EXHIBIT 10.17.03.01
EARLY RATE LOCK AGREEMENT
This Early Rate Lock Agreement is made as of April 26, 2005 by and
between Ashford Hospitality Limited Partnerhip ("Borrower"), and Xxxxxxx Xxxxx
Mortgage Lending, Inc., individually and as agent for its affiliates ("ML").
1. Borrower and Ashford Hospitality Trust, Inc., have executed and
delivered to ML a Commitment Letter dated April 26, 2005 (the
"Commitment Letter") for a mortgage loan in the approximate principal
amount of $370,000,000 (the "Loan") with regard to financing certain
properties identified on Exhibit A to the Commitment Letter (the
"Property");
2. Borrower has requested that, as an accommodation to Borrower, and at
Borrower's sole risk, cost and expense, ML lock in advance the interest
rate for the Loan (the "Rate Lock"), in connection with ML's issuance
of the Commitment Letter, notwithstanding that all of the conditions
necessary to fund the Loan as set forth therein have not yet been
fulfilled and satisfied by Borrower. Borrower acknowledges that ML has
not completed its due diligence review, except as otherwise set forth
in the Commitment Letter.
3. Neither this Agreement nor any Confirmation (as hereinafter defined)
shall constitute a commitment to lend, either express or implied. ML's
commitment to make the Loan is documented in the Commitment Letter.
4. Borrower shall be permitted to enter into the Rate Lock transaction
(the "Transaction") with regard to the requested Loan subject to the
terms of this Agreement. Such Transaction shall be evidenced by a
confirmation in the form attached hereto and made a part hereof as
EXHIBIT A (the "Confirmation") setting forth, among other things, the
"Fixed Rate", the "Specified Principal Amount", the "Initial Rate Lock
Deposit", the "Breakage Multiplier", the "Base Swap Rate Index", the
"Base Swap Rate", the "Margin Threshold", the "Initial CMBS Spread
Index", the "CMBS Spread Index", and the "Fixed Rate Period" of the
Transaction.
5. In order to effect the Transaction, ML may or may not enter into
certain hedging arrangements and/or a series of combined or offsetting
transactions in its sole and absolute discretion through the purchase
or sale of United States Treasury notes, swap contracts, or any other
instruments deemed necessary or appropriate, any of which may be with
an affiliate of ML (collectively, "Hedging Arrangements").
Notwithstanding the terms hereof, ML will not be required to Rate Lock
on any day or at any time at which, in ML's sole and absolute judgment,
there is not an orderly market.
6. Borrower understands and agrees that ML is under no obligation to give,
and will not give, Borrower the benefit of any decline in interest
rates subsequent to ML's locking of the interest rate hereunder.
7. In consideration for ML agreeing to the early interest rate lock,
Borrower has agreed to deposit with ML an Initial Rate Lock Deposit
which shall be held by ML in accordance with the terms of this
Agreement. The interest rate on the Loan will be the Fixed Rate as
set forth on the Confirmation, which will be calculated pursuant to the
Commitment Letter. If at any time during the Fixed Rate Period, (i) the
number of basis points by which the Base Swap Rate Index decreases from
the Base Swap Rate exceeds (ii) the Margin Threshold, the Borrower
shall be required, no later than 10:00 am (New York City time) on the
business day following notice thereof (the "Losses Payment Date") to
deposit additional funds with ML by wire transfer an amount sufficient
to bring the cumulative Rate Lock Deposits to an amount equal to the
Initial Rate Lock Deposit plus the current value of the sum of the
Principal Losses (as hereinafter defined) plus Per Diem Carrying Costs
(as hereinafter defined). In addition, if at any time during the Fixed
Rate Period, the accrued Per Diem Carrying Costs (as hereinafter
defined) are greater than one-half of one (1) percent of the Specified
Principal Amount then the Borrower shall be required, no later than
10:00 am (New York City time) on the business day following notice
thereof (the "Losses Payment Date") to deposit additional funds with ML
by wire transfer an amount sufficient to bring the cumulative Rate Lock
Deposits to an amount equal to the Initial Rate Lock Deposit plus the
current value of the sum of the Principal Losses (as hereinafter
defined) plus Per Diem Carrying Costs (as hereinafter defined).
