Exhibit 10.4
FOUR PARTY AGREEMENT
THIS FOUR PARTY AGREEMENT is made as of this 10th day of October, 1995, by
and among Marriott Residence Inn Limited Partnership, a Delaware limited
partnership ("Borrower"), German American Capital Corporation, a Maryland
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corporation, as agent or trustee for itself and others, and its successors and
assigns ("Senior Lender"), Starwood Mezzanine Investors, L.P., a Delaware
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limited partnership ("Subordinate Lender") (Senior Lender and Subordinate Lender
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are collectively referred to herein as "Lenders" and individually as "Lender")
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and Residence Inn by Marriott, Inc., a Delaware corporation ("Manager").
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R E C I T A L S:
This Agreement is based upon the following recitals:
WHEREAS, Senior Lender has made fifteen separate loans (collectively, the
"Loan") to Borrower which are governed by that certain Loan Agreement of even
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date herewith between Borrower and Senior Lender (the "Loan Agreement"); and
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WHEREAS, the Loan is evidenced by fifteen separate Promissory Notes of even
date herewith, in the original aggregate principal amount of $100,000,000.00
made by Borrower and payable to the order of Senior Lender (collectively, the
"Promissory Notes"); and
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WHEREAS, the Promissory Notes are secured by, among other things, (i) 15
separate security instruments from Borrower to Senior Lender of even date
herewith (collectively, the "Senior Mortgages"), granting to Senior Lender a
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lien on, among other things, the Inns described on Exhibit "A" attached hereto
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and the Sites, and (ii) 15 separate Assignments of Rents and Revenues from
Borrower to Senior Lender of even date herewith (collectively, the "Senior
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Assignments of Rents and Revenues") (the Loan Agreement, the Promissory Notes,
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the Senior Mortgages, the Senior Assignments of Rents and Revenues and all other
documents evidencing, securing or pertaining to the Loan are referred to herein
as the "Senior Loan Documents"); and
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WHEREAS, Subordinate Lender has made a loan (the Subordinate Loan") to
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Borrower in the amount of $30,000,000 which is governed by that certain Loan
Agreement of even date herewith between Borrower and Subordinate Lender (the
"Subordinate Loan Agreement"); and
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WHEREAS, the Subordinate Loan is secured by, among other things, 15
separate security instruments from Borrower to Subordinate Lender of even date
herewith (collectively, the "Subordinate Mortgages") and 15 separate Assignments
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of Rents and Revenues from Borrower to Subordinate Lender of even date herewith
(collectively, the "Subordinate Assignments") (the Subordinate Loan Agreement,
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the Subordinate Mortgages, the Subordinate Assignments and all other documents
evidencing, securing or pertaining to the Subordinate Loan are referred to
herein as the "Subordinate Loan Documents"); and
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WHEREAS, Borrower, Senior Lender, Subordinate Lender and Manager have
agreed to enter into this Four Party Agreement setting forth a mechanism by
which the Net Cash Flow, at times more particularly described herein, will be
paid directly into the Cash Collateral Account or the Senior Account, both
hereinafter defined. The parties hereto desire to enter into this Four Party
Agreement and to be bound by the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
mutually acknowledged, the parties hereto do hereby agree as follows:
1. Affirmation of Recitals. The recitals set forth above are true and
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correct and are incorporated herein by this reference.
2. Definitions.
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(a) As used herein, the following terms have the following meanings:
"Account" shall mean the Cash Collateral Account, unless an
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Application Trigger Date has occurred and an Application Restoration Date has
not thereafter occurred, in which case the Account shall mean the Senior
Account.
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"Annual Rolling Average Ratios" means the Annual Combined DSCR Rolling
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Average Ratio and the Annual DSCR Rolling Average Ratio.
"Annual Combined DSCR Rolling Average Ratio" means for any Accounting
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Period the Combined DSCR computed for such Accounting Period and the immediately
preceding 12 Accounting Periods on a cumulative basis.
"Annual DSCR Rolling Average Ratio" means for any Accounting Period
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the DSCR computed for such Accounting Period and the immediately preceding 12
Accounting Periods on a cumulative basis.
"Application Restoration Date" means the date after the occurrence of
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an Application Trigger Date on which (A) none of the conditions described in
subparagraphs (i) through (xi) of the definition of Application Trigger Date
then exists, (B) no Event of Default (other than an Event of Default arising
solely under Section 9.1(l) of the Loan Agreement) has occurred and is
continuing, and (C) the following apply to the extent applicable:
(i) If an Application Trigger Date occurred solely or in part because
of a failure to maintain the Annual Rolling Average Ratios required pursuant to
subparagraphs (i) through (iv) of the definition of Application Trigger Date,
(a) the Annual Combined DSCR Rolling Average Ratio for each of the three most
recent Accounting Periods equals or exceeds 1.15, or (b) if the No Second Lien
Condition exists, the Annual DSCR Rolling Average Ratio for each of the three
most recent Accounting Periods equals or exceeds 1.25;
(ii) If an Application Trigger Date occurred solely or in part because
of a failure to maintain the Six Period Rolling Average Ratios required pursuant
to subparagraphs (v) through (viii) of the definition of Application Trigger
Date, (a) the Six Period Combined DSCR Rolling Average Ratio for each of the
three most recent Accounting Periods equals or exceeds 1.0, or (b) if the No
Second Lien Condition exists, the Six Period DSCR Rolling Average Ratio for each
of the three most recent Accounting Periods equals or exceeds 1.10;
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(iii) If an Application Trigger Date occurred solely or in part
because of a failure to maintain the Rolling Average Ratios required pursuant to
subparagraphs (ix) or (x) of the definition of Application Trigger Date, (a)(1)
the Three Period Combined DSCR Rolling Average Ratio for each of the three most
recent Accounting Periods equals or exceeds the Required Amount for each of such
Accounting Periods, or (2) if the No Second Lien Condition exists, the Three
Period DSCR Rolling Average Ratio for each of the three most recent Accounting
Periods equals or exceeds the sum of the Required Amount plus 0.10 for each of
such Accounting Periods, and (b) (1) the Annual Combined DSCR Rolling Average
Ratio for the most recent Accounting Period equals or exceeds 1.15 and the Six
Period Combined DSCR Rolling Average Ratio for the most recent Accounting Period
equals or exceeds 1.0, or (2) if the No Second Lien Condition exists, the Annual
DSCR Rolling Average Ratio for the most recent Accounting Period equals or
exceeds 1.25 and the Six Period DSCR Rolling Average Ratio for the most recent
Accounting Period equals or exceeds 1.10; and
(iv) If an Application Trigger Date occurred solely or in part
because of the occurrence of an Event of Default as described in subparagraph
(xi) of the definition of Application Trigger Date, then an Application
Restoration Date shall thereafter occur only if Senior Lender specifically and
irrevocably waives in writing the occurrence of such Event of Default or such
Event of Default is cured prior to acceleration of the Loans by Senior Lender.
