Common use of Hotel Covenants Clause in Contracts

Hotel Covenants. (a) Each of Borrower and Leasehold Pledgor shall cause each of Owner and Operating Lessee to cause the hotel located on each Individual Property to be operated pursuant to the applicable Franchise Agreement. (b) Borrower or Leasehold Pledgor shall cause each of Owner and Operating Lessee to (i) promptly perform and/or observe all of the covenants and agreements required to be performed and observed by Owner under each Franchise Agreement and do all things necessary to preserve and to keep unimpaired its material rights thereunder; (ii) promptly notify Lender of any default under any Franchise Agreement of which it is aware; and (iii) promptly enforce the performance and observance of all of the covenants and agreements required to be performed and/or observed by each Franchisor under each Franchise Agreement. (c) Neither Borrower nor Leasehold Pledgor shall, without Lender’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed) permit Owner or Operating Lessee to (1) surrender, terminate or cancel any Franchise Agreement; (2) reduce the term of any Franchise Agreement; (3) increase the amount of any charges under any Franchise Agreement; or (4) otherwise materially modify, change, supplement, alter or amend, or waive or release any of its rights and remedies under, any Franchise Agreement in a manner adverse to Borrower, Leasehold Pledgor or Lender.

Hotel Covenants. (a) Each of Borrower and Leasehold Pledgor shall cause each of Owner and Operating Lessee to cause the hotel located on each Individual Property to be operated pursuant to the applicable Franchise Agreement. (b) Borrower or Leasehold Pledgor shall cause each of Owner and Operating Lessee to (i) promptly perform and/or observe all of the covenants and agreements required to be performed and observed by Owner under each Franchise Agreement and do all things necessary to preserve and to keep unimpaired its material rights thereunder; (ii) promptly notify Lender of any default under any Franchise Agreement of which it is aware; and (iii) promptly enforce the performance and observance of all of the covenants and agreements required to be performed and/or observed by each Franchisor under each Franchise Agreement. (c) Neither Except as expressly set forth in Section 4.34(d) below, neither Borrower nor Leasehold Pledgor shall, without Lender’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed) cause or permit Owner or Operating Lessee to (1) surrender, terminate or cancel any Franchise Agreement; (2) reduce the term of any Franchise Agreement; (3) increase the amount of any charges under any Franchise Agreement; or (4) otherwise materially modify, change, supplement, alter or amend, or waive or release any of its rights and remedies under, any Franchise Agreement in a manner adverse to Borrower, Leasehold Pledgor or Lender.. -119- Mezzanine B Loan Agreement (d) Notwithstanding the foregoing and without limiting Borrower’s and Leasehold Pledgor’s rights under clause (c) above, from time to time after the earlier of (1) the date that is six (6) months following the Closing Date and (2) the final Securitization of the Loan, without the consent of Lender, Borrower and Leasehold Pledgor may permit Owner and Operating Lessee to elect to “reflag” one or more Individual Properties by terminating an existing Franchise Agreement as to an Individual Property and entering into a replacement Franchise Agreement as to such Individual Property; so long as (i) the Franchisor is an Approved Brand, (ii) during the term of the Loan, not more than forty-three (43) Individual Properties are replaced pursuant to this paragraph (d), (iii) Lender shall have approved the replacement Franchise Agreement (which approval shall not be unreasonably withheld, conditioned or delayed), except that such approval shall not be required if the Individual Property is operated under an Approved Brand and such replacement Franchise Agreement is (x) substantially in the same form and substance as a Franchise Agreements in effect on the Closing Date or (y) entered into on an arms’-length basis and otherwise on commercially reasonable terms, with economic terms and franchise fees comparable to then existing local market rates and otherwise approved by Lender, such approval not to be unreasonably withheld, conditioned or delayed (provided that the requirement for such approval and any other approval requested under this subsection (d) shall be deemed to have been waived if (I) the correspondence from Borrower to Lender requesting such approval (A) is enclosed in an envelope marked “PRIORITY”, (B) contains a legend, prominently displayed at the top of each page thereof, in bold, all caps and fourteen (14) point or larger font stating that Borrower or Leasehold Pledgor is requesting the Lender’s approval of the proposed Franchise Agreement under Section 4.34(d) hereof and that Lender’s failure to respond to such request within five (5) Business Days following its receipt of such request shall result in such request being deemed granted, (C) is accompanied by a copy of the proposed replacement Franchise Agreement, the PIP and the estimated PIP Expenses associated with the PIP (which information may be provided electronically in the form of a CD Rom or other portable electronic media enclosed with such notice) and (D) is also sent via electronic mail to Lender’s e-mail address provided by Lender to Borrower from time to time, and (II) Lender shall fail to respond to such request within five (5) Business Days following its receipt of such request), (iv) the termination, if applicable, of an existing Franchise Agreement as to an Individual Property shall not violate or result in the termination of any other Franchise Agreements with respect to other Individual Properties (unless such other Franchise Agreements are being terminated in accordance with this Section 4.34) as evidenced by an Officer’s Certificate, (v) no Event of Default shall have occurred and be continuing, (vi) such reflagging shall not violate or be prohibited by any applicable Ground Lease (unless the consent or waiver of the Ground Lessor thereunder shall have been obtained in writing) as evidenced by an Officer’s Certificate, (vii) the Franchisor of the Approved Brand party to such replacement Franchise Agreement shall have delivered to Lender a comfort letter reasonably satisfactory to Lender (it being agreed that in the case of a Franchisor that franchises another Individual Property, the form of comfort letter delivered with respect to such other Individual Property on the Closing Date shall be deemed reasonably satisfactory), (viii) the replacement Franchise Agreement shall be with a franchisor that is in no more than two categories of hotels lower than the Franchisor being replaced as on the Closing Date, based on the annual STR Chain Scale classification, (ix) the Approved Brand Requirements shall be satisfied to the extent required under the definition thereof, unless otherwise reasonably agreed by Lender, (x) if the replacement franchisor is an Affiliate of Borrower, Borrower shall deliver an Additional Insolvency Opinion in form and substance reasonably satisfactory to Lender and satisfactory to the applicable Rating Agencies and (xi) if and to the extent required under the provisions of paragraph (e)(ii) below, Borrower shall deliver to Lender, as additional security for Borrower’s and Leasehold Pledgor’s Obligations under the Loan Documents, security for payment of any New/Renewal Flagging Costs. -120- Mezzanine B Loan Agreement (e) To the extent not previously provided to and approved by Lender in the Approved Flagging Budget for an Individual Property, Borrower or Leasehold Pledgor shall provide or cause Owner or Operating Lessee to provide to Lender a budget for all New/Renewal Flagging Costs and Change of Control Flagging Costs (collectively, the “Flagging Costs”). The budgeting and delivery of security for Flagging Costs shall be governed by the following principles: