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EXHIBIT 10.58
LOAN AGREEMENT
Dated as of January 27, 1999
Among
THE BORROWERS NAMED HEREIN
as Borrowers,
STARWOOD OPERATOR I LLC
as Operator,
STARWOOD OPERATOR II LLC
as Manager under the Management Contracts
and
XXXXXX BROTHERS HOLDINGS INC. D/B/A XXXXXX CAPITAL,
A DIVISION OF XXXXXX BROTHERS HOLDINGS INC.
as Lender
Secured by:
Eleven Mortgaged Properties as specified in Schedule A hereto
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS; PRINCIPLES OF CONSTRUCTION.................................................... 5
Section 1.1 Definitions................................................................................ 5
Section 1.2 Principles of Construction................................................................. 38
ARTICLE II GENERAL.................................................................................... 39
Section 2.1 The Loan................................................................................... 39
2.1.1 Commitment................................................................................. 39
2.1.2 Disbursement to Borrower and Use of Loan Proceeds.......................................... 39
2.1.3 The Notes.................................................................................. 39
Section 2.2 Principal and Interest..................................................................... 40
2.2.1 Principal and Interest..................................................................... 40
2.2.2 Default Rate............................................................................... 41
2.2.3 Late Fee................................................................................... 41
Section 2.3 Loan Repayment and Defeasance.............................................................. 41
2.3.1 Prepayment and Repayment................................................................... 41
2.3.2 Voluntary Defeasance of the Notes.......................................................... 41
2.3.3 Repayment on or After Anticipated Repayment Date........................................... 45
2.3.4 Repayment Upon Default..................................................................... 45
2.3.5 Limited Right of Prepayment................................................................ 45
2.3.6 Mandatory Prepayment upon Title Defect or Survey Defect.................................... 45
Section 2.4 Release of the Property.................................................................... 45
2.4.1 Release of All the Properties.............................................................. 46
2.4.2 Release of Individual Properties........................................................... 46
2.4.3 Release on Payment in Full................................................................. 48
2.4.4 Further Assurances......................................................................... 48
Section 2.5 Payments and Computations.................................................................. 49
2.5.1 Making of Payments......................................................................... 49
2.5.2 Computations............................................................................... 49
2.5.3 Loan Account and Computer Access to Collateral Accounts.................................... 49
Section 2.6 Substitution of Properties................................................................. 49
ARTICLE III CONDITIONS PRECEDENT....................................................................... 58
Section 3.1 Conditions Precedent to the Loan........................................................... 58
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................................. 64
Section 4.1 Obligor Representations.................................................................... 64
Section 4.2 Nonrecourse Carveout Indemnitor Representations............................................ 84
Section 4.3 Member Representations..................................................................... 86
Section 4.4 Second-Tier Member Representations......................................................... 90
Section 4.5 Survival of Representations................................................................ 90
ARTICLE V AFFIRMATIVE COVENANTS...................................................................... 91
Section 5.1 Obligor Covenants.......................................................................... 91
Section 5.2 Operator Covenants......................................................................... 107
ARTICLE VI NEGATIVE COVENANTS......................................................................... 108
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Section 6.1 Obligor's Negative Covenants.............................................................. 108
Section 6.2 Operator's Negative Covenants............................................................. 116
ARTICLE VII ALTERATIONS AND EXPANSIONS; LEASING....................................................... 116
Section 7.1 Alterations and Expansions................................................................ 116
Section 7.2 Inspections; Undertaking of Work.......................................................... 123
Section 7.3 Leasing................................................................................... 123
ARTICLE VIII CASUALTY AND CONDEMNATION................................................................. 124
Section 8.1 Insurance; Casualty and Condemnation...................................................... 124
8.1.1 Insurance................................................................................. 124
8.1.2 Casualty; Application of Proceeds......................................................... 129
8.1.3 Condemnation.............................................................................. 132
ARTICLE IX ACCOUNTS AND RESERVES..................................................................... 133
Section 9.1 Collection Accounts....................................................................... 133
Section 9.2 Deposit Account........................................................................... 133
Section 9.3 Reserve Account........................................................................... 137
Section 9.4 Tax, Insurance and Ground Rents Escrow Account............................................ 137
9.4.1 Application Generally..................................................................... 138
Section 9.5 FF&E Reserve Account...................................................................... 139
Section 9.6 Deferred Maintenance and Environmental Remediation
Reserve Account........................................................................... 143
Section 9.7 Earthquake Deductible Account............................................................. 144
Section 9.8. Account Collateral........................................................................ 144
Section 9.9 Remedies.................................................................................. 145
Section 9.10 Special Reserve Account................................................................... 145
ARTICLE X DEFAULTS.................................................................................. 146
Section 10.1 Event of Default.......................................................................... 146
Section 10.2 Remedies.................................................................................. 150
Section 10.3 Remedies Cumulative....................................................................... 150
ARTICLE XI PROPERTY MANAGEMENT....................................................................... 150
Section 11.1 Termination of Property Managers.......................................................... 150
ARTICLE XII MISCELLANEOUS............................................................................. 151
Section 12.1 Survival.................................................................................. 151
Section 12.2 Permitted Investments; Eligible Accounts; Eligible Institutions........................... 151
Section 12.3 Governing Law; Consent to Jurisdiction.................................................... 152
Section 12.4 Modification, Waiver in Writing........................................................... 153
Section 12.5 Delay Not a Waiver........................................................................ 153
Section 12.6 Notices................................................................................... 154
Section 12.7 Trial by Jury............................................................................. 156
Section 12.8 Headings.................................................................................. 156
Section 12.9 Severability.............................................................................. 156
Section 12.10 Preferences............................................................................... 156
Section 12.11 Waiver of Notice.......................................................................... 157
Section 12.12 Remedies of Obligor....................................................................... 157
Section 12.13 Expenses; Indemnity....................................................................... 157
Section 12.14 Exhibits and Schedules Incorporated....................................................... 158
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Section 12.15 Offsets, Counterclaims and Defenses....................................................... 158
Section 12.16 No Joint Venture or Partnership........................................................... 158
Section 12.17 Publicity................................................................................. 158
Section 12.18 Waiver of Marshalling of Assets........................................................... 159
Section 12.19 Waiver of Counterclaim.................................................................... 159
Section 12.20 Conflict; Construction of Documents....................................................... 159
Section 12.21 Brokers and Financial Advisors............................................................ 159
Section 12.22 No Third Party Beneficiaries.............................................................. 159
Section 12.23 Prior Agreements.......................................................................... 160
Section 12.24 Recourse.................................................................................. 160
Section 12.25 Loan Assignability........................................................................ 162
Section 12.26 Exculpation of Lender..................................................................... 163
Section 12.27 Exculpation of REIT Trustee............................................................... 163
ARTICLE XIII RETENTION OF SERVICER..................................................................... 163
Section 13.1 Retention of Servicer..................................................................... 163
SCHEDULES
Schedule A - Mortgaged Properties
Schedule B - Borrower Entities, Member Entities and Second-Tier Member Entities
Schedule C - Allocated Loan Amounts
Schedule D - Management Contracts
Schedule E - Deferred Maintenance and Environmental Conditions
Schedule F - Franchise Agreements
Schedule G - Release Amounts
Schedule H - Adjusted NOI Calculation Percentages
Schedule I - Maximum Allowed Lease Payments and License Fees per Property
Schedule J - Threshold Amounts per Property
Schedule K - Liquor License Agreements
Schedule L - Intentionally Omitted
Schedule M - Intentionally Omitted
Schedule N - CMBS Agreed Upon Procedures
Schedule 3.1(p) - Properties for which Seismic Reports are Required by Lender
Schedule 3.1(u) - List of Tenants to Provide SNDAs
Schedule 4.1(d) - Litigation
Schedule 4.1(e) - Necessary Consents to Assignment
Schedule 4.1(k) - Schedule of Material Agreements
Schedule 4.1(u) - Insurance Claims or Risks of Impaired Insurance Coverage
Schedule 4.1(x)(i) - Schedule of Engineering Reports, Environmental Reports and Seismic Reports
Schedule 4.1(y) - Schedule of Tenant Security Deposits and Letters of Credit
Schedule 4.1(y)(ii) - Leases with Overdue Landlord Obligations and Pending Monetary Claims by Tenant
Schedule 4.1(y)(iii) - Leases with Outstanding Brokerage or Leasing Commissions
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Schedule 4.1(y)(vi) - Leases with Delinquent Tenant Monetary Obligations
Schedule 4.1(gg) Compliance with ERISA
Schedule 4.1(hh) Rents Paid More Than One Month in Advance
Schedule 4.1(ii) Legal Compliance
Schedule 9.2 - Capital Budgets
Schedule 9.6 - Quarterly FF&E Reserve Amount
EXHIBITS
Exhibit A - Form of Clearing Account Agreement
Exhibit B - Form of Cooperation Agreement
Exhibit C - Form of Deposit Account Agreement
Exhibit D - Form of Subordination and Intercreditor Agreement
Exhibit E - Form of Subordination, Nondisturbance and Attornment Agreement
Exhibit F - Form of Subordination, Assignment and Attornment Agreement
Exhibit G - Form of Disbursement Request
Exhibit H - Form of Tenant Estoppel Certificate
Exhibit 2.5 - Lot Line Agreement (Mission Hills)
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LOAN AGREEMENT, dated as of January 27, 1999 (as amended, restated,
replaced, supplemented or otherwise modified from time to time in accordance
with the terms hereof, this "Agreement"), among the eight entities identified as
"Borrowers" on Schedule B hereto, Starwood Operator I LLC, Starwood Operator II
LLC and Xxxxxx Brothers Holdings Inc. d/b/a Xxxxxx Capital, a division of Xxxxxx
Brothers Holdings Inc., a Delaware corporation.
All capitalized terms used herein shall have the respective meanings
set forth in Section 1.1 hereof.
W I T N E S S E T H:
WHEREAS, Borrowers desire to obtain the Loan from Lender and secure
the same by, among other things, the Borrowers' respective interests in the
eleven hotel properties identified on Schedule A hereto and the Operator's
interest in the Operating Leases and the eleven hotel properties identified in
Schedule A hereto;
WHEREAS, Lender is willing to make the Loan to Borrowers, subject to
and in accordance with the terms of this Agreement and the other Loan Documents;
NOW, THEREFORE, in consideration of the making of the Loan by Lender
and the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions.
For all purposes of this Agreement, except as otherwise expressly
provided herein:
"Acceptable Franchisor" shall mean, with respect to each Property,
(i) Sheraton, Westin, Sponsor, or any Affiliate thereof (provided that at the
time such party becomes a Franchisor it meets the requirements set forth in
clause (ii)(A) hereof); or (ii) any reputable and experienced professional hotel
franchising company which (A) shall have at least five years' experience in the
franchising or licensing of upscale urban and resort hotel properties
substantially similar to the Properties and located in similar markets, (B)
shall have franchise or license agreements, at the time of its engagement as
Franchisor, with respect to not fewer than twenty full-service hotel properties
(excluding the Properties) containing not fewer than 5,000 hotel rooms, and (C)
with respect to which the Borrowers have obtained a Rating Confirmation.
"Acceptable Property Manager" shall mean (i) Sheraton, Westin,
Sponsor, or any Affiliate thereof; or (ii) any reputable and experienced
professional hotel management company which (A) shall have at least five years'
experience in the management of hotel properties substantially similar to the
Properties and located in similar markets, (B) shall have under
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management, at the time of its engagement as Property Manager, not fewer than
twenty such full-service hotel properties (excluding the Properties) containing
not fewer than 5,000 hotel rooms, and (C) with respect to which the Borrowers
have obtained a Rating Confirmation.
"Account Collateral" means, collectively, the Collateral Accounts
and all sums at any time held, deposited or invested therein, together with any
interest or other earnings thereon, and all proceeds thereof (including, without
limitation, proceeds of sales and other dispositions), whether accounts, general
intangibles, chattel paper, deposit accounts, instruments, documents or
securities.
"Accrued Additional Interest" shall have the meaning set forth in
Section 2.2.1(d).
"Additional Interest" shall mean the excess of the amount payable as
interest under the Notes at the Revised Interest Rate over the amount that would
have been payable as interest under the Notes at the Initial Interest Rate.
"Adjusted NOI" means, for any specified period and specified
Property, Net Operating Income, less the amount which is 4% of Rents during such
period with respect to such Property (which amount is intended to approximate
FF&E expenditures payable during such period), less the greater of actual fees
payable to the applicable Property Managers and 4% of Rents received by the
applicable Obligor during such period with respect to such Property.
"Affiliate" shall mean a Person or Persons directly or indirectly,
through one or more intermediaries, Controlling, Controlled by or under common
Control with the Person or Persons in question.
"Allocated Loan Amount" means, with respect to any Property, the
portion of the Loan Amount allocated thereto, as set forth on Schedule C hereto.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"Alteration" shall mean, with respect to any Property, any single
plan of demolition, alteration, installation, improvement or decoration of or to
such Property or any part thereof or the Improvements thereon.
"Annual Budget" shall mean Borrowers' annual operating and capital
budget for any Fiscal Year setting forth, in accordance with the Uniform System
of Accounts for Hotels, current edition, and in reasonable detail Borrower's
good faith estimates of (i) all Operating Income, (ii) all Operating Expenses,
including Franchise Fees and Management Fees, (iii) all Capital Expenditures,
(iv) the Monthly FF&E Reserve Amount for each month during such Fiscal Year and
(v) Borrowers' marketing strategy for each Property. The amounts referred to in
clauses (iv) and (v) of this definition may be set forth under cover of a
separate report or reports from the amounts set forth in clauses (i) through
(iii).
"Anticipated Repayment Date" shall mean the Payment Date occurring
on February 1, 2009 (or, if such date is not a Business Day, the next preceding
Business Day).