"Application Trigger Date" shall mean the earliest to occur of the
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following:
(i) unless the No Second Lien Condition exists, the date on which the
Annual Combined DSCR Rolling Average Ratio for each of six consecutive
Accounting Periods is less than 1.15;
(ii) in the event that the No Second Lien Condition exists, the date
on which the Annual DSCR Rolling Average Ratio for each of six consecutive
Accounting Periods is less than 1.25;
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(iii) unless the No Second Lien Condition exists, the date on which
the Annual Combined DSCR Rolling Average Ratio for any Accounting Period is less
than 1.10;
(iv) in the event that the No Second Lien Condition exists, the
date on which the Annual DSCR Rolling Average Ratio for any Accounting Period is
less than 1.20;
(v) unless the No Second Lien Condition exists, the date on which
the Six Period Combined DSCR Rolling Average Ratio for each of three consecutive
Accounting Periods is less than 1.0;
(vi) in the event that the No Second Lien Condition exists, the
date on which the Six Period DSCR Rolling Average Ratio for each of three
consecutive Accounting Periods is less than 1.10;
(vii) unless the No Second Lien Condition exists, the date on which
the Six Period Combined DSCR Rolling Average Ratio for any Accounting Period is
less than .95;
(viii) in the event that the No Second Lien Condition exists, the
date on which the Six Period DSCR Rolling Average Ratio for any Accounting
Period is less than 1.05;
(ix) unless the No Second Lien Condition exists, the date on which
(A) the Three Period Combined DSCR Rolling Average Ratio for each of three
consecutive Accounting Periods is less than the Required Amount for each of such
Accounting Periods, and (B) either (1) the Annual Combined DSCR Rolling Average
Ratio for the previous Accounting Period is less than 1.15, or (2) the Six
Period Combined DSCR Rolling Average Ratio for the previous Accounting Period is
less than 1.0;
(x) in the event that the No Second Lien Condition exists, the
date on which (A) the Three Period DSCR Rolling Average Ratio for each of three
consecutive Accounting Periods is less than the sum of (x) the Required Amount,
plus (y) 0.10, for each of such Accounting Periods, and (B) either (1) the
Annual DSCR Rolling Average Ratio for the previous Accounting Period is less
than 1.25, or (2) the Six
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Period DSCR Rolling Average Ratio for the previous Accounting Period is less
than 1.10; or
(xi) the date on which an Event of Default (other than an Event of
Default under Section 9.1(l) of the Loan Agreement) shall occur and be
continuing.
"Cash Collateral" means all Net Cash Flow and all funds, deposits,
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rights or other assets or amounts at any time deposited into, or required by
this Agreement to be deposited into, the Cash Collateral Account and all
proceeds of the foregoing.
"Cash Collateral Account" shall mean an account or accounts
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established by the Escrow Agent with notice to Borrower, Manager and Lenders for
the use and benefit of Senior Lender and Subordinate Lender, which account shall
be of a type and maintained with a financial institution selected by Senior
Lender, subject to the reasonable approval of Borrower and Subordinate Lender,
or if no such approval is obtained within five (5) days after written request by
Senior Lender, any commercial bank (an "Approved Institution") with offices in
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the United States with deposits in excess of $100,000,000 selected by Senior
Lender, in Senior Lender's sole and absolute discretion.
"Escrow Agent" shall mean an escrow agent selected by Senior Lender
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with the reasonable approval of Subordinate Lender or if no such approval is
obtained within five (5) days after written request by Senior Lender, any
commercial bank with offices in the United States with deposits in excess of
$100,000,000 or any "Big Six" accounting firm, in either case as selected by
Senior Lender in Senior Lender's sole and absolute discretion, provided that
Senior Lender shall give notice to Borrower and Subordinate Lender of the
designation of the Escrow Agent. The Escrow Agent may be Senior Lender or any
party holding a direct or indirect interest in the Loan so long as such Person
satisfies the requirements set forth in the preceding sentence.
"Intercreditor Account" means an account or accounts of the type and
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established by and in the name of Senior Lender with a financial institution
with deposits of at least $100,000,000.00 selected by Senior Lender, in its sole
and absolute discretion.
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"Intercreditor Payment Date" means the earliest to occur of the
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following:
(i) May 15th of any calendar year;
(ii) the date on which an Event of Default occurs (other than an
Event of Default arising solely pursuant to Section 9.1(l);
(iii) the date on which the Annual Combined DSCR Rolling Average
Ratio for any Accounting Period is less than 1.0; and
(iv) the date on which the No Second Lien Condition exists.
"Lenders" means the collective reference to Senior Lender and
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Subordinate Lender.
"Maximum Intercreditor Account Amount" means an amount equal to (i)
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4.5%, multiplied by (ii) the sum of (a) Promissory Note Debt Service for the
most recent thirteen (13) Accounting Periods, plus (b) all amounts paid or due
and payable by the Borrower under the Subordinate Loan for the preceding
thirteen (13) Accounting Periods.
"Net Cash Flow" has the meaning set forth in Paragraph 3 hereof.
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"No Second Lien Condition" means that all of the Subordinate Mortgages
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have been foreclosed or otherwise have ceased to encumber the Mortgaged
Property.
"Required Amount" for each Accounting Period means the following:
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First Accounting Period beginning in
any calendar year - .80
Second Accounting Period during
any calendar year - .80
Third Accounting Period during
any calendar year - 1.00
Fourth Accounting Period during
any calendar year - 1.10
Fifth Accounting Period during
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any calendar year - 1.15
Sixth Accounting Period during
any calendar year - 1.20
Seventh Accounting Period during
any calendar year - 1.25
Eighth Accounting Period during
any calendar year - 1.40
Ninth Accounting Period during
any calendar year - 1.40
Tenth Accounting Period during
any calendar year - 1.40
Eleventh Accounting Period during
any calendar year - 1.25
Twelfth Accounting Period during
any calendar year - 1.20
Thirteenth Accounting Period during
any calendar year (and
continuing into the following
calendar year, if applicable) - 1.00
"Restoration Date" means the date on which each of the following
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exists:
(i) the Annual Combined DSCR Rolling Average Ratio for each of
the previous three Accounting Periods is greater than or equal to
1.15, or if the No Second Lien Condition exists, the Annual DSCR
Rolling Average Ratio for each of the previous three Accounting
Periods is greater than or equal to 1.25; and
(ii) the Six Period Combined DSCR Rolling Average Ratio for each
of the previous three Accounting Periods is greater than or equal to
1.0, or if the No Second Lien Condition exists, the Six Period DSCR
Rolling Average Ratio for each of the previous three Accounting
Periods is greater than or equal to 1.10; and
(iii) the Three Period Combined DSCR Rolling Average Ratio for
each of the previous three Accounting Periods is greater than or equal
to the Required Amount for each of such Accounting Periods, or in the
event that the No Second Lien Condition exists, the Three Period DSCR
Rolling
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Average Ratio for each of the previous three Accounting Periods is
equal to or greater than the sum of (x) 0.10, plus (y) the Required
Amount, for each of such Accounting Periods; and
(iv) no Event of Default (other than an Event of Default under
section 9.1(l) of the Loan Agreement) shall have occurred and be
continuing.
