrower confirms that it has established with Cash
Management Bank (First Mezzanine) a sub-account for the retention of Account
Collateral (First Mezzanine) in respect of Debt Service (First Mezzanine) on the
Loan with the account number 1014253513FS2 (the MEZZANINE DEBT SERVICE RESERVE
ACCOUNT) (the SUB-ACCOUNT and, together with the First Mezzanine Account, the
COLLATERAL ACCOUNTS (FIRST MEZZANINE)), which (i) may be a ledger or book entry
sub-account and need not be an actual sub-account, (ii) shall be linked to the
First Mezzanine Account, (iii) shall be a "Securities Account" pursuant to
Article 8 of the UCC, and (iv) shall be an Eligible Account to which certain
funds shall be allocated and from which disbursements shall be made pursuant to
the terms of this Agreement.
3.1.2 PLEDGE OF ACCOUNT COLLATERAL (FIRST MEZZANINE). To
secure the full and punctual payment and performance of the Obligations (First
Mezzanine), Mezzanine Borrower hereby collaterally assigns, grants a security
interest in and pledges to Mezzanine Lender, to the extent not prohibited by
applicable law, a first priority continuing security interest in and to the
following property of Mezzanine Borrower, whether now owned or existing or
hereafter acquired or arising and regardless of where located (all of the same,
collectively, the ACCOUNT COLLATERAL (FIRST Mezzanine)):
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(a) any and all Excess Cash Flow from time to time available
in the Holding Account and required, by the terms of the Loan Agreement
(Mortgage) as now in effect or amended with the consent of Mezzanine Lender, to
be deposited by the Mortgage Lender or the Cash Management Bank (Mortgage) into
the First Mezzanine Account;
(b) the Collateral Accounts (First Mezzanine) and all cash,
checks, drafts, securities entitlements, certificates, instruments and other
property, including, without limitation, all deposits and/or wire transfers from
time to time deposited or held in, credited to or made to Collateral Accounts
(First Mezzanine);
(c) any and all amounts invested in Permitted Investments;
(d) all interest, dividends, cash, instruments, securities
entitlements and other property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any or all of the foregoing
or purchased with funds from the Collateral Accounts (First Mezzanine); and
(e) to the extent not covered by clauses (a), (b), (c) or (d)
above, all proceeds (as defined under the UCC) of any or all of the foregoing.
In addition to the rights and remedies herein set forth, Mezzanine
Lender shall have all of the rights and remedies with respect to the Account
Collateral (First Mezzanine) available to a secured party at law or in equity,
including, without limitation, the rights of a secured party under the UCC, as
if such rights and remedies were fully set forth herein.
This Agreement shall constitute a security agreement for purposes of
the Uniform Commercial Code and other applicable law.
3.1.3 MAINTENANCE OF COLLATERAL ACCOUNTS. Mezzanine Borrower
agrees that the First Mezzanine Account and the Sub-Accounts are and shall each
be maintained (i) as a "securities account" (as such term is defined in Section
8-501(a) of the UCC), (ii) in such a manner that Mezzanine Lender shall have
control (within the meaning of Section 8-106(d)(2) of the UCC) over the First
Mezzanine Account and any Sub-Account thereof, (iii) such that Mezzanine
Borrower, and Manager shall have no right of withdrawal from the First Mezzanine
Account or the Sub-Accounts and, except as provided herein, no Account
Collateral (First Mezzanine) shall be released to Mezzanine Borrower or Manager
from the First Mezzanine Account or the Sub-Accounts, (iv) in such a manner that
the Cash Management Bank shall agree to treat all property credited to the
Holding Account or the Sub Accounts as "financial assets" and (v) such that all
securities or other property underlying any financial assets credited to the
Accounts shall be registered in the name of Cash Management Bank, indorsed to
Cash Management Bank or in blank or credited to another securities account
maintained in the name of Cash Management Bank and in no case will any financial
asset credited to any of the Collateral Accounts be registered in the name of
Borrower, payable to the order of Borrower or specially indorsed to Borrower
except to the extent the foregoing have been specially indorsed to Cash
Management Bank or in blank. Without limiting the Mezzanine Borrower's
obligations under the immediately preceding sentence, Mezzanine Borrower shall
only establish and maintain the First Mezzanine Account with a financial
institution that has executed an agreement
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substantially in the form of the Account Agreement (First Mezzanine) or in such
other form acceptable to Mezzanine Lender in its sole discretion.
3.1.4 ELIGIBLE ACCOUNTS. The Collateral Accounts (First
Mezzanine) shall be Eligible Accounts. The Collateral Accounts (First Mezzanine)
shall be subject to such applicable laws, and such applicable regulations of the
Board of Governors of the Federal Reserve System and of any other banking or
governmental authority, as may now or hereafter be in effect. Income and
interest accruing on the Collateral Accounts (First Mezzanine) or any
investments held in such accounts shall be periodically added to the principal
amount of such account and shall be held, disbursed and applied in accordance
with the provisions of this Agreement and the Account Agreement (First
Mezzanine). Mezzanine Borrower shall be the beneficial owner of the Collateral
Accounts (First Mezzanine) for federal income tax purposes and shall report all
income on the Collateral Accounts (First Mezzanine).
3.1.5 DEPOSITS INTO SUB-ACCOUNTS. On the date hereof,
Mezzanine Borrower has deposited the following amounts into the Sub-Accounts:
(i) $0.00 into the Mezzanine Debt Service Reserve
Account.
3.1.6 MONTHLY FUNDING.
(a) Mezzanine Borrower hereby irrevocably authorizes Mezzanine
Lender to transfer (and pursuant to the Account Agreement (First Mezzanine)
shall irrevocably authorize Cash Management Bank (First Mezzanine) to execute
any corresponding instructions of Mezzanine Lender), and Mezzanine Lender shall
transfer (or cause Cash Management Bank to transfer pursuant to disbursement
instructions from Mezzanine Lender) to the Mezzanine Debt Service Reserve
Account, from the First Mezzanine Account by 11:00 am New York time on the first
(1st) calendar day of each calendar month (and if such day is not a Business Day
then on the immediately preceding Business Day) or as soon thereafter as there
shall be sufficient collected funds on deposit in the First Mezzanine Account,
and from time to time (but no less frequently than weekly thereafter) funds in
an amount equal to the sum of any Protective Advances which may have been
advanced by (and not previously reimbursed to) the Mezzanine Lender pursuant to
the terms of the Loan Documents (First Mezzanine) to cure any Default or Event
of Default, any Mortgage Default or Mortgage Event of Default, or to protect the
Collateral together with any interest payable on such amounts pursuant to the
Loan Documents (First Mezzanine), plus (x) the unpaid Debt Service (First
Mezzanine) for the next occurring Payment Date, plus (y) an amount equal to such
payments for any prior month(s), to the extent not previously paid, plus (z) an
amount equal to the amount, if any, deducted from the First Mezzanine Account in
any preceding month to pay any other amounts then due under the Loan Documents
(First Mezzanine) (other than any Debt Service (First Mezzanine)). Mezzanine
Borrower acknowledges that Mezzanine Lender shall not be required to make such
withdrawal and deposit until such time as Mezzanine Lender is able to calculate
the amount of the Debt Service (First Mezzanine) for the next occurring Payment
Date. As used herein, the term NET EXCESS CASH FLOW means the amount available
in the First Mezzanine Account after the transfers to the Mezzanine Debt Service
Reserve Account required under this Section 3.1.5 have been made and the term
NET EXCESS CASH FLOW COMMENCEMENT DATE shall mean the date such amounts have
been fully funded or reserved within the First Mezzanine Account in any given
calendar month.
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(b) If for any reason there will be insufficient amounts in
the Mezzanine Debt Service Reserve Account on any Payment Date to pay the Debt
Service (First Mezzanine) due on such Payment Date, Mezzanine Borrower shall
immediately deposit into the First Mezzanine Account an amount equal to the
shortfall of available funds in the Mezzanine Debt Service Reserve Account. Any
failure by Mezzanine Borrower to deposit the full amount required by the
preceding sentence shall constitute an Event of Default hereunder. If Mezzanine
Lender shall reasonably determine that there will be insufficient amounts in the
First Mezzanine Account to pay any Protective Advances as and when the same are
due and payable, Mezzanine Lender shall provide written notice of same to
Mezzanine Borrower setting forth the basis for such determination. Within five
(5) Business Days of receipt of said notice, Mezzanine Borrower shall deposit
into the First Mezzanine Account an amount equal to the shortfall of available
funds in the First Mezzanine Account. Any failure by Mezzanine Borrower to
deposit the full amount required by the preceding sentence within said five (5)
Business Day period shall constitute an Event of Default hereunder.
(c) Provided that (i) no Event of Default shall have occurred
and be continuing hereunder or under any of the other Loan Documents (First
Mezzanine), (ii) no Mortgage Event of Default shall have occurred and be
continuing, (iii) Mezzanine Borrower shall have delivered to Mezzanine Lender an
Officer's Certificate (which Mezzanine Borrower shall not be obligated to
deliver more frequently than once per calendar month) certifying that the
signatories know of no Event of Default or Mortgage Event of Default (as
applicable) that has occurred and is then outstanding hereunder or under any of
the other Loan Documents (First Mezzanine) or under any of the Loan Documents
(Mortgage), and (iv) Mezzanine Borrower shall have deposited into the First
Mezzanine Account all funds then required to have been so deposited, then
Mezzanine Lender shall transfer the Net Excess Cash Flow from the First
Mezzanine Account to (A) the Second Mezzanine Account, or (B) following the
repayment of the Second Mezzanine Loan, to the Third Mezzanine Account, or (C)
following the repayment of the Second Mezzanine Loan and the Third Mezzanine
Loan, to the Fourth Mezzanine Account, or (D) following the repayment of the
Second Mezzanine Loan, the Third Mezzanine Loan, and the Fourth Mezzanine Loan,
and provided that Fifth Mezzanine Lender shall have funded the Fifth Mezzanine
Loan on or before the Outside Date, to the Fifth Mezzanine Account, or (E)
following the repayment of the Second Mezzanine Loan, the Third Mezzanine Loan,
the Fourth Mezzanine Loan, and the Fifth Mezzanine Loan, to the Mezzanine
Borrower's Account.
(d) In the event that an Event of Default shall have occurred
and is then continuing, then, without notice from Mezzanine Lender, all Net
Excess Cash Flow shall be applied to reduce the outstanding Principal Amount of
the Mezzanine Note. At such time that the Event of Default shall no longer be
continuing and provided no other Event of Default shall have occurred and be
continuing under the Mortgage Loan or Mezzanine Loan, then all Net Excess Cash
Flow shall be distributed in accordance with the provision of subsection (c)
above.
(e) Mezzanine Lender (so long as Mezzanine Lender is not the
same entity as Mortgage Lender) agrees to deliver to Mortgage Lender a monthly
notice letter (the MEZZANINE LENDER MONTHLY DEBT SERVICE NOTICE LETTER) at least
five (5) Business Days prior to each Payment Date setting forth the Debt Service
(First Mezzanine) payable by Mezzanine Borrower on the first Payment Date
occurring after the date such notice is delivered.
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(f) Mezzanine Borrower hereby acknowledges that, pursuant to
Section 3.1.5 of the Loan Agreement (Mortgage), (i) to the extent the Mortgage
Lender has received notice from Mezzanine Lender that an Event of Default has
occurred and is continuing under the Loan Documents (First Mezzanine) (a
MEZZANINE LOAN DEFAULT NOTICE) and until such time as Mortgage Lender receives a
notice from Mezzanine Lender that such Event of Default is no longer continuing
(a MEZZANINE LOAN DEFAULT REVOCATION NOTICE), the Mortgage Borrower has
irrevocably directed that Excess Cash Flow is to be deposited directly into the
Mezzanine Account for application as provided in this Agreement (in lieu of
transferring such funds to such accounts of the Mortgage Borrower as the
Mortgage Borrower may have so directed if the Mortgage Lender had not received
such notice from Mezzanine Lender), (ii) to the extent Mortgage Lender has not
received a Mezzanine Loan default notice but has received a Second Mezzanine
Loan Default Notice and until such time as Mortgage Lender receives a Second
Mezzanine Loan Default Revocation Notice, Mortgage Borrower irrevocably directs
that all Excess Cash Flow be deposited directly into the Second Mezzanine
Account for application as provided in the Second Mezzanine Loan Agreement (in
lieu of transferring such funds to such accounts of Mortgage Borrower as
Mortgage Borrower may have so directed if Mortgage Lender had not received such
notice from Second Mezzanine Lender) and (iii) the directions described in the
preceding clauses (i) or (ii) shall not be changed or terminated without the
written consent of the Mezzanine Lender. Notwithstanding any provision herein to
the contrary, provided no Event of Default has occurred or is continuing, there
shall be disbursed to Mezzanine Borrower the Proceeds of a Condemnation or
Casualty remaining after payment of all amounts to which Mortgage Lender,
Mezzanine Lender and each Junior Mezzanine Lender is entitled. Mezzanine
Borrower agrees that Mezzanine Lender shall not be required to deliver to
Mortgage Lender a Mezzanine Loan Default Notice prior to the deposit of Proceeds
into the Mezzanine Account.
3.1.7 CASH MANAGEMENT BANK.
(a) For the purposes of this Agreement, the Cash Management
Bank (First Mezzanine) named herein shall be deemed to be an Approved Bank;
provided, however, that the term "Approved Bank" shall be applicable for all
other purposes and shall be applicable to any successor or assign of Cash
Management Bank (First Mezzanine). Mezzanine Lender shall have the right at
Mezzanine Borrower's sole cost and expense to replace the Cash Management Bank
(First Mezzanine) with a financial institution reasonably satisfactory to
Mezzanine Borrower in the event that (i) the Cash Management Bank (First
Mezzanine) fails, in any material respect, to comply with the Account Agreement
(First Mezzanine), (ii) the Cash Management Bank (First Mezzanine) named herein
is no longer the Cash Management Bank (First Mezzanine) or (iii) the Cash
Management Bank (First Mezzanine) is no longer an Approved Bank.
(b) During the term of the Loan, so long as no Event of
Default shall have occurred and is continuing, Mezzanine Borrower, at its sole
cost and expense, shall have the right to replace the Cash Management Bank
(First Mezzanine) with a financial institution that is an Approved Bank provided
such institution shall execute and deliver to Mezzanine Lender (with a copy to
Mortgage Lender) the Account Agreement (First Mezzanine) (and Mezzanine Lender
shall reasonably cooperate with Mezzanine Borrower in connection with such
transfer). Upon the occurrence and during the continuance of an Event of
Default, Mezzanine Lender shall
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have the right at Mezzanine Borrower's sole cost and expense to replace Cash
Management Bank at any time, without notice to Mezzanine Borrower. Mezzanine
Borrower shall cooperate with Mezzanine Lender in connection with the
appointment of any replacement Cash Management Bank and the execution by the
Cash Management Bank and the Mezzanine Borrower of an Account Agreement and
delivery of same to Mezzanine Lender.
(c) So long as no Event of Default shall have occurred and be
continuing, Mezzanine Borrower shall have the right at its sole cost and expense
to replace the Cash Management Bank (First Mezzanine) with a financial
institution that is an Approved Bank provided that such financial institution
and Mezzanine Borrower shall execute and deliver to Mezzanine Lender an Account
Agreement substantially similar to the Account Agreement (First Mezzanine)
executed as of the Closing Date.
3.1.8 MEZZANINE BORROWER'S ACCOUNT REPRESENTATIONS, WARRANTIES
AND COVENANTS. Mezzanine Borrower represents, warrants and covenants that:
(a) Pursuant to the Loan Agreement (Mortgage), Mortgage
Borrower has directed that, after Mortgage Lender receives notice of a Default
hereunder, all Excess Cash Flow is to be deposited into the First Mezzanine
Account;
(b) Neither Mortgage Borrower nor Mezzanine Borrower nor any
other Person will have any right, title or interest in or to any Excess Cash
Flow from and after the time at which the Mortgage Lender becomes obligated
under the Loan Agreement (Mortgage) to transfer such Excess Cash Flow to the
First Mezzanine Account, except any rights Mezzanine Borrower shall have to
allocations of such funds following the disbursement to Mezzanine Borrower of
any Net Excess Cash Flow as provided in Section 3.1.5(a);
(c) There are no accounts other than the Collateral Accounts,
the Manager Accounts, Collateral Accounts (First Mezzanine), and Collateral
Accounts (Junior Mezzanine), maintained by Mortgage Borrower, Mezzanine
Borrower, Junior Mezzanine Borrower, or any other Person with respect to the
collection of rents, revenues, proceeds or other income from the Property or for
the collection of Receipts, except for the Collection Account (as defined in the
Loan Agreement (Mortgage)), the Holding Account (as defined in the Loan
Agreement (Mortgage)) and the First Mezzanine Account and any accounts held by
Mezzanine Borrower, or Junior Mezzanine Borrower in which they are permitted to
receive transfers of Net Excess Cash Flow as provided in Section 3.1.5(c);
(d) Mezzanine Borrower shall cause Mortgage Borrower to
deposit or cause to be deposited all Distributions into the First Mezzanine
Account as required by the Pledge and this Agreement or any other Loan Document
(First Mezzanine); and
(e) so long as the Loan shall be outstanding, neither Mortgage
Borrower, Affiliate Tenant, Manager, Mezzanine Borrower, nor any of their
Affiliates shall open any other operating accounts with respect to the
collection of rents, revenues, proceeds or other income from the Property or for
the collection of Receipts.
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3.1.9 ACCOUNT COLLATERAL (FIRST MEZZANINE) AND REMEDIES.
(a) Upon the occurrence and during the continuance of an Event
of Default, without additional notice from Mezzanine Lender to Mezzanine
Borrower, (i) Mezzanine Lender may, in addition to and not in limitation of
Mezzanine Lender's other rights, make any and all withdrawals from, and
transfers between and among, the Collateral Accounts (First Mezzanine) as
Mezzanine Lender shall determine in its sole and absolute discretion to pay any
Obligations (First Mezzanine), Operating Expenses and/or Capital Expenditures
for the Property; (ii) all Excess Cash Flow shall be retained in the First
Mezzanine Account or applicable Sub-Accounts, (iii) all payments to the
Mezzanine Borrower's Account pursuant to Section 3.1.5 shall immediately cease
and (iv) Mezzanine Lender may liquidate and transfer any amounts then invested
in Permitted Investments to the Collateral Accounts (First Mezzanine) to which
they relate or reinvest such amounts in other Permitted Investments as Mezzanine
Lender may reasonably determine is necessary to perfect or protect any security
interest granted or purported to be granted hereby or to enable Mezzanine Lender
to exercise and enforce Mezzanine Lender's rights and remedies hereunder with
respect to any Account Collateral (First Mezzanine) or to preserve the value of
the Account Collateral (First Mezzanine).
(b) Upon the occurrence and during the continuance of an Event
of Default, Mezzanine Borrower hereby irrevocably constitutes and appoints
Mezzanine Lender as Mezzanine Borrower's true and lawful attorney-in-fact, with
full power of substitution, to execute, acknowledge and deliver any instruments
and to exercise and enforce every right, power, remedy, option and privilege of
Mezzanine Borrower with respect to the Account Collateral (First Mezzanine), and
do in the name, place and stead of Mezzanine Borrower, all such acts, things and
deeds for and on behalf of and in the name of Mezzanine Borrower, which
Mezzanine Borrower could or might do or which Mezzanine Lender may deem
necessary or desirable to more fully vest in Mezzanine Lender the rights and
remedies provided for herein and to accomplish the purposes of this Agreement.
The foregoing powers of attorney are irrevocable and coupled with an interest.
Upon the occurrence and during the continuance of an Event of Default, Mezzanine
Lender may perform or cause performance of any such agreement, and any
reasonable expenses of Mezzanine Lender incurred in connection therewith shall
be paid by Mezzanine Borrower as provided in Section 5.1.12.
(c) Mezzanine Borrower hereby expressly waives, to the fullest
extent permitted by law, presentment, demand, protest or any notice of any kind
(except as expressly required under the Loan Documents (First Mezzanine)) in
connection with this Agreement or the Account Collateral (First Mezzanine).
Mezzanine Borrower acknowledges and agrees that ten (10) Business Days' prior
written notice of the time and place of any public sale of the Account
Collateral (First Mezzanine) or any other intended disposition thereof shall be
reasonable and sufficient notice to Mezzanine Borrower within the meaning of the
UCC.
3.1.10 TRANSFERS AND OTHER LIENS. Mezzanine Borrower agrees
that it will not (i) sell or otherwise dispose of any of the Account Collateral
(First Mezzanine) except as may be expressly permitted under the Loan Documents
(First Mezzanine), or (ii) create or permit to exist any Lien upon or with
respect to all or any of the Account Collateral (First Mezzanine), except for
the Lien granted to Mezzanine Lender under this Agreement.
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3.1.11 REASONABLE CARE. Beyond the exercise of reasonable care
in the custody thereof, Mezzanine Lender shall have no duty as to any Account
Collateral (First Mezzanine) in its possession or control as agent therefor or
bailee thereof or any income thereon or the preservation of rights against any
person or otherwise with respect thereto. Mezzanine Lender shall be deemed to
have exercised reasonable care in the custody and preservation of the Account
Collateral (First Mezzanine) in its possession if the Account Collateral (First
Mezzanine) is accorded treatment substantially equal to that which Mezzanine
Lender accords its own property, it being understood that Mezzanine Lender shall
not be liable or responsible for any loss or damage to any of the Account
Collateral (First Mezzanine), or for any diminution in value thereof, by reason
of the act or omission of Mezzanine Lender, its Affiliates, agents, employees or
bailees, except to the extent that such loss or damage results from Mezzanine
Lender's gross negligence or willful misconduct. In no event shall Mezzanine
Lender be liable either directly or indirectly for losses or delays resulting
from any event which may be the basis of an Excusable Delay, computer
malfunctions, interruption of communication facilities, labor difficulties or
other causes beyond Mezzanine Lender's reasonable control or for indirect,
special or consequential damages except to the extent of Mezzanine Lender's
gross negligence or willful misconduct. Notwithstanding the foregoing, Mezzanine
Borrower acknowledges and agrees that (i) Mezzanine Lender does not have custody
of the Account Collateral (First Mezzanine), (ii) Cash Management Bank (First
Mezzanine) has custody of the Account Collateral (First Mezzanine), (iii) the
initial Cash Management Bank (First Mezzanine) was chosen by Mezzanine Borrower,
and (iv) Mezzanine Lender has no obligation or duty to supervise Cash Management
Bank (First Mezzanine) or to see to the safe custody of the Account Collateral
(First Mezzanine).
3.1.12 MEZZANINE LENDER'S LIABILITY.
(a) Mezzanine Lender shall be responsible for the performance
only of such duties with respect to the Account Collateral (First Mezzanine) as
are specifically set forth in this Section 3.1 or elsewhere in the Loan
Documents (First Mezzanine), and no other duty shall be implied from any
provision hereof. Mezzanine Lender shall not be under any obligation or duty to
perform any act with respect to the Account Collateral (First Mezzanine) which
would cause it to incur any expense or liability or to institute or defend any
suit in respect hereof, or to advance any of its own monies. Mezzanine Borrower
shall indemnify and hold Mezzanine Lender, its employees and officers harmless
from and against any loss, cost or damage (including, without limitation,
reasonable attorneys' fees and disbursements) incurred by Mezzanine Lender in
connection with the transactions contemplated hereby with respect to the Account
Collateral (First Mezzanine) (excluding losses on Permitted Investments) except
as such may be caused by the gross negligence or willful misconduct of Mezzanine
Lender, its employees, officers or agents.
(b) Mezzanine Lender shall be protected in acting upon any
notice, resolution, request, consent, order, certificate, report, opinion, bond
or other paper, document or signature believed by it in good faith to be
genuine, and, in so acting, it may be assumed that any person purporting to give
any of the foregoing in connection with the provisions hereof has been duly
authorized to do so. Mezzanine Lender may consult with counsel, and the opinion
of such counsel shall be full and complete authorization and protection in
respect of any action taken or suffered by it hereunder and in good faith in
accordance therewith.
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3.1.13 CONTINUING SECURITY INTEREST. This Agreement shall
create a continuing security interest in the Account Collateral (First
Mezzanine) and shall remain in full force and effect until payment in full of
the Indebtedness; provided, however, such security interest shall automatically
terminate with respect to funds which were duly deposited into Mezzanine
Borrower's Account in accordance with the terms hereof. Upon payment in full of
the Indebtedness, this security interest shall automatically terminate without
further notice from any party and Mezzanine Borrower shall be entitled to the
return, upon its request, of such of the Account Collateral (First Mezzanine) as
shall not have been sold or otherwise applied pursuant to the terms hereof and
Mezzanine Lender shall execute such instruments and documents as may be
reasonably requested by Mezzanine Borrower to evidence such termination and the
release of the Account Collateral (First Mezzanine).
IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.1 MEZZANINE BORROWER REPRESENTATIONS.
Mezzanine Borrower represents and warrants as of the Closing Date
that:
4.1.1 ORGANIZATION. Each of Mortgage Borrower and Mezzanine
Borrower is a limited partnership and has been duly organized and is validly
existing and in good standing pursuant to the laws of the State of Delaware with
requisite power and authority to own its properties or the Collateral, as
applicable, and to transact the businesses in which it is now engaged. Each
General Partner is a limited liability company and has been duly organized and
is validly existing and in good standing pursuant to the laws of the State of
Delaware, with requisite power and authority to own its properties and to
transact the business in which it is now engaged. Guarantor is a corporation and
has been duly organized and is validly existing and in good standing pursuant to
the laws of the State of Maryland with requisite power and authority to own its
properties and to transact the businesses in which it is now engaged. Each
Affiliate Tenant is a corporation and has been duly organized and is validly
existing and in good standing pursuant to the laws of the State of Delaware,
with requisite power and authority to own its properties and to transact the
businesses in which it is now engaged. Each of Borrower, Borrower Parents, and
Guarantor is duly qualified to do business and is in good standing in each
jurisdiction where it is required to be so qualified in connection with its
properties, businesses and operations. Each of Mortgage Borrower, Mezzanine
Borrower, Borrower Parents, and Guarantor, and Affiliate Tenant 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 (provided, however, with respect to Guarantor only,
those rights, licenses, permits and authorizations that would cause a Material
Adverse Effect), and the sole business of Mezzanine Borrower is the ownership of
the Collateral. The organizational structure of Mortgage Borrower, Mezzanine
Borrower, Borrower Parents, and Borrower Subsidiary, Affiliate Tenant, Sole
Shareholder, and certain of their Affiliates is accurately depicted by the
schematic diagram attached hereto as EXHIBIT H. Mezzanine Borrower shall not
itself, and shall not permit Mortgage Borrower, Affiliate Tenant, Borrower
Subsidiary, or Borrower Parents, to, change its name, identity, corporate
structure or jurisdiction of organization unless it shall have given Mezzanine
Lender thirty (30) days prior written notice of any such change and shall have
taken all steps reasonably requested by Mezzanine Lender to
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grant, perfect, protect and/or preserve the security interest granted hereunder
to Mezzanine Lender.