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"Appraisal" means an as-is appraisal of each Property, prepared not
more than thirty (30) days (or such longer period as shall be acceptable to
Lender in its sole discretion) prior to the Closing Date or other applicable
delivery date by Hospitality Valuation Services, Inc., or another member of the
American Institute of Real Estate Appraisers selected by Lender (or, if such
appraiser is selected by Obligor, such appraiser shall be independent from the
Obligors, shall be acceptable to Lender and shall have a national reputation and
at least ten (10) years' experience in evaluating and appraising properties
similar in type and geographic location as the Properties), which appraisal
shall meet the minimum appraisal standards for national banks promulgated by the
Comptroller of the Currency pursuant to Title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, as amended (FIRREA).
"Approved Banks" shall mean banks or other financial institutions
which have (i) (a) a minimum net worth of $500,000,000 or (b) total assets of
$5,000,000,000 and (ii) a minimum long-term senior unsecured debt rating from
the Rating Agencies at least equivalent to the Required Rating, in all cases
excluding any institution that owns or controls (or any institution that has an
Affiliate that owns or controls) a competitor of Sponsor.
"Approved Transferee" shall mean:
(i) any Person, or any Person that Controls, is Controlled by or is
under common Control with a Person, that satisfies each of the following two
categories, so long as such Person is not a Disqualified Transferee:
(A) any one of the following:
(1) a pension fund, pension trust or pension account; (2) an
insurance company; (3) a national money-center bank; or (4) a
Person with a long-term unsecured debt rating from the Rating
Agencies of at least investment grade; and
(B) each of the following (all of the figures in this clause (B)
are to be calculated exclusive of the Properties):
(1) a Person with a current net worth of $250 million or
more and that owns real estate assets of $500 million or more
or, if such Person is a pension fund advisor, one which Controls
$1 billion or more of real estate equity investments or (2) a
pension fund, pension trust or pension account that has total
real estate equity investments of $500 million or more, managed
by a Person that Controls at least $1 billion in real estate
equity investments; and
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(ii) any Person approved by Lender in Lender's sole discretion
and affirmed by a Rating Confirmation.
"Assignment" shall have the meaning set forth in Section 5.1(y) hereof.
"Assignment of Agreements" shall mean, with respect to each
Property, that certain first priority Assignment of Agreements, Licenses,
Permits and Contracts dated as of the date hereof, from the Obligor that owns
and/or operates such Property, as assignor, to Lender, as assignee, assigning to
Lender as security for the Loan, to the extent assignable under law, all of such
Obligor's interest in and to the Property Management Agreement or Operating
Lease relating to such Property, the Franchise Agreement (if applicable)
relating to such Property, all other Material Agreements relating to such
Property and all other licenses, permits and contracts necessary or desirable
for the use and operation of the Property, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time pursuant to the
provisions thereof or of the other Loan Documents.
"Assignment of Leases" shall mean, with respect to each Property,
the Assignment of Leases and Rents, dated as of the date hereof, from each
Borrower, as assignor, to Lender, as assignee, together with any amendments
thereto pursuant to the provisions thereof, assigning all the Leases and Rents
with respect to such Property, and each Operator Assignment of Leases and Rents,
dated as of the date hereof, from each Operator, as assignor, to Lender, as
assignee, together with any amendments thereto pursuant to the provisions
thereof, assigning all the Leases and Rents with respect to such Property.
"Bank Group" shall mean Bankers Trust Company and the Chase
Manhattan Bank as Administrative Agents on behalf of themselves and the other
Lenders, Xxxxxx Commercial Paper Inc. and Bank of Montreal as Syndication Agents
on behalf of themselves and the other lenders, and the other lenders under the
Credit Agreement, dated as of February 23, 1998 (as amended through the date
hereof, the "Credit Agreement"), among Starwood Hotels & Resorts, SLT Realty
Limited Partnership, Starwood Hotels & Resorts Worldwide, Inc., Chess
Acquisition Corp. (and ITT Corporation, its successor by merger), each Alternate
Currency Revolving Borrower (as defined in the Credit Agreement) and the Bank
Group.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy" as the same may be amended, modified, succeeded or
replaced, from time to time.
"Basic Carrying Costs" shall mean, with respect to any Property, the
sum of the following costs associated with the Property: (i) Taxes and Other
Charges, (ii) Insurance Premiums and (iii) ground rent, if any.
"Beneficial" when used in the context of beneficial ownership has
the analogous meaning to that specified in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended.
"Borrower" shall mean each of the eight limited liability companies
set forth under the caption "Borrowers" on Schedule B hereto, in each case
together with any of its
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successors and assigns as permitted hereunder, which Persons are collectively
referred to herein as "Borrower" or "Borrowers".
"Business Day" means any day other than (i) a Saturday and a Sunday
and (ii) a day on which federally insured depository institutions in the State
of New York or the state in which the offices of Lender, its Servicer or its
Special Servicer, if any, and any Trustee in any Securitization, are located are
authorized or obligated by law, governmental decree or executive order to be
closed.
"Capital Expenditures" means, with respect to each Property, hard
and soft costs incurred by the related Obligor with respect to replacements and
capital repairs made to such Property (including, without limitation, repairs
to, and replacements of, the structural components, roofs, building systems,
parking garages and parking lots, and additions to, and replacements of, FF&E),
in each case to the extent such items are capitalized in accordance with GAAP.
"Cash" shall mean coin or currency of the United States of America
or immediately available federal funds, including such funds delivered by wire
transfer.
"Cash and Cash Equivalents" shall mean (i) Cash, (ii) U.S.
Government Securities, (iii) interest bearing or discounted obligations of
federal agencies and government sponsored entities or pools of such instruments
offered by Approved Banks and dealers, including, without limitation, Federal
Home Loan Mortgage Corporation participation sale certificates, Government
National Mortgage Association modified pass-through certificates, Federal
National Mortgage Association bonds and notes, Federal Farm Credit System
securities (provided all of the obligations described in this clause (iii) shall
be rated "AAA" by the Rating Agencies or backed by the full faith and credit of
the United States government for full and timely payment), (iv) time deposits,
domestic and Eurodollar certificates of deposit, bankers acceptances or
commercial paper rated at least A-1+ (or its equivalent) by the Rating Agencies,
and/or guaranteed by an entity having a long-term rating at least equal to the
Required Rating, (v) floating rate notes, other money market instruments and
letters of credit each issued by Approved Banks (provided that if the scheduled
maturity of any such note, instrument or letter of credit is more than six (6)
months after the date of purchase of such obligation by Borrower or Lender, the
note, instrument or letter of credit must be issued by a bank having a long-term
senior unsecured debt rating from the Rating Agencies at least equal to the
Required Rating), (vi) obligations issued by state and local governments or
their agencies, carrying a rating at least equal to the Required Rating and/or
guaranteed by an irrevocable letter of credit of an Approved Bank (provided that
if the scheduled maturity of any such obligation is more than six (6) months
after the date of purchase by Borrower or Lender and such obligation is
guaranteed by a letter of credit, the letter of credit guaranteeing such
obligation must be issued by an Approved Bank having a long-term senior
unsecured debt rating from each of the Rating Agencies at least equal to the
Required Rating), (vii) repurchase agreements with major banks and primary
government securities dealers fully secured by U.S. government or agency
collateral with a value equal to or exceeding the principal amount on a daily
basis and held in safekeeping (provided that at the time of purchase the
counterparty to such repurchase agreement must have a long-term senior
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unsecured debt rating at least equal to the Required Rating), (viii) investments
in money market funds and money market mutual funds all the assets of which are
comprised of investments described in clauses (i) through vii above, and (ix)
any other investment which the Rating Agencies confirm in writing will not in
and of itself result in a downgrading, qualification or withdrawal of any of the
ratings then assigned to any Certificates; provided that prior to the
Securitization, Lender shall make such determination consistent with Rating
Agency Requirements (as defined in the Cooperation Agreement). Except as
otherwise provided in this definition, Cash and Cash Equivalents shall not
include any investments commonly known as "derivatives", any investments
requiring a payment above par for an obligation, and under no circumstances
shall Cash and Cash Equivalents include interest-only strips. Any investment in
Cash and Cash Equivalents shall have a maturity date not later than one Business
Day prior to the date that the proceeds therefrom are required hereunder.
"Casualty" means a fire, explosion, flood, collapse or other
casualty affecting any of the Properties.
"Certificates" shall have the meaning specified in the Cooperation
Agreement.
"Clearing Account" shall have the meaning given such term in Section
9.1 hereof.
"Clearing Account Agreement" shall mean a Clearing Account Agreement
among Borrowers, Operators, Lender and a depository bank for the Clearing
Accounts relating to the collection and application of all the Rents from the
Properties, in the form set forth as Exhibit A hereto.
"Close Affiliate" of a Person shall mean that such Person (i)
satisfies the definition of "Affiliate" with respect to the other Person in
question and (ii) owns 100%, is owned 100% by, or is under 100% common ownership
with, the other Person in question.
"Closing Date" shall mean January 27, 1999.
"Closing Estoppel Requirement" shall mean the estoppel letters
referred to in the Post-Closing Agreement, dated as of January 27, 1999, among
the Borrowers and Lenders, and Section 23 of the Cooperation Agreement.
"Code" means the United States Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder.
"Collateral Accounts" means, collectively, the Clearing Accounts,
the Deposit Account, the Tax, Insurance and Ground Rents Escrow Account, the
FF&E Reserve Account, the Deferred Maintenance and Environmental Conditions
Reserve Account, the Special Reserve Account and the Reserve Account.
"Commitment Fee" shall have the meaning specified in the Term Sheet.
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"Condemnation" shall mean a taking or voluntary conveyance during
the term hereof of all or any part of a 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, whether or not the same shall have actually been commenced.
"Consent, Security Agreement and Agreement of Liquor Manager" shall
mean, with respect to each Property pursuant to which the related Borrower does
not own a liquor license, that certain Consent, Security Agreement and Agreement
of Liquor Manager, dated as of the date hereof, between Lender and the relevant
liquor manager.
"Control" shall mean, with respect to a Person that is a
corporation, the right to exercise, directly or indirectly, more than fifty
percent (50%) of the voting rights attributable to the shares of the controlled
corporation, including the ability to exercise a veto, and, with respect to a
Person that is not a corporation, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the
controlled Person. "Controlling" and "Controlled" have meanings correlative
thereto.
"Contribution Agreement" shall mean that certain Contribution
Agreement, dated as of the date hereof, among the Borrowers.
"Cooperation Agreement" shall mean that certain Mortgage Loan
Cooperation Agreement, dated as of the date hereof, in the form attached hereto
as Exhibit B.
"Credit Facility" shall mean a clean, irrevocable, unconditional
transferable letter of credit, payable on sight draft only, in respect of which
neither the Borrowers nor Obligors have any reimbursement obligation and such
reimbursement obligation is not secured directly or indirectly by any Property
or any other property pledged to secure the Loan, in favor of Lender and
entitling Lender to draw thereon in New York City or in such other city as
Lender's corporate trust office may be located at the time of the issuance of
such letter of credit, issued by either (i) a domestic bank or the U.S. agency
or branch of a foreign bank, in each case, the long-term senior unsecured debt
rating of which at the time such letter of credit is delivered and throughout
the term of such letter of credit is not less than the Required Rating, or (ii)
any other bank approved by Lender in its Discretion, and as to which Borrowers
shall have obtained a Rating Confirmation. Such Credit Facility shall provide
that it will automatically renew unless the issuer of such Credit Facility
delivers written notice to Lender, as beneficiary, and Borrowers, as account
party, at least thirty (30) days prior to its expiration that such Credit
Facility will not be renewed, and, in such case, shall provide that Lender, as
beneficiary, shall be entitled to draw upon the full amount of such Credit
Facility. Without in any way limiting the generality of the foregoing, if any
Credit Facility is not renewed or replaced with another Credit Facility prior to
the date that is thirty (30) days prior to its expiration, Lender shall be
entitled to draw upon the full amount of such Credit Facility.
"Damages" to a party means any and all liabilities, obligations,
losses, damages, penalties, assessments, actions, judgments, suits, claims,
costs, expenses (including, without
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limitation, reasonable attorneys' fees whether or not suit is brought),
settlement costs and disbursements imposed on, incurred by or asserted against
such party.
"Debt" shall mean the outstanding principal amount set forth in, and
evidenced by, the Notes, together with all interest accrued and unpaid thereon
and all other sums due to Lender in respect of the Loan, including any Yield
Maintenance Payments and any sums due under the Notes, this Agreement, the
Security Instruments or in any other Loan Document.
"Debt Securities" shall mean debt obligations, other than U.S.
Government Securities, of any Person, whether evidenced by bonds, notes,
debentures, certificates, book entry deposits, certificates of deposit,
commercial paper, bankers acceptances, reinvestment letters, funding agreements
or other instruments, which (i) are not subject to prepayment or redemption
prior to maturity and (ii) are rated not less than the then Required Rating; or
any combination of the foregoing. Any Debt Securities delivered to Lender as
collateral for an obligation shall mature not less than one (1) Business Day
prior to the due date of such obligation.
"Debt Service" shall mean, with respect to any specified date or a
particular period of time, scheduled principal, if any, and interest payments
under the Notes due as of such date or payable during such period (including the
last day thereof), as applicable.
"Debt Service Coverage Ratio" shall mean, as of any date, with
respect to a specified Property or Properties, a ratio in which (a) the
numerator is Adjusted NOI of the applicable Property or Properties for the
complete 12-month period immediately preceding such date and (b) the denominator
is the aggregate Debt Service in respect of the Notes for the complete 12-month
period immediately following such date (other than any Defeased Notes, except as
set forth in Section 2.4.2A.(c)), assuming a loan constant (comprised of
interest and amortization) of 8.5627%.
