UP TO U.S. $200,000,000
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of December 29, 1995
as amended by Amendment No. 1 dated February 26, 1996
Between
HOSPITALITY PROPERTIES TRUST
as Borrower
and
DLJ MORTGAGE CAPITAL, INC.
as Lender
SCHEDULES
Schedule 1.1 - Initial Hotels
Schedule 3.2 - Mortgaged Property Prioritization Schedule
Schedule 5.8(a) - Stock Related Agreements
Schedule 5.8(c) - Subsidiaries
Schedule 5.19 - Environmental Matters
Schedule 5.22(a) - Owned Real Estate
Schedule 5.22(b) - Leased Real Estate
Schedule 5.22(c) - Defects in Improvements
Schedule 8.1 - Existing Liens
v
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Negative Pledge Agreement
Exhibit D - Form of Opinion of Counsel for the Loan
Parties
Exhibit E - Form of Mortgage
Exhibit F - Form of Assignment Agreement
Exhibit G - Form of Management Agreement
Exhibit H - Form of Operating Lease
Exhibit I - Form of Security Agreement
Exhibit J - Form of Subordination Agreement
Exhibit K - Form of Letter Agreement
vi
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of
the 29th day of December, 1995, between HOSPITALITY PROPERTIES TRUST, a Maryland
real estate investment trust (the "Borrower") and DLJ MORTGAGE CAPITAL, INC., a
Delaware corporation (the "Lender").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Revolving Credit Agreement
dated as of August 22, 1995 between the Borrower and the Lender (the "Original
Revolving Credit Agreement"), the Lender agreed to make to the Borrower
revolving credit advances of up to $200,000,000 in aggregate principal amount
outstanding at any one time, for the purposes and upon the terms and subject to
the conditions set forth therein;
WHEREAS, as of the date hereof no advances have been made
under the Original Revolving Credit Agreement;
WHEREAS, the Borrower and the Lender have agreed to amend
certain terms and provisions of the Original Revolving Credit Agreement and to
restate the same as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, the parties hereto hereby agree that
the aforementioned recitals are true and correct and hereby incorporated herein
and that the Original Revolving Credit Agreement is hereby amended and restated
in its entirety so that all of the terms and conditions contained in this
Agreement shall supersede and control the terms and conditions of the Original
Revolving Credit Agreement.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms. As used in this Agreement,
the following terms have the following meanings (such
meanings to be equally applicable to both the singular and
plural forms of the terms defined):
1
"Advisor" means HRPT Advisors or such other Person as shall
act as an advisor to the Borrower, whether pursuant to the Advisory Agreement,
or an agreement analogous to the Advisory Agreement, with the prior written
consent of the Lender.
"Advisory Agreement" means the Advisory Agreement, dated as of
August 21, 1995, between the Borrower and the Advisor, as amended, supplemented
or modified from time to time in a manner not inconsistent with the terms hereof
or of the Subordination Agreement.
"Affiliate" means, as to any Person, any Subsidiary of such
Person and any other Person which, directly or indirectly, controls, is
controlled by or is under common control with such Person and includes each
officer or director or trustee or general partner of such Person, and each
Person who is the beneficial owner of 10% or more of any class of voting Stock
of such Person. For the purposes of this definition, "control" means the
possession of the power to direct or cause the direction of management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" means the Original Revolving Credit Agreement as
amended and restated pursuant to this Amended and Restated Revolving Credit
Agreement, together with all Exhibits and Schedules hereto, as the same may be
amended, supplemented or otherwise modified from time to time.
"Appraisal" means an appraisal using methodologies reasonably
acceptable to the Lender at the time such appraisal is or was made and performed
by a Recognized Appraiser.
"Approved Hotel Facility" means any Proposed Hotel Facility
approved by the Lender pursuant to Section 3.1 hereof.
"Asset Sale" means any sale, conveyance, transfer, assignment,
lease or other disposition (including, without limitation, by merger or
consolidation and whether by operation of law or otherwise) by the Borrower or
any of its Subsidiaries to any Person of any Stock of any of its Subsidiaries,
any Stock Equivalents of any of its
2
Subsidiaries or any Mortgaged Property but excluding Operating Leases.
Asset Sale Proceeds" means payments received by the Borrower
or any of its Subsidiaries (including, without limitation, any payments received
by way of deferred payment of principal pursuant to a note or receivable or
otherwise, but only as and when received) from any Asset Sale (after repayment
of any Indebtedness other than the Loans secured by the Mortgaged Property
subject of such Asset Sale to the extent such Indebtedness is permitted
hereunder), in each case net of the amount of (i) brokers' and advisors' fees
and commissions payable other than to an Affiliate of the Borrower in connection
with such Asset Sale, (ii) all foreign, federal, state and local taxes payable
as a direct consequence of such Asset Sale, (iii) the reasonable fees and
expenses attributable to such Asset Sale, to the extent not included in clause
(i), except to the extent payable to any Affiliate of the Borrower, and (iv) any
amount required to be paid to any Person (other than the Borrower and any of its
Subsidiaries) owning a beneficial interest in the property or assets sold.
"Assignment Agreement" means, with respect to each Mortgaged
Property, an agreement substantially in the form of Exhibit F, executed by the
Borrower, the Lender and the Manager, assigning to the Lender, the Management
Agreement relating thereto,
"Base Rate" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time, which rate per annum shall be
equal at all times to the higher of:
(a) the rate of interest announced publicly by Citibank, N.A.
in New York, New York, from time to time, as such bank's prime rate; and
(b) the sum (adjusted to the nearest 1/4 of one percent or, if
there is no nearest 1/4 of one percent, to the next higher 1/4 of one percent)
of (i) one and one-half percent (1 1/2%) per annum plus (ii) the Federal Funds
Rate.
"Base Rent" means, for any period, the base or fixed rent or
percentage rent during such period payable by
3
an Operating Lessee pursuant to the terms of an Operating Lease.
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City and a day on which dealings are
also carried on in the London interbank market.
"Capital Expenditures" means, for any Person for any period,
the aggregate of all expenditures by such Person and its consolidated
Subsidiaries, except interest capitalized during construction, during such
period for property, plant or equipment, including, without limitation,
renewals, improvements, replacements and capitalized repairs, that would be
reflected as additions to property, plant or equipment on a consolidated balance
sheet of such Person and its Subsidiaries prepared in conformity with GAAP. For
the purpose of this definition, the purchase price of equipment which is
acquired simultaneously with the trade-in of existing equipment owned by such
Person or any of its Subsidiaries or with insurance proceeds shall be included
in Capital Expenditures only to the extent of the gross amount of such purchase
price less the credit granted by the seller of such equipment being traded in at
such time or the amount of such proceeds, as the case may be.
"Capital Financing Indebtedness" means the principal amount of
all Indebtedness incurred or assumed in connection with any Capital
Expenditures, all Capitalized Lease Obligations and all other Indebtedness
(including purchase money Indebtedness) incurred solely for the purpose of
financing or refinancing the acquisition of assets or properties.
"Capitalized Lease" means, as to any Person, any lease of
property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in conformity with GAAP.
"Capitalized Lease Obligations" means, as to any Person, the
capitalized amount of all obligations of such Person or any of its Subsidiaries
under Capitalized Leases, as determined on a consolidated basis in conformity
with GAAP.
4
"Cash Flow" means, for any Person for any period, the Net
Income (Loss) of such Person for such period plus all non-cash charges of such
Person and its consolidated Subsidiaries for such period to the extent included
in the computation of such Net Income (Loss).
"Closing Date" means the first date on which any Loan is made.
"Code" means the Internal Revenue Code of 1986 (or any
successor legislation thereto), as amended from time to time.
"Collateral" means all property and interests in property and
proceeds thereof now owned or hereafter acquired by any Loan Party in or upon
which a Lien is granted under any of the Collateral Documents.
"Collateral Documents" means, the Negative Pledge Agreements,
the Assignment Agreements, the Mortgages, the Security Agreements and any other
document now or hereafter executed and delivered by a Loan Party granting a Lien
on any of its property to secure payment of the Obligations.
"Commitment" has the meaning specified in Section 2.1.
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of such Person with
respect to any Indebtedness or Contractual Obligation of another Person, if the
purpose or intent of such Person in incurring the Contingent Obligation is to
provide assurance to the obligee of such Indebtedness or Contractual Obligation
that such Indebtedness or Contractual Obligation will be paid or discharged, or
that any agreement relating thereto will be complied with, or that any holder of
such Indebtedness or Contractual Obligation will be protected (in whole or in
part) against loss in respect thereof. Contingent Obligations of a Person
include, without limitation, (a) the direct or indirect guarantee, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of an
obligation of another Person, and (b) any liability of such Person for an
obligation of
5
another Person through any agreement (contingent or other wise) (i) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of a loan, advance, stock purchase, capital contribution or otherwise),
(ii) to maintain the solvency or any balance sheet item, level of income or
financial condition of another Person, (iii) to make take-or-pay or similar
payments, if required, regardless of non-performance by any other party or
parties to an agreement, (iv) to purchase, sell or lease (as lessor or lessee)
property, or to purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such obligation or to assure the holder of such
obligation against loss, or (v) to supply funds to or in any other manner invest
in such other Person (including, without limitation, to pay for property or
services irrespective of whether such property is received or such services are
rendered), if in the case of any agreement described under subclause (i), (ii),
(iii), (iv) or (v) of this sentence the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported.
"Contract" means any contract, agreement, undertaking,
indenture, note, bond, loan, instrument, lease, conditional sales contract,
mortgage, deed of trust, license, franchise, insurance policy, commitment or
other arrangement or agreement.
"Contractual Obligation" of any Person means any obligation,
agreement, undertaking or similar provision of any security issued by such
Person or of any Contract (excluding a Loan Document) to which such Person is a
party or by which it or any of its property is bound or to which any of its
properties is subject.
"Default" means any event which with the passing of time or
the giving of notice or both would become an Event of Default.
"DOL" means the United States Department of Labor, or any
successor thereto.
6
"Dollars" and the sign "$" each mean the lawful money of the
United States of America.
"Environmental Claim" means any accusation, allegation, notice
of violation, action, claim, Environmental Lien, demand, abatement or other
Order or direction (conditional or otherwise) by any Governmental Authority or
any other Person for personal injury (including sickness, disease or death),
tangible or intangible property damage, damage to the environment, nuisance,
pollution, contamination or other adverse effects on the environment, or for
fines, penalties or restriction, resulting from or based upon (i) the existence,
or the continuation of the existence, of a Release (including, without
limitation, sudden or non-sudden accidental or non-accidental Releases) of, or
exposure to, any Hazardous Material or odor, audible noise or other nuisance, or
other Release in, into or onto the environment (including, without limitation,
the air, soil, surface water or groundwater) at, in, by, from or related to any
property owned, operated or leased by the Borrower or any of its Subsidiaries or
any activities or operations thereof; (ii) the environmental aspects of the
transportation, storage, treatment or disposal of Hazardous Materials in
connection with any property owned, operated or leased by the Borrower or any of
its Subsidiaries or their operations or facilities; or (iii) the violation, or
alleged violation, of any Environmental Laws, Orders or Environmental Permits of
or from any Governmental Authority relating to environmental matters connected
with any property owned, leased or operated by the Borrower or any of its
Subsidiaries.
"Environmental Laws" means any federal, state, local or
foreign law (including common law), statute, code, ordinance, rule, regulation
or other requirement relating in any way to the environment, natural resources,
or public or employee health and safety and includes, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"), 42 U.S.C. ss. 9601 et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801 et seq., the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. ss. 136 et seq., the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq., the Toxic Substances Control
Act, 15 U.S.C. ss. 2601 et seq., the Clean Air Act, 42 U.S.C. ss. 7401 et seq.,
the Clean Water Act, 33 U.S.C. ss. 1251 et seq., the Occupational Safety and
Health
7
Act, 29 U.S.C. ss. 651 et seq., and the Oil Pollution Act of 1990, 33 U.S.C. ss.
2701 et seq., as such laws have been amended or supplemented, and the
regulations promulgated pursuant thereto, and all analogous state and local
statutes.
"Environmental Liabilities and Costs" means, as to any Person,
all liabilities, obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages, costs and
expenses (including, without limitation, all fees, disbursements and expenses of
counsel, experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
Environmental Claim.
"Environmental Lien" means any Lien in favor of any
Governmental Authority arising under any Environmental Law.
"Environmental Permit" means any Permit required under any
applicable Environmental Laws or Order and all supporting documents associated
therewith.
"ERISA" means the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control or treated as a single employer with any Loan
Party within the meaning of Section 414 (b), (c), (m) or (o) of the Code.
"ERISA Event" means (i) an event described in Sections
4043(b)(1), (2), (3), (5), (6), (8) or (9) of ERISA with respect to a Pension
Plan; (ii) the withdrawal of any Loan Party or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer, as defined in Section 4001(a)(2) of ERISA; (iii) the
complete or partial withdrawal of any Loan Party or any ERISA Affiliate from
any Multiemployer Plan or the insolvency of any Multiemployer Plan; (iv) the
filing of a notice of intent to terminate a Pension Plan or the treatment of a
plan amendment as a termination under Section 4041 of ERISA; (v) the institution
8
of proceedings by the PBGC to terminate or appoint a trustee to administer a
Pension Plan or Multiemployer Plan; (vi) the failure to make any required
contribution to a Pension Plan; (vii) any other event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multiemployer Plan; (viii) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA; (ix) a prohibited transaction (as described in Code Section 4975 or ERISA
Section 406) shall occur with respect to any Plan; or (x) any Loan Party or
ERISA Affiliate shall request a minimum funding waiver from the IRS with respect
to any Pension Plan.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
"Eurodollar Rate" means, for any Interest Period, an interest
rate per annum equal to the sum of (a) the rate per annum obtained by dividing
(i) the rate of interest determined by the Lender to be the average (rounded
upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is
not such a multiple) of the rates for Dollar deposits which appear on the
display designated as page "LIBO" on the Reuter Monitor Money Rates Service (or
such other page as may replace such page or that service for the purpose of
displaying London interbank offered rates for major banks) (the "Reuters Page"),
as of 11:00 A.M. (London time) two Business Days before the first day of such
Interest Period in an amount substantially equal to the Loan during such
Interest Period and for a period equal to such Interest Period by (ii) a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such
Interest Period, plus (b) 1.50%. If the Lender is unable to ascertain the
interest rate referred to in (i) above from the Reuters Page, such rate shall be
determined from such financial reporting service or other information as shall
be reasonably determined by the Lender.
"Eurodollar Rate Reserve Percentage" for any Interest Period
means the reserve percentage applicable two Business Days before the first day
of such Interest Period
9
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other marginal
reserve requirement) for a member bank of the Federal Reserve System in New York
City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of liabilities
which includes deposits by reference to which the Eurodollar Rate is determined)
having a term equal to such Interest Period.
"Event of Default" has the meaning specified in Section 9.1.
"Fair Market Value" means with respect to any Hotel Facility
at any date, the value thereof reasonably determined by the Lender by dividing
the Base Rents from such Hotel Property during the previous twelve (12) month
period by ten percent (10%).
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Lender from three Federal funds brokers of
recognized standing selected by it.
"FF&E Reserve" has the meaning given to such term in the
Management Agreement attached as Exhibit G hereto
"Final Maturity Date" means December 31, 1998.
"Financial Officer's Certificate" has the meaning specified in
Section 7.11(c).
"Fiscal Quarter" means each of the three month periods ending
on March 31, June 30, September 30 and December 31.
10
"Fiscal Year" means the twelve month period ending on December
31.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination except that, for purposes of Article VI, GAAP shall be determined
on the basis of such principles in effect on the date hereof and consistent with
those used in the preparation of the audited financial statements referred to in
Section 5.5.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Hazardous Material" means any substance, material or waste
which is regulated by any Governmental Authority of the United States or other
national government, including, without limitation, any material, substance or
waste which is defined as a "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"contaminant," "toxic waste" or "toxic substance" under any provision of
Environmental Law, which includes, but is not limited to, petroleum, petroleum
products, asbestos, urea formaldehyde and polychlorinated biphenyls.
"HMC" means Host Marriott Corporation, a Delaware corporation.
"Hotel Facility" means, subject to the provisions of Section
3.2 hereof, each of (a) the Initial Hotels, and (b) the Approved Hotel
Facilities acquired by the Borrower using the proceeds of a Loan or Loans made
by the Lender hereunder.
11
"HRP" means Health and Retirement Properties Trust, a Maryland
real estate investment trust.
"HRP Loan" means the demand loan made by HRP to the Borrower
in connection with the acquisition by the Borrower of certain of the Initial
Hotels.
"HRPT Advisors" means HRPT Advisors, Inc., a Delaware
corporation.
"Improvements" has the meaning specified in Section 5.22(c).
"Indebtedness" of any Person means (i) all indebtedness of
such Person for borrowed money (including, without limitation, reimbursement and
all other obligations with respect to surety bonds, letters of credit and
bankers' acceptances, whether or not matured) or for the deferred purchase price
of property or services, (ii) all obligations of such Person evidenced by notes,
bonds, debentures or similar instruments, (iii) all indebtedness of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (iv) all Capitalized
Lease Obligations of such Person, (v) all Contingent Obligations of such Person,
(vi) all obligations of such Person to purchase, redeem, retire, defease or
otherwise acquire for value any Stock or Stock Equivalents of such Person,
valued, in the case of redeemable preferred stock, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (vii) all obligations of such Person under Interest Rate Contracts,
and (viii) all Indebtedness referred to in clause (i), (ii), (iii), (iv), (v),
(vi) or (vii) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in property (including, without limitation, accounts and general intangibles)
owned by such Person, even though such Person has not assumed or become liable
for the payment of such Indebtedness, (ix) in the case of the Borrower, the
Obligations, and (x) all liabilities of such Person that would be shown on a
balance sheet of such Person prepared in conformity with GAAP.
12
"Indemnitees" has the meaning specified in Section 10.4.
"Initial Hotels" means the Real Estate consisting of 37
Courtyard by Marriott(R) hotels listed in Schedule 1.1 hereto.
"Initial Selected Properties" means such of the Initial Hotels
as the Lender shall select (consistent with the Mortgaged Property
Prioritization Schedule attached as Schedule 3.2 hereto and made a part hereof)
such that, after giving effect to the Initial Loan to be made hereunder and the
Mortgage Documents relating to such Initial Hotels, the Loan to Value
Requirement would be satisfied.
"Interest Period" means, in the case of any Loan, (i)
initially, the period commencing on the date such Loan is made and ending one
(1) month thereafter, and (ii) there after, a period commencing on the last day
of the immediately preceding Interest Period therefor and ending one (1) month
thereafter; provided, however, that:
(a) if any Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless the result of such extension would be to extend
such Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day;
(b) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of a calendar month; and
(c) if the Borrower, by written notice to the Lender given no
later than two (2) Business Days prior to the expiration of an Interest Period
for any Loan, requests a one day interest period for such Loan, the Interest
Period for such Loan shall mean a period of one day (the "1 Day Interest
Period"); provided that in no event shall any Loan have a 1 Day Interest Period
for a period in excess of thirty (30) consecutive days (the "Limited Period"),
and upon the expiration of the Limited Period in respect of any
13
Loan, such Loan shall automatically be continued at the one (1) month Interest
Period specified above.
"Interest Rate Contracts" means interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance, and other agreements or arrangements designed to provide protection
against fluctuations in interest rates.
"Investments" has the meaning specified in Section 8.6.
"IRS" means the Internal Revenue Service, or any successor
thereto.
"Leases" means, with respect to the Borrower or any of its
Subsidiaries, all of those leasehold estates in real property owned by the
Borrower or such Subsidiary, as lessee, as such may be amended, supplemented or
otherwise modified from time to time to the extent permitted by this Agreement.
"Legal Proceedings" means any judicial, administrative or
arbitral actions, suits, proceedings (public or private), claims or governmental
proceedings.
"Lending Office" means, with respect to the Lender, the office
located at 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 or such other office of
the Lender as the Lender may from time to time specify to the Borrower.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to secure
payment of any Indebtedness or other obligation, including, without limitation,
any conditional sale or other title retention agreement, the interest of a
lessor under a Capitalized Lease Obligation, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing,
under the Uniform Commercial Code or comparable law of any jurisdiction, of any
financing statement naming the owner of the asset to which such Lien relates as
debtor (excluding precautionary filings.
14
"Loan" or "Loans" means the revolving credit loan or loans
made or to be made by the Lender to the Borrower pursuant to Article II.
"Loan Documents" means, collectively, this Agreement, the
Note, the Collateral Documents and each certificate, agreement or document
executed by a Loan Party and delivered to the Lender in connection with or
pursuant to any of the foregoing, as such agreements, documents or instruments
may be amended, modified or supplemented from time to time.
"Loan Party" means the Borrower and each Subsidiary and
Affiliate of the Borrower which executes and delivers a Loan Document.
"Loan to Value Requirement" means the requirement that, at any
time, the aggregate principal amount of the Loans outstanding at such time shall
not exceed the lesser of (i) fifty percent (50%) of the aggregate of the Fair
Market Values for all of the Mortgaged Properties, and (ii) the aggregate of the
Qualified Loan Amounts for all of the Mortgaged Properties.
"Management Agreement" means an agreement relating to the
operation and/or management of a Hotel Facility between the Borrower and the
Manager, substantially in the form of the management agreement and amendments
thereto annexed as Exhibit G hereto or such other form as shall be approved by
the Lender, which approval shall not be unreasonably withheld, delayed or
conditioned.
"Manager" means Courtyard Management Corporation, a wholly
owned subsidiary of Marriott International Inc., or such other manager as shall
be approved by the Lender (which approval shall not be unreasonably withheld,
delayed or conditioned), as manager under the Management Agreement.
15
"Material Adverse Change" means a material adverse change in
any of (i) the condition (financial or otherwise), business, performance,
prospects, operations or properties of (A) any Loan Party and its Subsidiaries
taken as one enterprise, (B) any Operating Lessee, (C) any Manager, or (D) the
Advisor (ii) the legality, validity or enforceability of any Loan Document or
any Operating Lease, Management Agreement or Advisory Agreement (iii) the
perfection or priority of the Liens granted pursuant to the Collateral
Documents, (iv) the ability of the Borrower to repay the Obligations or of any
Loan Party to perform its material obligations under any Loan Document, (v) the
ability of any Operating Lessee to perform obligations under any Operating
Lease, (vi) the ability of any Manager to perform its obligations under any
Management Agreement; (vii) the ability of the Advisor to perform its
obligations under the Advisory Agreement or (viii) the rights and remedies of
the Lender under the Loan Documents.
"Material Adverse Effect" means an effect that results in or
causes, or has a reasonable likelihood of resulting in or causing, a Material
Adverse Change.
"Mortgages" means the mortgages or deeds of trust made or
required herein to be made by the Borrower or any of its Subsidiaries in
substantially the form of Exhibit E, as such Mortgages may be amended,
supplemented or otherwise modified from time to time.
"Mortgage Documents" means with respect to any Hotel Facility,
a Mortgage and the other documents and payments including, without limitation,
the Mortgage Payments, specified in Sections 4.2(c)(ii) through (iv) and 4.2(d),
where applicable, in the forms attached hereto, subject to appropriate revisions
for state or property specific requirements.
"Mortgage Payments" means the payments specified in Section
4.2(d)(vi).
"Mortgaged Property" means any property subject to a Mortgage
in favor of the Lender.
"Multiemployer Plan" means, as of any applicable date, a
multiemployer plan, as defined in Section 4001(a)(3)
16
of ERISA, and to which any Loan Party, any of its Subsidiaries or any ERISA
Affiliate is making, is obligated to make, or within the six-year period ending
at such date, has made or been obligated to make, contributions on behalf of
participants who are or were employed by any of them.
"Negative Pledge Agreement" means, in respect of each Hotel
Facility, an agreement, in substantially the form of Exhibit C, executed by the
Borrower or the Subsidiary owning such Hotel Facility, as such agreement may be
amended, supplemented or modified from time to time.
"Net Income (Loss)" means, for any Person for any period, the
aggregate of net income (or loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis in conformity with GAAP.
"Net Interest Expense" means, for any Person for any period,
gross interest expense in respect of all Indebtedness of such Person and its
Subsidiaries for such period determined on a consolidated basis in conformity
with GAAP, less the following for such Person and its Subsidiaries determined on
a consolidated basis in conformity with GAAP: (a) the sum of (i) interest
capitalized during construction for such period, (ii) interest income for such
period, and (iii) gains for such period on Interest Rate Contracts (to the
extent not included in interest income above and to the extent not deducted in
the calculation of such gross interest expense), plus the following for such
Person and its Subsidiaries determined on a consolidated basis in conformity
with GAAP: (b) the sum of (i) losses for such period on Interest Rate Contracts
(to the extent not included in such gross interest expense), and (ii) the
amortization of upfront costs or fees for such period associated with Interest
Rate Contracts (to the extent not included in gross interest expense).
"Net Worth" of any Person means at any date the excess of (a)
the total assets of such Person and its Subsidiaries at such date determined on
a consolidated basis in conformity with GAAP over (b) all obligations which in
conformity with GAAP would be included in determining total liabilities as shown
on the liabilities side of a consolidated balance sheet of such Person and its
Subsidiaries at such date.
17
"Note" means a promissory note of the Borrower payable to the
order of the Lender in a principal amount equal to the amount of the Commitment
as originally in effect, in substantially the form of Exhibit A, evidencing the
aggregate Indebtedness of the Borrower to the Lender resulting from the Loans
made by the Lender.
"Notice of Borrowing" has the meaning specified in Section
2.2(a).
"Obligations" means the Loans and all other advances, debts,
liabilities, obligations, covenants and duties owing by the Borrower to the
Lender, any Affiliate of the Lender or any Indemnitee, of every type and
description, present or future, whether or not evidenced by any note, guaranty
or other instrument, arising under this Agreement or under any other Loan
Document, whether or not for the payment of money, loan, guaranty,
indemnification, foreign exchange transaction or Interest Rate Contract or in
any other manner, whether direct or indirect (including, without limitation,
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired. The term "Obligations"
includes, without limitation, all interest, charges, expenses, fees, attorneys'
fees and disbursements and any other sum chargeable to the Borrower under this
Agreement or any other Loan Document.
"Operating Lease" means a lease or sublease relating to any
Real Estate or Lease, between the Borrower or any of its Subsidiaries, as
lessor, and the Operating Lessee, as lessee, substantially in the form of the
lease annexed as Exhibit H hereto or such other form as shall be approved by the
Lender, which approval shall not be unreasonably withheld, delayed or
conditioned.
"Operating Lessee" means HMH HPT Courtyard, Inc., a wholly
owned subsidiary of HMC or such other lessee as shall be approved by the Lender
(which approval shall not be unreasonably withheld, delayed or conditioned), as
lessee under the Operating Lease.
"Operator" means the Operating Lessee and/or the Manager (as
the case may be) responsible for the operation and management of any Real
Estate.
18
"Order" means any order, injunction, judgment, decree, ruling,
assessment or arbitration award.
"Other Taxes" has the meaning specified in Section 2.14(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Pension Plan" means a plan, other than a Multiemployer Plan,
which is covered by Title IV of ERISA or Code Section 412 and which any Loan
Party, any of its Subsidiaries or any ERISA Affiliate maintains, contributes to
or has an obligation to contribute to on behalf of participants who are or were
employed by any of them.
"Permit" means any permit, approval, authorization, license,
variance, registration, permission or consent required from a Governmental
Authority under an applicable Requirement of Law.
"Permitted Lien" means any Lien permitted under Section 8.1
hereof.
"Person" means an individual, partnership, corporation
(including, without limitation, a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a Governmental
Authority.
"Plan" means an employee benefit plan, as defined in Section
3(3) of ERISA, which any Loan Party or any of its Subsidiaries maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Proposed Hotel Facility" means any Real Estate or Lease
comprising an operating facility offering hotel or other lodging services which
the Borrower desires to acquire using the proceeds of a Loan made by the Lender
hereunder.
"Proposed Hotel Facility Statement" means a certificate of a
Responsible Officer providing each of the following:
19
(i) details of the location of the Proposed Hotel Facility and
the real estate interest to be acquired;
(ii) specification of the proposed acquisition costs of the
Borrower in respect of such Proposed Hotel Facility;
(iii) certification (based on information available to the
Borrower after diligent enquiry) as to the ratio of (A) the lesser of
(1) the Cash Flow of the current owner or operator of the Proposed
Hotel Facility (as applicable) over the four most recent financial
quarters attributable to the Proposed Hotel Facility, and (2) the
proposed annual Base Rent under the proposed Operating Lease of the
Proposed Hotel Facility; to (B) projected fixed charges (including the
Net Interest Expense) for such Proposed Hotel Facility for the next one
year period and, further, certification that, to the knowledge of the
Borrower after diligent enquiry, with respect to the Proposed Hotel
Facility the details of Cash Flows of the operator thereof used by the
Borrower in its calculations are current;
(iv) audited balance sheets if available, or pro forma balance
sheets, of the owner or operator of the Proposed Hotel Facility, and
the related consolidated statements of income, retained earnings and
cash flows of such owner or operator for its previous three (3) fiscal
years;
(v) audited balance sheets if available, or pro forma balance
sheets, in respect of the Proposed Hotel Facility and the related
consolidated statements of operations, changes in owner's equity
(deficit) and cash flows in respect of such Proposed Hotel Facility,
for the previous three (3) fiscal years;
(vi) a written report of an investigation by an environmental
consultant, reasonably acceptable to the Lender, addressing any
significant environmental, health and safety violations, hazards or
liabilities to which the owner or operator of the Proposed Hotel
Facility may be subject, which report shall demonstrate, to the
reasonable satisfaction of the
20
Lender, that the Proposed Hotel Facility and the operations thereof are
in compliance in all material respects with all applicable
Environmental Laws and are not subject to any material Environmental
Liabilities and Costs.
(vii) a copy of the proposed form of Operating Lease and, if
applicable, Management Agreement;
(viii) the names of the proposed Operating Lessee and, if
applicable, Manager;
(ix) a copy of a recent market study in respect of the
Proposed Hotel Facility;
(x) a current title report and survey in respect of the
Proposed Hotel Facility, issued by a title company/surveyor reasonably
acceptable to the Lender; and
(xi) a written report of an investigation by an engineering
consultant reasonably acceptable to the Lender.
"Qualified Loan Amount" means, with respect to each Mortgaged
Property, the maximum principal amount permitted for any Qualified Loan as such
term is defined in the Management Agreement attached as Exhibit G hereto.
"Rating Agency" shall mean any nationally recognized
statistical agency selected by the Lender including, without limitation, Duff &
Xxxxxx Rating Co., Fitch Investors Services, Inc., Xxxxx'x Investors Services,
Inc., and/or Standard and Poors corporation, collectively, and any successor to
any of them; provided, however, that at any time during which the Loans are an
asset of a securitization, "Rating Agency" shall mean the rating agency or
rating agencies that from time to time rate the securities issued in connection
with such securitization.
"Recognized Appraiser" means a qualified and recognized
professional appraiser as may be selected or approved by the Lender, having at
least five (5) years' prior experience in performing real estate appraisals in
the geographic area where the property being appraised is
21
located, having a recognized expertise in appraising properties operated as
hotel or other lodging facilities.
"Real Estate" means all of those plots, pieces or parcels of
land now owned or hereafter acquired by the Borrower or any of its Subsidiaries
(the "Land"), including, without limitation, those listed on Schedule 5.22(a)
and described in the Mortgages, together with the right, title and interest of
the Borrower or such Subsidiary, if any, in and to the streets, the land lying
in the bed of any streets, roads or avenues, opened or proposed, in front of,
adjoining or abutting the Land to the center line thereof, the air space and
development rights pertaining to the Land and the right to use such air space
and development rights, all rights of way, privileges, liberties, tenements,
hereditaments and appurtenances belonging or in any way appertaining thereto,
all fixtures, all easements now or hereafter benefiting the Land and all
royalties and rights appertaining to the use and enjoyment of the Land,
including, without limitation, all alley, vault, drainage, mineral, water, oil
and gas rights, together with all of the buildings and other improvements now or
hereafter erected on the Land, and any fixtures appurtenant thereto.
"Registration Statement" means the Form S-11 Registration
Statement under the Securities Act of 1933 as filed by the Borrower with the
Securities and Exchange Commission on May 15, 1995 (as Registration Number
33-92330) and any filed amendments thereto.
"Release" means any release, spill, emission, leaking,
pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching or migration on or into the indoor or outdoor environment or
into or out of any property.
"Remedial Action" means all actions including, without
limitation, any Capital Expenditures, required or voluntarily undertaken to (i)
clean up, remove, treat or in any other way address any Hazardous Material or
other sub stance in the indoor or outdoor environment, (ii) prevent the Release
or threat of Release, or minimize the further Release, of any Hazardous Material
or other substance so it does not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment,
22
(iii) perform pre-remedial studies and investigations or post-remedial
monitoring and care, or (iv) bring facilities on any property owned, leased or
operated by the Borrower or any of its Subsidiaries into compliance with all
Environmental Laws and Environmental Permits.
"Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and all federal, state and local laws, rules and regulations,
including, without limitation, federal, state or local securities, antitrust and
licensing laws, all food, health and safety laws, and all applicable trade laws
and requirements, including, without limitation, all disclosure requirements of
Environmental Laws, ERISA and all orders, judgments, decrees or other
determinations of any Governmental Authority or arbitrator, applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
"Responsible Officer" means, with respect to any Person, any
of the principal executive officers or general partners of such Person.
"Second Facility" means the proposed revolving credit facility
in a maximum principal amount of up to approximately $250,000,000, to be entered
into by and between the Borrower and the Lender.
"Secured Indebtedness" of any Person means any Indebtedness of
such Person for which the obligations thereunder are secured by a Lien on any
assets of such Person.
"Security Agreement" means, with respect to each Hotel
Property, an agreement in substantially the form of Exhibit I, subject to such
changes as the Manager shall reasonably request and the Lender shall reasonably
agree to, executed by the Borrower and the other parties thereto, granting to
the Lender a security interest in the Borrower's interest in the FF&E Reserve.
"Selected Properties" has the meaning specified in Section
3.2.
23
"Solvent" means, with respect to any Person, that the value of
the assets of such Person (both at fair value and present fair saleable value)
is, on the date of determination, greater than the total amount of liabilities
(including, without limitation, contingent and unliquidated liabilities) of such
Person as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and does not have
unreasonably small capital. In computing the amount of contingent or
unliquidated liabilities at any time, such liabilities will be computed at the
amount which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Stock" means shares of capital stock, beneficial or
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation or equivalent entity, whether voting or
non-voting, and includes, without limitation, common stock and preferred stock.
"Stock Equivalents" means all securities convertible into or
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any stock, whether or not presently convertible, exchangeable or
exercisable.
"Subsidiary" means, with respect to any Person, any
corporation, partnership or other business entity of which an aggregate of 50%
or more of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors, managers, trustees or other controlling
persons, is, at the time, directly or indirectly, owned or controlled by such
Person and/or one or more Subsidiaries of such Person (irrespective of whether,
at the time, Stock of any other class or classes of such entity shall have or
might have voting power by reason of the happening of any contingency).
"Subordination Agreement" means an agreement among the Lender,
the Advisor and the Borrower, substantially in the form annexed as Exhibit J, as
amended, supplemented or modified from time to time in a manner not inconsistent
with the terms thereof and hereof.
24
"Tangible Net Worth" of any Person means, at any date, the Net
Worth of such Person at such date, excluding, however, from the determination of
the total assets of such Person at such date, (i) all goodwill, organizational
expenses, research and development expenses, trademarks, trade names,
copyrights, patents, patent applications, licenses and rights in any thereof,
and other similar intangibles, (ii) all prepaid expenses, deferred charges or
unamortized debt discount and expense, (iii) all reserves carried and not
deducted from assets, (iv) treasury stock and capital stock, obligations or
other securities of, or capital contributions to, or investments in, any
Subsidiary of such Person, (v) securities which are not readily marketable, (vi)
cash held in a sinking or other analogous fund established for the purpose of
redemption, retirement, defeasance or prepayment of any Stock or Indebtedness,
(vii) any write-up in the book value of any asset resulting from a revaluation
thereof, and (viii) any items not included in clauses (i) through (vii) above
which are treated as intangibles in conformity with GAAP.
"Tax Affiliate" means, as to any Person, (i) any Subsidiary of
such Person, and (ii) any Affiliate of such Person with which such Person files
or is eligible to file consolidated, combined or unitary tax returns.
"Tax Return" has the meaning specified in Section 5.3.
"Taxes" has the meaning specified in Section 2.14(a).
"Title Insurance Policies" has the meaning specified in
Section 4.2(d)(i).
"Total Assets" of any Person means, at any date, the aggregate
value of all assets of such Person, determined on the basis of cost of each such
asset to such Person without reduction for depreciation or adjustments due to
asset reappraisals or otherwise.
"Total Base Rents" means, for any period, the aggregate sum of
Base Rents for such period payable under any Operating Leases in effect during
such period, determined on a consolidated basis.
25
"Treasury Constant Maturity Yield Index" means the average
yield for "This Week" as reported by the Federal Reserve Board in Federal
Reserve Statistical Release H.15(519).
"Underwriters" means the underwriters under the Underwriting
Agreement.
"Underwriting Agreement" means that certain Underwriting
Agreement dated August 16, 1995 between the Borrower, Xxxxxxxxx, Lufkin &
Xxxxxxxx Securities Corporation and the other Underwriters.
"Unsecured Indebtedness" of any Person means any Indebtedness
of such Person for which the obligations thereunder are not secured by a pledge
of or other encumbrance on any assets of such Person.
1.2. Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding" and the word "through" means "to and including".
1.3. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in conformity with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in conformity with GAAP.
1.4. Certain Terms. (a) The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole, and not to any particular Article, Section, subsection or clause in this
Agreement. References herein to an Exhibit, Schedule, Article, Section,
subsection or clause refer to the appropriate Exhibit or Schedule to, or
Article, Section, subsection or clause in this Agreement.
