EXHIBIT 10.22.1
FORM OF
MEZZANINE LOAN AGREEMENT
(FLOATING RATE POOL)
DATED AS OF JUNE ___, 2004
BETWEEN
LODGIAN MEZZANINE FLOATING, LLC
AS BORROWER
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............................................... 21
Section 1.3 Other Definitional Provisions.................................. 21
ARTICLE II TERMS OF THE LOAN............................................................. 22
Section 2.1 Loan........................................................... 22
Section 2.2 Interest....................................................... 22
Section 2.3 Interest Rate Cap Agreement.................................... 23
Section 2.4 Payments....................................................... 24
Section 2.5 Maturity....................................................... 25
Section 2.6 Prepayment..................................................... 27
Section 2.7 Outstanding Balance............................................ 28
Section 2.8 Taxes.......................................................... 28
Section 2.9 Reasonableness of Charges...................................... 28
Section 2.10 Funding Losses/Change in Law Etc............................... 28
Section 2.11 Servicing/Special Servicing.................................... 30
Section 2.12 Mortgage Loan Event of Default................................. 30
Section 2.13 Mezzanine Lender Approvals..................................... 30
ARTICLE III CONDITIONS TO LOAN........................................................... 31
Section 3.1 Conditions to Funding of the Loan on the Closing Date.......... 31
ARTICLE IV REPRESENTATIONS AND WARRANTIES................................................ 35
Section 4.1 Organization, Powers, Capitalization, Good Standing, Business.. 35
Section 4.2 Authorization of Borrowing, etc................................ 36
Section 4.3 Financial Statements........................................... 37
Section 4.4 Indebtedness and Contingent Obligations........................ 37
Section 4.5 Title to the Properties and Collateral......................... 37
Section 4.6 Zoning; Compliance with Laws................................... 37
Section 4.7 Leases; Agreements............................................. 38
Section 4.8 Condition of the Properties.................................... 39
Section 4.9 Representations and Warranties of the Mortgage Borrowers....... 40
Section 4.10 Payment of Taxes............................................... 40
Section 4.11 Adverse Contracts.............................................. 40
Section 4.12 Performance of Agreements...................................... 40
Section 4.13 Governmental Regulation........................................ 40
Section 4.14 Employee Benefit Plans......................................... 40
Section 4.15 Broker's Fees.................................................. 40
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Section 4.16 Litigation; Adverse Facts.............................. 41
Section 4.17 Solvency............................................... 41
Section 4.18 Disclosure............................................. 41
Section 4.19 Use of Proceeds and Margin Security.................... 41
Section 4.20 Security Interests..................................... 42
Section 4.21 Investments............................................ 42
Section 4.22 Defaults............................................... 42
Section 4.23 No Plan Assets......................................... 42
Section 4.24 Governmental Plan...................................... 42
Section 4.25 Not Foreign Person..................................... 42
Section 4.26 No Collective Bargaining Agreements.................... 42
Section 4.27 Bankruptcy............................................. 42
Section 4.28 No Prohibited Persons.................................. 43
ARTICLE V COVENANTS OF BORROWER PARTIES.......................................... 43
Section 5.1 Financial Statements and Other Reports................. 43
Section 5.2 Existence; Qualification............................... 48
Section 5.3 Payment of Impositions and Claims...................... 48
Section 5.4 Maintenance of Insurance............................... 48
Section 5.5 Operation and Maintenance of the Properties; Casualty.. 49
Section 5.6 Inspection............................................. 50
Section 5.7 O&M Plan............................................... 51
Section 5.8 Intentionally Deleted.................................. 51
Section 5.9 Compliance with Laws and Contractual Obligations....... 51
Section 5.10 Further Assurances..................................... 51
Section 5.11 Performance of Agreements and Leases................... 51
Section 5.12 Leases................................................. 51
Section 5.13 Management; Franchise Agreements....................... 52
Section 5.14 Material Agreements.................................... 55
Section 5.15 Deposits; Application of Receipts...................... 55
Section 5.16 Estoppel Certificates.................................. 55
Section 5.17 Indebtedness........................................... 56
Section 5.18 No Liens............................................... 56
Section 5.19 Contingent Obligations................................. 56
Section 5.20 Restriction on Fundamental Changes..................... 56
Section 5.21 Transactions with Related Persons...................... 57
Section 5.22 Bankruptcy, Receivers, Similar Matters................. 57
Section 5.23 ERISA.................................................. 57
Section 5.24 Press Release.......................................... 58
Section 5.25 Ground Leases.......................................... 58
Section 5.26 Mortgaged Condominium Property......................... 61
Section 5.27 Lender's Expenses...................................... 62
Section 5.28 Distributions.......................................... 62
Section 5.29 Cancellation of Indebtedness; Settlement of Claims..... 62
Section 5.30 Modification of Mortgage Documents..................... 62
Section 5.31 Prohibited Persons..................................... 63
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ARTICLE VI RESERVES............................................................................ 63
Section 6.1 Security Interest in Reserves; Other Matters Pertaining to Reserves.. 63
Section 6.2 Funds Deposited with Lender.......................................... 64
Section 6.3 FF&E Reserve......................................................... 64
Section 6.4 Capital Improvement Reserve; Required Capital Improvements........... 64
Section 6.5 Hazardous Materials Remediation Reserve.............................. 64
Section 6.6 Conditions to Disbursements from Hazardous Materials Remediation
Reserve, Capital Improvement Reserve; Performance of Work............ 65
Section 6.7 Cash Trap Reserve.................................................... 67
Section 6.8 Substitute Cash Management Agreement................................. 67
ARTICLE VII LOCK BOX; CASH MANAGEMENT.......................................................... 67
Section 7.1 Establishment of Lock Box Account.................................... 67
Section 7.2 Application of Funds in Lock Box Account............................. 68
Section 7.3 Application of Funds After Event of Default.......................... 68
Section 7.4 Mortgage Loan Lock Box............................................... 68
ARTICLE VIII DEFAULT, RIGHTS AND REMEDIES...................................................... 68
Section 8.1 Event of Default..................................................... 68
Section 8.2 Acceleration and Remedies............................................ 71
Section 8.3 Performance by Lender................................................ 73
Section 8.4 Evidence of Compliance............................................... 74
ARTICLE IX SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS, WARRANTIES AND COVENANTS......... 74
Section 9.1 Applicable to the Borrower........................................... 74
Section 9.2 Applicable to the Borrower and Member................................ 76
ARTICLE X RESTRUCTURING LOAN, SECONDARY MARKET TRANSACTIONS.................................... 77
Section 10.1 Secondary Market Transactions Generally.............................. 77
Section 10.2 Cooperation; Limitations............................................. 78
Section 10.3 Information.......................................................... 78
Section 10.4 Additional Provisions................................................ 79
ARTICLE XI RESTRICTIONS ON LIENS, TRANSFERS; ASSUMABILITY; RELEASE OF PROPERTIES............... 80
Section 11.1 Restrictions on Transfer and Encumbrance............................. 80
Section 11.2 Transfers of Beneficial Interests in the Borrower.................... 80
Section 11.3 Assumability......................................................... 81
Section 11.4 Release of Collateral................................................ 82
Section 11.5 Intentionally Omitted................................................ 84
Section 11.6 Sale of Building Equipment........................................... 84
Section 11.7 Immaterial Transfers and Easements, etc.............................. 84
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ARTICLE XII RECOURSE; LIMITATIONS ON RECOURSE................................................. 84
Section 12.1 Limitations on Recourse............................................. 84
Section 12.2 Partial Recourse.................................................... 85
Section 12.3 Miscellaneous....................................................... 85
ARTICLE XIII WAIVERS OF DEFENSES OF GUARANTORS AND SURETIES................................... 86
Section 13.1 Waivers............................................................. 86
ARTICLE XIV MISCELLANEOUS..................................................................... 88
Section 14.1 Expenses and Attorneys' Fees........................................ 88
Section 14.2 Indemnity........................................................... 88
Section 14.3 Amendments and Waivers.............................................. 89
Section 14.4 Retention of the Borrower's Documents............................... 89
Section 14.5 Notices............................................................. 89
Section 14.6 Survival of Warranties and Certain Agreements....................... 90
Section 14.7 Failure or Indulgence Not Waiver; Remedies Cumulative............... 91
Section 14.8 Marshaling; Payments Set Aside...................................... 91
Section 14.9 Severability........................................................ 91
Section 14.10 Headings............................................................ 91
Section 14.11 APPLICABLE LAW...................................................... 91
Section 14.12 Successors and Assigns.............................................. 92
Section 14.13 Sophisticated Parties, Reasonable Terms, No Fiduciary Relationship.. 92
Section 14.14 Reasonableness of Determinations.................................... 92
Section 14.15 Limitation of Liability............................................. 92
Section 14.16 No Duty............................................................. 93
Section 14.17 Entire Agreement.................................................... 93
Section 14.18 Construction; Supremacy of Loan Agreement........................... 93
Section 14.19 Consent to Jurisdiction............................................. 93
Section 14.20 Waiver of Jury Trial................................................ 93
Section 14.21 Counterparts; Effectiveness......................................... 94
Section 14.22 Servicer............................................................ 94
Section 14.23 Obligations of Borrower Parties..................................... 94
Section 14.24 Additional Inspections; Reports..................................... 94
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Properties
Exhibit B - Environmental Reports
Exhibit C - Franchise Agreements
Exhibit D - Allocated Loan Amounts/Aggregate Allocated Loan Amounts
Exhibit E - Management Agreements
Exhibit F - [Reserved]
Exhibit G - Property Improvement Plans
Exhibit H - [Reserved]
Exhibit I - Acceptable Franchisors
Exhibit J - [Reserved]
Exhibit K - Zoning Reports
Schedule 2.4 - Scheduled Mezzanine Principal Payments
Schedule 3.1(A) - List of Loan Documents
Schedule 4.1(C) - Organizational Chart for Borrower Parties
Schedule 4.2 - Consents
Schedule 4.5 - Condemnation Proceedings
Schedule 4.5(A) - Rights to Purchase/Rights of First Offer
Schedule 4.7(B) - Rent Roll
Schedule 4.7(E) - Franchise Defaults
Schedule 4.9 - Litigation
Schedule 4.14 - ERISA Plans
Schedule 4.26 - Collective Bargaining Agreements
Schedule 5.14 - Material Agreements
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MEZZANINE LOAN AGREEMENT
This MEZZANINE LOAN AGREEMENT (this "LOAN AGREEMENT") is dated as of
June ___, 2004 and entered into by and between LODGIAN MEZZANINE FLOATING, LLC,
a Delaware limited liability company (the "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 Borrower 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. All terms not otherwise
defined herein shall have the meaning given such terms in the Mortgage Loan
Agreement.
"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 Mortgage 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 Borrower's 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, if any, and all earnings
and investments held therein and proceeds thereof.
"ACCOUNTS" means, collectively, the Deposit Account, the Lock Box Account,
all accounts maintained by or for the benefit of Mortgage Lender pursuant to the
terms of the Mortgage Loan Documents 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, directors,
managing members, or general partners of the entity.
"AGGREGATE ALLOCATED LOAN AMOUNT" means the aggregate portion of the
Mortgage 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 Loan and the
Mortgage Loan.
"ALLOCATED LOAN AMOUNT" means the portion of the Loan allocated to each
Property as set forth on EXHIBIT D.
"APPLICABLE SPREAD" means 3.4%.
"APPROVAL PROCEDURES" has the meaning set forth in Section 2.13(A).
"APPROVED ACCOUNTING FIRM" means Ernst and Young, PriceWaterhouseCoopers,
Deloitte & Touche or KPMG Peat Marwick or any successor entity.
"ASSIGNMENT OF RATE CAP" means that certain Collateral Assignment of
Interest Rate Protection Agreement of even date herewith from the Borrower 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 MANAGEMENT AGREEMENTS" means, collectively, those certain
Conditional Assignments of Hotel Management Agreements of even date herewith
executed by the Borrower 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" means any Person (other than the Borrower and the
Mortgage 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 Condominium Property Documents.
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"BORROWER" has the meaning set forth in the preamble.
"BORROWER PARTY" and "BORROWER PARTIES" means, individually or
collectively, the Borrower, 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 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.
"CAPITAL EXPENDITURES" means expenditures for Capital Improvements.
"CAPITAL IMPROVEMENTS" means capital improvements, repairs or alterations
(including any improvements, repairs or alterations required pursuant to a
Property Improvement Plan), FF&E and other capital items (whether paid in cash
or property or accrued as liabilities) made by the Mortgage Borrowers that, in
conformity with GAAP, would not be included in the Mortgage Borrowers' annual
financial statements as an Operating Expense of the Properties.
"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 Mezzanine Cash Management Agreement
of even date herewith among the Borrower, Lender, Manager, and Lock Box Account
Bank.
"CATEGORY" means the applicable Tier 1 Hotel, the Tier 2 Hotel or the Tier
3 Hotel category.
3
"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 Pledge Agreement, the Cash Management Agreement or the other
Loan Documents, including the Account Collateral.
"COLLATERAL RELEASE" has the meaning set forth in Section 11.4.
"COLLATERAL RELEASE PRICE" has the meaning set forth in Section 11.4.
"COMPLIANCE CERTIFICATE" has the meaning set forth in Section 5.1.
"CONDOMINIUM BORROWER" has the meaning given such term in the Mortgage
Loan Agreement.
"CONDOMINIUM DEFAULT" has the meaning set forth in the Mortgage Loan
Agreement.
"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.
4
"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.
"DEBT SERVICE COVERAGE RATIO" or "DSCR" means, at any time of
determination, Net Cash Flow for the trailing twelve (12) month period divided
by the amount of interest (assuming an interest rate equal to the Test Rate)
that will be required to be paid over the succeeding twelve (12) months on the
Loan and the Mortgage Loan plus principal amortization of the Loan and the
Mortgage Loan that would be required in respect of the then outstanding
principal amount of the Loan and the Mortgage Loan over the succeeding twelve
(12) months based on a twenty-five (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 twelve (12) month period divided by the then outstanding principal
balance of the Loan and the Mortgage Loan.
"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 given such term in the Cash Management
Agreement.
"DETERMINATION DATE" means the day which is two (2) Eurodollar Business
Days prior to the first (1st) day of an Interest Accrual Period; provided that
the first (1st) 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 $100,000,000 and
(iii) the short-term debt of which is rated A-1 or better by S&P or P-1 or
better by Moody's or is similarly rated by any successor thereof, provided that
each such item of commercial paper, each such obligation, and each such time
deposit has a maturity date not later than thirty days after the date of
purchase thereof.
5
"DOLLARS" and the sign "$" mean the lawful money of the United States of
America.
"ELIGIBLE ACCOUNT" means 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" means 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 the Borrower or any ERISA Affiliate, (ii) which has
at any time within the preceding six (6) years been maintained for the employees
of the Borrower or any current or former ERISA Affiliate or (iii) for which the
Borrower or any ERISA Affiliate has any liability, including contingent
liability.
"ENVIRONMENTAL INDEMNITY" means the Environmental Indemnity of even date
herewith from the Borrower and Guarantor to Lender, as same may be amended or
modified from time to time.
"ENVIRONMENTAL LAWS" shall have the meaning given such term in the
Mortgage Loan Agreement.
"ENVIRONMENTAL REPORTS" means those certain environmental reports and
audits for the Properties as described on EXHIBIT B.
"ERISA" means the Employee Retirement Income Security Act of 1974, and all
rules and regulations promulgated thereunder.
"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 given such term in the Mortgage Loan
Cash Management Agreement.
"EXCESS INTEREST" has the meaning set forth in Section 2.2.
"EXCULPATED PARTIES" has the meaning set forth in Section 12.2.