"Rolling Average Ratios" means the collective reference to the Annual
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Rolling Average Ratios, the Six Period Rolling Average Ratios and the Three
Period Rolling Average Ratios.
"Senior Account" shall mean an account or accounts of a type and
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established by and in the name of Senior Lender, with notice to Borrower,
Manager and Subordinate Lender, with a financial institution with deposits of at
least $100,000,000 selected by Senior Lender, in its sole and absolute
discretion.
"Six Period Combined DSCR Rolling Average Ratio" means for any
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Accounting Period the Combined DSCR computed for such Accounting Period and the
immediately preceding 5 Accounting Periods on a cumulative basis.
"Six Period DSCR Rolling Average Ratio" means for any Accounting
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Period the DSCR computed for such Accounting Period and the immediately
preceding 5 Accounting Periods on a cumulative basis.
"Six Period Rolling Average Ratios" means the Six Period Combined DSCR
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Rolling Average Ratio and the Six Period DSCR Rolling Average Ratio.
"Three Period Combined DSCR Rolling Average Ratio" means for any
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Accounting Period the Combined DSCR computed for such Accounting Period and the
immediately preceding 2 Accounting Periods on a cumulative basis.
"Three Period DSCR Rolling Average Ratio" means for any Accounting
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Period the DSCR computed for such Accounting Period and the immediately
preceding 2 Accounting Periods on a cumulative basis.
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"Three Period Rolling Average Ratios" means the Three Period Combined
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DSCR Rolling Average Ratio and the Three Period DSCR Rolling Average Ratio.
"Trigger Date" means the earliest to occur of the following:
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(i) the date on which the Annual Combined DSCR Rolling Average
Ratio for any Accounting Period is less than 1.15;
(ii) in the event that the No Second Lien Condition exists, the
date on which the Annual DSCR Rolling Average Ratio for any Accounting
Period is less than 1.25;
(iii) the date on which the Six Period Combined DSCR Rolling
Average Ratio for any Accounting Period is less than 1.0;
(iv) in the event that the No Second Lien Condition exists, the
date on which the Six Period DSCR Rolling Average Ratio for any
Accounting Period is less than 1.10;
(v) the date on which the Three Period Combined DSCR Rolling
Average Ratio for any Accounting Period is less than the Required
Amount for such Accounting Period;
(vi) in the event that the No Second Lien Condition exists, the
date on which the Three Period DSCR Rolling Average Ratio for any
Accounting Period is less than the sum of (x) 0.10, plus (y) the
Required Amount, for such Accounting Period; or
(vi) an Event of Default has occurred and is continuing.
(b) Capitalized terms used herein but not otherwise defined herein
have the meaning set forth in the Loan Agreement.
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(c) Prior to the first anniversary of this Agreement, all computations
pursuant to this Agreement shall be made on a pro forma basis as if the Loan and
the Subordinate Loan had been in place throughout the relevant thirteen
Accounting Periods, six Accounting Periods or three Accounting Periods.
3. Disposition of Net Cash Flow.
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(a) Borrower and Manager hereby acknowledge and agree that all Inn
Income has been pledged and assigned to Senior Lender (first priority) and
Subordinate Lender (second priority). Pursuant to the Management Agreement, all
Gross Revenues (as defined in the Management Agreement) are collected by
Manager. Pursuant to the Management Agreement, Manager may use the Gross
Revenues for the payment of Deductions (as defined in the Management Agreement)
and the establishment and maintenance of the Reserve (as defined in and in
accordance with the Management Agreement) and must remit a portion of the
Operating Profit (as defined in the Management Agreement) to Borrower in the
priorities set forth in, and otherwise in accordance with, the Management
Agreement. After the occurrence of a Trigger Date, and until a Restoration Date
thereafter occurs, the parties hereto hereby agree that all (i) Operating Profit
and/or other amounts required or permitted to be paid to Borrower pursuant to
the Management Agreement, plus (ii) all cash or other amounts to which Borrower
is entitled from any source or which Borrower otherwise receives (collectively,
the "Net Cash Flow") shall be paid directly to the Cash Collateral Account (or,
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if Senior Lender notifies Manager, Borrower and Subordinate Lender in writing
that the Application Trigger Date has occurred, to the Senior Account), rather
than to Borrower, whenever Net Cash Flow is payable to Borrower pursuant to the
Management Agreement or whenever Net Cash Flow is otherwise received by
Borrower. Borrower hereby assigns, conveys, mortgages, pledges, hypothecates and
transfers and delivers to Senior Lender (first priority) and Subordinate Lender
(second priority) all of Borrower's right, title and interest in and to the Cash
Collateral and the Cash Collateral Account as collateral for the payment of the
Indebtedness owed to such Lender, and hereby grants to Senior Lender (first
priority) and Subordinate Lender (second priority) a continuing lien on and
security interest therein. Additionally, Borrower
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absolutely assigns to Senior Lender (first priority) and Subordinate Lender
(second priority) the outright ownership of (and not a security interest in) the
Senior Account and Intercreditor Account and the funds therein (subject to
Borrower's right to receive credit against the indebtedness owed for any funds
actually paid to and applied by the respective Lenders). Manager hereby agrees
to deliver all Net Cash Flow to the applicable Account in accordance with the
provisions of this Agreement; provided, however, that (i) prior to the date on
which either Senior Lender or Subordinate Lender or their agent notifies
Borrower and Manager in writing that a Trigger Date or an Application Trigger
Date has occurred or Manager is otherwise informed by Borrower that a Trigger
Date or an Application Trigger Date has occurred, and (ii) after Senior Lender
notifies Manager that a Restoration Date has occurred (which Senior Lender
agrees to do promptly after a Restoration Date occurs), in either case Manager
may pay all Net Cash Flow directly to Borrower and Borrower may dispose of such
Net Cash Flow in accordance with and subject to the terms and conditions of the
Senior Loan Documents and Subordinate Loan Documents. Notwithstanding anything
contained herein to the contrary, prior to the date on which Manager receives
written notice from Senior Lender or Subordinate Lender that a Trigger Date or
an Application Trigger Date has occurred, Manager shall not be obligated to
deliver Net Cash Flow to the Cash Collateral Account or Senior Cash Collateral
Account. In the event Manager receives conflicting instructions from Senior
Lender, Subordinate Lender and/or Borrower, Manager shall rely exclusively on
the instructions from Senior Lender and shall be fully protected in such
reliance. So long as Manager complies with Lender's written instructions,
Borrower shall and does hereby release Manager from any claims with respect
thereto and Borrower shall and does hereby indemnify, defend and hold harmless
Manager from and against any such claims. Borrower's right to receive and use,
and the right of Manager to pay, the Net Cash Flow in accordance with the
preceding sentence shall terminate automatically and without notice or further
action upon the date on which Senior Lender or Subordinate Lender notifies
Borrower and Manager in writing that a Trigger Date or an Application Trigger
Date has occurred or Manager is otherwise informed by Borrower that a Trigger
Date or an Application Trigger Date has occurred. Notwithstanding anything to
the contrary in this Agreement, Senior Lender's
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rights pursuant to this Agreement are in addition to, and not in derogation of,
any rights contained in the Senior Loan Documents, and nothing contained herein
shall alter, affect or impair the absolute assignment contained in the
Assignments of Rents and Revenues. Notwithstanding anything to the contrary in
this Agreement, Subordinate Lender's rights pursuant to this Agreement are in
addition to, and not in derogation of, any rights contained in the Subordinate
Loan Documents, and nothing contained herein shall alter, affect or impair the
absolute assignment contained in the Subordinate Assignments of Rents and
Revenues.