(b) The term "Lender" includes its successors and each
assignee of the Lender who becomes a party hereto pursuant to Section 10.7.
26
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
2.1. The Loans. On the terms and subject to the conditions
contained in this Agreement, the Lender agrees to make revolving credit loans
(each a "Loan" and collectively, the "Loans") to the Borrower from time to time
on any Business Day during the period from the date hereof to and including the
Final Maturity Date in an aggregate outstanding amount not to exceed TWO HUNDRED
MILLION DOLLARS ($200,000,000) (the "Commitment") at any time, to be used for
the purposes identified in Section 5.18. Within the limits of the Commitment and
subject to the other terms and conditions hereof, amounts prepaid pursuant to
Section 2.6(b) may be reborrowed under this Section 2.1 up to and including the
Final Maturity Date. No portion of the Commitment may be borrowed or reborrowed
after the Final Maturity Date. The Loans shall be evidenced by the Note. The
Lender is authorized to endorse, at any time, the date and amount of each Loan
and the date and amount of each payment of principal with respect to the Loans
on the schedule annexed to and constituting a part of the Note, which
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed.
2.2. Making the Loans. (a) Each Loan shall be made on notice,
given by the Borrower to the Lender not later than 12:00 noon (New York City
time) on the fifth (5th) Business Day prior to the date of the proposed Loan.
Each such notice (a "Notice of Borrowing") shall be in substantially the form of
Exhibit B, specifying therein (i) the date of such proposed Loan, (ii) the
amount of such proposed Loan, (iii) the account or accounts to which the Loan
should be made, and (iv) that the proceeds of the proposed Loan shall be used to
repay the HRP Loan or details of the Approved Hotel Facility or Facilities or
other permitted use for which the proceeds of the proposed Loan shall be used.
Notwithstanding the foregoing, the Borrower agrees promptly to notify the Lender
in writing that it intends to request a Loan in order to allow adequate time for
the preparation of the Mortgage Documents for the Initial Selected Properties
and the Selected Properties pursuant to Section 3.3 hereof.
27
(b) Upon fulfillment of the applicable conditions set forth in
Article IV, the Lender shall on the date of the proposed Loan, make available to
the Borrower at the account or accounts specified in the Notice of Borrowing, in
immediately available federal funds, the Loan.
(c) The Borrower may not request more than one (1) Loan per
calendar month.
(d) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower. The Borrower shall indemnify the Lender against any loss, cost
or expense incurred by the Lender as a result of any failure to fulfill on or
before the date specified in any Notice of Borrowing for a proposed Loan the
applicable conditions set forth in Article IV, including, without limitation,
any loss (including, without limitation, loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Lender to fund any Loan to be made by the Lender
when such Loan, as a result of such failure, is not made on such date.
2.3. [Intentionally Omitted]
2.4. Reduction and Termination of the Commitment. The Borrower
may, upon at least three Business Days' prior notice to the Lender, terminate in
whole or reduce in part the unused portions of the Commitment without premium or
penalty; provided, however, that each partial reduction shall be in the
aggregate amount of not less than $10,000,000.
2.5. Repayment. The Borrower shall repay the
entire unpaid principal amount of all and any Loans on the
Final Maturity Date.
2.6. Prepayments. The Borrower may, upon at least ten (10)
Business Days' prior notice to the Lender, stating the proposed date and
aggregate principal amount of the prepayment, prepay the outstanding principal
amount of the Loans in whole or in part, together with accrued interest to the
date of such prepayment on the principal amount prepaid without premium or
penalty, provided, however, that any prepayment of the Loans bearing interest at
the Eurodollar Rate made other than on the last day of an Interest Period
28
for the Loans shall be subject to payment by the Borrower to the Lender of any
costs, fees or expenses incurred by the Lender in connection with such
prepayment including, without limitation, any costs to unwind any Eurodollar
Rate contracts or Interest Rate Contracts. Any partial prepayment shall be
applied to the installments of principal in the inverse order of maturity. Upon
the giving of such notice of prepayment by the Borrower, the principal amount of
the Loans specified to be prepaid shall become due and payable on the date
specified for such prepayment.
(c) If at any time the aggregate principal amount of Loans
outstanding at such time exceeds the Commitment, the Borrower shall forthwith
prepay the Loans then outstanding in an amount equal to such excess, together
with accrued interest.
(d) The Borrower shall forthwith prepay the Loans upon receipt
by the Borrower or its Subsidiaries of Asset Sale Proceeds in connection with an
Asset Sale of a Mortgaged Property in an amount equal to such Asset Sale
Proceeds, together with accrued interest to the date of such prepayment on the
principal amount prepaid.
2.7. Continuation of Loans at the Eurodollar Rate. At the end
of any Interest Period with respect to the Loans, unless the Borrower has given
notice pursuant to Section 2.6, the Loans will automatically be continued for an
additional Interest Period at the Eurodollar Rate for such Interest Period.
2.8. Interest. The Borrower shall pay interest on the unpaid
principal amount of each Loan from the date thereof until the principal amount
thereof shall be paid in full:
(a) At a rate per annum equal at all times during the
applicable Interest Period for each Loan to the Eurodollar Rate for such
Interest Period, payable on the last day of such Interest Period and on the
Final Maturity Date; provided, however, that during the continuance of an Event
of Default, all Loans shall bear interest, payable on demand, at a rate per
annum equal at all times to 2% above the Eurodollar Rate in effect until the
maturity of the Loans or the end of such Interest Period, whichever occurs
29
first, and thereafter at the greater of (x) 2% per annum above the Base Rate in
effect from time to time and (y) 2% per annum above the rate per annum required
to be paid on the Loans immediately prior to the date on which such Event of
Default occurred.
2.9. Interest Rate Determination and Protection. (a) The
Eurodollar Rate for each Interest Period for Loans shall be determined by the
Lender two Business Days before the first day of such Interest Period.
(b) The Lender shall give prompt notice to the Borrower of the
applicable interest rate determined by the Lender for purposes of Section 2.9.
(c) If, (i) the Lender determines, which determination shall
be conclusive in the absence of manifest error, that quotations of interest
rates for the relevant deposits referred to in the definition of "Eurodollar
Rate" are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining the rates of interest for the Loans as
provided herein, or (ii) the Lender determines, which determination shall be
conclusive in the absence of manifest error, that the Eurodollar Rate for any
Interest Period therefor will not adequately reflect the cost to the Lender of
making the Loans or funding or maintaining the Loans for such Interest Period,
the Lender shall forthwith so notify the Borrower, whereupon
(i) each Loan will automatically, on the last day of
the then existing Interest Period therefor, convert so as to accrue
interest at an interest rate per annum equal to the Base Rate in effect
from time to time; and
(ii) the obligations of the Lender to make Loans at the
Eurodollar Rate shall be suspended until the Lender shall notify the
Borrower that the Lender has determined that the circumstances causing
such suspension no longer exist; provided that, during the period of
such suspension, the obligations of the Lender to make Loans at the
Eurodollar Rate shall convert to obligations to make Loans at the Base
Rate in effect from time to time.
30
2.10. Increased Costs. If, due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation (other
than any change by way of imposition or increase of reserve requirements
included in determining the Eurodollar Rate Reserve Percentage) or (ii)
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to the Lender of agreeing to make or making, funding or
maintaining any Loans at the Eurodollar Rate, then the Borrower shall from time
to time, upon demand by the Lender, pay to the Lender additional amounts
sufficient to compensate the Lender for such increased cost. A certificate as to
the amount of such increased cost, submitted to the Borrower by the Lender,
shall be conclusive and binding for all purposes, absent manifest error. If the
Borrower so notifies the Lender within five Business Days after the Lender
notifies the Borrower of any increased cost pursuant to the foregoing provisions
of this Section 2.10, the Borrower may either (A) prepay in full all Loans
bearing interest at the Eurodollar Rate then outstanding in accordance with
Section 2.6(b) and, additionally, reimburse the Lender for such increased cost
in accordance with this Section 2.10, or (B) require the Lender to, and the
Lender shall, convert all Loans bearing interest at the Eurodollar Rate into
Loans bearing interest at the Base Rate in effect from time to time, and
additionally, reimburse the Lender for such increased cost in accordance with
this Section 2.10, provided that in the event that the election in (B) is made
by the Borrower, the Lender's obligations to make Loans hereunder shall
thereafter be deemed to be obligations to make Loans at the Base Rate in effect
from time to time.
2.11. Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for the Lender or its
Lending Office to make Loans at the Eurodollar Rate or to continue to fund or
maintain Loans at the Eurodollar Rate, then, on notice thereof and demand
therefor by the Lender to the Borrower (i) the obligation of the Lender to make
or to continue the Loans bearing interest at the Eurodollar Rate shall
terminate, (ii) the Borrower shall forthwith prepay in full all Loans then
outstanding,
31
together with interest accrued thereon (and until paid in full, all such Loans
bearing interest at the Eurodollar Rate then outstanding shall accrue interest
at an interest rate per annum equal to the Base Rate in effect from time to
time) provided that, the Borrower shall not be required to prepay such Loans if
the Borrower, within five Business Days of such notice and demand, requires the
Lender to convert such Loans to Loans bearing interest at the Base Rate in
effect from time to time.
2.12. Capital Adequacy. If (i) the introduction of or any
change in or in the interpretation of any law or regulation, (ii) compliance
with any law or regulation, or (iii) compliance with any guideline or request
from any central bank or other Governmental Authority (whether or not having the
force of law) affects or would affect the amount of capital required or expected
to be maintained by the Lender or any corporation controlling the Lender and the
Lender reasonably determines that such amount is based upon the existence of the
Lender's Commitment and Loans and its other commitment and loans of this type,
then, upon demand by the Lender, the Borrower shall pay to the Lender, from time
to time as specified by the Lender, additional amounts sufficient to compensate
the Lender in the light of such circumstances, to the extent that the Lender
reasonably determines such increase in capital to be allocable to the existence
of the Lender's Commitment and Loans. A certificate as to such amounts submitted
to the Borrower by the Lender shall be conclusive and binding for all purposes
absent manifest error.
2.13. Payments and Computations. (a) The Borrower shall make
each payment hereunder and under the Note not later than 12:00 noon (New York
City time) on the day when due, in Dollars, to the Lender at its address
referred to in Section 10.2 in immediately available funds without set-off or
counterclaim, to be applied in accordance with the terms of this Agreement.
Payment received by the Lender after 12:00 noon (New York City time) shall be
deemed to be received on the next Business Day.
(b) All computations of interest shall be made by the Lender
on the basis of a year of 360 days for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest is
32
payable. Each determination by the Lender of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
(c) Whenever any payment hereunder or under the Note shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or fee, as the case
may be; provided, however, that if such extension would cause payment of
interest on or principal of any Loan to be made in the next calendar month, such
payment shall be made on the next preceding Business Day.
2.14. Taxes. (a) Any and all payments by the Borrower under
each Loan Document shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding taxes measured
by the Lender's net income, and franchise taxes imposed on the Lender, by the
jurisdiction under the laws of which the Lender is organized or any political
subdivision thereof and taxes measured by the Lender's net income, and franchise
taxes imposed on the Lender, by the jurisdiction of the Lender's Lending Office
or any political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to the Lender (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including, without limitation, deductions applicable to additional
sums payable under this Section 2.14) the Lender receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions, (iii) the Borrower shall pay the full amount
deducted to the relevant taxing authority or other authority in accordance with
applicable law, and (iv) the Borrower shall deliver to the Lender evidence of
such payment to the relevant taxation or other authority.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other
33
excise or property taxes, charges or similar levies of the United States or any
political subdivision thereof or any applicable foreign jurisdiction which arise
from any payment made under any Loan Document or from the execution, delivery or
registration of, or otherwise with respect to, any Loan Document (collectively,
"Other Taxes").
(c) The Borrower will indemnify the Lender for the full amount
of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.14) paid by
the Lender and any liability (including, without limitation, for penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date the Lender makes
written demand therefor.
(d) Within 30 days after the date of any payment of Taxes or
Other Taxes, the Borrower will furnish to the Lender, at its address referred to
in Section 10.2, the original or a certified copy of a receipt evidencing
payment thereof.
(e) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.14 shall survive the payment in full of the
Obligations.
ARTICLE III
APPROVAL OF PROPOSED HOTEL FACILITIES;
SELECTED PROPERTIES AND PREPARATION
OF MORTGAGE DOCUMENTS
3.1. Approval of Proposed Hotel Facilities. In the event that
the Borrower desires to acquire either itself or through a Subsidiary a Proposed
Hotel Facility using the proceeds of a Loan to be made by the Lender hereunder,
the Borrower shall prior to submitting its Notice of Borrowing in respect of
such Loan request in writing the Lender's consent to the acquisition thereof,
which request shall be accompanied by a Proposed Hotel Facility Statement
(together with all documents referred to therein) in respect of the
34
Proposed Hotel Facility and such other information as the Lender may reasonably
require. The Lender's consent to such acquisition shall not be unreasonably
withheld. The Lender shall not withhold its consent to such acquisition on
grounds of insufficient Cash Flow from the Proposed Hotel Facility if and only
if the Cash Flow of the current owner or operator of the Proposed Hotel Facility
(as applicable) attributable to the Proposed Hotel Facility, over the four most
recent financial quarters after deduction of an FF&E Reserve equal to five
percent (5%) of total sales for such period but before payment of any income
taxes or management fees for such period is not less than 1.0 times the proposed
annual Base Rent under the proposed Operating Lease of the Proposed Hotel
Facility. The Lender shall not approve the acquisition of any Proposed Hotel
Facility that will not on the date the Loan is made be subject to and have the
benefit of an Operating Lease.
3.2. Loan to Value Requirement; Selected Properties. If, at
any time, the Lender determines in its reasonable discretion that the Loan to
Value Requirement has not been or, after giving effect to any Loans that the
Borrower intends to request, would not be satisfied, the Lender may require the
Borrower to deliver and the Borrower promptly shall deliver to the Lender,
Mortgage Documents with respect to such of the Hotel Properties as the Lender
shall select (the "Selected Properties"), such that, after giving effect to such
Mortgage Documents the Loan to Value Requirement would be satisfied. The parties
acknowledge and agree that certain of the Hotel Properties which are not
Mortgaged Properties pursuant to this Agreement may be granted as collateral
security for the Second Facility and that to the extent mortgage documents are
executed and delivered (and whether or not the same are recorded) in respect of
any Hotel Facility as security for the Second Facility, such Hotel Facility
shall be deemed to no longer be a Hotel Facility for the purposes of this
Agreement, to the intent that no Hotel Facility shall be granted as collateral
for both the purposes of loans obtained pursuant to this Agreement and the
Second Facility. The Lender agrees that it shall select such Hotel Properties
consistent with the priorities set forth in the Mortgaged Property
Prioritization Schedule attached as Schedule 3.2 hereto and made a part hereof
provided that, within each of the First through Ninth Priority States, Lender
may select Hotel
35
Properties in any order Lender may determine, provided further that, if the
Lender shall select a Hotel Property in a particular state, the Lender shall
then prioritize such state for its selection of future Selected Properties.
3.3. Preparation and Execution of Mortgage Documents. (a)
Immediately after (i) the Lender approves a Proposed Hotel Facility, and (ii)
Lender determines that the Loan to Value Requirement has not been (or will not
after giving effect to Loans requested by the Borrower be) satisfied, the Lender
shall commence the preparation of the Mortgage Documents for the Selected
Properties including, without limitation, the Initial Selected Properties and
the parties shall cooperate and diligently proceed to prepare such Mortgage
Documents (including, without limitation, ordering commitments for the title
insurance policies, ALTA surveys and UCC-searches, obtaining estoppel
certificates and retaining counsel, including local counsel for purposes of
reviewing the Mortgage Documents and rendering opinions with respect to such
documents in form and substance acceptable to the Lender as set forth in Section
4.2(d)(ii)).
(b) The Borrower, on behalf of itself and each of its
Subsidiaries, hereby appoints the Lender its attorney-in-fact to execute,
acknowledge and deliver for and in the name of the Borrower or any of its
Subsidiaries, as applicable, any and all of the Mortgage Documents for the
Initial Selected Properties and/or the Selected Properties which the Borrower or
any of its Subsidiaries fails to execute, acknowledge and/or deliver in
accordance with the terms hereof, and this power, being coupled with an
interest, shall be irrevocable as long as any part of the Obligations remains
unpaid.
ARTICLE IV
CONDITIONS OF LENDING
4.1. Conditions Precedent to the Initial Loan. The obligation
of the Lender to make the initial Loan is subject to satisfaction of the
conditions precedent that the Lender shall have received, on the Closing Date,
the following, each dated the Closing Date unless otherwise
36
indicated, in form and substance reasonably satisfactory to
the Lender:
(a) The Note to the order of the Lender.
(b) A certificate of the Secretary or an Assistant Secretary
of each Loan Party certifying (i) the resolutions of its Board of Trustees or
Directors, as appropriate, approving each Loan Document to which it is a party,
(ii) all documents evidencing other necessary trust or corporate action, as
appropriate, and required governmental and third party approvals, licenses and
consents with respect to each Loan Document to which it is a party and the
transactions contemplated thereby, (iii) a copy of its and each of its
Subsidiaries' declaration of trust, certificates of incorporation and By-Laws,
as appropriate, as of the Closing Date, and (iv) the names and true signatures
of each of its officers who has been authorized to execute and deliver any Loan
Document or other document required hereunder to be executed and delivered by or
on behalf of such Person.
(c) A copy of the declaration of trust or articles or
certificate of incorporation, as appropriate, of each Loan Party and of each of
its Subsidiaries (if any) which is not a Loan Party certified as of a recent
date by the Secretary of State of the state of formation of such Loan Party or
Subsidiary, together with certificates of such official attesting to the good
standing of each such Loan Party and Subsidiary.
(d) A favorable opinion of Xxxxxxxx & Worcester, counsel to
the Loan Parties, in substantially the form of Exhibit D, and as to such other
matters as the Lender may reasonably request.
(e) A Negative Pledge Agreement in respect of each of the
Initial Hotels, duly executed and acknowledged by the Borrower.
(f) Mortgage Documents, duly executed and acknowledged where
appropriate, in respect of each of the Initial Selected Properties including,
without limitation, payment of the Mortgage Payments in respect of such Initial
Selected Properties.
37
(g) Assignment Agreements in respect of the Management
Agreements for each Initial Selected Property duly executed by the Borrower or
its Subsidiary, as applicable, and the Manager.
(h) Security Agreements in respect of the FF&E Reserves for
each of the Initial Hotels duly executed by the Borrower or its Subsidiary, as
applicable, the Operating Lessee and the Manager, provided that, to the extent
the FF&E Reserve in respect of each Initial Selected Property is not
consolidated with other FF&E Reserves, the Lender shall accept in lieu of the
foregoing, Security Agreements in respect of the FF&E Reserves for each Initial
Selected Property, duly executed by the Borrower or its subsidiary, as
applicable, the Operating Lessee and the Manager.