"Default" shall mean the occurrence of any event under any of the
Loan Documents which, but for the giving of notice or passage of time, or both,
would be an Event of Default.
"Default Rate" shall mean a rate per annum equal to the lesser of
(i) the maximum rate permitted by applicable law and (ii) the greater of (x) 500
basis points in excess of the applicable Interest Rate and (y) the Prime Rate
plus one (1%).
"Defeasance" shall have the meaning set forth in Section 2.3.2
hereof.
"Defeasance Deposit" shall mean an amount equal to the sum of (A)(i)
with respect to a total Defeasance, all costs and expenses incurred or to be
incurred in the purchase of U.S. Government Securities (including, without
limitation, the purchase price thereof) necessary to meet the Scheduled
Defeasance Payments, or (ii) with respect to a partial Defeasance in connection
with the release of one or more Properties, the Release Amount for such Property
or Properties plus without duplication all costs and expenses (including the
purchase price) incurred or to be incurred in the purchase of U.S. Government
Securities necessary to meet the Scheduled Defeasance Payments relating to such
Release Amount; and (B) in both cases, any revenue,
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documentary stamp or intangible taxes or any other tax or charge due in
connection with any transfer of the Notes, the creation of one or more Defeased
Notes and Undefeased Notes, if applicable, any transfer of one or more Defeased
Notes or otherwise required to accomplish the agreements of Section 2.3.2
hereof.
"Defeased Note" shall have the meaning set forth in Section
2.3.2(a)(vi) hereof.
"Deferred Maintenance Account" shall have the meaning set forth in
Section 9.6 hereof.
"Deferred Maintenance and Environmental Conditions" shall mean,
collectively, the conditions at the Properties described on Schedule E hereto as
the "Deferred Maintenance and Environmental Conditions."
"Deferred Maintenance and Environmental Conditions Reserve Amount"
shall mean $3,812,501.
"Deposit Account" shall have the meaning given such term in Section
9.1 hereof.
"Deposit Account Agreement" shall mean an agreement among Obligors,
Lender and the depositary bank, if any, for the Deposit Account, relating to the
collection and application of all the Rents from each Property, which agreement
shall be in substantially the form attached hereto as Exhibit C, with such
changes therein as shall be mutually agreeable to the parties thereto.
"Discretion" shall mean discretion exercised in a manner consistent
with that of a prudent institutional lender of a loan which would qualify for a
"shadow rating" of no less than investment grade (i.e., not less than BBB- by
S&P and Baa3 by Xxxxx'x) ("Investment Grade") intended for securitization (with
Certificates rated no less than Investment Grade) and with a principal amount
comparable to the Loan Amount, a maturity date comparable to the Maturity Date
and secured by a pool of properties comparable to the Properties.
"Disqualified Transferee" shall mean any Person that, or any Person
that Controls, is Controlled by or is under common Control with a Person that,
(i) has defaulted, or is in breach, beyond any applicable cure period, of its
obligations, under any written agreement with Lender, any Affiliate of Lender,
any financial institution or other Person providing or arranging financing; (ii)
has commenced any proceeding against Lender, any Affiliate of Lender, any
financial institution or other Person providing or arranging financing under a
commitment letter, loan agreement, letter of credit, unsecured credit facility,
mortgage loan or other written financing arrangement; (iii) has been convicted
in a criminal proceeding for a felony or a crime involving moral turpitude or
that is an organized crime figure or is reputed (as determined by Lender in its
sole discretion) to have substantial business or other affiliations with an
organized crime figure; (iv) has at any time filed a voluntary petition under
the Bankruptcy Code or any other federal or state bankruptcy or insolvency law;
(v) as to which an involuntary petition has at any time been filed under the
Bankruptcy Code or any other federal or state bankruptcy or insolvency law; (vi)
has at any time filed an answer consenting to or acquiescing in any
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involuntary petition filed against it by any other Person under the Bankruptcy
Code or any other federal or state bankruptcy or insolvency law; (vii) has at
any time consented to or acquiesced in or joined in an application for the
appointment of a custodian, receiver, trustee or examiner for itself or any of
its property; (viii) has at any time made an assignment for the benefit of
creditors, or has at any time admitted its insolvency or inability to pay its
debts as they become due; or (ix) has been found by a court of competent
jurisdiction or other Governmental Authority in a comparable proceeding to have
violated any federal or state securities laws or regulations promulgated
thereunder.
"Duff" shall mean Duff & Xxxxxx Credit Rating Co.
"Eligible Account" shall mean (i) an account or account maintained
with a federal or state-chartered depository institution or trust company which
complies with the definition of Eligible Institution, or (ii) a segregated trust
account or accounts maintained with the corporate trust department of a federal
depository institution or state-chartered depository institution 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.
"Eligible Collateral" shall mean U.S. Government Securities, Debt
Securities, Credit Facility or Cash and Cash Equivalents, or any combination
thereof.
"Eligible Institution" shall mean an institution whose (i)
commercial paper, short-term debt obligations or other short-term deposits are
rated at least "A-1+" or the equivalent by the Rating Agencies, if the
deposits are to be held in the account for thirty (30) days or less, or (ii)
long-term senior unsecured debt obligations are rated at least "AA" or the
equivalent, if the deposits are to be held in the account for thirty (30) days
or more.
"Employee Benefit Plan" shall mean any employee pension benefit plan
subject to the provisions of Title IV of ERISA or subject to the minimum funding
standards under Part 3 of Title I of ERISA or Section 412 of the Code or Section
302 of ERISA, and in respect of which the Obligor or any ERISA Affiliate is (or,
if such plan were terminated, would under Section 4069 of ERISA be deemed to be)
an "employer" as defined in Section 3(5) of ERISA.
"Engineer" means Law Engineering and Environmental Services Inc. or
such Independent Engineer as shall be reasonably approved by Lender.
"Engineering Report" means the structural engineering report or
reports with respect to a Property, including reports on the compliance of such
Property with the terms of the Americans with Disabilities Act and applicable
building code, prepared by an Engineer and delivered to Lender in connection
with the Loan, and any amendments or supplements thereto delivered to Lender.
"Environmental Auditor" means Law Engineering and Environmental
Services Inc. or any independent licensed or registered environmental auditor
that is licensed or registered
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in the jurisdiction where a Property is located, if required by the laws of such
jurisdiction, not affiliated with Obligor or Lender, and reasonably approved by
Lender.
"Environmental Claim" means any written notice, claim, proceeding,
investigation, demand or other communication by any Person or Governmental
Authority alleging or asserting liability with respect to Obligor or a Property
arising out of, based on or resulting from (i) the presence, Use or Release of
any Hazardous Substance, (ii) any fact, circumstance, condition or occurrence
forming the basis of any violation, or alleged violation, of any Environmental
Law, or (iii) any alleged injury or threat of injury to property, health or
safety or to the environment caused by Hazardous Substances.
"Environmental Indemnity" shall mean that certain Environmental
Indemnity Agreement, dated as of the date hereof, executed by each Obligor and
each Sponsor in connection with the Loan for the benefit of Lender.
"Environmental Laws" means any and all present and future federal,
state or local laws, statutes, ordinances or regulations, any judicial or
administrative orders, decrees or judgments thereunder, and any permits,
approvals, licenses, registrations, filings and authorizations, in each case as
now or hereafter in effect, relating to the pollution, protection or cleanup of
the environment, the impact of Hazardous Substances on property, health or
safety, or the Use or Release of Hazardous Substances.
"Environmental Reports" means a "Phase I Environmental Site
Assessment" as referred to in the ASTM Standard Practice for Environmental Site
Assessments, E 1527-97 (and, if necessary, a "Phase II Environmental Site
Assessment"), prepared by an Environmental Auditor and delivered to Lender and
any amendments or supplements thereto delivered to Lender, and shall also
include any other environmental reports delivered to Lender pursuant to this
Agreement and the Environmental Indemnity.
"Equipment" shall have the meaning set forth in the Security
Instruments.
"ERISA" means the United States Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations promulgated and
the rulings issued thereunder.
"ERISA Affiliate" at any time, means each trade or business (whether
or not incorporated) that would, at the time, be treated together with Obligor
as a single employer under Title IV or Section 302 of ERISA or Section 412 of
the Code.
"ERISA Event" means (i) a "reportable event" described in Section
4043 of ERISA (other than a "reportable event" not subject to the provision for
30-day notice to the PBGC and other than a reportable event described in Section
4043(c)(9) through (12) of ERISA), (ii) the incurrence of a material liability
by the Borrower or any ERISA Affiliate as a result of the withdrawal of the
Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year
in which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA or by reason of the provisions of Section 4064 of ERISA upon the
termination of a Multiple Employer
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Plan, (iii) the provision or filing of a notice of intent to terminate a Plan
other than in a standard termination within the meaning of Section 4041 of ERISA
or the treatment of a Plan amendment as a distress termination under Section
4041 of ERISA, (iv) the institution of proceedings to terminate a Plan by the
PBGC, or (v) any other event or condition which might reasonably be expected to
constitute grounds for the termination of, or the appointment of a trustee to
administer, any Plan other than in a standard termination within the meaning of
Section 4041 of ERISA or the imposition of any lien on the assets of the
Borrower under ERISA, including as a result of the operation of Section 4069 of
ERISA.
"Event of Default" shall have the meaning set forth in Section
10.1(a) hereof.
"Expansion" shall mean any single plan of expansion or reduction of
a Property or any portion thereof or the Improvements thereon.
"Extended Maturity Date" shall mean, if Lender exercises the
Extension Option, February 1, 2024, or if such day is not a Business Day then on
the first Business Day preceding such date, or such earlier date on which the
final payment of principal of the Notes becomes due and payable as herein or
therein provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise.
"Extension Option" shall have the meaning given in Section 2.1.1
hereof.
"FF&E" means furniture, fixtures and Equipment for each Property.
"FF&E Reserve Account" shall have the meaning set forth in Section
9.5(a) hereof.
"Final Completion" shall mean, with respect to any specified work,
the final completion of all such work, including the performance of all "punch
list" items, as confirmed by an Officer's Certificate and, with respect to any
Material Alteration or Material Expansion, a certificate of the Independent
Architect.
"Fiscal Year" shall mean the period commencing on the Closing Date
and ending on and including December 31 of the calendar year in which the
Closing occurs and thereafter each twelve month period commencing on January 1
and ending on December 31 until the Debt is repaid in full, or such other fiscal
year of Borrower as Borrower may select from time to time with the prior consent
of Lender, such consent not to be unreasonably withheld.
"Fitch" shall mean Fitch IBCA, Inc.
"Foreign Pension Plan" shall mean any plan, fund (including without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States by any Obligor primarily for the benefit of
employees of such Obligor residing outside the United States of America, which
plan, fund or other similar program provides, or results in, retirement income,
a deferral of income in contemplation of retirement or payments to be made
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upon termination of employment, and which plan is not subject to ERISA or the
Code and which plan, fund or similar program could result in liability or other
obligation or lien to any Obligor.
"Franchise Agreement" means, with respect to each Property, any
license or franchise agreement concerning the operation of hotel licenses or
franchises at such Property between the applicable Obligor and the applicable
Franchisor, including the License Agreements, as the same may be amended from
time to time in accordance with the provisions of this Agreement, as set forth
on Schedule F.
"Franchise Fees" means all fees, commissions, expenses and other
compensation (including, without limitation, any base fees, trade name fees,
incentive fees, marketing and advertising fees) payable by an Obligor to a
Franchisor, which Franchise Fees shall be commercially reasonable based upon the
then current market for the area in which the related Property is located for a
property of similar type and quality, but which in no event shall exceed 4% of
hotel room revenues.
"Franchisor" means the current hotel franchisor or licensor with
respect to a Property and any successor franchisor or licensor approved by
Lender in Lender's Discretion.
"Franchisor Letter" shall mean, with respect to each Property, the
Subordination, Assignment and Attornment Agreement from the related Franchisor
to Lender acknowledging the Loan and providing certain assurances, satisfactory
to Lender, with respect thereto.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as of the relevant date in question, consistently
applied.
"Governmental Authority" means any national or federal government,
any state, regional, local or other political subdivision thereof with
jurisdiction and any Person with jurisdiction exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
or quasi-governmental issues (including, without limitation, any court).
"Ground Lease" shall mean the leases or licenses in which any
Borrower is the lessee (or licensee) thereunder relating to or affecting the use
and occupancy of the Properties, or any part thereof, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time in accordance with the terms hereof.
"Ground Leased Property" shall mean, with respect to any Ground
Lease and any Property, that portion of such Property demised to a Borrower
under such Ground Lease.
"Hazardous Substance" means, collectively, (i) any petroleum or
petroleum products or waste oils, explosives, radioactive materials, asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls ("PCBs"), and
lead-based paint, (ii) any chemicals or other materials or substances which are
now or hereafter become defined as or included in the definitions of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
wastes", "restricted hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants", "pollutants" or words of similar import under any Environmental
Law, and (iii)
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any other chemical or any other material or substance, exposure to which is now
or hereafter prohibited, limited or regulated under any Environmental Law.
"Historical Calendar Years" shall mean 1996, 1997 and 1998.
"Improvements" shall have the meaning set forth in the Security
Instrument.
"Independent Architect" shall mean any reputable architecture or
construction management firm selected by Obligor that is licensed or registered
in the jurisdiction where a Property is located, if required by the laws of such
jurisdiction, and not affiliated with and is in fact independent from Lender or
Obligors.