(b) If after the occurrence of a Trigger Date a Restoration Date shall
occur, then the previous occurrence of the Trigger Date shall thereafter be of
no force or effect, and if no Event of Default or Default has occurred and is
continuing any funds then held in the Cash Collateral Account shall be (i)
first, used to pay any unpaid costs or expenses described in Paragraphs 5 or 7
hereof, (ii) second, used to pay all reasonable amounts incurred by or on behalf
of Subordinate Lender for attorneys' fees in connection with this Agreement, and
(iii) third, released to Borrower, provided that any amounts previously paid or
released from the Cash Collateral Account in accordance with this Agreement
shall not be repaid to Borrower, and Borrower waives any rights with respect to
any such payments. If after the occurrence of an Application Trigger Date an
Application Restoration Date and/or a Restoration Date shall occur, then
notwithstanding the occurrence of such Application Restoration Date and/or such
Restoration Date, (i) any amounts previously paid or released from the Senior
Account or the Intercreditor Account in accordance with this Agreement shall not
be repaid to Borrower, and Borrower waives any rights with respect to any such
payments or amounts, and (ii) no amounts then held in the Senior Account or the
Intercreditor Account shall ever be returned or released to Borrower under any
circumstances whatsoever, and Borrower waives any rights with respect thereto.
Additionally, notwithstanding anything in subparagraph 3(f) to the contrary,
upon the occurrence of an Application Restoration Date, any amounts held in the
Intercreditor Account shall continue to be held in the Intercreditor Account in
accordance with this Agreement until an
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Intercreditor Payment Date occurs and then shall be disposed of as set forth in
Paragraph 3(f)(iv) below.
(c) Subordinate Lender hereby acknowledges the priority of Senior
Lender's security interest with respect to the Cash Collateral and the priority
of Senior Lender's rights with respect to any funds in the Senior Account or the
Intercreditor Account and acknowledges that Senior Lender shall have sole
dominion and control over the Account and any funds in the Intercreditor Account
in accordance with this Agreement, and that Senior Lender may dispose of any
Cash Collateral and any funds in the Senior Account and/or the Intercreditor
Account in accordance with the terms of this Agreement free and clear of any
claims by Subordinate Lender so long as any amounts remain unpaid pursuant to
the Loan Agreement. Borrower acknowledges and agrees that Borrower has no right
to withdraw any funds or amounts held in the Cash Collateral Account, Senior
Account or the Intercreditor Account.
(d) Any funds held in the Cash Collateral Account, after the
occurrence of a Trigger Date but prior to the occurrence of a Restoration Date,
shall be applied by the Escrow Agent on the first business day of each month as
follows:
(i) First, to pay all amounts then due and payable to the
Senior Lender pursuant to the Senior Loan Documents;
(ii) Second, at the sole option of Senior Lender, to pay the
reasonable costs and expenses of Escrow Agent and any third party accountant
retained by Senior Lender or Escrow Agent as set forth in Paragraphs 5(a), 5(b)
and 7, provided that this provision shall not affect or lessen Borrower's
obligation to pay such costs and expenses as required by Paragraphs 5(a), 5(b)
and 7;
(iii) Third, to the extent available, to pay regularly scheduled
payments of principal and interest then due and payable to Subordinate Lender in
accordance with the Subordinate Loan Documents and the Intercreditor Agreement;
and
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(iv) Any remaining amounts shall be retained in the Cash Collateral
Account until an Application Trigger Date or a Restoration Date occurs, and then
shall be (i) released to Borrower in accordance with Section 3(b) hereof, if a
Restoration Date has occurred, or (ii) delivered to Senior Lender for deposit
into the Senior Account in accordance with Section 3(i) hereof, if an
Application Trigger Date has occurred.
(e) Any amounts held in the Senior Account shall be applied on the
first business day of each month as follows:
(i) First, to pay all amounts then due and payable to the Senior
Lender pursuant to the Senior Loan Documents;
(ii) Second, at the sole option of Senior Lender, to pay the
reasonable costs and expenses of Escrow Agent and any third party accountant or
Approved Institution retained by Senior Lender or Escrow Agent as set forth in
Paragraphs 5(a), 5(b) and 7, provided that this provision shall not affect or
lessen Borrower's obligation to pay such costs and expenses as required by
Paragraphs 5(a), 5(b) and 7;
(iii) Third, to the extent available, to pay the current month's
regularly scheduled payments of principal and interest then due and payable to
Subordinate Lender in accordance with the Subordinate Loan Documents and the
Intercreditor Agreement;
(iv) Fourth, any remaining amounts shall be paid to the
Intercreditor Account until the balance in the Intercreditor Account is equal to
the Maximum Intercreditor Account Amount; and
(v) Fifth, any remaining funds in the Senior Account may be paid,
at the sole option and election of Senior Lender, to reduce the outstanding
balance of the Loan, by applying such amounts (x) first to amounts owing
pursuant to the Senior Loan Documents other than principal and interest, then
(y) to accrued but unpaid interest, and then (z) to reduce the principal balance
of the Loan.
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(f) Any amounts held in the Intercreditor Account shall be applied
on the first business day of each month as follows:
(i) First, to pay all amounts then due and payable to the
Senior Lender pursuant to the Senior Loan Documents, to the extent not paid from
the Senior Account pursuant to the preceding subparagraph 3(e) hereof;
(ii) Second, at the sole option of Senior Lender, to pay the
reasonable costs and expenses of Escrow Agent and any third party accountant or
Approved Institution retained by Senior Lender or Escrow Agent as set forth in
Paragraphs 5(a), 5(b) and 7, to the extent not paid from the Senior Account
pursuant to the preceding subparagraph 3(e) hereof; provided that this provision
shall not affect or lessen Borrower's obligation to pay such costs and expenses
as required by Paragraphs 5(a), 5(b) and 7;
(iii) Third, to the extent available, to pay the current
month's regularly scheduled payments of principal and interest then due and
payable to Subordinate Lender in accordance with the Subordinate Loan Documents
and the Intercreditor Agreement, to the extent not paid from the Senior Account
pursuant to the preceding subparagraph 3(e) hereof; and
(iv) Any amounts remaining in the Intercreditor Account shall
be held in the Intercreditor Account until the occurrence of an Intercreditor
Payment Date. Upon the occurrence of an Intercreditor Payment Date, any funds or
other amounts then held in the Intercreditor Account may be paid at the sole
option and election of Senior Lender to reduce the outstanding balance of the
Loan, by applying such amounts (x) first to amounts owing pursuant to the Senior
Loan Documents other than principal and interest, then (y) to accrued but unpaid
interest, and then (z) to reduce the principal balance of the Loan.
