Exhibit 10.16
LOAN AGREEMENT
Dated as of December 20, 2004
by and among
GREAT WOLF KANSAS SPE, LLC
and
GREAT WOLF TRAVERSE SPE, LLC
as Borrower,
and
CITIGROUP GLOBAL MARKETS REALTY CORP.
as Lender
joined in the execution and delivery hereof by
THE TRAVELERS INSURANCE COMPANY,
as initial Note B Lender
TABLE OF CONTENTS
PAGE
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ARTICLE I. CERTAIN DEFINITIONS................................................................... 1
Section 1.1. Definitions........................................................................... 1
ARTICLE II. GENERAL TERMS......................................................................... 33
Section 2.1. The Loan.............................................................................. 33
Section 2.2. Use of Proceeds....................................................................... 33
Section 2.3. Security for the Loan................................................................. 34
Section 2.4. Borrower's Note....................................................................... 34
Section 2.5. Principal and Interest................................................................ 34
Section 2.6. Prepayment............................................................................ 35
Section 2.7. Defeasance............................................................................ 38
Section 2.8. Application of Payments............................................................... 42
Section 2.9. Method and Place of Payment........................................................... 42
Section 2.10. Taxes................................................................................. 43
Section 2.11. KC Release............................................................................ 43
Section 2.12. Central Cash Management............................................................... 45
Section 2.13. Reserve Accounts...................................................................... 49
Section 2.14. Additional Provisions Relating to the Pledged Accounts................................ 54
Section 2.15. Security Agreement.................................................................... 54
Section 2.16. Mortgage Recording Taxes; Release of Liens............................................ 57
Section 2.17. Release of Permitted Use Facility..................................................... 57
ARTICLE III. CONDITIONS PRECEDENT.................................................................. 61
Section 3.1. Conditions Precedent to Closing....................................................... 61
Section 3.2. Execution and Delivery of Agreement................................................... 66
ARTICLE IV. REPRESENTATIONS AND WARRANTIES........................................................ 66
Section 4.1. Representations and Warranties as to Borrower......................................... 66
Section 4.2. Representations and Warranties as to the Mortgaged Property........................... 70
Section 4.3. Survival of Representations........................................................... 75
ARTICLE V. AFFIRMATIVE COVENANTS................................................................. 75
Section 5.1. Affirmative Covenants................................................................. 75
ARTICLE VI. NEGATIVE COVENANTS.................................................................... 105
Section 6.1. Negative Covenants.................................................................... 105
ARTICLE VII. EVENT OF DEFAULT...................................................................... 108
Section 7.1. Event of Default...................................................................... 108
Section 7.2. Remedies.............................................................................. 110
Section 7.3. Remedies Cumulative................................................................... 111
Section 7.4. Intentionally Omitted................................................................. 111
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PAGE
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Section 7.5. Curative Advances..................................................................... 112
ARTICLE VIII. SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS, WARRANTIES AND COVENANTS........... 112
Section 8.1. Applicable to Borrower................................................................ 112
ARTICLE IX. MISCELLANEOUS......................................................................... 117
Section 9.1. Survival.............................................................................. 117
Section 9.2. Lender's Discretion................................................................... 117
Section 9.3. Governing Law......................................................................... 117
Section 9.4. Modification, Waiver in Writing....................................................... 118
Section 9.5. Delay Not a Waiver.................................................................... 118
Section 9.6. Notices............................................................................... 118
Section 9.7. TRIAL BY JURY......................................................................... 119
Section 9.8. Headings.............................................................................. 119
Section 9.9. Assignment............................................................................ 119
Section 9.10. Severability.......................................................................... 120
Section 9.11. Preferences........................................................................... 120
Section 9.12. Waiver of Notice...................................................................... 120
Section 9.13. Consents.............................................................................. 121
Section 9.14. Schedules Incorporated................................................................ 121
Section 9.15. Offsets, Counterclaims and Defenses................................................... 121
Section 9.16. No Joint Venture or Partnership....................................................... 121
Section 9.17. Waiver of Marshalling of Assets Defense............................................... 121
Section 9.18. Waiver of Counterclaim................................................................ 122
Section 9.19. Conflict; Construction of Documents................................................... 122
Section 9.20. Brokers and Financial Advisors........................................................ 122
Section 9.21. Counterparts.......................................................................... 122
Section 9.22. Estoppel Certificates................................................................. 122
Section 9.23. Payment of Expenses................................................................... 122
Section 9.24. Non-Recourse.......................................................................... 123
Section 9.25. Joint and Several Liability........................................................... 126
SCHEDULES
1 - Immediate Repairs Reserved for in Deferred Maintenance Escrow Account
2 - Organizational Chart
3 - Exceptions to Representations and Warranties
4 - Addresses for Notices
5 - Intellectual Property
6 - Mold Abatement O&M Program
7 - Release Parcel
8 - Qualified Transferee
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LOAN AGREEMENT
THIS LOAN AGREEMENT, made as of December 20, 2004, is by and among
GREAT WOLF KANSAS SPE, LLC, a Delaware limited liability company ("KC Borrower")
and GREAT WOLF TRAVERSE SPE, LLC, a Delaware limited liability company ("TC
Borrower"; KC Borrower and TC Borrower are collectively and individually
referred to herein as "Borrower"; references herein to "Borrower", unless
otherwise specifically stated, shall also mean and refer to each and every one
of KC Borrower and TC Borrower, jointly and severally), each having an address
at c/o Great Wolf Resorts, Inc., 000 Xxxx Xxxxxxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxx, Xxxxxxxxx 00000, and CITIGROUP GLOBAL MARKETS REALTY CORP., a New York
corporation, having an address at 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000 (together with its successors and assigns, and together with the
Note A Lender and the Note B Lender, and their respective successors and
assigns, whether one or more, "Lender"). THE TRAVELERS INSURANCE COMPANY, a
Connecticut corporation, joins in the execution and delivery of this Loan
Agreement as the initial Note B Lender hereunder.
RECITALS
WHEREAS, Borrower desires to obtain from Lender the Loan in an
amount equal to the Loan Amount (each as hereinafter defined) to, with respect
to the Mortgaged Property (as hereinafter defined), finance a portion of the
acquisition cost of and/or refinance existing debt at such Mortgaged Property
and to pay certain other fees and expenses;
WHEREAS, Lender is unwilling to make the Loan unless Borrower
executes and delivers this Agreement, the Note and the Loan Documents (each as
hereinafter defined) to which it is a party which shall establish the terms and
conditions of, and provide security for, the Loan; and
WHEREAS, Borrower has agreed to establish certain accounts and to
grant to Lender, a security interest therein upon the terms and conditions of
the security agreement set forth in Section 2.15.
NOW, THEREFORE, in consideration of the making of the Loan by Lender
and for other good and valuable consideration, the mutual receipt and legal
sufficiency of which are hereby acknowledged, the parties hereby covenant,
agree, represent and warrant as follows:
ARTICLE I.
CERTAIN DEFINITIONS
Section 1.1. Definitions. For all purposes of this Agreement: (1)
the capitalized terms defined in this Article 1 have the meanings assigned to
them in this Article 1 and include the plural as well as the singular; (2) all
accounting terms have the meanings assigned to them in accordance with GAAP (as
hereinafter defined) unless otherwise explicitly set forth herein; (3) 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, or other
subdivision; (4) the words "include," "includes" or "including" shall be deemed
to be followed
by the phrase "without limitation," if not already so drafted; and (5) the
following terms have the following meanings:
"Account Collateral" has the meaning set forth in Section 2.15(a)
hereof.
"Accounts" means all accounts (as defined in the relevant UCC), now
owned or hereafter acquired by Borrower, and arising out of or in connection
with, the operation of the Mortgaged Property and all other accounts described
in the Management Agreement and all present and future accounts receivable,
inventory accounts, chattel paper, notes, insurance policies, Instruments,
Documents or other rights to payment and all forms of obligations owing at any
time to Borrower thereunder, whether now existing or hereafter created or
otherwise acquired by or on behalf of Borrower, and all Proceeds thereof and all
liens, security interests, guaranties, remedies, privileges and other rights
pertaining thereto, and all rights and remedies of any kind forming the subject
matter of any of the foregoing.
"Actual Knowledge" means the actual knowledge of the chief executive
officer, the chief financial officer, the general counsel and the treasurer of
Great Wolf after due inquiry of the general manager and the assistant general
manager at each Mortgaged Property.
"Additional Resort Test" means, as of any date of calculation from
and after the occurrence of an Additional Resort Event, a test which shall be
satisfied if the Underwritten Net Cash Flow, measured quarterly on a trailing
twelve month basis as of the end of each of the immediately preceding eight (8)
calendar quarters, is at least equal to the product of (i) 1.80 and (ii) an
assumed loan debt service amount equal to the product of the then current
Principal Indebtedness multiplied by a market constant of 0.085.
"Additional Resort Coverage Test" means, as of any date of
calculation from and after the occurrence of an Additional Resort Event, a test
which shall be satisfied if the Underwritten Net Cash Flow, measured quarterly
on a trailing twelve month basis is at least equal to the product of (i) 1.50
and (ii) an assumed loan debt service amount equal to the product of the then
current Principal Indebtedness multiplied by a market constant of 0.085.
"Additional Resort Event" means the event that shall be deemed to
have occurred if, commencing in the twenty-fifth (25th) month of the loan term
or thereafter, another hotel is opened or operated within 100 miles (with
respect to the Great Lakes, however, measured, along the land routes, not across
the water, of the Great Lakes) of either Mortgaged Property under the name
"Great Wolf Lodge", "Great Bear Lodge", "Blue Harbor" or any other name or theme
similar to any of the foregoing or to that under which the Mortgaged Property is
operated, which such names or themes are owned or licensed by Great Wolf or its
Affiliates.
"Additional Resort Release Test" means, as of any date of
calculation from and after the occurrence of an Additional Resort Event, a test
which shall be satisfied if the Underwritten Net Cash Flow, measured quarterly
on a trailing twelve month basis is at least equal to the product of (i) 1.80
and (ii) an assumed loan debt service amount equal to the product of the then
current Principal Indebtedness multiplied by a market constant of 0.085.
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"Advance Bookings" means all commitments, reservations and
agreements regarding future use of guest rooms, banquet rooms, conference rooms
and other facilities constituting part of the Mortgaged Property.
"Advance Bookings Deposits" means all deposits, advance payments and
similar items for Bookings.
"Affiliate" of any specified Person means any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests, by contract or otherwise; and the
terms "controlling" and "controlled" have the meanings correlative to the
foregoing.
"Agreement" means this Loan Agreement, together with the Schedules
and Exhibits hereto, as the same may from time to time hereafter be modified,
supplemented or amended.
"Applicable Interest Rate" means for Loan A and Loan B a rate per
annum equal to (a) 5.8350% with respect to Loan A, and (b) 9.2100% with respect
to Loan B.
"Appraisal" means each appraisal with respect to an individual
Mortgaged Property prepared by an Appraiser in accordance with the Uniform
Standards of Professional Appraisal Practice of the Appraisal Foundation, in
compliance with the requirements of Title 11 of the Financial Institution
Reform, Recovery and Enforcement Act and utilizing customary valuation methods
such as the income, sales/market or cost approaches.
"Appraiser" means a nationally recognized MAI appraiser selected by
Borrower and reasonably approved by Lender.
"Assignment of Profits and Leases" means each Assignment of Profits
and Leases, dated as of the Closing Date, granted by each Borrower to Lender
with respect to the Mortgaged Property owned by such Borrower, as the same may
thereafter from time to time be supplemented, amended, modified or extended, and
collectively, all of them.
"Assumed Loan Debt Service" means the greater of (i) the product of
the Monthly Debt Service Payment Amount multiplied by twelve (12) and (ii) the
product of the Principal Indebtedness multiplied by a market constant of 0.085.
"Bankruptcy Code" means Title 11 of the United States Code, as
amended from time to time, and all rules and regulations promulgated thereunder.
"Basic Carrying Costs" means the following costs with respect to the
Mortgaged Property: (i) Impositions and (ii) insurance premiums for policies of
insurance required to be maintained by Borrower pursuant to this Agreement or
the other Loan Documents.
"Borrower" has the meaning provided in the first paragraph of this
Agreement.
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"Business Day" means any day other than a Saturday, a Sunday or a
day on which commercial banks in the State of New York are authorized or
obligated by law, governmental decree or executive order to be closed.
"Capital Improvement Costs" means costs incurred or to be incurred
in connection with replacements and capital repairs made to the Mortgaged
Property which would be capitalized in accordance with GAAP.
"Case Goods" shall mean furniture and furnishings used in the
Mortgaged Property, including, without limitation: chairs, beds, chests,
headboards, desks, lamps, tables, television sets, mirrors, pictures, wall
decorations and similar items.
"Central Reservations Services Agreement" means the Central
Reservations Services Agreement for each Mortgaged Property entered into between
the Licensor and each Borrower, as such agreement(s) may be amended, modified or
supplemented in accordance with the terms and conditions hereof from time to
time.
"CERCLA" has the meaning set forth in Section 5.1(d)(i) hereof.
"Chattel Paper" means all "chattel paper" as defined in the UCC
(whether tangible chattel paper or electronic chattel paper), in, to or under
which Borrower has any right, title or interest, whether now owned or hereafter
acquired.
"Closing Date" means the date of the funding of the Loan.
"Code" means the Internal Revenue Code of 1986, as amended, and as
it may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
"Collateral" means, collectively, the Land, Improvements, Leases,
Receipts, Receivables, Personalty, and all Proceeds, and (to the full extent
assignable) Permits, which is or hereafter may become subject to a Lien in favor
of Lender as security for the Loan (whether pursuant to the Mortgages, any other
Loan Document or otherwise), all whether now owned or hereafter acquired and all
other property which is or hereafter may become subject to a Lien in favor
Lender as security for the Loan and including all property of any kind described
as part of the Mortgaged Property under any of the Mortgages, including, without
limitation, all Water Amenities. The Collateral shall not include Deposit
Accounts which are not Pledged Accounts and cash and cash equivalents which this
Agreement provides are free of Lender's Liens and security interests.
"Collateral Agent" shall mean initially the Note A Lender, in its
capacity as collateral agent for each Lender under this Agreement and the other
Loan Documents, and its successors and assigns from time to time as such
collateral agent.
"Collateral Security Instrument" means any right, document or
instrument, other than the Mortgage, given as security for the Loan, including,
without limitation the Contract Assignment.
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"Collection Account" has the meaning set forth in Section 2.12(a)
hereof.
"Collection Account Agreement" means the Collection Account
Agreement, dated as of the applicable date and executed by Borrower, Lender and
the Collection Account Bank, relating to the Collection Account and the Reserve
Accounts and any other accounts maintained with the Collection Account Bank.
"Collection Account Bank" means Wachovia Bank, N.A., or any
successor financial institution appointed by Lender.
"Condemnation Proceeds" means, in the event of a Taking with respect
to the Mortgaged Property, the proceeds in respect of such Taking less any
reasonable third party out-of-pocket expenses incurred in prosecuting the claim
for and otherwise collecting such proceeds.
"Consumer Price Index" means the Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics of the United States
Department of Labor, in the area where the Mortgaged Property is located; All
Items (1982-84 = 100), or any successor index thereto, appropriately adjusted
and if the Consumer Price Index ceases to be published and there is no successor
thereto, such other index as Lender and Borrower shall mutually agree upon.
"Contest" has the meaning set forth in Section 9.24 hereof.
"Contingent Obligation" means, as used in the definition of Other
Borrowings, without duplication, any obligation of Borrower guaranteeing any
indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly. Without limiting the generality of the foregoing, the term
"Contingent Obligation" shall include any obligation of Borrower:
(i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor;
(ii) to advance or supply funds (x) for the purchase or payment of
any such primary obligation or (y) to maintain working capital or equity
capital of the primary obligor;
(iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation;
or
(iv) otherwise to assure or hold harmless the holder of such primary
obligation against loss in respect thereof.
The amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming Borrower
is required to perform thereunder) as determined by Lender in good faith.
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"Contract Assignment" means, with respect to the Mortgaged Property,
each Assignment of Contracts, Licenses, Permits, Agreements, Warranties and
Approvals, dated as of the Closing Date and executed by each Borrower, and
collectively, all of them..
"Contracts" means the Management Agreement, the License Agreement,
the Central Reservations Services Agreement, the Tall Pines Agreement and all
other agreements to which Borrower is a party or which are assigned to Borrower
by the Manager in the Management Agreement and which are executed in connection
with the construction, operation and management of the Mortgaged Property
(including, without limitation, agreements for the sale, lease or exchange of
goods or other property and/or the performance of services by it, in each case
whether now in existence or hereafter arising or acquired) as any such
agreements have been or may be from time to time amended, supplemented or
otherwise modified.
"Debt Service Coverage Ratio" at any time of determination thereof
is equal to the ratio of Underwritten Net Cash Flow as determined by Lender for
the most recently ended twelve month period divided by the Assumed Loan Debt
Service.
"Debt Service Coverage Test" means a test which shall be satisfied
if the Underwritten Net Cash Flow, measured quarterly on a trailing twelve month
basis as of the end of each calendar quarter beginning with the calendar quarter
ending December 31, 2005, is at least equal to the product of 1.35 multiplied by
the Assumed Loan Debt Service.
"Deed of Trust Trustee" means the trustee under any Mortgage that
constitutes a "deed of trust" under applicable law.
"Default" means the occurrence of any event which, but for the
giving of notice or the passage of time, or both, would be an Event of Default.
"Default Rate" means the per annum interest rate equal to the lesser
of (a) 5.0% per annum in excess of the rate otherwise applicable hereunder and
(b) the maximum rate allowable by applicable law.
"Defeasance" means any of a Total Defeasance or a Partial
Defeasance.
"Defeasance Collateral" shall mean the Partial Defeasance Collateral
or Total Defeasance Collateral, as applicable.
"Defeasance Collateral Account" has the meaning set forth in Section
2.7.
"Defeasance Date" has the meaning set forth in Section 2.7(a)(i).
"Defeased Note" has the meaning set forth in Section 2.7(b)(iv).
"Defeased A Note" has the meaning set forth in Section 2.7(b)(iv).
"Defeased B Note" has the meaning set forth in Section 2.7(b)(iv).
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"Deferred Maintenance Escrow Account" has the meaning set forth in
Section 2.13(a).
"Deposit Account" means all "deposit accounts" as defined in the
UCC, in which Borrower has any right, title or interest, whether now owned or
hereafter acquired.
"Direction Letter" has the meaning set forth in Section 2.12(a)(i).
"Disclosure Certificate" has the meaning set forth in Section 5.1(w)
hereof.
"Disclosure Documents" has the meaning set forth in Section 5.1(w)
hereof.
"Documents" means all "documents" as defined in the UCC (whether
negotiable or non-negotiable) or other receipts covering, evidencing or
representing goods, in, to or under which Borrower has any right, title or
interest, whether now owned or hereafter acquired.
"EO13224" has the meaning set forth in Section 4.1(v) hereof.
"Eligible Account" means a separate and identifiable account from
all other funds held by the holding institution, which account is either (i) an
account maintained with a federal or state chartered depository institution or
trust company that (A) satisfies the Rating Criteria and (B) insures the
deposits made to such account through the Federal Deposit Insurance Corporation,
or (ii) a segregated trust account maintained with the corporate trust
department of a federal or state chartered depository institution or trust
company subject to regulations regarding fiduciary funds on deposit similar to
Title 12 of the Code of Federal Regulations Section 9.10(b) which, in either
case, has corporate trust powers, acting in its fiduciary capacity and in either
case having combined capital and surplus of at least $100,000,000 or otherwise
acceptable to the Rating Agencies. An Eligible Account shall not be evidenced by
a certificate of deposit, passbook, other instrument or any other physical
indicia of ownership. Following a downgrade of such institution below the Rating
Criteria, or a withdrawal, qualification or suspension of such institution's
rating, each account must at Lender's request promptly (and in any case within
not more than thirty (30) calendar days) be moved to a qualifying institution or
to one or more segregated trust accounts in the trust department of such
institution, if permitted.
"Eligible Bank" shall mean a bank that (i) satisfies the Rating
Criteria and (ii) insures the deposits hereunder through the Federal Deposit
Insurance Corporation.
"Engineer" means an Independent engineer selected by Borrower and
reasonably approved by Lender.
"Environmental Auditor" means an Independent environmental auditor
selected by Borrower and reasonably approved by Lender.
"Environmental Claim" means any written notice, written
notification, written request for information, written claim, administrative,
regulatory or judicial action, suit, judgment or written demand by any Person or
Governmental Authority alleging or asserting liability with respect to Borrower
or any Mortgaged Property (whether for damages, contribution, indemnification,
cost recovery, compensation, injunctive relief, investigatory,
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response, remedial or cleanup costs, damages to natural resources, personal
injuries, fines or penalties) arising out of, based on or resulting from (i) the
presence, Use or Release into the environment of any Hazardous Substance at any
location (whether or not owned, managed or operated by Borrower) that affects
Borrower or any Mortgaged Property, (ii) any fact, circumstance, condition or
occurrence forming the basis of any violation, or alleged violation, of any
applicable Environmental Law or (iii) any alleged injury or threat of injury on
or about the Mortgaged Property to human health, safety or the environment
arising out of (x) the presence, Use or Release into the environment of any
Hazardous Substance at any location (whether or not owned, managed or operated
by Borrower) that affects Borrower or any Mortgaged Property or (y) any fact,
circumstance, condition or occurrence forming the basis of any violation, or
alleged violation, of any applicable Environmental Law.
"Environmental Indemnity Agreement" means the Environmental
Indemnity Agreement dated as of the Closing Date, from Borrower and the
Guarantor, collectively, as indemnitor, to Lender, as indemnitee, as the same
may be amended, modified or supplemented from time to time.
"Environmental Laws" means any and all present and future federal,
state or local laws, statutes, ordinances, rules or regulations, or any judicial
interpretation thereof, any judicial or administrative orders, decrees or
judgments thereunder issued by a Governmental Authority, and any permits,
approvals, licenses, registrations, filings and authorizations, in each case as
now or hereafter in effect, relating to the environment, protection of human
health or safety from Hazardous Substances, or the Release or threatened Release
of Hazardous Substances or otherwise relating to the Use of Hazardous
Substances.
"Environmental Reports" means each and every "Phase I Environmental
Site Assessment" (and, if applicable, "Phase II Environment Site Assessment") as
referred to in the ASTM Standards on Environmental Site Assessments for
Commercial Real Estate, E 1527-2000 and an asbestos survey, with respect to the
Mortgaged Property, prepared by one or more Environmental Auditors and delivered
to Lender and any amendments or supplements thereto delivered to Lender.
"Equipment" means (i) all "equipment" as defined in the UCC, in
which Borrower has any right, title or interest, whether now owned or hereafter
acquired, including without limitation all such equipment included in or
associated with Water Amenities, and (ii) all of the following (regardless of
how classified under the UCC): all building materials, construction materials,
personal property constituting furniture, fittings, appliances, apparatus,
leasehold improvements, machinery, devices, interior improvements,
appurtenances, equipment, plant, furnishings, fixtures, computers, electronic
data processing equipment, telecommunications equipment and other fixed assets
now owned or hereafter acquired by Borrower, and all Proceeds of (i) and (ii) as
well as all additions to, substitutions for, replacements of or accessions to
any of the items recited as aforesaid and all attachments, components, parts
(including spare parts) and accessories, whether installed thereon or affixed
thereto, all regardless of whether the same are located on any Mortgaged
Property or are located elsewhere (including, without limitation, in warehouses
or other storage facilities or in the possession of or on the premises of a
bailee, vendor or manufacturer) for purposes of
8
manufacture, storage, fabrication or transportation and all extensions and
replacements to, and proceeds of, any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated thereunder.
Section references to ERISA are to ERISA, as in effect at the date of this
Agreement and, as of the relevant date, any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means any corporation or trade or business that is
a member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which Borrower is a member and (ii) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, described in Section 414(m) or (o) of the Code of which Borrower is a
member.
"Event Date" has the meaning set forth in Section 2.6(c) hereof.
"Event of Default" has the meaning set forth in Section 7.1 hereof.
"Excess Interest" has the meaning set forth in Section 2.5(e)
hereof.
"FF&E Costs" means, collectively, the costs of (i) replacement of
and/or addition to Soft Goods and Case Goods at the Mortgaged Property, (ii)
signage, audio-visual equipment, kitchen appliances, carpeting and all
equipment, including front desk and back-of-the-house computer equipment and
(iii) maintaining, repairing, replacing existing Equipment in, acquiring new
Equipment for, and making improvements to, the water park including without
limitation with respect to all Water Amenities; provided, that FF&E Costs shall
not include costs of or associated with the repair or replacement or upgrade of
Fixed Asset Supplies or Software.
"FF&E Costs Reserve Account" has the meaning set forth in Section
2.13(a)(i).
"FF&E Percentage" means 3.0% with respect to years 2-5 of the term
of the Loan and 3.5% thereafter.
"FF&E Suspension Condition" means the suspension of the requirement
of monthly deposits into the FF&E Costs Reserve Account which shall apply at all
times up to December 31, 2005, and, thereafter, if and for so long as Borrower
demonstrates to Lender's reasonable satisfaction, and Lender reasonably
determines based upon such information and any other information which Lender
may obtain, that Borrower has made for the past twelve months, commencing with
the twelve months ending December 31, 2005, and reasonably expects to continue
to make expenditures for FF&E Costs which equal or exceed the FF&E Percentage of
Gross Revenues for such period.
"FF&E/DSCR Test" means a test which shall be satisfied if the
Underwritten Net Cash Flow, measured quarterly on a trailing twelve month basis
as of the end of each calendar quarter beginning with the calendar quarter
ending December 31, 2005, is at least equal to the product of 1.40 multiplied by
the Assumed Loan Debt Service.
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"Fixed Asset Supplies" shall mean items included within "Property
and Equipment" under the Uniform System of Accounts including, but not limited
to, linen, china, glassware, tableware, uniforms, and similar items, whether
used in connection with public space or guest rooms at the Mortgaged Property.
"First Open Defeasance Date" shall mean the earlier of (i) the
Payment Date in January, 2009, or (ii) the date that is two (2) years from the
"start up day" (within the meaning of Section 860G(a)(9) of the IRC) of the
REMIC Trust established in connection with the final Securitization involving
the Loan.
"First Open Prepayment Date" is the Payment Date which is in the
second month preceding the month in which the Scheduled Maturity Date occurs.
The First Open Prepayment Date is the Payment Date in the month of November,
2014.
"First Payment Date" has the meaning set forth in Section 2.5(a)
hereof.
"Fiscal Year" means the 12-month period ending on December 31st of
each year (or, in the case of the fiscal year in which the Closing Date occurs,
such shorter period from the Closing Date through such date) or such other
fiscal year of Borrower as Borrower may select from time to time with the prior
consent of Lender.
"Fitch" means Fitch, Inc. and its successors.
"Fund" has the meaning set forth in the definition of "Permitted
Investments".
"GAAP" means generally accepted accounting principles in the United
States of America as of the date of the applicable financial report, modified to
reflect the Uniform System of Accounts, where applicable, and in all cases
consistently applied.
"General Intangibles" means all "general intangibles" as defined in
the relevant UCC, now owned or hereafter acquired by Borrower, in, to or under
which Borrower has any right, title or interest, whether now owned or hereafter
acquired.
"Governmental Authority" means any nation or government, any state,
county, municipality or other political subdivision thereof or any governmental
body, agency, authority, department or commission (including, without
limitation, any taxing authority) or any instrumentality or officer of any of
the foregoing (including, without limitation, any court or tribunal) exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation, partnership or other entity
directly or indirectly owned or controlled by the foregoing.
"Great Lakes" means The Great Lakes Companies, Inc., a Wisconsin
corporation.
"Great Wolf" means Great Wolf Resorts, Inc., a Delaware corporation.
"Gross Revenue" means, for any period, the total dollar amount of
all income and receipts received by, or for the account of, Borrower in the
ordinary course of business with respect to the Mortgaged Property, but
excluding Loss Proceeds (other than the proceeds of
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business interruption insurance or the proceeds of a temporary Taking in lieu of
Receipts which shall be included in Gross Revenue).
"Guarantor" means Great Wolf and GWR Operating Partnership,
L.L.L.P., on a joint and several basis.
"Guaranty of Nonrecourse Obligations" means, with respect to the
Loan, the Guaranty of Nonrecourse Obligations guaranteeing the exceptions to the
nonrecourse provisions of the Loan Documents for which liability is retained as
described in Section 9.24 hereof from the Guarantor to Lender.
"Hazardous Substance" means all or any of the following: (i)
substances, materials, compounds, wastes, products, emissions and vapors that
are defined or listed in, regulated by, or otherwise classified pursuant to, any
applicable Environmental Law, as hazardous, toxic, deleterious, harmful or
dangerous, including any so defined, listed, regulated or classified as
"hazardous substances", "hazardous materials", "hazardous wastes", "toxic
substances", "pollutants", or "contaminants"; (ii) waste oil, oil, petroleum or
petroleum derived substances, natural gas, natural gas liquids or synthetic gas
and drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (iii) any flammable substances or explosives or any radioactive
materials; (iv) asbestos in any form (other than if properly contained in
accordance with applicable Environmental Law); (v) electrical or hydraulic
equipment which contains any oil or dielectric fluid containing at least 50
parts per million of polychlorinated biphenyls (PCBs); (vi) radon; (vii) urea
formaldehyde; (viii) lead paint; or (ix) fungus, mold or mildew the presence of
which is reasonably likely to materially adversely affect the health of average
individuals or materially adversely affect the value or utility of the Mortgaged
Property. Notwithstanding the foregoing, "Hazardous Substances" will not include
ordinary cleaning solvents, fuels, lubricants, maintenance items, paints,
disinfectants and other substances which are customarily used in the operation
of a waterpark resort that includes a hotel, indoor water park, restaurants,
spas and associated facilities and vehicles, provided such solvents and
substances are stored and used in material compliance with applicable
Environmental Law.
"Immediate Repairs" has the meaning set forth in Section 2.13(a)(ii)
hereof.
"Impositions" means all taxes (including, without limitation, all
real estate, ad valorem, sales (including those imposed on lease rentals), use,
single business, gross receipts, value added, intangible transaction privilege,
privilege or license or similar taxes), assessments (including, without
limitation, all assessments for public improvements or benefits, whether or not
commenced or completed within the term of the Loan), ground rents, water, sewer
or other rents and charges, excises, levies, governmental fees (including,
without limitation, license, permit, inspection, authorization and similar
fees), and all other governmental charges, in each case whether general or
special, ordinary or extraordinary, foreseen or unforeseen, in respect of each
Mortgaged Property (including all interest and penalties thereon), accruing
during or in respect of the term hereof and which may be assessed against or
imposed on or in respect of or be a Lien upon (1) Borrower (including, without
limitation, all income, franchise, single business or other taxes imposed on
Borrower for the privilege of doing business in the jurisdiction in which each
Mortgaged Property, or any other collateral delivered or pledged to Lender in
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connection with the Loan, is located) or Lender, or (2) any Mortgaged Property,
or any other collateral delivered or pledged to Lender in connection with the
Loan, or any part thereof or any Receipts therefrom or any estate, right, title
or interest therein, or (3) any occupancy, operation, use or possession of, or
sales from, or activity conducted on, or in connection with any Mortgaged
Property or the leasing or use of any Mortgaged Property or any part thereof, or
the acquisition or financing of the acquisition of any Mortgaged Property by
Borrower. Impositions shall exclude all income, franchise and corporate taxes
with respect to Borrower (other than those referred to under clause (1) above).
"Improvements" means all buildings, structures, fixtures and
improvements now or hereafter owned by Borrower of every nature whatsoever
situated on any Land constituting part of the Mortgaged Property (including,
without limitation, all buildings, structures, fixtures and improvements now or
hereafter owned by Borrower included in or associated with Water Amenities, and
all gas and electric fixtures, radiators, heaters, engines and machinery,
boilers, ranges, elevators and motors, plumbing and heating fixtures, carpeting
and other floor coverings, water heaters, awnings and storm sashes, and cleaning
apparatus which are or shall be affixed to the Land or said buildings,
structures or improvements and including any additions, enlargements,
extensions, modifications, repairs or replacements thereto).
"Indebtedness" means the Principal Indebtedness, together with all
other obligations and liabilities due or to become due to Lender pursuant
hereto, under the Note or in accordance with any of the other Loan Documents,
and all other amounts, sums and expenses paid by or payable to Lender hereunder
or pursuant to the Note or any of the other Loan Documents.
"Indemnified Parties" has the meaning set forth in Section 5.1(i).
"Independent" means, when used with respect to any Person, a Person
that (i) does not have any material direct financial interest or any material
indirect financial interest in Borrower or in any Affiliate of Borrower, (ii) is
not connected with Borrower or any Affiliate of Borrower as an officer,
employee, trustee, partner, director or person performing similar functions, and
(iii) is not a member of the immediate family of any Person described in clauses
(i) or (ii).
"Independent Director" has the meaning set forth in Section 8.1
hereof.
"Instruments" means all "instruments" as defined in the UCC, in, to
or under which Borrower has any right, title or interest, whether now owned or
hereafter acquired.
"Insurance Escrow Account" has the meaning set forth in Section
2.13(b).
"Insurance Premiums" has the meaning set forth in Section
5.1(x)(iii).
"Insurance Proceeds" means, in the event of a casualty with respect
to the Mortgaged Property, the proceeds received under any insurance policy
applicable thereto.
"Insurance Requirements" means all material terms of any insurance
policy required pursuant to this Agreement or any of the Mortgages and all
material regulations, rules
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and other requirements of the National Board of Fire Underwriters or such other
body exercising similar functions applicable to or affecting the Mortgaged
Property or any part thereof or any use or condition thereof.
"Insured Casualty" has the meaning set forth in Section
5.1(x)(iv)(B).
"Intellectual Property" means all trademark licenses, trademarks,
rights in intellectual property, trade names, service marks and copyrights,
copyright licenses, patents, patent licenses or the license to use intellectual
property such as computer software (other than commercially available software),
in each case owned or licensed for use (but if so licensed, only as to
Borrower's interest as licensee therein) by Borrower and used at or in
connection with the Mortgaged Property or its operation, and other proprietary
business information belonging to Borrower relating to Borrower's policies,
procedures, manuals and trade secrets.
"Interested Parties" has the meaning set forth in Section 5.1(w)
hereof.
"Inventory" means all "inventory" as defined in the UCC and shall
include all Documents representing the same, in which Borrower has any right,
title or interest, whether now owned or hereafter acquired, including, without
limitation, all such inventory included in or associated with Water Amenities.
"Investment Property" means all "investment property" as defined in
the UCC, in, to or under which Borrower has any right, title or interest,
whether now owned or hereafter acquired.
"IRS" has the meaning provided in Section 2.10(b) hereof.
"KC Allocated Loan Amount" means an amount equal to 44% of the then
outstanding Principal Indebtedness.
"KC Property" means the Land and Improvements owned by the KC
Borrower located on the parcel of real estate identified on Exhibit A attached
to the Mortgage granted by the KC Borrower and recorded in Wyandotte County,
Kansas.
"KC Release" has the meaning set forth in Section 2.11.
"KC Special Use Permit" means the current special use permit, if
any, with respect to the KC Property, and any amendments thereto through the
date hereof, with respect to the KC Property.
"Land" means the parcels of real estate described on each Exhibit A
attached to each of the Mortgages.
"Leases" means all leases, subleases, lettings, occupancy
agreements, tenancies and licenses for the use of space by Borrower as landlord
of the Mortgaged Property or any part thereof now or hereafter entered into, and
all amendments, extensions, renewals and guarantees thereof, and all security
therefor.
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"Legal Requirements" means all governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities (including, without limitation, any of the foregoing
relating to zoning, parking or land use, any and all Environmental Laws and the
Americans with Disabilities Act) affecting Borrower or any Mortgaged Property or
any part thereof or the construction, use, alteration or operation thereof, or
any part thereof (whether now or hereafter enacted and in force), and all
permits, licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments, at any time in force affecting the Mortgaged Property or any part
thereof or any utility services or septic systems or other infrastructure
serving any portion of the Mortgaged Property (including, without limitation,
any which may (i) require repairs, modifications or alterations in or to the
Mortgaged Property or any part thereof or any utility services or septic systems
or other infrastructure serving any portion of the Mortgaged Property, or (ii)
in any way limit the use and enjoyment thereof).
"Lender" has the meaning provided in the first paragraph of this
Agreement.
"Letter of Credit Rights" means all "letter of credit rights" as
defined in the UCC, in, to or under which Borrower has any right, title or
interest, whether now owned or hereafter acquired.
"License Agreement" means each License Agreement for each Mortgaged
Property entered into between Licensor and each Borrower, as such agreement(s)
may be amended, modified or supplemented in accordance with the terms and
conditions hereof from time to time.
"License Tri-Party Agreement" means those certain agreements
relating to each Mortgaged Property, each among the Borrower owning such
Mortgaged Property, Lender and Licensor, respecting each License Agreement for
each Mortgaged Property, as such agreement(s) may be amended, modified or
supplemented in accordance with the terms and conditions hereof from time to
time.
"Licensor" means Great Lakes Services, LLC, and its permitted
successors and assigns under the License Agreement and License Tri-Party
Agreement.
"Lien" means any mortgage, deed of trust, lien (statutory or other),
pledge, hypothecation, assignment, security interest, or any other encumbrance
or charge on or affecting Borrower or any Mortgaged Property or any portion
thereof, or any interest therein (including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and mechanic's,
materialmen's and other similar liens and encumbrances).
"Loan" means the loan made by Lender to Borrower pursuant to the
terms of this Agreement.
"Loan Amount" means an amount equal to $75,000,000.
"Loan A" means the loan in the principal amount of $50,000,000.
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"Loan A Interest" means interest accrued or accruing on Loan A.
"Loan B" means the loan in the principal amount of $25,000,000.
"Loan B Interest" means interest accrued or accruing on Loan B.
"Loan Documents" means this Agreement, the Note, each Contract
Assignment, each Manager's Subordination, each Mortgage, each Assignment of
Profits and Leases, each License Tri-Party Agreement, each Tall Pines
Recognition Agreement, the Environmental Indemnity Agreement, the Guaranty of
Non-Recourse Obligations and all other agreements, instruments, certificates and
documents delivered by or on behalf of Borrower or an Affiliate of Borrower to
evidence or secure the Loan as the same may be amended or modified from time to
time.
"Local Collection Account" and "Local Collection Account Bank" have
the meanings set forth in Section 2.12(a).
"Local Collection Account Agreement" means with respect to the Local
Collection Account, the lockbox agreement, dated as of the applicable date and
executed by Borrower, Lender and the Local Collection Account Bank.
"Loss Proceeds" means Condemnation Proceeds and/or Insurance
Proceeds.
"Loss Proceeds Account" has the meaning set forth in Section 2.12
hereof.
"Losses" has the meaning set forth in Section 5.1(j).
"Management Agreement" means with respect to any Mortgaged Property,
the property management agreement entered into between the Borrower owning such
Mortgaged Property and the Manager (and all such property management agreements
collectively), in such form as may be reasonably approved by Lender, as such
agreement(s) may be amended, modified or supplemented in accordance with the
terms and conditions hereof from time to time, and any management agreement
which may hereafter be entered into with respect to any Mortgaged Property in
accordance with the terms and conditions hereof, as the same may be amended,
modified or supplemented in accordance with the terms and conditions hereof from
time to time.
"Manager" means Great Lakes Services, LLC, the current manager of
the Mortgaged Property under the current Management Agreement, or such other
Person as may hereafter be charged with management of any Mortgaged Property
pursuant to a Management Agreement entered into in accordance with the terms and
conditions hereof.
"Manager's Subordination" means, with respect to each Mortgaged
Property, initially each Manager's Consent and Subordination of Management
Agreement, each executed by the Manager, the Borrower owning such Mortgaged
Property and Lender, dated as of the Closing Date, and in the event a successor
or assignee Manager is engaged at any Mortgaged Property, a subordination
agreement executed by Manager, the Borrower owning such Mortgaged Property and
Lender in form and substance satisfactory to Lender, whereby, among
15
other things, each Management Agreement is subordinated to the Indebtedness and
to the Lien of each Mortgage so long as the Loan remains outstanding.
"Material Adverse Effect" means a material adverse effect upon (i)
the business operations, properties, assets or condition (financial or
otherwise) of Borrower, (ii) the ability of Borrower to perform, or of Lender to
enforce, any of the Loan Documents or (iii) the aggregate value of the Mortgaged
Property.
"Material Agreement" means (i) any lease of Equipment, Case Goods,
Soft Goods, Fixed Asset Supplies or similar items at the Mortgaged Property
which provide for annual aggregate lease payments under such lease by the
Borrower in excess of $25,000 or (ii) any franchise agreement or other Contract
entered into by the Borrower, which Contract would be binding on the Lender or
the Mortgaged Property, upon the Lender foreclosing its Lien on the Mortgaged
Property (or otherwise accepting a deed-in-lieu of foreclosure and which
Contract runs with the Land or otherwise burdens Lender post-foreclosure).
"Maturity Date" means the earlier of (a) the Scheduled Maturity Date
or (b) such earlier date on which the entire Loan is required to be paid in
full, by acceleration or otherwise under this Agreement or any of the other Loan
Documents.