4.1.2 PROCEEDINGS. Each of Mezzanine Borrower, Guarantor, and
Borrower Parents has full power to and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents (First Mezzanine). This Agreement and the other Loan
Documents (First Mezzanine) have been duly executed and delivered by, or on
behalf of, Mezzanine Borrower, Guarantor, Affiliate Tenant, and Borrower
Parents, as applicable, and constitute legal, valid and binding obligations of
Mezzanine Borrower, Guarantor, Affiliate Tenant, and Borrower Parents, as
applicable, enforceable against Mezzanine Borrower, Guarantor, Affiliate Tenant,
and Borrower Parents, as applicable, in accordance with their respective terms,
subject only to applicable bankruptcy, insolvency and similar laws affecting
rights of creditors generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
4.1.3 NO CONFLICTS. The execution, delivery and performance of
this Agreement and the other Loan Documents (First Mezzanine) by Mezzanine
Borrower, Guarantor, Affiliate Tenant, and Borrower Parents, as applicable, will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance (other than pursuant to the Loan Documents (First
Mezzanine)) upon any of the property or assets of Mezzanine Borrower, Guarantor,
Affiliate Tenant, and Borrower Parents pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement, partnership agreement or other
agreement or instrument to which Mezzanine Borrower, Guarantor, Affiliate
Tenant, and Borrower Parents is a party or by which any of Mezzanine Borrower's,
Guarantor's, Affiliate Tenant's, and Borrower Parents' property or assets is
subject (unless consents from all applicable parties thereto have been
obtained), nor will such action result in any violation of the provisions of any
statute or any order, rule or regulation of any Governmental Authority, and any
consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority required for the execution, delivery and
performance by Mezzanine Borrower, Guarantor, Affiliate Tenant, and Borrower
Parents of this Agreement or any other Loan Documents (First Mezzanine) has been
obtained and is in full force and effect.
4.1.4 LITIGATION. Except as set forth on SCHEDULE I attached
hereto, there are no arbitration proceedings, governmental investigations,
actions, suits or proceedings at law or in equity by or before any Governmental
Authority now pending or, to the Best of Mezzanine Borrower's Knowledge,
threatened against or affecting Mezzanine Borrower, Mortgage Borrower, Borrower
Subsidiary, Affiliate Tenant, or the Property (other than (i) personal injury
claims which are covered by insurance and have a claim amount of less than
$250,000 and (ii) arbitration proceedings, governmental investigations, actions,
suits or proceedings at law or in equity which have a claim amount of less than
(a) $250,000 with respect to any individual proceeding and (b) $500,000 in the
aggregate of all such proceedings). The actions, suits or proceedings identified
on SCHEDULE I which outcome, if determined against Mortgage Borrower, Mezzanine
Borrower, Affiliate Tenant, Borrower Subsidiary, Borrower Parents, or the
Property, would not have a Material Adverse Effect on any individual Property or
all of the Property. There are no arbitration proceedings, governmental
investigations, actions, suits or proceedings at law or in equity by or before
any Governmental Authority now pending or,
48
to the Best of Mezzanine Borrower's Knowledge, threatened against or affecting
Guarantor which, if determined against Guarantor would have a Material Adverse
Effect.
4.1.5 AGREEMENTS. None of Mezzanine Borrower, Mortgage
Borrower, Borrower Subsidiary, or Affiliate Tenant is a party to any agreement
or instrument or subject to any restriction which is reasonably likely to have a
Material Adverse Effect. None of Mezzanine Borrower, Borrower Subsidiary, or
Affiliate Tenant is in default in any respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party or by which Mezzanine Borrower,
Mortgage Borrower, Borrower Subsidiary, or Affiliate Tenant, or the Property is
bound, which default is reasonably likely to have a Material Adverse Effect.
None of Mezzanine Borrower, Mortgage Borrower, Borrower Subsidiary, or Affiliate
Tenant, has any material financial obligation (contingent or otherwise) under
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which Mezzanine Borrower, Mortgage Borrower, Borrower Subsidiary,
or Affiliate Tenant is a party or by which Mezzanine Borrower Mortgage Borrower,
Borrower Subsidiary, or Affiliate Tenant, or the Property is otherwise bound,
other than (a) obligations incurred in the ordinary course of the operation of
the Property, including membership programs disclosed in writing to Mezzanine
Lender on or prior to the date hereof, and (b) obligations under the Loan
Documents (First Mezzanine).
4.1.6 TITLE. Mezzanine Borrower owns the Collateral as of the
date hereof, subject to no rights of others, including any mortgages, leases,
conditional sales agreements, title retention agreements, liens or other
encumbrances, except for the Permitted Encumbrances.
4.1.7 NO BANKRUPTCY FILING. None of Mezzanine Borrower,
Mortgage Borrower, Borrower Subsidiary, Affiliate Tenant, Borrower Parents, Sole
Shareholder, or Guarantor 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 such entity's assets or property, and Mezzanine
Borrower has no knowledge of any Person contemplating the filing of any such
petition against it or against Mezzanine Borrower, Borrower Parents, Guarantor,
Mortgage Borrower, Borrower Subsidiary, Sole Shareholder or Affiliate Tenant.
4.1.8 FULL AND ACCURATE DISCLOSURE. To the Best of Mezzanine
Borrower's Knowledge, no statement of fact made by Mezzanine Borrower in this
Agreement or in any of the other Loan Documents (First Mezzanine) contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no fact presently known to Mezzanine Borrower which has not been disclosed
which has a Material Adverse Effect, or to the Best of Mezzanine Borrower's
Knowledge could reasonably be expected to have a Material Adverse Effect.
4.1.9 ERISA.
(a) Mezzanine Borrower does not maintain or contribute to and
is not required to contribute to, an "employee benefit plan" as defined by
Section 3(3) of ERISA, which is subject to Title IV of ERISA (other than a
"multiemployer plan" as defined by Section 3(37) of ERISA), and Mezzanine
Borrower (i) has no knowledge of any material liability which has
49
been incurred or is expected to be incurred by Mezzanine Borrower which is
reasonably likely to result in a Material Adverse Effect and is or remains
unsatisfied for any taxes or penalties or unfunded contributions with respect to
any "employee benefit plan" or any "plan," within the meaning of Section
4975(e)(1) of the Internal Revenue Code or any other benefit plan (other than a
"multiemployer plan") maintained, contributed to, or required to be contributed
to by Mezzanine Borrower or by any entity that is under common control with
Mezzanine Borrower within the meaning Section 4001(a)(14) of ERISA (each, an
ERISA AFFILIATE) (each, a PLAN) or any plan that would be a Plan but for the
fact that it is a multiemployer plan within the meaning of ERISA Section 3(37);
and (ii) has made and shall continue to make when due all required contributions
to all such Plans (other than Plans relating to ERISA Affiliates), if any, where
the failure to so contribute is reasonably likely to result in a Material
Adverse Effect. Each such Plan (other than Plans relating to ERISA Affiliates),
if any, has been and will be administered in material compliance with its terms
and the applicable provisions of ERISA, the Internal Revenue Code, and any other
applicable federal or state law; and no action shall be taken or fail to be
taken that would result in the disqualification or loss of tax-exempt status of
any such Plan intended to be qualified and/or tax exempt; and
(b) With respect to any "multiemployer plan," (i) Mezzanine
Borrower has not, since September 26, 1980, made or suffered a "complete
withdrawal" or a "partial withdrawal," as such terms are respectively defined in
Sections 4203 and 4205 of ERISA, (ii) Mezzanine Borrower has made and shall
continue to make when due all required contributions to all such "multiemployer
plans" and (iii) no ERISA Affiliate has, since September 26, 1980, made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203 and 4205 of ERISA which withdrawal is
reasonably expected to have a Material Adverse Effect.
(c) Mezzanine Borrower is not an employee benefit plan, as
defined in Section 3(3) of ERISA, whether or not subject to Title I of ERISA,
none of the assets of Mezzanine Borrower, Guarantor or Mortgage 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 and transactions by or with any of
Mezzanine Borrower and Mortgage Borrower are not subject to similar laws
regulating investment of, and fiduciary obligations with respect to, plans
similar to the provisions of Section 406 of ERISA or Section 4975 of the Code
currently in effect which prohibit or otherwise restrict the transactions
contemplated by this Agreement.
4.1.10 COMPLIANCE. Except as set forth on attached SCHEDULE
XII to the Loan Agreement (Mortgage), Mezzanine Borrower, Mortgage Borrower,
Borrower Parents, and the Property and the use thereof comply in all material
respects with all applicable Legal Requirements, including, without limitation,
building and zoning ordinances and codes except where the failure to so comply
is not reasonably expected to result in a Material Adverse Effect. None of the
matters set forth on said SCHEDULE XII would have a Material Adverse Effect on
any individual Property or all of the Property. To the Best of Mezzanine
Borrower's Knowledge, none of Mezzanine Borrower, Affiliate Tenant, Mortgage
Borrower, Borrower Subsidiary, or Borrower Parents is in default or in violation
of any order, writ, injunction, decree or demand of any Governmental Authority.
To the Best of Mezzanine Borrower's Knowledge, there has not been committed by
Mezzanine Borrower or Mortgage Borrower any act or omission affording the
federal government or any other Governmental Authority the right of forfeiture
as against the
50
Property, the Collateral or any part thereof or any monies paid in performance
of Mezzanine Borrower's obligations under any of the Loan Documents (First
Mezzanine).
4.1.11 FINANCIAL INFORMATION. To the Best of Mezzanine
Borrower's Knowledge, all financial data of Mezzanine Borrower and Mortgage
Borrower, including, without limitation, the statements of cash flow and income
and operating expense, that have been delivered by or on behalf of Mezzanine
Borrower or Mortgage Borrower to Mezzanine Lender in respect of the Property (i)
are true, complete and correct in all material respects, (ii) fairly represent
the financial condition of the Property, the Mezzanine Borrower and Mortgage
Borrower as of the date of such reports, and (iii) to the extent prepared or
audited by an independent certified public accounting firm, have been prepared
in accordance with GAAP throughout the periods covered, except as disclosed
therein. None of Mezzanine Borrower, Mortgage Borrower, Borrower Subsidiary,
Affiliate Tenant, or Borrower Parents has any material contingent liabilities,
liabilities for delinquent taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that are known
to Mezzanine Borrower and could reasonably be expected to have a Material
Adverse Effect, except as referred to or reflected in said financial statements
and operating statements. Since the date of such financial statements, there has
been no material adverse change in the financial condition, operations or
business of Mezzanine Borrower, Mortgage Borrower, Affiliate Tenant, Borrower
Subsidiary, or Borrower Parents from that set forth in said financial
statements.
4.1.12 ABSENCE OF UCC FINANCING STATEMENTS, ETC. Except with
respect to the Permitted Encumbrances, the Loan Documents (Mortgage), the Junior
Mezzanine Loan Documents, and the Loan Documents (First Mezzanine), there is no
financing statement, security agreement, chattel mortgage, real estate mortgage
or other document filed or recorded with any filing records, registry, or other
public office, that purports to cover, affect or give notice of any present or
possible future lien on, or security interest or security title in the interest
in the Property or any of the Collateral.
4.1.13 FEDERAL RESERVE REGULATIONS. None of the proceeds of
the Loan will be used for the purpose of purchasing or carrying any "margin
stock" as defined in Regulation U, Regulation X or Regulation T or for the
purpose of reducing or retiring any Indebtedness which was originally incurred
to purchase or carry "margin stock" or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of Regulation
U or Regulation X. As of the Closing Date, Mezzanine Borrower does not own any
"margin stock."
4.1.14 SETOFF, ETC. The Collateral and the rights of Mezzanine
Lender with respect to the Collateral are not subject to any setoff, claims,
withholdings or other defenses.
4.1.15 NOT A FOREIGN PERSON. None of Mezzanine Borrower,
Guarantor or Mortgage Borrower is a foreign person within the meaning of Section
1445(f)(3) of the Code.
4.1.16 ENFORCEABILITY. The Loan Documents (First Mezzanine)
are not subject to any existing right of rescission, set-off, counterclaim or
defense by Mezzanine Borrower or Guarantor, as applicable, including the defense
of usury, nor would the operation of
51
any of the terms of the Loan Documents (First Mezzanine), or the exercise of any
right thereunder, render the Loan Documents (First Mezzanine) unenforceable
(subject to applicable bankruptcy, insolvency and similar laws affecting rights
of creditors generally, and subject as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding in equity
or at law)), and neither Mezzanine Borrower nor Mortgage Borrower has asserted
any right of rescission, set-off, counterclaim or defense with respect thereto.
4.1.17 INSURANCE. Mezzanine Borrower has obtained and has
delivered to Mezzanine Lender certified copies or original certificates of all
insurance policies required under this Agreement, reflecting the insurance
coverages, amounts and other requirements set forth in this Agreement. Mezzanine
Borrower has not, and to the Best of Mezzanine Borrower's Knowledge no Person
has, done by act or omission anything which would impair the coverage of any
such policy.
4.1.18 PHYSICAL CONDITION. To the Best of Mezzanine Borrower's
Knowledge and except as expressly disclosed in the Physical Conditions Report,
the Property, including, without limitation, all buildings, Improvements,
parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems,
HVAC systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects; to
the Best of Mezzanine Borrower's Knowledge and except as disclosed in the
Physical Conditions Report, there exists no structural or other material defects
or damages in or to the Property, whether latent or otherwise, and Mezzanine
Borrower has not received any written notice from any insurance company or
bonding company of any defects or inadequacies in the Property, or any part
thereof, which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.
4.1.19 LEASES. The Property is not subject to any Material
Leases other than the Affiliate Leases and the Leases described in the certified
rent roll delivered in connection with the origination of the Loan. To the Best
of Mezzanine Borrower's Knowledge (which shall include consultation with
Manager), such certified rent roll is true, complete and correct in all material
respects as of the date set forth therein. Except as described in the Ground
Leases, no Person has any possessory interest in the Property or right to occupy
the same (other than typical short-term occupancy rights of hotel guests which
are not the subject of a written agreement) except under and pursuant to the
provisions of the Leases. To the Best of Mezzanine Borrower's Knowledge, the
current Leases are in full force and effect and there are no material defaults
thereunder by either party (other than as expressly disclosed on the certified
rent roll delivered to Mezzanine Lender or the Tenant estoppel certificates
delivered to Mezzanine Lender in connection with the closing of the Loan) and
there are no conditions that, with the passage of time or the giving of notice,
or both, would constitute material defaults thereunder. To the Best of Mezzanine
Borrower's Knowledge, all construction and other obligations of a material
nature to be performed by the Mortgage Borrower under the Leases have been
satisfied and) any required payments by Mortgage Borrower to the Tenants under
the Leases for tenant improvements have been made to the extent required to be
satisfied. To the Best of Mezzanine Borrower's Knowledge, no Tenant under any
Lease is entitled to any offsets, abatements, deductions against the Rent
payable under any Lease from and after the date hereof. To the best
52
of Borrower's Knowledge, the Rent has been paid current under the Leases. To the
best of Borrower's Knowledge, no Rent has been paid more than one (1) month in
advance of its due date, except as disclosed in the Tenant estoppel certificates
delivered to Mezzanine Lender in connection with the closing of the Loan. There
has been no prior sale, transfer or assignment, hypothecation or pledge by
Mortgage Borrower of Mortgage Borrower's interest in any Lease or of the Rents
received therein, which will be outstanding following the funding of the Loan,
other than those being assigned to Mortgage Lender concurrently herewith. No
Tenant or other Person under any Lease or other agreement has any right or
option pursuant to such Lease or other agreement or otherwise to purchase all or
any part of the Property.
4.1.20 SINGLE PURPOSE ENTITY/SEPARATENESS.
(a) Mezzanine Borrower hereby represents, warrants and
covenants that each of Mezzanine Borrower, Mortgage Borrower, Affiliate Tenant,
Borrower Parents, and Borrower Subsidiary is, and has been since the date of its
respective formation, a Single Purpose Entity.
(b) All of the assumptions made in the Non-Consolidation
Opinion, including, but not limited to, any exhibits attached thereto and any
certificates delivered by Mezzanine Borrower in connection with the issuance of
the Non-Consolidation Opinion, are true and correct in all respects and any
assumptions made in any subsequent non-consolidation opinion delivered in
connection with the Loan Documents (First Mezzanine) (an ADDITIONAL
NON-CONSOLIDATION OPINION), including, but not limited to, any exhibits attached
thereto, are true and correct in all material respects. Mezzanine Borrower,
Mortgage Borrower, Affiliate Tenant, Borrower Parents, and Borrower Subsidiary
have complied with all of the assumptions made with respect to it in the
Non-Consolidation Opinion. To the Best of Mezzanine Borrower's Knowledge, each
entity other than Mezzanine Borrower with respect to which an assumption shall
be made in any Additional Non-Consolidation Opinion will have complied and will
comply with all of the assumptions made with respect to it in any Additional
Non-Consolidation Opinion.
4.1.21 MANAGEMENT AGREEMENT. The Management Agreement is in
full force and effect and there is no default thereunder by any party thereto
and no event has occurred that, with the passage of time and/or the giving of
notice would constitute a default thereunder. The Manager is not an Affiliate of
Borrower.
4.1.22 COMPLIANCE WITH ANTI-TERRORISM, EMBARGO AND ANTI-MONEY
LAUNDERING LAWS. (i) None of Mezzanine Borrower, Guarantor or any Person who
owns any equity interest in or Controls Mezzanine Borrower or, to the Best of
Borrower's Knowledge, Guarantor, currently is identified on the OFAC List or
otherwise qualifies as a Prohibited Person, and Mezzanine Borrower has
implemented procedures to ensure that no Person who now or hereafter owns any
equity interest in Mezzanine Borrower or Guarantor is a Prohibited Person or
Controlled by a Prohibited Person, and (ii) none of Mezzanine Borrower or
Guarantor is in violation of any Legal Requirements relating to anti-money
laundering or anti-terrorism, including, without limitation, Legal Requirements
related to transacting business with Prohibited Persons or the requirements of
the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, U.S. Public Law 107-56, and the
related regulations issued thereunder, including temporary regulations, all as
amended from
53
time to time. To the Best of Mezzanine Borrower's Knowledge, no tenant at the
Premises currently is identified on the OFAC List or otherwise qualifies as a
Prohibited Person, and no tenant at the Premises is owned or Controlled by a
Prohibited Person. Mezzanine Borrower has determined that Manager has
implemented procedures, approved by Mezzanine Borrower to ensure that no tenant
at the Premises is a Prohibited Person or owned or Controlled by a Prohibited
Person.
4.1.23 TAX FILINGS. Mezzanine Borrower has filed (or has
obtained effective extensions for filing) all federal, state and local tax
returns required to be filed and has paid or made adequate provision for the
payment of all federal, state and local taxes, charges and assessments payable
by Mezzanine Borrower.
4.1.24 SOLVENCY/FRAUDULENT CONVEYANCE. Mezzanine Borrower (a)
has not entered into the transaction contemplated by this Agreement or any Loan
Document (First Mezzanine) with the actual intent to hinder, delay, or defraud
any creditor and (b) has received reasonably equivalent value in exchange for
its obligations under the Loan Documents (First Mezzanine). After giving effect
to the Loan, the fair saleable value of Mezzanine Borrower's assets exceeds and
will, immediately following the making of the Loan, exceed Mezzanine Borrower's
total liabilities, including, without limitation, subordinated, unliquidated,
disputed and contingent liabilities. The fair saleable value of Mezzanine
Borrower's assets is and will, immediately following the making of the Loan, be
greater than Mezzanine Borrower's probable liabilities, including the maximum
amount of its contingent liabilities on its Debts as such Debts become absolute
and matured. Mezzanine Borrower's assets do not and, immediately following the
making of the Loan will not, constitute unreasonably small capital to carry out
its business as conducted or as proposed to be conducted. Mezzanine Borrower
does not intend to, and does not believe that it will, incur Debt and
liabilities (including contingent liabilities and other commitments) beyond its
ability to pay such Debt and liabilities as they mature (taking into account the
timing and amounts of cash to be received by Mezzanine Borrower and the amounts
to be payable on or in respect of obligations of Mezzanine Borrower).
4.1.25 INVESTMENT COMPANY ACT. Mezzanine Borrower is not (a)
an investment company or a company Controlled by an investment company, within
the meaning of the Investment Company Act of 1940, as amended, (b) a holding
company or a subsidiary company of a holding company or an affiliate of either a
holding company or a subsidiary company within the mean of the Public Utility
Holding Company Act of 1935, as amended or (c) subject to any other federal or
state law or regulation which purports to restrict or regulate its ability to
borrow money.
4.1.26 INTEREST RATE CAP AGREEMENT. The Interest Rate Cap
Agreement (First Mezzanine) is in full force and effect and enforceable against
Mezzanine Borrower in accordance with its terms, subject to applicable
bankruptcy, insolvency or similar laws generally affecting the enforcement of
creditors' rights and subject as to enforceability to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).
4.1.27 BROKERS. Neither Mezzanine Borrower nor, to the Best of
Mezzanine Borrower's Knowledge, Mezzanine Lender has dealt with any broker or
finder with respect to the transactions contemplated by the Loan Documents
(First Mezzanine) and neither
54
party has done any acts, had any negotiations or conversations, or made any
agreements or promises which will in any way create or give rise to any
obligation or liability for the payment by either party of any brokerage fee,
charge, commission or other compensation to any Person with respect to the
transactions contemplated by the Loan Documents (First Mezzanine). Mezzanine
Borrower covenants and agrees that it shall pay as and when due any and all
brokerage fees, charges, commissions or other compensation or reimbursement due
to any broker of Mezzanine Borrower with respect to the transactions
contemplated by the Loan Documents (First Mezzanine). Mezzanine Borrower and
Mezzanine Lender shall each indemnify and hold harmless the other from and
against any loss, liability, cost or expense, including any judgments,
attorneys' fees, or costs of appeal, incurred by the other party and arising out
of or relating to any claim for brokerage commissions or finder's fees alleged
to be due as a result of the indemnifying party's agreements or actions. The
provisions of this Section 4.1.27 shall survive the expiration and termination
of this Agreement and the payment of the Indebtedness.
4.1.28 NO OTHER DEBT. Neither Mezzanine Borrower nor General
Partner has borrowed or received debt financing that has not been heretofore
repaid in full, other than the Permitted Debt.
4.1.29 TAXPAYER IDENTIFICATION NUMBER. Mezzanine Borrower's
Federal taxpayer identification number is ▇▇-▇▇▇▇▇▇▇.
4.1.30 KNOWLEDGE QUALIFICATIONS. Mezzanine Borrower represents
that ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and C. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ are in a position to have
meaningful knowledge with respect to the matters set forth in the Loan Documents
(First Mezzanine) which have been qualified to the knowledge of such Persons.
4.1.31 REPRESENTATIONS AND WARRANTIES. Mezzanine Borrower
represents and warrants that each of the representations and warranties
contained in the Loan Documents (Mortgage) (which are hereby incorporated by
reference as if fully set forth herein) is true and correct in all material
respects, as of the Closing Date and to the best of its knowledge, after
reasonable inquiry, there is no Mortgage Event of Default thereunder.
SECTION 4.2 SURVIVAL OF REPRESENTATIONS. Mezzanine Borrower agrees
that all of the representations and warranties of Mezzanine Borrower set forth
in Section 4.1 and elsewhere in this Agreement and in the other Loan Documents
(First Mezzanine) shall be deemed given and made as of the date of the funding
of the Loan and survive for so long as any amount remains owing to Mezzanine
Lender under this Agreement or any of the other Loan Documents (First Mezzanine)
by Mezzanine Borrower or Guarantor unless a longer survival period is expressly
stated in a Loan Document (First Mezzanine) with respect to a specific
representation or warranty, in which case, for such longer period. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents (First Mezzanine) by Mezzanine Borrower shall be
deemed to have been relied upon by Mezzanine Lender notwithstanding any
investigation heretofore or hereafter made by Mezzanine Lender or on its behalf.
55
V. MEZZANINE BORROWER COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS.
From the Closing Date and until payment and performance in full of
all obligations of Mezzanine Borrower under the Loan Documents (First
Mezzanine), Mezzanine Borrower hereby covenants and agrees with Mezzanine Lender
that:
5.1.1 PERFORMANCE BY MEZZANINE BORROWER.
(a) Mezzanine Borrower shall in a timely manner observe,
perform and fulfill each and every covenant, term and provision of each Loan
Document (First Mezzanine) executed and delivered by, or applicable to,
Mezzanine Borrower and shall not enter into or otherwise suffer or permit any
amendment, waiver, supplement, termination or other modification of any Loan
Document (First Mezzanine) executed and delivered by, or applicable to,
Mezzanine Borrower without the prior written consent of Mezzanine Lender.
(b) Mezzanine Borrower shall cause Mortgage Borrower in a
timely manner to observe, perform and fulfill each and every covenant, term and
provision of each Loan Document (Mortgage) executed and delivered by, or
applicable to, Mortgage Borrower.
5.1.2 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS;
INSURANCE. Subject to Mortgage Borrower's right of contest pursuant to Section
7.3, of the Loan Agreement (Mortgage), Mezzanine Borrower shall comply and cause
the Mortgage Borrower, Borrower Subsidiary, and the Property to be in compliance
with all Legal Requirements applicable to the Mezzanine Borrower, Mortgage
Borrower, Borrower Parent, Borrower Subsidiary, Affiliate Tenant, Manager and
the Property and the uses permitted upon the Property. Mezzanine Borrower shall
do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its existence, rights, licenses, permits and franchises
necessary to comply with all Legal Requirements applicable to it and the
Property. There shall never be committed by Mezzanine Borrower, and Mezzanine
Borrower shall not knowingly permit Mortgage Borrower, Borrower Subsidiary,
Affiliate Tenant, or any other Person in occupancy of or involved with the
operation or use of the Property to commit, any act or omission affording the
federal government or any state or local government the right of forfeiture as
against the Property or any part thereof or any monies paid in performance of
Mezzanine Borrower's obligations under any of the Loan Documents (First
Mezzanine). Mezzanine Borrower hereby covenants and agrees not to commit,
knowingly permit or suffer to exist any act or omission affording such right of
forfeiture. Mezzanine Borrower shall at all times maintain, preserve and protect
(and shall cause Mortgage Borrower to at all times maintain, preserve and
protect) all franchises and trade names and preserve all the remainder of its
property used in the conduct of its business and shall keep the Property in good
working order and repair, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto, as required by the Loan Agreement (Mortgage). Mezzanine
Borrower shall keep or shall cause Mortgage Borrower to keep the Property
insured at all times to such extent and against such risks, and maintain
liability and such other insurance, as is more fully set forth in this Agreement
and the Loan Agreement (Mortgage).
56
5.1.3 LITIGATION. Mezzanine Borrower shall give prompt written
notice to Mezzanine Lender of any litigation or governmental proceedings pending
or threatened in writing against Mezzanine Borrower, Mortgage Borrower,
Affiliate Tenant, Borrower Subsidiary, the Collateral or the Property which, if
determined adversely to Mezzanine Borrower, Mortgage Borrower, the Collateral or
the Property would have a Material Adverse Effect.
5.1.4 SINGLE PURPOSE ENTITY.
(a) Each of Mezzanine Borrower, Mortgage Borrower, Borrower
Parents, Borrower Subsidiary, and Affiliate Tenant has been since the date of
its respective formation and shall remain a Single Purpose Entity.
(b) Each of Mezzanine Borrower, Mortgage Borrower, Borrower
Parents, Borrower Subsidiary, and Affiliate Tenant shall continue to maintain
its own account or accounts, separate from those of any Affiliate, with
commercial banking institutions. None of the funds of Mezzanine Borrower, will
be commingled with the funds of any other Affiliate.
(c) To the extent that Mezzanine Borrower, Mortgage Borrower,
Borrower Parents, Borrower Subsidiary, and Affiliate Tenant shares the same
officers or other employees as any of their Affiliates, the salaries of and the
expenses related to providing benefits to such officers and other employees
shall be fairly allocated among such entities, and each such entity shall bear
its fair share of the salary and benefit costs associated with all such common
officers and employees.