"Independent Director" of any entity means a duly appointed member
of the board of directors of such entity reasonably satisfactory to Lender who
shall not have been at the time of such individual's appointment, and who may
not have been at any time during the preceding five years (i) a shareholder or
director (other than an independent director) of, or an officer or employee of,
an Obligor (except in the context of this transaction), a Sponsor, or any of
their respective shareholders or Affiliates, (ii) based on information provided
by such individual and reasonably believed by Obligors, a customer of, or
supplier or service provider (including a provider of professional services) to,
an Obligor, a Sponsor, or any of their respective shareholders or Affiliates
such that such individual's annual revenues derived from any or all Obligors,
Sponsors, and their respective shareholders or Affiliates exceeds five percent
(5%) of such individual's annual revenues for any of the preceding five years,
or (iii) a member of the immediate family of any such shareholder, officer,
employee, supplier or customer or a member of the immediate family of any other
director of such entity.
"Independent Engineer" shall mean any independent licensed or
registered engineering firm selected by Obligor that is licensed or registered
in the jurisdiction where a Property is located, if required by the laws of such
jurisdiction, and not affiliated with Lender or Obligors.
"Initial Interest Rate" means with respect to the Note or Notes, a
rate per annum as set forth in such Note or Notes, including Schedule A to such
Note or Notes.
"Initial Maturity Date" shall mean February 1, 2009, or if such day
is not a Business Day then on the immediately preceding Business Day, or such
earlier date on which the final payment of principal of the Notes becomes due
and payable as herein or therein provided, whether at such stated maturity date,
by declaration of acceleration, or otherwise.
"Insufficiency" means, at any time with respect to any Plan, the
amount, if any, of such Plan's unfunded benefit liabilities within the meaning
of Section 4001(a)(18) of ERISA.
"Insurance Premiums" shall have the meaning set forth in Section
8.1.1(d) hereof.
"Insurance Requirements" shall mean all terms of any insurance
policy required hereunder covering or applicable to the Properties or any part
thereof, all requirements of the
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issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Properties or any
part thereof or any use of the Properties or any part thereof.
"Interest Accrual Period" means, with respect to a Payment Date, the
period beginning on (and including) the first (1st) day of the month preceding
such Payment Date (or, with respect to the first Interest Accrual Period,
commencing on and including the Closing Date) and ending on (and including) the
last day of such month.
"Interest Rate" shall mean, as applicable, (i) the Initial Interest
Rate, with respect to the period from and including the Closing Date to but
excluding the first Payment Date following the tenth anniversary of the Closing
Date, and (ii) in the event that Lender exercises the Extension Option, with
respect to the period from (and including) and after the Anticipated Repayment
Date, the Revised Interest Rate.
"knowledge" or words of similar import shall mean the actual and
constructive knowledge of a Person or, if such Person is not an individual, of
such Person's representatives, agents, employees, officers or directors who
would be reasonably likely to have material information as to the relevant
subject matter.
"Lease" shall mean any lease, sublease, sub-sublease, license,
letting, concession, occupancy agreement or other agreement (whether written or
oral and whether now or hereafter in effect) (excluding the Operating Leases and
Ground Leases), existing as of the date hereof or hereafter entered into by an
Obligor, pursuant to which any Person is granted a possessory interest in, or
right to use or occupy all or any portion of any space in a Property, and every
modification, amendment or other agreement relating to such lease, sublease,
sub-sublease, or other agreement entered into, in accordance with the terms of
the Loan Documents, in connection with such lease, sublease, sub-sublease, or
other agreement and all agreements related thereto, and every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.
"Leasing Commissions" shall mean leasing commissions required to be
paid by an Obligor in connection with the leasing of space to Tenants at a
Property pursuant to the Leases entered into by such Obligor in accordance with
the terms hereof and payable in accordance with either (i) a Property Management
Agreement, or (ii) third-party/arm's-length brokerage agreements, provided that
the commissions payable pursuant thereto are commercially reasonable based upon
the then current brokerage market for the area in which such Property is located
for property of a similar type and quality.
"Legal Requirements" shall mean:
(i) all governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental
Authorities (including, without limitation, Environmental Laws)
affecting an Obligor or a Property or any part thereof or the
construction,
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ownership, use, alteration or operation thereof, or any part thereof
(whether now or hereafter enacted and in force),
(ii) all permits, licenses and authorizations and regulations
relating thereto, and
(iii) all covenants, conditions and restrictions contained in any
instruments at any time in force (whether or not involving Governmental
Authorities) affecting a Property or any part thereof which, in the case
of this clause (iii), require repairs, modifications or alterations in
or to a Property or any part thereof, or in any material way limit or
restrict the existing use and enjoyment thereof.
"Lender" shall mean Xxxxxx Brothers Holdings Inc. d/b/a Xxxxxx
Capital, a division of Xxxxxx Brothers Holdings Inc., a Delaware corporation, or
its successors or assigns.
"Lender Expenses" shall mean all origination costs and all
reasonable out-of-pocket expenses and costs incurred by Lender (or any of its
affiliates) with respect to the making of the Loan (or (if incurred prior to the
Closing) in connection with any Securitization) (as well as such costs and
expenses as Lender (or any of its affiliates) customarily includes in
reimbursables, such as the duplication and binding of presentation books),
including for preparation of audits, agreed-upon-procedures, reasonable travel
expenses, preparation of environmental, seismic and engineering reports, credit
reports, appraisals, preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby (including reasonable attorneys' fees and
disbursements in connection therewith and in connection with Lender's due
diligence), rating agency fees and expenses, printing costs, mortgage recording
taxes and other document filing fees and any other reasonable out-of-pocket
expenses relating to credit and collateral evaluations.
"License Agreements" shall mean those certain License Agreements,
each dated as of January 27, 1999, between Sheraton or Westin on the one hand
and Operator I (or, in the case of the Properties known as the Sheraton San
Diego and the Phoenician, the applicable Borrower) on the other hand.
"Licenses" shall have the meaning set forth in Section 4.1(v)
hereof.
"Lien" shall mean any mortgage, deed of trust, security title and/or
security interest through a security deed, lien (statutory or other), pledge,
hypothecation, assignment, preference, priority, security interest, or any other
encumbrance or charge on or affecting a Property or any portion thereof or an
Obligor, or any interest therein (including, without limitation, any conditional
sale or other title retention agreement, any sale-leaseback, any financing lease
having substantially the same economic effect as any of the foregoing, the
filing of any financing statement or similar instrument under the Uniform
Commercial Code or comparable law of any other jurisdiction, domestic or
foreign, and mechanics', materialmen's and other similar liens and
encumbrances).
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"Limited Liability Company" means, with respect to each Member, the
Obligor of which it is a Member.
"Liquor License Agreement" means those management agreements
relating to the operation of liquor sales at the Properties, set forth on
Schedule K hereto.
"Loan" shall mean the loans made to Borrowers by Lender pursuant
hereto and the other Loan Documents in the original principal amount of the Loan
Amount, and evidenced by the Notes and secured by the Security Instruments and
the other Loan Documents.
"Loan Amount" shall mean five hundred forty two million and 00/100
Dollars ($542,000,000.00).
"Loan Documents" shall mean, collectively, this Agreement, the
Notes, the Security Instruments, the Assignment of Agreements, the Assignment of
Leases, the Environmental Indemnity, the Deposit Account Agreement, the Clearing
Account Agreements, the Cooperation Agreement, the Consent, Security Agreement
and Agreement of Liquor Manager, the Subordination, Assignment and Attornment
Agreement, the Operator Guaranty, the Operator II Guaranty and any other
document now or hereafter executed and/or delivered by any Obligor or any
Sponsor or any Affiliate of such Persons pursuant to the requirements hereof or
of any other Loan Document in connection with the Loan.
"Low NOI Period" means, prior to the Initial Maturity Date, a period
(i) beginning with a Payment Date (the "Commencement Date") with respect to
which Adjusted NOI has been less than $86,407,994 for the NOI Test Period ending
on the second Payment Date preceding such Commencement Date and (ii) ending on
the last day of the second consecutive fiscal quarter following the applicable
Commencement Date for which Adjusted NOI for the related NOI Test Period is
equal to or exceeds $86,407,994.
"Major Tenant" shall mean a Tenant providing restaurant or other
food or beverage service at a Property, or any other Tenant occupying more than
2,500 rentable square feet at such Property, and/or providing for gross annual
rentals in excess of 2% of the gross annual revenues of such Property.
"Management Contracts" shall mean, with respect to each Property,
those certain Property Management Agreements, dated as of January 27, 1999, each
between Operator and Operator II as Property Manager (or, in the case of the
Properties known as the Sheraton Phoenician and the Sheraton San Diego), between
Operator II as Manager and the applicable Borrower, as set forth on Schedule D.
"Management Control" shall mean, with respect to any direct or
indirect interest in an Obligor or a Property, the primary responsibility to
make or the ability to veto all material decisions with respect to the
operation, management, financing and disposition of the specified interest.
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"Management Fees" shall mean, with respect to a Property, all fees,
commissions, expenses and other compensation (including, without limitation, any
base fees, trade name fees, incentive management fees, termination fees and all
fees in respect of liquor license operations) (and including, in the case of the
Operating Leases, any amounts to which the lessee is entitled thereunder)
payable by a Borrower to the related Property Manager or lessee under an
Operating Lease and under the Property Management Agreements, which Management
Fees shall be commercially reasonable based upon the then current market for the
area in which such Property is located for a property of similar type and
quality, but in no event (in the case of Management Fees payable to entities
which are not Affiliates of the Borrowers) to exceed 4% of the Rents of such
Property.
"Material Adverse Effect" means a material adverse effect upon (i)
the business operations, assets or condition (financial or otherwise) of an
Obligor, (ii) the ability of an Obligor to perform, or of Lender to enforce, any
material provision of any Loan Document, or (iii) with respect to a Property,
the value, use or enjoyment of such Property or the operation thereof.
"Material Agreements" means, with respect to a Property, the
Property Management Agreement relating thereto, the Franchise Agreement relating
thereto, any applicable Operating Agreement, any Ground Lease relating thereto,
any Operating Lease relating thereto, any Liquor License Agreement relating
thereto and all agreements with terms exceeding one year, requiring payments by
any Obligor per annum in excess of $100,000 and relating to the ownership,
development, use, operation, leasing, maintenance or repair of such Property.
"Material Alteration" shall mean, with respect to a Property, any
Alteration to be performed by or on behalf of the related Obligor at such
Property (other than an Alteration the cost of which a Tenant is obligated to
repay or reimburse to such Obligor and which such Obligor reasonably believes
will be so reimbursed, as applicable) the cost of which as reasonably estimated
by an Independent Architect, exceeds the Threshold Amount.
"Material Casualty" shall mean, with respect to a Property, a
Casualty where the loss (a) is in an aggregate amount equal to or in excess of
thirty percent (30%) of the outstanding Allocated Loan Amount relating to such
Property or (b) has caused material damage to thirty (30%) or more of the hotel
rooms and common areas (including banquet and conference facilities) located at
such Property.
"Material Condemnation" shall mean, with respect to a Property, a
Condemnation where the loss (a) is in an aggregate amount equal to or in excess
of thirty percent (30%) of the outstanding Allocated Loan Amount relating to
such Property or (b) has caused thirty percent (30%) of the hotel rooms and
common areas (including banquet and conference facilities) in such Property to
be unavailable for use as a hotel room.
"Material Expansion" shall mean, with respect to a Property, any
Expansion to be performed by or on behalf of the related Obligor at such
Property, the total cost of which, as reasonably estimated by an Independent
Architect, exceeds the Threshold Amount.
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"Maturity Date" shall mean the Initial Maturity Date, unless and
until Lender exercises the Extension Option, at which time it shall mean the
Extended Maturity Date.
"Member" shall mean each of the eight limited liability companies
set forth under the caption "Members" on Schedule B hereto, in each case
together with any of its successors and assigns as permitted hereunder.
"Monthly Debt Service Payment Amount" shall have the meaning set
forth in Section 2.2.1(b) hereof.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which Obligor or any ERISA Affiliate is making or
accruing an obligation to make contributions or has within any of the preceding
five plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means an employee benefit plan, other than
a Multiemployer Plan, subject to Title IV of ERISA to which the Obligor or any
ERISA Affiliate and more than one employer other than the Obligor or an ERISA
Affiliate is making or accruing an obligation to make contributions, has within
any of the preceding five years made or accrued an obligation to make
contributions or, in the event that any such plan has been terminated, to which
the Obligor or any ERISA Affiliate made or accrued an obligation to make
contributions during any of the previous five plan years preceding the date of
termination of such plan.
"Net Operating Income" means, for any specified Property, the excess
of Operating Income over Operating Expenses for such Property for the trailing
twelve (12) month period.
"NOI Test Period" means each successive complete twelve (12) month
period ending on a Payment Date.
"Nonrecourse Carveout Indemnitor" means the Sponsors.
"Notes" shall mean collectively that certain Promissory Note or
Notes of even date herewith, each made by the Borrowers on a joint and several
basis in favor of Lender in the aggregate principal amount stated therein and
secured by all of the Properties, as the same may be amended, restated,
replaced, supplemented, consolidated or otherwise modified from time to time
pursuant to the provisions thereof or of the other Loan Documents, including any
Undefeased Notes that may exist from time to time, and "Note" shall mean any one
of the Notes.
"Obligations" means all of Borrowers' obligations with respect to
the Debt.
"Obligor" or "Obligors" shall mean the Borrowers, Operator and
Operator II.
"Officer's Certificate" shall mean a certificate made by an
individual authorized to act on behalf of an Obligor and, to the extent
applicable, any constituent Person with respect to
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an Obligor. Without limiting the foregoing, if the individual signing the
certificate is doing so on behalf of a corporation, then such individual shall
hold the office of President, Vice President, senior or executive vice president
or Chief Financial Officer (or the equivalent) with respect to such corporation.