Additionally, to the extent that the amount held in the Intercreditor Account at
any time exceeds the Maximum Intercreditor Account Amount, then any funds or
amounts then held in the Intercreditor Account in excess of the Maximum
Intercreditor Account Amount may, at the sole option and election of Senior
Lender, be paid or applied by Senior Lender in accordance with the preceding
sentence.
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(g) After the occurrence of a Trigger Date or an Application Trigger
Date and until the occurrence of a Restoration Date, Manager hereby agrees to
remit to the Account the maximum amount to which Borrower is then and thereafter
entitled pursuant to the Management Agreement, notwithstanding any contrary
requests or instructions from Borrower.
(h) Any interest earned on the Account or the Intercreditor Account
shall be added thereto and reported under Borrower's taxpayer identification
number.
(i) In the event that Senior Lender notifies Escrow Agent, Borrower
and Subordinate Lender that an Application Trigger Date has occurred, Escrow
Agent shall immediately deliver all funds or amounts then or thereafter held in
the Cash Collateral Account to Senior Lender for deposit into the Senior
Account.
(j) Borrower acknowledges and agrees that the Senior Account and the
Intercreditor Account are the sole property of Senior Lender and have been
established solely to provide for the payment of Indebtedness owed to Senior
Lender and Subordinate Lender. Borrower has absolutely no rights whatsoever
with respect to the Senior Account or the Intercreditor Account or any funds
contained therein (other than the right to receive credit against the Debt for
any such amounts applied against the Debt) and under no circumstances whatsoever
shall Borrower ever have or claim to have any rights whatsoever with respect to
the Senior Account or the Intercreditor Account or any funds contained therein.
Specifically, but without limitation, Borrower acknowledges and agrees that in
the event that a bankruptcy proceeding is commenced by or against Borrower, the
Senior Account and the Intercreditor Account and/or any funds contained in the
Senior Account and/or the Intercreditor Account shall not constitute the
property of Borrower's bankruptcy estate and Borrower shall not claim or assert
that the Senior Account and/or the Intercreditor Account or any funds contained
therein constitute the property of Borrower's bankruptcy estate.
17
(k) Any amounts applied to reduce the principal balance of the Loan
pursuant to this Agreement shall be without any Yield Maintenance Payment or
other prepayment premium or penalty, notwithstanding any provisions of the
Senior Loan Documents to the contrary, unless an Event of Default has occurred
and is continuing and has not been cured by Subordinate Lender within five days
after written notice from Senior Lender, in which case any Yield Maintenance
Payments required by the Senior Loan Documents shall be fully due and payable,
subject to Paragraph 29 of the Intercreditor Agreement.
4. Cash Collateral.
---------------
(a) Borrower shall take all reasonably necessary actions and shall
otherwise reasonably cooperate to ensure that, when required by this Agreement,
all of the Net Cash Flow is paid into the Account in accordance with this
Agreement, including without limitation paying into the Account any Net Cash
Flow inadvertently or otherwise received by Borrower in violation of this
Agreement.
(b) Borrower hereby grants to Escrow Agent (and all persons
designated by Escrow Agent, including without limitation the officers and
employees of the financial institution where the Cash Collateral Account is
maintained) the full right, power and authority, which shall be deemed to be
coupled with an interest, to endorse and deposit all checks and credit card or
similar receipts pertaining to the Mortgaged Property delivered for deposit into
the Cash Collateral Account, whether or not made payable to Borrower, Escrow
Agent, Manager or otherwise, and Borrower agrees to execute all necessary or
appropriate documentation confirming the authority granted hereby. On or prior
to the tenth (10th) day of each month after the Trigger Date, Escrow Agent (or
its designee, nominee or assignee) shall furnish Senior Lender, Subordinate
Lender, Borrower and Manager with a reasonably detailed accounting of all Net
Cash Flow deposited into the Cash Collateral Account for the preceding month and
the use of any amounts withdrawn from the Cash Collateral Account. The monies
contained in the Cash Collateral Account may be transferred by Escrow Agent from
time to time to any other account or sub-account chosen by Senior Lender in
accordance with this Agreement, provided that each such account and the monies
contained therein
18
shall remain subject to the terms and provisions of this Agreement.
(c) Borrower hereby grants to Senior Lender (and all persons
designated by Senior Lender, including without limitation the officers and
employees of the financial institution where the Senior Account is maintained)
the full right, power and authority, which shall be deemed to be coupled with an
interest, to endorse and deposit all checks and credit card or similar receipts
pertaining to the Mortgaged Property delivered for deposit into the Senior
Account, whether or not made payable to Borrower, Senior Lender, Manager or
otherwise, and Borrower agrees to execute all necessary or appropriate
documentation confirming the authority granted hereby. On or prior to the tenth
(10th) day of each month during the term of this Agreement, Senior Lender (or
its designee, nominee or assignee) shall furnish Subordinate Lender, Borrower
and Manager with an accounting of all amounts deposited into the Senior Account
for the preceding month and the use of any amounts withdrawn from the Senior
Account. The monies contained in the Senior Account may be transferred by
Senior Lender from time to time to any other account or sub-account chosen by
Senior Lender in accordance with this Agreement, provided that each such account
and the monies contained therein shall remain subject to the terms and
provisions of this Agreement.
(d) Borrower hereby confirms that all Cash Collateral is subject to
(i) Senior Lender's first priority lien and security interest created by the
Loan Documents and (ii) Subordinate Lender's second priority lien and security
interest created by the Subordinate Loan Documents. In addition to, and without
limitation of, any such liens or security interests, Borrower hereby confirms
each Lender's security interest in and to all Cash Collateral as security for
the obligations to Senior Lender under the Loan Documents and to the Subordinate
Lender under the Subordinate Loan Documents. Borrower acknowledges and agrees
that Senior Lender has a presently enforced, possessory and "▇▇▇▇▇▇" first
priority lien and security interest in and to all Cash Collateral and that
Subordinate Lender has a presently enforced, possessory and "▇▇▇▇▇▇" second
priority lien and security interest in the Cash Collateral, notwithstanding the
License. On demand, from time to time, Borrower agrees to execute and deliver
to each
19
Lender and hereby authorizes each Lender to execute in the name of Borrower to
the extent each Lender may lawfully do so, financing statements or comparable
security instruments as may reasonably be requested or required by each Lender
to perfect or continue the respective security interests in the Cash Collateral
Account and Lender's rights with respect to the other accounts provided for
herein.