(d) To the extent that Mezzanine Borrower, Mortgage Borrower,
Borrower Parents, Borrower Subsidiary, and Affiliate Tenant jointly contracts
with any of Mezzanine Borrower, Mortgage Borrower, Borrower Parents, Borrower
Subsidiary, and Affiliate Tenant or any of their Affiliates, as applicable, to
do business with vendors or service providers or to share overhead expenses, the
costs incurred in so doing shall be allocated fairly among such entities, and
each such entity shall bear its fair share of such costs. To the extent that
Mezzanine Borrower, Mortgage Borrower, Borrower Parents, Borrower Subsidiary, or
Affiliate Tenant contracts or does business with vendors or service providers
where the goods and services provided are partially for the benefit of any other
Person, the costs incurred in so doing shall be fairly allocated to or among
such entities for whose benefit the goods and services are provided, and each
such entity shall bear its fair share of such costs. All material transactions
between (or among) Mezzanine Borrower, Mortgage Borrower, Borrower Parents,
Borrower Subsidiary, Affiliate Tenant and any of their respective Affiliates
shall be conducted on substantially the same terms (or on more favorable terms
for Mezzanine Borrower, Mortgage Borrower, Borrower Parents, Borrower
Subsidiary, or Affiliate Tenant, as applicable) as would be conducted with third
parties.
(e) To the extent that Mezzanine Borrower, Mortgage Borrower,
Borrower Parents, Borrower Subsidiary, Affiliate Tenant or any of their
Affiliates have offices in the same location, there shall be a fair and
appropriate allocation of overhead costs among them, and each such entity shall
bear its fair share of such expenses.
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(f) Mezzanine Borrower, Mortgage Borrower, Borrower Parents,
Borrower Subsidiary, and Affiliate Tenant shall conduct their affairs strictly
in accordance with its organizational documents, and observe all necessary,
appropriate and customary corporate, limited liability company or partnership
formalities, as applicable, including, but not limited to, obtaining any and all
members' consents necessary to authorize actions taken or to be taken, and
maintaining accurate and separate books, records and accounts, including,
without limitation, payroll and intercompany transaction accounts.
(g) In addition, Mezzanine Borrower, Mortgage Borrower,
Borrower Parents, Borrower Subsidiary, and Affiliate Tenant shall each: (i)
maintain books and records separate from those of any other Person; (ii)
maintain its assets in such a manner that it is not more costly or difficult to
segregate, identify or ascertain such assets; (iii) hold regular meetings of its
board of directors, shareholders, partners or members, as the case may be, and
observe all other corporate, partnership or limited liability company, as the
case may be, formalities; (iv) hold itself out to creditors and the public as a
legal entity separate and distinct from any other entity; (v) prepare separate
tax returns and financial statements, or if part of a consolidated group, then
it will be shown as a separate member of such group; (vi) transact all business
with its Affiliates on an arm's-length basis and pursuant to enforceable
agreements; (vii) conduct business in its name and use separate stationery,
invoices and checks; (viii) not commingle its assets or funds with those of any
other Person; and (ix) not assume, guarantee or pay the debts or obligations of
any other Person.
5.1.5 CONSENTS. If Mezzanine Borrower, Mortgage Borrower,
Borrower Parents, Borrower Subsidiary, or Affiliate Tenant is a corporation, the
board of directors of such Person may not take any action requiring the
unanimous affirmative vote of 100% of the members of the board of directors
unless all of the directors, including the Independent Directors, shall have
participated in such vote. If Mezzanine Borrower, Mortgage Borrower, Borrower
Parents, Borrower Subsidiary, or Affiliate Tenant is a limited liability
company, (a) if such Person is managed by a board of managers, the board of
managers of such Person may not take any action requiring the unanimous
affirmative vote of 100% of the members of the board of managers unless all of
the managers, including the Independent Managers, shall have participated in
such vote, (b) if such Person is not managed by a board of managers, the members
of such Person may not take any action requiring the affirmative vote of 100% of
the members of such Person unless all of the members, including the Independent
Members, shall have participated in such vote. An affirmative vote of 100% of
the directors, board of managers or members, as applicable, of Mezzanine
Borrower, Mortgage Borrower, Borrower Parents, Borrower Subsidiary, or Affiliate
Tenant shall be required to (i) file a bankruptcy or insolvency petition or
otherwise institute insolvency proceedings or to authorize Mezzanine Borrower,
Mortgage Borrower, Borrower Parents, Borrower Subsidiary, or Affiliate Tenant to
do so or (ii) file an involuntary bankruptcy petition against any Close
Affiliate, Manager, or any Close Affiliate of Manager. Furthermore, the
formation documents of Mezzanine Borrower, Mortgage Borrower, Borrower Parents,
Borrower Subsidiary, and Affiliate Tenant shall expressly state that for so long
as the Loan is outstanding, none of Mezzanine Borrower, Mortgage Borrower,
Borrower Parents, Borrower Subsidiary, or Affiliate Tenant shall be permitted to
(i) dissolve, liquidate, consolidate, merge or sell all or substantially all of
the assets of Mezzanine Borrower, Mortgage Borrower, Borrower Parents, Borrower
Subsidiary, or Affiliate Tenant other than in
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connection with the repayment of the Loan or (ii) engage in any other business
activity and such restrictions shall not be modified or violated for so long as
the Loan is outstanding.
5.1.6 NOTICE OF DEFAULT. Mezzanine Borrower shall promptly
advise Mezzanine Lender (a) of any event or condition that has or is likely to
have a Material Adverse Effect and (b) of the occurrence of any Default, Event
of Default, Mortgage Default or Mortgage Event of Default of which Mezzanine
Borrower has knowledge.
5.1.7 COOPERATE IN LEGAL PROCEEDINGS. Mezzanine Borrower shall
cooperate (and shall cause Mortgage Borrower to cooperate) fully with Mezzanine
Lender with respect to any proceedings before any court, board or other
Governmental Authority which would reasonably be expected to affect in any
material adverse way the rights of Mezzanine Lender hereunder or under any of
the other Loan Documents (First Mezzanine) and, in connection therewith, permit
Mezzanine Lender, at its election, to participate in any such proceedings which
may have a Material Adverse Effect.
5.1.8 PERFORM LOAN DOCUMENTS (FIRST MEZZANINE). Mezzanine
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 (First Mezzanine) executed and
delivered by, or applicable to, Mezzanine Borrower.
5.1.9 FURTHER ASSURANCES; SEPARATE NOTES.
(a) Mezzanine Borrower shall, at its cost and expense, execute
and acknowledge (or cause to be executed and acknowledged) and deliver to
Mezzanine Lender all documents, and take all actions, reasonably required by
Mezzanine Lender from time to time to confirm the rights created or now or
hereafter intended to be created under this Agreement and the other Loan
Documents (First Mezzanine) and any security interest created or purported to be
created thereunder, to protect and further the validity, priority and
enforceability of this Agreement and the other Loan Documents (First Mezzanine),
to subject to the Loan Documents (First Mezzanine) any property of Mezzanine
Borrower intended by the terms of any one or more of the Loan Documents (First
Mezzanine) to be encumbered by the Loan Documents (First Mezzanine), or
otherwise carry out the purposes of the Loan Documents (First Mezzanine) and the
transactions contemplated thereunder. Mezzanine Borrower agrees that it shall,
upon request, reasonably cooperate with Mezzanine Lender in connection with any
request by Mezzanine Lender to sever the Mezzanine Note into two (2) or more
separate substitute or component notes in an aggregate principal amount equal to
the Principal Amount and to reapportion the Loan among such separate substitute
notes, including, without limitation, by executing and delivering to Mezzanine
Lender new substitute notes to replace the Mezzanine Note, amendments to or
replacements of existing Loan Documents (First Mezzanine) to reflect such
severance and/or Opinions of Counsel with respect to such substitute notes,
amendments and/or replacements, and the holders of such substitute or component
notes shall designate a lead lender or agent for such holders to whom Mezzanine
Borrower may direct all communications with respect to the Loan. Any such
substitute or component notes may have varying principal amounts and economic
terms, provided, however, that (i) the maturity date of any such substitute note
shall be the same as the scheduled Maturity Date of the Mezzanine Note
immediately prior to the issuance of such substitute notes, (ii) the substitute
notes shall provide for amortization of the Principal Amount
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on a weighted average basis over a period not less than the amortization period
provided under the Mezzanine Note, if any, immediately prior to the issuance of
the substitute notes, (iii) the weighted average LIBOR Margin (First Mezzanine)
of the substitute notes shall not exceed the LIBOR Margin (First Mezzanine)
under the Mezzanine Note immediately prior to the issuance of such substitute
notes; and (iv) the economics of the Loan, taken as a whole, shall not change in
a manner which is adverse to Mezzanine Borrower. Upon the occurrence and during
the continuance of a material Event of Default (as determined by Lender in its
sole and absolute discretion), Mezzanine Lender may apply payment of all sums
due under such substitute notes in such order and priority as Mezzanine Lender
shall elect in its sole and absolute discretion.
(b) Mezzanine Borrower further agrees that if, in connection
with the Securitization, it is determined by the Rating Agencies that a portion
of the Securitization would not receive an "investment grade" rating unless the
principal amount of the Mortgage Loan were to be decreased and, as a result, the
principal amount of the Mortgage Loan is decreased, then (i) the Mezzanine
Borrower shall take all actions as are necessary to effect the "resizing" of the
Loan and the Mortgage Loan, (ii) the Mezzanine Borrower shall cause the Mortgage
Borrower to comply with its agreements to effect a "resizing", and (iii)
Mezzanine Lender shall on the date of the "resizing" of the Loan lend to the
Mezzanine Borrower (by way of a reallocation of the principal amount of the
Mortgage Loan and the Loan) such additional amount equal to the amount of the
principal reduction of the Loan (in which case the Prepayment Fee shall be
inapplicable to such repayment) provided that Mortgage Borrower and Mezzanine
Borrower execute and deliver any and all necessary amendments or modifications
to the Loan Documents (Mortgage) and the Loan Documents (First Mezzanine). In
addition, Mezzanine Borrower and Mezzanine Lender agree that if, in connection
with the Securitization, it is determined by the Rating Agencies that, if the
principal amount of the Loan were to be decreased and, as a result the principal
amount of the Mortgage Loan were increased, more "investment grade" rated
securities could be issued, then (i) if "resizing" to increase the size of the
Mortgage Loan and decrease the size of the Loan is provided for in the Loan
Documents (Mortgage), each of them shall take all actions provided for in the
documentation for the Loan as are necessary to effect the "resizing" of the Loan
and the Mortgage Loan, (ii) Mezzanine Borrower shall cause the Mortgage Borrower
to comply with its agreements to effect a "resizing" and (iii) Mortgage Lender
shall on the date of the "resizing" of the Loan lend to the Mortgage Borrower
(by way of a reallocation of the principal amount of the Mortgage Loan and the
Loan) an additional amount equal to the amount of principal reduction of the
Loan, provided that Mortgage Borrower and Mezzanine Borrower execute and deliver
any and all necessary modifications to the Loan Documents (Mortgage) and Loan
Documents (First Mezzanine). In connection with the foregoing, Mezzanine
Borrower agrees, at Mezzanine Borrower's sole cost and expense, to execute and
deliver such documents and other agreements reasonably required by Mortgage
Lender and/or Mezzanine Lender to "re-size" the Loan and the Mortgage Loan,
including, without limitation, an amendment to this Agreement, the Mezzanine
Note, the Pledge and the other Loan Documents (Mortgage) and, if the principal
amount of the Mortgage Loan is increased, an endorsement to the Title Policy
reflecting an increase in the insured amount thereunder. Mezzanine Borrower
agrees to reimburse Mezzanine Lender for all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) incurred by
Mezzanine Lender in connection with any "resizing" of the Loan and to pay for
any additional "Eagle 9" or other UCC insurance coverage reasonably required by
Mezzanine Lender in connection with any increase in the principal amount of any
Mezzanine Loan, and shall deliver
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opinions of counsel similar to those delivered on the date hereof with respect
to Mezzanine Borrower and the Mezzanine Loans. Notwithstanding the foregoing,
Mezzanine Lender agrees that any "resizing" of the Mortgage Loan and the Loan
shall not change the economics of the Mortgage Loan, Mezzanine Loan, Junior
Mezzanine Loans and the Loan taken as a whole in a manner which is adverse to
Mezzanine Borrower.
(c) In addition, Mezzanine Borrower shall, at Mezzanine
Borrower's sole cost and expense:
(i) furnish to Mezzanine Lender, to the extent not
otherwise already furnished to Mezzanine Lender and reasonably acceptable
to Mezzanine 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 Mortgage Borrower pursuant to the terms of the Loan Documents
(Mortgage);
(ii) execute and deliver, from time to time, such
further instruments (including, without limitation, authorize or deliver
of any financing statements under the UCC) as may be reasonably requested
by Mezzanine Lender to confirm the lien of the Pledge and this Agreement
or any Collateral;
(iii) execute and deliver to Mezzanine Lender such
documents, instruments, certificates, assignments and other writings, and
do such other acts necessary to evidence, preserve and/or protect the
collateral at any time securing or intended to secure the obligations of
Mezzanine Borrower under the Loan Documents (First Mezzanine), as
Mezzanine Lender may reasonably require;
(iv) do and execute all and such further lawful and
reasonable acts, conveyances and assurances for the carrying out of the
terms and conditions of this Agreement and the other Loan Documents (First
Mezzanine), as Mezzanine Lender shall reasonably require from time to
time; and
(v) cause its New York counsel to re-issue the New York
opinion delivered on the date hereof (in identical form and without
updating) in favor of any purchaser of the Loan or an interest therein.
5.1.10 BUSINESS AND OPERATIONS. Mortgage Borrower, Mezzanine
Borrower, Borrower Subsidiary, and Affiliate Tenant shall continue to engage in
the businesses presently conducted by it as and to the extent the same are
necessary for the ownership, maintenance, management and operation of the
Property and the Collateral, as applicable. Mezzanine Borrower shall and shall
cause Mortgage Borrower to, qualify to do business and shall remain in good
standing under the laws of all applicable jurisdictions and to the extent
required for the ownership, maintenance, management and operation of the
Property and, as applicable, the ownership of the Collateral.
5.1.11 TITLE TO THE COLLATERAL. Mezzanine Borrower shall
warrant and defend (a) its title to the Collateral and every part thereof,
subject only to Liens permitted
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hereunder (including Permitted Encumbrances) and (b) the validity and priority
of the Lien of the Pledge and this Agreement on the Collateral, subject only to
Liens permitted hereunder (including Permitted Encumbrances), in each case
against the claims of all Persons whomsoever. Mezzanine Borrower shall reimburse
Mezzanine Lender for any losses, costs, damages or expenses (including
reasonable attorneys' fees and court costs) incurred by Mezzanine Lender if an
interest in the Collateral, other than as permitted hereunder, is claimed by
another Person.
5.1.12 COSTS OF ENFORCEMENT. In the event (a) that this
Agreement or the Pledge is foreclosed upon in whole or in part or that this
Agreement or the Pledge is put into the hands of an attorney for collection,
suit, action or foreclosure, (b) of the foreclosure of any security agreement
prior to or subsequent to this Agreement or the Pledge in which proceeding
Mezzanine Lender is made a party, or a Pledge prior to or subsequent to the
Pledge in which proceeding Mezzanine Lender is made a party, or (c) of the
bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of
Mezzanine Borrower or any of its constituent Persons or an assignment by
Mezzanine Borrower or any of its constituent Persons for the benefit of its
creditors, Mezzanine Borrower, its successors or assigns, shall be chargeable
with and agrees to pay all costs of collection and defense, including reasonable
attorneys' fees and costs, incurred by Mezzanine Lender or Mezzanine Borrower in
connection therewith and in connection with any appellate proceeding or
post-judgment action involved therein, together with all required service or use
taxes.
5.1.13 ESTOPPEL STATEMENT.
(a) Mezzanine Borrower shall, from time to time, upon thirty
(30) days' prior written request from Mezzanine Lender, execute, acknowledge and
deliver to the Mezzanine Lender (and shall cause Mortgage Borrower to execute,
acknowledge and deliver to Mezzanine Lender), an Officer's Certificate, stating
that this Agreement and the other Loan Documents (First Mezzanine) (or as
applicable, the Loan Documents (Mortgage)) are unmodified and in full force and
effect (or, if there have been modifications, that this Agreement and the other
Loan Documents (First Mezzanine) or, as applicable, Loan Documents (Mortgage)
are in full force and effect as modified and setting forth such modifications),
stating the amount of accrued and unpaid interest and the outstanding principal
amount of the Mezzanine Note (or, as applicable, the Mortgage Note) and
containing such other information, qualified to the Best of Mezzanine Borrower's
Knowledge, with respect to the Mezzanine Borrower, Guarantor, Mortgage Borrower,
the Property, the Loan and the Mortgage Loan as Mezzanine Lender shall
reasonably request. The estoppel certificate shall also state either that no
Event of Default or Mortgage Event of Default exists hereunder or thereunder or,
if any Event of Default or Mortgage Event of Default shall exist hereunder or
thereunder, specify such Event of Default or Mortgage Event of Default and the
steps being taken to cure such Event of Default or Mortgage Event of Default.
(b) Mezzanine Borrower shall use commercially reasonable
efforts to deliver to Mezzanine Lender, within thirty (30) days of Mezzanine
Lender's request, tenant estoppel certificates from each Tenant under Material
Leases entered into after the Closing Date in substantially the form and
substance of the estoppel certificate set forth in EXHIBIT G provided that
Mezzanine Borrower shall not be required to deliver such certificates more
frequently than one time in any calendar year; provided, however, that there
shall be no limit on the number of
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times Mezzanine Borrower may be required to obtain such certificates if a
Default hereunder or under any of the Loan Documents (First Mezzanine) has
occurred and is continuing.
5.1.14 LOAN PROCEEDS. Mezzanine Borrower shall use the
proceeds of the Loan received by it on the Closing Date only for the purposes
set forth in Section 2.1.4.
5.1.15 NO JOINT ASSESSMENT. Mezzanine Borrower shall not
suffer, permit or initiate the joint assessment of the Property (a) with any
other real property constituting a tax lot separate from the Property and (b)
which constitutes real property with any portion of the Property which may be
deemed to constitute personal property, or any other procedure whereby the lien
of any taxes which may be levied against such personal property shall be
assessed or levied or charged to such real property portion of the Property.
5.1.16 NO FURTHER ENCUMBRANCES. Mezzanine Borrower shall do,
or cause to be done, all things necessary to keep and protect the Property and
the Collateral and all portions thereof unencumbered from any Liens, easements
or agreements granting rights in or restricting the use or development of the
Property, except for (a) with respect to the Property, Permitted Encumbrances,
(b) Liens permitted pursuant to the Loan Documents (First Mezzanine), or the
Loan Documents (Mortgage), (c) Liens for Impositions prior to the imposition of
any interest, charges or expenses for the non-payment thereof and (d) any Liens
permitted pursuant to Leases.
5.1.17 LEASES. Mezzanine Borrower shall cause Mortgage
Borrower, promptly after receipt thereof, to deliver to Mezzanine Lender a copy
of any notice received with respect to Material Leases claiming that Mortgage
Borrower is in default in the performance or observance of any of the material
terms, covenants or conditions of any of the Material Leases.
5.1.18 LOAN (MORTGAGE) COVENANTS.
(a) Mezzanine Borrower hereby covenants that it shall cause
Mortgage Borrower to fully keep, perform and comply with (or cause to be kept,
performed and complied with) each of the covenants set forth in the Loan
Agreement (Mortgage) and the Security Instrument, which are hereby incorporated
by reference as if fully set forth herein, notwithstanding any waiver or future
amendment of such covenants by Mortgage Lender (other than a Permitted Loan
Amendment). Mezzanine Borrower acknowledges that the obligation to comply with
such covenants is separate from, and may be enforced independently from, the
obligations of the Mortgage Borrower under the Loan Documents (Mortgage).
(b) Mezzanine Borrower shall not, and shall cause Mortgage
Borrower not to, (i) amend or modify (by agreement on the part of the Mortgage
Borrower or Mezzanine Borrower) or (ii) affirmatively permit the modification or
amendment of (by operation of law or otherwise) the Loan Documents (Mortgage) in
effect as of the Closing Date that would be a Prohibited Loan Amendment (as
hereinafter defined) except for those amendments or modifications (PERMITTED
LOAN AMENDMENTS) that (i) are required under the Loan Documents (Mortgage) or
that Mortgage Borrower is required to consent to thereunder pursuant to the
express terms of the Loan Documents (Mortgage), (ii) do not constitute a
Prohibited Loan Amendment, or (iii) are otherwise consented to by Mezzanine
Lender. As used herein, a
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PROHIBITED LOAN AMENDMENT shall mean an amendment or modification to the Loan
Documents (Mortgage) that (A) is reasonably likely to have a Material Adverse
Effect, or (B) which (1) increases the principal amount of the Loan (Mortgage)
(exclusive of protective advances), (2) increases the interest rate payable
under the Loan (Mortgage), (3) provides for the payment of any additional
interest, additional fees, increases the amount of or adds additional reserve
payments or increases the amount of or adds additional escrows, or otherwise
increases the amount payable under the Loan (Mortgage), (4) increases the
frequency or payment amount of the periodic principal installments under the
Loan (Mortgage), (5) modifies the recourse carveout obligations under the Loan
Documents (Mortgage) in a manner which increases or expands recourse liability,
(6) modifies the due-on-sale, due-on-encumbrance, or collateral release
provisions of the Loan Documents (Mortgage), (7) modifies the provisions
governing requirements with respect to the Independent Managers under the Loan
Documents (Mortgage) in a manner materially adverse to Mortgage Lender, (8) adds
material additional obligations, liabilities or indemnities on the part of
Mortgage Borrower, Guarantor, General Partner or Mezzanine Borrower, (9)
shortens any default cure periods or adds any additional defaults under the Loan
Documents (Mortgage), (10) extends the maturity date of the Loan (Mortgage)
beyond the initially scheduled maturity date (except in connection with any
work-out or other surrender, compromise, release, renewal, or indulgence
relating to the Loan (Mortgage), (11) modifies any provisions related to the
Management Agreement, (12) waives or modifies any provisions related to the use
of proceeds under the Loan Documents (Mortgage), (13) modifies any provisions of
the Loan Documents (Mortgage) related to the funding of escrows or cash
management or any provision of the Account Agreement (Mortgage) or (14)
decreases or materially modifies any insurance requirements under the Loan
Documents (Mortgage). Any amendment or modification to the Loan Documents
(Mortgage) in violation of this Section shall be ineffective as between
Mezzanine Borrower and Mezzanine Lender, and, if not cured by Mezzanine Borrower
within thirty (30) days after written notice from Mezzanine Lender shall
constitute an Event of Default hereunder, unless Mezzanine Lender consents
thereto in writing in its sole discretion.
(c) In the event the Loan (Mortgage) shall at any time be
repaid, or the Liens securing the Loan (Mortgage) at any time be released in
full, then unless and until the Mezzanine Note shall have been repaid in full
and all obligations of Mezzanine Borrower to Mezzanine Lender hereunder and
under the other Loan Documents (First Mezzanine) shall have been satisfied, then
Mezzanine Borrower and Manager shall nevertheless comply or cause the Mortgage
Borrower to comply with each of the terms and provisions of the Loan Documents
(Mortgage) (other than payment of principal, interest and premium (if any)) and
the Loan Documents (Mortgage) shall nevertheless be deemed to remain in full
force and effect as between Mezzanine Borrower and Mezzanine Lender with
Mezzanine Lender being deemed in such context to possess exclusively all of the
rights and remedies of the Mortgage Lender thereunder including without
limitation, all rights of consent and approval, rights to receive and control
the disposition of casualty insurance proceeds and condemnation awards, and the
right to collect rents through a lockbox and make waterfall distributions (but
expressly excluding any rights and remedies relating to payment of the
indebtedness under the Loan Documents (Mortgage) and evidenced by the Mortgage
Note and Mezzanine Borrower shall nevertheless comply or cause the Mortgage
Borrower to comply with each of the terms and provisions of the Loan Documents
(Mortgage) (and any Permitted Loan Amendments or amendment or modification
consented to in writing by Mezzanine Lender) (other than the payment of
principal,
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interest and premium, if any). Mezzanine Borrower shall, and shall cause
Mortgage Borrower to, execute any and all documents reasonably requested by
Mezzanine Lender for the implementation or furtherance of the foregoing provided
that the same shall be at Mezzanine Lender's sole cost and expense. Mezzanine
Borrower shall deliver to Mezzanine Lender copies of any and all modifications
to the Loan Documents (Mortgage) within five (5) Business Days after execution
thereof.
(d) Mezzanine Borrower covenants and agrees to cause Mortgage
Borrower to deliver any and all financial information delivered or required to
be delivered to Mortgage Lender pursuant to the terms of the Loan Documents
(Mortgage) to be delivered simultaneously to Mezzanine Lender.
5.1.19 IMPOSITIONS. Mezzanine Borrower shall cause Mortgage
Borrower to pay all Impositions, to timely pay all claims for labor, material or
supplies that if unpaid or unbonded might by law become a lien or charge upon
any of its property (including the Property), and to keep the Property free from
any Lien (other than the lien of the Loan Documents (Mortgage) and the Permitted
Encumbrances), and shall in any event cause the prompt, full and unconditional
discharge of all Liens imposed upon the Property or any portion thereof within
thirty (30) days after receiving written notice (whether from Mezzanine Lender,
the lienholder or any other Person) of the filing thereof; subject in each case
to Mortgage Borrower's right to contest the same as permitted in but subject to
the conditions set forth in the Loan Agreement (Mortgage) so long as no Event of
Default has occurred. In the event that Mortgage Borrower elects to commence any
contest or similar proceeding with respect to any such Imposition, Lien or other
claim described herein, Mezzanine Borrower shall provide prompt written notice
thereof to Mezzanine Lender together with such evidence as Mezzanine Lender may
reasonably require showing Mortgage Borrower's satisfaction of the requirements
set forth in Section 7.3 of the Loan Agreement (Mortgage) to Mortgage Borrower
conducting such contest. Notwithstanding the foregoing, Mezzanine Borrower shall
cause Mortgage Borrower promptly to pay any contested Imposition, Lien or claim
and the payment thereof shall not be deferred, if Mezzanine Lender or Mortgage
Borrower may be subject to civil or criminal damages as a result thereof. If
such action or proceeding is terminated or discontinued adversely to Mortgage
Borrower, then Mezzanine Borrower shall cause Mortgage Borrower to deliver to
Mezzanine Lender reasonable evidence of payment of such contested Imposition or
Lien.
5.1.20 LEASES. Mezzanine Borrower shall promptly after receipt
thereof (or receipt by Mortgage Borrower) deliver to Mezzanine Lender a copy of
any notice received with respect to the Leases claiming that Mortgage Borrower
is in default in the performance or observance of any of the material terms,
covenants or conditions of any of the Leases, if such default is reasonably
likely to have a Material Adverse Effect.
5.1.21 DORAL SETTLEMENT AGREEMENT. Mezzanine Borrower shall
cause Mortgage Borrower to use diligent efforts to comply with the terms of and
substantially complete the improvements contemplated by the Doral Settlement
Agreement and shall promptly after receipt thereof deliver to Mezzanine Lender a
copy of any notice received with respect to the Doral Settlement Agreement
claiming that Mortgage Borrower is in default in the performance or observance
of any of the terms, covenants or conditions of the Doral Settlement Agreement.
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5.1.22 MEMBERSHIP PROGRAMS. Mezzanine Borrower shall receive
Mezzanine Lender's prior written consent to make any material modifications to
(or permit Mortgage Borrower to make any material modifications to) any existing
membership program or similar program at the Property or enter into any new
membership or similar program at the Property to the extent such modification or
new program (i) would allow any member to redeem a membership deposit prior to
Mortgage Borrower obtaining at least one new membership deposit in an amount at
least equal to the existing deposit to be redeemed (i.e., a 1:1 redemption
program), or (ii) could adversely affect the value of Mezzanine Lender's
security for the Loan.
5.1.23 ARTICLE 8 "OPT IN" LANGUAGE. Each organizational
document of Mezzanine Borrower, Borrower Parents, Borrower Subsidiary, Affiliate
Tenant, and Mortgage Borrower shall be modified to include the language set
forth on EXHIBIT R and such language shall remain in each such organizational
document for so long as the Obligations are outstanding.
SECTION 5.2 NEGATIVE COVENANTS.
