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EXHIBIT 10.5
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Execution Counterpart
GUARANTY AGREEMENT
This Guaranty Agreement (this "Guaranty") is made as of the 13th day of
November, 1998, by DOUBLETREE CORPORATION, a Delaware corporation (hereinafter
referred to as "Doubletree" or as the "Guarantor"), in favor of GMAC COMMERCIAL
MORTGAGE CORPORATION, a California corporation ("GMACCM"), and its successors
and assigns.
RECITALS
A. GMACCM has agreed to provide, or is considering issuing a
conditional Loan Commitment, substantially in the form of Exhibit A attached
hereto and made a part hereof (as amended from time to time, the "Loan
Commitment"), for the financing of certain hotel properties with
developers/borrowers approved by Candlewood Hotel Company, Inc., a Delaware
corporation ("Candlewood"). Candlewood will submit the approved projects to
GMACCM for loan underwriting. Such loans which are accepted by GMACCM and for
which it issues a Loan Commitment shall be hereinafter referred to as the
"Mortgage Loans."
B. Doubletree, directly or indirectly, owns a substantial equity
interest in Candlewood and will receive a substantial benefit from the projects
to be financed by GMACCM.
C. Doubletree has agreed to certain guaranties and credit enhancements
in connection with the Mortgage Loans as more fully set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the matters described in the
foregoing Recitals, in order to induce GMACCM to enter into the Loan Commitment
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. For purposes of this Guaranty, the following terms shall have
the meanings indicated:
(a) "Affiliate of Mortgagor" means, with respect to Mortgagor, another
Person who: (i) directly or indirectly through one or more intermediaries
controls, is controlled by, or is under common control with the Mortgagor; (ii)
is a partner, director, officer or trustee of the Mortgagor or of any Person
covered by clause (i) above; (iii) is a partner of a partnership or joint
venture which owns, or is a beneficiary or trustee of a trust which owns, or
other owner of any stock or other evidences of beneficial ownership in, the
Mortgagor or any Person who directly or indirectly through one or more
intermediaries controls or is controlled by the Mortgagor; or (iv) is related to
the Mortgagor by blood (including grandparents of the Person specified and of
his or her spouse and all lineal descendants of such grandparents) or marriage
or close business association to the specified person or to any Person covered
by clause (i) above or of the spouse of any of the foregoing persons. For
purposes of this definition, the term "control" with respect to a Mortgagor
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of the Mortgagor, whether through
the ownership of voting stock, by contract or otherwise.
(b) "Allonge" means an instrument to be executed and delivered by the
Mortgagee to assign to Guarantor each Mortgage Note being repurchased pursuant
to the Repurchase Option.
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(c) "Approved Project Costs" for a particular Mortgage Loan shall have
the meaning set forth in the Loan Commitment applicable to such Loan, together
with any increases thereto permitted pursuant to the terms and provisions of the
Building Loan Agreement for variances and cost overruns.
(d) "Assignment of Rents and Leases" means, with respect to any
Mortgage Loan, the assignment of rents and leases executed by the Mortgagor with
respect to such Mortgage Loan.
(e) "Bankruptcy Default" shall mean any default under the Mortgage Loan
Documents caused by the Mortgagor filing or being the subject of a bankruptcy,
insolvency or reorganization proceeding under state or federal law.
(f) "Building Loan Agreement" means, with respect to any Mortgage Loan,
the building loan agreement executed by the Mortgagor with respect to the
Construction Loan.
(g) "Business Day" means any day other than a Saturday, a Sunday, a
federal holiday or another day on which commercial banks in the Commonwealth of
Pennsylvania are authorized or required to be closed for the conduct of their
regular banking operations.
(h) "Candlewood" shall refer to Candlewood Hotel Company, Inc., a
Delaware corporation and successor to Candlewood Hotel Company, LLC, a Delaware
limited liability company, together with the successors and permitted assigns of
such Delaware corporation.
(i) "Conforming Loan Criteria" shall refer to a Mortgaged Property
which at the maturity of the Construction Loan or the Extended Construction
Loan, as the case may be, meets, in GMACCM's sole discretion, each of GMACCM's
then current conduit origination and underwriting standards for loans and
borrowers of this type, including but not limited to (i) DSCR equal to or
greater than 1.4 and (ii) the LTV shall not be greater than 75%.
(j) "Construction Loan" shall mean and refer to the construction loan
over its initial loan term (and excluding any extension or renewal terms or time
periods), closed and funded pursuant to the Loan Commitment.
(k) "Debt" means Total Assets less Total Stockholders' Equity, as
reported with the U.S. Securities and Exchange Commission on any financial
statements on an annual or quarterly basis, whether such financial statements
are audited or are unaudited. If at any time Guarantor is not a corporation
whose stock is publicly traded, "Debt" shall mean the substantial equivalent of
the concept set forth in the preceding sentence, as reflected in those financial
statements to be provided by Guarantor pursuant to Section 23 below.
(l) "Delinquency" and "Delinquencies" means any portion of the
Indebtedness which is due and owing to GMACCM prior to the Maturity Date of the
Mortgage Loan (whether by acceleration or otherwise) and which is not paid as
and when due (following applicable notice and grace periods, if any) in
accordance with the provisions of the applicable Mortgage Loan Documents.
(m) "Doubletree" shall refer to Doubletree Corporation, a Delaware
corporation, its successors and permitted assigns.
(n) "DSCR" shall mean Debt Service Coverage Ratio which shall be
computed by dividing annual NOI by the annual debt service payments on the
subject Mortgage Loan, as both the debt component and NOI component of such
ratio may be adjusted in accordance with GMACCM's then-applicable underwriting
standards and requirements for loans and borrowers of this type.
(o) "Environmental Indemnity" means, with respect to any Mortgage Loan,
the environmental indemnity executed in connection with such Mortgage Loan.
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(p) "Extended Construction Loan" shall mean the Construction Loan, to
the extent the term of the same may be extended for one or both extension terms
or time periods, in accordance with the conditions, terms and provisions set
forth in the Loan Commitment.
(q) "Event of Default" shall have the meaning set forth in Section 11
hereof.
(r) "Expenses" shall mean for any specified period, all ordinary,
necessary and reasonable operating and capital expenses actually paid on a cash
basis during such period and which are related to the Mortgagor's ownership and
operation of the Mortgaged Property during such period. Such Expenses shall
include, by way of example rather than of limitation: (1) departmental expenses;
(2) undistributed operating expenses; and (3) fixed charges, as such items (1)
- - - (3) are described in more detail in the current version of the Uniform System
of Accounts. Such Expense categories include, by way of example rather than
limitation (a) management fees, overhead and expenses of no less than five
percent (5%) of gross annual revenues; (b) franchise fees of no less than five
percent (5%) of gross annual revenues; and (c) an equipment and property reserve
of no less than four percent (4%) of gross annual revenues and as may be
adjusted in accordance with Lender's then-applicable underwriting standards and
requirements for loans and borrowers of this type. Such Expenses shall not
include the following: (i) any overhead of Mortgagor incurred in connection with
the management of the Mortgaged Property; (ii) all amounts paid to Mortgagor or
an Affiliate of Mortgagor in excess of amounts that would reasonably be paid in
an arms-length transaction to a Person that is not an Affiliate of Mortgagor;
(iii) non-cash deductions of Mortgagor; (iv) salaries or distributions paid or
made to any employee, partner, officer, director or shareholder of Mortgagor or
an Affiliate of Mortgagor; (v) the cost of capital improvements made to the
Mortgaged Property not approved in advance in writing, by GMACCM; (vi) the cost
of Mortgagor's federal, state or local income taxes, franchise taxes or other
taxes (other than real property taxes for the Mortgaged Property); or (vii)
principal, interest and other debt service payments for the Mortgage Loan
secured by such Mortgaged Property.
(s) "GMACCM" shall refer to GMAC Commercial Mortgage Corporation, a
California corporation, and its successors and assigns.
(t) "Gross Revenues" means for any specified period, all revenue
received on a cash basis during such period from all sources related to the
Mortgaged Property, including without limitation, all rents, issues, profits,
revenues, cash proceeds from accounts and accounts receivable, and other income
and proceeds from the use or occupancy of hotel rooms, conference rooms and
other public facilities at the Mortgaged Property, all parking revenue,
refunds, license, lease and concession fees and rentals, income from vending,
machines, food and beverage sales, wholesale and retail sales of merchandise,
and service charges; provided, however, Gross Revenues for such specified
period shall also include on an accrual basis, prorated over such specified
period, any property or casualty insurance proceeds that are not used for
restoration of the Mortgaged Property, any condemnation awards from a temporary
taking that are not used for restoration of the Mortgaged Property or to replace
such collateral with its substantial equivalent, any proceeds of business
interruption and other loss of income insurance, and any health club membership
fees; provided, further, Gross Revenues shall not include the following: (i)
gratuities to employees, (ii) federal, state or municipal excise, sales, use or
similar taxes collected directly from patrons or guests or included as part of
the sales price of any goods or services, (iii) insurance proceeds (other than
proceeds from business interruption or other loss of income insurance or other
than property insurance not used for restoration), (iv) condemnation proceeds
(other than proceeds from a temporary taking that are not used for restoration),
(v) proceeds from any sale of the Mortgaged Property or from a refinancing of
any debt encumbering the Mortgaged Property, (vi) proceeds from any disposition
of furniture, fixtures and equipment no longer necessary for the operation of
the Mortgaged Property; (vii) or interest accruing on amounts deposited in any
FF&E or other reserve account.
(u) "Guaranteed Obligations" shall have the meaning set forth in
Section 11 hereof.
(v) "Guarantor" shall mean Doubletree and its successors and permitted
assigns.
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(w) "Guaranty" means this Guaranty, including all Schedules and
Exhibits hereto, as the same may be amended, supplemented, corrected or
otherwise modified.
(x) "Guaranty Fee" shall have the meaning set forth in Section 9
hereof.
(y) "Guaranty Interest Rate" shall have the meaning set forth in
Section 9 hereof.
(z) "Indebtedness" means all principal, interest, late fees, exit fees,
indemnification indebtedness and other amounts outstanding, from time to time,
under the Mortgage Loan Documents for a particular Mortgage Loan.
(aa) "Letter of Credit" shall have the meaning set forth in Section 8
hereof.
(bb) "Liquidation Recoveries" shall have the meaning set forth in
Section 6 hereof.
(cc) "Loan Amount" shall refer to the amount of financing that GMACCM
agrees to provide to any Mortgagor for any of the respective Mortgage Loans,
whether a Construction Loan or an Extended Construction Loan, pursuant to the
Loan Commitment. The respective Loan Amounts for the Construction Loan and the
Extended Construction Loan need not necessarily be the same amounts.
(dd) "Loan Commitment" shall have the definition set forth in the
Recitals hereto.
(ee) "Loan Guaranty" means, with respect to any Mortgage Loan, any and
all guaranties executed in connection therewith including, without limitation,
any completion guaranty.
(ff) "Loss" shall have the meaning set forth in Section 6 hereof.
(gg) "LTV" means the ratio of the Loan Amount to the fair market value
of the Mortgaged Property, as such fair market value is established pursuant to
an appraisal dated within thirty (30) days of such determination and acceptable
in all respects to GMACCM, in its sole discretion.
(hh) "Maturity Date" shall refer to the date any, referenced Mortgage
Loan then outstanding is due and payable in full.
(ii) "Maximum Amount" means, with respect to any Mortgage Loan, the
initial Maximum Amount for such Mortgage Loan, as said initial Maximum Amount is
set forth on the Mortgage Loan Schedule, as increased by (a) interest on the
Maximum Amount or the portion thereof then due, accruing, from the date the same
is due by Guarantor hereunder until the date paid in full, at the annual rate of
three percent (3%) over the prime rate published from time to time by The Wall
Street Journal, and (b) all collection costs hereunder, and as decreased by any
amounts attributable to principal for such Mortgage Loan and which is actually
funded by Guarantor hereunder (other than pursuant to clause (ii) of the first
sentence of Section 7 below) and not reimbursed to Guarantor pursuant to the
provisions hereof. The initial Maximum Amount for a particular Mortgage Loan
is derived pursuant to a formula that ensures that the portion of the Mortgage
Loan held by GMACCM which is not guaranteed under this Guaranty, does not exceed
sixty percent (60.0%) of the Approved Project Costs applicable to that Mortgage
Loan and related Mortgaged Property.
(jj) "Monetary Default" shall mean a default under the Mortgage Loan
Documents which directly results from the nonpayment of a monetary sum as and
when due.
(kk) "Mortgage" means, with respect to any Mortgage Loan, the
mortgages, deeds of trust, deeds to secure debt or other real property security
instruments, together with each modification, amendment and supplement thereto,
creating a lien on the Mortgaged Property described therein to secure a Mortgage
Note.
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(ll) "Mortgage/Deed of Trust Assignment" means an instrument to be
delivered by the Mortgagee to transfer the related Mortgage, Assignment of Rents
and Leases, and all other recorded security agreements to Guarantor pursuant to
the Repurchase Option.
(mm) "Mortgage Loan and Mortgage Loans" shall mean either a
Construction Loan or an Extended Construction Loan, which is actually closed and
funded pursuant to a particular Loan Commitment as more fully set forth on the
Mortgage Loan Schedule.
(nn) "Mortgage Loan Documents" means with regard to each Mortgage Loan,
the Mortgage Note, Mortgage, Assignment of Rents and Leases, Environmental
Indemnity, Building Loan Agreement, Loan Guaranty, Security Agreement and each
other document or instrument further securing, evidencing, indemnifying
guaranteeing or governing, the Mortgage Loan or otherwise related to the
Mortgage Loan.
(oo) "Mortgage Loan Files" means the Mortgage Loan Documents and all
correspondence and other materials relating to the Mortgagor, the Mortgaged
Property or the Mortgage Loan, its origination or servicing.
(pp) "Mortgage Loan Schedule" means the schedule of Mortgage Loans
attached hereto as Schedule 1, as the same shall be supplemented after the
closing of each Mortgage Loan and as the same may be amended, corrected or
otherwise modified by instrument executed or initialed by GMACCM and Guarantor,
which schedule includes, without limitation, the initial Maximum Amount for each
such loan and the Guaranty Interest Rate, if any, applicable to each such loan.
To the extent any proposed loan listed on the Mortgage Loan Schedule is not
actually committed to by GMACCM, in its sole discretion, or is not closed and
funded by GMACCM, it shall not be considered a Mortgage Loan hereunder and shall
not be considered a part of such schedule, and Guarantor shall have no liability
or obligations related thereto.
(qq) "Mortgage Note" means the promissory note or notes or other
documents, together with all amendments and modifications thereof, evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
(rr) "Mortgaged Property" means, with respect to a Mortgage Note, the
land, improvements, fixtures, personal property, contract rights (including
rights under any management agreement or franchise agreement), leases, rents,
hotel revenues, profits, permits and licenses (including, liquor licenses), and
other collateral (including any interest under a ground lease) directly securing
such Mortgage Note.
(ss) "Mortgage" means, with respect to any Mortgage as of any date of
determination, the holder of the related Mortgage Note as of such date.
(tt) "Mortgagor" means the obligor or obligors identified as such under
a Mortgage Note or Mortgage, which may be an affiliate of Candlewood or may be
an unaffiliated franchisee of Candlewood.
(uu) "Multiple Delinquency" means, with respect to any Mortgage Loan,
either (i) the second Delinquency to occur in any continuous twelve (12) month
period or (ii) the fourth Delinquency to occur under such Mortgage Loan over its
term, as may be extended from time to time.
(vv) "Net Worth" means, as of any date, the difference between the
assets shown on the financial statements of such Person (whether certified or
made in connection with a filing with the Securities and Exchange Commission)
less all liabilities of such Person, including, without limitation, all Debt.
(ww) "NOI" shall mean
(a) for purposes of GMACCM determining whether a Mortgage
Loan and the related Mortgaged Property satisfy the
Conforming Loan Criteria, "NOI" shall mean Net
Operating Income as defined and determined by GMACCM
in accordance with its then-
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current underwriting standards and practices for its
conduit program for loans and borrowers of that
type, which may include, without limitation:
1. An allowance of no less than 5% multiplied
by gross annual revenues for management
fees;
2. An allowance of no less than 5% multiplied
by gross annual revenues for franchise fees
payable to Candlewood; and
3. An allowance of no less than 4% multiplied
by gross annual revenues for a property,
plant, furniture, fixture, and equipment
replacement reserve; and
(b) for all other purposes, "NOI" shall mean Gross
Revenues less Expenses, all to the extent confirmed
by the periodic financial and property reporting and
audit requirements set forth in the Mortgage Loan
Documents.
(xx) "Non-Monetary Default" shall mean any default under the Mortgage
Loan Documents beyond any applicable cure period, other than a Monetary Default
and a Bankruptcy Default.
(yy) "Participation Agreement" shall mean that agreement in the form
attached hereto as Exhibit B (with Promus guaranteeing the obligations of
Doubletree thereunder), governing the subordinate participation rights Guarantor
may obtain in a particular Mortgage Loan upon payment of Guaranteed Obligations
related thereto, together with all exhibits and schedules to such agreement.
(zz) "Periodic Recovery" shall have the meaning set forth in Section 3
hereof.
(aaa) "Person" means an individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
bank, unincorporated organization or government or any agency or political
subdivision thereof.
(bbb) "Promus" means Promus Hotel Corporation, a Delaware corporation,
its successors and permitted assigns. Promus is the beneficial owner of all of
the issued and outstanding stock of Doubletree, and has agreed to guaranty all
obligations of Doubletree under this Guaranty pursuant to that agreement
attached hereto as Schedule 11 and made a part hereof.
(ccc) "Remedies Notice" shall have the meaning set forth in Section 4
hereof.
(ddd) "Repurchase Option" shall mean the option of Guarantor to
purchase a Mortgage Loan pursuant to Section 5 hereof.
(eee) "Security Agreement" means, with respect to any Mortgage Loan,
the financing statements and security agreements executed in connection
therewith.
2. "Guaranty of Payment. Guarantor hereby unconditionally and irrevocably
guarantees to GMACCM the punctual payment when due, and not merely the
collectability, of (a) all Delinquencies as set forth in Section 3 below and (b)
all Loss as set forth in Section 6 below, in the aggregate up to the Maximum
Amount for all Mortgage Loans. The Maximum Amount for any particular Mortgage
Loan shall be reduced by the amount of any Delinquency satisfied from time to
time by Guarantor in accordance with Section 3 below which is attributable to
principal under a particular Mortgage Loan, and shall be increased by the cash
amount, without interest, of any subsequent recoveries by GMACCM against the
Mortgagor for those Delinquencies which were previously satisfied by Guarantor,
which recoveries shall be promptly paid to Guarantor by GMACCM in the ordinary
course of GMACCM's servicing of Mortgage Loan payments. Sums paid by Guarantor
hereunder (other than interest and
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collection costs under Section 19 below), shall not be applied on account of the
Indebtedness outstanding for a particular Mortgage Loan, but rather, shall
constitute the purchase by Guarantor of a subordinated participation in such
Mortgage Loan in the amount paid by Guarantor, which participation shall be
governed by the terms and provisions of the Participation Agreement. Recoveries
paid by GMACCM to Guarantor shall be applied to reduce Guarantor's participation
interest in such Mortgage Loan. Interest and collection costs paid by Guarantor
under Section 19 below, will belong to GMACCM and will not be applied on account
of the Indebtedness outstanding under any Mortgage Loan or to the purchase by
Guarantor of a participation interest in any Mortgage Loan.
3. Guaranty of Delinquencies. To the extent that for any month during a Mortgage
Loan term that GMACCM does not receive, for any reason, any portion of the
Indebtedness due for such month, following applicable notice and grace periods,
if any, GMACCM may give written notice to Guarantor of such Delinquency.
Guarantor hereby unconditionally and irrevocably guarantees to GMACCM that
Guarantor shall pay to GMACCM no later than seven (7) Business Days after the
date of such notice from GMACCM, the amount of such Delinquency, up to the then
Maximum Amount. To the extent that such guarantee payment is not timely received
by GMACCM, Guarantor shall be in default hereunder and shall be liable for
interest and collection costs as set forth in Section 19 below. To the extent
that GMACCM subsequently receives from Mortgagor after payment of all current
Indebtedness, any portion of the Delinquencies previously satisfied by Guarantor
pursuant to this Guaranty (a "Periodic Recovery"), such cash Periodic Recovery
amounts up to the amount of the prior Delinquency, without interest, actually
received from Mortgagor shall be remitted promptly to Guarantor and shall be
added to and shall increase the Maximum Amount. As described more fully in
Section 27 below but subject to the provisions of Section 6(c) below, Guarantor
shall have no subrogation rights against Mortgagor and shall not demand or
request repayment from Mortgagor or an Affiliate of Mortgagor for any
Delinquency which Guarantor has satisfied and paid under this Guaranty.
Satisfaction by Guarantor of any Delinquency shall not cure or remedy
Mortgagor's failure to properly pay such sums under the Mortgage Loan Documents
and the Mortgage Loan default resulting therefrom.
4. Loan Administration. Guarantor acknowledges and agrees that GMACCM has full
and absolute control over administration of the Mortgage Loans, including
decisions regarding whether to modify the Mortgage Loan terms, extend the
Maturity Date, advance additional funds, release collateral, terminate
management, franchise or other pledged contractual rights, waive or relinquish
rights or remedies, or assign GMACCM's rights and interests, subject to the
terms and conditions of such agreements and Mortgage Loan Documents.
