EXHIBIT 10.44
LOAN AND SECURITY AGREEMENT
DATED NOVEMBER 25, 2002
BETWEEN
THE BORROWER OR BORROWERS LISTED ON SCHEDULE 1 HERETO
AS BORROWERS
AND
MERRILL LYNCH MORTGAGE LENDING, INC.
AS LENDER
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS .......................................................... 1
Section 1.1 Certain Defined Terms ......................................... 1
Section 1.2 Accounting Terms .............................................. 25
Section 1.3 Other Definitional Provisions ................................. 25
ARTICLE II TERMS OF THE LOAN ................................................... 25
Section 2.1 Loan .......................................................... 25
Section 2.2 Interest ...................................................... 26
Section 2.3 Interest Rate Cap Agreement ................................... 27
Section 2.4 Payments ...................................................... 28
Section 2.5 Maturity ...................................................... 30
Section 2.6 Prepayment .................................................... 32
Section 2.7 Outstanding Balance ........................................... 33
Section 2.8 Taxes ......................................................... 33
Section 2.9 Reasonableness of Charges ..................................... 33
Section 2.10 Funding Losses/Change in Law Etc .............................. 33
Section 2.11 Servicing/Special Servicing ................................... 35
ARTICLE III CONDITIONS TO LOAN ................................................. 35
Section 3.1 Conditions to Funding of the Loan on the Closing Date ......... 35
ARTICLE IV REPRESENTATIONS AND WARRANTIES ...................................... 40
Section 4.1 Organization, Powers, Capitalization, Good Standing, Business . 40
Section 4.2 Authorization of Borrowing, etc. .............................. 41
Section 4.3 Financial Statements .......................................... 41
Section 4.4 Indebtedness and Contingent Obligations ....................... 42
Section 4.5 Title to the Properties ....................................... 42
Section 4.6 Zoning; Compliance with Laws .................................. 42
Section 4.7 Leases; Agreements ............................................ 43
Section 4.8 Condition of the Properties ................................... 44
Section 4.9 Litigation; Adverse Facts ..................................... 44
Section 4.10 Payment of Taxes .............................................. 45
Section 4.11 Adverse Contracts ............................................. 45
Section 4.12 Performance of Agreements ..................................... 45
Section 4.13 Governmental Regulation ....................................... 45
Section 4.14 Employee Benefit Plans ........................................ 45
Section 4.15 Broker's Fees ................................................. 45
Section 4.16 Intentionally Deleted ......................................... 45
Section 4.17 Solvency ...................................................... 45
Section 4.18 Disclosure .................................................... 46
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Section 4.19 Use of Proceeds and Margin Security................................... 46
Section 4.20 Insurance ............................................................ 46
Section 4.21 Separate Tax Lots .................................................... 46
Section 4.22 Investments .......................................................... 46
Section 4.23 Reserved ............................................................. 47
Section 4.24 Defaults ............................................................. 47
Section 4.25 No Plan Assets ....................................................... 47
Section 4.26 Governmental Plan .................................................... 47
Section 4.27 Not Foreign Person ................................................... 47
Section 4.28 No Collective Bargaining Agreements................................... 47
Section 4.29 Mortgaged Condominium Documents....................................... 47
Section 4.30 Ground Leases ........................................................ 47
ARTICLE V COVENANTS OF BORROWER PARTIES.................................................. 48
Section 5.1 Financial Statements and Other Reports................................. 48
Section 5.2 Existence; Qualification .............................................. 53
Section 5.3 Payment of Impositions and Claims...................................... 53
Section 5.4 Maintenance of Insurance............................................... 54
Section 5.5 Operation and Maintenance of the Properties; Casualty.................. 58
Section 5.6 Inspection ............................................................ 61
Section 5.7 O&M Plan .............................................................. 62
Section 5.8 Intentionally Deleted ................................................. 62
Section 5.9 Compliance with Laws and Contractual Obligations....................... 62
Section 5.10 Further Assurances .................................................... 62
Section 5.11 Performance of Agreements and Leases................................... 62
Section 5.12 Leases ................................................................ 62
Section 5.13 Management; Franchise Agreement ....................................... 64
Section 5.14 Material Agreements ................................................... 66
Section 5.15 Deposits; Application of Receipts ..................................... 66
Section 5.16 Estoppel Certificates.................................................. 66
Section 5.17 Indebtedness........................................................... 67
Section 5.18 No Liens............................................................... 67
Section 5.19 Contingent Obligations ................................................ 68
Section 5.20 Restriction on Fundamental Changes..................................... 68
Section 5.21 Transactions with Related Persons ..................................... 68
Section 5.22 Bankruptcy, Receivers, Similar Matters ................................ 68
Section 5.23 ERISA ................................................................. 69
Section 5.24 Press Release ......................................................... 69
Section 5.25 Ground Leases.......................................................... 69
Section 5.26 Mortgaged Condominium Property ........................................ 73
Section 5.27 Lender's Expenses ..................................................... 75
Section 5.28 Distributions ......................................................... 75
Section 5.29 Completion of Required Capital Improvements............................ 75
Section 5.30 Compliance with Plan of Reorganization................................. 75
Section 5.31 Cancellation of Indebtedness; Settlement of Claims .................... 75
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ARTICLE VI RESERVES....................................................................... 75
Section 6.1 Security Interest in Reserves; Other Matters pertaining to Reserves...... 75
Section 6.2 Funds Deposited with Lender.............................................. 76
Section 6.3 Impositions and Insurance Reserve........................................ 76
Section 6.4 FF&E Reserve............................................................. 77
Section 6.5 Capital Improvement Reserve; Required Capital Improvements .............. 77
Section 6.6 Hazardous Materials Remediation Reserve ................................. 78
Section 6.7 Conditions to Disbursements from Hazardous Materials Remediation
Reserve and Capital Improvement Reserve; Performance of Work ............ 78
Section 6.8 Cash Trap Reserve........................................................ 83
ARTICLE VII LOCK BOX; CLEARING ACCOUNT; CENTRAL ACCOUNT; CASH MANAGEMENT.................. 84
Section 7.1 Establishment of Deposit Account and Lock Box Account ................... 84
Section 7.2 Application of Funds in Lock Box Account ................................ 85
Section 7.3 Application of Funds After Event of Default.............................. 85
ARTICLE VIII DEFAULT, RIGHTS AND REMEDIES................................................ 86
Section 8.1 Event of Default......................................................... 86
Section 8.2 Acceleration and Remedies................................................ 88
Section 8.3 Performance by Lender.................................................... 90
Section 8.4 Evidence of Compliance................................................... 90
ARTICLE IX SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS,
WARRANTIES AND COVENANTS................................................. 91
Section 9.1 Applicable to all Primary Borrower Parties............................... 91
Section 9.2 Applicable to Borrowers, General Partner and Member...................... 93
ARTICLE X RESTRUCTURING LOAN, SECONDARY MARKET TRANSACTIONS............................... 94
Section 10.1 Secondary Market Transactions Generally.................................. 94
Section 10.2 Cooperation; Limitations ................................................ 95
Section 10.3 Information.............................................................. 95
Section 10.4 Additional Provisions.................................................... 97
ARTICLE XI RESTRICTIONS ON LIENS, TRANSFERS; ASSUMABILITY;
RELEASE OF PROPERTIES.................................................... 97
Section 11.1 Restrictions on Transfer and Encumbrance................................. 97
Section 11.2 Transfers of Beneficial Interests in Borrowers........................... 97
Section 11.3 Assumability............................................................. 98
Section 11.4 Release of Properties ................................................... 99
Section 11.5 Conversion/Release....................................................... 101
Section 11.6 Sale of Building Equipment............................................... 102
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Section 11.7 Immaterial Transfers and Easements, etc.................................. 102
ARTICLE XII RECOURSE; LIMITATIONS ON RECOURSE............................................. 103
Section 12.1 Limitations on Recourse.................................................. 103
Section 12.2 Partial Recourse......................................................... 103
Section 12.3 Miscellaneous............................................................ 104
ARTICLE XIII WAIVERS OF DEFENSES OF GUARANTORS AND SURETIES............................... 104
Section 13.1 Waivers.................................................................. 104
ARTICLE XIV MISCELLANEOUS................................................................. 106
Section 14.1 Expenses and Attorneys' Fees............................................. 106
Section 14.2 Indemnity................................................................ 107
Section 14.3 Amendments and Waivers................................................... 107
Section 14.4 Retention of Borrowers' Documents........................................ 107
Section 14.5 Notices.................................................................. 108
Section 14.6 Survival of Warranties and Certain Agreements............................ 109
Section 14.7 Failure or Indulgence Not Waiver, Remedies Cumulative.................... 109
Section 14.8 Marshaling; Payments Set Aside .......................................... 109
Section 14.9 Severability............................................................. 109
Section 14.10 Headings ................................................................ 110
Section 14.11 APPLICABLE LAW........................................................... 110
Section 14.12 Successors and Assigns................................................... 110
Section 14.13 Sophisticated Parties, Reasonable Terms, No Fiduciary Relationship....... 110
Section 14.14 Reasonableness of Determinations ........................................ 111
Section 14.15 Limitation of Liability ................................................. 111
Section 14.16 No Duty.................................................................. 111
Section 14.17 Entire Agreement......................................................... 111
Section 14.18 Construction; Supremacy of Loan Agreement ............................... 111
Section 14.19 Consent to Jurisdiction.................................................. 112
Section 14.20 Waiver of Jury Trial..................................................... 112
Section 14.21 Counterparts; Effectiveness.............................................. 113
Section 14.22 Servicer................................................................. 113
Section 14.23 Obligations of Borrower Parties.......................................... 113
Section 14.24 Additional Inspections; Reports.......................................... 113
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Capital Improvement Plan
Exhibit B - Environmental Reports
Exhibit C - Franchise Agreements
Exhibit D - Allocated Loan Amount
Exhibit E - Management Agreements
Exhibit F - Properties
Exhibit G - Property Improvement Plan
Exhibit H - Ground Lessor Estoppels
Exhibit I - Acceptable Franchisors
Exhibit J - [Reserved]
Exhibit K - [Reserved]
Exhibit L - [Reserved]
Exhibit M - Property Condition Reports
Schedule 1 - Borrowers
Schedule 3.1(A) - List of Loan Documents
Schedule 4.1(C) - Organizational Chart for Borrower Parties
Schedule 4.2 - Consents
Schedule 4.4 - Contingent Obligations
Schedule 4.5 - Condemnation Proceedings
Schedule 4.6 - Zoning
Schedule 4.7(B) - Rent Roll
Schedule 4.7(E) - Franchise Defaults
Schedule 4.9 - Litigation
Schedule 4.14 - ERISA Plans
Schedule 4.20 - Insurance
Schedule 4.28 - Collective Bargaining Agreements
Schedule 4.29 - Mortgaged Condominium Property Documents
Schedule 4.30 - Ground Lease Amendments
Schedule 5.1(D) - CapEx/FF&E Budget
Schedule 5.7 - O&M Plans
Schedule 5.14 - Material Agreements
Schedule 6.6 - Environmental Work
Schedule 6.7 - Reserve Funding Condition
List of Schedules
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT (this "LOAN AGREEMENT") is
dated as of November 25, 2002 and entered into by and between THE BORROWER OR
BORROWERS LISTED ON SCHEDULE 1 HERETO (collectively, "BORROWERS", and
individually, each a "BORROWER"), and MERRILL LYNCH MORTGAGE LENDING, INC., a
Delaware corporation (together with its successors and assigns, "LENDER").
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the Borrowers and Lender
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. The terms defined below are used in
this Loan Agreement as so defined. Terms defined in the preamble and recitals to
this Loan Agreement are used in this Loan Agreement as so defined.
"ACCEPTABLE FRANCHISOR" and "ACCEPTABLE FRANCHISE NAME" means the
franchisors identified on EXHIBIT I.
"ACCEPTABLE MANAGER" means Lodgian Management Corp. or any other
Affiliate of the Borrowers and, upon receipt of a Rating Confirmation, another
reputable hotel management company with at least five (5) years experience
managing hotel properties similar to the Properties and which at the time of its
engagement is managing at least 5,000 hotel rooms (exclusive of the Properties).
"ACCEPTABLE REPLACEMENT CAP" has the meaning set forth in Section 2.3.
"ACCOUNT COLLATERAL" means all of the Borrowers' right, title and
interest in and to the Accounts, the Reserves, all monies and amounts which may
from time to time be on deposit therein, all monies, checks, notes, instruments,
documents, deposits, and credits from time to time in the possession of Lender
representing or evidencing such Accounts and Reserves and all earnings and
investments held therein and proceeds thereof.
"ACCOUNTS" means, collectively, the Deposit Account, the FF&E Reserve,
any Loss Proceeds Account, the Lock Box Account, the Sub-Accounts thereof and
any other accounts pledged to Lender pursuant to this Loan Agreement or any
other Loan Document.
"AFFILIATE" means in relation to any Person, any other Person: (i)
directly or indirectly controlling, controlled by, or under common control with,
the first Person; (ii) directly or indirectly owning or holding fifty percent
(50%) or more of any equity interest in the first Person; or (iii) fifty percent
(50%) or more of whose voting stock or other equity interest is directly or
indirectly owned or held by the first Person. In addition, the Affiliates of
each Borrower Party include, without limitation, all other Borrower Parties,
irrespective of whether they now or hereafter satisfy the foregoing criteria.
For purposes of this definition, "CONTROL" (including with correlative meanings,
the terms "CONTROLLING", "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means
the possession directly or indirectly of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. Where expressions
such as "[name of party] or any Affiliate" are used, the same shall refer to the
named party and any Affiliate of the named party. Further, the Affiliates of any
Person that is an entity shall include all natural persons who are officers,
agents, directors, members, partners, or employees of the entity Person.
"AGGREGATE ALLOCATED LOAN AMOUNT" shall mean the aggregate portion of
the Mezzanine Loan and the Loan allocated to each Property as set forth on
EXHIBIT D.
"AGGREGATE OUTSTANDING PRINCIPAL BALANCE" means, at the time of
determination, the aggregate outstanding principal balance of the Mezzanine Loan
and the Loan.
"ALLOCATED LOAN AMOUNT" shall mean the portion of the Loan allocated to
each Property as set forth on EXHIBIT D.
"AMORTIZATION DEFICIENCY" shall mean, as of the date of determination,
(x) the aggregate of all monthly Scheduled Mortgage Principal Payments through
the date of determination minus (y) the actual principal payments made to Lender
pursuant to Section 2.4(A)(ii) and Section 2.4(A)(iv) of this Loan Agreement
through the date immediately preceding the date of determination.
"APPLICABLE SPREAD" means 2.2442%.
"APPROVED ACCOUNTING FIRM" means Ernst and Young,
PricewaterhouseCoopers, Deloitte & Touche or KPMG Peat Marwick or any successor
entity.
"APPROVED CAPITAL IMPROVEMENT EXPENDITURES" has the meaning set forth
in Section 6.7.
"APPROVED ENVIRONMENTAL EXPENDITURES" has the meaning set forth in
Section 6.7.
"APPROVED EXPENDITURES" has the meaning set forth in Section 6.7.
"ARCHITECT" has the meaning set forth in Section 5.5.
"ASSIGNMENT OF RATE CAP" means that certain Collateral Assignment of
Interest Rate Protection Agreement of even date herewith from the Borrowers to
Lender, constituting an assignment of the Cap and proceeds therefrom as
Collateral for the Loan, as same may be amended or modified from time to time.
"ASSIGNMENTS OF LEASES" means, collectively, the Assignments of Leases
and Rents of even date herewith from each of the Borrowers to Lender,
constituting assignments of each Borrower's right, title and interest in the
Leases and proceeds therefrom for each of their respective Properties as
Collateral for the Loan, as same may be amended or modified from time to time.
"ASSIGNMENTS OF MANAGEMENT AGREEMENTS" means, collectively, those
certain Conditional Assignments of Management Hotel Agreements of even date
herewith executed by
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each of the Borrowers and the applicable Manager, constituting an assignment of
each Management Agreement as collateral for the Loan, as same may be amended or
modified from time to time.
"ASSUMPTION" has the meaning set forth in Section 11.3.
"BANKRUPTCY CODE" means Title 11 of the United States Code, as amended
from time to time, and all rules and regulations promulgated thereunder.
"BEVERAGE COMPANY" shall mean any Person (other than any of the
Borrowers) holding, or entitled to any proceeds from, any liquor license or
other beverage permit for the sale of alcoholic beverages at any Property.
"BOARD OF MANAGERS" means the board of managers, or similar governing
entity, established for the governance of the condominium association
established pursuant to the terms of the Mortgaged Condominium Property
Documents.
"BORROWER" and "BORROWERS" have the meanings set forth in the preamble;
provided that, following a Release, "BORROWERS" shall mean each of the Borrowers
remaining as a party to the Loan Documents, and whose Properties remain
encumbered by the Deeds of Trust as Collateral for the Loan and "BORROWER" shall
mean any of such remaining parties.
"BORROWER PARTY" and "BORROWER PARTIES" means, individually or
collectively, the Borrowers, General Partner, Member and Guarantor.
"BORROWER PARTY SECRETARY" has the meaning set forth in Section 3.1.
"BUSINESS DAY" means any day excluding (i) Saturday, (ii) Sunday, (iii)
any day which is a legal holiday under the laws of the State of New York, the
state or states where the servicing offices of the Servicer, and, if the Loan
becomes a "specially serviced mortgage loan" pursuant to the terms of any trust
and servicing agreement entered into in connection with any Securitization
backed in whole or in part by the Loan, the special servicer, are located or the
state in which the corporate trust office of the trustee in connection with any
such Securitization is located, and (iv) any day on which banking institutions
located in such state are generally not open for the conduct of regular
business.
"CALCULATION DATE means (x) prior to the occurrence of a Cash Trap
Event, the last day of each calendar quarter, and (y) during the continuance of
a Cash Trap Event, the last day of each calendar month.
"CAP" has the meaning set forth in Section 2.3.
"CAPEX/FF&E BUDGET" means the expenditures for Replacements and other
expenditures for FF&E and Capital Expenditures set forth in an annual budget
approved by Lender in writing (such approval not to be unreasonably withheld or
delayed as long as the budget is consistent with the form of the CapEx/FF&E
Budget provided to Lender prior to Closing), covering the planned FF&E
expenditures and Capital Expenditures for the period covered by such budget, as
same may be amended pursuant to Section 5.1 (D) hereof.
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"CAPITAL EXPENDITURES" means expenditures for Capital Improvements.
"CAPITAL IMPROVEMENTS" means capital improvements, repairs or
alterations, furnishings, fixtures, equipment and other capital items (whether
paid in cash or property or accrued as liabilities) made by the Borrowers that,
in conformity with GAAP, would not be included in the Borrowers' annual
financial statements as an Operating Expense of the Properties.
"CAPITAL IMPROVEMENT PLAN" means each of the Borrower's current plan
and budget for certain ongoing multi-phased capital improvements to the
respective Properties, as more particularly described on EXHIBIT A.
"CAPITAL IMPROVEMENT RESERVE" has the meaning set forth in Section 6.5.
"CAP PROVIDER" has the meaning set forth in Section 2.3.
"CAP RESERVE" has the meaning set forth in Section 2.3.
"CAP THRESHOLD RATE" has the meaning set forth in Section 2.3.
"CASH MANAGEMENT AGREEMENT" means the Cash Management Agreement of even
date herewith among the Borrowers, Lender, Manager, and Lock Box Account Bank.
"CASH TRAP EVENT" has the meaning set forth in Section 6.8.
"CASH TRAP RESERVE" has the meaning set forth in Section 6.8.
"CATEGORY" means the applicable Tier 1 Hotel, the Tier 2 Hotel or the
Tier 3 Hotel category.
"CLAIMS" has the meaning set forth in Section 5.3.
"CLOSING" means the funding of the Loan and the consummation of the
other transactions contemplated by this Loan Agreement.
"CLOSING DATE" means the date on which the Closing occurs.
"COLLATERAL" means rights, interests, and property of every kind, real
and personal, tangible and intangible, which is granted, pledged, liened, or
encumbered as security for the Loan or any of the other Obligations under this
Loan Agreement, the Deeds of Trust, the Cash Management Agreement or other Loan
Documents, including without limitation the Properties and the Account
Collateral.
"COMPLIANCE CERTIFICATE" has the meaning set forth in Section 5.1.
"CONDOMINIUM BORROWER" means Servico Maryland, Inc., together with,
following a Condominium Release, the Borrower owning the Hotel Unit.
"CONDOMINIUM DEFAULT" has the meaning set forth in Section 4.29.
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"CONTINGENT OBLIGATION", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person: (A) with respect to
any indebtendness, lease, dividend or other obligation of another if the primary
purpose or intent of the Person incurring such liability, or the primary effect
thereof, is to provide assurance to the obligee of such liability that such
liability will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such liability will be protected
(in whole or in part) against loss with respect thereto; (B) with respect to any
letter of credit issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings; (C) under any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement or arrangement designed to protect against
fluctuations in interest rates; or (D) under any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect that Person against fluctuations in currency values. Contingent
Obligations shall include (i) the direct or indirect guaranty, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making (other than the Loan), discounting with recourse or sale with recourse
by such Person of the obligation of another, (ii) the obligation to make
take-or-pay or similar payments if required regardless of nonperformance by any
other party or parties to an agreement, and (iii) any liability of such Person
for the obligations of another through any agreement to purchase, repurchase or
otherwise acquire such obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to
maintain the solvency, financial condition or any balance sheet item or level of
income of another. The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guaranteed or otherwise supported or, if not a fixed
and determined amount, the maximum amount so guaranteed.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject, other
than the Loan Documents.
"CONVERSION" shall mean the conversion of the West Palm Beach Property
to a condominium form of ownership.
"CONVERSION DOCUMENTS" has the meaning set forth in Section 11.5.
"CREDIT CARD COMPANIES" has the meaning set forth in Section 7.1.
"CREDIT CARD RECEIVABLES PAYMENT DIRECTION LETTER" has the meaning set
forth in Section 7.1.
"D&O INSURANCE" has the meaning set forth in Section 5.4.
"DEBT SERVICE COVERAGE RATIO" OR "DSCR" means, at any time of
determination, Net Cash Flow for the trailing 12-month period divided by the
amount of interest (assuming an interest rate equal to the Test Rate) that the
Borrowers will be required to pay over the succeeding 12 months on the Loan and
the Mezzanine Loan plus, in the case of any determination after the first
anniversary of the Closing Date, principal amortization of the Loan and the
Mezzanine Loan that would be required in respect of the then outstanding
principal
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amount of the Loan and the Mezzanine Loan over the first 12 months of a 25-year
amortization schedule, calculated using the Test Rate.
"DEBT SERVICE SUB-ACCOUNT" has the meaning set forth in Section 7.1.
"DEBT YIELD" means, at any time of determination, Net Cash Flow for the
trailing 12-month period divided by the then outstanding principal balance of
the Loan and the Mezzanine Loan.
"DEEDS OF TRUST" means, collectively, (i) those certain Fee/Leasehold
Deeds of Trust, Assignments of Leases and Security Agreements, (ii) those
certain Fee/Leasehold Mortgages, Assignments of Leases and Security Agreements,
and (iii) those certain Deeds to Secure Debt, Assignment of Leases and Security
Agreements of even date herewith from the Borrowers to Lender (or deed trustee
on behalf of Lender, as applicable), constituting Liens on their respective
Properties as Collateral for the Loan as same may be modified or amended from
time to time.
"DEFAULT" means any breach or default under any of the Loan Documents,
whether or not the same is an Event of Default, and also any condition or event
that, after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within any
applicable grace or cure period.
"DEFAULT RATE" has the meaning set forth in Section 2.2.
"DEPOSIT ACCOUNT" has the meaning set forth in Section 7.1.
"DEPOSIT ACCOUNT AGREEMENT" has the meaning set forth in Section 7.1.
"DEPOSIT BANK" has the meaning set forth in Section 7.1.
"DETERMINATION DATE" means the day which is two (2) Eurodollar Business
Days prior to the first day of an Interest Accrual Period; provided that the
first Determination Date shall be two (2) Eurodollar Business Days prior to the
Closing Date or, if such date is not a Eurodollar Business Day, the immediately
preceding Eurodollar Business Day. The LIBO Rate set on each Determination Date
shall be in effect for the Interest Accural Period immediately following such
Determination Date.
"DISCLOSURE DOCUMENTS" has the meaning set forth in Section 10.3.
"DOLLAR EQUIVALENTS" means (a) commercial paper rated P-1 or better by
Moody's or A-1 or better by S&P or similarly rated by any successor to either of
such rating services, (b) obligations of the United States government or any
agency thereof which are backed by the full faith and credit of the United
States, or (c) deposits, including certificates of deposit, in any commercial
bank or trust company (i) which is registered to do business in any state of the
United States, (ii) which has capital and surplus in excess of $100,000,000 and
(iii) the short-term debt of which is rated A-1 or better by S&P or P-1 or
better by Moody's or is similarly rated by any successor thereof, provided that
each such item of commercial paper, each such obligation, and each such time
deposit has a maturity date not later than thirty days after the date of
purchase thereof.
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"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
"DOTHAN HOTEL" has the meaning set forth in Section 5.13.
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable account from
all other funds held by the holding institution, which account is either (i) an
account maintained with an Eligible Bank or (ii) a segregated trust account
maintained by a corporate trust department of a federal depository institution
or a state chartered depository institution subject to regulations regarding
fiduciary funds on deposit similar to Title 12 of the Code of Federal
Regulations Section 9.10(b), which, in either case, has corporate trust powers
and is acting in its fiduciary capacity or is otherwise acceptable to the Rating
Agencies.
"ELIGIBLE BANK" shall mean a bank that satisfies the Rating Criteria.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan within the
meaning of Section 3(3) of ERISA (including any Multiemployer Plan) (i) which is
maintained for employees of any of the Borrowers or any ERISA Affiliate, (ii)
which has at any time within the preceding six (6) years been maintained for the
employees of any of the Borrowers or any current or former ERISA Affiliate or
(iii) for which any of the Borrowers or any ERISA Affiliate has any liability,
including contingent liability.
"ENVIRONMENTAL INDEMNITY" means the Environmental Indemnity of even
date herewith from the Borrowers and Guarantor to Lender, as same may be amended
or modified from time to time.
"ENVIRONMENTAL LAWS" means all present and future local, state, federal
or other governmental authority, statutes, ordinances, codes, orders, decrees,
laws, rules or regulations pertaining to or imposing liability or standards of
conduct concerning environmental regulation (including, without limitation,
regulations concerning health and safety), contamination or clean-up or the
handling, generation, release or storage of Hazardous Material affecting the
Properties including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, the Resource Conservation
and Recovery Act, as amended, the Emergency Planning and Community Right-to-Know
Act of 1986, as amended, the Hazardous Substances Transportation Act, as
amended, the Solid Waste Disposal Act, as amended, the Clean Water Act, as
amended, the Clean Air Act, as amended, the Toxic Substances Control Act, as
amended, the Safe Drinking Water Act, as amended, the Occupational Safety and
Health Act, as amended, any state superlien and environmental clean-up statutes
and all regulations adopted in respect of the foregoing laws whether now or
hereafter in effect.
"ENVIRONMENTAL REPORTS" means those certain environmental reports and
audits for the Properties as described on EXHIBIT B.
"ENVIRONMENTAL WORK" has the meaning set forth in Section 6.6.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
all rules and regulations promulgated thereunder.
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"ERISA AFFILIATE" means, in relation to any Person, any other Person
under common control with the first Person, within the meaning of Section
4001(a)(14) of ERISA.
"EURODOLLAR BUSINESS DAY" means any day on which banks in the City of
London, England are generally open for interbank or foreign exchange
transactions and which is also a Business Day.
"EVENT OF DEFAULT" has the meaning set forth in Section 8.1.
"EXCESS CASH FLOW" has the meaning set forth in the Cash Management
Agreement.
"EXCESS INTEREST" has the meaning set forth in Section 2.2.
"EXCLUSIONS FROM COVERAGE" has the meaning set forth in Section 5.4.
"EXCULPATED PARTIES" has the meaning set forth in Section 12.2.
"EXTENSION CAP THRESHOLD RATE" has the meaning set forth in Section
2.5.
"EXTENSION NOTICE" has the meaning set forth in Section 2.5.
"EXTENSION TERMS" has the meaning set forth in Section 2.5.
"EXTRAORDINARY RECEIPTS SUB-ACCOUNT" has the meaning set forth in the
Cash Management Agreement.
"FF&E" means all machinery, furniture, furnishings, equipment, fixtures
(including, without limitation, all heating, air conditioning, plumbing,
lighting, communications and elevator fixtures), inventory and articles of
personal property and accessions, renewals and replacements thereof and
substitutions therefor (including, without limitation, beds, bureaus,
chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables, rugs,
carpeting, drapes, draperies, venetian blinds, screens, paintings, hangings,
pictures, divans, couches, luggage carts, luggage racks, stools, sofas,
chinaware, linens, pillows, blankets, glassware, foodcarts, cookware, dry
cleaning facilities, dining room wagons, tools, keys or other entry systems,
bars, bar fixtures, liquor and drink dispensers, ice makers, radios, clock
radios, television sets, intercom and paging equipment, electric and electronic
equipment, dictating equipment, private telephone systems, medical equipment,
potted plants, heating, lighting and plumbing fixtures, fire prevention and
extinguishing apparatus, cooling and air-conditioning systems, elevators,
escalators, fittings, plants, apparatus, stoves, ranges, refrigerators, laundry
machines, tools, machinery, engines, dynamos, motors, boilers, incinerators,
switchboards, conduits, compressors, vacuum cleaning systems, floor cleaning,
waxing and polishing equipment, call systems, brackets, electrical signs, bulbs,
bells, fuel, conveyors, cabinets, lockers, shelving, spotlighting equipment,
dishwashers, garbage disposals, washer and dryers), other customary hotel
equipment and other tangible property of every kind and nature whatsoever owned
by the Borrowers, or in which the Borrowers have or shall have an interest, now
or hereafter located at the Properties, or appurtenant thereto, and useable in
connection with the present or future operation and occupancy of the Properties
and all building equipment, material and supplies of any nature whatsoever owned
by the Borrowers, or in which the Borrowers have or shall have an interest,
8
now or hereafter located at the Properties, or appurtenant thereto, and useable
in connection with the present or future operation, enjoyment and occupancy of
the Properties.
"FF&E RESERVE" means the reserve established pursuant to Section 6.4.
"FINANCIAL STATEMENTS" means statements of operations and retained
earnings, statements of cash flow and balance sheets.
"FINANCING STATEMENTS" means the Uniform Commercial Code Financing
Statements naming the applicable Borrower Parties as debtor, and Lender as
secured party, required under applicable state law to perfect the security
interests created hereunder or under the other Loan Documents.
"FIRST EXTENSION TERM" has the meaning set forth in Section 2.5.
"FITCH" means Fitch, Inc.
"FORCE MAJEURE" means acts of god, governmental restrictions, stays,
judgments, orders, decrees, enemy actions, civil commotion, fire, casualty,
strikes or work stoppages which are industry-wide and not aimed at the Borrowers
or their Affiliates, or other causes beyond the reasonable control of the
Borrowers and/or their Affiliates, but the Borrowers' lack of funds in and of
itself shall not be deemed a cause beyond the control of the Borrowers.
"FRANCHISE AGREEMENTS" means, collectively, those certain agreements
described in EXHIBIT C and any replacement franchise agreement which may
hereafter be entered into in accordance with the terms and conditions hereof by
any of the Borrowers, as franchisee, pursuant to which the Borrowers have the
right to operate the Properties under names and hotel systems controlled by the
Franchisor.
"FRANCHISOR" means the current hotel franchisor or licensor with
respect to each Property or any other successor franchisor or licensor permitted
pursuant to Section 5.13.
"FRANCHISOR LETTER" shall mean, with respect to each Property, a
comfort letter(s), and/or similar instrument(s) from the related Franchisor to
Lender acknowledging the Loan and providing certain assurances, reasonably
satisfactory to Lender, with respect thereto.
"FUNDING LOSSES" has the meaning set forth in Section 2.10.
"FUNDING PARTY" means any bank or other entity, if any, which is
indirectly or directly funding Lender with respect to the Loan, in whole or in
part, including, without limitation, any direct or indirect assignee of, or
participant in, the Loan.
"GAAP" means generally accepted accounting principles as set forth in
Statement on Auditing Standards No. 69 entitled "The Meaning of Presenting
Fairly in Conformity with Generally Accepted Accounting Principles in the
Independent Auditor's Report" issued by the Auditing Standards Board of the
institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board to the extent such principles are
applicable to the facts and circumstances as of the date of determination.
9
"GENERAL PARTNER" shall mean, individually or collectively, those
parties identified on SCHEDULE 4.1(c) as "General Partners", and any other
entity which is now or hereafter becomes a general partner of any of the
Borrowers under such Borrower's limited partnership agreement.
"GOVERNMENTAL AUTHORITY" means, with respect to any Person, any federal
or state government or other political subdivision thereof and any entity,
including any regulatory or administrative authority or court, exercising
executive, legislative, judicial, regulatory or administrative or
quasi-administrative functions of or pertaining to government, and any
arbitration board or tribunal in each case having jurisdiction over such
applicable Person or such Person's property, and any stock exchange on which
shares of capital stock of such Person are listed or admitted for trading.
"GROUND LEASE DEFAULT" has the meaning set forth in Section 4.30
"GROUND LEASED PROPERTIES" means the Properties subject to the Ground
Leases as described on SCHEDULE 4.30 attached hereto.
"GROUND LEASES" means the ground leases described on SCHEDULE 4.30
attached hereto.
"GROUND LESSORS" means the lessors under the Ground Leases as described
on SCHEDULE 4.30 attached hereto.
"GUARANTOR" means Lodgian, Inc., a Delaware corporation.
"GUARANTY" means the Guaranty of Recourse Obligations and the
Environmental Indemnity, each of even date herewith executed by Guarantor in
favor of Lender, as same may be amended or modified from time to time.
"HAZARDOUS MATERIAL" means all or any of the following: (A) substances,
materials, compounds, wastes, products, emissions and vapors that are defined or
listed in, regulated by, or otherwise classified pursuant to, any applicable
Environmental Laws, including any so defined, listed, regulated or classified as
"hazardous substances", "hazardous materials", "hazardous wastes", "toxic
substances", "pollutants", "contaminants", or any other formulation intended to
regulate, define, list or classify substances by reason of deleterious, harmful
or dangerous properties; (B) waste oil, oil, petroleum or petroleum derived
substances, natural gas, natural gas liquids or synthetic gas and drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources; (C)
any flammable substances or explosives or any radioactive materials; (D)
asbestos in any form; (E) electrical or hydraulic equipment which contains any
oil or dielectric fluid containing polychlorinated biphenyls; (F) radon; (G)
mold; or (H) urea formaldehyde, provided, however, such definition shall not
include cleaning materials and other substances commonly used in the ordinary
course of the Borrowers' business, which materials exist only in reasonable
quantities and are stored, contained, transported, used, released, and disposed
of in accordance with all applicable Environmental Laws.
"HAZARDOUS MATERIALS REMEDIATION RESERVE" means the Reserve established
pursuant to Section 6.6.
10
"HOTEL UNIT" has the definition set forth in Section 11.5.
"IMPOSITIONS" means (i) all real estate and personal property taxes,
and vault charges and all other taxes, levies, assessments and other similar
charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, of every kind and nature whatsoever (including any payments in lieu
of taxes), which at any time prior to, at or after the execution hereof may be
assessed, levied or imposed by, in each case, a governmental authority upon any
of the Properties or the rents relating thereto or upon the ownership, use,
occupancy or enjoyment thereof, and any interest, cost or penalties imposed by
such governmental authority with respect to any of the foregoing and (ii) all
rent and other amounts payable by the Borrowers under each of the Ground Leases
and under the Mortgaged Condominium Property Documents. Impositions shall not
include (x) any sales or use taxes payable by the Borrowers, (y) taxes payable
by tenants or guests occupying any portions of the Properties, or (z) taxes or
other charges payable by any Manager or Franchisor unless such taxes are being
paid on behalf of the Borrowers.
"IMPOSITIONS AND INSURANCE RESERVE" means the reserve established
pursuant to Section 6.3.
"IMPROVEMENTS" means all buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
of every kind and nature now or hereafter located on the Properties.
"INDEBTEDNESS" or "INDEBTEDNESS", shall mean, for any Person, without
duplication: (i) all indebtedness of such Person for borrowed money, for amounts
drawn under a letter of credit, or for the deferred purchase price of property
for which such Person or its assets is liable, (ii) all unfunded amounts under a
loan agreement, letter of credit (unless secured in full by Dollars), or other
credit facility for which such Person would be liable if such amounts were
advanced thereunder, (iii) all amounts required to be paid by such Person as a
guaranteed payment to partners or a preferred or special dividend, including any
mandatory redemption of shares or interests but not any preferred return or
special dividend paid solely from, and to the extent of, excess cash flow after
the payment of all operating expenses, capital improvements and debt service on
all Indebtedness, (iv) all obligations under leases that constitute capital
leases for which such Person is liable, and (v) all obligations of such Person
under interest rate swaps, caps, floors, collars and other interest hedge
agreements, in each case whether such Person is liable contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations such Person otherwise, as obligor, guarantor or otherwise, or in
respect of which obligations such Person otherwise assures a creditor against
loss.
"INDEMNIFIED LIABILITIES" has the meaning set forth in Section 14.2.
"INDEMNITEES" has the meaning set forth in Section 14.2.
"INDEPENDENT DIRECTOR" means an individual who shall not have been at
the time of such individual's appointment or at any time while serving as a
director of General Partner, Member, any of the Borrowers or any of their
respective Affiliates, and may not have been at any time during the preceding
five years (i) a stockholder, director (other than as an independent
director/member), officer, employee, partner, attorney or counsel of General
Partner, Member, Guarantor, any of the Borrowers or any Affiliate of any of them
(except that such individual may
11
be an independent director of any other Affiliate of the foregoing), (ii) a
customer, supplier or other Person who derives any of its purchases or revenues
from its activities with General Partner, Member, Guarantor, any of the
Borrowers or any Affiliate of any of them (other than a company that provides
professional independent directors and which also may provide other ancillary
corporate, partnership, company or trust services to the Borrowers, Member,
General Partner or their Affiliates in the ordinary course of business (for
example, The Corporation Trust Company)), (iii) a Person or other entity
controlling or under common control with any such stockholder, partner,
customer, supplier or other Person, or (iv) a member of the immediate family of
any such stockholder, director, officer, employee, partner, customer, supplier
or other Person. As used in this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management, policies or activities of a Person, whether through
ownership of voting securities, by contract or otherwise.
"INITIAL TERM" means the period from the Closing Date to the Scheduled
Maturity Date.
"INSURANCE POLICIES" has the meaning set forth in Section 5.4.
"INSURANCE PREMIUMS" means the annual insurance premiums for the
insurance policies required to be maintained by the Borrowers with respect to
the Properties under Section 5.4.
"INTEREST ACCRUAL PERIOD" means a period commencing on the first
Business Day of a calendar month and ending on the day immediately prior to the
first Business Day of the next calendar month; provided that the first Interest
Accrual Period shall mean the period from and including the Closing Date and
including the day immediately prior to the first Business Day of the next
calendar month.
"INTERESTED PARTIES" has the meaning set forth in Section 10.3.
"INTEREST RATE" has the meaning set forth in Section 2.2.
"INVOLUNTARY BORROWER BANKRUPTCY" has the meaning set forth in Section
5.22.
"IRC" means the Internal Revenue Code of 1986, and any rule or
regulation promulgated thereunder from time to time, in each case as amended
from time to time.
"IRS" means the Internal Revenue Service or any successor thereto.
"KNOWLEDGE": whenever in this Loan Agreement or any of the Loan
Documents, or in any document or certificate executed on behalf of any Borrower
Party pursuant to this Loan Agreement or any of the Loan Documents, reference is
made to the knowledge of the Borrowers or any other Borrower Party (whether by
use of the words "knowledge" or "known", or other words of similar meaning, and
whether or not the same are capitalized), such shall be deemed to refer to the
knowledge (without independent investigation unless otherwise specified) of (i)
the individuals who have significant responsibility for any policy making, major
decisions or financial affairs of the applicable entity; (ii) the general
manager for the applicable Property; (iii) the regional vice president of
operations for Guarantor, the president of each Borrower and Member, with
respect to operational issues of any Property or any of the Borrowers; (iv) the
12
chief operating officer of Guarantor, with respect to representations regarding
Guarantor; and (v) also to the knowledge of the person signing such document or
certificate.
"LEASE" means any lease, tenancy, license, assignment and/or other
rental or occupancy agreement or other agreement or arrangement (including,
without limitation, any and all guaranties of any of the foregoing) heretofore
or hereafter entered into affecting the use, enjoyment or occupancy of, or the
conduct of any activity upon or in, the Properties or any portion thereof,
including any extensions, renewals, modifications or amendments thereof.
"LENDER" is defined in the preamble.
"LENDERS'S CONSULTANT" has the meaning set forth in Section 6.7
"LETTER OF CREDIT" shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit (either an evergreen letter of
credit or one which does not expire until at least thirty (30) days after the
Maturity Date (the "LC EXPIRATION DATE")), in favor of Lender, entitling Lender
to draw thereon in New York, New York based solely on a statement executed by an
officer or authorized signatory of Lender, in form and substance reasonably
acceptable to Lender and issued by an Eligible Bank. If at any time (a) the
institution issuing any such Letter of Credit shall cease to be an Eligible
Bank, or (b) if the Letter of Credit is due to expire prior to the LC Expiration
Date, Lender shall have the right immediately to draw down the same in full and
hold the proceeds thereof in accordance with the provisions of this Loan
Agreement, unless the Borrowers shall deliver a replacement Letter of Credit
from an Eligible Bank within (i) as to (a) above, twenty (20) days after Lender
delivers written notice to the Borrowers that the institution issuing the Letter
of Credit has ceased to be an Eligible Bank, or (ii) as to (b) above, within
twenty (20) days prior to the expiration date of said Letter of Credit.
"LIBO RATE" means the applicable London interbank offered rate (rounded
upwards, if necessary, to the nearest one sixteenth (1/16th) of one percent
(1%)) expressed as a percentage per annum for deposits in U.S. dollars appearing
on Telerate Page 3750 as of 11:00 a.m. (London time) two business days prior to
the first day of the applicable Interest Accrual Period and having a maturity
equal to the duration of such Interest Accrual Period, provided that, (1) if
Telerate Page 3750 is not available for any reason, LIBO Rate for the relevant
Interest Accrual Period shall instead be the applicable London interbank offered
rate for deposits in U.S. Dollars as reported by any other generally recognized
financial information service as of 11:00 a.m. (London time) two business days
prior to the first day of such Interest Accrual Period, and having a remaining
term to maturity equal to such Interest Accrual Period, and (2) if no such
report is available, LIBO Rate for the relevant interest period shall instead be
the rate determined by the Lender to be the rate at which it offers to place
deposits in U.S. dollars with first-class banks in the London interbank market
at approximately 11:00 a.m. (London time) two business days prior to the first
day of such Interest Accrual Period, in the approximate amount of its portion of
the relevant loan and having a maturity equal to such Interest Accrual Period.
LIBO Rate shall be adjusted for Federal Reserve Board reserve requirements.
"LIEN" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
13
"LOAN" has the meaning set forth in Section 2.1.
"LOAN AGREEMENT" means this Loan and Security Agreement, as same may be
amended, modified or restated from time to time (including all schedules,
exhibits, annexes and appendices hereto).
"LOAN DOCUMENTS" means this Loan Agreement, the Note, the Deeds of
Trust, the Assignments of Leases, the Assignments of Management Agreements, the
Guaranty, the Environmental Indemnity, the Assignment of Rate Cap, the Financing
Statements, the Cash Management Agreement and any and all other documents and
agreements from any of the Borrowers, General Partner, Member, Guarantor or
Manager and accepted by Lender for the purposes of evidencing and/or securing
the Loan, excluding the Mezzanine Loan Documents.
"LOCK BOX ACCOUNT" and "LOCK BOX ACCOUNT BANK" are defined in Section
7.1.
"MANAGEMENT AGREEMENTS" means those certain Management Agreements
described in EXHIBIT E, between each Borrower and the applicable Manager
described therein, the Memphis Interim Agreement, and any management agreement
which may hereafter be entered into in accordance with the terms and conditions
hereof, pursuant to which any subsequent Manager may hereafter manage one or
more of the Properties.
"MANAGEMENT FEE" means the fees earned by all Managers pursuant to the
terms of the Management Agreements.
"MANAGERS" means the managers described in EXHIBIT E or an Acceptable
Manager as may hereafter be charged with management of one or more of the
Properties in accordance with the terms and conditions hereof.
"MATERIAL ADVERSE EFFECT" means, as determined by Lender in its
reasonable discretion, (A) a material adverse effect (which may include economic
or political events) upon the business, operations, properties, assets or
condition (financial or otherwise) of any of the Borrowers or Guarantor, or (B)
the impairment of the ability of any of the Borrowers or Guarantor to perform
its obligations under any Loan Documents, or (C) the impairment of the ability
of Lender to enforce or collect any of the Obligations as such Obligations
become due. In determining whether any individual event would result in a
Material Adverse Effect, notwithstanding that such event does not of itself have
such effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then occurring events and existing
conditions would result in a Material Adverse Effect.
"MATERIAL AGREEMENT" means any contract or agreement relating to the
ownership, management, development, use, operation, leasing, maintenance, repair
or improvement of the Properties under which there is an obligation of the
Borrowers, in the aggregate, to pay, or under which any of the Borrowers
receives in compensation, more than $1,000,000 per annum, other than (i) the
Management Agreements, (ii) any Franchise Agreements, and (iii) any agreement
under which (x) there is an obligation of the Borrowers, in the aggregate, to
pay, or under which any of the Borrowers (or all the Borrowers in the aggregate)
receives in compensation, not more than $5,000,000 per annum and (y) which is
terminable by the Borrowers on not more than sixty (60) days prior written
notice without any fee or penalty.
14
"MATERIAL ALTERATION" means any improvement or alteration to a Property
(other than decorative work such as painting, wallpapering and carpeting), the
cost of which exceeds the greater of (x) five percent (5%) of the Aggregate
Allocated Loan Amount with respect to the applicable Property or (y) $250,000,
or is not otherwise already approved by Lender as part of the CapEx/FF&E Budget
or Capital Improvement Plan then in effect, or which otherwise does not
constitute Work.
"MATERIAL LEASE" means any Lease of space in a Property (other than
Leases for space in the office building located at the West Palm Beach Property)
which (i) is with an Affiliate of the Borrowers, (ii)(a) either provides for
annual rent or other payments in an amount equal to or greater than $100,000, or
has a term (including all extensions and renewals which are unilaterally
exercisable by the tenant thereunder) of more than ten (10) years, and (b) may
not be cancelled by either party thereto on thirty (30) days' notice without
payment of a termination fee, penalty or other cancellation fee, (iii) demises
in excess of 2000 square feet of space, (iv) is for any establishment the
primary purpose of which is the service of food and/or beverages or for any use
not currently in effect at the Properties, or (v) obligates the Borrowers to
make any improvements to the Properties either directly or through cash
allowances (including, without limitation, free rent, tenant improvement
allowances, or landlord's construction work) to the applicable tenant in excess
of $25,000. For purposes of this definition only, in determining the square
footage demised under any Lease, all space in the applicable Property which may
in the future be demised to the tenant under such Lease by reason of such tenant
exercising any right or option contained in such Lease shall be included in the
calculation of the square footage demised under such Lease.
"MATURITY DATE" shall mean the Scheduled Maturity Date, as same may be
extended for the first Extension Term, the Second Extension Term, or the Third
Extension Term (subject to the terms and conditions of Section 2.5(B)), or such
other date on which the final payment of principal of the Note becomes due and
payable as herein provided, whether at such stated maturity date, by
acceleration, or otherwise.
"MAXIMUM RATE" has the meaning set forth in Section 2.2.
"MEMPHIS INTERIM AGREEMENT" means that certain Management Agreement
dated as of the Closing Date between IMPAC I, L.L.C. and Lodging Memphis
Property Owner, LLC, with respect to certain interim management services
provided at the Property location a 2144 Madison Avenue, Memphis, Tennessee.
"MEMBER" shall mean, individually or collectively, those parties
identified on SCHEDULE 4.1(c) as "Members", and any other entity which is now or
hereafter becomes the managing member of any of the Borrowers under such
Borrower's limited liability company operating agreement (other than the sole
member of any single member limited liability company).
"MERRILL LYNCH" has the meaning set forth in Section 10.3.
"MEZZANINE BORROWER" shall mean, individually or collectively, those
parties identified on SCHEDULE 4.1(c) as "Mezzanine Borrower".
15
"MEZZANINE LENDER" shall mean Merrill Lynch Mortgage Lending, Inc., its
successors and assigns.
"MEZZANINE LENDER'S PERCENTAGE" shall mean, at the time of
determination, the ratio, expressed as a percentage, that the outstanding
principal balance of the Mezzanine Loan bears to the Aggregate Outstanding
Principal Balance. As of the date hereof Mezzanine Lender's Percentage is
25.99%.
"MEZZANINE LOAN" means that certain loan in the amount of $78,671,201
from Mezzanine Lender to Mezzanine Borrower.
"MINIMUM DEBT YIELD" means (i) prior to the first 1st anniversary of
the Closing Date, 12.75%, (ii) from the first 1st anniversary of the Closing
Date but prior to the second 2nd anniversary of the Closing Date, 13.25%,
(iii) during the First Extension Term, 13.50%, (iv) during the Second Extension
Term, 13.75%, and (v) during the Third Extension Term, 14.00%.
"MINIMUM DSCR" means 1.20:1.0.
"MONTHLY FF&E PAYMENT" has the meaning set forth in Section 6.4.
"MOODY'S" means Moody's Investors Service.
"MORTGAGED CONDOMINIUM PROPERTY" means, collectively, the Property
identified on SCHEDULE 4.29, together with, following the Office Unit Release,
the Hotel Unit.
"MORTGAGED CONDOMINIUM PROPERTY DOCUMENTS" means those certain
documents identified on SCHEDULE 4.29, and, following a Conversion, the
documents establishing and governing the condominium regime applicable to the
Hotel Unit and the Office Unit.
"MORTGAGE LENDER'S PERCENTAGE" shall mean, at the time of
determination, the ratio, expressed as a percentage, that the outstanding
principal balance of the Loan bears to the Aggregate Outstanding Principal
Balance. As of the date hereof Mortgage Lender's Percentage is 74.01%.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
3(37) or Section 4001(a)(3) of ERISA to which any of the Borrowers or any
Affiliate is making, or is accruing an obligation to make, contributions or has
made, or been obligated to make, contributions within the preceding six (6)
years, or for which any of the Borrowers or any Affiliate has any liability,
including contingent liability.
"NET CASH FLOW" means Net Operating Income for any period less (i) a
base management fee equal to the greater of (A) the actual base management fee
for such period and (B) 4.0% of Operating Revenues for such period, (ii) a
reserve for FF&E equal to 4.0% of Operating Revenues for such period, and (iii)
fees due to all Franchisors for such period.
"NET OPERATING INCOME" OR "NOI" means, for any period, the amount by
which Operating Revenues (other than from the office building located at the
West Palm Beach Property) exceed Operating Expenses (excluding Management Fees,
interest, income taxes,
16
depreciation, amortization, FF&E reserves, fees due to all Franchisors for such
period, and expenses related solely to the office building located at the West
Palm Beach Property).
"NET SALES PROCEEDS" means all consideration, from whatever source, for
the purchase of a Property pursuant to the terms of a purchase contract with an
entity which is not an Affiliate of the Borrowers or Guarantor and less
customary and reasonable costs (as determined by Lender in its reasonable
discretion), including broker's fees, closing attorney's fees, and transfer and
sales taxes payable by the Borrowers.
"NON-FLAGGED PROPERTIES" means the Properties located at 9700 Bluegrass
Highway, Louisville, Kentucky and 2144 Madison Avenue, Memphis, Tennessee, prior
to such Properties becoming subject to a Franchise Agreement.
"NOTE" has the meaning set forth in Section 2.1.
"OBLIGATIONS" means the Loan and all obligations, liabilities and
indebtedness of every nature to be paid or performed by the Borrowers under the
Loan Documents, including the principal amount of the Loan, interest accrued
thereon and all fees, costs and expenses, and other sums now or hereafter owing,
due or payable and whether before or after the filing of a proceeding under the
Bankruptcy Code by or against any of the Borrowers, and the performance of all
other terms, conditions and convenants under the Loan Documents.
"OFFICE UNIT" has the meaning set forth in Section 11.5.
"OFFICE UNIT RELEASE" has the meaning set forth in Section 11.5.
"O&M PLANS" has the meaning set forth in Section 5.7.
"OPERATING BUDGET" means, for any period, the Borrowers' budget setting
forth the Borrowers' best estimate, after due consideration, of all Operating
Revenues and Operating Expenses and any other revenues, costs and expenses for
each of the Properties for such period, which budget has been approved by Lender
in accordance herewith, as same may be amended pursuant to Section 5.1(D)
hereof.
"OPERATING EXPENSES" means, for any period, without duplication, all
costs and expenses of operating, maintaining and managing the Properties
determined in accordance with GAAP, including, without limitation, Impositions
(due and payable during the applicable period of determination), Insurance
Premiums, repair and maintenance costs, Management Fees and costs, fees payable
to all Franchisors, utilities, accounting, legal and other professional fees,
fees relating to environmental and financial audits, wages, salaries, payroll
taxes and benefits, business franchise taxes, tips and gratuities paid to
employees and staff and other personnel expenses, costs and expenses related to
operating and maintaining all guest rooms, restaurants (including inventory and
supplies), retail stores and shops, bars, meeting rooms, banquet rooms,
apartments, parking and recreational facilities, and all other "costs and
expenses" as defined in the Uniform System; but excluding principal and interest
payments on the Loan, fees and expenses of a non-operating nature and fees and
expenses due and payable to or for the benefit of Lender under this Loan
Agreement or any of the other Loan Documents (including, without limitation, all
loan servicing fees and expenses, and expenses related to a Cap), expenses
which,
17
in accordance with GAAP, should be capitalized, any expense paid by a tenant
that would otherwise be an Operating Expense, capital expenditures, tenant
improvement allowances and leasing commissions, if any, asset management fees,
any payment or expense for which each Borrower was or is to be reimbursed from
proceeds of the Loan or insurance or by any third party, any fees or expenses
paid to any partner or member of the Borrowers for services provided to any of
the Borrowers and any non-cash charges such as depreciation and amortization.
Operating Expenses shall not include federal, state or local income taxes or
legal and other professional fees unrelated to the operation of the Properties.
"OPERATING REVENUES" means, without duplication, all revenues and
receipts of the Borrowers from operation of the Properties or otherwise arising
in respect of the Properties which are properly allocable to the Properties for
the applicable period in accordance with GAAP, including, without limitation,
all hotel receipts, revenues and credit card receipts collected from guest
rooms, restaurants and bars (including without limitation, service charges for
employees and staff), mini-bars, meeting rooms, banquet rooms, apartments,
parking and recreational facilities, health club membership fees, food and
beverage wholesale and retail sales, service charges, convention services,
special events, audio-visual services, boat cruises, travel agency fees,
internet booking fees, telephone charges, laundry services, vending machines and
otherwise, all rents, revenues and receipts now existing or hereafter arising or
created out of the sale, lease, sublease, license, concession or other grant of
the right of the possession, use of occupancy of all or any portion of the
Properties or personalty located thereon, or rendering of service by any of the
Borrowers or any operator or manager of the hotel or commercial space
(including, without limitation, from the rental of any office space, retail
space, guest rooms or other space, halls, stores and deposits securing
reservations of such space (only to the extent such deposits are not required to
be returned or refunded to the depositor)), proceeds from rental or business
interruption insurance relating to business interruption or loss of income for
the period in question and any other items of revenue which would be included in
operating revenues under the Uniform System; but excluding proceeds from the
sale of FF&E, abatements, reductions or refunds of real estate or personal
property taxes relating to the Properties, dividends on insurance policies
relating to the Properties, condemnation proceeds arising from a temporary
taking of all or a part of any Properties, security and other deposits until
they are forfeited by the depositor, advance rentals until they are earned,
proceeds from a sale, financing or other disposition of the Properties or any
part thereof or interest therein and other non-recurring revenues as determined
by Lender, insurance proceeds (other than proceeds from rental or business
interruption insurance), other condemnation proceeds, capital contributions or
loans to any of the Borrowers and disbursements to any of the Borrowers from the
Reserves.
"OSI DEFAULTS" means defaults under the Crowne Plaza Franchise
Agreements resulting from the failure to achieve or maintain an Overall Service
Index Level (as such term is defined in the applicable standards manual in
effect for the Crowne Plaza Franchise Agreements) of 80, or such other default
standard as may be set forth in the applicable standards manual after the
Closing Date, at the following Properties: (i) the West Palm Beach Property;
(ii) 350 1st Avenue N.E., Cedar Rapids, Iowa; (iii) 91 State Street, Albany,
New York and (iv) 2801 NW Freeway, Houston, Texas.
"OWNERSHIP INTERESTS" has the meaning set forth in Section 9.1.
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"PAYMENT DATE" means the date that is the last day of each calendar
month occurring during the term of the Loan (or if such last day is not a
Business Day, the immediately preceding Business Day).
"PERMITTED ASSUMPTION" has the meaning set forth in Section 11.3.
"PERMITTED ENCUMBRANCES" means, collectively, (i) the Deeds of Trust
and the other Liens of the Loan Documents in favor of Lender, (ii) the items
shown in Schedule B to the Title Policies as of Closing, (iii) Liens for
Impositions not yet due and payable or Liens arising after the date hereof which
are being contested in good faith by appropriate proceedings promptly instituted
and diligently conducted in accordance with Section 5.3(B) hereof; (iv) in the
case of Liens arising after the date hereof, statutory Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens arising by
operation of law, which are incurred in the ordinary course of business and
discharged by the Borrowers by payment, bonding or otherwise within forty-five
(45) days after the filing thereof or which are being contested in good faith in
accordance with Section 5.3(B) hereof; (v) Liens arising from reasonable and
customary purchase money financing of personal property and equipment leasing to
the extent the same are created in the ordinary course of business in accordance
with Section 5.17(B) hereof; (vi) all easements, rights-of-way, restrictions and
other similar charges or non-monetary encumbrances against real property which
do not materially adversely affect (A) the ability of the Borrowers to pay any
of their obligations to any Person as and when due, (B) the marketability of
title to the Properties, (C) the fair market value of the Properties, or (D) the
use or operation of the Properties as of the Closing Date and thereafter; (vii)
rights of existing and future tenants, as tenants only, pursuant to the Leases;
and (viii) any other Lien to which Lender may expressly consent in writing.
"PERMITTED INDEBTEDNESS" has the meaning set forth in Section 5.17.
"PERMITTED INVESTMENTS" has the meaning set forth in the Cash
Management Agreement.
"PERMITTED OWNERSHIP INTEREST TRANSFERS" has the meaning set forth in
Section 11.2.
"PERMITTED TRANSFEREE" means any Person (provided such Person satisfies
the requirements of Article IX hereof) controlled by, and more than 51% of which
is owned by, one of the following:
(i) a pension fund, pension trust or pension account that (a) has
total real estate assets of at least $2.5 Billion and (b) is managed by a Person
who controls real estate equity assets (not including the Properties) having a
fair market value of at least $1.25 Billion; or
(ii) a pension fund advisor who (a) immediately prior to such
transfer, controls at least $1 Billion of real estate equity assets and (b) is
acting on behalf of one or more pension funds that, in the aggregate, satisfy
the requirements of clause (i) of this definition; or
(iii) an insurance company which is subject to supervision by the
insurance commissioner, or a similar official or agency, of a state or territory
of the United States (including the District of Columbia) (a) with a net worth,
as of the date immediately prior to the
19
date of the transfer, of at least $1 Billion and (b) who, immediately prior to
such transfer, controls real estate equity assets (not including the Properties)
having a fair market value of at least $2.5 Billion; or
(iv) a corporation organized under the banking laws of the United
States or any state or territory of the United States (including the District of
Columbia) (a) with a combined capital and surplus of at least $1 Billion and (b)
who, immediately prior to such transfer, controls real estate equity assets (not
including the Properties) having a fair market value of at least $5 Billion; or
(v) any other Person (a) with a long-term unsecured debt rating
from the Rating Agencies of at least investment grade and (b) that owns or
operates at least 15,000 hotel rooms, (ii) has a net worth, as of the date
immediately prior to the date of such transfer, of at least $750 Million and
(iii) immediately prior to such transfer, controls real estate equity assets
(not including the Properties) having a fair market value of at least $1.5
Billion.
"PERSON" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof
and their respective permitted successors and assigns (or in the case of a
governmental Person, the successor functional equivalent of such Person).
"PLAN OF REORGANIZATION" means the Joint Plan of Reorganization of
Lodgian, Inc., et al., together with the Official Committee of Unsecured
Creditors under Chapter 11 of the Bankruptcy Code, as approved pursuant to the
terms of the Bankruptcy Code, together with any confirmation and/or amendments
thereto entered in accordance with the Bankruptcy Code.
"PRE-CLOSING CONDEMNATION" means those certain condemnation proceedings
by the Florida Department of Transportation against Servico Pensacola 7200, Inc.
related to Item/Segment No. 2224341, Parcel No. 101.1, and Servico Pensacola
7330, Inc. relating to Item/Segment No. 2224341, Parcel No. 102.1 with respect
to certain parcels of land which do not constitute any portion of any of the
Properties.
"PRE-EXISTING CONDITION" has the meaning set forth in Section 5.5.
"PREPAYMENT CONSIDERATION" has the meaning set forth in Section 2.6.
"PRIMARY BORROWER PARTIES" means, collectively, the Borrowers, General
Partner and Member.
"PROPERTIES" and "PROPERTY" means, collectively or individually, the
properties (including land and Improvements) described in EXHIBIT F, together
with all Improvements now or hereafter located thereon and all related
facilities, amenities and FF&E owned by the Borrowers and which shall be
encumbered by and are more particularly described in the respective Deeds of
Trust: provided that, following a Release, "PROPERTIES" shall mean each of the
Properties that remain encumbered by the Deeds of Trust as Collateral for the
Loan.
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"PROPERTY CONDITION REPORT" means those certain property condition
reports for the Properties as described on EXHIBIT M.
"PROPERTY IMPROVEMENT PLAN" means, collectively, those certain property
improvement plans for the Properties attached as EXHIBIT G and any future
Property Improvement Plans required to be implemented by the applicable
Franchisor.
"PROPERTY RELEASE" has the meaning set forth in Section 11.4.
"RATING AGENCY" shall mean, prior to a securitization, any of S&P,
Moody's and Fitch or any other nationally-recognized statistical rating
organization designated by Lender in its sole discretion, and, after a
Securitization, each Rating Agency which has rated the Securities that are the
subject of the Securitization.
"RATING CONFIRMATION" with respect to the transaction or matter in
question, shall mean: (i) if all or any portion of the Loan, by itself or
together with other loans, has been the subject of a Securitization, then each
applicable Rating Agency shall have confirmed in writing that such transaction
or matter shall not result in a downgrade, qualification, or withdrawal of any
rating then in effect for any certificate or other securities issued in
connection with such Securitization, and (ii) if all of the Loan has not been
the subject of a Securitization, then Lender shall have determined in its
reasonable discretion (taking into consideration such factors as Lender may in
good faith determine, including the attributes of the loan pool in which the
Loan might reasonably be expected to be securitized) that no rating for any
certificate or other securities that would be issued in connection with a
Securitization of such portion of the Loan will be downgraded, qualified, or
withheld by reason of such transaction or matter.
"RATING CRITERIA" with respect to any Person, shall mean that (i) the
short-term unsecured debt obligations of such Person are rated at least "A-1" by
S&P, "P-1" by Moody's and "F-1" by Fitch, if deposits are held by such Person
for a period of less than one month, or (ii) the long-term unsecured debt
obligations of such Person are rated at least "AA-" by S&P (or "A" if the
short-term unsecured debt obligations of such Person are rated at least "A-l"),
"Aa2" by Moody's and "A" by Fitch, if deposits are held by such Person for a
period of one month or more.
"RECEIPTS" shall mean all revenues, receipts and other payments of
every kind arising from ownership or operation of the Properties, including
without limitation, all warrants, stock options, or equity interests in any
tenant, licensee or other Person occupying space at, or providing services
related to or for the benefit of, the Properties received by the Borrowers or
any Related Person of the Borrowers in lieu of rent or other payment.
"RELATED PERSON" means any Person in which any of the Borrowers or the
Guarantor holds greater than a ten percent (10%) equity interest.
"RELEASE" has the meaning set forth in Section 11.4.
"RELEASE DATE" has the meaning set forth in Section 11.4.
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"RELEASE PRICE" means an amount equal to the greater of (i) one hundred
twenty-five percent (125%) of the Aggregate Allocated Loan Amount of the
applicable Property, and (ii) seventy-five percent (75%) of the Net Sales
Proceeds of a Property to be released.
"RELEASE PRICE EXCESS" means the amount by which any Release Price
exceeds the Aggregate Allocated Loan Amount of the Property being released;
provided, however, Release Price Excess shall exclude any portion of a Release
Price paid in connection with (x) a Release necessary to prevent an Uncured
Franchise Default, or (y) a Release necessary to enable the Borrowers to comply
with the restrictions set forth in Section 5.13(D).
"RENT ROLL" has the meaning set forth in Section 3.1.
"RENTS" has the meaning set forth in the Granting Clauses of the Deeds
of Trust.
"REPLACEMENTS" has the meaning set forth in Section 6.4.
"REQUIRED CAPITAL IMPROVEMENTS" has the meaning set forth in Section
6.5.
"REQUIRED INSURANCE POLICY" and "REQUIRED INSURANCE POLICIES" have the
meanings set forth in Section 5.4.
"RESERVE PRINCIPAL PAYMENT" has the meaning set forth in the Mezzanine
Loan Agreement.
"RESERVE SUB-ACCOUNTS" has the meaning set forth in Section 7.1.
"RESERVES" means the reserves held by or on behalf of Lender pursuant
to this Loan Agreement or the other Loan Document, including without limitation,
the reserves established pursuant to Article VI.
"RESTORATION" has the meaning set forth in Section 5.5.
"RESTORATION THRESHOLD" shall mean the greater of (x) $250,000 or (y)
five percent (5%) of the Aggregate Allocated Loan amount of the applicable
Property, not to exceed $500,000, per Property per occurrence.
"REVPAR" means average room revenues per available room per day.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"SCHEDULED MATURITY DATE" shall mean, November 30, 2004.
"SCHEDULED MEZZANINE PRINCIPAL PAYMENTS" shall mean (x) $64,975.00
through and including the Payment Date in November 2003, (y) $97,462.50
following the Payment Date in November 2003, through and including the Payment
Date in November 2004, and (z) $129,950.00 thereafter through the Maturity Date.
22
"SCHEDULED MORTGAGE PRINCIPAL PAYMENTS" shall mean (x) $185,025.00
through and including the Payment Date in November 2003, (y) $277,537.50
following the Payment Date in November 2003, through and including the Payment
Date in November 2004, and (z) $370,050.00 thereafter through the Maturity Date.
"SECOND EXTENSION TERM" has the meaning set forth in Section 2.5(B).
"SECONDARY MARKET TRANSACTION" has the meaning set forth in Section
10.1.
"SECURITIES" (whether or not capitalized) means any stock, shares,
voting trust certificates, bonds, debentures, options, warrants, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"SECURITIZATION" shall mean a rated offering of securities representing
direct or indirect interests in the Loan or the right to receive income
therefrom.
"SERVICER" means a servicer selected by Lender from time to time in its
sole discretion to service the Loan.
"SERVICING FEES" has the meaning set forth in Section 2.11.
"SUB-ACCOUNTS" has the meaning set forth in Section 7.1.
"SUPPLEMENTAL FINANCIAL INFORMATION" means (i) a comparison of the
budgeted income and expenses and the actual income and expenses for the prior
calendar year or corresponding calendar quarter for such prior year, (ii) a
calculation of the average daily rate, RevPAR and average occupancy statistics
for the Properties for the applicable period and (iii) such other financial
reports as the subject entity shall routinely and regularly prepare.
"SUPPLEMENTAL INSURANCE RESERVE PAYMENT" shall mean $1,189,062.
"SURVEY" has the meaning set forth in Section 3.1.
"TAX LIABILITIES" has the meaning set forth in Section 2.9.
"TERRORISM INSURANCE CAP" means $250,000.
"TEST RATE" means an interest rate equal to the greater of (x) the then
current yield on the 10-year United States Treasury Note plus the Test Rate
Spread, and (y) the then current LIBO Rate plus the Test Rate Spread.
"TEST RATE SPREAD" means 4.0%; provided, however, if the Mezzanine
Borrowers have not made the Reserve Principal Payment on or prior to the Payment
Date occurring in November 2003, the "TEST RATE SPREAD" shall mean 4.15%
throughout the remainder of the term of the Loan, including any Extension Terms.
23
"THIRD EXTENSION TERM" has the meaning set forth in Section 2.5(B).
"TIER 1 HOTEL" means any of the Properties subject to a Franchise
Agreement with an Acceptable Franchisor, or under a Franchisor brand, as
applicable, identified in the "Tier 1" category on EXHIBIT I.
"TIER 2 HOTEL" means any of the Properties subject to a Franchise
Agreement with an Acceptable Franchisor, or under a Franchisor brand, identified
in the "Tier 2" category on EXHIBIT I.
"TIER 3 HOTEL" means any of the Properties subject to a Franchise
Agreement with an Acceptable Franchisor, or under a Franchisor brand, identified
in the "Tier 3" category on EXHIBIT I.
"TITLE COMPANIES" means Fidelity National Title Insurance Company of
New York, Land America (as co-insurer), and such other national title insurance
company as may be acceptable to Lender.
"TITLE POLICIES" means, collectively, the ALTA mortgagee policies of
title insurance pertaining to the Deeds of Trust issued by the Title Companies
to Lender in connection with the Closing.
"TRANSFER" has the meaning set forth in Section 11.2.
"TRANSFEREE BORROWER" has the meaning set forth in Section 11.3.
"UNCURED FRANCHISE DEFAULT" means (x) the voluntary or involuntary
termination of any Franchise Agreement, or (y) the occurrence of one or more
breaches or defaults (other than OSI Defaults) which do not result from the
failure of the Borrowers to pay to the Franchisors amounts due under the
applicable Franchise Agreements and the continuance thereof beyond all
applicable notice and grace periods, if any, under Franchise Agreements (or such
other cure periods as may be provided by Franchisor in writing) covering
Properties with Aggregate Allocated Loan Amounts of ten percent (10%) or more of
the outstanding principal balance of the Loan and the Mezzanine Loan; provided,
however, no Uncured Franchise Default shall be deemed to have occurred following
the voluntary or involuntary termination of any Franchise Agreement if (a)
within ten (10) Business Days of the termination of the applicable Franchise
Agreement (and at the time of delivery of each report pursuant to Section
5.1(A)(v)) the Borrowers deliver to Lender evidence reasonably satisfactory to
Lender that the Borrowers are diligently pursuing a Franchise Agreement with an
Acceptable Franchisor for the applicable Property and shall thereafter
diligently and continuously pursue such Franchise Agreement, (b) at the time of
such termination not more than the lesser of (i) four (4) Properties, or (ii)
Properties with Aggregate Allocated Loan Amounts of five percent (5%) of the
outstanding principal balance of the Loan and the Mezzanine Loan, in either case
excluding the Non-Flagged Properties, shall be in operation without being
subject to Franchise Agreements, and (c) no Property (other than the Non-Flagged
Properties) shall be without a Franchise Agreement in place for a period in
excess of six (6) months from the termination of the applicable Franchise
Agreement.
24
"UNIFORM SYSTEM" means the Uniform System of Accounts for the Lodging
Industry promulgated by the American Hotel and Motel Association, as in effect
from time to time.
"WAIVING PARTY" has the meaning set forth in Section 13.1.
"WEST PALM BEACH PROPERTY" means the Property located at 1601 Belvedere
Boulevard, West Palm Beach, Florida.
"WORK" has the meaning set forth in Section 6.7.
"WORK RESERVES" has the meaning set forth in Section 6.7.
SECTION 1.2 ACCOUNTING TERMS.
For purposes of this Loan Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP or the Uniform System, as the case may be.
SECTION 1.3 OTHER DEFINITIONAL PROVISIONS.
References to "ARTICLES", "SECTIONS", "SUBSECTIONS", "EXHIBITS" and
"SCHEDULES" shall be to Articles, Sections, Subsections, Exhibits and
Schedules, respectively, of this Loan Agreement unless otherwise specifically
provided. Any of the terms defined in Section 1.1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference. In this Loan Agreement, "HEREOF", "HEREIN", "HERETO", "HEREUNDER"
and the like mean and refer to this Loan Agreement as a whole and not merely to
the specific article, section, subsection, paragraph or clause in which the
respective word appears; words importing any gender include the other genders;
references to "WRITING" include printing, typing, lithography and other means
of reproducing words in a tangible visible form; the words "INCLUDING",
"INCLUDES" and "INCLUDE" shall be deemed to be followed by the words "without
limitation"; and any reference to any statute or regulation may include any
amendments of same and any successor statutes and regulations. Further, (i)
any reference to any agreement or other document may include subsequent
amendments, assignments, and other modifications thereto, and (ii) any
reference to any Person may include such Person's respective permitted
successors and assigns or, in the case of governmental Persons, Persons
succeeding to the relevant functions of such Persons.
ARTICLE II
TERMS OF THE LOAN
SECTION 2.1 LOAN.
(A) LOAN. Subject to the terms and conditions of this Loan
Agreement and in reliance upon the representations and warranties of the
Borrowers contained herein, Lender agrees to lend to the Borrowers, and the
Borrowers agree to borrow from Lender, a loan in the original principal amount
of $224,036,325 (such loan and the obligation of the Borrowers to repay the same
together with all interest and other amounts from time to time owing hereunder
may be referred to as the "LOAN").
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(B) NOTE. On the Closing Date, the Borrowers shall execute and
deliver to Lender a Promissory Note, dated of even date herewith (as amended,
modified or restated, and any replacement or substitute notes therefor, by means
of multiple notes or otherwise, collectively, the "NOTE"), made by the Borrowers
to the order of Lender, in the original principal amount of $224,036,325.
(C) USE OF PROCEEDS. The proceeds of the Loan funded at Closing
shall be used to (i) refinance existing indebtedness; (ii) pay all recording
fees and taxes, title insurance premiums, the reasonable out-of-pocket costs and
expenses incurred by Lender, including reasonable legal fees and expenses of
counsel to Lender, and other costs and expenses approved by Lender (which
approval will not be unreasonably withheld) related to the Loan; (iii) establish
the Reserves required hereunder; (iv) fund cash collateral requirements under
certain letters of credit; and (v) provide for general corporate purposes,
including, without limitation, payment of transaction costs and expenses
incurred by the Borrowers. The remaining proceeds of the Loan, if any, shall be
disbursed to or as otherwise directed by the Borrowers.
SECTION 2.2 INTEREST.
(A) RATE OF INTEREST. The outstanding principal balance of the
Loan shall bear interest at a rate per annum equal to the Interest Rate in
effect for each Interest Accrual Period during the term hereof. The "INTEREST
RATE" for any Interest Accrual Period shall be the rate of interest per annum
equal to the sum of (i) the Applicable Spread plus (ii) the LIBO Rate in effect
for such Interest Accrual Period.
(B) DEFAULT RATE. Notwithstanding the foregoing, upon the
occurrence and during the continuance of an Event of Default and in any event
from and after the Maturity Date of the Loan and until the Loan and all other
Obligations are satisfied in full, the outstanding principal balance of the Loan
and all other Obligations shall bear interest until paid in full at a rate per
annum that is five percent (5.0%) in excess of the Interest Rate otherwise
applicable under this Loan Agreement and the Note (the "DEFAULT RATE").
(C) COMPUTATION OF INTEREST. Interest on the Loan and all other
Obligations owing to Lender shall be computed on the basis of a 360-day year,
and shall be charged for the actual number of days elapsed during any month or
other accrual period. Interest shall be payable in arrears (except with respect
to the number of days from the Payment Date in any Interest Accrual Period to
the last day of such Interest Accrual Period as to which interest shall be
payable in advance, if any).
(D) INTEREST LAWS. Notwithstanding any provision to the contrary
contained in this Loan Agreement or the other Loan Documents, the Borrowers
shall not be required to pay, and Lender shall not be permitted to collect, any
amount of interest in excess of the maximum amount of interest permitted by law
("EXCESS INTEREST"). If any Excess Interest is provided for or determined by a
court of competent jurisdiction to have been provided for in this Loan Agreement
or in any of the other Loan Documents, then in such event: (1) the provisions of
this subsection shall govern and control, (2) the Borrowers shall not be
obligated to pay any Excess Interest; (3) any Excess Interest that Lender may
have received hereunder shall be, at Lender's option, (a) applied as a credit
against either or both of the outstanding principal balance of the
26
Loan or accrued and unpaid interest thereunder (not to exceed the maximum amount
permitted by law), (b) refunded to the payor thereof, or (c) any combination of
the foregoing; (4) the interest rate(s) provided for herein shall be
automatically reduced to the maximum lawful rate allowed from time to time under
applicable law (the "MAXIMUM RATE"), and this Loan Agreement and the other Loan
Documents shall be deemed to have been and shall be, reformed and modified to
reflect such reduction; and (5) the Borrowers shall not have any action against
Lender for any damages arising out of the payment or collection of any Excess
Interest. Notwithstanding the foregoing, if for any period of time interest on
any Obligation is calculated at the Maximum Rate rather than the applicable rate
under this Loan Agreement, and thereafter such applicable rate becomes less than
the Maximum Rate, the rate of interest payable on such Obligations shall, to the
extent permitted by law, remain at the Maximum Rate until Lender shall have
received or accrued the amount of interest which Lender would have received or
accrued during such period on Obligations had the rate of interest not been
limited to the Maximum Rate during such period. If the Default Rate shall be
finally determined to be unlawful, then the Interest Rate shall be applicable
during any time when the Default Rate would have been applicable hereunder,
provided however that if the Maximum Rate is greater or lesser than the Interest
Rate, then the foregoing provisions of this paragraph shall apply.
(E) LATE CHARGES. If an Event of Default regarding non-payment of
principal, interest or other sums due hereunder or under any of the other Loan
Documents shall occur, then the Borrowers shall pay to Lender, in addition to
all sums otherwise due and payable, a late fee in an amount equal to five
percent (5.0%) of such principal, interest or other sums due hereunder or under
any other Loan Document, such late charge to be immediately due and payable
without demand by Lender.
SECTION 2.3 INTEREST RATE CAP AGREEMENT.
(A) As a condition to Closing, the Borrowers shall purchase and
pledge and deliver to Lender an interest rate cap agreement satisfying the
criteria set forth below (the "CAP"), and the Borrowers shall maintain such Cap
in the possession of Lender, in full force and effect, until all Obligations are
fully and finally repaid. The Cap (i) shall have a notional amount equal to the
outstanding principal balance of the Loan calculated based upon the declining
principal balance of the Loan scheduled to be outstanding over the term of such
Cap taking into account scheduled principal amortization hereunder, (ii) shall
provided that to the extent that the LIBO Rate exceeds six and one half percent
(6.5%) per annum (the "CAP THRESHOLD RATE"), then the Cap Provider shall pay to
Lender, on behalf of the Borrowers, not less than the amount of interest that
would accrue on the Loan at a per annum rate equal to the difference between the
LIBO Rate and the Cap Threshold Rate, (iii) shall be in form and substance
reasonably satisfactory to Lender, (iv) shall have a term equal to the Initial
Term of the Loan (or the applicable Extension Term), and (v) shall be issued by
a financial institution (the "CAP PROVIDER") having a financial rating by S&P of
at least "AA" (and at least an equivalent rating from each of the other Rating
Agencies).
(B) If at any time the financial rating assigned to any Cap
Provider by S&P shall fall below AA- (or the equivalent rating for any other
Rating Agency), the Borrowers shall be required to deliver a replacement Cap in
substantially the form of the Cap delivered at Closing issued by a Cap Provider
meeting the rating requirements for a Cap Provider under Section
27
2.3(A)(v), providing for a cap "strike price" not greater than the Cap Threshold
Rate (a replacement Cap meeting all of the foregoing conditions, an "ACCEPTABLE
REPLACEMENT CAP") within twenty (20) Business Days after receipt of notice from
Lender or Servicer of such downgrade of the Cap Provider, together with an
assignment of such Cap substantially in the form of the Assignment of Rate Cap
and such Financing Statements and opinions of in-house or outside counsel to the
Cap Provider as Lender may reasonably require each in form and substance
acceptable to Lender. Notwithstanding the foregoing to the contrary, under no
circumstances shall the Cap be terminated by the Borrowers prior to delivery of
an Acceptable Replacement Cap, together with the required documentation with
respect thereto, to Lender. If, for any reason, the Borrowers are unable to
deliver a replacement Cap when required hereunder, then at or prior to the time
when the replacement Cap is due hereunder, the Borrowers shall deliver to Lender
cash security (such cash security together with any interest thereon, the "CAP
RESERVE") in an amount sufficient to cover the amount of additional interest
which Lender reasonably estimates may be incurred during the remaining term of
the Loan (or remaining Extension Term then in effect) as a result of the LIBO
Rate exceeding the Cap Threshold Rate, which Cap Reserve shall be held by Lender
and applied to the Obligations in accordance with Section 6.1. Upon delivery of
an Acceptable Replacement Cap reasonably acceptable to Lender, the remaining
balance of the Cap Reserve shall be promptly returned to the Borrowers.
(C) All payments made by the Cap Provider under the Cap shall be
deposited directly by the Cap Provider into the Lock Box Account and applied in
accordance with the Cash Management Agreement.
SECTION 2.4 PAYMENTS.
(A) PAYMENTS OF INTEREST AND PRINCIPAL. The Borrowers shall make
payments of interest and principal on the Note as follows:
(i) The Borrowers shall make a payment to Lender of
interest only on the Closing Date for the first Interest Accrual Period;
(ii) On each Payment Date commencing with the Payment Date
in December 2002, and on each Payment Date thereafter through but not including
the Payment Date in December 2003, the Borrowers shall make a payment of
interest on the Loan for the Interest Accrual Period immediately preceding each
such Payment Date, and in addition shall make a payment of principal on the Loan
in an amount equal to the lesser of (x) the Scheduled Mortgage Principal Payment
or (y) Mortgage Lender's Percentage of all Excess Cash Flow; provided that the
amount of Mortgage Lender's Percentage of the amount of any Release Price Excess
for any Property released during such period shall be deemed applied (without
duplication) in reduction of each of the Scheduled Mortgage Principal Payments
next becoming due and payable under this clause (ii) and under clause (iii) of
this Section 2.4(A) through the Scheduled Maturity Date (but not beyond) in an
amount equal to (x) Mortgage Lender's Percentage of such Release Price Excess
divided by (y) the number of such Scheduled Mortgage Principal Payments
remaining through the Scheduled Maturity Date; and
(iii) On each Payment Date commencing with the Payment Date
in December 2003, and on each Payment Date thereafter through the Maturity Date,
the Borrowers shall make
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a payment of interest on the Loan for the Interest Accrual Period immediately
preceding each such Payment Date, and in addition shall make a payment of
principal on the Loan in an amount equal to the Scheduled Mortgage Principal
Payment; provided that the amount of Mortgage Lender's Percentage of the amount
of any Release Price Excess for any Property released during such period shall
be deemed applied (without duplication) in reduction of each of the Scheduled
Mortgage Principal Payments next becoming due and payable under this Section
2.4(A)(iii) through the Scheduled Maturity Date (but not beyond), or, if the
subject Release occurs during an Extension Term, through the last Scheduled
Mortgage Principal Payment to be made during that Extension Term (but not
beyond) in an amount equal to (x) the Mortgage Lender's Percentage of such
Release Price Excess divided by (y) the number of such Scheduled Mortgage
Principal Payments remaining through the current Maturity Date; and
(iv) On each Payment Date prior to the Payment Date in
December 2003, if Mortgage Lender's Percentage of Excess Cash Flow in any month
exceeds the Scheduled Mortgage Principal Payment for such month, such excess
amount shall be paid to Lender and applied to principal on the Loan until the
amount of any Amortization Deficiency has been reduced to zero, and any
remainder Excess Cash Flow thereafter shall be distributed in accordance with
the terms of the Cash Management Agreement; and
(v) At any time the then Aggregate Outstanding Principal
Balance is less than $90,812,257.80, Mortgage Lender's Percentage of Excess Cash
Flow shall be paid to Lender and applied on each Payment Date in reduction of
the principal balance of the Loan (which payment shall be made without the
imposition of any Prepayment Consideration).
(B) DATE AND TIME OF PAYMENT. The Borrowers shall receive credit
for payments on the Loan which are transferred to the account of Lender as
provided below (i) on the day that such funds are received by Lender if such
receipt occurs by 2:00 p.m. (New York time) on such day, or (ii) on the next
succeeding Business Day after such funds are received by Lender if such receipt
occurs after 2:00 p.m. (New York time). Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day.
(C) MANNER OF PAYMENT; APPLICATION OF PAYMENTS. The Borrowers
promise to pay all of the Obligations relating to the Loan as such amounts
become due or are declared due pursuant to the terms of this Loan Agreement. All
payments by the Borrowers on the Loan shall be made without deduction, defense,
set off or counterclaim and in immediately available funds delivered to Lender
by wire transfer to such accounts at such banks as Lender may from time to time
designate. Prior to an Event of Default, each payment shall be applied first to
pay late charges and the charges and expenses of Lender, Servicer and any
special servicer as provided hereunder, second to accrued and unpaid interest,
and the balance to principal. Prior to an Event of Default, to the extent
sufficient funds are contained in the Lock Box Account, or an Account or
Sub-Account thereof, to make the required monthly payments to the applicable
Reserves and Sub-Account on such Payment Date, the Borrowers shall be deemed to
have satisfied its obligation to make such payments. Upon the occurrence and
during the continuance of an Event of Default, payments shall be applied to the
Obligations in such order as Lender shall determine in its sole and absolute
discretion.
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SECTION 2.5 MATURITY.
(A) SCHEDULED MATURITY DATE. To the extent not sooner due and
payable in accordance with the Loan Documents (and unless the Borrowers shall
extend the term of the Loan for the First Extension Term, the Second Extension
Term, or the Third Extension Term upon the terms and subject to the conditions
of Section 2.5(B) below), the then outstanding principal balance of the Loan,
all accrued and unpaid interest thereon (and including interest through the end
of the Interest Accrual Period then in effect), and all other sums then owing to
Lender hereunder and under the Note, the Deeds of Trust and the other Loan
Documents, shall be due and payable on (i) the Scheduled Maturity Date or (ii)
if the Borrowers shall have extended the term of the Loan for the First
Extension Term, the Second Extension Term, or the Third Extension Term, upon the
terms and subject to the conditions of Section 2.5(B) below, the applicable
Maturity Date.
(B) EXTENSION TERMS. The Borrowers may extend the term of the Loan
for three extension terms of one year each (each, an "EXTENSION TERM", and,
collectively the "EXTENSION TERMS"); (i) the first Extension Term (the "FIRST
EXTENSION TERM") commencing on the day immediately following the Scheduled
Maturity Date and ending (unless sooner terminated in accordance with the Loan
Documents) on the first (1st) anniversary of the Scheduled Maturity Date, (ii)
the second Extension Term (the "SECOND EXTENSION TERM") commencing on the day
immediately following the last day of the First Extension Term and ending
(unless sooner terminated in accordance with the Loan Documents) on the second
(2nd) anniversary of the Scheduled Maturity Date and (iii) the third Extension
Term (the "THIRD EXTENSION TERM") commencing on the day immediately following
the last day of the Second Extension Term and ending (unless sooner terminated
in accordance with the Loan Documents) on the third (3rd) anniversary of the
Scheduled Maturity Date; subject to the following terms and conditions, provided
that subsections (iii) and (iv) shall not be conditions to the exercise of the
First Extension Term:
(i) The Borrowers shall give Lender notice (an "EXTENSION
NOTICE") of their request to extend the term of the
Loan for the First Extension Term at any time not
later than forty-five (45) days prior to the
Scheduled maturity Date and for the Second Extension
Term and the Third Extension Term, at least
forty-five (45) days but not more than one hundred
twenty (120) days prior to the expiration of the
First Extension Term, or expiration of the Second
Extension Term, as the case may be;
(ii) With respect to the First Extension Term, no Event of
Default under Sections 8.1(A) or (B) shall have
occurred and be continuing as of the first (1st) day
of the First Extension Term, and, with respect to the
Second Extension Term and the Third Extension Term,
no Event of Default shall have occurred and be
continuing as of the date the Borrowers deliver the
applicable Extension Notice or as of the expiration
of the First Extension Term, or expiration of the
Second Extension Term, as the case may be;
(iii) The Debt Service Coverage Ratio for the trailing
twelve (12) month period ended on the last day of the
immediately preceding calendar quarter prior
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to the expiration of the First Extension Term, or
expiration of the Second Extension Term, as the case
may be, is at least equal to the Minimum DSCR, and
the Debt Yield for the twelve (12) month period ended
on the last day of the immediately preceding calendar
quarter prior to the expiration of the First
Extension Term, or expiration of the Second Extension
Term, as the case may be, is not less than 13.25%;
provided however, if the Debt Service Coverage Ratio
and/or the Debt Yield fail to satisfy such
requirements, the Borrowers shall be entitled to make
a principal prepayment of a portion of the Aggregate
Outstanding Principal Balance (to be applied in
accordance with the terms of the Cash Management
Agreement) on the then current Maturity Date in an
amount, as reasonably determined by Lender,
sufficient to cause the Debt Service Coverage Ratio
and/or the Debt Yield, as applicable, to satisfy such
requirements based upon a recalculation thereof
assuming that the prepayment amount were applied to
reduce the Aggregate Outstanding Principal Balance as
of the last day of the immediately preceding calendar
quarter (and provided that the Prepayment
Consideration shall be payable in connection with
such prepayment);
(iv) Prior to the date the applicable Extension Term
commences, the Borrowers shall deliver to Lender an
extension fee equal to one quarter of one percent
(.25%) of the outstanding principal balance of the
Loan as of the date the applicable Extension Term
commences for each of the Second Extension Term and
the Third Extension Term;
(v) All of the conditions required to be satisfied for
the extension of the Mezzanine Loan pursuant to
Section 2.5(B)(viii) thereof (whether or not the
Mezzanine Loan is actually extended) shall have been
satisfied;
(vi) The Borrowers shall execute all such documents and
other agreements as Lender shall reasonably request;
(vii) The Borrowers shall deliver to Lender an extension of
the Cap or a replacement Cap in form substantially
the same as the Cap delivered at Closing covering the
term of the applicable Extension Term, providing for
a cap "strike price" (such "strike price", the
"EXTENSION CAP THRESHOLD RATE") not greater than six
and one-half percent (6.5%) per annum (it being
acknowledged that the Borrowers may purchase an
extension or replacement Cap for the applicable
Extension Term with an Extension Cap Threshold Rate
lower than such rate in order to satisfy the Debt
Service Coverage Ratio requirement under Section
2.5(B)(iii) above) and otherwise satisfying the
requirements of Section 2.3 together with an
assignment of such replacement Cap substantially in
the form of the Assignment of Rate Cap and such
Financing Statements and opinions of in-house or
outside counsel to the Cap Provider as Lender may
reasonably require each in form and substance
reasonably acceptable to Lender. The Borrowers shall
be required to pay any and all reasonable
out-of-pocket
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costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements)
incurred by Lender (and by any Servicer and trustee
in connection with any Securitization backed in whole
or in part by the Loan) in connection with delivery
of such extension or replacement Cap and all related
documentation and opinions required above; and
(viii) The Borrowers shall have delivered evidence
reasonably satisfactory to Lender that the
environmental insurance, including mold coverage, in
form and with coverages in effect as of the Closing
Date has been renewed through the end of the
applicable Extension Term.
SECTION 2.6 PREPAYMENT.
(A) LIMITATION ON PREPAYMENT; PREPAYMENT CONSIDERATION DUE ON
ACCELERATION. The Borrowers shall have no right to prepay the Loan in whole or
part, except as expressly set forth in this Loan Agreement or the other Loan
Documents. The Borrowers may prepay the Loan in whole, or, to the extent
expressly provided herein, in part, at any time, provided that (i) the Borrowers
shall provide to Lender not less than fifteen (15) days prior written notice of
such prepayment, (ii) together with such prepayment the Borrowers also shall pay
all accrued and unpaid interest and all other Obligations then due and owing and
(iii) if such prepayment occurs on any day other than a Payment Date, then
together therewith the Borrowers also shall pay to Lender the amount of interest
that would have accrued on the amount being prepaid from and including the date
of such prepayment to the end of such Interest Accrual Period.
(B) PREPAYMENT CONSIDERATION DUE. If any prepayment of all or any
portion of the Loan shall occur on account of acceleration of the Loan (whether
or not due to an Event of Default), or otherwise, then except only as expressly
provided in this Loan Agreement or the other Loan Documents to the contrary, the
Borrowers shall pay the Prepayment Consideration on the amount prepaid to Lender
together with such prepayment, as liquidated damages and compensation for costs
incurred, and in addition to all other amounts due and owing to Lender.
Notwithstanding the foregoing, no Prepayment Consideration will be due as to a
prepayment of the Loan in connection with (i) application of insurance or
condemnation proceeds required by Lender pursuant to this Loan Agreement or the
Deeds of Trust in the absence of an Event of Default, (ii) amortization payments
made in accordance with Section 2.4(A), (iii) in connection with the first
$36,324,903.12 of prepayments made in connection with one or more Releases (it
being agreed that the Prepayment Consideration will be due with respect to all,
or any portion of, a prepayment made in connection with a Release after the
aggregate amount of all prepayments made in connection with Releases (other than
Releases effectuated pursuant to Section 5.5(E)) exceeds $36,324,903.12, or (iv)
upon prepayment of the Loan in full, on any date on or after the Payment Date
occurring in October 2004, through the Scheduled Maturity Date (provided the
amount of interest that would have accrued on the amount being prepaid from and
including the date of such prepayment through the following Payment Date shall
be payable with such prepayment). The foregoing designation of any amount of
Prepayment Consideration in this Agreement shall not create a right to prepay at
any time or in any circumstances where this Agreement does not expressly state
that such a right exists. "PREPAYMENT CONSIDERATION" shall mean an amount equal
to (i) prior to the Payment Date in December 2003, three percent (3%) of the
Loan balance at the time of prepayment, and (ii) on and after the Payment Date
in December
32
2003, but prior to the Payment Date in May 2004, two percent (2%) of the Loan
balance at the time of prepayment, and (iii) thereafter through the Scheduled
Maturity Date one percent (1%) of the Loan balance at the time of prepayment.
SECTION 2.7 OUTSTANDING BALANCE. The balance on Lender's books and records
shall be presumptive evidence (absent manifest error) of the amounts owing to
Lender by the Borrowers; provided that any failure to record any transaction
affecting such balance or any error in so recording shall not limit or otherwise
affect the Borrowers' obligation to pay the Obligations.
SECTION 2.8 TAXES. Any and all payments or reimbursements made hereunder
or under the Note shall be made free and clear of and without deduction for any
and all taxes, withholding taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto arising out of or in
connection with the transactions contemplated by the Loan Documents (all such
taxes, levies, imposts, deductions, charges or withholdings and all liabilities
with respect thereto (excluding taxes imposed on net income in accordance with
the following sentence) herein "TAX LIABILITIES"). Notwithstanding the
foregoing, the Borrowers shall not be liable for taxes imposed on the net income
of Lender by the jurisdiction under the laws of which Lender is organized or
doing business or any political subdivision thereof and taxes imposed on its net
income by the jurisdiction of Lender's applicable lending office or any
political subdivision thereof. If the Borrowers shall be required by law to
deduct any such Tax Liabilities (or amounts in estimation or reimbursement for
the same) from or in respect of any sum payable hereunder to Lender, then the
sum payable hereunder shall be increased as may be necessary so that, after
making all required deduction, Lender receives an amount equal to the sum it
would have received had no such deductions been made.
SECTION 2.9 REASONABLENESS OF CHARGES. The Borrower Parties agree that (i)
the actual costs and damages that Lender would suffer by reason of an Event of
Default (exclusive of the attorneys' fees and other costs incurred in connection
with enforcement of Lender's rights under the Loan Documents) or a prepayment
would be difficult and needlessly expensive to calculate and establish, and (ii)
the amounts of the Default Rate, the late charges, and the Prepayment
Consideration are reasonable, taking into consideration the circumstances known
to the parties at this time, and (iii) such Default Rate and late charges and
Lender's reasonable attorneys' fees and other costs and expenses incurred in
connection with enforcement of Lender's rights under the Loan Documents shall be
due and payable as provided herein, and (iv) such interest at the Default Rate,
late charges, Prepayment Consideration, and the obligation to pay Lender's
reasonable attorneys' fees and other enforcement costs do not, individually or
collectively, constitute a penalty.
SECTION 2.10 FUNDING LOSSES/CHANGE IN LAW ETC.
(A) The Borrowers hereby agree to pay to Lender any amount
necessary to compensate Lender and any Funding Party for any losses or costs
(including, without limitation, the costs of breaking any "LIBOR" contract, if
applicable, or funding losses determined on the basis of Lender's or such
Funding Party's reinvestment rate and the interest rate on the Loan)
(collectively, "FUNDING LOSSES") sustained by Lender or any Funding Party: (i)
if the Note, or any portion thereof, is repaid for any reason whatsoever on any
date other than a Payment Date (including, without limitation, from condemnation
or insurance proceeds); or (ii) as a
33
consequence of (x) any increased cost of funds that Lender or any Funding Party
may sustain in maintaining the borrowing evidenced hereby or (y) the reduction
of any amounts received or receivable from the Borrowers, in either case, due to
the introduction of, or any change in, law or applicable regulation or treaty
adopted after the date hereof (including the administration or interpretation
thereof), whether or not having the force of law, or due to the compliance by
Lender or the Funding Party, as the case may be, with any directive, whether or
not having the force of law, or request from any central bank or domestic or
foreign governmental authority, agency or instrumentality having jurisdiction
made as of the date hereof, to the extent Lender reasonably determines that such
Funding Losses are allocable to the Loan.
(B) If Lender or any Funding Party shall have determined that the
applicability of any law, rule, regulation or guideline adopted pursuant to or
arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption of any other law,
rule, regulation or guideline (including but not limited to any United States
law, rule, regulation or guideline) regarding capital adequacy, or any change
becoming effective in any of the foregoing or in the enforcement or
interpretation or administration of any of the foregoing by any court or any
domestic or foreign governmental authority, central bank or comparable agency
charged with the enforcement or interpretation or administration thereof, or
compliance by Lender or its holding company or a Funding Party or its holding
company, as the case may be, with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency made after the date hereof, has or would have the
effect of reducing the rate of return on the capital of Lender or its holding
company, or of the Funding Party's or its holding company, as the case may be,
then, upon demand by Lender, the Borrowers shall pay to Lender, from time to
time, such additional amount or amounts as will compensate Lender or such
Funding Party for any such reduction suffered.
(C) Any amount payable by the Borrowers under Section 2.10(A) or
2.10(B) shall be paid to Lender within fifteen (15) Business Days after receipt
by the Borrowers of a certificate signed by an officer of Lender setting forth
the amount due and the basis for the determination of such amount in reasonable
detail and the computations made by Lender to determine the amount due, which
statement shall be conclusive and binding upon the Borrowers, absent manifest
error. Failure on the part of Lender to demand payment from the Borrowers for
any such amount attributable to any particular period shall not constitute a
waiver of Lender's right to demand payment of such amount for any subsequent or
prior period. Lender shall use reasonable efforts to deliver to the Borrowers
prompt notice of any event described in Sections 2.10(A) or 2.10(B) above and of
the amount to be paid as a result thereof, provided, however, any failure by
Lender to so notify the Borrowers shall not affect the Borrower's obligation to
make the payments to be made under this Section as a result thereof. All amounts
which may become due and payable by the Borrowers in accordance with the
provisions of this Section shall constitute additional interest under the Loan
and shall be secured by the Deeds of Trust and the other Loan Documents.
(D) If Lender or any Funding Party requests compensation for any
losses or costs to be reimbursed pursuant to any one or more of the provisions
of clause (ii) of Sections 2.10(A) or 2.10(B), then, upon request of the
Borrowers, Lender or such Funding Party shall use reasonable efforts in a manner
consistent with such institution's practice in connection with loans like the
34
Loan to eliminate, mitigate or reduce amounts that would otherwise be payable by
the Borrowers under the foregoing provisions, provided that such action would
not be otherwise prejudicial to Lender or such Funding Party, including, without
limitation, by designating another of Lender's or such Funding Party's offices,
branches or affiliates; the Borrowers hereby agreeing to pay all reasonably
incurred costs and expenses incurred by Lender or any Funding Party in
connection with any such action.
SECTION 2.11 SERVICING/SPECIAL SERVICING. Lender may change the Servicer from
time to time without the consent of the Borrowers, on prior written notice to
the Borrowers. The Borrowers expressly acknowledge and agree that the Servicer's
fees (the "SERVICING FEE"), which shall in no event exceed .05% per annum on the
outstanding principal balance of the Loan, payable in monthly installments, and
if the Loan becomes a specially serviced loan, any fees of the special servicer,
shall be payable by the Borrowers and shall constitute a portion of the
Obligations; provided, however, that at no time shall the Borrowers be liable
for Servicing Fees or special servicing fees in excess of those fees charged to
Lender by the Servicer or any special servicer.
ARTICLE III
CONDITIONS TO LOAN
SECTION 3.1 CONDITIONS TO FUNDING OF THE LOAN ON THE CLOSING DATE. The
obligations of Lender to fund the Loan are subject to the prior or concurrent
satisfaction or waiver of the conditions set forth below, and to satisfaction of
any other conditions specified herein or elsewhere in the Loan Documents. With
respect to facts and circumstances actually known to Lender at Closing, by
funding the Loan Lender shall be deemed to have acknowledged that each of the
conditions set forth below has been satisfied or waived (except as otherwise set
forth in any other agreement in writing between the Borrowers and Lender). Where
in this Section any documents, instruments or information are to be delivered to
Lender, then the condition shall not be satisfied unless (i) the same shall be
in form and substance satisfactory to Lender, and (ii) if so required by Lender,
the Borrowers shall deliver to Lender a certificate duly executed by the
Borrowers stating that the applicable document, instrument or information is
true and complete and does not omit to state any information without which the
same might reasonably be deemed materially misleading.
(A) LOAN DOCUMENTS. On or before the Closing Date, the Borrowers
shall execute and deliver and cause to be executed and delivered to Lender all
of the Loan Documents specified in SCHEDULE 3.1(A), together with such other
Loan Documents as may be reasonably required by Lender, each, unless otherwise
noted, of even date herewith, duly executed, in form and substance satisfactory
to Lender and in quantities designated by Lender (except for the Note, of which
only one shall be signed), which Loan Documents shall become effective upon the
Closing.
(B) DEPOSITS. The deposits required herein, including without
limitation, the initial deposits into the Reserves and Accounts, shall have been
made (and at the Borrowers' option, the same may be made from the proceeds of
the Loan).
(C) PERFORMANCE OF AGREEMENTS, TRUTH OF REPRESENTATIONS AND
WARRANTIES. Each Borrower Party and all other Persons executing any agreement on
behalf of any Borrower
35
Party shall have performed in all material respects all agreements which this
Loan Agreement provides shall be performed on or before the Closing Date. The
representations and warranties contained herein and in the other Loan Documents
shall be true, correct and complete in all material respects on and as of the
Closing Date.
(D) CLOSING CERTIFICATE. On or before the Closing Date, Lender
shall have received certificates of even date herewith executed on behalf of
each Borrower by the chief financial officer (or similar officer of the
Borrowers) stating that: (i) on such date, to the Borrowers' Knowledge no
Default exists; (ii) no material adverse change in the financial condition or
operations of the business of the Borrowers or the projected cash flow of the
Borrowers or the Properties has occurred since the delivery to Lender of any
financial statements, budgets, proformas, or similar materials (or if there has
been any change, specifying such change in detail), and that, to the Borrowers'
Knowledge after due inquiry, such financial materials fairly present the
financial condition and results of operations of the Borrowers and the
Properties, and all other materials delivered to Lender are complete and
accurate in all material respects; and (iii) the representations and warranties
set forth in this Loan Agreement are true and correct in all material respects
on and as of such date with the same effect as though made on and as of such
date (or if any such representations or warranties require qualification,
specifying such qualification in detail) and (iv) to the Borrowers' Knowledge,
there are no material facts or conditions concerning the Properties or any
Borrower Party that have not been disclosed to Lender which could have a
Material Adverse Effect.
(E) OPINIONS OF COUNSEL. On or before the Closing Date, Lender
shall have received from Cadwalader, Wickersham & Taft or other legal counsel
for the Borrowers satisfactory to Lender, written legal opinions, each in form
and substance acceptable to Lender, as to such matters as Lender shall request,
including opinions to the effect that (i) each of the Borrower Parties is duly
formed, validly existing, and in good standing in its state of organization and,
in the case of each Borrower, in each state where its Property is located, (ii)
this Loan Agreement and the Loan Documents have been duly authorized, executed
and delivered and are enforceable in accordance with their terms subject to
customary qualifications for bankruptcy, general equitable principles, and other
customary assumptions and qualifications; (iii) the Deposit Account Agreement
and Cash Management Agreement have been duly authorized, executed and delivered
by Borrower and Manager and are enforceable in accordance with their terms and
the security interests in favor of Lender in the Account Collateral have been
validly created and perfected; and (iv) no Borrower, Member or General Partner
would be consolidated in any bankruptcy proceeding affecting Guarantor or
certain other Affiliates of the Borrower Parties specified by Lender. Also on or
before the Closing Date, Lender shall have received the following legal
opinions, each in form and substance acceptable to Lender: (a) an opinion of the
Borrowers' local counsel in each state where the Properties are located as to
the enforceability of, and the creation and perfection of Liens under, the Deeds
of Trust and the Assignments of Leases and such other matters as Lender may
reasonably request; (b) an opinion of counsel to the Cap Provider (which may be
in-house counsel) that the Cap has been duly authorized, executed and delivered
by the Cap Provider and is enforceable in accordance with its terms and such
other matters as Lender may reasonably request; (c) opinions of Richards, Layton
& Finger or other Delaware legal counsel, acceptable to Lender, for each
Borrower that is a single member limited liability company formed under the laws
of the State of Delaware that, among other matters, (1) under Delaware law (x)
the prior unanimous written consent of Member (and the unanimous
36
written consent of the board of directors of Member including the Independent
Directors) would be required for a voluntary bankruptcy filing by each such
Borrower, (y) the prior unanimous written consent of the board of directors of
Member (including the Independent Directors), or the unanimous prior written
consent of the board of managers' of each Borrower, including the Independent
Directors' would be required for a voluntary bankruptcy filing by Member, (z)
such unanimous consent requirements are enforceable against Member in accordance
with their terms; (2) under Delaware law the bankruptcy or dissolution of Member
would not cause the dissolution of any of the Borrowers and the bankruptcy or
dissolution of the sole shareholder or member would not cause the dissolution of
Member; (3) under Delaware law, creditors of Member shall have no legal or
equitable remedies with respect to the assets of any of the Borrowers and
creditors of Guarantor shall have no legal or equitable remedies with respect to
the assets of Member; and (4) a federal bankruptcy court would hold that
Delaware law governs the determination of what Persons have authority to file a
voluntary bankruptcy petition on behalf of each Borrower and Member; and (d)
such other legal opinions as Lender may reasonably request.
(F) TITLE POLICIES. On or before the Closing Date, Lender shall
have received and approved pro forma Title Policies for the Deeds of Trust, and
as of the Closing, each Title Company shall be irrevocably committed and
prepared immediately to issue the Title Policies or binding commitments. The
Title Policies shall be in form and substance satisfactory to Lender. Without
limitation, each Title Policy shall be issued on an ALTA form acceptable to
Lender by each Title Company or if an ALTA form is not available in the
applicable jurisdiction, another form acceptable to Lender, together with such
reinsurance and direct access agreements as Lender may require, insuring that
the Deeds of Trust are valid first and prior enforceable liens on each
Borrower's fee simple interest or ground leasehold interest, as the case may be,
in the applicable Property (including any easements appurtenant thereto) subject
only to such exceptions to coverage as are acceptable to Lender, including the
Permitted Exceptions. Each Title Policy shall contain such endorsements as
Lender may require (to the extent available in the state where the Properties is
located) in form acceptable to Lender, including deletion of the creditors'
rights exception and affirmative endorsement coverage for creditors' rights
risks.
(G) SURVEY. Lender shall have received a survey of each of the
Properties, certified to Lender and its successors, assigns and designees and to
each Title Company by a surveyor reasonably satisfactory to Lender (the
"SURVEY"). Each Survey shall contain the minimum detail for land surveys as most
recently adopted by ALTA/ASCM, shall comply with Lender's survey requirements
and shall contain Lender's standard form certification, and shall show no state
of facts or conditions reasonably objectionable to Lender.
(H) ZONING. On or before the Closing Date, Lender shall have
received evidence reasonably satisfactory to Lender as to the zoning and
subdivision compliance of each of the Properties.
(I) CERTIFICATES OF FORMATION AND GOOD STANDING. On or before the
Closing Date, Lender shall have received copies of the organizational documents
and filings of each Borrower Party, together with good standing certificates (or
similar documentation) (including verification of tax status) from the state of
its formation and from all states in which the laws thereof require such Person
to be qualified and/or licensed to do business (including without limitation,
each
37
state in which the Properties are located for the applicable Borrower(s) and, to
the extent required by law, Member and General Partner). Each such certificate
shall be dated not more than 30 days prior to the Closing Date, as applicable,
and certified by the applicable Secretary of State or other authorized
governmental entity. In addition, on or before the Closing Date the secretary or
corresponding officer of each Borrower Party, or the secretary or corresponding
officer of the partner, trustee, or other Person as required by such Borrower
Party's organizational documents (as the case may be, the "BORROWER PARTY
SECRETARY") shall have delivered to Lender a certificate stating that the copies
of the organizational documents as delivered to Lender are true and complete and
are in full force and effect, and that the same have not been amended except by
such amendments as have been so delivered to Lender.
(J) CERTIFICATES OF INCUMBENCY AND RESOLUTIONS. On or before the
Closing Date, Lender shall have received certificates of incumbency and
resolutions of each Borrower Party and its constituents as requested by Lender,
approving and authorizing the Loan and the execution, delivery and performance
of the Loan Documents, certified as of the Closing Date by the Borrower Party
Secretary as being in full force and effect without modification or amendment.
(K) FINANCIAL STATEMENTS. On or before the Closing Date, Lender
shall have received such financial statements and other financial information as
shall be satisfactory to Lender for each Borrower Party (including for each
Guarantor) and for the Properties. If any such statements are not available for
the Properties, then the Borrowers shall provide such financial reports as are
available. All such financial statements shall be certified to Lender by the
applicable Borrower Party (through its chief financial officer or other officer
charged with similar duties), which certification shall be in form and substance
reasonably satisfactory to Lender.
(L) OPERATING AND CAPEX/FF&E BUDGETS; CAPITAL IMPROVEMENT PLAN. On
or before the Closing Date, Lender shall have received and approved the
Operating Budget and CapEx/FF&E Budget for the Properties for the remainder of
the current calendar year and the Capital Improvement Plan for the Properties.
(M) AGREEMENTS. On or before the Closing Date, Lender shall have
received a list of all Material Agreements and, to the extent requested by
Lender, copies thereof.
(N) MANAGEMENT AGREEMENT; FRANCHISE AGREEMENT. On or before the
Closing Date, Lender shall have received copies of the Management Agreements and
any leasing brokerage agreements pertaining to the Properties and the
Assignments of Management Agreements, duly executed by each Manager and the
Borrowers. On or before the Closing Date, Lender shall have received copies of
the existing Franchise Agreements and each Franchisor Letter (including any
Property Improvement Plan) duly executed by the applicable Franchisor and, if
applicable, such additional Franchise Agreement (or commitment to issue such
Franchise Agreement), together with Franchisor Letters (including any Property
Improvement Plan) duly executed by the Franchisors.
(O) RENT ROLL. Prior to the Closing, Lender shall have received
from the Borrowers a rent roll for each of the Properties (collectively, the
"RENT ROLL"), certified by the Borrowers,
38
and in form and substance satisfactory to Lender. The Rent Roll shall constitute
a true, correct, and complete list of each and every Material Lease, together
with all extensions and amendments thereof, and shall accurately and completely
disclose all annual and monthly rents payable by all tenants, including all
percentage rents, if any, and expiration dates of such Material Leases, and the
amount of security deposit being held by the Borrowers under each Material
Lease, if any.
(P) MATERIAL LEASES. Prior to the Closing, Lender shall have
received true, correct and complete copies of the Material Leases, as amended.
(Q) LICENSES, PERMITS AND APPROVALS. On or before Closing Date,
Lender shall have received copies of the final, unconditional certificates of
occupancy issued with respect to each of the Properties, together with all other
applicable licenses (including, without limitation, each liquor license and beer
permit), permits and approvals required for each Borrower to own, use, occupy,
operate and maintain each of the Properties as a hotel.
(R) INSURANCE POLICIES AND ENDORSEMENTS. On or before the Closing
Date, Lender shall have received copies of certificates of insurance (dated not
more than 20 days prior to the Closing Date) regarding insurance required to be
maintained under this Loan Agreement and the other Loan Documents, together with
endorsements satisfactory to Lender naming Lender as an additional insured and
loss payee, as required by this Loan Agreement, under such policies. In
addition, as to any insurance matters arising under Environmental Laws or
pertaining to any environmental insurance that any of the Borrowers has with
respect to any Property, the same shall be endorsed to Lender as required by
this Loan Agreement and shall name Lender as an insured, additional insured
and/or loss payee, as applicable.
(S) ENVIRONMENTAL ASSESSMENT. Lender shall have received the
Environmental Reports relating to each of the Properties, together with a letter
from each preparer thereof entitling Lender and its successors and assigns to
rely upon said Environmental Report.
(T) PROPERTY CONDITION REPORTS. On or before the Closing Date,
Lender shall have received a property condition report for each of the
Properties, which shall be prepared by an engineer or other consultant
satisfactory to Lender and otherwise shall be in form and substance satisfactory
to Lender in its sole discretion. Each such report shall set forth any items of
deferred maintenance at the applicable Property.
(U) APPRAISAL. On or before the Closing Date, Lender shall have
received an independent appraisal of each of the Properties from a state
certified appraiser engaged by Lender. Each such appraisal shall conform in all
respects to the criteria for appraisals set forth in the Financial Institutions
Reform and Recovery Act of 1989 and the regulations promulgated thereunder (as
if Lender were an institution under the jurisdiction thereof) and the Uniform
Standards of Professional Appraisal Practices of the Appraisal Foundation.
(V) SEARCHES. Prior to the Closing Date, Lender shall have
received copies of Uniform Commercial Code, judgment, lien, bankruptcy and
litigation search reports with respect to the Borrowers, Guarantor, Managers,
General Partner and Member, all dated not more than thirty (30) days prior to
the Closing Date.
39
(W) DOCUMENTATION REGARDING APPLICATION OF PROCEEDS. At least two
(2) days prior to the Closing Date, Lender shall have received payoff demand
letters and wiring instructions from each lender or other obligee of any
existing indebtedness which is required to be repaid pursuant to this Loan
Agreement.
(X) LEGAL FEES; CLOSING EXPENSES. The Borrowers shall have paid
any and all reasonable legal fees and expenses of counsel to Lender, together
with all recording fees and taxes, title insurance premiums, and other
reasonable costs and expenses related to the Closing.
(Y) COMMITMENT CONDITIONS. If a commitment letter or similar
agreement shall have been issued by Lender for the Loan, such additional
conditions as shall be specified in such commitment shall have been satisfied.
(Z) OTHER REVIEW. Lender shall have completed all other review of
the Borrower Parties, the Properties, and such other items as it reasonably
determines relevant, and shall have determined based upon such review to fund
the Loan. The Borrower Parties shall have satisfied such other reasonable
criteria as Lender may reasonably specify.
(AA) GROUND LEASES; GROUND LESSOR ESTOPPELS. On or before the
Closing Date, Lender shall have received (i) true and complete copies of each of
the Ground Leases, certified by the Borrowers, and (ii) estoppels and agreements
substantially in the form of EXHIBIT H, or otherwise reasonably acceptable to
Lender, duly executed by each Ground Lessor.
(BB) MORTGAGED CONDOMINIUM PROPERTY AGREEMENTS. On or before the
Closing Date, Lender shall have received an estoppel and agreement of the Board
of Managers in form and substance reasonably acceptable to Lender.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Loan Agreement and to make
the Loan, each Borrower represents and warrants to Lender that the statements
set forth in this Article IV, after giving effect to the Closing, will be, true,
correct and complete in all material respects as of the Closing Date.
SECTION 4.1 ORGANIZATION, POWERS, CAPITALIZATION, GOOD STANDING, BUSINESS.
(A) ORGANIZATION AND POWERS. Each Borrower Party is duly
organized, validly existing and in good standing under the laws of the state of
its formation. Each Borrower Party has all requisite power and authority to own
and operate its properties, to carry on its business as now conducted and
proposed to be conducted, and to enter into each Loan Document to which it is a
party and to perform the terms thereof.
(B) QUALIFICATION. Each Borrower Party is duly qualified and in
good standing in the state of its formation. In addition, each Borrower Party is
duly qualified and in good standing in each state where necessary to carry on
its present business and operations, except in jurisdictions in which the
failure to be qualified and in good standing could not reasonably be expected to
have a Material Adverse Effect.
40
(C) ORGANIZATION. The organizational chart set forth as SCHEDULE
4.1(C) accurately sets forth the direct and indirect ownership structure of the
Borrowers, General Partners and Members.
SECTION 4.2 AUTHORIZATION OF BORROWING, ETC.
(A) AUTHORIZATION OF BORROWING. The Borrowers have the power and
authority to incur the Indebtedness evidenced by the Note. The execution,
delivery and performance by each Borrower Party of each of the Loan Documents to
which it is a party and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary limited liability company,
partnership, trustee, corporate or other action, as the case may be.
(B) NO CONFLICT. The execution, delivery and performance by each
Borrower Party of the Loan Documents to which it is a party and the consummation
of the transactions contemplated thereby do not and will not: (1) violate (x)
any provision of law applicable to any Borrower Party; (y) the partnership
agreement, certificate of limited partnership, certificate of incorporation,
bylaws, declaration of trust, operating agreement or other organizational
documents, as the case may be, of each Borrower Party; or (z) any order,
judgment or decree of any Governmental Authority binding on any Borrower Party
or any of its Affiliates; (2) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any Contractual
Obligation of any Borrower Party or any of its Affiliates (except where such
breach will not cause a Material Adverse Effect); (3) result in or require the
creation or imposition of any material Lien (other than the Lien of the Loan
Documents) upon the Properties or assets of any Borrower Party; or (4) except as
set forth on SCHEDULE 4.2, require any approval or consent of any Person under
any material Contractual Obligation of any Borrower Party, which approvals or
consents have been obtained on or before the dates required under such material
Contractual Obligation, but in no event later than the Closing Date.
(C) GOVERNMENTAL CONSENTS. The execution and delivery by each
Borrower Party of the Loan Documents to which it is a party, and the
consummation of the transactions contemplated thereby do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any Governmental Authority.
(D) BINDING OBLIGATIONS. This Loan Agreement is, and the Loan
Documents, including the Note, when executed and delivered will be, the legally
valid and binding obligations of each Borrower Party that is a party thereto,
enforceable against each of the Borrower Parties, as applicable, in accordance
with their respective terms, subject to bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditor's rights. No Borrower
Party has any defense or offset to any of its obligations under the Loan
Documents to which it is a party. No Borrower Party has any claim against Lender
or any Affiliate of Lender.
SECTION 4.3 FINANCIAL STATEMENTS. To the Borrowers' Knowledge after due inquiry,
all financial statements concerning any of the Borrowers, their Affiliates and
the Properties which have been furnished by or on behalf of the Borrowers to
Lender pursuant to this Loan Agreement have been prepared in accordance with
GAAP consistently applied (except as disclosed therein) and present fairly the
financial condition of the Persons covered thereby as at the dates thereof and
the results of their operations for the periods then ended. Since the date of
the financial
41
statements delivered to Lender, there has been no material adverse change in the
financial condition, operations or business of the Borrower Parties or the
Properties from that set forth in said financial statements.
SECTION 4.4 INDEBTEDNESS AND CONTINGENT OBLIGATIONS. As of the Closing, except
as previously disclosed to and approved by Lender in writing and set forth on
SCHEDULE 4.4, the Borrowers shall have no outstanding Indebtedness or
Contingent Obligations other than the Obligations or any other Permitted
Indebtedness.
SECTION 4.5 TITLE TO THE PROPERTIES. The Borrowers have good and marketable fee
simple title (or, in the case of the Ground Leased Properties, leasehold title)
to the Properties, free and clear of all Liens except for the Permitted
Encumbrances. The Borrowers own and will own at all times all FF&E relating to
the Properties (other than personal property which is either owned by tenants of
such Property, not used or necessary for the operation of the applicable
Property, or leased by the Borrowers as permitted hereunder), subject only to
the Permitted Encumbrances. The Deeds of Trust, when properly recorded in the
appropriate records, together with any Uniform Commercial Code financing
statements required to be filed in connection therewith, will create (i) a
valid, perfected first lien on each of the Properties, subject only to the
Permitted Encumbrances, and (ii) perfected first priority security interests in
and to, and perfected collateral assignments of, all personalty (including the
Rents and the Leases), all in accordance with the terms thereof, in each case
subject only to any applicable Permitted Encumbrances. Lender will have a
perfected first priority security interest in and to the FF&E owned by the
Borrower, if any, not located at the Properties. To the Borrowers' Knowledge,
except as set forth in SCHEDULE 4.5, there are no proceedings in condemnation or
eminent domain affecting any of the Properties, and to the actual knowledge of
the Borrower, none is threatened. No Person has any option or other right to
purchase all or any portion of any of the Properties or any interest therein. To
the Borrowers' Knowledge, there are no mechanic's, materialman's or other
similar liens or claims which have been filed for work, labor or materials
affecting the Properties which are or will be liens prior to, or equal or
coordinate with, the lien of any of the Deeds of Trust. None of the Permitted
Encumbrances, individually or in the aggregate, materially interfere with the
benefits of the security intended to be provided by the Deeds of Trust and this
Loan Agreement, materially and adversely affect the value of any of the
Properties, impair the use or operations of the Properties or impair the
Borrower's ability to pay its obligations in a timely manner.
SECTION 4.6 ZONING; COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE 4.6,
to the Borrower's Knowledge, the Properties and the use thereof comply in all
material respects with all applicable zoning, subdivision and land use laws,
regulations and ordinances, rules and regulations applicable to the Properties,
or any of them, including without limitation the Americans with Disabilities
Act. To the Borrowers' knowledge, there are no illegal activities relating to
controlled substances on any of the Properties. All material permits, licenses
and certificates for the lawful use, occupancy and operation of each component
of each of the Properties in the manner in which it is currently being used,
occupied and operated, including, but not limited to liquor licenses and
certificates of occupancy, or the equivalent, have been obtained and are current
and in full force and effect. To the Borrower's Knowledge, except as disclosed
on SCHEDULE 4.6, in the event that all or any part of the Improvements located
on any
42
Property is destroyed or damaged, said Improvements can be legally reconstructed
to their condition prior to such damage or destruction, and thereafter exist for
the same use without violating any zoning or other ordinances applicable thereto
and without the necessity of obtaining any variances or special permits, other
than customary demolition, building and other construction related permits. To
the Borrowers' Knowledge, no legal proceedings are pending or threatened with
respect to the zoning of any Property. To the Borrowers' Knowledge, except as
set forth in the Title Policies and/or the Surveys, neither the zoning nor any
other right to construct, use or operate any Property is in any way dependent
upon or related to any real estate other than such Property. No tract map,
parcel map, condominium plan, condominium declaration, or plat of subdivision
will be recorded by the Borrowers with respect to any Property without Lender's
prior written consent, which consent shall not be unreasonably withheld, delayed
or conditioned.
SECTION 4.7 LEASES; AGREEMENTS.
(A) LEASES; AGREEMENTS. To the Borrowers' Knowledge, it has
delivered to Lender true and complete copies (in all material respect) of all
(i) Leases and (ii) Material Agreements affecting the operation and management
of the Properties, and such Leases and Material Agreements have not been
modified or amended except pursuant to amendments or modifications delivered to
Lender. Except for the rights of each of the current Managers pursuant to the
existing Management Agreements, no Person has any right or obligation to manage
any of the Properties or to receive compensation in connection with such
management. Except for the parties to any leasing brokerage agreement that has
been delivered to Lender, no Person has any right or obligation to lease or
solicit tenants for the Properties, or (except for cooperating outside brokers)
to receive compensation in connection with such leasing.
(B) RENT ROLL, DISCLOSURE. A true and correct copy of the Rent
Roll is attached hereto as SCHEDULE 4.7(B) and, except for the Material Leases
described in the Rent Roll, none of the Properties are subject to any Material
Leases. Except only as specified in the Rent Roll, or as otherwise disclosed to
Lender in the estoppel certificates delivered to Lender at Closing, to the
Borrowers' Knowledge, (i) the Material Leases are in full force and effect; (ii)
the Borrowers have not given any notice of default to any tenant under any Lease
which remains uncured; (iii) no tenant has any set off, claim or defense to the
enforcement of any Lease; (iv) no tenant is in arrears in the payment of rent,
additional rent or any other charges whatsoever due under any Material Lease, or
is materially in default in the performance of any other obligations under such
Material Lease; (v) the Borrowers have completed all work or alterations
required of the landlord or lessor under each Material Lease, and all of the
other obligations of landlord or lessor under the Material Lease have been
performed; and (vi) there are no rent concessions (whether in form of cash
contributions, work agreements, assumption of an existing tenant's other
obligations, or otherwise) or extensions of time whatsoever not reflected in
such Rent Roll. There are no legal proceedings commenced (or, to the Knowledge
of the Borrowers, threatened) against the Borrowers by any tenant or former
tenant. No rental in excess of one month's rent has been prepaid under any of
the Material Leases. To the Borrowers' Knowledge, each of the Material Leases is
valid and binding on the parties thereto in accordance with its terms.
43
(C) NO RESIDENTIAL UNITS. There are no residential units in any of
the Properties and, to each Borrower's Knowledge, no person (other than a site
manager employed by Manager) occupies any part of the Properties for dwelling
purposes other than on a transient basis.
(D) MANAGEMENT AGREEMENT. The Borrowers have delivered to Lender a
true and complete copy of each of the Management Agreements to which they are a
party that will be in effect on the Closing Date, and such Management Agreements
have not been modified or amended except pursuant to amendments or modifications
delivered to Lender. The Management Agreements are in full force and effect and
no default by any of the Borrowers or Manager exists thereunder.
(E) FRANCHISE AGREEMENT. The Borrowers have delivered to Lender a
true and complete copy of each of the Franchise Agreements to which they are a
party, and such Franchise Agreements have not been modified or amended except
pursuant to amendments or modification delivered to Lender. To the Borrowers'
Knowledge, (i) the applicable Franchise Agreements are in full force and effect
and (ii) except as set forth on SCHEDULE 4.7(E), no material default by the
Borrowers, Manager or the applicable Franchisor exists thereunder.
