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Exhibit 10.1
LOAN AGREEMENT
BY AND BETWEEN
INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.
AND
PNC BANK, NATIONAL ASSOCIATION
CLOSING DATE: FEBRUARY 14, 0000
XXXXXXXXX XXX
XXXXX XXXXXXX XXXXXXXX, XXXXXXXXX XXXXXX, XXXXXXXXXXXX
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LIST OF SCHEDULES AND EXHIBITS
Schedule I Names, Addresses, Telephone and Telecopier Numbers of Parties
Exhibit A Loan Interest Rate Request Form
Exhibit B Items to be Supplied
Exhibit C Financial Reporting Requirements
Exhibit D Compliance Certificate
Exhibit E Amortization Schedule
Exhibit F Leased Office Equipment
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LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made as of the __ day of February,
2000, by and between INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C., a Delaware
limited liability company (the "Borrower"), and PNC BANK, NATIONAL ASSOCIATION,
a national banking association (the "Bank"). Each initially capitalized term
used in the following recitals and not otherwise defined shall have the meaning
ascribed to it in Article 1.
WITNESSETH:
WHEREAS, Borrower is the owner in fee simple of the Land which is
located in the Township of North Fayette, County of Allegheny, Commonwealth of
Pennsylvania, comprising approximately 8.877 acres.
WHEREAS, pursuant to the terms of this Agreement, the Bank has agreed
to make a loan to Borrower in the maximum aggregate principal amount of
$7,560,000 (the "Loan").
WHEREAS, the Bank is willing to provide the Loan upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
1. DEFINITIONS
1.1 Definitions.
In addition to words and terms defined elsewhere in this Agreement, the
following terms shall have the following meanings:
"Affiliate" as to any Person shall mean any other Person (i) which
directly or indirectly controls, is controlled by, or is under common control
with such Person, (ii) which beneficially owns or holds 50% or more of any class
of the voting stock (or in the case of a Person which is not a corporation, more
than 50% of the equity interest) of such Person, or (iii) 50% or more of the
voting stock (or in the case of a Person which is not a corporation, 50% or more
of the equity interest) of which is beneficially owned or held, directly or
indirectly, by such Person. Control, as used in this definition, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the power to
elect a majority of the directors or trustees of a corporation or trust, as the
case may be.
"Agreement" shall mean this Loan Agreement as the same may be
supplemented or amended from time to time, including all schedules and exhibits.
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"Appraisal" shall mean a written appraisal prepared by an independent
appraiser engaged by Bank at Borrower's sole cost and expense prepared in
compliance with all applicable regulatory requirements, being also subject to
the Bank's customary independent appraisal requirements.
"Appraised Value" for any period of determination shall mean the
stabilized dollar value of the Project as determined by an Appraisal of the
Project.
"Assignment of Leases and Rents" shall mean that certain Assignment of
Leases and Rents of even date herewith from the Borrower to the Bank securing
the Loan, as the same may be amended, replaced or supplemented from time to time
in writing by the Borrower and the Bank.
"Assignment of Property Management Agreement" shall mean that certain
Assignment of Property Management Agreement of even date hereunder from the
Borrower to the Bank, as the same may be amended, replaced or supplemented from
time to time in writing by the Borrower and the Bank.
"Authorized Officer" shall mean those Persons designated by written
notice to the Bank from the Borrower, authorized to execute notices, reports and
other documents on behalf of the Borrower. The Borrower may amend such list of
Persons from time to time by giving written notice of such amendment to the
Bank.
"Bank" shall mean PNC BANK, NATIONAL ASSOCIATION and its successors and
assigns.
"Bank Debt" shall mean all monetary obligations, liabilities and
Indebtedness of the Borrower to the Bank, its successors, assigns or
participants, evidenced by, arising under or directly relating to the Loan
Documents, whether as principal, guarantor, surety or otherwise, secured or
unsecured, joint and/or several, absolute or contingent, due or not due, matured
and unmatured, original, renewed, extended, refinanced or replaced, now existing
or hereafter incurred or created, consensual or created by law, and including
principal (whether resulting from advances made by the Bank or from Indebtedness
purchased by the Bank), interest, yield protection payments, premiums, fees,
expenses (including reasonable collection expenses), taxes, charges, commissions
and reasonable attorneys' fees actually incurred, and including all monetary
obligations, liabilities and Indebtedness of Borrower to the Bank incurred or
arising after the commencement of any case by or against Borrower under the U.S.
Bankruptcy Code, specifically including any post-petition interest or advances.
"Base-Rate" shall mean the greater of (i) the Prime Rate, or (ii) the
Federal Funds Effective Rate plus 0.5% per annum.
"Base-Rate Options" shall have the meaning assigned to that term in
subsection 3.1(a) hereof.
"Benefit Arrangement" shall mean at any time an "employee benefit
plan," within the
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meaning of Section 3(3) of ERISA, which is neither a Plan nor a Multiemployer
Plan and which is maintained, sponsored or otherwise contributed to, by any
member of the ERISA Group.
"Borrower" shall mean Interstate Pittsburgh Hotel Holdings, L.L.C., a
Delaware limited liability company.
"Borrower Documents" shall mean the Borrower's operating agreement,
articles of organization and resolutions and all other formation documents of
the Borrower.
"Borrowing Date" shall mean the date for the making of an advance of
the Loan or the renewal or conversion thereof to the same or a different
Interest Rate Option, which shall be a Business Day.
"Borrowing Tranche" shall mean (i) portions of the Loan to which a
Euro-Rate Option applies by reason of the selection of, conversion to or renewal
of such Interest Rate Option on the same day and having the same Interest
Period, and (ii) portions of the Loan to which any Base-Rate Option applies by
reason of the selection of or conversion to such Interest Rate Option.
"Business Day" shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required to be closed
for business in Pittsburgh, Pennsylvania.
"Cash and Cash Equivalents" shall mean as of any date of determination,
cash, demand deposits, securities issued by the U.S. Department of the Treasury,
certificates of deposit (provided that no securities or certificates of deposit
shall have maturities of more than ninety (90) days from such date) and publicly
traded, marketable equity securities acceptable to the Bank.
"Closing Date" shall mean the date hereof. The closing shall take place
on the Closing Date at the offices of Marcus & Shapira LLP, One Oxford Centre,
35th Floor, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, or at such other time and place as
the parties agree.
"Collateral" shall mean the real estate encumbered by the Mortgage and
all security pledged pursuant to this Agreement in connection with the Loan and
the Collateral Documents.
"Collateral Documents" shall mean the Mortgage, the Assignment of
Leases and Rents, the Subordination Agreement, the Assignment of Property
Management Agreement, the Pledge Agreement and the Financing Statements.
"Comfort Letter" shall mean that certain Standard Form Comfort Letter
dated February ___, 2000 from Franchisor to the Bank with respect to the
Franchise Agreement.
"Commitment Fee" shall mean the sum of $47,250.00.
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"Conditions for Extension" shall mean the provision by Borrower to the
Bank of evidence satisfactory to the Bank of Borrower's compliance with the
following:
(i) no Event of Default shall have occurred and be continuing and no
Potential Default shall have occurred, which Potential Default is not cured
prior to the commencement date of the Extension Period;
(ii) the entire Project is free of Liens and encumbrances (except for
Permitted Encumbrances);
(iii) the Debt Service Coverage Ratio for the twelve (12) month period
ending December 31, 2001 for the Project shall not be less than 1.50 to 1.00;
and
(iv) together with its notice of its election to exercise the Extension
Option, Borrower shall pay the Extension Fee to the Bank.
"Consequential Loss" shall mean an amount equal to the present value
(as determined by Bank) of the product of (a) the positive difference resulting
from subtracting the interest rate for the Euro-Rate Option which would be
applicable to a similarly sized Borrowing Tranche determined on the date of
prepayment for a period of time commencing on the date of prepayment and
terminating on the last day of the Interest Period for the Borrowing Tranche
being prepaid from the interest rate for the Euro-Rate Option actually in effect
for the Borrowing Tranche being prepaid; and (b) the amount of the prepayment;
and (c) a fraction with a numerator equal to the number of days remaining in the
Interest Period of the Borrowing Tranche being prepaid and a denominator of 360.
Any certificate of Bank delivered to Borrower setting forth the amount of
Consequential Loss as provided herein shall show the calculations required to
determine such Consequential Loss and shall be conclusive and binding, absent
manifest error, as to such amount and determination.
"Current Assets" shall have the meaning ascribed to such term by GAAP.
"Current Liabilities" shall have the meaning ascribed to such term by
GAAP (excluding maturities of property level debt).
"Current Ratio" shall mean the ratio of Current Assets to Current
Liabilities.
"Debt Multiple Ratio" shall mean the ratio of Total Debt to EBITDA, as
measured for the twelve (12) month period ending on the last day of the
applicable quarter.
"Debt Service" shall mean, for any period of determination the sum of
all principal and interest payments that would be payable over a twelve (12)
month period with respect to the Loan based upon a twenty-five (25) year
mortgage-style amortization of the Loan, assuming an interest rate per annum
(based on a year of twelve equal months) equal to the greater of (i) two and
three-quarters percent (2 3/4%) above the Treasury Rate or (ii) eight and
one-quarter percent (8 1/4%) per annum.
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"Debt Service Coverage Ratio" shall mean the ratio of Net Operating
Income to Debt Service.
"Default Rate" shall mean interest at a rate per annum equal to four
percent (4%) above the Base Rate.
"EBITDA" shall mean, for any period of determination with respect to
Guarantor, Guarantor's net income after minority interest, plus Guarantors
portion of depreciation and amortization, plus other non-cash losses, plus
Guarantor's portion of Interest Expense or interest income, as the case maybe,
plus income taxes, less non-cash gains, as each one of the foregoing is
determined in accordance with GAAP, provided however, that EBITDA shall also
include pro forma adjustments for any tangible or intangible assets acquired
with Indebtedness. Such pro forma adjustments shall utilize the previous twelve
(12) month's Net Operating Income with respect to the asset in the calculation
of the Debt Multiple Ratio.
"Environmental Complaint" shall mean any written complaint setting
forth a cause of action for personal or property damage or equitable relief,
order, notice of violation, citation, request for information issued pursuant to
any Environmental Laws by an Official Body, subpoena or other written notice of
any type relating to, arising out of, or issued pursuant to any Environmental
Law or any Environmental Conditions, as the case may be.
"Environmental Conditions" shall mean any conditions of the environment,
including the workplace, the ocean, natural resources (including flora or
fauna), soil, surface water, groundwater, any actual or potential drinking water
supply sources, substrata or the ambient air, relating to or arising out of, or
caused by the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, emptying, discharging,
injecting, escaping, leaching, disposal, dumping, threatened release or other
management or mismanagement of Regulated Substances resulting from the
renovation and construction of the Improvements or the use of, or operations on,
the Land.
"Environmental Indemnity Agreement" shall mean that certain Hazardous
Materials Certificate and Indemnity Agreement of even date herewith from
Borrower and the Guarantor to the Bank, as the same may be amended, replaced or
supplemented from time to time in writing by the parties thereto with the prior
written consent of the Bank.
"Environmental Laws" shall mean, in each case applicable to the
Project, all federal, state, local and foreign laws and regulations, including
permits, licenses authorizations, bonds, orders, judgments and consent decrees
issued, or entered into, pursuant thereto, relating to pollution or protection
of human health or the environment or employee safety in the workplace.
"Environmental Report" shall mean that certain Phase I Environmental
Site Assessment Update prepared for Interstate Hotels Corporation by Law
Engineering and Environmental Services, Inc. dated October 13, 1999, or any
other written report of the review and inspection of the Project prepared by an
environmental consultant acceptable to Bank and engaged by Borrower (or by Bank
pursuant to Section 7.1(c)) at Borrower's sole cost and expense, together
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with a reliance letter satisfactory to Bank stating that Bank may rely on such
report in making the Loan, in all cases together with all annexes, schedules,
exhibits and attachments thereto that have been provided to the Bank.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
"ERISA Group" shall mean, at any time, the Borrower and all members of
a controlled group of corporations and businesses (whether or not incorporated)
under common control and all other entities which, together with the Borrower,
are treated as a single employer under Section 414 of the Internal Revenue Code.
"Euro-Rate" shall mean with respect to any Borrowing Tranche to which a
Euro-Rate Option applies for any Interest Period, the interest rate per annum
determined by the Bank by dividing (the resulting quotient rounded upward to the
nearest 1/100th of 1% per annum) (i) the rate of interest determined by the Bank
in accordance with its usual procedures (which determination shall be conclusive
absent manifest error) to be the "offered" eurodollar rate as quoted by
Exco-Xxxxxx, Incorporated (or appropriate successor or, if Exco-Xxxxxx or its
successor ceases to provide such quotes, a comparable replacement as determined
by the Bank), as evidenced on Dow Xxxxx Markets Service (formerly known as
Telerate) display page 3750 (or other such display page on the Dow Xxxxx Markets
Service system as may replace Dow Xxxxx Markets Service display page 3750) two
(2) Business Days prior to the first day of such Interest Period in amounts
comparable to such Borrowing Tranche and having maturities comparable to such
Interest Period by a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. The Euro-Rate may also be expressed by the following formula:
Dow Xxxxx Markets Service display page 3750
Euro-Rate = as quoted by Exco-Xxxxxx, or appropriate successor
-----------------------------------------------------------
1.00 - Euro-Rate Reserve Percentage
Each determination by the Bank of the Euro-Rate or of the non-existence or non-
determinability through its customary means of any Euro-Rate, in the absence of
manifest error, shall be conclusive and binding. The Euro-Rate shall be adjusted
with respect to any Euro-Rate Option outstanding on the effective date of any
change in the Euro-Rate Reserve Percentage as of such effective date. The Bank
shall give prompt notice to the Borrower of the Euro-Rate as determined or
adjusted in acceptance herewith, which determination shall be conclusive and
binding absent manifest error.
"Euro-Rate Options" shall have the meaning assigned to that term in
Section 3.1.
"Euro-Rate Reserve Percentage" shall mean the maximum effective
percentage in effect on such day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirements (including, without limitation, supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding (currently
referred to as "Eurocurrency Liabilities"). Each determination by the Bank
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of a Euro-Rate Reserve Percentage, in the absence of manifest error, shall be
conclusive and binding.
"Event of Default" or "Events of Default" shall have the meaning
assigned to those terms in Section 10.1.
"Exhibits" shall mean those schedules and exhibits attached hereto and
made a part hereof, including Schedule I - Names, Addresses, Telephone and
Telecopier Numbers of Parties; Exhibit A - Loan Interest Rate Request Form;
Exhibit B - Items to be Supplied; Exhibit C - Financial Reporting Requirements;
Exhibit D - Compliance Certificate; Exhibit E - Amortization Schedule and
Exhibit F - Leased Office Equipment.
"Expiration Date" shall mean the earlier of (i) February ___, 2002, or
(ii) the date upon which the Loan is accelerated pursuant to this Agreement by
virtue of an Event of Default which is not cured within applicable notice and
cure periods.
"Extension Fee" shall mean the amount which is equal to one-quarter of
one percent (1/4%) of the outstanding principal balance of the Loan at the
commencement of the Extension Period, which shall be payable prior to the
commencement of the Extension Period pursuant to Section 2.4 hereof.
"Extension Period" shall mean a single period of twelve (12) months by
which Borrower may extend the Expiration Date subject to the terms and
conditions of Section 2.4 hereof.
"FF&E Account" shall have the meaning assigned to such term in Section
4.23 hereof.
"Federal Funds Effective Rate" for any day shall mean the rate per
annum (based on a year of 365 or 366 days and actual days elapsed, and rounded
upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New
York (or any successor) on such day as being the weighted average of the rates
on overnight federal funds transactions arranged by Federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank (or
any successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, however, that if
such Federal Reserve Bank (or its successor) does not announce such rate on any
day, the "Federal Funds Effective Rate" for such day shall be the Federal Funds
Effective Rate for the last day on which such rate was announced.