Notwithstanding the foregoing, GMACCM hereby agrees as follows:
(a) GMACCM shall provide Guarantor with copies of all written notices
of default sent to each Mortgagor by GMACCM;
(b) As to those Mortgage Loan defaults which directly result from the
occurrence of a Monetary Default, GMACCM shall only accelerate the maturity of
the Indebtedness and foreclose on the Mortgaged Property, obtain a receiver
therefor or accept a deed in lieu thereof if within a period of sixty (60) days
(inclusive of any applicable notice and/or grace periods set forth in the
Mortgage Loan Documents) from the occurrence of such Monetary Default, the
Monetary Default has not been cured by Mortgagor or satisfied by Guarantor in
accordance with Section 3 above (with the seven Business Day notice period
described in Section 3 being a part of such sixty-day forbearance period);
provided, however, (i) the foregoing restrictions shall in no way affect or
restrict GMACCM's rights to immediately proceed with its available remedies upon
the occurrence of any Mortgage Loan default that is caused by a Bankruptcy
Default or a Non-Monetary Default, and (ii) GMACCM shall have no obligation to
forbear from pursuing its lawful remedies for such sixty-day period if the
Monetary Default is a Multiple Delinquency;
(c) If the Mortgage Loan default is a Non-Monetary Default or if the
Monetary Default has not been cured within such sixty-day period or if the
Monetary Default is a Multiple Delinquency, GMACCM may, at its option, elect to
foreclose on all or a portion of the Mortgaged Property, appoint a receiver
therefor, accept a deed in lieu thereof of otherwise exercise its rights and
remedies as regards the Mortgaged Property and/or the Mortgagor,
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in which event, GMACCM shall give Guarantor written notice (the "Remedies
Notice") of (i) GMACCM's intention to pursue its available remedies and (ii) the
aggregate Indebtedness then outstanding, together with per diem interest and
other charges, under the applicable Mortgage Loan. Guarantor shall then have
thirty (30) days to avoid potential exposure for a Loss by instead, exercising
Guarantor's Repurchase Option; and
(d) GMACCM will not materially modify the Mortgaged Loan terms, extend
the Maturity Date, advance additional funds (except in an emergency) release
collateral, terminate management, franchise or other material pledged
contractual rights or waive or relinquish material rights or remedies, without
first (i) having determined in its business judgment, after considering all
facts and circumstances, that to do so is necessary or desirable to prevent a
default or to protect the value of the security for the Mortgage Loan, and (ii)
notifying Guarantor of GMAC-MC's intent to do so, which notice shall also
constitute a Remedies Notice hereunder.
5. Repurchase Option. At any time during the thirty (30) days following
GMACCM's Remedies Notice, Guarantor may, at its option (the "Repurchase Option")
purchase the defaulted Mortgage Loan by payment to the Mortgagee, within such
time period, of the aggregate Indebtedness then outstanding under such Mortgage
Loan less the amount, if any, of Guarantor's participation interest in such
Mortgage Loan. Upon receipt of such funds, GMACCM shall execute and deliver,
without representation, warranty or recourse, the Allonge, the Mortgage/Deed of
Trust Assignment and other assignments and transfers of the applicable Mortgage
Loan Documents, together with all assignable rights of GMACCM in and to policies
of insurance (property, title or other) and all claims thereunder, all rights of
GMACCM to condemnation awards and all other rights of GMACCM related to such
Mortgage Loan other than indemnification rights for the benefit of GMACCM which
survive the payoff of such loan; provided, however, GMACCM shall represent and
warrant that it has done nothing during its ownership of the Mortgage Loan to
affect the validity and enforceability of such loan as a first mortgage lien on
the Mortgaged Property, and that it has not transferred, encumbered or assigned
the Mortgage Loan; and provided, further, GMACCM shall take such other actions
as may be necessary, after taking into account all facts and circumstances, to
vest in Guarantor unencumbered title to all of the foregoing, all at Guarantor's
sole cost and expense.
6. Guaranty of Loss.
(a) If Guarantor does not timely exercise its Repurchase Option and if
the Mortgage Loan default is continuing, GMACCM may, at its option, proceed to
exercise its available remedies, including foreclosure. In such event, GMACCM
may suffer a "Loss" in an amount equal to the then outstanding Indebtedness
under the Loan minus all Liquidation Recoveries (as hereinafter defined)
actually received by GMACCM with respect to the Loan or Mortgaged Property. As
used herein, the term "Liquidation Recoveries" shall mean (i) if the Mortgaged
Property has been sold at foreclosure to a third party, the net cash proceeds
from such foreclosure sale actually received by GMACCM (it being understood and
agreed that Guarantor shall have the right to purchase the Mortgaged Property at
such foreclosure sale), (ii) if the Mortgaged Property is acquired by GMACCM or
its designee at a foreclosure sale (it being understood and agreed that
Guarantor shall have the right to purchase the Mortgaged Property at such
foreclosure sale), the successful GMACCM foreclosure bid less reasonable
foreclosure costs, (iii) if GMACCM has elected to accept a deed to the Mortgaged
Property in lieu of foreclosure, the value of such Mortgaged Property as
reasonably agreed to by GMACCM based upon an internal or other appraisal of the
Mortgaged Property, or (iv) if GMACCM has elected to pursue other available
remedies, the net cash proceeds to GMACCM from the exercise of such remedies.
GMACCM shall not give less than thirty (30) days prior notice to Guarantor of
any foreclosure sale of the Mortgaged Property (which notice period may be part
of the sixty (60) day and thirty (30) day notice periods set forth in Sections
4(b), 4(c) and 6(b) of this Agreement), which shall include the date, time and
place of the sale. There shall be added to Liquidation Recoveries, the net cash
amount of all sums recovered by GMACCM with respect to such Mortgage Loan (other
than under this Guaranty), including without limitation, the net amount
recovered under any policy of property, title or other insurance applicable to
such Mortgage Loan, under any assigned contract or from any other guarantor of
such Mortgage Loan; provided, however, GMACCM shall not be required to institute
or prosecute any proceedings or claims against any or all of such collateral,
insurance or other sources of payment (including without limitation, proceedings
under the Loan Guaranty to recover any deficiency or alleged breach of
non-recourse covenants or conditions) as a condition of payment hereunder or
enforcement of
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the terms of this Guaranty; provided, however, GMACCM shall use reasonable
efforts, taking into accounts all facts and circumstances, to recover any Loss
satisfied by Guarantor and to remit the same to Guarantor.
(b) If the Mortgage Loan default is a Bankruptcy Default, the Loss
guaranteed by Guarantor hereunder shall be equal to the then Maximum Amount.
Within thirty (30) days of written notice from GMACCM of the occurrence of a
Bankruptcy Default, Guarantor may, at its option, exercise its Repurchase Option
as to such Mortgage Loan or shall pay to GMACCM the then Maximum Amount. To the
extent that the Repurchase Option is not consummated or the Maximum Amount has
not been received within such thirty-day period, Guarantor shall be in default
hereunder, with Guarantor liable for additional interest and for collections
costs, as described below.
(c) After completion of the foreclosure or other enforcement action
(except for remedies taken for a Bankruptcy Default, for which recovery against
Guarantor is governed by clause (b) above) and after GMACCM's determination of
the amount of its Loss, GMACCM shall provide written notice to Guarantor of the
amount of such Loss. Guarantor hereby unconditionally and irrevocably guarantees
to GMACCM that Guarantor shall pay to GMACCM, no later than seven (7) Business
Days after the date of such notice from GMACCM, the amount of such Loss, up to
the then Maximum Amount. To the extent that such guarantee payment is not timely
received by GMACCM, Guarantor shall be in default hereunder and shall be liable
for interest and collection costs. GMACCM shall not be required to seek a
personal judgement against Mortgagor and/or Mortgagor's principal equity owners
under the Loan Documents (for breaches of non-recourse covenants and conditions,
under the Environmental Indemnity or otherwise) prior to seeking payment from
Guarantor of any Loss; provided, however, GMACCM shall use reasonable efforts,
taking, into account all facts and circumstances, to recover the Loss and remit
the same to Guarantor. Upon receipt by GMACCM of all Indebtedness owing to
GMACCM under the Mortgage Loan Documents (except in the case of a Bankruptcy
Default), GMACCM shall assign, without recourse, representation or warranty
(except as provided in Section 5 above), the Mortgage Loan Documents to
Guarantor, together with all other rights of GMACCM described in Section 5
above.
7. Loan Paydown. In addition to the guarantee of Delinquencies and the guarantee
of Loss, as described above, Guarantor hereby unconditionally and irrevocable
guarantees to GMACCM that, in the event that on or before sixty (60) days prior
to (a) the Maturity Date of each Construction Loan or (b) the first Maturity
Date of each Extended Construction Loan, as applicable, the related Mortgaged
Property has not achieved a minimum 1.10 DSCR, then, in such event, Guarantor,
not earlier than sixty (60) days but at least thirty (30) days prior to each
such Maturity Date shall have either (i) paid down, up to the then Maximum
Amount, the Loan Amount for such particular Mortgage Loan in order to achieve a
1.10 DSCR or (ii) entered into an agreement, in the form attached to and made a
part of the Participation Agreement, whereby Guarantor agrees to become fully
liable for the payment of all principal, interest, net cash flow, tax and
insurance escrows, and other sums payable monthly on account of such Mortgage
Loan. Sums payable by Guarantor pursuant to clause (ii) of the preceding
sentence shall be applied to the purchase by Guarantor of a subordinated
participation in the Mortgage Loan, in accordance with the terms and provisions
of the Participation Agreement, but shall not reduce the Maximum Amount.
Guarantor may at any time revoke its agreement under such clause (ii) above and
terminate its obligations thereunder by paying the sum then owing, if any, under
clause (i) above, and such agreement will automatically terminate when the
Mortgage Loan achieves a 1.10 DSCR or when the Maximum Amount for such loan
equals zero (Guarantor acknowledging, however, that payments under clause (ii)
above shall not reduce the Maximum Amount). GMACCM will continue its customary
efforts to collect all interest and other sums coming due from the Mortgagor and
will promptly credit to Guarantor all sums so collected.
8. Acceleration/Letter of Credit.
(a) In addition to all other rights and remedies set forth herein, the
Maximum Amount for all Mortgage Loans then outstanding shall be immediately due
and payable if any of the representations and warranties in Section 22 are
incorrect as of the date hereof or if, at any time during the term of any
Mortgage Loan (i) Guarantor files or has filed against it a bankruptcy,
insolvency or reorganization proceeding under federal or state law (unless, in
the case of an involuntary proceeding, such proceeding is dismissed within sixty
(60) days of the
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filing, thereof), (ii) any representation, warranty or covenant in Section
22(b), (d), (e), (i), (j), (k) or (l) is incorrect or breached, or (iii)
Guarantor breaches any covenant set forth in clauses (b) and (c) below.
(b) If, at any time, one or more of the covenants set forth in Section
23 below is violated, within fifteen (15) Business Days of notice thereof by
GMACCM, Guarantor shall obtain and deliver to GMACCM at Guarantor's sole
expense, an unconditional, irrevocable letter of credit (the "Letter of Credit")
in an amount equal to twenty-five percent (25%) of the aggregate Maximum Amount
for all Mortgage Loans then outstanding. The Letter of Credit shall be from a
financial institution having at least $100 million in assets, shall name GMACCM
as the sole beneficiary and shall be in form and content acceptable to GMACCM,
in its sole discretion. GMACCM shall be entitled to present the Letter of Credit
and to make a draw against the same if Guarantor fails to pay a Delinquency,
Loss, or other sum required to be paid under this Guaranty in accordance with
the terms hereof. GMACCM shall promptly return the Letter of Credit to Guarantor
if and to the extent that the breach of the financial covenants set forth herein
is cured, without in any manner limiting GMACCM's rights to require another
Letter of Credit if one or more of such covenants are violated at a subsequent
date.
(c) If, after obtaining the Letter of Credit and prior to its return to
Guarantor, one of the covenants set forth in Section 23 below is violated for a
second time (when measured at least one hundred twenty (120) days after the date
of the first breach), GMACCM shall have the right to require Guarantor, within
fifteen (15) Business Days of notice thereof by GMACCM, to obtain an additional
letter of credit or an increase to or supplement of the Letter of Credit so that
the face amount of the aggregate Letter of Credit equals fifty percent (50%) of
the aggregate Maximum Amount for all Mortgage Loans then outstanding.
9. Rebate to Guarantor. GMACCM hereby agrees to pay to Guarantor monthly on the
twenty-fifth day of each month (or if such day is not a Business Day, on the
next succeeding Business Day) (the "Rebate Payment Date"), commencing on the
twenty-fifth (25th) day of the first calendar month following the closing of
each Mortgage Loan, an amount (the "Guaranty Fee") equal to the product of (i)
the quotient of (1) the interest rate (the "Guaranty Interest Rate,"), if any,
as is set forth on the Mortgage Loan Schedule opposite the particular Mortgage
Loan to which it applies divided by (2) the non-default contract interest rate
(LIBOR plus the applicable spread) set forth in the applicable Mortgage Note,
multiplied by (ii) the actual interest remitted by Mortgagor under that Mortgage
Loan for that month and (to the extent not previously rebated to Guarantor in
accordance herewith) any prior or partial month; provided, however, such
payments by GMACCM to Guarantor shall only be made as and to the extent that (a)
GMACCM has received all principal, interest, net cash flow, tax and insurance
escrows and other sums owing by Mortgagor under such Mortgage Loan by the fifth
(5th) business day prior to such Rebate Payment date and (b) GMACCM has made no
claim against Guarantor under this Guaranty which has not been satisfied in
full. Any Mortgage Loan payments received by GMACCM later than five (5) business
days prior to the applicable Rebate Payment Date will be paid (absent breach of
clause (b) of the preceding sentence) to Guarantor on the next calendar month's
Rebate Payment Date. Guarantor acknowledges and agrees that the Guaranty
Interest Rate is in addition to the interest rate which GMACCM would otherwise
charge to the Mortgagor, shall be disclosed to the Mortgagor in the Loan
Commitment or other document, and the Guaranty Fee represents reasonable
consideration to Guarantor for its costs and expenses in providing this Guaranty
for the benefit of Mortgagor. Guarantor further acknowledges and agrees that if
a claim has been made under this Guaranty but has not been fully satisfied for
any reason, or if, for any reason, GMACCM has not received from the Mortgagor,
by the prior month's payment date, all sums due and payable under such Mortgage
Loan, the Guaranty Fee for that Mortgage Loan for that month shall be applied to
the Indebtedness and shall not be due and payable to Guarantor unless and until
GMAC-MC has received all such delinquent sums from Guarantor and the Mortgagor.
Notwithstanding the foregoing, in those circumstances where Guarantor has
exercised its option under clause (ii) of Section 7 to become fully liable for
the payment of sums owing under a particular Mortgage Loan, to the extent that a
Guaranty Fee is received from the Mortgagor for that Mortgage Loan, it shall be
retained by GMACCM as consideration for GMACCM's increased costs of servicing
such loan.
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10. Termination of Guaranty.
(a) Except as set forth in clause (b) below, this Guaranty shall be
terminated as to a particular Mortgage Loan and Guarantor shall be released from
all liability with respect to a particular Mortgage Loan at such time as GMACCM
has notified Guarantor in writing that the related Mortgaged Property has
satisfied the Conforming Loan Criteria. GMACCM agrees to provide Guarantor with
such notice promptly after confirming to GMACCM's satisfaction, in its sole
discretion, that the Conforming Loan Criteria have been satisfied.
(b) This Guaranty shall continue in effect as to all Mortgage Loans
which have not satisfied the Conforming Loan Criteria. With respect to each
Mortgage Loan which has satisfied the Conforming Loan Criteria, this Guaranty
shall continue in effect (i) with respect to all obligations and liabilities of
Guarantor under Section 19, and (ii) as provided in Section 12(b).
11. Primary Liability of Guarantor.
(a) This Guaranty is an absolute, irrevocable and unconditional
guaranty of payment. Guarantor shall be liable, with respect to each Mortgage
Loan, for the payment of all indebtedness described herein up to the Maximum
Amount applicable to such loan (up to such ceiling in the aggregate for all
Mortgage Loans, the "Guaranteed Obligations"), as set forth in this Guaranty, as
a primary obligor. This Guaranty shall be effective as a waiver of, and
Guarantor hereby expressly waives, any and all rights to which Guarantor may
otherwise have been entitled under any suretyship laws in effect from time to
time; including any right or privilege, whether existing under statute, at law
or in equity, to require GMACCM to take prior recourse or proceedings against
any collateral, security or Person whatsoever.
(b) Guarantor hereby agrees that in the event of the occurrence of a
default of an obligation of Guarantor hereunder which continues beyond
applicable notice and grace periods, if any, (individually and collectively an
"Event of Default"), then upon the occurrence of such Event of Default, the
Guaranteed Obligations, for purposes of this Guaranty, shall be deemed
immediately due and payable at the election of GMACCM, and Guarantor shall, on
demand and without presentment, protest, notice of protest, further notice of
nonpayment or of dishonor or of default, or notice of acceleration or of intent
to, or any other notice whatsoever, without any notice having been given to
Guarantor or Mortgagor previous to such demand of the acceptance by GMACCM of
this Guaranty, and without any notice having been given to Guarantor or
Mortgagor previous to such demand of the creating or incurring of such
indebtedness, all such notices being hereby waived by Guarantor, pay all damages
and all costs and expenses, up to the then Maximum Amount, that may arise in
consequence of any such Event of Default (including any and all costs and
expenses incurred by GMACCM in connection with the collection and enforcement of
this Guaranty or any portion thereof including all reasonable attorneys' fees
and expenses, investigation costs, and all court costs, whether or not suit is
filed hereon, and it shall not be necessary for GMACCM, in order to enforce such
payment by Guarantor, first to institute suit or pursue or exhaust any rights or
remedies against Mortgagor or others liable on such indebtedness or to institute
suit or pursue or exhaust any rights or remedies against Mortgagor and all other
Guarantor or other sureties of the Guaranteed Obligations or to enforce any
rights against any security that shall ever have been given to secure such
indebtedness, or to join Mortgagor or any others liable for the payment of the
Guaranteed Obligations or any part thereof in any action to enforce this
Guaranty, or to resort to any other means of obtaining payment of the Guaranteed
Obligations; provided, however, except as specifically set forth above, nothing
herein contained shall prevent GMACCM from suing on the Mortgage Note or
foreclosing the Mortgage or from exercising, any other rights thereunder, and if
such foreclosure or other remedy is availed of, only the net proceeds therefrom,
after deduction of all charges and expenses of every kind and nature whatsoever,
shall be applied in reduction of the amount due on the Mortgage Note and
Mortgage, and GMACCM shall not be required to institute or prosecute proceedings
to recover any deficiency or alleged breach of non-recourse covenants or
conditions as a condition of payment hereunder or enforcement hereof; provided,
however, GMACCM shall use reasonable efforts, taking into account all facts and
circumstances, to recover any Loss amount and remit the same to Guarantor. At
any sale of the Mortgaged Property or other collateral given for the
Indebtedness or any part thereof, whether by foreclosure or otherwise, GMACCM
may at its
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discretion purchase all or any part of the Mortgaged Property or collateral so
sold or offered for sale for its own account and may, in payment of the amount
bid therefor, deduct such amount from the balance due it pursuant to the terms
of the Mortgage Note and Mortgage.
(c) Suit may be brought or demand may be made against all parties who
have signed this Guaranty or any other guaranty covering all or any part of the
Guaranteed Obligations, or against any one or more of them, separately or
together, without impairing the rights of GMACCM against any party hereto. Any
time that GMACCM is entitled to exercise its rights or remedies hereunder, it
may in its discretion elect to demand payment.
12. Certain Agreements and Waivers by Guarantor.
(a) Guarantor hereby agrees that neither GMACCM's rights or remedies
nor Guarantor's obligations under the terms of this Guaranty shall be released,
diminished, impaired, reduced or affected by any one or more of the following,
events, actions, facts, or circumstances, and the liability of Guarantor under
this Guaranty shall be absolute and unconditional irrespective of:
(i) any limitation of liability or recourse in any other Loan
Document or arising under any law;
(ii) any claim or defense that this Guaranty was made without
consideration or is not supported by adequate consideration;
(iii) the taking or accepting of any other security or
guaranty for, or right of recourse with respect to, any or all of the
Guaranteed Obligations;
(iv) any homestead exemption or any other exemption under
applicable law;
(v) any release, surrender, abandonment, exchange, alteration,
sale or other disposition, subordination, deterioration, waste, failure
to protect or preserve, impairment, or loss of, or any failure to
create or perfect any lien or security interest with respect to, or any
other dealings with, any collateral or security at any time existing or
purported, believed or expected to exist in connection with any or all
of the Guaranteed Obligations, including any impairment of Guarantor's
recourse against any Person or collateral;
(vi) whether express or by operation of law, any partial
release of the liability of Guarantor hereunder, or if one or more
other guaranties are now or hereafter obtained by GMACCM covering all
or any part of the Guaranteed Obligations, any complete or partial
release of any one or more of such guarantors under any such other
guaranty, or any complete or partial release or settlement of Mortgagor
or any other party liable, directly or indirectly, for the payment of
any or all of the Guaranteed Obligations;
(vii) the death, insolvency, bankruptcy, disability,
dissolution, liquidation, termination, receivership, reorganization,
merger, consolidation, change of form, structure or ownership, sale of
all assets, or lack of corporate, partnership or other power of
Mortgagor or any other party at any time liable for the payment of any
or all of the Guaranteed Obligations;
(viii) either with or without notice to or consent of
Guarantor, except as required under Section 4(d) above: any renewal,
extension, modification or rearrangement of the terms of any or all of
the Guaranteed Obligations and/or any of the Loan Documents, including
material alterations of the terms of payment (including changes in
maturity date(s) and interest rate(s)) or performance (including
changes in the final plans and specifications and other terms or
aspects of construction of the improvements at the Mortgaged Property)
or any other terms thereof, or any waiver, termination, or release of,
or consent to departure from, any of the Loan Documents or any other
guaranty of any or all of the Guaranteed Obligations, or any
adjustment, indulgence, forbearance, or compromise that may be granted
from time to
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time by GMACCM to Mortgagor, Guarantor, and/or any other Person at any
time liable for the payment of any or all of the Guaranteed
Obligations;
(ix) any neglect, lack of diligence, delay, omission, failure,
or refusal of GMACCM to take or prosecute (or in taking or prosecuting)
any action for the collection or enforcement of any of the Guaranteed
Obligations, or to foreclose or take or prosecute any action to
foreclose (or in foreclosing or taking or prosecuting any action to
foreclose) upon any security therefor, or to exercise (or in
exercising) any other right or power with respect to any security
therefor, or to take or prosecute (or in taking or prosecuting) any
action in connection with any Loan Document, or any failure to sell or
otherwise dispose of in a commercially reasonable manner any collateral
securing any or all of the Guaranteed Obligations; provided, however,
GMACCM shall use reasonable efforts, taking into account all facts and
circumstances, to recover any Loss amount and to remit the same to
Guarantor;
(x) any failure of GMACCM to notify Guarantor, to the extent
required under Section 4(d) above, of any creation, renewal, extension,
rearrangement, modification, supplement, subordination, or assignment
of the Guaranteed Obligations or any part thereof, or of any Loan
Document, or of any release of or change in any security, or of any
other action taken or refrained from being taken by GMACCM against
Mortgagor or any security or other recourse, or of any new agreement
between GMACCM and Mortgagor, it being understood that GMACCM shall
not be required to give Guarantor any notice of any kind under any
circumstances with respect to or in connection with the Guaranteed
Obligations, any and all rights to notice Guarantor may have otherwise
had being hereby waived by Guarantor, and Guarantor shall be
responsible for obtaining for itself information regarding the
Mortgagor, including, any changes in the business or financial
condition of the Mortgagor, and Guarantor acknowledges and agrees that
GMACCM shall have no duty to notify Guarantor of any information which
the GMACCM may have concerning the Mortgagor.
