EXHIBIT 10.31
LOAN FACILITY AGREEMENT
Between
EACH OF THE PERSONS IDENTIFIED ON SCHEDULE 1 ATTACHED HERETO
and
JPMORGAN CHASE BANK
Dated as of June 18, 2003
$200,000,000.00
TABLE OF CONTENTS
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION................................................................. 1
SECTION 1.2 Principles of Construction.................................................................. 27
II. AMOUNT AND TERMS OF LOAN ADVANCES....................................................................... 28
SECTION 2.1 ADVANCES.................................................................................... 28
2.1.1 Agreement to Lend and Borrow................................................................... 28
2.1.2 Additional Advances............................................................................ 28
2.1.3 Limitation on Advances......................................................................... 28
2.1.4 Intentionally Omitted.......................................................................... 28
2.1.5 Notice of Borrowing............................................................................ 28
2.1.6 Disbursement of Funds.......................................................................... 28
2.1.7 The Note....................................................................................... 29
SECTION 2.2 INTEREST; LOAN PAYMENTS; LATE PAYMENT CHARGE................................................ 29
2.2.1 Payments....................................................................................... 29
2.2.2 Interest Calculation........................................................................... 29
2.2.3 Eurodollar Rate Unascertainable; Illegality; Increased Costs................................... 29
2.2.4 Payment on Maturity Date....................................................................... 31
2.2.5 Intentionally Omitted.......................................................................... 32
2.2.6 Late Payment Charge............................................................................ 32
2.2.7 Usury Savings.................................................................................. 32
2.2.8 Foreign Taxes.................................................................................. 32
SECTION 2.3 PREPAYMENTS................................................................................. 34
2.3.1 Voluntary Prepayments.......................................................................... 34
2.3.2 Mandatory Prepayments.......................................................................... 34
2.3.3 Prepayments After Default...................................................................... 35
2.3.4 Making of Payments............................................................................. 35
2.3.5 Application of Prepayments..................................................................... 35
SECTION 2.4 RELEASE OF EXCLUDED PROPERTY................................................................ 35
SECTION 2.5 RELEASE AND SUBSTITUTION OF COLLATERAL...................................................... 36
SECTION 2.6 FEES........................................................................................ 43
2.6.1 Non-Use Fee.................................................................................... 43
2.6.2 Administration Fee............................................................................. 43
2.6.3 Origination Fee............................................................................... 43
2.6.4 Termination Fee............................................................................... 44
SECTION 2.7 INCREASING AVAILABLE FACILITY AMOUNT........................................................ 44
SECTION 2.8 INTENTIONALLY OMITTED....................................................................... 45
SECTION 2.9 ADDITIONAL BORROWERS/OPERATING LESSEE....................................................... 45
SECTION 2.10 EXTENSION OF MATURITY DATE............................................................... 45
SECTION 2.11 TERMINATION OF LOAN...................................................................... 46
III. CONDITIONS PRECEDENT; CASH MANAGEMENT................................................................... 47
SECTION 3.1 CONDITIONS PRECEDENT........................................................................ 47
3.1.1 Conditions Precedent to the Initial Advance.................................................... 47
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3.1.2 Conditions Precedent to All Advances of the Loan............................................... 53
3.1.3 Cross-Collateralization........................................................................ 54
SECTION 3.2 ACCEPTANCE OF ADVANCES...................................................................... 54
SECTION 3.3 SUFFICIENT COUNTERPARTS..................................................................... 55
SECTION 3.4 CASH MANAGEMENT PROVISIONS.................................................................. 55
3.4.1 Establishment of Accounts...................................................................... 55
3.4.2 Deposits into Lockbox Account.................................................................. 56
3.4.3 Account Name................................................................................... 57
3.4.4 Eligible Accounts.............................................................................. 57
3.4.5 Permitted Investments.......................................................................... 57
3.4.6 The Initial Deposits........................................................................... 58
3.4.7 Transfer To and Disbursements from the Lockbox Account......................................... 58
3.4.8 Withdrawals From the Tax Account and the Insurance Premium Account............................. 58
3.4.9 Withdrawals from the Replacement Reserve Account............................................... 59
3.4.10 Withdrawals from the Required Repair Account................................................... 59
3.4.11 Withdrawals from the Ground Rent Account....................................................... 59
3.4.12 Sole Dominion and Control...................................................................... 59
3.4.13 Security Interest.............................................................................. 59
3.4.14 Rights on Default.............................................................................. 59
3.4.15 Financing Statement; Further Assurances........................................................ 60
3.4.16 Borrower's Obligation Not Affected............................................................. 60
3.4.17 Payments Received Under this Agreement......................................................... 60
SECTION 3.5 WAVIER OF CASH MANAGEMENT PROVISIONS........................................................ 60
IV. REPRESENTATIONS AND WARRANTIES.......................................................................... 61
SECTION 4.1 BORROWER REPRESENTATIONS AND WARRANTIES..................................................... 61
4.1.1 Organization................................................................................... 61
4.1.2 Proceedings.................................................................................... 61
4.1.3 No Conflicts................................................................................... 62
4.1.4 Litigation..................................................................................... 62
4.1.5 Agreements..................................................................................... 63
4.1.6 Solvency....................................................................................... 63
4.1.7 Full and Accurate Disclosure................................................................... 64
4.1.8 No Plan Assets................................................................................. 64
4.1.9 Compliance..................................................................................... 64
4.1.10 Financial Information.......................................................................... 64
4.1.11 Condemnation................................................................................... 65
4.1.12 Federal Reserve Regulations.................................................................... 65
4.1.13 Utilities and Public Access.................................................................... 65
4.1.14 Not a Foreign Person........................................................................... 65
4.1.15 Separate Lots.................................................................................. 65
4.1.16 Assessments.................................................................................... 66
4.1.17 Enforceability................................................................................. 66
4.1.18 No Prior Assignment............................................................................ 66
4.1.19 Insurance...................................................................................... 66
4.1.20 Use of Property................................................................................ 66
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4.1.21 Certificate of Occupancy; Licenses............................................................. 66
4.1.22 Flood Zone..................................................................................... 66
4.1.23 Physical Condition............................................................................. 67
4.1.24 Boundaries..................................................................................... 67
4.1.25 Leases......................................................................................... 67
4.1.26 Survey......................................................................................... 68
4.1.27 Intentionally Omitted.......................................................................... 68
4.1.28 Filing and Recording Taxes..................................................................... 68
4.1.29 Franchise Agreement............................................................................ 68
4.1.30 Management Agreement/Operating Lease........................................................... 68
4.1.31 Illegal Activity............................................................................... 69
4.1.32 No Change in Facts or Circumstances; Disclosure................................................ 69
4.1.33 Investment Company Act......................................................................... 69
4.1.34 Principal Place of Business; State of Organization............................................. 69
4.1.35 Single Purpose Entity.......................................................................... 69
4.1.36 Business Purposes.............................................................................. 74
4.1.37 Taxes.......................................................................................... 74
4.1.38 Intentionally Omitted.......................................................................... 74
4.1.39 Environmental Representations and Warranties................................................... 74
4.1.40 Taxpayer Identification Number................................................................. 75
4.1.41 OFAC........................................................................................... 75
4.1.42 Ground Lease Representations................................................................... 75
SECTION 4.2 SURVIVAL OF REPRESENTATIONS................................................................. 76
V. BORROWER COVENANTS...................................................................................... 76
SECTION 5.1 AFFIRMATIVE COVENANTS....................................................................... 76
5.1.1 Existence; Compliance with Legal Requirements.................................................. 77
5.1.2 Taxes and Other Charges........................................................................ 77
5.1.3 Litigation..................................................................................... 78
5.1.4 Access to Properties........................................................................... 78
5.1.5 Notice of Default.............................................................................. 78
5.1.6 Cooperate in Legal Proceedings................................................................. 78
5.1.7 Award and Insurance Benefits................................................................... 79
5.1.8 Further Assurances............................................................................. 79
5.1.9 Mortgage and Intangible Taxes.................................................................. 79
5.1.10 Financial Reporting............................................................................ 79
5.1.11 Business and Operations........................................................................ 82
5.1.12 Costs of Enforcement........................................................................... 82
5.1.13 Estoppel Statement............................................................................. 83
5.1.14 Intentionally Omitted.......................................................................... 83
5.1.15 Performance by Borrower........................................................................ 83
5.1.16 Intentionally Omitted.......................................................................... 84
5.1.17 Leasing Matters................................................................................ 84
5.1.18 Management Agreement........................................................................... 85
5.1.19 Environmental Covenants........................................................................ 87
5.1.20 Alterations.................................................................................... 88
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5.1.21 Franchise Agreement............................................................................ 88
5.1.22 Operating Lease................................................................................ 89
5.1.23 OFAC........................................................................................... 90
5.1.24 The Ground Lease............................................................................... 90
SECTION 5.2 NEGATIVE COVENANTS.......................................................................... 91
5.2.1 Liens.......................................................................................... 91
5.2.2 Dissolution.................................................................................... 91
5.2.3 Change In Business............................................................................. 92
5.2.4 Debt Cancellation.............................................................................. 92
5.2.5 Zoning......................................................................................... 92
5.2.6 No Joint Assessment............................................................................ 92
5.2.7 Name, Identity, Structure, or Principal Place of Business...................................... 92
5.2.8 ERISA.......................................................................................... 93
5.2.9 Affiliate Transactions......................................................................... 93
5.2.10 Transfers...................................................................................... 93
SECTION 5.3 RECALCULATION OF AVAILABLE FACILITY AMOUNT.................................................. 95
SECTION 5.4 UPDATED APPRAISALS.......................................................................... 95
VI. INSURANCE; CASUALTY; CONDEMNATION....................................................................... 96
SECTION 6.1 INSURANCE................................................................................... 96
SECTION 6.2 CASUALTY................................................................................... 101
SECTION 6.3 CONDEMNATION............................................................................... 102
SECTION 6.4 RESTORATION................................................................................. 102
VII. RESERVE FUNDS........................................................................................... 106
SECTION 7.1 REQUIRED REPAIR FUNDS....................................................................... 106
7.1.1 Deposits....................................................................................... 106
7.1.2 Release of Required Repair Funds............................................................... 107
SECTION 7.2 TAX AND INSURANCE ESCROW FUND............................................................... 108
SECTION 7.3 REPLACEMENTS AND REPLACEMENT RESERVE........................................................ 109
7.3.1 Replacement Reserve Fund....................................................................... 109
7.3.2 Disbursements from Replacement Reserve Account................................................. 109
7.3.3 Performance of Replacements.................................................................... 110
7.3.4 Failure to Make Replacements................................................................... 112
7.3.5 Balance in the Replacement Reserve Account..................................................... 112
SECTION 7.4 GROUND LEASE ESCROW FUND.................................................................... 113
SECTION 7.5 RESERVE FUNDS, GENERALLY.................................................................... 113
VIII. DEFAULT................................................................................................. 114
SECTION 8.1 EVENT OF DEFAULT............................................................................ 114
SECTION 8.2 REMEDIES.................................................................................... 118
SECTION 8.3 REMEDIES CUMULATIVE; WAIVERS................................................................ 119
IX. SPECIAL PROVISIONS...................................................................................... 120
SECTION 9.1 CONVERSION TO FIXED RATE CMBS LOANS......................................................... 120
9.1.1 Conversion..................................................................................... 120
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9.1.2 Fixed Rate CMBS Loan Provisions............................................................... 122
9.1.3 Costs and Expenses Relating to Conversion..................................................... 123
SECTION 9.2 CONVERSION TO FLOATING RATE CMBS LOAN...................................................... 123
9.2.1 Floating Rate Conversion...................................................................... 123
9.2.2 Floating Rate CMBS Loan Provisions............................................................ 125
9.2.3 Costs and Expenses Relating to Floating Rate Conversion....................................... 126
SECTION 9.3 SERVICER................................................................................... 126
SECTION 9.4 EXCULPATION................................................................................ 126
X. MISCELLANEOUS.......................................................................................... 128
SECTION 10.1 SURVIVAL................................................................................... 128
SECTION 10.2 LENDER'S DISCRETION........................................................................ 129
SECTION 10.3 GOVERNING LAW.............................................................................. 129
SECTION 10.4 MODIFICATION, WAIVER IN WRITING............................................................ 130
SECTION 10.5 DELAY NOT A WAIVER......................................................................... 130
SECTION 10.6 NOTICES.................................................................................... 130
SECTION 10.7 TRIAL BY JURY.............................................................................. 131
SECTION 10.8 HEADINGS................................................................................... 132
SECTION 10.9 SEVERABILITY............................................................................... 132
SECTION 10.10 PREFERENCES................................................................................ 132
SECTION 10.11 WAIVER OF NOTICE........................................................................... 132
SECTION 10.12 REMEDIES OF BORROWER....................................................................... 132
SECTION 10.13 EXPENSES; INDEMNITY........................................................................ 133
SECTION 10.14 SCHEDULES AND EXHIBITS INCORPORATED........................................................ 134
SECTION 10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES........................................................ 134
SECTION 10.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY BENEFICIARIES.............................. 134
SECTION 10.17 PUBLICITY.................................................................................. 135
SECTION 10.18 CROSS-DEFAULT; CROSS-COLLATERALIZATION; WAIVER OF MARSHALLING OF ASSETS.................... 135
SECTION 10.19 WAIVER OF COUNTERCLAIM..................................................................... 136
SECTION 10.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE.............................................. 136
SECTION 10.21 BROKERS AND FINANCIAL ADVISORS............................................................. 136
SECTION 10.22 PRIOR AGREEMENTS........................................................................... 137
SECTION 10.23 COUNTERPARTS............................................................................... 137
SECTION 10.24 LIABILITY.................................................................................. 137
SECTION 10.25 BORROWER/MAKER............................................................................. 137
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THIS LOAN FACILITY AGREEMENT (this "Agreement"), dated as of June 18,
2003 is made among each of the Persons identified on Schedule 1 attached hereto,
each having its principal place of business at c/o FelCor Lodging Trust
Incorporated, ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(each, an "Initial Borrower"; together with any Additional Borrowers
(hereinafter defined) hereinafter referred to, collectively and individually, as
appropriate, as "Maker") and FCH/DT BWI HOTEL, L.L.C., a Delaware limited
liability company, having its principal place of business at c/o FelCor Lodging
Trust Incorporated, ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ (the "Maryland Guarantor"; together with Maker, collectively, "Borrower")
and JPMORGAN CHASE BANK, a New York banking corporation, having an address at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Lender").
W I T N E S S E T H:
WHEREAS, Maker desires to obtain the Loan (as hereinafter defined) from
Lender; and
WHEREAS, Lender is willing to make the Loan to Maker, subject to and in
accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).
NOW THEREFORE, in consideration of the making of the Loan by Lender and
the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
"Account Collateral" shall mean: (i) the Accounts, and all
Cash, checks, drafts, certificates and instruments, if any, from time to time
deposited or held in the Accounts from time to time; (ii) any and all amounts
invested in Permitted Investments; (iii) all interest, dividends, Cash,
instruments and other property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any or all of the
foregoing; and (iv) to the extent not covered by clauses (i) - (iii) above, all
"proceeds" (as defined under the UCC as in effect in the State in which the
Accounts are located) of any or all of the foregoing.
"Accounts" shall mean, collectively, the Property Account, the
Concentration Account, the Tax Account, the Insurance Premium Account, the
Required Repair Account, the Ground Rent Account, the Replacement Reserve
Account, the Debt Service Account and the Lockbox Account.
"Accounts Receivable" shall have the meaning set forth in
Article 1 of the Security Instrument with respect to each Property.
"Act" shall have the meaning provided in Section 4.1.35.
"Additional Borrower" shall have the meaning provided in
Section 2.9(a).
"Additional Operating Lessee" shall have the meaning provided
in Section 2.9(b).
"Additional Origination Fee" shall have the meaning provided
in Section 2.6.3.
"Administrative Fee" shall have the meaning provided in
Section 2.6.
"Adjusted Prime Rate" shall mean an interest rate per annum
equal to the Prime Rate in effect from time to time plus one percent (1%).
"Advance" shall mean each advance of the principal balance of
the Loan and shall be evidenced by the Note and secured by a Security
Instrument.
"Advance Date" shall mean the date on which an Advance is
made.
"Affiliate" shall mean, as to any Person, any other Person
that, directly or indirectly, is in control of, is controlled by or is under
common control with such Person or is a director or officer of such Person or of
an Affiliate of such Person.
"Affiliated Manager" shall mean any property manager which is
an Affiliate of Borrower, any Operating Lessee SPE Entity, Principal, or any
Guarantor or Indemnitor, or in which Borrower, any Operating Lessee SPE Entity,
Principal, or any Guarantor or Indemnitor has, directly or indirectly, any
legal, beneficial or economic equity interest.
"ALTA" shall mean American Land Title Association, or any
successor thereto.
"Annual Budget" shall mean the operating budget, including all
planned capital expenditures, for each Property prepared by Manager and approved
by Borrower for the applicable Fiscal Year or other period.
"Applicable Interest Rate" shall mean for each Interest Period
through and including the date on which the Debt is paid in full, an interest
rate per annum equal to (I) the Eurodollar Rate or (II) the Adjusted Prime Rate,
if the Loan begins bearing interest at the Adjusted Prime Rate in accordance
with the provisions hereof.
"Appraisal" shall mean an appraisal prepared in accordance
with the requirements of FIRREA, prepared by an independent third party
appraiser holding an MAI designation, who is State licensed or State certified
if required under the laws of the State where the applicable Property is
located, who meets the requirements of FIRREA and who is otherwise satisfactory
to Lender.
"Appraisal Update Event" shall mean, with respect to each
Property, the determination by Lender in its reasonable discretion that either
(i) based upon an Appraisal received by Lender in connection with the conversion
of a portion of the Loan into (A) a Fixed Rate CMBS Loan pursuant to the terms
of Section 9.1 hereof or (B) a Floating Rate CMBS Loan pursuant to the terms of
Section 9.2 hereof, that there has been a material increase in Market
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Capitalization Rates (as compared to the Market Capitalization Rates used by
Lender in connection with the determination of the Initial Available Facility
Amount) or (ii) a Material Adverse Hotel Market exists with respect to such
Property. In no event shall an Appraisal Update Event occur, with respect to
each Property, more than once in any consecutive twelve (12) month period.
"Approved Annual Budget" shall have the meaning provided in
Section 5.1.10(g).
"Assignment of Leases" shall have meaning provided in Section
3.1(h).
"Assignment of Management Agreement" shall have meaning
provided in Section 3.1(j).
"Assumed Non-Use Fees" shall mean the quarterly Non-Use Fee
which would be due based on the unfunded portion of the Facility Amount on the
Termination Date.
"Austin Property" shall mean that certain Property commonly
known as Austin Doubletree Guest Suites located in Austin, Texas.
"Available Facility Amount" shall mean that portion of the
Facility Amount equal to the aggregate maximum hypothetical loan amounts
applicable to Fixed Rate CMBS Loans which each satisfy (i) a loan to value ratio
of sixty percent (60%) and (ii) a Debt Service Coverage Ratio of 1.30:1.00;
provided, however, in no event shall the Available Facility Amount exceed the
Facility Amount.
"Award" shall mean any compensation paid by any Governmental
Authority in connection with a Condemnation in respect of all or any part of any
Property.
"Bankruptcy Code" shall mean Title 11 U.S.C. Section 101 et
seq., and the regulations adopted and promulgated pursuant thereto (as the same
may be amended from time to time).
"Borrower" shall have the meaning set forth in the
introductory paragraph hereto, together with its successors and assigns.
"Borrowing" shall mean a borrowing from Lender on a given date
(or resulting from conversions on a given date).
"Breakage Costs" shall have the meaning provided in Section
2.2.3.
"Business Day" shall mean any day other than a Saturday,
Sunday or any other day on which national banks in New York, New York are not
open for business.
"Business Party" shall have the meaning provided in Section
4.1.35.
"Capital Expenditures" shall mean, for any period, the amount
expended for items capitalized under GAAP (including, but not limited to,
expenditures for building improvements or major repairs, leasing commissions and
tenant improvements).
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"Cash" shall mean coin or currency of the United States of
America or immediately available federal funds, including such funds delivered
by wire transfer.
"Casualty" shall have the meaning provided in Section 6.2.
"Casualty Consultant" shall have the meaning provided in
Section 6.4(b)(iii).
"Casualty Retainage" shall have the meaning provided in
Section 6.4(b)(iv).
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, as it may be further amended from time to time, and any successor
statutes thereto, and all applicable U.S. Department of Treasury regulations
issued pursuant thereto in temporary or final form.
"Collateral" shall mean the Properties, the Accounts, the
Reserve Funds, the Personal Property, the Rents, the Account Collateral, the
Maryland Guaranty, and all other real or personal property of Borrower or any
Guarantor that is at any time pledged, mortgaged or otherwise given as security
to Lender for the payment of the Debt under the Security Instruments, this
Agreement or any other Loan Document.
"Condemnation" shall mean a temporary or permanent taking by
any Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
any Property, or any interest therein or right accruing thereto, including any
right of access thereto or any change of grade affecting such Property or any
part thereof.
"Condemnation Proceeds" shall have the meaning provided in
(b).
"Conduit Securitization" shall mean a previous securitization
of a pool of fixed-rate first lien conduit commercial mortgage loans, excluding
any so-called "large loan" and, unless Lender has determined that a
Securitization of a pool of fixed-rate first lien conduit commercial mortgage
loans has not occurred for a period of at least one hundred twenty (120) days,
any so-called "fusion" securitization.
"CMBS Loan Amount" means the original principal loan amount,
as the same may be adjusted from time to time, determined by Lender to be the
maximum hypothetical loan amount applicable to a Fixed Rate CMBS Loan which
satisfies (i) a loan to value ratio of sixty percent (60%) and (ii) a Debt
Service Coverage Ratio of 1.30:1.00.
"Commercial Lending Program Criteria" shall have the meaning
provided in Section 9.1.2.
"Compliance Certificate" shall have the meaning provided in
Section 5.1.10(c).
"Concentration Account" shall have the meaning provided in
Section 3.4.1(a).
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"Contract Rate" shall mean the greater of (i) 10.90% or (ii)
the Fixed Rate CMBS Rate that would be in effect in the event of a Conversion
(regardless of the outstanding principal balance of the Loan), as the same may
change from time to time. The determination of the Contract Rate by Lender shall
be conclusive absent manifest error.
"Control" (and the correlative terms "controlled by" and
"controlling") shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of management and policies of the business and
affairs of the entity in question by reason of the ownership of beneficial
interests, by contract or otherwise.
"Conversion" shall have the meaning provided in Section 9.1.1.
"Conversion Amended Loan Documents" shall have the meaning
provided in Section 9.1.1(a).
"Conversion Certificate" shall have the meaning provided in
Section 9.1.1.
"Conversion Date" shall have the meaning provided in Section
9.1.1.
"Conversion Documents" shall have the meaning provided in
Section 9.1.1.
"Conversion Limitations" shall mean that Lender shall not have
the right to consummate a Conversion if the total outstanding principal balance
of the Loan is less than $25,000,000.00; provided, however, (i) Lender shall
have the right to consummate a Conversion regardless of the outstanding
principal balance of the Loan one (1) time in any four (4) month period
(regardless of whether or not any Conversions (other than pursuant to this
clause (i)) have occurred during such four (4) month period) and (ii) in the
event that Borrower has extended the Maturity Date in accordance with the terms
hereof, the Conversion Limitations shall not apply during the period beginning
on the initial Maturity Date. The Conversion Limitation shall not apply in the
event of a Lender Extension.
"Conversion Notice" shall have the meaning provided in Section
9.1.1.
"Conversion Parameters" shall have the meaning provided in
Section 9.1.1.
"Creditors Rights Laws" shall mean with respect to any Person,
any existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, conservatorship, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to its debts or debtors.
"Debt" shall mean the outstanding principal amount set forth
in, and evidenced by, this Agreement and the Note together with all interest
accrued and unpaid thereon and all other sums due to Lender in respect of the
Loan under the Note, this Agreement, the Security Instruments or any other Loan
Document, including, without limitation, all Reserve Fund Deposits.
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"Debt Service" shall mean, for any given period during the
term of the Loan, an amount equal to the aggregate amount of interest and
principal, if any, that would have been or would be payable on the Loan for such
period.
"Debt Service Account" shall have the meaning provided in
Section 3.1.4.
"Debt Service Coverage Ratio" shall mean a ratio in which:
(a) the numerator is Underwritten Cash Flow; and
(b) the denominator is all the aggregate interest and
principal payments that would be due and payable for the twelve (12)
full calendar month period for which Underwritten Cash Flow is
determined, on the Loan assuming a principal and interest constant
equal to the Contract Rate.
"Default" shall mean the occurrence of any event hereunder or
under any other Loan Document which, but for the giving of notice or passage of
time, or both, would constitute an Event of Default.
"Default Rate" shall mean, with respect to the Loan, a rate
per annum equal to the lesser of (a) the Maximum Legal Rate, or (b) five percent
(5%) above the Applicable Interest Rate.
"Discount Rate" shall mean the rate which, when compounded
monthly, is equivalent to the Treasury Rate when compounded semi-annually.
"Dow ▇▇▇▇▇ Market Service Page 3750" means the display
designated as page 3750 on the Dow ▇▇▇▇▇ Market Service (formerly Telerate) Page
3750 (or such other page as may replace page 3750 on that service or such other
service as may be nominated by the British Bankers-Association as the
information vendor for the purposes of displaying British Bankers-Association
Interest Settlement Rates for U.S. dollar deposits).
"Eligible Account" shall mean a separate and identifiable
account from all other funds held by the holding institution that is either (a)
an account or accounts maintained with a federal or State-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (b) a segregated trust account or accounts maintained with a
federal or State chartered depository institution or trust company acting in its
fiduciary capacity which, in the case of a State chartered depository
institution or trust company, is subject to regulations substantially similar to
12 C.F.R. Section 9.10(b), having in either case a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal and
State authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"Eligible Institution" shall mean a depository institution or
trust company, insured by the Federal Deposit Insurance Corporation, (a) the
short term unsecured debt obligations or commercial paper of which are rated at
least A-1 by S&P, P-1 by ▇▇▇▇▇'▇ and F-1 by Fitch in the case of accounts in
which funds are held for thirty (30) days or less, or (b) the long term
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unsecured debt obligations of which are rated at least AA by Fitch and S&P and
Aa2 by ▇▇▇▇▇'▇ in the case of accounts in which funds are held for more than
thirty (30) days.
"Environmental Indemnity" shall have the meaning provided in
Section 3.1(i).
"Environmental Law" shall mean any federal, State and local
laws, statutes, ordinances, rules, regulations, standards, policies and other
government directives or requirements, as well as common law, that, at any time,
apply to Borrower and/or Indemnitor or any Property and relate to Hazardous
Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act and the Resource Conservation and
Recovery Act.
"Environmental Liens" shall have the meaning provided in
Section 5.1.19.
"Environmental Reports" shall have the meaning provided in
Section 4.1.39.
"Equipment" shall have the meaning provided in Section 5.2.10.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"Estoppel Certificate" shall have the meaning provided in
3.1(r).
"Eurodollar Rate" shall mean, with respect to any Interest
Period, an interest rate per annum equal to LIBOR plus the Eurodollar Spread.
"Eurodollar Rate Spread" means the applicable percentage per
annum set forth in the column "Eurodollar Rate Spread":
PORTFOLIO LOAN TO VALUE RATIO EURODOLLAR RATE SPREAD
--------------------------------------------------------------
Less than twenty-five percent (25%) 225 basis points
--------------------------------------------------------------
Twenty-five percent (25%) or more
but less than forty percent (40%) 250 basis points
--------------------------------------------------------------
Forty percent (40%) or greater 275 basis points
--------------------------------------------------------------
The Eurodollar Rate Spread shall be determined by reference to
the matrix above, and any change in the Eurodollar Rate Spread shall be
effective immediately (i) upon the date of each Advance hereunder, (ii) upon a
Property becoming an Excluded Property, (iii) after giving effect to any release
and substitution in accordance with Section 2.5 hereof (iv) after receipt of new
Appraisals pursuant to Section 5.4 hereof or (v) upon a Conversion or a Floating
Rate CMBS Conversion.
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"Event of Default" shall have the meaning provided in Section
8.1.
"Excluded Properties" shall mean any Temporarily Excluded
Property which does not comply with the Excluded Property Cash Flow
Requirements; provided, however, Borrower may, at any time, by written notice to
Lender, convert any Property that became a Temporarily Excluded Property due to
a Material Adverse Effect to an Excluded Property.
"Excluded Property Cash Flow Requirements" shall mean the
determination by Lender (which determination shall be made after four (4) full
calendar months immediately succeeding a Material Adverse Effect at the
applicable Property) that the Underwritten Cash Flow for such four (4) full
calendar months has not been equal to or greater than sixty seven percent (67%)
of the Underwritten Cash Flow for such Property for the same four (4) full
calendar months in the immediately preceding calendar year. In the event a
Temporarily Excluded Property fails to comply with the Excluded Property Cash
Flow Requirements, such Property shall automatically be deemed to be an Excluded
Property. In the event a Temporarily Excluded Property complies with the
Excluded Property Cash Flow Requirements, such Property shall no longer be
deemed a Temporarily Excluded Property.
"Extended Maturity Date" shall have the meaning provided in
Section 2.10.
"Facility Amount" shall mean U.S. $200,000,000.00.
"FelCor" shall mean FelCor Lodging Limited Partnership.
"Fees" shall mean, collectively, the Non-Use Fee, the
Administrative Fee, the Termination Fee, the Origination Fee and the Additional
Origination Fee.
"Financing Quote" shall have the meaning provided in Section
2.11.
"Financing Statement" shall have the meaning provided in
Section 3.1(o).
"FIRREA" shall mean the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as the same may be amended from time to
time.
"Fiscal Year" shall mean each twelve (12) month period
commencing on January 1 and ending on December 31 during the term of the Loan.
"Fitch" shall mean Fitch, Inc.
"Fixed Rate CMBS Collateral" shall have the meaning provided
in Section 9.1.1.
"Fixed Rate CMBS Loan" shall mean the fixed rate loan
resulting from the Conversion in accordance with and pursuant to the terms of
Section 9.1 hereof, which Fixed Rate CMBS Loan shall be in accordance with
Lender's Commercial Lending Program Criteria.
"Fixed Rate CMBS Rate" shall have the meaning provided in
Section 9.1.2(b).
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"Floating Rate CMBS Collateral" shall have the meaning
provided in Section 9.2.3.
"Floating Rate CMBS Conversion" shall have the meaning
provided in Section 9.2.1.
"Floating Rate CMBS Loan" shall mean the floating rate loan
resulting from the Conversion in accordance with and pursuant to the terms of
Section 9.2 hereof, which Floating Rate CMBS Loan shall be in accordance with
Lender's Commercial Lending Program Criteria.
"Floating Rate Conversion Documents" shall have the meaning
provided in Section 9.2.1.
"Floating Rate Conversion Date" shall have the meaning
provided in Section 9.2.1.
"Floating Rate Conversion Notice" shall have the meaning
provided in Section 9.2.1.
"Floating Rate Securitization" shall mean a previous
securitization of a pool of floating rate first lien large commercial mortgage
loans.
"Flood Insurance Act" shall have the meaning provided in
Section 6.1(a)(vii).
"Foreign Taxes" shall mean any present or future income, stamp
or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority.
"Franchise Agreement" means each Franchise Agreement as
provided on EXHIBIT A hereto between Operating Lessee and the applicable
Franchisor pursuant to which Operating Lessee has the right to operate the hotel
located on the related Property under a name and/or hotel system controlled by
such franchisor.
"Franchisor" shall mean each franchisor with respect to the
applicable Franchise Agreement, as same is identified on EXHIBIT A hereto.
"Franchisor Estoppel and Recognition Letter" shall have the
meaning provided in Section 3.1(l).
"GAAP" shall mean generally accepted accounting principles in
the United States of America as of the date of the applicable financial report.
"Governmental Authority" shall mean any court, board, agency,
commission, office, central bank or other authority of any nature whatsoever for
any governmental unit (federal, State, county, district, municipal, city,
country or otherwise) or quasi-governmental unit whether now or hereafter in
existence.
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"Gross Income From Operations" shall mean, for each Property,
all income, room revenues, food and beverage revenue, telephone revenue,
computed in accordance with GAAP derived from the ownership and operation of the
Properties from whatever source, including, but not limited to, the Rents,
utility charges, service fees or charges, license fees, parking fees, rent
concessions or credits, and other required pass-throughs, but excluding sales,
use and occupancy or other taxes on receipts required to be accounted for by
Borrower or Operating Lessee to any Governmental Authority, interest on the
Reserve Funds, interest on credit accounts, refunds and uncollectible accounts,
sales of furniture, fixtures and equipment, Insurance Proceeds (other than
business interruption or other loss of income insurance), Awards, unforfeited
security deposits, utility and other similar deposits, escalations, forfeited
security deposits and any disbursements to Borrower from the Reserve Funds.
Gross income shall not be diminished as a result of the Security Instruments or
the creation of any intervening estate or interest in a Property or any part
thereof.
"Ground Lease" shall mean, individually and collectively, as
the context may require, each ground lease described on EXHIBIT B attached
hereto and made a part hereof.
"Ground Lease Cash Reserve" shall have the meaning provided in
Section 7.4.
"Ground Lease Escrow Fund" shall have the meaning provided in
Section 7.4.
"Ground Lessor" shall mean the fee owner, as landlord, under
each Ground Lease.
"Ground Rent" shall have the meaning provided in Section 7.4.
"Ground Rent Account" shall have the meaning provided in
Section 3.4.
"Guarantor" shall mean FelCor and any other entity
guaranteeing any payment or performance obligation of Borrower.
"Hazardous Materials" shall mean petroleum and petroleum
products and compounds containing them, including gasoline, diesel fuel and oil;
explosives; flammable materials; radioactive materials; polychlorinated
biphenyls ("PCBs") and compounds containing them; lead and lead-based paint;
asbestos or asbestos-containing materials in any form that is or could become
friable; underground or above-ground storage tanks, whether empty or containing
any substance; toxic mold; any substance the presence of which on any Property
is prohibited by any federal, State or local authority; any substance that
requires special handling and/or disposal; and any other material or substance
now or in the future defined as a "hazardous substance," "hazardous material,"
"hazardous waste," "toxic substance," "toxic pollutant," "contaminant,"
"pollutant" or other words of similar import within the meaning of any
Environmental Law.
"Hilton" shall mean Hilton Hotels Corporation.
"Improvements" shall have the meaning set forth in Article 1
of the related Security Instrument with respect to each Property.
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"Indebtedness" of a Person, at a particular date, means the
sum (without duplication) at such date of (a) all indebtedness or liability of
such Person (including, without limitation, amounts for borrowed money); (b)
obligations evidenced by bonds, debentures, notes, or other similar instruments;
(c) obligations for the deferred purchase price of property or services
(including trade obligations); (d) obligations under letters of credit; (e) all
guaranties, endorsements (other than for collection or deposit in the ordinary
course of business) and other contingent obligations to purchase, to provide
funds for payment, to supply funds, to invest in any Person or entity, or
otherwise to assure a creditor against loss; and (f) obligations secured by any
Liens, whether or not the obligations have been assumed.
"Indemnified Liabilities" shall have the meaning provided in
Section 10.13(b).
"Indemnified Parties" shall mean Lender, any Affiliate of
Lender who is or will have been involved in the origination of the Loan, any
Person who is or will have been involved in the servicing of the Loan, any
Person in whose name the encumbrance created by the Security Instruments is or
will have been recorded, Persons who may hold or acquire or will have held a
full or partial interest in the Loan, as well as custodians, trustees and other
fiduciaries who hold or have held a full or partial interest in the Loan for the
benefit of third parties) as well as the respective directors, officers,
shareholders, partners, members, employees, agents, servants, representatives,
contractors, subcontractors, Affiliates, subsidiaries, participants, successors
and assigns of any and all of the foregoing (including but not limited to any
other Person who holds or acquires or will have held a participation or other
full or partial interest in the Loan or any Property, whether during the term of
the Loan or as a part of or following a foreclosure of the Loan and including,
but not limited to, any successors by merger, consolidation or acquisition of
all or a substantial portion of Lender's assets and business).
"Indemnitor" shall mean FelCor.
"Indemnity Deed of Trust" shall mean that certain first
priority Indemnity Deed of Trust and Security Agreement executed and delivered
by the Maryland Guarantor and Operating Lessee as security for the Maryland
Guaranty and encumbering the Maryland Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Independent Director" shall have the meaning provided in
Section 4.1.35.
"Initial Available Facility Amount" shall mean $75,000,000.
"Initial Borrower" shall have the meaning provided in the
opening paragraph of this Agreement.
"Initial Deposits" shall have the meaning provided in Section
3.4.6.
"Initial Tier" shall have the meaning provided in Section
6.1(b).
"Initial Tier Insurer" shall have the meaning provided in
Section 6.1(b).
-11-
"Insolvency Opinion" shall mean, that certain bankruptcy
non-consolidation opinion letter delivered by counsel for Borrower in connection
with the Loan and approved by Lender.
"Insurance Premium Account" shall have the meaning provided in
Section 3.1.4.
"Insurance Premiums" shall have the meaning provided in
Section 6.1(b).
"Insurance Proceeds" shall have the meaning provided in
Section 6.4(b).
"Interest Period" shall mean the period from the ninth (9th)
day of each month through and including the eighth (8th) day of the following
month, provided that, notwithstanding the foregoing, Lender shall have the one
(1) time right to change the Interest Period by giving notice of such change to
Borrower.
"Investment Grade" shall mean a rating of BBB- or its
equivalent by all of the Rating Agencies.
"Leases" shall have the meaning set forth in Article 1 of the
Security Instrument with respect to each Property, including, without
limitation, the Operating Lease.
"Legal Requirements" shall mean all federal, State, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities
affecting Borrower or any Property or any part thereof, or the zoning,
construction, use, alteration, occupancy or operation thereof, or any part
thereof, whether now or hereafter enacted and in force, and all material
permits, licenses and authorizations and regulations relating thereto, and all
material covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrower, at any time in force
affecting such Property or any part thereof, including, without limitation, any
which may (a) require repairs, modifications or alterations in or to such
Property or any part thereof, or (b) in any way limit the use and enjoyment
thereof.
"Lender" shall have the meaning set forth in the introductory
paragraph hereto, together with its successors and assigns.
"Lender Extension" shall have the meaning set forth in Section
2.10 hereof.
"LIBOR" shall mean the rate per annum calculated as set forth
below:
(i) With respect to each Interest Period, the rate for
deposits in U.S. Dollars, for a period equal to one month, which
appears on the Dow ▇▇▇▇▇ Market Service (formerly Telerate) Page 3750
as of 11:00 a.m., London time, on the related LIBOR Determination Date
(rounded upwards to the nearest 1/16 of 1%). If such rate does not
appear on Dow ▇▇▇▇▇ Market Service Page 3750, the rate for that
Interest Period shall be determined on the basis of the rates at which
deposits in Dollars are offered by any four major reference banks in
the London interbank market selected by Lender to provide such bank's
offered quotation of such rates at approximately 11:00 a.m., London
time, on
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the related LIBOR Determination Date to prime banks in the London
interbank market for a period of one month, commencing on the first day
of such Interest Period and in an amount that is representative for a
single such transaction in the relevant market at the relevant time.
Lender shall request the principal London office of any four major
reference banks in the London interbank market selected by Lender to
provide a quotation of such rates, as offered by each such bank. If at
least two such quotations are provided, the rate for that Interest
Period shall be the arithmetic mean of the quotations. If fewer than
two quotations are provided as requested, the rate for that Interest
Period shall be the arithmetic mean of the rates quoted by major banks
in New York City selected by Lender, at approximately 11:00 a.m., New
York City time, on the LIBOR Determination Date with respect to such
Interest Period for loans in Dollars to leading European banks for a
period equal to one month, commencing on the first day of such Interest
Period and in an amount that is representative for a single transaction
in the relevant market at the relevant time. Lender shall determine
LIBOR for each Interest Period and the determination of LIBOR by Lender
shall be binding upon Borrower absent manifest error.
(ii) In the event that Lender shall have determined in its
reasonable discretion that none of the methods set forth in the
definition of "LIBOR" herein are available, then Lender shall forthwith
give notice by telephone of such determination, confirmed in writing,
to Borrower at least one (1) day prior to the last day of the related
Interest Period.
"LIBOR Business Day" shall mean any day on which banks are
open for dealing in foreign currency and exchange in London, England.
"LIBOR Determination Date" shall mean (i) with respect to the
Interest Period in which any Advance is made, two (2) LIBOR Business Days prior
to the date of the applicable Advance and (ii) with respect to any other
Interest Period, two (2) LIBOR Business Days prior to the ninth (9th) day of the
calendar month in which the applicable Interest Period commences, provided that,
notwithstanding the foregoing, Lender shall have the one (1) time right to
change the LIBOR Determination Date by giving notice of such change to Borrower.
"Licenses" shall have the meaning provided in Section 4.1.21.
"Lien" shall mean, with respect to each Property, any
mortgage, deed of trust, lien, pledge, hypothecation, assignment, security
interest, or any other encumbrance, charge or transfer of, on or affecting
Borrower, Operating Lessee, the related Property, any portion thereof or any
interest therein, including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing statement,
and mechanic's, materialmen's and other similar liens and encumbrances.
"LLC Agreement" shall have the meaning provided in Section
4.1.35.
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"Loan" shall mean, in the aggregate, the Advances made to
Borrower under this Agreement and evidenced by the Note, the aggregate principal
amount of which shall not at any one time exceed $200,000,000.00.
"Loan Documents" shall mean this Agreement, the Note, the
Security Instruments, the Maryland Guaranty, the Environmental Indemnity, the
Assignments of Leases, the Assignments of Management Agreement, the Franchisor
Estoppel and Recognition Letter, the Property Account Agreement, each Estoppel
Certificate, each Financing Statement filed in connection herewith, and any
other documents or instruments evidencing, securing, guaranteeing or executed in
connection with an Advance or perfecting Lender's Lien in the Collateral.
"Lockbox Account" shall have the meaning provided in Section
3.4.1(b).
"Lockbox Bank" shall mean JPMorgan Chase Bank or any other
Eligible Institution selected by Lender.
"Losses" shall mean any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, fines, penalties, charges,
fees, expenses, judgments, awards, amounts paid in settlement of whatever kind
or nature (including but not limited to attorneys' fees and other costs of
defense).
"Major Lease" shall mean (i) the Operating Lease, (ii) any
Lease for sit-down restaurant facilities at any Property, (iii) any Lease which
together with all other Leases to the same tenant and to all Affiliates of such
tenant, (A) provides for ten percent (10%) or more of the total gross income for
any Property, (B) covers five percent (5%) or more of the total space at any
Property, in the aggregate, (C) provides for a lease term of more than ten (10)
years including options to renew or (D) is with an Affiliate of Borrower and
(iv) any instrument guaranteeing or providing credit support for any Major
Lease.
"Maker" shall have the meaning set forth in the introductory
paragraph hereto.