5. Administration of Accounts.
--------------------------
(a) The Senior Account shall be administered solely by Senior Lender.
Senior Lender shall have the sole, absolute and unconditional right, at any time
after the Application Trigger Date, without notice, to designate a qualified
third party accountant or Approved Institution acceptable to Senior Lender to
administer the Senior Account on its behalf in accordance with the provisions of
this Agreement, which shall by instrument in form and substance satisfactory to
Senior Lender in all respects, be assumed by any such third party accountant or
Approved Institution. The reasonable costs of any such third party accountant or
Approved Institution shall be paid by Borrower. Borrower agrees that the
reasonable fees of Senior Lender, or such other accountant or Approved
Institution incurred in establishing and administering the Senior Account shall
be paid upon the occurrence of an Application Trigger Date and on a monthly
basis out of funds other than the Cash Collateral, the funds in the Senior
Account or the funds in the Intercreditor Account, notwithstanding Senior
Lender's option to pay such costs and expenses from the Cash Collateral or funds
in the Senior Account in accordance with Paragraph 3(d)(ii) above. Borrower
acknowledges that any third party accountant or Approved Institution designated
subsequent to the execution hereof to administer the Senior Account shall
collect the Net Cash Flow as agent of and in trust for the use and benefit of
the Lenders and for application in accordance with the terms of this Agreement.
The amounts to be held in the Senior Account shall be held in an Account
maintained by Senior Lender or in the event Senior Lender so designates, by such
other accountant or Approved Institution as agent of and in trust for the
benefit of Senior Lender.
(b) The Cash Collateral Account shall be administered by Escrow Agent.
All costs of the Escrow Agent
20
shall be paid by Borrower. Escrow Agent shall have the right, at any time after
the date hereof, with the consent of Senior Lender, and the consent of
Subordinate Lender, which consent by Subordinate Lender shall not be
unreasonably withheld or delayed, to designate a qualified third party
accountant or Approved Institution to administer the Cash Collateral Account on
its behalf in accordance with the provisions of this Agreement, which shall by
instrument in form and substance satisfactory to Escrow Agent and Senior Lender
in all respects, be assumed by any such third party accountant or Approved
Institution. Borrower agrees that the reasonable fees of Escrow Agent, or such
other accountant or Approved Institution incurred in establishing and
administering the Cash Collateral Account shall be paid upon the occurrence of a
Trigger Date and on a monthly basis out of funds other than the Cash Collateral,
the funds in the Senior Account or the funds in the Intercreditor Account,
notwithstanding Senior Lender's option to pay such costs and expenses from the
Cash Collateral or funds in the Senior Account in accordance with Paragraph
3(d)(ii) above. Borrower acknowledges that any third party accountant or
Approved Institution designated subsequent to the execution hereof to administer
the Cash Collateral Account shall collect the Net Cash Flow as agent of and in
trust for the use and benefit of the Lenders and for application in accordance
with the terms of this Agreement. The Cash Collateral shall be held in an
account maintained by Escrow Agent or in the event Escrow Agent so designates,
by such other accountant as agent of and in trust for the benefit of Escrow
Agent, Lenders and Borrower.
(c) The Intercreditor Account shall be administered solely by Senior
Lender. Senior Lender shall have the sole, absolute and unconditional right, at
any time after the Application Trigger Date, without notice, to designate a
qualified third party accountant or Approved Institution acceptable to Senior
Lender to administer the Intercreditor Account on its behalf in accordance with
the provisions of this Agreement, which shall by instrument in form and
substance satisfactory to Senior Lender in all respects, be assumed by any such
third party accountant or Approved Institution. The costs of any such third
party accountant or Approved Institution shall be paid by Borrower. Borrower
agrees that the reasonable fees of Senior Lender, or such other accountant or
Approved
21
Institution incurred in establishing and administering the Intercreditor Account
shall be paid upon the occurrence of an Application Trigger Date and on a
monthly basis out of funds other than the Cash Collateral or funds in the Senior
Account or the Intercreditor Account, notwithstanding Senior Lender's option to
pay such costs and expenses from the Cash Collateral or the funds in the Senior
Account in accordance with Paragraph 3(d)(ii) and 3(f) above.
6. No Forbearance or Waiver of Remedies.
------------------------------------
(a) Nothing contained herein shall be deemed to be an agreement by
Lenders to forbear in exercising any of their rights or remedies available under
the Loan Documents, at law or in equity, during the pendency of this Agreement.
Specifically, but without limitation, nothing contained in this Agreement shall
limit or restrict the rights of Senior Lender after the occurrence and during
the continuation of an Event of Default under the Senior Loan Documents or the
rights of Subordinate Lender after the occurrence and during the continuation of
an Event of Default (as defined in the Subordinate Loan Documents); provided,
however, that Subordinate Lender's exercise of its rights shall be limited as
set forth in the Intercreditor Agreement. Upon the occurrence and during the
continuation of an Event of Default, Senior Lender shall have the absolute,
unconditional and unqualified right, at any time, in its sole and absolute
discretion, to (i) apply any funds or other amounts then held in the
Intercreditor Account, Senior Account or the Cash Collateral Account to the
Loan, in such order and manner as may be permitted by the Senior Loan Documents,
notwithstanding any provision to the contrary in this Agreement (including
without limitation Paragraph 3 hereof), and (ii) pursue all rights and remedies
available pursuant to the Senior Loan Documents, applicable law or otherwise,
without any limitation or restriction as a result of this Agreement. Lenders
expressly reserve any and all rights and remedies available to them under the
Senior Loan Documents or Subordinate Loan Documents, as applicable, at law or in
equity, including, without limitation, the right to accelerate the Loan and the
Subordinate Loan, as applicable, and to commence an action to foreclose the
Senior Mortgages or Subordinate Mortgages, as applicable, pursue rights with
respect to Cash Collateral (including, without limitation, "cash collateral" as
defined in the
22
Bankruptcy Code), petition for the appointment of a receiver, or pursue any
other rights or remedies, including, but not limited to, seeking a lifting of
the automatic stay in, or dismissal or conversion of, any bankruptcy case,
seeking the appointment of a trustee for the Borrower, termination of either or
both of the exclusive periods set forth in section 1121 of the Bankruptcy Code
or the filing by Lenders of a Chapter 11 plan with respect to Borrower, and
Lenders expressly reserve all such rights or remedies and any and all other
rights and remedies afforded Lenders under this Agreement, under state law or
other applicable law, under the Bankruptcy Code or otherwise, irrespective of
whether this Agreement is in effect, it being expressly agreed that the
termination of this Agreement shall in no event or under any circumstances be a
condition precedent to the exercise by Senior Lender of any of such rights and
remedies; provided however, that the provisions of this sentence shall be
subject to the limitations of the Intercreditor Agreement. No failure to
exercise or delay by Lenders in exercising any right, power or privilege under
the Loan Documents or Subordinate Loan Documents, at law or in equity shall
preclude any other or further exercise thereof, or the exercise of any other
right, power or privilege. The rights and remedies provided in this Agreement
and the Loan Documents are cumulative and not exclusive of each other or of any
right or remedy provided by law or in equity. Except as otherwise expressly
provided in the Loan Documents, no notice to or demand upon Borrower in any
instance shall, in itself, entitle Borrower to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the right of
Senior Lender to any other or further action in any circumstances without notice
or demand.