(xi) if any requirement for any reason that GMACCM is required
to refund any payment by Mortgagor to any other party liable for the
payment of any or all of the Guaranteed Obligations or pay the amount
thereof to someone else;
(xii) the making of advances by GMACCM to protect its interest
in the Mortgaged Property, preserve the value of the Mortgaged Property
or for the purpose of perform in any term or covenant contained in any
of the Loan Documents;
(xiii) the existence of any claim, counterclaim, set-off,
recoupment, reduction or defense based upon any claim or other right
that Guarantor may at any time have against Mortgagor, GMACCM, or any
other Person, whether or not arising, in connection with this Guaranty,
the Mortgage Note, the Loan Agreement, or any other Loan Document;
(xiv) the unenforceability of all or any part of the
Guaranteed Obligations against Mortgagor, whether because the
Guaranteed Obligations exceed the amount permitted by law or violate
any usury law, or because the act of creating the Guaranteed
Obligations, or any part thereof, is ultra vires, or because the
officers or Persons creating same acted in excess of their authority,
or because of a lack of validity or enforceability of or defect or
deficiency in any of the Loan Documents, or because Mortgagor has any
valid defense, claim or offset with respect thereto, or because
Mortgagor's obligation ceases to exist by operation of law, or because
of any other reason or circumstance, it being agreed that Guarantor
shall remain liable hereon regardless of whether Mortgagor or any other
Person be found not liable on the Guaranteed Obligations, or any part
thereof, for any reason (and regardless of any joinder of Mortgagor or
any other party in any action to obtain payment of any or all of the
Guaranteed Obligations); or
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(xv) any order, ruling or plan of reorganization emanating
from proceedings under Title II of the United States Code with respect
to Mortgagor or any other Person, including any extension, reduction,
composition, or other alteration of the Guaranteed Obligations,
whether or not consented to by GMACCM.
(b) In the event any payment by Mortgagor, Guarantor or any other
Person to GMACCM is held to constitute a preference, fraudulent transfer or
other voidable payment under any bankruptcy, insolvency or similar law, or if
for any other reason GMACCM is required to refund such payment or pay the amount
thereof to any other party, such payment by Mortgagor, Guarantor or any other
Person to GMACCM shall not constitute a release of Guarantor from any liability
hereunder, and this Guaranty shall continue to be effective or shall be
reinstated (notwithstanding any prior release, surrender or discharge by GMACCM
of this Guaranty or of Guarantor), as the case may be, with respect to, and this
Guaranty shall apply to, any and all amounts so refunded by GMACCM or paid by
GMACCM to Guarantor or another Person (which amounts shall constitute part of
the Guaranteed Obligations), and any interest paid by GMACCM and any attorneys'
fees, costs and expenses paid or incurred by GMACCM in connection with any such
event. It is the intent of Guarantor and GMACCM that the obligations and
liabilities of Guarantor hereunder are absolute and unconditional under any and
all circumstances and that until the Guaranteed Obligations are fully and
finally paid and performed, and not subject to refund or disgorgement, the
obligations and liabilities of Guarantor hereunder shall not be discharged or
released, in whole or in part, by any act or occurrence that might, but for the
provisions of this Guaranty, be deemed a legal or equitable discharge or release
of a guarantor. GMACCM shall be entitled to continue to hold this Guaranty in
its possession for so long as may be necessary (including any bankruptcy
"preference" periods following the satisfaction of all Guaranteed Obligations)
to enforce any obligation of Guarantor hereunder and/or to exercise any right or
remedy of GMACCM hereunder.
(c) If acceleration of the time for payment of any amount payable by
Mortgagor under the Mortgage Note, the Loan Agreement, or any other Loan
Document is stayed or delayed by any law or tribunal, all such amounts shall
nonetheless be payable by Guarantor on demand by GMACCM.
13. Subordination. If, for any reason whatsoever, Mortgagor and/or Candlewood is
now or hereafter becomes indebted to Guarantor for any payments made under this
Guaranty:
(a) such indebtedness and all interest thereon and all liens, security
interests and rights now or hereafter existing with respect to property of
Mortgagor and/or Candlewood securing same shall, at all times, be subordinate in
all respects to the Guaranteed Obligations and to all liens, security interests
and rights now or hereafter existing to secure the Guaranteed Obligations;
(b) Guarantor shall not be entitled to enforce or receive payment,
directly or indirectly, of any such indebtedness of Mortgagor and/or Candlewood
to Guarantor until the Guaranteed Obligations have been fully and finally paid
and performed;
(c) Guarantor hereby assigns and grants to GMACCM a security interest
in all such indebtedness and security therefor, if any, of Mortgagor and/or
Candlewood to Guarantor now existing or hereafter arising, including any
dividends and payments pursuant to debtor relief or insolvency proceedings
referred to below. In the event of receivership, bankruptcy, reorganization,
arrangement or other debtor relief or insolvency proceedings involving Mortgagor
and/or Candlewood as debtor, GMACCM shall have the right to prove its claim in
any such proceeding so as to establish its rights hereunder and shall have the
right to receive directly from the receiver, trustee or other custodian (whether
or not a Default shall have occurred or be continuing under any of the Loan
Documents), dividends and payments that are payable upon any obligation of
Mortgagor and/or Candlewood to Guarantor now existing or hereafter arising, and
to have all benefits of any security therefor, until the Guaranteed Obligations
have been fully and finally paid and performed. If, notwithstanding the
foregoing provisions, Guarantor should receive any payment, claim or
distribution that is prohibited as provided above in this Section, Guarantor
shall pay the same to GMACCM immediately, Guarantor hereby agreeing that it
shall receive the payment, claim or distribution in trust for GMACCM and shall
have absolutely no dominion over the same except to pay it immediately to
GMACCM; and
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(d) Guarantor shall promptly upon request of GMACCM from time to time
execute such documents and perform such acts as GMACCM may require to evidence
and perfect its interest and to permit or facilitate exercise of its rights
under this Section, including execution and delivery of financing statements,
proofs of claim, further assignments and security agreements, and delivery to
GMACCM of any promissory notes or other instruments evidencing indebtedness of
Mortgagor and/or Candlewood to Guarantor. All promissory notes, accounts
receivable ledgers or other evidences, now or hereafter held by Guarantor, of
obligations of Mortgagor and/or Candlewood to Guarantor shall contain a specific
written notice thereon that the indebtedness evidenced thereby is subordinated
under and is subject to the terms of this Guaranty.
14. Other Liability of Guarantor or Mortgagor. GMACCM agrees that, without the
prior written consent of Guarantor, GMAC shall not extend to a particular
Mortgagor any debt ("Additional Debt") other than the Indebtedness outstanding
under the Mortgage Loan to such Mortgagor; provided, however, to the extent that
Guarantor has received a Loan Commitment or other written notification regarding
any such Additional Debt and has not objected in writing, to GMACCM prior to the
closing of such Additional Debt, Guarantor shall be deemed to have consented to
the issuance of such Additional Debt by GMACCM. If Guarantor is or becomes
liable, by endorsement or otherwise, for any indebtedness owing by Mortgagor to
GMACCM other than under this Guaranty, such liability shall not be in any manner
impaired or affected hereby, and the rights of GMACCM hereunder shall be
cumulative of any and all other rights that GMACCM may have against Guarantor.
This Guaranty is independent of (and shall not be limited by) any other guaranty
now existing or hereafter given.
15. GMACCM Assigns. This Guaranty is for the benefit of GMACCM and GMACCM's
successors, assigns and participants, and in the event of an assignment of the
Guaranteed Obligations, or any part thereof, the rights and benefits hereunder,
to the extent applicable to the Guaranteed Obligations so assigned, may be
transferred with such Guaranteed Obligations.
16. Binding Effect. This Guaranty is binding not only on Guarantor, but also on
Guarantor's successors and assigns; provided, however, (a) Guarantor may not,
without the prior written consent of GMACCM, assign any of its rights, powers,
duties or obligations hereunder and (b) Guarantor shall provide prior written
notice to GMACCM if any of the obligations of Guarantor hereunder are to become
binding on a successor to Guarantor.
17. Governing Law; Forum. This Guaranty is an agreement executed under seal, and
its validity, enforcement, and interpretation, shall for all purposes be
governed by and construed in accordance with the laws of the Commonwealth of
Pennsylvania and applicable United States federal law, and is intended to be
performed in accordance with, and only to the extent permitted by, such laws. If
any Guarantor is a corporation, the designation "(SEAL)" on this Guaranty shall
be effective as the affixing of such Guarantor's corporate seal physically to
this Guaranty. All obligations of Guarantor hereunder are payable and
performable at the place or places where the Guaranteed Obligations are payable
and performable. Guarantor hereby irrevocably submits generally and
unconditionally for Guarantor and in respect of Guarantor's property to the
jurisdiction of any state court, or any United States federal court, sitting, in
the state specified in the first sentence of this Section and to the
jurisdiction of any state or United States federal court sitting in the state in
which any of the Mortgaged Property is located, over any suit, action or
proceeding arising out of or relating to this Guaranty or the Guaranteed
Obligations. Guarantor hereby irrevocably waives, to the fullest extent
permitted by law, any objection that Guarantor may now or hereafter have to the
laying of venue in any such court and any claim that any such court is an
inconvenient forum. Guarantor hereby agrees and consents that, in addition to
any methods of service of process provided for under applicable law, all service
of process in any such suit, action or proceeding in any state court, or any
United States federal court, sitting in the state specified in the first
sentence of this Section may be made by certified or registered mail, return
receipt requested, directed to Guarantor at the address set forth at the end of
this Guaranty, or at a subsequent address of which GMACCM received actual notice
from Guarantor in accordance with said Section, and service so made shall be
complete when received or when delivery is refused by Guarantor. Nothing herein
shall affect the right of GMACCM to serve process in any manner permitted by law
or limit the right of GMACCM to bring proceedings against Guarantor in any other
court or jurisdiction.
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18. Invalidity of Certain Provisions. If any provision of this Guaranty or the
application thereof to any Person or circumstance shall, for any reason and to
any extent, be declared to be invalid or unenforceable, neither the remaining
provisions of this Guaranty nor the application of such provision to any other
Person or circumstance shall be affected thereby, and the remaining provisions
of this Guaranty, or the applicability of such provision to other Persons or
circumstances, as applicable, shall remain in effect and be enforceable to the
maximum extent permitted by applicable law.
19. Attorneys' Fees and Costs of Collection. Guarantor acknowledges that the
Maximum Amount of the Guaranteed Obligations shall be increased by all fees,
costs, interest and other sums described in this Section. Guarantor shall pay on
demand all attorneys' fees and all other costs and expenses incurred by GMACCM
in the enforcement of or preservation of GMACCM's rights under this Guaranty
including all reasonable attorneys' fees and expenses, investigation costs, and
all court costs, whether or not suit is filed herein, or whether at maturity or
by acceleration, or whether before or after maturity, or whether in connection
with bankruptcy, insolvency or appeal, or whether in connection with the
collection and enforcement of this Guaranty against any other Guarantor, if
there be more than one. Guarantor agrees to pay interest on (i) any Guaranteed
Obligations not paid when due in accordance with the provisions of this
Guaranty, and (ii) any expenses or other sums due to GMACCM under this Section
that are not paid when due, in each case at an annual rate equal to three
percent (3%) over the prime rate published from time to time by The Wall Street
Journal. Guarantor's obligations and liabilities under this Section shall
survive any payment or discharge in full of the Guaranteed Obligations.
Notwithstanding the foregoing, it is understood and agreed, in the event that
Guarantor is the prevailing party in any suit between GMACCM and Guarantor, (a)
GMACCM shall not be entitled to collect its attorneys' fees, expenses,
investigation costs or court costs from Guarantor and (b) GMACCM shall reimburse
Guarantor for its reasonable attorneys' fees, expenses, investigation costs and
court costs related to such suit.
20. Payments. All sums payable under this Guaranty shall be paid in lawful money
of the United States of America that at the time of payment is legal tender for
the payment of public and private debts.
21. Controlling Agreement. It is not the intention of GMACCM or Guarantor to
obligate Guarantor to pay interest in excess of that lawfully permitted to be
paid by Guarantor under applicable law. Should it be determined that any portion
of the Guaranteed Obligations or any other amount payable by Guarantor under
this Guaranty constitutes interest in excess of the maximum amount of interest
that Guarantor, in Guarantor's capacity as guarantor, may lawfully be required
to pay under applicable law, the obligation of Guarantor to pay such interest
shall automatically be limited to the payment thereof in the maximum amount so
permitted under applicable law. The provisions of this Section shall override
and control all other provisions of this Guaranty and of any other agreement
between Guarantor and GMACCM.
22. Representations, Warranties, and General Covenants of Guarantor. Guarantor
hereby represents, warrants, and covenants that (a) Guarantor owns a substantial
equity interest in Candlewood and Guarantor will derive a material and
substantial benefit, directly or indirectly, from the agreement of GMACCM to
issue the Loan Commitment; (b) this Guaranty is duly authorized and valid, and
is binding upon and enforceable against Guarantor; (c) Guarantor is not, and the
execution, delivery and performance by Guarantor of this Guaranty will not cause
Guarantor to be, in violation of or in default with respect to any law or in
default (or at risk of acceleration of indebtedness) under any agreement or
restriction by which Guarantor is bound or affected; (d) Guarantor is duly
organized, validly existing, and in good standing under the laws of the state of
its organization and has full power and authority to enter into and perform this
Guaranty; (e) Guarantor will indemnify GMACCM from any loss, cost or expense as
a result of any representation or warranty of Guarantor being false, incorrect,
incomplete or misleading in any material respect; (f) there is no litigation
pending or, to the knowledge of Guarantor, threatened before or by any tribunal
against or affecting Guarantor which would materially and adversely affect its
ability to perform hereunder; (g) all financial statements and information
heretofore furnished to GMACCM by Guarantor do, and all financial statements and
information hereafter furnished to GMACCM by Guarantor will, fairly present the
condition (financial or otherwise) of Guarantor as of their dates and the
results of Guarantor's operations for the periods therein specified; (h) after
giving effect to this Guaranty, Guarantor is solvent, is not engaged or about to
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engage in business or a transaction for which the property of Guarantor is an
unreasonably small capital, and does not intend to incur or believe that it will
incur debts that will be beyond its ability to pay as such debts mature; (i)
Guarantor acknowledges that, except to the extent set forth in the Participation
Agreement, GMACCM has no duty at any time to investigate or inform Guarantor of
the financial or business condition or affairs of Mortgagor or any change
therein; (j) Guarantor acknowledges and agrees that Guarantor may be required to
pay and perform the Guaranteed Obligations in full without assistance or support
from the Mortgagor or any other Person; (k) Guarantor has read and fully
understands the provisions contained in the Loan Commitment (including without
limitation, the Approved Project Costs described therein) and in the Mortgage
Note, the Building Loan Agreement, the Mortgage, the Environmental Indemnity,
and the other Mortgage Loan Documents; and (l) unless Guarantor has notified
GMACCM in writing prior to the execution of any Loan Commitment for a particular
Mortgage Loan, Jack P. DeBoer has not been fired from and remains a senior
officer of Candlewood, with significant day to day decision-making authority.
Guarantor's representations, warranties and covenants are a material inducement
to GMACCM to enter into the Loan Commitment and shall survive the execution
hereof and any bankruptcy, foreclosure, transfer of security or other event
affecting Mortgagor, Guarantor, any other party, or any security for all or any
part of the Guaranteed Obligations.
23. Financial Covenants Regarding Promus. Guarantor hereby covenants and agrees
that so long as any of the Guaranteed Obligations remain unpaid:
(a) Minimum Net Worth. At all times during the term of this Guaranty,
Promus shall maintain a Net Worth of at least $1 billion;
(b) Debt to Net Work. At all times during the term of this Guaranty,
Promus shall maintain a ratio of its debt to Net Worth not exceeding 2.5:1;
(c) Cash Flow From Operations. At all times during the term of this
Guaranty, Promus shall not permit its Net Cash Provide By Operating Activities,
as reflected in its financial statements, whether audited or unaudited, reported
from time to time with the U.S. Securities & Exchange Commission, to be negative
for any fiscal year or for any two (2) successive calendar quarters; and
(d) Material Adverse Change. At all times during the term of this
Guaranty, there shall be no change in the financial condition of Promus which
could materially and adversely affect its ability to satisfy any or all of the
Guaranteed Obligations hereunder; provided, however, this covenant shall not
have been breached or violated unless and until (i) within thirty (30) days
after written notice by GMACCM to Guarantor of a potential material adverse
change, Guarantor has not provided to GMACCM a reasonable written explanation
regarding why such event should not be considered a material adverse change,
(ii) GMACCM has determined and has notified Guarantor, within thirty (30) days
of receipt of Guarantor's explanation, that such explanation is not satisfactory
to allay GMACCM's concerns regarding the material adverse change, and (iii)
within sixty (60) days of such second notice from GMACCM, Doubletree or Promus
has not cured such adverse event or provided alternative comfort satisfactory to
GMACCM regarding the same.
Breach of one or more of the foregoing covenants will not constitute an
Event of Default of Guarantor hereunder, provided Guarantor timely performs its
obligations under Section 8(b) and, when applicable, Section 8(c) above.
From and after such time, if any, as Promus is no longer a corporation
whose stock is publicly traded, Guarantor covenants and agrees to promptly
provide to GMACCM annual financial statements for Promus, audited by an
independent public accounting firm reasonably acceptable to GMACCM, together
with such additional financial information and reports as GMACCM may
periodically request.
24. Notices. All notices, requests, consents, demands and other communications
required or which any party desires to give hereunder or under any other Loan
Document shall be in writing and, unless otherwise specifically
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provided in such other Loan Document, shall be deemed sufficiently given or
furnished if delivered by personal delivery, by courier, or by registered or
certified United States mail, postage prepaid, addressed to the party to whom
directed at the addresses specified near the signature blocks of this Guaranty
(unless changed by similar notice in writing given by the particular party whose
address is to be changed) or by telegram, telex, or facsimile. Any such notice
or communication shall be deemed to have been given either at the time of
personal delivery or, in the case of courier or mail, as of the date of first
attempted delivery at the address and in the manner provided herein, or, in the
case of telegram, telex or facsimile, upon receipt; provided that, service of a
notice required by any applicable statute shall be considered complete when the
requirements of that statute are met. Notwithstanding the foregoing, no notice
of change of address shall be effective except upon actual receipt. This section
shall not be construed in any way to affect or impair any waiver of notice or
demand provided in this Guaranty or in any Loan Document or to require giving of
notice or demand to or upon any person in any situation or for any reason.
25. Cumulative Rights. The exercise by GMACCM of any right or remedy hereunder
or under any other Loan Document, or at law or in equity, shall not preclude the
concurrent or subsequent exercise of any other right or remedy. GMACCM shall
have all rights, remedies and recourses afforded to GMACCM by reason of this
Guaranty or any other Loan Document or by law or equity or otherwise, and the
same (a) shall be cumulative and concurrent, (b) may be pursued separately,
successively or concurrently against Guarantor or others obligated for the
Guaranteed Obligations, or any part thereof, or against any one or more of them,
or against any security or otherwise, at the sole discretion of GMACCM, (c) may
be exercised as often as occasion therefor shall arise, it being agreed by
Guarantor that the exercise of, discontinuance of the exercise of or failure to
exercise any of such rights, remedies, or recourses shall in no event be
construed as a waiver or release thereof or of any other right, remedy, or
recourse, and (d) are intended to be, and shall be, nonexclusive. No waiver of
any default on the part of Guarantor or of any breach of any of the provisions
of this Guaranty or of any other document shall be considered a waiver of any
other or subsequent default or breach, and no delay or omission in exercising or
enforcing the rights and powers granted herein or in any other document shall be
construed as a waiver of such rights and powers, and no exercise or enforcement
of any rights or powers hereunder or under any other document shall be held to
exhaust such rights and powers, and every such right and power may be exercised
from time to time. The granting of any consent, approval or waiver by GMACCM
shall be limited to the specific instance and purpose therefor and shall not
constitute consent or approval in any other instance or for any other purpose.
No notice to or demand on Guarantor in any case shall of itself entitle
Guarantor to any other or further notice or demand in similar or other
circumstances. No provision of this Guaranty or any right, remedy or recourse of
GMACCM with respect hereto, or any default or breach, can be waived, nor can
this Guaranty or Guarantor be released or discharged in any way or to any
extent, except specifically in each case by a writing intended for that purpose
(and which refers specifically to this Guaranty) executed, and delivered to
Guarantor, by GMACCM.
26. Right of Set-Off. Upon the occurrence and during the continuance of any
default in the payment when due of any of the Guaranteed Obligations, GMACCM is
hereby authorized at any time and from time to time, to the fullest extent
permitted by applicable law, without notice to any Person (any such notice being
expressly waived by Guarantor to the fullest extent permitted by applicable
law), to set off and apply any and all deposits, funds, or assets at any time
held and other indebtedness at any time owing by GMACCM to or for the credit or
the account of Guarantor against any and all of the obligations of Guarantor now
or hereafter existing under this Guaranty, whether or not GMACCM shall have made
any demand under this Guaranty or exercised any other right or remedy hereunder.
GMACCM will promptly notify Guarantor after any such set-off and application
made by GMACCM, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of GMACCM under this
Section are in addition to the other rights and remedies (including other rights
of set-off) that GMACCM may have and every right of setoff and lien shall
continue in full force and effect until such right of setoff or lien is
specifically waived or released by an instrument in writing executed by GMACCM.
The foregoing rights shall not apply to any commercial paper or publicly traded
debt or securities of GMACCM held by Guarantor.
27. Subrogation. Notwithstanding anything to the contrary contained herein but
subject to the provisions of Section 6(c) hereof, (a) Guarantor shall not have
any right of subrogation in or under any of the Loan Documents or
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any right, title or interest in and to any security or right of recourse for the
Indebtedness, until the Indebtedness has been fully and finally paid, and as set
forth in the Participation Agreement, Guarantor's participation in a Mortgage
Loan will be fully subordinate to GMACCM's interests therein, and (b) if
Guarantor is or becomes an "insider" (as defined in Section 101 of the United
States Bankruptcy Code) with respect to Mortgagor, then Guarantor hereby
irrevocably and absolutely waives any and all rights of contribution,
indemnification, reimbursement or any similar rights against Mortgagor with
respect to this Guaranty (including any right of subrogation, except to the
extent of collateral held by GMACCM), whether such rights arise under an express
or implied contract or by operation of law. It is the intention of the parties
that Guarantor shall not be deemed to be a "creditor" (as defined in Section 101
of the United States Bankruptcy Code) of Mortgagor by reason of the existence of
this Guaranty in the event that Mortgagor or Guarantor becomes a debtor in any
proceeding under the United States Bankruptcy Code. This waiver is given to
induce GMACCM to make the Loan as evidenced by the Mortgage Note to the
Mortgagor.
28. Further Assurances. Guarantor at Guarantor's expense will promptly execute
and deliver to GMACCM upon GMACCM's reasonable request all such other and
further documents, agreements, and instruments in compliance with or
accomplishment of the agreements of Guarantor under this Guaranty.
Notwithstanding the generality of the foregoing Guarantor agrees to promptly
execute and deliver a written confirmation of this Guaranty at the request of
GMACCM from time to time, including at such times as GMACCM has extended,
renewed, supplemented, modified or assigned the Loan.
29. No Fiduciary Relationship. The relationship between Guarantor and GMACCM is
solely that of guarantor and beneficiary. GMACCM has no fiduciary or other
special relationship with or duty to Guarantor and none is created hereby or may
be inferred from any course of dealing or act or omission of GMACCM.
30. Interpretation. If this Guaranty is signed by more than one Person as
"Guarantor", then the term "Guarantor" as used in this Guaranty shall refer to
all such Persons jointly and severally, and all promises, agreements, covenants,
waivers, consents, representations, warranties and other provisions in this
Guaranty are made by and shall be binding upon each and every such undersigned
Person, jointly and severally and GMACCM may pursue any Guarantor hereunder
without being required (i) to pursue any other Guarantor hereunder or (ii)
pursue rights and remedies under tile Mortgage and/or applicable law with
respect to the Mortgaged Property or any other Mortgage Loan Documents. The term
"GMACCM" shall be deemed to include any subsequent holder(s) of the Mortgage
Note. Whenever the context of any provisions hereof shall require it, words in
the singular shall include the plural, words in the plural shall include the
singular, and pronouns of any gender shall include the other genders. Captions
and headings in the Loan Documents are for convenience only and shall not affect
the construction of the Mortgage Loan Documents. All references in this Guaranty
to Schedules, Articles, Sections, Subsections, paragraphs and subparagraphs
refer to the respective subdivisions of this Guaranty, unless such reference
specifically identifies another document. The terms "herein", "hereof",
"hereto", "hereunder" and similar terms refer to this Guaranty and not to any
particular Section or subsection of this Guaranty. The terms "include" and
"including" shall be interpreted as if followed by the words "without
limitation". All references in this Guaranty to sums denominated in dollars or
with the symbol "$" refer to the lawful currency of the United States of
America, unless such reference specifically identifies another currency. For
purposes of this Guaranty, "Person" or "Persons" shall include firms,
associations, partnerships (including limited partnerships), joint ventures,
trusts, corporations, limited liability companies, and other legal entities,
including governmental bodies, agencies, or instrumentalities, as well as
natural persons.
31. Time of Essence. Time shall be of the essence in this Guaranty with respect
to all of Guarantor's obligations hereunder.
32. Execution. This Guaranty may be executed in multiple counterparts, each of
which, for all purposes, shall be deemed an original, and all of which together
shall constitute one and the same agreement.
33. Entire Agreement. This Guaranty embodies the entire agreement between GMACCM
and Guarantor with respect to the guaranty by Guarantor of the Guaranteed
Obligations. This Guaranty supersedes all prior agreements
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and understandings, if any, with respect to guaranty by Guarantor of the
Guaranteed Obligations. No condition or conditions precedent to the
effectiveness of this Guaranty exist. This Guaranty shall be effective upon
execution by Guarantor and delivery to GMACCM. This Guaranty may not be
modified, amended or superseded except in a writing signed by GMACCM and
Guarantor referencing this Guaranty by its date and specifically identifying the
portions hereof that are to be modified, amended or superseded.
34. WAIVER OF JURY TRIAL. GMACCM AND GUARANTOR HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO WHICH GUARANTOR AND GMACCM MAY BE PARTIES ARISING OUT
OF, IN CONNECTION WITH, OR IN ANY WAY PERTAINING TO, THIS GUARANTY. THIS WAIVER
IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY GUARANTOR AND GMACCM, AND
GUARANTOR AND GMACCM HEREBY REPRESENT, EACH ON ITS RESPECTIVE BEHALF, THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.
GUARANTOR AND GMACCM FURTHER REPRESENT AND WARRANT, EACH ON ITS RESPECTIVE
BEHALF, THAT EACH HAS BEEN REPRESENTED IN THE SIGNING OF THIS GUARANTY AND IN
THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE
OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF EACH
PARTY'S RESPECTIVE FREE WILL, AND THAT EACH HAS HAD THE OPPORTUNITY TO DISCUSS
THIS WAIVER WITH COUNSEL.
35. Consent to Jurisdiction. GMAC and Guarantor each irrevocably submit
generally and unconditionally for itself and in respect of its property to the
nonexclusive jurisdiction of any state or federal court sitting in the
Commonwealth of Pennsylvania over any suit, action or proceeding arising out of,
or relating to, this Guaranty, and irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such state or
federal court. GMAC and Guarantor irrevocably waive, to the fullest extent
permitted by law, any objection that each may now or hereafter have to the
laying of venue of an such suit, action or proceeding brought in any such court,
and any claims that any such suit, action or proceeding is brought in an
inconvenient forum. Final judgment in any such suit, action or proceeding
brought in any such court shall be conclusive and binding upon GMAC and
Guarantor and may be enforced in any court in which GMAC and Guarantor are
subject to jurisdiction, by a suit upon such judgment provided that service of
process is effected upon Guarantor as permitted by applicable law.
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THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
IN WITNESS WHEREOF, Guarantor and GMACCM duly executed this Guaranty
under seal as of the date first written above.
Address of Guarantor DOUBLETREE CORPORATION, a Delaware corporation
Doubletree Corporation
c/o Promus Hotel Corporation By: /s/ Carol G. Champion
755 Crossover Lane -----------------------------------
Memphis, Tennessee 38117 Name: Carol G. Champion
Attention: Treasurer -----------------------------
Fax No.: (901) 374-5490 Title: Vice President
-----------------------------
GMAC Commercial Mortgage Corporation GMAC COMMERCIAL MORTGAGE CORPORATION, a
8614 Westwood Center Drive California corporation
Suite 630
Vienna, Virginia 22182-2233
Attn: Morgan G. Earnest, II
Fax No. (703) 749-4399 By: /s/ James C. Poff
-----------------------------------
Name: James C. Poff
-----------------------------
Title: Vice President
-----------------------------
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STATE OF TENNESSEE
COUNTY OF SHELTY, TO WIT:
I HEREBY CERTIFY, that on this 1st day of October, 1998, before me, the
undersigned Notary Public of said State, personally appeared Carol G. Champion,
who acknowledged herself to be the Vice President of DOUBLETREE CORPORATION, a
Delaware corporation, known to me (or satisfactorily proven) to be the person
whose name is subscribed to the within instrument, and acknowledged that she
executed the same for the purposes therein contained as the duly authorized Vice
President of said corporation by signing the name of the corporation by herself
as Carol G. Champion.
WITNESS my hand and Notarial Seal.
/s/ Sharon D. Harris
------------------------------------
Notary Public
MY COMMISSION EXPIRES MAY 11, 1999
My Commission Expires:
COMMONWEALTH OF VIRGINIA
COUNTY OF FAIRFAX, TO WIT:
I HEREBY CERTIFY, that on this 13th day of November, 1998, before me,
the undersigned Notary Public of said Commonwealth, personally appeared James C.
Poff, who acknowledged himself to be a senior vice president of GMAC COMMERCIAL
MORTGAGE CORPORATION, a California corporation, known to me (or satisfactorily
proven) to be the person whose name is subscribed to the within instrument, and
acknowledged that he executed the same for the purposes therein contained as the
duly authorized senior vice president of said corporation by signing the name of
the corporation by himself as senior vice president.
WITNESS my hand and Notarial Seal.
/s/ Susan F. Renick
------------------------------------
Notary Public
My Commission Expires: 10/31/2000
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Schedule I
to Guaranty Agreement dated November 13, 1998 Between the Undersigned
Mortgage Loan Schedule
(This instrument supersedes any Schedule I dated
prior to the signature dates set forth below)
Initial
Construction Approved Maximum Guaranty
Name of Borrower Loan Amount Project Costs Amount Interest Rate*
1. Candlewood Ft. Worth, TX-Tanacross, LLC $4,650,000 $ 5,820,000 $1,376,250 0.50%
2. Candlewood Houston, TX-Loop Central, LLC $6,300,000 $ 7,875,000 $1,870,313 0.50%
3. Candlewood Detroit, MI-Auburn Hills, LLC $6,100,000 $ 7,625,000 $1,810,938 0.50%
4. I.H. Stemmons Limited Partnership, L.P. $6,000,000 $ 8,000,000 $1,500,000 0.50%
5. I.H. San Antonio Limited Partnership L.P. $4,800,000 $ 7,000,000 $ 862,500 0.50%
6. Tramz N.Y., LLC $4,875,000 $ 6,500,000 $1,218,750 0.50%
7. Candlewood Baltimore, MD - Airport, LLC** $6,960,000 $ 8,700,000 $1,740,000 0.50%
8. Candlewood Oklahoma City, OK, LLC** $6,160,000 $ 7,700,000 $1,540,000 0.50%
9. Candlewood Philadelphia-Mt. Laurel, NJ, LLC** $6,320,000 $ 7,900,000 $1,580,000 0.50%
10. Candlewood Cleveland, OH-North Olmstead, LLC** $7,520,000 $ 9,400,000 $1,880,000 0.50%
11. Candlewood St. Louis, MO, LLC** $6,080,000 $ 7,600,000 $1,520,000 0.50%
12. Candlewood Austin, TX-South, LLC** $6,480,000 $ 8,100,000 $1,620,000 0.50%
13. Candlewood Orange County, CA-Airport, LLC** $8,640,000 $10,800,000 $2,160,000 0.50%
14. Candlewood Miami, FL-Miami Lakes, LLC** $6,960,000 $ 8,700,000 $1,740,000 0.50%
15. Candlewood Montgomery, AL, LLC** $5,68O,000 $ 7,100,000 $1,420,000 0.50%
16. Candlewood Portland, OR-Tigard, LLC** $8,000,000 $10,000,000 $2,000,000 0.50%
17. Candlewood Santa Clara, CA, LLC** $9,040,000 $11,300,000 $2,260,000 0.50%
18. To-be-formed Candlewood Entity for Hotel in $5,920,000 $ 7,400,000 $1,480,000 0.50%
Chester, VA**
* For those Construction Loans where the Mortgagor is contributing no more than
twenty percent (20%) of Approved Project Costs, the Guaranty Interest Rate shall
be equal to fifty basis points (0.50%). For those Construction Loans where
the Mortgagor is contributing in excess of forty percent (40.0%) of Approved
Project Costs, the Guaranty Interest Rate shall be zero. For all other
Construction Loans, the Guaranty Interest Rate shall be equal to twenty-five
basis points (0.25%).
** Proposed Mortgage Loan. To the extent GMACCM, in its sole discretion, does
not commit to this loan, or if after committing, there is a decrease in the
projected Approved Project Costs and/or an increase in the projected
Construction Loan Amount (either or both of which shall increase the Initial
Maximum Amount shown above), until and unless this Schedule I is re-executed by
the undersigned, such proposed Mortgage Loan shall not be a part of this
schedule, and Guarantor shall have no liability or obligations related thereto.
DOUBLETREE CORPORATION., a Delaware corporation
Date: October 1, 1998 By: /s/ Carol G. Champion
--------------- -------------------------------------------
Name: Carol G. Champion
-----------------------------------------
Title: Vice President
----------------------------------------
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
Date: November 13, 1998 By: /s/ James C. Poff
----------------- -------------------------------------------
Name: James C. Poff
-----------------------------------------
Title: Vice President
----------------------------------------
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Schedule II
Parent Guaranty and Acknowledgment of Liability
PROMUS HOTEL CORPORATION, a Delaware corporation ("Promos") and sole
owner of all beneficial interests in the stock of Doubletree Corporation, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby agrees to and for the benefit of GMAC COMMERCIAL MORTGAGE
CORPORATION ("GMACCM") and to induce GMACCM to enter into that Guaranty
Agreement (the "Guaranty") to which this agreement is attached and made a part
hereof, as follows:
Promus unconditionally and irrevocably guarantees to GMACCM the payment
and performance of, and agrees to pay and perform as primary obligor, all
liabilities, obligations and duties imposed upon Doubletree and Guarantor, under
and as defined in the Guaranty, as if Promus had executed the Guaranty as
Guarantor thereunder. This is a continuing guaranty and shall apply to any and
all Guaranty amendments, extensions and modifications whatsoever, including all
amendments and supplements to Schedule I of the Guaranty which occur from time
to time. Promus expressly consents to any extension of time, leniency,
modification, waiver or other change which may be made in any term, condition or
provision of the Guaranty, and no such change, modification, extension, waiver
or forbearance shall release Promus from any liability or obligation hereunder.
This is not merely a conditional guaranty of collection. The obligations of
Promus hereunder are absolute and unconditional and if Doubletree shall be in
default under the Guaranty, GMACCM shall have the right to demand performance
from and proceed against Promus or otherwise exercise any available remedy
without the necessity of first proceeding against or demanding performance by
Doubletree, it being expressly agreed by Promus that its liability under the
Guaranty shall be primary. Promus acknowledges that it has reviewed and
understands its potential liability under the Guaranty and it agrees that all
agreements, waivers, covenants and obligations attributable thereunder to
Doubletree are, by reference, also hereby made by and attributable to Promus as
if Promus had executed the Guaranty as a Guarantor. The liability of Promus
hereunder shall not be affected and Promus expressly waives any defenses that
may arise by reason of the release or discharge of Doubletree in any bankruptcy
or similar proceeding. Promus assumes the responsibility to remain informed of
all circumstances bearing upon the risk of Doubletree's default and agrees that
GMACCM shall have no duty to advise Promus of information known to it regarding
any such circumstance. This addendum shall inure to the benefit of GMACCM, its
successors and assigns. Promus represents and warrants that the undersigned
signatory has full authority to bind the corporation.
Acknowledged and Agreed to as of the 1st day of October, 1998:
PROMUS HOTEL CORPORATION, a Delaware corporation
By: Carol G. Champion
--------------------------------
Name: Carol G. Champion
------------------------------
Title: V.P. & Treasurer
-----------------------------
STATE OF TENNESSEE
COUNTY OF SHELTY, TO WIT:
I HEREBY CERTIFY, that on this 1st day of October, 1998, before me, the
undersigned Notary Public of said State, personally appeared Carol G. Champion,
who acknowledged herself to be the Vice President & Treasurer of PROMUS HOTEL
CORPORATION, a Delaware corporation, known to me (or satisfactorily proven) to
be the person whose name is subscribed to the within instrument and acknowledged
that he executed the same for the purposes therein contained as the duly
authorized Vice President & Treasurer of said corporation by signing the name of
the corporation by herself as Carol G. Champion.
WITNESS my hand and Notarial Seal.
/s/ Sharon D. Harris
----------------------------------
Notary Public
My Commission Expires: MY COMMISSION EXPIRES MAY 11, 1999
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Exhibit A
Form of Loan Commitment
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APPLICATION TO AND COMMITMENT BY
GMAC COMMERCIAL MORTGAGE CORPORATION
FOR A FIRST MORTGAGE CONSTRUCTION AND PERMANENT LOAN
Gentlemen:
Candlewood Hotel Company, Inc. ("Candlewood" or the "Company") hereby
makes application (the "Application") to GMAC Commercial Mortgage Corporation
("Lender") to receive from Lender a commitment (the "Commitment") to provide a
first mortgage construction/mini-perm loan (including any approved extensions,
the "Construction Loan") and a permanent ("Permanent Loan") first mortgage loan
according to the terms and conditions hereinafter set forth. All capitalized
terms not otherwise defined in the body of this Commitment shall have the
meanings ascribed thereto in Section IV below or on Exhibit A attached hereto.
This Application will be applicable only to Company-developed Projects until
canceled or replaced, as to Projects not previously approved, by either
Candlewood or Lender. Each Project will be subject to the terms and conditions
contained herein and this Application will be supplemented with an addendum for
each approved project signed and dated by the respective parties (the "Specific
Project Commitment").
Subject to the terms and conditions set forth in Section II below, the
Commitment, if and when issued, will commit Lender to provide a Construction
Loan for each Project described in an approved Specific Project Commitment, to
provide extensions to the term of the Construction Loan under certain
circumstances and, subject to the terms and conditions set forth in Section III
below, to refinance the Construction Loan with a Permanent Loan.
Lender may accept this Application at any time during this exclusive
period by having an officer of the Hospitality Industry Division and an officer
of the Construction Division of Lender's Loan Committee execute and deliver to
Candlewood a Specific Project Commitment, at which time and assuming any
pre-conditions herein or in such other written acceptance have been satisfied,
such written instrument(s) will constitute the Commitment. Thereupon, the
Commitment shall become and be a commitment from Lender under which Lender
agrees to lend and Candlewood, on behalf of the respective Borrower, agrees to
borrow from Lender the first mortgage loans on the terms and conditions
hereinafter set forth. Until such time, if any, as Lender issues a Commitment,
this Application shall create no obligation or liability for and shall not be
binding on Lender.
Candlewood agrees that each Project will require a deposit with Lender
for the following amounts:
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A. EXPENSE DEPOSIT. An expense deposit (the "Expense Deposit") in an amount set
forth on Exhibit A hereto to be held by Lender in a non-interest bearing
account, which shall be applied to out-of-pocket expenses incurred by Lender on
behalf of Borrower, including but not limited to appraisals, market studies,
legal fees, and environmental and engineering reports, as more specifically set
forth in Section II.I below, as well as travel expenses and other direct office
expenses of Lender. In the event that this Application is not approved by
Lender, that Borrower withdraws its application or defaults under the
Commitment, or in the event the Construction Loan is closed, the Expense
Deposit, less expenses incurred by Lender in connection with the Construction
Loan, shall be returned to Borrower or credited to Borrower at the closing of
the Construction Loan. Similarly, Borrower shall reimburse Lender for any such
expenses incurred by Lender in excess of the Expense Deposit.
B. NONREFUNDABLE COMMITMENT FEE. A nonrefundable Commitment Fee (the "Commitment
Fee") equal to two percent (2%) of the Construction Loan Amount of which one
percent (1%) will constitute a fee for the Construction Loan and one percent
(1%) will constitute a fee for providing the Commitment, of which a good faith
deposit (the "Good Faith Deposit") in an amount set forth on Exhibit A hereto is
immediately due and payable upon submission to Lender of this Application by
Borrower. Such Commitment Fee shall be earned upon the acceptance by Lender of
this Application and the issuance of the Commitment and such Commitment Fee
(less the Good Faith Deposit) shall be due and payable in part upon submission
of this Application and in part upon Closing of the Construction Loan, as set
forth on Exhibit A hereto. Such Commitment Fee is compensation to Lender for
issuing the Commitment and the reservation of funds committed to be loaned
pursuant thereto. If, after acceptance of this Application and issuance of the
Commitment, Lender is unable to fund the Construction Loan due to Borrower's
failure to meet one of the Closing conditions described herein, including,
without limitation, delivery of acceptable Technical Reports (as hereinafter
defined), Lender shall return to Borrower any portion of the Commitment Fee,
without interest, previously received by Lender from Borrower.
C. UNDERWRITING EXPENSE. Five thousand dollars ($5,000) to cover its
underwriting expense for the Construction Loan. This underwriting expense
deposit is in all events nonrefundable.
I. BORROWER AND GUARANTOR INFORMATION
Borrower shall be a single purpose "bankruptcy remote" entity,
organized under the laws of the State indicated on Exhibit A as a
limited liability company or other legal entity subject to approval by
Lender.