"Financing Statements" shall mean the financing statements which the
Bank may from time to time require in order to perfect its security interest in
the collateral described in the Mortgage, the other Collateral Documents and
this Agreement pursuant to the applicable Uniform Commercial Code.
"First Disbursement" shall have the meaning ascribed thereto in Section
6.1 thereof.
"Franchise Agreement" shall mean that certain Franchise Agreement dated
November 1,
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1999 between Marriott International, Inc. as Franchisor and Borrower as
Franchisee, as the same may be amended, replaced or supplemented from time to
time in writing with the consent of the Bank.
"Franchisor" shall mean Marriott International, Inc.
"GAAP" shall mean generally accepted accounting principles as are in
effect from time to time and applied on a consistent basis both as to
classification of items and amounts.
"Governmental Approvals" shall mean all consents, licenses, permits and
all other authorizations or approvals required by Official Bodies with respect
to the construction, completion, use and occupancy of the Improvements.
"Guarantor" shall mean Interstate Hotels Corporation, a Maryland
corporation.
"Guarantor Default" shall mean a default or a defined "event of
default" under any Indebtedness of Guarantor where such default or a defined
"event of default" has occurred as a result of Guarantor's failure to make a
principal or interest payment due under such Indebtedness.
"Guaranty" of any Person shall mean any obligation of such Person
guaranteeing or in effect guaranteeing any liability or obligation of any other
Person in any manner, whether directly or indirectly, including any agreement to
indemnify or hold harmless any other Person, any performance bond or other
suretyship arrangement and any other form of assurance against loss, except
endorsement of negotiable or other instruments for deposit or collection in the
ordinary course of business.
"Impositions" shall mean all (i) real estate and personal property
taxes and other taxes and assessments, water and sewer rates and charges and all
other governmental charges and any interest or costs or penalties with respect
thereto and charges for any easement or agreement maintained for the benefit of
the Land and Improvements, general and special, ordinary and extraordinary,
foreseen and unforeseen, of any kind and nature whatsoever which at any time may
be assessed, levied or imposed upon the Land or the Improvements, or the rent or
income received therefrom, or any use or occupancy thereof, and (ii) other
taxes, assessments, fees and governmental charges levied, imposed or assessed
upon or against the Borrower or any of its properties.
"Improvements" shall mean that certain 156 room Residence Inn and any
and all related improvements now or hereafter located on the Land.
"Indebtedness" shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of (i) borrowed money, (ii) amounts
raised under or liabilities in respect of any note purchase or acceptance credit
facility, (iii) reimbursement obligations under any letter of credit, currency
swap agreement, interest rate swap, cap, collar or floor agreement or
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other interest rate management device, (iv) any other transaction (including
without limitation forward sale or purchase agreements, capitalized leases and
conditional sales agreements) having the commercial effect of a borrowing of
money entered into by such Person to finance its operations or capital
requirements (but not including trade payables and accrued expenses incurred in
the ordinary course of business which are not represented by a promissory note
or other evidence of indebtedness and which are not more than thirty (30) days
past due), or (v) any Guaranty of Indebtedness for borrowed money.
"Interest Expense" shall mean, for any period of determination, all
interest expense incurred by the Guarantor with respect to the Indebtedness of
Guarantor, as defined in accordance with GAAP.
"Insolvency Proceedings" shall mean an action or proceeding seeking any
reorganization, arrangement, composition, readjustment, liquidation or other
similar relief under the U.S. Bankruptcy Code or any present or future statute,
law or regulation, or any proceedings for voluntary liquidation, dissolution or
other winding up, or the appointment of any trustee, receiver, liquidator or
conservator or similar official (whether in a proceeding or otherwise), or any
assignment for the benefit of creditors or any marshaling of assets.
"Interest Payment Date" shall mean each date specified for the payment
of interest in Section 3.8.
"Interest Period" shall mean the term during which a Euro-Rate option
will apply, such period to be one, two, three, six or twelve months.
"Interest Rate Option" shall mean any Euro-Rate Option or any Base-Rate
Option.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
"Land" shall mean the real property owned in fee simple by the Borrower
consisting of approximately 8.877 acres and identified in Exhibit A to the
Mortgage, together with all rights of the Borrower in and to all easements,
rights and privileges benefitting the Land.
"Leases" shall have the meaning assigned to such term in the Mortgage.
"Lien" shall mean any deed of trust, mortgage, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing).
"Loan" shall mean the mortgage loan which shall be made by the Bank
pursuant to this
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Agreement in the maximum principal of $7,560,000.
"Loan Documents" shall mean this Agreement, the Note, the Collateral
Documents, the Environmental Indemnity Agreement, the Payment Guaranty, the
Comfort Letter and all other documents, instruments, certificates and agreements
executed in connection with the Loan, as the same may be amended, replaced or
supplemented from time to time. "Loan Document" shall mean any of the Loan
Documents.
"Manager" shall mean Crossroads Hospitality Management Company.
"Material Adverse Change" shall mean any set of circumstances or events
which (a) has any material adverse effect whatsoever upon the validity or
enforceability of this Agreement or any other Loan Document, (b) is or could
reasonably be expected to be material and adverse to the business properties,
assets, financial condition, results of operations or prospects of the Borrower
or Guarantor taken as a whole, (c) impairs materially or could reasonably be
expected to impair materially the ability of the Borrower or Guarantor to duly
and punctually pay or perform its Indebtedness, or (d) impairs materially the
ability of the Bank, to the extent permitted, to enforce its legal remedies
pursuant to this Agreement or any other Loan Document.
"Month" with respect to an Interest Period, shall mean the interval
between the days in consecutive calendar months numerically corresponding to the
first (lst) day of such Interest Period.
"Monthly Mandatory Principal Payments" shall have the meaning ascribed
thereto in Section 3.10.
"Mortgage" shall mean that certain Open-End Mortgage and Security
Agreement of even date herewith, given by the Borrower to the Bank securing the
Loan, as the same may be amended, replaced or supplemented from time to time in
writing by the Borrower and the Bank.
"Multiemployer Plan" shall mean any employee benefit plan which is a
"multiemployer plan" within the meaning of Section 4001 (a)(3) of ERISA and to
which the Borrower or any member of the ERISA Group is then making or accruing
an obligation to make contributions or, within the preceding five Plan years,
has made or had an obligation to make such contributions.
"Multiple Employer Plan" shall mean a Plan which has two or more
contributing sponsors (including the Borrower or any member of the ERISA Group)
at least two of whom are not under common control, as such a plan is described
in Sections 4063 and 4064 of ERISA.
"Net Operating Income" shall mean the Operating Income of Borrower,
including all gross revenues from the Project, as calculated in accordance with
GAAP and as determined for the twelve (12) month period prior to the date of
calculation less (i) actual Operating Expenses, (ii) a base management fee equal
to three percent (3%), (iii) franchise fees paid pursuant to the Franchise
Agreement, and (iv) the Required FF&E Reserve net of extraordinary gains and
losses.
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"Net Worth" shall mean the consolidated net worth of Guarantor which
shall be determined in accordance with GAAP.
"Note" shall mean that certain Mortgage Note of even date herewith,
given by Borrower to the Bank in the aggregate principal face amount of the Loan
as the same may be amended, reserved, replaced or supplemented from time to time
with the prior written consent of the Bank.
"Official Body" shall mean any national, federal, state, local or other
government or political subdivision or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"Operating Expenses" shall mean the expenses actually and reasonably
incurred by Borrower with respect to the ownership, operation, leasing and
occupancy of the Project in the normal course of business, determined on the
basis of GAAP.
"Operating Income" shall mean all gross income, revenues and
consideration of whatever nature, received by or paid to or for the account or
benefit of Borrower, whether received by Borrower or any of its agents, or
employees, or any affiliate of Borrower, its agents or employees, from any and
all sources, resulting from or attributable to the ownership, operation, and
occupancy of the Project determined on the basis of GAAP.
"Payment Guaranty" shall mean that certain Agreement of Guaranty and
Suretyship (Payment), of even date herewith, given by the Guarantor to the Bank,
as the same may be amended, replaced or supplemented from time to time in
writing by the Guarantor and the Bank.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor.
"Pension Plan" shall mean at any time an employee pension benefit plan
(including a Multiple Employer Pension Plan but not a Multiemployer Pension
Plan) which is covered by Title IV of ERISA or is subject to the minimum funding
standards under Section 412 of the Code and either (i) is maintained by any
member of the ERISA Group for employees of any member of the ERISA Group, or
(ii) has at any time within the preceding five years been maintained by any
entity which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.
"Permitted Encumbrances" shall mean the liens, assignments and security
interests in favor of the Bank pursuant hereto; the easements, restrictions,
encumbrances and other matters described in and permitted to exist under the
terms of the Mortgage; such other matters as may be expressly consented to in
writing by the Bank; and real estate taxes on the Land and Improvements not yet
due and payable.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock
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company, trust, unincorporated organization, joint venture, government or
political subdivision or agency thereof, or any other entity.
"Plans" shall mean at any time an employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained by
any member of the ERISA Group for employees of any member of the ERISA Group or
(ii) has at any time within the preceding five years been maintained by any
entity which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.
"Pledge Agreement" shall mean that certain Pledge Agreement of even date
herewith from Borrower to the Bank with respect to the FF&E Account.
"Potential Default" shall mean an event or condition which, with the
passage of time, the giving of notice, or a determination by the Bank, or any
combination of the foregoing, would constitute an Event of Default.
"Prime Rate" shall mean the interest rate per annum announced from time
to time by the Bank at its Principal Office as its then prime rate, which rate
may not be the lowest rate then being charged commercial borrowers by the Bank.
"Principal Office" shall mean the main banking office of the Bank in
Pittsburgh, Pennsylvania.
"Prohibited Transaction" shall mean any prohibited transaction as
defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA for
which neither an individual nor a class exemption has been issued by the United
States Department of Labor.
"Project" shall mean the Land and the Improvements.
"Property Management Agreement" shall mean that certain Management
Agreement between Borrower and Manager dated November 1, 1999, as the same may
be amended, replaced or supplemented from time to time in writing with the
consent of the Bank.
"Regulated Substances" shall mean any substance, including any solid,
liquid, semisolid, gaseous, thermal, thoriated or radioactive material, refuse,
garbage, wastes, chemicals, petroleum products, by-products, co-products,
impurities, dust, scrap, heavy metals, defined as a "hazardous substance,"
"pollutant," "pollution," "contaminant," "hazardous or toxic substance,"
"extremely hazardous substance," "toxic chemical," "toxic waste," "hazardous
waste," "industrial waste," "residual waste," "solid waste," "municipal waste,"
"mixed waste," "infectious waste," "chemotherapeutic waste," "medical waste," or
"regulated substance" or any related materials, substances or wastes as now or
hereafter defined pursuant to any Environmental Laws, ordinances, rules,
regulations or other directives of any Official Body, the generation,
manufacture, extraction, processing, distribution, treatment, storage, disposal,
transport, recycling, reclamation, use, reuse, spilling, leaking, dumping,
injection, pumping, leaching,
15
emptying, discharge, escape, release or other management or mismanagement of
which is regulated by the Environmental Laws.
"Regulation U" shall mean Regulation U, T, G or X as promulgated by the
Board of Governors of the Federal Reserve System, as amended from time to time.
"Reportable Event" means a reportable event described in Section 4043
of ERISA and regulations thereunder with respect to a Pension Plan or
Multiemployer Pension Plan.
"Required Amortization Portion" shall mean a portion of the outstanding
principal balance of the Loan as determined by the Bank in its discretion
immediately prior to the commencement of each Interest Period, which shall be
sufficient to permit all principal payments projected by the Bank to occur
during the term of an applicable Interest Period to be applied against the
portion of the outstanding principal balance that is subject to any Base-Rate
Option.
"Required FF&E Reserve" shall have the meaning assigned to such term in
Section 4.23 hereof.
"Solvent" shall mean, with respect to any Person on a particular date,
that on such date (i) the fair value of the property of such Person is greater
than the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (ii) the present fair market value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (iii) such Person not is able to realize upon its assets and pay its
debts and other liabilities, contingent obligations and other commitments as
they mature in the normal course of business, and (iv) such Person does not
intend to, and does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay such debts and liabilities as they mature.
"Subordination Agreement" shall mean that certain Subordination
Agreement of even date hereunder by and among the Borrower, IHC Holdings, Inc.,
a Delaware corporation, ("IHC") and the Bank, as the same may be amended,
replaced or supplemented from time to time in writing by the Borrower, IHC and
the Bank.
"Subordinated Debt" shall have the meaning assigned to such term in the
Subordination Agreement.
"Total Debt" shall mean all Indebtedness of Guarantor which is
outstanding as the last day of the applicable quarter, as determined in
accordance with GAAP.
"Treasury Rate" shall mean the "weekly average yield" on United States
Treasury Securities adjusted to a constant maturity of ten (10) years, rounded
to the nearest one- sixteenth of one percent (1/16%), as published in the
Release five (5) Business Days prior to the date of determination. It is
provided, however, that if the Release is no longer published, a substitute
therefor as may be selected by the Bank in its reasonable discretion shall be
utilized, and further provided that if the Release is not published five (5)
Business Days prior
16
to the date of determination, then the Release as published on the most recent
date prior thereto shall be utilized.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in each applicable jurisdiction.
1.2 Interpretation.
Unless the context of this Agreement otherwise clearly requires, the
following rules of construction shall apply to this Agreement and each of the
other Loan Documents:
(a) Number; Inclusion.
References to the plural include the singular, the plural, the
part and the whole; "or" has the inclusive meaning represented by the phrase
"and/or," and "including" has the meaning represented by the phrase "including
without limitation";
(b) Documents Taken as a Whole.
The words "hereof," "herein," "hereunder," "hereto" and
similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document as a whole and not to any particular
provision of this Agreement or such other Loan Document;
(c) Headings.
The section and other headings contained in this Agreement or
such other Loan Document and the Table of Contents (if any), preceding this
Agreement or such other Loan Document are for reference purposes only and shall
not control or affect the construction of this Agreement or such other Loan
Document or the interpretation thereof in any respect;
(d) Implied References to this Agreement.
Article, section, subsection, clause, schedule and exhibit references are to
this Agreement unless otherwise specified;
(e) Persons.
Reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are permitted by
this Agreement or such other Loan Document, as the case may be, and reference to
a Person in a particular capacity excludes such Person in any other capacity;
17
(f) Modifications to Documents.
Reference to any agreement (including this Agreement and any
other Loan Document together with the schedules and exhibits hereto or thereto),
document or instrument means such agreement, document or instrument as amended,
modified, replaced, substituted for, superseded or restated;
(g) From, To and Through.
Relative to the determination of any period of time, "from"
means "from and including," "to" means "to but excluding," and "through" means
"through and including"; and
(h) Shall: Will.
References to "shall" and "will" are intended to have the same
meaning.
1.3 Accounting Principles.
Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and prepared
in accordance with GAAP.
2. AGREEMENT TO BORROW AND LEND
2.1 Agreement to Borrow and Lend.
Subject to the terms, provisions and conditions contained in this
Agreement in reliance upon the representations and warranties set forth herein,
the Bank agrees to lend to Borrower the Loan.
2.2 The Note.
The Loan is and shall be evidenced by the Note, and the Loan shall bear
interest calculated and payable as provided in Article 3 below. Borrower shall
pay the outstanding principal of the Loan and all unpaid interest accrued on the
Loan and all other sums then owing under the Loan Documents in full on the
Expiration Date. The unpaid amounts of the Loan, as set forth on the books and
records of the Bank or other holder of the Note maintained in the ordinary
course of business shall be presumptive evidence of the principal amount thereof
owing and unpaid, absent manifest error, but the failure to record any such
amount on the books and records shall not limit or affect the obligations of
Borrower hereunder or under the Note to make payments of principal and interest
on the Loan when due.