(i) Financing Statements (Form UCC-1) under the Uniform
Commercial Code of all jurisdictions as may be necessary or, in the reasonable
opinion of the Lender, desirable to perfect the Lien created by the Security
Agreements for each Initial Selected Property; copies of Requests for
Information or Copies (Form UCC-11), or equivalent reports, listing all
effective financing statements which name the Borrower or any Subsidiary of the
Borrower (under its present name or any previous name) as debtor and which are
filed in the jurisdictions referred to above, together with copies of such other
financing statements (none of which shall cover the Collateral purported to be
covered by the Security Agreement).
(j) A copy of the Operating Lease and Management Agreement in
respect of each Hotel Facility, each certified by a Responsible Officer.
(k) Evidence that the insurance required by the terms of the
Collateral Documents and by Section 7.4 is in full force and effect.
(l) A written report of an investigation by an environmental
consultant, reasonably acceptable to the Lender, addressing any significant
environmental, health and safety violations, hazards or liabilities to which the
Borrower or any of its Subsidiaries may be subject, which report shall
demonstrate, to the reasonable satisfaction of the Lender, that the Borrower and
its Subsidiaries and their
38
operations are in compliance in all material respects with all applicable
Environmental Laws and are not subject to any material Environmental Liabilities
and Costs.
(m) Such additional documents, information and materials as
the Lender may reasonably request.
(n) The Lender shall have received evidence satisfactory to it
that all costs and accrued and unpaid fees and expenses (including, without
limitation, legal fees and expenses) required to be paid to the Lender on or
before the Closing Date, including, without limitation, those referred to in
Section 10.4 and any Mortgage Payment, to the extent then due and payable, have
been paid.
(o) A certificate, signed by a Responsible Officer of the
Borrower, stating that the statements set forth in Section 4.2 (a) and (b) are
true and correct on the Closing Date, after giving effect to the Loans being
made on the Closing Date.
(p) A copy of the Advisory Agreement certified by a
Responsible Officer.
(q) The Subordination Agreement duly executed and acknowledged
by the Borrower and the Advisor.
4.2. Conditions Precedent to Each Loan. The obligation of the
Lender to make any Loan (including the Loan being made by the Lender on the
Closing Date) shall be subject to the further conditions precedent that:
(a) The following statements shall be true on the date of such
Loan, before and after giving effect thereto and to the application of the
proceeds therefrom (and the acceptance by the Borrower of the proceeds of such
Loan shall constitute a representation and warranty by the Borrower that on the
date of such Loan such statements are true):
39
(i) The representations and warranties of the Borrower
contained in Article V. and of each Loan Party in the other Loan
Documents are correct on and as of such date as though made on and as
of such date; and
(ii) No Default or Event of Default will result from the Loans
being made on such date.
(b) The making of the Loans on such date does not violate any
Requirement of Law and is not enjoined, temporarily, preliminarily or
permanently.
(c) The Lender shall have received, on or before such date, in
respect of any Hotel Facility for which the same have not been delivered
pursuant to Section 4.1(e), (j), (k) and (l) respectively:
(i) a Negative Pledge Agreement duly executed and acknowledged
by the Borrower or its Subsidiary, as applicable;
(ii) A copy of the Operating Lease and Management Agreement in
respect of such Hotel Facility, each certified by a Responsible
Officer;
(iii) Evidence that the insurance required by the terms of the
Collateral Documents and by Section 7.4 is in full force and effect;
and
(iv) A written report of an investigation by an environmental
consultant, reasonably acceptable to the Lender, addressing any
significant environmental, health and safety violations, hazards or
liabilities to which the Borrower or any of its Subsidiaries may be
subject, which report shall demonstrate, to the reasonable satisfaction
of the Lender, that the Borrower and its Subsidiaries and their
operations are in compliance in all material respects with all
applicable Environmental Laws and are not subject to any material
Environmental Liabilities and Costs.
(d) The Lender shall have received, on or before such date,
duly executed and acknowledged Mortgages for each of the Selected Properties, in
such amounts as shall be reasonably acceptable to the Lender, securing all of
the
40
Indebtedness and the Obligations as such terms are defined and more particularly
described therein, together with:
(i) commitments for title insurance policies (the
"Title Insurance Policies") issued by a title company acceptable to the
Lender, in such form and amounts as are reasonably acceptable to the
Lender, insuring that each such Mortgage is a valid first priority Lien
on such Selected Properties subject only to such exceptions to title as
shall be acceptable to the Lender in its reasonable discretion and
containing such endorsements and affirmative insurance as the Lender
may reasonably require and as are obtainable in the applicable
jurisdiction, and true copies of each document, instrument or
certificate required by the terms of each such policy or Mortgage to
be, or have been, filed, recorded, executed or delivered in connection
therewith;
(ii) opinions reasonably satisfactory to the Lender
of counsel and/or local counsel retained by the Borrower with respect
to the due execution and delivery, validity and enforceability of the
Mortgage Documents and such other matters as may be reasonably required
by the Lender; and
(iii) duly executed UCC-1 Financing Statements under
the applicable Uniform Commercial Code to be filed in connection with
such Mortgages in form and substance reasonably satisfactory to the
Lender, to perfect the Lien created by the applicable Mortgages;
(iv) (A) duly executed and acknowledged landlord
consents from all lessors under all the Leases comprising Selected
Properties, in form and substance reasonably satisfactory to the
Lender, (B) duly executed and acknowledged non-disturbance and
attornment agreements with the mortgagees, ground lessors and
sublessors of property subject to Leases comprising Selected
Properties, in form and substance reasonably satisfactory to the
Lender, (C) duly executed and acknowledged consents from all
mortgagees, ground lessors and sublessors of property subject to Leases
comprising Selected Properties, in form and substance reasonably
satisfactory to the Lender,
41
(D) duly executed and acknowledged estoppel certificates, dated not
earlier than 30 days prior to the date of the Loan, from each landlord,
ground lessor, sublessor and lessee of a Selected Property, in form and
substance reasonably satisfactory to the Lender, (E) duly executed and
acknowledged subordination, non-disturbance and attornment agreements
(in recordable form) from each lessee (other than the Borrower or its
Subsidiary) of a Selected Property, unless such lessee's lease, by its
terms, is subject and subordinate to the Lien of the applicable
Mortgage provided that, notwithstanding the foregoing, a subordination,
non-disturbance and attornment agreement in the form attached as
Exhibit K hereto and made a part hereof, duly executed and acknowledged
by the Borrower and the Operating Lessee shall be required in respect
of each such Selected Property, and (F) evidence satisfactory to the
Lender that all such consents and agreements, and a memorandum of each
Lease comprising a Selected Property, have been filed or recorded in
all appropriate public records or delivered to the title company
providing title insurance thereon, as the case may be;
(v) current ALTA surveys and surveyor's certification
as to all such Selected Properties, each in form and substance
reasonably satisfactory to the Lender; and
(vi) payment to the Lender, or as the Lender may
direct, of all title insurance premiums, documentary, stamp or
intangible taxes, recording fees and mortgage taxes payable in
connection with the recording of any of the Loan Documents or the
issuance of the Title Insurance Policies;
(vii) an Assignment Agreement in respect of the Management
Agreement for such Selected Property duly executed by the Borrower or
its Subsidiary, as applicable, and the Manager;
(viii) a Security Agreement in respect of the FF&E Reserves
for such Selected Property duly executed by the Borrower or its
Subsidiary, as applicable, the Operating Lessee and the Manager;
42
(ix) Financing Statements (Form UCC-1) under the Uniform
Commercial Code of all jurisdictions as may be necessary or, in the
reasonable opinion of the Lender, desirable to perfect the Lien created
by the Security Agreement for such Selected Property; copies of
Requests for Information or Copies (Form UCC-11), or equivalent
reports, listing all effective financing statements which name the
Borrower or any Subsidiary of the Borrower (under its present name or
any previous name) as debtor and which are filed in the jurisdictions
referred to above, together with copies of such other financing
statements (none of which shall cover the Collateral purported to be
covered by the Security Agreement).
(e) The Borrower shall have paid the reasonable fees and out
of pocket expenses of counsel to the Lender and local counsel, in connection
with the preparation, execution, review and delivery of the Mortgage Documents.
(f) All costs and accrued and unpaid fees and expenses
(including, without limitation, legal fees and expenses) required to be paid to
the Lender on or before the Closing Date, including, without limitation, those
referred to in Section 10.4 and any Mortgage Payment, to the extent then due and
payable, have been paid.
(g) The Lender shall have received such additional documents,
information and materials as the Lender may reasonably request.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, the
Borrower represents and warrants to the Lender that:
5.1. Existence; Compliance with Law. Each Loan Party and each
of its Subsidiaries (i) is a real estate investment trust or a corporation, as
specified herein, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation; (ii) is duly
43
qualified or licensed and in good standing under the laws of each jurisdiction
where such qualification is necessary, except for failures which in the
aggregate have no Material Adverse Effect; (iii) has all requisite power and
authority and the legal right to own, pledge and mortgage its properties, to
lease (as lessee) the properties that it leases as lessee, to lease or sublease
(as lessor) the properties it owns and/or leases (as lessee) and to conduct its
business as now or currently proposed to be conducted; (iv) is in compliance
with its declaration of trust or certificate of incorporation and by-laws, as
appropriate; (v) is in compliance with all other applicable Requirements of Law
except for such non-compliances as in the aggregate have no Material Adverse
Effect; and (vi) has all necessary licenses, permits, consents or approvals from
or by, has made all necessary filings with, and has given all necessary notices
to, each Governmental Authority having jurisdiction, to the extent required for
such ownership, leasing and conduct, except for licenses, permits, consents or
approvals which can be obtained by the taking of ministerial action to secure
the grant or transfer thereof or failures which in the aggregate have no
Material Adverse Effect.
5.2. Power; Authorization; Enforceable Obligations. (a) The
execution, delivery and performance by each Loan Party of the Loan Documents to
which it is a party and the consummation of the transactions contemplated
hereby:
(i) are within such Loan Party's corporate or trust
powers, as appropriate;
(ii) have been or, at the time of delivery thereof
pursuant to Article IV, will have been duly authorized by all necessary
corporate or trust action, as appropriate, including, without
limitation, the consent of any trustees or stockholders where required;
(iii) do not and will not (A) contravene any Loan Party's
or any of its Subsidiaries' respective declaration of trust,
certificate of incorporation or by-laws or other comparable governing
documents, (B) violate any other applicable Requirement of Law
(including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve
44
System), or any order or decree of any Governmental Authority or
arbitrator, (C) conflict with or result in the breach of, or constitute
a default under, or result in or permit the termination or acceleration
of, any material Contractual Obligation of any Loan Party or any of its
Subsidiaries, or (D) result in the creation or imposition of any Lien
upon any of the property of any Loan Party or any of its Subsidiaries,
other than those in favor of the Lender pursuant to the Collateral
Documents; and
(iv) do not require the consent of, authorization by,
approval of, notice to, or filing or registration with, any
Governmental Authority or any other Person, other than those which have
been or will be, prior to the Closing Date, obtained or made and copies
of which have been or will be delivered to the Lender pursuant to
Section 4.1, and each of which on the Closing Date will be in full
force and effect, and any consents, authorizations, approvals of,
notices to or filings or registrations required to be delivered under
Article IV hereof.
(b) This Agreement has been, and each of the other Loan
Documents will have been upon delivery thereof pursuant to Article IV hereof,
duly executed and delivered by each Loan Party thereto. This Agreement is, and
the other Loan Documents will be, when delivered hereunder, the legal, valid and
binding obligation of each Loan Party thereto, enforceable against it in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
5.3. Taxes. All federal, state, local and foreign tax returns,
reports and statements (collectively, the "Tax Returns") which, to the best
knowledge and belief of the Borrower, are required to be filed by the Borrower
or any of its Tax Affiliates have been filed with the appropriate governmental
agencies in all jurisdictions in which such Tax Returns, are required to be
filed, all such Tax Returns are true and correct in all material respects, and
all taxes, charges and other impositions due and payable have been timely paid
prior to the date on which any fine,
45
penalty, interest, late charge or loss may be added thereto for non-payment
thereof, except where contested in good faith and by appropriate proceedings if
adequate reserves therefor have been established on the books of the Borrower or
such Tax Affiliate in conformity with GAAP. If applicable, proper and accurate
amounts have been withheld by the Borrower and each of its respective Tax
Affiliates from their respective employees (if any) for all periods in full and
complete compliance with the tax, social security and unemployment withholding
provisions of applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective Governmental Authorities.
None of the Borrower or any of its Tax Affiliates has (i) executed or filed with
the IRS or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for assessment or
collection of any charges other than those that in the aggregate would have no
Material Adverse Effect; (ii) agreed or been requested to make any adjustment
under Section 481(a) of the Code by reason of a change in accounting method or
otherwise other than those that in the aggregate would have no Material Adverse
Effect; or (iii) any obligation under any written tax sharing agreement.
5.4. Full Disclosure. (a) No written statement prepared or
furnished by or on behalf of any Loan Party or any of its Affiliates in
connection with any of the Loan Documents or the consummation of the
transactions contemplated thereby, and no financial statement delivered pursuant
hereto or thereto, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading. All facts known to the Borrower which are material to an
understanding of the financial condition, business, properties or prospects of
the Borrower and its Subsidiaries taken as one enterprise have been disclosed to
the Lender.
5.5. Financial Matters. (a) The balance sheet of the Borrower
as of March 31, 1995, and the related statement of income, retained earnings and
cash flow of the Borrower for the period from February 7, 1995 (inception) to
March 31, 1995, certified by Xxxxxx Xxxxxxxx, LLP, and the combined statements
of assets, liabilities and net investment and advances of the Initial Hotels as
of
46
December 30, 1994, and the related combined statements of revenues and expenses
excluding income taxes, and cash flows for the fiscal year ended December 30,
1994, certified by Xxxxxx Xxxxxxxx, LLP, copies of which have been furnished to
the Lender, fairly present the financial condition of the Borrower and the
combined assets, liabilities and net investment and advances of the Initial
Hotels as of such dates and the consolidated results of the operations of the
Borrower and the revenues and expenses excluding income taxes, and cash flows of
the Initial Hotels for the period ended on such dates, all in conformity with
GAAP.
(b) Since March 31, 1995, there has been no Material Adverse
Change and there have been no events or developments that in the aggregate have
had a Material Adverse Effect.
(c) Neither the Borrower nor any of its Subsidiaries had at
March 31, 1995 any material obligation, contingent liability or liability for
taxes, long-term leases or unusual forward or long-term commitment which is not
reflected in the balance sheet at such date referred to in subsection (a) above
or in the notes thereto.
(d) The unaudited pro forma balance sheets of the Borrower and
in respect of the Initial Hotels (the "Pro Forma Balance Sheets"), copies of
which have been delivered to the Lender, have been prepared with respect to the
Borrower as of March 31, 1995, and with respect to the Initial Hotels, as of
March 24, 1995, and reflect as of such dates, the pro forma financial condition
of the Borrower and of the Initial Hotels.
(e) The Borrower is, and on a consolidated basis the Borrower
and its Subsidiaries are, Solvent.
5.6. Litigation. There are no pending or, to the knowledge of
the Borrower, threatened actions, investigations or proceedings affecting the
Borrower or, to the knowledge of the Borrower, any Operator or any of their
respective properties or revenues before any court, Governmental Authority or
arbitrator, other than those that in the aggregate, if adversely determined,
would have no Material Adverse Effect. The performance of any action by (a) any
Loan Party required or contemplated by any of the
47
Loan Documents or (b) any Operator required or contemplated by any Operating
Lease or Management Agreement is not (in the case of (b) only, to the knowledge
of the Borrower) restrained or enjoined (either temporarily, preliminarily or
permanently), and no material adverse condition has been imposed by any
Governmental Authority or arbitrator upon any of the foregoing transactions
contemplated by the aforementioned documents.
5.7. Margin Regulations. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System), and no proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock.
5.8. Ownership of Borrower and HRPT Advisors; Subsidiaries.
(a) The authorized capital stock of the Borrower consists of 100,000,000 common
shares of beneficial interest, $0.01 par value per share, of which 11,750,000
shares will be issued and outstanding upon consummation of the Initial Public
Offering, assuming that the Underwriters' over-allotment option is not
exercised, and 100,000,000 preferred shares of beneficial interest, $0.01 par
value per share, none of which shares will be issued and outstanding upon the
consummation of the Initial Public Offering. Upon consummation of the Initial
Public Offering all of the outstanding capital stock of the Borrower will be
validly issued, fully paid and non-assessable and at least 250,000 shares of
such stock will be owned beneficially and of record by HRPT Advisors free and
clear of all Liens as of the date of this Agreement. No authorized but unissued
shares, no treasury shares and, to the best knowledge of the Borrower, no other
outstanding shares of capital stock of the Borrower are subject to any option,
warrant, right of conversion or purchase or any similar right. Except as set
forth on Schedule 5.8(a) hereto, there are no agreements or understandings with
respect to the voting, sale or transfer of any shares of capital stock of the
Borrower, or to the best knowledge of the Borrower, any agreement restricting
the transfer or hypothecation of any such shares.
48
(b) The authorized capital stock of HRPT Advisors consists of
100,000 shares of common stock, $0.01 par value per share, of which 1,000 shares
are issued and outstanding as of the date hereof. All of the outstanding capital
stock of HRPT Advisors has been validly issued, is fully paid and non-assessable
and at least 51% of such stock is owned, in the aggregate, beneficially and of
record by Xxxxx X. Xxxxxxx and/or Xxxxxx X. Xxxxxx, free and clear of all Liens
as of the date of this Agreement. No authorized but unissued shares, no treasury
shares and, to the best knowledge of the Borrower, no other outstanding shares
of capital stock of HRPT Advisors are subject to any option, warrant, right of
conversion or purchase or any similar right. There are no agreements or
understandings with respect to the voting, sale or transfer of any shares of
capital stock of HRPT Advisors, or to the best knowledge of the Borrower, any
agreement restricting the transfer or hypothecation of any such shares.
(c) Set forth on Schedule 5.8(c) hereto is a complete and
accurate list showing, as of the date hereof, all Subsidiaries of the Borrower
and, as to each such Subsidiary, the jurisdiction of its incorporation, the
number of shares of each class of Stock authorized, the number outstanding on
the date hereof and the percentage of the outstanding shares of each such class
owned (directly or indirectly) by the Borrower. No Stock of any Subsidiary of
the Borrower is subject to any outstanding option, warrant, right of conversion
or purchase or any similar right. All of the outstanding capital Stock of each
such Subsidiary has been validly issued, is fully paid and non-assessable and is
owned by the Borrower, free and clear of all Liens. Neither the Borrower nor any
such Subsidiary is a party to, or has knowledge of, any agreement restricting
the transfer or hypothecation of any shares of Stock of any such Subsidiary,
other than the Loan Documents. The Borrower does not own or hold, directly or
indirectly, any capital stock or equity security of, or any equity interest in,
any Person other than such Subsidiaries.
5.9. ERISA. (a) There are no Multiemployer Plans.
(b) Each Plan and any related trust intended to qualify under
Code Section 401 or 501 has been determined by
49
the IRS to be so qualified and to the best knowledge of the Borrower nothing has
occurred which would cause the loss of such qualification.