"Operating Agreements" shall mean, with respect to a Property,
reciprocal easement and/or operating agreements; covenants, conditions and
restrictions; and similar agreements affecting such Property and binding upon
and/or benefiting the related Obligor and/or other third parties.
"Operating Expenses" shall mean, for any specified period and any
Property, on an accrual basis, all expenses paid (or due and payable) by the
applicable Obligor (or by a Property Manager for the account of such Obligor)
during such period in connection with the operation of such Property (including
Basic Carrying Costs, Management Fees and Franchise Fees payable to
non-Affiliates, including any portion of such fees which constitute fees or
expenses charged for centralized services of the type set forth in Exhibit B of
the Management Contracts in place as of the date hereof, and also including such
centralized services fees payable to Affiliates of the Borrowers), as well as
bookkeeping, accounting, insurance costs, wages and other costs and expenses
incurred for such Property and legal expenses incurred in connection with the
operation of such Property, determined, in each case, consistently with GAAP.
"Operating Expenses" shall not include (i) depreciation or amortization or other
noncash items (other than expenses that are due and payable but not yet paid),
(ii) the principal of and interest on the Notes or any other indebtedness of the
applicable Borrower (including the Starwood Intercompany Mortgage Loan), (iii)
income taxes or other taxes in the nature of income taxes, (iv) any expenses
(including legal, accounting and other professional fees, expenses and
disbursements) incurred in connection with and allocable to the issuance of the
Notes, (v) the cost of Tenant Improvements, Leasing Commissions and any Capital
Expenditures for such Property (to the extent such items are capitalized in
accordance with GAAP), (vi) distributions to the members or partners in
Borrowers or any management or franchise fees or similar compensation payable to
any Affiliate of Borrowers (other than fees or expenses charged for centralized
services of the type set forth in Exhibit B of the Management Contracts, which
fees and expenses shall be considered to be Operating Expenses), and (vii) any
item of expense which otherwise would be considered within Operating Expenses
but is paid directly by any Tenant. Expenses that are accrued as Operating
Expenses during any period shall not be included in Operating Expenses when paid
during any subsequent period.
"Operating Income" shall mean, for any specified period and any
Property, all Rents received by the applicable Obligor (or by the applicable
Property Manager for the account of such Borrower) from any Person during such
period in connection with the operation of such Property, determined on a cash
receipts basis, other than:
(i) any Proceeds (other than business interruption insurance
proceeds or Condemnation Proceeds with respect to a temporary
Condemnation and, in any such case, only to the extent allocable to such
period);
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(ii) any proceeds resulting from the sale, exchange, transfer,
financing or refinancing of such Property;
(iii) any Rents attributable to Leases which are more than one month
delinquent (provided, that such delinquent Rents shall be included as
Operating Income when received, and shall be applied to the period
during which such Rents were required to have been paid absent such
delinquency) ;
(iv) any interest income from any source other than interest earned
on amounts deposited in Collateral Accounts in accordance with the
provisions of this Agreement; and
(v) any other extraordinary or non-recurring items.
"Operating Lease Payments" means the rent due and payable to
Borrowers under the Operating Leases, including, without limitation, all Base
Rent, Basic Rent and all Percentage Rent but excluding Additional Rent (as each
term is defined in the Operating Leases).
"Operating Leases" means those operating leases, each between a
Borrower as lessor and Operator as lessee, with respect to each Property other
than the Properties known as the Phoenician Hotel and the Sheraton San Diego
Hotel & Marina, and any other operating lease in the same form between a
Borrower and Operator or a subsidiary of Starwood Hotels and Resorts Worldwide
Inc. with respect to any Substitute Property.
"Operator" means Starwood Operator I LLC, as lessee under each
Operating Lease.
"Operator II" means Starwood Operator II LLC.
"Operator Guaranty" means the Guaranty, made as of the date hereof,
by Operator in favor of Lender.
"Operator II Guaranty" means the Guaranty, made as of the date
hereof, by Operator II in favor of Lender.
"Optional Defeasance Date" means the earlier of (a) the third
anniversary of the Closing Date and (b) the day after the second anniversary of
the "start-up day" (within the meaning of Section 860G(a)(9) of the Code) of the
REMIC Trust.
"Origination Adjusted NOI" means the Adjusted NOI, with respect to
all of the Properties, calculated by Lender as of the date hereof, which is
$115,210,659.
"Origination Debt Service Coverage Ratio" shall be 2.48x.
"Other Charges" shall mean all maintenance charges, impositions
other than Taxes, and any other charges, including vault charges and license
fees for the use of vaults,
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chutes and similar areas adjoining the Properties, now or hereafter levied or
assessed or imposed against the Properties or any part thereof and payable by an
Obligor.
"Participation" shall have the meaning set forth in Section 5.1(y)
hereof.
"Payment Date" shall mean the first (1st) day of each calendar month
or, if in any month the first (1st) day is not a Business Day, then the Payment
Date for such month shall be the first Business Day immediately preceding such
first (1st) day.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any entity succeeding to any or all of its
functions under ERISA.
"Permits" means, with respect to a Property, all licenses, permits,
variances and certificates used or issued in connection with the ownership,
operation, use or occupancy of such Property (including, without limitation,
business licenses, state health department licenses, licenses to conduct
business and all such other permits, licenses and rights, obtained from any
Governmental Authority or private Person concerning ownership, operation, use or
occupancy of such Property).
"Permitted Encumbrances" shall mean, with respect to a specified
Borrower or Property, (i) the Liens and security interests created by the Loan
Documents, (ii) all Liens, encumbrances and other matters disclosed in the
Qualified Title Policy relating to such Property, (iii) Liens, if any, for Taxes
or Other Charges relating to such Property not yet payable or delinquent or
which are being diligently contested in good faith in accordance with Section
5.1(b)(ii) hereof, (iv) Liens in respect of property or assets imposed by law
which were incurred in the ordinary course of business, such as carriers',
warehousemen's, landlord's, mechanic's, materialmen's, repairmen's and other
similar Liens arising in the ordinary course of business, and Liens for workers'
compensation, unemployment insurance and similar programs, in each case arising
in the ordinary course of business which are being diligently contested in good
faith in accordance with Section 5.1(b)(ii) hereof, (v) Leases granted to third
parties, entered into in the ordinary course of business or otherwise in
compliance with the terms of the Loan Documents, not interfering in any material
respect with the business, operation or use of such Property, including the
Operating Leases, (vi) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances (including any
of such matters incurred or entered into by such Obligor in the ordinary course
of business) which in each case do not diminish in any material respect the
value of such Property or materially and adversely impact the use or operating
income of the Mortgaged Property or affect in any respect the validity,
enforceability or priority of the Liens created by the Loan Documents, (vii)
such other title and survey exceptions as Lender has approved or may approve in
writing in Lender's Discretion and (viii) with respect to the Properties known
as the Phoenician and the Sheraton San Diego Hotel & Marina, Liens granted in
connection with the Starwood Intercompany Mortgage Loan.
"Permitted Indebtedness" shall mean, with respect to a Borrower, (i)
the Debt, (ii) Trade Payables incurred in the ordinary course of such Borrower's
business, customarily paid by such Borrower within sixty (60) days of incurrence
and in fact not more than sixty (60) days
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outstanding and not amounting in the aggregate to more than 3% (or in the case
of the Properties known as the Phoenician, the Sheraton San Diego Hotel & Marina
and the Westin Mission Hills, 4%) of the outstanding Allocated Loan Amount with
respect to the related Mortgaged Property, (iii) written indemnities entered
into in the ordinary course of business and on customary terms and conditions in
connection with the acquisitions of goods or services, or in connection with the
execution of Leases or amendments thereto, or in connection with the acquisition
of the Properties in which such Borrower owns an interest, (iv) any indebtedness
owed by such Borrower to Sponsor or to a wholly-owned subsidiary of Sponsor (a
"Permitted Intercompany Lender"), including, without limitation, with respect to
the Properties known as the Phoenician and the Sheraton San Diego Hotel &
Marina, the indebtedness relating to the Starwood Intercompany Mortgage Loan,
provided that, with respect to any such indebtedness other than the Starwood
Intercompany Mortgage Loan, (a) the terms of such indebtedness are on an
arm's-length basis, (b) such indebtedness is unsecured and evidenced in writing,
(c) the entity making the loan has entered into a subordination and
intercreditor agreement with the Lender with respect to any such loan it may
make in substantially the form attached as Exhibit D and has pledged any such
loan to Lender as security for such entity's obligations under such
subordination and intercreditor agreement, (d) such loan shall not mature, and,
except to the extent provided for in the next clause (e), does not require any
mandatory amortization, earlier than the fifth anniversary of making of such
loan, (f) such indebtedness is required to be repaid from excess cash flow of
the borrowing Borrower prior to any distributions to equity, (g) such loan may
not be transferred except to a Permitted Intercompany Lender that complies with
clause (c) above and in connection therewith the applicable Borrower has given
Lender at least five Business Days advance written notice of such transfer
accompanied by drafts of the documents that will evidence such transfer, and
agrees to deliver to Lender final copies of all documents evidencing or executed
by such Borrower and any Permitted Intercompany Lender in connection with such
transfer promptly after the effective date of such transfer, (f) Obligors shall
have received a Rating Confirmation with respect to such indebtedness and (g)
such loan shall be necessary to accommodate Sponsor's REIT qualification
requirements, (v) capital lease obligations or purchase money financing secured
only by the assets acquired or leased, including leases, licenses or financing
arrangements with respect to signage, televisions, audio-visual equipment,
office supplies, computers, telephone systems, vans or other equipment or
personal property used at the related Property for which aggregate annual lease
payments, license fees and debt service for each Property is less than the
amount per annum set forth for each such Property on Schedule I and (vi) such
other unsecured indebtedness approved by Lender in its sole discretion and with
respect to which Borrower has received a Rating Confirmation.
"Permitted Investments" shall mean the following, subject to
qualifications hereinafter set forth:
1. Obligations of, or obligations guaranteed as to principal and
interest by, the U.S. government or any agency or
instrumentality thereof, when such obligations are backed by
the full faith and credit of the United States of America.
These obligations include, but are not limited to:
-- Treasury obligations (all direct or fully guaranteed US
obligations)
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-- Farmers Home Administration Certificates of beneficial
ownership
-- General Services Administration Participation certificates
-- Maritime Administration Guaranteed Title XI financing
-- Small Business Administration Guaranteed participation
certificates Guaranteed pool certificates
-- Department of Housing and Urban Development Local authority
bonds
-- Washington Metropolitan Area Transit Authority Guaranteed
transit bonds
2. Obligations of government-sponsored agencies that are not backed
by the full faith and credit of the U.S., where the obligation is
limited to those instruments that have a predetermined fixed
dollar amount of principal due at maturity that cannot vary or
change. These obligations are limited to:
-- Federal Home Loan Mortgage Corp. (FHLMC) Debt obligations
-- Farm Credit System (formerly: Federal Land Banks, Federal
Intermediate Credit Banks, and Banks for Cooperatives)
Consolidated system wide bonds and notes
-- Federal Home Loan Banks (FHL Banks) Consolidated debt
obligations
-- Federal National Mortgage Association (FNMA) Debt obligations
-- Student Loan Marketing Association (SLMA) Debt obligations
-- Financing Corp. (FICO) Debt obligations
-- Resolution Funding Corp. (REFCORP) Debt obligations.
3. Federal funds, unsecured certificates of deposit, time deposits,
banker's acceptances, and repurchase agreements having maturities
of not more than 365 days of any bank, the short-term debt
obligations of which are rated "A-1+" (or the equivalent) by the
Rating Agencies.
4. Deposits that are fully insured by the Federal Deposit Insurance
Corp. (FDIC).
5. Debt obligations maturing in 365 days or less that are rated AAA
or higher (or the equivalent) by the Rating Agencies.
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6. Commercial paper rated "A-1+" (or the equivalent) by the
Rating Agencies and maturing in 365 days or less.
7. Investments in certain short-term debt of issuers rated "A-1+"
(or the equivalent) by the Rating Agencies may be permitted
with certain restrictions. The total amount of debt from
"A-1+" issuers must be limited to the investment of an amount
equal to Monthly Debt Service Payment Amount. The total amount
of "A-1+" investments should not represent more than twenty
percent (20%) of the rated issue's outstanding principal
amount and each investment should not mature beyond thirty
(30) days. Investment in "A-1+" (or the equivalent) rated
securities are not eligible for reserve accounts, cash
collateral accounts, or other forms of credit enhancement.
Short-term debt for purposes of this definition includes:
commercial paper, federal funds, repurchase agreements,
unsecured certificates of deposit, time deposits, and banker's
acceptances.
8. Investment in money market funds rated "AAAm" or "AAAm-G"
(or the equivalent) by the Rating Agencies.
9. Such other investments as shall be approved in writing by
means of a Rating Confirmation.
Notwithstanding the foregoing, "Permitted Investments": (i) shall exclude any
security with the Standard & Poor's "r" symbol (or any other Rating Agency's
corresponding symbol) attached to the rating (indicating high volatility or
dramatic fluctuations in their expected returns because of market risk), as well
as any mortgage-backed securities and any security of the type commonly known as
"strips"; (ii) shall not have maturities in excess of one year; (iii) as to the
investments described in (1), (2), (3), (4), (5), (6) and (7): the obligations
shall be limited to those instruments that have a predetermined fixed dollar of
principal due at maturity that cannot vary or change; interest may either be
fixed or variable; and any variable interest should be tied to a single interest
rate index plus a single fixed spread (if any), and move proportionately with
that index; and (iv) shall exclude any investment where the right to receive
principal and interest derived from the underlying investment provide a yield to
maturity in excess of 120% of the yield to maturity at par of such underlying
investment. No investment shall be made which requires a payment above par for
an obligation if the obligation may be prepaid at the option of the issuer
thereof prior to its maturity. All investments, other than those payable on
demand, shall mature or be redeemable upon the option of the holder thereof on
or prior to the earlier of (x) three (3) months from the date of their purchase
or (y) the Business Day preceding the day before the date such amounts are
required to be applied hereunder.