2.3 Term.
The term of the Loan shall commence on the Closing Date and shall
terminate on the Expiration Date.
18
2.4 Extension Option.
If the Conditions for Extension are satisfied prior to the initial
Expiration Date and remain satisfied on the date of exercise by Borrower of the
Extension Option and on the date of the commencement of the Extension Period,
the Borrower shall have the right to extend the Expiration Date for an
additional period of twelve (12) months. Borrower shall provide the Bank with
written notice of its election to extend the initial Expiration Date for the
Extension Period no earlier than ninety (90) nor later than forty-five (45) days
prior to the initial Expiration Date.
3. LOAN INTEREST RATES, PAYMENTS AND FEES
3.1 Interest Rate Options.
The Borrower shall pay interest in respect of the outstanding unpaid
principal amount of the Loan as selected by it from the Base-Rate Options or
Euro-Rate Options set forth below, it being understood that, subject to the
provisions of this Agreement, the Borrower may select different Interest Rate
Options and different Interest Periods to apply simultaneously to the Loan
comprising different Borrowing Tranches and may convert to or renew one or more
Interest Rate Options with respect to all or any portion of the Loan comprising
any Borrowing Tranche, provided that, there shall not be at any one time
outstanding more than three (3) Borrowing Tranches (including the Base-Rate
Tranche) in the aggregate, and provided further that the Borrowing Tranche
subject to the Base-Rate Options shall at all times be equal to or greater than
the Required Amortization Portion. If at any time the designated rate applicable
to the Loan exceeds the Bank's highest lawful rate, the rate of interest on the
Loan shall be limited to the Bank's highest lawful rate. The Borrower shall have
the right to select from the following Interest Rate Options, with the interest
rate to be paid by Borrower being determined based upon the most recent
quarterly calculation of the Debt Service Coverage Ratio to be made pursuant to
Exhibit C Section (c) hereof as follows :
(a) Base-Rate Options:
(i) in the event that the Debt Service Coverage Ratio
shall be greater than 1.35 to 1.00 but less than 1.55 to 1.00, a fluctuating
rate per annum (computed on the basis of a year of 360 days and actual days
elapsed) equal to the Base-Rate plus one and three-quarters percent (1 3/4%),
such interest rate to change automatically from time to time effective as of the
effective date of each change in the Base Rate; or
(ii) in the event that the Debt Service Coverage
Ratio shall be equal to or greater than 1.55 to 1.00 but less than 1.75 to 1.00,
a fluctuating rate per annum (computed on the basis of a year of 360 days and
actual days elapsed) equal to the Base-Rate plus one and one-half percent
(1 1/2%), such interest rate to change automatically from time to time effective
as of the effective date of each change in the Base Rate; or
19
(iii) in the event that the Debt Service Coverage
Ratio shall be equal to or greater than 1.75 to 1.00, a fluctuating rate per
annum (computed on the basis of a year of 360 days and actual days elapsed)
equal to the Base-Rate plus one and one-quarter percent (1 1/4%), such interest
rate to change automatically from time to time effective as of the effective
date of each change in the Base Rate (collectively, the "Base-Rate Options").
(b) Euro-Rate Options:
(i) in the event that the Debt Service Coverage Ratio
shall be greater than 1.35 to 1.00 but less than 1.55 to 1.00, a fluctuating
rate per annum (computed on the basis of a year of 360 days and actual days
elapsed) equal to the Euro-Rate plus two and one-half percent (2 1/2%); or
(ii) in the event that the Debt Service Coverage
Ratio shall be equal to or greater than 1.55 to 1.00 but less than 1.75 to 1.00,
a fluctuating rate per annum (computed on the basis of a year of 360 days and
actual days elapsed) equal to the Euro-Rate plus two and one-quarter percent
(2 1/4%); or
(iii) in the event that the Debt Service Coverage
Ratio shall be equal to or greater than 1.75 to 1.00, a fluctuating rate per
annum (computed on the basis of a year of 360 days and actual days elapsed)
equal to the Euro-Rate plus two percent (2%) (collectively, the "Euro-Rate
Options")
3.2 Loan Requests/Interest Periods.
Except as otherwise provided herein, following the First Disbursement,
the Borrower may, on any Borrowing Date, request the Bank to renew or convert
any Interest Rate Option applicable to a portion of the Loan, by the delivery to
the Bank, not later than 12:00 noon Eastern time (i) three (3) Business Days
prior to the proposed Borrowing Date with respect to the conversion to or the
renewal of a Euro-Rate Option for a portion of the Loan; and (ii) one (1)
Business Day prior to the last day of the preceding Interest Period with respect
to the renewal or conversion to a Base-Rate Option for a portion of the Loan, of
a duly completed request therefor substantially in the form of Exhibit A hereto
or a request by telephone immediately confirmed in writing by letter, facsimile
or telex in such form (each, an "Interest Rate Request"), it being understood
that the Bank may rely on the authority of any Person making such a telephonic
request without the necessity of receipt of such written confirmation. Each
Interest Rate Request shall be irrevocable and shall specify (i) the proposed
Borrowing Date; (ii) the aggregate amount of the portion of the Loan comprising
the Borrowing Tranche, which shall not be less than $1,000,000 for portions of
the Loan to which a Euro-Rate Option applies; (iii) whether a Euro-Rate Option
or a Base-Rate Option shall apply to the portion of the Loan comprising the
Borrowing Tranche; and (iv) in the case of portions of the Loan to which a
Euro-Rate Option applies, an appropriate Interest Period for the proposed
portion of the Loan comprising the Borrowing Tranche, provided that:
(a) any Interest Period which would otherwise end on a date
which is not a
20
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such Interest
Period shall end on the immediately preceding Business Day;
(b) any Interest Period which begins on the last day of a
calendar month for which there is no numerically corresponding day in the
subsequent calendar month during which such Interest Period is to end shall end
on the last Business Day of such subsequent month;
(c) the Borrower shall not select, convert to or renew a
Euro-Rate Option for an Interest Period that would end after the Expiration
Date;
(d) in the case of the renewal of a Euro-Rate Option at the
end of an Interest Period, the first day of the Interest Period shall be the
last day of the preceding Interest Period, without duplication in payment of
interest for such day.
3.3 Default Interest and Late Payment Charge.
To the extent permitted by law, upon the occurrence and during the
continuation of any Event of Default, the Borrower shall pay interest on the
entire principal amount then outstanding and all other sums due under the Loan,
regardless of the Interest Rate Option otherwise applicable thereto, at a rate
per annum equal to the Default Rate. The Default Rate shall accrue before and
after any judgment has been entered. In addition, Borrower shall pay upon demand
by Bank a late payment charge equal to four percent (4%) of the amount of any
payment due under the Loan, prior to maturity or acceleration, which is not
received by the Bank within ten (10) days after the date such payment is due.
The Borrower acknowledges that the increased interest rate and the late payment
charge provided for herein reflect, among other things, the fact that the Loan
has become a substantially greater risk given its default status and that the
Bank is entitled to additional compensation for such risk.
3.4 Euro-Rate Unascertainable.
(a) If, on any date on which a Euro-Rate would otherwise be
determined, the Bank shall have determined (which determination shall be
conclusive absent manifest error) that:
(i) adequate and reasonable means do not exist for
ascertaining such Euro-Rate, or
(ii) an event or condition has occurred which
materially and adversely affects the applicable U.S. eurodollar markets, or
(b) If, at any time, the Bank shall have determined (which
determination shall be conclusive absent manifest error) that:
21
(i) the making, maintenance or funding of any portion
of the Loan to which a Euro-Rate Option applies has been made impracticable or
unlawful if the Bank complies in good faith with any law or any interpretation
or application thereof by any Official Body or with any request or directive of
any such Official Body (whether or not having the force of law), or
(ii) such Euro-Rate will not adequately and fairly
reflect the cost to the Bank of the establishment or maintenance of any portion
of the Loan to which a Euro-Rate Option applies, or
(iii) after making all reasonable efforts, deposits
of the relevant amount in U.S. dollars for the relevant Interest Period for any
portion of the Loan to which a Euro-Rate Option applies are not available to the
Bank in the applicable U.S. eurodollar markets,
then, in the case of any event specified in subsection (a) or (b) above, the
Bank shall promptly so notify the Borrower thereof. Upon such date as shall be
specified in any such notice (which shall not be earlier than the date such
notice is given) the obligation of the Bank to allow the Borrower to select,
continue, convert to or renew a Euro-Rate Option shall be suspended until the
Bank shall have later notified the Borrower of the Bank's determination (which
determination shall be conclusive absent manifest error) that the circumstances
giving rise to such previous determination no longer exist. If at any time the
Borrower receives notice from the Bank as provided for in this Section 3.4
whether or not any Euro-Rate Option has gone into effect, such notification
shall, subject to the Borrower's indemnification obligations under Section
3.12(b), be deemed to provide for selection of, conversion to or renewal of a
Base-Rate Option.
3.5 Selection of Interest Rate Options.
If the Borrower fails to select an Interest Period in accordance with
the provisions of Section 3.2 in the case of a portion of the Loan to which a
Euro-Rate Option applies, the Borrower shall be deemed to have converted such
portion of the Loan to a one month Euro- Rate Borrowing Tranche. If an Event of
Default shall occur and be continuing, the Bank may in its discretion limit the
Borrower to the Default Rate.
3.6 Payments.
All payments and prepayments to be made in respect of principal,
interest, or other amounts due from the Borrower to the Bank hereunder shall be
payable prior to 12:00 noon, Eastern time, on the date when due without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Borrower, and without setoff, counterclaim or other
deduction of any nature, and an action therefor shall immediately accrue. Such
payments shall be made to the Bank at the Principal Office in U.S. Dollars and
in immediately available funds. The Bank's statement of account, ledger or other
relevant record shall, in the absence of manifest error, be conclusive as the
statement of the amount of principal of and interest on the Loan and other
amounts owing under this Agreement and shall be deemed an "account stated."
3.7 [INTENTIONALLY OMITTED]
22
3.8 Interest Payment Dates.
Interest shall be due in arrears on the first day of each month after
the date hereof and on the Expiration Date or upon acceleration of the Note.
3.9 Optional Prepayments.
(a) The Borrower shall have the right at its option from time
to time to prepay the Loan in whole or part on the dates set forth below without
premium or penalty (except as provided below or in Section 3.12(b) hereof):
(i) on any Business Day with respect to any portion
of the Loan to which a Base-Rate Option applies;
(ii) on the last day of the applicable Interest
Period with respect to any portion of the Loan to which a Euro-Rate Option
applies; or
(iii) with the Bank's prior approval, on any Business
Day of an Interest Period with respect to any portion of the Loan to which a
Euro-Rate Option applies, provided such prepayment is accompanied by an amount
sufficient to compensate the Bank for all Consequential Loss and other costs and
losses reimbursable under Section 3.12(b).
Whenever the Borrower desires to prepay any part of the Loan,
it shall provide a prepayment notice to the Bank at least five (5) Business Days
prior to the date of prepayment setting forth the date, which shall be a
Business Day, on which the proposed prepayment is to be made, and the total
principal amount of such prepayment, which shall not be less than $500,000. The
principal amount of the portion of the Loan for which a prepayment notice is
given shall be due and payable on the date specified in such prepayment notice.
3.10 Mandatory Principal Payments.
(a) Beginning on April 1, 2000, and on the first (1st) day of
each calendar month thereafter, throughout the remaining term of the Loan,
Borrower shall make monthly payments of the outstanding principal balance of the
Loan based upon the principal portion of the level payment amount which is
payable pursuant to a twenty-five (25) year mortgage style amortization of the
maximum principal amount of the Loan assuming an interest rate per annum equal
to eight and one quarter percent (8 1/4%) as set forth on Exhibit E attached
hereto.
(b) The principal payments made by Borrower pursuant to this
Section 3.10 are hereinafter referred to as the "Monthly Mandatory Principal
Payments".
3.11 Application Among Interest Rate Options.
All payments permitted or required pursuant to Sections 3.9 or 3.10
shall be applied among
23
the Interest Rate Options first to the principal amount of the Loan subject to a
Base-Rate Option, then to the principal amount of the Loan subject to a
Euro-Rate Option to be applied to such Borrowing Tranches subject to a Euro-Rate
Option as designated by Borrower, as long as no Event of Default exists
hereunder. In accordance with subsection 3.12(b), the Borrower shall indemnify
the Bank for any loss or expense including loss of margin incurred with respect
to any such prepayments, other than prepayments made under Section 3.10, applied
against any portion of the Loan subject to a Euro-Rate Option on any day other
than the last day of the applicable Interest Period, provided that, to the
extent that the outstanding principal balance which is subject to a Base-Rate
Option is less than the amount of the applicable payment, then, at the election
of Borrower, as long as no Event of Default exists hereunder, such payment and
any interest earned thereon, if applicable, shall be applied against such
Borrowing Tranches subject to the Euro-Rate Option as Borrower may choose, to
the extent of such insufficiency, subject to Borrower's obligation to indemnify
the Bank pursuant to subsection 3.12(b). Upon the occurrence of an Event of
Default, notwithstanding anything to the contrary contained above in this
Section 3.11, the Bank shall have the right to designate the application of such
payments.
3.12 Additional Compensation in Certain Circumstance
(a) Increased Costs or Reduced Return on Borrowing Tranches
Subject to a Euro-Rate Option Resulting From Taxes, Reserves, Capital Adequacy
Requirements, Expenses, Etc. With respect to Borrowing Tranches subject to a
Euro-Rate Option, if any law, guideline or interpretation or any change in any
law, guideline or interpretation or application thereof by any Official Body
charged with the interpretation or administration thereof or compliance with any
request or directive (whether or not having the force of law) of any central
bank or other Official Body:
(i) subjects the Bank to any tax or charge with
respect to this Agreement, the Note, the Loan or payments by the Borrower of
principal, interest, or other amounts due from the Borrower hereunder or under
the Note (except for taxes on the overall net income of the Bank or any
corporate franchise tax imposed on the Bank),
(ii) imposes, modifies or deems applicable any
reserve, special deposit or similar requirement against credits or commitments
to extend credit extended by, or assets (funded or contingent) of, deposits with
or for the account of, or other acquisition of funds by, the Bank, or
(iii) imposes, modifies or deems applicable any
capital adequacy or similar requirement (A) against assets (funded or
contingent) of, or credits or commitments to extend credit extended by the Bank,
or (B) otherwise applicable to the obligations of the Bank under this Agreement,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expenses (including loss of margin) upon the
Bank with respect to this Agreement, the Note or the making, maintenance or
funding of any part of the Loan (or, in the case of any capital adequacy or
similar requirement, to have the effect of reducing the rate of return on the
Bank's capital, taking into consideration the Bank's customary policies with
respect to capital adequacy) by an amount which the Bank in its sole discretion
deems to be material, the Bank may from time to time notify the Borrower of the
amount determined in good faith (using any averaging and attribution methods
employed in
24
good faith) by the Bank (which determination shall be conclusive absent manifest
error) to be necessary to compensate the Bank for such increase in cost,
reduction of income or additional expense. Such notice shall set forth in
reasonable detail the basis for such determination. Such amount shall be due and
payable by Borrower to the Bank within ten (10) Business Days after such notice
is given; provided, however, that if the Bank demands compensation under this
Section 3.12, Borrower may at any time upon five (5) Business Days' prior notice
to the Bank (a) give notice to the Bank that it is canceling such Borrowing
Tranches subject to a Euro-Rate Option, whereupon each such Borrowing Tranche so
canceled shall terminate and the Borrower shall be obligated to compensate the
Bank as provided in this Section 3.12(a) above and to indemnify the Bank as
provided in subsection 3.12(b) below and to pay the Bank upon demand an amount
equal to all Consequential Loss, if any, resulting therefrom, and (b) convert
such Borrowing Tranches subject to a Euro-Rate Option to the Base Rate Option.