SECTION 4.8 CONDITION OF THE PROPERTIES. To each Borrower's Knowledge, except as
set forth in the property condition report for the Properties delivered to
Lender, all Improvements including, without limitation, the roof and all
structural components, plumbing systems, HVAC systems, fire protection systems,
electrical systems, equipment, elevators, exterior doors, parking facilities,
sidewalks and landscaping are in working condition and repair. Except as
disclosed in the Property Condition Reports, (i) the Borrowers are not aware of
any latent or patent structural or other material defect or deficiency in the
Properties and, (ii) to the Borrower's Knowledge, city water supply, storm and
sanitary sewers, and electrical, gas (if applicable) and telephone facilities
are available to each of the Properties within the boundary lines of each of the
Properties (except as may be shown on the applicable Survey), are fully
connected to the Improvements and are fully operational, are sufficient to meet
the reasonable needs of each of the Properties as now used or presently
contemplated to be used, and no other utility facilities are necessary to meet
the reasonable needs of each of the Properties as now used or presently
contemplated. Except as may be shown on the applicable Survey, to the Borrowers'
Knowledge no part of any of the Properties is within a flood plain and none of
the Improvements create encroachment over, across or upon the Properties'
boundary lines, rights of way or easements, and no building or other
improvements on adjoining land create such an encroachment which could
reasonably be expected to have a Material Adverse Effect. All public roads and
streets necessary for service of and access to each of the Properties for the
current and contemplated uses thereof have been completed and are serviceable
and are physically and legally open for use by the public. To the Borrowers'
Knowledge after due inquiry, and except as disclosed in the Property Condition
Reports, any septic system located at any of the Properties is in good and safe
condition and repair and in compliance with all applicable law.
SECTION 4.9 LITIGATION; ADVERSE FACTS. Except as set forth on SCHEDULE 4.9, to
the Borrowers' Knowledge after due inquiry, there are no judgments outstanding
against any Primary Borrower Party, or affecting any of the Properties or any
property of any Borrower, nor is there any action, charge, claim, demand, suit
proceeding, petition, governmental investigation or arbitration now pending or
threatened against any Primary Borrower Party that could
44
reasonably be expected to result in a Material Adverse Effect. To the Borrowers'
Knowledge after due inquiry, the actions, charges, claims, demand, suits,
proceedings, petitions, investigations and arbitrations set forth on SCHEDULE
4.9 are not reasonably expected to result, either individually or in the
aggregate, in any Material Adverse Effect.
SECTION 4.10 PAYMENT OF TAXES. All federal, state and local tax returns and
reports of each Primary Borrower Party required to be filed have been timely
filed (or each Borrower has timely filed for an extension and the applicable
extension has not expired), and all taxes, assessments, fees and other
governmental charges (including any payments in lieu of taxes) upon such Person
and upon its properties, assets, income and franchises which are due and payable
have been paid. To the Borrowers' Knowledge, there is not presently pending any
special assessment against any of the Properties or any part thereof.
SECTION 4.11 ADVERSE CONTRACTS. Except for the Loan Documents, none of the
Primary Borrower Parties is a party to or bound by, nor is any property of such
Person subject to or bound by, any contract or other agreement which restricts
such Person's ability to conduct its business in the ordinary course as
currently conducted that, either individually or in the aggregate, has a
Material Adverse Effect or could reasonably be expected to have a Material
Adverse Effect.
SECTION 4.12 PERFORMANCE OF AGREEMENTS. To the Borrowers' Knowledge, no Borrower
Party is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual Obligation of
any such Person which could reasonably be expected to have a Material Adverse
Effect, and no condition exists that, with the giving of notice or the lapse of
time or both, would constitute such a default which could reasonably be expected
to have a Material Adverse Effect.
SECTION 4.13 GOVERNMENTAL REGULATION. No Primary Borrower Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940 or to any federal or state
statute or regulation limiting its ability to incur indebtedness for borrowed
money.
SECTION 4.14 EMPLOYEE BENEFIT PLANS. Except as set forth on SCHEDULE 4.14, no
Primary Borrower Party maintains or contributes to, or has any obligation
(including a contingent obligation) under, any Employee Benefit Plans.
SECTION 4.15 BROKER'S FEES. No broker's or finder's fee, commission or similar
compensation will be payable by or pursuant to any contract or other obligation
of any Primary Borrower Party with respect to the making of the Loan or any of
the other transactions contemplated hereby or by any of the Loan Documents. The
Borrowers shall indemnify, defend, protect, pay and hold Lender harmless from
any and all broker's or finder's fees claimed to be due in connection with the
making of the Loan arising from any Borrower Parties' actions.
SECTION 4.16 INTENTIONALLY DELETED.
SECTION 4.17 SOLVENCY. The Borrowers (a) have not entered into the transaction
or any Loan Document with the actual intent to hinder, delay, or defraud any
creditor and (b) received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the Loan, the fair
saleable value of each Borrower's assets exceed and will, immediately
45
following the making of the Loan, exceed such Borrower's total liabilities,
including, without limitation, subordinated, unliquidated, disputed and
Contingent Obligations. The fair saleable value of each Borrower's assets is and
will, immediately following the making of the Loan, be greater than the
Borrower's probable liabilities, including the maximum amount of its Contingent
Obligations on its debts as such debts become absolute and matured. Each
Borrower's assets do not and, immediately following the making of the Loan will
not, constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. The Borrowers do not intend to, and do
not believe that they will, incur Indebtedness and liabilities (including
Contingent Obligations and other commitments) beyond its ability to pay such
Indebtedness and liabilities as they mature (taking into account the timing and
amounts of cash to be received by the Borrowers and the amounts to be payable on
or in respect of obligations of the Borrowers).
SECTION 4.18 DISCLOSURE. No financial statements furnished to Lender by or on
behalf of any Primary Borrower Party contains any untrue representation,
warranty or statement of a material fact, or omits to state a material fact
necessary in order to make the statements contained therein not misleading. No
Loan Document or any other document, certificate or written statement for use in
connection with the Loan and prepared by any Borrower Party, or any information
provided by any Borrower Party and contained in, or used in preparation of, any
document or certificate for use in connection with the Loan, contains any untrue
representation, warranty or statement of a material fact, or omits to state a
material fact necessary in order to make the statements contained therein not
misleading. There is no material fact actually known to the Borrowers that has
had or will have a Material Adverse Effect and that has not been disclosed in
writing to Lender by the Borrowers.
SECTION 4.19 USE OF PROCEEDS AND MARGIN SECURITY. The Borrowers shall use the
proceeds of the Loan only for the purposes set forth herein and consistent with
all applicable laws, statues, rules and regulations. No portion of the proceeds
of the Loan shall be used by the Borrowers or any Person in any manner that
might cause the borrowing or the application of such proceeds to violate
Regulation T, Regulation U or Regulation X or any other regulation of the Board
of Governors of the Federal Reserve System.
SECTION 4.20 INSURANCE. Set forth on SCHEDULE 4.20 is a complete and accurate
description of all policies of insurance for each Borrower that are in effect as
of the Closing Date. No notice of cancellation has been received with respect to
such policies, and, to each Borrower's Knowledge, the Borrowers are in
compliance with all conditions contained in such policies.
SECTION 4.21 SEPARATE TAX LOTS. Each of the Properties are comprised of one (1)
or more parcels which constitute separate tax lots. No part of any of the
Properties is included or assessed under or as part of another tax lot or
parcel, and no part of any other property is included or assessed under or as
part of the tax lots or parcels comprising any of the Properties.
SECTION 4.22 INVESTMENTS. The Borrowers have no (i) direct or indirect interest
in, including without limitation stock, partnership interest or other securities
of, any other Person, or (ii) direct or indirect loan, advance or capital
contribution to any other Person, including all indebtedness and accounts
receivable from that other Person.
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SECTION 4.23 RESERVED.
SECTION 4.24 DEFAULTS. To the Borrowers' Knowledge, except as disclosed to
Lender in writing, no Default exists.
SECTION 4.25 NO PLAN ASSETS. No Primary Borrower Party is or will be (i) an
employee benefit plan as defined in Section 3(3) of ERISA which is subject to
ERISA, (ii) a plan as defined in Section 4975(e)(1) of the IRC which is subject
to Section 4975 of the IRC, or (iii) an entity whose underlying assets
constitute "plan assets" of any such employee benefit plan or plan for purposes
of Title I of ERISA of Section 4975 of the IRC; provided that, in making such
representation, the Borrowers have assumed that (i) no portion of the Loan shall
be funded with plan assets of any employee benefit plan that is subject to Title
I of ERISA or any plan that is covered by Section 4975 of the Code unless the
Lender is eligible to apply one or more exemptions such that the Loan will not
constitute a nonexempt prohibited transaction under Section 406 of ERISA or that
could subject a Borrower Party or its Affiliates to an excise tax under Section
4975 of the IRC; and (ii) such assumption in the preceding clause is true and
correct with respect to any party to which Lender transfers or assigns any
portion of the Loan.
SECTION 4.26 GOVERNMENTAL PLAN. No Primary Borrower Party is or will be a
"governmental plan" within the meaning of Section 3(32) of ERISA and
transactions by or with the Borrowers are not and will not be subject to state
statutes applicable to the Borrowers' regulating investments of and fiduciary
obligations with obligations with respect to governmental plans.
SECTION 4.27 NOT FOREIGN PERSON. No Primary Borrower Party is a "foreign person"
within the meaning of Section 1445(f)(3) of the IRC.
SECTION 4.28 NO COLLECTIVE BARGAINING AGREEMENTS. Except as set forth on
SCHEDULE 4.28, no Primary Borrower Party is a party to any collective bargaining
agreement.
SECTION 4.29 MORTGAGED CONDOMINIUM DOCUMENTS.
(A) The Borrowers have delivered true and correct copies of each
of the Mortgaged Condominium Documents to Lender and same have not been
modified, amended or assigned except as set forth on SCHEDULE 4.29, and to the
Borrowers' Knowledge, there are no other material documents or agreements
affecting the Condominium Borrower's interest in the Mortgaged Condominium
Property.
(B) Each of the Mortgaged Condominium Property Documents is in
full force and effect and, to the Condominium Borrower's Knowledge, no breach or
default, or event that, with the giving of notice or the passage of time or both
would constitute a breach or default, under any of the Mortgaged Condominium
Property Documents (a "CONDOMINIUM DEFAULT") exists or has occurred on the part
of the Condominium Borrower or on the part of any other party to any of the
Mortgaged Condominium Property Documents.
SECTION 4.30 GROUND LEASES
(A) Each Ground Lease contains the entire agreement of the Ground
Lessor and the applicable Borrower pertaining to each Ground Leased Property
covered thereby. The
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Borrowers have no estate, right, title or interest in or to the Ground Leased
Properties except under and pursuant to the Ground Leases. The Borrowers have
delivered true and correct copies of each of the Ground Leases to Lender and the
Ground Leases have not been modified, amended or assigned except as set forth on
SCHEDULE 4.30.
(B) To the knowledge of the Borrowers, each Ground Lessor is the
exclusive fee simple owner of its Ground Leased Property, subject only to the
Ground Lease and the Permitted Encumbrances, and each Ground Lessor is the sole
owner of the lessor's interest in the applicable Ground Lease.
(C) There are no right to terminate any Ground Lease other than
any Ground Lessor's right to terminate by reason of default, casualty,
condemnation or other reasons, in each case as expressly set forth in the
applicable Ground Lease.
(D) Each Ground Lease is in full force and effect and to the
Borrowers' knowledge, no breach or default or event that with the giving of
notice or passage of time would constitute a breach or default under any Ground
Lease (a "GROUND LEASE DEFAULT") exists or has occurred on the part of the
Borrowers or on the part of any Ground Lessor under any Ground Lease. The
Borrowers have not received any written notice that a Ground Lease Default has
occurred or exists, or that any Ground Lessor or any third party alleges the
same to have occurred or exist.
(E) The applicable Borrower set forth on SCHEDULE 4.30 is the
exclusive owner of the lessee's interest under and pursuant to the applicable
Ground Lease and has not assigned, transferred, or encumbered its interest in,
to, or under any Ground Lease (other than assignments that will terminate on or
prior to Closing), except in favor of Lender pursuant to this Loan Agreement and
the other Loan Documents.
ARTICLE V
COVENANTS OF BORROWER PARTIES
The Borrowers covenant and agree that until payment in full of the
Loan, all accrued and unpaid interest and all other Obligations, the Borrowers
shall perform and comply with all covenants in this Article V applicable to such
Person.
SECTION 5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
(A) FINANCIAL STATEMENTS.
(i) ANNUAL REPORTING. Within one hundred twenty (120)
days after the end of each calendar year, the Borrowers (on a consolidated
basis), and within ninety (90) days after the end of each calendar year,
Guarantor shall provide true and complete copies of their Financial Statements
for such year to Lender. All such Financial Statements shall be audited by an
Approved Accounting Firm or by other independent certified public accountants
reasonably acceptable to Lender, and shall bear the unqualified certification of
such accountants that such Financial Statements present fairly in all material
respects the financial position of the subject company. The annual Financial
Statements shall be accompanied by Supplemental Financial Information for such
calendar year. The annual Financial Statements for the Borrowers (on a
consolidated basis) and Guarantor shall also be accompanied by a certification
executed by the
48
entity's chief executive officer or chief financial officer (or other officer
with similar duties), satisfying the criteria set forth in Section 5.1(A)(viii)
below, and a Compliance Certificate (as defined below).
(ii) QUARTERLY REPORTING - BORROWERS. Within forty-five
(45) days after the end of each calender quarter, the Borrowers on a
consolidated basis (other than with respect to income statements, which shall be
on an individual property basis) shall provide copies of their Financial
Statements for such quarter to Lender, together with a certification executed on
behalf of each of the Borrowers by their respective chief executive officers or
chief financial officers (or other officer with similar duties) in accordance
with the criteria set forth in Section 5.1(A)(viii) below. Such quarterly
Financial Statements shall be accompanied by Supplemental Financial Information
and a Compliance Certificate for such quarter.
(iii) QUARTERLY REPORTING - GUARANTOR. Within forty-five
(45) days after the end of each calendar quarter, Guarantor shall provide copies
of its Financial Statements for such quarter to Lender, together with a
certification executed on behalf of Guarantor by its chief executive officer or
chief financial officer (or other officer with similar duties) in accordance
with the criteria set forth in Section 5.1(A)(viii) below.
(iv) LEASING REPORTS. Within forty-five (45) days after
each calendar quarter, each Borrower shall provide to Lender a certified Rent
Roll and a schedule of security deposits held under Material Leases, each in
form and substance reasonably acceptable to Lender. Within forty-five (45) days
after each calendar quarter, each Borrower shall also provide to Lender (a) a
schedule of any retail Material Leases that expired during such calendar quarter
and a schedule of retail Material Leases scheduled to expire within the next
twelve (12) months and (b) to the extent the Borrowers received notice thereof,
a list of any retail tenants under Material Leases that filed bankruptcy,
insolvency or reorganization proceedings during such calendar quarter. Within
ninety (90) days after the end of each calendar year, each Borrower shall
provide to Lender a statement of income and expenses for all retail space at
each of the Properties owned and operated by the Borrowers and sales reports for
retail tenants for such year.
(v) MONTHLY REPORTING. Within thirty (30) days after the
end of each calendar month, each Borrower shall provide, or cause Manager to
provide, to Lender the following items determined on an accrual basis: (a) a
calculation of the average daily rate, RevPAR and occupancy calculations and
statistics for the Properties for the subject month; (b) Smith Travel Research
"STAR" reports then available; (c) monthly and year to date operating statements
prepared for such calendar month, noting Net Operating Income, Net Cash Flow and
including budgeted and last year results for the same year-to-date period and
other information necessary and sufficient under GAAP to fairly represent the
results of operation of the Properties during such calendar month, all in form
reasonably satisfactory to Lender; (d) reports for FF&E and Capital Expenditure
projects completed during such calendar month (including a detailed explanation
for any material deviations from budget); (e) monthly and year to date detailed
reports of Operating Expenses, including supporting documentation satisfactory
to Lender in its sole discretion for each item of Extraordinary Expense (as such
term is defined in the Cash Management Agreement) for which Lender has approved
a disbursement from the Cash Trap Reserve pursuant to the terms of Section
3.3(a)(viii) of the Cash Management Agreement; (f) most recently available
"QFI", or similar quality index, scores; and (g) a report setting forth (i)
49
the date of termination by Property for each Franchise Agreement that has been
terminated after the Closing Date and not replaced with an Approved Franchisor,
(ii) the number of Properties for which a default has occurred and has continued
beyond applicable notice and grace periods under the applicable Franchise
Agreement (including the percentage of the original Aggregate Allocated Loan
Amount represented by such Properties), (iii) a summary report establishing
whether the Borrowers are diligently continuing to pursue reflagging efforts
with respect to each such Property, and (iv) a summary report including (a) the
aggregate number of Properties for which the Borrowers have entered into new
Franchise Agreements as permitted by Sections 5.13(D)(i) and 5.13(D)(iv)
together with the resulting Category of each such Property, and (b) the
aggregate number of Properties for which any replacement (and, if more than one
replacement has occurred to a single Property, the number of replacements with
respect to such Property) of the applicable Franchise Agreements has occurred
pursuant to the terms of Sections 5.13(D)(ii) and 5.13(D)(iii) together with the
percentage of the Aggregate Outstanding Principal Balance represented by such
Properties and including the resulting Category of each such Property. Along
with such operating statements, each Borrower shall deliver to Lender a
Compliance Certificate of such Borrower's chief executive officer or chief
financial officer (or other officer with similar duties) satisfying the criteria
set forth in Section 5.1(A)(viii) below.
(vi) ADDITIONAL REPORTING. In addition to the foregoing,
the Borrowers shall, and shall cause Guarantor and Manager to, promptly provide
to Lender such further documents and information concerning its operations,
properties, ownership, and finances as Lender shall from time to time reasonably
request upon prior written notice to the Borrowers.
(vii) GAAP; UNIFORM SYSTEM. The Borrowers will, and will
cause Guarantor and Manager to, maintain systems of accounting established and
administered in accordance with sound business practices and sufficient in all
respects to permit preparation of Financial Statements in conformity with GAAP
and the Uniform System. All Financial Statements shall be prepared in accordance
with GAAP and the Uniform System, consistently applied; provided, however, in
the event of a conflict between the Uniform System and GAAP, GAAP will be
followed.
(viii) CERTIFICATIONS OF FINANCIAL STATEMENTS AND OTHER
DOCUMENTS, COMPLIANCE CERTIFICATE. Together with the Financial Statements and
other documents and information provided to Lender by or on behalf of the
Borrowers or Guarantor under this Section, the Borrowers or Guarantor also shall
deliver to Lender a certification to Lender, executed on behalf of the Borrowers
or Guarantor by their respective chief executive officer or chief financial
officer (or other officer with similar duties), stating that to their Knowledge
after due inquiry such quarterly and annual Financial Statements and information
fairly present the financial condition and results of operations of the
Borrowers, Guarantor and/or the Properties for the period(s) covered thereby,
and do not omit to state any material information without which the same might
reasonably be misleading, and all other non-financial documents submitted to
Lender (whether monthly, quarterly or annually) are true, correct, accurate and
complete in all material respects. In addition, where this Loan Agreement
requires a "COMPLIANCE CERTIFICATE", the Person required to submit the same
shall deliver a certificate duly executed on behalf of such Person by its chief
executive officer or chief financial officer (or other officer with similar
duties) stating that, to their Knowledge after due inquiry, there does not
50
exist any Default or Event of Default under the Loan Documents (or if any
exists, specifying the same in detail).
(ix) FISCAL YEAR. Each Borrower represents that its fiscal
year and that of the Guarantor ends on December 31, and agrees that no change
shall be made to each such fiscal year.
(B) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, each
Borrower will deliver copies of all material reports submitted by independent
public accountants in connection with each annual, interim or special audit of
the Financial Statements or other business operations of such Borrower made by
such accountants, including the comment letter submitted by such accountants to
management in connection with the annual audit.
(C) TAX RETURNS. Within thirty (30) days after filing the same,
each Borrower shall deliver to Lender a copy of its Federal income tax returns
(or the return of the applicable Person into which such Borrower's Federal
income tax return is consolidated) certified on its behalf by its chief
financial officer (or similar position) to be true and correct.
(D) ANNUAL OPERATING BUDGET, CAPEX/FF&E BUDGETS AND CAPITAL
IMPROVEMENTS PLAN. Prior to February 15 of each calendar year, each Borrower
shall deliver to Lender for its review for its Property a proposed Operating
Budget, Capital Improvements Plan and CapEx/FF&E Budget (in each case presented
on a monthly and annual basis) for such calendar year. Each Operating Budget,
CapEx/FF&E Budget and, so long as any funds remain in the Capital Improvement
Reserve or Required Capital Improvements remain to be performed, each Capital
Improvements Plan shall be subject to Lender's approval which shall not be
unreasonably withheld, conditioned or delayed. The Borrowers may make changes to
the Operating Budget and the CapEx/FF&E Budget from time to time as deemed
reasonably necessary by the Borrower, provided no such modification shall alter
any single line item (or the applicable Budget as a whole) by more than ten
percent (10%) without Lender's prior written approval, which approval shall not
be unreasonably withheld. Notice of any modifications to the Operating Budget
and the CapEx/FF&E Budget shall be delivered to Lender at the time of delivery
of the next financial reporting required pursuant to Section 5.1(A)(v). Lender
acknowledges that it has approved the annual Operating Budget for the 2002
calendar year, and the CapEx/FF&E Budget and Capital Improvements Plan for the
2002 and 2003 calendar years each as set forth on Schedule 5.1(D). The proposed
Operating Budget shall identify and set forth each Borrower's reasonable
estimate, after due consideration, of all revenue, costs, and expenses, and
shall specify Operating Revenues and Operating Expenses on a line-item basis
consistent with the form of Operating Budget delivered to Lender prior to
Closing. If any of said budgets or plans requiring Lender's approval is not in
form and substance reasonably satisfactory to Lender, Lender may disapprove the
same and specify the reasons therefor in writing, and the Borrowers shall
promptly amend and resubmit for approval revised budgets or plans, as
applicable, making such changes as are necessary to comply with the reasonable
requirements of Lender. If any such budget or plan requiring Lender's approval
is not approved or deemed approved by the beginning of the calendar year covered
thereby, the applicable budget or plan for the previous year shall remain in
effect until the new budget or plan is approved or deemed approved. Lender's
consent to any budget, plan or amendments thereto shall be deemed given, if the
first correspondence from the Borrowers to Lender requesting such approval is in
an
51
envelope marked "PRIORITY" and contains a bold-faced, conspicuous legend at the
top of the first page thereof stating that "IF YOU FAIL TO RESPOND TO OR TO
EXPRESSLY DENY THIS REQUEST FOR APPROVAL IN WRITING WITHIN FIFTEEN (15) DAYS,
YOUR APPROVAL MAY BE DEEMED GIVEN", and is accompanied by the information and
documents required above and any other information reasonably requested by
Lender in writing prior to the expiration of such fifteen (15) day period in
order to adequately review the same has been delivered and, if Lender fails to
respond or to expressly deny such request for approval in writing within the
fifteen (15) day period, a second notice is delivered to Lender from the
Borrowers in an envelope marked "PRIORITY" requesting approval containing a
bold-faced, conspicuous legend at the top of the first page thereof stating that
"IF YOU FAIL TO RESPOND TO OR EXPRESSLY DENY THIS REQUEST FOR APPROVAL IN
WRITING WITHIN TEN (10) DAYS, YOUR APPROVAL SHALL BE DEEMED GIVEN" and Lender
fails to respond or to expressly deny each request for approval within the ten
(10) day period.
(E) MATERIAL NOTICES.
(i) The Borrowers shall promptly deliver, or cause to be
delivered, copies of all notices given or received with respect to a default
under any term or condition related to any Permitted Indebtedness of any
Borrower, and shall notify Lender within five (5) Business Days of any potential
or actual event of default with respect to any such Permitted Indebtedness.
(ii) The Borrowers shall promptly deliver to Lender copies
of any and all material notices (including without limitation any notice
alleging any default or breach which is reasonably expected to result in a
termination) received with respect to any Material Agreement or any Lease,
including, without limitation, any inspection report and any progress reports
related to any Property Improvement Plan received from a Franchisor related to
such Borrower's Property.
(F) EVENTS OF DEFAULT, ETC. Promptly upon any of the Borrowers
obtaining knowledge of any of the following events or conditions, such Borrower
shall deliver a certificate executed on its behalf by its chief financial
officer or similar officer specifying the nature and period of existence of such
condition or event and what action such Borrower or any Affiliate thereof has
taken, is taking and proposes to take with respect thereto: (i) any condition or
event that constitutes an Event of Default; (ii) any Material Adverse Effect; or
(iii) any actual or alleged breach or default or assertion of (or written threat
to assert) remedies under any Management Agreement, Franchise Agreement or
Ground Lease.
(G) LITIGATION. Promptly upon any of the Borrowers obtaining
knowledge of (1) the institution of any action, suit, proceeding, governmental
investigation or arbitration against the Borrowers or any of the Properties not
previously disclosed in writing by the Borrowers to Lender which would be
reasonably likely to have a Material Adverse Effect or is not covered by
insurance or (2) any material development in any action, suit, proceeding,
governmental investigation or arbitration at any time pending against or
affecting the Borrowers or the Properties which, in each case, if adversely
determined would reasonably be expected to have a Material Adverse Effect, the
Borrowers will give notice thereof to Lender and, upon request
52
from Lender, provide such other information as may be reasonably available to
them to enable Lender and its counsel to evaluate such matter.
(H) INSURANCE. At least five (5) Business Days prior to the end of
each insurance policy period of the Borrowers, the Borrowers will deliver
certificates, reports, and/or other information (all in form and substance
reasonably satisfactory to Lender), (i) outlining all material insurance
coverage maintained as of the date thereof by the Borrowers and all material
insurance coverage planned to be maintained by the Borrowers in the subsequent
insurance policy period and (ii) evidencing payment in full of the premiums for
such insurance policies.
(I) OTHER INFORMATION. With reasonable promptness, Borrowers will
deliver such other information and data with respect to such Person and its
Affiliates or the Properties as from time to time may be reasonably requested by
Lender.
SECTION 5.2 EXISTENCE; QUALIFICATION. The Borrowers will at all times preserve
and keep in full force and effect their existence as a limited partnership,
limited liability company, or corporation, as the case may be, and all rights
and franchises material to its business, including their qualification to do
business in each state where it is required by law to so qualify. Without
limitation of the foregoing, each Borrower and, to the extent required by
applicable law, General Partner and Member, shall at all times be qualified to
do business in each of the states where the Properties located.
SECTION 5.3 PAYMENT OF IMPOSITIONS AND CLAIMS.
(A) Except for those matter being contested pursuant to clause (B)
below, the Borrowers will pay (i) all Impositions; (ii) all claims (including
claims for labor, services, materials and supplies) for sums that have become
due and payable and that by law have or may become a Lien upon any of its
properties or assets (hereinafter referred to as the "CLAIMS"); and (iii) all
federal, state and local income taxes, sales taxes, excise taxes and all other
taxes and assessments of the Borrowers on their business, income or assets; in
each instance before any penalty or fine is incurred with respect thereto.
(B) The Borrowers shall not be required to pay, discharge or
remove any Imposition or Claim relating to a Property so long as the Borrowers
contest in good faith such Imposition, Claim or the validity, applicability or
amount thereof by an appropriate legal proceeding which operates to prevent the
collection of such amounts and the sale of the applicable Property or any
portion thereof, so long as: (i) no Event of Default shall have occurred and be
continuing, (ii) prior to the date on which such Imposition or Claim would
otherwise have become delinquent, the Borrowers shall have given Lender prior
written notice of their intent to contest said Imposition or Claim; (iii) prior
to the date on which such Imposition or Claim would otherwise have become
delinquent, the Borrowers shall have deposited with Lender (or with a court of
competent jurisdiction or other appropriate body reasonably approved by Lender)
such additional amounts as are necessary to keep on deposit at all times, an
amount by way of cash, Dollar Equivalents, or a Letter of Credit, equal to at
least one hundred twenty-five percent (125%) (or such higher amount as may be
required by applicable law) of the total of (x) the balance of such Imposition
or Claim then remaining unpaid, and (y) all interest, penalties, costs and
charges accrued or accumulated thereon; (iv) no risk of sale, forfeiture or loss
of any interest in the
53
applicable Property or any part thereof arises, in Lender's reasonable judgment,
during the pendency of such contest; (v) such contest does not, in Lender's
reasonable determination, have a Material Adverse Effect; and (vi) such contest
is based on bona fide, material, and reasonable claims or defenses. Any such
contest shall be prosecuted with due diligence, and the Borrowers shall promptly
pay the amount of such Imposition or Claim as finally determined, together with
all interest and penalties payable in connection therewith. Lender shall have
full power and authority, but no obligation, to apply any amount deposited with
Lender under this subsection to the payment of any unpaid Imposition or Claim to
prevent the sale or forfeiture of the applicable Property for non-payment
thereof, if Lender reasonably believes that such sale or forfeiture is
threatened. Any surplus retained by Lender after payment of the Imposition or
Claim for which a deposit was made shall be promptly repaid to the Borrowers
unless an Event of Default shall have occurred, in which case said surplus may
be retained by Lender to be applied to the Obligations. Notwithstanding any
provision of this Section to the contrary, the Borrowers shall pay any
Imposition or Claim which they might otherwise be entitled to contest if an
Event of Default shall occur and be continuing, or if, in the reasonable
determination of Lender, the applicable Property is in danger of being forfeited
or foreclosed. If the Borrowers refuses to pay any such Imposition or Claim,
Lender may (but shall not be obligated to) make such payment and the Borrowers
shall reimburse Lender on demand for all such advances.
SECTION 5.4 MAINTENANCE OF INSURANCE.
The Borrowers will continuously maintain the following described
policies of insurance on each of the respective Properties without cost to
Lender (the "INSURANCE POLICIES"):
(i) Property insurance against loss and damage by all
risks of physical loss or damage, including fire, sprinkler leakage, windstorm,
hurricane, terrorism, and other risks covered by the so-called extended coverage
endorsement covering the Improvements and personal property in amounts not less
than the full insurable replacement value of all Improvements (less building
foundations and footings) and personal property from time to time on the
Properties and without sublimits, and bearing a replacement cost agreed-amount
endorsement;
(ii) Commercial general liability insurance, including
death, bodily injury, innkeeper legal liability and broad from property damage
coverage with a combined single limit in an amount not less than One Million
Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) in the
aggregate for any policy year;
(iii) If any of the Properties are in an area prone to
geological phenomena, including, but not limited to, sinkholes, mine subsidence
or earthquakes, insurance covering such risks in an amount equal to 100% of the
full replacement cost of all improvements (without any deductions for
depreciation) and with a maximum permissible deductible equal to the lesser of
$25,000 or 10% of the face value of the policy;
(iv) For each Property located in whole or in part in a
federally designated "special flood hazard area", flood insurance in the maximum
available amount;
54
(v) An umbrella excess liability policy with a limit of
not less than Twenty Million Dollars ($20,000,000) over primary insurance, which
policy shall include coverage for water damage, so-called assumed and
contractual liability coverage, premises medical payment and automobile
liability coverage, and coverage for safeguarding of personalty and shall also
include such additional coverages and insured risks which are acceptable to
Lender;
(vi) Business interruption and/or rent loss insurance with
an aggregate limit equal to at least the gross income from the Properties for an
indemnity period commencing on the date of such casualty and ending at least six
(6) months after completion of the Restoration (such amount being adjusted
annually);
(vii) Crime protection coverage with the same coverages,
limits of coverage and deductibles as currently in place at the Properties;
(viii) Steam boiler, machinery and pressurized vessel
insurance insuring against breakdown or explosion of such equipment on a
replacement cost value basis, which shall not contain any exclusions for testing
procedures;
(ix) Worker's Compensation Insurance in statutory amounts,
if any, at all times;
(x) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air conditioning
equipment, high pressure piping, machinery and equipment, pressure vessels or
similar apparatus now or hereafter installed in the Improvements (without
exclusion for explosions), in an amount at least equal to the Aggregate
Allocated Loan Amount;
(xi) During any period of construction, repair or
restoration, builder's "all risk" insurance in an amount equal to not less than
the full insurable value of the Properties (excluding building foundations and
footings) against such risks (including, without limitation, fire and extended
coverage and collapse of the Improvements to agreed limits) as Lender may
reasonably request;
(xii) If the Properties are or become a "non-conforming
use" under applicable zoning and building ordinances, or other requirements of
the applicable Governmental Authority, law or ordinance coverage to compensate
for the cost of demolition and the increased cost of construction, if available;
(xiii) If the Borrowers, Manager or any of their respective
Affiliates holds a liquor license for the Properties, liquor liability insurance
(including "dram shop" liability) in an amount not less than $2,000,000;
provided that if such liquor license is held by any tenant under a Lease, the
Borrowers shall cause such tenant to cause liquor liability insurance in an
amount not less than $2,000,000 to be carried in such tenant's name, and shall
include the Borrowers and Lender as additional insureds thereunder;
(xiv) Environmental insurance, including mold coverage, in
form and with coverages (including business interruption coverage) reasonably
satisfactory to Lender;
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(xv) Fiduciary liability insurance and directors and
officers liability insurance ("D&O INSURANCE") with coverages at levels in
effect as of the Closing Date;
(xvi) Such other insurance as may from time to time be
reasonably required by Lender and which is then customarily required by
institutional lenders for securitized loans secured by similar properties
similarly situated, against other insurable hazards, including, but not limited
to, malicious mischief, vandalism, windstorm and or earthquake, due regard to be
given to the size and type of the Properties, Improvements, fixtures and
equipment and their location, construction and use. Additionally, the Borrowers
shall carry such insurance coverage as Lender may from time to time require if
the failure to carry such insurance would result in a downgrade, qualification
or withdrawal of any class of securities issued in connection with a
Securitization. Notwithstanding the provision of this subsection (xv), any
terrorism insurance required to be obtained by the Borrowers shall be subject to
the provisions of subsection (xvi) below;
(xvii) To the extent any of the commercial property
insurance policies required under subsection (i), (ii), (v), or (vi) above (each
a "REQUIRED INSURANCE POLICY," collectively, the "REQUIRED INSURANCE POLICIES"),
or any renewal or replacement of any Required Insurance Policy, either does not
include or specifically excludes coverage for damage resulting from terrorism
with coverages as provided in the Required Insurance Policies delivered to
Lender in connection with the origination of the Loan (collectively, the
"EXCLUSIONS FROM COVERAGE"), the Borrowers shall either (x) obtain an
endorsement to any such Required Insurance Policy or (y) maintain a separate
insurance policy, in each case insuring against any damage resulting from such
Exclusions from Coverage to the same extent each of the Required Insurance
Policies would have provided such coverage had each Required Insurance Policy
not contained an exclusion for such Exclusions from Coverage, in each case on
terms consistent with the insurance policies required under subsections (i),
(ii), (v), and (vi) above; provided that the cost for omission of such
exclusions from any such policies, or separate insurance, shall not exceed the
Terrorism Insurance Cap, in which instance the Borrowers shall obtain such
maximum coverage as is available for the Terrorism Insurance Cap. Such insurance
may, at the option of the Borrowers, be effected by a blanket policy of
insurance issued to the Borrowers covering the Properties and other property,
provided that, in each case, (A) such blanket policy is acceptable to Lender in
its reasonable discretion (taking into account, by way of example only, such
matters as the type and location of the other properties named in such blanket
policy) and (B) such policy otherwise complies with the provisions of this Loan
Agreement and allocates to the Properties, at all times that any portion of the
Obligations remains outstanding, the coverage specified by this Loan Agreement,
without possibility of reduction or coinsurance by reason of, or damage to, any
other property (real or personal) named therein. Lender's prior written consent,
which shall not be unreasonably withheld, shall be required prior to the
Borrowers' addition of any property to any such blanket policy. If such
insurance shall be effected by such blanket policy, the Borrowers shall furnish
to Lender an original policy or certified copy thereof, and an original
certificate of insurance together with reasonable access to the original of such
policy to review such policy's coverage of the Properties, with schedules
attached thereto showing the amount of the insurance provided under such
policies applicable to the Properties.
All Insurance Policies shall be in content (including, without
limitation, endorsements or exclusions, if any), form, and amounts, and issued
by companies, satisfactory to Lender from
56
time to time and shall name Lender and its successors and assignees as their
interests may appear as (x) an "additional insured" for each of the liability
policies under this Section 5.4 hereof, and (y) a "mortgagee" for each of the
property and casualty policies under this Section hereof, and shall (except for
Worker's Compensation Insurance) contain a waiver of subrogation clause
reasonably acceptable to Lender. Other than with respect to D&O Insurance, an
insurance company shall not be satisfactory unless such insurance company (a) is
licensed or authorized to issue insurance in the State where the applicable
Property is located and (b) has a claims paying ability rating by the Rating
Agencies of AA- (or its equivalent). Notwithstanding the foregoing, a carrier
which does not meet the foregoing ratings requirement shall nevertheless be
deemed acceptable hereunder provided that such carrier is reasonably acceptable
to Lender and the Borrowers shall obtain and deliver to Lender a Rating
Confirmation with respect to such carrier from each of the Rating Agencies,
provided, however, if any insurance coverage required under this Section 5.4 is
maintained by a syndicate of insurers, the preceding ratings requirements shall
be deemed satisfied (without any required Rating Confirmation) as long as at
least seventy five percent (75%) of the coverage (if there are four or fewer
members of the syndicate) or at least sixty percent (60%) of the coverage (if
there are five or more members of the syndicate) is maintained with carriers
meeting the claims-paying ability ratings requirements by S&P and Moody's (if
applicable) set forth above and all carriers in such syndicate have a
claims-paying ability rating by S&P of not less than "BBB" and by Moody's of not
less than "Baa2" (to the extent rated by Moody's). All Insurance Policies under
Sections 5.4 (i), (iv), (vi), (vii), (x), (xi) and (xii) hereof shall contain a
Non-Contributory Standard mortgagee clause and a mortgagee's Loss Payable
Endorsement (Form 438 BFU NS), or their equivalents (such endorsements shall
entitle Lender to collect any and all proceeds payable under all such insurance,
with the insurance company waiving any claim or defense against Lender for
premium payment, deductible, self-insured retention or claims reporting
provisions). All Insurance Policies shall provide that the coverage shall not be
modified without (30) days' advance written notice to Lender and shall provide
that no claims shall be paid thereunder to a Person other than Lender without
ten (10) day's advance written notice to Lender. The Borrowers may obtain any
insurance required by this Section through blanket policies; provided, however,
that such blanket policies shall separately set forth the amount of insurance in
force with respect to the Properties (which shall not be reduced by reason of
events occurring on property other than the Properties) and shall afford all the
protections to Lender as are required under this Section. Except as may be
expressly provided above, all policies of insurance required hereunder shall
contain no annual aggregate limit of liability, other than with respect to
liability insurance. If a blanket policy is issued, a certified copy of said
policy shall be furnished, together with a certificate indicating that Lender is
an additional insured (and, if applicable, loss payee) under such policy in the
designated amount. The Borrowers will deliver duplicate originals of all
Insurance Policies, premium prepaid for a period of one (1) year, to Lender and,
in case of Insurance Policies about to expire, the Borrowers will deliver
duplicate originals of replacement policies satisfying the requirements hereof
to Lender not less than thirty (30) days prior to the date of expiration;
provided, however, if such replacement policy is not yet available, the
Borrowers shall provide Lender with an insurance certificate executed by the
insurer or its authorized agent evidencing that the insurance required hereunder
is being maintained under such policy, which certificate shall be acceptable to
Lender on an interim basis until the duplicate original of the policy is
available. The Borrowers shall furnish Lender receipts for the payment of
premiums on such insurance policies or other evidence of such payment reasonably
satisfactory to Lender in the
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event that such premiums have not been paid by Lender pursuant to the Loan
Agreement. The requirements of this Section 5.4 shall apply to any separate
policies of insurance taken out by the Borrowers concurrent in form or
contributing in the event of loss with the Insurance Policies. Losses shall be
payable to Lender notwithstanding (1) any act, failure to act or negligence of
the Borrowers or their agents or employees, Lender or any other insured party
which might, absent such agreement, result in a forfeiture or all or part of
such insurance payment, other than the willful misconduct of Lender knowingly in
violation of the conditions of such policy, (2) the occupation or use of the
Properties or any part thereof for purposes more hazardous than permitted by the
terms of such policy, (3) any foreclosure or other action or proceeding taken
pursuant to this Loan Agreement or (4) any change in title to or ownership of
the Properties or any part thereof. The property insurance and the boiler and
machinery insurance described in Sections 5.4(i) and (x) hereof shall include
"underground hazards" coverage; "time element" coverage by which Lender shall be
assured payment of all amounts due under the Note, this Loan Agreement and the
other Loan Documents; "extra expense" (i.e., soft costs), clean-up, transit and
ordinary payroll coverage; and "expediting expense" coverage to facilitate rapid
repair or restoration of the Properties. The Insurance Policies shall not
contain any deductible in excess of $250,000.
Notwithstanding anything contained in this Section 5.4 to the contrary,
Lender acknowledges that the Borrowers's insurance in effect as of the Closing
Date, and as described on SCHEDULE 4.20 are acceptable to Lender as of the
Closing Date, and shall continue to be acceptable to Lender for so long as (x)
the Borrowers do not change such insurance companies, and (y) no downgrade has
occurred to the ratings in effect as of the Closing Date for each such insurance
company. Notwithstanding the foregoing, not later than five (5) Business Days
prior to the expiration of each of the Insurance Policies in effect as of the
Closing Date, the Borrowers shall deliver to Lender replacements of each such
Insurance Policy which provides coverage required hereunder for a period of one
(1) year, together with evidence of the payment in full of the annual premium(s)
payable for such policy.
SECTION 5.5 OPERATION AND MAINTENANCE OF THE PROPERTIES; CASUALTY.
(A) The Borrowers will operate and maintain the Properties as is
necessary to maintain hotel standards at least as high as those that currently
apply to each Property, subject to ordinary wear and tear, as reasonably
determined by the Borrowers, and otherwise in compliance with the standards
under the applicable Franchise Agreement and shall maintain or cause to be
maintained in good repair, working order and condition all material property
used in the business of each Borrower, including the applicable Property, and
will make or cause to be made all appropriate repairs, renewals and replacements
thereof. Without limitation of the foregoing, each Borrower will operate and
maintain its Property substantially in accordance with the applicable Operating
Budget and the CapEx/FF&E Budget. All work required or permitted under this Loan
Agreement shall be performed in a workmanlike manner and in compliance with all
applicable laws.
So long as no Event of Default has occurred and is continuing, the
Borrowers may, without Lender's consent, perform alterations to the Properties
which do not constitute a Material Alteration. The Borrowers shall not perform
any Material Alteration without Lender's prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed;
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provided, however, that Lender may, in its sole and absolute discretion,
withhold consent to any Material Alteration which is likely to result in a
decrease of Net Operating Income (taking into consideration all Material
Alterations being undertaken at the Properties at such time) by 5% or more below
that which was in effect prior to the commencement of the first such Material
Alteration being undertaken at the time of determination for a period of sixty
(60) days or longer; provided, further, however, the Borrowers may perform a
Material Alteration without Lender's consent if (i) the delay caused by
obtaining Lender's prior consent may result in injury or death at, or further
destruction or deterioration of, the applicable Property, (ii) such Material
Alteration is necessary to prevent the likelihood of injury or death at, or
further destruction or deterioration of, the applicable Property, and (iii) the
Borrowers deliver notice to Lender within two (2) Business Days of commencement
of such Material Alteration together with such supporting documentation as
Lender may require with respect to such Material Alteration. Lender may, as a
condition to giving its consent to a Material Alteration, require that the
Borrowers deliver to Lender evidence reasonably satisfactory to Lender that the
Borrowers have cash available for payment of the cost of such Material
Alteration or, if the Borrowers fail to deliver such evidence, cash, Dollar
Equivalents or a Letter of Credit, in an amount equal to 125% of the cost of
such Material Alteration as reasonably estimated by Lender. Cash deposited by
the Borrowers with Lender in connection with any Material Alteration pursuant to
the foregoing sentence shall be held by Lender in a Sub-Account of the Lock Box
Account and disbursed to the Borrowers to pay for the cost of such Material
Alteration as such work progresses subject to satisfaction of the conditions for
disbursement of amounts from the FF&E Reserve under Section 6.4 (including the
requirements set forth under Section 6.7). Upon completion of the Material
Alteration, the Borrowers shall provide evidence reasonably satisfactory to
Lender that (i) the Material Alteration was constructed in accordance with all
material applicable laws and substantially in accordance with plans and
specifications approved by Lender (which approval shall not be unreasonably
withheld or delayed), (ii) all contractors, subcontractors, materialmen and
professionals who provided work, materials or services in connection with the
Material Alteration have been paid in full and have delivered unconditional
releases of lien and (iii) all material licenses necessary for the use,
operation and occupancy of the Material Alteration (other than those which
depend on the performance of tenant improvement work) have been issued. The
Borrowers shall reimburse Lender upon demand for all reasonable out-of-pocket
costs and expenses (including the reasonable fees of any architect, engineer or
other professional engaged by Lender) incurred by Lender in reviewing plans and
specifications or in making any determinations necessary to implement the
provisions of this Section 5.5(A).
(B) In the event of casualty or loss at any of the Properties, the
Borrowers shall give immediate written notice of the same to the insurance
carrier and to Lender and shall promptly commence and diligently prosecute to
completion, in accordance with the terms hereof, the repair and restoration of
the Property as nearly as possible to the Pre-Existing Condition (a
"RESTORATION"). The Borrowers hereby authorize and empower Lender as
attorney-in-fact for the Borrowers (jointly with the Borrowers unless an Event
of Default has occurred and is continuing), or any of them, to make proof of
loss, to adjust and compromise any claim under insurance policies, to appear in
and prosecute any action arising from such insurance policies, to collect and
receive insurance proceeds, and to deduct therefrom Lender's expenses incurred
in the collection of such proceeds; provided however, that nothing contained in
this Section shall require Lender to incur any expense or take any action
hereunder. The Borrowers further authorize Lender, at Lender's option, (i) to
hold the balance of such proceeds to be used to
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reimburse the Borrowers for the cost of Restoration of any of the Properties or
(ii) subject to Subsection 5.5(C), to apply such proceeds to payment of the
Obligations whether or not then due, in any order. Notwithstanding the
foregoing, in the event of a casualty where the loss does not exceed the
Restoration Threshold, the Borrowers may settle and adjust such claim; provided
that (a) no Event of Default has occurred and is continuing and (b) such
adjustment is carried out in a commercially reasonable and timely manner.
(C) Lender shall not exercise Lender's option to apply insurance
proceeds to payment of the Obligations if all of the following conditions are
met: (i) no Event of Default then exists; (ii) Lender reasonably determines that
there will be sufficient funds to complete the Restoration of the Property to at
least substantially the Pre-Existing Condition and to timely make all payments
due under the Loan Documents during the Restoration of the affected Property;
(iii) Lender reasonably determines that the Net Operating Income of the
Properties (including rental income or business interruption insurance) will be
sufficient to pay principal and interest on the Loan and the Mezzanine Loan and
Operating Revenues of the Properties, after the Restoration thereof to the
Pre-Existing Condition, will be sufficient to meet all Operating Expenses,
payments for Reserves and payments of principal and interest under the Note and
the Mezzanine Loan; (iv) Lender determines that the Restoration of the affected
Property to the Pre-Existing Condition will be completed not later than five (5)
months prior to the expiration of any business interruption insurance, but in no
event later than six (6) months prior to the Maturity Date; (v) less than fifty
percent (50%) of the total floor area of the Improvements has been damaged,
destroyed or rendered unusable as a result of such fire or other casualty; and
(vi) such Property can be restored and repaired substantially to the condition
it was in immediately prior to such casualty and in compliance with all
applicable zoning, building and other laws and codes (the "PRE-EXISTING
CONDITION"). If Lender elects to apply insurance proceeds to payment of the
Obligations, such application shall be made on the Payment Date immediately
following such election in accordance with the terms of the Cash Management
Agreement.
(D) If Lender elects or is obligated to make the insurance
proceeds available for the Restoration of any Property and Lender is holding
such proceeds, the Borrowers agree that, if at any time during the Restoration,
the cost of completing such Restoration, as reasonably determined by Lender,
exceeds the undisbursed insurance proceeds, the Borrowers shall, within ten (10)
Business Days following the written demand by Lender, deposit the amount of such
excess with Lender, and Lender shall first disburse such deposit to pay for the
costs of such Restoration on the same terms and conditions as the insurance
proceeds are disbursed. If the Borrowers deposit such excess with Lender and if,
after completion of the Restoration, any funds remain from the combination of
insurance proceeds and the funds so deposited with Lender by the Borrowers, and
if no Event of Default shall have occurred and be continuing, then Lender shall
promptly disburse to the Borrowers such remaining funds.
(E) Lender may, at Lender's option, condition disbursement of any
insurance proceeds on Lender's approval (which approval shall not be
unreasonably withheld) of plans and specifications of an independent architect
licensed in the state where the Property is located and reasonably satisfactory
to Lender (the "ARCHITECT"), any and all contractors, subcontractors and
materialmen engaged in the Restoration and the contracts under which they have
been engaged, contractor's cost estimates, architect's certificates, waivers of
liens, sworn statements of mechanics and materialmen and such other evidence of
costs, percentage completion of
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construction, application of payments, and satisfaction of liens as Lender may
reasonably require. Lender shall not be obligated to disburse insurance proceeds
more frequently than once every calendar month. If insurance proceeds are
applied to the payment of the Obligations and provided no Event of Default
exists, any such application of proceeds to principal shall be without any
Prepayment Consideration and shall not extend or postpone the due dates of the
monthly payments due under the Note or otherwise under the Loan Documents, or
change the amounts of such payments. If Lender elects to apply all of such
insurance proceeds toward the repayment of the Obligations, the Borrowers shall
(subject to compliance with clauses (A), (B), (D) and (F) of Section 11.4) be
entitled to obtain from Lender a Property Release (without representation or
warranty) of the applicable Property from the Lien of the Deed of Trust relating
to such Property (in which event the Borrowers shall not be obligated to restore
the applicable Property pursuant to Section 5.5(B) above) provided that the
Borrowers pay to Lender the amount, if any, by which the Release Price for such
Property exceeds the insurance proceeds received by Lender and applied to
repayment of the Obligations. If any proceeds are applied to reduce the
Obligations under this Section 5.5, provided that no Event of Default has
occurred and is continuing, no Prepayment Consideration shall be due and payable
in connection with such application. Any amount of insurance proceeds remaining
in Lender's possession after full and final payment and discharge of all
Obligations shall be refunded to, or as directed by, the Borrowers or otherwise
paid in accordance with applicable law. If the Property is sold at foreclosure
or if Lender acquires title to the Property, Lender shall have all of the right,
title and interest of the applicable Borrower in and to any insurance policies
and unearned premiums thereon and in and to the proceeds resulting from any
damage to such Property prior to such sale or acquisition.
(F) In no event shall Lender be obligated to make disbursements of
insurance 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 Architect, less a retainage equal to the lesser of (x) the actual retainage
required pursuant to the permitted contract, or (y) ten percent (10%) of such
costs incurred until the Restoration has been completed. The retainage shall in
no event be less than the amount actually held back by the Borrowers from
contractors, subcontractors and materialmen engaged in the Restoration. The
retainage shall not be released until the Architect certifies to Lender, or, if
no Architect has been retained by Lender, Lender is reasonably satisfied, that
the Restoration has been completed in accordance with the provisions of this
Section 5.5 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 final lien waivers and such other evidence reasonably
satisfactory to Lender that the costs of the Restoration have been paid in full
or will be paid in full out of the retainage.
SECTION 5.6 INSPECTION. Each Borrower shall permit any authorized
representatives designated by Lender to visit and inspect during normal business
hours its Property and its business, including its financial and accounting
records, and to make copies and take extracts therefrom and to discuss its
affairs, finances and business with its officers and independent public
accountants (with such Borrower's representative(s) present), at such reasonable
times during normal business hours and as often as may be reasonably requested.
Unless an Event of Default has occurred and is continuing, Lender shall provide
advance written notice of at least three (3) Business Days prior to visiting or
inspecting any Property or such Borrower's offices.
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SECTION 5.7 O&M PLAN. Each Borrower that is the owner of a Property set forth on
SCHEDULE 5.7 shall cause to be prepared and delivered to Lender an operations
and maintenance program (the "O&M PLANS") with respect to suspected asbestos,
asbestos-containing materials, and/or mold located in its Property as set forth
in the applicable Environmental Reports. Each Borrower shall at all times
implement and carry out the O&M Plan in accordance with its terms. Lender's
requirement that the Borrowers develop and comply with the O&M Plan shall not be
deemed to constitute a waiver or modification of any covenants or agreements of
the Borrowers or Guarantor with respect to Hazardous Material or Environmental
Laws as set forth in the Environmental Indemnity.
SECTION 5.8 INTENTIONALLY DELETED.
SECTION 5.9 COMPLIANCE WITH LAWS AND CONTRACTUAL OBLIGATIONS. The Borrowers will
(A) comply with the requirements of all present and future applicable laws,
rules, regulations and orders of any governmental authority in all jurisdictions
in which it is now doing business or may hereafter be doing business, other than
those laws, rules, regulations and orders the noncompliance with which would not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, (B) maintain all licenses and permits now held or
hereafter acquired by any Borrower, the loss, suspension, or revocation of
which, or failure to renew, could have a Material Adverse Effect and (C)
perform, observe, comply and fulfill all of its material obligations, covenants
and conditions contained in any Contractual Obligation.
SECTION 5.10 FURTHER ASSURANCES. The Borrowers shall, from time to time, execute
and/or deliver such documents, instruments, agreements, financing statements,
and perform such acts as Lender at any time may reasonably request to evidence,
preserve and/or protect the Collateral at any time securing or intended to
secure the Obligations and/or to better and more effectively carry out the
purposes of this Loan Agreement and the other Loan Documents.
SECTION 5.11 PERFORMANCE OF AGREEMENTS AND LEASES. Each Primary Borrower Party
shall duly and punctually perform, observe and comply in all material respects
with all of the terms, provisions, conditions, covenants and agreements on its
part to be performed, observed and complied with (i) hereunder and under the
other Loan Documents to which it is a party, (ii) under all Material Agreements
and Leases and (iii) all other agreements entered into or assumed by such Person
in connection with the Properties, and will not suffer or permit any material
default or event of default (giving effect to any applicable notice requirements
and cure periods) to exist under any of the foregoing except where the failure
to perform, observe or comply with any agreement referred to in this clause
(iii) would not reasonably be expected to have a Material Adverse Effect.
SECTION 5.12 LEASES. (A) Without the prior written consent of Lender, which
shall not be unreasonably withheld or delayed, the Borrowers shall not, nor
shall the Borrowers authorize Manager or any other Person to, (i) enter into any
Material Lease, (ii) cancel or terminate any Material Lease (except to enforce
any such Lease after a default thereunder); (iii) amend or modify and Material
Lease (except for minor modifications and amendments entered into in the
ordinary course of business, consistent with prudent property management
practices, not materially and adversely affecting the economic terms of the
Material Lease); (iv) approve any assignment, sublease or underlease of any
Material Lease (except as required pursuant to the
62
express terms of any existing Lease or Lease hereafter approved by Lender); or
(v) cancel or modify any guaranty, or release any security deposit, letter of
credit, or other item constituting security pertaining to any Material Lease
(except as required pursuant to the express terms of any existing Lease or Lease
hereafter approved by Lender).
(B) Any request for approval of any Material Lease or assignment,
termination, amendment or modification of any Material Lease shall be made to
Lender in writing and together with such request the Borrowers shall furnish to
Lender: (i) such biographical and financial information about the proposed
tenant as Lender may reasonably require in conjunction with its review, (ii) a
copy of the proposed form of Lease (or amendment or modification), and (iii) a
summary of the material terms of such proposed Lease (or amendment or
modification) including, without limitation, rental terms and the term of the
proposed Lease and any options. Lender's approval of any Material Lease or
assignment, termination, amendment or modification of any Material Lease, shall
be deemed given, if the first correspondence from the Borrowers to Lender
requesting such approval is in an envelope marked "PRIORITY" and contains a
bold-faced, conspicuous legend at the top of the first page thereof stating that
"IF YOU FAIL TO RESPOND TO OR TO EXPRESSLY DENY THIS REQUEST FOR APPROVAL IN
WRITING WITHIN FIFTEEN (15) DAYS, YOUR APPROVAL MAY BE DEEMED GIVEN", and is
accompanied by the information and documents required above and any other
information reasonably requested by Lender in writing prior to the expiration of
such fifteen (15) day period in order to adequately review the same has been
delivered and, if Lender fails to respond or to expressly deny such request for
approval in writing within the fifteen (15) day period, a second notice is
delivered to Lender from the Borrowers in an envelope marked "PRIORITY"
requesting approval containing a bold-faced, conspicuous legend at the top of
the first page thereof stating that "IF YOU FAIL TO RESPOND TO OR EXPRESSLY DENY
THIS REQUEST FOR APPROVAL IN WRITING WITHIN TEN (10) DAYS, YOUR APPROVAL SHALL
BE DEEMED GIVEN" and Lender fails to respond or to expressly deny each request
for approval within the ten (10) day period.
Except for security deposits, no Material Lease executed after the Closing Date
shall provide for payment of rent more than one month in advance, and the
Borrowers shall not under any circumstances collect any such rent more than one
month in advance. The Borrowers, at Lender's request, shall furnish Lender with
executed copies of all Material Leases hereafter made. Each new Material Lease
or a separate agreement with the tenant of such Material Lease shall be in
recordable form and shall specifically provide that such Material Lease (i) is
subordinate to the Deeds of Trust; (ii) that the tenant attorns to Lender, such
attornment to be effective upon Lender's acquisition of title to the Property;
(iii) that the tenant agrees to execute such further evidences of attornment as
Lender may from time to time request; (iv) that the attornment of the tenant
shall not be terminated by foreclosure; (v) that in no event shall Lender, as
holder of the Deeds of Trust or as successor landlord, be liable to the tenant
for any act or omission of any prior landlord or for any liability or obligation
of any prior landlord occurring prior to the date that Lender or any subsequent
owner acquire title to the Property; and (vi) that Lender may, at Lender's
option, accept or reject such attornment.
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SECTION 5.13 MANAGEMENT; FRANCHISE AGREEMENT.
(A) The Borrowers shall cause each Manager to manage the
Properties in accordance with the Management Agreements including, without
limitation, maintaining inventory in amounts and type customary for hotels
comparable to each Property. The Borrowers shall (i) perform and observe all of
the material terms, covenants and conditions of the Management Agreement on the
part of each Borrower to be performed and observed, and (ii) promptly notify
Lender of any notice to any of the Borrowers of any material default under the
Management Agreement of which it is aware. If any of the Borrowers shall default
in the performance or observance of any material term, covenant or condition of
the applicable Management Agreement on the part of the Borrowers to be performed
or observed, then, without limiting Lender's other rights or remedies under this
Agreement or the other Loan Documents, and without waiving or releasing the
Borrowers from any of their obligations hereunder or under the applicable
Management Agreement, Lender shall have the right, upon prior written notice to
the Borrower, but shall be under no obligation, to pay any sums and to perform
any act as may be reasonably appropriate to cause such material conditions of
the applicable Management Agreement on the part of the Borrowers to be performed
or observed.
(B) The Borrowers shall not surrender, terminate, cancel, modify
(other than non-material changes), renew or extend the Management Agreement, or
enter into any other Management Agreement with Manager or any new Manager (other
than an Acceptable Manager), or consent to the assignment by the Manager of its
interest under the Management Agreement, in each case without (i) prior to a
Securitization, the express consent of Lender, which consent shall not be
unreasonably withheld, or (ii) after a Securitization, delivery of Rating
Confirmations from each of the Rating Agencies; provided, however, the Borrowers
may terminate the Memphis Interim Agreement at any time provided that (x) the
applicable Property continues to be managed by Lodgian Management Corp. pursuant
to the terms of the applicable Management Agreement in effect as of the Closing
Date, and (y) the applicable Borrower has obtained, in its or Manager's name,
all licenses and permits required to operate the applicable Property. If at any
time Lender consents to the appointment of a new Manager, or if an Acceptable
Manager shall become the Manager, such new Manager, or the Acceptable Manager,
as the case may be, and the Borrowers shall, as a condition of Lender's consent,
or with respect to an Acceptable Manager, prior to commencement of its duties as
Manager, execute a subordination of management agreement in substantially the
form delivered in connection with the closing of the Loan.
(C) Lender shall have the right to require any of the Borrowers to
replace any Manager with a Person chosen by the Borrowers and reasonably
acceptable to Lender (unless such proposed Manager is an Acceptable Manager) and
the applicable Franchisor (to the extent the applicable Franchisor has consent
rights), upon the earliest to occur of any one or more of the following events:
(i) upon the occurrence and during the continuance of an Event of Default; (ii)
thirty (30) days after notice from Lender to the Borrowers if Manager has
engaged in fraud, gross negligence or willful misconduct arising from or in
connection with its performance under the applicable Management Agreement; or
(iii) upon a change of control of the current Manager.
(D) The Borrowers shall not terminate or enter into any Franchise
Agreement without Lender's prior written consent, which may be granted or
withheld in Lender's sole discretion.
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Notwithstanding the foregoing, the following changes to Franchise Agreements
shall be permitted without Lender's prior written consent:
(i) Replacement of any Franchise Agreement with a new
Franchise Agreement in form substantially similar to
a form previously approved by Lender with any
Franchisor that would cause a Tier 3 Hotel to become
either a Tier 2 Hotel or a Tier 1 Hotel, or that
would cause a Tier 2 Hotel to become a Tier 1 Hotel;
(ii) Replacement of any Franchise Agreement with a new
Franchise Agreement in form substantially similar to
a form previously approved by Lender with a
Franchisor that would cause the Property to remain
within the same Category, provided no such
replacement shall occur (in the aggregate) with
respect to more than the lesser of (x) five (5)
Properties, or (y) Properties with Aggregate
Allocated Loan Amounts (in the aggregate) of ten
percent (10%) of the Aggregate Outstanding Principal
Balance;
(iii) Replacement of any Franchise Agreement at a Tier 2
Hotel with a new Franchise Agreement in form
substantially similar to a form previously approved
by Lender for Tier 3 Hotels, provided no such
replacements shall occur (in the aggregate) with
respect to more than the lesser of (x) three (3)
Properties, or (y) Properties with Aggregate
Allocated Loan Amounts (in the aggregate) of two
percent (2%) of the Aggregate Outstanding Principal
Balance; and
(iv) Entering into a new Franchise Agreement in form
substantially similar to a form previously approved
by Lender with an Approved Franchisor (or with
respect to the Property located at 3071 Ross Clark
Circle, Dothan, Alabama (the "DOTHAN HOTEL"), La
Quinta Corporation under the La Quinta brand) for any
of the Non-Flagged Hotels, the Dothan Hotel, and the
Property located at 7330 Plantation Road, Pensacola,
Florida, at which time the applicable Property shall
be deemed to be within the Category determined by the
applicable Franchise Agreement; provided that the La
Quinta brand shall be deemed to be within the Tier 3
Hotel category solely for the purpose of determining
the Dothan Hotel's Category.
In connection with the replacement of any Franchisors permitted hereunder, the
applicable Borrower shall, within ten (10) Business Days of the execution of
such Franchise Agreement, deliver to Lender Franchisor Letter from any
replacement Franchisor in form and substance reasonably acceptable to Lender. In
all cases, each Borrower shall (a) cause the hotel located on the applicable
Property to be operated pursuant to the applicable Franchise Agreement; (b)
promptly perform and observe in all material respects all of the covenants
required to be performed and observed by it under the applicable Franchise
Agreement (including the requirements of any Property Improvement Plan); (c)
promptly notify Lender of any material default under the applicable Franchise
Agreement of which it is aware; and (d) promptly enforce in a commercially
reasonable manner the performance and observance of all of the material
covenants required to be performed and observed by the Franchisor under the
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Franchise Agreement. In addition, the Borrowers shall not, without Lender's
prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed: (x) increase or consent to the increase of the aggregate
amount of any fees under any Franchise Agreement; or (y) otherwise materially
modify, change, supplement, alter or amend, or waive or release any of its
material rights and remedies under, any Franchise Agreement.
Lender's consent to any replacement of any Franchise Agreement, or the
termination, renewal, extension or modification of an existing Franchise
Agreement, shall be deemed given, if the first correspondence from the Borrowers
to Lender requesting such consent is in an envelope marked "PRIORITY" and
contains a bold-faced, conspicuous legend at the top of the first page thereof
stating that "IF YOU FAIL TO RESPOND TO OR TO EXPRESSLY DENY THIS REQUEST FOR
APPROVAL IN WRITING WITHIN FIFTEEN (15) DAYS, YOUR APPROVAL MAY BE DEEMED
GIVEN", and is accompanied by the information and documents required above and
any other information reasonably requested by Lender in writing prior to the
expiration of such fifteen (15) day period in order to adequately review the
same has been delivered and, if Lender fails to respond or to expressly deny
such request for approval in writing within the fifteen (15) day period, a
second notice is delivered to Lender from the Borrowers in an envelope marked
"PRIORITY" requesting approval containing a bold-faced, conspicuous legend at
the top of the first page thereof stating that "IF YOU FAIL TO RESPOND TO OR
EXPRESSLY DENY THIS REQUEST FOR APPROVAL IN WRITING WITHIN TEN (10) DAYS, YOUR
APPROVAL SHALL BE DEEMED GIVEN" and Lender fails to respond or to expressly deny
each request for approval within the ten (10) day period.
SECTION 5.14 MATERIAL AGREEMENTS. The Borrowers shall not enter into or become
obligated under any Material Agreement pertaining to any Property, including
without limitation brokerage agreements, without Lender's prior written
approval, which approval shall not be unreasonably withheld or conditioned;
except that the following Material Agreements shall not require Lender approval:
(i) Leases complying with the Loan Documents, (ii) the Management Agreement,
(iii) the existing Material Agreements described on SCHEDULE 5.14 attached
hereto, (iv) any Franchise Agreement complying with the provisions of Section
5.13(E) or (v) any other agreement that may be terminated without cause and
without payment of a penalty or premium, on not more than thirty (30) days'
prior written notice.
SECTION 5.15 DEPOSITS; APPLICATION OF RECEIPTS. The Borrowers will deposit all
Receipts from the Properties into, and otherwise comply with, the Accounts
established from time to time hereunder. Subject to Article VII hereof and the
Cash Management Agreement, each Borrower shall promptly apply all Receipts to
the payment of all current and past due Operating Expenses, and to the repayment
of all sums currently due or past due under the Loan Documents, including all
payments into the Reserves.
SECTION 5.16 ESTOPPEL CERTIFICATES.
(A) Within ten (10) Business Days following a request by Lender,
the Borrowers shall provide to Lender a duly acknowledged written statement
confirming (i) the amount of the outstanding principal balance of the Loan, (ii)
the terms of payment and maturity date of the Note, (iii) the date to which
interest has been paid, (iv) whether any offsets or defenses exist
66
against the Obligations, and if any such offsets or defenses are alleged to
exist, the nature thereof shall be set forth in detail and (v) that this Loan
Agreement, the Note, the Deeds of Trust and the other Loan Documents are legal,
valid and binding obligations of the Borrowers and have not been modified or
amended, or if modified or amended, describing such modification or amendments.
(B) Within ten (10) Business Days following a written request by
the Borrowers, Lender shall provide to the Borrowers a duly acknowledged written
statement setting forth the amount of the outstanding principal balance of the
Loan, the date to which interest has been paid, and whether Lender has provided
the Borrowers with written notice of any Event of Default. Compliance by Lender
with the requirements of this Section shall be for informational purposes only
and shall not be deemed to be a waiver of any rights or remedies of Lender
hereunder or under any other Loan Document.
SECTION 5.17 INDEBTEDNESS. The Borrowers will not directly or indirectly create,
incur, assume, guaranty, or otherwise become or remain directly or indirectly
liable with respect to any Indebtedness except for the following (collectively,
"PERMITTED INDEBTEDNESS"):
(A) The Obligations;
(B) (i) Unsecured trade payables not evidenced by a note and
arising out of purchases of goods or services in the ordinary course of business
and (ii) Indebtedness incurred in the financing of equipment or other personal
property used at any Property in the ordinary course of business, provided that
(a) each such trade payable is payable not later than ninety (90) days after the
original invoice date and is not overdue by more than thirty (30) days, and (b)
the aggregate amount of such trade payables and Indebtedness relating to
financing of equipment and personal property or otherwise referred to in clauses
(i) and (ii) above (excluding therefrom utility expenses of the Properties and
fees payable to the Franchisors pursuant to the terms of the Franchise
Agreements) outstanding does not, at any time, exceed five percent (5%) of the
outstanding principal balance of the Loan; and
(C) That certain unsecured loan in the original principal amount
of $17,686,292, evidenced by a certain replacement promissory note dated as of
November 15, 2002 given by Servico Center Associates, Ltd. to Servico Palm Beach
General Partner SPE, Inc., the outstanding principal balance of which on the
Closing Date is $17,686,292, and which is subject to the terms that certain
Subordination and Standstill Agreement given by the holder of such note in favor
of Lender and dated as of the Closing Date;
(D) Other Indebtedness of the Borrowers pursuant to the terms of
those certain promissory notes required to be delivered pursuant to the terms of
the Plan of Reorganization with respect to certain tax liabilities of the
Borrowers not to exceed $1,700,000.
In no event shall any Indebtedness other than the Loan be secured, in whole or
in part, by the Properties or any portion thereof or interest therein,
SECTION 5.18 NO LIENS. The obligations of each Borrower under this Section are
in addition to and not in limitation of its obligations under Article XI herein.
The Borrower shall not create, incur, assume or permit to exist any Lien on or
with respect to the Properties, any other
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Collateral or any such direct or indirect ownership interest in the Borrowers,
except the Permitted Encumbrances and Liens on the ownership interests in the
Borrowers securing the Mezzanine Loan.
SECTION 5.19 CONTINGENT OBLIGATIONS. Other than Permitted Indebtedness, no
Primary Borrower Party shall directly or indirectly create or become or be
liable with respect to any Contingent Obligation except Contingent existing on
the Closing Date and described in SCHEDULE 4.4.
SECTION 5.20 RESTRICTION ON FUNDAMENTAL CHANGES. Except as otherwise expressly
permitted in this Loan Agreement, no Primary Borrower Party shall, or shall
permit any other Person to, (i) amend, modify or waive any term or provision of
such Borrower Party's partnership agreement, certificate of limited partnership,
articles of incorporation, by-laws, articles of organization, operating
agreement or other organizational documents so as to violate or permit the
violation of the single-purpose entity provisions set forth in Article IX,
unless required by law; or (ii) liquidate, wind-up or dissolve such Primary
Borrower Party.
SECTION 5.21 TRANSACTIONS WITH RELATED PERSONS. Except for fees and expenses
payable to the Manager under the Management Agreement, the Borrowers shall not
pay any management, consulting, director or similar fees to any Related Person
of the Borrowers or to any director, officer or employee of the Borrowers. The
Borrowers shall not directly or indirectly enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Related Person of any of the Borrowers or
with any director, officer or employee of any Borrower Party, except
transactions in the ordinary course of and pursuant to the reasonable
requirements of the business of the Borrowers and upon fair and reasonable terms
and are no less favorable to any of the Borrowers than would be obtained in a
comparable arm's length transaction with a Person that is not a Related Person
of any Borrower. The Borrowers shall not make any payment or permit any payment
to be made to any Related Person of any of the Borrowers when or as to any time
when any Event of Default shall exist.
SECTION 5.22 BANKRUPTCY, RECEIVERS, SIMILAR MATTERS.
(A) VOLUNTARY CASES. The Borrower Parties shall not commence any
voluntary case under the Bankruptcy Code or under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect.
(B) INVOLUNTARY CASES, RECEIVERS, ETC. The Borrower Parties shall
not apply for, consent to, or aid, solicit, support, or otherwise act, cooperate
or collude to cause the appointment of or taking possession by, a receiver,
trustee or other custodian for all or a substantial part of the assets of any
Borrower. As used in this Loan Agreement, an "INVOLUNTARY BORROWER BANKRUPTCY"
shall mean any involuntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, in which
any of the Borrowers is a debtor or any portion of the Properties is property of
the estate therein. The Borrowers shall not file a petition for, consent to the
filing of a petition for, or aid, solicit, support, or otherwise act, cooperate
or collude to cause the filing of a petition for an Involuntary Borrower
Bankruptcy. In any Involuntary Borrower Bankruptcy, no Borrower Party shall,
without the prior written consent of Lender, consent to the entry of any order,
file any motion, or
68
support any motion (irrespective of the subject of the motion), and the
Borrowers shall not file or support any plan of reorganization. The Borrowers
having any interest in any Involuntary Borrower Bankruptcy shall do all things
reasonably requested by Lender to assist Lender in obtaining such relief as
Lender shall seek, and shall in all events vote as directed by Lender. Without
limitation of the foregoing, each such Borrower shall do all things reasonably
requested by Lender to support any motion for relief from stay or plan of
reorganization proposed or supported by Lender.
SECTION 5.23 ERISA.
(A) NO ERISA PLANS. None of the Primary Borrower Parties will
establish any Employee Benefit Plan, Pension Plan or Multiemployer Plan, or will
commence making contributions to (or become obligated to make contributions to)
any Employee Benefit Plan, Pension Plan or Multiemployer Plan.
(B) COMPLIANCE WITH ERISA. The Borrowers shall not: (i) engage in
any nonexempt prohibited transaction under Section 406 of ERISA or Section 4975
of the IRC; or (ii) except as may be necessary to comply with applicable laws,
establish or amend any Employee Benefit Plan which establishment or amendment
could result in liability to the Borrowers or any ERISA Affiliate or increase
the obligation of the Borrowers, provided that the Borrower shall not be in
default of this covenant if, in either case, any portion of the Loan has been,
or will be, funded with plan assets of any employee benefit plan that either (x)
is subject to Title I of ERISA or any plan that is covered by Section 4975 of
the Code (unless the Lender is eligible to apply for one or more exemptions such
that the Loan will not constitute a nonexempt prohibited transaction under
Section 406 of ERISA) or (y) could subject a Borrower Party or its Affiliates to
an excise tax under Section 4975 of the IRC.
(C) NO PLAN ASSETS. The Borrowers shall not at any time during the
term of this Loan Agreement become (1) an employee benefit plan defined in
Section 3(3) of ERISA which is subject to ERISA, (2) a plan as defined in
Section 4975(e)(1) of the IRC which is subject to Section 4975 of the IRC, (3) a
"governmental plan" within the meaning of Section 3(32) of ERISA or (4) an
entity any of whose underlying assets constitute "plan assets" of any such
employee benefit plan, plan or governmental plan for purposes of Title I or
ERISA, Section 4975 of the IRC or any state statutes applicable to the Borrowers
regulating investments of governmental plans.
SECTION 5.24 PRESS RELEASE. The Borrowers shall not, and shall not permit any
other Person within its control to, disclose the name of Lender or terms of this
Loan Agreement or the Loan Documents in any press release without the prior
written consent of Lender, which shall not be unreasonably withheld.
Notwithstanding the foregoing to the contrary, the Borrowers shall be permitted
to make such filings and disclosures with respect to the Loan as are required by
law.
SECTION 5.25 GROUND LEASES.
(A) NO MODIFICATION. The Borrowers shall not modify or amend any
material or economic terms of, or terminate or surrender any Ground Lease, in
each case without the prior written consent of Lender, which consent may be
withheld by Lender in its sole and absolute
69
discretion. Any attempted or purported material modification, amendment, or any
surrender or termination of any Ground Lease without Lender's prior written
consent shall be null and void and of no force or effect.
(B) PERFORMANCE OF GROUND LEASES. The Borrowers shall fully
perform as and when due each and all of its obligations under each Ground Lease
in accordance with the terms of such Ground Lease, and shall not cause or suffer
to occur any material breach or default in any of such obligations. The
Borrowers shall keep and maintain each Ground Lease in full force and effect.
The Borrowers shall exercise any option to renew or extend any Ground Lease and
give written confirmation thereof to Lender within thirty (30) days after such
option is exercised. Notwithstanding that certain of the obligations of the
Borrowers under this Loan Agreement may be similar or identical to certain of
the obligations of the Borrowers under the Ground Leases, all of the obligations
of the Borrowers under this Loan Agreement are and shall be separate from and in
addition to its obligations under the Ground Leases.
(C) NOTICE OF DEFAULT. If any of the Borrowers shall have or
receive any written notice that any Ground Lease Default has occurred, then the
Borrowers immediately shall notify Lender in writing of the same and immediately
deliver to Lender a true and complete copy of each such notice. Further, the
Borrowers shall provide such documents and information as Lender shall
reasonably request concerning the Ground Lease Default.
(D) LENDER'S RIGHT TO CURE. If any Ground Lease Default shall
occur and be continuing, or if any Ground Lessor asserts that a Ground Lease
Default has occurred (whether or not the Borrowers question or deny such
assertion), then, subject to the terms and conditions of the applicable Ground
Lease, Lender, upon five (5) Business Days' prior written notice to the
Borrowers, unless Lender reasonably determines that a shorter period (or no
period) of notice is necessary to protect Lender's interest in the Ground Lease,
may (but shall not be obligated to) take any action that Lender deems reasonably
necessary, including, without limitation, (i) performance or attempted
performance of the applicable Borrower's obligations under the applicable Ground
Lease, (ii) curing or attempting to cure any actual or purported Ground Lease
Default, (iii) mitigating or attempting to mitigate any damages or consequences
of the same and (iv) entry upon the applicable Ground Leased Property for any or
all of such purposes. Upon Lender's request, each Borrower shall submit
satisfactory evidence of payment or performance of any of its obligations under
each Ground Lease. Lender may pay and expend such sums of money as Lender in its
sole discretion deems necessary or desirable for any such purpose, and the
Borrowers shall pay to Lender within five (5) Business Days of the written
demand of Lender all such sums so paid or expended by Lender, together with
interest thereon from the date of expenditure at the Default Rate.
(E) LEGAL ACTION. The Borrowers shall not commence any action or
proceeding against any Ground Lessor or affecting or potentially affecting any
Ground Lease or the Borrowers' or Lender's interest therein, the effect of which
could cause an event of default or termination of any such Ground Lease, without
the prior written consent of Lender, which consent shall not be unreasonably
withheld, conditioned or delayed. The Borrowers shall notify Lender immediately
if any action or proceeding shall be commenced between any Ground Lessor and
either Borrower, or affecting or potentially affecting any Ground Lease or
either Borrower's or Lender's interest therein (including, without limitation,
any case commenced by
70
or against any Ground Lessor under the Bankruptcy Code). Lender shall have the
option, exercisable upon notice from Lender to the Borrowers, to participate in
any such action or proceeding with counsel of Lender's choice. The Borrowers
shall cooperate with Lender, comply with the reasonable instructions of Lender,
execute any and all powers, authorizations, consents or other documents
reasonably required by Lender in connection therewith, and shall not settle any
such action or proceeding without the prior written consent of Lender, which
consent shall not be unreasonably withheld, conditioned or delayed.
(F) ESTOPPEL CERTIFICATE. Subject to the terms and conditions of
the applicable Ground Lease, the Borrowers shall use commercially reasonable
efforts to obtain and deliver to Lender within the time period required under
the applicable Ground Lease, an estoppel certificate from each Ground Lessor
setting forth (A)(i) the identities of the original lessor and lessee under the
applicable Ground Lease and each of their respective successors, (ii) that the
Ground Lease has not been modified or, if it has been modified, the date of each
modification (together with copies of each such modification), (iii) the rent
payable under the Ground Lease, (iv) the dates to which all rent and other
charges have been paid, (v) whether there are any alleged Ground Lease Defaults
and, if so, setting forth the nature thereof in reasonable detail, and (vi) such
other matters as Lender may reasonably request or (B) the matters required to be
certified by the Ground Lessor under the applicable Ground Lease. The Borrowers
shall not be required to request an estoppel from any Ground Lessor more than
two (2) times in any calendar year.
(G) BANKRUPTCY.
(i) If any Ground Lessor shall reject any Ground Lease
under or pursuant to Section 365 of Title 11 of the Bankruptcy Code, the
Borrowers shall not elect to treat the Ground Lease as terminated but shall
elect to remain in possession of the applicable Ground Leased Property and the
leasehold estate under such Ground Lease. The lien of the Deed of Trust covering
such Property does and shall encumber and attach to all of the Borrowers' rights
and remedies at any time arising under or pursuant to Section 365 of the
Bankruptcy Code, including without limitation, all of such Borrower's rights to
remain in possession of such Property and the leasehold estate.
(ii) The Borrowers acknowledge and agree that in any case
commenced by or against the Borrowers under the Bankruptcy Code, Lender by
reason of the liens and rights granted under the Deed of Trust covering such
Property and the Loan Documents shall have a substantial and material interest
in the treatment and preservation of such Borrower's rights and obligations
under such Ground Lease, and that such Borrower shall, in any such bankruptcy
case, provide to Lender immediate and continuous reasonably adequate protection
of such interests. Each Borrower and Lender agree that such adequate protection
shall include but shall not necessarily be limited to the following:
(a) Lender shall be deemed a party to the Ground
Lease (but shall not have any obligations thereunder) for purposes of Section
365 of the Bankruptcy Code, and shall, provided that, prior to an Event of
Default, no such action by Lender would adversely and materially affect the
Borrowers' ability to prosecute, or defend, any such claims asserted therein,
71
have standing to appear and act as a party in interest in relation to any matter
arising out of or related to the Ground Lease or such Property.
(b) The Borrowers shall serve Lender with copies
of all notices, pleadings and other documents relating to or affecting the
Ground Lease or the applicable Property. Any notice, pleading or document served
by the Borrowers on any other party in the bankruptcy case shall be
contemporaneously served by such Borrower on Lender, and any notice, pleading or
document served upon or received by such Borrower from any other party in the
bankruptcy case shall be served by such Borrower on Lender promptly upon receipt
by such Borrower.
(c) Upon written request of Lender, the
Borrowers shall assume the Ground Lease, and shall take such steps as are
necessary to preserve such Borrower's right to assume the Ground Lease,
including without limitation using commercially reasonable efforts to obtain
extensions of time to assume or reject the Ground Lease under Subsection 365(d)
of the Bankruptcy Code to the extent it is applicable.
(H) If the Borrowers or the applicable Ground Lessor seeks to
reject any Ground Lease or have the Ground Lease deemed rejected, then prior to
the hearing on such rejection Lender shall, subject to applicable law, be given
no less than twenty (20) days' notice and opportunity to elect in lieu of
rejection to have the Ground Lease assumed and assigned to a nominee of Lender.
If Lender shall so elect to assume and assign the Ground Lease, then the
Borrowers shall, subject to applicable law, continue any request to reject the
Ground Lease until after the motion to assume and assign has been heard. If
Lender shall not elect to assume and assign the Ground Lease, then Lender may,
subject to applicable law, obtain in connection with the rejection of the Ground
Lease a determination that the applicable Ground Lessor, at Lender's option,
shall (1) agree to terminate the Ground Lease and enter into a new lease with
Lender on the same terms and conditions as the Ground Lease, for the remaining
term of the Ground Lease, or (2) treat the Ground Lease as breached and provide
Lender with the rights to cure defaults under the Ground Lease and to assume the
rights and benefits of the Ground Lease.
Each Borrower shall join with and support any request by
Lender to grant and approve the foregoing as necessary for adequate protection
of Lender's interests. Notwithstanding the foregoing, Lender may seek additional
terms and conditions, including such economic and monetary protections as it
deems reasonably appropriate to adequately protect its interests, and any
request for such additional terms or conditions shall not delay or limit
Lender's right to receive the specific elements of adequate protection set forth
herein.
Each Borrower hereby appoints Lender as its attorney in fact
to act on behalf of Lender in connection with all matters relating to or arising
out of the assumption or rejection of any Ground Lease, in which the other party
to the lease is a debtor in a case under the Bankruptcy Code. This grant of
power of attorney is present, unconditional, irrevocable, durable and coupled
with an interest.
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SECTION 5.26 MORTGAGED CONDOMINIUM PROPERTY.
(A) NO MODIFICATION. The Condominium Borrowers shall not modify or
amend any material terms of, or terminate any of the Mortgaged Condominium
Property Documents, in each case, without the prior written consent of Lender,
which consent shall not be unreasonably withheld, conditioned or delayed.
(B) PERFORMANCE OF MORTGAGED CONDOMINIUM PROPERTY DOCUMENTS. The
Condominium Borrowers shall fully and faithfully pay when due and payable all
assessments, common charges and other charges payable by the Condominium
Borrowers under the Mortgaged Condominium Property Documents and shall perform
as and when due each of its material obligations under the Mortgaged Condominium
Property Documents in substantial accordance with their respective terms, and
shall not cause or suffer to occur any breach or default in any of such
obligations. The Condominium Borrowers shall keep and maintain each of the
Mortgaged Condominium Property Documents in full force and effect.
(C) NOTICE OF DEFAULT. If the Condominium Borrowers shall receive
any written notice of any Condominium Default, the Condominium Borrowers
immediately shall notify Lender of same and deliver to Lender a true and
complete copy of each such notice, and provide such documents and information as
Lender may reasonably request concerning such Condominium Default.
(D) LENDER'S RIGHT TO CURE. If any Condominium Default shall occur
and be continuing, or if any party to any Mortgaged Condominium Property
Document asserts that a Condominium Default has occurred (whether or not the
Borrowers question or deny such assertion), then, subject to the terms and
conditions of the applicable Mortgaged Condominium Property Documents, after
notice to Condominium Borrower, Lender upon five (5) Business Days' prior
written notice to the Borrowers, unless Lender reasonably determines that a
shorter period (or no period) of notice is necessary to protect Lender's
interest in the Ground Lease, may (but shall not be obligated to) take any
action that Lender deems reasonably necessary to cure such Condominium Default,
including, without limitation, (i) performance or attempted performance of the
Borrowers' obligations under the applicable Mortgaged Condominium Property
Documents, (ii) curing or attempting to cure any actual or purported Condominium
Default, (iii) mitigating or attempting to mitigate any damages or consequences
of the same and (iv) entry upon the Mortgaged Condominium Property for any or
all of such purposes. Upon Lender's request, the Condominium Borrowers shall
submit satisfactory evidence of payment or performance of any of its obligations
under each of the Mortgaged Condominium Property Documents. Lender may pay and
expend such sums of money as Lender in its sole discretion deems necessary or
desirable for any such purpose, and the Borrowers shall pay to Lender within
five (5) Business Days of the written demand of Lender all such sums so paid or
expended by Lender pursuant to this Section 5.26, together with interest thereon
from the date of expenditure at the Default Rate.
(E) PRESERVATION OF CONDOMINIUM. The Condominium Borrowers will do
all things necessary to preserve and to keep unimpaired its material rights,
powers and privileges under the Mortgaged Condominium Property Documents and to
prevent the termination or expiration of the Mortgaged Condominium Property
Documents, or the withdrawal of the Mortgaged
73
Condominium Property from a condominium form of ownership under applicable law,
to the end that the Condominium Borrowers may enjoy all of the material rights
granted to it as a party to the Mortgaged Condominium Property Documents.
(F) NOTICE OF CONDOMINIUM DEFAULTS. The Condominium Borrowers will
(i) promptly notify Lender of the receipt by the Condominium Borrowers of any
notice from the Board of Managers, or the owner of any other unit in the
condominium, covering the Mortgaged Condominium Property, asserting or claiming
a default by the Condominium Borrowers thereunder or lack of compliance by the
Condominium Borrowers with the Mortgaged Condominium Property Documents, (ii)
promptly notify Lender of the receipt by the Condominium Borrowers of any notice
or request from the Board of Managers or owner of any unit of the termination or
purported termination of the Mortgaged Condominium Property Documents or to
withdraw the Mortgaged Condominium Property from condominium ownership pursuant
to applicable law or to seek any action for partition, (iii) promptly notify
Lender of the receipt by the Condominium Borrowers of any notice or request from
the Board of Managers or owner of any unit of the material modification or
change or proposed material modification or change of the Mortgaged Condominium
Property Documents and (iv) promptly cause a copy of each such notice of request
received by the Condominium Borrowers from the Board of Managers or any unit
owner, or from a mortgagee of a mortgage on such other unit, to be delivered to
Lender. The Condominium Borrowers will permit Lender to participate in any such
partition or withdrawal proceeding to the extent permitted by law and the
Mortgaged Condominium Property Documents (but Lender shall not be obligated so
to do). The Condominium Borrowers will promptly deliver to Lender a copy of each
notice, pleading, brief and preliminary, interim and final determination or
decision and other papers received by it in each such partition or withdrawal
proceeding.
(G) INTENTIONALLY DELETED.
(H) STATEMENTS, NOTICES. The Condominium Borrowers will, within
twenty (20) days after demand from Lender (which shall not be required more than
two (2) times in any calendar year), obtain, if and to the extent that the
Condominium Borrowers is entitled to the same under the Mortgaged Condominium
Property Documents, and otherwise request from and make good faith efforts to
obtain, from the Board of Managers and deliver to Lender a duly signed and
acknowledged certificate (signed also by Condominium Borrower) that the
Mortgaged Condominium Property Documents are unmodified and in full force and
effect (or, if the same have been modified in compliance with this Loan
Agreement, that the Mortgaged Condominium Property Documents are in full force
and effect as to modified and that there have been no other modifications),
stating the dates to which the assessments, common charges and other charges
payable under the Mortgaged Condominium Property Documents have been paid and
stating whether to the certifying party's and Condominium Borrower's knowledge
Condominium Borrower's is in compliance with the Mortgaged Condominium Property
Documents, or, if not, specifying each default or failure of compliance of which
the certifying party has knowledge. The Condominium Borrowers will, promptly
upon receipt thereof by Condominium Borrower, furnish Lender with a copy of all
notices and statements, however characterized, issued by the Board of Managers
or relating to the Mortgaged Condominium Property Documents including without
limitation, financial statements and projected budgets.
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SECTION 5.27 LENDER'S EXPENSES. The Borrowers shall pay, on demand by Lender,
all reasonable out-of-pocket expenses, charges, costs and fees (including
reasonable attorneys' fees and expenses) in connection with the negotiation,
documentation, closing, administration, servicing, enforcement interpretation,
and collection of the Loan and the Loan Documents, and in the preservation and
protection of Lender's rights hereunder and thereunder. Without limitation the
Borrowers shall pay all costs and expenses, including reasonable attorneys'
fees, incurred by Lender in any case or proceeding under the Bankruptcy Code (or
any law succeeding or replacing any of the same). At the Closing, Lender is
authorized to pay directly from the proceeds of the Loan any or all of the
foregoing expenses then or theretofore incurred and approved by the Borrowers.
SECTION 5.28 DISTRIBUTIONS. During the continuance of any Event of Default, and
at any time that a Cash Trap Event is in effect, the Borrowers shall not make
any distributions of cash or other property to any Borrower Party, or make any
payments in lieu thereof, without Lender's prior written approval, which may be
granted or withheld in Lender's sole discretion.
SECTION 5.29 COMPLETION OF REQUIRED CAPITAL IMPROVEMENTS. The Borrowers shall
commence the Required Capital Improvements promptly following the Closing and
complete the Required Capital Improvements in accordance with Section 6.5
hereof.
SECTION 5.30 COMPLIANCE WITH PLAN OF REORGANIZATION. The Borrowers shall comply,
and shall cause all other parties under the control of Borrower or Guarantor or
any Affiliates thereof, to comply, in all material respects with the Plan of
Reorganization.
SECTION 5.31 CANCELLATION OF INDEBTEDNESS; SETTLEMENT OF CLAIMS. Unless
otherwise specifically provided herein to the contrary, the Borrowers shall not
cancel any indebtedness from any Person owing to any Borrower, or settle any
claims without Lender's prior written consent which shall not be unreasonably
withheld.
ARTICLE VI
RESERVES
SECTION 6.1 SECURITY INTEREST IN RESERVES; OTHER MATTERS PERTAINING TO RESERVES.
(A) The Borrowers hereby pledge, assign and grant to Lender a
security interest in and to all of the Borrowers' right, title and interest in
and to the Account Collateral, including the Reserves, as security for payment
and performance of all of the Obligations hereunder and under the Note and the
other Loan Documents. The Reserves constitute Account Collateral and are subject
to the security interest in favor of Lender created herein and all provisions of
this Loan Agreement and the other Loan Documents pertaining to Account
Collateral.
(B) In addition to the rights and remedies provided in Article VII
and elsewhere herein, upon the occurrence and during the continuance of any
Event of Default, Lender shall have all rights and remedies pertaining to the
Reserves as are provided for in any of the Loan Documents or under any
applicable law. Without limiting the foregoing, upon and at all times after the
occurrence and during the continuance of an Event of Default, Lender in its sole
and absolute discretion, may use the Reserves (or any portion thereof) for any
purpose, including but not limited to any combination of the following: (i)
payment of any of the Obligations including
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the Prepayment Consideration (if any) applicable upon such payment in such order
as Lender may determine in its sole discretion; provided, however, that such
application of funds shall not cure or be deemed to cure any default; (ii)
reimbursement of Lender for any actual losses or expenses (including, without
limitation, reasonable legal fees) suffered or incurred as a result of such
Event of Default; (iii) payment for the work or obligation for which such
Reserves were reserved or were required to be reserved; and (iv) application of
the Reserves in connection with the exercise of any and all rights and remedies
available to Lender at law or in equity or under this Loan Agreement or pursuant
to any of the other Loan Documents. Nothing contained in this Loan Agreement
shall obligate Lender to apply all or any portion of the funds contained in the
Reserves during the continuance of an Event of Default to payment of the Loan or
in any specific order of priority.
SECTION 6.2 FUNDS DEPOSITED WITH LENDER.
(A) INTEREST, OFFSETS. Except only as expressly provided otherwise
herein, all funds of the Borrowers which are deposited with Lock Box Account
Bank as Reserves hereunder shall be held by Lock Box Account Bank in one or more
Permitted Investments, such Permitted Investments, prior to an Event of Default,
to be as directed by Borrower. All interest which accrues on the Reserves shall
be taxable to the Borrowers and shall be added to and disbursed in the same
manner and under the same conditions as the principal sum on which said interest
accrued. Additional provisions pertaining to investments are set forth in
Article VII. After repayment of all of the Obligations, all funds held as
Reserves will be promptly returned to, or as directed by, the Borrowers.
(B) FUNDING AT CLOSING. The Borrowers shall deposit with Lender
the amounts necessary to fund each of the Reserves as set forth below. Deposits
into the Reserves at Closing may occur by deduction from the amount of the Loan
that otherwise would be disbursed to the Borrowers, followed by deposit of the
same into the applicable Sub-Account or Account of the Lock Box Account in
accordance with the Cash Management Agreement on the Closing Date.
Notwithstanding such deductions, the Loan shall be deemed for all purposes to be
fully disbursed at Closing.
SECTION 6.3 IMPOSITIONS AND INSURANCE RESERVE. On the Closing Date, the
Borrowers shall deposit with Lock Box Account Bank $4,225,548.90 and, pursuant
to the Cash Management Agreement, the Borrowers shall deposit monthly, on each
Payment Date commencing on the Payment date in December 2002, 1/12th of the
annual charges (as reasonably estimated by Lender) for all Impositions and all
Insurance Premiums (other than for D&O Insurance) payable with respect to the
Properties hereunder (said funds, together with any interest thereon and
additions thereto, the "IMPOSITIONS AND INSURANCE RESERVE"). The initial amount
of the monthly deposit to be made to the Impositions and Insurance Reserve from
and after the date hereof is $1,100,249. The Borrowers shall also deposit with
Lock Box Account Bank within ten (10) Business Days of the written demand by
Lender, to be added to and included within such reserve, a sum of money which
Lender reasonably estimates, together with such monthly deposits, will be
sufficient to make the payment of each such charge at least ten (10) Business
Days prior to the date initially due. The Borrowers shall provide Lender with
bills and all other documents necessary for the payment of the foregoing charges
at least thirty (30) days prior to the date on which each payment shall first
become subject to penalty or interest if not paid. So
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long as (i) no Event of Default has occurred and is continuing, (ii) the
Borrowers have provided Lender with the foregoing bills and other documents in a
timely manner, and (iii) sufficient funds are held by Lender for the payment of
the Impositions and insurance premiums relating to the Property, as applicable,
Lender shall pay said items or disburse to the Borrowers from such Reserve an
amount sufficient to pay said items. Interest shall accrue in favor of the
Borrowers on funds in the Impositions and Insurance Reserve. In addition to (and
not in lieu of) the aforementioned reserves, at Closing, the Borrowers shall
deposit with Lock Box Bank the Supplemental Insurance Reserve Payment to be held
in the Impositions and Insurance Reserve. Lender shall be under no obligation to
cause any portion of the Supplemental Insurance Reserve Payment to be released
to the Borrowers for the payment of any Impositions. Notwithstanding the
foregoing to the contrary, provided no Event of Default has occurred and is then
continuing, Lender shall cause the remainder, if any, of the Supplemental
Insurance Reserve Payment to be disbursed to the Borrowers within five (5)
Business Days of the delivery by the Borrowers to Lender of each of the
Insurance Policies required pursuant to the terms of Section 5.4 hereof
providing coverage for a period of one (1) year, together with evidence of the
payment in full of the annual premiums payable for such Insurance Policies.
SECTION 6.4 FF&E RESERVE. On or prior to the Closing Date, Lender or Servicer on
behalf of Lender shall establish and maintain with the Lock Box Bank an account,
for the purpose of creating a reserve for replacements of the furniture,
fixtures and equipment at or in, or used in connection with, the Property (the
"REPLACEMENTS") in accordance with the applicable CapEx/FF&E Budget approved by
Lender (said funds, together with any interest thereon and additions thereto,
the "FF&E RESERVE") which account shall be an Eligible Account entitled "FF&E
Reserve Account for the benefit of Merrill Lynch Mortgage Lending, Inc., as
secured party" and shall be under the sole dominion and control of Lender,
subject to the terms of the Cash Management Agreement. Pursuant to the Cash
Management Agreement, the Borrowers shall deposit with Lock Box Account Bank
monthly, on each Payment Date commencing with the Payment Date in December 2002,
an amount equal to 4.0% of the Operating Revenues generated from the Properties
for the prior calendar month (such amount, the "MONTHLY FF&E PAYMENT"). Funds
held in the FF&E Reserve may be withdrawn by the Borrowers, subject in all
instances to the terms of the Cash Management Agreement, only in accordance with
the approved CapEx/FF&E Budget, and no funds held in the FF&E Reserve shall be
used in connection with the Required Capital Improvements. Upon and at all times
after the occurrence and during the continuance of an Event of Default, no draws
will be permitted from the FF&E Reserve other than for normal repairs,
replacements, maintenance expenses, and otherwise in accordance with the terms
of the Management Agreement, subject, in each instance, to Manager's compliance
with the FF&E reporting requirements set forth in Section 5.1(A)(v)(d).
SECTION 6.5 CAPITAL IMPROVEMENT RESERVE; REQUIRED CAPITAL IMPROVEMENTS. At
Closing, the Borrowers shall reserve from the proceeds of the Loan and shall
deposit with Lock Box Account Bank $6,953,315.50 (said funds, together with any
interest thereon, the "CAPITAL IMPROVEMENT RESERVE"), which funds shall be made
available to the Borrowers solely for payment of certain Capital Improvements
required to be made to the Properties and designated as "Required Capital
Improvements" on the Capital Improvement Plan attached hereto as EXHIBIT A (the
"REQUIRED CAPITAL IMPROVEMENTS") and shall not be used by the Borrowers for
purposes for which any other Reserve is established or for any other purpose
other than completion of the Required Capital Improvements. The Borrowers shall
promptly commence and diligently
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prosecute to completion, subject to Force Majeure, the Required Capital
Improvements within the time periods for each Required Capital Improvement set
forth on EXHIBIT A. Funds held in the Capital Improvement Reserve shall be
disbursed in accordance with Section 6.7. Subject to the foregoing conditions,
the Borrowers shall be entitled to draw any remaining balance in the Capital
Improvement Reserve when all Required Capital Improvements are complete, and
paid for, in accordance with the terms hereof.
Section 6.6 HAZARDOUS MATERIALS REMEDIATION RESERVE. At Closing, the Borrowers
shall reserve from the proceeds of the Loan and shall deposit with Lock Box
Account Bank, an amount equal to $1,039,688.00 (said funds, together with any
interest thereon and additions thereto, the "HAZARDOUS MATERIALS REMEDIATION
RESERVE") for certain work related to Hazardous Materials on the Properties as
indicated in the Environmental Reports for the Properties prepared and delivered
prior to the Closing and as such work is more particularly described on SCHEDULE
6.6 (the "ENVIRONMENTAL WORK"). Prior to the earlier of (x) the date required by
any applicable Governmental Authority or (y) nine (9) months after the Closing,
the Borrowers shall, subject to Force Majeure, complete such Environmental Work
and shall provide to Lender such closure reports, no-further-action letters, or
other evidence of compliance with law as Lender may reasonably require. The
funds contained in the Hazardous Materials Remediation Reserve shall be utilized
by the Borrowers solely for performance of the Environmental Work in accordance
with the Environmental Reports, and shall not be used by the Borrowers for
purposes for which any other Reserve is established. Subject to the Borrowers'
satisfaction of the applicable conditions of Section 6.7, the Borrowers shall be
entitled to draw upon the Hazardous Materials Remediation Reserve to pay for
costs that have been incurred by the Borrowers for such Environmental Work,
provided that the Borrowers deliver to Lender such evidence as may be reasonably
satisfactory to Lender that, after payment of such draw, the funds remaining in
the Hazardous Materials Remediation Reserve shall be sufficient to pay for the
remainder of such Environmental Work. Subject to the foregoing conditions, the
Borrowers shall be entitled to draw any remaining balance in the Hazardous
Materials Remediation Reserve when all such Environmental Work is complete, and
is paid for, in accordance with the terms hereof.
SECTION 6.7 CONDITIONS TO DISBURSEMENTS FROM HAZARDOUS MATERIALS REMEDIATION
RESERVE AND CAPITAL IMPROVEMENT RESERVE; PERFORMANCE OF WORK.
(A) DISBURSEMENTS FROM THE HAZARDOUS MATERIALS REMEDIATION RESERVE
AND CAPITAL IMPROVEMENT RESERVE. Upon the Borrowers' written request for
disbursement, Lender shall authorize Lock Box Account Bank to disburse funds to
or for the account of the Borrowers (x) from the Hazardous Materials Remediation
Reserve, to pay to, or pay on behalf of, the Borrowers for the amount of the
Borrowers' actual bona fide out-of-pocket expenditures or costs incurred for
Environmental Work (the "APPROVED ENVIRONMENTAL EXPENDITURES", and (y) from the
Capital Improvement Reserve, to pay to, or pay on behalf of, the Borrowers for
the amount of the Borrowers' actual bona fide out-of-pocket expenditures or
costs incurred for Required Capital Improvements ("APPROVED CAPITAL IMPROVEMENT
EXPENDITURES"; and together with the Approved Environmental Expenditures,
collectively, "APPROVED EXPENDITURES"; and the related Environmental Work or
Required Capital Improvements to which any such request for disbursement relates
shall be referred to as the "WORK"), upon satisfaction of each of the
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conditions listed on SCHEDULE 6.7 and each of the conditions set forth below in
Lender's reasonable discretion:
(i) Except as provided in this Section 6.7, each request
for disbursement from the Hazardous Materials Remediation Reserve or the Capital
Improvement Reserve (such Reserves, the "WORK RESERVES") shall be made for
completion of the Approved Expenditures for which disbursement is requested.
(ii) A request for disbursement from the Work Reserves may
be made after completion of a portion of the work under such contract, provided
(1) all other conditions in this Loan Agreement for disbursement have been
satisfied, (2) funds remaining in the Hazardous Materials Remediation Reserve
are, in Lender's reasonable judgment, sufficient to complete the Environmental
Work when required and/or funds remaining in the Capital Improvement Reserve
are, in Lender's reasonable judgment, sufficient to complete such item of
Required Capital Improvements and any other Required Capital Improvements
remaining to be performed, as the case may be, and (3) if reasonably required by
Lender, each contractor or subcontractor receiving payments in excess of
$100,000 under such contract shall provide a waiver of lien with respect to
amounts which have been paid to that contractor or subcontractor.
(iii) To the extent the contract with the relevant
contractor or supplier provides for a retainage, each disbursement from a Work
Reserve, except for a final disbursement, shall be in the amount of actual costs
incurred less the percentage of such costs that the contract with the relevant
contractor or supplier specifies to be retained and advanced as part of the
final disbursement. No funds will be advanced for materials stored at any
Property unless such materials are properly stored and secured at the applicable
Property in accordance with the Borrowers' customary procedures and sound
construction practices as reasonably determined by Lender. No funds will be
advanced for materials stored at any location other than at the Properties
unless Lender determines in its reasonable discretion that Lender has a
perfected first priority security interest in any such materials.
(iv) The amount of all invoices in connection with the
Work with respect to which a disbursement is requested and which has been
approved by Lender shall be disbursed by Lock Box Account Bank as directed by
the Borrowers (in which event, the Borrowers covenant and agree to promptly pay
such invoices) or, if an Event of Default has occurred and is continuing, at
Lender's option and in Lender's sole and absolute discretion, directly to the
contractor, supplier, materialman, mechanic or subcontractor indicated on said
invoices unless already paid by the Borrowers and Lender has received
satisfactory evidence of such payment in which case Lender shall reimburse the
Borrowers. If the Borrowers request that any amounts be disbursed directly to
the Borrowers pursuant to the foregoing sentence, the Borrowers shall be
required to deliver evidence reasonably acceptable to Lender of payment of all
invoices for which disbursements were previously made to the Borrowers as a
condition to such requested disbursement.
(v) No more than two (2) disbursements will be made by
Lender from the Hazardous Materials Remediation Reserve or the Capital
Improvement Reserve in any calendar month, and, if made in accordance herewith
or otherwise approved by Lender, requested disbursements will be made within
five (5) Business Days after the request therefor. Lender
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shall not be required to make any disbursement from a Work Reserve with respect
to the Property unless such requested disbursement is in an amount equal to or
greater than $25,000 (other than the final disbursement).
(vi) Lender reserves the right, at its option and as a
condition to any disbursement from a Work Reserve, to approve (which shall not
be unreasonably withheld, delayed or conditioned) (i) all drawings and plans and
specifications, if any, for any Work which require aggregate payments in amounts
exceeding the greater of (x) five percent (5%) of the Aggregate Allocated Loan
Amount with respect to the applicable Property or (y) $250,000, and (ii) all
contracts and work orders with materialmen, mechanics, suppliers,
subcontractors, contractors and other parties providing labor or materials in
connection with any Work which require aggregate payments in amounts exceeding
the greater of (x) five percent (5%) of the Aggregate Allocated Loan Amount with
respect to the applicable Property or (y) $250,000. Upon Lender's reasonable
request, the Borrowers shall assign (to the extent assignable) any drawings,
plans and specifications, contracts or subcontracts to Lender. Drawings, plans
and specifications, contracts and work orders approved by Lender shall not be
changed in any material respect without Lender's prior written consent, which
shall not be unreasonably withheld, delayed or conditioned.
(vii) The Borrowers shall have delivered a certificate to
Lender from an Architect certifying that the Work has been completed in a good
and workmanlike manner in accordance with all applicable laws for any item in
excess of the greater of (x) five percent (5%) of the Aggregate Allocate Loan
Amount with respect to the applicable Property or (y) $250,000. Lender may
retain its own architect or engineer ("LENDER'S CONSULTANT") to review any plans
and specifications for any items in excess of the greater of (x) five percent
(5%) of the Aggregate Allocated Loan Amount with respect to the applicable
Property or (y) $250,000, and to periodically inspect any Work at the Borrowers'
sole cost and expense.
(viii) The Borrowers shall have delivered to Lender a
certificate of the Borrowers certifying as to the actual costs which were
incurred by the Borrowers to complete such Work, which costs shall not
materially exceed the amount budgeted for such Work under the Capital
Improvement Plan then in effect unless approved by Lender, which shall not be
unreasonably withheld, delayed or conditioned (together with supporting
documentation reasonably acceptable to Lender).
(ix) The Borrowers shall have delivered to Lender all
necessary material certificates, authorizations, permits and licenses which are
required to permit the construction and completion of the Work, as issued by the
appropriate Governmental Authority. The Borrowers, to the full extent permitted
by applicable law, hereby assigns to Lender as additional security for the
payment of the Obligations and the observance and performance by the Borrowers
of the terms, covenants and provisions of the Loan Documents all right, title
and interest which the Borrowers may now have or may hereafter acquire in and to
such certificates, authorizations, permits and licenses.
(x) Lender may require an inspection of the Property
prior to making a monthly disbursement from the applicable Work Reserve in order
to verify completion of the Work for which disbursement is sought in excess of
the greater of (x) five percent (5%) of the
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Aggregate Allocated Loan Amount with respect to the applicable Property or (y)
$250,000. Lender may require that such inspection be conducted by Lender's
Consultant and/or may require a copy of a certificate of completion by an
independent qualified architect or engineer acceptable to Lender prior to the
disbursement of any amounts from the applicable Work Reserve. The Borrowers
shall pay the reasonable out-of-pocket expense of such inspections as reasonably
required hereunder, whether such inspections are conducted by Lender, Servicer,
Lender's Consultant or by an independent qualified professional.
(B) PERFORMANCE OF WORK.
(i) The Borrowers shall complete all Work in a good and
workmanlike manner as soon as practicable following the commencement thereof
substantially in accordance with the applicable budget approved by Lender in
accordance with the terms of this Loan Agreement. The insufficiency of the
balance in the applicable Work Reserve shall not relieve the Borrowers from
their obligations to perform and complete the related Work as herein provided or
to fulfill all other preservation and maintenance covenants in the Loan
Documents.
(ii) If Lender determines in its reasonable discretion
that any Work is not being performed in a workmanlike or timely manner or that
any Work has not been completed in a workmanlike manner, Lender shall have the
option to withhold disbursement for such unsatisfactory work and so notify the
Borrowers with reasonable detail regarding the basis for Lender's
dissatisfaction and, after the expiration of forty-five (45) days from the
giving of such notice by Lender to the Borrowers of such unsatisfactory work
without the cure thereof (or, if such unsatisfactory work is susceptible of a
cure but cannot reasonably be cured within said forty-five (45) day period and
provided that the Borrowers shall have commenced to cure such unsatisfactory
work within said forty-five (45) day period and thereafter diligently and
expeditiously proceeds to cure the same, after the expiration of such longer
period as is reasonably necessary for the Borrowers in the exercise of due
diligence to cure such unsatisfactory work, up to a maximum of an additional
sixty (60) days, subject to Force Majeure, without the cure thereof). Lender may
proceed under existing contracts or contract with third parties to complete such
Work, as the case may be, and apply amounts contained in the applicable Work
Reserve toward the labor and materials necessary to complete the same, without
providing any additional prior notice to the Borrowers, and exercise any and all
other remedies available to Lender upon and during the continuance of an Event
of Default hereunder.
(iii) In order to facilitate Lender's completion or making
of any Work pursuant to Section 6.7(B)(ii) above, the Borrowers grant Lender the
right to enter onto each Property during normal business hours after the
expiration of the notice specified above and perform, subject to the rights of
tenants, any and all work and labor necessary to complete the applicable Work
and/or employ watchmen to protect the Property from damage. All sums so expended
by Lender shall be deemed to have been advanced under the Loan to the Borrowers
and secured by the applicable Deed of Trust. For this purpose, the Borrowers
constitute and appoint Lender their true and lawful attorney-in-fact with full
power of substitution to complete or undertake the applicable Work in the name
of the Borrowers pursuant to Section 6.7(B)(ii) above. Such power of attorney
shall be deemed to be a power coupled with an interest and cannot be revoked.
Upon the occurrence and during the continuance of an Event of Default, the
Borrowers empower said attorney-in-fact as follows: (i) to use any funds in the
applicable Work Reserve for the purpose
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of making or completing any Work; (ii) to make such additions, changes and
corrections to any Work as shall be reasonably necessary or desirable to
complete the same; (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
any Work, or for clearance of title; (v) to execute all applications and
certificates in the name of the Borrowers which may be required by any of the
contract documents; (vi) in its reasonable discretion, to prosecute and defend
all actions or proceedings in connection with any Property or the rehabilitation
and repair of such Property; and (vii) to do any and every act which the
Borrowers might do in their own behalf to fulfill the terms of this Loan
Agreement.
(iv) Nothing in this Section shall: (i) make Lender
responsible for making or completing any Work; (ii) require Lender to expend
funds in addition to the amounts on deposit in the applicable Work Reserve to
make or complete any Work; (iii) obligate Lender to proceed with any Work; or
(iv) obligate Lender to demand from the Borrowers additional sums to make or
complete any Work.
(v) The Borrowers shall permit Lender and Lender's agents
and representatives (including, without limitation, Lender's engineer, architect
or inspector) or third parties performing any Work pursuant to this Section 6.7
to enter onto any Property during normal business hours upon reasonable notice
(subject to the rights of tenants under their Leases) to inspect the progress of
any Work and all materials being used in connection therewith, to examine all
plans and shop drawings relating thereto which are or may be kept at any
Property, and to complete any Work made pursuant to Section 6.7(B)(ii). The
Borrowers shall use commercially reasonable efforts to cause all contractors and
subcontractors to cooperate with Lender or Lender's representatives or such
other persons described above in connections with inspections described in this
Section 6.7(B) or the completion of the Work pursuant to this Section 6.7(B).
(vi) All Work and all materials, equipment, fixtures and
any other item comprising a part thereof shall be constructed, installed or
completed, as applicable, free and clear of all mechanic's, materialman's or
other liens (except for the Permitted Encumbrances).
(vii) All Work shall comply with all applicable legal
requirements of all Governmental Authorities having jurisdiction over the
Properties and applicable insurance requirements, including, without limitation,
applicable building codes, special use permits, environmental regulations and
requirements of insurance underwriters.
(C) INDEMNIFICATION. The Borrowers shall indemnify Lender and hold
Lender harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations, out-of-pocket costs and expenses
(including, without limitation, litigation costs and reasonable attorneys fees
and expenses) arising from or in any way connected with the performance of the
Work, except to the extent caused by the bad faith, willful misconduct or gross
negligence of Lender. The Borrowers shall assign to Lender all rights and claims
the Borrowers may have against all Persons supplying labor or materials in
connection with the Work; provided, however, that Lender may not pursue any such
right or claim or pursue any
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other action with respect to such rights and claims unless an Event of Default
has occurred and remains uncured.
SECTION 6.8 CASH TRAP RESERVE. (i) If, at any time prior to the repayment of the
Obligations in full, a Cash Trap Event shall occur, then, from and after the
occurrence of such Cash Trap Event and for so long as such Cash Trap Event
continues to exist, all Excess Cash Flow (except as otherwise expressly provided
below) shall be deposited with Lender (or its Servicer or agent) and held in the
Lock Box Account in accordance with the terms of the Cash Management Agreement
(said funds, together with any interest thereon, the "CASH TRAP RESERVE"). A
"CASH TRAP EVENT" shall occur as of any Calculation Date when (x) the Debt Yield
is less than the Minimum Debt Yield or (y) the Debt Service Coverage Ratio is
less than the Minimum DSCR, in each case for the trailing twelve (12) month
period ending on such Calculation Date and shall continue to exist until such
time as the Minimum Debt Yield and the Minimum DSCR tests have been satisfied
for three (3) consecutive Calculation Dates (on a trailing twelve (12) month
basis) following such Calculation Date. Notwithstanding that the Debt Yield is
less than the Minimum Debt Yield or the Debt Service Coverage Ratio is less than
the Minimum DSCR as of any Calculation Date, no Cash Trap Event shall be deemed
to have occurred as a result of such event if the Borrowers make a principal
prepayment of the Aggregate Outstanding Principal Balance (which prepayment
amount shall be disbursed in accordance with the term of the Cash Management
Agreement) in such amounts, and applied, on the next Payment Date), within three
(3) Business Days after the date of delivery of the financial statements
disclosing the existence of such Cash Trap Event (or the date on which such
financial statements are required to be delivered pursuant to Section 5.1), in
an amount equal to the greater of (x) one percent (1%) of the Aggregate
Outstanding Principal Balance, or (y) 120% of the amount, as determined by
Lender in its reasonable discretion, sufficient to cause the Debt Yield to meet
or exceed the Minimum Debt Yield and the Debt Service Coverage Ratio to meet or
exceed the Minimum DSCR if such calculations were recalculated as provided above
assuming that such amount was applied to reduce the Aggregate Outstanding
Principal Balance as of the first day of the relevant measuring period. During
the continuance of a Cash Trap Event, any funds on deposit in the Cash Trap
Reserve may, at the Borrowers' election, be retained in the Cash Trap Reserve or
may be applied to (i) prepayment of the Aggregate Outstanding Principal Balance
as provided above, (ii) Capital Expenditures reasonably approved by Lender, or
(iii) scheduled payments (not to exceed $3,000,000 in the aggregate) of
principal and interest under the Loan and the Mezzanine Loan (to be applied in
accordance with the terms of the Cash Management Agreement). Any funds of
deposit in the Cash Trap Reserve shall continue to be held as additional
Collateral in accordance with this Section 6.8 until the earlier of (a) the date
that such funds are applied or disbursed pursuant to the foregoing sentence and
(b) the date the Minimum Debt Yield and the Minimum DSCR tests have each been
satisfied for three (3) consecutive months (as determined above), at which time,
provided no Event of Default exists, such funds shall be released to the
Borrowers. The existence of a Cash Trap Event shall be determined by Lender in
its reasonable good faith determination. If Lender determines that a Cash Trap
Event has occurred, Lender shall send the Borrowers written notice thereof.
Notwithstanding any provision herein to the contrary, if an Event of Default has
occurred and is continuing, all funds on deposit in the Cash Trap Reserve and
any subsequent Excess Cash Flow, while such Event of Default is continuing, may
be applied by Lender to payment of the Loan (including payment of any Prepayment
Consideration) or other Obligations (or to the obligations of the Mezzanine
Borrowers to Mezzanine Lender) as Lender may elect.
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ARTICLE VII
LOCK BOX; CLEARING ACCOUNT;
CENTRAL ACCOUNT; CASH MANAGEMENT
SECTION 7.1 ESTABLISHMENT OF DEPOSIT ACCOUNT AND LOCK BOX ACCOUNT.
(A) (i) DEPOSIT ACCOUNT. On or before the Closing Date, one or
more deposit accounts shall be established at the Borrowers' sole cost and
expense in the name of Lender, as secured party hereunder (said accounts, and
any accounts replacing same in accordance with this Loan Agreement and the
Deposit Account Agreement, collectively, the "DEPOSIT ACCOUNT") with one or more
financial institutions reasonably approved by Lender (collectively, the "DEPOSIT
BANK"), pursuant to one or more agreements (collectively, the "DEPOSIT ACCOUNT
AGREEMENT") substantially similar to Lender's form or otherwise in form and
substance reasonably acceptable to Lender, executed and delivered by the
Borrowers and the Deposit Bank. The Deposit Account shall be under the sole
dominion and control of Lender (which dominion and control may be exercised by
Servicer). Among other things, the Deposit Account Agreement shall provide that
the Borrowers shall have no access to or control over the Deposit Account, that
all available funds on deposit in the Deposit Account shall be transferred by
wire transfer (or transfer via the ACH System) on each Business Day by the
Deposit Bank into the Lock Box Account, for application in accordance with the
Cash Management Agreement. The Deposit Bank and the Lock Box Account Bank shall
be directed to deliver to the Borrowers copies of bank statements and other
information made available by the Deposit Bank and the Lock Box Account Bank
concerning the Deposit Account and the Lock Box Account.
(ii) Upon establishing the Deposit Account, (1) the
Borrowers shall cause any and all Operating Revenues, including distributions or
other payments made directly or indirectly to the Borrowers, Manager, or any of
their respective Affiliates, from any Beverage Company, but excluding any award
made to the Borrowers with respect to the Pre-Closing Condemnation, to be
deposited promptly into the Deposit Account and in no event later than two (2)
Business Days after the same are paid to or for the benefit of the Borrowers,
and (2) the Borrowers shall each obtain an agreement (each, a "CREDIT CARD
RECEIVABLES PAYMENT DIRECTION LETTER") from each of the Persons paying or
disbursing credit card receivables (the "CREDIT CARD COMPANIES"), substantially
similar to Lender's form or otherwise in form and substance reasonably
acceptable to Lender, pursuant to which the Credit Card Companies agree to pay
all credit card receivables into the Lock Box Account, and acknowledge and agree
that Lender shall have a first priority perfected security interest in such
credit card receivables. To the extent that the Borrowers or any Person on the
Borrowers' behalf holds any Receipts, whether in accordance with this Loan
Agreement or otherwise, the Borrowers shall be deemed to hold the same in trust
for Lender for the protection of the interests of Lender hereunder and under the
Loan Documents. The Borrowers represent and warrant that, as of the date hereof,
the only Credit Card Companies paying or disbursing credit card receivables with
respect to the Property are Chase Merchant Services, American Express, Discover
Financial Service, Diners Club, JCB (Japanese Credit Bureau), and, if any of the
Borrowers shall hereafter enter into an agreement with any other Credit Card
Company pursuant to which such Credit Card Company shall pay credit card
receivables with respect to the Properties, such Borrower shall promptly obtain
a Credit Card Receivables Payment Direction Letter in form and substance
reasonably acceptable to Lender from such Credit Card Company.
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(iii) The Borrowers shall pay all reasonable out-of-pocket
costs and expenses incurred by Lender in connection with the transactions and
other matters contemplated by this Section 7.1, including but not limited to,
Lender's reasonable attorneys fees and expenses, and all reasonable fees and
expenses of the Deposit Bank and the Lock Box Account Bank, including without
limitation their reasonable attorneys fees and expenses.
(B) LOCK BOX ACCOUNT. On or before the Closing Date, pursuant to
the terms of the Cash Management Agreement, an Eligible Account shall be
established in the name of Lender, as secured party hereunder, to serve as the
"Lock Box Account" (said account, and any account replacing the same in
accordance with this Loan Agreement and the Cash Management Agreement, the "LOCK
BOX ACCOUNT"; and the depositary institution in which the Lock Box Account is
maintained, the "LOCK BOX ACCOUNT BANK"). The Lock Box Account shall be under
the sole dominion and control of Lender (which dominion and control may be
exercised by Servicer); and except as expressly provided hereunder and/or in the
Cash Management Agreement, the Borrowers shall not have the right to control or
direct the investment or payment of funds therein during the continuance of an
Event of Default. Lender may elect to change any financial institution in which
the Lock Box Account shall be maintained if such institution is no longer an
Eligible Bank, upon not less than five (5) Business Days' notice to the
Borrower. The Lock Box Account shall be deemed to contain such sub-accounts as
Lender may designate ("SUB-ACCOUNTS"), which may be maintained as separate
ledger accounts and need not be separate Eligible Accounts. The Sub-Accounts
shall include the following as more particularly described in the Cash
Management Agreement.
(i) "DEBT SERVICE SUB-ACCOUNT" shall mean the Sub-Account
of the Lock Box Account established for the purposes of reserving for payments
of principal and interest and other amounts due under the Loan Documents (but
without duplication of amounts covered under item (ii) below); and
(ii) "RESERVE SUB-ACCOUNTS" shall mean the Sub-Accounts of
the Lock Box Account established for the purpose of holding funds in the
Reserves including: (a) the "Imposition and Insurance Reserve Sub-Account"; (b)
the "Hazardous Materials Remediation Reserve Sub-Account"; (c) the
"Extraordinary Receipts Sub-Account" (d) the "Mezzanine Loan Debt Service
Sub-Account"; and (e) the "Cash Trap Reserve Sub-Account".
SECTION 7.2 APPLICATION OF FUNDS IN LOCK BOX ACCOUNT. Funds in the Lock Box
Account shall be allocated to the Sub-Accounts or the other Accounts (or paid,
as the case may be) in accordance with the Cash Management Agreement.
SECTION 7.3 APPLICATION OF FUNDS AFTER EVENT OF DEFAULT. If any Event of Default
shall occur and be continuing, then notwithstanding anything to the contrary in
this Section or elsewhere, Lender shall have all rights and remedies available
under applicable law and under the Loan Documents. Without limitation of the
foregoing, for so long as an Event of Default exists, Lender may apply any and
all funds in the Deposit Account, the FF&E Reserve, the Lock Box Account, the
Hazardous Materials Remediation Reserve Sub-Account, the Extraordinary Receipts
Sub-Account, the Cash Trap Reserve Sub-Account and/or any Sub-Accounts against
all or any portion of any of the Obligations, in any order.
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ARTICLE VIII
DEFAULT, RIGHTS AND REMEDIES
SECTION 8.1 EVENT OF DEFAULT.
"EVENT OF DEFAULT" shall mean the occurrence or existence of any one or
more of the following:
(A) SCHEDULED PAYMENTS. Failure of the Borrowers to pay any
scheduled payment amount when the same is due under this Loan Agreement, the
Note, or any other Loan Documents (whether such amount is interest, principal,
Reserves, or otherwise), or to pay for any Insurance Policies required pursuant
to Section 5.4 hereof; or
(B) OTHER PAYMENTS. Failure of the Borrowers to pay any amount
from time to time owing under this Loan Agreement, the Note, or any other Loan
Documents (other than amounts subject to the preceding paragraph) within ten
(10) days after written notice to the Borrowers; or
(C) BREACH OF REPORTING PROVISIONS. Failure of any Borrower Party
to perform or comply with any term or condition contained in Section 5.1 which
continues for a period of ten (10) days after written notice to the Borrowers
(except that no notice or grace period shall be granted for any breach under
Section 5.1(H)); or
(D) BREACH OF PROVISIONS REGARDING INSURANCE, TRANSFERS, LIENS,
SINGLE PURPOSE. Breach or default under any of Section 5.4, 5.12, 5.17, 5.18,
5.19, 5.20, Article IX, or Section 11.1 (provided that in the case of an
involuntary Lien under Section 5.18 or 11.1, the same shall not constitute an
Event of Default if within thirty (30) days after the filing thereof, the
Borrowers shall either (i) cause the same to be removed of record, or (ii)
provide to Lender security for the same in an amount and pursuant to terms both
satisfactory to Lender in Lender's sole discretion; provided however that if (x)
the default under Section 5.18 or 11.1 is capable of cure but with diligence
cannot be cured within such period of thirty (30) days, (y) the Borrowers (or
the applicable Borrower Party) has commenced the cure within such thirty (30)
day period and has pursued such cure diligently, and (z) each Borrower delivers
to Lender promptly following written demand (which demand may be made from time
to time by Lender) evidence reasonably satisfactory to Lender of the foregoing,
then such period shall be extended for so long as is reasonably necessary for
the Borrowers in the exercise of due diligence to cure such default, but in no
event beyond ninety (90) days after the original notice of default); or
(E) BREACH OF WARRANTY. Any representation, warranty,
certification or other statement made by any Borrower, Guarantor or Manager
thereof in any Loan Document or in any statement or certificate at any time
given in writing pursuant to or in connection with any Loan Document is false in
any material respect as of the date made; or
(F) OTHER DEFAULTS UNDER LOAN DOCUMENTS. A default shall occur in
the performance of or compliance with any term contained in this Loan Agreement
or the other Loan Documents and such default is not fully cured within thirty
(30) days after receipt by the Borrowers of written notice from Lender of such
default (other than occurrences described in other provisions of this Section
8.1 for which a different grace or cure period is specified or which constitute
immediate Events of Default); provided however that if (i) the default is
capable
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of cure but with diligence cannot be cured within such period of thirty (30)
days, (ii) the Borrowers (or the applicable Borrower Party) has commenced the
cure within such thirty (30) day period and has pursued such cure diligently,
and (iii) each Borrower delivers to Lender promptly following written demand
(which demand may be made from time to time by Lender) evidence reasonably
satisfactory to Lender of the foregoing, then such period shall be extended for
so long as is reasonably necessary for the Borrowers in the exercise of due
diligence to cure such default, but in no event beyond one hundred and twenty
(120) days after the original notice of default; or
(G) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) A
court enters a decree or order for relief with respect to any Borrower Party, in
an Involuntary Borrower Bankruptcy, which decree or order is not stayed or other
similar relief is not granted under any applicable federal or state law unless
dismissed within ninety (90) days; (ii) the occurrence and continuance of any of
the following events for ninety (90) days unless dismissed or discharged within
such time: (x) an Involuntary Borrower Bankruptcy is commenced, (y) a decree or
order of a court for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over any Borrower
Party or over all or a substantial part of its property, is entered, or (z) an
interim receiver, trustee or other custodian is appointed without the consent of
any Borrower Party, for all or a substantial part of the property of such
Person; or
(H) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) An
order for relief is entered with respect to any Borrower Party, or any Borrower
Party commences a voluntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary case or to the
conversion of an involuntary case to a voluntary case under any such law or
consents to the appointment of or taking possession by a receiver, trustee or
other custodian for any Borrower Party or for all or a substantial part of the
property of any Borrower Party; (ii) any Borrower Party makes any assignment for
the benefit of creditors; or (iii) the Board of Directors or other governing
body of any Borrower Party adopts any resolution or otherwise authorizes action
to approve any of the actions referred to in this subsection 8.1(H); or
(I) BANKRUPTCY INVOLVING OWNERSHIP INTERESTS OR PROPERTIES. Other
than as described in either of Subsections 8.1(G) or 8.1(H), all or any portion
of the Collateral becomes property of the estate or subject to the automatic
stay in any case or proceeding under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect (provided
that if the same occurs in the context of an involuntary proceeding, it shall
not constitute an Event of Default if it is dismissed or discharged within
ninety (90) days following its occurrence); or
(J) SOLVENCY. Any Borrower Party ceases to be solvent or admits in
writing its present or prospective inability to pay its debts as they become
due; or
(K) JUDGMENT AND ATTACHMENTS. Any lien, money judgment, writ or
warrant of attachment, or similar process is entered or filed against any
Borrower Party or any of its assets,, which claim is not fully covered by
insurance (other than with respect to the amount of commercially reasonable
deductibles permitted hereunder), would have a Material Adverse
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Effect and remains undischarged, unvacated, unbonded or unstayed for a period of
forty-five (45) days; or
(L) INJUNCTION. The Borrowers are enjoined, restrained or in any
way prevented by the order of any court or any administrative or regulatory
agency from conducting all or any material part of their business and such order
continues for more than thirty (30) days; or
(M) INVALIDITY OF LOAN DOCUMENTS. This Loan Agreement, any Deed of
Trust or any of the Loan Documents for any reason ceases to be in full force and
effect or ceases to be a legally valid, binding and enforceable obligation of
the Borrowers or any Lien securing the Obligations shall, in whole or in part,
cease to be a perfected first priority Lien, subject to the Permitted
Encumbrances (except in any of the foregoing cases in accordance with the terms
hereof or under any other Loan Document) and the Borrowers do not take all
actions requested by Lender to correct such defect within ten (10) days after
the written request by Lender to take such action, or any Person under the
control of the Borrowers or Guarantor who is a party thereto, other than Lender,
denies that it has any further liability (as distinguished from denial of the
existence of a Default or Event of Default) under any Loan Documents to which it
is party, or gives notice to such effect; or
(N) CROSS-DEFAULT WITH OTHER LOAN DOCUMENTS. A default beyond any
applicable grace periods shall occur under any of the other Loan Documents; or
(O) DEFAULT UNDER MANAGEMENT AGREEMENTS OR FRANCHISE AGREEMENTS.