Borrower acknowledges and agrees that ML may require one or more
additional Rate Lock Deposits at any time during the Fixed Rate Period
as provided above. If Borrower fails to post required additional Rate
Lock Deposits with ML by any Losses Payment Date, ML may, in its sole
discretion, declare a default hereunder, in which event (i) the
interest rate for the Loan will no longer be fixed at the Fixed Rate,
(ii) ML may unwind the Hedging Arrangements, and (iii) ML's only
obligation hereunder to Borrower shall be to return all Rate Lock
Deposits less any Breakage Costs (as hereinafter defined). Borrower
shall promptly upon demand remit to ML the amount of any Breakage Costs
(as hereinafter defined) in excess of the Rate Lock Deposits. Borrower
hereby pledges all Rate Lock Deposits to ML as security for the
obligations of Borrower hereunder. Borrower agrees to act and negotiate
in good faith to consummate the closing of the Loan during the Fixed
Rate Period, including, without limitation, (a) providing to ML,
promptly upon request therefor, all due diligence materials reasonably
requested by ML and (b) executing final loan documents and other
agreements satisfactory to ML.
8. Upon the closing of the Loan, Borrower shall pay Lender Per Diem
Carrying Costs, except that Borrower shall not be required to pay Per
Diem Carrying Costs for the first ten (10) days of the Fixed Rate
Period. In the event that the Loan amount is less than the Specified
Principal Amount or the Loan fails to close for any reason, other than
by Borrower default, and in any case, the Transaction is terminated by
ML in its sole discretion, ML shall return the balance, if any, of all
Rate Lock Deposits less Breakage Costs (as hereinafter defined).
"Breakage Costs" shall be equal to the sum of all Principal Losses (as
defined herein), Per Diem Carrying Costs (as defined herein), damages,
losses, liabilities, legal fees, costs, and other fees and expenses.
Per Diem Carrying Costs will be calculated as the amount equal to the
product of (i) the Per Diem Charge (as set forth on the Confirmation)
multiplied by (ii) the number of days, commencing on and including the
date hereof through and including the date of closing or the date the
Transaction is otherwise terminated. Borrower acknowledges and agrees
that it shall be liable for, and fully responsible to pay Lender, all
Breakage Costs. If, upon the termination of the Transaction, the Rate
Lock Deposit is not sufficient to cover the
Breakage Costs, Borrower agrees to pay to ML such deficiency
immediately upon demand. Borrower further agrees that any loan expense
deposit, application fee and/or commitment fee or any loan commitment
which may be issued may, at ML's option, be applied to the payment of
Breakage Costs. Notwithstanding anything to the contrary contained in
the Commitment Letter, in no event shall the Initial Deposit (as
defined in the Commitment Letter), application fee or commitment fee be
returned to Borrower until all Breakage Costs have been paid in full.
Principal Losses will be calculated as the amount equal to the sum of
(A) the product of (i) the Breakage Multiplier multiplied by the (ii)
the number of basis points by which the Base Swap Rate Index decreases
from the Base Swap Rate, plus (B) the product of (i) Breakage
Multiplier multiplied by (ii) the number of basis points by which the
CMBS Spread Index decreases from the Initial CMBS Spread Index. In the
event the Loan closes, but the principal amount of the Loan at closing
is less than the Specified Principal Amount, Borrower will be required
to pay the Pro-Rata amount of the Breakage Costs represented by the
amount by which the Specified Principal Amount exceeds the principal
amount of the Loan at closing.