"Maximum Rate" has the meaning set forth in Section 2.5(e) hereof.
"Minimum Additional Parking Spaces" has the meaning set forth in
Section 2.17.
"Xxxxx'x" means Xxxxx'x Investors Services, Inc. and its successors.
"Money" means (i) all "money" as defined in the UCC and (ii) all
moneys, cash, or other items of legal tender generated from the use or operation
of the Mortgaged Property, in, to or under which Borrower has any right, title
or interest, whether now owned or hereafter acquired.
"Monthly Debt Service Payment" has the meaning set forth in Section
2.5(a) hereof.
"Monthly Debt Service Payment Amount" means the sum of the Monthly
Loan A Debt Service Payment Amount and the Monthly Loan B Debt Service Payment
Amount.
"Monthly Loan A Debt Service Payment Amount" means $317,126.55.
"Monthly Loan B Debt Service Payment Amount" means $213,405.85.
"Monthly Property Expenses" means, with respect to any Payment Date
after and for so long as the Debt Service Coverage Test has not been satisfied,
an amount equal to not less than 100% and up to 110% of the monthly Property
Expenses projected by Borrower to be incurred during the applicable period
commencing on such Payment Date and ending on the next Payment Date as set forth
in the Operating Budget for the applicable Fiscal Year; provided, however, that
the Lender's prior written consent shall be required for any amount greater than
110% of the projected monthly amount in such Operating Budget for Property
Expenses.
16
"Monthly Statement" has the meaning provided in Section 2.12(e).
"Mortgage" means, with respect to the Mortgaged Property, a first
priority Mortgage or Deed of Trust (as applicable), Assignment of Profits and
Leases, Security Agreement and Fixture Filing, dated as of the Closing Date
(and, if there are more than one, each and every one of them), each granted by
the Borrower owing such Mortgaged Property to or for the benefit of Lender or
Deed of Trust Trustee for the benefit of Lender, respectively, with respect to
the Mortgaged Property as security for the Loan, as the same may thereafter from
time to time be supplemented, amended, modified or extended by one or more
agreements supplemental thereto.
"Mortgaged Property" means, at any time, individually or
collectively, as applicable, the Land, the Improvements, the Personalty, the
Leases and the Receipts, and all rights, titles, interests and estates
appurtenant thereto, encumbered by, and more particularly described in, each
Mortgage.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA and which is covered by Title IV of ERISA (i) to which
contributions have been, or were required to have been made by Borrower or any
ERISA Affiliate within the past six years or (ii) with respect to which Borrower
could reasonably be expected to incur liability.
"Net Proceeds" means either (x) the purchase price (at foreclosure
or otherwise) actually received by Lender from a third party purchaser with
respect to any Mortgaged Property, as a result of the exercise by Lender of its
rights, powers, privileges and other remedies after the occurrence of an Event
of Default or (y) in the event that Lender (or its nominee) is the purchaser at
foreclosure of any Mortgaged Property, the higher of (i) the amount of Lender's
credit bid or (ii) such amount as shall be determined in accordance with
applicable law, and in either case minus all reasonable third party, out of
pocket costs and expenses (including, without limitation, all attorneys' fees
and disbursements and any brokerage fees, if applicable) incurred by Lender (and
its nominee, if applicable) in connection with the exercise of such remedies;
provided, however, that such costs and expenses shall not be deducted to the
extent such amounts previously have been added to the Indebtedness in accordance
with the terms of the Loan Documents or applicable law.
"Note" means, collectively, Note A and Note B, each as the same may
be modified, amended, supplemented, restated or extended, and any replacement
notes therefor.
"Note A" means that certain Promissory Note (Note A), dated of even
date herewith, made by Borrower to the Note A Lender evidencing Loan A, as
amended, modified, restated or split, and any replacement notes therefor.
"Note A Lender" means the holder from time to time of Note A. The
initial Note A Lender is Citigroup Global Markets Realty Corp.
"Note B" means that certain Promissory Note (Note B), dated of even
date herewith, made by Borrower to the Note B Lender evidencing Loan B, as
amended, modified, restated or split, and any replacement notes therefor.
17
"Note B Lender" means the holder from time to time of Note B. The
initial Note B Lender is The Travelers Insurance Company.
"O&M Program" has the meaning set forth in Section 5.1(d)(iv)
hereof.
"OFAC" has the meaning set forth in Section 4.1(v) hereof.
"Officer's Certificate" means a certificate delivered to Lender by
Borrower which is signed by an authorized officer of Borrower.
"Open Space Agreement" means the terms and provisions of Section 10
of that certain Agreement of Sale dated as of July 14, 2000, between G.D.O.
Investments, as sellers, and The Great Lakes Companies, Inc, as purchaser, as
amended June 1, 2001 and as further amended September 29, 2001.
"Operating Budget" means, with respect to any Fiscal Year, the
operating budget for the Mortgaged Property reflecting Borrower's projections of
Gross Revenues, Property Expenses, Capital Improvements Costs and FF&E Costs for
the Mortgaged Property for such Fiscal Year, prepared on an annual, quarterly
and monthly basis and submitted by Borrower to Lender in accordance with the
provisions of Section 5.1(r).
"Operating Expense Account" has the meaning provided in Section
2.13(c).
"Operating Expenses" means, for any period of calculation, all
expenditures incurred and required to be expensed under GAAP during such period
in connection with the ownership, operation, maintenance, repair and/or leasing
of the Mortgaged Property, including without limitation (or duplication)
Property Expenses. Notwithstanding the foregoing, Operating Expenses shall not
include (a) Capital Improvement Costs, (b) any extraordinary items (unless
Lender approves of the inclusion of such items as Operating Expenses), (c)
depreciation, amortization and other non-cash charges or (d) any payments of
principal or interest on the Indebtedness or otherwise payable to the holder of
the Indebtedness. Operating Expenses shall be calculated on the accrual basis of
accounting.
"Operating Revenues" means, for any period, all regular ongoing
income during such period from the operation of the Mortgaged Property that, in
accordance with GAAP, is included in annual financial statements as revenue.
Notwithstanding the foregoing, Operating Revenues shall not include (a) any Loss
Proceeds (other than business interruption proceeds or Condemnation Proceeds in
connection with a temporary Taking and, in either case, only to the extent
allocable to such period or other applicable reporting period), (b) any proceeds
resulting from the sale, exchange, transfer, financing or refinancing of the
Mortgaged Property, (c) any Rent attributable to a Lease more than one month
prior to the date on which the actual payment of Rent is required to be made
thereunder, (d) any Advance Bookings revenues not attributable to actual
occupancy of the Mortgaged Property during such period by the guest(s) making
such Advance Bookings, (e) any interest income from any source, or (f) any other
extraordinary items as determined by GAAP. Operating Revenues shall be
calculated on the accrual basis of accounting.
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"Organizational Agreements" means, individually or collectively, (i)
the certificate of formation and operating agreement, (ii) the certificate of
limited partnership and partnership agreement, (iii) the certificate of
incorporation and by-laws or (iv) the trust agreement or other organizational
documents, as applicable of any Person, each as amended or restated from time to
time.
"Origination Fee" means 1.0% of the Loan Amount, payable to Lender
on the Closing Date.
"Other Borrowings" means, with respect to Borrower, without
duplication (but not including the Indebtedness) (i) all indebtedness of
Borrower for borrowed money or for the deferred purchase price of property or
services, (ii) all indebtedness of Borrower evidenced by a note, bond, debenture
or similar instrument, (iii) the face amount of all letters of credit issued for
the account of Borrower and, without duplication, all unreimbursed amounts drawn
thereunder, and obligations evidenced by bankers' acceptances, (iv) all
indebtedness of Borrower secured by a Lien on any property owned by Borrower
(whether or not such indebtedness has been assumed), (v) all Contingent
Obligations of Borrower, (vi) liabilities and obligations for the payment of
money relating to a capitalized lease obligation or sale/leaseback obligation,
and (vii) liabilities and obligations representing the balance deferred and
unpaid of the purchase price of any property or services, except those incurred
in the ordinary course of Borrower's business that would constitute ordinarily a
trade payable to trade creditors; provided, that the liabilities and obligations
referred to in clauses (vi) and (vii) shall not constitute Other Borrowings to
the extent they are permitted under Section 8.1(e) and/or Section 5.1(t) below.
"Partial Defeasance" and "Partial Defeasance Date" have the
respective meanings set forth in Section 2.7(b).
"Partial Defeasance Amount" has the meaning set forth in Section
2.11.
"Partial Loan A Defeasance Amount" has the meaning set forth in
Section 2.7.
"Partial Loan B Defeasance Amount" has the meaning set forth in
Section 2.7.
"Partial Defeasance Collateral" shall mean U.S. Obligations, which
provide payments (i) on or prior to, but as close as possible to, all Payment
Dates and other scheduled payment dates, if any, under the Defeased Note after
the Defeasance Date and up to and including the Scheduled Maturity Date, and
(ii) in amounts equal to or greater than the respective Scheduled Defeasance
Payments related to such Payment Dates.
"Partial Release" has the meaning set forth in Section 2.17.
"Patriot Act" means the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Public Law 107-56).
"Payment Date" has the meaning provided in Section 2.5(a).
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"Payment Intangibles" means all "payment intangibles" as defined in
the UCC, in, to or under which Borrower has any right, title or interest,
whether now owned or hereafter acquired.
"PBGC" means the Pension Benefit Guaranty Corporation established
under ERISA, or any successor thereto.
"Permits" means all licenses, permits, variances and certificates
required by Legal Requirements to be obtained by Borrower and used in connection
with the ownership, operation, use or occupancy of the Mortgaged Property
(including, without limitation, certificates of occupancy, building permits,
business licenses, state health department licenses, licenses to conduct
business and all such other permits, licenses and rights, obtained from any
Governmental Authority concerning ownership, operation, use or occupancy of the
Mortgaged Property).
"Permitted Encumbrances" means, with respect to each Mortgaged
Property, collectively, (i) the Lien created by the Mortgage on such Mortgaged
Property, or any other Loan Documents of record encumbering such Mortgaged
Property, (ii) all Liens and other matters disclosed on the Title Insurance
Policy concerning such Mortgaged Property, (iii) the KC Special Use Permit, (iv)
the TC Special Use Permit, (v) the Open Space Agreement, (vi) Liens, if any, for
Impositions imposed by any Governmental Authority not yet delinquent or being
contested in good faith and by appropriate proceedings in accordance with
Section 5.1(b)(ii) hereof, provided that no foreclosure has been commenced by
the lien claimant, (vii) mechanic's or materialmen's Liens, if any, being
contested in good faith and by appropriate proceedings in accordance with
Section 5.1(b)(ii) hereof, provided that no foreclosure has been commenced by
the lien claimant, (viii) rights of existing and future tenants as tenants only
pursuant to any Leases, (ix) Liens and other matters encumbering the Remaining
Realty after giving effect to Section 2.17 hereof; (x) Liens for public
utilities, (xi) Liens, if any, relating to financing leases, equipment leases
and purchase money debt permitted under Section 8.1(e)(iii) and/or Section
5.1(t), in each case only on the applicable equipment or other personal property
which is the subject of such financing lease or purchase money debt and (xii)
Liens permitted under any specific provision of the Loan Agreement or other Loan
Document, which Liens and encumbrances referred to in clauses (i)-(xii) above do
not materially and adversely affect (1) the ability of Borrower to pay in full
the Principal Indebtedness and interest thereon in a timely manner or (2) the
use of any Mortgaged Property for the use currently being made thereof, the
operation of any Mortgaged Property as currently being operated.
"Permitted Great Wolf Pledge" means (x) any mortgaging, encumbrance,
pledging, hypothecation, or granting of a security interest in, any of (1) the
limited partnership interests of Great Wolf and its successors and assigns in
GWR Operating Partnership, L.L.L.P., (2) the membership interests of Great Wolf
and its successors and assigns in GWR, OP General Partner, LLC, (3) the general
partnership interests of GWR OP General Partner, LLC in GWR Operating
Partnership, L.L.L.P., in each of the foregoing cases to a Qualified Pledgee, or
(4) the membership interests in Great Wolf Lodge of Traverse City, LLC, Great
Wolf Lodge of Kansas City, LLC, or GLGB Manager III, LLC, and (y) any
conveyance, assignment, sale or other disposition (and not a mortgaging,
encumbrance, pledging, hypothecation, or granting of a security interest)
(directly or indirectly) of ownership interests in KC Borrower and/or TC
20
Borrower in connection with the exercise of remedies pursuant thereto following
which either (a) a Qualified Pledgee, through its ownership of the
aforementioned ownership interests, owns not less than 51% of the ownership
interests in Borrower (directly or indirectly) and controls the operations and
management of Borrower or (b) clause(2) under the definition of "Permitted
Transfer" is satisfied.
"Permitted Great Wolf Transfer" means (i) any merger or
reorganization of Great Wolf Lodge of Traverse City, LLC, Great Wolf Lodge of
Kansas City, LLC, GLGB Manager III, LLC, GWR Operating Partnership, L.L.L.P.,
GWR OP General Partner, LLC and/or Great Wolf, and their respective successors
and assigns; (ii) the issuance or sale of stock in Great Wolf, its successors
and assigns; or (iii) the issuance or sale of limited partnership interests in
GWR Operating Partnership, L.L.L.P., its successors and assigns.
"Permitted Investments" means any one or more of the following
obligations or securities acquired at a purchase price of not greater than par:
(i) obligations of, or obligations fully guaranteed as to payment of
principal and interest by, the United States or any agency or
instrumentality thereof provided such obligations are backed by the full
faith and credit of the United States of America;
(ii) obligations of the following United States of America
government sponsored agencies, provided such obligations are backed by the
full faith and credit of the United States of America: Federal Home Loan
Mortgage Corp. (debt obligations), the Farm Credit System (consolidated
systemwide bonds and notes), the Federal Home Loan Banks (consolidated
debt obligations), the Federal National Mortgage Association (debt
obligations), the Financing Corp. (debt obligations), and the Resolution
Funding Corp. (debt obligations);
(iii) federal funds, unsecured certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements with maturities
of not more than 365 days of any bank, the short-term obligations of which
are rated in the highest short-term rating category by the Rating
Agencies;
(iv) certificates of deposit, time deposits, demand deposits or
banker's acceptances issued by any depository institution or trust company
incorporated under the laws of the United States or of any state thereof
and subject to supervision and examination by federal and/or state banking
authorities, the short-term obligations of which are rated in the highest
short-term rating category by the Rating Agencies, which investments are
fully insured by the Federal Deposit Insurance Corp.;
(v) debt obligations with maturities of not more than 365 days and
rated by the Rating Agencies in its highest long-term unsecured rating
category;
(vi) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof)
with maturities of not more than 270 days and that is rated by the Rating
Agencies in their highest short-term unsecured debt rating; and
21
(vii) any other demand, money market or time deposit, demand
obligation or any other obligation, security or investment, which Lender
shall have approved in writing and for which Borrower shall have delivered
a Rating Confirmation;
provided, however, that (A) the investments described in clauses (i) through
(vii) above must have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (B) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, (C) such
investments must not be subject to liquidation prior to their maturity or have
an "r" highlighter affixed to its rating by S&P, and (D) such investments must
not be subject to liquidation prior to their maturity; and provided, further,
that, in the judgment of Lender, such instrument continues to qualify as a "cash
flow investment" pursuant to Code Section 860G(a)(6) earning a passive return in
the nature of interest and that no instrument or security shall be a Permitted
Investment if such instrument or security evidences (x) a right to receive only
interest payments or (y) the right to receive principal and interest payments
derived from an underlying investment at a yield to maturity in excess of 120%
of the yield to maturity at par of such underlying investment.
"Permitted Use Facility" has the meaning set forth in Section 2.17.
"Permitted Transfer" means either of (1) a Permitted Great Wolf
Pledge or (2) any conveyance, assignment, sale or other disposition (and not a
mortgaging, encumbrance, pledging, hypothecation, or granting of a security
interest) (directly or indirectly) of ownership interests in KC Borrower and/or
TC Borrower (including, without limitation, a Permitted Great Wolf Transfer)
following which in the case of this clause(2) (i) GWR Operating Partnership,
L.L.L.P. owns (directly or indirectly) 51% or more of the voting and beneficial
ownership interests in each of KC Borrower and TC Borrower and controls the
operations and management of Borrower and (ii) Great Wolf owns (directly or
indirectly) 51% or more of the voting and beneficial ownership interests in GWR
Operating Partnership, L.L.L.P. and controls the operations and management of
GWR Operating Partnership, L.L.L.P.; provided, that
(a) under no circumstance shall any Transfer be a Permitted Transfer
hereunder unless after giving effect to such Transfer each Borrower is
under 100% common ownership (direct and indirect) and control (but
acknowledging and agreeing that Great Wolf Lodge of Kansas City, LLC has
no interest in TC Borrower and Great Wolf Lodge of Traverse City, LLC and
GLGB Manager III, LLC have no interest in KC Borrower),
(b) if after any conveyance, assignment, sale or other disposition
of ownership interests in KC Borrower and/or TC Borrower, the
aforementioned requirements of a 51% (direct or indirect) ownership
percentage and control over operations and management by GWR Operating
Partnership, L.L.L.P. shall not be satisfied, then such requirements shall
not apply in the event Borrower obtains a Rating Confirmation with respect
to the proposed conveyance, assignment, sale or other disposition of
ownership interests,
22
(c) if after any conveyance, assignment, sale or other disposition
of ownership interests in GWR Operating Partnership, L.L.L.P., the
aforementioned requirements of a 51% (direct or indirect) ownership
percentage and control over operations and management by Great Wolf shall
not be satisfied, then such requirements shall not apply in the event
Great Wolf obtains a Rating Confirmation with respect to the proposed
conveyance, assignment, sale or other disposition of ownership interests
in GWR Operating Partnership, L.L.L.P. (except that no Rating Confirmation
shall be required in connection with a merger or reorganization of Great
Wolf if the successor entity is a Qualified Transferee),
(d) any such Transfer referred to above which takes the form of a
Transfer of the equity ownership interests in KC Borrower and/or TC
Borrower to a transferee which (collectively amongst itself and its
Affiliates that own such equity ownership interests) acquires (directly or
indirectly) a greater than 49% ownership interest in KC Borrower and/or TC
Borrower, or which acquires control over the operations and management of
KC Borrower and/or TC Borrower, shall not be permitted unless, in addition
to satisfaction of the conditions set forth in clauses (a), (b), (c) and
(e) of this definition above, Borrower delivers to Lender a substantive
non-consolidation opinion in form and substance reasonably acceptable to
Lender and the Rating Agencies, if required by Lender or the Rating
Agencies, and
(e) no Transfer of a (direct or indirect) ownership interest in KC
Borrower or TC Borrower shall be made to a Prohibited Person or a Person
that is owned or controlled by or acting for or on behalf of a Prohibited
Person or a Person with whom Lender is prohibited from dealing or
otherwise engaging in any transaction by any terrorism or money laundering
or other Legal Requirements (including the Executive Order or the Patriot
Act) (provided, however, that for the purposes of this clause (e), said
prohibition shall not apply to securities in Great Wolf, its successors
and assigns, traded on any national securities exchange or quotation
service on which the securities may be listed or quoted at the time of
sale, other than such securities traded by Great Wolf or any Affiliate
thereof).
Notwithstanding the foregoing, in the event a Rating Confirmation is
obtained (or a Qualified Transferee succeeds to the interests of Great Wolf) as
contemplated by clauses (b) and (c) above, then from and after the applicable
date, for purposes of a "Permitted Transfer" under this Agreement, the entity
that is the successor or assign to GWR Operating Partnership, L.L.L.P. or Great
Wolf as contemplated by such Rating Confirmation or merger transaction shall
replace GWR Operating Partnership, L.L.L.P. or Great Wolf.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"Personalty" means all Equipment, Inventory,, General Intangibles,
Supporting Obligations, Instruments, Receivables, Pledged Accounts, Contracts
and Intellectual Property and all other personal property as defined in the
relevant UCC, now owned or hereafter acquired
23
by Borrower, or in, to or under which Borrower has any right, title or interest,
whether now owned or hereafter acquired, including all of the foregoing now or
hereafter affixed to, placed upon, used in connection with, arising from or
otherwise related to the Mortgaged Property or which may be used in or relating
to the planning, development, financing or operation of such Mortgaged Property,
and including, without limitation, all Case Goods, Soft Goods, Fixed Asset
Supplies, personal property included in or associated with Water Amenities,
furniture, furnishings, equipment, machinery, money in Pledged Accounts,
insurance proceeds, contract rights, trademarks, goodwill, chattel paper,
documents, trade names, licenses and/or franchise agreements, rights of Borrower
under leases of fixtures or other personal property or equipment, inventory, all
refundable, returnable or reimbursable fees, deposits or other funds or
evidences of credit or indebtedness deposited by or on behalf of Borrower with
any governmental authorities, boards, corporations, providers of utility
services, public or private, including specifically, but without limitation, all
refundable, returnable or reimbursable tap fees, utility deposits, commitment
fees and development costs.
"Plan" means an employee benefit or other plan, other than a
Multiemployer Plan, that is covered by Title IV of ERISA or Section 302 of ERISA
or Section 412 of the Code, and (i) was established or maintained by Borrower or
any ERISA Affiliate during the five year period ended prior to the date of this
Agreement or to which Borrower or any ERISA Affiliate makes, is obligated to
make or has, within the five year period ended prior to the date of this
Agreement, been required to make contributions or (ii) with respect to which
Borrower could reasonably be expected to incur liability.
"Pledged Accounts" means the Local Collection Account, the
Collection Account, the Reserve Accounts, and the Loss Proceeds Account and any
successor accounts to any of the foregoing.
"Policies" has the meaning provided in Section 5.1(x)(iii).
"Pre-existing Condition" has the meaning set forth in Section
5.1(x)(iii)(B) hereof.
"Prepayment Consideration" and "Present Value Yield Differential"
have the respective meanings set forth in Section 2.6(c) hereof.
"Principal Indebtedness" means the principal amount of the Loan
outstanding as adjusted by each increase (including advances made by Lender to
protect the Collateral), or decrease in such principal amount of the Loan
outstanding, whether as a result of prepayment or otherwise, from time to time.
"Principal Reserve Account" has the meaning set forth in Section
2.13(c).
"Proceeds" shall have the meaning given in the UCC and, in any
event, shall include, without limitation, all proceeds, products, offspring,
rents, profits or receipts, in whatever form, arising from the Collateral.
"Prohibited Person" has the meaning set forth in Section 4.1(v)
hereof.
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"Property Expenses" means, with respect to the Mortgaged Property,
the following costs and expenses but only, in the case of costs and expenses in
respect of goods and services, to the extent that they do not constitute Capital
Improvement Costs:
(i) Impositions;
(ii) insurance premiums for policies of insurance required to be
maintained by Borrower pursuant to this Agreement or the other Loan
Documents or otherwise maintained by Borrower or an Affiliate of Borrower
on behalf of Borrower in the ordinary course of business with respect to
the Mortgaged Property;
(iii) the cost of all electricity, oil, gas, water, steam, heat,
ventilation, air conditioning and any other energy, utility or similar
item and overtime services with respect to the Mortgaged Property;
(iv) payments required under service contracts for any services or
items used at the Mortgaged Property or otherwise used in the operation of
the Mortgaged Property (including, without limitation, service contracts
for heating, ventilation and air conditioning systems, elevators,
landscape maintenance, pest extermination, security, furniture, trash
removal, answering service and credit checks);
(v) wages, benefits, payroll taxes, uniforms, the cost of cleaning
supplies and all related expenses for on-site personnel directly involved
in the day-to-day operation of the Mortgaged Property (including, without
limitation, full time, part time or seasonal employees, housekeeping
employees, porters and general repair, maintenance and security employees,
and employees of Manager or others whose time is allocated among one or
more properties), whether hired by Borrower, Manager or any other Person;
(vi) costs incurred in connection with the enforcement of any Lease
(including, without limitation, reasonable attorneys' fees, charges for
lock changes and storage and moving expenses for furniture, fixtures and
equipment);
(vii) advertising and marketing expenses (including, without
limitation, concessions, promotions, banners and signs);
(viii) out-of-pocket cleaning, maintenance and repair expenses;
(ix) any expense the total cost of which is passed through to
tenants pursuant to executed Leases;
(x) legal, accounting, auditing and other professional fees and
expenses incurred in connection with the ownership and operation of the
Mortgaged Property (including, without limitation, collection costs and
expenses);
(xi) permits, licenses and registration fees and costs;
(xii) any expense necessary in order to prevent or cure a violation
of any Legal Requirement (including Environmental Law), regulation, code
or ordinance;
25
(xiii) costs and expenses of any appraisals, valuations, surveys,
inspections, environmental assessments or market studies, zoning reports;
(xiv) costs and expenses of security and security systems provided
to and/or installed and maintained with respect to the Mortgaged Property;
(xv) costs of title, UCC, litigation and other searches and costs of
maintaining the Lien of the Mortgage thereon and the security interest in
any related Collateral;
(xvii) fees and expenses of property managers contracted with by
Borrower to perform management, administrative, payroll or other services
in connection with the operation of the Mortgaged Property (including,
without limitation, the fees and expenses owed to Licensor under the
License Agreement and Manager under the Management Agreement);
(xviii) franchise and license fees of Licensor under the License
Agreement, and royalties and other payments to Tall Pines under the Tall
Pines Agreement, to the extent relating to the Mortgaged Property;
(xix) any other costs and expenses contemplated by the Operating
Budget and customarily incurred in connection with operating properties
similar in type and character to the Mortgaged Property;
(xx) allocations to the Mortgaged Property of expenses of the type
set forth above under bulk purchase contracts or bulk services agreements;
and
(xxi) any other category of property expense that is customary for a
property of the type and size as the Mortgaged Property and is reasonably
approved by Lender, including (without duplication of the foregoing) all
"costs and expenses" as such phrase is used on page 18 of the Uniform
System of Accounts.
"Qualified Pledgee" and "Qualified Transferee" have the respective
meanings set forth on Schedule 8 attached hereto.
"Quarterly Statement" has the meaning provided in Section 2.12(e).
"Rating Agencies" means at least two of Fitch, Xxxxx'x and S&P (or,
if a Secondary Market Transaction has occurred in which Securities have been
issued, each of the foregoing that rated such Securities).
"Rating Confirmation" with respect to any transaction, matter or
action in question, means: (i) if all or any portion of the Loan, by itself or
together with other loans, has been the subject of a Secondary Market
Transaction in which the related Securities have themselves been rated, the
written confirmation of the Rating Agencies that such transaction, matter or
action shall not, in and of itself, result in the downgrading, withdrawal or
qualification of the then-current ratings assigned to any of the Securities
issued in connection with a Secondary Market Transaction; and (ii) if any
portion of the Loan has not been the subject of a Secondary Market Transaction
in which the related Securities have themselves been rated (or, if
26
any portion of the Loan was the subject of a Secondary Market Transaction in
which the related Securities were rated but is no longer the subject of a
Secondary Market Transaction in which the related Securities have been rated,
and no portion of the Loan is then the subject of a Secondary Market Transaction
in which the related Securities have been rated), Lender shall have determined
in its reasonable discretion (taking into consideration such factors as Lender
may determine, including the attributes of the loan pool in which any portion of
the Loan reasonably be expected to be securitized) that no rating for any
Securities that would be issued in connection with such Secondary Market
Transaction involving any of such portion of the Loan would be downgraded,
qualified, or withheld by reason of such transaction, matter or action.
"Rating Criteria" with respect to any Person, means that (i) the
short-term unsecured debt obligations of such Person are rated at least "A-1" by
S&P, "P-1" by Xxxxx'x and "F-1" by Fitch, if deposits are held by such Person
for a period of less than one month, or (ii) the long-term unsecured debt
obligations of such Person are rated at least "AA-" by S&P, "Aa3" by Xxxxx'x and
"AA-" by Fitch, if deposits are held by such Person for a period of one month or
more.
"Real Estate Taxes Escrow Account" has the meaning provided in
Section 2.13(b).
"Receipts" means all revenues, receipts and other payments of every
kind arising from ownership or operation of the Mortgaged Property and received
by Borrower or an Affiliate of Borrower on behalf of Borrower, including,
without limitation, (a) all hotel receipts, revenues and credit card receipts
collected from guest rooms, restaurants, bars, conference rooms, meeting rooms,
banquet rooms, ball rooms, waterpark and other recreational facilities,
incidental charges to hotel guests or other users or customers, any payments
(and the right to receive payments) from credit card companies, travel agents or
reservation systems or services relating to the Mortgaged Property, all
receivables, customer obligations, installment payment obligations and other
obligations now existing or hereafter arising or created out of the sale, lease,
sublease, license, concession or other grant of the right of the use and
occupancy of property or rendering of services by Borrower or any operator or
manager of the Mortgaged Property or the commercial space located thereon or
acquired from others (including, without limitation, from the rental of any
office space, retail space, guest rooms or other space, halls, stores, and
offices, and deposits securing reservations of such space), license, lease,
sublease and concession fees and rentals, health club use and membership fees
and other health club and personal care revenues, food and beverage wholesale
and retail sales (including without limitation room service dining and mini bar
sales), service charges, vending machine sales, telephone and telecommunications
receipts (including without limitation DSL access fees), and any charges of any
kind that appear on any xxxx or statement rendered to any guest or other user or
customer of the Mortgaged Property (excluding any such items not subject to the
Lien of Lender under Section 2.17 herein), and (b) all Rents received from any
tenant, licensee or other Person occupying space at, or providing services
related to or for the benefit of the Mortgaged Property and all payments in lieu
of Rents (excluding any such items not subject to the Lien of Lender under
Section 2.17 herein).
"Receivables" means all of Borrower's right, title and interest,
whether now owned or hereafter acquired, in, to and under income deriving from
(i) any Accounts, Chattel
27
Paper, Instruments, Payment Intangibles, Letter of Credit Rights, Documents,
insurance policies, drafts, bills of exchange, trade acceptances, notes or other
indebtedness, owing to Borrower from whatever source arising (excluding any such
items not subject to the Lien of Lender under Section 2.17 herein), (ii) to the
extent not otherwise included above, and expressly excluding any such items not
subject to the Lien of Lender under Section 2.17 herein, (a) all income,
Receipts, issues, profits, revenues, deposits and other benefits from the
Mortgaged Property and (b) all receivables and other obligations now existing or
hereafter arising, or created out of the sale, lease, sublease, license,
concession or other grant of the right of the use and occupancy of property or
rendering of services by Borrower or any operator or manager of the Mortgaged
Property or other commercial space located at the Mortgaged Property or acquired
from others (including, without limiting the generality of the foregoing, from
rental of space, halls, stores, and offices, and deposits securing reservations
of such space, exhibit or sales space of every kind, license, lease, sublease
and concession fees and rentals, health club membership fees, wholesale and
retail sales of food and beverages, merchandise, service charges, vending
machine sales and proceeds, if any, from business interruption or other loss of
income insurance), (iii) all of the books and records (whether in tangible,
electronic or other form) now or hereafter maintained by or on behalf of
Borrower in connection with the operation of the Mortgaged Property or in
connection with any of the foregoing and (iv) all Supporting Obligations and all
liens and security interests securing any of the foregoing and all other rights,
privileges and remedies relating to any of the foregoing.
"Release" means any active or passive release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration of Hazardous Substances into the indoor or outdoor environment
(including, without limitation, the movement of Hazardous Substances through
ambient air, soil, surface water, ground water, wetlands, land or subsurface
strata).
"Release Parcel" and "Remaining Realty" have the respective meanings
set forth in Section 2.17.
"Remedial Work" has the meaning set forth in Section 5.1(d)(i).
"REMIC" and "REMIC Pool" have the respective meanings set forth in
Section 2.17(xiv).
"Rents" means all income, rents (including base rent), issues,
profits, revenues (including all oil and gas or other mineral royalties and
bonuses), deposits (other than utility and security deposits) and other benefits
from the Mortgaged Property (excluding any such items not subject to the Lien of
Lender under Section 2.17 herein).
"Reserve Account(s)" means the Deferred Maintenance Escrow Account,
the FF&E Costs Reserve Account, the Real Estate Taxes Escrow Account, the
Insurance Escrow Account, the Operating Expense Account and the Principal
Reserve Account, collectively, and any successor accounts to any of the
foregoing.
"Restoration" has the meaning set forth in Section 5.1(x).
28
"Scheduled Defeasance Payments" shall mean scheduled payments of
interest and principal under the Note in the case of a Total Defeasance and
under the Defeased Note in the case of a Partial Defeasance for all Payment
Dates occurring after the Defeasance Date and up to and including the Scheduled
Maturity Date (including, in the case of a Total Defeasance, the outstanding
principal balance of the Loan as of the Scheduled Maturity Date and, in the case
of a Partial Defeasance, the outstanding principal balance of the Defeased Note
as of the Scheduled Maturity Date), and all payments required after the
Defeasance Date, if any, under the Loan Documents for servicing fees and other
similar charges.
"Scheduled Maturity Date" means January 11, 2015.
"Scheduled Principal Payments" has the meaning set forth in Section
2.6(c) hereof.
"S&P" shall mean Standard & Poor's Rating Services, a division of
The XxXxxx-Xxxx Companies, Inc and its successors.
"Secondary Market Transaction" has the meaning set forth in Section
5.1(w).
"Security Agreement" shall mean a security agreement in form and
substance that would be satisfactory to a prudent lender pursuant to which
Borrower grants Lender a perfected, first priority security interest in the
Defeasance Collateral Account and the Defeasance Collateral.
"Securities" means mortgage pass-through certificates or other
securities issued in a Secondary Market Transaction and evidencing a beneficial
interest in or secured in whole or in part by the Loan in a rated or unrated
public offering or private placement.
"Soft Goods" shall mean all fabric, textile and flexible plastic
products (not including items which are classified as "Fixed Asset Supplies"
under the Uniform System of Accounts) which are used in furnishing the Mortgaged
Property, including, without limitation: carpeting, drapes, bedspreads, wall and
floor coverings, mats, shower curtains and similar items.
"Software" shall mean all computer software and accompanying
documentation (including all future upgrades, enhancements, additions,
substitutions and modifications thereof), other than computer software which is
commercially available, which are used by Manager, Borrower or other Persons in
connection with the property management system, the reservation system and all
future electronic systems developed or designated by Manager, Borrower or other
Persons for use in the Mortgaged Property.
"Successor Borrower" has the meaning set forth in Section 2.7(d).
"Supporting Obligations" means all (i) all "supporting obligations"
as defined in the UCC and (ii) any other guarantee, letter of credit, secondary
obligation, right or privilege that supports or pertains to any of the Mortgaged
Property, in, to or under which Borrower has any right, title or interest,
whether now owned or hereafter acquired.
29
"Survey" means a certified ALTA/ACSM survey of the Mortgaged
Property prepared by a registered Independent surveyor, containing the form of
survey or certification provided to Borrower by Lender and in form and content
reasonably satisfactory to Lender and the company issuing the Title Insurance
Policy for the Mortgaged Property.
"Tall Pines" means Tall Pines Development Corporation, a Wisconsin
corporation, its successors and assigns.
"Tall Pines Agreement" means that certain Tall Pines Exclusive
License and Royalty Agreement executed as of July 25, 2004, by and among Tall
Pines and Great Lakes, together with, and as modified with respect to the
Mortgaged Property by, each Tall Pines Recognition Agreement.
"Tall Pines Recognition Agreement" means each Recognition Agreement
for each Mortgaged Property, each among the parties to the Tall Pines Agreement,
the Borrower owing such Mortgaged Property and Lender, each dated as of the
Closing Date.
"Taking" means a taking or voluntary conveyance during the term
hereof of all or part of any Mortgaged Property, or any interest therein or
right accruing thereto or use thereof, as the result of, or in settlement of,
any condemnation or other eminent domain proceeding by any Governmental
Authority affecting the Mortgaged Property or any portion thereof whether or not
the same shall have actually been commenced.
"TC Allocated Loan Amount" means an amount equal to 56% of the then
outstanding Principal Indebtedness.
"TC Special Use Permit" means Special Use Permit #2001-02, Charter
Township of Garfield, Great Buffalo Lodge, Approved January 25, 2001, as amended
by Amendment #00-00 Xxxxx Xxxxxx, approved January 23, 2003.
"Title Insurance Policy" means each mortgagee's title insurance
policy or policies (i) issued by one or more title companies reasonably
satisfactory to Lender which policy or policies shall (unless Lender otherwise
requires or consents) be in form ALTA 1992, where available (with waiver of
arbitration provisions), naming Lender as the insured party, (ii) insuring each
Mortgage as being a first and prior lien upon the related Mortgaged Property,
(iii) showing no encumbrances against any Mortgaged Property (whether junior or
superior to the related Mortgage) other than Permitted Encumbrances, (iv) in the
amount of the Loan Amount, and (v) otherwise in form and content reasonably
acceptable to Lender. Each Title Insurance Policy shall include the following
endorsements or affirmative coverages in form and substance reasonably
acceptable to Lender, to the extent available in the jurisdiction in which the
Land is located: variable rate endorsement; survey endorsement; comprehensive
endorsement; zoning (ALTA 3.1 with parking added) endorsement; first loss, last
dollar and tie-in endorsement; access coverage; separate tax parcel coverage;
contiguity (if applicable) coverage; and such other endorsements as Lender shall
reasonably require with respect to a particular Mortgaged Property in order to
provide insurance against specific risks identified by Lender in connection with
the Mortgaged Property.
"Total Defeasance" has the meaning set forth in Section 2.7(a).
30
"Total Defeasance Collateral" shall mean U.S. Obligations, which
provide payments (i) on or prior to, but as close as possible to, all Payment
Dates and other scheduled payment dates, if any, under the Note and this Loan
Agreement after the Defeasance Date and up to and including the Scheduled
Maturity Date, and (ii) in amounts equal to or greater than the respective
Scheduled Defeasance Payments related to such Payment Dates.
"Transaction" means the transactions contemplated by the Loan
Documents.
"Transaction Costs" means all costs and expenses paid or payable by
Borrower relating to the Transaction (including, without limitation, appraisal
fees, legal fees and accounting fees and the costs and expenses described in
Section 9.23).
"Transfer" means the conveyance, assignment, sale, mortgaging,
pledging, hypothecation, granting of a security interest in, granting of options
with respect to, or other disposition of (directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, and whether or not for
consideration or of record) all or any portion of any direct or indirect
(irrespective of the number of tiers of ownership) legal or beneficial interest
(a) in all or any portion of the Mortgaged Property; or (b) any membership
interests in, economic rights to distributions or dividends from, or other
equity ownership interests in, Borrower or the constituent entities directly or
indirectly (irrespective of the number of tiers of ownership) owning any such
membership interests or other ownership interests in Borrower. A Transfer shall
also include, without limitation to the foregoing, the following: an installment
sales agreement wherein Borrower (or any Affiliate of Borrower) agrees to sell
the Mortgaged Property or any part thereof or any interest therein for a price
to be paid in installments; an agreement by Borrower (or any Affiliate of
Borrower) leasing all or a substantial part of the Mortgaged Property to one or
more Persons pursuant to a single or related transactions, or a sale, assignment
or other transfer of, or the grant of a security interest in, Borrower's right,
title and interest in and to any Leases or any Rent; and except as permitted
under Section 2.17 below, any instrument subjecting the Mortgaged Property to a
condominium regime or transferring ownership to a cooperative corporation. A
Permitted Encumbrance shall not be a Transfer.
"Treasury Rate" means, on the date on which such rate is calculated,
the yield on the ten year "on the run" U.S. Treasury issue (primary issue) with
such yield being based on the bid price for such issue as reasonably determined
by Lender.
"UCC" means with respect to any Collateral, the Uniform Commercial
Code as in effect from time to time in the State of New York; provided, that if
by reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection or priority of the security interest in any item or
portion of the Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or effect of perfection or
non-perfection or priority. Wherever this agreement refers to terms as defined
in the UCC, if such term is defined in more than one Article of the UCC, the
definition in Article 9 of the UCC shall control.
"UCC Searches" has the meaning set forth in Section 3.1(v) hereof.
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"Undefeased Note" has the meaning set forth in Section 2.7(b)(iv).
"Undefeased A Note" has the meaning set forth in Section 2.7(b)(iv).
"Undefeased B Note" has the meaning set forth in Section 2.7(b)(iv).
"Underwritten Net Cash Flow" means, as of any date of calculation
with respect to the Mortgaged Property, (i) the Operating Revenues during the
most recently ended twelve month period, minus (ii) the Operating Expenses with
respect to the Mortgaged Property during such twelve month period, each as
determined by Lender and after Lender makes adjustments, if necessary, for the
following (and without duplication where such items are already included within
Operating Expenses)
(1) expenses for management fees equal to the greater of actual
management fees or 3% of Gross Revenues for such period,
(2) royalties and other fees attributable to the Mortgaged
Property under the Tall Pines Agreement for such period,
(3) a reduction in Operating Revenues to reflect a maximum
occupancy percentage of 75% (regardless of actual occupancy in
excess thereof),
(4) an annual minimum reserve for FF&E Costs equal to the greater
of actual FF&E Costs and the FF&E Percentage of Gross Revenues
for such period,
(5) exclusion of any other revenue items deemed nonrecurring under
GAAP, and
(6) inclusion of increases in future operating costs as determined
by Lender, based on operating costs increases which have been
identified and quantified and are not hypothetical or
subjectively determined, so that, assuming current occupancy,
the annualized underwritten Operating Expenses fully reflect
the operating costs expected to be incurred over the next
twelve month period.