(b) Indemnity. In addition to the compensation required by
subsection (a) of this Section 3.12, the Borrower shall indemnify the Bank
against any loss or expense (including Consequential Loss, loss of margin, any
loss incurred in liquidating or employing deposits from third parties and any
loss or expense incurred in connection with funds acquired by the Bank to fund
or maintain a portion of the Loan subject to a Euro-Rate Option) which the Bank
sustains or incurs as a consequence of any
(i) payment, prepayment, conversion or renewal of any
portion of the Loan to which a Euro-Rate Option applies on a day other than the
last day of an Interest Period (whether or not such payment or prepayment is
mandatory or automatic and whether or not such payment or prepayment is then
due), or
(ii) attempt by the Borrower to revoke (expressly, by
later inconsistent notices or otherwise) in whole or part any notice relating to
the selection of a Euro-Rate Option under Section 3.2 or prepayments under
Section 3.9.
If the Bank sustains or incurs any such loss or expense it
shall from time to time notify the Borrower of the amount determined in good
faith by the Bank (which determination shall be conclusive absent manifest error
and may include such assumptions, allocations of costs and expenses and
averaging or attribution methods as the Bank shall deem reasonable) to be
necessary to indemnify the Bank for such loss or expense. Such notice shall set
forth in reasonable detail the basis for such determination. Such amount shall
be due and payable by the Borrower to the Bank ten (10) Business Days after such
notice is given.
3.13 Commitment Fee.
The Borrower agrees to pay to the Bank, on or before the Closing Date,
as consideration for the Loan, the Commitment Fee.
4. AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees that, from the date hereof and
until the Bank Debt has been paid in full and all other obligations hereunder
shall have been performed and
25
discharged, it shall comply at all times with the following affirmative
covenants:
4.1 Preservation of Existence, Etc.
The Borrower and Guarantor shall each maintain its corporate existence
and its license or qualification and good standing in each jurisdiction in which
its ownership or lease of property or the nature of its business makes such
licensing or qualification necessary.
4.2 Payment of Liabilities, Including Impositions.
The Borrower shall duly pay and discharge all liabilities to which it is
subject or which are asserted against it, prior to the date when any fine, late
charge or other penalty for late payment may be imposed, including all
Impositions, provided that it shall not be deemed to be a violation of this
Section 4.2 if such liabilities, including Impositions, are being contested in
good faith and by appropriate and lawful proceedings diligently conducted, and
such failure to pay and discharge such liabilities, including Impositions, (a)
would not reasonably be expected to result in a Material Adverse Change, (b)
would not reasonably be expected to materially affect the Collateral or the
validity of the Loan, and (c) for which such reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made.
4.3 Compliance with Laws.
The Borrower shall comply with all applicable laws in all respects,
including, but not limited to, all Environmental Laws.
4.4 Keeping of Records and Books of Account.
The Borrower and Guarantors shall maintain and keep proper books of
record and account which enable each of them to issue financial statements and
reports in accordance with Section 7.2 and in which full, true and correct
entries shall be made in all material respects of all their respective dealings
and business and financial affairs.
4.5 Visitation Rights.
The Borrower shall permit any of the officers or authorized employees or
representatives of the Bank to visit and inspect the Project and to examine and
make excerpts from its books and records and discuss its affairs, finances and
accounts with its officers, all in such reasonable detail and at such reasonable
times during normal business hours and as often as the Bank may reasonably
request.
4.6 [RESERVED]
4.7 Maintenance of Insurance.
(a) The Borrower shall obtain the insurance coverages
specified in this subsection 4.7(a). The insurer issuing any such policy shall
certify to the Bank that (1) losses will be adjusted with the approval of the
Bank, (2) loss payments will be payable to the Bank,
26
such payments to be applied in the manner set forth in the Mortgage either to
the restoration, repair or replacement of the Improvements or to the payment of
the Bank Debt, (3) the interests of the Bank shall be insured regardless of any
breach or violation by the Borrower of any warranties, declarations or
conditions contained in such policy, and (4) if such insurance is canceled or
materially changed or if any reinsurance is canceled for any reason whatsoever,
such insurer will promptly notify the Bank and such cancellation or change shall
not be effective as to the Bank for thirty (30) days after receipt by the Bank
of such notice. The Borrower shall deliver to the Bank Xxxxx Form 27 Evidence of
Insurance with respect to such policies on or before the Closing Date, and
evidence of each renewal policy in a form acceptable to Bank not less than
thirty (30) days prior to the expiration of the original policy or preceding
renewal policy (as the case may be); and to deliver to the Bank, upon Bank's
request, receipts or other evidence that the premiums thereon have been paid in
accordance with the Policy. The insurer or reinsurer for all such policies shall
be rated A- IX by A.M. Best, or such other rating reasonably acceptable to the
Bank. The form, content, insurers and reinsurers of all insurance policies
required under this Agreement and the Mortgage shall be satisfactory to the Bank
in accordance with the standards established in this Section 4.7. Such insurance
coverages shall include:
(i) Fire and Extended Coverage Insurance. Fire and
Extended Coverage Insurance insuring the Improvements and all materials
(installed and uninstalled), supplies and other personal property owned by
Borrower on the Land against loss or damage by fire, vandalism, burglary, theft,
riot, and other hazards insured against by extended coverage insurance and such
other insurance (including, but not limited to, business interruption insurance
covering loss of net earnings, including rental income, and costs associated
with the period of project restoration, malicious mischief insurance and flood
insurance if in a Federal flood prone area) as may be specified by the Bank from
time to time, in amounts acceptable to the Bank and to be evidenced by an Xxxxx
Form 27 Evidence of Insurance (or such other equivalent form as may be
acceptable to the Bank). The Borrower shall, to the extent applicable, cause
each insurance policy issued in connection herewith to name the Bank as
mortgagee and loss payee.
(ii) Public Liability Insurance. Commercial public
liability and property damage insurance in connection with the Land and
Improvements, and contractual liability and completed operations coverage, and
comprehensive automobile liability insurance covering all motor vehicles used in
connection with the Land and Improvements, all in amounts and with insurers
acceptable to the Bank. The Borrower shall cause the insurer to name the Bank as
an additional insured under such coverage.
(iii) Workers' Compensation Insurance. Workers'
compensation and employer's liability insurance covering all liability in
connection with the Land and Improvements under applicable laws with respect to
the Borrower and, with respect to all contractors employed by Borrower, Borrower
shall contractually obligate each such contractor to obtain worker's
compensation and employer's liability insurance.
(b) The Borrower shall insure its properties and assets (other
than the Land and Improvements which are required to be insured in the manner
provided in subsection (a) above) against loss or damage by fire and such other
insurable hazards as such assets are commonly insured (including business
interruption insurance) and in such amounts as similar properties and assets are
insured by prudent companies in similar circumstances carrying on
27
similar businesses and against public liability for damages and against other
risks in amounts normally carried by prudent companies carrying on similar
businesses and reasonably satisfactory to the Bank.
4.8 Notice.
The Borrower shall give prompt written notice to the Bank (a) of any
action or proceeding instituted by or against it or as to which it shall have
received written notice or of which it has actual knowledge which constitutes a
Potential Default or an Event of Default under this Agreement, or (b) of a
default by the Borrower under any other material contract, instrument or
agreement to which it is a party or by which it or any of its properties or
assets may be bound or to which it or any of its properties or assets may be
subject, which default could be reasonably expected result in a Material Adverse
Change.
4.9 Performance of Obligations
The Borrower shall duly pay, perform and discharge all of its
obligations hereunder and under the other Loan Documents.
4.10 Compliance with Agreements.
The Borrower and Guarantor shall each comply in all material respects
with all obligations under any contracts, instruments and agreements to which it
is a party or to which any of its properties or assets may be subject.
4.11 Title to Land and Improvements.
The Borrower shall retain its fee simple interest in the Land and
Improvements until the Bank Debt has been indefeasibly paid in cash and
satisfied in full.
4.12 Further Assurances.
The Borrower shall, from time to time, at its expense, faithfully
preserve and protect the Bank's liens on and security interest in the Collateral
as a continuing first priority perfected lien, as applicable, subject only to
Permitted Encumbrances, and shall take such other action as the Bank in its sole
discretion may reasonably deem necessary from time to time in order to preserve,
perfect and protect the liens granted under the Collateral Documents, to
exercise and enforce the Bank's rights and remedies thereunder and with respect
to the Collateral and to carry out the terms of this Agreement and the other
Loan Documents.
4.13 Estoppel Certificate.
At any time within ten (10) Business Days after written demand by the
Bank therefor, the Borrower shall deliver to the Bank a certificate duly
executed and in form satisfactory to the Bank, stating and acknowledging, to the
best of Borrower's knowledge, (i) the then unpaid principal balance, and
interest due and unpaid under, the Loan, the fact that there are no defenses,
off-sets or counterclaims thereto (or, if such should not be the fact, then the
facts and
28
circumstances relating to such defenses, off-sets or counterclaims); (ii) the
Borrower has kept, observed, complied with, fulfilled and performed in all
material respects every term, covenant and condition in this Agreement and the
other Loan Documents on its part to be kept and performed; (iii) that no
Potential Default or Event of Default exists; that no event has occurred or is
threatened which if continued would permit the holder of any recourse
indebtedness of the Borrower or to which its property is subject to accelerate
the maturity thereof or enforce any lien securing the same; and (iv) that no
material litigation or administrative proceeding has been instituted by or
against the Borrower (or, if such should not be the fact, then the facts and
circumstances relating to such event or litigation in detail) and covering such
other matters relating to the Borrower, the Loan or the Collateral as the Bank
may reasonably require.
4.14 Repairs.
The Borrower shall maintain and keep the Land and the Improvements in
good working order and condition and make all necessary and proper repairs and
replacements thereto, including, without limitation, making such repairs and
alterations as are necessary to the generator room so that such room is in
compliance with applicable building codes and regulations.
4.15 Protection Against Lien Claims.
Any Lien claimed or filed against any part of the Land or the
Improvements for labor done or materials or services furnished in connection
with any construction activities performed on the Land or Improvements shall be
insured over or discharged, by bond or otherwise, within the time frames set
forth in Section 4.2 hereof.
4.16 Plans and Benefit Arrangements.
The Borrower shall, and shall cause each other member of the ERISA
Group to, comply with ERISA, the Internal Revenue Code and other applicable laws
applicable to Plans and Benefit Arrangements except where such failure, alone or
in conjunction with any other failure, would not result in a Material Adverse
Change. Without limiting the generality of the foregoing, the Borrower shall
cause all of its Plans and all Plans maintained by any member of the ERISA Group
to be funded in accordance with the minimum funding requirements of ERISA and
shall make, and cause each member of the ERISA Group to make, in a timely
manner, all contributions due to Plans, Benefit Arrangements and Multiemployer
Plans.
4.17 Conditions Precedent.
As conditions precedent to the Bank's obligation to close the Loan and
make the First Disbursement, Borrower shall have complied with all the
requirements and shall have fulfilled all the conditions set forth in this
Agreement and shall prior to the Closing Date (unless otherwise set forth herein
or waived in writing by the Bank), furnish to Bank at Borrower's sole cost and
expense, the items set forth on Exhibit B attached hereto, all of which shall be
in form and content satisfactory to Bank and its counsel.
29
4.18 Use of Proceeds.
The Borrower shall use the proceeds of the Loan for the purpose of
consolidating and refinancing the existing Indebtedness secured by the Project.
4.19 Year 2000.
The Borrower has reviewed the areas within its businesses and
operations which could be adversely affected by, and has developed a program to
address on a timely basis, the risk that certain computer applications used by
the Borrower (or any of its material suppliers, customers or vendors) may be
unable to recognize and perform properly date-sensitive functions involving
dates prior to and after December 31, 1999 (the "Year 2000 Problem"). The Year
2000 Problem will not result in any Material Adverse Change with respect to
Borrower.
4.20 Management of the Project.
The Borrower shall operate the Project strictly in accordance with the
Franchise Agreement. The Project will be managed at all times by the Manager
pursuant to the Property Management Agreement and Borrower shall not terminate
or materially modify the Property Management Agreement without the prior written
consent of the Bank. The Borrower shall terminate the Manager at Bank's request
upon thirty (30) days' prior written notice to Borrower and the Manager, which
termination notice may be given by the Bank upon the occurrence of an Event of
Default under Section 10.1(a), (c) or (d) hereof. In the event that the Manager
is terminated pursuant hereto, Borrower shall immediately seek to appoint a
replacement property manager acceptable to Bank in Bank's sole discretion, and
Borrower's failure to obtain such an acceptable property manager within 30 days
of Bank's request to terminate the Manager shall constitute an immediate Event
of Default hereunder.
4.21 Borrower Financial Covenants.
(a) The Borrower covenants and agrees that during the first
calendar year following the Closing Date, the Debt Service Coverage Ratio for
the Project, as measured as of the end of each calendar quarter for the prior
twelve (12) month period and as set forth on the covenant compliance certificate
required to be delivered to the Bank pursuant to Exhibit C, Section (c) hereof,
shall not be less than 1.30 to 1.00.
(b) The Borrower covenants and agrees that during the second
calendar year following the Closing Date, the Debt Service Coverage Ratio for
the Project, as measured as of the end of each calendar quarter for the prior
twelve (12) month period and as set forth on the covenant compliance certificate
required to be delivered to the Bank pursuant to Exhibit C, Section (c) hereof,
shall not be less than 1.35 to 1.00.
(c) The Borrower covenants and agrees that during the
Extension Period, the Debt Service Coverage Ratio for the Project, as measured
as of the end of each calendar quarter for the prior twelve (12) month period
and as set forth on the covenant compliance certificate required to be delivered
to the Bank pursuant to Exhibit C, Section (c) hereof, shall not be less than
1.50 to 1.00.
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4.22 Guarantor Financial Covenants.
Until payment in full of all Bank Debt, satisfaction of all of
Borrower's other obligations hereunder and under the other Loan Documents, the
Borrower shall cause the Guarantor to comply at all times with the following
covenants (as reflected on the financial statements of the Guarantors prepared
and delivered to the Bank in accordance with Exhibit C Section (c) of this
Agreement):
(i) Cash and Cash Equivalents. The amount of the Guarantor's
Cash and Cash Equivalents shall not be less than $8,000,000 at any given time;
(ii) Debt Multiple Ratio. The Debt Multiple Ratio with respect
to Guarantor shall not exceed 3.00 to 1.00;
(iii) Current Ratio. The Guarantor shall maintain a Current
Ratio of at least 1.25 to 1.00; and
(iv) Net Worth. The Net Worth of Guarantor shall not be less
than $50,000,000 excluding minority interest.
4.23 Required FF&E Reserve.
Borrower shall establish an interest-bearing reserve account (the "FF&E
Account") to be maintained with the Bank, subject to the payment of all
customary charges and fees, and shall pledge all of its right, title and
interest in the FF&E Account to the Bank pursuant to the Pledge Agreement.
Beginning with the first calendar quarter following the Closing Date as soon as
available and in any event within fifteen (15) days following the end of each
calendar quarter throughout the term of the Loan, Borrower shall deposit the
greater of (i) three percent (3%) of all Facility Revenues (as hereinafter
defined) or (ii) the actual amount spent by Borrower for the costs of
acquisition of furniture, fixtures and equipment to be used in connection with
the Project into the FF&E Account (the "Required FF&E Reserve"). The Borrower
shall be permitted to withdraw amounts from the FF&E Account, so long as no
Event of Default or Potential Default shall then exist and be continuing, to
cover the cost of acquisition of furniture, fixtures and equipment to be used in
connection with the Project as long as the acquisition thereof is required to be
capitalized in accordance with Borrower's capitalization policy as approved by
the Bank prior to the Closing Date (each being a "Capital Acquisition"). At the
time the quarterly financial reports required to be delivered to the Bank
pursuant to Exhibit C, Section (c) are due, Borrower shall provide a summary and
accounting of all Capital Acquisitions made by the Borrower during the previous
calendar quarter. For the purposes hereof, the term "Facility Revenues" shall
mean all gross revenues and receipts derived from the operation of the Project,
including, without limitation, all revenues and receipts from room rents, food,
and beverage sales and other miscellaneous revenues arising from the operation
of the Project.
5. NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that, from the date hereof and
until the Bank
31
Debt has been paid in full and all other obligations hereunder shall have been
performed and discharged, it shall comply at all times with the following
negative covenants:
5.1 Changes in Organizational Documents.
The Borrower shall not amend or modify, or permit the amendment or
modification of, in any material respect, the Borrower Documents, without
providing prior written notice to the Bank and obtaining the prior written
consent of the Bank.
5.2 Transfer of Land and Improvements.
The Borrower shall not voluntarily or by operation of law, directly or
indirectly, sell, convey, transfer, assign, pledge, encumber, or permit to be
sold, conveyed, transferred, assigned, pledged or encumbered any interest
whether nominal, beneficial or otherwise in or any part of the Land or the
Improvements, without the prior written consent of the Bank having been
obtained. Any transaction which is prohibited under this Section 5.2 shall be
null and void to the extent permitted by applicable law. The Bank shall not be
under any obligation to allege or show any impairment of the Collateral, and the
Bank may pursue any legal or equitable remedies for default, without such
allegation or showing, notwithstanding the foregoing.
5.3 Change in Ownership.
The Borrower shall not cause or permit sales, pledges, encumbrances,
conveyances, transfers or assignments of interests in the Borrower (whether
owned directly or through other entities) without the prior written consent of
the Bank.
5.4 Liquidations, Mergers, Consolidations, Acquisitions.
The Borrower shall not dissolve, liquidate or become a party to any
merger or consolidation, or acquire by purchase, lease or otherwise all or
substantially all of the assets or capital stock of any other Person.
5.5 Breach of Documents.
The Borrower shall not commit any act, or permit any act to occur,
which would, in any manner, give rise to a breach of any term, covenant or
condition on Borrower's part to be performed under any contract to which the
Borrower is a party or by which it is bound.
5.6 Judgments.
The Borrower shall not permit any final judgment obtained against it to
remain unpaid for a period of ten (10) days following the entry thereof without
obtaining a stay of execution or bonding or causing such judgment to be bonded.
5.7 Leasing of Premises.
The Borrower shall not, without the prior written approval of the Bank,
enter into,
32
terminate, amend, modify, extend or give any consent to any tenant under any
Lease.
5.8 Material Adverse Change.
The Borrower shall not permit any Material Adverse Change in the
business, assets, operation or condition, financial or otherwise, of Borrower or
Guarantor to occur.
5.9 Conduct of Business.
The Borrower shall not conduct any business or activity, the nature of
which would differ in any material respect from that presently conducted by it.
5.10 Creation of Liens.
Except as specifically contemplated by the Loan Documents the Borrower
shall not create, incur, assume or suffer to exist or be created, or permit any
pledge of, or any deed of trust, mortgage, Lien, charge, security interest or
encumbrances of any nature with respect to the Land or the Improvements, or
assign, pledge or in any way transfer or encumber its rights to receive income
from the Land or the Improvements.
5.11 Value of Collateral.
The Borrower shall not take any action which would result in any
material impairment of the value of any Collateral.
5.12 Transfer of Personalty.
The Borrower shall not voluntarily or by operation of law, directly or
indirectly, sell, assign, transfer, encumber, pledge, mortgage, hypothecate,
convey or otherwise dispose of any interest of Borrower in or any part of any
personalty located upon the Land or the Improvements or used or intended to be
used in connection therewith, provided that Borrower may dispose of any worn out
personal property as long the same is promptly replaced with personal property
that is the functional equivalent of the replaced property within such time as
would not impair the operation of the Project.
5.13 Disposition of Rents.
The Borrower shall not consent to or commit any sale, conveyance,
pledge, mortgage, hypothecation or other disposition of any rents or other funds
arising from the Land or the Improvements.
5.14 Indebtedness.
The Borrower shall not at any time create, incur, assume or suffer to
exist any Indebtedness, except for leases entered into by Borrower for certain
office equipment (as set forth on Exhibit F attached hereto), Indebtedness under
the Loan Documents and the Subordinated Debt.
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5.15 Dividends and Related Distributions.
Borrower shall not make or pay, or agree to become or remain liable to
make or pay, any dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of its membership
interests, on account of the purchase, redemption, retirement or acquisition of
its membership interests (or warrants, options or rights therefor), except as
may be permitted in accordance with Borrower's Operating Agreement, provided
however that an Event of Default shall not have occurred and be continuing.
5.16 Pension Plans and Benefit Arrangements.
The Borrower and members of the ERISA Group shall not:
(i) fail to satisfy the minimum funding requirements of ERISA
and the Internal Revenue Code with respect to any Plan;
(ii) request a minimum funding waiver from the Internal
Revenue Service with respect to any Plan;
(iii) engage in a Prohibited Transaction with any Plan,
Benefit Arrangement or Multiemployer Plan which, alone or in conjunction with
any other circumstances or set of circumstances resulting in liability under
ERISA, would constitute a Material Adverse Change;
(iv) permit the aggregate actuarial present value of all
benefit liabilities (whether or not vested) under each Plan, determined on a
plan termination basis, as disclosed in the most recent actuarial report
completed with respect to such Plan, to exceed, as of any actuarial valuation
date, the fair market value of the assets of such Plan;
(v) fail to make when due any contribution to any
Multiemployer Plan that the Borrower or any member of the ERISA Group may be
required to make under any agreement relating to such Multiemployer Plan, or any
law pertaining thereto;
(vi) withdraw (completely or partially) from any Multiemployer
Plan or withdraw (or be deemed under Section 4062(e) of ERISA to withdraw) from
any Multiple Employer Pension Plan, where any such withdrawal is likely to
result in a material liability of Borrower or any member of the ERISA Group;
(vii) terminate, or institute proceedings to terminate, any
Plan, where such termination is likely to result in a material liability to the
Borrower or any member of the ERISA Group;
(viii) make any amendment to any Plan with respect to which
security is required under Section 307 of ERISA; or
(ix) fail to give any and all notices and make all disclosures
and governmental
34
filings required under ERISA or the Internal Revenue Code, where such failure is
likely to result in a Material Adverse Change.
6. DISBURSEMENT MATTERS
6.1 First Disbursement.
The Bank's obligation to disburse the Loan proceeds (the "First
Disbursement") shall be subject to the satisfaction of all requirements set
forth on Exhibit B hereto and to the satisfaction of the following conditions:
(a) No material portion of the Project shall have been damaged
by fire or other casualty and no condemnation or taking of the Project or any
portion thereof shall be pending or threatened;
(b) The Bank shall have received all duly executed Loan
Documents on or before the Closing Date; and the Collateral Documents and other
documents to be placed of record shall have been duly recorded and filed in all
appropriate offices;
(c) The security interest in all property described in the
Collateral Documents shall have been duly perfected and shall be a valid and
enforceable first Lien;
(d) The Commitment Fee shall have been paid on or before the
Closing Date;
(e) All Governmental Approvals shall be in full force and
effect, and no notices of violation or revocation with respect thereto shall
have been received which have not been cured to the satisfaction of the
applicable Governmental Authority;
(f) The Bank shall have received, at Borrower's expense, a
marked title insurance commitment to issue a lender's title insurance policy in
the amount of the Loan (and a title policy reflecting such marked commitment
promptly thereafter) . Such title insurance commitment and policy shall be
satisfactory to the Bank and shall insure the first priority of the Lien of the
Mortgage and contain no exceptions other than the Permitted Encumbrances;
(g) No Event of Default or Potential Default shall have
occurred and be continuing under this Agreement or any of the other Loan
Documents;
(h) The Franchise Agreement and Property Management Agreement
shall each be in full force and effect;
(i) The Bank shall have received a structural report
satisfactory to Bank from its inspecting architect concerning its review of the
Improvements, and the Governmental Approvals; and
(j) The representations and warranties of the Borrower
contained in Article 8 hereof shall be true and accurate in all material
respects on and as of the date of the First
35
Disbursement of Loan proceeds with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date or time,
which representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein), and the Borrower shall have
performed and complied with all covenants and conditions hereof.
7. REPORTING REQUIREMENTS
7.1 Appraisals, Environmental Reports and Title Reports.
(a) Appraisal. In addition to the Appraisal required prior to
the Closing Date as set forth on Exhibit B attached hereto, until the Bank Debt
is repaid in full the Bank shall have the right at any time and from time to
time but no more frequently than once each calendar year prior to the occurrence
of an Event of Default to obtain an Appraisal with respect to the Project, which
Appraisal shall be at the expense of the Borrower. After the occurrence of an
Event of Default and so long thereafter as such Event of Default shall remain
uncured, the Bank shall have the right to obtain such Appraisals as it may
require at the expense of the Borrower without limitation.
(b) Title Reports. In addition to the title insurance
commitment required prior to the Closing Date, at the option of Bank, exercised
not more than once each calendar year until the Bank Debt has been repaid in
full, Bank may request and Borrower shall deliver within fifteen (15) days of
such request, an updated title report on the Project, prepared and issued by the
same title insurance company that delivered to Bank the lender's policy of title
insurance in connection with the delivery of the Mortgage and such updated title
report shall be provided at Borrower's expense. After the occurrence of an Event
of Default and so long thereafter as such Event of Default shall remain uncured,
Borrower will furnish such title reports, endorsements or policies as the Bank
shall require. If Borrower fails to deliver the title updates, reports,
endorsements or policies required pursuant to this Section, Bank may obtain such
item(s) and Borrower will reimburse Bank for costs incurred upon demand.
(c) Environmental Reports. Within sixty (60) days following
the request of Bank, which request must be after such time that Bank reasonably
suspects that there has been a breach of the Environmental Indemnity Agreement,
or if a previously undisclosed adverse environmental condition becomes apparent
or a change in applicable law with respect to environmental matters should occur
(but such request may be made at any time following the occurrence of an Event
of Default and so long thereafter as such Event of Default shall remain uncured,
or if Bank has reason to believe there has been a breach of the Environmental
Indemnity Agreement) until the Bank Debt has been repaid in full, the Borrower
shall cause an Environmental Report of the Project to be prepared at Borrower's
sole cost and expense, which Environmental Report will be in form and performed
by a consultant approved by Bank, and if Borrower does not respond to Bank's
request within sixty (60) days, the Bank shall cause an Environmental Report of
the Project to be performed and, upon demand, Borrower will reimburse Bank for
all costs incurred.
36
7.2 Financial Reports.
Until the Bank Debt is repaid in full, the Borrower shall furnish or
cause to be furnished to the Bank, within the time periods specified on Exhibit
C attached hereto, the financial reports and information listed on Exhibit C.
8. REPRESENTATIONS AND WARRANTIES
The Borrower hereby warrants and represents to the Bank as follows:
8.1 Due Formation: Capacity.
(a) The Borrower is duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has full power and
authority to own or lease and operate properties, and to conduct its affairs as
now being conducted and as proposed to be conducted.
(b) The Guarantor is duly organized, validly existing and in
good standing under the laws of the State of Maryland, and has full power and
authority to own or lease and operate properties, and to conduct its affairs as
now being conducted and as proposed to be conducted.
8.2 Power and Authority.
The Borrower and Guarantor each has full power and authority to enter
into, execute, deliver and carry out this Agreement and the other Loan Documents
to which either of them is a party, and to perform their respective obligations
hereunder and thereunder and all such actions have been duly authorized by all
necessary proceedings on Borrower's and Guarantor's part.
8.3 Validity and Binding Effect.
This Agreement and the other Loan Documents will have been duly
executed and delivered by the Borrower and the Guarantor, to the extent they are
a party thereto, on the required date of delivery of such document. This
Agreement and the other Loan Documents constitute the legal, valid and binding
obligations of the Borrower, and the Guarantor, to the extent they are a party
thereto, enforceable against them in accordance with their respective terms.
8.4 No Conflict.
Neither the execution and delivery of this Agreement, the other Loan
Documents, nor the consummation of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or thereof,
will conflict with, constitute a default under or result in any breach of (i)
the terms and conditions of the Borrower Documents or (ii) any Governmental
Approval, any applicable law or any material agreement, instrument, order, writ,
judgment, injunction or decree to which the Borrower or Guarantor is a party or
by which either of them is bound, or result in the creation or enforcement of
any Lien, charge or encumbrance whatsoever upon any property (now or hereafter
acquired) of Borrower or Guarantor (other than Liens
37
granted under the Loan Documents).
8.5 Other Agreements.
Neither the Borrower nor Guarantor is a party to any agreement or
instrument that materially and adversely affects its present or proposed
business, properties or assets, operation or conditions, financial or otherwise
or is in default of the performance, observance, or fulfillment of any of the
material obligations, covenants or conditions set forth in any material
agreement or instrument to which Borrower or Guarantor is a party.
8.6 No Potential Default or Event of Default.
No Potential Default has occurred and no condition exists or will be
caused by the First Disbursement which will constitute a Potential Default or
Event of Default.
8.7 No Litigation or Investigations.
There is no pending or threatened litigation or governmental
investigation (or any basis therefor known to the Borrower) which questions the
capacity, ability or authority of the Borrower or Guarantor to execute, deliver
and perform the provisions of the Loan Documents to which either of them is a
party, or if determined adversely to the Borrower or Guarantor would reasonably
be expected to cause a Material Adverse Change.
8.8 Financial Statements and Other Information.
The information, financial statements and other financial data
furnished by the Borrower and the Guarantor to the Bank are true and correct in
all material respects and present fairly the financial condition of the Borrower
and the Guarantor . All other information given to the Bank by and with respect
to the Borrower or the Guarantor is accurate, correct and complete in all
material respects. To the best of the Borrower's knowledge, all surveys, plot
plans and similar documents heretofore furnished by the Borrower to the Bank
with respect to the Land and Improvements are accurate and complete in all
material respects as of their respective dates.
8.9 Impositions.
All returns for Impositions required to have been filed by the Borrower
have been timely filed and payment has been made, or will be made prior to the
date upon which any penalty or fine may be imposed, for all Impositions which
have or may become due pursuant to said returns or to assessments received.
8.10 Title Aspects.
The Borrower has good and marketable fee simple title to the Land and
Improvements, subject only to Permitted Encumbrances. The Borrower has been
granted all easements appropriate for the occupancy and operation of the
Improvements, and any mortgage liens now or hereafter affecting any land
burdened by such easements are subordinate to such easements.
38
8.11 Zoning and Governmental Approvals.
The development, construction, use and occupancy of the Project
conforms in all material respects to all applicable laws, all existing
Governmental Approvals and all covenants, conditions and restrictions contained
in a deed, lease or other instrument or agreement covering or affecting all or
any portion of the Land. All Governmental Approvals have been obtained and are
valid and in full force and effect.
8.12 Utilities.
All utility and municipal services necessary for the use and occupancy
of the Improvements are available to the Land and have sufficient capacity to
operate the Improvements for their intended purposes, including water supply,
storm and sanitary sewer facilities, electricity and telephone facilities.
8.13 Security Interests.
The liens and security interests granted or to be granted to the Bank
pursuant to this Agreement and the other Loan Documents constitute and will
continue to constitute valid perfected first priority security interests under
the Uniform Commercial Code or other applicable law, entitled to all the rights,
benefits and priorities provided by the Uniform Commercial Code or any other
law, upon proper filing, and the property secured thereby is subject to no other
Liens or encumbrances except for the Permitted Encumbrances.