From the Closing Date until payment and performance in full of all
obligations of Mezzanine Borrower under the Loan Documents (First Mezzanine) or
the earlier release of the Lien of this Agreement or the Pledge in accordance
with the terms of this Agreement and the other Loan Documents (First Mezzanine),
Mezzanine Borrower covenants and agrees with Mezzanine Lender that it will not
do (and will not permit Affiliate Tenant to do), or permit to be done, directly
or indirectly, or allow Borrower Subsidiary to do, directly or indirectly, any
of the following (and in such connection, references in this Article V to
Mortgage Borrower shall alternatively mean Affiliate Tenant, as the context may
require):
5.2.1 INCUR DEBT. Incur, create or assume any Debt other than
Permitted Debt (First Mezzanine) or Transfer all or any part of the Collateral
or any interest therein, except as permitted in the Loan Documents (First
Mezzanine);
5.2.2 ENCUMBRANCES. Other than in connection with the Loan
Documents (First Mezzanine), the Loan Documents (Mortgage), and the Loan
Documents (Junior Mezzanine), incur, create or assume or permit the incurrence,
creation or assumption of any Debt secured by an interest in Mortgage Borrower,
Mezzanine Borrower, Affiliate Tenant, or General Partner, and shall not Transfer
or permit the Transfer of any interest in Mortgage Borrower, Mezzanine Borrower,
or Affiliate Tenant, except as permitted pursuant to Article VIII;
5.2.3 ENGAGE IN DIFFERENT BUSINESS. Engage, directly or
indirectly, in any business other than that of entering into this Agreement and
the other Loan Documents (First Mezzanine) to which Mezzanine Borrower is a
party and ownership of interests in the Mortgage Borrower and activities related
thereto;
5.2.4 MAKE ADVANCES. Make advances or make loans to any
Person, or hold any investments, except as expressly permitted pursuant to the
terms of this Agreement or any other Loan Document (First Mezzanine);
5.2.5 PARTITION. Permit Mortgage Borrower to partition the
Property;
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5.2.6 COMMINGLE. Commingle its assets with the assets of any
of its Affiliates;
5.2.7 GUARANTEE OBLIGATIONS. Guarantee any obligations of any
Person;
5.2.8 TRANSFER ASSETS. Transfer any asset other than in the
ordinary course of business or Transfer any interest in the Property except as
may be permitted hereby or in the other Loan Documents (First Mezzanine);
5.2.9 AMEND ORGANIZATIONAL DOCUMENTS. Amend or modify any of
its organizational documents without Mezzanine Lender's consent, other than in
connection with any Transfer permitted pursuant to Article VIII or to reflect
any change in capital accounts, contributions, distributions, allocations or
other provisions that do not and could not reasonably be expected to have a
Material Adverse Effect and provided that Mezzanine Borrower, Mortgage Borrower,
Borrower Parents, Borrower Subsidiary, and Affiliate Tenant each remain a Single
Purpose Entity;
5.2.10 DISSOLVE. Dissolve, wind-up, terminate, liquidate,
merge with or consolidate into another Person, except following or
simultaneously with a repayment of the Loan in full or as expressly permitted
pursuant to this Agreement;
5.2.11 BANKRUPTCY. (i) File a bankruptcy or insolvency
petition or otherwise institute insolvency proceedings, (ii) dissolve,
liquidate, consolidate, merge or sell all or substantially all of Mezzanine
Borrower's assets other than in connection with the repayment of the Loan, (iii)
engage in any other business activity or (iv) file or solicit the filing of an
involuntary bankruptcy petition against Mezzanine Borrower, Mortgage Borrower,
Manager or any Close Affiliate of Mezzanine Borrower or Manager, without
obtaining the prior consent of all of the directors of Mezzanine Borrower,
including, without limitation, the Independent Directors;
5.2.12 ERISA. Engage in any activity that would subject it to
regulation under ERISA or qualify it as an "employee benefit plan" (within the
meaning of Section 3(3) of ERISA) to which ERISA applies and Mezzanine
Borrower's assets do not and will not constitute plan assets within the meaning
of 29 C.F.R. Section 2510.3-101;
5.2.13 DISTRIBUTIONS. From and after the occurrence and during
the continuance of an Event of Default, make any distributions to or for the
benefit of any of its shareholders, partners or members, as the case may be, or
its or their Affiliates;
5.2.14 MANAGER.
(a) Except as provided in this Section 5.2.14, Mezzanine
Borrower shall not, without the prior written consent of Mezzanine Lender, which
consent shall not be unreasonably withheld or delayed, permit Mortgage Borrower
to amend, modify, supplement, alter or waive any material right under the
Management Agreement without Mezzanine Lender's prior written consent, not to be
unreasonably withheld. Without the receipt of Mezzanine Lender's prior written
consent, Mezzanine Borrower may permit Mortgage Borrower to make any nonmaterial
modification, change, supplement, alteration or amendment to the Management
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Agreement and to waive any nonmaterial rights thereunder, provided that no such
modification, change, supplement, alteration, amendment or waiver shall
adversely affect the cash management procedures set forth in the Management
Agreement or the Loan Documents (Mortgage) or Loan Documents (First Mezzanine),
decrease the cash flow of the Property, adversely affect the marketability of
the Property or the Collateral, adversely change the definitions of "default" or
"event of default," adversely change the definitions of "operating expense" or
words of similar meaning to add additional items to such definitions, change any
definitions or provisions so as to reduce the payments due the Mortgage Borrower
thereunder, adversely change the timing of remittances to the Mortgage Borrower
thereunder, increase or decrease reserve requirements, change the term of the
Management Agreement or increase any Management Fees payable under the
Management Agreement.
(b) Mezzanine Borrower may permit Mortgage Borrower to enter
into a new Management Agreement with an Acceptable Manager upon receipt of a
Rating Agency Confirmation (or, if such manager is a Pre-Approved Manager, upon
receipt of Mezzanine Lender's prior written consent) with respect to the
Property Management Agreement and delivery of an acceptable Non-Consolidation
Opinion covering such replacement Manager if such Person is an Affiliate of
Mortgage Borrower.
5.2.15 MANAGEMENT FEE. Mezzanine Borrower may not, without the
prior written consent of Mezzanine Lender (not to be unreasonably withheld) take
or permit Mortgage Borrower to take any action that would increase the
percentage amount of the Management Fee, or add a new type of fee payable to any
Manager relating to any Property, including, without limitation, the Management
Fee.
5.2.16 SUBSIDIARY MANAGEMENT AGREEMENTS. Mezzanine Borrower
shall not permit Mortgage Borrower to, without first obtaining Mezzanine
Lender's prior written consent, which consent shall not be unreasonably
withheld, amend, change, supplement or modify any material term of the
Subsidiary Management Agreements in any manner that could adversely affect the
Mezzanine Lender.
5.2.17 REAS. Without the prior consent of Mezzanine Lender,
which shall not be unreasonably withheld, delayed or conditioned, Mezzanine
Borrower shall not permit Mortgage Borrower to execute modifications to the
REAs;
5.2.18 MODIFY ACCOUNT AGREEMENT (FIRST MEZZANINE). Without the
prior consent of Mezzanine Lender, which shall not be unreasonably withheld,
delayed or conditioned, Mezzanine Borrower shall not execute any modification to
the Account Agreement (First Mezzanine);
5.2.19 ZONING RECLASSIFICATION. Except as contemplated by
Section 2.3.4 of the Loan Agreement (Mortgage), without the prior written
consent of Mezzanine Lender, which consent shall not be unreasonably withheld,
permit Mortgage Borrower to (a) initiate or consent to any zoning
reclassification of any portion of the Property, (b) seek any variance under any
existing zoning ordinance that would result in the use of the Property becoming
a non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, or (c) allow any portion of the Property to be used in
any manner that could result in
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the use of the Property becoming a non-conforming use under any zoning ordinance
or any other applicable land use law, rule or regulation;
5.2.20 CHANGE OF PRINCIPAL PLACE OF BUSINESS. Change its
principal place of business and chief executive office set forth on the first
page of this Agreement without first giving Mezzanine Lender thirty (30) days'
prior written notice (but in any event, within the period required pursuant to
the UCC) and there shall have been taken such action, reasonably satisfactory to
Mezzanine Lender, as may be necessary to maintain fully the effect, perfection
and priority of the security interest of Mezzanine Lender hereunder in the
Account Collateral (First Mezzanine) and the Rate Cap Collateral (First
Mezzanine) at all times;
5.2.21 RESERVED.
5.2.22 DEBT CANCELLATION. Cancel or otherwise forgive or
release any material claim or debt owed to it by any Person, except for adequate
consideration or in the ordinary course of its business;
5.2.23 MISAPPLICATION OF FUNDS. Distribute any revenue from
the Property or any Proceeds in violation of the provisions of this Agreement,
fail to remit amounts to the First Mezzanine Account, as required by Section
3.1, or the Pledge, misappropriate any security deposit or portion thereof or
apply the proceeds of the Loan in violation of Section 2.1.4; or
5.2.24 SINGLE-PURPOSE ENTITY. Fail to be a Single-Purpose
Entity or take or suffer any action or inaction the result of which would be to
cause it or Mortgage Borrower, Borrower Parent, Borrower Subsidiary, or
Affiliate Tenant to cease to be a Single-Purpose Entity.
VI. INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
SECTION 6.1 INSURANCE COVERAGE REQUIREMENTS.
(a) Mezzanine Borrower will cause Mortgage Borrower, at its
expense, to procure and maintain the insurance policies required by the Loan
Documents (Mortgage). Each commercial general liability or umbrella liability
policy with respect to the Property shall name Mezzanine Lender as an additional
insured and shall contain a cross liability/severability endorsement in form and
substance acceptable to Mezzanine Lender.
(b) In the event of any loss or damage to the Property,
Mezzanine Borrower shall give prompt written notice to the insurance carrier and
Mezzanine Lender. Mezzanine Lender acknowledges that Mortgage Borrower's rights
to any insurance proceeds are subject to the terms of the Loan Agreement
(Mortgage). Mezzanine Borrower may not and shall not permit Mortgage Borrower to
settle, adjust or compromise any claim under such insurance policies without the
prior written consent of Mezzanine Lender which shall not be unreasonably
withheld, delayed or denied; provided, further, that Mortgage Borrower may make
proof of loss and adjust and compromise any claim under casualty insurance
policies which is of an amount less than $500,000 so long as no Event of Default
has occurred. Any proceeds of such claim which are not used to reconstruct or
repair the Property, or applied to the balance of the loan evidenced by the Loan
Documents (Mortgage), shall be deposited into the accounts established
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pursuant to the Loan Agreement (Mortgage) to the extent required thereby, or if
such deposit is not required thereunder, then such proceeds shall be paid to
Mezzanine Lender and applied to the payment of the Obligations (First Mezzanine)
whether or not then due.
(c) In the event that Mortgage Borrower is permitted pursuant
to the terms of the Loan Agreement (Mortgage) to reconstruct, restore or repair
the Property following a casualty to any portion of the Property, Mezzanine
Borrower shall cause Mortgage Borrower to promptly and diligently repair and
restore the Property in the manner and within the time periods required by the
Loan Agreement (Mortgage), the Leases and any other agreements affecting the
Property. In the event that Mortgage Borrower is permitted pursuant to terms of
the Loan Agreement (Mortgage) to elect to not reconstruct, restore or repair the
Property following a casualty to any portion of the Property, Mezzanine Borrower
shall not permit Mortgage Borrower to elect not to reconstruct, restore or
repair the Property without the prior written consent of Mezzanine Lender.
(d) Mezzanine Borrower shall comply with all Insurance
Requirements and shall not bring or keep or permit to be brought or kept any
article upon any of the Property or cause or permit any condition to exist
thereon which would be prohibited by any Insurance Requirement, or would
invalidate insurance coverage required to be maintained by Mortgage Borrower on
or with respect to any part of the Property pursuant to Section 6.1 of the Loan
Agreement (Mortgage).
SECTION 6.2 CONDEMNATION AND INSURANCE PROCEEDS. In the event that
all or any portion of the Property shall be damaged or taken through
condemnation (which term shall include any damage or taking by any governmental
authority, quasi-governmental authority, any party having the power of
condemnation, or any transfer by private sale in lieu thereof), or any such
condemnation shall be threatened, Mezzanine Borrower shall give prompt written
notice to Mezzanine Lender. Mezzanine Lender acknowledges that Mortgage
Borrower's rights to any condemnation award is subject to the terms of the Loan
Agreement (Mortgage). Mezzanine Borrower may not and shall not permit Mortgage
Borrower to settle or compromise any claim, action or proceeding relating to
such damage or condemnation without the prior written consent of Mezzanine
Lender, which shall not be unreasonably withheld, delayed or denied; provided,
further, that Mortgage Borrower may settle, adjust and compromise any such
claim, action or proceeding which is of an amount less than $5,000,000 so long
as no Default or Event of Default has occurred. Any Excess Proceeds shall be
paid to Mezzanine Lender and applied to the payment of the Obligations (First
Mezzanine) whether or not then due pursuant to Section 2.3.1(b). In the event
that Mortgage Borrower is permitted pursuant to the terms of the Loan Agreement
(Mortgage) to reconstruct, restore or repair the Property following a
condemnation of any portion of the Property, Mezzanine Borrower shall cause
Mortgage Borrower to promptly and diligently repair and restore the Property in
the manner and within the time periods required by the Loan Agreement
(Mortgage), the Leases and any other agreements affecting the Property. In the
event that Mortgage Borrower is permitted pursuant to the terms of the Loan
Agreement (Mortgage) to elect not to reconstruct, restore or repair the Property
following a condemnation of any portion of the Property, Mezzanine Borrower
shall not permit Mortgage Borrower to elect not to reconstruct, restore or
repair the Property without the prior written consent of Mezzanine Lender.
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SECTION 6.3 CERTIFICATES. Mezzanine Borrower shall deliver (or cause
Mortgage Borrower to deliver) to Mezzanine Lender annually, concurrently with
the renewal of the insurance policies required hereunder, a certificate from
Mezzanine Borrower's and Mortgage Borrower's insurance agent stating that the
insurance policies required to be delivered to Mezzanine Lender pursuant to
Section 6.1 and Section 2.5.2(h) are maintained with insurers who comply with
the terms of Section 6.1.9 of the Loan Agreement (Mortgage), setting forth a
schedule describing all premiums required to be paid by Mezzanine Borrower or
Mortgage Borrower, as applicable, to maintain the policies of insurance required
under Section 6.1 and Section 2.5.2(h), and stating that either Mezzanine
Borrower or Mortgage Borrower, as applicable, has paid such premiums.
Certificates of insurance with respect to all replacement policies shall be
delivered to Mezzanine Lender not less than fifteen (15) Business Days prior to
the expiration date of any of the insurance policies required to be maintained
hereunder which certificates shall bear notations evidencing payment of
applicable premiums. Originals (or certified copies) of such replacement
insurance policies shall be delivered to Mezzanine Lender promptly after
Mezzanine Borrower's receipt thereof but in any case within thirty (30) days
after the effective date thereof (including the insurance certificates delivered
pursuant to Section 2.5.2(h)). If Mezzanine Borrower fails to (i) maintain or to
deliver to Mezzanine Lender the certificates of insurance required by this
Agreement or (ii) maintain and deliver originals (or certificated copies) of
such insurance policies within thirty (30) days after the effective date
thereof, upon five (5) Business Days' prior notice to Mezzanine Borrower,
Mezzanine Lender may procure such insurance, and all costs thereof (and interest
thereon at the Default Rate) shall be added to the Indebtedness. Mezzanine
Lender shall not, by the fact of approving, disapproving, accepting, preventing,
obtaining or failing to obtain any insurance, incur any liability for or with
respect to the amount of insurance carried, the form or legal sufficiency of
insurance contracts, solvency of insurance companies, or payment or defense of
lawsuits, and Mezzanine Borrower hereby expressly assumes full responsibility
therefor and all liability, if any, with respect thereto. Mezzanine Borrower
agrees that any replacement insurance policy required hereunder shall not
include any so called "terrorist exclusion" or similar exclusion or exception to
insurance coverage relating to the acts of terrorist groups or individuals.
VII. INTENTIONALLY DELETED
VIII. TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS
SECTION 8.1 RESTRICTIONS ON TRANSFERS AND INDEBTEDNESS.
(a) Unless such action is a Permitted Mezzanine Transfer, or
is otherwise permitted by the subsequent provisions of this Article VIII, no
Person owning a direct or indirect interest in Mezzanine Borrower, Mortgage
Borrower, Borrower Parents, Borrower Subsidiary, or Affiliate Tenant shall,
without Mezzanine Lender's prior written consent and a Rating Agency
Confirmation with respect to the transfer or other matter in question, (A)
Transfer legal, Beneficial or direct or indirect equitable interests in all or
any part of the Property, the Mezzanine Borrower, Mortgage Borrower, Borrower
Parents, Affiliate Tenant, or Borrower Subsidiary, (B) permit or suffer any
owner, directly or indirectly, of a legal, Beneficial, or equitable interest in
the Property, the Mezzanine Borrower, Borrower Parents, Mortgage Borrower,
Affiliate Tenant, or Mortgage Borrower General Partner, to Transfer such
interest, whether by Transfer of stock or other legal, Beneficial or equitable
interest in any entity or
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otherwise, (C) mortgage, hypothecate or otherwise encumber or grant a security
interest in all or any part of the legal, Beneficial or equitable interests in
all or any part of the Collateral, the Property, the Mezzanine Borrower,
Mortgage Borrower, Borrower Parents, Borrower Subsidiary, or Affiliate Tenant,
or (D) file a declaration of condominium with respect to the Property.
Notwithstanding any provision herein to the contrary, nothing contained herein
shall be deemed to restrict or otherwise interfere with the ability of the
holders of direct or indirect legal, Beneficial or equitable interests in
Guarantor to Transfer such interests and, in addition, Guarantor (and the
Permitted Borrower Transferee, Pre-approved Transferee or other approved entity
that assumes the obligations of Guarantor pursuant to Section 8.5) may be merged
into a surviving entity (the SURVIVOR) so long as after giving effect to such
merger, the identity of a majority of members of the board of directors of the
Survivor are individuals that (immediately prior to such merger) were members of
the board of directors of the predecessor Guarantor (or the Permitted Borrower
Transferee, Pre-approved Transferee or other approved entity that assumes the
obligations of Guarantor pursuant to Section 8.5) and continue to maintain
operational and management control of Survivor (and, in such event, Survivor
shall become the Guarantor hereunder).
(b) None of Mortgage Borrower, Mezzanine Borrower, Affiliate
Tenant, Borrower Subsidiary, or Borrower Parents shall incur, create or assume
any Debt or incur any liabilities without the consent of Lender; provided,
however, (i) Mortgage Borrower, Mezzanine Borrower and Affiliate Tenant may,
without the consent of Lender, incur, create or assume Permitted Debt, and (ii)
if Fifth Mezzanine Lender does not fund the Fifth Mezzanine Loan on or prior to
the Anticipated Funding Date, Fifth Mezzanine Borrower shall be permitted to
incur mezzanine indebtedness in an amount not to exceed $100,000,000 (the
ADDITIONAL MEZZANINE LOAN), subject to satisfaction of the following conditions
(the FUNDING CONDITIONS): (i) no Event of Default shall have occurred and be
continuing under the Loan Documents (First Mezzanine) or the Mortgage Loan
Documents at the time of funding of the Additional Mezzanine Loan, (ii) the
lender under such Additional Mezzanine Loan shall have entered into an
intercreditor agreement in form and substance acceptable to Mezzanine Lender,
(iii) the trailing twelve month Portfolio DSCR as of the date of the funding of
the Additional Mezzanine Loan shall exceed 1.40:1.00, (iv) the funding of the
Additional Mezzanine Loan shall occur on or before the Outside Date and shall
have a maturity date concurrent with the Maturity Date, and (v) Mezzanine
Borrower shall have delivered to Mezzanine Lender an Additional
Non-Consolidation Opinion addressing the Additional Mezzanine Loan in form and
substance acceptable to Mezzanine Lender.
(c) Neither Borrower Subsidiary nor Affiliate Tenant shall
incur, create or assume any debt or guaranty the payment of any debt or
obligation other than Permitted Debt.
(d) Except with respect to the Pledge and as permitted under
Section 8.1(a), Mezzanine Borrower shall not permit Mortgage Borrower to
Transfer legal, Beneficial or direct or indirect equitable interests in all or
any part of any Borrower Subsidiary.
(e) Except as permitted under Section 8.1(a) and the Pledge,
Guarantor shall not Transfer legal, Beneficial or direct or indirect equitable
interests in all or any
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part of Mortgage Borrower, Mezzanine Borrower, Borrower Parents, Borrower
Subsidiary, or Affiliate Tenant.
(f) Except as permitted in Section 2.3.5 of the Loan Agreement
(Mortgage), Section 8.1(a), and with respect to the Pledges, Borrower and
Guarantor shall not permit or suffer any of Sole Shareholder, Borrower Parents,
Affiliate Tenant or any entity owned directly or indirectly by Sole Shareholder
to Transfer legal, Beneficial or direct or indirect equitable interests in all
or any part of the Property, the Borrower, Borrower Parents, Affiliate Tenant or
Borrower Subsidiary.
(g) Notwithstanding any provision herein to the contrary,
nothing contained herein shall be deemed to prohibit (i) a Transfer by Guarantor
of its interests in CNL Hospitality LP Corp. or CNL Hospitality GP Corp. (the
FIRST TIER CNL ENTITIES), or a Transfer by the First Tier CNL Entities of
interests in CNL OP (and together with the First Tier CNL Entities, the CNL
CORPORATE ENTITIES) in connection with a financing by Guarantor or any of the
CNL Corporate Entities; provided, CNL OP continues to own, directly or
indirectly, a substantial portfolio of properties in addition to the Property,
or (ii) Transfers of interests in Guarantor.
SECTION 8.2 SALE OF BUILDING EQUIPMENT AND IMMATERIAL TRANSFERS AND
EASEMENTS BY MORTGAGE BORROWER. Mezzanine Borrower may permit Mortgage Borrower
to effect any Transfer permitted pursuant to Section 8.2 and 8.3 of the Loan
Agreement (Mortgage) without Mezzanine Lender's prior written consent.
SECTION 8.3 TRANSFER OF CLAREMONT PROPERTY. Notwithstanding the
foregoing provisions of this Article VIII, in connection with Claremont Borrower
and Affiliate Tenant entering into a new Management Agreement for the Claremont
Property with an Acceptable Manager in accordance with Section 5.2.14, Sole
Shareholder shall have the right to transfer up to forty-nine percent (49%) of
the beneficial interests in the Claremont Property subject to the following
terms and conditions:
(a) Sole Shareholder shall cause a restructuring of the ownership
interests in Claremont Borrower, so that immediately following such
restructuring:
(i) (A) a newly formed Single Purpose Entity limited partnership
shall have acquired Mezzanine Borrower's 99.9% limited partnership interest in
Claremont Borrower, (B) such newly formed limited partnership shall become a
co-borrower under the Mezzanine Loan, and (C) a newly formed Single Purpose
Entity limited liability company that is solely owned by the entity formed
pursuant to Clause (A) shall own a 0.1% general partnership interest in
Claremont Borrower;
(ii) (A) a newly formed Single Purpose Entity limited partnership
shall become a co-borrower under the Second Mezzanine Loan and shall own a 99.9%
direct partnership interest in the limited partnership created pursuant to
clause (i) above, and (B) a newly formed Single Purpose Entity limited liability
company that is solely owned by the entity formed pursuant to Clause (A) shall
own a 0.1% general partnership interest in such limited partnership created
pursuant to clause (i);
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(iii) (A) a newly formed Single Purpose Entity limited partnership
shall become a co-borrower under the Third Mezzanine Loan and shall own a 99.9%
direct partnership interest in the limited partnership created pursuant to
clause (ii) above, and (B) a newly formed Single Purpose Entity limited
liability company that is solely owned by the entity formed pursuant to Clause
(A) shall own a 0.1% general partnership interest in such limited partnership
created pursuant to clause (ii) above;
(iv) (A) a newly formed Single Purpose Entity limited partnership
shall become a co-borrower under the Fourth Mezzanine Loan and shall own a 99.9%
direct partnership interest in the limited partnership created pursuant to
clause (iii) above, and (B) a newly formed Single Purpose Entity limited
liability company that is solely owned by the entity formed pursuant to Clause
(A) shall own a 0.1% general partnership interest in such limited partnership
created pursuant to clause (iii) above;
(v) (A) a newly formed Single Purpose Entity limited partnership
shall own a 99.9% direct partnership interest in the limited partnership created
pursuant to clause (iv) above, and if the Fifth Mezzanine Loan has been funded
by Fifth Mezzanine Lender on or before the Outside Date, shall become a
co-borrower under the Fifth Mezzanine Loan, and (B) a newly formed Single
Purpose Entity limited liability company that is solely owned by the entity
formed pursuant to Clause (A) shall own a 0.1% general partnership interest in
such limited partnership created pursuant to clause (iv) above;
(vi) Sole Shareholder shall own (A) no less than a fifty-one percent
(51%) direct limited partnership interest in the limited partnership created
pursuant to clause (v) above, and (B) no less than a one hundred percent (100%)
direct limited liability company interest (B) a newly formed Single Purpose
Entity limited liability company that is solely owned by Sole Shareholder shall
own a 0.1% general partnership interest in such limited partnership created
pursuant to clause (v) above;
(vii) the transferee of the beneficial interests in the Claremont
Property permitted pursuant to this Section 8.3 shall own no more than a
forty-nine percent (49%) direct partnership interest in the limited partnership
created pursuant to clause (v) above; and
(viii) the limited liability companies formed pursuant to clauses
(i) through (vi) above shall have at least one (1) independent director on its
board of directors.