7. Expenses, Attorneys' Fees. Senior Lender is hereby authorized to
-------------------------
reimburse itself from the Senior Account or the Intercreditor Account or to
receive reimbursement from the Cash Collateral Account for all reasonable
amounts incurred by or on behalf of Senior Lender for attorneys' fees and all
other expenses reasonably incurred by or on behalf of Senior Lender in
connection with this Agreement or otherwise chargeable to Borrower as provided
in the Loan Documents (to the extent that funds are available in the Senior
Account and/or the Intercreditor Account and/or the Cash Collateral Account).
In the event
23
any dispute shall arise concerning the subject matter of this Agreement, Lenders
shall be entitled to recover from Borrower their reasonable attorneys' fees and
costs incurred in connection therewith, including without limitation, all costs
of trial, appellate and bankruptcy proceedings (other than any of same arising
or resulting from a dispute solely between Senior Lender and Subordinate Lender
and not arising from or based upon the actions or failure to act of Borrower).
The rights and remedies of Lenders contained in this paragraph shall be in
addition to, and not in lieu of, the rights and remedies contained in the Loan
Documents and Subordinate Loan Documents and as otherwise provided by law or in
equity.
8. Lenders Not Liable for Expenses. Nothing in this Agreement shall be
-------------------------------
intended or construed to hold Lenders liable or responsible for any expense,
disbursement, liability or obligation of any kind or nature whatsoever,
including, but not limited to, wages, salaries, payroll taxes, withholding,
benefits or other amounts payable to or on behalf of Borrower, whether or not
there is sufficient money in the Cash Collateral Account and/or the Senior
Account and/or the Intercreditor Account to pay such expenses or costs and
whether any present or future creditor attempts to assert a claim against
Lenders or the Mortgaged Property, including, but not limited to, any attempt in
any bankruptcy proceeding to assert a claim under Section 506(c) of the
Bankruptcy Code, or any other provision of the Bankruptcy Code. Nothing
contained in this Agreement shall limit Subordinate Lender's right to
reimbursement from Borrower for any costs or expenses required to be paid
pursuant to the Subordinate Loan Documents, subject, however, in all event to
the provisions of the Intercreditor Agreement.
9. Management Company's Duties. Manager hereby expressly confirms and
---------------------------
acknowledges that Manager shall at all times have a fiduciary duty to Lenders
with respect to the administration of Net Cash Flow in accordance with this
Agreement.
10. No Joint Venture. This Agreement shall not constitute a joint venture
----------------
or partnership agreement of any kind between the parties hereto or otherwise
create the relationship of joint venturers or partners among the
24
parties hereto. Nothing contained herein shall characterize or be deemed to
characterize Lenders as "mortgagee-in-possession."
11. Injunctive Relief/Irreparable Harm. Borrower and Manager acknowledge
----------------------------------
and agree that any breach or default by either Borrower or Manager pursuant to
this Agreement would result in irreparable harm to Senior Lender and Subordinate
Lender and that therefore money damages would not be an adequate remedy to
compensate Senior Lender or Subordinate Lender for such breach or default.
Accordingly, Borrower and Manager acknowledge and agree that in the event of a
breach or default by either of them pursuant to the terms of this Agreement,
Senior Lender and/or Subordinate Lender shall each be entitled to specific
performance of Borrower's and Manager's obligations under this Agreement and/or
any other equitable remedy which Lenders may seek, in their sole and absolute
discretion, and Borrower and Manager hereby waive and release any right to claim
that monetary damages would be an adequate remedy.
12. Transfer, etc. Without the prior written consent of Lenders, Borrower
--------------
will not sell, assign, transfer or otherwise dispose of, grant any option with
respect to, or pledge or grant any security interest in or otherwise encumber
any of the Cash Collateral or any interest therein, except for the pledge
thereof and security interests therein provided for in this Agreement or in any
of the other Senior Loan Documents or Subordinate Loan Documents, and any such
purported action in violation of this paragraph shall be void.
13. Duty as to Collateral. Neither Senior Lender, Subordinate Lender,
---------------------
Escrow Agent nor any of their respective officers, directors or employees shall
be liable for any action taken or omitted to be taken in good faith by them
hereunder or in connection herewith except for their own gross negligence or
willful misconduct. Senior Lender, Subordinate Lender and Escrow Agent may rely
on all certificates, documents and other proofs delivered to them and believed
by them in good faith to be reliable as to the facts therein disclosed and the
statements therein made, and any such certificate, document or other proof shall
be evidence of such facts to protect such parties in any action that they may or
may not do, by reason of the supposed
25
existence of such fact. Neither Senior Lender, Subordinate Lender, Escrow Agent
nor their agents shall incur any liability to Borrower arising our of their
taking or failing to take any action hereunder except for their own willful
misconduct or gross negligence.
14. Representations and Warranties. Borrower hereby represents and
------------------------------
warrants that:
(a) Borrower has full legal right to execute, delivery and perform
this Agreement and this Agreement has been duly executed and delivered by
Borrower and constitutes a legal, valid and binding obligation of Borrower
enforceable against Borrower in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally.
(b) No security agreements have been executed by Borrower and
delivered, and no financing statements have been filed by Borrower in any
jurisdiction, granting or purporting to ▇▇▇▇▇ ▇ ▇▇▇▇ on or security interest in
the funds constituting or to constitute the Cash Collateral or to be held in the
Senior Account or Intercreditor Account to any secured party except in
connection with this Agreement and the other Loan Documents.
(c) No consent of any other party and no consent, license, approval
or authorization of, exemption by, or registration or declaration with, any
governmental instrumentality is required to be obtained in connection with the
execution, delivery or performance of this Agreement.
(d) Borrower's federal tax identification number is ▇▇-▇▇▇▇▇▇▇.
(e) Borrower will defend Senior Lender's right and interest in and to
the Cash Collateral and the Senior Account and the Intercreditor Account and the
income, distributions and Proceeds thereof against the claims and demands of all
Persons whomsoever (other than parties claiming through Senior Lender).
26
(f) Borrower will defend Subordinate Lender's right and interest in
and to the Cash Collateral and the Senior Account and the Intercreditor Account
and the income, distributions and Proceeds thereof against the claims and
demands of all Persons whomsoever (other than parties claiming through
Subordinate Lender).