"Person" shall mean any individual, sole proprietorship,
corporation, general partnership, limited partnership, limited liability company
or partnership, joint venture, association, joint stock company, bank, trust,
estate, unincorporated organization, any federal, state, county or municipal
government (or any agency or political subdivision thereof), endowment fund or
any other form of entity.
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"Phoenician Subleases" shall mean all those subleases indicated on
that marked title insurance commitment delivered by Fidelity National Title
Insurance Company and Xxxxxxx Title Guaranty Company, dated January 29, 1999,
and delivered contemporaneously herewith.
"Plan" means an employee benefit plan, other than a Multiemployer
Plan, (i) which is maintained for employees of the Obligor or any ERISA
Affiliate and which is subject to Title IV of ERISA or (ii) with respect to
which the Obligor or any ERISA Affiliate could be subjected to liability under
Title IV of ERISA (including Section 4069 of ERISA). Without limitation on the
foregoing, the term "Plan" includes any employee benefit plan subject to Title
IV of ERISA for which the Obligor may have any liability arising from the joint
and several liability provisions of Title IV of ERISA, from the maintenance or
participation in any such plan by the Obligor, as a result of the Obligor being
the successor in interest to any person maintaining or participating in any such
plan or otherwise.
"Plan Assets" means assets of any employee benefit plan subject to
Part 4, Subtitle A, Title I of ERISA.
"Policies" shall have the meaning specified in Section 8.1.1(c)
hereof.
"Prepayment" shall have the meaning specified in Section 2.4.2 hereof.
"Prepayment Date" shall have the meaning specified in Section 2.4.2
hereof.
"Prime Rate" shall mean the annual rate of interest published in The
Wall Street Journal from time to time as the "Prime Rate". If more than one
"Prime Rate" is published in The Wall Street Journal for a day, the average of
such "Prime Rates" shall be used, and such average shall be rounded up to the
nearest one-sixteenth of one percent (.0625%). If The Wall Street Journal ceases
to publish the "Prime Rate", the Lender shall select an equivalent publication
that publishes such "Prime Rate", and if such "Prime Rates" are no longer
generally published or are limited, regulated or administered by a governmental
or quasi-governmental body, then Lender shall select a comparable interest rate
index.
"Proceeds" shall mean amounts, awards or payments payable to Obligors
or Lender in respect of all or any part of a Property in connection with a
Casualty or Condemnation thereof (after the deduction therefrom and payment to
Obligors and Lender, respectively, of any and all reasonable expenses incurred
by Obligors and Lender in the recovery thereof, including all attorneys' fees
and disbursements, the fees of insurance experts and adjusters and the costs
incurred in any litigation or arbitration with respect to such Casualty or
Condemnation).
"Properties" shall mean the parcel or parcels of real property and
improvements thereon owned by Obligors and all of Obligors' leasehold interest
in any Ground Leased Property and encumbered by a Security Instrument, together
with all rights pertaining to such property, improvements and leasehold
interests, as more particularly described in the preliminary statement of each
Security Instrument and referred to therein as the "Property", the "Mortgaged
Property" or the "Trust Property", as the case may be. "Property" shall mean any
one of the Properties.
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"Property Management Agreement" shall mean, with respect to any
Property, the property management agreement entered into by Operator II as
Property Manager and Operator or, in the case of the Properties known as the
Phoenician and the Sheraton San Diego, by Operator II as Property Manager and
the applicable Borrower, as currently in effect, including the Management
Contracts, pursuant to which the Property Manager is to provide property
management and other services with respect to the Property, and any other
property management agreement entered into with the prior written consent of
Lender.
"Property Manager" shall mean, with respect to any Property, the
Person named in clause (i) of the definition of "Acceptable Property Manager" or
any replacement "Property Manager" appointed in accordance with Section 11.1
hereof.
"Qualified Survey" shall mean a current title survey of a Property,
certified to the title company and Lender and their successors and assigns, that
(i) is in form and content satisfactory to Lender in its Discretion, (ii) is
prepared by a professional and properly licensed land surveyor satisfactory to
Lender in its Discretion in accordance with the 1997 Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys, (iii) meets the classification of
an "Urban Survey", and the following additional items from the list of "Optional
Survey Responsibilities and Specifications" (Table A) should be added to each
survey: 1, 2, 3, 4, 6, 7(a), (b)(1) and (c), 8, 9, 10, 11, 13, 15 and 16 (iv)
reflects the same legal description contained in the Qualified Title Policy
relating to such Property, (v) includes, among other things, a metes and bounds
description of the real property comprising part of such Property satisfactory
to Lender, (vi) contains a certification in form and substance acceptable to
Lender.
"Qualified Title Policy" shall mean, with respect to a Property, an
ALTA title insurance policy (1970 unmodified form, where issuable) issued by one
or more title companies acceptable to Lender in its Discretion, with ALTA
facultative reinsurance and direct access agreements acceptable to Lender, and
subject to a reinsurance program satisfactory to Lender in its sole discretion,
which title insurance policy shall (i) provide coverage in the amount of 125% of
the Allocated Loan Amount of such Property (or, in the case of the Phoenician,
135%) in the case of all Properties not included within the scope of a tie-in
endorsement, (ii) insure Lender that the related Security Instrument creates a
valid first mortgage lien on such Property, free and clear of all exceptions
from coverage other than such liens, encumbrances and other matters described in
Schedule B of such policy, which matters have been approved by Lender in its
Discretion, Permitted Encumbrances (other than those described in clause (ii) of
the definition thereof) and such standard exceptions and exclusions from
coverage as Lender shall approve, (iii) contain such endorsements and
affirmative coverages as Lender may request in its Discretion (including a
deletion of the creditor's rights exceptions), (iv) name Lender as the insured
and (v) be assignable by its terms with a transfer of the Loan.
"Rating Agency" shall mean each of S&P, Xxxxx'x, and any other
nationally-recognized statistical rating agency from time to time selected by
Lender and rating the Certificates issued in connection with the Securitization.
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"Rating Confirmation," with respect to the matter in question, shall
mean that as a condition precedent thereto the Rating Agency shall have
confirmed in writing that (i) such investment, replacement or action shall not
result, in and of itself, in a downgrade, withdrawal or qualification of any
rating then assigned to any outstanding Certificates (if the Securitization has
occurred), or (ii) such investment, replacement or action would not result, in
and of itself, in a downgrade, withdrawal or qualification of any rating for
proposed Certificates then under consideration by the Rating Agencies (if the
Securitization has not yet occurred); provided that if the Securitization has
not taken (or as certified by Lender, will not take) the form of a transaction
rated by the Rating Agency, then "Rating Confirmation" shall instead mean that
the matter in question shall be subject to the prior approval of the Lender
which approval shall not be unreasonably withheld or delayed.
"Reciprocal Easement Agreement (Sheraton Colony Square)" shall mean
the Declaration of Easements and Covenants by and between The Prudential
Insurance Company of America and SLT Realty Limited Partnership, dated July 18,
1995, as amended.
"Reciprocal Easement Agreement (Westin Atlanta North)" shall mean the
Declaration of Easements, Cross-Easements and Restrictions between The Landmarks
Group Properties Corporation and Landmark Twenty-Six, Ltd., dated July 9, 1984,
as amended.
"Reference Date" means the first day of each January and the first day
of each July.
"Related Party" means any member, shareholder, partner, principal,
Affiliate, employee, officer, director, agent or representative of an Obligor.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration 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 Amount" means, with respect to a Property, the amount set
forth on Schedule G hereto, but in no event less than 125% of the Allocated
Amount relating to such Property (or, in the case of the Phoenician, 135% of
such Allocated Loan Amount).
"Release Instruments" shall have the meaning set forth in Section
2.4.1(b) hereof.
"Remaining Work" shall mean, with respect to a Property, any work
which (a) may, in the written opinion of an Independent Architect, be completed
for an amount of $50,000 or less, (b) may be completed within six months or less
and (c) whether or not it is completed, will have no material impact on the use,
operation, operating income or value of such Property.
"REMIC" shall mean a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code.
"REMIC Trust" shall mean a REMIC which holds any Note or Notes.
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"Rents" shall mean, with respect to each Property, all fees, charges,
accounts, or other payments for the use or occupancy of rooms and other public
facilities in the Properties, all rents, rent equivalents, moneys payable as
damages pursuant to a Lease or in lieu of rent or rent equivalents, royalties
(including all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including security, utility and other
deposits), accounts, cash, issues, profits, charges for services rendered, and
other consideration of whatever form or nature received by or paid to or for the
account of or benefit of each Borrower or Operator that holds a direct or
indirect interest in such Property or its agents or employees from any and all
sources arising from or attributable to the Property, including, without
limitation, all room rents related to overnight occupancy of guests at the
Property, all banquet, conference and other room rentals, fees and other
consideration of any sort, all credit card receivables, and all deposits of
money as advance rent, for security, as xxxxxxx money or as down payment or
deposit for the reservation or occupancy of rooms or other facilities in or at
the Property and any obligations now existing or hereafter arising or created
out of the sale, Lease (including the Operating Leases), license, concession or
other grant of the right of the use and occupancy of property or rendering of
services by the applicable Obligor and proceeds, if any, from business
interruption or other loss of income insurance.
"Required Loan-to-Value Ratio" shall mean that the aggregate principal
amount of the Loan is not more than sixty-five percent (65%) of the appraised
value of the Property as set forth in the Appraisals prepared in accordance with
the origination of the Loan.
"Required Rating" shall mean the higher of (i) the highest rating then
assigned by the Rating Agency to any of the Certificates and (ii) "AA" (or its
equivalent) by the Rating Agency.
"Required Records" shall have the meaning set forth in Section
5.1(j)(viii) hereof.
"Reserve Account" shall have the meaning set forth in Section 2.3
hereof.
"Restoration" shall have the meaning set forth in Section 8.1.2(b)
hereof.
"Revised Interest Rate" shall mean the greater of (I) the Initial
Interest Rate plus 5.00 percent and (ii) the Treasury Rate on the Anticipated
Repayment Date plus 5.00 percent.
"Scheduled Defeasance Payments" shall have the meaning set forth in
Section 2.3.2(b).
"Second-Tier Member" shall mean each of the entities holding a
membership interest in the Members, as set forth in Schedule B hereto, in each
case together with any of its successors and assigns as permitted hereunder.
"S&P" shall mean Standard & Poor's Ratings Services, a Division of
XxXxxx-Xxxx Companies, Inc.
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"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Securitization" shall have the meaning set forth in the Cooperation
Agreement.
"Security Instrument" shall mean, with respect to a Property, (i) that
certain first priority Mortgage (or Deed of Trust or Deed to Secure Debt),
Security Agreement, Assignment of Leases and Rents and Fixture Filing, dated as
of the date hereof, executed and delivered by the Borrower that owns an interest
(fee or leasehold) in such Property as security for the Loan and encumbering
such Property, as the same may be amended, restated, replaced, supplemented,
consolidated or otherwise modified from time to time pursuant to the provisions
thereof or of the other Loan Documents and (ii) that certain first priority
Operating Leasehold Mortgage (or Deed of Trust or Deed to Secure Debt), Security
Agreement, Assignment of Leases and Rents and Fixture Filing, dated as of the
date hereof, executed and delivered by the Operator as security for the Operator
Guaranty and encumbering the leasehold interest of Operator in such Property, as
the same may be amended, restated, replaced, supplemented, consolidated or
otherwise modified from time to time pursuant to the provisions thereof or of
the other Loan Documents.
"Servicer" shall mean the entity appointed by Lender to service the
Loan or its successor in interest, or if any successor servicer is appointed
pursuant to the Servicing Agreement, such successor servicer. If at any time no
entity shall be so appointed, Servicer shall be deemed to refer to Lender.
Initially, the Servicer shall be Xxxxx Fargo Bank, N.A.
"Servicing Agreement" shall mean any trust, pooling and servicing
agreement or trust and servicing agreement that may be entered into from time to
time in connection with the Loan or any Securitization of the Loan.
"Sheraton" means ITT Sheraton Corporation, a Delaware corporation.
"Single Purpose Entity" shall mean a Person, other than an individual,
which (a) is formed solely for the purpose of acquiring and directly holding an
ownership interest in one or more of the Properties or an ownership interest in
an Obligor, (b) does not engage in any business unrelated to one or more of the
Properties and the financing thereof, (c) does not have any assets other than
those related to its interest in one or more of the Properties or an Obligor, as
the case may be, or any indebtedness other than Permitted Indebtedness, (d) is
bankruptcy-remote from any other Person, (e) has no liabilities, actual or
contingent, other than the Debt, Permitted Indebtedness and liabilities normal
and incidental to the ownership, operation, leasing and letting of rooms to
overnight guests and hotel facilities to those guests and other hotel patrons at
the Properties owned by it, (f) provides for the subordination of any obligation
to indemnify any of its partners or members, officers, directors or employees
(as applicable) to the Debt, (g) has books, records, accounts, financial
statements, stationery, invoices and checks which are separate and apart from
those of any other Person, (h) is subject to and complies with all of the
limitations on powers and separateness requirements set forth in the
organizational documentation of Obligors, as of the Closing Date, (i) holds
itself out as being a Person separate and apart from each other Person, conducts
its business in its own name and exercises reasonable efforts to correct any
known misunderstanding actually known to it regarding its separate
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identity, (j) pays its own liabilities out of its own funds and reasonably
allocates any overhead for shared office space, (k) maintains a sufficient
number of employees in light of its contemplated business operations, and in the
case of a limited liability company, observes all applicable limited liability
company formalities in all material respects, has at all times either (x) a
corporate managing member that is a Single-Purpose Entity with two independent
partners, members or directors, or (y) a single member and a board of managers
with two Independent Directors and has an operating agreement which provides
that for so long as the Loan is outstanding, the limited liability company shall
not take any of the following actions:
(i) the dissolution, liquidation, consolidation, merger or sale of all
or substantially all of the assets of the related Obligor,
(ii) the engagement by the related Obligor in any business other than
the ownership, maintenance and operation of the related Property or Properties,
(iii) the filing, or consent to the filing, of a bankruptcy or
insolvency petition, any general assignment for the benefit of creditors or the
institution of any other insolvency proceeding, or the seeking or consenting to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for the related Obligor or a substantial
portion of its properties, without the unanimous vote of all of the Independent
Directors of the limited liability company, and
(iv) the amendment or modification of any material provision of its
operating agreement or certificate of limited liability company (for purposes
hereof, any amendment or modification that adversely affects any of the
requirements for qualifying as a "Single-Purpose Entity" shall be considered
material).