6
"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 given such term in
the Mortgage Loan 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 Mortgage Borrowers, or in which the Mortgage 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 Mortgage Borrowers, or in which Mortgage 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, enjoyment and occupancy of the Properties.
"FF&E RESERVE" means the reserve established pursuant to Section 6.4 of
the Mortgage Loan Agreement.
"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 Borrower 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.
7
"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 Borrower
or its Affiliates, or other causes beyond the reasonable control of the Borrower
and/or its Affiliates, but the Borrower's lack of funds in and of itself shall
not be deemed a cause beyond the control of the Borrower.
"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 Mortgage Borrowers, as the case may be, as franchisee, pursuant to
which the Mortgage Borrowers, as the case may be, have the right to operate the
Properties under names and hotel systems controlled by the applicable
Franchisor.
"FRANCHISOR" means the current hotel franchisor or licensor with respect
to any of the Properties or any other successor franchisor or licensor permitted
pursuant to Section 5.13.
"FRANCHISOR LETTER" means, with respect to each Property, a comfort
letter(s), and/or similar instrument(s) from the related Franchisor to Mortgage
Lender and 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.
"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 given such term in the Mortgage
Loan Agreement.
"GROUND LEASED PROPERTIES" has the meaning given such term in the Mortgage
Loan Agreement.
8
"GROUND LEASES" has the meaning given such term in the Mortgage Loan
Agreement.
"GROUND LESSOR" means each of the lessors under the Ground Leases.
"GUARANTOR" means Lodgian, Inc., a Delaware corporation.
"GUARANTY" means the Guaranty of Recourse Obligations and the
Environmental Indemnity.
"GUARANTY OF RECOURSE OBLIGATIONS" means the Guaranty of Recourse
Obligations of even date herewith from Guarantor to Lender, as same may be
amended or modified from time to time.
"HAZARDOUS MATERIALS REMEDIATION RESERVE" means the Reserve established
pursuant to Section 6.6 of the Mortgage Loan Agreement.
"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 Mortgage Borrowers under each of the
Ground Leases and under the Condominium Property Documents. Impositions shall
not include (x) any sales or use taxes payable by the Mortgage 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 Mortgage Borrowers.
"IMPOSITIONS AND INSURANCE RESERVE" means the reserve established pursuant
to Section 6.3 of the Mortgage Loan Agreement.
"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" means, 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,
9
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 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 Member, the Borrower, the Mortgage 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 Member, Guarantor, the
Borrower, the Mortgage Borrowers or any Affiliate of any of them (except that
such individual may 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 Member, Guarantor, the Borrower,
the Mortgage 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 Member, the
Borrower, the Mortgage Borrowers 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 Mortgage Borrowers pursuant to Section
5.4.
"INTEREST ACCRUAL PERIOD" means a period commencing on the first (1st)
Business Day of a calendar month and ending on the day immediately prior to the
first (1st) Business Day of the next calendar month; provided that the first
(1st) Interest Accrual Period means the period from and including the Closing
Date to 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.
10
"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 Borrower 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 or inquiry 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 the Borrower and Member, with respect
to operational issues of any of the Mortgage Borrowers, any of the Properties,
or the Borrower; (iv) the chief operating officer of Guarantor, with respect to
representations regarding Guarantor; and (v) 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 6.6.
"LETTER OF CREDIT" means 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 Borrower 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 Borrower 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 hundredth (1/100th) 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.
11
(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).
"LLC INTERESTS" has the meaning given such term in the Pledge Agreement.
"LOAN" has the meaning set forth in Section 2.1.
"LOAN AGREEMENT" means this Mezzanine Loan 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 Assignments of
Management Agreements, the Pledge Agreement, the Guaranty, the Assignment of
Rate Cap, the Financing Statements, the Cash Management Agreement and any and
all other documents and agreements from the Borrower, Member, Guarantor or
Manager accepted by Lender for the purposes of evidencing and/or securing the
Loan, excluding the Mortgage Loan Documents.
"LOCK BOX ACCOUNT" and "LOCK BOX ACCOUNT BANK" are defined in Section 7.1.
"LP INTERESTS" has the meaning given such term in the Pledge Agreement.
"MANAGEMENT AGREEMENTS" means those certain Management Agreements
described in EXHIBIT E, between each Mortgage Borrower, and the applicable
Manager described therein 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 approved by Lender 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 the Borrower, the
12
Mortgage Borrowers or Guarantor, or (B) the impairment of the ability of the
Borrower, the Mortgage Borrowers or Guarantor to perform their respective
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 or of Mortgage Lender to enforce or collect any of the obligations under the
Mortgage Loan Documents 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
Mortgage Borrowers, in the aggregate, to pay, or under which any Mortgage
Borrower receives in compensation, more than $500,000 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 Mortgage Borrowers, in
the aggregate, to pay, or under which any Mortgage Borrower (or all of the
Mortgage Borrowers, in the aggregate) receives in compensation, not more than
$1,000,000 per annum and (y) which is terminable by the Mortgage Borrowers on
not more than sixty (60) days prior written notice without any fee or penalty.
"MATERIAL ALTERATION" means any improvement or alteration to any 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,
and is not otherwise already approved by Lender as part of the CapEx/FF&E Budget
then in effect or which otherwise does not constitute Work.
"MATERIAL LEASE" means any Lease of space in a Property which (i) is with
an Affiliate of the Mortgage 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, or (iv) obligates the Mortgage Borrowers to make any
improvements to the Property 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" means 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.
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"MEMBER" means, as of the date hereof, Lodgian Financing Mezzanine, LLC, a
Delaware limited liability company, and thereafter any other entity which
hereafter becomes the managing member or sole member of the Borrower under its
limited liability company operating agreement.
"MEMBERSHIP CERTIFICATES" has the meaning given such term in the Pledge
Agreement.
"MERRILL LYNCH" has the meaning set forth in Section 10.3.
"MEZZANINE LENDER'S PERCENTAGE" means, if the Mortgage Loan remains
outstanding at the time of determination, the ratio, expressed as a percentage,
that the then outstanding principal balance of the Loan bears to the Aggregate
Outstanding Principal Balance, and following satisfaction of the Mortgage Loan,
100%. As of the date hereof Mezzanine Lender's Percentage is 0%.
"MINIMUM DEBT YIELD" means (i) prior to the first (1st) anniversary of the
Closing Date, 9%, (ii) from the first (1st) anniversary of the Closing Date but
prior to the second (2nd) anniversary of the Closing Date, 10%, (iii) during the
First Extension Term, 11%, (iv) during the Second Extension Term, 12%, and (v)
during the Third Extension Term, 13%.
"MINIMUM DSCR" means (i) during the Second Extension Term, 1.30:1.0; and
(ii) during the Third Extension Term, 1.35:1.0.
"MOODY'S" means Moody's Investors Service.
"MORTGAGE BORROWERS" means, collectively, each of the entities identified
as owners of Properties set forth on SCHEDULE 4.1(C), provided that, following a
Property Release, "MORTGAGE BORROWERS" shall mean each of the Mortgage Borrowers
remaining as a party to the Mortgage Loan Agreement and whose Property remains
subject to the Mortgages.
"MORTGAGE LENDER" means Merrill Lynch Mortgage Lending, Inc., its
successors and assigns, as lender under the Mortgage Loan Documents.
"MORTGAGE LOAN" means that certain loan in the amount of ___________ from
Mortgage Lender to the Mortgage Borrowers.
"MORTGAGE LOAN AGREEMENT" means the Loan and Security Agreement between
the Mortgage Borrowers and Mortgage Lender.
"MORTGAGE LOAN CASH MANAGEMENT AGREEMENT" means the Cash Management
Agreement of even date herewith among Mortgage Borrowers, Mortgage Lender,
Manager, and Mortgage Loan Lock Box Account Bank and any replacement thereof
entered into with a successor Agent in accordance with the terms thereof.
"MORTGAGE LOAN DOCUMENTS" means the documents executed and delivered by
the Mortgage Borrowers and certain Affiliates thereof to Mortgage Lender in
connection with the Mortgage Loan.
14
"MORTGAGE LOAN LOCK BOX ACCOUNT" means the Lock Box Account established
pursuant to the terms of the Mortgage Loan Cash Management Agreement.
"MORTGAGE LOAN LOCK BOX ACCOUNT BANK" has the meaning given such term in
the Mortgage Loan Agreement for the term "Lock Box Account Bank."
"MORTGAGES" means, collectively, (i) those certain Mortgages, Assignments
of Leases and Security Agreements, (ii) those certain Deeds of Trust,
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 applicable Mortgage Borrowers to Mortgage Lender (or deed trustee on
behalf of Mortgage Lender, as applicable), constituting Liens on their
respective Properties as collateral for the Mortgage Loan as same may be
modified or amended from time to time.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
3(37) or Section 4001(a)(3) of ERISA to which the Borrower 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 the Borrower 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" has the meaning given such term in the
Mortgage Loan Agreement.
"NON-FLAGGED PROPERTIES" means the Property located at 2144 Madison
Avenue, Memphis, Tennessee, prior to such Property 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 Borrower 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 the Borrower, and the performance of all other
terms, conditions and covenants under the Loan Documents.
"OPERATING BUDGET" means, collectively, for any period, the Mortgage
Borrowers' budgets setting forth the Mortgage 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 budgets have been approved by Lender in accordance herewith, as same may
be amended pursuant to Section 5.1(D) hereof.
"OPERATING EXPENSES" has the meaning given such term in the Mortgage Loan
Agreement.
15
"OPERATING REVENUES" has the meaning given such term in the Mortgage Loan
Agreement.
"OWNERSHIP INTERESTS" has the meaning set forth in Section 9.1.
"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" has the meaning given such term in the Mortgage
Loan Agreement.
"PERMITTED INDEBTEDNESS" has the meaning set forth in Section 5.17.
"PERMITTED INVESTMENTS" has the meaning given such term 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 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,
16
(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).
"PLEDGE AGREEMENT" means, that certain Pledge and Security Agreement dated
as of the date hereof given by the Borrower, as pledgor, in favor of Lender, as
secured party, with respect to 100% of the LLC Interests, 100% of the LP
Interests, and 100% of the Stock Interests.
"PREPAYMENT CONSIDERATION" means (i) prior to the Payment Date in July
2005, three percent (3%) of the principal amount of the Loan being prepaid, (ii)
from the Payment Date in July 2005 but prior to the Payment Date in July 2006,
one percent (1%) of the principal amount of the Loan being prepaid and (iii)
thereafter, none.
"PROPERTIES" and "PROPERTY" means, collectively or individually, the
properties (including land and Improvements) described in EXHIBIT A, together
with all Improvements now or hereafter located thereon and all related
facilities, amenities and FF&E owned by the applicable Mortgage Borrowers and
which shall be encumbered by and are more particularly described in the
respective Mortgages; provided that, following a Property Release, "PROPERTIES"
and "PROPERTY" means each of the Properties or the Property, as applicable, that
remain encumbered by the Mortgages as Collateral for the Mortgage Loan.
"PROPERTY IMPROVEMENT PLAN" means, collectively, those certain property
improvement plans for the Properties described on EXHIBIT G and any future
Property Improvement Plans required to be implemented by the applicable
Franchisor.
"PROPERTY RELEASE" has the meaning given such term in the Mortgage Loan
Agreement.
"RATING AGENCY" means, 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, means: (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
17
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, means 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 "AA-" by Fitch, if deposits are held by such Person for a
period of one month or more.
"RECEIPTS" means 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 Mortgage Borrowers or any
Related Person of the Mortgage Borrowers in lieu of rent or other payment.
"RELATED PERSON" means any Person in which the Borrower or the Guarantor
holds greater than a ten percent (10%) equity interest.
"RELEASE PRICE" has the meaning given such term in the Mortgage Loan
Agreement.
"RENT ROLLS" has the meaning set forth in Section 3.1.
"RENTS" has the meaning given such term in the Mortgages.
"REPLACEMENTS" has the meaning given such term in Section 6.4 of the
Mortgage Loan Agreement.
"RESERVE SUB-ACCOUNTS" has the meaning given such term in Section 7.1 of
the Mortgage Loan Agreement.
"RESERVES" means the reserves established by or on behalf of Mortgage
Lender pursuant to the Mortgage Loan Documents including the reserves
established pursuant to Article VI of the Mortgage Loan Agreement, and the
reserves held by or on behalf of Lender pursuant to this Loan Agreement or the
other Loan Documents.
"RESTORATION" has the meaning given such term in the Mortgage Loan
Agreement.
"REVPAR" means average room revenues per available room per day.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"SALE PROPERTY" and "SALE PROPERTIES" have the meanings given such terms
in the Mortgage Loan Agreement.
"SCHEDULED MATURITY DATE" means the Payment Date in June 2006.
18
"SCHEDULED MEZZANINE PRINCIPAL PAYMENTS" means the monthly payments of
principal for each Payment Date as set forth on Schedule 2.4 attached hereto;
which payment amounts were calculated based upon a twenty-five (25) year
amortization schedule at an assumed interest rate of eight and four tenths
percent (8.4%) per annum. In the event that the amount of principal prepayments
on the Loan from Collateral Releases under Section 11.4 or application of
casualty insurance proceeds or condemnation awards under Section 5.5 shall
exceed $10,000,000, in the aggregate, from the Closing Date or from the date of
the last re-amortization of the Loan under this sentence, Lender shall
recalculate the Scheduled Mezzanine Principal Payments based upon the then
remaining principal amount of the Loan and the foregoing assumptions and deliver
a revised Schedule 2.4 to the Borrower, which revised schedule shall replace
Schedule 2.4 hereto in its entirety.
"SCHEDULED MORTGAGE PRINCIPAL PAYMENTS" has the meaning given such term in
the Mortgage Loan Agreement.
"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" means a rated offering of securities representing direct
or indirect interests in the Loan or the right to receive income therefrom.
"SERVICER" means a servicer or servicers selected by Lender from time to
time in its sole discretion to service the Loan.
"SERVICING FEE" has the meaning set forth in Section 2.11.
"SPECIFIED APPROVAL" means any request for Lender approval required to be
submitted by the Borrower under Section 5.1(D) [Budgets]; Section 5.5(A)
[Material Alterations]; Section 5.12 [Leases]; Section 5.13
[Management/Franchise Agreements]; Section 11.1 [Transfers]; or Section 11.3
[Assumptions].
"STOCK INTERESTS" has the meaning given such term in the Pledge Agreement.
"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) a calculation of the Debt
Service Coverage Ratio and the Debt Yield for the applicable period (which shall
not be
19
binding on Lender), and (iv) such other financial reports as the subject entity
shall routinely and regularly prepare.
"SURVEY" has the meaning set forth in Section 3.1.
"TAX LIABILITIES" has the meaning set forth in Section 2.9.
"TEST RATE" means an interest rate equal to the greater of (x) the then
current yield on the ten (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 3.40%.
"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 LandAmerica Title Insurance Company, Stewart Title
Company of New York and/or such other national title insurance company as may be
acceptable to Lender.