(b) The Loan Documents (Mortgage), the Loan Documents (First Mezzanine)
and the Junior Mezzanine Loan Documents shall be amended to reflect such new
ownership structure;
(c) The Loan Documents (First Mezzanine) and the Junior Mezzanine Loan
Documents shall be amended so that each of the Single Purpose Entity limited
partnerships created pursuant to paragraph (a) above shall become joint and
several co-borrowers with Mezzanine Borrower and the Junior Mezzanine Borrowers,
as applicable, under this Mezzanine Loan and the Junior Mezzanine Loans, as
applicable, and 100% of the ownership interest in each entity holding a general
partnership interest in each new limited partnership shall be pledged as
collateral for the Mezzanine Loan and Junior Mezzanine Loans, as applicable;
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(d) Mezzanine Borrower shall deliver to Mezzanine Lender a new
non-consolidation opinion in form acceptable to Mezzanine Lender;
(e) Mezzanine Borrower shall deliver a new Opinion of Counsel from
Delaware and New York counsel substantially in the forms delivered on the
Closing Date and otherwise in compliance with the requirements set forth in
Exhibit D or in such other form approved by the Mezzanine Lender;
(f) Mezzanine Lender shall have received copies certified by an Officer's
Certificate of all organizational documentation related to such newly formed
entities and such Acceptable Manager and/or Close Affiliate thereof, together
with evidence, as Mezzanine Lender may request in its sole discretion, of the
formation, structure, existence, good standing and/or qualification to do
business of such newly formed entities, such Acceptable Manager and/or Close
Affiliate, including, without limitation, good standing certificates,
qualifications to do business in the appropriate jurisdictions, resolutions
authorizing the transactions contemplated hereby, and incumbency certificates as
may be requested by Mezzanine Lender. Each of the organizational documents of
each new entity shall contain provisions having a substantive effect materially
similar to that of the language set forth in Exhibit C or such other language as
approved by Mezzanine Lender;
(g) Mezzanine Lender shall have received a copy of the no-impairment
letter to the Title Policy (Mortgage) (or substantially equivalent assurance) as
Mezzanine Lender may reasonably require confirming title insurance coverage is
not impaired or reduced by such transaction;
(h) An Acceptable Manager shall manage the Claremont Property pursuant to
an Acceptable Management Agreement approved by Mezzanine Lender in its
reasonable discretion;
(i) Mezzanine Borrower shall deliver to Mezzanine Lender a pledge of its
interests in the Claremont Borrower and such newly formed general partner of the
Claremont Borrower;
(j) Mezzanine Borrower shall cause the Interests Rate Cap Agreement (First
Mezzanine) to be amended to reflect the new co-borrower under the Mezzanine
Loan;
(k) Mezzanine Borrower shall cause to be delivered to Mezzanine Lender
such endorsements and revisions to the existing "Eagle 9" policy or other UCC
insurance policy (or, alternatively, Mezzanine Borrower may deliver a new "Eagle
9" policy or other UCC insurance policy), insuring the pledges contemplated
hereby;
(l) Mortgage Borrower and each Junior Mezzanine Borrower shall have
satisfied the requirements set forth in Section 8.8 of the Loan Agreement
(Mortgage) and Section 8.3 of each Junior Mezzanine Loan Agreement, including,
without limitation, delivery to each Junior Mezzanine Lender, as additional
collateral for each Mezzanine Loan, a pledge of the interests of each limited
partnership and each limited liability company general partner formed pursuant
to Section 8.3(a) of each Junior Mezzanine Loan Agreement;
(m) Mezzanine Borrower shall pay to Mezzanine Lender all reasonable
out-of-pocket costs and expenses incurred by Mezzanine Lender (including,
without limitation, attorneys fees
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and any applicable costs and expenses of the Rating Agencies) in connection with
the matters set forth in this Section 8.3; and
(n) Notwithstanding anything to the contrary set forth in Section 8.3(a),
(i) Mezzanine Borrower and the co-borrower under the Mezzanine Loan pursuant to
paragraph (a)(i) above may share the same general partner, (ii) Second Mezzanine
Borrower and the co-borrower under the Second Mezzanine Loan pursuant to
paragraph (a)(ii) above may share the same general partner, (iii) Third
Mezzanine Borrower and the co-borrower under the Third Mezzanine Loan pursuant
to paragraph (a)(iii) above may share the same general partner, (iv) Fourth
Mezzanine Borrower and the co-borrower under the Fourth Mezzanine Loan pursuant
to paragraph (a)(iv) above may share the same general partner, and (v) Fifth
Mezzanine Borrower and the co-borrower under the Fifth Mezzanine Loan pursuant
to paragraph (a)(v) above may share the same general partner.
SECTION 8.4 TRANSFERS OF INTERESTS IN MEZZANINE BORROWER. Each
holder of any direct or indirect interest in Mezzanine Borrower shall have the
right to transfer (but not pledge, hypothecate or encumber) its direct or
indirect legal, beneficial or equity interests in the Mezzanine Borrower to any
Person who is not a Disqualified Transferee without Mezzanine Lender's consent
or a Rating Agency Confirmation if Section 8.6 is complied with and, after
giving effect to such transfer:
(A) Mezzanine Borrower and the Property will be directly owned by a
Single Purpose Entity in compliance with the representations, warranties and
covenants in Section 4.1.20 hereof (as if the Mezzanine Borrower shall have
remade all of such representations, warranties and covenants as of, and after
giving effect to, the transfer), and which shall have executed and delivered to
Mezzanine Lender an assumption agreement in form and substance acceptable to
Mezzanine Lender, evidencing the continuing agreement of the Mezzanine Borrower
to abide and be bound by all the terms, covenants and conditions set forth in
this Agreement, the Mezzanine Note, the Pledge and the other Loan Documents
(First Mezzanine) and all other outstanding obligations under the Loan, together
with such legal opinions and title insurance endorsements as may be reasonably
requested by Mortgage Lender and Mezzanine Lender;
(B) an Acceptable Manager shall continue to act as Manager for the
Property pursuant to the existing Management Agreement or an Acceptable
Management Agreement;
(C) Guarantor or a Close Affiliate of Guarantor owns directly or
indirectly at least fifty-one percent (51%) of the equity interests in the
Mezzanine Borrower and Mortgage Borrower and the Person that is the proposed
transferee is not a Disqualified Transferee; provided that, after giving effect
to any such transfer, in no event shall any Person other than Guarantor or a
Close Affiliate of Guarantor exercise Management Control over the Mezzanine
Borrower and/or Mortgage Borrower. In the event that Management Control shall be
exercisable jointly by Guarantor or a Close Affiliate of Guarantor with any
other Person or Persons, then Guarantor or such Close Affiliate shall be deemed
to have Management Control only if Guarantor or such Close Affiliate retains the
ultimate right as between the Guarantor or such Close Affiliate and the
transferee to unilaterally make all material decisions (subject to the
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applicable Management Agreement) with respect to the operation, management,
financing and disposition of the Property;
(D) if there has been a Transfer of more than forty-nine percent
(49%) of the direct membership interests, stock or other direct equity ownership
interests in Mezzanine Borrower, Mortgage Borrower, General Partner, Mortgage
Borrower or Borrower Parents, Mezzanine Borrower shall have first delivered to
Mezzanine Lender an Officer's Certificate and legal opinion of the types
described in Section 8.6 below; and
(E) Mezzanine Borrower shall cause the transferee, if Mezzanine
Lender so requests and if such transferee is required to be a Single Purpose
Entity pursuant to this Agreement, to deliver to Mezzanine Lender its
organizational documents solely for the purpose of Mezzanine Lender confirming
that such organizational documents comply with the single purpose bankruptcy
remote entity requirements set forth herein.
SECTION 8.5 LOAN ASSUMPTION. Without limiting the foregoing,
Mezzanine Borrower shall have the right to sell, assign, convey or transfer (but
not mortgage, hypothecate or otherwise encumber or grant a security interest in)
the direct or indirect legal or equitable title to all (but not less than all)
of the Collateral only if Mortgage Borrower simultaneously exercise their right
to transfer the Property pursuant to Section 8.5 of the Loan Agreement
(Mortgage) and:
(A) after giving effect to the proposed transaction:
(1) Mezzanine Borrower will be owned by a Single Purpose
Entity wholly owned (directly or indirectly) by a Permitted Borrower Transferee,
Pre-approved Transferee or such other entity (specifically approved in writing
by Mezzanine Lender) which will be in compliance with the representations,
warranties and covenants contained in Section 4.1.20 hereof (as if such
transferee shall have remade all of such representations, warranties and
covenants as of, and after giving effect to, the proposed transaction); such
Single Purpose Entity shall have executed and delivered to Mezzanine Lender an
assumption agreement and such other agreements as Mezzanine Lender may
reasonably request (collectively, the Assumption Agreement) in form and
substance acceptable to Mezzanine Lender, evidencing the proposed transferee's
agreement to abide and be bound by all the terms, covenants and conditions set
forth in this Agreement, the Mezzanine Note and the other Loan Documents (First
Mezzanine) and all other outstanding obligations under the Loan; the Permitted
Borrower Transferee, Pre-Approved Transferee or such other approved entity shall
assume the obligations of Guarantor under the Loan Documents (First Mezzanine)
(and such Single Purpose Entity and the applicable Permitted Borrower
Transferee, Pre-approved Transferee or other approved entity shall thereafter be
subject to the provisions of this Article VIII), and the transferee shall cause
to be delivered to Mezzanine Lender such legal opinions and title insurance
endorsements as may be reasonably requested by Mezzanine Lender;
(2) an Acceptable Manager shall continue to act as Manager for
the Property pursuant to the existing Management Agreement or an Acceptable
Management Agreement;
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(3) no Event of Default shall have occurred and be continuing;
and
(4) Mezzanine Borrower shall have caused (i) the transferee to
execute and deliver to Mezzanine Lender a fully executed counterpart to the
Pledge, pledging all of such transferee's direct equity interests in Mortgage
Borrower to Mezzanine Lender as additional collateral for the Loan and (ii) the
ultimate parent(s) of such transferee to execute and deliver to Mezzanine Lender
a fully executed counterpart to the Recourse Guaranty (First Mezzanine) and
Environmental Indemnity (First Mezzanine), together with a legal opinion from
such transferee's counsel reasonably satisfactory to Mezzanine Lender with
respect to the due execution, delivery, authority, enforceability and perfection
(solely with respect to the Pledge) of the Pledge, Recourse Guaranty (First
Mezzanine) and Environmental Indemnity (First Mezzanine).
(B) the Assumption Agreement shall state the applicable transferee's
agreement to abide by and be bound by the terms in the Mezzanine Note (or such
other promissory notes to be executed by the transferee, such other promissory
note or notes to be on the same terms as the Mezzanine Note), this Agreement (or
such other loan agreement to be executed by such transferee, which shall contain
terms substantially identical to the terms hereof) and such other Loan Documents
(First Mezzanine) (or other loan documents to be delivered by such transferee,
which shall contain terms substantially identical to the terms of the applicable
Loan Documents (First Mezzanine)) whenever arising, and Mezzanine Borrower,
and/or such transferee shall deliver such legal opinions and title insurance
endorsements as may reasonably be requested by Mezzanine Lender;
(C) following execution of a contract for the sale of the Property
and not less than thirty (30) days prior to the expected date of such proposed
sale, Mezzanine Borrower shall submit notice of such sale to Mezzanine Lender.
Mezzanine Borrower shall submit to Mezzanine Lender, not less than ten (10) days
prior to the expected date of such sale, the Assumption Agreement for execution
by Mezzanine Lender. Such documents shall be in a form appropriate for the
jurisdiction in which the Collateral is located and shall be reasonably
satisfactory to Mezzanine Lender. In addition, Mezzanine Borrower shall provide
all other documentation Mezzanine Lender reasonably requires to be delivered by
Mezzanine Borrower in connection with such assumption, together with an
Officer's Certificate certifying that (i) the assumption to be effected will be
effected in compliance with the terms of this Agreement and (ii) will not impair
or otherwise adversely affect the validity or priority of the Lien of the Pledge
(or replacement pledge agreements, as applicable);
(D) prior to any such transaction, the proposed transferee shall
deliver to Mezzanine Lender an Officer's Certificate stating that (x) such
transferee is not an "employee benefit plan" within the meaning of Section 3(3)
of ERISA that is subject Title I of ERISA or any other Similar Law and (y) the
underlying assets of the proposed transferee do not constitute assets of any
such employee benefit plan for purposes of ERISA or any Similar Law;
(E) if the transfer is to (i) an entity other than a Pre-approved
Transferee, such transfer shall be subject to Mezzanine Lender's consent in its
sole discretion, and (ii) a Permitted
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Borrower Transferee, such transfer shall be subject to Mezzanine Lender's prior
written consent in its reasonable discretion;
(F) the terms of Section 8.6 shall be complied with and Mezzanine
Borrower shall cause the transferee to deliver to Mezzanine Lender its
organizational documents solely for the purpose of Mezzanine Lender confirming
that such organizational documents comply with the single purpose bankruptcy
remote entity requirements set forth herein; and
(G) Mezzanine Lender shall have received the payment of, or
reimbursement for, all reasonable costs and expenses incurred by Mezzanine
Lender (and any Servicer) in connection therewith (including, without
limitation, reasonable attorneys' fees and disbursements).
SECTION 8.6 NOTICE REQUIRED; LEGAL OPINIONS. Not less than five (5)
Business Days prior to the closing of any transaction permitted under the
provisions of Sections 8.2 through 8.5, Mezzanine Borrower shall deliver or
cause to be delivered to Mezzanine Lender (A) an Officer's Certificate
describing the proposed transaction and stating that such transaction is
permitted hereunder and under the other Loan Documents (First Mezzanine),
together with any documents upon which such Officer's Certificate is based, and
(B) if required by Section 8.4(d), a legal opinion of counsel to Mezzanine
Borrower or the transferee selected by either of them (to the extent approved by
Mezzanine Lender), in form and substance consistent with similar opinions then
being required by the Mezzanine Lender and acceptable to the Mezzanine Lender,
confirming, among other things, that the assets of the Mezzanine Borrower, and
of its managing general partner or managing member, as applicable, will not be
substantively consolidated with the assets of such owners or Controlling Persons
of the Mezzanine Borrower as Mezzanine Lender may specify, in the event of a
bankruptcy or similar proceeding involving such owners or Controlling Persons.
SECTION 8.7 LEASES.
8.7.1 NEW LEASES AND LEASE MODIFICATIONS. Except as otherwise
provided in this Section 8.7, Mezzanine Borrower shall not (i) permit Mortgage
Borrower to enter into any Lease on terms other than "market" and rental rates
(in Borrower's good faith judgment), or (ii) enter into any Material Lease (a
NEW LEASE), (iii) consent to the assignment of any Material Lease (unless
required to do so by the terms of such Lease) that releases the original Tenant
from its obligations under the Lease, or (iv) modify any Material Lease
(including, without limitation, accept a surrender of any portion of the
Property subject to a Material Lease (unless otherwise permitted or required by
law), allow a reduction in the term of any Material Lease or a reduction in the
Rent payable under any Lease, change any renewal provisions of any Material
Lease, materially increase the obligations of the landlord or materially
decrease the obligations of any Tenant) or terminate any Lease (any such action
referred to in clauses (iii) and (iv) being referred to herein as a LEASE
MODIFICATION) without the prior written consent of Mezzanine Lender which
consent shall not be unreasonably withheld or delayed. Any New Lease or Lease
Modification that requires Mezzanine Lender's consent shall be delivered to
Mezzanine Lender for approval not less than ten (10) Business Days prior to the
effective date of such New Lease or Lease Modification.
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8.7.2 LEASING CONDITIONS. Subject to terms of this Section
8.7, provided no Event of Default shall have occurred and be continuing,
Mortgage Borrower may enter into a New Lease or Lease Modification, without
Mezzanine Lender's prior written consent, that satisfies each of the following
conditions (as evidenced by an Officer's Certificate delivered to Mezzanine
Lender prior to Mortgage Borrower's entry into such New Lease or Lease
Modification):
(a) with respect to a New Lease or Lease Modification, the
premises demised thereunder is not more than 10,000 net rentable square feet of
the Property;
(b) the term of such New Lease or Lease Modification, as
applicable, does not exceed 120 months, plus up to two (2) 60-month option terms
(or equivalent combination of renewals);
(c) the New Lease or Lease Modification provides for "market"
rental rates other terms and does not contain any terms which would adversely
affect Mezzanine Lender's rights under the Loan Documents (First Mezzanine) or
that would have a Material Adverse Effect;
(d) the New Lease or Lease Modification, as applicable,
provides that the premises demised thereby cannot be used for any of the
following uses; any pornographic or obscene purposes, any commercial sex
establishment, any pornographic, obscene, nude or semi-nude performances,
modeling, materials, activities or sexual conduct or any other use that has or
could reasonably be expected to have a Material Adverse Effect;
(e) the Tenant under such New Lease or Lease Modification, as
applicable, is not an Affiliate of Mortgage Borrower;
(f) the New Lease or Lease Modification, as applicable, does
not prevent Proceeds from being held and disbursed by Mezzanine Lender in
accordance with the terms of the Loan Documents (Mortgage) and does not entitle
any Tenant to receive and retain Proceeds except those that may be specifically
awarded to it in condemnation proceedings because of the Condemnation of its
trade fixtures and its leasehold improvements which have not become part of the
Property and such business loss as Tenant may specifically and separately
establish; and
(g) the New Lease or Lease Modification, as applicable
satisfies the requirements of Section 8.7.7 and Section 8.7.8 of the Loan
Agreement (Mortgage).
8.7.3 DELIVERY OF NEW LEASE OR LEASE MODIFICATION. Upon the
execution of any New Lease or Lease Modification, as applicable, Mezzanine
Borrower shall cause Mortgage Borrower to deliver to Mezzanine Lender an
executed copy of the Lease.
8.7.4 LEASE AMENDMENTS. Mezzanine Borrower shall cause
Mortgage Borrower to agree that it shall not have the right or power, as against
Mezzanine Lender without its consent, to cancel, abridge, amend or otherwise
modify any Lease unless such modification complies with this Section 8.7.
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8.7.5 SECURITY DEPOSITS. All security or other deposits of
Tenants of the Property shall be treated as trust funds and shall not be
commingled with any other funds of Mortgage Borrower, and such deposits shall be
deposited, upon receipt of the same by Mortgage Borrower in a separate trust
account maintained by Mortgage Borrower expressly for such purpose; provided,
however, so long as such security deposits do not, in the aggregate exceed the
sum of $100,000 at any Property, Mezzanine Borrower shall not be required to
cause Mortgage Borrower to treat such deposits at such Property as trust funds
and may commingle such deposits. Within ten (10) Business Days after written
request by Mezzanine Lender, Mezzanine Borrower shall cause Mortgage Borrower to
furnish to Mezzanine Lender reasonably satisfactory evidence of compliance with
this Section 8.7.5, together with a statement of all security deposits deposited
with Mortgage Borrower by the Tenants and, if such deposits exceed the sum of
$100,000 in the aggregate at any Property, the location and account number of
the account in which such security deposits are held.
8.7.6 NO DEFAULT UNDER LEASES. Mezzanine Borrower shall cause
Mortgage Borrower to (i) promptly perform and observe all of the material terms,
covenants and conditions required to be performed and observed by Mortgage
Borrower under the Leases and the REAs, if the failure to perform or observe the
same would have a Material Adverse Effect; (ii) exercise, within ten (10)
Business Days after a written request by Mezzanine Lender, any right to request
from the Tenant under any Lease, or the party to any REAs, a certificate with
respect to the status thereof and (iii) not collect any of the Rents, more than
one (1) month in advance (except that Mortgage Borrower may collect such
security deposits and last month's Rents as are permitted by Legal Requirements
and are commercially reasonable in the prevailing market and collect other
charges in accordance with the terms of each Lease).
IX. INTEREST RATE CAP AGREEMENT
SECTION 9.1 INTEREST RATE CAP AGREEMENT. Mezzanine Borrower shall
maintain the Interest Rate Cap Agreement (or any Replacement Interest Rate Cap
Agreement (First Mezzanine) or Extension Interest Rate Cap Agreement) with an
Acceptable Counterparty in effect and having a term extending through the
Maturity Date and an initial notional amount equal to the Loan Amount, subject
to reduction to reflect prepayments of principal amounts of the Loan. The
Interest Rate Cap Agreement (or any Replacement Interest Rate Cap Agreement
(First Mezzanine) or Extension Interest Rate Cap Agreement, as applicable) shall
have a strike rate equal to the Maximum LIBOR Pay Rate (First Mezzanine). The
notional amount of the Interest Rate Cap Agreement (or any Replacement Interest
Rate Cap Agreement (First Mezzanine) or Extension Interest Rate Cap Agreement,
as applicable) may be reduced from time to time in amounts equal to any
prepayment of the principal of the Loan made in accordance with the Loan
Documents (First Mezzanine), provided that the strike rate shall be equal to the
Maximum LIBOR Pay Rate (First Mezzanine).
SECTION 9.2 PLEDGE AND COLLATERAL ASSIGNMENT. Mezzanine Borrower
hereby pledges, assigns, transfers, delivers and grants a continuing first
priority lien to Mezzanine Lender, as security for payment of all sums due in
respect of the Loan and the performance of all other terms, conditions and
covenants of this Agreement and any other Loan Documents (First Mezzanine) on
Mezzanine Borrower's part to be paid and performed, in, to and under all of
Mezzanine Borrower's right, title and interest whether now owned or hereafter
acquired and
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whether now existing or hereafter arising (collectively, the RATE CAP COLLATERAL
(FIRST MEZZANINE)): (i) in the Interest Rate Cap Agreement (as soon as such
agreement is effective or when and if any replacement agreement becomes
effective, any Replacement Interest Rate Cap Agreement (First Mezzanine) or
Extension Interest Rate Cap Agreement); (ii) to receive any and all payments
under the Interest Rate Cap Agreement (or, when and if any such agreement
becomes effective, any Replacement Interest Rate Cap Agreement (First Mezzanine)
or Extension Interest Rate Cap Agreement), whether as contractual obligations,
damages or otherwise; and (iii) to all claims, rights, powers, privileges,
authority, options, security interests, liens and remedies, if any, under or
arising out of the Interest Rate Cap Agreement (as soon as such agreement is
effective or when and if any such agreement becomes effective, any Replacement
Interest Rate Cap Agreement (First Mezzanine) or Extension Interest Rate Cap
Agreement), in each case including all accessions and additions to,
substitutions for and replacements, products and proceeds of any of the
foregoing. Mezzanine Borrower shall deliver to Mezzanine Lender an executed
counterpart of such Interest Rate Cap Agreement, Replacement Interest Rate Cap
Agreement (First Mezzanine) or Extension Interest Rate Cap Agreement (First
Mezzanine) (which shall, by its terms, authorize the assignment to Mezzanine
Lender and require that payments be made directly to Mezzanine Lender) and
notify the Counterparty of such assignment (either in such Interest Rate Cap
Agreement (First Mezzanine), Replacement Interest Rate Cap Agreement (First
Mezzanine) or Extension Interest Rate Cap Agreement or by separate instrument).
Mezzanine Borrower shall not, without obtaining the prior written consent of
Mezzanine Lender, further pledge, transfer, deliver, assign or grant any
security interest in the Interest Rate Cap Agreement (First Mezzanine) (or, when
and if any such agreement becomes effective, any Replacement Interest Rate Cap
Agreement (First Mezzanine) or Extension Interest Rate Cap Agreement), or permit
any Lien or encumbrance to attach thereto, or any levy to be made thereon, or
any UCC-1 Financing Statements or any other notice or instrument as may be
required under the UCC, as appropriate, except those naming Mezzanine Lender as
the secured party, to be filed with respect thereto. Notwithstanding the
foregoing, upon a prepayment of a portion of the principal amount of the Loan,
Mezzanine Borrower shall have the right to transfer a portion of the Interest
Rate Cap Agreement (First Mezzanine) or to reduce the notional amount thereof so
long as the notional amount remaining under the Interest Rate Cap Agreement
(First Mezzanine) equals or exceeds the then Principal Amount of the Mezzanine
Note. Mezzanine Lender agrees to reasonably cooperate with Mezzanine Borrower,
at Mezzanine Borrower's sole cost and expense, to effect such transfer or
reduction, free of Mezzanine Lender's Lien on such Agreement.
SECTION 9.3 COVENANTS.
(a) Mezzanine Borrower shall comply with all of its
obligations under the terms and provisions of the Interest Rate Cap Agreement
(First Mezzanine). All amounts paid by the Counterparty under the Interest Rate
Cap Agreement to Mezzanine Borrower or Mezzanine Lender shall be deposited
immediately into the First Mezzanine Account pursuant to Section 3.1. Mezzanine
Borrower shall take all actions reasonably requested by Mezzanine Lender to
enforce Mezzanine Borrower's rights under the Interest Rate Cap Agreement (First
Mezzanine) in the event of a default by the Counterparty thereunder and shall
not waive, amend or otherwise modify any of its rights thereunder.
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(b) Mezzanine Borrower shall defend Mezzanine Lender's right,
title and interest in and to the Rate Cap Collateral (First Mezzanine) pledged
by Mezzanine Borrower pursuant hereto or in which it has granted a security
interest pursuant hereto against the claims and demands of all other Persons.
(c) In the event of (x) any downgrade, withdrawal or
qualification (each, a DOWNGRADE) of the rating of the Counterparty such that,
thereafter, the Counterparty shall cease to be an Acceptable Counterparty and
(y) the Counterparty shall fail to comply with the requirements contained in the
Interest Rate Cap Agreement (First Mezzanine) which are described in EXHIBIT I
upon such occurrence, the Mezzanine Borrower shall either (i) obtain Lender's
prior written consent to retain such Counterparty or (ii) replace the Interest
Rate Cap Agreement (First Mezzanine) with a Replacement Interest Cap Agreement,
(x) having a term extending through the end of the Interest Period in which the
Maturity Date occurs, (y) in a notional amount at least equal to the Principal
Amount of the Loan then outstanding, and (z) having a strike rate equal to the
Maximum LIBOR Pay Rate (First Mezzanine).
(d) In the event that Mezzanine Borrower fails to purchase and
deliver to Mezzanine Lender the Interest Rate Cap Agreement (First Mezzanine) as
and when required hereunder, Mezzanine Lender may purchase the Interest Rate Cap
Agreement (First Mezzanine) and the cost incurred by Mezzanine Lender in
purchasing the Interest Rate Cap Agreement (First Mezzanine) shall be paid by
Mezzanine Borrower to Mezzanine Lender with interest thereon at the Default Rate
from the date such cost was incurred by Mezzanine Lender until such cost is paid
by Mezzanine Borrower to Mezzanine Lender.
(e) Mezzanine Borrower shall not (i) without the prior written
consent of Mezzanine Lender, modify, amend or supplement the terms of the
Interest Rate Cap Agreement (First Mezzanine), (ii) without the prior written
consent of Mezzanine Lender, except in accordance with the terms of the Interest
Rate Cap Agreement (First Mezzanine), cause the termination of the Interest Rate
Cap Agreement (First Mezzanine) prior to its stated maturity date, (iii) without
the prior written consent of Mezzanine Lender, except as aforesaid, waive or
release any obligation of the Counterparty (or any successor or substitute party
to the Interest Rate Cap Agreement (First Mezzanine)) under the Interest Rate
Cap Agreement (First Mezzanine), (iv) without the prior written consent of
Mezzanine Lender, consent or agree to any act or omission to act on the part of
the Counterparty (or any successor or substitute party to the Interest Rate Cap
Agreement (First Mezzanine)) which, without such consent or agreement, would
constitute a default under the Interest Rate Cap Agreement (First Mezzanine),
(v) fail to exercise promptly and diligently each and every material right which
it may have under the Interest Rate Cap Agreement (First Mezzanine), (vi) take
or intentionally omit to take any action or intentionally suffer or permit any
action to be omitted or taken, the taking or omission of which would result in
any right of offset against sums payable under the Interest Rate Cap Agreement
(First Mezzanine) or any defense by the Counterparty (or any successor or
substitute party to the Interest Rate Cap Agreement (First Mezzanine)) to
payment or (vii) fail to give prompt notice to Mezzanine Lender of any notice of
default given by or to Mezzanine Borrower under or with respect to the Interest
Rate Cap Agreement (First Mezzanine), together with a complete copy of such
notice.
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(f) In connection with an Interest Rate Cap Agreement (First
Mezzanine), Mezzanine Borrower shall obtain and deliver to Mezzanine Lender an
Opinion of Counsel from counsel (which counsel may be in-house counsel for the
Counterparty) for the Counterparty upon which Mezzanine Lender and its
successors and assigns may rely (the COUNTERPARTY OPINION), under New York law
and, if the Counterparty is a non-U.S. entity, the applicable foreign law,
substantially in compliance with the requirements set forth in EXHIBIT F or in
such other form approved by the Mezzanine Lender.
SECTION 9.4 REPRESENTATIONS AND WARRANTIES. Mezzanine Borrower
hereby covenants with, and represents and warrants to, Mezzanine Lender as
follows:
(a) The Interest Rate Cap Agreement (First Mezzanine)
constitutes the legal, valid and binding obligation of Mezzanine Borrower,
enforceable against Mezzanine Borrower in accordance with its terms, subject
only to applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).
(b) The Rate Cap Collateral (First Mezzanine) is free and
clear of all claims or security interests of every nature whatsoever, except
such as are created pursuant to this Agreement and the other Loan Documents
(First Mezzanine), and Mezzanine Borrower has the right to pledge and grant a
security interest in the same as herein provided without the consent of any
other Person other than any such consent that has been obtained and is in full
force and effect.
(c) The Rate Cap Collateral (First Mezzanine) has been duly
and validly pledged hereunder. All consents and approvals required to be
obtained by Mezzanine Borrower for the consummation of the transactions
contemplated by this Agreement have been obtained.