(i) An Uncured Franchise Default occurs; (ii) or any breach or default shall
occur in the material obligations of the Borrowers under any of the Management
Agreements, and such breach or default either is of such a nature or continues
for such a period of time beyond applicable notice and cure periods, if any,
that Manager shall have the right to exercise material remedies as a consequence
thereof; or
(P) GROUND LEASE/MORTGAGED CONDOMINIUM PROPERTY. Any default by
any of the Borrowers beyond any applicable grace period shall occur under any
Ground Lease or any Mortgaged Condominium Property Document or any actual or
attempted surrender, termination, modification or amendment of any Ground Lease
or any Mortgaged Condominium Property Document without Lender's prior written
consent.
If more than one of the foregoing paragraphs shall describe
the same condition or event, then Lender shall have the right to select which
paragraph or paragraphs shall apply. In any such case, Lender shall have the
right (but not the obligation) to designate the paragraph or paragraphs which
provide for non-written notice (or for no notice) or for a shorter time to cure
(or for no time to cure).
SECTION 8.2 ACCELERATION AND REMEDIES
(A) Upon the occurrence and during the continuance of any Event of
Default described in any of Subsections 8.1(G), 8.1(H), or 8.1(I), the unpaid
principal amount of and accrued interest and fees on the Loan and all other
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other requirements of any kind, all of which are hereby
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expressly waived by the Borrowers. Upon and at any time after the occurrence of
any other Event of Default, at the option of Lender, which may be exercised
without notice or demand to anyone, all or any portion of the Loan and other
Obligations shall immediately become due and payable.
(B) Upon the occurrence and during the continuance of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against the Borrowers under this Loan Agreement or
any of the other Loan Documents, or at law or in equity, may be exercised by
Lender at any time and from time to time, whether or not all or any of the
Obligations shall be declared due and payable, and whether or not Lender shall
have commenced any foreclosure proceeding or other action for the enforcement of
its rights and remedies under any of the Loan Documents with respect to the
Properties. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singly, successively, together or otherwise,
at such time and in such order as Lender may determine in its sole discretion,
to the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Lender permitted by law, equity or contract or
as set forth herein or in the other Loan Documents. Without limiting the
generality of the foregoing, if an Event of Default is continuing (i) to the
fullest extent permitted by law, Lender shall not be subject to any "one action"
or "election of remedies" law or rule, and (ii) all liens and other rights,
remedies or privileges provided to Lender shall remain in full force and effect
until Lender has exhausted all of its remedies against each Property and the
Deeds of Trust have been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Obligations or the Obligations have been paid in full.
(C) Lender shall have the right from time to time to partially
foreclose the Deeds of Trust in any manner and for any amounts secured by the
Deeds of Trust then due and payable as determined by Lender in its sole
discretion including, without limitation, the following circumstances: (i) in
the event the Borrowers default beyond any applicable grace period in the
payment of one or more scheduled payments of principal and interest, Lender may
foreclose the Deed of Trust 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 the Deed of Trust or any of them to
recover so much of the principal balance of the Loan as Lender may accelerate
and such other sums secured by the Deed of Trust as Lender may elect.
Notwithstanding one or more partial foreclosures, the Property shall remain
subject to the Deed of Trust to secure payment of sums secured by the Deed of
Trust and not previously recovered.
(D) During the continuance of an Event of Default, 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 in such
denominations as Lender shall determine in its sole discretion for purposes of
evidencing and enforcing its rights and remedies provided hereunder. The
Borrowers shall execute and deliver to Lender from time to time, within ten (10)
days after the request of Lender, a severance agreement and such other documents
as Lender shall reasonably request in order to effect the severance described in
the preceding sentence, all in form and substance reasonably satisfactory to
Lender. The Borrowers hereby absolutely and irrevocably appoint Lender as their
true and lawful attorney, coupled with an interest, in their name and stead to
make and execute all documents reasonably necessary to effect the aforesaid
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severance if the Borrowers fail to do so within ten (10) days of Lender's
written request, the Borrowers ratifying all that their said attorney shall do
by virtue thereof.
(E) Any amounts recovered from the Properties or any other
collateral for the Loan after an Event of Default may be applied by Lender
toward the payment of any interest and/or principal of the Loan and/or any other
amounts due under the Loan Documents in such order, priority and proportions as
Lender in its sole discretion shall determine.
(F) The rights, powers and remedies of Lender under this Loan
Agreement shall be cumulative and not exclusive of any other right, power or
remedy which Lender may have against the Borrowers pursuant to this Loan
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. Lender's rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender's sole discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of one Default or Event of Default with respect to
the Borrowers shall not be construed to be a waiver of any subsequent Default or
Event of Default by the Borrowers or to impair any remedy, right or power
consequent thereon.
SECTION 8.3 PERFORMANCE BY LENDER.
(A) Upon the occurrence and during the continuance of an Event of
Default, if any of the Borrowers shall fail to perform, or cause to be
performed, any material covenant, duty or agreement contained in any of the Loan
Documents (subject to applicable notice and cure periods), Lender may perform or
attempt to perform such covenant, duty or agreement on behalf of the Borrowers
including making protective advances on behalf of any Borrower, or, in its sole
discretion, causing the obligations of any of the Borrowers to be satisfied with
the proceeds of any Reserve. In such event, the Borrowers shall, at the request
of Lender, promptly pay to Lender, or reimburse, as applicable, any of the
Reserves, any actual amount reasonably expended or disbursed by Lender in such
performance or attempted performance, together with interest thereon at the
Default Rate (including reimbursement of any applicable Reserves), from the date
of such expenditure or disbursement, until paid. Any amounts advanced or
expended by Lender to perform or attempt to perform any such matter shall be
added to and included within the indebtedness evidenced by the applicable Note
and shall be secured by all of the Collateral securing the applicable Loan.
Notwithstanding the foregoing, it is expressly agreed that Lender shall not have
any liability or responsibility for the performance of any obligation of the
Borrowers under this Loan Agreement or any other Loan Document, and it is
further expressly agreed that no such performance by Lender shall cure any Event
of Default hereunder.
(B) Lender may cease or suspend any and all performance required
of Lender under the Loan Documents upon and at any time after the occurrence and
during the continuance of any Event of Default.
SECTION 8.4 EVIDENCE OF COMPLIANCE. Promptly following request by Lender, each
Borrower shall provide such documents and instruments as shall be reasonably
satisfactory to Lender to
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evidence compliance with any material provision of the Loan Documents applicable
to the Borrowers.
ARTICLE IX
SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS,
WARRANTIES AND COVENANTS
SECTION 9.1 APPLICABLE TO ALL PRIMARY BORROWER PARTIES. The Borrowers hereby
represent, warrant and covenant as of the Closing Date and until such time as
all Obligations are paid in full, that absent express advance written waiver
from Lender, which may be withheld in Lender's sole discretion, that each
Primary Borrower Party:
(A) does not own and will not own any assets other than the
Properties (including incidental personal property necessary for the operation
thereof and proceeds therefrom) or direct or indirect ownership interests in the
Borrowers, and such other wholly owned subsidiaries of the Primary Borrower
Parties established solely for the purpose of holding liquor licenses with
respect to one or more of the Properties or, with respect to each of the Primary
Borrower Parties, such incidental assets as are necessary to enable it to
discharge its obligations with respect to the Borrowers (the "OWNERSHIP
INTERESTS");
(B) is not engaged and will not engage in any business, directly
or indirectly, other than the ownership, management and operation of the
Properties or the Ownership Interests;
(C) will not enter into any contract or agreement with any
partner, member, shareholder, trustee, beneficiary, principal or Affiliate of
any Primary Borrower Party except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arms-length basis with third parties other than such Affiliate (including the
Management Agreements);
(D) has not incurred any debt that remains outstanding as of
Closing and will not incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than (i) the Obligations, (ii)
Permitted Indebtedness, and (iii) the Mezzanine Loan;
(E) has not made any loans or advances to any Person that remains
outstanding as of Closing and will not make any loan or advances to any Person
(including any of its Affiliates), and has not acquired and will not acquire
obligations or securities of any of its Affiliates other than the other Borrower
Parties;
(F) is and reasonably expects to remain solvent and pay its own
liabilities, indebtedness, and obligations of any kind from its own separate
assets as the same shall become due other than the other Borrower Parties;
(G) has done or caused to be done and will do all things necessary
to preserve its existence, and will not, nor will any partner, member,
shareholder, trustee, beneficiary, or principal amend, modify or otherwise
change its partnership certificate, partnership agreement, articles of
incorporation, by-laws, articles of organization, operating agreement, or other
organizational documents in any manner with respect to the matters set forth in
this Article IX;
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(H) shall continuously maintain its existence and be qualified to
do business in all states necessary to carry on its business, specifically
including in the case of each Borrower, the state where its Property is located;
(I) will conduct and operate its business as presently
contemplated with respect to the ownership of its Property, or the ownership
interests in the Borrowers, as applicable;
(J) will maintain books and records and bank accounts (other than
bank accounts established hereunder, or established by Manager with respect to
the operations of the Properties pursuant to the Management Agreement) separate
from those of its partners, members, shareholders, trustees, beneficiaries,
principals, Affiliates, and any other Person and will maintain separate
financial statements except that it may also be included in consolidated
financial statements of its Affiliates;
(K) will be, and at all times will hold itself out to the public
as, a legal entity separate and distinct from any other Person (including any of
its partners, members, shareholders, trustees, beneficiaries, principals and
Affiliates, and any Affiliates of any of the same), and not as a department or
division of any Person and will correct any known misunderstandings regarding
its existence as a separate legal entity;
(L) will pay the salaries of its own employees, if any;
(M) will allocate fairly and reasonably any overhead for shared
office space;
(N) will use stationery, invoices and checks;
(O) will file its own tax returns with respect to itself (or
consolidated tax returns, if applicable) as may be required under applicable
law;
(P) reasonably expects 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;
(Q) will not seek, acquiesce in, or suffer or permit its
liquidation, dissolution or winding up, in whole or in part;
(R) will not enter into any transaction of merger or
consolidation, or acquire by purchase or otherwise all or substantially all of
the business or assets of, or any stock or beneficial ownership of, any Person;
(S) will not commingle or permit to be commingled its funds or
other assets with those of any other Person (other than, with respect to the
Borrowers, each other Borrower, or as may be held by Manager, as agent, for each
Borrower pursuant to the terms of the Management Agreement);
(T) has and will maintain its assets in such a manner that it is
not costly or difficult to segregate, ascertain or identify its individual
assets from those of any other Person;
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(U) does not and will not hold itself out to be responsible for
the debts or obligations (other than the Obligations) of any other Person;
(V) has not guaranteed or otherwise become liable in connection
with any obligation of any other Person that remains outstanding, and will not
guarantee or otherwise become liable on or in connection with any obligation
(other than the Obligations) of any other Person that remains outstanding;
(W) except for funds deposited into the Accounts in accordance
with the Loan Documents, shall not hold title to its assets other than in its
name; and
(X) shall comply with all of the assumptions, statements,
certifications, representations, warranties and covenants regarding or made by
it contained in or appended to the nonconsolidation opinion delivered pursuant
hereto.
SECTION 9.2 APPLICABLE TO BORROWERS, GENERAL PARTNER AND MEMBER. In addition to
their respective obligations under Section 9.1, each Borrower, General Partner
and Member (other than the sole member of a single member limited liability
company) hereby represents, warrants and covenants as of the Closing Date and
until such time as all Obligations are paid in full, that absent express advance
written waiver from Lender, which may be withheld in Lender's sole discretion,
it:
(A) General Partner shall at all times act as the sole general
partner of each Borrower that is a limited partnership, with all of the rights,
powers, obligations and liabilities thereof under the limited partnership
agreement of such Borrower and shall take any and all actions and do any and all
things necessary or appropriate to the accomplishment of the same and will
engage in no other business;
(B) Member shall at all times act as the sole member of each
Borrower that is a limited liability company with all of the rights, powers,
obligations and liabilities thereof under the limited liability company
operating agreement of such Borrower and shall take any and all actions and do
any and all things necessary or appropriate to the accomplishment of the same
and will engage in no other business;
(C) The Borrowers that are limited liability companies shall not,
without the prior written consent of Member (including the unanimous written
consent of Member's board of directors including the Independent Directors or
the unanimous written consent of each of the Borrowers' board of managers
including the Independent Directors), and the Borrowers that are limited
partnerships shall not, without the prior written consent of General Partner
(including the unanimous written consent of General Partner's Independent
Directors), institute proceedings for itself to be adjudicated bankrupt or
insolvent; consent to the institution of bankruptcy or insolvency proceedings
against itself; file a petition seeking, or consent to, reorganization or relief
under any applicable federal or state law relating to bankruptcy; consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) for itself or a substantial part of its property; make any
assignment for the benefit of creditors; or admit in writing its inability to
pay its debts generally as they become due;
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(D) The Borrowers that are corporations shall not, without the
prior unanimous written consent of its board of directors, including its two
Independent Directors (if required to have Independent Directors), institute
proceedings for itself to be adjudicated bankrupt or insolvent; consent to the
institution of bankruptcy or insolvency proceedings against it; file a petition
seeking, or consent to, reorganization or relief under any applicable federal or
state law relating to bankruptcy; consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) for
itself or a substantial part of its property; make any assignment for the
benefit of creditors; or admit in writing its inability to pay its debts
generally as they become due;
(E) Neither Member nor General Partner shall, without the
unanimous vote of its board of directors including its Independent Directors,
institute proceedings for itself or any Borrower, to be adjudicated bankrupt or
insolvent; consent to the institution of a bankruptcy or insolvency proceeding
against it or any Borrower; file a petition seeking, or consent to,
reorganization or relief under any applicable federal or state law relating to
bankruptcy; consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) for itself or any Borrower; or
a substantial part of its or any Borrower's property; make any assignment for
the benefit of creditors; or admit in writing its inability to pay its debts
generally as they become due;
(F) Except as otherwise permitted hereunder, General Partner shall
not for itself or for any of the Borrowers (i) liquidate or dissolve, in whole
or in part; (ii) consolidate, merge or enter into any form of consolidation with
or into any other Person, nor convey, transfer or lease its or any Borrower's
assets substantially as an entirety to any Person nor permit any Person to
consolidate, merge or enter into any form of consolidation with or into itself
or any Borrower, nor convey, transfer or lease its or any Borrower's assets
substantially as an entirety to any Person; and (iii) amend any provisions of
its or any Borrower's organizational documents containing provisions similar to
those contained in this Article IX; and
(G) Member, General Partner and each Borrower that is a
corporation shall each promptly elect and at all times maintain at least two (2)
Independent Directors on its board of directors, who shall be selected by
Member, General Partner and such Borrower, as applicable. Each Borrower that is
a single member limited liability company shall promptly appoint and at all
times maintain at least two (2) Independent Directors on its board of managers,
who shall be selected by such Borrower.
ARTICLE X
RESTRUCTURING LOAN, SECONDARY MARKET TRANSACTIONS
SECTION 10.1 SECONDARY MARKET TRANSACTIONS GENERALLY. Lender shall have the
right to engage in one or more Secondary Market Transactions with respect to the
Loan, and to structure and restructure all or any part of the Loan, including
without limitation in multiple tranches, as a wraparound loan, or for inclusion
in a REMIC or other Securitization. Without limitation, Lender shall have the
right, at Lender's sole cost (other than each Borrower's internal costs and
expenses and the costs and expenses of the Borrowers' counsel), to cause the
Note and any Deed of Trust to be split into a first and a second mortgage loan,
or into one or more loans evidenced by multiple notes and secured by multiple
deeds of trust and/or by ownership interests in any of
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the Borrowers in whatever proportion Lender determines, and thereafter to engage
in Secondary Market Transactions with respect to all or any part of the
indebtedness and loan documentation. Each of the Borrower Parties acknowledge
that it is the intention of the parties that all or a portion of the Loan will
be securitized and that all or a portion of the Loan will be rated by one or
more Rating Agencies. Each of the Borrower Parties further acknowledge that
additional structural modifications may be required to satisfy issues raised by
any Rating Agencies. As used herein, "SECONDARY MARKET TRANSACTION" means any of
(i) the sale, assignment, or other transfer of all or any portion of the
Obligations or the Loan Documents or any interest therein to one or more
investors, (ii) the sale, assignment, or other transfer of one or more
participation interests in the Obligations or Loan Documents to one or more
investors, (iii) the transfer or deposit of all or any portion of the
Obligations or Loan Documents to or with one or more trusts or other entities
which may sell certificates or other instruments to investors evidencing an
ownership interest in the assets of such trust or the right to receive income or
proceeds therefrom or (iv) any other Securitization backed in whole or in part
by the Loan or any interest therein.
SECTION 10.2 COOPERATION; LIMITATIONS. The Borrower Parties shall use all
reasonable efforts and cooperate reasonably and in good faith with Lender in
effecting up to three (3) such restructuring or Secondary Market Transactions at
Lender's sole cost (other than, with respect to the first successful Secondary
Market Transaction only, each Borrower's internal costs and expenses and the
costs and expenses of the Borrowers' counsel). Such cooperation shall include
without limitation, executing and delivering such reasonable amendments to the
Loan Documents and the organizational documents of each Borrower as Lender or
any Interested Party (as defined below) may request, provided however that, no
such amendment shall modify (i) the weighted average interest rate payable under
the Note (or notes); (ii) the stated maturity date of the Note, (iii) the
amortization of the principal amount of the Note, (iv) any other material
economic terms of the Obligations, (v) the non-recourse provisions of the Loan
or (vi) any provision, the effect of which would increase the Borrowers'
obligations or decrease the Borrowers' rights under the Loan Documents except to
a de minimis extent. The Borrower Parties shall not be required to provide
additional collateral to effect any such restructuring or Secondary Market
Transaction after the Closing Date. The Borrower Parties shall not be required
to pay any third party (other than, with respect to the first successful
Secondary Market Transaction only, the costs and expenses of the Borrowers'
counsel) costs and expenses incurred by Lender in connection with any such
Secondary Market Transaction unless otherwise expressly payable by the Borrower
Parties under this Loan Agreement or the other Loan Documents.
SECTION 10.3 INFORMATION. The Borrower Parties, at Lender's cost and expense
(other than the Borrowers' internal costs and, with respect to the first
successful Secondary Market Transaction only, expenses and the costs and
expenses of the Borrowers' counsel), shall provide such access to personnel and
such information and documents relating to the Borrower Parties, Manager, the
Properties and Collateral and the business and operations of all of the
foregoing and access to such opinions of counsel (including nonconsolidation
opinions) as any Rating Agency may request or as Lender or any other Interested
Party may reasonably request in connection with any such Secondary Market
Transaction including, without limitation, updated financial information,
appraisals, market studies, environmental reviews (Phase I's and, if
appropriate, Phase II's), mold inspection, property condition reports and other
due diligence investigations together with appropriate verification of such
updated information and reports through letters of auditors and
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consultants and, as of the closing date of the Secondary Market Transaction,
updated representations and warranties made in the Loan Documents and such
additional representations and warranties as any Rating Agency may request or
any purchaser, transferee, assignee, trustee, servicer or potential investor
(the Rating Agencies and all of the foregoing parties, collectively, "INTERESTED
PARTIES") may reasonably request, to the extent such updated representations and
warranties are true. On or prior to the date of closing of any Secondary Market
Transaction, the Borrowers, at Lender's cost and expense (other than the
Borrowers' internal costs and expenses and, with respect to the first successful
Secondary Market Transaction only, the costs and expenses of the Borrowers'
counsel), shall, if required by any Rating Agency or reasonably required by
Lender, provide revisions or "bringdowns" to any opinions delivered at Closing
(including nonconsolidation opinions), or if required by the Rating Agencies,
new versions of such opinions, which opinions shall be consistent in substance
with the opinions covered by the original opinions, addressed to Lender, any
trustee under any Securitization backed in whole or in part by the Loan, any
Rating Agency that assigns a rating to any securities in connection therewith
and any investor purchasing securities therein. Lender shall be permitted to
share all such information with the investment banking firms, Rating Agencies,
accounting firms, law firms, other third party advisory firms, potential
investors, servicers and other service providers and other parties directly
involved in any proposed Secondary Market Transaction. The Borrowers understand
that any such information may be incorporated into any offering circular,
prospectus, prospectus supplement, private placement memorandum or other
offering documents for any Secondary Market Transaction. Lender and the Rating
Agencies shall be entitled to rely upon such information. Without limiting the
foregoing, the Borrowers and Guarantor shall each provide in connection with
each of (i) a preliminary and a final private placement memorandum or (ii) a
preliminary and final prospectus or prospectus supplement, as applicable (the
documents referred to in the foregoing clauses (i) and (ii), collectively, the
"DISCLOSURE DOCUMENTS"), an agreement reasonably satisfactory to the Borrowers
and Guarantor certifying that the Borrowers and Guarantor have examined such
Disclosure Documents specified by Lender and, that the sections of such
Disclosure Document describing the Borrowers, Guarantor, the Properties and
Manager do not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not materially misleading. The
Borrowers and Guarantor shall each indemnify, defend, protect and hold harmless
Lender, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MERRILL LYNCH"),
and their respective Affiliates, directors, employees, agents and each Person,
if any, who controls Lender, Merrill Lynch or any such Affiliate within the
meaning of Section 15 of the Securities Act of 1933 or Section 20 of the
Securities Exchange Act of 1934, and any other placement agent or underwriter
with respect to any Securitization or Secondary Market Transaction from and
against any losses, claims, damages and liabilities that arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Disclosure Document as to the Borrowers, Guarantor, Manager and
the Properties or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated in such
information or necessary in order to make the statements in such information not
materially misleading; provided, however, the Borrowers shall not be required to
indemnify Merrill Lynch for any liabilities arising out of untrue statements or
omissions that were identified to Lender in writing or are set forth in any
third party report not prepared by the Borrowers or their Affiliates unless such
reports are caused to be incorrect or misleading based upon information provided
by the Borrowers or their Affiliates. Lender may publicize the existence of
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the Obligations in connection with Lender's Secondary Market Transaction
activities or otherwise.
SECTION 10.4 ADDITIONAL PROVISIONS. In any Secondary Market Transaction, Lender
may transfer its obligations under this Loan Agreement and under the other Loan
Documents (or may transfer the portion thereof corresponding to the transferred
portion of the Obligations), and thereafter Lender shall be relieved of any
obligations hereunder and under the other Loan Documents arising after the date
of said transfer with respect to the transferred interest. Each transferee
investor shall become a "Lender" hereunder.
ARTICLE XI
RESTRICTIONS ON LIENS, TRANSFERS; ASSUMABILITY; RELEASE OF
PROPERTIES
SECTION 11.1 RESTRICTIONS ON TRANSFER AND ENCUMBRANCE. Except for a Transfer or
a Permitted Assumption expressly permitted under this Article XI, Leases entered
into as permitted hereunder, and pledges in connection with the Mezzanine Loan,
the Borrowers shall not cause or suffer to occur or exist, directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise, any
sale, transfer, mortgage, pledge, Lien or encumbrance (other than the Permitted
Encumbrances) of (i) all or any part of the Properties or any interest therein,
or (ii) any direct or indirect ownership or beneficial interest in any Borrower
(other than to Mezzanine Lender), irrespective of the number of tiers of
ownership without Lender's consent.
SECTION 11.2 TRANSFERS OF BENEFICIAL INTERESTS IN BORROWERS. The following
voluntary or involuntary sales, encumbrances, conveyances, transfers and pledges
(each, a "TRANSFER") of a direct, indirect or beneficial interest in any
Borrower shall be permitted without Lender's consent ("PERMITTED OWNERSHIP
INTEREST TRANSFERS"):
(A) A Transfer of no more than forty-nine percent (49%) of the
direct or indirect ownership interests in such Borrower (in the aggregate),
provided that, following such Transfer, Guarantor maintains control of such
Borrower.
(B) A Transfer or a series of Transfers that result in the
proposed transferee, together with Affiliates of such transferee, owning in the
aggregate (directly or indirectly) more than forty-nine percent (49%) of the
economic and beneficial interests in such Borrower (where, prior to such
Transfer, such proposed transferee and its Affiliates owned in the aggregate
(directly or indirectly) forty-nine percent (49%) or less of such interests in
that Borrower); and, provided that such Transfer shall not be a Permitted
Ownership Interest Transfer unless Lender receives, prior to such Transfer, both
(x) evidence reasonably satisfactory to Lender (which shall include a legal
non-consolidation opinion reasonably acceptable to Lender and the Rating
Agencies) that the single purpose nature and bankruptcy remoteness of such
Borrower (and its members and general partners, as applicable) following such
Transfer or Transfers will be the same as prior to such Transfer or Transfers
and (y) a Rating Agency Confirmation.
(C) For so long as Guarantor's (or its successor's) stock is
traded through the "over-the-counter market" or through any recognized stock
exchange, any Transfer of all or any portion of the issued and outstanding
capital stock of Guarantor, or the issuance of additional
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capital stock of Guarantor (including common or preferred shares) through the
"over-the-counter market" or through any recognized stock exchange.
(D) The pledge of ownership interests granted by the Mezzanine
Borrowers pursuant to the Pledge Agreement (as such term is defined in the
Mezzanine Loan Agreement).
For purposes of this Section 11.2, "control" shall have the meaning given
thereto in the definition of "Affiliate" in Section 1.1 and a "change of
control" of any Person shall include the Transfer of legal or equitable
ownership interests in such Person which after giving effect to such Transfer
results in any transferee or pledgee of such interests holding more than a 49%
legal or equitable ownership interest or security interest in such Person.
SECTION 11.3 ASSUMABILITY.
(A) The Borrowers shall have the right to request that Lender
consent to (i) a transfer of all of the Properties to another Person (the
"TRANSFEREE BORROWER") and the assumption by the Transferee Borrower of all of
the Borrowers' obligations under the Loan Documents, (ii) replacement of
Guarantor with new guarantors and indemnitors who shall assume all of the
obligations of the Guarantors arising from and after such date and release of
the Borrowers and Guarantor from obligations arising after such date and (iii)
the replacement of the Mezzanine Borrowers with pledgors of the ownership
interests in the Transferee Borrower (collectively, an "ASSUMPTION"), subject to
the conditions set forth in paragraphs (C) and (D) of this Section. Together
with such written application, the Borrowers will pay to Lender the reasonable
review fee of $10,000. The Borrowers also shall pay on demand all of the
reasonable out-of-pocket costs and expenses incurred by Lender, including
reasonable attorneys' fees and expenses, and the fees and expenses of Rating
Agencies, if any, and other outside entities, in connection with considering any
proposed Transfer and Assumption, whether or not the same is permitted or
occurs.
(B) Lender shall not withhold its consent to an Assumption (any
such Assumption consented to by Lender, a "PERMITTED ASSUMPTION") provided and
upon the conditions that:
(i) No Event of Default shall have occurred and be
continuing at the time of such Assumption;
(ii) The Borrowers shall have submitted to Lender true,
correct and complete copies of any and all information and documents reasonably
requested by Lender concerning the Transferee Borrower, replacement guarantors
and indemnitors and all of such information and documents shall be reasonably
acceptable to Lender;
(iii) Evidence reasonably satisfactory to Lender shall have
been provided showing that the Transferee Borrower and such of its Affiliates as
shall reasonably be designated by Lender comply and will comply with Article IX,
as those provisions may be modified by Lender taking into account the ownership
structure of Transferee Borrower and its Affiliates;
(iv) The Borrowers shall have obtained (and delivered to
Lender) a Rating Confirmation with respect to the Assumption, the Transferee
Borrower, the new guarantors and indemnitors and all related transactions;
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(v) The Borrowers shall have paid all of Lender's
reasonable out-of-pocket costs and expenses in connection with considering the
Assumption, and shall have paid the amount reasonably requested by Lender as a
deposit against Lender's reasonable costs and expenses in connection with
effecting the Assumption;
(vi) The Borrowers, the Transferee Borrower, and the
replacement guarantors and indemnitors shall have indicated in writing in form
and substance reasonably satisfactory to Lender their readiness and ability to
satisfy the conditions set forth in Subsection (C) below;
(vii) (a) The Transferee Borrower shall be a Permitted
Transferee or (b) the identity, experience and financial condition of the
Transferee Borrower shall otherwise be satisfactory to Lender in its sole
discretion; and
(viii) The identity and financial condition of the
replacement guarantors and indemnitors shall be satisfactory to Lender.
(C) If Lender consents to the proposed Assumption, the Transferee
Borrower and/or Borrowers, as the case may be, shall promptly and as a condition
to the Assumption deliver the following to Lender:
(i) The Borrowers, Transferee Borrower, the original and
replacement guarantors and indemnitors shall execute and deliver any and all
documents reasonably required by Lender to evidence the Transfer and Assumption
of the Loan, in form and substance reasonably required by Lender and similar to
those received at Closing;
(ii) Counsel to the Transferee Borrower and replacement
guarantors and indemnitors shall deliver to Lender opinions in form and
substance reasonably satisfactory to Lender as to such matters as Lender shall
reasonably require in connection with such Assumption, which may include
opinions as to substantially the same matters as were required in connection
with the origination of the Loan including, without limitation, a bankruptcy
non-consolidation opinion;
(iii) The Borrowers shall cause to be delivered to Lender,
an endorsement (relating to the change in the identity of the Borrowers and
execution and delivery of the Assumption documents) to Lender's policy of title
insurance in form and substance acceptable to Lender, in Lender's reasonable
discretion; and
(D) The Borrowers shall deliver to Lender a payment in the amount
of all remaining unpaid reasonable costs incurred by Lender in connection with
the Assumption, including but not limited to, Lender's reasonable attorneys'
fees and expenses, all recording fees, and all fees payable to the title company
in connection with the Transfer and Assumption.
SECTION 11.4 RELEASE OF PROPERTIES. On one or more occasions, the Borrowers may
obtain the release (each, a "RELEASE") of one (1) or more of the Properties from
the Lien of the applicable Deed of Trust in connection with (x) a sale of the
applicable Property or Properties to one or more Persons which are not Related
Persons of the Borrowers or Guarantor, (y) a Release necessary to prevent an
Uncured Franchise Default, or (z) a Release necessary to enable the Borrowers to
comply with the restrictions set forth in Section 5.13(D), and prepayment of all
or a
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portion of the Loan subject to the conditions of the Note and subject to the
satisfaction of the following conditions:
(A) Lender shall have received from the Borrowers at least fifteen
(15) days prior written notice of the date proposed for such release (the
"RELEASE DATE") which notice is revocable;
(B) No Event of Default shall have occurred and be continuing as
of the date of such notice and the Release Date;
(C) Lender shall have received from the Borrowers on the date
proposed for such Release, the Release Price, for deposit into the Lock Box
Account and disbursement in accordance with the terms of the Cash Management
Agreement, and following such disbursement, Lender shall have received Mortgage
Lender's Percentage of the Release Price and Mezzanine Lender shall have
received Mezzanine Lender's Percentage of the Release Price;
(D) The Borrowers at their sole cost and expense, shall have
delivered to Lender, one or more endorsements to the Title Policies delivered to
Lender on the date hereof in connection with the Deeds of Trust insuring that,
after giving effect to such Release, (i) the Liens created hereby and thereby
and insured under the Title Policies are first priority Liens on the respective
remaining Properties subject only to the Permitted Encumbrances applicable to
the remaining Properties and (ii) that the Title Policies remain in full force
and effect and unaffected by such Release;
(E) Immediately following any Release both the Debt Service
Coverage Ratio and the Debt Yield (based upon a trailing twelve (12) month
period) shall be equal to or greater than the Debt Service Coverage Ratio and
the Debt Yield in effect immediately prior to the Release (based upon a trailing
twelve (12) month period);
(F) The Borrowers shall pay all reasonable out-of-pocket costs and
expenses (including, without limitation, title search costs and endorsement
premiums and reasonable attorney's fees and disbursements) incurred by Lender,
Servicer, and any custodian employed by Lender or Servicer, in connection with
the Release; and
(G) Immediately following such Property Release, the Released
Property will be owned by a Person other than the Borrowers.
Upon satisfaction of the above conditions, Lender shall effectuate the following
(hereinafter referred to as a "PROPERTY RELEASE"): the security interest of
Lender under the Deed of Trust and other Loan Documents relating to the Released
Property shall be released and Lender will execute and deliver any agreements
reasonably requested by the Borrowers to release and terminate or reassign, at
the Borrowers' option, the Deed of Trust, the applicable Assignment of Leases,
and financing statements as to the released Property; provided, that such
release and termination or reassignment shall be without recourse to Lender and
without any representation or warranty except that Lender shall be deemed to
have represented that such release and termination or reassignment has been duly
authorized and that it has not assigned or encumbered the Deed of Trust or the
other Loan Documents relating to the released Property (except as contemplated
hereby) and Lender shall return the originals of any Loan Documents that relate
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solely to the released Property to the Borrowers; provided, further, that upon
the release and termination or reassignment of Lender's security interest in the
Deed of Trust relating to the released Property all references herein to the
Deed of Trust relating to the released Property shall be deemed deleted, except
as otherwise provided herein with respect to indemnities.
SECTION 11.5 CONVERSION/RELEASE. The Borrower that owns the West Palm Beach
Property may (i) convert the West Palm Beach Property to a condominium form of
ownership (the "CONVERSION") consisting of two (2) units, one consisting of the
hotel located on the West Palm Beach Property and appurtenances thereto (the
HOTEL UNIT"), and the other consisting of the office building located on the
West Palm Beach Property (the "OFFICE UNIT"), in accordance with all legal
requirements, and (ii) cause the simultaneous release of the Office Unit from
the lien of the applicable Deed of Trust (the "OFFICE UNIT RELEASE").
Notwithstanding anything in this Loan Agreement to the contrary, the
Borrowers shall not allow nor cause a Conversion until the satisfactory
completion, as determined by Lender, in its reasonable discretion, of the
following conditions (hereinafter collectively referred to as the "CONVERSION
CONDITIONS"):
(A) No Event of Default shall have occurred and be continuing.
(B) The Borrowers shall have given Lender at least forty-five (45)
days prior written notice of its election to seek a Conversion.
(C) The documents delivered or executed by the Borrowers in
connection with the Conversion shall have been properly recorded and/or placed
of record as required by the applicable Governmental Authority and Lender shall
have received (i) an endorsement to the title insurance policy insuring the lien
of the applicable Deed of Trust insuring that the Hotel Unit and the Office Unit
will each constitute, or will constitute after Conversion, a separate tax lot,
and that, following the Office Unit Release, the Hotel Unit will remain subject
to the lien of the applicable Deed of Trust, and (ii) endorsements to each of
the Title Policies insuring that the Office Unit Release will not have an
adverse affect on the priority of the liens of any of the Deeds of Trust.
(D) Lender shall have received the following opinions of counsel
(which opinions shall be in form and substance and issued by counsel reasonably
satisfactory to Lender) in connection with the Conversion: (i) organization,
foreign qualification and good standing with respect to such Persons as Lender
may reasonably require; (ii) due authorization, validity and enforceability of
documents, absence of conflicts with law and documents and agreements, and
absence of litigation; and (iii) such other matters as Lender may reasonably
request.
(E) Lender shall have received and reasonably approved all of the
Condominium Documents.
(F) The Borrowers shall have paid or reimbursed Lender for all
third party out-of-pocket costs and expenses incurred by Lender (including,
without limitation, reasonable attorneys' fees and disbursements) in connection
with the Conversion and the Office Unit Release, and the Borrowers shall have
paid all recording charges, filing fees, taxes or other
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expenses (including, without limitation, mortgage and intangibles taxes and
documentary stamp taxes) payable in connection with the Conversion and the
Office Unit Release.
(G) The Borrowers shall submit to Lender, or cause to be provided
to Lender, any other items reasonably requested by Lender and Lender shall have
received such other and further approvals, opinions, documents and information
in connection with the Conversion as Lender may reasonably request and shall
take any actions reasonably requested by Lender.
(H) The Borrowers shall, at their sole expense, prepare any and
all documents and instruments necessary to effect the Office Unit Release, all
of which shall be subject to the reasonable approval of Lender.
(I) Title to the Office Unit shall have been or shall
simultaneously be conveyed to a Person other than the Borrowers or the Primary
Borrower Parties.
SECTION 11.6 SALE OF BUILDING EQUIPMENT. Notwithstanding anything to the
contrary contained herein, provided no Event of Default exists, the Borrowers
may Transfer or dispose of building equipment which is being replaced or which
is no longer necessary in connection with the operation of the Property free
from the lien of the Deed of Trust, provided that such transfer or disposal will
not have a Material Adverse Effect on the value of any individual Property or on
the Properties taken as a whole, will not materially impair the utility of any
individual Property or on the Properties, taken as a whole, and will not result
in a reduction or abatement of, or right of offset against, the Rents payable
under any Lease, in either case as a result thereof, and provided further that
any new building equipment acquired by the Borrowers (and not so disposed of)
shall be subject to the lien of the Deed of Trust. Lender shall, from time to
time, upon the reasonable request of any Borrower, execute a written instrument
in form reasonably satisfactory to Lender to confirm that such building
equipment which is to be, or has been, sold or disposed of is free from the lien
of the Deed of Trust.
SECTION 11.7 IMMATERIAL TRANSFERS AND EASEMENTS, ETC. Provided no Event of
Default exists, the Borrowers may, without the consent of Lender, (i) make
immaterial Transfers of portions of the applicable Property to Governmental
Authorities for dedication for public use, and (ii) grant easements,
restrictions, covenants, reservations and rights of way in the ordinary course
of business for access, water and sewer lines, telephone and telegraph lines,
electric lines or other utilities or for other similar purposes, provided that
no such transfer, conveyance or encumbrance set forth in the foregoing clauses
(i) and (ii) shall materially impair the utility and operation of such Property
or have a Material Adverse Effect on the value of such Property taken as a
whole. In connection with any Transfer permitted pursuant to this Section 11.7,
Lender shall execute and deliver any instrument reasonably necessary or
appropriate, in the case of the Transfers referred to in clause (i) above, to
release the portion of such Property affected by such transfer from the lien of
the Deed of Trust to such easements, restrictions, covenants, reservations and
rights of way or other similar grants within ten (10) days of Lender's receipt
of the following:
(A) Ten (10) days prior written notice thereof.
(B) A copy of the instrument or instruments of transfer.
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(C) An officer's certificate given by the Borrowers stating that
such transfer does not materially impair the utility and operation of the
Property, materially reduce the value of the Property or have a Material Adverse
Effect.
(D) Reimbursement of all of Lender's reasonable, out-of-pocket
costs and expenses incurred in connection with such Transfer.
ARTICLE XII
RECOURSE; LIMITATIONS ON RECOURSE
SECTION 12.1 LIMITATIONS ON RECOURSE. Subject to the provisions of this Article,
and notwithstanding any provision of the Loan Documents other than this Article,
the personal liability of the Borrowers to pay any and all Obligations including
but not limited to the principal of and interest on the debt evidenced by the
Note and any other agreement evidencing the Borrowers' obligations under the
Note shall be limited to (i) the Properties, (ii) the rents, profits, issues,
products and income of the Properties, received or collected by or on behalf of
the Borrowers or any Borrower Party after an Event of Default, and (iii) any
other Collateral.
Notwithstanding anything to the contrary in this Loan Agreement, the Deeds of
Trust or any of the Loan Documents, Lender shall not be deemed to have waived
any right which Lender may have under Section 506(a), 506(b), 1111(b) or any
other provisions of the Bankruptcy Code to file a claim for the full amount of
the Obligations secured by the Deeds of Trust or to require that all collateral
shall continue to secure all of the Obligations owing to Lender in accordance
with the Loan Documents.
SECTION 12.2 PARTIAL RECOURSE. Notwithstanding Section 12.1, the Borrowers (but
not their members, partners (other than the General Partners), employees,
shareholders agents, directors or officers (the "EXCULPATED PARTIES")) and
Guarantor shall be personally liable to the extent of any liability, loss,
damage, cost or expense (including, without limitation, attorneys' fees and
expenses) suffered or incurred by Lender resulting from any and all of the
following: (i) fraud of any of the Borrower Parties or their agents or
employees; (ii) any material misrepresentation made by the Borrowers or any
Borrower Party in this Loan Agreement or any other Loan Document; (iii)
insurance proceeds, condemnation awards, or other sums or payments attributable
to the Properties which are not applied in accordance with the provisions of the
Loan Documents; (iv) all rents, profits, issues, products and income of the
Properties received or collected by or on behalf of the Borrowers or any
Borrower Party or Manager and not deposited into the Deposit Account in
accordance with Article VII and the Cash Management Agreement; (v) failure to
turn over to Lender, after an Event of Default, or misappropriation of any
tenant security deposits or rents collected in advance (other than by Lender or
Servicer); (vi) failure to notify Lender of any change in the principal place of
business address of the Borrowers or of any change in the name of any of the
Borrowers or if any of the Borrowers takes any other action which could make the
information set forth in the Financing Statements relating to the Loan
materially misleading; (vii) failure by the Borrowers, any general partner or
managing member of the Borrowers, or any indemnitor or guarantor to comply with
the covenants, obligations, liabilities, warranties and representations
contained in the Environmental Indemnity or otherwise pertaining to
environmental matters; (viii) material waste; (ix) all liabilities and expenses
under the indemnification provisions of Section 10.3; (x) any uncured default
under Section 11.1; (xi)
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any material uncured default under Article IX; and (xii) any distributions made
in violation of Section 5.28 (to the extent of any such distribution) including
amounts improperly paid or distributed, directly or indirectly, by Manager in
circumvention of such restrictions. Notwithstanding the preceding sentence, the
Loan shall be fully recourse to the Borrowers and Guarantor (but, with respect
to Guarantor only, not in excess of ten percent (10%) of the original principal
balance of the Loan) upon the happening of any of the following: (i) any
Borrower Party's defense of any such collection efforts following maturity of
the Loan or acceleration of the Loan on account of an Event of Default under
Section 8.1(A), or any other defense of any collection efforts without a good
faith basis following any other Event of Default), and (ii) any condition or
event described in any of Subsections 8.1(G), 8.1(H), or 8.1(I) (except that the
Borrowers and Guarantor shall not be liable under this Section 12.2 in
connection with any Involuntary Borrower Bankruptcy unless such involuntary
proceeding is solicited, procured, consented to or acquiesced in by any
Borrower, Guarantor or any Affiliate of either of them or any Involuntary
Borrower Bankruptcy caused by Mezzanine Lender following the exercise by
Mezzanine Lender of its rights under the Mezzanine Loan Documents).
SECTION 12.3 MISCELLANEOUS. No provision of this Article shall (i) affect the
enforcement of the Environmental Indemnity, the Guaranty or any guaranty or
similar agreement executed in connection with the Loan, (ii) release or reduce
the debt evidenced by the Note, (iii) impair the lien of any of the Deeds of
Trust or any other security document, (iv) impair the rights of Lender to
enforce any provisions of the Loan Documents, or (v) limit Lender's ability to
obtain a deficiency judgment or judgment on the Note or otherwise against any
Borrower Party but not any Exculpated Party to the extent necessary to obtain
any amount for which such Borrower Party may be liable in accordance with this
Article or any other Loan Document.
ARTICLE XIII
WAIVERS OF DEFENSES OF GUARANTORS AND SURETIES
SECTION 13.1 WAIVERS. To the extent that any of the Borrowers (in this Article,
a "WAIVING PARTY") is deemed for any reason to be a guarantor or surety of or
for any other Borrower Party or Affiliate or to have rights or obligations in
the nature of the rights or obligations of a guarantor or surety (whether by
reason of execution of a guaranty, provision of security for the obligations of
another, or otherwise) then this Article shall apply. This Article shall not
affect the rights of the Waiving Party other than to waive or limit rights and
defenses that Waiving Party would have (i) in its capacity as a guarantor or
surety or (ii) in its capacity as one having rights or obligations in the nature
of a guarantor or surety.
Waiving Party hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of receivership or bankruptcy of any
of the other Borrower Parties, protest or notice with respect to any of the
obligations of any of the other Borrower Parties, setoffs and counterclaims and
all presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor and notices of acceptance, the benefits
of all statutes of limitation, and all other demands whatsoever (and shall not
require that the same be made on any of the other Borrower Parties as a
condition precedent to the obligations of Waiving Party), and covenants that the
Loan Documents will not be discharged, except by complete payment and
performance of the obligations evidenced and secured thereby, except only as
limited by the express contractual provisions of the Loan Documents. Waiving
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Party further waives all notices that the principal amount, or any portion
thereof, and/or any interest on any instrument or document evidencing all or any
part of the obligations of any of the other Borrower Parties to Lender is due,
notices of any and all proceedings to collect from any of the other Borrower
Parties or any endorser or any other guarantor of all or any part of their
obligations, or from any other person or entity, and, to the extent permitted by
law, notices of exchange, sale, surrender or other handling of any security or
collateral given to Lender to secure payment of all or any part of the
obligations of any of the other Borrower Parties.
Except only to the extent provided otherwise in the express contractual
provisions of the Loan Documents, Waiving Party hereby agrees that all of its
obligations under the Loan Documents shall remain in full force and effect,
without defense, offset or counterclaim of any kind, notwithstanding that any
right of Waiving Party against any of the other Borrower Parties or defense of
Waiving Party against Lender may be impaired, destroyed, or otherwise affected
by reason of any action or inaction on the part of Lender. Waiving Party waives
all rights and defenses arising out of an election of remedies by the Lender,
even though that election of remedies, may have destroyed the Waiving Party's
rights of subrogation and reimbursement against the other Borrower Parties.
Lender is hereby authorized, without notice or demand, from time to
time, (a) to renew, extend, accelerate or otherwise change the time for payment
of, or other terms relating to, all or any part of the obligations of any of the
other Borrower Parties; (b) to accept partial payments on all or any part of the
obligations of any of the other Borrower Parties; (c) to take and hold security
or collateral for the payment of all or any part of the obligations of any of
the other Borrower Parties; (d) to exchange, enforce, waive and release any such
security or collateral for such obligations; (e) to apply such security or
collateral and direct the order or manner of sale thereof as in its discretion
it may determine; (f) to settle, release, exchange, enforce, waive, compromise
or collect or otherwise liquidate all or any part of such obligations and any
security or collateral for such obligations. Any of the foregoing may be done in
any manner, and Waiving Party agrees that the same shall not affect or impair
the obligations of Waiving Party under the Loan Documents.
Waiving Party hereby assumes responsibility for keeping itself informed
of the financial condition of all of the other Borrower Parties and any and all
endorsers and/or other guarantors of all or any part of the obligations of the
other Borrower Parties, and of all other circumstances bearing upon the risk of
nonpayment of such obligations, and Waiving Party hereby agrees that Lender
shall have no duty to advise Waiving Party of information known to it regarding
such condition or any such circumstances.
Waiving Party agrees that neither Lender nor any person or entity
acting for or on behalf of Lender shall be under any obligation to marshal any
assets in favor of Waiving Party or against or in payment of any or all of the
obligations secured hereby. Waiving Party further agrees that, to the extent
that any of the other Borrower Parties or any other guarantor of all or any part
of the obligations of the other Borrower Parties makes a payment or payments to
Lender, or Lender receives any proceeds of collateral for any of the obligations
of the other Borrower Parties, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid or refunded, then, to the extent of such payment or
repayment, the part of such obligations which has been paid,
105
reduced or satisfied by such amount shall be reinstated and continued in full
force and effect as of the time immediately preceding such initial payment,
reduction or satisfaction.
Waiving Party (i) shall have no right of subrogation with respect to
the obligations of the other Borrower Parties; (ii) waives any right to enforce
any remedy that Lender now has or may hereafter have against any of the other
Borrower Parties any endorser or any guarantor of all or any part of such
obligations or any other person; and (iii) waives any benefit of, and any right
to participate in, any security or collateral given to Lender to secure the
payment or performance of all or any part of such obligations or any other
liability of the other parties to Lender.
Waiving Party agrees that any and all claims that it may have against
any of the other Borrower Parties, any endorser or any other guarantor of all or
any part of the obligations of the other Borrower Parties, or against any of
their respective properties, shall be subordinate and subject in right of
payment to the prior payment in full of all obligations secured hereby.
Notwithstanding any right of any of the Waiving Party to ask, demand, sue for,
take or receive any payment from the other Borrower Parties, all rights, liens
and security interests of Waiving Party, whether now or hereafter arising and
howsoever existing, in any assets of any of the other Borrower Parties (whether
constituting part of the security or collateral given to Lender to secure
payment of all or any part of the obligations of the other Borrower Parties or
otherwise) shall be and hereby are subordinated to the rights of Lender in those
assets.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 EXPENSES AND ATTORNEYS' FEES. Whether or not the transactions
contemplated hereby shall be consummated, the Borrowers agree to promptly pay
all reasonable fees, costs and expenses incurred by Lender in connection with
any matters contemplated by or arising out of this Loan Agreement, including the
following, and all such fees, costs and expenses shall be part of the
Obligations, payable on demand: (A) reasonable fees, costs and expenses
(including reasonable attorneys' fees, and other professionals retained by
Lender) incurred in connection with the examination, review, due diligence
investigation, documentation and closing of the financing arrangements evidenced
by the Loan Documents; (B) subject to Section 10.2, reasonable fees, costs and
expenses (including reasonable attorneys' fees and other professionals retained
by Lender) incurred in connection with the administration of the Loan Documents
and the Loan and any amendments, modifications and waivers relating thereto; (C)
subject to Section 10.2, reasonable fees, costs and expenses (including
reasonable attorneys' fees) incurred in connection with the review,
documentation, negotiation, closing and administration of any subordination or
intercreditor agreements; and (D) reasonable fees, costs and expenses (including
attorneys' fees and fees of other professionals retained by Lender) incurred in
any action to enforce or interpret this Loan Agreement or the other Loan
Documents or to collect any payments due from the Borrowers under this Loan
Agreement, the Note or any other Loan Document or incurred in connection with
any refinancing or restructuring of the credit arrangements provided under this
Loan Agreement, whether in the nature of a "workout" or in connection with any
insolvency or bankruptcy proceedings or otherwise. Any costs and expenses due
and payable to Lender after the Closing Date may be paid to Lender pursuant to
the Cash Management Agreement.
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SECTION 14.2 INDEMNITY. In addition to the payment of expenses as required
elsewhere herein, whether or not the transactions contemplated hereby shall be
consummated, the Borrowers agree to indemnify, defend, protect, pay and hold
Lender, Servicer and their successors and assigns (including, without
limitation, the trustee and/or the trust under any trust agreement executed in
connection with any Securitization backed in whole or in part by the Loan and
any other Person which may hereafter be the holder of the Note or any interest
therein), and the officers, directors, stockholders, partners, members,
employees, agents, Affiliates and attorneys of Lender and such successors and
assigns (collectively called the "INDEMNITEES") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, Tax Liabilities, broker's or finders fees, reasonable
costs, expenses and disbursements of any kind or nature whatsoever (including
the reasonable fees and disbursements of outside counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that are imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of (A) the negotiation,
execution, delivery, performance, administration, ownership, or enforcement of
any of the Loan Documents; (B) any of the transactions contemplated by the Loan
Documents; (C) any breach by the Borrowers of any material representation,
warranty, convenant, or other agreement contained in any of the Loan Documents;
(D) Lender's agreement to make the Loan hereunder; (E) any claim brought by any
third party arising out of any condition or occurrence at or pertaining to the
Properties; (F) any design, construction, operation, repair, maintenance, use,
non-use or condition of the Properties or Improvements, including claims or
penalties arising from violation of any applicable laws or insurance
requirements, as well as any claim based on any patent or latent defect, whether
or not discoverable by Lender; (G) any performance of any labor or services or
the furnishing of any materials or other property in respect of the Properties
or any part thereof; (H) any contest referred to in Section 5.3(B) hereof; (I)
any obligation or undertaking relating to the performance or discharge of any of
the terms, covenants and conditions of the landlord contained in the Leases; or
(J) the use or intended use of the proceeds of any of the Loan (the foregoing
liabilities herein collectively referred to as the "INDEMNIFIED LIABILITIES");
provided that the Borrowers shall not have an obligation to an Indemnitee
hereunder with respect to Indemnified Liabilities arising from the fraud, gross
negligence or willful misconduct of such Indemnitee as determined by a court of
competent jurisdiction. The obligations and liabilities of the Borrowers under
this Section 14.2 shall survive the term of the Loan and the exercise by Lender
of any of its rights or remedies under the Loan Documents, including the
acquisition of the Properties by foreclosure or a conveyance in lieu of
foreclosure.
SECTION 14.3 AMENDMENTS AND WAIVERS. Except as otherwise provided herein, no
amendment, modification, termination or waiver of any provision of this Loan
Agreement, the Note or any other Loan Document, or consent to any departure
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Lender and any other party to be charged. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on the Borrowers in any case shall entitle the Borrowers or other Person
to any other or further notice or demand in similar or other circumstances.
SECTION 14.4 RETENTION OF THE BORROWERS' DOCUMENTS. Lender may, in accordance
with Lender's customary practices, destroy or otherwise dispose of all
documents, schedules, invoices
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or other papers, delivered by the Borrowers to Lender (other than the Note)
unless the Borrowers request in writing that same be returned. Upon such request
and at the Borrowers' expense, Lender shall return such papers when Lender's
actual or anticipated need for same has terminated.
SECTION 14.5 NOTICES. Unless otherwise specifically provided herein, any notice
or other communication required or permitted to be given shall be in writing and
addressed to the respective party as set forth below. Notices shall be effective
(i) three (3) days after the date such notice is mailed, (ii) on the next
Business Day if sent by a nationally recognized overnight courier service, (iii)
on the date of delivery by personal delivery and (iv) on the date of
transmission if sent by telefax during business hours on a Business Day
(otherwise on the next Business Day).
Notices shall be addressed as follows:
If to the Borrowers or any Borrower Party:
c/o Lodgian
3445 Peachtree Road NE
Suite 700
Atlanta, Georgia 30326
Attention: General Counsel
Facsimile: (404) 364-0088
With a copy to:
Cadwalader Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: Robert F. McDonough
Facsimile: (212) 504-6666
If to Lender:
c/o Merrill Lynch & Co.
4 World Financial Center
New York, New York 10080
Attention: John Gluszak
Facsimile: (212) 449-7298
and
Attention: Steve Glassman
Facsimile: (212) 738-1013
With a copy to:
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Sidley Austin Brown & Wood LLP
787 Seventh Avenue
New York, New York 10019
Attn: Alan S. Weil, Esq.
Facsimile: (212) 839-5599
Any party may change the address at which it is to receive notices to another
address in the United States at which business is conducted (and not a
post-office box or other similar receptacle), by giving notice of such change of
address in accordance with the foregoing. This provision shall not invalidate or
impose additional requirements for the delivery or effectiveness of any notice
(i) given in accordance with applicable statutes or rules of court, or (ii) by
service of process in accordance with applicable law. If there is any assignment
or transfer of Lender's interest in the Loan, then the new Lenders may give
notice to the parties in accordance with this Section, specifying the addresses
at which the new Lenders shall receive notice, and they shall be entitled to
notice at such address in accordance with this Section.
SECTION 14.6 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Loan Agreement, the making of the Loan hereunder and the
execution and delivery of the Note. Notwithstanding anything in this Loan
Agreement or implied by law to the contrary, the agreements of the Borrowers to
indemnify or release Lender or Persons related to Lender, or to pay Lender's
costs, expenses, or taxes shall survive the payment of the Loan and the
termination of this Loan Agreement.
SECTION 14.7 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure
or delay on the part of Lender in the exercise of any power, right or privilege
hereunder or under the Note or any other Loan Document shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege. All rights and remedies existing under this Loan Agreement,
the Note and the other Loan Documents are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
SECTION 14.8 MARSHALING; PAYMENTS SET ASIDE. Lender shall not be under any
obligation to marshal any assets in favor of any Person or against or in payment
of any or all of the Obligations. To the extent that any Person makes a payment
or payments to Lender, or Lender enforces its remedies or exercises its rights
of set off, and such payment or payments or the proceeds of such enforcement or
set off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/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 recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
if any, and rights and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or set
off had not occurred.
SECTION 14.9 SEVERABILITY. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Loan Agreement, the
Note or other Loan Documents
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shall not affect or impair the validity, legality or enforceability of the
remaining provisions or obligations under this Loan Agreement, the Note or other
Loan Documents or of such provision or obligation in any other jurisdiction.
SECTION 14.10 HEADINGS. Section and subsection headings in this Loan Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Loan Agreement for any other purpose or be given any substantive
effect.
SECTION 14.11 APPLICABLE LAW. THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
WERE NEGOTIATED IN THE STATE OF NEW YORK, AND EXECUTED AND DELIVERED IN THE
STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN WERE DISBURSED FROM NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THE STATE OF NEW YORK AND ANY APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED
PURSUANT TO THE DEED OF TRUST AND THE ASSIGNMENT OF LEASES SHALL BE GOVERNED BY
THE LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED, EXCEPT THAT THE SECURITY
INTERESTS IN ACCOUNT COLLATERAL SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK OR THE STATE WHERE THE SAME IS HELD, AT THE OPTION OF LENDER.
SECTION 14.12 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns except that the Borrowers may not assign their rights or obligations
hereunder or under any of the other Loan Documents except as expressly provided
in Article XI.
SECTION 14.13 SOPHISTICATED PARTIES, REASONABLE TERMS, NO FIDUCIARY
RELATIONSHIP. The Borrowers, on behalf of themselves and all Borrower Parties,
represent, warrant and acknowledge that (i) they are sophisticated real estate
investors, familiar with transactions of this kind, and (ii) they have entered
into this Loan Agreement and the other Loan Documents after conducting their own
assessment of the alternatives available to them in the market, and after
lengthy negotiations in which they have been represented by legal counsel of
their choice. The Borrowers, on behalf of themselves and all Borrower Parties,
also acknowledge and agree that the rights of Lender under this Loan Agreement
and the other Loan Documents are reasonable and appropriate, taking into
consideration all of the facts and circumstances including without limitation
the quantity of the Loan, the nature of the Properties, and the risks incurred
by Lender in this transaction. No provision in this Loan Agreement or in any of
the other Loan Documents and no course of dealing between the parties shall be
deemed to create (i) any partnership or joint venture between Lender and the
Borrowers or any other Person, or (ii) any fiduciary or similar
110
duty by Lender to the Borrowers or any other Person. The relationship between
Lender and the Borrowers is exclusively the relationship of a creditor and a
debtor, and all relationship between Lender and any other Borrower are ancillary
to such creditor/debtor relationship.
SECTION 14.14 REASONABLENESS OF DETERMINATIONS. In any instance where any
consent, approval, determination or other action by Lender is, pursuant to the
Loan Documents or applicable law, required to be done reasonably or required not
to be unreasonably withheld, then Lender's action shall be presumed to be
reasonable, and the Borrowers shall bear the burden of proof of showing that the
same was not reasonable. 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 Loan Agreement or the other Loan Documents,
Lender or such agent, as the case may be, has an obligation to act reasonably or
promptly, neither Lender nor its agents shall be liable for any monetary
damages, and the Borrowers' sole remedy shall be limited to commencing an action
seeking injunctive relief or declaratory judgment. Any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an action
seeking declaratory judgment.
SECTION 14.15 LIMITATION OF LIABILITY. Neither Lender, nor any Affiliate,
officer, director, employee, attorney, or agent of Lender, shall have any
liability with respect to, and each of the Borrowers hereby waives, releases,
and agrees not to sue any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by the Borrower
Parties in connection with, arising out of, or in any way related to, this Loan
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Loan Agreement or any of the other Loan Documents, other
than the gross negligence or willful misconduct of Lender. Each of the Borrowers
hereby waives, releases, and agrees not to sue Lender or any of Lender's
Affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Loan Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Loan Agreement or any of the
transactions contemplated hereby, except to the extent the same is caused by the
gross negligence or willful misconduct of Lender.
SECTION 14.16 NO DUTY. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Lender shall have the right to
act exclusively in the interest of Lender and shall have no duty of disclosure,
duty of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to any of the Borrowers or Affiliates therof, or any other Person.
SECTION 14.17 ENTIRE AGREEMENT. This Loan Agreement, the Note, and the other
Loan Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements among the parties to the Loan
Documents.
SECTION 14.18 CONSTRUCTION; SUPREMACY OF LOAN AGREEMENT. The Borrowers and
Lender acknowledge that each of them has had the benefit of legal counsel of its
own choice and has been afforded an opportunity to review this Loan Agreement
and the other Loan Documents with its legal counsel and that this Loan Agreement
and the other Loan Documents shall be construed
111
as if jointly drafted by the Borrowers and Lender. If any term, condition or
provision of this Loan Agreement shall be inconsistent with any term, condition
or provision of any other Loan Document, then this Loan Agreement shall control.
SECTION 14.19 CONSENT TO JURISDICTION. EACH OF THE BORROWERS HEREBY CONSENTS TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW
YORK, STATE OF NEW YORK OR WITHIN THE COUNTY AND STATE IN WHICH THE PROPERTY IS
LOCATED AND IRREVOCABLY AGREES THAT, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN
SUCH COURTS. EACH OF THE BORROWERS ACCEPTS FOR ITSELF AND IN CONNECTION WITH THE
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT, THE NOTE, SUCH OTHER LOAN DOCUMENTS OR SUCH OBLIGATION. NOTHING
HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT OF LENDER TO BRING PROCEEDINGS AGAINST ANY BORROWER
IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 14.20 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS AND LENDER HEREBY
WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS LOAN AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR
ANY DEALINGS BETWEEN ANY BORROWER PARTY AND LENDER RELATING TO THE SUBJECT
MATTER OF THIS LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS
BEING ESTABLISHED. EACH OF THE BORROWER PARTIES AND LENDER ALSO WAIVES ANY BOND
OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE
REQUIRED OF IT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF
ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH OF THE BORROWERS AND LENDER ACKNOWLEDGES THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO THIS LOAN AGREEMENT, THAT EACH HAS
ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS LOAN AGREEMENT AND THAT EACH
WILL CONTINUE TO RELY ON THE WAIVER IN THE FUTURE. EACH OF THE BORROWERS AND
LENDER FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
112
MODIFICATIONS TO THIS LOAN AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN. IN THE EVENT OF LITIGATION, THIS
LOAN AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
SECTION 14.21 COUNTERPARTS; EFFECTIVENESS. This Loan Agreement and other Loan
Documents and any amendments or supplements thereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all of which counterparts together shall constitute but one and the same
instrument. This Loan Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.
SECTION 14.22 SERVICER. Lender shall have the right from time to time to
designate and appoint a Servicer and special servicer, and to change or replace
any Servicer or special servicer. Provided that the Borrowers have been notified
of such Servicer's role, all rights of the Lender hereunder may be exercised by
Servicer on behalf of Lender and provided the Borrowers shall not be required
to deal with more than one such servicing entity at any time. Lender shall
notify the Borrowers in writing as to the identity of the Servicer and any
special servicer.
SECTION 14.23 OBLIGATIONS OF BORROWER PARTIES. The Borrower Parties other than
the Borrowers are parties to this Loan Agreement only with regard to the
representation, warranties, and covenants specifically applicable to them.
SECTION 14.24 ADDITIONAL INSPECTIONS; REPORTS. Notwithstanding anything
contained in this Loan Agreement to the contrary, if for any reason whatsoever
Lender suspects that any conditions exist or may exist at any Property which
might have a Material Adverse Effect, Lender shall have the right, at the
Borrowers' sole reasonable cost and expense, to cause such inspections and
reports to be prepared and performed with respect to any Property as Lender
shall reasonably determine.
[signatures follow on next page]
113
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Loan Agreement as of the date first written above.
BORROWER:
ALBANY HOTEL, INC., a Florida corporation,
APICO HILLS, INC., a Pennsylvania corporation,
APICO INNS OF GREEN TREE, INC., a
Pennsylvania corporation,
BRUNSWICK MOTEL ENTERPRISES, INC., a
Georgia corporation,
DOTHAN HOSPITALITY 3053, INC., an Alabama
corporation,
DOTHAN HOSPITALITY 3071, INC., an Alabama
corporation,
GADSDEN HOSPITALITY, INC., an Alabama
corporation,
LODGIAN AMI, INC., a Maryland corporation,
MINNEAPOLIS MOTEL ENTERPRISES, INC., a
Minnesota corporation,
NH MOTEL ENTERPRISES, INC., a Michigan
corporation,
SERVICO AUSTIN, INC., a Texas corporation,
SERVICO CEDAR RAPIDS, INC., an Iowa
corporation,
SERVICO COLUMBIA, INC., a Maryland
corporation,
SERVICO GRAND ISLAND, INC., a New York
corporation,
SERVICO HOUSTON, INC., a Texas corporation,
SERVICO JAMESTOWN, INC., a New York
corporation,
SERVICO LANSING, INC., a Michigan
corporation,
SERVICO MARKET CENTER, INC., a Texas
corporation,
SERVICO MARYLAND, INC., a Maryland
corporation,
SERVICO METAIRIE, INC., a Louisiana
corporation,
SERVICO NEW YORK, INC., a New York
corporation,
SERVICO NIAGARA FALLS, INC., a New York
corporation,
SERVICO NORTHWOODS, INC., a Florida
corporation,
SERVICO PENSACOLA 7200, INC., a Delaware
corporation,
SERVICO PENSACOLA 7330, INC., a Delaware
corporation,
SERVICO PENSACOLA, INC., a Delaware
corporation,
SERVICO ROLLING MEADOWS, INC., an
Illinois corporation,
SERVICO WINTER HAVEN, INC., a Florida
corporation,
SHEFFIELD MOTEL ENTERPRISES, INC., an
Alabama corporation,
IMPAC HOTELS I, L.L.C., a Georgia limited
liability company,
LODGIAN MEMPHIS PROPERTY OWNER,
LLC, a Delaware limited liability company,
By: /s/ Daniel E. Ellis
--------------------------
Name: Daniel E. Ellis
Title: Vice President and Secretary, or
Authorized Signatory for each of the
entities listed above
AMI OPERATING PARTNERS, L.P., a Delaware
limited partnership
By: AMIOP ACQUISITION GENERAL
PARTNER SPE CORP., a Delaware
corporation, its General Partner
By: /s/ Daniel E. Ellis
-----------------------------
Name: Daniel E. Ellis
Title: Vice President and Secretary
DEDHAM LODGING ASSOCIATES I, LIMITED
PARTNERSHIP, a Georgia limited partnership
By: DEDHAM LODGING SPE, INC., a Delaware
corporation, its General Partner
By: /s/ Daniel E. Ellis
-----------------------------
Name: Daniel E. Ellis
Title: Vice President and Secretary
LITTLE ROCK LODGING ASSOCIATES I,
LIMITED PARTNERSHIP, a Georgia limited
partnership
By: LODGIAN LITTLE ROCK SPE, INC., a
Delaware corporation, its General Partner
By: /s/ Daniel E. Ellis
-----------------------------
Name: Daniel E. Ellis
Title: Vice President and Secretary
SERVICO CENTRE ASSOCIATES, LTD., a
Florida limited partnership
By: SERVICO PALM BEACH GENERAL
PARTNER SPE, INC., a Delaware
corporation, its General Partner
By: /s/ Daniel E. Ellis
-----------------------------
Name: Daniel E. Ellis
Title: Vice President and Secretary
LENDER:
MERRILL LYNCH MORTGAGE LENDING,
INC.
By: /s/ Steven Glassman
----------------------------
Name: STEVEN GLASSMAN
Title: AUTHORIZED SIGNATORY
LOAN AND SECURITY AGREEMENT
DATED NOVEMBER 25, 2002
BETWEEN
THE BORROWER OR BORROWERS LISTED ON SCHEDULE 1 HERETO
AS BORROWERS
AND
MERRILL LYNCH MORTGAGE LENDING, INC.
AS LENDER
------------------------------------
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS .......................................................... 1
Section 1.1 Certain Defined Terms ......................................... 1
Section 1.2 Accounting Terms .............................................. 25
Section 1.3 Other Definitional Provisions ................................. 25
ARTICLE II TERMS OF THE LOAN ................................................... 25
Section 2.1 Loan .......................................................... 25
Section 2.2 Interest ...................................................... 26
Section 2.3 Interest Rate Cap Agreement ................................... 27
Section 2.4 Payments ...................................................... 28
Section 2.5 Maturity ...................................................... 30
Section 2.6 Prepayment .................................................... 32
Section 2.7 Outstanding Balance ........................................... 33
Section 2.8 Taxes ......................................................... 33
Section 2.9 Reasonableness of Charges ..................................... 33
Section 2.10 Funding Losses/Change in Law Etc. ............................. 33
Section 2.11 Servicing/Special Servicing ................................... 35
ARTICLE III CONDITIONS TO LOAN ................................................. 35
Section 3.1 Conditions to Funding of the Loan on the Closing Date ......... 35
ARTICLE IV REPRESENTATIONS AND WARRANTIES ...................................... 40
Section 4.1 Organization, Powers, Capitalization, Good Standing, Business.. 40
Section 4.2 Authorization of Borrowing, etc. .............................. 41
Section 4.3 Financial Statements .......................................... 41
Section 4.4 Indebtedness and Contingent Obligations ....................... 42
Section 4.5 Title to the Properties ....................................... 42
Section 4.6 Zoning; Compliance with Laws .................................. 42
Section 4.7 Leases; Agreements ............................................ 43
Section 4.8 Condition of the Properties ................................... 44
Section 4.9 Litigation; Adverse Facts ..................................... 44
Section 4.10 Payment of Taxes .............................................. 45
Section 4.11 Adverse Contracts ............................................. 45
Section 4.12 Performance of Agreements ..................................... 45
Section 4.13 Governmental Regulation ....................................... 45
Section 4.14 Employee Benefit Plans ........................................ 45
Section 4.15 Broker's Fees ................................................. 45
Section 4.16 Intentionally Deleted ......................................... 45
Section 4.17 Solvency ...................................................... 45
Section 4.18 Disclosure .................................................... 46
i
Section 4.19 Use of Proceeds and Margin Security ........................... 46
Section 4.20 Insurance ..................................................... 46
Section 4.21 Separate Tax Lots ............................................. 46
Section 4.22 Investments ................................................... 46
Section 4.23 Reserved ...................................................... 47
Section 4.24 Defaults ...................................................... 47
Section 4.25 No Plan Assets ................................................ 47
Section 4.26 Governmental Plan ............................................. 47
Section 4.27 Not Foreign Person ............................................ 47
Section 4.28 No Collective Bargaining Agreements ........................... 47
Section 4.29 Mortgaged Condominium Documents ............................... 47
Section 4.30 Ground Leases ................................................. 47
ARTICLE V COVENANTS OF BORROWER PARTIES ........................................ 48
Section 5.1 Financial Statements and Other Reports ........................ 48
Section 5.2 Existence; Qualification ...................................... 53
Section 5.3 Payment of Impositions and Claims ............................. 53
Section 5.4 Maintenance of Insurance ...................................... 54
Section 5.5 Operation and Maintenance of the Properties; Casualty ......... 58
Section 5.6 Inspection .................................................... 61
Section 5.7 O&M Plan ...................................................... 62
Section 5.8 Intentionally Deleted ......................................... 62
Section 5.9 Compliance with Laws and Contractual Obligations .............. 62
Section 5.10 Further Assurances ............................................ 62
Section 5.11 Performance of Agreements and Leases .......................... 62
Section 5.12 Leases ........................................................ 62
Section 5.13 Management; Franchise Agreement ............................... 64
Section 5.14 Material Agreements ........................................... 66
Section 5.15 Deposits; Application of Receipts ............................. 66
Section 5.16 Estoppel Certificates ......................................... 66
Section 5.17 Indebtedness .................................................. 67
Section 5.18 No Liens ...................................................... 67
Section 5.19 Contingent Obligations ........................................ 68
Section 5.20 Restriction on Fundamental Changes ............................ 68
Section 5.21 Transactions with Related Persons ............................. 68
Section 5.22 Bankruptcy, Receivers, Similar Matters ........................ 68
Section 5.23 ERISA ......................................................... 69
Section 5.24 Press Release ................................................. 69
Section 5.25 Ground Leases ................................................. 69
Section 5.26 Mortgaged Condominium Property ................................ 73
Section 5.27 Lender's Expenses ............................................. 75
Section 5.28 Distributions ................................................. 75
Section 5.29 Completion of Required Capital Improvements ................... 75
Section 5.30 Compliance with Plan of Reorganization ........................ 75
Section 5.31 Cancellation of Indebtedness; Settlement of Claims ............ 75
ii
ARTICLE VI RESERVES ................................................................... 75
Section 6.1 Security Interest in Reserves; Other matters Pertaining to Reserves .. 75
Section 6.2 Funds Deposited with Lender .......................................... 76
Section 6.3 Impositions and Insurance Reserve .................................... 76
Section 6.4 FF&E Reserve ......................................................... 77
Section 6.5 Capital Improvement Reserve; Required Capital Improvements ........... 77
Section 6.6 Hazardous Materials Remediation Reserve .............................. 78
Section 6.7 Conditions to Disbursements from Hazardous Materials Remediation
Reserve and Capital Improvement Reserve; Performance of Work ......... 78
Section 6.8 Cash Trap Reserve .................................................... 83
ARTICLE VII LOCK BOX; CLEARING ACCOUNT; CENTRAL ACCOUNT; CASH MANAGEMENT .............. 84
Section 7.1 Establishment of Deposit Account and Lock Box Account ................ 84
Section 7.2 Application of Funds in Lock Box Account ............................. 85
Section 7.3 Application of Funds After Event of Default .......................... 85
ARTICLE VIII DEFAULT, RIGHTS AND REMEDIES.............................................. 86
Section 8.1 Event of Default ..................................................... 86
Section 8.2 Acceleration and Remedies............................................. 88
Section 8.3 Performance by Lender................................................. 90
Section 8.4 Evidence of Compliance ............................................... 90
ARTICLE IX SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS, WARRANTIES AND COVENANTS. 91
Section 9.1 Applicable to all Primary Borrower Parties ........................... 91
Section 9.2 Applicable to Borrowers, General Partner and Member .................. 93
ARTICLE X RESTRUCTURING LOAN, SECONDARY MARKET TRANSACTIONS ........................... 94
Section 10.1 Secondary Market Transactions Generally .............................. 94
Section 10.2 Cooperation; Limitations ............................................. 95
Section 10.3 Information .......................................................... 95
Section 10.4 Additional Provisions ................................................ 97
ARTICLE XI RESTRICTIONS ON LIENS, TRANSFERS; ASSUMABILITY; RELEASE OF PROPERTIES ...... 97
Section 11.1 Restrictions on Transfer and Encumbrance ............................. 97
Section 11.2 Transfers of Beneficial Interests in Borrowers ....................... 97
Section 11.3 Assumability ......................................................... 98
Section 11.4 Release of Properties ................................................ 99
Section 11.5 Conversion/Release ................................................... 101
Section 11.6 Sale of Building Equipment ........................................... 102
iii
Section 11.7 Immaterial Transfers and Easements, etc .............................. 102
ARTICLE XII RECOURSE; LIMITATIONS ON RECOURSE ......................................... 103
Section 12.1 Limitations on Recourse .............................................. 103
Section 12.2 Partial Recourse ..................................................... 103
Section 12.3 Miscellaneous ........................................................ 104
ARTICLE XIII WAIVERS OF DEFENSES OF GUARANTORS AND SURETIES ........................... 104
Section 13.1 Waivers .............................................................. 104
ARTICLE XIV MISCELLANEOUS ............................................................. 106
Section 14.1 Expenses and Attorneys' Fees ......................................... 106
Section 14.2 Indemnity ............................................................ 107
Section 14.3 Amendments and Waivers ............................................... 107
Section 14.4 Retention of Borrowers' Documents .................................... 107
Section 14.5 Notices .............................................................. 108
Section 14.6 Survival of Warranties and Certain Agreements ........................ 109
Section 14.7 Failure or Indulgence Not Waiver; Remedies Cumulative ................ 109
Section 14.8 Marshaling; Payments Set Aside ....................................... 109
Section 14.9 Severability ......................................................... 109
Section 14.10 Headings ............................................................. 110
Section 14.11 APPLICABLE LAW ....................................................... 110
Section 14.12 Successors and Assigns ............................................... 110
Section 14.13 Sophisticated Parties, Reasonable Terms, No Fiduciary Relationship ... 110
Section 14.14 Reasonableness of Determinations ..................................... 111
Section 14.15 Limitation of Liability .............................................. 111
Section 14.16 No Duty .............................................................. 111
Section 14.17 Entire Agreement ..................................................... 111
Section 14.18 Construction; Supremacy of Loan Agreement ............................ 111
Section 14.19 Consent to Jurisdiction .............................................. 112
Section 14.20 Waiver of Jury Trial ................................................. 112
Section 14.21 Counterparts; Effectiveness .......................................... 113
Section 14.22 Servicer ............................................................. 113
Section 14.23 Obligations of Borrower Parties ...................................... 113
Section 14.24 Additional Inspections; Reports ...................................... 113
iv
LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Capital Improvement Plan
Exhibit B - Environmental Reports
Exhibit C - Franchise Agreements
Exhibit D - Allocated Loan Amount
Exhibit E - Management Agreements
Exhibit F - Properties
Exhibit G - Property Improvement Plan
Exhibit H - Ground Lessor Estoppels
Exhibit I - Acceptable Franchisors
Exhibit J - [Reserved]
Exhibit K - [Reserved]
Exhibit L - [Reserved]
Exhibit M - Property Condition Reports
Schedule 1 - Borrowers
Schedule 3.1(A) - List of Loan Documents
Schedule 4.1(C) - Organizational Chart for Borrower Parties
Schedule 4.2 - Consents
Schedule 4.4 - Contingent Obligations
Schedule 4.5 - Condemnation Proceedings
Schedule 4.6 - Zoning
Schedule 4.7(B) - Rent Roll
Schedule 4.7(E) - Franchise Defaults
Schedule 4.9 - Litigation
Schedule 4.14 - ERISA Plans
Schedule 4.20 - Insurance
Schedule 4.28 - Collective Bargaining Agreements
Schedule 4.29 - Mortgaged Condominium Property Documents
Schedule 4.30 - Ground Lease Amendments
Schedule 5.1(D) - CapEx/FF&E Budget
Schedule 5.7 - O&M Plans
Schedule 5.14 - Material Agreements
Schedule 6.6 - Environmental Work
Schedule 6.7 - Reserve Funding Condition
List of Schedules
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT (this "LOAN AGREEMENT") is
dated as of November 25, 2002 and entered into by and between THE BORROWER OR
BORROWERS LISTED ON SCHEDULE 1 HERETO (collectively, "BORROWERS", and
individually, each a "BORROWER"), and MERRILL LYNCH MORTGAGE LENDING, INC., a
Delaware corporation (together with its successors and assigns, "LENDER").
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and convenants herein contained, the Borrowers and Lender
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. The terms defined below are used in this Loan
Agreement as so defined. Terms defined in the preamble and recitals to this Loan
Agreement are used in this Loan Agreement as so defined.
"ACCEPTABLE FRANCHISOR" and "ACCEPTABLE FRANCHISE NAME" means the
franchisors identified on EXHIBIT I.
"ACCEPTABLE MANAGER" means Lodgian Management Corp. or any other
Affiliate of the Borrowers and, upon receipt of a Rating Confirmation, another
reputable hotel management company with at least five (5) years experience
managing hotel properties similar to the Properties and which at the time of its
engagement is managing at least 5,000 hotel rooms (exclusive of the Properties).
"ACCEPTABLE REPLACEMENT CAP" has the meaning set forth in Section 2.3.
"ACCOUNT COLLATERAL" means all of the Borrowers' right, title and
interest in and to the Accounts, the Reserves, all monics and amounts which may
from time to time be on deposit therein, all monies, checks, notes, instruments,
documents, deposits, and credits from time to time in the possession of Lender
representing or evidencing such Accounts and Reserves and all earnings and
investments held therein and proceeds thereof.
"ACCOUNTS" means, collectively, the Deposit Account, the FF&E Reserve,
any Loss Proceeds Account, the Lock Box Account, the Sub-Accounts thereof and
any other accounts pledged to Lender pursuant to this Loan Agreement or any
other Loan Document.
"AFFILIATE" means in relation to any Person, any other Person: (i)
directly or indirectly controlling, controlled by, or under common control with,
the first Person; (ii) directly or indirectly owning or holding fifty percent
(50%) or more of any equity interest in the first Person; or (iii) fifty percent
(50%) or more of whose voting stock or other equity interest is directly or
indirectly owned or held by the first Person. In addition, the Affiliates of
each Borrower Party include, without limitation, all other Borrower Parties,
irrespective of whether they now or hereafter satisfy the foregoing criteria.
For purposes of this definition, "CONTROL" (including with correlative meanings,
the terms "CONTROLLING", "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means
the possession directly or indirectly of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. Where expressions
such as "[name of party] or any Affiliate" are used, the same shall refer to the
named party and any Affiliate of the named party. Further, the Affiliates of any
Person that is an entity shall include all natural persons who are officers,
agents, directors, members, partners, or employees of the entity Person.
"AGGREGATE ALLOCATED LOAN AMOUNT" shall mean the aggregate portion of
the Mezzanine Loan and the Loan allocated to each Property as set forth on
EXHIBIT D.
"AGGREGATE OUTSTANDING PRINCIPAL BALANCE" means, at the time of
determination, the aggregate outstanding principal balance of the Mezzanine Loan
and the Loan.
"ALLOCATED LOAN AMOUNT" shall mean the portion of the Loan allocated to
each Property as set forth on EXHIBIT D.
"AMORTIZATION DEFICIENCY" shall mean, as of the date of determination,
(x) the aggregate of all monthly Scheduled Mortgage Principal Payments through
the date of determination minus (y) the actual principal payments made to Lender
pursuant to Section 2.4(A)(ii) and Section 2.4(A)(iv) of this Loan Agreement
through the date immediately preceding the date of determination.
"APPLICABLE SPREAD" means 2.2442%.
"APPROVED ACCOUNTING FIRM" means Ernst and Young,
PricewaterhouseCoopers, Deloitte & Touche or KPMG Peat Marwick or any successor
entity.
"APPROVED CAPITAL IMPROVEMENT EXPENDITURES" has the meaning set forth
in Section 6.7.
"APPROVED ENVIRONMENTAL EXPENDITURES" has the meaning set forth in
Section 6.7.
"APPROVED EXPENDITURES" has the meaning set forth in Section 6.7.
"ARCHITECT" has the meaning set forth in Section 5.5.
"ASSIGNMENT OF RATE CAP" means that certain Collateral Assignment of
Interest Rate Protection Agreement of even date herewith from the Borrowers to
Lender, constituting an assignment of the Cap and proceeds thereform as
Collateral for the Loan, as same may be amended or modified from time to time.
"ASSIGNMENTS OF LEASES" means, collectively, the Assignments of Leases
and Rents of even date herewith from each of the Borrowers to Lender,
constituting assignments of each Borrower's right, title and interest in the
Leases and proceeds therefrom for each of their respective Properties as
Collateral for the Loan, as same may be amended or modified from time to time.
"ASSIGNMENTS OF MANAGEMENT AGREEMENTS" means, collectively, those
certain Conditional Assignments of Management Hotel Agreements of even date
herewith executed by
2
each of the Borrowers and the applicable Manager, constituting an assignment of
each Management Agreement as Collateral for the Loan, as same may be amended or
modified from time to time.
"ASSUMPTION" has the meaning set forth in Section 11.3.
"BANKRUPTCY CODE" means Title 11 of the United States Code, as amended
from time to time, and all rules and regulations promulgated thereunder.
"BEVERAGE COMPANY" shall mean any Person (other than any of the
Borrowers) holding, or entitled to any proceeds from, any liquor license or
other beverage permit for the sale of alcoholic beverages at any Property.
"BOARD OF MANAGERS" means the board of managers, or similar governing
entity, established for the governance of the condominium association
established pursuant to the terms of the Mortgaged Condominium Property
Documents.
"BORROWER" and "BORROWERS" have the meanings set forth in the preamble;
provided that, following a Release, "BORROWERS" shall mean each of the Borrowers
remaining as a party to the Loan Documents, and whose Properties remain
encumbered by the Deeds of Trust as Collateral for the Loan and "BORROWER" shall
mean any of such remaining parties.
"BORROWER PARTY" and "BORROWER PARTIES" means, individually or
collectively, the Borrowers, General Partner, Member and Guarantor.
"BORROWER PARTY SECRETARY" has the meaning set forth in Section 3.1.
"BUSINESS DAY" means any day excluding (i) Saturday, (ii) Sunday,
(iii) any day which is a legal holiday under the laws of the State of New York,
the state or states where the servicing offices of the Servicer, and, if the
Loan becomes a "specially serviced mortgage loan" pursuant to the terms of any
trust and servicing agreement entered into in connection with any Securitization
backed in whole or in part by the Loan, the special servicer, are located or the
state in which the corporate trust office of the trustee in connection with any
such Securitization is located, and (iv) any day on which banking institutions
located in such state are generally not open for the conduct of regular
business.
"CALCULATION DATE" means (x) prior to the occurrence of a Cash Trap
Event, the last day of each calendar quarter, and (y) during the continuance of
a Cash Trap Event, the last day of each calendar month.
"CAP" has the meaning set forth in Section 2.3.
"CapEX/FF&E BUDGET" means the expenditures for Replacements and other
expenditures for FF&E and Capital Expenditures set forth in an annual budget
approved by Lender in writing (such approval not to be unreasonably withheld or
delayed as long as the budget is consistent with the form of the CapEx/FF&E
Budget provided to Lender prior to Closing), covering the planned FF&E
expenditures and Capital Expenditures for the period covered by such budget, as
same may be amended pursuant to Section 5.1(D) hereof.
3
"CAPITAL EXPENDITURES" means expenditures for Capital Improvements.
"CAPITAL IMPROVEMENTS" means capital improvements, repairs or
alterations, furnishings, fixtures, equipment and other capital items (whether
paid in cash or property or accrued as liabilities) made by the Borrowers that,
in conformity with GAAP, would not be included in the Borrowers' annual
financial statements as an Operating Expense of the Properties.
"CAPITAL IMPROVEMENT PLAN" means each of the Borrower's current plan
and budget for certain ongoing multi-phased capital improvement to the
respective Properties, as more particularly described on EXHIBIT A.
"CAPITAL IMPROVEMENT RESERVE" has the meaning set forth in Section 6.5.
"CAP PROVIDER" has the meaning set forth in Section 2.3.
"CAP RESERVE" has the meaning set forth in Section 2.3.
"CAP THRESHOLD RATE" has the meaning set forth in Section 2.3.
"CASH MANAGEMENT AGREEMENT" means the Cash Management Agreement of even
date herewith among the Borrowers, Lender, Manager, and Lock Box Account Bank.
"CASH TRAP EVENT" has the meaning set forth in Section 6.8.
"CASH TRAP RESERVE" has the meaning set forth in Section 6.8.
"CATEGORY" means the applicable Tier 1 Hotel, the Tier 2 Hotel or the
Tier 3 Hotel category.
"CLAIMS" has the meaning set forth in Section 5.3.
"CLOSING" means the funding of the Loan and the consummation of the
other transactions contemplated by this Loan Agreement.
"CLOSING DATE" means the date on which the Closing occurs.
"COLLATERAL" means rights, interests, and property of every kind, real
and personal, tangible and intangible, which is granted, pledged, liened, or
encumbered as security for the Loan or any of the other Obligations under this
Loan Agreement, the Deeds of Trust, the Cash Management Agreement or other Loan
Documents, including without limitation the Properties and the Account
Collateral.
"COMPLIANCE CERTIFICATE" has the meaning set forth in Section 5.1.
"CONDOMINIUM BORROWER" means Servico Maryland, Inc., together with,
following a Condominium Release, the Borrower owning the Hotel Unit.
"CONDOMINIUM DEFAULT" has the meaning set forth in Section 4.29.
4
"CONTINGENT OBLIGATION", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person: (A) with respect to
any indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent of the Person incurring such liability, or the primary effect
thereof, is to provide assurance to the obligee of such liability that such
liability will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such liability will be protected
(in whole or in part) against loss with respect thereto; (B) with respect to any
letter of credit issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings; (C) under any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement or arrangement designed to protect against
fluctuations in interest rates; or (D) under any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect that Person against fluctuations in currency values. Contingent
Obligations shall include (i) the direct or indirect guaranty, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making (other than the Loan), discounting with recourse or sale with recourse
by such Person of the Obligation of another, (ii) the obligation to make
take-or-pay or similar payments if required regardless of nonperformance by any
other party or parties to an agreement, and (iii) any liability of such Person
for the obligations of another through any agreement to purchase, repurchase or
otherwise acquire such obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to
maintain the solvency, financial condition or any balance sheet item or level of
income of another. The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guaranteed or otherwise supported or, if not a fixed
and determined amount, the maximum amount so guaranteed.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject, other
than the Loan Documents.
"CONVERSION" shall mean the conversion of the West Palm Beach Property
to a condominium form of ownership.
"CONVERSION DOCUMENTS" has the meaning set forth in Section 11.5.
"CREDIT CARD COMPANIES" has the meaning set forth in Section 7.1.
"CREDIT CARD RECEIVABLES PAYMENT DIRECTION LETTER" has the meaning set
forth in Section 7.1.
"D&O INSURANCE" has the meaning set forth in Section 5.4.
"DEBT SERVICE COVERAGE RATIO" OR "DSCR" means, at any time of
determination, Net Cash Flow for the tailing 12-month period divided by the
amount of interest (assuming an interest rate equal to the Test Rate) that the
Borrowers will be required to pay over the succeeding 12 months on the Loan and
the Mezzanine Loan plus, in the case of any determination after the first
anniversary of the Closing Date, principal amortization of the Loan and the
Mezzanine Loan that would be required in respect of the then outstanding
principal
5
amount of the Loan and the Mezzanine Loan over the first 12 months of a 25-year
amortization schedule, calculated using the Test Rate.
"DEBT SERVICE SUB-ACCOUNT" has the meaning set forth in Section 7.1.
"DEBT YIELD" means, at any time of determination, Net Cash Flow for the
trailing 12-month period divided by the then outstanding principal balance of
the Loan and the Mezzanine Loan.
"DEEDS OF TRUST" means, collectively, (i) those certain Fee/Leasehold
Deeds of Trust, Assignments of Leases and Security Agreements, (ii) those
certain Fee/Leasehold Mortgages, Assignment of Leases and Security Agreements,
and (iii) those certain Deeds to Secure Debt, Assignment of Leases and Security
Agreements of even date herewith from the Borrowers to Lender (or deed trustee
on behalf of Lender, as applicable), constituting Liens on their respective
Properties as Collateral for the Loan as same may be modified or amended from
time to time.
"DEFAULT" means any breach or default under any of the Loan Documents,
whether or not the same is an Event of Default, and also any condition or event
that, after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within any
applicable grace or cure period.
"DEFAULT RATE" has the meaning set forth in Section 2.2.
"DEPOSIT ACCOUNT" has the meaning set forth in Section 7.1.
"DEPOSIT ACCOUNT AGREEMENT" has the meaning set forth in Section 7.1.
"DEPOSIT BANK" has the meaning set forth in Section 7.1.
"DETERMINATION DATE" means the day which is two (2) Eurodollar Business
Days prior to the first day of an Interest Accrual Period; provided that the
first Determination Date shall be two (2) Eurodollar Business Days prior to the
Closing Date or, if such date is not a Eurodollar Business Day, the immediately
preceding Eurodollar Business Day. The LIBO Rate set on each Determination Date
shall be in effect for the Interest Accrual Period immediately following such
Determination Date.
"DISCLOSURE DOCUMENTS" has the meaning set forth in Section 10.3.
"DOLLAR EQUIVALENTS" means (a) commercial paper rated P-1 or better by
Moody's or A-1 or better by S&P or similarly rated by any successor to either of
such rating services, (b) obligations of the United States government or any
agency thereof which are backed by the full faith and credit of the United
States, or (c) deposits, including certificates of deposit, in any commercial
bank or trust company (i) which is registered to do business in any state of the
United States, (ii) which has capital and surplus in excess of $100,000,000 and
(iii) the short-term debt of which is rated A-1 or better by S&P or P-1 or
better by Moody's or is similarly rated by any successor thereof, provided that
each such item of commercial paper, each such obligation, and each such time
deposit has a maturity date not later than thirty days after the date of
purchase thereof.
6
"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
"DOTHAN HOTEL" has the meaning set forth in Section 5.13.
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable account from
all other funds held by the holding institution, which account is either (i) an
account maintained with an Eligible Bank or (ii) a segregated trust account
maintained by a corporate trust department of a federal depository institution
or a state chartered depository institution subject to regulations regarding
fiduciary funds on deposit similar to Title 12 of the Code of Federal
Regulations Section 9.10(b), which, in either case, has corporate trust powers
and is acting in its fiduciary capacity or is otherwise acceptable to the Rating
Agencies.
"ELIGIBLE BANK" shall mean a bank that satisfies the Rating Criteria.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan within the
meaning of Section 3(3) of ERISA (including any Multiemployer Plan) (i) which is
maintained for employees of any of the Borrowers or any ERISA Affiliate, (ii)
which has at any time within the preceding six (6) years been maintained for the
employees of any of the Borrowers or any current or former ERISA Affiliate or
(iii) for which any of the Borrowers or any ERISA Affiliate has any liability,
including contingent liability.
"ENVIRONMENTAL INDEMNITY" means the Environmental Indemnity of even
date herewith from the Borrowers and Guarantor to Lender, as same may be amended
or modified from time to time.
"ENVIRONMENTAL LAWS" means all present and future local, state, federal
or other governmental authority, statutes, ordinances, codes, orders, decrees,
laws, rules or regulations pertaining to or imposing liability or standards of
conduct concerning environmental regulation (including, without limitation,
regulations concerning health and safety), contamination or cleanup or the
handling, generation, release or storage of Hazardous Material affecting the
Properties including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, the Resource Conservation
and Recovery Act, as amended, the Emergency Planning and Community Right-to-Know
Act of 1986, as amended, the Hazardous Substances Transportation Act, as
amended, the Solid Waste Disposal Act, as amended, the Clean Water Act, as
amended, the Clean Air Act, as amended, the Toxic Substances Control Act, as
amended, the Safe Drinking Water Act, as amended, the Occupational Safety and
Health Act, as amended, any state superlien and environmental clean-up statutes
and all regulations adopted in respect of the foregoing laws whether now or
hereafter in effect.
"ENVIRONMENTAL REPORTS" means those certain environmental reports and
audits for the Properties as described on EXHIBIT B.
"ENVIRONMENTAL WORK" has the meaning set forth in Section 6.6.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
all rules and regulations promulgated thereunder.
7
"ERISA AFFILIATE" means, in relation to any Person, any other Person
under common control with the first Person, within the meaning of Section
4001(a)(14) of ERISA.
"EURODOLLAR BUSINESS DAY" means any day on which banks in the City of
London, England are generally open for interbank or foreign exchange
transactions and which is also a Business Day.
"EVENT OF DEFAULT" has the meaning set forth in Section 8.1.
"EXCESS CASH FLOW" has the meaning set forth in the Cash Management
Agreement.
"EXCESS INTEREST" has the meaning set forth in Section 2.2.
"EXCLUSIONS FROM COVERAGE" has the meaning set forth in Section 5.4.
"EXCULPATED PARTIES" has the meaning set forth in Section 12.2.
"EXTENSION CAP THRESHOLD RATE" has the meaning set forth in Section
2.5.
"EXTENSION NOTICE" has the meaning set forth in Section 2.5.
"EXTENSION TERMS" has the meaning set forth in Section 2.5.
"EXTRAORDINARY RECEIPTS SUB-ACCOUNT" has the meaning set forth in the
Cash Management Agreement.
"FF&E" means all machinery, furniture, furnishings, equipment, fixtures
(including, without limitation, all heating, air conditioning, plumbing,
lighting, communications and elevator fixtures), inventory and articles of
personal property and accessions, renewals and replacements thereof and
substitutions therefor (including, without limitation, beds, bureaus,
chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables, rugs,
carpeting, drapes, draperies, venetian blinds, screens, paintings, hangings,
pictures, divans, couches, luggage carts, luggage racks, stools, sofas,
chinaware, linens, pillows, blankets, glassware, foodcarts, cookware, dry
cleaning facilities, dining room wagons, tools, keys or other entry systems,
bars, bar fixtures, liquor and drink dispensers, ice makers, radios, clock
radios, television sets, intercom and paging equipment, electric and electronic
equipment, dictating equipment, private telephone systems, medical equipment,
potted plants, heating, lighting and plumbing fixtures, fire prevention and
extinguishing apparatus, cooling and air-conditioning systems, elevators,
escalators, fittings, plants, apparatus, stoves, ranges, refrigerators, laundry
machines, tools, machinery, engines, dynamos, motors, boilers, incinerators,
switchboards, conduits, compressors, vacuum cleaning systems, floor cleaning,
waxing and polishing equipment, call systems, brackets, electrical signs, bulbs,
bells, fuel, conveyors, cabinets, lockers, shelving, spotlighting equipment,
dishwashers, garbage disposals, washer and dryers), other customary hotel
equipment and other tangible property of every kind and nature whatsoever owned
by the Borrowers, or in which the Borrowers have or shall have an interest, now
or hereafter located at the Properties, or appurtenant thereto, and useable in
connection with the present or future operation and occupancy of the Properties
and all building equipment, material and supplies of any nature whatsoever owned
by the Borrowers, or in which the Borrowers have or shall have an interest,
8
now or hereafter located at the Properties, or appurtenant, thereto, and useable
in connection with the present or future operation, enjoyment and occupancy of
the Properties.
"FF&E RESERVE" means the reserve established pursuant to Section 6.4.
"FINANCIAL STATEMENTS" means statements of operations and retained
earnings, statements of cash flow and balance sheets.
"FINANCING STATEMENTS" means the Uniform Commercial Code Financing
Statements naming the applicable Borrower Parties as debtor, and Lender as
secured party, required under applicable state law to perfect the security
interests created hereunder or under the other Loan Documents.
"FIRST EXTENSION TERM" has the meaning set forth in Section 2.5.
"FITCH" means Fitch, Inc.
"FORCE MAJEURE" Means acts of god, governmental restrictions, stays,
judgments, orders, decrees, enemy actions, civil commotion, fire, casualty,
strikes or work stoppage which are industry-wide and not aimed at the Borrowers
or their Affiliates, or other causes beyond the reasonable control of the
Borrowers and/or their Affiliates, but the Borrowers' lack of funds in and of
itself shall not be deemed a cause beyond the control of the Borrowers.
"FRANCHISE AGREEMENTS" means, collectively, those certain agreements
described in EXHIBIT C and any replacement franchise agreement which may
hereafter be entered into in accordance with the terms and conditions hereof by
any of the Borrowers, as franchisee, pursuant to which the Borrowers have the
right to operate the Properties under names and hotel systems controlled by the
Franchisor.
"FRANCHISOR" means the current hotel franchisor or licensor with
respect to each Property or any other successor franchisor or licensor permitted
pursuant to Section 5.13.
"FRANCHISOR LETTER" shall mean, with respect to each Property, a
comfort letter(s), and/or similar instrument(s) from the related Franchisor to
Lender acknowledging the Loan and providing certain assurances, reasonably
satisfactory to Lender, with respect thereto.
"FUNDING LOSSES" has the meaning set forth in Section 2.10.
"FUNDING PARTY" means any bank or other entity, if any, which is
indirectly or directly funding Lender with respect to the Loan, in whole or in
part, including, without limitation, any direct or indirect assignee of, or
participant in, the Loan.
"GAAP" means generally accepted accounting principles as set forth in
Statement on Auditing Standards No. 69 entitled "The Meaning of Presenting
Fairly in Conformity with Generally Accepted Accounting Principles in the
Independent Auditor's Report" issued by the Auditing Standards Board of the
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board to the extent such principles are
applicable to the facts and circumstances as of the date of determination.
9
"GENERAL PARTNER" shall mean, individually or collectively, those
parties identified on SCHEDULE 4.1(c) as "General Partners", and any other
entity which is now or hereafter becomes a general partner of any of the
Borrowers under such Borrower's limited partnership agreement.
"GOVERNMENTAL AUTHORITY" means, with respect to any Person, any federal
or state government or other political subdivision thereof and any entity,
including any regulatory or administrative authority or court, exercising
executive, legislative, judicial, regulatory or administrative or
quasi-administrative functions of or pertaining to government, and any
arbitration board or tribunal in each case having jurisdiction over such
applicable Person or such Person's property, and any stock exchange on which
shares of capital stock of such Person are listed or admitted for trading.
"GROUND LEASE DEFAULT" has the meaning set forth in Section 4.30
"GROUND LEASED PROPERTIES" means the Properties subject to the Ground
Leases as described on SCHEDULE 4.30 attached hereto.
"GROUND LEASES" means the ground leases described on SCHEDULE 4.30
attached hereto.
"GROUND LESSORS" means the lessors under the Ground Leases as described
on SCHEDULE 4.30 attached hereto.
"GUARANTOR" means Lodgian, Inc., a Delaware corporation.
"GUARANTY" means the Guaranty of Recourse Obligations and the
Environmental Indemnity, each of even date herewith executed by Guarantor in
favor of Lender, as same may be amended or modified from time to time.
"HAZARDOUS MATERIAL" means all or any of the following: (A) substances,
materials, compounds, wastes, products, emissions and vapors that are defined or
listed in, regulated by, or otherwise classified pursuant to, any applicable
Environmental Laws, including any so defined, listed, regulated or classified as
"hazardous substances", "hazardous materials", "hazardous wastes", "toxic
substances", "pollutants", "contaminants", or any other formulation intended to
regulate, define, list or classify substances by reason of deleterious, harmful
or dangerous properties; (B) waste oil, oil, petroleum or petroleum derived
substances, natural gas, natural gas liquids or synthetic gas and drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources; (C)
any flammable substances or explosives or any radioactive materials; (D)
asbestos in any form; (E) electrical or hydraulic equipment which contains any
oil or dielectric fluid containing polychlorinated biphenyls; (F) radon; (G)
mold; or (H) urea formaldehyde, provided, however, such definition shall not
include cleaning materials and other substances commonly used in the ordinary
course of the Borrowers' business, which materials exist only in reasonable
quantities and are stored, contained, transported, used, released, and disposed
of in accordance with all applicable Environmental Laws.
"HAZARDOUS MATERIALS REMEDIATION RESERVE" means the Reserve established
pursuant to Section 6.6.
10
"HOTEL UNIT" has the definition set forth in Section 11.5.
"IMPOSITIONS" means (i) all real estate and personal property taxes,
and vault charges and all other taxes, levies, assessments and other similar
charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, of every kind and nature whatsoever (including any payments in lieu
of taxes), which at any time prior to, at or after the execution hereof may be
assessed, levied or imposed by, in each case, a governmental authority upon any
of the Properties or the rents relating thereto or upon the ownership, use,
occupancy or enjoyment thereof, and any interest, cost or penalties imposed by
such governmental authority with respect to any of the foregoing and (ii) all
rent and other amounts payable by the Borrowers under each of the Ground Leases
and under the Mortgaged Condominium Property Documents. Impositions shall not
include (x) any sales or use taxes payable by the Borrowers, (y) taxes payable
by tenants or guests occupying any portions of the Properties, or (z) taxes or
other charges payable by any Manager or Franchisor unless such taxes are being
paid on behalf of the Borrowers.
"IMPOSITIONS AND INSURANCE RESERVE" means the reserve established
pursuant to Section 6.3.
"IMPROVEMENTS" means all buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
of every kind and nature now or hereafter located on the Properties.
"INDEBTEDNESS" or "INDEBTEDNESS", shall mean, for any Person, without
duplication: (i) all indebtedness of such Person for borrowed money, for amounts
drawn under a letter of credit, or for the deferred purchase price of property
for which such Person or its assets is liable, (ii) all unfunded amounts under a
loan agreement, letter of credit (unless secured in full by Dollars), or other
credit facility for which such Person would be liable if such amounts were
advanced thereunder, (iii) all amounts required to be paid by such Person as a
guaranteed payment to partners or a preferred or special dividend, including any
mandatory redemption of shares or interests but not any preferred return or
special dividend paid solely from, and to the extent of, excess cash flow after
the payment of all operating expenses, capital improvements and debt service on
all Indebtedness, (iv) all obligations under leases that constitute capital
leases for which such Person is liable, and (v) all obligations of such Person
under interest rate swaps, caps, floor, collars and other interest hedge
agreements, in each case whether such Person is liable contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations such Person otherwise assures a creditor against loss.
"INDEMNIFIED LIABILITIES" has the meaning set forth in Section 14.2.
"INDEMNITEES" has the meaning set forth in Section 14.2.
"INDEPENDENT DIRECTOR" means an individual who shall not have been at
the time of such individual's appointment or at any time while serving as a
director of General Partner, Member, any of the Borrowers or any of their
respective Affiliates, and may not have been at any time during the preceding
five years (i) a stockholder, director (other than as an independent
director/member), officer, employee, partner, attorney or counsel of General
Partner, Member, Guarantor, any of the Borrowers or any Affiliate of any of them
(except that such individual may
11
be an independent director of any other Affiliate of the foregoing), (ii) a
customer, supplier or other Person who derives any of its purchases or revenues
from its activities with General Partner, Member, Guarantor, any of the
Borrowers or any Affiliate of any of them (other than a company that provides
professional independent directors and which also may provide other ancillary
corporate, partnership, company or trust services to the Borrowers, Member,
General Partner or their Affiliates in the ordinary course of business (for
example, The Corporation Trust Company)), (iii) a Person or other entity
controlling or under common control with any such stockholder, partner,
customer, supplier or other Person, or (iv) a member of the immediate family of
any such stockholder, director, officer, employee, partner, customer, supplier
or other Person. As used in this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management, policies or activities of a Person, whether through
ownership of voting securities, by contract or otherwise.
"INITIAL TERM" means the period from the Closing Date to the Scheduled
Maturity Date.
"INSURANCE POLICIES" has the meaning set forth in Section 5.4.
"INSURANCE PREMIUMS" means the annual insurance premiums for the
insurance policies required to be maintained by the Borrowers with respect to
the Properties under Section 5.4.
"INTEREST ACCRUAL PERIOD" means a period commencing on the first
Business Day of a calender month and ending on the day immediately prior to the
first Business Day of the next calender month; provided that the first Interest
Accrual Period shall mean the period from and including the Closing Date and
including the day immediately prior to the first Business Day of the next
calendar month.
"INTERESTED PARTIES" has the meaning set forth in Section 10.3.
"INTEREST RATE" has the meaning set forth in Section 2.2.
"INVOLUNTARY BORROWER BANKRUPTCY" has the meaning set forth in Section
5.22.
"IRC" means the Internal Revenue Code of 1986, and any rule or
regulation promulgated thereunder from time to time, in each case as amended
from time to time.
"IRS" means the Internal Revenue Service or any successor thereto.
"KNOWLEDGE": whenever in this Loan Agreement or any of the Loan
Documents, or in any document or certificate executed on behalf of any Borrower
Party pursuant to this Loan Agreement or any of the Loan Documents, reference is
made to the knowledge of the Borrowers or any other Borrower Party (whether by
use of the words "knowledge" or "known", or other words of similar meaning, and
whether or not the same are capitalized), such shall be deemed to refer to the
knowledge (without independent investigation unless otherwise specified) of (i)
the individuals who have significant responsibility for any policy making, major
decisions or financial affairs of the applicable entity; (ii) the general
manager for the applicable Property; (iii) the regional vice president of
operations for Guarantor, the president of each Borrower and Member, with
respect to operational issues of any Property or any of the Borrowers; (iv) the
12
chief operating officer of Guarantor, with respect to representations regarding
Guarantor; and (v) also to the knowledge of the person signing such document or
certificate.
"LEASE" means any lease, tenancy, license, assignment and/or other
rental or occupancy agreement or other agreement or arrangement (including,
without limitation, any and all guaranties of any of the foregoing) heretofore
or hereafter entered into affecting the use, enjoyment or occupancy of, or the
conduct of any activity upon or in, the Properties or any portion thereof,
including any extensions, renewals, modifications or amendments thereof.
"LENDER" is defined in the preamble.
"LENDER'S CONSULTANT" has the meaning set forth in Section 6.7
"LETTER OF CREDIT" shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit (either an evergreen letter of
credit or one which does not expire until at least thirty (30) days after the
Maturity Date (the "LC EXPIRATION DATE" )), in favor of Lender, entitling Lender
to draw thereon in New York, New York based solely on a statement executed by an
officer or authorized signatory of Lender, in form and substance reasonably
acceptable to Lender and issued by an Eligible Bank. If at any time (a) the
institution issuing any such Letter of Credit shall cease to be an Eligible
Bank, or (b) if the Letter of Credit is due to expire prior to the LC Expiration
Date, Lender shall have the right immediately to draw down the same in full and
hold the proceeds thereof in accordance with the provisions of this Loan
Agreement, unless the Borrowers shall deliver a replacement Letter of Credit
from an Eligible Bank within (i) as to (a) above, twenty (20) days after Lender
delivers written notice to the Borrowers that the institution issuing the Letter
of Credit has ceased to be an Eligible Bank, or (ii) as to (b) above, within
twenty (20) days prior to the expiration date of said Letter of Credit.
"LIBO RATE" means the applicable London interbank offered rate (rounded
upwards, if necessary, to the nearest one sixteenth (1/16th) of one percent
(1%)) expressed as a percentage per annum for deposits in U.S. dollars
appearing on Telerate Page 3750 as of 11:00 a.m. (London time) two business
days prior to the first day of the applicable Interest Accrual Period and
having a maturity equal to the duration of such Interest Accrual Period,
provided that, (1) if Telerate Page 3750 is not available for any reason, LIBO
Rate for the relevant Interest Accrual Period shall instead be the applicable
London interbank offered rate for deposits in U.S. dollars as reported by any
other generally recognized financial information service as of 11:00 a.m.
(London time) two business days prior to the first day of such Interest Accrual
Period, and having a remaining term to maturity equal to such Interest Accrual
Period, and (2) if no such report is available, LIBO Rate for the relevant
interest period shall instead be the rate determined by the Lender to be the
rate at which it offers to place deposits in U.S. dollars with first-class
banks in the London interbank market at approximately 11:00 a.m. (London time)
two business days prior to the first day of such Interest Accrual Period, in
the approximate amount of its portion of the relevant loan and having a
maturity equal to such Interest Accrual Period. LIBO Rate shall be adjusted for
Federal Reserve Board reserve requirements.
"LIEN" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
13
"LOAN" has the meaning set forth in Section 2.1.
"LOAN AGREEMENT" means this Loan and Security Agreement, as same may be
amended, modified or restated from time to time (including all schedules,
exhibits, annexes and appendices hereto).
"LOAN DOCUMENTS" means this Loan Agreement, the Note, the Deeds of
Trust, the Assignments of Leases, the Assignments of Management Agreements, the
Guaranty, the Environmental Indemnity, the Assignment of Rate Cap, the Financing
Statements, the Cash Management Agreement and any and all other documents and
agreements from any of the Borrowers, General Partner, Member, Guarantor or
Manager and accepted by Lender for the purposes of evidencing and/or securing
the Loan, excluding the Mezzanine Loan Documents.
"LOCK BOX ACCOUNT" and "LOCK BOX ACCOUNT BANK" are defined in Section
7.1.
"MANAGEMENT AGREEMENTS" means those certain Management Agreements
described in EXHIBIT E, between each Borrower and the applicable Manager
described therein, the Memphis Interim Agreement, and any management agreement
which may hereafter be entered into in accordance with the terms and conditions
hereof, pursuant to which any subsequent Manager may hereafter manage one or
more of the Properties.
"MANAGEMENT FEE" means the fees earned by all Managers pursuant to the
terms of the Management Agreements.
"MANAGERS" means the managers described in EXHIBIT E or an Acceptable
Manager as may hereafter be charged with management of one or more of the
Properties in accordance with the terms and conditions hereof.
"MATERIAL ADVERSE EFFECT" means, as determined by Lender in its
reasonable discretion, (A) a material adverse effect (which may include economic
or political events) upon the business, operations, properties, assets or
condition (financial or otherwise) of any of the Borrowers or Guarantor, or (B)
the impairment of the ability of any of the Borrowers or Guarantor to perform
its obligations under any Loan Documents, or (C) the impairment of the ability
of Lender to enforce or collect any of the Obligations as such Obligations
become due. In determining whether any individual event would result in a
Material Adverse Effect, notwithstanding that such event does not of itself have
such effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then occurring events and existing
conditions would result in a Material Adverse Effect.
"MATERIAL AGREEMENT" means any contract or agreement relating to the
ownership, management, development, use, operation, leasing, maintenance, repair
or improvement of the Properties under which there is an obligation of the
Borrowers, in the aggregate, to pay, or under which any of the Borrowers
receives in compensation, more than $1,000,000 per annum, other than (i) the
Management Agreements, (ii) any Franchise Agreements, and (iii) any agreement
under which (x) there is an obligation of the Borrowers, in the aggregate, to
pay, or under which any of the Borrowers (or all the Borrowers in the aggregate)
receives in compensation, not more than $5,000,000 per annum and (y) which is
terminable by the Borrowers on not more than sixty (60) days prior written
notice without any fee or penalty.
14
"MATERIAL ALTERATION" means any improvement or alteration to a Property
(other than decorative work such as painting, wallpapering and carpeting), the
cost of which exceeds the greater of (x) five percent (5%) of the Aggregate
Allocated Loan Amount with respect to the applicable Property or (y) $250,000,
or is not otherwise already approved by Lender as part of the CapEx/FF&E Budget
or Capital Improvement Plan then in effect, or which otherwise does not
constitute Work.
"MATERIAL LEASE" means any Lease of space in a Property (other than
Leases for space in the office building located at the West Palm Beach Property)
which (i) is with an Affiliate of the Borrowers, (ii)(a) either provides for
annual rent or other payments in an amount equal to or greater than $100,000, or
has a term (including all extensions and renewals which are unilaterally
exercisable by the tenant thereunder) of more than ten (10) years, and (b) may
not be cancelled by either party thereto on thirty (30) days' notice without
payment of a termination fee, penalty or other cancellation fee, (iii) demises
in excess of 2000 square feet of space, (iv) is for any establishment the
primary purpose of which is the service of food and/or beverages or for any use
not currently in effect at the Properties, or (v) obligates the Borrowers to
make any improvements to the Properties either directly or through cash
allowances (including, without limitation, free rent, tenant improvement
allowances, or landlord's construction work) to the applicable tenant in excess
of $25,000. For purposes of this definition only, in determining the square
footage demised under any Lease, all space in the applicable Property which may
in the future be demised to the tenant under such Lease by reason of such tenant
exercising any right or option contained in such Lease shall be included in the
calculation of the square footage demised under such Lease.
"MATURITY DATE" shall mean the Scheduled Maturity Date, as same may be
extended for the First Extension Term, the Second Extension Term, or the Third
Extension Term (subject to the terms and conditions of Section 2.5(B)), or such
other date on which the final payment of principal of the Note becomes due and
payable as herein provided, whether at such stated maturity date, by
acceleration, or otherwise.
"MAXIMUM RATE" has the meaning set forth in Section 2.2.
"MEMPHIS INTERIM AGREEMENT" means that certain Management Agreement
dated as of the Closing Date between IMPAC I, L.L.C. and Lodging Memphis
Property Owner, LLC, with respect to certain interim management services
provided at the Property location a 2144 Madison Avenue, Memphis, Tennessee.
"MEMBER" shall mean, individually or collectively, those parties
identified on SCHEDULE 4.1(c) as "Members", and any other entity which is now or
hereafter becomes the managing member of any of the Borrowers under such
Borrower's limited liability company operating agreement (other than the sole
member of any single member limited liability company).
"MERRILL LYNCH" has the meaning set forth in Section 10.3.
"MEZZANINE BORROWER" shall mean, individually or collectively, those
parties identified on SCHEDULE 4.1(c) as "Mezzanine Borrower".
15
"MEZZANINE LENDER" shall mean Merrill Lynch Mortgage Lending, Inc., its
successors and assigns.
"MEZZANINE LENDER'S PERCENTAGE" shall mean, at the time of
determination, the ratio, expressed as a percentage, that the outstanding
principal balance of the Mezzanine Loan bears to the Aggregate Outstanding
Principal Balance. As of the date hereof Mezzanine Lender's Percentage is
25.99%.
"MEZZANINE LOAN" means that certain loan in the amount of $78,671,201
from Mezzanine Lender to Mezzanine Borrower.
"MINIMUM DEBT YIELD" means (i) prior to the first (1st) anniversary of
the Closing Date, 12.75%, (ii) from the first (1st) anniversary of the Closing
Date but prior to the second (2nd) anniversary of the Closing Date, 13.25%,
(iii) during the First Extension Term, 13.50%, (iv) during the Second Extension
Term, 13.75%, and (v) during the Third Extension Term, 14.00%.
"MINIMUM DSCR" means 1.20:1.0.
"MONTHLY FF&E PAYMENT" has the meaning set forth in Section 6.4.
"MOODY'S" means Moody's Investors Service.
"MORTGAGED CONDOMINIUM PROPERTY" means, collectively, the Property
identified on SCHEDULE 4.29, together with, following the Office Unit Release,
the Hotel Unit.
"MORTGAGED CONDOMINIUM PROPERTY DOCUMENTS" means those certain
documents identified on SCHEDULE 4.29, and, following a Conversion, the
documents establishing and governing the condominium regime applicable to the
Hotel Unit and the Office Unit.
"MORTGAGE LENDER'S PERCENTAGE" shall mean, at the time of
determination, the ratio, expressed as a percentage, that the outstanding
principal balance of the Loan bears to the Aggregate Outstanding Principal
Balance. As of the date hereof Mortgage Lender's Percentage is 74.01%.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
3(37) or Section 4001(a)(3) of ERISA to which any of the Borrowers or any
Affiliate is making, or is accruing an obligation to make, contributions or has
made, or been obligated to make, contributions within the preceding six (6)
years, or for which any of the Borrowers or any Affiliate has any liability,
including contingent liability.
"NET CASH FLOW" means Net Operating Income for any period less (i) a
base management fee equal to the greater of (A) the actual base management fee
for such period and (B) 4.0% of Operating Revenues for such period, (ii) a
reserve for FF&E equal to 4.0% of Operating Revenues for such period, and (iii)
fees due to all Franchisors for such period.
"NET OPERATING INCOME" OR "NOI" means, for any period, the amount by
which Operating Revenues (other than from the office building located at the
West Palm Beach Property) exceed Operating Expenses (excluding Management Fees,
interest, income taxes,
16
depreciation, amortization, FF&E reserves, fees due to all Franchisors for such
period, and expenses related solely to the office building located at the West
Palm Beach Property).
"NET SALES PROCEEDS" means all consideration, from whatever source, for
the purchase of a Property pursuant to the terms of a purchase contract with an
entity which is not an Affiliate of the Borrowers or Guarantor and less
customary and reasonable costs (as determined by Lender in its reasonable
discretion), including broker's fees, closing attorney's fees, and transfer and
sales taxes payable by the Borrowers.
"NON-FLAGGED PROPERTIES" means the Properties located at 9700 Bluegrass
Highway, Louisville, Kentucky and 2144 Madison Avenue, Memphis, Tennessee, prior
to such Properties becoming subject to a Franchise Agreement.
"NOTE" has the meaning set forth in Section 2.1.
"OBLIGATIONS" means the Loan and all obligations, liabilities and
indebtedness of every nature to be paid or performed by the Borrowers under the
Loan Documents, including the principal amount of the Loan, interest accrued
thereon and all fees, costs and expenses, and other sums now or hereafter owing,
due or payable and whether before or after the filing of a proceeding under the
Bankruptcy Code by or against any of the Borrowers, and the performance of all
other terms, conditions and covenants under the Loan Documents.
"OFFICE UNIT" has the meaning set forth in Section 11.5.
"OFFICE UNIT RELEASE" has the meaning set forth in Section 11.5.
"O&M PLANS" has the meaning set forth in Section 5.7.
"OPERATING BUDGET" means, for any period, the Borrowers' budget setting
forth the Borrowers' best estimate, after due consideration, of all Operating
Revenues and Operating Expenses and any other revenues, costs and expenses for
each of the Properties for such period, which budget has been approved by Lender
in accordance herewith, as same may be amended pursuant to Section 5.1(D)
hereof.
"OPERATING EXPENSES" means, for any period, without duplication, all
costs and expenses of operating, maintaining and managing the Properties
determined in accordance with GAAP, including, without limitation, Impositions
(due and payable during the applicable period of determination), Insurance
Premiums, repair and maintenance costs, Management Fees and costs, fees payable
to all Franchisors, utilities, accounting, legal and other professional fees,
fees relating to environmental and financial audits, wages, salaries, payroll
taxes and benefits, business franchise taxes, tips and gratuities paid to
employees and staff and other personnel expenses, costs and expenses related to
operating and maintaining all guest rooms, restaurants (including inventory and
supplies), retail stores and shops, bars, meeting rooms, banquet rooms,
apartments, parking and recreational facilities, and all other "costs and
expenses" as defined in the Uniform System; but excluding principal and interest
payment on the Loan, fees and expenses of a non-operating nature and fees and
expenses due and payable to or for the benefit of Lender under this Loan
Agreement or any of the other Loan Documents (including, without limitation, all
loan servicing fees and expenses, and expenses related to a Cap), expenses
which,
17
in accordance with GAAP, should be capitalized, any expense paid by a tenant
that would otherwise be an Operating Expense, capital expenditures, tenant
improvement allowances and leasing commissions, if any, asset management fees,
any payment or expense for which each Borrower was or is to be reimbursed from
proceeds of the Loan or insurance or by any third party, any fees or expenses
paid to any partner or member of the Borrowers for services provided to any of
the Borrowers and any non-cash charges such as depreciation and amortization.
Operating Expenses shall not include federal, state or local income taxes or
legal and other professional fees unrelated to the operation of the Properties.
"OPERATING REVENUES" means, without duplication, all revenues and
receipts of the Borrowers from operation of the Properties or otherwise arising
in respect of the Properties which are properly allocable to the Properties for
the applicable period in accordance with GAAP, including, without limitation,
all hotel receipts, revenues and credit card receipts collected from guest
rooms, restaurants and bars (including without limitation, service charges for
employees and staff), mini-bars, meeting rooms, banquet rooms, apartments,
parking and recreational facilities, health club membership fees, food and
beverage wholesale and retail sales, service charges, convention services,
special events, audio-visual services, boat cruises, travel agency fees,
internet booking fees, telephone charges, laundry services, vending machines and
otherwise, all rents, revenues and receipts now existing or hereafter arising or
created out of the sale, lease, sublease, license, concession or other grant of
the right of the possession, use or occupancy of all or any portion of the
Properties or personalty located thereon, or rendering of service by any of the
Borrowers or any operator or manager of the hotel or commercial space
(including, without limitation, from the rental of any office space, retail
space, guest rooms or other space, halls, stores and deposits securing
reservations of such space (only to the extent such deposits are not required to
be returned or refunded to the depositor)), proceeds from rental or business
interruption insurance relating to business interruption or loss of income for
the period in question and any other items of revenue which would be included in
operating revenues under the Uniform System; but excluding proceeds from the
sale of FF&E, abatements, reductions or refunds of real estate or personal
property taxes relating to the Properties, dividends on insurance policies
relating to the Properties, condemnation proceeds arising from a temporary
taking of all or a part of any Properties, security and other deposits until
they are forfeited by the depositor, advance rentals until they are earned,
proceeds from a sale, financing or other disposition of the Properties or any
part thereof or interest therein and other non-recurring revenues as determined
by Lender, insurance proceeds (other than proceeds from rental or business
interruption insurance), other condemnation proceeds, capital contributions or
loans to any of the Borrowers and disbursements to any of the Borrowers from the
Reserves.
"OSI DEFAULTS" means defaults under the Crowne Plaza Franchise
Agreements resulting from the failure to achieve or maintain an Overall Service
Index Level (as such term is defined in the applicable standards manual in
effect for the Crowne Plaza Franchise Agreements) of 80, or such other default
standard as may be set forth in the applicable standards manual after the
Closing Date, at the following Properties: (i) the West Palm Beach Property;
(ii) 350 1(st) Avenue N.E., Cedar Rapids, Iowa; (iii) 91 State Street, Albany,
New York and (iv) 2801 NW Freeway, Houston, Texas.
"OWNERSHIP INTERESTS" has the meaning set forth in Section 9.1.
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"PAYMENT DATE" means the date that is the last day of each calendar
month occurring during the term of the Loan (or if such last day is not a
Business Day, the immediately preceding Business Day).
"PERMITTED ASSUMPTION" has the meaning set forth in Section 11.3.