A. GUARANTY. Borrower and the Project Guarantors (the "Guarantor
Group"), as identified on Exhibit A, shall execute a joint and
several guaranty agreement in favor of Lender (the "Guaranty
Agreement") in form and content satisfactory to Lender,
guaranteeing the completion of the Project and repayment of
the
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Construction Loan and any extensions thereto. To the extent
that Lender, in the course of its due diligence, discovers
that the Guarantor Group does not possess adequate financial
assets or that a principal equity owner of Borrower should be
added to the Guarantor Group, Lender may request that the
Guarantor Group be expanded, subject to acceptance by the
Borrower.
B. CREDIT REPORTS. Borrower acknowledges, and has advised the
Guaranty Group, that Lender will submit the names of the
Guarantor Group to a credit rating agency for the purpose of
obtaining credit reports on such person and entities.
II. CONSTRUCTION LOAN
A. LOAN AMOUNT, TERM, AMORTIZATION, INTEREST RATE, PREPAYMENT,
RESERVES, RECOURSE
1. Construction Loan Amount. The Construction Loan shall
be that original principal amount indicated on
Exhibit A. In no event shall the Construction Loan
Amount exceed the lesser of (a) eighty percent (80%)
of the Approved Project Costs (as hereinafter
defined) or (b) seventy-five percent (75%) of the "as
stabilized" market value of the Project, as reflected
in the Appraisal (as hereinafter defined); provided,
however, for any Construction Loans for which a
Doubletree Guaranty is not required, the Construction
Loan Amount shall not exceed the lesser of (a)
seventy percent (70%) of the Approved Project Costs
(b) sixty-five percent (65%) of the "as stabilized"
market value of the Project, as reflected in the
Appraisal.
2. Term. The term of the Construction Loan shall be four
(4) years (the "Initial Period"), with two one (1)
year extensions (each one year extension period, an
"Extension Period") granted to Borrower (an
"Extension Privilege") on the terms and conditions
set forth herein.
3. Construction Loan Extension Privilege. Borrower may,
in the absence of the occurrence of a default under
the Construction Loan Documents or the occurrence and
continuance of an event which, with the passage of
time or the giving of notice, or both, would
constitute a default, elect to extend the maturity of
the Construction Loan beyond the stated maturity date
("Maturity Date") of the Initial Period or the first
Extension Period, as applicable, for an additional
twelve (12) months (each such extension, an "Extended
Maturity Date") upon (i) delivery to Lender at least
ninety (90) days prior to the Maturity Date (or the
first Extended Maturity Date, as applicable) of
written notice of the exercise of the Extension
Privilege, (ii) the payment on or before the Maturity
Date of an extension fee (the "Extension Fee") equal
to five tenths of one percent (0.5%) of the
Construction Loan Amount on or before the Maturity
Date or the First Extended Maturity Date, as
applicable, (iii) confirmation, to Lender's
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satisfaction that the Project has achieved a minimum
1.30 DSCR over the preceding continuous twelve-month
operating period, (iv) continued satisfaction of the
appraisal requirements set forth herein, (v) delivery
and approval of an updated title report, (vi)
delivery and approval of estoppels from the Project
manager and franchisor and (vi) delivery and approval
of such other updated reports or information as
Lender shall reasonably request.
4. Amortization/Payments.
a. Subject to Lender's acceleration rights upon
a default and Borrower's right to prepay the
Construction Loan, for the first eighteen
(18) months of the Initial Period of the
Construction Loan, interest only shall be
paid on a monthly basis. On and after that
initial eighteen-month period, the
Construction Loan shall also require monthly
principal payments principal in an amount
sufficient to fully amortize the principal
balance of the Construction Loan over a
period of twenty-five (25) years, adjusted
monthly to the current interest rate, on a
self-amortizing basis. Unless refinanced
pursuant to a Permanent Loan or unless
Borrower exercises its Extension Privilege,
a balloon payment shall be due on the
Construction Loan Maturity Date or Extended
Maturity Date, as applicable, in an amount
sufficient to pay all outstanding principal,
interest and other sums due in respect of
the Construction Loan.
b. Subject to Lender's acceleration rights upon
a default and Borrower's right to prepay the
Construction Loan, during any Extension
Period, in addition to interest payments at
the rate set forth below, the Construction
Loan shall also require monthly principal
payments principal in an amount sufficient
to fully amortize the principal balance of
the Construction Loan over a period of
twenty-five (25) years, adjusted monthly to
the current interest rate, on a
self-amortizing basis. In addition, during
any Extension Period, one hundred percent
(100%) of Net Cash Flow (hereinafter
defined) shall be payable on a quarterly
basis. A balloon payment shall be due at the
Extended Maturity Date in an amount
sufficient to repay all outstanding
principal, interest and other sums due in
respect of the Construction Loan.
5. Interest Rate. The interest rate for the Construction
Loan during both the Initial Period and any Extension
Period shall be equal to (a) that number of basis
points set forth in Exhibit A hereto plus (b) the
30-day LIBOR rate (as defined by Lender), adjusted
monthly and floating over the term of the loan plus
(c) any Guaranty Fee. The Interest Rate shall be
computed on the basis of a 360-day year, payable
monthly in arrears and adjusted monthly.
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6. Prepayments/Deferred Financing Fee. Upon the earliest
to occur of repayment, maturity or acceleration of
the Construction Loan, Borrower shall pay Lender a
fee (the "Deferred Financing") equal to one percent
(1%) of the Construction Loan Amount; provided,
however, if Borrower procures a Permanent Loan
through Lender (i.e., Borrower satisfies the
conditions set forth herein for a Permanent Loan and
does, in fact, close such loan), then the Deferred
Financing Fee shall be waived.
7. Replacement Reserve Escrow. Commencing upon the
completion of the construction of the Project, a
minimum Replacement Reserve of four percent (4%) of
Total Gross Revenues (hereinafter defined) from the
Project shall be required to be deposited, on a
monthly basis, into an escrow account in Lender's
name. Borrower may request withdrawals of funds on a
monthly basis to replace furniture, fixtures and
equipment and other capital items.
8. Recourse. The Construction Loan shall be a recourse
loan and shall be guaranteed (on a joint and several
basis) by the Guarantor Group.
B. MANAGEMENT AGREEMENT/FRANCHISE AGREEMENT.
1. Management Agreement. Borrower must have a cancelable
property management agreement (the "Management
Agreement") acceptable to Lender, which, inter alia,
is fully subordinate to the Construction Loan and is
in form and substance acceptable to Lender. At the
closing of the Construction Loan, the manager shall
acknowledge the Management Agreement as being in full
force and effect and will execute a consent to an
assignment of such agreement to Lender. The
assignment of the Management Agreement shall be in
form and substance acceptable to Lender.
2. Franchise Agreement. For Projects which are not
Company-developed Projects, Borrower must have a
franchise agreement (the "Franchise Agreement")
between Candlewood and Borrower. The Franchise
Agreement shall be acceptable to Lender in all
respects. At the closing of the Construction Loan,
Candlewood, as the franchisor, shall acknowledge the
Franchise Agreement as being in full force and
effect and will execute a consent to an assignment of
the Franchise Agreement to Lender. The assignment of
the Franchise Agreement shall be in form and
substance acceptable to Lender.
C. LOAN DOCUMENTS. The following documents, executed by
Borrower, unless otherwise indicated, and payable to or
otherwise in favor of Lender, unless otherwise indicated,
shall evidence, govern and secure the Construction Loan
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(collectively, the "Construction Loan Documents" and
individually a "Construction Loan Document"), each in form
and content acceptable to Lender:
1. Construction Note. A promissory note (the
"Construction Note") in the full amount of the
Construction Loan.
2. Mortgage. A credit instrument and security agreement,
whether a mortgage, deed of trust, trust deed or deed
to secure debt (the "Mortgage") conveying a first
priority lien in the Project. Among other things, the
Mortgage will:
i) specifically provide for the waiver of the
right of redemption to the extent permitted
by the laws of the State in which the
Project is situated;
ii) provide that (a) any sale or transfer of the
Project or any portion thereof, (b)
encumbering the Project or any portion
thereof with any junior or subordinate
financing, or (c) the sale, pledge or
transfer of any interest in Borrower or in
certain identified constituents thereof
shall, at the sole election of Lender,
constitute a default under the Construction
Loan and shall cause the indebtedness to
become and be immediately due and payable;
iii) contain warranties and representations that
the Project is free of any hazardous or
toxic materials or waste and that Borrower
will indemnify and hold Lender harmless
from all loss, cost, damage, claim and
expense incurred by Lender with respect
thereto;
iv) contain general warranties and
representations regarding: title to the
Project; organization and good standing of
Borrower; corporation, partnership or
limited liability company authority, as the
case may be; enforceability of loan
documents; accuracy of financial
information; issuance of permits, licenses
and approvals as to construction, use,
occupancy and operation of the Project; no
encroachments by or upon the Project;
accuracy of survey; zoning land use and
compliance with all laws; full force and
effect of the Mortgage; full force and
effect of Management Agreement and Franchise
Agreement; no conflicts or violations with
other agreements; no governmental approvals
required; no pending litigation; single
purpose entity; no material adverse change;
ERISA; and such other representations and
warranties as Lender shall reasonably
require;
v) contain the following affirmative covenants:
compliance with all laws; payment of taxes
and insurance premiums; property, casualty,
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liability and other insurance, maintenance
and repair of the Project; inspection of and
access to the Project; estoppel
certificates, including estoppels from the
franchisor and manager; customary further
assurances; and such other covenants as
Lender shall reasonably require;
vi) contain Lender's usual and customary
negative covenants, including, without
limitation, prohibitions on: liens and
encumbrances; additional indebtedness;
transfers of interests in Borrower, the
Principals, the Guarantors or in the
Project; changes in the use of the Project;
change in location of principal place of
business; change in state of incorporation;
changes in the Franchise Agreement; changes
in the Management Agreement; and such other
prohibitions as Lender shall reasonably
impose;
vii) require monthly deposits, into one or more
non-interest bearing escrow accounts
maintained in Lender's name, equal to 1/12th
of the annual real estate taxes and
assessments levied against the Project and
1/12th of the annual insurance premiums for
insurance policies issued with respect to
the Project;
viii) require Borrower and the rest of the
Guarantor Group to deposit with Lender the
financial information set forth on Exhibit B
hereto during the term of the Loan;
ix) permit Lender to conduct an independent
audit of the Project and the related
financial statements at its own expense at
any time. In the event that an error in
excess of 2% of either total revenues or
total expenses is discovered, the cost of
the audit will be borne by Borrower;
x) contain Lender's usual and customary default
provisions, including, without limitation,
the defaults set forth on Exhibit C hereto
(an "Event of Default"):
xi) if not set forth in the Construction Note,
require in the event that any payment of
principal, interest, taxes and/or insurance
due under the Loan is not made on the stated
maturity date or within five (5) days after
any installment due date, a late charge of
five percent (5%) of such payment shall
automatically become due to Lender. This
charge shall be in addition to all other
rights and remedies available to Lender upon
occurrence of an Event of Default under the
loan documents. Upon Borrower's default in
the making of any payment under the
Construction Loan, such unpaid amount
(including the entire Construction Loan
balance after an
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acceleration) shall bear interest at an
annual rate equal to the lesser of (i) five
percent (5%) over the variable non-default
interest rate set forth in the Construction
Note or (ii) the maximum amount allowed by
law until paid; and
xii) be cross-collateralized with loans
previously made to affiliates of Candlewood
or Borrower (the "Cross-Collateralized
Indebtedness").
3. Assignment. Assignment of Leases and Profits
representing a present absolute assignment to Lender
of all hotel profits and proceeds and all present and
future leases, and other occupancy agreements, rents,
security deposits, permits, revenues and income of
all or any part of the Project (the "Leases"), all
guarantees thereof and all rent and other sums
payable thereunder, with a license to collect such
rents, revocable upon an Event of Default under any
of the Construction Loan Documents, being granted to
Borrower.
4. Security Agreement. Security Agreement and Financing
Statements pursuant to the Uniform Commercial Code of
the State in which the Project is situated
constituting a valid first priority security
interest, free of chattel mortgages, security
agreements, conditional sales contracts and other
liens or title retention arrangements covering all
personal property now or hereafter used in connection
with the Project (other than personal property leased
pursuant to leases for which Lender has given its
prior written approval), including, without
limitation, all intangibles and personal property,
all accounts receivable, trademarks, tradenames,
franchise rights, the tax escrow, the insurance
escrow, insurance policies and proceeds, condemnation
awards, all permits and licenses (including without
limitation, all food and beverage licenses), all
other deposits, rights, and action with respect
to the Project, and furnishings, fixtures, equipment
and articles of personal property now or hereafter
affixed to or used in the management, maintenance and
operation of the Project. Borrower shall also execute
and deliver such UCC Financing Statements as Lender's
counsel may request.
5. Assignment of Construction Agreements, Plans and
Property Agreements. Assignment of Construction
Agreements, Plans and Property Agreements affecting
the Project, including, but not limited to,
architectural contracts for the design and periodic
inspection of the Project and contracts for the
construction of the Project, which agreement shall be
acknowledged and agreed to by all third parties
deemed necessary by Lender, including the architect
and the general contractor.
6. Collateral Assignment. A collateral assignment of all
licenses (including all food and beverage licenses),
permits, contracts, and warranties issued
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with respect to the Project, including, but not
limited to, the Management Agreement and Franchise
Agreement, which assignment shall be acknowledged and
agreed to by all third parties deemed necessary by
Lender, including the manager and franchisor.
7. Building Loan Agreement. Building Loan Agreement,
which shall, among other things, govern all
disbursements of Construction Loan proceeds,
including whether such disbursements shall be made
through a construction escrow agreement established
with the Title Company (hereinafter defined), and
shall set forth all Lender requirements for the
Project budget, retainage requirements, the opening
of the Construction Loan, the initial disbursement of
the proceeds thereof, and all subsequent
disbursements thereof.
8. Indemnification Agreement. Indemnification Agreement
executed by the Guarantor Group and indemnifying
Lender, on a joint and several basis, with respect to
hazardous materials or waste with respect to the
Project.
9. Guaranty Agreement. Guaranty Agreement, as described
in Section I.A above, executed by the Guarantor Group
in favor of Lender.
10. Replacement Reserve Agreement. A security agreement
in favor of Lender governing the terms of the
escrowed Replacement Reserve.
10. Opinion. An attorney's opinion, in such form and
content as Lender shall reasonably require.
11. Miscellaneous. Such other certifications and
documents as Lender shall reasonably require.
D. CONDITION OF TITLE TO PROJECT. The Mortgage shall establish a
first and valid lien upon the Project, the validity and
priority of which shall be insured by a mortgagee title
insurance policy in a form acceptable to Lender ("Title
Policy"), issued by a title insurance company ("Title
Company") acceptable to Lender:
1. Subject only to such exceptions and exclusions to
title as may be acceptable to Lender and its counsel;
2. Providing for the issuance of "interim
certifications" or "down date endorsements" setting
forth that the amount of Construction Loan proceeds
disbursed from time to time is not subordinate to the
lien or any person, firm, corporation or other
entity, furnishing or supplying services, labor or
material to or for the benefit of the Project; and
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3. Containing, or providing for the issuance of such
other endorsements, co-insurance and/or reinsurance
agreements as Lender may reasonably require (Borrower
expressly acknowledging that for a particular Project
or Borrower, Lender may deem it necessary in the
exercise of its reasonable judgment, to obtain
certain endorsements that require the payment of an
additional title premium, including a zoning
endorsement, "comprehensive" endorsement and/or
"non-imputation" endorsement).
E. SURVEY OF THE PROJECT. Borrower shall furnish Lender a plat of
survey prepared by a surveyor licensed in the State in which
the Project is situated ("Plat of Survey"), certified as
having been prepared for Lender and Borrower, satisfying all
ALTA survey requirements and incorporating and indicating:
1. The boundary lines and legal description of the
Project;
2. The location of all recorded or unrecorded easements
for utilities, ingress and egress, or for whatever
other purpose, affecting the use or enjoyment of the
Project, identifying all recorded easements by
recordation number if recorded;
3. Identifying by recordation number, all matters of
record affecting the Project capable of being located
and identified on the Plat of Survey, such as
building set back lines, building height restrictions
and the like;
4. The location of adjacent streets, alleys and public
ways, identifying each of such streets, alleys and
public ways as being either public or private;
5. Ingress and egress to and from public roads and
highways; and
6. The lack of encroachment of any improvement within
the Project over and upon easement areas or adjacent
land and encroachments, if any, of improvements
situated on adjacent land over and upon the Project.
7. Upon completion of the foundations of the Project,
Borrower shall furnish a so-called "foundation"
survey.
8. Upon completion of the Project, Borrower shall
furnish a so-called "as built" survey.
All data, legends and information set forth on the
Plat of Survey shall be satisfactory in form and
content to Lender and shall establish, to Lender's
satisfaction that the value of and title to the
Project is not materially diminished or adversely
affected thereby.
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F. CONSTRUCTION OF THE PROJECT - OPENING OF CONSTRUCTION LOAN.
The Construction Loan shall be opened, and the initial
disbursement of Construction Loan proceeds made on or before
Projected Closing Date as set forth on Exhibit A. The
construction of the Project shall commence no sooner than ten
(10) days after the actual Closing Date and shall be completed
on or before twelve (12) months after the actual Closing Date
or, if such construction is delayed by a Force Majeure
(hereinafter defined) cause, on or before fifteen (15) months
from the actual Closing Date (unless further extended by
Lender, in its sole discretion, following receipt from
Borrower of a detailed explanation as to why additional Force
Majeure delay should be justified), all in strict compliance
with the plans and specifications approved by Lender under the
Building Loan Agreement.
G. FURNITURE, FIXTURES AND EQUIPMENT.
1. Schedule. Upon completion of the construction of all
improvements in accordance with the Building Loan
Agreement, Borrower shall furnish to Lender a
detailed schedule, satisfactory in form and substance
to Lender, of all personal property, furniture,
fixtures and equipment ("FF&E") which will be used
in the ownership and operation of the Project.
2. UCC Security Interest. Lender shall require a first
lien on all personal property, fixtures and equipment
now or hereafter used in the operation of the Project
(other than personal property leased pursuant to
leases for which Lender has given its prior written
approval), with necessary security agreements and
Uniform Commercial Code Financing Statements to be
executed and filed with the appropriate county and/or
state offices, all as provided in Section II.C.5
hereof. Borrower agrees to furnish continuation
statements at required intervals. Lender is to
receive satisfactory evidence that Lender's lien on
said personal property, fixtures and equipment is a
first and prior lien.
H. TECHNICAL REPORTS. Following the issuance of the Commitment by
Lender, the following items (collectively, the "Technical
Reports") shall be obtained by Lender from firms and on
specifications acceptable to Under in its sole discretion:
1. An appraisal of the Project satisfactory in substance
and form to Lender (the "Appraisal") prepared at
Borrower's expense by a qualified appraiser
designated by and satisfactory to Lender, estimating
the Project's market value upon completion and upon
projected stabilization.
2. A binding commitment for the Title Policy.
3. The Plat of survey.
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4. An environment assessment (the "Environmental
Assessment") of the Project and such other
environmental examinations and assessments deemed
necessary by Lender in its sole discretion.
5. A market study relating to the feasibility of the
Project.
6. A plan and cost review prepared by Lender's
consulting engineer.
7. Such other due diligence reports or reviews of the
Project deemed necessary of Lender in its sole
discretion. The obligation of Lender to close and
fund the Construction Loan shall be subject to the
receipt and approval by Lender of each of the
Technical Reports, in form and substance satisfactory
to Lender in its sole discretion.
I. ATTORNEY'S FEES, CONSULTANT'S FEES, DEFERRED FEE AND OTHER
COSTS AND EXPENSES:
1. Borrower shall reimburse Lender for the following
expenses incurred by Lender on behalf of Borrower in
connection with the Construction Loan:
i. All Lender's reasonable attorney's fees and
costs, whether in-house or outside counsel;
ii. All fees and costs of architects, engineers
and environmental consultants engaged by
Lender with respect to the Project; and
iii. All fees and costs of the Technical Reports.
2. It is acknowledged and agreed that the Expense
Deposit referred to on page 1 of this Application is
intended to defray the cost of the items described
above; provided, however, to the extent such Expense
Deposit is insufficient to pay in full such sums,
Borrower shall satisfy all such sums at the closing
of the Construction Loan.
J. CLOSING CONDITIONS. In addition to those more detailed closing
conditions set forth in the Building Loan Agreement, Lender's
obligation to fund and close the Construction Loan shall be
conditioned upon, and subject to satisfaction of each of the
following conditions:
1. Compliance. As a condition of opening the
Construction Loan and throughout the term thereof,
the Project and its use for the purpose contemplated
herein must be in compliance with all applicable
federal, state and local laws, rules, regulations and
ordinances. Prior to opening the Construction Loan,
Borrower shall furnish Lender the original building
permit or a true copy thereof and other
certifications, permits and licenses
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of appropriate governmental authorities evidencing
compliance with all zoning, building, environmental
and other applicable laws, rules, regulations and
ordinances.
2. Hazardous Materials. There must not be present on, in
or under the Project any asbestos, PCB's hazardous
wastes or other hazardous or toxic materials and
Lender must be furnished a written report from an
environmental engineer acceptable to Lender
certifying that no such materials are presently
located on, in or under the Project. In the event of
the discovery of any such materials, Lender shall
not be obligated to make the Construction Loan.
3. Plans and Specifications. Four (4) complete sets of
the plans and specifications for the Project, and
related landscaping, must be submitted to Lender for
review and approval. Lender shall retain, at
Borrower's expense, an architect/engineer of Lender's
choice to perform various services on behalf of
Lender, including reviewing the plans and
specifications, reviewing the construction budget and
making monthly inspections of the Project during the
term of the Construction Loan. The report of the
architect/engineer must be satisfactory to Lender in
all respects.
4. Utilities. Borrower shall have delivered to Lender
letters or certificates from the appropriate
governmental authorities (which letters or
certificates shall state the expiration date, if any,
thereof) evidencing the availability, capacity and
suitability of electric, gas, telephone, water,
sanitary sewer and storm water drainage services
needed to service properly the Project for its
intended use, and stating that no condition exists
which affects Borrower's rights to service by said
utilities.