(c) None of the Borrower, any of its Subsidiaries or any ERISA
Affiliate, with respect to any Pension Plan, has failed to make any contribution
or pay any amount due as required by Section 412 of the Code or Section 302 of
ERISA or the terms of any such plan, and all required contributions and benefits
have been paid in accordance with the provisions of each such plan.
(d) There are no pending or, to the knowledge of the Borrower,
threatened claims, actions or proceedings (other than claims for benefits in the
normal course), relating to any Plan other than those that in the aggregate, if
adversely determined, would have no Material Adverse Effect.
(e) No Pension Plan has any unfunded accrued benefit
liabilities, as determined by using reasonable actuarial assumptions utilized by
such plan's actuary for funding purposes. Within the last five years none of the
Borrower, any of its Subsidiaries or any ERISA Affiliate has caused a Pension
Plan with any such liabilities to be transferred outside of its "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA).
(f) No Plan provides for continuing health, disability,
accident or death benefits or coverage for any participant or his or her
beneficiary after such participant's termination of employment (except as may be
required by Section 4980B of the Code and at the sole expense of the participant
or the beneficiary) which would result in the aggregate under all Plans in a
liability in an amount which would have a Material Adverse Effect.
5.10. Liens. There are no Liens of any nature whatsoever on
any Hotel Facilities of the Borrower or any of its Subsidiaries other than those
permitted by Section 8.1. The forms of the Collateral Documents attached hereto
are sufficient to grant to the Lender fully perfected first priority Liens in
and to the Collateral subject only to Permitted Liens.
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5.11. [Intentionally Omitted]
5.12. No Burdensome Restrictions; No Defaults; Contractual
Obligations. (a) Neither the Borrower nor any of its Subsidiaries is in default
beyond the expiration of any applicable notice or grace period under or with
respect to any Contractual Obligation owed by it and, to the knowledge of the
Borrower, no other party is in default beyond the expiration of any applicable
notice or grace period under or with respect to any Contractual Obligation owed
to the Borrower or to any of its Subsidiaries, other than those defaults which
in the aggregate have no Material Adverse Effect.
(b) No Event of Default or Default has occurred and is
continuing.
(c) There is no Requirement of Law that has not been complied
with by the Borrower, the compliance with which by the Borrower or any of its
Subsidiaries would have a Material Adverse Effect.
(d) No Subsidiary of the Borrower is subject to any
Contractual Obligation restricting or limiting its ability to transfer its
assets to the Borrower or to declare or make any dividend payment or other
distribution on account of any shares of any class of its Stock or its ability
to purchase, redeem, or otherwise acquire for value or make any payment in
respect of any such shares or any shareholder rights.
5.13. No Investments. Except as permitted by Section 8.6, none
of the Borrower or any of its Subsidiaries is engaged in any joint venture or
partnership with any other Person or maintains any Investment.
5.14. Government Regulation. Neither the Borrower nor any of
its Subsidiaries is an "investment com pany" or an "affiliated person" of, or
"promoter" or "prin cipal underwriter" for, an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended, or subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, or any other federal or state statute or
regulation such that its ability to incur
51
Indebtedness is limited, or its ability to consummate the transactions
contemplated hereby or by any other Loan Document, or the exercise by the Lender
of rights and remedies hereunder or thereunder, is impaired. The making of the
Loans by the Lender, the application of the proceeds and repayment thereof by
the Borrower and the consummation of the transactions contemplated by the Loan
Documents will not violate any provision of any of the foregoing or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder.
5.15. Insurance. All policies of insurance of any kind or
nature owned by or issued to the Borrower or any of its Subsidiaries, or issued
in respect of any real property owned or leased by the Borrower or any of its
Subsidiaries including, without limitation, policies of life, fire, theft,
product liability, public liability, property damage, other casualty, employee
fidelity, workers' compensation and employee health and welfare insurance, are
in full force and effect and are of a nature and provide such coverage as
(except earthquake coverage) is sufficient and as is customarily carried by
companies of the size and character of such Person. None of the Borrower or any
of its Subsidiaries has been refused insurance for which it applied or had any
policy of insurance terminated (other than at its request). Lender confirms and
agrees that the policies of insurance owned by or issued to the Operating Lessee
in respect of any Hotel Facility shall be sufficient for the purposes of this
representation provided that the same comply with the terms of the Operating
Lease relating thereto.
5.16. Employees. Neither the Borrower nor any of its
Subsidiaries has any employees and none of them has ever engaged employees.
5.17. Force Majeure. Neither the business nor the properties
of the Borrower or any of its Subsidiaries are currently suffering from the
effects of any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy or other casualty (whether or not covered by insurance), other than those
which in the aggregate have no Material Adverse Effect.
52
5.18. Use of Proceeds. The proceeds of the Loans are being
used by the Borrower solely as follows: (a) to repay the HRP Loan, (b) to pay
the purchase price of Approved Hotel Facilities and for the payment of related
transaction costs, fees and expenses, or (c) as to an aggregate amount not to
exceed twenty million dollars ($20,000,000), for general business purposes in
the ordinary course.
5.19. Environmental Protection. Except as disclosed on
Schedule 5.19:
(a) all real property leased, owned or operated by the
Borrower or any of its Subsidiaries is free from contamination by any Hazardous
Material which could reasonably be expected to subject the Borrower or any of
its Subsidiaries to Environmental Liabilities and Costs that could in the
aggregate have a Material Adverse Effect;
(b) the operations of the Borrower and each of its
Subsidiaries, and the operations at any real property leased, owned or operated
by the Borrower or any of its Subsidiaries are in material compliance in all
respects with all applicable Environmental Laws;
(c) neither the Borrower nor any of its Subsidiaries have
liabilities with respect to Hazardous Materials, and no facts or circumstances
exist which could give rise to liabilities with respect to Hazardous Materials
which could reasonably be expected to subject the Borrower or any of its
Subsidiaries to Environmental Liabilities and Costs that could in the aggregate
have a Material Adverse Effect;
(d) (i) the Borrower and its Subsidiaries and, to the best
knowledge of the Borrower and its Subsidiaries, the Operators have obtained,
currently maintained and have all Environmental Permits necessary for their
operations and are in material compliance with such Environmental Permits,
except to the extent that the failure to obtain or maintain such Permits or to
be in compliance therewith would not, in the aggregate, have a Material Adverse
Effect, (ii) there are no Legal Proceedings pending nor, to the best knowledge
of the Borrower and its Subsidiaries, threatened to revoke, or alleging the
violation of, such Environmental Permits,
53
other than Legal Proceedings which, if adversely determined, would not, in the
aggregate, have a Material Adverse Effect and (iii) neither the Borrower nor any
of its Subsidiaries or, to the best knowledge of the Borrower and its
Subsidiaries, the Operators have received any notice from any Governmental
Authority to the effect that there is lacking any Environmental Permit required
in connection with the current use or operation of any property leased, owned or
operated by the Borrower or any of its Subsidiaries;
(e) neither the Borrower's nor any of its Subsidiaries'
current facilities and operations, nor, to the best knowledge of the Borrower
and its Subsidiaries, any Operator or predecessor of the Borrower or any of its
Subsidiaries, nor any of their past facilities and operations, nor any owner of
premises leased or operated by the Borrower and its Subsidiaries, are subject to
any outstanding written Order or Contract, including Environmental Liens, with
any Governmental Authority or other Person, or to any federal, state, local,
foreign or territorial investigation respecting (i) Environmental Laws, (ii)
Remedial Action, (iii) any Environmental Claim, or (iv) the Release or
threatened Release of any Hazardous Material, the compliance with which, in any
case, is reasonably likely to have a Material Adverse Effect;
(f) neither the Borrower, nor any of its Subsidiaries or, to
the best knowledge of the Borrower and its Subsidiaries, any of the Operators
are subject to any pending Legal Proceeding alleging the violation of any
Environmental Law which, if adversely determined is reasonably likely to have a
Material Adverse Effect, nor, to the best knowledge of the Borrower and its
Subsidiaries, are any such proceedings threatened;
(g) neither the Borrower nor any of its Subsidiaries nor, to
the best knowledge of the Borrower and its Subsidiaries, any Operators or
predecessor of the Borrower or any of its Subsidiaries, nor any owner of prem
ises leased by the Borrower or any of its Subsidiaries, have filed any notice
under federal, state or local, territorial or foreign law indicating past or
present treatment, storage, or disposal of or reporting a Release of Hazardous
Material into the environment, in the case of any Operator, with respect to
Hotel Facilities only;
54
(h) none of the operations of the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower and its Subsidiaries, of
any Operators or predecessor of the Borrower or any of its Subsidiaries, or of
any owner of premises leased by the Borrower or any of its Subsidiaries, involve
or previously involved the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 (in effect
as of the date of this Agreement) or any state, local, territorial or foreign
equivalent, in the case of any Operator, with respect to Hotel Facilities only;
and
(i) there is not now, nor has there been in the past, on, in
or under any real property leased or owned by the Borrower or any of its
Subsidiaries (i) any underground storage tanks or surface tanks, dikes or
impoundments, (ii) any asbestos-containing materials, (iii) any polychlorinated
biphenyls, or (iv) any radioactive substances, the existence of which, in any
case, is reasonably likely to have a Material Adverse Effect.
5.20. Contractual Obligations Concerning Assets. Except with
respect to the Initial Hotels listed in Part II of Schedule 1.1 hereto, as of
the date of this Agreement, neither the Borrower nor any of its Subsidiaries
owns or holds, or is obligated under or a party to, any option, right of first
refusal, or other contractual right to purchase or acquire, or any Contractual
Obligation to effect an Asset Sale of, any asset or property owned or leased by
the Borrower or any of its Subsidiaries.
5.21. Status as REIT. The Borrower is organized in conformity
with the requirements for qualification as a real estate investment trust under
the Code. Borrower has met all of the requirements for qualification as a real
estate investment trust under the Code for its fiscal year ended December 31,
1995. The Borrower is in a position to qualify for its current fiscal year as a
real estate investment trust under the Code and its proposed methods of
operation will enable it to so qualify.
5.22. Real Property. (a) The Borrower and its Subsidiaries own
good, clean and marketable fee simple absolute title to all of the Real Estate
purported to be owned by them in fee simple, which Real Estate is at the
55
date hereof described in Schedule 5.22(a), and good, clean and marketable title
to, or valid leasehold interests in, all other properties and assets purported
to be owned by the Borrower or any of its Subsidiaries, including, without
limitation, valid leasehold interests pursuant to the Leases and all property
reflected in the latest balance sheet referred to in Section 5.5(a), except for
such property as has been disposed of since that date without violation of any
of the provisions hereof, and none of such properties and assets, including,
without limitation, the Real Estate and the Leases, is subject to any Lien,
except Liens granted to the Lender pursuant to the Loan Documents or permitted
hereunder or thereunder. The Borrower and its Subsidiaries have received all
deeds, assignments, waivers, consents, non-disturbance and recognition or
similar agreements, bills of sale and other documents, and have duly effected
all recordings, filings and other actions reasonably necessary to establish,
protect and perfect the Borrower's and its Subsidiaries' right, title and
interest in and to all such property.
(b) All real property leased at the date hereof by the
Borrower or any of its Subsidiaries, as lessee, is listed on Schedule 5.22(b),
setting forth information regarding the commencement date, termination date,
renewal options (if any) and annual base rents for each year until the Final
Maturity Date, in each case as in effect on the Closing Date. To the best
knowledge of the Borrower, each of such leases is valid and enforceable in
accordance with its terms and is in full force and effect. The Borrower has
delivered to the Lender true and complete copies of each of such leases and all
documents affecting the rights or obligations of the Borrower or any of its
Subsidiaries which is a party thereto, including, without limitation, any
non-disturbance and recognition agreements, subordination agreements, attornment
agreements and agreements regarding the term or rental of any of the leases.
(c) Except as disclosed on Schedule 5.22(c) and those which in
the aggregate have no Material Adverse Effect, (i) all components of all
improvements included within the real property owned or leased by the Borrower
or any of its Subsidiaries (collectively, "Improvements"), including, without
limitation, the roofs and structural elements thereof and the heating,
ventilation, air
56
conditioning, plumbing, electrical, mechanical, sewer, waste water, storm water,
paving and parking equipment, systems and facilities included therein, are in
good working order and repair; (ii) all water, gas, electrical, steam,
compressed air, telecommunication, sanitary and storm sewage lines and systems
and other similar systems serving the real property owned or leased by the
Borrower or any of its Subsidiaries are installed and operating and are
sufficient to enable the real property owned or leased by the Borrower and its
Subsidiaries to continue to be used and operated in the manner currently being
used and operated, and none of the Borrower or any of its Subsidiaries has any
knowledge of any factor or condition that could result in the termination or
material impairment of the furnishing thereof. No Improvement or portion thereof
is dependent for its access, operation or utility on any land, building or other
Improvement not included in the real property owned or leased by the Borrower or
any of its Subsidiaries.
(d) All Permits required to have been issued or appropriate to
enable all real property owned or leased by the Borrower or any of its
Subsidiaries to be lawfully occupied and used for all of the purposes for which
they are currently occupied and used have been lawfully issued and are in full
force and effect, other than those which in the aggregate have no Material
Adverse Effect.
(e) Neither the Borrower nor, to its knowledge, any Operator
has received any notice, or has any knowledge, of (i) any pending, threatened or
contemplated condemnation proceeding affecting any real property owned or leased
by the Borrower or any of its Subsidiaries or any part thereof, or (ii) any
proposed termination or impairment of any parking at any such owned or leased
real property or (iii) any sale or other disposition of any real property owned
or leased by the Borrower or any of its Subsidiaries or any part thereof in lieu
of condemnation, in each case, other than those which in the aggregate have no
Material Adverse Effect.
(f) No material portion of any real property owned or leased
by the Borrower or any of its Subsidiaries has suffered any material damage by
fire or other casualty loss which has not heretofore been completely repaired
and restored to its original condition or which will not be
57
completely repaired or restored to its original condition within twelve (12)
months from the date hereof. No portion of any real property, that is not
covered by adequate flood insurance, owned or leased by the Borrower or any of
its Subsidiaries is located in a special flood hazard area as designated by any
Federal Governmental Authorities.
5.23. Operator and Advisor: Compliance with Law.
(a) To the best knowledge of the Borrower and its
Subsidiaries, each Operator (i) has full power and authority and the legal right
to own, lease (or sublease), manage and operate (as applicable) the Hotel
Facilities it operates and to conduct the business in which it is currently
engaged with respect to any real property owned or leased by the Borrower or any
of its Subsidiaries, (ii) is duly qualified or licensed and is in good standing
under the laws of each jurisdiction where its ownership, lease (or sublease),
management or operation of any real property owned or leased by the Borrower or
any of its Subsidiaries requires such qualification, and (iii) is in compliance
with all Requirements of Law applicable to the real property owned or leased by
the Borrower or any of its Subsidiaries operated or managed by it, or applicable
to the operation or management thereof, except to the extent that the failure to
comply therewith is not reasonably likely to have, in the aggregate, a Material
Adverse Effect.
(b) To the best knowledge of Borrower and its Subsidiaries,
the Advisor (i) has full power and authority and legal right to conduct the
business in which it is presently engaged and to perform its obligations under
the Advisory Agreement, (ii) is duly qualified or licensed and is in good
standing under the laws of each jurisdiction where the conduct of its business
requires such qualification, and (iii) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith is not reasonably
likely to have, in the aggregate, a Material Adverse Effect.
5.24. Operating Leases, Management Agreement and Advisory
Agreement. Each of the Operating Leases and Management Agreements in respect of
the Hotel Facilities and the Advisory Agreement is in full force and effect and
is a legally valid and binding obligation of the Borrower or its
58
Subsidiaries and the other parties thereto, subject to such exceptions which are
not reasonably likely to have, in the aggregate, a Material Adverse Effect.
Neither the Borrower nor any of its Subsidiaries has mortgaged, pledged or
otherwise encumbered any of the Operating Leases, Management Agreements or
Advisory Agreements or its rights thereunder including, without limitation, its
right to obtain rental, interest or other payments under the Operating Leases,
other than by way of such mortgages, pledges or encumbrances in favor of the
Lender. Neither the Borrower nor any of its Subsidiaries has collected any rents
becoming due under any Operating Lease more than 30 days in advance. All rent
and other sums and charges payable by any Operating Lessee under each Operating
Lease to which it is a party are current, no notice of default or termination
under any such Operating Lease is outstanding, to the knowledge of the Borrower
no termination event or condition or uncured default on the part of the
Operating Lessee exists under any Operating Lease, and to the knowledge of the
Borrower no event of default has occurred which, with the giving of notice or
the lapse of time or both, would constitute such a default or termination event
or condition or uncured default on the part of the Borrower or its Subsidiaries
or the Operators (as the case may be), subject to such exceptions which are not
reasonably likely to have, in the aggregate, a Material Adverse Effect. As to
all of the Leases, Borrower and each of its Subsidiaries has performed all of
its repair and maintenance obligations (if any) and, to the best knowledge and
belief of Borrower, each Operating Lessee under each Operating Lease to which it
is a party has performed all of its repair and maintenance obligations, subject
to such exceptions which are not reasonably likely to have, in the aggregate, a
Material Adverse Effect.
5.25. FF&E Reserves. An FF&E Reserve has been established in
respect of each Hotel Facility and is currently funded as required by the terms
of the Operating Lease and/or the Management Agreement relating thereto.
ARTICLE VI
FINANCIAL COVENANTS
59
As long as any of the Obligations or Commitment remain
outstanding, unless the Lender otherwise consents in writing the Borrower agrees
with the Lender that:
6.1. Limitation on Indebtedness. The Borrower shall maintain
during each Fiscal Quarter on a consolidated basis, a ratio of (a) the total
Indebtedness for borrowed money (including, without limitation, the Obligations
and all Capitalized Lease Obligations) of the Borrower and its Subsidiaries to
(b) Total Assets of the Borrower and its Subsidiaries not in excess of 1:2
6.2. Limitation on Secured Indebtedness. The Borrower shall
maintain during each Fiscal Quarter on a consolidated basis a ratio of (a) total
Secured Indebtedness (including, without limitation, Obligations and all
Capitalized Lease Obligations) of the Borrower and its Subsidiaries to (b) Total
Assets of the Borrower and its Subsidiaries not in excess of 1:2.
6.3. Interest Expense Coverage. The Borrower shall maintain at
the end of each Fiscal Quarter, commencing with the Fiscal Quarter ending on
September 30, 1995, a ratio of (a) Total Base Rents for such Fiscal Quarter to
(b) Net Interest Expense for such Fiscal Quarter, of not less than 2:1.
6.4. Maintenance of Tangible Net Worth. The Borrower shall
maintain during each Fiscal Quarter a Tangible Net Worth of not less than
$200,000,000.
6.5. Maintenance of Loan to Value Ratio. The Borrower shall
maintain during each Fiscal Quarter the Loan to Value Requirement.