"Uniform System of Accounts" shall mean the Uniform System of
Accounts for the Lodging Industry, Ninth Revised Edition, 1996, as published by
the American Hotel & Motel Association.
"U.S. Obligations" shall mean securities that are (i) direct
obligations of the United States of America for the full and timely payment of
which its full faith and credit is pledged or (ii) obligations of an entity
controlled or supervised by and acting as an agency or instrumentality and
guaranteed as a full faith and credit obligation which shall be fully and timely
paid by the United States of America, which in either case are (a) not subject
to prepayment, call or early redemption at the option of the issuer thereof, and
(b) constitute "government securities" within the meaning of Section 2(a)(16) of
the Investment Company Act of 1940, as amended.
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"Use" means, with respect to any Hazardous Substance, the
generation, manufacture, processing, distribution, handling, use, treatment,
recycling or storage of such Hazardous Substance or transportation of such
Hazardous Substance in connection with or affecting Borrower or the Mortgaged
Property.
"Water Amenities" the water-based attractions, including, without
limitation, pools, water slides, fountains, lockers, food and beverage service
areas, saunas, hot tubs, showers, water amusement structures and all associated
buildings, structures, equipment, inventory and other personal property located
at or used or useful in connection with such water-based attractions or the
operation, maintenance, repair and replacement thereof.
"Weighted Amortization Product" and "Weighted Average Life to
Maturity" have the respective meanings set forth in Section 2.6(c) hereof.
"Welfare Plan" means an employee welfare benefit plan as defined in
Section 3(1) of ERISA established or maintained by Borrower or any ERISA
Affiliate or with respect to which Borrower or any ERISA Affiliate has an
obligation to make contributions and covers any current or former employee of
Borrower or any ERISA Affiliate.
"Yield Determination Date", "Yield Differential", "Yield Rate" and
"Yield Rate Determination Date" have the respective meanings set forth in
Section 2.6(c) hereof.
ARTICLE II.
GENERAL TERMS
Section 2.1. The Loan.
(a) Subject to the terms and conditions of this Agreement, Lender
shall lend to Borrower on the Closing Date the Loan Amount, consisting of Loan A
and Loan B. The proceeds of the Loan shall be used solely for the purposes
identified in Section 2.2 hereof. Lender is hereby authorized to fund directly
from the proceeds of the Loan advanced on the Closing Date (net of any deposits
or payments made by Borrower or its Affiliates prior to the Closing Date) (i)
the Origination Fee, (ii) the deposits to the Deferred Maintenance Escrow
Account, the Real Estate Taxes Escrow Account and the Insurance Escrow Account
required to be funded from Loan proceeds pursuant to Section 2.13, (iii) the
out-of-pocket expenses incurred by Lender in connection with the origination and
funding of the Loan (to the extent not previously paid) and (iv) the reasonable
fees and expenses of Lender's and Borrower's counsel.
(b) The Loan shall constitute one general obligation of Borrower to
Lender and shall be secured by the security interest in and Liens granted upon
all of the Collateral, and by all other security interests and Liens at any time
or times hereafter granted by Borrower to Lender as security for the Loan.
Section 2.2. Use of Proceeds. Proceeds of the Loan shall be used
only for the following purposes: (a) to refinance existing mortgage debt at the
Mortgaged Property, (b) to make the required deposits to the Deferred
Maintenance Escrow Account, the Real Estate Taxes Escrow Account and the
Insurance Escrow Account, (c) to pay to Lender the Origination Fee, (d) to pay
Transaction Costs (including the reasonable out-of-pocket expenses incurred by
Lender in
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connection with the origination and funding of the Loan) and (e) to pay
reasonable fees, expenses and disbursements of Lender's and Borrower's counsel.
Any proceeds of the Loan in excess of the amounts applied in accordance with
Sections 2.1(a) and 2.2(a)-(e) may be used by the Borrower for its general
purposes.
Section 2.3. Security for the Loan. The Note and Borrower's
obligations hereunder and under all other Loan Documents shall be secured by (a)
Liens upon the Mortgaged Property pursuant to the Mortgage, (b) the Contract
Assignment, (c) the Manager's Subordination, (d) the Assignment of Profits and
Leases, and (e) all other security interests and Liens granted in this Agreement
and in the other Loan Documents.
Section 2.4. Borrower's Note. Borrower's obligation to pay the
principal of and interest on the Loan and all other amounts due under the Loan
Documents shall be evidenced initially by the Note, duly executed and delivered
by Borrower on the Closing Date. The Note shall be payable as to principal,
interest and all other amounts due under the Loan Documents, as specified in
this Agreement, with a final maturity on the Maturity Date. Subject to the
provisions of Section 5.1(w), Lender shall have the right to have the Note
subdivided, by exchange for promissory notes of lesser denominations in the form
of the initial Note, upon written request to Borrower and the delivery to
Borrower by Lender of the predecessor note(s) marked "Cancelled" and, in such
event, Borrower shall promptly execute additional or replacement Notes. At no
time shall the aggregate original principal amount of the Note (or of such
replacement Notes) exceed the Loan Amount.
Section 2.5. Principal and Interest.
(a) Interest on the Loan shall accrue at the rate set forth in
Section 2.5(b) below commencing on the Closing Date. Borrower shall make a
payment to Lender of interest only on the Closing Date for the period from the
Closing Date through the tenth (10th) day of January, 2005. Commencing on the
eleventh (11th) day of February, 2005 (the "First Payment Date") and on the
eleventh (11th) day of each calendar month thereafter (each, with the First
Payment Date, a "Payment Date"), Borrower shall make equal monthly payments
(each, a "Monthly Debt Service Payment") of principal and interest in the amount
of the Monthly Debt Service Payment Amount. The entire outstanding Principal
Indebtedness of the Loan and the Note, together with all accrued but unpaid
interest thereon and all other amounts due under the Loan Documents, shall be
due and payable by Borrower to Lender on the Maturity Date. Interest shall be
computed on the basis of a 360 day year and the actual number of days elapsed
during any month or other accrual period.
(b) The Loan shall bear interest at a rate per annum equal to the
Applicable Interest Rate, increasing, however, to the Default Rate while an
Event of Default has occurred and is continuing, as provided in Section 2.5(c)
below.
(c) While an Event of Default has occurred and is continuing,
Borrower shall pay to Lender interest at the Default Rate on the outstanding
Indebtedness until such amount is paid in full.
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(d) If any payment of principal, interest or other sums shall not be
made to Lender on the date the same is due hereunder or under any of the other
Loan Documents, then Borrower shall pay to Lender, in addition to all sums
otherwise due and payable, a late fee in an amount equal to five percent (5.0%)
of such principal, interest or other sums due hereunder (other than the entire
principal balance of the Loan due upon acceleration of the Loan or upon
Maturity) or under any other Loan Document (or, in the case of a partial
payment, the unpaid portion thereof), such late charge to be immediately due and
payable without demand by Lender.
(e) Notwithstanding any provision to the contrary contained in this
Agreement or the other Loan Documents, Borrower shall not be required to pay,
and Lender shall not be permitted to collect, any amount of interest in excess
of the maximum amount of interest permitted by law ("Excess Interest"). If any
Excess Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Agreement or in any of the other
Loan Documents, then in such event: (1) the provisions of this paragraph shall
govern and control; (2) Borrower shall not be obligated to pay any Excess
Interest; (3) any Excess Interest that Lender may have received hereunder shall
be, at Lender's option, (a) applied as a credit against either or both of the
Principal Indebtedness of the Loan or accrued and unpaid interest thereunder
(not to exceed the maximum amount permitted by law), (b) refunded to the payor
thereof, or (c) any combination of the foregoing; (4) the interest rate(s)
provided for herein shall be automatically reduced to the maximum lawful rate
allowed from time to time under applicable law (the "Maximum Rate"), and this
Agreement and the other Loan Documents shall be deemed to have been and shall
be, reformed and modified to reflect such reduction; and (5) Borrower shall not
have any action against Lender for any damages arising out of the payment or
collection of any Excess Interest. Notwithstanding the foregoing, if for any
period of time interest on any Indebtedness is calculated at the Maximum Rate
rather than the applicable rate under this Agreement, and thereafter such
applicable rate becomes less than the Maximum Rate, the rate of interest payable
on such Indebtedness shall, to the extent permitted by law, remain at the
Maximum Rate until Lender shall have received or accrued the amount of interest
which Lender would have received or accrued during such period on Indebtedness
had the rate of interest not been limited to the Maximum Rate during such
period. If the Default Rate shall be finally determined to be unlawful, then the
Maximum Rate shall be applicable during any time when the Default Rate would
have been applicable hereunder, provided however that if the Maximum Rate is
greater than the applicable interest rate, then the foregoing provisions of this
paragraph shall apply.
Section 2.6. Prepayment.
(a) Limitation on Prepayment; Prepayment Consideration Due on
Acceleration. Borrower shall have no right to prepay the Loan in whole or part
at any time, except as expressly set forth in this Section 2.6(a). Commencing on
and at any time after the First Open Prepayment Date, Borrower may prepay the
Loan in whole, but not in part, without payment of Prepayment Consideration,
provided that (i) Borrower shall provide to Lender not less than thirty (30)
days' prior written notice of such prepayment, (ii) together with such
prepayment Borrower also shall pay all accrued and unpaid interest and all other
Obligations and (iii) if such prepayment occurs on any day other than a Payment
Date, then together therewith Borrower also shall pay to Lender the amount of
interest that would have accrued on the amount being prepaid from and including
the date of such prepayment to (but excluding) the Payment
35
Date following such date of prepayment. Borrower shall not be required to pay
any Prepayment Consideration with respect to an application of insurance
proceeds or condemnation awards by Lender pursuant to this Agreement or the
Mortgage in the absence of an Event of Default. In addition, in the event the
Lender elects to apply insurance proceeds or condemnation proceeds to the
payment of the Indebtedness pursuant to this Agreement, then, so long as an
Event of Default has not occurred and is not continuing, the Borrower may prepay
the Loan in part and simultaneously obtain a release of the affected Mortgaged
Property and all Collateral related thereto from the Lien of the Mortgage and
the Loan Documents, provided that on the date of the release, (i) the Borrower
prepays the Principal Indebtedness in an amount equal to 125% of the KC
Allocated Loan Amount (in the case of a Release of the Mortgaged Property owned
by the KC Borrower) or 125% of the TC Allocated Loan Amount (in the case of a
Release of the Mortgaged Property owned by the TC Borrower) TC Borrower and (ii)
the Borrower makes the payments provided for in clauses (i) and (ii) of the
second preceding sentence.
(b) Prepayment Consideration Due. If the Maturity Date shall be
accelerated to a date prior to the Scheduled Maturity Date, or if any prepayment
of all or any portion of the Principal Indebtedness hereunder occurs, whether in
connection with Lender's acceleration of the unpaid Principal Indebtedness of
the Loan or in any other circumstances whatsoever, or if the Mortgage is
satisfied or released by foreclosure (whether by power of sale or judicial
proceeding), deed in lieu of foreclosure or by any other means, then the
Prepayment Consideration shall become immediately due and owing and Borrower
shall forthwith pay the Prepayment Consideration to Lender. The foregoing shall
not create any right of prepayment. Borrower shall have no right whatsoever to
prepay all or any portion of the Principal Indebtedness of the Note, except as
set forth in Section 2.6(a) above.
(c) Definitions. The following terms shall have the meanings
indicated:
The "Prepayment Consideration" shall be the amount equal to the sum
of (i) an amount equal to the interest which would have accrued on the Principal
Indebtedness for the period from and including (A) the date (the "Event Date")
which is the earlier of (x) the date of prepayment of the Loan or (y) such
earlier date upon which the entire remaining Principal Indebtedness shall become
due and payable, whether as a result of acceleration of the maturity of the Loan
or otherwise, to but excluding (B) the next Payment Date following the Event
Date, plus (ii) the sum of two percent of the Principal Indebtedness on the
Event Date plus an amount equal to the "Present Value Yield Differential",
calculated as the excess, if any, of (A) the amount of the monthly interest
which would otherwise be payable on the principal balance of the Loan from (1)
the date (the "Yield Determination Date") which is the Payment Date following
the Event Date through and including (2) the Scheduled Maturity Date, over (B)
the amount of the monthly interest Lender would earn if an amount equal to the
Principal Balance of the Loan as of the Event Date were invested for the period
from the Yield Determination Date through the Scheduled Maturity Date at the
Yield Rate (as hereinafter defined), such difference (the "Yield Differential")
to be discounted to present value at the Yield Rate using the following formula:
Yield Differential x [1-(1+r)-(n)]
----------------------------------
Present Value Yield Differential = r
where:
36
r = Yield Rate, and
n = the remaining Weighted Average Life to Maturity (as
defined below) from the Yield Determination Date.
The "Yield Rate" shall be the annualized yield on securities issued by the
United States Treasury having a maturity corresponding to the then remaining
Weighted Average Life to Maturity (as defined below) of the Loan as determined
by Lender, as quoted in Federal Reserve Statistical Release [H. 15(519)] under
the heading "U.S. Government Securities - Treasury Constant Maturities" for the
Yield Rate Determination Date (as defined below), converted to a monthly
equivalent yield. If yields for such securities of such maturity are not shown
in such publication, then the Yield Rate shall be determined by Lender by linear
interpolation between the yields of securities of the next longer and next
shorter maturities. If said Federal Reserve Statistical Release or any other
information necessary for determination of the Yield Rate in accordance with the
foregoing is no longer published or is otherwise unavailable, then the Yield
Rate shall be determined by Lender based on comparable data. The term "Yield
Rate Determination Date" shall mean the date which is five (5) Business Days
prior to the Yield Determination Date. The term "Weighted Average Life to
Maturity" shall mean, at any date, the number of years (including fractional
years, expressed as a decimal (e.g., three years and three moths = 3.25 years))
obtained by dividing (x) the outstanding Principal Indebtedness on the Event
Date into (y) the sum total of the Weighted Amortization Products (as defined
below) for each Scheduled Principal Payment (as defined below). The "Scheduled
Principal Payment(s)" shall mean each then remaining scheduled principal payment
(assuming no prepayment or Loan acceleration), including payment of the
outstanding principal balance of the Loan on the Scheduled Maturity Date, in
respect of the Loan. The "Weighted Amortization Product" for each Scheduled
Principal Payment shall mean the product of (A) the amount of such Scheduled
Principal Payment multiplied by (B) the number of years (including fractional
years, expressed as a decimal) which will elapse between the Yield Determination
Date and the date on which such Scheduled Principal Payment is to be made under
this Agreement.
Borrower agrees that the Prepayment Consideration required hereunder
is reasonable. Borrower has given individual weight to the consideration in this
transaction for this waiver and agreement.
(d) Prepayment Allocations. All proceeds of a prepayment made in
accordance with this Section 2.6 shall be applied by Lender in the following
order of priority, unless Lender elects an alternate priority of application in
Lender's discretion:
(i) first, to the payment of all accrued and unpaid interest on Loan
A;
(ii) second, to the payment of the outstanding principal amount of
Loan A until the full principal amount of Loan A is paid in full;
(iii) third, to the payment of all accrued and unpaid interest on
Loan B; and
(iv) fourth, to the payment of the outstanding principal amount of
Loan B, until such principal amount is paid in full.
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In the absence of an Event of Default any Prepayment Consideration
shall be allocated by Lender between Loan A and Loan B in an amount equal to the
relative principal balances of Loan A and Loan B prepaid.
Section 2.7. Defeasance.
(a) Total Defeasance. Borrower shall have the right at any time
after the First Open Defeasance Date and prior to the First Open Prepayment Date
to obtain a release of the Lien of the Mortgage encumbering the Mortgaged
Property (a "Total Defeasance") upon satisfaction of the following conditions:
(i) Borrower shall provide Lender at least thirty (30) days' prior
written notice (or such shorter period of time if permitted by Lender)
specifying a date (the "Defeasance Date") on which Borrower shall have
satisfied the conditions in this Section 2.7(a) and on which it shall
effect the Total Defeasance;
(ii) Borrower shall pay to Lender (A) all payments of interest due
on the Loan to and including the Defeasance Date and (B) all other sums,
then due under the Note, this Loan Agreement, the Mortgage and the other
Loan Documents;
(iii) Borrower shall irrevocably deposit the Total Defeasance
Collateral into the Defeasance Collateral Account and otherwise comply
with the provisions of this Section 2.7(a) and Sections 2.7(c) and (d)
hereof;
(iv) Borrower shall execute and deliver to Lender a Security
Agreement in respect of the Defeasance Collateral Account and the Total
Defeasance Collateral;
(v) Borrower shall deliver to Lender an opinion of counsel for
Borrower that is customary in commercial lending transactions and subject
only to normal qualifications, assumptions and exceptions opining to any
matter as then required by the Rating Agencies in connection with similar
transactions and including, among other things, that (w) Lender has a
legal and valid perfected first priority security interest in the
Defeasance Collateral Account and the Total Defeasance Collateral, and (x)
if a Securitization has occurred, the REMIC Trust formed pursuant to such
Securitization will not fail to maintain its status as a "real estate
mortgage investment conduit" within the meaning of Section 860D of the
Code as a result of the Total Defeasance pursuant to this Section 2.7(a);
(vi) If and to the extent required by the Rating Agencies, a
non-consolidation opinion with respect to the Successor Borrower;
(vii) Borrower shall deliver to Lender a confirmation in writing
from the applicable Rating Agencies to the effect that the release of the
Mortgaged Property from the Lien of the Mortgage as contemplated by this
Section 2.7(a) and the substitution of the Total Defeasance Collateral
will not result in a downgrading, withdrawal or qualification of the
respective ratings in effect immediately prior to such defeasance for the
Certificates issued in connection with the Securitization which are then
outstanding;
38
(viii) Borrower shall deliver an officer's certificate certifying
that the requirements set forth in this Section 2.7 have been satisfied;
(ix) Borrower shall deliver a certificate of a nationally recognized
public accounting firm reasonably acceptable to Lender certifying that the
Total Defeasance Collateral will generate monthly amounts equal to or
greater than the Scheduled Defeasance Payments;
(x) Borrower shall deliver such other certificates, opinions,
documents and instruments as Lender may reasonably request, provided the
same do not materially increase Borrower's obligations or decrease
Borrower's rights hereunder; and
(xi) Borrower shall pay all costs and expenses of Lender incurred in
connection with the defeasance, including Lender's reasonable attorneys'
fees and expenses and Rating Agency fees and expenses.
If a Total Defeasance occurs and all of the requirements of this Section 2.7
have been satisfied, (i) Lender shall execute any and all documents required to
release the Mortgaged Property, all Account Collateral and all other Collateral
from the Lien of the Mortgage and the Assignment of Profits and Leases, and to
terminate the Local Collection Account Agreements, the Collection Account
Agreement and all Direction Letters, and cause all Account Collateral held by or
on behalf of Lender to be released to Borrower, and the Total Defeasance
Collateral, pledged pursuant to the Security Agreement, shall be the sole source
of collateral securing the Loan. In connection with any such release of the
Lien, Borrower shall submit to Lender, not less than thirty (30) days prior to
the Defeasance Date (or such shorter time as permitted by Lender), a release of
Lien (and related Loan Documents) for execution by Lender. Such release shall be
in a form appropriate in the jurisdiction in which the Mortgaged Property is
located and contain standard provisions protecting the rights of a releasing
lender. In addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with such release.
Borrower shall pay all costs, taxes and expenses associated with the release of
the Lien of the Mortgage and the Assignment of Leases, including Lender's
reasonable attorneys' fees.
(b) Partial Defeasance. Borrower shall, as a condition to and only
in connection with a KC Release of the KC Property after the First Open
Defeasance Date and prior to the First Open Prepayment Date as provided in
Section 2.11 below, have the right to defease a portion of the Loan in the
amount of the Partial Defeasance Amount (a "Partial Defeasance") upon
satisfaction of the following conditions:
(i) Borrower shall provide Lender at least thirty (30) days' prior
written notice (or such shorter period of time if permitted by Lender)
specifying a date (the "Partial Defeasance Date") on which Borrower shall
have satisfied the conditions in this Section 2.7(b) and on which it shall
effect the Partial Defeasance;
(ii) Borrower shall pay to Lender (A) all payments of interest due
on the Loan to and including the Partial Defeasance Date and (B) all other
sums, then due under the Note, this Loan Agreement, the Mortgage and the
other Loan Documents;
39
(iii) Borrower shall irrevocably deposit the Partial Defeasance
Collateral into the Defeasance Collateral Account and otherwise comply
with the provisions of this Section 2.7(b) and Sections 2.7(c) and (d)
hereof;
(iv) Lender shall prepare (at Borrower's expense) all necessary
documents to modify this Loan Agreement and to amend and restate each Note
and issue four substitute notes, two of which notes (collectively, the
"Defeased Note") shall have an aggregate principal balance equal to the
Partial Defeasance Amount, with one such Defeased Note payable to the Note
A Lender and having a principal balance equal to the Partial Loan A
Defeasance Amount (the "Defeased A Note"), and the other such Defeased
Note payable to the Note B Lender and having a principal balance equal to
the Partial Loan B Defeasance Amount (the "Defeased B Note"), and the
other two of which notes (collectively, the "Undefeased Note") having an
aggregate principal balance equal to the excess of (A) the
then-outstanding principal amount of the Loan, over (B) the aggregate
amount of the Defeased Note, with one such Undefeased Note (the
"Undefeased A Note") payable to the Note A Lender and having a principal
balance equal to the excess of (1) the then-outstanding principal amount
of Loan A, over (2) the aggregate amount of the Defeased A Note, and the
other such Defeased Note the "Undefeased B Note") payable to the Note B
Lender and having a principal balance equal to the excess of (X) the
then-outstanding principal amount of Loan B, over (Y) the aggregate amount
of the Defeased B Note. The Defeased A Note and Undefeased A Note shall
have identical terms as Note A except for the principal balance and
monthly payments. The Defeased B Note and Undefeased B Note shall have
identical terms as Note B except for the principal balance and monthly
payments. The "Partial Loan A Defeasance Amount" shall be equal to the
product of the Partial Defeasance Amount multiplied by a fraction, the
numerator of which is the then-outstanding Principal Indebtedness of Loan
A and the denominator of which is the aggregate then-outstanding Principal
Indebtedness of Loan A and Loan B. The "Partial Loan B Defeasance Amount"
shall be equal to the product of the Partial Defeasance Amount multiplied
by a fraction, the numerator of which is the then-outstanding Principal
Indebtedness of Loan B and the denominator of which is the aggregate
then-outstanding Principal Indebtedness of Loan A and Loan B. The Defeased
Note and the Undefeased Note shall be cross defaulted and cross
collateralized. A Defeased Note may not be the subject of any further
defeasance;
(v) Borrower shall execute and deliver to Lender a Security
Agreement in respect of the Defeasance Collateral Account and the Partial
Defeasance Collateral;
(vi) Borrower shall deliver to Lender an opinion of counsel for
Borrower that is customary in commercial lending transactions and subject
only to normal qualifications, assumptions and exceptions opining to any
matter as then required by the Rating Agencies in connection with similar
transactions and including, among other things, that (w) Lender has a
legal and valid perfected first priority security interest in the
Defeasance Collateral Account and the Partial Defeasance Collateral and
(x) if a Securitization has occurred, the REMIC Trust formed pursuant to
such Securitization will not fail to maintain its status as a "real estate
mortgage investment conduit" within the meaning of Section 860D of the
Code as a result of the Partial Defeasance pursuant to this Section
2.7(b);
40
(vii) If and to the extent required by the Rating Agencies, a
non-consolidation opinion with respect to the Successor Borrower;
(viii) Borrower shall deliver to Lender a confirmation in writing
from the applicable Rating Agencies to the effect that the release of the
KC Property from the Lien of the Mortgage as contemplated by this Section
2.7(b) and the substitution of the Partial Defeasance Collateral will not
result in a downgrading, withdrawal or qualification of the respective
ratings in effect immediately prior to such defeasance for the
Certificates issued in connection with the Securitization which are then
outstanding;
(ix) Borrower shall deliver an officer's certificate certifying that
the requirements set forth in this Section 2.7 have been satisfied;
(x) Borrower shall deliver a certificate of a nationally recognized
public accounting firm reasonably acceptable to Lender certifying that the
Partial Defeasance Collateral will generate monthly amounts equal to or
greater than the Scheduled Defeasance Payments;
(xi) Borrower shall deliver such other certificates, opinions,
documents and instruments as Lender may reasonably request; and
(xii) Borrower shall pay all costs and expenses of Lender incurred
in connection with the defeasance, including Lender's reasonable
attorneys' fees and expenses and Rating Agency fees and expenses.
(c) Defeasance Collateral Account. On or before the date on which
Borrower delivers the Defeasance Collateral, Borrower or Successor Borrower (as
applicable) shall open at any Eligible Bank the defeasance collateral account
(the "Defeasance Collateral Account") which shall at all times be an Eligible
Account. The Defeasance Collateral Account shall contain only (i) Defeasance
Collateral and (ii) cash from interest and principal paid on the Defeasance
Collateral. All cash from interest and principal payments paid on the Defeasance
Collateral shall be paid over to Lender on each Payment Date and applied to the
monthly installments of principal and interest on the Loan (or in the case of a
Partial Defeasance, the portion thereof evidenced by the Defeased Note) and,
upon Maturity, to accrued interest and the Principal Balance of the Loan (or in
the case of a Partial Defeasance, the portion thereof evidenced by the Defeased
Note) Borrower shall cause the Eligible Bank at which the Defeasance Collateral
is deposited to enter an agreement with Borrower and Lender, satisfactory to
Lender, pursuant to which such Eligible Bank shall agree to hold and distribute
the Defeasance Collateral in accordance with this Loan Agreement. Borrower (or
Successor Borrower, as applicable) shall be the owner of the Defeasance
Collateral Account and shall report all income accrued on Defeasance Collateral
for federal, state and local income tax purposes in its income tax return.
Borrower shall prepay all costs and expenses associated with opening and
maintaining the Defeasance Collateral Account. Lender shall not in any way be
liable by reason of any insufficiency in the Defeasance Collateral Account.
(d) Successor Borrower. In connection with a Defeasance under this
Section 2.7, Borrower shall, if required by the Rating Agencies or if Borrower
so elects or Lender
41
requires, establish or designate a successor entity (the "Successor Borrower")
which shall be a single purpose bankruptcy remote entity and which shall be
approved by the Rating Agencies. Any such Successor Borrower may, at Borrower's
option, be an Affiliate of Borrower unless the Rating Agencies or Lender shall
require otherwise. Borrower shall transfer and assign all obligations, rights
and duties under and to the Note (or the Defeased Note, as applicable), together
with the Defeasance Collateral, to such Successor Borrower. Such Successor
Borrower shall assume the obligations under the Note (or the Defeased Note, as
applicable) and the Security Agreement. Borrower shall pay $1,000 to any such
Successor Borrower as consideration for assuming the obligations under the Note
(or the Defeased Note, as applicable) and the Security Agreement. Borrower shall
pay all reasonable costs and expenses incurred by Lender, including Lender's
attorney's fees and expenses incurred in connection therewith, and all fees,
expenses and other charges of the Rating Agencies.
Section 2.8. Application of Payments. In the absence of an Event of
Default, each payment of principal and/or interest on the Loan shall be applied
first (a) in the amount of the Monthly Loan A Debt Service Amount, first to
accrued and unpaid Loan A Interest and the balance of the Monthly Loan A Debt
Service Amount to the payment of principal on Loan A, then (b) in the amount of
the Monthly Loan B Debt Service Amount, first to accrued and unpaid Loan B
Interest and the balance of the Monthly Loan B Debt Service Amount to the
payment of principal on Loan B. After the occurrence and during the continuance
of an Event of Default, Borrower irrevocably waives the right to direct the
application of any and all payments at any time hereafter received by Lender
from or on behalf of Borrower, and Borrower irrevocably agrees that Lender shall
have the continuing exclusive right to apply any and all such payments and any
and all proceeds and recoveries from the Pledged Accounts, the Mortgaged
Property or Borrower after the occurrence and during the continuance of an Event
of Default, in Lender's discretion, to the Indebtedness and other amounts then
outstanding under this Agreement in such order and manner as Lender may
determine, including, without limitation, (i) reasonable out-of-pocket costs and
expenses of Lender reimbursable pursuant to the terms of this Agreement arising
as a result of such repayment, any accrued and unpaid interest then payable with
respect to the Loan or the portion thereof being repaid, the Principal
Indebtedness, any accrued and unpaid Prepayment Consideration in respect of any
such Principal Indebtedness or the portion thereof being repaid, any other sums
then due and payable to or for the benefit of Lender pursuant to this Agreement
or any other Loan Document(s), or to Property Expenses and Capital Improvement
Costs for the Mortgaged Property, or to fund Reserve Accounts, and (ii)
application of payments to principal and interest under Loan A under
circumstances where interest or other amounts remain accrued and unpaid on Loan
B.
Section 2.9. Method and Place of Payment. Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 2:00 p.m., Eastern time, on
the date when due and shall be made in lawful money of the United States of
America by wire transfer in federal or other immediately available funds to its
account at such bank(s) as Lender may from time to time designate. Any funds
received by Lender after such time shall, for all purposes hereof, be deemed to
have been paid on the next succeeding Business Day. Lender shall notify Borrower
in writing of any changes in the account to which payments are to be made. All
payments made by Borrower hereunder, or by Borrower under the other Loan
Documents, shall be made irrespective of, and without any deduction for, any
defenses, set-offs or counterclaims. Whenever any payment to be
42
made hereunder shall be stated to be due on a day that is not a Business Day,
the payment may be made on the next succeeding Business Day.
Section 2.10. Taxes. All payments made by or on behalf of Borrower
under the Note and this Agreement shall be made without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority.
Section 2.11. KC Release. After the First Open Defeasance Date and
prior to the First Open Payment Date, and provided no Default or Event of
Default exists, Borrower may obtain a release of the KC Property, the Account
Collateral with respect to the KC Property and/or KC Borrower and all collateral
with respect to the KC Property and/or KC Borrower (the "KC Release") from the
lien of the Mortgage and the Loan Documents, provided that all of the following
conditions precedent have been satisfied:
(a) No KC Release will be permitted until after the First Open
Defeasance Date or if any Default or Event of Default has occurred and is
continuing. No KC Release will be permitted on or after the First Open Payment
Date.
(b) No KC Release will be permitted unless Borrower establishes to
Lender's satisfaction that the Debt Service Coverage Ratio for the remainder of
the Mortgaged Property (i.e., exclusive of any income from the KC Property) is
and shall continue to be equal to or greater than the greater of (i) the Debt
Service Coverage Ratio for the Mortgaged Property calculated immediately prior
to the KC Release (i.e., inclusive of the income from the KC Property), and (ii)
1.50:1.00. If the foregoing condition would not be satisfied by defeasance of
the Partial Defeasance Amount indicated in subparagraph (e) below, Borrower may
by written notice to Lender given not less than fifteen (15) days prior to the
Partial Defeasance increase the Partial Defeasance Amount to an amount which
would result in the foregoing condition being satisfied upon completion of the
Partial Defeasance of such larger Partial Defeasance Amount.
(c) No KC Release will be permitted unless Borrower establishes to
Lender's satisfaction that the value of the remainder of the Mortgaged Property
(as determined by then-current Appraisals prepared by Appraisers approved by
Lender, the fees and expenses of which shall be paid by Borrower) is sufficient
to satisfy a loan-to-value ratio (based on the outstanding principal balance of
the Loan immediately prior to the KC Release, less the Partial Defeasance
Amount) which is the lesser of (i) 60% and (ii) the loan-to-value ratio for the
Mortgaged Property (inclusive of the KC Property, and based on the outstanding
principal balance of the Loan immediately prior to the KC Release) calculated
immediately prior to the KC Release. If the foregoing condition would not be
satisfied by defeasance of the Partial Defeasance Amount indicated in
subparagraph (e) below, Borrower may by written notice to Lender given not less
than fifteen (15) days prior to the Partial Defeasance increase the Partial
Defeasance Amount to an amount which would result in the foregoing condition
being satisfied upon completion of the Partial Defeasance of such larger Partial
Defeasance Amount.
(d) The KC Release shall be allowed only in connection with a bona
fide all-cash sale of the KC Property to an unaffiliated third party on
arms-length terms and conditions,
43
and upon closing of such sale (and thereafter) shall not be owned, purchased or
acquired by Borrower or any Affiliate of Borrower.
(e) Borrower will on the date of the KC Release (the "KC Release
Date") complete a Partial Defeasance, pursuant to Section 2.7 hereof, of a
portion of the Loan (the "Partial Defeasance Amount" for such KC Property) equal
to 125% of the KC Allocated Loan Amount; provided, that if Borrower elects in
connection with a Partial Defeasance of a KC Property to increase the Partial
Defeasance Amount for such KC Property pursuant to the provisions of paragraphs
(b) and/or (c) above, the Partial Defeasance Amount for such KC Property shall
be such higher amount for purposes of such Partial Defeasance.
(f) Borrower will execute (and Guarantor will consent in writing
thereto and reaffirm their obligations under the Loan Documents to which they
are a party notwithstanding the KC Release) and deliver all such amendments to
the Loan Documents and other instruments or documents as may be required by
Lender (using commercial standards customarily applied with respect to mortgage
loans such as the Loan) in order to continue to fully protect Lender's lien and
security interest in the remainder of the Mortgaged Property.
(g) Borrower, at its sole cost and expense, shall obtain
endorsements (to the extent legally obtainable) to Lender's loan policy of title
insurance satisfactory in form and content to Lender, which endorsements will
insure that the lien created by the Loan Documents remains a valid first lien on
the remainder of the Mortgaged Property.
(h) Borrower shall pay Lender's reasonable costs and expenses in
connection with the KC Release, including, without limitation, all costs and
expenses incurred in the preparation, negotiation and review of any and all
materials required to be provided in connection with the KC Release, the costs
and expenses of preparing and recording KC Releases, UCC-3 releases, and any
loan modification documents required by Lender (provided such modification
documents do not increase Borrower's obligations or decrease Borrower's rights
under the Loan Documents), Lender's reasonable attorneys' fees and costs, all
survey charges and costs, all title premiums and costs, documentary stamps
incurred in connection with the release of the KC Property in accordance with
the requirements contained herein, and all other reasonable out-of-pocket costs,
fees, and expenses incurred by Lender in connection with the requested release
of the KC Property. Borrower shall pay or reimburse Lender for such costs and
expenses upon Lender's demand regardless of whether a KC Release occurs or is
permitted to occur.
(i) If a KC Release occurs and all of the requirements of this
Section 2.11 have been satisfied, (i) Lender shall execute any and all documents
required to release the KC Property, all related Account Collateral and all
other Collateral related to the KC Property from the Lien of the applicable
Mortgage and the applicable Assignment of Profits and Leases, and to terminate
the related Local Collection Account Agreements, Collection Account Agreement
and Direction Letters, and cause all related Account Collateral held by or on
behalf of Lender to be released to Borrower. In connection with any such release
of the Lien, Borrower shall submit to Lender, not less than thirty (30) days
prior to the KC Release Date (or such shorter time as permitted by Lender), a
release of Lien (and related Loan Documents) for execution by Lender. Such
release shall be in a form appropriate in the jurisdiction in which the KC
Property is located
44
and contain standard provisions protecting the rights of a releasing lender. In
addition, Borrower shall provide all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release. Borrower
shall pay all costs, taxes and expenses associated with the release of the Lien
of the applicable Mortgage and the applicable Assignment of Leases, including
Lender's reasonable attorneys' fees.
Section 2.12. Central Cash Management.
(a) Local Collection Account; Collection Account; Deposits to and
Withdrawals from the Collection Account.
(i) On or before the Closing Date, Lender shall (1) establish on
behalf of the Borrower and maintain with the Collection Account Bank a
collection account for each Mortgaged Property (collectively, the
"Collection Account"), each of which shall be an Eligible Account with a
separate and unique identification number in the name of Lender, as
secured party, or, at Lender's option, in the name of Borrower for the
benefit of Lender, as secured party, and (2) cause the Collection Account
Bank to deliver to Lender the Collection Account Agreement in form and
substance reasonably acceptable to Lender acknowledging Lender's security
interest in and "control" of Lender within the meaning of Sections 9-104
and 9-106 of the UCC over the Collection Account. On or before the Closing
Date, Borrower shall (x) establish and maintain with one or more financial
institutions acceptable to Lender in its sole reasonable discretion
(individually each, and collectively, the "Local Collection Account
Bank"), one or more local collection accounts for each Mortgaged Property
(the "Local Collection Account"), each of which shall be an Eligible
Account with a separate and unique identification number and entitled in
the same name as the Collection Account and (y) cause each Local
Collection Account Bank to deliver to Lender a Local Collection Account
Agreement in form and substance reasonably acceptable to Lender
acknowledging Lender's security interest in and "control" of Lender within
the meaning of Sections 9-104 and 9-106 of the UCC over the Local
Collection Account. Not later than the Closing Date, Borrower shall and
shall cause Manager, if any, to
(A) direct all tenants under the Leases (if any) to pay all
Rents thereunder directly into the Local Collection Account, and
deliver irrevocable (without Lender's written consent) letters of
direction to such effect to such tenants in Lender's reasonable
form,
(B) instruct each of the credit card banks, credit card
companies or other credit card receipt intermediaries with which
Borrower has entered into merchant, clearing or other agreements
with respect to the Mortgaged Property that all credit card receipts
with respect to the Mortgaged Property cleared by such credit card
banks, credit card companies or other intermediaries shall be
transferred by such credit card banks, credit card companies or
other intermediaries by wire transfer or the ACH system to the
Collection Account, and deliver irrevocable (without Lender's prior
written consent) instruction letters to such effect to such Persons
(and obtain each such Person's acknowledgment and agreement thereto)
in Lender's reasonable form,
45
(C) instruct all Persons that maintain open accounts with
Borrower or Manager or with whom Borrower or Manager does business
on an "accounts receivable" basis with respect to the Mortgaged
Property to deliver all payments due under such accounts to the
Local Collection Account, and deliver to such Persons irrevocable
(without Lender's written consent) letters of instruction in
Lender's reasonable form, and
(D) cause (and cause Manager to) deposit any and all other
Receipts to be deposited promptly into the Local Collection Account
and in no event later than one Business Day after the same are paid
to or for the benefit of Borrower or Manager.
Neither Borrower nor Manager shall (x) terminate, amend, revoke or modify any
tenant direction letter or instruction letter provided pursuant to clauses (A),
(B) and (C) above to a credit card bank, credit card company or other
intermediary or other Person (each a "Direction Letter") in any manner
whatsoever, or (y) direct or cause any Person receiving or bound by a Direction
Letter, or purportedly or intended or required to receive or be bound or
instructed by a Direction Letter, to pay any amount in any manner other than as
provided in the related Direction Letter. To the extent that Borrower, Manager
or any Person on Borrower's or Manager's behalf holds any Receipts or Advance
Bookings Deposits, whether in accordance with this Agreement or otherwise, (1)
such amounts shall be deemed to be Collateral and shall be held in trust for the
benefit, and as the property, of Lender, and (2) such amounts shall not be
commingled with any other funds or property of Manager. Subject to the following
proviso, on each Business Day during the term of this Agreement, the Borrower
may withdraw the funds deposited in the Local Collection Account and the
Collection Account pursuant to clauses (A) through (D) above in whole or in part
and remit same to an operating or concentration account of Borrower free of
Lender's Liens and security interest; provided, that the foregoing right of the
Borrower shall be immediately suspended
(i) if Lender notifies the Borrower in writing that an Event of
Default has occurred and is continuing, or
(ii) if, commencing in January, 2006, based upon the Monthly
Statement and Quarterly Statement delivered during such month, and thereafter,
Lender notifies Borrower in writing that as of the most recent quarterly test
date the Debt Service Coverage Test was not satisfied, or
(iii) if, after an Additional Resort Event has occurred, based upon
the Monthly Statement and Quarterly Statement delivered during any month, Lender
notifies Borrower in writing that as of the most recent quarterly test date the
Additional Resort Coverage Test was not satisfied, or
(iv) if Borrower fails to cause to be on deposit in the Collection
Account by not later than the close of business on the Business Day immediately
preceding each Payment Date an amount of funds sufficient to make the payments
required pursuant to clauses first through third of Section 2.12(b) of this
Agreement.
46
Subject to Section 2.12(a)(ii), on each Business Day during a calendar month
following the delivery of a notification by Lender in writing that as of the
most recent quarterly test date the Debt Service Coverage Test or the Additional
Resort Coverage Test was not satisfied (and until Lender notifies Borrower in
writing as of a subsequent quarterly test date that the Debt Service Coverage
Test or the Additional Resort Coverage Test was satisfied), Borrower shall sweep
or cause to be swept all Money on deposit in the Local Collection Account (in
excess of $20,000 which may be retained in the Local Collection Account and
applied by Borrower to pay Operating Expenses) to the Collection Account. Except
as described above or elsewhere in this Agreement, Borrower shall not have any
right to withdraw Money from the Local Collection Account or the Collection
Account, which shall be under the "control" of Lender within the meaning of
Sections 9-104 and 9-106 of the UCC. Borrower shall be responsible for the
payment of all costs and expenses in connection with establishing and
maintaining the Collection Account, the Local Collection Account and the Reserve
Accounts (including, without limitation, Collection Account Bank's and Local
Collection Account Bank's fees and charges) and shall reimburse Lender upon
demand for any such costs or expenses incurred by Lender.