"Management Agreement" shall mean, with respect to any
Property, the management agreement entered into by and between Operating Lessee
and Manager, pursuant to which the Manager is to provide management and other
services with respect to such Property, or, if the context requires, the
Replacement Management Agreement executed in accordance with the terms and
provisions of this Agreement.
"Manager" shall mean, for each Property, that certain property
manager set forth on EXHIBIT C or, if the context requires, a Qualified Manager
who is managing the Property(s) in accordance with the terms and provisions of
this Agreement.
"Manager Account" shall mean such account as Manager may from
time to time designate by written notice to Lender and the bank maintaining the
Concentration Account.
"Mandalay Beach Property" shall mean the Property commonly
known as Embassy Suites Mandalay Beach, located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
-14-
"Market Capitalization Rate" shall mean the appropriate
capitalization rate for hotels as determined by Lender or the Rating Agencies.
"Maryland Guarantor" shall have the meaning set forth in the
introductory paragraph hereto.
"Maryland Guaranty" shall mean that certain Guaranty dated as
of the date hereof given by the Maryland Guarantor to Lender as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Maryland Property" shall mean the Property known as BWI
Doubletree Guest Suites and located in Baltimore, Maryland.
"Material Adverse Effect" shall mean any condition which
causes or continues the occurrence of an Event of Default or has a material
adverse effect upon (i) the business, operations, properties, assets, prospects
or condition (financial or otherwise) of Borrowers, individually or taken as a
whole, (ii) the ability of Borrowers to perform, or of Lender to enforce, any of
the Obligations or (iii) the value of the Collateral, individually or taken as a
whole.
"Material Adverse Hotel Market" shall mean the determination
by Lender in its reasonable discretion there has been a material adverse change
in the general market for hotels similar in quality, location and size as the
applicable Property.
"Maturity Date" shall mean December 18, 2004 or (i) such
earlier date on which the principal balance of the Loan and all other sums due
in connection with the Loan shall be due as a result of the acceleration of the
Loan or (ii) such later date pursuant to the terms of Section 2.10 hereof.
"Maturity Date Extension Criteria" shall mean, with respect to
the extension of the Maturity Date as provided herein, (i) no Event of Default
has occurred and is continuing under the Loan and (ii) Borrower sends Lender
written request at least thirty (30) days, but not more than ninety (90) days,
prior to the original Maturity Date.
"Maximum Legal Rate" shall mean the maximum nonusurious
interest rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received on the indebtedness evidenced by the
Note and as provided for herein or the other Loan Documents, under the laws of
such State or States whose laws are held by any court of competent jurisdiction
to govern the interest rate provisions of the Loan.
"Member" shall have the meaning provided in Section 4.1.35.
"Monthly Debt Service Payment Amount" shall mean the amount of
interest and the amortization, if any, due and payable on each Payment Date,
pursuant to the Note and the terms hereof.
"Monthly Ground Rent Deposit" shall have the meaning provided
in Section 7.4.
-15-
"Monthly Insurance Premium Deposit" shall have the meaning set
forth in Section 7.2 hereof.
"Monthly Pegged Amount" shall mean an amount, which amount
shall be determined on April 1st of each Fiscal Year, equal to one hundred
fifteen percent (115%) of one-twelfth (1/12) of the annual operating expenses
required to be paid during the then current Fiscal Year by Manager, on behalf of
Borrower, in accordance with the Approved Annual Budget; provided however that
such annual operating expenses shall not include Taxes, Insurance Premiums and
incentive management fees. The Monthly Pegged Amount shall be adjusted based
upon the release, substitution and/or addition of Properties in accordance with
the terms hereof.
"Monthly Tax Deposit" shall have the meaning set forth in
Section 7.2 hereof.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage Loan Borrower's Certificate" shall have the meaning
provided in Section 3.1(n).
"Net Cash Flow" for any period shall mean the amount obtained
by subtracting Operating Expenses and Capital Expenditures for such period from
Gross Income from Operations for such period.
"Net Operating Income" shall mean, with respect to any
Property, the amount obtained by subtracting Operating Expenses from Gross
Income From Operations.
"Net Proceeds" shall have the meaning provided in Section
6.4(b).
"Net Proceeds Deficiency" shall have the meaning provided in
Section 6.4(b)(vi).
"New Property" shall have the meaning provided in Section 2.7.
"Non-Use Fee Due Date" shall mean the date which is five (5)
Business Days after the date Lender has furnished Borrower with an invoice
showing the amount of the Non-Use Fee; provided, however, such due date shall
(i) occur once per calendar quarter and (ii) not extend beyond the Maturity
Date.
"Non-Use Fee" shall have the meaning provided in Section
2.6.1.
"Note" shall have the meaning provided in Section 2.1.7.
"Notice of Borrower" shall have the meaning provided in
Section 2.1.5.
"Obligations" shall mean Borrower's obligation to pay the Debt
and perform its obligations under the Note, this Agreement and the other Loan
Documents.
-16-
"Officers' Certificate" shall mean a certificate delivered to
Lender by Borrower which is signed by a Responsible Officer of Borrower.
"Origination Fee" shall have the meaning provided in Section
2.6.3(a).
"Operating Expenses" shall mean, with respect to each
Property, the total of all expenditures, computed in accordance with GAAP, of
whatever kind relating to the operation, maintenance and management of the
Properties that are incurred on a regular monthly or other periodic basis,
including without limitation, utilities, ordinary repairs and maintenance,
insurance premiums, license fees, property taxes and assessments, advertising
expenses, management fees, franchise fees, payroll and related taxes, computer
processing charges, operational equipment or other lease payments as approved by
Lender, and other similar costs, but excluding depreciation, principal and
interest payments required pursuant to the Note, Capital Expenditures and
contributions to the Reserve Funds.
"Operating Lease" shall mean those certain Operating Leases
described on EXHIBIT D attached hereto.
"Operating Lease Subordination Agreement" shall mean those
certain Operating Lease Subordination Agreements with respect to the Properties.
"Operating Lessee" shall mean each operating lessee with
respect to the applicable Operating Lease, as same is identified on EXHIBIT D
hereto, together with any Additional Operating Lessee.
"Operating Lessee Principal" shall have the meaning set forth
in the Operating Lease Subordination Agreement.
"Operating Lessee SPE Entities" shall mean individually and
collectively, Operating Lessees and Operating Lessee Principals.
"Operating Lessee Documents" shall mean the Security
Instruments, the Assignments of Leases, the Environmental Indemnity, the
Assignment of Management Agreement, the Operating Lease Subordination Agreement
and all other documents executed and/or delivered by Operating Lessee in
connection with the Loan.
"Other Charges" shall mean all personal property taxes, Ground
Rents, maintenance charges, impositions other than Taxes, and any other charges,
including, without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining any Property, now or hereafter levied
or assessed or imposed against such Property or any part thereof.
"Payment Date" shall mean the ninth (9th) day of each month,
or if such day is not a Business Day, the immediately succeeding Business Day.
Notwithstanding the foregoing, Lender shall have the one (1) time right to
change the Payment Date by giving at least thirty (30) days prior written notice
of such change to Borrower.
-17-
"Permitted Encumbrances" shall mean, with respect to a
Property, collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policy relating to such Property or any part thereof, as approved by
Lender, (c) Liens, if any, for Taxes imposed by any Governmental Authority not
yet delinquent, (d) Liens securing Permitted FF&E Financing. and (e) such other
title and survey exceptions as Lender has approved or may approve in writing in
Lender's sole discretion.
"Permitted FF&E Financing" shall have the meaning provided in
Section 5.2.10.
"Permitted Investments" shall mean any one or more of the
following obligations or securities acquired at a purchase price of not greater
than par, including those issued by Servicer or any of its respective
Affiliates, payable on demand or having a maturity date not later than the
Business Day immediately prior to the date it is anticipated such funds will be
needed to meet Borrower's obligations hereunder and meeting one of the
appropriate standards set forth below:
(i) obligations of, or obligations fully guaranteed as to
payment of principal and interest by, the United States or any agency
or instrumentality thereof provided such obligations are backed by the
full faith and credit of the United States of America including,
without limitation, obligations of: the U.S. Treasury (all direct or
fully guaranteed obligations), the Farmers Home Administration
(certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime
Administration (guaranteed Title XI financing), the Small Business
Administration (guaranteed participation certificates and guaranteed
pool certificates), the U.S. Department of Housing and Urban
Development (local authority bonds) and the Washington Metropolitan
Area Transit Authority (guaranteed transit bonds); provided, however,
that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot
vary or change, (B) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate
of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with
that index, and (D) such investments must not be subject to liquidation
prior to their maturity;
(ii) Federal Housing Administration debentures;
(iii) obligations of the following United States government
sponsored agencies: Federal Home Loan Mortgage Corp. (debt
obligations), the Farm Credit System (consolidated systemwide bonds and
notes), the Federal Home Loan Banks (consolidated debt obligations),
the Federal National Mortgage Association (debt obligations), the
Financing Corp. (debt obligations), and the Resolution Funding Corp.
(debt obligations); provided, however, that the investments described
in this clause must (A) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (B) if rated by S&P, must
not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must
be tied to a single
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interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be
subject to liquidation prior to their maturity;
(iv) federal funds, unsecured certificates of deposit,
time deposits, bankers' acceptances and repurchase agreements with
maturities of not more than 365 days of any bank, the short term
obligations of which at all times are rated in the highest short term
rating category by each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency in the highest short term
rating category and otherwise acceptable to each other Rating Agency);
provided, however, that the investments described in this clause must
(A) have a predetermined fixed dollar of principal due at maturity that
cannot vary or change, (B) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, such interest rate must be tied to a single
interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be
subject to liquidation prior to their maturity;
(v) fully Federal Deposit Insurance Corporation-insured
demand and time deposits in, or certificates of deposit of, or bankers'
acceptances with maturities of not more than 365 days and issued by,
any bank or trust company, savings and loan association or savings
bank, the short term obligations of which at all times are rated in the
highest short term rating category by each Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency in
the highest short term rating category and otherwise acceptable to each
other Rating Agency); provided, however, that the investments described
in this clause must (A) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (B) if rated by S&P, must
not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must
be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments
must not be subject to liquidation prior to their maturity;
(vi) debt obligations with maturities of not more than 365
days and at all times rated by each Rating Agency (or, if not rated by
all Rating Agencies, rated by at least one Rating Agency and otherwise
acceptable to each other Rating Agency) in its highest long-term
unsecured rating category; provided, however, that the investments
described in this clause must (A) have a predetermined fixed dollar of
principal due at maturity that cannot vary or change, (B) if rated by
S&P, must not have an "r" highlighter affixed to their rating, (C) if
such investments have a variable rate of interest, such interest rate
must be tied to a single interest rate index plus a fixed spread (if
any) and must move proportionately with that index, and (D) such
investments must not be subject to liquidation prior to their maturity;
(vii) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand
or on a specified date not more than one year after the date of
issuance thereof) with maturities of not more than 365 days and that at
all times is rated by each Rating Agency (or, if not rated by all
Rating Agencies, rated by at least one Rating Agency and otherwise
acceptable to each
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other Rating Agency) in its highest short-term unsecured debt rating;
provided, however, that the investments described in this clause must
(A) have a predetermined fixed dollar of principal due at maturity that
cannot vary or change, (B) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, such interest rate must be tied to a single
interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be
subject to liquidation prior to their maturity;
(viii) units of taxable money market funds, with maturities
of not more than 365 days and which funds are regulated investment
companies, seek to maintain a constant net asset value per share and
invest solely in obligations backed by the full faith and credit of the
United States, which funds have the highest rating available from each
Rating Agency (or, if not rated by all Rating Agencies, rated by at
least one Rating Agency and otherwise acceptable to each other Rating
Agency) for money market funds; and
(ix) any other security, obligation or investment which
has been approved as a Permitted Investment in writing by (a) Lender
and (b) each Rating Agency;
provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.
"Permitted Prepayment Period" shall mean any time during the
thirty (30) day period immediately preceding the Maturity Date, provided that
the outstanding principal balance of all hypothetical Fixed Rate CMBS Loans do
not comply with the Conversion Parameters (taken individually, and not as a
whole).
"Person" shall mean any individual, corporation, partnership,
joint venture, limited liability company, estate, trust, unincorporated
association, any federal, State, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.
"Personal Property" shall have the meaning set forth in
Article 1 of the Security Instrument with respect to each Property.
"Physical Conditions Report" shall have the meaning provided
in Section 3.1(y).
"Plan" shall mean an employee benefit plan (as defined in
section 3(3) of ERISA) whether or not subject to ERISA or a plan or other
arrangement within the meaning of section 4975 of the Code.
"Plan Assets" shall mean assets of a Plan within the meaning
of section 29 C.F.R. section 2510.3-101 or similar law.
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"Policies" shall have the meaning provided in Section 6.1(b).
"Portfolio Debt Service Coverage Ratio" shall mean the Debt
Service Coverage Ratio of all of the Properties then remaining subject to the
Lien of a Security Instrument; provided, however the Underwritten Cash Flow of
all Excluded Properties shall not be included in the calculation of Portfolio
Debt Service Coverage Ratio.
"Portfolio Loan to Value Ratio" shall mean the ratio,
expressed as a percentage, of (a) the amount outstanding under the Loan divided
by (b) the aggregate Property Value of all of the Properties; provided, however
the Property Value of all Excluded Properties shall not be included in the
calculation of Portfolio Loan to Value Ratio.
"Post-Termination Financing" shall have the meaning provided
in Section 2.11.
"Post-Termination Financing Notice" shall have the meaning
provided in Section 2.11.
"Prepayment Date" shall mean the date on which the prepayment
of any principal amount of the Loan is made.
"Prime Rate" shall mean, on a particular date, a rate per
annum equal to the rate of interest published in The Wall Street Journal as the
"prime rate", as in effect on such day, with any change in the prime rate
resulting from a change in said prime rate to be effective as of the date of the
relevant change in said prime rate; provided, however, that if more than one
prime rate is published in The Wall Street Journal for a day, the average of the
prime rates shall be used; provided, further, however, that the Prime Rate (or
the average of the prime rates) will be rounded to the nearest 1/16 of 1% or, if
there is no nearest 1/16 of 1%, to the next higher 1/16 of 1%. In the event that
The Wall Street Journal should cease or temporarily interrupt publication, then
the Prime Rate shall mean the daily average prime rate published in another
business newspaper, or business section of a newspaper, of national standing
chosen by Lender. If The Wall Street Journal resumes publication, the substitute
index will immediately be replaced by the prime rate published in The Wall
Street Journal. In the event that a prime rate is no longer generally published
or is limited, regulated or administered by a governmental or quasi-governmental
body, then Lender shall select a comparable interest rate index which is readily
available to Borrower and verifiable by Borrower but is beyond the control of
Lender. Lender shall give Borrower prompt written notice of its choice of a
substitute index and when the change became effective. Such substitute index
will also be rounded to the nearest 1/16 of 1% or, if there is no nearest 1/16
of 1%, to the next higher 1/16 of 1%. The determination of the Prime Rate by
Lender shall be conclusive and binding absent manifest error.
"Principal" shall have the meaning provided in Section 4.1.35.
"Prohibited Person" shall mean any Person:
(a) listed in the Annex to, or otherwise subject to the
provisions of, the Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001, and
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relating to Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (the "Executive
Order");
(b) that is owned or controlled by, or acting for or on
behalf of, any person or entity that is listed to the Annex to, or is
otherwise subject to the provisions of, the Executive Order;
(c) with whom Lender is prohibited from dealing or
otherwise engaging in any transaction by any terrorism or money
laundering law, including the Executive Order;
(d) who commits, threatens or conspires to commit or
supports "terrorism" as defined in the Executive Order;
(e) that is named as a "specially designated national and
blocked person" on the most current list published by the U.S. Treasury
Department Office of Foreign Assets Control at its official website,
▇▇▇▇://▇▇▇.▇▇▇▇▇.▇▇▇.▇▇▇▇/▇▇▇▇▇▇.▇▇▇ or at any replacement website or
other replacement official publication of such list; or
(f) who is an Affiliate of or affiliated with a Person
listed above.
"Properties" shall mean, collectively, each and every Property
which is subject to the terms of this Agreement.
"Property" shall mean each parcel of real property (including,
without limitation, any interest created pursuant to a Ground Lease), the
Improvements thereon and all Personal Property owned by Borrower and Operating
Lessee and encumbered by a Security Instrument, together with all rights
pertaining to such Property and Improvements, as more particularly described in
Article 1 of each Security Instrument and referred to therein as the "Property",
including any Release Property prior to its release or Substitute Property upon
substitution.
"Property Account" shall have the meaning provided in Section
3.4.1(a).
"Property Account Agreement" shall have the meaning provided
in Section 3.4.1(a).
"Property Account Bank" shall mean, for each Property, that
certain property account bank set forth on EXHIBIT E, provided that such bank
remains an Eligible Institution, and any successor Eligible Institution or other
Eligible Institution selected by Borrower, subject to Lender's approval.
"Property Value" shall mean as used herein, for each Property,
shall mean the value of such Property as determined by an Appraisal of such
Property.
"Qualified Insurer" shall have the meaning provided in Section
6.1(b).
"Qualified Manager" shall mean a reputable and experienced
professional management organization (a) which manages on a national basis,
together with its Affiliates, one
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hundred fifty (150) properties of a type, quality and size similar to the
Properties, totaling in the aggregate no less than 30,000 guest rooms, (b) prior
to whose employment as manager of the Properties, such employment shall have
been approved by Lender, which approval shall not be unreasonably withheld or
delayed and (c) with a general business standing and experience, as determined
by Lender, similar to the Managers on the Closing Date.
"Quality Assurance Reports" shall mean any quality assurance
reports of inspection or compliance from a Franchisor under a Franchise
Agreement with respect to any Property.
"Rating Agencies" shall mean each of S&P, ▇▇▇▇▇'▇, and Fitch,
and any other nationally-recognized statistical rating agency which has been
approved by Lender.
"Release" of any Hazardous Materials shall mean any release,
deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting,
pumping, pouring, emptying, escaping, dumping, disposing or other movement of
Hazardous Materials.
"Release Property" shall have the meaning provided in Section
2.5.
"Renewal Lease" shall have the meaning provided in Section
5.1.17(a).
"Rents" shall have the meaning set forth in Article 1 of the
Security Instrument with respect to each Property.
"Replacement Management Agreement" shall mean, collectively,
(a) either (i) a management agreement with a Qualified Manager substantially in
the same form and substance as the Management Agreement, or (ii) a management
agreement with a Qualified Manager, which management agreement shall be
acceptable to Lender in form and substance, and (b) a conditional assignment of
management agreement substantially in the form of the Assignment of Management
Agreement (or such other form acceptable to Lender), executed and delivered to
Lender by Operating Lessee and such Qualified Manager at Borrower's expense.
"Replacement Reserve Account" shall have the meaning provided
in Section 3.4.1(b)(iv).
"Replacement Reserve Fund" shall have the meaning provided in
Section 7.3.1.
"Replacement Reserve Monthly Deposit" shall mean the greatest
of (i) such aggregate amounts as are required under the Franchise Agreements to
be reserved for furniture, fixtures and equipment, (ii) such aggregate amounts
as are required under the Management Agreements to be reserved for furniture,
fixtures and equipment and (iii) the quotient obtained by dividing (A) the
aggregate Gross Income From Operations for the Properties still subject to the
Lien of a Security Instrument for the preceding calendar year (as reflected in
Borrower's annual operating statements as approved and accepted by Lender)
multiplied by four percent (4%) by (B) twelve (12). The Replacement Reserve
Monthly Deposit shall be adjusted annually and shall be effective for the
Replacement Reserve Monthly Deposit due on the Payment Date first
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occurring after the appropriate financial statements have been delivered to
Lender as required herein.
"Replacements" shall have the meaning provided in Section
7.3.1.
"Required Earthquake Insurance Amount" shall mean earthquake
insurance equal to (A) the product of (i) 100% of the "Full Replacement Cost" of
the Improvements and the Personal Property and (ii) one times (1x) the probable
maximum loss (which probable maximum loss for the Mandalay Beach Property is
nineteen percent (19%)) plus (B) twelve (12) months of loss of business income
derived from the applicable Property.
"Required Repair Account" shall have the meaning provided in
Section 7.1.1.
"Required Repair Fund" shall have the meaning provided in
Section 7.1.1.
"Required Repairs" shall have the meaning provided in Section
7.1.1.
"Reserve Fund Deposits" shall mean the amounts to be deposited
into the Reserve Funds for any given month or at any other time as provided in
this Agreement or in the other Loan Documents.
"Reserve Funds" shall mean the Tax and Insurance Escrow Fund,
the Required Repair Fund, the Ground Lease Escrow Fund, the Replacement Reserve
Fund or any other escrow or reserve fund established by the Loan Documents.
"Reserve Properties" shall mean one or more Properties
selected by Lender in Lender's sole discretion which, if the subject of a
Conversion, would provide an aggregate Debt Service Coverage Ratio of at least
1.30:1.00 and an aggregate loan to value ratio of less than sixty percent (60%);
provided, however, there shall be no Reserve Properties prior to the time the
Portfolio Loan to Value Ratio equals or exceeds fifty percent (50%).
"Required Ratios" shall mean the Available Facility Amount,
the Portfolio Loan to Value Ratio and the Portfolio Debt Service Coverage Ratio.
"Responsible Officer" means with respect to a Person, the
president, chief financial officer or treasurer of such Person.
"Restoration" shall mean the repair and restoration of a
Property after a Casualty or Condemnation as nearly as possible to the condition
the Property was in immediately prior to such Casualty or Condemnation, with
such alterations as may be approved by Lender.
"Restricted Party" shall mean Borrower, Principal, the
Operating Lessee SPE Entities, or any Affiliated Manager or any shareholder,
partner or member or any direct or indirect legal or beneficial owner of,
Borrower, Principal, the Operating Lessee SPE Entities or any Affiliated
Manager; provided, however, that in no event shall FelCor, FelCor Lodging Trust
Incorporated or Hilton be deemed a Restricted Party.
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"S&P" shall mean Standard & Poor's Ratings Services, a
division of ▇▇▇▇▇▇-▇▇▇▇, Inc.
"Sale or Pledge" shall mean a voluntary or involuntary sale,
conveyance, transfer or pledge of a direct or indirect legal or beneficial
interest.
"Second Tier" shall have the meaning provided in Section
6.1(b).
"Second Tier Insurer" shall have the meaning provided in
Section 6.1(b).
"Security Deposits" shall have the meaning provided in Section
5.1.17(e).
"Security Instrument" shall mean, with respect to each
Property, except for the Maryland Property, that certain first priority Mortgage
(or Deed of Trust or Deed to Secure Debt, as applicable) and Security Agreement,
executed and delivered by Borrower and Operating Lessee as security for the Loan
and encumbering such Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time and with respect to the
Maryland Property, the Indemnity Deed of Trust, as the same may be amended,
restated, replaced, supplemental or otherwise modified from time to time.
"Servicer" shall have the meaning provided in Section 9.3.
"Servicing Agreement" shall have the meaning provided in
Section 9.3.
"Severed Loan Documents" shall have the meaning provided in
Section 8.2(c).
"Special Member" shall have the meaning provided in Section
4.1.35.
"Spread Adjustment" shall mean the positive or negative
addition to the applicable interest rate and shall be calculated by Lender in
its sole discretion (and disclosed to Borrower) based on market fluctuations in
underlying commercial mortgage backed securities bond spreads. In order to
calculate the Spread Adjustment, (i) in connection with a Conversion, Lender
shall compare the weighted average fixed rate conduit loan spreads on the
Closing Date, as shown on EXHIBIT F hereto, to the weighted average fixed rate
conduit loan spreads from the most recent Conduit Securitization closed (A) with
respect to that portion of such conduit loans rated at least Investment Grade,
in the secondary mortgage market (as determined by Lender) and (B) with respect
to that portion of such conduit loans not rated at least Investment Grade, by
Lender and (ii) in connection with a Floating Rate Conversion, Lender shall
compare the weighted average large loan floating rate spreads on the Closing
Date, as shown on EXHIBIT F hereto, to the weighted average large loan floating
rate spreads from the most recent Floating Rate Securitization closed in the
secondary mortgage market (as determined by Lender). The determination of the
Spread Adjustment by Lender shall be conclusive absent manifest error. For
illustration purposes only, a hypothetical calculation of the Spread Adjustment
is attached as EXHIBIT F hereto.
"State" shall mean, with respect to a Property, the State or
Commonwealth in which such Property or any part thereof is located
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"Subordination Agreement" shall have the meaning provided in
Section 3.1(p).
"Substitute Property" shall have the meaning provided in
Section 2.5.
"Survey" shall mean, with respect to a Property, a survey
prepared by a surveyor licensed in the State where such Property is located and
satisfactory to Lender and the company or companies issuing the Title Insurance
Policies, and containing a certification of such surveyor satisfactory to
Lender.
"Tax Account" shall have the meaning provided in Section
3.1.4.
"Tax and Insurance Escrow Fund" shall have the meaning
provided in Section 7.2.
"Taxes" shall mean all real estate taxes, assessments, water
rates or sewer rents, now or hereafter levied or assessed or imposed against any
Property or part thereof.
"Temporarily Excluded Properties" shall mean each Property (i)
which has had a Material Adverse Effect or (ii) which has been the subject of a
Casualty or Condemnation and the Net Proceeds relating thereto are equal to or
greater than $250,000; provided, however, such Property shall no longer be
deemed a Temporarily Excluded Property (A) in the case of subsection (i) above,
after calculation of the Excluded Property Cash Flow Requirements or (B) in the
case of subsection (ii), after the completion of Restoration of such Property in
accordance with the terms of Section 6.4.
"Termination Date" shall have the meaning provided in Section
2.11.
"Termination Fee" shall mean the present value as of the
Termination Date of the Assumed Non-Use Fee from the Termination Date through
the Maturity Date determined by discounting such payments at the Discount Rate.
The determination by Lender of the Termination Fee shall be conclusive and
binding on Borrower absent manifest error.
"Terrorism Exclusion" shall have the meaning provided in
Section 6.1(a)(x).
"Terrorism Insurance" shall have the meaning provided in
Section 6.1(a)(x).
"Terrorism Insurance Cap" shall have the meaning provided in
Section 6.1(a)(x).
"Terrorism Insurance Required Amount" shall have the meaning
provided in Section 6.1(a)(x).
"Third Party Reports" shall mean collectively, the Appraisal,
the Physical Conditions Report and the Environmental Report.
"Title Insurance Policy" shall have the meaning provided in
Section 3.1(t).
"Title Date-Down" shall have the meaning provided in Section
3.1(t).
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"Transaction Costs" shall mean all costs and expenses paid or
payable by Borrower relating to the Transactions (other than in connection with
the securitization of any portion of the Loan, a Fixed Rate CMBS Loan or a
Floating Rate CMBS Loan) including, without limitation, the costs and expenses
of Lender in conducting its due diligence with respect to the Transactions,
advisory fees, appraisal fees, legal fees, accounting fees, title insurance
premiums, recording charges and taxes, whether directly or as reimbursement to
Lender.
"Transactions" shall mean each of the transactions
contemplated by the Loan Documents.
"Transfer" shall have the meaning provided in Section
5.2.10(a).
"Treasury Rate" shall mean the yield calculated by the linear
interpolation of the yields, as reported in the Federal Reserve Statistical
Release H.15-Selected Interest Rates under the heading U.S. Government
Securities/Treasury constant maturities for the week ending prior to the
Termination Date, of the U.S. Treasury constant maturities with maturity dates
(one longer and one shorter) most nearly approximating the Maturity Date. In the
event Release H.15 is no longer published, Lender shall select a comparable
publication to determine the Treasury Rate.
"UCC" or "Uniform Commercial Code" shall mean the Uniform
Commercial Code as in effect in the State in which a Property is located.
"Underwritten Cash Flow" shall mean the Net Operating Income
for the most recently available 12 full calendar month period preceding the date
of calculation as set forth in the financial statements required hereunder,
without deduction for (i) actual management fees incurred in connection with the
operation of the Properties, (ii) actual franchise fees incurred in connection
with the operation of the Properties, or (iii) amounts paid to the Reserve
Funds, less (A) management fees equal to the greater of (1) assumed management
fees of four percent (4%) of Gross Income from Operations or (2) the actual
management fees incurred, (B) the actual franchise fees incurred and (C) the
greater of (1) actual Replacement Reserve Fund contributions equal to 4% of
Gross Income From Operations and (2) contributions for Replacements required
pursuant to the Management Agreements and the Franchise Agreements, as the
foregoing may be adjusted to be consistent with Lender's then current Commercial
Lending Program Criteria.
SECTION 1.2 Principles of Construction.
All references to sections and schedules are to sections and schedules
in or to this Agreement unless otherwise specified. All uses of the word
"including" shall mean "including, without limitation" unless the context shall
indicate otherwise. Unless otherwise specified, the words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined. The term "Borrower", as used herein, shall mean, individually
and collectively, as the context requires "Maker" in its capacity as the owner
of all of the Properties other than the Maryland Property and "Maryland
Guarantor" in its capacity as the owner of the Maryland Property.
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II. AMOUNT AND TERMS OF LOAN ADVANCES
SECTION 2.1 ADVANCES.
2.1.1 Agreement to Lend and Borrow.
Subject to and upon the terms and conditions set forth herein, Lender
hereby agrees to make and Borrower hereby agrees to accept the Loan on the
Closing Date.
2.1.2 Additional Advances.
Subject to and upon the terms and conditions herein set forth, Lender
agrees, at any time and from time to time on and after the Closing Date and
prior to the Maturity Date, to make Advances to Borrower, which Advances shall
not exceed in aggregate principal amount at any time outstanding, the Available
Facility Amount at such time; provided, however, for the purpose of this Section
2.1.2, Available Facility Amount shall be calculated excluding all Temporarily
Excluded Properties and all Excluded Properties.
2.1.3 Limitation on Advances.
Each Advance of the Loan shall be in the minimum increments of Fifteen
Million Dollars (U.S. $15,000,000.00). No Advance shall be made after the
Maturity Date. Beginning on the Closing Date through and including July 18,
2003, there shall be no more than three (3) Advances. Beginning on July 19, 2003
and thereafter, there shall be no more than one (1) Advance made in any calendar
month.
2.1.4 Intentionally Omitted.
2.1.5 Notice of Borrowing.
Whenever Borrower desires an Advance hereunder, it shall give Lender at
Lender's office prior to 10:00 A.M., New York City time, telex, facsimile, or
telephonic notice (promptly confirmed in writing) of each Advance to be made
hereunder, at least three (3) Business Days prior to such Advance being made.
Each such notice (a "Notice of Borrowing") (i) shall be irrevocable, (ii) shall
be executed by Borrower, (iii) shall specify (w) the aggregate principal amount
of the requested Advance and (x) the date of Borrowing (which shall be a
Business Day), (iv) shall certify that, taking into account the amount of the
requested Advance, no Default or Event of Default has occurred and is
continuing, all provisions of the Loan Documents, will be complied with after
giving effect to such Advance, (v) shall include wiring instructions relating to
the proceeds of such Advance, (vi) shall contain a description of the intended
use of the Advance and (vii) shall be in the form annexed hereto as EXHIBIT G.
2.1.6 Disbursement of Funds.
No later than 2:00 P.M., New York City time on the date specified in
each Notice of Borrowing, provided all conditions precedent to the making of
such Advance have been complied with, Lender will make available to Borrower (i)
in accordance with the wire
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instructions provided by Borrower or (ii) by wire transfer into an account at
Lender's office as directed by Borrower, in the applicable Notice of Borrowing.
2.1.7 The Note.
Borrower's obligation to pay the principal of, and interest on, the
Loan shall be evidenced by a promissory note duly executed and delivered by
Borrower (together with any additional notes executed in connection with the
Loan, as any of the same may be amended, restated, modified or supplemented from
time to time, the "Note") which shall be secured by the Loan Documents.
SECTION 2.2 INTEREST; LOAN PAYMENTS; LATE PAYMENT CHARGE.
2.2.1 Payments.
(a) Interest. Interest on the outstanding principal balance
of the Loan shall accrue from the Closing Date to the end of the Interest
Period in which the Maturity Date occurs at the Applicable Interest Rate.
Monthly installments of interest only shall be paid on each Payment Date
commencing on the first Payment Date immediately succeeding the date on
which the initial Advance occurs and on each subsequent Payment Date
thereafter up to and including the Maturity Date for the Interest Period in
which such Payment Date or Maturity Date occurs.
(b) All payments and other amounts due under the Note, this
Agreement and the other Loan Documents shall be made without any setoff,
defense or irrespective of, and without deduction for, counterclaims.
2.2.2 Interest Calculation.
Interest on the outstanding principal balance of the Loan shall be
calculated by multiplying (a) the actual number of days elapsed in the period
for which the calculation is being made by (b) a daily rate equal to the
Applicable Interest Rate divided by three hundred sixty (360) by (c) the
outstanding principal balance.
2.2.3 Eurodollar Rate Unascertainable; Illegality; Increased Costs.
(a) (i) In the event that Lender shall have determined (which
determination shall be conclusive and binding upon Borrower absent manifest
error) that by reason of circumstances affecting the interbank eurodollar
market, adequate and reasonable means do not exist for ascertaining LIBOR, then
Lender shall forthwith give notice by telephone of such determination, to
Borrower at least one (1) Business Day prior to the last day of the related
Interest Period, with a written confirmation of such determination promptly
thereafter. If such notice is given, the Loan shall bear interest at the
Adjusted Prime Rate beginning on the first day of the next succeeding Interest
Period. (ii) If, pursuant to the terms of this Section, the Loan is bearing
interest at the Adjusted Prime Rate and Lender shall determine (which
determination shall be conclusive and binding upon Borrower absent manifest
error) that the event(s) or circumstance(s) which resulted in such conversion
shall no longer be applicable, Lender shall give notice thereof
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to Borrower by telephone of such determination, confirmed in writing, to
Borrower as soon as reasonably practical, but in no event later than one (1)
Business Day prior to the last day of the then current Interest Period. If such
notice is given, the Loan shall bear interest at the Eurodollar Rate beginning
on the first day of the next succeeding Interest Period. Notwithstanding any
provision of this Agreement to the contrary, in no event shall Borrower have the
right to elect to have the Loan bear interest at either the Eurodollar Rate or
the Adjusted Prime Rate.
(b) If any requirement of law or any change therein or in
the interpretation or application thereof, shall hereafter make it
unlawful for Lender in good faith to make or maintain the portion of
the Loan bearing interest at the Eurodollar Rate, (I) the obligation of
Lender hereunder to make the Loan bearing interest at the Eurodollar
Rate shall be canceled forthwith and (II) the Loan shall automatically
bear interest at the Adjusted Prime Rate on the next succeeding Payment
Date or within such earlier period as required by Applicable Law.
Borrower hereby agrees promptly to pay Lender (within ten (10) days of
Lender's written demand therefor), any additional amounts necessary to
compensate Lender for any reasonable costs incurred by Lender in making
any conversion in accordance with this Agreement, including, without
limitation, any interest or fees payable by Lender to lenders of funds
obtained by it in order to make or maintain the Loan hereunder. Upon
written demand from Borrower, Lender shall demonstrate in reasonable
detail the circumstances giving rise to Lender's determination and the
calculation substantiating the Adjusted Prime Rate and any additional
costs incurred by Lender in making the conversion. Lender's written
notice of such costs, as certified to Borrower, shall be conclusive
absent manifest error.
(c) In the event that any change in any requirement of
any Applicable Law or in the interpretation or application thereof, or
compliance in good faith by Lender with any request or directive
(whether or not having the force of law) hereafter issued from any
Governmental Authority, in each such case, which is generally
applicable to all Lenders subject to such Governmental Authority's
jurisdiction:
(i) shall hereafter impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any U.S. office of Lender which is not
otherwise included in the determination of LIBOR hereunder;
(ii) shall, if the Loan is then bearing interest at the
Eurodollar Rate, hereafter have the effect of reducing the rate of
return on Lender's capital as a consequence of its obligations
hereunder to a level below that which Lender could have achieved but
for such adoption, change or compliance (taking into consideration
Lender's policies with respect to capital adequacy) by any amount
deemed by Lender to be material; or
(iii) shall, if the Loan is then bearing interest at the
Eurodollar Rate, hereafter impose on Lender any other condition, the
result of which is to increase the cost to Lender of making, renewing
or maintaining loans or extensions of credit or to reduce any amount
receivable hereunder by any amount deemed by Lender to be material;
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then, in any such case, Borrower shall promptly pay Lender (within ten (10) days
of Lender's written demand therefor), any additional amounts necessary to
compensate Lender for such additional cost or reduced amount receivable which
Lender deems to be material. If Lender becomes entitled to claim any additional
amounts pursuant to this Section, Lender shall provide Borrower with written
notice specifying in reasonable detail the event or circumstance by reason of
which it has become so entitled and the additional amount required to fully
compensate Lender for such additional cost or reduced amount. A certificate as
to any additional costs or amounts payable pursuant to the foregoing sentence
submitted by Lender to Borrower shall be conclusive absent manifest error. This
provision shall survive payment of the Note and the satisfaction of all other
obligations of Borrower under the Note, this Agreement and the other Loan
Documents.
(d) Borrower agrees to indemnify Lender and to hold
Lender harmless from any loss or expense which Lender sustains or
incurs to the extent it is a consequence of (I) any default by Borrower
in payment of the principal of or interest on the Loan while bearing
interest at the Eurodollar Rate, including, without limitation, any
such loss or expense arising from interest or fees payable by Lender to
lenders of funds obtained by it in order to maintain the Eurodollar
Rate, (II) any prepayment (whether voluntary or mandatory) of the Loan
on a day that (A) is not the Payment Date immediately following the
last day of an Interest Period with respect thereto or (B) is the
Payment Date immediately following the last day of an Interest Period
with respect thereto if Borrower did not give the prior written notice
of such prepayment required pursuant to the terms of this Agreement,
including, without limitation, such loss or expense arising from
interest or fees payable by Lender to lenders of funds obtained by it
in order to maintain the Eurodollar Rate hereunder and (III) the
conversion (for any reason whatsoever, whether voluntary or
involuntary) of the Applicable Interest Rate from the Eurodollar Rate
to the Adjusted Prime Rate with respect to any portion of the
outstanding principal amount of the Loan then bearing interest at the
Eurodollar Rate on a date other than the Payment Date immediately
following the last day of an Interest Period, including, without
limitation, such loss or expenses arising from interest or fees payable
by Lender to lenders of funds obtained by it in order to maintain the
Eurodollar Rate hereunder (the amounts referred to in clauses (I), (II)
and (III) are herein referred to collectively as the "Breakage Costs").
This provision shall survive payment of the Note and the satisfaction
of all other obligations of Borrower under this Agreement and the other
Loan Documents.
(e) In the case that the Loan is affected by the
circumstances described above, if any Advance has not yet been made but
is then the subject of a Notice of Borrowing, Borrower shall be deemed
to have canceled and rescinded such notice.
2.2.4 Payment on Maturity Date.
Borrower shall pay to Lender on (or, to the extent permitted herein,
before) the Maturity Date the outstanding principal balance, all accrued and
unpaid interest thereon, and all other amounts due hereunder and under the Note,
the Security Instruments and the other Loan Documents, including, without
limitation, all interest that would accrue on the outstanding
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principal balance of the Loan through and including the end of the Interest
Period in which the Maturity Date occurs (even if such Interest Period extends
beyond the Maturity Date).
2.2.5 Intentionally Omitted.
2.2.6 Late Payment Charge.
If any principal, interest or any other sums due under the Loan
Documents is not paid by Borrower on the date on which it is due, Borrower shall
pay to Lender upon demand an amount equal to the lesser of five percent (5%) of
such unpaid sum or the maximum amount permitted by Applicable Law in order to
defray the expense incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment. Any such amount shall be secured by the Security Instruments and the
other Loan Documents to the extent permitted by Applicable Law; provided,
however, Borrower shall have the option, not to be exercised more than three (3)
times during the term of the Loan, to not pay the late payment charge
contemplated by this Section 2.2.6 in the event any Monthly Debt Service Payment
Amount is paid within one (1) Business Day after the date the same was due.
2.2.7 Usury Savings.
This Agreement and the Note are subject to the express condition that
at no time shall Borrower be obligated or required to pay interest on the
principal balance of the Loan at a rate in excess of the Maximum Legal Rate. If,
by the terms of this Agreement or the other Loan Documents, Borrower is at any
time required or obligated to pay interest on the principal balance due
hereunder at a rate in excess of the Maximum Legal Rate, the Applicable Interest
Rate or the Default Rate, as the case may be, shall be deemed to be immediately
reduced to the Maximum Legal Rate and all previous payments in excess of the
Maximum Legal Rate shall be deemed to have been payments in reduction of
principal and not on account of the interest due hereunder. All sums paid or
agreed to be paid to Lender for the use, forbearance, or detention of the sums
due under the Loan, shall, to the extent permitted by Applicable Law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Loan until payment in full so that the rate or amount of interest on account
of the Loan does not exceed the Maximum Legal Rate of interest from time to time
in effect and applicable to the Loan for so long as the Loan is outstanding.
2.2.8 Foreign Taxes.
If the Loan is bearing interest at the Eurodollar Rate, all payments
made by Borrower hereunder shall be made free and clear of, and without
reduction for or on account of, Foreign Taxes, excluding, in the case of Lender,
Foreign Taxes measured by its net income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which Lender is resident or organized, or any
political subdivision thereof and, in the case of Lender, taxes measured by its
overall net income, and franchise taxes imposed on it, by the jurisdiction of
Lender's lending office or any political subdivision thereof or in which Lender
is resident or engaged in business. If any non-excluded Foreign Taxes are
required to be withheld from any amounts payable to Lender hereunder, the
amounts so payable to Lender shall be increased to the extent necessary to
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yield to Lender (after payment of all non-excluded Foreign Taxes) interest or
any such other amounts payable hereunder at the rate or in the amounts specified
hereunder. Whenever any non-excluded Foreign Tax is payable pursuant to
Applicable Law by Borrower, Borrower shall send to Lender an original official
receipt showing payment of such non-excluded Foreign Tax or other evidence of
payment reasonably satisfactory to Lender. Borrower hereby indemnifies Lender
for any incremental taxes, interest or penalties that may become payable by
Lender which may result from any failure by Borrower to pay any such
non-excluded Foreign Tax when due to the appropriate taxing authority or any
failure by Borrower to remit to Lender the required receipts or other required
documentary evidence, provided, however, in the event that Lender or any
successor and/or assign of Lender is not incorporated under the laws of the
United States of America or a state thereof Lender agrees that, prior to the
first date on which any payment is due such entity hereunder, it will deliver to
Borrower (i) two duly completed copies of United States Internal Revenue Service
Form W-8BEN or W-8ECI or successor applicable form, as the case may be,
certifying in each case that such entity is entitled to receive payments under
the Note, without deduction or withholding of any United States federal income
taxes, or (ii) an Internal Revenue Service Form W-9 or successor applicable
form, as the case may be, to establish an exemption from United States backup
withholding tax. Each entity required to deliver to Borrower a Form W-8BEN or
W-8ECI or Form W-9 pursuant to the preceding sentence further undertakes to
deliver to Borrower two further copies of the said letter and W-8BEN or W-8ECI
or Form W-9, or successor applicable forms, or other manner of certification, as
the case may be, on or before the date that any such letter or form expires
(which, in the case of the Form W-8ECI, is the last day of each U.S. taxable
year of the non-U.S. entity) or becomes obsolete or after the occurrence of any
event requiring a change in the most recent letter and form previously delivered
by it to Borrower, and such other extensions or renewals thereof as may
reasonably be requested by Borrower, certifying in the case of a Form W-8BEN or
W-8ECI that such entity is entitled to receive payments under the Note without
deduction or withholding of any United States federal income taxes, unless in
any such case an event (including, without limitation, any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such entity from duly completing and delivering any such letter or form
with respect to it and such entity advises Borrower that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax, and in the case of a Form W-9, establishing an exemption from United
States backup withholding tax. Notwithstanding the foregoing, if such entity
fails to provide a duly completed Form W-8BEN or W-8ECI or other applicable form
and, under Applicable Law, in order to avoid liability for Foreign Taxes,
Borrower is required to withhold on payments made to such entity that has failed
to provide the applicable form, Borrower shall be entitled to withhold the
appropriate amount of Foreign Taxes. In such event, Borrower shall promptly
provide to such entity evidence of payment of such Foreign Taxes to the
appropriate taxing authority and shall promptly forward to such entity any
official tax receipts or other documentation with respect to the payment of the
Foreign Taxes as may be issued by the taxing authority.