ARTICLE VII
AFFIRMATIVE COVENANTS
As long as any of the Obligations or the Commitment remain
outstanding, unless the Lender otherwise consents in writing, the Borrower
agrees with the Lender that:
60
7.1. Compliance with Laws, Etc. The Borrower shall comply, and
shall cause each of its Subsidiaries and, with respect to Hotel Facilities only,
each Operator to comply, in all material respects with all Requirements of Law,
Contractual Obligations, commitments, instruments, licenses, permits and
franchises, including, without limitation, all Permits; provided, however, that
the Borrower shall not be deemed in default of this Section 7.1 if all such
non-compliances in the aggregate have no Material Adverse Effect.
7.2. Conduct of Business. The Borrower shall (a) conduct, and
shall cause each of its Subsidiaries to conduct, its business in the ordinary
course and consistent with the description set forth in the Registration
Statement; and (b) perform and observe, and cause each of its Subsidiaries to
perform and observe, all the terms, covenants and conditions required to be
performed and observed by it under its Contractual Obligations (including,
without limitation, to pay all rent and other charges payable under any lease
and all debts and other obligations as the same become due), and do, and cause
its Subsidiaries to do, all things necessary to preserve and to keep unimpaired
its rights under such Contractual Obligations; provided, however, that, in the
case of each of clauses (a) and (b), the Borrower shall not be deemed in default
of this Section 7.2 if all such failures in the aggregate have no Material
Adverse Effect.
7.3. Payment of Taxes, Etc. The Borrower shall pay and
discharge, and shall cause each of its Subsidiaries to pay and discharge, before
the same shall become delinquent, all lawful governmental claims, taxes,
assessments, charges and levies, except where contested in good faith, by proper
proceedings, if adequate reserves therefor have been established on the books of
the Borrower or the appropriate Subsidiary in conformity with GAAP; provided,
however, that the Borrower shall not be deemed in default of this Section 7.3 if
all such uncontested non- payments in the aggregate have no Material Adverse
Effect and, with respect to any Mortgaged Property, the Borrower and each such
Subsidiary otherwise complies with the provisions of the Mortgage in respect
thereof.
61
7.4. Maintenance of Insurance. The Borrower shall maintain, or
shall cause the Operators to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
is usually carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower or such Subsidiary
operates and as otherwise satisfactory to the Lender, in its sole judgment
exercised reasonably, and, in any event, all insurance required by any
Collateral Document. All such insurance shall name the Lender as additional
insured or loss payee, as the Lender shall determine. The Borrower will furnish
to the Lender from time to time such information as may be reasonably requested
as to such insurance. The Lender acknowledges that (i) no earthquake insurance
has been obtained with respect to any Hotel Facilities in California and (ii)
insurance maintained by the Operating Lessee in respect of any Hotel Facility
shall be sufficient for the purposes of this covenant provided that such
insurance complies with the terms of the Operating Lease relating thereto.
7.5. Preservation of Existence, Etc. The Borrower shall
preserve and maintain, and shall cause each of its Subsidiaries to preserve and
maintain, its existence (except as permitted under Section 8.5) and its rights
(charter and statutory) and franchises, except to the extent that the failure to
preserve and maintain such rights and/or franchises would not have a Material
Adverse Effect.
7.6. Access. The Borrower shall upon reasonable advance
notice, at any reasonable time and from time to time, permit the Lender, or any
agents or representatives of the Lender, to (a) examine and make copies of and
abstracts from the records and books of account of the Borrower and each of its
Subsidiaries, (b) visit the properties of the Borrower and each of its
Subsidiaries, (c) discuss the affairs, finances and accounts of the Borrower and
each of its Subsidiaries with any of their respective officers or directors, and
(d) communicate directly with the Borrower's independent certified public
accountants. The Borrower shall authorize its independent certified public
accountants to disclose to the Lender any and all financial statements and other
information of any kind, including, without limitation, copies of any management
letter, or the
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substance of any oral information that such accountants may have with respect to
the business, financial condition, results of operations or other affairs of the
Borrower or any of its Subsidiaries.
7.7. Keeping of Books. The Borrower shall keep, and shall
cause each of its Subsidiaries to keep, proper books of record and account, in
accordance with GAAP, in which full and correct entries shall be made of all
financial transactions and the assets and business of the Borrower and each such
Subsidiary.
7.8. Maintenance of Properties, Etc. The Borrower shall
maintain and preserve, and shall cause each of its Subsidiaries and each
Operator to maintain and preserve, (i) all of its Hotel Facilities in good
working order and condition, and (ii) all rights, permits, licenses, approvals
and privileges (including, without limitation, all Permits) which are used or
useful or necessary in the conduct of its business, in the case of an Operator,
with respect to Hotel Facilities only; provided, however, that the Borrower
shall not be deemed in default of this Section 7.8 if all such failures in the
aggregate have no Material Adverse Effect.
7.9. Performance and Compliance with Other Covenants. The
Borrower shall perform and comply with, and shall cause each of its Subsidiaries
to perform and comply with, each of the covenants and agreements set forth in
any Contractual Obligation to which it or any of its Subsidiaries is a party;
provided, however, that the Borrower shall not be deemed in default of this
Section 7.9 if all such failures in the aggregate have no Material Adverse
Effect.
7.10. Application of Proceeds. The Borrower shall use the
entire amount of the proceeds of the Loans as provided in Section 5.18.
7.11. Financial Statements. The Borrower shall furnish to the
Lender:
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(a) as soon as available and in any event within 45 days after
the end of each Fiscal Quarter of each Fiscal Year (other than the last Fiscal
Quarter of such Fiscal Year), consolidated balance sheets of the Borrower and
its Subsidiaries as of the end of such quarter and consolidated statements of
income, retained earnings and cash flow of the Borrower and its Subsidiaries for
the period commencing at the end of the previous Fiscal Year and ending with the
end of such Fiscal Quarter, all prepared in conformity with GAAP and certified
by the chief financial officer of the Borrower as fairly presenting the
financial condition and results of operations of the Borrower and its
Subsidiaries at such date and for such period, subject to normal year-end audit
adjustments, together with (i) a certificate of said officer stating that no
Default or Event of Default has occurred and is continuing or, if a Default or
an Event of Default has occurred and is continuing, a statement as to the nature
thereof and the action which the Borrower proposes to take with respect thereto,
(ii) a schedule in form reasonably satisfactory to the Lender of the
computations used by the Borrower in determining compliance with all financial
covenants contained herein, and (iii) a written discussion and analysis by the
management of the Borrower of the financial statements furnished in respect of
such Fiscal Quarter;
(b) as soon as available and in any event within 90 days after
the end of each Fiscal Year, consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such year and consolidated statements of income,
retained earnings and cash flow of the Borrower and its Subsidiaries for such
Fiscal Year, all prepared in conformity with GAAP and certified, in the case of
such consolidated financial statements, without qualification as to the scope of
the audit or as to the Borrower being a going concern by Xxxxxx Xxxxxxxx LLP or
other independent public accountants of recognized national standing, together
with (i) a certificate of such accounting firm stating that in the course of the
regular audit of the business of the Borrower and its Subsidiaries, which audit
was conducted by such accounting firm in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge that a
Default or Event of Default has occurred and is continuing, or, if in the
opinion of such accounting firm, a Default or Event of Default has occurred and
is
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continuing, a statement as to the nature thereof, (ii) a schedule in form
reasonably satisfactory to the Lender of the computations used by such
accountants in determining, as of the end of such Fiscal Year, the Borrower's
compliance with all financial covenants contained herein, and (iii) a written
discussion and analysis by the management of the Borrower of the financial
statements furnished in respect of such Fiscal Year;
(c) as soon as available and in any event within 60 days after
the end of each fiscal quarter of each fiscal year, in each case of any
Operating Lessee (other than the last fiscal quarter of such fiscal year)
consolidated balance sheets and statements of income and cash flow in respect of
such Operating Lessee for such fiscal quarter, all prepared in conformity with
GAAP and certified by the chief financial officer or chief accounting officer
(or such officer's authorized designee) of the Operating Lessee, duly
authorized, as fairly presenting the consolidated financial conditions and
results of operations of such Operating Lessee at such date and for such period,
subject to normal year-end adjustments, together with a certificate of said
officer stating that no Default or Event of Default has occurred and is
continuing under the relevant Operating Lease(s) (said certification, the
"Financial Officer's Certificate");
(d) as soon as available, and in any event within 105 days
after the end of each fiscal year of any Operating Lessee, consolidated balance
sheets and statements of income, retained earnings and cash flow in respect of
such Operating Lessee for such fiscal year, all prepared in conformity with GAAP
and certified without qualification as to the scope of the audit by independent
public accountants of recognized national standing, together with a Financial
Officer's Certificate;
(e) within thirty (30) days after the end of each Accounting
Period (as defined in the Management Agreement) or if there is no Management
Agreement, within thirty (30) days after the end of each calendar month, an
unaudited operating statement in respect of each Hotel Facility, including
occupancy percentages and average rate, accompanied by a Financial Officer's
Certificate;
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(f) promptly after the same are received by the Borrower, a
copy of each management letter provided to the Borrower by its independent
certified public accountants which refers in whole or in part to any inadequacy,
defect, problem, qualification or other lack of fully satisfactory accounting
controls utilized by the Borrower or any of its Subsidiaries or any Operating
Lessee.
7.12. Reporting Requirements. The Borrower shall furnish to
the Lender:
(a) prior to any Asset Sale, a notice (i) describing the
assets being sold and (ii) stating the estimated Asset Sales Proceeds in respect
of such Asset Sale;
(b) as soon as available and in any event within 30 days prior
to the end of each Fiscal Year, an annual budget of the Borrower and its
Subsidiaries for the succeeding Fiscal Year, displaying on a quarterly basis
anticipated balance sheets, forecasted Capital Expenditures, working capital
requirements, rent revenues, contributions by Operating Lessees to any FF&E
Reserves, interest income, net income, cash flow and sales, all on a
consolidated basis;
(c) promptly and in any event within 30 days after the
Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has reason to
know that any ERISA Event has occurred, a written statement of the chief
financial officer or other appropriate officer of the Borrower describing such
ERISA Event or waiver request and the action, if any, which the Borrower, its
Subsidiaries and ERISA Affiliates propose to take with respect thereto and a
copy of any notice filed by or with the PBGC or the IRS pertaining thereto;
(d) promptly and in any event within 10 days after receipt
thereof, a copy of any adverse notice, determination letter, ruling or opinion
the Borrower, any of its Subsidiaries or any ERISA Affiliate receives from the
PBGC, DOL or IRS with respect to any Plan, other than those which, in the
aggregate, do not have any reasonable likelihood of resulting in a Material
Adverse Change;
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(e) promptly after the commencement thereof, notice of all
actions, suits and proceedings before any domestic or foreign Governmental
Authority or arbitrator, affecting the Borrower, any of its Subsidiaries or any
Operator (subject to the Borrower having received notice or knowledge thereof),
except those which in the aggregate, if adversely determined, would have no
Material Adverse Effect;
(f) promptly and in any event within five (5) Business Days
after the Borrower becomes aware of the existence of (i) any Default or Event of
Default, (ii) any breach or non-performance of, or any default under any
Operating Lease, Management Agreement, Advisory Agreement or any Contractual
Obligation which is material to the business, prospects, operations or financial
condition of the Borrower and its Subsidiaries taken as one enterprise, or (iii)
any Material Adverse Change or any event, development or other circumstance
which has reasonable likelihood of causing or resulting in a Material Adverse
Change, telephonic or telecopied notice in reasonable detail specifying the
nature of such Default, Event of Default, breach, non-performance, default,
event, development or circumstance, including, without limitation, the
anticipated effect thereof, which notice (if by telephone) shall be promptly
confirmed in writing within five days;
(g) promptly after the sending or filing thereof, copies of
all reports which the Borrower sends to its security holders generally, and
copies of all reports and registration statements which the Borrower or any of
its Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange or the National Association of Securities Dealers,
Inc.;
(h) upon the request of the Lender copies of all federal,
state and local tax returns and reports filed by the Borrower or any of its
Subsidiaries in respect of taxes measured by income (excluding sales, use and
like taxes);
(i) promptly and in any event within five days of the Borrower
or any Subsidiary learning of any of the fol lowing, written notice to the
Lender of any of the following:
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(i) the Release or threatened Release of any
Hazardous Material on or from any property owned, operated or leased by
the Borrower of any of its Subsidiaries and any written order, notice,
permit, application or other written communication or report received
by the Borrower, any of its Subsidiaries or any Operator in connection
with or relating to any such Release or threatened Release, unless such
Release or threatened Release is not reasonably likely to have a
Material Adverse Effect;
(ii) any notice or claim to the effect that the
Borrower, any of its Subsidiaries or any Operator is or may be liable
to any Person as a result of the Release or threatened Release of any
Hazardous Material into the environment that could reasonably be
expected to have a Material Adverse Effect;
(iii) receipt by the Borrower, any of its
Subsidiaries or any Operator of notification that any real or personal
property of the Borrower or any of its Subsidiaries is subject to an
Environmental Lien that could reasonably be expected to have a Material
Adverse Effect;
(iv) any Remedial Action taken by the Borrower, any
of its Subsidiaries or (if known to the Borrower) any Operator or any
other Person in response to any Hazardous Material on, under or about
any real property owned, operated or leased by the Borrower or any of
its Subsidiaries, unless such Remedial Action is not reasonably likely
to have a Material Adverse Effect;
(v) receipt by the Borrower, any of its
Subsidiaries or any Operator of any notice of violation of, or
knowledge by the Borrower, any of its Subsidiaries or any Operator that
there exists a condition which may result in a violation by the
Borrower, any of its Subsidiaries or any Operator of, any Environmental
Law, unless such violation is not reasonably likely to have a Material
Adverse Effect;
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(vii) the commencement of any judicial or
administrative proceeding or investigation alleging a violation
of any Environmental Law; or
(viii) any proposed acquisition of stock, assets or
real property, or any proposed leasing of property by the Borrower or
any of its Subsidiaries, unless such action is not reasonably likely to
have a Material Adverse Effect;
(j) upon written request by the Lender, a report providing an
update of the status of any Environmental Claim, Remedial Action or any other
issue identified in any notice or report required pursuant to this Section 7.12;
(k) promptly, such additional financial and other information
respecting the financial or other condition of any Operators, the Advisor or the
Borrower or any of its Subsidiaries or the status or condition of any real
property owned or leased by the Borrower or its Subsidiaries, or the operation
thereof which the Borrower is entitled to or can otherwise reasonably obtain, as
the Lender from time to time reasonably request; and
(l) such other information respecting the business,
properties, condition, financial or otherwise, or operations of the Borrower,
any of its Subsidiaries or any Operators as the Lender may from time to time
reasonably request.
7.13. Leases and Operating Leases. The Borrower shall provide
the Lender with a copy of each lease of real property to which the Borrower or
any Subsidiary of the Borrower is then a party, whether as lessor or lessee. The
Borrower shall, and shall cause each of its Subsidiaries to, (i) comply in all
material respects with all of their respective obligations under all of their
respective Leases and Operating Leases now or hereafter held respectively by
them with respect to real property, including, without limitation, the Leases
set forth in Schedule 5.22(b); (ii) not modify, amend, cancel, extend or
otherwise change in any materially adverse manner any of the terms, covenants or
conditions of any such Leases or Operating Leases; (iii) provide the Lender with
a copy of each notice of default under any Lease or Operating Leases received by
the
69
Borrower or any Subsidiary of the Borrower immediately upon receipt thereof and
deliver to the Lender a copy of each notice of default sent by the Borrower or
any Subsidiary of the Borrower under any Operating Lease or Lease simultaneously
with its delivery of such notice under such Operating Lease or Lease; (iv)
notify the Lender, not later than 30 days prior to the date of the expiration of
the term of any Lease, of the Borrower's or any Subsidiary of the Borrower's
intention either to renew or to not renew any such Lease, and, if the Borrower
or any Subsidiary of the Borrower intends to renew such Lease, the terms and
conditions of such renewal; and (v) maintain each Operating Lease in full force
and effect in all material respects and enforce the material obligations of the
Operating Lessee thereunder, in a timely manner.
7.14. [Intentionally Omitted]
7.15. Employee Plans. For each Plan and any related trust
hereafter adopted or maintained by a Loan Party or any of its ERISA Affiliates
intended to qualify under Code Section 125, 401 or 501, the Borrower shall (i)
seek, and cause such of its ERISA Affiliates to seek, and receive determination
letters from the IRS to the effect that such plan is so qualified; and (ii)
cause such plan to be so qualified.
7.16. [Intentionally Omitted]
7.17. Fiscal Year. The Borrower shall maintain as its Fiscal
Year the twelve month period ending on December 31 of each year.
7.18. Environmental Matters. (a) The Borrower shall comply and
shall cause each of its Subsidiaries and, with respect to Hotel Facilities only,
each Operator to comply in all material respects with all applicable
Environmental Laws currently or hereafter in effect.
(b) If the Lender at any time has a reasonable basis to
believe that there may be a material violation of any Environmental Law by
Borrower any of its Subsidiaries or any Operator related to any Hotel Facility,
or real property adjacent thereto, then Borrower agrees, upon request from the
Lender, to provide the Lender, at Borrower's expense,
70
with such reports, certificates, engineering studies or other written material
or data as the Lender may reasonably require so as to reasonably satisfy the
Lender that Borrower or such Subsidiary or Operator is in material compliance
with all applicable Environmental Laws. Furthermore, the Lender shall have the
right upon prior notice (except in the case of an emergency) to inspect during
normal business hours any real property owned, operated or leased by Borrower or
any of its Subsidiaries if at any time the Lender has a reasonable basis to
believe that there may be such a material violation of Environmental Law.
(c) The Borrower shall, and shall cause each of its
Subsidiaries and, with respect to Hotel Facilities only, each Operator to, take
such Remedial Action or other action as required by Environmental Laws, as any
Governmental Authority requires, except to the extent contested in good faith
and by proper proceedings, or as is appropriate and consistent with good
business practice.
7.19. Appraisals and other Valuations. (a) From time to time
during the term of this Agreement, the Lender may, in its sole discretion, order
an Appraisal of one or more of the Hotel Facilities. Any such Appraisal shall be
at the Borrower's cost if the Lender shall have obtained a letter from an expert
appraiser or evaluator of real property or hotel or other lodging facilities to
the effect that, or the Lender shall otherwise in good faith have determined
that, facts or circumstances exist, or changes in market conditions have
occurred, as a result of which there exists a reasonable possibility that
Appraisals of the Hotel Facilities, might result in an aggregate valuation
thereof reflecting a material loss of value as compared to the value thereof
indicated in the certificate of a Responsible Officer delivered to the Lender
pursuant to Section 7.12(k), or (ii) an Event of Default has occurred.
(b) In addition to the Appraisals referred to in subsection
(a) above, from time to time during the term of this Agreement, if so requested
by the Lender, in its sole discretion, the Borrower shall furnish to the Lender
a certificate of a Responsible Officer certifying as to the value of one or more
of the Hotel Facilities in such officer's reasonable opinion.