5. Appraisal. Prior to closing the Construction Loan,
Lender shall be furnished the Appraisal, which
Appraisal shall be subject to the review and approval
of Lender's in-house MAI appraiser and which
Appraisal shall indicate an "as completed" value and
an "as stabilized" value, each acceptable to Lender
in its sole discretion. Borrower acknowledges and
agrees that the "as stabilized" value of the Project
is a true and accurate reflection of the Project's
fair market value. Borrower further acknowledges that
Lender is relying primarily on this valuation of the
Project (rather than the "as completed" valuation) in
determining whether this underwriting requirement for
the Construction Loan has been satisfied.
6. Flood Hazard Insurance. Lender shall be furnished
evidence satisfactory to it that the Project is not
situated in a special flood hazard area as designated
by the Federal Insurance Administration. In the event
the Project has been designated as being in a flood
hazard area, Lender shall
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have the option of either declining to make the
Construction Loan or requiring Borrower to obtain
adequate flood insurance.
7. Insurance. Lender shall be furnished evidence
satisfactory to it that the Project is insured for
fire and extended coverage in amounts acceptable to
Lender on a Builder's All Hazard Risk Completed Value
form (nonreporting), is subject to employer's
liability and workman's compensation insurance, and
is subject to general public liability coverage and
other appropriate insurance, each in amounts
acceptable to Lender. Such coverage shall be placed
with insurance companies acceptable to Lender with a
standard mortgagee endorsement in Lender's favor. At
Lender's option the originals of all such policies
shall be deposited with Lender.
8. Other Insurance. At Lender's sole option, Lender may
require Borrower to obtain earthquake and/or
sink-hole insurance if applicable to the Project.
9. Payment and Performance Bonds. Lender may, at its
election, require payment and performance bonds for
the general contractor and for certain key
subcontractors and materials suppliers, with such
bond(s) being in such amount, from such surety and in
form and content as are reasonably acceptable to
Lender. All such bonds shall contain a dual obligee
rider naming Lender as a co-obligee. Lender may waive
this bonding requirement for some or all non-material
subcontracts (e.g., those that are not for
foundation, plumbing, electrical, etc.) and/or for
the general contractor.
10. Approval of Contractor, Construction Budget and
Schedule. Lender shall have reviewed and approved the
proposed general contractor and the general
contractor's agreements with Borrower, key
subcontractors and material suppliers, the proposed
construction budget and the proposed construction
schedule.
11. Selection of Legal Counsel. Lender shall require
representation of Lender by attorneys of its choice
in the preparation and review of the Construction
Loan, Commitment, Permanent Loan documents and all
other legal matters related hereto. All reasonable
fees and costs for such attorneys shall be paid by
Borrower.
12. Payment of All Closing Costs by Borrower. Borrower
agrees to pay all taxes and assessments due on the
date of closing and within 30 days thereafter, all
recording fees, registration taxes, title insurance
premiums, appraisal fees, engineering fees, and all
other costs in connection with the negotiation of and
closing of the Construction Loan, Commitment and
Permanent Loan.
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13. Equity Requirement. The initial equity requirement
from Borrower is as shown on Exhibit A. The
Construction Loan at all times during the term shall
be in balance. Borrower agrees to deposit with Lender
at any time as Lender shall determine the
Construction Loan is not in balance, equity in an
amount necessary to meet, in Lender's determination,
all construction, financing and leasing costs
required to complete the Project or otherwise
required to support the Project until it has achieved
a positive net cash flow and is fully supporting
itself. Borrower's equity contributions shall be
expended prior to disbursements under the
Construction Loan.
14. Construction Loan Documents. All of the Construction
Loan Documents and title documents executed and
delivered in connection with the closing of the
Construction Loan, all title policies and surveys,
all Borrower organizational documents, all legal
opinions, all insurance policies and coverage and
insurance companies, all required evidence of
compliance with all applicable laws and regulations,
and all other evidence, information and material
required by Lender or its counsel, shall be in form,
scope and substance reasonably satisfactory to
Lender's counsel, who must approve title to the
Project, the legality, validity and enforceability of
all documents pertaining to the Construction Loan,
all proceedings in connection therewith and all other
matters relating to the Construction Loan and the
closing thereof.
15. Damage, Condemnation or Similar Proceedings. Since
the date of the last inspection of the Project by
Lender, no portion of the Project shall have been
damaged and not repaired to Lender's satisfaction, or
shall have been taken in condemnation or other
similar proceedings (and no such proceedings shall be
pending). Since the date of the last inspection of
the Project by Lender, no change in the structure or
physical condition of the Project shall have
occurred.
16. Insolvency, Material Adverse Change. None of
Borrower, or any general partner of Borrower, or any
Principal, or any Guarantor shall be the subject of
any bankruptcy, reorganization, insolvency or other
similar proceeding. A material adverse change in the
financial condition of any of the Guarantor Group
shall not have occurred since the date the financial
data and documentation relating to such persons was
most recently furnished to Lender.
17. Default. No default shall have occurred and be
continuing in the performance of any obligation of
Borrower, its Principals or the Guarantors which
would be deemed an Event of Default under the
Construction Loan Documents if they were in effect.
There shall exist no other fact, event or disclosure
in connection with the Construction Loan that
reasonably can be
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42
expected to cause the Construction Loan to become
delinquent or materially adversely affect the
Construction Loan or the Project.
18. Action, Suit or Proceeding. No uncorrected notice of
violations of any municipal ordinances shall have
been filed against the Project by any municipal
department. No action, suit or proceeding judicial,
administrative or otherwise shall be pending against
or affecting Borrower, the Principals, the Guarantors
or the Project which could have a material adverse
effect on any thereof.
19. Reports, Submissions. All reports and submissions to
Lender by Borrower or Borrower's third party vendors
or consultants in connection with the Project,
including, without limitation, the Technical Reports
shall be certified and addressed to Lender's
satisfaction and shall have been approved by Lender.
20. Management Agreement, Franchise Agreement. The
Management Agreement and the Franchise Agreement (if
applicable) shall be in full force and effect, shall
be subordinate to the Construction Loan, shall be
assigned to Lender and shall be otherwise acceptable
to Lender.
21. Doubletree Guaranty. If set forth on Exhibit A, the
Doubletree Guaranty shall be in full force and effect
and Schedule 1 to the Doubletree Guaranty shall be
fully executed and supplemented to specifically
include the Project identified on Exhibit A within
such Guaranty. For Projects requiring the Doubletree
Guaranty, Borrower acknowledges that Doubletree is
receiving the Guaranty Fee as fair consideration for
Doubletree agreeing to enter into the Doubletree
Guaranty. The parties hereto acknowledge that the
Doubletree Guaranty shall not be required for
Company-developed Projects for which the Construction
Loan Amount does not exceed the lesser of (a) seventy
percent (70%) of the Approved Project Costs (b)
sixty-five percent (65%) of the "as stabilized"
market value of the Project, as reflected in the
Appraisal.
22. Timely Performance. Each of the requirements
contained in this Application to be performed by
Borrower and each term and condition herein is
material to Lender's obligation to make the
Construction Loan and such obligation is specifically
conditioned upon the full and complete performance or
satisfaction of each and every requirement, term and
condition hereof. Time is of the essence of this
Application; and in the event that Borrower fails to
perform any of the requirements contained in this
Application or any term or condition is not satisfied
on or before the Closing Date, such failure shall
terminate Lender's obligation to make Construction
Loan. In the event Lender's obligations under any
Commitment issued pursuant hereto shall terminate due
to Borrower's
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43
failure to comply with or breach of any provision of
the Commitment, Lender shall retain the Commitment
Fee, the deposit made to cover its underwriting
expenses and, to the extent set forth above, the
Expense Deposit.
23. Interpretation. All of Borrower's representations and
agreements and all other terms and conditions
contained in this Application are material conditions
to the making and opening of the Construction Loan
and Commitment, making the initial disbursement and
all subsequent disbursements of the Construction Loan
proceeds and are established for the protection of
Lender. Lender may, at its sole option, waive any
such condition and Lender shall have no liability to
anyone for failing to enforce any such condition.
III. PERMANENT LOAN. In the event the Construction Loan on or before six (6)
months prior to the Maturity Date or the Extended Maturity Date, as
applicable, satisfies the Permanent Loan Criteria, subject to the terms
and conditions set forth in this Article III, Lender shall refinance
the Construction Loan.
A. LOAN AMOUNT, TERM, AMORTIZATION, INTEREST RATE, PREPAYMENT,
NONRECOURSE
1. Permanent Loan Amount. The Permanent Loan shall be in
an amount equal to no more than the full amount of
the Construction Loan, subject to Lender's then
current hotel underwriting standards and practices.
Lender at its sole discretion may waive this
limitation. As reflected in the definition of
"Permanent Loan Criteria" below, the Permanent Loan
Amount must be consistent with a minimum 1.40 DSCR.
2. Term. The term of the Permanent Loan shall be up to
twenty-five (25) years in accordance with Lender's
then-applicable underwriting standards and practices
for loans and borrowers of this type.
3. Amortization/Payments. Subject to Lender's
acceleration rights upon a default and Borrower's
right to prepay the Loan, the Permanent Loan shall be
amortized over a period of up to twenty-five (25)
years (or applicable loan term, if shorter) in level
monthly payments of principal and interest.
4. Interest Rate. The interest rate for a Permanent Loan
shall be the long-term fixed rate hotel loan spreads
over the relevant Treasury index then being offered
by Lender for its conduit program for loans of this
type.
5. Prepayments. For a Permanent Loan, Borrower may
prepay the loan in part or in full, but only with the
prior written consent of Lender and also subject to
"yield maintenance" to compensate Lender for the
loss, cost and
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44
expense incurred by Lender as a result of such
prepayment. As used herein, the term "yield
maintenance," shall be based upon a twenty-year
amortization schedule payable until the earlier to
occur of (i) six months prior to the scheduled
Permanent Loan maturity or (ii) 15 years.
6. Replacement Reserve Escrow. A minimum Replacement
Reserve of four percent (4%) of total gross revenues
(as defined pursuant to and as subject to Lender's
then-current underwriting criteria) from the Project
shall be required to be deposited, on a monthly
basis, into an escrow account in Lender's name.
Borrower may request withdrawals of funds on a
monthly basis to replace furniture, fixtures and
equipment and other capital items. Borrower shall
receive or be credited with interest on the funds
held in the Replacement Reserve.
7. Nonrecourse. The Permanent Loan shall be non-recourse
to Borrower and the Guarantor Group, except as set
forth in Sections III.I and III.J below.
B. MODIFICATION DOCUMENTS. Lender reserves the right to require
that the Permanent Loan be documented by new loan
documentation, opinions, certifications and the like, all
acceptable to Lender in its sole discretion. To the extent
that Lender chooses, in its sole discretion, to use the
Construction Loan Documents, as modified and/or extended to
evidence, govern and secure the Permanent Loan, the following
documents, executed by Borrower, shall evidence the refinance
of the Construction Loan into the Permanent Loan
(collectively, the "Modification Documents" and individually a
"Modification Document"):
1. A modification, restatement and renewal of the
Construction Note, Indemnification Agreement,
Mortgage and other Construction Loan Documents (other
than the Guaranty Agreement), as previously modified
and/or extended, containing such terms, modifications
and waivers as shall be required by Lender.
2. Borrower shall provide a "Comfort Letter" from the
franchisor under the Franchise Agreement and the
property manager under the Management Agreement in a
form satisfactory to Lender.
3. Borrower shall provide a certificate to Lender as to
(i) the correctness of representations and warranties
made in the Construction Loan Documents, this
Application and in the Commitment, (ii) the
authorization by Borrower of the execution and
delivery of the Modification Documents, (iii)
Borrower's financial condition as of the Closing
Date, (iv) that no defaults have occurred under the
Construction Loan Documents, and that Borrower has no
defenses, claims or offset rights thereunder, and (v)
such other matters as Lender may require in its
reasonable discretion.
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4. Such other certifications, opinions and documents as
Lender shall require in its reasonable discretion.
C. CONDITION OF TITLE TO THE PROJECT. Lender shall receive an
updated Title Policy (the "Updated Title Policy") issued by
the Title Company acceptable to Lender:
1. Showing ownership of the Project in the name of
Borrower, verifying that the Mortgage, as amended by
the Modification Documents, establishes a first and
valid lien upon the Project, and subject only to such
exceptions and exclusions to title as may be
acceptable to Lender and its counsel;
2. Showing that construction of the improvements on the
Project has been completed free and clear of all
mechanic's and materialmen's liens;
3. Containing or providing for the issuance of an "as
built" zoning endorsement and such other
endorsements, co-insurance and/or reinsurance
agreements as Lender may require.
D. SURVEY OF THE PROJECT. Borrower shall furnish Lender a
satisfactory "as-built" survey (the "As-Built Survey") showing
the completed improvements and contained all of the
information set forth in Section II.E hereof.
E. FURNITURE, FIXTURES AND EQUIPMENT.
1. Updated Schedule. Borrower shall provide an updated
detailed schedule satisfactory in form and substance
to Lender of all FF&E which is being used in the
operation of the Project.
2. UCC Security Interest. Lender shall require a first
lien on all personal property, fixtures and equipment
now or hereafter used in the operation of the
Project, with necessary security agreements and
Uniform Commercial Code Financing Statements to be
executed and filed with the appropriate county and/or
state offices. Borrower agrees to furnish
continuation statements at required intervals. Lender
is to receive satisfactory evidence that Lender's
lien on said personal property, fixtures and
equipment is a first and prior lien.
F. TECHNICAL REPORTS. The following items (collectively, the
"Updated Technical Reports") shall be obtained by Lender from
firms and on specifications to Lender in its sole discretion.
1. An updated appraisal of the Project (the "Updated
Appraisal").
2. The Updated Title Policy.
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3. The As-Built Survey.
4. An updated environment assessment (the "Updated
Environmental Assessment") of the Project and such
other environmental examinations and assessments
deemed necessary by Lender in its sole discretion.
5. An engineer's report of the Project (the "Engineer's
Report").
6. An updated market study relating to the feasibility
of the Project.
7. A updated plan and cost review prepared by Lender's
consulting engineer.
8. Such other due diligence reports or reviews of the
Project deemed necessary by Lender in its sole
discretion.
The obligation of Lender to close and fund the Permanent Loan shall be
subject to the receipt and approval by Lender of each of the Updated
Technical Reports, in form and substance satisfactory to Lender in its
sole discretion.
G. ATTORNEYS FEES, CONSULTANTS FEES, DEFERRED FEE AND OTHER COSTS
AND EXPENSES.
1. In addition to the Commitment Fee set forth above,
Borrower agrees to pay Lender, at the closing of the
Permanent Loan, a fee equal to one percent (1%) of
the Permanent Loan amount as compensation for making
the Permanent Loan. Such fee shall be earned upon
Lender's funding of the Permanent Loan.
2. Borrower shall also reimburse Lender for the
following expenses incurred by Lender on behalf of
Borrower in connection with the Permanent Loan:
i. All Lender's reasonable attorney's fees,
whether in-house or outside counsel;
ii. All fees of architects, engineers and
environmental consultants engaged by Lender
with respect to the Project; and
iii. All costs of the Updated Technical Reports.
H. CLOSING CONDITIONS. Lender's obligation to fund and refinance
the Construction Loan with the Permanent Loan shall be
conditioned upon and subject to satisfaction of each of the
following conditions:
1. Compliance. As a condition of refinancing the
Construction Loan with the Permanent Loan and
throughout the term thereof, the Project and its use
for
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the purpose contemplated herein must be in compliance
with all applicable federal, state and local laws,
rules, regulations and ordinances. Borrower shall
furnish Lender with copies of all applicable permits
and licenses required for the use and operation of
the Project, including, without limitation any
certificates of occupancy or similar evidence of
completion and other certifications of appropriate
governmental authorities evidencing compliance with
all zoning, building, environmental and other
applicable laws, rules, regulations and ordinances.
If the Project is a legal nonconforming use property,
Lender must be satisfied, in its sole discretion,
that either (i) in the event of a casualty, the
improvements may be rebuilt without any loss or
decrease in the number of rooms or any modification
in the use of the Project, or (ii) that Borrower has
obtained ordinance insurance covering this risk in a
manner acceptable to Lender.
2. Completion and Operation. The Project shall have been
completed in accordance with the original approval
plans and specifications and shall have been open for
business for a period of at least twelve (12)
continuous, stabilized months.
3. 1.40 DSCR. The Project shall have achieved a minimum
1.40 DSCR over a continuous, stabilized twelve-month
operating period.
4. Hazardous Materials. There must not be present on, in
or under the Project any asbestos, PCB's hazardous
wastes or other hazardous or toxic materials and
Lender must be furnished and have approved the
Updated Environmental Assessment.
5. Flood Hazard Insurance. Lender shall be furnished
evidence satisfactory to it that the Project is not
situated in a special flood hazard area as designated
by the Federal Insurance Administration.
6. Insurance. Lender shall be furnished evidence
satisfactory to it that the Project is insured for
fire and extended coverage and is insured for public
liability coverage, in each case in amounts and on
forms acceptable to Lender. Such coverage shall be
placed with insurance companies acceptable to Lender
with a standard mortgagee endorsement in Lender's
favor. At Lender's option the originals of all such
policies shall be deposited with Lender.
7. Other Insurance. At Lender's sole option, Lender may
require Borrower to obtain earthquake and/or
sink-hole insurance if applicable to the Project.
8. Selection of Legal Counsel. Lender shall require
representation of Lender by attorneys of Lender's
choice in the preparation and review of the
Modification Documents or other Permanent Loan
documents and all other
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48
legal matters related to the Permanent Loan. All
reasonable fees and costs for such attorneys shall be
paid by Borrower.
9. Payment of All Closing Costs by Borrower. Borrower
agrees to pay all taxes and assessments due on the
date of closing and within 30 days thereafter, all
recording fees, registration taxes, title insurance
premiums, appraisal fees, engineering fees, and all
other costs in connection with the negotiation of and
closing of the Permanent Loan.
10. Modification Documents. All of the Permanent Loan
documents and title documents executed and delivered
in connection with the closing of the Permanent Loan,
all title policies and surveys, all Borrower
organizational documents, all legal opinions
(including legal opinions then typically required by
ratings agencies), all insurance policies and
coverage and insurance companies, all required
evidence of compliance with all applicable laws and
regulations, and all other evidence, information and
material required by Lender or its counsel, shall be
in form, scope and substance satisfactory to Lender's
counsel who must approve title to the Project, the
legality, validity and enforceability of all
documents pertaining to the Permanent Loan, all
proceedings in connection therewith and all other
matters relating to the Permanent Loan and the
closing thereof.
11. Damage, Condemnation or Similar Proceedings. Since
the date of the last inspection of the Project by
Lender, no portion of the Project shall have been
damaged and not repaired to Lender's satisfaction, or
shall have been taken in condemnation or other
similar proceedings (and no such proceedings shall be
pending). Since the date of the last inspection of
the Project by Lender, no change in the structure or
physical condition of the Project shall have
occurred.
12. Insolvency, Material Adverse Change. None of
Borrower, or any general partner of Borrower, any
Principal or any Guarantor shall be the subject of
any bankruptcy, reorganization, insolvency or other
similar proceeding. A material adverse change in the
financial condition of Borrower, its Principals, the
Guarantors or a general partner of Borrower shall not
have occurred since the date the financial data and
documentation relating to such persons was most
recently furnished to Lender.
13. Default. No default shall have occurred and be
continuing in the performance of any obligation of
Borrower, its Principals or the Guarantors which
would be deemed an Event of Default under the
Construction Loan Documents. There shall exist no
other fact, event or disclosure in connection with
the Permanent Loan that reasonably can be expected to
cause the Permanent Loan to become delinquent or
materially adversely affect the Permanent Loan or the
Project.
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49
14. Action, Suit or Proceeding. No uncorrected notice of
violations of any municipal ordinances shall have
been filed against the Project by any municipal
department. No action, suit or proceeding judicial,
administrative or otherwise shall be pending against
or affecting Borrower, the Principals, the Guarantors
or the Project.
15. Reports, Submissions. All reports and submissions to
Lender by Borrower or Borrower's third party vendors
or consultants in connection with the Project,
including, without limitation, the Updated Technical
Reports, shall be certified and addressed to Lender's
satisfaction and shall have been approved by Lender.
16. Management Agreement, Franchise Agreement. The
Management Agreement and the Franchise Agreement
shall be in full force and effect, shall be
subordinate to the Permanent Loan, shall be assigned
to Lender and shall be otherwise acceptable to Lender
and shall be otherwise acceptable to Lender.
17. Permanent Loan Criteria. Each of the Permanent Loan
Criteria shall have been met to the satisfaction of
Lender.
18. Leases. Copies of all leases encumbering the Project,
which leases shall be in form and substance
acceptable to Lender and shall be subordinate to the
Permanent Loan.
19. Cross Default. No default shall exist under any other
loan by Lender to any affiliate of Borrower.
20. Rating Agency Requirements. The Permanent Loan shall
satisfy all requirements of Standard & Poor's or
other prominent rating agency in connection with
Lender's then current conduit program for loans of
this type.
I. NON-RECOURSE. The Permanent Loan will be non-recourse to
Borrower and its Principals (as determined by Lender at the
time of the closing of the Permanent Loan) and Guarantors,
except that the Guarantor Group, on a joint and several basis,
shall hold Lender harmless from any loss, cost, expenses
(including reasonable attorneys' fees), damages or liability
arising from fraud or misrepresentation, gross negligence,
willful misconduct, physical waste, removal or disposal of any
portion of the Project, enforcement costs, misappropriation of
funds, insured deductible amounts, and environmental matters.