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SECTION 2.3 PREPAYMENTS.
2.3.1 Voluntary Prepayments.
Except as otherwise provided in this Section 2.3.1 and Section 2.3.2
hereof, Borrower shall not have the right to prepay the Loan, in whole or in
part.
(a) On any Business Day during a Permitted Prepayment
Period, Borrower may, at its option, prepay the Loan in whole, but not
in part, without penalty or premium, upon satisfaction of the following
conditions:
(i) Borrower shall provide prior written notice
to Lender specifying the Prepayment Date upon which the
prepayment is to be made, which notice shall be delivered to
Lender not less than five (5) Business Days prior to such
payment.
(ii) Borrower shall pay to Lender, simultaneously
with such prepayment, (i) Breakage Costs, if any; and (ii) all
other sums then due under this Agreement, the Note or the
other Loan Documents.
(b) In the event that Lender has failed to give Borrower
a Conversion Notice (that ultimately results in the consummation of a
Conversion) for a period of two hundred seventy (270) consecutive
calendar days, beginning on any Business Day thereafter and ending on
the Business Day Borrower receives such a Conversion Notice, Borrower
may, at its option, prepay the Loan in whole, but not in part, without
penalty or premium, upon satisfaction of the following conditions:
(i) Borrower shall provide prior written notice
to Lender specifying the Prepayment Date upon which the
prepayment is to be made, which notice shall be delivered to
Lender not less than five (5) Business Days prior to such
payment.
(ii) Borrower shall pay to Lender, simultaneously
with such prepayment, (i) Breakage Costs, if any; and (ii) all
other sums then due under this Agreement, the Note or the
other Loan Documents.
2.3.2 Mandatory Prepayments.
(a) If at any time, the outstanding principal balance of
the Loan shall exceed the then Available Facility Amount, Borrower
shall be required to (i) prepay the Loan (within five (5) Business Days
of written notice from Lender), without penalty or premium, such that
the Available Facility Amount shall equal the outstanding balance of
the Loan or (ii) within forty-five (45) calendar days of written notice
from Lender, encumber not more than two (2) additional Properties by
the Lien of the Security Instruments, which Properties shall be
satisfactory to Lender and comply with the provisions of Section 2.7
hereof such that the Available Facility Amount shall equal or exceed
the outstanding balance of the Loan.
(b) On the next occurring Payment Date following the date
on which Borrower actually receives any Net Proceeds, if and to the
extent Lender is not obligated to make such
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Net Proceeds available to Borrower for the Restoration of a Property,
Borrower shall prepay, without penalty or premium, the outstanding
principal balance of the Note in an amount equal to one hundred percent
(100%) of such Net Proceeds.
2.3.3 Prepayments After Default.
If, following an uncured Event of Default, Borrower tenders payment of
all or any part of the outstanding principal of the Debt, or if all or any
portion of the outstanding principal of the Debt is recovered by Lender after
such Event of Default such tender or recovery shall be deemed a voluntary
prepayment by Borrower in violation of the prohibition against prepayment of the
Loan and Borrower shall pay, in addition to the outstanding principal of the
Debt, (i) all accrued and unpaid interest calculated at the Applicable Interest
Rate on the amount of principal being prepaid through and including the
Prepayment Date, (ii) a prepayment consideration equal to two percent (2%) of
the amount being prepaid, (iii) Breakage Costs, if any,; and (iv) all other sums
due under this Agreement, the Note or the other Loan Documents in connection
with a partial or total prepayment.
2.3.4 Making of Payments.
Each payment by Borrower hereunder or under the Note shall be made in
funds settled through the New York Clearing House Interbank Payments System or
other funds immediately available to Lender by 12:00 p.m., New York City time,
on or prior to the date such payment is due, to Lender by deposit to such
account as Lender may designate by written notice to Borrower. Whenever any
payment hereunder or under the Note shall be stated to be due on a day which is
not a Business Day, such payment shall be made on the first Business Day
succeeding such scheduled due date.
2.3.5 Application of Prepayments.
All prepayments received pursuant to this Section 2.3 and all proceeds
of a Conversion or a Floating Rate CMBS Conversion shall be applied first, to
unpaid Fees which are then due and payable, second, to interest on the
outstanding principal balance being prepaid that accrued through and including
the Prepayment Date, third to interest on the outstanding principal balance
being prepaid that would have accrued through the end of the Interest Period in
which the prepayment occurred, notwithstanding that such Interest Period extends
beyond the date of prepayment, and fourth, to the reduction of principal.
SECTION 2.4 RELEASE OF EXCLUDED PROPERTY.
Provided no Event of Default has occurred and is continuing, Borrower
may obtain the release of an Excluded Property from the Lien of the Security
Instrument thereon (and related Loan Documents) and the release of Borrower's
obligations under the Loan Documents with respect to such Excluded Property
(other than those expressly stated to survive), but only upon the satisfaction
of each of the following conditions:
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(a) Borrower shall provide Lender with at least thirty
(30) days but no more than ninety (90) days prior written notice of its
request to obtain a release of the Excluded Property;
(b) Borrower shall submit to Lender, not less than ten
(10) days prior to the date of such release, a release of Lien (and
related Loan Documents) for such Excluded Property for execution by
Lender. Such release shall be in a form appropriate in the State in
which the Excluded Property is located and shall contain standard
provisions, if any, protecting the rights of Lender. In addition,
Borrower shall provide all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release,
together with an Officer's Certificate certifying that (i) such
documentation is in compliance with all applicable Legal Requirements
and (ii) the release will not impair or otherwise adversely affect the
Liens, security interests and other rights of Lender under the Loan
Documents not being released (or as to the parties to the Loan
Documents and Properties subject to the Loan Documents not being
released);
(c) Intentionally Omitted;
(d) In the event the Release Property is subject to an
Operating Lease along with one or more additional Properties, Lender
shall have received a certified copy of an amendment to the Operating
Lease reflecting the deletion of the Property to be released; and
(e) Lender shall have received payment of all Lender's
reasonable costs and expenses, including due diligence review costs and
reasonable counsel fees and disbursements incurred in connection with
the release of the Excluded Property from the Lien of the related
Security Instrument and the review and approval of the documents and
information required to be delivered in connection therewith.
SECTION 2.5 RELEASE AND SUBSTITUTION OF COLLATERAL.
Subject to the terms of this Section, Borrower may obtain a release of
the Lien of a Security Instrument (and the related Loan Documents) encumbering a
Property (a "Release Property") by substituting therefor another hotel property
acquired by Borrower (individually, a "Substitute Property" and collectively,
the "Substitute Properties"), provided that the following conditions precedent
are satisfied:
(a) Borrower shall not have the right to release and
substitute more than three (3) Properties in accordance with this
Section unless such the Release Property is an Excluded Property, in
which case the limitations contained in this sentence shall not apply.
Any Substitute Property shall, among other things, require approval by
Lender's internal credit committee(s) prior to being encumbered by a
Security Instrument pursuant to the terms hereof.
(b) Lender shall have received at least thirty (30) days
prior written notice requesting the substitution and identifying the
Substitute Property and Release Property.
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(c) If the Borrower continues to own a Property subject
to the Lien of a Security Instrument, Lender shall have received (i) a
copy of a deed conveying all of Borrower's right, title and interest in
and to the Release Property to a Person other than Borrower or
Principal pursuant to an arms length transaction and (ii) a letter from
Borrower countersigned by a title insurance company acknowledging
receipt of such deed and agreeing to record such deed in the real
estate records for the county in which the Release Property is located.
(d) Unless Lender shall have consented in writing to a
lower appraised value, Lender shall have received a current Appraisal
(which Appraisal shall be ordered by Lender and paid for by Borrower)
of (i) the Substitute Property and (ii) the Release Property, each
prepared within sixty (60) days prior to the release and substitution,
showing an appraised value of the Substitute Property equal to or
greater than one hundred percent (100%) of (A) the appraised value of
the Release Property as of the Closing Date and (B) the appraised value
of the Release Property immediately prior to the date of the proposed
substitution.
(e) Unless Lender shall have consented in writing to a
lower Underwritten Cash Flow, Lender shall have received a certificate
of Borrower certifying, together with other evidence satisfactory to
Lender that, the Underwritten Cash Flow for the twelve (12) months
immediately preceding the substitution with respect to the Substitute
Property is equal to or greater than the Underwritten Cash Flow for the
twelve (12) full calendar months immediately preceding the date of the
proposed substitution with respect to the Release Property.
(f) Lender shall have consented in writing to such
release and substitution, which consent shall be given in Lender's
reasonable discretion, and shall be based upon, among other things, (i)
revenue per available room, (ii) occupancy rates, (iii) the revenue per
available room penetration index, (iv) operating cash flow, (v) quality
of the Franchisor and Manager and (vi) general trends of the Release
Property and the Substitute Property with respect to (i), (ii), (iii),
(iv) and (v) above, all as determined by Lender in its reasonable
discretion.
(g) Unless such event or condition relates solely to the
Release Property and will be fully cured by the release and
substitution, no Event of Default shall have occurred and be continuing
and Borrower shall be in compliance in all material respects with all
terms and conditions set forth in this Agreement and in each other Loan
Document on Borrower's part to be observed or performed. Lender shall
have received a certificate from Borrower confirming the foregoing,
stating that the representations and warranties contained in this
Agreement and the other Loan Documents are true and correct in all
material respects on and as of the date of the release and substitution
with respect to Borrower, the Properties and the Substitute Property
and containing any other representations and warranties with respect to
Borrower, the Properties, the Substitute Property or the Loan as Lender
may require, unless such certificate would be inaccurate, such
certificate to be in form and substance satisfactory to Lender.
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(h) Borrower shall (A) have executed, acknowledged and
delivered to Lender (I) a Security Instrument, an Assignment of Leases
and two UCC-1 Financing Statements with respect to the Substitute
Property, together with a letter from Borrower countersigned by a title
insurance company acknowledging receipt of such Security Instrument,
Assignment of Leases and UCC-1 Financing Statements and agreeing to
record or file, as applicable, such Security Instrument, Assignment of
Leases and one of the UCC-1 Financing Statements in the real estate
records for the county in which the Substitute Property is located and
to file one of the UCC-1 Financing Statements in the office of the
Secretary of State (or other central filing office) of the State in
which the Substitute Property is located, so as to effectively create
upon such recording and filing valid and enforceable first priority
Liens upon the Substitute Property, in favor of Lender (or such other
trustee as may be desired under local law), subject only to the
Permitted Encumbrances and such other Liens as are permitted pursuant
to the Loan Documents and (II) an Environmental Indemnity with respect
to the Substitute Property from Indemnitor and (B) have caused
Guarantor to acknowledge and confirm its obligations under the Loan
Documents. The Security Instrument, Assignment of Leases, UCC-1
Financing Statements and Environmental Indemnity shall be the same in
form and substance as the counterparts of such documents executed and
delivered with respect to the related Release Property subject to
modifications reflecting only the Substitute Property as the Property
and such modifications reflecting the laws of the State in which the
Substitute Property is located. The Security Instrument encumbering the
Substitute Property shall secure all amounts then outstanding under the
Note, provided that in the event that the jurisdiction in which the
Substitute Property is located imposes a mortgage recording,
intangibles or similar tax and does not permit the allocation of
indebtedness for the purpose of determining the amount of such tax
payable, the principal amount secured by such Security Instrument shall
be equal to one hundred twenty-five percent (125%) of the applicable
CMBS Loan Amount for the Substitute Property.
(i) Lender shall have received (A) to the extent
available, any "tie-in" or similar endorsement, together with a "first
loss" endorsement, to each Title Insurance Policy insuring the Lien of
the existing Security Instruments as of the date of the substitution
with respect to the Title Insurance Policy insuring the Lien of the
Security Instrument with respect to the Substitute Property and (B) a
Title Insurance Policy (or a marked, signed and redated commitment to
issue such Title Insurance Policy) insuring the Lien of the Security
Instrument encumbering the Substitute Property, issued by the title
company that issued the Title Insurance Policies insuring the Lien of
the existing Security Instruments and dated as of the date of the
substitution, with reinsurance and direct access agreements that
replace such agreements issued in connection with the Title Insurance
Policy insuring the Lien of the Security Instrument encumbering the
Release Property. The Title Insurance Policy issued with respect to the
Substitute Property shall (1) provide coverage in the amount of the
CMBS Loan Amount if the "tie-in" or similar endorsement described above
is available or, if such endorsement is not available, in an amount
equal to one hundred twenty-five percent (125%) of the CMBS Loan
Amount, together, if available, with "last dollar endorsement," (2)
insure Lender that the relevant Security Instrument creates a valid
first lien on the Substitute Property encumbered thereby, free and
clear of all exceptions from coverage other than Permitted Encumbrances
and standard exceptions and exclusions from
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coverage (as modified by the terms of any endorsements), (3) contain
such endorsements and affirmative coverages as are then available and
are contained in the Title Insurance Policies insuring the Liens of the
existing Security Instruments, and such other endorsements or
affirmative coverage that Lender shall require, and (4) name Lender as
the insured. Lender also shall have received copies of paid receipts or
other evidence showing that all premiums in respect of such
endorsements and Title Insurance Policies have been paid.
(j) Lender shall have received a current Survey for each
Substitute Property, certified to the title company and Lender and its
successors and assigns, in the same form and having the same content as
the certification of the Survey of the Release Property prepared by a
professional land surveyor licensed in the State in which the
Substitute Property is located and acceptable to the Rating Agencies in
accordance with the 1999 Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys. Such Survey shall reflect the same legal
description contained in the Title Insurance Policy relating to such
Substitute Property and shall include, among other things, a metes and
bounds description of the real property comprising part of such
Substitute Property (unless such real property has been satisfactorily
designated by lot number on a recorded plat). The surveyor's seal shall
be affixed to each Survey and each Survey shall certify whether or not
the surveyed property is located in a "one-hundred-year flood hazard
area."
(k) Lender shall have received valid certificates of
insurance indicating that the requirements for the policies of
insurance required for a Property have been satisfied with respect to
the Substitute Property and evidence of the payment of all Insurance
Premiums payable for the existing policy period.
(l) Lender shall have received a Phase I environmental
report dated not more than one hundred eighty (180) days prior to the
proposed date of substitution and otherwise acceptable to Lender (which
Phase I environmental report shall be ordered by Lender and paid for by
Borrower) and, if recommended under the Phase I environmental report, a
Phase II environmental report acceptable to Lender, which conclude that
the Substitute Property does not contain any Hazardous Materials and is
not subject to any significant risk of contamination from any off site
Hazardous Materials.
(m) Borrower shall deliver or cause to be delivered to
Lender (A) updates or, if the Substitute Property is to be owned by an
Affiliate of Borrower, originals, in either case certified by Borrower
or such Affiliate, as applicable, of all organizational documentation
related to Borrower or such Affiliate, as applicable, and/or the
formation, structure, existence, good standing and/or qualification to
do business delivered to Lender on the Closing Date; (B) good standing
certificates, certificates of qualification to do business in the
jurisdiction in which the Substitute Property is located (if required
in such jurisdiction); and (C) resolutions of Borrower or such
Affiliate, as applicable, authorizing the substitution and any actions
taken in connection with such substitution.
(n) Lender shall have received the following opinions of
Borrower's counsel: (A) an opinion or opinions of counsel admitted to
practice under the laws of the State in
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which the Substitute Property is located stating that the Loan
Documents delivered with respect to the Substitute Property pursuant to
clause (i) above are valid and enforceable in accordance with their
terms, subject to the laws applicable to creditors' rights and
equitable principles, and that Borrower is qualified to do business and
in good standing under the laws of the jurisdiction where the
Substitute Property is located or that Borrower is not required by
Applicable Law to qualify to do business in such jurisdiction; (B) an
opinion of counsel acceptable to Lender stating that the Loan Documents
delivered with respect to the Substitute Property pursuant to this
Section, among other things, have been duly authorized, executed and
delivered by Borrower and that the execution and delivery of such Loan
Documents and the performance by Borrower of its obligations thereunder
will not cause a breach of, or a default under, any agreement, document
or instrument to which Borrower is a party or to which it or its
properties are bound; and (C) an update of the Insolvency Opinion
indicating that the substitution does not affect the opinions set forth
therein.
(o) Borrower shall (i) have paid, (ii) have escrowed with
Lender or (iii) be contesting in accordance with the terms hereof, all
Transaction Costs relating to each of the Properties and the Substitute
Property, including without limitation, (x) accrued but unpaid
Insurance Premiums relating to each of the Properties and the
Substitute Property, and (y) currently due and payable Taxes (including
any in arrears) relating to each of the Properties and the Substitute
Property and (z) currently due and payable Other Charges relating to
each of the Properties and Substitute Property.
(p) Borrower shall have paid or reimbursed Lender for all
reasonable costs and expenses incurred by Lender (including, without
limitation, reasonable attorneys' fees and disbursements) in connection
with the release and substitution and Borrower shall have paid all
recording charges, filing fees, taxes or other expenses (including,
without limitation, mortgage and intangibles taxes and documentary
stamp taxes) payable in connection with the substitution.
(q) Lender shall have received annual operating
statements and occupancy statements for the Substitute Property for the
most current completed fiscal year and a current operating statement
for the Release Property, each certified by Borrower to Lender as being
true and correct in all material respects and a certificate from
Borrower certifying that there has been no material adverse change in
the financial condition of the Substitute Property since the date of
such operating statements.
(r) Upon the request of Lender, Borrower shall have
delivered to Lender estoppel certificates from all tenants under Major
Leases at the Substitute Property. All such estoppel certificates shall
be substantially in the form approved by Lender in connection with the
origination of the Loan and shall indicate that (1) the subject Lease
is a valid and binding obligation of the tenant thereunder, (2) to the
best of the tenant's knowledge, there are no defaults under such Lease
on the part of the landlord or tenant thereunder, (3) the tenant
thereunder has no knowledge of any defense or offset to the payment of
rent under such Lease, (4) no rent under such Lease has been paid more
than one (1) month in advance, (5) the tenant thereunder has no option
under such Lease to purchase all or any portion of the Substitute
Property, and (6) all tenant improvement work required under such
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Lease has been substantially completed and the tenant under such Lease
is in actual occupancy of its leased premises. If an estoppel
certificate indicates that all tenant improvement work required under
the subject Lease has not yet been completed, Borrower shall deliver to
Lender financial statements indicating that Borrower has adequate funds
to pay all costs related to such tenant improvement work as required
under such Lease.
(s) Lender shall have received copies of all Leases
affecting the Substitute Property (of which the Major Leases shall be
satisfactory to Lender in its reasonable discretion) certified by
Borrower as being true and correct.
(t) Upon the request of Lender, Lender shall have
received subordination agreements in the form approved by Lender in
connection with the origination of the Loan (or such other form
approved by Lender, which approval shall not be unreasonably withheld)
with respect to tenants under all Leases at the Substitute Property to
the extent such Leases for such tenants are not automatically
subordinate (in lien and in terms) pursuant to the terms of the
applicable Leases.
(u) Lender shall have received (A) an endorsement to the
Title Insurance Policy insuring the Lien of the Security Instrument
encumbering the Substitute Property insuring that the Substitute
Property constitutes a separate tax lot or, if such an endorsement is
not available in the State in which the Substitute Property is located,
a letter from the title insurance company issuing such Title Insurance
Policy stating that the Substitute Property constitutes a separate tax
lot or (B) a letter from the appropriate taxing authority stating that
the Substitute Property constitutes a separate tax lot.
(v) Lender shall have received a Physical Conditions
Report (which Physical Conditions Report shall be ordered by Lender and
paid for by Borrower)with respect to the Substitute Property stating
that the Substitute Property and its use comply in all material
respects with all applicable Legal Requirements (including, without
limitation, zoning, subdivision and building laws) and that the
Substitute Property is in good condition and repair and free of damage
or waste or in the event such report indicates the need for immediate
or on-going repairs at the Substitute Property, Lender shall have
established a reserve in the amount of 125% of the estimated cost of
completing such immediate or on-going repairs, provided, however, in no
event shall Lender be obligated to accept a Substitute Property if the
physical condition report relating to such Substitute Property
indicates any damage or deficiencies which in Lender's reasonable
judgment create a risk to the safety or well-being to the occupants of
such Substitute Property.
(w) Lender shall have received evidence satisfactory to
Lender to the effect that all material building and operating licenses
and permits necessary for the use and occupancy of the Substitute
Property as a hotel including, but not limited to, current certificates
of occupancy, have been obtained and are in full force and effect.
(x) In the event the Release Property is subject to a
Management Agreement along with one or more additional Properties,
Lender shall have received a certified copy of an amendment to the
Management Agreement reflecting the deletion of the Release
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Property and, if appropriate, the addition of the Substitute Property
as a property managed pursuant thereto and Manager shall have executed
and delivered to Lender an amendment to the Assignment of Management
Agreement reflecting such amendment to the Management Agreement. In the
event that the Release Property is subject to a Management Agreement
relating only to such Release Property, Lender shall have received a
Replacement Management Agreement for the Substitute Property and the
Manager thereunder shall have executed and delivered to Lender an
Assignment of Management Agreement with respect to such new Management
Agreement on substantially the same terms as used in connection with
the Release Property or such other terms as are acceptable to Lender.
(y) Lender shall have received an Operating Lease (i) in
substantially the form as the Operating Lease in effect on the date
hereof or (ii) which is satisfactory to Lender, encumbering only the
Substitute Property or, in the event the Release Property is subject to
a Operating Lease along with one or more additional Properties, Lender
shall have received a certified copy of an amendment to the Operating
Lease reflecting the deletion of the Release Property and, if
appropriate, the addition of the Substitute Property as a property
encumbered pursuant thereto.
(z) Lender shall have received such other approvals,
opinions, documents and information in connection with the substitution
as reasonably requested by Lender.
(aa) Lender shall have received certified copies of all
material contracts and agreements relating to the leasing and operation
of the Substitute Property (other than the Management Agreement), each
of which shall be in a form and substance reasonably satisfactory to
Lender.
(bb) Lender shall have received certified copies of all
material consents, licenses and approvals, if any, required in
connection with the substitution of a Substitute Property, including,
without limitation, liquor licenses and evidence that such consents,
licenses and approvals are in full force and effect.
(cc) Lender shall have received satisfactory (i.e.,
showing no Liens other than Permitted Encumbrances) UCC searches,
together with tax lien, judgment and litigation searches with respect
to the Substitute Property and Borrower in the State where the
Substitute Property is located and the jurisdictions where each such
Person has its principal place of business.
(dd) Lender shall have approved the applicable franchisor
and, unless such franchise agreement is substantially in the same form
and substance as the Franchise Agreements, the applicable franchise
agreement and shall have received a Franchisor Estoppel and Recognition
Letter from the franchisor under the Franchise Agreement, if any, for
the Substitute Property, in form and substance reasonably satisfactory
to Lender.
(ee) Lender shall have received certified copies of the
most recent Quality Assurance Reports for the Substitute Property, if
any which shall be reasonably satisfactory to Lender.
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(ff) Borrower shall submit to Lender, not less than ten
(10) days prior to the date of such substitution, a release of Lien
(and related Loan Documents) for the Release Property for execution by
Lender. Such release shall be in a form appropriate for the
jurisdiction in which the Release Property is located and shall contain
standard provisions, if any, protecting the rights of Lender in and to
the remaining Properties and regarding the Release Property to the
extent of any surviving provisions of the Loan Documents relating to
the Release Property.
(gg) Borrower shall deliver an Officers Certificate
certifying that the requirements set forth in this Section have been
satisfied.
Upon the satisfaction of the foregoing conditions precedent, Lender
will release its Lien from the Release Property and the Substitute Property
shall be deemed to be a Property for purposes of this Agreement.
All due diligence required to be delivered to Lender in
connection with this Section shall be in form, scope and substance reasonably
satisfactory to Lender.
SECTION 2.6 FEES.
2.6.1 Non-Use Fee.
Borrower shall pay to Lender a fee (the "Non-Use Fee"), computed at the
per annum rate (based on a year of 360 days, for the actual number of days
elapsed) of one-half of one percent (0.5%) on the average daily unfunded portion
of the Facility Amount, from and including the Closing Date through and
including the Maturity Date, payable, quarterly in arrears, on the Non-Use Fee
Due Date. Lender shall notify Borrower on or about the last day of the calendar
quarter (or on the Maturity Date, if applicable) of the amount of the Non-Use
Fee then due.
2.6.2 Administration Fee.
Borrower shall pay to Lender an administrative fee as compensation for
administering and servicing the Loan and performing its duties under this
Agreement and the Loan Documents equal to $10,000.00 per annum (the
"Administrative Fee") as the same may be pro-rated for any period of less than a
full calendar year. The Administrative Fee shall be paid in advance on the date
hereof and on the first day of each twelfth calendar month thereafter.
2.6.3 Origination Fee.
(a) In consideration of Lender making the Facility Amount
available to Borrower, Borrower shall pay to Lender an origination fee
equal to one-half of one percent (0.5%) of the Initial Available Facility
Amount (the "Origination Fee") which shall be earned upon the signing of
this Agreement and will be paid on the date hereof.
(b) In addition, upon demand, Borrower shall pay to Lender
an additional origination fee (the "Additional Origination Fee") equal to
one-half of one percent (0.5%) of any increase in the Available Facility
Amount determined in accordance with Section 2.7
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or Section 5.3 hereof; provided, however, Borrower shall not be obligated
to pay the Additional Origination Fee (i) to the extent that Borrower has
previously paid an Additional Origination Fee based on the then current
Available Facility Amount or (ii) in the event that Borrower irrevocably
waives in writing the right to receive Advances in excess of the Initial
Available Facility Amount.
2.6.4 Termination Fee.
Borrower shall pay to Lender a termination fee equal to the Termination
Fee upon the termination of this Agreement and the Loan pursuant to Section 2.11
hereof.
SECTION 2.7 INCREASING AVAILABLE FACILITY AMOUNT.
(a) In addition to the provisions of Section 5.3 hereof,
Borrower may, prior to the Maturity Date and subject to the limitations set
forth herein, increase the Available Facility Amount by offering to add not
more than two (2) additional properties as security for the Loan and
encumbering them with the Lien of the Security Instruments and the Loan
Documents (each, a "New Property" and collectively, the "New Properties").
If Lender determines that such New Properties are satisfactory to Lender in
its sole discretion (including, without limitation, approval by Lender's
internal credit committee(s)) and all the conditions in this Section and
Section 3.1 are complied with, the Available Facility Amount shall be
increased (when New Properties have been encumbered by the Lien of the
Security Instruments and the Loan Documents) by the maximum amount equal to
the lesser of (i) sixty percent (60%) of the appraised fair market value of
the New Properties being added and (ii) that amount necessary to insure a
Debt Service Coverage Ratio of at least 1.30:1.00, subject to the condition
that each New Property be encumbered by the Lien of the Security
Instruments and the Loan Documents prior to any increase in the Available
Facility Amount and promptly following notification by Lender to Borrower
that such New Property is satisfactory.
(b) In no event shall the Available Facility Amount be
increased to more than the Facility Amount.
(c) In addition to the restrictions set forth above, at any
time that the Available Facility Amount is to be increased at the request
of Borrower, the following conditions precedent must be satisfied:
(i) No Default or Event of Default has occurred and is
continuing or would result from the consummation of the proposed
addition of the New Property;
(ii) The increase in the Available Facility Amount as a
result of the addition of one or more New Properties pursuant to this
Section 2.7 shall be equal to or in excess of $5,000,000 per New
Property;
(iii) Borrower has executed and delivered to Lender (at
Borrower's sole cost and expense) all of the documents required under
Section 2.5 for a Substitute Property and has complied with all of the
conditions contained in Section 2.5 with respect to a Substitute
Property;
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(iv) If requested by Lender and at no additional
material cost to Borrower (other than with respect to legal counsel
retained by Borrower), Borrower shall execute a new or amended Note
covering the amount of such increase and provide to Lender such
amendments, supplements, modifications or increases to the applicable
Security Instruments and Loan Documents as Lender may deem reasonably
necessary in connection therewith, which may include some or all of the
documents or items required under Section 2.5 in connection with a
Substitute Property and under Section 3.1 in connection with an
Advance, and it is understood that any new Note shall be
cross-defaulted with the other Note, Security Instruments and Loan
Documents and cross collateralized with the Properties; and
(v) No increase in the Available Facility Amount
pursuant to this Section 2.7 may take place after ninety (90) days
prior to the Maturity Date or the Extended Maturity Date, as
applicable.
SECTION 2.8 INTENTIONALLY OMITTED.
SECTION 2.9 ADDITIONAL BORROWERS/OPERATING LESSEE.
(a) FelCor shall create additional entities for the purpose
of adding any New Property to be encumbered by a Security Instrument, and
each such additional entity ("Additional Borrower") shall be wholly owned,
directly or indirectly, by FelCor and controlled by FelCor and shall upon
execution of a Security Instrument be deemed to be a Borrower for the
purpose of this Agreement and the Loan Documents. FelCor agrees to cause
each such additional entity to execute a modification to this Agreement
adding such additional entity as a Borrower hereunder. For any Advance made
subsequent to the creation of such additional entity, such additional
entity shall be required to deliver and execute documents and comply with
the requirements of this Agreement (including, but not limited to, the
obligations to execute any Notes in connection with any further Advances).
(b) FelCor shall create additional entities to be the
Operating Lessee of such New Property to be encumbered by a Security
Instrument, and each such additional entity ("Additional Operating Lessee")
shall be wholly owned, directly or indirectly, by FelCor and controlled by
FelCor and shall upon execution of a Security Instrument be deemed to be a
Operating Lessee for the purpose of this Agreement and the Loan Documents.
FelCor agrees to cause each such additional entity to execute a
modification to this Agreement adding such additional entity as an
Additional Operating Lessee hereunder. For any Advance made subsequent to
the creation of such additional entity, such additional entity shall be
required to deliver and execute documents and comply with the requirements
of this Agreement (including, but not limited to, the obligations to
execute any Notes in connection with any further Advances).
SECTION 2.10 EXTENSION OF MATURITY DATE.
Upon compliance with the Maturity Date Extension Criteria, Borrower may
extend the Maturity Date for one (1) additional six (6) month period (the
"Extended Maturity Date"). In
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addition, Lender may, upon written notice to Borrower, extend the Maturity Date
or the Extended Maturity Date, as applicable, (a "Lender Extension") for a
period of not more than four (4) months if Lender determines in its sole
discretion that such an extended Maturity Date is necessary or desirable in
order to convert all or a portion of the Loan into Fixed Rated CMBS Loans
pursuant to the terms of Section 9.1 hereof. Borrower shall not be entitled to
any Advances (and Lender shall not be obligated to make any Advances) beginning
on the Maturity Date or Extended Maturity Date, as applicable.
SECTION 2.11 TERMINATION OF LOAN.
(a) In the event the outstanding principal balance of the
Loan does not exceed the Conversion Parameters for all hypothetical Fixed
Rate CMBS Loans (taken individually, and not as a whole), upon at least ten
(10) Business Days prior irrevocable written notice to Lender, Borrower
shall have the right to terminate the Loan, this Agreement and reduce the
Facility Amount to zero, provided that Borrower, on the date specified in
such notice (the "Termination Date"), pays to Lender, the entire
outstanding principal balance of the Loan, together with all interest
accrued and unpaid thereon, all Breakage Costs, the Termination Fee, and
all other sums due under the Note, this Agreement and the other Loan
Documents. From and after the Termination Date, Lender shall have no
further obligation to make any Advances.
(b) From and after a Termination Date through and
including Maturity Date or Extended Maturity Date, as applicable, in the
event Borrower or any Affiliate thereof desires to obtain secured first
lien mortgage financing for one or more Properties (a "Post-Termination
Financing") then Borrower shall deliver to Lender written notice of its
intention to obtain such Post-Termination Financing (the "Post-Termination
Financing Notice"). Lender shall thereafter have an exclusive opportunity
for a period of thirty (30) days following its receipt of the
Post-Termination Financing Notice to issue a term sheet, application or
similar loan quote for such Post-Termination Financing which shall be on
terms and conditions substantially similar to those contained in (i)
Section 9.1 or 9.2 hereof, as applicable (including, without limitation,
relating to the applicable interest rate) and (ii) the Conversion Amended
Loan Documents or Floating Rate Conversion Documents, as applicable (the
"Financing Quote"). Lender shall be under no obligation to deliver the
Financing Quote and said Financing Quote, if offered, shall in no way be
construed as a commitment by Lender to engage in the Post-Termination
Financing. After receipt by Borrower of the Financing Quote, Borrower and
Lender shall thereafter proceed in good faith to (A) obtain approval by
Lender's internal credit committee(s) of such Post-Termination Financing
and, (B) if such approval is obtained, to promptly close the
Post-Termination Financing pursuant to the terms of the Financing Quote.
Notwithstanding anything to the contrary contained in this Section 2.11,
nothing in this Agreement shall constitute either (i) a commitment by
Lender for the Post-Termination Financing or (ii) an offer by Lender to
make a commitment for the Post-Termination Financing.
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III. CONDITIONS PRECEDENT; CASH MANAGEMENT
SECTION 3.1 CONDITIONS PRECEDENT
3.1.1 Conditions Precedent to the Initial Advance.
The obligation of Lender to close the Loan is subject to the
satisfaction by Borrower on the Closing Date of the following conditions
precedent:
(a) Due Diligence. Lender shall have conducted a due
diligence analysis concerning the Properties to the extent required by
Lender, the results of which must be satisfactory to Lender in its sole
discretion. Borrower shall promptly deliver all materials reasonably
requested by Lender, including, without limitation, all Leases, in
connection with such analysis.
(b) Valuation. The amount of the Advances to be secured by
the Properties shall not exceed the aggregate Property Values.
Notwithstanding the foregoing, no Advance shall be permitted that would
cause the aggregate principal balance of the Loan to exceed the Available
Facility Amount.
(c) Loan Documents.
(i) Loan Facility Agreement. Borrower and FelCor shall
have executed and delivered this Agreement to Lender.
(ii) The Note. Borrower shall have executed and delivered
to Lender the Note in the amount, maturity and as otherwise provided
herein.
(iii) Security Instruments. Borrower and Operating Lessee
shall have executed and delivered to Lender mortgages, deeds of trust,
deeds to secure debt or other security instruments substantially in the
form set forth as EXHIBIT H hereto, as such Security Instrument may be
modified to confirm with the requirements of any federal, state and
local laws, statutes, orders, ordinances, rules, and regulations or
orders (as amended, restated, modified or supplemented from time to
time, collectively, the "Security Instruments"), covering the Property.
(iv) Assignment of Leases. Borrower and Operating Lessee
shall have executed and delivered the Assignment of Leases
substantially in the form set forth as EXHIBIT I hereto, as such
Assignment of Leases may be modified to confirm with the requirements
of any federal, state and local laws, statutes, orders, ordinances,
rules, and regulations or orders (as amended, restated, modified or
supplemented from time to time, the "Assignment of Leases").
(v) Environmental Indemnity. Borrower and FelCor shall
have executed and delivered to Lender the Environmental Indemnity
substantially in the form set forth as EXHIBIT J hereto, (as amended,
restated, modified or supplemented from time to time, the
"Environmental Indemnity").
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(vi) Assignment of Management Agreement. Operating Lessee
and Manager shall have executed and delivered to Lender, the Assignment
of Management Agreement with respect to each Property substantially in
the form set forth as EXHIBIT K hereto, (as amended, restated, modified
or supplemented from time to time, the "Assignment of Management
Agreement").
(vii) Property Account Agreement. Borrower and an Eligible
Institution shall have executed and delivered to Lender a Property
Account Agreement substantially in the form set forth as EXHIBIT L
hereto with respect to each Property.
(viii) Franchisor Estoppel and Recognition Letter. Borrower
shall have delivered to the Lender the Franchisor Estoppel and
Recognition Letter substantially in the form set forth as EXHIBIT M
hereto, executed by Franchisor, (a "Franchisor Estoppel and Recognition
Letter") with respect to each Property.
(ix) Quality Assurance Reports. Lender shall have
received, with respect to each Property, certified copies of the most
recent Quality Assurance Reports, each of which shall be reasonably
satisfactory to Lender.
(x) Mortgage Loan Borrower's Certificate. Borrower shall
have executed and delivered to Lender a certification by Borrower
("Mortgage Loan Borrower's Certificate") substantially in the form set
forth as EXHIBIT N (i) certifying that (A) all of the representations
and warranties contained in this Agreement, the Security Instruments
and the other Loan Documents are true and correct in all material
respects, (B) and that there is no uncured Default or uncured Event of
Default hereunder and (ii) containing a Compliance Certificate.
(xi) Operating Lessee Documents. The applicable Operating
Lessee shall have executed and delivered to Lender the Operating Lessee
Documents.
(d) Opinions of Counsel.
Lender shall have received legal opinions from counsel to Borrower, in
form and substance satisfactory to Lender and its counsel that, among other
things: (i) the Loan Documents have been duly authorized, executed and delivered
by Borrower, (ii) the Loan Documents are valid and enforceable in accordance
with their terms, subject to bankruptcy and equitable principles; (iii) that
Borrower is qualified to do business and in good standing under the laws of the
jurisdiction in which it is organized, in which it is transacting business and
where the Properties are located; (iv) the encumbrance of the Property by the
Lien of the Loan Documents shall not cause a breach of, or a default under, any
material agreement, document or instrument to which Borrower is a party or to
which they or any of their properties are bound or affected; (v) either (A) to
the extent that the Loan Documents state that the laws of the State of New York
shall apply, the courts of the State where the applicable Property is located
would, in a properly presented case (1) give effect to the agreement of the
parties that the Loan Documents be governed by and construed in accordance with
the laws of the State of New York to the extent provided in the Loan Documents
and (2) construe the Loan Documents in accordance with the
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laws of the State of New York to the extent provided in the Loan Documents or
(B) the Loan does not violate any applicable usury laws; and (vi) the Uniform
Commercial Code Financing Statements, will provide a valid Lien in the
collateral intended to be secured thereby. In addition, Lender shall receive an
opinion relating to the substantive non-consolidation of Borrower and its
constituent parties in form, scope and substance acceptable to Lender. The
opinions required in subsections (ii), (v) and (vi) shall be delivered from a
counsel to Borrower located in the state in which the applicable Property is
located.
(e) Organizational Documents.
Lender shall have received (i) with respect to the applicable Borrower,
Operating Lessee, general partners or managing members thereof, if such entity
is a partnership, the agreement of partnership, as amended, modified or
supplemented to the Closing Date, certified to be true, correct and complete by
each general partner of such partnership, together with a copy of the filed
partnership certificate of such entity, as amended, modified or supplemented to
the Closing Date, certified to be true, correct and complete by the appropriate
Secretary of State as of a date not more than thirty (30) days prior to the
Closing Date, together with a good standing certificate from such Secretary of
State and a good standing certificate from the Secretary of State (or the
equivalent thereof) of each state in which each such entity is required to be
qualified to transact business, each to be dated not more than thirty (30) days
prior to the Closing Date; (ii) with respect to the applicable Borrower,
Operating Lessee, general partners or managing members thereof, if such entity
is a limited liability company, the operating agreement of the limited liability
company, as amended, modified or supplemented to the Closing Date, certified to
be true, correct and complete by the managing member of such limited liability
company, together with a copy of the filed articles of organization or similar
instrument of such entity, as amended, modified or supplemented to the Closing
Date, certified to be true, correct and complete by the appropriate Secretary of
State as of a date not more than thirty (30) days prior to the Closing Date,
together with a good standing certificate from such Secretary of State and a
good standing certificate from the Secretary of State (or the equivalent
thereof) of each state in which each such entity is required to be qualified to
transact business, each to be dated not more than thirty (30) days prior to the
Closing Date; and (iii) with respect to the corporate general partner of the
applicable Borrower Owner and Operating Lessee, general partners or managing
members thereof, if such entity is a corporation, the certificate of
incorporation, as amended, modified or supplemented to the Closing Date,
certified to be true, correct and complete by the appropriate Secretary of State
as of a date not more than thirty (30) days prior to the Closing Date, a good
standing certificate from such Secretary of State and a good standing
certificate from the Secretaries of State (or the equivalent thereof) of the
state in which the Property is located and in which each of them is required to
be qualified to transact business, each to be dated a date not more than thirty
(30) days prior to the Closing Date and a copy of the by-laws certified by an
officer of the corporation.
(f) Certified Resolutions, etc. Lender shall have received a
certificate, dated the Closing Date, of a Responsible Office of the
applicable Borrower, general partners or managing members thereof, if such
entity is a corporation, certifying (i) the names and true signatures of
the incumbent officers of such Person authorized to sign the applicable
Loan Documents, (ii) the by-laws of such Person as in effect on the Closing
Date, (iii) the
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resolutions of such Person's board of directors approving and authorizing
the execution, delivery and performance of all Loan Documents executed by
such Person, and (iv) that there have been no changes in the certificate of
incorporation of such Person since the date of the most recent
certification thereof by the appropriate Secretary of State.
(g) Estoppel Certificates. Upon the request of Lender,
Lender shall have received executed estoppel letters or certificates
substantially in the form reasonably satisfactory to Lender with respect to
Major Leases in effect at the Properties (each, an "Estoppel Certificate").
(h) Subordination Agreements. If requested by Lender,
Borrower shall have delivered a Subordination Agreement substantially in
the form set forth as EXHIBIT O hereto or in form satisfactory to Lender;
such agreement to be fully executed by such tenants under Major Leases as
required by Lender (as amended, restated, modified or supplemented from
time to time, the "Subordination Agreement").