"PERMITTED ENCUMBRANCES" means, collectively, (i) the Deeds of Trust
and the other Liens of the Loan Documents in favor of Lender, (ii) the items
shown in Schedule B to the Title Policies as of Closing, (iii) Liens for
Impositions not yet due and payable or Liens arising after the date hereof which
are being contested in good faith by appropriate proceedings promptly instituted
and diligently conducted in accordance with Section 5.3(B) hereof; (iv) in the
case of Liens arising after the date hereof, statutory Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens arising by
operation of law, which are incurred in the ordinary course of business and
discharged by the Borrowers by payment, bonding or otherwise within forty-five
(45) days after the filing thereof or which are being contested in good faith in
accordance with Section 5.3(B) hereof, (v) Liens arising from reasonable and
customary purchase money financing of personal property and equipment leasing to
the extent the same are created in the ordinary course of business in accordance
with Section 5.17(B) hereof; (vi) all easements, rights-of-way, restrictions and
other similar charges or non-monetary encumbrances against real property which
do not materially adversely affect (A) the ability of the Borrowers to pay any
of their obligations to any Person as and when due, (B) the marketability of
title to the Properties, (C) the fair market value of the Properties, or (D) the
use or operation of the Properties as of the Closing Date and thereafter; (vii)
rights of existing and future tenants, as tenants only, pursuant to the Leases;
and (viii) any other Lien to which Lender may expressly consent in writing.
"PERMITTED INDEBTEDNESS" has the meaning set forth in Section 5.17.
"PERMITTED INVESTMENTS" has the meaning set forth in the Cash
Management Agreement.
"PERMITTED OWNERSHIP INTEREST TRANSFERS" has the meaning set forth in
Section 11.2.
"PERMITTED TRANSFEREE" means any Person (provided such Person satisfies
the requirements of Article IX hereof) controlled by, and more than 51% of which
is owned by, one of the following.
(i) a pension fund, pension trust or pension account that (a) has
total real estate assets of at least $2.5 Billion and (b) is managed by a Person
who controls real estate equity assets (not including the Properties) having a
fair market value of at least $1.25 Billion; or
(ii) a pension fund advisor who (a) immediately prior to such
transfer, controls at least $1 Billion of real estate equity assets and (b) is
acting on behalf of one or more pension funds that, in the aggregate, satisfy
the requirements of clause (i) of this definition; or
(iii) an insurance company which is subject to supervision by the
insurance commissioner, or a similar official or agency, of a state or territory
of the United States (including the District of Columbia) (a) with a net worth,
as of the date immediately prior to the
19
date of the transfer, of at least $1 Billion and (b) who, immediately prior to
such transfer, controls real estate equity assets (not including the Properties)
having a fair market value of at least $2.5 Billion; or
(iv) a corporation organized under the banking laws of the United
States or any state or territory of the United States (including the District of
Columbia) (a) with a combined capital and surplus of at least $1 Billion and (b)
who, immediately prior to such transfer, controls real estate equity assets (not
including the Properties) having a fair market value of at least $5 Billion; or
(v) any other Person (a) with a long-term unsecured debt rating
from the Rating Agencies of at least investment grade and (b) that owns or
operates at least 15,000 hotel rooms, (ii) has a net worth, as of the date
immediately prior to the date of such transfer, of at least $750 Million and
(iii) immediately prior to such transfer, controls real estate equity assets
(not including the Properties) having a fair market value of at least $1.5
Billion.
"PERSON" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof
and their respective permitted successors and assigns (or in the case of a
governmental Person, the successor functional equivalent of such Person).
"PLAN OF REORGANIZATION" means the Joint Plan of Reorganization of
Lodgian, Inc., et al., together with the Official Committee of Unsecured
Creditors under Chapter 11 of the Bankruptcy Code, as approved pursuant to the
terms of the Bankruptcy Code, together with any confirmation and/or amendments
thereto entered in accordance with the Bankruptcy Code.
"PRE-CLOSING CONDEMNATION" means those certain condemnation
proceedings by the Florida Department of Transportation against Servico
Pensacola 7200, Inc. related to Item/Segment No. 2224341, Parcel No. 101.1, and
Servico Pensacola 7330, Inc. relating to Item/Segment No. 2224341, Parcel No.
102.1 with respect to certain parcels of land which do not constitute any
portion of any of the Properties.
"PRE-EXISTING CONDITION" has the meaning set forth in Section 5.5.
"PREPAYMENT CONSIDERATION" has the meaning set forth in Section 2.6.
"PRIMARY BORROWER PARTIES" means, collectively, the Borrowers, General
Partner and Member.
"PROPERTIES" and "PROPERTY" means, collectively or individually, the
properties (including land and Improvements) described in EXHIBIT F, together
with all Improvements now or hereafter located thereon and all related
facilities, amenities and FF&E owned by the Borrowers and which shall be
encumbered by and are more particularly described in the respective Deeds of
Trust: provided that, following a Release, "PROPERTIES" shall mean each of the
Properties that remain encumbered by the Deeds of Trust as Collateral for the
Loan.
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"PROPERTY CONDITION REPORT" means those certain property condition
reports for the Properties as described on EXHIBIT M.
"PROPERTY IMPROVEMENT PLAN" means, collectively, those certain property
improvement plans for the Properties attached as EXHIBIT G and any future
Property Improvement Plans required to be implemented by the applicable
Franchisor.
"PROPERTY RELEASE" has the meaning set forth in Section 11.4.
"RATING AGENCY" shall mean, prior to a securitization, any of S&P,
Moody's and Fitch or any other nationally-recognized statistical rating
organization designated by Lender in its sole discretion, and, after a
Securitization, each Rating Agency which has rated the Securities that are the
subject of the Securitization.
"RATING CONFIRMATION" with respect to the transaction or matter in
question, shall mean: (i) if all or any portion of the Loan, by itself or
together with other loans, has been the subject of a Securitization, then each
applicable Rating Agency shall have confirmed in writing that such transaction
or matter shall not result in a downgrade, qualification, or withdrawal of any
rating then in effect for any certificate or other securities issued in
connection with such Securitization; and (ii) if all of the Loan has not been
the subject of a Securitization, then Lender shall have determined in its
reasonable discretion (taking into consideration such factors as Lender may in
good faith determine, including the attributes of the loan pool in which the
Loan might reasonably be expected to be securitized) that no rating for any
certificate or other securities that would be issued in connection with a
Securitization of such portion of the Loan will be downgraded, qualified, or
withheld by reason of such transaction or matter.
"RATING CRITERIA" with respect to any Person, shall mean that (i) the
short-term unsecured debt obligations of such Person are rated at least "A-1" by
S&P, "P-1" by Moody's and "F-1" by Fitch, if deposits are held by such Person
for a period of less than one month, or (ii) the long-term unsecured debt
obligations of such Person are rated at least "AA-" by S&P (or "A" if the
short-term unsecured debt obligations of such Person are rated at least "A-1"),
"Aa2" by Moody's and "A" by Fitch, if deposits are held by such Person for a
period of one month or more.
"RECEIPTS" shall mean all revenues, receipts and other payments of
every kind arising from ownership or operation of the Properties, including
without limitation, all warrants, stock options, or equity interests in any
tenant, licensee or other Person occupying space at, or providing services
related to or for the benefit of, the Properties received by the Borrowers or
any Related Person of the Borrowers in lieu of rent or other payment.
"RELATED PERSON" means nay Person in which any of the Borrowers or the
Guarantor holds greater than a ten percent (10%) equity interest.
"RELEASE" has the meaning set forth in Section 11.4.
"RELEASE DATE" has the meaning set forth in Section 11.4.
21
"RELASE PRICE" means an amount equal to the greater of (i) one hundred
twenty-five percent (125%) of the Aggregate Allocated Loan Amount of the
applicable Property, and (ii) seventy-five percent (75%) of the Net Sales
Proceeds of a Property to be released.
"RELEASE PRICE EXCESS" means the amount by which any Release Price
exceeds the Aggregate Allocated Loan Amount of the Property being released;
provided, however, Release Price Excess shall exclude any portion of a Release
Price paid in connection with (x) a Release necessary to prevent an Uncured
Franchise Default, or (y) a Release necessary to enable the Borrowers to comply
with the restrictions set forth in Section 5.13(D).
"RENT ROLL" has the meaning set forth in Section 3.1.
"RENTS" has the meaning set forth in the Granting Clauses of the Deeds
of Trust.
"REPLACEMENTS" has the meaning set forth in Section 6.4.
"REQUIRED CAPITAL IMPROVEMENTS" has the meaning set forth in Section
6.5.
"REQUIRED INSURANCE POLICY" and "REQUIRED INSURANCE POLICIES" have the
meanings set forth in Section 5.4.
"RESERVE PRINCIPAL PAYMENT" has the meaning set forth in the Mezzanine
Loan Agreement.
"RESERVE SUB-ACCOUNTS" has the meaning set forth in Section 7.1.
"RESERVES" means the reserves held by or on behalf of Lender pursuant
to this Loan Agreement or the other Loan Document, including without limitation,
the reserves established pursuant to Article VI.
"RESTORATION" has the meaning set forth in Section 5.5.
"RESTORATION THRESHOLD" shall mean the greater of (x) $250,000 or (y)
five percent (5%) of the Aggregate Allocated Loan amount of the applicable
Property, not to exceed $500,000, per Property per occurence.
"REVPAR" means average room revenues per available room per day.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"SCHEDULED MATURITY DATE" shall mean, November 30, 2004.
"SCHEDULED MEZZANINE PRINCIPAL PAYMENTS" shall mean (x) $64,975.00
through and including the Payment Date in November 2003, (y) $97,462.50
following the Payment Date in November 2003, through and including the Payment
Date in November 2004, and (z) $129,950.00 thereafter through the Maturity Date.
22
"SCHEDULED MORTGAGE PRINCIPAL PAYMENTS" shall mean (x) $185,025.00
through and including the Payment Date in November 2003, (y) $277,537.50
following the Payment Date in November 2003, through and including the Payment
Date in November 2004, and (z) $370,050.00 thereafter through the Maturity Date.
"SECOND EXTENSION TERM" has the meaning set forth in Section 2.5(B).
"SECONDARY MARKET TRANSACTION" has the meaning set forth in Section
10.1.
"SECURITIES" (whether or not capitalized) means any stock, shares,
voting trust certificates, bonds, debentures, options, warrants, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"SECURITIZATION" shall mean a rated offering of securities representing
direct or indirect interests in the Loan or the right to receive income
therefrom.
"SERVICER" means a servicer selected by Lender from time to time in its
sole discretion to service the Loan.
"SERVICING FEES" has the meaning set forth in Section 2.11.
"SUB-ACCOUNTS" has the meaning set forth in Section 7.1.
"SUPPLEMENTAL FINANCIAL INFORMATION" means (i) a comparison of the
budgeted income and expenses and the actual income and expenses for the prior
calendar year or corresponding calendar quarter for such prior year, (ii) a
calculation of the average daily rate, RevPAR and average occupancy statistics
for the Properties for the applicable period and (iii) such other financial
reports as the subject entity shall routinely and regularly prepare.
"SUPPLEMENTAL INSURANCE RESERVE PAYMENT" shall mean $1,189,062.
"SURVEY" has the meaning set forth in Section 3.1.
"TAX LIABILITIES" has the meaning set forth in Section 2.9.
"TERRORISM INSURANCE CAP" means $250,000.
"TEST RATE" means an interest rate equal to the greater of (x) the then
current yield on the 10-year United States Treasury Note plus the Test Rate
Spread, and (y) the then current LIBO Rate plus the Test Rate Spread.
"TEST RATE SPREAD" means 4.0%; provided, however, if the Mezzanine
Borrowers have not made the Reserve Principal Payment on or prior to the Payment
Date occurring in November 2003, the "TEST RATE SPREAD" shall mean 4.15%
throughout the remainder of the term of the Loan, including any Extension Terms.
23
"THIRD EXTENSION TERM" has the meaning set forth in Section 2.5(B).
"TIER 1 HOTEL" means any of the Properties subject to a Franchise
Agreement with an Acceptable Franchisor, or under a Franchisor brand, as
applicable, identified in the "Tier 1" category on EXHIBIT I.
"TIER 2 HOTEL" means any of the Properties subject to a Franchise
Agreement with an Acceptable Franchisor, or under a Franchisor, or under a
Franchisor brand, identified in the "Tier 2" category on EXHIBIT I.
"TIER 3 HOTEL" means any of the Properties subject to a Franchise
Agreement with an Acceptable Franchisor, or under a Franchisor brand, identified
in the "Tier 3" category on EXHIBIT I.
"TITLE COMPANIES" means Fidelity National Title Insurance Company of
New York, Land America (as co-insurer), and such other national title insurance
company as may be acceptable to Lender.
"TITLE POLICIES" means, collectively, the ALTA mortgagee policies of
title insurance pertaining to the Deeds of Trust issued by the Title Companies
to Lender in connection with the Closing.
"TRANSFER" has the meaning set forth in Section 11.2.
"TRANSFEREE BORROWER" has the meaning set forth in Section 11.3.
"UNCURED FRANCHISE DEFAULT" means (x) the voluntary or involuntary
termination of any Franchise Agreement, or (y) the occurrence of one or more
breaches or defaults (other than OSI Defaults) which do not result from the
failure of the Borrowers to pay to the Franchisors amounts due under the
applicable Franchise Agreement and the continuance thereof beyond all applicable
notice and grace periods, if any, under Franchise Agreements (or such other cure
periods as may be provided by Franchisor in writing) covering Properties with
Aggregate Allocated Loan Amounts of ten percent (10%) or more of the outstanding
principal balance of the Loan and the Mezzanine Loan; provided, however, no
Uncured Franchise Default shall be deemed to have occurred following the
voluntary or involuntary termination of any Franchise Agreement if (a) within
ten (10) Business Days of the termination of the applicable Franchise Agreement
(and at the time of delivery of each report pursuant to Section 5.1(A)(v)) the
Borrowers deliver to Lender evidence reasonably satisfactory to Lender that the
Borrowers are diligently pursuing a Franchise Agreement with an Acceptable
Franchisor for the applicable Property and shall thereafter diligently and
continuously pursue such Franchise Agreement, (b) at the time of such
termination not more than the lesser of (i) four (4) Properties, or (ii)
Properties with Aggregate Allocated Loan Amounts of five percent (5%) of the
outstanding principal balance of the Loan and the Mezzanine Loan, in either case
excluding the Non-Flagged Properties, shall be in operation without being
subject to Franchise Agreement, and (c) no Property (other than the Non-Flagged
Properties) shall be without a Franchise Agreement in place for a period in
excess of six (6) months from the termination of the applicable Franchise
Agreement.
24
"UNIFORM SYSTEM" means the Uniform System of Accounts for the Lodging
Industry promulgated by the American Hotel and Motel Association, as in effect
from time to time.
"WAIVING PARTY" has the meaning set forth in Section 13.1.
"WEST PALM BEACH PROPERTY" means the Property located at 1601 Belvedere
Boulevard, West Palm Beach, Florida.
"WORK" has the meaning set forth in Section 6.7.
"WORK RESERVES" has the meaning set forth in Section 6.7.
SECTION 1.2 ACCOUNTING TERMS.
For purposes of this Loan Agreement, all accounting terms not otherwise
defined herein shall have the meanings assigned to such terms in conformity with
GAAP or the Uniform System, as the case may be.
SECTION 1.3 OTHER DEFINITIONAL PROVISIONS.
References to "ARTICLES", "SECTIONS", "SUBSECTIONS", "EXHIBITS" and
"SCHEDULES" shall be to Articles, Sections, Subsections, Exhibits and Schedules,
respectively, of this Loan Agreement unless otherwise specifically provided. Any
of the terms defined in Section 1.1 may, unless the context otherwise requires,
be used in the singular or the plural depending on the reference. In this Loan
Agreement, "HEREOF", "HEREIN", "HERETO", "HEREUNDER" and the like mean and refer
to this Loan Agreement as a whole and not merely to the specific article,
section, subsection, paragraph or clause in which the respective word appears;
words importing any gender include the other genders; references to "WRITING"
include printing, typing, lithography and other means of reproducing words in a
tangible visible form; the words "INCLUDING", "INCLUDES" and "INCLUDE" shall be
deemed to be followed by the words "without limitation"; and any reference to
any statute or regulation may include any amendments of same and any successor
statutes and regulations. Further, (i) any reference to any agreement or other
document may include subsequent amendments, assignments, and other modifications
thereto, and (ii) any reference to any Person may include such Person's
respective permitted successors and assigns or, in the case of governmental
Persons, Persons succeeding to the relevant functions of such Persons.
ARTICLE II
TERMS OF THE LOAN
SECTION 2.1 LOAN.
(A) LOAN. Subject to the terms and conditions of this Loan
Agreement and in reliance upon the representations and warranties of the
Borrowers contained herein, Lender agrees to lend to the Borrowers, and the
Borrowers agree to borrow from Lender, a loan in the original principal amount
of $224,036,325 (such loan and the obligation of the Borrowers to repay the same
together with all interest and other amounts from time to time owing hereunder
may be referred to as the "LOAN").
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(B) NOTE. On the Closing Date, the Borrowers shall execute and
deliver to Lender a Promissory Note, dated of even date herewith (as amended,
modified or restated, and any replacement or substitute notes therefor, by means
of multiple notes or otherwise, collectively, the "NOTE"), made by the Borrowers
to the order of Lender, in the original principal amount of $224,036,325.
(C) USE OF PROCEEDS. The proceeds of the Loan funded at Closing
shall be used to (i) refinance existing indebtedness; (ii) pay all recording
fees and taxes, title insurance premiums, the reasonable out-of-pocket costs and
expenses incurred by Lender, including reasonable legal fees and expenses of
counsel to Lender, and other costs and expenses approved by Lender (which
approval will not be unreasonably withheld) related to the Loan; (iii) establish
the credit; and (v) provide for general corporate purposes, including, without
limitation, payment of transaction costs and expenses incurred by the Borrowers.
The remaining proceeds of the Loan, if any, shall be disbursed to or as
otherwise directed by the Borrowers.
SECTION 2.2 INTEREST.
(A) RATE OF INTEREST. The outstanding principal balance of the
Loan shall bear interest at a rate per annum equal to the Interest Rate in
effect for each Interest Accrual Period during the term hereof. The "INTEREST
RATE" for any Interest Accrual Period shall be the rate of interest per annum
equal to the sum of (i) the Applicable Spread plus (ii) the LIBO Rate in effect
for such Interest Accrual Period.
(B) DEFAULT RATE. Notwithstanding the foregoing, upon the
occurrence and during the continuance of an Event of Default and in any event
from and after the Maturity Date of the Loan and until the Loan and all other
Obligations are satisfied in full, the outstanding principal balance of the Loan
and all other Obligations shall bear interest until paid in full at a rate per
annum that is five percent (5.0%) in excess of the Interest Rate otherwise
applicable under this Loan Agreement and the Note (the "DEFAULT RATE").
(C) COMPUTATION OF INTEREST. Interest on the Loan and all other
Obligations owing to Lender shall be computed on the basis of a 360-day year,
and shall be charged for the actual number of days elapsed during any month or
other accrual period. Interest shall be payable in arrears (except with respect
to the number of days from the Payment Date in any Interest Accrual Period to
the last day of such Interest Accrual Period as to which interest shall be
payable in advance, if any).
(D) INTEREST LAWS. Notwithstanding any provision to the contrary
contained in this Loan Agreement or the other Loan Documents, the Borrowers
shall not be required to pay, and Lender shall not be permitted to collect, any
amount of interest in excess of the maximum amount of interest permitted by law
("EXCESS INTEREST"). If any Excess Interest is provided for or determined by a
court of competent jurisdiction to have been provided for in this Loan Agreement
or in any of the other Loan Documents, then in such event: (1) the provisions of
this subsection shall govern and control, (2) the Borrowers shall not be
obligated to pay any Excess Interest; (3) any Excess Interest that Lender may
have received hereunder shall be, at Lender's option, (a) applied as a credit
against either or both of the outstanding principal balance of the
26
Loan or accrued and unpaid interest thereunder (not to exceed the maximum amount
permitted by law), (b) refunded to the payor thereof, or (c) any combination of
the foregoing; (4) the interest rate(s) provided for herein shall be
automatically reduced to the maximum lawful rate allowed from time to time under
applicable law (the "MAXIMUM RATE"), and this Loan Agreement and the other Loan
Documents shall be deemed to have been and shall be, reformed and modified to
reflect such reduction; and (5) the Borrowers shall not have any action against
Lender for any damages arising out of the payment or collection of any Excess
Interest. Notwithstanding the foregoing, if for any period of time interest on
any Obligation is calculated at the Maximum Rate rather than the applicable rate
under this Loan Agreement, and thereafter such applicable rate becomes less than
the Maximum Rate, the rate of interest payable on such Obligations shall, to the
extent permitted by law, remain at the Maximum Rate until Lender shall have
received or accrued the amount of interest which Lender would have received or
accrued during such period on Obligations had the rate of interest not been
limited to the Maximum Rate during such period. If the Default Rate shall be
finally determined to be unlawful, then the Interest Rate shall be applicable
during any time when the Default Rate would have been applicable hereunder,
provided however that if the Maximum Rate is greater or lesser than the Interest
Rate, then the foregoing provisions of this paragraph shall apply.
(E) LATE CHARGES. If an Event of Default regarding non-payment of
principal, interest or other sums due hereunder or under any of the other Loan
Documents shall occur, then the Borrowers shall pay to Lender, in addition to
all sums otherwise due and payable, a late fee in an amount equal to five
percent (5.0%) of such principal, interest or other sums due hereunder or under
any other Loan Document, such late charge to be immediately due and payable
without demand by Lender.
SECTION 2.3 INTEREST RATE CAP AGREEMENT.
(A) As a condition to Closing, the Borrowers shall purchase and
pledge and deliver to Lender an interest rate cap agreement satisfying the
criteria set forth below (the "CAP"), and the Borrowers shall maintain such Cap
in the possession of Lender, in full force and effect, until all Obligations are
fully and finally repaid. The Cap (i) shall have a notional amount equal to the
outstanding principal balance of the Loan calculated based upon the declining
principal balance of the Loan scheduled to be outstanding over the term of such
Cap taking into account scheduled principal amortization hereunder, (ii) shall
provide that to the extent that the LIBO Rate exceeds six and one half percent
(6.5%) per annum (the "CAP THRESHOLD RATE"), then the Cap Provider shall pay to
Lender, on behalf of the Borrowers, not less than the amount of interest that
would accrue on the Loan at a per annum rate equal to the difference between the
LIBO Rate and the Cap Threshold Rate, (iii) shall be in form and substance
reasonably satisfactory to Lender, (iv) shall have a term equal to the Initial
Term of the Loan (or the applicable Extension Term), and (v) shall be issued by
a financial institution (the "CAP PROVIDER") having a financial rating by S&P of
at least "AA" (and at least an equivalent rating from each of the other Rating
Agencies).
(B) If at any time the financial rating assigned to any Cap
Provider by S&P shall fall below AA- (or the equivalent rating for any other
Rating Agency), the Borrowers shall be required to deliver a replacement Cap in
substantially the form of the Cap delivered at Closing issued by a Cap Provider
meeting the rating requirements for a Cap Provider under Section
27
2.3(A)(v), providing for a cap "strike price" not greater than the Cap Threshold
Rate (a replacement Cap meeting all of the foregoing conditions, an "ACCEPTABLE
REPLACEMENT CAP") within twenty (20) Business Days after receipt of notice from
Lender or Servicer of such downgrade of the Cap Provider, together with an
assignment of such Cap substantially in the form of the Assignment of Rate Cap
and such Financing Statements and opinions of in-house or outside counsel to the
Cap Provider as Lender may reasonably require each in form and substance
acceptable to Lender. Notwithstanding the foregoing to the contrary, under no
circumstances shall the Cap be terminated by the Borrowers prior to delivery of
an Acceptable Replacement Cap, together with the required documentation with
respect thereto, to Lender. If, for any reason, the Borrowers are unable to
deliver a replacement Cap when required hereunder, then at or prior to the time
when the replacement Cap is due hereunder, the Borrowers shall deliver to Lender
cash security (such cash security together with any interest thereon, the "CAP
RESERVE") in an amount sufficient to cover the amount of additional interest
which Lender reasonably estimates may be incurred during the remaining term of
the Loan (or remaining Extension Term then in effect) as a result of the LIBO
Rate exceeding the Cap Threshold Rate, which Cap Reserve shall be held by Lender
and applied to the Obligations in accordance with Section 6.1. Upon delivery of
an Acceptable Replacement Cap reasonably acceptable to Lender, the remaining
balance of the Cap Reserve shall be promptly returned to the Borrowers.
(C) All payments made by the Cap Provider under the Cap shall be
deposited directly by the Cap Provider into the Lock Box Account and applied in
accordance with the Cash Management Agreement.
SECTION 2.4 PAYMENTS.
(A) PAYMENTS OF INTEREST AND PRINCIPAL. The Borrowers shall make
payments of interest and principal on the Note as follows:
(i) The Borrowers shall make a payment to Lender of
interest only on the Closing Date for the first Interest Accrual Period;
(ii) On each Payment Date commencing with the Payment Date
in December 2002, and on each Payment Date thereafter through but not including
the Payment Date in December 2003, the Borrowers shall make a payment of
interest on the Loan for the Interest Accrual Period immediately preceding each
such Payment Date, and in addition shall make a payment of principal on the Loan
in an amount equal to the lesser of (x) the Scheduled Mortgage Principal Payment
or (y) Mortgage Lender's Percentage of all Excess Cash Flow; provided that the
amount of Mortgage Lender's Percentage of the amount of any Release Price Excess
for any Property released during such period shall be deemed applied (without
duplication) in reduction of each of the Scheduled Mortgage Principal Payments
next becoming due and payable under this clause (ii) and under clause (iii) of
this Section 2.4(A) through the Scheduled Maturity Date (but not beyond) in an
amount equal to (x) Mortgage Lender's Percentage of such Release Price Excess
divided by (y) the number of such Scheduled Mortgage Principal Payments
remaining through the Scheduled Maturity Date; and
(iii) On each Payment Date commencing with the Payment Date
in December 2003, and on each Payment Date thereafter through the Maturity Date,
the Borrowers shall make
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a payment of interest on the Loan for the Interest Accrual Period immediately
preceding each such Payment Date, and in addition shall make a payment of
principal on the Loan in an amount equal to the Scheduled Mortgage Principal
Payment; provided that the amount of Mortgage Lender's Percentage of the amount
of any Release Price Excess for any Property released during such period shall
be deemed applied (without duplication) in reduction of each of the Scheduled
Mortgage Principal Payments next becoming due and payable under this Section
2.4(A)(iii) through the Scheduled Maturity Date (but not beyond), or, if the
subject Release occurs during an Extension Term, through the last Scheduled
Mortgage Principal Payment to be made during that Extension Term (but not
beyond) in an amount equal to (x) the Mortgage Lender's Percentage of such
Release Price Excess divided by (y) the number of such Scheduled Mortgage
Principal Payments remaining through the current Maturity Date; and
(iv) On each Payment Date prior to the Payment Date in
December 2003, if Mortgage Lender's Percentage of Excess Cash Flow in any month
exceeds the Scheduled Mortgage Principal Payment for such month, such excess
amount shall be paid to Lender and applied to principal on the Loan until the
amount of any Amortization Deficiency has been reduced to zero, and any
remainder Excess Cash Flow thereafter shall be distributed in accordance with
the terms of the Cash Management Agreement; and
(v) At any time the then Aggregate Outstanding Principal
Balance is less than $90,812,257.80, Mortgage Lender's Percentage of Excess Cash
Flow shall be paid to Lender and applied on each Payment Date in reduction of
the principal balance of the Loan (which payment shall be made without the
imposition of any Prepayment Consideration).
(B) DATE AND TIME OF PAYMENT. The Borrowers shall receive credit
for payments on the Loan which are transferred to the account of Lender as
provided below (i) on the day that such funds are received by Lender if such
receipt occurs by 2:00 p.m. (New York time) on such day, or (ii) on the next
succeeding Business Day after such funds are received by Lender if such receipt
occurs after 2:00 p.m. (New York time). Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day.
(C) MANNER OF PAYMENT; APPLICATION OF PAYMENTS. The Borrowers
promise to pay all of the Obligations relating to the Loan as such amounts
become due or are declared due pursuant to the terms of this Loan Agreement. All
payments by the Borrowers on the Loan shall be made without deduction, defense,
set off or counterclaim and in immediately available funds delivered to Lender
by wire transfer to such accounts at such banks as Lender may from time to time
designate. Prior to an Event of Default, each payment shall be applied first to
pay late charges and the charges and expenses of Lender, Servicer and any
special servicer as provided hereunder, second to accrued and unpaid interest,
and the balance to principal. Prior to an Event of Default, to the extent
sufficient funds are contained in the Lock Box Account, or an Account or
Sub-Account thereof, to make the required monthly payments to the applicable
Reserves and Sub-Account on such Payment Date, the Borrowers shall be deemed to
have satisfied its obligation to make such payments. Upon the occurrence and
during the continuance of an Event of Default, payments shall be applied to the
Obligations in such order as Lender shall determine in its sole and absolute
discretion.
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SECTION 2.5 MATURITY.
(A) SCHEDULED MATURITY DATE. To the extent not sooner due and
payable in accordance with the Loan Documents (and unless the Borrowers shall
extend the term of the Loan for the First Extension Term, the Second Extension
Term, or the Third Extension Term upon the terms and subject to the conditions
of Section 2.5(B) below), the then outstanding principal balance of the Loan,
all accrued and unpaid interest thereon (and including interest through the end
of the Interest Accrual Period then in effect), and all other sums then owing to
Lender hereunder and under the Note, the Deeds of Trust and the other Loan
Documents, shall be due and payable on (i) the Scheduled Maturity Date or (ii)
if the Borrowers shall have extended the term of the Loan for the First
Extension Term, the Second Extension Term, or the Third Extension Term, upon the
terms and subject to the conditions of Section 2.5(B) below, the applicable
Maturity Date.
(B) EXTENSION TERMS. The Borrowers may extend the term of the Loan
for three extension terms of one year each (each, an "EXTENSION TERM", and,
collectively the "EXTENSION TERMS"); (i) the first Extension Term (the "FIRST
EXTENSION TERM") commencing on the day immediately following the Scheduled
Maturity Date and ending (unless sooner terminated in accordance with the Loan
Documents) on the first (1st) anniversary of the Scheduled Maturity Date, (ii)
the second Extension Term (the "SECOND EXTENSION TERM") commencing on the day
immediately following the last day of the First Extension Term and ending
(unless sooner terminated in accordance with the Loan Documents) on the second
(2nd) anniversary of the Scheduled Maturity Date and (iii) the third Extension
Term (the "THIRD EXTENSION TERM") commencing on the day immediately following
the last day of the Second Extension Term and ending (unless sooner terminated
in accordance with the Loan Documents) on the third (3rd) anniversary of the
Scheduled Maturity Date; subject to the following terms and conditions, provided
that subsections (iii) and (iv) shall not be conditions to the exercise of the
First Extension Term:
(i) The Borrowers shall give Lender notice (an "EXTENSION
NOTICE") of their request to extend the term of the
Loan for the First Extension Term at any time not
later than forty-five (45) days prior to the
Scheduled Maturity Date and for the Second Extension
Term and the Third Extension Term, at least
forty-five (45) days but not more than one hundred
twenty (120) days prior to the expiration of the
First Extension Term, or expiration of the
Second-Extension Term, as the case may be;
(ii) With respect to the First Extension Term, no Event of
Default under Sections 8.1(A) or (B) shall have
occurred and be continuing as of the first (1st) day
of the First Extension Term, and with respect to the
Second Extension Term and the Third Extension Term,
no Event of Default shall have occurred and be
continuing as of the date the Borrowers deliver the
applicable Extension Notice or as of the expiration
of the First Extension Term, or expiration of the
Second Extension Term, as the case may be;
(iii) The Debt Service Coverage Ratio for the trailing
twelve (12) month period ended on the last day of the
immediately preceding calendar quarter prior
30
to the expiration of the First Extension Term, or
expiration of the Second Extension Term, as the case
may be, is at least equal to the Minimum DSCR, and
the Debt Yield for the twelve (12) month period ended
on the last day of the immediately preceding calendar
quarter prior to the expiration of the First
Extension Term, or expiration of the Second Extension
Term, as the case may be, is not less than 13.25%;
provided however, if the Debt Service Coverage Ratio
and/or the Debt Yield fail to satisfy such
requirements, the Borrowers shall be entitled to make
a principal prepayment of a portion of the Aggregate
Outstanding Principal Balance (to be applied in
accordance with the terms of the Cash Management
Agreement) on the then current Maturity Date in an
amount, as reasonably determined by Lender,
sufficient to cause the Debt Service Coverage Ratio
and/or the Debt Yield, as applicable, to satisfy such
requirements based upon a recalculation thereof
assuming that the prepayment amount were applied to
reduce the Aggregate Outstanding Principal Balance as
of the last day of the immediately preceding calendar
quarter (and provided that the Prepayment
Consideration shall be payable in connection with
such prepayment);
(iv) Prior to the date the applicable Extension Term
commences, the Borrowers shall deliver to Lender an
extension fee equal to one quarter of one percent
(.25%) of the outstanding principal balance of the
Loan as of the date the applicable Extension Term
commences for each of the Second Extension Term and
the Third Extension Term;
(v) All of the conditions required to be satisfied for
the extension of the Mezzanine Loan pursuant to
Section 2.5(B)(viii) thereof (whether or not the
Mezzanine Loan is actually extended) shall have been
satisfied;
(vi) The Borrowers shall execute all such documents and
other agreements as Lender shall reasonably request;
(vii) The Borrowers shall deliver to Lender an extension of
the Cap or a replacement Cap in form substantially
the same as the Cap delivered at Closing covering the
term of the applicable Extension Term, providing for
a cap "strike price" (such "strike price", the
"EXTENSION CAP THRESHOLD RATE") not greater than six
and one-half percent (6.5%) per annum (it being
acknowledged that the Borrowers may purchase an
extension or replacement Cap for the applicable
Extension Term with an Extension Cap Threshold Rate
lower than such rate in order to satisfy the Debt
Service Coverage Ratio requirement under Section
2.5(B)(iii) above) and otherwise satisfying the
requirements of Section 2.3 together with an
assignment of such replacement Cap substantially in
the form of the Assignment of Rate Cap and such
Financing Statements and opinions of in-house or
outside counsel to the Cap Provider as Lender may
reasonably require each in form and substance
reasonably acceptable to Lender. The Borrowers shall
be required to pay any and all reasonable
out-of-pocket
31
costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements)
incurred by Lender (and by any Servicer and trustee
in connection with any Securitization backed in whole
or in part by the Loan) in connection with delivery
of such extension or replacement Cap and all related
documentation and opinions required above; and
(viii) The Borrowers shall have delivered evidence
reasonably satisfactory to Lender that the
environmental insurance, including mold coverage, in
form and with coverages in effect as of the Closing
Date has been renewed through the end of the
applicable Extension Term.
SECTION 2.6 PREPAYMENT.
(A) LIMITATION ON PREPAYMENT; PREPAYMENT CONSIDERATION DUE ON
ACCELERATION The Borrowers shall have no right to prepay the Loan in whole or
part, except as expressly set forth in this Loan Agreement or the other Loan
Documents. The Borrowers may prepay the Loan in whole, or, to the extent
expressly provided herein, in part, at any time, provided that (i) the Borrowers
shall provide to Lender not less than fifteen (15) days prior written notice of
such prepayment, (ii) together with such prepayment the Borrowers also shall pay
all accrued and unpaid interest and all other Obligations then due and owing and
(iii) if such prepayment occurs on any day other than a Payment Date, then
together therewith the Borrowers also shall pay to Lender the amount of interest
that would have accrued on the amount being prepaid from and including the date
of such prepayment to the end of such Interest Accrual Period.
(B) PREPAYMENT CONSIDERATION DUE. If any prepayment of all or any
portion of the Loan shall occur on account of acceleration of the Loan (whether
or not due to an Event of Default), or otherwise, then except only as expressly
provided in this Loan Agreement or the other Loan Documents to the contrary, the
Borrowers shall pay the Prepayment Consideration on the amount prepaid to Lender
together with such prepayment, as liquidated damages and compensation for costs
incurred, and in addition to all other amounts due and owing to Lender.
Notwithstanding the foregoing, no Prepayment Consideration will be due as to a
prepayment of the Loan in connection with (i) application of insurance or
condemnation proceeds required by Lender pursuant to this Loan Agreement or the
Deeds of Trust in the absence of an Event of Default, (ii) amortization payments
made in accordance with Section 2.4(A), (iii) in connection with the first
$36,324,903.12 of prepayments made in connection with one or more Releases (it
being agreed that the Prepayment Consideration will be due with respect to all,
or any portion of, a prepayment made in connection with a Release after the
aggregate amount of all prepayments made in connection with Release (other than
Releases effectuated pursuant to Section 5.5(E)) exceeds $36,324,903.12, or (iv)
upon prepayment of the Loan in full, on any date on or after the Payment Date
occurring in October 2004, through the Scheduled Maturity Date (provided the
amount of interest that would have accrued on the amount being prepaid from and
including the date of such prepayment through the following Payment Date shall
be payable with such prepayment). The foregoing designation of any amount of
Prepayment Consideration in this Agreement shall not create a right to prepay at
any time or in any circumstances where this Agreement does not expressly state
that such a right exists. "PREPAYMENT CONSIDERATION" shall mean an amount equal
to (i) prior to the Payment Date in December 2003, three percent (3%) of the
Loan balance at the time of prepayment, and (ii) on and after the Payment Date
in December
32
2003, but prior to the Payment Date in May 2004, two percent (2%) of the Loan
balance at the time of prepayment, and (iii) thereafter through the Scheduled
Maturity Date one percent (1%) of the Loan balance at the time of prepayment.
SECTION 2.7 OUTSTANDING BALANCE. The balance on Lender's books and records shall
be presumptive evidence (absent manifest error) of the amounts owing to Lender
by the Borrowers; provided that any failure to record any transaction affecting
such balance or any error in so recording shall not limit or otherwise affect
the Borrowers' obligation to pay the Obligations.
SECTION 2.8 TAXES. Any and all payments or reimbursements made hereunder or
under the Note shall be made free and clear of and without deduction for any and
all taxes, withholding taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto arising out of or in
connection with the transactions contemplated by the Loan Documents (all such
taxes, levies, imposts, deductions, charges or withholdings and all liabilities
with respect thereto (excluding taxes imposed on net income in accordance with
the following sentence) herein "TAX LIABILITIES"). Notwithstanding the
foregoing, the Borrowers shall not be liable for taxes imposed on the net income
of Lender by the jurisdiction under the laws of which Lender is organized or
doing business or any political subdivision thereof and taxes imposed on its net
income by the jurisdiction of Lender's applicable lending office or any
political subdivision thereof. If the Borrowers shall be required by law to
deduct any such Tax Liabilities (or amounts in estimation or reimbursement for
the same) from or in respect of any sum payable hereunder to Lender, then the
sum payable hereunder shall be increased as may be necessary so that, after
making all required deductions, Lender receives an amount equal to the sum it
would have received had no such deductions been made.
SECTION 2.9 REASONABLENESS OF CHARGES. The Borrower Parties agree that (i) the
actual costs and damages that Lender would suffer by reason of an Event of
Default (exclusive of the attorney's fees and other costs incurred in connection
with enforcement of Lender's rights under the Loan Documents) or a prepayment
would be difficult and needlessly expensive to calculate and establish, and (ii)
the amounts of the Default Rate, the late charges, and the Prepayment
Consideration are reasonable, taking into consideration the circumstances known
to the parties at this time, and (iii) such Default Rate and late charges and
Lender's reasonable attorneys' fees and other costs and expenses incurred in
connection with enforcement of Lender's rights under the Loan Documents shall be
due and payable as provided herein, and (iv) such interest at the Default Rate,
late charges, Prepayment Consideration, and the obligation to pay Lender's
reasonable attorneys' fees and other enforcement costs do not, individually or
collectively, constitute a penalty.
SECTION 2.10 FUNDING LOSSES/CHANGE IN LAW ETC.
(A) The Borrowers hereby agree to pay to Lender any amount
necessary to compensate Lender and any Funding Party for any losses or costs
(including, without limitation, the costs of breaking any "LIBOR" contract, if
applicable, or funding losses determined on the basis of Lender's or such
Funding Party's reinvestment rate and the interest rate on the Loan)
(collectively, "FUNDING LOSSES") sustained by Lender or any Funding Party: (i)
if the Note, or any portion thereof, is repaid for any reason whatsoever on any
date other than a Payment Date (including, without limitation, from condemnation
or insurance proceeds); or (ii) as a
33
consequence of (x) any increased cost of funds that Lender or any Funding Party
may sustain in maintaining the borrowing evidence hereby or (y) the reduction of
any amounts received or receivable from the Borrowers, in either case, due to
the introduction of, or any change in, law or applicable regulation or treaty
adopted after the date hereof (including the administration or interpretation
thereof), whether or not having the force of law, or due to the compliance by
Lender or the Funding Party, as the case may be, with any directive, whether or
not having the force of law, or request from any central bank of domestic or
foreign governmental authority, agency or instrumentality having jurisdiction
made as of the date hereof, to the extent Lender reasonably determines that such
Funding Losses are allocable to the Loan.
(B) If Lender or any Funding Party shall have determined that the
applicability of any law, rule, regulation or guideline adopted pursuant to or
arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption of any other law,
rule, regulation or guideline (including but not limited to any United States
law, rule, regulation or guideline) regarding capital adequacy, or any change
becoming effective in any of the foregoing or in the enforcement or
interpretation or administration of any of the foregoing by any court or any
domestic or foreign governmental authority, central bank or comparable agency
charged with the enforcement or interpretation or administration thereof, or
compliance by Lender or its holding company or a Funding Party or its holding
company, as the case may be, with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency made after the date hereof, has or would have the
effect of reducing the rate of return on the capital of Lender or its holding
company, or of the Funding Party's or its holding company, as the case may be,
then, upon demand by Lender, the Borrowers shall pay to Lender, from time to
time, such additional amount or amounts as will compensate Lender or such
Funding Party for any such reduction suffered.
(C) Any amount payable by the Borrowers under Section 2.10(A) or
2.10(B) shall be paid to Lender within fifteen (15) Business Days after receipt
by the Borrowers of a certificate signed by an officer of Lender setting forth
the amount due and the basis for the determination of such amount in reasonable
detail and the computations made by Lender to determine the amount due, which
statement shall be conclusive and binding upon the Borrowers, absent manifest
error. Failure on the part of Lender to demand payment from the Borrowers for
any such amount attributable to any particular period shall not constitute a
waiver of Lender's right to demand payment of such amount for any subsequent or
prior period. Lender shall use reasonable efforts to deliver to the Borrowers
prompt notice of any event described in Sections 2.10(A) or 2.10(B) above and of
the amount to be paid as a result thereof, provided, however, any failure by
Lender to so notify the Borrowers shall not affect the Borrowers' obligation to
make the payments to be made under this Section as a result thereof. All amounts
which may become due and payable by the Borrowers in accordance with the
provisions of this Section shall constitute additional interest under the Loan
and shall be secured by the Deeds of Trust and the other Loan Documents.
(D) If Lender or any Funding Party requests compensation for any
losses or costs to be reimbursed pursuant to any one or more of the provisions
of clause (ii) of Sections 2.10(A) or 2.10(B), then, upon request of the
Borrowers, Lender or such Funding Party shall use reasonable efforts in a manner
consistent with such institution's practice in connection with loans like the
34
Loan to eliminate, mitigate or reduce amounts that would otherwise be payable by
the Borrowers under the foregoing provisions, provided that such action would
not be otherwise prejudicial to Lender or such Funding Party, including, without
limitation, by designating another of Lender's or such Funding Party's offices,
branches or affiliates; the Borrowers hereby agreeing to pay all reasonably
incurred costs and expenses incurred by Lender or any Funding Party in
connection with any such action.
SECTION 2.11 SERVICING/SPECIAL SERVICING. Lender may change the Servicer from
time to time without the consent of the Borrowers, on prior written notice to
the Borrowers. The Borrowers expressly acknowledge and agree that the Servicer's
fees (the "SERVICING FEE"), which shall in no event exceed .05% per annum on the
outstanding principal balance of the Loan, payable in monthly installments, and
if the Loan becomes a specially serviced loan, any fees of the special servicer,
shall be payable by the Borrowers and shall constitute a portion of the
Obligations; provided, however, that at no time shall the Borrowers be liable
for Servicing Fees or special servicing fees in excess of those fees charged to
Lender by the Servicer or any special servicer.
ARTICLE III
CONDITIONS TO LOAN
SECTION 3.1 CONDITIONS TO FUNDING OF THE LOAN ON THE CLOSING DATE. The
obligations of Lender to fund the Loan are subject to the prior or concurrent
satisfaction or waiver of the conditions set forth below, and to satisfaction of
any other conditions specified herein or elsewhere in the Loan Documents. With
respect to facts and circumstances actually known to Lender at Closing, by
funding the Loan Lender shall be deemed to have acknowledged that each of the
conditions set forth below has been satisfied or waived (except as otherwise set
forth in any other agreement in writing between the Borrowers and Lender). Where
in this Section any documents, instruments or information are to be delivered to
Lender, then the condition shall not be satisfied unless (i) the same shall be
in form and substance satisfactory to Lender, and (ii) if so required by Lender,
the Borrowers shall deliver to Lender a certificate duly executed by the
Borrowers stating that the applicable document, instrument or information is
true and complete and does not omit to state any information without which the
same might reasonably be deemed materially misleading.
(A) LOAN DOCUMENTS. On or before the Closing Date, the Borrowers
shall execute and deliver and cause to be executed and delivered to Lender all
of the Loan Documents specified in SCHEDULE 3.1(A), together with such other
Loan Documents as may be reasonably required by Lender, each, unless otherwise
noted, of even date herewith, duly executed, in form and substance satisfactory
to Lender and in quantities designated by Lender (except for the Note, of which
only one shall be signed), which Loan Documents shall become effective upon the
Closing.
(B) DEPOSITS. The deposits required herein, including without
limitation, the initial deposits into the Reserves and Accounts, shall have been
made (and at the Borrowers' option, the same may be made from the proceeds of
the Loan).
(C) PERFORMANCE OF AGREEMENTS, TRUTH OF REPRESENTATIONS AND
WARRANTIES. Each Borrower Party and all other Persons executing any agreement on
behalf of any Borrower
35
Party shall have performed in all material respects all agreements which this
Loan Agreement provides shall be performed on or before the Closing Date. The
representations and warranties contained herein and in the other Loan Documents
shall be true, correct and complete in all material respects on and as of the
Closing Date.
(D) CLOSING CERTIFICATE. On or before the Closing Date, Lender
shall have received certificates of even date herewith executed on behalf of
each Borrower by the chief financial officer (or similar officer of the
Borrowers) stating that: (i) on such date, to the Borrowers' Knowledge no
Default exists; (ii) no material adverse change in the financial condition or
operations of the business of the Borrowers or the projected cash flow of the
Borrowers or the Properties has occurred since the delivery to Lender of any
financial statements, budgets, proformas, or similar materials (or if there has
been any change, specifying such change in detail), and that, to the Borrowers'
Knowledge after due inquiry, such financial materials fairly present the
financial condition and results of operations of the Borrowers and the
Properties, and all other materials delivered to Lender are complete and
accurate in all material respects; and (iii) the representations and warranties
set forth in this Loan Agreement are true and correct in all material respects
on and as of such date with the same effect as though made on and as of such
date (or if any such representations or warranties require qualification,
specifying such qualification in detail) and (iv) to the Borrowers' Knowledge,
there are no material facts or conditions concerning the Properties or any
Borrower Party that have not been disclosed to Lender which could have a
Material Adverse Effect.
(E) OPINIONS OF COUNSEL. On or before the Closing Date, Lender
shall have received from Cadwalader, Wickersham & Taft or other legal counsel
for the Borrowers satisfactory to Lender, written legal opinions, each in form
and substance acceptable to Lender, as to such matters as Lender shall request,
including opinions to the effect that (i) each of the Borrower Parties is duly
formed, validly existing, and in good standing in its state of organization and,
in the case of each Borrower, in each state where its Property is located, (ii)
this Loan Agreement and the Loan Documents have been duly authorized, executed
and delivered and are enforceable in accordance with their terms subject to
customary qualifications for bankruptcy, general equitable principles, and other
customary assumptions and qualifications; (iii) the Deposit Account Agreement
and Cash Management Agreement have been duly authorized, executed and delivered
by Borrower and Manager and are enforceable in accordance with their terms and
the security interests in favor of Lender in the Account Collateral have been
validly created and perfected; and (iv) no Borrower, Member or General Partner
would be consolidated in any bankruptcy proceeding affecting Guarantor or
certain other Affiliates of the Borrower Parties specified by Lender. Also on or
before the Closing Date, Lender shall have received the following legal
opinions, each in form and substance acceptable to Lender: (a) an opinion of the
Borrowers' local counsel in each state where the Properties are located as to
the enforceability of, and the creation and perfection of Liens under, the Deeds
of Trust and the Assignments of Leases and such other matters as Lender may
reasonably request; (b) an opinion of counsel to the Cap Provider (which may be
in-house counsel) that the Cap has been duly authorized, executed and delivered
by the Cap Provider and is enforceable in accordance with its terms and such
other matters as Lender may reasonably request; (c) opinions of Richards, Layton
& Finger or other Delaware legal counsel, acceptable to Lender, for each
Borrower that is a single member limited liability company formed under the laws
of the State of Delaware that, among other matters, (1) under Delaware law (x)
the prior unanimous written consent of Member (and the unanimous
36
written consent of the board of directors of Member including the Independent
Directors) would be required for a voluntary bankruptcy filing by each such
Borrower, (y) the prior unanimous written consent of the board of directors of
Member (including the Independent Directors), or the unanimous prior written
consent of the board of managers' of each Borrower, including the Independent
Directors' would be required for a voluntary bankruptcy filing by Member, (z)
such unanimous consent requirements are enforceable against Member in accordance
with their terms; (2) under Delaware law the bankruptcy or dissolution of Member
would not cause the dissolution of any of the Borrowers and the bankruptcy or
dissolution of the sole shareholder or member would not cause the dissolution of
Member; (3) under Delaware law, creditors of Member shall have no legal or
equitable remedies with respect to the assets of any of the Borrowers and
creditors of Guarantor shall have no legal or equitable remedies with respect to
the assets of Member; and (4) a federal bankruptcy court would hold that
Delaware law governs the determination of what Persons have authority to file a
voluntary bankruptcy petition on behalf of each Borrower and Member; and (d)
such other legal opinions as Lender may reasonably request.
(F) TITLE POLICIES. On or before the Closing Date, Lender shall
have received and approved pro forma Title Policies for the Deeds of Trust, and
as of the Closing, each Title Company shall be irrevocably committed and
prepared immediately to issue the Title Policies or binding commitments. The
Title Policies shall be in form and substance satisfactory to Lender. Without
limitation, each Title Policy shall be issued on an ALTA form acceptable to
Lender by each Title Company or if an ALTA form is not available in the
applicable jurisdiction, another form acceptable to Lender, together with such
reinsurance and direct access agreements as Lender may require, insuring that
the Deeds of Trust are valid first and prior enforceable liens on each
Borrower's fee simple interest or ground leasehold interest, as the case may be,
in the applicable Property (including any easements appurtenant thereto) subject
only to such exceptions to coverage as are acceptable to Lender, including the
Permitted Exceptions. Each Title Policy shall contain such endorsements as
Lender may require (to the extent available in the state where the Properties is
located) in form acceptable to Lender, including deletion of the creditors'
rights exception and affirmative endorsement coverage for creditors' rights
risks.
(G) SURVEY. Lender shall have received a survey of each of the
Properties, certified to Lender and its successors, assigns and designees and to
each Title Company by a surveyor reasonably satisfactory to Lender (the
"SURVEY"). Each Survey shall contain the minimum detail for land surveys as most
recently adopted by ALTA/ASCM, shall comply with Lender's survey requirements
and shall contain Lender's standard form certification, and shall show no state
of facts or conditions reasonably objectionable to Lender.
(H) ZONING. On or before the Closing Date, Lender shall have
received evidence reasonably satisfactory to Lender as to the zoning and
subdivision compliance of each of the Properties.
(I) CERTIFICATES OF FORMATION AND GOOD STANDING. On or before the
Closing Date, Lender shall have received copies of the organizational documents
and filings of each Borrower Party, together with good standing certificates (or
similar documentation) (including verification of tax status) from the state of
its formation and from all states in which the laws thereof require such Person
to be qualified and/or licensed to do business (including without limitation,
each
37
state in which the Properties are located for the applicable Borrower(s) and, to
the extent required by law, Member and General Partner). Each such certificate
shall be dated not more than 30 days prior to the Closing Date, as applicable,
and certified by the applicable Secretary of State or other authorized
governmental entity. In addition, on or before the Closing Date the secretary or
corresponding officer of each Borrower Party, or the secretary or corresponding
officer of the partner, trustee, or other Person as required by such Borrower
Party's organizational documents (as the case may be, the "BORROWER PARTY
SECRETARY") shall have delivered to Lender a certificate stating that the copies
of the organizational documents as delivered to Lender are true and complete and
are in full force and effect, and that the same have not been amended except by
such amendments as have been so delivered to Lender.
(J) CERTIFICATES OF INCUMBENCY AND RESOLUTIONS. On or before the
Closing Date, Lender shall have received certificates of incumbency and
resolutions of each Borrower Party and its constituents as requested by Lender,
approving and authorizing the Loan and the execution, delivery and performance
of the Loan Documents, certified as of the Closing Date by the Borrower Party
Secretary as being in full force and effect without modification or amendment.
(K) FINANCIAL STATEMENTS. On or before the Closing Date, Lender
shall have received such financial statements and other financial information as
shall be satisfactory to Lender for each Borrower Party (including for each
Guarantor) and for the Properties. If any such statements are not available for
the Properties, then the Borrowers shall provide such financial reports as are
available. All such financial statements shall be certified to Lender by the
applicable Borrower Party (through its chief financial officer or other officer
charged with similar duties), which certification shall be in form and substance
reasonably satisfactory to Lender.
(L) OPERATING AND CAPEX/FF&E BUDGETS; CAPITAL IMPROVEMENT PLAN. On
or before the Closing Date, Lender shall have received and approved the
Operating Budget and CapEx/FF&E Budget for the Properties for the remainder of
the current calendar year and the Capital Improvement Plan for the Properties.
(M) AGREEMENTS. On or before the Closing Date, Lender shall have
received a list of all Material Agreements and, to the extent requested by
Lender, copies thereof.
(N) MANAGEMENT AGREEMENT; FRANCHISE AGREEMENT. On or before the
Closing Date, Lender shall have received copies of the Management Agreements and
any leasing brokerage agreements pertaining to the Properties and the
Assignments of Management Agreements, duly executed by each Manager and the
Borrowers. On or before the Closing Date, Lender shall have received copies of
the existing Franchise Agreements and each Franchisor Letter (including any
Property Improvement Plan) duly executed by the applicable Franchisor and, if
applicable, such additional Franchise Agreement (or commitment to issue such
Franchise Agreement), together with Franchisor Letters (including any Property
Improvement Plan) duly executed by the Franchisors.
(O) RENT ROLL. Prior to the Closing, Lender shall have received
from the Borrowers rent roll for each of the Properties (collectively, the "RENT
ROLL", certified by the Borrowers,
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and in form and substance satisfactory to Lender. The Rent Roll shall constitute
a true, correct, and complete list of each and every Material Lease, together
with all extensions and amendments thereof, and shall accurately and completely
disclose all annual and monthly rents payable by all tenants, including all
percentage rents, if any, and expiration dates of such Material Leases, and the
amount of security deposit being held by the Borrowers under each Material
Lease, if any.
(P) MATERIAL LEASES. Prior to the Closing, Lender shall have
received true, correct and complete copies of the Material Leases, as amended.
(Q) LICENSES, PERMITS AND APPROVALS. On or before Closing Date,
Lender shall have received copies of the final, unconditional certificates of
occupancy issued with respect to each of the Properties, together with all other
applicable licenses (including, without limitation, each liquor license and beer
permit), permits and approvals required for each Borrower to own, use, occupy,
operate and maintain each of the Properties as a hotel.
(R) INSURANCE POLICIES AND ENDORSEMENTS. On or before the Closing
Date, Lender shall have received copies of certificates of insurance (dated not
more than 20 days prior to the Closing Date) regarding insurance required to be
maintained under this Loan Agreement and the other Loan Documents, together with
endorsements satisfactory to Lender naming Lender as an additional insured and
loss payee, as required by this Loan Agreement, under such policies. In
addition, as to any insurance matters arising under Environmental Laws or
pertaining to any environmental insurance that any of the Borrowers has with
respect to any Property, the same shall be endorsed to Lender as required by
this Loan Agreement and shall name Lender as an insured, additional insured
and/or loss payee, as applicable.
(S) ENVIRONMENTAL ASSESSMENT. Lender shall have received the
Environmental Reports relating to each of the Properties, together with a letter
from each preparer thereof entitling Lender and its successors and assigns to
rely upon said Environmental Report.
(T) PROPERTY CONDITION REPORTS. On or before the Closing Date,
Lender shall have received a property condition report for each of the
Properties, which shall be prepared by an engineer or other consultant
satisfactory to Lender and otherwise shall be in form and substance satisfactory
to Lender in its sole discretion. Each such report shall set forth any items of
deferred maintenance at the applicable Property.
(U) APPRAISAL. On or before the Closing Date, Lender shall have
received an independent appraisal of each of the Properties from a state
certified appraiser engaged by Lender. Each such appraisal shall conform in all
respects to the criteria for appraisals set forth in the Financial Institutions
Reform and Recovery Act of 1989 and the regulations promulgated thereunder (as
if Lender were an institution under the jurisdiction thereof) and the Uniform
Standards of Professional Appraisal Practices of the Appraisal Foundation.
(V) SEARCHES. Prior to the Closing Date, Lender shall have
received copies of Uniform Commercial Code, judgment, lien, bankruptcy and
litigation search reports with respect to the Borrowers, Guarantor, Managers,
General Partner and Member, all dated not more than thirty (30) days prior to
the Closing Date.
39
(W) DOCUMENTATION REGARDING APPLICATION OF PROCEEDS. At least two
(2) days prior to the Closing Date, Lender shall have received payoff demand
letters and wiring instructions from each lender or other obligee of any
existing indebtedness which is required to be repaid pursuant to this Loan
Agreement.
(X) LEGAL FEES; CLOSING EXPENSES. The Borrowers shall have paid
any and all reasonable legal fees and expenses of counsel to Lender, together
with all recording fees and taxes, title insurance premiums, and other
reasonable costs and expenses related to the Closing.
(Y) COMMITMENT CONDITIONS. If a commitment letter or similar
agreement shall have been issued by Lender for the Loan, such additional
conditions as shall be specified in such commitment shall have been satisfied.
(Z) OTHER REVIEW. Lender shall have completed all other review of
the Borrower Parties, the Properties, and such other items as it reasonably
determines relevant, and shall have determined based upon such review to fund
the Loan. The Borrower Parties shall have satisfied such other reasonable
criteria as Lender may reasonably specify.
(AA) GROUND LEASES; GROUND LESSOR ESTOPPELS. On or before the
Closing Date, Lender shall have received (i) true and complete copies of each of
the Ground Leases, certified by the Borrowers, and (ii) estoppels and agreements
substantially in the form of EXHIBIT H, or otherwise reasonably acceptable to
Lender, duly executed by each Ground Lessor.
(BB) MORTGAGED CONDOMINIUM PROPERTY AGREEMENTS. On or before the
Closing Date, Lender shall have received an estoppel and agreement of the Board
of Managers in form and substance reasonably acceptable to Lender.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Loan Agreement and to make
the Loan, each Borrower represents and warrants to Lender that the statements
set forth in this Article IV, after giving effect to the Closing, will be, true,
correct and complete in all material respects as of the Closing Date.
SECTION 4.1 ORGANIZATION, POWERS, CAPITALIZATION, GOOD STANDING, BUSINESS.
(A) ORGANIZATION AND POWERS. Each Borrower Party is duly
organized, validly existing and in good standing under the laws of the state of
its formation. Each Borrower Party has all requisite power and authority to own
and operate its properties, to carry on its business as now conducted and
proposed to be conducted, and to enter into each Loan Document to which it is a
party and to perform the terms thereof.
(B) QUALIFICATION. Each Borrower Party is duly qualified and in
good standing in the state of its formation. In addition, each Borrower Party is
duly qualified and in good standing in each state where necessary to carry on
its present business and operations, except in jurisdictions in which the
failure to be qualified and in good standing could not reasonably be expected to
have a Material Adverse Effect.
40
(C) ORGANIZATION. The organizational chart set forth as SCHEDULE
4.1(C) accurately sets forth the direct and indirect ownership structure of the
Borrowers, General Partners and Members.
SECTION 4.2 AUTHORIZATION OF BORROWING, ETC.
(A) AUTHORIZATION OF BORROWING. The Borrowers have the power and
authority to incur the Indebtedness evidenced by the Note. The execution,
delivery and performance by each Borrower Party of each of the Loan Documents to
which it is a party and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary limited liability company,
partnership, trustee, corporate or other action, as the case may be.
(B) NO CONFLICT. The execution, delivery and performance by each
Borrower Party of the Loan Documents to which it is a party and the consummation
of the transactions contemplated thereby do not and will not: (1) violate (x)
any provision of law applicable to any Borrower Party; (y) the partnership
agreement, certificate of limited partnership, certificate of incorporation,
bylaws, declaration of trust, operating agreement or other organizational
documents, as the case may be, of each Borrower Party; or (z) any order,
judgment or decree of any Governmental Authority binding on any Borrower Party
or any of its Affiliates; (2) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any Contractual
Obligation of any Borrower Party or any of its Affiliates (except where such
breach will not cause a Material Adverse Effect); (3) result in or require the
creation or imposition of any material Lien (other than the Lien of the Loan
Documents) upon the Properties or assets of any Borrower Party; or (4) except as
set forth on SCHEDULE 4.2, require any approval or consent of any Person under
any material Contractual Obligation of any Borrower Party, which approvals or
consents have been obtained on or before the dates required under such material
Contractual Obligation, but in no event later than the Closing Date.
(C) GOVERNMENTAL CONSENTS. The execution and delivery by each
Borrower Party of the Loan Documents to which it is a party, and the
consummation of the transactions contemplated thereby do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any Governmental Authority.
(D) BINDING OBLIGATIONS. This Loan Agreement is, and the Loan
Documents, including the Note, when executed and delivered will be, the legally
valid and binding obligations of each Borrower Party that is a party thereto,
enforceable against each of the Borrower Parties, as applicable, in accordance
with their respective terms, subject to bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditor's rights. No Borrower
Party has any defense or offset to any of its obligations under the Loan
Documents to which it is a party. No Borrower Party has any claim against Lender
or any Affiliate of Lender.
SECTION 4.3 FINANCIAL STATEMENTS. To the Borrowers' Knowledge after due inquiry,
all financial statements concerning any of the Borrowers, their Affiliates and
the Properties which have been furnished by or on behalf of the Borrowers to
Lender pursuant to this Loan Agreement have been prepared in accordance with
GAAP consistently applied (except as disclosed therein) and present fairly the
financial condition of the Persons covered thereby as at the dates thereof and
the results of their operations for the periods then ended. Since the date of
the financial
41
statements delivered to Lender, there has been no material adverse change in the
financial condition, operations or business of the Borrower Parties or the
Properties from that set forth in said financial statements.
SECTION 4. INDEBTEDNESS AND CONTINGENT OBLIGATIONS. As of the Closing, except as
previously disclosed to and approved by Lender in writing and set forth on
SCHEDULE 4.4, the Borrowers shall have no outstanding Indebtedness or Contingent
Obligations other than the Obligations or any other Permitted Indebtedness.
SECTION 4.5 TITLE TO THE PROPERTIES. The Borrowers have good and marketable fee
simple title (or, in the case of the Ground Leased Properties, leasehold title)
to the Properties, free and clear of all Liens except for the Permitted
Encumbrances. The Borrowers own and will own at all times all FF&E relating to
the Properties (other than personal property which is either owned by tenants of
such Property, not used or necessary for the operation of the applicable
Property, or leased by the Borrowers as permitted hereunder), subject only to
the Permitted Encumbrances. The Deeds of Trust, when properly recorded in the
appropriate records, together with any Uniform Commercial Code financing
statements required to be filed in connection therewith, will create (i) a
valid, perfected first lien on each of the Properties, subject only to the
Permitted Encumbrances, and (ii) perfected first priority security interests in
and to, and perfected collateral assignments of, all personalty (including the
Rents and the Leases), all in accordance with the terms thereof, in each case
subject only to any applicable Permitted Encumbrances. Lender will have a
perfected first priority security interest in and to the FF&E owned by the
Borrower, if any, not located at the Properties. To the Borrowers' Knowledge,
except as set forth in SCHEDULE 4.5, there are no proceedings in condemnation or
eminent domain affecting any of the Properties, and to the actual knowledge of
the Borrower, none is threatened. No Person has any option or other right to
purchase all or any portion of any of the Properties or any interest therein. To
the Borrowers' Knowledge, there are no mechanic's, materialman's or other
similar liens or claims which have been filed for work, labor or materials
affecting the Properties which are or will be liens prior to, or equal or
coordinate with, the lien of any of the Deeds of Trust. None of the Permitted
Encumbrances, individually or in the aggregate, materially interfere with the
benefits of the security intended to be provided by the Deeds of Trust and this
Loan Agreement, materially and adversely affect the value of any of the
Properties, impair the use or operations of the Properties or impair the
Borrowers' ability to pay its obligations in a timely manner.
SECTION 4.6 ZONING; COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE 4.6,
to the Borrower's Knowledge, the Properties and the use thereof comply in all
material respects with all applicable zoning, subdivision and land use laws,
regulations and ordinances, all applicable health, fire, building codes, parking
laws and all other laws, statutes, codes, ordinances, rules and regulations
applicable to the Properties, or any of them, including without limitation the
Americans with Disabilities Act. To the Borrowers' knowledge, there are no
illegal activities relating to controlled substances on any of the Properties.
All material permits, licenses and certificates for the lawful use, occupancy
and operation of each component of each of the Properties in the manner in which
it is currently being used, occupied and operated, including, but not limited to
liquor licenses and certificates of occupancy, or the equivalent, have been
obtained and are current and in full force and effect. To the Borrower's
Knowledge, except as disclosed on SCHEDULE 4.6, in the event that all or any
part of the Improvements located on any
42
Property is destroyed or damaged, said Improvements can be legally reconstructed
to their condition prior to such damage or destruction, and thereafter exist for
the same use without violating any zoning or other ordinances applicable thereto
and without the necessity of obtaining any variances or special permits, other
than customary demolition, building and other construction related permits. To
the Borrowers' Knowledge, no legal proceedings are pending or threatened with
respect to the zoning of any Property. To the Borrowers' Knowledge, except as
set forth in the Title Policies and/or the Surveys, neither the zoning nor any
other right to construct, use or operate any Property is in any way dependent
upon or related to any real estate other than such Property. No tract map,
parcel map, condominium plan, condominium declaration, or plat of subdivision
will be recorded by the Borrowers with respect to any Property without Lender's
prior written consent, which consent shall not be unreasonably withheld, delayed
or conditioned.
SECTION 4.7 LEASES; AGREEMENTS.
(A) LEASES; AGREEMENTS. To the Borrowers' Knowledge, it has
delivered to Lender true and complete copies (in all material respects) of all
(i) Leases and (ii) Material Agreements affecting the operation and management
of the Properties, and such Leases and Material Agreements have not been
modified or amended except pursuant to amendments or modifications delivered to
Lender. Except for the rights of each of the current Managers pursuant to the
existing Management Agreements, no Person has any right or obligation to manage
any of the Properties or to receive compensation in connection with such
management. Except for the parties to any leasing brokerage agreement that has
been delivered to Lender, no Person has any right or obligation to lease or
solicit tenants for the Properties, or (except for cooperating outside brokers)
to receive compensation in connection with such leasing.
(B) RENT ROLL, DISCLOSURE. A true and correct copy of the Rent
Roll is attached hereto as SCHEDULE 4.7(B) and, except for the Material Leases
described in the Rent Roll, none of the Properties are subject to any Material
Leases. Except only as specified in the Rent Roll, or as otherwise disclosed to
Lender in the estoppel certificates delivered to Lender at Closing, to the
Borrowers' Knowledge, (i) the Material Leases are in full force and effect; (ii)
the Borrowers have not given any notice of default to any tenant under any Lease
which remains uncured; (iii) no tenant has any set off, claim or defense to the
enforcement of any Lease; (iv) no tenant is in arrears in the payment of rent,
additional rent or any other charges whatsoever due under any Material Lease, or
is materially in default in the performance of any other obligations under such
Material Lease; (v) the Borrowers have completed all work or alterations
required of the landlord or lessor under each Material Lease, and all of the
other obligations of landlord or lessor under the Material Leases have been
performed; and (vi) there are no rent concessions (whether in form of cash
contributions, work agreements, assumption of an existing tenant's other
obligations, or otherwise) or extensions of time whatsoever not reflected in
such Rent Roll. There are no legal proceedings commenced (or, to the Knowledge
of the Borrowers, threatened) against the Borrowers by any tenant or former
tenant. No rental in excess of one month's rent has been prepaid under any of
the Material Leases. To the Borrowers' Knowledge, each of the Material Leases is
valid and binding on the parties thereto in accordance with its terms.
43
(C) NO RESIDENTIAL UNITS. There are no residential units in any of
the Properties and, to each Borrower's Knowledge, no person (other than a site
manager employed by Manager) occupies any part of the Properties for dwelling
purposes other than on a transient basis.
(D) MANAGEMENT AGREEMENT. The Borrowers have delivered to Lender a
true and complete copy of each of the Management Agreements to which they are a
party that will be in effect on the Closing Date, and such Management Agreements
have not been modified or amended except pursuant to amendments or modifications
delivered to Lender. The Management Agreements are in full force and effect and
no default by any of the Borrowers or Manager exists thereunder.
(E) FRANCHISE AGREEMENT. The Borrowers have delivered to Lender a
true and complete copy of each of the Franchise Agreements to which they are a
party, and such Franchise Agreements have not been modified or amended except
pursuant to amendments or modifications delivered to Lender. To the Borrowers'
Knowledge, (i) the applicable Franchise Agreements are in full force and effect
and (ii) except as set forth on SCHEDULE 4.7(E), no material default by the
Borrowers, Manager or the applicable Franchisor exists thereunder.
SECTION 4.8 CONDITION OF THE PROPERTIES. To each Borrower's Knowledge, except as
set forth in the property condition report for the Properties delivered to
Lender, all Improvements including, without limitation, the roof and all
structural components, plumbing systems, HVAC systems, fire protection systems,
electrical systems, equipment, elevators, exterior doors, parking facilities,
sidewalks and landscaping are in working condition and repair. Except as
disclosed in the Property Condition Reports, (i) the Borrowers are not aware of
any latent or patent structural or other material defect or deficiency in the
Properties and, (ii) to the Borrower's Knowledge, city water supply, storm and
sanitary sewers, and electrical, gas (if applicable) and telephone facilities
are available to each of the Properties within the boundary lines of each of the
Properties (except as may be shown on the applicable Survey), are fully
connected to the Improvements and are fully operational, are sufficient to meet
the reasonable needs of each of the Properties as now used or presently
contemplated to be used, and no other utility facilities are necessary to meet
the reasonable needs of each of the Properties as now used or presently
contemplated. Except as may be shown on the applicable Survey, to the Borrowers'
Knowledge no part of any of the Properties is within a flood plain and none of
the Improvements create encroachment over, across or upon the Properties'
boundary lines, rights of way or easements, and no building or other
improvements on adjoining land create such an encroachment which could
reasonably be expected to have a Material Adverse Effect. All public roads and
streets necessary for service of and access to each of the Properties for the
current and contemplated uses thereof have been completed and are serviceable
and are physically and legally open for use by the public. To the Borrowers'
Knowledge after due inquiry, and except as disclosed in the Property Condition
Reports, any septic system located at any of the Properties is in good and safe
condition and repair and in compliance with all applicable law.
SECTION 4.9 LITIGATION; ADVERSE FACTS. Except as set forth on SCHEDULE 4.9, to
the Borrowers' Knowledge after due inquiry, there are no judgments outstanding
against any Primary Borrower Party, or affecting any of the Properties or any
property of any Borrower, nor is there any action, charge, claim, demand, suit,
proceeding, petition, governmental investigation or arbitration now pending or
threatened against any Primary Borrower Party that could
44
reasonably be expected to result in a Material Adverse Effect. To the Borrowers'
Knowledge after due inquiry, the actions, charges, claims, demand, suits,
proceedings, petitions, investigations and arbitrations set forth on SCHEDULE
4.9 are not reasonably expected to result, either individually or in the
aggregate, in any Material Adverse Effect.
SECTION 4.10 PAYMENT OF TAXES. All federal, state and local tax returns and
reports of each Primary Borrower Party required to be filed have been timely
filed (or each Borrower has timely filed for an extension and the applicable
extension has not expired), and all taxes, assessments, fees and other
governmental charges (including any payments in lieu of taxes) upon such Person
and upon its properties, assets, income and franchises which are due and payable
have been paid. To the Borrowers' Knowledge, there is not presently pending any
special assessment against any of the Properties or any part thereof.
SECTION 4.11 ADVERSE CONTRACTS. Except for the Loan Documents, none of the
Primary Borrower Parties is a party to or bound by, nor is any property of such
Person subject to or bound by, any contract or other agreement which restricts
such Person's ability to conduct its business in the ordinary course as
currently conducted that, either individually or in the aggregate, has a
Material Adverse Effect or could reasonably be expected to have a Material
Adverse Effect.
SECTION 4.12 PERFORMANCE OF AGREEMENTS. To the Borrowers' Knowledge, no Borrower
Party is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual Obligation of
any such Person which could reasonably be expected to have a Material Adverse
Effect, and no condition exists that, with the giving of notice or the lapse of
time or both, would constitute such a default which could reasonably be expected
to have a Material Adverse Effect.
SECTION 4.13 GOVERNMENTAL REGULATION. No Primary Borrower Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940 or to any federal or state
statute or regulation limiting its ability to incur indebtedness for borrowed
money.
SECTION 4.14 EMPLOYEE BENEFIT PLANS. Except as set forth on SCHEDULE 4.14, no
Primary Borrower Party maintains or contributes to, or has any obligation
(including a contingent obligation) under, any Employee Benefit Plans.
SECTION 4.15 BROKER'S FEES. No broker's or finder's fee, commission or similar
compensation will be payable by or pursuant to any contract or other obligation
of any Primary Borrower Party with respect to the Making of the Loan or any of
the other transactions contemplated hereby or by any of the Loan Documents. The
Borrowers shall indemnify, defend, protect, pay and hold Lender harmless from
any and all broker's or finder's fees claimed to be due in connection with the
making of the Loan arising from any Borrower Parties' actions.
SECTION 4.16 INTENTIONALLY DELETED.
SECTION 4.17 SOLVENCY. The Borrowers (a) have not entered into the transaction
or any Loan Document with the actual intent to hinder, delay, or defraud any
creditor and (b) received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the Loan, the fair
saleable value of each Borrower's assets exceed and will, immediately
45
following the making of the Loan, exceed such Borrower's total liabilities,
including, without limitation, subordinated, unliquidated, disputed and
Contingent Obligations. The fair saleable value of each Borrower's assets is and
will, immediately following the making of the Loan, be greater than the
Borrower's probable liabilities, including the maximum amount of its Contingent
Obligations on its debts as such debts become absolute and matured. Each
Borrower's assets do not and, immediately following the making of the Loan will
not, constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. The Borrowers do not intend to, and do
not believe that they will, incur Indebtedness and liabilities (including
Contingent Obligations and other commitments) beyond its ability to pay such
Indebtedness and liabilities as they mature (taking into account the timing and
amounts of cash to be received by the Borrowers and the amounts to be payable on
or in respect of obligations of the Borrowers).
SECTION 4.18 DISCLOSURE. No financial statements furnished to Lender by or on
behalf of any Primary Borrower Party contains any untrue representation,
warranty or statement of a material fact, or omits to state a material fact
necessary in order to make the statements contained therein not misleading. No
Loan Document or any other document, certificate or written statement for use in
connection with the Loan and prepared by any Borrower Party, or any information
provided by any Borrower Party and contained in, or used in preparation of, any
document or certificate for use in connection with the Loan, contains any untrue
representation, warranty or statement of a material fact, or omits to state a
material fact necessary in order to make the statements contained therein not
misleading. There is no material fact actually known to the Borrowers that has
had or will have a Material Adverse Effect and that has not been disclosed in
writing to Lender by the Borrowers.
SECTION 4.19 USE OF PROCEEDS AND MARGIN SECURITY. The Borrowers shall use the
proceeds of the Loan only for the purposes set forth herein and consistent with
all applicable laws, statutes, rules and regulations. No portion of the proceeds
of the Loan shall be used by the Borrowers or any Person in any manner that
might cause the borrowing or the application of such proceeds to violate
Regulation T, Regulation U or Regulation X or any other regulation of the Board
of Governors of the Federal Reserve System.
SECTION 4.20 INSURANCE. Set forth on SCHEDULE 4.20 is a complete and accurate
description of all policies of insurance for each Borrower that are in effect as
of the Closing Date. No notice of cancellation has been received with respect to
such policies, and, to each Borrower's Knowledge, the Borrowers are in
compliance with all conditions contained in such policies.
SECTION 4.21 SEPARATE TAX LOTS. Each of the Properties are comprised of one (1)
or more parcels which constitute separate tax lots. No part of any of the
Properties is included or assessed under or as part of another tax lot or
parcel, and no part of any other property is included or assessed under or as
part of the tax lots or parcels comprising any of the Properties.
SECTION 4.22 INVESTMENTS. The Borrowers have no (i) direct or indirect interest
in, including without limitation stock, partnership interest or other securities
of, any other Person, or (ii) direct or indirect loan, advance or capital
contribution to any other Person, including all indebtedness and accounts
receivable from that other Person.
46
SECTION 4.23 RESERVED.
SECTION 4.24 DEFAULTS. To the Borrowers' Knowledge, except as disclosed to
Lender in writing, no Default exists.
SECTION 4.25 NO PLAN ASSETS. No Primary Borrower Party is or will be (i) an
employee benefit plan as defined in Section 3(3) of ERISA which is subject to
ERISA, (ii) a plan as defined in Section 4975(e)(1) of the IRC which is subject
to Section 4975 of the IRC, or (iii) an entity whose underlying assets
constitute "plan assets" of any such employee benefit plan or plan for purposes
of Title I of ERISA of Section 4975 of the IRC; provided that, in making such
representation, the Borrowers have assumed that (i) no portion of the Loan shall
be funded with plan assets of any employee benefit plan that is subject to Title
I of ERISA or any plan that is covered by Section 4975 of the Code unless the
Lender is eligible to apply one or more exemptions such that the Loan will not
constitute a nonexempt prohibited transaction under Section 406 of ERISA or that
could subject a Borrower Party or its Affiliates to an excise tax under Section
4975 of the IRC; and (ii) such assumption in the preceding clause is true and
correct with respect to any party to which Lender transfers or assigns any
portion of the Loan.
SECTION 4.26 GOVERMENTAL PLAN. No Primary Borrower Party is or will be a
"governmental plan" within the meaning of Section 3(32) of ERISA and
transactions by or with the Borrowers are not and will not be subject to state
statutes applicable to the Borrowers' regulating investments of and fiduciary
obligations with obligations with respect to governmental plans.
SECTION 4.27 NOT FOREIGN PERSON. No Primary Borrower Party is a "foreign person"
within the meaning of Section 1445(f)(3) of the IRC.
SECTION 4.28 NO COLLECTIVE BARGAINING AGREEMENTS. Except as set forth on
SCHEDULE 4.28, no Primary Borrower Party is a party to any collective bargaining
agreement.
SECTION 4.29 MORTGAGED CONDOMINIUM DOCUMENTS.
(A) The Borrowers have delivered true and correct copies of each
of the Mortgaged Condominium Documents to Lender and same have not been
modified, amended or assigned except as set forth on SCHEDULE 4.29, and to the
Borrowers' Knowledge, there are no other material documents or agreements
affecting the Condominium Borrower's interest in the Mortgaged Condominium
Property.
(B) Each of the Mortgaged Condominium Property Documents is in
full force and effect and, to the Condominium Borrower's Knowledge, no breach or
default, or event that, with the giving of notice or the passage of time or both
would constitute a breach or default, under any of the Mortgaged Condominium
Property Documents (a "CONDOMINIUM DEFAULT") exists or has occurred on the part
of the Condominium Borrower or on the part of any other party to any of the
Mortgaged Condominium Property Documents.
SECTION 4.30 GROUND LEASES
(A) Each Ground Lease contains the entire agreement of the Ground
Lessor and the applicable Borrower pertaining to each Ground Leased Property
covered thereby. The
47
Borrowers have no estate, right, title or interest in or to the Ground Leased
Properties except under and pursuant to the Ground Leases. The Borrowers have
delivered true and correct copies of each of the Ground Leases to Lender and the
Ground Leases have not been modified, amended or assigned except as set forth on
SCHEDULE 4.30.
(B) To the knowledge of the Borrowers, each Ground Lessor is the
exclusive fee simple owner of its Ground Leased Property, subject only to the
Ground Lease and the Permitted Encumbrances, and each Ground Lessor is the sole
owner of the lessor's interest in the applicable Ground Lease.
(C) There are no rights to terminate any Ground Lease other than
any Ground Lessor's right to terminate by reason of default, casualty,
condemnation or other reasons, in each case as expressly set forth in the
applicable Ground Lease.
(D) Each Ground Lease is in full force and effect and to the
Borrowers' knowledge, no breach or default or event that with the giving of
notice or passage of time would constitute a breach or default under any Ground
Lease (a"GROUND LEASE DEFAULT") exists or has occurred on the part of the
Borrowers or on the part of any Ground Lessor under any Ground Lease. The
Borrowers have not received any written notice that a Ground Lease Default has
occurred or exists, or that any Ground Lessor or any third party alleges the
same to have occurred or exist.
(E) The applicable Borrower set forth on SCHEDULE 4.30 is the
exclusive owner of the lessee's interest under and pursuant to the applicable
Ground Lease and has not assigned, transferred, or encumbered its interest in,
to, or under any Ground Lease (other than assignments that will terminate on or
prior to Closing), except in favor of Lender pursuant to this Loan Agreement and
the other Loan Documents.
ARTICLE V
COVENANTS OF BORROWER PARTIES
The Borrowers covenant and agree that until payment in full of the
Loan, all accrued and unpaid interest and all other Obligations, the Borrowers
shall perform and comply with all covenants in this Article V applicable to
such Person.
SECTION 5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
(A) FINANCIAL STATEMENTS.
(i) ANNUAL REPORTING. Within one hundred twenty (120)
days after the end of each calendar year, the Borrowers (on a consolidated
basis), and within ninety (90) days after the end of each calendar year,
Guarantor shall provide true and complete copies of their Financial Statements
for such year to Lender. All such Financial Statements shall be audited by an
Approved Accounting Firm or by other independent certified public accountants
reasonably acceptable to Lender, and shall bear the unqualified certification of
such accountants that such Financial Statements present fairly in all material
respects the financial position of the subject company. The annual Financial
Statements shall be accompanied by Supplemental Financial Information for such
calendar year. The annual Financial Statements for the Borrowers (on a
consolidated basis) and Guarantor shall also be accompanied by a certification
executed by the
48
entity's chief executive officer or chief financial officer (or other officer
with similar duties), satisfying the criteria set forth in Section 5.1(A)(viii)
below, and a Compliance Certificate (as defined below).
(ii) QUARTERLY REPORTING - BORROWERS. Within forty-five
(45) days after the end of each calendar quarter, the Borrowers on a
consolidated basis (other than with respect to income statements, which shall be
on an individual property basis) shall provide copies of their Financial
Statements for such quarter to Lender, together with a certification executed on
behalf of each of the Borrowers by their respective chief executive officers or
chief financial officers (or other officer with similar dutics) in accordance
with the critcria sct forth in Scction 5.1(A)(viii) below. Such quarterly
Financial Statements shall be accompanied by Supplemental Financial Information
and a Compliance Certificate for such quarter.
(iii) QUARTERLY REPORTING - GUARANTOR. Within forty-five
(45) days after the end of each calendar quarter, Guarantor shall provide copies
of its Financial Statements for such quarter to Lender, together with a
certification executed on behalf of Guarantor by its chief executive officer or
chief financial officer (or other officer with similar duties) in accordance
with the criteria set forth in Section 5.1(A)(viii) below.
(iv) LEASING REPORTS. Within forty-five (45) days after
each calendar quarter, each Borrower shall provide to Lender a certified Rent
Roll and a schedule of security deposits held under Material Leases, each in
form and substance reasonably acceptable to Lender. Within forty-five (45) days
after each calendar quarter, each Borrower shall also provide to Lender (a) a
schedule of any retail Material Leases that expired during such calendar quarter
and a schedule of retail Material Leases scheduled to expire within the next
twelve (12) months and (b) to the extent the Borrowers received notice thereof,
a list of any retail tenants under Material Leases that filed bankruptcy,
insolvency or reorganization proceedings during such calendar quarter. Within
ninety (90) days after the end of each calendar year, each Borrower shall
provide to Lender a statement of income and expenses for all retail space at
each of the Properties owned and operated by the Borrowers and sales reports for
retail tenants for such year.
(v) MONTHLY REPORTING. Within thirty (30) days after the
end of each calendar month, each Borrower shall provide, or cause Manager to
provide, to Lender the following items determined on an accural basis: (a) a
calculation of the average daily rate, RevPAR and occupancy calculations and
statistics for the Properties for the subject month; (b) Smith Travel Research
"STAR" reports then available; (c) monthly and year to date operating statements
prepared for such calendar month, noting Net Operating Income, Net Cash Flow and
including budgeted and last year results for the same year-to-date period and
other information necessary and sufficient under GAAP to fairly represent the
results of operation of the Properties during such calendar month, all in form
reasonably satisfactory to Lender; (d) reports for FF&E and Capital Expenditure
projects completed during such calendar month (including a detailed explanation
for any material deviations from budget); (e) monthly and year to date detailed
reports of Operating Expenses, including supporting documentation satisfactory
to Lender in its sole discretion for each item of Extraordinary Expense (as such
term is defined in the Cash Management Agreement) for which Lender has approved
a disbursement from the Cash Trap Reserve pursuant to the terms of Section
3.3(a)(viii) of the Cash Management Agreement; (f) most recently available
"QFI", or similar quality index, scores; and (g) a report setting forth (i)
49
the date of termination by Property for each Franchise Agreement that has been
terminated after the Closing Date and not replaced with an Approved Franchisor,
(ii) the number of Properties for which a default has occurred and has continued
beyond applicable notice and grace periods under the applicable Franchise
Agreement (including the percentage of the original Aggregate Allocated Loan
Amount represented by such Properties), (iii) a summary report establishing
whether the Borrowers are diligently continuing to pursue reflagging efforts
with respect to each such Property, and (iv) a summary report including (a) the
aggregate number of Properties for which the Borrowers have entered into new
Franchise Agreements as permitted by Sections 5.13(D)(i) and 5.13(D)(iv)
together with the resulting Category of each such Property, and (b) the
aggregate number of Properties for which any replacement (and, if more than one
replacement has occurred to a single Property, the number of replacements with
respect to such Property) of the applicable Franchise Agreements has occurred
pursuant to the terms of Sections 5.13(D)(ii) and 5.13(D)(iii) together with the
percentage of the Aggregate Outstanding Principal Balance represented by such
Properties and including the resulting Category of each such Property. Along
with such operating statements, each Borrower shall deliver to Lender a
Compliance Certificate of such Borrower's chief executive officer or chief
financial officer (or other officer with similar duties) satisfying the criteria
set forth in Section 5.1(A)(viii) below.
(vi) ADDITIONAL REPORTING. In addition to the foregoing,
the Borrowers shall, and shall cause Guarantor and Manager to, promptly provide
to Lender such further documents and information concerning its operations,
properties, ownership, and finances as Lender shall from time to time reasonably
request upon prior written notice to the Borrowers.
(vii) GAAP; UNIFORM SYSTEM. The Borrowers will, and will
cause Guarantor and Manager to, maintain systems of accounting established and
administered in accordance with sound business practices and sufficient in all
respects to permit preparation of Financial Statements in conformity with GAAP
and the Uniform System. All Financial Statements shall be prepared in accordance
with GAAP and the Uniform System, consistently applied; provided, however, in
the event of a conflict between the Uniform System and GAAP, GAAP will be
followed.
(viii) CERTIFICATIONS OF FINANCIAL STATEMENTS AND OTHER
DOCUMENTS, COMPLIANCE CERTIFICATE. Together with the Financial Statements and
other documents and information provided to Lender by or on behalf of the
Borrowers or Guarantor under this Section, the Borrowers or Guarantor also shall
deliver to Lender a certification to Lender, executed on behalf of the Borrowers
or Guarantor by their respective chief executive officer or chief financial
officer (or other officer with similar duties), stating that to their Knowledge
after due inquiry such quarterly and annual Financial Statements and information
fairly present the financial condition and results of operations of the
Borrowers, Guarantor and/or the Properties for the period(s) covered thereby,
and do not omit to state any material information without which the same might
reasonably be misleading, and all other non-financial documents submitted to
Lender (whether monthly, quarterly or annually) are true, correct, accurate and
complete in all material respects. In addition, where this Loan Agreement
requires a "COMPLIANCE CERTIFICATE", the Person required to submit the same
shall deliver a certificate duly executed on behalf of such Person by its chief
executive officer or chief financial officer (or other officer with similar
duties) stating that, to their Knowledge after due inquiry, there does not
50
exist any Default or Event of Default under the Loan Documents (or if any
exists, specifying the same in detail).
(ix) FISCAL YEAR. Each Borrower represents that its fiscal
year and that of the Guarantor ends on December 31, and agrees that no change
shall be made to each such fiscal year.
(B) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, each
Borrower will deliver copies of all material reports submitted by independent
public accountants in connection with each annual, interim or special audit of
the Finacial Statements or other business operations of such Borrower made by
such accountants, including the comment letter submitted by such accountants to
management in connection with the annual audit.
(C) TAX RETURNS. Within thirty (30) days after filing the same,
each Borrower shall deliver to Lender a copy of its Federal income tax returns
(or the return of the applicable Person into which such Borrower's Federal
income tax return is consolidated) certified on its behalf by its chief
financial officer (or simiar position) to be true and correct.
(D) ANNUAL OPERATING BUDGET, CAPEX/FF&E BUDGETS AND CAPITAL
IMPROVEMENTS PLAN. Prior to February 15 of each calendar year, each Borrower
shall deliver to Lender for its review for its Property a proposed Operating
Budget, Capital Improvements Plan and CapEx/FF&E Budget (in each case presented
on a monthly and annual basis) for such calendar year. Each Operating Budget,
CapEx/FF&E Budget and, so long as any funds remain in the Capital Improvement
Reserve or Required Capital Improvements remain to be performed, each Capital
Improvements Plan shall be subject to Lender's approval which shall not be
unreasonably withheld, conditioned or delayed. The Borrowers may make changes to
the Operating Budget and the CapEx/FF&E Budget from time to time as deemed
reasonably necessary by the Borrower, provided no such modification shall alter
any single line item (or the applicable Budget as a whole) by more than ten
percent (10%) without Lender's prior written approval, which approval shall not
be unreasonably withheld. Notice of any modifications to the Operating Budget
and the CapEx/FF&E Budget shall be delivered to Lender at the time of delivery
of the next financial reporting required pursuant to Section 5.1(A)(v). Lender
acknowledges that it has approved the annual Operating Budget for the 2002
calendar year, and the CapEx/FF&E Budget and Capital Improvements Plan for the
2002 and 2003 calendar years each as set forth on Schedule 5.1(D). The proposed
Operating Budget shall identify and set forth each Borrower's reasonable
estimate, after due consideration, of all revenue, costs, and expenses, and
shall specify Operating Revenues and Operating Expenses on a line-item basis
consistent with the form of Operating Budget delivered to Lender prior to
Closing. If any of said budgets or plans requiring Lender's approval is not in
form and substance reasonably satisfactory to Lender, Lender may disapprove the
same and specify the reasons therefor in writing, and the Borrowers shall
promptly amend and resubmit for approval revised budgets or plans, as
applicable, making such changes as are necessary to comply with the reasonable
requirements of Lender. If any such budget or plan requiring Lender's approval
is not approved or deemed approved by the beginning of the calendar year
covered thereby, the applicable budget or plan for the previous year shall
remain in effect until the new budget or plan is approved or deemed approved.
Lender's consent to any budget, plan or amendments thereto shall be deemed
given, if the first correspondence from the Borrowers to Lender requesting such
approval is in an
51
envelope marked "PRIORITY" and contains a bold-faced, conspicuous legend at the
top of the first page thereof stating that "IF YOU FAIL TO RESPOND TO OR TO
EXPRESSLY DENY THIS REQUEST FOR APPROVAL IN WRITING WITHIN FIFTEEN (15) DAYS,
YOUR APPROVAL MAY BE DEEMED GIVEN", and is accompanied by the information and
documents required above and any other information reasonably requested by
Lender in writing prior to the expiration of such fifteen (15) day period in
order to adequately review the same has been delivered and, if Lender fails to
respond or to expressly deny such request for approval in writing within the
fifteen (15) day period, a second notice is delivered to Lender from the
Borrowers in an envelope marked "PRIORITY" requesting approval containing a
bold-faced, conspicuous legend at the top of the first page thereof stating that
"IF YOU FAIL TO RESPOND TO OR EXPRESSLY DENY THIS REQUEST FOR APPROVAL IN
WRITING WITHIN TEN (10) DAYS, YOUR APPROVAL SHALL BE DEEMED GIVEN" and Lender
fails to respond or to expressly deny each request for approval within the ten
(10) day period.
(E) MATERIAL NOTICES.
(i) The Borrowers shall promptly deliver, or cause to be
delivered, copies of all notices given or received with respect to a default
under any term or condition related to any Permitted Indebtedness of any
Borrower, and shall notify Lender within five (5) Business Days of any potential
or actual event of default with respect to any such Permitted Indebtedness.
(ii) The Borrowers shall promptly deliver to Lender copies
of any and all material notices (including without limitation any notice
alleging any default or breach which is reasonably expected to result in a
termination) received with respect to any Material Agreement or any Lease,
including, without limitation, any inspection report and any progress reports
related to any Property Improvement Plan received from a Franchisor related to
such Borrower's Property.
(F) EVENTS OF DEFAULT, ETC. Promptly upon any of the Borrowers
obtaining knowledge of any of the following events or conditions, such Borrower
shall deliver a certificate executed on its behalf by its chief financial
officer or similar officer specifying the nature and period of existence of such
condition or event and what action such Borrower or any Affiliate thereof has
taken, is taking and proposes to take with respect thereto: (i) any condition or
event that constitutes an Event of Default; (ii) any Material Adverse Effect; or
(iii) any actual or alleged breach or default or assertion of (or written threat
to assert) remedies under any Management Agreement, Franchise Agreement or
Ground Lease.
(G) LITIGATION. Promptly upon any of the Borrowers obtaining
knowledge of (1) the institution of any action, suit, proceeding, governmental
investigation or arbitration against the Borrowers or any of the Properties not
previously disclosed in writing by the Borrowers to Lender which would be
reasonably likely to have a Material Adverse Effect or is not covered by
insurance or (2) any material development in any action, suit, proceeding,
governmental investigation or arbitration at any time pending against or
affecting the Borrowers or the Properties which, in each case, if adversely
determined would reasonably be expected to have a Material Adverse Effect, the
Borrowers will give notice thereof to Lender and, upon request
52
from Lender, provide such other information as may be reasonably available to
them to enable Lender and its counsel to evaluate such matter.
(H) INSURANCE. At least five (5) Business Days prior to the end of
each insurance policy period of the Borrowers, the Borrowers will deliver
certificates, reports, and/or other information (all in form and substance
reasonably satisfactory to Lender), (i) outlining all material insurance
coverage maintained as of the date thereof by the Borrowers and all material
insurance coverage planned to be maintained by the Borrowers in the subsequent
insurance policy period and (ii) evidencing payment in full of the premiums for
such insurance policies.
(I) OTHER INFORMATION. With reasonable promptness, Borrowers will
deliver such other information and data with respect to such Person and its
Affiliates or the Properties as from time to time may be reasonably requested by
Lender.
SECTION 5.2 EXISTENCE; QUALIFICATION. The Borrowers will at all times preserve
and keep in full force and effect their existence as a limited partnership,
limited liability company, or corporation, as the case may be, and all rights
and franchises material to its business, including their qualification to do
business in each state where it is required by law to so qualify. Without
limitation of the foregoing, each Borrower and, to the extent required by
applicable law, General Partner and Member, shall at all times be qualified to
do business in each of the states where the Properties located.
SECTION 5.3 PAYMENT OF IMPOSITIONS AND CLAIMS.
(A) Except for those matters being contested pursuant to clause
(B) below, the Borrowers will pay (i) all Impositions; (ii) all claims
(including claims for labor, services, materials and supplies) for sums that
have become due and payable and that by law have or may become a Lien upon any
of its properties or assets (hereinafter referred to as the "CLAIMS"); and (iii)
all federal, state and local income taxes, sales taxes, excise taxes and all
other taxes and assessments of the Borrowers on their business, income or
assets; in each instance before any penalty or fine is incurred with respect
thereto.
(B) The Borrowers shall not be required to pay, discharge or
remove any Imposition or Claim relating to a Property so long as the Borrowers
contest in good faith such Imposition, Claim or the validity, applicability or
amount thereof by an appropriate legal proceeding which operates to prevent the
collection of such amounts and the sale of the applicable Property or any
portion thereof, so long as: (i) no Event of Default shall have occurred and be
continuing, (ii) prior to the date on which such Imposition or Claim would
otherwise have become delinquent, the Borrowers shall have given Lender prior
written notice of their intent to contest said Imposition or Claim; (iii) prior
to the date on which such Imposition or Claim would otherwise have become
delinquent, the Borrowers shall have deposited with Lender (or with a court of
competent jurisdiction or other appropriate body reasonably approved by Lender)
such additional amounts as are necessary to keep on deposit at all times, an
amount by way of cash, Dollar Equivalents, or a Letter of Credit, equal to at
least one hundred twenty-five percent (125%) (or such higher amount as may be
required by applicable law) of the total of (x) the balance of such Imposition
or Claim then remaining unpaid, and (y) all interest, penalties, costs and
charges accrued or accumulated thereon; (iv) no risk of sale, forfeiture or loss
of any interest in the
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applicable Property or any part thereof arises, in Lender's reasonable judgment,
during the pendency of such contest; (v) such contest does not, in Lender's
reasonable determination, have a Material Adverse Effect; and (vi) such contest
is based on bona fide, material, and reasonable claims or defenses. Any such
contest shall be prosecuted with due diligence, and the Borrowers shall promptly
pay the amount of such Imposition or Claim as finally determined, together with
all interest and penalties payable in connection therewith. Lender shall have
full power and authority, but no obligation, to apply any amount deposited with
Lender under this subsection to the payment of any unpaid Imposition or Claim to
prevent the sale or forfeiture of the applicable Property for non-payment
thereof, if Lender reasonably believes that such sale or forfeiture is
threatened. Any surplus retained by Lender after payment of the Imposition or
Claim for which a deposit was made shall be promptly repaid to the Borrowers
unless an Event of Default shall have occurred, in which case said surplus may
be retained by Lender to be applied to the Obligations. Notwithstanding any
provision of this Section to the contrary, the Borrowers shall pay any
Imposition or Claim which they might otherwise be entitled to contest if an
Event of Default shall occur and be continuing, or if, in the reasonable
determination of Lender, the applicable Property is in danger of being
forfeited or foreclosed. If the Borrowers refuses to pay any such Imposition or
Claim, Lender may (but shall not be obligated to) make such payment and the
Borrowers shall reimburse Lender on demand for all such advances.
SECTION 5.4 MAINTENANCE OF INSURANCE.
The Borrowers will continuously maintain the following described
policies of insurance on each of the respective Properties without cost to
Lender (the "INSURANCE POLICIES"):
(i) Property insurance against loss and damage by all
risks of physical loss or damage, including fire, sprinkler leakage, windstorm,
hurricane, terrorism, and other risks covered by the so-called extended covering
endorsement covering the Improvements and personal property in amounts not less
than the full insurable replacement value of all Improvements (less building
foundations and footings) and personal property from time to time on the
Properties and without sublimits, and bearing a replacement cost agreed-amount
endorsement;
(ii) Commercial general liability insurance, including
death, bodily injury, innkeeper legal liability and broad form property damage
coverage with a combined single limit in an amount not less than One Million
Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) in the
aggregate for any policy year;
(iii) If any of the Properties are in an area prone to
geological phenomena, including, but not limited to, sinkholes, mine subsidence
or earthquakes, insurance covering such risks in an amount equal to 100% of the
full replacement cost of all improvements (without any deductions for
depreciation) and with a maximum permissible deductible equal to the lesser of
$25,000 or 10% of the face value of the policy;
(iv) For each Property located in whole or in part in a
federally designated "special flood hazard area", flood insurance in the maximum
available amount;
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(v) An umbrella excess liability policy with a limit of
not less than Twenty Million Dollars ($20,000,000) over primary insurance, which
policy shall include coverage for water damage, so-called assumed and
contractual liability coverage, premises medical payment and automobile
liability coverage, and coverage for safeguarding of personalty and shall also
include such additional coverages and insured risks which are acceptable to
Lender;
(vi) Business interruption and/or rent loss insurance with
an aggregate limit equal to at least the gross income from the Properties for an
indemnity period commencing on the date of such casualty and ending at least six
(6) months after completion of the Restoration (such amount being adjusted
annually);
(vii) Crime protection coverage with the same coverages,
limits of coverage and deductibles as currently in place at the Properties;
(viii) Steam boiler, machinery and pressurized vessel
insurance insuring against breakdown or explosion of such equipment on a
replacement cost value basis, which shall not contain any exclusions for testing
procedures;
(ix) Worker's Compensation Insurance in statutory amounts,
if any, at all times;
(x) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air conditioning
equipment, high pressure piping, machinery and equipment, pressure vessels or
similar apparatus now or hereafter installed in the Improvements (without
exclusion for explosions), in an amount at least equal to the Aggregate
Allocated Loan Amount;
(xi) During any period of construction, repair or
restoration, builder's "all risk" insurance in an amount equal to not less than
the full insurable value of the Properties (excluding building foundations and
footings) against such risks (including, without limitation, fire and extended
coverage and collapse of the Improvements to agreed limits) as Lender may
reasonably request;
(xii) If the Properties are or become a "non-conforming
use" under applicable zoning and building ordinances, or other requirements of
the applicable Governmental Authority, law or ordinance coverage to compensate
for the cost of demolition and the increased cost of construction, if available;
(xiii) If the Borrowers, Manager or any of their respective
Affiliates holds a liquor license for the Properties, liquor liability insurance
(including "dram shop" liability) in an amount not less than $2,000,000;
provided that if such liquor license is held by any tenant under a Lease, the
Borrowers shall cause such tenant to cause liquor liability insurance in an
amount not less than $2,000,000 to be carried in such tenant's name, and shall
include the Borrowers and Lender as additional insureds thereunder;
(xiv) Environmental insurance, including mold coverage, in
form and with coverages (including business interruption coverage) reasonably
satisfactory to Lender;
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(xv) Fiduciary liability insurance and directors and
officers liability insurance ("D&O INSURANCE") with coverages at levels in
effect as of the Closing Date;
(xvi) Such other insurance as may from time to time be
reasonably required by Lender and which is then customarily required by
institutional lenders for securitized loans secured by similar properties
similarly situated, against other insurable hazards, including, but not limited
to, malicious mischief, vandalism, windstorm and or earthquake, due regard to be
given to the size and type of the Properties, Improvements, fixtures and
equipment and their location, construction and use. Additionally, the Borrowers
shall carry such insurance coverage as Lender may from time to time require if
the failure to carry such insurance would result in a downgrade, qualification
or withdrawal of any class of securities issued in connection with a
Securitization. Notwithstanding the provision of this subsection (xv), any
terrorism insurance required to be obtained by the Borrowers shall be subject to
the provisions of subsection (xvi) below;
(xvii) To the extent any of the commercial property
insurance policies required under subsection (i), (ii), (v), or (vi) above (each
a "REQUIRED INSURANCE POLICY," collectively, the "REQUIRED INSURANCE POLICIES"),
or any renewal or replacement of any Required Insurance Policy, either does not
include or specifically excludes coverage for damage resulting from terrorism
with coverages as provided in the Required Insurance Policies delivered to
Lender in connection with the origination of the Loan (collectively, the
"EXCLUSIONS FROM COVERAGE"), the Borrowers shall either (x) obtain an
endorsement to any such Required Insurance Policy or (y) maintain a separate
insurance policy, in each case insuring against any damage resulting from such
Exclusions from Coverage to the same extent each of the Required Insurance
Policies would have provided such coverage had each Required Insurance Policy
not contained an exclusion for such Exclusions from Coverage, in each case on
terms consistent with the insurance policies required under subsections (i),
(ii), (v), and (vi) above; provided that the cost for omission of such
exclusions from any such policies, or separate insurance, shall not exceed the
Terrorism Insurance Cap, in which instance the Borrowers shall obtain such
maximum coverage as is available for the Terrorism Insurance Cap. Such insurance
may, at the option of the Borrowers, be effected by a blanket policy of
insurance issued to the Borrowers covering the Properties and other property,
provided that, in each case, (A) such blanket policy is acceptable to Lender in
its reasonable discretion (taking into account, by way of example only, such
matters as the type and location of the other properties named in such blanket
policy) and (B) such policy otherwise complies with the provisions of this Loan
Agreement and allocates to the Properties, at all times that any portion of the
Obligations remains outstanding, the coverage specified by this Loan Agreement,
without possibility of reduction or coinsurance by reason of, or damage to, any
other property (real or personal) named therein. Lender's prior written consent,
which shall not be unreasonably withheld, shall be required prior to the
Borrowers' addition of any property to any such blanket policy. If such
insurance shall be effected by such blanket policy, the Borrowers shall furnish
to Lender an original policy or certified copy thereof, and an original
certificate of insurance together with reasonable access to the original of such
policy to review such policy's coverage of the Properties, with schedules
attached thereto showing the amount of the insurance provided under such
policies applicable to the Properties.
All Insurance Policies shall be in content (including, without
limitation, endorsements or exclusions, if any), form, and amounts, and issued
by companies, satisfactory to Lender from
56
time to time and shall name Lender and its successors and assignees as their
interests may appear as (x) an "additional insured" for each of the liability
policies under this Section 5.4 hereof, and (y) a "mortgagee" for each of the
property and casualty policies under this Section hereof, and shall (except for
Worker's Compensation Insurance) contain a waiver of subrogation clause
reasonably acceptable to Lender. Other than with respect to D&O Insurance, an
insurance company shall not be satisfactory unless such insurance company (a) is
licensed or authorized to issue insurance in the State where the applicable
Property is located and (b) has a claims paying ability rating by the Rating
Agencies of AA- (or its equivalent). Notwithstanding the foregoing, a carrier
which does not meet the foregoing ratings requirement shall nevertheless be
deemed acceptable hereunder provided that such carrier is reasonably acceptable
to Lender and the Borrowers shall obtain and deliver to Lender a Rating
Confirmation with respect to such carrier from each of the Rating Agencies,
provided, however, if any insurance coverage required under this Section 5.4 is
maintained by a syndicate of insurers, the preceding ratings requirements shall
be deemed satisfied (without any required Rating Confirmation) as long as at
least seventy five percent (75%) of the coverage (if there are four or fewer
members of the syndicate) or at least sixty percent (60%) of the coverage (if
there are five or more members of the syndicate) is maintained with carriers
meeting the claims-paying ability ratings requirements by S&P and Moody's (if
applicable) set forth above and all carriers in such syndicate have a
claims-paying ability rating by S&P of not less than "BBB" and by Moody's of not
less than "Baa2" (to the extent rated by Moody's). All Insurance Policies under
Sections 5.4 (i), (iv), (vi), (vii), (x), (xi) and (xii) hereof shall contain a
Non-Contributory Standard mortgagee clause and a mortgagee's Loss Payable
Endorsement (From 438 BFU NS), or their equivalents (such endorsements shall
entitle Lender to collect any and all proceeds payable under all such insurance,
with the insurance company waiving any claim or defense against Lender for
premium payment, deductible, self-insured retention or claims reporting
provisions). All Insurance Policies shall provide that the coverage shall not be
modified without (30) days' advance written notice to Lender and shall provide
that no claims shall be paid thereunder to a Person other than Lender without
ten (10) days' advance written notice to Lender. The Borrowers may obtain any
insurance required by this Section through blanket policies; provided, however,
that such blanket policies shall separately set forth the amount of insurance in
force with respect to the Properties (which shall not be reduced by reason of
events occurring on property other than the Properties) and shall afford all the
protections to Lender as are required under this Section. Except as may be
expressly provided above, all policies of insurance required hereunder shall
contain no annual aggregate limit of liability, other than with respect to
liability insurance. If a blanket policy is issued, a certified copy of said
policy shall be furnished, together with a certificate indicating that Lender is
an additional insured (and, if applicable, loss payee) under such policy in the
designated amount. The Borrowers will deliver duplicate originals of all
Insurance Policies, premium prepaid for a period of one (1) year, to Lender and,
in case of Insurance Policies about to expire, the Borrowers will deliver
duplicate originals of replacement policies satisfying the requirements hereof
to Lender not less than thirty (30) days prior to the date of expiration;
provided, however, if such replacement policy is not yet available, the
Borrowers shall provide Lender with an insurance certificate executed by the
insurer or its authorized agent evidencing that the insurance required hereunder
is being maintained under such policy, which certificate shall be acceptable to
Lender on an interim basis until the duplicate original of the policy is
available. The Borrowers shall furnish Lender receipts for the payment of
premiums on such insurance policies or other evidence of such payment reasonably
satisfactory to Lender in the
57
event that such premiums have not been paid by Lender pursuant to the Loan
Agreement. The requirements of this Section 5.4 shall apply to any separate
policies of insurance taken out by the Borrowers concurrent in form or
contributing in the event of loss with the Insurance Policies. Losses shall be
payable to Lender notwithstanding (1) any act, failure to act or negligence of
the Borrowers or their agents or employees, Lender or any other insured party
which might, absent such agreement, result in a forfeiture or all or part of
such insurance payment, other than the willful misconduct of Lender knowingly in
violation of the conditions of such policy, (2) the occupation or use of the
Properties or any part thereof for purposes more hazardous than permitted by the
terms of such policy, (3) any foreclosure or other action or proceeding taken
pursuant to this Loan Agreement or (4) any change in title to or ownership of
the Properties or any part thereof. The property insurance and the boiler and
machinery insurance described in Section 5.4(i) and (x) hereof shall include
"underground hazards" coverage; "time element" coverage by which Lender shall be
assured payment of all amounts due under the Note, this Loan Agreement and the
other Loan Documents; "extra expense" (i.e., soft costs), clean-up, transit and
ordinary payroll coverage; and "expediting expense" coverage to facilitate rapid
repair or restoration of the Properties. The Insurance Policies shall not
contain any deductible in excess of $250,000.
Notwithstanding anything contained in this Section 5.4 to the contrary,
Lender acknowledges that the Borrowers' insurance in effect as of the Closing
Date and as described on SCHEDULE 4.20 are acceptable to Lender as of the
Closing Date, and shall continue to be acceptable to Lender for so long as (x)
the Borrowers do not change such insurance companies, and (y) no downgrade has
occurred to the ratings in effect as of the Closing Date for each such insurance
company. Notwithstanding the foregoing, not later than five (5) Business Days
prior to the expiration of each of the Insurance Policies in effect as of the
Closing Date, the Borrowers shall deliver to Lender replacements of each such
Insurance Policy which provides coverage required hereunder for a period of one
(1) year, together with evidence of the payment in full of the annual premium(s)
payable for such policy.
SECTION 5.5 OPERATION AND MAINTENANCE OF THE PROPERTIES; CASUALTY.
(A) The Borrowers will operate and maintain the Properties as is
necessary to maintain hotel standards at least as high as those that currently
apply to each Property, subject to ordinary wear and tear, as reasonably
determined by the Borrowers, and otherwise in compliance with the standards
under the applicable Franchise Agreement and shall maintain or cause to be
maintained in good repair, working order and condition all material property
used in the business of each Borrower, including the applicable Property, and
will make or cause to be made all appropriate repairs, renewals and replacements
thereof. Without limitation of the foregoing, each Borrower will operate and
maintain its Property substantially in accordance with the applicable Operating
Budget and the CapEx/FF&E Budget. All work required or permitted under this Loan
Agreement shall be performed in a workmanlike manner and in compliance with all
applicable laws.
So long as no Event of Default has occurred and is continuing, the
Borrowers may, without Lender's consent, perform alterations to the Properties
which do not constitute a Material Alteration. The Borrowers shall not perform
any Material Alteration without Lender's prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed;
58
provided, however, that Lender may, in its sole and absolute discretion,
withhold consent to any Material Alteration which is likely to result in a
decrease of Net Operating Income (taking into consideration all Material
Alterations being undertaken at the Properties at such time) by 5% or more below
that which was in effect prior to the commencement of the first such Material
Alteration being undertaken at the time of determination for a period of sixty
(60) days or longer; provided, further, however, the Borrowers may perform a
Material Alteration without Lender's consent if (i) the delay caused by
obtaining Lender's prior consent may result in injury or death at, or further
destruction or deterioration of, the applicable Property, (ii) such Material
Alteration is necessary to prevent the likelihood of injury or death at, or
further destruction or deterioration of, the applicable Property, and (iii) the
Borrowers deliver notice to Lender within two (2) Business Days of commencement
of such Material Alteration together with such supporting documentation as
Lender may require with respect to such Material Alteration. Lender may, as a
condition to giving its consent to a Material Alteration, require that the
Borrowers deliver to Lender evidence reasonably satisfactory to Lender that the
Borrowers have cash available for payment of the cost of such Material
Alteration or, if the Borrowers fail to deliver such evidence, cash, Dollar
Equivalents or a Letter of Credit, in an amount equal to 125% of the cost of
such Material Alteration as reasonably estimated by Lender. Cash deposited by
the Borrowers with Lender in connection with any Material Alteration pursuant to
the foregoing sentence shall be held by Lender in a Sub-Account of the Lock Box
Account and disbursed to the Borrowers to pay for the cost of such Material
Alteration as such work progresses subject to satisfaction of the conditions for
disbursement of amounts from the FF&E Reserve under Section 6.4 (including the
requirements set forth under Section 6.7). Upon completion of the Material
Alteration, the Borrowers shall provide evidence reasonably satisfactory to
Lender that (i) the Material Alteration was constructed in accordance with all
material applicable laws and substantially in accordance with plans and
specifications approved by Lender (which approval shall not be unreasonably
withheld or delayed), (ii) all contractors, subcontractors, materialmen and
professionals who provided work, materials or services in connection with the
Material Alteration have been paid in full and have delivered unconditional
releases of lien and (iii) all material licenses necessary for the use,
operation and occupancy of the Material Alteration (other than those which
depend on the performance of tenant improvement work) have been issued. The
Borrowers shall reimburse Lender upon demand for all reasonable out-of-pocket
costs and expenses (including the reasonable fees of any architect, engineer or
other professional engaged by Lender) incurred by Lender in reviewing plans and
specifications or in making any determinations necessary to implement the
provisions of this Section 5.5(A).
(B) In the event of casualty or loss at any of the Properties, the
Borrowers shall give immediate written notice of the same to the insurance
carrier and to Lender and shall promptly commence and diligently prosecute to
completion, in accordance with the terms hereof, the repair and restoration of
the Property as nearly as possible to the Pre-Existing Condition
(a "RESTORATION"). The Borrowers hereby authorize and empower Lender as
attorney-in-fact for the Borrowers (jointly with the Borrowers unless an Event
of Default has occurred and is continuing), or any of them, to make proof of
loss, to adjust and compromise any claim under insurance policies, to appear in
and prosecute any action arising from such insurance policies, to collect and
receive insurance proceeds, and to deduct therefrom Lender's expenses incurred
in the collection of such proceeds; provided however, that nothing contained in
this Section shall require Lender to incur any expense or take any action
hereunder. The Borrowers further authorize Lender, at Lender's option, (i) to
hold the balance of such proceeds to be used to
59
reimburse the Borrowers for the cost of Restoration of any of the Properties or
(ii) subject to Subsection 5.5(C), to apply such proceeds to payment of the
Obligations whether or not then due, in any order. Notwithstanding the
foregoing, in the event of a casualty where the loss does not exceed the
Restoration Threshold, the Borrowers may settle and adjust such claim; provided
that (a) no Event of Default has occurred and is continuing and (b) such
adjustment is carried out in a commercially reasonable and timely manner.
(C) Lender shall not exercise Lender's option to apply insurance
proceeds to payment of the Obligations if all of the following conditions are
met: (i) no Event of Default then exists; (ii) Lender reasonably determines that
there will be sufficient funds to complete the Restoration of the Property to at
least substantially the Pre-Existing Condition and to timely make all payments
due under the Loan Documents during the Restoration of the affected Property;
(iii) Lender reasonably determines that the Net Operating Income of the
Properties (including rental income or business interruption insurance) will be
sufficient to pay principal and interest on the Loan and the Mezzanine Loan and
Operating Revenues of the Properties, after the Restoration thereof to the
Pre-Existing Condition, will be sufficient to meet all Operating Expenses,
payments for Reserves and payments of principal and interest under the Note and
the Mezzanine Loan; (iv) Lender determines that the Restoration of the affected
Property to the Pre-Existing Condition will be completed not later than five (5)
months prior to the expiration of any business interruption insurance, but in no
event later than six (6) months prior to the Maturity Date; (v) less than fifty
percent (50%) of the total floor area of the Improvements has been damaged,
destroyed or rendered unusable as a result of such fire or other casualty; and
(vi) such Property can be restored and repaired substantially to the condition
it was in immediately prior to such casualty and in compliance with all
applicable zoning, building and other laws and codes (the "PRE-EXISTING
CONDITION"). If Lender elects to apply insurance proceeds to payment of the
Obligations, such application shall be made on the Payment Date immediately
following such election in accordance with the terms of the Cash Management
Agreement.
(D) If Lender elects or is obligated to make the insurance
proceeds available for the Restoration of any Property and Lender is holding
such proceeds, the Borrowers agree that, if at any time during the Restoration,
the cost of completing such Restoration, as reasonably determined by Lender,
exceeds the undisbursed insurance proceeds, the Borrowers shall, within ten (10)
Business Days following the written demand by Lender, deposit the amount of such
excess with Lender, and Lender shall first disburse such deposit to pay for the
costs of such Restoration on the same terms and conditions as the insurance
proceeds are disbursed. If the Borrowers deposit such excess with Lender and if,
after completion of the Restoration, any funds remain from the combination of
insurance proceeds and the funds so deposited with Lender by the Borrowers, and
if no Event of Default shall have occurred and be continuing, then Lender shall
promptly disburse to the Borrowers such remaining funds.
(E) Lender may, at Lender's option, condition disbursement of any
insurance proceeds on Lender's approval (which approval shall not be
unreasonably withheld) of plans and specifications of an independent architect
licensed in the state where the Property is located and reasonably satisfactory
to Lender (the "ARCHITECT"), any and all contractors, subcontractors and
materialmen engaged in the Restoration and the contracts under which they have
been engaged, contractor's cost estimates, architect's certificates, waivers of
liens, sworn statements of mechanics and materialmen and such other evidence of
costs, percentage completion of
60
construction, application of payments, and satisfaction of liens as Lender may
reasonably require. Lender shall not be obligated to disburse insurance proceeds
more frequently than once every calendar month. If insurance proceeds are
applied to the payment of the Obligations and provided no Event of Default
exists, any such application of proceeds to principal shall be without any
Prepayment Consideration and shall not extend or postpone the due dates of the
monthly payments due under the Note or otherwise under the Loan Documents, or
change the amounts of such payments. If Lender elects to apply all of such
insurance proceeds toward the repayment of the Obligations, the Borrowers shall
(subject to compliance with clauses (A), (B), (D) and (F) of Section 11.4) be
entitled to obtain from Lender a Property Release (without representation or
warranty) of the applicable Property from the Lien of the Deed of Trust relating
to such Property (in which event the Borrowers shall not be obligated to restore
the applicable Property pursuant to Section 5.5(B) above) provided that the
Borrowers pay to Lender the amount, if any, by which the Release Price for such
Property exceeds the insurance proceeds received by Lender and applied to
repayment of the Obligations. If any proceeds are applied to reduce the
Obligations under this Section 5.5, provided that no Event of Default has
occurred and is continuing, no Prepayment Consideration shall be due and payable
in connection with such application. Any amount of insurance proceeds remaining
in Lender's possession after full and final payment and discharge of all
Obligations shall be refunded to, or as directed by, the Borrowers or otherwise
paid in accordance with applicable law. If the Property is sold at foreclosure
or if Lender acquires title to the Property, Lender shall have all of the right,
title and interest of the applicable Borrower in and to any insurance policies
and unearned premiums thereon and in and to the proceeds resulting from any
damage to such Property prior to such sale or acquisition.
(F) In no event shall Lender be obligated to make disbursements of
insurance 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 Architect, less a retainage equal to the lesser of (x) the actual retainage
required pursuant to the permitted contract, or (y) ten percent (10%) of such
costs incurred until the Restoration has been completed. The retainage shall in
no event be less than the amount actually held back by the Borrowers from
contractors, subcontractors and materialmen engaged in the Restoration. The
retainage shall not be released until the Architect certifies to Lender, or, if
no Architect has been retained by Lender, Lender is reasonably satisfied, that
the Restoration has been completed in accordance with the provisions of this
Section 5.5 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 final lien waivers and such other evidence reasonably
satisfactory to Lender that the costs of the Restoration have been paid in full
or will be paid in full out of the retainage.
SECTION 5.6 INSPECTION. Each Borrower shall permit any authorized
representatives designated by Lender to visit and inspect during normal business
hours its Property and its business, including its financial and accounting
records, and to make copies and take extracts therefrom and to discuss its
affairs, finances and business with its officers and independent public
accountants (with such Borrower's representative(s) present), at such reasonable
times during normal business hours and as often as may be reasonably requested.
Unless an Event of Default has occurred and is continuing, Lender shall provide
advance written notice of at least three (3) Business Days prior to visiting or
inspecting any Property or such Borrower's offices.
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SECTION 5.7 O&M PLAN. Each Borrower that is the owner of a Property set forth on
SCHEDULE 5.7 shall cause to be prepared and delivered to Lender an operations
and maintenance program (the "O&M PLANS") with respect to suspected asbestos,
asbestos-containing materials, and/or mold located in its Property as set forth
in the applicable Environmental Reports. Each Borrower shall at all times
implement and carry out the O&M Plan in accordance with its terms. Lender's
requirement that the Borrowers develop and comply with the O&M Plan shall not be
deemed to constitute a waiver or modification of any covenants or agreements of
the Borrowers or Guarantor with respect to Hazardous Material or Environmental
Laws as set forth in the Environmental Indemnity.
SECTION 5.8 INTENTIONALLY DELETED.
SECTION 5.9 COMPLIANCE WITH LAWS AND CONTRACTUAL OBLIGATIONS. The Borrowers will
(A) comply with the requirements of all present and future applicable laws,
rules, regulations and orders of any governmental authority in all jurisdictions
in which it is now doing business or may hereafter be doing business, other than
those laws, rules, regulations and orders the noncompliance with which would not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, (B) maintain all licenses and permits now held or
hereafter acquired by any Borrower, the loss, suspension, or revocation of
which, or failure to renew, could have a Material Adverse Effect and (C)
perform, observe, comply and fulfil all of its material obligations, covenants
and conditions contained in any Contractual Obligation.
SECTION 5.10 FURTHER ASSURANCES. The Borrowers shall, from time to time, execute
and/or deliver such documents, instruments, agreements, financing statements,
and perform such acts as Lender at any time may reasonably request to evidence,
preserve and/or protect the Collateral at any time securing or intended to
secure the Obligations and/or to better and more effectively carry out the
purposes of this Loan Agreement and the other Loan Documents.
SECTION 5.11 PERFORMANCE OF AGREEMENTS AND LEASES. Each Primary Borrower Party
shall duly and punctually perform, observe and comply in all material respects
with all of the terms, provisions, conditions, covenants and agreements on its
part to be performed, observed and complied with (i) hereunder and under the
other Loan Documents to which it is a party, (ii) under all Material Agreements
and Leases and (iii) all other agreements entered into or assumed by such Person
in connection with the Properties, and will not suffer or permit any material
default or event of default (giving effect to any applicable notice requirements
and cure periods) to exist under any of the foregoing except where the failure
to perform, observe or comply with any agreement referred to in this clause
(iii) would not reasonably be expected to have a Material Adverse Effect.
SECTION 5.12 LEASES. (A) Without the prior written consent of Lender, which
shall not be unreasonably withheld or delayed, the Borrowers shall not, nor
shall the Borrowers authorize Manager or any other Person to, (i) enter into any
Material Lease, (ii) cancel or terminate any Material Lease (except to enforce
any such Lease after a default thereunder); (iii) amend or modify any Material
Lease (except for minor modifications and amendments entered into in the
ordinary course of business, consistent with prudent property management
practices, not materially and adversely affecting the economic terms of the
Material Lease); (iv) approve any assignment, sublease or underlease of any
Material Lease (except as required pursuant to the
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express terms of any existing Lease or Lease hereafter approved by Lender); or
(v) cancel or modify any guaranty, or release any security deposit, letter of
credit, or other item constituting security pertaining to any Material Lease
(except as required pursuant to the express terms of any existing Lease or Lease
hereafter approved by Lender).
(B) Any request for approval of any Material Lease or assignment,
termination, amendment or modification of any Material Lease shall be made to
Lender in writing and together with such request the Borrowers shall furnish to
Lender: (i) such biographical and financial information about the proposed
tenant as Lender may reasonably require in conjunction with its review, (ii) a
copy of the proposed form of Lease (or amendment or modification), and (iii) a
summary of the material terms of such proposed Lease (or amendment or
modification) including, without limitation, rental terms and the term of the
proposed Lease and any options. Lender's approval of any Material Lease or
assignment, termination, amendment or modification of any Material Lease, shall
be deemed given, if the first correspondence form the Borrowers to Lender
requesting such approval is in an envelope marked "PRIORITY" and contains a
boldfaced, conspicuous legend at the top of the first page thereof stating that
"IF YOU FAIL TO RESPOND TO OR TO EXPRESSLY DENY THIS REQUEST FOR APPROVAL IN
WRITING WITHIN FIFTEEN (15) DAYS, YOUR APPROVAL MAY BE DEEMED GIVEN", and is
accompanied by the information and documents required above and any other
information reasonably requested by Lender in writing prior to the expiration of
such fifteen (15) day period in order to adequately review the same has been
delivered and, if Lender fails to respond or to expressly deny such request for
approval in writing within the fifteen (15) day period, a second notice is
delivered to Lender from the Borrowers in an envelope marked "PRIORITY"
requesting approval containing a bold-faced, conspicuous legend at the top of
the first page thereof stating that "IF YOU FAIL TO RESPOND TO OR EXPRESSLY DENY
THIS REQUEST FOR APPROVAL IN WRITING WITHIN TEN (10) DAYS, YOUR APPROVAL SHALL
BE DEEMED GIVEN" and Lender fails to respond or to expressly deny each request
for approval within the ten (10) day period.
Except for security deposits, no Material Lease executed after the
Closing Date shall provide for payment of rent more than one month in advance;
and the Borrowers shall not under any circumstances collect any such rent more
than one month in advance. The Borrowers, at Lender's request, shall furnish
Lender with executed copies of all Material Leases hereafter made. Each new
Material Lease or a separate agreement with the tenant of such Material Lease
shall be in recordable form and shall specifically provide that such Material
Lease (i) is subordinate to the Deeds of Trust; (ii) that the tenant attorns to
Lender, such attornment to be effective upon Lender's acquisition of title to
the Property; (iii) that the tenant agrees to execute such further evidences of
attornment as Lender may from time to time request; (iv) that the attornment of
the tenant shall not be terminated by foreclosure; (v) that in no event shall
Lender, as holder of the Deeds of Trust or as successor landlord, be liable to
the tenant for any act or omission of any prior landlord or for any liability or
obligation of any prior landlord occurring prior to the date that Lender or any
subsequent owner acquire title to the Property; and (vi) that Lender may, at
Lender's option, accept or reject such attornment.