In the event (i) of a voluntary bankruptcy filing by Borrower,
or any involuntary filing against Borrower or its general
partner or general partners, not dismissed within 90 days
(except if such involuntary action is brought by Lender), (ii)
of failure to permit on-site inspections or deliver financial
information as required under the loan
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50
documents, (iii) any financial information concerning Borrower
or any Principal or Guarantor is fraudulent in any respect,
contains any fraudulent information or misrepresents in any
material respect the financial condition of such person or
entity, (iv) Borrower shall fail to obtain Lender's prior
written consent to any subordinate financing, (v) Borrower
shall fail to obtain Lender's prior written consent to any
transfer of the Project or of any direct or indirect ownership
interest in Borrower where Lender consent is required under
the Loan Documents or (vi) Borrower fails to remain as a
single asset or single purpose entity, then the Guarantor
Group shall be fully liable, or a joint and several basis, for
the Permanent Loan Amount plus interest and related costs.
J. ENVIRONMENTAL INDEMNITY. The Guarantor Group shall execute,
on a joint and several basis, an environmental Indemnity
Agreement in form and substance satisfactory to Lender which
is not subject to limitations on recourse.
IV. DEFINITIONS. As used herein, the following definitions shall apply.
A. "Approved Project Costs" shall mean all direct and indirect
construction costs, land costs and "soft costs" for the
Project as are set forth on Exhibit D attached hereto, all to
the extent approved by Lender and Borrower.
B. "Candlewood" shall refer to Candlewood Hotel Company, Inc., a
Delaware corporation, its successors and assigns.
C. "Doubletree" shall mean Doubletree Corporation, a Delaware
corporation, and its successors and permitted assigns.
Doubletree is the owner of a substantial equity interest in
Candlewood and as such, derives significant value from the
Franchise Agreement and this Commitment.
D. "Doubletree Guaranty" shall mean that Guaranty Agreement dated
as of December 31, 1996, executed by Doubletree, as guarantor,
for the benefit of Lender, together with all exhibits and
schedules thereto, including without limitation, Schedule 1
thereto, which must be executed and dated by Lender and
Doubletree to refer to the Project described herein.
E. "Expenses" shall mean for any specified period, all ordinary,
necessary and reasonable operating and capital expenses
actually paid on a cash basis during such period and which are
related to the Borrower ownership and operation of the Project
during such period. Such Expenses shall include, by way of
example rather than of limitation: (1) principal, interest and
other debt service payments for the Lender loan secured by
such Project; (2) property taxes and assessments; (3) utility
charges; (4) costs of providing elevator, janitorial, trash
removal and maintenance services; (5) costs of maintaining and
repairing the Project; (6) management fees, overhead and
expenses (of no less than four percent (4%) of gross annual
revenues); (7) franchise fees of no less than five percent
(5%) of gross annual
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revenues; (8) an equipment and property replacement reserve of
no less than four percent (4%) of gross annual revenues; and
(9) any capital improvement costs paid by Borrower and not
approved in advance in writing by Lender. Such Expenses shall
not include the following: (i) any overhead of Borrower
incurred in connection with the management of the Project;
(ii) all amounts paid to Borrower or an affiliate of Borrower
in excess of amounts that would reasonably be paid in an
arms-length transaction to a person or entity that is not an
affiliate of Borrower; (iii) non-cash deductions of Borrower;
(iv) salaries or distributions paid or made to any employee,
partner, officer, director or shareholder of Borrower or an
affiliate of Borrower; (v) the cost of capital improvements
made to the Project which are approved in advance in writing
by Lender; or (vi) the cost of Borrower's federal, state or
local income taxes, franchise taxes or other taxes (other than
real property taxes for the Project).
F. "DSCR" shall mean Debt Service Coverage Ratio, which shall be
computed by dividing annual NOI by the annual debt service
payments on the particular loan then under application from
Borrower.
G. "Force Majeure" shall mean strikes, lock-outs, riots or other
labor troubles, unavailability of materials, a national
emergency, any rule, order or regulation or governmental
authorities, tornadoes, floods, hurricanes or other natural
disasters.
H. "Lender" shall refer to GMAC Commercial Mortgage Corporation,
a California corporation, and its successors and assigns.
I. "Guaranty Fee" shall mean that fee, if any, payable by Lender
to Doubletree in accordance with the terms and provisions of
the Doubletree Guaranty. The Guaranty Fee hereunder is equal
to that amount set forth on Exhibit A.
J. "Loan Amount" shall refer to the amount of financing that
Lender agrees to provide to Borrower for any of the respective
loans, whether the Construction Loan or the Permanent Loan.
The Construction Loan Amount is set forth on Exhibit A. The
respective Loan Amounts for the respective loans need not
necessarily be the same amounts.
K. "Net Cash Flow" shall mean the net cash flow from the Project
for a specified period of time, as confirmed by the periodic
financial and operating reports provided by Borrower under the
applicable loan documents and which conforms with Lender's
then-applicable underwriting criteria. It is currently
anticipated that Net Cash Flow will be substantially similar
to that NOI definition set forth in Section IV.L below, except
that the permitted Expenses shall include a working capital
reserve, held by Lender, equal to not more than two (2) months
of debt service.
L. "NOI" shall mean
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(a) for purposes of Lender determining whether a Project
satisfies the Permanent Loan Criteria, "NOI" shall
mean annual Net Operating Income as defined and
determined by Lender in accordance with its
then-current underwriting standards and practices for
its conduit program for loans of this type, which may
include, without limitation:
1. An allowance of no less than 4% multiplied
by gross annual revenues for management
fees;
2. An allowance of no less than 10% multiplied
by gross annual revenues for the combination
of marketing and franchise fees payable to
Candlewood; and
3. An allowance of no less than 5% multiplied
by gross annual revenues for a property,
plant, furniture, fixture, and equipment
replacement reserve; and
(b) for all other purposes, "NOI" shall mean Total Gross
Revenue less Expenses, all to the extent confirmed by
the periodic financial and property reporting and
audit requirements set forth in the applicable loan
documents.
M. "Permanent Loan Criteria" shall refer to a Project which at
the specified date, not later than the maturity of the
Construction Loan (including any Extension Periods) meets, in
GMAC's sole discretion, Lender's then current conduit
origination and underwriting standards, including but not
limited to (i) DSCR equal to or greater than 1.4 and (ii) the
ratio of the applicable Loan Amount to the market value of the
Project as determined by an acceptable appraisal dated within
30 days of such determination, shall not be greater than 75%.
N. "Project" shall refer to a Candlewood hotel identified on
Exhibit A.
0. "Total Gross Revenue" shall mean any specified period, all
revenue received on a cash basis during such period from all
sources related to the Project, including without limitation,
all rents, issues, profits, revenues, accounts, accounts
receivable and other income and proceeds from the use or
occupancy of hotel rooms, conference rooms and other public
facilities at the Project, all parking revenue, proceeds from
any business interruption insurance, condemnation awards from
a temporary taking, refunds, license, lease and concession
fees and rentals, income from vending machines, health club
membership fees, food and beverage sales, wholesale and retail
sales of merchandise and equipment, service charges, and
proceeds of business interruption and other loss of income
insurance; provided, however, Gross Revenues shall not include
the following: (i) gratuities to employees, (ii) federal,
state or municipal excise, sales, use or similar taxes
collected directly from patrons or guests or included as part
of the sales price of any goods or services, (iii) insurance
proceeds (other than proceeds from business
26
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interruption or other loss of income insurance), (iv)
condemnation proceeds (other than for a temporary
taking), (v) proceeds from any sale of the Project or
from a refinancing of any debt encumbering the
Project, (vi) proceeds from any disposition of
furniture, fixtures and equipment no longer necessary
for the operation of the Project; (vii) or interest
accruing on amounts deposited in any FF&E or other
reserve account.
V. MISCELLANEOUS.
A. Publicity. In the event the Construction Loan closed,
Lender shall have the right to issue press releases,
advertisements and other promotional materials
describing in general terms Lender's participation in
such transaction.
B. Sole Discretion of Lender. Wherever pursuant to this
Commitment (a) Lender exercises any right given to it
to approve or disapprove, (b) any arrangement or term
is to be satisfactory to Lender, or (c) any other
decision or determination is to be made by Lender,
the decision of Lender to approve or disapprove, the
determination that arrangements or terms are
satisfactory or not satisfactory and all other
decisions and determinations made by Lender, shall be
in the sole and absolute discretion of Lender and
shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.
C. Candlewood's Representations. Candlewood, on behalf
of itself and on behalf of its Borrowers,
acknowledges that Lender is relying upon both the
truthfulness and completeness of all information,
documents and statements made or delivered in
connection with the Construction Loan or contained in
this Application and any supplements or amendments
hereto. Candlewood represents that all such
documents, information and statements are true and
complete to the best of Candlewood's knowledge and
belief and are made for the purpose of securing
financing from Lender. Candlewood further agrees to
notify Lender of any material changes in connection
with such information, documents and statements.
D. Termination. If Lender issues a Commitment, Lender
shall have the option, in its sole discretion, to
terminate the Commitment for the Construction Loan,
or, if the Construction Loan has already been funded,
for any Extension Period and for the Permanent Loan,
by written notice to Borrower if there has been or
there exists: (1) any material misrepresentation,
misstatement or omission; (2) any material error in
any factual data submitted; (3) any material adverse
change in the state of facts indicated herein or in
any document delivered in connection with the
Construction Loan, this Loan Application or the
Commitment; (4) substantial or unrepaired damage to
the land or improvements forming portions of the
Project; (5) conditions that make the buildings on
the Project untenable; (6) an insolvency, bankruptcy,
appointment or receiver of or for, or a similar event
affecting, or the incapacitation of, Borrower or any
Principal or any Guarantor; and (7) any default under
the Construction Loan, the Management Agreement
and/or the Franchise
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54
Agreement which is not remedied before the expiration
of any applicable cure period.
E. Insurance. Any and all insurance coverage required
hereunder (i) shall be provided by an insurance
company that (a) has a claims paying ability or
general policyholder's rating of AA- or better from
Standard & Poor's or Duff & Phelps, Aa3 or better
from Moody's or A- or better from A.M. Best, (b) a
financial size rating of X or better from A.M. Best
or a policyholders' surplus of $500 million or more
and (c) is in any event satisfactory to Lender in its
sole discretion, (ii) shall name Lender and any other
parties designated by Lender as loss payees or
additional insureds and (iii) shall provide for such
deductibles and be in such form and on such other
terms as may be required by Lender in its sole
discretion.
F. Counterparts. This Application may be executed in any
number of counterparts and by different parties in
separate counterparts, each of which when executed
and delivered shall be deemed an original and all of
which counterparts taken together shall constitute
but one and the same instrument. Execution and
delivery of this Application may take place by
exchange of facsimile signature pages (provided
receipt of transmission confirmation is obtained).
G. Broker. Lender shall be under no obligation for
payment of any brokerage commission or fee of any
kind with respect to this Application and, by its
acceptance of this Application, Candlewood, on its
behalf and on behalf of its Borrowers, agrees to pay
the fees and commissions of any broker retained by
or on its behalf, and Candlewood, on its behalf and
on behalf of its Borrowers, agrees to indemnify, save
harmless and defend Lender from and against any and
all claims for brokers' or finders' fees and
commissions in connection with the negotiation,
execution and consummation of the Construction Loan
and this Application, including Lender's counsel's
fees and expenses relating to such claims.
H. Governing Law. This Application shall be governed by
the laws of the United States of America and the
internal laws of the Commonwealth of Pennsylvania.
I. Waiver. The provisions of this Application cannot be
waived or modified unless such waiver or modification
is in writing and signed by the party against whom
such waiver or modification is sought to be enforced.
This Application is for the benefit only of the
parties hereto and no third party shall have any
interest herein or in the proceeds of the Loan. This
Application sets forth the entire agreement among
Candlewood, its Borrower and Lender and all other
prior or contemporaneous agreements shall be deemed
to have merged herewith and to be superseded by this
Application except to the extent that they have been
expressly incorporated herein.
J. Assignability. This Application, the proceeds of the
Construction Loan, Permanent Loan, or any one or more
of the foregoing, shall not be assignable by
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Candlewood, its Borrowers or any other person or
entity without Lender's prior written consent.
Candlewood and the Principals recognize that Lender
may (i) fund the Loan through an affiliate, (ii) sell
or transfer interests in the Loan and the Loan
Documents related thereto to one or more participants
or special purpose entities, (iii) pledge Lender's
interests in the Loan and the Loan Documents as
security for one or more loans obtained by Lender or
(iv) sell or transfer Lender's interests in the Loan
and the Loan Documents in connection with a
securitization transaction, in each case, at no cost
to Borrower, and that all documentation, financial
statements, appraisals, reports and other data, or
copies thereof, related to this Application, the
Commitment, Borrower, the Principals, the Guarantors,
the Project or the Loan may be exhibited to and
retained by any party that is reviewing the Loan for
the purposes of purchasing, valuing or rating. To the
extent that Lender assigns all of its rights and
interests in the Construction Loan prior to the
completion of all disbursements to be made
thereunder, Lender shall remain liable for such
outstanding disbursements to the extent not properly
made by the new holder of the Construction Loan.
K. Confidentiality. This Application is being furnished
to Candlewood on a confidential basis and Candlewood
shall not reproduce, use, distribute or disclose this
Application or the terms and provisions hereof to
third parties (or permit the reproduction, use,
distribution or disclosure of this Application or the
terms and provisions hereof to third parties), in
whole or in part, except (i) with Lender's prior
written consent or (ii) to Candlewood's attorneys,
accountants and consultants; provided, however, that
Candlewood shall cause all such attorneys,
accountants and consultants to keep this Application
and all information contained herein confidential.
All copies and drafts hereof shall remain the sole
property of Lender and, if not so accepted, all
copies and drafts hereof are to be immediately
returned to Lender.
L. Notices. Any and all notices required or agreed to be
given pursuant to this Application or the Commitment
shall be sufficient if in writing and mailed by
United States Certified or Registered Mail, postage
prepaid, addressed to Lender and Borrower as follows:
If to Candlewood or its Borrowers at:
9342 East Central
Wichita, KS 67206
Attention: Warren D. Fix,
Executive Vice President
If to Lender, at:
100 South Wacker, Suite 400
Chicago, IL 60606
Attention: Vacys Garbonkus,
Senior Vice President
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56
and
8614 Westwood Center Drive, Suite 630
Vienna, Virginia 22182-2233
Attention: David B. Post,
Senior Vice President
All notices shall be deemed to have been received
three (3) days following the postmark dates thereof.
M. Jury Waiver. Candlewood, on its behalf and on behalf
of its Borrowers, now waives and agrees to waive in
the Construction Loan Documents, the Modification
Documents and any other loan documents governing the
loans addressed in this Application, the right to
trial by jury in connection with any dispute arising
under this Application, any Commitment, or in
connection with the Construction Loan or the
Permanent Loan.
N. Number and Gender. Whenever the context may require,
any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall
include the plural and vice versa.
O. Inapplicable Provisions. If any term, covenant or
condition of this Application is held to be invalid,
illegal or unenforceable in any respect, this
Application shall be construed without such
provision.
P. Time of Essence. Time is of the essence of this
Application and of each and every term, covenant and
condition herein.
Q. Inconsistency/Ambiguities. To the extent there is or
is deemed to be any inconsistency or ambiguity
between the terms and provisions of this Application
and the terms and provisions of the Note, Mortgage,
Building Loan Agreement or other Loan Documents
following the execution and delivery of such Loan
Documents, the terms and provisions of such Loan
Documents shall govern and control over any contrary,
inconsistent or ambiguous term contained in this
Application.
APPLICANT ACKNOWLEDGES THAT (I) THE RECEIPT BY LENDER OF THIS LOAN APPLICATION,
THE PROCESSING OF THIS LOAN APPLICATION BY LENDER, THE ORDERING OF ANY APPRAISAL
OR ANY ENGINEERING, ENVIRONMENTAL, ARCHITECTURAL OR OTHER REVIEW, ASSESSMENT OR
REPORT, OR THE TAKING OF ANY OTHER ACTION, BY LENDER IN CONNECTION WITH THIS
LOAN APPLICATION SHALL NOT IN ANY WAY CONSTITUTE AN OBLIGATION BY LENDER TO
ISSUE THE COMMITMENT OR TO MAKE THE LOAN, OR TO ISSUE
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57
THE COMMITMENT BY ANY DATE CERTAIN OR ON THE TERMS SET FORTH HEREIN, AND THAT
LENDER MAY FOR ANY REASON OR NO REASON DECLINE OR REFUSE TO MAKE THE LOAN, (II)
LENDER MAY AT ANY TIME, FOR ANY REASON OR NO REASON, TERMINATE THE PROCESSING OF
THIS LOAN APPLICATION, (III) IF LENDER, IN ITS SOLE DISCRETION, ELECTS TO MAKE
THE LOAN, THEN LENDER SHALL ISSUE THE COMMITMENT, WHICH WILL SET FORTH THE ONLY
TERMS AND CONDITIONS UPON WHICH LENDER SHALL BE OBLIGATED TO MAKE THE LOAN, AND
THAT LENDER WILL HAVE NO OBLIGATION TO MAKE THE LOAN OTHER THAN IN ACCORDANCE
WITH THE TERMS AND CONDITIONS SET FORTH IN THE COMMITMENT AND (IV) THE
PROVISIONS OF THE COMMITMENT MAY DIFFER FROM THE PROVISIONS OF THIS LOAN
APPLICATION AND IF ANY PROVISION OF THIS LOAN APPLICATION CONFLICTS WITH ANY
PROVISION OF THE COMMITMENT, THE PROVISION OF THE COMMITMENT SHALL CONTROL.
Candlewood Hotel Company, Inc. GMAC Commercial Mortgage Corporation
Warren D. Fix /s/ Vacys Garbonkus
- - ------------------------------ ------------------------------
By: /s/ Warren D. Fix By: Vacys Garbonkus
--------------------------- ------------------------------
Its: Its: Senior Vice President
-------------------------- ------------------------------
Date: 11/20/97 Date: 11/24/97
------------------ -------------------
Warren D. Fix
Executive Vice President
GMAC Commercial Mortgage Corporation
/s/ David B. Post
----------------------------------
By: David B. Post
------------------------------
Its: Senior Vice President
-----------------------------
Date: 11/25/97
-----------------------------
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EXHIBIT A
SPECIFIC PROJECT COMMITMENT
Candlewood Hotel Company, Inc., on its behalf and on behalf of the
Borrower named below, hereby submits this Specific Project Commitment to GMAC
Commercial Mortgage Corporation ("GMAC-CM") in connection with that certain
Application by Candlewood Hotel Company, Inc. and Commitment by GMAC Commercial
Mortgage Corporation for First Mortgage Construction And Permanent Loans entered
into by the parties on November _, 1997. The parties hereby confirm that all
terms and conditions contained therein are applicable to this Project unless
indicated otherwise herein.
For purposes of this Project, Candlewood Hotel Company, Inc. hereby
submits the following information:
Borrower: Candlewood ________ LLC, a limited liability company
organized under the laws of _____________________
Address: 9342 E. Central
Wichita, KS 67208
Tel: 316-631-1300
Fax: 316-631-1333
Managing Member: Candlewood Hotel Company, Inc.
Principals of Borrower: Candlewood Hotel Company, Inc.
Project Guarantors: Candlewood Hotel Company, Inc.
Project: A Candlewood hotel consisting of _______ building
containing approximately _______ square feet, ________
studios and ______ suites along with amenities including
fitness center, administrative offices, and ____ parking
spaces to be constructed on a parcel approximately
_______ acres in size located at _________ in ________,
_______________.
Total Project Cost: $
---------
Requested Construction Loan Amount: $
---------
Interest Rate: 30-day LIBOR +___________ bp (not including Guaranty Fee, if any)
Is Doubletree Guaranty Required __________ Yes; __________ No
If Doubletree Guarantee is required, then:
Doubletree Guarantee Fee: 0.5% to be added to Interest Rate
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Borrower's Attorneys: Foulston & Siefkin
700 Fourth Financial Center
Wichita, KS 67202
Tel: 316-267-6371
Fax: 316-267-6345
Commitment Fee (2% of Construction Loan Amount): $
-------------
Required Deposits with Application:
Expense Deposit: $25,000
Good Faith Deposit (to be applied against
Commitment Fee): $20,000
Underwriting Fee Payable with Application $ 5,000
Total Amount Remitted with Application $50,000
-------
Projected Closing Date:
---------------
Attachments:
- - -----------
Exhibit D: Approved Project Costs
Copy of organization documents of Borrower
Borrower GMAC Commercial Mortgage Corporation
- - --------------------------------- ------------------------------------
By: Candlewood Hotel Company, Inc. By: Vacys Garbonkus
Its: Managing Member Its: Senior Vice President
Date: Date:
---------------------------- ------------------------------
Candlewood Hotel Company, Inc. GMAC Commercial Mortgage
Corporation:
- - --------------------------------- ------------------------------------
By: By: David B. Post
Its: Its: Senior Vice President
-----------------------------
Date: Date:
---------------------------- -------------------------------
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EXHIBIT B
Candlewood and its Borrowers will furnish, or cause to be furnished to Lender,
within 30 days of the end of each calendar month, the following items, each
certified by a senior financial officer of Candlewood or its respective Borrower
as true, correct and complete as of the end of and for such period (subject to
normal year-end adjustments), and as having been prepared in accordance with the
Uniform System of Accounts, consistently applied: (a) a written occupancy
statement dated as of the last day of the most recently ended calendar quarter
identifying each of the Leases by the term, space occupied, rental required
to be paid, security deposit paid, any rental concessions, and identifying any
defaults or payment delinquencies thereunder; (b) monthly and year to date
operating statements detailing the total revenues received and total expenses
incurred in connection with the ownership and operation of the Project,
including a comparison of the budgeted income and expenses and the actual income
and expenses for such month and the year to date (which operating information
shall include the Improvements); and (c) a written statement dated as of the
last day of the most recently ended month showing the percentage of hotel or
motel rooms rented and occupied during such month and the average daily room
rate charged during such month. Upon request by Lender, Candlewood and its
Borrowers will provide a detailed explanation of any variances of ten (10%)
percent or more between budgeted and actual amounts for such periods. Borrower
shall furnish, within 90 days following the end of each calendar year, a
statement of the financial affairs and condition of the Project, including a
statement of profit and loss and a balance sheet for the Project (and Borrower,
Candlewood and each member of the Guarantor Group) for the immediately preceding
fiscal year, prepared by an independent certified public accountant acceptable
to lender. Candlewood and its Borrowers shall deliver to Lender on or before
December 31 of each calendar year an itemized operating budget and capital
expenditure budget for the Project and a management plan for the Project for the
next succeeding calendar year in such detail as Lender may reasonably request.