(i) Insurance. Lender shall have received certificates of
insurance demonstrating insurance coverage in respect of each Property of
types, in amounts, and with insurers in compliance with the terms,
provisions and conditions of Section 6.1 hereof, with each policy naming
Lender as an additional insured (in the case of liability insurance) and as
an additional loss payee (in the case of property damage insurance) and
with standard mortgagee endorsements.
(j) Lien Search Reports. Lender shall have received
satisfactory (i.e., showing no Liens other than Permitted Encumbrances) UCC
searches, together with tax lien, judgment and litigation searches
conducted in the appropriate jurisdictions as requested by Lender,
performed by a search firm acceptable to Lender with respect to the
Properties and Borrower.
(k) Financing Statements. Borrower shall have executed
and delivered to Lender UCC-l financing statement signed by Borrower, as
debtor, naming Lender, as secured party, and filed in the appropriate
offices of each jurisdiction where the Properties and Borrower are located
(each, a "Financing Statement").
(l) Title Insurance Policy. Lender shall have received
(i) title insurance policies issued by a title insurance company
satisfactory to Lender insuring the Lien of the Security Instruments on the
Properties, in form and substance satisfactory to Lender insuring that the
Security Instruments are a first Lien on the good and indefeasible fee
simple title or ground leasehold interest, as applicable, of Borrower to
the applicable Property, in an amount equal to the amount of the Facility
Amount, together with a "tie-in" and first loss endorsement satisfactory to
Lender, or, if such endorsement is not available in the state in which such
Property is located, in an amount equal to one hundred twenty-five percent
(125%) of the amount of the applicable CMBS Loan Amount for each Property,
together with, if available, a "last dollar" endorsement (the "Title
Insurance Policy"). The Title Insurance Policy shall name Lender as
insured, shall run to successor holders of the Security Instrument and
shall contain such coinsurance, reinsurance and direct access agreements as
Lender shall require in accordance with Lender's customary practices. In
addition, Lender shall have received an
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endorsement(s) to each of the Title Insurance Policies insuring the
Security Instruments which endorsement(s) shall (i) insure Lender (or if
such Title Insurance Policy contains an endorsement that insures Lender
that all future Advances shall have the same priority as the initial
Advance of the Loan, a date-down of title (a "Title Date-Down") with
respect to the related Property indicating) that as of the date of the
Advance, there are no Liens on the Properties other than the Liens existing
on each Advance Date and listed in the respective Title Insurance Policy
issued on the Advance Date and (ii) increase the coverage provided by all
prior "tie-in" endorsements to an amount not less than the amount
outstanding under the Loan.
(m) Survey. Lender shall have received a recent survey
with respect to each of the Properties certified to Lender, its successors
and assigns and the applicable title insurance company, dated within thirty
(30) days of the date such Property is to become subject to the Lien of a
Security Instrument prepared by a land surveyor licensed in the state where
the Property is located pursuant to the then current ALTA/ACSM standards
for title surveys and otherwise satisfactory to Lender and showing thereon
the location of the perimeter of the Property by courses and distances, the
lines of the streets abutting of the Property and the width thereof, the on
site improvements to the extent constructed and the relation of the on site
improvements by distance to the perimeter of the Property, and the
established building lines and the street lines, all encroachments and the
extent thereof upon the Property and indicating that the on-site
improvements to the extent constructed are within the lot and building
lines of the Property, indicating whether the Property is in a flood plain
and otherwise containing such items as are reasonably requested by Lender.
(n) Financial Statements. Lender shall have received for
each Property and Borrower financial statements in compliance with the
requirements of Section 5.1.10 hereof, which financial statements shall be
acceptable to Lender in its sole discretion, and each such statement shall
be certified by Borrower and shall include a statement that, as of the
Closing Date, there has been no material adverse change to the financial
condition of the Property or Borrower since the date thereof.
(o) Environmental Matters. Lender shall have received an
Environmental Report dated within thirty (30) days of the date such
Property is to become subject to the Lien of a Security Instrument which
shall be in form and substance satisfactory to Lender and shall include,
without limitation, the following: (i) a Phase I environmental site
assessment analyzing the presence of environmental contaminants,
polychlorinated biphenyls or storage tanks and other Hazardous Materials at
the Property, the risk of contamination from off-site Hazardous Materials
and compliance with Environmental Laws, (ii) an asbestos survey of the
Property, which shall include random sampling of materials and air quality
testing and (iii) such further site assessments Lender may reasonably
require due to the results obtained in (i) or (ii) hereof or in its
discretion.
(p) Appraisal. If required by Lender, Lender shall have
received an Appraisal acceptable to Lender with respect to each Property
dated within thirty (30) days prior to delivery.
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(q) Physical Conditions Report. Lender shall have received an
physical conditions report dated within thirty (30) days of the date such
Property is to become subject to the Lien of a Security Instrument and in
form and substance satisfactory to Lender with respect to the Property;
such physical conditions report shall be prepared in accordance with
Lender's then current guidelines for property inspection reports by
licensed engineers acceptable to Lender, and such report should state,
among other things, that the Property is in good condition and repair, free
from damage and waste and is in compliance with the Americans with
Disabilities Act (the "Physical Conditions Report").
(r) Zoning and Use Compliance. Lender shall have received
evidence satisfactory to Lender to the effect that each Property and the
use thereof are in compliance with all applicable zoning, subdivision, and
all other applicable federal, state or local laws and ordinances affecting
the Property, and that all building and material operating licenses and
permits necessary for the use and occupancy of the Property for its current
use, including, but not limited to, current certificates of occupancy (or
evidence that the same were issued or that the improvements on the Property
were constructed prior to the issuance of certificates of occupancy), have
been obtained and are in full force and effect.
(s) Contracts and Agreements. Lender shall have received
certified copies of all material contracts and agreements relating to the
management, leasing and operation of each Property, each of which shall be
satisfactory to Lender.
(t) Ground Leases. If Borrower owns a leasehold estate in
any Property, Lender shall have received, (i) a certified copy of the
Ground Lease for such Property, together with all amendments and
modifications thereto and a recorded memorandum thereof, which Ground Lease
is reasonably satisfactory to Lender and which contains customary leasehold
mortgagee provisions and protections, and which shall provide, among other
things, (A) for a remaining term of no less than thirty-five (35) years
from the Maturity Date, (B) that the Ground Lease shall not be terminated
until Lender has received notice of a default thereunder and has had a
reasonable opportunity to cure or complete foreclosure, and fails to do so
in a diligent manner, (C) for a new lease on the same terms to Lender as
tenant if the Ground Lease is terminated for any reason, (D) the non-merger
of fee and leasehold interests, and (E) that insurance proceeds and
condemnation awards (from the fee interest as well as the leasehold
interest) will be applied pursuant to the terms of this Agreement, and (ii)
a ground lease estoppel executed by the fee owner of such Property, in
form, scope and substance reasonably acceptable to Lender.
(u) Compliance with Legal Requirements. Lender shall have
received such evidence as Lender shall deem necessary to establish that
each Property is in compliance in all material respects with all Legal
Requirements as of the Closing Date.
(v) Recording and Other Fees. Lender shall have received
evidence of payment by Borrower of all recording charges, filing fees,
taxes, or other expenses, including but not limited to intangibles taxes,
documentary stamp taxes and mortgage taxes in connection with the recording
of the Security Instrument and the Lien necessary to grant and perfect
Lender a first priority lien on and security interest in the Property.
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(w) Transaction Costs. Lender shall have received, for
its account, all Transaction Costs and other fees and expenses incurred by
or on behalf of Lender which are due and payable hereunder on or before the
Closing Date, including, without limitation, the costs of all engineering,
environmental and real property appraisal reports required to be delivered
hereunder, and the reasonable fees and expenses accrued through the Closing
Date, of counsel retained by Lender.
(x) Consents, Licenses, Approvals, etc. Lender shall have
received copies certified by Borrower of all material consents, licenses
and approvals, if any, required in connection with the execution, delivery
and performance by Borrower, and the validity and enforceability, of the
Loan Documents, or in connection with any of the Transactions, and such
consents, licenses and approvals shall be in full force and effect.
(y) Additional Matters. Lender shall have received such
other certificates, opinions, documents and instruments relating to the
Transactions as may have been reasonably requested by Lender, and all
corporate and other proceedings and all other documents (including, without
limitation, all documents referred to in this Section 3.1.1 and not
appearing as exhibits hereto) and all legal matters in connection with the
Transactions shall be satisfactory in form and substance to Lender.
3.1.2 Conditions Precedent to All Advances of the Loan.
The obligation of Lender to make any Advance under the Loan (including
the initial Advance made on or after the Closing Date) is subject to the
satisfaction on the date such Advance is made of the following conditions
precedent:
(a) Representations and Warranties. The representations
and warranties contained herein and in the other Loan Documents (other than
representations and warranties which expressly speak only as of a different
date) shall be true and correct in all material respects on such date both
before and after giving effect to the making of such Advance.
(b) No Default or Event of Default. No Default or Event
of Default shall have occurred and be continuing on such date either before
or after giving effect to the making of such Advance.
(c) No Injunction or Litigation. No law or regulation
shall have been adopted, no order, judgment or decree of any governmental
authority shall have been issued, and no litigation shall be pending or
threatened, which in the judgment of Lender would enjoin, prohibit or
restrain, or impose or result in the imposition of any material adverse
condition upon, the making of the Advances or Borrower's obligation to pay
(or Lender rights to receive payment) of the Loan and the other Obligations
or the consummation of the Transactions.
(d) Intentionally Omitted.
(e) Notice of Borrowing. Lender shall have received a
fully executed Notice of Borrowing in respect of the Advance to be made on
such date.
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(f) Title Insurance Policies. Lender shall have received
an endorsement satisfactory to Lender to each Title Insurance Policy
insuring Lender that as of the date of the Advance, there are no Liens on
the Properties other than the Liens existing on the Closing Date and listed
in the respective Title Insurance Policy issued on the Closing Date and
increasing the insured amount of the Title Insurance Policy to an amount
equal to one hundred twenty-five percent (125%) of the amount of the
applicable CMBS Loan Amount for each Property.
(g) UCC Searches. Lender shall have received satisfactory
(i.e., showing no Liens other than Permitted Encumbrances) UCC searches,
together with tax lien, judgment and litigation searches conducted in the
appropriate jurisdictions as requested by Lender, performed by a search
firm acceptable to Lender with respect to the Properties and Borrower.
(h) Recording and Other Fees. Lender shall have received
evidence of payment by Borrower of all recording charges, filing fees,
taxes, or other expenses, including but not limited to intangibles taxes,
documentary stamp taxes and mortgage taxes in connection with the recording
of the Security Instrument and the Lien necessary to grant and perfect
Lender a first priority lien on and security interest in the Property.
(i) Transaction Costs. Lender shall have received, for
its account, all Transaction Costs and other fees and expenses incurred by
or on behalf of Lender which are due and payable hereunder on or before the
Advance Date, including, without limitation, the costs of all engineering,
environmental and real property appraisal reports required to be delivered
hereunder, and the reasonable fees and expenses accrued through the Advance
Date, of counsel retained by Lender.
(j) Additional Matters. Lender shall have received such
other certificates, opinions, documents and instruments relating to the
Transactions as may have been reasonably requested by Lender, and all
corporate and other proceedings and all other documents (including, without
limitation, all documents referred to herein and not appearing as exhibits
hereto) and all legal matters in connection with the Transactions shall be
satisfactory in form and substance to Lender.
3.1.3 Cross-Collateralization.
Subject to the terms of Section 8.1 hereof, it is the intention of the
parties hereto that the Loan shall be cross-collateralized against all of the
Properties that secure the Loan, and that each Note (if more than one) shall be
cross-defaulted with the other Notes, Security Instruments and Loan Documents
and cross-collateralized with the Properties. In the event Lender determines it
necessary to accomplish the cross-collateralization, Borrower agrees that it
shall execute and provide to Lender such amendments or supplements to the
applicable Security Instruments and Loan Documents as Lender may reasonably deem
necessary in connection therewith.
SECTION 3.2 ACCEPTANCE OF ADVANCES.
The acceptance by Borrower of the proceeds of each Advance shall
constitute a representation and warranty by Borrower to Lender that all of the
conditions required to be
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satisfied under this Section 3 in connection with the making of such Advance and
all of the terms and provisions of this Agreement have been satisfied in all
material respects.
SECTION 3.3 SUFFICIENT COUNTERPARTS.
All certificates, agreements, legal opinions and other documents and
papers referred to in this Section 3, unless otherwise specified, shall be
delivered to Lender and shall be satisfactory in form and substance to Lender in
its sole discretion and Borrower shall deliver sufficient counterparts of all
such materials for distribution to Lender's counsel.
SECTION 3.4 CASH MANAGEMENT PROVISIONS.
3.4.1 Establishment of Accounts.
(a) Borrower and Operating Lessee shall, simultaneously
herewith, (i) establish one or more accounts (individually and
collectively, the "Property Account") with one or more Property Account
Banks into which Borrower and/or Operating Lessee shall deposit, or cause
to be deposited, all Gross Income From Operations not already deposited
directly into the Concentration Account, (ii) establish one or more
accounts (individually and collectively, the "Concentration Account") with
an Eligible Institution into which Borrower shall deposit, or cause to be
deposited, all of the funds on deposit in the applicable Property Account
and (iii) execute an agreement with Lender and each Property Account Bank
providing for the control of the applicable Property Account and
Concentration Account substantially in the form of EXHIBIT P attached
herewith (the "Property Account Agreement").
(b) Lender (or Servicer on behalf of Lender) shall,
simultaneously herewith establish an account with the Lockbox Bank (the
"Lockbox Account"), into which, upon the occurrence and during the
continuance of an Event of Default, Borrower and Operating Lessee shall
deposit or cause Manager to deposit all sums on deposit in the
Concentration Account, in accordance with Section 3.4.2 and Section 3.4.6
hereof, establishing the following Accounts (which may be book entry
sub-accounts) into which amounts in the Concentration Account shall be
deposited or allocated:
(i) An account with Lockbox Bank into which Borrower
shall deposit, or cause to be deposited, the Monthly Tax Deposit (the
"Tax Account");
(ii) An account with Lockbox Bank into which Borrower
shall deposit, or cause to be deposited, the Monthly Insurance Premium
Deposit, if any (the "Insurance Premium Account");
(iii) An account with Lockbox Bank into which Borrower
shall deposit, or cause to be deposited, the Monthly Debt Service
Payment Amount (the "Debt Service Account");
(iv) An account with Lockbox Bank into which Borrower
shall deposit, or cause to be deposited, the Monthly Ground Rent
Deposit (the "Ground Rent Account"); and
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(v) An account with Lockbox Bank into which Borrower
shall deposit, or cause to be deposited, the Replacement Reserve
Monthly Deposit (the "Replacement Reserve Account").
3.4.2 Deposits into Lockbox Account.
(a) Borrower represents, warrants and covenants that (i)
Borrower shall, or shall cause Manager or Operating Lessee to, immediately
deposit all Gross Income From Operations into the applicable Property
Account or Concentration Account, (ii) Borrower or Operating Lessee shall
send a notice, substantially in the form of EXHIBIT Q, to all tenants now
or hereafter occupying space at each Property directing them to pay all
Rents and other sums due under the Lease to which they are a party into the
applicable Property Account or Concentration Account, (iii) Borrower,
Operating Lessee or Manager shall instruct the Manager to deposit all
Accounts Receivable for the Properties and all other sums collected by
Manager pursuant to the Management Agreement into the applicable Property
Account or the Concentration Account, (iv) Borrower, Operating Lessee or
Manager shall deliver a notice substantially in the form of EXHIBIT R
hereto to all credit card companies to pay all Accounts Receivable directly
into the applicable Property Account or the Concentration Account, (v)
other than the Accounts, there shall be no other accounts maintained by
Borrower, Operating Lessee or any other Person into which revenues from the
ownership and operation of the Properties are deposited, (vi) neither
Borrower nor any other Person shall open any other such account with
respect to the deposit of income in connection with the Properties, (vii)
on or before May 1st of each Fiscal Year, Borrower shall provide to Lender
evidence reasonably satisfactory to Lender that Borrower has notified the
Eligible Institution(s) maintaining the Concentration Account(s) of the
revised calculation of the Monthly Pegged Amount and (viii) three (3)
Business Days before each Payment Date, Borrower and/or Operating Lessee
shall cause Manager to deposit, or cause to be deposited, all remaining
funds on deposit in the Manager Account into the Concentration Account.
Until deposited into the applicable Property Account, any Gross Income from
Operations from the Properties held by Borrower or Operating Lessee shall
be deemed to be Collateral and shall be held in trust by it for the
benefit, and as the property, of Lender and shall not be commingled with
any other funds or property of Borrower or Operating Lessee.
(b) Borrower, Operating Lessee or Lender on behalf of
Borrower or Operating Lessee, shall direct each Property Account Bank to
transfer, on each Business Day, all funds on deposit in the applicable
Property Account to the Concentration Account and Borrower, Operating
Lessee or Lender on behalf of Borrower or Operating Lessee, shall direct
each Eligible Institution maintaining a Concentration Account to transfer,
on each Business Day, all funds on deposit in the Concentration Account to
(i) prior to the occurrence of an Event of Default, such account as shall
be specified by Borrower and Operating Lessee in writing and (ii) following
the occurrence and during the continuance of an Event of Default, (I) the
Manager Account until sums equal to the Monthly Pegged Amount have been
transferred to the Manager Account for the then current calendar month and
(II) thereafter, the Lockbox Account.
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(c) Borrower and Operating Lessee warrant and covenant
that they shall not rescind, withdraw or change any notices or instructions
required to be sent by it pursuant to this 3.4.2 without Lender's prior
written consent.
3.4.3 Account Name.
(a) The Accounts (other than the Manager Account) shall
each be in the name of Borrower for the benefit Lender.
(b) In the event Lender transfers or assigns the Loan,
Borrower and Operating Lessee acknowledge that each Property Account Bank,
Lockbox Bank and the Eligible Institution maintaining the Concentration
Account, at Lender's request, shall change the name of each Account to the
name of Borrower for the benefit of the transferee or assignee. In the
event Lender retains a servicer to service the Loan, Borrower and Operating
Lessee acknowledge that each Property Account Bank and Lockbox Bank, at
Lender's request, shall rename each account to be in the name of Borrower
for the benefit of the servicer, as agent for Lender.
3.4.4 Eligible Accounts.
Borrower and Operating Lessee shall, and Borrower and Operating Lessee
shall cause each Property Account Bank, Lockbox Account Bank and the Eligible
Institution maintaining the Concentration Account to, maintain each Account as
an Eligible Account.
3.4.5 Permitted Investments.
Sums on deposit in any Account other than any Property Account, any
Concentration Account or Lockbox Account may be invested in Permitted
Investments provided (i) such investments are then regularly offered by Lockbox
Bank for accounts of this size, category and type, (ii) such investments are
permitted by Applicable Law, (iii) the maturity date of the Permitted Investment
is not later than the date on which sums in the applicable Account are
anticipated by Lender to be required for payment of an obligation for which such
Account was created, and (iv) no Event of Default shall have occurred and be
continuing. All income earned from Permitted Investments the property of
Borrower. Borrower and Operating Lessee hereby irrevocably authorize and direct
Lockbox Bank, to hold any income earned from Permitted Investments as part of
the Accounts. Borrower shall be responsible for payment of any federal, State or
local income or other tax applicable to income earned from Permitted
Investments. No other investments of the sums on deposit in the Accounts shall
be permitted except as set forth in this Section 3.4.5. Lender shall not be
liable for any loss sustained on the investment of any funds constituting the
Reserve Funds or of any funds deposited in the related Accounts. Notwithstanding
anything to the contrary contained herein, Borrower acknowledges that the only
Permitted Investment which Lockbox Bank may only offer is an interest bearing
escrow account (bearing interest at a money market rate as determined by Lockbox
Bank).
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3.4.6 The Initial Deposits.
Lender shall determine, in its reasonable discretion, the initial
deposit amounts (the "Initial Deposits") required to be deposited in each of the
Tax Account, the Insurance Premium Account, the Required Repair Account, the
Ground Rent Account and the Replacement Reserve Account and Borrower shall
deposit the respective Initial Deposits into each Account.
3.4.7 Transfer To and Disbursements from the Lockbox Account.
(a) Lockbox Bank shall withdraw all funds on deposit in
the Lockbox Account on the date immediately preceding each Payment Date
(and if such day is not a Business Day then the preceding day which is a
Business Day).
(b) Lockbox Bank shall disburse the funds in the Lockbox
Account in the following order of priority:
(i) First, funds sufficient to pay the Monthly Ground
Rent Deposit, if any, shall be deposited in the Ground Rent Account
(ii) Second, funds sufficient to pay the Monthly Tax
Deposit shall be deposited in the Tax Account;
(iii) Third, funds sufficient to pay the Monthly Insurance
Premium Deposit, if any, shall be deposited in the Insurance Premium
Account;
(iv) Fourth, funds sufficient to pay the Monthly Debt
Service Payment Amount shall be deposited into the Debt Service Account
to be applied to the payment of accrued and unpaid interest computed at
the Applicable Interest Rate;
(v) Fifth, funds sufficient to pay the Replacement
Reserve Monthly Deposit shall be deposited in the Replacement Reserve
Account;
(vi) Sixth, funds sufficient to pay any interest accruing
at the Default Rate, and late payment charges, if any, shall be
deposited in the Debt Service Account;
(vii) Seventh, to the payment of Lockbox Bank for customary
and reasonable fees and expenses incurred in connection with this
Agreement and the accounts established hereunder
(viii) Eighth, provided no Event of Default has occurred and
is continuing all amounts remaining in the Lockbox Account after
deposits for items (i) through (vii) for the current month and all
prior months shall be disbursed to Borrower.
3.4.8 Withdrawals From the Tax Account and the Insurance Premium
Account.
Lender shall have the right to withdraw funds from the Tax Account to
pay Taxes on or before the date Taxes are delinquent. Lender shall have the
right to withdraw funds from the
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Insurance Premium Account to pay Insurance Premiums on or before the date
Insurance Premiums are due and payable. Lockbox Bank shall disburse funds from
the Tax Account and the Insurance Premium Account in accordance with Lender's
written request therefor on the Business Day following Lockbox Bank's receipt of
such written request.
3.4.9 Withdrawals from the Replacement Reserve Account.
Lender shall disburse funds on deposit in the Replacement Reserve
Account in accordance with the provisions of Section 7.3 hereof.
3.4.10 Withdrawals from the Required Repair Account.
Lender shall disburse funds on deposit in the Required Repair Account
in accordance with the provisions of Section 7.1 hereof.
3.4.11 Withdrawals from the Ground Rent Account.
Lender shall have the right to withdraw funds from the Ground Rent
Account in accordance with Section 7.4 hereof.
3.4.12 Sole Dominion and Control.
Borrower and Operating Lessee acknowledge and agree that the Accounts
are subject to the sole dominion, control and discretion of Lender, its
authorized agents or designees, including Property Account Bank and Lockbox
Bank, subject to the terms hereof; and Borrower and Operating Lessee shall have
no right of withdrawal with respect to any Account except with the prior written
consent of Lender or as otherwise provided herein.
3.4.13 Security Interest.
Borrower and Operating Lessee hereby grant to Lender a first priority
security interest in each of the Accounts and the Account Collateral as
additional security for the Debt.
3.4.14 Rights on Default.
Notwithstanding anything to the contrary in this Section 3.4, upon the
occurrence of an Event of Default, Lender shall promptly notify Property Account
Bank and Lockbox Bank in writing of such Event of Default and, without notice
from Property Account Bank, Lockbox Bank or Lender, (a) Borrower and Operating
Lessee shall have no further right in respect of (including, without limitation,
the right to instruct Lockbox Bank or Property Account Bank to transfer from)
the Accounts, (b) Lender may direct Lockbox Account to liquidate and transfer
any amounts then invested in Permitted Investments to the Accounts or reinvest
such amounts in other Permitted Investments as Lender may reasonably determine
is necessary to perfect or protect any security interest granted or purported to
be granted hereby or pursuant to the other Loan Documents or to enable Lockbox
Bank, as agent for Lender, or Lender to exercise and enforce Lender's rights and
remedies hereunder or under any other Loan Document with respect to any Account
or any Account Collateral, and (c) Lender shall have all rights and remedies
with
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respect to the Accounts and the amounts on deposit therein and the Account
Collateral as described in this Agreement and in the Security Instruments, in
addition to all of the rights and remedies available to a secured party under
the UCC, and, notwithstanding anything to the contrary contained in this
Agreement or in the Security Instruments, Lender may apply the amounts of such
Accounts as Lender determines in its sole discretion including, but not limited
to, payment of the Debt.
3.4.15 Financing Statement; Further Assurances.
Borrower and Operating Lessee hereby authorize Lender to file, and upon
Lender's request, shall execute and deliver to Lender for filing, a financing
statement or statements under the UCC in connection with any of the Accounts and
the Account Collateral with respect thereto in the form required to properly
perfect Lender's security interest therein. Borrower and Operating Lessee agree
that at any time and from time to time, at the expense of Borrower, Borrower and
Operating Lessee will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Lender may request, in order to perfect and protect any security interest
granted or purported to be granted hereby (including, without limitation, any
security interest in and to any Permitted Investments) or to enable Lockbox Bank
or Lender to exercise and enforce its rights and remedies hereunder with respect
to any Account or Account Collateral.
3.4.16 Borrower's Obligation Not Affected.
The insufficiency of funds on deposit in the Accounts shall not absolve
Borrower of the obligation to make any payments, as and when due pursuant to
this Agreement and the other Loan Documents, and such obligations shall be
separate and independent, and not conditioned on any event or circumstance
whatsoever.
3.4.17 Payments Received Under this Agreement.
Notwithstanding anything to the contrary contained in this Agreement or
the other Loan Documents, and provided no Event of Default has occurred and is
continuing, Borrower's obligations with respect to the monthly payment of Debt
Service and amounts due for the Tax and Insurance Escrow Fund, Required Repair
Fund, Ground Lease Escrow Fund, Replacement Escrow Fund, and any other payment
reserves established pursuant to this Agreement or any other Loan Document shall
(provided Lender is not prohibited from withdrawing or applying any funds in the
Accounts by Applicable Law or otherwise) be deemed satisfied to the extent
sufficient amounts are deposited in the Lockbox Account established pursuant to
this Agreement to satisfy such obligations on the dates each such payment is
required, regardless of whether any of such amounts are so applied by Lender.
SECTION 3.5 WAVIER OF CASH MANAGEMENT PROVISIONS.
Borrower shall be relieved of its obligations pursuant to Section 3.4
hereof in the event that Borrower has delivered to Lender evidence that each
Manager has agreed in writing that upon written notice from Lender of the
occurrence of an Event of Default, each such Manager shall (and shall continue
to) promptly deliver to Lender all sums that are otherwise to be
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distributed to Borrower or its Affiliates pursuant to the terms of the
applicable Management Agreement, which sums, provided no Event of Default has
occurred and is continuing, shall be applied by Lender in the order of priority
set forth in Section 3.4.7(b) hereof.
IV. REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to make the
Loan, Borrower makes the following representations and warranties as of the date
hereof and as of the date of each Advance, which shall survive the execution and
delivery of this Agreement and the Note and the making of the Loan and each
Advance:
SECTION 4.1 BORROWER REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants as of the Closing Date that:
4.1.1 Organization.
(a) Borrower is duly organized and is validly existing and in
good standing in the jurisdiction in which it is organized, with requisite
power and authority to own the Properties and to transact the businesses in
which it is now engaged. Borrower is duly qualified to do business and is
in good standing in each jurisdiction where it is required to be so
qualified in connection with the Properties, its businesses and operations.
Borrower possesses all rights, licenses, permits and authorizations,
governmental or otherwise, necessary to entitle it to own the Properties
and to transact the businesses in which it is now engaged. Attached hereto
as EXHIBIT S is an organizational chart of Borrower.
(b) Operating Lessee is duly organized and is validly
existing and in good standing in the jurisdiction in which it is organized,
with requisite power and authority to own the lessee's interest in the
Operating Lease and to operate the Properties and to transact the
businesses in which it is now engaged. Operating Lessee is duly qualified
to do business and is in good standing in each jurisdiction where it is
required to be so qualified in connection with the Properties, its
businesses and operations. Operating Lessee possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle
it to transact the businesses in which it is now engaged. Attached hereto
as EXHIBIT T is an organizational chart of Operating Lessee.
4.1.2 Proceedings.
(a) Borrower has taken all necessary action to authorize
the execution, delivery and performance of this Agreement and the other
Loan Documents. This Agreement and the other Loan Documents have been duly
executed and delivered by or on behalf of Borrower and constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject only to applicable
bankruptcy, insolvency and similar laws affecting rights of creditors
generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
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(b) Operating Lessee has taken all necessary action to
authorize the execution, delivery and performance of the Operating Lessee
Documents. The Operating Lessee Documents have been duly executed and
delivered by or on behalf of Operating Lessee and constitutes the legal,
valid and binding obligations of Operating Lessee enforceable against
Operating Lessee in accordance with their respective terms, subject only to
applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
4.1.3 No Conflicts.
(a) The execution, delivery and performance of this
Agreement and the other Loan Documents by Borrower will not conflict with
or result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any Lien, charge
or encumbrance (other than pursuant to the Loan Documents) upon any of the
property or assets of Borrower pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement, partnership agreement, management
agreement, franchise agreement, or other agreement or instrument to which
Borrower is a party or by which any of Borrower's property or assets is
subject, nor will such action result in any violation of the provisions of
any statute or any order, rule or regulation of any court or Governmental
Authority or body having jurisdiction over Borrower or any of the
Properties or any of Borrower's other assets, or any license or other
approval required to operate the Properties, and any consent, approval,
authorization, order, registration or qualification of or with any
governmental agency required for the execution, delivery and performance by
Borrower of this Agreement or any other Loan Documents have been obtained
and is in full force and effect.
(b) The execution, delivery and performance of the
Operating Lessee Documents by Operating Lessee will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any Lien, charge
or encumbrance (other than pursuant to such Loan Documents) upon any of the
property or assets of Operating Lessee pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, partnership agreement,
management agreement, franchise agreement, or other agreement or instrument
to which Operating Lessee is a party or by which any of Operating Lessee's
property or assets is subject, nor will such action result in any violation
of the provisions of any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over Operating
Lessee or any of the Properties or any of Operating Lessee's other assets,
or any license or other approval required to operate the Properties, and
any consent, approval, authorization, order, registration or qualification
of or with any Governmental Agency required for the execution, delivery and
performance by Operating Lessee of the Operating Lessee Documents have been
obtained and is in full force and effect.
4.1.4 Litigation.
There are no actions, suits or proceedings at law or in equity by or
before any Governmental Authority or other agency now pending or threatened
against or affecting
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Borrower, Operating Lessee or any Property, which actions, suits or proceedings,
if determined against Borrower, Operating Lessee or any Property, would
reasonably be expected to materially adversely affect the condition (financial
or otherwise) or business of Borrower, Operating Lessee or the condition or
ownership of any Property.
4.1.5 Agreements.
Neither Borrower nor Operating Lessee is a party to any agreement or
instrument or subject to any restriction which would reasonably be expected to
materially and adversely affect Borrower, Operating Lessee or any Property, or
Borrower's or Operating Lessee's business, properties or assets, operations or
condition, financial or otherwise. Neither Borrower nor Operating Lessee is in
default in any material respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which Borrower, Operating Lessee or any
of the Properties are bound. Neither Borrower nor Operating Lessee has material
financial obligation under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which Borrower or Operating Lessee
is a party or by which Borrower or Operating Lessee is a party or by which
Borrower, Operating Lessee or any Property is otherwise bound, other than (a)
obligations incurred in the ordinary course of the operation of the Properties
and (b) obligations under the Loan Documents.
4.1.6 Solvency.
Neither Borrower nor Operating Lessee (a) has entered into the
transaction or executed the Note, this Agreement or any other Loan Documents
with the actual intent to hinder, delay or defraud any creditor and (b) has
received reasonably equivalent value in exchange for its obligations under the
Loan Documents. Giving effect to the Loan, the fair saleable value of Borrower's
and Operating Lessee's assets exceeds and will, immediately following the making
of the Loan, exceed Borrower's and Operating Lessee's total liabilities,
including, without limitation, subordinated, unliquidated, disputed and
contingent liabilities. Borrower's and Operating Lessee's assets do not and,
immediately following the making of the Loan will not, constitute unreasonably
small capital to carry out its business as conducted or as proposed to be
conducted. Neither Borrower nor Operating Lessee intends to incur debt and
liabilities (including contingent liabilities and other commitments) beyond its
ability to pay such debt and liabilities as they mature (taking into account the
timing and amounts of cash to be received by Borrower and Operating Lessee and
the amounts to be payable on or in respect of obligations of Borrower and
Operating Lessee). No petition under the Bankruptcy Code or similar state
bankruptcy or insolvency law has been filed against Borrower, Operating Lessee
or any constituent Person in the last seven (7) years, and neither Borrower,
Operating Lessee nor any constituent Person in the last seven (7) years has ever
made an assignment for the benefit of creditors or taken advantage of any
insolvency act for the benefit of debtors. Neither Borrower, Operating Lessee
nor any of its constituent Persons are contemplating either the filing of a
petition by it under the Bankruptcy Code or similar state bankruptcy or
insolvency law or the liquidation of all or a major portion of Borrower's or
Operating Lessee's assets or property, and neither Borrower nor Operating Lessee
has any knowledge of any Person contemplating the filing of any such petition
against it or such constituent Persons.
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4.1.7 Full and Accurate Disclosure.
No statement of fact made by Borrower in this Agreement or in any of
the other Loan Documents contains any untrue statement of a material fact or
omits to state any material fact necessary to make statements contained herein
or therein not misleading in any material respects. No statement of fact made by
Operating Lessee in the Operating Lessee Documents contain any untrue statement
of a material fact or omits to state any material fact necessary to make
statements contained herein or therein not misleading in any material respect.
There is no fact presently known to Borrower or Operating Lessee which has not
been disclosed to Lender which materially and adversely affects, or would
reasonably be expected to materially and adversely affect, any Property or the
business, operations or condition (financial or otherwise) of Borrower or
Operating Lessee.
4.1.8 No Plan Assets.
Neither Borrower nor Operating Lessee is, a Plan and none of the assets
of Borrower or Operating Lessee constitute or will constitute "Plan Assets" of
one or more Plans. In addition, (a) neither Borrower nor Operating Lessee is a
"governmental plan" within the meaning of Section 3(32) of ERISA and (b)
transactions by or with Borrower and Operating Lessee are not subject to State
statutes regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or Section
4975 of the Code currently in effect, which prohibit or otherwise restrict the
transactions contemplated by this Agreement.
4.1.9 Compliance.
Borrower, Operating Lessee and the Properties and the use thereof
comply in all material respects with all applicable Legal Requirements,
including, without limitation, to the best of Borrower's knowledge, all
Environmental Laws, building and zoning ordinances and codes. Neither Borrower
nor Operating Lessee is in default or violation in any material respect of any
order, writ, injunction, decree or demand of any Governmental Authority. There
has not been committed by Borrower, Operating Lessee or any other Person in
occupancy of or involved with the operation or use of the Properties any act or
omission affording the federal government or any other Governmental Authority
the right of forfeiture as against any Property or any part thereof or any
monies paid in performance of Borrower's or Operating Lessee's obligations under
any of the Loan Documents.
4.1.10 Financial Information.
All financial data, including, without limitation, the statements of
cash flow and income and operating expense, that have been delivered to Lender
by or on behalf of Borrower, Operating Lessee and the Properties (i) considered
in the aggregate, are true, complete and correct in all material respects, (ii)
fairly present the financial condition of Borrower, Operating Lessee and the
Properties, as applicable, as of the date of such reports, and (iii) have been
prepared in accordance with GAAP throughout the periods covered, except as
disclosed therein (but subject to normal year-end adjustments). Except for
Permitted Encumbrances, neither
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Borrower nor Operating Lessee have any contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments that are known to Borrower or Operating
Lessee and reasonably likely to have a materially adverse effect on any Property
or the operation thereof as hotels except as referred to or reflected in said
financial statements. Since the date of the most recent such financial
statements, there has been no materially adverse change in the financial
condition, operations or business of Borrower or Operating Lessee from that set
forth in said financial statements.
4.1.11 Condemnation.
No Condemnation or other similar proceeding has been commenced or, to
the best of Borrower's and Operating Lessee's knowledge, is threatened or
contemplated with respect to all or any portion of any Property or for the
relocation of roadways providing access to any Property.
4.1.12 Federal Reserve Regulations.
No part of the proceeds of the Loan will be used for the purpose of
purchasing or acquiring any "margin stock" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System or for any other purpose
which would be inconsistent with such Regulation U or any other Regulations of
such Board of Governors, or for any purposes prohibited by Legal Requirements or
by the terms and conditions of this Agreement or the other Loan Documents.
4.1.13 Utilities and Public Access.
Each Property has rights of access to public ways and is served by
public water, sewer, sanitary sewer and storm drain facilities adequate to
service such Property for its respective intended uses. All public utilities
necessary or convenient to the full use and enjoyment of each Property are
located either in the public right-of-way abutting each Property (which are
connected so as to serve each Property without passing over other property) or
in recorded easements serving each Property and such easements are set forth in
and insured by the Title Insurance Policy. All roads necessary for the use of
each Property for their current respective purposes have been completed, are
physically open and except as disclosed on the Surveys, are dedicated to public
use and have been accepted by all Governmental Authorities.
4.1.14 Not a Foreign Person.
Neither Borrower nor Operating Lessee is a "foreign person" within the
meaning of Section 1445(f)(3) of the Code.
4.1.15 Separate Lots.
Each Property is comprised of one (1) or more parcels which constitute
a separate tax lot or lots and does not constitute a portion of any other tax
lot not a part of such Property.
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4.1.16 Assessments.
To the best of Borrower's knowledge, there are no pending or proposed
special or other assessments for public improvements or otherwise affecting any
Property, nor are there any contemplated improvements to any Property that may
result in such special or other assessments.
4.1.17 Enforceability.
The Loan Documents are not subject to any right of rescission, set-off,
counterclaim or defense by Borrower or Operating Lessee, including the defense
of usury, and neither Borrower nor Operating Lessee has asserted any right of
rescission, set-off, counterclaim or defense with respect thereto.
4.1.18 No Prior Assignment.
There are no prior assignments of the Leases or any portion of the
Rents due and payable or to become due and payable which are presently
outstanding.
4.1.19 Insurance.
Borrower has obtained and has delivered to Lender certified copies of
all insurance policies reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement. To the best of Borrower's knowledge,
no Person, including Borrower and Operating Lessee, has done, by act or
omission, anything which would impair the coverage of any such policy.
4.1.20 Use of Property.
Each Property is used exclusively for hotel purposes and other
appurtenant and related uses including but not limited to restaurants and
lounges.
4.1.21 Certificate of Occupancy; Licenses.
All material certifications, permits, licenses and approvals, including
without limitation, certificates of completion and occupancy permits required
for the legal use, occupancy and operation of each Property by Borrower and
Operating Lessee as a hotel (collectively, the "Licenses"), have been obtained
and are in full force and effect and are not subject to revocation, suspension
or forfeiture. Borrower shall keep and maintain all Licenses necessary for the
operation of each Property as a hotel. The use being made of each Property is in
conformity with the certificate of occupancy issued for such Property.
4.1.22 Flood Zone.
Except as disclosed on the Surveys, none of the Improvements on any
Property are located in an area as identified by the Federal Emergency
Management Agency as an area having special flood hazards and, if so located,
the flood insurance required pursuant to the terms hereof is in full force and
effect with respect to each such Property.
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4.1.23 Physical Condition.
Each Property, including, without limitation, all buildings,
improvements, parking facilities, sidewalks, storm drainage systems, roofs,
plumbing systems, HVAC systems, fire protection systems, electrical systems,
equipment, elevators, exterior sidings and doors, landscaping, irrigation
systems and all structural components, are in good condition, order and repair
in all material respects; there exists no structural or other material defects
or damages in any Property, whether latent or otherwise, and Borrower and
Operating Lessee have not received notice from any insurance company or bonding
company of any defects or inadequacies in any Property, or any part thereof,
which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond. Each Property is free
from damage caused by fire or other casualty. All liquid and solid waste
disposal, septic and sewer systems located on each Property are, in all material
respects, in a good and safe condition and repair and in compliance with all
Legal Requirements.
4.1.24 Boundaries.
Except as disclosed on the Surveys, all of the Improvements which were
included in determining the appraised value of each Property lie wholly within
the boundaries and building restriction lines of such Property, and no
improvements on adjoining properties encroach upon such Property, and no
easements or other encumbrances upon the applicable Property encroach upon any
of the Improvements.
4.1.25 Leases.
Borrower is the owner and lessor of landlord's interest in the
Operating Leases. Operating Lessee is the lessor under all other Leases. No
Person (other than hotel guests) has any possessory interest in any Property or
right to occupy the same except under and pursuant to the provisions of the
Leases and Management Agreements. The current Leases are in full force and
effect and, there are no defaults by Borrower or, to the best of Borrower's
knowledge, any tenant under any Lease, and there are no conditions that, with
the passage of time or the giving of notice, or both, would constitute defaults
under any Lease. No Rent has been paid more than one (1) month in advance of its
due date. There are no offsets or defenses to the payment of any portion of the
Rents. All work to be performed by Borrower under each Lease has been performed
as required and has been accepted by the applicable tenant, and any payments,
free rent, partial rent, rebate of rent or other payments, credits, allowances
or abatements required to be given by Borrower to any tenant has already been
received by such tenant. There has been no prior sale, transfer or assignment,
hypothecation or pledge of any Lease or of the Rents received therein which is
still in effect. No tenant (other than the Operating Lessees) under any Lease
has sublet all or any portion of the premises demised thereby, nor does anyone
except such tenant and its employees occupy such leased premises. No tenant
under any Lease has a right or option pursuant to such Lease or otherwise to
purchase all or any part of the leased premises or the building of which the
leased premises are a part. Except as set forth in the Leases, no tenant under
any Lease has any right or option for additional space in the Improvements. To
the best of Borrower's knowledge, no Hazardous Materials have been disposed,
stored or treated by any
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tenant under any Lease on or about the leased premises nor does Borrower or
Operating Lessee have any knowledge of any tenant's intention to use its leased
premises for any activity which, directly or indirectly, involves the use,
generation, treatment, storage, disposal or transportation of any Hazardous
Materials, except those that are both (i) in compliance with current
Environmental Laws and with permits issued pursuant thereto (if such permits are
required), and (ii) either (A) in amounts not in excess of that necessary to
operate, clean, repair and maintain the applicable Property or each tenant's
respective business at such Property as set forth in their respective Leases,
(B) held by a tenant for sale to the public in its ordinary course of business,
or (C) fully disclosed to and approved by Lender in writing pursuant to the
Environmental Reports.
4.1.26 Survey.
To the best of Borrower's knowledge, the Survey for each Property
delivered to Lender in connection with this Agreement does not fail to reflect
any material matter affecting such Property or the title thereto.