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7.20. REIT Requirements. The Borrower shall operate its
business at all times so as to satisfy all requirements necessary to qualify as
a real estate investment trust under Section 856 through 860 of the Code. The
Borrower will maintain adequate records so as to comply with all record-keeping
requirements relating to the qualification of the Borrower as a real estate
investment trust as required by the Code and applicable regulations of the
Department of the Treasury promulgated thereunder and will properly prepare and
timely file with the IRS all returns and reports required thereby. The Borrower
will request from its shareholders all shareholder information required by the
Code and applicable regulations of the Department of Treasury promulgated
thereunder.
7.21. Maintenance of FF&E Reserves. The Borrower shall cause
the Operator to maintain FF&E Reserves in respect of each Hotel Facility,
pursuant to the terms of the Operating Lease and/or Management Agreement
relating thereto and shall direct the Operator to deliver to the Lender
simultaneously with delivery to the Borrower or its Subsidiaries, copies of any
reports, statements or other information required to be supplied to the Borrower
or its Subsidiary under any Operating Lease or Management Agreement for any
Hotel Facility. The Borrower shall not commingle, or permit the commingling of,
other funds with the funds in the FF&E Reserves except to the extent permitted
by the Management Agreement.
7.22. Further Assurances. At any time upon the request of the
Lender, the Borrower will, promptly and at its expense, execute, acknowledge and
deliver such further documents and do such other acts and things as the Lender
may reasonably request to provide for payment of the Loans made hereunder and
interest thereon in accordance with the terms of this Agreement.
7.23. Amendment to Management Agreement. The Borrower shall
use all reasonable efforts to procure the following within three months of the
date hereof: (i) an amendment to the definition of "Qualified Loan" in the
Management Agreement and to any other applicable provisions of the Management
Agreement including, without limitation, Section 6.09 thereof, to the effect
that all and any Loans made pursuant to this Agreement, whether before or after
the
72
date of such amendment, shall comply with the requirements of such definition
and that in the context of cross collateralization of the Hotel Facilities, the
test for Qualified Loans shall be applied on a consolidated basis for all such
Hotel Facilities to be mortgaged as collateral for the Loans hereunder, and (ii)
a written and binding agreement from the Management Company that,
notwithstanding any provision to the contrary set forth in any Assignment
Agreement, if this Agreement shall be amended, modified or supplemented without
the prior written consent of the Management Company, provided that all Loans
made by the Lender hereunder comply with the requirements for Qualified Loans,
as the same are set forth in the Management Agreement and may be amended
pursuant to subparagraph (i) above, such amendment, modification or supplement
shall not disqualify the Loans from being Qualified Loans and Lender shall
remain entitled to the benefits of the provisions of any existing Assignment
Agreements and to the provisions of the Management Agreement intended for the
benefit of a Qualified Lender as such term is defined in the Management
Agreement."
ARTICLE VIII
NEGATIVE COVENANTS
As long as any of the Obligations or Commitment remain
outstanding, without the written consent of the Lender, the Borrower agrees with
the Lender that:
8.1. Liens, Etc. The Borrower shall not create or suffer to
exist, and shall not permit any of its Subsidiaries to create or suffer to
exist, any Lien upon or with respect to any of its or such Subsidiary's
properties, whether now owned or hereafter acquired, or assign, or permit any of
its Subsidiaries to assign, any right to receive income therefrom, except for
the following and the Lender hereby consents to the following liens
notwithstanding the provisions of any Negative Pledge Agreement:
(a) Liens created pursuant to the Loan Documents;
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(b) Liens arising by operation of law in favor of materialmen,
mechanics, warehousemen, carriers, lessors or other similar Persons
incurred by the Borrower or any of its Subsidiaries in the ordinary
course of business which secure its obligations to such Person;
provided, however, that (i) the Borrower or such Subsidiary is not in
default with respect to such payment obligation to such Person, (ii)
the Borrower or such Subsidiary is in good faith and by appropriate
proceedings diligently contesting such obligation and adequate
provision is made for the payment thereof, or (iii) all such failures
in the aggregate have no Material Adverse Effect;
(c) Liens (excluding Environmental Liens) securing taxes,
assessments or governmental charges or levies; provided, however, that
(i) neither the Borrower nor any of its Subsidiaries is in default in
respect of any payment obligation with respect thereto unless the
Borrower or such Subsidiary is in good faith and by appropriate
proceedings diligently contesting such obligation and adequate
provision is made for the payment thereof, and (ii) all such failures
in the aggregate have no Material Adverse Effect;
(d) Zoning restrictions, easements, licenses, reservations,
restrictions on the use of real property or minor irregularities
incident thereto which do not in the aggregate materially detract from
the value or use of the property or assets of the Borrower or any of
its Subsidiaries or impair, in any material manner, the use of such
property for the purposes for which such property is held by the
Borrower or any such Subsidiary;
(e) Liens in favor of landlords securing operating leases
permitted by Section 8.3;
(f) Liens existing on the date of this Agreement and disclosed
on Schedule 8.1;
(g) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of
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tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(h) Any attachment or judgment Lien not constituting an Event
of Default under Section 9.1(f);
(i) Any (i) interest or title of a lessor or sublessor under
any Capitalized Lease or any operating lease not prohibited by this
Agreement, (ii) restriction or encumbrance that the interest or title
of such lessor or sublessor may be subject to, or (iii) subordination
of the interest of the lessee or sublessee under such lease to any
restriction or encumbrance referred to in the preceding clause (ii);
(j) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement;
(k) Deposits in the ordinary course of business to secure
liabilities to insurance carriers, lessors, utilities and other service
providers;
(l) Purchase money security interests (including mortgages,
conditional sales, Capitalized Leases and any other title retention or
deferred purchase devices) in personal property of the Borrower or any
of its Subsidiaries in an amount not exceeding $200,000 in respect of
each Hotel Facility, existing or created at the time of acquisition
thereof or within 60 days thereafter.
(m) Any Lien securing the renewal, extension or refunding of
any Indebtedness or other Obligation secured by any Lien permitted by
this Section 8.1 provided that such renewal, extension or refunding is
otherwise permitted by this Agreement and the amount of such
Indebtedness or other Obligation secured by such Lien and the assets
subject to such Lien are not increased.
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(n) Any Lien securing Indebtedness permitted pursuant to
Section 8.2(v) and Section 8.2(vi).
8.2. Indebtedness. (a) The Borrower shall not create, incur or
suffer to exist, or permit any of its Subsidiaries to create, incur or suffer to
exist, any Indebtedness, or incur, assume, endorse, be or become liable for, or
guarantee, directly or indirectly, or permit or suffer to exist, any Contingent
Obligation, except:
(i) Indebtedness and Contingent Obligations in respect of the
Obligations or evidenced by a Loan Document;
(ii) current liabilities in respect of taxes, assessments and
governmental charges or levies incurred, or claims for labor,
materials, inventory, services, supplies and rentals incurred, or for
goods or services purchased, in the ordinary course of business
consistent with the past practice of the Borrower and its Subsidiaries;
(iii) Indebtedness of the Borrower consisting of fees and
expenses referred to in Section 4.1(n) and 4.2(f);
(iv) Indebtedness of the Borrower or any of its Subsidiaries
arising pursuant to the Second Facility.
(v) Indebtedness of the Borrower or any of its Subsidiaries
under Capital Financing Indebtedness in respect of each Hotel Facility
in an aggregate amount for such Hotel Facility not exceeding
$200,000.00 at any one time outstanding; and
(vi) Indebtedness of the Borrower or any of its Subsidiaries
comprising pre-existing Indebtedness secured by Real Estate and any
personal property located thereon, which the Borrower or any of its
Subsidiaries assumes in connection with the acquisition of such Real
Estate, in an aggregate amount not exceeding $25,000,000.
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(b) The Borrower shall not cancel, or permit any of its
Subsidiaries to cancel, any claim or Indebtedness owed to it except for adequate
consideration and in the ordinary course of business.
8.3. Lease Obligations. The Borrower shall not, and shall not
permit any of its Subsidiaries to, become or remain liable as lessee or
guarantor or other surety with respect to any lease, whether an operating lease
or a Capitalized Lease, of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, which (i) the Borrower or any of its
Subsidiaries has sold or transferred or is to sell or transfer to any other
Person, or (ii) the Borrower or any of its Subsidiaries intends to use for
substantially the same purposes as any other property which has been or is to be
sold or transferred by that entity to any other Person in connection with such
lease.
8.4. [Intentionally Omitted.]
8.5. Mergers, Stock Issuances, Asset Sales, Etc. (a) The
Borrower shall not sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its assets or properties, and shall not, and shall not
permit any of its Subsidiaries to, (i) merge with any Person, or (ii)
consolidate with any Person other than (A) the merger of a Subsidiary of the
Borrower into a wholly-owned Subsidiary of the Borrower that is a Loan Party, or
(B) the merger of a wholly-owned Subsidiary of the Borrower into the Borrower.
(b) The Borrower shall not transfer, or permit any of its
Subsidiaries to issue or transfer, any Stock or Stock Equivalents of any
Subsidiary other than any such issuance or transfer (i) by a Subsidiary of the
Borrower to a wholly-owned Subsidiary of the Borrower that is a Loan Party or
(ii) by a wholly-owned Subsidiary of the Borrower to the Borrower.
(c) The Borrower shall not and shall not permit any of its
Subsidiaries to effect, enter into, consummate or suffer to exist any Asset Sale
(other than an Asset Sale with respect to Mortgaged Properties as to which
subsection (d) below shall apply) without the prior written consent of
77
the Lender, such consent not to be unreasonably withheld or delayed.
(d) The Borrower shall not and shall not permit any of its
Subsidiaries to effect, enter into, consummate or suffer to exist any Asset Sale
with respect to any Mortgaged Property without (y) the prior written consent of
the Lender, such consent not to be unreasonably withheld or delayed, and (z)
prepayment of the Loans pursuant to Section 2.6(d).
In the event that an Asset Sale of a Mortgaged Property is
entered into in violation of any of the provisions of this Section 8.5(d), in
addition to the other rights and remedies of the Lender hereunder, the Borrower
shall forthwith prepay the Loans upon receipt by the Borrower of its
Subsidiaries of the Asset Sale Proceeds relating thereto, in an amount equal to
such Asset Sale Proceeds, together with accrued interest to the date of such
prepayment on the principal amount prepaid.
8.6. Investments. The Borrower shall not, directly or
indirectly, make or maintain, or permit any of its Subsidiaries to make or
maintain, any loan or advance to any Person or own, purchase or otherwise
acquire, or permit any of its Subsidiaries to own, purchase or otherwise
acquire, any Stock, Stock Equivalents, other equity interest, obligations or
other securities of, or all or substantially all of the assets of, any Person or
all or substantially all of the assets constituting the business of a division,
branch or other unit operation of any Person, or enter into any joint venture or
partnership with, or make or maintain, or permit any of its Subsidiaries to make
or maintain, any capital contribution to, or otherwise invest in, any Person or
incorporate or organize any Subsidiary which was not in existence on the Closing
Date (any such transaction being an "Investment"), except Investments consisting
of the Stock of Subsidiaries listed on Schedule 5.8,
8.7. Change in Nature of Business or Organizational
Documents(a) The Borrower shall not make, and shall not permit any of its
Subsidiaries to make, any material change in the nature or conduct of its
business as carried on at the date hereof.
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(b) The Borrower shall not, and shall not permit any of its
Subsidiaries to, amend its declaration of trust, certificate of incorporation or
by-laws other than for amendments which in the aggregate have no Material
Adverse Effect.
8.8. Modification of Material Agreements. The Borrower shall
not, and shall not permit any of its Subsidiaries to, (i) alter, rescind,
terminate, amend, supplement, waive or otherwise modify any provision of or
permit any breach or default to exist under the Advisory Agreement without the
prior written consent of the Lender; or (ii) alter, amend, modify, rescind,
terminate, supplement or waive any of their respective rights under, or fail to
comply in all material respects with, any of its material obligations arising
under any Operating Lease or Management Agreement; provided, however, that, with
respect to any such -------- ------- failure to comply with any such
obligations, the Borrower shall not be deemed in default of this Section 8.8 if
all such failures in the aggregate would have no Material Adverse Effect; and
provided, further, that in the event of -------- ------- any material breach or
event of default by a Person other than the Borrower or any of its Subsidiaries,
the Borrower shall promptly notify the Lender of any such breach or event of
default and take all such action as may be reasonably necessary in order to
endeavor to avoid having such breach or event of default have a Material Adverse
Effect.
8.9. Accounting Changes. The Borrower shall not make, nor
permit any of its Subsidiaries to make, any change in accounting treatment and
reporting practices or tax reporting treatment, except as required by GAAP or
law and disclosed to the Lender.
8.10. Transactions with Affiliates. The Borrower shall not,
and shall not permit any of its Subsidiaries, to enter into any transaction
directly or indirectly with or for the benefit of any Affiliate of the Borrower
(including, without limitation, employment contracts or contracts involving the
payment of management or consulting fees, guaranties and assumptions of
obligations of any such Affiliate) except for (A) transactions in the ordinary
course of business on a basis no less favorable to the Borrower or such
Subsidiary as would be obtained in a comparable arm's length transaction with a
Person not an
79
Affiliate, and (B) salaries and other employee compensation and benefits to
officers or directors of the Borrower or any of its Subsidiaries commensurate
with current compensation and benefit levels.
8.11. Environmental Matters. (a) The Borrower shall not, and
shall not permit any of its Subsidiaries or any Operator, or, to the extent
practicable, any other Person to dispose of any Hazardous Material by placing it
in or on the ground or waters of any property owned, operated or leased by the
Borrower or any of its Subsidiaries, except as in compliance with all applicable
Environmental Laws currently and hereinafter in effect; provided, however, that
the Borrower shall not be deemed in default of this provision if all such
disposals in the aggregate would have no Material Adverse Effect.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries or any Operator, or, to the extent practicable, any other Person
to, dispose or to arrange for the disposal of any Hazardous Material on any
property owned, operated or leased by any other Person, except as in compliance
with all applicable Environmental Laws currently and hereinafter in effect;
provided, however, that the Borrower shall not be deemed in default of this
provision if all such disposals in the aggregate would have no Material Adverse
Effect.
ARTICLE IX
EVENTS OF DEFAULT
9.1. Events of Default. Each of the following events shall be
an Event of Default:
(a) The Borrower shall fail to pay any principal (including,
without limitation, mandatory prepayments of principal) of, or interest
on, any Loan, any fee, any other amount due hereunder or under the
other Loan Documents or other of the Obligations when the same becomes
due and payable; or
(b) Any representation or warranty made or deemed
made by any Loan Party in any Loan Document or by any
80
Loan Party (or any of its officers) in writing in connection with any
Loan Document shall prove to have been incorrect in any material
respect when made or deemed made; or
(c) Any Loan Party shall fail to perform or observe (i) any
term, covenant or agreement contained in Articles VI or VIII or in any
Collateral Document, or (ii) any other term, covenant or agreement
contained in this Agreement or in any other Loan Document if such
failure under this clause (ii) shall remain unremedied for fifteen (15)
days after the date on which written notice thereof shall have been
given to the Borrower by the Lender; or
(d) Any Loan Party or any of its Subsidiaries shall fail to
pay any principal of or premium or interest on any Indebtedness of such
Loan Party or Subsidiary (excluding Indebtedness evidenced by the Note)
beyond the period of grace (not to exceed 30 days), if any, with
respect thereto (whether the same becomes due and payable by scheduled
maturity, required prepayment, acceleration, demand or otherwise); or
any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Indebtedness, if the
effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such
Indebtedness shall become or be declared to be due and payable, or any
Loan Party or any of its Subsidiaries shall be required to repurchase
or offer to repurchase such Indebtedness, prior to the stated maturity
thereof; or
(e) Any Loan Party or any of its Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors, or any proceeding shall be
instituted by or against any Loan Party or any of its Subsidiaries
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for
81
relief or the appointment of a custodian, receiver, trustee or other
similar official for it or for any substantial part of its property
and, in the case of any such proceedings instituted against any Loan
Party or any of its Subsidiaries (but not instituted by it), either
such proceedings shall remain undismissed or unstayed for a period of
sixty (60) days or any of the actions sought in such proceedings shall
occur; or any Loan Party or any of its Subsidiaries shall take any
corporate action to authorize any of the actions set forth above in
this subsection (e); or
(f) One or more judgments or orders for the payment of money
in an aggregate amount in excess of $100,000 to the extent not fully
covered by insurance shall be rendered against any Loan Party or any of
its Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order, or (ii) there
shall be any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(g) An ERISA Event shall occur which, in the reasonable
determination of the Lender, is reasonably likely to have a Material
Adverse Effect; or
(h) The Borrower or any of its Subsidiaries shall have entered
into any consent or settlement decree or agreement or similar
arrangement with an Governmental Authority or any judgment, order,
decree or similar action shall have been entered against the Borrower
or any of its Subsidiaries or any Operator, in any case based on or
arising from the violation of or pursuant to any Environmental Law, or
the generation, storage, transportation, treatment, disposal or Release
of any Hazardous Material and such judgment, order, decree or similar
action is reasonably likely to have a Material Adverse Effect; or
(i) Any material provision of any Collateral Document after
delivery thereof under Article IV shall for any reason cease to be
valid and binding on any Loan Party thereto, or any Loan Party shall so
state in writing; or
82
(j) Any Collateral Document after delivery thereof pursuant to
Article IV shall, for any reason, cease to create a valid Lien on any
of the Collateral purported to be covered thereby or such Lien shall
cease to be a perfected and first priority Lien, or any Loan Party
shall so state in writing; or
(k) There shall occur a Material Adverse Change or an event
which is reasonable likely to have a Material Adverse Effect; or
(l) The Lender shall have determined in good faith, and shall
have so given notice to the Borrower, that the Borrower has at any time
ceased to be in a position to qualify, or has not qualified, as a real
estate investment trust for any of the purposes of the provisions of
the Code applicable to real estate investment trusts; provided that no
Event of Default under this subsection shall be deemed to have occurred
and be continuing if, within 10 days after notice of any such
determination is given to the Borrower, the Borrower shall have
furnished the Lender with an opinion of the Borrower's tax counsel (who
shall be reasonably satisfactory to the Lender) to the effect that the
Borrower is then in a position to so qualify, or has so qualified, as
the case may be, which opinion shall not contain any material
qualification unsatisfactory to the Lender; or
(m) HRPT Advisors shall cease at any time to (A) hold
beneficially and of record at least 250,000 of the issued and
outstanding common shares and each other class of equity securities of
the Borrower (adjusted for any division, reclassification or stock
dividend in respect of Common Shares), or (B) hold the power to direct
or cause the direction of the management and policies of the Borrower;
or
(n) Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx shall cease at any
time to (A) hold beneficially and of record, in the aggregate, at least
51% of the issued and outstanding common shares and each other class of
equity securities of HRPT Advisors (adjusted for any division,
reclassification or stock dividend in respect of Common Shares), or (B)
hold the power to direct or
83
cause the direction of the management and policies of HRPT Advisors; or
(o) HRPT Advisors shall cease to be the sole Advisor to
Borrower pursuant to and in accordance with the Advisory Agreement,
without the Lender's prior written consent or the Advisory Agreement
shall be materially amended, supplemented or modified without the
Lender's prior written consent; or
(p) Advisor shall default in the observance or
performance of any material provision of the
Subordination Agreement; or
(q) Any Manager shall default in the observance or performance
of any material provision of a Management Agreement and such defaults,
in the aggregate, are reasonably likely to have a Material Adverse
Effect; or
(r) Any Operating Lessee shall default in the observance or
performance of any material provision of an Operating Lease and such
defaults, in the aggregate, are reasonably likely to have a Material
Adverse Effect.