(d) Giving effect to the aforesaid grant and assignment to
Mezzanine Lender, Mezzanine Lender has, as of the date of this Agreement, and as
to Rate Cap Collateral (First Mezzanine) acquired from time to time after such
date, shall have, a valid, and upon proper filing, perfected and continuing
first priority lien upon and security interest in the Rate Cap Collateral (First
Mezzanine); provided that no representation or warranty is made with respect to
the perfected status of the security interest of Mezzanine Lender in the
proceeds of Rate Cap Collateral (First Mezzanine) consisting of "cash proceeds"
or "non-cash proceeds" as defined in the UCC except if, and to the extent, the
provisions of Section 9-306 of the UCC shall be complied with.
(e) Except for financing statements filed or to be filed in
favor of Mezzanine Lender as secured party, there are no financing statements
under the UCC covering any or all of the Rate Cap Collateral (First Mezzanine)
and Mezzanine Borrower shall not, without the prior written consent of Mezzanine
Lender, until payment in full of all of the Obligations (First Mezzanine),
execute and file in any public office, any enforceable financing statement or
statements covering any or all of the Rate Cap Collateral (First Mezzanine),
except financing statements filed or to be filed in favor of Mezzanine Lender as
secured party.
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SECTION 9.5 PAYMENTS. If Mezzanine Borrower at any time shall be
entitled to receive any payments with respect to the Interest Rate Cap Agreement
(First Mezzanine), such amounts shall, immediately upon becoming payable to
Mezzanine Borrower, be deposited by Counterparty into the First Mezzanine
Account.
SECTION 9.6 REMEDIES. Subject to the provisions of the Interest Rate
Cap Agreement (First Mezzanine), if an Event of Default shall occur and then be
continuing:
(a) Mezzanine Lender, without obligation to resort to any
other security, right or remedy granted under any other agreement or instrument,
shall have the right to, in addition to all rights, powers and remedies of a
secured party pursuant to the UCC, at any time and from time to time, sell,
resell, assign and deliver, in its sole discretion, any or all of the Rate Cap
Collateral (First Mezzanine) (in one or more parcels and at the same or
different times) and all right, title and interest, claim and demand therein and
right of redemption thereof, at public or private sale, for cash, upon credit or
for future delivery, and in connection therewith Mezzanine Lender may grant
options and may impose reasonable conditions such as requiring any purchaser to
represent that any "securities" constituting any part of the Rate Cap Collateral
(First Mezzanine) are being purchased for investment only, Mezzanine Borrower
hereby waiving and releasing any and all equity or right of redemption to the
fullest extent permitted by the UCC or applicable law. If all or any of the Rate
Cap Collateral (First Mezzanine) is sold by Mezzanine Lender upon credit or for
future delivery, Mezzanine Lender shall not be liable for the failure of the
purchaser to purchase or pay for the same and, in the event of any such failure,
Mezzanine Lender may resell such Rate Cap Collateral (First Mezzanine). It is
expressly agreed that Mezzanine Lender may exercise its rights with respect to
less than all of the Rate Cap Collateral (First Mezzanine), leaving unexercised
its rights with respect to the remainder of the Rate Cap Collateral (First
Mezzanine), provided, however, that such partial exercise shall in no way
restrict or jeopardize Mezzanine Lender's right to exercise its rights with
respect to all or any other portion of the Rate Cap Collateral (First Mezzanine)
at a later time or times.
(b) Mezzanine Lender may exercise, either by itself or by its
nominee or designee, in the name of Mezzanine Borrower, all of Mezzanine
Lender's rights, powers and remedies in respect of the Rate Cap Collateral
(First Mezzanine), hereunder and under law.
(c) Mezzanine Borrower hereby irrevocably, in the name of
Mezzanine Borrower or otherwise, authorizes and empowers Mezzanine Lender and
assigns and transfers unto Mezzanine Lender, and constitutes and appoints
Mezzanine Lender its true and lawful attorney-in-fact, and as its agent,
irrevocably, with full power of substitution for Mezzanine Borrower and in the
name of Mezzanine Borrower, upon the occurrence and during the continuance of an
Event of Default, (i) to exercise and enforce every right, power, remedy,
authority, option and privilege of Mezzanine Borrower under the Interest Rate
Cap Agreement (First Mezzanine), including any power to subordinate or modify
the Interest Rate Cap Agreement (First Mezzanine) (but not, unless an Event of
Default exists and is continuing, the right to terminate or cancel the Interest
Rate Cap Agreement (First Mezzanine)), or to give any notices, or to take any
action resulting in such subordination, termination, cancellation or
modification and (ii) in order to more fully vest in Mezzanine Lender the rights
and remedies provided for herein, to exercise all of the rights, remedies and
powers granted to Mezzanine Lender in this Agreement, and Mezzanine Borrower
further authorizes and empowers Mezzanine
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Lender, as Mezzanine Borrower's attorney-in-fact, and as its agent, irrevocably,
with full power of substitution for Mezzanine Borrower and in the name of
Mezzanine Borrower, upon the occurrence and during the continuance of an Event
of Default, to give any authorization, to furnish any information, to make any
demands, to execute any instruments and to take any and all other action on
behalf of and in the name of Mezzanine Borrower which in the opinion of
Mezzanine Lender may be necessary or appropriate to be given, furnished, made,
exercised or taken under the Interest Rate Cap Agreement (First Mezzanine), in
order to comply therewith, to perform the conditions thereof or to prevent or
remedy any default by Mezzanine Borrower thereunder or to enforce any of the
rights of Mezzanine Borrower thereunder. These powers-of-attorney are
irrevocable and coupled with an interest, and any similar or dissimilar powers
heretofore given by Mezzanine Borrower in respect of the Rate Cap Collateral
(First Mezzanine) to any other Person are hereby revoked.
(d) Upon the occurrence and during the continuance of an Event
of Default, Mezzanine Lender may, without notice to, or assent by, Mezzanine
Borrower or any other Person (to the extent permitted by law), but without
affecting any of the Obligations (First Mezzanine), in the name of Mezzanine
Borrower or in the name of Mezzanine Lender, notify the Counterparty, or if
applicable, any other counterparty to the Interest Rate Cap Agreement (First
Mezzanine), to make payment and performance directly to Mezzanine Lender; extend
the time of payment and performance of, compromise or settle for cash, credit or
otherwise, and upon any terms and conditions, any obligations owing to Mezzanine
Borrower, or claims of Mezzanine Borrower, under the Interest Rate Cap Agreement
(First Mezzanine); file any claims, commence, maintain or discontinue any
actions, suits or other proceedings deemed by Mezzanine Lender necessary or
advisable for the purpose of collecting upon or enforcing the Interest Rate Cap
Agreement (First Mezzanine); and execute any instrument and do all other things
deemed necessary and proper by Mezzanine Lender to protect and preserve and
realize upon the Rate Cap Collateral (First Mezzanine) and the other rights
contemplated hereby.
(e) Pursuant to the powers-of-attorney provided for above,
Mezzanine Lender may take any action and exercise and execute any instrument
which it may deem necessary or advisable to accomplish the purposes hereof;
provided, however, that Mezzanine Lender shall not be permitted to take any
action pursuant to said power-of-attorney that would conflict with any
limitation on Mezzanine Lender's rights with respect to the Rate Cap Collateral
(First Mezzanine). Without limiting the generality of the foregoing, Mezzanine
Lender, after the occurrence of an Event of Default, shall have the right and
power to receive, endorse and collect all checks and other orders for the
payment of money made payable to Mezzanine Borrower representing: (i) any
payment of obligations owed pursuant to the Interest Rate Cap Agreement (First
Mezzanine), (ii) interest accruing on any of the Rate Cap Collateral (First
Mezzanine) or (iii) any other payment or distribution payable in respect of the
Rate Cap Collateral (First Mezzanine) or any part thereof, and for and in the
name, place and stead of Mezzanine Borrower, to execute endorsements,
assignments or other instruments of conveyance or transfer in respect of any
property which is or may become a part of the Rate Cap Collateral (First
Mezzanine) hereunder.
(f) Mezzanine Lender may exercise all of the rights and
remedies of a secured party under the UCC.
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(g) Without limiting any other provision of this Agreement or
any of Mezzanine Borrower's rights hereunder, and without waiving or releasing
Mezzanine Borrower from any obligation or default hereunder, Mezzanine Lender
shall have the right, but not the obligation, to perform any act or take any
appropriate action, as it, in its reasonable judgment, may deem necessary to
protect the security of this Agreement, to cure such Event of Default or to
cause any term, covenant, condition or obligation required under this Agreement
or the Interest Rate Cap Agreement (First Mezzanine) to be performed or observed
by Mezzanine Borrower to be promptly performed or observed on behalf of
Mezzanine Borrower. All amounts advanced by, or on behalf of, Mezzanine Lender
in exercising its rights under this Section 9.7(g) (including, but not limited
to, reasonable legal expenses and disbursements incurred in connection
therewith), together with interest thereon at the Default Rate from the date of
each such advance, shall be payable by Mezzanine Borrower to Mezzanine Lender
upon demand and shall be secured by this Agreement.
SECTION 9.7 SALES OF RATE CAP COLLATERAL (FIRST MEZZANINE). No
demand, advertisement or notice, all of which are, to the fullest extent
permitted by law, hereby expressly waived by Mezzanine Borrower, shall be
required in connection with any sale or other disposition of all or any part of
the Rate Cap Collateral (First Mezzanine), except that Mezzanine Lender shall
give Mezzanine Borrower at least thirty (30) Business Days' prior written notice
of the time and place of any public sale or of the time when and the place where
any private sale or other disposition is to be made, which notice Mezzanine
Borrower hereby agrees is reasonable, all other demands, advertisements and
notices being hereby waived. To the extent permitted by law, Mezzanine Lender
shall not be obligated to make any sale of the Rate Cap Collateral (First
Mezzanine) if it shall determine not to do so, regardless of the fact that
notice of sale may have been given, and Mezzanine Lender may without notice or
publication adjourn any public or private sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. Upon each private sale of the Rate Cap Collateral (First Mezzanine)
of a type customarily sold in a recognized market and upon each public sale,
unless prohibited by any applicable statute which cannot be waived, Mezzanine
Lender (or its nominee or designee) may purchase any or all of the Rate Cap
Collateral (First Mezzanine) being sold, free and discharged from any trusts,
claims, equity or right of redemption of Mezzanine Borrower, all of which are
hereby waived and released to the extent permitted by law, and may make payment
therefor by credit against any of the Obligations (First Mezzanine) in lieu of
cash or any other obligations. In the case of all sales of the Rate Cap
Collateral (First Mezzanine), public or private, Mezzanine Borrower shall pay
all reasonable costs and expenses of every kind for sale or delivery, including
brokers' and attorneys' fees and disbursements and any tax imposed thereon.
However, the proceeds of sale of Rate Cap Collateral (First Mezzanine) shall be
available to cover such costs and expenses, and, after deducting such costs and
expenses from the proceeds of sale, Mezzanine Lender shall apply any residue to
the payment of the Obligations (First Mezzanine) in the order of priority as set
forth in Section 17.5.
SECTION 9.8 PUBLIC SALES NOT POSSIBLE. Mezzanine Borrower
acknowledges that the terms of the Interest Rate Cap Agreement (First Mezzanine)
may prohibit public sales, that the Rate Cap Collateral (First Mezzanine) may
not be of the type appropriately sold at public sales, and that such sales may
be prohibited by law. In light of these considerations, Mezzanine Borrower
agrees that private sales of the Rate Cap Collateral (First Mezzanine) shall not
be
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deemed to have been made in a commercially unreasonably manner by mere virtue of
having been made privately.
SECTION 9.9 RECEIPT OF SALE PROCEEDS. Upon any sale of the Rate Cap
Collateral (First Mezzanine) by Mezzanine Lender hereunder (whether by virtue of
the power of sale herein granted, pursuant to judicial process or otherwise),
the receipt by Mezzanine Lender or the officer making the sale or the proceeds
of such sale shall be a sufficient discharge to the purchaser or purchasers of
the Rate Cap Collateral (First Mezzanine) so sold, and such purchaser or
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to Mezzanine Lender or such officer or be answerable in
any way for the misapplication or non-application thereof.
SECTION 9.10 EXTENSION INTEREST RATE CAP AGREEMENT (FIRST
MEZZANINE). If Mezzanine Borrower exercises any of its options to extend the
Maturity Date pursuant to Section 5 of the Note, then, on or prior to the
Maturity Date being extended, the Mezzanine Borrower shall obtain or have in
place an Extension Interest Rate Cap Agreement (i) having a term through the end
of the Interest Period in which the extended Maturity Date occurs, (ii) in a
notional amount at least equal to the Principal Amount of the Loan as of the
Maturity Date being extended, and (iii) having a strike rate equal to an amount
such that the maximum interest rate paid by the Mezzanine Borrower after giving
effect to payments made under such Extension Interest Rate Cap Agreement shall
equal no more than the Maximum LIBOR Pay Rate (First Mezzanine).
X. RESERVED
XI. BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER
INFORMATION
SECTION 11.1 BOOKS AND RECORDS. Mezzanine Borrower shall cause
Mortgage Borrower to keep and maintain on a fiscal year basis proper books and
records separate from any other Person, in which accurate and complete entries
shall be made of all dealings or transactions of or in relation to the Mortgage
Note, the Mezzanine Note, the Property and the business and affairs of Mortgage
Borrower and Mezzanine Borrower relating to the Property which shall reflect all
items of income and expense in connection with the operation on an individual
basis of the Property and in connection with any services, equipment or
furnishings provided in connection with the operation of the Property, in
accordance with GAAP. Mezzanine Lender and its authorized representatives shall
have the right at reasonable times and upon reasonable notice to examine the
books and records of Mortgage Borrower and Mezzanine Borrower relating to the
operation of the Property and to make such copies or extracts thereof as
Mezzanine Lender may reasonably require. Mezzanine Borrower shall simultaneously
furnish (or cause Mortgage Borrower to furnish) to Mezzanine Lender copies of
all financial statements, reports and information required to be submitted by
Mortgage Borrower to Mortgage Lender pursuant to the Loan Agreement (Mortgage).
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SECTION 11.2 FINANCIAL STATEMENTS.
11.2.1 BUDGET.
Not later than February 15th of each Fiscal Year hereafter,
Mezzanine Borrower shall prepare or cause to be prepared and deliver to
Mezzanine Lender, for informational purposes only, a Budget in respect of the
Property for the Fiscal Year in which such delivery date falls. If Mezzanine
Borrower or Mortgage Borrower subsequently amends the Budget, Mezzanine Borrower
shall promptly deliver the amended Budget to Mezzanine Lender.
11.2.2 OTHER INFORMATION. Mezzanine Borrower shall, promptly
after written request by Mezzanine Lender, furnish or cause to be furnished to
Mezzanine Lender, in such manner and in such detail as may be reasonably
requested by Mezzanine Lender, such reasonable additional information as may be
reasonably requested with respect to the Property and/or the Collateral. The
information required to be furnished by Mezzanine Borrower to Mezzanine Lender
under this Section 11.2 shall be provided in both hard copy format and
electronic format; provided that Mezzanine Borrower shall only be required to
provide the information required under this Section 11.2.7 in electronic format
if such information is so available in the ordinary course of the operations of
the Mezzanine Borrower and Manager, and without significant expense.
XII. ENVIRONMENTAL MATTERS
SECTION 12.1 REPRESENTATIONS. Mezzanine Borrower hereby represents
and warrants that except as set forth in the environmental reports and studies
delivered to Mezzanine Lender (the ENVIRONMENTAL REPORTS), (i) neither Mezzanine
Borrower nor Mortgage Borrower (to the Best of Mezzanine Borrower's Knowledge
for the period prior to April 2, 2004) has engaged in or knowingly permitted any
operations or activities upon, or any use or occupancy of the Property, or any
portion thereof, for the purpose of or in any way involving the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal of any Hazardous Materials on, under, in or about the
Property, or transported any Hazardous Materials to, from or across the
Property, except in all cases in material compliance with Environmental Laws and
only in the course of legitimate business operations at the Property; (ii) to
the Best of Mezzanine Borrower's Knowledge, no tenant, occupant or user of the
Property, or any other Person, has engaged in or permitted any operations or
activities upon, or any use or occupancy of the Property, or any portion
thereof, for the purpose of or in any material way involving the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal of any Hazardous Materials on, in or about the Property, or
transported any Hazardous Materials to, from or across the Property, except in
all cases in material compliance with Environmental Laws and only in the course
of legitimate business operations at the Property; (iii) to the Best of
Mezzanine Borrower's Knowledge, no Hazardous Materials are presently
constructed, deposited, stored, or otherwise located on, under, in or about the
Property except in material compliance with Environmental Laws; (iv) to the Best
of Mezzanine Borrower's Knowledge, no Hazardous Materials have migrated from the
Property upon or beneath other properties which would reasonably be expected to
result in material liability for Mezzanine Borrower or Mortgage Borrower; and
(v) to the Best of Mezzanine Borrower's Knowledge, no Hazardous Materials have
migrated or threaten to migrate from other
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properties upon, about or beneath the Property which would reasonably be
expected to result in material liability for Mezzanine Borrower or Mortgage
Borrower.
SECTION 12.2 COVENANTS.
12.2.1 COMPLIANCE WITH ENVIRONMENTAL LAWS. Subject to Mortgage
Borrower's right to contest under Section 7.3 of the Loan Agreement (Mortgage),
Mezzanine Borrower covenants and agrees with Mezzanine Lender that it shall
comply and shall cause Mortgage Borrower to comply in all material respects with
all Environmental Laws. If at any time during the continuance of the Lien of the
Security Instrument and/or Pledge, a Governmental Authority having jurisdiction
over the Property requires remedial action to correct the presence of Hazardous
Materials in, around, or under the Property (an ENVIRONMENTAL EVENT), Mezzanine
Borrower shall deliver prompt notice of the occurrence of such Environmental
Event to Mezzanine Lender. Within thirty (30) days after Mezzanine Borrower has
knowledge of the occurrence of an Environmental Event, Mezzanine Borrower shall
deliver to Mezzanine Lender an Officer's Certificate (an ENVIRONMENTAL
CERTIFICATE) explaining the Environmental Event in reasonable detail and setting
forth the proposed remedial action, if any. Mezzanine Borrower shall promptly
provide Mezzanine Lender with copies of all notices which allege or identify any
actual or potential violation or noncompliance received by or prepared by or for
Mezzanine Borrower in connection with any Environmental Law. For purposes of
this paragraph, the term "notice" shall mean any summons, citation, directive,
order, claim, pleading, letter, application, filing, report, findings,
declarations or other materials pertinent to compliance of the Property and
Mezzanine Borrower with such Environmental Laws.
12.2.2 RESERVED.
SECTION 12.3 ENVIRONMENTAL REPORTS. Upon the occurrence and during
the continuance of an Environmental Event with respect to the Property or an
Event of Default, Mezzanine Lender shall have the right to have its consultants
perform a comprehensive environmental audit of the Property. Such audit shall be
conducted by an environmental consultant chosen by Mezzanine Lender and may
include a visual survey, a record review, an area reconnaissance assessing the
presence of hazardous or toxic waste or substances, PCBs or storage tanks at the
Property, an asbestos survey of the Property, which may include random sampling
of the Improvements and air quality testing, and such further site assessments
as Mezzanine Lender may reasonably require due to the results obtained from the
foregoing. Mezzanine Borrower grants (and shall cause Mortgage Borrower to
grant) to Mezzanine Lender, its agents, consultants and contractors the right to
enter the Property as reasonable or appropriate for the circumstances for the
purposes of performing such studies and the reasonable cost of such studies
shall be due and payable by Mezzanine Borrower to Mezzanine Lender upon demand
and shall be secured by the Lien of this Agreement and the Pledge. Mezzanine
Lender shall not unreasonably interfere with (and shall cause Mortgage Borrower
not to unreasonably interfere with), and Mezzanine Lender shall direct the
environmental consultant to use its commercially reasonable efforts not to
hinder, Mortgage Borrower's or any Tenant's, other occupant's or Manager's
operations upon the Property when conducting such audit, sampling or
inspections. By undertaking any of the measures identified in and pursuant to
this Section 12.3, Mezzanine Lender shall not be deemed to be exercising any
control over the operations of Mezzanine Borrower or Mortgage Borrower or the
handling of any environmental matter or hazardous
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wastes or substances of Mezzanine Borrower or Mortgage Borrower for purposes of
incurring or being subject to liability therefor.
SECTION 12.4 ENVIRONMENTAL INDEMNIFICATION. Mezzanine Borrower shall
protect, indemnify, save, defend, and hold harmless the Indemnified Parties from
and against any and all liability, loss, damage, actions, causes of action,
costs or expenses whatsoever (including reasonable attorneys' fees and expenses)
and any and all claims, suits and judgments which any Indemnified Party may
suffer, as a result of or with respect to: (a) any Environmental Claim relating
to or arising from the Property; (b) the violation of any Environmental Law in
connection with the Property; (c) any release, spill, or the presence of any
Hazardous Materials affecting the Property; and (d) the presence at, in, on or
under, or the release, escape, seepage, leakage, discharge or migration at or
from, the Property of any Hazardous Materials, whether or not such condition was
known or unknown to Mezzanine Borrower; provided that, in each case, Mezzanine
Borrower shall be relieved of its obligation under this subsection if any of the
matters referred to in clauses (a) through (d) above did not occur (but need not
have been discovered) prior to the foreclosure of the Pledge. If any such action
or other proceeding shall be brought against Mezzanine Lender, upon written
notice from Mezzanine Borrower to Mezzanine Lender (given reasonably promptly
following Mezzanine Lender's notice to Mezzanine Borrower of such action or
proceeding), Mezzanine Borrower shall be entitled to assume the defense thereof,
at Mezzanine Borrower's expense, with counsel reasonably acceptable to Mezzanine
Lender; provided, however, Mezzanine Lender may, at its own expense, retain
separate counsel to participate in such defense, but such participation shall
not be deemed to give Mezzanine Lender a right to control such defense, which
right Mezzanine Borrower expressly retains. Notwithstanding the foregoing, each
Indemnified Party shall have the right to employ separate counsel at Mezzanine
Borrower's expense if, in the reasonable opinion of legal counsel, a conflict or
potential conflict exists between the Indemnified Party and Mezzanine Borrower
that would make such separate representation advisable. Mezzanine Borrower shall
have no obligation to indemnify an Indemnified Party for damage or loss
resulting from such Indemnified Party's gross negligence or willful misconduct.
SECTION 12.5 RECOURSE NATURE OF CERTAIN INDEMNIFICATIONS.
Notwithstanding anything to the contrary provided in this Agreement or in any
other Loan Document (First Mezzanine), the indemnification provided in Section
12.4 shall be fully recourse to Mezzanine Borrower and shall be independent of,
and shall survive, the discharge of the Indebtedness, the release of the Lien
created by the Pledge, and/or the conveyance of title to the Collateral to
Mezzanine Lender or any purchaser or designee in connection with a foreclosure
of the Pledge or conveyance in lieu of foreclosure.
XIII. RESERVED
XIV. RESERVED
XV. ASSIGNMENTS AND PARTICIPATIONS.
SECTION 15.1 ASSIGNMENT AND ACCEPTANCE. Lender may, at Mezzanine
Borrower's sole cost and expense in accordance with Section 15.6, and subject to
Section 19.23, assign to one or more Persons all or a portion of its rights and
obligations under this Agreement
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and the other Loan Documents (First Mezzanine) (including, without limitation,
all or a portion of the Mezzanine Note); provided that the parties to each such
assignment shall execute and deliver to Mezzanine Lender, for its acceptance and
recording in the Register (as hereinafter defined), an Assignment and
Acceptance. In addition, Mezzanine Lender may participate (subject to Section
19.23) to one or more Persons all or any portion of its rights and obligations
under this Agreement and the other Loan Documents (First Mezzanine) (including
without limitation, all or a portion of the Mezzanine Note) utilizing such
documentation to evidence such participation and the parties' respective rights
thereunder as Mezzanine Lender, in its sole discretion, shall elect.
SECTION 15.2 EFFECT OF ASSIGNMENT AND ACCEPTANCE. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in such Assignment and Acceptance, (i) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of Mezzanine Lender, as the case may be, hereunder and such assignee
shall be deemed to have assumed such rights and obligations, and (ii) Mezzanine
Lender shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement and the other Loan
Documents (First Mezzanine) (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of Mezzanine Lender's rights and
obligations under this Agreement and the other Loan Documents (First Mezzanine),
Mezzanine Lender shall cease to be a party hereto) accruing from and after the
effective date of the Assignment and Acceptance, except with respect to (A) any
payments made by Mezzanine Borrower to Mezzanine Lender pursuant to the terms of
the Loan Documents (First Mezzanine) after the effective date of the Assignment
and Acceptance and (B) any letter of credit, cash deposit or other deposits or
security (other than the Liens of this Agreement and the Pledge and the other
Loan Documents (First Mezzanine)) delivered to or for the benefit of or
deposited with German American Capital Corporation, as Mezzanine Lender, for
which German American Capital Corporation shall remain responsible for the
proper disposition thereof until such items are delivered to a party who is
qualified as an Approved Bank and agrees to hold the same in accordance with the
terms and provisions of the agreement pursuant to which such items were
deposited.
SECTION 15.3 CONTENT. By executing and delivering an Assignment and
Acceptance, Mezzanine Lender and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, Mezzanine Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Documents (First Mezzanine) or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or security interest created or purported to
be created under or in connection with, this Agreement or any other Loan
Documents (First Mezzanine) or any other instrument or document furnished
pursuant hereto or thereto; (ii) Mezzanine Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of Mezzanine Borrower or the performance or observance by Mezzanine Borrower of
any of its obligations under any Loan Documents (First Mezzanine) or any other
instrument or document furnished pursuant thereto; (iii) such assignee confirms
that it has received a copy of this
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Agreement, together with copies of such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon Mezzanine Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents (First Mezzanine); (v) such assignee appoints and
authorizes Mezzanine Lender to take such action as agent on its behalf and to
exercise such powers and discretion under the Loan Documents (First Mezzanine)
as are delegated to Mezzanine Lender by the terms hereof together with such
powers and discretion as are reasonably incidental thereto; and (vi) such
assignee agrees that it will perform, in accordance with their terms, all of the
obligations which by the terms of this Agreement and the other Loan Documents
(First Mezzanine) are required to be performed by Mezzanine Lender.
SECTION 15.4 REGISTER. Mezzanine Lender shall maintain a copy of each
Assignment and Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of Mezzanine Lender and each assignee
pursuant to this Article XV and the Principal Amount of the Loan owing to each
such assignee from time to time (the REGISTER). The entries in the Register
shall, with respect to such assignees, be conclusive and binding for all
purposes, absent manifest error. The Register shall be available for inspection
by Mezzanine Borrower or any assignee pursuant to this Article XV at any
reasonable time and from time to time upon reasonable prior written notice.
SECTION 15.5 SUBSTITUTE NOTES. Upon its receipt of an Assignment and
Acceptance executed by an assignee, together with any Mezzanine Note or
Mezzanine Notes subject to such assignment, Mezzanine Lender shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
EXHIBIT J hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, and (iii) give prompt written
notice thereof to Mezzanine Borrower. Within five (5) Business Days after its
receipt of such notice, Mezzanine Borrower, at Mezzanine Lender's own expense,
shall execute and deliver to Mezzanine Lender in exchange and substitution for
the surrendered Mezzanine Note or Mezzanine Notes a new Mezzanine Note to the
order of such assignee in an amount equal to the portion of the Loan assigned to
it and a new Mezzanine Note to the order of Mezzanine Lender in an amount equal
to the portion of the Loan retained by it hereunder. Such new Mezzanine Note or
Mezzanine Notes shall be in an aggregate Principal Amount equal to the aggregate
then outstanding principal amount of such surrendered Mezzanine Note or
Mezzanine Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the Mezzanine
Note (modified, however, to the extent necessary so as not to impose duplicative
or increased obligations on Mezzanine Borrower and to delete obligations
previously satisfied by Mezzanine Borrower). Notwithstanding the provisions of
this Article XV, Mezzanine Borrower shall not be responsible or liable for any
additional taxes, reserves, adjustments or other costs and expenses that are
related to, or arise as a result of, any transfer of the Loan or any interest or
participation therein that arise solely and exclusively from the transfer of the
Loan or any interest or participation therein or from the execution of the new
Mezzanine Note contemplated by this Section 15.5, including, without limitation,
any mortgage tax. Mezzanine Lender and/or the assignees, as the case may be,
shall from time to time designate one agent through which Mezzanine Borrower
shall request all approvals and consents
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required or contemplated by this Agreement and on whose statements Mezzanine
Borrower may rely.