4.1.27 Intentionally Omitted.
4.1.28 Filing and Recording Taxes.
All transfer taxes, deed stamps, intangible taxes or other amounts in
the nature of transfer taxes required to be paid by any Person under applicable
Legal Requirements currently in effect in connection with the transfer of the
Properties to Borrower have been paid. All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Security Instruments, have been paid.
4.1.29 Franchise Agreement.
The Franchise Agreement, if applicable, for each Property is in full
force and effect, all franchise fees, reservation fees, royalties and other sums
due and payable thereunder have been paid in full to date, and neither Borrower,
Operating Lessee nor, to the best of Borrower's knowledge, Franchisor is in
default thereunder.
4.1.30 Management Agreement/Operating Lease.
(a) The Management Agreement for each Property is in full
force and effect and there is no default thereunder by Borrower, Operating
Lessee or, to Borrower's knowledge, Manager thereunder and, to the best of
Borrower's knowledge, no event has occurred that, with the passage of time
and/or the giving of notice would constitute a default thereunder
(b) The Operating Lease for each Property is in full
force and effect and there is no default thereunder by any party thereto
and no event has occurred that, with the passage of time and/or the giving
of notice would constitute a default thereunder.
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4.1.31 Illegal Activity.
No portion of any Property has been or will be purchased by Borrower or
Operating Lessee with proceeds of any illegal activity and to the best of
Borrower's knowledge, there are no illegal activities or activities relating to
any controlled substances at any Property.
4.1.32 No Change in Facts or Circumstances; Disclosure.
All information submitted by Borrower and Operating Lessee to Lender
and in all financial statements, rent rolls, reports, certificates and other
documents submitted in connection with the Loan or in satisfaction of the terms
thereof and all statements of fact made by Borrower and Operating Lessee in this
Agreement or in any other Loan Document, considered in the aggregate, are
accurate, complete and correct in all material respects. There has been no
material adverse change in any condition, fact, circumstance or event that would
make any such information inaccurate, incomplete or otherwise misleading in any
material respect or that otherwise materially and adversely affects or would
reasonably be expected to materially and adversely affect the use, operation or
value of the Properties or the business operations or the financial condition of
Borrower or Operating Lessee.
4.1.33 Investment Company Act.
Neither Borrower nor Operating Lessee is (a) an "investment company" or
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended; (b) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of either a
"holding company" or a "subsidiary company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended; or (c) subject to any other
federal or State law or regulation which purports to restrict or regulate its
ability to borrow money.
4.1.34 Principal Place of Business; State of Organization.
Borrower's principal place of business as of the date hereof is the
address set forth in the introductory paragraph of this Agreement. Each Borrower
is organized under the laws of the State of Delaware and Borrowers'
organizational identification numbers are set forth on EXHIBIT U attached
hereto.
4.1.35 Single Purpose Entity.
Borrower covenants and agrees that its organizational documents shall
provide that it has not, and shall not, and that the organizational documents of
its general partner(s), if Borrower is a partnership, or its managing member(s),
if Borrower is a limited liability company (in each case, "Principal") shall
provide that it has not and shall not:
(a) with respect to Borrower, engage in any business or
activity other than the acquisition, development, ownership, operation,
leasing, managing and maintenance of the Properties, and entering into the
Loan, and activities incidental thereto and with respect to
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Principal, engage in any business or activity other than the ownership of
its interest in Borrower, and activities incidental thereto;
(b) with respect to Borrower, acquire or own any material
assets other than (i) the Properties, and (ii) such incidental Personal
Property as may be necessary for the operation of the Property or
Properties, as the case may be and with respect to Principal, acquire or
own any material asset other than its interest in Borrower;
(c) merge into or consolidate with any person or entity
or dissolve, terminate or liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change its
legal structure;
(d) (i) fail to observe its organizational formalities or
preserve its existence as an entity duly organized, validly existing and in
good standing (if applicable) under the laws of the jurisdiction of its
organization or formation, and qualification to do business in the State
where a Property or Properties is located, if applicable, or (ii) without
the prior written consent of Lender, amend, modify, terminate or fail to
comply with the provisions of Borrower's Partnership Agreement, Articles of
Organization or similar organizational documents, as the case may be, or of
Principal's Certificate of Incorporation, Articles of Organization or
similar organizational documents, as the case may be, whichever is
applicable;
(e) own any subsidiary or make any investment in, any
Person without the prior written consent of Lender;
(f) commingle its assets with the assets of any of its
members, general partners, Affiliates, principals or of any other Person or
entity, participate in a cash management system (other than pursuant to the
Management Agreement) with any other entity or Person or fail to use its
own separate stationery, invoices and checks;
(g) with respect to Borrower, incur any debt, secured or
unsecured, direct or contingent (including, other than with respect to the
Maryland Guaranty, guaranteeing any obligation), other than (I) Permitted
Encumbrances, (II) the Permitted FF&E Financing and (III) the Debt, except
for trade payables in the ordinary course of its business of owning and
operating the Property or Properties as applicable, provided that such
trade debt (i) is not evidenced by a note, (ii) is paid within sixty (60)
days of the date incurred, (iii) does not exceed, in the aggregate, four
percent (4%) of the outstanding principal balance of the Note and (iv) is
payable to trade creditors and in amounts as are normal and reasonable
under the circumstances and with respect to Principal, incur any debt
secured or unsecured, direct or contingent (including guaranteeing any
obligations);
(h) become insolvent and fail to pay its debts and
liabilities (including, as applicable, shared personnel and overhead
expenses) from its assets as the same shall become due;
(i) (i) fail to maintain its records (including financial
statements), books of account and bank accounts separate and apart from
those of the members, general partners, principals and Affiliates of
Borrower or of Principal, as the case may be, the Affiliates of a member,
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general partner or principal of Borrower or of Principal, as the case may
be, and any other Person, (ii) permit its assets or liabilities to be
listed as assets or liabilities on the financial statement of any other
Person or (iii) include the assets or liabilities of any other Person on
its financial statements; except for consolidated financial statements
which contain a note indicating that Borrower's and Principal's separate
assets and liabilities are neither available to pay the debts of the
consolidated entity nor constitute obligations of the consolidated entity
(j) Other than in connection with the Operating Leases,
enter into any contract or agreement with any member, general partner,
principal or Affiliate of Borrower or of Principal, as the case may be, or
any member, general partner, principal or Affiliate thereof (other than a
business management services agreement with an Affiliate of Borrower,
provided that (i) such agreement is acceptable to Lender, (ii) the manager,
or equivalent thereof, under such agreement holds itself out as an agent of
Borrower and (iii) the agreement meets the standards set forth in this
subsection following this parenthetical), except upon terms and conditions
that are commercially reasonable, intrinsically fair and substantially
similar to those that would be available on an arms-length basis with third
parties other than any member, general partner, principal or Affiliate of
Borrower or of Principal, as the case may be, or any member, general
partner, principal or Affiliate thereof;
(k) seek the dissolution or winding up in whole, or in
part, of Borrower or of Principal, as the case may be;
(l) fail to correct any known misunderstandings regarding
the separate identity of Borrower, or of Principal, as the case may be, or
any member, general partner, principal or Affiliate thereof or any other
Person;
(m) other than Borrower's guaranty of Operating Lessee's
obligations under or pursuant to the Management Agreement, guarantee or
become obligated for the debts of any other Person or hold itself out to be
responsible for the debts of another Person;
(n) make any loans or advances to any third party,
including any member, general partner, principal or Affiliate of Borrower
or of Principal, as the case may be, or any member, general partner,
principal or Affiliate thereof, and shall not acquire obligations or
securities of any member, general partner, principal or Affiliate of
Borrower or Principal, as the case may be, or any member, general partner,
or Affiliate thereof;
(o) fail to file its own tax returns or be included on
the tax returns of any other Person except as required by Applicable Law;
(p) fail either to hold itself out to the public as a
legal entity separate and distinct from any other Person or to conduct its
business solely in its own name or a name franchised or licensed to it by
an entity other than an Affiliate of Borrower or of Principal, as the case
may be, and not as a division or part of any other entity in order not (i)
to mislead others as to the identity with which such other party is
transacting business, or (ii) to suggest that Borrower or Principal, as the
case may be, is responsible for the debts of any third party
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(including any member, general partner, principal or Affiliate of Borrower,
or of Principal, as the case may be, or any member, general partner,
principal or Affiliate thereof);
(q) fail to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character
and in light of its contemplated business operations;
(r) share any common logo (other than a name franchised
or licensed to it by an entity other than an Affiliate of Borrower or of
Principal) with or hold itself out as or be considered as a department or
division of (i) any general partner, principal, member or Affiliate of
Borrower or of Principal, as the case may be, (ii) any Affiliate of a
general partner, principal or member of Borrower or of Principal, as the
case may be, or (iii) any other Person;
(s) fail to allocate fairly and reasonably any overhead
expenses that are shared with an Affiliate, including paying for office
space and services performed by any employee of an Affiliate;
(t) pledge its assets for the benefit of any other
Person, and with respect to Borrower, other than with respect to the Loan;
(u) fail to maintain a sufficient number of employees in
light of its contemplated business operations;
(v) fail to provide in its (i) Articles of Organization,
Certificate of Formation and/or Operating Agreement, as applicable, if it
is a limited liability company, (ii) Limited Partnership Agreement, if it
is a limited partnership or (iii) Certificate of Incorporation, if it is a
corporation, that for so long as the Loan is outstanding pursuant to the
Note, this Agreement and the other Loan Documents, it shall not file or
consent to the filing of any petition, either voluntary or involuntary, to
take advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or make an assignment for the benefit of creditors
without the affirmative vote of the Independent Director and of all other
general partners/managing members/directors;
(w) fail to hold its assets in its own name;
(x) if Borrower or Principal is a corporation, fail to
consider the interests of its creditors in connection with all corporate
actions to the extent required by Applicable Law;
(y) have any of its obligations guaranteed by an
Affiliate;
(z) violate or cause to be violated the assumptions made
with respect to Borrower and Principal in the Insolvency Opinion;
(aa) with respect to Principal, or if Borrower is a single
member limited liability company that complies with the requirements of
Section 4.1.35(cc) below, fail at any time to have at least one independent
director/manager (an "Independent Director") that is not and has not been
for at least five (5) years: (a) a stockholder, director (other than an
independent
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director of an Affiliate of Borrower), officer, employee, partner,
member, attorney or counsel of Borrower or of Principal or any
Affiliate of either of them; (b) a customer, supplier or other Person
who derives its purchases or revenues (other than any fee paid to such
director as compensation for such director to serve as an Independent
Director) from its activities with Borrower, Principal or any Affiliate
of either of them (a "Business Party"); (c) a person or other entity
controlling or under common control with any such stockholder, partner,
member, director, officer, attorney, counsel or Business Party; or (d)
a member of the immediate family of any such stockholder, director,
officer, employee, partner, member, attorney, counsel or Business
Party; or
(bb) with respect to Principal, or if Borrower is a single
member limited liability company that complies with the requirements of
Section 4.1.35(cc) below, permit its board of directors/managers to
take any action which, under the terms of any applicable organizational
documents, requires the unanimous vote of one hundred percent (100%) of
the members of the board without the vote of the Independent Director.
(cc) In the event Borrower is a Delaware limited liability
company that does not have a managing member which complies with the
requirements for a Principal under this Section 4.1.35, the limited
liability company agreement of Borrower (the "LLC Agreement") shall
provide that (A) upon the occurrence of any event that causes the last
remaining member of Borrower ("Member") to cease to be the member of
Borrower (other than (1) upon an assignment by Member of all of its
limited liability company interest in Borrower and the admission of the
transferee in accordance with the Loan Documents and the LLC Agreement,
or (2) the resignation of Member and the admission of an additional
member of Borrower in accordance with the terms of the Loan Documents
and the LLC Agreement), any person designated by Borrower shall,
without any action of any other Person and simultaneously with the
Member ceasing to be the member of Borrower, automatically be admitted
to Borrower ("Special Member") and shall continue Borrower without
dissolution and (B) Special Member may not resign from Borrower or
transfer its rights as Special Member unless a successor Special Member
has been admitted to Borrower as Special Member in accordance with
requirements of Delaware law. The LLC Agreement shall further provide
that (v) Special Member shall automatically cease to be a member of
Borrower upon the admission to Borrower of a substitute Member, (w)
Special Member shall be a member of Borrower that has no interest in
the profits, losses and capital of Borrower and has no right to receive
any distributions of Borrower assets, (x) pursuant to Section 18-301 of
the Delaware Limited Liability Company Act (the "Act"), Special Member
shall not be required to make any capital contributions to Borrower and
shall not receive a limited liability company interest in Borrower, (y)
Special Member, in its capacity as Special Member, may not bind
Borrower and (z) except as required by any mandatory provision of the
Act, Special Member, in its capacity as Special Member, shall have no
right to vote on, approve or otherwise consent to any action by, or
matter relating to, Borrower, including, without limitation, the
merger, consolidation or conversion of Borrower. In order to implement
the admission to Borrower of Special Member, Special Member shall
execute a counterpart to the LLC Agreement. Prior to its admission to
Borrower as Special Member, Special Member shall not be a member of
Borrower.
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Upon the occurrence of any event that causes the Member to cease to be
a member of Borrower, to the fullest extent permitted by law, the personal
representative of Member shall, within ninety (90) days after the occurrence of
the event that terminated the continued membership of Member in Borrower, agree
in writing (A) to continue Borrower and (B) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute
member of Borrower, effective as of the occurrence of the event that terminated
the continued membership of Member of Borrower in Borrower. Any action initiated
by or brought against Member or Special Member under any Creditors Rights Laws
shall not cause Member or Special Member to cease to be a member of Borrower and
upon the occurrence of such an event, the business of Borrower shall continue
without dissolution. The LLC Agreement shall provide that each of Member and
Special Member waives any right it might have to agree in writing to dissolve
Borrower upon the occurrence of any action initiated by or brought against
Member or Special Member under any Creditors Rights Laws, or the occurrence of
an event that causes Member or Special Member to cease to be a member of
Borrower.
4.1.36 Business Purposes.
The Loan is solely for the business purpose of Borrower, and is not for
personal, family, household, or agricultural purposes.
4.1.37 Taxes.
Borrower and Operating Lessee have each filed all federal, State,
county, municipal, and city income and other tax returns required to have been
filed by it and has paid, prior to delinquency thereof, all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by it. Borrower and Operating Lessee know of no basis for
any additional assessment in respect of any such taxes and related liabilities
for prior years.
4.1.38 Intentionally Omitted.
4.1.39 Environmental Representations and Warranties.
Borrower represents and warrants, except as disclosed on those certain
written reports identified on EXHIBIT V attached hereto and made a part hereof
(collectively, the "Environmental Report") of each Property that: (a) there are
no Hazardous Materials or underground storage tanks in, on, or under any of the
Properties, except those that are both (i) in compliance with current
Environmental Laws and with permits issued pursuant thereto (if such permits are
required), and (ii) either (A) in amounts not in excess of that necessary to
operate, clean, repair and maintain the applicable Property or each tenant's
respective business at such Property as set forth in their respective Leases, or
(B) held by a tenant for sale to the public in its ordinary course of business,
(b) there are no past, present or threatened Releases of Hazardous Materials in
violation of any Environmental Law and which would require remediation by a
Governmental Authority in, on, under or from any of the Properties; (c) there is
no threat of any Release of Hazardous Materials migrating to any of the
Properties; (d) there is no present or, to Borrower's knowledge, prior
non-compliance with Environmental Laws, or with permits issued
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pursuant thereto, in connection with any of the Properties except as described
in the Environmental Reports; (e) Borrower and Operating Lessee do not know of,
and has not received, any written or oral notice or other communication from any
Person (including but not limited to a Governmental Authority) relating to
Hazardous Materials in, on, under or from any of the Properties; and (f)
Borrower and Operating Lessee have truthfully and fully provided to Lender, in
writing, any and all information relating to environmental conditions in, on,
under or from any of the Properties known to Borrower or Operating Lessee or
contained in Borrower's or Operating Lessee's files and records, including but
not limited to any reports relating to Hazardous Materials in, on, under or
migrating to or from any of the Properties and/or to the environmental condition
of the Properties.
4.1.40 Taxpayer Identification Number.
Each Borrower's United States taxpayer identification number is set
forth on EXHIBIT W hereto.
4.1.41 OFAC.
Borrower represents and warrants that neither Borrower, Operating
Lessee, Guarantor, Indemnitor or any of their respective Affiliates is a
Prohibited Person, and Borrower, Operating Lessee Guarantor, Indemnitor and
their respective Affiliates are in compliance in all material respects with all
applicable orders, rules, regulations and recommendations of The Office of
Foreign Assets Control of the U.S. Department of the Treasury.
4.1.42 Ground Lease Representations.
(a) (i) Each Ground Lease is in full force and effect and
has not been modified or amended in any manner whatsoever, (ii) there are
no defaults under any Ground Lease by Borrower, or, to the best of
Borrower's knowledge, landlord thereunder, and, to the best of Borrower's
knowledge, no event has occurred which but for the passage of time, or
notice, or both would constitute a default under such Ground Lease, (iii)
all rents, additional rents and other sums due and payable under each
Ground Lease have been paid in full, and (iv) neither Borrower nor the
landlord under each Ground Lease has commenced any action or given or
received any notice for the purpose of terminating such Ground Lease.
(b) The Ground Leases or a memorandum thereof have been
duly recorded, the Ground Leases permits the interest of the lessee
thereunder to be encumbered by the applicable Security Instrument, and
there has not been any change in the terms of the Ground Leases since their
recordation;
(c) Except as indicated in the related Title Insurance
Policy, Borrower's interest in the Ground Leases are not subject to any
Liens superior to, or of equal priority with, the applicable Security
Instrument;
(d) Borrower's interest in the Ground Leases are
assignable upon notice to, but without the consent of, the lessor
thereunder and, in the event that it is so assigned, it is further
assignable upon notice to, but without the need to obtain the consent of,
such lessor;
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(e) The Ground Leases require the lessor thereunder to
give notice of any default by Borrower to Lender and the Ground Leases
further provide that notice of termination given under the Ground
Leases are not effective against Lender unless a copy of the notice has
been delivered to Lender in the manner described in the applicable
Ground Lease;
(f) Lender is permitted a reasonable opportunity
(including, where necessary, sufficient time to gain possession of the
interest of Borrower under the Ground Leases) to cure any default under
the Ground Leases, which is curable after the receipt of notice of any
default before the lessor thereunder may terminate such Ground Lease;
(g) Each Ground Lease has a term which extends not less
than thirty-five (35) years beyond the Maturity Date;
(h) The Ground Leases require the lessor to enter into a
new lease upon termination of the applicable Ground Lease for any
reason, including rejection of such Ground Lease in a bankruptcy
proceeding;
(i) Under the terms of each Ground Lease and the
applicable Loan Documents, taken together, any Net Proceeds will be
applied either to the Restoration of all or part of the Properties,
with Lender or a trustee appointed by Lender having the right to hold
and disburse such Net Proceeds as the Restoration progresses, or to the
payment of the outstanding principal balance of the Loan together with
any accrued interest thereon; and
(j) The Ground Leases do not impose restrictions on
subletting.
SECTION 4.2 SURVIVAL OF REPRESENTATIONS.
Borrower agrees that all of the representations and warranties of
Borrower set forth in Section 4.1 and elsewhere in this Agreement and in the
other Loan Documents shall survive for so long as any amount remains owing to
Lender under this Agreement or any of the other Loan Documents by Borrower. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents by Borrower shall be deemed to have been relied upon
by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.
V. BORROWER COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS.
From the date hereof and until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Security Instruments encumbering the Properties (and all related
obligations) in accordance with the terms of this Agreement and the other Loan
Documents, Borrower hereby covenants and agrees with Lender that:
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5.1.1 Existence; Compliance with Legal Requirements.
(a) Borrower shall do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its
existence, rights, licenses, permits and franchises, and comply, in all
material respects, with all Legal Requirements applicable to it and the
Properties. There shall never be committed by Borrower or any other Person
in occupancy of or involved with the operation or use of the Properties any
act or omission affording the federal government or any State or local
government the right of forfeiture against any Property or any part thereof
or any monies paid in performance of Borrower's obligations under any of
the Loan Documents. Borrower hereby covenants and agrees not to commit,
permit or suffer to exist any act or omission affording such right of
forfeiture. Borrower shall, or shall cause Operating Lessee to, at all
times maintain, preserve and protect all franchises and trade names and
preserve all the remainder of its property used or useful in the conduct of
its business and shall keep the Properties in good working order and
repair, and from time to time make, or cause to be made, all reasonably
necessary repairs, renewals, replacements, betterments and improvements
thereto, all as more fully provided in the Security Instruments. Borrower
shall keep the Properties insured at all times by financially sound and
reputable insurers, to such extent and against such risks, and maintain
liability and such other insurance, as is more fully provided in this
Agreement.
(b) After prior written notice to Lender, Borrower, at
its own expense, may contest by appropriate legal proceeding promptly
initiated and conducted in good faith and with due diligence, the validity
of any Legal Requirement, the applicability of any Legal Requirement to
Borrower or any Property or any alleged violation of any Legal Requirement,
provided that (i) no Event of Default has occurred and remains uncured;
(ii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any instrument to which Borrower is
subject and shall not constitute a default thereunder and such proceeding
shall be conducted in accordance with all Legal Requirements; (iii) no
Property nor any part thereof or interest therein will be in danger of
being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall
promptly upon final determination thereof comply with any such Legal
Requirement determined to be valid or applicable or cure any violation of
any Legal Requirement; (v) such proceeding shall suspend the enforcement of
the contested Legal Requirement against Borrower or any Property; and (vi)
Borrower shall furnish such security as may be required in the proceeding,
or as may be reasonably requested by Lender, to insure compliance with such
Legal Requirement, together with all interest and penalties payable in
connection therewith. Lender may apply any such security or part thereof,
as necessary to cause compliance with such Legal Requirement at any time
when, in the judgment of Lender, the validity, applicability or violation
of such Legal Requirement is finally established or any Property (or any
part thereof or interest therein) shall be in danger of being sold,
forfeited, terminated, cancelled or lost.
5.1.2 Taxes and Other Charges.
Borrower shall pay all Taxes and Other Charges now or hereafter levied
or assessed or imposed against the Properties or any part thereof prior to
delinquency thereof. Borrower shall
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furnish to Lender receipts, or other evidence for the payment of the Taxes and
the Other Charges prior to the date the same shall become delinquent (provided,
however, that Borrower is not required to furnish such receipts for payment of
Taxes in the event that such Taxes are being paid by Lender pursuant to the
terms hereof). Borrower shall not suffer and shall promptly cause to be paid and
discharged any Lien or charge whatsoever which may be or become a Lien or charge
against the Properties, and shall promptly pay for all utility services provided
to the Properties. After prior written notice to Lender, Borrower, at its own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any Taxes or Other Charges, provided that (i)
no Event of Default has occurred and remains uncured; (ii) such proceeding shall
be permitted under and be conducted in accordance with the provisions of any
other instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all Legal
Requirements; (iii) no Property nor any part thereof or interest therein will be
in danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower
shall promptly upon final determination thereof pay the amount of any such Taxes
or Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith; (v) such proceeding shall suspend the
collection of such contested Taxes or Other Charges from the applicable
Property; and (vi) Borrower shall furnish such security as may be required in
the proceeding, or as may be requested by Lender, to insure the payment of any
such Taxes or Other Charges, together with all interest and penalties thereon.
Lender may apply such security or part thereof held by Lender at any time when,
in the judgment of Lender, the validity or applicability of such Taxes or Other
Charges are established or any Property (or part thereof or interest therein)
shall be in danger of being sold, forfeited, terminated, cancelled or lost or
there shall be any danger of the Lien of any Security Instrument being primed by
any related Lien.
5.1.3 Litigation.
Borrower shall give prompt written notice to Lender of any litigation
or governmental proceedings pending or threatened against Borrower which might
materially adversely affect Borrower's condition (financial or otherwise) or
business or any Property.
5.1.4 Access to Properties.
Borrower shall permit agents, representatives and employees of Lender
to inspect the Properties or any part thereof at reasonable hours upon
reasonable advance notice.
5.1.5 Notice of Default.
Borrower shall promptly advise Lender of any material adverse change in
Borrower's condition, financial or otherwise, or of the occurrence of any
Default or Event of Default of which Borrower has knowledge.
5.1.6 Cooperate in Legal Proceedings.
Borrower shall cooperate fully with Lender with respect to any
proceedings before any court, board or other Governmental Authority which may in
any way adversely affect the rights
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of Lender hereunder or any rights obtained by Lender under any of the other Loan
Documents and, in connection therewith, permit Lender, at its election, to
participate in any such proceedings.
5.1.7 Award and Insurance Benefits.
Borrower shall cooperate with Lender in obtaining for Lender the
benefits of any Awards or Insurance Proceeds lawfully or equitably payable in
connection with any Property, and Lender shall be reimbursed for any expenses
incurred in connection therewith (including attorneys' fees and disbursements,
and the payment by Borrower of the expense of an appraisal on behalf of Lender
in case of Casualty or Condemnation affecting any Property or any part thereof)
out of such Award or Insurance Proceeds.
5.1.8 Further Assurances.
Borrower shall, at Borrower's sole cost and expense:
(a) furnish to Lender all instruments, documents,
boundary surveys, footing or foundation surveys, certificates, plans and
specifications, appraisals, title and other insurance reports and
agreements, and each and every other document, certificate, agreement and
instrument required to be furnished by Borrower pursuant to the terms of
the Loan Documents or reasonably requested by Lender in connection
therewith;
(b) execute and deliver to Lender such documents,
instruments, certificates, assignments and other writings, and do such
other acts necessary or desirable, to evidence, preserve and/or protect the
collateral at any time securing or intended to secure the obligations of
Borrower under the Loan Documents, as Lender may reasonably require
including, without limitation, the authorization of Lender to execute
and/or the execution by Borrower of UCC financing statements and the
execution and delivery of all such writings necessary to transfer any
liquor licenses into the name of Lender or its designee after the
occurrence of any Event of Default; and
(c) do and execute all and such further lawful and
reasonable acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of this Agreement and
the other Loan Documents, as Lender shall reasonably require from time to
time.
5.1.9 Mortgage and Intangible Taxes.
Borrower shall pay (to the extent permitted by Applicable Law) all
State, county and municipal recording, mortgage, intangible, and all other taxes
imposed upon the execution and recordation of the Security Instruments and/or
upon the execution and delivery of the Note.
5.1.10 Financial Reporting.
(a) Borrower and Operating Lessee will keep and maintain
or will cause to be kept and maintained on a Fiscal Year basis, in
accordance with GAAP (or such other
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accounting basis acceptable to Lender), proper and accurate books, records
and accounts reflecting all of the financial affairs of Borrower and
Operating Lessee and all items of income and expense in connection with the
operation on an individual basis of the Properties. Lender shall have the
right from time to time at all times during normal business hours upon
reasonable notice to examine such books, records and accounts at the office
of Borrower, Operating Lessee or any other Person maintaining such books,
records and accounts and to make such copies or extracts thereof as Lender
shall desire. Upon the occurrence and during the continuance of an Event of
Default, Borrower shall pay any costs and expenses incurred by Lender to
examine Borrower's accounting records with respect to the Properties, as
Lender shall determine to be necessary or appropriate. All operating and
profits and loss statements required pursuant to this Section 5.1.10 shall
be prepared for each Property and for the Properties taken as a whole. All
other statements required pursuant to this Section 5.1.10 shall be prepared
for the Properties taken as a whole.
(b) Borrower will furnish to Lender annually, within
ninety (90) days following the end of each Fiscal Year, a complete copy of
(i) upon Lender's request following an Event of Default, Operating Lessee's
annual financial statements audited by a "Big Four" accounting firm or
other independent certified public accountant acceptable to Lender
accompanied by a consolidating schedule reflecting the results of operation
of each Property individually, (ii) Operating Lessee's and Borrower's
annual financial statements certified by a Responsible Officer of Borrower
or Operating Lessee, as applicable, both in accordance with GAAP (or such
other accounting basis acceptable to Lender) covering the Properties for
such Fiscal Year and containing statements of profit and loss and a balance
sheet and (iii) an operating statement certified by a Responsible Officer
of Borrower for each Property and the Properties taken as a whole which
present the operating results of the Properties in a manner consistent with
those operating statements given by Borrower to Lender in connection with
Lender's underwriting of the Loan, which operating statement shall be in
substantially the form attached hereto as EXHIBIT X. Such statements
referred to in subsection (iii) above shall set forth the financial
condition and the results of operations of the Properties for such Fiscal
Year, and shall include, but not be limited to, amounts representing annual
Net Cash Flow, Net Operating Income, Gross Income From Operations and
Operating Expenses. Borrower's and Operating Lessee's annual financial
statements shall be accompanied by (i) a comparison of the budgeted income
and expenses and the actual income and expenses for the prior Fiscal Year,
(ii) a certificate executed by a Responsible Officer or other appropriate
officer of Borrower, an Operating Lessee SPE Entity or Principal, as
applicable, stating that each such annual financial statement presents
fairly the financial condition and the results of operations of Borrower,
Operating Lessee and the Properties being reported upon and has been
prepared in accordance with GAAP, and (iii) an annual occupancy report for
such year, including the average daily room rate for such year.
Notwithstanding the foregoing, for calendar year 2003 only, the statements
required pursuant to Section 5.1.10(b)(i) and (ii) hereof shall assume
Borrower's operations commenced on July 1, 2003.
(c) Borrower will furnish, or cause to be furnished, to
Lender on or before forty-five (45) days after the end of each calendar
quarter (or within thirty (30) days after
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the end of each calendar month in the case of (ii) below) the following
items, accompanied by a certificate of a Responsible Officer or other
appropriate officer of Borrower or Principal, as applicable, stating that
such items are true, correct, accurate, and complete and fairly present the
results of the operations of Borrower and the Properties: (i) a report of
occupancy for the subject quarter including an average daily rate, and any
and all franchise inspection reports received by Borrower during the
subject quarter accompanied by an Officer's Certificate with respect
thereto; (ii) monthly and year-to-date operating statements (including
Capital Expenditures) presented for each Property and the Properties taken
as a whole in a form consistent with the operating statements delivered by
Borrower to Lender in connection with Lender's underwriting of the Loan)
which operating statement shall be in substantially the form attached
hereto as EXHIBIT Y) and prepared for each calendar monthly, noting Net
Operating Income, Gross Income from Operations, and Operating Expenses (not
including any contributions to the Replacement Reserve Fund), and other
information necessary and sufficient to fairly present the results of
operation of the Properties during such calendar month, and containing a
comparison of budgeted income and expenses and the actual income and
expenses, (iii) a detailed explanation of any variances which are both (I)
ten percent (10%) or more and (II) in excess of $20,000 between budgeted
and actual amounts for such periods, all in form satisfactory to Lender;
(iv) a calculation reflecting the annual Debt Service Coverage Ratio for
the immediately preceding twelve (12) month period as of the last day of
such quarter accompanied by an Officer's Certificate with respect thereto;
(v) a ▇▇▇▇▇ Travel Research STAR Report or similar market benchmarking
service and (vi) a certificate (a "Compliance Certificate") demonstrating
compliance with the Required Ratios.
(d) Beginning in Fiscal Year 2004 and for each Fiscal
Year thereafter during the term of the Loan, (I) Borrower shall submit to
Lender a preliminary Annual Budget for each Property not later than thirty
(30) days prior to the commencement of such Fiscal Year and (II) Borrower
shall submit to Lender a final proposed Annual Budget for each Property not
later than sixty (60) days after to the commencement of such Fiscal Year,
each in form reasonably satisfactory to Lender, and shall be subject to
Lender's written approval (each such Annual Budget after it has been
approved in writing by Lender shall be hereinafter referred to as an
"Approved Annual Budget"). In the event that Lender objects to either the
preliminary or final proposed Annual Budget submitted by Borrower, Lender
shall advise Borrower of such objections within fifteen (15) days after
receipt respectively thereof (and deliver to Borrower a reasonably detailed
description of such objections) and Borrower shall promptly revise such
Annual Budget and resubmit the same to Lender. Lender shall advise Borrower
of any objections to such revised Annual Budget within ten (10) days after
receipt thereof (and deliver to Borrower a reasonably detailed description
of such objections) and Borrower shall promptly revise the same in
accordance with the process described in this subsection until Lender
approves the Annual Budget. Until such time that Lender approves a proposed
Annual Budget, the most recently Approved Annual Budget shall apply;
provided that, such Approved Annual Budget shall be adjusted to reflect
actual increases in Taxes, Insurance Premiums and utilities expenses. Any
such preliminary or final proposed Annual Budget submitted to Lender for
Lender's approval shall be deemed approved if Lender shall have failed to
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notify Borrower of its approval or disapproval within fifteen (15) Business
Days following Lender's receipt of Borrower's written request together with
such preliminary or final proposed Annual Budget, as the case may be, and
any and all required information and documentation required by Lender to
reach a decision, provided, such request to Lender is marked in bold
lettering with the following language: "LENDER'S RESPONSE IS REQUIRED
WITHIN FIFTEEN (15) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE
TERMS OF A LOAN FACILITY AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER" and
the envelope containing the request must be marked "PRIORITY".
(e) Borrower shall furnish to Lender, within ten (10)
Business Days after written request such further detailed information with
respect to the operation of the Properties and the financial affairs of
Borrower as may be reasonably requested by Lender.
(f) Any reports, statements or other information required
to be delivered under this Agreement shall be delivered (i) in paper form,
(ii) if requested by Lender, on a diskette or via email, and (iii) if
requested by Lender and within the capabilities of Borrower's data systems
without change or modification thereto, in electronic form and prepared
using a Microsoft Excel, Microsoft Word for Windows or WordPerfect for
Windows files (which files may be prepared using a spreadsheet program and
saved as word processing files).
5.1.11 Business and Operations.
Borrower and Operating Lessee will continue to engage in the businesses
presently conducted by them as and to the extent the same are necessary for the
ownership, maintenance, management and operation of the Properties. Borrower and
Operating Lessee will remain in good standing under the laws of each
jurisdiction to the extent required for the ownership, maintenance, management
and operation of the Properties.
5.1.12 Costs of Enforcement.
In the event (a) that any Security Instrument encumbering any Property
is foreclosed in whole or in part or that any such Security Instrument is put
into the hands of an attorney for collection, suit, action or foreclosure, (b)
of the foreclosure of any mortgage prior to or subsequent to any Security
Instrument encumbering any Property in which proceeding Lender is made a party,
or (c) of the bankruptcy, insolvency, rehabilitation or other similar proceeding
in respect of Borrower, Operating Lessee or any of their constituent Persons or
an assignment by Borrower, Operating Lessee or any of their constituent Persons
for the benefit of its creditors, Borrower, Operating Lessee, their successors
or assigns, shall be chargeable with and agrees to pay all costs of collection
and defense, including attorneys' fees and costs, incurred by Lender, Borrower,
or Operating Lessee in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, together with all required
service or use taxes.
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5.1.13 Estoppel Statement.
(a) After written request by Lender, Borrower shall
within ten (10) Business Days furnish Lender with a statement, duly
acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Note, (ii) the unpaid principal amount of the Note,
(iii) the Applicable Interest Rate of the Note, (iv) the date installments
of interest and/or principal were last paid, (v) any offsets or defenses to
the payment of the Debt, and (vi) that the Note, this Agreement, the
Security Instruments and the other Loan Documents are valid, legal and
binding obligations and have not been modified or if modified, giving
particulars of such modification.
(b) Borrower shall deliver to Lender upon request, tenant
estoppel certificates from each commercial tenant leasing space at the
Properties in form and substance reasonably satisfactory to Lender.
(c) Borrower shall use commercially reasonable efforts,
promptly upon request of Lender, deliver an estoppel certificate from
Franchisor stating that (i) the Franchise Agreement is in full force and
effect and has not been modified, amended or assigned, (ii) neither
Franchisor nor Operating Lessee is in default under any of the terms,
covenants or provisions of the Franchise Agreement and Franchisor knows of
no event which, but for the passage of time or the giving of notice or
both, would constitute an event of default under the Franchise Agreement,
(iii) neither Franchisor nor Operating Lessee has commenced any action or
given or received any notice for the purpose of terminating the Franchise
Agreement and (iv) all sums due and payable to Franchisor under the
Franchise Agreement have been paid in full.
(d) Borrower shall, promptly upon request of Lender,
deliver to Lender an estoppel certificate from Operating Lessee stating
that (i) the Operating Lease is in full force and effect and has not been
modified, amended or assigned, (ii) neither Operating Lessee nor Borrower
is in default under any of the terms, covenants or provisions of the
Operating Lease and Operating Lessee knows of no event which, but for the
passage of time or the giving of notice or both, would constitute an event
of default under the Operating Lease, (iii) neither Operating Lessee nor
Borrower has commenced any action or given or received any notice for the
purpose of terminating the Operating Lease and (iv) all sums due and
payable under the Operating Lease have been paid in full.
5.1.14 Intentionally Omitted.
5.1.15 Performance by Borrower.
Borrower shall in a timely manner observe, perform and fulfill each and
every covenant, term and provision of each Loan Document executed and delivered
by, or applicable to, Borrower, and shall not enter into or otherwise suffer or
permit any amendment, waiver, supplement, termination or other modification of
any Loan Document executed and delivered by, or applicable to, Borrower without
the prior written consent of Lender.
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5.1.16 Intentionally Omitted.
5.1.17 Leasing Matters.
(a) With respect to any Property, Borrower may (and may
allow Operating Lessee to) enter into a proposed Lease (including the
renewal or extension of an existing Lease (a "Renewal Lease")) without
the prior written consent of Lender, provided such proposed Lease or
Renewal Lease (i) provides for rental rates and terms comparable to
existing local market rates and terms (taking into account the type and
quality of the tenant) as of the date such Lease is executed by
Borrower or Operating Lessee (unless, in the case of a Renewal Lease,
the rent payable during such renewal, or a formula or other method to
compute such rent, is provided for in the original Lease), (ii) is an
arms-length transaction with a bona fide, independent third party
tenant, (iii) does not have a material adverse effect on the value or
quality of the applicable Property, (iv) is subject and subordinate to
the related Security Instrument and, upon Lender's reasonable request,
the lessee thereunder agrees to attorn to Lender and (v) is not a Major
Lease. All proposed Leases which do not satisfy the requirements set
forth in this Section shall be subject to the prior approval of Lender,
which approval shall not be unreasonably withheld. At Lender's request,
Borrower shall promptly deliver to Lender copies of all Leases which
are entered into pursuant to this Subsection together with Borrower's
certification that it has satisfied all of the conditions of this
Section.
(b) Borrower and/or Operating Lessee, as applicable, (i)
shall observe and perform all the obligations imposed upon the lessor
under the Major Leases and shall not do or permit to be done anything
to impair the value of any of the Major Leases as security for the
Debt; (ii) shall promptly send copies to Lender of all notices of
default or other material matters which Borrower or Operating Lessee
shall send or receive with respect to the Major Leases; (iii) shall
enforce all of the material terms, covenants and conditions contained
in the Major Leases upon the part of the tenant thereunder to be
observed or performed (except for termination of a Major Lease which
shall require Lender's prior written approval); (iv) shall not collect
any of the Rents more than one (1) month in advance (except Security
Deposits shall not be deemed Rents collected in advance); (v) shall not
execute any other assignment of the lessor's interest in any of the
Leases or the Rents; and (vi) shall not consent to any assignment of or
subletting under any Major Leases not in accordance with their terms,
without the prior written consent of Lender.
(c) Borrower may (and may allow Operating Lessee to),
without the consent of Lender, amend, modify or waive the provisions of
any Lease or terminate, reduce rents under, accept a surrender of space
under, or shorten the term of, any Lease (including any guaranty,
letter of credit or other credit support with respect thereto) provided
that such Lease is not a Major Lease and that such action (taking into
account, in the case of a termination, reduction in rent, surrender of
space or shortening of term, the planned alternative use of the
affected space) does not have a material adverse effect on the value of
the applicable Property taken as a whole, and provided that such Lease,
as amended, modified or waived, is otherwise in compliance with the
requirements of this Agreement
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and any lease subordination agreement binding upon Lender with respect
to such Lease. A termination of a Lease (other than a Major Lease) with
a tenant who is in default beyond applicable notice and grace periods
shall not be considered an action which has a material adverse effect
on the value of the applicable Property taken as a whole. Any
amendment, modification, waiver, termination, rent reduction, space
surrender or term shortening which does not satisfy the requirements
set forth in this Subsection shall be subject to the prior written
approval of Lender and its counsel, at Borrower's expense. At Lender's
request, Borrower shall promptly deliver to Lender copies of all
Leases, amendments, modifications and waivers which are entered into
pursuant to this Section together with Borrower's certification that it
has satisfied all of the conditions of this Section.
(d) Notwithstanding anything contained herein to the
contrary, with respect to any Property, Borrower shall not (and shall
not allow Operating Lessee to), without the prior written consent of
Lender, enter into, materially amend, materially modify, waive any
material provisions of, terminate, reduce rents under, accept a
surrender of space under, or shorten the term of, or renew or extend
upon terms and conditions less favorable to Operating Lessee, any Major
Lease or any instrument guaranteeing or providing credit support for
any Major Lease.
(e) To the extent actually received by Lender, Lender
shall hold any and all monies representing security deposits under the
Leases (the "Security Deposits") received by Lender, in accordance with
the terms of the respective Lease, and shall only release the Security
Deposits in order to return a tenant's Security Deposit to such tenant
if such tenant is entitled to the return of the Security Deposit under
the terms of the Lease.
5.1.18 Management Agreement.
(a) The Improvements on the Properties are operated under
the terms and conditions of the Management Agreement. In no event shall
the base management fees under the Management Agreement exceed (I) with
respect to the Properties managed by Six Continents Hotels, the sum of
(x) five percent (5%) of total room revenue and (y) two percent (2%) of
total revenue; provided, however, Six Continents Hotels shall not
charge any additional franchise fees in connection with such Properties
and (II) with respect to the Properties managed by any Person other
than Six Continents Hotels, four percent (4%) of the gross income
derived from the Property (excluding any incentive management fees
which are subordinate to the Loan). Borrower shall (or shall cause
Operating Lessee to) (i) diligently perform and observe all of the
terms, covenants and conditions of the Management Agreement, on the
part of Operating Lessee to be performed and observed to the end that
all things shall be done which are necessary to keep unimpaired the
rights of Operating Lessee under the Management Agreement and (ii)
promptly notify Lender of the giving of any notice by Manager to
Operating Lessee of any default by Operating Lessee in the performance
or observance of any of the terms, covenants or conditions of the
Management Agreement on the part of Operating Lessee to be performed
and observed and deliver to Lender a true copy of each such notice.