9.2. Remedies. If there shall occur and be continuing any
Event of Default, the Lender (i) may by notice to the Borrower, declare the
obligation of the Lender to make Loans to be terminated, whereupon the same
shall forthwith terminate, and (ii) may by notice to the Borrower, declare the
Loans, all interest thereon and all other amounts and Obligations payable under
this Agreement to be forthwith due and payable, whereupon the Note, all such
interest and all such amounts and Obligations (to the extent permitted by
applicable law), shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, however, that upon the
occurrence of the Event of Default specified in subparagraph (e) above, (A) the
obligation of the Lender to make Loans shall automatically be terminated and (B)
the Loans, all such interest and all such amounts and Obligations shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the
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Borrower. In addition to the remedies set forth above, the Lender may exercise
any remedies provided for by the Collateral Documents in accordance with the
terms thereof or any other remedies provided by applicable law.
ARTICLE X
MISCELLANEOUS
10.1. Amendments, Etc. No amendment or waiver of any provision
of this Agreement nor consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be in writing and signed by the
Lender, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
10.2. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including, without limitation,
telegraphic, telex, telecopy or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered by hand:
If to the Borrower, at its address at:
000 Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
(telecopy number: 617-332-2261)
(telephone number: 000-000-0000);
with a copy to:
Xxxxxxxx & Worcester
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
(telecopy number: 617-338-2800)
(telephone number: 000-000-0000).
85
If to the Lender, at its address at
000 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Managing Director
(telecopy number: 212-504-4096)
(telephone number: 000-000-0000)
with a copy to:
Xxxx Xxxxxxx & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: J. Xxxxxx Xxxxx, Esq.
(telecopy number: 212-310-8007)
(telephone number: 000-000-0000)
or, as to the Borrower or the Lender, at such other address as shall be
designated by such party in a written notice to the other party. All such
notices and communications shall, when mailed, telegraphed, telexed, telecopied,
cabled or delivered, be effective three (3) Business Days after being deposited
in the mails, delivered to the telegraph company, confirmed by telex answerback,
telecopied with confirmation of receipt, delivered to the cable company or
delivered by hand to the addressee, respectively, except that notices and
communications to the Lender pursuant to Article II shall not be effective until
received by the Lender.
10.3. No Waiver; Remedies. No failure on the part of the
Lender to exercise, and no delay in exercising, any right hereunder or under any
Note shall operate as a waiver thereof; nor shall any single or partial exercise
of any such right preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
10.4. Costs; Expenses; Indemnities. (a) The Borrower agrees to
pay to the Lender or as the Lender may direct (i) on or before the date hereof
(and not including any amounts previously paid) the sum of ONE HUNDRED THOUSAND
DOLLARS ($100,000) toward the reasonable costs and expenses of the Lender in
connection with the preparation, execution and delivery of this Agreement, each
of the other Loan
86
Documents and each of the other documents to be delivered hereunder and
thereunder, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel, accountants, appraisers, consultants or industry experts
retained by the Lender with respect thereto, provided that the Borrower
acknowledges and agrees that the foregoing shall not include the fees and
expenses to be paid by the Borrower pursuant to Section 4.2(e) hereof, and (ii)
on demand, all costs and expenses of the Lender (including, without limitation,
the fees and out-of-pocket expenses of counsel, retained by the Lender) in
connection with the modification, amendment or enforcement (whether through
negotiation, legal proceedings or otherwise) of this Agreement and the other
Loan Documents.
(b) The Borrower agrees to indemnify and hold harmless the
Lender and its Affiliates, and the directors, officers, employees, agents,
attorneys, consultants and advisors of or to any of the foregoing (including,
without limitation, those retained in connection with the satisfaction or
attempted satisfaction of any of the conditions set forth in Article IV) (each
of the foregoing being an "Indemnitee") from and against any and all claims,
damages, liabilities, obligations, losses, penalties, actions, judgments, suits,
costs, disbursements and expenses of any kind or nature (including, without
limitation, fees and disbursements of counsel to any such Indemnitee and
experts, engineers and consultants and the costs of investigation and
feasibility studies) which may be imposed on, incurred by or asserted against
any such Indemnitee in connection with or arising out of any investigation,
litigation or proceeding, whether or not any such Indemnitee is a party thereto,
whether direct, indirect, or consequential and whether based on any federal,
state or local law or other statutory regulation, securities or commercial law
or regulation, or under common law or in equity, or on contract, tort or
otherwise, in any manner relating to or arising out of or based upon or
attributable to this Agreement, any other Loan Document, any document delivered
hereunder or thereunder, any Obligation, or any act, event or transaction
related or attendant to any thereof, including, without limitation, (i) arising
from any misrepresentation or breach of warranty under Section 5.19 or any
Environmental Claim or any Environmental Lien or any Remedial Action arising out
of or based upon anything
87
relating to real property owned, leased or operated by the Borrower or any of
its Subsidiaries and the facilities or operations (collectively, the
"Indemnified Matters"); provided, however, that the Borrower shall not have any
obligation under this Section 10.4(b) to an Indemnitee with respect to any
Indemnified Matter caused by or resulting from the gross negligence or willful
misconduct of that Indemnitee, as determined by a court of competent jurisdic
tion in a final non-appealable judgment or order.
(c) If the Lender receives any payment of principal of any
Loan other than on the last day of an Interest Period relating to such Loan, as
a result of any payment made by the Borrower or acceleration of the maturity of
the Note pursuant to Section 9.2 or for any other reason, the Borrower shall,
upon demand by the Lender, pay to the Lender all amounts required to compensate
the Lender for any additional losses, costs or expenses which it may reasonably
incur as a result of such payment, including, without limitation, any loss
(including, without limitation, loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by the Lender to fund or maintain such Loan.
(d) The Borrower shall indemnify the Lender for, and hold the
Lender harmless from and against, any and all claims for brokerage commissions,
fees and other compensation made against the Lender for any broker, finder or
consultant with respect to any agreement, arrangement or understanding made by
or on behalf of any Loan Party or any of its Subsidiaries in connection with the
transactions contemplated by this Agreement.
(e) The Borrower agrees that any indemnification or other
protection provided to any Indemnitee pursuant to this Agreement (including,
without limitation, pursuant to this Section 10.4) or any other Loan Document
shall (i) survive payment of the Obligations and (ii) inure to the benefit of
any Person who was at any time an Indemnitee under this Agreement or any other
Loan Document.
(f) The provisions of this Section 10.4 shall survive any
termination of this Agreement.
88
10.5. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default the Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Lender
to or for the credit or the account of the Borrower against any and all of the
Obligations now or hereafter existing whether or not the Lender shall have made
any demand under this Agreement or any Note or any other Loan Document and
although such Obligations may be unmatured. The Lender agrees promptly to notify
the Borrower after any such set-off and application made by the Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Lender under this
Section are in addition to the other rights and remedies (including, without
limitation, other rights of set-off) which the Lender may have.
10.6. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Lender and thereafter
shall be binding upon and inure to the benefit of the Borrower and the Lender
and their respective successors and assigns, except that the Borrower shall not
have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lender.
10.7. Assignments and Participations. (a) The Lender may sell,
transfer, negotiate or assign to one or more other financial institutions all or
a portion of its Commitment, the Loans owing to it and an interest in the Note
held by it and a commensurate portion of its rights and obligations hereunder
and under the other Loan Documents subject to the proviso to subparagraph (c)
below.
(b) The Lender may sell participations to one or more banks or
other Persons in or to all or a portion of its rights and obligations under the
Loan Documents (including, without limitation, all or a portion of the
Commitment, the Loans owing to it and the Note held by it). In the event of the
sale of any participation by the Lender, (i) the Lender's obligations under the
Loan Documents (including, without limitation, the Commitment) shall remain
unchanged,
89
(ii) the Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) the Lender shall remain the holder of
such Note and Obligations for all purposes of this Agreement, and (iv) the
Borrower shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under this Agreement.
(c) Each participant shall be entitled to the benefits of Sections
2.10, 2.12 and 2.14 as if it were a Lender; provided, however, that anything
herein to the contrary notwithstanding, the Borrower shall not, at any time, be
obligated to pay to any participant of any interest of the Lender, under Section
2.10, 2.12 or 2.14, any sum in excess of the sum which the Borrower would have
been obligated to pay Lender in respect of such interest had such assignment not
been effected or had such participation not been sold.
(d) The Borrower shall cooperate with Lender, at no cost or
expense to the Borrower, and any other party to whom the Lender may assign or
sell participations (or negotiate for such assignment or sale) in all or a
portion of the Commitment, the Loans owing to it and an interest in the Note.
Such cooperation of the part of the Borrower shall include but shall not be
limited to the execution and delivery of (i) amendments, modifications and/or
supplements to one or more Loan Documents, in form and substance as may be
required by Lender, and (ii) the execution and delivery of one or more
additional promissory notes, at no cost or expense to the Borrower; provided
however, that such promissory notes, amendments, modifications and/or
supplements do not materially increase the obligations of the Borrower or
materially diminish the rights of the Borrower under the Loan Documents.
10.8. Governing Law; Severability. This Agree ment and the
Note and the rights and obligations of the parties hereto and thereto shall be
governed by, and construed and interpreted in accordance with, the law of the
State of New York. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this agreement shall be prohibited by or invalid under
applicable law, such provision shall be
90
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
10.9. Submission to Jurisdiction; Service of Process. (a) Any
legal action or proceeding with respect to this Agreement or the Note or any
document related thereto may be brought in the courts of the State of New York
or of the United States of America for the Southern District of New York, and,
by execution and delivery of this Agreement, the Borrower hereby accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably
waive any objection, including, without limitation, any objection to the laying
of venue or based on the grounds of forum non conveniens, which any of them may
now or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(b) The Borrower irrevocably consents to the service of
process of any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the borrower at its address provided herein.
(c) Nothing contained in this Section 10.9 shall affect the
right of the Lender or any holder of the Note to serve process in any other
manner permitted by law or commence legal proceedings or otherwise proceed
against the Borrower in any other jurisdiction.
10.10. Section Titles. The Section titles contained in this
Agreement are and shall be without sub stantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
10.11. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by differ ent parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
10.12. Entire Agreement. This Agreement, together with all of
the other Loan Documents and all
91
certificates and documents delivered hereunder or thereunder embody the entire
agreement of the parties and supersedes all prior agreements and understandings
relating to the subject matter hereof.
10.13. Confidentiality. The Lender agrees to keep information
obtained by it pursuant hereto and the other Loan Documents confidential in
accordance with the Lender's customary practices and agrees that it will only
use such information in connection with the transactions contemplated by this
Agreement and not disclose any of such information other than (i) to the
Lender's employees, representatives and agents who are or are expected to be
involved in the evaluation of such information in connection with the
transactions contemplated by this Agreement and who are advised of the
confidential nature of such information, (ii) to the extent such information
presently is or hereafter becomes available to the Lender, as the case may be,
on a non-confidential basis from a source other than the Borrower, (iii) to the
extent disclosure is required by law, regulation or judicial order or requested
or required by bank regulators or auditors, or (iv) to assignees or participants
or potential assignees or participants who agree to be bound by the provisions
of this sentence.
10.14. Waiver of Jury Trial. Each of the parties hereto waives
any right it may have to trial by jury in respect of any litigation based on, or
arising out of, under or in connection with this Agreement or any other Loan
Document, or any course of conduct, course of dealing, verbal or written
statement or action of any party hereto.
10.15. NON-LIABILITY OF TRUSTEES. THE DECLARATION OF TRUST OF
THE BORROWER, DATED MAY 12, 1995, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS
THERETO ("THE DECLARATION"), IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF
ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME
"HOSPITALITY PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE BORROWER SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, THE BORROWER. ALL PERSONS DEALING WITH THE BORROWER, IN ANY
92
WAY, SHALL LOOK ONLY TO THE ASSETS OF THE BORROWER FOR THE PAYMENT OF ANY SUM OR
THE PERFORMANCE OF ANY OBLIGATION.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
HOSPITALITY PROPERTIES TRUST
By:/s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Treasurer and Chief Financial Officer
DLJ MORTGAGE CAPITAL, INC.
By:/s/ N. Xxxxx XxXxxxx
Name: N. Xxxxx XxXxxxx
Title: Senior Vice President
By:/s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Vice President
93
Schedule 1.1
Initial Hotels
94
Schedule 3.2
Mortgaged Property Prioritization Schedule
95
Schedule 5.8 (a)
Stock Related Agreements
96
Schedule 5.8 (c)
Subsidiaries
97
Schedule 5.19
Environmental Matters
98
Schedule 5.22(a)
Owned Real Estate
99
Schedule 5.22(b)
Leased Real Estate
100
Schedule 5.22(c)
Defects in Improvements
101
Schedule 8.1
Existing Liens
102
Exhibit A
Note
103
Exhibit B
Notice of Borrowing
104
Exhibit C
Form of Negative Pledge Agreement
105
Exhibit D
Form of Opinion of Counsel for the Loan Parties
106
Exhibit E
Form of Mortgage
107
Exhibit F
Form of Assignment Agreement
108
Exhibit G
Form of Management Agreement
109
Exhibit H
Form of Operating Lease
110
Exhibit I
Form of Security Agreement
111
Exhibit J
Form of Subordination Agreement
112
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS.....................................1
1.1. Defined Terms..................................................1
1.2. Computation of Time Periods...................................26
1.3. Accounting Terms..............................................26
1.4. Certain Terms.................................................26
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS......................................27
2.1. The Loans.....................................................27
2.2. Making the Loans..............................................27
2.3. [Intentionally Omitted].......................................28
2.4. Reduction and Termination of the Commitment...................28
2.5. Repayment.....................................................28
2.6. Prepayments...................................................28
2.7. Continuation of Loans at the Eurodollar Rate..................29
2.8. Interest......................................................29
2.9. Interest Rate Determination and Protection....................30
2.10. Increased Costs..............................................31
2.11. Illegality...................................................31
2.12. Capital Adequacy.............................................32
2.13. Payments and Computations....................................32
2.14. Taxes .......................................................33
ARTICLE III
APPROVAL OF PROPOSED HOTEL FACILITIES;
SELECTED PROPERTIES AND PREPARATION
OF MORTGAGE DOCUMENTS...............................................34
3.1. Approval of Proposed Hotel Facilities.........................34
3.2. Loan to Value Requirement; Selected Properties................35
3.3. Preparation and Execution of Mortgage Documents...............36
ARTICLE IV
CONDITIONS OF LENDING...............................................36
4.1. Conditions Precedent to the Initial Loan......................36
4.2. Conditions Precedent to Each Loan.............................39
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ARTICLE V
REPRESENTATIONS AND WARRANTIES......................................43
5.1. Existence; Compliance with Law................................43
5.2. Power; Authorization; Enforceable Obligations.................44
5.3. Taxes .......................................................45
5.4. Full Disclosure...............................................46
5.5. Financial Matters.............................................46
5.6. Litigation....................................................47
5.7. Margin Regulations............................................48
5.8. Ownership of Borrower and HRPT Advisors;
Subsidiaries...........................................48
5.9. ERISA .......................................................49
5.10. Liens .......................................................50
5.11. [Intentionally Omitted]......................................51
5.12. No Burdensome Restrictions; No Defaults; Contractual
Obligations............................................51
5.13. No Investments...............................................51
5.14. Government Regulation........................................51
5.15. Insurance....................................................52
5.16. Employees....................................................52
5.17. Force Majeure................................................52
5.18. Use of Proceeds..............................................53
5.19. Environmental Protection.....................................53
5.20. Contractual Obligations Concerning Assets....................55
5.21. Status as REIT...............................................55
5.22. Real Property................................................55
5.23. Operator and Advisor: Compliance with Law....................58
5.24. Operating Leases, Management Agreement and Advisory
Agreement..............................................58
5.25. FF&E Reserves................................................59
ARTICLE VI
FINANCIAL COVENANTS.................................................59
6.1. Limitation on Indebtedness....................................60
6.2. Limitation on Secured Indebtedness............................60
6.3. Interest Expense Coverage.....................................60
6.4. Maintenance of Tangible Net Worth.............................60
6.5. Maintenance of Loan to Value Ratio............................60
ARTICLE VII
AFFIRMATIVE COVENANTS...............................................60
7.1. Compliance with Laws, Etc.....................................61
7.2. Conduct of Business...........................................61
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7.3. Payment of Taxes, Etc.........................................61
7.4. Maintenance of Insurance......................................62
7.5. Preservation of Existence, Etc................................62
7.6. Access .......................................................62
7.7. Keeping of Books..............................................63
7.8. Maintenance of Properties, Etc................................63
7.9. Performance and Compliance with Other Covenants...............63
7.10. Application of Proceeds......................................63
7.11. Financial Statements.........................................63
7.12. Reporting Requirements.......................................66
7.13. Leases and Operating Leases..................................69
7.14. [Intentionally Omitted]......................................70
7.15. Employee Plans...............................................70
7.16. [Intentionally Omitted]......................................70
7.17. Fiscal Year..................................................70
7.18. Environmental Matters........................................70
7.19. Appraisals and other Valuations..............................71
7.20. REIT Requirements............................................72
7.21. Maintenance of FF&E Reserves.................................72
7.22. Further Assurances...........................................72
7.23. Amendment to Management Agreement............................72
ARTICLE VIII
NEGATIVE COVENANTS..................................................73
8.1. Liens, Etc....................................................73
8.2. Indebtedness..................................................76
8.3. Lease Obligations.............................................77
8.4. [Intentionally Omitted.]......................................77
8.5. Mergers, Stock Issuances, Asset Sales, Etc....................77
8.6. Investments...................................................78
8.7. Change in Nature of Business or Organizational
Documents..............................................78
8.8. Modification of Material Agreements...........................79
8.9. Accounting Changes............................................79
8.10. Transactions with Affiliates.................................79
8.11. Environmental Matters........................................80
ARTICLE IX
EVENTS OF DEFAULT...................................................80
9.1. Events of Default.............................................80
9.2. Remedies......................................................84
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ARTICLE X
MISCELLANEOUS.......................................................85
10.1. Amendments, Etc..............................................85
10.2. Notices, Etc.................................................85
10.3. No Waiver; Remedies..........................................86
10.4. Costs; Expenses; Indemnities.................................86
10.5. Right of Set-off.............................................89
10.6. Binding Effect...............................................89
10.7. Assignments and Participations...............................89
10.8. Governing Law; Severability..................................90
10.9. Submission to Jurisdiction; Service of Process...............91
10.10. Section Titles..............................................91
10.11. Execution in Counterparts...................................91
10.12. Entire Agreement............................................91
10.13. Confidentiality.............................................92
10.14. Waiver of Jury Trial........................................92
10.15. NON-LIABILITY OF TRUSTEES...................................92
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