9. Borrower agrees that if the Loan does not close during the Fixed Rate
Period, Lender has the option to extend the terms of this Agreement and
require Borrower to execute an acknowledgement of such extension and
pay the applicable extension fees (the "Extension Acknowledgement"). In
addition, provided that Borrower is not in default hereunder or under
the Commitment Letter, Borrower shall have the option to extend the
terms of this Agreement for up to 30 days and in such case Borrower
shall execute an Extension Acknowledgement. This Agreement shall govern
until any such Extension Acknowledgement is executed. In the event of
any extension beyond the Fixed Rate Period, in addition to all other
sums due in connection herewith, Borrower agrees to pay to ML Per Diem
Carrying Costs through the date of closing.
10. Borrower agrees that in the event Borrower willfully fails or refuses
to close the Loan in connection with its acquisition of the Property,
fails to act and negotiate in good faith to consummate the closing of
the Loan during the Fixed Rate Period as set forth in Paragraph 7
hereof, or otherwise defaults under this Agreement or the Commitment
Letter, the entire Rate Lock Deposit shall become non-refundable, be
deemed immediately earned and be retained by ML. In such event,
Borrower shall be and remain liable for all Breakage Costs, and if the
Rate Lock Deposit is not sufficient to cover the Breakage Costs,
Borrower agrees to pay to ML such deficiency immediately upon demand.
11. Borrower agrees to indemnify, defend and hold ML harmless from and
against all costs, fees and expenses (including attorneys' fees and
disbursements) incurred by ML pursuant to this Agreement and/or the
rate lock Transaction.
12. In the event that a default of Borrower or any affiliate thereof shall
occur under the Commitment Letter or this Agreement (including, without
limitation, the commencement of a case under the U.S. Bankruptcy Code
or other creditor protection action or proceeding by or with respect to
Borrower), ML may, at its option, terminate the Transaction upon
written notice to Borrower. In such event, Borrower shall be and remain
liable for all Breakage Costs as otherwise provided in this Agreement.
13. This Agreement represents the entire agreement and understanding of the
parties with respect to its subject matter and supersedes all oral
communications and prior writings. No amendment, modification or waiver
under this Agreement shall be effective unless in writing signed by the
parties hereto. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
BORROWER
Ashford Hospitality Limited Partnerhip
By: Ashford OP General Partner LLC
By: /s/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: Chief Legal Officer
XXXXXXX XXXXX
Xxxxxxx Xxxxx Mortgage Lending, Inc.
By: /s/ XXXXXX SPINNA
Name: Xxxxxx Spinna
Title:
SCHEDULE A
CONFIRMATION dated April 27, 2005 between Xxxxxxx Xxxxx Mortgage Lending, Inc.
("Xxxxxxx Xxxxx"), and Ashford Hospitality Limited Partnerhip (the "Borrower").
This Confirmation is entered into between Xxxxxxx Xxxxx and Borrower
pursuant to that certain Early Rate Lock Agreement dated as of the date hereof
(the "Early Rate Lock Agreement") and is the "Confirmation" referred to in the
Early Rate Lock Agreement and is intended to confirm the terms of a Rate Lock.
Capitalized terms used herein shall have the meanings set forth in the Early
Rate Lock Agreement.
The terms of the Transaction are hereby confirmed as follows:
1. Transaction Type: Early Interest Rate Lock.
2. Initial Rate Lock Deposit: $7,400,000 payable by Borrower to
Xxxxxxx Xxxxx (as such amount may be
increased from time to time per
paragraph 7 of the Early Rate Lock
Agreement, the "Rate Lock Deposit").
3. Lock Date: April 27, 2005.
4. Fixed Rate: 5.3175 % per annum.
5. Specified Principal Amount: $370,000,000
6. Fixed Rate Period: From the date hereof to and
including June 17, 2005 (52 days).
7. Breakage Multiplier: $283,790
8. Per Diem Charge: $24,576
9. Base Swap Rate Index: Mid-Market 10-Year Swap Rate as
referenced on Bloomberg, Page SSRC7
(or its successor).
10. Base Swap Rate: 4.7375 %
11. Margin Threshold: 13 basis points
12. CMBS Spread Index: Xxxxxx LEH InvG 8.5+ Index, as
referenced on Bloomberg, Page "LEHM."
13. Initial CMBS Spread Index: 37.3 basis points
A-1