8.14 Mortgage.
The Lien granted to the Bank pursuant to the Mortgage constitutes and
will, upon proper recording, constitute a valid perfected first priority Lien
under applicable law, and the property secured thereby is subject to no other
Liens or encumbrances except for the Permitted Encumbrances. All action as is
necessary or advisable to establish such Lien and its priority as described in
the preceding sentence, including recordation of the Mortgage in the appropriate
offices, will be taken promptly following the Closing Date, and there will be,
upon execution, delivery and recordation of the Mortgage, no necessity for any
further action in order to protect, preserve and continue such Lien and such
priority.
8.15 [INTENTIONALLY OMITTED]
8.16 Environmental Matters.
(a) Except as disclosed in the Environmental Report, the
Borrower has not received any Environmental Complaint from any Official Body or
private Person alleging that any past owner or operator of the Land is a
potentially responsible party under the Comprehensive Environmental Response,
Cleanup and Liability Act, 42 U. S.C. Section 960 1, et seq., and the Borrower
has no reason to believe that such an Environmental Complaint might be received.
Except as disclosed in the Environmental Report, to Borrower's knowledge, there
are no pending or threatened, Environmental Complaints relating to the Land
pertaining to or arising out of any Environmental Conditions.
39
(b) Except as disclosed in the Environmental Report, to
Borrower's knowledge, there are no conditions, facilities or any other facts or
circumstances at, on or under the Project that constitute a breach of or
non-compliance with any of the Environmental Laws, and there are no past or
present Environmental Conditions at, on or under the Project that prevent
compliance with the Environmental Laws.
(c) Except as disclosed in the Environmental Report, to
Borrower's knowledge, there are no conditions, facilities or any other facts or
circumstances at, on or under adjacent property, and there are no past or
present Environmental Conditions at, on or under adjacent property that prevent
compliance of the Project with the Environmental Laws.
(d) Except as disclosed in the Environmental Report, to
Borrower's knowledge, neither the Land nor any structures, improvements,
equipment, fixtures, activities or facilities thereon or thereunder contain or
use Regulated Substances, except in compliance with Environmental Laws.
8.17 Insurance.
All insurance policies furnished to the Bank by the Borrower are valid
and in full force and effect. No notice has been given or claim made and, to the
best of the Borrower's knowledge, no grounds presently exist to cancel or void
any of such policies or to reduce the coverage provided thereby. Such policies
provide adequate coverage in amounts sufficient to insure the assets and risks
of the Borrower in accordance with prudent business practices.
8.18 Solvency.
The Borrower and Guarantor are Solvent as of the Closing Date and will
be Solvent after giving effect to the transactions contemplated by the Loan
Documents, including all Indebtedness incurred thereby, the security interests
granted therein and the payment of all fees related thereto.
8.19 Pension Plans and Benefit Arrangements.
(a) The Borrower and each other member of the ERISA Group are
in compliance in all material respects with any applicable provisions of ERISA
with respect to all Benefit Arrangements, Plans and Multiemployer Plans. There
has been no Prohibited Transaction with respect to any Benefit Arrangement or
any Pension Plan or, to the best knowledge of the Borrower, with respect to any
Multiemployer Plan or Multiple Employer Plan, which could result in any material
liability of the Borrower or any other member of the ERISA Group. The Borrower
and all members of the ERISA Group have made when due any and all payments
required to be made under any agreement relating to a Multiemployer Plan or a
Multiple Employer Plan or any law pertaining thereto. With respect to each Plan
and Multiemployer Plan, the Borrower and each member of the ERISA Group (i) have
fulfilled in all material respects their obligations under the minimum funding
standards of ERISA, (ii) have not incurred any liability to the PBGC, and (iii)
have not had asserted against them any penalty for failure to fulfill the
minimum funding requirements of ERISA.
40
(b) To the best of the Borrower's knowledge, each
Multiemployer Plan and Multiple Employer Plan is able to pay benefits thereunder
when due.
(c) Neither the Borrower nor any other member of the ERISA
Group has instituted or intends to institute proceedings to terminate any Plan.
(d) No event requiring notice to the PBGC under Section
302(f)(4)(A) of ERISA has occurred or is reasonably expected to occur with
respect to any Plan, and no amendment with respect to which security is required
under Section 307 of ERISA has been made or is reasonably expected to be made to
any Plan.
(e) The aggregate actuarial present value of all benefit
liabilities (whether or not vested) under each Plan, determined on a plan
termination basis, as disclosed in, and as of the date of, the most recent
actuarial report for such Plan, does not exceed the aggregate fair market value
of the assets of such Plan.
(f) Neither the Borrower nor any other member of the ERISA
Group has incurred or reasonably expects to incur any material withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer Plan.
Neither the Borrower nor any other member of the ERISA Group has been notified
by any Multiemployer Plan or Multiple Employer Plan that such Multiemployer Plan
or Multiple Employer Plan has been terminated within the meaning of Title IV of
ERISA, and, to the best knowledge of the Borrower, no Multiemployer Plan or
Multiple Employer Plan is reasonably expected to be reorganized or terminated,
within the meaning of Title IV of ERISA.
(g) To the extent that any Benefit Arrangement is insured, the
Borrower and all members of the ERISA Group have paid when due all premiums
required to be paid for all periods through and including the Closing Date. To
the extent that any Benefit Arrangement is funded other than with insurance, the
Borrower and all other members of the ERISA Group have made when due all
contributions required to be paid for all periods through the Closing Date.
(h) All Plans, Benefit Arrangements and Multiemployer Plans
have been administered in accordance with their terms and applicable law.
[ARTICLE 9 - RESERVED]
10. DEFAULTS AND REMEDIES
10.1 Events of Default.
The following shall be deemed to be Events of Default under this
Agreement (whatever the reason therefor and whether voluntary, involuntary or
effected by operation of law):
(a) The Borrower shall fail to make any principal payment due
under the Loan or shall fail to pay any interest on the Loan or any other amount
owing hereunder or under the other Loan Documents after such principal, interest
or other amount shall become due and payable in accordance with the terms hereof
or thereof;
41
(b) Any representation or warranty made at any time by the
Borrower or Guarantor herein or in any other Loan Document, or any certificate,
other instrument or written statement furnished by Borrower or Guarantor
pursuant to the provisions hereof or thereof, shall prove to have been false or
misleading in any material respect as of the time it was made or furnished;
(c) The Borrower shall fail to comply with any other covenant
contained in this Agreement or any of the other Loan Documents which calls for
the payment of money and shall not cure that failure within ten (10) days after
written demand by the Bank;
(d) The Borrower shall fail to comply with any covenant
contained in this Agreement or any of the other Loan Documents, other than those
defaults referred to in the other subparagraphs of this Section 10.1, and shall
not cure that failure within thirty (30) days after written notice thereof by
the Bank to Borrower or such shorter period of time for cure specified in any
Loan Document (such grace period to be applicable only in the event such default
can be remedied by corrective action of the Borrower as determined by the Bank
in its sole discretion);
(e) The Borrower shall fail to comply with the covenant set
forth in Section 4.21;
(f) The Guarantor shall fail to comply with any covenant set
forth in Section 4.22;
(g) The Borrower or Guarantor shall cease to be Solvent or
shall be unable to pay their respective debts as the same shall mature or there
shall be filed by or against the Borrower or Guarantor a petition in bankruptcy
or a petition seeking the appointment of a receiver, trustee or conservator for
Borrower or Guarantor or any portion of their respective properties or seeking
reorganization or to effect a plan or other arrangement with or for the benefit
of creditors, or the Borrower or Guarantor shall consent to the appointment of a
receiver, trustee or conservator;
(h) Any Lien or encumbrance, other than a Permitted
Encumbrance, is entered against the Land or Improvements and such Lien or
encumbrance is not discharged, vacated or bonded within ten (10) Business Days
after the filing thereof;
(i) Any final judgments for the payment of money shall be
entered against the Borrower or Guarantor by a court having jurisdiction which
is not discharged, vacated, bonded or stayed pending appeal within a period of
thirty (30) days from the date of entry of such judgment and such judgment shall
result in a Material Adverse Change with respect to the Borrower or Guarantor;
(j) There shall occur any uninsured damage to or loss, theft
or destruction of any of the Collateral in excess of $100,000, and such damage,
loss, theft or destruction is not restored within one hundred twenty (120) days
of the date thereof;
42
(k) Any of the Loan Documents shall cease to be legal, valid
and binding agreements enforceable against the Borrower or Guarantor in
accordance with the respective terms thereof or shall in any way be terminated
(except in accordance with their terms) or become or be judicially declared
ineffective or inoperative or shall in any way cease to give or provide the
respective liens, security interests, rights, titles, interests, remedies,
powers or privileges intended to be created thereby and Borrower has not
provided to the Bank either replacement documentation or substitute collateral
satisfactory to the Bank with thirty (30) days following written notice from the
Bank;
(l) Any party shall obtain an order or decree in any court of
competent jurisdiction to enjoin or prohibit the Bank, the Borrower or Guarantor
from carrying out the terms and conditions of any of the Loan Documents to which
any of them is a party and such order or decree is not vacated or stayed within
ten (10) days after the filing thereof;
(m) Any of the following occurs: (i) any Reportable Event,
which the Bank determines in good faith constitutes grounds for the termination
of any Plan by the PBGC or the appointment of a trustee to administer or
liquidate any Plan, shall have occurred and be continuing; (ii) proceedings
shall have been instituted or other action taken to terminate any Plan, or a
termination notice shall have been filed with respect to any Plan; (iii) a
trustee shall be appointed to administer or liquidate any Plan; (iv) the PBGC
shall give notice of its intent to institute proceedings to terminate any Plan
or Plans or to appoint a trustee to administer or liquidate any Plan; and, in
the case of the occurrence of (i), (ii), (iii) or (iv) above, the Bank
determines in good faith that the amount of Borrower's liability is likely to
cause a Material Adverse Change; (v) the Borrower or any member of the ERISA
Group shall fail to make any contributions when due to a Plan or a Multiemployer
Plan; (vi) the Borrower or any member of the ERISA Group shall make any
amendment to a Plan with respect to which security is required under Section 307
of ERISA; (vii) the Borrower or any member of the ERISA Group shall withdraw
completely or partially from a Multiemployer Plan; (viii) the Borrower or any
member of the ERISA Group shall withdraw (or shall be deemed under Section
4062(e) of ERISA to withdraw) from a Multiple Employer Plan; or (ix) any
applicable law, rule or regulation is adopted, changed or interpreted by any
governmental authority or agency or court with respect to or otherwise affecting
one or more Plans, Multiemployer Plans or Benefit Arrangements and, with respect
to any of the events specified in (v), (vi), (vii), (viii) or (ix), the Bank
determines in good faith that any such occurrence would be reasonably likely to
materially and adversely affect the total enterprise represented by the Borrower
and the other members of the ERISA Group;
(n) A Guarantor Default shall occur with respect to any
Indebtedness of Guarantor;
(o) a default shall occur under the Franchise Agreement which
is not cured within any applicable cure period (as such cure period may be
extended by the Franchisor) or the Franchise Agreement shall cease to be in full
force and effect;
(p) a default shall occur under the Property Management
Agreement which is not cured within any applicable cure period or the Property
Management Agreement shall cease to be in full force and effect;
(q) a "default" or defined "event of default" shall occur
under the Subordinated Debt; or
43
(r) Borrower shall fail to fund the Required FF&E Reserve
pursuant to Section 4.23 hereof.
10.2 Remedies.
The Bank may exercise any or all of the following rights and remedies:
(a) If an Event of Default shall occur, the Bank may by
written notice to the Borrower, declare the unpaid principal amount of the Note
then outstanding and all interest accrued thereon and all other Indebtedness of
the Borrower to the Bank hereunder and thereunder to be immediately due and
payable without presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived.
(b) If an Event of Default shall occur, the Bank and any
branch, subsidiary or affiliate of the Bank anywhere in the world shall have the
right, in addition to all other rights and remedies available to it, without
notice to the Borrower, to set-off against and apply to the then unpaid balance
of the Loan and all other obligations of the Borrower hereunder or under any
other Loan Document any debt owing to, and any other funds held in any manner
for the account of the Borrower, or by such branch subsidiary or affiliate,
including without limitation, all funds in all deposit accounts (whether time or
demand, general or special, provisionally credited or finally credited, or
otherwise) now or hereafter maintained by the Borrower for its own account with
the Bank or such branch, subsidiary or affiliate. Such right shall exist whether
or not the Bank shall have made any demand under this Agreement or any other
Loan Document, whether or not such debt owing to or funds held for the account
of the Borrower is or are matured or unmatured and regardless of the existence
or adequacy of any Collateral, or other security to the Bank;
(c) If an Event of Default shall occur, and so long thereafter
as such Event of Default shall remain uncured, and whether or not the Bank shall
have accelerated the maturity of the Loan pursuant to any of the foregoing
provisions of this Section 10.2, the Bank may proceed to protect and enforce the
Bank's rights by suit in equity, action at law and/or other appropriate
proceeding, for the specific performance of any covenant or agreement contained
in this Agreement or the other Loan Documents and, as to any amount that shall
have become due, by declaration or otherwise, proceed to enforce the payment
thereof to enforce any other legal or equitable right of the Bank;
(d) From and after the date on which the Bank has taken any
action pursuant to this Article 10 and until all Bank Debt has been paid in
full, any and all proceeds received by the Bank from any sale or other
disposition of any Collateral, or any part thereof, or the exercise of any other
remedy by the Bank, shall be applied as follows:
(i) first, to reimburse the Bank for out-of-pocket
costs, expenses and disbursements, including without limitation, reasonable
attorneys' fees and legal expenses actually incurred by the Bank in connection
with realizing on any Collateral or collection of any obligations of the
Borrower under any of the Loan Documents, including advances made subsequent to
an Event of Default by the Bank or any of them or the Bank for the reasonable
44
maintenance, preservation, protection or enforcement of, or realization upon,
any Collateral, including without limitation, advances for Impositions,
insurance, repairs and the like and reasonable expenses incurred to sell or
otherwise realize on, or prepare for sale or other realization on, any of the
Collateral;
(ii) second, to the repayment of all Bank Debt in the
order and manner determined by the Bank as to principal, interest, fees or other
amounts;
(iii) the balance, if any, as required by law.
(e) The Bank shall have all of the rights and remedies
contained in this Agreement and the other Loan Documents (including the right to
appoint a receiver and all other rights described in the Mortgage). In addition,
the Bank shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code or other applicable law, all of which rights and
remedies shall be cumulative and nonexclusive, to the extent permitted by law;
and
(f) The Bank shall have the further right to enter the Project
and take any and all actions necessary, in its judgment, to secure, winterize,
protect and preserve the Improvements and any materials or supplies located on
the Land.
10.3 Notice of Sale.
Any notice required to be given by the Bank of a sale, lease, or other
disposition of any Collateral or any other intended action by the Bank, if given
ten (10) Business Days prior to such proposed action, shall constitute
commercially reasonable and fair notice thereof to the Borrower.
11. MISCELLANEOUS
11.1 Modifications, Amendments or Waivers.
The Bank and the Borrower may from time to time enter into written
agreements amending or changing any provision of this Agreement or any other
Loan Document (except as otherwise expressly provided herein) or the rights of
the Bank or the Borrower hereunder or thereunder, or may grant written waivers
or consents to a departure from the due performance of the obligations of the
Borrower hereunder or thereunder.
11.2 No Implied Waivers: Cumulative Remedies; Writing Required.
No course of dealing and no delay or failure of the Bank in exercising
any right, power, remedy or privilege under this Agreement or any other the Loan
Document shall affect any other or future exercise thereof or operate as a
waiver thereof, nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege preclude any further exercise thereof or of any other right, power,
remedy or privilege. The rights and remedies of the Bank under this Agreement
and any other Loan Documents are cumulative and not exclusive of any rights or
remedies which they would otherwise have. Any waiver, permit consent or approval
of any kind or character on the part of the Bank of any breach or default under
this Agreement or any such waiver of any provision or condition of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing.