"TITLE POLICIES" means the mezzanine title insurance policy, or similar
title insurance policy, 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, (y) the failure to pay to any Franchisor
any amount due under any Franchise Agreement (a "FRANCHISE PAYMENT Default") and
the continuance thereof beyond any applicable notice and grace period under such
Franchise Agreement or the occurrence of one or more breaches or defaults (other
than Franchise Payment Defaults), and the continuance thereof beyond all
applicable notice and grace periods, if any, under such Franchise Agreements (or
such other cure periods as may be provided by the applicable Franchisors in
writing) covering Properties with Aggregate Allocated Loan Amounts of ten
percent (10%) or more of the Aggregate Outstanding Principal Balance; provided,
however, no Uncured Franchise Default shall be deemed to have occurred under
clause (x) above with respect to any Property (excluding
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the Non-Flagged Properties) following the voluntary or involuntary termination
of the applicable Franchise Agreement if (a) within ten (10) Business Days of
the termination of such Franchise Agreement (and at the time of delivery of each
report pursuant to Section 5.1(A)(v)) the Borrower delivers to Lender evidence
reasonably satisfactory to Lender that the applicable Mortgage Borrower is
diligently pursuing efforts to enter into a new Franchise Agreement with an
Acceptable Franchisor for the applicable Property and shall thereafter
diligently and continuously pursue such efforts to enter into a new Franchise
Agreement, (b) at the time of such termination not more than the lesser of (i)
two (2) Properties, or (ii) Properties with Aggregate Allocated Loan Amounts of
five percent (5%) of the Aggregate Outstanding Principal Balance, in either
case, shall be in operation for more than five (5) consecutive days without
being subject to Franchise Agreements, and (c) no Property (other than any
Non-Flagged Property) 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.
"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.
"WORK" has the meaning given such term in the Mortgage Loan Agreement.
"WORK RESERVES" has the meaning given such term in Section 6.7 of the
Mortgage Loan Agreement.
"ZONING REPORTS" means those certain zoning and site requirements
summaries for the Properties as described on EXHIBIT K.
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
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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 Borrower contained
herein, Lender agrees to lend to the Borrower, and the Borrower agrees to borrow
from Lender, a loan in the original principal amount of $_______ (the "LOAN").
(B) NOTE. On the Closing Date, the Borrower shall execute and deliver to
Lender a Mezzanine 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 Borrower to the order
of Lender, in the original principal amount of $_______.
(C) USE OF PROCEEDS. The proceeds of the Loan funded at Closing may be
used to (i) refinance existing indebtedness; (ii) pay all recording and filing
fees and taxes, title insurance premiums, the reasonable out-of-pocket costs and
expenses incurred by Lender and Mortgage Lender, including reasonable legal fees
and expenses of counsel to Lender and Mortgage Lender, and other costs and
expenses approved by Lender (which approval will not be unreasonably withheld)
related to the Loan; (iii) provide for general corporate purposes, including,
without limitation, payment of transaction costs and expenses incurred by the
Borrower and capital contributions to the Mortgage Borrowers. The remaining
proceeds of the Loan, if any, shall be disbursed to or as otherwise directed by
the Borrower.
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
four percent (4.0%) 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
22
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).
(D) INTEREST LAWS. Notwithstanding any provision to the contrary contained
in this Loan Agreement or the other Loan Documents, the Borrower 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 Borrower 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 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 Borrower 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 Borrower 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 Borrower shall purchase and pledge and
deliver to Lender an interest rate cap agreement satisfying the criteria set
forth below (the "CAP"), and the Borrower 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
23
five percent (5.0%) per annum (the "CAP THRESHOLD RATE"), then the Cap Provider
shall pay to Lender, on behalf of the Borrower, 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 Borrower 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 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 Borrower prior to delivery of an Acceptable Replacement
Cap, together with the required documentation with respect thereto, to Lender.
If, for any reason, the Borrower is unable to deliver a replacement Cap when
required hereunder, then at or prior to the time when the replacement Cap is due
hereunder, the Borrower 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 Borrower.
(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 Borrower shall make payments
of interest and principal on the Note as follows:
(i) The Borrower shall make a payment to Lender of interest only on
the Closing Date for the first Interest Accrual Period; and
(ii) On each Payment Date commencing with the Payment Date in July
2004, and on each Payment Date thereafter through the Maturity Date, the
Borrower shall make a payment of interest on the Loan for the Interest Accrual
Period corresponding to such Payment
24
Date, and in addition, shall make a payment of principal on the Loan in an
amount equal to the Scheduled Mezzanine Principal Payment for such Payment Date.
(B) DATE AND TIME OF PAYMENT. The Borrower 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 Borrower promises 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 Borrower 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 a
Sub-Account thereof, to make the required monthly payments to the applicable
Reserves and Sub-Account, if any, on such Payment Date, the Borrower 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.
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 Borrower 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 Pledge Agreement and the other Loan Documents,
shall be due and payable on (i) the Scheduled Maturity Date or (ii) if the
Borrower 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 Borrower 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
25
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 Borrower 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
but not more than one hundred twenty (120) days prior to the
Scheduled Maturity Date, the expiration of the First Extension
Term, or expiration of the Second Extension Term, as the case
may be;
(ii) No Event of Default shall have occurred and be continuing as
of the date the Borrower delivers the applicable Extension
Notice or as of the first (1st) day of the applicable
Extension Term;
(iii) The Debt Service Coverage Ratio for the trailing twelve (12)
month period ended (x) on the last day of the immediately
preceding calendar quarter prior to the expiration of the
First Extension Term is at least 1.30:1.0, with respect to the
Second Extension Term and (y) on the last day immediately
prior to the expiration of the Second Extension Term is at
least 1.35:1.0, with respect to the Third Extension Term, 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%; provided however, if the Debt Service Coverage Ratio
and/or the Debt Yield fail to satisfy such requirements, the
Borrower 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 Mortgage Loan Cash
Management Agreement or the Cash Management Agreement, as
applicable), 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
(on a pro-rata basis between the Loan and the Mortgage Loan)
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
Borrower 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
26
applicable Extension Term commences for each of the Second
Extension Term and the Third Extension Term;
(v) The Borrower shall execute all such documents and other
agreements as Lender shall reasonably request; and
(vi) The Borrower 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 five percent (5.0%) per annum 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 Borrower shall
be required to pay any and all reasonable out-of-pocket 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.
SECTION 2.6 PREPAYMENT.
(A) LIMITATION ON PREPAYMENT; PREPAYMENT CONSIDERATION DUE ON
ACCELERATION. The Borrower may prepay the Loan in whole, or, to the extent
expressly provided herein, in part (in amounts of at least $1,000,000), at any
time, provided that (i) the Borrower shall provide to Lender not less than
fifteen (15) days prior written notice of such prepayment, (ii) together with
such prepayment the Borrower also shall pay all accrued and unpaid interest and
all other Obligations then due and owing, (iii) if such prepayment occurs on any
day other than a Payment Date, then together therewith the Borrower 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, and (iv) the Borrowers shall pay the applicable
Prepayment Consideration.
(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
Borrower 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 in the
absence of an Event of Default, (ii) Scheduled Mezzanine Principal Payments,
(iii) in connection with prepayments made in connection with any Release of a
Sales Property, or Collateral Releases related thereto (it being agreed that the
27
Prepayment Consideration will be due with respect to all other Collateral
Releases), or (iv) upon prepayment of the Loan in full or in part during any
Extension Term (provided the amount of interest that would have accrued on the
amount being prepaid from and including the date of such prepayment through the
end of the current Interest Accrual Period 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.
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 Borrower; provided that any failure to record any transaction affecting
such balance or any error in so recording shall not limit or otherwise affect
the Borrower's 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 Borrower 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 Borrower 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 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 Borrower 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
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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 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 Borrower, 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 Borrower 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 Borrower under Section 2.10(A) or 2.10(B)
shall be paid to Lender within fifteen (15) Business Days after receipt by the
Borrower 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 Borrower, absent manifest
error. Failure on the part of Lender to demand payment from the Borrower 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 Borrower 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 Borrower 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 Borrower in accordance with the provisions of
this Section shall constitute additional interest under the Loan and shall be
secured by the Pledge Agreement and the other Loan Documents.
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(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 Borrower, Lender
or such Funding Party shall use reasonable efforts in a manner consistent with
such institution's practice in connection with loans like the Loan to eliminate,
mitigate or reduce amounts that would otherwise be payable by the Borrower 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 Borrower 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 Borrower, on prior written notice to the
Borrower. The Borrower expressly acknowledges and agrees that the Servicer's
fees (the "SERVICING FEE"), which shall in no event exceed five one-hundredths
of one percent (.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
Borrower and shall constitute a portion of the Obligations; provided, however,
that at no time shall the Borrower be liable for Servicing Fees or special
servicing fees in excess of those fees charged to Lender by the Servicer or any
special servicer.
SECTION 2.12 MORTGAGE LOAN EVENT OF DEFAULT. Notwithstanding anything to the
contrary contained herein or the other Loan Documents, if compliance by the
Borrower with the provisions of this Loan Agreement would cause an Event of
Default (as such term is defined in the Mortgage Loan Agreement) to occur, after
the giving of notice or passage of any grace periods provided for in the
Mortgage Loan Agreement, the Borrower shall notify the Lender in writing and the
Borrower shall not be in default hereunder or under the other Loan Documents by
reason of its failure to comply with such provisions. Lender reserves the right
to modify any such provisions to prevent the occurrence of an Event of Default
under the Mortgage Loan Agreement, in which case failure to comply with such
modified provisions shall not be excused hereby. Furthermore, the Borrower
acknowledges and agrees that this Section 2.12 shall in no way relieve the
Borrower from the obligation to perform any obligation under the Loan Agreement
or the other Loan Documents that may be performed by the payment of a sum of
money.
SECTION 2.13 MEZZANINE LENDER APPROVALS. (A) Lender and the Borrower acknowledge
and agree that both Mortgage Lender and Lender have certain approval rights with
respect to the operation of the Properties and other matters pursuant to the
Mortgage Loan Documents and the Loan Documents, including approval of Managers,
Franchisors, Leases, alterations and annual budgets. Notwithstanding anything to
the contrary contained herein or in the other Loan Documents, until such time as
the Mortgage Loan has been satisfied, and to the extent Lender and Mortgage
Lender shall have approval rights covering the same matters, the Borrower shall
submit such requests for approval in the following manner and shall be subject
to the following procedures (the "APPROVAL PROCEDURES"): (i) the Borrower shall
(x) with respect to any Specified Approval, deliver to Lender any such request
for any Specified Approval at least fifteen (15) days prior to the date a
corresponding request for approval shall be submitted by the Mortgage Borrowers
to the Mortgage Lenders under the Mortgage Loan Agreement (it being
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agreed that the Borrower shall not permit the Mortgage Borrowers to submit a
corresponding request for approval to the Mortgage Lenders until such fifteen
(15) day period has expired), and (y) with respect to all other requests for
approval, shall deliver such requests simultaneously to both Lender and Mortgage
Lender, (ii) following the initial submission requesting any Specified Approval
to Lender, the Borrower shall cooperate with Lender during such fifteen (15) day
period and respond to any comments or suggested changes recommended by Lender
prior to the Mortgage Borrowers submitting a corresponding request for approval
to Mortgage Lender, (iii) if the Borrower or the Mortgage Borrowers intend to
submit a request for approval to the Mortgage Lender that differs in any respect
from the matters as approved (or disapproved) by Lender, the Borrower shall, or
shall cause the Mortgage Borrowers to, submit to Mortgage Lender with any such
request, a copy of all correspondence and materials from Lender relating to
Lender's approval or disapproval of the request for the Specified Approval, and
(iv) provided the Borrower complies, and causes the Mortgage Borrowers to
comply, with the foregoing, the Borrower shall be entitled to rely on the
approval or requirements given by the Mortgage Lender in accordance with the
terms of the Mortgage Loan Documents.
(B) Until such time as the Mortgage Loan has been satisfied, if and
to the extent the consent or approval of the Mortgage Lender is required in
order for the Borrower to perform its obligations under the Loan Documents
without violating the provisions of the Mortgage Loan Documents, the Borrower
shall not be deemed in default hereunder, but shall seek all consents and
approvals of the Lender in accordance with the terms and provisions of this Loan
Agreement and the other Loan Documents and shall seek all required consents or
approvals of the Mortgage Lender under the Mortgage Loan Documents to permit the
Borrower to comply with its obligations under the Loan Documents; and the
Borrower shall not be in default if Mortgage Lender does not grant such approval
or consent.
ARTICLE III
CONDITIONS TO LOAN
SECTION 3.1 CONDITIONS TO FUNDING OF THE LOAN ON THE CLOSING DATE. The
obligation of Lender to fund the Loan is 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 Borrower 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 Borrower shall deliver to Lender a certificate duly executed by the Borrower
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 Borrower shall
execute and deliver and cause to be executed and delivered to Lender all of the
Loan Documents specified in SCHEDULE 3.1(A) to which it is a party, together
with such other Loan Documents as may be reasonably required by Lender, each,
unless otherwise noted, of even date herewith, duly
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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 pursuant to the terms of the Mortgage
Loan Agreement and this Loan Agreement, including without limitation, the
initial deposits into the Reserves and Accounts, shall have been made (and at
the Borrower's 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 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 the Borrower
by the chief financial officer (or similar officer of the Borrower) stating
that: (i) on such date, to the Borrower's Knowledge no Default exists; (ii) no
material adverse change in the financial condition or operations of the business
of the Borrower, Mortgage Borrowers or the projected cash flow of either of them
or of the Properties, in each case taken as a whole, 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 Borrower's Knowledge after due inquiry, such financial
materials fairly present the financial condition and results of operations of
the Borrower, the Mortgage Borrowers, and the Properties, in each case taken as
a whole, 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 Borrower's Knowledge after due inquiry,
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 Morris, Manning & Martin, LLP or other legal counsel for the
Borrower 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,
(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 Cash
Management Agreement has been duly authorized, executed and delivered by the
Borrower and is enforceable in accordance with its terms and the security
interests in favor of Lender in the Account Collateral have been validly created
and perfected; and (iv) neither Borrower nor Member 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
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Closing Date, Lender shall have received the following legal opinions, each in
form and substance acceptable to Lender: (a) an opinion of the Borrower's
counsel as to the enforceability of, and the creation and perfection of Liens
under, the Pledge Agreement 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 the Borrower
that, among other matters, (1) under Delaware law (x) the prior unanimous
written consent of Member (and the 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 the Borrower, including the
Independent Directors) would be required for a voluntary bankruptcy filing by
the Borrower, (y) the prior unanimous written consent of the board of directors
of Member (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 the Borrower and the bankruptcy or dissolution of Guarantor 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 the
Borrower 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 the 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 the Title Policies. The Title Policies shall be in form and substance
satisfactory to Lender.
(G) 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. 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.
(H) 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.
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(I) 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 Guarantor) and for
the Properties. If any such statements are not available for the Properties,
then the Borrower shall cause the Mortgage Borrowers to 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.
(J) OPERATING AND CAPEX/FF&E BUDGETS. 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.
(K) 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.
(L) MANAGEMENT AGREEMENT; FRANCHISE AGREEMENTS. 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 applicable Mortgage
Borrower. On or before the Closing Date, Lender shall have received copies of
the existing Franchise Agreements (including any Property Improvement Plan) and
Franchisor Letters for each of the Properties duly executed by the applicable
Franchisors.
(M) RENT ROLL. Prior to the Closing, Lender shall have received from the
Borrower a rent roll for each of the Properties (collectively, the "RENT ROLL")
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 Mortgage Borrowers under each
Material Lease, if any.
(N) MATERIAL LEASES. Prior to the Closing, Lender shall have received
true, correct and complete copies of the Material Leases, as amended.
(O) 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.
(P) PROPERTY CONDITION REPORT. 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 (the "PROPERTY CONDITION REPORTS"). Such reports shall set forth any
items of deferred maintenance at the Properties.
(Q) 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
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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.
(R) SEARCHES. Prior to the Closing Date, Lender shall have received copies
of Uniform Commercial Code, judgment, tax lien, bankruptcy and litigation search
reports with respect to the Borrower, Guarantor and Member, all dated not more
than thirty (30) days prior to the Closing Date.
(S) LEGAL FEES; CLOSING EXPENSES. The Borrower 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.
(T) 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.
(U) 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.
(V) 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 Borrower, and (ii) estoppels and agreements acceptable
to Lender, duly executed by each Ground Lessor.