Neither Borrower nor Operating Lessee shall surrender the Management
Agreement, consent to the assignment by the Manager of
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its interest under the Management Agreement, or terminate or cancel the
Management Agreement, or modify, change, supplement, alter or amend the
Management Agreement, in any material respect, either orally or in
writing. Borrower hereby assigns (and Borrower shall cause Operating
Lessee to assign) to Lender as further security for the payment of the
Debt and for the performance and observance of the terms, covenants and
conditions of this Agreement, all the rights, privileges and
prerogatives of Borrower and/or Operating Lessee to surrender the
Management Agreement, or to terminate, cancel, modify, change,
supplement, alter or amend the Management Agreement, in any material
respect, and any such surrender of the Management Agreement, or
termination, cancellation, modification, change, supplement, alteration
or amendment of the Management Agreement in any material respect,
without the prior consent of Lender, shall be void and of no force and
effect. If Operating Lessee shall default in the performance or
observance of any material term, covenant or condition of the
Management Agreement on the part of Operating Lessee to be performed or
observed, then, without limiting the generality of the other provisions
of this Agreement, and without waiving or releasing Borrower from any
of its obligations hereunder, Lender shall have the right, but shall be
under no obligation, to pay any sums and to perform any act or take any
action as may be appropriate to cause all the terms, covenants and
conditions of the Management Agreement on the part of Operating Lessee
to be performed or observed to be promptly performed or observed on
behalf of Operating Lessee to the end that the rights of Operating
Lessee in, to and under the Management Agreement shall be kept
unimpaired and free from default. Lender and any Person designated by
Lender by written notice to Borrower shall have, and are hereby
granted, the right to enter upon the applicable Property at any time
and from time to time for the purpose of taking any such action. If the
Manager shall deliver to Lender a copy of any notice sent to Borrower
and/or Operating Lessee of default under the Management Agreement, such
notice shall constitute full protection to Lender for any action taken
or omitted to be taken by Lender in good faith, in reliance thereon.
Borrower and Operating Lessee shall not, and shall not permit the
Manager to, sub-contract all or any material portion of its management
responsibilities under the Management Agreement to a third-party
without the prior written consent of Lender, which consent shall not be
unreasonably withheld. Borrower shall, from time to time, cause
Operating Lessee to request of Manager and deliver to Lender upon
receipt such certificates of estoppel with respect to compliance by
Operating Lessee with the terms of the Management Agreement as may be
reasonably requested by Lender. Borrower and/or Operating Lessee shall
exercise each individual option, if any, to extend or renew the term of
the Management Agreement to the extent required to continue it in full
force and effect until after the Maturity Date, and Borrower hereby
authorizes and appoints (and shall cause Operating Lessee to authorize
and appoint) Lender their attorney-in-fact to exercise any such option
in the name of and upon behalf of Borrower and/or Operating Lessee,
which power of attorney shall be irrevocable and shall be deemed to be
coupled with an interest. Any sums expended by Lender pursuant to this
paragraph (i) shall bear interest at the Default Rate from the date
such cost is incurred to the date of payment to Lender, (ii) shall be
deemed to constitute a portion of the Debt, (iii) shall be secured by
the lien of the Security Instruments and the other Loan Documents and
(iv) shall be immediately due and payable upon demand by Lender
therefor.
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(b) Without limitation of the foregoing, Borrower shall
cause Operating Lessee, upon the request of Lender and in accordance
with the provisions of the applicable Assignment of Management
Agreement, to terminate the Management Agreement and replace the
Manager, without penalty or fee, if at any time during the Loan: (a)
the Manager shall become insolvent or a debtor in any bankruptcy or
insolvency proceeding, (b) there exists an Event of Default or (c)
there exists an event of default by Manager under the Management
Agreement. At all times, a Qualified Manager shall manage each Property
pursuant to the Management Agreement or a Replacement Management
Agreement, as applicable.
5.1.19 Environmental Covenants.
(a) Borrower covenants and agrees that so long as the
Loan is outstanding (i) all uses and operations on or of the
Properties, whether by Borrower or any other Person, shall be in
compliance in all material respects with all Environmental Laws and
permits issued pursuant thereto; (ii) there shall be no Releases of
Hazardous Materials in, on, under or from any of the Properties; (iii)
there shall be no Hazardous Materials in, on, or under any of the
Properties, except those that are both (A) in compliance with all
Environmental Laws and with permits issued pursuant thereto, if and to
the extent required, and (B) (1) in amounts not in excess of that
necessary to operate the applicable Property or (2) fully disclosed to
and approved by Lender in writing; (iv) Borrower shall keep the
Properties free and clear of all liens and other encumbrances imposed
pursuant to any Environmental Law, whether due to any act or omission
of Borrower or any other Person (the "Environmental Liens"); (v)
Borrower shall, at its sole cost and expense, fully and expeditiously
cooperate in all activities pursuant to paragraph (b) below, including
but not limited to providing all relevant information and making
knowledgeable persons available for interviews; (vi) Borrower shall, at
its sole cost and expense, perform any environmental site assessment or
other investigation of environmental conditions in connection with any
of the Properties, pursuant to any reasonable written request of
Lender, upon Lender's reasonable belief that a Property is not in full
compliance with all Environmental Laws, and share with Lender the
reports and other results thereof, and Lender and other Indemnified
Parties shall be entitled to rely on such reports and other results
thereof; (vii) Borrower shall, at its sole cost and expense, comply
with all reasonable written requests of Lender to (A) reasonably
effectuate remediation of any Hazardous Materials in, on, under or from
any Property; and (B) comply with any Environmental Law; (viii)
Borrower shall not allow any tenant or other user of any of the
Properties to violate any Environmental Law; and (ix) Borrower shall
immediately notify Lender in writing after it has become aware of (A)
any presence or Release or threatened Releases of Hazardous Materials
in, on, under, from or migrating towards any of the Properties; (B) any
non-compliance with any Environmental Laws related in any way to any of
the Properties; (C) any actual or potential Environmental Lien; (D) any
required or proposed remediation of environmental conditions relating
to any of the Properties; and (E) any written or oral notice or other
communication of which Borrower becomes aware from any source
whatsoever (including but not limited to a Governmental Authority)
relating in any way to Hazardous Materials in connection with the
Properties.
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(b) Lender and any other Person designated by Lender by
written notice to Borrower, including but not limited to any
representative of a Governmental Authority, and any environmental
consultant, and any receiver appointed by any court of competent
jurisdiction, shall have the right, but not the obligation, to enter
upon any Property at all reasonable times to assess any and all aspects
of the environmental condition of any Property and its use, including
but not limited to conducting any environmental assessment or audit
(the scope of which shall be determined in Lender's sole and absolute
discretion) and taking samples of soil, groundwater or other water,
air, or building materials, and conducting other invasive testing.
Borrower shall cooperate with and provide access to Lender and any such
Person or entity designated by Lender by written notice to Borrower.
5.1.20 Alterations.
Borrower shall obtain Lender's prior written consent to (i) any
structural alteration or (ii) any other alteration to any Improvements which is
estimated to cost in excess of four percent (4%) of the Property Value of the
applicable Property, which consent shall not be unreasonably withheld except
with respect to alterations that may have a material adverse effect on
Borrower's financial condition, the value of the related Property or the Net
Operating Income thereof.
5.1.21 Franchise Agreement.
The Improvements on the Properties shall be operated under the terms
and conditions of the Franchise Agreements, if applicable or a replacement
franchise agreement approved by Lender (unless such franchise agreement is
substantially in the same form and substance as the Franchise Agreements) with a
Franchisor approved by Lender. Borrower shall (or shall cause Operating Lessee
to) (i) pay all sums required to be paid by Operating Lessee under the Franchise
Agreement, (ii) diligently perform, observe and enforce all of the terms,
covenants and conditions of the Franchise Agreement on the part of Operating
Lessee to be performed, observed and enforced to the end that all things shall
be done which are necessary to keep unimpaired the rights of Borrower and/or
Operating Lessee under the Franchise Agreement, (iii) promptly notify Lender of
the giving of any notice to Operating Lessee of any default by Operating Lessee
in the performance or observance of any of the terms, covenants or conditions of
the Franchise Agreement on the part of Operating Lessee to be performed and
observed and deliver to Lender a true copy of each such notice, and (iv)
promptly deliver to Lender a copy of each financial statement, business plan,
Quality Assurance Report, capital expenditure plan, notice, report and estimate
received by it under the Franchise Agreement. Borrower shall not (and shall
cause Operating Lessee to not), without the prior consent of Lender, surrender
the Franchise Agreement or terminate or cancel the Franchise Agreement or
modify, change, supplement, alter or amend the Franchise Agreement, in any
material respect, either orally or in writing, and Borrower hereby assigns (and
Borrower shall cause Operating Lessee to assign) to Lender as further security
for the payment of the Debt and for the performance and observance of the terms,
covenants and conditions of this Agreement, all the rights, privileges and
prerogatives of Borrower and Operating Lessee to surrender the Franchise
Agreement or to terminate, cancel, modify, change, supplement, alter or amend
the Franchise Agreement in any material respect, and any such surrender of the
Franchise Agreement or termination,
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cancellation, modification, change, supplement, alteration or amendment of the
Franchise Agreement in any material respect without the prior consent of Lender
shall be void and of no force and effect. If Operating Lessee shall default in
the performance or observance of any material term, covenant or condition of the
Franchise Agreement on the part of Operating Lessee to be performed or observed,
then, without limiting the generality of the other provisions of this Agreement,
and without waiving or releasing Borrower from any of its obligations hereunder,
Lender shall have the right, but shall be under no obligation, to pay any sums
and to perform any act or take any action as may be appropriate to cause all the
terms, covenants and conditions of the Franchise Agreement on the part of
Operating Lessee to be performed or observed to be promptly performed or
observed on behalf of Operating Lessee, to the end that the rights of Operating
Lessee in, to and under the Franchise Agreement shall be kept unimpaired and
free from default. Lender and any Person designated by Lender by written notice
to Borrower shall have, and are hereby granted, the right to enter upon the
Properties at any time and from time to time for the purpose of taking any such
action. If Franchisor shall deliver to Lender a copy of any notice sent to
Borrower and/or Operating Lessee of default under the Franchise Agreement, such
notice shall constitute full protection to Lender for any action taken or
omitted to be taken by Lender in good faith, in reliance thereon. Borrower
shall, from time to time, use its best efforts to obtain from Franchisor such
certificates of estoppel with respect to compliance by Operating Lessee with the
terms of the Franchise Agreement as may be requested by Lender. Borrower and/or
Operating Lessee shall exercise each individual option, if any, to extend or
renew the term of the Franchise Agreement to the extent required to continue it
in full force and effect until after the Maturity Date, and Borrower hereby
expressly authorizes and appoints (and Borrower shall cause Operating Lessee to
authorize and appoint) Lender as its attorney-in-fact to exercise any such
option in the name of and upon behalf of Borrower and/or Operating Lessee, which
power of attorney shall be irrevocable and shall be deemed to be coupled with an
interest. Any sums expended by Lender pursuant to this paragraph shall bear
interest at the Default Rate from the date such cost is incurred to the date of
payment to Lender, shall be deemed to constitute a portion of the Debt, shall be
secured by the lien of the Security Instruments and the other Loan Documents and
shall be immediately due and payable upon demand by Lender therefor.
5.1.22 Operating Lease.
Borrower shall:
(a) promptly perform and/or observe all of the covenants
and agreements required to be performed and observed by it under the
Operating Lease and do all things necessary to preserve and to keep
unimpaired its rights thereunder;
(b) promptly notify Lender of any event of default under
the Operating Lease;
(c) promptly enforce the performance and observance of
all of the covenants and agreements required to be performed and/or
observed by the Operating Lessee under the Operating Lease.
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5.1.23 OFAC.
At all times throughout the term of the Loan, Borrower, Guarantor,
Indemnitor and their respective Affiliates shall be in compliance in all
material respects with all applicable orders, rules, regulations and
recommendations of The Office of Foreign Assets Control of the U.S. Department
of the Treasury.
5.1.24 The Ground Lease.
(a) With respect to each Ground Lease, (a) Borrower shall
(i) pay all rents, additional rents and other sums required to be paid
by Borrower, as tenant under and pursuant to the provisions of each
Ground Lease, (ii) diligently perform and observe all of the terms,
covenants and conditions of each Ground Lease on the part of Borrower,
as tenant thereunder, (iii) promptly notify Lender of the giving of any
notice by the landlord under the applicable Ground Lease to Borrower of
any default by Borrower, as tenant thereunder, and deliver to Lender a
true copy of each such notice within five (5) Business Days of receipt
and (iv) promptly notify Lender of any bankruptcy, reorganization or
insolvency of the landlord under the applicable Ground Lease or of any
notice thereof, and deliver to Lender a true copy of such notice within
five (5) Business Days of Borrower's receipt. Borrower shall not,
without the prior consent of Lender, surrender the leasehold estate
created by the applicable Ground Lease or terminate or cancel any
Ground Lease or modify, change, supplement, alter or amend any Ground
Lease, either orally or in writing, and if Borrower shall default in
the performance or observance of any term, covenant or condition of any
Ground Lease on the part of Borrower, as tenant thereunder, and shall
fail to cure the same prior to the expiration of any applicable cure
period provided thereunder, Lender shall have the right, but shall be
under no obligation, to pay any sums and to perform any act or take any
action as may be appropriate to cause all of the terms, covenants and
conditions of such Ground Lease on the part of Borrower to be performed
or observed on behalf of Borrower, to the end that the rights of
Borrower in, to and under such Ground Lease shall be kept unimpaired
and free from default. If the landlord under the applicable Ground
Lease shall deliver to Lender a copy of any notice of default under
such Ground Lease, such notice shall constitute full protection to
Lender for any action taken or omitted to be taken by Lender, in good
faith, in reliance thereon. Borrower shall exercise each individual
option, if any, to extend or renew the term of each Ground Lease upon
demand by Lender made at any time within one (1) year prior to the last
day upon which any such option may be exercised, and Borrower hereby
expressly authorizes and appoints Lender its attorney-in-fact to
exercise any such option in the name of and upon behalf of Borrower,
which power of attorney shall be irrevocable and shall be deemed to be
coupled with an interest.
(b) Notwithstanding anything contained in any Ground
Lease to the contrary, Borrower shall not further sublet any portion of
the related Individual Property (other than as permitted pursuant to
Section 5.1.17 hereof) without prior written consent of Lender. Each
sublease hereafter made shall provide that, (a) in the event of the
termination of the Ground Lease, the sublease shall not terminate or be
terminable by the lessee thereunder; (b) in the event of any action for
the foreclosure of the Security Instrument with respect to
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the related Individual Property, the sublease shall not terminate or be
terminable by the lessee thereunder by reason of the termination of the
Ground Lease unless such lessee is specifically named and joined in any
such action and unless a judgment is obtained therein against such
lessee; and (c) in the event that the Ground Lease is terminated as
aforesaid, the lessee under the sublease shall attorn to the lessor
under the Ground Lease or to the purchaser at the sale of the related
Individual Property on such foreclosure, as the case may be. In the
event that any portion of such Individual Property shall be sublet
pursuant to the terms of this subsection, such sublease shall be deemed
to be included in the Individual Property
SECTION 5.2 NEGATIVE COVENANTS.
From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Security Instruments encumbering the Properties in accordance with
the terms of this Agreement and the other Loan Documents, Borrower covenants and
agrees with Lender that it will not do, directly or indirectly, any of the
following:
5.2.1 Liens.
Borrower shall not create, incur, assume or suffer to exist any Lien on
any portion of any Property or permit any such action to be taken, except for
Permitted Encumbrances.
5.2.2 Dissolution.
(a) Borrower shall not (i) engage in any dissolution,
liquidation or consolidation or merger with or into any other business
entity, (ii) transfer, lease or sell, in one transaction or any
combination of transactions, the assets or all or substantially all of
the properties or assets of Borrower except to the extent expressly
permitted by the Loan Documents, (iii) except as expressly permitted
under the Loan Documents, modify, amend, waive or terminate its
organizational documents or its qualification and good standing in any
jurisdiction or (iv) cause Principal to (A) dissolve, wind up or
liquidate or take any action, or omit to take an action, as a result of
which Principal would be dissolved, wound up or liquidated in whole or
in part, or (B) except as expressly permitted under the Loan Documents,
amend, modify, waive or terminate the certificate of incorporation,
bylaws or similar organizational documents of Principal, in each case,
without obtaining the prior written consent of Lender, which consent
(with respect to (iv)(B) only) shall not be unreasonably withheld or
delayed.
(b) Borrower shall not permit Operating Lessee to (i)
engage in any dissolution, liquidation or consolidation or merger with
or into any other business entity, (ii) transfer, lease or sell, in one
transaction or any combination of transactions, the assets or all or
substantially all of the properties or assets of Operating Lessee
except to the extent expressly permitted by the Loan Documents, (iii)
except as expressly permitted under the Loan Documents, modify, amend,
waive or terminate its organizational documents or its qualification
and good standing in any jurisdiction or (iv) cause the
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Operating Lessee Principal to (A) dissolve, wind up or liquidate or
take any action, or omit to take an action, as a result of which
Operating Lessee Principal would be dissolved, wound up or liquidated
in whole or in part, or (B) except as expressly permitted under the
Loan Documents, amend, modify, waive or terminate the certificate of
incorporation, bylaws or similar organizational documents of Operating
Lessee Principal, in each case, without obtaining the prior written
consent of Lender, which consent (with respect to (iv)(B) only) shall
not be unreasonably withheld or delayed.
5.2.3 Change In Business.
Borrower shall not enter into any line of business other than the
ownership, acquisition, development, operation, leasing and management of the
Properties (including providing services in connection therewith), or make any
material change in the scope or nature of its business objectives, purposes or
operations or undertake or participate in activities other than the continuance
of its present business.
5.2.4 Debt Cancellation.
Borrower shall not cancel or otherwise forgive or release any material
claim or debt (other than termination of Leases in accordance herewith) owed to
Borrower by any Person, except for adequate consideration and in the ordinary
course of Borrower's business.
5.2.5 Zoning.
Borrower shall not initiate or consent to any zoning reclassification
of any portion of any Property or seek any variance under any existing zoning
ordinance or use or permit the use of any portion of any Property in any manner
that could result in such use becoming a non-conforming use under any zoning
ordinance or any other Applicable Law, without the prior written consent of
Lender.
5.2.6 No Joint Assessment.
Borrower shall not suffer, permit or initiate the joint assessment of
any Property with (a) any other real property constituting a tax lot separate
from such Property, or (b) any portion of such 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 Property.
5.2.7 Name, Identity, Structure, or Principal Place of Business.
Borrower shall not change its name, identity (including its trade name
or names), or principal place of business set forth in the introductory
paragraph of this Agreement, without, in each case, first giving Lender thirty
(30) days prior written notice. Borrower shall not change its corporate,
partnership or other structure, or the place of its organization as set forth in
Section 4.1.34, without, in each case, the consent of Lender. Upon Lender's
request, Borrower shall execute and deliver additional financing statements,
security agreements and other instruments
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which may be necessary to effectively evidence or perfect Lender's security
interest in the Collateral as a result of such change of principal place of
business or place of organization.
5.2.8 ERISA.
(a) During the term of the Loan or of any obligation or
right hereunder, Borrower shall not be a Plan and none of the assets of
Borrower shall constitute Plan Assets.
(b) Borrower further covenants and agrees to deliver to
Lender such certifications or other evidence from time to time
throughout the term of the Loan, as requested by Lender in its sole
discretion, and represents and covenants that (A) Borrower is not and
does not maintain an "employee benefit plan" as defined in Section
3(32) of ERISA, which is subject to Title I of ERISA, or a
"governmental plan" within the meaning of Section 3(3) of ERISA; (B)
Borrower is not subject to State statutes regulating investments and
fiduciary obligations with respect to governmental plans; and (C) one
or more of the following circumstances is true:
(i) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R.Section 2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each
outstanding class of equity interests in Borrower are held by "benefit
plan investors" within the meaning of 29 C.F.R.Section
2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a
"real estate operating company" within the meaning of 29 C.F.R.
Section 2510.3-101(c) or (e).
5.2.9 Affiliate Transactions.
Borrower shall not enter into, or be a party to, any transaction with
an Affiliate of Borrower, Principal, the Operating Lessee SPE Entities or any of
the partners of Borrower, Principal or the Operating Lessee SPE Entities except
in the ordinary course of business and on terms which are fully disclosed to
Lender in advance and are no less favorable to Borrower or such Affiliate than
would be obtained in a comparable arm's-length transaction with an unrelated
third party.
5.2.10 Transfers.
(a) Neither Borrower nor Operating Lessee shall sell,
convey, mortgage, grant, bargain, encumber, pledge, assign, grant
options with respect to, or otherwise transfer or dispose of (directly
or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, and whether or not for consideration or of record) any
Property or any part thereof or any legal or beneficial interest
therein (other than in connection with a Condemnation) or permit or
suffer a Sale or Pledge of an interest in any Restricted Party
(collectively, a "Transfer"), other than pursuant to Leases of space in
the Improvements to
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tenants in accordance with the provisions of Section 5.1.17 hereof or a
release of a Property in accordance with the provisions hereof, without
the prior written consent of Lender.
(b) A Transfer shall include, but not be limited to: (i)
an installment sales agreement wherein Borrower agrees to sell one or
more Properties or any part thereof for a price to be paid in
installments; (ii) an agreement by Borrower leasing all or a
substantial part of any Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or
the grant of a security interest in, Borrower's right, title and
interest in and to any Leases or any Rents; (iii) if a Restricted Party
is a corporation, any merger, consolidation or Sale or Pledge of such
corporation's stock or the creation or issuance of new stock; (iv) if a
Restricted Party is a limited or general partnership or joint venture,
any merger or consolidation or the change, removal, resignation or
addition of a general partner or the Sale or Pledge of the partnership
interest of any general partner or any profits or proceeds relating to
such partnership interest, or the Sale or Pledge of limited partnership
interests or any profits or proceeds relating to such limited
partnership interests or the creation or issuance of new limited
partnership interests; (v) if a Restricted Party is a limited liability
company, any merger or consolidation or the change, removal,
resignation or addition of a managing member or non-member manager (or
if no managing member, any member) or the Sale or Pledge of the
membership interest of a managing member (or if no managing member, any
member) or any profits or proceeds relating to such membership
interest, or the Sale or Pledge of non-managing membership interests or
the creation or issuance of new non-managing membership interests; or
(vi) if a Restricted Party is a trust or nominee trust, any merger,
consolidation or the Sale or Pledge of the legal or beneficial interest
in a Restricted Party or the creation or issuance of new legal or
beneficial interests.
(c) Notwithstanding the provisions of Sections 5.2.10(a)
and (b), the following transfers shall not be deemed to be a Transfer:
(i) a transfer by devise or descent or by operation of law upon the
death of a member, partner or shareholder of a Restricted Party or a
Restricted Party itself; (ii) the Sale or Pledge, in one or a series of
transactions, of not more than forty nine percent (49%) of the stock in
a Restricted Party; provided, however, no such transfers shall result
in the change of voting control in the Restricted Party, and as a
condition to each such transfer, Lender shall receive not less than
thirty (30) days prior written notice of such proposed transfer and
(iii) the Sale or Pledge, in one or a series of transactions, of not
more than forty nine percent (49%) of the limited partnership interests
or non managing membership interests (as the case may be) in a
Restricted Party; provided, however, as a condition to each such
transfer, Lender shall receive not less than thirty (30) days prior
written notice of such proposed transfer.
(d) Lender shall not be required to demonstrate any
actual impairment of its security or any increased risk of default
hereunder in order to declare the Debt immediately due and payable upon
a Transfer in violation of this Section 5.2.2. This provision shall
apply to every Transfer regardless of whether voluntary or not, or
whether or not Lender has consented to any previous Transfer.
Notwithstanding anything to the contrary contained in this Section
5.2.10, (a) no transfer (whether or not such transfer shall constitute
a Transfer) shall be made to any Prohibited Person and (b) in the event
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any transfer (whether or not such transfer shall constitute a Transfer)
results in any Person owning in excess of forty-nine percent (49%) of
the ownership interest in a Restricted Party, Borrower shall, prior to
such transfer, deliver an updated Insolvency Opinion to Lender, which
opinion shall be in form, scope and substance acceptable in all
respects to Lender.
(e) Notwithstanding anything to the contrary contained in
this Section 5.2.10, Lender's consent shall not be required for the
financing or leasing of personal property, including, without
limitation, furniture, fixtures and equipment owned or to be purchased
by Borrower that is used in connection with the operation of the
Property ("Equipment"), provided Lender has received prior written
notification of Borrower's intent to finance such Equipment, and
provided, further, that (i) any such financing or leasing is subject to
commercially prudent terms and conditions and at a market rate of
interest, (ii) the Equipment financed or leased is readily replaceable
without material interference or interruption to the operation of any
Property, and (iii) the aggregate principal amount of such financing
and leasing for Equipment located on or used in connection with each
Property is at all times less than $250,000 ("Permitted FF&E
Financing") and (iv) the financing does not create a Lien on any
Property other than on the Equipment financed or leased thereunder.
(f) Notwithstanding anything to the contrary contained in
this Section 5.2.10, a transfer of direct or indirect limited
partnership interests and/or non-managing membership interests in a
Restricted Party shall be permitted provided that (i) FelCor Lodging
Limited Partnership shall, at all times, own, directly or indirectly,
at least fifty-one percent (51%) of the equity interests in, and
Control, all Restricted Parties and (ii) FelCor Lodging Trust
Incorporated must at all times be the sole general partner of FelCor
Lodging Limited Partnership.
SECTION 5.3 RECALCULATION OF AVAILABLE FACILITY AMOUNT.
Borrower acknowledges and agrees that the Available Facility
Amount shall be recalculated (and increased or decreased as applicable): (a)
upon the date of each Advance hereunder, (b) each calendar month promptly
following Lender's receipt of the operating statements required pursuant to
Section 5.1.10 hereof based upon the calculation by Lender of the Portfolio Debt
Service Coverage Ratio and the Portfolio Loan To Value Ratio, (c) after giving
effect to any release and substitution in accordance with Section 2.5 hereof,
(d) after receipt of new or updated Appraisals pursuant to Section 5.4 hereof
and (e) upon a Conversion or a Floating Rate CMBS Conversion.
SECTION 5.4 UPDATED APPRAISALS.
(a) Upon the occurrence of an Appraisal Update Event,
Lender shall order, at Borrower's sole cost and expense, Appraisals for
(i) in the event that Lender reasonably determines that the Appraisal
Update Event is specific to one or more particular Property or
Properties, such Property or Properties or (ii) in the event that
Lender determines that the Appraisal Update Event is general in nature,
all of the Properties. Notwithstanding the
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foregoing sentence, in the event that the Appraisal Update Event was
the result of a Material Adverse Hotel Market and the new or updated
Appraisals indicate an aggregate Property Value of all of the
Properties of equal to or greater than the aggregate Property Value of
all of the Properties on the Closing Date (as the same may be adjusted
for any substitutions and releases pursuant to Section 2.5 and the
addition of New Properties pursuant to Section 2.7), then Borrower
shall only be obligated to pay for fifty percent (50%) of the cost of
obtaining such new or updated Appraisals.
(b) Notwithstanding the provisions of Section 5.4(a) to
the contrary, Borrower may request Lender to obtain (and Lender shall
promptly order) new Appraisals for one or more Properties; provided,
(i) Borrower shall be obligated to pay all costs and expenses in
connection with such Appraisals and (ii) Borrower may not request
Lender to obtain such Appraisals more than one (1) time with respect to
each Property in any consecutive twelve (12) month period.
VI. INSURANCE; CASUALTY; CONDEMNATION
SECTION 6.1 INSURANCE.
(a) Borrower shall obtain and maintain, or cause to be
maintained, Policies for Borrower and the Properties providing at least
the following coverages:
(i) so called "All Risk" or Special Form insurance
on the Improvements and the Personal Property, in each case (ii)
in an amount equal to 100% of the "Full Replacement Cost," which
for purposes of this Agreement shall mean actual replacement value
(exclusive of costs of excavations, foundations, underground
utilities and footings) with a waiver of depreciation, (iii)
containing an agreed amount endorsement or its equivalent with
respect to the Improvements, business income, rent loss and
Personal Property waiving all co-insurance provisions; (iv)
providing for no deductible in excess of $100,000; and (v)
providing coverage for contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements together with an "Ordinance or Law Coverage" or
"Enforcement" endorsement if any of the Improvements or the use of
each Property shall at any time constitute legal non-conforming
structures or uses. The Full Replacement Cost shall be
redetermined from time to time (but not more frequently than once
in any twenty-four (24) calendar months) at the request of Lender
by an appraiser or contractor designated and paid by Borrower and
approved by Lender, or by an engineer or appraiser in the regular
employ of the insurer. After the first appraisal, additional
appraisals may be based on construction cost indices customarily
employed in the trade. No omission on the part of Lender to
request any such ascertainment shall relieve Borrower of any of
its obligations under this Subsection;
(ii) commercial general liability insurance against
claims for personal injury, bodily injury, death or property
damage occurring upon, in or about each Property, including "Dram
Shop" or other liquor liability coverage if alcoholic beverages
are sold from or may be consumed at the Property such insurance
(A) to be on the so-called
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"occurrence" form with a combined single limit of not less than
$5,000,000.00; (B) to continue at not less than the aforesaid
limit until required to be changed by Lender in writing by reason
of changed economic conditions making such protection inadequate;
and (C) to cover at least the following hazards: (1) premises and
operations; (2) products and completed operations on an "if any"
basis; (3) independent contractors; (4) blanket contractual
liability for all written and oral contracts; and (5) contractual
liability covering the indemnities contained in Article 10 of the
Security Instruments to the extent the same is available;
(iii) business interruption/loss of rents insurance
(A) with loss payable to Lender; (B) covering all risks required
to be covered by the insurance provided for in Section 6.1(a)(i);
(C) in an amount equal to 100% of the projected gross income from
each Property (on an actual loss sustained basis) for a period
continuing until the Restoration of the Property is completed; the
amount of such business interruption/loss of rents insurance shall
be determined prior to the Closing Date and at least once each
year thereafter based on the greatest of: (x) Borrower's
reasonable estimate of the gross income from each Property and (y)
the highest gross income received during the term of the Note for
any full calendar year prior to the date the amount of such
insurance is being determined, in each case for the succeeding
twenty-four (24) month period and (D) containing an extended
period of indemnity endorsement which provides that after the
physical loss to the Improvements and the Personal Property has
been repaired, the continued loss of income will be insured until
such income either returns to the same level it was at prior to
the loss, or the expiration of twelve (12) months from the date
that the applicable Property is repaired or replaced and
operations are resumed, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of
such period; All insurance proceeds payable to Lender pursuant to
this Section 6.1(a)(iii) shall be held by Lender and shall be
applied to the obligations secured hereunder from time to time due
and payable hereunder and under the Note and this Agreement;
provided, however, that nothing herein contained shall be deemed
to relieve Borrower of its obligations to pay the obligations
secured hereunder on the respective dates of payment provided for
in the Note and this Agreement except to the extent such amounts
are actually paid out of the proceeds of such business
interruption/loss of rents insurance.
(iv) at all times during which structural
construction, repairs or alterations are being made with respect
to the Improvements (A) owner's contingent or protective liability
insurance covering claims not covered by or under the terms or
provisions of the insurance provided for in Section 6.1(c)(ii);
and (B) the insurance provided for in Section 6.1(a)(i) shall be
written in a so-called builder's risk completed value form (1) on
a non-reporting basis, (2) against all risks insured against
pursuant to Section 6.1(a)(i), (3) shall include permission to
occupy each Property, and (4) shall contain an agreed amount
endorsement waiving co-insurance provisions; provided, however,
the insurance required pursuant to this Section 6.1(a)(iv) may be
obtained by the Manager for the benefit of Borrower and the
applicable Property.
(v) workers' compensation, subject to the statutory
limits of the State in which each Property is located, and
employer's liability insurance with a limit of at least
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$1,000,000.00 per accident and per disease per employee, and
$1,000,000.00 for disease aggregate in respect of any work or
operations on or about each Property, or in connection with such
Property or its operation (if applicable);
(vi) comprehensive boiler and machinery insurance
covering all mechanical and electrical equipment and boilers and
pressure valves, if applicable, in amounts as shall be reasonably
required by Lender on terms consistent with the commercial
property insurance policy required under Section 6.1(b)(i);
(vii) if any portion of the Improvements is at any
time located in an area identified by the Secretary of Housing and
Urban Development or any successor thereto as an area having
special flood hazards pursuant to the National Flood Insurance Act
of 1968, the Flood Disaster Protection Act of 1973 or the National
Flood Insurance Reform Act of 1994, as each may be amended, or any
successor law (the "Flood Insurance Acts"), flood hazard insurance
of the following types and in the following amounts (A) coverage
under Policies issued pursuant to the Flood Insurance Acts (the
"Flood Insurance Policies") in an amount equal to the maximum
limit of coverage available for the applicable Property under the
Flood Insurance Acts, subject only to customary deductibles under
such Policies and (B) coverage under supplemental private Policies
in an amount, which when added to the coverage provided under the
Flood Act Policies with respect to a Property, is not less than
the applicable CMBS Loan Amount for such Property;
(viii) (A) if required by Lender for each Property
(other than the Mandalay Beach Property), earthquake, sinkhole and
mine subsidence insurance in amounts as determined by Lender in
its sole discretion and in form and substance satisfactory to
Lender, provided that the insurance pursuant to this Section
6.1(a)(viii) hereof shall be on terms consistent with the all risk
insurance policy required under Section 6.1(a)(i) hereof and (B)
for the Mandalay Beach Property, earthquake insurance equal to the
Required Earthquake Insurance Amount and if required by Lender,
sinkhole and mine subsidence insurance in amounts as determined by
Lender in its sole discretion and in form and substance
satisfactory to Lender, provided that the insurance pursuant to
this Section 6.1(a)(viii) hereof shall be on terms consistent with
the all risk insurance policy required under Section 6.1(a)(i)
hereof;
(ix) umbrella liability insurance in an amount not
less than Two Hundred Million and No/100 Dollars ($200,000,000.00)
per occurrence on terms consistent with the commercial general
liability insurance policy required under Section 6.1(b)(v)
hereof;
(x) insurance against terrorism, terrorist acts or
similar acts of sabotage ("Terrorism Insurance") pursuant to, at
Borrower's option, a (A) blanket insurance policy with aggregate
limits of not less than $50,000,000.00 or (B) a stand-alone
insurance policy covering only the Properties with coverage of not
less than $50,000,000.00, and, in either case with a deductible of
not more than $250,000.00 (the "Terrorism Insurance Required
Amount"). Notwithstanding the foregoing sentence, in the event
Borrower has obtained a stand-alone insurance policy pursuant to
subsection (B) above, Borrower shall
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not be obligated to expend more than $400,000.00 in any fiscal
year on Insurance Premiums for Terrorism Insurance (the "Terrorism
Insurance Cap") and if the cost of the Terrorism Insurance
Required Amount exceeds the Terrorism Insurance Cap, Borrower
shall purchase the maximum amount of Terrorism Insurance available
with funds equal to the Terrorism Insurance Cap; provided,
however, in the event it is customary among owners of Class A
hotel properties in the United States to have "All Risk" coverage
without any exclusion (a "Terrorism Exclusion") from coverage
under such Policy for loss or damage incurred as a result of an
act of terrorism, terrorist acts or similar acts of sabotage,
Borrower shall (provided the same does not add any material cost
to Borrower's Insurance Premiums) obtain a Policy without any such
Terrorism Exclusion. After the occurrence of any event which
reduces the amount of insurance available under the Terrorism
Insurance required hereunder (whether due to a claim or
otherwise), Borrower shall be obligated to immediately increase
the coverage of such Terrorism Insurance so that at least
$50,000,000.00 of coverage is available thereunder at all times.
(xi) a blanket fidelity bond and errors and omissions
insurance coverage insuring against losses resulting from
dishonest or fraudulent acts committed by (A) Borrower's
personnel; (B) any employees of outside firms that provide
appraisal, legal, data processing or other services for Borrower
or (C) temporary contract employees or student interns; provided,
however, the insurance required pursuant to this Section
6.1(a)(xi) may be obtained by the Manager for the benefit of
Borrower and the applicable Property and
(xii) such other insurance and in such amounts as are
required pursuant to the Franchise Agreement or as Lender from
time to time may reasonably request against such other insurable
hazards which at the time are commonly insured against for
property similar to each Property located in or around the region
in which the each Property is located.
(b) All insurance provided for in Section 6.1(a) hereof
shall be obtained under valid and enforceable policies (the "Policies"
or in the singular, the "Policy"), in such forms and, from time to time
after the date hereof, in such amounts as may be satisfactory to
Lender, issued by financially sound and responsible insurance companies
authorized to do business in the State in which each Property is
located and approved by Lender. The initial $30,000,000 of insurance
required pursuant to Section 6.1(a)(i), (iii) and (vi) hereof (the
"Initial Tier") may be with (1) one or more primary insurers having (or
a syndicate of insurers through which at least 75% of the coverage (if
there are 4 or fewer members of the syndicate) or at least 60% of the
coverage (if there are 5 or more members of the syndicate) is with
carriers having), a claims paying ability rating by S&P not lower than
"AA-" and an A.M. Best rating of at least "A:IX" (a "Initial Tier
Insurer") and (2) the balance of the coverage is with one or more
carriers having a claims paying ability rating by S&P not lower than
"BBB-" and an A.M. Best rating of at least "A:IX"; provided, however,
Endurance Specialty Insurance, Ltd. shall be deemed a Initial Tier
Insurer so long as it (x) maintains an A.M. Best rating of at least
"A-:IX" and (y) does not provide in excess of $2,000,000 of the
insurance coverage required pursuant to the Initial Tier. The remaining
portions of the insurance required pursuant to Section 6.1(a)(i), (iii)
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and (vi) hereof (the "Second Tier") may be with (1) one or more primary
insurers having (or a syndicate of insurers through which at least 75%
of the coverage (if there are 4 or fewer members of the syndicate) or
at least 60% of the coverage (if there are 5 or more members of the
syndicate) is with carriers having), a claims paying ability rating by
S&P not lower than "A" and an A.M. Best rating of at least "A-:IX" (a
"Second Tier Insurer") and (2) the balance of the coverage is with one
or more carriers having a claims paying ability rating by S&P not lower
than "BBB-" and an A.M. Best rating of at least "A-:IX"; provided,
however, Allied World Assurance Co. shall be deemed a Second Tier
Insurer so long as it (x) maintains an A.M. Best rating of at least
"A-:IX" and (y) does not provide in excess of $4,500,000 of the
insurance coverage required pursuant to the Second Tier. All other
insurance companies must have a claims paying ability/financial
strength rating of "A" (or its equivalent) or better by all of the
Rating Agencies and have an A.M. Best rating of "A:IX" or greater (each
such insurer shall be referred to below as a "Qualified Insurer"). Not
less than thirty (30) days prior to the expiration dates of the
Policies theretofore furnished to Lender pursuant to Section 6.1(a),
Borrower shall deliver certified copies of the Policies marked "premium
paid" or accompanied by evidence satisfactory to Lender of payment of
the premiums due thereunder (the "Insurance Premiums"). In the event
Borrower desires to obtain the insurance required hereunder from an
insurer not meeting the requirements of this Section 6.1(b), Borrower
may request, in writing, Lender's approval of such insurer, which
approval may be given or withheld in Lender's sole discretion.
(c) Borrower shall not obtain (i) any umbrella or blanket
liability or casualty Policy unless, in each case, such Policy is at
least equal in scope of coverage as if a "stand-alone" Policy meeting
all of the requirement noted above is provided as such Policy is
approved in advance in writing by Lender and Lender's interest is
included therein as provided in this Agreement and such Policy is
issued by a Qualified Insurer, or (ii) separate insurance concurrent in
form or contributing in the event of loss with that required in Section
6.1(a) to be furnished by, or which may be reasonably required to be
furnished by, Borrower. In the event Borrower obtains separate
insurance or an umbrella or a blanket policy, Borrower shall notify
Lender of the same and shall cause certified copies of each Policy to
be delivered as required in Section 6.1(a). Any blanket insurance
Policy shall specifically allocate to the Property the amount of
coverage from time to time required hereunder and shall otherwise
provide the same protection as would a separate Policy insuring only
the Property in compliance with the provisions of Section 6.1(a).
Notwithstanding Lender's approval of any umbrella or blanket liability
or casualty Policy hereunder, Lender reserves the right, in its sole
discretion, to require Borrower to obtain a separate Policy in
compliance with this Section 6.1.
(d) All Policies provided for or contemplated by Section
6.1(a)hereof, except for the Policy referenced in Section 6.1(a)(v),
shall name Lender and Borrower as the insured or additional insured, as
their respective interests may appear, and in the case of property
damage, boiler and machinery, and flood insurance, shall contain a
so-called New York standard non-contributing mortgagee clause in favor
of Lender providing that the loss thereunder shall be payable to
Lender.
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(e) All Policies provided for in Section 6.1(a) hereof
shall contain clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting
for Borrower, or failure to comply with the provisions of any Policy
which might otherwise result in a forfeiture of the insurance or any
part thereof, shall in any way affect the validity or enforceability of
the insurance insofar as Lender is concerned;
(ii) the Policy shall not be materially changed (other
than to increase the coverage provided thereby) or cancelled without at
least 30 days' written notice to Lender and any other party named
therein as an insured;
(iii) each Policy shall provide that the issuers thereof
shall give written notice to Lender if the Policy has not been renewed
thirty (30) days prior to its expiration; and
(iv) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder.
(f) Borrower shall furnish to Lender, on or before thirty
(30) days after the close of each of Borrower's fiscal years, a
statement certified by Borrower or a duly authorized officer of
Borrower of the amounts of insurance maintained in compliance herewith,
of the risks covered by such insurance and of the insurance company or
companies which carry such insurance and, if requested by Lender,
verification of the adequacy of such insurance by an independent
insurance broker or appraiser acceptable to Lender.
(g) If at any time Lender is not in receipt of written
evidence that all insurance required hereunder is in full force and
effect, Lender shall have the right, with prior notice to Borrower, to
take such action as Lender deems necessary to protect its interest in
the Properties, including, without limitation, the obtaining of such
insurance coverage as Lender in its sole discretion deems appropriate,
and all expenses incurred by Lender in connection with such action or
in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and until paid shall be secured by the
Security Instruments and shall bear interest at the Default Rate.
(h) In the event of a foreclosure of any of the Security
Instruments, or other transfer of title to any Property in
extinguishment in whole or in part of the Debt all right, title and
interest of Borrower in and to the Policies then in force and all
proceeds payable thereunder shall thereupon vest in the purchaser at
such foreclosure or Lender or other transferee in the event of such
other transfer of title.
SECTION 6.2 CASUALTY.
If a Property shall be damaged or destroyed, in whole or in part, by
fire or other casualty (a "Casualty"), Borrower shall give prompt notice of such
damage to Lender and shall promptly commence and diligently prosecute the
completion of the Restoration of the Property as nearly as possible to the
condition the Property was in immediately prior to such Casualty, with such
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alterations as may be reasonably approved by Lender and otherwise in accordance
with Section 6.4. Borrower shall pay all costs of such Restoration whether or
not such costs are covered by insurance. Lender may, but shall not be obligated
to make proof of loss if not made promptly by Borrower.
SECTION 6.3 CONDEMNATION.