(ii) In the event that any Event of Default has occurred and is
continuing,
(A) all Receipts and Money received from Accounts or derived
from the Mortgaged Property and all Proceeds thereof shall be
payable to Lender or as otherwise directed by Lender,
(B) Lender shall make deposits, or cause deposits to be made,
of such Receipts, Money and Proceeds directly to the Collection
Account, and Borrower shall cooperate (and shall cause the Manager
to cooperate) with Lender in the making of such deposits or causing
such deposits to be made,
(C) Borrower shall not have any right to make or direct any
withdrawals from the Local Collection Account, the Collection
Account or the Reserve Accounts without the prior written consent of
Lender, and
(D) proceeds on deposit in the Collection Account and the
Reserve Accounts may be applied by Lender for the payment of the
Indebtedness pursuant to Section 2.8 of this Agreement.
(b) Distribution of Cash. So long as an Event of Default has not
occurred and is not continuing (and thereafter at Lender's option and
discretion), on each Payment Date, Lender shall, prior to the time required
therefor under Section 2.9, apply funds on deposit as of such Payment Date to
the extent of such funds in the Collection Account (with the exception of Loss
Proceeds, which shall be applied as provided in Section 2.12(e) and Section
5.1(x) of this Agreement) as follows:
(i) first, to the Real Estate Taxes Escrow Account and the Insurance
Escrow Account, in that order, in the respective amounts required to be
deposited therein as described in Section 2.13(b);
47
(ii) second, to the Note A Lender and the Note B Lender in the
amount of the Monthly Loan A Debt Service Payment Amount and the Monthly
Loan B Debt Service Payment Amount, respectively, then due and payable;
(iii) third, to the FF&E Costs Reserve Account in the amount (if
any), but only if the same is required to be deposited therein as
described in Section 2.13(a);
(iv) fourth, if the Operating Expense Account is required to be
funded pursuant to Section 2.13(c), to the Operating Expense Account in
the amount required, or permitted, to be deposited therein as described in
Section 2.13(c); and
(v) fifth, to the payment to Lender of any expenses or other amounts
(other than the Monthly Debt Service Payment due on the next Payment Date)
then due and payable to Lender or its servicer(s) pursuant to this
Agreement or the other Loan Documents, including to the payment of any
outstanding indemnification payment to which an Indemnified Party is then
entitled pursuant to Sections 5.1(i) and 5.1(j); and
(vi) sixth, either (x) at any time commencing on and after the
February 2006 Payment Date if the Debt Service Coverage Test has not been
satisfied, to the Principal Reserve Account or (y) at any time prior to
the February 2006 Payment Date and commencing on and after the February
2006 Payment Date if the Debt Service Coverage Test has been satisfied in
each case, to Borrower, free and clear of Lender's Lien and security
interest, in each case, in an amount equal to remaining available funds.
(c) Permitted Investments. So long as no Event of Default has
occurred and is continuing, Borrower shall direct Lender in writing to invest
and reinvest any balance in the Collection Account, from time to time in
Permitted Investments (subject to the availability of such Permitted Investments
with the Collection Account Bank); provided, however, that
(i) the maturity of the Permitted Investments on deposit therein
shall be at the discretion of Borrower, but in any event no later than the
Business Day immediately preceding the date on which such funds are
required to be withdrawn therefrom pursuant to Section 2.12(a) or 2.12(b)
of this Agreement,
(ii) after an Event of Default has occurred and for so long as such
Event of Default is continuing Borrower shall not have any right to direct
investment of the balance in the Collection Account,
(iii) all such Permitted Investments shall be held in the name of
Lender, as secured party, or at Lender's option in the name of Borrower
for the benefit of Lender, as secured party or its servicer and shall be
credited to the Collection Account, and
(iv) if no written investment direction is provided to Lender by
Borrower, Lender may at Lender's option invest any balance in the
Collection Account in such Permitted Investments as may be selected by
Lender.
Lender shall have no liability for any loss in investments of funds in the
Collection Account that are invested in Permitted Investments and no such loss
shall affect Borrower's obligation to
48
fund, or liability for funding, the Collection Account. All interest paid or
other earnings on funds deposited into the Collection Account made hereunder
shall be deposited into the Collection Account. Borrower shall include all
earnings on the Collection Account as income of Borrower for federal and
applicable state tax purposes.
(d) Intentionally Omitted.
(e) Loss Proceeds. In the event of a casualty or Taking with respect
to the Mortgaged Property, all Loss Proceeds shall be paid directly to the
Collection Account and, if notwithstanding the foregoing, Borrower or any of its
Affiliates receive any Loss Proceeds, Borrower shall deposit or cause such Loss
Proceeds to be deposited in the Collection Account upon such receipt. Subject to
the provisions of Section 5.1(x) of this Agreement, whereby Loss Proceeds may in
certain cases and upon satisfaction of the terms and conditions set forth in
Section 5.1(x) be made available for Restoration, Loss Proceeds may, at Lender's
option, be applied to the Indebtedness in accordance with the provisions of
Section 2.6(a) above, and, upon payment in full of the Indebtedness or, if an
Event of Default exists, in any manner determined by Lender in accordance with
Section 2.8 hereof. If the Loss Proceeds are to be made available for
Restoration pursuant to Section 5.1(x) of this Agreement, such Loss Proceeds
shall be held by Lender in a segregated interest-bearing Eligible Account in the
name of Lender and under the "control" of Lender within the meaning of Sections
9-104 and 9-106 of the UCC to be opened (if not previously opened and maintained
by the Collection Account Bank under the Collection Account Agreement by the
Lender) by Lender at a financial institution selected by Lender (the "Loss
Proceeds Account"). Funds on deposit in the Loss Proceeds Account shall be
invested in Permitted Investments (subject to the availability of such Permitted
Investments with the Collection Account Bank) in the same manner and subject to
the same restrictions as set forth in Section 2.12(c) with respect to the
Collection Account (except that the maturity shall be not later than as
necessary to satisfy any schedule of distributions for Restoration required or
approved by Lender). If any Loss Proceeds are received by Borrower, such Loss
Proceeds shall be received in trust for Lender, shall be segregated from other
funds of Borrower, and shall be forthwith paid to Lender to the extent necessary
to comply with this Agreement.
Section 2.13. Reserve Accounts.
(a) Deferred Maintenance Escrow Account, FF&E Costs Reserve Account.
(i) On or before the Closing Date, Lender shall establish on behalf
of Borrower and maintain with the Collection Account Bank two separate
accounts for deferred maintenance and FF&E Costs, each of which shall be
an Eligible Account and shall have the same title as the Collection
Account, for the benefit of Lender until the Loan is paid in full. The two
accounts shall be designated the "Deferred Maintenance Escrow Account"
(the "Deferred Maintenance Escrow Account") and the "FF&E Costs Reserve
Account" (the "FF&E Costs Reserve Account"). On the Closing Date, Lender
shall deposit out of the Loan proceeds $62,350 in the Deferred Maintenance
Escrow Account.
(ii) Any and all Moneys remitted to the Deferred Maintenance Escrow
Account, together with any interest, earnings or income earned thereon,
shall be held in
49
the Deferred Maintenance Escrow Account to be withdrawn by Lender upon
written request of Borrower made not more than once each month in an
amount not less than $10,000 (except in the case of a final disbursement),
and applied to pay directly or reimburse Borrower for repairs set forth on
Schedule 1 attached hereto (the "Immediate Repairs"). Within the
applicable time period(s) for completion set forth on Schedule 1, Borrower
shall complete such Immediate Repairs and shall provide to Lender such
documentation, and other evidence of compliance with law as Lender may
reasonably require. The funds contained in the Deferred Maintenance Escrow
Account shall be utilized by Borrower solely for performance of the
Immediate Repairs in accordance with the engineering reports and
Environmental Reports delivered at closing of the Loan, and shall not be
used by Borrower for purposes for which any other Reserve Account is
established. Upon written application of Borrower (which may be done by
electronic mail or e-mail), Borrower shall be entitled to obtain
disbursements by Lender from the Deferred Maintenance Escrow Account to
pay costs incurred by Borrower for such Immediate Repairs, provided that
(a) no Event of Default has occurred and is continuing, (b) Borrower shall
provide to Lender (including electronic mail or e-mail) such documentation
and certifications as Lender may reasonably request to substantiate the
requirement for and entitlement to such disbursement, (c) Borrower shall
provide to Lender (including by electronic mail or e-mail) with all
invoices, receipts, lien waivers and other documentation of lawful and
workmanlike progress or completion, lien-free status, and availability of
sufficient funds, all as may be reasonably requested by Lender, and (d)
Borrower shall provide Lender such evidence as may be reasonably
satisfactory to Lender that after payment of any draw for Immediate
Repairs, the funds remaining in the Deferred Maintenance Escrow Account
shall be sufficient to pay for the remainder of such Immediate Repairs. In
the event Borrower completes the repairs for which funds were reserved in
the Deferred Maintenance Escrow Account to the reasonable satisfaction of
Lender, Lender shall disburse any and all amounts then on deposit in the
Deferred Maintenance Escrow Account to the Collection Account.
(iii) On (x) each Payment Date after the Lender notifies the
Borrower in writing that the FF&E/DSCR Test or the Additional Resort
Coverage Test has not been satisfied (and until such test is satisfied on
a subsequent quarterly test date), (y) any Payment Date following the
delivery of written notice from the Lender to the Borrower that the FF&E
Suspension Condition has not been satisfied (and until the FF&E Suspension
Condition is satisfied) or (z) any Payment Date following the occurrence
of an Event of Default (and continuing until such Event of Default has
been cured and Lender has waived Borrower's obligation to make deposits
hereunder as a result of such Event of Default), Borrower shall deposit
from the Collection Account (or if the funds for such deposit are not
sufficient to make such deposit after giving effect to Section 2.12(b),
Borrower shall make an additional deposit of Borrower's funds in the
amount of such deficiency sourced from equity capital contributions) into
the FF&E Costs Reserve Account an amount equal the FF&E Percentage of
Gross Revenues at the Mortgaged Property during the penultimate calendar
month preceding the calendar month in which such Payment Date occurs (for
example, the deposit required for the Payment Date in July would be based
upon the Gross Revenues for May). Any and all Moneys remitted to the FF&E
Costs Reserve Account, together with any Permitted Investments in which
such Moneys are or will be invested or reinvested during the term of this
Agreement,
50
shall be held in the FF&E Costs Reserve Account to be withdrawn by Lender
upon written request by Borrower made not more than once each month in an
amount not less than $10,000, and applied to pay directly or reimburse
Borrower for FF&E Costs shown on the Operating Budget currently due to be
paid; provided, that Borrower shall not (absent Lender's written consent)
be entitled to reimbursement from the FF&E Costs Reserve Account for FF&E
Costs incurred prior to the Closing Date, or for FF&E Costs incurred more
than ninety (90) days prior to the date of Borrower's written request for
reimbursement. Not less than five (5) Business Days prior to Borrower's
delivery of a request to Lender to withdraw the funds on deposit in the
FF&E Costs Reserve Account, in whole or in part, Borrower shall provide
Lender with written notice of such request (including therein a statement
of the purpose for the withdrawal and in the case of a reimbursement of
the Borrower, evidence that the related costs have been paid). Following
the determination by the Lender that the FF&E Suspension Condition or the
FF&E/DSCR Test which was previously not satisfied has been satisfied,
Lender shall release any and all amounts on deposit in the FF&E Costs
Reserve Account to Borrower free and clear of Lender's Lien and security
interest, by not later than the Business Day following the Business Day on
which such determination is made.
(b) Real Estate Taxes Escrow Account and Insurance Escrow Account.
On or before the Closing Date, Lender shall on behalf of the Borrower establish
and maintain with the Collection Account Bank two separate accounts for Basic
Carrying Costs, each of which shall be an Eligible Account and shall have the
same title as the Collection Account for the benefit of Lender until the Loan is
paid in full. The two accounts shall be designated the "Real Estate Taxes Escrow
Account" (the "Real Estate Taxes Escrow Account") and the "Insurance Escrow
Account" (the "Insurance Escrow Account"). On the Closing Date, the Lender shall
deposit out of the Loan proceeds $532,534.95 in the Real Estate Taxes Escrow
Account and $1,221,423.50 in the Insurance Escrow Account (i.e. the amount
necessary to meet the first xxxx with credit for existing monthly escrow
payments made prior to the applicable due date). With respect to each Payment
Date, Borrower shall deposit from the Collection Account (or, if the funds for
such deposit are not available pursuant to Section 2.12(b), shall make an
additional deposit of Borrower's funds sourced from equity capital
contributions),
(1) an amount equal to (1/12th) one-twelfth of the annual real
estate taxes and any governmental real property assessments or other
charges that if not paid in a timely manner will result in a Lien on a
Mortgaged Property in the Real Estate Taxes Escrow Account,
(2) an amount equal to one-twelfth (1/12th) of the annual insurance
premiums for policies of insurance required to be maintained by Borrower
with respect to the Mortgaged Property pursuant to this Agreement, and any
additional insurance required under any of the other Loan Documents, in
the Insurance Escrow Account.
Any and all Moneys remitted to the Real Estate Taxes Escrow Account or Insurance
Escrow Account shall be held in the Real Estate Taxes Escrow Account or
Insurance Escrow Account to be withdrawn from the Real Estate Taxes Escrow
Account or Insurance Escrow Account, as applicable, by Lender or its servicer
upon written request of Borrower delivered to Lender and its servicer together
with documentation and other evidence (including invoices and in the case of a
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reimbursement of Borrower, evidence that the related costs have been paid) with
respect to the respective Basic Carrying Costs towards which such funds are to
be applied, and applied to pay directly (or reimburse Borrower, in the case of
insurance premiums only) for (x) any Impositions (in the case of the Real Estate
Taxes Escrow Account) or (y) any insurance premiums for policies of insurance
required to be maintained by Borrower with respect to the Mortgaged Property
pursuant to this Agreement, and any additional insurance required under any of
the other Loan Documents (in the case of the Insurance Escrow Account). Borrower
shall provide Lender or its servicer with bills and other documents necessary
for payment of Impositions and insurance premiums at least ten (10) Business
Days prior to the due dates therefor. In the event the amount on deposit in the
Real Estate Taxes Escrow Account or the Insurance Escrow Account exceeds the
amount due for Impositions by more than one-twelfth (1/12th) of the annual real
estate taxes (in the case of the Real Estate Taxes Escrow Account) or the amount
due for insurance premiums (in the case of the Insurance Escrow Account),
respectively, Lender or its servicer shall in its discretion credit such excess
against future payment obligations to the Real Estate Taxes Escrow Account or
the Insurance Escrow Account, as applicable.
(c) Operating Expense Account and Principal Reserve Account. On or
before the Closing Date, Lender shall on behalf of the Borrower establish and
maintain with the Collection Account Bank two accounts for the remittance of
funds by Lender or its servicer after and for so long as, commencing in January
2006 and thereafter, the Debt Service Coverage Test has not been satisfied (or
after the Additional Resort Coverage Test has not been satisfied, if
applicable), each of which shall be an Eligible Account and shall have the same
title as the Collection Account for the benefit of Lender, as secured party
until the Loan is paid in full. The two accounts shall be designated the
"Operating Expense Account" (the "Operating Expense Account") and the "Principal
Reserve Account" (the "Principal Reserve Account"). On any Payment Date after
and for so long as the Debt Service Coverage Test or the Additional Resort
Coverage Test, if applicable, has not been satisfied, Lender or its servicer
shall deposit, to the extent of available funds pursuant to Section 2.12(b),
into the Operating Expense Account an amount equal to Monthly Property Expenses
and into the Principal Reserve Account any remaining available funds then on
deposit in the Collection Account pursuant to clause sixth of Section 2.12(b).
Any and all Moneys remitted to the Operating Expense Account or the Principal
Reserve Account shall be held in the Operating Expense Account or Principal
Reserve Account, as applicable, and applied,
(x) with respect to the Operating Expense Account only, to pay
Property Expenses up to 110% of those provided for in the then applicable
Operating Budget, as directed in writing by Borrower, and/or for other
Property Expenses approved by Lender, upon Borrower's written request for
disbursement therefor from time to time (but no more frequently than once
every two weeks without Lender's consent), and
(y) with respect to the Operating Expense Account and the Principal
Reserve Account, the balance thereof shall be disbursed to Borrower free
and clear of Lender's Lien and security interest, promptly upon Borrower's
request upon the Debt Service Coverage Test or the Additional Resort
Release Test, if applicable, becoming satisfied, as determined by Lender;
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provided, that notwithstanding the foregoing, Lender may at any time, at its
option, elect to apply the funds on deposit in the Operating Expense Account and
the Principal Reserve Account to pay the Indebtedness (including without
limitation any Prepayment Consideration and other amounts due Lender in
connection with such prepayment) while any Event of Default exists. Following
the determination by Lender that the Debt Service Coverage Test or the
Additional Resort Release Test which was previously not satisfied has been
satisfied, Lender shall release any and all amounts on deposit in the Operating
Expense Account and the Principal Reserve Account to Borrower free and clear of
Lender's Lien and security interest, by not later than the Business Day
following the Business Day on which such determination is made.
(d) Intentionally Omitted.
(e) Investment of Funds. All or a portion of any Moneys in the
Reserve Accounts (other than the Real Estate Tax Escrow Account and the
Insurance Escrow Account, neither of which shall bear interest for the benefit
of Borrower) shall, so long as no Event of Default has occurred and is
continuing, be invested and reinvested by Lender in accordance with written
instructions delivered by Borrower, or after an Event of Default has occurred
and is continuing, by Lender, in one or more Permitted Investments (subject to
the availability of such Permitted Investments with the Collection Account
Bank). If no written investment direction is provided to Lender by Borrower,
Lender may at its option invest such Moneys in a Permitted Investment selected
by Lender. All interest paid or other earnings on funds deposited into the
Reserve Accounts made hereunder shall be deposited into the Reserve Accounts
(other than with respect to the Real Estate Taxes Escrow Account and the
Insurance Escrow Account, for which Lender and its servicer shall not have any
obligation to deposit such interest or earnings into such accounts). Lender
shall have no liability for any loss in investments of funds in any Reserve
Account that are invested in Permitted Investments and no such loss shall affect
Borrower's obligation to fund, or liability for funding, the Reserve Accounts.
Unless and until title to the funds therein shall have vested in any Person
other than Borrower, Borrower shall include all such income or gain on any
account of the Reserve Account as income of Borrower for federal and applicable
state tax purposes.
(f) Event of Default. After an Event of Default has occurred and is
continuing, Lender may liquidate any Permitted Investments of the amount on
deposit in such account, withdraw and use such amount on deposit in the Pledged
Accounts to make payments on account of the Indebtedness or otherwise as
provided in Section 2.8. Without in any way limiting the foregoing or Lender's
rights and remedies upon an Event of Default, and subject to Lender's direction
otherwise from time to time, in whole or in part, in Lender's discretion, after
and during the continuance of an Event of Default Lender may direct the
Collection Account Bank or the Local Collection Account Bank to disburse to
Lender or allocate all available funds on deposit in the Pledged Accounts to:
(a) any debt service or other Indebtedness due under this Loan Agreement or the
other Loan Documents; (b) any Reserve Account established under this Loan
Agreement; (c) otherwise as a reserve for Property Expenses, Capital Improvement
Costs, Impositions and other expenditures relating to the use, management,
operation or leasing of the Mortgaged Property; and/or (d) any costs and
expenses incurred by Lender in connection with such Event of Default, or
expended by Lender to protect or preserve the value of the Mortgaged Property.
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Section 2.14. Additional Provisions Relating to the Pledged
Accounts.
(a) Borrower covenants and agrees that: (i) all securities or other
property underlying any financial assets credited to any Pledged Account shall
be registered in the name of Lender, indorsed to Lender or indorsed in blank or
credited to another securities account maintained in the name of Lender as
secured party under this Agreement and in no case will any financial asset
credited to any Pledged Account be registered in the name of Borrower, payable
to the order of Borrower or specially indorsed to Borrower except to the extent
the foregoing have been specially indorsed to Lender or in blank; and (ii) all
Permitted Investments and all other property delivered to Lender pursuant to
this Agreement will be promptly credited to one of the Pledged Accounts.
(b) Borrower hereby agrees that each item of property (whether
investment property, financial asset, security, instrument, cash or otherwise)
credited to any Pledged Account shall be treated as a "financial asset" within
the meaning of Section 8-102(a)(9) of the UCC.
(c) Borrower acknowledges and agrees that the Collection Account
Bank and Local Collection Account Bank shall comply with all "entitlement
orders" (i.e. an order directing transfer or redemption of any financial asset
relating to a Pledged Account, and any "entitlement order" as defined in Section
8-102(a)(8) of the UCC) and instructions (including any "instruction" within the
meaning of Section 9-104 of the UCC) originated by Lender without further action
or consent by Borrower, Manager or any other Person.
(d) Regardless of any provision in any other agreement, for purposes
of the UCC, with respect to each Pledged Account, New York shall be deemed to be
the bank's jurisdiction (within the meaning of Section 9-304 of the UCC) and the
securities intermediary's jurisdiction (within the meaning of Section 8-110 of
the UCC). The Pledged Accounts shall be governed by the laws of the State of New
York.
(e) Except for the claims and interest of Lender and of Borrower in
the Pledged Accounts, Borrower represents and warrants that it does not know of
any Lien on or claim to, or interest in, any Pledged Account or in any
"financial asset" (as defined in Section 8-102(a) of the UCC) credited thereto.
If any Person asserts any Lien, encumbrance or adverse claim (including any
writ, garnishment, judgment, warrant of attachment, execution or similar
process) against the Pledged Accounts or in any financial asset carried therein,
Borrower will promptly notify Lender thereof and shall indemnify, defend and
hold Lender and each of the Indemnified Parties harmless from and against any
such Lien, encumbrance or claim.
Section 2.15. Security Agreement.
(a) Pledge of Pledged Accounts. To secure the full and punctual
payment and performance of all of the Indebtedness, Borrower hereby assigns,
conveys, pledges and transfers to Lender, as secured party, and grants Lender a
first priority and continuing security interest in and to, the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located (collectively, the "Account Collateral"):
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(i) all of Borrower's right, title and interest in the Pledged
Accounts and all Money and Permitted Investments, if any, from time to
time deposited or held in the Pledged Accounts or purchased with funds or
assets on deposit in the Pledged Accounts;
(ii) all of Borrower's right, title and interest in interest,
dividends, Money, Instruments and other property from time to time
received, receivable or otherwise payable in respect of, or in exchange
for, any of the foregoing until such time as such items are disbursed from
the Pledged Accounts; and
(iii) to the extent not covered by clause (i) or (ii) above, all
Proceeds of any or all of the foregoing until such time as such items are
disbursed from the Pledged Accounts.
Lender and Collection Account Bank and Local Collection Account
Bank, each as agent for Lender, shall have with respect to the foregoing
collateral, in addition to the rights and remedies herein set forth, all of the
rights and remedies available to a secured party under the UCC, as if such
rights and remedies were fully set forth herein.
(b) Covenants; Control. Except as set forth in this Agreement,
Borrower shall not have any right to withdraw Money from the Pledged Accounts.
Borrower acknowledges and agrees that the Pledged Accounts are and shall at all
times continue to be subject to and under the "control" of Lender within the
meaning of Sections 9-104 and 9-106 of the UCC. Except as expressly permitted
herein, neither Borrower nor Manager nor any other person or entity, through or
under Borrower, shall have any control over the use of, or any right to withdraw
any amount from, any Pledged Accounts, and Borrower acknowledges that the
Collection Account Bank and the Local Collection Account Bank shall comply with
all instructions originated by Lender without further consent by Borrower.
Borrower acknowledges and agrees that the Collection Account Bank and Local
Collection Account Bank shall be entitled to comply with the instructions of
Lender with respect to the Pledged Accounts without the further consent of
Borrower or Manager. The Account Collateral shall be subject to such applicable
laws, and such applicable regulations of the Board of Governors of the Federal
Reserve System and of any other banking authority or Governmental Authority, as
may now or hereafter be in effect, and to the rules, regulations and procedures
of the financial institution where the Account Collateral is maintained relating
to demand deposit accounts generally from time to time in effect.
(c) Financing Statements; Further Assurances. Borrower hereby
irrevocably authorizes Lender at any time and from time to time to file any
financing statements or continuation statements, and amendments to financing
statements, in any jurisdictions and with any filing offices as Lender may
determine, in its discretion, are necessary or advisable to perfect the security
interests granted to Lender in connection herewith. Such financing statements
may describe the collateral in the same manner as described in any security
agreement or pledge agreement entered into by the parties in connection herewith
or may contain an indication or description of collateral that describes such
property in any other manner as Lender may determine, in its discretion, is
necessary, advisable or prudent to ensure the perfection of the security
interest in the collateral granted to Lender in connection herewith whether now
owned or hereafter acquired. From time to time, at the expense of Borrower,
Borrower shall promptly execute and deliver all further instruments, and take
all further action, that Lender may
55
reasonably request, in order to continue the perfection and protection of the
pledge and security interest granted or purported to be granted hereby.
(d) Transfers and Other Liens. Borrower shall not sell or otherwise
dispose of any of the Account Collateral other than pursuant to the terms of
this Agreement and the other Loan Documents, or create or permit to exist any
Lien upon or with respect to all or any of the Account Collateral, except for
the Lien granted to Lender under or as contemplated by this Agreement.
(e) No Waiver. Every right and remedy granted to Lender under this
Agreement or by law may be exercised by Lender at any time and from time to
time, and as often as Lender may deem it expedient. Any and all of Lender's
rights with respect to the pledge of and security interest in the Account
Collateral granted hereunder shall continue unimpaired, and to the extent
permitted by law, Borrower shall be and remain obligated in accordance with the
terms hereof, notwithstanding (i) any proceeding of Borrower under the
Bankruptcy Code or any bankruptcy, insolvency or reorganization laws or statutes
of any state, (ii) the release or substitution of Account Collateral at any
time, or of any rights or interests therein or (iii) any delay, extension of
time, renewal, compromise or other indulgence granted by Lender in the event of
any Default with respect to the Account Collateral or otherwise hereunder. No
delay or extension of time by Lender in exercising any power of sale, option or
other right or remedy hereunder, and no notice or demand which may be given to
or made upon Borrower by Lender, shall constitute a waiver thereof, or limit,
impair or prejudice Lender's right, without notice or demand, to take any action
against Borrower or to exercise any other power of sale, option or any other
right or remedy.
(f) Lender Appointed Attorney-In-Fact. Borrower hereby irrevocably
constitutes and appoints Lender as Borrower's true and lawful attorney-in-fact,
with full power of substitution, at any time after the occurrence and during the
continuation of an Event of Default, to execute, acknowledge and deliver any
instruments and to exercise and enforce every right, power, remedy, option and
privilege of Borrower with respect to the Account Collateral, and do in the
name, place and stead of Borrower, all such acts, things and deeds for and on
behalf of and in the name of Borrower with respect to the Account Collateral,
which Borrower could or might do or which Lender may deem necessary or desirable
to more fully vest in Lender the rights and remedies provided for herein with
respect to the Account Collateral and to accomplish the purposes of this
Agreement. The foregoing powers of attorney are irrevocable and coupled with an
interest and shall terminate upon (i) repayment of the Indebtedness in full, or
(ii) the occurrence of either a Total Defeasance or, with respect to the related
portion of the Account Collateral in the event of a KC Release, a Partial
Defeasance.
(g) Continuing Security Interest; Termination. This Section 2.15
shall create a continuing pledge of and security interest in the Account
Collateral and shall remain in full force and effect until payment in full (or
Total Defeasance or, with respect to the related portion of the Account
Collateral in the event of a KC Release of the KC Property (i.e. Local
Collection Account and Collection Account), Partial Defeasance) by Borrower of
the Indebtedness. Upon payment in full (or Total Defeasance or, with respect to
the related portion of the Account Collateral in the event of a KC Release of
the KC Property (i.e. Local Collection Account and Collection Account), Partial
Defeasance) by Borrower of the Indebtedness, Lender shall return to
56
Borrower such of the Account Collateral as shall not have been applied pursuant
to the terms hereof, and shall execute such instruments and documents as may be
reasonably requested by Borrower to evidence such termination and the release of
the pledge and lien hereof.
Section 2.16. Mortgage Recording Taxes; Release of Liens.
(a) The Lien to be created by the Mortgage is intended to encumber
the Mortgaged Property to the full extent of the Indebtedness. On the Closing
Date, Borrower shall have paid all state, county and municipal recording and all
other taxes imposed upon the execution and recordation of the Mortgage, if any.
(b) Upon repayment of the Loan and all other amounts due hereunder
and under the Loan Documents in full (or upon a Total Defeasance, or with
respect to the related portion of the Collateral in the event of a KC Release of
the KC Property, a Partial Defeasance) in accordance with the terms hereof and
thereof, the Lender shall, promptly after such payment, release or cause to be
released all Liens with respect to all Account Collateral and Collateral
(including, without limitation, terminating the Local Collection Account
Agreements, the Collection Account Agreement, the tenant direction letters and
other Direction Letters delivered pursuant to Section 2.12(a)) or, to the extent
necessary to facilitate future savings of mortgage tax in states that impose
mortgage taxes, assign such Liens to Borrower's new lender(s), provided that any
such assignments shall be without recourse, representation, or warranty of any
kind, except that Lender and each Lender shall represent and warrant (1) the
then outstanding amount of the Principal Indebtedness and (2) that such Liens
have not been previously assigned by Lender.
Section 2.17. Release of Permitted Use Facility. Borrower has
represented to Lender that it may wish to subdivide the Mortgaged Property for
purposes of construction of a Permitted Use Facility on the parcel generally
identified as the "Release Parcel" on Schedule 7 (together with the easements
and other rights appurtenant thereto, the "Release Parcel"), subject to
alterations in the boundaries of such Release Parcel which do not adversely
affect the Lender, provided that the conditions to the release (the "Partial
Release") of the Release Parcel set forth herein are satisfied. As used herein,
the term "Permitted Use Facility" means a first class condominium development
architecturally harmonious with, of at least equal quality of construction with,
and adjacent to (and, at Borrower's option, connecting to) the main building on
the Mortgaged Property which would include approximately 35 condominium units,
ancillary common areas, at least that number of parking spaces as would be
required by applicable zoning laws or any special use permit governing the
Release Parcel for the number of units contained within the Permitted Use
Facility (which may, to the extent permitted by applicable zoning laws or any
special use permit governing the Release Parcel and/or the Remaining Realty (as
hereinafter defined), include parking spaces on the Remaining Realty) (the
"Minimum Additional Parking Spaces") and an approximately 80,000 square foot (or
less) building footprint. Lender agrees to release the Release Parcel from the
encumbrance of the Mortgage and the other Loan Documents upon satisfaction of
all the following conditions:
(i) No Default or Event of Default shall then exist.
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(ii) Borrower will obtain a separation upon all public taxing and
assessment rolls so that the remainder of the Mortgaged Property (the
"Remaining Realty") then covered by the Lien of the Loan Documents will be
separately assessed.
(iii) Any request by Borrower to release the Release Parcel must be
in writing and must be delivered to Lender not fewer than forty-five (45)
days prior to the date of the proposed release.
(iv) No current parking spaces at the Mortgaged Property shall be
included in the Release Parcel or otherwise eliminated or rendered
unusable as a result of the Partial Release unless, to the extent required
by applicable zoning laws or any special use permit governing the
Mortgaged Property, such spaces are replaced with new parking spaces.
(v) Borrower will execute (and each Guarantor will consent in
writing thereto and reaffirm their obligations under the Loan Documents to
which they are a party notwithstanding the Partial Release), and cause the
owner of the Release Parcel, to execute and deliver all such instruments
or documents as may be deemed by Borrower necessary or desirable in order
to
(a) provide for the construction of the Minimum
Additional Parking Spaces on the Release Parcel, the
relocation of the roadway presently located on the Release
Parcel, the construction of the Permitted Use Facility and
other improvements required or desirable in connection
therewith and the connection between the Permitted Use
Facility and the main building on the Mortgaged Property
(including, without limitation, a party wall agreement in
connection therewith), and the landscaping of the Mortgaged
Property and the Release Parcel (all at no cost to Borrower
and in a manner reasonably acceptable to Lender),
(b) provide for necessary or desirable easements
burdening the Remaining Realty and serving the Release Parcel,
(c) provide for owners, lessors and other users of the
Release Parcel and the condominium units to be erected thereon
to have use rights and/or privileges with respect to the
Remaining Realty,
(d) provide for amendments to Permitted Encumbrances,
material agreements and the special use permit necessary or
desirable for the development of the Release Parcel
(including, if applicable, a new special use permit with
respect to the Remaining Realty),
(e) provide for management agreements between Borrower
and (x) condominium unit owners and (y) the condominium
association,
(f) govern the integrated use and operation of the
Remaining Realty and the Release Parcel,
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(g) restrict the development and use of the Release
Parcel to the Permitted Use Facility to insure that use of the
Release Parcel will not violate the provisions of the Mortgage
or any Leases or material agreements,
(h) continue to fully protect Lender's Lien and security
interest in the Remaining Realty, and create Lender's Lien and
security interest in the covenants, rights and easements
contemplated herein, and
(i) preserve the independence (subject to the reciprocal
rights, easements and other agreements described herein) of
the Remaining Realty, including, without limitation,
amendments to the Loan Documents, perpetual easements for
ingress-egress, access, parking, drainage, utilities, support,
encroachments, and other purposes on, over, under, across, and
through the Release Parcel, and declarations, covenants, and
restrictions concerning the use, occupancy, repair,
maintenance and operation of the Release Parcel and the
Remaining Realty (without limitation, such covenants, and
restrictions may provide for contributions by the owner of the
Release Parcel and the Remaining Realty to the cost of
maintenance, repair, operation, insurance, and replacement of
facilities commonly used by the owners of the Release Parcel
and the Remaining Realty.
Lender shall use commercially reasonable efforts to cooperate with respect to
the determinations made by Borrower in connection with the foregoing. Lender's
consent shall be required for Borrower's execution of any of the documents
described in subsection (a) through (i) herein, which consent shall not be
unreasonably withheld or delayed. Additionally, Borrower shall execute and cause
the owner of the Release Parcel to execute and deliver all such other
instruments or documents as Lender may reasonably require (using commercial
standards customarily applied with respect to mortgage loans such as the Loan),
including, without limitation, any agreement requiring contributions by the
owner of the Release Parcel and the Remaining Realty to the cost of maintenance,
repair, operation, insurance, and replacement of facilities commonly used by the
owners of the Release Parcel and the Remaining Realty.
(vi) Borrower shall provide evidence reasonably satisfactory to the
Lender demonstrating that (a) subject to this Section 2.17, the Remaining
Realty will continue to be in compliance with the terms of the Mortgage
and the Loan Documents, and remain in compliance with all Legal
Requirements in all material respects and with the terms of all Leases and
material agreements relating to the Remaining Realty; and (b) the proposed
use of the Release Parcel will not violate the provisions of any Lease or
material agreement affecting the Remaining Realty.
(vii) Borrower shall obtain all required consents to the Partial
Release under any of the Permitted Encumbrances.
(viii) Borrower shall furnish to Lender, at Borrower's sole expense,
an updated as-built survey of the Mortgaged Property at the time of the
Partial Release, showing all buildings, improvements, utilities, and
drainage facilities thereon and including an
59
accurate legal description of the Release Parcel. The actual dimensions
and legal description of the Release Parcel must be acceptable to Lender
in its sole but reasonable discretion.
(ix) Borrower shall affirmatively represent to Lender that it has
fully complied with all applicable laws, ordinances, rules and regulations
pertaining to the subdivision or platting of the Land prior to the time of
the Partial Release.
(x) Upon request by Lender, Borrower, at Borrower's sole cost and
expense, shall obtain endorsements (to the extent legally obtainable) to
Lender's Title Insurance Policy satisfactory in form and content to
Lender, which endorsements will (a) insure that the Lien created by the
Loan Documents remains a valid first Lien on the Remaining Realty, and (b)
insure any covenants, restrictions and easements created over, under,
across, and through the Release Parcel and benefiting the Remaining
Realty, and the Lien of the Loan Documents thereon, as Lender requires.
(xi) Lender acknowledges and agrees that, in connection with the
Partial Release, the existing TC Special Use Permit will be amended, and
Lender agrees that it will reasonably consider joining in the application
for the amendment, if such joinder is required by law or by any
governmental authority.
(xii) Borrower shall pay for the reasonable costs of preparing and
recording partial releases, UCC-3 releases, and any Loan modification
documents, easements, declarations, and/or restrictive covenants
reasonably required by Lender, reasonable Lender's attorneys' fees and
costs, all survey charges and costs, all title premiums and costs,
documentary stamps incurred in connection with the Partial Release of the
Release Parcel, and all other reasonable out-of-pocket costs, fees, and
expenses incurred by Lender in connection with the requested release of
the Release Parcel.
(xiii) Following the Partial Release, the Remaining Realty shall be
provided and maintained with separate utility metering and service from
the Release Parcel.
(xiv) In connection with the Partial Release, the Release Parcel
shall have been or be conveyed to a Person other than Borrower; provided,
that all times during the term of the Loan, the Release Parcel and the
Mortgaged Property shall have 100% common ownership (direct and indirect)
and control.
(xv) If the Loan has been involved in a Secondary Market
Transaction, Borrower shall provide Lender with a legal opinion to the
effect that, if the Loan were in a real estate mortgage investment conduit
("REMIC") (as such term is defined in Section 860D(a) of the Code) pool
("REMIC Pool"), the partial release shall not cause (i) the Loan to fail
to be a "qualified mortgage" within the meaning of Section 860G(a)(3) of
the Code, (ii) any failure of any REMIC Pool to qualify as a REMIC for
federal income tax purposes, or (iii) the imposition of any tax upon any
REMIC Pool or any of such REMIC Pool's assets, including without
limitation any tax on prohibited "transactions" imposed under Section
860F(a)(2) of the Code.
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(xvi) Borrower shall have provided Lender with a Rating Confirmation
with respect to the Partial Release and the above-described related
transactions and documentation.
(xvii) The owner of the Release Parcel, Borrower and Manager shall
have provided to Lender evidence of an arrangement satisfactory to Lender
for the administration of payments from condominium unit owners and
renters from condominium unit owners and the allocation of such payments
between Borrower and the condominium unit owner. In furtherance of the
foregoing and notwithstanding anything to the contrary in this Agreement
and/or the other Loan Documents, Lender acknowledges and agrees that (x)
all references in this Agreement and the other Loan Documents to Accounts,
Pledged Accounts, Receipts, Receivables, Account Collateral, Profits and
Rents (and any other terms used herein which include such amounts) shall
be deemed to refer solely to the portion of such payments to which
Borrower is entitled and (y) Lender's security interest shall not apply to
any portion of such payments to which the condominium unit owner (and not
Borrower) is entitled.
(xviii) Giving effect to the Partial Release, the Debt Service
Coverage Test will be satisfied.
(xix) The Release Parcel shall be governed by condominium documents
reasonably acceptable to Lender.
All reasonable costs and expenses incurred by Lender in connection with such
request for a Partial Release, including, but not limited to, the preparation,
negotiation and review of any and all materials required to be provided in
connection therewith (including Lender's reasonable attorneys' fees and
expenses) shall be paid or reimbursed by Borrower promptly upon demand.
ARTICLE III.
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to Closing. The obligation of the
Lender to make the Loan is subject to the satisfaction by Borrower (and
Guarantor, where applicable) or waiver by Lender in writing of the following
conditions no later than the Closing Date:
(a) Loan Agreement. Borrower and Lender shall have executed and
delivered this Agreement.
(b) Note. Borrower shall have executed and delivered to Lender the
Note.
(c) Environmental Indemnity Agreement; Guaranty of Non-Recourse
Obligations. Borrower and Guarantor shall have executed and delivered the
Environmental Indemnity Agreement to Lender. Guarantor shall have executed and
delivered the Guaranty of Non-Recourse Obligations.
(d) Opinions of Counsel. Lender shall have received from counsel to
Borrower and the Guarantor, legal opinions in form and substance acceptable to
Lender, with respect to corporate matters and with respect to substantive
non-consolidation of either
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Guarantor, the Manager or certain other Affiliates, on the one hand, and either
Borrower, on the other, in the event of the bankruptcy of either Guarantor or
the Manager or such other Affiliates. Such legal opinions shall be addressed to
Lender and its successors and assigns, dated the Closing Date, and in form and
substance reasonably satisfactory to Lender and its counsel.
(e) Organizational Documents. Lender shall have received with
respect to each of Borrower and the Guarantor its certificate of formation,
certificate of limited partnership or certificate of incorporation, as
applicable, as amended, modified or supplemented to the Closing Date, as filed
with the Secretary of State in the jurisdiction of organization and in effect on
the Closing Date and certified to be true, correct and complete by the
appropriate Secretary of State as of a date not more than thirty (30) days prior
to the Closing Date, together with a good standing certificate from such
Secretary of State dated not more than thirty (30) days prior to the Closing
Date and, for Borrower to the extent required by applicable law, a good standing
certificate from the Secretaries of State (or the equivalent thereof) of each
other State in which Borrower is required to be qualified to transact business,
each dated not more than thirty (30) days prior to the Closing Date.