SECTION 15.6 PARTICIPATIONS. Subject to Section 19.23, each assignee
pursuant to this Article XV may sell participations to one or more Persons
(other than Mezzanine Borrower or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement and the other Loan
Documents (First Mezzanine) (including, without limitation, all or a portion of
the Mezzanine Note held by it); provided, however, that (i) such assignee's
obligations under this Agreement and the other Loan Documents (First Mezzanine)
shall remain unchanged, (ii) such assignee shall remain solely responsible to
the other parties hereto for the performance of such obligations, (iii) such
assignee shall remain the holder of any such Mezzanine Note for all purposes of
this Agreement and the other Loan Documents (First Mezzanine), and (iv)
Mezzanine Borrower, Mezzanine Lender and the assignees pursuant to this Article
XV shall continue to deal solely and directly with such assignee in connection
with such assignee's rights and obligations under this Agreement and the other
Loan Documents (First Mezzanine). In the event that more than one (1) party
comprises Mezzanine Lender, Mezzanine Lender shall designate one party to act on
the behalf of all parties comprising Mezzanine Lender in providing approvals and
all other necessary consents under the Loan Documents (First Mezzanine) and on
whose statements Mezzanine Borrower may rely.
SECTION 15.7 DISCLOSURE OF INFORMATION. Any assignee pursuant to this
Article XV may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Article XV, and subject to the
Securities Act or other applicable securities laws governing disclosure of
non-public information, disclose to the assignee or participant or proposed
assignee or participant, any information relating to Mezzanine Borrower
furnished to such assignee by or on behalf of Mezzanine Borrower; provided,
however, that, prior to any such disclosure, the assignee or participant or
proposed assignee or participant shall agree in writing for the benefit of
Mezzanine Borrower to preserve the confidentiality of any confidential
information received by it.
SECTION 15.8 SECURITY INTEREST IN FAVOR OF FEDERAL RESERVE BANK.
Notwithstanding any other provision set forth in this Agreement or any other
Loan Document (First Mezzanine), any assignee pursuant to this Article XV may at
any time create a security interest in all or any portion of its rights under
this Agreement or the other Loan Documents (First Mezzanine) (including, without
limitation, the amounts owing to it and the Mezzanine Note or Mezzanine Notes
held by it) in favor of any Federal Reserve Bank in accordance with Regulation A
of the Board of Governors of the Federal Reserve System.
XVI. RESERVED
XVII. DEFAULTS
SECTION 17.1 EVENT OF DEFAULT.
(a) Each of the following events shall constitute an event of
default hereunder (an EVENT OF DEFAULT):
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(i) if (A) the Indebtedness is not paid in full on the
Maturity Date, (B) any Debt Service is not paid in full on the applicable
Payment Date, (C) any prepayment of principal due under this Agreement or
the Mezzanine Note is not paid when due, (D) the Prepayment Fee is not
paid when due, (E) any deposit to the First Mezzanine Account or any of
the other Collateral Accounts is not made on the required deposit date
therefor; or (F) except as to any amount included in (A), (B), (C), (D)
and/or (E) of this clause (i), any other amount payable pursuant to this
Agreement, the Mezzanine Note or any other Loan Document (First Mezzanine)
is not paid in full when due and payable in accordance with the provisions
of the applicable Loan Document (First Mezzanine), with such failure as
described in subclauses (A), (B), (C), (D) and (E) continuing for ten (10)
Business Days after Mezzanine Lender delivers written notice thereof to
Mezzanine Borrower;
(ii) subject to Mortgage Borrower's right to contest as set
forth in Section 7.3 of the Loan Agreement (Mortgage), if any of the
Impositions or Other Charges are not paid prior to the imposition of any
interest, penalty, charge or expense for the non-payment thereof;
(iii) if the insurance policies required by Section 6.1 are
not kept in full force and effect, or if certificates of any of such
insurance policies are not delivered to Mezzanine Lender within fifteen
(15) Business Days following Mezzanine Lender's request therefor;
(iv) if, except as permitted pursuant to Article VIII, (a) any
Transfer of any direct or indirect legal, Beneficial or equitable interest
in all or any portion of the Collateral, (b) any Transfer of any direct or
indirect interest in Mortgage Borrower, Mezzanine Borrower, Borrower
Parents, Borrower Subsidiary, or Affiliate Tenant, or other Person
restricted by the terms of Article VIII, (c) any Lien or encumbrance on
all or any portion of the Collateral, (d) any pledge, hypothecation,
creation of a security interest in or other encumbrance of any direct or
indirect interests in Mezzanine Borrower, Mortgage Borrower, Borrower
Parents, Borrower Subsidiary, or Affiliate Tenant, Guarantor or (e) the
filing of a declaration of condominium with respect to the Property;
(v) if (i) any representation or warranty made by Mezzanine
Borrower in Section 4.1.23 shall have been false or misleading in any
material respect as of the date the representation or warranty was made
which incorrect, false or misleading statement is not cured within thirty
(30) days after receipt by Mezzanine Borrower of notice from Mezzanine
Lender in writing of such breach or (ii) if any other representation or
warranty made by Mezzanine Borrower herein or by Mezzanine Borrower,
Borrower Subsidiary, Affiliate Tenant, Guarantor, or any Affiliate of
Mezzanine Borrower in any other Loan Document (First Mezzanine), or in any
report, certificate (including, but not limited to, any certificate by
Mezzanine Borrower delivered in connection with the issuance of the
Non-Consolidation Opinion), financial statement or other instrument,
agreement or document furnished to Mezzanine Lender shall have been false
or misleading in any material respect as of the date the representation or
warranty was made; provided, however, that if such representation or
warranty which was false or misleading
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in any material respect is, by its nature, curable and is not reasonably
likely to have a Material Adverse Effect, and such representation or
warranty was not, to the Best of Mezzanine Borrower's Knowledge, false or
misleading in any material respect which made, then same shall not
constitute an Event of Default unless Mezzanine Borrower has not cured
same within five (5) Business Days after receipt by Mezzanine Borrower of
notice from Mezzanine Lender in writing of such breach;
(vi) if Mezzanine Borrower, Mortgage Borrower, Borrower
Subsidiary, Affiliate Tenant, or Guarantor shall make an assignment for
the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed
for Mezzanine Borrower, Mortgage Borrower, Borrower Subsidiary, Affiliate
Tenant, or Guarantor or if Mezzanine Borrower, Mortgage Borrower, Borrower
Subsidiary, Affiliate Tenant, or Guarantor shall be adjudicated a bankrupt
or insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal or
state law, shall be filed by or against, consented to, or acquiesced in
by, Mezzanine Borrower, Mortgage Borrower, Borrower Subsidiary, Affiliate
Tenant, or Guarantor, or if any proceeding for the dissolution or
liquidation of Mezzanine Borrower, Mortgage Borrower, Borrower Subsidiary,
Affiliate Tenant, or Guarantor shall be instituted; provided, however, if
such appointment, adjudication, petition or proceeding was involuntary and
not consented to by Mezzanine Borrower, Mortgage Borrower, Borrower
Subsidiary, Affiliate Tenant, or Guarantor upon the same not being
discharged, stayed or dismissed within ninety (90) days;
(viii) if Mezzanine Borrower, Borrower Parents, Guarantor, or
Affiliate Tenant as applicable, Transfers its rights under this Agreement
or any of the other Loan Documents (First Mezzanine) or any interest
herein or therein in contravention of the Loan Documents (First
Mezzanine);
(ix) the occurrence of a Mortgage Event of Default;
(x) with respect to any term, covenant or provision set forth
herein (other than the other subsections of this Section 17.l) which
specifically contains a notice requirement or grace period, if Mezzanine
Borrower, Borrower Parents, Affiliate Tenant, or Guarantor shall be in
default under such term, covenant or condition after the giving of such
notice or the expiration of such grace period;
(xi) if Mezzanine Borrower fails to deliver the Replacement
Interest Rate Cap Agreement (First Mezzanine) to Mezzanine Lender prior to
expiration of the Interest Rate Cap Agreement (First Mezzanine);
(xii) if Mezzanine Borrower shall fail to comply with any
covenants set forth in Article V or Section XI with such failure
continuing for ten (10) Business Days after Mezzanine Lender delivers
written notice thereof to Mezzanine Borrower; provided, however, that if
such Default is susceptible of cure but cannot reasonably be cured within
such ten (10) Business Day period and provided further that
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Mezzanine Borrower shall have commenced to cure such Default within such
ten (10) Business Day period and thereafter diligently proceeds to cure
the same, such ten (10) Business Day period shall be extended for such
time as is reasonably necessary for Mezzanine Borrower in the exercise of
due diligence to cure such Default, such additional period not to exceed
twenty (20) days;
(xiii) if Mortgage Borrower shall fail to comply with any
covenants set forth in Section 4 or Section 3(d) or Section 8 of the
Security Instrument (Mortgage) with such failure continuing for ten (10)
Business Days after Mortgage Lender delivers written notice thereof to
Mortgage Borrower; provided, however, that if such Default is susceptible
of cure but cannot reasonably be cured within such ten (10) Business Day
period and provided further that Mezzanine Borrower shall have commenced
to cure such Default within such ten (10) Business Day period and
thereafter diligently proceeds to cure the same, such ten (10) Business
Day period shall be extended for such time as is reasonably necessary for
Mezzanine Borrower in the exercise of due diligence to cure such Default,
such additional period not to exceed twenty (20) days;
(xiv) Mezzanine Borrower shall fail to deposit any sums
required to be deposited in the First Mezzanine Account or any Sub-Account
thereof pursuant to Article III when due;
(xv) if this Agreement or any other Loan Document (First
Mezzanine) or any Lien granted hereunder or thereunder, in whole or in
part, shall terminate or shall cease to be effective or shall cease to be
a legally valid, binding and enforceable obligation of Mezzanine Borrower
or any Guarantor, or any Lien securing the Indebtedness shall, in whole or
in part, cease to be a perfected first priority Lien, subject to the
Permitted Encumbrances (except in any of the foregoing cases in accordance
with the terms hereof or under any other Loan Document (First Mezzanine)
or by reason of any affirmative act of Mezzanine Lender);
(xvi) if the Management Agreement is terminated (other than as
a result of a Borrower default as addressed in clause (xvii)) and an
Acceptable Manager is not appointed as a replacement manager pursuant to
the provisions of Section 5.2.14 of the Loan Agreement (Mortgage) within
sixty (60) days after such termination;
(xvii) if there exists any fact or circumstance that
reasonably could be expected to result in the (a) imposition of a Lien or
security interest under Section 412(n) of the Code or under ERISA or (b)
the complete or partial withdrawal by Mezzanine Borrower or any ERISA
Affiliate from any "multiemployer plan" that is reasonably expected to
result in any material liability to Borrower; provided, however that the
existence of such fact or circumstance under clause (xvii)(b) shall not
constitute an Event of Default if such material withdrawal liability (x)
in the case of a withdrawal by an ERISA Affiliate that is reasonably
expected to cause a Material Adverse Effect or any withdrawal by Mezzanine
Borrower, is paid within thirty (30) days after the date incurred or is
contested in accordance with Section 7.3 hereof or (y) in the case of a
withdrawal by an ERISA Affiliate that is not reasonably expected to cause
a Material
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Adverse Effect, is paid within the period required under applicable ERISA
statutes or is contested in accordance with Section 7.3 hereof;
(xviii) Intentionally Deleted;
(xix) if Mezzanine Borrower, Mortgage Borrower, Affiliate
Tenant, Borrower Subsidiary, Borrower Parents, or Guarantor shall continue
to be in Default under any of the other terms, covenants or conditions of
this Agreement or of any Loan Document (First Mezzanine) not specified in
subsections (i) to (xvii) above, for thirty (30) days after notice from
Mezzanine Lender; provided, however, that if such Default is susceptible
of cure but cannot reasonably be cured within such thirty (30) day period
and provided further that Mezzanine Borrower, Mortgage Borrower, Affiliate
Tenant, Borrower Subsidiary, Borrower Parents, or Guarantor shall have
commenced to cure such Default within such thirty (30) day period and
thereafter diligently proceeds to cure the same, such thirty (30) day
period shall be extended for such time as is reasonably necessary for
Mezzanine Borrower in the exercise of due diligence to cure such Default,
such additional period not to exceed ninety (90) days.
(b) Unless waived in writing by Mezzanine Lender, upon the
occurrence and during the continuance of an Event of Default (other than an
Event of Default described in clauses (a)(vi), (vii) or (viii) above) Mezzanine
Lender may, without notice or demand, in addition to any other rights or
remedies available to it pursuant to this Agreement and the other Loan Documents
(First Mezzanine) or at law or in equity, take such action that Mezzanine Lender
deems advisable to protect and enforce its rights against Mezzanine Borrower and
in the Collateral, including, without limitation, (i) declaring immediately due
and payable the entire Principal Amount together with interest thereon and all
other sums due by Mezzanine Borrower under the Loan Documents (First Mezzanine),
(ii) collecting interest on the Principal Amount at the Default Rate whether or
not Mezzanine Lender elects to accelerate the Mezzanine Note and (iii) enforcing
or availing itself of any or all rights or remedies set forth in the Loan
Documents (First Mezzanine) against Mezzanine Borrower and the Collateral,
including, without limitation, all rights or remedies available at law or in
equity; and upon any Event of Default described in subsections (a)(vi) or
(a)(vii) above, the Indebtedness and all other obligations of Mezzanine Borrower
hereunder and under the other Loan Documents (First Mezzanine) shall immediately
and automatically become due and payable, without notice or demand, and
Mezzanine Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document (First Mezzanine) to the contrary
notwithstanding. The foregoing provisions shall not be construed as a waiver by
Mezzanine Lender of its right to pursue any other remedies available to it under
this Agreement, the Pledge or any other Loan Document (First Mezzanine). Any
payment hereunder may be enforced and recovered in whole or in part at such time
by one or more of the remedies provided to Mezzanine Lender in the Loan
Documents (First Mezzanine).
(c) Upon the occurrence of an Event of Default pursuant to Section
17.1(a)(ix), Mezzanine Borrower shall cause Mortgage Borrower to deliver to
Mezzanine Lender within five (5) Business Days after the first to occur of (a)
receipt by Mortgage Borrower of notice of such Mortgage Default or Mortgage
Event of Default from Mortgage Lender or (b) the date Mortgage Borrower obtains
actual knowledge of the occurrence of such Mortgage Default
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or Mortgage Event of Default, a detailed description of the actions to be taken
by Mortgage Borrower to cure such Mortgage Default or Mortgage Event of Default
and the dates by which each such action shall occur. Such schedule shall be
subject to the approval of Mezzanine Lender. Mezzanine Borrower shall cause
Mortgage Borrower to take all such actions as are necessary to cure such
Mortgage Default or Mortgage Event of Default by the date approved by Mezzanine
Lender and shall deliver to Mezzanine Lender not less frequently than weekly
thereafter written updates concerning the status of Mortgage Borrower's efforts
to cure such Mortgage Default or Mortgage Event of Default. Mezzanine Lender
shall have the right, but not the obligation, to pay any sums or to take any
action which Mezzanine Lender deems necessary or advisable to cure any default
or alleged default under the Loan Documents (Mortgage) (whether or not Mortgage
Borrower is undertaking efforts to cure such default), and such payment or such
action is hereby authorized by Mezzanine Borrower, and any sum so paid and any
expense incurred by Mezzanine Lender in taking any such action shall be
evidenced by this Agreement and secured by this Agreement and the Pledge and
shall be immediately due and payable by Mezzanine Borrower to Mezzanine Lender
with interest at the Default Rate until paid. Mezzanine Borrower shall cause
Mortgage Borrower to permit Mezzanine Lender to enter upon the Collateral for
the purpose of curing any default or alleged default under the Loan Documents
(Mortgage) or hereunder. Mezzanine Borrower hereby transfers and assigns any
excess proceeds arising from any foreclosure or sale under power pursuant to the
Loan Documents (Mortgage) or any instrument evidencing the indebtedness secured
thereby, and Mezzanine Borrower hereby authorizes and directs the holder or
holders of the Loan Documents (Mortgage) to pay such excess proceeds directly to
Mezzanine Lender up to the amount of the Obligations (First Mezzanine).
SECTION 17.2 REMEDIES.
(a) Unless waived in writing by Mezzanine Lender, upon the
occurrence and during the continuance of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to Mezzanine
Lender against Mezzanine Borrower and Guarantor under this Agreement or any of
the other Loan Documents (First Mezzanine) executed and delivered by, or
applicable to, Mezzanine Borrower or at law or in equity may be exercised by
Mezzanine 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 Mezzanine
Lender shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents (First
Mezzanine) with respect to the Collateral. Any such actions taken by Mezzanine
Lender shall be cumulative and concurrent and may be pursued independently,
singly, successively, together or otherwise, at such time and in such order as
Mezzanine Lender may determine in its sole discretion, to the fullest extent
permitted by law, without impairing or otherwise affecting the other rights and
remedies of Mezzanine Lender permitted by law, equity or contract or as set
forth herein or in the other Loan Documents (First Mezzanine). Without limiting
the generality of the foregoing, Mezzanine Borrower agrees that if an Event of
Default is continuing (i) Mezzanine Lender shall not be subject to any one
action or election of remedies law or rule and (ii) all liens and other rights,
remedies or privileges provided to Mezzanine Lender shall remain in full force
and effect until Mezzanine Lender has exhausted all of its remedies against the
Collateral and this Agreement and the Pledge have been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Indebtedness or the Indebtedness
has been paid in full.
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(b) Upon the occurrence of any Event of Default, Mezzanine Lender
may, but without any obligation to do so and without notice to or demand on
Mezzanine Borrower and without releasing Mezzanine Borrower from any obligation
hereunder, take any action to cure such Event of Default. Mezzanine Lender may
appear in, defend, or bring any action or proceeding to protect its interests in
the Collateral or to foreclose its security interest under this Agreement and
the Pledge or under any of the other Loan Documents (First Mezzanine) or collect
the Indebtedness.
(c) Upon the occurrence and during the continuance of an Event of
Default, with respect to the Account Collateral (First Mezzanine), the Mezzanine
Lender may:
(i) without notice to Mezzanine Borrower, except as required
by law, and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Account Collateral (First
Mezzanine) against the Obligations (First Mezzanine) or any part thereof;
(ii) in Mezzanine Lender's sole discretion, at any time and
from time to time, exercise any and all rights and remedies available to
it under this Agreement, and/or as a secured party under the UCC;
(iii) demand, collect, take possession of or receipt for,
settle, compromise, adjust, ▇▇▇ for, foreclose or realize upon the Account
Collateral (First Mezzanine) (or any portion thereof) as Mezzanine Lender
may determine in its sole discretion; and
(iv) take all other actions provided in, or contemplated by,
this Agreement.
(d) With respect to Mezzanine Borrower, the Account Collateral
(First Mezzanine), the Rate Cap Collateral (First Mezzanine) and the Collateral,
nothing contained herein or in any other Loan Document (First Mezzanine) shall
be construed as requiring Mezzanine Lender to resort to the Collateral for the
satisfaction of any of the Indebtedness, and Mezzanine Lender may seek
satisfaction out of the Collateral or any part thereof, in its absolute
discretion in respect of the Indebtedness. In addition, Mezzanine Lender shall
have the right from time to time to partially foreclose this Agreement and the
Pledge in any manner and for any amounts secured by this Agreement or the Pledge
then due and payable as determined by Mezzanine Lender in its sole discretion
including, without limitation, the following circumstances: (i) in the event
Mezzanine Borrower defaults beyond any applicable grace period in the payment of
one or more scheduled payments of principal or interest, Mezzanine Lender may
foreclose this Agreement and the Pledge to recover such delinquent payments, or
(ii) in the event Mezzanine Lender elects to accelerate less than the entire
outstanding principal balance of the Loan, Mezzanine Lender may foreclose this
Agreement and the Pledge to recover so much of the principal balance of the Loan
as Mezzanine Lender may accelerate and such other sums secured by this Agreement
or the Pledge as Mezzanine Lender may elect. Notwithstanding one or more partial
foreclosures, the Collateral shall remain subject to this Agreement and the
Pledge to secure payment of sums secured by this Agreement and the Pledge and
not previously recovered.
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SECTION 17.3 REMEDIES CUMULATIVE; WAIVERS.
The rights, powers and remedies of Mezzanine Lender under this Agreement
and the Loan Documents (First Mezzanine) shall be cumulative and not exclusive
of any other right, power or remedy which Mezzanine Lender may have against
Mezzanine Borrower pursuant to this Agreement or the other Loan Documents (First
Mezzanine), or existing at law or in equity or otherwise. Mezzanine Lender's
rights, powers and remedies may be pursued singly, concurrently or otherwise, at
such time and in such order as Mezzanine Lender may determine in Mezzanine
Lender's sole discretion. No delay or omission to exercise any remedy, right or
power accruing upon an Event of Default shall impair any such remedy, right or
power or shall be construed as a waiver thereof, but any such remedy, right or
power may be exercised from time to time and as often as may be deemed
expedient. A waiver of one Default or Event of Default with respect to Mezzanine
Borrower or any Guarantor shall not be construed to be a waiver of any
subsequent Default or Event of Default by Mezzanine Borrower or any Guarantor or
to impair any remedy, right or power consequent thereon.
SECTION 17.4 COSTS OF COLLECTION. In the event that after an Event of
Default: (i) the Mezzanine Note or any of the Loan Documents (First Mezzanine)
is placed in the hands of an attorney for collection or enforcement or is
collected or enforced through any legal proceeding; (ii) an attorney is retained
to represent Mezzanine Lender in any bankruptcy, reorganization, receivership,
or other proceedings affecting creditors' rights and involving a claim under
this Agreement, the Mezzanine Note or any of the Loan Documents (First
Mezzanine); or (iii) an attorney is retained to protect or enforce the lien or
any of the terms of this Agreement, the Pledge or any of the Loan Documents
(First Mezzanine); then Mezzanine Borrower shall pay to Mezzanine Lender all
reasonable attorney's fees, costs and expenses actually incurred in connection
therewith, including costs of appeal, together with interest on any judgment
obtained by Mezzanine Lender at the Default Rate.
SECTION 17.5 DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that,
following the occurrence and during the continuance of any Event of Default, any
monies are received in connection with the enforcement of any of the Loan
Documents (First Mezzanine), or otherwise with respect to the realization upon
any of the Collateral, such monies shall be distributed for application as
follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of, Mezzanine Lender for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or sustained
by Mezzanine Lender to protect or preserve the Collateral or in connection with
the collection of such monies by Mezzanine Lender (including without limitation,
enforcement costs), for the exercise, protection or enforcement by Mezzanine
Lender of all or any of the rights, remedies, powers and privileges of Mezzanine
Lender under this Agreement or any of the other Loan Documents (First Mezzanine)
or in respect of the Collateral or in support of any provision of adequate
indemnity to Mezzanine Lender against any taxes or liens which by law shall
have, or may have, priority over the rights of Mezzanine Lender to such monies;
(b) Second, to all other Obligations (First Mezzanine) in such order
or preference as Mezzanine Lender shall determine in its sole and absolute
discretion;
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(c) Third, the excess, if any, shall be deposited (i) in the Second
Mezzanine Account for application under the Second Mezzanine Loan Documents, or
(ii) after repayment of the Second Mezzanine Loan, to the Third Mezzanine
Account for application under the Third Mezzanine Loan Documents, or (iii) after
repayment of the Second Mezzanine Loan and the Third Mezzanine Loan, to the
Fourth Mezzanine Account for application under the Fourth Mezzanine Loan
Documents, or (iv) after repayment of the Second Mezzanine Loan, the Third
Mezzanine Loan, and the Fourth Mezzanine Loan, provided that Fifth Mezzanine
Lender has funded the Fifth Mezzanine Loan on or before the Outside Date, to the
Fifth Mezzanine Account for application under the Fifth Mezzanine Loan
Documents, or (v) after repayment of the Second Mezzanine Loan, the Third
Mezzanine Loan, the Fourth Mezzanine Loan, and the Fifth Mezzanine Loan, to the
Mezzanine Borrower or to such other Persons as are entitled thereto.
XVIII. SPECIAL PROVISIONS
SECTION 18.1 EXCULPATION.
18.1.1 EXCULPATED PARTIES. Except as set forth in this Section 18.1, the
Recourse Guaranty and the Environmental Indemnity, no personal liability shall
be asserted, sought or obtained by Mezzanine Lender or enforceable against (i)
Mezzanine Borrower, (ii) any Affiliate of Mezzanine Borrower (including
Affiliate Tenant), (iii) any Person owning, directly or indirectly, any legal or
beneficial interest in Mezzanine Borrower or any Affiliate of Mezzanine Borrower
or (iv) any direct or indirect partner, member, principal, officer, Controlling
Person, beneficiary, trustee, advisor, shareholder, employee, agent, Affiliate
or director of any Persons described in clauses (i) through (iii) above
(collectively, the EXCULPATED PARTIES) and none of the Exculpated Parties shall
have any personal liability (whether by suit, deficiency, judgment or otherwise)
in respect of the Obligations (First Mezzanine), this Agreement, the Pledge, the
Mezzanine Note, the Collateral or any other Loan Document (First Mezzanine), or
the making, issuance or transfer thereof, all such liability, if any, being
expressly waived by Mezzanine Lender. The foregoing limitation shall not in any
way limit or affect Mezzanine Lender's right to any of the following and
Mezzanine Lender shall not be deemed to have waived any of the following:
(a) Foreclosure of the lien of this Agreement and the Pledge in
accordance with the terms and provisions set forth herein and in the Pledge;
(b) Action against any other security at any time given to secure
the payment of the Mezzanine Note and the other Obligations (First Mezzanine);
(c) Exercise of any other remedy set forth in this Agreement or in
any other Loan Document (First Mezzanine) which is not inconsistent with the
terms of this Section 18.1;
(d) Any right which Mezzanine Lender may have under Sections 506(a),
506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim
for the full amount of the Indebtedness secured by this Agreement and the Pledge
or to require that all
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collateral shall continue to secure all of the Indebtedness owing to Mezzanine
Lender in accordance with the Loan Documents (First Mezzanine); or
(e) The liability of any given Exculpated Party with respect to any
separate written guaranty or agreement given by any such Exculpated Party in
connection with the Loan (including, without limitation, the Recourse Guaranty
and the Environmental Indemnity).