45
11.3 Reimbursement and Indemnification of Bank by the Borrower;
Impositions.
The Borrower agrees unconditionally upon demand to pay or reimburse to
the Bank and to save the Bank harmless against (i) liability for the payment of
all reasonable out-of-pocket costs, expenses and disbursements, (including
reasonable fees and expenses of counsel including allocated costs of staff
counsel) for the Bank except with respect to (a) and (b) below (a) in connection
with the administration and interpretation of this Agreement, and other
instruments and documents to be delivered hereunder, (b) relating to any
amendments, waivers or consents pursuant to the provisions hereof, (c) in
connection with the enforcement of this Agreement or any other Loan Document, or
collection of amounts due hereunder or thereunder or the proof and allowability
of any claim arising under this Agreement or any other Loan Document, whether in
bankruptcy or receivership proceedings or otherwise, and (d) incurred by the
Bank in connection with any workout or restructuring, or in connection with the
protection, preservation, exercise or enforcement of this Agreement or any other
Loan Document or collection of amounts due hereunder or thereunder or the proof
and allowability of any claim arising under this Agreement or any other Loan
Document, whether in Insolvency Proceedings or otherwise, and (ii) all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
actually imposed on, incurred by or asserted against the Bank in any way
relating to or arising out of this Agreement or any other Loan Document or any
action taken or omitted by the Bank hereunder or thereunder, provided that the
Borrower shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements) if the same results from the Bank's gross negligence or willful
misconduct. The Bank will attempt to minimize the fees and expenses of legal
counsel for the Bank which are subject to reimbursement by the Borrower
hereunder by considering the usage of one law firm to represent the Bank if
appropriate under the circumstances. The Borrower agrees unconditionally to pay
all stamp, document, transfer, recording or filing taxes or fees and similar
Impositions during the Borrower's ownership of the Land and the Improvements
(except for taxes on the overall net income of the Bank and except for franchise
taxes) now or hereafter determined by the Bank to be actually due and payable in
connection with this Agreement or any other Loan Document, and the Borrower
agrees unconditionally to save the Bank harmless from and against any and all
present or future claims, liabilities or losses with respect to or resulting
from any omission to pay or delay in paying any such taxes, fees or other
similar Impositions, except as otherwise provided herein.
11.4 Holidays.
Whenever any payment or action to be made or taken hereunder shall be
stated to be due on a day which is not a Business Day, such payment or action
shall be made or taken on the next following Business Day (except as provided in
Section 3.2 with respect to Interest Periods), and such extension of time may be
included in computing interest or fees, if any, in connection with such payment
or action, except that the Loan shall be due on the Business Day preceding the
Expiration Date if the Expiration Date is not a Business Day.
46
11.5 Funding by Branch, Subsidiary or Affiliate.
(a) Notional Funding. The Bank shall have the right from time
to time, without notice to the Borrower, to deem any branch, subsidiary or
Affiliate entity (which for the purposes of this Section 11.5 shall mean any
corporation or association which is directly or indirectly controlled by or is
under direct or indirect common control with any corporation or association
which directly or indirectly controls the Bank) of the Bank to have made,
maintained or funded any portion of the Loan to which the Euro-Rate Option
applies at any time, provided that immediately following (on the assumption that
a payment was then due from the Borrower to such other office), and as a result
of such change, the Borrower would not be under any greater financial obligation
pursuant to Section 3.12 than it would have been in the absence of such change.
Notional funding offices may be selected by the Bank without regard to the
Bank's actual methods of making, maintaining or funding the Loan or any sources
of funding actually used by or available to the Bank.
(b) Actual Funding. The Bank shall have the right from time to
time to make or maintain any portion of the Loan by arranging for a branch,
subsidiary or Affiliate of the Bank to make or maintain such portion of the Loan
subject to the last sentence of this subsection 11.5(b). If the Bank causes a
branch, subsidiary or Affiliate to make or maintain any portion of the Loan
hereunder, all terms and conditions of this Agreement shall, except where the
context clearly requires otherwise, be applicable to such portion of the Loan to
the same extent as if such portion of the Loan were made or maintained by the
Bank, but in no event shall the Bank's use of such a branch, subsidiary or
Affiliate to make or maintain any part of the Loan hereunder cause the Bank or
such branch, subsidiary or Affiliate to incur any cost or expenses payable by
the Borrower hereunder or require the Borrower to pay any other compensation to
the Bank (including any expenses incurred or payable pursuant to Section 3.12)
which would otherwise not be incurred.
11.6 Notices.
All notices, requests, demands, directions and other communications
(collectively, "notices") given to or made upon any party hereto under the
provisions of this Agreement shall be in writing (including telex or facsimile
communication) unless otherwise expressly required hereunder and shall be
delivered by mail or other means or sent by telex or facsimile (in either case,
to be immediately confirmed verbally by telephone) to the respective parties at
the addresses and numbers set forth on Schedule I hereto or in accordance with
any subsequent written direction from any party to the others. All notices
shall, except as otherwise expressly herein provided, be effective (i) in the
case of telex or facsimile, when received and confirmed by telephone, (ii) in
the case of hand-delivered notice, when hand-delivered, (iii) if given by mail,
four (4) days after such communication is deposited in the mails with
first-class postage prepaid, return receipt requested, and (iv) if given by any
other means (including by air courier), when delivered; provided, however, that
notices to the Bank with respect to conversion or renewal of Interest Rate
Options and prepayment shall not be effective until received by the Bank.
11.7 Severability.
The provisions of this Agreement are intended to be severable. If any
provision of this
47
Agreement shall be held invalid or unenforceable in whole or in part in any
jurisdiction such provision shall, as to such jurisdiction, be ineffective to
the extent of such invalidity or un enforceability without in any manner
affecting the validity or enforceability thereof in any other jurisdiction or
the remaining provisions hereof in any jurisdiction.
11.8 Governing Law.
This Agreement shall be deemed to be a contract under the laws of the
Commonwealth of Pennsylvania and for all purposes shall be governed by and
construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania without regard to its conflicts of laws principles.
11.9 Prior Understanding.
This Agreement, together with the other Loan Documents, supersedes all
prior understandings and agreements, whether written or oral, between the
parties hereto and thereto relating to the transactions provided for herein and
therein, including any prior confidentiality agreements and commitments.
11.10 Duration: Survival.
All representations and warranties of the Borrower contained herein or
made in connection herewith shall survive the making of the Loan and shall not
be waived by the execution and delivery of this Agreement, any investigation by
the Bank or the making of the Loan in each case. All covenants and agreements of
the Borrower contained herein relating to the payment of additional compensation
or expenses and indemnification, including those set forth in the Note and
Sections 3.12 and 11.3 hereof, shall survive payment in full of the Bank Debt.
11.11 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of
the Bank and the Borrower and their respective successors and assigns, except
that the Borrower may not assign or transfer any of its rights and obligations
hereunder or any interest herein without the Bank's prior written consent. The
Bank may, at its own cost, make assignments in all or any part of the Loan to
one or more banks or other entities. In the case of a participation, the
participant's rights against Bank in respect of such participation shall be
those set forth in the agreement executed by Bank in favor of the participant
relating thereto and shall not include any voting rights. All of Bank's
obligations under this Agreement or any other Loan Documents shall remain
unchanged and all amounts payable by the Borrower hereunder or thereunder shall
be determined as if the Bank had not sold such participation.
11.12 Counterparts.
This Agreement may be executed by different parties hereto on any
number of separate counterparts, each of which, when so executed and delivered,
shall be an original, and all such counterparts shall together constitute one
and the same instrument.
48
11.13 Exceptions.
The representations and warranties and covenants contained herein shall
be independent of each other and no exception to any representation, warranty or
covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exceptions be deemed to permit any action or omission that would be in
contravention of applicable law.
11.14 Consent to Jurisdiction.
THE BORROWER HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY AND THE UNITED
STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA, AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND AGREES THAT ALL SUCH SERVICE
OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO THE BORROWER AT
THE ADDRESSES PROVIDED FOR IN SECTION 11.6 HEREOF AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. THE BORROWER WAIVES ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE.
11.15 No Third Parties Benefitted.
This Agreement is made and entered into for the sole protection and
benefit of the Borrower and the Bank. No trust fund is created by this Agreement
and no other Persons or entities will have any right of action under this
Agreement or any right against the Bank to obtain any proceeds of the Loan.
11.16 Authority to File Notices.
The Borrower irrevocably appoints the Bank as its attorney-in-fact,
with full power of substitution, to file for record, at the Borrower's cost and
expense and in the Borrower's name, any notices that the Bank considers
necessary or desirable to protect the Collateral.
11.17 Publicity.
Borrower agrees that Bank may at its expense publish advertisements,
print media and promotional materials or other announcements in such
publications as it may choose identifying the Borrower, the transaction and the
Bank's participation therein.
11.18 Interpretation.
Whenever the context requires, all words used in the singular will be
construed to have been used in the plural, and vice versa, and each gender will
include any other gender. The captions of the articles, sections, schedules and
exhibits of this Agreement are for convenience
49
only and do not define or limit any terms or provisions. In the event of a
conflict between the terms of the other Loan Documents and the terms of this
Agreement, the terms of this Agreement shall control.
11.19 Status of Parties.
It is understood and agreed that the relationship of the parties hereto
is that of borrower and lender and that nothing contained herein or in any of
the other Loan Documents shall be construed to constitute a partnership, joint
venture or co-tenancy among Borrower and the Bank.
11.20 Brokerage Fee.
The Borrower represents to the Bank that no broker or other Person is
entitled to a brokerage fee or commission as a result of the Borrower's actions
or undertakings in connection with the financing of the Improvements and agrees
to hold the Bank harmless from all claims for brokerage commissions which may be
made as a result of such actions or undertakings, if any.
11.21 Waiver of Jury Trial.
THE BORROWER WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS RELATED TO ANY OF THE
LOAN DOCUMENTS. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY
BORROWER AND BORROWER ACKNOWLEDGES THAT NEITHER THE BANK NOR ANY PERSON ACTING
ON BEHALF OF THE BANK HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER
OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THE BORROWER
FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO
BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED BY ITS OWN FREE WILL, AND THAT
BORROWER HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. THE
BORROWER AGREES THAT THE OBLIGATIONS EVIDENCED BY THIS AGREEMENT ARE EXEMPTED
TRANSACTIONS UNDER THE TRUTH-IN- LENDING ACT, 15 U.S.C. SECTION 1601, ET SEQ.
THE BORROWER FURTHER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING
OF THIS WAIVER PROVISION.
11.22 Warrant of Attorney to Enter Judgment by Confession.
(A) THE BORROWER ACKNOWLEDGES THAT (i) IT HAS READ AND UNDERSTANDS,
AFTER CONSULTATION WITH ITS COUNSEL, THAT THE PROVISIONS OF PARAGRAPH (B) BELOW
COULD ENABLE THE BANK TO OBTAIN A JUDGMENT AGAINST THE BORROWER AND COMMENCE
EXECUTION PROCEEDINGS THAT RESULT IN THE SEIZURE OF ASSETS OF THE BORROWER, IN
EITHER CASE, WITHOUT THE BORROWER HAVING THE BENEFIT OF PRIOR NOTICE OR A
HEARING; AND (ii) THE BORROWER NEVERTHELESS KNOWINGLY AND
50
VOLUNTARILY AGREES TO SUCH POSSIBLE CONSEQUENCES AND THE PROVISIONS OF PARAGRAPH
(B) BELOW.
(B) FOLLOWING THE OCCURRENCE OF AN EVENT OF DEFAULT BORROWER DOES
HEREBY EMPOWER ANY ATTORNEY OF ANY COURT OF RECORD WITHIN THE COMMONWEALTH OF
PENNSYLVANIA, TO APPEAR FOR BORROWER AND, WITH OR WITHOUT A COMPLAINT OR
DECLARATION FILED, CONFESS A JUDGMENT OR JUDGMENTS AGAINST BORROWER AND IN FAVOR
OF THE BANK OR THE BANK'S SUCCESSORS OR ASSIGNS IN ANY COURT OF RECORD WITHIN
THE COMMONWEALTH OF PENNSYLVANIA FOR THE UNPAID PRINCIPAL BALANCE OF THE NOTES,
AND ALL INTEREST THEREON, TOGETHER WITH COSTS OF SUIT AND AN ATTORNEY'S
COMMISSION OF IO% FOR COLLECTION. THE AUTHORITY AND POWER TO APPEAR FOR AND
ENTER JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY ONE OR MORE EXERCISES
THEREOF, AND MAY BE EXERCISED FROM TIME TO TIME AND AS OFTEN AS THE BANK OR ITS
SUCCESSORS OR ASSIGNS SHALL DEEM NECESSARY OR DESIRABLE. ANY SUCH JUDGMENT SHALL
BE FULLY ENFORCEABLE UP TO THE AMOUNT DUE FROM BORROWER AT THE TIME ENFORCEMENT
OF THE JUDGMENT IS SOUGHT, PLUS AN ATTORNEY'S COMMISSION OF 10% FOR COLLECTION.
BORROWER HEREBY FOREVER WAIVES AND RELEASES ANY AND ALL ERRORS IN SAID
PROCEEDINGS, WAIVES STAY OF EXECUTION, STAY, CONTINUANCE OR ADJOURNMENT OF SALE
ON EXECUTION, THE RIGHT TO PETITION TO SET ASIDE OR ORDER A RESALE, THE RIGHT TO
EXCEPT TO THE SHERIFF'S SCHEDULE OF PROPOSED DISTRIBUTION, THE RIGHT OF
INQUISITION AND EXTENSION OF TIME OF PAYMENT, AND AGREES TO CONDEMNATION OF ANY
PROPERTY LEVIED UPON BY VIRTUE OF ANY EXECUTION ISSUED ON ANY SUCH JUDGMENT, AND
BORROWER SPECIFICALLY WAIVES ALL EXEMPTIONS FROM LEVY AND SALE OF ANY PROPERTY
THAT NOW IS OR MAY HEREAFTER BE EXEMPT UNDER ANY EXISTING OR FUTURE LAWS OF THE
UNITED STATES OF AMERICA OR THE COMMONWEALTH OF PENNSYLVANIA OR OF ANY OTHER
JURISDICTION.
11.23 Time of Essence.
Time is of the essence with respect to each obligation of the Borrower
hereunder.
[REST OF PAGE INTENTIONALLY
LEFT BLANK]
51
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement under seal as of the day and year first
above written.
BORROWER:
WITNESS/ATTEST: INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.,
a Delaware limited liability company
By: Interstate Property Partnership, L.P.,
a Delaware limited partnership, sole Member
By: Interstate Property Corporation,
a Delaware corporation, General Partner
/s/ XXXXXXXX XXXXXXX
--------------------------- By: /s/ J. XXXXXXX XXXXXXXXXX
--------------------------------------------
Name: J. Xxxxxxx Xxxxxxxxxx
------------------------------------------
Title: Vice President
-----------------------------------------
BANK:
WITNESS: PNC BANK, NATIONAL ASSOCIATION,
a national banking association
/s/ XXXXX XXXX
--------------------------- By: /s/ XXXXXXX X. XXXXXXXXX
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
------------------------------------------
Title: Assistant Vice President
-----------------------------------------
52
SCHEDULE I
Names, Addresses, Telephone
and Telecopier Numbers of Parties
Borrower:
INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.
x/x Xxxxxxxxxx Xxxxxx Xxxxxxxxxxx
Xxxxxx Xxxxx Ten
000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
(000) 000-0000 (Phone)
(000) 000-0000 (Fax)
With a copy to:
Interstate Hotels Corporation
Xxxxxx Plaza Ten
000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
(000) 000-0000 (Phone)
(000) 000-0000 (Fax)
Bank:
PNC BANK NATIONAL ASSOCIATION
One PNC Plaza, 000 Xxxxx Xxxxxx
X0-XXXX-00-0
Xxxxxxxxxx, XX 00000-0000
Attention: Real Estate Banking
Xxxxxxx X. Xxxxxxxxx
(000) 000-0000 (Phone)
(000) 000-0000 (Fax)
Xxxxxxx Xxxxxx
(000) 000-0000 (Phone)
(000) 000-0000 (Fax)
53
EXHIBIT A
LOAN INTEREST RATE REQUEST
[OPTION A: NOTICE OF CONVERSION TO OR ELECTION OF EURO-RATE OPTION]
PNC BANK NATIONAL ASSOCIATION
One PNC Plaza, 000 Xxxxx Xxxxxx
X0-XXXX-00-0
Xxxxxxxxxx, XX 00000-0000
Attention: Real Estate Banking
Ladies and Gentlemen:
The undersigned refers to the Loan Agreement dated as of February
_______, 2000 (as amended, restated, supplemented or modified from time to time,
the "Loan Agreement") between INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.