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SECTION 5.13 MANAGEMENT; FRANCHISE AGREEMENT.
(A) The Borrowers shall cause each Manager to manage the
Properties in accordance with the Management Agreements including, without
limitation, maintaining inventory in amounts and types customary for hotels
comparable to each Property. The Borrowers shall (i) perform and observe all of
the material terms, covenants and conditions of the Management Agreement on the
part of each Borrower to be performed and observed, and (ii) promptly notify
Lender of any notice to any of the Borrowers of any material default under the
Management Agreement of which it is aware. If any of the Borrowers shall default
in the performance or observance of any material term, covenant or condition of
the applicable Management Agreement on the part of the Borrowers to be performed
or observed, then, without limiting Lender's other rights or remedies under this
Agreement or the other Loan Documents, and without waiving or releasing the
Borrowers from any of their obligations hereunder or under the applicable
Management Agreement, Lender shall have the right, upon prior written notice to
the Borrower, but shall be under no obligation, to pay any sums and to perform
any act as may be reasonably appropriate to cause such material conditions of
the applicable Management Agreement on the part of the Borrowers to be performed
or observed.
(B) The Borrowers shall not surrender, terminate, cancel, modify
(other than nonmaterial changes), renew or extend the Management Agreement, or
enter into any other Management Agreement with Manager or any new Manager (other
than an Acceptable Manager), or consent to the assignment by the Manager of its
interest under the Management Agreement, in each case without (i) prior to a
Securitization, the express consent of Lender, which consent shall not be
unreasonably withheld, or (ii) after a Securitization, delivery of Rating
Confirmations from each of the Rating Agencies; provided, however, the Borrowers
may terminate the Memphis Interim Agreement at any time provided that (x) the
applicable Property continues to be managed by Lodgian Management Corp. pursuant
to the terms of the applicable Management Agreement in effect as of the Closing
Date, and (y) the applicable Borrower has obtained, in its or Manager's name,
all licenses and permits required to operate the applicable Property. If at any
time Lender consents to the appointment of a new Manager, or if an Acceptable
Manager shall become the Manager, such new Manager, or the Acceptable Manager,
as the case may be, and the Borrowers shall, as a condition of Lender's consent,
or with respect to an Acceptable Manager, prior to commencement of its duties as
Manager, execute a subordination of management agreement in substantially the
form delivered in connection with the closing of the Loan.
(C) Lender shall have the right to require any of the Borrowers to
replace any Manager with a Person chosen by the Borrowers and reasonably
acceptable to Lender (unless such proposed Manager is an Acceptable Manager) and
the applicable Franchisor (to the extent the applicable Franchisor has consent
rights), upon the earliest to occur of any one or more of the following events:
(i) upon the occurrence and during the continuance of an Event of Default; (ii)
thirty (30) days after notice from Lender to the Borrowers if Manager has
engaged in fraud, gross negligence or willful misconduct arising from or in
connection with its performance under the applicable Management Agreement; or
(iii) upon a change of control of the current Manager.
(D) The Borrowers shall not terminate or enter into any Franchise
Agreement without Lender's prior written consent, which may be granted or
withheld in Lender's sole discretion.
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Notwithstanding the foregoing, the following changes to Franchise Agreements
shall be permitted without Lender's prior written consent:
(i) Replacement of any Franchise Agreement with a new
Franchise Agreement in form substantially similar to
a form previously approved by Lender with any
Franchisor that would cause a Tier 3 Hotel to become
either a Tier 2 Hotel or a Tier 1 Hotel, or that
would cause a Tier 2 Hotel to become a Tier 1 Hotel;
(ii) Replacement of any Franchise Agreement with a new
Franchise Agreement in form substantially similar to
a form previously approved by Lender with a
Franchisor that would cause the Property to remain
within the same Category, Provided no such
replacement shall occur (in the aggregate) with
respect to more than the lesser of (x) five (5)
Properties, or (y) Properties with Aggregate
Allocated Loan Amounts (in the aggregate) of ten
percent (10%) of the Aggregate Outstanding Principal
Balance;
(iii) Replacement of any Franchise Agreement at a Tier 2
Hotel with a new Franchise Agreement in form
substantially similar to a form previously approved
by Lender for Tier 3 Hotels, provided no such
replacements shall occur (in the aggregate) with
respect to more than the lesser of (x) three (3)
Properties, or (y) Properties with Aggregate
Allocated Loan Amounts (in the aggregate) of two
percent (2%) of the Aggregate Outstanding Principal
Balance; and
(iv) Entering into a new Franchise Agreement in form
substantially similar to a form previously approved
by Lender with an Approved Franchisor (or with
respect to the Property located at 3071 Ross Clark
Circle, Dothan, Alabama (the "DOTHAN HOTEL"), La
Quinta Corporation under the La Quinta brand) for any
of the Non-Flagged Hotels, the Dothan Hotel, and the
Property located at 7330 Plantation Road, Pensacola,
Florida, at which time the applicable Property shall
be deemed to be within the Category determined by the
applicable Franchise Agreement; provided that the La
Quinta brand shall be deemed to be within the Tier 3
Hotel category solely for the purpose of determining
the Dothan Hotel's Category.
In connection with the replacement of any Franchisors permitted
hereunder, the applicable Borrower shall, within ten (10) Business Days of the
execution of such Franchise Agreement, deliver to Lender a Franchisor Letter
from any replacement Franchisor in form and substance reasonably acceptable to
Lender. In all cases, each Borrower shall (a) cause the hotel located on the
applicable Property to be operated pursuant to the applicable Franchise
Agreement; (b) promptly perform and observe in all material respects all of the
covenants required to be performed and observed by it under the applicable
Franchise Agreement (including the requirements of any Property Improvement
Plan); (c) promptly notify Lender of any material default under the applicable
Franchise Agreement of which it is aware; and (d) promptly enforce in a
commercially reasonable manner the performance and observance of all of the
material convenants required to be performed and observed by the Franchisor
under the
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Franchise Agreement. In addition, the Borrowers shall not, without Lender's
prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed: (x) increase or consent to the increase of the aggregate
amount of any fees under any Franchise Agreement; or (y) otherwise materially
modify, change, supplement, alter or amend, or waive or release any of its
material rights and remedies under, any Franchise Agreement.
Lender's consent to any replacement of any Franchise Agreement, or the
termination, renewal, extension or modification of an existing Franchise
Agreement, shall be deemed given, if the first correspondence from the Borrowers
to Lender requesting such consent is in an envelope marked "PRIORITY" and
contains a bold-faced, conspicuous legend at the top of the first page thereof
stating that "IF YOU FAIL TO RESPOND TO OR TO EXPRESSLY DENY THIS REQUEST FOR
APPROVAL IN WRITING WITHIN FIFTEEN (15) DAYS, YOUR APPROVAL MAY BE DEEMED
GIVEN," and is accompanied by the information and documents required above and
any other information reasonably requested by Lender in writing prior to the
expiration of such fifteen (15) day period in order to adequately review the
same has been delivered and, if Lender fails to respond or to expressly deny
such request for approval in writing within the fifteen (15) day period, a
second notice is delivered to Lender from the Borrowers in an envelope marked
"PRIORITY" requesting approval containing a bold-faced, conspicious legend at
the top of the first page thereof stating that "IF YOU FAIL TO RESPOND TO OR
EXPRESSLY DENY THIS REQUEST FOR APPROVAL IN WRITING WITHIN TEN (10) DAYS, YOUR
APPROVAL SHALL BE DEEMED GIVEN" and Lender fails to respond or to expressly deny
each request for approval within the ten (10) day period.
SECTION 5.14 MATERIAL AGREEMENTS. The Borrowers shall not enter into or become
obligated under any Material Agreement pertaining to any Property, including
without limitation brokerage agreements, without Lender's prior written
approval, which approval shall not be unreasonably withheld or conditioned;
except that the following Material Agreements shall not require Lender approval:
(i) Leases complying with the Loan Documents, (ii) the Management Agreement,
(iii) the existing Material Agreements described on SCHEDULE 5.14 attached
hereto, (iv) any Franchise Agreement complying with the provisions of Section
5.13(E) or (v) any other agreement that may be terminated without cause and
without payment of a penalty or premium, on not more than thirty (30) days'
prior written notice.
SECTION 5.15 DEPOSITS; APPLICATION OF RECEIPTS. The Borrowers will deposit all
Receipts from the Properties into, and otherwise comply with, the Accounts
established from time to time hereunder. Subject to Article VII hereof and the
Cash Management Agreement, each Borrower shall promptly apply all Receipts to
the payment of all current and past due Operating Expenses, and to the repayment
of all sums currently due or past due under the Loan Documents, including all
payments into the Reserves.
SECTION 5.16 ESTOPPEL CERTIFICATES.
(A) Within ten (10) Business Days following a request by Lender,
the Borrowers shall provide to Lender a duly acknowledged written statement
confirming (i) the amount of the outstanding principal balance of the Loan, (ii)
the terms of payment and maturity date of the Note, (iii) the date to which
interest has been paid, (iv) whether any offsets or defenses exist
66
against the Obligations, and if any such offsets or defenses are alleged to
exist, the nature thereof shall be set forth in detail any (v) that this Loan
Agreement, the Note, the Deeds of Trust and the other Loan Documents are legal,
valid and binding obligations of the Borrowers and have not been modified or
amended, or if modified or amended, describing such modification or amendments.
(B) Within ten (10) Business Days following a written request by
the Borrowers, Lender shall provide to the Borrowers a duly acknowledged written
statement setting forth the amount of the outstanding principal balance of the
Loan, the date to which interest has been paid, and whether Lender has provided
the Borrowers with written notice of any Event of Default. Compliance by Lender
with the requirements of this Section shall be for informational purposes only
and shall not be deemed to be a waiver of any rights or remedies of Lender
hereunder or under any other Loan Document.
SECTION 5.17 INDEBTEDNESS. The Borrowers will not directly or indirectly create,
incur, assume, guaranty, or otherwise become or remain directly or indirectly
liable with respect to any Indebtedness except for the following
(collectively, "PERMITTED INDEBTEDNESS"):
(A) The Obligations;
(B) (i) Unsecured trade payables not evidenced by a note and
arising out of purchases of goods or services in the ordinary course of business
and (ii) Indebtedness incurred in the financing of equipment or other personal
property used at any property in the ordinary course of business, provided that
(a) each such trade payable is payable not later than ninety (90) days after the
original invoice date and is not overdue by more than thirty (30) days, and (b)
the aggregate amount of such trade payables and Indebtedness relating to
financing of equipment and personal property or otherwise referred to in clauses
(i) and (ii) above (excluding thereform utility expenses of the Properties and
fees payable to the Franchisors pursuant to the terms of the Franchise
Agreements) outstanding does not, at any time, exceed five percent (5%) of the
outstanding principal balacnce of the Loan; and
(C) That certain unsecured loan in the original principal amount
of $17,686,292, evidenced by a certain replacement promissory note dated as of
November 15, 2002 given by Servico Center Associates, Ltd. to Servico Palm Beach
General Partner SPE, Inc., the outstanding principal balance of which on the
Closing Date is $17,686,292, and which is subject to the terms that certain
Subordination and Standstill Agreement given by the holder of such note in favor
of Lender and dated as of the Closing Date;
(D) Other Indebtedness of the Borrowers pursuant to the terms of
those certain promissory notes required to be delivered pursuant to the terms of
the plan of Reorganization with respect to certain tax liabilities of the
Borrowers not to exceed $1,700,000.
In no event shall any Indebtedness other than the Loan be secured, in whole or
in part, by the Properties or any portion thereof or interest therein,
SECTION 5.18 NO LIENS. The obligations of each Borrower under this Section are
in addition to and not in limitation of its obligations under Article XI herein.
The Borrower shall not create, incur, assume or permit to exist any Lien on or
with respect to the Properties, any other
67
Collateral or any such direct or indirect ownership interest in the Borrowers,
except the Permitted Encumbrances and Liens on the ownership interests in the
Borrowers securing the Mezzanine Loan.
SECTION 5.19 CONTINGENT OBLIGATIONS. Other than Permitted Indebtedness, no
Primary Borrower Party shall directly or indirectly create or become or be
liable with respect to any Contingent Obligation except Contingent Obligations
existing on the Closing Date and described in SCHEDULE 4.4.
SECTION 5.20 RESTRICTION ON FUNDAMENTAL CHANGES. Except as otherwise expressly
permitted in this Loan Agreement, no Primary Borrower Party shall, or shall
permit any other Person to, (i) amend, modify or waive any term or provision of
such Borrowers Party's partnership agreement, certificate of limited
partnership, articles of incorporation, by-laws, articles of organization,
operating agreement or other organizational documents so as to violate or permit
the violation of the single-purpose entity provisions set forth in Article IX,
unless required by law; or (ii) liquidate, wind-up or dissolve such Primary
Borrower Party.
SECTION 5.21 TRANSACTIONS WITH RELATED PERSONS. Except for fees and expenses
payable to the Manager under the Management Agreement, the Borrowers shall not
pay any management, consulting, director or similar fees to any Related Person
of the Borrowers or to any director, officer or employee of the Borrowers. The
Borrowers shall not directly or indirectly enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Related Person of any of the Borrowers or
with any director, officer or employee of any Borrowers Party, except
transactions in the ordinary course of and pursuant to the reasonable
requirements of the business of the Borrowers and upon fair and reasonable terms
and are no less favorable to any of the Borrowers than would be obtained in a
comparable arm's length transaction with a Person that is not a Related Person
of any Borrower. The Borrowers shall not make any payment or permit any payment
to be made to any Related Person of any of the Borrowers when or as to any time
when any Event of Default shall exist.
SECTION 5.22 BANKRUPTCY, RECEIVERS, SIMILAR MATTERS.
(A) VOLUNTARY CASES. The Borrowers Parties shall not commence any
voluntary case under the Bankruptcy Code or under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect.
(B) INVOLUNTARY CASES, RECEIVERS, ETC. The Borrower Parties shall
not apply for, consent to, or aid, solicit, support, or otherwise act, cooperate
or collude to cause the appointment of or taking possession by, a receiver,
trustee or other custodian for all or a substantial part of the assets of any
Borrower. As used in this Loan Agreement, an "INVOLUNTARY BORROWER BANKRUPTCY"
shall mean any involuntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, in which
any of the Borrowers is a debtor or any portion of the Properties is property of
the estate therein. The Borrowers shall not file a petition for, consent to the
filing of a petition for, or aid, solicit, support, or otherwise act, cooperate
or collude to cause the filing of a petition for an Involuntary Borrower
Bankruptcy. In any Involuntary Borrower Bankruptcy, no Borrower Party shall,
without the prior written consent of Lender, consent to the entry of any order,
file any motion, or
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support any motion (irrespective of the subject of the motion), and the
Borrowers shall not file or support any plan of reorganization. The Borrowers
having any interest in any Involuntary Borrower Bankruptcy shall do all things
reasonably requested by Lender to assist Lender in obtaining such relief as
Lender shall seek, and shall in all events vote as directed by Lender. Without
limitation of the foregoing, each such Borrower shall do all things reasonably
requested by Lender to support any motion for relief from stay or plan of
reorganization proposed or supported by Lender.
SECTION 5.23 ERISA.
(A) NO ERISA PLANS. None of the Primary Borrower Parties will
establish any Employee Benefit Plan, Pension Plan or Multiemployer Plan, or will
commence making contributions to (or become obligated to make contributions to)
any Employee Benefit Plan, Pension Plan or Multimployer Plan.
(B) COMPLIANCE WITH ERISA. The Borrowers shall not: (i) engage in
any nonexempt prohibited transaction under Section 406 of ERISA or Section 4975
of the IRC; or (ii) except as may be necessary to comply with applicable laws,
establish or amend any Employee Benefit Plan which establishment or amendment
could result in liability to the Borrowers or any ERISA Affiliate or increase
the obligation of the Borrowers, provided that the Borrowers shall not be in
default of this covenant if, in either case, any portion of the Loan has been,
or will be, funded with plan assets of any employee benefit plan that either (x)
is subject to Title I of ERISA or any plan that is covered by Section 4975 of
the Code (unless the Lender is eligible to apply for one or more exemptions such
that the Loan will not constitute a nonexempt prohibited transaction under
Section 406 of ERISA) or (y) could subject a Borrower Party or its Affiliates to
an excise tax under Section 4975 of the IRC.
(C) NO PLAN ASSETS. The Borrowers shall not at any time during the
term of this Loan Agreement become (1) an employee benefit plan defined in
Section 3(3) of ERISA which is subject to ERISA, (2) a plan as defined in
Section 4975(e)(1) of the IRC which is subject to Section 4975 of the IRC, (3) a
"governmental plan" within the meaning of Section 3(32) of ERISA or (4) an
entity any of whose underlying assets constitute "plan assets" of any such
employee benefit plan, plan or governmental plan for purpose of Title I or
ERISA, Section 4975 of the IRC or any state statutes applicable to the Borrowers
regulating investments of governmental plans.
SECTION 5.24 PRESS RELEASE. The Borrowers shall not, and shall not permit any
other Person within its control to, disclose the name of Lender or terms of this
Loan Agreement or the Loan Documents in any press release without the prior
written consent of Lender, which shall not be unreasonably withheld.
Notwithstanding the foregoing to the contrary, the Borrowers shall be permitted
to make such filings and disclosures with respect to the Loan as are required by
law.
SECTION 5.25 GROUND LEASES.
(A) NO MODIFICATION. The Borrowers shall not modify or amend any
material or economic terms of, or terminate or surrender any Ground Lease, in
each case without the prior written consent of Lender, which consent may be
withheld by Lender in its sole and absolute
69
discretion. Any attempted or purported material modification, amendment, or any
surrender or termination of any Ground Lease without Lender's prior written
consent shall be null and void and of no force or effect.
(B) PERFORMANCE OF GROUND LEASES. The Borrowers shall fully
perform as and when due each and all of its obligations under each Ground Lease
in accordance with the terms of such Ground Lease, and shall not cause or suffer
to occur any material breach or default in any of such obligations. The
Borrowers shall keep and maintain each Ground Lease in full force and effect.
The Borrowers shall exercise any option to renew or extend any Ground Lease and
give written confirmation thereof to Lender within thirty (30) days after such
option is exercised. Notwithstanding that certain of the obligations of the
Borrowers under this Loan Agreement may be similar or identical to certain of
the obligations of the Borrowers under the Ground Leases, all of the obligations
of the Borrowers under this Loan Agreement are and shall be separate from and in
addition to its obligations under the Ground Leases.
(C) NOTICE OF DEFAULT. If any of the Borrowers shall have or
receive any written notice that any Ground Lease Default has occurred, then the
Borrowers immediately shall notify Lender in writing of the same and immediately
deliver to Lender a true and complete copy of each such notice. Further, the
Borrowers shall provide such documents and information as Lender shall
reasonably request concerning the Ground Lease Default.
(D) LENDER'S RIGHT TO CURE. If any Ground Lease Default shall
occur and be continuing, or if any Ground Lessor asserts that a Ground Lease
Default has occurred (whether or not the Borrowers question or deny such
assertion), then, subject to the terms and conditions of the applicable Ground
Lease, Lender, upon five (5) Business Days' prior written notice to the
Borrowers, unless Lender reasonably determines that a shorter period (or no
period) of notice is necessary to protect Lender's interest in the Ground Lease,
may (but shall not be obligated to) take any action that Lender deems reasonably
necessary, including, without limitation, (i) performance or attempted
performance of the applicable Borrower's obligations under the applicable Ground
Lease, (ii) curing or attempting to cure any actual or purported Ground Lease
Default, (iii) mitigating or attempting to mitigate any damages or consequences
of the same and (iv) entry upon the applicable Ground Leased Property for any or
all of such purposes. Upon Lender's request, each Borrower shall submit
satisfactory evidence of payment or performance of any of its obligations under
each Ground Lease. Lender may pay and expend such sums of money as Lender in its
sole discretion deems necessary or desirable for any such purpose, and the
Borrowers shall pay to Lender within five (5) Business Days of the written
demand of Lender all such sums so paid or expended by Lender, together with
interest thereon from the date of expenditure at the Default Rate.
(E) LEGAL ACTION. The Borrowers shall not commence any action or
proceeding against any Ground Lessor or affecting or potentially affecting any
Ground Lease or the Borrowers' or Lender's interest therein, the effect of which
could cause an event of default or termination of any such Ground Lease, without
the prior written consent of Lender, which consent shall not be unreasonably
withheld, conditioned or delayed. The Borrowers shall notify Lender immediately
if any action or proceeding shall be commenced between any Ground Lessor and
either Borrower, or affecting or potentially affecting any Ground Lease or
either Borrower's or Lender's interest therein (including, without limitation,
any case commenced by
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or against any Ground Lessor under the Bankruptcy Code). Lender shall have the
option, exercisable upon notice from Lender to the Borrowers, to participate in
any such action or proceeding with counsel of Lender's choice. The Borrowers
shall cooperate with Lender, comply with the reasonable instructions of Lender,
execute any and all powers, authorizations, consents or other documents
reasonably required by Lender in connection therewith, and shall not settle any
such action or proceeding without the prior written consent of Lender, which
consent shall not be unreasonably withheld, conditioned or delayed.
(F) ESTOPPEL CERTIFICATE. Subject to the terms and conditions of
the applicable Ground Lease, the Borrowers shall use commercially reasonable
efforts to obtain and deliver to Lender within the time period required under
the applicable Ground Lease, an estoppel certificate from each Ground Lessor
setting forth (A) (i) the identities of the original lessor and lessee under the
applicable Ground Lease and each of their respective successors, (ii) that the
Ground Lease has not been modified or, if it has been modified, the date of each
modification (together with copies of each such modification), (iii) the rent
payable under the Ground Lease, (iv) the dates to which all rent and other
charges have been paid, (v) whether there are any alleged Ground Lease Defaults
and, if so, setting forth the nature thereof in reasonable detail, and (vi) such
other matters as Lender may reasonably request or (B) the matters required to be
certified by the Ground Lessor under the applicable Ground Lease. The Borrowers
shall not be required to request an estoppel from any Ground Lessor more than
two (2) times in any calendar year.
(G) BANKRUPTCY.
(i) If any Ground Lessor shall reject any Ground Lease
under or pursuant to Section 365 of Title 11 of the Bankruptcy Code, the
Borrowers shall not elect to treat the Ground Lease as terminated but shall
elect to remain in possession of the applicable Ground Leased Property and the
leasehold estate under such Ground Lease. The lien of the Deed of Trust covering
such Property does and shall encumber and attach to all of the Borrowers' rights
and remedies at any time arising under or pursuant to Section 365 of the
Bankruptcy Code, including without limitation, all of such Borrower's right to
remain in possession of such Property and the leasehold estate.
(ii) The Borrowers acknowledge and agree that in any case
commenced by or against the Borrowers under the Bankruptcy Code, Lender by
reason of the liens and rights granted under the Deed of Trust covering such
Property and the Loan Documents shall have a substantial and material interest
in the treatment and preservation of such Borrower's right and obligations under
such Ground Lease, and that such Borrowers shall, in any such bankruptcy case,
provide to Lender immediate and continuous reasonably adequate protection of
such interests. Each Borrower and Lender agree that such adequate protection
shall include but shall not necessarily be limited to the following:
(a) Lender shall be deemed a party to the Ground
Lease (but shall not have any obligations thereunder) for purposes of Section
365 of the Bankruptcy Code, and shall, provided that, prior to an Event of
Default, no such action by Lender would adversely and materially affect the
Borrowers' ability to prosecute, or defend, any such claims asserted therein,
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have standing to appear and act as a party in interest in relation to any matter
arising out of or related to the Ground Lease or such Property.
(b) The Borrowers shall serve Lender with copies
of all notices, pleadings and other documents relating to or affecting the
Ground Lease or the applicable Property. Any notice, pleading or document served
by the Borrowers on any other party in the bankruptcy case shall be
contemporaneously served by such Borrower on Lender, and any notice, pleading or
document served upon or received by such Borrower from any other party in the
bankruptcy case shall be served by such Borrower on Lender promptly upon receipt
by such Borrower.
(c) Upon written request of Lender, the
Borrowers shall assume the Ground Lease, and shall take such steps as are
necessary to preserve such Borrower's right to assume the Ground Lease,
including without limitation using commercially reasonable efforts to obtain
extensions of time to assume or reject the Ground Lease under Subsection 365(d)
of the Bankruptcy Code to the extent it is applicable.
(H) If the Borrowers or the applicable Ground Lessor seeks to
reject any Ground Lease or have the Ground Lease deemed rejected, then prior to
the hearing on such rejection Lender shall, subject to applicable law, be given
no less than twenty (20) days' notice and opportunity to elect in lieu of
rejection to have the Ground Lease assumed and assigned to a nominee of Lender.
If Lender shall so elect to assume and assign the Ground Lease, then the
Borrowers shall, subject to applicable law, continue any request to reject the
Ground Lease until after the motion to assume and assign has been heard. If
Lender shall not elect to assume and assign the Ground Lease, then Lender may,
subject to applicable law, obtain in connection with the rejection of the Ground
Lease a determination that the applicable Ground Lessor, at Lender's option,
shall (1) agree to terminate the Ground Lease and enter into a new lease with
Lender on the same terms and conditions as the Ground Lease, for the remaining
term of the Ground Lease, or (2) treat the Ground Lease as breached and provide
Lender with the rights to cure defaults under the Ground Lease and to assume the
rights and benefits of the Ground Lease.
Each Borrower shall join with and support any request by
Lender to grant and approve the foregoing as necessary for adequate protection
of Lender's interests. Notwithstanding the foregoing, Lender may seek additional
terms and conditions, including such economic and monetary protections as it
deems reasonably appropriate to adequately protect its interests, and any
request for such additional terms or conditions shall not delay or limit
Lender's right to receive the specific elements of adequate protection set forth
herein.
Each Borrower hereby appoints Lender as its attorney in fact
to act on behalf of Lender in connection with all matters relating to or arising
out of the assumption or rejection of any Ground Lease, in which the other party
to the lease is a debtor in a case under the Bankruptcy Code. This grant of
power of attorney is present, unconditional, irrevocable, durable and coupled
with an interest.
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SECTION 5.26 MORTGAGED CONDOMINIUM PROPERTY.
(A) NO MODIFICATION. The Condominium Borrowers shall not modify or
amend any material terms of, or terminate any of the Mortgaged Condominium
Property Documents, in each case, without the prior written consent of Lender,
which consent shall not be unreasonably withheld, conditioned or delayed.
(B) PERFORMANCE OF MORTGAGED CONDOMINIUM PROPERTY DOCUMENTS. The
Condominium Borrowers shall fully and faithfully pay when due and payable all
assessments, common charges and other charges payable by the Condominium
Borrowers under the Mortgaged Condominium Property Documents and shall perform
as and when due each of its material obligations under the Mortgaged Condominium
Property Documents in substantial accordance with their respective terms, and
shall not cause or suffer to occur any breach or default in any of such
obligations. The Condominium Borrowers shall keep and maintain each of the
Mortgaged Condominium Property Documents in full force and effect.
(C) NOTICE OF DEFAULT. If the Condominium Borrowers shall receive
any written notice of any Condominium Default, the Condominium Borrowers
immediately shall notify Lender of same and deliver to Lender a true and
complete copy of each such notice, and provide such documents and information as
Lender may reasonably request concerning such Condominium Default.
(D) LENDER'S RIGHT TO CURE. If any Condominium Default shall occur
and be continuing, or if any party to any Mortgaged Condominium Property
Document asserts that a Condominium Default has occurred (whether or not the
Borrowers question or deny such assertion), then, subject to the terms and
conditions of the applicable Mortgaged Condominium Property Documents, after
notice to Condominium Borrower, Lender upon five (5) Business Days' prior
written notice to the Borrowers, unless Lender reasonably determines that a
shorter period (or no period) of notice is necessary to protect Lender's
interest in the Ground Lease, may (but shall not be obligated to) take any
action that Lender deems reasonably necessary to cure such Condominium Default,
including, without limitation, (i) performance or attempted performance of the
Borrowers' obligations under the applicable Mortgaged Condominium Property
Documents, (ii) curing or attempting to cure any actual or purported Condominium
Default, (iii) mitigating or attempting to mitigate any damages or consequences
of the same and (iv) entry upon the Mortgaged Condominium Property for any or
all of such purposes. Upon Lender's request, the Condominium Borrowers shall
submit satisfactory evidence of payment or performance of any of its obligations
under each of the Mortgaged Condominium Property Documents. Lender may pay and
expend such sums of money as Lender in its sole discretion deems necessary or
desirable for any such purpose, and the Borrowers shall pay to Lender within
five (5) Business Days of the written demand of Lender all such sums so paid or
expended by Lender pursuant to this Section 5.26, together with interest thereon
from the date of expenditure at the Default Rate.
(E) PRESERVATION OF CONDOMINIUM. The Condominium Borrowers will do
all things necessary to preserve and to keep unimpaired its material rights,
powers and privileges under the Mortgaged Condominium Property Documents and to
prevent the termination or expiration of the Mortgaged Condominium Property
Documents, or the withdrawal of the Mortgaged
73
Condominium Property from a condominium form of ownership under applicable law,
to the end that the Condominium Borrowers may enjoy all of the material rights
granted to it as a party to the Mortgaged Condominium Property Documents.
(F) NOTICE OF CONDOMINIUM DEFAULTS. The Condominium Borrowers will
(i) promptly notify Lender of the receipt by the Condominium Borrowers of any
notice from the Board of Managers, or the owner of any other unit in the
condominium, covering the Mortgaged Condominium Property, asserting or claiming
a default by the Condominium Borrowers thereunder or lack of compliance by the
Condominium Borrowers with the Mortgaged Condominium Property Documents, (ii)
promptly notify Lender of the receipt by the Condominium Borrowers of any notice
or request from the Board of Managers or owner of any unit of the termination or
purported termination of the Mortgaged Condominium Property Documents or to
withdraw the Mortgaged Condominium Property from condominium ownership pursuant
to applicable law or to seek any action for partition, (iii) promptly notify
Lender of the receipt by the Condominium Borrowers of any notice or request from
the Board of Managers or owner of any unit of the material modification or
change or proposed material modification or change of the Mortgaged Condominium
Property Documents and (iv) promptly cause a copy of each such notice of request
received by the Condominium Borrowers from the Board of Managers or any unit
owner, or from a mortgage of a mortgage on such other unit, to be delivered to
Lender. The Condominium Borrowers will permit Lender to participate in any such
partition or withdrawal proceeding to the extent permitted by law and the
Mortgaged Condominium Property Documents (but Lender shall not be obligated so
to do). The Condominium Borrowers will promptly deliver to Lender a copy of each
notice, pleading, brief and preliminary, interim and final determination or
decision and other papers received by it in each such partition or withdrawal
proceeding.
(G) INTENTIONALLY DELETED.
(H) STATEMENTS, NOTICES. The Condominium Borrowers will, within
twenty (20) days after demand from Lender (which shall not be required more than
two (2) times in any calendar year), obtain, if and to the extent that the
Condominium Borrowers is entitled to the same under the Mortgaged Condominium
Property Documents, and otherwise request from and make good faith efforts to
obtain, from the Board of Managers and deliver to Lender a duly signed and
acknowledged certificate (signed also by Condominium Borrower) that the
Mortgaged Condominium Property Documents are unmodified and in full force and
effect (or, if the same have been modified in compliance with this Loan
Agreement, that the Mortgaged Condominium Property Documents are in full force
and effect as to modified and that there have been no other modifications),
stating the dates to which the assessments, common charges and other charges
payable under the Mortgaged Condominium Property Documents have been paid and
stating whether to the certifying party's and Condominium Borrower's knowledge
Condominium Borrower's is in compliance with the Mortgaged Condominium Property
Documents, or, if not, specifying each default or failure of compliance of which
the certifying party has knowledge. The Condominium Borrowers will, promptly
upon receipt thereof by Condominium Borrower, furnish Lender with a copy of all
notices and statements, however characterized, issued by the Board of Managers
or relating to the Mortgaged Condominium Property Documents including without
limitation, financial statements and projected budgets.
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SECTION 5.27 LENDER'S EXPENSES. The Borrowers shall pay, on demand by Lender,
all reasonable out-of-pocket expenses, charges, costs and fees (including
reasonable attorneys' fees and expenses) in connection with the negotiation,
documentation, closing, administration, servicing, enforcement interpretation,
and collection of the Loan and the Loan Documents, and in the preservation and
protection of Lender's rights hereunder and thereunder. Without limitation the
Borrowers shall pay all costs and expenses, including reasonable attorneys'
fees, incurred by Lender in any case or proceeding under the Bankruptcy Code (or
any law succeeding or replacing any of the same). At the Closing, Lender is
authorized to pay directly from the proceeds of the Loan any or all of the
foregoing expenses then or theretofore incurred and approved by the Borrowers.
SECTION 5.28 DISTRIBUTIONS. During the continuance of any Event of Default, and
at any time that a Cash Trap Event is in effect, the Borrowers shall not make
any distributions of cash or other property to any Borrower Party, or make any
payments in lieu thereof, without Lender's prior written approval, which may be
granted or withheld in Lender's sole discretion.
SECTION 5.29 COMPLETION OF REQUIRED CAPITAL IMPROVEMENTS. The Borrowers shall
commence the Required Capital Improvements promptly following the Closing and
complete the Required Capital Improvements in accordance with Section 6.5
hereof.
SECTION 5.30 COMPLIANCE WITH PLAN OF REORGANIZATION. The Borrowers shall comply,
and shall cause all other parties under the control of Borrower or Guarantor or
any Affiliates thereof, to comply, in all material respects with the Plan of
Reorganization.
SECTION 5.31 CANCELLATION OF INDEBTEDNESS; SETTLEMENT OF CLAIMS. Unless
otherwise specifically provided herein to the contrary, the Borrowers shall not
cancel any indebtedness from any Person owing to any Borrower, or settle any
claims without Lender's prior written consent which shall not be unreasonably
withheld.
ARTICLE VI
RESERVES
SECTION 6.1 SECURITY INTEREST IN RESERVES; OTHER MATTERS PERTAINING TO RESERVES.
(A) The Borrowers hereby pledge, assign and grant to Lender a
security interest in and to all of the Borrowers' right, title and interest in
and to the Account Collateral, including the Reserves, as security for payment
and performance of all of the Obligations hereunder and under the Note and the
other Loan Documents. The Reserves constitute Account Collateral and are subject
to the security interest in favor of Lender created herein and all provisions of
this Loan Agreement and the other Loan Documents pertaining to Account
Collateral.
(B) In addition to the rights and remedies provided in Article VII
and elsewhere herein, upon the occurrence and during the continuance of any
Event of Default, Lender shall have all rights and remedies pertaining to the
Reserves as are provided for in any of the Loan Documents or under any
applicable law. Without limiting the foregoing, upon and at all times after the
occurrence and during the continuance of an Event of Default, Lender in its sole
and absolute discretion, may use the Reserves (or any portion thereof) for any
purpose, including but not limited to any combination of the following: (i)
payment of any of the Obligations including
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the Prepayment Consideration (if any) applicable upon such payment in such order
as Lender may determine in its sole discretion; provided, however, that such
application of funds shall not cure or be deemed to cure any default; (ii)
reimbursement of Lender for any actual losses or expenses (including, without
limitation, reasonable legal fees) suffered or incurred as a result of such
Event of Default; (iii) payment for the work or obligation for which such
Reserves were reserved or were required to be reserved; and (iv) application of
the Reserves in connection with the exercise of any and all rights and remedies
available to Lender at law or in equity or under this Loan Agreement or pursuant
to any of the other Loan Documents. Nothing contained in this Loan Agreement
shall obligate Lender to apply all or any portion of the funds contained in the
Reserves during the continuance of an Event of Default to payment of the Loan or
in any specific order of priority.
SECTION 6.2 FUNDS DEPOSITED WITH LENDER.
(A) INTEREST, OFFSETS. Except only as expressly provided otherwise
herein, all funds of the Borrowers which are deposited with Lock Box Account
Bank as Reserves hereunder shall be held by Lock Box Account Bank in one or more
Permitted Investments, such Permitted Investments, prior to an Event of Default,
to be as directed by Borrower. All interest which accrues on the Reserves shall
be taxable to the Borrowers and shall be added to and disbursed in the same
manner and under the same conditions as the principal sum on which said interest
accrued. Additional provisions pertaining to investments are set forth in
Article VII. After repayment of all of the Obligations, all funds held as
Reserves will be promptly returned to, or as directed by, the Borrowers.
(B) FUNDING AT CLOSING. The Borrowers shall deposit with Lender
the amounts necessary to fund each of the Reserves as set forth below. Deposits
into the Reserves at Closing may occur by deduction from the amount of the Loan
that otherwise would be disbursed to the Borrowers, followed by deposit of the
same into the applicable Sub-Account or Account of the Lock Box Account in
accordance with the Cash Management Agreement on the Closing Date.
Notwithstanding such deductions, the Loan shall be deemed for all purposes to be
fully disbursed at Closing.
SECTION 6.3 IMPOSITIONS AND INSURANCE RESERVE. On the Closing Date, the
Borrowers shall deposit with Lock Box Account Bank $4,225,548.90 and, pursuant
to the Cash Management Agreement, the Borrowers shall deposit monthly, on each
Payment Date commencing on the Payment date in December 2002, 1/12th of the
annual charges (as reasonably estimated by Lender) for all Impositions and all
Insurance Premiums (other than for D&O Insurance) payable with respect to the
Properties hereunder (said funds, together with any interest thereon and
additions thereto, the "IMPOSITIONS AND INSURANCE RESERVE"). The initial amount
of the monthly deposit to be made to the Impositions and Insurance Reserve from
and after the date hereof is $1,100,249. The Borrowers shall also deposit with
Lock Box Account Bank within ten (10) Business Days of the written demand by
Lender, to be added to and included within such reserve, a sum of money which
Lender reasonably estimates, together with such monthly deposits, will be
sufficient to make the payment of each such charge at least ten (10) Business
Days prior to the date initially due. The Borrowers shall provide Lender with
bills and all other documents necessary for the payment of the foregoing charges
at least thirty (30) days prior to the date on which each payment shall first
become subject to penalty or interest if not paid. So
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long as (i) no Event of Default has occurred and is continuing, (ii) the
Borrowers have provided Lender with the foregoing bills and other documents in a
timely manner, and (iii) sufficient funds are held by Lender for the payment of
the Impositions and insurance premiums relating to the Property, as applicable,
Lender shall pay said items or disburse to the Borrowers from such Reserve an
amount sufficient to pay said items. Interest shall accrue in favor of the
Borrowers on funds in the Impositions and Insurance Reserve. In addition to (and
not in lieu of) the aforementioned reserves, at Closing, the Borrowers shall
deposit with Lock Box Bank the Supplemental Insurance Reserve Payment to be held
in the Impositions and Insurance Reserve. Lender shall be under no obligation to
cause any portion of the Supplemental Insurance Reserve Payment to be released
to the Borrowers for the payment of any Impositions. Notwithstanding the
foregoing to the contrary, provided no Event of Default has occurred and is then
continuing, Lender shall cause the remainder, if any, of the Supplemental
Insurance Reserve Payment to be disbursed to the Borrowers within five (5)
Business Days of the delivery by the Borrowers to Lender of each of the
Insurance Policies required pursuant to the terms of Section 5.4 hereof
providing coverage for a period of one (1) year, together with evidence of the
payment in full of the annual premiums payable for such Insurance Policies.
SECTION 6.4 FF&E RESERVE. On or prior to the Closing Date, Lender or Servicer on
behalf of Lender shall establish and maintain with the Lock Box Bank an account,
for the purpose of creating a reserve for replacements of the furniture,
fixtures and equipment at or in, or used in connection with, the Property (the
"REPLACEMENTS") in accordance with the applicable CapEx/FF&E Budget approved by
Lender (said funds, together with any interest thereon and additions thereto,
the "FF&E RESERVE") which account shall be an Eligible Account entitled "FF&E
Reserve Account for the benefit of Merrill Lynch Mortgage Lending, Inc., as
secured party" and shall be under the sole dominion and control of Lender,
subject to the terms of the Cash Management Agreement. Pursuant to the Cash
Management Agreement, the Borrowers shall deposit with Lock Box Account Bank
monthly, on each Payment Date commencing with the Payment Date in December 2002,
an amount equal to 4.0% of the Operating Revenues generated from the Properties
for the prior calendar month (such amount, the "MONTHLY FF&E PAYMENT"). Funds
held in the FF&E Reserve may be withdrawn by the Borrowers, subject in all
instances to the terms of the Cash Management Agreement, only in accordance with
the approved CapEx/FF&E Budget, and no funds held in the FF&E Reserve shall be
used in connection with the Required Capital Improvements. Upon and at all times
after the occurrence and during the continuance of an Event of Default, no draws
will be permitted from the FF&E Reserve other than for normal repairs,
replacements, maintenance expenses, and otherwise in accordance with the terms
of the Management Agreement, subject, in each instance, to Manager's compliance
with the FF&E reporting requirements set forth in Section 5.1(A)(v)(d).
SECTION 6.5 CAPITAL IMPROVEMENT RESERVE; REQUIRED CAPITAL IMPROVEMENTS. At
Closing the Borrowers shall reserve from the proceeds of the Loan and shall
deposit with Lock Box Account Bank $6,953,315.50 (said funds, together with any
interest thereon, the "CAPITAL IMPROVEMENT RESERVE"), which funds shall be made
available to the Borrowers solely for payment of certain Capital Improvements
required to be made to the Properties and designated as "Required Capital
Improvements" on the Capital Improvement Plan attached hereto as EXHIBIT A (the
"REQUIRED CAPITAL IMPROVEMENTS") and shall not be used by the Borrowers for
purposes for which any other Reserve is established or for any other purpose
other than completion of the Required Capital Improvements. The Borrowers shall
promptly commence and diligently
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prosecute to completion, subject to Force Majeure, the Required Capital
Improvements within the time periods for each Requied Capital Improvement set
forth on EXHIBIT A. Funds held in the Capital Improvement Reserve shall be
disbursed in accordance with Section 6.7. Subject to the foregoing conditions,
the Borrowers shall be entitled to draw any remaining balance in the Capital
Improvement Reserve when all Required Capital Improvements are complete, and
paid for, in accordance with the terms hereof.
SECTION 6.6 HAZARDOUS MATERIALS REMEDIATION RESERVE. At Closing, the
Borrowers shall reserve from the proceeds of the Loan and shall deposit with
Lock Box Account Bank, an amount equal to $1,039,688.00 (said funds, together
with any interest thereon and additions thereto, the "HAZARDOUS MATERIALS
REMEDIATION RESERVE") for certain work related to Hazardous Materials on the
Properties as indicated in the Environmental Reports for the Properties prepared
and delivered prior to the Closing and as such work is more particularly
described on SCHEDULE 6.6 (the "ENVIRONMENTAL WORK"). Prior to the earlier of
(x) the date required by any applicable Governmental Authority or (y) nine (9)
months after the Closing, the Borrowers shall, subject to Force Majeure,
complete such Environmental Work and shall provide to Lender such closure
reports, no-further-action letters, or other evidence of compliance with law as
Lender may reasonably require. The funds contained in the Hazardous Materials
Remediation Reserve shall be utilized by the Borrowers solely for performance of
the Environmental Work in accordance with the Environmental Reports, and shall
not be used by the Borrowers for purposes for which any other Reserve is
established. Subject to the Borrowers' satisfaction of the applicable conditions
of Section 6.7, the Borrowers shall be entitled to draw upon the Hazardous
Materials Remediation Reserve to pay for costs that have been incurred by the
Borrowers for such Environmental Work, provided that the Borrowers deliver to
Lender such evidence as may be reasonably satisfactory to Lender that, after
payment of such draw, the funds remaining in the Hazardous Materials Remediation
Reserve shall be sufficient to pay for the remainder of such Environmental Work.
Subject to the foregoing conditions, the Borrowers shall be entitled to draw any
remaining balance in the Hazardous Materials Remediation Reserve when all such
Environmental Work is complete, and is paid for, in accordance with the terms
hereof.
SECTION 6.7 CONDITIONS TO DISBURSEMENTS FROM HAZARDOUS MATERIALS REMEDIATION
RESERVE AND CAPITAL IMPROVEMENT RESERVE; PERFORMANCE OF WORK.
(A) DISBURSEMENTS FROM THE HAZARDOUS MATERIALS REMEDIATION RESERVE
AND CAPITAL IMPROVEMENT RESERVE. Upon the Borrowers' written request for
disbursement, Lender shall authorize Lock Box Account Bank to disburse funds to
or for the account of the Borrowers (x) from the Hazardous Materials Remediation
Reserve, to pay to, or pay on behalf of, the Borrowers for the amount of the
Borrowers' actual bona fide out-of-pocket expenditures or costs incurred for
Environmental Work (the "APPROVED ENVIRONMENTAL EXPENDITURES", and (y) from the
Capital Improvement Reserve, to pay to, or pay on behalf of, the Borrowers for
the amount of the Borrowers' actual bona fide out-of-pocket expenditures or
costs incurred for Required Capital Improvements ("APPROVED CAPITAL IMPROVEMENT
EXPENDITURES", and together with the Approved Environmental Expenditures,
collectively, "APPROVED EXPENDITURES", and the related Environmental Work or
Required Capital Improvements to which any such request for disbursement relates
shall be referred to as the "WORK"), upon satisfaction of each of the
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conditions listed on SCHEDULE 6.7 and each of the conditions set forth below in
Lender's reasonable discretion:
(i) Except as provided in this Section 6.7, each request
for disbursement from the Hazardous Materials Remediation Reserve or the Capital
Improvement Reserve (such Reserves, the "WORK RESERVES") shall be made for
completion of the Approved Expenditures for which disbursement is requested.
(ii) A request for disbursement from the Work Reserves may
be made after completion of a portion of the work under such contract, provided
(1) all other conditions in this Loan Agreement for disbursement have been
satisfied, (2) funds remaining in the Hazardous Materials Remediation Reserve
are, in Lender's reasonable judgment, sufficient to complete the Environmental
Work when required and/or funds remaining in the Capital Improvement Reserve
are, in Lender's reasonable judgment, sufficient to complete such item of
Required Capital Improvements and any other Required Capital Improvements
remaining to be performed, as the case may be, and (3) if reasonably required by
Lender, each contractor or subcontractor receiving payments in excess of
$100,000 under such contract shall provide a waiver of lien with respect to
amounts which have been paid to that contractor or subcontractor.
(iii) To the extent the contract with the relevant
contractor or supplier provides for a retainage, each disbursement from a Work
Reserve, except for a final disbursement, shall be in the amount of actual costs
incurred less the percentage of such costs that the contract with the relevant
contractor or supplier specifies to be retained and advanced as part of the
final disbursement. No funds will be advanced for materials stored at any
Property unless such materials are properly stored and secured at the applicable
Property in accordance with the Borrowers' customary procedures and sound
construction practices as reasonably determined by Lender. No funds will be
advanced for materials stored at any location other than at the Properties
unless Lender determines in its reasonable discretion that Lender has a
perfected first priority security interest in any such materials.
(iv) The amount of all invoices in connection with the
Work with respect to which a disbursement is requested and which has been
approved by Lender shall be disbursed by Lock Box Account Bank as directed by
the Borrowers (in which event, the Borrowers covenant and agree to promptly pay
such invoices) or, if an Event of Default has occurred and is continuing, at
Lender's option and in Lender's sole and absolute discretion, directly to the
contractor, supplier, materialman, mechanic or subcontractor indicated on said
invoices unless already paid by the Borrowers and Lender has received
satisfactory evidence of such payment in which case Lender shall reimburse the
Borrowers. If the Borrowers request that any amounts be disbursed directly to
the Borrowers pursuant to the foregoing sentence, the Borrowers shall be
required to deliver evidence reasonably acceptable to Lender of payment of all
invoices for which disbursements were previously made to the Borrowers as a
condition to such requested disbursement.
(v) No more than two (2) disbursements will be made by
Lender from the Hazardous Materials Remediation Reserve or the Capital
Improvement Reserve in any calendar month, and, if made in accordance herewith
or otherwise approved by Lender, requested disbursements will be made within
five (5) Business Days after the request therefor. Lender
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shall not be required to make any disbursement from a Work Reserve with respect
to the Property unless such requested disbursement is in an amount equal to or
greater than $25,000 (other than the final disbursement).
(vi) Lender reserves the right, at its option and as a
condition to any disbursement from a Work Reserve, to approve (which shall not
be unreasonably withheld, delayed or conditioned) (i) all drawings and plans and
specifications, if any, for any Work which require aggregate payments in amounts
exceeding the greater of (x) five percent (5%) of the Aggregate Allocated Loan
Amount with respect to the applicable Property or (y) $250,000, and (ii) all
contracts and work orders with materialmen, mechanics, suppliers,
subcontractors, contractors and other parties providing labor or materials in
connection with any Work which require aggregate payments in amounts exceeding
the greater of (x) five percent (5%) of the Aggregate Allocated Loan Amount with
respect to the applicable Property or (y) $250,000. Upon Lender's reasonable
request, the Borrowers shall assign (to the extent assignable) any drawings,
plans and specifications, contracts or subcontracts to Lender. Drawings, plans
and specifications, contracts and work orders approved by Lender shall not be
changed in any material respect without Lender's prior written consent, which
shall not be unreasonably withheld, delayed or conditioned.
(vii) The Borrowers shall have delivered a certificate to
Lender from an Architect certifying that the Work has been completed in a good
and workmanlike manner in accordance with all applicable laws for any item in
excess of the greater of (x) five percent (5%) of the Aggregate Allocated Loan
Amount with respect to the applicable Property or (y) $250,000. Lender may
retain its own architect or engineer ("LENDER'S CONSULTANT") to review any plans
and specifications for any item in excess of the greater of (x) five percent
(5%) of the Aggregate Allocated Loan Amount with respect to the applicable
Property or (y) $250,000, and to periodically inspect any Work at the Borrowers'
sole cost and expense.
(viii) The Borrowers shall have delivered to Lender a
certificate of the Borrowers certifying as to the actual costs which were
incurred by the Borrowers to complete such Work, which costs shall not
materially exceed the amount budgeted for such Work under the Capital
Improvement Plan then in effect unless approved by Lender, which shall not be
unreasonably withheld, delayed or conditioned (together with supporting
documentation reasonably acceptable to Lender).
(ix) The Borrowers shall have delivered to Lender all
necessary material certificates, authorizations, permits and licenses which are
required to permit the construction and completion of the Work, as issued by the
appropriate Governmental Authority. The Borrowers, to the full extent permitted
by applicable law, hereby assigns to Lender as additional security for the
payment of the Obligations and the observance and performance by the Borrowers
of the terms, covenants and provisions of the Loan Documents all right, title
and interest which the Borrowers may now have or may hereafter acquire in and to
such certificates, authorizations, permits and licenses.
(x) Lender may require an inspection of the Property
prior to making a monthly disbursement from the applicable Work Reserve in order
to verify completion of the Work for which disbursement is sought in excess of
the greater of (x) five percent (5%) of the
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Aggregate Allocated Loan Amount with respect to the applicable Property or (y)
$250,000. Lender may require that such inspection be conducted by Lender's
Consultant and/or may require a copy of a certificate of completion by an
independent qualified architect or engineer acceptable to Lender prior to the
disbursement of any amounts from the applicable Work Reserve. The Borrowers
shall pay the reasonable out-of-pocket expense of such inspections as reasonably
required hereunder, whether such inspections are conducted by Lender, Servicer,
Lender's Consultant or by an independent qualified professional.
(B) PERFORMANCE OF WORK.
(i) The Borrowers shall complete all Work in a good and
workmanlike manner as soon as practicable following the commencement thereof
substantially in accordance with the applicable budget approved by Lender in
accordance with the terms of this Loan Agreement. The insufficiency of the
balance in the applicable Work Reserve shall not relieve the Borrowers from
their obligations to perform and complete the related Work as herein provided or
to fulfill all other preservation and maintenance covenants in the Loan
Documents.
(ii) If Lender determines in its reasonable discretion
that any Work is not being performed in a workmanlike or timely manner or that
any Work has not been completed in a workmanlike manner, Lender shall have the
option to withhold disbursement for such unsatisfactory work and so notify the
Borrowers with reasonable detail regarding the basis for Lender's
dissatisfaction and, after the expiration of forty-five (45) days from the
giving of such notice by Lender to the Borrowers of such unsatisfactory work
without the cure thereof (or, if such unsatisfactory work is susceptible of a
cure but cannot reasonably be cured within said forty-five (45) day period and
provided that the Borrowers shall have commenced to cure such unsatisfactory
work within said forty-five (45) day period and thereafter diligently and
expeditiously proceeds to cure the same, after the expiration of such longer
period as is reasonably necessary for the Borrowers in the exercise of due
diligence to cure such unsatisfactory work, up to a maximum of an additional
sixty (60) days, subject to Force Majeure, without the cure thereof), Lender may
proceed under existing contracts or contract with third parties to complete such
Work, as the case may be, and apply amounts contained in the applicable Work
Reserve toward the labor and materials necessary to complete the same, without
providing any additional prior notice to the Borrowers, and exercise any and all
other remedies available to Lender upon and during the continuance of an Event
of Default hereunder.
(iii) In order to facilitate Lender's completion or making
of any Work pursuant to Section 6.7(B)(ii) above, the Borrowers grant Lender the
right to enter onto each Property during normal business hours after the
expiration of the notice specified above and perform, subject to the rights of
tenants, any and all work and labor necessary to complete the applicable Work
and/or employ watchmen to protect the Property from damage. All sums so expended
by Lender shall be deemed to have been advanced under the Loan to the Borrowers
and secured by the applicable Deed of Trust. For this purpose, the Borrowers
constitute and appoint Lender their true and lawful attorney-in-fact with full
power of substitution to complete or undertake the applicable Work in the name
of the Borrowers pursuant to Section 6.7(B)(ii) above. Such power of attorney
shall be deemed to be a power coupled with an interest and cannot be revoked.
Upon the occurrence and during the continuance of an Event of Default, the
Borrowers empower said attorney-in-fact as follows: (i) to use any funds in the
applicable Work Reserve for the purpose
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of making or completing any Work; (ii) to make such additions, changes and
corrections to any Work as shall be reasonably necessary or desirable to
complete the same; (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
any Work, or for clearance of title; (v) to execute all applications and
certificates in the name of the Borrowers which may be required by any of the
contract documents; (vi) in its reasonable discretion, to prosecute and defend
all actions or proceedings in connection with any Property or the rehabilitation
and repair of such Property; and (vii) to do any and every act which the
Borrowers might do in their own behalf to fulfill the terms of this Loan
Agreement.
(iv) Nothing in this Section shall: (i) make Lender
responsible for making or completing any Work; (ii) require Lender to expend
funds in addition to the amounts on deposit in the applicable Work Reserve to
make or complete any Work; (iii) obligate Lender to proceed with any Work; or
(iv) obligate Lender to demand from the Borrowers additional sums to make or
complete any Work.
(v) The Borrowers shall permit Lender and Lender's agents
and representatives (including, without limitation, Lender's engineer, architect
or inspector) or third parties performing any Work pursuant to this Section 6.7
to enter onto any Property during normal business hours upon reasonable notice
(subject to the rights of tenants under their Leases) to inspect the progress of
any Work and all materials being used in connection therewith, to examine all
plans and shop drawings relating thereto which are or may be kept at any
Property, and to complete any Work made pursuant to Section 6.7(B)(ii). The
Borrowers shall use commercially reasonable efforts to 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 6.7(B) or the completion of the Work pursuant to this Section 6.7(B).
(vi) All Work and all materials, equipment, fixtures and
any other item comprising a part thereof shall be constructed, installed or
completed, as applicable, free and clear of all mechanic's, materialman's or
other liens (except for the Permitted Encumbrances).
(vii) All Work shall comply with all applicable legal
requirements of all Governmental Authorities having jurisdiction over the
Properties and applicable insurance requirements, including, without limitation,
applicable building codes, special use permits, environmental regulations and
requirements of insurance underwriters.
(C) INDEMNIFICATION. The Borrowers shall indemnify Lender and hold
Lender harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations, out-of-pocket costs and expenses
(including, without limitation, litigation costs and reasonable attorneys fees
and expenses) arising from or in any way connected with the performance of the
Work, except to the extent caused by the bad faith, willful misconduct or gross
negligence of Lender. The Borrowers shall assign to Lender all rights and claims
the Borrowers may have against all Persons supplying labor or materials in
connection with the Work; provided, however, that Lender may not pursue any such
right or claim or pursue any
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other action with respect to such rights and claims unless an Event of Default
has occurred and remains uncured.
SECTION 6.8 CASH TRAP RESERVE. (i) If, at any time prior to the repayment of the
Obligations in full, a Cash Trap Event shall occur, then, from and after the
occurrence of such Cash Trap Event and for so long as such Cash Trap Event
continues to exist, all Excess Cash Flow (except as otherwise expressly provided
below) shall be deposited with Lender (or its Servicer or agent) and held in the
Lock Box Account in accordance with the terms of the Cash Management Agreement
(said funds, together with any interest thereon, the "CASH TRAP RESERVE"). A
"CASH TRAP EVENT" shall occur as of any Calculation Date when (x) the Debt Yield
is less than the Minimum Debt Yield or (y) the Debt Service Coverage Ratio is
less than the Minimum DSCR, in each case for the trailing twelve (12) month
period ending on such Calculation Date and shall continue to exist until such
time as the Minimum Debt Yield and the Minimum DSCR tests have been satisfied
for three (3) consecutive Calculation Dates (on a trailing twelve (12) month
basis) following such Calculation Date. Notwithstanding that the Debt Yield is
less than the Minimum Debt Yield or the Debt Service Coverage Ratio is less than
the Minimum DSCR as of any Calculation Date, no Cash Trap Event shall be deemed
to have occurred as a result of such event if the Borrowers make a principal
prepayment of the Aggregate Outstanding Principal Balance (which prepayment
amount shall be disbursed in accordance with the terms of the Cash Management
Agreement) in such amounts, and applied, on the next Payment Date), within three
(3) Business Days after the date of delivery of the financial statements
disclosing the existence of such Cash Trap Event (or the date on which such
financial statements are required to be delivered pursuant to Section 5.1), in
an amount equal to the greater of (x) one percent (1%) of the Aggregate
Outstanding Principal Balance, or (y) 120% of the amount, as determined by
Lender in its reasonable discretion, sufficient to cause the Debt Yield to meet
or exceed the Minimum Debt Yield and the Debt Service Coverage Ratio to meet or
exceed the Minimum DSCR if such calculations were recalculated as provided above
assuming that such amount was applied to reduce the Aggregate Outstanding
Principal Balance as of the first day of the relevant measuring period. During
the continuance of a Cash Trap Event, any funds on deposit in the Cash Trap
Reserve may, at the Borrowers' election, be retained in the Cash Trap Reserve or
may be applied to (i) prepayment of the Aggregate Outstanding Principal Balance
as provided above, (ii) Capital Expenditures reasonably approved by Lender, or
(iii) scheduled payments (not to exceed $3,000,000 in the aggregate) of
principal and interest under the Loan and the Mezzanine Loan (to be applied in
accordance with the terms of the Cash Management Agreement). Any funds on
deposit in the Cash Trap Reserve shall continue to be held as additional
Collateral in accordance with this Section 6.8 until the earlier of (a) the date
that such funds are applied or disbursed pursuant to the foregoing sentence and
(b) the date the Minimum Debt Yield and the Minimum DSCR tests have each been
satisfied for three (3) consecutive months (as determined above), at which time,
provided no Event of Default exists, such funds shall be released to the
Borrowers. The existence of a Cash Trap Event shall be determined by Lender in
its reasonable good faith determination. If Lender determines that a Cash Trap
Event has occurred, Lender shall send the Borrowers written notice thereof.
Notwithstanding any provision herein to the contrary, if an Event of Default has
occurred and is continuing, all funds on deposit in the Cash Trap Reserve and
any subsequent Excess Cash Flow, while such Event of Default is continuing, may
be applied by Lender to payment of the Loan (including payment of any Prepayment
Consideration) or other Obligations (or to the obligations of the Mezzanine
Borrowers to Mezzanine Lender) as Lender may elect.
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ARTICLE VII
LOCK BOX; CLEARING ACCOUNT;
CENTRAL ACCOUNT; CASH MANAGEMENT
SECTION 7.1 ESTABLISHMENT OF DEPOSIT ACCOUNT AND LOCK BOX ACCOUNT.
(A) (i) DEPOSIT ACCOUNT. On or before the Closing Date, one
or more deposit accounts shall be established at the Borrowers' sole cost and
expense in the name of Lender, as secured party hereunder (said accounts, and
any accounts replacing same in accordance with this Loan Agreement and the
Deposit Account Agreement, collectively, the "DEPOSIT ACCOUNT") with one or more
financial institutions reasonably approved by Lender (collectively, the "DEPOSIT
BANK"), pursuant to one or more agreements (collectively, the "DEPOSIT ACCOUNT
AGREEMENT") substantially similar to Lender's form or otherwise in form and
substance reasonably acceptable to Lender, executed and delivered by the
Borrowers and the Deposit Bank. The Deposit Account shall be under the sole
dominion and control of Lender (which dominion and control may be exercised by
Servicer). Among other things, the Deposit Account, that all available funds on
deposit in the Deposit Account shall be transferred by wire transfer (or
transfer via the ACH System) on each Business Day by the Deposit Bank into the
Lock Box Account, for application in accordance with the Cash Management
Agreement. The Deposit Bank and the Lock Box Account Bank shall be directed to
deliver to the Borrowers copies of bank statements and other information made
available by the Deposit Bank and the Lock Box Account Bank concerning the
Deposit Account and the Lock Box Account.
(ii) Upon establishing the Deposit Account, (1) the
Borrowers shall cause any and all Operating Revenues, including distributions or
other payments made directly or indirectly to the Borrowers, Manager, or any of
their respective Affiliates, from any Beverage Company, but excluding any award
made to the Borrowers with respect to the Pre-Closing Condemnation, to be
deposited promptly into the Deposit Account and in no event later than two (2)
Business Days after the same are paid to or for the benefit of the Borrowers,
and (2) the Borrowers shall each obtain an agreement (each, a "CREDIT CARD
RECEIVABLES PAYMENT DIRECTION LETTER") from each of the Persons paying or
disbursing credit card receivables (the "CREDIT CARD COMPANIES"), substantially
similar to Lender's form or otherwise in form and substance reasonably
acceptable to Lender, pursuant to which the Credit Card Companies agree to pay
all credit card receivables into the Lock Box Account, and acknowledge and agree
that Lender shall have a first priority perfected security interest in such
credit card receivables. To the extent that the Borrowers or any Person on the
Borrowers' behalf holds any Receipts, whether in accordance with this Loan
Agreement or otherwise, the Borrowers shall be deemed to hold the same in trust
for Lender for the protection of the interests of Lender hereunder and under the
Loan Documents. The Borrowers represent and warrant that, as of the date hereof,
the only Credit Card Companies paying or disbursing credit card receivables with
respect to the Property are Chase Merchant Services, American Express, Discover
Financial Service, Diners Club, JCB (Japanese Credit Bureau), and, if any of the
Borrowers shall hereafter enter into an agreement with any other Credit Card
Company pursuant to which such Credit Card Company shall pay credit card
receivables with respect to the Properties, such Borrower shall promptly obtain
a Credit Card Receivables Payment Direction Letter in form and substance
reasonably acceptable to Lender from such Credit Card Company.
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(iii) The Borrowers shall pay all reasonable out-of-pocket
costs and expenses incurred by Lender in connection with the transactions and
other matters contemplated by this Section 7.1, including but not limited to,
Lender's reasonable attorneys fees and expenses, and all reasonable fees and
expenses of the Deposit Bank and the Lock Box Account Bank, including without
limitation their reasonable attorneys fees and expenses.
(B) LOCK BOX ACCOUNT. On or before the Closing Date, pursuant to
the terms of the Cash Management Agreement, an Eligible Account shall be
established in the name of Lender, as secured party hereunder, to serve as the
"Lock Box Account" (said account, and any account replacing the same in
accordance with this Loan Agreement and the Cash Management Agreement, the "LOCK
BOX ACCOUNT"; and the depositary institution in which the Lock Box Account is
maintained, the "LOCK BOX ACCOUNT BANK"). The Lock Box Account shall be under
the sole dominion and control of Lender (which dominion and control may be
exercised by Servicer); and except as expressly provided hereunder and/or in the
Cash Management Agreement, the Borrowers shall not have the right to control or
direct the investment or payment of funds therein during the continuance of an
Event of Default. Lender may elect to change any financial institution in which
the Lock Box Account shall be maintained if such institution is no longer an
Eligible Bank, upon not less than five (5) Business Days' notice to the
Borrower. The Lock Box Account shall be deemed to contain such sub-accounts as
Lender may designate ("SUB-ACCOUNTS"), which may be maintained as separate
ledger accounts and need not be separate Eligible Accounts. The Sub-Accounts
shall include the following as more particularly described in the Cash
Management Agreement:
(i) "DEBT SERVICE SUB-ACCOUNT" shall mean the Sub-Account
of the Lock Box Account established for the purposes of reserving for payments
of principal and interest and other amounts due under the Loan Documents (but
without duplication of amounts covered under item (ii) below); and
(ii) "RESERVE SUB-ACCOUNTS" shall mean the Sub-Accounts of
the Lock Box Account established for the purpose of holding funds in the
Reserves including: (a) the "Imposition and Insurance Reserve Sub-Account"; (b)
the "Hazardous Materials Remediation Reserve Sub-Account"; (c) the
"Extraordinary Receipts Sub-Account" (d) the "Mezzanine Loan Debt Service
Sub-Account"; and (e) the "Cash Trap Reserve Sub-Account".
SECTION 7.2 APPLICATION OF FUNDS IN LOCK BOX ACCOUNT. Funds in the Lock Box
Account shall be allocated to the Sub-Accounts or the other Accounts (or paid,
as the case may be) in accordance with the Cash management Agreement.
SECTION 7.3 APPLICATION OF FUNDS AFTER EVENT OF DEFAULT. If any Event of Default
shall occur and be continuing, then notwithstanding anything to the contrary in
this Section or elsewhere, Lender shall have all rights and remedies available
under applicable law and under the Loan Documents. Without limitation of the
foregoing, for so long as an Event of Default exists, Lender may apply any and
all funds in the Deposit Account, the FF&E Reserve, the Lock Box Account, the
Hazardous Materials Remediation Reserve Sub-Account, the Extraordinary Receipts
Sub-Account, the Cash Trap Reserve Sub-Account and/or any Sub-Accounts against
all or any portion of any of the Obligations, in any order.
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ARTICLE VIII
DEFAULT, RIGHTS AND REMEDIES
SECTION 8.1 EVENT OF DEFAULT.
"EVENT OF DEFAULT" shall mean the occurrence or existence of any one or
more of the following:
(A) SCHEDULED PAYMENTS. Failure of the Borrowers to pay any
scheduled payment amount when the same is due under this Loan Agreement, the
Note, or any other Loan Documents (whether such amount is interest, principal,
Reserves, or otherwise), or to pay for any Insurance Policies required pursuant
to Section 5.4 hereof; or
(B) OTHER PAYMENTS. Failure of the Borrowers to pay any amount
from time to time owing under this Loan Agreement, the Note, or any other Loan
Documents (other than amounts subject to the preceding paragraph) within ten
(10) days after written notice to the Borrowers; or
(C) BREACH OF REPORTING PROVISIONS. Failure of any Borrower Party
to perform or comply with any term or condition contained in Section 5.1 which
continues for a period of ten (10) days after written notice to the Borrowers
(except that no notice or grace period shall be granted for any breach under
Section 5.1(H)); or
(D) BREACH OF PROVISIONS REGARDING INSURANCE, TRANSFERS, LIENS,
SINGLE PURPOSE. Breach or default under any of Section 5.4, 5.12, 5.17, 5.18,
5.19, 5.20, Article IX, or Section 11.1 (provided that in the case of an
involuntary Lien under Section 5.18 or 11.1, the same shall not constitute an
Event of Default if within thirty (30) days after the filing thereof, the
Borrowers shall either (i) cause the same to be removed of record, or (ii)
provide to Lender security for the same in an amount and pursuant to terms both
satisfactory to Lender in Lender's sole discretion; provided however that if (x)
the default under Section 5.18 or 11.1 is capable of cure but with diligence
cannot be cured within such period of thirty (30) days, (y) the Borrowers (or
the applicable Borrower Party) has commenced the cure within such thirty (30)
day period and has pursued such cure diligently, and (z) each Borrower delivers
to Lender promptly following written demand (which demand may be made from time
to time by Lender) evidence reasonably satisfactory to Lender of the foregoing,
then such period shall be extended for so long as is reasonably necessary for
the Borrowers in the exercise of due diligence to cure such default, but in no
event beyond ninety (90) days after the original notice of default); or
(E) BREACH OF WARRANTY. Any representation, warranty,
certification or other statement made by any Borrower, Guarantor or Manager
thereof in any Loan Document or in any statement or certificate at any time
given in writing pursuant to or in connection with any Loan Document is false in
any material respect as of the date made; or
(F) OTHER DEFAULTS UNDER LOAN DOCUMENTS. A default shall occur in
the performance of or compliance with any term contained in this Loan Agreement
or the other Loan Documents and such default is not fully cured within thirty
(30) days after receipt by the Borrowers of written notice from Lender of such
default (other than occurrences described in other provisions of this Section
8.1 for which a different grace or cure period is specified or which constitute
immediate Events of Default); provided however that if (i) the default is
capable
86
of cure but with diligence cannot be cured within such period of thirty (30)
days, (ii) the Borrowers (or the applicable Borrower Party) has commenced the
cure within such thirty (30) day period and has pursued such cure diligently,
and (iii) each Borrower delivers to Lender promptly following written demand
(which demand may be made from time to time by Lender) evidence reasonably
satisfactory to Lender of the foregoing, then such period shall be extended for
so long as is reasonably necessary for the Borrowers in the exercise of due
diligence to cure such default, but in no event beyond one hundred and twenty
(120) days after the original notice of default; or
(G) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) A
court enters a decree or order for relief with respect to any Borrower Party, in
an Involuntary Borrower Bankruptcy, which decree or order is not stayed or other
similar relief is not granted under any applicable federal or state law unless
dismissed within ninety (90) days; (ii) the occurrence and continuance of any of
the following events for ninety (90) days unless dismissed or discharged within
such time: (x) an Involuntary Borrower Bankruptcy is commenced, (y) a decree or
order of a court for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over any Borrower
Party or over all or a substantial part of its property, is entered, or (z) an
interim receiver, trustee or other custodian is appointed without the consent of
any Borrower Party, for all or a substantial part of the property of such
Person; or
(H) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) An
order for relief is entered with respect to any Borrower Party, or any Borrower
Party commences a voluntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary case or to the
conversion of an involuntary case to a voluntary case under any such law or
consents to the appointment of or taking possession by a receiver, trustee or
other custodian for any Borrower Party or for all or a substantial part of the
property of any Borrower Party; (ii) any Borrower Party makes any assignment for
the benefit of creditors; or (iii) the Board of Directors or other governing
body of any Borrower Party adopts any resolution or otherwise authorizes action
to approve any of the actions referred to in this subsection 8.1(H); or
(I) BANKRUPTCY INVOLVING OWNERSHIP INTERESTS OR PROPERTIES. Other
than as described in either of Subsections 8.1(G) or 8.1(H), all or any portion
of the Collateral becomes property of the estate or subject to the automatic
stay in any case or proceeding under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect (provided
that if the same occurs in the context of an involuntary proceeding, it shall
not constitute an Event of Default if it is dismissed or discharged within
ninety (90) days following its occurrence); or
(J) SOLVENCY. Any Borrower Party ceases to be solvent or admits in
writing its present or prospective inability to pay its debts as they become
due; or
(K) JUDGMENT AND ATTACHMENTS. Any lien, money judgment, writ or
warrant of attachment, or similar process is entered or filed against any
Borrower Party or any of its assets, which claim is not fully covered by
insurance (other than with respect to the amount of commercially reasonable
deductibles permitted hereunder), would have a Material Adverse
87
Effect and remains undischarged, unvacated, unbonded or unstayed for a period of
forty-five (45) days; or
(L) INJUNCTION. The Borrowers are enjoined, restrained or in any
way prevented by the order of any court or any administrative or regulatory
agency from conducting all or any material part of their business and such order
continues for more than thirty (30) days; or
(M) INVALIDITY OF LOAN DOCUMENTS. This Loan Agreement, any Deed of
Trust or any of the Loan Documents for any reason ceases to be in full force and
effect or ceases to be a legally valid, binding and enforceable obligation of
the Borrowers or any Lien securing the Obligations shall, in whole or in part,
cease to be a perfected first priority Lien, subject to the Permitted
Encumbrances (except in any of the foregoing cases in accordance with the terms
hereof or under any other Loan Document) and the Borrowers do not take all
actions requested by Lender to correct such defect within ten (10) days after
the written request by Lender to take such action, or any Person under the
control of the Borrowers or Guarantor who is a party thereto, other than Lender,
denies that it has any further liability (as distinguished from denial of the
existence of a Default or Event of Default) under any Loan Documents to which it
is party, or gives notice to such effect; or
(N) CROSS-DEFAULT WITH OTHER LOAN DOCUMENTS. A default beyond any
applicable grace periods shall occur under any of the other Loan Documents; or
(O) DEFAULT UNDER MANAGEMENT AGREEMENTS OR FRANCHISE AGREEMENTS.
(i) An Uncured Frachise Default occurs; (ii) or any breach or default shall
occur in the material obligations of the Borrowers under any of the Management
Agreements, and such breach or default either is of such a nature or continues
for such a period of time beyond applicable notice and cure periods, if any,
that Manager shall have the right to exercise material remedies as a consequence
thereof; or
(P) GROUND LEASE/MORTGAGED CONDOMINIUM PROPERTY. Any default by
any of the Borrowers beyond any applicable grace period shall occur under any
Ground Lease or any Mortgaged Condominium Property Document or any actual or
attempted surrender, termination, modification or amendment of any Ground Lease
or any Mortgaged Condominium Property Document without Lender's prior written
consent.
If more than one of the foregoing paragraphs shall describe
the same condition or event, then Lender shall have the right to select which
paragraph or paragraphs shall apply. In any such case, Lender shall have the
right (but not the obligation) to designate the paragraph or paragraphs which
provide for non-written notice (or for no notice) or for a shorter time to cure
(or for no time to cure).
SECTION 8.2 ACCELERATION AND REMEDIES.
(A) Upon the occurrence and during the continuance of any Event of
Default described in any of Subsections 8.1(G), 8.1(H), or 8.1(I), the unpaid
principal amount of and accrued interest and fees on the Loan and all other
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other requirements of any kind, all of which are hereby
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expressly waived by the Borrowers. Upon and at any time after the occurrence of
any other Event of Default, at the option of Lender, which may be exercised
without notice or demand to anyone, all or any portion of the Loan and other
Obligations shall immediately become due and payable.
(B) Upon the occurrence and during the continuance of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against the Borrowers under this Loan Agreement or
any of the other Loan Documents, or at law or in equity, may be excercised by
Lender at any time and from time to time, whether or not all or any of the
Obligations shall be declared due and payable, and whether or not Lender shall
have commenced any foreclosure proceeding or other action for the enforcement of
its rights and remedies under any of the Loan Documents with respect to the
Properties. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singly, successively, together or otherwise,
at such time and in such order as Lender may determine in its sole discretion,
to the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Lender permitted by law, equity or contract or
as set forth herein or in the other Loan Documents. Without limiting the
generality of the foregoing, if an Event of Default is continuing (i) to the
fullest extent permitted by law, Lender shall not be subject to any "one action"
or "election of remedies" law or rule, and (ii) all liens and other rights,
remedies or privileges provided to Lender shall remain in full force and effect
until Lender has exhausted all of its remedies against each Property and the
Deeds of Trust have been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Obligations or the Obligations have been paid in full.
(C) Lender shall have the right from time to time to partially
foreclose the Deeds of Trust in any manner and for any amounts secured by the
Deeds of Trust then due and paybale as determined by Lender in its sole
discretion including, without limitation, the following circumstances: (i) in
the event the Borrowers default beyond any applicable grace period in the
payment of one or more scheduled payments of principal and interest, Lender may
foreclose the Deed of Trust 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 the Deed of Trust or any of them to
recover so much of the principal balance of the Loan as Lender may accelerate
and such other sums secured by the Deed of Trust as Lender may elect.
Notwithstanding one or more partial foreclosures, the Property shall remain
subject to the Deed of Trust to secure payment of sums secured by the Deed of
Trust and not previously recovered.
(D) During the continuance of an Event of Default, 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 in such
denominations as Lender shall determine in its sole discretion for purposes of
evidencing and enforcing its rights and remedies provided hereunder. The
Borrowers shall execute and deliver to Lender from time to time, within ten(10)
days after the request of Lender, a severance agreement and such other documents
as Lender shall reasonably request in order to effect the severance described in
the preceding sentence, all in form and substance reasonably satisfactory to
Lender. The Borrowers hereby absolutely and irrevocably appoint Lender as their
true and lawful attorney, coupled with an interest, in their irrevocably appoint
Lender as their true and lawful attorney, coupled with an interest, in their
name and stead to make and execute all documents reasonably necessary to effect
the aforesaid
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severance if the Borrowers fail to do so within ten (10) days of Lender's
written request, the Borrowers ratifying all that their said attorney shall do
by virtue thereof.
(E) Any amounts recovered from the Properties or any other
collateral for the Loan after an Event of Default may be applied by Lender
toward the payment of any interest and/or principal of the Loan and/or any other
amounts due under the Loan Documents in such order, priority and proportions as
Lender in its sole discretion shall determine.
(F) The rights, powers and remedies of Lender under this Loan
Agreement shall be cumulative and not exclusive of any other right, power or
remedy which Lender may have against the Borrowers pursuant to this Loan
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. Lender's rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender's sole discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of one Default or Event of Default with respect to
the Borrowers shall not be construed to be a waiver of any subsequent Default or
Event of Default by the Borrowers or to impair any remedy, right or power
consequent thereon.
SECTION 8.3 PERFORMANCE BY LENDER.
(A) Upon the occurrence and during the continuance of an Event of
Default, if any of the Borrowers shall fail to perform, or cause to be
performed, any material covenant, duty or agreement contained in any of the Loan
Documents (subject to applicable notice and cure periods), Lender may perform or
attempt to perform such covenant, duty or agreement on behalf of the Borrowers
including making protective advances on behalf of any Borrower, or, in its sole
discretion, causing the obligations of any of the Borrowers to be satisfied with
the proceeds of any Reserve. In such event, the Borrowers shall, at the request
of Lender, promptly pay to Lender, or reimburse, as applicable, any of the
Reserves, any actual amount reasonably expended or disbursed by Lender in such
performance or attempted performance, together with interest thereon at the
Default Rate (including reimbursement of any applicable Reserves), from the date
of such expenditure or disbursement, until paid. Any amounts advanced or
expended by Lender to perform or attempt to perform any such matter shall be
added to and included within the indebtedness evidenced by the applicable Note
and shall be secured by all of the Collateral securing the applicable Loan.
Notwithstanding the foregoing, it is expressly agreed that Lender shall not have
any liability or responsibility for the performance of any obligation of the
Borrowers under this Loan Agreement or any other Loan Document, and it is
further expressly agreed that no such performance by Lender shall cure any Event
of Default hereunder.
(B) Lender may cease or suspend any and all performance required
of Lender under the Loan Documents upon and at any time after the occurrence and
during the continuance of any Event of Default.
SECTION 8.4 EVIDENCE OF COMPLIANCE. Promptly following request by Lender, each
Borrower shall provide such documents and instruments as shall be reasonably
satisfactory to Lender to
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evidence compliance with any material provision of the Loan Documents applicable
to the Borrowers.
ARTICLE IX
SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS,
WARRANTIES AND COVENANTS
SECTION 9.1 APPLICABLE TO ALL PRIMARY BORROWER PARTIES. The Borrowers hereby
represent, warrant and covenant as of the Closing Date and until such time as
all Obligations are paid in full, that absent express advance written waiver
from Lender, which may be withheld in Lender's sole discretion, that each
Primary Borrower Party:
(A) does not own and will not own any assets other than the
Properties (including incidental personal property necessary for the operation
thereof and proceeds therefrom) or direct or indirect ownership interests in the
Borrowers, and such other wholly owned subsidiaries of the Primary Borrower
Parties established solely for the purpose of holding liquor licenses with
respect to one or more of the Properties or, with respect to each of the Primary
Borrower Parties, such incidental assets as are necessary to enable it to
discharge its obligations with respect to the Borrowers (the "OWNERSHIP
INTERESTS");
(B) is not engaged and will not engage in any business, directly
or indirectly, other than the ownership, management and operation of the
Properties or the Ownership Interests;
(C) will not enter into any contract or agreement with any
partner, member, shareholder, trustee, beneficiary, principal or Affilliate of
any Primary Borrower Party except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arms-length basis with third parties other than such Affiliate (including the
Management Agreements);
(D) has not incurred any debt that remains outstanding as of
Closing and will not incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than (i) the Obligations, (ii)
Permitted Indebtedness, and (iii) the Mezzanine Loan;
(E) has not made any loans or advances to any Person that remains
outstanding as of Closing and will not make any loan or advances to any Person
(including any of its Affiliates), and has not acquired and will not acquire
obligations or securities of any of its Affiliates other than the other Borrower
Parties;
(F) is and reasonably expects to remain solvent and pay its own
liabilities, indebtedness, and obligations of any kind from its own separate
assets as the same shall become due other than the other Borrower Parties;
(G) has done or caused to be done and will do all things necessary
to preserve its existence, and will not, nor will any partner, member,
shareholder, trustee, beneficiary, or principal amend, modify or otherwise
change its partnership certificate, partnership agreement, articles of
incorporation, by-laws, articles of organization, operating agreement, or other
organizational documents in any manner with respect to the matters set forth in
this Article IX;
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(H) shall continuously maintain its existence and be qualified to
do business in all states necessary to carry on its business, specifically
including in the case of each Borrower, the state where its Property is located;
(I) will conduct and operate its business as presently
contemplated with respect to the ownership of its Property, or the ownership
interests in the Borrowers, as applicable;
(J) will maintain books and records and bank accounts (other than
bank accounts established hereunder, or established by Manager with respect to
the operations of the Properties pursuant to the Management Agreement) separate
from those of its partners, members, shareholders, trustees, beneficiaries,
principals, Affiliates, and any other Person and will maintain separate
financial statements except that it may also be included in consolidated
financial statements of its Affiliates;
(K) will be, and at all times will hold itself out to the public
as, a legal entity separate and distinct from any other Person (including any of
its partners, members, shareholders, trustees, beneficiaries, principals and
Affiliates, and any Affiliates of any of the same), and not as a department or
division of any Person and will correct any known misunderstandings regarding
its existence as a separate legal entity;
(L) will pay the salaries of its own employees, if any;
(M) will allocate fairly and reasonably any overhead for shared
office space;
(N) will use stationery, invoices and checks;
(O) will file its own tax returns with respect to itself (or
consolidated tax returns, if applicable) as may be required under applicable
law;
(P) reasonably expects 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;
(Q) will not seek, acquiesce in, or suffer or permit its
liquidation, dissolution or winding up, in whole or in part;
(R) will not enter into any transaction of merger or
consolidation, or acquire by purchase or otherwise all or substantially all of
the business or assets of, or any stock or beneficial ownership of, any Person;
(S) will not commingle or permit to be commingled its funds or
other assets with those of any other Person (other than, with respect to the
Borrowers, each other Borrower, or as may be held by Manager, as agent, for each
Borrower pursuant to the terms of the Management Agreement);
(T) has and will maintain its assets in such a manner that it is
not costly or difficult to segregate, ascertain or identify its individual
assets from those of any other Person;
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(U) does not and will not hold itself out to be responsible for
the debts or obligations (other than the Obligations) of any other Person;
(V) has not guaranteed or otherwise become liable in connection
with any obligation of any other Person that remains outstanding, and will not
guarantee or otherwise become liable on or in connection with any obligation
(other than the Obligations) of any other Person that remains outstanding;
(W) except for funds deposited into the Accounts in accordance
with the Loan Documents, shall not hold title to its assets other than in its
name; and
(X) shall comply with all of the assumptions, statements,
certifications, representations, warranties and covenants regarding or made by
it contained in or appended to the nonconsolidation opinion delivered pursuant
hereto.
SECTION 9.2 APPLICABLE TO BORROWERS, GENERAL PARTNER AND MEMBER. In addition to
their respective obligations under Section 9.1, each Borrower, General Partner
and Member (other than the sole member of a single member limited liability
company) hereby represents, warrants and covenants as of the Closing Date and
until such time as all Obligations are paid in full, that absent express advance
written waiver from Lender, which may be withheld in Lender's sole discretion,
it:
(A) General Partner shall at all times act as the sole general
partner of each Borrower that is a limited partnership, with all of the rights,
powers, obligations and liabilities thereof under the limited partnership
agreement of such Borrower and shall take any and all actions and do any and all
things necessary or appropriate to the accomplishment of the same and will
engage in no other business;
(B) Member shall at all times act as the sole member of each
Borrower that is a limited liability company with all of the rights, powers,
obligations and liabilities thereof under the limited liability company
operating agreement of such Borrower and shall take any and all actions and do
any and all things necessary or appropriate to the accomplishment of the same
and will engage in no other business;
(C) The Borrowers that are limited liability companies shall not,
without the prior written consent of Member (including the unanimous written
consent of Member's board of directors including the Independent Directors or
the unanimous written consent of each of the Borrowers' board of managers
including the Independent Directors), and the Borrowers that are limited
partnerships shall not, without the prior written consent of General Partner
(including the unanimous written consent of General Partner's Independent
Directors), institute proceedings for itself to be adjudicated bankrupt or
insolvent; consent to the institution of bankruptcy or insolvency proceedings
against itself; file a petition seeking, or consent to, reorganization or relief
under any applicable federal or state law relating to bankruptcy; consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) for itself or a substantial part of its property; make any
assignment for the benefit of creditors; or admit in writing its inability to
pay its debts generally as they become due;
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(D) The Borrowers that are corporations shall not, without the
prior unanimous written consent of its board of directors, including its two
Independent Directors (if required to have Independent Directors), institute
proceedings for itself to be adjudicated bankrupt or insolvent; consent to the
institution of bankruptcy or insolvency proceedings against it; file a petition
seeking, or consent to, reorganization or relief under any applicable federal or
state law relating to bankruptcy; consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) for
itself or a substantial part of its property; make any assignment for the
benefit of creditors; or admit in writing its inability to pay its debts
generally as they become due;
(E) Neither Member nor General Partner shall, without the
unanimous vote of its board of directors including its Independent Directors,
institute proceedings for itself or any Borrower, to be adjudicated bankrupt or
insolvent; consent to the institution of a bankruptcy or insolvency proceeding
against it or any Borrower, file a petition seeking, or consent to,
reorganization or relief under any applicable federal or state law relating to
bankruptcy; consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) for itself or any Borrower; or
a substantial part of its or any Borrower's property; make any assignment for
the benefit of creditors; or admit in writing its inability to pay its debts
generally as they become due;
(F) Except as otherwise permitted hereunder, General Partner shall
not for itself or for any of the Borrowers (i) liquidate or dissolve, in whole
or in part; (ii) consolidate, merge or enter into any form of consolidation with
or into any other Person, nor convey, transfer or lease its or any Borrower's
assets substantially as an entirety to any Person nor permit any Person to
consolidate, merge or enter into any form of consolidation with or into itself
or any Borrower, nor convey, transfer or lease its or any Borrower's assets
substantially as an entirety to any Person; and (iii) amend any provisions of
its or any Borrower's organizational documents containing provisions similar to
those contained in this Article IX; and
(G) Member, General Partner and each Borrower that is a
corporation shall each promptly elect and at all times maintain at least two (2)
Independent Directors on its board of directors, who shall be selected by
Member, General Partner and such Borrower, as applicable. Each Borrower that is
a single member limited liability company shall promptly appoint and at all
times maintain at least two (2) Independent Directors on its board of managers,
who shall be selected by such Borrower.
ARTICLE X
RESTRUCTURING LOAN, SECONDARY MARKET TRANSACTIONS
SECTION 10.1 SECONDARY MARKET TRANSACTIONS GENERALLY. Lender shall have the
right to engage in one or more Secondary Market Transactions with respect to the
Loan, and to structure and restructure all or any part of the Loan, including
without limitation in multiple tranches, as a wraparound loan, or for inclusion
in a REMIC or other Securitization. Without limitation, Lender shall have the
right, at Lender's sole cost (other than each Borrower's internal costs and
expenses and the costs and expenses of the Borrowers' counsel), to cause the
Note and any Deed of Trust to be split into a first and a second mortgage loan,
or into one or more loans evidenced by multiple notes and secured by multiple
deeds of trust and/or by ownership interests in any of
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the Borrowers in whatever proportion Lender determines, and thereafter to engage
in Secondary Market Transactions with respect to all or any part of the
indebtedness and loan documentation. Each of the Borrower Parties acknowledge
that it is the intention of the parties that all or a portion of the Loan will
be securitized and that all or a portion of the Loan will be rated by one or
more Rating Agencies. Each of the Borrower Parties further acknowledge that
additional structural modifications may be required to satisfy issues raised by
any Rating Agencies. As used herein, "SECONDARY MARKET TRANSACTION" means any of
(i) the sale, assignment, or other transfer of all or any portion of the
Obligations or the Loan Documents or any interest therein to one or more
investors, (ii) the sale, assignment, or other transfer of one or more
participation interests in the Obligations or Loan Documents to one or more
investors, (iii) the transfer or deposit of all or any portion of the
Obligations or Loan Documents to or with one or more trusts or other entities
which may sell certificates or other instruments to investors evidencing an
ownership interest in the assets of such trust or the right to receive income or
proceeds therefrom or (iv) any other Securitization backed in whole or in part
by the Loan or any interest therein.
SECTION 10.2 COOPERATION; LIMITATIONS. The Borrower Parties shall use all
reasonable efforts and cooperate reasonably and in good faith with Lender in
effecting up to three (3) such restructuring or Secondary Market Transactions at
Lender's sole cost (other than, with respect to the first successful Secondary
Market Transaction only, each Borrower's internal costs and expenses and the
costs and expenses of the Borrowers' counsel). Such cooperation shall include
without limitation, executing and delivering such reasonable amendments to the
Loan Documents and the organizational documents of each Borrower as Lender or
any Interested Party (as defined below) may request, provided however that, no
such amendment shall modify (i) the weighted average interest rate payable under
the Note (or notes); (ii) the stated maturity date of the Note, (iii) the
amortization of the principal amount of the Note, (iv) any other material
economic terms of the Obligations, (v) the non-recourse provisions of the Loan
or (vi) any provision, the effect of which would increase the Borrowers'
obligations or decrease the Borrowers' rights under the Loan Documents except to
a de minimis extent. The Borrower Parties shall not be required to provide
additional collateral to effect any such restructuring or Secondary Market
Transaction after the Closing Date. The Borrower Parties shall not be required
to pay any third party (other than, with respect to the first successful
Secondary Market Transaction only, the costs and expenses of the Borrowers'
counsel) costs and expenses incurred by Lender in connection with any such
Secondary Market Transaction unless otherwise expressly payable by the Borrower
Parties under this Loan Agreement or the other Loan Documents.
SECTION 10.3 INFORMATION. The Borrower Parties, at Lender's cost and expense
(other than the Borrowers' internal costs and, with respect to the first
successful Secondary Market Transaction only, expenses and the costs and
expenses of the Borrowers' counsel), shall provide such access to personnel and
such information and documents relating to the Borrower Parties, Manager, the
Properties and Collateral and the business and operations of all of the
foregoing and access to such opinions of counsel (including nonconsolidation
opinions) as any Rating Agency may request or as Lender or any other Interested
Party may reasonably request in connection with any such Secondary Market
Transaction including, without limitation, updated financial information,
appraisals, market studies, environmental reviews (Phase I's and, if
appropriate, Phase II's), mold inspection, property condition reports and other
due diligence investigations together with appropriate verification of such
updated information and reports through letters of auditors and
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consultants and, as of the closing date of the Secondary Market Transaction,
updated representations and warranties made in the Loan Documents and such
additional representations and warranties as any Rating Agency may request or
any purchaser, transferee, assignee, trustee, servicer or potential investor
(the Rating Agencies and all of the foregoing parties, collectively, "INTERESTED
PARTIES") may reasonably request, to the extent such updated representations and
warranties are true. On or prior to the date of closing of any Secondary Market
Transaction, the Borrowers, at Lender's cost and expense (other than the
Borrowers' internal costs and expenses and, with respect to the first successful
Secondary Market Transaction only, the costs and expenses of the Borrowers'
counsel), shall, if required by any Rating Agency or reasonably required by
Lender, provide revisions or "bringdowns" to any opinions delivered at Closing
(including nonconsolidation opinions), or if required by the Rating Agencies,
new versions of such opinions, which opinions shall be consistent in substance
with the opinions covered by the original opinions, addressed to Lender, any
trustee under any Securitization backed in whole or in part by the Loan, any
Rating Agency that assigns a rating to any securities in connection therewith
and any investor purchasing securities therein. Lender shall be permitted to
share all such information with the investment banking firms, Rating Agencies,
accounting firms, law firms, other third party advisory firms, potential
investors, servicers and other service providers and other parties directly
involved in any proposed Secondary Market Transaction. The Borrowers understand
that any such information may be incorporated into any offering circular,
prospectus, prospectus supplement, private placement memorandum or other
offering documents for any Secondary Market Transaction. Lender and the Rating
Agencies shall be entitled to rely upon such information. Without limiting the
foregoing, the Borrowers and Guarantor shall each provide in connection with
each of (i) a preliminary and a final a private placement memorandum or (ii) a
preliminary and final prospectus or prospectus supplement, as applicable (the
documents referred to in the foregoing clauses (i) and (ii), collectively, the
"DISCLOSURE DOCUMENTS"), an agreement reasonably satisfactory to the Borrowers
and Guarantor certifying that the Borrowers and Guarantor have examined such
Disclosure Documents specified by Lender and, that the sections of such
Disclosure Document describing the Borrowers, Guarantor, the Properties and
Manager do not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not materially misleading. The
Borrowers and Guarantor shall each indemnify, defend, protect and hold harmless
Lender, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MERRILL LYNCH"),
and their respective Affiliates, directors, employees, agents and each Person,
if any, who controls Lender, Merrill Lynch or any such Affiliate within the
meaning of Section 15 of the Securities Act of 1933 or Section 20 of the
Securities Exchange Act of 1934, and any other placement agent or underwriter
with respect to any Securitization or Secondary Market Transaction from and
against any losses, claims, damages and liabilities that arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Disclosure Document as to the Borrowers, Guarantor, Manager and
the Properties or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated in such
information or necessary in order to make the statements in such information not
materially misleading; provided, however, the Borrowers shall not be required to
indemnify Merrill Lynch for any liabilities arising out of untrue statements or
omissions that were identified to Lender in writing or are set forth in any
third party report not prepared by the Borrowers or their Affiliates unless such
reports are caused to be incorrect or misleading based upon information provided
by the Borrowers or their Affiliates. Lender may publicize the existence of
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the Obligations in connection with Lender's Secondary Market Transaction
activities or otherwise.
SECTION 10.4 ADDITIONAL PROVISIONS. In any Secondary Market Transaction, Lender
may transfer its obligations under this Loan Agreement and under the other Loan
Documents (or may transfer the portion thereof corresponding to the transferred
portion of the Obligations), and thereafter Lender shall be relieved of any
obligations hereunder and under the other Loan Documents arising after the date
of said transfer with respect to the transferred interest. Each transferee
investor shall become a "Lender" hereunder.
ARTICLE XI
RESTRICTIONS ON LIENS, TRANSFERS; ASSUMABILITY; RELEASE OF PROPERTIES
SECTION 11.1 RESTRICTIONS ON TRANSFER AND ENCUMBRANCE. Except for a Transfer or
a Permitted Assumption expressly permitted under this Article XI, Leases entered
into as permitted hereunder, and pledges in connection with the Mezzanine Loan,
the Borrowers shall not cause or suffer to occur or exist, directly or
indirectly, voluntatily or involuntarily, by operation of law or otherwise, any
sale, transfer, mortgage, pledge, Lien or encumbrance (other than the Permitted
Encumbrances) of (i) all or any part of the Properties or any interest therein,
or (ii) any direct or indirect ownership or beneficial interest in any Borrower
(other than to Mezzanine Lender), irrespective of the number of tiers of
ownership without Lender's consent.
SECTION 11.2 TRANSFERS OF BENEFICIAL INTERESTS IN BORROWERS. The following
voluntary or involuntary sales, encumbrances, conveyances, transfers and pledges
(each, a "TRANSFER") of a direct, indirect or beneficial interest in any
Borrower shall be permitted without Lender's consent ("PERMITTED OWNERSHIP
INTEREST TRANSFERS"):
(A) A Transfer of no more than forty-nine percent (49%) of the
direct or indirect ownership interests in such Borrower (in the aggregate),
provided that, following such Transfer, Guarantor maintains control of such
Borrower.
(B) A Transfer or a series of Transfers that result in the
proposed transferee, together with Affiliates of such transferee, owning in the
aggregate (directly or indirectly) more than forty-nine percent (49%) of the
economic and beneficial interests in such Borrower (where, prior to such
Transfer, such proposed transferee and its Affiliates owned in the aggregate
(directly or indirectly) forty-nine percent (49%) or less of such interests in
that Borrower); and, provided that such Transfer shall not be a Permitted
Ownership Interest Transfer unless Lender receives, prior to such Transfer, both
(x) evidence reasonably satisfactory to Lender (which shall include a legal
non-consolidation opinion reasonably acceptable to Lender and the Rating
Agencies) that the single purpose nature and bankruptcy remoteness of such
Borrower (and its members and general partners, as applicable) following such
Transfer or Transfers will be the same as prior to such Transfer or Transfers
and (y) a Rating Agency Confirmation.
(C) For so long as Guarantor's (or its successor's) stock is
traded through the "over-the-counter market" or through any recognized stock
exchange, any Transfer of all or any portion of the issued and outstanding
capital stock of Guarantor, or the issuance of additional
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capital stock of Guarantor (including common or preferred shares) through the
"over-the-counter market" or through any recognized stock exchange.
(D) The pledge of ownership interests granted by the Mezzanine
Borrowers pursuant to the Pledge Agreement (as such term is defined in the
Mezzanine Loan Agreement).
For purposes of this Section 11.2, "control" shall have the meaning
given thereto in the definition of "Affiliate" in Section 1.1 and a "change of
control" of any Person shall include the Transfer of legal or equitable
ownership interests in such Person which after giving effect to such Transfer
results in any transferee or pledgee of such interests holding more than a 49%
legal or equitable ownership interest or security interest in such Person.
SECTION 11.3 ASSUMABILITY.
(A) The Borrowers shall have the right to request that Lender
consent to (i) a transfer of all of the Properties to another Person (the
"TRANSFEREE BORROWER") and the assumption by the Transferee Borrower of all of
the Borrowers' obligations under the Loan Documents, (ii) replacement of
Guarantor with new guarantors and indemnitors who shall assume all of the
obligations of the Guarantors arising from and after such date and release of
the Borrowers and Guarantor from obligations arising after such date and (iii)
the replacement of the Mezzanine Borrowers with pledgors of the ownership
interests in the Transferee Borrower (collectively, an "ASSUMPTION"), subject to
the conditions set forth in paragraphs (C) and (D) of this Section. Together
with such written application, the Borrowers will pay to Lender the reasonable
review fee of $10,000. The Borrowers also shall pay on demand all of the
reasonable out-of-pocket costs and expenses incurred by Lender, including
reasonable attorneys' fees and expenses, and the fees and expenses of Rating
Agencies, if any, and other outside entities, in connection with considering any
proposed Transfer and Assumption, whether or not the same is permitted or
occurs.
(B) Lender shall not withhold its consent to an Assumption (any
such Assumption consented to by Lender, a "PERMITTED ASSUMPTION") provided and
upon the conditions that:
(i) No Event of Default shall have occurred and be
continuing at the time of such Assumption;
(ii) The Borrowers shall have submitted to Lender true,
correct and complete copies of any and all information and documents reasonably
requested by Lender concerning the Transferee Borrower, replacement guarantors
and indemnitors and all of such information and documents shall be reasonably
acceptable to Lender;
(iii) Evidence reasonably satisfactory to Lender shall have
been provided showing that the Transferee Borrower and such of its Affiliates as
shall reasonably be designated by Lender comply and will comply with Article IX,
as those provisions may be modified by Lender taking into account the ownership
structure of Transferee Borrower and its Affiliates;
(iv) The Borrowers shall have obtained (and delivered to
Lender) a Rating Confirmation with respect to the Assumption, the Transferee
Borrower, the new guarantors and indemnitors and all related transactions;
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(v) The Borrowers shall have paid all of Lender's
reasonable out-of-pocket costs and expenses in connection with considering the
Assumption, and shall have paid the amount reasonably requested by Lender as a
deposit against Lender's reasonable costs and expenses in connection with
effecting the Assumption;
(vi) The Borrowers, the Transferee Borrower, and the
replacement guarantors and indemnitors shall have indicated in writing in form
and substance reasonably satisfactory to Lender their readiness and ability to
satisfy the conditions set forth in Subsection (C) below;
(vii) (a) The Transferee Borrower shall be a Permitted
Transferee or (b) the identity, experience and financial condition of the
Transferee Borrower shall otherwise be satisfactory to Lender in its sole
discretion; and
(viii) The identity and financial condition of the
replacement guarantors and indemnitors shall be satisfactory to Lender.
(C) If Lender consents to the proposed Assumption, the Transferee
Borrower and/or Borrowers, as the case may be, shall promptly and as a condition
to the Assumption deliver the following to Lender:
(i) The Borrowers, Transferee Borrower, the original and
replacement guarantors and indemnitors shall execute and deliver any and all
documents reasonably required by Lender to evidence the Transfer and Assumption
of the Loan, in form and substance reasonably required by Lender and similar to
those received at Closing;
(ii) Counsel to the Transferee Borrower and replacement
guarntors and indemnitors shall deliver to Lender opinions in form and substance
reasonably satisfactory to Lender as to such matters as Lender shall reasonably
require in connection with such Assumption, which may include opinions as to
substantially the same matters as were required in connection with the
origination of the Loan including, without limitation, a bankruptcy
non-consolidation opinion;
(iii) The Borrowers shall cause to be delivered to Lender,
an endorsement (relating to the change in the identity of the Borrowers and
execution and delivery of the Assumption documents) to Lender's policy of title
insurance in form and substance acceptable to Lender, in Lender's reasonable
discretion; and
(D) The Borrowers shall deliver to Lender a payment in the amount
of all remaining unpaid reasonable costs incurred by Lender in connection with
the Assumption, including but not limited to, Lender's reasonable attorneys'
fees and expenses, all recording fees, and all fees payable to the title company
in connection with the Transfer and Assumption.
SECTION 11.4 RELEASE OF PROPERTIES. On one or more occasions, the Borrowers may
obtain the release (each, a "RELEASE") of one (1) or more of the Properties from
the Lien of the applicable Deed of Trust in connection with (x) a sale of the
applicable Property or Properties to one or more Persons which are not Related
Persons of the Borrowers or Guarantor, (y) a Release necessary to prevent an
Uncured Franchise Default, or (z) a Release necessary to enable the Borrowers to
comply with the restrictions set forth in Section 5.13(D), and prepayment of all
or a
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portion of the Loan subject to the conditions of the Note and subject to the
satisfaction of the following conditions:
(A) Lender shall have received from the Borrowers at least fifteen
(15) days prior written notice of the date proposed for such release (the
"RELEASE DATE") which notice is revocable;
(B) No Event of Default shall have occurred and be continuing as
of the date of such notice and the Release Date;
(C) Lender shall have received from the Borrowers on the date
proposed for such Release, the Release Price, for deposit into the Lock Box
Account and disbursement in accordance with the terms of the Cash Management
Agreement, and following such disbursement, Lender shall have received Mortgage
Lender's Percentage of the Release Price and Mezzanine Lender shall have
received Mezzanine Lender's Percentage of the Release Price;
(D) The Borrowers at their sole cost and expense, shall have
delivered to Lender, one or more endorsements to the Title Polices delivered to
Lender on the date hereof in connection with the Deeds of Trust insuring that,
after giving effect to such Release, (i) the Liens created hereby and thereby
and insured under the Title Policies are first priority Liens on the respective
remaining Properties subject only to the Permitted Encumbrances applicable to
the remaining Properties and (ii) that the Title Policies remain in full force
and effect and unaffected by such Release;
(E) Immediately following any Release both the Debt Service
Coverage Ratio and the Debt Yield (based upon a trailing twelve (12) month
period) shall be equal to or greater than the Debt Service Coverage Ratio and
the Debt Yield in effect immediately prior to the Release (based upon a trailing
twelve (12) month period);
(F) The Borrowers shall pay all reasonable out-of-pocket costs and
expenses (including, without limitation, title search costs and endorsement
premiums and reasonable attorney's fees and disbursements) incurred by Lender,
Servicer, and any custodian employed by Lender or Servicer, in connection with
the Release; and
(G) Immediately following such Property Release, the Released
Property will be owned by a Person other than the Borrowers.
Upon satisfaction of the above conditions, Lender shall effectuate the following
(hereinafter referred to as a "PROPERTY RELEASE"): the security interest of
Lender under the Deed of Trust and other Loan Documents relating to the Released
Property shall be released and Lender will execute and deliver any agreements
reasonably requested by the Borrowers to release and terminate or reassign, at
the Borrowers' option, the Deed of Trust, the applicable Assignment of Leases,
and financing statements as to the released Property; provided, that such
release and termination or reassignment shall be without recourse to Lender and
without any representation or warranty except that Lender shall be deemed to
have represented that such release and termination or reassignment has been duly
authorized and that it has not assigned or encumbered the Deed of Trust or the
other Loan Documents relating to the released Property (except as contemplated
hereby) and Lender shall return the originals of any Loan Documents that relate
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solely to the released Property to the Borrowers; provided, further, that upon
the release and termination or reassignment of Lender's security interest in the
Deed of Trust relating to the released Property all references herein to the
Deed of Trust relating to the released Property shall be deemed deleted, except
as otherwise provided herein with respect to indemnities.
SECTION 11.5 CONVERSION/RELEASE. The Borrower that owns the West Palm Beach
Property may (i) convert the West Palm Beach Property to a condominium form of
ownership (the "CONVERSION") consisting of two (2) units, one consisting of the
hotel located on the West Palm Beach Property and appurtenances thereto (the
"HOTEL UNIT"), and the other consisting of the office building located on the
West Palm Beach Property (the "OFFICE UNIT"), in accordance with all legal
requirements, and (ii) cause the simultaneous release of the Office Unit from
the lien of the applicable Deed of Trust (the "OFFICE UNIT RELEASE").
Notwithstanding anything in this Loan Agreement to the contrary, the
Borrowers shall not allow nor cause a Conversion until the satisfactory
completion, as determined by Lender, in its reasonable discretion, of the
following conditions (hereinafter collectively referred to as the "CONVERSION
CONDITIONS"):
(A) No Event of Default shall have occurred and be continuing.
(B) The Borrowers shall have given Lender at least forty-five (45)
days prior written notice of its election to seek a Conversion.
(C) The documents delivered or executed by the Borrowers in
connection with the Conversion shall have been properly recorded and/or placed
of record as required by the applicable Governmental Authority and Lender shall
have received (i) an endorsement to the title insurance policy insuring the lien
of the applicable Deed of Trust insuring that the Hotel Unit and the Office Unit
will each constitute, or will constitute after Conversion, a separate tax lot,
and that, following the Office Unit Release, the Hotel Unit will remain subject
to the lien of the applicable Deed of Trust, and (ii) endorsements to each of
the Title Policies insuring that the Office Unit Release will not have an
adverse affect on the priority of the liens of any of the Deeds of Trust.
(D) Lender shall have received the following opinions of counsel
(which opinions shall be in form and substance and issued by counsel reasonably
satisfactory to Lender) in connection with the Conversion: (i) organization,
foreign qualification and good standing with respect to such Persons as Lender
may reasonably require; (ii) due authorization, validity and enforceability of
documents, absence of conflicts with law and documents and agreements, and
absence of litigation; and (iii) such other matters as Lender may reasonably
request.
(E) Lender shall have received and reasonably approved all of the
Condominium Documents.
(F) The Borrowers shall have paid or reimbursed Lender for all
third party out-of-pocket costs and expenses incurred by Lender (including,
without limitation, reasonable attorneys' fees and disbursements) in connection
with the Conversion and the Office Unit Release, and the Borrowers shall have
paid all recording charges, filing fees, taxes or other
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expenses (including, without limitation, mortgage and intangibles taxes and
documentary stamp taxes) payable in connection with the Conversion and the
Office Unit Release.
(G) The Borrowers shall submit to Lender, or cause to be provided
to Lender, any other items reasonably requested by Lender and Lender shall have
received such other and further approvals, opinions, documents and information
in connection with the Conversion as Lender may reasonably request and shall
take any actions reasonably requested by Lender.
(H) The Borrowers shall, at their sole expense, prepare any and
all documents and instruments necessary to effect the Office Unit Release, all
of which shall be subject to the reasonable approval of Lender.
(I) Title to the Office Unit shall have been or shall
simultaneously be conveyed to a Person other than the Borrowers or the Primary
Borrower Parties.
SECTION 11.6 SALE OF BUILDING EQUIPMENT. Notwithstanding anything to the
contrary contained herein, provided no Event of Default exist, the Borrowers may
Transfer or dispose of building equipment which is being replaced or which is no
longer necessary in connection with the operation of the Property free from the
lien of the Deed of Trust, provided that such transfer or disposal will not have
a Material Adverse Effect on the value of any individual Property or on the
Property or on the Properties, taken as a whole, and will not result in a
reduction or abatement of, or right of offset against, the Rents payable under
any Lease, in either case as a result thereof, and provided further that any new
building equipment acquired by the Borrowers (and not so disposed of) shall be
subject to the lien of the Deed of Trust. Lender shall, from time to time, upon
the reasonable request of any Borrower, execute a written instrument in from
reasonably satisfactory to Lender to confirm that such building equipment which
is to be, or has been, sold or disposed of is free from the lien of the Deed of
Trust.
SECTION 11.7 IMMATERIAL TRANSFERS AND EASEMENTS, ETC. Provided no Event of
Default exists, the Borrowers may, without the consent of Lender, (i) make
immaterial Transfers of portions of the applicable Property to Governmental
Authorities for dedication for public use, and (ii) grant easements,
restrictions, covenants, reservations and rights of way in the ordinary course
of business for access, water and sewer lines, telephone and telegraph lines,
electric lines or other utilities or for other similar purposes, provided that
no such transfer, conveyance or encumbrance set forth in the foregoing clauses
(i) and (ii) shall materially impair the utility and operation of such Property
or have a Material Adverse Effect on the value of such Property taken as a
whole. In connection with any Transfer permitted pursuant to this Section 11.7,
Lender shall execute and deliver any instrument reasonably necessary or
appropriate, in the case of the Transfers referred to in clause (i) above, to
release the portion of such Property affected by such transfer from the lien of
the Deed of Trust to such easements, restrictions, covenants, reservations and
rights of way or other similar grants within ten (10) days of Lender's receipt
of the following:
(A) Ten (10) days prior written notice thereof.
(B) A copy of the instrument of transfer.
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(c) An officer's certificate given by the Borrowers stating that
such transfer does not materially impair the utility and operation of the
Property, materially reduce the value of the Property or have a Material Adverse
Effect.
(D) Reimbursement of all of Lender's reasonable, out-of-pocket
costs and expenses incurred in connection with such Transfer.
ARTICLE XII
RECOURESE; LIMITATIONS ON RECOURSE
SECTION 12.1 LIMITATIONS ON RECOURSE. Subject to the provisions of this Article,
and notwithstanding any provision of the Loan Documents other than this Article,
the personal liability of the Borrowers to pay any and all Obligations including
but not limited to the principal of and interest on the debt evidenced by the
Note and any other agreement evidencing the Borrowers' obligations under the
Note shall be limited to (i) the Properties, (ii) the rents, profits, issues,
products and income of the Properties, received or collected by or on behalf of
the Borrowers or any Borrower Party after an Event of Default, and (iii) any
other Collateral.
Notwithstanding anything to the contrary in this Loan Agreement, the Deeds of
Trust or any of the Loan Documents, Lender shall not be deemed to have waived
any right which Lender may have under Section 506(a), 506(b), 1111(b) or any
other provisions of the Bankruptcy Code to file a claim for the full amount of
the Obligations secured by the Deeds of Trust or to require that all collateral
shall continue to secure all of the Obligations owing to Lender in accordance
with the Loan Documents.
SECTION 12.2 PARTIAL RECOURSE. Notwithstanding Section 12.1, the Borrowers (but
not their members, partners (other than the General Partners), employees,
shareholders agents, directors or officers (the "EXCULPATED PARTIES")) and
Guarantor shall be personally liable to the extent of any liability, loss,
damage, cost or expense (including, without limitation, attorneys' fees and
expenses) suffered or incurred by Lender resulting from any and all of the
following: (i) fraud of any of the Borrower Parties or their agents or
employees; (ii) any material misrepresentation made by the Borrowers or any
Borrower Party in this Loan Agreement or any other Loan Document; (iii)
insurance proceeds, condemnation awards, or other sums or payments attributable
to the Properties which are not applied in accordance with the provisions of the
Loan Documents; (iv) all rents, profits, issues, products and income of the
Properties received or collected by or on behalf of the Borrowers or any
Borrower Party or Manager and not deposited into the Deposit Account in
accordance with Article VII and the Cash Management Agreement; (v) failure to
turn over to Lender, after an Event of Default, or misappropriation of any
tenant security deposits or rents collected in advance (other than by Lender or
Servicer); (vi) failure to notify Lender of any change in the principal place of
business address of the Borrowers or of any change in the name of any of the
Borrowers or if any of the Borrowers takes any other action which could make the
information set forth in the Financing Statements relating to the Loan
materially misleading; (vii) failure by the Borrowers, any general partner or
managing member of the Borrowers, or any indemnitor or guarantor to comply with
the covenants, obligations, liabilities, warranties and representations
contained in the Environmental Indemnity or otherwise pertaining to
environmental matters; (viii) material waste; (ix) all liabilities and expenses
under the indemnification provisions of Section 10.3; (x) any uncured default
under Section 11.1; (xi)
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any material uncured default under Article IX; and (xii) any distributions made
in violation of Section 5.28 (to the extent of any such distribution) including
amounts improperly paid or distributed, directly or indirectly, by Manager in
circumvention of such restrictions. Notwithstanding the preceding sentence, the
Loan shall be fully recourse to the Borrowers and Guarantor (but, with respect
to Guarantor only, not in excess of ten percent (10%) of the original principal
balance of the Loan) upon the happening of any of the following: (i) any
Borrower Party's defense of any such collection efforts following maturity of
the Loan or acceleration of the Loan on account of an Event of Default under
Section 8.1(A), or any other defense of any collection efforts without a good
faith basis following any other Event of Default), and (ii) any condition or
event described in any of Subsections 8.1(G), 8.1(H), or 8.1(I) (except that the
Borrowers and Guarantor shall not be liable under this Section 12.2 in
connection with any Involuntary Borrower Bankruptcy unless such involuntary
proceeding is solicited, procured, consented to or acquiesced in by any
Borrower, Guarantor or any Affiliate of either of them or any Involuntary
Borrower Bankruptcy caused by Mezzanine Lender following the exercise by
Mezzanine Lender of its rights under the Mezzanine Loan Documents).
SECTION 12.3 MISCELLANEOUS. No provision of this Article shall (i) affect the
enforcement of the Environmental Indemnity, the Guaranty or any guaranty or
similar agreement executed in connection with the Loan, (ii) release or reduce
the debt evidenced by the Note, (iii) impair the lien of any of the Deeds of
Trust or any other security document, (iv) impair the rights of Lender to
enforce any provisions of the Loan Documents, or (v) limit Lender's ability to
obtain a deficiency judgment or judgment on the Note or otherwise against any
Borrower Party but not any Exculpated Party to the extent necessary to obtain
any amount for which such Borrower Party may be liable in accordance with this
Article or any other Loan Document.
ARTICLE XIII
WAIVERS OF DEFENSES OF GUARANTORS AND SURETIES
SECTION 13.1 WAIVERS. To the extent that any of the Borrowers (in this Article,
a "WAIVING PARTY" is deemed for any reason to be a guarantor or surety of or for
any other Borrower Party or Affiliate or to have rights or obligations in the
nature of the rights or obligations of a guarantor or surety (whether by reason
of execution of a guaranty, provision of security for the obligations of
another, or otherwise) then this Article shall apply. This Article shall not
affect the rights of the Waiving Party other than to waive or limit rights and
defenses that Waiving Party would have (i) in its capacity as a guarantor or
surety or (ii) in its capacity as one having rights or obligations in the nature
of a guarantor or surety.
Waiving Party hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of receivership or bankruptcy of any
of the other Borrower Parties, protest or notice with respect to any of the
obligations of any of the other Borrower Parties, setoffs and counterclaims and
all presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor and notices of acceptance, the benefits
of all statutes of limitation, and all other demands whatsoever (and shall not
require that the same be made on any of the other Borrower Parties as a
condition precedent to the obligations of Waiving Party), and covenants that the
Loan Documents will not be discharged, except by complete payment and
performance of the obligations evidenced and secured thereby, except only as
limited by the express contractual provisions of the Loan Documents. Waiving
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Party further waives all notices that the principal amount, or any portion
thereof, and/or any interest on any instrument or document evidencing all or any
part of the obligations of any of the other Borrower Parties to Lender is due,
notices of any and all proceedings to collect from any of the other Borrower
Parties or any endorser or any other guarantor of all or any part of their
obligations, or from any other person or entity, and, to the extent permitted by
law, notices of exchange, sale, surrender or other handling of any security or
collateral given to Lender to secure payment of all or any part of the
obligations of any of the other Borrower Parties.
Except only to the extent provided otherwise in the express contractual
provisions of the Loan Documents, Waiving Party hereby agrees that all of its
obligations under the Loan Documents shall remain in full force and effect,
without defense, offset or counterclaim of any kind, notwithstanding that any
right of Waiving Party against any of the other Borrower Parties or defense of
Waiving Party against Lender may be impaired, destroyed, or otherwise affected
by reason of any action or inaction on the part of Lender. Waiving Party waives
all rights and defenses arising out of an election of remedies by the Lender,
even though that election of remedies, may have destroyed the Waiving Party's
rights of subrogation and reimbursement against the other Borrower Parties.
Lender is hereby authorized, without notice or demand, from time to
time, (a) to renew, extend, accelerate or otherwise change the time for payment
of, or other terms relating to, all or any part of the obligations of any of the
other Borrower Parties; (b) to accept partial payments on all or any part of the
obligations of any of the other Borrower Parties; (c) to take and hold security
or collateral for the payment of all or any part of the obligations of any of
the other Borrower Parties; (d) to exchange, enforce, waive and release any such
security or collateral for such obligations; (e) to apply such security or
collateral and direct the order or manner of sale thereof as in its discretion
it may determine; (f) to settle, release, exchange, enforce, waive, compromise
or collect or otherwise liquidate all or any part of such obligations and any
security or collateral for such obligations. Any of the foregoing may be done in
any manner, and Waiving Party agrees that the same shall not affect or impair
the obligations of Waiving Party under the Loan Documents.
Waiving Party hereby assumes responsibility for keeping itself informed
of the financial condition of all of the other Borrower Parties and any and all
endorsers and/or other guarantors of all or any part of the obligations of the
other Borrower Parties, and of all other circumstances bearing upon the risk of
nonpayment of such obligations, and Waiving Party hereby agrees that Lender
shall have no duty to advise Waiving Party of information known to it regarding
such condition or any such circumstances.
Waiving Party agrees that neither Lender nor any person or entity
acting for or on behalf of Lender shall be under any obligation to marshal any
assets in favor of Waiving Party or against or in payment of any or all of the
obligations secured hereby. Waiving Party further agrees that, to the extent
that any of the other Borrower Parties or any other guarantor of all or any part
of the obligations of the other Borrower Parties makes a payment or payments to
Lender, or Lender receives any proceeds of collateral for any of the obligations
of the other Borrower Parties, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid or refunded, then, to the extent of such payment or
repayment, the part of such obligations which has been paid,
105
reduced or satisfied by such amount shall be reinstated and continued in full
force and effect as of the time immediately preceding such initial payment,
reduction or satisfaction.
Waiving Party (i) shall have no right of subrogation with respect to
the obligations of the other Borrower Parties; (ii) waives any right to enforce
any remedy that Lender now has or may hereafter have against any of the other
Borrower Parties any endorser or any guarantor of all or any part of such
obligations or any other person; and (iii) waives any benefit of, and any right
to participate in, any security or collateral given to Lender to secure the
payment or performance of all or any part of such obligations or any other
liability of the other parties to Lender.
Waiving Party agrees that any and all claims that it may have against
any of the other Borrower Parties, any endorser or any other guarantor of all or
any part of the obligations of the other Borrower Parties, or against any of
their respective properties, shall be subordinate and subject in right of
payment to the prior payment in full of all obligations secured hereby.
Notwithstanding any right of any of the Waiving Party to ask, demand, sue for,
take or receive any payment from the other Borrower Parties, all rights, liens
and security interests of Waiving Party, whether now or hereafter arising and
howsoever existing, in any assets of any of the other Borrower Parties (whether
constituting part of the security or collateral given to Lender to secure
payment of all or any part of the obligations of the other Borrower Parties or
otherwise) shall be and hereby are subordinated to the rights of Lender in those
assets.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 EXPENSES AND ATTORNEYS' FEES. Whether or not the transactions
contemplated hereby shall be consummated, the Borrowers agree to promptly pay
all reasonable fees, costs and expenses incurred by Lender in connection with
any matters contemplated by or arising out of this Loan Agreement, including the
following, and all such fees, costs and expenses shall be part of the
Obligations, payable on demand: (A) reasonable fees, costs and expenses
(including reasonable attorneys' fees, and other professionals retained by
Lender) incurred in connection with the examination, review, due diligence
investigation, documentation and closing of the financing arrangements evidenced
by the Loan Documents; (B) subject to Section 10.2, reasonable fees, costs and
expenses (including reasonable attorneys' fees and other professionals retained
by Lender) incurred in connection with the administration of the Loan Documents
and the Loan and any amendments, modifications and waivers relating thereto; (C)
subject to Section 10.2, reasonable fees, costs and expenses (including
reasonable attorneys' fees) incurred in connection with the review,
documentation, negotiation, closing and administration of any subordination or
intercreditor agreements; and (D) reasonable fees, costs and expenses (including
attorneys' fees and fees of other professionals retained by Lender) incurred in
any action to enforce or interpret this Loan Agreement or the other Loan
Documents or to collect any payments due from the Borrowers under this Loan
Agreement, the Note or any other Loan Document or incurred in connection with
any refinancing or restructuring of the credit arrangements provided under this
Loan Agreement, whether in the nature of a "workout" or in connection with any
insolvency or bankruptcy proceedings or otherwise. Any costs and expenses due
and payable to Lender after the Closing Date may be paid to Lender pursuant to
the Cash Management Agreement.
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SECTION 14.2 INDEMNITY. In addition to the payment of expenses as required
elsewhere herein, whether or not the transactions contemplated hereby shall be
consummated, the Borrowers agree to indemnify, defend, protect, pay and hold
Lender, Servicer and their successors and assigns (including, without
limitation, the trustee and/or the trust under any trust agreement executed in
connection with any Securitization backed in whole or in part by the Loan and
any other Person which may hereafter be the holder of the Note or any interest
therein), and the officers, directors, stockholders, partners, members,
employees, agents, Affiliates and attorneys of Lender and such successors and
assigns (collectively called the "INDEMNITEES") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, Tax Liabilities, broker's or finders fees, reasonable
costs, expenses and disbursements of any kind or nature whatsoever (including
the reasonable fees and disbursements of outside counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that are imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of (A) the negotiation,
execution, delivery, performance, administration, ownership, or enforcement of
any of the Loan Documents; (B) any of the transactions contemplated by the Loan
Documents; (C) any breach by the Borrowers of any material representation,
warranty, covenant, or other agreement contained in any of the Loan Documents;
(D) Lender's agreement to make the Loan hereunder; (E) any claim brought by any
third party arising out of any condition or occurrence at or pertaining to the
Properties; (F) any design, construction, operation, repair, maintenance, use,
non-use or condition of the Properties or Improvements, including claims or
penalties arising from violation of any applicable laws or insurance
requirements, as well as any claim based on any patent or latent defect, whether
or not discoverable by Lender; (G) any performance of any labor or services or
the furnishing of any materials or other property in respect of the Properties
or any part thereof; (H) any contest referred to in Section 5.3(B) hereof; (I)
any obligation or undertaking relating to the performance or discharge of any of
the terms, covenants and conditions of the landlord contained in the Leases; or
(J) the use or intended use of the proceeds of any of the Loan (the foregoing
liabilities herein collectively referred to as the "INDEMNIFIED LIABILITIES");
provided that the Borrowers shall not have an obligation to an Indemnitee
hereunder with respect to Indemnified Liabilities arising from the fraud, gross
negligence or willful misconduct of such Indemnitee as determined by a court of
competent jurisdiction. The obligations and liabilities of the Borrowers under
this Section 14.2 shall survive the term of the Loan and the exercise by Lender
of any of its rights or remedies under the Loan Documents, including the
acquisition of the Properties by foreclosure or a conveyance in lieu of
foreclosure.
SECTION 14.3 AMENDMENTS AND WAIVERS. Except as otherwise provided herein, no
amendment, modification, termination or waiver of any provision of this Loan
Agreement, the Note or any other Loan Document, or consent to any departure
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Lender and any other party to be charged. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on the Borrowers in any case shall entitle the Borrowers or other Person
to any other or further notice or demand in similar or other circumstances.
SECTION 14.4 RETENTION OF THE BORROWERS' DOCUMENTS. Lender may, in accordance
with Lender's customary practices, destroy or otherwise dispose of all
documents, schedules, invoices
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or other papers, delivered by the Borrowers to Lender (other than the Note)
unless the Borrowers request in writing that same be returned. Upon such request
and at the Borrowers' expense, Lender shall return such papers when Lender's
actual or anticipated need for same has terminated.
SECTION 14.5 NOTICES. Unless otherwise specifically provided herein, any notice
or other communication required or permitted to be given shall be in writing and
addressed to the respective party as set forth below. Notices shall be effective
(i) three (3) days after the date such notice is mailed, (ii) on the next
Business Day if sent by a nationally recognized overnight courier service, (iii)
on the date of delivery by personal delivery and (iv) on the date of
transmission if sent by telefax during business hours on a Business Day
(otherwise on the next Business Day).
Notices shall be addressed as follows:
If to the Borrowers or any Borrower Party:
c/o Lodgian
3445 Peachtree Road NE
Suite 700
Atlanta, Georgia 30326
Attention: General Counsel
Fascimile: (404) 364-0088
With a copy to:
Cadwalader Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: Robert F. McDonough
Facsimile: (212) 504-6666
If to Lender:
c/o Merrill Lynch & Co.
4 World Financial Center
New York, New York 10080
Attention: John Gluszak
Facsimile: (212) 449-7298
and
Attention: Steve Glassman
Facsimile: (212) 738-1013
With a copy to:
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Sidley Austin Brown & Wood LLP
787 Seventh Avenue
New York, New York 10019
Attn: Alan S. Weil, Esq.
Facsimile: (212) 839-5599
Any party may change the address at which it is to receive notices to another
address in the United States at which business is conducted (and not a
post-office box or other similar receptacle), by giving notice of such change of
address in accordance with the foregoing. This provision shall not invalidate or
impose additional requirements for the delivery or effectiveness of any notice
(i) given in accordance with applicable statutes or rules of court, or (ii) by
service or process in accordance with applicable law. If there is any assignment
or transfer of Lender's interest in the Loan, then the new Lenders may give
notice to the parties in accordance with this Section, specifying the addresses
at which the new Lenders shall receive notice, and they shall be entitled to
notice at such address in accordance with this Section.