"Special Servicer" shall mean the entity appointed by Lender to
specially service the Loan or its successor in interest, or if any successor
special servicer is appointed pursuant to the Servicing Agreement, such
successor servicer. If at any time no entity shall be so appointed, Special
Servicer shall be deemed to refer to Lender. Initially, the Special Servicer
shall be Xxxxx Fargo Bank, N.A.
"Specified Default" means any Default specified in clauses (i), (iv),
(vi), (vii) (without giving regard to the sixty-day period described in such
clause (vi)), (ix) or (xii) (with regard to material Defaults referenced by such
clause (xii)) of Section 10.1(a).
"Sponsors" shall mean Starwood Hotels & Resorts Worldwide, Inc., a
Maryland corporation and Starwood Hotels & Resorts, a Maryland real estate
investment trust. The Sponsors may be referred to herein collectively as
"Sponsor".
"Starwood Intercompany Mortgage Loan" shall mean those certain
intercompany mortgage loans secured by the hotels known as the Sheraton San
Diego and the Phoenician and
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evidenced by (i) that certain Substitute Note (Phoenician) by ITT Corporation,
as maker, in favor of SLT Realty Limited Partnership, as payee, dated January
27, 1999 in the principal sum of $210,000,000.00; (ii) that certain Promissory
Note made by Starwood Hotels & Resorts Worldwide, Inc., as maker, in favor of
Starwood Hotels & Resorts, as payee, dated February 23, 1998 in the principal
amount of $50,000,000.00; and (iii) that certain Promissory Note made by
Starwood Hotels & Resorts Worldwide, Inc., as maker, in favor of Starwood Hotels
& Resorts, as payee, dated February 23, 1998 in the principal amount of
$100,000,000.00
"Subordination, Assignment and Attornment Agreement" shall mean the
Subordination, Assignment and Attornment Agreement entered into as of January
27, 1999, by and among the Borrowers, Operator, ITT Sheraton Corporation, a
Delaware corporation, Westin License Company, a Delaware corporation and Lender.
"Subordination, Non-disturbance and Attornment Agreement" shall mean
an agreement between Lender and a Tenant, relating to the granting of
non-disturbance rights, which agreement shall be in substantially the form
attached hereto as Exhibit E and made a part hereof, with such changes therein
as shall be reasonably required by Lender or any Tenant.
"Substantial Completion" shall mean, with respect to any specified
work, the Final Completion of all such work other than any Remaining Work.
"Substitute Property or Properties" shall have the meaning set forth
in Section 2.6 hereof.
"Substituted Property or Properties" shall have the meaning set forth
in Section 2.6 hereof.
"Successor Borrower" shall have the meaning set forth in Section
2.3.2(c) hereof.
"Survey Defect" shall have the meaning set forth in Section
3.1(c)(iii) hereof.
"Tax, Insurance and Ground Rents Escrow Account" shall have the
meaning set forth in Section 9.3.1 hereof.
"Taxes" shall mean all real estate and personal property taxes,
assessments, fees, taxes on rents or rentals, water rates or sewer rents, and
other governmental charges now or hereafter levied or assessed or imposed
against Obligors or the Properties or rents therefrom or which may become Liens.
"Tenant" shall mean any Person liable by contract or otherwise to pay
monies (including a percentage of gross income, revenue or profits) pursuant to
a Lease.
"Tenant Improvements" shall mean, collectively, (i) tenant
improvements to be undertaken for any Tenant required to be completed by
Obligors pursuant to the terms of such Tenant's Lease, or (ii) allowances to be
paid to a Tenant pursuant to such Tenant's Lease in
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connection with such Tenant's construction of its tenant improvements at the
related Property, but specifically excluding any rent concessions granted to a
Tenant by Obligors.
"Term" means the period from the Closing Date to (but not including)
the Payment Date falling in the month after the month in which the 10th
anniversary of the Closing Date occurs unless Lender, in its sole discretion,
exercises the Extension Option, in which case the Term shall mean the period
from the Closing Date to (but not including) the Payment Date falling in the
month in which the 25th anniversary of the Closing Date occurs.
"Term Sheet" shall mean that certain term sheet, dated December 31,
1998, among Xxxxxxx Xxxxx Mortgage Company, Xxxxxx Brothers Holdings Inc. d/b/a
Xxxxxx Capital and Sponsor, in respect of the principal terms of the Loan,
including certain fees and expenses to be paid in connection with the Loan.
"Threshold Amount" shall mean, with respect to each Property, the
amount set forth on Schedule J hereto.
"Title Defect" shall have the meaning set forth in Section 3.1(c)(ii)
hereof.
"Trade Payables" shall mean unsecured amounts payable by or on behalf
of Obligors for or in respect of the operation of the Properties in the ordinary
course and which would under GAAP be regarded as ordinary expenses, as well as
Leasing Commissions and Tenant Improvements, including amounts payable to
suppliers, vendors, contractors, mechanics, materialmen or other Persons
providing property or services to the Properties or Obligors.
"Treasury Constant Yield" shall mean the arithmetic mean of the rates
published as "Treasury Constant Maturities" as of 5:00 p.m., New York time, for
the five Business Days preceding the date on which acceleration has been
declared, as shown on the USD screen of the Telerate service, or if such service
is not available, the Bloomberg service, or if neither the Telerate nor the
Bloomberg service is available, under Section 504 in the weekly statistical
release designated H.15519 (or any successor publication) published by the Board
of Governors of the Federal Reserve System, for "On the Run" U.S. Treasury
obligations corresponding to the Payment Date occurring on the Initial Maturity
Date or Anticipated Repayment Date, unless Lender has elected the Extension
Option, in which case such "On the Run" U.S. Treasury obligations shall
correspond to the Extended Maturity Date; if no such maturity shall so exactly
correspond, yields for the two most closely corresponding published maturities
shall be calculated pursuant to the foregoing sentence and the Treasury Constant
Yield shall be interpolated or extrapolated (as applicable) from such yields on
a straight-line basis (rounding, in the case of relevant periods, to the nearest
month).
"Treasury Rate" shall mean, as of the Anticipated Repayment Date, the
linear interpolation of the bond equivalent yields as reported in Federal
Reserve Statistical Release H.15-Selected Interest Rates under the heading
"U.S. Government Securities/Treasury Constant Maturities" for the week ending
prior to the Anticipated Repayment Date of U.S. Treasury constant maturities
with maturity dates of fifteen years or as close as possible in time thereto.
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"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the state in which the applicable Property is located.
"Underfunding" means, with respect to any Plan, the excess, if any, of
the "accumulated benefit obligations" (within the meaning of Statement of
Financial Accounting Standards 87) under such Plan (determined using the
actuarial assumptions and discount rate used with respect to such Plan in the
most recent financial statements of the Borrower) over the fair market value of
the assets held under the Plan.
"Use" means any handling, treatment, storage, disposal,
transportation, use, re-use, recycling, reclamation, manufacture, generation,
formulation, processing or distribution.
"U.S. Government Securities" shall mean securities evidencing an
obligation to pay principal and interest in a full and timely manner that are
(i) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a Person Controlled
or supervised by and acting as an agency or instrumentality of and guaranteed as
a full faith and credit obligation by the United States of America, which in
either case are not callable or redeemable at the option of the issuer thereof
(including a depository receipt issued by a bank (as defined in Section 3(a)(2)
of the Securities Act) as custodian with respect to any such securities or a
specific payment of principal of or interest on any such securities held by such
custodian for the account of the holder of such depository receipt; provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the securities or the
specific payment of principal of or interest on the securities evidenced by such
depository receipt).
"Waste" means any material abuse or destructive use (whether by action
or inaction of Obligor or Sponsor or any of their Affiliates) of a Property
which causes Lender to suffer a loss or a diminution in the value of its
interest therein.
"Westin" means Westin License Company, a Delaware corporation.
"Withdrawal Liability" has the meaning given such term under Part I of
Subtitle E of Title V of ERISA.
"Yield Maintenance Payments" shall have the meaning set forth in
Section 2.3.4 hereof.
Section 1.2 Principles of Construction.
All references to sections, schedules and exhibits are to sections,
schedules and exhibits in or to this Agreement unless otherwise specified.
Unless otherwise specified, the words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
words "includes", "including" and similar terms shall be construed as if
followed by the words "without limitation". The terms "Property" shall be
construed to be
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followed by the phrase "or any part or portion thereof". Unless otherwise
specified, all meanings attributed to defined terms herein shall be equally
applicable to both the singular and plural forms of the terms so defined. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP, as may be modified herein. As a matter of convenience
herein, rating categories are generally stated in the S&P's nomenclature, it
being understood that unless otherwise expressly stated to the contrary,
reference to such category shall also be deemed to be a reference to the
comparable category of each other Rating Agency; provided that if a specified
rating (or its equivalent) from any of the Rating Agencies is required hereunder
with respect to an issuer or a security (other than the Certificates), and one
of the Rating Agencies in connection with a Securitization does not rate the
issuer or security in question, then such requirement hereunder shall
nevertheless be deemed satisfied so long as such Rating Agency has issued a
Rating Confirmation with respect thereto.
ARTICLE II
GENERAL
Section 2.1 The Loan.
2.1.1 Commitment. Subject to and upon the terms and conditions set
forth herein, including the conditions precedent set forth in Section 3.1
hereof, Lender hereby agrees to make the Loan to Borrowers on the Closing Date,
which Loan shall mature on the Initial Maturity Date. Borrowers hereby
acknowledge that prior to the Securitization, Lender shall have the right, but
not the obligation, in Lender's sole discretion, to elect by written notice to
the Borrowers and the Sponsor to extend the maturity of the Loan to the Extended
Maturity Date (the "Extension Option"). In the event that Lender exercises the
Extension Option, the Initial Maturity Date shall cease to be the Maturity Date
and shall instead become the Anticipated Repayment Date. Borrowers hereby agree
to accept the Loan on the Closing Date, subject to and upon the terms and
conditions set forth herein.
2.1.2 Disbursement to Borrowers and Use of Loan Proceeds. Borrowers
may request and receive only one disbursement hereunder in respect of the Loan.
Borrowers shall receive the proceeds of the Loan on the Closing Date, subject to
the direction given by Borrowers as to the application of Loan proceeds to pay
the Lender Expenses and any other amounts owing to Lender and to fund (i) the
Tax, Insurance and Ground Rents Escrow Account, (ii) the FF&E Reserve Account
and (iii) the Deferred Maintenance and Environmental Conditions Reserve Account.
Any amount borrowed and repaid hereunder in respect of the Loan may not be
reborrowed.
2.1.3 The Notes. (a) The Loan shall be evidenced by a Note or multiple
Notes, in the aggregate original principal amount of the Loan. On the date
hereof, there shall be a single Note secured by all of the Properties which
shall bear interest at the applicable Interest Rate. If after the date hereof
such Note is converted into multiple Notes pursuant to the terms of the
Cooperation Agreement, the aggregate weighted average coupon rate of the Notes
as of Origination shall be the applicable Interest Rate. The Notes shall be
subject to repayment as provided in Section 2.3 hereof, shall be entitled to the
benefits of this Agreement and shall be
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secured by the Security Instruments granting a first mortgage lien on the
Properties and by the other Loan Documents.
(b) Use of Proceeds of Loan. Borrowers shall use the proceeds of the
Loan to (i) pay all past-due Basic Carrying Costs, if any, in respect of the
Properties, (ii) fund the Deferred Maintenance and Environmental Conditions
Reserve Account, the Tax, Insurance and Ground Rents Escrow Account and the FF&E
Reserve Account, (iii) pay costs and expenses actually incurred in connection
with the closing of the Loan, (iv) pay Lender Expenses, (v) pay any other
amounts owing to Lenders as of the date hereof, (vi) pay related costs or
expenses in connection with any of the foregoing and establish escrows and
reserves for future expenses and any transaction contemplated by any Loan
Document and (vii) general corporate purposes including repayment of Sponsor
debt.
Section 2.2 Principal and Interest.
2.2.1 Principal and Interest.
(a) Subject to Section 2.2.1(d), from the date hereof to but excluding
the Maturity Date, Borrowers shall pay interest on the outstanding principal
balance of the Loan at the applicable Interest Rate computed in accordance with
Section 2.5.2 hereof (it being acknowledged that from and after the Anticipated
Repayment Date (if applicable), interest on the Notes shall accrue at the
Revised Interest Rate). On the date hereof, Borrowers shall make a payment of
interest on each Note at the Initial Interest Rate, and principal based on the
amortization schedule set forth on Schedule A to such Note, for the period to
but excluding the Payment Date on March 1, 1999.