(W) CONDOMINIUM PROPERTY AGREEMENTS. On or before the Closing Date, Lender
shall have received an estoppel and agreement of the Board of Managers with
respect to the Condominium Property Documents 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, the 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.
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(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.
(C) ORGANIZATION. The organizational chart set forth as SCHEDULE 4.1(C)
accurately sets forth the direct and indirect ownership structure of the
Borrower, Mortgage Borrowers and Member. The Borrower owns all direct and
indirect interests in the Mortgage Borrowers and has the power and authority to
control the actions of the Mortgage Borrowers.
SECTION 4.2 AUTHORIZATION OF BORROWING, ETC.
(A) AUTHORIZATION OF BORROWING. The Borrower has 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 Collateral 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 as set forth on SCHEDULE 4.2 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
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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. All financial statements concerning the
Borrower, its Affiliates, the Mortgage Borrowers and the Properties which have
been furnished by or on behalf of the Borrower or the Mortgage Borrowers to
Lender pursuant to this Loan Agreement present fairly the financial condition of
the Persons covered thereby as of the dates thereof and the results of their
operations for the periods then ended, and, to the Borrower's Knowledge after
due inquiry, have been prepared in accordance with GAAP consistently applied
(except as disclosed therein). Since the date of the financial 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, neither
the Borrower nor the Mortgage Borrowers shall have any outstanding Indebtedness
or Contingent Obligations other than the Obligations or any other Permitted
Indebtedness.
SECTION 4.5 TITLE TO THE PROPERTIES AND COLLATERAL. Each of the Mortgage
Borrowers has good and marketable fee simple title (or, in the case of the
Ground Leased Properties, leasehold title) to its Property, free and clear of
all Liens except for the Permitted Encumbrances. The Mortgage 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
Mortgage Borrowers as permitted hereunder), subject only to Permitted
Encumbrances. The Borrower is the record and beneficial owner and owns good and
indefeasible title to the Collateral, free and clear of all Liens. There are no
outstanding options to purchase or rights of first refusal affecting the
Collateral. To the Borrower's Knowledge, except as set forth on 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.
Except as set forth on Schedule 4.5(A), 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 Borrower's 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. None of the Permitted Encumbrances, individually or in
the aggregate, materially interfere with the benefits of the security intended
to be provided by the Pledge Agreement and this Loan Agreement, materially and
adversely affect the value of any of the Collateral or impair the Borrower's
ability to pay its obligations in a timely manner.
SECTION 4.6 ZONING; COMPLIANCE WITH LAWS. To the Borrower's Knowledge, except as
set forth in the Zoning Reports for the Properties delivered to Lender, 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 Borrower's Knowledge, there are no illegal activities relating to
controlled substances on the Properties. To the Borrower's Knowledge, except as
set forth in the Zoning Reports for the Properties delivered to Lender, all
material permits, licenses and certificates for the lawful use, occupancy and
operation of each component of the Properties in the manner in which it is
currently being used,
37
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 set forth
in the Zoning Reports for the Properties delivered to Lender, in the event that
all or any part of the Improvements located on the Properties 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 Borrower's
Knowledge, no legal proceedings are pending or threatened with respect to the
zoning of the Properties. To the Borrower's Knowledge, except as set forth in
the Title Policies and/or the Survey, each as defined in and delivered to the
Mortgage Lender pursuant to the Mortgage Loan Agreement, neither the zoning nor
any other right to construct, use or operate the Properties is in any way
dependent upon or related to any real estate other than the Properties. The
Borrower will not permit any tract map, parcel map, condominium plan,
condominium declaration, or plat of subdivision will be recorded by the Mortgage
Borrowers with respect to the Properties without Lender's prior written consent,
which consent shall not be unreasonably withheld, delayed or conditioned.
SECTION 4.7 LEASES; AGREEMENTS.
(A) LEASES; AGREEMENTS. The Borrower has delivered to Lender true and
complete copies (in all material respects) of all (i) Leases for more than five
hundred (500) square feet of space at any Property 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, if any, the Properties are not 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 Borrower's
Knowledge, (i) the Material Leases are in full force and effect; (ii) the
Mortgage 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 Mortgage 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 Borrower,
38
threatened) against the Mortgage 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 Borrower's Knowledge, each of the Material Leases is valid and
binding on the parties thereto in accordance with its terms.
(C) NO RESIDENTIAL UNITS. There are no residential units in any of the
Properties and, to the 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 AGREEMENTS. The Borrower has delivered to Lender a true and
complete copy of each Management Agreement relating to the Properties to which
the Mortgage Borrowers 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. Each such Management
Agreement is in full force and effect and no default by the Mortgage Borrowers
or Manager exists thereunder.
(E) FRANCHISE AGREEMENTS/PROPERTY IMPROVEMENT PLANS. The Borrower has
delivered to Lender a true and complete copy of the Franchise Agreements
relating to each of the Properties to which the Mortgage Borrowers are a party,
and such Franchise Agreements have not been modified or amended except pursuant
to amendments or modifications delivered to Lender. To the Borrower's Knowledge,
(i) each Franchise Agreement is in full force and effect and (ii) except as set
forth on SCHEDULE 4.7(E), no material default by the Mortgage Borrowers, Manager
or the applicable Franchisors exists thereunder. The defaults listed on SCHEDULE
4.7(E), individually and in the aggregate, do not and will not have a Material
Adverse Effect. Except for the Property Improvement Plans set forth on EXHIBIT G
attached hereto, there are no other property improvement plans or similar
capital improvement plans or obligations required by any Franchisor pursuant to
any Franchise Agreement, in effect for any of the Properties.
SECTION 4.8 CONDITION OF THE PROPERTIES. To the Borrower's Knowledge, except as
set forth in the Property Condition Reports 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 good condition and repair. Except as disclosed
in the Property Condition Reports, (i) the Borrower is 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 the applicable
Property (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 the applicable Property as now used or presently
contemplated to be used, and no other utility facilities are necessary to meet
the reasonable needs of the applicable Property as now used or presently
contemplated. Except as may be shown on the Surveys, to the Borrower's Knowledge
no part of any Property is within a flood plain and none of the Improvements
create encroachments over, across or upon any Property's 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 Property for the current and contemplated uses
39
thereof have been completed and are serviceable and are physically and legally
open for use by the public. To the Borrower's Knowledge after due inquiry, and
except as disclosed in the Property Condition Reports, any septic system located
at the Properties is in good and safe condition and repair and in compliance
with all applicable law.
SECTION 4.9 REPRESENTATIONS AND WARRANTIES OF THE MORTGAGE BORROWERS. All of the
representations and warranties of the Mortgage Borrowers or any Affiliate of the
Mortgage Borrowers made under the Mortgage Loan Documents are true, complete and
correct in all material respects.
SECTION 4.10 PAYMENT OF TAXES. All federal, state and local tax returns and
reports of the Borrower required to be filed have been timely filed (or the
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 the Borrower and upon its
properties, assets, income and franchises which are due and payable have been
paid. To the Borrower's Knowledge, no taxes which are due and payable remain
unpaid and no claims are being asserted with respect to any such taxes.
SECTION 4.11 ADVERSE CONTRACTS. Except for the Loan Documents, none of the
Borrower or Member 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. The Borrower is not in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Contractual Obligation of the Borrower 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. The Borrower is not 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
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 the 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 Borrower
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 the Borrower Parties' actions.
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SECTION 4.16 LITIGATION; ADVERSE FACTS. Except as set forth on SCHEDULE 4.16,
there are no judgments outstanding against the Borrower or any Mortgage
Borrower, or affecting any of the Collateral or any property of the Borrower or
of the Mortgage Borrowers, nor is there any action, charge, claim, demand, suit,
proceeding, petition, governmental investigation or arbitration now pending or,
to the Borrower's Knowledge, threatened against the Borrower or any Mortgage
Borrower, that could reasonably be expected to result in a Material Adverse
Effect. To the Borrower's Knowledge after due inquiry, the actions, charges,
claims, demand, suits, proceedings, petitions, investigations and arbitrations
set forth on SCHEDULE 4.16 are not reasonably expected to result, either
individually or in the aggregate, in any Material Adverse Effect.
SECTION 4.17 SOLVENCY. The Borrower (a) has 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 aggregate
fair saleable value of the Borrower's assets exceeds and will, immediately
following the making of the Loan, exceed the Borrower's total liabilities,
including, without limitation, subordinated, unliquidated, disputed and
Contingent Obligations. The aggregate fair saleable value of the Borrower's
assets is and will, immediately following the making of the Loan, be greater
than the Borrower's probable total liabilities, including the maximum amount of
its Contingent Obligations on its debts as such debts become absolute and
matured. The 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 Borrower does not
intend to, and does not believe that it 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 Borrower and the amounts to be
payable on or in respect of obligations of the Borrower).
SECTION 4.18 DISCLOSURE. No financial statements furnished to Lender by or on
behalf of any 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 Borrower that has
had or could reasonably be expected to have a Material Adverse Effect and that
has not been disclosed in writing to Lender by the Borrower.
SECTION 4.19 USE OF PROCEEDS AND MARGIN SECURITY. The Borrower 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 Borrower 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.
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SECTION 4.20 SECURITY INTERESTS. Upon execution and delivery of the Pledge
Agreement, delivery to Lender of the certificates, if any, representing the LLC
Interests, the LP Interests and the Stock Interests, and the filing of the
Financing Statements with the Secretary of State of the State of Delaware,
Lender shall have a first priority perfected security interest in the
Collateral, subject to the Permitted Encumbrances.
SECTION 4.21 INVESTMENTS. The Borrower does not have any (i) direct or indirect
interest in, including without limitation stock, partnership interest or other
securities of, any other Person (other than the Beverage Companies) not pledged
to Lender pursuant to the terms of the Pledge Agreement, or (ii) direct or
indirect loan, advance or capital contribution to any other Person, including
all indebtedness and accounts receivable from that other Person.
SECTION 4.22 DEFAULTS. To the Borrower's Knowledge, except as disclosed to
Lender in writing herein or in any of the Loan Documents, no Default exists.
SECTION 4.23 NO PLAN ASSETS. The Borrower is not and will not 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 Borrower has 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 4.24 GOVERNMENTAL PLAN. The Borrower is not and will not be a
"governmental plan" within the meaning of Section 3(32) of ERISA and
transactions by or with the Borrower are not and will not be subject to state
statutes applicable to the Borrower's regulating investments of and fiduciary
obligations with obligations with respect to governmental plans.
SECTION 4.25 NOT FOREIGN PERSON. The Borrower is not a "foreign person" within
the meaning of Section 1445(f)(3) of the IRC.
SECTION 4.26 NO COLLECTIVE BARGAINING AGREEMENTS. Except as set forth on
SCHEDULE 4.26, no Borrower Party is a party to any collective bargaining
agreement.
SECTION 4.27 BANKRUPTCY. No Borrower Party is a debtor, and no property of any
of them (including any Property) is property of the estate, in any voluntary or
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or other similar law now or hereafter in effect. No
Borrower Party and no property of any of them is under the possession or control
of a receiver, trustee or other custodian. No Borrower Party has made any
assignment for the benefit of creditors. No such assignment or bankruptcy or
similar case or proceeding is now contemplated.
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SECTION 4.28 NO PROHIBITED PERSONS. Neither any Borrower Party nor any of their
respective officers, directors, partners, members, Affiliates or, to the
knowledge of the Borrower, shareholders is an entity or person: (i) that is
listed in the Annex to, or is otherwise subject to the provisions of Executive
Order 13224 issued on September 24, 2001 ("EO13224"); (ii) whose name appears on
the United States Treasury Department's Office of Foreign Assets Control
("OFAC") most current list of "Specifically Designated National and Blocked
Persons" (which list may be published from time to time in various mediums
including, but not limited to, the OFAC website,
http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to commit or
supports "terrorism", as that term is defined in EO 13224; or (iv) who is
otherwise affiliated with any entity or person listed above (any and all parties
or persons described in clauses (i) through (iv) above are herein referred to as
a "PROHIBITED PERSON").
ARTICLE V
COVENANTS OF BORROWER PARTIES
The Borrower covenants and agrees that until payment in full of the Loan,
all accrued and unpaid interest and all other Obligations, the Borrower shall
perform and comply with all covenants in this Article V.
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 Borrower shall, and shall cause Mortgage
Borrowers (on a consolidated basis) to, provide true and complete copies of
their Financial Statements for such year to Lender, and within ninety (90) days
after the end of each calendar year, Guarantor shall provide true and complete
copies of its 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. Such annual Financial
Statements shall be accompanied by a certification executed by the 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 - THE BORROWER. Within forty-five (45) days
after the end of each calendar quarter, the Borrower shall provide copies of its
Financial Statements for such quarter to Lender (including the Financial
Statements of Mortgage Borrowers on a consolidated basis), together with a
certification executed on behalf of the Borrower 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. Such quarterly
Financial Statements shall be accompanied by Supplemental Financial Information
and a Compliance Certificate for such quarter.
43
(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 the end of
each calendar year, the Borrower shall provide, or cause the Mortgage Borrowers
to 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 the end of each calendar year, the
Borrower shall also provide, or cause the Mortgage Borrowers to provide, to
Lender (a) a schedule of any retail Material Leases that expired during such
calendar year and a schedule of retail Material Leases scheduled to expire
within the next calendar year and (b) to the extent the Mortgage Borrowers
received notice thereof, a list of any retail tenants under Material Leases that
filed bankruptcy, insolvency or reorganization proceedings during such calendar
year. Within ninety (90) days after the end of each calendar year, the Borrower
shall provide, or cause the Mortgage Borrowers to provide, to the extent
provided to the Borrower or the Mortgage Borrowers and not subject to
confidentiality restrictions, to Lender a statement of income and expenses for
all retail space at each of the Properties and sales reports for retail tenants
for such year.
(v) MONTHLY REPORTING. Within thirty (30) days after the end of each
calendar month, the Borrower shall provide, or cause Manager or the Mortgage
Borrowers 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 each of 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 and for the trailing
twelve (12) month period then ended, 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 each 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) and setting forth that all
disbursements and/or withdrawals, as applicable, from the Capital Improvement
Reserve and the FF&E Reserve have been made with respect to items of Capital
Improvement only (as opposed to items that, in accordance with GAAP, would be
included as an Operating Expense); (e) monthly and year to date detailed reports
of Operating Expenses for each of the Properties, 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)(v) of the Cash Management Agreement; (f) most
recently available "OSI", or similar quality index scores (including detailed
information regarding criteria and thresholds); and (g) prior to Securitization
(as such term is defined in the Mortgage Loan Agreement) of the Mortgage Loan,
market segmentation reports for the trailing twelve (12) month period for each
of the Properties; and (h) a report setting forth (i) 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
44
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 that the Borrower is 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 Mortgage 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.
All of the above statements, reports and information shall be provided to Lender
by email in Microsoft Excel format or other spreadsheet format reasonably
acceptable to Lender (in the case of any statements, reports or information
provided by third parties that are not Affiliates of the Borrower, to the extent
same are available in such format). Along with such operating statements, each
Borrower shall deliver to Lender a Compliance Certificate of the 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
Borrower shall, and shall cause the Mortgage Borrowers, 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 Borrower.
(vii) GAAP; UNIFORM SYSTEM. The Borrower will, and will cause the
Mortgage Borrowers, 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 Borrower or
Guarantor under this Section, the Borrower or Guarantor also shall deliver to
Lender a certification to Lender, executed on behalf of the applicable Person by
its 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 Borrower, 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
45
their Knowledge after due inquiry, there does not exist any Default or Event of
Default under the Loan Documents (or if any exists, specifying the same in
detail), and (b) the Borrower and Guarantor have complied with the applicable
reporting requirements of this Section 5.1.