Borrower shall promptly give Lender notice of the actual or threatened
commencement of any proceeding for the Condemnation of all or any part of any
Property and shall deliver to Lender copies of any and all papers served in
connection with such proceedings. Lender may participate in any such
proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including, but not
limited to, any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the Award interest at the rate or rates provided herein or in the Note.
If any Property or any portion thereof is taken by a condemning authority,
Borrower shall, promptly commence and diligently prosecute the Restoration of
the applicable Property and otherwise comply with the provisions of Section 6.4.
If any Property is sold, through foreclosure or otherwise, prior to the receipt
by Lender of the Award, Lender shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or denied, to receive the
Award, or a portion thereof sufficient to pay the Debt.
SECTION 6.4 RESTORATION.
The following provisions shall apply in connection with the Restoration
of any Property:
(a) If the Net Proceeds shall be less than Two Hundred
Fifty Thousand and 00/100 Dollars ($250,000.00) and the costs of
completing the Restoration shall be less than Two Hundred Fifty
Thousand and 00/100 Dollars ($250,000.00), the Net Proceeds will be
disbursed by Lender to Borrower upon receipt, provided that all of the
conditions set forth in Section 6.4(b)(i) are met and Borrower delivers
to Lender a written undertaking to expeditiously commence and to
satisfactorily complete with due diligence the Restoration in
accordance with the terms of this Agreement.
(b) If the Net Proceeds are equal to or greater than Two
Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) or the costs of
completing the Restoration is equal to or greater than Two Hundred
Fifty Thousand and 00/100 Dollars ($250,000.00) Lender shall make the
Net Proceeds available for the Restoration in accordance with the
provisions of this Section 6.4. The term "Net Proceeds" shall mean: (i)
the net amount of
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all insurance proceeds received by Lender pursuant to Section
6.1(a)(i), (iv), (vi), (vii) and (viii) as a result of such damage or
destruction, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in
collecting same ("Insurance Proceeds"), or (ii) the net amount of the
Award, after deduction of its reasonable costs and expenses (including,
but not limited to, reasonable counsel fees), if any, in collecting
same ("Condemnation Proceeds"), whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower
for Restoration provided that each of the following conditions are met:
(A) no Default or Event of Default (unless
caused solely by the Condemnation or Casualty) shall have
occurred and be continuing;
(B) (1) in the event the Net Proceeds are
Insurance Proceeds, less than thirty percent (30%) of the
total floor area of the Improvements on the Property has been
damaged, destroyed or rendered unusable as a result of such
Casualty or (2) in the event the Net Proceeds are Condemnation
Proceeds, less than ten percent (10%) of the land constituting
the Property is taken, and such land is located along the
perimeter or periphery of the Property, and no portion of the
Improvements is located on such land;
(C) The Operating Lease shall remain in full
force and effect during and after the completion of the
Restoration;
(D) Borrower shall commence the Restoration as
soon as reasonably practicable (but in no event later than
thirty (30) days after such Casualty or Condemnation,
whichever the case may be, occurs) and shall diligently pursue
the same to satisfactory completion in compliance with all
Legal Requirements, including, without limitation, all
applicable Environmental Laws and in accordance with the terms
and conditions of the Franchise Agreement;
(E) Lender shall be satisfied that any operating
deficits, including all scheduled payments of principal and
interest under the Note, which will be incurred with respect
to the Property as a result of the occurrence of any such
Casualty or Condemnation, whichever the case may be, will be
covered out of (1) the Net Proceeds, (2) the insurance
coverage referred to in Section 6.1(a)(iii), if applicable, or
(3) by other funds of Borrower;
(F) Lender shall be satisfied that the
Restoration will be completed on or before the earliest to
occur of (1) six (6) months prior to the Maturity Date, (2)
six (6) months after the occurrence of such Casualty or
Condemnation, or (3) the earliest date required for such
completion under the terms of any Leases which are required in
accordance with the provisions of this Section 6.4(b) to
remain in effect subsequent to the occurrence of such Casualty
or Condemnation and the completion of the Restoration, or (4)
the date required for such completion pursuant to the
Franchise Agreement, (5) such time as may be required under
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Applicable Law, in order to repair and restore the applicable
Property to the condition it was in immediately prior to such
Casualty or Condemnation or (6) the expiration of the
insurance coverage referred to in Section 6.1(a)(iii);
(G) the Property and the use thereof after the
Restoration will be in compliance with and permitted under all
Legal Requirements;
(H) Lender shall be satisfied that the Debt
Service Coverage Ratio for the twelve (12) month period
immediately succeeding the completion of the Restoration shall
be equal to or greater than 1.30 to 1;
(I) such Casualty or Condemnation, as
applicable, does not result in the loss of access in any
material respect to the Property or the related Improvements;
(J) Borrower shall deliver, or cause to be
delivered, to Lender a signed detailed budget approved in
writing by Borrower's architect or engineer stating the entire
cost of completing the Restoration, which budget shall be
acceptable to Lender;
(K) the Net Proceeds together with any Cash or
Cash equivalent deposited by Borrower with Lender are
sufficient in Lender's discretion to cover the cost of the
Restoration;
(L) the Management Agreement in effect as of the
date of the occurrence of such Casualty or Condemnation,
whichever the case may be, shall (1) remain in full force and
effect during the Restoration and shall not otherwise
terminate as a result of the Casualty or Condemnation or the
Restoration or (2) if terminated, shall have been replaced
with a Replacement Management Agreement with a Qualified
Manager, prior to the opening or reopening of the applicable
Property or any portion thereof for business with the public;
and
(M) the Franchise Agreement is not terminated as
a result of such Casualty or Condemnation.
(ii) The Net Proceeds shall be held by Lender in an
interest-bearing account and, until disbursed in accordance with the
provisions of this Section 6.4(b), shall constitute additional security
for the Debt and other obligations under the Loan Documents. The Net
Proceeds shall be disbursed by Lender to, or as directed by, Borrower
from time to time during the course of the Restoration, upon receipt of
evidence satisfactory to Lender that (A) all materials installed and
work and labor performed (except to the extent that they are to be paid
for out of the requested disbursement) in connection with the
Restoration have been paid for in full, and (B) there exist no notices
of pendency, stop orders, mechanic's or materialman's liens or notices
of intention to file same, or any other Liens or encumbrances of any
nature whatsoever on the Property which have not either been fully
bonded to the satisfaction of Lender and
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discharged of record or in the alternative fully insured to the
satisfaction of Lender by the title company issuing the Title Insurance
Policy.
(iii) All plans and specifications required in connection
with the Restoration, the cost of which is greater than $250,000.00,
shall be subject to prior review and acceptance in all respects by
Lender and by an independent consulting engineer selected by Lender
(the "Casualty Consultant"). Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or
obtained in connection with the Restoration. The identity of the
contractors, subcontractors and materialmen engaged in the Restoration
the cost of which is greater than $250,000.00, as well as the contracts
under which they have been engaged, shall be subject to prior review
and acceptance by Lender and the Casualty Consultant. All costs and
expenses incurred by Lender in connection with making the Net Proceeds
available for the Restoration including, without limitation, reasonable
counsel fees and disbursements and the Casualty Consultant's fees,
shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to the
costs actually incurred from time to time for work in place as part of
the Restoration, as certified by the Casualty Consultant, minus the
Casualty Retainage. The term "Casualty Retainage" shall mean an amount
equal to ten percent (10%), of the costs actually incurred for work in
place as part of the Restoration, as certified by the Casualty
Consultant, until the Restoration has been completed. The Casualty
Retainage shall in no event, and notwithstanding anything to the
contrary set forth above in this Section 6.4(b), be less than the
amount actually held back by Borrower from contractors, subcontractors
and materialmen engaged in the Restoration. The Casualty Retainage
shall not be released until the Casualty Consultant certifies to Lender
that the Restoration has been completed in accordance with the
provisions of this Section 6.4(b) and that all approvals necessary for
the re-occupancy and use of the Property have been obtained from all
appropriate Governmental Authorities, and Lender receives evidence
satisfactory to Lender that the costs of the Restoration have been paid
in full or will be paid in full out of the Casualty Retainage;
provided, however, that Lender will release the portion of the Casualty
Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the
Casualty Consultant certifies to Lender that the contractor,
subcontractor or materialman has satisfactorily completed all work and
has supplied all materials in accordance with the provisions of the
contractor's, subcontractor's or materialman's contract, the
contractor, subcontractor or materialman delivers the lien waivers and
evidence of payment in full of all sums due to the contractor,
subcontractor or materialman as may be reasonably requested by Lender
or by the title company issuing the Title Insurance Policy for the
related Property, and Lender receives an endorsement to such Title
Insurance Policy insuring the continued priority of the Lien of the
related Security Instrument and evidence of payment of any premium
payable for such endorsement. If required by Lender, the release of any
such portion of the Casualty Retainage shall be approved by the surety
company, if any, which has issued a payment or performance bond with
respect to the contractor, subcontractor or materialman.
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(v) Lender shall not be obligated to make disbursements
of the Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed
balance thereof shall not, in the opinion of Lender in consultation
with the Casualty Consultant, if any, be sufficient to pay in full the
balance of the costs which are estimated by the Casualty Consultant to
be incurred in connection with the completion of the Restoration,
Borrower shall deposit the deficiency (the "Net Proceeds Deficiency")
with Lender before any further disbursement of the Net Proceeds shall
be made. The Net Proceeds Deficiency deposited with Lender shall be
held by Lender and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to
the disbursement of the Net Proceeds, and until so disbursed pursuant
to this Section 6.4(b) shall constitute additional security for the
Debt and other obligations under the Loan Documents.
(vii) The excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency deposited
with Lender after the Casualty Consultant certifies to Lender that the
Restoration has been completed in accordance with the provisions of
this Section 6.4(b), and the receipt by Lender of evidence satisfactory
to Lender that all costs incurred in connection with the Restoration
have been paid in full, shall be remitted by Lender to Borrower,
provided no Event of Default shall have occurred and shall be
continuing under the Note, this Agreement or any of the other Loan
Documents.
(c) All Net Proceeds not required (i) to be made
available for the Restoration or (ii) to be returned to Borrower as
excess Net Proceeds pursuant to Section 6.1(b)(vii) may be retained and
applied by Lender toward the payment of the Debt whether or not then
due and payable in such order, priority and proportions as Lender in
its sole discretion shall deem proper, or, at the discretion of Lender,
the same may be paid, either in whole or in part, to Borrower for such
purposes as Lender shall approve, in its discretion. If Lender shall
receive and retain Net Proceeds, the Lien of the Security Instruments
shall be reduced only by the amount thereof received and retained by
Lender and actually applied by Lender in reduction of the Debt.
VII. RESERVE FUNDS
SECTION 7.1 REQUIRED REPAIR FUNDS.
7.1.1 Deposits.
With respect to the Reserve Properties only (unless Lender has agreed
to waive such requirement with respect to one or more such Reserve Properties),
on the Closing Date, Borrower shall deposit into an escrow account with Lender
(the "Required Repair Account") one-hundred twenty five percent (125%) of such
amount as reasonably determined by Lender to be necessary to perform the
Required Repairs for such Property. Amounts so deposited with Lender shall be
held by Lender in accordance with Section 7.7 hereof. Amounts so deposited
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shall hereinafter be referred to as Borrower's "Required Repair Fund." Borrower
shall perform the repairs at all of the Properties, including, without
limitation, the Reserve Properties, as more particularly set forth on EXHIBIT Z
hereto (such repairs hereinafter referred to as "Required Repairs"). Borrower
shall provide evidence to Lender that all Required Repairs have been completed
in a good and workmanlike manner and in accordance with all Legal Requirements
on or before the date which is three hundred sixty five (365) days from the date
such Property is encumbered by the Lien of a Security Instrument. It shall be an
Event of Default under this Agreement if (a) Borrower does not complete the
Required Repairs at each Property within three hundred sixty five (365) days
from the date such Property is encumbered by the Lien of a Security Instrument
or (b) Borrower does not satisfy each condition contained in Section 7.1.2
hereof. Upon the occurrence of an Event of Default, Lender, at its option, may
withdraw all Required Repair Funds from the Required Repair Account and Lender
may apply such funds either to completion of the Required Repairs at one or more
of the Properties or toward payment of the Debt in such order, proportion and
priority as Lender may determine in its sole discretion. Lender's right to
withdraw and apply Required Repair Funds shall be in addition to all other
rights and remedies provided to Lender under this Agreement and the other Loan
Documents.
7.1.2 Release of Required Repair Funds.
With respect to the Reserve Properties only, Lender shall disburse to
Borrower the Required Repair Funds from the Required Repair Account from time to
time upon satisfaction by Borrower of each of the following conditions: (a)
Borrower shall submit a written request for payment to Lender at least fifteen
(15) days prior to the date on which Borrower requests such payment be made and
specifies the Required Repairs to be paid, (b) on the date such request is
received by Lender and on the date such payment is to be made, no Event of
Default shall exist and remain uncured, (c) Lender shall have received an
Officers' Certificate (i) stating that all Required Repairs at the applicable
Property to be funded by the requested disbursement have been completed in good
and workmanlike manner and, to the best of Borrower's knowledge, in accordance
with all Legal Requirements and Environmental Laws, such certificate to be
accompanied by a copy of any license, permit or other approval by any
Governmental Authority required to commence and/or complete the Required
Repairs, (ii) identifying each Person that supplied materials or labor in
connection with the Required Repairs performed at such Property with respect to
the reimbursement to be funded by the requested disbursement, and (iii) stating
that each such Person has been paid in full upon such disbursement, such
Officers' Certificate to be accompanied by lien waivers or other evidence of
payment satisfactory to Lender, (d) at Lender's option, a title search for such
Property indicating that such Property is free from all Liens, claims and other
encumbrances not previously approved by Lender, and (e) Lender shall have
received such other evidence as Lender shall reasonably request that the
Required Repairs at such Property to be funded by the requested disbursement
have been completed and are paid for upon such disbursement to Borrower. Lender
shall not be required to make disbursements from the Required Repair Account
with respect to any Property unless such requested disbursement is in an amount
greater than $25,000 (or a lesser amount if the total amount in the Required
Repair Account is less than $25,000, in which case only one disbursement of the
amount remaining in the account shall be made). Lender shall not be obligated to
make disbursements from the Required Repair Account with respect to a Property
in excess of the amount allocated for such Property. Upon Lender's receipt of
evidence of completion of all
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Required Repairs for all Reserve Properties in accordance with the terms hereof,
any remaining Required Repair Funds shall be disbursed to Borrower.
SECTION 7.2 TAX AND INSURANCE ESCROW FUND.
With respect to the Reserve Properties only (unless Lender has agreed
to waive such requirement with respect to one or more such Reserve Properties),
Borrower shall pay to Lender on each Payment Date (a) one-twelfth of the Taxes
(the "Monthly Tax Deposit") that Lender estimates will be payable during the
next ensuing twelve (12) months in order to accumulate with Lender sufficient
funds to pay all such Taxes at least thirty (30) days prior to their respective
due dates; and (b) at the option of Lender, if the liability or casualty Policy
maintained by Borrower covering the Properties shall not constitute an approved
blanket or umbrella Policy pursuant to Section 6.1(c) hereof, or Lender shall
require Borrower to obtain a separate Policy pursuant to Section 6.1(c) hereof,
one-twelfth of the Insurance Premiums (the "Monthly Insurance Premium Deposit")
that Lender estimates will be payable for the renewal of the coverage afforded
by the Policies upon the expiration thereof in order to accumulate with Lender
sufficient funds to pay all such Insurance Premiums at least thirty (30) days
prior to the expiration of the Policies (said amounts in (a) and (b) above
hereinafter called the "Tax and Insurance Escrow Fund"). In the event Lender
shall elect to collect payments in escrow for Insurance Premiums pursuant to
clause (b) above, Borrower shall pay to Lender an Initial Deposit to be
determined by Lender, in its sole discretion, to increase the amounts in the Tax
and Insurance Escrow Fund to an amount which, together with anticipated Monthly
Insurance Premium Deposits, shall be sufficient to pay all Insurance Premiums as
they become due. The Tax and Insurance Escrow Fund and the payments of interest
or principal or both, payable pursuant to the Note and this Agreement, shall be
added together and shall be paid as an aggregate sum by Borrower to Lender.
Lender will apply the Tax and Insurance Escrow Fund to payments of Taxes and
Insurance Premiums required to be made by Borrower pursuant to Section 5.1.2
hereof. In making any payment relating to the Tax and Insurance Escrow Fund,
Lender may do so according to any ▇▇▇▇, statement or estimate procured from the
appropriate public office (with respect to Taxes) or insurer or agent (with
respect to Insurance Premiums), without inquiry into the accuracy of such ▇▇▇▇,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax and
Insurance Escrow Fund shall exceed the amounts due for Taxes and Insurance
Premiums pursuant to Section 5.1.2 hereof, Lender shall, in its sole discretion,
return any excess to Borrower or credit such excess against future payments to
be made to the Tax and Insurance Escrow Fund. In allocating such excess, Lender
may deal with the Person shown on the records of Lender to be the owner of the
Properties. Any amount remaining in the Tax and Insurance Escrow Fund after the
Debt has been paid in full shall be returned to Borrower. If at any time Lender
reasonably determines that the Tax and Insurance Escrow Fund is not or will not
be sufficient to pay Taxes and Insurance Premiums by the dates set forth in (a)
and (b) above, Lender shall notify Borrower of such determination and Borrower
shall increase its monthly payments to Lender by the amount that Lender
estimates is sufficient to make up the deficiency at least thirty (30) days
prior to delinquency of the Taxes and/or thirty (30) days prior to expiration of
the Policies, as the case may be.
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SECTION 7.3 REPLACEMENTS AND REPLACEMENT RESERVE.
7.3.1 Replacement Reserve Fund.
With respect to the Reserve Properties only (unless Lender has agreed
to waive such requirement with respect to one or more such Reserve Properties),
Borrower shall pay to Lender on each Payment Date, the Replacement Reserve
Monthly Deposit for Capital Expenditures required to be made to such Reserve
Properties during the calendar year, as may be necessary to maintain and operate
first class, reputable hotels in the manner and quality of the hotels operated
at the Properties on the date hereof (collectively, the "Replacements"). Amounts
so deposited shall hereinafter be referred to as Borrower's "Replacement Reserve
Fund".
7.3.2 Disbursements from Replacement Reserve Account.
(a) Lender shall make disbursements from the Replacement
Reserve Account to reimburse Borrower only for the costs of the
Replacements. Lender shall not be obligated to make disbursements from the
Replacement Reserve Account to reimburse Borrower for the costs of routine
maintenance (other than Replacements) to a Property or for costs which are
to be reimbursed from the Required Repair Fund.
(b) Lender shall, upon written request from Borrower and
satisfaction of the requirements set forth in this Section 7.3.2, disburse
to Borrower amounts from the Replacement Reserve Account necessary to
reimburse Borrower for the actual costs of Replacements. In no event shall
Lender be obligated to disburse funds from the Replacement Reserve Account
if an Event of Default exists.
(c) Each request for disbursement from the Replacement
Reserve Account shall be in a form reasonably acceptable to Lender and
shall specify (i) the specific Replacements for which the disbursement is
requested, (ii) the quantity and price of each item purchased, if the
Replacement includes the purchase or replacement of specific items, (iii)
the price of all materials (grouped by type or category) used in any
Replacement other than the purchase or replacement of specific items, and
(iv) the cost of all contracted labor or other services applicable to each
Replacement for which the disbursement is requested. With each request
Borrower shall certify that, to the best of Borrower's knowledge, all
Replacements have been made in accordance with all applicable Legal
Requirements of any Governmental Authority having jurisdiction over the
applicable Property to which the Replacements are being provided. Upon
request of Lender in connection with each request for disbursement in
excess of $200,000, Borrower shall provide Lender with copies of invoices
for amounts in excess of $100,000 for items or materials purchased or
contracted labor or services. Borrower shall provide Lender evidence of
completion satisfactory to Lender in its reasonable judgment.
(d) Borrower shall pay all invoices in connection with
the Replacements with respect to each request for disbursement prior to
submitting such request for disbursement from the Replacement Reserve
Account or, at the request of Borrower, Lender will issue joint checks,
payable to Borrower and the contractor, supplier, materialman, mechanic,
subcontractor or other party to whom payment is due in connection with a
Replacement. In
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the case of payments made by joint check, Lender may require a waiver of
lien from each Person receiving payment prior to Lender's disbursement from
the Replacement Reserve Account. In addition, as a condition to any
disbursement, Lender may require Borrower to obtain lien waivers from each
contractor, supplier, materialman, mechanic or subcontractor who receives
payment in an amount equal to or greater than $100,000 for completion of
its work or delivery of its materials. Any lien waiver delivered hereunder
shall conform to the requirements of Applicable Law and shall cover all
work performed and materials supplied (including equipment and fixtures)
for the applicable Property by that contractor, supplier, subcontractor,
mechanic or materialman through the date covered by the current
reimbursement request (or, in the event that payment to such contractor,
supplier, subcontractor, mechanic or materialmen is to be made by a joint
check, the release of lien shall be effective through the date covered by
the previous release of funds request).
(e) Borrower shall not make a request for disbursement
from the Replacement Reserve Account more frequently than once in any
calendar month and (except in connection with the final disbursement) the
total cost of all Replacements in any request shall not be less than
$25,000.
7.3.3 Performance of Replacements.
(a) Borrower shall make Replacements when required in
order to keep each Property in condition and repair consistent with other
first class, full service hotels in the same market segment and under the
same franchisor in the metropolitan area in which the respective Property
is located, and to keep each Property or any portion thereof from
deteriorating. Borrower shall complete all Replacements in a good and
workmanlike manner as soon as practicable following the commencement of
making each such Replacement.
(b) Intentionally Omitted.
(c) Upon the occurrence and during the continuance of an
Event of Default, in the event Lender determines in its reasonable
discretion that any Replacement is not being performed in a workmanlike or
timely manner or that any Replacement has not been completed in a
workmanlike or timely manner, Lender shall have the option, without
providing any prior notice to Borrower, to withhold disbursement for such
unsatisfactory Replacement and to proceed under existing contracts or, upon
five (5) Business Days prior written notice to Borrower, to contract with
third parties to complete such Replacement and to apply the Replacement
Reserve Fund toward the labor and materials necessary to complete such
Replacement and to exercise any and all other remedies available to Lender
upon an Event of Default hereunder.
(d) In order to facilitate Lender's completion or making
of the Replacements pursuant to Section 7.3.3(c) above, upon the occurrence
and during the continuance of an Event of Default, Borrower grants Lender
the right to enter onto any Property and perform any and all work and labor
necessary to complete or make the Replacements and/or employ watchmen to
protect such Property from damage. All sums so expended by Lender, to the
extent not from the Replacement Reserve Fund, shall be deemed to have been
advanced under
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the Loan to Borrower and secured by the Security Instruments. For this
purpose, Borrower constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to complete or undertake
the Replacements in the name of Borrower. Such power of attorney shall be
deemed to be a power coupled with an interest and cannot be revoked.
Borrower empowers said attorney-in-fact as follows: (i) to use any funds in
the Replacement Reserve Account for the purpose of making or completing the
Replacements; (ii) to make such additions, changes and corrections to the
Replacements as shall be necessary or desirable to complete the
Replacements; (iii) to employ such contractors, subcontractors, agents,
architects and inspectors as shall be required for such purposes; (iv) to
pay, settle or compromise all existing bills and claims which are or may
become Liens against any Property, or as may be necessary or desirable for
the completion of the Replacements, or for clearance of title; (v) to
execute all applications and certificates in the name of Borrower which may
be required by any of the contract documents; (vi) to prosecute and defend
all actions or proceedings in connection with any Property or the
rehabilitation and repair of any Property; and (vii) to do any and every
act which Borrower might do in its own behalf to fulfill the terms of this
Agreement.
(e) Nothing in this Section 7.3.3 shall: (i) make Lender
responsible for making or completing the Replacements; (ii) require Lender
to expend funds in addition to the Replacement Reserve Fund to make or
complete any Replacement; (iii) obligate Lender to proceed with the
Replacements; or (iv) obligate Lender to demand from Borrower additional
sums to make or complete any Replacement.
(f) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer,
architect, or inspector) or third parties making Replacements pursuant to
this Section 7.3.3 to enter onto each Property during normal business hours
(subject to the rights of tenants under their Leases) to inspect the
progress of any Replacements and all materials being used in connection
therewith, to examine all plans and shop drawings relating to such
Replacements which are or may be kept at each Property, and to complete any
Replacements made pursuant to this Section 7.3.3. Borrower shall cause all
contractors and subcontractors to cooperate with Lender or Lender's
representatives or such other persons described above in connection with
inspections described in this Section 7.3.3(f) or the completion of
Replacements pursuant to this Section 7.3.3.
(g) Upon the occurrence and during the continuance of an
Event of Default, Lender may require an inspection of a Property at
Borrower's expense prior to making a monthly disbursement from the
Replacement Reserve Account, with respect to each Property, in order to
verify completion of the Replacements for which reimbursement is sought.
Lender may require that such inspection be conducted by an appropriate
independent qualified professional selected by Lender and/or may require a
copy of a certificate of completion by an independent qualified
professional acceptable to Lender prior to the disbursement of any amounts
from the Replacement Reserve Account. Borrower shall pay the expense of the
inspection as required hereunder, whether such inspection is conducted by
Lender or by an independent qualified professional.
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(h) The Replacements and all materials, equipment,
fixtures, or any other item comprising a part of any Replacement shall be
constructed, installed or completed, as applicable, free and clear of all
mechanic's, materialmen's or other Liens.
(i) Before each disbursement from the Replacement Reserve
Account relating to actual physical work on the Improvements in excess of
$200,000 with respect to each Property, Lender may require Borrower to
provide Lender with a search of title to the applicable Property effective
to the date of the disbursement, which search shows that no mechanic's or
materialmen's Liens or other Liens of any nature have been placed against
the applicable Property since the date of recordation of the related
Security Instrument and that title to such Property is free and clear of
all Liens (other than the Lien of the related Security Instrument and other
Permitted Encumbrances).
(j) All Replacements shall comply with all applicable
Legal Requirements of all Governmental Authorities having jurisdiction over
the applicable Property and applicable insurance requirements including,
without limitation, applicable building codes, special use permits,
environmental regulations, and requirements of insurance underwriters.
(k) In addition to any insurance required under the Loan
Documents, Borrower shall provide or cause to be provided workmen's
compensation insurance, builder's risk, and public liability insurance and
other insurance to the extent required under Applicable Law in connection
with a particular Replacement. All such policies shall be in form and
amount reasonably satisfactory to Lender. All such policies which can be
endorsed with standard mortgagee clauses making loss payable to Lender or
its assigns shall be so endorsed. Certified copies of such policies shall
be delivered to Lender
7.3.4 Failure to Make Replacements.
(a) It shall be an Event of Default under this Agreement
if Borrower fails to comply with any provision of this Section 7.3 and such
failure is not cured within thirty (30) days after written notice from
Lender. Upon the occurrence of an Event of Default, Lender may use the
Replacement Reserve Fund (or any portion thereof) for any purpose,
including but not limited to completion of the Replacements as provided in
Sections 7.3.3(c) and 7.3.3(d), or for any other repair or replacement to
any Property or toward payment of the Debt in such order, proportion and
priority as Lender may determine in its sole discretion. Lender's right to
withdraw and apply the Replacement Reserve Funds shall be in addition to
all other rights and remedies provided to Lender under this Agreement and
the other Loan Documents.
(b) Nothing in this Agreement shall obligate Lender to
apply all or any portion of the Replacement Reserve Fund on account of an
Event of Default to payment of the Debt or in any specific order or
priority.
7.3.5 Balance in the Replacement Reserve Account.
The insufficiency of any balance in the Replacement Reserve Account
shall not relieve Borrower from its obligation to fulfill all preservation and
maintenance covenants in the Loan Documents.
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SECTION 7.4 GROUND LEASE ESCROW FUND.
With respect to the Reserve Properties only (unless Lender has agreed
to waive such requirement with respect to one or more such Reserve Properties),
Borrower shall pay to Lender, together with the Monthly Debt Service Payment
Amount, an amount (the "Monthly Ground Rent Deposit") that is estimated by
Lender to be due and payable by Borrower under the Ground Lease for all rent and
any and all other charges (the "Ground Rent") which may be due by Borrower under
the Ground Lease in order to accumulate with Lender sufficient funds to pay all
sums payable under the Ground Lease at least ten (10) Business Days prior to the
dates due (said amounts, hereinafter called the "Ground Lease Escrow Fund"). The
Ground Lease Escrow Fund is for the purpose of paying all sums due under the
Ground Lease. Upon Borrower's failure to pay any Ground Rents after the receipt
of any notice and at least ten (10) days prior to the expiration of any cure
period available to Borrower pursuant to the Ground Lease, Lender may, in its
discretion, apply any amounts held in the Ground Lease Escrow Fund to the
payment of such Ground Rent; provided however, that the provisions of this
Section 7.4 shall not be deemed to create any obligation on the part of Lender
to pay any such Ground Rent from amounts on deposit in the Ground Lease Escrow
Fund. Such deposit may be increased by Lender in the amount Lender deems is
necessary in its reasonable discretion based on any increases in the Ground Rent
due under the Ground Lease. Notwithstanding anything contained in this Section
7.4 to the contrary, Lender may, in its sole discretion, require Borrower to
post a cash reserve in an amount equal to one payment of Ground Rents due under
each Ground Lease (the "Ground Lease Cash Reserve") in lieu of Borrower making
the Monthly Ground Rent Deposit. Borrower shall have no right to a withdrawal of
(and Lender shall have no obligation to disburse and/or apply) any portion of
the Ground Lease Cash Reserve.
SECTION 7.5 RESERVE FUNDS, GENERALLY.
(a) Borrower grants to Lender a first-priority perfected
security interest in each of the Reserve Funds and the related Accounts and
any and all monies now or hereafter deposited in each Reserve Fund and
related Account as additional security for payment of the Debt. Until
expended or applied in accordance herewith, the Reserve Funds and the
related Accounts shall constitute additional security for the Debt.
(b) Upon the occurrence of an Event of Default, Lender
may, in addition to any and all other rights and remedies available to
Lender, apply any sums then present in any or all of the Reserve Funds to
the payment of the Debt in any order in its sole discretion.
(c) The Reserve Funds shall not constitute trust funds
and may be commingled with other monies held by Lender.
(d) The Reserve Funds shall be held in interest bearing
accounts and all earnings or interest on a Reserve Fund shall be added to
and become a part of such Reserve Fund and shall be disbursed in the same
manner as other monies deposited in such Reserve Fund, except that earnings
or interest on the Tax and Insurance Escrow Fund shall not be added to or
become a part thereof and shall be the sole property of and shall be paid
to Lender.
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(e) Borrower shall not, without obtaining the prior
written consent of Lender, further pledge, assign or grant any security
interest in any Reserve Fund or related Account or the monies deposited
therein or permit any lien or encumbrance to attach thereto, or any levy to
be made thereon, or any UCC-1 Financing Statements, except those naming
Lender as the secured party, to be filed with respect thereto.
(f) Borrower shall indemnify Lender and hold Lender
harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations and costs and expenses (including
litigation costs and reasonable attorneys fees and expenses) arising from
or in any way connected with the Reserve Funds or the related Accounts or
the performance of the obligations for which the Reserve Funds or the
related Accounts were established, except to the extent arising from the
fraud, illegal acts, gross negligence or willful misconduct of Lender, its
agents or employees. Borrower shall assign to Lender all rights and claims
Borrower may have against all Persons supplying labor, materials or other
services which are to be paid from or secured by the Reserve Funds or the
related Accounts; provided, however, that Lender may not pursue any such
right or claim unless an Event of Default has occurred and remains uncured
VIII. DEFAULT
SECTION 8.1 EVENT OF DEFAULT.
(a) Each of the following events shall constitute an event of
default hereunder (an "Event of Default"):
(i) if any portion of the Debt is not paid on or before
the date the same is due and payable;
(ii) if any of the Taxes or Other Charges are not paid on
or before the date when the same are due and payable;
(iii) if the Policies are not kept in full force and effect
or if certified copies of the Policies are not delivered to Lender
promptly on request;
(iv) if a Transfer occurs in violation of the provisions
of Section 5.2.10 hereof or Article 7 of the Security Instruments;
(v) if any representation or warranty made by Borrower,
an Operating Lessee SPE Entity, Principal, Indemnitor or Guarantor
herein or in any other Loan Document, or in any report, certificate,
financial statement or other instrument, agreement or document
furnished to Lender shall have been false or misleading in any material
respect as of the date the representation or warranty was made;
(vi) if Borrower, an Operating Lessee SPE Entity,
Principal, Indemnitor, Guarantor or any other guarantor under any
guaranty issued in connection with the Loan shall make an assignment
for the benefit of creditors;
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(vii) if a receiver, liquidator or trustee shall be
appointed for Borrower, Principal, an Operating Lessee SPE Entity,
Indemnitor, Guarantor or any other guarantor under any guarantee issued
in connection with the Loan or if Borrower, Principal, an Operating
Lessee SPE Entity, Indemnitor, Guarantor or such other guarantor shall
be adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to the Bankruptcy
Code, or any similar federal or State law, shall be filed by or
against, consented to, or acquiesced in by, Borrower, Principal, an
Operating Lessee SPE Entity, Indemnitor, Guarantor or such other
guarantor, or if any proceeding for the dissolution or liquidation of
Borrower, Principal, an Operating Lessee SPE Entity, Indemnitor,
Guarantor or such other guarantor shall be instituted; provided,
however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by Borrower, Principal, an Operating
Lessee SPE Entity, Indemnitor, Guarantor or such other guarantor, upon
the same not being discharged, stayed or dismissed within sixty (60)
days;
(viii) if Borrower or Operating Lessee attempts to
assign its rights under this Agreement or any of the other Loan
Documents or any interest herein or therein in contravention of the
Loan Documents;
(ix) other than for with respect to a default which is
expressly contemplated by another subsection of this Section 8.1(a), if
Borrower breaches any of its respective negative covenants contained in
Section 5.2;
(x) if Borrower violates or does not comply in any
material respect with any of the provisions of Section 5.1.17 hereof;
(xi) if a (a) default has occurred and continues beyond
any applicable cure period under the Management Agreement (or any
Replacement Management Agreement) if such default permits the Manager
thereunder to terminate or cancel the Management Agreement (or any
Replacement Management Agreement) or (b) any Management Agreement (or
Replacement Management Agreement) expires or otherwise terminates and
is not replaced with a Replacement Management Agreement or (c) if any
Property operates for any time without the Management Agreement or a
Replacement Management Agreement;
(xii) if Borrower or Principal violates or does not comply
in all material respects with the provisions of Section 4.1.35 hereof;
(xiii) if any Property becomes subject to any mechanic's,
materialman's or other Lien other than a Lien for local real estate
taxes and assessments not then due and payable and the Lien shall
remain undischarged of record (by payment, bonding or otherwise) for a
period of sixty (60) days;
(xiv) if any federal tax Lien or state or local income tax
Lien is filed against Borrower, Principal, an Operating Lessee SPE
Entity, any Guarantor, Indemnitor or any Property and same is not
discharged of record within thirty (30) days after same is filed;
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(xv) (A) Borrower fails to timely provide Lender with the
written certification and evidence referred to in Section 5.2.8 hereof,
(B) Borrower or Operating Lessee is a Plan or its assets constitute
Plan Asset; or (C) Borrower or Operating Lessee consummates a
transaction which would cause the Security Instruments or Lender's
exercise of its rights under the Security Instruments, the Note, this
Agreement or the other Loan Documents to constitute a nonexempt
prohibited transaction under ERISA or result in a violation of a State
statute regulating governmental plans, subjecting Lender to liability
for a violation of ERISA, the Code, a State statute or other similar
law;
(xvi) if Borrower shall fail to deliver to Lender, within
fifteen (15) Business Days after request by Lender, the estoppel
certificates required pursuant to the terms of Section 5.1.13(a)
hereof;
(xvii) if any default occurs under any guaranty or indemnity
executed in connection herewith (including, without limitation, the
Guaranty and the Environmental Indemnity) and such default continues
after the expiration of applicable grace periods, if any;
(xviii) other than in connection with the Permitted FF&E
Financing, if Borrower shall be in default beyond applicable notice and
grace periods under any other mortgage, deed of trust, deed to secure
debt or other security agreement covering any part of any Property
whether it be superior or junior in lien to the related Security
Instrument;
(xix) Intentionally Omitted;
(xx) with respect to any term, covenant or provision set
forth herein which specifically contains a notice requirement or grace
period, if Borrower shall be in default under such term, covenant or
condition after the giving of such notice or the expiration of such
grace period;
(xxi) if any default occurs under the Operating Lease
Subordination Agreement, and such default continues after the
expiration of applicable grace or cure periods, if any;
(xxii) if there shall occur any material default under the
Operating Lease, in the observance or performance of any term, covenant
or condition of the Operating Lease to be observed or performed and
said default is not cured following the expiration of any applicable
grace and notice periods therein provided or if the leasehold estate
created by the Operating Lease shall be surrendered or if the Operating
Lease shall cease to be in full force and effect or the Operating Lease
shall be terminated or canceled for any reason or under any
circumstances whatsoever, or if any of the terms, covenants or
conditions of the Operating Lease shall in any manner be modified,
changed, supplemented, altered, or amended in any material respect
without the consent of Lender;
(xxiii) if any of the assumptions contained in the Insolvency
Opinion, or in any other "non-consolidation" opinion delivered to
Lender in connection with the Loan, or in any other "non-consolidation"
opinion delivered subsequent to the closing of the Loan, is or shall
become untrue in any material respect;
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(xxiv) Intentionally Omitted;
(xxv) if there shall occur (A) any uncured default in the
payment of Ground Rent by Borrower or (B) any other material default by
Borrower, as tenant under any Ground Lease, in the observance or
performance of any term, covenant or condition of such Ground Lease on
the part of Borrower to be observed or performed and said default is
not cured following the expiration of any applicable grace and notice
periods therein provided, or if the leasehold estate created by such
Ground Lease shall be surrendered or if such Ground Lease shall cease
to be in full force and effect or such Ground Lease shall be terminated
or canceled for any reason or under any circumstances whatsoever, or if
any of the terms, covenants or conditions of such Ground Lease shall in
any manner be modified, changed, supplemented, altered, or amended
without the consent of Lender;
(xxvi) if (a) a material default has occurred and continues
beyond any applicable cure period under the Franchise Agreement, and
such default permits a party to terminate or cancel the Franchise
Agreement or (b) any Franchise Agreement expires or otherwise
terminates and is not replaced with a replacement Franchise Agreement
reasonably acceptable to Lender;
(xxvii) if Borrower ceases to operate a hotel on any Property
or terminates such business for any reason whatsoever (other than
temporary cessation in connection with any renovations to a Property or
restoration of the Property after Casualty or Condemnation);
(xxviii) if Borrower terminates or cancels the Franchise
Agreement, without Lender's prior written consent;
(xxix) if Borrower shall continue to be in Default under any
of the other terms, covenants or conditions of this Agreement not
specified in subsections (i) to (xxviii) above, for ten (10) days after
written notice to Borrower from Lender, in the case of any Default
which can be cured by the payment of a sum of money, or for thirty (30)
days after written notice from Lender in the case of any other Default;
provided, however, that if such non-monetary Default is susceptible of
cure but cannot reasonably be cured within such 30-day period and
provided further that Borrower shall have commenced to cure such
Default within such thirty (30) day period and thereafter diligently
and expeditiously proceeds to cure the same, such thirty (30) day
period shall be extended for such time as is reasonably necessary for
Borrower in the exercise of due diligence to cure such Default, such
additional period not to exceed sixty (60) days; or
(xxx) if there shall be default under the Security
Instruments or any of the other Loan Documents beyond any applicable
notice and cure periods contained in such documents, whether as to
Borrower or any Property, or if any other such event shall occur or
condition shall exist, if the effect of such event or condition is to
accelerate the maturity of any portion of the Debt or to permit Lender
to accelerate the maturity of all or any portion of the Debt.
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(b) Upon the occurrence of an Event of Default (other
than an Event of Default described in clauses Section 8.1(a)(vi) or (vii)
above) and at any time thereafter, in addition to any other rights or
remedies available to it pursuant to this Agreement and the other Loan
Documents or at law or in equity, Lender may take such action, without
notice or demand, that Lender deems advisable to protect and enforce its
rights against Borrower and in and to all or any Property, including,
without limitation, declaring the Debt to be immediately due and payable,
and Lender may enforce or avail itself of any or all rights or remedies
provided in the Loan Documents against Borrower and any or all of the
Properties, including, without limitation, all rights or remedies available
at law or in equity; and upon any Event of Default described in clauses
Section 8.1(a)(vi) or (vii) above, the Debt and all other obligations of
Borrower hereunder and under the other Loan Documents shall immediately and
automatically become due and payable, without notice or demand, and
Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary
notwithstanding.
SECTION 8.2 REMEDIES.
(a) Upon the occurrence of an Event of Default, all or
any one or more of the rights, powers, privileges and other remedies
available to Lender against Borrower under this Agreement or any of the
other Loan Documents executed and delivered by, or applicable to, Borrower
or at law or in equity may be exercised by Lender at any time and from time
to time, whether or not all or any of the Debt shall be declared due and
payable, and whether or not Lender shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies
under any of the Loan Documents with respect to all or any Property or any
other Collateral. Any such actions taken by Lender shall be cumulative and
concurrent and may be pursued independently, singly, successively, together
or otherwise, at such time and in such order as Lender may determine in its
sole discretion, to the fullest extent permitted by Applicable Law, without
impairing or otherwise affecting the other rights and remedies of Lender
permitted by Applicable Law, equity or contract or as set forth herein or
in the other Loan Documents. Without limiting the generality of the
foregoing, Borrower agrees that if an Event of Default is continuing (i)
Lender is not subject to any "one action" or "election of remedies" law or
rule, and (ii) all Liens and other rights, remedies or privileges provided
to Lender shall remain in full force and effect until Lender has exhausted
all of its remedies against the Properties and the other Collateral and
each Security Instrument has been foreclosed, sold and/or otherwise
realized upon in satisfaction of the Debt or the Debt has been paid in
full.
(b) With respect to Borrower and the Properties, nothing
contained herein or in any other Loan Document shall be construed as
requiring Lender to resort to any Property or Collateral for the
satisfaction of any of the Debt in preference or priority to any other
Property or Collateral, and Lender may seek satisfaction out of all of the
Properties or any other Collateral or any part thereof, in its absolute
discretion in respect of the Debt. In addition, Lender shall have the right
from time to time to partially foreclose the Security Instruments in any
manner and for any amounts secured by the Security Instruments then due and
payable as determined by Lender in its sole discretion including, without
limitation, the following circumstances: (i) in the event Borrower
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defaults beyond any applicable grace period in the payment of one or more
scheduled payments of principal and interest, Lender may foreclose one or
more of the Security Instruments to recover such delinquent payments, or
(ii) in the event Lender elects to accelerate less than the entire
outstanding principal balance of the Loan, Lender may foreclose one or more
of the Security Instruments to recover so much of the principal balance of
the Loan as Lender may accelerate and such other sums secured by one or
more of the Security Instruments as Lender may elect. Notwithstanding one
or more partial foreclosures, the Properties shall remain subject to the
Security Instruments to secure payment of sums secured by the Security
Instruments and not previously recovered.