SECTION 14.6 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Loan Agreement, the making of the Loan hereunder and the
execution and delivery of the Note. Notwithstanding anything in this Loan
Agreement or implied by law to the contrary, the agreements of the Borrowers to
indemnify or release Lender or Persons related to Lender, or to pay Lender's
costs, expenses, or taxes shall survive the payment of the Loan and the
termination of this Loan Agreement.
SECTION 14.7 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure
or delay on the part of Lender in the exercise of any power, right or privilege
hereunder or under the Note or any other Loan Document shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege. All rights and remedies existing under this Loan Agreement,
the Note and the other Loan Documents are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
SECTION 14.8 MARSHALING; PAYMENTS SET ASIDE. Lender shall not be under any
obligation to marshal any assets in favor of any Person or against or in payment
of any or all of the Obligations. To the extent that any Person makes a payment
or payments to Lender, or Lender enforces its remedies or exercises its rights
of set off, and such payment or payments or the proceeds of such enforcement or
set off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/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 recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
if any, and rights and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or set
off had not occurred.
SECTION 14.9 SEVERABILITY. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Loan Agreement, the
Note or other Loan Documents
109
shall not affect or impair the validity, legality or enforceability of the
remaining provisions or obligations under this Loan Agreement, the Note or other
Loan Documents or of such provision or obligation in any other jurisdiction.
SECTION 14.10 HEADINGS. Section and subsection headings in this Loan Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Loan Agreement for any other purpose or be given any substantive
effect.
SECTION 14.11 APPLICABLE LAW. THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
WERE NEGOTIATED IN THE STATE OF NEW YORK, AND EXECUTED AND DELIVERED IN THE
STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN WERE DISBURSED FROM NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THE STATE OF NEW YORK AND ANY APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED
PURSUANT TO THE DEED OF TRUST AND THE ASSIGNMENT OF LEASES SHALL BE GOVERNED BY
THE LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED, EXCEPT THAT THE SECURITY
INTERESTS IN ACCOUNT COLLATERAL SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK OR THE STATE WHERE THE SAME IS HELD, AT THE OPTION OF LENDER.
SECTION 14.12 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns except that the Borrowers may not assign their rights or obligations
hereunder or under any of the other Loan Documents except as expressly provided
in Article XI.
SECTION 14.13 SOPHISTICATED PARTIES, REASONABLE TERMS, NO FIDUCIARY
RELATIONSHIP. The Borrowers, on behalf of themselves and all Borrower Parties,
represent, warrant and acknowledge that (i) they are sophisticated real estate
investors, familiar with transactions of this kind, and (ii) they have entered
into this Loan Agreement and the other Loan Documents after conducting their own
assessment of the alternatives available to them in the market, and after
lengthy negotiations in which they have been represented by legal counsel of
their choice. The Borrowers, on behalf of themselves and all Borrowers Parties,
also acknowledge and agree that the rights of Lender under this Loan Agreement
and the other Loan Documents are reasonable and appropriate, taking into
consideration all of the facts and circumstances including without limitation
the quantity of the Loan, the nature of the Properties, and the risks incurred
by Lender in this transaction. No provision in this Loan Agreement or in any of
the other Loan Documents and no course of dealing between the parties shall be
deemed to create (i) any partnership or joint venture between Lender and the
Borrowers or any other Person, or (ii) any fiduciary or similar
110
duty by Lender to the Borrowers or any other Person. The relationship between
Lender and the Borrowers is exclusively the relationship of a creditor and a
debtor, and all relationships between Lender and any other Borrower are
ancillary to such creditor/debtor relationship.
SECTION 14.14 REASONABLENESS OF DETERMINATIONS. In any instance where any
consent, approval, determination or other action by Lender is, pursuant to the
Loan Documents or applicable law, required to be done reasonably or required not
to be unreasonably withheld, then Lender's action shall be presumed to be
reasonable, and the Borrowers shall bear the burden of proof of showing that the
same was not reasonable. 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 Loan Agreement or the other Loan Documents,
Lender or such agent, as the case may be, has an obligation to act reasonably or
promptly, neither Lender nor its agents shall be liable for any monetary
damages, and the Borrowers' sole remedy shall be limited to commencing an action
seeking injunctive relief or declaratory judgment. Any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an action
seeking declaratory judgment.
SECTION 14.15 LIMITATION OF LIABILITY. Neither Lender, nor any Affiliate,
officer, director, employee, attorney, or agent of Lender, shall have any
liability with respect to, and each of the Borrowers hereby waives, releases,
and agrees not to sue any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by the Borrower
Parties in connection with, arising out of, or in any way related to, this Loan
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Loan Agreement or any of the other Loan Documents, other
than the gross negligence or willful misconduct of Lender. Each of the Borrowers
hereby waives, releases, and agrees not to sue Lender or any of Lender's
Affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Loan Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Loan Agreement or any of the
transactions contemplated hereby, except to the extent the same is caused by the
gross negligence or willful misconduct of Lender.
SECTION 14.16 NO DUTY. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Lender shall have the right to
act exclusively in the interest of Lender and shall have no duty of disclosure,
duty of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to any of the Borrowers or Affiliates thereof, or any other Person.
SECTION 14.17 ENTIRE AGREEMENTS. This Loan Agreement, the Note, and the other
Loan Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements among the parties to the Loan
Documents.
SECTION 14.18 CONSTRUCTION; SUPREMACY OF LOAN AGREEMENT. The Borrowers and
Lender acknowledge that each of them has had the benefit of legal counsel of its
own choice and has been afforded an opportunity to review this Loan Agreement
and the other Loan Documents with its legal counsel and that this Loan Agreement
and the other Loan Documents shall be construed
111
as if jointly drafted by the Borrowers and Lender. If any term, condition or
provision of this Loan Agreement shall be inconsistent with any term, condition
or provision of any other Loan Documents, then this Loan Agreement shall
control.
SECTION 14.19 CONSENT TO JURISDICTION. EACH OF THE BORROWERS HEREBY CONSENTS TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW
YORK, STATE OF NEW YORK OR WITHIN THE COUNTY AND STATE IN WHICH THE PROPERTY IS
LOCATED AND IRREVOCABLY AGREES THAT, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN
SUCH COURTS. EACH OF THE BORROWERS ACCEPTS FOR ITSELF AND IN CONNECTION WITH THE
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT, THE NOTE, SUCH OTHER LOAN DOCUMENTS OR SUCH OBLIGATION. NOTHING
HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT OF LENDER TO BRING PROCEEDINGS AGAINST ANY BORROWER
IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 14.20 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS AND LENDER HEREBY
WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS LOAN AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR
ANY DEALINGS BETWEEN ANY BORROWER PARTY AND LENDER RELATING TO THE SUBJECT
MATTER OF THIS LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS
BEING ESTABLISHED. EACH OF THE BORROWER PARTIES AND LENDER ALSO WAIVES ANY BOND
OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE
REQUIRED OF IT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF
ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH OF THE BORROWERS AND LENDER ACKNOWLEDGES THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO THIS LOAN AGREEMENT, THAT EACH HAS
ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS LOAN AGREEMENT AND THAT EACH
WILL CONTINUE TO RELY ON THE WAIVER IN THE FUTURE. EACH OF THE BORROWERS AND
LENDER FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
112
MODIFICATIONS TO THIS LOAN AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN. IN THE EVENT OF LITIGATION, THIS
LOAN AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
SECTION 14.21 COUNTERPARTS; EFFECTIVENESS. This Loan Agreement and other Loan
Documents and any amendments or supplements thereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all of which counterparts together shall constitute but one and the same
instrument. This Loan Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.
SECTION 14.22 SERVICER. Lender shall have the right from time to time to
designate and appoint a Servicer and special servicer, and to change or replace
any Servicer or special servicer. Provided that the Borrowers have been notified
of such Servicer's role, all rights of the Lender hereunder may be exercised by
Servicer on behalf of Lender and provided the Borrowers shall not be required to
deal with more than one such servicing entity at any time. Lender shall notify
the Borrowers in writing as to the identity of the Servicer and any special
servicer.
SECTION 14.23 OBLIGATIONS OF BORROWER PARTIES. The Borrower Parties other than
the Borrowers are parties to this Loan Agreement only with regard to the
representations, warranties, and covenants specifically applicable to them.
SECTION 14.24 ADDITIONAL INSPECTIONS; REPORTS. Notwithstanding anything
contained in this Loan Agreement to the contrary, if for any reason whatsoever
Lender suspects that any conditions exist or may exist at any Property which
might have a Material Adverse Effect, Lender shall have the right, at the
Borrowers' sole reasonable cost and expense, to cause such inspections and
reports to be prepared and performed with respect to any Property as Lender
shall reasonably determine.
[signatures follow on next page]
113
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Loan Agreement as of the date first written above.
BORROWER:
ALBANY HOTEL, INC., a Florida corporation,
APICO HILLS, INC., a Pennsylvania corporation,
APICO INNS OF GREEN TREE, INC., a
Pennsylvania corporation,
BRUNSWICK MOTEL ENTERPRISES, INC., a
Georgia corporation,
DOTHAN HOSPITALITY 3053, INC., an Alabama
corporation,
DOTHAN HOSPITALITY 3071, INC., an Alabama
corporation,
GADSDEN HOSPITALITY, INC., an Alabama
corporation,
LODGIAN AMI, INC., a Maryland corporation,
MINNEAPOLIS MOTEL ENTERPRISES, INC., a
Minnesota corporation,
NH MOTEL ENTERPRISES, INC., a Michigan
corporation,
SERVICO AUSTIN, INC., a Texas corporation,
SERVICO CEDAR RAPIDS, INC., an Iowa
corporation,
SERVICO COLUMBIA, INC., a Maryland corporation,
SERVICO GRAND ISLAND, INC., a New York
corporation,
SERVICO HOUSTON, INC., a Texas corporation,
SERVICO JAMESTOWN, INC., a New York
corporation,
SERVICO LANSING, INC., a Michigan corporation,
SERVICO MARKET CENTER, INC., a Texas
corporation,
SERVICO MARYLAND, INC., a Maryland
corporation,
SERVICO METAIRIE, INC., a Louisiana
corporation,
SERVICO NEW YORK, INC., a New York
corporation,
SERVICO NIAGARA FALLS, INC., a New York
corporation,
SERVICO NORTHWOODS, INC., a Florida
corporation,
SERVICO PENSACOLA 7200, INC., a Delaware
corporation,
SERVICO PENSACOLA, 7330, INC., a Delaware
corporation,
SERVICO PENSACOLA, INC., a Delaware
corporation,
SERVICO ROLLING MEADOWS, INC., an
Illinois corporation,
SERVICO WINTER HAVEN, INC., a Florida
corporation,
SHEFFIELD MOTEL ENTERPRISES, INC., an
Alabama corporation,
IMPAC HOTELS I, L.L.C., a Georgia limited
liability company,
LODGIAN MEMPHIS PROPERTY OWNER,
LLC, a Delaware limited liability company,
By: /s/ Daniel E. Ellis
--------------------------
Name: Daniel E. Ellis
Title: Vice President and Secretary, or
Authorized Signatory for each of the
entities listed above
AMI OPERATING PARTNERS, L.P., a Delaware
limited partnership
By: AMIOP ACQUISITION GENERAL
PARTNER SPE CORP., a Delaware
corporation its General Partner
By: /s/ Daniel E. Ellis
------------------------------
Name: Daniel E. Ellis
Title: Vice President and Secretary
DEDHAM LODGING ASSOCIATES I, LIMITED
PARTNERSHIP, a Georgia limited partnership
By: DEDHAM LODGING SPE, INC., a Delaware
corporation, its General Partner
By: /s/ Daniel E. Ellis
------------------------------
Name: Daniel E. Ellis
Title: Vice President and Secretary
LITTLE ROCK LODGING ASSOCIATES I,
LIMITED PARTNERSHIP, a Georgia limited
partnership
By: LODGIAN LITTLE ROCK SPE, INC., a
Delaware corporation, its General Partner
By: /s/ Daniel E. Ellis
------------------------------
Name: Daniel E. Ellis
Title: Vice President and Secretary
SERVICO CENTRE ASSOCIATES, LTD., a
Florida limited partnership
By: SERVICO PALM BEACH GENERAL
PARTNER SPE, INC., a Delaware
corporation, its General Partner
By: /s/ Daniel E. Ellis
------------------------------
Name: Daniel E. Ellis
Title: Vice President and Secretary
LENDER:
MERRILL LYNCH MORTGAGE LENDING,
INC.
By: /s/ Steven Glassman
------------------------------
Name: Steven Glassman
Title: Authorized Signatory
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
Exhibit A
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
0220 Holiday Inn Dothan AL $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------------------
0230 Hampton Inn Dothan AL $ 0 $ 74,530 Common area, carpet($1080)
Guestroom: carpet (limited
service) ($45,200)
Guestroom: soft goods
(limited service) ($28,250)
- -----------------------------------------------------------------------------------------------------------------------------------
0240 Holiday Inn Gadsden AL $164,600 Immediate Needs $ 60,750 Roof covering, built-up
Express Identified in the EMG system replacement
report: ADA ($35,000)
accessibility $2,600; HVAC, thru-the-wall units (older
Foundation and units)($9,913)
sidewalk settlement on DHW heaters,>150 gal.
NE side of Bldg. D, Building D($3,500)
$1,500, Asphalt repair Guestroom: carpet($9,400)
overlay $142,500; Roof Guestroom: paint and
covering, built-up wallcovering ($2,938)
system replacement on
Building D, $18,000.
- -----------------------------------------------------------------------------------------------------------------------------------
0210 Holiday Inn Sheffield AL $ 6,000 Immediate Needs: $136,162 Exterior walls, painting &
$6,000 of ADA coating ($40,200)
accessibility upgrades. HVAC, thru-the-wall units
($10,238)
Elevator, machinery ($60,000)
Guestroom: carpet ($20,100)
Commercial laundry: washers
($5,625)
- -----------------------------------------------------------------------------------------------------------------------------------
0505 Courtyard by Bentonville AR $ 0 $ 0
Marriott
- -----------------------------------------------------------------------------------------------------------------------------------
0560 Residence Inn Little Rock AR $ 0 EMG PSA notes that $ 0
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
the last lifesafety
service/inspection was
March, 2000. Need to
confirm date of last
inspection
- -----------------------------------------------------------------------------------------------------------------------------------
0850 Holiday Inn East CT $ 1,000 Immediate Needs: $ 70,500 Asphalt pavement ($9,000)
Hartford $1,000 to repair a Rooftop package unit per
leaking hydraulic ton ($8,000)
elevator. Elevator, machinery ($19,000)
Guestroom: soft goods ($32,500)
Commercial kitchen: ice machine
($2,000)
- -----------------------------------------------------------------------------------------------------------------------------------
1168 Hampton Inn Pensacola FL $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------------------
1113 Holiday Inn Pensacola FL $ 30,000 Immediate Needs: $ 0
Express replace the roof on the
building at the
southwest corner of the
property adjacent to
the "L" -shaped
building due to leaks
and ponding, $30,000.
- -----------------------------------------------------------------------------------------------------------------------------------
1116 Holiday Inn Pensacola FL $ 87,351 Engineering Report $ 0
(University Immediate Needs: ADA
Mall) Accessibility $10,700,
Roof covering
replacement$45,401;
Soffits
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
replacement/repair
$7,000; Mansard
roofing shingles
replacement $2,250;
Bay window replacement
and lounge restoration
$20,000; Down unit
restoration $3,000.
- -----------------------------------------------------------------------------------------------------------------------------------
1108 Crowne Plaza West Palm FL $ 17,400 Immediate Needs: $ 0
Beach Damaged hollow metal
exterior doors to be
replaced, $2,400;
Repair leaks at lobby
skylights $10,000;
Replace insulation at
roof top piping for the
chilled water, $5,000.
- -----------------------------------------------------------------------------------------------------------------------------------
1132 Holiday Inn Winter FL $ 0 $ 0
Haven
- -----------------------------------------------------------------------------------------------------------------------------------
1212 Courtyard by Atlanta GA $186,950 Engineering Report $ 0
Marriott Immediate Needs:
$108,600 guestroom
carpet replacement;
$63,800 guestroom
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
paint and wallcovering
replacement; $15,000
in Lobby case good and
furniture replacement.
- -----------------------------------------------------------------------------------------------------------------------------------
1206 Holiday Inn Brunswick GA $ 39,513 Immediate Repair needs $418,840 Asphalt pavement (seal coat
are 3,100 sq. ft. of over term) ($8,890)
Sidewalk Concrete Curbing, concrete ($2,500)
Repair, $7,813; Swimming pool equipment ($4,000)
Kitchen and laundry Swimming pool relining ($3,500)
floor tile repairs to Exterior walls, EIFS minor
prevent tripping patching, cleaning, caulking and
hazards, $6,500; and, recoating ($54,000)
Guestroom bathroom tub Common area floors, carpet-lobby,
surroundings need meeting rooms, rest. &
replacement to due lounge ($22,770)
improper prepping for Guestroom: carpet (full service)
refinishing, 126 ($75,600)
rooms, $25,200. Guestroom: soft goods (full
service) (newer) ($13,300)
Guestroom: television sets
(older) ($22,880)
Guestroom: case goods & furniture
(full service - older) ($105,600)
Guestroom: soft goods (full
service) (older) ($30,800)
Commercial kitchen: range ($8,500)
Commercial kitchen: refrigerator
($4,500)
Commercial kitchen: walk in
cooler/freezer ($28,500)
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
Guest laundry equipment ($1,000)
Ice machines ($4,000)
Lobby: case goods & furniture
($13,500)
Meeting room: case goods &
furniture ($15,000)
- -----------------------------------------------------------------------------------------------------------------------------------
1255 Holiday Inn Marietta GA $ 0 Engineering Report $119,600 Asphalt pavement (seal coat
(hotel & references on-going over term, striping, minor
suites) capital construction repair) ($27,000)
and significant room Rooftop package unit per ton
renovations. ($24,000)
Guestroom: soft goods (full
service) ($68,600)
- -----------------------------------------------------------------------------------------------------------------------------------
1280 Fairfield Inn Valdosta GA $ 0 $ 78,465 Asphalt pavement (seal coat
over term) ($5,565)
Common area floors, carpet
($2,700)
Guestroom: carpet (limited
service) ($43,200)
Guestroom: soft goods
(limited service) ($27,000)
- -----------------------------------------------------------------------------------------------------------------------------------
1285 Holiday Inn Valdosta Ga $ 0 $237,850 Asphalt pavement (seal coat
over term) ($7,700)
Roof covering, rubber membrane
($63,600)
Roof covering, metal ($7,200)
Common area floors, carpet
($18,900)
Rooftop package unit per ton
($30,400)
Hot and cold water distribution
($1,500)
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
Guestroom: carpet (limited
service) ($66,800)
Guestroom: soft goods
(limited service) ($41,750)
- -----------------------------------------------------------------------------------------------------------------------------------
1840 Crowne Plaza Cedar IA $ 401,000 Immediate Needs: $ 0
Rapids Repair leaks in the
pool skylight $1,000;
Metal Frames of Window
units to be adjusted,
seals replaced and/or
caulked to prevent
leaks $40,000;
Replacement of a fire
damaged hot water
boiler/storage tank
$150,000; Replace
obsolete and
malfunctioning
components of the fire
monitoring panel and
related alarm system
components $200,000;
Replace in adequate
kitchen range hood
fire suppression
systems $10,000.
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
1310 Holiday Inn Rolling IL $ 15,000 Immediate Needs: $ 396,040 ADA Survey ($6,000) Asphalt
Meadows $15,000 to bring pool repair (cut & patch,
up to code. full-depth) ($65,625)
Asphalt pavement (seal coat
over term) ($13,125)
Curbing, concrete - Replace
sections in varoius locations
($1,500)
Retaining walls, wood timber
south and west property ($8,000)
Roof covering, built-up system,
ballast - five story sect.
($25,000)
Roof covering, rubber membrane,
ballast-ninestory section
($16,500)
Window glazing and seal - replace
- 5 and 9 story building ($17,400)
Concrete balcony repair -5 story
building front elevation ($8,640)
Rooftop make-up air unit ($54,000)
Holding tank - 2 story building
($15,000)
Emergency generator -replace
730KVA - 9-story building
($20,000)
Guestroom: carpet (limited
service) ($84,400)
Guestroom: soft goods (limited
service) ($52,750)
Commercial laundry: dryers
- 50 lb ($2,100)
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial laundry: washers
- 75 lb ($4,000)
Guest laundry equipment - coin
washers and dryers ($2,000)
- -----------------------------------------------------------------------------------------------------------------------------------
2035 Courtyard by Florence KY $ 0 0 $ 61,770 ADA Accessibility ($50)
Marriott Asphalt pavement (seal coat
over term) ($3,220)
Guestroom: carpet (limited
service) ($31,200)
Guestroom: soft goods
(limited service) ($27,300)
- -----------------------------------------------------------------------------------------------------------------------------------
2040 Hurstbourne Louisville KY $403,000 Immediate Needs from $741,000 ADA Accessibility ($20,100)
Hotel EMG PSA are as Common area floors, carpet
follows: 4 City ($99,000)
mandated Backflow HVAC, thru-the-wall units
protectors, $40,000; ($228,800)
Pool area ceiling DHW heaters,>150 gal. ($12,000)
repair, $30,000; Pool Fire alarm, horn and strobe
de-humidification lights ($3,000)
equipment $333,000. Guestroom: carpet (full service)
($238,800)
Guestroom: soft goods (full
service) ($139,300)
- -----------------------------------------------------------------------------------------------------------------------------------
2007 Courtyard by Paducah KY $ 0 $ 0
Marriott
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
1502 Quality Hotel Metairie LA $ 60,600 Immediate Need in the $ 0
PSA are as follows:
$9,000 of misc. roof
repairs to counter
leaks, ponding and
lack of ventilation;
$5,000 in repairs to
the rusting exterior
stairs; $1,600 replace
corroded metal
exterior doors and
reseal same;
re-sealing and
caulking of the
windows, $30,000;
repair the damaged
exit stairwell doors
and replace inoperable
hardware and closers
in compliance with
code, 2 per floor,
$15,000; replace
penthouse roof vent,
$2,000.
- -----------------------------------------------------------------------------------------------------------------------------------
2777 Residence Inn Dedham MA $ 0 $ 52,650 Guestroom: carpet (limited
service) ($32,400)
Guestroom: soft goods
(limited service) ($20,250)
- -----------------------------------------------------------------------------------------------------------------------------------
1775 Holiday Inn Baltimore - MD $ 6,000 Immediate Needs: Seal, $ 0
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
BWI patch and layer asphalt
Airport cracks and depressions
in the parking lot
($6,000).
- -----------------------------------------------------------------------------------------------------------------------------------
1785 Holiday Inn Baltimore MD $ 26,400 Immediate Needs: $137,929 Sidewalk maintenance
West Replace 2, 12.5-ton in program ($845)
(Belmont) operable and failing Roof covering, built-up system
units serving the overlay (Commercial Building)
cocktail lounge, ($36,000)
restaurant and lobby Roof drainage, provide adequate
to maintain slope
temperature and (Buildings A & C) ($39,000)
climate control Gas distribution system ($1,500)
$20,000; Replace two Guestroom: soft goods ($11,333)
leaking water storage Commercial kitchen equipment
tanks, $6,400. ($3,500)
Commercial laundry: dryers
($18,000)
Commercial laundry: washers
($27,750)
- -----------------------------------------------------------------------------------------------------------------------------------
1765 Holiday Inn Baltimore, MD $ 0 $ 0
Inn Harbor
- -----------------------------------------------------------------------------------------------------------------------------------
1710 Hilton Columbia MD $ 30,000 Immediate Repair Needs $219,710 ADA Accessibility ($23,110)
are as follows: Asphalt pavement (seal coat
$10,000 in Mold over term) ($7,525)
remediation mentioned Curbing, concrete ($1,000)
above; Asphalt repair Compactor/coling tower enclosures,
$7,500; Repair of various ($4,000)
compactor/cooling Swimming pool equipment $0
tower pad and gas Level pre-cast concrete plank
floor joints ($3,000)
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
meter pad, $2,000; Roof covering, asphalt
Repair damaged shingles ($1,875)
sidewalk concrete, Exterior walls, caulking and
$2,000; Repair damaged sealants ($45,000)
face brink and Exterior walls, EIFS patch and
spalling concrete on repair $0
exterior walls, Exterior doors, hollow metal
$3,250, $1,500 in roof ($1,600)
and soffit repair in Common area floors, carpet
the pool area; and, ($41,400)
repair/replace leaking Common area walls, refinish $0
pipe for the hot water Cooling tower $0
distribution,$3,750. Heat pumps, air to air $0
Guestroom: carpet(full service)
($91,200)
- -----------------------------------------------------------------------------------------------------------------------------------
1776 Holiday Inn Frederick MD $ 0 Immediate Needs: $ 49,000 Concrete balconies ($1,000)
$2,000 to patch roof Elevator, machinery
leaks. ($48,000)
- -----------------------------------------------------------------------------------------------------------------------------------
1770 Holiday Inn Glen MD $ 53,500 Immediate Needs of $ 0
Burnie $53,000 are as
follows: Asphalt
repair, $2,500; repair
damaged concrete
pavement in service
area, $1,500; repair
damaged concrete
retaining wall,
$3,500; repair damaged
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
masonry retaining wall,
$2,000;
repair cracking and
spalling pool deck,
$1,000; and, replace
three rooftop package
units servicing the
common corridors, they
are currently
inoperable, $42,000.
- -----------------------------------------------------------------------------------------------------------------------------------
1720 Holiday Inn Silver MD $126,000 Two Chillers are down. $ 0
Spring Loss of 110T capacity,
needs replacement,
$121K. (mold concern).
Lodgian has a
temporary HVAC system
in place to provide
AC. Sprinkler heads
will need replacement.
Confirm that the
hydraulic elevator is
being repaired.
- -----------------------------------------------------------------------------------------------------------------------------------
1780 Holiday Inn Towson MD $ 6,800 Immediate Needs are as $ 0
(Cromwell follows: Asphalt
Bridge) repair $2,500; review
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
and repair subsidence
at drainage inlet
to prevent retaining
wall failure $3,500;
patch and repair
damaged EIFS at rear
overhang adjacent to
banquet room $800.
- -----------------------------------------------------------------------------------------------------------------------------------
3970 Holiday Inn Lansing MI $ 14,600 Immediate Needs are $ 65,000 Asphalt overlay ($65,000)
ADA upgrades of $2,100
and Asphalt repairs of
$12,500.
- -----------------------------------------------------------------------------------------------------------------------------------
3930 Hilton Troy MI $ 7,800 Immediate Needs $ 0
(Northfield) include ADA
accessibility $4,800;
and, $3,000 in roofing
repairs.
- -----------------------------------------------------------------------------------------------------------------------------------
1910 Holiday Inn Arden MN $ 15,000 ADA Upgrades to the $214,200 Lobby floors; carpet ($10,800)
Hills/St. Elevators totaling Common area floors; carpet
Paul $15,000 are the only ($45,000)
immediate needs. Meeting room floors; carpet
($27,000)
Restaurant/lounge floors;
carpet ($13,500)
Guestroom: carpet (limited
service)($62,400)
Guestroom: soft goods
(limited service) ($39,000)
Commercial laundry:
washers($16,500)
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- -----------------------------------------------------------------------------------------------------------------------------------
2222 Holiday Inn St. Louis MO $ 2,500 Preliminary inspection $ 0
North revealed cracks in the
balcony's that might
need review by a
structural engineer.
In addition the hotel
has a adjacent vacant
office building that
is used for storage.
Immediate Needs
$2,500 in structural
engineering review
of the A Building
balcony's.
- -----------------------------------------------------------------------------------------------------------------------------------
3311 Crowne Plaza Albany NY $ 3,600 Immediate Needs: $ 0
$1,600 in masonry and
concrete repair on an
exterior retaining
wall with visible
displacement and
cracks; $2,000 in
concrete repair on the
exterior stairs at the
loading dock area.
- -----------------------------------------------------------------------------------------------------------------------------------
3345 Holiday Inn Grand NY $ 4,000 Immediate Needs: $ 0
Island $4,000 in fencing
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- ------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- ------------------------------------------------------------------------------------------------------------------------------
repair/replacement
and fencing for
shored up fence
in the service
area; $1,000 in
soffit repair on
the mansard
roofing at the
pool area; and,
$500 in bathroom
vent repairs,
some bathroom
fans were not
working and led
to mold problems..
- ------------------------------------------------------------------------------------------------------------------------------
3330 Holiday Inn Jamestown NY $ 20,200 Immediate Repair $ 0
Needs: $12,500;
Concrete Entrance
Apron Repair,
$2,000; Sidewalk
Concrete Repair,
$1,000; Elevated
pedestrian
walkway skylight
leakage, $4,700.
- ------------------------------------------------------------------------------------------------------------------------------
3314 Holiday Inn Niagara NY $ 6,400 $ 151,730 Planters, brick ($1,500)
Select Falls Skylights ($4,000)
Window units, metal frame ($40,000)
Corridor area floors, carpet ($36,000)
Common area floors, carpet ($43,200)
- ------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- ----------------------------------------------------------------------------------------------------------------------------------
Commercial laundry: dryers ($27,030)
- ----------------------------------------------------------------------------------------------------------------------------------
3326 Four Points Niagara NY $ 0 Immediate Repairs: $ 0
Falls replacement and
repair of brick
pavers $3,500;
concrete stoop
adjacent to the
loading dock area
is in poor
condition with
cracking,
misalignment,
spalling and
missing handrails,
$1,200; and,
repair of spalling
concrete on the
loading dock $1,700.
- ----------------------------------------------------------------------------------------------------------------------------------
3515 Holiday Inn Strongsville OH $ 2,000 Immediate Needs $ 108,300 ADA Accessibility ($39,300)
Select are only $2,000 Commercial laundry: washers ($69,000)
for asphalt
repair work.
- ------------------------------------------------------------------------------------------------------------------------------------
3802 Holiday Inn Greentree PA $ 10,400 Immediate Needs: $ 0
$2,500 for
engineering
review of
spalling loading
dock
- ------------------------------------------------------------------------------------------------------------------------------------
3890 Holiday Inn Lancaster PA $ 17,500 Immediate Needs $ 79,000 Rooftop package unit per ton ($24,000)
are $17,500 in Commercial laundry: dryers ($25,000)
asphalt
- ------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- ------------------------------------------------------------------------------------------------------------------------------------
repair for Commercial laundry: washers ($30,000)
alligatored areas
in the parking lot.
- ------------------------------------------------------------------------------------------------------------------------------------
3838 Doubletree Philadelphia PA $ 4,000 EMG noted $4,000 of $ 0
Club Immediate Needs in
the form of roofing
repairs for the
mansard and
membrane roofing.
The Philadelphia
Building Department
has the following
building and fire
code violation on
file: Storm water
should be conducted
to the public storm
water system;
secure annual
electric permit;
submit annual fire
test records.
- ------------------------------------------------------------------------------------------------------------------------------------
3804 Holiday Inn Pittsburgh PA $ 12,900 Immediate Needs: $ 85,000 Epoxy traffic surface at roof of
(Pkwy East) ADA upgrades, garage area ($35,000)
$10,400 and a Repairs to underside of deck at
engineering review loading dock ($50,000)
of the spalling
concrete on the
underside of the
loading dock floor
structure ($2,500).
- ---------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- ---------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- ---------------------------------------------------------------------------------------------------------------------------------
3875 Holiday Inn York PA $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------------
4021 Clarion Charleston SC $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------------
4040 Holiday Inn Myrtle Beach SC $ 0 $ 614,540 Common area floors, carpet ($207,000)
SunSpree Rooftop package unit per ton ($5,040)
Boiler ($2,500)
Elevator, machinery ($400,000)
- ---------------------------------------------------------------------------------------------------------------------------------
4215 French Memphis TN $ 18,020 Immediate Needs: $ 0
Quarter ADA Deficiencies -
Suites One car and one
van stall with
signage $350,
Signage
indicating
accessible
parking spaces
$100, exterior
accessible route
from access
aisles adjacent
to parking
space, crossing
hazardous vehicle
areas, from
main roadways
and public
transportation
stops to the
building
sidewalks and
entrances $100,
Signage (4 signs)
indicating
accessible
- ------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- ------------------------------------------------------------------------------------------------------------------------------------
restrooms $100,
restroom
modifications
$1,370. ($2,020
in total ADA
Upgrades) There
are also a
number of PTAC
units that are
not in service.
Termite infested
meeting room
doors to be
replaced, $8,000.
Repair mold
damaged meeting
rooms, $8,000.
- ------------------------------------------------------------------------------------------------------------------------------------
4343 Courtyard Abilene TX $ 0 $ 96,300 Asphalt pavement (seal coat over term)
by Marriott ($5,250)
Guestroom: carpet (full service)
($29,700)
Guestroom: soft goods (full service)
($34,650)
Common area floors, carpet
($26,730)
- ------------------------------------------------------------------------------------------------------------------------------------
4375 Holiday Inn Austin TX $ 50,000 Repair Inoperable $ 0
irrigation system
allowance ($20,000),
Paint metal mansards
($25,000), Replace
tower coping ($5,000)
- ------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
CAPITAL IMPROVEMENT PLAN
REQUIRED CAPITAL IMPROVEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
IMMEDIATE
REPAIRS YR 1 REPAIRS
TO BE TO BE
COMPLETED COMPLETED
PROPERTY WITHIN 6 PRIOR TO FIRST
# CHAIN/NAME CITY STATE MONTHS PURPOSE ANNIVERSARY PURPOSE
- ------------------------------------------------------------------------------------------------------------------------------------
4388 Holiday Inn Dallas (DFW TX $ 0 $ 321,907 Asphalt pavement (seal coat over
Select Airport) term) ($14,875)
Curbing, concrete ($4,000)
Exterior walls, painting & coating
($112,800)
Common area floors, carpet ($30,600)
Common area floors, VCT ($1,350)
Common area walls, refinish ($51,000)
Public restroom finishes ($12,000)
Rooftop package unit per ton
($12,032)
Boilers - package unit ($32,000)
Elevator, cab interiors ($1,500)
Commercial laundry: dryers ($11,000)
Commercial laundry: washers ($11,250)
Ice machines ($2,500)
Meeting room: case goods & furniture
($25,000)
- ------------------------------------------------------------------------------------------------------------------------------------
4380 Holiday Inn Dallas (Mkt TX $ 40,000 Immediate Needs: $ 0
Center) Roof is leaking and
requires repair to
avoid further
interior damage to
the meeting rooms
and lobby areas
where water
intrusion was
evident, $40,000.
- ------------------------------------------------------------------------------------------------------------------------------------
4310 Crowne Plaza Houston TX $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------------------
Totals $1,892,534 $ 4,590,773
- ------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT B
ENVIRONMENTAL REPORTS
Exhibit B
Lodgian
Phase I and Phase II Environmental Reports and
Visible Mold and Moisture Assessments
Report Chain/Name City ST Address
- --------------------------------------------- --------------------- ----------------- -- ----------------------
EMG: Phase I Environmental Site Assessment of Hampton Inn Dothan AL 3071 Ross Clark Circle
EMG: Phase I Environmental Site Assessment of Holiday Inn West Dothan AL 3053 Ross Clark
EMG: Phase I Environmental Site Assessment of Holiday Inn Express Gadsden AL 801 Cleveland Ave.
EMG: Visible Mold and Moisture Assessment of Holiday Inn Express Gadsden AL 801 Cleveland Ave.
EMG: Phase I Environmental Site Assessment of Holiday Inn Sheffield AL 4900 Halch Blvd.
EMG: Phase I Environmental Site Assessment of Courtyard by Marriott Bentonville AR 1001 McClain Rd.
EMG: Phase I Environmental Site Assessment of Residence Inn Little Rock AR 1401 S. Shackleford Rd.
EMG: Phase I Environmental Site Assessment of Holiday Inn East Hartford CT 363 Roberts St.
EMG: Phase I Environmental Site Assessment of Hampton Inn Pensacola FL 7330 Plantation Rd.
EMG: Phase I Environmental Site Assessment of Holiday Inn Express Pensacola FL 6501 Pensacola Blvd.
EMG: Phase I Environmental Site Assessment of Holiday Inn Pensacola FL 7200 Plantation Rd.
(University Mail)
EMG: Phase I Environmental Site Assessment of Crowne Plaza West Palm Beach FL 1601 Belvedere Rd.
EMG: Phase I Environmental Site Assessment of Holiday Inn Winter Haven FL 1150 3rd St., SW
EMG: Phase I Environmental Site Assessment of Courtyard by Marriott Atlanta GA 3332 Peachtree Rd.
EMG: Phase I Environmental Site Assessment of Holiday Inn Brunswick GA 5252 New Jesup Hwy
EMG: Phase I Environmental Site Assessment of Holiday Inn Marietta (hotel & GA 2265 Kingston Cl.
suites)
EMG: Phase I Environmental Site Assessment of Fairfield Inn Valdosta GA 1311 St. Augustine Rd.
EMG: Phase I Environmental Site Assessment of Holiday Inn Valdosta GA 1309 St. Augustine Rd.
EMG: Phase I Environmental Site Assessment of Crowne Plaza Cedar Rapids IA 350 1st Ave, NE
EMG: Phase I Environmental Site Assessment of Holiday Inn Rolling Meadows IL 3405 Algonquin Rd.
EMG: Phase I Environmental Site Assessment of Courtyard by Marriott Florence KY 46 Cavaler Blvd.
EMG: Phase I Environmental Site Assessment of Hurstbourne Hotel Louisville KY 9700 Blue Grass Parkway
EMG: Phase I Environmental Site Assessment of Courtyard by Marriott Paducah KY 3835 Technology Dr.
EMG: Phase I Environmental Site Assessment of Quality Hotel Metairie LA 2261 N. Causeway Blvd.
EMG: Visible Mold and Moisture Assessment of Quality Hotel Metairie LA 2261 N. Causeway Blvd.
EMG: Phase I Environmental Site Assessment of Residence Inn Dedham MA 259 Elm St.
EMG: Phase I Environmental Site Assessment of Holiday Inn Baltimore - BWI MD 890 Elkrdge Landing Rd.
Airport
EMG: Phase I Environmental Site Assessment of Holiday Inn Baltimore West MD 1800 Belmont Ave.
(Belmont)
EMG: Phase I Environmental Site Assessment of Holiday Inn Baltimore, Inn MD 301 W. Lombard St.
Harbor
EMG: Phase I Environmental Site Assessment of Hilton Columbia MD 5485 Twin Knolls Rd.
EMG: Phase I Environmental Site Assessment of Holiday Inn Frederick MD 999 W. Patrick St.
EMG Project
Report Chain/Name City/ST/Zip Dated Number
- --------------------------------------------- --------------------- -------------------------- --------------- -------
EMG: Phase I Environmental Site Assessment of Hampton Inn Dothan, AL 36301 August 16, 2002 94677
EMG: Phase I Environmental Site Assessment of Holiday Inn West Dothan, AL 36301 August 15, 2002 94679
EMG: Phase I Environmental Site Assessment of Holiday Inn Express Gadsden, AL 35954 August 15, 2002 94681
EMG: Visible Mold and Moisture Assessment of Holiday Inn Express Gadsden, AL 35954 October 22, 2002 97020
EMG: Phase I Environmental Site Assessment of Holiday Inn Sheffield, AL 35660 August 15, 2002 94683
EMG: Phase I Environmental Site Assessment of Courtyard by Marriott Bentonville, AR 72712 August 15, 2002 94685
EMG: Phase I Environmental Site Assessment of Residence Inn Little Rock, AR 72211 August 15, 2002 94687
EMG: Phase I Environmental Site Assessment of Holiday Inn E. Hartford, CT 06108 October 24, 2002 94691
EMG: Phase I Environmental Site Assessment of Hampton Inn Pensacola, FL 32504 August 17, 2002 94697
EMG: Phase I Environmental Site Assessment of Holiday Inn Express Pensacola, FL 32505 August 15, 2002 94699
EMG: Phase I Environmental Site Assessment of Holiday Inn Pensacola, FL 32504
August 15, 2002 94701
EMG: Phase I Environmental Site Assessment of Crowne Plaza West Palm Beach, FL 33406 August 15, 2002 94704
EMG: Phase I Environmental Site Assessment of Holiday Inn Winter Haven, FL 33830 August 20, 2002 94706
EMG: Phase I Environmental Site Assessment of Courtyard by Marriott Atlanta, GA 30326 August 15, 2002 94708
EMG: Phase I Environmental Site Assessment of Holiday Inn Brunswick, GA 31525 August 15, 2002 94712
EMG: Phase I Environmental Site Assessment of Holiday Inn Marietta, GA 30067 August 15, 2002 94718
EMG: Phase I Environmental Site Assessment of Fairfield Inn Valdosta, GA 31601 August 15, 2002 94722
EMG: Phase I Environmental Site Assessment of Holiday Inn Valdosta, GA 31601 August 15, 2002 94720
EMG: Phase I Environmental Site Assessment of Crowne Plaza Cedar Rapids, IA 52401 August 15, 2002 94724
EMG: Phase I Environmental Site Assessment of Holiday Inn Rolling Meadows, IL 60008 November5, 2002 94728
EMG: Phase I Environmental Site Assessment of Courtyard by Marriott Florence, KY 41042 August 19, 2002 94730
EMG: Phase I Environmental Site Assessment of Hurstbourne Hotel Louisvile, KY 40299 August 15, 2002 94735
EMG: Phase I Environmental Site Assessment of Courtyard by Marriott Paducah, KY 42001 August 15, 2002 94739
EMG: Phase I Environmental Site Assessment of Quality Hotel Metairie, LA 70001 August 15, 2002 94741
EMG: Visible Mold and Moisture Assessment of Quality Hotel Metairie, LA 70001 22-Oct-02 97022
EMG: Phase I Environmental Site Assessment of Residence Inn Dedham, MA 02026 August 16, 2002 94745
EMG: Phase I Environmental Site Assessment of Holiday Inn Linthicum Heights,MD 21090 August 16, 2002 94748
EMG: Phase I Environmental Site Assessment of Holiday Inn Baltimore, MD 21244
EMG: Phase I Environmental Site Assessment of Holiday Inn August 15, 2002 94750
EMG: Phase I Environmental Site Assessment of Hilton Baltimore, MD 21201 August 15, 2002 94752
EMG: Phase I Environmental Site Assessment of Holiday Inn Columbia, MD 21045 August 15, 2002 94755
Frederick, MD 21702 August 15, 2002 94759
EMG: Phase I Environmental Site Assessment of Holiday Inn Glen Burnie MD 6323 Governor Ritchie Hwy
EMG: Phase I Environmental Site Assessment of Holiday Inn Silver Spring MD 8777 Georgia Ave.
EMG: Phase I Environmental Site Assessment of Holiday Inn Towson (Cromwell MD 1100 Cromwell Bridge Rd.
Bridge)
EMG: Phase I Environmental Site Assessment of Holiday Inn Lansing MI 7501 W. Saginaw Hwy
EMG: Phase I Environmental Site Assessment of Hilton Troy (Northfield) MI 5500 Crooks Rd.
EMG: Phase I Environmental Site Assessment of Holiday Inn Arden Hills/St. Paul MN 1201 West Country Rd. E
EMG: Phase I Environmental Site Assessment of Holiday Inn St. Louis North MO 4545 N. Lindbergh Blvd.
EMG: Phase I Environmental Site Assessment of Crowne Plaza Albany NY Ten Eyck Flaza
EMG: Phase I Environmental Site Assessment of Holiday Inn Grand Island NY 100 Whitehaven Rd.
EMG: Phase I Environmental Site Assessment of Holiday Inn Jamestown NY 150 W. 4th St.
EMG: Phase II Environmental Site Assessment of Holiday Inn Jamestown NY 150 W. 4th St.
EMG: Phase I Environmental Site Assessment of Four Points Niagara Falls NY 114 Buffalo Ave.
EMG: Phase I Environmental Site Assessment of Holiday Inn Select Niagara Falls NY 300 Third st.
EMG: Phase I Environmental Site Assessment of Holiday Inn Select Strongsville OH 15471 Royalton Rd.
EMG: Phase I Environmental Site Assessment of Holiday Inn Select Windsor ONT 1855 Huron Church Road
EMG: Phase I Environmental Site Assessment of Holiday Inn Greentree PA 401 Holiday Drive
EMG: Phase I Environmental Site Assessment of Holiday Inn Lancaster PA 521 Greenfield Rd.
EMG: Phase I Environmental Site Assessment of Doubletree Club Philadelphia PA 9461 Roosavelt Blvd.
EMG: Phase I Environmental Site Assessment of Holiday Inn Pittsburgh (Pkwy PA 915 Brinton Rd.
East)
EMG: Phase II Environmental Site Assessment of Holiday Inn Pittsburgh (Pkwy PA 915 Brinton Rd.
East)
EMG: Phase I Environmental Site Assessment of Holiday Inn York PA 334 Arsenal Rd.
EMG: Phase I Environmental Site Assessment of Clarton North Charleston SC 7401 Northwoods Blvd.
EMG: Visible Mold and Molslure Assessment of Clarton North Charleston SC 7401 Northwoods Blvd.
EMG: Phase I Environmental Site Assessment of Holiday Inn SunSpree Myrtle Beach SC 1601 N. Ocean Blvd.
EMG: Phase I Environmental Site Assessment of French Quarter Suites Memphis TN 2144 Madison Ave.
EMG: Visible Mold and Moisture Assessment of French Quarter Suites Memphis TN 2144 Madison Ave.
EMG: Phase I Environmental Site Assessment of Courtyard by Marriott Abllene TX 4350 Ridgemont Dr.
EMG: Phase I Environmental Site Assessment of Holiday Inn Austin TX 3401 South 1-35
EMG: Phase I Environmental Site Assessment of Holiday Inn Select Dallas (DFW Airport) TX 4441 Hwy 114 & Esters Blvd.
EMG: Phase I Environmental Site Assessment of Holiday Inn Dallas (Mkt Center) TX 1955 Market Center Blvd.
EMG: Phase I Environmental Site Assessment of Crowne Plaza Houston TX 12801 NW Freeway US 290
EMG: Phase I Environmental Site Assessment of Holiday Inn Glen Burrie, MD 21061
August 15, 2002 94761
EMG: Phase I Environmental Site Assessment of Holiday Inn Silver Spring, MD 20910 August 15, 2002 94763
EMG: Phase I Environmental Site Assessment of Holiday Inn Towson, Md 21286
August 15, 2002 94765
EMG: Phase I Environmental Site Assessment of Holiday Inn Lansing, MI 48917 August 15, 2002 94767
EMG: Phase I Environmental Site Assessment of Hilton Troy, MI 48098 August 19, 2002 94770
EMG: Phase I Environmental Site Assessment of Holiday Inn St. Paul, MN 55112 August 20, 2002 94772
EMG: Phase I Environmental Site Assessment of Holiday Inn St. Louis, MO 63044 August 15, 2002 94774
EMG: Phase I Environmental Site Assessment of Crowne Plaza Albany, NY 12207 August 15, 2002 94776
EMG: Phase I Environmental Site Assessment of Holiday Inn Grand Island, NY 14072 August 15, 2002 94778
EMG: Phase I Environmental Site Assessment of Holiday Inn Jamestown, NY 14701 August 15, 2002 94781
EMG: Phase II Environmental Site Assessment of Holiday Inn Jamestown, NY 14701 October 17, 2002 97025
EMG: Phase I Environmental Site Assessment of Four Points Niagara Falls, NY 14303 August 15, 2002 94785
EMG: Phase I Environmental Site Assessment of Holiday Inn Select Niagara Falls, NY 14303 August 15, 2002 94783
EMG: Phase I Environmental Site Assessment of Holiday Inn Select Strongsville, OH 44136 August 15, 2002 94787
EMG: Phase I Environmental Site Assessment of Holiday Inn Select Canada N9C 2L6
August 15, 2002 94789
EMG: Phase I Environmental Site Assessment of Holiday Inn Pittsburgh, PA 15220 August 15, 2002 94791
EMG: Phase I Environmental Site Assessment of Holiday Inn Lancaster, PA 17601 August 15, 2002 94793
EMG: Phase I Environmental Site Assessment of Doubletree Club Philadelphia, PA 19114 August 15, 2002 94795
EMG: Phase I Environmental Site Assessment of Holiday Inn Pittsburgh, PA 15221 August 15, 2002 94797
EMG: Phase II Environmental Site Assessment of Holiday Inn Pittsburgh, PA 15221 October 21, 2002 97024
EMG: Phase I Environmental Site Assessment of Holiday Inn York, PA 17402 August 15, 2002 94799
EMG: Phase I Environmental Site Assessment of Clarton Charleston SC 29406 August 15, 2002 94801
EMG: Visible Mold and Moisture Assessment of Clarton Charleston, SC 29406 October 22, 2002 97023
EMG: Phase I Environmental Site Assessment of Holiday Inn SunSpree Surfside Beach, SC 29575 August 22, 2002 94803
EMG: Phase I Environmental Site Assessment of French Quarter Suites Memphis, TN 38104 August 15, 2002 94805
EMG: Visible Mold and Moisture Assessment of French Quarter Suites Memphis, TN 38104 October 22, 2002 97021
EMG: Phase I Environmental Site Assessment of Courtyard by Marriott Abllene, TX 79606 August 15, 2002 94812
EMG: Phase I Environmental Site Assessment of Holiday Inn Austin, TX 78741 August 20, 2002 94814
EMG: Phase I Environmental Site Assessment of Holiday Inn Select Irving, TX 75063
August 15, 2002 94817
EMG: Phase I Environmental Site Assessment of Holiday Inn Dallas, TX 75207 August 15, 2002 94822
EMG: Phase I Environmental Site Assessment of Crowne Plaza Houston, TX 77040
August 15, 2002 94824
EXHIBIT C
FRANCHISE AGREEMENTS
PROPERTY NAME STATE FRANCHISOR
- --------------------------------------------------------------------------------------------
Clarion Charleston SC Choice
Quality Hotel Metairie LA Choice
Doubletree Club Philadelphia PA Hilton
Hampton Inn Dothan AL
Hampton Inn Pensacola FL
Hilton Inn Columbia MD Hilton
Hilton Inn Northfield MI Hilton
Courtyard by Marriott - Abilene TX Marriott
Courtyard by Marriott - Atlanta GA Marriott
Courtyard by Marriott - Bentonville AR Marriott
Courtyard by Marriott - Florence KY Marriott
Courtyard by Marriott - Paducah KY Marriott
Fairfield Inn Valdosta GA Marriott
Residence Inn Dedham MA Marriott
Residence Inn Little Rock AR Marriott
Crowne Plaza Albany NY Six Continents
Crowne Plaza Cedar Rapids IA Six Continents
Crowne Plaza Houston TX Six Continents
Crowne Plaza West Palm Beach FL Six Continents
Holiday Inn Arden Hills/St. Paul MN Six Continents
Holiday Inn Austin TX Six Continents
Holiday Inn Belmont MD Six Continents
Holiday Inn Brunswick GA Six Continents
Holiday Inn BWI Airport MD Six Continents
Holiday Inn Cromwell Bridge MD Six Continents
Holiday Inn Dothan AL Six Continents
Holiday Inn East Hartford CT Six Continents
Holiday Inn Express Gadsden AL Six Continents
Holiday Inn Express Pensacola FL Six Continents
Holiday Inn Frederick MD Six Continents
Holiday Inn Glen Burnie North MD Six Continents
Holiday Inn Grand Island NY Six Continents
Holiday Inn Greentree PA Six Continents
Holiday Inn Hotel & Suites Marietta GA Six Continents
Holiday Inn Inner Harbor MD Six Continents
Holiday Inn Jamestown NY Six Continents
Holiday Inn Lancaster PA Six Continents
Holiday Inn Market Center Dallas TX Six Continents
Holiday Inn Parkway East PA Six Continents
Holiday Inn Rolling Meadows IL Six Continents
Holiday Inn Select DFW Airport TX Six Continents
Holiday Inn Select Niagara Falls NY Six Continents
Holiday Inn Select Strongsville OH Six Continents
Holiday Inn Sheffield AL Six Continents
Holiday Inn Silver Spring MD Six Continents
Holiday Inn St. Louis North MO Six Continents
Holiday Inn Sunspree Myrtle Beach SC Six Continents
Holiday Inn University Mall FL Six Continents
Holiday Inn Valdosta GA Six Continents
Holiday Inn West Lansing MI Six Continents
Holiday Inn Winter Haven FL Six Continents
Holiday Inn York PA Six Continents
Four Points Niagara Falls NY Starwood
French Quarter Suites Memphis TN
Hurtsbourne Hotel KY
EXHIBIT D
LODGIAN: ALA SCHEDULE
ALA
-----------------------------------
ALLOCATED AGGREGATE
LOAN ALLOCATED
No. Hotel Location State Rms AMOUNT LOAN AMOUNT
- -------------------------- ------------------------ ----- ---- ------------- -------------
1 Holiday Inn Baltimore - Inner Harbor MD 375 $ 17,363,078 $ 23,359,709
2 Crowne Plaza Albany NY 384 $ 12,983,512 $ 17,467,585
3 Holiday Inn Silver Spring MD 231 $ 12,442,532 $ 16,739,769
4 Holiday Inn Baltimore - BWI Airport MD 259 $ 12,101,539 $ 16,281,009
5 Crowne Plaza Houston TX 291 $ 11,049,232 $ 14,865,269
6 Courtyard by Marriott Atlanta GA 181 $ 9,930,047 $ 13,359,555
7 Holiday Inn Lansing MI 244 $ 6,945,221 $ 9,343,883
8 Doubletree Club Philadelphia PA 282 $ 6,785,620 $ 9,092,823
9 Holiday Inn Select Dallas (DFW Airport) TX 189 $ 6,313,847 $ 8,494,440
10 Hilton Troy (Northfield) MI 191 $ 5,950,776 $ 8,005,977
11 Hilton Columbia MD 152 $ 5,787,693 $ 7,786,570
12 Residence Inn Dedham MA 219 $ 5,261,539 $ 7,078,700
13 Holiday Inn Select Strongsville OH 304 $ 5,261,539 $ 7,078,700
14 Crowne Plaza West Palm Beach FL 81 $ 5,261,539 $ 7,078,700
15 Holiday Inn Rolling Meadows IL 420 $ 4,945,847 $ 6,653,978
16 Courtyard by Marriott Bentonville AR 392 $ 4,209,231 $ 5,662,960
17 Holiday Inn St. Louis North MO 90 $ 4,209,231 $ 5,662,960
18 Holiday Inn Select Niagara Falls NY 397 $ 3,946,154 $ 5,309,025
19 Holiday Inn Greentree PA 200 $ 3,788,308 $ 5,096,664
20 Crowne Plaza Cedar Rapids IA 275 $ 3,788,308 $ 5,096,664
21 Holiday Inn Towson (Cromwell Bridge) MD 139 $ 3,683,077 $ 4,955,090
22 Holiday Inn Arden Hills/St. Paul MN 156 $ 3,630,462 $ 4,884,303
23 Holiday Inn Winter Haven FL 228 $ 3,577,846 $ 4,813,516
24 Residence Inn Little Rock AR 96 $ 3,367,385 $ 4,530,368
25 Courtyard by Marriott Abilene TX 99 $ 3,104,308 $ 4,176,400
26 Hampton Inn Pensacola FL 124 $ 3,081,264 $ 4,145,430
27 Courtyard by Marriott Paducah KY 100 $ 2,999,077 $ 4,034,859
28 Holiday Inn SunSpree Myrtle Beach SC 133 $ 2,946,462 $ 3,964,072
29 Holiday Inn Austin TX 210 $ 2,841,231 $ 3,822,498
30 Holiday Inn Jamestown NY 146 $ 2,841,231 $ 3,822,498
31 Holiday Inn Glen Burnie MD 127 $ 2,788,616 $ 3,751,711
32 Holiday Inn Frederick MD 158 $ 2,683,385 $ 3,610,137
33 Holiday Inn Lancaster PA 189 $ 2,683,385 $ 3,610,137
34 Holiday Inn Pensacola (University Mall) FL 152 $ 2,630,769 $ 3,539,350
35 Fairfield Inn Valdosta GA 108 $ 2,630,769 $ 3,539,350
36 Holiday Inn Sheffield AL 201 $ 2,262,462 $ 3,043,841
37 Hurstbourne Hotel Louisville KY 398 $ 2,054,176 $ 2,763,620
38 Holiday Inn Brunswick GA 126 $ 2,052,000 $ 2,760,693
39 Courtyard by Marriott Florence KY 78 $ 1,999,385 $ 2,689,906
40 Quality Hotel Metairie LA 205 $ 1,946,769 $ 2,619,119
41 Holiday Inn York PA 100 $ 1,946,769 $ 2,619,119
42 Holiday Inn Valdosta GA 167 $ 1,736,308 $ 2,335,971
43 Holiday Inn East Hartford CT 130 $ 1,736,308 $ 2,335,971
44 Hampton Inn Dothan AL 113 $ 1,633,978 $ 2,198,299
45 Holiday Inn Express Pensacola FL 214 $ 1,631,077 $ 2,194,397
46 French Quarter Suites Memphis TN 105 $ 1,516,177 $ 2,039,815
47 Holiday Inn Pittsburgh (Pkwy East) PA 180 $ 1,420,615 $ 1,911,249
48 Four Points Niagara Falls NY 189 $ 1,315,385 $ 1,769,675
49 Holiday Inn Baltimore West (Belmont) MD 135 $ 1,262,769 $ 1,698,888
50 Holiday Inn Express Gadsden AL 141 $ 1,262,769 $ 1,698,888
51 Holiday Inn Marietta (hotel & suites) GA 196 $ 1,157,539 $ 1,557,314
52 Holiday Inn Select Dallas (Mkt Center) TX 246 $ 1,052,308 $ 1,415,740
53 Clarion Charleston SC 197 $ 894,462 $ 1,203,379
54 Holiday Inn Grand Island NY 261 $ 684,000 $ 920,231
55 Holiday Inn Dothan AL 102 $ 684,000 $ 920,231
Total 10,806 $ 224,036,325 $ 302,707,526
EXHIBIT E
MANAGEMENT AGREEMENTS
1. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Albany Hotel, Inc. as owner, re:
Crowne Plaza, Albany, NY.
2. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and AMI Operating Partners, Limited
Partnership, as owner, re: Holiday Inn, East Hartford, CT.
3. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and AMI Operating Partners, Limited
Partnership, as owner, re: Holiday Inn, Fredrick, MD.
4. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and AMI Operating Partners, Limited
Partnership, as owner, re; Holiday Inn, Cromwell Bridge, MD.
5. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and AMI Operating Partners, Limited
Partnership, as owner, re: Holiday Inn, Belmont, MD.
6. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and AMI Operating Partners, Limited
Partnership, as owner, re: Holiday Inn, York, PA.
7. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Apico Hills, Inc., as owner, re:
Holiday Inn, Pittsburgh, PA.
8. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Apico Inns of Green Tree, Inc., as
owner, re: Holiday Inn Green Tree, Pittsburgh, PA.
9. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Brunswick Motel Enterprises, Inc., as
owner, re: Holiday Inn, Brunswick, GA.
10. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Dedham Lodging Associates I, Limited
Partnership, as owner, re: Residence Inn, Dedham, MA.
11. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Dothan Hospitality 3053, Inc., as
owner, re: Holiday Inn, Dothan, AL.
12. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Dothan Hospitality 3071, Inc., as
owner, re: Hampton Inn, Dothan, AL.
13. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Gadsden Hospitality, Inc., as owner,
re: Holiday Inn Express, Gadsden, AL.
14. Management Agreement, dated November 12, 2002 between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
Courtyard by Marriott, Atlanta, GA.
15. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
Courtyard by Marriott, Abilene TX.
16. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
Courtyard by Marriott, Florence, KY.
17. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
Courtyard by Marriott, Bentonville, AR.
18. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
DoubleTree Club, Philadelphia, PA.
19. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
The Hurtsbourne Hotel, Louisville, KY.
20. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
Fairfield Inn, Valdosta, GA.
21. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
Holiday Inn, Valdosta, GA.
22. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
Holiday Inn Select, Dallas/Fort Worth Airport, TX.
23. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
Holiday Inn, North St. Louis, MO.
24. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
Holiday Inn, Surfside Beach, SC.
25. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
Holiday Inn Select, Strongsville OH.
26. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
Holiday Inn Suites, Marieeta, GA.
27. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Impac Hotels I, L.L.C., as owner, re:
Courtyard by Marriott, Paducah, KY.
-2-
28. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Little Rock Lodging Associates I,
Limited Partnership, as owner, re: Residence Inn, Little Rock, AR.
29. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Lodgian AMI, Inc., as owner, re:
Holiday Inn, Inner Harbor, Baltimore, MD.
30. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Lodgian AMI, Inc., as owner, re:
Holiday Inn, Glen Burnie, MD.
31. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Lodgian AMI, Inc., as owner, re:
Holiday Inn, BWI Airport, Baltimore, MD.
32. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Lodgian AMI, Inc., as owner, re:
Holiday Inn, Lancaster, PA.
33. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Minneapolis Motel Enterprises, Inc.,
as owner, re: Holiday Inn, St. Paul, MN.
34. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and NH Motel Enterprises, Inc., as owner,
re: Hilton Norfield, Troy, MI.
35. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Cedar Rapids, Inc., as owner,
re: Crowne Plaza, Cedar Rapids, IA.
36. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Centre Associates, Ltd., as
owner, re: Crowne Plaza, West Palm Beach, FL.
37. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Grand Island, Inc., as owner,
re: Holiday Inn, Grand Island, NY.
38. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Jamestown, Inc., as owner,
re: Holiday Inn, Jamestown, NY.
39. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Lansing, Inc., as owner, re:
Holiday Inn, Lansing, MI.
40. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Maryland, Inc., as owner, re:
Holiday Inn, Silver Springs, MD.
41. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Metairie, Inc., as owner, re:
Quality Hotel, Metaire, LA.
-3-
42. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico New York, Inc., as owner, re:
Holiday Inn Select, Niagara Falls, NY.
43. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Niagara Falls, as owner, re:
Four Points Sheraton, Niagara Falls, NY.
44. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Northwoods, Inc., as owner,
re: Clarion Hotel, Charleston, SC.
45. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Pensacola 7200, Inc., as
owner, re: Holiday Inn, Pensacola, FL.
46. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Pensacola 7330, Inc., as
owner, re: Hampton Inn, Pensacola, FL.
47. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Pensacola, Inc., as owner,
re: Holiday Inn Express, Pensacola, FL.
48. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Rolling Meadows, Inc., as
owner, re: Holiday Inn, Rolling Meadows, IL.
49. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Winter Haven, Inc., as owner,
re: Holiday Inn, Winter Haven, FL.
50. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Sheffield Motel Enterprises, Inc., as
owner, re: Holiday Inn, Sheffield, AL.
51. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Austin, Inc., as owner, re:
Holiday Inn, Austin, TX.
52. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Columbia, Inc., as owner, re:
Hilton, Columbia, MD.
53. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Houston, Inc., as owner, re:
Crowne Plaza, Houston, TX.
54. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Servico Market Center, Inc., as
owner, re: Holiday Inn, Dallas, TX.
55. Management Agreement, dated November 12, 2002, between Lodgian
Management Corp., as manager, and Lodgian Memphis Property Owner, LLC,
as owner, re: French Quarter Suites, Memphis, TN.
-4-
EXHIBIT F
LODGIAN
CHAIN/NAME CITY ST ADDRESS CITY/ST/ZIP
- --------------------- -------------------------- -- ---------------------- ---------------------------
Hampton Inn Dothan AL 3071 Ross Clark Circle Dothan, AL 36301
Holiday Inn West Dothan AL 3053 Ross Clark Dothan, AL 36301
Holiday Inn Express Gadsden AL 801 Cleveland Ave. Gadsden, AL 35954
Holiday Inn Sheffield AL 4900 Hatch Blvd. Sheffield, AL 35660
Courtyard by Marriott Bentonville AR 1001 McClain Rd. Bentonville, AR 72712
Residence Inn Little Rock AR 1401 S. Shackleford Rd. Little Rock, AR 72211
Holiday Inn East Hartford CT 363 Roberts St. E. Hartford, CT 06108
Hampton Inn Pensacola FL 7330 Plantation Rd. Pensacola, FL 32504
Holiday Inn Express Pensacola FL 6501 Pensacola Blvd. Pensacola, FL 32505
Holiday Inn Pensacola (University Mall) FL 7200 Plantation Rd. Pensacola, FL 32504
Crowne Plaza West Palm Beach FL 1601 Belvedere Rd. West Palm Beach, FL 33406
Holiday Inn Winter Haven FL 1150 3rd St., SW Winter Haven, FL 33880
Courtyard by Marriott Atlanta GA 3332 Peachtree Rd. Atlanta, GA 30326
Holiday Inn Brunswick GA 5252 New Jesup Hwy Brunswick, GA 31525
Holiday Inn Marietta (hotel & suites) GA 2265 Kingston Ct. Marietta, GA 30067
Fairfield Inn Valdosta GA 1311 St. Augustine Rd. Valdosta, GA 31601
Holiday Inn Valdosta GA 1309 St. Augustine Rd. Valdosta, GA 31601
Crowne Plaza Cedar Rapids IA 350 1st Ave, NE Cedar Rapids, IA 52401
Holiday Inn Rolling Meadows IL 3405 Algonquin Rd. Rolling Meadows, IL 60008
Courtyard by Marriott Florence KY 46 Cavalier Blvd. Florence, KY 41042
Hurstbourne Hotel Louisville KY 9700 Blue Grass Parkway Louisville, KY 40299
Courtyard by Marriott Paducah KY 3835 Technology Dr. Paducah, KY 42001
Quality Hotel Metairie LA 2261 N. Causeway Blvd. Metairie, LA 70001
Residence Inn Dedham MA 259 Elm St. Dedham, MA 02026
Holiday Inn Baltimore - BWI Airport MD 890 Elkridge Landing Rd. Linthicum Heights, MD 21090
Holiday Inn Baltimore West (Belmont) MD 1800 Belmont Ave. Baltimore, MD 21244
Holiday Inn Baltimore, Inn Harbor MD 301 W. Lombard St. Baltimore, MD 21201
Hilton Columbia MD 5485 Twin Knolls Rd. Columbia, MD 21045
Holiday Inn Frederick MD 999 W. Patrick St. Frederick, MD 21702
Holiday Inn Glen Burnie MD 6323 Governor Ritchie Hwy Glen Burnie, MD 21061
Holiday Inn Silver Spring MD 8777 Georgia Ave. Silver Spring, MD 20910
Holiday Inn Towson (Cromwell Bridge) MD 1100 Cromwell Bridge Rd. Towson, MD 21286
Holiday Inn Lansing MI 7501 W. Saginaw Hwy Lansing, MI 48917
Hilton Troy (Northfield) MI 5500 Crooks Rd. Troy, MI 48098
EXHIBIT F
Holiday Inn Arden Hills/St. Paul MN 1201 West Country Rd. E St. Paul, MN 55112
Holiday Inn St. Louis North MO 4545 N. Lindbergh Blvd. St. Louis, MO 63044
Crowne Plaza Albany NY Ten Eyck Plaza Albany, NY 12207
Holiday Inn Grand Island NY 100 Whitehaven Rd. Grand Island, NY 14072
Holiday Inn Jamestown NY 150 W. 4th St. Jamestown, NY 14701
Four Points Niagara Falls NY 114 Buffalo Ave. Niagara Falls, NY 14303
Holiday Inn Select Niagara Falls NY 300 Third St. Niagara Falls, NY 14303
Holiday Inn Select Strongsville OH 15471 Royalton Rd. Strongsville, OH 44136
Holiday Inn Greentree PA 401 Holiday Drive Pittsburgh, PA 15220
Holiday Inn Lancaster PA 521 Greenfield Rd. Lancaster, PA 17601
Doubletree Club Philadelphia PA 9461 Roosevelt Blvd. Philadelphia, PA 19114
Holiday Inn Pittsburgh (Pkwy East) PA 915 Brinton Rd. Pittsburgh, PA 15221
Holiday Inn York PA 334 Arsenal Rd. York, PA 17402
Clarion North Charleston SC 7401 Northwoods Blvd. Charleston, SC 29406
Holiday Inn SunSpree Myrtle Beach SC 1601 N. Ocean Blvd. Surfside Beach, SC 29575
French Quarter Suites Memphis TN 2144 Madison Ave. Memphis, TN 38104
Courtyard by Marriott Abilene TX 4350 Ridgemont Dr. Abilene, TX 79606
Holiday Inn Austin TX 3401 South I-35 Austin, TX 78741
Holiday Inn Select Dallas (DFW Airport) TX 4441 Hwy 114 & Irving, TX 75063
Esters Blvd.
Holiday Inn Dallas (Mkt Center) TX 1955 Market Center Blvd. Dallas, TX 75207
Crowne Plaza Houston TX 12801 NW Freeway US 290 Houston, TX 77040
EXHIBIT G
Property Improvement Plans
Clarion Hotel Charleston, SC
Hilton Hotel Troy (Northfield), MI
Hilton Hotel Columbia, MD
Doubletree Club Hotel Philadelphia, PA
Holiday Inn Sheffield, AL
PROPERTY IMPROVEMENT PLAN
CLARION HOTEL
CHARLESTON, SC
SC237
CLARION HOTEL
ADDENDUM NO.1
The Franchise Agreement ( "Agreement ") of even date between Choice
Hotels International, Inc., a Delaware corporation ( "we" or "us") and SERVICO
NORTHWOODS INC., a Florida corporation, TOM GRYBOSKI, Individually, jointly and
severally ( "you") is amended by the following:
1. You agree to make the following changes and additions to
upgrade the Hotel to meet our standards or to cure existing deficiencies before
entering the CLARION HOTEL System, BUT IN NO EVENT LATER THAN SEPTEMBER 15,
2000. You may not use the proprietary marks until we authorize you to do so.
(a) replace informational/ directional signage package
(b) provide minimally 4 Guest Privileges "upgrade" type rooms.
(c) install towel rack at all guest bath room vanity's
(d) replace all damaged guest bath room ceiling grids and tiles in atrium
rooms.
(e) install Clarion Sleeper by SERTA bedding in 50% of guest rooms
(f) replace all guest room door signage, numbers, to a more contemporary
design
(g) paint guest room entry doors
(h) install a microwave oven in all Clarion Class Leisure rooms.
(i) install refrigerators in all Clarion Leisure and Business Class rooms.
All refrigerators are to be placed in enclosed cabinet.
(j) renovate and equip no less than 20% of available room inventory as
Clarion Class Leisure Rooms.
(k) renovate and equip no less than 35% of available room inventory as
Clarion Class Business rooms. These must include the Class One Business
Station per the Clarion rules & regulations.
(l) replace damaged luggage carts
(m) replace all desk chairs not meeting Clarion minimum specifications.
Desk chairs must have a fully upholstered seat and back
(n) repaint all damaged restaurant and lounge furniture (in Atrium)
(o) paint all railings (interior and exterior)
(p) install full sized irons and ironing boards in all guestrooms
(q) install a hair dryer (minimum heat output of 1500 watts) in all
guestrooms
(r) install telephone data ports in all guest rooms
Addendum No. 1
Page 2
(s) install required furniture at pool, to include, but not limited to
umbrella tables with chairs, chaise lounges and suntan lounges per the
Clarion minimum specifications.
(t) repair pool fence and gate(s). Pool gates must be self closing and
self locking.
(u) replace damaged wall vinyl in atrium/ lobby. Paint damaged area as
needed.
(v) replace stained/ damaged ceiling tile in all public bathrooms.
(w) replace damaged/ stained ceiling tile in public corridors. Restore
acoustic spray where lacking.
(x) replace damaged windows in atrium/ lobby.
(y) clean all walkways and driveway(under porte-cochere) thoroughly.
2. You agree to make the following changes and additions to
upgrade the Hotel to meet our standards or to cure existing deficiencies in
accordance with the CLARION HOTEL Rules and Regulations AFTER ENTERING THE
SYSTEM IN ACCORDANCE WITH THE FOLLOWING SCHEDULE:
By December 1, 2001
(a) install new Clarion Sleeper by Serta bed sets in all remaining
guestrooms
(b) replace guest bath room tile floors with ceramic tile of at least 2
square inches.
(c) replace all television sets with 25", swivel mounted remote control
television sets
(d) replace wall vinyl in all guest rooms and guest bath rooms.
By December 31, 2001
(e) enclose closets in guest rooms per requirements of the Clarion rules
and regulations.
(f) install window sheers in all guest rooms.
(g) modify and equip an area to comply with all requirements of the Clarion
BIZNET business center. It is strongly recommended that guests have
access to this area 24 hours per day.
(h) replace all wall vinyl in interior (atrium) hallways
(i) recondition both elevator cabs by renovating ceiling, walls and floor.
(j) replace damaged lobby entrance doors.
3. You acknowledge and agree that the changes and additions
stated in paragraphs 1 and 2 are in addition to your continuing obligation to
comply with the Rules and Regulations under paragraph 6.a. of the Franchise
Agreement.
Addendum No. 1
Page 3
4. You represent and warrant to us that you are not party to any
contract that would conflict with this Agreement. If the Hotel is presently
operated under a franchise agreement with another franchisor, this Agreement is
contingent on you furnishing verification satisfactory to us within thirty (30)
days, but in any event before entering the System, evidencing your right to
terminate the other franchise. Furthermore, you agree to defend, indemnify and
hold us harmless against any claims, losses, or liabilities that may be asserted
against us by the other franchisor arising out of or related to the termination
of the other franchise, including tortious interference with contractual
relations or similar claims.
5. The secondary name "Airport" may be used so long as the Hotel
is located within five (5) miles of the airport, you provide or have arranged
transportation to and from the airport upon guest demand (this service does not
need to be complimentary) and you must have a direct-dial telephone in the
terminal of the airport. In the event any of the aforementioned requirements
have not been met or cease to be met, the Hotel will not be authorized to use
the secondary name.
6. We agree that you may use the secondary name of airport. Your
property will now be referred to as "CLARION HOTEL Airport". Please bear in mind
that our approval of this secondary marketing name does not grant you a
contractual right to use this name indefinitely. If the circumstances, market
conditions, or our criteria change, we reserve the right to revoke our approval
of this secondary name at a later date.
7. Subject to the provisions of paragraph 8 below, paragraph 4(b)
of the Agreement thereto are hereby replaced by the following:
(a) "You must pay to Us a monthly Royalty Fee as follows:
beginning on the Opening Date, a sum equal to 3.13%
of the Gross Room Revenues for each month.
(b) "You must pay to Us a monthly Marketing Fee as
follows:
beginning on the Opening Date, a sum equal to 0.83%
of the Gross Room Revenues for each month.
We may increase the Marketing Fee for increases in inflation or costs
of advertising, publicity, public relations or marketing so long as any the
increases apply to all or most of the U.S. hotels in the System unless we get
your approval to a greater amount.
(c) "You must pay to Us a monthly Reservations Fee as
follows:
beginning on the Opening Date, sum equal to 1.04% of
the Gross Room Revenues for each month.
We may increase the Reservations Fee for increases in our cost of
providing the reservations system so long as any the increases apply to all or
most of the U.S. hotels in the System unless we get your approval to a greater
amount
Addendum No. 1
Page 4
8. The modifications referred to in paragraph 7 above are made upon the
express conditions that you permit no material default of your obligations in
this Agreement (including any Addenda thereto) to continue for more than 30 days
or, after the Opening Date, that you not receive a failing Quality Assurance
Review score in any of the categories which are scored (i.e., Housekeeping,
Mandatory or Maintenance & Capital Improvements). "Material default" includes
non payment of any fees or other monies required to be paid by this Agreement.
In the event either of the aforementioned deficiencies shall occur, the
modification(s) referred to in paragraph 7 shall thereafter automatically become
null and void and shall not be reinstated even if the conditions are
subsequently removed and paragraph 4(b) of the Agreement thereto shall be
reinstated. Such modification is exclusive to you and is not transferable to any
other party.
9. Notwithstanding anything to the contrary contained in paragraph 10
of the Agreement, if the Hotel is sold to a bona fide purchaser and the
purchaser does not enter into a Franchise Agreement with us for the Hotel or
does not assume this Agreement, the amount of liquidated damages shall not
exceed $25,000 so long as liquidated damages and all fees accruing under the
Agreement are paid in certified funds within 30 days from the sale of the Hotel.
10. Notwithstanding anything contained in paragraph 9(b) of the
Agreement, you may transfer a direct or indirect interest in the Hotel or in
this Agreement to a limited liability company, a corporation or a partnership
formed within 60 months of the date of this Agreement without payment of any
affiliation fee, if:
(a) You send us prior written notice of the transfer;
(b) You are not in default under this Agreement;
(c) You execute and deliver to us a general release of all claims
you have against us;
(d) You will own a majority of the beneficial interest in the
limited liability company, corporation or partnership after
the transfer;
(e) You agree that you are not relieved of your obligation under
this Agreement unless we specifically release you in writing;
(f) Your successor assumes, in a writing that we accept, your
obligations under this Agreement;
(g) Your successor submits evidence to us that it owns the Hotel;
and
(h) We approve of the transfer after a credit and legal review.
11. Notwithstanding anything to the contrary, if we approve and enter
into 2 additional franchise agreements with you for NE069-CLHO (Omaha) and
IA078-QIIN (Council Bluffs) by September 10, 2000, then the Affiliation Fee
pursuant to paragraph 4(a) of this Agreement will be $25,000, the discounted
fees contained in paragraph 7 of Addendum No. 1 will be in effect and
liquidated damages pursuant to paragraph 9 of Addendum No. 1 will be in effect.
The additional franchise agreements will be entitled to the same discounted
fees in this Agreement. If we do not approve and enter into the 2 additional
franchise agreements with you pursuant to this paragraph, then the affiliation
fee will be $40,000 and you must pay the balance according to the terms of the
attached Promissory Note that you will execute, and the modification(s)
referred to in paragraphs 7 and 9 shall thereafter automatically become null
and void and paragraph 4(b) of the Agreement shall be reinstated. If we do
execute the 2 additional franchise agreements with you, then we will waive the
terms of the Promissory Note.
(SEE NEXT PAGE FOR SIGNATURES)
Addendum No. 1
Page 5
IN WITNESS WHEREOF, you and we have signed this Addendum to the Franchise
Agreement.
Attest: CHOICE HOTELS INTERNATIONAL, INC.,
A Delaware corporation
__________________________ By:_________________________________________ L.S.
Name: Kevin M. Rooney Name: Michael J. DeSantis
Title: Assistant Secretary Title: Senior Vice President
SERVICO NORTHWOODS INC., a Florida corporation,
TOM GRYBOSKI, Individually, jointly and severally
Witness: SERVICO NORTHWOODS INC., a Florida corporation
__________________________ By:__________________________________________L.S.
Name: Name: Karyn M. Gutierrez
Title: Title: President
Date:____________________________
Witness: TOM GRYBOSKI, Individually
__________________________ _____________________________________________L.S.
Name:
Date:____________________________
Witness:
__________________________ By:__________________________________________L.S.
Name: Name:
Title: Title:
Date:____________________________
Witness:
__________________________ By:__________________________________________L.S.
Name: Name:
Title: Title:
Date:____________________________
PROPERTY IMPROVEMENT PLAN
HILTON HOTEL
TROY (NORTHFIELD), MI
PRELIMINARY
PRODUCT IMPROVEMENT REPORT
HILTON HOTEL-DETROIT, NORTHFIELD, MI
CONDUCTED ON: 7/15/02. BY C. ENGELHARDT
THE IMPROVEMENTS IDENTIFIED IN THIS REPORT ARE BASED ON CONDITIONS EXISTING ON
THE ABOVE DATE. PROPERTY TRANSACTIONS OCCURRING AFTER 180 DAYS WILL REQUIRE AN
UPDATED REPORT. ANY WAIVERS AND/OR VARIANCES ISSUED ARE CANCELLED AND NO LONGER
EFFECTIVE AT TIME OF SALE, CLOSING, OR ANY OTHER AMENDMENT TO THE ORIGINAL
FRANCHISE AGREEMENT. HILTON HOTELS DOES NOT AND CANNOT WARRANT CONFORMANCE WITH
INTERPRETATION OF THE AMERICANS WITH DISABILITIES ACT ("ADA") AND THE ADA
ACCESSIBILITY GUIDELINES. OWNERSHIP IS RESPONSIBLE FOR COMPLIANCE WITH
APPLICABLE PROVISIONS OF THE ADA. APPROPRIATE COUNSEL TO ENSURE COMPLIANCE IS
URGED.
EXTERIOR
==============================================================================================================================
START FINISH STATUS
DATE SCOPE OF WORK DATE
==============================================================================================================================
BUILDING, ENTRANCE, PORTE COCHERE AND SIGNAGE
==============================================================================================================================
7/31/02 Replace T-10-11 Surface with EIFS. 180 days
- ------------------------------------------------------------------------------------------------------------------------------
7/31/02 Add decorative stamped paver slab under Porte Cochere 180 days
- ------------------------------------------------------------------------------------------------------------------------------
7/31/02 Add new recessed lighting package to underside of Porte Cochere roof. 180 days
- ------------------------------------------------------------------------------------------------------------------------------
7/31/02 Repair water stains Porte Cochere ceiling. 180 days
- ------------------------------------------------------------------------------------------------------------------------------
7/31/02 Replace damaged PTAC grills. 180 days
- ------------------------------------------------------------------------------------------------------------------------------
7/31/02 Resurface cracked areas of building exterior 180 days
- -----------------------------------------------------------------------------------------------------------------------------
7/31/02 Add electronic card swipes at all entrances 180 days
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
==============================================================================================================================
PARKING LOT, LANDSCAPING, LIGHTING, ETC.
==============================================================================================================================
7/31/02 Resurface and stripe entire parking area. 180 days
- ------------------------------------------------------------------------------------------------------------------------------
7/31/02 Add additional landscaping around perimeter of hotel and on all island beds in parking lot. 180 days
- ------------------------------------------------------------------------------------------------------------------------------
7/31/02 Replace all exterior signage with new Hilton logo. 180 days
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
==============================================================================================================================
Page 1 of 9
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
================================================================================
PUBLIC AREAS
================================================================================
=========================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=========================================================================================
LOBBY/ENTRANCE
- -----------------------------------------------------------------------------------------
7/31/02 Cover all concrete surfaces with gypsum board or 180 days
an appropriate millwork treatment.
- -----------------------------------------------------------------------------------------
7/31/02 Replace wall sconces. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace carpet a entrance. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace and upgrade all millwork on telephone 180 days
partitions must be modified to comply with ADA
requirements.
- -----------------------------------------------------------------------------------------
7/31/02 Replace wall vinyl in lobby area and first floor 180 days
corridors.
- -----------------------------------------------------------------------------------------
7/31/02 Refinish front desk surfaces. 180 days
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
=========================================================================================
PUBLIC RESTROOMS
=========================================================================================
7/31/02 Remodel restrooms to include; wall coverings, 180 days
partitions, vanities, tile, lighting package
and mirrors.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
=========================================================================================
CORRIDORS/ELEVATOR/STAIRWELLS
=========================================================================================
7/31/02 Replace all carpet and carpet pad 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Upgrade wall sconces on floors 1 and 3 to same 180 days
style as 2nd floor.
- -----------------------------------------------------------------------------------------
7/31/02 Provide artwork in all guest room corridors. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Upgrade ceiling in guest corridors. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Refinish elevator cabs to include; walls floors 180 days
ceilings and lighting.
- -----------------------------------------------------------------------------------------
7/31/02 Ensure panel controls are ADA compliant. 180 days
- -----------------------------------------------------------------------------------------
Page 2 0f 9
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
=========================================================================================
COMPLIMENTARY SERVICES AREA
=========================================================================================
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
=========================================================================================
RESTAURANT
=========================================================================================
7/31/02 Completely remodel the restaurant facility, to 180 days
include; carpet, carpet pad, walls, lighting
package, artwork, tables, chairs, ceiling,
entrance/host stand and buffet line.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
=========================================================================================
KITCHENS
=========================================================================================
7/31/02 Professionally deep clean walls and equipment. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace ceiling tiles. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace kitchen floor file 180 days
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
================================================================================
PUBLIC AREAS
================================================================================
=========================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=========================================================================================
LOUNGE
=========================================================================================
7/31/02 Refinish bar surface and front. Replace bar 180 days
stools.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Page 3 of 9
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
================================================================================
MEETING FACILITIES
================================================================================
=========================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=========================================================================================
BALLROOM
=========================================================================================
7/31/02 Replace existing lay-in ceiling tile with a 180 days
combination of gyp board and lay-in tile. New
ceiling tile must be a tegular edge tile with a
fine line 9/16" grid system.
- -----------------------------------------------------------------------------------------
7/31/02 Replace vinyl wall covering. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Repair or replace existing air walls. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace carpet and carpet pad. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace all banquet stack chairs. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace lighting package. 180 days
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
=========================================================================================
PRE-FUNCTION AREA
=========================================================================================
7/31/02 Replace carpet and carpet pad 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace all wall vinyl 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace soft seating groups 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace lighting package 180 days
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
=========================================================================================
MEETING ROOM
=========================================================================================
7/31/02 Replace lay in ceiling system with a 2x2' tile 180 days
with tegular edge and a 9/16" grid system.
- -----------------------------------------------------------------------------------------
7/31/02 Replace carpet and carpet pad 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace all wall vinyl 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace lighting package 180 days
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
=========================================================================================
RESTROOMS-PRE-FUNCTION AREA
=========================================================================================
7/31/02 Completely remodel restrooms to include; floors, 180 days
vanities, mirrors, partitions, wall vinyl,
ceilings, and chrome
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Page 4 of 9
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
================================================================================
BACK OF HOUSE/STORAGE AREAS
================================================================================
=========================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=========================================================================================
HOUSEKEEPING/MAINTENANCE
=========================================================================================
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
=========================================================================================
STORAGE AREAS
=========================================================================================
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
=========================================================================================
================================================================================
RECREATIONAL FACILITIES
================================================================================
=========================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=========================================================================================
POOL AND ADJACENT AREAS
=========================================================================================
7/31/02 Remodel pool area to include; new deck, replace 180 days
vinyl and resurface bottom of pool.
- -----------------------------------------------------------------------------------------
7/31/02 Repair broken window seals. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Add required exercise room with appropriate 180 days
pieces of equipment.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Page 5 of 9
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
================================================================================
POOL-PUBLIC RESTROOMS
================================================================================
7/31/02 Remodel Men's and Women's Locker rooms, restrooms 180 days
and shower areas to include: ceramic tile
surfaces, wall finishes, ceilings, vanities,
fixtures, chrome and lighting package.
- --------------------------------------------------------------------------------
================================================================================
GUESTROOMS
================================================================================
=========================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=========================================================================================
BEDROOM
=========================================================================================
9/1/01 Add two line telephones with two phones present 180 days
in each room. The telephone on the desk must be
equipped with an RJ11 jack located at the base
of the phone that is clearly labeled Data Port.
- -----------------------------------------------------------------------------------------
7/31/02 Install 27" televisions per brand standards. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Install approved closer rod system as stated in 180 days
the Design and Construction Standards Manual.
- -----------------------------------------------------------------------------------------
7/31/02 Add new "soft goods" and case good pieces to 180 days
rooms to include; Carpet, carpet pad, drapes,
bedspreads, soft seating, lamps and Hilton
approved work desk and ergonomic chair.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Page 6 of 9
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
================================================================================
GUEST ROOMS
================================================================================
=========================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=========================================================================================
BATHROOM
=========================================================================================
7/31/02 Remodel all guest bathrooms on 1st and 3rd floor 180 days
to include; minimum 6x6" ceramic tile, new tub
surrounds that meet current standards, new VWC, new
lighting package, replace vanities, new chrome and
paint ceilings.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Page 7 of 9
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
================================================================================
OTHER
================================================================================
=========================================================================================
DATE AREA STATUS
=========================================================================================
=========================================================================================
7/31/02 Replace carpet in back office area. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace flooring in back of house offices. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Replace office furniture in back of house 180 days
offices
- -----------------------------------------------------------------------------------------
7/31/02 Repair leaks in stairwells and repair water 180 days
damage.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
=========================================================================================
=========================================================================================
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Page 8 of 9
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
Page 9 of 9
PROPERTY IMPROVEMENT PLAN
HILTON HOTEL
COLUMBIA, MD
PRELIMINARY
PRODUCT IMPROVEMENT REPORT
================================================================================
HILTON HOTEL-COLUMBIA. MD.
================================================================================
CONDUCTED ON: 7/16/02 BY: C. ENGELHARDT
THE IMPROVEMENTS IDENTIFIED IN THIS REPORT ARE BASED ON CONDITIONS EXISTING ON
THE ABOVE DATE. PROPERTY TRANSACTIONS OCCURRING AFTER 180 DAYS WILL REQUIRE AN
UPDATED REPORT. ANY WAIVERS AND/OR VARIANCES ISSUED ARE CANCELLED AND NO LONGER
EFFECTIVE AT TIME OF SALE, CLOSING, OR ANY OTHER AMENDMENT TO THE ORIGINAL
FRANCHISE AGREEMENT. HILTON HOTELS DOES NOT AND CANNOT WARRANT CONFORMANCE WITH
INTERPRETATION OF THE AMERICANS WITH DISABILITIES ACT ("ADA") AND THE ADA
ACCESSIBILITY GUIDELINES. OWNERSHIP IS RESPONSIBLE FOR COMPLIANCE WITH
APPLICABLE PROVISIONS OF THE ADA. APPROPRIATE COUNSEL TO ENSURE COMPLIANCE IS
URGED.
================================================================================
EXTERIOR
================================================================================
=========================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=========================================================================================
BUILDING, ENTRANCE, PORTE COCHERE AND SIGNAGE
=========================================================================================
7/31/02 The Porte Cochere requires renovation in 180 days
conjunction with the exterior improvements to
heighten curb appeal and create a "First Class"
sense of arrival. Provide new roofline, strong
architectural detail at the fascia, built out
columns with capitals and bases, decorative
lighting, new ceiling treatment and upgraded
stamped paving. The entrance walk areas where
matting exists are to receive upgraded
treatments. Architect renderings are to be
submitted to Hilton for approval.
- -----------------------------------------------------------------------------------------
7/31/02 Resurfacing of exterior wall finishes with 180 days
synthetic stucco, stone or brick. Reseal or
replace all exterior windows and repaint frames.
Install upgraded exterior lighting package and
exterior entrances. Architect renderings are to
be submitted to Hilton for approval.
- -----------------------------------------------------------------------------------------
7/31/02 Replace all sidewalks that are cracked, graveled 180 days
or sunken.
- -----------------------------------------------------------------------------------------
7/31/02 Replace existing Hilton signage with new logo 180 days
and cartouche to meet all current Hilton
standards and requirements.
- -----------------------------------------------------------------------------------------
7/31/02 Install Hilton Brand Standard flagpoles (3) and 180 days
flags in front of building.
- -----------------------------------------------------------------------------------------
7/31/02 Vans to be repainted and conform to the current 180 days
graphic identity standards.
- -----------------------------------------------------------------------------------------
7/31/02 Remove existing enclosure of trash/dumpster 180 days
area. Remove and replace concrete pad and
adequately seal at wall joint to prevent further
sub structure leakage. Resurface exterior walls
and provide additional lighting.
- -----------------------------------------------------------------------------------------
7/31/02 Replace awning at exterior restaurant entrance. 180 days
- -----------------------------------------------------------------------------------------
7/31/02 Properly enclose chilling tower to include 180 days
wooden louvered vent panels.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Page 1 of 10
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
=====================================================================================================
PARKING LOT, LANDSCAPING, LIGHTING, ETC.
=====================================================================================================
7/31/02 Patch, resurface and stripe entire parking lot. Remove or replace all 180 days
concrete car curbs.
- -----------------------------------------------------------------------------------------------------
7/31/02 Retain a professional landscape artist that will design and install 180 days
an upgraded landscaping package to create a "First Class" sense of
arrival. Ensure tree, shrubbery and plantings are designed for a
four-season approach with seasonal foliage at all times of year.
Submit design plan to Hilton for approval.
- -----------------------------------------------------------------------------------------------------
7/31/02 Install upgraded parking lot lighting package that meets Hilton 180 days
lighting design specifications.
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
================================================================================
PUBLIC AREAS
================================================================================
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
LOBBY/ENTRANCE
- -----------------------------------------------------------------------------------------------------
7/31/02 Remodel entire lobby to include: carpet, carpet pad, VWC, soft 180 days
seating, case good pieces and artwork.
- -----------------------------------------------------------------------------------------------------
7/31/02 Refinish front desk millwork. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace floor to ceiling windows in lobby with a dry wall surface. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Install upgraded directional signage package that meets Hilton and 180 days
ADA specifications.
- -----------------------------------------------------------------------------------------------------
7/31/02 Place business center in public area to increase guest 180 days
impact/utilization.
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Page 2 of 10
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
=====================================================================================================
PUBLIC RESTROOMS
=====================================================================================================
7/31/02 Replace vanities with corian or equal, marble or granite with under- 180 days
mount china bowl.
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace all chrome, mirrors and provide an upgraded lighting package. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Upgrade/refinish restroom entrance doors. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Upgrade ceiling tile with a 2x2" tegular tile with 9/16 grid. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace VWC. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace ceramic floor tile with 8x8" 180 days
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
CORRIDORS/ELEVATOR/STAIRWELLS
=====================================================================================================
7/31/02 The corridors will require a complete renovation to include carpet 180 days
and pad (ensure new carpet has 'rug' inset style design), wall
vinyl and color coordinated corner guards, ceiling finish, lighting
upgrade, window treatments, artwork and ADA compliant signage.
- -----------------------------------------------------------------------------------------------------
7/31/02 Upgrade the appearance of the elevator foyers with appropriately 180 days
scaled accent furnishings, decorative lighting, artwork and
accessories.
- -----------------------------------------------------------------------------------------------------
7/31/02 Paint and install VCT flooring in all stairways. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Resurface all finishes in elevators including floor, wall and ceiling. 180 days
Ensure panel controls meet all ADA requirements.
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
COMPLIMENTARY SERVICES AREA
=====================================================================================================
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
RESTAURANT
=====================================================================================================
7/31/02 Repair wood floor, replace bar stools, apply new fabric/vinyl to all 180 days
booth type seating.
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace carpeting in both restaurant and lounge areas. Replace stained 180 days
and damaged ceiling tile in both areas.
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace or repair all restaurant tables and seating to "like new 180 days
condition."
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
KITCHENS
=====================================================================================================
- -----------------------------------------------------------------------------------------------------
Page 3 of 10
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
PUBLIC AREAS
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
LOUNGE
=====================================================================================================
See restaurant area...
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
================================================================================
MEETING FACILITIES
================================================================================
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
BALLROOM
=====================================================================================================
7/31/02 Repair and paint all millwork. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace carpet and carpet pad. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace VWC. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace all banquet stack chairs. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace both ballrooms' entrance signage and upgrade the overall 180 days
meeting room sign package.
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace or repair air walls to like new condition. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace or refinish all podiums. 180 days
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
PRE-FUNCTION AREA
=====================================================================================================
7/31/02 In conjunction with the adjacent Atrium renovation the pre-function 180 days
- -----------------------------------------------------------------------------------------------------
Page 4 of 10
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
- -----------------------------------------------------------------------------------------------------
area will require a complete renovation to include floor and wall
surfaces, base and wall moldings, ceiling and lighting upgrade, art
and accessories package.
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
MEETING ROOM
=====================================================================================================
7/31/02 Repair and paint all millwork 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Install window treatments allowing blackout conditions for 180 days
audio/visual purposes.
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace all VWC. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace all carpet and carpet pad. 180 days
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
RESTROOMS-PRE-FUNCTION AREA
=====================================================================================================
7/31/02 Complete restroom remodel in Women's restroom 180 days
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
================================================================================
BACK OF HOUSE/STORAGE AREAS
================================================================================
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
HOUSEKEEPING/MAINTENANCE
=====================================================================================================
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
STORAGE AREAS
=====================================================================================================
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Page 5 of 10
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
RECREATIONAL FACILITIES
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
POOL AND ADJACENT AREAS
=====================================================================================================
7/31/02 Replace flooring in pool area. Resurface pool and spa. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Repaint depth markers on coping around pool. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace pool expansion joint seal. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Reseal exterior windows. Repair water damage on wall above window. 180 days
Repaint rusted sprinkler pipes.
- -----------------------------------------------------------------------------------------------------
7/31/02 Refinish or replace any entrance doors. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace carpet, pad and base at pool as well as fitness center 180 days
entrance.
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace pool and deck furniture. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace fitness area exercise equipment to Hilton specifications. 180 days
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
POOL-PUBLIC RESTROOMS
=====================================================================================================
7/31/02 Repair and refinish saumas in both the women and men's restrooms. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Install new toiletry dispensers in both women's and men's restrooms. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Install upgraded lighting package. 180 days
- -----------------------------------------------------------------------------------------------------
================================================================================
GUESTROOMS
================================================================================
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
BEDROOM
=====================================================================================================
7/31/02 The guest rooms will require a complete replacement of the FF&E to 180 days
include but not limited to: carpet, pad and base, wall vinyl,
ceiling paint, case-goods to include desks (ensure desks are
replaced with over-scaled work desks that meet all Hilton
requirements), desk chairs (ensure desk chairs are replaced with
ergonomic chairs), coverlets and dust ruffles, drapery
treatments and sheers, lighting package, art, mirrors, lever type
door hardware and Serta Perfect Sleeper "Suite Dreams by Hilton".
- -----------------------------------------------------------------------------------------------------
Page 6 of 10
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
- -----------------------------------------------------------------------------------------------------
7/31/02 All HVAC units must have wall mounted remote thermostats. Replace 180 days
all dented, damaged, poorly operating and noisy PTAC units.
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace or repair all closet doors. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 The suites will require a complete replacement of the FF&E to 180 days
include, but not limited to: carpet, pad and base, wall vinyl,
ceiling paint, case-goods to include desks (ensure desks are
replaced with over-scaled work desks that meet Hilton
requirements), desk chairs (ensure desk chairs are replaced with
ergonomic chairs), coverlets and dust ruffles, drapery treatments
and sheers, lighting package, art, mirrors, and Serta Perfect
Sleeper "Suite Dreams by Hilton".
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Page 7 of 10
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
================================================================================
GUEST ROOMS
================================================================================
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
BATHROOM
=====================================================================================================
7/31/02 Replace remaining 65 rooms of bathrooms floor tiles with either 180 days
ceramic, marble or granite tiles with dimensions of 8X8 or greater.
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace remaining 65 rooms of fiberglass inserts in tub surrounds 180 days
with either a ceramic tile, marble or granite with same dimensions
as above. Caulk existing tub surrounds.
- -----------------------------------------------------------------------------------------------------
7/31/02 Move remaining 65 rooms of towel racks to the back of the shower 180 days
in all guest baths and vinyl walls.
- -----------------------------------------------------------------------------------------------------
7/31/02 Repaint remaining 65 rooms of bathroom ceilings. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace vanity hardware and relocate toilet tissue holders. 180 days
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Page 8 of 10
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
================================================================================
OTHER
================================================================================
=====================================================================================================
DATE AREA STATUS
=====================================================================================================
LIFE SAFETY
=====================================================================================================
7/31/02 Ensure all systems are in complete compliance with Hilton and 180 days
Governmental requirements for Life Safety.
- -----------------------------------------------------------------------------------------------------
7/31/02 Ensure all Hilton requirements are met to ensure guest security. 180 days
- -----------------------------------------------------------------------------------------------------
7/31/02 Ensure all applicable Federal, State, and Local codes have been 180 days
met to ensure compliance with ADA requirements.
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
STRUCTURAL/MECHANICAL/OFFICES
=====================================================================================================
7/31/02 Repair or replace concrete foundation located in cooling tower and 180 days
gas main area. Repair or replace loading-dock doors and walls.
- -----------------------------------------------------------------------------------------------------
7/31/02 Repair and seal basement walls caused by water leakage from 180 days
concrete foundation collapse and sinking.
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace public area air exchange or heating and cooling towers for 180 days
proper ventilation.
- -----------------------------------------------------------------------------------------------------
7/31/02 Replace carpet in back offices to include behind front desk and 180 days
executive offices.
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
Page 9 of 10
HILTON HOTELS
PRODUCT IMPROVEMENT REPORT
2001
Page 10 of 10
PROPERTY IMPROVEMENT PLAN
DOUBLETREE CLUB HOTEL
PHILADELPHIA, PA
PRELIMINARY
PRODUCT IMPROVEMENT REPORT
================================================================================
DOUBLETREE CLUB HOTEL - PHILADELPHIA, PA
================================================================================
CONDUCTED ON: April 6, 2002
THE IMPROVEMENTS IDENTIFIED IN THIS REPORT ARE BASED ON CONDITIONS EXISTING ON
THE ABOVE DATE. PROPERTY TRANSACTIONS OCCURRING AFTER 180 DAYS WILL REQUIRE AN
UPDATED REPORT. ANY WAIVERS AND/OR VARIANCES ISSUED ARE CANCELLED AND NO LONGER
EFFECTIVE AT TIME OF SALE, CLOSING, OR ANY OTHER AMENDMENT TO THE ORIGINAL
FRANCHISE AGREEMENT. HILTON HOTELS DOES NOT AND CANNOT WARRANT CONFORMANCE WITH
INTERPRETATION OF THE AMERICANS WITH DISABILITIES ACT ("ADA") AND THE ADA
ACCESSIBILTY GUIDELINES. OWNERSHIP IS RESPONSIBLE FOR COMPLIANCE WITH APPLICABLE
PROVISIONS OF THE ADA. APPROPRIATE COUNSEL TO ENSURE COMPLIANCE IS URGED.
================================================================================
EXTERIOR
================================================================================
This is a six-story interior corridor hotel. It was converted to a Doubletree
Club hotel approximately six years ago. The actual building is twenty-eight
years old. The curb appeal is average at best. The repair of the damaged canopy
ceiling and the addition of decorative pavers under the canopy will help create
a sense of arrival for guests. The numerous areas of ceiling damaged throughout
the interior of the property indicate the need for a new roof. There is a
missing section of mansard that will also need to be replaced.
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
BUILDING, ENTRANCE, PORTE COCHERE AND SIGNAGE
=====================================================================================================
Closing Replace roof of building. Ensure all open seams of flashing are 6 months
covered.
- -----------------------------------------------------------------------------------------------------
Closing Replace missing section of mansard 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair damage to building at Dumpster entrance 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair/replace all inoperative exhaust fans 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add decorative pavers under canopy 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace mismatched windows (some are clear and some are bronze) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair all broken window seals 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add entrance or primary sign at secondary entrance (Grant Ave.) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair peeling/damaged ceiling areas of canopy ceiling 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair to a like new appearance all holes left in building from 6 months
previous signs
- -----------------------------------------------------------------------------------------------------
Closing Replace heating core and compressor of roof mounted unit 6 months
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
PARKING LOT, LANDSCAPING, LIGHTING, ETC.
=====================================================================================================
Closing Add additional building mounted down lights to front of building 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair damaged asphalt at rear of building. 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair landscape damage to islands and ends of parking lot by snow 6 months
plows
- -----------------------------------------------------------------------------------------------------
Closing Add drainage to sunken area at end of building 6 months
- -----------------------------------------------------------------------------------------------------
Closing Trim overhanging trees at rear of building 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add 20 ft. concrete pad at Dumpster
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Page 1 of 8
HILTON HOTELS CORP.
DOUBLETREE HOTELS
PRODUCT IMPROVEMENT REPORT
2002
================================================================================
PUBLIC AREAS
================================================================================
The public areas of the hotel are in overall poor condition and most items will
need to be replaced. The soft seating in the lobby and registration areas is
worn and will need to be replaced. The carpet is also in poor condition and will
require replacement. As in most areas of the hotel, there were numerous ceiling
tiles that will need to be replaced after roof repairs. Corridor carpet is also
worn.
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
LOBBY/ENTRANCE
- -----------------------------------------------------------------------------------------------------
Closing Electrostatically repaint faded finish on electric entry doors 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace carpet 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace all soft seating 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace all discolored or water damaged ceiling tiles 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair any ceilings that have been water damaged 6 months
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
REGISTRATION AREA
=====================================================================================================
Closing Add ADA tray to registration desk. Repair small chip in counter top 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace soft seating (worn and misshapen) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace wall vinyl (holed where previous sign was mounted) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace vinyl cove base with carpet cove base (at wall behind
registration desk) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add cookie warmer 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace carpet (at area from registration desk to elevators) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair chips on pay telephone enclosures 6 months
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
PUBLIC RESTROOMS
=====================================================================================================
Closing 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add recessed feminine hygiene machine to ladies room 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace dated wall tile with vinyl wall covering. 6 months
Repair any damaged vinyl in stall areas
- -----------------------------------------------------------------------------------------------------
Closing Replace vanities and basins (china undermounts required) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Recess towel dispenses and other equipment 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace discolored ceiling tiles 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace scratched vanity mirrors 6 months
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
CORRIDORS/ELEVATOR/STAIRWELLS
=====================================================================================================
Closing Replace carpet 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add additional lighting in elevator landings. Increase light levels 6 months
in corridors and stairwells. Increase light levels in vending areas
- -----------------------------------------------------------------------------------------------------
Closing Return handrails to wall in stairwells 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace sign package (all signs throughout the hotel should be 6 months
coordinated). Additional directional signage required in corridors
- -----------------------------------------------------------------------------------------------------
Closing Regrout floor tile in vending areas 6 months
- -----------------------------------------------------------------------------------------------------
Closing Refinish elevator cabs and landings 6 months
- -----------------------------------------------------------------------------------------------------
Closing Paint and seal discolored stairwell landings 6 months
- -----------------------------------------------------------------------------------------------------
Page 2 of 8
HILTON HOTELS CORP.
DOUBLETREE HOTELS
PRODUCT IMPROVEMENT REPORT
2002
- -----------------------------------------------------------------------------------------------------
Closing Paint all back of house doors 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace or refinish all worn door handles 6 months
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
ADMINISTRATIVE AREAS
=====================================================================================================
Closing Add window treatment to sales office 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace all discolored ceiling tiles 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace vinyl wall covering in back offices 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace ceiling tiles in admin areas 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace carpet in back offices 6 months
=====================================================================================================
CLUB ROOM
=====================================================================================================
Closing Replace carpet 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add additional phones and lines to Club Room 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add supplies to personal harbors 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace chairs in Steel Case units. Repair controls (fan, lights) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair damaged ceilings 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace damaged ceiling tiles 6 months
- -----------------------------------------------------------------------------------------------------
Closing Refinish foot rails at bar in Club Lounge 6 months
- -----------------------------------------------------------------------------------------------------
Closing Professionally mount light fixture under counter at 6 months
employee side of bar
- -----------------------------------------------------------------------------------------------------
Closing Clean or replace chairs/fabric in conference room 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair chipped bar (employee side) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace wall vinyl in business center and Club Room. 6 months
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
GIFT SHOP
=====================================================================================================
Closing The gift shop has been eliminated and is now currently being 6 months
used as a vending area. There are numerous vending machines
lining the walls. Although a vending area is required on each floor,
this space could potentially be used as an arcade area or other
amenity for guests. Approval must be obtained and specifications
must be submitted for approval. An arcade would require a door
(with view panel) to reduce the noise level as this area is adjacent
to the registration area. As a vending area, vinyl wall
covering must be added and ceramic floor tile installed.
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
================================================================================
PUBLIC AREAS
================================================================================
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
AU BON PAIN
=====================================================================================================
Closing Replace carpet 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace discolored ceiling tiles (guest and employee side) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Remove banquet tables used for serving. Suggest installing counters 6 months
for buffet service.
- -----------------------------------------------------------------------------------------------------
Closing Replace worn laminate counter top at beverage 6 months
service station. Solid surface required.
- -----------------------------------------------------------------------------------------------------
Page 3 of 8
HILTON HOTELS CORP.
DOUBLETREE HOTELS
PRODUCT IMPROVEMENT REPORT
2002
- -----------------------------------------------------------------------------------------------------
Closing Refinish or replace worn tables and chairs (wooden 6 months
arms and table edges are scarred). Metal frame
chairs are in good condition.
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
GUEST LAUNDRY
=====================================================================================================
Closing Replace door. Must have view panel and electronic 6 months
card reader to ensure access by guests only
- -----------------------------------------------------------------------------------------------------
Closing Add folding table or counter 6 months
- -----------------------------------------------------------------------------------------------------
Closing Increase light levels 6 months
- -----------------------------------------------------------------------------------------------------
Closing Conceal exposed pipes and valves in ceiling. Add 6 months
lowered ceiling
- -----------------------------------------------------------------------------------------------------
Closing Replace discolored floor with tile 6 months
- -----------------------------------------------------------------------------------------------------
Closing Paint walls or add vinyl wall covering 6 months
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
================================================================================
MEETING FACILITIES
================================================================================
There are four separate meeting spaces at this property. Overall, these areas
are in acceptable condition. As in all other areas of the hotel, there are some
discolored ceiling tiles that will need to be replaced. The Philadelphia and
Roosevelt rooms were guestrooms at one time. The carpet must be replaced as well
as window treatment. The wall vinyl may be repaired to a like new condition and
appearance.
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
MEETING ROOM(S)
=====================================================================================================
Closing Add incandescent lighting and rheostats to Philadelphia and Roosevelt 6 months
rooms.
- -----------------------------------------------------------------------------------------------------
Closing Laminate at wet bars in all meeting rooms is chipped and damaged. 6 months
Replace with solid surface countertops
- -----------------------------------------------------------------------------------------------------
Closing Upgrade restrooms (former guestrooms). Replace small floor tile, 6 months
replace de-silvered mirrors
- -----------------------------------------------------------------------------------------------------
Closing Replace HVAC units 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair any damaged wall vinyl 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair ceiling damage (Roosevelt, Pennsylvania) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace seating 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add under counter lighting at wet bar areas where missing 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace window treatment (Philadelphia) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace carpet 6 months
- -----------------------------------------------------------------------------------------------------
Closing Refinish or replace worn podiums 6 months
- -----------------------------------------------------------------------------------------------------
=====================================================================================================
=====================================================================================================
BALL ROOM (BRANDYWINE)
=====================================================================================================
Closing Replace carpet 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace all discolored ceiling tiles 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair any damaged wall vinyl 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace drapes and sheers 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repaint or clean discolored glass panels above windows 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace tarnished door hardware at entry 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair, replace, or remove portable dance floor 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair / refinish chipped window ledges 6 months
- -----------------------------------------------------------------------------------------------------
Page 4 of 8
HILTON HOTELS CORP.
DOUBLETREE HOTELS
PRODUCT IMPROVEMENT REPORT
2002
================================================================================
BACK OF HOUSE/STORAGE AREAS
================================================================================
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
HOUSEKEEPING/MAINTENANCE
=====================================================================================================
Closing Add central air to laundry area 6 months
- -----------------------------------------------------------------------------------------------------
Closing Enclose dryers from general work area. Add smoke detector and heat 6 months
detector to dryer enclosure after completion
- -----------------------------------------------------------------------------------------------------
Closing Repair damaged walls in housekeeping and laundry areas. 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace worn laundry carts and maids carts 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add full size refrigerator to break rooms. Upgrade employee 6 months
breakrooms. This includes painting, ventilation, carpet, and
bathrooms.
- ------------------------------------------------------------------------------------------------------
Closing Replace vinyl wall covering and carpet in break rooms 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add additional venting to smoking break room 6 months
- -----------------------------------------------------------------------------------------------------
Closing Clean and paint all back of house area walls 6 months
- -----------------------------------------------------------------------------------------------------
Closing Clean and paint (or replace) rusted employee lockers 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair ceiling damage. Replace discolored or damaged ceiling tiles in 6 months
all back of house areas
- -----------------------------------------------------------------------------------------------------
Closing Repair or replace chipped folding table in laundry 6 months
=====================================================================================================
STORAGE AREAS/MECHANICALROOMS
=====================================================================================================
Closing Replace rusted pipes and fittings on boilers 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace worn rollaway beds 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair ceiling damage 6 months
- -----------------------------------------------------------------------------------------------------
================================================================================
RECREATIONAL FACILITIES
================================================================================
The swimming pool area is in very poor condition. It is covered by a dome type
structure that will need to be replaced, repaired, or removed. It is cracking
and the leaks from the cracks and condensation create a need for constant
operational attention. This area will require a complete
renovation/refurbishment.
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
POOL AND ADJACENT AREAS
=====================================================================================================
Closing Repair leaks in dome 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add dehumidification unit 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace pool furniture and patio/deck furniture 6 months
- -----------------------------------------------------------------------------------------------------
Closing Resurface pool bottom 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace pool deck (new deck must have proper drainage capabilities) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add heating, air conditioning, and ventilation 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair damaged walls and door in entry way 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace peeling tint on windows 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace, repair to a like new condition, or remove wooden deck at 6 months
exterior of pool.
- -----------------------------------------------------------------------------------------------------
Page 5 of 8
HILTON HOTELS CORP.
DOUBLETREE HOTELS
PRODUCT IMPROVEMENT REPORT
2002
- -----------------------------------------------------------------------------------------------------
Closing Replace cracked windows 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace all tarnished door and window hardware 6 months
=====================================================================================================
EXERCISE ROOM
=====================================================================================================
Closing Replace drapes 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add carpet cove base where missing 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace ceiling tiles 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add door with view panel and card reader to separate from pool area 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace rusted HVAC unit 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace vinyl wall covering 6 months
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
================================================================================
GUEST ROOMS
================================================================================
The guestrooms are dated and in severe need of a complete facelift. Carpet,
bedspreads, mattresses and box springs, window treatment, wall vinyl all need to
be replaced. On the positive side, the guestrooms are large and there is
tremendous potential with a new room package in place. The undersized desk will
need to be replaced with the larger executive workspace and an ergonomic desk
chair must also be added. The required new lamp package must also contain a task
lamp for the desk surface.
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
BEDROOM
=====================================================================================================
Closing Replace carpet 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace wall vinyl 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace HVAC units 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace mattresses and box springs 6 months
- -----------------------------------------------------------------------------------------------------
Closing Professionally refinish casegoods to a like new appearance 6 months
(credenzas, nightstands, headboards, etc.). Refinished product must
coordinate/match with the required addition of large desks and
ergonomic desk chairs.
- -----------------------------------------------------------------------------------------------------
Closing Replace lamp package. Most shades are yellowed and many are misshapen. 6 months
Task lamp is required at desk. Bases of floor lamps are dented. One
wall-mounted lamp is currently positioned behind the television set
and does not provide illumination to any guest impact area. Table
lamps at nightstands will be acceptable.
- -----------------------------------------------------------------------------------------------------
Closing Replace bedspreads 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace drapery sheers and drapes 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace soft seating. Wingback chairs will also need to be replaced. 6 months
Standards require a chair/ottoman combo or a recliner.
- -----------------------------------------------------------------------------------------------------
Closing Replace guest service directories 6 months
- -----------------------------------------------------------------------------------------------------
Closing Remove extension cords from guestrooms 6 months
- -----------------------------------------------------------------------------------------------------
Closing Refurbish/renovate suites (one each on fifth and sixth floors). The 6 months
small tile at the wet bar area will need to be replaced. Microwaves
must be enclosed in cabinets and the painted and laminate surfaces at
the wet bars should be replaced with a solid surface. Repair damaged
wall and ceiling in sixth floor suite (from roof leaks)
Page 6 of 8
HILTON HOTELS CORP.
DOUBLETREE HOTELS
PRODUCT IMPROVEMENT REPORT
2002
- -----------------------------------------------------------------------------------------------------
Closing Add wall mounted door stops 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace sofa sleepers. Mechanisms are binding and fabric is worn 6 months
- -----------------------------------------------------------------------------------------------------
Closing Refinish/paint chipped entry doors 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace any missing door guards at entry doors 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace telephones that do not meet current standards (CareLine 6 months
button/info missing, bedside phones do not have 2 line capabilities,
etc.)
- -----------------------------------------------------------------------------------------------------
================================================================================
GUEST ROOMS
================================================================================
=====================================================================================================
START FINISH
DATE SCOPE OF WORK DATE STATUS
=====================================================================================================
BATHROOM
=====================================================================================================
Closing Replace 2"floor tile (6" min. required) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace any missing sound deadening pads/tabs 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace basins with china undermounts. Vanities must be restored to a 6 months
like new condition or replaced.
- -----------------------------------------------------------------------------------------------------
Closing Replace all chrome (single lever chrome required) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Resurface tub bottoms. All tub bottoms currently are discolored and 6 months
the non slip provision is gone
- -----------------------------------------------------------------------------------------------------
Closing Add pulsating shower heads to all showers 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace door knobs with lever type hardware 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add second soap dish in showers 6 months
- -----------------------------------------------------------------------------------------------------
Closing Refinish/paint chipped entry doors 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace wall vinyl 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace hollow core doors (or remove full length mirrors from doors) 6 months
- -----------------------------------------------------------------------------------------------------
Closing Add support bracket to towel shelves 6 months
- -----------------------------------------------------------------------------------------------------
Closing Wrap exposed vanity popes with insulation in accessible rooms 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace any metal soap dishes in showers with non metal soap dish 6 months
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
================================================================================
OTHER
================================================================================
=====================================================================================================
DATE STATUS
=====================================================================================================
KITCHEN
=====================================================================================================
Closing Replace rusted bins on ice machines. Repair door. 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace ceiling tiles 6 months
- -----------------------------------------------------------------------------------------------------
Closing Repair ceiling damage 6 months
- -----------------------------------------------------------------------------------------------------
Closing Clean and refinish scarred floors 6 months
- -----------------------------------------------------------------------------------------------------
Closing Clean walls 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace door hardware leading into dry goods storage area 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace, remove, or repair any inoperative equipment. ex: cold line 6 months
prep unit now used for storage
- -----------------------------------------------------------------------------------------------------
Closing Replace worn cutting boards 6 months
- -----------------------------------------------------------------------------------------------------
Closing Replace microwave (interior discolored) 6 months
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Page 7 of 8
PROPERTY IMPROVEMENT PLAN
HOLIDAY INN
SHEFFIELD, AL
BASS
HOTELS & RESORTS
LICENSE RENEWAL OF THE HOLIDAY INN
SHEFFIELD, AL. - LOCATION #4419
PROPERTY IMPROVEMENT PLAN
January 25, 1999
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
TABLE OF CONTENTS:
PROPERTY INFORMATION ............................. 1
LIFE SAFETY ...................................... 3
EXTERIOR ......................................... 5
LOBBY/ENTRANCE/FRONT DESK ........................ 9
PUBLIC RESTROOMS ................................. 12
FOOD SERVICE FACILITIES .......................... 14
LOUNGE FACILITIES ................................ 15
MEETING / BANQUET ROOMS .......................... 17
ATRIUMS/POOL ENCLOSURES .......................... 18
KITCHEN .......................................... 20
INTERIOR CORRIDORS ............................... 21
GUEST ROOMS ...................................... 23
GUEST ROOM BATHS ................................. 26
BACK OF HOUSE .................................... 27
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
PROPERTY INFORMATION
Address: Holiday Inn - Sheffield. AL
Florence-Muscle Shoals Area
4900 Hatch Blvd.
Sheffield, AL 35660
256-381-7313
GENERAL DESCRIPTION:
This 3-story, interior corridor hotel (with ground level rooms also having
exterior doors as well as interior doors) was originally constructed in 1982.
The hotel will require varying degrees of renovation to all areas of the hotel;
guest room areas, commercial areas and the exterior.
More specifically, the guest rooms will require the installation of the
Standardized Room Decor Package, while 2/3's of the guest bathrooms will
vanity/sink/hardware replacement.
The commercial areas will require a complete renovation of the restaurant and
lounge.
The exterior will require roofline enhancements, new stucco finishes and
replacement of the guestroom storefronts with a new insulated synthetic stucco
wall system and new windows.
Submit all plans, specifications and color boards to Bass Hotels & Resorts for
review and approval, prior to purchasing or renovation. Any items not submitted
for approval may be required to be replaced or modified. Professional
Architectural and design assistance is required. Franchisee to ensure all areas
of the hotel are in complete compliance with local codes and Americans with
Disabilities Act (ADA). An ADA certification letter is required to be submitted
during the design review and prior to final sign off of the PIP. Owner is
required to repair or replace all items and finishes in the hotel that may be
damaged during the course of the renovation. Ensure all areas of the hotel are
in new condition upon completion of the PIP.
During the Property Improvement process, signage from the Holiday Inn
"Renovation Kit" must be put on display, in a professional manner, throughout
appropriate areas of the hotel. You will receive this kit within 90 days from
license execution.
All areas of the hotel must meet current Holiday Inn standards, including all
supplements and addendum's.
Year Built: 1982 Year(s) Renovated: 1991
Parking Spaces: 250 Swimming Pool 20 x 15
Dimensions/maximum
depth:
Number of Stories: 3
COMMERCIAL AREA CAPACITIES
Food Service Facility: Great Southern Mining Company seats: 45
1
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
Lounge: Fizz seats: 75
Meeting/Banquet Room: Cedar, Cypress, Willow, Magnolia seats: 450
Fitness Room: yes X no _____
Guest Rooms: No. of Rooms/Opening Date
Original Rooms: 201
1st. Addition:
2nd. Addition:
Total Rooms: 201
HVAC Systems: (2/4 pipe: thru-wall or split system)
Commercial Area 2/4 pipe
Guest room Building thru-wall
Fire Safety Systems:
Hardwire Smoke Commercial Area yes X no ___
Guest room Building yes X no ___
Holidomes Structure yes ___ no ___
Sprinkler System Commercial Area yes ___ no X
Guest room Building yes ___ no X
Holidomes Structure yes ___ no ___
This Property Improvement Plan was developed from an on-site review of the
subject hotel on 1/14/99 by Jim Brink of Bass Hotels and Resorts accompanied by
General Manager Linda Whitaker, and Chief Engineer Keith Yerbey.
2
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
LIFE SAFETY
AREAS REQUIRING ACTION CURE/REMEDY
- --------------------------------- ------------------------------------------------------------------------------------------------
FIRE SAFETY SYSTEM Prior to issuance of the license, written documentation must be submitted certifying that the
Fire Safety System meets or exceeds Holiday Inn's Standards and that the system
if fully operational as of that date.
- --------------------------------- ------------------------------------------------------------------------------------------------
- --------------------------------- ------------------------------------------------------------------------------------------------
COMMERCIAL & PUBLIC AREAS
- --------------------------------- ------------------------------------------------------------------------------------------------
Emergency Lighting: Ensure emergency lighting is in proper working condition.
- --------------------------------- ------------------------------------------------------------------------------------------------
Exit Signs: Ensure adequate exit signage is provided per standards and codes. Ensure bright illumination.
- --------------------------------- ------------------------------------------------------------------------------------------------
Panic Hardware: Ensure panic hardware at all exit doors is in proper working condition.
- --------------------------------- ------------------------------------------------------------------------------------------------
Fire Separation: Ensure area meets fire separation requirements per codes and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Visual Heat/Smoke Detectors: Ensure adequate heat and smoke detectors are present per code and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Manual Pull Stations: Ensure manual pull stations are present per code and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
- --------------------------------- ------------------------------------------------------------------------------------------------
PUBLIC RESTROOMS
- --------------------------------- ------------------------------------------------------------------------------------------------
Emergency Lighting: Ensure emergency lighting is provided. Lights must remain on continuously in all public
restrooms.
- --------------------------------- ------------------------------------------------------------------------------------------------
Visual Heat/Smoke Detectors: Ensure adequate heat and smoke detectors are present per code and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
- --------------------------------- ------------------------------------------------------------------------------------------------
HOLIDOMES/ATRIUMS/POOL ENCLOSURES
- --------------------------------- ------------------------------------------------------------------------------------------------
Emergency Lighting: Ensure emergency lighting is provided at indoor pool area.
- --------------------------------- ------------------------------------------------------------------------------------------------
Exit Signs: Ensure adequate exit signage is provided at indoor pool area per standards and codes. Ensure
bright illumination.
- --------------------------------- ------------------------------------------------------------------------------------------------
Panic Hardware: Provide panic hardware at all exit doors in the indoor pool area
- --------------------------------- ------------------------------------------------------------------------------------------------
Fire Separation: Ensure indoor pool area meets fire separation requirements per codes and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Visual Heat/Smoke Detectors: Ensure adequate heat and smoke detectors are present at the indoor pool area per code and
standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Manual Pull Stations: Ensure manual pull stations are present at the indoor pool area per code and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
- --------------------------------- ------------------------------------------------------------------------------------------------
KITCHEN
- --------------------------------- ------------------------------------------------------------------------------------------------
Emergency Lighting: Ensure emergency lighting is provided.
- --------------------------------- ------------------------------------------------------------------------------------------------
Exit Signs: Ensure adequate exit signage is provided per standards and codes. Ensure bright illumination.
- --------------------------------- ------------------------------------------------------------------------------------------------
Panic Hardware: Provide panic hardware at all exit doors.
- --------------------------------- ------------------------------------------------------------------------------------------------
Fire Extinguisher: Provide required fire extinguishers per codes and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Fire Separation: Ensure area meets fire separation requirements per codes and standards
- --------------------------------- ------------------------------------------------------------------------------------------------
Heat/Smoke Detectors: Ensure adequate heat and smoke detectors are present per code and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Manual Pull Stations: Ensure manual pull stations are present per code and standards. Ensure a pull station is
located at the rear exit door wall.
- --------------------------------- ------------------------------------------------------------------------------------------------
Sprinklers:
- --------------------------------- ------------------------------------------------------------------------------------------------
3
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
- --------------------------------- ------------------------------------------------------------------------------------------------
Req. Number of Exits: Ensure adequate exit signage is provided per standards and codes. Ensure bright illumination.
- --------------------------------- ------------------------------------------------------------------------------------------------
- --------------------------------- ------------------------------------------------------------------------------------------------
INTERIOR CORRIDORS
- --------------------------------- ------------------------------------------------------------------------------------------------
Emergency Lighting: Ensure emergency lighting is provided, including in all stairwells and in all elevator cabs.
- --------------------------------- ------------------------------------------------------------------------------------------------
Exit Signs: Ensure adequate exit signage is provided per standard and codes. Ensure bright illumination.
- --------------------------------- ------------------------------------------------------------------------------------------------
Panic Hardware: Provide panic hardware at all exit doors.
- --------------------------------- ------------------------------------------------------------------------------------------------
Fire Extinguisher: Ensure fire extinguisher boxes are recessed into corridor walls.
- --------------------------------- ------------------------------------------------------------------------------------------------
Fire Separation: Ensure fire separation is maintained per standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Visual Heat/Smoke Detectors: Ensure adequate heat and smoke detectors are present per code and standards, including in
all stairwells.
- --------------------------------- ------------------------------------------------------------------------------------------------
Manual Pull Stations: Ensure manual pull stations are present per code and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Sprinklers:
- --------------------------------- ------------------------------------------------------------------------------------------------
Req. Number of Exits: Ensure adequate exit signage is provided per standards and codes. Ensure bright illumination.
- --------------------------------- ------------------------------------------------------------------------------------------------
Dead End (+25 Feet)
- --------------------------------- ------------------------------------------------------------------------------------------------
Fire Separation (1 hour min) Ensure area meets fire separation requirements per codes and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Sounding Devises: Ensure sounding devises are present per code and standards, including in all stairwells.
- --------------------------------- ------------------------------------------------------------------------------------------------
- --------------------------------- ------------------------------------------------------------------------------------------------
GUEST ROOMS
- --------------------------------- ------------------------------------------------------------------------------------------------
Fire Separation: Ensure area meets fire separation requirements per codes and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Heat/Smoke Detectors: Ensure hard wire smoke detectors are present per standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Visual Heat/Smoke Detectors in Ensure that visual heat and smoke detectors are present in the wheelchair accessible and rooms
ADA rooms for the deaf and hard of hearing per ADAAG standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Sprinklers:
- --------------------------------- ------------------------------------------------------------------------------------------------
Fire Separation (1 hour min) Ensure guest rooms meet fire separation requirements per codes and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
- --------------------------------- ------------------------------------------------------------------------------------------------
BACK OF HOUSE
- --------------------------------- ------------------------------------------------------------------------------------------------
Emergency Lighting: Ensure emergency lighting is provided.