(ix) FISCAL YEAR. The Borrower's, Guarantor's, and the Mortgage
Borrowers' fiscal years each end on December 31, and no change shall be
permitted with respect to any such fiscal year, without Lender's prior written
consent.
(B) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, the 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 the Borrower or the
Mortgage Borrowers 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, the
Borrower shall deliver, and shall cause the Mortgage Borrowers to deliver, to
Lender a copy of its Federal income tax returns (or the return of the applicable
Person into which the Borrower's and/or the Mortgage Borrowers' Federal income
tax returns are 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. Prior to February 1 of
each calendar year, the Borrower shall deliver, or cause the Mortgage Borrowers
to deliver, to Lender for its review for the Properties a proposed Operating
Budget and CapEx/FF&E Budget (in each case presented on a monthly and annual
basis) for such calendar year. Each Operating Budget and CapEx/FF&E Budget shall
be subject to Lender's approval which shall not be unreasonably withheld,
conditioned or delayed. Provided that no Cash Trap Event or Event of Default
exists, the Borrower may allow changes to be made to the Operating Budget and
the CapEx/FF&E Budget from time to time as deemed reasonably necessary by the
Mortgage Borrowers, provided no such modification (together with all prior
modifications taken as a whole) 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;
provided, however, during a Cash Trap Event, increases to the Operating Budget
(not to exceed ten percent (10%) of the Operating Budget as a whole) will be
permitted without Lender's consent for actual verifiable increases in utilities,
water, and sewer over the amounts set forth in the Operating Budget for the
applicable period. Notice of any modifications to an Operating Budget and a
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 and the CapEx/FF&E
Budget for the 2004 calendar year. The proposed Operating Budget shall identify
and set forth the Mortgage Borrowers' 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 such budget or plan, as applicable, shall promptly be
amended and resubmitted for approval, making such changes as are necessary to
comply with the reasonable requirements of Lender. Until any such budget or plan
for any year requiring Lender's approval is approved or deemed approved, subject
to the terms of the
46
Mortgage Loan Documents, 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 Borrower 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 Lender fails to respond or to expressly deny such request for
approval in writing within the fifteen (15) day period.
(E) MATERIAL NOTICES.
(i) The Borrower 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 the 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 Borrower 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 any of the
Properties.
(F) EVENTS OF DEFAULT, ETC. Promptly upon the Borrower obtaining knowledge
of any of the following events or conditions, the 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 the 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 the Borrower obtaining knowledge of (1) the
institution of any action, suit, proceeding, governmental investigation or
arbitration against the Borrower, any of the Properties, or the Collateral, not
previously disclosed in writing by the Borrower 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 Borrower, or the Mortgage Borrowers, or the Properties which, in
each case, if adversely determined would reasonably be expected to have a
Material Adverse Effect, the Borrower will give notice thereof to Lender and,
upon request from Lender, provide such other information as may be reasonably
available to it to enable Lender and its counsel to evaluate such matter.
47
(H) INSURANCE. At least five (5) Business Days prior to the end of each
insurance policy period of the Mortgage Borrowers, the Borrower shall cause to
be delivered to Lender 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 Mortgage
Borrowers, and all material insurance coverage planned to be maintained by the
Mortgage 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, the Borrower will
deliver such other information and data with respect to such Person, the
Mortgage Borrowers, their Affiliates, and the Properties as from time to time
may be reasonably requested by Lender.
SECTION 5.2 EXISTENCE; QUALIFICATION. The Borrower will at all times preserve
and keep in full force and effect its existence as a limited liability company
and all rights and franchises material to its business, including its
qualification to do business in each state where it is required by law to so
qualify. Without limitation of the foregoing, the Borrower and Member, shall at
all times be qualified to do business in each of the states where such
qualification is required to continue the business of the Borrower as in effect
on the Closing Date.
SECTION 5.3 PAYMENT OF IMPOSITIONS AND CLAIMS.
(A) The Borrower will pay, or cause to be paid, all federal, state and
local income taxes, sales taxes, excise taxes and all other taxes and
assessments of the Borrower on its business, income or assets; in each instance
before any penalty or fine is incurred with respect thereto.
(B) The Borrower shall cause the Mortgage Borrowers to pay, discharge or
remove any Imposition or Claim relating to the Properties owned by such Mortgage
Borrowers in accordance with the terms of the Mortgage Loan Agreement.
SECTION 5.4 MAINTENANCE OF INSURANCE.
The Borrower shall cause the Mortgage Borrowers to continuously maintain
the policies of insurance (all such policies, the "INSURANCE POLICIES") required
pursuant to the terms of Section 5.4 of the Mortgage Loan Agreement, including
meeting all insurer requirements thereunder (it being agreed that, following
satisfaction of the Mortgage Loan, the requirements of Section 5.4 of the
Mortgage Loan Agreement shall be deemed to be the continuing obligations of the
Borrower and the Mortgage Borrowers for as long as the Loan is outstanding and
this Agreement is in effect).
The provisions of Section 5.4 of the Mortgage Loan Agreement are
incorporated herein by reference. The Lender shall be named as an additional
insured or loss payee under such policies to the extent that Mortgage Lender is
required to be named as such under the Mortgage Loan Agreement. Upon request
from Lender, Lender shall be entitled to receive copies of any insurance
policies obtained by Mortgage Lender to the extent and at the time such policies
are delivered to the Mortgage Lender by the Mortgage Borrowers. 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 Mortgage
48
Lender or Lender without ten (10) days' advance written notice to Lender. The
Borrower 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 event that such premiums have not been paid by Lender pursuant to
the Loan Agreement.
SECTION 5.5 OPERATION AND MAINTENANCE OF THE PROPERTIES; CASUALTY.
(A) The Borrower shall, and shall cause the Mortgage Borrowers to, 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 Mortgage 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 of the Mortgage Borrowers,
including the applicable Property, and will make or cause to be made all
appropriate repairs, renewals and replacements thereof. Without limitation of
the foregoing, the Borrower shall, and shall cause the Mortgage Borrowers to,
operate and maintain the Properties 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
Borrower may and may permit the Mortgage Borrowers to, without Lender's consent,
perform alterations to the Properties which do not constitute a Material
Alteration. The Mortgage Borrowers shall not be permitted to perform any
Material Alteration without Lender's prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed; 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 Mortgage Borrowers may be permitted to 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 Borrower
delivers 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 Borrower delivers
to Lender evidence reasonably satisfactory to Lender that the Mortgage Borrowers
have cash available for payment of the cost of such Material Alteration or, if
the Borrower fails 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, unless such amounts have
previously been deposited with Mortgage Lender pursuant to the terms of the
Mortgage Loan Documents. Cash deposited by the Borrower 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
Borrower to pay for the cost of such Material Alteration as such work progresses
subject to satisfaction of the conditions for
49
disbursement of amounts from the Capital Improvements Reserve under Section 6.4
(including the requirements set forth under Section 6.6). Upon completion of the
Material Alteration, the Borrower 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
Borrower 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
Borrower shall give, or shall cause the Mortgage Borrowers to give, immediate
written notice of the same to the insurance carrier and to Lender. The terms of
the Mortgage Loan Documents will govern the application and distribution of
insurance and condemnation proceeds until the Mortgage Loan has been paid in
full. Any insurance and/or condemnation proceeds payable with respect to any of
the Properties securing the Mortgage Loan shall be paid directly to Mortgage
Lender pursuant to the terms of the Mortgage Loan Documents until the Mortgage
Loan has been paid in full and, thereafter, shall be paid to Lender pursuant to
this Loan Agreement and the Cash Management Agreement. Upon application of any
casualty or condemnation proceeds by Mortgage Lender and repayment in full of
the Mortgage Loan, if the Loan remains outstanding, any remaining insurance or
condemnation proceeds shall be disbursed into the Cash Management Agreement and,
at Lender's election, applied to prepay the Loan without the imposition of any
Prepayment Consideration on the Payment Date immediately following such
election. If Lender elects to apply all of such insurance proceeds toward the
repayment of the Obligations, the Borrower shall (subject to compliance with
clauses (A), (B), (D) and (F) - (H) of Section 11.4) be entitled to obtain from
Lender a Collateral Release (without representation or warranty) relating to
such Property, provided that the Borrower pays to Lender the amount, if any, by
which the Collateral Release Price for such Collateral exceeds the insurance
proceeds received by Lender and applied to repayment of the Obligations.
SECTION 5.6 INSPECTION. The Borrower shall, and shall cause the Mortgage
Borrowers to, permit any authorized representatives designated by Lender to
visit and inspect during normal business hours the Properties 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 the 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 to
the Borrower or the Mortgage Borrower of at least three (3) Business Days prior
to visiting or inspecting any of the Properties or the Borrower's offices.
50
SECTION 5.7 O&M PLAN. The Borrower shall cause the Mortgage Borrowers to comply
fully with the O&M Plans pursuant to the terms of the Mortgage Loan Agreement
and this Loan Agreement.
SECTION 5.8 INTENTIONALLY DELETED.
SECTION 5.9 COMPLIANCE WITH LAWS AND CONTRACTUAL OBLIGATIONS. The Borrower will,
and will cause the Mortgage Borrowers to, (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 on the
operation or value of any Property, (B) maintain all licenses and permits now
held or hereafter acquired by the Borrower and the Mortgage Borrowers, the loss,
suspension, or revocation of which, or failure to renew, could have a material
adverse effect on the operation or value of any Property 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 Borrower 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. The Borrower shall, and shall
cause the Mortgage Borrowers to, duly and punctually perform, observe and comply
in all material respects with all of the terms, provisions, conditions,
covenants and agreements on its or their 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 on the operation or
value of any Property.
SECTION 5.12 LEASES. (A) Without the prior written consent of Lender, which
shall not be unreasonably withheld or delayed, the Borrower shall not, and shall
not permit the Mortgage Borrowers, nor shall the Borrower authorize the Mortgage
Borrower 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 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
51
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 Borrower shall, or shall
cause the Mortgage Borrowers to, 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 Borrower 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 Lender fails to
respond or to expressly deny such request for approval in writing within the
fifteen (15) 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
Mortgage Borrowers shall not under any circumstances be permitted to collect any
such rent more than one month in advance. The Borrower, at Lender's request,
shall, or shall cause the Mortgage Borrowers to, furnish Lender with executed
copies of all Material Leases hereafter made.
SECTION 5.13 MANAGEMENT; FRANCHISE AGREEMENTS.
(A) The Borrower shall cause the Properties to be managed in accordance
with the Management Agreements including, without limitation, maintaining
inventory in amounts and types customary for hotels comparable to each Property.
The Borrower shall, and shall cause the Mortgage Borrowers to (i) perform and
observe all of the material terms, covenants and conditions of the Management
Agreements on the part of the Mortgage Borrowers to be performed and observed,
and (ii) promptly notify Lender of any notice of any material default under the
Management Agreements of which it is aware. If any Mortgage Borrower shall
default in the performance or observance of any material term, covenant or
condition of the applicable Management Agreement on the part of such Mortgage
Borrower 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 Borrower or such Mortgage Borrower 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 such Mortgage Borrower to be performed or observed.
52
(B) The Borrower shall not, and shall not permit the Mortgage Borrowers
to, 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, 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. The Borrower shall cause,
or shall cause the Mortgage Borrowers to cause, any new Manager with respect to
any Property to execute and deliver a subordination of management agreement in
substantially the form delivered in connection with the closing of the Mortgage
Loan.
(C) Lender shall have the right, subject to the rights of Mortgage Lender
under the terms of the Mortgage Loan Agreement, to require the replacement of
any Manager with a Person chosen by the Borrower 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 Borrower 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 Borrower shall not, and shall not permit the Mortgage Borrowers
not to terminate or enter into any Franchise Agreement without Lender's prior
written consent, which may be granted or withheld in Lender's sole discretion.
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 another Franchisor within the same Category,
provided that the Borrower shall not cause or permit the Mortgage
Borrowers to replace Franchise Agreements (in the aggregate)
pursuant to this Section 5.13(D)(ii) with respect to more than the
lesser of (x) three (3) 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 that the
Borrower shall not cause or permit the Mortgage Borrowers to replace
Franchise Agreements (in the aggregate) pursuant to this Section
5.13(D)(iii) with respect to more than the lesser of (x) two (2)
Properties, or (y) Properties with Aggregate Allocated Loan Amounts
(in the aggregate) of three percent (3%) of the Aggregate
Outstanding Principal Balance (in each case under clauses (x) or
(y), exclusive of the Franchise
53
Agreement for the Holiday Inn, located at 5252 New Jessup Highway,
Brunswick, Georgia 31525, which is in the process of being reflagged
as a "Park Inn");
(iv) Entering into a new Franchise Agreement in form substantially
similar to a form previously approved by Lender with an Acceptable
Franchisor for any of the Non-Flagged Hotels, at which time the
applicable Property shall be deemed to be within the Category
determined by the applicable Franchise Agreement;
(v) Entering into a new Franchise Agreement in form substantially
similar to a form previously approved by Lender with Park
Hospitality LLC under the "Park Inn" brand for the hotel located at
5252 New Jessup Highway, Brunswick, Georgia 31525 at which time the
applicable Property shall be deemed to be a Tier 3 Hotel; and
(vi) Entering into new Franchise Agreements (or amendments or addenda to
existing Franchise Agreements) with the existing Franchisors for the
applicable Properties for the same franchise brand, each in form
substantially similar to the forms previously approved for the
respective Properties by Lender, as required by the existing
Franchisors under the respective Franchise Agreements in connection
with the transfers of the applicable Properties and the direct and
indirect ownership interests in the Mortgage Borrowers made by the
Borrower Parties and their Affiliates in connection with the Closing
of the Loan.
In connection with the replacement of any Franchisors permitted
hereunder, the Borrower shall cause the applicable Mortgage Borrower to, 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, the 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 Franchise Agreement. In addition, the Borrower shall not, and shall not
permit any Mortgage Borrower to, 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.
54
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 Borrower
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 Lender fails to respond or to expressly deny such
request for approval in writing within the fifteen (15) day period.
SECTION 5.14 MATERIAL AGREEMENTS. The Borrower shall not, and shall not permit
the Mortgage Borrowers to, enter into or become obligated under any Material
Agreement pertaining to any Property 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) any
Lease that does not require Lender's approval under, and otherwise complies
with, the provisions of Section 5.12 hereof, (ii) any Management Agreement that
does not require Lender's approval under, and otherwise complies with, the
provisions of Section 5.13 hereof (provided, however, that the foregoing shall
not affect the Borrower's or Mortgage Borrowers' obligation to deliver Rating
Confirmations with respect to any such Management Agreement if required under
Section 5.13), (iii) the existing Material Agreements described on SCHEDULE 5.14
attached hereto, (iv) any Franchise Agreement that does not require Lender's
approval under, and otherwise complies 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 Borrower will cause all
Receipts from the Properties to be deposited into, and shall otherwise comply
with, the applicable Accounts established from time to time under the Mortgage
Loan Cash Management Agreement and/or the Cash Management Agreement. Subject to
Article VII hereof and the Cash Management Agreement, the 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
Borrower 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 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 Pledge Agreement and the other Loan Documents are legal, valid and
binding obligations of the Borrower and have not been modified or amended, or if
modified or amended, describing such modification or amendments.
55
(B) Within ten (10) Business Days following a written request by the
Borrower, Lender shall provide to the Borrower 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 Borrower 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 Borrower will not, and will not permit the
Mortgage Borrowers to, 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) The Mortgage Loan; and
(C) (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 the Properties 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 referred to in clauses (i) and (ii)
above outstanding does not, at any time, exceed five percent (5%) of the
outstanding principal balance of the Loan.