("Borrower") and PNC BANK, NATIONAL ASSOCIATION, a national banking association
(the "Bank"). Terms defined in the Loan Agreement shall have the same meanings
assigned to them therein when used herein.
1. The undersigned Borrower hereby gives notice, irrevocably, that it
wishes to convert all or part of the outstanding Loan subject to a Base-Rate
Option into, or elect to have a new Borrowing Tranche subject to a Euro-Rate
Option as follows:
(a) Proposed date of conversion or election to Euro-Rate Option and
expiration of Interest Period (must be three (3) Business Days after date of
this Notice for conversion or election to Euro-Rate Option):
Conversion Date Expiration Date
, 200- ,200-
(b) Aggregate amount of the Loan to be converted to the Euro-Rate
Option (must be at least $1,000,000 for each Interest Period selected) and
Euro-Rate Interest Period (must be one, two, three, six or twelve months and end
before the Expiration Date), to apply to the following conversion:
54
Amount Euro-Rate Interest
Period Euro-Rate Option
$ months
------
from 200
-------- --
%
to 200
------------ --
$ months
------
from 200
-------- --
%
to 200
------------ --
$ months
------
from 200
-------- --
%
to 200
------------ --
$ months
------
from 200
-------- --
%
to 200
------------ --
2. The undersigned confirms as of the date hereof that no Event of
Default or Potential Default has occurred and is continuing.
DATED:
Very truly yours,
WITNESS/ATTEST: INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.,
a Delaware limited liability company
By: Interstate Property Partnership, L.P.,
a Delaware limited partnership, sole Member
By: Interstate Property Corporation,
a _________ corporation, General Partner
--------------------------- By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
55
[OPTION B: CONTINUATION OF EURO-RATE OPTION]
PNC BANK, NATIONAL ASSOCIATION
PNC Bank, National Association
One PNC Plaza, 000 Xxxxx Xxxxxx
X0-XXXX-00-0
Xxxxxxxxxx, XX 00000-0000
Attention: Real Estate Banking
Ladies and Gentlemen:
The undersigned refers to the Loan Agreement dated as of February __,
2000 (as amended, restated, supplemented or modified from time to time, the
"Loan Agreement") between INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.
("Borrower") and PNC BANK, NATIONAL ASSOCIATION, a national banking association
(the "Bank"). Terms defined in the Loan Agreement shall have the same meanings
assigned to them therein when used herein.
1. The undersigned Borrower hereby gives notice, irrevocably, that it
wishes to continue all or part of the outstanding Borrowing Tranche subject to a
Euro-Rate Option with a Euro-Rate Interest Period whose last day is ___________,
200__ (the "Subject Tranche") as follows:
(a) Proposed date of continuation and expiration of Euro-Rate Interest
Period (must be (i) three (3) Business Days after date of this Notice, and (ii)
the maturity date of the Euro-Rate Interest Period for the subject Tranche):
Amount Conversion Date Expiration Date Effective Date
------------------------------------------------------------------------------------------------------
$
56
(b) Aggregate amount of Subject Tranche to be continued under Euro-Rate
Option (must be at least $1,000,000 for each Euro-Rate Interest Period selected)
and Interest Period (must be one, two, three, six or twelve months and end
before the Expiration Date):
Amount Euro-Rate Interest
Period Euro-Rate Option
$ months
------
from 200
-------- --
%
to 200
------------ --
$ months
------
from 200
-------- --
%
to 200
------------ --
$ months
------
from 200
-------- --
%
to 200
------------ --
$ months
------
from 200
-------- --
%
to 200
------------ --
57
2. The undersigned confirms as of the date hereof that no Event of
Default or Potential Default has occurred and is continuing.
DATED:
Very truly yours,
WITNESS/ATTEST: INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.,
a Delaware limited liability company
By: Interstate Property Partnership, L.P.,
a Delaware limited partnership, sole Member
By: Interstate Property Corporation,
a _________ corporation, General Partner
--------------------------- By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
EXHIBIT B
ITEMS TO BE SUPPLIED
1. Title and Collateral Matters:
(a) a current survey of the Land, certified by a registered surveyor
approved by Bank, such certification to be addressed to the Bank and the title
company issuing the lender's title insurance policy and (i) to show the location
and area covered by all building lines affecting the Land, the location and area
of all easements encumbering and/or benefitting the Land, the relation of the
Land to public thoroughfares for access purposes, the location of all physical
conditions on the Land, the location of the Improvements and any encroachments
of the Improvements or other physical conditions upon any easements, building
lines or property boundary lines, and (ii) to state whether the Land or any
portion thereof is located in any federally designated flood prone area, and if
so, to locate on the survey such portion of the Land so designated and to show
the dimension and location of all improvements, parking areas, drives, easements
and rights-of-way and the location of adjoining streets and distances to the
nearest intersecting street);
(b) an Appraisal of the Project which shall establish that the amount
of the Loan does not exceed sixty percent (60%) of the Project's stabilized
Appraised Value;
58
(c) a legal description of the Land and all easements, compatible with
the above mentioned survey and sufficient for the purpose of the Mortgage;
(d) evidence in such form as Bank may require of (i) satisfactory
subdivision of the Land and zoning for the Project; (ii) the availability of all
utility and municipal services required for the operation of the Project; (iii)
satisfactory soils compaction conditions and sub-surface support for the
Project; and (iv) the availability of means of access to and from the Land by
means of easements benefitting the same;
(e) evidence in such form as Bank may require, including without
limitation engineering and soils reports, environmental assessment reports,
reports and clearances from governmental agencies, chain of title searches and
certifications of Borrower, that the Project is free from all asbestos, and
hazardous waste and all other materials regulated by the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, the
Resource Conservation Recovery Act, as amended, or by any other federal, state
or local law, statute, regulation, ordinance, code or order together with a
reliance letter indicating that the Bank may rely on such report in making the
Loan;
(f) evidence in such form as Bank may require (including the actual
policies and Xxxxx Form 27 Evidence of Insurance, and evidence of payment of
premiums) that all types of hazard insurance (including business interruption
insurance, loss of rents insurance, malicious mischief insurance and flood
insurance, if in a federal flood prone area) available with respect to the
Improvements, public liability and property damage insurance with respect to the
Land and Improvements, and workers' compensation insurance are in force and will
continue in force so long as the Bank Debt is outstanding (the policies for such
insurance to be in form, in amounts and with companies satisfactory to Bank, and
all hazard and liability policies, as applicable, to have attached to them
additional insured, mortgagee and loss payee clauses, as applicable, in favor of
Bank);
(g) a title insurance binder, together with a specimen policy issued by
a title insurance company acceptable to Bank, pursuant to which said title
insurance company will on the Closing Date issue an ALTA lender's policy of
title insurance insuring the Mortgage in the principal sum secured thereby, as a
first lien upon Borrower's fee simple title to the Land and Improvements, and
all appurtenances thereto (including such easements and appurtenances as may be
required by Bank), subject only to such exceptions as may be approved in writing
by Bank, with endorsements thereto as to such matters as Bank may designate,
including, without limitation, a compliance endorsement and contiguity of the
Land with all easements and public roads, and together with such reinsurance and
direct access agreements as Bank shall in its discretion require;
(h) the certificate of occupancy for the Improvements; and
(i) the report from the Bank's inspecting architect as set forth in
Section 6.1(j) hereof.
59
2. Corporate Documents
(a) an opinion or opinions of counsel acceptable to Bank and its
counsel (including local counsel), to be delivered on the Closing Date in form
and scope satisfactory to Bank, to the effect (in addition to other matters
which Bank may require to be favorably addressed) that (i) Borrower is duly
organized, validly existing and in good standing under the laws of the
jurisdictions of their formation; (ii) Borrower is duly qualified to do business
in the jurisdiction in which the Land is located, and Borrower and the Guarantor
have all requisite power and authority to operate the Land and Improvements and
to enter into, perform and consummate all aspects of the transactions
contemplated hereby; (iii) all Loan Documents and other documents to be executed
by or on behalf of Borrower or the Guarantor have been duly executed and are
valid and binding upon and enforceable against the parties thereto (other than
the Bank) in accordance with the respective terms of each, except as the same
may be limited by bankruptcy, insolvency and similar laws affecting the rights
of creditors generally; (iv) there is no action, proceeding or investigation
pending or to the knowledge of counsel threatened (or any basis therefor known
to counsel) which questions the validity of the Loan or the transactions
contemplated hereby or the ability of Borrower or the Guarantor from performing
their respective obligations under the Loan Documents; (v) the performance of
and compliance with the provisions hereof and the other documents referred to
herein will not result in or be in conflict with or constitute a default under
any agreement, instrument, document, decree, order or any federal, state or
local law, statute, rule, regulation or ordinance applicable to or affecting
Borrower or the Guarantor; (vi) no consent, approval, order or authorization of,
or registration or filing with, any governmental or public body or authority is
required in connection with the acceptance hereof, the Loan or the matters
contemplated hereby; (vii) the Loan shall not violate the usury or other laws of
the Commonwealth of Pennsylvania or of any other jurisdiction relating to the
maximum rate of interest and (viii) the Bank has a security interest in that
portion of the Mortgaged Property defined in the Mortgage and in the other
personal property described in this Agreement as security for the Loan, subject
to no Liens or encumbrances except as may have been approved by the Bank in
writing;
(b) a good standing certificate for Borrower from Delaware and evidence
of Borrower's authorization to do business in Pennsylvania;
(c) a current copy of Borrower's articles of organization certified by
the Secretary of State of Delaware;
(d) an Incumbency Certificate of Borrower certifying as to the
Operating Agreement, Bylaws of the Borrower and the corporate resolutions of
Borrower authorizing the Loan;
(e) a good standing certificate for Guarantor from Maryland and
evidence of Guarantor's authorization to do business in Pennsylvania;
(f) a current copy of Guarantor's articles of incorporation certified
by the Secretary of State of Maryland; and
(g) an Incumbency Certificate of Borrower certifying as to the Bylaws
of the Guarantor and the corporate resolutions of Guarantor authorizing the
Loan.
60
(h) information satisfactory to the Bank relating to the financial
condition of the Borrower and the Guarantor;
(i) the Property Management Agreement;
(j) the Franchise Agreement; and
(j) such other documents and other materials as the Bank may require
with respect to the Borrower, the Guarantor the Project, the Leases, the tenants
of the Project and the market area in which the Project is located.
61
EXHIBIT C
FINANCIAL REPORTS
(a) As soon as available and in any event within forty-five (45) days
after the close of each calendar quarter, internally prepared, unaudited
financial statements for the Borrower, including a balance sheet and related
statements of operations and statements of cash flow and net worth as of the end
of such calendar quarter and for such calendar quarter, which shall be certified
by the Chief Financial Officer of Borrower as being true and correct and
prepared in accordance with GAAP, and shall fairly present the financial
condition of the Borrower as at the end of such calendar quarter;
(b) Beginning with the first calendar quarter following the Closing
Date as soon as available and in any event within sixty (60) days after the
close of each calendar quarter, operating reports and occupancy reports with
respect to the Project as of the end of such calendar quarter, which reports
shall be prepared in a manner acceptable to the Bank;
(c) As soon as available, but in no event later than forty-five (45)
days after each calendar quarter for the Borrower and the Guarantor,
certificates of the Borrower and Guarantor, each as certified by the Chief
Financial Officer of Borrower or Guarantor, certifying, in sufficient detail
acceptable to the Bank, calculations substantiating compliance, as of the date
of the certificate, with all financial covenants in this Agreement, including,
without limitation, the financial covenants set forth in Sections 4.21 and 4.22
hereof for Borrower;
(f) As soon as available and in any event within forty five (45) days
after the close of each fiscal year, forecasts for the Project and an annual
budget with respect to the Project, which budget shall compare the prior year's
results of operation and forecasts for the Project on a line item basis and
shall be prepared in a manner acceptable to the Bank;
(g) As soon possible and in any event within ten (10) days after the
occurrence of any Material Adverse Change in the operations, financial condition
or prospects of the Borrower or Guarantor, notice of any such occurrence;
(h) As soon as possible and in any event within ten (10) days after the
occurrence of each Event of Default or each Potential Default, a statement of
the Borrower setting forth the details of such Event of Default or Potential
Default and the action which the Borrower proposes to take with respect thereto;
(i) Within forty-five (45) days following the due date thereof, copies
of the receipts evidencing payment of all real estate taxes relating to the
Project;
(j) All material filings made by the Borrower or the Guarantor with the
Securities Exchange Commission, including, without limitation, all Forms 10-K
and 10-Q and 8-K, within ten (10) Business Days after the filing thereof; and
(k) Such other information respecting the operations and properties,
financial or
62
otherwise, of the Borrower, the Guarantor and the Project as the Bank may from
time to time reasonably request.
63
EXHIBIT D
COMPLIANCE CERTIFICATE
Covenant Compliance Certificate
(Borrower)
Dated as of _____________, 200_
Pursuant to that certain Loan Agreement (the "Loan Agreement") dated February
___, 2000 between INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C. (the "Borrower")
and PNC Bank, National Association, (the "Bank"), the Borrower hereby certifies
to the Bank, effective on the date hereof, that:
(1) The Borrower has performed and complied with all covenants and
conditions contained in the Loan Documents;
(2) No Event of Default, after giving effect to any applicable notice,
grace and cure periods, has occurred and is continuing or exists under
the Note and the other Loan Documents; and
(3) Attached hereto are calculations substantiating compliance with the
financial covenant set forth in Section 4.21 of the Loan Agreement.
All capitalized terms used herein shall have the meanings ascribed thereto in
the Loan Agreement. The Borrower has executed and delivered this Certificate
with the understanding that the Bank will rely hereon pursuant to the terms of
the Loan Documents.
WITNESS: INTERSTATE PITTSBURGH HOTEL
HOLDINGS, L.L.C.
--------------------------- By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
64
Covenant Compliance Certificate
(Guarantor)
Dated as of _____________, 200_
Pursuant to that certain Loan Agreement (the "Loan Agreement") dated February
___, 2000 between INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C. (the "Borrower")
and PNC Bank, National Association, (the "Bank"), the undersigned hereby
certifies to the Bank, effective on the date hereof, that:
(1) The Guarantor has performed and complied with all covenants and
conditions contained in the Loan Documents to which it is a party;
(2) Attached hereto are calculations substantiating compliance with the
financial covenants set forth in Section 4.22 of the Loan Agreement and
Section ___ of the Payment Guaranty.
All capitalized terms used herein shall have the meanings ascribed thereto in
the Loan Agreement. The undersigned Guarantor has executed and delivered this
Certificate with the understanding that the Bank will rely hereon pursuant to
the terms of the Loan Documents.
WITNESS: INTERSTATE HOTELS CORPORATION
--------------------------- By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