(f) Certified Resolutions, etc. Lender shall have received a
certificate of each of Borrower and the Guarantor dated the Closing Date,
certifying (i) the names and true signatures of its incumbent officers
authorized to sign the Loan Documents to which Borrower or the Guarantor is a
party, (ii) the Organizational Agreement of each of Borrower and Guarantor, in
each case as in effect on the Closing Date, (iii) the resolutions of each of
Borrower and the Guarantor, approving and authorizing the execution, delivery
and performance of the Loan Documents to which it is a party, and (iv) that
there have been no changes in any Organizational Agreement since the date of
execution or preparation thereof.
(g) Additional Matters. Lender shall have received such other
certificates, opinions, documents and instruments relating to the Loan as may
have been reasonably requested by Lender. All corporate and other organizational
proceedings, all other documents (including, without limitation, all documents
referred to herein and not appearing as exhibits hereto) and all legal matters
in connection with the Loan shall be reasonably satisfactory in form and
substance to Lender in its discretion.
(h) Transaction Costs. Borrower shall have paid all Transaction
Costs for which bills have been submitted in accordance with the provisions of
Section 8.23.
(i) No Default or Event of Default. No event which would constitute
either a Default or Event of Default under this Agreement or the other Loan
Documents shall have occurred and be continuing on the Closing Date.
(j) No Injunction. No law or regulation shall have been adopted, no
order, judgment or decree of any Governmental Authority shall have been issued,
and no litigation shall be pending or threatened, which in the good faith
judgment of Lender would enjoin, prohibit or restrain, or impose or result in
the imposition of any material adverse condition upon, the making or repayment
of the Loan or the consummation of the Transaction.
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(k) Representations and Warranties. The representations and
warranties herein and in the other Loan Documents shall be true and correct in
all material respects on the Closing Date.
(l) Survey; Appraisal. Lender shall have received the Survey and the
Appraisal with respect to the Mortgaged Property, which shall be in form and
substance satisfactory to Lender.
(m) Engineering Reports. Lender shall have received the engineering
reports with respect to the Mortgaged Property prepared by the Engineer or
another Person acceptable to the Lender, which engineering reports shall be
acceptable to Lender.
(n) Environmental Matters. Lender shall have received an
Environmental Report prepared by an Environmental Auditor with respect to the
Mortgaged Property, which Environmental Report shall be acceptable to Lender.
(o) Financial Information. Lender shall have received financial
information relating to the Guarantor, Borrower and the Mortgaged Property
satisfactory to Lender. Such information shall include, without limitation, the
following, to the extent reasonably available:
(i) operating statements for the current year (including actual to
date information, an annual budget and trailing twelve month data in hard
copy and on diskette) and for not less than the three preceding years
(including capital reserves, major repairs, replacement items and
occupancy rates in hard copy and on diskette);
(ii) current real estate tax bills and historical real estate tax
bills of record for the Mortgaged Property for not less than the three
preceding years;
(iii) the most recent annual financial statements and unaudited
quarterly financial statements; and
(iv) such other financial information as is customarily required by
institutional lenders for loans similar in size and type as the Loan.
The annual financial statements relating to the Mortgaged Property and Borrower
shall be either (x) audited by a "Big Four" accounting firm or another firm of
certified public accountants reasonably acceptable to Lender or (y) prepared in
accordance with agreed upon procedures reasonably acceptable to Lender to be
performed by a "Big Four" accounting firm or another firm of certified public
accountants reasonably acceptable to Lender to create similar information.
(p) Pro-Forma Financial Statement; Operating Budget. Lender shall
have received (i) the initial pro-forma financial statement and Operating Budget
for the Mortgaged Property for the following twelve months (including on an
annual and monthly basis a break-down of projected Gross Revenues, Property
Expenses, Capital Improvement Costs, FF&E Costs, Advance Bookings and average
occupancy level (expressed as a percentage)), (ii) a financial statement that
forecasts projected revenues and operating expenses for not less than
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three years (including the assumptions used in such forecast), and (iii) any
local market study and/or research and demographics report prepared for Borrower
and/or commercially available.
(q) Site Inspection. Borrower shall have provided to Lender the
opportunity to perform, or cause to be performed on its behalf, an on-site due
diligence review of the Mortgaged Property, which inspection is satisfactory to
Lender.
(r) Mortgaged Property Documents.
(i) Mortgage; Assignment of Profits and Leases. Borrower shall have
executed and delivered to Lender the Mortgage and the Assignment of
Profits and Leases with respect to the Mortgaged Property and such
Mortgage and Assignment of Profits and Leases shall have been filed of
record in the appropriate filing office in the jurisdiction in which the
Mortgaged Property is located or irrevocably delivered to a title agent
for such recordation.
(ii) Financing Statements. Borrower shall have executed and
delivered to Lender all financing statements required by Lender pursuant
hereto and such financing statements shall have been filed of record in
the appropriate filing offices in each of the appropriate jurisdictions or
irrevocably delivered to a title agent for such recordation.
(iii) Management Agreement and Manager's Subordination. Lender shall
have received the executed Management Agreement for the Mortgaged Property
and the Manager shall have executed and delivered the Manager's
Subordination to Lender.
(iv) License Agreement and License Tri-Party Agreement. Lender shall
have received the executed License Agreement for the Mortgaged Property
and the Borrower and Licensor shall have executed and delivered the
License Tri-Party Agreement to Lender.
(v) Tall Pines Agreement and Tall Pines Recognition Agreement.
Lender shall have received the executed Tall Pines Agreement, including
the Tall Pines Recognition Agreement, for the Mortgaged Property.
(vi) Contract Assignment. With respect to the Mortgaged Property,
Borrower shall have executed and delivered to Lender a Contract Assignment
with respect to the Mortgaged Property.
(s) Opinions of Counsel. Lender shall have received from counsel to
Borrower reasonably acceptable to Lender in each state in which any Mortgaged
Property is located its legal opinion in form and substance satisfactory to
Lender, as to (i) the enforceability of each Mortgage, each Assignment of
Profits and Leases and any other Loan Documents governed by the law of such
jurisdiction, (ii) perfection of Liens and security interests and (iii) other
matters referred to therein with respect to each Mortgaged Property. The legal
opinions will be addressed to Lender and its successors and assigns, dated the
Closing Date, and in form and substance reasonably satisfactory to Lender and
its counsel.
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(t) Insurance. Lender shall have received certificates of insurance
demonstrating insurance coverage in respect of the Mortgaged Property of types,
in amounts, with insurers and otherwise in compliance with the terms, provisions
and conditions set forth in this Agreement. Such certificates shall indicate
that Lender is a named additional insured and shall contain a loss payee
endorsement in favor of Lender with respect to the property policies required to
be maintained under this Agreement.
(u) Title Insurance Policy. Lender shall have received countersigned
pro forma title policies or marked binders constituting the unconditional
commitment (in form and substance reasonably satisfactory to Lender) to issue
the Title Insurance Policy covering the Mortgaged Property with an aggregate
amount at least equal to the Loan Amount.
(v) Lien Search Reports. Lender shall have received satisfactory
reports of UCC (collectively, the "UCC Searches"), tax lien, judgment and
litigation searches and title updates conducted by the companies issuing the
Title Insurance Policy with respect to the Collateral, Guarantor and Borrower,
such searches to be conducted in each of the locations required by Lender.
(w) Consents, Licenses, Approvals, etc. Lender shall have received
copies of all consents, licenses and approvals, if any, required in connection
with the execution, delivery and performance by Borrower and Guarantor and the
validity and enforceability, of the Loan Documents, and such consents, licenses
and approvals shall be in full force and effect.
(x) Additional Real Estate Matters. Lender shall have received such
other real estate related certificates and documentation relating to the
Mortgaged Property as Lender may have reasonably requested. Such documentation
shall include the following as requested by Lender and to the extent reasonably
available:
(i) certificates of occupancy issued by the appropriate Governmental
Authority of the jurisdiction in which the Mortgaged Property is located
reflecting, and consistent with, the use of the Mortgaged Property as of
the Closing Date;
(ii) letters from the appropriate local Governmental Authorities of
the jurisdiction in which each Mortgaged Property is located, certifying
that the Mortgaged Property is in compliance with all applicable zoning
laws, rules and regulations, and a zoning endorsement to the applicable
Title Insurance Policy with respect to each Mortgaged Property or any
opinion of zoning counsel to such effect;
(iii) a certified copy of the License Agreement; and
(iv) a certified copy of the Tall Pines Agreement.
(y) Closing Statement. Lender and Borrower shall have agreed upon a
detailed closing statement in a form reasonably acceptable to Lender, which
includes a complete description of Borrower's sources and uses of funds on the
Closing Date.
(z) Loan to Value Ratio; Debt Service Coverage Ratio. Lender shall
have determined that (i) the Loan Amount is not greater than 66% of the
aggregate value of the
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Mortgaged Property as set forth in the Appraisals delivered on or prior to the
Closing Date, and (ii) the Debt Service Coverage Ratio is at least 1.50 as of
the Closing Date.
(aa) Origination Fee. Lender shall have received its Origination
Fee, which may be retained by Lender from the proceeds of the Loan.
Section 3.2. Execution and Delivery of Agreement. The execution and
delivery of this Agreement by each party to this Agreement shall be deemed to
constitute the satisfaction or waiver of the conditions set forth in Section
3.1; provided, that any such deemed satisfaction or waiver shall be solely for
the purposes of Section 3.1 and shall not be deemed or construed to constitute a
waiver of any other provision of this Agreement or of any provisions of any of
the other Loan Documents, including, without limitation, any undelivered items
undertaking or agreement or other post-closing agreement or undertaking entered
into by Borrower and/or Guarantor.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties as to Borrower. Borrower
represents and warrants that, as of the Closing Date:
(a) Organization. Borrower (i) is a duly organized and validly
existing limited liability company in good standing under the laws of the State
of Delaware, (ii) has the requisite power and authority to own its properties
(including, without limitation, the Mortgaged Property) and to carry on its
business as now being conducted and is qualified to do business in the
jurisdiction in which the Mortgaged Property is located, and (iii) has the
requisite power to execute and deliver, and perform its obligations under, this
Agreement, the Note and all of the other Loan Documents to which it is a party.
(b) Authorization; No Conflict; Consents and Approvals. The
execution and delivery by Borrower of this Agreement, the Note and each of the
other Loan Documents, Borrower's performance of its obligations hereunder and
under the other Loan Documents and the creation of the security interests and
liens provided for in this Agreement and the other Loan Documents to which it is
a party (i) have been duly authorized by all requisite action on the part of
Borrower, (ii) will not violate any provision of any Legal Requirements, any
order of any court or other Governmental Authority, the Organizational Agreement
or any indenture or, except for any violations which would not reasonably be
expected to have a Material Adverse Effect on Borrower or the Mortgaged
Property, agreement or other instrument to which Borrower is a party or by which
Borrower is bound, and (iii) will not be in conflict with, result in a breach
of, or constitute (with due notice or lapse of time or both) a default under, or
result in the creation or imposition of any Lien of any nature whatsoever upon
the Mortgaged Property pursuant to, any such indenture or agreement or material
instrument other than the Loan Documents. Other than those obtained or filed on
or prior to the Closing Date, Borrower is not required to obtain any consent,
approval or authorization from, or to file any declaration or statement with,
any Governmental Authority or other agency in connection with or as a condition
to the execution, delivery or performance of this Agreement, the Note or the
other Loan Documents executed and delivered by Borrower.
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(c) Enforceability. This Agreement, the Note and each other Loan
Document executed by Borrower in connection with the Loan (including, without
limitation, any Collateral Security Instrument), is the legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, subject to bankruptcy, insolvency, and other limitations on creditors'
rights generally and to equitable principles. This Agreement, the Note and such
other Loan Documents are not subject to any right of rescission, set-off,
counterclaim or defense by Borrower (including the defense of usury), and
Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.
(d) Litigation. Except as set forth on Schedule 3, there are no
actions, suits or proceedings at law or in equity by or before any Governmental
Authority or other agency now pending and served or, to the Actual Knowledge of
Borrower, threatened against Borrower or any Collateral, which actions, suits or
proceedings are reasonably likely to result in a Material Adverse Effect.
(e) Agreements. Borrower is not in default in the performance,
observance or fulfillment of any of the material obligations, covenants or
conditions contained in any agreement or instrument to which it is a party or by
which Borrower or any Collateral is bound which default is reasonably likely to
have a Material Adverse Effect. Other than the Permitted Encumbrances, Borrower
is not a party to any agreement or instrument or subject to any restriction
which restricts such Person's ability to conduct its business in the ordinary
course and is reasonably likely to have a Material Adverse Effect.
(f) No Bankruptcy Filing. Neither Borrower nor Guarantor is
contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency laws or the liquidation of all or a material portion of
its assets or property. To the Actual Knowledge of Borrower, no Person is
contemplating the filing of any such petition against Borrower.
(g) Solvency. Giving effect to the transactions contemplated hereby,
the fair market value of Borrower's assets exceeds and will, immediately
following the making of the Loan, exceed Borrower's total liabilities
(including, without limitation, subordinated, unliquidated, disputed and
contingent liabilities). The fair market value of Borrower's assets is and will,
immediately following the making of the Loan, be greater than Borrower's
probable liabilities (including the maximum amount of its contingent liabilities
on its debts as such debts become absolute and matured). Borrower's assets do
not and, immediately following the making of the Loan will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to, and does not believe that it will,
incur debts and liabilities (including, without limitation, contingent
liabilities and other commitments) beyond its ability to pay such debts as they
mature (taking into account the timing and amounts to be payable on or in
respect of obligations of Borrower).
(h) Other Debt. Borrower has not borrowed or received other debt
financing whether unsecured or secured by the Mortgaged Property or any part
thereof which is outstanding as of the Closing Date, other than as permitted
under the Loan Agreement. As of the Closing Date, Borrower has no Other
Borrowings other than trade debt expressly permitted under Article VIII of this
Agreement.
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(i) Full and Accurate Disclosure. No statement of fact made by or on
behalf of Borrower in this Agreement or in any of the other Loan Documents
contains any untrue statement of material fact or omits to state any material
fact necessary to make statements contained herein or therein not misleading. To
the Actual Knowledge of Borrower, no financial statements or any other document,
certificate or written statement furnished to Lender by Borrower or Guarantor,
or by any third party on behalf of Borrower or Guarantor, for use in connection
with the Loan contains any untrue representation, warranty or statement of a
fact, and none omits or will omit to state a fact necessary in order to make the
statements contained herein or therein not misleading in any material respect.
To the Actual Knowledge of Borrower, there is no fact that has not been
disclosed to Lender that is reasonably likely to result in a Material Adverse
Effect.
(j) Financial Information. All financial statements and other data
concerning Borrower, Guarantor and the Mortgaged Property that has been
delivered by or on behalf of Borrower or Guarantor to Lender is true, complete
and correct in all material respects as of the respective dates thereof and,
except as disclosed on Schedule 3 attached hereto, has been prepared in
accordance with GAAP. Since the delivery of such data, except as otherwise
disclosed in writing to Lender, there has been no change in the financial
position of Borrower, Guarantor or the Mortgaged Property, or in the results of
operations of Borrower or Guarantor, which change results or is reasonably
likely to result in a Material Adverse Effect. Neither Borrower nor Guarantor
has incurred any obligation or liability, contingent or otherwise, not reflected
in such financial data, which is likely to have a Material Adverse Effect upon
its business operations or the Mortgaged Property.
(k) Investment Company Act; Public Utility Holding Company Act.
Borrower is not (i) an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended, (ii) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of either a "holding company" or a "subsidiary
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or (iii) subject to any other federal or state law or regulation
which purports to restrict or regulate its ability to borrow money in accordance
with this Agreement.
(l) Compliance. Borrower is in compliance with all applicable Legal
Requirements, except for noncompliance that is not reasonably likely to have a
Material Adverse Effect. Borrower is not in default or violation of any order,
writ, injunction, decree or demand of any Governmental Authority except for
defaults or violations which are not reasonably likely to have a Material
Adverse Effect.
(m) Use of Proceeds; Margin Regulations. Borrower will use the
proceeds of the Loan for the purposes described in Section 2.2. No part of the
proceeds of the Loan will be used for the purpose of purchasing or acquiring any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System or for any other purpose which would be inconsistent
with such Regulation U or any other Regulations of such Board of Governors, or
for any purposes prohibited by Legal Requirements.
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(n) Organizational Chart. The organizational chart set forth as
Schedule 2 accurately sets forth the direct and indirect ownership structure of
Borrower.
(o) No Defaults. No Event of Default or, to the Actual Knowledge of
Borrower, Default, exists under or with respect to any Loan Document.
(p) Plans and Welfare Plans. The assets of Borrower are not treated
as "plan assets" under regulations currently promulgated under ERISA. Except to
the extent it would not have a Material Adverse Effect, neither Borrower nor any
ERISA Affiliate sponsors, maintains, contributes to or is required to contribute
to any Plan or Multiemployer Plan nor has the Borrower or any ERISA Affiliate
sponsored, maintained, contributed to or been required to contribute to any Plan
or Multiemployer Plan within the past six years. Except to the extent it would
not have a Material Adverse Effect, (i) there are no pending issues or claims
before the Internal Revenue Service, the United States Department of Labor or
any court of competent jurisdiction related to any Plan or Welfare Plan, (ii) no
event has occurred, and there exists no condition or set of circumstances, in
connection with any Plan or Welfare Plan which will subject Borrower directly or
indirectly (through an indemnification agreement or otherwise), to any liability
under Section 409 or 502(i) of ERISA or Section 4975 of the Code, and (iii) no
Welfare Plan provides or will provide benefits, including, without limitation,
death or medical benefits (whether or not insured) with respect to any current
or former employee of Borrower beyond his or her retirement or other termination
of service other than (A) coverage mandated by applicable law, (B) death or
disability benefits that have been fully provided for by fully paid up insurance
or (C) severance benefits.
(q) Additional Borrower UCC Information. Borrower's organizational
identification numbers are 00-0000000 for the KC Borrower and 00-0000000 for the
TC Borrower, and the full legal name of each Borrower is as set forth on the
signature pages hereof, and Borrower has not done in the last five (5) years,
and does not do, business under any other name (including any trade-name or
fictitious business name).
(r) Not Foreign Person. Borrower is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code.
(s) Labor Matters. Borrower is not a party to any collective
bargaining agreements.
(t) Pre-Closing Date Activities. Borrower has not conducted any
business or other activity on or prior to the Closing Date, other than in
connection with the acquisition, development, management and ownership of the
Mortgaged Property.
(u) No Bankruptcies or Criminal Proceedings Involving Borrower or
Related Parties. No bankruptcy, insolvency, reorganization or comparable
proceedings have ever been instituted by or against Borrower, any Affiliate of
Borrower, any Guarantor or any individual or entity owning, with his, her or its
family members, 20% or more of the direct, or indirect beneficial ownership
interests in Borrower (each such Guarantor, individual, or entity being herein
referred to as a "Principal"), and no such proceeding is now pending or
contemplated. None of Borrower or any Principal have been charged, indicted or
convicted, or are currently
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under the threat of charge, indictment or conviction, for (i) any felony or (ii)
any crime which involves fraud or which involves any act that is reasonably
likely to have a Material Adverse Effect on the business operations or condition
(financial or otherwise) of Borrower or the value of the Mortgaged Property.
(v) No Prohibited Persons. Neither Borrower, Guarantor nor any of
their respective officers, directors, members or Affiliates is or will be an
entity or person: (i) that is listed in the Annex to, or is otherwise subject to
the provisions of Executive Order 13224 issued on September 24, 2001
("EO13224"); (ii) whose name appears on the United States Treasury Department's
Office of Foreign Assets Control ("OFAC") most current list of "Specifically
Designated National and Blocked Persons" (which list may be published from time
to time in various mediums including, but not limited to, the OFAC website,
http:xxx.xxxxx.xxx/xxxx/x00xxx.xxx) (the "OFAC List"); (iii) who commits,
threatens to commit or supports "terrorism", as that term is defined in EO
13224; or (iv) who is otherwise affiliated with any entity or person listed
above (any and all parties or persons described in clauses (i) through (iv)
above are herein referred to as a "Prohibited Person"). To the Actual Knowledge
of the Borrower, no tenant at the Property currently is identified on the OFAC
List or otherwise qualifies as a Prohibited Person and no tenant at the Property
is owned by or an Affiliate of a Prohibited Person. Borrower and Manager have
implemented and will continue to follow procedures to ensure that no tenant at
the Property is a Prohibited Person or owned by or an Affiliate of a Prohibited
Person.
Section 4.2. Representations and Warranties as to the Mortgaged
Property. Borrower hereby represents and warrants to Lender that, as to the
Mortgaged Property and each Mortgage, as of the Closing Date:
(a) Title to the Mortgaged Property. Borrower owns good, marketable
and insurable fee simple title to the Land and Improvements, free and clear of
all Liens, other than the Permitted Encumbrances and except as disclosed on
Schedule 3. Borrower owns the Personalty free and clear of any and all Liens,
other than Permitted Encumbrances. There are no outstanding options to purchase
or rights of first refusal affecting any Mortgaged Property or any portion
thereof or interest therein.
(b) Utilities and Public Access. Except as disclosed on Schedule 3,
(i) the Mortgaged Property has adequate rights of access to public ways and is
served by public water, electric, sewer, sanitary sewer and storm drain
facilities; (ii) all public utilities necessary to the continued use and
enjoyment of the Mortgaged Property as presently used and enjoyed are located in
valid easements or in the public right-of-way abutting the premises; and (iii)
all roads necessary for the full utilization of the Mortgaged Property for its
current purpose have been completed and dedicated to public use and accepted by
all Governmental Authorities or are the subject of access easements for the
benefit of the Mortgaged Property.
(c) Condemnation. No Taking has been commenced or, to the best of
Borrower's knowledge, is contemplated with respect to all or any portion of any
Mortgaged Property or for the relocation of roadways providing access to any
Mortgaged Property.
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(d) Compliance. The Mortgaged Property and the current use thereof
is in compliance with all applicable Legal Requirements (including, without
limitation, building, parking, subdivision, land use, health, fire, safety and
zoning ordinances and codes) and all applicable Insurance Requirements, except
for noncompliance which is not reasonably likely to result in a Material Adverse
Effect. The Mortgaged Property is zoned for its current use or subject to a
special use permit which permits its current use, which zoning designation or,
subject to the terms thereof, special use permit, is unconditional, in full
force and effect, and is beyond all applicable appeal periods. In the event that
all or any part of the Improvements located on any Mortgaged Property are
destroyed or damaged, said Improvements can be legally reconstructed to their
condition prior to such damage or destruction, and thereafter exist for the same
use without violating (after taking into account the effect of any special use
permit) any zoning or other ordinances applicable thereto and without the
necessity of obtaining any variances or special permits (other than any special
use permits now in effect), other than customary demolition, building and other
construction related permits. No legal proceedings are pending or, to the Actual
Knowledge of Borrower, threatened with respect to the zoning of the Mortgaged
Property. Except as set forth in the Permitted Encumbrances and/or any permit
for a planned unit development affecting the Mortgaged Property, neither the
zoning nor any other right to construct, use or operate the Mortgaged Property
is in any way dependent upon or related to any real estate other than the
Mortgaged Property. Subject to Section 2.17, no tract map, parcel map,
condominium plan, condominium declaration, or plat of subdivision will be
recorded by Borrower with respect to the Mortgaged Property without Lender's
prior written consent.
(e) Environmental Compliance. Except for matters set forth in the
Environmental Reports delivered to Lender in connection with the Loan (true,
correct and complete copies of which have been provided to Lender by Borrower):
(i) The Mortgaged Property is in full compliance with all applicable
Environmental Laws except for noncompliance which would not reasonably be
expected to result in a Material Adverse Effect.
(ii) There is no material Environmental Claim pending or, to the
Actual Knowledge of Borrower, threatened, and no unpaid, material
penalties arising under Environmental Laws have been assessed against
Borrower, the Manager or any Mortgaged Property, or, to the Actual
Knowledge of Borrower, against any Person whose liability for any material
Environmental Claim Borrower or the Manager has retained or assumed either
contractually or to the Actual Knowledge of Borrower, by operation of law,
and to the Actual Knowledge of Borrower, no material investigation or
review is pending or threatened by any Governmental Authority, citizens
group, employee or other Person with respect to any alleged failure by
Borrower or the Manager or any Mortgaged Property to have any material
permit, license or other authorization required under, or to otherwise
comply with, any applicable Environmental Law or with respect to any
alleged material liability of Borrower or the Manager for any Use or
Release of any Hazardous Substances.
(iii) To the Actual Knowledge of the Borrower, there are no present
and there have been no past material Releases of any Hazardous Substances
that are reasonably
71
likely to form the basis of any material Environmental Claim against
Borrower, the Manager, any Mortgaged Property or against any Person whose
liability for any material Environmental Claim Borrower or the Manager has
retained or assumed either contractually or to the Actual Knowledge of
Borrower, by operation of law (other than Hazardous Substances present or
otherwise being used in amounts that are customary for properties such as
the Mortgaged Property and for purposes that are typical for properties
such as the Mortgaged Property and in all cases are utilized in compliance
with applicable Environmental Law in all material respects).
(iv) Without limiting the generality of the foregoing, to the Actual
Knowledge of the Borrower, there is not present at, on, in or under any
Mortgaged Property, any Hazardous Substances (including, without
limitation, PCB-containing (at least 50 parts per million) equipment,
friable asbestos or friable asbestos containing materials, underground
storage tanks or surface impoundments for Hazardous Substances, lead based
paint or, to the extent reasonably likely to materially adversely affect
the value or utility of such Mortgaged Property, lead in drinking water)
(other than Hazardous Substances present or otherwise being used in
amounts that are customary for properties such as the Mortgaged Property
and for purposes that are typical for properties such as the Mortgaged
Property and in all cases are utilized in compliance with applicable
Environmental Law in all material respects) or any fungus, mold, mildew or
biological agent, except, for the purposes of this Section 4.2(e)(iv) in
amounts which are not, and under circumstances which are not, reasonably
likely to materially adversely affect the value or utility of such
Mortgaged Property.
(v) No liens are presently recorded with the appropriate land
records under or pursuant to any applicable Environmental Law with respect
to the Mortgaged Property and to the Actual Knowledge of Borrower, no
Governmental Authority has been taking or, is in the process of taking any
action that could subject the Mortgaged Property to Liens under any
applicable Environmental Law.
(vi) There have been no potentially material reports of
environmental investigations, studies, audits, reviews or other analyses
conducted by or that are in the possession of Borrower in relation to any
Mortgaged Property which have not been made available to Lender.
(f) Mortgage and Other Liens. Each Mortgage creates a valid and
enforceable first priority Lien on the applicable Mortgaged Property described
therein, as security for the repayment of the Indebtedness, subject only to the
Permitted Encumbrances applicable to such Mortgaged Property, subject to
bankruptcy, insolvency, and other limitations on creditors' rights generally and
to equitable principles. This Agreement and the other Loan Documents create a
valid and enforceable first priority Lien on all Account Collateral, subject to
bankruptcy, insolvency, and other limitations on creditors' rights generally and
to equitable principles. Each Collateral Security Instrument establishes and
creates a valid, subsisting and enforceable Lien on and a security interest in,
or claim to, the rights and property described therein, subject to bankruptcy,
insolvency, and other limitations on creditors' rights generally and to
equitable principles. All property covered by any Collateral Security Instrument
in which a security interest can be perfected by the filing of a financing
statement is subject to a UCC
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financing statement filed and/or recorded, as appropriate (or irrevocably
delivered to an agent for such recordation or filing) in all places necessary to
perfect a valid first priority Lien with respect to the rights and property that
are the subject of such Collateral Security Instrument to the extent governed by
the UCC.
(g) Assessments. Except as contemplated under the Permitted
Encumbrances, there are no pending or, to the Actual Knowledge of Borrower,
proposed special or other assessments for public improvements or otherwise
affecting any Mortgaged Property, nor, except as set forth on Schedule 3 or as
contemplated by Section 2.17, are there any contemplated improvements to any
Mortgaged Property that may result in such special or other assessments.
(h) No Joint Assessment; Separate Lots. Borrower has not suffered,
permitted or initiated the joint assessment of the Land and Improvements with
any other real property constituting a separate tax lot. The Land and
Improvements are comprised of one or more parcels, each of which constitutes a
separate tax lot or lots and none of which constitutes a portion of any other
tax lot.
(i) No Prior Assignment. Lender is the collateral assignee of
Borrower's interest as licensee under the License Agreement, pursuant to the
License Tri-Party Agreement. There are no prior assignments of the License
Agreement or any portion of the Rent due and payable or to become due and
payable which are presently effective.
(j) Permits; Certificate of Occupancy. Borrower has obtained all
Permits necessary to the use and operation of the Mortgaged Property, except for
noncompliance which is not reasonably expected to result in a Material Adverse
Effect. The use being made of the Mortgaged Property is in conformity with the
certificate of occupancy and/or such Permits for such Mortgaged Property and any
other restrictions, covenants or conditions affecting such Mortgaged Property,
except for noncompliance which is not reasonably likely to result in a Material
Adverse Effect.
(k) Flood Zone. Except as shown on the Survey, no Mortgaged Property
or any portion thereof is located in a flood hazard area as defined by the
Federal Insurance Administration.
(l) Physical Condition. Except as set forth in the Property
Condition Assessment, to the Actual Knowledge of Borrower, the Mortgaged
Property is free of structural defects which would reasonably be expected to
have a Material Adverse Effect and all Improvements, including the building
systems contained therein are in good working order subject to ordinary wear and
tear.
(m) Advance Bookings Deposits. Borrower and the Manager are in
compliance in all material respects with all Legal Requirements relating to all
Advance Bookings Deposits with respect to the Mortgaged Property, except for
non-compliance which is not reasonably expected to have a Material Adverse
Effect on Borrower or the Mortgaged Property.
(n) Intellectual Property. Attached hereto as Schedule 5 is a true,
correct and complete listing of all material Intellectual Property. All material
Intellectual Property is in good standing and uncontested. Other than those
conferred under the License Agreement or the
73
Central Reservations Services Agreement and those which may be conferred under
the Tall Pines Agreement, there is no right under any Intellectual Property
necessary to the business of Borrower as presently conducted or as Borrower
contemplates conducting its business which Borrower does not have. Except as set
forth on Schedule 3, Borrower has not infringed, is not infringing, and has not
received notice of infringement with respect to asserted Intellectual Property
of others. To the Actual Knowledge of Borrower, there is no infringement by
others of material Intellectual Property of Borrower.
(o) No Encroachments. Except as shown on the Survey and except to
the extent the same is not likely to have a Material Adverse Effect, to the
Actual Knowledge of Borrower, (i) all of the Improvements which were included in
determining the appraised value of the Mortgaged Property lie wholly within the
boundaries and building restriction lines of the Mortgaged Property, (ii) no
improvements on adjoining properties encroach upon any Mortgaged Property, and
(iii) no Improvements encroach upon any easements or other encumbrances
affecting the Mortgaged Property except in conformity with the terms or such
easements or such other encumbrances.
(p) Management Agreement. The Management Agreement is in full force
and effect. There is no default, breach or violation existing thereunder by
Borrower or Manager.
(q) Leases. No Mortgaged Property is subject to any Leases (other
than the License Lease and Services Agreement between KC Borrower and GWR KC
Beverage, Inc., an Affiliate of the Borrower, which is the holder of the liquor
license with respect to the KC Property). No portion of the Mortgaged Property
is occupied by any Affiliate of Borrower.
(r) No Other Real Property. Except for the Land and Improvements and
public streets and sidewalks, and except to the extent set forth in any
Permitted Encumbrance, neither Borrower nor Manager uses or occupies any other
material real property in connection with the operation, occupancy and
management of the Mortgaged Property and all amenities (including parking and
any recreational facilities) made available to guests and other users of the
Mortgaged Property. The Land and Improvements include all of the interests in
real property used or proposed to be used for the Mortgaged Property, except to
the extent set forth in any Permitted Encumbrance.
(s) Personal Property. Except for the Equipment, the Inventory, Case
Goods, Soft Goods, Fixed Asset Supplies, furnishings, cash on hand in the
Mortgaged Property, and property of transient hotel guests and tenants, no
material tangible personal property is located within the Mortgaged Property, or
used or proposed to be used in the Mortgaged Property. Borrower has good title
to all Equipment (except for permitted Equipment leased under Equipment Leases
and Financing Leases in accordance with Sections 8.1(e) and/or 5.1(t)) and
Inventory free and clear of all Liens, except the Permitted Encumbrances.
(t) Fees, Royalties, Commissions and Compensation. Except as
provided under the License Agreement, the Central Reservations Services
Agreement and the Management Agreement, the Permitted Encumbrances disclosed on
the Title Insurance Policy, neither the Manager nor Licensor has any right or
claim to any fees, commissions, royalties, compensation or other remuneration in
connection with or arising out of the use, occupancy,
74
management, and operation of the Mortgaged Property and no brokerage commissions
or similar compensation are or will become due to any Person in connection with
the operation or management of the Mortgaged Property.
(u) License Agreement. The License Agreement is in full force and
effect, has not been modified or amended, and there is no default, breach or
violation existing thereunder by Borrower or Licensor.
(v) Tall Pines Agreement. The Tall Pines Agreement is in full force
and effect, has not been modified or amended, and there is no default, breach or
violation existing thereunder by Great Lakes or, to the Actual Knowledge of
Borrower, Tall Pines.
Section 4.3. Survival of Representations. Borrower agrees that (i)
all of the representations and warranties of Borrower set forth in Section 4.1
and 4.2 and in the other Loan Documents delivered on the Closing Date are made
as of the Closing Date, and (ii) all representations and warranties made by
Borrower shall survive the delivery of the Note and making of the Loan and
continue for so long as any amount remains owing to Lender under this Agreement,
the Note or any of the other Loan Documents; provided, however, that the
representations set forth in Section 4.2(e) shall survive in perpetuity. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
Lender's behalf.
ARTICLE V.
AFFIRMATIVE COVENANTS
Section 5.1. Affirmative Covenants. Borrower covenants and agrees
that, from the date hereof and until payment in full of the Indebtedness:
(a) Existence; Compliance with Legal Requirements: Insurance.
Borrower shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its existence as a limited liability company,
and any rights, licenses, Permits and franchises necessary for the conduct of
its business, except those not reasonably likely to cause a Material Adverse
Effect, and will comply, except for noncompliance not reasonably likely to cause
a Material Adverse Effect, with all Legal Requirements and Insurance
Requirements applicable to it and to the Mortgaged Property. Borrower shall at
all times maintain, preserve and protect all franchises and trade names and
preserve all the remainder of its property necessary for the continued conduct
of its business and keep the Mortgaged Property in good repair, working order
and condition, except for reasonable wear and use (and except for casualty
losses as to which other provisions hereof shall govern), and from time to time
make, or cause to be made, all reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto.
(b) Basic Carrying Costs and Other Claims; Contest.
(i) Subject to Borrower's contest rights set forth in Section
5.1(b)(ii) below, Borrower will pay when due (A) all Basic Carrying Costs
with respect to Borrower and the Mortgaged Property; (B) all claims
(including claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or may
75
become a Lien upon any of the Mortgaged Property or its other properties
or assets (hereinafter referred to as the "Lien Claims"); and (C) all
federal, state and local income taxes, sales taxes, excise taxes and all
other taxes and assessments of Borrower on its business, income or assets;
in each instance before any penalty or fine is incurred with respect
thereto. Borrower's obligation to pay Basic Carrying Costs pursuant to
this Agreement shall include, to the extent permitted by applicable law,
Impositions resulting from future changes in law which impose upon Lender
an obligation to pay any property taxes on the Mortgaged Property or other
Impositions.
(ii) Borrower shall not be required to pay, discharge or remove any
Imposition or Lien Claim (the Lender acknowledging the existence of the
Lien Claims as of the Closing Date referenced on Exhibit 3 attached
hereto) and agreeing that the bonding of such Lien Claims are sufficient
security by Borrower with respect thereto), so long as Borrower contests
in good faith such Imposition or Lien Claim or the validity, applicability
or amount thereof by an appropriate legal proceeding which operates to
prevent the collection of such amounts and the sale of the applicable
Mortgaged Property or any portion thereof, so long as:
(A) the Indebtedness shall not have been accelerated, if an
Event of Default shall have occurred and be continuing;
(B) prior to the date on which such Imposition or Lien Claim
would otherwise have become delinquent, Borrower shall have given
Lender prior written notice of its intent to contest said Imposition
or Lien Claim and deposited with Lender (or with a court of
competent jurisdiction or other appropriate body approved by Lender)
such additional amounts as are necessary to keep on deposit at all
times (taking into account any funds on deposit in the Operating
Expense Account), an amount equal to at least one hundred twenty
five percent (125%) (or such higher amount as may be required by
applicable law) of the total of (x) the balance of such Imposition
or Lien Claim then remaining unpaid, and (y) all interest,
penalties, costs and charges accrued or accumulated thereon,
together with such other security as may be required in the
proceeding, or as may be required by Lender, to insure the payment
of any such Imposition or Lien Claim and all interest and penalties
thereon; provided, that notwithstanding the foregoing, with respect
to Impositions or Lien Claims in an amount not in excess of
$200,000, Borrower shall not be required to deposit such amounts
with the Lender, so long as Borrower demonstrates to the reasonable
satisfaction of the Lender that Borrower has otherwise reserved such
funds or such funds are otherwise available to the Borrower;
(C) no risk of sale, forfeiture or loss of any interest in the
Mortgaged Property or any part thereof arises, in Lender's judgment,
during the pendency of such contest;
(D) such contest does not, in Lender's determination, have a
Material Adverse Effect;
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(E) such contest is based on bona fide, material, and
reasonable claims or defenses;
(F) such proceeding shall be permitted under and be conducted
in accordance with the provisions of any other instrument to which
Borrower is subject and shall not constitute a default thereunder
and such proceeding shall be conducted in accordance with all
applicable statutes, laws and ordinances; and
(G) Borrower shall have obtained such endorsements to the
Title Insurance Policy with respect to such Imposition or Lien Claim
as Lender may reasonably require (or escrowed with a title insurance
company funds sufficient to obtain such endorsements pursuant to
escrow arrangements reasonably satisfactory to Lender).
Any such contest shall be prosecuted with due diligence, and
Borrower shall promptly pay the amount of such Imposition or Lien Claim as
finally determined, together with all interest and penalties payable in
connection therewith. Lender shall have full power and authority, but no
obligation, to apply any amount deposited with Lender under this
subsection to the payment of any unpaid Imposition or Lien Claim to
prevent the sale or forfeiture of the Mortgaged Property for non-payment
thereof, if Lender reasonably believes that such sale or forfeiture is
threatened. Any surplus retained by Lender after payment of the Imposition
or Lien Claim for which a deposit was made shall be promptly repaid to
Borrower unless an Event of Default shall have occurred, in which case
said surplus may be retained by Lender to be applied as Lender, in its
discretion, may elect.
(c) Litigation. Borrower shall give prompt written notice to Lender
of any material litigation or governmental proceedings pending or threatened (in
writing) against Borrower, or the Mortgaged Property, other than personal injury
or other litigation which is covered by insurance, eviction matters with respect
to tenants or occupants (in which no counterclaims for material damages or
liabilities are made against Borrower), and matters related to enforcement of
building or zoning codes (as long as the Mortgaged Property is in material
compliance with such building and zoning codes).
(d) Environmental Remediation.
(i) If any investigation, site monitoring, cleanup, removal,
restoration or other remedial work of any kind or nature is required
pursuant to an order or directive of any Governmental Authority or under
any applicable Environmental Law, because of or in connection with the
current or future presence, suspected presence, Release or suspected
Release of a Hazardous Substance on, under or from any Mortgaged Property
or any portion thereof (collectively, the "Remedial Work"), Borrower shall
promptly commence and diligently prosecute to completion all such Remedial
Work, and shall conduct such Remedial Work in accordance with all
applicable Environmental Laws that impose legally binding obligations
governing such Remedial Work, including without limitation the National
Contingency Plan promulgated under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq.