In no event shall any Indebtedness other than the Mortgage Loan be
secured, in whole or in part, by the Properties or any portion thereof or
interest therein, nor shall any Indebtedness other than the Loan be secured, in
whole or in part, by the Collateral or any portion thereof or interest therein.
SECTION 5.18 NO LIENS. The obligations of the Borrower under this Section are in
addition to and not in limitation of its obligations under Article XI herein.
The Borrower shall not, and shall not permit the Mortgage Borrowers to, create,
incur, assume or permit to exist any Lien on or with respect to the Properties,
any Collateral or any direct or indirect ownership interest in the Borrower or
any Mortgage Loan Borrower, except Permitted Encumbrances.
SECTION 5.19 CONTINGENT OBLIGATIONS. Other than Permitted Indebtedness, neither
the Borrower nor Member shall directly or indirectly create or become or be
liable with respect to any Contingent Obligation.
SECTION 5.20 RESTRICTION ON FUNDAMENTAL CHANGES. Except as otherwise expressly
permitted under this Loan Agreement, neither the Borrower nor Member shall, or
shall permit any other Person to, (i) amend, modify or waive any term or
provision of the Borrower's or Member's 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 the Borrower or Member.
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SECTION 5.21 TRANSACTIONS WITH RELATED PERSONS. Except for fees and expenses
payable to Manager under the Management Agreement, the Borrower shall not, and
shall not permit the Mortgage Borrowers to, 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 the
Borrower 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 Borrower, upon fair and reasonable terms and
which are no less favorable to the Borrower than would be obtained in a
comparable arm's length transaction with a Person that is not a Related Person
of the Borrower. The Borrower shall not make any payment or permit any payment
to be made to any Related Person of the Borrower 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 the Borrower.
As used in this Loan Agreement, an "INVOLUNTARY BORROWER BANKRUPTCY" means any
involuntary case under the Bankruptcy Code or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, in which the
Borrower is a debtor or any portion of the Properties or the Collateral is
property of the estate therein. The Borrower 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 support any motion (irrespective of the subject of
the motion), and no Borrower Party shall file or support any plan of
reorganization. Each Borrower Party 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 Party 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. Neither the Borrower nor Member 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 Borrower shall not: (i) engage in any
non-exempt 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
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Benefit Plan which establishment or amendment could result in liability to the
Borrower or any ERISA Affiliate or increase the obligation of the Borrower,
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 the Borrower or its Affiliates to an excise tax under Section 4975
of the IRC.
(C) NO PLAN ASSETS. The Borrower 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 Borrower regulating investments of
governmental plans.
SECTION 5.24 PRESS RELEASE. The Borrower 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 Borrower 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 Borrower shall not permit any Mortgage Borrower
to modify or amend, 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 discretion. Any attempted or purported
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 Borrower shall cause the Mortgage
Borrowers to (i) 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, (ii) keep and maintain each Ground Lease in full force and effect,
and (iii) 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.
(C) NOTICE OF DEFAULT. If the Borrower or any of the Mortgage Borrowers
shall receive any written notice that any Ground Lease Default has occurred,
then the Borrower 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 Borrower shall provide and shall cause the Mortgage Borrowers to
provide, such documents and information as Lender shall reasonably request
concerning the Ground Lease Default.
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(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 Borrower questions or denies 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 Borrower, 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 Mortgage Borrowers' 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, the 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 Borrower
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 Borrower shall not commence, or permit the Mortgage
Borrowers to commence, any action or proceeding against any Ground Lessor or
affecting or potentially affecting any Ground Lease or the Mortgage 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 Borrower shall notify Lender immediately if any action or
proceeding shall be commenced between any Ground Lessor and the Mortgage
Borrowers, or affecting or potentially affecting any Ground Lease or the
Mortgage Borrowers' or Lender's interest therein (including, without limitation,
any case commenced by or against any Ground Lessor under the Bankruptcy Code).
Lender shall have the option, exercisable upon notice from Lender to the
Borrower, to participate in any such action or proceeding with counsel of
Lender's choice. The Borrower shall cause the Mortgage Borrowers to 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, from time to time, at Lender's request, the Borrower
shall, or shall cause the Mortgage Borrowers to, 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
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Ground Lessor under the applicable Ground Lease. The Borrower 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 Borrower shall
not permit the Mortgage Borrowers to 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.
(ii) The Borrower acknowledges and agrees that in any case commenced
by or against the Borrower or the Mortgage Borrowers under the Bankruptcy Code,
Lender by reason of the liens and rights granted under the Pledge Agreement and
the Loan Documents shall have a substantial and material interest in the
treatment and preservation of such Mortgage Borrower's rights and obligations
under such Ground Lease, and that the Borrower shall, in any such bankruptcy
case, provide to Lender immediate and continuous reasonably adequate protection
of such interests. The Borrower and Lender agree that such adequate protection
shall include but shall not necessarily be limited to the following:
(a) The Borrower 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
Borrower or the Mortgage Borrowers on any other party in the bankruptcy case
shall be contemporaneously served by the Borrower on Lender, and any notice,
pleading or document served upon or received by the Borrower or the Mortgage
Borrowers from any other party in the bankruptcy case shall be served by the
Borrower on Lender promptly upon receipt by the Borrower or the Mortgage
Borrower.
(b) Upon written request of Lender, the Borrower shall cause
the applicable Mortgage Borrower to assume the Ground Lease, and shall take such
steps as are necessary to preserve such Mortgage 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.
(c) If the Borrower, the Mortgage 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 thereof.
(iii) Rights of Mortgage Lender. The rights of Lender in connection
with any bankruptcy proceeding of any Ground Lessor, Borrower or the Mortgage
Borrowers under this Section 5.25(G) shall be subject and subordinate to the
rights of Mortgage Lender in connection with any such bankruptcy proceeding as
and to the extent provided in any intercreditor or similar agreement between
Lender and any Mortgage Lender.
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SECTION 5.26 CONDOMINIUM PROPERTY.
(A) NO MODIFICATION. The Borrower shall not permit the Condominium
Borrower to modify or amend any material terms of, or terminate or amend any of
the 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 Borrower
shall cause the Condominium Borrower to fully and faithfully pay when due and
payable all assessments, common charges and other charges payable by Condominium
Borrower under the Condominium Property Documents and shall perform as and when
due each of its material obligations under the 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 Borrower
shall cause the Condominium Borrower to keep and maintain each of the
Condominium Property Documents in full force and effect.
(C) NOTICE OF DEFAULT. If the Borrower or the Condominium Borrower shall
receive any written notice of any Condominium Default, the Borrower 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 Condominium Property Document asserts that a
Condominium Default has occurred (whether or not the Borrower questions or
denies such assertion), then, subject to the terms and conditions of the
applicable Condominium Property Documents, after notice to the Borrower, Lender,
upon five (5) Business Days' prior written notice to the Borrower, 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 Condominium Borrower's obligations under the
applicable 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
Condominium Property for any or all of such purposes. Upon Lender's request, the
Borrower shall submit satisfactory evidence of payment or performance of any of
its obligations under each of the 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 Borrower 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 Borrower will do, and will cause the
Condominium Borrower to do, all things necessary to preserve and to keep
unimpaired its material rights, powers and privileges under the Condominium
Property Documents and to prevent the termination or expiration of the
Condominium Property Documents, or the withdrawal of the Condominium Property
from a condominium form of ownership under
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applicable law, to the end that the Condominium Borrower may enjoy all of the
material rights granted to it as a party to the Condominium Property Documents.
(F) STATEMENTS, NOTICES. The Borrower will, within twenty (20) days after
demand from Lender (which shall not be required more than two (2) times in any
calendar year), obtain, or cause the Condominium Borrower to obtain, if and to
the extent that the Condominium Borrower is entitled to the same under the
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 the Condominium Borrower)
that the 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 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 Condominium Property Documents have been paid and stating whether to each
certifying party's and the Condominium Borrower's Knowledge, the Condominium
Borrower is in compliance with the Condominium Property Documents, or, if not,
specifying each default or failure of compliance of which the certifying party
has knowledge. The Borrower 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 Condominium
Property Documents including without limitation, financial statements and
projected budgets.
SECTION 5.27 LENDER'S EXPENSES. The Borrower 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 Borrower 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 Borrower.
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 Borrower 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 CANCELLATION OF INDEBTEDNESS; SETTLEMENT OF CLAIMS. Unless
otherwise specifically provided herein to the contrary, the Borrower shall not
cancel any indebtedness from any Person owing to the Borrower, or settle any
claims without Lender's prior written consent which shall not be unreasonably
withheld.
SECTION 5.30 MODIFICATION OF MORTGAGE DOCUMENTS. The Borrower shall not consent
to, nor permit the Mortgage Borrowers to agree to, any amendment, modification,
waiver or restatement of any of the Mortgage Loan Documents without Lender's
prior written consent, which will not be unreasonably withheld.
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SECTION 5.31 PROHIBITED PERSONS. The Borrower covenants and agrees that no
Borrower Party, nor any of their respective Affiliates, officers, directors,
partners or members will knowingly: (i) conduct any business, nor engage in any
transaction or dealing, with any Prohibited Person, including, but not limited
to, the making or receiving of any contribution of funds, goods, or services, to
or for the benefit of a Prohibited Person; or (ii) engage in or conspire to
engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, or attempts to violate, any of the prohibitions set forth in
EO13224. The Borrower further covenants and agrees to deliver (from time to
time) to Lender any such certification or other evidence as may be requested by
Lender in its sole and absolute discretion, confirming that: (i) neither any
Borrower Party, nor their respective officers, directors, partners, members or
Affiliates, is a Prohibited Person; and (ii) neither any Borrower Party, nor
their respective officers, directors, partners, members or Affiliates, has to
its Knowledge engaged in any business, transaction or dealings with a Prohibited
Person, including, but not limited to, the making or receiving of any
contribution of funds, goods, or services, to or for the benefit of a Prohibited
Person.
ARTICLE VI
RESERVES
SECTION 6.1 SECURITY INTEREST IN RESERVES; OTHER MATTERS PERTAINING TO RESERVES.
(A) The Borrower hereby pledges, assigns and grants to Lender a security
interest in and to all of the Borrower's 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, subject, in each case, to the interests of the Mortgage Lender,
if any, in the Account Collateral. 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
then held by or on behalf of Lender 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) then held by or on behalf of Lender for any purpose,
including but not limited to any combination of the following: (i) payment of
any of the Obligations including 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.
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SECTION 6.2 FUNDS DEPOSITED WITH LENDER. (A) Except only as expressly provided
otherwise herein, all funds of the Borrower 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 Borrower 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 the Borrower.
(B) The Borrower shall cause the Mortgage Borrowers to deposit with
Mortgage Lender the amounts necessary to fund each of the Reserves as set forth
in the Mortgage Loan Agreement and the Mortgage Loan Cash Management Agreement.
SECTION 6.3 FF&E RESERVE. Funds held in the FF&E Reserve may be withdrawn by the
Borrower or the Mortgage Borrowers, subject in all instances to the terms of the
Mortgage Loan Cash Management Agreement, only in accordance with the approved
CapEx/FF&E Budget relating to the Properties. 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 Agreements, subject, in each instance, to Manager's compliance with
the FF&E reporting requirements set forth in Section 5.1(A)(v)(d).
SECTION 6.4 CAPITAL IMPROVEMENT RESERVE; REQUIRED CAPITAL IMPROVEMENTS. The
Borrower shall cause the Mortgage Borrowers to promptly commence and diligently
prosecute to completion the Required Capital Improvements within the time
periods for each Required Capital Improvement set forth on Schedule 6.5 to the
Mortgage Loan Agreement. Funds held in the Capital Improvement Reserve shall be
disbursed to the Mortgage Borrowers only in accordance with Section 6.7 of the
Mortgage Loan Agreement.
SECTION 6.5 HAZARDOUS MATERIALS REMEDIATION RESERVE. The Borrower shall cause
the funds contained in the Hazardous Materials Remediation Reserve to be
utilized by the Mortgage Borrowers solely for performance of the Environmental
Work in accordance with the Environmental Reports, and shall not be used by the
Borrower or the Mortgage Borrowers for purposes for which any other Reserve is
established. Subject to the Mortgage Borrowers' satisfaction of the applicable
conditions of Section 6.7 of the Mortgage Loan Agreement, the Borrower and the
Mortgage Borrowers shall be entitled to draw upon the Hazardous Materials
Remediation Reserve to pay for costs that have been incurred by the Borrower, or
the Mortgage Borrowers, for such Environmental Work, provided that the Borrower
delivers 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 Borrower or the
Mortgage 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, to Lender's reasonable satisfaction.
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SECTION 6.6 Conditions to Disbursements from Hazardous Materials Remediation
Reserve, Capital Improvement Reserve and Performance of Work.
(A) 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 Borrower shall
cause the Mortgage Borrowers to assign, or cause to be assigned, (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. The Borrower 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, in each case at the
Borrower's sole cost and expense.
(B) PERFORMANCE OF WORK. 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
Borrower 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 Borrower 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 Borrower
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 Borrower 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, subject to Mortgage Lender's rights under
the Mortgage Loan Documents, 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 then held by or on behalf of Lender
toward the labor and materials necessary to complete the same, without providing
any additional prior notice to the Borrower, and exercise any and all other
remedies available to Lender upon and during the continuance of an Event of
Default hereunder.
In order to facilitate Lender's completion or making of any Work
pursuant to this Section 6.6, the Borrower shall cause the Mortgage Borrowers to
grant Lender the right to enter
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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 Borrower and secured
by the Pledge Agreement. For this purpose, the Borrower constitutes and appoints
Lender its true and lawful attorney-in-fact with full power of substitution to
complete or undertake the applicable Work in the name of the Borrower pursuant
to this Section 6.6(B). 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 Borrower empowers said
attorney-in-fact as follows: (i) to use any funds in the applicable Work Reserve
then held by or on behalf of Lender for the purpose 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
applicable Mortgage Borrower 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 Borrower
might do in its own behalf to fulfill the terms of this Loan Agreement.
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 Borrower additional sums to make or complete any Work.
The Borrower shall, and shall cause the Mortgage Borrowers to,
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 6.6 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 this Section 6.6(B). The Borrower shall, and
shall cause the Mortgage Borrowers to, 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 6.6(B) or the completion of the Work
pursuant to this Section 6.6(B).
(C) INDEMNIFICATION. The Borrower 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 Borrower shall assign, and shall cause to be assigned,
to Lender all rights and claims the Mortgage Borrowers may have against all
Persons supplying labor or
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materials in connection with the Work; provided, however, that Lender may not
pursue any such right or claim or pursue any other action with respect to such
rights and claims unless an Event of Default has occurred and remains uncured.
SECTION 6.7 CASH TRAP RESERVE. (i) If, at any time prior to the repayment of the
Obligations (as defined in the Mortgage Loan Agreement) in full, a Cash Trap
Event shall occur, then 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 Mortgage Lender (or its Servicer or agent) and held by Mortgage
Lender in accordance with the Mortgage Loan Cash Management Agreement or, if not
so held by Mortgage Lender, shall be deposited with Lender and held in the Lock
Box Account and, in each case disbursed in accordance with the terms of the
Mortgage Loan Cash Management Agreement.