(c) Lender shall have the right, from time to time, to
sever the Note and the other Loan Documents into one or more separate
notes, mortgages and other security documents (the "Severed Loan
Documents") in such denominations as Lender shall determine in its sole
discretion for purposes of evidencing and enforcing its rights and remedies
provided hereunder. Borrower shall execute and deliver to Lender from time
to time, promptly after the request of Lender, a severance agreement and
such other documents as Lender shall request in order to effect the
severance described in the preceding sentence, all in form and substance
reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with
an interest, in its name and stead to make and execute all documents
necessary or desirable to effect the aforesaid severance, Borrower
ratifying all that its said attorney shall do by virtue thereof; provided,
however, Lender shall not make or execute any such documents under such
power until three (3) days after notice has been given to Borrower by
Lender of Lender's intent to exercise its rights under such power. The
Severed Loan Documents shall not contain any representations, warranties or
covenants not contained in the Loan Documents and any such representations
and warranties contained in the Severed Loan Documents will be given by
Borrower only as of the Closing Date.
SECTION 8.3 REMEDIES CUMULATIVE; WAIVERS.
The rights, powers and remedies of Lender under this Agreement shall be
cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singularly, concurrently or otherwise, at such time
and in such order as Lender may determine in Lender's sole discretion. No delay
or omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one or more
Defaults or Events of Default with respect to Borrower shall not be construed to
be a waiver of any subsequent Default or Event of Default by Borrower or to
impair any remedy, right or power consequent thereon.
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IX. SPECIAL PROVISIONS
SECTION 9.1 CONVERSION TO FIXED RATE CMBS LOANS.
9.1.1 Conversion.
On or before the Maturity Date, but subject to the Conversion
Limitations, Lender may, in one or a series of transactions, convert all or any
portion of the outstanding balance of the Loan to one or more Fixed Rate CMBS
Loans (each, a "Conversion") subject to the terms and conditions set forth
below; provided, however, Lender shall not give notice to Borrower of its intent
to consummate a Conversion for a period of sixty (60) days beginning on the date
Lender actually receives a Floating Rate Conversion Notice. Upon Lender's
exercise of the Conversion and the execution of the Conversion Documents, the
portion of the Loan that is the subject of such Conversion shall automatically
convert into a Fixed Rate CMBS Loan and the Property secured thereby shall no
longer be deemed a Property hereunder. Lender shall not have the right to
exercise a Conversion unless and until the conditions in subsection (i), (ii)
and (iii) below have been satisfied.
(i) Lender shall have given notice (a "Conversion
Notice") to Borrower of the date of Conversion (the "Conversion Date");
which notice shall be given to Borrower at least thirty (30) days prior
to the Conversion Date unless Lender has waived Borrower's obligation
to comply with the provisions of Section 9.1.1(iv)(A), (C) and (D)
hereof.
(ii) Prior to any Conversion, Lender shall consult with
Borrower with respect to the selection of the Property which will be
the collateral for such Fixed Rate CMBS Loan (the "Fixed Rate CMBS
Collateral"), but in no event shall Lender be bound by any
recommendation or request of Borrower pertaining to such Fixed Rate
CMBS Collateral and Lender shall select the Fixed Rate CMBS Collateral
in its sole and absolute discretion; provided, however, that (A) the
Fixed Rate CMBS Collateral shall not be comprised of more than one (1)
Property and (B) the original principal balance of the Fixed Rate CMBS
Loan shall be equal to the maximum amount in order for the Fixed Rate
CMBS Loan to achieve (i) a Debt Service Coverage Ratio of not less than
1.30:1.00 and (ii) a ratio, expressed as a percentage, of (I) the
original principal balance of the Fixed Rate CMBS Loan divided by (II)
the Property Value of the Fixed Rate CMBS Collateral, of not more than
sixty percent (60%) (the "Conversion Parameters").
(iii) Lender shall have provided Borrower with all of the
Conversion Amended Loan Documents not later than five (5) Business Days
prior to the Conversion Date;
(iv) Borrower shall have delivered, among other things,
the following documents to Lender at Borrower's sole cost and expense,
which documents shall be in form, content and substance acceptable to
Lender in its sole discretion (the "Conversion Documents"):
(A) an update, dated not more than thirty (30)
days prior to the Conversion Date, of all of the Third Party
Reports of the applicable Property
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accepted by Lender in connection with the closing of the Loan;
provided, however, (i) such update(s) shall be ordered by
Lender and paid for by Borrower and (ii) no such update shall
be required with respect to a Third Party Report in the event
that the Conversion Date occurs less than two hundred seventy
(270) days from the date such Third Party Report was obtained
and approved by Lender in accordance with the closing of the
Loan;
(B) a Title Insurance Policy (or a marked,
signed and redated commitment to issue such Title Insurance
Policy) insuring the Lien of the Security Instrument
encumbering the Fixed Rate CMBS Collateral, issued by the
title insurance company that issued the Title Insurance Policy
on the Closing Date (or such other title company acceptable to
Lender) and dated as of the Conversion Date, with reinsurance
and direct access agreements acceptable to Lender. The Title
Insurance Policy issued with respect to the Fixed Rate CMBS
Loan shall (1) provide coverage in the amount of the original
principal amount of the Fixed Rate CMBS Loan, (2) insure
Lender that the relevant mortgage creates a valid first lien
on the Fixed Rate CMBS Collateral encumbered thereby, free and
clear of all exceptions from coverage other than Permitted
Encumbrances and standard exceptions and exclusions from
coverage (as modified by the terms of any endorsements), (3)
contain such endorsements and affirmative coverages as are
then available and are reasonably required by Lender, and (4)
name Lender as the insured. Lender also shall have received
copies of paid receipts or other evidence showing that all
premiums in respect of such endorsements and Title Insurance
Policy have been paid;
(C) a Franchisor Estoppel and Recognition
Letter, dated not more than thirty (30) days prior to the
Conversion Date, from the Franchisor under the Franchise
Agreement, if any;
(D) estoppel certificates dated not more than
thirty (30) days prior to the Conversion Date, from Manager,
Operating Lessor and tenants under Major Leases;
(E) a certification by Borrower that as of the
Conversion Date, no proceedings shall have been threatened or
commenced by a Governmental Authority having the power of
eminent domain to condemn any portion of the Property;
(F) if not previously delivered to Lender
pursuant to Section 5.1.10 hereof, updated financial
statements containing information consistent with those
financial statements required pursuant to Section 5.1.10
hereof; and
(G) a certificate executed by Borrower and
FelCor at Conversion in substantially the form attached to
this Agreement as EXHBIT AA (a "Conversion Certificate").
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(v) Borrower and, if applicable, FelCor shall have
executed and delivered to Lender loan documents substantially in the
form of EXHIBIT BB hereto and such amendments to the Note, this
Agreement and any of the other Loan Documents as Lender may reasonably
require to evidence the Conversion (the "Conversion Amended Loan
Documents"); which Conversion Amended Loan Documents (A) will require,
among other things, (1) reserves and/or escrow as reasonably determined
by Lender, including, without limitation, tax and insurance escrows,
replacement reserves and required repair reserves and (2) cash
management provisions (or reserves in lieu thereof satisfactory to
Lender in all respects) in the event the original principal balance of
the applicable Fixed Rate CMBS Loan equals or exceeds $15,000,000 and
(B) will not require any financial statements of Borrower and/or
Operating Lessee to be audited by a certified public accountant.
(vi) Lender shall have received (A) an opinion of counsel
with respect to the execution, delivery and enforceability of the
Conversion Amended Loan Documents and (B) an update or revised
Insolvency Opinion, each such opinion shall be in form, scope and from
counsel reasonably acceptable to Lender; and
(vii) Borrower shall have satisfied, or caused the
satisfaction of, such other requirements and/or conditions as are then
reasonably being required by Lender with respect to fixed rate loans
being made by Lender for the purpose of resale into the secondary
mortgage market (including, without limitation, the execution and
delivery by Borrower of any supplemental documentation then reasonably
being required by Lender).
9.1.2 Fixed Rate CMBS Loan Provisions.
(a) Each Fixed Rate CMBS Loan shall have a term of ten
(10) years and require amortization payments based on a twenty-five
(25) year schedule. Except to the extent expressly set forth herein or
in the Conversion Amended Loan Documents, Lender shall determine the
terms and conditions of all other provisions of the Fixed Rate CMBS
Loan, all of which shall be determined by Lender in its reasonable
discretion in accordance with Lender's then current criteria pursuant
to which Lender is then originating commercial mortgage loans solely
for sale in the secondary mortgage market, as the same may change from
time to time (the "Commercial Lending Program Criteria"); provided,
however, in the event of any inconsistencies between the terms and
conditions of the Conversion Amended Loan Documents and the provisions
of the then current Commercial Lending Program Criteria, the terms and
conditions of the then current Commercial Lending Program Criteria
shall control and be binding, except with respect to the determination
of the applicable interest rate and the CMBS Loan Amount for which the
terms and conditions of the Conversion Amended Loan Documents shall
control and be binding.
(b) The applicable interest rate for each Fixed Rate CMBS
Loan (the "Fixed Rate CMBS Rate") shall be fixed on the Conversion Date
and shall be determined by Lender based upon the greater of (i) 5.55%
and (ii) the sum of (A) the yield to maturity for the "on-the-run"
10-year U.S. Treasury note; plus (B) the offered side of the 10-year
swap rate; plus (C) 160 basis points; plus (D) the Spread Adjustment.
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(c) No Fixed Rate CMBS Loan shall be cross-collateralized
or cross-defaulted with any additional loan or indebtedness and, the
applicable Borrower shall be released by Lender from any and all
indebtedness, obligations or other liabilities with respect to the
Loan.
(d) Lender shall endeavor in good faith to make the
original principal balance of each Fixed Rate CMBS Loan comply with the
definition of CMBS Loan Amount.
9.1.3 Costs and Expenses Relating to Conversion.
In addition to the requirements of Section 9.1.1 hereof, whether or not
one or more Conversions are consummated, Borrower shall pay, among other things,
all costs and expenses of Lender in connection with Lender's due diligence
review of the Fixed Rate CMBS Collateral, the negotiation, preparation,
execution and delivery of the Conversion Amended Loan Documents and the
documents and instruments referred to therein and the creation, perfection or
protection of Lender's Liens in the Fixed Rate CMBS Collateral (including,
without limitation, fees and expenses for title insurance, property inspections,
appraisals, consultants, surveys, lien searches, filing and recording fees, and
escrow fees and expenses); provided, however, other than as expressly provided
herein or in the Conversion Amended Loan Documents, Borrower shall not be
required to pay any costs or expenses incurred by Lender in connection with the
securitization of the Fixed Rate CMBS Loan.
SECTION 9.2 CONVERSION TO FLOATING RATE CMBS LOAN.
9.2.1 Floating Rate Conversion.
(a) On or before the Maturity Date, Borrower may convert
all or a portion of the Loan to a Floating Rate CMBS Loan (a "Floating Rate
CMBS Conversion") subject to the terms and conditions set forth below. Upon
Borrower's consummation of the Floating Rate CMBS Conversion, the portion
of the Loan that is the subject of such Floating Rate CMBS Conversion shall
automatically convert into a Floating Rate CMBS Loan and the Property
secured thereby shall no longer be deemed a Property hereunder. Borrower
shall have no right to exercise the Floating Rate CMBS Conversion unless
and until all of the following conditions shall be satisfied in Lender's
sole and absolute discretion:
(i) Borrower shall not have the right to request a
Floating Rate CMBS Conversion that is to be consummated (A) prior to
January 1, 2004 (or such earlier date upon which Lender has sold or
securitized one hundred percent (100%) of the loan made by Lender to
Affiliates of Borrower on April 24, 2003), (B) more than one (1) time
during the term of the Loan or (C) if Lender shall have previously
delivered a notice of Conversion relating to the proposed Floating Rate
CMBS Collateral;
(ii) Borrower shall have delivered written notice to
Lender (the "Floating Rate Conversion Notice") not less than sixty (60)
days prior to the requested date of Floating Rate CMBS Conversion (the
"Floating Rate Conversion Date"), which Floating Rate Conversion Date
shall be no later than sixty (60) days prior to the Maturity Date or
the Extended Maturity Date, as applicable;
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(iii) no Default or Event of Default shall have occurred
and be continuing under this Agreement or any of the other Loan
Documents at the time of delivery of the Floating Rate Conversion
Notice and on the Floating Rate Conversion Date;
(iv) at the time of Borrower's request for Floating Rate
CMBS Conversion the outstanding principal balance of the Loan must be
greater than $25,000,000.00;
(v) the original principal balance of the Floating Rate
CMBS Loan must be not less than $50,000,000.00 and not more than
$75,000,000.00; provided, however, (A) Lender shall not give Borrower
notice of its intent to consummate a Conversion for a period of sixty
(60) days beginning on the date Lender actually receives the Floating
Rate Conversion Notice, and (B) on or before the Floating Rate
Conversion Date, Borrower may obtain an Advance to increase the
outstanding principal balance of the Loan to an aggregate amount not
less than $50,000,000.00 and not more than $75,000,000.00;
(vi) Lender shall determine in its reasonable discretion
that the last dollar of such Floating Rate CMBS Loan shall be rated no
less than Investment Grade from each of the Rating Agencies, but the
amount of the Floating Rate CMBS Loan shall be not less than
forty-eight percent (48%) of the Property Value of the Floating Rate
CMBS Collateral;
(vii) Borrower shall have provided Lender with all
Conversion Documents (relating to the Floating Rate CMBS Loan) not
later than five (5) Business Days prior to the Floating Rate Conversion
Date;
(viii) Lender shall have received evidence that no
circumstances or conditions regarding the Floating Rate CMBS
Collateral, Borrower, FelCor, Manager, Franchisor or Operating Lessee
or any tenant under a Major Lease exist that could reasonably be
expected to (A) cause the Floating Rate CMBS Loan to become in default
or (B) adversely affect the value or marketability of the Floating Rate
CMBS Loan;
(ix) Borrower and, if applicable, FelCor shall have
executed and delivered to Lender loan documents substantially in the
form of EXHIBIT CC hereto and such amendments to the Note, this
Agreement and any of the other Loan Documents as Lender may reasonably
require to evidence the Floating Rate CMBS Conversion (the "Floating
Rate Conversion Documents") which Lender shall have provided to
Borrower not later than five (5) Business Days prior to the Floating
Rate Conversion Date; provided, however, in the event of any
inconsistencies between the terms and conditions of the Floating Rate
Conversion Documents and the provisions of the then current Commercial
Lending Program Criteria, the terms and conditions of the then current
Commercial Lending Program Criteria shall control and be binding,
except with respect to the determination of the applicable interest
rate and the CMBS Loan Amount for which the terms and conditions of the
Floating Rate Conversion Documents shall control and be binding. The
Floating Rate Conversion Documents will require, among other things,
(A) reserves and/or escrow as reasonably determined by Lender,
including, without limitation, tax and insurance escrows, replacement
reserves and required repair reserves,
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(B) full cash management provisions and (C) that the financial
statements of Borrower and/or Operating Lessee be audited by a
certified public accountant.
(x) Lender shall have received (A) an opinion of counsel
with respect to the execution, delivery and enforceability of the
Floating Rate Conversion Documents and (B) an update or revised
Insolvency Opinion, each such opinion shall be in form, scope and from
counsel reasonably acceptable to Lender; and
(xi) Borrower shall have paid to Lender the origination
fee required pursuant to Section 9.2.2(a)(iv) hereof.
(b) Borrower shall have satisfied, or caused the
satisfaction of, such other requirements and/or conditions as are then
reasonably being required by Lender with respect to floating rate loans
being made by Lender for the purpose of resale into the secondary mortgage
market (including, without limitation, the execution and delivery by
Borrower of any supplemental documentation then being reasonably required
by Lender).
9.2.2 Floating Rate CMBS Loan Provisions.
(a) The Floating Rate CMBS Loan shall (i) have an initial
term of two (2) or three (3) years (as determined by agreement of Lender
and Borrower) and shall provide for an extension term such that the initial
term, as extended by such extension term, shall be five (5) years, (ii)
require amortization payments based on a twenty-five (25) year schedule,
(iii) be prepayable, in whole, after eighteen (18) months from the closing
date thereof, without penalty or premium, (iv) require an interest rate cap
agreement, which shall be coterminous with the Floating Rate CMBS Loan, in
the notional amount of not less than the original principal balance of the
Floating Rate CMBS Loan that provides for payments by the counterparty in
the event LIBOR exceeds a strike price to be determined by Lender in its
reasonable discretion consistent with Lender's Commercial Lending Program
Criteria and (v) require an origination fee equal to three-quarters of one
percent (0.75%) of the original principal balance of the Floating Rate CMBS
Loan. Except to the extent expressly set forth in the Floating Rate
Conversion Documents, Lender shall determine the terms and conditions of
all other provisions of the Floating Rate CMBS Loan, all of which shall be
determined by Lender in its reasonable discretion in accordance with
Lender's Commercial Lending Program Criteria.
(b) The applicable interest rate for each Floating Rate
CMBS Loan shall be determined on the Floating Rate Conversion Date and
shall be equal to LIBOR plus (i) one and one-half percent (1.50%) plus (ii)
the Spread Adjustment.
(c) No Floating Rate CMBS Loan shall be (i)
cross-collateralized (other than with the Properties which are collateral
for such Floating Rate CMBS Loan) or (ii) cross-defaulted with any
additional loan or indebtedness. including, without limitation the Loan or
any Fixed Rate CMBS Loan and the applicable Borrower shall be released by
Lender from any and all indebtedness, obligations or other liabilities with
respect to the Loan.
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9.2.3 Costs and Expenses Relating to Floating Rate Conversion.
In addition to the requirements of Section 9.2.1 hereof, whether or not
a Floating Rate Conversions is consummated, Borrower shall pay, among other
things, all costs and expenses of Lender in connection with Lender's due
diligence review of the collateral securing the Floating Rate CMBS Loan (the
"Floating Rate CMBS Collateral"), all Breakage Costs, the negotiation,
preparation, execution and delivery of the Floating Rate Conversion Documents
and the documents and instruments referred to therein and the creation,
perfection or protection of Lender's Liens in the Floating Rate CMBS Collateral
(including, without limitation, fees and expenses for title insurance, property
inspections, appraisals, consultants, surveys, lien searches, filing and
recording fees, and escrow fees and expenses); provided, however, other than as
expressly provided herein or in the Floating Rate Conversion Documents, Borrower
shall not be required to pay any costs or expenses incurred by Lender in
connection with the securitization of the Floating Rate CMBS Loan.
SECTION 9.3 SERVICER.
At the option of Lender, the Loan may be serviced by a
servicer/trustee (the "Servicer") selected by Lender and Lender may delegate all
or any portion of its responsibilities under this Agreement and the other Loan
Documents to the Servicer pursuant to a servicing agreement (the "Servicing
Agreement") between Lender or Servicer.
SECTION 9.4 EXCULPATION.
(a) Except as otherwise provided in this Section and
comparable provisions in the Security Instruments or in the other Loan
Documents, Lender shall not enforce the liability and obligation of
Borrower or any of Borrower's Affiliates to perform and observe the
obligations contained in this Agreement, the Note or the Security
Instruments by any action or proceeding wherein a money judgment shall
be sought against Borrower or any of Borrower's Affiliates, except that
Lender may bring a foreclosure action, action for specific performance
or other appropriate action or proceeding to enable Lender to enforce
and realize upon this Agreement, the Note, the Security Instruments,
the other Loan Documents, and the interest in the Properties, the Rents
and any other Collateral created by this Agreement, the Note, the
Security Instruments and the other Loan Documents; provided, however,
that any judgment in any such action or proceeding shall be enforceable
against Borrower only to the extent of Borrower's interest in the
Properties, in the Rents and in any other Collateral. Lender, by
accepting this Agreement, the Note and the Security Instruments, agrees
that it shall not, except as otherwise provided in this Section and
comparable provisions in the Security Instruments, ▇▇▇ for, seek or
demand any deficiency judgment against Borrower or any of Borrower's
Affiliates in any such action or proceeding, under or by reason of or
under or in connection with this Agreement, the Note, the Security
Instruments or the other Loan Documents. The provisions of this Section
shall not, however, (i) constitute a waiver, release or impairment of
any obligation evidenced or secured by this Agreement, the Note, the
Security Instruments or the other Loan Documents; (ii) impair the right
of Lender to name Borrower as a party defendant in any action or suit
for judicial foreclosure and sale under the Security Instruments; (iii)
except as
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set forth in this Section, affect the validity or enforceability of any
indemnity (including, without limitation, the Environmental Indemnity),
guaranty (including, without limitation, the Maryland Guaranty), master
lease or similar instrument made in connection with this Agreement, the
Note, the Security Instruments, or the other Loan Documents; (iv)
impair the right of Lender to obtain the appointment of a receiver; (v)
except as set forth in this Section, impair the enforcement of the
Assignment of Leases; (vi) impair the right of Lender to enforce the
provisions of Sections 10.2 of the Security Instruments or Sections
4.1.8, 4.1.28, 5.1.9 and 5.2.8 hereof; or (vii) impair the right of
Lender to obtain a deficiency judgment or other judgment on the Note
against Borrower to the extent necessary to (A) preserve or enforce its
rights and remedies against any Property or (B) obtain any Insurance
Proceeds or Awards to which Lender would otherwise be entitled under
the terms of this Agreement or the Security Instruments; provided
however, Lender shall only enforce such judgment to the extent of the
Insurance Proceeds and/or Awards.
(b) Notwithstanding the provisions of this Section to the
contrary, Borrower shall be personally liable to Lender for the Losses
Lender incurs to the extent due to: (i) fraud or material
misrepresentation in connection with the execution and the delivery of
this Agreement, the Note, the Security Instrument, or the other Loan
Documents; (ii) Borrower's or Operating Lessee's misapplication or
misappropriation of Rents received by Borrower or Operating Lessee
after the occurrence of an Event of Default; (iii) Borrower's or
Operating Lessee's misapplication or misappropriation of Security
Deposits or Rents collected more than thirty (30) days in advance; (iv)
Borrower's or Operating Lessee's misapplication or the misappropriation
of Insurance Proceeds or Awards; (v) Borrower's or Operating Lessee's
failure to pay Taxes, Other Charges (except to the extent that sums
sufficient to pay such amounts have been deposited in escrow with
Lender pursuant to the terms of Section 7.2 hereof), charges for labor
or materials or other charges that can create Liens on the Properties;
(vi) Borrower's or Operating Lessee's failure to return or to reimburse
Lender for all Personal Property taken from any Properties by or on
behalf of Borrower or Operating Lessee and not replaced with Personal
Property of comparable utility and value; (vii) any act of intentional
waste or arson to the Collateral by Borrower, Principal, the Operating
Lessee SPE Entities or any Affiliate or thereof or by any Indemnitor or
Guarantor; (viii) any fees or commissions paid by Borrower to
Principal, the Operating Lessee SPE Entities or any Affiliate of
Borrower, Principal, the Operating Lessee SPE Entities, Indemnitor, or
Guarantor in violation of the terms of this Agreement, the Note, the
Security Instruments or the other Loan Documents; (ix) Borrower's
failure to comply with the provisions of Sections 4.1.39 and 5.1.19 of
this Agreement; (x) any Loss resulting from a Casualty due to
Borrower's failure to obtain the insurance required pursuant to Section
6.1, (xi) Borrower's default under Section 5.1.10 hereof (after ten
(10) Business Days prior written notice to Borrower), (xii) a material
default by Borrower under Section 9.1 and/or Section 9.2 hereof which
is not cured within thirty (30) days following Borrower's receipt of
written notice from Lender and (xiii) any Loss resulting from the
Austin Property's failure to comply with all applicable zoning laws and
ordinances; provided, however, Borrower shall have no liability
pursuant to this Section 9.4(b)(xiii) from and after the date Borrower
has delivered to Lender evidence acceptable to Lender that the Austin
Property complies with all applicable zoning laws and ordinances.
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(c) Notwithstanding the foregoing, the agreement of
Lender not to pursue recourse liability as set forth in Subsection (a)
above SHALL BECOME NULL AND VOID and shall be of no further force and
effect and the obligation to repay the Debt shall become a personal
recourse obligation of Borrower (i) in the event of Borrower's or
Principal's default under Section 4.1.35 hereof or Operating Lessee's
default under Section 12 of the Operating Lease Subordination Agreement
(such that such failure was considered by a court as a factor in the
court's finding for a consolidation of the assets of Borrower,
Principal and/or Operating Lessee with the assets of another Person) or
any Transfer in violation of the provisions of Section 5.2.10 hereof or
Article 7 of the Security Instruments, (ii) if any Property or any part
thereof shall become an asset, or if Borrower, Principal, or an
Operating Lessee SPE Entity shall be a debtor, in (A) a voluntary
bankruptcy or insolvency proceeding or (B) an involuntary bankruptcy or
insolvency proceeding commenced by any Person (other than Lender) and,
with respect to such involuntary proceeding, Borrower consents or fails
to object to such proceedings) or if Borrower, Principal or an
Operating Lessee SPE Entity has acted in concert with, colluded or
conspired with the party to cause the filing of such involuntary
proceeding or (iii) an Event of Default contemplated by Section
8.1(a)(xi)(b), 8.1(a)(xi)(c) or 8.1(a)(xxvi)(b) hereof has occurred
(unless caused by, or at the request of Lender); provided, however,
with respect to this Section 9.4(c)(iii) only, Borrower shall only be
liable on a recourse basis for the applicable CMBS Loan Amounts (plus
interest thereon and costs and expenses relating thereto) of the
Properties that were the cause of such Event of Default.
(d) Nothing herein shall be deemed to be a waiver of any
right which Lender may have under Section 506(a), 506(b), 1111(b) or
any other provision of the Bankruptcy Code to file a claim against
Borrower or Principal for the full amount of the indebtedness secured
by the Security Instruments or to require that all Collateral shall
continue to secure all of the indebtedness owing to Lender in
accordance with this Agreement, the Note, the Security Instruments and
the other Loan Documents.
X. MISCELLANEOUS
SECTION 10.1 SURVIVAL.
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Debt is outstanding and unpaid unless a longer period is expressly
set forth herein or in the other Loan Documents. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender, and all covenants, promises and agreements in this Agreement, by or on
behalf of Lender, shall be binding upon the legal representatives successors and
assigns of Lender.
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SECTION 10.2 LENDER'S DISCRETION.
Whenever pursuant to this Agreement, Lender exercises any right given
to it to approve or disapprove, or any arrangement or term is to be satisfactory
to Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive.
SECTION 10.3 GOVERNING LAW.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF NEW YORK AND SHALL IN
ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK (OTHER THAN THOSE CONFLICT OF
LAW PROVISIONS THAT WOULD DEFER TO THE SUBSTANTIVE LAWS OF ANOTHER
JURISDICTION). WITHOUT IN ANY WAY LIMITING THE PRECEDING CHOICE OF LAW,
THE PARTIES ELECT TO BE GOVERNED BY NEW YORK LAW IN ACCORDANCE WITH,
AND ARE RELYING (AT LEAST IN PART) ON, SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK; PROVIDED HOWEVER, THAT WITH
RESPECT TO THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE
LIENS AND SECURITY INTERESTS CREATED BY THIS AGREEMENT, THE SECURITY
INSTRUMENTS AND THE OTHER LOAN DOCUMENTS, AND THE DETERMINATION OF
DEFICIENCY JUDGMENTS, THE LAWS OF THE STATE WHERE EACH PROPERTY IS
LOCATED SHALL APPLY.
(b) WITH RESPECT TO ANY CLAIM OR ACTION ARISING HEREUNDER
OR UNDER THIS AGREEMENT, THE NOTE, OR THE OTHER LOAN DOCUMENTS,
BORROWER (A) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT
COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK, NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF, AND (B) IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING ON VENUE OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS BROUGHT IN ANY SUCH
COURT, IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING IN THIS AGREEMENT, THE NOTE OR THE OTHER
LOAN DOCUMENTS INSTRUMENT WILL BE DEEMED TO PRECLUDE LENDER FROM
BRINGING AN ACTION OR PROCEEDING WITH RESPECT HERETO IN ANY OTHER
JURISDICTION. WITHOUT IN ANY WAY LIMITING THE PRECEDING CONSENTS TO
JURISDICTION AND VENUE, THE PARTIES AGREE TO SUBMIT TO THE JURISDICTION
OF SUCH NEW YORK COURTS IN ACCORDANCE WITH SECTION 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF
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NEW YORK OR ANY CORRESPONDING OR SUCCEEDING PROVISIONS THEREOF.
SECTION 10.4 MODIFICATION, WAIVER IN WRITING.
No modification, amendment, extension, discharge, termination or waiver
of any provision of this Agreement, the Note, or of any other Loan Document, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.
SECTION 10.5 DELAY NOT A WAIVER.
Neither any failure nor any delay on the part of Lender or Borrower in
insisting upon strict performance of any term, condition, covenant or agreement,
or exercising any right, power, remedy or privilege hereunder, or under the Note
or under any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
SECTION 10.6 NOTICES.
All notices or other written communications hereunder shall be deemed
to have been properly given (i) upon delivery, if delivered in person or by
facsimile transmission with receipt acknowledged by the recipient thereof and
confirmed by telephone by sender, (ii) one (1) Business Day after having been
deposited for overnight delivery with any reputable overnight courier service,
or (iii) three (3) Business Days after having been deposited in any post office
or mail depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to Borrower: c/o FelCor Lodging Trust Incorporated
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to: Jenkens & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: JPMorgan Chase Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
and
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or addressed as such party may from time to time designate by written notice to
the other parties.
Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.
SECTION 10.7 TRIAL BY JURY.
BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO
THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE
LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY
EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. BORROWER AND LENDER ARE HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY
BORROWER AND LENDER, AS APPLICABLE.
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SECTION 10.8 HEADINGS.
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
SECTION 10.9 SEVERABILITY.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under Applicable Law,
but if any provision of this Agreement shall be prohibited by or invalid under
Applicable Law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
SECTION 10.10 PREFERENCES.
Except as otherwise expressly provided herein, Lender shall have the
continuing and exclusive right to apply or reverse and reapply any and all
payments by Borrower to any portion of the obligations of Borrower hereunder. To
the extent Borrower makes a payment or payments to Lender, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, State or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by Lender.
SECTION 10.11 WAIVER OF NOTICE.
Borrower shall not be entitled to any notices of any nature whatsoever
from Lender except with respect to matters for which this Agreement or the other
Loan Documents specifically and expressly provide for the giving of notice by
Lender to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.
SECTION 10.12 REMEDIES OF BORROWER.
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Borrower agrees that neither Lender nor its agents shall be liable for any
monetary damages, and Borrower's sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment. The parties hereto
agree that any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment.
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SECTION 10.13 EXPENSES; INDEMNITY.
(a) Except as otherwise expressly provided herein,
Borrower covenants and agrees to pay or, if Borrower fails to pay, to
reimburse, Lender within five (5) days of receipt of written notice
from Lender for all reasonable costs and expenses (including reasonable
attorneys' fees and disbursements) incurred by Lender in connection
with (i) the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents and the consummation of the
transactions contemplated hereby and thereby and all the costs of
furnishing all opinions by counsel for Borrower (including without
limitation any opinions requested by Lender as to any legal matters
arising under this Agreement or the other Loan Documents with respect
to the Properties); (ii) Borrower's ongoing performance of and
compliance with Borrower's respective agreements and covenants
contained in this Agreement and the other Loan Documents on its part to
be performed or complied with after the Closing Date, including,
without limitation, confirming compliance with environmental and
insurance requirements; (iii) Lender's ongoing performance and
compliance with all agreements and conditions contained in this
Agreement and the other Loan Documents on its part to be performed or
complied with after the Closing Date; (iv) the negotiation,
preparation, execution, delivery and administration of any consents,
amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters requested by
Lender; (v) securing Borrower's compliance with any requests made
pursuant to the provisions of this Agreement; (vi) the filing and
recording fees and expenses, title insurance and reasonable fees and
expenses of counsel for providing to Lender all required legal
opinions, and other similar expenses incurred in creating and
perfecting the Liens in favor of Lender pursuant to this Agreement and
the other Loan Documents; (vii) enforcing or preserving any rights, in
response to third party claims or the prosecuting or defending of any
action or proceeding or other litigation, in each case against, under
or affecting Borrower, this Agreement, the other Loan Documents, the
Properties, or any other security given for the Loan; and (viii)
enforcing any obligations of or collecting any payments due from
Borrower under this Agreement, the other Loan Documents or with respect
to the Properties or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement
in the nature of a "work-out" or of any insolvency or bankruptcy
proceedings; provided, however, that Borrower shall not be liable for
the payment of any such costs and expenses to the extent the same arise
by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender. Any cost and expenses due and payable to Lender
may be paid from any amounts in the Lockbox Account.
(b) Borrower shall indemnify, defend and hold harmless
Lender from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs,
expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel
for Lender in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not Lender
shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against Lender in any manner relating to or arising out
of (i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other
Loan
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Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "Indemnified Liabilities"); provided, however, that
Borrower shall not have any obligation to Lender hereunder to the
extent that such Liabilities arise from the gross negligence, illegal
acts, fraud or willful misconduct of Lender. To the extent that the
undertaking to indemnify, defend and hold harmless set forth in the
preceding sentence may be unenforceable because it violates any law or
public policy, Borrower shall pay the maximum portion that it is
permitted to pay and satisfy under Applicable Law to the payment and
satisfaction of all Indemnified Liabilities incurred by Lender.
(c) Borrower shall, at its sole cost and expense,
protect, defend, indemnify, release and hold harmless Lender and the
Indemnified Parties from and against any and all losses (including,
without limitation, reasonable attorneys' fees and costs incurred in
the investigation, defense, and settlement of losses incurred in
correcting any prohibited transaction or in the sale of a prohibited
loan, and in obtaining any individual prohibited transaction exemption
under ERISA, the Code, any State statute or other similar law that may
be required, in Lender's sole discretion) that Lender may incur,
directly or indirectly, as a result of a default under Sections 4.1.8
or 5.2.8 hereof.
(d) Other than in connection with a Securitization,
Borrower covenants and agrees to pay for or, if Borrower fails to pay,
to reimburse Lender for, (i) any fees and expenses incurred by any
Rating Agency in connection with any Rating Agency review of the Loan,
the Loan Documents or any transaction contemplated thereby or (ii) any
consent, approval, waiver or confirmation obtained from such Rating
Agency pursuant to the terms and conditions of this Agreement or any
other Loan Document and Lender shall be entitled to require payment of
such fees and expenses as a condition precedent to the obtaining of any
such consent, approval, waiver or confirmation.
SECTION 10.14 SCHEDULES AND EXHIBITS INCORPORATED.
The Schedules and Exhibits annexed hereto are hereby incorporated
herein as a part of this Agreement with the same effect as if set forth in the
body hereof.
SECTION 10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES.
Any assignee of Lender's interest in and to this Agreement, the Note
and the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to the Loan Documents which
Borrower may otherwise have against any assignor of the Loan Documents, and no
such unrelated counterclaim or defense shall be interposed or asserted by
Borrower in any action or proceeding brought by any such assignee upon such
documents and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by Borrower.
SECTION 10.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES.
(a) Borrower and Lender intend that the relationships
created hereunder and under the other Loan Documents be solely that of
borrower and lender. Nothing herein or therein is intended to create a
joint venture, partnership, tenancy-in-common, or joint
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tenancy relationship between Borrower and Lender nor to grant Lender any
interest in the Properties other than that of mortgagee, beneficiary or
lender.
(b) This Agreement and the other Loan Documents are
solely for the benefit of Lender and Borrower and nothing contained in
this Agreement or the other Loan Documents shall be deemed to confer
upon anyone other than Lender and Borrower (or an Affiliate of either
of the foregoing acting on behalf of Borrower or Lender, as applicable)
any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to
the obligations of Lender to make the Loan hereunder are imposed solely
and exclusively for the benefit of Lender and no other Person shall
have standing to require satisfaction of such conditions in accordance
with their terms or be entitled to assume that Lender will refuse to
make the Loan in the absence of strict compliance with any or all
thereof and no other Person shall under any circumstances be deemed to
be a beneficiary of such conditions, any or all of which may be freely
waived in whole or in part by Lender if, in Lender's sole discretion,
Lender deems it advisable or desirable to do so.
SECTION 10.17 PUBLICITY.
All news releases, publicity or advertising by Borrower or their
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the financing evidenced by the Loan Documents, to
Lender, JPMorgan Chase, or any of their Affiliates shall be subject to the prior
written approval of Lender, which shall not be unreasonably withheld.
Notwithstanding the foregoing, disclosure required by any federal or State
securities laws, rules or regulations, as determined by Borrower's counsel,
shall not be subject to the prior written approval of Lender.
SECTION 10.18 CROSS-DEFAULT; CROSS-COLLATERALIZATION; WAIVER OF
MARSHALLING OF ASSETS.
(a) Borrower acknowledges that Lender has made the Loan
to Borrower upon the security of its collective interest in the
Properties and in reliance upon the aggregate of the Properties taken
together being of greater value as collateral security than the sum of
each Property taken separately. Borrower agrees that the Security
Instruments are and will be cross-collateralized and cross-defaulted
with each other so that (i) an Event of Default under any of the
Security Instruments shall constitute an Event of Default under each of
the other Security Instruments which secure the Note; (ii) an Event of
Default under the Note or this Agreement shall constitute an Event of
Default under each Security Instrument; (iii) each Security Instrument
shall constitute security for the Note as if a single blanket lien were
placed on all of the Properties as security for the Note; and (iv) such
cross-collateralization shall in no event be deemed to constitute a
fraudulent conveyance.
(b) To the fullest extent permitted by Applicable Law,
Borrower, for itself and its successors and assigns, waives all rights
to a marshalling of the assets of Borrower and of the Properties, or to
a sale in inverse order of alienation in the event of foreclosure of
all or any of the Security Instruments, and agrees not to assert any
right under any laws
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pertaining to the marshalling of assets, the sale in inverse order of
alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect
the right of Lender under the Loan Documents to a sale of the
Properties for the collection of the Debt without any prior or
different resort for collection or of the right of Lender to the
payment of the Debt out of the net proceeds of the Properties in
preference to every other claimant whatsoever. In addition, Borrower,
for itself and its successors and assigns, waives in the event of
foreclosure of any or all of the Security Instruments, any equitable
right otherwise available to Borrower which would require the separate
sale of the Properties or require Lender to exhaust its remedies
against any Property or any combination of the Properties before
proceeding against any other Property or combination of Properties; and
further in the event of such foreclosure Borrower does hereby expressly
consent to and authorize, at the option of Lender, the foreclosure and
sale either separately or together of any combination of the
Properties.
SECTION 10.19 WAIVER OF COUNTERCLAIM.
Borrower hereby waives the right to assert a counterclaim, other than a
compulsory counterclaim, in any action or proceeding brought against it by
Lender or its agents.
SECTION 10.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE.
In the event of any conflict between the provisions of this Agreement
and any of the other Loan Documents, the provisions of this Agreement shall
control. The parties hereto acknowledge that they were represented by competent
counsel in connection with the negotiation, drafting and execution of the Loan
Documents and that such Loan Documents shall not be subject to the principle of
construing their meaning against the party which drafted same. Borrower
acknowledges that, with respect to the Loan, Borrower shall rely solely on its
own judgment and advisors in entering into the Loan without relying in any
manner on any statements, representations or recommendations of Lender or any
parent, subsidiary or Affiliate of Lender. Lender shall not be subject to any
limitation whatsoever in the exercise of any rights or remedies available to it
under any of the Loan Documents or any other agreements or instruments which
govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Lender of any equity interest any of them may acquire in Borrower,
and Borrower hereby irrevocably waives the right to raise any defense or take
any action on the basis of the foregoing with respect to Lender's exercise of
any such rights or remedies. Borrower acknowledges that Lender engages in the
business of real estate financings and other real estate transactions and
investments which may be viewed as adverse to or competitive with the business
of Borrower or its Affiliates.
SECTION 10.21 BROKERS AND FINANCIAL ADVISORS.
Borrower and Lender hereby represent that they have dealt with no
financial advisors, brokers, underwriters, placement agents, agents or finders
in connection with the transactions contemplated by this Agreement. Borrower
hereby agrees to indemnify, defend and hold Lender harmless from and against any
and all claims, liabilities, costs and expenses of any kind (including Lender's
reasonable attorneys' fees and expenses) in any way relating to or arising
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from a claim by any Person that such Person acted on behalf of Borrower in
connection with the transactions contemplated herein. The provisions of this
Section 10.21 shall survive the expiration and termination of this Agreement and
the payment of the Debt.
SECTION 10.22 PRIOR AGREEMENTS.
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, between Borrower and/or its Affiliates and
Lender are superseded by the terms of this Agreement and the other Loan
Documents.
SECTION 10.23 COUNTERPARTS.
This Agreement may be executed in any number of duplicate originals and
each duplicate original shall be deemed to be an original. This Agreement may be
executed in several counterparts, each of which counterparts shall be deemed an
original instrument and all of which together shall constitute a single
Agreement.
SECTION 10.24 LIABILITY.
This Agreement shall be binding upon and inure to the benefit of
Borrower and Lender and their respective successors and assigns forever.
SECTION 10.25 BORROWER/MAKER.
In the event that the Maryland Guaranty is released as security for the
Loan, all references herein to "Borrower" shall refer solely to "Maker".
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
LENDER:
JPMORGAN CHASE BANK, a New York banking
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
BORROWER:
FELCOR/JPM ATLANTA CP HOTEL, L.L.C., a
Delaware limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
FELCOR/JPM ATLANTA ES HOTEL, L.L.C., a
Delaware limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
FELCOR/JPM AUSTIN HOLDINGS, L.P., a
Delaware limited partnership
By: FELCOR/JPM AUSTIIN HOTEL, L.L.C.,
a Delaware limited liability
company, its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
FELCOR/JPM BWI HOTEL, L.L.C., a Delaware
limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
FELCOR/JPM MANDALAY HOTEL, L.L.C., a
Delaware limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
FELCOR/JPM NASHVILLE HOTEL, L.L.C., a
Delaware limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
FELCOR/JPM ORLANDO HOTEL, L.L.C., a
Delaware limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
FELCOR/JPM PHOENIX HOTEL, L.L.C., a
Delaware limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
FELCOR/JPM WILMINGTON HOTEL, L.L.C.,
a Delaware limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
MARYLAND GUARANTOR:
FCH/DT BWI HOTEL, L.L.C., a Delaware
limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
ACKNOWLEDGED AND AGREED TO WITH RESPECT
TO ITS OBLIGATIONS SET FORTH IN ARTICLE
9 HEREOF:
FELCOR LODGING LIMITED PARTNERSHIP, a
Delaware limited liability company
By: FELCOR LODGING TRUST INCORPORATED,
a Maryland corporation, its
general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
SCHEDULES AND EXHIBITS INTENTIONALLY OMITTED.