("CERCLA"), if
77
applicable. In all events, such Remedial Work shall be commenced within
such period of time as required under any applicable Environmental Law. If
any fungus, mold, mildew or other biological agent is present at any
Mortgaged Property in a manner or at a level that is reasonably likely to
materially adversely affect the value or utility of such Mortgaged
Property or that poses a significant adverse health risk to an average
person, the Borrower shall promptly commence and diligently prosecute to
completion the remediation of such condition so as to eliminate the
reasonable likelihood of a material adverse effect or a significant
adverse health risk to an average person to the reasonable satisfaction of
the Lender or its servicer, which shall also constitute Remedial Work. In
all events, such Remedial Work shall be commenced within such period of
time as required under any applicable Environmental Law; provided,
however, that Borrower shall not be required to commence such Remedial
Work within the above specified time periods: (x) if prevented from doing
so by any Governmental Authority, (y) if commencing such Remedial Work
within such time periods would result in Borrower or such Remedial Work
violating any applicable Environmental Law or (z) if Borrower, at its
expense and after prior notice to Lender, is contesting by appropriate
legal, administrative or other proceedings conducted in good faith and
with due diligence the need to perform Remedial Work, the scope of any
Remedial Work, or any other legally contestable aspect of any Remedial
Work, as long as (1) Borrower is permitted by the applicable Environmental
Laws to delay performance of the Remedial Work pending such proceedings,
(2) neither the Mortgaged Property nor any part thereof or interest
therein shall be sold, forfeited or lost during such delay if Borrower
does not perform the Remedial Work being contested, and Borrower would
have the opportunity to do so, in the event of Borrower's failure to
prevail in the contest, (3) the Lenders would not, by virtue of such
permitted contest, be exposed to any risk of any civil liability for which
Borrower has not furnished additional security as provided in clause (4)
below, or to any risk of criminal liability, and neither the Mortgaged
Property nor any interest therein would be subject to the imposition of
any lien for which Borrower has not furnished additional security as
provided in clause (4) below, as a result of the failure to perform such
Remedial Work and (4) Borrower shall have furnished to the Lender
additional security in respect of the Remedial Work being contested and
the loss or damage that may result from Borrower's failure to prevail in
such contest in such amount as may be reasonably requested by the Lender.
(ii) Except for immediate response situations described in clause
(iii) below, if requested by Lender, all Remedial Work under clause (i)
above shall be performed by contractors, and under the supervision of a
consulting Engineer, each approved in advance by Lender which approval
shall not be unreasonably withheld or delayed. Borrower shall pay all
costs and expenses reasonably incurred in connection with such Remedial
Work. If Borrower does not timely commence and diligently prosecute to
completion the Remedial Work as provided in clause (i) above, Lender may
(but shall not be obligated to), upon 30 days prior written notice to
Borrower of its intention to do so, cause such Remedial Work to be
performed. Borrower shall pay or reimburse Lender on demand for all
reasonable expenses (including reasonable attorneys' fees and
disbursements, but excluding internal overhead, administrative and similar
costs of Lender) reasonably relating to and incurred by Lender in
connection with monitoring, reviewing or performing any Remedial Work in
accordance herewith.
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(iii) Borrower shall not commence any Remedial Work under clause (i)
above, nor enter into any settlement agreement, consent decree or other
legally binding obligation to resolve a material adverse claim without
providing notice to Lender as provided in Section 5.1(f). Notwithstanding
the foregoing, if the presence or threatened presence of Hazardous
Substances on, under, about or emanating from the Mortgaged Property poses
an immediate threat to the health, safety or welfare of any Person or the
environment, or is of such a nature that an immediate response is
necessary or required under applicable Environmental Law, Borrower may
initiate and perform such activities without providing advance notice to
Lender and complete all necessary Remedial Work. In such events, Borrower
shall notify Lender as soon as practicable and, in any event, within three
(3) Business Days, of any action taken.
(iv) In the event the Environmental Report recommends the
development of any operation and maintenance program(s) for any recognized
environmental condition at a Mortgaged Property (including, without
limitation, mold abatement and preventative maintenance and measures,
underground storage tanks asbestos and asbestos containing materials,
lead-based paints and lead in water supplies) (each individually, and
collectively, the "O & M Program"), Borrower shall develop each O & M
Program, as reasonably approved by Lender, and shall, during the term of
the Loan, comply in all material respects with the terms and conditions of
each O & M Program. Without limiting the foregoing, Borrower shall
continue the O&M Program currently in place at the Mortgaged Property
relating to mold abatement and preventative maintenance and measures, and
shall comply in all material respects therewith; Borrower represents,
warrants and covenants that a true, correct and complete copy of such mold
abatement and prevention O&M Program is attached hereto as Schedule 7.
(e) Environmental Matters: Inspection.
(i) Borrower shall not cause and shall use commercially reasonable
measures to prevent any other Person from causing any Hazardous Substances
to be present on or under or to emanate from the Mortgaged Property,
except under conditions permitted by applicable Environmental Laws (such
as cleaning and operating materials, fuels and lubricants, and other items
used in the ordinary course of business at the Mortgaged Property in
material compliance with and in amounts not in excess of that permitted
under applicable Environmental Laws) and, in the event that such
prohibited Hazardous Substances are present on, under or emanate from the
Mortgaged Property, or migrate onto or into the Mortgaged Property,
Borrower shall to the extent required by applicable Environmental Law
cause the removal or remediation of such Hazardous Substances, in
accordance with this Agreement and as required by applicable Environmental
Laws, either on its own behalf or by causing a tenant or other party
legally responsible therefor to perform such removal and remediation.
Borrower shall use commercially reasonable efforts to prevent, and to seek
the remediation of, any migration of Hazardous Substances onto or into the
Mortgaged Property from any adjoining property.
(ii) Upon reasonable prior written notice identifying the time,
place and scope of a proposed inspection, Lender shall have the right at
all reasonable times during normal business hours to enter upon and
inspect environmental conditions with respect to
79
all or any portion of any Mortgaged Property, provided that such
inspections shall not unreasonably interfere with the operation or the
tenants, customers, residents, occupants or other authorized users of any
Mortgaged Property and shall be appropriate in scope and location to the
proposed inspection. If Lender has reasonable grounds to suspect that
Remedial Work may be required, Lender shall notify Borrower and,
thereafter, may select a consulting Engineer to conduct and prepare
reports of such inspections (with reasonable prior written notice to
Borrower of the scope and location of such inspection prior to the
commencement of such inspection). Borrower shall be given a reasonable
opportunity to review any reports, data and other documents or materials
reviewed or prepared by the Engineer, and to submit comments and suggested
revisions or rebuttals to same before they are issued in final form. The
inspection rights granted to Lender in this Section 5.1(e) shall be in
addition to, and not in limitation of, any other inspection rights granted
to Lender in this Agreement, and shall expressly include the right (if
Lender reasonably suspects that Remedial Work may be required) to conduct
soil borings, establish ground water monitoring xxxxx and conduct other
customary environmental tests, assessments and audits to the extent such
activities are reasonably related to the scope of the suspected Remedial
Work.
(iii) Borrower agrees to bear and shall pay or reimburse Lender on
demand for all sums reasonably advanced and reasonable expenses incurred
(including reasonable attorneys' fees and disbursements, but excluding
internal overhead, administrative and similar costs of Lender) reasonably
relating to and incurred by Lender in connection with, the inspections and
reports described in this Section 5.1(e) (to the extent such inspections
and reports relate to any Mortgaged Property) in the following situations:
(x) If Lender has reasonable grounds to believe, at the time
any such inspection is ordered, that there exists an occurrence or
condition that could reasonably be expected to lead to a material
Environmental Claim;
(y) If any such inspection reveals an occurrence or condition
that is reasonably likely to lead to a material Environmental Claim
with respect to such Mortgaged Property; or
(z) If an Event of Default with respect to such Mortgaged
Property exists at the time any such inspection is ordered, and such
Event of Default relates to any representation, covenant or other
obligation pertaining to Hazardous Substances, Environmental Laws or
any other environmental matter.
(f) Environmental Notices. To the extent Borrower has actual notice
of any of the following, Borrower shall promptly provide notice to Lender of:
(i) a material Environmental Claim asserted by any Governmental
Authority against Borrower, any Affiliate or Borrower or with respect to
the Mortgaged Property with respect to any Hazardous Substance on, in,
under or emanating from any Mortgaged Property;
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(ii) any proceeding, investigation or inquiry commenced or
threatened in writing by any Governmental Authority, against Borrower, any
Affiliate of Borrower or with respect to any Mortgaged Property concerning
the presence, suspected presence, Release or threatened Release of
Hazardous Substances from or onto, in or under any property not owned by
Borrower (including, without limitation, proceedings under the CERCLA);
(iii) a material Environmental Claim asserted or threatened against
Borrower, against any other party occupying any Mortgaged Property or any
portion thereof which become known to Borrower or against any Mortgaged
Property;
(iv) the discovery by Borrower of a material occurrence or condition
involving Hazardous Substances and on any Mortgaged Property or on any
real property adjoining or in the vicinity of any Mortgaged Property
giving rise to an obligation of the Borrower to the Lender hereunder; and
(v) the commencement or completion of any Remedial Work required
pursuant to clause (d) above.
(g) Copies of Notices. Borrower shall transmit to Lender copies of
any citations, orders, notices or other material written communications received
from any Person and any notices, reports or other written communications
submitted to any Governmental Authority with respect to the matters described in
Section 5.1(f).
(h) Environmental Claims. Lender may join and participate in, as a
party with separate counsel, any legal or administrative proceeding or action
concerning the Mortgaged Property or any portion thereof under any applicable
Environmental Law, if, in Lender's reasonable judgment, such action or
proceeding would expose Lender to a material liability and a conflict of
interest exists which makes representation by counsel chosen by Borrower not
advisable; provided, however, that Lender shall not participate in day-to-day
decision making with respect to environmental compliance. Borrower shall pay or
reimburse Lender on demand for all reasonable sums advanced and reasonable
expenses incurred (including reasonable attorneys' fees and disbursements, but
excluding internal overhead, administrative and similar costs of Lender) by
Lender in connection with any such action or proceeding.
(i) Environmental Indemnification. Borrower shall indemnify,
reimburse, defend, and hold harmless Lender, and each of its respective parents,
subsidiaries, Affiliates, shareholders, directors, officers, employees,
representatives, agents, successors, assigns and attorneys (collectively, the
"Indemnified Parties") for, from, and against all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, costs and expenses
(including, without limitation, interest, penalties, reasonable attorneys' fees,
disbursements and expenses, and reasonable consultants' fees, disbursements and
expenses (but excluding internal overhead, administrative, lost opportunity and
similar costs of Lender)), asserted against, resulting to, imposed on, or
incurred by any Indemnified Party, directly or indirectly, in connection with
any of the following (except to the extent same are directly and solely caused
by the gross negligence or willful misconduct of any Indemnified Party and
except that any Indemnified Party shall not be indemnified against claims
resulting from actions taken or events
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occurring with respect to the Mortgaged Property after Lender forecloses its
Lien or security interest upon the Mortgaged Property or accepts a deed in lieu
of foreclosure or is a so-called "mortgagee-in-possession" unless and to the
extent such indemnification relates to any of the following which occurred while
Borrower owned the Mortgaged Property):
(i) events, circumstances, or conditions which form the reasonable
basis for an Environmental Claim;
(ii) any pollution or threat to human health or the environment
involving Hazardous Substances that is related in any way to Borrower's or
any previous owner's or operator's management, use, control, ownership or
operation of any Mortgaged Property, and whether occurring, existing or
arising prior to or from and after the date hereof, and whether or not the
pollution or threat to human health or the environment involving Hazardous
Substances is described in the Environmental Reports;
(iii) any Environmental Claim against any Person whose liability for
such Environmental Claim Borrower has assumed or retained either
contractually or by operation of law; or
(iv) the breach of any representation, warranty or covenant set
forth in Section 4.2(e) and Sections 5.1(d) through 5.1(i), inclusive.
The provisions of and undertakings and indemnification set forth in this Section
5.1(i) shall survive the satisfaction and payment of the Indebtedness and
termination of this Agreement.
(j) General Indemnity.
(i) Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties for, from and
against any and all claims, suits, liabilities (including, without
limitation, strict liabilities), administrative and judicial actions and
proceedings, obligations, debts, damages, losses, costs, expenses, fines,
penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement, and litigation costs, of whatever kind or nature and whether
or not incurred in connection with any judicial or administrative
proceedings (including, but not limited to, reasonable attorneys' fees and
other reasonable costs of defense) (the "Losses") imposed upon or incurred
by or asserted against any Indemnified Parties (except as to any
Indemnified Party to the extent same are directly and solely caused by the
gross negligence or willful misconduct of such Indemnified Party) and
directly or indirectly arising out of or in any way relating to any one or
more of the following:
(A) any breach by Borrower of obligations under, or material
misrepresentation contained in, this Agreement, the Note or any of
the other Loan Documents;
(B) any and all claims and demands whatsoever which may be
asserted against Lender by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms,
covenants, or agreements contained in the
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License Agreement or the Tall Pines Agreement prior to entry on the
Mortgaged Property by Lender after an Event of Default;
(C) any and all lawful action that may be taken and is taken
by the Lender in connection with the enforcement of the provisions
of this Agreement, the Note or any of the other Loan Documents,
whether or not suit is filed in connection with same, or in
connection with Borrower or any Affiliate of Borrower becoming a
party to a voluntary or involuntary federal or state bankruptcy,
insolvency or similar proceeding;
(D) any accident, injury to or death of persons or loss of or
damage to property occurring in, on or about any Mortgaged Property
or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways;
(E) any use, nonuse or condition in, on or about the Mortgaged
Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways;
(F) any failure of the Mortgaged Property to be in compliance
with any Legal Requirement;
(G) performance of any labor or services or the furnishing of
any materials or other property in respect of the Mortgaged Property
or any part thereof pursuant to provisions of this Agreement; and
(H) the failure of Borrower to file timely with the Internal
Revenue Service an accurate Form 0000-X, Xxxxxxxxx for Recipients of
Proceeds from Real Estate, Broker and Barter Exchange Transactions,
which may be required in connection with this Agreement.
Any amounts payable to an Indemnified Party by reason of the application of this
Section 5.1(j)(i) shall become due and payable ten (10) days after written
demand and shall bear interest at the Default Rate from the tenth (10th) day
after demand until paid.
(ii) Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and
against any and all Losses imposed upon or incurred by or asserted against
any of the Indemnified Parties and directly or indirectly arising out of
or in any way relating to any tax on the making and/or recording of this
Agreement, the Note or any of the other Loan Documents.
(iii) Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and
against any and all Losses (including, without limitation, reasonable
attorneys' fees and costs) that the Indemnified Parties may incur,
directly or indirectly, as a result of a default under Borrower's
covenants with respect to ERISA and employee benefits plans contained
herein, including, without limitation, any costs or expenses incurred in
the investigation, defense, and settlement of Losses incurred in
correcting any prohibited transaction or in the sale of
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a prohibited loan, and in obtaining any individual prohibited transaction
exemption under ERISA that may be required, in the Lender's reasonable
discretion).
(iv) Promptly after receipt by an Indemnified Party under this
Section 5.1(j) of notice of the making of any claim or the commencement of
any action, such Indemnified Party shall, if a claim in respect thereof is
to be made by such Indemnified Party against Borrower under this Section
5.1(j), notify Borrower in writing. In case any such claim is made or
action is brought against any Indemnified Party and such Indemnified Party
seeks or intends to seek indemnity from Borrower, Borrower will be
entitled to participate in, and, to the extent that it may wish, to assume
the defense thereof with counsel reasonably satisfactory to the
Indemnified Party; and, upon receipt of notice from Borrower to such
Indemnified Party of its election so to assume the defense of such claim
or action and only upon approval by the Indemnified Party of such counsel
(such approval not to be unreasonably withheld or delayed), Borrower will
not be liable to such Indemnified Party under this Section 5.1(j) for any
legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof. Notwithstanding the preceding
sentence, each Indemnified Party will be entitled to employ counsel
separate from such counsel for Borrower and from any other party in such
action if such Indemnified Party reasonably determines that a conflict of
interest exists which makes representation by counsel chosen by Borrower
not advisable. In such event, Borrower shall pay the reasonable fees and
disbursements of such separate counsel. Borrower shall not, without the
prior written consent of an Indemnified Party, which consent shall not be
unreasonably withheld or delayed, voluntarily settle or consent to the
entry of any judgment or otherwise enter into any legally binding
obligation to resolve a material adverse claim with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Indemnified
Party is an actual or potential party to such claim or action) unless such
settlement or consent includes an unconditional release of each
Indemnified Party from all liability arising out of such claim, action,
suit or proceeding. Each Indemnified Party shall not enter into a
settlement of or consent to the entry of any judgment with respect to any
action, claim, suit or proceeding as to which an Indemnified Party would
be entitled to indemnification hereunder without the prior written consent
of Borrower.
The provisions of and undertakings and indemnification set forth in this Section
5.1(j) shall survive the satisfaction and payment of the Indebtedness and
termination of this Agreement.
(k) Access to Mortgaged Property. Borrower shall permit agents,
representatives and employees of Lender to inspect the Mortgaged Property or any
part thereof at such reasonable times as may be requested by Lender upon
reasonable advance written notice (except during an Event of Default), subject,
however, to the rights of Borrower, of the tenants and of other authorized users
of the Mortgaged Property.
(l) Notice of Default. Borrower shall promptly advise Lender in
writing of any change in Borrower's condition, financial or otherwise, of which
Borrower is aware, that is reasonably likely to have a Material Adverse Effect,
or of the occurrence of any Default or Event of Default.
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(m) Cooperate in Legal Proceedings. Except with respect to any claim
by Borrower or the Guarantor against Lender, Borrower shall reasonably cooperate
with Lender with respect to any proceedings before any Governmental Authority
that are reasonably likely to in any way materially affect the rights of Lender
hereunder or any rights obtained by Lender under any of the Loan Documents and,
in connection therewith, shall not prohibit Lender, at its election, from
participating in any such proceedings.
(n) Perform Loan Documents. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions required to be
observed, performed or satisfied by it, and shall pay when due all costs, fees
and expenses required to be paid by it, under the Loan Documents.
(o) Insurance Benefits. Borrower shall reasonably cooperate with
Lender in obtaining for Lender the benefits of any Insurance Proceeds lawfully
or equitably payable to Borrower or Lender in connection with any Mortgaged
Property. Lender shall be reimbursed for any expenses reasonably incurred in
connection therewith (including reasonable attorneys' fees and disbursements,
but excluding internal overhead, administrative and similar costs of Lender) out
of such Insurance Proceeds, all as more specifically provided in this Agreement.
(p) Further Assurances. Borrower shall, at Borrower's sole cost and
expense:
(i) upon Lender's reasonable request therefor given from time to
time, pay for (a) reports of UCC, tax lien, judgment and litigation
searches with respect to Borrower, and (b) searches of title to the
Mortgaged Property, each such search to be conducted by search firms
designated by Lender in each of the locations designated by Lender;
(ii) furnish to Lender all instruments, documents, certificates,
title and other insurance reports and agreements, and each and every other
document, certificate, agreement and instrument required to be furnished
by Borrower pursuant to the terms of the Loan Documents;
(iii) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts
necessary, to evidence, preserve and/or protect the Collateral at any time
securing or intended to secure the Note, as Lender may reasonably require
(including, without limitation, tenant estoppel certificates, an amended
or replacement Mortgage, UCC financing statements or Collateral Security
Instruments), provided that none of the foregoing shall materially
increase Borrower's obligations or material reduce Borrower's rights under
this Agreement or any other Loan Document; and
(iv) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out
of the intents and purposes of this Agreement and the other Loan
Documents, as Lender shall reasonably require from time to time.
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(q) Management of Mortgaged Property.
(i) The Mortgaged Property shall be managed at all times by the
current Manager or another manager reasonably satisfactory to Lender,
pursuant to a Management Agreement reasonably approved in writing by
Lender. Manager may be an Affiliate of Borrower, provided that: (a) the
terms and conditions of such Manager's engagement are at arm's length,
reasonable, competitive and customary in the applicable marketplace; and
(b) Lender has approved such Manager and such terms and the related
Management Agreement. Both the Manager and the Management Agreement, dated
as of the date hereof, between the Borrower and the Manager are approved
by Lender. Borrower shall cause the Manager of the Mortgaged Property to
agree that such Manager's Management Agreement is subject and subordinate
in all respects to the Indebtedness and to the Lien of the Mortgage as and
to the extent set forth in the Subordination of Management Agreement. A
Management Agreement may be terminated or assigned (1) by Borrower at any
time in accordance with the provisions of such Management Agreement or
otherwise so long as a successor or assignee Manager approved by Lender
shall have been appointed and such successor Manager has (i) entered into
(or assumed) a Management Agreement in form and substance approved by
Lender, and (ii) has executed and delivered a Manager's Subordination to
Lender, and (2) with respect to a termination only, by Lender upon thirty
(30) days' prior written notice to Borrower and the Manager upon the
occurrence and continuation of an Event of Default. Notwithstanding the
foregoing, any successor manager selected hereunder by Lender or Borrower
to manage the Mortgaged Property shall be a reputable management company
having substantial experience in the management of real property of a
similar type, size and quality in the state in which the Mortgaged
Property is located. Borrower acknowledges and agrees that any consent or
approval requested of Lender under this Section may be conditioned by
Lender, at Lender's discretion, upon Borrower first obtaining a Rating
Confirmation with respect to such change in management, and Lender shall
not be deemed to be acting unreasonably in requiring such a Rating
Confirmation. Borrower further covenants and agrees that any manager of
Mortgaged Property shall at all times while any Indebtedness is
outstanding maintain worker's compensation insurance as required by
Governmental Authorities.
(ii) Borrower further covenants and agrees that the Mortgaged
Property shall be operated pursuant to the Management Agreement and that
Borrower shall: (w) promptly perform and/or observe all of the material
covenants and agreements required to be performed and observed by it under
the Management Agreement and do all things reasonably necessary to
preserve and to keep unimpaired its material rights thereunder; (x)
promptly notify Lender of any material default under the Management
Agreement of which it is aware; (y) promptly deliver to Lender a copy of
each financial statement, business plan, capital expenditures plan, notice
and report received by it under the Management Agreement, including, but
not limited to, financial statements; and (z) promptly enforce the
performance and observance of the material covenants and agreements
required to be performed and/or observed by the Manager under the
Management Agreement.
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(r) Financial Reporting.
(i) Borrower shall keep and maintain or shall cause to be kept and
maintained on a Fiscal Year basis in accordance with GAAP consistently
applied, books, records and accounts reflecting in reasonable detail all
of the financial affairs of Borrower and all items of income and expense
in connection with the operation of the Mortgaged Property and ownership
of the Mortgaged Property and in connection with any services, equipment
or furnishings provided in connection with the operation of the Mortgaged
Property, whether such income or expense may be realized by Borrower or by
any other Person whatsoever. Lender shall have the right from time to time
at all times during normal business hours upon reasonable prior written
notice to Borrower to examine such books, records and accounts at the
office of Borrower or other Person maintaining such books, records and
accounts and to make such copies or extracts thereof as Lender shall
desire. Borrower shall pay any reasonable costs and expenses incurred by
Lender to examine Borrower's accounting records, as Lender shall
reasonably determine to be necessary or appropriate in the protection of
Lender's interest.
(ii) Borrower shall furnish to Lender annually, within ninety (90)
days following the end of each Fiscal Year, a complete copy of Borrower's
and Guarantor's financial statements, each audited by a "Big Four"
accounting firm or such other Independent certified public accountant
acceptable to Lender in accordance with GAAP consistently applied covering
Borrower's and Guarantor's respective financial position and results of
operations, for such Fiscal Year and containing a statement of revenues
and expenses, a statement of assets and liabilities and a statement of
Borrower's or Guarantor's (as applicable) equity, all of which shall be in
form and substance reasonably acceptable to Lender. Lender shall have the
right from time to time to review and consult with respect to the auditing
procedures used in the preparation of such annual financial statements.
Together with Borrower's and Guarantors' annual financial statements,
Borrower shall furnish, and cause Guarantor to furnish, to Lender an
Officer's Certificate certifying as of the date thereof (x) to Borrower's
Actual Knowledge, that the annual financial statements present fairly in
all material respects the results of operations and financial condition of
Borrower or Guarantor, as applicable, all in accordance with GAAP
consistently applied, and (y) whether there exists an Event of Default or
Default, and if such Event of Default or Default exists, the nature
thereof, the period of time it has existed and the action then being taken
to remedy same. Lender acknowledges that KC Borrower and TC Borrower may
furnish a single financial statement and that Great Wolf and GWR Operating
Partnership, L.L.L.P. may file financial statements on a consolidated
basis, provided, however, that any such consolidated financial statement
filed by Great Wolf and GWR Operating Partnership, L.L.L.P. shall contain
a note indicating that the separate assets and liabilities of the Borrower
are neither available to pay the debts of the consolidated entity nor
constitute obligations of the consolidated entity.
(iii) Borrower shall furnish to Lender, within forty-five (45) days
following the end of each Fiscal Year quarter true, complete and correct
copies of quarterly unaudited financial statements (including statements
of cash flow) prepared in accordance with GAAP with respect to Borrower
and Guarantor for the portion of the Fiscal Year then ended.
87
(iv) No later than thirty-five (35) days following the end of each
calendar month, Borrower shall prepare and deliver to Lender and its
servicer a statement (each a "Monthly Statement") in form and substance
reasonably satisfactory to Lender, setting forth with respect to the
Mortgaged Property (which shall be prepared for each individual Mortgaged
Property and, on a consolidated basis, for all the Mortgaged Property),
(A) a cash flow report detailing Gross Revenues, Operating
Revenues and the Operating Expenses, in each case on a trailing
twelve month basis;
(B) revenue reports, an occupancy report including the
occupancy percentage, an average daily room rate, and RevPar for the
applicable month and an advance booking report, and, in all cases,
any other information as is reasonably required by Lender; and
(C) monthly and year-to-date operating statements prepared for
such calendar month, each of which shall include an itemization of
actual (not pro forma) capital expenditures and FF&E Costs during
the applicable period, and a comparison on a year-to-date basis to
budget and prior year, for each Mortgaged Property and Borrower.
(v) No later than forty-five (45) days following the end of each of
the months of December, March, June, and September, Borrower shall prepare
and deliver to Lender and its servicer a statement (each a "Quarterly
Statement") in form and substance reasonably satisfactory to Lender,
setting forth with respect to the Mortgaged Property (which shall be
prepared for each individual Mortgaged Property and, on a consolidated
basis, for all the Mortgaged Property),
(A) a property balance sheet for such month;
(B) quarterly and year-to-date operating statements, each of
which shall include an itemization of budgeted and actual (not pro
forma) capital expenditures and FF&E Costs during the applicable
period; and
(C) a quarterly and year-to-date comparison of the budgeted
income and expenses with the actual income and expenses for such
quarter and year to date, together with if requested by Lender, a
detailed explanation of any variances between budgeted and actual
amounts that are in excess of five percent (5%) for each line item
therein.
(vi) Borrower shall furnish to Lender, within fifteen (15) Business
Days after request, such further information with respect to the operation
of the Mortgaged Property and the financial affairs of Borrower as may be
reasonably requested by Lender, including all business plans prepared for
Borrower.
(vii) Borrower shall furnish to Lender, within ten (10) Business
Days after request, such further information regarding any Plan or
Multiemployer Plan and any reports or other information required to be
filed under ERISA as may be reasonably requested by Lender in writing.
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(viii) At least fifteen (15) days prior to the end of each of
Borrower's Fiscal Years, Borrower shall submit or cause to be submitted to
Lender an Operating Budget for Gross Revenues, Property Expenses, Capital
Improvement Costs and FF&E Costs for the next Fiscal Year for the
Mortgaged Property. If at the time such Operating Budget is submitted to
Lender the Debt Service Coverage Test is applicable and is not satisfied,
such Operating Budget shall be subject to the Lender's approval, such
approval not to be unreasonably withheld or delayed. Such Operating Budget
may allow for a five percent (5%) line item variance. If the Lender has
the right to approve a proposed Operating Budget as described above, then
until so approved by Lender for the subsequent Fiscal Year, the Operating
Budget approved by Lender for the preceding Fiscal Year shall remain in
effect for purposes of Section 2.12 and Section 2.13; provided, that for
so long as such prior Operating Budget remains in effect, amounts set
forth in the prior Operating Budget with respect to Property Expenses
shall be deemed increased with respect to actual increases in Basic
Carrying Costs and non-discretionary utility expenditures and shall be
deemed increased with regard to discretionary items on a percentage basis
by an amount equal to the greater of (x) actual increases then known to
Borrower and (y) the increase in the Consumer Price Index (expressed as
percentage) as measured over the calendar year that the prior Operating
Budget was in effect.
(ix) Together with the financial statements, operating statements
and other documents and information provided to Lender by or on behalf of
Borrower under this Section, Borrower also shall deliver to Lender a
certification in form and substance reasonably satisfactory to Lender,
executed on behalf of Borrower by its chief executive officer or chief
financial officer or treasurer (provided that all non-monthly financial
statements shall be executed by Borrower's chief executive officer or
chief financial officer) stating that, to such officer's knowledge, such
financial statements, operating statements and other documents and
information are true and complete in all material respects.
(s) Operation of Mortgaged Property. Borrower shall cause the
operation of the Mortgaged Property to be conducted at all times in a manner
consistent with at least the level of operation of such Mortgaged Property as of
the Closing Date, including, without limitation, the following:
(i) to maintain or cause to be maintained the standard of the
Mortgaged Property at all times at a level not lower than that maintained
by prudent managers of similar facilities or land in the region where the
Mortgaged Property is located;
(ii) to operate or cause to be operated the Mortgaged Property in a
prudent manner in compliance, other than compliance which is not
reasonably likely to result in a Material Adverse Effect, with applicable
Legal Requirements and Insurance Requirements relating thereto and, except
to the extent failure to maintain the same is not reasonably likely to
result in a Material Adverse Effect, maintain or cause to be maintained
all licenses, Permits and any other agreements necessary for the continued
use and operation of the Mortgaged Property (other than liquor permits,
which Borrower shall not be obligated to maintain or cause to be
maintained); and
89
(iii) to maintain or cause to be maintained sufficient Inventory and
Equipment of types and quantities at the Mortgaged Property to enable
Borrower to operate the Mortgaged Property.
(t) Material Agreements. Borrower shall not enter into or become
obligated under any Material Agreement pertaining to the Mortgaged Property,
without the prior written consent of Lender, which consent shall not be
unreasonably withheld or delayed.
Borrower shall not amend or modify in any material respect or terminate, or
cause or permit to be amended or modified in any material respect or terminated,
the License Agreement or the Tall Pines Agreement (as such Tall Pines Agreement
relates to or benefits the Mortgaged Property) without the prior written consent
of Lender, which consent shall not be unreasonably withheld or delayed. Borrower
shall keep and maintain the License Agreement and the Tall Pines Agreement in
full force and effect, and enforce or cause to be enforced the obligations of
the Licensor under the License Agreement and Tall Pines under the Tall Pines
Agreement, to the end that Borrower, and Lender as its assignee, may enjoy all
the rights granted under the License Agreement and the Tall Pines Agreement.
(u) ERISA. Borrower shall deliver to Lender as soon as possible, and
in any event within ten days after Borrower knows or has reason to know that any
of the events or conditions specified below with respect to any Plan or
Multiemployer Plan has occurred or exists, an Officer's Certificate setting
forth details respecting such event or condition and the action, if any, that
Borrower or its ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to PBGC by
Borrower or an ERISA Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA and
the regulations issued thereunder, with respect to a Plan, as to which
PBGC has not by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within thirty (30) days of the occurrence of
such event (provided that a failure to meet the minimum funding standard
of Section 412 of the Code or Section 302 of ERISA, including, without
limitation, the failure to make on or before its due date a required
installment under Section 412(m) of the Code or Section 302(e) of ERISA,
shall be a reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code); and any request for a waiver
under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041(c) of ERISA of a notice of
intent to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by Borrower or any ERISA Affiliate of
Borrower of a notice from a Multiemployer Plan that such action has been
taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer Plan by
Borrower or any ERISA Affiliate of Borrower that results in material
liability under
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Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt by
Borrower or any ERISA Affiliate of Borrower of notice from a Multiemployer
Plan that it is in reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against Borrower or any ERISA Affiliate of Borrower to
enforce Section 515 of ERISA, which proceeding is not dismissed within
thirty (30) days;
(vi) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, would result in
the loss of tax-exempt status of the trust of which such Plan is a part if
Borrower or an ERISA Affiliate of Borrower fails to timely provide
security to the Plan in accordance with the provisions of said Sections;
and
(vii) the imposition of a lien or a security interest on Borrower in
connection with a Plan.
(v) Intentionally Omitted.
(w) Secondary Market Transaction. Borrower acknowledges that Lender
and its successors and assigns may (i) sell the Loan to one or more investors as
a whole loan, (ii) participate the Loan to one or more investors, (iii) deposit
the Loan with a trust, which trust may sell certificates to investors evidencing
an ownership interest in the trust assets, or (iv) otherwise sell the Loan or
interests therein to investors (the transactions referred to in clauses (i)
through (iv) above are hereinafter each referred to as a "Secondary Market
Transaction"). Borrower shall cooperate with Lender in attempting to effect or
effecting any such Secondary Market Transaction and shall cooperate in
attempting to implement or implementing all requirements imposed by any Rating
Agency involved in any Secondary Market Transaction, including but not limited
to,
(i) providing Lender an estoppel certificate and such information,
legal opinions and documents (including updated non-consolidation
opinions) relating to Borrower, the Guarantor, the Mortgaged Property and
any tenants of the Mortgaged Property as Lender or the Rating Agencies or
other Interested Parties (as defined below), may reasonably request in
connection with such Secondary Market Transaction, including, without
limitation, updated financial information, appraisals, market studies,
environmental reviews (Phase I's and, if appropriate, Phase II's),
Mortgaged Property condition reports and other due diligence
investigations together with appropriate verification of such updated
information and reports through letters of auditors and consultants, as of
the closing date of the Secondary Market Transaction,
(ii) amending the Loan Documents and Organizational Agreement of
Borrower, updating and/or restating officer's certificates, title
insurance and other closing items, and providing updated certificates,
representations and warranties in Loan Documents and such additional
representations and warranties as may be required by
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Lender or the Rating Agencies (provided, however, that Borrower shall only
be required to provide such updated or additional certificates,
representations and warranties to the extent the same are then true and
correct),
(iii) participating in bank, investors and Rating Agencies' meetings
if requested by Lender,
(iv) upon Lender's request, amending the Loan Documents (and
updating and/or restating officer's certificates (to the extent the same
are then true and correct), title insurance and other closing items in
connection therewith) to divide the Loan into a first and a second
mortgage loan, or into a one or more loans secured by mortgages and by
ownership interests in Borrower in whatever proportion Lender determines,
which separated loans may have different interest rates and amortization
schedules (but with aggregated financial terms which are equivalent to
that of the Loan prior to such separation) and thereafter to engage in
separate Secondary Market Transactions with respect to all or any part of
the indebtedness and loan documentation, and
(v) reviewing the offering documents relating to any Secondary
Market Transaction to ensure that all information concerning Borrower, the
Guarantor, the Mortgaged Property, and the Loan is correct, and certifying
to the accuracy thereof.
Lender shall be permitted to share all such information with the investment
banking firms, Rating Agencies, accounting firms, law firms and other
third-party advisory firms and trustees, purchasers, transferees, assignees,
trustees, servicers and actual or potential investors involved with the Loan and
the Loan Documents or the applicable Secondary Market Transaction (collectively,
"Interested Parties"). Lender and all of the aforesaid Interested Parties shall
be entitled to rely on the information supplied by, or on behalf of, Borrower.
Lender may publicize the existence of the Loan in connection with its marketing
for a Secondary Market Transaction or otherwise as part of its business
development. Borrower shall provide such reasonable access to the Mortgaged
Property and personnel of the Manager and of Borrower's constituent members and
the business and operations of all of the foregoing as Lender or other
Interested Parties may request in connection with any such Secondary Market
Transaction, provided that such access shall not unreasonably interfere with the
operation or the tenants, customers, residents, occupants or other authorized
users of any Mortgaged Property. Borrower understands that any such information
may be incorporated into any offering circular, prospectus, prospectus
supplement, private placement memorandum or other offering documents for any
Secondary Market Transaction. Without limiting the foregoing, Borrower and
Guarantor shall provide in connection with each of (i) a preliminary and a final
private placement memorandum or (ii) a preliminary and final prospectus or
prospectus supplement, as applicable (the documents referred to in the foregoing
clauses (i) and (ii), collectively, the "Disclosure Documents"), an agreement
certifying that Borrower and Guarantor have examined such Disclosure Documents
specified by Lender and that each such Disclosure Document, as it relates to
Borrower, Guarantor, any Affiliates, the Mortgaged Property and Manager, does
not, to the knowledge of Borrower and Guarantor, contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading (a "Disclosure Certificate"), provided, that Borrower and
Guarantor shall be given a five (5) Business Day period to review and comment on
each
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Disclosure Document prior to the delivery of any such Disclosure Certificate.
Borrower and Guarantor shall indemnify, defend, protect and hold harmless
Lender, its Affiliates, directors, employees, agents and each Person, if any,
who controls Lender or any such Affiliate within the meaning of Section 15 of
the Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934,
and any other placement agent or underwriter with respect to any Securitization
or Secondary Market Transaction from and against any losses, claims, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) that arise out of or are based upon any
untrue statement of any material fact contained in any Disclosure Certificate or
other information or documents so furnished by Borrower, Guarantor or their
Affiliates or in any representation or warranty of any Borrower contained herein
or in the other Loan Documents or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated in such
information or necessary in order to make the statements in such information not
materially misleading, provided Borrower, Guarantor or their Affiliates had
Actual Knowledge of such untrue statement or omission. In any Secondary Market
Transaction, Lender may transfer its obligations under this Loan Agreement and
under the other Loan Documents (or may transfer the portion thereof
corresponding to the transferred portion of the Indebtedness), and thereafter
Lender shall be relieved of any obligations hereunder and under the other Loan
Documents arising after the date of said transfer with respect to the
transferred interest. Each transferee investor shall become a "Lender"
hereunder. The holders from time to time of the Loan and/or any other interest
of the "Lender" under this Loan Agreement and the other Loan Documents may from
time to time enter into one or more co-lender or similar agreements in their
discretion. Borrower acknowledges and agrees that such agreements, as the same
may from time to time be amended, modified or restated, may govern the exercise
of the powers and discretionary authority of the Lender hereunder and under the
other Loan Documents, but Borrower shall be entitled to rely upon any actions
taken by Lender or the designated servicer(s) or agent(s) for Lender, whether or
not within the scope of its power and authority under such other agreements.
All costs and expenses in connection with any Secondary Market Transaction
shall be borne by Lender, including without limitation any costs and expenses
incurred by Borrower or any Guarantor in cooperating with Lender in connection
with any Secondary Market Transaction or performing any of their respective
undertakings and covenants (other than any indemnification obligation) under
this Agreement or any other Loan Document in connection with any Secondary
Market Transaction. No agreement or other document required from Borrower in
connection with any Secondary Market Transaction shall serve to materially
increase Borrower's obligations under this Agreement or any other Loan Document
or materially reduce Borrower's rights under this Agreement or any other Loan
Document; provided, however, that Borrower shall pay the costs and expenses of
Borrower's counsel in the event Borrower engages counsel in connection with any
Secondary Market Transaction or in responding to Lender's requests for
cooperation hereunder.
Notwithstanding any provision of this Agreement to the contrary, Borrower
shall not be obligated to agree to any modification of a Loan Document or any
Borrower Organizational Agreements that would materially and adversely affect
Borrower or Guarantor or that would increase the interest rate or interest
payments (including any changes in the calculation of yield maintenance premiums
or instances in which such yield maintenance premiums are payable), increase the
rate of amortization, shorten the Maturity Date, increase the amounts of escrows
and
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reserves, increase the defeasance amounts, alter in any material way the
transfer restrictions relating to direct or indirect interests in Borrower or
the Mortgaged Property or affect the limitations on recourse against Borrower,
Guarantor or their Affiliates set forth in this Agreement or the other Loan
Documents, change the outstanding principal balance of the Loan (provided the
Loan may be divided into components as set forth in this Agreement), modify the
frequency of deposits into or distributions from any reserves or escrows, expand
the scope of authority of any independent directors or managers of Borrower or
any of its Affiliates, or alter Borrower's rights to make distributions to its
partners or members, materially alter Borrower's rights with respect to
prepayments or defeasance of the Notes, confer additional rights on the Lender
in respect of management and license agreements or otherwise result in a
material adverse change to Borrower or Guarantor in the terms of the
transaction.
(x) Insurance.
(i) Borrower, at its sole cost and expense, shall keep the
Improvements and Equipment insured (including, but not limited to, any
period of renovation, alteration and/or construction) during the term of
the Loan with the coverage and in the amounts required under this
Agreement for the mutual benefit of Borrower and Lender against loss or
damage by fire, lightning, wind and such other perils as are customarily
included in a standard "all-risk" or "special cause of loss" form and
against loss or damage by other risks and hazards covered by a standard
extended coverage insurance policy (including, without limitation, fire,
lightning, hail, hurricane, windstorm, tidal wave, explosion, acts of
terrorism, riot and civil commotion, vandalism, malicious mischief,
strike, water damage, sprinkler leakage, collapse, burglary, theft, mold
and microbial matter coverage arising as a result of covered perils under
the standard "all risk" policy and such other coverages as may be
reasonably required by Lender on the special form (formerly known as an
all risk form)). Such insurance shall be in an amount (i) equal to at
least the greater of then full replacement cost of the Improvements and
Equipment (exclusive of the cost of foundations and footings), without
deduction for physical depreciation and the outstanding Principal
Indebtedness, and (ii) such that the insurer would not deem Borrower a
co-insurer under said policies. The policies of insurance carried in
accordance with this Section 5.1(x) shall be paid on or prior to not less
than ten (10) days in advance of the due date thereof and shall contain
the "Replacement Cost Endorsement" with a waiver of depreciation. If
terrorism coverage is excluded on an "all-risk" basis, then Borrower shall
obtain coverage for terrorism and similar acts in the stand alone
terrorism market.