SECTION 6.8 SUBSTITUTE CASH MANAGEMENT AGREEMENT. If the Mortgage Loan shall
have been satisfied prior to the payment in full of the Loan, the Borrower
shall, and shall cause the Mortgage Borrowers to, enter into a substitute Cash
Management Agreement and related lockbox agreements and pledge agreements with
substantially the same terms as the agreements entered into as of the date
hereof in connection with the Mortgage Loan (including, the provisions in the
Mortgage Loan Agreement relating to all Reserves and Collateral Accounts,
Section 5.4, Article VI and Article VII of the Mortgage Loan Agreement) within
five (5) days after the satisfaction of such Mortgage Loan, all of which
agreements shall be for the benefit of Lender rather than Mortgage Lender. Such
substitute agreements shall provide that all Receipts shall be deposited
directly into the Deposit Account for disbursement in accordance with the terms
of such substitute Cash Management Agreement and this Agreement. Notwithstanding
the foregoing, the substitute Cash Management Agreement shall provide that the
aggregate amortization payments that were being made prior to the satisfaction
of the Mortgage Loan shall continue to be paid and 100% of such payments shall
be distributed to Lender.
ARTICLE VII
LOCK BOX; CASH MANAGEMENT
SECTION 7.1 ESTABLISHMENT OF LOCK BOX ACCOUNT.
LOCK BOX ACCOUNTS. 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 Borrower shall not have the right to control or direct the
investment or payment of funds therein during the continuance of an Event of
Default. The Borrower shall direct that all amounts paid by the Cap Provider
under the Cap together with all Receipts with respect to the Properties which
the Mortgage Borrower or the Borrower is entitled to receive from Mortgage
Lender pursuant to the Mortgage Loan Cash Management Agreement or otherwise,
after all sums which are then due and payable have been paid to Mortgage Lender
pursuant to the terms of the
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Mortgage Loan Documents, to be transferred by wire transfer (or transfer via the
ACH system) on each Business Day by the Mortgage Loan Lock-Box Account Bank to
the Lock Box Account. 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" means 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" means 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 "Cash Trap Reserve
Sub-Account"; and (d) the Minimum Balance 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 Lock Box Account, and/or any Sub-Accounts
against all or any portion of any of the Obligations, in any order.
SECTION 7.4 MORTGAGE LOAN LOCK BOX. If the lock box and cash management
arrangements under the Mortgage Loan Documents in effect as of the Closing Date
are terminated, or if the Mortgage Loan shall be repaid in full, while any
portion of the Obligations remain outstanding, the Borrower will immediately
cause the Mortgage Borrowers to comply with the requirements of Section 6.8 and
Section 7.1 hereof. In addition, upon the occurrence of any such event the
Borrower shall cause the Mortgage Borrowers to direct the Mortgage Lender to
release all funds held in the Mortgage Loan Lock Box or any of the reserves
established pursuant to the Mortgage Loan Cash Management Agreement, or the
Mortgage Loan Documents, to be deposited with Lock Box Account Bank to be held
in the applicable Reserves in accordance with the terms hereof and the Cash
Management Agreement.
ARTICLE VIII
DEFAULT, RIGHTS AND REMEDIES
SECTION 8.1 EVENT OF DEFAULT.
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"EVENT OF DEFAULT" means the occurrence or existence of any one or more of
the following:
(A) SCHEDULED PAYMENTS. Failure of the Borrower 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 Borrower 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 Borrower; 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 Borrower
(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 (i) within forty-five (45) days after the filing thereof, the
Borrower shall cause the same to be removed of record by payment, bonding or
otherwise, or (ii) same is being contested in good faith by the Borrower or the
Mortgage Borrowers in accordance with Section 5.3(B) of the Mortgage Loan
Agreement); or
(E) BREACH OF WARRANTY. Any representation, warranty, certification or
other statement made by the Borrower, Guarantor or any Affiliate 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 Borrower 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 of cure but with diligence cannot be cured within such period of thirty
(30) days, (ii) the Borrower (or the applicable Borrower Party) has commenced
the cure within such thirty (30) day period and has pursued such cure
diligently, and (iii) the 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 Borrower 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
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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 Effect and remains undischarged,
unvacated, unbonded or unstayed for a period of forty-five (45) days; or
(L) INJUNCTION. The Borrower is 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 its business and such order
continues for more than thirty (30) days; or
(M) INVALIDITY OF LOAN DOCUMENTS. This Loan Agreement, the Pledge
Agreement 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 Borrower 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 Borrower does not take all
actions requested by Lender to correct such defect within ten (10) days after
the written request
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by Lender to take such action, or any Person under the control of the Borrower
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; or (ii) any breach or default shall occur in
the material obligations of the Mortgage 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/CONDOMINIUM PROPERTY. Any default by any of the Mortgage
Borrowers beyond any applicable grace period shall occur under any Ground Lease
or any Condominium Property Document or any actual or attempted surrender,
termination, modification or amendment of any Ground Lease or any Condominium
Property Document without Lender's prior written consent; or
(Q) MORTGAGE LOAN DOCUMENTS. Any "Event of Default" (as defined in the
Mortgage Loan Agreement) or any other default beyond any applicable notice and
grace period under the Mortgage Loan Documents shall occur.
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 expressly waived by the
Borrower. 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 Borrower 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
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any foreclosure proceeding or other action for the enforcement of its rights and
remedies under any of the Loan Documents with respect to the Collateral. Any
such actions taken by Lender shall be cumulative and concurrent and may be
pursued independently, singly, successively, together or otherwise, at such time
and in such order as Lender may determine in its sole discretion, to the fullest
extent permitted by 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 the Collateral and the Pledge
Agreement 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
upon the Collateral in any manner and for any amounts secured by the Collateral
then due and payable as determined by Lender in its sole discretion including,
without limitation, the following circumstances: (i) in the event the Borrower
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of principal and interest, Lender may foreclose upon the
Collateral 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 upon the Collateral to recover so much of the
principal balance of the Loan as Lender may accelerate and such other sums
secured by the Collateral as Lender may elect. Notwithstanding one or more
partial foreclosures, the Collateral shall remain subject to the Pledge
Agreement to secure payment of sums secured by the Collateral 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
Borrower 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 Borrower hereby absolutely and irrevocably appoints Lender as its
true and lawful attorney, coupled with an interest, in its name and stead to
make and execute all documents reasonably necessary to effect the aforesaid
severance if the Borrower fails to do so within ten (10) days of Lender's
written request, the Borrower ratifying all that its 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 Borrower pursuant to this Loan Agreement or the
other Loan Documents, or existing
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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 Borrower shall not be construed to be a waiver of
any subsequent Default or Event of Default by the Borrower 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 the Borrower 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 Borrower including making
protective advances on behalf of the Borrower, or, in its sole discretion,
causing the obligations of the Borrower to be satisfied with the proceeds of any
Reserve held by or on behalf of Lender. In such event, the Borrower 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
Borrower 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) The Borrower, on behalf of the Mortgage Borrowers, hereby agrees that
Lender shall have the right to cure defaults by the Mortgage Borrowers under the
Mortgage Loan Documents whenever, in Lender's reasonable judgment (after taking
into consideration all cure periods provided to Lender under any intercreditor
agreement with Mortgage Lender), the existence of such default by the Mortgage
Borrowers is reasonably likely to have a material adverse effect on the
Borrower, any Mortgage Borrower, the Collateral or any Property. Lender shall
endeavor, in good faith, to notify the Borrower prior to taking any such cure
action, but shall have no liability to the Borrower or the Mortgage Borrowers
for failing to do so. From and after the occurrence of a default under the
Mortgage Loan Documents, the Borrower shall cooperate in all commercially
reasonable respects with, and shall cause the Mortgage Borrowers to cooperate in
all commercially reasonable respects with (and not to impede or interfere with
in any respect), Lender's efforts to cure (or cause the cure of) all monetary
and non-monetary defaults under the Mortgage Loan Documents, including, without
limitation, causing the payment, removal or bonding over of all Liens, claims or
judgments, or entering upon the Properties (or any portion thereof) to cure (or
cause the cure of ) any non-monetary default under the Mortgage Loan Documents.
In addition, after the occurrence of a default under the Mortgage Loan
Documents, the Borrower agrees that it will cause the Mortgage Borrowers to
coordinate
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with Lender with respect to all communications (written or oral) with the
Mortgage Lender (or any person or entity servicing the Mortgage Loan).
(C) Any funds expended by or on behalf of Lender to effect a cure of the
Mortgage Loan as contemplated in this Section shall constitute protective
advances under the Loan. If Lender so elects to cure (or attempts to cure) any
default under the Mortgage Loan, the amount of such expenditures made by or on
behalf of Lender shall be added to the Obligations, shall accrue interest at the
Default Rate, and shall be secured by the Collateral.
(D) 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, the
Borrower shall provide such documents and instruments as shall be reasonably
satisfactory to Lender to evidence compliance with any material provision of the
Loan Documents applicable to the Borrower.
ARTICLE IX
SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS,
WARRANTIES AND COVENANTS
SECTION 9.1 APPLICABLE TO THE BORROWER. The Borrower 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, that the Borrower:
(A) does not own and will not own any assets other than the Collateral
(including incidental personal property necessary for the operation thereof and
proceeds therefrom) or direct or indirect ownership interests in the Mortgage
Borrowers, and other direct or indirect wholly owned subsidiaries of the
Borrower established solely for the purpose of holding liquor licenses with
respect to one or more of the Properties (collectively, the "OWNERSHIP
INTERESTS") or such incidental assets as are necessary to enable it to discharge
its obligations with respect to the Mortgage Borrowers, the Collateral or the
Properties;
(B) is not engaged and will not engage in any business, directly or
indirectly, other than the ownership, management and operation of the Collateral
or the Ownership Interests;
(C) will not enter into any contract or agreement with any partner,
member, shareholder, trustee, beneficiary, principal or Affiliate of the
Borrower or Member 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;
(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 and (ii) Permitted
Indebtedness;
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(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 (other than the Ownership Interests) 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;
(G) has done or caused to be done and will do or will cause to be done,
all things necessary to preserve its existence, and will not, nor will any
member, or principal further amend, modify or otherwise change its articles of
organization, operating agreement, or other organizational documents, as
modified, amended, restated or supplemented as of the date hereof, in any manner
with respect to the matters set forth in this Article IX;
(H) has at all times continuously maintained its existence and has at all
times been qualified to do business, and shall continue to maintain its
existence and be qualified to do business in all states necessary to carry on
its business;
(I) has at all times conducted and operated and will conduct and operate
its business as presently contemplated with respect to the ownership of the
Collateral;
(J) has at all times maintained and 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) has at all times held itself out to the public as, and will at all
times 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 has at all
times corrected and will correct any known misunderstandings regarding its
existence as a separate legal entity;
(L) has at all times paid and will pay the salaries of its own employees,
if any;
(M) has at all times allocated and will allocate fairly and reasonably any
overhead for shared office space;
(N) has at all times used and will use its own stationery, invoices and
checks;
(O) has at all times filed and will file its own tax returns with respect
to itself (or consolidated tax returns, if applicable) as may be required under
applicable law;
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(P) has and 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) has not at any time sought, acquiesced in, or suffered or permitted
and will not seek, acquiesce in, or suffer or permit its liquidation,
dissolution or winding up, in whole or in part;
(R) has not at any time entered and 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 (other than the Ownership Interests) of, any Person;
(S) has not at any time commingled or permitted to be commingled and will
not commingle or permit to be commingled its funds or other assets with those of
any other Person;
(T) has at all times maintained 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;
(U) has not at any time held, 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 at any time 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) has at all times complied and 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 THE BORROWER AND MEMBER. In addition to their
respective obligations under Section 9.1, each of the Borrower and Member hereby
represent, warrant and covenant as of the Closing Date and until such time as
all Obligations are paid and satisfied in full, that absent express advance
written waiver from Lender, which may be withheld in Lender's sole discretion:
(A) Borrower shall at all times act only as the direct or indirect parent
of each of the Mortgage Borrowers and the Beverage Companies with all of the
rights, powers, obligations and liabilities thereof under the respective
organizational documents of such Mortgage Borrower or Beverage Company and has
at all times taken and shall take any and all actions and will do any and all
things necessary or appropriate to the accomplishment of the same and will not
engage in any other business;
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(B) the Borrower shall not, without the prior unanimous written consent of
the Borrower's board of managers including the 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;
(C) Member shall not institute proceedings for itself or the Borrower to
be adjudicated bankrupt or insolvent; consent to the institution of a bankruptcy
or insolvency proceeding against it or the 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 the
Borrower; or a substantial part of its or the 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;
(D) The Borrower shall promptly elect and at all times maintain at least
two (2) Independent Directors on its board of managers, who shall be selected by
the Borrower and be reasonably acceptable to Lender.
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 the Borrower's internal costs and
expenses and the costs and expenses of the Borrower's counsel), to cause the
Note and any Pledge Agreement to be split into one or more loans evidenced by
multiple notes and secured by multiple pledge agreements 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.
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SECTION 10.2 COOPERATION; LIMITATIONS. The Borrower Parties shall use all
reasonable efforts and cooperate reasonably and in good faith with Lender in
effecting any such restructuring or Secondary Market Transactions at Lender's
sole cost (other than, with respect to the first successful Secondary Market
Transaction only (or if the Loan shall be hereafter split into multiple loans,
the first successful Secondary Market Transaction with respect to each of such
loans), the Borrower Parties' internal costs and expenses and the costs and
expenses of the Borrower Parties' counsel). Notwithstanding the foregoing or
anything to the contrary contained in this Article X, it is acknowledged and
agreed that in no event shall Lender be responsible for payment of any Borrower
Party's (or its Affiliate's) internal costs and expenses in connection with any
Secondary Market Transaction. Such cooperation shall include without limitation,
executing and delivering such reasonable amendments to the Loan Documents and
the organizational documents of the 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 Borrower's obligations or decrease the
Borrower's 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 shall not be required to pay any third party (other than,
with respect to the first successful Secondary Market Transaction only (or if
the Loan shall hereafter be split into multiple loans, the first successful
Secondary Market Transaction with respect to each of such loans) the Borrower
Parties' internal costs and expenses and the costs and expenses of the Borrower
Parties' 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 with respect to the first successful Secondary Market Transaction
only (or if the Loan shall be hereafter split into multiple loans, the first
successful Secondary Market Transaction with respect to each of such loans), the
Borrower Parties' internal costs and expenses and the costs and expenses of the
Borrower Parties' 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 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 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 Borrower, at Lender's cost and
expense (other than with respect to the first successful Secondary Market
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Transaction only (or if the Loan shall be hereafter split into multiple loans,
the first successful Secondary Market Transaction with respect to each of such
loans), the Borrower Parties' internal costs and expenses and the costs and
expenses of the Borrower Parties' 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 Borrower understands 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 Borrower and
Guarantor shall each provide in connection with each (i) preliminary and final
private placement memorandum or (ii) a preliminary and final prospectus or
prospectus supplement, as applicable, prepared in connection with any Secondary
Market Transaction (the documents referred to in the foregoing clauses (i) and
(ii), collectively, the "DISCLOSURE DOCUMENTS"), an agreement reasonably
satisfactory to the Borrower and Guarantor certifying that the Borrower and
Guarantor have examined such Disclosure Documents specified by Lender and, that
the sections of such Disclosure Document describing the Borrower, 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 Borrower 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 Borrower,
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 Borrower 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 Borrower or its Affiliates
unless such reports are caused to be incorrect or misleading based upon
information provided by the Borrower or its Affiliates. Lender may publicize the
existence of 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
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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, the Borrower
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 Collateral, any Properties or any interest therein,
or (ii) any direct or indirect ownership or beneficial interest in the Borrower
or the Mortgage Borrowers, irrespective of the number of tiers of ownership,
without Lender's consent.
SECTION 11.2 TRANSFERS OF BENEFICIAL INTERESTS IN THE BORROWER. The following
voluntary or involuntary sales, encumbrances, conveyances, transfers and pledges
(each, a "TRANSFER") of a direct, indirect or beneficial interest in the
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 capital stock of Guarantor
(including common or preferred shares) through the "over-the-counter market" or
through any recognized stock exchange.