- --------------------------------- ------------------------------------------------------------------------------------------------
Exit Signs: Ensure adequate exit signage is provided per standards and codes. Ensure bright illumination.
- --------------------------------- ------------------------------------------------------------------------------------------------
Panic Hardware: Provide panic hardware at all exit doors.
- --------------------------------- ------------------------------------------------------------------------------------------------
Fire Extinguisher: Provide required fire extinguishers per codes and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Fire Separation: Ensure area meets fire separation requirements per codes and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Heat/Smoke Detectors: Ensure adequate heat and smoke detectors are present per code and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Manual Pull Stations: Ensure manual pull stations are present per code and standards.
- --------------------------------- ------------------------------------------------------------------------------------------------
Sprinklers:
- --------------------------------- ------------------------------------------------------------------------------------------------
Req. Number of Exits: Ensure adequate exit signage is provided per standards and codes. Ensure bright illumination.
- --------------------------------- ------------------------------------------------------------------------------------------------
Dead End (+25 Feet) Ensure area meets fire separation requirements per codes and standards
- --------------------------------- ------------------------------------------------------------------------------------------------
Fire Separation (1 hour min)
- --------------------------------- ------------------------------------------------------------------------------------------------
18 Gauge Steel Cabinet Provide an 18 gauge steel cabinet for storage of flammable materials.
- --------------------------------- ------------------------------------------------------------------------------------------------
4
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
EXTERIOR
GENERAL DESCRIPTION:
The exterior will require moderate renovations to the Porte Cochere, roofline
and facade to update the appearance and address conditional issues. Professional
design assistance is required. All plans, color renderings and specifications
are to reviewed by Holiday Inn for approval prior to any renovation and
installation. ADA compliance certification letters are required at the time of
plan review.
- ------------------------- ----------- -----------------------------------------------------------------------
BASIS FOR
REQUIRED
AREAS REQUIRE ACTION ACTION CURE/REMEDY
- ------------------------- ----------- -----------------------------------------------------------------------
COMMERCIAL BUILDING
- ------------------------- ----------- -----------------------------------------------------------------------
Porte Cochere Competitive The Porte Cochere requires renovation in conjunction with the exterior
improvements to heighten curb appeal Install a new decorative synthetic
stucco parapet or metal hip, gable, mansard, or other appropriate roof
structure to coincide with the new commercial and rental building
roofline enhancements. Incorporate new interesting design elements into
the structure, such as frieze work, medallions, accent lighting and the
addition of built-out column capitals and bases. Provide new upgraded
light fixtures to the Porte Cochere underside and decorative fixtures
at the columns.
- ------------------------- ----------- -----------------------------------------------------------------------
Drive through surface Competitive Provide a new colored stamped concrete of new interlocking pavers
beneath the Porte Cochere. Integrate ADA compliant ramp into the new
drive through surface to eliminate the steep existing-ramp in front of
the entry doors.
- ------------------------- ----------- -----------------------------------------------------------------------
Building roof line / arch. Competitive Upgrade the existing flat, linear roof line. The roofline lacks detail
finishes & features and architectural interest. Incorporate new architectural details into
the existing commercial building parapet with an emphasis on vertical
roof line elements. These vertical roof line elements should be
repeated in a reoccurring pattern around the structure. Conceal all
rooftop equipment. Design enhancements must coordinate with the new
rental building and Porte Cochere upgrades. Submit new plans to Bass
Hotels & Resorts for review.
- ------------------------- ----------- -----------------------------------------------------------------------
Entrance doors Competitive Recommend installing power actuated (2 sets within a vestibule) doors
for guest convenience.
- ------------------------- ----------- -----------------------------------------------------------------------
Color scheme Condition Provide new color scheme to update and freshen the exterior appearance
Competitive of the Porte Cochere, commercial and rental buildings. Consider
horizontal or vertical earth tone contrasting colors or shading to add
interest.
- ------------------------- ----------- -----------------------------------------------------------------------
Service doors Repair all holes and refinish doors to like new condition. Replace the
service door and frame into the laundry area.
- ------------------------- ----------- -----------------------------------------------------------------------
5
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
- ------------------------- ----------- -----------------------------------------------------------------------
Auxiliary entrance doors Competitive Provide new permanent roof structures with decorative columns over the
Fizz, and three side entrances. Awnings are not permitted. Coordinate
with new Porte Cochere design.
- ------------------------- ----------- -----------------------------------------------------------------------
Commercial Windows/frames Condition Clean oxidation and repaint if necessary to achieve like new
appearance. Replace any cloudy windows or windows with broken seals.
For energy savings, recommended is tinting the sloped overhead windows
into Fizz or replacing them with a solid material.
- ------------------------- ----------- -----------------------------------------------------------------------
Lighting Competitive Provide new accent lighting such as concealed up-lighting from
landscape beds, and replace the existing building mounted sconces with
new sconces incorporated into the new cornice work. Install 2
additional lamps on each parking lot fixture that currently has 2
existing lamps for a total of 4 per fixture.
- ------------------------- ----------- -----------------------------------------------------------------------
Walkways Condition Repair and resurface sidewalks where lifting, sinking, stained or
damaged. Provide new topical surface treatment to return sidewalks to
like new condition. Ensure consistent finish throughout project.
- ------------------------- ----------- -----------------------------------------------------------------------
Flag poles Standards Provide additional nighttime illumination per standards.
- ------------------------- ----------- -----------------------------------------------------------------------
Kitchen/Delivery Screen Competitive Pressure wash existing delivery bay area concrete apron and maintain to
an acceptable clean condition. Install a delivery gate to screen off
the area from public view. Exposed chain link fencing is not permitted.
- ------------------------- ----------- -----------------------------------------------------------------------
News paper stands at entrance Competitive Upgrade the overall appearance of the news stands with an enclosure
that compliments the new Porte Cochere design.
- ------------------------- ----------- -----------------------------------------------------------------------
Trash cans Condition Replace and upgrade trash can and relocate in appropriate locations.
- ------------------------- ----------- -----------------------------------------------------------------------
SERVICE/ OUT BUILDINGS
- ------------------------- ----------- -----------------------------------------------------------------------
Recommended is putting a service building on the site to eliminate
clutter from laundry and other areas. Architecture finishes and feature
should coordinate with the new facade finishes.
- ------------------------- ----------- -----------------------------------------------------------------------
- ------------------------- ----------- -----------------------------------------------------------------------
RENTAL UNIT (GST. RM.)
BUILDINGS
- ------------------------- ----------- -----------------------------------------------------------------------
6
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
- ------------------------- ----------- -----------------------------------------------------------------------
Building roof line/arch. Competitive Upgrade the existing flat, linear roof line. Introduce elevation
finishes & features changes and vertical design elements, such as a decorative parapet or
peak roof structure to break up the long horizontal runs. These new
architectural enhancements must be repeated in a reoccurring pattern
around the structure. Ensure a continuity of design between the rental
building, commercial building and the Porte Cochere. Submit new plans
to Bass Hotels & Resorts for review. Provide new false pilasters, over
existing CMU's, along the existing exterior walls. Ensure continuity of
design with the Porte Cochere and commercial building improvements.
Conceal all drainage pipes and exposed conduits into the new stucco
facade.
- ------------------------- ----------- -----------------------------------------------------------------------
Color scheme Condition Provide new stucco finish color scheme to update and freshen the
Competitive exterior appearance of the Porte Cochere. commercial and rental
buildings. Consider horizontal or vertical earth tone contrasting
colors or shading to add interest.
- ------------------------- ----------- -----------------------------------------------------------------------
Auxiliary entrance doors Competitive Provide new permanent building mounted roof structures with roofline to
coordinate with new rental building improvements.
- ------------------------- ----------- -----------------------------------------------------------------------
Storefront windows/frames Condition The existing spandrel and glazing systems on the guest room building
Competitive are worn, dated and energy inefficient. As such, they will require
replacement and upgrading. Remove the entire existing exterior guest
room bay storefront system, including door and frame. Construct a new
metal stud wall with an exterior skin assembly of sheathing and
synthetic stucco (drywall finish on the interior). Provide new
insulated window units (with integral mullions), correctly proportioned
to the exterior facade, along with a new full blade louvers painted to
match the stucco color. Provide new metal insulated guest room exterior
entry doors. Window frames must utilize an accent color. bronze is not
acceptable.
- ------------------------- ----------- -----------------------------------------------------------------------
Windows/Frames Condition Clean oxidation and repaint if necessary to achieve like new
appearance. Replace any cloudy windows or windows with broken seals.
- ------------------------- ----------- -----------------------------------------------------------------------
HVAC/Grilles Competitive Provide new architectural louvers for all through wall HVAC units.
Paint to match new accent color.
- ------------------------- ----------- -----------------------------------------------------------------------
Recessed fire extinguishers Competitive Recess fire extinguisher cabinets into walls and columns to eliminate
protrusion into the walkway traffic areas.
- ------------------------- ----------- -----------------------------------------------------------------------
Walkways Condition Repair and resurface sidewalks where lifting, sinking, stained or
damaged. Provide new topical surface treatment to return sidewalks to
like new condition. Ensure consistent finish throughout project.
- ------------------------- ----------- -----------------------------------------------------------------------
7
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
- ------------------------- ----------- -----------------------------------------------------------------------
PARKING
- ------------------------- ----------- -----------------------------------------------------------------------
Asphalt Parking Condition Repair any cracked and damaged parking lot surfaces to like new
condition. Ensure low spots are corrected to eliminate/avoid ponding
water.
- ------------------------- ----------- -----------------------------------------------------------------------
Wheelchair accessible parking Condition Include blue striped access aisles, signage and proper curb cuts per
spaces. ADA requirements.
- ------------------------- ----------- -----------------------------------------------------------------------
Lighting Standards Increase lighting in all parking areas to meet I-foot candle minimum
per the standards by installing 2 additional lamps to the fixtures that
currently have 2 existing lamps.
- ------------------------- ----------- -----------------------------------------------------------------------
Curbing Condition Repair all cracked and broken curbing. Remove all painted curbs, unless
required by local code.
- ------------------------- ----------- -----------------------------------------------------------------------
Transformers Condition Seek permission from the proper authorities to install an upgraded
enclosure around the transformer
- ------------------------- ----------- -----------------------------------------------------------------------
- ------------------------- ----------- -----------------------------------------------------------------------
LANDSCAPING
- ------------------------- ----------- -----------------------------------------------------------------------
Rental Units Install additional shrubs and hedges along the guest room building.
Include fresh plantings with seasonal foliage to increase overall
appearance.
- ------------------------- ----------- -----------------------------------------------------------------------
- ------------------------- ----------- -----------------------------------------------------------------------
EXTERIOR SWIMMING POOL
- ------------------------- ----------- -----------------------------------------------------------------------
Deck Finish Condition Provide a new topical deck surface treatment, such as Sundeck. Submit
product specifications to Bass Hotels and Resorts for approval.
- ------------------------- ----------- -----------------------------------------------------------------------
Pool furnishings Condition Replace and upgrade existing pool deck furniture. Plastic resin
Competitive furniture is not acceptable. Provide new high quality, commercial grade
chairs, tables and chaise lounges. Furnish ample number of shade
umbrellas for guest comfort.
- ------------------------- ----------- -----------------------------------------------------------------------
Whirlpool Standards Provide 15-minute timer and emergency cut-off switch per standards.
- ------------------------- ----------- -----------------------------------------------------------------------
Drainage(2drains req.)(vortex) Standards Provide two anti-vortex drains per Holiday Inn standards.
- ------------------------- ----------- -----------------------------------------------------------------------
8
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
LOBBY/ENTRANCE/FRONT DESK
GENERAL DESCRIPTION:
The lobby and entry vestibule will require moderate renovations to furnishings,
fixtures and equipment update the appearance and address conditional issues.
Professional design assistance is required. All plans, color renderings and
specifications are to reviewed by Holiday inn for approval prior to any
renovation and installation. ADA compliance certification letters are required
at the time of plan review.
BASIS FOR
REQUIRED
AREAS REQUIRE ACTION ACTION CURE/REMEDY
- ------------------------- ----------- -----------------------------------------------------------------------
LOBBY One of the guest's first impressions of a Holiday Inn(R) hotel occurs in
the lobby. The lobby, therefore, must be a welcome, attractive,
uncluttered space reflecting the overall decor of the hotel and
maintaining comfortable, residential ambiance. The lobby must offer
inviting, comfortable seating and appropriate lighting.
- ------------------------- ----------- -----------------------------------------------------------------------
Vestibule Doors/Frames Condition Recondition to like new. Recommend installing power actuated (2 sets
within a vestibule) doors for guest convenience.
- ------------------------- ----------- -----------------------------------------------------------------------
Vestibule Floor Condition Replace and upgrade the existing floor tiles with new marble tiles with
a minimum static coefficient of 0.6 per ASTM 1028. Install recessed
walk-off mat. Surface mats are not permitted.
- ------------------------- ----------- -----------------------------------------------------------------------
Vestibule Walls Condition Replace and upgrade existing wall finishes to coordinate with new lobby
wall finishes.
- ------------------------- ----------- -----------------------------------------------------------------------
Vestibule Ceiling Condition Replace existing ceiling system.
- ------------------------- ----------- -----------------------------------------------------------------------
Vestibule Lighting Competitive Replace and upgrade lighting fixtures.
- ------------------------- ----------- -----------------------------------------------------------------------
Luggage Carts Standards Provide minimum 2 luggage carts per standards addendum. Carts must be
stored in an appropriate area when not in use.
- ------------------------- ----------- -----------------------------------------------------------------------
Directional Signage Condition Install a full coordinated directional signage package throughout the
Competitive entire lobby, commercial and guest room areas. All signage must be ADA
compliant.
- ------------------------- ----------- -----------------------------------------------------------------------
Lobby Ceiling Condition Replace and upgrade lobby ceiling with new recessed edge, 2'x2'
Competitive architectural ceiling tiles with updated surface texture. Provide new
decorative ceiling elements, such as coffer and beams, or tray ceiling
with concealed cove lighting to add interest.
- ------------------------- ----------- -----------------------------------------------------------------------
Lobby Walls Replace existing wall vinyl with new 20 oz. wall vinyl.
- ------------------------- ----------- -----------------------------------------------------------------------
Lobby Floors Replace and upgrade the existing floor tiles with new marble tiles with
a minimum static coefficient of 0.6 per ASTM 1028. Install recessed
walk-off mat. Surface mats are not permitted.
- ------------------------- ----------- -----------------------------------------------------------------------
Windows Condition Paint, clad or replace existing worn aluminum window frames. Replace
any windows with broken seals.
- ------------------------- ----------- -----------------------------------------------------------------------
Window Treatments condition Install window treatments. Install new sheers with appropriate side
panels and valance to soften the seating areas.
- ------------------------- ----------- -----------------------------------------------------------------------
9
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
- ------------------------- ----------- -----------------------------------------------------------------------
Lobby Feature Standards Provide a lobby feature or an architectural point of interest per
standards, such as a focal table with large flower arrangement to give
visual interest.
- ------------------------- ----------- -----------------------------------------------------------------------
Furnishings Condition Replace and upgrade furnishings with new updated seating group and
occasional tables. Provide a mixture of colors, textures and fabrics
for visual interest.
- ------------------------- ----------- -----------------------------------------------------------------------
Ceiling Lighting Competitive Provide a central chandelier to coordinate with the new lobby feature.
- ------------------------- ----------- -----------------------------------------------------------------------
Decor Competitive Provide a complete art and accessories package to include framed
original artwork, table top accessory items, well scaled lamps, plants
and other similar items to create a residential environment. Coordinate
the existing brochures into the new decor.
- ------------------------- ----------- -----------------------------------------------------------------------
Area Lighting Competitive Provide for all seating arrangements.
- ------------------------- ----------- -----------------------------------------------------------------------
Public Telephone Standards Install new privacy partitions, counter, and appropriate seating for
Condition the public telephones that compliment the new lobby finishes. Ensure at
least one phone is ADA compatible. Provide power outlet at the
wheelchair accessible telephone and a sign indicating that a TDD is
available for use at the front desk.
- ------------------------- ----------- -----------------------------------------------------------------------
Drinking Fountain Standards Provide a "high/low" unit for guests in wheelchairs and guests that
stand.
- ------------------------- ----------- -----------------------------------------------------------------------
Ash/ waste receptacles Replace and upgrade receptacles.
- ------------------------- ----------- -----------------------------------------------------------------------
GM office Condition Replace and upgrade carpet. Install wall vinyl. Provide artwork to
walls. Replace sled base chairs and round tables. Relocate Xerox
machine from entrance: reduce clutter. Repaint doors and frames.
Electrostatically paint existing filing cabinets.
- ------------------------- ----------- -----------------------------------------------------------------------
Accounting Office Condition Eliminate clutter from the office. Conceal all exposed wiring in an
appropriate chase or enclosure.
- ------------------------- ----------- -----------------------------------------------------------------------
REGISTRATION DESK The registration desk must be modified to comply with ADA requirements.
Specifically, a 3' wide section located 3' above the finished floor
must be provided for guests who use wheelchairs or guests that wish to
register sitting down.
- ------------------------- ----------- -----------------------------------------------------------------------
Registration desk top & face Condition Reconfigure front desk design as needed to eliminate the ability to
Competitive view behind the front desk to observe transactions.
Replace and upgrade the dated front desk facing to coordinate with
other new upgraded lobby finishes. Incorporate new design elements into
the facing, such as vertical and horizontal trim pieces, reveals, etc.
Provide new hard surface desk top, such as marble. Plans to be reviewed
by Holiday Inn for approval.
- ------------------------- ----------- -----------------------------------------------------------------------
Work Area Exposed Competitive Conceal all equipment and work areas from guest view. Eliminate all
clutter from the area.
- ------------------------- ----------- -----------------------------------------------------------------------
10
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
- ------------------------- ----------- -----------------------------------------------------------------------
Ceiling Competitive Install a new bulkhead with soffit lighting above the registration
counter.
- ------------------------- ----------- -----------------------------------------------------------------------
Walls Remove mirrors and wall sconces.
- ------------------------- ----------- -----------------------------------------------------------------------
Artwork Competitive Provide original art piece on wall behind the front desk. Art piece
must be well scaled, decoratively framed, and should reflect locale of
hotel.
- ------------------------- ----------- -----------------------------------------------------------------------
Floor Condition Replace and upgrade to match new lobby carpet.
- ------------------------- ----------- -----------------------------------------------------------------------
Lighting Competitive Install new upgraded lighting above the registration counter. Existing
lighting is not bright enough.
- ------------------------- ----------- -----------------------------------------------------------------------
Signage Standards Provide appropriate Manager on Duty and Owner/Operator signage. See
Holiday Inn standards for proper wording.
- ------------------------- ----------- -----------------------------------------------------------------------
Safety Deposit Boxes Standards Replace plastic laminate top and front surfaces.
- ------------------------- ----------- -----------------------------------------------------------------------
Fax machine Standards Provide for guest convenience.
- ------------------------- ----------- -----------------------------------------------------------------------
11
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
PUBLIC RESTROOMS
GENERAL DESCRIPTION:
The public restrooms will require moderate renovations to furnishings, fixtures
and equipment update the appearance and address conditional issues. Professional
design assistance is required. All plans, color renderings and specifications
are to reviewed by Holiday Inn for approval prior to any renovation and
installation. ADA compliance certification letters are required at the time of
plan review.
BASIS FOR
REQUIRED
AREAS REQUIRE ACTION ACTION CURE/REMEDY
- ------------------------- ----------- -----------------------------------------------------------------------
RESTROOM
- ------------------------- ----------- -----------------------------------------------------------------------
Accessible Standards Ensure that all public restrooms meet the Americans with Disabilities
Act.
- ------------------------- ----------- -----------------------------------------------------------------------
Signage Condition Install signage to coordinate with overall directional
Competitive signage package. Room signage needs to meet ADA.
- ------------------------- ----------- -----------------------------------------------------------------------
Entry/Door Frame(self Condition Repair, and refinish doors and frames to like new condition. Install
closing) new door hardware including handles, pulls and kick plates.
- ------------------------- ----------- -----------------------------------------------------------------------
Ceiling Condition Replace existing ceiling system with new 2x2 recessed architectural
ceiling system.
- ------------------------- ----------- -----------------------------------------------------------------------
Walls (4'wainscot @ Condition Replace existing wall finishes. Provide a new 4' tile wainscot at all
plumbing wall) fixture walls and new Type II, 20 oz. wall vinyl at all remaining
walls.
- ------------------------- ----------- -----------------------------------------------------------------------
Floor/cove base Condition Replace and upgrade the existing 1x1 green floor tiles. Replacement
Competitive tiles must be a minimum 8" x 8" in a neutral tone. Provide a
coordinating tile cove base and threshold.
- ------------------------- ----------- -----------------------------------------------------------------------
Lighting Competitive Lighting must remain on continuously at all times; install
Standards keyed switch or motion sensor.
- ------------------------- ----------- -----------------------------------------------------------------------
Vanity Condition Replace all vanities with new upgraded solid surface tops and fronts.
Provide new under mounted sink bowls, hardware, soap dispensers and
tissue dispensers. Conceal all under counter plumbing, pipes, etc. from
guest view.
- ------------------------- ----------- -----------------------------------------------------------------------
Vanity Lighting Competitive Provide new boxed soffit lighting over the full width of the vanity.
Install upgraded parabolic light diffuser.
- ------------------------- ----------- -----------------------------------------------------------------------
Vanity hardware Competitive Replace and upgrade to single lever handles.
- ------------------------- ----------- -----------------------------------------------------------------------
Mirrors Condition Replace and upgrade worn, delivered mirrors. Ensure mirrors are full
width over the vanities.
- ------------------------- ----------- -----------------------------------------------------------------------
Soap Dispensers Competitive Integrate the soap dispensers into the "new" vanity top.
- ------------------------- ----------- -----------------------------------------------------------------------
Towel/waste receptacles Provide new recessed or semi-recessed paper towel/trash receptacles.
Remove any free standing trash units.
- ------------------------- ----------- -----------------------------------------------------------------------
Urinals/hardware Install a lowered urinal per the ADA.
- ------------------------- ----------- -----------------------------------------------------------------------
12
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
- ------------------------- ----------- -----------------------------------------------------------------------
Toilet Partitions Condition Replace with new upgraded plastic laminate partitions that compliment
the new restroom decor. Ensure ADA requirements are meet. Provide
matching urinal screens in the men's room.
- ------------------------- ----------- -----------------------------------------------------------------------
Reserve Toilet Tissue Standards Provide in each stall per standards.
Dispenser
- ------------------------- ----------- -----------------------------------------------------------------------
HVAC Condition Replace and upgrade the existing HVAC vent covers.
- ------------------------- ----------- -----------------------------------------------------------------------
Baby Changing Stations Standards Provide a baby changing station in one men's and one women's restroom.
- ------------------------- ----------- -----------------------------------------------------------------------
13
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
FOOD SERVICE FACILITIES
GENERAL DESCRIPTION:
The restaurant is currently located on a raised area of the atrium and will
require a ramp that meets the ADA guidelines. Strongly recommended is relocating
the restaurant into the Fizz lounge. Professional design assistance is required.
All plans, color renderings and specifications are to reviewed by Holiday Inn
for approval prior to any renovation and installation. ADA compliance
certification letters are required at the time of plan review. Ensure restaurant
complies with the Best-4-Breakfast program.
BASIS FOR
REQUIRED
AREAS REQUIRE ACTION ACTION CURE/REMEDY
- ------------------------- ----------- -----------------------------------------------------------------------
FACILITIES
- ------------------------- ----------- -----------------------------------------------------------------------
Signage Condition Replace and upgrade signage due to worn / dated condition. Coordinate
Competitive with new signage package throughout the hotel.
- ------------------------- ----------- -----------------------------------------------------------------------
Owner/Operator Sign Standards Provide per standards. See standards manual for proper wording.
- ------------------------- ----------- -----------------------------------------------------------------------
Walls Condition Replace and upgrade the existing worn wall vinyl. Replacement vinyl
must be a Type II, 20 oz. material.
- ------------------------- ----------- -----------------------------------------------------------------------
Floor Condition Replace and upgrade worn carpet and pad. Replace existing floor tile.
Provide new coordinating carpet, wood or low profile vinyl base.
- ------------------------- ----------- -----------------------------------------------------------------------
Steps Standards Install adequate step lighting leading to raised seating areas. Ensure
adequate handrails are provided to meet standards.
- ------------------------- ----------- -----------------------------------------------------------------------
Host/Cashier Station Standards Remove all storage from behind station.
Condition
- ------------------------- ----------- -----------------------------------------------------------------------
Tables Condition Replace. Provide new to coordinate with decor theme.
- ------------------------- ----------- -----------------------------------------------------------------------
Chairs Condition Replace and upgrade all chairs. Provide an updated style chair to
compliment the overall decor scheme of the room. Select a chair with a
fabric upholstered seat and back.
- ------------------------- ----------- -----------------------------------------------------------------------
Kitchen Access Condition
- ------------------------- ----------- -----------------------------------------------------------------------
Buffet Condition Replace the skirted tables being used as a buffet with a new permanent
built-in buffet unit which will provide proper heating and cooling for
food items. Provide sneeze guards. Relocate out of the atrium area and
into the restaurant.
- ------------------------- ----------- -----------------------------------------------------------------------
Planting Competitive Provide container plants to soften room and enhance visual interest and
atmosphere.
- ------------------------- ----------- -----------------------------------------------------------------------
Grab & Go Standards Provide a permanent area to accommodate the Grab & Go concept.
- ------------------------- ----------- -----------------------------------------------------------------------
14
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
LOUNGE FACILITIES
GENERAL DESCRIPTION:
The lounge will require moderate renovations to furnishings, fixtures and
equipment update the appearance and address conditional issues. Professional
design assistance is required. All plans, color renderings and specifications
are to reviewed by Holiday Inn for approval prior to any renovation and
installation. ADA compliance certification letters are required at the time of
plan review
- ------------------------- ----------- -----------------------------------------------------------------------
BASIS FOR
REQUIRED
AREAS REQUIRE ACTION ACTION CURE/REMEDY
- ------------------------- ----------- -----------------------------------------------------------------------
- ------------------------- ----------- -----------------------------------------------------------------------
FACILITIES
- ------------------------- ----------- -----------------------------------------------------------------------
Entrance Condition Replace the wall vinyl and globe lighting fixture with an upgraded
lighting fixture.
- ------------------------- ----------- -----------------------------------------------------------------------
Signage Condition Replace and upgrade signage due to worn / dated condition
Competitive Coordinate with new signage package throughout the hotel.
- ------------------------- ----------- -----------------------------------------------------------------------
Owner/Operator Sign Standards Provide per standards. See standards manual for proper wording.
- ------------------------- ----------- -----------------------------------------------------------------------
Ceiling Replace the existing ceiling system.
- ------------------------- ----------- -----------------------------------------------------------------------
Walls Replace the existing wall vinyl.
- ------------------------- ----------- -----------------------------------------------------------------------
Floor condition Replace and upgrade the existing worn carpet and coordinate with new
decor theme.
Refinish existing wood dance floor to like new condition or replace or
remove.
Replace |x| tile around the bar with new approved flooring.
- ------------------------- ----------- -----------------------------------------------------------------------
Window Treatments Condition Provide new upgraded fabric window treatments. Blinds are not
permitted.
- ------------------------- ----------- -----------------------------------------------------------------------
Lighting Condition Provide adequate lighting for seating areas and task lighting
Standards for servers.
- ------------------------- ----------- -----------------------------------------------------------------------
Lighting/Dimmer Control Condition Replace lighting fixtures with new upgraded fixtures with provide
Competitive adequate illumination. Provide decorative wall mounted and ceiling hung
fixtures.
- ------------------------- ----------- -----------------------------------------------------------------------
Decor Competitive Provide a new upscale decor theme to enliven the lounge. If the photos
are to be part of the new decor theme then they should be professional
mounted and framed and coordinated into the new concept.
- ------------------------- ----------- -----------------------------------------------------------------------
Tables Competitive Replace all tables.
- ------------------------- ----------- -----------------------------------------------------------------------
Chairs Condition Replace and upgrade all seating, including bar stools and soft seating.
Ensure all new seating features fully fabric upholstered seats and
backs.
- ------------------------- ----------- -----------------------------------------------------------------------
Booths Condition Replace and upgrade the booths due to worn condition. Seat backs must
be a fabric upholstered material.
- ------------------------- ----------- -----------------------------------------------------------------------
Bar glass rack Competitive The existing rack is dated in appearance and I recommend removing the
rack and designing an alternative method of storing glasses.
- ------------------------- ----------- -----------------------------------------------------------------------
15
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
- ------------------------- ----------- -----------------------------------------------------------------------
Bar Top/Rail/Facing Condition Replace bar top and facing with new finishes that compliment new lounge
design/decor theme.
- ------------------------- ----------- -----------------------------------------------------------------------
Back Bar Condition Replace back bar finishes to compliment new lounge decor. Eliminate all
clutter. Position point-of-sale system out of guest view by
appropriately screening or recessing.
- ------------------------- ----------- -----------------------------------------------------------------------
Television Enclosures Competitive Provide for all televisions. Conceal all cables and wiring from guest
view.
- ------------------------- ----------- -----------------------------------------------------------------------
Popcorn/Vending Machines Competitive Remove or relocate machines to an appropriate location.
- ------------------------- ----------- -----------------------------------------------------------------------
16
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
MEETING / BANQUET ROOMS
GENERAL DESCRIPTION;
The pre-function and meeting areas will require moderate renovations to
furnishings, fixtures and equipment update the appearance and address
conditional issues. Professional design assistance is required. All plans,
color renderings and specifications are to reviewed by Holiday Inn for approval
prior to any renovation and installation. ADA compliance certification letters
are required at the time of plan review.
BASIS FOR
REQUIRED
AREAS REQUIRE ACTION ACTION CURE/REMEDY
- ------------------------- ----------- -----------------------------------------------------------------------
MEETING-BANQUET FACILITIES
- ------------------------- ----------- -----------------------------------------------------------------------
Prefunction Area Condition Replace the existing ceiling tiles.
- ------------------------- ----------- -----------------------------------------------------------------------
Door Hardware/Frames Condition Replace the pink doors and sand the frames. Coordinate with new decor
theme.
- ------------------------- ----------- -----------------------------------------------------------------------
Door Signage Competitive Replace and upgrade signage due to worn / dated condition. Coordinate
with new signage package throughout the hotel.
- ------------------------- ----------- -----------------------------------------------------------------------
Door Viewer Standards Provide door viewers per the standards at 48 inches above the finish
floor.
- ------------------------- ----------- -----------------------------------------------------------------------
Ceiling Standards Replace the existing ceiling system with a new 2x2 recessed ceiling
Competitive tile system.
- ------------------------- ----------- -----------------------------------------------------------------------
Walls Competitive Install new type II wall vinyl on all walls. Refinish all wood trim,
base and chair rails.
- ------------------------- ----------- -----------------------------------------------------------------------
Partitions (50 STC Min.) Condition Install new type II wall vinyl on all partitions.
- ------------------------- ----------- -----------------------------------------------------------------------
Floor Condition Replace the carpet.
- ------------------------- ----------- -----------------------------------------------------------------------
Tables Condition Replace and upgrade any worn tables.
- ------------------------- ----------- -----------------------------------------------------------------------
17
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
ATRIUMS/POOL ENCLOSURES
GENERAL DESCRIPTION:
The fitness room will require moderate renovations to furnishings, fixtures
and equipment update the appearance and address conditional issues. Professional
design assistance is required. All plans, color renderings and specifications
are to reviewed by Holiday Inn for approval prior to any renovation and
installation. ADA compliance certification letters are required at the time of
plan review
BASIS FOR
REQUIRED
AREAS REQUIRE ACTION ACTION CURE/REMEDY
- ------------------------- ----------- -----------------------------------------------------------------------
STRUCTURE BUILDING Competitive The existing atrium space is drab, dark and uninviting. Create a more
Condition enlivened atmosphere, one that is bright and bold. Bring the facing
guest rooms into the new vibrant interior make these guests want to
keep their drapes open. Design in liberal amounts of accent decor
items. such as colorful accent walls, ceiling banners, flags, hanging
light fixtures, umbrellas, contemporary furniture and like items. Add
pavilions, trellises and other structures to bring down the level of
the space. Brighten up the area with new light fixtures utilizing a
variety of lighting techniques. Round out the design with upgraded
hardscape and generous amounts of exotic landscaping. Professional
design assistance is required. Submit all plans to Bass Hotels &
Resorts for review.
- ------------------------- ----------- -----------------------------------------------------------------------
Ceiling Replace the existing ceiling tile. Ensure skylights are not leaking.
- ------------------------- ----------- -----------------------------------------------------------------------
Walls Where the exterior and interior block walls are seen together; continue
the stucco finishes into the interior CMU's walls. On the remaining
blocks walls not covered in stucco; stain the block to match the new
color.
- ------------------------- ----------- -----------------------------------------------------------------------
Floor Replace the existing floor tiles.
- ------------------------- ----------- -----------------------------------------------------------------------
FITNESS ROOM Furnish per the Holiday Inn "Fitness Center Guidelines/Standards"
manual.
- ------------------------- ----------- -----------------------------------------------------------------------
Entrance Condition Provide a new entrance from the pool side of the fitness center.
- ------------------------- ----------- -----------------------------------------------------------------------
Restroom Condition Either make the restroom wheelchair accessible or consider removing it.
Maybe provide a sink and vanity only.
- ------------------------- ----------- -----------------------------------------------------------------------
Ceiling Standards Minimum 8' high 10' recommended.
- ------------------------- ----------- -----------------------------------------------------------------------
Walls Standards Provide one fully mirrored wall.
- ------------------------- ----------- -----------------------------------------------------------------------
Floor Standards Provide a minimum 28 oz. carpet per Fitness Center standards.
- ------------------------- ----------- -----------------------------------------------------------------------
Door/Frame (elec. Lock) Standards Provide with electronic lock.
- ------------------------- ----------- -----------------------------------------------------------------------
Visual access Standards Provide a glass door, door viewer or window with a minimum of 144 sq.
in, of continuous viewing space.
- ------------------------- ----------- -----------------------------------------------------------------------
18
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
HVAC Standards Provide to maintain a constant 68-72 degrees Fahrenheit temperature.
- ------------------------- ----------- -----------------------------------------------------------------------
Exercise Equipment Standards 3 pieces of brand name exercise equipment are required, such as
(minimum 3, depending on Lifecycle. Stairmaster and Nordic-track. Minimum 2 treadmills and 1
size of hotel) upright bike required. Include equipment instructions.
- ------------------------- ----------- -----------------------------------------------------------------------
House Telephone Standards Provide a house phone that rings directly to the switchboard.
- ------------------------- ----------- -----------------------------------------------------------------------
Magazine Rack Competitive Recommended to provide.
- ------------------------- ----------- -----------------------------------------------------------------------
Drinking Water Standards Provide a chilled drinking water fountain or chilled bottled water
cooler per standards.
- ------------------------- ----------- -----------------------------------------------------------------------
Towels and towel racks Standards Provide per the Holiday Inn Fitness Center Guidelines/Standards.
- ------------------------- ----------- -----------------------------------------------------------------------
Area map Standards Provide a detailed map of the area around the hotel showing streets,
landmarks a distances, including 1, 3 and 6 mile routes.
- ------------------------- ----------- -----------------------------------------------------------------------
Clock Standards A wall mounted minimum size 14" diameter clock is required.
- ------------------------- ----------- -----------------------------------------------------------------------
TV Standards Provide a 25" minimum size T.V.
- ------------------------- ----------- -----------------------------------------------------------------------
Artwork Competitive Provide colorful graphics with a sports theme
- ------------------------- ----------- -----------------------------------------------------------------------
Scale Standards Provide per standards.
- ------------------------- ----------- -----------------------------------------------------------------------
Lighting Standards Provide 50-60 foot-candles of ambient neutral color temperature
fluorescent lighting per standards.
- ------------------------- ----------- -----------------------------------------------------------------------
- ------------------------- ----------- -----------------------------------------------------------------------
INTERIOR POOL/
SAUNA/WHIRLPOOL
- ------------------------- ----------- -----------------------------------------------------------------------
Pool furnishings Condition Replace and upgrade existing pool deck furniture. Provide new high
quality, commercial grade chairs, tables and chaise lounges. Furnish
ample number of shade umbrellas for guest comfort.
- ------------------------- ----------- -----------------------------------------------------------------------
Whirlpool (15timer&Kill Ensure that the 15 timer and kill switch is in proper working
switch?) condition.
- ------------------------- ----------- -----------------------------------------------------------------------
Drainage(2drains req.) Install an anti vortex drain.
(vortex)
- ------------------------- ----------- -----------------------------------------------------------------------
Fence Standard Pool must be secured with appropriately designed, decorative 4'0"
minimum height fence with a self-closing and latching gate.
- ------------------------- ----------- -----------------------------------------------------------------------
19
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
KITCHEN
GENERAL DESCRIPTION
- ------------------------- ----------- -----------------------------------------------------------------------
BASIS FOR
REQUIRED
AREAS REQUIRE ACTION ACTION CURE/REMEDY
- ------------------------- ----------- -----------------------------------------------------------------------
FACILITIES
- ------------------------- ----------- -----------------------------------------------------------------------
Ceiling (Washable) Replace damage ceiling title.
- ------------------------- ----------- -----------------------------------------------------------------------
Equipment Install a metal shield between the grease fryer and the open flame
grille.
- ------------------------- ----------- -----------------------------------------------------------------------
Walk-ins Replace seals on all walk-ins.
- ------------------------- ----------- -----------------------------------------------------------------------
20
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
INTERIOR CORRIDORS
GENERAL DESCRIPTION:
The interior corridors will require moderate renovations to furnishings,
fixtures and equipment update the appearance and address conditional issues.
Professional design assistance is required. All plans, color renderings and
specifications are to reviewed by Holiday Inn for approval prior to any
renovation and installation. ADA compliance certification letters are required
at the time of plan review
- ------------------------- ----------- -----------------------------------------------------------------------
BASIS FOR
REQUIRED
AREAS REQUIRE ACTION ACTION CURE/REMEDY
- ------------------------- ----------- -----------------------------------------------------------------------
CORRIDOR
- ------------------------- ----------- -----------------------------------------------------------------------
Doors Condition Repaint all door frames in conjunction with the guest room
improvements.
- ------------------------- ----------- -----------------------------------------------------------------------
Signage Condition Replace all signage, including door numbers, vending, and directional,
Standards with new upgraded signage package. All non-smoking rooms must have
Competitive designated signage. All signage must be ADA compliant, and be
consistent throughout the hotel. Return doors to like new condition
where old signage was removed from the doors.
- ------------------------- ----------- -----------------------------------------------------------------------
Walls Condition Replace and upgrade existing wall vinyl with new Type II wall vinyl.
Replace and upgrade chair rail with new architectural millwork.
Remove ash urns from walls.
Provide an architectural millwork package to further enhance
improvements.
- ------------------------- ----------- -----------------------------------------------------------------------
Misc. Doors Repair any damaged or worn doors and frames.
- ------------------------- ----------- -----------------------------------------------------------------------
Floor Replace carpet on the 3rd floor. Remove the 12 inch base and
replace with a 4 - 6 inch carpet base.
- ------------------------- ----------- -----------------------------------------------------------------------
Lighting Replace the existing wall sconces with new light sconces that do not
protrude more than 4 inches from the wall. Install 4 additional sconces
in each corridor. Center between existing locations. Corridors must
have 20 foot candles of light per the standards.
Replace the under sized fluorescent fixtures at the guest room bulk
heads with fixtures that span the full length of the bulk head.
- ------------------------- ----------- -----------------------------------------------------------------------
Window Treatments Install window treatments at the window ends of all corridors.
- ------------------------- ----------- -----------------------------------------------------------------------
Misc. vents & grills Condition Replace any damaged miscellaneous vents and grills.
- ------------------------- ----------- -----------------------------------------------------------------------
- ------------------------- ----------- -----------------------------------------------------------------------
VENDING
- ------------------------- ----------- -----------------------------------------------------------------------
Alcoves Standards Relocate all vending machines to appropriate vending alcoves. Vending
alcoves must include full height wing walls, Type II wallcovering or
acrylic knockdown wall finish, appropriate lighting and fully grounded
electrical outlets (GFIC).
- ------------------------- ----------- -----------------------------------------------------------------------
21
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
- ------------ --------- -----------------------------------------------------
Walls Condition Replace with new upgraded wall finishes to match the
corridor.
- ------------ --------- -----------------------------------------------------
ELEVATORS Ensure elevators meet ADA
- ------------ --------- -----------------------------------------------------
Door Finish Condition Paint elevator doors and frames to coordinate with
finishes
- ------------ --------- -----------------------------------------------------
Ceiling Replace existing ceiling with new ceiling system.
- ------------ --------- -----------------------------------------------------
Walls Replace existing plastic laminate with new upgraded
design.
- ------------ --------- -----------------------------------------------------
Floor Finish Condition Replace and upgrade to match and/or coordinate with
lobby and corridor floor finishes.
- ------------ --------- -----------------------------------------------------
Lighting Condition Provide additional lighting to increase illumination.
- ------------ --------- -----------------------------------------------------
22
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
GUEST ROOMS
GENERAL DESCRIPTION:
The guest rooms will require moderate renovations to furnishings, fixtures and
equipment update the appearance and address conditional issues. A total of 8
wheelchair accessible are required 2 of which shall have a roll in shower.
Professional design assistance is required. All plans, color renderings and
specifications are to reviewed by Holiday Inn for approval prior to any
renovation and installation. ADA compliance certification letters are required
at the time of plan review
BASIS FOR
REQUIRED
AREAS REQUIRE ACTION ACTION CURE/REMEDY
- --------------------------- ----------------- ---------------------------------------------------------------
STRUCTURE BASE BUILDING
- --------------------------- ----------------- ---------------------------------------------------------------
Doors/Hardware
- --------------------------- ----------------- ---------------------------------------------------------------
Door Numbers Standards Provide new ADA compliant guest room door number plaques
Plaques must have raised numbers and Braille inscription. Mount
plaques 60" above the finished floor on the wall adjacent to
the latch side of the door.
- --------------------------- ----------------- ---------------------------------------------------------------
Self-Closing Standards Ensure all self-closing devices are properly adjusted and fully
operational.
- --------------------------- ----------------- ---------------------------------------------------------------
Closet walls Install new wall finish to coordinate with guest room wall
finish.
- --------------------------- ----------------- ---------------------------------------------------------------
Soundproofing Standards Provide sound gasket at connecting room doors per standards.
- --------------------------- ----------------- ---------------------------------------------------------------
Electrical Outlets Standards Ensure an electrical outlet and data port are conveniently
located near all work surface areas. Eliminate excessive cord
visibility by installing addition outlets as required to
service the equipment.
- --------------------------- ----------------- ---------------------------------------------------------------
Service vanity Replace all black plastic laminate on service vanities.
- --------------------------- ----------------- ---------------------------------------------------------------
INTERIOR BUILDING
FINISHES/LIGHTING
- --------------------------- ----------------- ---------------------------------------------------------------
Ceiling Condition Repaint ceilings to like new condition. Repair any
irregularities prior to painting.
- --------------------------- ----------------- ---------------------------------------------------------------
Walls Condition Replace and upgrade existing wall finishes. Provide new Holiday
Inn standardized room decor wall vinyl or color integrated
acrylic knockdown wall finish per specifications. All existing
wall finishes must be removed, and walls appropriately prepared
prior to receipt of new wall finish.
- --------------------------- ----------------- ---------------------------------------------------------------
Floor Condition Replace and upgrade worn carpet and pad. Provide a new Holiday
Inn standardized room decor carpet. Provide a coordinating
carpet base or 2-1/2" straight vinyl base. Prepare floor
surfaces prior to installation of new floor finishes.
- --------------------------- ----------------- ---------------------------------------------------------------
Entry Light Competitive Replace and upgrade with decorative wall sconce.
- --------------------------- ----------------- ---------------------------------------------------------------
23
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
- --------------------------- ------------------- ---------------------------------------------------------------
Lighting Condition Replace and upgrade existing worn guest room lighting package
to include new table and floor lamps with new Holiday Inn
standardized room decor lighting. Wall mounted lamps will not
be acceptable. Coordinate all lamps and shades. All bulbs must
provide a minimum of 100 watts of light. Provide touch
sensitive fixtures in ADA accessible rooms. Provide smart lamps
at work areas.
Replace and upgrade ceiling mounted entry lights.
- --------------------------- ------------------- ---------------------------------------------------------------
SOFT GOODS All new soft goods must comply with the new Holiday Inn
standardized room decor program.
- --------------------------- ------------------- ---------------------------------------------------------------
Window Treatment Condition Standards Replace all drapes with new upgraded window treatments that
comply with the new Holiday Inn standardized room decor
program. These include sheers and over-drapes with blackout
lining.
- --------------------------- ------------------- ---------------------------------------------------------------
Lines Condition Replace all worn linens. Ensure new linens meet Holiday Inn
minimum weight standards.
- --------------------------- ------------------- ---------------------------------------------------------------
Bedspreads Condition Standards Replace bedspreads with new bedspreads and optional dust
ruffles that comply with the new Holiday Inn standardized room
decor program.
- --------------------------- ------------------- ---------------------------------------------------------------
CASE GOODS Replace all Americans of Martinsville casegoods, including all
headboards, night stands, desks, activity tables, credenzas and
credenza mirrors, occasional tables, and luggage benches by
Jan. 1, 2003.
Refinish any existing damaged casegoods to like new condition
in conjuction with this renovation.
Ensure all rooms are furnished per Holiday Inn standards.
All new room furnishings must comply with the new Holiday Inn
standardized guest room decor program.
- --------------------------- ------------------- ---------------------------------------------------------------
Credenza Standards Replace existing credenzas with new armoires per the
standardized guest room decor program.
- --------------------------- ------------------- ---------------------------------------------------------------
Activity Chair Condition Reupholster with the SRD approved fabric.
- --------------------------- ------------------- ---------------------------------------------------------------
Desk Chair Condition Replace with new ergonomic chair per standardized guest room
decor program with Krypton fabric.
- --------------------------- ------------------- ---------------------------------------------------------------
Sofa Condition Replace any worn sofa fabric and coordinate with the SRD upon
replacement. Replace all sofas by Jan 1, 2002.
- --------------------------- ------------------- ---------------------------------------------------------------
Artwork Condition Replace all artwork to meet the Holiday Inn standardized room
decor program.
- --------------------------- ------------------- ---------------------------------------------------------------
Mattresses Condition Replace any worn, sagging mattresses.
- --------------------------- ------------------- ---------------------------------------------------------------
Bed Frame Standards Open bed frames are required in wheelchair accessible guest
rooms.
- --------------------------- ------------------- ---------------------------------------------------------------
24
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
- --------------------------- ------------------- ---------------------------------------------------------------
EQUIPMENT
- --------------------------- ------------------- ---------------------------------------------------------------
Televisions (25") Standards Replace all existing undersized television with new 25" units.
- --------------------------- ------------------- ---------------------------------------------------------------
Refrigerator/Microwave Competitive Provide a new piece of furniture to match new case goods to
house the refrigerator and microwave units.
- --------------------------- ------------------- ---------------------------------------------------------------
Coffee Makers Standards Install in all rooms per standards.
- --------------------------- ------------------- ---------------------------------------------------------------
MOT Standards Comply with all Moment of Truth Standards as deadline dates
become affective.
- --------------------------- ------------------- ---------------------------------------------------------------
25
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
GUEST ROOM BATHS
GENERAL DESCRIPTION:
The guest bath rooms will require moderate renovations to furnishings, fixtures
and equipment update the appearance and address conditional issues. Professional
design assistance is required. All plans, color renderings and specifications
are to reviewed by Holiday Inn for approval prior to any renovation and
installation. ADA compliance certification letters are required at the time of
plan review
BASIS FOR
REQUIRED
AREAS REQUIRE ACTION ACTION CURE/REMEDY
- --------------------------- ------------------ ---------------------------------------------------------------
FACILITIES
- --------------------------- ------------------ ---------------------------------------------------------------
Entry Doors/frames Condition Repair, paint and restore doors and frames to like new
condition. Replace any corroded door hardware.
- --------------------------- ------------------ ---------------------------------------------------------------
Walls Condition Replace any worn wall vinyl.
- --------------------------- ------------------ ---------------------------------------------------------------
Floors Condition Regrout floor tiles to like new condition.
- --------------------------- ------------------ ---------------------------------------------------------------
Ceiling Paint any stained ceilings.
- --------------------------- ------------------ ---------------------------------------------------------------
Vanities Condition Replace and upgrade vanities with new cultured marble, natural
stone or other solid surface material in the 120 guest rooms
with the old orange vanities.
- --------------------------- ------------------ ---------------------------------------------------------------
SINKS Condition Install under-mounted sinks and new single lever sink hardware
in conjunction with vanity top replacement in the 120 guest
rooms.
- --------------------------- ------------------ ---------------------------------------------------------------
Vanity Hardware Replace and upgrade to single lever handles.
- --------------------------- ------------------ ---------------------------------------------------------------
Vanity Mirrors Condition Replace and any de-silvered mirrors. Recommend wood frame for
upgrade appearance.
- --------------------------- ------------------ ---------------------------------------------------------------
Bathtubs Condition Recondition to like new or replace.
- --------------------------- ------------------ ---------------------------------------------------------------
Bathtub Hardware Condition Replace tarnished and scratched tub hardware.
- --------------------------- ------------------ ---------------------------------------------------------------
Mechanical Exhaust Condition Replace any damaged or worn exhaust vents.
- --------------------------- ------------------ ---------------------------------------------------------------
26
PROPERTY IMPROVEMENT PLAN
LICENSE RENEWAL OF THE HOLIDAY INN;
SHEFFIELD, AL. - LOCATION #4419
JANUARY 25, 1999
BACK OF HOUSE
GENERAL DESCRIPTION:
BASIS FOR
REQUIRED
AREAS REQUIRE ACTION ACTION CURE/REMEDY
- --------------------------- ------------------------- ---------------------------------------------------------------
SERVICE AREAS/ROOMS
- --------------------------- ------------------------- ---------------------------------------------------------------
Service Corridors Pressure wash service corridor to Dumpster.
- --------------------------- ------------------------- ---------------------------------------------------------------
MAINTENANCE SHOP
- --------------------------- ------------------------- ---------------------------------------------------------------
Other Paint walls and floors.
- --------------------------- ------------------------- ---------------------------------------------------------------
LAUNDRY/HOUSEKEEPING
- --------------------------- ------------------------- ---------------------------------------------------------------
Walls Replace damaged walls.
- --------------------------- ------------------------- ---------------------------------------------------------------
Floors Replace floor tiles.
- --------------------------- ------------------------- ---------------------------------------------------------------
27
EXHIBIT H
GROUND LESSOR ESTOPPELS
Exhibit H
ACKNOWLEDGEMENT, ESTOPPEL CERTIFICATE AND AGREEMENT
(HOLIDAY INN, SHEFFIELD, ALABAMA)
THIS ACKNOWLEDGMENT, ESTOPPEL CERTIFICATE AND AGREEMENT
("Agreement") is executed and delivered as of the ____day of ____, 2002, among
THE CITY OF SHEFFIELD ("Landlord"), MERRILL LYNCH MORTGAGE LENDING, INC., its
successors and/or assigns ("Lender"), and SHEFFIELD MOTEL ENTERPRISES, INC.
("Tenant").
WHEREAS, Landlord has heretofore leased certain lands
described on Exhibit "A" attached hereto (hereinafter the "Premises") to Tenant
pursuant to an agreement of lease dated February 6, 1981, which lease was
recorded February 16, 1981, in Deed Book 391, page 79 in the Office of the Judge
of Probate of Colbert County, Alabama (such lease, as amended, and as it may be
further amended and assigned from time to time, hereinafter the "Lease");
WHEREAS, Tenant is desirous of obtaining from Lender a loan
(the "Loan") secured by a first leasehold mortgage upon Tenant's interest as
tenant in the Lease.
WHEREAS, Lender is unwilling to make the Loan unless Landlord
reaffirms to Lender that the provisions of the Lease respecting Leasehold
mortgages are restated and confirmed for Lender's benefit;
NOW THEREFORE, Landlord hereby certifies to Lender as follows:
1. Without implying that Landlord's acknowledgment or
consent may be required under the Lease, Landlord does hereby acknowledge (a)
the granting by Tenant of a leasehold mortgage ("Leasehold Mortgage") to Lender
on Tenant's interests in the Premises, (b) the pledge of the ownership interests
in the Tenant by the holder or holders of all ownership interests in Tenant
(i.e. the mezzanine borrower) to the applicable Merrill Lynch mezzanine lending
entity (together with its successors and assigns, the "Mezzanine Lender") as
security for a mezzanine loan (the "Mezzanine Loan") and the right of Mezzanine
Lender to foreclose on such ownership interests in the event of a default under
the Mezzanine Loan and (c) the address for delivery of notices to Lender and
Mezzanine Lender as set forth below. Upon the mortgaging of the Premises, the
pledge of the ownership interests in Tenant pursuant to the Mezzanine Loan and
the execution of this Agreement, Landlord acknowledges and agrees that both
Lender and Mezzanine Lender shall be deemed to be, and shall have all of the
rights and protections granted to a "mortgagee" or "Leasehold Mortgagee" or to
the "Servicer" under the Lease.
2. Landlord hereby agrees that the execution of this
Agreement shall satisfy the notice requirement set forth in Section 5 of the
1995 Amendment of the Lease.
3. All of the leasehold mortgage protection provisions
contained in the Lease, including but not limited to Sections 11.01 and 12.01 of
the Lease and Sections 3, 4, 5 and 7 of the 1995 Amendment, and all other
provisions inuring to the benefit of Leasehold Mortgagees or their successors
and assigns are hereby incorporated into this agreement by
reference and restated and confirmed by Landlord for the benefit of Lender,
Mezzanine Lender, their successors and assigns.
4. Unless otherwise notified by Lender or Mezzanine
Lender, copies of any notices to Lender or Mezzanine Lender, as the case may be,
shall be sent to the following address:
If to Lender:
Merrill Lynch Mortgage Lending, Inc.
c/o Merrill Lynch & Co.
Global Principal Investments
4 World Financial Center
New York, NY 10080
Attn: Steve Glassman (Facsimile: 212-738-1013)
Attn: John Gluszak (Facsimile: 212-738-2053)
with a copy to:
Sidley Austin Brown & Wood, LLP
787 Seventh Avenue
New York, NY 10019
Attn: Alan S. Weil, Esq.
Facsimile: (212) 839-5599
If to Mezzanine Lender:
Merrill Lynch Mortgage Lending, Inc.
c/o Merrill Lynch & Co.
Global Principal Investments
4 World Financial Center
New York, NY 10080
Attn: Steve Glassman (Facsimile: 212-738-1013)
Attn: John Katz (Facsimile: 212-738-8094)
with a copy to:
Sidley Austin Brown & Wood, LLP
787 Seventh Avenue
New York, NY 10019
Attn: Alan S. Weil, Esq.
Facsimile: (212) 839-5599
5. Landlord hereby agrees that for so long as any sums
in respect of the Loan remain outstanding, it shall not, without the prior
written consent of both Lender and Mezzanine Lender: (a) notwithstanding any
provisions of the Lease to the contrary, accept, consent to or join in the
execution of any instrument purporting to (i) effect the termination, prior to
November 30, 2077, of the Lease by Tenant, or (ii) amend or modify the Lease;
(b) permit or accept the
2
exercise by Tenant of any right it may have to purchase the Premises without
having first obtained Lender's written consent thereto. To the extent Lender
shall have approved any such exercise by Tenant of such right, the conveyance
instrument executed in connection therewith shall expressly provide for the
preservation of the leasehold under the Lease, and for the non-merger of the fee
and leasehold estates in the Premises.
6. Landlord hereby confirms with respect to the new
lease referred to in Section 5 of the 1995 Amendment that should Lender or
Mezzanine Lender become the tenant under a new lease pursuant to Section 5 of
the Amendment title to all improvements including the Building, as defined in
the Lease, situate on the Land, as defined in the Lease, shaft automatically
vest in Lender or Mezzanine Lender, pursuant to Section 5 of the 1995 Amendment.
7. Landlord acknowledges that as between Landlord and
Lender, its nominee, or a purchaser at a foreclosure or other sale, the Lease
shall not be deemed to be terminated, notwithstanding the rejection of the Lease
by the Tenant thereunder or its representative in any proceeding under the
Bankruptcy Code (11 U.S.C. Section 101 et seq. ) (the "Bankruptcy Code") or any
other insolvency law. Lender shall be deemed to have satisfied its obligation to
commence foreclosure proceedings by asserting a claim in a proceeding under the
Bankruptcy Code or other insolvency proceeding, and Lender shall not be deemed
to have failed to satisfy such obligation if Lender is unable to do so as a
result of the provisions of Section 362 of the Bankruptcy Code or similar
provisions of any other insolvency law.
8. Landlord acknowledges that Lender shall have the
right to act on behalf of Tenant in any proceeding commenced by or against
Landlord under the Bankruptcy Code.
9. Landlord acknowledges that Lender and Mezzanine
Lender have requested that Landlord execute this Agreement in connection with
the Loan and the Mezzanine Loan, and that Lender has agreed to make the Loan and
Mezzanine Lender has agreed to make the Mezzanine Loan in reliance on the
matters set forth herein.
10. Landlord hereby confirms that pursuant to Section 1
of the 1995 Amendment, any mortgage placed by Landlord on the fee estate of the
Premises shall be subject to and subordinate to the terms of this Lease and the
Leasehold Mortgage.
11. Landlord hereby certifies as follows:
(a) Landlord is the owner of the fee simple estate in the
Premises subject to covenants, easements and
restrictions of record, and is the Landlord under the
Lease,
(b) Landlord has not mortgaged the fee simple estate in
the Premises and there are currently no fee simple
mortgages, deeds of trust or other security interests
encumbering the fee estate in the Premises.
(c) The Lease is in full force and effect in accordance
with its terms and has not been further assigned,
supplemented, modified or otherwise amended accept as
set forth herein.
3
(d) To the best of Landlord's knowledge, each of the
obligations on Tenant's part to be performed to date
under the Lease have been performed.
(e) To the best of Landlord's knowledge, there are no
offsets, counterclaims, defenses, deductions or
credits whatsoever with respect to the Lease.
(f) There are, with respect to the Lease, no options to
renew or extend, and no security deposits or prepaid
rent or liens.
(g) Except for the Amendment of Lease dated January 24,
1995 (the "1995 Amendment") and Second Amendment of
Lease dated June 16, 1997 (the "1997 Amendment"),
there are no agreements (including Subordination,
Non-Disturbance and Attornment Agreements) concerning
the Premises, whether oral or written between
Landlord and Tenant under the Lease (or its
predecessors or successors).
(h) As of the date hereof, basic rent is $100 per year,
payable on or before December 1st of each year. Basic
rent due under the Lease has been paid through _____,
20___.
(i) The term commencement date of the Lease was February
6, 1981, and the current term of the lease shall
expire on November 30, 2077.
12. The parties agree that the protections and rights
granted to the Lender and Mezzanine Lender by this Agreement shall also apply to
any other prospective mortgagee of Tenant's interest in the Lease or any other
prospective pledgee of the ownership interests in Tenant, provided that the name
and address of such lender is provided in writing to Landlord, and such other
lender shall be deemed the "Servicer" or the "Leasehold Mortgagee" for the
purposes of this Agreement and for the purposes of the Lease.
13. Except as amended hereby, the Lease and all the
terms, covenants and conditions thereof remain unchanged and in full force and
effect, and the Lease, as amended hereby, is hereby ratified and confirmed in
all respects.
14. This Agreement may be executed in counterparts, and
each such counterpart shall constitute an original.
This Agreement shall be binding upon, and may be relied upon by, the
parties, their successors and assigns, and the terms hereof shall inure to the
benefit of the parties, their successors and assigns.
[SIGNATURE PAGES FOLLOW]
4
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date and year first above written.
LANDLORD:
CITY OF SHEFFIELD, ALABAMA
By:___________________________________
Name:
Title:
TENANT:
SHEFFIELD MOTEL ENTERPRISES, INC.
By:__________________________________
Name:
Title:
[NO FURTHER SIGNATURES ON THIS PAGE]
5
LENDER:
MERRILL LYNCH MORTGAGE LENDING, INC.
By:__________________________________
Name:
Title:
MEZZANINE LENDER:
MERRILL LYNCH MORTGAGE LENDING, INC.
By:__________________________________
Name:
Title:
[ACKNOWLEDGEMENTS ON FOLLOWING PAGES]
A-1
ACKNOWLEDGMENT, ESTOPPEL CERTIFICATE AND AGREEMENT
(Holiday Inn - East Hartford, Connecticut)
THIS ACKNOWLEDGMENT, ESTOPPEL CERTIFICATE AND AGREEMENT
("Agreement") is executed and delivered as of the ___ day of _____, 2002, among
H.W. STEANE COMPANY, INC., formerly known as The Poly Choke Company, Inc.
("Lessor"), and MERRILL LYNCH MORTGAGE LENDING, INC., as Administrative Agent,
its successors and/or assigns ("Lender"), and AMI OPERATING PARTNERS, L.P., a
Delaware limited partnership ("Lessee").
RECITALS
A. Lessor is the lessor under the ground lease described on
Exhibit "A" hereto between. Lessor, as lessor, and Lessee, as lessee, affecting
the real property ("Land") and improvements ("Improvements") known as and
located at 363 Roberts Street, East Hartford, Connecticut 06108, more
particularly described on Exhibit "B" hereto (the Land and Improvements,
collectively, the "Leased Premises"; such lease, as so amended and assigned, and
as it may be further amended and assigned from time to time, the "Lease");
B. Lessee has transferred controlling interest in its partnership
to [_____], a [___] corporation, and Lessee is now in the process of obtaining
from Lender a refinancing loan (the "Loan") to be secured by, among other
things, a leasehold mortgage (the "Mortgage") on and collateral assignment of
all of Lessee's interests under the Lease;
C. Lender is unwilling to make the Loan unless Lessor reaffirms
to Lender that the provisions of the Lease are confirmed and restated for
Lender's benefit.
NOW, THEREFORE , in consideration of the sum of Ten Dollars ($10.00),
and for other good and valuable consideration, the receipt and legal sufficiency
of which are hereby acknowledged, Lessor agrees as follows:
1. Without implying that Lessor's acknowledgment or consent may
be required under the Lease, Lessor does hereby acknowledge the granting by
Lessee of the Mortgage to Lender on Lessee's interests in the Leased Premises,
(b) the pledge of the ownership interests in the Lessee by the holder or holders
of all ownership interests in Lessee (i.e. the mezzanine borrower) to the
applicable Merrill Lynch mezzanine lending entity (together with its successors
and assigns, the "Mezzanine Lender") as security for a mezzanine loan (the
"Mezzanine Loan") and the right of Mezzanine Loan and (c) the address for
delivery of notices to Lender and Mezzanine Lender as set forth below. Upon the
mortgaging of the Leased Premises, the pledge of the ownership interests in
Lessee pursuant to the Mezzanine Loan and the execution of this Agreement,
Lessor acknowledges and agrees that both Lender and Mezzanine Lender shall be
deemed to be, and shall have all of the rights and protections granted to a
"mortgagee" or "Leasehold Mortgagee" or to the "Servicer" under the Lease.
2. Lessor and Lessee hereby certify to Lender that: (a) Lessor is
the current owner of (i) the fee interest in the Leased Premises, and (ii) all
of the rights and benefits of
"Lessor" under the Lease; (b) all rents and other sums due and owing under the
Lease as of the date hereof are current and not in arrears; (c) there exists no
uncured default under the Lease by Lessor or Lessee; (d) the Lease is in full
force and effect, (e) the current term of the Lease expires on April 30, 2007,
the extended term of the Lease expires on April 30, 2022, and Lessee has
remaining two (2) 15-year options to renew the term; (f) all of the material
obligations under the Lease which have accrued prior to the date of this
Agreement have been fully performed; and (g) Exhibit "A" lists the only
instruments governing Lessor's and Lessee's rights and obligations with respect
to the Leased Premises.
3. The "Net Basic Rental" for the current period
(5/01/02 through 4/30/07) is payable $9,398.19 per month. Net Basic Rental shall
next be adjusted in 2007 to be effective for the 5-year period beginning
05/01/07. Rent is due in advance on the 1st day of each month. Rent is paid
through October 31, 2002, and the next rent payment is due on _____, 2002.
4. There is no parking lot lease, either oral or
written, currently in effect.
5. Unless otherwise notified by Lender or Mezzanine
Lender, copies of any notices to Lender or Mezzanine Lender, as the case may be,
shall be sent to the following address:
If to Lender:
Merrill Lynch Mortgage Lending, Inc.
c/o Merrill Lynch & Co.
Global Principal Investments
4 World Financial Center
New York, NY 10080
Attn: Steve Glassman
Facsimile: (212) 738-1013
Attn: John Gluszak
Facsimile: (212) 738-2053
with a copy to:
Sidley Austin Brown & Wood, LLP
787 Seventh Avenue
New York, NY 10019
Attn: Alan S. Weil, Esq.
Facsimile: (212) 839-5599
If to Mezzanine Lender:
2
Merrill Lynch Mortgage Lending, Inc.
c/o Merrill Lynch & Co.
4 World Financial Center
New York, NY 10080
Attn: Steve Glassman
Facsimile: (212) 738-1013
Attn: John Katz
Facsimile: (212) 738-8094
with a copy to:
Sidley Austin Brown & Wood, LLP
787 Seventh Avenue
New York, NY 10019
Attn: Alan S. Weil, Esq.
Facsimile: (212) 839-5599
6. In the event Lender shall acquire, assume or succeed
to Lessee's interest under the Lease, then in such event, so long as Lender is
not in default in the performance of any of the terms, covenants or conditions
of the Lease on Lessee's part to be performed and has cured all prior defaults,
Lender's possession under the Lease and Lender's rights and privileges
thereunder, or under any extensions thereof which may be effected in accordance
with any option therefor contained in the Lease, shall not be diminished or
interfered with by Lessor, and Lender's occupancy shall not be disturbed by
Lessor during the term of the Lease or any such extensions or renewals thereof.
7. Lender understands and agrees that Lessor is neither
a party to the Loan nor are Lessor's fee title and Lessor's interest in the
Lease subordinate to the security interest of the Mortgage on the lessee's
interest in the Lease.
8. Lessor hereby agrees that either Lender or Mezzanine
Lender shall have the right, pursuant to the terms of the Lease, to exercise
either of the remaining two (2) options to renew the term of the Lease, if the
Lessee shall fail to do so, whether or not an event of default under the
Mortgage shall have occurred, provided that Lender or Mezzanine Lender shall do
so strictly in accordance with the Lease. In the event Lender or Mezzanine
Lender does so exercise any option to renew, Lender or Mezzanine Lender shall
become obligated with the Lessee for the performance of the obligations set
forth in the Lease.
9. Lessor hereby agrees that for so long as any sums in
respect of the Loan remain outstanding, it shall not, without the prior written
consent of both Lender and Mezzanine Lender: (a) notwithstanding any provisions
of the Lease to the contrary, accept, consent to or join in the execution of any
instrument purporting to (i) effect the termination, prior to April 30, 2022, of
the Lease by Lessee, or (ii) amend or modify the Lease; (b) permit or accept the
exercise by Lessee of any right it may have to purchase the Leased Premises
without having first obtained Lender's written consent thereto. To the extent
Lender shall have approved any such exercise by Lessee of such right, the
conveyance instrument executed in connection therewith
3
shall expressly provide for the preservation of the leasehold under the Lease,
and for the non-merger of the fee and leasehold estates in the Leased Premises.
10. Lessor's fee simple interest in the Leased Premises
and the Lessor's interest under the Lease are not encumbered.
11. Lessor acknowledges that as between Lessor and
Lender, its nominee, or a purchaser at a foreclosure or other sale, the Lease
shall not be deemed to be terminated, notwithstanding the rejection of the Lease
by the Lessee thereunder or its representative in any proceeding under the
Bankruptcy Code (11 U.S.C. Section 101 et seq. ) (the "Bankruptcy Code") or any
other insolvency law. Lender shall be deemed to have satisfied its obligation to
commence foreclosure proceedings by asserting a claim in a proceeding under the
Bankruptcy Code or other insolvency proceeding, and Lender shall not be deemed
to have failed to satisfy such obligation if Lender is unable to do so as a
result of the provisions of Section 362 of the Bankruptcy Code or similar
provisions of any other insolvency law.
12. Lessor acknowledges that Lender shall have the right
to act on behalf of Lessee in any proceeding commenced by or against Lessor
under the Bankruptcy Code.
13. Lessor acknowledges that Lender and Mezzanine Lender
have requested that Lessor execute this Agreement in connection with the Loan
and the Mezzanine Loan, and that Lender has agreed to make the Loan and
Mezzanine Lender has agreed to make the Mezzanine Loan in reliance on the
matters set forth herein.
14. Lessor hereby agrees that for so long as any sums in
respect of the Loan remain outstanding, notwithstanding any provisions of the
Lease to the contrary, in the event of a casualty to or condemnation affecting
the Leased Premises, Lender shall be entitled to receive all insurance proceeds
and condemnation awards and apply the same in accordance with the terms of the
loan documents entered into between Lessee and Lender in connection with the
Loan, and shall have the right, but not the obligation, to restore the Leased
Premises
15. This Agreement may be executed in counterparts, and
each such counterpart shall constitute an original.
16. Except as amended hereby, the Lease and all the
terms, covenants and conditions thereof remain unchanged and in full force and
effect, and the Lease, as amended hereby, is hereby ratified and confirmed in
all respects.
17. The parties agree that the protections and rights
granted to the Lender and Mezzanine Lender by this Agreement shall also apply to
any other prospective mortgages of Lessee's interest in the Lease or any other
prospective pledgee of the ownership interests in Lessee, provided that the name
and address of such lender is provided in writing to Lessor, and such other
lender shall be deemed the "Servicer" or the "Leasehold Mortgagee" for the
purposes of this Agreement and for the purposes of the Lease.
18. This Agreement shall be binding upon, and may be
relied upon by, the parties, their successors and assigns, and the terms hereof
shall inure to the benefit of the parties, their successors and assigns.
4
IN WITNESS WHEREOF, Lessor has executed this Agreement as of
the date and year first above written.
LESSOR:
H.W. STEANE COMPANY, INC., a Connecticut
corporation, formerly known as The Poly Choke
Company, Inc.
By: _____________________________________
Name:
Title:
[NO FURTHER SIGNATURES ON THIS PAGE]
5
LESSEE:
AMI OPERATING PARTNERS; L.P., a Delaware
limited partnership, acting by and through
its sole general partner, to wit:
AMIOP ACQUISITION CORP., a Delaware
corporation,
By: _____________________________________
Name:
Title:
[NO FURTHER SIGNATURES ON THIS PAGE]
LENDER:
MERRILL LYNCH MORTGAGE LENDING, INC.,
as Administrative Agent
By: _____________________________________
Name:
Title:
[NO FURTHER SIGNATURES ON THIS PAGE]
MEZZANINE LENDER:
MERRILL LYNCH MORTGAGE LENDING, INC.
By: _____________________________________
Name: _______________________________
Title: ______________________________
[NO FURTHER SIGNATURES ON THIS PAGE]
ACKNOWLEDGMENT
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On this ___day of _____,2002, before me personally appeared _____, to me known,
who, being by me duly sworn, did depose and say that he/she is _____of MERRILL
LYNCH MORTGAGE LENDING, INC. as Administrative Agent, described in and which
executed the foregoing instrument; and that he/she signed his/her name thereto
by authority of the Board of Directors of the corporation.
_____________________________________________
Notary Public, State of New York At Large
Print Name:
[Notarizations continued on following page.]
ACKNOWLEDGMENT
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On this ___day of _____,2002, before me personally appeared _____, to me known,
who, being by me duly sworn, did depose and say that he/she is _____of MERRILL
LYNCH MORTGAGE LENDING, INC. as Administrative Agent, described in and which
executed the foregoing instrument; and that he/she signed his/her name thereto
by authority of the Board of Directors of the corporation.
_____________________________________________
Notary Public, State of New York At Large
Print Name:
[Notarizations continued on following page.]
STATE OF ______)
)ss:
COUNTY OF _____)
The foregoing instrument was acknowledged before me this ___day of
_____,2002 by _____, as _____, of H. W. STEANE COMPANY, INC., a Connecticut
corporation, on behalf of said corporation.
Personally Known _____OR Produced Identification _____
Type of Identification Produced: _____________________
_____________________________________________
Print or Stamp Name:
Notary Public, State of ____________ At Large
Commission No: ______________________________
My Commission Expires: ______________________
[Notarizations continued on following page.]
STATE OF _____ )
)ss:
COUNTY OF_____ )
The foregoing instrument was acknowledged before me this _____day of
_____,2002 by _____, as _____of AMI Operating Partners, L.P., a Delaware limited
partnership, acting by and through its sole general partner, AMIOP Acquisition
Corp., a Delaware corporation.
Personally Known _____ OR Produced Identification _____
Type of Identification Produced: ______________________
_____________________________________________
Notary Public, State of ____________ At Large
Commission No.: _____________________________
My Commission Expires: ______________________
This Document Was Prepared By, Record and Return To: Alan S. Weil, Esq., Sidley
Austin Brown & Wood LLP, 787 Seventh Avenue, New York, New York 10019.
CONSENT, CERTIFICATE AND AGREEMENT OF LESSOR
THIS CONSENT, CERTIFICATE AND AGREEMENT OF LESSOR is executed and
delivered as of this _____ day of _____,2002, by the City of Cedar Rapids, lowa
(the "City").
RECITALS:
A. The City is the lessor under that certain Lease of Air Rights
dated October 14, 1976, by and between the City, as lessor, and Five Seasons
Inn, Inc. ("Five Seasons"), as lessee, relating to "air space", "footings and
support columns" and the "stairway and elevator" more particularly described in
Exhibit "A" thereto (the "Hotel Leased Premises"), which lease was recorded in
Volume 1733, at Page 1 of the Records of Linn County, Iowa, as amended pursuant
to that certain Agreement to Correct Legal Description dated January 4, 1978, a
true and correct copy of which is attached hereto as Exhibit "A" . (Such lease,
as so amended and as assigned and as it may be further amended and assigned from
tome to time is hereinafter referred to as the "Hotel Air Rights Lease"). The
lessee's interests in the Hotel Air Rights Lease were subsequently assigned to
and assumed by C.R.I. Hotel Associates, L.P. ("CRI") by that certain Assignment
and Assumption of Lease of Air Rights between AETNA Life Insurance Company
("AETNA") (as successor in interest to Five Seasons), as assignor, and CRI, as
assignee, recorded in Liber 2877, at Page 344, of the Records of Linn County,
Iowa.
B. The City is the lessor under that certain unrecorded Lease
dated May 23, 1979, by and between the City, as lessor, and Five Seasons, as
lessee, relating to an enclosed overhead pedestrian passage in the airspace over
a portion of the alley in Block 16, Original Town, Cedar Rapids, Iowa, more
particularly described therein (the "Pedestrian Passage"), as amended by that
certain Amendment to Lease Originally Executed May 23, 1979, executed by and
between the City and Five Seasons as of January 3, 1984 and that certain
Amendment to Lease Originally Executed May 23, 1979, executed by and between the
City and Five Seasons as of may 22, 1985, true and correct copies of which are
attached hereto as Exhibits "B-1", "B-2" and "B-3". (Such lease, as so amended
and assigned, and as it may be further amended and assigned from time to time,
is hereinafter referred to as the "Block 16 Air Rights Lease"). The lessee's
interest in the foregoing Lease were subsequently assigned to and assumed by
CRI, by Assignment and Assumption of Lease between AETNA (as successor in
interest to Five Seasons), as assignor, and CRI, as assignee.
C. The City is the lessor under that certain Ballroom Rental
Agreement dated October 26, 1977, by and between the City and Five Seasons,
relating to the use of a ballroom (the "Ballroom") located on the second floor
of the City's Community Center, which agreement was recorded in Volume 1733, at
Page 32, of the Records of Linn County, Iowa, as modified by that certain
unrecorded Proposed Amendment to Ballroom Rental Agreement, dated October 26,
1977, by and between the City and CRI (as assignee of AETNA, as successor in
interest to Five Seasons), dated February 17, 1993 (a true and correct copy of
which unrecorded amendment is attached hereto as Exhibit "C" (such agreement, as
to amended and assigned, and as it may be further amended and assigned from time
to time, is hereinafter referred to as the "Ballroom Agreement").
D. The City is a party to that certain unrecorded Parking Space
Agreement dated May 18, 1977, by and between the City and Five Seasons, relating
to the use of City parking facilities by the holder of the lessee's interests in
the Hotel Air Rights Lease, a true and correct copy of which is attached hereto
as Exhibit "D" (such agreement, as assigned as it may further be amended and
assigned form time to time, is hereinafter referred to as the "Parking
Agreement").
E. The City is the owner of that certain pedestrian skywalk (the
"Garage Skywalk") extending easterly from Block 23, Original Town of Cedar
Rapids, lowa, across Fourth Street N.E. to the parking garage owned by the City
and referred to in the Parking Agreement.
F. CRI has sold, transferred, conveyed and assigned to Servico
Cedar Rapids, Inc., an Iowa corporation ("Servico") all of its rights, title and
interests in and to the Hotel Air Rights Lease, Block 16 Air Rights Lease,
Ballroom Agreement, Parking Agreement (collectively, the "Lease Agreements") and
any rights of CRI in and to the Garage Skywalk (collectively, the "Assigned
Interests"), by Special Warranty Deed dated May 28, 1997, recorded in Book 3494,
at Page 693, of the Records of Linn County, Iowa and Assignment and Assumption
of Leases dated May 28, 1997, recorded in Book 3494, at page 684 of the Records
of Linn County, Iowa.
G. In accordance with the provisions of the Lease Agreements, and
in connection with Merrill Lynch Mortgage Lending, Inc. (in its capacity as
lender and mezzanine lender, together with its respective successors and assigns
and any subsequent holder of mortgages or security interests in the Assigned
Interests) (collectively, the "Lender") making a loan to Servico, or any
refinancing of such loan, the City has agreed to execute this Agreement.
AGREEMENT
In consideration of the sum of Ten Dollars ($10.00) and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the City hereby confirms and agrees as follows:
1. The Recitals contained hereinabove are true and
correct.
2. The City hereby represents and warrants that it is
the current owner, in fee simple, of the Hotel Leased Premises, the Pedestrian
Passage and the Ballroom (collectively, the "Lease Agreements Premises"), the
Garage Skywalk and the "Five Seasons Parkade" (the garage facility to which the
Garage Skywalk is connected). The City is the current owner and holder of all of
the rights and benefits of the "lessor" under the Lease Agreements.
2
3. The Lease Agreements are all of the documents
pertaining to the Assigned Interests to which the City is a party, such Lease
Agreements have not been modified or amended except as described in the
Recitals, and the Lease Agreements are in full force and effect.
4. To the City's knowledge, after due inquiry, Servico
is not in material default under any of the Lease Agreements, and all rents and
other charges payable thereunder are current.
5. With respect to the Hotel Air Rights Lease, the City
hereby waives its right of first refusal (as set forth in Section 14 of the
Hotel Air Rights Lease) as it applies to the conveyance of the lessee's
interests in the Lease Agreements from Servico to Lender (or any designee of
Lender) pursuant to a foreclosure upon Lender's security interests in the
Assigned Interests, or a conveyance in lieu thereof.
6. With respect to the Block 16 Air Rights Lease, the
City confirms and agrees to the following:
(a) The current rental rate is $1.00 per year,
(b) The date upon which the last structural
inspection certificate required under the Block 16 Air Rights Lease was filed
with the City is _____; and
(c) The City reaffirms the provisions of the
Block 16 Air Rights Lease, and confirms that its records reflect that such lease
has heretofore been assigned to Servico.
7. With respect to the Ballroom Agreement, the City
agrees as follows:
(a) In clarification of the provisions of
Section 4 of the Ballroom Agreement, the rental payable under such Ballroom
Agreement is currently the greater of $50,000.00 per year or the percentage rent
described in Section 4 of the Ballroom Rental Agreement. Rental payable for the
year 2002 is _____; and
(b) The Ballroom Agreement has been executed
pursuant to Section 11 of the Hotel Air Rights Lease, and the City agrees that
the lessee under the Hotel Air Rights Lease shall have the exclusive use of the
Ballroom throughout the term of the Hotel Air Rights Lease; provided, however,
that the Ballroom Agreement may be amended from time to time with respect to the
rental payments required thereunder. Accordingly, prior to the expiration of the
Ballroom Agreement, City agrees that it shall execute an amendment, renewal or
extension thereof, extending the term of the Ballroom Agreement on terms
reasonably acceptable to City and the then holder of the lessee's interests
under the Hotel Air Rights Lease.
8. With respect to the Parking Agreement, the City
agrees that the applicable parking rate has been negotiated by and between the
City and the holder of the
3
lessee's interest in the Lease Agreements consistent with Iowa law and the Lease
Agreements. The current applicable parking rate is ______.
9. The Garage Skywalk is public property, and Servico
and all subsequent holders of lessee's interests in the Hotel Air Rights Lease,
their officers, employees, licensees and invitees shall have the right to use
the Garage Skywalk for pedestrian access between the Hotel Leased Premises and
the Five Seasons Parkade during the term of the Hotel Air Rights Lease.
10. The City hereby consents to the granting of liens in
Servico's interests in the Assigned Interests in favor of Lender (without
implying herein that the City's consent may be required under any or all of the
Lease Agreements). Neither the foregoing consent nor any other provision of this
Agreement shall be deemed or interpreted as a subordination by the City of its
interests in the Lease Agreements or any of the property relating thereto.
11. The City hereby agrees that in the event of any
casualty to the Hotel Leased Premises or the Pedestrian Passage, Servico (and
any subsequent holder of the lessee's interests in the Hotel Air Rights Lease)
shall be entitled to all insurance proceeds payable with respect to such
casualty under insurance policies obtained, maintained and whose premiums are
paid by the holder of such lessee's interests, and the City shall have no claim
to such proceeds.
12. Unless otherwise notified by Lender, copies of any
notices to the lessee under the Lease Agreements shall be sent to Lender at the
following address:
Merrill Lynch Mortgage Lending, Inc.
4 World Financial Center
New York, NY 10080
Attn: Steven Glassman
Facsimile: (212) 738-1013
With Copy to:
Sidley Austin Brown & Wood LLP
787 Seventh Avenue
New York, NY 10019
Attn: Alan S. Weil, Esq.
Facsimile: (212) 839-5599
The City shall accept the cure, by Lender, of any default under the
Lease Agreements with the same force and effect as if such cure had been made by
the lease under the Lease Agreements.
13. In the event Lender shall acquire, assume or succeed
to Servico's interests under any of the Lease Agreements, then in such event, so
long as Lender is not in default in the performance of any of the terms,
conditions or covenants of the Lease Agreements to be performed by the lessees
thereunder, Lender's possession of the Lease Agreements Premises under the Lease
Agreements and Lender's rights and privileges thereunder, or under
4
any extension or renewals thereof which may be effected in connection with any
option therefor contained in the Lease Agreements, shall not be diminished or
interfered with by City, and Lender's occupancy shall not be disturbed by the
City during the term of the Lease Agreements or any such extension or renewals
thereof and Lender shall be entitled to the benefit of this Agreement.
14. City hereby agrees that for so long as the Loan shall
not have been satisfied, notwithstanding any provisions of the Lease Agreements
to the contrary, City shall not accept, consent to or join in the execution of
any instrument purporting to effect the termination, prior to April 30, 2020, of
the Hotel Air Rights Lease without the prior written consent of Lender unless a
material default shall have occurred under the Hotel Air Rights Lease and shall
not have been waived by resolution of the City Council or cured within any
applicable grace or cure period.
15. City hereby acknowledges that it has not given
Servico any right to purchase or acquire the Lease Agreements Premises and the
City agrees that it shall not permit Servico or any subsequent lessee under the
Hotel Air Rights Lease to purchase the Hotel Leased Premises at any time prior
to the satisfaction of the Loan without first having obtained Lender's written
consent thereto.
16. City acknowledges that, as between City and the
Lender, its nominee or a purchaser at a foreclosure or other sale, the Lease
Agreements shall not be deemed to be terminated notwithstanding the rejection of
the Lease Agreements by the lessee thereunder or its representative in any
proceeding under the Bankruptcy Code (11 U.S.C. Section 101 et. seq.) (the
"Bankruptcy Code") or any other insolvency law provided Lender shall, from and
after the date it acquires the lessee's interests in the Assigned Interests,
comply with the lessee's obligations under the Lease Agreements.
CITY OF CEDAR RAPIDS, IOWA
By: _____________________________
Mayor
Attest:____________________________
its Clerk
5
STATE OF IOWA )
)ss:
COUNTY OF LINN )
On this _____ day of _____, 2002, before me, the undersigned, a Notary
Public in and for the State of Iowa, personally appeared _____ and _____, to me
personally known, who being by me duly sworn, did say that they are the Mayor
and City Clerk, respectively, of the City of Cedar Rapids, Iowa; a municipal
corporation; that the seal affixed to the foregoing instrument is the corporate
seal on behalf of the corporation, by authority of its City Council, as
contained in Resolution No. _____ passed by the City Council on the _____ day of
_____, 2002; and _____ and _____ acknowledged the execution of the instrument to
be their voluntary act and deed and the voluntary act and deed of the
corporation, by it voluntarily executed.
_____________________________________________
NOTARY PUBLIC - STATE OF IOWA
The following parties have executed this Agreement for the purpose of
acknowledging and consenting to the matters referred to herein.
SERVICO CEDAR RAPIDS, INC., an Iowa
corporation
By: _________________________________
Name:
Title:
STATE OF IOWA )
)ss:
COUNTY OF LINN )
On this _____ day of _____, 2002, before me, the undersigned, a Notary
Public in and for the State of _____, personally appeared _____, to me
personally known, who being by me duly sworn, he is the _____ of Servico Cedar
Rapids, Inc. an Iowa corporation; that the seal affixed to the foregoing
instrument is the corporate seal of the corporation and that the instrument was
signed and sealed on behalf of the corporation, by authority of its Board of
Directors; and _____ acknowledged the execution of the instrument to be his
voluntary act and deed and the voluntary act and deed of the corporation, by it
voluntarily executed.
_____________________________________________
NOTARY PUBLIC - STATE OF IOWA
HARRY G. PAPPAS & SONS, LLC
5504 KEMPER ROAD
BALTIMORE, MD 21210
November 20, 2002
VIA REGULAR MAIL & FACSIMILE (212-738-1013)
Merrill Lynch Mortgage Lending, Inc.
c/o Merrill Lynch & Co.
Global Principal Investments
4 World Financial Center
New York, New York 10080
VIA REGULAR MAIL & FACSIMILE (404-364-0088)
Lodgian AMI, Inc.
c/o Servico, Inc.
3445 Peachtree Road N.E.
Atlanta, Georgia 30326
RE: LEASE, DECEMBER 31, 1962, HARRY G. PAPPAS & SONS, LLC TO LODGIAN
AMI, INC.
HOLIDAY INN - INNER HARBOR, BALTIMORE, MARYLAND
301 WEST LOMBARD STREET, BALTIMORE, MARYLAND
Dear Ladies and Gentlemen:
Harry G. Pappas & Sons, LLC, the "Lessor" in connection with the
above-referenced lease, as amended, (the "Lease"), hereby confirms to you in
connection with the granting of a leasehold mortgage from Lodgian AMI, Inc.
("Lessee") to Merrill Lynch Mortgage Lending, Inc. and its successors and
assigns ("Lender") with respect to the Lease that:
(a) to the best of Lessor's knowledge, information and belief,
without investigation or inquiry, all rents and other sums due and
owing under the Lease as of the date hereof are current and not in
arrears;
(b) the current term of the Lease expires on December 31, 2037,
and there is one (1) remaining twenty (20) year option to extend the
term;
Merrill Lynch Mortgage Lending, Inc.
Lodgian, Inc.
November 15, 2002
(c) the "basic rental" and "additional rental" (as those terms are used
in the Lease Agreement dated December 31, 1962) for the current
period (1/1/98 through 12/31/02) is $32,146.29 per month. Rent is
due in advance on the 1st day of each month, is paid through
November 1, 2002, and the next rent payment is due on December 1,
2002. Basic and Additional Rent shall next be adjusted in 2003, to
be effective for the five-year period beginning January 1, 2003; and
(d) Lessor hereby agrees that the Lease may be assigned by Lender, its
successors and assigns, in foreclosure or by a purchaser without
Lessor's consent, and upon that assignee's written acknowledgment
and assumption of all of Lessee's obligations under the Lease,
Lender shall have no further liability to perform any of the
obligations, conditions or covenants contained in the Lease.
The Lessor understands that, in consideration for Lessor's provision of
this confirmation and agreement and Lessor's related inconvenience and expense,
(a) Lessee shall compensate Landlord in the amount of Ten Thousand Dollars
($10,000), to be paid and delivered to Lessee within ten days from the date of
this letter, and (b) Lender and Lessee shall notify the Lessor at the above
stated address (with a copy to Steven A. Thomas. Esq., Thomas & Libowitz, P.A.,
100 Light Street, Suite 1100, Baltimore, MD 21202) of any material default by
Lessee with respect to Lessee's obligations in connection with the
aforementioned leasehold mortgage.
Harry G. Pappas & Sons, LLC
By: /s/ Harry P.Pappas
---------------------------------
Harry P. Pappas, Managing Member
cc: Peter W. Taliaferro, Esq.
Robert McDonough, Esq.
Chrystic Dooley, Esq.
ACKNOWLEDGMENT, ESTOPPEL CERTIFICATE
AND AGREEMENT
(Baltimore-International Airport)
THIS ACKNOWLEDGEMENT, ESTOPPEL CERTIFICATE AND AGREEMENT ("Agreement")
is executed and delivered as of this _____day of _____,2002, among HARRY W.
RODGERS, III, WILLIAM A. RODGERS and W. DALE HESS, as partners trading as D.R.H.
INVESTMENT COMPANY (as to a 90% undivided interest), and BALTIMORE-WASHINGTON
SCIENCE AND INDUSTRY CENTER, L.P., a Maryland limited partnership (as to a 10%
undivided interest) (collectively, "lessor "); MERRILL LYNCH MORTGAGE LENDING,
INC., in its capacity as mortgage lender and mezzanine lender (together with its
respective successors and/or assigns, collectively, "Lender "); and LODGIAN AMI,
INC. a Maryland corporation ( "Lessee ").
RECITALS
A. Lessor is the lessor under the ground lease described on
Exhibit "A" hereto between Lessor, as lessor, and Lessee, as lessee, affecting
the real property ("Land") and improvements ("Improvements") known as located at
BWI International Airport, 890 Elkridge Landing Road, Linthicum Heights,
Maryland 21090, more particularly described on Exhibit "B" hereto (the Land and
Improvements, collectively, the "Leased Premises"; such lease, as so amended and
assigned, and as it may be further amended and assigned from time to time, the
"Lease");
B. Lessee is now in the process of obtaining from Lender a
refinancing loan (the "Loan") to be secured by, among other things, a leasehold
mortgage and collateral assignment of all interests under the Lease;
C. In order to facilitate the transactions described herein,
Lessor has agreed to enter into this Agreement, without which Lender would not
make the Loan.
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00),
and for other good and valuable consideration, the receipt and legal sufficiency
of which are hereby acknowledged, Lessor agrees as follows:
1. Without implying that Lessor's acknowledgement or consent may
be required under the Lease, Lessor does hereby acknowledge and consent to (a)
the granting by Lessee of a leasehold mortgage ("Leasehold Mortgage") to Lender
on Lessee's interests in the Leased Premises, (b) the pledge of the ownership
interests in the Lessee by the holder or holders of all ownership interests in
Lessee (i.e. the mezzanine borrower) to the applicable Merrill Lynch mezzanine
lending entity (together with its successors and assigns, the "Mezzanine
Lender") as security for a mezzanine loan (the "Mezzanine Loan") and the right
of Mezzanine Lender to foreclose on such ownership interests in the event of a
default under the Mezzanine Loan and (c) the address for delivery of notices to
Lender and Mezzanine Lender as set forth below. Upon the mortgaging of the
Leased Premises, the pledge of the ownership interests in Lessee pursuant to the
Mezzanine Loan and the execution of this Agreement, Lessor acknowledges and
agrees that both Lender and Mezzanine Lender shall be deemed to be, and shall
have all of the rights and
protections granted to a "mortgagee" or "Leasehold Mortgagee" or to the
"Servicer" under the Lease.
2. Lessee hereby gives notice of and Lessor hereby accepts
Lessee's election to extend the term of the Lease for an additional 10-year
term, to September 11, 2023.
3. Lessor and Lessee hereby certify to Lender that: (a) Lessor is
the current owner of (i) the fee interest in the Leased Premises, and (ii) all
of the rights and benefits of "Lessor" under the Lease; (b) to the best of
Lessor's knowledge, all rents and other sums due and owing under the Lease as of
the date hereof are current and not in arrears; (c) to the best of Lessor's
knowledge, there exists no uncured default under the Lease by Lessor or Lessee;
(d) the Lease is in full force and effect; (e) the current term of the Lease
expires on September 11, 2003, the first extended term expires on September 11,
2013, the second extended term expires on September 11, 2023 and Lessee has
remaining three (3) 10-year options to extend the term; (f) to the best of
Lessor's knowledge, all of the material obligations under the Lease which have
accrued prior to the date of this Agreement have been fully performed; (g)
Exhibit "A" lists the only instruments governing Lessor's and Lessee's rights
and obligations with respect to the Leased Premises; and (h) to the best of
Lessor's knowledge, the Option to purchase the Leased Premises granted by Lessor
in favor of Lessee expired on June 30, 2002.
4. The "Fixed Rent" for the current period (1/1/02 through
12/31/02) is $51,712.68 per month. Fixed Rent shall remain at this same rate
throughout the Initial Term and any Extended Terms. Fixed Rent is due in advance
on the 1st day of each month, is paid through November 1, 2002, and the next
rent payment is due on December 1, 2002.
5. Unless otherwise notified by Lender, copies of any notices to
Lender shall be sent to the following address:
If to Lender:
Merrill Lynch Mortgage Lending, Inc.
c/o Merrill Lynch & Co.
Global Principal Investments
4 World Financial Center
New York, NY 10080
Attention: Steven Glassman
Facsimile: (212) 738-1013
Attention: John Gluszak
Facsimile: (212) 738-2053
Attention: John Katz
Facsimile: (212) 449-8094
with a copy to:
Sidley Austin Brown & Wood, LLP
787 Seventh Avenue
New York, NY 10019
Attn: Alan S. Weil, Esq.
Facsimile: (212) 839-5599
6. Lender understands and agrees that Lessor is neither a party
to the Loan nor are Lessor's fee title and Lessor's interest in the Lease
subordinate to the security interest of the Leasehold Mortgage on the lessee's
interest in the Lease.
7. Lessor's fee simple interest in the Leased Premises and the
Lessor's interest under the Lease are encumbered by the liens described on
Exhibit "C" attached hereto and made a part hereof, in the approximate current
principal balance(s) shown on Exhibit "C."
8. Lessor acknowledges that Lender has requested that Lessor
execute this Agreement in connection with the Loan, and that Lender has agreed
to make the Loan in reliance on the matters set forth herein.
9. This Agreement may be executed in counterparts, and each such
counterpart shall constitute an original.
10. Except as amended hereby, the Lease and all the terms,
covenants and conditions thereof remain unchanged and in full force and effect,
and the Lease, as amended hereby, is hereby ratified and confirmed in all
respects.
11. The parties agree that the protections and rights granted to
the Lender by this Agreement shall also apply to any other prospective mortgagee
of Lessee's interest in the Lease or any other prospective pledgee of the
ownership interests in Lessee, provided that the name and address of such lender
is provided in writing to Lessor, and such other lender shall be deemed the
"Servicer" or the "Leasehold Mortgagee" for the purposes of this Agreement and
for the purposes of the Lease.
12. This Agreement shall be binding upon, and may be relied upon
by, the parties, their successors and assigns, and the terms hereof shall inure
to the benefit of the parties, their successors and assigns.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date and year first above written.
LESSEE: LESSOR:
LODGIAN AMI, INC., a D.R.H. INVESTMENT COMPANY (as to a
Maryland Corporation 90% undivided interest)
By: Harry W. Rodgers, III, as its general
partner
By:____________________________ /s/ Harry W.Rodgers.
Name:
Title:
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
and
BALTIMORE-WASHINGTON SCIENCE
AND INDUSTRY CENTER, L.P., a Maryland
limited partnership (as to a 10% undivided
interest)
By: Rodgers/BWSIC, LLC, as its general
partner
By: Harry W. Rodgers, III Family Number 2,
L.P., Member
By: H.W.R., III Family Number 2, LLC,
as its general partner
By: /s/ Harry W. Rodgers.
-------------------------------------
Harry W. Rodgers, III,
Manager
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
LENDER:
MERRILL LYNCH MORTGAGE
LENDING, INC.
By: _____________________________________
Name:
Title:
[ACKNOWLEDGEMENTS ON FOLLOWING PAGE]
STATE OF____ )
)ss:
COUNTY OF___ )
On this _____ day of _____, 2002, before me personally appeared _____,
to me known, who, being by me duly sworn, did depose and say that he is the
_____ of Merrill Lynch Mortgage Lending, Inc., a Delaware corporation, described
in and which executed the foregoing instrument; and that he/she signed his/her
name thereto by authority of the Board of Directors of the corporation.
_______________________________________
Notary Public
Print Name: ___________________________
STATE OF )
)ss:
COUNTY OF )
On this _____ day of _____, 2002, before me personally appeared _____,
to me known, who, being by me duly sworn, did depose and say that he is the
_____ of _____ described in and which executed the foregoing instrument; and
that he/she signed his/her name thereto by authority of the Board of Directors
of _____.
________________________________________
Notary Public
Print Name: ____________________________
STATE OF: [ILLEGIBLE] )
)ss:
COUNTY OF [ILLEGIBLE] )
On this 20 day of November, 2002, before me personally appeared Harry
W. Rodgers, III, to me known, who, being by me duly sworn, did depose and say
that he executed the foregoing instrument; and that he signed his name thereto
in his individual capacity and in the capacity as set forth above in the
signature block for Lessor:
[ILLEGIBLE]
-----------------------------------------
Notary Public
Print Name: SANDRA H JUSTIS
-----------------------------
Expires - 5/1/05
EXHIBIT "A"
Lease dated August 24, 1971, among Samuel H. Heffner, Edward H.
Dickinson, Harry W. Rodgers, III, William Rodgers and W. Dale Hess, co-partners,
trading as D.R.H. Investment Co. ("DRH Investment Co."), Landlord ("Lessor"),
and American Motor Inns, Incorporated, Tenant ("Original Lessee").
(a) Lease dated August 24, 1971, (recorded in Liber 3883,
at Folio 284, Land Records of Anne Arundel Country, Maryland).
(b) Agreement to Construct and Lease dated August 24,
1971, between D.R.H. Investment Co., Landlord, and American Motor Inns,
Incorporated, Tenant.
(c) Option dated August 24, 1971, between D.R.H.
Investment Co., Owners, and American Motor Inns, Incorporated, Lessee (recorded
in Liber MSH No. 2467, at Folio 798, of the Land Records of Anne Arundel County,
Maryland).
(d) First Amendment to Agreement to Construct and Lease
dated May 18, 1972, among D.R.H. Investment Co., Landlord, and American Motor
Inns, Incorporated, Tenant.
(e) Agreement dated May 18, 1972, among D.R.H. Investment
Co., Landlord, and American Motor Inns, Incorporated, Tenant (recorded in Liber
2490, at Page 581, of the Land Records of Anne Arundel County, Maryland).
(f) Subordination Agreement dated May 18, 1972, American
Motor Inns, Incorporated, Robert J. Schultze and Charles J. Fleury, Trustees,
and Loyola Federal Savings & Loan Association (recorded in Liber 2490, at Page
585, of the Land Records of Anne Arundel County, Maryland); and Non-Disturbance
and Attornment Agreement dated September 8, 1986, between Loyola Federal Savings
and Loan and American Motor Inns, Inc. (recorded in Liber 4212, at Page 211,
Land Records of Anne Arundel County, Maryland).
(g) Consolidated Amendatory Agreement dated May 7, 1984
between D.R.H. Investment Co. (which now has only 3 partners - Rodgers III,
Rodgers and Hess) and American Motor Inns, Incorporated (recorded in Liber EAC
No. 3883, at Folio 325, Land Records of Anne Arundel County, Maryland).
(h) Notification of Election to Extend Term dated May 9,
1985 (election to extend term to September 11, 2013.
(i) Amendment to Lease, dated December 1, 1985, between
D.R.H. Investment Co., Landlord, and American Motor Inns, Incorporated, Tenant
(recorded in Liber 4009, at Page 445, Land Records of Anne Arundel County,
Maryland).
(j) Amendment of Lease Agreement dated December 31, 1985,
between D.R.H. Investment Co., Landlord, and American Motor Inns, Incorporated,
Tenant.
(k) Amendment to Lease Agreement dated December 20, 1986,
between D.R.H. Investment Co., Lessor, and American Motor Inns, Incorporated,
Lessee (recorded in Liber 4223, at Folio 64, of the Land Records of Anne Arundel
County, Maryland).
(l) Assignment of Lease and Indemnification Agreement,
dated December 23, 1986, between American Motor Inns, Incorporated, Assignor,
and AMI Operating Partners, L.P., Assignee (recorded in Liber 4223, at Folio 70,
of the Land Records of Anne Arundel County, Maryland).
(m) Assignment of Option Agreement dated December 23,
1986, from American Motor Inns, Incorporated, to AMI Operating Partners, L.P.
(recorded in Liber 4223, folio 75, on the Land Records of Anne Arundel County,
Maryland).
(n) Subordination, Non-Disturbance and Attornment
Agreement dated July 26, 1995 between AMI Operating Partners, L.P., DRH
Investment Company and American Enterprise Life Insurance Company.
EXHIBIT "B"
LEASED PREMISES
EXHIBIT "C"
ENCUMBRANCES OF LESSOR'S
INTEREST IN THE FEE AND THE LEASE
Approximate Principal Balance
Lien/Encumbrance As of the Date hereof
[PRIME HOSPITALITY CORP. LOGO]
DOUGLAS W. VICAR)
Senior Vice President -
& Chief Financial Officer
OID (973) 808-7776
FAX (973) 882-7689
Email: dwv@primehospitality.com
November 21, 2002
Merrill Lynch Mortgage Lending, Inc.,
In its capacity as mortgage lender and
mezzanine lender (together with its
respective successors and assigns,
collectively, "Merrill")
c/o Merrill Lynch & Co.
4 World Financial Center
New York, New York 10080
Re: Holiday Inn, Glen Burnie, MD
Dear Sir/Madam:
Prime has been requested by our tenant to provide you with information
concerning our lease of the hotel premises described on Schedule A to
his letter.
1. The lease consists of an agreement dated May 10, 1968 by and
between David H. Greenberg and Janice C. Greenberg and A.O.
Krisch, Joel Krisch and Rosalie K. Shaftman, as amended by
Amendment to Lease dated February 24, 1971, Second Amendment
to Lease dated August 22, 1975, and Amendment to Lease dated
as of December 20, 1986, all attached to this letter.
2. The present monthly rental is $2,000 and rent has been paid
through November 30, 2002.
3. There is no notice of default outstanding and uncured. Prime
is not aware of the occurrence of any event of default that is
uncured.
4. Prime will forward to Merrill Lynch Mortgage Lending, Inc.
("Merrill") a copy of any notice sent to tenant, to the extent
that the Lease requires a copy of such notice to be sent to
the "Servicer," as defined in the Lease. The failure of Prime
to forward to Merrill a copy of any other notice or
communication to tenant shall not limit Prime's rights under
the Lease nor create any liability or obligation to Merrill,
the tenant, or another party. Required notices will be sent to
the following addresses unless Prime is otherwise notified by
Merrill in writings;
-2-
Merrill Lynch Mortgage Lending, Inc.,
in its capacity as mortgage lender and
mezzanine lender (together with its
respective successors and assigns,
collectively "Merrill")
c/o Merrill Lynch & Co.
4 World Financial Center
New York, New York 10080
Attention: Steve Glassman
Facsimile: 212-738-1013
Attention: John Gluszak
Facsimile: 212-738-2053
Attention: John Katz
Facsimile: 212-449-8094
With a copy to:
Sidley Austin Brown & Wood, LLP
787 Seventh Avenue
New York, New York 10019
Attention: Alan S. Well, Esq.
Facsimile: 212-839-5599
5. Notices to Prime will be addressed to Prime Hospitality Corp.,
700 Route 46 East, Fairfield, New Jersey 07004, Attention:
Douglas Vicari, with a copy to the same address, Law
Department, Merrill will provide Prime with a copy of any
notice of default sent to tenant.
6. Prime agrees that the Lease may be assigned by Merrill, its
successors and assigns, in foreclosure or by a purchaser at
foreclosure without Prime's consent and upon that assignee's
written acknowledgement and assumption of tenant's obligations
under the lease, Merrill shall have no further liability to
perform any of the obligations, conditions or covenants
contained in the Lease.
7. Merrill acknowledge that this letter is provided as an
accommodation to Prime's tenant. Merrill's acceptance of this
letter will evidence its agreement to all of the terms of this
letter.
-3-
This letter is given based on the actual knowledge of its signatory without
independent inquiry. However, the statements contained in this letter are
statements of Prime ("Prime") and no liability will accrue to the signatory.
Prime will be estopped from later claiming any state of facts contrary to the
statements contained in this letter only if the statements made in this letter
were actually known to be false by the signatory at the time made.
Very truly yours,
PRIME HOSPITALITY CORP.
/s/ Douglas Vicari
----------------------------------------
Douglas Vicari
Senior Vice President and Chief
Financial Officer
DV:jm
CONSENT, ESTOPPEL CERTIFICATE
AND AGREEMENT
(Crowne Plaza, Albany, New York)
This CONSENT, ESTOPPEL CERTIFICATE AND AGREEMENT is executed and
delivered as of this 15 day of November, 2002, among UDC-TEN EYCK DEVELOPMENT
CORPORATION-III ("Hotel Lessor'), UDC-TEN EYCK DEVELOPMENT CORPORATION-II
("Garage Lessor"), each a wholly-owned subsidiary of New York Urban Development
Corporation, a corporate governmental agency of the State of New York
constituting a political subdivision and a public benefit corporation having an
address at c/o New York State Urban Development Corporation, 633 Third Avenue,
New York, New York 10017 (Hotel Lessor and Garage Lessor, collectively,
"Lessor"), ALBANY HOTEL, INC., a Florida corporation ("Lessee") and MERRILL
LYNCH MORTGAGE LENDING, INC., as Administrative Agent, its permitted successors
and/or assigns as set forth in paragraph 4 hereof, 4 World Financial Center, New
York, New York 10080 ("Lender" as that term is defined below).
WITNESSETH:
WHEREAS, (a) Hotel Lessor is the lessor under a certain Agreement of
Lease dated as of December 20, 1979, with Ten Eyck Hotel Associates, a New York
limited partnership ("Ten Eyck"), as lessee, affecting the real property
described on Exhibit A hereto (the "Hotel Premises"), which Lease was recorded
January 4, 1980 in Liber 2181 of Deeds, Page 1000 in the Office of the Albany
County Clerk; which Lease was subsequently amended and restated in its entirety
by Restatement of Agreement of Lease dated as of December 20, 1979 between Hotel
Lessor, as lessor, and Ten Eyck, as lessee, recorded December 17, 1981 in Liber
2216 at page 135 in the Office of the Albany County Clerk; the lessee's
interests in which Lease were subsequently assigned to Albany Motel Enterprises,
Inc., pursuant to Bargain and Sale Deed dated November 11, 1992 and recorded
January 21, 1993 in Liber 2476 at page 871 in the Office of the Albany County
Clerk with respect to which a corrective instrument naming Albany Hotel, Inc., a
Florida corporation, as lessee, dated May 5, 1995 was recorded August 15, 1995
in Liber 2593 at page 703 in the Office of Albany County Clerk (such Lease, as
so amended and assigned, and as it may be further amended and assigned from time
to time, the "Hotel Lease"); and (b) Garage Lessor is the lessor under a certain
Agreement of Lease dated as of December 20, 1979, with Ten Eyck, as lessee,
affecting the real property described on Exhibit B hereto (the "Garage
Premises"; the Hotel Premises and the Garage Premises, collectively, the "Leased
Premises"), which Lease was recorded January 4, 1980 in Liber 2181 of Deeds,
Page 845 in the Office of the Albany County Clerk; which Lease was subsequently
amended and restated in its entirety by Restatement of Agreement of Lease dated
as of December 20, 1979 between Garage Lessor, as lessor, and Ten Eyck, as
lessee, recorded December 17, 1981 in Liber 2216 at page 135 in the Office of
Albany County Clerk; the lessee's interests in which Lease were subsequently
assigned to Albany Motel Enterprises, Inc., pursuant to Bargain and Sale Deed
dated November 11, 1992 and recorded January 21, 1993 in Liber 2476 at page 871
in the Office of the Albany County Clerk with respect to which a corrective
instrument naming Lessee, as lessee, dated May 5, 1995 was recorded August 15,
1995 in Liber 2593 at page 703 in the Office of the Albany County Clerk (such
Lease, as so amended and assigned, and as it may be further amended and assigned
from time to time, the "Garage Lease"; the Hotel Lease and the Garage Lease,
collectively, the "Lease");
WHEREAS, Lessee has requested that Merrill Lynch Mortgage Lending,
Inc., in its capacity as mortgage lender and mezzanine lender (together with its
respective successors and assigns, collectively, "Lender") make a loan to Lessee
to be secured by, among other things, a first mortgage lien on Lessee's interest
in the Leased Premises (such loan, the "Loan"); and
WHEREAS, Lender requires that Lessor enter into this Agreement,
without which Lender would not make the Loan;
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00),
and for other good and valuable consideration, the receipt and legal sufficiency
of which are hereby acknowledged, Lessor agrees as follows;
1. Without implying that Lessor's acknowledgment or consent may
be required under the Lease, Lessor does hereby acknowledge and consent to (a)
the granting by Lessee of a leasehold mortgage in the principal amount of
[$15,500,000] to Lender on Lessee's interests in the Leased Premises ("Leasehold
Mortgage") and (b) the address for delivery of notices to Lender as set forth
below. Lessor acknowledges and agrees that Lender shall be deemed to be, and
shall have all of the rights and protections granted to a "mortgagee,"
"Leasehold Mortgagee," "Institutional Lender" or "Servicer" under the Lease.
2. Lessor does hereby certify to Lender that: (a) Lessor is the
current owner of (i) the fee estate in the Leased Premises, and (ii) all of the
rights and benefits of "Lessor" under the Lease; (b) except as qualified herein,
Base Rent and other sums due and owing under the Lease as of the date hereof are
current and not in arrears; (c) there exist no Events of Default under the Lease
by Lessor or Lessee; (d) the Lease is in full force and effect; (e) the Lease
has not been amended or modified; and (f) to the best of Lessor's knowledge,
there are no offsets, counterclaims, defenses, deductions or credits whatsoever
with respect to the Lease, or any amounts owing under any other agreement.
Notwithstanding anything else herein to the contrary, Lessor makes no
representations as to whether any portion of the Base Rent is due and owing nor
whether Additional Base Rent is due and owing.
3. Lessor does hereby agree that: (a) Lender shall be deemed to
be an "Institutional Lender" (as such term is defined in the Lease) for all
purposes under the Lease; and (b) the mortgage on the Leased Premises securing
the Loan shall be deemed to be a "Permanent Mortgage" (as such term is defined
in the Lease) for all purposes under the Lease.
4. Lessor acknowledges that Lender may assign its interests as
referred to in paragraph I hereof to any of the following: (a) an Institutional
Lender (as referred to in the Lease), and (b) an Institutional Lender acting as
trustee, and Lessor hereby approves any such assignment.
5. Unless otherwise notified by Lender, copies of any notices to
Lessee shall be sent to Lender at the following address:
2
Merrill Lynch Mortgage Lending, Inc.
c/o Merrill Lynch & Co.
Global Principal Investments
4 World Financial Center
New York, NY 10080
Attention: Steven Glassman
Facsimile: (212) 738-1013
Attention: John Gluszak
Facsimile: (212) 738-2053
Attention: John Katz
Facsimile: (212) 449-8094
with a copy to:
Sidley Austin Brown & Wood LLP
787 Seventh Avenue
New York, NY 10019
Attn: Alan S. Weil, Esq.
Facsimile: (212) 839-5599
6. In the event Lender shall acquire, assume or succeed to
Lessee's interest under the Lease, then in such event, so long as there exists
no uncured Event of Default under the Lease on Lessee's part to be performed,
Lender's possession under the Lease and Lender's rights and privileges
thereunder, or under any extensions or renewals thereof which may be effected in
accordance with any option therefor contained in the Lease, shall not be
diminished or interfered with by Lessor, and Lender's occupancy shall not be
disturbed by Lessor during the term of the Lease or any such extensions or
renewals thereof.
7. Lessor hereby agrees that for so long as any sums in respect
of the Loan remain outstanding, Lessor shall not mortgage its fee interest in
the Leased Premises unless such mortgage shall expressly provide for the
preservation of the leasehold under the Lease, and for the non-merger of the fee
and leasehold estates in the Leased Premises.
8. Lessor hereby agrees that for so long as any sums in respect
of the Loan remain outstanding, notwithstanding any provisions of the Lease to
the contrary, in the absence of an uncured default, it shall not accept, consent
to or join in the execution of any instrument purporting to effect the early
cancellation or termination of the Lease by Lessee, or a modification or
amendment thereof without the prior written consent of Lender. Lessee hereby
agrees that for so long as any sums in respect of the Loan remain outstanding,
notwithstanding any provisions of the Lease to the contrary, Lessee will not
exercise any right it may have to purchase the Leased Premises without the prior
written consent of Lender.
9. Lessor acknowledges that as between Lessor and Lender, its
nominee or a purchaser at a foreclosure or other sale, the Lease shall not be
deemed to be terminated notwithstanding the rejection of the Lease by the lessee
thereunder or its representative in any proceeding under the Bankruptcy Code (11
U.S.C., Section 101 et seq.) (the "Bankruptcy Code") or any other insolvency law
provided Lender cures any and all defaults susceptible to cure by Lender,
3
including any monetary defaults. Leader shall be deemed to have satisfied its
obligation to commence foreclosure proceedings by asserting a claim in a
proceeding under the Bankruptcy Code or other insolvency proceeding, and Lender
shall not be deemed to have failed to satisfy such obligation if Lender is
unable to do so as a result of the provisions of Section 362 of the Bankruptcy
Code or similar provisions of any other insolvency law.
10. Lessor acknowledges that Lender has requested that Lessor
execute this Agreement in connection with the Loan, and that Lender has agreed
to make the Loan in reliance on the matters set forth herein.
11. This Agreement shall be binding upon, and may be relied upon
by, the parties, their successors and assigns, and the terms hereof shall inure
to the benefit of the parties, their successors and assigns.
[NO FURTHER TEXT ON THIS PAGE]
4
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
LESSOR:
UDC-TEN EYCK DEVELOPMENT
CORPORATION-II
By: [ILLEGIBLE]
-------------------------------
Name:
Title : V P
UDC-TEN EYCK DEVELOPMENT
CORPORATION-III
By: [ILLEGIBLE]
------------------------------
Name:
Title: V P
LESSEE:
ALBANY HOTEL, INC.
By: __________________________________
Name:
Title:
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
LENDER:
MERRILL LYNCH MORTGAGE LENDING,
INC., as Administrative Agent
By: __________________________
Name:
Title:
6
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 15 day of
Nov, 2002, by Harris Rosenthal who resides at WEST ORANGE N.J. as V.P. of
UDC-TEN EYCK DEVELOPMENT CORPORATION-II, on behalf of said corporation. He/she
is personally known to me or who has produced a driver's license as
identification and who did take an oath.
/s/ STEVEN J. MATLIN
_________________________________
Print or Stamp Name:
Notary Public
STATE OF NEW YORK ) STEVEN J. MATLIN
)ss: NOTARY PUBLIC OF NEW YORK
COUNTY OF NEW YORK ) Qualified in New York County
Reg# 02MA6063225
My Commission Expires August 27, 2005
The foregoing instrument was acknowledg$ed before me this 15 day of
Nov, 2002, by Harris Rosenthal who resides at WEST ORANGE N.J. as V.P. of
UDC-TEN EYCK DEVELOPMENT CORPORATION-III, on behalf of said corporation. He/she
is personally known to me or who has produced a driver's license as
identification and who did take an oath.
/s/ STEVEN J. MATLIN
_________________________________
Print or Stamp Name:
Notary Public
STATE OF ) STEVEN J. MATLIN
)ss: NOTARY PUBLIC OF NEW YORK
COUNTY OF ____) Qualified in New York County
Reg# 02MA6063225
My Commission Expires August 27, 2005
The foregoing instrument was acknowledged before me this _____ day of
_____, 2002, by _____, who resides at _____, as _____ of ALBANY HOTEL, INC., on
behalf of said corporation. He/she is personally known to me or who has produced
a driver's license as identification and who did take an oath.
_________________________________
Print or Stamp Name:
Notary Public
STATE OF ____)
)ss:
COUNTY OF ___)
The foregoing instrument was acknowledged before me this _____ day of
_____, 2002, by _____ who resides at _____, as _____ of MERRILL LYNCH MORTGAGE
LENDING, INC., on behalf of said corporation. He/she is personally known to me
or who has produced a driver's license as identification and who did take an
oath.
_____________________
Print or Stamp Name:
Notary Public
EXHIBIT A
Legal Description - Hotel
EXHIBIT A
ALL that certain parcel of land in the City and County of Albany, State
of New York, comprising Parcel D on a certain map filed April 29, 1976 in the
Albany County Clerk's Office as Map No. 5197, filed in Drawer No. 168, said
parcel being more particularly bounded and described as follows:
BEGINNING at the point where the division line between Parcels A and D
on said map intersects the Northeasterly line of State Street and which point is
128.68 feet Northwesterly on a course of North 52 degrees 43 minutes 30 seconds
West as measured along the Northeast line of North State Street from its
intersection with the Northwest line of North Pearl Street;
RUNNING THENCE along the Northeast line of State Street, the following
courses and distances:
North 52 degrees 43 minutes 30 seconds West 44.77 feet;
North 51 degrees 30 minutes 20 seconds West 47.68 feet, and
North 55 degrees 53 minutes West 134.61 feet to the East line of Lodge
Street; as per deed to the City of Albany recorded November 17, 1976 in Book
2123 of deeds page 120.
THENCE along the said East line of Lodge Street, the following courses
and distances;
North 26 degrees 53 minutes 30 seconds East 159.95 feet, and
North 25 degrees 47 minutes 00 seconds East 83.31 feet to the division
line between Parcel D and Parcel C on said map;
THENCE along said division line, South 17 degrees 38 minutes 30 seconds
East 45.58 feet;
(CONTINUED)
THENCE continuing along said division line and the division line
between Parcel D and Parcel E, South 62 degrees 38 minutes 30 seconds East
206.09 feet to a point in the division line between Parcel D and Parcel E on
said map;
THENCE along said division line, the following courses and distances:
South 27 degrees 21 minutes 30 seconds West 154.84 feet, and
South 17 degrees 38 minutes 30 seconds East 19.72 feet to the division
line between Parcel D and Parcel A on said map;
THENCE along same, South 72 degrees 21 minutes 30 seconds West 34.11
feet, and
South 27 degrees 21 minutes 30 seconds West 50.85 feet to the point of
BEGINNING.
EASEMENT D-1
TOGETHER with an easement for the footings of the building constructed
upon Parcel D to project beyond the division line between Parcel D and Parcel E,
said footings to be constructed as shown on the Construction Contract except as
modified, changed, altered or redesigned to meet existing conditions.
EASEMENT D-2
TOGETHER with an easement for signs erected within the area (Level 51)
of the building constructed upon Parcel D to project beyond the division line
between Parcel D and Parcel E. The signs so erected shall meet the approval of
UDC.
EASEMENT D-7
SUBJECT to an easement for the footings of the building constructed
upon Parcel C, to project beyond the parcel limits of Parcel C into Parcel D,
near the southwest corner of Parcel C.
-2-
EASEMENT D-3
TOGETHER with an easement for exit onto a portion of Parcel E
designated in the Construction Contracts as the "East Plaza" an easement for
ingress and egress across said "East Plaza".
EASEMENT D-4
TOGETHER with an easement for roof projections of the building
constructed upon Parcel D to project beyond the division line between Parcel D
and Parcel E.
EASEMENT D-5
TOGETHER with an easement for the footings of the buildings to be
constructed upon Parcel D to project beyond the Parcel limits of Parcel D into
State Street and Lodge Street.
EASEMENT D-6
TOGETHER with an easement for the construction, operation, maintenance,
repair and replacement of an electric vault within the limits of Lodge Street
and/or State Street adjacent to Parcel D if such vault is required and approved
by UDC.
TOGETHER with the right to erect and maintain within the air space covered by
Easement C-1, mentioned in Exhibit "A" to that certain Restatement of Agreement
of Lease between UDC - Ten Eyck Development Corporation-II and Ten Eyck Hotel
Associates dated as of December 20, 1979, a portion of the Buildings constructed
upon the aforesaid Parcel D pursuant to the Lease.
- 3 -
EXHIBIT B
Legal Description - Garage
Description of Land
ALL that certain parcel of land in the City and County of Albany, State
of New York, comprising Parcel C on a certain map filed April 29, 1976 in the
Albany County Clerk's Office as Map No. 5197, filed in Drawer No. 168, said
parcel being more particularly bounded and described as follows:
BEGINNING at a point in the east line of Lodge Street at the northwest
corner of Parcel D on said map;
THENCE North 17 degrees 38 minutes 30 seconds West, along the East line
of Lodge Street, 2.92 feet;
THENCE North 27 degrees 21 minutes 30 seconds East, along the East line
of Lodge Street, 32.37 feet;
THENCE South 62 degrees 38 minutes 30 seconds East, along the East line
of Lodge Street, 1.11 feet;
THENCE North 25 degrees 47 minutes 00 seconds East, along the East line
of Lodge Street, 120.40 feet to a point in the South line of Pine Street;
THENCE South 64 degrees 44 minutes East, along the South line of Pine
Street, 129.35 feet;
THENCE South 79 degrees 36 minutes 30 seconds East, along the South
line of Pine Street, 9.25 feet to the division line between Parcels C and E on
said map;
THENCE along said division line South 27 degrees 21 minutes 30 seconds
West, 194.44 feet to the division line between Parcels C and D on said map;
THENCE North 62 degrees 38 minutes 30 seconds West, along said division
line 101.62 feet;
THENCE Continuing along said division line North 17 degrees 38 minutes
30 seconds West, 45.58 feet to the point and place of BEGINNING.
EASEMENT C-1
TOGETHER with the right to have that volume of air-space over Parcel D
above an elevation of 104 feet 0 inches above Mean Sea Level (U. S. C. G.
S.-1929 Datum) retained free of structures or other encumbrances to the free
movement of air and light within the following limits:
BEGINNING at a point in the south line of Parcel C hereinbefore
described, said point of beginning being more
EXHIBIT "A"
PAGE 1 OF 7
particularly described as follows:
beginning at the point of intersection of the north line of State
Street with the west line of North Pearl Street;
thence N. 52 degrees 43' 30" W., along the north line of State Street,
173.45 feet;
thence N. 51 degrees 30' 20" W., along the north line of State Street,
47.68 feet;
thence N. 55 degrees 53' W., along the north line of State Street,
134.61 feet to a point in the east line of Lodge Street;
thence N. 26 degrees 53' 30" E., along the east line of Lodge Street,
159.95 feet;
thence N. 25 degrees 47' 00" E., along the east line of Lodge Street,
83.31 feet;
thence S. 17 degrees 38' 30" E., 45.58 feet to the first mentioned
point of beginning which point is the point of beginning of the parcel herein
described:
THENCE S. 27 degrees 21' 30" W., 10.0 feet;
thence S. 62 degrees 38' 30" E., 183.87 feet;
thence N. 27 degrees 21' 30" E., 10.0 feet to a point in the north line
of Parcel D,
thence N. 62 degrees 38' 30" W., along the north line of Parcel D,
183.87 feet to the point and place of beginning.
OCCUPYING on a horizontal plane at an elevation of 104 feet 0 inches
above Mean Sea Level (U.S.C.G.S. - 1929 Datum) an area of 1838.7 square feet
(.04221 Acre).
EASEMENT C-2
TOGETHER with all rights to that volume of airspace over Parcel E above
an elevation of 67 feet 0 inches above Mean Sea Level (U.S.C.G.S.-1929 Datum)
having the following limits:
BEGINNING at the southeast corner of Parcel C herein-before described,
said point of beginning being more particularly described as follows:
beginning at the point of intersection of the north
EXHIBIT "A"
PAGE 2 OF 7
line of State Street with the west line of North Pearl Street;
thence N. 52 degrees 43' 30" W., along the north line of State Street,
173.45 feet;
thence N. 51 degrees 30' 20" W., along the north line of State Street,
47.68 feet;
thence N. 55 degrees 53' W., along the north line of State Street,
134.61 feet to the east line of Lodge Street;
thence N. 26 degrees 53' 30" E., along the east line of Lodge Street,
159.95 feet;
thence N. 25 degrees 47' 00" E., along the east line of Lodge Street,
83.31 feet;
thence S. 17 degrees 38' 30" E., 45.58 feet;
thence S. 62 degrees 38' 30" E., 101.62 feet to the first mentioned
point of beginning which point is the point of beginning of the parcel herein
described:
THENCE N. 27 degrees 21' 30" E., 194.44 feet to a point in the south
line of Pine Street;
thence S. 79 degrees 36' 30" E., along the south line of Pine Street,
40.95 feet;
thence S. 63 degrees 31' E., along the south line of Pine Street, 25.92
feet;
thence S. 27 degrees 21' 30" W., 170.63 feet;
thence S. 17 degrees 38' 30" E., 10.13 feet;
thence S. 27 degrees 21' 30" W., 29.0 feet;
thence N. 62 degrees 38' 30" W., 72.25 feet to the point and place of
beginning.
OCCUPYING on a horizontal plane at an elevation of 67 feet 0 inches
above Mean Sea Level (U.S.C.G.S.-1929 Datum) an area of 13, 438 square feet
(0.30849 Acre).
EASEMENT C-3
TOGETHER with the right to have that volume of airspace over Parcel E
above an elevation of 85 feet 0 inches above Mean Sea Level (U.S.C.G.S.-1929
Datum) retained free of structures of other encumbrances to the free movement of
air and light within the following limits:
EXHIBIT "A"
PAGE 3 OF 7
BEGINNING, at the southeast corner of Easement C-2 hereinbefore
described; said point of beginning being more particularly described as follows:
beginning at the point of intersection of the north line of State
Street with the west line of North Pearl Street;
thence N. 52 degrees 43' 30" W., along the north line of State Street,
173.45 feet;
thence N. 51 degrees 30' 20" W., along the north line of State Street,
47.68 feet;
thence N. 55 degrees 53' W., along the north line of State Street,
134.61 feet to the east line of Lodge Street;
thence N. 26 degrees 53' 30" E., along the east line of Lodge Street,
159.95 feet;
thence N. 25 degrees 47' 00" E., along the east line of Lodge Street,
83.31 feet;
thence S. 17 degrees 38' 30" E., 45.58 feet;
thence S. 62 degrees 38' 30" E., 173.87 feet to the first mentioned
point of beginning which point is the point of beginning of the parcel herein
described:
THENCE N. 27 degrees 21' 30" E., 29.0 feet;
thence N. 17 degrees 38' 30" W., 10.13 feet;
thence N. 27 degrees 21' 30" E., 170.63 feet to a point in the south
line of Pine Street;
thence S. 63 degrees 31' E., along the south line of Pine Street, 10.00
feet;
thence S. 27 degrees 21' 30" W., 166.64 feet;
thence S. 17 degrees 38' 30" E., 10.13 feet;
thence S. 27 degrees 21' 30" W., 33.14 feet;
thence N. 62 degrees 38' 30" W., 10.00 feet to the point and place of
beginning.