18.1.2 CARVEOUTS FROM NON-RECOURSE LIMITATIONS. Notwithstanding the
foregoing or anything in this Agreement or any of the Loan Documents (First
Mezzanine) to the contrary, there shall at no time be any limitation on
Mezzanine Borrower's or Guarantor's liability for the payment, in accordance
with the terms of this Agreement, the Mezzanine Note, the Pledge and the other
Loan Documents (First Mezzanine), to Mezzanine Lender of:
(a) any loss, damage, cost or expense incurred by or on behalf of
Mezzanine Lender by reason of the fraudulent acts of Mezzanine Borrower or
intentional misrepresentations by Mezzanine Borrower or any Affiliate of
Mezzanine Borrower;
(b) Proceeds which Mortgage Borrower, any Affiliate of Mortgage
Borrower, Mezzanine Borrower or any Affiliate of Mezzanine Borrower has received
and to which Mezzanine Lender is entitled pursuant to the terms of this
Agreement or any of the Loan Documents (First Mezzanine) to the extent the same
have not been applied toward payment of the Indebtedness, or used for the repair
or replacement of the Property in accordance with the Loan Agreement (Mortgage);
(c) any membership deposits and any security deposits and advance
deposits which are not held as collateral for Mortgage Loan or delivered to the
Mortgage Lender upon a foreclosure of the Property or upon foreclosure of the
Collateral, or action in lieu thereof, except to the extent any such membership
deposits, security deposits or advance deposits were applied or refunded in
accordance with the terms and conditions of any of the Leases or membership
agreement, as applicable, prior to the occurrence of the Event of Default that
gave rise to such foreclosure or action in lieu thereof;
(d) any loss, damage, cost or expense incurred by or on behalf of
Mezzanine Lender by reason of all or any part of the Collateral, the Account
Collateral (First Mezzanine) or the Rate Cap Collateral (First Mezzanine) being
encumbered by a Lien (other than this Agreement and the Pledge) in violation of
the Loan Documents (First Mezzanine);
(e) after the occurrence and during the continuance of an Event of
Default, any Rents, issues, profits and/or income collected by Mortgage
Borrower, Affiliate Tenant, Mezzanine Borrower or any Affiliate of Mortgage
Borrower, Mezzanine Borrower, or Affiliate Tenant (other than Rents and credit
card receivables sent to the Collection Account pursuant to the Loan Agreement
(Mortgage) or paid directly to Mortgage Lender pursuant to any notice of
direction delivered to tenants of the Property or credit card companies) and not
applied to payment of the Obligations or used to pay normal and verifiable
Operating Expenses of the Property or otherwise applied in a manner permitted
under the Loan Documents (Mortgage) and Loan Documents (First Mezzanine);
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(f) any loss, damage, cost or expense incurred by or on behalf of
Mezzanine Lender by reason of physical damage to the Property from intentional
waste committed by Mortgage Borrower, any Affiliate of Mortgage Borrower,
Mezzanine Borrower or any Affiliate of Mezzanine Borrower;
(g) any loss, damage, cost or expense incurred by or on behalf of
Mezzanine Lender by reason of the breach of any representation, warranty,
covenant or indemnification provision in the Environmental Indemnity (First
Mezzanine) concerning environmental laws, hazardous substances and asbestos and
any indemnification of Mezzanine Lender with respect thereto;
(h) Intentionally Deleted;
(i) any loss, damage, cost or expense incurred by or on behalf of
Mezzanine Lender if Mezzanine Borrower fails to obtain Mezzanine Lender's prior
written consent to any Transfer, as required by this Agreement or the Pledge;
(j) any loss, damage, cost or expense incurred by or on behalf of
Mezzanine Lender by reason of (i) Mortgage Borrower's breach of any term or
terms of the Doral Settlement Agreement (provided Mezzanine Lender, may in its
sole but reasonable discretion, enter into a separate written agreement with
Mortgage Borrower limiting the liability arising with respect to the Doral
Settlement Agreement to a specific dollar amount based upon documentation
delivered to Lender that indicates the aggregate cost to complete all of the
work set forth in the Doral Settlement Agreement (provided, it is further agreed
that such amount will also include all potential fines, penalties and future
settlement amounts that may arise relating to the Doral Settlement Agreement)),
(ii) the failure of Mortgage Borrower to comply with its obligations under
Section 16.3 of the Loan Agreement (Mortgage) (subject to a cap of liability in
an amount equal to $178,938), (iii) the personal injury matter relating to ▇▇▇▇
▇▇▇▇▇▇▇▇▇ and the matters identified as items 1, 5, 6, 8 and 12 on attached
SCHEDULE I (provided, Mezzanine Lender may agree in writing to reduce any or all
of the liability under this clause (iv) based upon its review of any documents
delivered to Lender) and/or (v) the failure of Mortgage Borrower to have a valid
certificate of occupancy for any Property (or portion thereof) that is required
under applicable Legal Requirements;
(k) any loss, damage, cost or expense incurred by or on behalf of
Mezzanine Lender relating to the liability, if any, of the Mortgage Borrower
owning the Desert Property under indemnities it gave in connection with the land
sales to Toll Bros., Inc. and to the La Quinta Redevelopment Agency;
(l) any and all liabilities, obligations, losses, damages, costs and
expenses (including, without limitation, reasonable attorneys' fees, causes of
action, suits, claims, demands and adjustments of any nature or description
whatsoever) which may at any time be imposed upon, incurred by or awarded
against Mezzanine Lender, in the event (and arising out of such circumstances)
that (x) Mezzanine Borrower should raise any defense, counterclaim and/or
allegation in any foreclosure action by Mezzanine Lender relative to the
Collateral, the Account Collateral (First Mezzanine) or the Rate Cap Collateral
(First Mezzanine) or any part thereof which is found by a court to have been
raised by Mezzanine Borrower in bad faith or to
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be without basis in fact or law, or (y) an involuntary case is commenced against
Mezzanine Borrower under the Bankruptcy Code with the collusion of Mezzanine
Borrower or any of its Affiliates or (z) an order for relief is entered with
respect to the Mezzanine Borrower under the Bankruptcy Code through the actions
of the Mezzanine Borrower or any of its Affiliates at a time when the Mezzanine
Borrower is able to pay its debts as they become due unless Mezzanine Borrower
and Guarantor shall have received an opinion of independent counsel that the
General Partner of Mezzanine Borrower has a fiduciary duty to seek such an order
for relief;
(m) any loss, damage, cost or expense incurred by or on behalf of
Mezzanine Lender solely and as a direct result of unfunded membership deposit
refund liabilities under the membership program in which Grand Wailea Refund
Members participate under the applicable Membership Agreements in effect at any
time up to the date, if applicable, that Mortgage Lender forecloses on or
accepts a deed in lieu of foreclosure of the Grand Wailea Property;
(n) any loss, damage, cost or expense incurred by or on behalf of
Mezzanine Lender as a result of any of the assumptions related to pre-existing
entities or their status as single-purposes entities or their compliance with
single purpose entity criteria prior to the date of this Agreement, contained in
the Non-Consolidation Opinion, in any Additional Non-Consolidation Opinion or in
any other non-consolidation opinion delivered to Mezzanine Lender in connection
with the Mezzanine Loan, or in any other non-consolidation delivered subsequent
to the closing of the Mezzanine Loan, is or shall become untrue in any material
respect; and
(o) reasonable attorney's fees and expenses incurred by Mezzanine
Lender in connection with any successful suit filed on account of any of the
foregoing clauses (a) through (n).
XIX. MISCELLANEOUS
SECTION 19.1 SURVIVAL. This Agreement and all covenants, indemnifications,
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the making by Mezzanine Lender of the
Loan and the execution and delivery to Mezzanine Lender of the Mezzanine Note,
and shall continue in full force and effect so long as all or any of the
Indebtedness is outstanding and unpaid unless a longer period is expressly set
forth herein or in the other Loan Documents (First Mezzanine). Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Mezzanine
Borrower, shall inure to the benefit of the successors and assigns of Mezzanine
Lender. If Mezzanine Borrower consists of more than one person, the obligations
and liabilities of each such person hereunder and under the other Loan Documents
(First Mezzanine) shall be joint and several.
SECTION 19.2 MEZZANINE LENDER'S DISCRETION. Whenever pursuant to this
Agreement, Mezzanine Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Mezzanine
Lender, the decision of Mezzanine Lender to approve or disapprove or to decide
whether arrangements or terms are satisfactory or
105
not satisfactory shall (except as is otherwise specifically herein provided) be
in the sole discretion of Mezzanine Lender and shall be final and conclusive.
SECTION 19.3 GOVERNING LAW.
(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS
MADE BY MEZZANINE LENDER AND ACCEPTED BY MEZZANINE BORROWER IN 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
(FIRST MEZZANINE) ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, MEZZANINE BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE MEZZANINE NOTE AND THE OTHER
LOAN DOCUMENTS (FIRST MEZZANINE), AND THIS AGREEMENT 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 LEGAL SUIT, ACTION OR PROCEEDING AGAINST MEZZANINE LENDER OR
MEZZANINE BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT MEZZANINE
LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND MEZZANINE BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR
HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND MEZZANINE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. MEZZANINE
BORROWER DOES HEREBY DESIGNATE AND APPOINT:
CORPORATION SERVICE COMPANY
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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
MAILED
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OR DELIVERED TO MEZZANINE BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON MEZZANINE BORROWER IN ANY
SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. MEZZANINE BORROWER (I)
SHALL GIVE PROMPT NOTICE TO MEZZANINE 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
SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR
SERVICE OF PROCESS), AND (III) 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 19.4 MODIFICATION, WAIVER IN WRITING. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement,
or of the Mezzanine Note, or of any other Loan Document (First Mezzanine), or
consent to any departure therefrom, shall in any event be effective unless the
same shall be in a writing signed by the party against whom enforcement is
sought and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to or demand on Mezzanine Borrower shall entitle
Mezzanine Borrower to any other or future notice or demand in the same, similar
or other circumstances.
SECTION 19.5 DELAY NOT A WAIVER. Neither any failure nor any delay on the
part of Mezzanine Lender in insisting upon strict performance of any term,
condition, covenant or agreement, or exercising any right, power, remedy or
privilege hereunder, or under the Mezzanine Note or under any other Loan
Document (First Mezzanine), or any other instrument given as security therefor,
shall operate as or constitute a waiver thereof, nor shall a single or partial
exercise thereof preclude any other future exercise, or the exercise of any
other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Mezzanine Note or any other Loan Document (First Mezzanine),
Mezzanine Lender shall not be deemed to have waived any right either to require
prompt payment when due of all other amounts due under this Agreement, the
Mezzanine Note or the other Loan Documents (First Mezzanine), or to declare a
default for failure to effect prompt payment of any such other amount.
SECTION 19.6 NOTICES. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document (First
Mezzanine) 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) expedited prepaid delivery
service, either commercial or United States Postal Service, with proof of
attempted delivery, addressed as follows (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):
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If to Mezzanine Lender:
German American Capital Corporation
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ and General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Mezzanine Borrower:
c/o CNL Hotels & Resorts, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., and Chief Financial
Officer
With a copy to: Lowndes Drosdick ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
All notices, elections, requests and demands under this Agreement shall be
effective and deemed received upon the earliest of (i) the actual receipt of the
same by personal delivery or otherwise, (ii) one (1) Business Day after being
deposited with a nationally recognized overnight courier service as required
above, (iii) three (3) Business Days after being deposited in the United States
mail as required above or (iv) on the day sent if sent by facsimile with
confirmation on or before 5:00 p.m. New York time on any Business Day or on the
next Business Day if so delivered after 5:00 p.m. New York time or on any day
other than a Business Day. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the notice, election, request, or
demand sent.
SECTION 19.7 TRIAL BY JURY. MEZZANINE BORROWER AND ALL PERSONS CLAIMING
BY, THROUGH OR UNDER IT, HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT, THE PLEDGE, THE MEZZANINE NOTE
OR ANY OTHER LOAN DOCUMENT (FIRST MEZZANINE), INCLUDING, WITHOUT LIMITATION, ANY
PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO THIS AGREEMENT, THE PLEDGE, THE MEZZANINE NOTE OR ANY OTHER LOAN
DOCUMENT (FIRST
108
MEZZANINE) (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND MEZZANINE BORROWER HEREBY AGREES AND CONSENTS
THAT AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION MAY BE FILED WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO
TRIAL BY JURY. MEZZANINE BORROWER ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL
COUNSEL REGARDING THE MEANING OF THIS WAIVER AND ACKNOWLEDGES THAT THIS WAIVER
IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF THE LOAN. THIS WAIVER SHALL SURVIVE
THE REPAYMENT OF THE LOAN.
SECTION 19.8 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 19.9 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
SECTION 19.10 PREFERENCES. To the extent Mezzanine Borrower makes a
payment or payments to Mezzanine 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 Mezzanine Lender.
SECTION 19.11 WAIVER OF NOTICE. Mezzanine Borrower shall not be entitled
to any notices of any nature whatsoever from Mezzanine Lender except with
respect to matters for which this Agreement or the other Loan Documents (First
Mezzanine) specifically and expressly provide for the giving of notice by
Mezzanine Lender to Mezzanine Borrower and except with respect to matters for
which Mezzanine Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Mezzanine Borrower hereby expressly
waives the right to receive any notice from Mezzanine Lender with respect to any
matter for which this Agreement or the other Loan Documents (First Mezzanine) do
not specifically and expressly provide for the giving of notice by Mezzanine
Lender to Mezzanine Borrower.
SECTION 19.12 EXPENSES; INDEMNITY.
(a) Except as may be otherwise expressly set forth in the Loan
Documents (First Mezzanine), Mezzanine Borrower covenants and agrees to pay or,
if Mezzanine Borrower fails to pay, to reimburse, Mezzanine Lender upon receipt
of written notice
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from Mezzanine Lender for all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by Mezzanine Lender in
connection with (i) the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents (First Mezzanine) and the consummation of
the transactions contemplated hereby and thereby and all the costs of furnishing
all opinions by counsel for Mezzanine Borrower (including without limitation any
opinions requested by Mezzanine Lender pursuant to this Agreement); (ii)
Mezzanine Lender's ongoing performance of and compliance with all agreements and
conditions contained in this Agreement and the other Loan Documents (First
Mezzanine) on its part to be performed or complied with after the Closing Date;
(iii) the negotiation, preparation, execution, delivery and administration of
any consents, amendments, waivers or other modifications to this Agreement and
the other Loan Documents (First Mezzanine) and any other documents or matters as
required herein or under the other Loan Documents (First Mezzanine); (iv)
securing Mezzanine Borrower's compliance with any requests made pursuant to the
provisions of this Agreement; (v) the filing and recording fees and expenses,
mortgage recording taxes, title insurance and reasonable fees and expenses of
counsel for providing to Mezzanine Lender all required legal opinions, and other
similar expenses incurred in creating and perfecting the Lien in favor of
Mezzanine Lender pursuant to this Agreement and the other Loan Documents (First
Mezzanine); (vi) 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 Mezzanine Borrower, this
Agreement, the other Loan Documents (First Mezzanine), the Property, or any
other security given for the Loan; (vii) enforcing any obligations of or
collecting any payments due from Mezzanine Borrower under this Agreement, the
other Loan Documents (First Mezzanine) or with respect to the Collateral or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a work-out or of any insolvency
or bankruptcy proceedings and (viii) procuring insurance policies pursuant to
Section 6.1.11; provided, however, that Mezzanine Borrower shall not be liable
for the payment of any such costs and expenses to the extent the same arise (A)
by reason of the gross negligence, illegal acts, fraud or willful misconduct of
Mezzanine Lender or (B) in connection with any action taken under Article IV,
other than the Mezzanine Borrower's internal administrative costs. Any cost and
expenses due and payable to Mezzanine Lender may be paid from any amounts in the
First Mezzanine Account if same are not paid by Mezzanine Borrower within ten
(10) Business Days after receipt of written notice from Mezzanine Lender.
(b) Subject to the non-recourse provisions of Section 18.1,
Mezzanine Borrower shall protect, indemnify and save harmless Mezzanine Lender,
and all officers, directors, stockholders, members, partners, employees, agents,
successors and assigns thereof (collectively, the INDEMNIFIED PARTIES) from and
against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including all reasonable attorneys' fees and
expenses actually incurred) imposed upon or incurred by or asserted against the
Indemnified Parties, the Collateral or the Property or any part of its interest
therein, by reason of the occurrence or existence of any of the following (to
the extent Proceeds payable on account of the following shall be inadequate; it
being understood that in no event will the Indemnified Parties be required to
actually pay or incur any costs or expenses as a condition to the effectiveness
of the foregoing indemnity) prior to (i) the acceptance by Mezzanine Lender or
its designee of a deed-in-lieu of foreclosure with respect to the Collateral, or
(ii) an Indemnified Party or its designee taking possession or control of the
Collateral or (iii) the foreclosure of the Pledge, except to the extent caused
by the willful misconduct or gross negligence of the Indemnified
110
Parties (other than such willful misconduct or gross negligence imputed to the
Indemnified Parties because of their interest in the Property): (1) ownership of
Mezzanine Borrower's interest in the Property, or any interest therein, or
receipt of any Rents or other sum therefrom, (2) any accident, injury to or
death of any persons or loss of or damage to Property occurring on or about the
Property or any Appurtenances (as defined in the Security Instrument) thereto,
(3) any design, construction, operation, repair, maintenance, use, non-use or
condition of the Property or Appurtenances thereto, including claims or
penalties arising from violation of any Legal Requirement or Insurance
Requirement, as well as any claim based on any patent or latent defect, whether
or not discoverable by Mezzanine Lender, any claim the insurance as to which is
inadequate, and any Environmental Claim, (4) any Default under this Agreement or
any of the other Loan Documents (First Mezzanine) or any failure on the part of
Mezzanine Borrower to perform or comply or to cause Mortgage Borrower to perform
or comply with any of the terms of any Lease within the applicable notice or
grace periods, (5) any performance of any labor or services or the furnishing of
any materials or other Property in respect of the Property or any part thereof,
(6) any negligence or tortious act or omission on the part of Mezzanine Borrower
or any of its agents, contractors, servants, employees, sublessees, licensees or
invitees, (7) any contest referred to in Section 7.3 of the Loan Agreement
(Mortgage), (8) any obligation or undertaking relating to the performance or
discharge of any of the terms, covenants and conditions of the landlord
contained in the Leases, or (9) except as may be expressly limited herein, the
presence at, in or under the Property or the Improvements of any Hazardous
Materials in violation of any Environmental Law. Any amounts the Indemnified
Parties are legally entitled to receive under this Section which are not paid
within fifteen (15) Business Days after written demand therefor by the
Indemnified Parties or Mezzanine Lender, setting forth in reasonable detail the
amount of such demand and the basis therefor, shall bear interest from the date
of demand at the Default Rate, and shall, together with such interest, be part
of the Indebtedness and secured by this Agreement and the Pledge. In case any
action, suit or proceeding is brought against the Indemnified Parties by reason
of any such occurrence, Mezzanine Borrower shall at Mezzanine Borrower's expense
resist and defend such action, suit or proceeding or will cause the same to be
resisted and defended by counsel at Mezzanine Borrower's reasonable expense for
the insurer of the liability or by counsel designated by Mezzanine Borrower
(unless reasonably disapproved by Mezzanine Lender promptly after Mezzanine
Lender has been notified of such counsel); provided, however, that nothing
herein shall compromise the right of Mezzanine Lender (or any Indemnified Party)
to appoint its own counsel at Mezzanine Borrower's expense for its defense with
respect to any action which in its reasonable opinion presents a conflict or
potential conflict between Mezzanine Lender and Mezzanine Borrower that would
make such separate representation advisable; provided further that if Mezzanine
Lender shall have appointed separate counsel pursuant to the foregoing,
Mezzanine Borrower shall not be responsible for the expense of additional
separate counsel of any Indemnified Party unless in the reasonable opinion of
Mezzanine Lender a conflict or potential conflict exists between such
Indemnified Party and Mezzanine Lender. So long as Mezzanine Borrower is
resisting and defending such action, suit or proceeding as provided above in a
prudent and commercially reasonable manner, Mezzanine Lender and the Indemnified
Parties shall not be entitled to settle such action, suit or proceeding without
Mezzanine Borrower's consent which shall not be unreasonably withheld or
delayed, and claim the benefit of this Section with respect to such action, suit
or proceeding and Mezzanine Lender agrees that it will not settle any such
action, suit or proceeding without the consent of Mezzanine Borrower; provided,
however, that if Mezzanine Borrower is not diligently defending
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such action, suit or proceeding in a prudent and commercially reasonable manner
as provided above, and Mezzanine Lender has provided Mezzanine Borrower with
thirty (30) days' prior written notice, or shorter period if mandated by the
requirements of applicable law, and opportunity to correct such determination,
Mezzanine Lender may settle such action, suit or proceeding and claim the
benefit of this Section 19.12 with respect to settlement of such action, suit or
proceeding. Any Indemnified Party will give Mezzanine Borrower prompt notice
after such Indemnified Party obtains actual knowledge of any potential claim by
such Indemnified Party for indemnification hereunder. The Indemnified Parties
shall not settle or compromise any action, proceeding or claim as to which it is
indemnified hereunder without notice to Mezzanine Borrower.
SECTION 19.13 EXHIBITS AND SCHEDULES 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 19.14 OFFSETS, COUNTERCLAIMS AND DEFENSES. Any assignee of
Mezzanine Lender's interest in and to this Agreement, the Mezzanine Note and the
other Loan Documents (First Mezzanine) shall take the same free and clear of all
offsets, counterclaims or defenses which are unrelated to such documents which
Mezzanine Borrower may otherwise have against any assignor of such documents,
and no such unrelated counterclaim or defense shall be interposed or asserted by
Mezzanine 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 Mezzanine Borrower.
SECTION 19.15 LIABILITY OF ASSIGNEES OF MEZZANINE LENDER. No assignee of
Mezzanine Lender shall have any personal liability, directly or indirectly,
under or in connection with this Agreement or any other Loan Document (First
Mezzanine) or any amendment or amendments hereto made at any time or times,
heretofore or hereafter, any different than the liability of Mezzanine Lender
hereunder. In addition, no assignee shall have at any time or times hereafter
any personal liability, directly or indirectly, under or in connection with or
secured by any agreement, lease, instrument, encumbrance, claim or right
affecting or relating to the Property or to which the Property is now or
hereafter subject any different than the liability of Mezzanine Lender
hereunder. The limitation of liability provided in this Section 19.15 is (i) in
addition to, and not in limitation of, any limitation of liability applicable to
the assignee provided by law or by any other contract, agreement or instrument,
and (ii) shall not apply to any assignee's gross negligence or willful
misconduct.
SECTION 19.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES.
(a) Mezzanine Borrower and Mezzanine Lender intend that the
relationships created hereunder and under the other Loan Documents (First
Mezzanine) 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 Mezzanine Borrower and Mezzanine Lender nor to
grant Mezzanine Lender any interest in the Collateral other than that of
Mezzanine Lender.
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(b) This Agreement and the other Loan Documents (First Mezzanine)
are solely for the benefit of Mezzanine Lender and Mezzanine Borrower and
nothing contained in this Agreement or the other Loan Documents (First
Mezzanine) shall be deemed to confer upon anyone other than Mezzanine Lender and
Mezzanine Borrower any right to insist upon or to enforce the performance or
observance of any of the obligations contained herein or therein. All conditions
to the obligations of Mezzanine Lender to make the Loan hereunder are imposed
solely and exclusively for the benefit of Mezzanine Lender and no other Person
shall have standing to require satisfaction of such conditions in accordance
with their terms or be entitled to assume that Mezzanine Lender will refuse to
make the Loan in the absence of strict compliance with any or all thereof and no
other Person shall under any circumstances be deemed to be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in part by
Mezzanine Lender if, in Mezzanine Lender's sole discretion, Mezzanine Lender
deems it advisable or desirable to do so.
SECTION 19.17 PUBLICITY. All news releases, publicity or advertising by
Mezzanine Borrower or its Affiliates through any media intended to reach the
general public which refers to the Loan Documents (First Mezzanine) or the
financing evidenced by the Loan Documents (First Mezzanine), to Mezzanine
Lender, or any of its Affiliates shall be subject to the prior written approval
of Mezzanine Lender.
SECTION 19.18 WAIVER OF MARSHALLING OF ASSETS. To the fullest extent
permitted by law, Mezzanine Borrower, for itself and its successors and assigns,
waives all rights to a marshalling of the assets of Mezzanine Borrower,
Mezzanine Borrower's shareholders and others with interests in Mezzanine
Borrower and of the Collateral, 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 Mezzanine
Lender under the Loan Documents (First Mezzanine) to a sale of the Collateral
for the collection of the Indebtedness without any prior or different resort for
collection or of the right of Mezzanine Lender to the payment of the
Indebtedness out of the net proceeds of the Collateral in preference to every
other claimant whatsoever.
SECTION 19.19 WAIVER OF COUNTERCLAIM AND OTHER ACTIONS. Mezzanine Borrower
hereby expressly and unconditionally waives, in connection with any suit, action
or proceeding brought by Mezzanine Lender on this Agreement, the Mezzanine Note,
the Pledge or any Loan Document (First Mezzanine), any and every right it may
have to (i) interpose any counterclaim therein (other than a counterclaim which
can only be asserted in the suit, action or proceeding brought by Mezzanine
Lender on this Agreement, the Mezzanine Note, the Pledge or any Loan Document
(First Mezzanine) and cannot be maintained in a separate action) and (ii) have
any such suit, action or proceeding consolidated with any other or separate
suit, action or proceeding.
SECTION 19.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE. In the event
of any conflict between the provisions of this Agreement and any of the other
Loan Documents (First Mezzanine), the provisions of this Agreement shall
control. The parties hereto acknowledge that they were represented by competent
counsel in connection with the negotiation, drafting and execution of the Loan
Documents (First Mezzanine) and that such Loan Documents
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(First Mezzanine) shall not be subject to the principle of construing their
meaning against the party which drafted same. Mezzanine Borrower acknowledges
that, with respect to the Loan, Mezzanine Borrower shall rely solely on its own
judgment and advisors in entering into the Loan without relying in any manner on
any statements, representations or recommendations of Mezzanine Lender or any
parent, subsidiary or Affiliate of Mezzanine Lender. Mezzanine Lender shall not
be subject to any limitation whatsoever in the exercise of any rights or
remedies available to it under any of the Loan Documents (First Mezzanine) or
any other agreements or instruments which govern the Loan by virtue of the
ownership by it or any parent, subsidiary or Affiliate of Mezzanine Lender of
any equity interest any of them may acquire in Mezzanine Borrower, and Mezzanine
Borrower hereby irrevocably waives the right to raise any defense or take any
action on the basis of the foregoing with respect to Mezzanine Lender's exercise
of any such rights or remedies. Mezzanine Borrower acknowledges that Mezzanine
Lender engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive
with the business of Mezzanine Borrower or its Affiliates.
SECTION 19.21 PRIOR AGREEMENTS. This Agreement and the other Loan
Documents (First Mezzanine) 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, are
superseded by the terms of this Agreement and the other Loan Documents (First
Mezzanine) and unless specifically set forth in a writing contemporaneous
herewith the terms, conditions and provisions of any and all such prior
agreements do not survive execution of this Agreement.
SECTION 19.22 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, but all of which shall
constitute one document.
SECTION 19.23 DISCLOSURE. Notwithstanding anything to the contrary
contained in Sections 15.1 and 15.6, in connection with the transactions
contemplated by such Sections, in no event shall Mezzanine Lender deliver
financial information with respect to the Collateral, the Property or the
Guarantor to the Persons listed in SCHEDULE III, without first obtaining
Mezzanine Borrower's prior written consent; provided, however, Mezzanine
Borrower's consent shall not be required with respect to ▇▇▇▇▇▇ Stanley, Lehman
Brothers, The Equitable Life Assurance Society of the United States, Teachers
Insurance and Annuity Association and the state of Ohio Pension Fund if
Mezzanine Lender delivers a confidentiality agreement from any of such Persons
reasonably acceptable to Mezzanine Borrower.
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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.
MEZZANINE BORROWER:
CNL RESORT SENIOR MEZZ, LP,
a Delaware limited partnership
By: CNL Resort Senior Mezz GP, LLC,
a Delaware limited liability company,
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Vice President
By signing below, First Mezzanine General Partner agrees that in consideration
of the substantial benefit that it will receive from Mezzanine Lender making the
Loan to Mezzanine Borrower, to comply with all of the terms, conditions,
obligations and restrictions affecting First Mezzanine General Partner set forth
herein:
FIRST MEZZANINE GENERAL PARTNER:
CNL RESORT SENIOR MEZZ GP, LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Vice President
[Mezzanine Lender's signature appears on following page]
Mezzanine Borrower's Execution Page
MEZZANINE LENDER:
GERMAN AMERICAN CAPITAL CORPORATION,
a Maryland corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President