Candlewood shall promptly after receipt deliver to lender copies of all quality
inspection reports or similar reports or inspection results that are delivered
to it by the franchisor. At any time and from time to time Borrower shall
deliver to Lender or its agents such other financial data as Lender or its
agents shall reasonably request with respect to Candlewood and the ownership,
maintenance, use and operation of the Project. All information required to be
furnished to lender pursuant to this Section shall be on the form provided by
Lender (which form shall accompany Lender's request). Lender shall have the
right to conduct an independent audit of any of the above financial information
at its own expense at any time. In the event that an error in excess of two
percent (2%) of the amount being audited is discovered, the cost of the audit
shall be borne by Borrower.
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EXHIBIT C
The term "Event of Default" shall include the occurrence or happening,
at any time and from time to time, of any one or more of the following:
(a) if any portion of the Loan is not paid prior to the fifth
(5th) day after the date such payment is due or if the entire Loan is not paid
on or before the Maturity Date;
(b) subject to Borrower's right to contest as provided herein, if
any of the Taxes or Other Charges are not paid when due and payable;
(c) if the Policies are not kept in full force and effect, or if
the Policies are not delivered to Lender upon request;
(d) if Borrower transfers or encumbers any portion of the Project
in a manner inconsistent with the terms of this Agreement;
(e) if any representation or warranty of Borrower, or of any
Principal, or of any Guarantor made herein, in any Loan Document, any guaranty,
or in any certificate, report, financial statement or other instrument or
document furnished to Lender shall have been false or misleading in any material
respect when made;
(f) if Borrower or any Principal or any Guarantor shall make an
assignment for the benefit of creditors, or if Borrower shall generally not be
paying its debts as they become due;
(g) if a receiver, liquidator or trustee of Candlewood or its
Borrowers or of any Principal or any Guarantor shall be appointed, or if
Candlewood or its Borrowers or any Principal or any Guarantor shall be
adjudicated a bankrupt or insolvent, any petition for bankruptcy, reorganization
or arrangement pursuant to federal bankruptcy law, or any similar federal or
state law, shall be filed by or against, consented to, or acquiesced in by,
Candlewood or its Borrowers or any Principal or any Guarantor, or if any
proceeding for the dissolution or liquidation of Borrower or of any Principal or
of any Guarantor shall be instituted; provided, however. that such appointment,
adjudication, petition or proceeding, if involuntary and not consented to by
Candlewood or its Borrowers or such Principal or such Guarantor, shall
constitute an Event of Default only if not being discharged, stayed or dismissed
within 90 days;
(h) if Borrower shall be in default under any other mortgage or
security agreement covering any part of the Project, whether it be superior or
junior in lien to the Mortgage;
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(i) subject to Borrower's right to contest as provided herein, if
the Project becomes subject to any mechanic's, materialman's or other lien
except a lien for local real estate taxes and assessments not then due and
payable;
(j) if Borrower fails to cure promptly any violations of laws or
ordinances affecting the Project;
(k) except as permitted in this Agreement, the actual or
threatened alteration, improvement, demolition or removal of any of the
Improvements without the prior written consent of Lender;
(1) if there shall occur any damage to the Project in any manner
which is not covered by insurance solely as a result of Borrower's failure to
maintain insurance required in accordance with this Agreement;
(m) if without Lender's prior written consent: (i) the manager
under the Management Agreement (or any succeeding management agreement) resigns
or is removed or; (ii) there is any material change in or termination of the
Management Agreement (or any succeeding management agreement);
(n) if without Lender's prior written consent, there is any
material change in the Franchise Agreement (or any succeeding franchise
agreement);
(0) if for more than 30 days after receipt of notice from Lender,
Borrower shall continue to be in default under any term, covenant, or condition
of this Agreement, the Assignment, the Environmental Agreement or any of the
other Loan Documents other than as specified in any of subsections (a) through
(n) of this Section; provided, however, that if the cure of any such default
cannot reasonably be effected within such 30 day period and Borrower shall have
promptly and diligently commenced to cure such default within such 30 day
period, then the period to cure shall be deemed extended for up to an additional
30 days (for a total of 60 days from Lender's default notice) so long as
Borrower diligently and continuously proceeds to cure such default to Lender's
satisfaction;
(p) if a default has occurred and continues beyond any applicable
cure period under the Management Agreement if such default permits a party to
terminate or cancel the Management Agreement;
(q) if a default has occurred and continues beyond any applicable
cure period under the Franchise Agreement if such default permits a party to
terminate or cancel the Franchise Agreement;
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63
(r) if Borrower ceases to operate a hotel on the Project or
terminates such business for any reason whatsoever (other than temporary
cessation in connection with any renovations to the Project or restoration of
the Project after casualty or condemnation);
(s) if Borrower terminates or cancels the Franchise Agreement or
operates the Project under the name of any hotel chain or system other than
Candlewood, without Lender's prior written consent; or
(t) if a default or event of default occurs under another loan now
or hereafter outstanding from Lender to Borrower, Candlewood or an affiliate of
either Borrower or Candlewood, including, without limitation, the
Cross-Collateralized Indebtedness.
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EXHIBIT D
Approved Project Costs
Borrower
-----------------------------
Project: Candlewood Hotel
Location:
-----------------------------
38
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END EXHIBIT A
66
EXHIBIT B
Form of Participation Agreement
- 26 -
67
EXHIBIT B
SUBORDINATE PARTICIPATION AGREEMENT
This Agreement, made this __________ day of __________, 1996 by and
between GMAC COMMERCIAL MORTGAGE CORPORATION, a California Corporation
("Lender"), and DOUBLETREE CORPORATION, a Delaware Corporation ("Participant").
The background of this Agreement is as follows:
A. Lender has agreed to provide certain commitments for loans (each, a
"Loan" and collectively the "Loans") with respect to hotel properties to be
developed by franchisees of Candlewood Hotel Company, Incorporated, a Delaware
corporation and an affiliate of Participant (each such franchisee who is the
borrower of a Loan a "Borrower" and collectively the "Borrowers"). Participant
has entered into a certain guarantee agreement (the "Guaranty") in favor of
Lender pursuant to which, inter alia, Participant has guaranteed the payment of
certain sums with respect to the Loans.
B. The parties wish to enter into this Agreement in order to confirm
their agreement regarding the interest of Participant in certain Loans as to
which Participant advances funds and to provide for the relative rights and
responsibilities of the parties regarding such participation.
NOW THEREFORE in consideration of the premises and the further sum of one
dollar ($1) by each party to the other duly paid, receipt whereof is hereby
acknowledged and intended to be legally bound, the parties agree as follows:
1. Participation. Sums paid by Participant to the Lender pursuant to the
Guaranty (other than interest and collection costs under Paragraph 19 thereof)
shall not be applied on account of the indebtedness of any Borrower to Lender,
but shall constitute automatically, without the need of any further document,
the purchase of a subordinated participation interest in the Loan in accordance
with this Agreement. Each Periodic Recovery disbursed to Participant under
Paragraph 3 of the Guaranty, each sum collected from Borrower and then credited
to Participant under Paragraph 7 of the Guaranty and all sums paid by Lender to
Participant on account of such participation interest hereunder will reduce the
participation interest of Participant in the Loan. The interest of Participant
in each Loan will be equal to the portion of the principal and interest owing
on such Loan which has been advanced by Participant to Lender under the
Guaranty and has not been paid or credited by Lender to Participant.
2. Subordination. The participating interest of Participant in a Loan
shall be absolutely subject and subordinate to the interest of Lender in such
Loan and all collateral securing such loan. Without limiting the generality of
the foregoing, except for the sums to be paid or credited to Participant
pursuant to Paragraphs 3 or 7 of the Guaranty, no money collected or recovered
by Lender with respect to a Loan will be paid or credited to Participant unless
and until all sums owing to Lender under such Loan have been fully and
irrevocably paid to Lender.
68
Participant will not, by reason of its subordinated participation interest in a
Loan, be (i) a creditor of any Borrower, (ii) entitled to assert any claim
against any Borrower, whether in bankruptcy proceedings or otherwise or
entitled to dispute or object to any claim made by Lender against a Borrower,
in bankruptcy proceedings or otherwise or (iii) otherwise entitled to share in
any foreclosure proceeds or any other sum collected or recovered with respect
to a Loan (other than sums to be paid or credited to Participant pursuant to
Paragraphs 3 or 7 of the Guaranty) until Lender has been fully and irrevocably
paid all sums owing to it with respect to such Loan. Participant acknowledges
that Lender has not guaranteed and does not guarantee repayment of all or any
portion of Participant's participation interest in the Loan.
3. Loan Administration. Lender alone shall administer each Loan,
shall hold all Loan Documents, shall make all collections, shall determine
whether and when to enforce remedies and which remedies to pursue (subject,
however, to the forbearance provisions of the Guaranty). Participant, in its
capacity as a subordinated participant in a Loan, shall not be entitled to
determine when or whether remedies should be pursued, and Lender shall have no
liability hereunder to Participant for any matter relating to Lender's
servicing of any Loan or for Lender's decision to pursue, or not to pursue any
remedy with respect to any Loan. Lender will furnish periodic reports to
Participant in the ordinary course of Lender's business and will respond to
Participant's reasonable requests for information regarding the Loans and the
participation interest of Participant therein.
4. Disclaimers. Lender makes no representation, and shall have no
responsibility, with respect to (a) the legality, genuineness, validity,
binding effect or enforceability of any document evidencing or securing a Loan
(individually a "Loan Document" and collectively the "Loan Documents"); (b) the
truthfulness, accuracy or completeness of any of the representations or
warranties in the Loan Documents; (c) the filing, recording or taking of any
other action with respect to any Loan Document or the validity, enforceability,
perfection or priority of any lien or security interest; (d) the collectibility
of any advance or the value of sufficiency of any collateral therefor; (e) the
financial or other condition of any Borrower or any other person or entity; or
(f) any other matter having any relation to any Loan Document, Participant's
participation interest, any Borrower or any other person or entity except as
otherwise specifically set forth herein. Participant acknowledges that
Participant is able to make and has made Participant's own independent
investigation and determination of the foregoing matters without reliance on
Lender, and Participant accepts responsibility therefor.
5. Actions Independent. Lender (a) shall not be deemed to be a
trustee or agent for Participant, and Lender shall have no fiduciary or similar
duties, in connection with this Agreement, the Guaranty, the other Loan
Documents, or Participant's participation interest; (b) may use Lender's sole
discretion with respect to exercising or refraining from taking any action that
may be vested in Lender or which Lender may be entitled to take or assert under
or in respect of any of the Loan Documents, including rights and actions
relating to any consent to departure therefrom, release of collateral in
connection therewith, waiver or amendment or any term thereof, or any
enforcement action of any kind under any circumstances (Participant agrees,
however, to promptly execute and deliver a written consent to any such actions
taken by Lender
-2-
69
as Lender may reasonably request); (c) shall endeavor to give the same degree
of care to the administration of the Loans as Lender generally gives to the
administration of similar loans in which Lender has not granted participation
to others, and (d) may act as financial adviser to any Borrower or as placement
agent for any debt or equity securities of any Borrower. Without limiting the
generality of the foregoing, Lender (i) may, without liability, rely upon the
advice of legal counsel, accountants and other experts (including those
retained or employed by any Borrower) and upon any written communication or
telephone conversation that Seller believes to be genuine and correct or to
have been signed, sent or made by the proper person or entity; (ii) shall not
be required to make any inquiry concerning the performance by any Borrower, any
guarantor or any other person or entity of any of its obligations and
liabilities under or in respect of the Loan Documents; (iii) shall not have any
duty to inspect the property (including the books and records) of any Borrower
or any collateral; and (iv) shall have no obligation to make any claim against,
or assert any lien upon, any property held by Lender or assert any offset
thereagainst.
6. Exercise of Remedies Etc. Participant will not have, and will not
assert or seek to exercise, any right of legal redress against any Borrower, any
guarantor or any other person or entity in respect of any of the Loan Documents,
any part of Participant's participation interest or any collateral security
therefor and any breach by Participant of the foregoing covenant will (i) render
Participant liable to Lender for all loss and expense to Lender (including
without limitation those for legal services) occasioned thereby, and (ii) if not
withdrawn by Participant within fifteen (15) days following notice from Lender,
constitute an Event of Default under the Guaranty. Participant agrees that
Lender may, in Lender's sole discretion, take legal action to enforce or protect
Participant's and/or Lender's interests in respect of the Loan Documents and any
collateral security therefor. If Lender incurs any costs or expenses (including,
without limitation, those for legal services) or if any liabilities,
obligations, losses, damages, penalties, actions, judgments or suits of any kind
or nature whatsoever (including, without limitation, by or in connection with
any taxes of any kind), become imposed upon Lender in any manner, in connection
with (i) any of the Loan Documents or any collateral security, (ii) any actual
or proposed amendment, consent, release or waiver in connection therewith or
restructuring or refinancing therefor or (iii) any effort to perfect, enforce or
protect Participant's or Lender's rights or interests with respect thereto, then
(except if and to the extent such may be payable by Participant under the
Guaranty) all such costs shall be added to Lender's share of the Loan in
question and shall be senior to Participant's interest in such Loan. Without
limiting the applicability of Section 19 of the Guaranty regarding claims
arising thereunder or in connection therewith, each party will reimburse the
other on demand for any enforcement costs and other liabilities, cost or
expenses (including without limitation those for legal services) a party may
incur as a result of or in relation to any breach of this Agreement by the
other.
7. No Amendment Etc. This Agreement may not be supplemented or altered,
either orally, by course of dealing or otherwise, except in a writing duly
executed by Lender and Participant. In the absence of manifest error, all
determinations made my Lender in good faith hereunder relating to Participant's
participation interest or the Loan Documents shall be conclusive and binding on
Participant. This Agreement and Lender's and Participant's
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respective rights and obligations hereunder shall be interpreted in accordance
with and governed by the laws of the Commonwealth of Pennsylvania, without
giving effect to the conflicts of law principles thereof. If any provision
hereof would be invalid, illegal or unenforceable under applicable law, then
such provision shall be deemed valid, legal and enforceable while most nearly
preserving its original intent; no provision hereof shall be affected by
another provision's being held invalid, illegal or unenforceable.
8. Authority. Each party hereto hereby represents to the other that it
has the power and authority to enter this Agreement and to perform its
obligations hereunder, that its execution, delivery and performance of this
Agreement does not violate any contractual provision to which it is subject,
and that this Agreement constitutes its legal, valid and binding obligation.
9. Headings. The paragraph headings hereof are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
10. Entire Agreement. This Agreement and the Guaranty together constitute
the entire agreement between Participant and Lender with respect to the subject
matter hereof, and no prior understandings or communications, oral or
otherwise, or course of dealing, may be deemed to alter, modify or vary the
terms and provisions hereof and of the Guaranty.
11. Counterparts. This Agreement may be executed in one or more
counterparts and by the parties hereto on separate counterparts, each of which
shall be deemed an original, and all of which taken together shall constitute
one and the same instrument.
12. Third Parties. None of the provisions of this Agreement shall inure
to the benefit of the Borrower, any guarantor (other than Participant) or any
person or entity other than Participant and Lender and their respective
successors and permitted assigns.
13. Notices. Each notice or other communication hereunder shall be in
writing, and shall be given in the manner and at the addresses specified in the
Guaranty (as such addresses may be changed from time to time as provided in the
Guaranty).
IN WITNESS WHEREOF, the parties hereto have executed this Participation
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Agreement by their respective duly authorized officers as of the date first
above written.
GMAC COMMERCIAL MORTGAGE CORPORATION
By:
----------------------------------
--------------------------------
Name:
--------------------------------
Title:
DOUBLETREE CORPORATION
By:
----------------------------------
--------------------------------
Name:
--------------------------------
Title:
72
AGREEMENT PURSUANT TO
CLAUSE (ii) OF SECTION 7 OF GUARANTY
THIS AGREEMENT, made this _____________ day of ____, 199_, by and
between GMAC COMMERCIAL MORTGAGE CORPORATION, a California Corporation
("Lender"), and DOUBLETREE CORPORATION, a Delaware Corporation ("Guarantor").
The background of this Agreement is as follows:
A. Lender has provided a loan (the "Loan") to __________________
("Borrower") in the original principal amount of $__________. Guarantor has
entered into a certain guarantee agreement dated __________, 1996 (the
"Guaranty") in favor of Lender pursuant to which, inter alia, Guarantor
guaranteed the payment of certain sums with respect to the Loan.
B. Guarantor has elected to enter into this Agreement pursuant to
clause (ii) of Section 7 of the Guaranty.
C. Terms used in this Agreement with initial capitals and not defined
herein shall have the meaning given in the Guaranty.
NOW THEREFORE in consideration of the premises and the further sum of
one dollar ($1) by each party to the other duly paid, receipt whereof is hereby
acknowledged and intended to be legally bound, the parties agree as follows:
1. Guarantor hereby becomes liable for the payment of all principal,
interest, net cash flow, tax and insurance escrows and other sums payable
monthly during the term of this Agreement on account of the Loan (but not the
principal at maturity or upon acceleration), all of which are to be billed to
Guarantor monthly and paid by Guarantor when due under the Loan Documents.
2. In accordance with Section 7 of the Guaranty, Lender will continue
its customary efforts to collect all interest and other sums coming due from
Borrower and will promptly credit to Guarantor all sums so collected. Sums paid
by Guarantor hereunder will not reduce the Maximum Amount under the Guaranty,
and sums credited by GMAC to Guarantor hereunder will not increase the Maximum
Amount.
3. This Agreement is entered into with respect to the obligations of
Guarantor under Section 7 of the Guaranty with respect to the Loan, and this
Agreement does not diminish or affect any other obligation of Guarantor under
the Guaranty with respect to the Loan or with respect to any other loan which is
subject to the Guaranty.
4. This Agreement will terminate in accordance with Section 7 of the
Guaranty (a) upon payment by Guarantor to Lender of the sum payable by Guarantor
73
pursuant to clause (i) of Section 7 of the Guaranty with respect to the Loan
accompanied by Guarantor's notice of termination of this Agreement, or (b)
automatically when the Loan achieves a DSCR of 1.10, as calculated by Lender in
accordance with the Guaranty, or when the Maximum Amount with respect to the
Loan equals zero.
5. This Agreement does not amend or modify the Guaranty, but is intended
solely to implement the provisions of clause (ii) of Section 7 of the Guaranty
with respect to the Loan.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their respective duly authorized officers as of the date first above written.
GMAC COMMERCIAL MORTGAGE CORPORATION
By:
----------------------------------
Name:
Title:
DOUBLETREE CORPORATION
By:
----------------------------------
Name:
Title:
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EXHIBIT A
SPECIFIC PROJECT COMMITMENT
Candlewood Hotel Company, Inc., on its behalf and on behalf of the Borrower
named below, hereby submits this Specific Project Commitment to GMAC Commercial
Mortgage Corporation ("GMAC-CM") in connection with that certain Application by
Candlewood Hotel Company, Inc. and Commitment by GMAC Commercial Mortgage
Corporation for First Mortgage Construction And Permanent Loans entered into by
the parties on November 25, 1997. The parties hereby confirm that all terms and
conditions contained therein are applicable to this Project unless indicated
otherwise herein.
For purposes of this Project, Candlewood Hotel Company, Inc. hereby submits
the following information:
Borrower: Candlewood Chicago, IL-Hoffman Estates, LLC, a limited
liability company organized under the laws of Delaware.
Address: 9342 E. Central
Wichita, KS 67208
Tel: 316-631-1300
Fax: 316-631-1333
Managing Member: Candlewood Hotel Company, Inc.
Principals of Borrower: Candlewood Hotel Company, Inc.
Project: A Candlewood hotel consisting of one (1) building
containing approximately 59,730 square feet, 98
studios and 24 king suites along with amenities
including fitness center, administrative offices, and
132 parking spaces to be constructed on a parcel
approximately 2.58 acres in size located at Higgins Rd
and Greenspoint Parkway, Chicago, IL.
Total Project Cost: $9,500,000
Requested Construction Loan Amount: $6,400,000
Equity investment by Borrower: $3,100,000
Cash $1,825,870
If Land, Original Cost $1,274,130
Interest Rate (Initial Period): LIBOR -- 3.75% (5% minimal LIBOR Index)
Borrower's Attorney
Kenneth D. Crews
Latham & Watkins
Sears Tower, Suite #5800
Chicago, IL 60606
(312) 876-7700
(312) 993-9767
REQUIRED DEPOSITS WITH APPLICATION:
Expense Deposit: $ 30,000
Underwriting Fee Payable with Application $ 5,000
Commitment Fee: $128,000
Amount Payable with Application: $163,000
Total Amount Remitted with Application $ 50,000
Amount Payable at Closing: $113,000
75
Projected Closing Date: October 30, 1998
Other matters: The loan term is four years without extensions.
ATTACHMENTS:
Exhibit D: Approved Project Costs
Copy of organization documents of Borrower
CANDLEWOOD CHICAGO, IL-HOFFMAN GMAC COMMERCIAL MORTGAGE
ESTATES, LLC CORPORATION
/s/ Pamela Cloud /s/ Vacys Garbonkus
- - ------------------------------------ -----------------------------------
By: Candlewood Hotel Company, Inc. By: Vacys Garbonkus
Its: Managing Member Its: Senior Vice President
Date: October 27, 1998 Date: October 29, 1998
CANDLEWOOD HOTEL COMPANY, INC. GMAC COMMERCIAL MORTGAGE
CORPORATION
/s/ Pamela Cloud /s/ James C. Poff
- - ------------------------------------ -----------------------------------
By: Pam Cloud By: James C. Poff
Its: Assistant Secretary Its: Vice President
Date: October 27, 1998 Date: October 28, 1998