(ii) Borrower, at its sole cost and expense, for the mutual benefit
of Borrower and Lender, shall also obtain and maintain or cause to be
obtained and maintained during the entire term of the Loan the following
policies of insurance:
(A) flood insurance, if any part of the Mortgaged Property is
located in an area identified by the Federal Emergency Management
Agency as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance
Act of 1968, the Flood Disaster Protection Act of 1973 or the
National Flood Insurance Reform Act of 1994 (and any amendment or
successor act thereto) in an amount at least equal to the
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maximum limit of coverage available with respect to the Improvements
and Equipment under said Act;
(B) Comprehensive General Liability or Commercial General
Liability insurance, including a broad form comprehensive general
liability endorsement and coverage for broad form property damage,
contractual damages, personal injuries (including death resulting
therefrom), a liquor liability endorsement, and (i) so-called
"dramshop" insurance or other liability insurance required in
connection with the sale of alcoholic beverages and (ii) motor
vehicle liability coverage for all owned and non-owned vehicles,
including rented and leased vehicles, each containing minimum limits
of liability of $500,000 for both injury to or death of a person and
for property damage per occurrence and $2 million in the aggregate
for the Mortgaged Property and all other property owned by
Affiliates of Borrower, and such other liability insurance
reasonably requested by Lender; in addition, at least $50 million
excess and/or umbrella liability insurance shall be obtained and
maintained for any and all claims, including all legal liability
imposed upon Borrower and all court costs and attorneys' fees
incurred in connection with the ownership, operation and maintenance
of the Mortgaged Property and at the option of Borrower one or more
other properties owned by Affiliates of Borrower;
(C) business interruption insurance in an amount equal to the
estimated gross revenues from operations at the Mortgaged Property,
such insurance to cover losses for a period of the longer of (x)
eighteen (18) months after the date of the fire or casualty in
question, or (y) the period from the time of loss until all repairs
are fully completed with reasonable diligence and dispatch, plus an
extended period of indemnity commencing at the time repairs are
completed for a period of not less than 365 days and to be increased
from time to time during the term of the Loan if, and when, the
gross revenues from the Mortgaged Property materially increase or
decrease, as applicable;
(D) insurance against loss or damage from (x) leakage of
sprinkler systems and (y) explosion of steam boilers, air
conditioning equipment, high pressure piping, machinery and
equipment, pressure vessels or similar apparatus now or hereafter
installed in the Improvements (without exclusion for explosions),
covering all boilers or other pressure vessels, machinery and
equipment located in, on, or about the Improvements; coverage is
required in an amount at least equal to the full replacement cost of
such equipment and the building or buildings housing same and shall
extend to electrical equipment, sprinkler systems, heating and air
conditioning equipment, refrigeration equipment and piping;
(E) worker's compensation insurance coverage (in amounts not
less than the statutory minimums for all persons employed by
Borrower or its tenants at the Mortgaged Property and in compliance
with all other requirements of applicable local, state and federal
law) and "Employers Liability" insurance in amounts not less than
required by statute;
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(F) blanket crime and fidelity bond insurance coverage and
insurance against dishonest or fraudulent acts committed by
Borrower's or Manager's personnel, in amounts and deductibles
reasonably satisfactory to Lender and in no event less than similar
insurance maintained or required by prudent institutional owners of
properties similar in type, location and quality as the Mortgaged
Property;
(G) during any period of repair or restoration, builder's "all
risk" insurance in an amount equal to not less than the full
insurable value of the Mortgaged Property against such risks
(including, without limitation, fire and extended coverage and
collapse of the Improvements to agreed limits) as Lender may
request, in form and substance acceptable to Lender;
(H) ordinance or law coverage to compensate for the cost of
demolition, increased cost of construction, and loss to any
undamaged portions of the Improvements, if the current use of the
Mortgaged Property or the Improvements themselves are or become
"nonconforming" pursuant to the applicable zoning regulations or
full rebuildability following casualty is not otherwise permitted
under such zoning regulations;
(I) if required by Lender as a result of any Mortgaged
Property being located in an area with a high degree of seismic
activity, earthquake damage insurance in an amount and form
acceptable to Lender;
(J) such other insurance as may from time to time be
reasonably required by Lender in order to protect its interests with
respect to the Loan and the Mortgaged Property and to conform such
requirements to then current standards for a Secondary Market
Transaction.
(iii) All policies of insurance (the "Policies") required pursuant
to this Section 5.1(x):
(A) shall be issued by (1) an insurer approved by Lender which
has a claims paying ability rating of not less than "A" (or the
equivalent) by Rating Agencies satisfactory to Lender (one of which
shall be Standard & Poor's Ratings Group) and A:VIII or better as to
claims paying ability by AM Best,
(B) shall name Lender as an additional insured and contain a
standard noncontributory mortgagee clause and a Lender's Loss
Payable Endorsement, or their equivalents, naming Lender (and/or
such other party as may be designated by Lender) as the party to
which all payments made by such insurance company shall be paid,
(C) shall be maintained throughout the term of the Loan
without cost to Lender,
(D) shall contain such provisions as Lender deems reasonably
necessary or desirable to protect its interest (including, without
limitation,
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endorsements providing that neither Borrower, Lender nor any other party
shall be a co-insurer under said Policies and that Lender shall receive at
least thirty (30) days prior written notice of any modification, reduction
or cancellation),
(E) shall contain a waiver of subrogation against Lender,
(F) shall be for a term of not less than one year,
(G) shall provide for claims to be made on an occurrence basis,
(H) shall contain an agreed value clause updated annually (if the
amount of coverage under such policy is based upon the replacement cost of
the Mortgaged Property),
(I) shall designate Lender as "mortgagee and loss payee" (except
general public liability and excess liability, as to which Lender shall be
named as additional insured),
(J) shall be issued by an insurer licensed in the state in which the
Mortgaged Property is located,
(K) shall provide that Lender may, but shall not be obligated to,
make premium payments to prevent any cancellation, endorsement, alteration
or reissuance, and such payments shall be accepted by the insurer to
prevent same, and
(L) shall be reasonably satisfactory in form and substance to Lender
and reasonably approved by Lender as to amounts, form, risk coverage,
deductibles, loss payees and insureds to the extent not otherwise
specified in this Section 5.1(x). All property damage insurance policies
(except for flood and earthquake policies) must automatically reinstate
after each loss.
Copies of said Policies, certified as true and correct by Borrower, or insurance
certificates thereof, shall be delivered to Lender. Not later than ten (10) days
prior to the expiration date of each of the Policies, Borrower shall deliver to
Lender satisfactory evidence of the renewal of each Policy. The insurance
coverage required under this Section 5.1(x) may be effected under a blanket
policy or policies covering the Mortgaged Property and other property and assets
not constituting a part of the Collateral; provided that any such blanket policy
shall provide at least the same amount and form of protection as would a
separate policy insuring the Mortgaged Property individually, which amount shall
not be less than the amount required pursuant to this Section 5.1(x) and which
shall in any case comply in all other respects with the requirements of this
Section 5.1(x). Upon demand therefor, Borrower shall reimburse Lender for all of
Lender's or its designee's reasonable costs and expenses incurred in obtaining
any or all of the Policies or otherwise causing the compliance with the terms
and provisions of this Section 5.1(x), including (without limitation) obtaining
updated flood hazard certificates and replacement of any so-called "forced
placed" insurance coverages to the extent Borrower was required to obtain and
maintain any such Policy or Policies hereunder and failed to do so. Borrower
shall pay
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the premiums for such Policies (the "Insurance Premiums") as the same become due
and payable and shall furnish to Lender evidence of the renewal of each of the
Policies with receipts for the payment of the Insurance Premiums or other
evidence of such payment reasonably satisfactory to Lender (provided, however,
that Borrower is not required to furnish such evidence of payment to Lender in
the event that such Insurance Premiums have been paid by Lender). If Borrower
does not furnish such evidence and receipts at least ten (10) days prior to the
expiration of any expiring Policy, then Lender may procure, but shall not be
obligated to procure, such insurance and pay the Insurance Premiums therefor,
and Borrower agrees to reimburse Lender for the cost of such Insurance Premiums
promptly on demand. Within thirty (30) days after request by Lender, Borrower
shall obtain such increases in the amounts of coverage required hereunder as may
be reasonably requested by Lender, based on then industry-standard amounts of
coverage then being obtained by prudent owners of properties similar to the
Mortgaged Property in the same applicable market region as the Mortgaged
Property. Borrower shall give Lender prompt written notice if Borrower (or any
Affiliate) receives from any insurer any written notification or threat of any
actions or proceedings regarding the non-compliance or non-conformity of the
Mortgaged Property with any insurance requirements.
(iv) If the Mortgaged Property shall be damaged or destroyed, in whole or
in part, by fire or other casualty, Borrower shall give prompt notice thereof to
Lender.
(A) In case of loss covered by Policies, Lender may either (a)
jointly with Borrower settle and adjust any claim and agree with the
insurance company or companies on the amount to be paid on the loss or (b)
allow Borrower to agree with the insurance company or companies on the
amount to be paid upon the loss; provided, that Borrower may settle and
adjust losses without participation by Lender aggregating not in excess of
$250,000, agree with the insurance company or companies on the amount to
be paid upon the loss and collect and receive any such Insurance Proceeds;
provided, further, that if at the time of the settlement of such claim an
Event of Default has occurred and is continuing, then Lender shall settle
and adjust such claim without the consent of Borrower, and for such
purpose is hereby irrevocably appointed as Borrower's attorney-in-fact
coupled with an interest from, after and during the continuance of an
Event of Default. Lender shall use commercially reasonable efforts to
respond promptly to any request from Borrower for approval of an insurance
settlement. In such case Lender shall and is hereby authorized to collect
and receipt for any such Insurance Proceeds subject to and to the extent
provided for in this Agreement. The reasonable out-of-pocket expenses
incurred by Lender in the adjustment and collection of Insurance Proceeds
shall become part of the Indebtedness and be secured by the Mortgage and
shall be reimbursed by Borrower to Lender upon demand therefor.
(B) In the event of any insured damage to or destruction of the
Mortgaged Property or any part thereof (herein called an "Insured
Casualty") where (1) the aggregate amount of the loss, as reasonably
determined by an Independent insurance adjuster, is less than thirty
percent (30%) of the Lender's
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reasonable estimate of the fair market value of the individual Mortgaged
Property affected by the damage or destruction, (2) in the reasonable
judgment of Lender, the Mortgaged Property can be restored, replaced
and/or rebuilt (collectively, the "Restoration") by not later than the
first to occur of (a) twelve (12) months after the date of casualty and
(b) the expiration of the business interruption insurance and, in any
case, not later than six (6) months prior to the Maturity Date to an
economic unit in substantially the condition it was in immediately prior
to the Insured Casualty and in compliance with all zoning, building and
other applicable Legal Requirements (the "Pre-Existing Condition") not
less materially valuable and not less useful than the same was prior to
the Insured Casualty, and (3) Lender reasonably determines that the income
of the Mortgaged Property, after the Restoration thereof to the
Pre-Existing Condition, will be sufficient to meet all Operating Expenses,
payments for Reserves and payments of principal and interest under the
Loan and satisfy a Debt Service Coverage Ratio of 1.50, or if Lender
otherwise elects to allow a Borrower to restore the Mortgaged Property,
then, if no Event of Default shall have occurred and be continuing, the
Insurance Proceeds (after reimbursement of any reasonable out-of-pocket
expenses incurred by Lender in connection with the collection of any
applicable Insurance Proceeds) shall be made available to reimburse
Borrower for the cost of restoring, repairing, replacing or rebuilding the
Mortgaged Property or part thereof subject to the Insured Casualty, as
provided for below. Borrower hereby covenants and agrees to commence and
diligently to prosecute such Restoration of the affected Mortgaged
Property as nearly as possible to the Pre-Existing Condition. Borrower
shall pay all out-of-pocket costs (and if required by Lender, Borrower
shall deposit the total thereof with Lender in advance) of such
Restoration in excess of the Insurance Proceeds made available pursuant to
the terms hereof.
(C) Except as provided above, the Insurance Proceeds collected upon
any Insured Casualty shall, at the option of Lender in its discretion, be
applied to the payment of the Indebtedness, subject to the provisions of
Section 2.6(a), or applied to the cost of Restoration of the affected
Mortgaged Property or part thereof subject to the Insured Casualty, in the
manner set forth below.
(D) Regardless of whether Insurance Proceeds, if any, are sufficient
or are made available to Borrower for the Restoration of any portion of
the affected Mortgaged Property, Borrower covenants to complete such
Restoration of the affected Mortgaged Property to be of at least
comparable value as prior to such damage or destruction, all to be
effected in accordance with Legal Requirements and plans and
specifications approved in advance by Lender, such approval not to be
unreasonably withheld or delayed.
(E) In the event Borrower is entitled to reimbursement out of
Insurance Proceeds, such proceeds shall be held by Lender in the Loss
Proceeds Account and disbursed from time to time as the Restoration
progresses upon Lender being furnished with (1) evidence reasonably
satisfactory to it (which evidence may include inspection(s) of the work
performed) that the Restoration covered by the disbursement has been
completed in accordance with plans and specifications
99
approved by Lender, (2) evidence reasonably satisfactory to it of the
estimated cost of completion of the Restoration, (3) funds, or, at
Lender's option, assurances reasonably satisfactory to Lender that such
funds are available and sufficient in addition to the Insurance Proceeds
to complete the proposed Restoration, and (4) such architect's
certificates, waivers of lien, contractor's sworn statements, title
insurance endorsements, bonds and other evidences of cost, payment and
performance of the foregoing Restoration as Lender may reasonably require
and approve. Lender may, in any event, require that all plans and
specifications for such Restoration be submitted to and reasonably
approved by Lender prior to commencement of work. Lender may retain a
construction consultant to inspect such work and review Borrower's request
for payments and Borrower shall, on demand by Lender, reimburse Lender for
the reasonable fees and disbursements of such consultant. No payment made
prior to the final completion of the Restoration shall exceed ninety
percent (90%) of the hard construction costs value of the work performed
from time to time (except for restoration work on a trade by trade basis
or on an hourly basis for professional services in which event, payment
may be made in full upon the completion of such work). No funds other than
Insurance Proceeds shall be disbursed prior to disbursement of such
proceeds; and, at all times, the undisbursed balance of such Insurance
Proceeds remaining in the Loss Proceeds Account, together with funds
deposited therein to pay the costs of the Restoration by or on behalf of
Borrower, shall be at least sufficient in the reasonable judgment of
Lender to pay for the cost of completion of the Restoration free and clear
of all liens or claims for lien, except for Permitted Encumbrances. Any
surplus which may remain out of Insurance Proceeds held by Lender after
payment of such costs of restoration, repair, replacement or rebuilding
shall, at the option of Lender in its discretion, be applied to the
payment of the Indebtedness or be paid to Borrower so long as no Event of
Default has occurred and is continuing.
(v) Borrower shall not carry separate insurance, concurrent in kind or
form or contributing in the event of loss, with any insurance required under
this Agreement that would be considered "co-insurance" or adversely affect the
ability to collect under a policy of insurance required hereunder.
(y) Condemnation.
(i) Borrower shall promptly give Lender written notice of the actual or
threatened commencement of any proceeding for a Taking and shall deliver to
Lender copies of any and all papers served in connection with such proceedings.
Lender is hereby irrevocably appointed, effective upon the occurrence and during
the continuance of an Event of Default, as Borrower's attorney-in-fact, coupled
with an interest, with exclusive power to collect, receive and retain any
Condemnation Proceeds for said Taking. With respect to any compromise or
settlement in connection with such proceeding, Lender shall jointly with
Borrower compromise and reach settlement unless at the time of such Taking an
Event of Default has occurred and is continuing and the Indebtedness has been
accelerated, in which event Lender shall compromise and reach settlement without
the consent of Borrower. Notwithstanding the foregoing provisions of
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this Section 5.1(y), Borrower is authorized to negotiate, compromise and settle,
without participation by Lender, Condemnation Proceeds of up to 750,000 in
connection with any Taking. Notwithstanding any Taking, Borrower shall continue
to pay the Indebtedness at the time and in the manner provided for in this
Agreement and the other Loan Documents and the Indebtedness shall not be reduced
except in accordance herewith.
(ii) Borrower shall cause the Condemnation Proceeds to be paid directly to
Lender. Lender may, in its discretion but subject to the provisions of Section
2.6(a), apply any such Condemnation Proceeds to the reduction or discharge of
the Indebtedness (whether or not then due and payable).
(iii) With respect to a Taking in part, which shall mean any Taking which
does not render the affected Mortgaged Property physically or economically
unsuitable in the reasonable judgment of Lender for the use to which it was
devoted prior to the Taking, Borrower shall cause the Condemnation Proceeds to
be paid to Lender as described above, and if Lender does not elect to apply the
same to the Indebtedness as provided in Section 5.1(y)(ii) above, Lender shall
deposit such Condemnation Proceeds in the Loss Proceeds Account and the same
shall be made available for application to the cost of Restoration of the
affected Mortgaged Property and disbursed from time to time as the Restoration
progresses upon Lender being furnished with (1) evidence reasonably satisfactory
to it (which evidence may include inspection(s) of the work performed) that the
Restoration covered by the disbursement has been completed in accordance with
plans and specifications approved by Lender, (2) evidence reasonably
satisfactory to it of the estimated cost of completion of the Restoration, (3)
funds, or, at Lender's option, assurances satisfactory to Lender that such funds
are available and sufficient in addition to the Condemnation Proceeds to
complete the proposed Restoration, and (4) such architect's certificates,
waivers of lien, contractor's sworn statements, title insurance endorsements,
bonds and other evidences of cost, payment and performance of the foregoing
repair, restoration, replacement or rebuilding as Lender may reasonably require
and approve.
(iv) Regardless of whether Condemnation Proceeds are sufficient or made
available for such purpose, Borrower hereby covenants to complete the
Restoration of the affected Mortgaged Property as nearly as possible to the
Pre-Existing Condition and to be of at least comparable value and, to the extent
commercially practicable, of substantially the same character as prior to the
Taking, all to be effected in accordance with applicable law and plans and
specifications reasonably approved in advance by Lender. Borrower shall pay all
costs (and if required by Lender, Borrower shall deposit the total thereof with
Lender in advance) of such Restoration in excess of the Condemnation Proceeds
made available pursuant to the terms hereof. Lender may, in any event, require
that all plans and specifications for such Restoration be submitted to and
reasonably approved by Lender prior to commencement of work. Lender may retain a
construction consultant to inspect such work and review any request by Borrower
for payments and Borrower shall, on demand by Lender, reimburse Lender for the
reasonable fees and disbursements of such consultant. No payment made prior to
the final completion of the Restoration shall exceed ninety percent (90%) of the
hard construction costs value of the construction work performed from time to
time (except for restoration work on a trade by trade basis or on
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an hourly basis for professional services in which event, payment may be made in
full upon the completion of such work); funds other than Condemnation Proceeds
shall be disbursed prior to disbursement of such proceeds; and at all times, the
undisbursed balance of such proceeds remaining in the hands of Lender, together
with funds deposited for that purpose or irrevocably committed to the repayment
of Lender by or on behalf of Borrower for that purpose, shall be at least
sufficient in the reasonable judgment of Lender to pay for the cost of
completion of the restoration, repair, replacement or rebuilding, free and clear
of all liens or claims for lien. Any surplus which may remain out of
Condemnation Proceeds held by Lender after payment of such costs of restoration,
repair, replacement or rebuilding shall, at the option of Lender in its
discretion, be applied to the payment of the Indebtedness or be paid to Borrower
so long as no Event of Default has occurred and is continuing.
(v) If the affected Mortgaged Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of any such Condemnation Proceeds to
which it is entitled hereunder, Lender shall have the right, whether or not a
deficiency judgment on the Note shall have been sought, recovered or denied, to
have reserved in any foreclosure decree a right to receive said award or
payment, or a portion thereof sufficient to pay the Indebtedness. In no case
shall any such application reduce or postpone any payments otherwise required
pursuant to this Agreement, other than the final payment on the Note.
(z) Leases and Receipts.
(i) Borrower absolutely and unconditionally assigns to Lender, Borrower's
right, title and interest in all current and future Leases and Receipts as
collateral for the Loan, it being intended by Borrower that this assignment
constitutes a present, absolute assignment and not an assignment for additional
security only. Such assignment to Lender shall not be construed to bind Lender
to the performance of any of the covenants, conditions or provisions contained
in any such Lease or otherwise impose any obligation upon Lender. Borrower shall
execute and deliver to Lender such additional instruments, in form and substance
reasonably satisfactory to Lender, as may hereafter be reasonably requested in
writing by Lender to further evidence and confirm such assignment. Nevertheless,
subject to the terms of this Section 5.1(z), Lender grants to Borrower a license
to maintain, operate and manage the Mortgaged Property and to collect, use and
apply the Receipts in accordance with the terms hereof, which license shall be
deemed automatically revoked upon the occurrence and during the continuance of
an Event of Default under this Agreement. Any portion of the Receipts held by
Borrower in breach of the provisions hereof shall be held in trust for the
benefit of Lender for use in the payment of the Indebtedness. Upon the
occurrence of an Event of Default and during the continuance thereof, the
license granted to Borrower herein shall automatically be revoked, and Lender
shall immediately be entitled to possession of all Receipts, whether or not
Lender enters upon or takes control of the Mortgaged Property. Lender is hereby
granted and assigned by Borrower the right, at its option, upon revocation of
the license granted herein, to enter upon the Mortgaged Property in person, by
agent or by court-appointed receiver to collect the Receipts. Any Receipts
collected after the revocation of
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the license may be applied toward payment of the Indebtedness as set forth in
Section 2.8 hereof.
(ii) All Leases entered into by Borrower shall provide for rental rates
comparable to then-existing local market rates and terms and conditions
commercially reasonable and consistent with then-prevailing local market terms
and conditions for similar type properties. With respect to any Lease for space
at the Mortgaged Property over 5,000 square feet or for an annual rental payment
in excess of $100,000, Borrower shall not enter into such Lease, without the
prior written consent of Lender. Borrower shall furnish Lender with (1) detailed
term sheets in advance in the case of any Leases, modifications, amendments or
renewals for which Lender's consent is required and (2) in the case of any other
Leases, executed copies of such Leases upon written request. All renewals or
amendments or modifications of Leases that do not satisfy the requirements of
the first sentence of this Section 5.1(z)(ii) shall be subject to the prior
approval of Lender. All Leases executed after the date hereof shall provide that
they are subordinate to the Mortgage, and that the lessee agrees to attorn to
Lender. If Borrower enters into any Leases, Borrower,
(A) shall observe and perform all of the material obligations
imposed upon the lessor under the Leases and shall not do or permit to be
done anything to materially impair the value of the Leases as security for
the Indebtedness;
(B) shall promptly send copies to Lender of all written notices of
default which Borrower shall send or receive thereunder;
(C) shall enforce all of the material terms, covenants and
conditions contained in the Leases upon the part of the lessee thereunder
to be observed or performed and shall effect a termination or diminution
of the obligations of tenants under leases, only in a manner that a
prudent owner of a similar property to the Mortgaged Property would
enforce such terms covenants and conditions or effect such termination or
diminution in the ordinary course of business;
(D) shall not collect any of the Rents more than one (1) month in
advance;
(E) shall not execute any other assignment of lessor's interest in
Leases or Rents; and
(F) shall not convey or transfer or suffer or permit a conveyance or
transfer of the Mortgaged Property or of any interest therein so as to
effect a merger of the estates and rights of, or a termination or
diminution of the obligations of, lessees thereunder.
(aa) Maintenance of Mortgaged Property. Borrower shall cause the Mortgaged
Property to be maintained in a good and safe condition and repair, subject to
wear and tear and damage caused by casualty or condemnation. The Improvements
and the Equipment shall not be removed, demolished or altered (except for (1)
normal replacement of the Equipment, (2) Improvements and replacement of the
Equipment contemplated in an Operating Budget, or
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(3) removals, demolition or alterations of Equipment that do not cost more than
$250,000 with respect to the threshold value of the related Equipment, all of
which activities in (1), (2) and (3) may be performed without Lender's consent)
without the consent of Lender which consent shall not be unreasonably withheld
or delayed. Notwithstanding anything set forth herein or in the other Loan
Documents to the contrary, Borrower may make such additions, substitutions
and/or replacements to the Water Amenities and associated Improvements as
provided for in an Operating Budget (except in the case of a removal and
replacement, in which event such removal and replacement is associated with new
Water Amenities and the removal and replacement does not diminish the over-all
value of a Mortgaged Property). Except with respect to an Insured Casualty which
shall be governed by the terms and conditions provided herein, Borrower shall
promptly repair, replace or rebuild any part of the Mortgaged Property that
becomes damaged, worn or dilapidated. Borrower shall complete and pay for any
structure at any time in the process of construction or repair on the Land.
Except with respect to the Release Parcel, in which event the provisions of
Section 2.17 shall govern, Borrower shall not initiate, voluntarily join in, or
voluntarily consent to any change in any private restrictive covenant, zoning
law or other public or private restriction, limiting in any material respect the
uses which may be made of any Mortgaged Property or any part thereof, except to
the extent Borrower is obligated to do so pursuant to law or any Permitted
Encumbrance, without the written consent of Lender. If under applicable zoning
provisions the use of all or any portion of the Mortgaged Property is or shall
become a nonconforming use, Borrower will not cause or permit such nonconforming
use to be discontinued or abandoned if such discontinuance of abandonment would
cause such nonconforming use to no longer be permitted without the express
written consent of Lender, which consent shall not be unreasonably withheld or
delayed. Borrower shall not (i) change the over-all use of any of the Land or
Improvements in any material respect, (ii) permit or suffer to occur any
physical waste on or to any Mortgaged Property or to any portion thereof or
(iii) take any steps whatsoever to convert any Mortgaged Property, or any
portion thereof, to a condominium or cooperative form of management except as
set forth in Section 2.17 hereof.
(bb) Prohibited Persons. Borrower covenants and agrees to deliver
(from time to time) to Lender any certification or other evidence as may be
requested by Lender in its discretion, confirming that: (i) neither Borrower,
Guarantor nor their respective officers, directors, partners, members or
majority-owned Affiliates is a Prohibited Person; and (ii) neither Borrower nor
Guarantor nor their respective officers, directors, partners, members or
majority-owned Affiliates has engaged in any business, transaction or dealings
with a Person known to Borrower to be a Prohibited Person, including, but not
limited to, the making or receiving of any contribution of funds, goods, or
services, to or for the benefit of a Person known to Borrower to be a Prohibited
Person.
(cc) Taxes on Security. Borrower shall pay all taxes, charges,
filing, registration and recording fees, excises and levies payable with respect
to the Note or the Lien created or secured by the Loan Documents, other than
income, franchise and doing business taxes imposed on Lender. If there shall be
enacted any law (1) deducting the Loan from the value of the Collateral for the
purpose of taxation, (2) affecting Lender's Lien on the Collateral or (3)
changing existing laws of taxation of mortgages, deeds of trust, security deeds,
or debts secured by realty, or changing the manner of collecting any such taxes,
Borrower shall promptly pay to Lender, on demand, all taxes, costs and charges
for which Lender is or may be liable as a result thereof in excess of those for
which Lender would otherwise have been liable had such law
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not been enacted; provided, however, if such payment would be prohibited by law
or would render the Loan usurious, then instead of collecting such payment,
Lender may declare all amounts owing under the Loan Documents to be immediately
due and payable.
ARTICLE VI.
NEGATIVE COVENANTS
Section 6.1. Negative Covenants. Borrower covenants and agrees that,
until payment in full of the Indebtedness, it will not do, directly or
indirectly, any of the following unless Lender consents thereto in writing:
(a) Liens on the Mortgaged Property. Incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, except as
permitted by Section 5.1(b) above, any Lien with respect to any Mortgaged
Property or any portion thereof, except: (i) Liens in favor of Lender, (ii)
Liens permitted under Section 2.17 and (iii) the Permitted Encumbrances.
(b) Ownership. Except as expressly permitted by or pursuant to this
Agreement or the other Loan Documents, own any property of any kind other than
the Mortgaged Property.
(c) Other Borrowings. Incur, create, assume, become or be liable in
any manner with respect to Other Borrowings.
(d) Dissolution; Merger or Consolidation. Dissolve, terminate,
liquidate, merge with or consolidate into another Person.
(e) Change In Business. Make any material change in the scope or
nature of its business objectives, purposes or operations, or undertake or
participate in activities other than the continuance of its present business.
(f) Debt Cancellation. Cancel or otherwise forgive or release any
material claim or debt owed to Borrower by any Person, except for adequate
consideration or in the ordinary course of Borrower's business.
(g) Affiliate Transactions. Except for fees payable to Manager under
the Management Agreement and fees payable to the Licensor under the License
Agreement and the Central Reservations Services Agreement, (i) pay any
management, consulting, director or similar fees to any Affiliate of Borrower or
to any director or manager (other than any customary fees of the Independent
Director), officer or employee of Borrower, (ii) directly or indirectly enter
into any transaction (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of Borrower or with
any director, officer or employee of any Affiliate of Borrower, except
transactions in the ordinary course of and pursuant to the reasonable
requirements of the business of Borrower and upon fair and reasonable terms
which are no less favorable to Borrower than would be obtained in a comparable
arm's length transaction with a Person that is not an Affiliate of Borrower, or
(iii) except as permitted under the Manager's Subordination or under the License
Tri-Party Agreement, make any payment or permit any payment to be made to any
Affiliate of Borrower when or as to any time when any Event of Default shall
exist.
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(h) Creation of Easements. Except as expressly permitted by or
pursuant to the Mortgage or this Agreement, create, or permit any Mortgaged
Property or any part thereof to become subject to, any easement or restrictive
covenant, other than a Permitted Encumbrance, provided, that the consent of
Lender shall not be unreasonably withheld or delayed to the extent that any such
easement or restrictive covenant is reasonably necessary or beneficial with
respect to the continued use, enjoyment, access to or operation of the
applicable Mortgaged Property.
(i) Misapplication of Funds. Distribute any Receipts or Moneys
received from Accounts in violation of the provisions of Section 2.12, or fail
to pay over the Lender, if an Event of Default exists, any and all Advance
Bookings Deposits, or misappropriate any Advance Bookings Deposit or portion
thereof.
(j) Certain Restrictions. Enter into any agreement that expressly
restricts the ability of Borrower to enter into amendments, modifications or
waivers of any of the Loan Documents.
(k) Assignment of Licenses and Permits. Assign or transfer any of
its interest in any Permits pertaining to any Mortgaged Property, or assign,
transfer or remove or permit any other Person to assign, transfer or remove any
records pertaining to any Mortgaged Property.
(l) Place of Organization. Change its jurisdiction of organization,
creation or formation, as applicable, without giving Lender at least fifteen
(15) days' prior written notice thereof and promptly providing Lender such
information as Lender may reasonably request in connection therewith.
(m) License Agreement and Tall Pines Agreement. Amend or modify in
any material respect or cancel (or cause or permit the same to occur) the
License Agreement or to the extent it relates to the Mortgaged Property in any
material manner the Tall Pines Agreement.
(n) Management Agreement. Except in accordance with this Agreement
or in connection with Section 2.17, (i) terminate or cancel the Management
Agreement, (ii) consent to either the reduction of the term of or the assignment
of the Management Agreement, (iii) increase or consent to the increase of the
amount of any charges under the Management Agreement, or (iv) otherwise modify,
change, supplement, alter or amend, or waive or release any of its rights and
remedies under, the Management Agreement in any material respect.
(o) Plans and Welfare Plans. Knowingly engage in or permit any
transaction in connection with which Borrower or any ERISA Affiliate could be
subject to either a material civil penalty or tax assessed pursuant to Section
502(i) or 502(1) of ERISA or Section 4975 of the Code, permit any Welfare Plan
to provide benefits, including without limitation, medical benefits (whether or
not insured), with respect to any current or former employee of Borrower beyond
his or her retirement or other termination of service other than (i) coverage
mandated by applicable law, (ii) death or disability benefits that have been
fully provided for by paid up insurance or otherwise or (iii) severance
benefits, permit the assets of Borrower to become "plan assets", whether by
operation of law or under regulations promulgated under ERISA or adopt,
materially amend (except as may be required by applicable law) or materially
increase the amount of any benefit or amount payable under, or permit any ERISA
Affiliate to adopt,
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materially amend (except as may be required by applicable law) or materially
increase the amount of any benefit or amount payable under, any Plan or Welfare
Plan, except for adoptions, amendments or increases in the ordinary course of
business that, in the aggregate, do not result in a Material Adverse Effect.
(p) Transfer of Mortgaged Property or Ownership Interests. Permit
any Transfer to occur, other than a Permitted Transfer.
(q) Equipment and Inventory. Except pursuant to the Management
Agreement or as otherwise permitted under Section 5.1(aa), permit any Equipment
owned by Borrower or any of its Affiliates to be removed at any time from any
Mortgaged Property unless the removed item is consumed or sold in the usual and
customary course of business, removed temporarily for maintenance and repair or,
if removed permanently, replaced by an article of equivalent suitability and not
materially less value, owned by Borrower free and clear of any Lien (other than
Permitted Encumbrances).
(r) Management Fees. Pay Borrower or any Affiliate of Borrower any
management fees with respect to the Mortgaged Property except for management
fees paid to Manager under the Management Agreement.
(s) Prohibited Persons. With respect to Borrower, Guarantor and any
of their respective officers, directors, partners, members or majority-owned
Affiliates: (i) conduct any business, or engage in any transaction or dealing,
with any Prohibited Person, including, but not limited to, the making or
receiving of any contribution of funds, goods, or services, to or for the
benefit of a Prohibited Person; or (ii) engage in or conspire to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in EO13224.
(t) Name; Non-Competition. (i) Change the name under which the
Mortgaged Property is operated from "Great Wolf Lodge" or another name
consistent with the names then currently utilized by Great Wolf in its family of
other lodges (except Lender shall not unreasonably withhold or delay its
approval of a name change which Great Wolf deems necessary or desirable for the
continued operation of its business), or (ii) make, suffer or permit any change
in franchise of "flag" or brand or other affiliation of the Mortgaged Property,
or (iii) suffer or permit, by its Affiliates, Manager or Licensor or any
Guarantor or any of their respective Affiliates, under any license, franchise,
concession or permission of any kind granted by any of its Affiliates, Manager
or Licensor or any Guarantor or any of their respective Affiliates, an
Additional Resort Event to occur; provided, that, not withstanding the
foregoing, commencing in the twenty fifth (25th) month of the Loan term and
thereafter, the Borrower shall be permitted to engage in an Additional Resort
Event on the following terms and conditions: (1) at any such time, the Borrower
may notify the Lender in writing that an Affiliate desires to commence
construction on another property which would qualify as an Additional Resort
Event; (2) if as of the date of such notice, the Additional Resort Test has been
satisfied, than at any time during the six month period immediately following
the date of such notice, such Affiliate shall be free to commence construction
on and complete building of such property contemplated to be the proposed
Additional Resort Event (irrespective of whether the Additional Resort Test
ceases to be satisfied during such time period or after construction is
commenced and prior to
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completion of building); and (3) if at any time during the six month period or
during construction or thereafter but prior to completion the Additional Resort
Test ceases to be satisfied, the Borrower shall not be in Default and such
Affiliate may proceed to complete building such property and thereafter to open
for business and operate such property (but after the giving of such notice the
Borrower shall be subject in all cases to the provisions of Sections 2.12 and
2.13 hereof with respect to any failure to satisfy the Additional Resort
Coverage Test).
ARTICLE VII.
EVENT OF DEFAULT
Section 7.1. Event of Default. The occurrence of one or more of the
following events shall be an "Event of Default" hereunder:
(a) if on any Payment Date Borrower fails to pay any Monthly Debt
Service Payment due and payable on such Payment Date, or if Borrower fails to
make any scheduled deposits into the Reserve Accounts when due and payable in
accordance with the provisions hereof;
(b) if Borrower fails to pay the outstanding Indebtedness on the
Maturity Date;
(c) if Borrower fails to pay or deposit any other amount payable or
required to be deposited pursuant to this Agreement or any other Loan Document
when due and payable in accordance with the provisions hereof or thereof, as the
case may be, and such failure continues for ten (10) days after Lender delivers
written notice thereof to Borrower;
(d) if any representation or warranty made herein or in any other
Loan Document, or in any report, certificate, financial statement or other
Instrument, agreement or document furnished by Borrower or Guarantor in
connection with this Agreement, the Note or any other Loan Document executed and
delivered by Borrower or Guarantor shall be materially false or materially
misleading as of the date such representation or warranty was made (or if such
representation or warranty relates to an earlier date, then as of such earlier
date);
(e) if any Borrower or Guarantor makes an assignment for the benefit
of creditors;
(f) if a receiver, liquidator or trustee shall be appointed for any
Borrower or Guarantor or if any Borrower or Guarantor shall be adjudicated a
bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal or state
law, shall be filed by or against, consented to, or acquiesced in by any
Borrower or Guarantor, or if any proceeding for the dissolution or liquidation
of any Borrower or Guarantor shall be instituted; provided, however, that if
such appointment, adjudication, petition or proceeding was involuntary and not
consented to by any Borrower or Guarantor, upon the same not being discharged,
stayed or dismissed within ninety (90) days, or if any Borrower or Guarantor
shall generally not be paying its debts as they become due;
(g) if Borrower defaults beyond any applicable notice and cure
period under the License Agreement, or Great Lakes defaults beyond any
applicable notice and cure period
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under the Tall Pines Agreement (as it related to the Mortgaged Property), or,
without Lender's prior written consent: (i) there is any material change in or
amendment to the License Agreement or the Tall Pines Agreement (as it related to
the Mortgaged Property) without the prior written consent of Lender; or (ii)
there is a cancellation, expiration, surrender or termination, for any reason,
of the License Agreement or the Tall Pines Agreement (as it related to the
Mortgaged Property);
(h) if Borrower ceases to operate a hotel and water park resort on
the Mortgaged Property or terminates such business for any reason whatsoever
(other than cessation in connection with any casualty or any renovations to the
Mortgaged Property or restoration of the Mortgaged Property after fire or other
casualty, or force majeure causes, or taking by a governmental authority having
jurisdiction over the Mortgaged Property);
(i) If (A) Borrower fails to provide Lender (to the extent not
previously provided to Lender) with written evidence of receipt of all required
permits and licenses (including, without limitation, food and other beverage
licenses) in connection with Borrower's ownership and operation of the Property
within thirty (30) days after Lender's written request therefor, or (B) any
required permit(s) and licenses (other than any liquor licenses) for the
operation of the Mortgaged Property as a full service first class hotel and
water park resort shall be revoked or terminated or expire, or food can no
longer be legally sold at the Mortgaged Property, in any such case, for a period
of longer than sixty (60) days; or
(j) if any Borrower attempts to delegate its obligations or assign
its rights under this Agreement, any of the other Loan Documents or any interest
herein or therein, or if any Transfer occurs, other than a Permitted Transfer or
otherwise in accordance with or as permitted under this Agreement;
(k) if any provision of the Organizational Agreement affecting the
purpose for which Borrower is formed is amended or modified in any material
respect which is reasonably likely to adversely affect the Lender, or if
Borrower fails to perform or enforce the provisions of the Organizational
Agreement and such failure has a Material Adverse Effect or attempts to dissolve
Borrower without Lender's consent;
(l) if an Event of Default as defined or described in the Note or
any other Loan Document occurs, whether as to Borrower or the Mortgaged Property
or any portion thereof;
(m) if any of the assumptions made with respect to Borrower and its
Affiliates in that certain substantive non-consolidation opinion letter dated as
of (or on or about) the Closing Date and delivered in connection with the Loan
is not true and correct in all respects;
(n) if Borrower fails to maintain any insurance required to be
maintained pursuant to Section 5.1(x) hereof; and
(o) if Borrower shall fail to perform any of the terms, covenants or
conditions of this Agreement, the Note, the Mortgage or the other Loan
Documents, other than as specifically otherwise referred to above in this
definition of "Event of Default," for ten (10) days after notice to Borrower
from Lender or its successors or assigns, in the case of any Default
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which can be cured by the payment of a sum of money (other than Events of
Default pursuant to Sections 7.1(a) and 7.1(b) above, as to which the grace
period, if any, set forth therein is applicable), or for thirty (30) days after
notice from Lender or its successors or assigns, in the case of any other
Default (unless a longer notice period is otherwise provided herein or in such
other Loan Document); provided, however, that if such non-monetary Default is
susceptible of cure but cannot reasonably be cured within such thirty (30) day
period and such Borrower shall have commenced to cure such Default within such
thirty (30) day period and thereafter diligently and expeditiously proceeds to
cure the same, such thirty (30) day period shall be extended for an additional
sixty (60) days;
then, upon the occurrence of any such Event of Default and at any time
thereafter, Lender or its successors or assigns, may, in addition to any other
rights or remedies available to it pursuant to this Agreement and the other Loan
Documents, or at law or in equity, take such action, without further notice or
demand, as Lender or its successors or assigns, deems advisable to protect and
enforce its rights against Borrower and in and to all or any portion of the
Collateral, and may enforce or avail itself of any or all rights or remedies
provided in the Loan Documents against Borrower and/or the Collateral
(including, without limitation, all rights or remedies available at law or in
equity). In addition to and without limiting the foregoing, upon the occurrence
of any Event of Default described in any of Sections 7.1(e), (f), or (g), the
unpaid principal amount of and accrued interest and fees on the Loan and all
other Indebtedness shall automatically become immediately due and payable,
without presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other requirements of any kind, all of which are hereby
expressly waived by Borrower. Upon and at any time after the occurrence of any
other Event of Default, at the option of Lender, which may be exercised without
notice or demand to anyone, all or any portion of the Loan and other
Indebtedness shall immediately become due and payable.