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
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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 Borrower shall have the right to request that Lender consent to
(i) a transfer of all of the Collateral to another Person (the "TRANSFEREE
BORROWER") and the assumption by the Transferee Borrower of all of the
Borrower's 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 Borrower and
Guarantor from obligations arising from and after such date and (iii) the
replacement of the Mortgage Borrowers with new owners of the Properties, all in
connection with an assumption completed in accordance with Section 11.3 of the
Mortgage Loan Agreement (collectively, an "ASSUMPTION"), subject to the
conditions set forth in paragraphs (B) and (C) of this Section. Together with
such written application, the Borrower will pay to Lender a review fee of
$10,000. The Borrower 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
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 Borrower 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 Borrower 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, if required in
connection with any Securitzation of the Mortgage Loan;
(v) The Borrower 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;
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(vi) The Borrower, 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
an Affiliate of a Permitted Transferee or (b) the identity, experience and
financial condition of the Transferee Borrower shall otherwise be satisfactory
to Lender in its reasonable discretion;
(viii) The identity and financial condition of the replacement
guarantors and indemnitors shall be satisfactory to Lender; and
(ix) The Borrower shall have delivered to Lender evidence reasonably
satisfactory to Lender that the consent of the Mortgage Lender has been obtained
and each of the other terms and conditions applicable to the transfer of the
Properties and assumption of the Mortgage Loan under Section 11.3 of the
Mortgage Loan Agreement has been satisfied.
(C) If Lender consents to the proposed Assumption, the Transferee Borrower
and/or the Borrower, as the case may be, shall promptly and as a condition to
the Assumption deliver the following to Lender:
(i) The Borrower, the 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 Borrower shall cause to be delivered to Lender, an
endorsement (relating to the change in the identity of the Borrower 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
(iv) The Borrower 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 COLLATERAL. On one or more occasions, Lender shall
permit the Borrower to cause the Mortgage Borrowers to transfer a Property and
the Borrower may obtain the release of a portion of the Collateral (each, a
"COLLATERAL RELEASE") relating only to the Borrower's direct or indirect
interest in the Mortgage Borrower and its respective Property that is the
subject of such Property Release completed in accordance with Section 11.4 of
the Mortgage
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Loan Agreement, simultaneous with such Property Release, subject to the
satisfaction of the following conditions:
(A) Lender shall have received from the Borrower 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 on the date proposed for such Collateral
Release the Mezzanine Lender's Percentage of the Release Price for the Property
that is the subject of the Property Release (the "COLLATERAL RELEASE PRICE") it
being agreed that, following satisfaction of the Mortgage Loan the entire
Release Price shall be paid to Lender and applied to the payment of the
Obligations (together with, except in connection with a Release of a Sale
Property, the applicable Prepayment Consideration);
(D) If required by any Rating Agency, the Borrower at its sole cost and
expense shall have delivered to Lender one or more endorsements to the Title
Policies insuring that, after giving effect to such Collateral Release, (i) the
Liens insured under the Title Policies are first priority Liens on the remaining
Collateral, and (ii) that the Title Policies remain in full force and effect and
unaffected by such Collateral Release;
(E) Immediately following any Collateral Release (other than in connection
with a Release of a Sale Property) 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 (based upon a
trailing twelve (12) month period) in effect at Closing or immediately prior to
the Collateral Release, whichever is greater;
(F) Notwithstanding the foregoing, the Borrower may not obtain a
Collateral Release under this Section 11.4 of any Collateral (other than in
connection with a Release of a Sale Property) which individually, or in the
aggregate (with all Collateral Releases (other than in connection with a Release
of a Sale Property) since the Closing Date), is with respect to Properties
having an Aggregate Allocated Loan Amount of more than thirty percent (30%) of
the Loan Amount (exclusive of the Allocated Loan Amount with respect to any Sale
Property);
(G) The Borrower 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 Collateral
Release; and
(H) Immediately following such Collateral Release, the Collateral that has
been released will be owned by a Person other than the Borrower.
Upon satisfaction of the above conditions, Lender shall effectuate the
following: the security interest of Lender in and to that portion of the
Collateral and the other Loan Documents relating to the Released Property shall
be released and Lender will execute and deliver any agreements reasonably
requested by the Borrower to effectuate such release. The Borrower acknowledges
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that it has, in most cases, pledged equity interests in multiple Mortgage
Borrowers and that, in several cases, the Mortgage Borrowers own more than one
Property. Accordingly, the Borrower acknowledges that, until such time as all
Properties owned by a particular Mortgage Borrower have been released, the
Collateral relating to such Mortgage Borrower shall not be released and,
notwithstanding that no Collateral Release shall have occurred (until the last
Property owned by such Mortgage Borrower is being released), a condition to the
Borrower permitting any Mortgage Borrower to obtain any Property Release shall
be the payment to Lender of the applicable Collateral Release Price and
satisfaction of the other conditions set forth in this Section 11.4. In
addition, promptly after consummation of any such Collateral Release and
Lender's receipt of the Collateral Release Price, any and all Reserves
designated as applicable to each Property that is the subject of the Property
Release then held by or on behalf of Lender, if any, shall be returned to the
Borrower.
SECTION 11.5 RESERVED.
SECTION 11.6 SALE OF BUILDING EQUIPMENT. Notwithstanding anything to the
contrary contained herein, provided no Event of Default exists, the Borrower may
permit the Mortgage Borrowers to transfer or dispose of building equipment which
is being replaced or which is no longer necessary in connection with the
operation of the Properties, provided that such transfer or disposal will not
have a Material Adverse Effect on the value of any individual Property or the
Properties taken as a whole, will not materially impair the utility of any
individual Property or 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.
SECTION 11.7 IMMATERIAL TRANSFERS AND EASEMENTS, ETC. Provided no Event of
Default exists, the Borrower may permit the Mortgage Borrowers to, without the
consent of Lender, (i) make immaterial transfers of portions of the Properties
to Governmental Authorities for dedication for public use, and (ii) grant
easements, restrictions, covenants, reservations and rights of way with respect
to any Property 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 the Properties or have a Material Adverse
Effect on the value of the Properties taken as a whole.
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 Borrower 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 Borrower's obligations under the
Note shall be limited to (i) the Collateral and (ii) the rents, profits, issues,
products and income of the Collateral.
Notwithstanding anything to the contrary in this Loan Agreement, the Pledge
Agreement 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
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file a claim for the full amount of the Obligations secured by the Collateral 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 Borrower (but
not its members, 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, reasonable 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 Borrower 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 Borrower or any Borrower Party or Manager and not deposited
into the Lock Box Account in accordance with Article VII and the Cash Management
Agreement; (v) failure to turn over to Lender or Mortgage Lender, after an Event
of Default, or misappropriation of any tenant security deposits or rents
collected in advance (other than by Mortgage Lender, the servicer of the
Mortgage Loan, Lender or Servicer); (vi) failure to notify Lender of any change
in the principal place of business address of the Borrower or of any change in
the name of the Borrower or if the Borrower 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 Borrower 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 with respect to any of the
Properties; (ix) all liabilities and expenses under the indemnification
provisions of Section 10.3; (x) any uncured default under Section 11.1; (xi) 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 or
Section 12.1, the Loan shall be fully recourse to the Borrower and Guarantor
upon the happening of any of the following: (i) any Borrower Party's defense of
any efforts by Lender to collect or enforce the Obligations 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 efforts by Lender to collect or
enforce the Obligations 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 Borrower 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 the Borrower, Guarantor or any Affiliate of either of them).
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 the Pledge Agreement 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 the Borrower
Party but not
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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 the Borrower (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
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
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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, 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.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 EXPENSES AND ATTORNEYS' FEES. Whether or not the transactions
contemplated hereby shall be consummated, the Borrower agrees 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
reasonable 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 Borrower 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.
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 Borrower agrees 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 Borrower 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
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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,
the Collateral, 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 Borrower 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 Borrower 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 or the
Collateral 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 Borrower in any case shall entitle the Borrower or other Person to
any other or further notice or demand in similar or other circumstances.
SECTION 14.4 RETENTION OF THE BORROWER'S DOCUMENTS. Lender may, in accordance
with Lender's customary practices, destroy or otherwise dispose of all
documents, schedules, invoices or other papers, delivered by the Borrower to
Lender (other than the Note) unless the Borrower requests in writing that same
be returned. Upon such request and at the Borrower's 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).
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Notices shall be addressed as follows:
If to the Borrower 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:
Morris, Manning & Martin, LLP
3343 Peachtree Road, NE
1600 Atlanta Financial Center
Atlanta, Georgia 30326
Attention: Thomas Gryboski, Esq.
Facsimile: (404) 365-9532
If to Lender:
c/o Merrill Lynch & Co.
Four World Financial Center
New York, New York 10080
Attention: Robert Spinna
Facsimile: (212) 738-1013
With a copy to:
Sidley Austin Brown & Wood LLP
787 Seventh Avenue
New York, New York 10019
Attention: Robert L. Boyd, 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
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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 Borrower 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 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
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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.
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 Borrower may not assign its 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 Borrower, on behalf of itself and all Borrower Parties,
represents, warrants and acknowledges 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 Borrower, on behalf of itself and all Borrower Parties,
also acknowledges and agrees 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
Borrower or any other Person, or (ii) any fiduciary or similar duty by Lender to
the Borrower or any other Person. The relationship between Lender and the
Borrower is exclusively the relationship of a creditor and a debtor, and all
relationships between Lender and the 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 Borrower 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 Borrower's 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 the Borrower 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. The Borrower hereby waives, releases, and agrees
not to sue Lender or any of Lender's Affiliates,
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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 the Borrower or Affiliates thereof, 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 Borrower 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 as if jointly drafted by the
Borrower 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. THE BORROWER 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 COLLATERAL
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. THE BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH THE
COLLATERAL, 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 THE BORROWER
IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 14.20 WAIVER OF JURY TRIAL. EACH OF THE BORROWER 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
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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 BORROWER 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 BORROWER 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 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 Borrower has 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 Borrower shall not be required to
deal with more than one such servicing entity at any time. Lender shall notify
the Borrower 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 Borrower 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,
94
Lender shall have the right, at the Borrower's 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]
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Loan Agreement as of the date first written above.
BORROWER:
LODGIAN MEZZANINE FLOATING, LLC,
a Delaware limited liability company
By:_________________________________________
Name: Daniel E. Ellis
Title: Vice President and Secretary
LENDER:
MERRILL LYNCH MORTGAGE LENDING, INC.
By:_________________________________________
Name:
Title:
LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Properties
Exhibit B - Environmental Reports
Exhibit C - Franchise Agreements
Exhibit D - Allocated Loan Amounts/Aggregate Allocated Loan Amounts
Exhibit E - Management Agreements
Exhibit F - [Reserved]
Exhibit G - Property Improvement Plans
Exhibit H - [Reserved]
Exhibit I - Acceptable Franchisors
Exhibit J - [Reserved]
Exhibit K - Zoning Reports
Schedule 2.4 - Scheduled Mezzanine Principal Payments
Schedule 3.1(A) - List of Loan Documents
Schedule 4.1(C) - Organizational Chart for Borrower Parties
Schedule 4.2 - Consents
Schedule 4.5 - Condemnation Proceedings
Schedule 4.5(A) - Rights to Purchase/Rights of First Offer
Schedule 4.7(B) - Rent Roll
Schedule 4.7(E) - Franchise Defaults
Schedule 4.14 - ERISA Plans
Schedule 4.16 - Litigation
Schedule 4.26 - Collective Bargaining Agreements
Schedule 5.14 - Material Agreements
List of Schedules
EXHIBIT A
PROPERTIES
CHAIN/NAME CITY ST
Holiday Inn Express Dothan (ex Hampton) AL
Quality Inn Dothan AL
Holiday Inn Express Gadsden (Attalla) AL
Holiday Inn Sheffield AL
Holiday Inn Pensacola FL
Holiday Inn Express Pensacola (ex Hampton) FL
Holiday Inn Winter Haven FL
Holiday Inn Brunswick GA
Holiday Inn Valdosta GA
Fairfield Inn Valdosta GA
Crowne Plaza Cedar Rapids IA
Holiday Inn Florence KY
Clarion Hotel Louisville KY
Holiday Inn Silver Spring MD
Holiday Inn Lansing MI
Holiday Inn St. Louis North MO
Holiday Inn Grand Island NY
Holiday Inn Hamburg NY
Holiday Inn Jamestown NY
Holiday Inn Select Niagara Falls NY
Four Points Sheraton Niagara Falls NY
Holiday Inn Pittsburgh (Pkwy East) PA
Fairfield Inn Jackson TN
French Quarter Suites Memphis TN
Holiday Inn Memphis TN
Holiday Inn Austin TX
Fairfield Inn Colchester VT
Holiday Inn Clarksburg (Bridgeport) WV
Holiday Inn Morgantown WV
Exhibit A
EXHIBIT B
ENVIRONMENTAL REPORTS
Exhibit B
EXHIBIT C
FRANCHISE AGREEMENTS
Exhibit C
EXHIBIT D
ALLOCATED LOAN AMOUNTS AGGREGATE ALLOCATED
LOAN AMOUNTS
Exhibit D
EXHIBIT E
MANAGEMENT AGREEMENTS
Exhibit E
EXHIBIT F
[RESERVED]
Exhibit F
EXHIBIT G
PROPERTY IMPROVEMENT PLANS
Exhibit G
EXHIBIT H
[RESERVED]
Exhibit H
EXHIBIT I
ACCEPTABLE FRANCHISORS
Exhibit I
EXHIBIT J
[RESERVED]
Exhibit J
EXHIBIT K
ZONING REPORTS
Exhibit K
SCHEDULE 2.4
SCHEDULED MEZZANINE PRINCIPAL PAYMENTS
Schedule 2.4
SCHEDULE 3.1(A)
LIST OF LOAN DOCUMENTS
1. Loan Agreement
2. Note
3. Pledge Agreement
4. Guaranty
5. Environmental Indemnity
6. Assignment of Rate Cap
7. Financing Statements
8. Cash Management Agreement
9. Assignments of Management Agreements
10. Post Closing Agreement
Schedule 3.1(A)
SCHEDULE 4.1(C)
ORGANIZATIONAL CHART FOR BORROWER PARTIES
Schedule 4.1(C)
SCHEDULE 4.2
CONSENTS
NONE.
Schedule 4.2
SCHEDULE 4.5
CONDEMNATION PROCEEDINGS
Schedule 4.5
SCHEDULE 4.5(A)
RIGHTS TO PURCHASE/RIGHTS OF FIRST OFFER
Schedule 4.5(A)
SCHEDULE 4.7(B)
RENT ROLL
Schedule 4.7(B)
SCHEDULE 4.7(E)
FRANCHISE DEFAULTS
HOTEL CITY, STATE REASON FOR DEFAULT
Holiday Inn Morgantown Morgantown, WV OSI failure
Fairfield Inn Jackson Jackson, TN GSS Red Zone
Schedule 4.7(E)
SCHEDULE 4.14
ERISA PLANS
1. Lodgian, Inc. 401(k) Plan.
2. Lodgian, Inc. Employee Health & Welfare Plan.
Schedule 4.14
SCHEDULE 4.16
LITIGATION
NONE
Schedule 4.16
SCHEDULE 4.26
COLLECTIVE BARGAINING AGREEMENTS
NONE
Schedule 4.26
SCHEDULE 5.14
MATERIAL AGREEMENTS
Agreement between PFG Broadline and Lodgian, Inc. dated July 1, 2003.
Agreement between Harbor Linen and Lodgian, Inc. dated March 1, 2002.
Various agreements between the Borrowers and On Command Video Corporation.
Guest Room Commitment between Servico New York, Inc. and Seneca Niagara Falls
Gaming Corporation dated January 21, 2003.
Schedule 5.14