EXHIBIT "A"
PAGE 4 OF 7
OCCUPYING on a horizontal plane at an elevation of 85 feet 0 inches
above Mean Sea Level (U.S.C.G.S.-1929 Datum) an area of 2098 square feet
(0.04816 Acre).
EASEMENT C-4
TOGETHER with the right to construct, operate, maintain or repair or
replace a stairway and elevator within that volume of space within Parcel E
below an elevation of 67 feet 0 inches above Mean Sea Level (U.S.C.G.S.-1929
Datum) having the following limits:
BEGINNING at the southeast corner of Easement C-2 hereinbefore
described, said point of beginning being more particularly described as follows:
beginning at the point of intersection of the north line of State
Street with the west line of North Pearl Street;
thence N. 52 degrees 43' 30" W., along the north line of State Street,
173.45 feet;
thence N. 51 degrees 30' 20" W., along the north line of State Street,
47.68 feet;
thence N. 55 degrees 53' W., along the north line of State Street,
134.61 feet to the east line of Lodge Street;
thence N. 26 degrees 53' 30" E., along the east line of Lodge Street,
159.95 feet;
thence N. 25 degrees 47' 00" E., along the east line of Lodge Street,
83.31 feet;
thence S. 17 degrees 38' 30" E., 45.58 feet;
thence S. 62 degrees 38' 30" E., 173.87 feet to the first mentioned
point of beginning which point is the point of beginning of the parcel herein
described:
THENCE N. 27 degrees 21' 30" E., 29.0 feet;
thence N. 62 degrees 38' 30" W., 8.83 feet;
thence S. 27 degrees 21' 30" W., 29.0 feet;
thence S. 62 degrees 38' 30" E., 8.83 feet to the point and place of
beginning.
OCCUPYING on a horizontal plane at an elevation of 67 feet 0 inches
above Mean Sea Level (U.S.C.G.S.-1929 Datum) an area of 256 square feet (0.00588
Acre).
EXHIBIT "A"
PAGE 5 OF 7
EASEMENT C-5
TOGETHER with the right to construct, repair, replace and maintain
columns and other structural elements for the proposed parking structure to be
erected upon Parcel C hereinbefore described within that volume of space within
Parcel C below an elevation of 67 feet 0 inches above Mean Sea Level
(U.S.C.G.S.-1929 Datum) having the following limits:
BEGINNING at the southeast corner of Parcel C hereinbefore described,
said point of beginning being more particularly described as follows:
beginning at the intersection of the north line of State Street with
the west line of North Pearl Street;
thence N. 52 degrees 43' 30" W., along the north line of State Street,
173.45 feet;
thence N. 51 degrees 30' 20" W., along the north line of State Street,
47.68 feet;
thence N. 55 degrees 53' W., along the north line of State Street,
134.61 feet to the east line of Lodge Street;
thence N. 26 degrees 53' 30" E., along the east line of Lodge Street,
159.95 feet;
thence N. 25 degrees 47' 00" E., along the east line of Lodge Street,
83.31 feet;
thence S. 17 degrees 38' 30" E., 45.58 feet;
thence S. 52 degrees 38' 30" E., 101.62 feet to the first mentioned
point of beginning which point is the point of beginning of the parcel herein
described:
THENCE N. 27 degrees 21' 30" E., 183.50 feet;
thence S. 62 degrees 38' 30" E., 7.5 feet;
thence S. 27 degrees 21' 30" W., 57.0 feet;
thence N. 62 degrees 38' 30" W., 6.0 feet;
thence S. 27 degrees 21' 30" W., 126.5 feet;
thence N. 62 degrees 38' 30" W., 1.5 feet to the point and place of
beginning.
EXHIBIT "A"
PAGE 6 OF 7
OCCUPYING on a horizontal plane at an elevation of 67 feet 0 inches
above Mean Sea Level (U.S.C.G.S.-1929 Datum) an area of 617.25 square feet
(0.01417 Acre).
EASEMENT C-6
TOGETHER with an easement for the footings of the building constructed
upon Parcel C to project beyond the parcel limits of Parcel C into Pine Street
and Lodge Street.
TOGETHER with an easement in favor of the Equitable Life Assurance
Society of the United States and The Equitable Life Mortgage and Realty
Investors, their successors and assigns, as set forth in Easement and Seven
Party Agreement dated December 20, 1979 and duly recorded in the office of the
Clerk of the County of Albany on January 4, 1980, in Liber 2181 of Deeds, at
page 775.
SUBJECT to the right of Tenant, as the tenant under a certain
Restatement of Lease Agreement ("Ground Lease") dated as of December 20, 1979
between UDC-Ten Eyck Development Corporation-III, as Landlord, and Ten Eyck
Hotel Associates, as Tenant, to be recorded simultaneously herewith to erect and
maintain within the airspace covered by the foregoing Easement C-1 a portion of
the Buildings to be constructed pursuant to the Ground Lease as located upon
completion thereof.
EXHIBIT "A"
PAGE 7 OF 7
ACKNOWLEDGMENT, ESTOPPEL CERTIFICATE
AND AGREEMENT
(Lancaster, PA - East)
THIS ACKNOWLEDGMENT, ESTOPPEL CERTIFICATE AND AGREEMENT ("Agreement")
is executed and delivered as of this 14th day of November, 2002, among JOYCE A.
BRISTOW, as Personal Representative of the estate of Dorothy H. Herr,
("Lessor"); MERRILL LYNCH MORTGAGE LENDING, INC., a Delaware corporation
("Lender") and AMI OPERATING PARTNERS, L.P., a Delaware limited partnership
("Lessee").
RECITALS
A. Lessor is the lessor under the ground lease described on
Exhibit "A" hereto between Lessor, as lessor, and Lessee, as lessee, affecting
the real property ("Land") and improvements ("improvements") known as and
located at 521 Greenfield Road, Lancaster, Pennsylvania 17601 more particularly
described on Exhibit "B" hereto (the Land and Improvements, collectively, the
"Leased Premises"; such lease, as so amended and assigned, and as it may be
further amended and assigned from time to time, the "Lease");
B. Lessee is now in the process of obtaining from Lender a
refinancing loan (the "Loan ") to be secured by, among other things, a mortgage
and collateral assignment of all of Lessee's interests under the Lease;
C. In order to facilitate the transactions described herein,
Lessor has agreed to enter into this Agreement, without which Lender would not
make the Loan.
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00),
and for other good and valuable consideration, the receipt and legal sufficiency
of which are hereby acknowledged, Lessor agrees as follows:
1. Without implying herein that Lessor's acknowledgment or
consent may be required under the Lease, Lessor does hereby acknowledge (a) the
granting by Lessee of a leasehold mortgage ("Leasehold Mortgage") to Lender on
Lessee's interests in the Leased Premises (b) the pledge of the ownership
interests in the Lessee by the holder or holders of all ownership interests in
Lessee (i.e. the mezzanine borrower) to the applicable Merrill Lynch mezzanine
lending entity (together with its successors and assigns, the "Mezzanine
Lender") as security for a mezzanine loan (the "Mezzanine Loan") and the right
of Mezzanine Lender to foreclose on such ownership interests in the event of a
default under the Mezzanine Loan and (c) the address for delivery of notices to
Lender and Mezzanine Lender as set forth below. Upon the mortgaging of the
Leased Premises, the pledge of the ownership interests in Lessee pursuant to the
Mezzanine Loan and the execution of this Agreement, Lessor acknowledges and
agrees that both Lender and Mezzanine Lender shall be deemed to be, and shall
have all of the rights and protections granted to the "Servicer" under the
Lease.
2. Lessor and Lessee hereby certify to Lender that: (a) Lessor is
the current owner of (i) the fee interest in the Leased Premises, and (ii) all
of the rights and benefits of "Lessor" under the Lease; (b) all rents and other
sums due and owing under the Lease as of the date hereof are current and not in
arrears; (c) there exists no uncured default under the Lease by Lessor or
Lessee; (d) the Lease is in full force and effect; (e) the current renewal term
of the Lease expires June 30, 2024, and Lessee has remaining two (2) 20-year
options to renew the term; (f) all of the material obligations under the Lease
which have accrued prior to the date of this Agreement have been fully
performed; and (g) Exhibit "A" lists the only instruments governing Lessor's and
Lessee's rights and obligations with respect to the Leased Premises.
3. The annual rental for the current period (08/01/99 through
07/30/04) is $67,456, payable $5,621,34 per month. Annual rental shall next be
adjusted in August, 2004, to be effective for the 5-year period beginning
08/01/04. Rent is due in advance on the 1st day of each month. Rent is paid
through November, 2002 and the next rent payment is due on December 1, 2002.
4. Lessor confirms that, notwithstanding any provisions of the
Lease to the contrary, in the event of casualty to the Improvements on the
Leased Premises, insurance proceeds in respect of such casualty shall be paid to
and held by Lender for Lender's disbursement to Lessee for repair and/or
reconstruction of the Improvements.
5. In accordance with the provisions of Section 13 of the Lease,
Lessor has at all times complied with the covenants regarding non-competition
contained therein.
6. Unless otherwise notified by Lender or Mezzanine Lender,
copies of any notices to Lender or Mezzanine Lender, as the case may be, shall
be sent to the following addresses:
If to Lender:
Merrill Lynch Mortgage Lending, Inc.
c/o Merrill Lynch & Co.
Global Principal Investments
4 World Financial Center
New York, New York 10080
Attn: Steve Glassman
Facsimile: (212) 738-1013
Attn: John Gluszak
Facsimile: (212) 738-2053
With a copy to:
Sidley Austin Brown & Wood, LLP
787 Seventh Avenue
New York, New York 10019
Attn: Alan S. Weil, Esq.
Facsimile: (212) 839-5599
If to Mezzanine Lender:
Merrill Lynch Mortgage Lending, Inc.
c/o Merrill Lynch & Co.
Global Principal Investments
4 World Financial Center
New York, New York 10080
Attn: Steven Glassman
Facsimile: (212) 738-1013
Attn: John Katz
Facsimile: (212) 738-8094
With a copy to:
Sidley Austin Brown & Wood, LLP
787 Seventh Avenue
New York, New York 10019
Attn: Alan S. Weil, Esq.
Facsimile: (212) 839-5599
7. In the event Lender shall acquire, assume or succeed to
Lessee's interest under the Lease, then in such event, so long as Lender is not
in default in the performance of any of the terms, covenants or conditions of
the Lease on Lessee's part to be performed, Lender's possession under the Lease
and Lender's rights and privileges thereunder, or under any extensions or
renewals thereof which may be effected in accordance with any option therefor
contained in the Lease, shall not be diminished or interfered with by Lessor,
and Lender's occupancy shall not be disturbed by Lessor during the term of the
Lease or any such extensions or renewals thereof.
8. Lender understands and agrees that Lessor is neither a party
to the Loan nor are Lessor's fee title and Lessor's interest in the Lease
subordinate to the security interest of the Leasehold Mortgage on the lessee's
interest in the Lease.
9. Lessor's Encumbrances. Lessor's fee simple interest in the
Leased Premises and the Lessor's interest under the Lease are not encumbered.
10. Lessor hereby agrees that either Lender or Mezzanine Lender
shall have the right, pursuant to the terms of the Lease, to exercise the
remaining two (2) options to renew the term of the Lease, if the Lessee shall
fail to do so, whether or not an event of default under the Leasehold Mortgage
shall have occurred, provided that Lender or Mezzanine Lender shall do so
strictly in accordance with the Lease. In the event Lender or Mezzanine Lender
does so exercise any option to renew, Lender or Mezzanine Lender shall become
obligated with the Lessee for the performance of the obligations set forth in
the Lease.
11. Lessor hereby agrees that for so long as any sums in respect
of the Loan remain outstanding, it shall not, without the prior written consent
of both Lender and Mezzanine Lender: (a) notwithstanding any provisions of the
Lease to the contrary, accept, consent to or join in the execution of any
instrument purporting to (i) effect the termination, prior to June 30, 2024, of
the Lease by Lessee, or (ii) amend or modify the Lease with respect to the term,
amounts payable by
the Lessee thereunder, the protections afforded to Lender as a leasehold
mortgagee thereunder or other material non-monetary modifications and shall give
Lender written notice of any other proposed modification thirty (30) days prior
to the effective date; (b) permit or accept the exercise by Lessee of any right
it may have to purchase the Leased Premises without having first obtained
Lender's written consent thereto. To the extent Lender shall have approved any
such exercise by Lessee of such right, the conveyance instrument executed in
connection therewith shall expressly provide for the preservation of the
leasehold under the Lease, and for the non-merger of the fee and leasehold
estates in the Leased Premises.
12. Lessor acknowledges that as between Lessor and Lender, its
nominee or a purchaser at a foreclosure or other sale, the Lease shall not be
deemed to be terminated notwithstanding the rejection of the Lease by the Lessee
thereunder or its representative in any proceeding under the Bankruptcy Code (11
U. S. C. Section 101 et seq.) (the "Bankruptcy Code") or any other insolvency
law. Lender shall be deemed to have satisfied its obligation to commence
foreclosure proceedings by asserting a claim in a proceeding under the
Bankruptcy Code or other insolvency proceeding, and Lender shall not be deemed
to have failed to satisfy such obligation if Lender is unable to do so as a
result of the provisions of Section 362 of the Bankruptcy Code or similar
provisions of any other insolvency law, provided all arrearages and rents are
paid within ninety (90) days of the institution of the bankruptcy proceeding.
13. Lessor acknowledges that Lender and Mezzanine Lender have
requested that Lessor execute this Agreement in connection with the Loan and the
Mezzanine Loan, and that Lender has agreed to make the Loan and Mezzanine Lender
has agreed to make the Mezzanine Loan in reliance on the matters set forth
herein.
14. This Agreement may be executed in counterparts, and each such
counterpart shall constitute an original.
15. Except as amended hereby, the Lease and all the terms,
covenants and conditions thereof remain unchanged and in full force and effect,
and the Lease, as amended hereby, is hereby ratified and confirmed in all
respects.
16. The parties agree that the protections and rights granted to
the Lender and Mezzanine Lender by this Agreement shall also apply to any other
prospective mortgagee of Lessee's interest in the Lease or any other prospective
pledgee of the ownership interests in Lessee, provided that the name and address
of such lender is provided in writing to Lessor, and such other lender shall be
deemed the "Servicer" or the "Leasehold Mortgagee" for the purposes of this
Agreement and for the purposes of the Lease.
17. This Agreement shall be binding upon, and may be relied upon
by, the parties, their successors and assigns, and the terms hereof shall inure
to the benefit of the parties, their successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed Agreement as of
the date and year first above written.
LENDER: LESSOR
MERRILL LYNCH MORTGAGE
LENDING, INC., a
Delaware corporation
Joyce A. Bristow
By:_______________________________ ----------------------------------------
Name: Joyce A. Bristow, as Personal
Title: Representative of the estate of
Dorothy H. Herr
MEZZANINE LENDER: LESSEE:
MERRILL LYNCH MORTGAGE AMI OPERATING PARTNERS, L.P.,
LENDING, INC., a Delaware limited partnership
a Delaware corporation
By:_______________________________ By:_____________________________________
Name: Name:
Title: Title:
[Notarizations commence on following page]
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
- --------------------------------------------------------------------------------
State of California )
) ss.
County of Solano )
On Nov 14, 2002, before me, Linda Bergen
----------- -----------------------------------------------
Date Name and Title of Officer
(e.g., "Jans Dee. Notary Public")
personally appeared Joyce A. Bristow
-------------------------------------------------------
Name(s) of Signer(s)
[ ] personally known to me
[X] proved to me on the basis of
satisfactory evidence
to be the person whose name is
subscribed to the within instrument and
acknowledged to me that she
[SEAL OF LINDA BERGEN] executed the same in her
authorized capacity, and that by
her signature on the instrument
the person, or the entity upon behalf of
which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Linda Bergen
----------------------------------------
Place Notary Seal Above Signature of Notary Public
OPTIONAL
Though the information below is not required by law, it may prove valuable to
persons relying on the document and could prevent fraudulent removal and
reattachment of this form to another document.
DESCRIPTION OF ATTACHED DOCUMENT
Title or Type of Document: Acknowledgment, Estoppel Cert & agreement
------------------------------------------------------
Document Date: Nov 14, 2002 Number of Pages: 7
Signer(s) Other Than Named Above: /s/ [ILLEGIBLE]
-----------------------------------------------
CAPACITY(IES) CLAIMED BY SIGNER
Signer's Name:___________________________________________ RIGHT THUMBPRINT
[X] Individual OF SIGNER
[ ] Corporate Officer -- Title(s):_________________________ Top of thumb here
[ ] Partner -- [ ] Limited [ ] General
[ ] Attorney in Fact
[ ] Trustee
[ ] Guardian or Conservator
[ ] Other:_______________________________________________
Signer is Representing:__________________________________
STATE OF ________ )
)ss:
COUNTY OF ___________ )
On this_____day of_____, 2002, before me personally appeared_____to me
known, who, being by me duly sworn, did depose and say that he is the_____of
Merrill Lynch Mortgage Lending, Inc., a Delaware corporation, described in and
which executed the foregoing instrument; and that he/she signed his/her name
thereto by authority of the Board of Directors of the corporation.
________________________________________
Notary Public, State of_____at Large
Print Name:_____________________________
STATE OF ________ )
)ss:
COUNTY OF ___________ )
On this_____day of_____, 2002, before me personally appeared_____to me
known, who, being by me duly sworn, did depose and say that he is the_____of
Merrill Lynch Mortgage Lending, Inc., a Delaware corporation, described in and
which executed the foregoing instrument; and that he/she signed his/her name
thereto by authority of the Board of Directors of the corporation.
________________________________________
Notary Public, State of_____at Large
Print Name:_____________________________
[Notarizations continued on following page]
STATE OF _______________)
)ss:
COUNTY OF ______________)
The foregoing instrument was acknowledged before me this ___ day of
_____, 2002 by Joyce A. Bristow, as Personal Representative of the estate of
Dorothy H. Herr.
Personally Known _____ OR Produced Identification _____
Type of Identification Produced ________________________________________________
________________________________________
Print or Stamp Name:
Notary Public, State of _____ at Large
Commission No.:
Commission Expires:
STATE OF _______________)
)ss:
COUNTY OF_______________)
On this ___ day of _____, 2002, before me personally appeared _____ to
me known, who being by me duly sworn, did depose and say that he is the _____ of
AMI Operating Partners, L.P., described in and which executed the foregoing
instrument; and that he/she signed his/her name thereto by authority of the
Board of Directors of _____
________________________________________
Notary Public, State of ___ at Large
Print Name: ____________________________
EXHIBIT "A"
LEASE
a. Lease Agreement, dated January 30, 1969, between Paul A. Herr
and Dorothy H. Herr, as lessor, Republic Motor Inns, Inc., as
lessee, and American Motor Inns, Inc., as guarantor, recorded
with the Recorder of Deeds, Lancaster, PA in Record Book W59,
Page 755,
b. Addendum dated January 16, 1971 and recorded with the Recorder
of Deeds, Lancaster, PA in Record Book R60, Page 233,
c. Amendment dated March 15, 1985 and recorded with the Recorder
of Deeds, Lancaster, PA in Record Book W91, Page 434,
d. Amendment to Lease dated December 20, 1986 and recorded with
the Recorder of Deeds, Lancaster, PA in Record Book Y96, Page
660.
e. Assignment of Lease and Indemnification Agreement, December
23, 1986, between Republic Motor Inns, Inc. and AMI Operating
Partners, LP, recorded with the Recorder of Deeds, Lancaster,
PA in Record Book Y96, Page 669,
f. Assignment and Assumption of Lessee's Interest in Ground
Lease, dated November 24, 1998, between AMI Operating
Partners, LP and Lodgian AMI Inc., recorded with the Recorder
of Deeds, Lancaster, PA in Record Book 604, Page 638, and
g. Acknowledgment, Estoppel Certificate and Agreement, dated
November 24, 1998, between Dorothy H. Herr and AMI Operating
Partners LP, recorded with the Recorder of Deeds, Lancaster,
PA in Record Book 6045, Page 1.
EXHIBIT "B"
LEASED PREMISES
GROUND LESSOR ESTOPPEL
(MEMPHIS FRENCH QUARTER HOTEL)
WHEREAS, BILL SUTTON and MARTHA SUTTON, having an address at 1405
Yucca, McAllen, Texas 78504 (hereinafter "Landlord"), are the holders of the
landlord's interest and IMPAC HOTELS I, LLC, a Georgia limited liability
company, having an address at Two Live Oak Center, 3445 Peachtree Road, Suite
700, Atlanta, Georgia 30326 (hereinafter "Tenant") is the holder of the tenant's
interest, respectively, in, to and under that certain lease and amendments
thereto and assignments thereof (the "Lease") described on Exhibit A annexed
hereto and made a part hereof, which Lease covers the land and improvements
therein described (the "Premises"),
WHEREAS, Tenant is desirous of obtaining from Merrill Lynch Mortgage
Lending, Inc., in its capacity as mortgage lender and mezzanine lender (together
with its respective successors and assigns, collectively, "Lender"), having an
office at 4 World Financial Center, New York, New York, 10080, a loan (the
"Loan") secured by, among other things, a first leasehold mortgage upon Tenant's
interest as tenant in the Lease (the "Leasehold Mortgage");
WHEREAS, Lender is unwilling to make the Loan unless Landlord executes
an estoppel certificate as required under the Lease;
NOW THEREFORE, Landlord hereby certifies to Lender as follows:
1. Landlord is the Landlord under the Lease.
2. The Lease constitutes the entire agreement between the
Landlord and the Tenant thereunder and has not been further modified or amended.
3. The Lease is in full force and effect.
4. As of the dare hereof, no basic rent or additional rent is due
and payable from Tenant under the lease. The amount of the monthly basic rent is
$1,600.00 and there is no additional rent. The rent due for the period _____
through _____ in the amount of $ _____ has been paid by Tenant.
5. The commencement date for the Lease was April 26, 1972 and the
expiration date for the current lease term is September 30, 2038.
6. To Landlord's knowledge, the Tenant under the Lease is not in
default thereunder.
7. Unless otherwise notified by Lender, copies of any notices to
Lender shall be sent to the following address:
Merrill Lynch Mortgage Lending, Inc.
c/o Merrill Lynch & Co.
Global Principal Investments
4 World Financial Center
New York, NY 10030
Attention: Steven Glassman
Facsimile: (212) 738-1013
Attention: John Gluszak
Facsimile: (212) 738-2053
Attention: John Katz
Facsimile: (212) 738-8094
with a copy to:
Sidley Austin Brown & Wood, LLP
787 Seventh Avenue
New York, NY 10019
Attn: Alan S. Weil, Esq.
Facsimile: (212) 839-5599
8. Landlord acknowledges that Lender has requested that Landlord
execute this Agreement in connection with the Loan, and that Lender has agreed
to make the Loan in reliance on the matters set forth herein.
This certificate and the representations made herein shall inure to the
benefit of Lender, its successors and assigns and shall be binding on the
Landlord, its successors and assigns.
Executed this 11 day of November 2002.
LANDLORD:
By: /s/ Bill Sutton
----------------------------------------
Bill Sutton
By: /s/ Martha Surton
----------------------------------------
Martha Sutton
[Acknowledgement on Following Page]
State of Texas
County of Hidalgo
On this 11 day of Nov, 2002, personally appeared the above named Bill Sutton and
Martha Sutton, and they each acknowledged the foregoing instrument to be their
free act and deed.
Before me, /s/ [ILLEGIBLE]
----------------------------------
Notary Public
[ SEAL OF KRISTINA K. MION ]
EXHIBIT A
That certain Lease dated April 26, 1972 between J. Murry Davis and wife, Mary
Alice Davis as Lessor and W. H. Welch, Jr., Meredith L. McCullar, Fred Don
Alfonso and Emie Barrasso, as Lessee, recorded as Instrument No. H3 3366 in the
Register's Office of Shelby County, Tennessee (the "Register's Office"); as
amended by Agreement Assigning, Modifying and Extending Lease and Granting
Certain Rights, dated as of February 29, 1976 between J. Murry Davis as Lessor
and Waymon H. Welch, Jr. and Waymon H. Welch, Sr. as Existing Lessee and The
Group, Inc. as New Lessee, recorded in said Register's Office as Instrument No.
L1 8178; as amended by Agreement Modifying and Extending Lease dated January 19,
1983 between Bill Sutton and Martha Sutton as Lessor and J. Garnett Murphy as
Lessee, recorded in said Register's Office as Instrument No. U6 8978; as amended
by Lease Modification Agreement dated June 4, 1983 by Bill Sutton and Martha
Sutton as Lessor and J. Garnett Murphy as Lessee, recorded in said Register's
Office as Instrument No. U3 3420; as amended by Lease Modification and Extension
Agreement dated October 6, 1983 between Martha Sutton as Lessor and M. K.
Partners, a partnership composed of J. Garnett Murphy and Ronald L. Kirkpatrick
as Lessee, recorded in said Register's Office as Instrument No. U6 8978; as
amended by Warranty Deed dated November 29, 1983 by M.K. Partners to French
Quarter Inn of Memphis, recorded in said Register's Office as Instrument No. U8
0878; as amended by Assignment of Ground Leases dated January 15, 1991 by
Middlesex Development Corporation, a California corporation d/b/a "French
Quarter Inn of Memphis", as Assignor and Memphis Lodging Associates, Inc., a
Florida corporation as Assignee, recorded in said Register's Office as
Instrument No. CA 3996; as assigned by Assignment of Ground Leases dated March
12, 1997 by Memphis Lodging Associates, Inc., a Florida corporation, as Assignor
to Impac Hotels, I, LLC, a Georgia limited liability company, as Assignee,
recorded in said Register's Office as Instrument No. GM 0294; and further
amended by Amendment of Ground Lease dated September 17, 1997, by Bill Sutton
and Martha Sutton, as Landlord and Impac Hotels I, LLC, a Georgia limited
liability company, as Tenant, recorded in said Register's Office as Instrument
No. HC 9439.
GROUND LESSOR ESTOPPEL
(MEMPHIS FRENCH QUARTER HOTEL)
WHEREAS, HORACE PROCTOR and ANN PROCTOR, having an address at 6555
Brunswick Road, Arlington, Tennessee 38802 (hereinafter "Landlord"), are the
holders of the landlord's interest and IMPAC HOTELS I, LLC, a Georgia limited
liability company, having an address at Two Live Oak Center, 3445 Pea chtree
Road, Suite 700, Atlanta, Georgia 30326 (hereinafter "Tenant") is the holder of
the tenant's interest, respectively, in, to and under that certain lease and
amendments thereto and assignments thereof (the "Lease") described on Exhibit A
annexed hereto and made a part hereof, which Lease covers the land and
improvements therein described (the "Premises").
WHEREAS, Tenant is desirous of obtaining from Mcrrill Lynch Mortgage
Lending, Inc., in its capacity as mortgage lender and mezzanine lender (together
with its respective successors and assigns, collectively, "Lender"), having an
office at 4 World Financial Center, New York, New York, 10080, a loan (the
"Loan") secured by, among other things, a first leasehold mortgage upon Tenant's
interest as tenant in the Lease (the "Leasehold Mortgage");
WHEREAS, Lender is unwilling to make the Loan unless Landlord executes
an estoppel certificate as required under the Lease;
NOW THEREFORE, Landlord hereby certifies to Lender as follows:
1. Landlord is the owner of the fee simple estate in the
Premises, subject to covenants, easements and restrictions of record, and is the
Landlord under the Lease.
2. The Lease constitutes the entire agreement between the
Landlord and the Tenant thereunder and has not been further modified or amended.
3. The Lease is in full force and effect.
4. The Tenant has taken possession of the ground on a rent-paying
basis.
5. As of the date hereof, no basic rent or additional rent is due
and payable from Tenant under the lease. The amount of the monthly basic rent is
$1,000.00 and there is no additional rent. The rent due for the
period_____through_____in the amount of $_____has been paid by Tenant.
6. The commencement date for the Lease was August 24, 1972 and
the expiration date for the current lease term is September 30, 2038.
7. To the best of Landlord's knowledge, all material obligations
under the Lease which have accrued prior to the date hereof have been fully
performed.
8. To the best of Landlord's knowledge, neither the Landlord nor
the Tenant under the Lease is in default under any of the terms, covenants or
provisions of the Lease and the
Landlord 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 Lease by the
Landlord or the Tenant thereunder.
9. Upon the Recording of the Leasehold Mortgage, Landlord hereby
recognizes Lender as a Leasehold Mortgagee as defined in Section 2(h) of the
September 24, 1997 Amendment of Ground Lease, for all purposes under the Lease.
10. All of the Leasehold Mortgage provisions contained in the
Lease, including but not limited to those contained in the September 24, 1997
Amendment of Ground Lease, and all other provisions inuring to the benefit of
Leasehold Mortgagees or their successors and assigns are hereby incorporated
into this estoppel by reference and restated and confirmed by Landlord for the
benefit of Lender, its successors and assigns.
11. Unless otherwise notified by Lender, copies of any notices to
Lender shall be sent to the following address:
Merrill Lynch Mortgage Lending, Inc.
c/o Merrill Lynch & Co.
Global Principal Investments
4 World Financial Center
New York, NY 10080
Attention: Steven Glassman
Facsimile: (212) 738-1013
Attention: John Gluszak
Facsimile: (212) 738-2053
Attention: John Katz
Facsimile: (212) 738-8094
with a copy to:
Sidley Austin Brown & Wood, LLP
787 Seventh Avenue
New York, NY 10019
Attn: Alan S. Weil, Esq.
Facsimile: (212) 839-5599
12. Landlord acknowledges that Lender has requested that Landlord
execute this Agreement in connection with the Loan, and that Lender has agreed
to make the Loan in reliance on the matters set forth herein.
13. To the best of Landlord's knowledge, neither the Landlord nor
the Tenant has commenced any action or given or received any notice for the
purpose of terminating the Lease.
14. To the best of Landlord's knowledge, there are no offsets or
defenses to the payment of the rent or other sums payable under the Lease.
This certificate and the representations made herein shall inure to the
benefit of Lender, its successors and assigns and shall be binding on the
Landlord, its successors and assigns.
[Signatures On Following Page]
Executed this ___ day of _____, 2002.
LANDLORD:
By:________________________
Horace Proctor
By:________________________
Ann Proctor
[Acknowledgement on Following Page]
State of Tennessee
County of Shelby
On this _____ day of _____________, 2002, personally appeared the above named
Horace Proctor and Ann Proctor, and they each acknowledged the foregoing
instrument to be their free act and deed.
Before me, _________________
Notary Public
EXHIBIT I
ACCEPTABLE FRANCHISORS
Exhibit I
EXHIBIT I
Acceptable Franchisors & Franchise Names
- ----------------------------------------- ------------------------------------ --------------------------------------
TIER 1 TIER 2 (WITH FOOD AND BEVERAGE) TIER 3 (WITHOUT FOOD AND BEVERAGE)
- ----------------------------------------- ------------------------------------ --------------------------------------
Six Continents Crowne Plaza Six Continents Holiday Inn Six Continents Holiday Inn
Express
Hilton Hotels Corp. Hilton Six Continents Holiday Inn Hilton Hotels Corp. Hampton Inn
Select
Hilton Hotels Corp. Doubletree Six Continents Holiday Inn Marriott Fairfield
SunSpree International, Inc.
Resort
Hilton Hotels Corp. Homewood Suites Hilton Hotels Corp. Hilton Choice Hotels Comfort Inn
Garden Inn International
Starwood Hotels & Westin Choice Hotels Clarion Choice Hotels Comfort Suites
Resorts International International
Starwood Hotels & Sheraton Best Western Best Western
Resorts International, Inc.
Starwood Hotels & W Cendant Corporation Ramada
Resorts
US Franchise Systems, Hawthorn Starwood Hotels & Four Points
Inc. Resorts
Marriott International, Marriott Choice Hotels Quality
Inc. International
Marriott International, Renaissance Wyndham International Wyndham
Inc. Gardens
Marriott International, Courtyard
Inc.
Marriott International, Residence Inn
Inc.
Wyndham International Wyndham Hotel
Carlson Hotels Worldwide Radisson
I-1
EXHIBIT J
[RESERVED]
Exhibit J
EXHIBIT K
[RESERVED]
Exhibit K
EXHIBIT L
[RESERVED]
Exhibit L
EXHIBIT M
PROPERTY CONDITION REPORTS
Exhibit M
LODGIAN
ENGINEERING REPORTS
- ------------------------------------------------------------------------------------------------------
REPORT CHAIN/NAME CITY ST
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Hampton Inn Dothan AL
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn West Dothan AL
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Express Gadsden AL
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Sheffield AL
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Courtyard by Marriott Bentonville AR
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Residence Inn Little Rock AR
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn East Hartford CT
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Hampton Inn Pensacola FL
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Express Pensacola FL
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Pensacola (University Mall) FL
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Crowne Plaza West Palm Beach FL
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Winter Haven FL
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Courtyard by Marriott Atlanta GA
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Brunswick GA
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Marietta (hotel & suites) GA
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Fairfield Inn Valdosta GA
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Valdosta GA
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Crowne Plaza Cedar Rapids IA
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Rolling Meacows IL
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Courtyard by Marriott Florence KY
- ------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Hurstbourne Hotel Louisville KY
- ------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
EMG PROJECT
REPORT ADDRESS CITY/ST/ZIP DATED NUMBER
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 3071 Ross Clark Circle Dothan, AL 36301 August 15, 2002 94678
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 3053 Ross Clark Dothan, AL 36301 August 15, 2002 94680
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 801 Cleveland Ave. Gadsden, AL 35954 August 15, 2002 94682
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 4900 Hatch Blvd. Sheffield, AL 35660 August 15, 2002 94684
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 1001 McClain Rd. Bentonville, AR 72712 August 15, 2002 94686
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 1401 S. Shackleford Rd. Little Rock, AR 72211 August 15, 2002 94689
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 363 Roberts St. E. Hartford, CT 06108 August 15, 2002 94692
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 7330 Plantation Rd. Pensacola, FL 32504 August 15, 2002 94698
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 6501 Pensacola Blvd. Pensacola, FL 32505 August 15, 2002 94700
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 7200 Plantation Rd. Pensacola, FL 32504 August 15, 2002 94702
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 1601 Belvedere Rd. West Pam Beach, FL 33406 August 15, 2002 94705
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 1150 3rd St., SW Winter Haven, FL 33880 August 15, 2002 94707
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 3332 Peachtree Rd. Atlanta, GA 30326 August 15, 2002 94709
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 5252 New Jesup Hwy Brunswick, GA 31525 August 15, 2002 94715
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 2265 Kingston Ct. Marietta, GA 30067 August 15, 2002 94719
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 1311 St. Augustine Rd. Valdosta, GA 31601 August 15, 2002 94723
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 1309 St. Augustine Rd. Valdosta, GA 31601 August 15, 2002 94731
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 350 1st Ave, NE Cedar Rapids, IA 52401 August 15, 2002 94725
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 3405 Algonquin Rd. Rolling Meadows, IL 60008 August 15, 2002 94729
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 46 Cavalier Blvd. Florence KY 41042 August 15, 2002 94731
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 9700 Blue Grass Parkway Louisville, KY 40299 August 15, 2002 94737
- -------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Courtyard by Marriott Paducah KY
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Quality Hotel Metairie LA
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Residence Inn Dedham MA
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Baltimore - BWI Airport MD
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Baltimore West (Belmont) MD
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Baltimore, Inn Harbor MD
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Hilton Columbia MD
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Frederick MD
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Glen Burnie MD
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Silver Spring MD
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Towson (Cromwell MD
Bridge)
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Lansing MI
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Hilton Troy (Northfield) MI
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Arden Hills/St. Paul MN
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn St. Louis North MO
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Crowne Plaza Albany NY
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Grand Island NY
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Jamestown NY
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Four Points Niagara Falls NY
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Select Niagara Falls NY
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Select Strongsville OH
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Greentree PA
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Lancaster PA
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Doubletree Club Philadelphia PA
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Pittsburgh (Pkwy East) PA
- --------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 3835 Technology Dr. Paducah, KY 42001 August 15, 2002 94740
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 2261 N. Causeway Blvd. Metairie, LA 70001 August 15, 2002 94742
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 259 Elm St. Dedham, MA 02026 August 15, 2002 94747
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 890 Elkridge Landing Rd. Linthicum Heights, MD 21090 August 15, 2002 94749
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 1800 Belmont Ave. Baltimore, MD 21244 August 15, 2002 94751
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 301 W. Lombard St. Baltimore, MD 21201 August 15, 2002 94753
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 5485 Twin Knolls Rd. Columbia, MD 21045 August 15, 2002 94757
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 999 W. Patrick St. Frederick, MD 21702 August 15, 2002 94760
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 6323 Governor Ritchie Hwy Glen Burnie, MD 21061 August 15, 2002 94762
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 8777 Georgia Ave. Silver Spring, MD 20910 August 15, 2002 94764
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 1100 Cromwell Bridge Rd. Towson, MD 21286 August 15, 2002 94766
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 7501 W. Saginaw Hwy Lansing, MI 48917 August 15, 2002 94768
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 5500 Crooks Rd. Troy, MI 48098 August 15, 2002 94771
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 1201 West Country Rd. E St. Paul, MN 55112 August 15, 2002 94773
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 4545 N. Lindbergh Blvd. St. Louis, MO 63044 August 15, 2002 94775
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Ten Eyck Plaza Albany, NY 12207 August 15, 2002 94777
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 100 Whitehaven Rd. Grand Island, NY 14072 August 15, 2002 94779
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 150 W. 4th St. Jamestown, NY 14701 August 15, 2002 94782
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 114 Buffalo Ave. Niagara Falls, NY 14303 August 15, 2002 94786
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 300 Third St. Niagara Falls, NY 14303 August 15, 2002 94784
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 15471 Royalton Rd. Strongsville, OH 44136 August 15, 2002 94788
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 401 Holiday Drive Pittsburgh, PA 15220 August 15, 2002 94792
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 521 Greenfield Rd. Lancaster, PA 17601 August 15, 2002 94794
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 9461 Roosevelt Blvd. Philadelphia, PA 19114 August 15, 2002 94796
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 915 Brinton Rd. Pittsburgh, PA 15221 August 15, 2002 94798
- -------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn York PA
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Clarion North Charleston SC
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn SunSpree Myrtle Beach SC
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of French Quarter Memphis TN
- --------------------------------------------------------------------------------------------------------
EMG: Seismic Risk Assessment French Quarter Suites Memphis TN
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Courtyard by Marriott Abilene TX
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Austin TX
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Select Dallas (DFW Airport) TX
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Holiday Inn Dallas (Mkt Center) TX
- --------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of Crowne Plaza Houston TX
- --------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 334 Arsenal Rd. York, PA 17402 August 15, 2002 94800
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 7401 Northwoods Blvd. Charleston, SC 29406 August 15, 2002 94802
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 1601 N. Ocean Blvd. Surfside Beach, SC 29575 August 15, 2002 94804
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 2144 Madison Ave. Memphis, TN 38104 August 14, 2002 94810
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Seismic Risk Assessment 2144 Madison Ave. Memphis, TN 38104 August 15, 2002 94811
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 4350 Ridgemont Dr. Abilene, TX 79606 August 15, 2002 94813
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 3401 South 1-35 Austin, TX 78741 August 15, 2002 94815
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 4441 Hwy 114 & Esters Blvd. Irving, TX 75063 August 15, 2002 94818
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 1955 Market Center Blvd. Dallas, TX 75207 August 15, 2002 94823
- -------------------------------------------------------------------------------------------------------------------------------
EMG: Property Condition Report of 12801 NW Freeway US 290 Houston, TX 77040 August 15, 2002 94825
- -------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 1
BORROWERS
ALBANY HOTEL, INC., a Florida corporation,
APICO HILLS, INC., a Pennsylvania corporation,
APICO INNS OF GREEN TREE, INC., a Pennsylvania corporation,
BRUNSWICK MOTEL ENTERPRISES, INC., a Georgia corporation,
DOTHAN HOSPITALITY 3053, INC., an Alabama corporation,
DOTHAN HOSPITALITY 3071, INC., an Alabama corporation,
GADSDEN HOSPITALITY, INC., an Alabama corporation,
LODGIAN AMI, INC., a Maryland corporation,
MINNEAPOLIS MOTEL ENTERPRISES, INC., a Minnesota corporation,
NH MOTEL ENTERPRISES, INC., a Michigan corporation,
SERVICO AUSTIN, INC., a Texas corporation,
SERVICO CEDAR RAPIDS, INC., an Iowa corporation,
SERVICO COLUMBIA, INC., a Maryland corporation,
SERVICO GRAND ISLAND, INC., a New York corporation,
SERVICO HOUSTON, INC., a Texas corporation,
SERVICO JAMESTOWN, INC., a New York corporation,
SERVICO LANSING, INC., a Michigan corporation,
SERVICO MARKET CENTER, INC., a Texas corporation,
SERVICO MARYLAND, INC., a Maryland corporation,
SERVICO METAIRIE, INC., a Louisiana corporation,
SERVICO NEW YORK, INC., a New York corporation,
SERVICO NIAGARA FALLS, INC., a New York corporation,
SERVICO NORTHWOODS, INC., a Florida corporation,
Schedule 1
SERVICO PENSACOLA 7200, INC., a Delaware corporation,
SERVICO PENSACOLA 7330, INC., a Delaware corporation,
SERVICO PENSACOLA, INC., a Delaware corporation,
SERVICO ROLLING MEADOWS, INC., an Illinois corporation,
SERVICO WINTER HAVEN, INC., a Florida corporation,
SHEFFIELD MOTEL ENTERPRISES, INC., an Alabama corporation,
IMPAC HOTELS I, L.L.C., a Georgia limited liability company,
LODGIAN MEMPHIS PROPERTY OWNER, LLC, a Delaware limited liability company,
AMI OPERATING PARTNERS, L.P., a Delaware limited partnership
DEDHAM LODGING ASSOCIATES I, LIMITED PARTNERSHIP, a Georgia limited partnership
LITTLE ROCK LODGING ASSOCIATES I, LIMITED PARTNERSHIP, a Georgia limited
partnership
SERVICO CENTRE ASSOCIATES, LTD., a Florida limited partnership
Schedule 1
SCHEDULE 3.1(A)
LIST OF LOAN DOCUMENTS
1. Loan Agreement
2. Note
3. Deeds of Trust
4. Assignments of Leases
5. Assignments of Management Agreement
6. Guaranty
7. Environmental Indemnity
8. Assignment of Rate Cap
9. Financing Statements
10. Cash Management Agreement
11. Post Closing Agreement
Schedule 3.1(A)
SCHEDULE 4.1(C)
ORGANIZATIONAL CHART FOR BORROWER PARTIES
Schedule 4.1(C)
[LODGIAN STRUCTURE CHART]
[LODGIAN STRUCTURE CHART]
[LODGIAN STRUCTURE CHART]
PROPERTY OWNER PROPERTY
- -------------------------------------------------------------------------------------------------------------------------
ALBANY HOTEL, INC. Crowne Plaza Albany Hotel, Albany, NY
- -------------------------------------------------------------------------------------------------------------------------
AMI OPERATING PARTNERS, L.P. Holiday Inn East Hartford, CT
Holiday Inn Frederick, MD
Holiday Inn Cromwell Bridge, MD
Holiday Inn Belmont, MD
Holiday Inn York, PA
- -------------------------------------------------------------------------------------------------------------------------
APICO HILLS, INC. Holiday Inn, Parkway East, Pittsburgh, PA
- -------------------------------------------------------------------------------------------------------------------------
APICO INNS OF GREEN TREE, INC. Holiday Inn Green Tree, Pittsburgh, PA
- -------------------------------------------------------------------------------------------------------------------------
BRUNSWICK MOTEL ENTERPRISES, INC. Brunswick Holiday Inn, Brunswick, GA
- -------------------------------------------------------------------------------------------------------------------------
DEDHAM LODGING ASSOCIATES I, LIMITED PARTNERSHIP Residence Inn, Dedham, MA
- -------------------------------------------------------------------------------------------------------------------------
DOTHAN HOSPITALITY 3053, INC. Holiday Inn West, Dothan, AL
- -------------------------------------------------------------------------------------------------------------------------
DOTHAN HOSPITALITY 3071, INC. Hampton Inn, Dothan, AL
- -------------------------------------------------------------------------------------------------------------------------
GADSDEN HOSPITALITY, INC. Holiday Inn Express Gadsden-Attalia, AL
- -------------------------------------------------------------------------------------------------------------------------
IMPAC HOTELS I, L.L.C. Marriott Courtyard, Buckhead, Atlanta, GA
Marriott Courtyard, Abilene, TX
Marriott Courtyard, Florence, KY
Marriott Courtyard, Bentonville, AR
Double Tree Club, Philadelphia, PA
The Hurstbourne Hotel, Louisville, KY
Fairfield Inn, Valdosta, GA
Holiday Inn Select, Dallas/Fort Worth Airport, TX
Holiday Inn, North St. Louis, MO
Holiday Inn, Surfside Beach, SC
Holiday Inn Select, Strongsville, OH
Holiday Inn Suites, Marietta, GA
Marriott Courtyard, Paducah, KY
- -------------------------------------------------------------------------------------------------------------------------
LITTLE ROCK LODGING ASSOCIATES I, LIMITED PARTNERSHIP Residence Inn, Little Rock, AK
- -------------------------------------------------------------------------------------------------------------------------
LODGIAN AMI, INC. Holiday Inn, Inner Harbor, MD
Holiday Inn, Glen Burnie, MD
Holiday Inn, BWI Airport, Baltimore, MD
Holiday Inn, Lancaster East, PA
- -------------------------------------------------------------------------------------------------------------------------
LODGIAN MEMPHIS PROPERTY OWNER, LLC French Quarter Suites, Memphis, TN
- -------------------------------------------------------------------------------------------------------------------------
MINNEAPOLIS MOTEL ENTERPRISES, INC. Holiday Inn St. Paul, St. Paul, MN
- -------------------------------------------------------------------------------------------------------------------------
NH MOTEL ENTERPRISES, INC. Hilton Northfield in Troy, MI
- -------------------------------------------------------------------------------------------------------------------------
SERVICO AUSTIN, INC. Holiday Inn, Austin South, TX
- -------------------------------------------------------------------------------------------------------------------------
SERVICO CEDAR RAPIDS, INC. Crowne Plaza Five Seasons Hotel, Cedar Rapids, IA
- -------------------------------------------------------------------------------------------------------------------------
SERVICO CENTRE ASSOCIATES, LTD. Crowne Plaza and Separate Office Space, West Palm Beach, FL
- -------------------------------------------------------------------------------------------------------------------------
SERVICO COLUMBIA, INC. Hilton Columbia, MD
- -------------------------------------------------------------------------------------------------------------------------
SERVICO GRAND ISLAND, INC. Holiday Inn Grand Island, Grand Island, NY
- -------------------------------------------------------------------------------------------------------------------------
SERVICO HOUSTON, INC. Crowne Plaza Houston, Houston, Texas
- -------------------------------------------------------------------------------------------------------------------------
SERVICO JAMESTOWN, INC. Holiday Inn Jamestown, NY
- -------------------------------------------------------------------------------------------------------------------------
SERVICO LANSING, INC. Holiday Inn Lansing, MI
- -------------------------------------------------------------------------------------------------------------------------
SERVICO MARKET CENTER, INC. Holiday Inn Market Center, Dallas, TX
- -------------------------------------------------------------------------------------------------------------------------
SERVICO MARYLAND, INC. Holiday Inn, Silver Springs, MD
- -------------------------------------------------------------------------------------------------------------------------
SERVICO METAIRIE, INC. Quality Hotel, Metairie, LA
- -------------------------------------------------------------------------------------------------------------------------
SERVICO NEW YORK, INC. Holiday Inn Select Niagara Falls, Niagara Falls, NY
- -------------------------------------------------------------------------------------------------------------------------
SERVICO NIAGARA FALLS, INC. Four Points Sheraton Niagara Falls, Niagara Falls, NY
- -------------------------------------------------------------------------------------------------------------------------
SERVICO NORTHWOODS, INC. Clarion Charleston International Airport, North
Charleston, SC
- -------------------------------------------------------------------------------------------------------------------------
SERVICO PENSACOLA 7200, INC. Holiday Inn University Mall - Pensacola, FL
- -------------------------------------------------------------------------------------------------------------------------
SERVICO PENSACOLA 7330, INC. Hampton Inn Pensacola, Pensacola, FL
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
SERVICO PENSACOLA, INC. Holiday Inn Express, Pensacola, FL
- -------------------------------------------------------------------------------------------------------------------------
SERVICO ROLLING MEADOWS, INC. Holiday Inn Rolling Meadows - Rolling Meadows, IL
- -------------------------------------------------------------------------------------------------------------------------
SERVICO WINTER HAVEN, INC. Holiday Inn, Winter Haven, FL
- -------------------------------------------------------------------------------------------------------------------------
SHEFFIELD MOTEL ENTERPRISES, INC. Holiday Inn, Sheffield, AL
- -------------------------------------------------------------------------------------------------------------------------
2
SCHEDULE 4.2
CONSENTS
None
Schedule 4.2
SCHEDULE 4.4
CONTINGENT OBLIGATIONS
None
Schedule 4.4
SCHEDULE 4.5
CONDEMNATION PROCEEDINGS
City of St. Louis, Missouri versus BNS Lodging Associates I
et. al. filed May 14, 2002 in the County of St. Louis, Missouri, under Cause No.
02CC-001903 - for a temporary easement for construction purposes.
Schedule 4.5
SCHEDULE 4.6
ZONING
APPLICABLE LEGAL NON-CONFORMITY NOT
PROPERTY REBUILDABILITY PROVISION MEETING CURRENT CODE
-------- ------------------------ --------------------
1. Holiday Inn Express If more than 60% of its replacement (1) Front setback deficient 33.7 ft.
Attalla (Gadsden), Alabama cost is destroyed, must comply with (2) Parking spaces must be screened.
current code. (3) 21 parking spaces located within
Right of Way of Cleveland Avenue.
2. Holiday Inn East If more than 50% of its replacement Special use permit required for hotels.
East Hartford, Connecticut cost is destroyed, must comply with
current code.
3. Crowne Plaza Must comply with current code. Parking deficient 87 spaces.
West Palm Beach, Florida
4. Hurstbourne Hotel A building which is legal Parking deficient 923 spaces.
Louisville, Kentucky non-conforming due to inadequate
parking may be altered if the
additional spaces required by
Off-Street Parking Requirements are
provided; voluntary demolition of
non-conforming structure nullifies its
non-conforming rights; if building is
involuntarily removed or destroyed, it
retains non-conforming rights for 1
year.
5. Quality Hotel If more than 75% is destroyed, must (1) Maximum building height exceeded
Metairie, Louisiana comply with current code. If less by at least 78 ft.
than 75% is destroyed, may be (2) Minimum landscaped area deficient by at
restored provided permit is obtained least 7%.
within 1 year following date of (3) Parking deficient 99 spaces.
destruction.
6. Residence Inn Can rebuild subject to the following: (1) Hotel/motel requires a Special
Dedham, Massachusetts (1) no non-conforming use shall be Use Permit.
increased in area (2) if foundation (2) Maximum FAR exceeded by 0.20.
is rebuilt, such foundation shall be
placed and building reconstructed so
as to conform to certain zoning
requirements (set back distance, side
yard width); if compliance is not
possible, reconstruction shall be in
manner authorized by Board of Appeals
and (3) reconstruction must be
completed within 2 years of fire or
casualty.
7. Hilton Hotel If destroyed by more than 60% of its (1) Minimum 200 unit criteria
Troy, Michigan replacement cost, exclusive of the deficient 9 units.
foundation at the time of (2) Minimum 250 persons scating area
destruction, must comply with current deficient 160 seats.
code. (3) Parking deficient 261 spaces.
APPLICABLE LEGAL NON-CONFORMITY NOT
PROPERTY REBUILDABILITY PROVISION MEETING CURRENT CODE
-------- ------------------------ --------------------
8. Holiday Inn North - St. Louis If 60% or more of its replacement (1) Parking area encroaches 50 foot
Bridgeton, Missouri value is destroyed, must comply with landscaped buffer.
current code; restoration must be (2) Maximum impervious surface area exceeded
started within 1 year. by 4%.
9. Crowne Plaza If damage is more than 50% of Maximum height exceeded by 85 ft.
Albany, New York replacement cost, must comply with
current code.
10. Holiday Inn If non-conforming building is damaged Maximum height exceeded by 22.5 ft.
Grand Island, New York or destroyed, other than deliberately
by the owner, may be rebuilt on the
same footprint.
11. Holiday Inn Select If destroyed by 50% or more of its (1) Maximum height exceeded by 19 ft.
Strongsville, Ohio restoration cost, must comply with (2) Parking deficient 189 spaces.
current code.
12. Holiday Inn - Parkway East Can rebuild if reconstruct within 20 (1) Maximum height exceeded by 67 ft.
Pittsburgh, Pennsylvania months of casualty if permitted as a (2) Front setback encroaches 10.6 ft.
special exception by the Zoning from
Brinton Road. Hearing Board, and if
restored structure has no greater
coverage and contains no greater cubic
content than before such casualty.
2
SCHEDULE 4.7(B)
RENT ROLL
Schedule 4.7(B)
MATERIAL LEASES
- ------------------------------------------------------------------------------------------------
PROPERTY
STATE PROPERTY LEASES LANDLORD TENANT AREA (SF)
- ------------------------------------------------------------------------------------------------
MD Holiday Inn a) Parking a) Lodgian a) PMS a) 193 parking spaces
Inner Harbor License AMI, Inc. Parking,Inc.
Baltimore Agreement b)parking space
b) Lodgian b) Mayor and for maximum of 20
b) Parking AMI, Inc. City Council vehicles
of Baltimore
- ------------------------------------------------------------------------------------------------
MI Holiday Inn Management Rado-Mat TGI Friday's 8,000 sf
West, Agreement Holdings U.S. Inc. 250 parking spaces
Lansing Inc.
- ------------------------------------------------------------------------------------------------
MI Hilton Hotel, Restaurant NH Motel C.A. Muer 10,000 sf
Troy Enterprises, Inc. Corporation
- ------------------------------------------------------------------------------------------------
NY Holiday Inn Parking City of Oakdale 125 parking spaces
Jamestown Jamestown Corporation 24/7; and 75
parking spaces
between 5:00 pm
and 7:00 am 7 days
a week.
- ------------------------------------------------------------------------------------------------
NY Holiday Inn Post Office Servico New United States 4,409 sf
Select York, Inc. Postal Service
Niagara Falls
- ------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
BASE RENT AND PERCENTAGE RENT,
STATE TERM IF ANY
- -----------------------------------------------------------------------------------
MD a) Commencing 5/1/2000, a) $11,500 per month
expiring 4/30/10
b) 5 year term commencing
12/12/01; Option to renew b)$625 per month
one additional period of
5 years.
- -----------------------------------------------------------------------------------
MI 10 years from the date the Fridays receives 7% gross sales profit;
restaurant opens(Lease is landlord receives 12% gross sales, to
dated 5/30/91); Option to extent of gross operating profit;
renew for four 5- year remainder of gross operating profit is
terms. split equally
- -----------------------------------------------------------------------------------
MI 20 years, commencing $8,368.33 per month
9/15/76; Option to renew
for 3 additional 5-year
terms. 2 renewal options
exercised, Lease expires
9/15/06.
- -----------------------------------------------------------------------------------
NY 25 years, commencing $1,233.33 per month
when Lessee notifies city
that it is ready to accept
use, which is no later than
30 days after occupancy of
the hotel (Lease executed
10/5/77).Option to renew
for one additional 25-year
period.
- -----------------------------------------------------------------------------------
NY Current term expires on $20,000.00 per year, payable in equal
5/31/03; no further option installments at the end of each
to renew. calendar month.
- -----------------------------------------------------------------------------------
SCHEDULE 4.7 (E)
FRANCHISE DEFAULTS
AS OF NOVEMBER 8, 2002
PROPERTY NAME STATE FRANCHISOR
- ----------------------------------------------------------------------
Doubletree Club Philadelphia, PA PA Hilton
Hampton Inn Dothan, AL AL Hilton
Hampton Inn Pensacola, FL FL Hilton
Hilton Inn Columbia, MD MD Hilton
Hilton Inn Northfield, MI MI Hilton
Courtyard by Marriott - Paducah,KY KY Marriott
Fairfield Inn Valdosta, GA GA Marriott
Crowne Plaza Albany, NY NY Six Continents
Crowne Plaza Cedar Rapids, IA IA Six Continents
Crowne Plaza West Palm Beach, FL FL Six Continents
Holiday Inn Arden Hills/St. Paul, MN MN Six Continents
Holiday Inn Express Pensacola, FL FL Six Continents
SCHEDULE 4.9
LITIGATION
None
Schedule 4.9
SCHEDULE 4.14
ERISA PLANS
1. Lodgian, Inc. 401(k) Plan
2. Lodgian, Inc. Employee Health & Welfare Plan
3. Multiemployer Plans covering employees of the following unions
Hotel, Motel & Restaurant Employees & Bartenders -- Local 471
(Albany, NY) (pension, welfare)
Hotel Employees & Restaurant Employees Local 274
(Philadelphia, PA) (pension, welfare)
Hotel Employees & Restaurant Employees Local 4
(Jamestown, NY) (pension only)
Hotel Employees & Restaurant Employees Local 17
(St. Paul, MN) (pension, welfare)
Hotel Employees & Restaurant Employees Local 24
(Northfield, MI) (pension, welfare)
International Union of Operating Engineers -- Local 547
- A,B,C,E,H (Northfield, MI) (pension, welfare)
Hotel, Motel, Club, Cafeteria, Restaurant Employees & Bartenders Union
-- Local 450 (Rolling Meadows, IL) (welfare only)
Schedule 4.14
SCHEDULE 4.20
INSURANCE
Schedule 4.20
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 1 of 14
- ------------------------------------------------------------------------------------------------------------
COVERAGE AMOUNT OR LIMITS TERM COMPANY POLICY NUMBER
- ------------------------------------------------------------------------------------------------------------
WORKERS' Statutory Workers' Comp. 09/01/02 Zurich American WC2346989-03
COMPENSATION to Insurance
DEDUCTIBLE Employers Liability Limits: 0901/03 Company
$1,000,000 Each Accident
$1,000,000 Each Employee
$1,000,000 Policy Limit
Deductibles: Excludes ALAE
$250,000 - WC-BI by Accident
$250,000 - WC BI by Disease
$250,000 - EL BI by Accident
$250,000 - EL BI by Disease
- ------------------------------------------------------------------------------------------------------------
WORKERS' Statutory WC 09/01/02 Zurich American WC2346990-03
COMPENSATION- Employers Liability: to Insurance
RETRO $1,000,000 Each Accident 0901/03 Company
(MASSACHUSETTS) $1,000,000 Each Employee
$1,000,000 Policy Limit
Stop Gap Liability
$1,000,000 Each Accident
$1,000,000 Each Employee
$1,000,000 Policy Limit
- ------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- --------------------------------------------------------------------------
WORKERS' $990,516 Policy provides medical, disability
COMPENSATION Plus $200 and death benefits to injured
DEDUCTIBLE (Expense Constant employees pursuant to the WC
$93,685 statutory requirement of states
(Surcharges) schedule in the policy except
Estimated Monopolistic States.
premium Includes Executive Officers
subject to
audit
- --------------------------------------------------------------------------
WORKERS' $77,554 Plus Policy provides medical, disability
COMPENSATION- $220 Expense and death benefits to injured
RETRO Constant & employees pursuant to the WC
(MASSACHUSETTS) $3,230 statutory requirements of states
Surcharge scheduled in the policy - Executive
Estimated Officers are covered
premium
subject to
audit
- --------------------------------------------------------------------------
McQUEARY HENRY BOWLES TROY, L.L.P
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 2 of 14
- --------------------------------------------------------------------------------------------------------------
COVERAGE AMOUNT OR LIMITS TERM COMPANY POLICY NUMBER
- --------------------------------------------------------------------------------------------------------------
GENERAL $9,750,000 General Aggregate 09/01/02 Zurich American GLO23456985-03
LIABILITY $1,750,000 Products & Completed to Insurance
Operations Aggregate 0901/03 Company
$1,750,000 Each Occurrence
$1,750,000 Personal Injury &
Advertising $
$1,750,000 Tenants Legal Liability.
N/A Medical Expense
750,000 Employee Benefits Each
Claim/Aggregate
750,000 Hospitality Professional
Liability Each Occurrence
/Aggregate
750,000 Hotel Safe Deposit Legal
Liability Each
Occurrence/Aggregate
Self Insured Retention
$250,000 Cov A BI&PD Each Claim
$250,000 Cov B-Personal & Adv Injury
$250,000 Cov.C.-Medical Payment
$250,000 Hotel Safe Deposit/Legal Liab
$250,000 Employee Benefit Liability
- --------------------------------------------------------------------------------------------------------------
LIQUOR $1,000,000 Liquor Liability Each 09-01- 2002 Zurich American GLO9298953-02
LIABILITY Common Cause Aggregate to Insurance Co.
POLICY $250,000 Deductible Each Claim 09-01-2003
- --------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- ---------------------------------------------------------------------------------
GENERAL $721,500 Policy provides legal liability
LIABILITY Est. Annual coverage for bodily injury and
property damage claims from the
public
Broad Form Named Insured
Aggregate Limits per Location
Notice of Occurrence
Knowledge of Occurrence
(Risk Mgt Dept-Dan Ellis)
Pesticide or herbicide applicator
Coverage
Unintentional Errors & Omissions
Employee Benefits Liability -
(Claims Made Form)
Notice of Error in Claims Reporting
Policy Covers Specific Managed
Properties
Extended BI
60 Day NOC
Excludes:
Asbestos
Total Pollution w/hostile fire
exception
Employment Related Practices
Medical Payments
Abuse & Molestation
- --------------------------------------------------------------------------------
LIQUOR $5,000 Policy provides legal liability
LIABILITY Estimated coverage for injury is imposed on insured
POLICY premium by reason of the selling,
subject to serving or furnishing of any
audit alcoholic beverage
- --------------------------------------------------------------------------------
McQUEARY HENRY BOWLES TROY, L.L.P
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 3 of 14
- -----------------------------------------------------------------------------------------------------------
POLICY
COVERAGE AMOUNT OR LIMITS TERM COMPANY NUMBER
- -----------------------------------------------------------------------------------------------------------
BUSINESS AUTO Automobile Liability 09/01/02 Zurich American TAP2346986-03
POLICY (TEXAS) $2,000,000 BI/PD CSL 09/01/03 Insurance Co.
$5,000 PIP
$1,000,000 UM/UIM
Deductible: $250,000 Each Accident
Physical Damage:
Comprehensive $250,000 deductible
Collision $250,000 deductible
Garage Keepers Legal
Each Location $500,000 less $250,000
Deductible Each Accident
excludes ALAE
- -----------------------------------------------------------------------------------------------------------
BUSINESS AUTO Automobile Liability 09/01/02 Zurich American BAP2346987-03
POLICY - O/S $2,000,000 BI/PD CSL 09/01/03 Insurance Co.
(EXCEPT TX) $5,000 MEDICAL
Basic PIP
$1,000,000 UM/UIM
500,000 Garage Keepers
Deductible: $250,000 Each Accident
Exluces ALAE
Physical Damage:
Comprehensive $250,000 deductible
Collision $250,000 deductible
- -----------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- --------------------------------------------------------------------------------
BUSINESS AUTO $20,106 plus Policy Provides Liability to the
POLICY (TEXAS) $9.00 public arising from Owned, Non-
Surcharge Auto Liability: (Texas Only)
Estimated (Extensions/Endorsements See
Annual BAP2346987-03)
Premium
subject to
audit
- --------------------------------------------------------------------------------
BUSINESS AUTO $283,718 Policy Provides Liability to the
POLICY - O/S Plus $956.83 public arising from Owned,
(EXCEPT TX) Surcharge Non-Auto Liability: All states except TX
Estimated & MA
Annual
premium Extensions/Endorsements
subjects to Additional Insured
audit. Broad Form Insured
Drive Other Car - Designated Person
Employees as Insureds
Fellow Employee Coverage Auto
Hired Autos-Specified as Covered
Autos owned-Long term leased
Auto
Unintentional errors & Omissions
Knowledge of Occurrence-(Risk Mgt
Dept-Dan Ellis)
60 Days Notice of Cancellation
Limited Mexico Coverage
Waiver of Subrogation-
- --------------------------------------------------------------------------------
McQUEARY HENRY BOWLES TROY, L.L.P
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 4 of 14
- ------------------------------------------------------------------------------------------------------------
POLICY
COVERAGE AMOUNT OR LIMITS TERM COMPANY NUMBER
- ------------------------------------------------------------------------------------------------------------
BUSINESS AUTO Automobile Liability 09-01-02 Zurich American MA2346986-03
POLICY - (MA) $2,000,000 BI/PD CSL 09-01-03 Insurance Co.
$5,000 MEDICAL PAYMENT
Basic FIP
$1,000,000 UM/UIM
Deductible: $250,000 Each Accident
Physical Damage:
Comprehensive $250,000 deductible
Collision $250,000 deductible
- ------------------------------------------------------------------------------------------------------------
COMMERCIAL $1,000,000 Products & Completed 09-01-02 Zurich American 8830042
GENERAL Operations Aggregate 09-01-03 Insurance Co.
LIABILITY $1,000,000 Occurrence
CANADA $1,000,000 Personal Injury &
Advertising
$1,000,000 Liquor Liability Each
Common Cause
Aggregate
$1,000,000 Tenants Legal Liability.
$20,000 Medical Expense
$1,000,000 Employee Benefits
1,000,000 Hired-Non-Owned Auto
Each Claim
- ------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- --------------------------------------------------------------------------------
BUSINESS AUTO $11,176 Policy Provides Liability to
POLICY - (MA) Estimated the public arising from Owned, Non-
Annual Auto Liability: (Massachusetts)
premium For Extension/Endorsements-See
subject to BAP2646987
audit
- --------------------------------------------------------------------------------
COMMERCIAL $10,000 plus Policy provides legal liability
GENERAL 826.80 coverage for bodily injury and
LIABILITY (Canadian Tax) property damage claims from the
CANADA Premium in US public for Canadian Location Only.
Dollars
Estimated
Annual
premium
subject to
audit
- --------------------------------------------------------------------------------
McQUEARY HENRY BOWLES TROY, L.L.P
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 5 of 14
- -------------------------------------------------------------------------------------------------------------
COVERAGE AMOUNT OR LIMITS TERM COMPANY POLICY NUMBER
- -------------------------------------------------------------------------------------------------------------
EXCESS $25,000,000 Occurrence 09-01-02 Lumbermans 9SX192024-03
LIABILITY $25,000,000 General Aggregate 09-01-03 Mutual Casualty
$25,000,000 Products/Completed (Kemper)
Operations
10,000 SIR
- ------------------------------------------------------------------------------------------------------------
EXCESS $25,000,000 Excess of $25,000,000 09-01-02 GreatAmerican TUU3577779-02
LIABILITY to Insurance Co.
09-01-03
- ------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- --------------------------------------------------------------------------
EXCESS $289,000 Policy provides liability limits to the
LIABILITY public for injury or property damage
in excess of Employers Liability,
General Liability & Automobile
Liability as shown on Schedule of
Underlying Information.
Follow Form:
Automobile, Employee Benefits;
Foreign Operations; Liquor Liability
Excludes:
ERISA; Nuclear Energy; Asbestos;
Pollution; UM/UIM/No Fault;
Securities & Financial Interest
Employment Related Practices;
Abuse of Molestation;
Professional Services;
Care Custody or Control; Year 2000
Mold
Not Subject to Audit
- --------------------------------------------------------------------------
EXCESS $ 63,848 Policy provides excess of the
LIABILITY underlying limits with respects to
Umbrella Policy #9SX192024-03
Exclusions:
Asbestos
Pollution (Except Named Perils &
Time Element)
Professional Services
Nuclear
- --------------------------------------------------------------------------
McQUEARY HENRY BOWLES TROY, L.L.P
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 6 of 14
- ------------------------------------------------------------------------------------------------------------
COVERAGE AMOUNT OR LIMITS TERM COMPANY POLICY NUMBER
- ------------------------------------------------------------------------------------------------------------
EXCESS $25,000,000 excess of $50,000,000 09-01-02 Zurich Insurance AEC2921558-03
LIABILITY to Company
09-01-03
- ------------------------------------------------------------------------------------------------------------
EXCESS $25,000,000 excess of $75,000,000 09-01-02 Gul fInsurance GA2857860
LIABILITY to Group
09-01-03
- ------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- ----------------------------------------------------------------------------
EXCESS $50,000 Excess Liability
LIABILITY
Exclusions:
Asbestos
Pollution (Except Named Perils &
Time Element)
Professional Services
Nuclear
- ----------------------------------------------------------------------------
EXCESS $37,500 Excess Liability
LIABILITY
Other Endorsements:
Aggregate Dropdown
Pay on Behalf Of
State Amendatory
Exclusions:
Asbestos; Aircraft; Maritime; EPL;
USL&H; Cross Suits;
Discrimination: Intellectual Property
Temp/Leasing Employee
Terrorism; Mold; Absolute Lead
Pending/Prior Litigation
Designated Premises
Professional;
Pollution (Except Named Perils &
Time Element
Nuclear
- ----------------------------------------------------------------------------
McQUEARY HENRY BOWLES TROY, L.L.P
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 7 of 14
- ------------------------------------------------------------------------------------------------------------
COVERAGE AMOUNT OR LIMITS TERM COMPANY POLICY NUMBER
- ------------------------------------------------------------------------------------------------------------
EXCESS $50,000,000 Excess of $100,000,000 09-01-02 Firemans' Fund XXK00084285352
LIABILITY to Insurance
09-01-03 Company
- ------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- -----------------------------------------------------------------------
EXCESS $50,000 Excess Liability
LIABILITY
Exclusions:
Asbestos
Pollution (Except Named Perils &
Time Element
Professional Services
Nuclear
- -----------------------------------------------------------------------
McQUEARY HENRY BOWLES TROY, L.L.P
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 8 of 14
- ---------------------------------------------------------------------------------------------------------
POLICY
COVERAGE AMOUNT OR LIMITS TERM COMPANY NUMBER
- ---------------------------------------------------------------------------------------------------------
PROPERTY $5,000,000 Blanket Real & 09-01-02 Crum & Forester 2450017341
Personal Property 09-01-03 (US Fire &
$5,000,000 Annual Aggregate-Earth Insurance
Movement Company)
5,000,000 Annual Aggregate -
Flood
5,000,000 Wind except State of
Florida and 1st Tier GA
& SC locations.
Deductibles:
$100,000 Occurrence all perils except
Flood excess of Max NFIP in
Zone A or V
Earthquake 5% of Values at risk at
time of loss minimum
of $100,000 as respects
to California
Earthquake
Wind 2% of values at risk
at time of loss at
affected locations with a
minimum of $100,000 per
occurrence as respects to
named Storm at
1st Tierlocations in TX
& Louisiana - Wind
excluded in the state of
Florida & 1st Tier GA &
AC
- ---------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- --------------------------------------------------------------------------------
PROPERTY $1,100,000 Per Schedule of Locations on
Includes File (See Attached)
Canada ISO Special Property Form,
Location Risk of Direct Physical loss
or damage including Flood &
EQ - Excludes Wind in Florida and 1st
Tier Locations of GA & SC Replacement
Cost Review Coverage Forms for Additional
Coverage & Limits Which are applicable.
Policy Excludes Terrorism,
Y2K, Mold, Pollution &
Boiler & Machinery
- --------------------------------------------------------------------------------
McQUEARY HENRY BOWLES TROY, L.L.P
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 9 of 14
- ---------------------------------------------------------------------------------------------------------
POLICY
COVERAGE AMOUNT OR LIMITS TERM COMPANY NUMBER
- ---------------------------------------------------------------------------------------------------------
EXCESS $20,000,000 Each Occurrence 9-1-02/03 Sheffield EAF101029
PROPERTY and in the annual aggregate for Insurance
flood & earthquake P/O. Limits; Corporation
$20,000,000 per occurrence and in
annual aggregate on flood and
earthquake
Deductible Excess of $5,000,000
Primary plus primary deductibles.
- ---------------------------------------------------------------------------------------------------------
EXCESS PROPERTY $500,000,000 per occurrence excess of 9-1-02/03 Royal Indemnity RHD329335
$ 25,000,000 per occurrence which Company
in turn, excess of
Underlying Deductible
- ---------------------------------------------------------------------------------------------------------
WINDSTORM $5,000,000 Primary for Florida and 9-01-02/03 First Specialty CAT000036
1st Tier GA & SC Insurance Co.
Per schedule on file with Co.
Deductible 2% each occurrence per site
Replacement Cost-
Actual Loss Sustained for BI if
Applicable
- ---------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- -----------------------------------------------------------------------------
EXCESS $400,000 Special Form Covering Building,
PROPERTY Plus $16,000 Personal Property, BI/EE, including
GA Surplus Flood & Earthquake but excluding CA
Lines Tax Earthquake
Valuation: Replacement Cost/BI
Actual Loss
Exclusion: Fungus, Terrorism, Cyber
- -----------------------------------------------------------------------------
EXCESS 95,000 Valuation:Replacement cost except
PROPERTY Actual Loss sustained as respects to
BI
- -----------------------------------------------------------------------------
WINDSTORM $465,000 Primary Wind in Florida and
Plus scheduled locations in SC & GA.
$16,035 GA
Surplus Lines
Tax
- -----------------------------------------------------------------------------
McQUEARY HENRY BOWLES TROY, L.L.P
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 10 of 14
- -------------------------------------------------------------------------------------------------------------
POLICY
COVERAGE AMOUNT OR LIMITS TERM COMPANY NUMBER
- -------------------------------------------------------------------------------------------------------------
EXCESS DIC $4,030,000 Each occurrence not to 9-01-02/03 Ins. Co of the XHO185154101
CALIFORNIA EQ exceed West
4,030,000 in any one policy year
separately as respects to
Flood & EQ part of
4,030,000 Per Occurrence not to
exceed
4,030,000 in any one policy year
separately as respects
Flood and EQ excess of
5,000,000 Each Occurrence which
in turn excess of
Underlying Deductibles
5,000,000 in any one policy year
separately as respect
Flood and EQ which in
turn excess of
Underlying Deductible.
- -------------------------------------------------------------------------------------------------------------
PROPERTY $25,000,000 Each and Every 9-1-02/03 Price Forbes L2PX114
TERRORISM Occurrence and in the Aggregate only Limited (Lloyds
to pay the excess of the $150,000 Each Underwriters)
and Every Occurrence in respect of
property damage/7 days waiting period
each and every occurrence in respects
of business interruption
- -------------------------------------------------------------------------------------------------------------
EXCESS $10,000,000 each and every 9-1-02/03 Price Forbes L2PX131
PROPERTY occurrence and In the Aggregate Limited
TERRORISM only to pay the excess of the (Lloyds
$25,000,000 each and every Underwriters)
occurrence and in the Aggregate
- -------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- -----------------------------------------------------------------------------
EXCESS DIC 10,000 DIC Including Flood & Earthquake
CALIFORNIA EQ At Location: TIV $9,030,000
74675 Hwy 111, Palm Desert, CA
92260
- -----------------------------------------------------------------------------
PROPERTY $243,170 Building & Business Interruption-
TERRORISM $9,726.80 Tax all as more fully defined in the
Underlying Policy Wording.
Insureds locations in US & Canada
TIV $1,296,905,888 or to be agreed
by insurers.
- -----------------------------------------------------------------------------
EXCESS $60,000
PROPERTY $2,400 Tax
TERRORISM
- -----------------------------------------------------------------------------
McQUEARY HENRY BOWLES TROY, L.L.P
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 11 of 14
- -------------------------------------------------------------------------------------------------------------
POLICY
COVERAGE AMOUNT OR LIMITS TERM COMPANY NUMBER
- -------------------------------------------------------------------------------------------------------------
BOILER & Equipment Breakdown 09-01-02 to Travelers BMG302D6931TI
MACHINERY $100,000,000 Property Damage, BI, EE 09-01-03 Property & L-02
250,000 Off Premises Service Casualty
Interruption
250,000 Spoilage
100,000 Media
250,000 Ammonia Contamination
250,000 Water Damage
500,000 Demolition & ICC
250,000 Expediting Expense
250,000 Hazardous Substances
100,000 Ordinance of Law
1,000,000 Error in Design
1,000,000 Newly Acquired
Locations
Deductible:
25,000 Damage to covered
property
24 Hours BI & EE
24 Hours Service Interruption
- -------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- -----------------------------------------------------------------------
BOILER & $80,479 Policy provides Comprehensive
MACHINERY Equipment Coverage including
production machines
Direct damage & BI caused by
sudden & accidental breakdown of
Pressure vessel & refrigeration
systems, mechanical objects and
electrical objects.
60 Days Notice of Cancellation
- -----------------------------------------------------------------------
McQUEARY HENRY BOWLES TROY, L.L.P
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 12 of 14
- ------------------------------------------------------------------------------------------------------------------
POLICY
COVERAGE AMOUNT OR LIMITS TERM COMPANY NUMBER
- ------------------------------------------------------------------------------------------------------------------
FIDUCIARY Limit of Liability: $2,000,000 09-01-02 Chubb Insurance 8158 25 39B DAL
LIABILITY Defense outside the Limit of Liability 09-01-03 Group - Federal
Deductible: $25,000 Insurance Co
- ------------------------------------------------------------------------------------------------------------------
CRIME $1,000,000 Employee Theft 12-15-01 (American 008747810
$1,000,000 Premises Coverage 12-15-02 International)
$1,000,000 Depositors Forgery National Union
$1,000,000 Funds Transfer Fraud Fire Insurance Co.
$50,000 Deductible
- ------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- --------------------------------------------------------------------------------
FIDUCIARY $8,316 Claims Made Policy
LIABILITY Provides coverage for claims arising
from breach of Fiduciary Duty while
acting as trustee for named
employee pension and welfare
plans.
Extended Reporting Period
(1 Year for 75% of Annual
Premium)
Prior and Pending Date - 8-5-92
Continuity Date 3-5-92
- --------------------------------------------------------------------------------
CRIME 11,918 Crime Employee Theft:
(Applicable only to employees at the
corporate office 3445 Peachtree Rd.,
Atlanta, GA)
- --------------------------------------------------------------------------------
McQUEARY HENRY BOWLES TROY, L.L.P
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 13 of 14
- -----------------------------------------------------------------------------------------------------------------
POLICY
COVERAGE AMOUNT OR LIMITS TERM COMPANY NUMBER
- -----------------------------------------------------------------------------------------------------------------
D&O (Claims Made) $20,000,000 Each Loss 12-11-01- XL Specialty DO 71000999
Management $20,000,000 Each Policy Year 12-11/02 Insurance
Liability Retention: $200,000 Company
- -----------------------------------------------------------------------------------------------------------------
Excess D&O (Claims $10,000,000 Each Loss Excess of 12-11-01/ RLI Insurance EPG 0002582
Made) $20,000,000 Each Loss/$10,000,000 12-11-02 Company
each policy year excess of $20,000,000
each policy year.
- -----------------------------------------------------------------------------------------------------------------
Excess D&O -Claims $15,000,000 12-11-01/ AIG-National 008574889
Made (Run Off) 12-11-02 Union Fire
Insurance Co of
PA
- -----------------------------------------------------------------------------------------------------------------
Excess D&O -Claims $15,000,000 excess of $15,000,000 12-11-01/ Chubb-Federal 81582583
Made -(Run Off) 12-11-02 Insurance
Company
- -----------------------------------------------------------------------------------------------------------------
Excess D&O -Claims $10,000,000 excess of $30,000,000 12-11-01/ Gulf Insurance GA0431469
Made (Run Off) 12-11-02 Company
- -----------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- --------------------------------------------------------------------------------
D&O (Claims Made) $430,000 Straight Retention for Securities
Management (90% Minimum Claims
Liability Earned) Prior Acts Exclusion (12-11-01)
General E&O Exclusion (excludes
services for other for a fee)
One Year Run Off
Change in Condition
Prior & Pending Litigation
Exclusion date: 12-11-01
- --------------------------------------------------------------------------------
Excess D&O (Claims $170,000 Prior & Pending Litigation
Made) Exclusion Date: 12-11-01
Subject to:
No bankruptcy prior to 12-11-01
- --------------------------------------------------------------------------------
Excess D&O -Claims $136,689 One Year Discovery
Made (Run Off) Limit is part of and not in addition
to limit of liability under 12-11-98
to 12-11-01 policy period.
- --------------------------------------------------------------------------------
Excess D&O -Claims $ 70,500 One Year Discovery
Made -(Run Off) Limit is part of and not in addition
to limit of liability under 12-11-98
to 12-11-01 policy period.
- --------------------------------------------------------------------------------
Excess D&O -Claims 24,000 One Year Discovery
Made (Run Off) Limit is part of and not in addition
to limit of liability under 12-11-98
to 12-11-01 policy period.
- --------------------------------------------------------------------------------
McQUEARY HENRY BOWLES TROY, L.L.P
CURRENT INSURANCE
SCHEDULE
for: LODGIAN, INC.. Date Prepared: September 2002
Prepared By: McQueary Henry Bowles Troy, L.L.P.
Michele Mariano Page 14 of 14
- ------------------------------------------------------------------------------------
POLICY
COVERAGE AMOUNT OR LIMITS TERM COMPANY NUMBER
- ------------------------------------------------------------------------------------
- --------------------------------------------------------
COVERAGE PREMIUM COMMENTS
- --------------------------------------------------------
We present this schedule so you may get an overall picture of your insurance
protection. For details of coverage please refer to your policies or contact
McQueary Henry Bowles Troy, L.L.P.
Please examine this schedule with particular reference to the amount or limits
of your insurance. Today's property values and liability judgments are higher
and insurance should be adjusted to cover.
Homedir/CSR4/United Schedule
McQUEARY HENRY BOWLES TROY, L.L.P
SCHEDULE 4.28
COLLECTIVE BARGAINING AGREEMENTS
Schedule 4.28
Schedule 4.28
Collective Bargining Agreements
Hotel Borrower Union
----- -------- -----
Holiday Inn - Rolling Meadows, IL Servico Rolling Meadows, Hotel, Motel, Club, Cafeteria, Restaurant Employees & Bartenders
Inc. Union, Local 450
Hilton - Northfield, MI NH Motel Enterprises, Hotel Employees and Restaurant Employees Union Local 24
Inc.
Hilton - Northfield, MI NH Motel Enterprises, The International Union of Operating Engineers, Local 547
Inc.
Holiday Inn - Niagara Falls, NY Servico New York, Inc. Hotel Employees and Restaurant Employees Union Local 4
Holiday Inn - Jamestown, NY Servico Jamestown, Inc. Hotel Employees and Restaurant Employees Union, Local 4
Doubletree Hotel - Philadelphia, Impac Hotels 1, LLC Hotel Employees and Restaurant Employees Union, Local 274
PA
Crowne Plaza - Abany, NY Albany Hotel, Inc. Hotel, Motel & Restaurant Employees & Bartenders Union, Local 471
Holiday Inn - St. Paul, IL Minneapolis Motel Hotel Employees and Restaurant Employees, Local 17
Enterprises, Inc.
Hotel Date of Agreement
----- -----------------
Holiday Inn - Rolling Meadows, IL 1/1/2002
Hilton - Northfield, MI 8/1/2002
Hilton - Northfield, MI 10/1/2000
Holiday Inn - Niagara Falls, NY 2/10/1999
Holiday Inn - Jamestown, NY 5/1/2000
Doubletree Hotel - Philadelphia,PA 10/1/2000
Crowne Plaza - Abany, NY 2/1/2000
Holiday Inn - St. Paul, IL 1/1/2002
SCHEDULE 4.29
MORTGAGED CONDOMINIUM PROPERTY DOCUMENTS
1. Declaration for Silver Spring Plaza Condominium, dated as
of April 21, 2000, by Servico Maryland, Inc.
2. Articles of Incorporation for Council of Unit Owners of
Silver Spring Plaza Condominium, Inc., dated as of June 22, 2000.
3. By-Laws of Council of Unit Owners of Silver Spring Plaza
Condominium.
4. Silver Spring Plaza Condominium, Unanimous Written Consent
of the Board of Directors in Lieu of the Annual Meeting, scheduled to be held on
May 4, 2000.
5. Resignation and Appointment of Directors of the Counsel of
Unit Owners of Silver Spring Plaza Condominium, effective as of May 4, 2000.
Schedule 4.29
SCHEDULE 4.30
GROUND LEASES
Schedule 4.30
SCHEDULE OF GROUND LEASES
1. ALBANY HOTEL, INC.
CROWNE PLAZA, LOCATED AT TEN EYCK PLAZA, ALBANY, NY
Agreement of Lease, dated as of December 20, 1979, between
UDC-Ten Eyck Development Corporation-III, as lessor, and Ten
Eyck Hotel Associates, a New York limited partnership ("Ten
Eyck"), as lessee, recorded January 4, 1980 in Liber 2181 of
Deeds, Page 1000 in the Office of the Albany County Clerk, as
amended and restated by that certain Restatement of Agreement
of Lease, dated as of December 20, 1979, recorded December 17,
1981 in Liber 2216, Page 1 in the Office of the Albany County
Clerk, as assigned by that certain Bargain and Sale Deed,
dated November 11, 1992, with Ten Eyck, as assignor, and
Albany Motel Enterprises, Inc., as assignee, and recorded
January 21, 1993 in Liber 2476, Page 871 in the Office of the
Albany County Clerk, as corrected by that certain corrective
instrument naming Albany Hotel, Inc., a Florida corporation,
as lessee, dated May 5, 1995 and recorded August 15, 1995 in
Liber 2593 at page 703 in the Office of Albany County Clerk.
Agreement of Lease, dated as of December 20, 1979, between
UDC-Ten Eyck Development Corporation-II, as lessor, and Ten
Eyck, as lessee, recorded January 4, 1980 in Liber 2181 of
Deeds, Page 845 in the Office of the Albany County Clerk, as
amended and restated by that certain Restatement of Agreement
of Lease, dated as of December 20, 1979, recorded December 17,
1981 in Liber 2216, Page 135 in the Office of Albany County
Clerk, as assigned by that certain Bargain and Sale Deed,
dated November 11, 1992, with Albany Motel Enterprises, Inc.,
as assignee, recorded January 21, 1993 in Liber 2476, Page 871
in the Office of the Albany County Clerk, as corrected by that
certain corrective instrument naming Albany Hotel, Inc., a
Florida corporation, as lessee, dated May 5, 1995 and recorded
August 15, 1995 in Liber 2593, Page 703 in the Office of the
Albany County Clerk.
2. AMI OPERATING PARTNERS, LIMITED PARTNERSHIP
HOLIDAY INN, LOCATED AT 363 EAST ROBERTS STREET, EAST
HARTFORD, CT
Lease, dated March 11, 1970, between The Poly Choke Company,
Incorporated, as lessor, and Hartford Motor Inns, Inc., as
lessee, a Notice of which is dated April 20, 1977 and recorded
in Volume 626, Page 107 of the East Hartford Land Records, as
amended by that certain unrecorded Amendatory Agreement dated
September 27, 1971, as further amended by that certain
unrecorded Second Amendatory Agreement dated July 5, 1972, as
further amended by that certain unrecorded Third Amendatory
Agreement dated March 15, 1972, as further amended by that
certain unrecorded Fourth Amendatory Agreement dated May 4,
1973, as further amended by that certain Agreement dated May
4, 1973 and recorded in Volume 511, Page 238 of the East
Hartford Land Records, as further amended by that certain
unrecorded Fifth Amendatory Agreement dated
September 11, 1978, as further amended by that certain
Agreement recorded on May 10, 1985 in Volume 911, Page 96 of
the East Hartford Land Records, as further amended by that
certain Agreement dated December 20, 1986 and recorded on
December 24, 1986 in Volume 1019, Page 59 of the East Hartford
Land Records, as assigned by that certain instrument, dated
December 25, 1986, to AMI Operating Partners Limited
Partnership a/k/a AMI Operating Partners, L.P., recorded on
December 24, 1986 in Volume 1019, Page 69 of the East Hartford
Land Records.
3. LODGIAN AMI, INC.
HOLIDAY INN, LOCATED AT 301 WEST LOMBARD STREET, BALTIMORE, MD
Lease between Kalliope Pappas, Helen P. Thomas and Basil A.
Thomas, husband & wife, George H. Pappas & Louisa N. Pappas,
husband & wife, Alexander H. Pappas & Chrysanthe A. Pappas,
husband & wife, and Harry P. Pappas and Anna Pappas, husband &
wife, as lessor, and Coliseum Motor Inns, Inc., as lessee,
dated December 31, 1962 and recorded among the Land Records of
Baltimore City in Liber JFC No. 1447. Folio 1, as affected by
that certain unrecorded Memorandum of Amendment to Lease,
dated February 11, 1963, between Kalliope Pappas, widow, Helen
P. Thomas and Basil A. Thomas, her husband, George H. Pappas
and Louisa N. Pappas, his wife, Alexander H. Pappas and
Chrysanthe A. Pappas, his wife, Harry P. Pappas and Anna
Pappas, his wife, collectively, as lessor, Coliseum Motor
Inns, Inc., as lessee, and Motels of Maryland, Inc., as
guarantor, as further affected by that certain Agreement of
Modification and Extension, dated September 10, 1964, between
Harry G. Pappas & Sons, a Maryland general partnership, by its
general partners, Basil A. Thomas, George H. Pappas, Alexander
H. Pappas, Harry P. Pappas, Helen P. Thomas, Louisa N. Pappas,
Chrysanthe A. Pappas, Anna Z. Pappas, Kalliope H. Pappas, as
lessor, and Coliseum Motor Inns, Inc., as lessee, and Motels
of Maryland, Inc., and American Motor Inns, Inc., as
guarantors, recorded in the Land Records of Baltimore City, in
Liber 1757, Page 403, as amended by that certain Amendment to
Lease, dated January 26, 1966, between Basil A. Thomas,
Kalliope Pappas, Helen P. Thomas, Louisa Pappas, Chrysanthe
Pappas, Anna Pappas, George H. Pappas, Alexander A. Pappas,
Harry P. Pappas, as lessor, and Coliseum Motor Inns, Inc., as
lessee, recorded among the Land Records of Baltimore City in
Liber JFC No. 2069, Folio 524, as further amended by that
certain unrecorded Amendment to Lease Agreement dated March
15, 1985, between Basil A. Thomas, Steven A. Thomas, George H.
Pappas, Louisa Pappas, Alexander Pappas, Chrysanthe Pappas,
Harry P. Pappas, Anna Pappas and Coliseum Motors Inns, Inc.,
et al, as further affected by that certain unrecorded Notice
of Intent to Extend Contract, dated May 9, 1985, as further
amended by that certain Lease Agreement between said parties
December 20, 1986 and recorded in Liber SEB No. 1117, Folio 50
and that certain Addendum to Amendment of Lease between said
parties dated December 20, 1986 and recorded among the
aforesaid Land Records in Liber 1117, Folio 62, as assigned by
that certain Assignment of Lease and Indemnification
Agreement, dated December 23, 1986, between Coliseum Motor
Inns, Inc., as assignor, and AMI Operating Partners, L.P., as
assignee,
recorded among the Land Records of Baltimore City in Liber SEB
No. 1117, Folio 069, as further amended by that certain
unrecorded Amendment to Lease dated December 31, 1997, by AMI
Operating Partners, L.P. in favor of Harry G. Pappas & Sons,
LLC, as further assigned by that certain Assignment and
Assumption of Lessee's Interest in Ground Lease, dated
December 8, 1998, between AMI Operating Partners, L.P. and
Lodgian AMI, Inc., recorded among the Land Records of
Baltimore City in Liber FMC 8033, Folio 295 (providing
constructive notice of all unrecorded documents noted above),
as further affected by that certain unrecorded Notice of
Extension to the Lease, dated November 8, 2002.
4. LODGIAN AMI, INC.
HOLIDAY INN, LOCATED AT 6323 GOVERNOR RITCHIE HWY., GLEN
BURNIE, MD
Unrecorded Lease Agreement, dated May 10, 1968, between David
H. Greenberg and Janice C. Greenberg and A.O. Krisch, Joel
Krisch and Rosalie K. Shaftman, as assigned by that certain
unrecorded Assignment of Lease, dated January 18, 1971, from
A.O. Krisch, Joel Krisch and Rosalie K. Shaftman to American
Motor Inns, Inc., as further assigned by that certain
unrecorded Assignment of Lease, dated January 18, 1971, from
American Motors Inns, Inc. to Connecticut Motor Inns, Inc., as
amended by that certain Amendment to Lease, dated February 24,
1971, from David H. Greenberg and Janice C. Greenberg, his
wife, as lessors, to Connecticut Motor Ins, Inc. et al, as
lessees, recorded among the Land Records of Anne Arundel
County in Liber 2395, Folio 270, as further amended by that
certain unrecorded Second Amendment to Lease, dated August 22,
1975, between David H. Greenberg and Janice C. Greenberg, as
lessors, and Connecticut Motor Inns, Inc., as lessee, and
American Motor Inns, Inc., as further amended by that certain
Amendment to Lease Agreement, dated December 20, 1986, between
General Motor Inns, Inc. and Connecticut Motor Inns, Inc. and
American Motor Inns, Inc., recorded among the Land Records of
Anne Arundel County, Maryland in Liber 4223, Folio 137, as
further assigned by that certain Assignment of Lease and
Indemnification Agreement, dated December 23, 1986, between
Connecticut Motor Inns, Inc. and AMI Operating Partners, L.P.,
recorded among the Land Records of Anne Arundel County,
Maryland in Liber 4223, Folio 145, as further assigned by that
certain Assignment and Assumption of Lessee's Interest in
Ground Lease, dated December 8, 1998, between AMI Operating
Partners, L.P. and Lodgian AMI, Inc., recorded among the Land
Records of Anne Arundel County, Maryland in Liber 8904, Folio
94 (providing constructive notice of all unrecorded documents
noted above).
10. LODGIAN AMI, INC.
HOLIDAY INN, LOCATED AT 890 ELKRIDGE LANDING ROAD, LINTHICUM,
MD
Lease, dated August 24, 1971, from D.R.H. Investment Company,
as lessor, to American Motor Inns, Inc., as lessee, recorded
among the Land Records of Anne Arundel County, Maryland in
Liber 3883, Folio 284, as affected by that certain Option
Agreement, recorded among the aforesaid land records in Liber
MSH No.
2467, Folio 798, as amended by that certain unrecorded First
Amendment to Agreement to Construct and Lease, dated May 18,
1972, among D.R.H. Investment Co., as landlord, and American
Motor Inns, Incorporated, as tenant, as further amended by
that certain agreement between Samuel M. Heffner, et al, and
American Motor Inns, Incorporated, dated May 18, 1972 and
recorded among the aforesaid land records in Liber MSH No.
2490, Folio 581, as further affected by that certain
Subordination Agreement, dated May 18, 1972, between American
Motor Inns, Incorporated and Trustees for Loyola Federal
Savings & Loan Association, recorded among the aforesaid land
records in Liber 2490, Folio 585, as further affected by that
certain Nondisturbance and Attornment Agreement, dated
September 8, 1986, between Loyola Federal Savings & Loan
Association and American Motor Inns, Inc., recorded among the
aforesaid land records in Liber 4212, Folio 211, as further
amended by that certain Consolidated Amendatory Agreement,
dated May 7, 1984, between Harry W. Rogers, III, et al, and
American Motor Inns, Incorporated, recorded among the
aforesaid land records in Liber EAC No. 3883, Folio 325, as
further affected by that certain unrecorded Notification of
Election to Extend Term, dated May 9, 1985, as further amended
by that certain Amendment to Lease, dated December 1, 1985,
between D.R.H. Investment Co., as landlord, and American Motor
Inns, Incorporated, as tenant, recorded among the aforesaid
land records in Liber 4009, Folio 445, as further amended by
that certain unrecorded Amendment of Lease Agreement, dated
December 31, 1985, between D.R.H. Investment Co., as landlord,
and American Motor Inns, Incorporated, as tenant, as further
amended by that certain Amendment to Lease Agreement, dated
December 20, 1986, between Harry W. Rodgers, III, et al, and
American Motor Inns, Incorporated, recorded among the
aforesaid land records in Liber 4223, Folio 64, as assigned by
that certain Assignment of Lease and Indemnification
Agreement, dated December 23, 1986, between American Motor
Inns, Incorporated and AMI Operating Partners, L.P., recorded
among the aforesaid land records in Liber 4223, Folio 70, as
further affected by that certain Assignment of Option
Agreement, dated December 23, 1986, from American Motors Inns,
Incorporated to AMI Operating Partners, L.P., recorded among
the aforesaid land records in Liber 4223, Folio 75, as further
affected by that certain unrecorded Subordination,
Non-Disturbance and Attornment Agreement, dated July 26, 1995,
between AMI Operating Partners, L.P., DRH Investment Company
and American Enterprise Life Insurance Company, as further
affected by that certain agreement, dated May 18, 1972,
between D.R.H. Investment Company and Anne Arundel County,
Maryland, recorded among the aforesaid land records in Liber
M.S.H. No. 2491, Folio 80 (as to water and sewer lines and
water connection to the insured property), as further affected
by that certain agreement, dated October 10, 1972, between
D.R.H. Investment Company and Anne Arundel County, Maryland,
recorded among the aforesaid land records in Liber M.S.H. No.
2529, Folio 187 (as to water and sewer lines and water
connection to the insured property).
6. LODGIAN AMI, INC.
HOLIDAY INN, LOCATED AT 521 GREENFIELD ROAD, LANCASTER, PA
Lease Agreement, dated January 30, 1969, between Paul A. Herr
and Dorothy H. Herr, as lessor, Republic Motor Inns, Inc., as
lessee, and American Motor Inns, Inc., as guarantor, recorded
with the Recorder of Deeds, Lancaster, PA in Record Book W59,
Page 755, as affected by that certain Addendum dated January
16, 1971 and recorded with the Recorder of Deeds, Lancaster,
PA in Record Book R60, Page 233, as amended by that certain
Amendment dated March 15, 1985 and recorded with the Recorder
of Deeds, Lancaster, PA in Record Book W91, Page 434, as
further amended by that certain Amendment to Lease dated
December 20, 1986 and recorded with the Recorder of Deeds,
Lancaster, PA in Record Book Y96, Page 660, as assigned by
that certain Assignment of Lease and Indemnification
Agreement, December 23, 1986, between Republic Motor Inns,
Inc. and AMI Operating Partners, LP., recorded with the
Recorder of Deeds, Lancaster, PA in Record Book Y96, Page 669,
as further assigned by that certain Assignment and Assumption
of Lessee's Interest in Ground Lease, dated November 24, 1998,
between AMI Operating Partners, LP and Lodgian AMI Inc.,
recorded with the Recorder of Deeds, Lancaster, PA in Record
Book 604, Page 638, as further affected by that certain
Acknowledgment, Estoppel Certificate and Agreement, dated
November 24, 1998, between Dorothy H. Herr and AMI Operating
Partners LP, recorded with the Recorder of Deeds, Lancaster,
PA in Record Book 6045, Page 1.
7. LODGIAN MEMPHIS PROPERTY OWNER, LLC
FRENCH QUARTER SUITES, LOCATED AT 2144 MADISON AVENUE,
MEMPHIS, TN
Lease, dated April 26, 1972, between J. Murry Davis and wife,
Mary Alice Davis, as lessor, and W. H. Welch, Jr., Meredith L.
McCullar, Fred Don Alfonso and Ernie Barrasso, as lessee,
recorded as Instrument No. H3 3366 in the Register's Office of
Shelby County, Tennessee, as amended and assigned by that
certain Agreement Assigning, Modifying and Extending Lease and
Granting Certain Rights, dated as of February 29, 1976,
between J. Murry Davis, as lessor, and Waymon H. Welch, Jr.
and Waymon H. Welch, Sr., as existing lessee, and The Group,
Inc., as new lessee, recorded in said Register's Office as
Instrument No. L1 8178, as further amended by that certain
Agreement Modifying and Extending Lease, dated January 19,
1983, between Bill Sutton and Martha Sutton, as lessor, and J.
Garnett Murphy, as lessee, recorded in said Register's Office
as Instrument No. U6 8978, as further amended by that certain
Lease Modification Agreement, dated June 4, 1983, by Bill
Sutton and Martha Sutton, as lessor, and J. Garnett Murphy, as
lessee, recorded in said Register's Office as Instrument No.
U3 3420, as further amended by that certain Lease Modification
and Extension Agreement, dated October 6, 1983, between Martha
Sutton, as lessor, and M.K. Partners, a partnership composed
of J. Garnett Murphy and Ronald L. Kirkpatrick as lessee,
recorded in said Register's Office as Instrument No. U6 8978,
as further amended by that certain Warranty Deed, dated
November 29, 1983, by M.K. Partners to French Quarter Inn of
Memphis, recorded in said Register's Office as Instrument
No. U8 0878, as further assigned by that certain Assignment of
Ground Leases, dated January 15, 1991, by Middlesex
Development Corporation, a California corporation d/b/a
"French Quarter Inn of Memphis," as assignor, and Memphis
Lodging Associates, Inc., a Florida corporation, as assignee,
recorded in said Register's Office as Instrument No. CA 3996,
as further assigned by that certain Assignment of Ground
Lease, dated March 12, 1997, by Memphis Lodging Associates,
Inc., a Florida corporation, as assignor, to Impac Hotels, I,
LLC, a Georgia limited liability company, as assignee,
recorded in said Register's Office as Instrument No. GM 0294,
as further amended by that certain Amendment of Ground Lease,
dated September 17, 1997, by Bill Sutton and Martha Sutton, as
landlord, and Impac Hotels, I, LLC, a Georgia limited
liability company, as tenant, recorded in said Register's
Office as Instrument No. HC 9439.
8. LODGIAN MEMPHIS PROPERTY OWNER, LLC
FRENCH QUARTER SUITES, LOCATED AT 2144 MADISON AVENUE,
MEMPHIS, TN
Lease, dated August 24, 1972, between Horace Proctor and Ann
Proctor, as lessor, and W. H. Welch, Jr., Meredith L.
McCullar, Fred Don Alfonso and Ernie Barrasso, as lessee,
recorded as Instrument No. H2 3640 in the Register's Office of
Shelby County, Tennessee, as amended and assigned by that
certain Agreement Assigning, Modifying and Extending Lease and
Granting Certain Rights, dated as of February 29, 1976,
between Horace Proctor and Ann Proctor, as lessor, Waymon H.
Welch, Jr. and Waymon H. Welch, Sr., as existing lessee, and
The Group, Inc., as new lessee, recorded as Instrument No. L1
8176 3640 in said Register's Office, as further amended by
that certain Agreement Modifying and Extending Lease, dated
December 30, 1982, between Horace Proctor and Ann Proctor, as
lessor, and J. Garnett Murphy, as lessee, recorded as
Instrument No. U6 8504 3640 in said Register's Office, as
further amended by that certain Lease Modification Agreement,
dated June 2, 1983, by Horace Proctor and Ann Proctor, as
lessor, and J. Garnett Murphy, as lessee, recorded as
Instrument No. U3 3419 3640 in said Register's Office, as
further amended by that certain Lease Modification and
Extension Agreement, dated October 7, 1983, between Horace
Proctor and Ann Proctor, as lessor, and M. K. Partners, a
partnership composed of J. Garnett Murphy and Ronald L.
Kirkpatrick, as lessee, recorded as Instrument No. U6 8504
3640 in said Register's Office, as further amended by that
certain Warranty Deed, dated November 29, 1983, between M. K.
Partners, as grantor, and French Quarter Inn of Memphis, as
grantee, recorded as Instrument No. U8 0878 3640 in said
Register's Office, as further assigned by that certain
Assignment of Ground Leases, dated January 15, 1991, by
Middlesex Development Corporation, a California corporation
d/b/a "French Quarter Inn of Memphis," as assignor, and
Memphis Lodging Associates, Inc., a Florida corporation, as
assignee, recorded as Instrument No. CA 3996 3640 in said
Register's Office, as further assigned by that certain
Assignment of Ground Leases, dated March 12, 1997, by Memphis
Lodging Associates, Inc., a Florida corporation, as assignor,
to Impac Hotels, I, LLC, a Georgia limited liability company,
as assignee, recorded as Instrument No. GM 0294 3640 in said
Register's Office, as further amended by that certain
Amendment of Ground
Lease, dated September 24, 1997, by Horace Proctor and Ann
Proctor, as landlord, and Impac Hotels I, LLC, a Georgia
limited liability company, as tenant, recorded as Instrument
No. HC 9438 3640 in said Register's Office.
9. SHEFFIELD MOTEL ENTERPRISES, INC.
HOLIDAY INN, LOCATED AT 4900 HATCH BLVD., SHEFFIELD, AL
Lease, dated as of February 6, 1981, between City of
Sheffield, Alabama, as lessor, and Sheffield Motel
Enterprises, Inc., as lessee, recorded on February 6, 2002 in
Book 391, Page 079-122, among the land records for Colbert
County, Alabama, as amended by that certain Amendment of
Lease, dated January 24, 1995 and recorded in Book 9714, Page
786, among the aforesaid land records, as further amended by
that certain Second Amendment of Lease dated June 16, 1997 and
recorded in Book 9714, Page 790, among the aforesaid land
records.
10. SERVICO CEDAR RAPIDS, INC.
CROWNE PLAZA, LOCATED AT 350 1ST AVENUE, NE, CEDAR RAPIDS, IA
(a) Lease of Air Rights originally executed October 14,
1976 by and between the City of Cedar Rapids, as Lessor, and
Five Seasons Inn, Inc., as Lessee, recorded in Volume 1733, at
Page I of the Records of Linn County, Iowa as amended pursuant
to that certain Agreement to Correct Legal Description dated
January 4, 1978 and recorded May 29, 1997 in Book 3494 at Page
655 of the Records of Linn County, Iowa and subsequently
amended pursuant to that certain Proposed Amendment to Air
Rights Lease dated June 28, 1995 referred to in instrument
recorded May 29, 1997 in Book 3494 at page 684;
(b) Lease of Air Rights originally executed May 23, 1979
by and between the City of Cedar Rapids, as Lessor, and Five
Seasons, as Lessee, as amended pursuant to that certain
Amendment to Lease Originally Executed May 23, 1979 by and
between the City and Five Seasons dated as of January 3, 1984
and subsequently amended pursuant to that certain Amendment to
Lease originally executed May 23, 1979 by and between the City
and Five Seasons dated as of May 22, 1985 and further
supplemented or otherwise affected by that certain Memorandum
of Understanding dated June 30, 1995 between the City of Cedar
Rapids, acting through the Five Seasons Center Commission, and
C.R.I. Hotel Associates, L.P.;
(c) Leasehold and other agreement based use rights of
Servico Cedar Rapids, Inc. including but not limited to (a)
that certain Ballroom Rental Agreement dated October 26, 1977
by and between Five Seasons Inn, Inc. and the City of Cedar
Rapids, Iowa, as amended by Proposed Amendment to Ballroom
Rental Agreement dated February 17, 1993 by and between C.R.I.
Hotel Associates, L.P. and the City of Cedar Rapids, Iowa and
further supplemented or otherwise affected by that certain
Memorandum of Understanding dated June 30, 1995 between the
City of Cedar Rapids, acting through the Five Seasons Center
Commission, and C.R.I. Hotel Associates, L.P. (b) that certain
Skyway
Agreement dated April 11, 1979 and (c) that certain Parking
Space Agreement dated May 18, 1977 by and between Five Seasons
Inn, Inc. and the City of Cedar Rapids, Iowa, each of the
above referenced agreements as disclosed by that certain
Consent, Certificate and Agreement of Lessor dated as of April
23, 1997 by and between Servico Cedar Rapids, Inc., City of
Cedar Rapids, Iowa, and C.R.I. Hotel Associates, L,P. and
recorded May 29, 1997 in Book 3494 at Page 620.
SCHEDULE 5.1(D)
CAPEX/FF&E BUDGET
Schedule 5.1(D)
Lodgian Merrill Lynch Schedule 5.1(0)
Portfolio
2002 Exit Financing Budget
56 Hotels
Income Statement Jul-02 Aug-02 Sep-02 Oct-02
------------ ------------ ------------ ------------
Rooms Available 339,977 339,977 329,010 339,977
Rooms Rented 229,429 216,927 202,961 229,196
Occupancy % 67.5% 63.8% 85.3% 67.4%
A.D.R $ 78.58 $ 78.08 $ 75.95 $ 76.29
REVPAR $ 53.02 $ 49.82 $ 45.85 $ 50.75
Department Revenue
Rooms $ 18,023,962 $ 16,937,031 $ 15,413,984 $ 17,255,121
Food 3,911,588 3,348,713 3,450,841 1,189,892
Beverage 665,010 710,285 715,014 759,574
Telephone 905,976 302,013 283,145 325,041
Other Operating Income 523,634 519,477 497,914 530,098
------------ ------------ ------------ ------------
Total Revenue 22,830,371 21,817,518 20,360,678 21,059,724
Dept Costs & Expenses
Rooms 4,702,779 4,449,841 4,304,288 1,400,058
Food 2,708,155 2,717,648 2,796,410 3,100,520
Beverage 334,967 350,785 354,509 349,404
Telephone 202,917 197,889 191,229 214,527
Other Operating Expenses 337,681 324,324 316,073 333,960
------------ ------------ ------------ ------------
Total Dept. Expenses 8,286,499 8,040,488 7,964,507 4,398,467
------------ ------------ ------------ ------------
Gross Contribution 14,543,872 13,777,392 12,396,171 11,661,256
G&U Expenses
General & Administrative 1,185,784 1,175,050 1,196,441 1,176,045
Advertising & Promotion 877,191 873,584 955,795 922,389
Franchise Expenses 1,564,362 1,500,189 1,341,015 1,518,451
Repairs & Maintenance 1,074,763 1,054,872 1,030,140 1,176,046
Utilities 1,209,841 1,196,189 1,141,473 1,060,747
------------ ------------ ------------ ------------
Total G&U Expenses 5,911,821 5,799,884 5,858,864 5,853,679
------------ ------------ ------------ ------------
House Profit 8,631,950 7,977,445 8,729,307 8,807,578
House Profit % 37.8% 35.6% 33.2% 38.2%
Other Operating Expenses
Management Fees 913,215 872,701 814,427 922,389
Equipment Rentals 123,257 123,354 124,402 125,358
Insurance 302,279 302,279 366,312 390,814
Property & Other Taxes 928,312 928,312 928,312 1,023,297
Other Expenses(Income) 45,000 45,000 45,000 45,000
Ground Rent 202,917 202,917 202,917 202,917
------------ ------------ ------------ ------------
Total Other Operating Expenses 2,514,980 2,474,563 2,471,370 2,709,575
------------ ------------ ------------ ------------
EBITDA $ 5,116,970 $ 5,502,885 $ 4,267,917 $ 4,698,000
============ ============ ============ ============
Cumulative $ 6,118,970 $ 11,619,855 $ 15,877,793 $ 21,975,798
Old EBITDA 6,422,152 5,886,193 4,810,110 4,705,153
$ 6,422,152 $ 12,418,351 $ 17,228,461 $ 23,933,614
Differences (Monthly) -4.75% -8.23% -11.48% -9.05%
Differences (Cumulative) -4.75% -6.43% -7.84% -8.18%
2002 Actual (Jan-June) 27,297,869 27,297,669
(Jul-Dec) Old Budget 29,093,700 26,415,729
------------ ------------
Total EBITDA 56,391,569 53,716,588
Less FF&E 9,930,948 9,930,948
------------ ------------
NCP 48,480,621 43,785,650
Income Statement Nov-02 Dec-02 3rd Quarter 2002 4th Quarter 2002
------------ ------------ ---------------- ----------------
Rooms Available 329,010 309,977 1,008,964 1,008,964
Rooms Rented 188,962 152,578 649,317 568,738
Occupancy % 56.8% 44.9% 64.4% 66.4%
A.D.R $ 72.57 $ 189.03 $ 77.58 $ 72.79
REVPAR $ 41.24 $ 30.98 $ 49.83 $ 40.96
Department Revenue
Rooms $ 13,567,021 $ 10,533,207 $ 50,374,957 $ 41,355,357
Food 3,377,945 3,538,951 10,550,943 11,106,789
Beverage 655,661 824,938 2,090,308 2,940,439
Telephone 267,402 208,950 691,194 801,394
Other Operating Income 454,734 373,734 1,541,225 1,356,563
------------ ------------ ------------ ------------
Total Revenue 18,322,971 85,579,839 86,008,567 56,962,541
Dept Costs & Expenses
Rooms 4,002,271 3,468,359 13,458,906 11,898,688
Food 2,680,571 2,851,161 8,222,112 8,850,258
Beverage 321,375 397,749 1,040,261 1,055,528
Telephone 197,871 162,981 591,835 575,388
Other Operating Expenses 309,211 242,927 960,078 886,108
------------ ------------ ------------ ------------
Total Dept. Expenses 7,469,321 7,135,176 24,291,192 23,028,988
------------ ------------ ------------ ------------
Gross Contribution 10,823,654 8,448,863 40,717,375 33,933,575
G&U Expenses
General & Administrative 1,090,217 1,204,325 3,558,255 3,467,591
Advertising & Promotion 824,534 878,572 2,706,570 2,625,495
Franchise Expenses 1,207,461 906,389 4,405,568 3,642,385
Repairs & Maintenance 961,954 959,211 3,159,776 3,057,213
Utilities 1,007,784 1,059,429 3,547,503 3,127,840
------------ ------------ ------------ ------------
Total G&U Expenses 5,091,931 4,974,929 17,378,889 15,920,544
------------ ------------ ------------ ------------
House Profit 5,731,719 3,413,734 23,338,706 18,013,031
House Profit % 31.3% 22.3% 35.9% 31.6%
Other Operating Expenses
Management Fees 732,911 623,194 2,600,343 2,278,502
Equipment Rentals 121,702 122,693 371,012 369,753
Insurance 357,884 356,685 960,870 1,106,183
Property & Other Taxes 1,023,297 928,312 2,784,937 2,974,906
Other Expenses(Income) 45,000 45,000 135,000 135,000
Ground Rent 202,917 202,917 808,751 808,751
------------ ------------ ------------ ------------
Total Other Operating 2,483,719 2,228,801 7,450,973 7,472,094
Expenses
------------ ------------ ------------ ------------
EXITDA $ 3,243,000 $ 1,164,334 $ 15,877,793 $ 10,540,936
============ ============ ============ ============
Cumulative $ 25,223,795 $ 26,418,729
Old EBITDA 3,806,354 1,553,732 17,223,461 $ 1,355,239
$ 17,228,461 $ 23,933,614 $ 27,539,958 $ 29,093,700
Differences (Monthly) -9.94% -23.09%
Differences (Cumulative) -8.41% -9.19%
2002 Actual (Jan-June)
(Jul-Dec) Old Budget
Total EBITDA
Less FF&E
NCP
Schedule 6.1 (D)
Capital Expenditures Budget
For the Period November 2002 through December 2003
(in $000's)
ALPHA PROPERTY TOTAL
abl Courtyard by Marriott - Abilene, TX $ 262
alb Crowne Plaza Albany, NY 4
aus Holiday Inn Austin, TX 600
bel Holiday Inn Belmont, MD 164
ben Courtyard by Marriott - Bentonville, AR 235
bkh Courtyard by Marriott - Atlanta, GA 512
brw Holiday Inn Brunawick, GA 458
bwi Holiday Inn BWI Airport, MD 6
ced Crowne Plaza Cedar Rapids, IA 1,085
cha Clarion Charleston, SC 100
col Hilton Inn Columbia, MD 2,067
crb Holiday Inn Cromwell Bridge, MD 7
dal Holiday Inn Market Center Dallas, TX 120
ded Residence Inn Dedham, MA 95
dfw Holiday Inn Select DFW Airport, TX 340
dha Hampton Inn Dothan, AL 280
dhi Holiday INN DOTHAN, AL 236
ehc Holiday INN EAST HARTFORD, CT 72
flo Courtyard by Marriott - Florence, KY 254
fre Holiday INN FREDERICK, MD 49
gad Holiday Inn Express Gadeden, AL 365
gil Holiday Inn Grand Island, NY 4
gln Holiday Inn Glen Burnie North, MD 54
gtr Holiday Inn Greentree, PA 10
har Holiday Inn Inner Harbor, MD 53
hou Crowne Plaza Houston, TX 0
jam Holiday Inn Jamestown, NY 20
lan Holiday Inn West Lansing, MI 80
lne Holiday Inn Lancaster, PA 97
lrk Residence Inn Little Rock, AR 0
lvl Hurstbourne Hotel, Louisville, KY 1,144
mar Holiday Inn Hotel & Suites Marietta, GA 215
mem French Quarter Suites Memphis, TN 267
met Quality Hotel Metairie, LA 408
myr Holiday Inn Sunspree Myrtle Beach, SC 615
nfa Four Points Niagara Falls, NY 0
nia Holiday Inn Select Niagara Falls, NY 158
nrf Hilton Inn Northfield, MI 3,800
pdk Courtyard by Marriott - Paducah, KY 297
pex Holiday Inn Express Pansacola, FL 30
phl Doubletree Club Philadelphia, PA 1,413
pns Hampton Inn Pansacola, FL 280
prk Holiday Inn Parkway East, PA 98
rlm Holiday Inn Rolling Meadows, IL 420
shf Holiday Inn Sheffield, AL 1,570
sln Holiday Inn St. Louis North, MO 480
ssp Holiday Inn Silver Spring, MO 126
stg Holiday Inn Select Strongsville, OH 489
stp Holiday Inn Arden Hills/St. Paul, MN 404
uma Holiday Inn University Mall, FL 596
vfi Fairfield Inn Valdosta, GA 338
vhi Holiday Inn Valdosta, GA 238
wnh Holiday Inn Winter Haven, FL 324
wpb Crowne Plaza West Palm Beach, FL 750
yor Holiday Inn York, PA 0
SUBTOTAL-HOTEL PROJECTS 22,086
Capitalized IT Equipment 2,100
Emergency/Contingency 4,185
TOTAL $ 28,371
Notes:
[1]- The budget includes expenditures reflected on the immediate Needs and
Year 1 schedule at Exhibit A.
[2]- The budget reflects management's estimate of expenditures which may be
incurred at the properties during this period.
SCHEDULE 5.7
O&M PLANS
Schedule 5.7
LODGIAN
PROPERTIES REQUIRING ASBESTOS O&M PLANS
YEAR
CHAIN/NAME CITY ST BUILT ADDRESS CITY/ST/ZIP
- ------------------------------------------------------------------------------------------------------------------------------------
Hampton Inn Dothan AL 1989 3071 Ross Clark Circle Dothan, AL 36301
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn West Dothan AL 1961 3053 Ross Clark Dothan, AL 36301
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Express Gadsden AL 1962 601 Cleveland Ave. Gadsden, AL 35954
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Sheffield AL 1981 4900 Hatch Blvd. Sheffield, AL 35660
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn East Hartford CT 1974 363 Roberts St. E. Hartford, CT 06106
- ------------------------------------------------------------------------------------------------------------------------------------
Hampton Inn Pensacola FL 1985 7330 Plantation Rd. Pensacola, FL 32504
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Express Pensacola FL 1962 6501 Pensacola Blvd. Pensacola, FL 32505
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Pensacola FL 1981 7200 Plantation Rd. Pensacola, FL 32504
(University
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Winter Haven FL 1967 1150 3rd St., SW Winter Haven, FL 33880
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Marietta (hotel GA 1973 2265 Kingston Ct. Marietta, GA 30067
& suites)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Fairfield Inn Valdosta GA 1963 1311 St. Augustine Rd. Valdosta, GA 31601
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Valdosta GA 1963 1309 St. Augustine Rd. Valdosta, GA 31601
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Rolling IL 1963 3405 Algonquin Rd. Rolling Meadows, IL 60008
Meadows
- ------------------------------------------------------------------------------------------------------------------------------------
Hurstbourne Hotel Louisville KY 1971 9700 Blue Grass Parkway Louisville, KY 40299
- ------------------------------------------------------------------------------------------------------------------------------------
Quality Hotel Metalrie LA 1985 2261 N. Causeway Blvd. Metalrie, LA 70001
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Baltimore - BWI MD 1973 890 Elkridge Landing Rd. Linthicum Heights, MD 21090
Airport
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Baltimore West MD 1972 1800 Belmont Ave. Baltimore, MD 21244
(Belmont)
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Baltimore, Inn MD 1964 301 W. Lombard St. Baltimore, MD 21201
Harbor
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Frederick MD 1963 999 W. Patrick St. Frederick, MD 21702
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Glen Burnie MD 1973 6323 Governor Ritchie Hwy Glen Burnie, MD 21061
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Silver Spring MD 1973 8777 Georgia Ave. Silver Spring, MD 20910
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Towson MD 1972 1100 Cromwell Bridge Rd. Towson, MD 21286
(Cromwell
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Lansing MI 1975 7501 W. Saginaw Hwy Lansing, MI 48917
- ------------------------------------------------------------------------------------------------------------------------------------
Hilton Troy MI 1976 5500 Crooks Rd. Troy, MI 48098
(Northfield)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Arden Hills/St. MN 1973 1201 West Country Rd. E St. Paul, MN 55112
Paul
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn St. Louis North MO 1956 4545 N. Lindbergh Blvd. St. Louis, MO 63044
- ------------------------------------------------------------------------------------------------------------------------------------
Crowne Plaza Albany NY 1960 Ten Eyck Plaza Albany, NY 12207
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Grand Island NY 1972 100 Whitehaven Rd. Grand Island, NY 14072
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Jamestown NY 1979 150 W. 4th St. Jamestown, NY 14701
- ------------------------------------------------------------------------------------------------------------------------------------
Four Points Niagara Falls NY 1965 114 Buffalo Ave. Niagara Falls, NY 14303
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Select Niagara Falls NY 1974 300 Third St. Niagara Falls, NY 14303
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Select Strongsville OH 1972 15471 Royalton Rd. Strongsville, OH 44136
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Greentree PA 1972 401 Holiday Drive Pittsburgh, PA 15220
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Lancaster PA 1971 521 Greenfield Rd. Lancaster, PA 17601
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Pittsburgh PA 1975 915 Brinton Rd. Pittsburgh, PA 15221
(Pkwy East)
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn York PA 1970 334 Arsenal Rd. York, PA 17402
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn SunSpree Myrtle Beach SC 1978 1601 N. Ocean Blvd. Surfside Beach, SC 29575
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Austin TX 1984 3401 South I-35 Austin, TX 78741
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Select Dallas (DFW TX 1974 4441 Hwy 114 & Esters Blvd. Irving, TX 75063
Airport)
- ------------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Dallas (Mkt TX 1971 1955 Market Center Blvd. Dallas, TX 75207
Center)
- ------------------------------------------------------------------------------------------------------------------------------------
LODGIAN: MOLD O&M Plan
REQUIRED LOCATIONS:
French Quarter Suites, 2144 Madison Avenue, Memphis, TN 38104
Quality Hotel, 2251 North Causeway Boulevard, Metairie, LA 70001
Clarion Hotel, 7401 Northwoods Boulevard, North Charleston, SC 29406
Holiday Inn Express, 801 Cleveland Avenue, Atalla (Gadsden), AL 35954
Schedule 5.14
Material Agreements
- --------------------------------------------------------------------------------------------------------------------
BORROWER/GUARANTOR VENDOR AGREEMENT TYPE REASON FOR MATERIALITY
Lodgian, Inc. IDC Construction LLC General Contractor/Renovation Payment in excess of $1 million
of Philadelphia Hotel
- --------------------------------------------------------------------------------------------------------------------
Lodgian, Inc. Harbor Linen Linen Requirements Agreement Payment in excess of $ 1 million
- --------------------------------------------------------------------------------------------------------------------
SCHEDULE 6.6
ENVIRONMENTAL WORK
Schedule 6.6
SCHEDULE 6.6
APPROXIMATE INDIVIDUAL
YEAR LOAN AMOUNTS OF TOTAL
GPI PROP # CHAIN/NAME CITY ST ROOMS BUILT LOAN ADDRESS
- --------------------------------------------------------------------------------------------------------------------
3 0240 Holiday Inn Gadsden AL 141 1962 0.6% 801 Cleveland Ave.
Express
24 1502 Quality Hotel Metalife LA 205 1985 0.8% 2261 N. Causeway Blvd.
50 4021 Clarion Charlesto SC 197 1981 0.4% 7401 Northwoods Blvd.
52 4215 French Quarter Memphis TN 105 1980 0.7% 2144 Madison Ave.
Suites
TOTAL REMEDIATION
CITY/ST/ZIP COST COST DETAIL
- -------------------------------------------------------------------------------------------------------
Gadsden, AL 35954 $ 37,500 Remediate water/mold damaged building
materials ($ 30,000).
HVAC evaluation ($7,500)
Metalife, LA 70001 $ 413,250 Remediation of vinyl covering from guest
room walls ($71,750),
windows repair ($120,000),
application of moisture-resistant paint finish
to brick veneer ($195,500),
remediate water damaged wallboard and
building materials ($1,000),
door repair ($20,000),
remediate water/mold damage to dining room
ceiling areas ($5,000).
Charleston, SC 29406 $ 115,000 Remediate water/mold damaged building
materials ($25,000),
on-site small/medium scale remediation
($90,000)
Memphis, TN 38104 $ 266,000 Remediate wallpaper and ceiling tile
($261,000),
consultation remediation of exhaust
ventilation system ($5,000)
Total remediation cost $ 831,750
Reserve amount $ 1,039,688
SCHEDULE 6.7
RESERVE FUNDING CONDITIONS
1. The Borrowers shall have submitted to Lender a written request
for disbursement at least five (5) days prior to the date on which the Borrowers
request such disbursement be made, specifying the specific Environmental Work or
Capital Improvements for which the disbursement is requested and such other
information (such as the price of materials and the cost of contracted labor or
other services) as Lender may reasonably require, which request must be on a
form specified or approved by Lender;
2. 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;
3. Lender shall have received a certificate from the Borrowers
stating that all Environmental Work or Capital Improvements at the Property to
be funded by the requested disbursement have been completed in a good and
workmanlike manner and in accordance with any plans and specifications approved
by Lender and all legal requirements of any Governmental Authority having
jurisdiction over the Property, such certificate to be accompanied, in either
case, by a copy of any license, permit or other approval by any Governmental
Authority required to commence (only for the first advance with respect to each
distinct item of work) and/or complete (only for the final advance with respect
to each distinct item of work) such Environmental Work or Capital Improvements;
4. Lender shall have received a certificate from the Borrowers
stating that each Person that supplied materials or labor in connection with the
Environmental Work to be funded by the requested disbursement has been paid in
full or will be paid in full upon such disbursement, such certificate to be
accompanied by copies of invoices for all items or materials purchased and all
contracted labor or services provided, and, with respect to Environmental Work
relating to mold, a certificate of a Certified Industrial Hygienist that the
such Work has been completed in conformity with applicable mold clean-up
procedures promulgated by the applicable Governmental Authority within the state
in which the applicable Property is located, or, if no such procedures exist, in
conformity with the New York City Department of Health or the United States
Environmental Protection guidelines for mold related clean-up work;
5. Lender shall have received appropriate lien waivers (including
final lien waivers) from each contractor, supplier, materialman, mechanic or
subcontractor who receives payment in an amount equal to or greater than $10,000
for completion of its work or delivery of its materials, which lien waivers
shall conform to the requirements of applicable law and shall cover all work
performed and materials supplied (including equipment and fixtures) for a
Property by that contractor, supplier, subcontractor, mechanic or materialman
through the date covered by the current disbursement request; and
6. At Lender's option, Lender shall have received a title search
for the 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 Property since the
Schedule 6.7
date of recordation of the applicable Deed of Trust and that title to the
Property is free and clear of all Liens (other than the Permitted Encumbrances).
Schedule 6.7