Section 7.2. Remedies.
(a) Upon the occurrence of an Event of Default, all or any one or
more of the rights, powers, other remedies available to Lender against Borrower
under this Agreement or any of the other Loan Documents executed by or with
respect to Borrower, or at law or in equity may be exercised by Lender at any
time and from time to time, whether or not all or any portion of the
Indebtedness shall be declared due and payable, and whether or not Lender shall
have commenced any foreclosure proceeding or other action for the enforcement of
its rights and remedies under any of the Loan Documents with respect to all or
any portion of the Collateral. Any such actions taken by Lender shall be
cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its discretion, to the fullest extent permitted by law, without
impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents.
(b) In the event of the foreclosure or other action by Lender to
enforce Lender's remedies in connection with all or any portion of the
Collateral, Lender shall apply all Net Proceeds received to repay the
Indebtedness in accordance with Section 2.8, the Indebtedness (as selected by
Lender in its discretion) shall be reduced to the extent of such Net Proceeds
and the remaining portion of the Indebtedness shall remain outstanding and
secured by the Loan Documents, it being understood and agreed by Borrower that
Borrower is liable for the
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repayment of all the Indebtedness; provided, however, that the Loan shall be
deemed to have been repaid only to the extent of the Net Proceeds actually
received by Lender with respect to the Collateral and applied in reduction of
the Indebtedness evidenced by the Note in accordance with the provisions of this
Agreement after payment by Borrower of all Transaction Costs and costs of
enforcement.
(c) Upon and during the continuation of an Event of Default, Lender
shall have the right, but not the obligation, with respect to any and all
bankruptcy proceedings that are now or hereafter commenced in connection with
the Mortgaged Property, to (i) vote to accept or reject any plans of
reorganization, (ii) vote in any election of a trustee, (iii) elect the
treatment of secured claims as specified in Section 1111(b) of the Bankruptcy
Code, and (iv) make any other decisions requested of holders of claims or
interests that Borrower would have had the right to do in such bankruptcy
proceedings in the absence of an Event of Default.
(d) Upon the request of Lender (or its nominees and successors and
assigns) in connection with a foreclosure, deed in lieu of foreclosure of other
acquisition of the Mortgaged Property or any part thereof resulting from an
Event of Default, Borrower shall, and shall cause Licensor and Manager to,
cooperate with Lender (and its nominees and successors and assigns) in (i) the
transfer to Lender (or such nominee, successor or assign) of any licenses and
permits (including, without limitation, but only to the extent permitted by law,
liquor licenses and subject to the provisions of the License Tri-Party Agreement
the licenses under the License Agreement) necessary or appropriate for the
operation of the Mortgaged Property; (ii) the obtaining by Lender (or such
nominee, successor or assign) of any licenses and permits (including without
limitation liquor licenses and licenses under the License Agreement) necessary
or appropriate for the operation of the Mortgaged Property; and (iii) the
continuation by Borrower, Manager and Licensor, as applicable, of any existing
licenses and permits (including without limitation liquor licenses and the
licenses under the License Agreement) and/or arrangements for liquor sales and
service to be conducted by third party venders, under catering licenses or
otherwise, until new licenses and permits are obtained.
Section 7.3. Remedies Cumulative. The rights, powers and remedies of
Lender under this Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents executed by or with respect to Borrower,
or existing at law or in equity or otherwise. Lender's rights, powers and
remedies may be pursued singly, concurrently or otherwise, at such time and in
such order as Lender may determine. No delay or omission to exercise any remedy,
right or power accruing upon an Event of Default shall impair any such remedy,
right or power or shall be construed as a waiver thereof, but any such remedy,
right or power may be exercised from time to time and as often as may be deemed
expedient. A waiver of any Default or Event of Default shall not be construed to
be a waiver of any subsequent Default or Event of Default or to impair any
remedy, right or power consequent thereon. Subject to Section 9.24, Lender
reserves the right to seek a deficiency judgment or preserve a deficiency claim,
in connection with the foreclosure of any Mortgage on the Mortgaged Property, to
the extent necessary to foreclose on other parts of the Collateral.
Section 7.4. Intentionally Omitted.
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Section 7.5. Curative Advances. If any Event of Default occurs, then
Lender may expend such sums as either shall reasonably deem appropriate in
connection with the matters giving rise to such Event of Default. Borrower shall
immediately repay all such sums so advanced, which sums shall immediately become
part of the Indebtedness, bear interest at the Default Rate from the date
advanced until the date repaid, and be secured by all Collateral.
ARTICLE VIII.
SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS,
WARRANTIES AND COVENANTS
Section 8.1. Applicable to Borrower. Borrower hereby acknowledges
that, as a condition of Lender's agreements and performance of its obligations
hereunder, Lender is relying on the status of Borrower as a legal entity
separate and apart from any Affiliate or other entity and has required that
Borrower maintain such status, and Lender hereby acknowledges such reliance and
requirement. Accordingly, each Borrower hereby represents, warrants and
covenants as of the Closing Date and until such time as the Loan is paid in
full, that absent express advance written waiver from Lender, which may be
withheld at Lender's discretion, each Borrower (it being understood and agreed
that these provisions shall not apply to the member(s) of each Borrower or any
owner of a direct or indirect interest in the Borrower):
(a) was and will be organized solely for the purpose of owning and
operating the Mortgaged Property;
(b) has not owned, does not own and will not own any assets other
than the Mortgaged Property (including incidental personal property necessary
for the operation thereof and proceeds therefrom);
(c) was not engaged, is not engaged and will not engage in any
business, directly or indirectly, other than the ownership, development,
management and operation of the Mortgaged Property (including expansions or
renovations to the Mortgaged Property, and as otherwise permitted in Section
2.17 herein);
(d) has not entered into and will not enter into any contract or
agreement with any partner, member, shareholder, trustee, beneficiary,
principal, joint venturer or Affiliate of Borrower, except in the ordinary
course of its business pursuant to written agreements upon terms and conditions
that are intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties other than such Affiliate;
(e) has not incurred and will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than (i) the Loan, (ii) trade payables not evidenced by a promissory note
incurred in the ordinary course of business with trade creditors in connection
with owning, operating and maintaining the Mortgaged Property, and customarily
paid by Borrower within 60 days of incurrence and in fact not more than 60 days
outstanding, and (iii) equipment financing leases and purchase money debt for
equipment, in each case incurred in the ordinary course of business in
connection with the use, financing or purchase of equipment used on the
Mortgaged Property, the payments upon which are made currently and in any event
prior to delinquency, provided, that (a) the aggregate capitalized
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amount of all such permitted financing leases plus the aggregate amount of all
such permitted purchase money debt shall not exceed $100,000 at any time or
require payments aggregating in excess of $300,000 (except such amounts may be
increased to reflect the increases in the Consumer Price Index (expressed as
percentage) as measured over the calendar year that the Loan closed), and (b)
the aggregate outstanding amount of (1) all trade payables described in clause
(ii) above, plus (2) the aggregate capitalized amount of all permitted financing
leases plus the aggregate amount of all permitted purchase money debt described
in clause (iii) above, shall not at any time be in excess of two percent (2%) of
the Principal Indebtedness.
(f) has not made and will not make any loan or advances to any
Person (including any of its Affiliates), or pledge its assets for the benefit
of any other Person, or seek or obtain credit or incur any obligation to any
third party based upon the assets of any other Person, or induce any third party
to rely on the creditworthiness of any other Person;
(g) has remained and as of the Closing Date reasonably expects to
remain, solvent, and has maintained, and as of the Closing Date reasonably
expects to maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations;
(h) has not acquired and will not acquire obligations or securities
of any Person, other than, with respect to obligations only, KC Borrower or TC
Borrower, as the case may be, to the extent provided under this Agreement, the
other Loan Documents and the Contribution Agreement;
(i) has not failed and will not fail to correct any known
misunderstanding or misrepresentation regarding its separate identity;
(j) has done or caused to be done and will do all things necessary
to preserve its existence;
(k) shall continuously maintain its existence and good standing and
be qualified to do business in all states necessary to carry on its business,
including the state in which the Mortgaged Property is located;
(l) has conducted and operated and will conduct and operate its
business solely in its own name, with all oral and written communications from
Borrower, including, without limitation, correspondence, invoices, purchase
orders, billing statements, applications and business forms, made solely in the
name of Borrower;
(m) has accurately maintained and will continue to accurately
maintain books, records, bank accounts, accounting records, financial statements
and other entity documents separate from those of its partners, members,
shareholders, trustees, beneficiaries, principals, Affiliates, and any other
Person, with such accounting records and financial statements having been
prepared and kept in accordance with reasonable accounting practices applied on
a consistent basis, and such financial statements of Borrower shall be prepared
in a manner that indicates (through appropriate footnotes if necessary) the
existence of Borrower and its assets and liabilities separate and apart from any
other Person; moreover, Borrower shall indicate in its financial statements that
the assets of Borrower are not available to satisfy the claims of creditors
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of any Affiliate of Borrower and that the assets of any Affiliate of Borrower
are not available to satisfy the claims of creditors of Borrower and, except
with appropriate designation as set forth above, Borrower shall not authorize
its assets or liabilities to be listed on the financial statement of any other
Person (other than the other legal entity constituting Borrower);
(n) has been and will be, and at all times has held and will hold
itself out to the public as, a legal entity separate and distinct from any other
Person (including any of its partners, members, shareholders, trustees,
beneficiaries, principals and Affiliates, and any Affiliates of any of the
same), and not as a department or division of any Person;
(o) has filed and will file such tax returns with respect to itself
as may be required under applicable law and has prepared and will prepare
separate tax returns and financial statements, or if part of a consolidated
group, is shown as a separate member of such group;
(p) has paid and shall pay its own liabilities, indebtedness, and
obligations of any kind, as the same shall become due, from its own separate
assets, rather than from those of other Persons, and Borrower shall not consent
to any Person operating the Mortgaged Property to incur expenses as agent or on
behalf of Borrower, unless such Person agrees, prior to incurring such expense,
to clearly indicate that such expenses are the sole responsibility of, and any
payment will come from, Borrower;
(q) other than in connection with Borrower's formation transactions,
has not and will not enter into any transaction of merger or consolidation, or
acquire by purchase or otherwise all or substantially all of the business or
assets of, or any stock or beneficial ownership of, any Person;
(r) has not commingled and will not commingle or permit to be
commingled its funds or other assets with those of any other Person; and has
held and will hold title to all of its real and personal property in its own
name and not in the name of any other Person;
(s) has maintained and will maintain its assets in such a manner
that it is not costly or difficult to segregate, ascertain or identify its
individual assets from those of any other Person;
(t) has not, does not and will not hold itself out to be responsible
for the debts or obligations of any other Person (other than the other legal
entity constituting Borrower) and, except for the Loan Documents to which other
Persons are party, shall not consent to any other Person holding itself out as
being responsible for the debts or obligations of Borrower;
(u) has not and will not assume, guarantee or otherwise become
liable on or in connection with any obligation of any other Person (other than
the other legal entity constituting Borrower) and, except for the Loan Documents
to which other Persons are party, shall not consent to any other Person
guaranteeing, assuming or otherwise becoming liable for any obligation of
Borrower (it being understood that notwithstanding anything to the contrary
contained in this Agreement Borrower's members and any owner of any direct or
indirect interest in Borrower shall not be prohibited from giving any guarantee
of obligations of Persons other than Borrower);
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(v) except for funds deposited into the Local Collection Account,
the Collection Account, the concentration account in accordance with Section
2.12(a)(i) or the Reserve Accounts in accordance with the Loan Documents, has
not and shall not hold title to its assets other than in its name;
(w) complies and shall at all times hereafter comply with all of the
assumptions, certifications, representations, warranties and covenants regarding
or made by it contained in or appended to the nonconsolidation opinion delivered
pursuant hereto;
(x) has paid and will pay its own liabilities and expenses, out of
its own funds and shall not consent to any other Person paying Borrower's
obligations except to the extent that timely reimbursement is made for the same;
(y) has observed at all times and will observe all limited liability
company formalities and record keeping;
(z) has allocated and will allocate to Borrower reasonably and on
the basis of fair market value determined on an arms-length basis all general
overhead and administrative expenses, including all costs associated with common
employees and shared office space, any such allocation shall be specifically and
reasonably documented and substantiated, any such allocation of expenses to
Borrower shall be paid solely by Borrower from Borrower's own funds, and
Borrower shall at all times use separate stationary, letterhead, invoices and
checks;
(aa) has not and will not identify its members or partners,
Independent Director (as defined below) or any other member or partner of any
Affiliate of Borrower, or any other Person, as a division or part of it;
(bb) has paid and will pay the salaries of its own employees and has
maintained and will maintain a sufficient number of employees in light of its
contemplated business operations;
(cc) has maintained, currently maintains, and will continue to
maintain, its own cash, cash positions and bank accounts separate from any other
Person;
(dd) shall not (i) liquidate or dissolve, in whole or in part; (ii)
consolidate, merge or enter into any form of consolidation with or into any
other Person, nor convey, transfer or lease its assets substantially as an
entirety to any Person nor permit any Person to consolidate, merge or enter into
any form of consolidation with or into itself, nor convey, transfer or lease its
assets substantially as an entirety to any Person; (iii) engage in any business
other than the ownership and operation of the Mortgaged Property; or (iv) amend
any provisions of its organizational documents containing provisions similar to
those contained in this Article VIII;
(ee) Borrower shall be a limited liability company formed under the
laws of the State of Delaware, and Borrower's certificate of formation and
operating agreement ("Borrower's Organizational Documents") shall be in form and
substance reasonably satisfactory to Lender;
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(ff) Borrower's Organizational Agreements shall contain each of the
representations, covenants and warranties set forth in this Article VIII and
require Borrower to at all times cause there to be at least one (1) duly
appointed independent manager of Borrower who is also a non-economic member of
Borrower and an Independent Director whose affirmative vote will be required in
order for Borrower to institute proceedings to have Borrower adjudicated
bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against Borrower or file a petition seeking or consent to,
reorganization or relief with respect to Borrower under any applicable federal
or state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of Borrower or a substantial part of Borrower's property, or make any
assignment for the benefit of creditors of Borrower, or admit in writing
Borrower's inability to pay its debts generally as they become due, or any
similar action, or take action in furtherance of any of the foregoing actions.
Borrower's Organizational Documents shall further require that upon the
occurrence of any event that causes any member of Borrower to cease to be a
member in Borrower, the Independent Director shall, without action of any person
and simultaneously with such member ceasing to be a member of Borrower,
automatically be admitted to Borrower as a member and shall continue Borrower
without dissolution;
(gg) Borrower shall cause reputable Delaware counsel reasonably
acceptable to Lender (the "Law Firm") to deliver to Lender an opinion letter
reasonably satisfactory to Lender whereby the Law Firm opines (which opinion may
be subject to standard assumptions, qualifications, limitations and exceptions
reasonably acceptable to Lender), among other requirements of Lender, that: (1)
the unanimous consent of the member(s) of Borrower and the Independent Director
is required in order for Borrower to file a voluntary bankruptcy petition; (2)
the provision in Borrower's Organizational Documents that requires unanimous
consent as a condition to filing a voluntary bankruptcy petition is enforceable
against the member(s) of Borrower; (3) the bankruptcy of the Borrower's
member(s) will not cause Borrower to be dissolved; (4) no creditor of any member
of Borrower shall have the right to obtain possession of, or otherwise exercise
legal or equitable remedies with respect to, Borrower's property; and (5)
Delaware law, not federal law, governs the determination of what persons or
entities have the authority to file a voluntary bankruptcy petition on behalf of
Borrower;
(hh) Borrower shall not cause or permit the board of directors or
managers of Borrower to take any action which, under the terms of Borrower's
Organizational Documents, requires the vote of the board of directors or
managers of Borrower, unless at the time of such action there shall be at least
one (1) member of such board of directors or managers who is an Independent
Director;
(ii) Borrower has complied and will comply with the separateness
provisions of the Borrower's Organizational Documents since such Borrower's
Organizational Documents were executed and delivered, and with the laws of the
state of its formation relating to limited liability companies; and
(jj) Borrower's Organizational Documents shall at all times continue
to provide that Borrower shall not cause, permit, or empower any Person to
consolidate or merge Borrower.
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ARTICLE IX.
MISCELLANEOUS
Section 9.1. Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the execution and delivery of this Agreement, the
making the Loan hereunder and the execution and delivery by Borrower to Lender
of the Loan Documents, and shall continue in full force and effect so long as
any portion of the Indebtedness is outstanding and unpaid. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All covenants,
promises and agreements in this Agreement contained, by or on behalf of
Borrower, shall inure to the benefit of the respective successors and assigns of
Lender. Nothing in this Agreement or in any other Loan Document, express or
implied, shall give to any Person other than the parties and the holder of the
Note and the other Loan Documents, and their legal representatives, successors
and assigns, any benefit or any legal or equitable right, remedy or claim
hereunder.
Section 9.2. Lender's Discretion. Whenever pursuant to this
Agreement, Lender is entitled to permit, approve or disapprove any action or
matter, or any action or matter is to be satisfactory to Lender, or any action
or matter is subject to Lender's determination, option or discretion, the
decision of Lender to permit, approve or disapprove, and any such determination
by Lender or exercise by Lender of any discretion or option with respect to any
action or matter, or to decide whether any action or matter is satisfactory or
not satisfactory shall (except as is otherwise specifically herein provided) be
in the sole discretion of Lender and shall be final and conclusive.
Section 9.3. Governing Law.
(a) This Agreement was negotiated in New York and made by Lender and
accepted by Borrower in the State of New York, and the proceeds of the Note
delivered pursuant hereto were disbursed from New York, which State the parties
agree has a substantial relationship to the parties and to the underlying
transaction embodied hereby, and in all respects (including, without limitation,
matters of construction, validity, performance, and maximum permissible rates of
interest), this Agreement and the obligations arising hereunder shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts made and performed in such State and any applicable law
of the United States of America, except that at all times the provisions for the
creation, perfection and enforcement of the liens and security interests created
pursuant to each Mortgage and Assignment of Profits and Leases shall be governed
by the laws of each State where the Mortgaged Property is located, except that
the security interests in Account Collateral shall be governed by the laws of
the State of New York or the State where the Account Collateral is held, at the
option of Lender.
(b) Borrower hereby consents to the jurisdiction of any federal
court or state court in New York, New York or within the county and state in
which any Mortgaged Property is located and irrevocably agrees that, subject to
Lender's election, any legal suit, action or proceeding against Lender or
Borrower arising out of or relating to this Agreement or the other Loan
Documents may be instituted and litigated in such courts. Borrower hereby (i)
irrevocably waives, to the fullest extent permitted by applicable law, any
objection which it may now or
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hereafter have to the laying of venue of any such suit, action or proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum, and (ii) irrevocably submits to
the jurisdiction of any such court in any such suit, action or proceeding.
Borrower does hereby designate and appoint Xxxxxxx X. Xxxxxxx, Esq., having an
office at XxXxxxx, Diamond & Ash, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as
its authorized agent to accept and acknowledge on its behalf service of any and
all process which may be served in any such suit, action or proceeding in any
federal or state court in New York, New York, and agrees that service of process
upon said agent at said address (or at such other office in New York, New York
as may be designated by Borrower from time to time in accordance with the terms
hereof) with a copy to Borrower at its principal executive offices, and written
notice of said service of Borrower mailed or delivered to Borrower in the manner
provided herein shall be deemed in every respect effective service of process
upon Borrower, in any such suit, action or proceeding in the State of New York.
Borrower (i) shall give prompt notice to Lender of any change in address of its
authorized agent hereunder, (ii) may at any time and from time to time designate
a substitute authorized agent with an office in New York, New York (which office
shall be designated as the address for service of process), and (iii) shall
promptly designate such a substitute if its authorized agent ceases to have an
office in New York, New York or is dissolved without leaving a successor.
Section 9.4. Modification, Waiver in Writing. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement or any other Loan Document, or consent or waiver referred to in any
Loan Document or consent to any departure by Borrower therefrom, shall in any
event be effective unless the same shall be in a writing signed by the party
against whom enforcement is sought, and then such waiver or consent shall be
effective only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to or demand on
Borrower shall entitle Borrower to any other or future notice or demand in the
same, similar or other circumstances.
Section 9.5. Delay Not a Waiver. Neither any failure nor any delay
on the part of Lender in insisting upon strict performance of any term,
condition, covenant or agreement, or exercising any right, power, remedy or
privilege hereunder, or under any other Loan Document, or any other instrument
given as security therefor, shall operate as or constitute a waiver thereof, nor
shall a single or partial exercise thereof preclude any other future exercise,
or the exercise of any other right, power, remedy or privilege. In particular,
and not by way of limitation, by accepting payment after the due date of any
amount payable under this Agreement, the Note or any other Loan Document, Lender
shall not be deemed to have waived any right either to require prompt payment
when due of all other amounts due under this Agreement, the Note or the other
Loan Documents, or to declare a default for failure to effect prompt payment of
any such other amount.
Section 9.6. Notices. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if delivered or sent by: (a)
hand delivery, (b) certified or registered United States mail, postage prepaid,
(c) nationally recognized overnight delivery service, (d) by facsimile
transmission, addressed if to Lender or to Borrower at its applicable address
set forth on Schedule 4 hereto, or at such other address and Person as shall be
designated from time to time by any party hereto, as the case may be, in a
written notice to the other parties hereto in the
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manner provided for in this Section 8.6, or (e) other than with respect to an
amendment or modification, an electronic medium. A notice shall be deemed to
have been given: in the case of hand delivery, at the time of delivery; in the
case of registered or certified mail, when delivered or three Business Days
after mailing; in the case of overnight delivery and facsimile transmission, on
the Business Day after the same was sent; or in the case of electronic medium,
when confirmed by e-mail. A party receiving a notice which does not comply with
the technical requirements for notice under this Section 9.6 may elect to waive
any deficiencies and treat the notice as having been properly given. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or the Notes or of any Exhibit hereto to be executed
and delivered hereunder shall be effective as delivery of an original executed
counterpart thereof.
Section 9.7. TRIAL BY JURY. BORROWER, TO THE FULLEST EXTENT THAT IT
MAY LAWFULLY DO SO, WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING, INCLUDING,
WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH RESPECT TO
THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS.
Section 9.8. Headings. The Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 9.9. Assignment.
(a) Borrower may not sell, assign or transfer any interest in the
Loan Documents, or any portion of the foregoing (including, without limitation,
Borrower's rights, title, interests, remedies, powers and duties hereunder and
thereunder) without Lender's prior written consent; provided, however, that a
Permitted Transfer shall not be deemed a breach of this provision.
(b) Lender shall have the right to assign or participate this
Agreement and/or its interest in any of the other Loan Documents and the
obligations hereunder to any Person, subject to the other applicable provisions
of this Agreement. In the event of an assignment by Lender, the assignee shall
have, to the extent of such assignment, the same rights, benefits and
obligations as it would have if it were an original "Lender" hereunder. The
holders from time to time of the Loan and/or any other interest of the "Lender"
under this Agreement and the other Loan Documents may from time to time enter
into one or more co-lender or similar agreements in their discretion. Borrower
acknowledges and agrees that such agreements, as the same may from time to time
be amended, modified or restated, may govern the exercise of the powers and
discretionary authority of Lender hereunder and under the other Loan Documents.
Liens granted and created in favor of the "Lender" under this Agreement, the
Mortgage and the other Loan Documents shall be held, and shall be deemed for all
purposes under this Agreement, the Mortgage and the other Loan Documents to be
held, by the designated "Lender" as Collateral Agent for itself as a Lender and
as Collateral Agent for each and every other Lender hereunder and under the
other Loan Documents. Without limiting the foregoing, Liens granted and created
in favor of Citigroup Global Markets Realty Corp. under the Loan Documents shall
be held, and be deemed for all purposes under the Loan Documents to be held by
Citigroup Global Markets
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Realty Corp., its successors and assigns, as Collateral Agent for itself as a
Lender and for each and every other Lender hereunder and under the Loan
Documents.
(c) Lender may from time to time elect to enter into a servicing
agreement with a servicer, pursuant to which the servicer shall be appointed to
service and administer the Loan and the Account Collateral in accordance with
the terms hereof and to exercise any and all other rights of Lender with respect
to the Loan as set forth in such servicing agreement. Lender shall promptly
notify Borrower if Lender shall elect to appoint or change the servicer, and all
notices and other communications from Borrower to Lender shall be delivered to
the servicer with a copy concurrently delivered to the Lender, and any notice,
direction or other communication from the servicer to Borrower shall have the
same force and effect as a notice, direction or communication from Lender. The
servicer shall be entitled to be reimbursed for any reasonable cost, expense or
liability which is incurred by the servicer pursuant to such servicing and
administrative duties and which would otherwise be reimbursable to Lender under
this Agreement or any other Loan Document in the same manner and to the same
extent as if Lender incurred such cost, expense or liability in the first place.
The parties hereto acknowledge and agree that the servicer shall be a third
party beneficiary to this Agreement and the other Loan Documents.
Section 9.10. Severability. 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 ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Section 9.11. Preferences. Lender shall have no obligation to
marshal any assets in favor of Borrower or any other party or against or in
payment of any or all of the obligations of Borrower pursuant to this Agreement,
the Note or any other Loan Document. Lender shall have the continuing and
exclusive right to apply or reverse and reapply any and all payments by Borrower
to any portion of the obligations of Borrower hereunder, provided that such
application or reapplication is performed by Lender in accordance with the terms
of this Agreement or any other applicable Loan Document. To the extent Borrower
makes a payment or payments to Lender for Borrower's benefit, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by Lender.
Section 9.12. Waiver of Notice. Borrower shall not be entitled to
any notices of any nature whatsoever from Lender except with respect to matters
for which this Agreement or another Loan Document specifically and expressly
provides for the giving of notice by Lender to Borrower and except with respect
to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement or the other Loan Documents does not specifically and expressly
provide for the giving of notice by Lender to Borrower.
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Section 9.13. Consents. In all cases Lender shall conclusively be
deemed to be acting reasonably when implementing any applicable appropriate
standard or requirement imposed by any applicable Rating Agency in connection
with a Securitization, or in refusing or delaying any consent due to the
existence of any Event of Default. In no event shall references herein or in the
other Loan Documents to the "existence" or "continuance" of an Event of Default
imply that any Event of Default, or any Default, once maturing into an Event of
Default due to the expiration of any applicable cure period or by operation of
this Agreement in the event no cure period is provided hereunder, shall be
further susceptible of cure by Borrower or otherwise cease to be an Event of
Default in the absence of a written waiver of such Event of Default by the
Lender. In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where,
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
neither Lender nor its agents shall be liable for any monetary damages, it being
intended that Borrower's sole remedy shall be to bring an action for an
injunction or specific performance.
Section 9.14. Schedules Incorporated. The information set forth on
the cover, heading and recitals hereof, and the Schedules attached hereto, are
hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.
Section 9.15. Offsets, Counterclaims and Defenses. Any assignee of
any of Lender's interest in and to this Agreement and the other Loan Documents
shall take the same free and clear of all offsets, counterclaims or defenses
which are unrelated to this Agreement and the other Loan Documents which
Borrower may otherwise have against any assignor or this Agreement and the other
Loan Documents. No such unrelated counterclaim or defense shall be interposed or
asserted by Borrower in any action or proceeding brought by any such assignee
upon this Agreement or upon any other Loan Document. Any such right to interpose
or assert any such unrelated offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by Borrower.
Section 9.16. No Joint Venture or Partnership. Borrower and Lender
intend that the relationship created hereunder be solely that of borrower and
lender. Nothing herein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower (or any
Affiliate of Borrower) and Lender nor to grant Lender any interest in the
Collateral other than that of secured party, mortgagee or lender.
Section 9.17. Waiver of Marshalling of Assets Defense. To the
fullest extent Borrower may legally do so, Borrower waives all rights to a
marshalling of the assets of Borrower, and others with interests in Borrower,
and of the Collateral, or to a sale in inverse order of alienation in the event
of foreclosure of the interests hereby created, and agrees not to assert any
right under any laws pertaining to the marshalling of assets, the sale in
inverse order of alienation, homestead exemption, the administration of estates
of decedents, or any other matters whatsoever to defeat, reduce or affect the
right of Lender under the Loan Documents to a sale of any Collateral for the
collection of the Indebtedness without any prior or different resort for
collection, or the right of Lender to the payment of the Indebtedness out of the
Net Proceeds of the Collateral in preference to every other claimant whatsoever.
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Section 9.18. Waiver of Counterclaim. To the extent permitted by
applicable law, Borrower hereby waives the right to assert a counterclaim, other
than compulsory counterclaim, in any action or proceeding brought against it by
Lender or its agents.
Section 9.19. Conflict; Construction of Documents. In the event of
any conflict between the provisions of this Agreement and the provisions of any
of the other Loan Documents, the provisions of this Agreement shall prevail. The
parties hereto acknowledge that they were represented by counsel in connection
with the negotiation and drafting of the Loan Documents and that the Loan
Documents shall not be subject to the principle of construing their meaning
against the party that drafted same.
Section 9.20. Brokers and Financial Advisors. Borrower hereby
represents that it has dealt with no financial advisors, brokers, underwriters,
placement agents, agents or finders in connection with the transactions
contemplated by this Agreement. Borrower hereby agrees to indemnify and hold
Lender harmless from and against any and all claims, liabilities, costs and
expenses of any kind in any way relating to or arising from a claim by any
Person that such Person acted on behalf of Borrower in connection with the
transactions contemplated herein. The provisions of this Section 9.20 shall
survive the expiration and termination of this Agreement and the repayment of
the Indebtedness.
Section 9.21. Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
Section 9.22. Estoppel Certificates. Borrower and Lender hereby
agree at any time and from time to time (but not more than four times per year)
upon not less than fifteen (15) days prior written notice by Borrower or Lender
to execute, acknowledge and deliver to the party specified in such notice, a
statement, in writing, certifying that this Agreement is unmodified and in full
force and effect (or if there have been modifications, that the same, as
modified, is in full force and effect and stating the modifications hereto), and
stating whether or not, to the knowledge of such certifying party, any Default
or Event of Default has occurred and is then continuing, and, if so, specifying
each such Default or Event of Default; provided, however, that it shall be a
condition precedent to Lender's obligation to deliver the statement pursuant to
this Section 9.22, that Lender shall have received, together with Borrower's
request for such statement, an Officer's Certificate stating that, to the
knowledge of Borrower, no Default or Event of Default exists as of the date of
such certificate (or specifying such Default or Event of Default).
Section 9.23. Payment of Expenses. Borrower shall pay all
Transaction Costs, which shall include, without limitation, (a) reasonable
out-of-pocket costs and expenses of Lender in connection with (i) the
negotiation, preparation, execution and delivery of the Loan Documents and the
documents and instruments referred to therein; (ii) the creation, perfection or
protection of Lender's Liens in the Collateral (including, without limitation,
fees and expenses for title and lien searches or amended or replacement
Mortgage, UCC financing statements or Collateral Security Instruments, title
insurance premiums and filing and recording fees, third party due diligence
expenses for the Mortgaged Property plus reasonable travel expenses, accounting
firm fees, costs of the Appraisals, Environmental Reports (and an environmental
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consultant), and the Property Condition Assessments and earthquake "maximum
probable loss" report and costs and fees incurred in connection with arranging,
setting up, servicing and maintaining the Account Collateral); (iii) response to
any requests by Borrower (or its Affiliates) for Lender consent or approval of
any matter; (iv) except as set forth in this Agreement with respect to any
Secondary Market Transaction, the negotiation, preparation, execution and
delivery of any amendment, waiver, restructuring or consent relating to any of
the Loan Documents, and (v) the preservation of rights under and enforcement of
the Loan Documents and the documents and instruments referred to therein,
including any communications or discussions relating to any action that Borrower
shall from time to time request Lender to take, as well as any restructuring or
rescheduling of the Indebtedness, (b) the reasonable fees, expenses and other
charges of counsel to Lender or its servicer in connection with all of the
foregoing, and (c) Lender's reasonable out-of-pocket travel expenses in
connection with site visits to the Mortgaged Property.
Section 9.24. Non-Recourse. Anything contained herein, in the Note
or in any other Loan Document to the contrary notwithstanding, but subject in
all respects to provisions set forth below, Lender shall not enforce the
liability and obligation of the Borrower to perform and observe any of its
obligations that may be contained in the Note, this Agreement, the Mortgage or
any other Loan Document by any action or proceeding wherein a money judgment
shall be sought against Borrower, except that Lender may bring a foreclosure
action, an action for specific performance or any other appropriate action or
proceeding to enable Lender to enforce and realize upon its interest under the
Note, this Agreement, the Mortgage and the other Loan Documents, or in the
Mortgaged Property, or any other Collateral pursuant to the Loan Documents;
provided, however, that, except as specifically provided herein, any judgment in
any such action or proceeding shall be enforceable against Borrower only to the
extent of Borrower's interest in the Mortgaged Property and in any other
Collateral. NOTWITHSTANDING ANYTHING TO THE CONTRARY ABOVE OR ELSEWHERE IN THIS
AGREEMENT, THE MORTGAGE OR ANY OF THE LOAN DOCUMENTS, however,
(a) the provisions of this Section 9.24 and the other provisions of
the Loan Documents shall not: (i) constitute a waiver of any right which
Lender may have under Sections 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of
the Indebtedness or to require that all Collateral shall continue to
secure all of the Indebtedness owing to Lender in accordance with the Loan
Documents; (ii) constitute a waiver, release or impairment of any
obligation evidenced or secured by any of the Loan Documents; (iii) impair
the right of Lender to name Borrower as a party defendant in any action or
suit for foreclosure and sale under the Mortgage or other Loan Documents;
(iv) impair the right of Lender to obtain the appointment of a receiver;
(v) impair the enforcement of the Assignment of Profits and Leases; (vi)
constitute a prohibition against Lender to seek a deficiency judgment
against Borrower (but only to the extent such deficiency judgment is
required) in order to fully realize the security granted by the Mortgage
and other Loan Documents or to commence any other appropriate action or
proceeding in order for Lender to exercise its remedies against the
Mortgaged Property or any other Collateral (provided that any such
deficiency judgment shall only be enforceable against Borrower to the
extent of Borrower's interest in the Mortgaged Property and other
Collateral); (vii) have any applicability whatsoever to or limit the
liability of the Borrower, Guarantor or other parties under the Guaranty
of
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Non-Recourse Obligations or the Environmental Indemnity Agreement; or
(viii) constitute a waiver, release or discharge of any Indebtedness or
obligation evidenced by the Note or this Agreement or secured by the Loan
Documents, and the same shall continue until paid or discharged in full,
and
(b) the provisions of this Section 9.24 and the other provisions of
the Loan Documents shall not
(A) prevent recourse to Borrower and Guarantor, jointly and
severally, and their respective assets for repayment of the
Indebtedness, and Lender's agreement not to pursue personal
liability of Borrower as set forth above SHALL BECOME NULL AND VOID
and shall be of no further force or effect, and the Indebtedness
shall be fully recourse not only to Borrower but also to Guarantor,
in the event Borrower shall file or commence any voluntary
bankruptcy, insolvency or similar proceeding, including any petition
for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, or Borrower
shall make an assignment for the benefit of creditors or institute
receivership proceedings or similar proceedings with respect to the
Mortgaged Property, Borrower or Borrower's assets, or (X) any such
proceedings or petition shall be filed or commenced against Borrower
by Guarantor or Guarantor's or Borrower's Affiliates or agents or
(Y) Borrower, Guarantor or their respective Affiliates aid, solicit,
support or otherwise cooperate or collude to bring about the filing
or commencement of any such proceedings or petition against Borrower
or acquiesce in or fail to contest, any such proceedings or
petition;
(B) prevent recourse to Borrower and Guarantor, jointly and
severally, and their respective assets, and Borrower and Guarantor
shall be fully and personally liable, for any loss, costs,
liability, damage or expense (including, without limitation,
reasonable attorneys' fees and disbursements) suffered or incurred
by Lender or any Indemnified Party related to or arising from any of
the following acts committed by or on behalf of Borrower, Guarantor
or any of their respective Affiliates:
(1) any fraud on the part of Borrower, Guarantor or their
respective Affiliates in connection with the Loan
(2) any intentional or willful misrepresentation by
Borrower, Guarantor or their respective Affiliates in
connection with the Loan or under any of the Loan
Documents or in any reports or certificates furnished
pursuant to any Loan Document;
(3) any misappropriation or misapplication of funds
(including Loss Proceeds, Advance Bookings Deposits,
Receipts, including Receipts collected in advance, or
other Receivables), including any use or application of
any thereof in contravention of the Loan Documents;
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(4) additional financing obtained by Borrower (whether
secured or unsecured) in violation of the terms of the
Loan Documents;
(5) physical waste to the Mortgaged Property or material
damage to the Mortgaged Property resulting from gross
negligence or willful misconduct, or removal of material
Equipment or other Personalty from the Property in
violation of the Loan Documents;
(6) any Transfer occurs in violation of the terms of the
Loan Documents;
(7) any material breach of the provisions of Article VIII of
this Agreement occurs;
(8) all costs and expenses, including reasonable attorneys'
fees and expenses, incurred in enforcing any obligation
or liability or in collecting any amount due under this
Section 9.24(b), the Environmental Indemnity and the
Guaranty of Non-Recourse Obligations, which, as to
Borrower, is a recourse obligation of Borrower as
described in this Section 9.24(b), the Environmental
Indemnity and the Guaranty of Non-Recourse Obligations,
or, as to Guarantor, is a recourse obligation of
Guarantor under the Guaranty of Non-Recourse Obligations
or the Environmental Indemnity;
(9) the failure to pay Impositions assessed against the
Mortgaged Property to the extent there was sufficient
funds available to pay and Lender allows Borrower to
apply the same, or the failure to maintain insurance as
required under the Loan Documents, or the failure to pay
any deductible amount in respect of any insurance
maintained in respect of the Mortgaged Property, or the
failure to pay and discharge any mechanic's or
materialman's Liens against the Mortgaged Property to
the extent there was sufficient funds available to pay
and discharge and Lender allows Borrower to apply the
same;
(10) If an Event of Default has occurred, and Borrower or any
Affiliate contests or in any way interferes with,
directly or indirectly (collectively, a "Contest"), any
foreclosure action or sale commenced by Lender or with
any other enforcement of Lender's rights, powers or
remedies under any of the Loan Documents or under any
document evidencing, securing or otherwise relating to
any of the Collateral (whether by making any motion,
bringing any counterclaim, claiming any defense, seeking
any injunction or other restraint, commencing any action
seeking to consolidate any such foreclosure or other
enforcement with any other action, or otherwise) (except
this clause (11) shall not apply if Borrower
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successfully asserts a Contest and obtain a final
non-appealable court order as to the same);
(11) any Legal Requirement mandating the forfeiture by
Borrower of the Collateral or any portion thereof
because of the conduct or purported conduct of criminal
activity by Borrower or any Affiliate in connection
therewith; or
(12) for as long as Licensor is an Affiliate of Borrower, any
material change in or amendment to, or cancellation,
expiration, surrender or termination of, the License
Agreement without Lender's prior written approval.
Section 9.25. Joint and Several Liability. All representations,
warranties, covenants (both affirmative and negative) and all other obligations
hereunder and under the Loan Documents shall be the joint and several obligation
of KC Borrower and TC Borrower and any default hereunder or under the Loan
Documents by any such person or entity shall be deemed a default by all such
entities comprising Borrower. The representations, covenants and warranties
contained herein and in the Loan Documents shall be read to apply to each of the
individual persons and entities comprising Borrower when the context so
requires, but a breach of any such representation, covenant or warranty shall be
deemed a breach by all such persons and entities and Borrower, entitling Lender
to exercise all of its rights and remedies hereunder and under applicable law.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
LENDER:
CITIGROUP GLOBAL MARKETS REALTY
CORP., a New York corporation
By: /s/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx Xxxxxx
Title: Authorized Agent
BORROWER:
GREAT WOLF KANSAS SPE, LLC, a
Delaware limited liability company
By: /s/ J. Xxxxxxx Xxxxxxxxx
------------------------------
Name: J. Xxxxxxx Xxxxxxxxx
Title: Secretary
GREAT WOLF TRAVERSE SPE, LLC, a
Delaware limited liability company
By: /s/ J. Xxxxxxx Xxxxxxxxx
------------------------------
Name: J. Xxxxxxx Xxxxxxxxx
Title: Secretary
INITIAL NOTE B LENDER:
THE TRAVELERS INSURANCE COMPANY,
a Connecticut corporation
By: /s/ Xxxxx Xxxxxxxxx
------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