15. Remedies. In addition to the rights, powers and remedies of the Loan
--------
Documents, Lenders shall have all of the rights, powers and remedies now or
hereafter permitted in law or equity, including without limitation, those of a
secured party under the Uniform Commercial Code, all such rights and remedies
being cumulative, not exclusive, and enforceable alternatively, successively or
concurrently, at such time or times as Lenders deem expedient, such remedies to
be exercised only after the occurrence and during the continuation of an Event
of Default and subject to the provisions of the Intercreditor Agreement.
16. Modifications. If any or all of the provisions of this Agreement are
-------------
hereafter modified, vacated or stayed by subsequent order of any court, such
stay, modification or vacation shall not affect the validity and enforceability
of any contractual right, property right, lien, security interest or priority
authorized hereby with respect to any of the Net Cash Flow which is deemed by
this Agreement to be Cash Collateral and which have been used pursuant to this
Agreement.
17. Governing Law. This Agreement shall be construed in accordance with
-------------
the internal laws of the State of New York, without regard to its conflict-of-
laws principles.
18. Benefit. This Agreement shall to the extent legally permissible be
-------
binding upon and shall inure to the benefit of Senior Lender, Subordinate
Lender, Borrower, Manager and their respective successors and assigns, to the
extent successors and assigns are permitted under the respective Senior Loan
Documents and Subordinate Loan Documents. This Agreement is made for the sole
protection of the parties hereto and their respective successors and assigns.
19. Miscellaneous. No other person shall have any right whatsoever
-------------
hereunder. Any notice, request, direction
27
or demand given or made under this Agreement shall be in writing and shall be
given in accordance with the Loan Documents or Subordinate Loan Documents. Each
party to this Agreement may designate a change of address by notice given to the
other party fifteen (15) days prior to the date such change of address is to
become effective. Time shall be of the essence in the performance of each and
every one of the provisions hereof. If any of the provisions of this Agreement
is held to be invalid or unenforceable, the remaining provisions shall remain in
effect without impairment. This Agreement may not be modified, amended or
terminated except by an agreement in writing executed by all of the parties
hereto. Notwithstanding any provision to the contrary herein or in any of the
Loan Documents, upon the occurrence of an Event of Default and an acceleration
of the Loans as permitted by the Loan Documents, Borrower shall have no right to
cure any Event of Default and no right to otherwise reinstate the Loans.
20. Counterparts. It is understood and agreed that this Agreement may be
------------
executed in telecopied, facsimile, or original counterparts, each of which
shall, for all purposes, be deemed an original and all of such counterparts,
taken together, shall constitute one and the same Agreement, even though all of
the parties hereto may not have executed the same counterpart of this Agreement.
21. Conflict. To the extent of any conflict between the terms and
--------
provisions of this Agreement and the Intercreditor Agreement, the terms and
provisions of the Intercreditor Agreement shall prevail and control.
22. Escrow Agent. The Escrow Agent may become a party to this Agreement
------------
at any time after the Escrow Agent is selected in accordance with this Agreement
by providing written notice to such effect to each of the parties to this
Agreement. The Escrow Agent shall neither be responsible for or under, nor
chargeable with knowledge of, the terms and conditions of any other agreement,
instrument or document in connection herewith other than the Senior Loan
Documents and Subordinate Loan Documents and shall be required to act in respect
of the Cash Collateral only as provided in this Agreement. This Agreement sets
forth all the obligations of the Escrow Agent with respect to any and all
matters pertinent to the escrow contemplated hereunder.
28
The Escrow Agent shall incur no liability in connection with the discharge of
its obligations under this Agreement or otherwise in connection therewith,
except such liability as may arise from the gross negligence or willful
misconduct of the Escrow Agent. Borrower hereby agrees to indemnify Escrow Agent
and hold Escrow Agent harmless from any loss, cost, liability or expense
incurred by Escrow Agent as a result of this Agreement or the performance of
Escrow Agent's obligations hereunder, except to the extent caused by Escrow
Agent's gross negligence or willful misconduct. The Escrow Agent may consult
with counsel of its choice and shall not be liable for any action taken or
omitted to be taken by the Escrow Agent in accordance with the advice of such
counsel. The Escrow Agent shall not be bound by any modification, cancellation
or rescission of this Agreement unless in writing and signed by the Escrow
Agent. Each of the parties to this Agreement hereby covenants and agrees to
execute and deliver any further documentation or amendments to this Agreement
(provided that such amendments are not inconsistent with the provisions of this
Agreement) reasonably requested by Escrow Agent as a condition to Escrow Agent
acting with respect to this Agreement.
23. Valid Security Interest. The parties hereto agree that this Agreement
-----------------------
is effective to create a valid lien on and security interest in the funds on
deposit in the Cash Collateral Account and to transfer full and complete
ownership of the Senior Account and the Intercreditor Account and the funds
therein to Lender, and Borrower has taken no action which would subject such
funds to any prior lien or security interest or to any agreement purporting to
grant to any third party a lien or security interest on the property or assets
of Borrower which would include such funds (other than any rights of the Manager
under the Management Agreement or this Agreement).
24. Estoppel Certificates. Each party to this Agreement agrees to execute
---------------------
and deliver to any other party to this Agreement within ten (10) days after
written request by such other party, an estoppel certificate certifying that (i)
this Agreement is in full force and effect, (ii) this Agreement is unmodified
(or specifying any modifications), (iii) to such party's knowledge, whether any
other party to this Agreement is then in default under this Agreement, and if
so, specifying the nature of the default, and (iv) as to
29
any other information with respect to this Agreement reasonably requested by the
requesting party.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
in manner and form sufficient to bind them, as of the day and year first set
forth above.
SENIOR LENDER:
GERMAN AMERICAN CAPITAL
CORPORATION, a Maryland
corporation, as agent or trustee
for itself and others, and its
successors and assigns
By:
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
By:
------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Authorized Signatory
SUBORDINATE LENDER:
STARWOOD MEZZANINE INVESTORS, L.P.,
a Delaware limited partnership
By: STARWOOD CAPITAL GROUP, L.P.,
a Delaware limited
partnership, its general
partner
By: BSS CAPITAL PARTNERS,
L.P., a Delaware limited
partnership, its general
partner
By: STERNLICHT HOLDINGS
II, INC., a Delaware
corporation, its
general partner
By:
-----------------
30
▇▇▇ ▇▇▇▇▇▇▇▇
Executive Vice
President
BORROWER:
MARRIOTT RESIDENCE INN LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: RIBM One Corporation, General
Partner
By:
--------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
MANAGER:
RESIDENCE INN BY MARRIOTT, INC., a
Delaware corporation
By:
--------------------------
Name:
------------------------
Title:
-----------------------
31
EXHIBIT "A"
-----------
DESCRIPTION OF INNS
32