(b) Commencing with the Payment Date on April 1, 1999 and on each and
every Payment Date thereafter through and including the Maturity Date, the
principal amount of each Note and interest thereon at the interest rate stated
on such note shall be payable in arrears in monthly installments of (i)
principal based on the amortization schedule as set forth on Schedule A to the
Note and (ii) interest at the applicable Interest Rate as computed in accordance
with Section 2.5.2 (the "Monthly Debt Service Payment Amount"). Unless otherwise
elected by Lender, such payments shall be applied first to the payment of
interest with the remainder of such payment being applied to the reduction of
the outstanding principal balance of such Note. Such payments shall be made only
on a Payment Date.
(c) From and after the Anticipated Repayment Date, in addition to the
principal to be repaid pursuant to Section 2.2.1(b), Borrowers shall repay on
each Payment Date the principal of the Loan to the extent provided for under
Section 9.2(b)(xii).
(d) From and after the Anticipated Repayment Date, Additional Interest
shall be due and payable in accordance with the terms of Section 9.2(b)(xiii)
and, to the extent unpaid by reason of insufficient Receipts, shall be deferred,
be added to the Debt and, to the extent permitted by applicable law, accrue
interest at the Revised Interest Rate (the "Accrued Additional Interest").
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(e) Except as provided herein or elected by Lender, payments made by
Borrowers in respect of the principal and interest of the Loan shall be applied
first to the payment of interest with the remainder of such payment being
applied to the reduction of the outstanding principal balance of the Notes.
2.2.2 Default Rate. If an Event of Default shall have occurred and is
continuing (including the failure of Borrowers to make a payment of principal or
interest on the Payment Date therefor, but subject to the last sentence of
Section 9.2(b)), Borrowers shall pay interest at the Default Rate on the
outstanding amount of the Loan and due but unpaid interest thereon, upon demand
from time to time (which interest is payable both before and after Lender has
obtained a judgment with respect to the Loan), to the extent permitted by
applicable law. Payment or acceptance of the increased rates provided for in
this subsection is not a permitted alternative to timely payment or full
performance by Borrowers and shall not constitute a waiver of any Default or
Event of Default or an amendment to this Agreement or any other Loan Document
and shall not otherwise prejudice or limit any rights or remedies of Lender.
2.2.3 Late Fee. If all or any portion of the Monthly Debt Service
Payment Amount or other amount due hereunder is not paid when due, Borrowers
shall pay to Lender upon demand an amount equal to the lesser of 5% of such
unpaid amount or the maximum amount permitted by applicable law (which amount
shall be in addition to all other amounts due hereunder), to defray in part the
expense incurred by Lender in handling and processing such delinquent payment
and to compensate Lender for the loss of the use of such delinquent payment.
Section 2.3 Loan Repayment and Defeasance.
2.3.1 Prepayment and Repayment. Borrowers shall repay any outstanding
principal indebtedness of the Loan in full on the Maturity Date of the
Loan, together with all accrued and unpaid interest thereon to (but
excluding) the date of repayment and all other amounts due to Lender in
connection with the Loan. Other than as set forth in Sections 2.3.2,
2.3.5 and 2.3.6 below, or as required or permitted pursuant hereto in
connection with a Casualty or Condemnation, Borrowers shall have no
right to prepay all or any portion of Loan.
2.3.2 Voluntary Defeasance of the Notes.
(a) On or after the Optional Defeasance Date and subject to the terms
and conditions set forth in this Section 2.3.2, Borrowers may defease
all or any portion of the Loan evidenced by the Note or Notes with U.S.
Government Securities (a "Defeasance"); provided that a partial
defeasance of the Note or Notes shall be permitted only in connection
with the release of one or more Properties in accordance with Section
2.4.2. No Defeasance shall be permitted on or after the Anticipated
Repayment Date. Defeasance shall be subject, in each case, to the
satisfaction of the following conditions precedent:
(i) Borrowers shall provide not less than thirty (30) days' prior
written notice to Lender specifying the date (the "Defeasance Date") on
which the Defeasance Deposit is to be made and on which the Defeasance
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is to occur, as well as the anticipated outstanding principal balance
of the Note (or, if applicable, Notes) as of the Defeasance Date.
(ii) Borrowers shall pay to Lender all accrued and unpaid interest on
the principal balance of the Note or Notes to but not including the
Defeasance Date (and if the Defeasance Date is not a Payment Date, the
Defeasance Deposit shall take into account the interest that would have
accrued on the Note or Notes to but not including the next Payment
Date).
(iii) Borrowers shall pay to Lender all other sums, not including
scheduled interest or principal payments, then due and payable under the
Loan Documents.
(iv) No Event of Default shall exist on the Defeasance Date, except
(prior to an acceleration of the Loan hereunder) for an Event of Default
relating solely to a Property that will be released from the Lien of the
Security Instrument thereon pursuant to Section 2.4.2 hereof in
connection with such Defeasance.
(v) Borrowers shall pay to Lender the required Defeasance Deposit for
the Defeasance, which Lender shall hold as security for the defeased
portion of the Loan .
(vi) Borrowers shall execute and deliver one or more security
agreements, in form and substance satisfactory to Lender (in its
reasonable judgment), creating a first priority lien on the Defeasance
Deposit and the U.S. Government Securities purchased with the Defeasance
Deposit in accordance with the provisions of this Section 2.3.2 (the
"Security Agreement").
(vii) Borrowers shall deliver to Lender an opinion of counsel for
Borrowers in form and substance satisfactory to Lender (in its sole
discretion) stating, among other things, that Lender has a perfected
first priority security interest in the U.S. Government Securities
purchased with the Defeasance Deposit.
(viii) If a Securitization has occurred, Borrowers shall deliver to
Lender an opinion of counsel for Borrowers in form and substance
satisfactory to Lender (in its reasonable judgment) and the applicable
Rating Agencies that the transfer of the Defeasance Deposit in exchange
for a release of the Lien on the Property or Properties securing the
Note or Notes (as the case may be) does not constitute a "significant
modification" of the Loan under Section 1001 of the Code or cause the
REMIC Trust to fail to qualify as a REMIC or otherwise cause a tax to be
imposed on the REMIC Trust and that such transfer will not adversely
affect the continued availability of any exemption relied upon in
connection with the
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securitization from the prohibited transaction rules of ERISA and
section 4975 of the Code.
(ix) If required by the applicable Rating Agencies, Borrowers shall
deliver or cause to be delivered a non-consolidation opinion with
respect to the Successor Borrower, if any, in form and substance
reasonably satisfactory to Lender and satisfactory to the applicable
Rating Agencies in their sole discretion.
(x) Borrowers shall deliver to Lender an Officer's Certificate
certifying that the requirements set forth in this Section 2.3.2(a) have
been satisfied.
(xi) Borrowers shall deliver such other certificates, documents or
instruments as Lender may reasonably request.
(xii) Borrowers shall pay all reasonable costs and expenses of Lender
incurred in connection with the Defeasance, including any costs and
expenses associated with the release of one or more Liens as provided in
Section 2.4 hereof and reasonable attorneys' fees and expenses.
(xiii) Borrowers shall deliver to Lender a confirmation, in form and
substance reasonably satisfactory to Lender, by a "Big Five" independent
certified public accounting firm selected by such Borrowers, that the
Defeasance Deposit is sufficient to pay all Scheduled Defeasance
Payments and other amounts required to be paid by the Borrowers
hereunder in connection with the proposed Defeasance.
(xiv) Borrowers shall deliver to Lender a Rating Confirmation with
respect to such Defeasance.
(xv) In the event only a portion of the Loan evidenced by the Note or
Notes is the subject of the Defeasance in connection with the release of
any Lien of any Security Instrument on one or more Properties as
described in Section 2.4.2 below, the Borrowers shall execute and
deliver all necessary documents to amend and restate such Note or Notes
and issue two substitute notes for each Note: one note having a
principal balance equal to the defeased portion of the original Note
(the "Defeased Note") and one note having a principal balance equal to
the undefeased portion of the original Note (the "Undefeased Note"). The
Defeased Note and the Undefeased Note shall have identical terms as the
original of each Note (and the Defeased Note or Notes and the Undefeased
Note or Notes shall be cross-defaulted with each other), except for the
principal balance. A Defeased Note cannot be the subject of any further
Defeasance. An Undefeased Note may be the subject of a further
Defeasance in accordance with the terms of this clause (xv) (the term
"Note", as used above in this
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clause (xv) for these purposes, being deemed to refer to the
Undefeased Note that is the subject of further defeasance) and the other
provisions of this Section 2.3.2; provided, however, that no such
partial defeasance shall take place unless the conditions outlined in
Section 2.4.2 are satisfied.
(b) In connection with the conditions set forth above in Section
2.3.2(a), each Borrower appoints Lender as its attorney-in-fact for the purpose
of using the Defeasance Deposit to purchase U.S. Government Securities which
provide payments on or prior to, but as close as possible to, all successive
Payment Dates after the Defeasance Date (including the Maturity Date or, if
applicable, the Anticipated Repayment Date), (including the outstanding
principal balance of either the Loan or the Defeased Note or Notes on the
Maturity Date or, if applicable, the Anticipated Repayment Date), and in amounts
equal to the Debt Service due on such dates under the Note or Notes or Defeased
Note or Notes, as applicable (the "Scheduled Defeasance Payments"). Borrowers,
pursuant to the Security Agreement or other appropriate document, shall
irrevocably authorize and direct that the payments received from the U.S.
Government Securities may be made directly to Lender and applied to satisfy the
obligations of Borrowers under the Note or Notes or Defeased Note or Notes, as
applicable. In connection with any total Defeasance of the Loan, any portion of
the Defeasance Deposit in excess of the amount necessary to purchase the U.S.
Government Securities required by this Section 2.3.2 and satisfy Borrowers'
obligations under Section 2.3 shall be remitted to Borrowers reasonably promptly
following the purchase of such U.S. Government Securities. In connection with
any partial Defeasance of the Loan, any portion of the Defeasance Deposit in
excess of the amount necessary to purchase the U.S. Government Securities
required by this Section 2.3.2 and satisfy Borrowers' obligations under Section
2.3 shall be retained by Lender in an Eligible Account as additional collateral
for the Loans, and shall be invested in Permitted Investments, each Borrower
hereby granting to Lender a security interest in such account and in such
Permitted Investments.
(c) Upon compliance with the requirements of this Section 2.3.2, if
requested by Borrowers in connection with a Defeasance under this Section 2.3.2
of the total aggregate outstanding principal of the Note, Lender shall designate
a successor entity (other than Lender) (the "Successor Borrower") to which
Borrowers shall transfer and assign all obligations, rights and duties under and
to the Note together with the pledged U.S. Government Securities (and the
obligation of the Lender named herein to designate a Successor Borrower shall be
retained by such Person notwithstanding the sale or transfer of the Loan unless
such obligation is specifically assumed by a transferee of the Loan). The
Successor Borrower shall assume the obligations under the Note or Notes and the
Security Agreement. The Borrowers shall pay $1,000 to any such Successor
Borrower as consideration for assuming the obligations under the Note or Notes
and the Security Agreement. Notwithstanding anything herein or in the Loan
Documents that may be construed to the contrary, no other assumption fee shall
be payable to the Successor Borrower upon or in consideration for its assumption
of the Note or Notes and the Security Agreement in accordance with this Section
2.3.2(c), but Borrowers shall pay all reasonable out-of-pocket costs and
expenses incurred by Lender, including Lender's reasonable attorneys' fees and
expenses, incurred in connection therewith.
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2.3.3 Repayment on or After Anticipated Repayment Date. Borrower shall
have the right, on not less than fifteen (15) days' prior written notice, to
prepay the Loan on a Payment Date, in whole or in part, at any time and from
time to time, from and after the Anticipated Repayment Date without penalty or
premium.
2.3.4 Repayment Upon Default. If all or any part of the principal
amount of the Loan is prepaid upon acceleration of the Loan following the
occurrence of an Event of Default at any time prior to the Initial Maturity Date
or the Anticipated Repayment Date, as the case may be, Borrower shall be
required to make such payments (the "Yield Maintenance Payments") in an amount
equal to the greater of (a) three (3%) of such prepaid principal balance and (b)
the excess, if any, of (i) the sum of (A) the aggregate respective present
values of all scheduled interest payments in respect of the Loan (or the portion
of all such interest payments corresponding to the portion of the principal of
the Loan to be prepaid upon acceleration) for the period from the date of such
prepayment upon acceleration to (and including) the Initial Maturity Date or
Anticipated Repayment Date, as the case may be, discounted monthly at a rate
equal to the Treasury Constant Yield and based on a 360-day year of twelve
30-day months and (B) the aggregate respective present values of all scheduled
principal payments in respect of the Loan (or the then unpaid portion thereof to
be prepaid upon acceleration), assuming for these purposes that the entire
outstanding scheduled principal amount of the Loan as of the Initial Maturity
Date or Anticipated Repayment Date (if applicable) were to be paid in full on
such Payment Date, discounted monthly at a rate equal to the Treasury Constant
Yield and based on a 360-day year of twelve 30-day months over (ii) the then
current outstanding principal amount of the Loan (or the then unpaid portion
thereof to be prepaid upon acceleration). If the Yield Maintenance Payments as
calculated pursuant to clause (b) of this Section 2.3.4 would not be a positive
number, then the number yielded by the calculation set forth in clause (b) shall
be zero. For purposes of this Section 2.3.4, the amount of the Loan on the date
of prepayment shall be determined after giving effect to any payment of
scheduled amortization made on such date. The determination of the Yield
Maintenance Payments by Lender shall be conclusive and binding on Borrower in
the absence of manifest error.
2.3.5 Limited Right of Prepayment. During the period between Closing
and February 8, 1999, Borrowers may elect to prepay the Loan in an amount less
than or equal to the difference between the Loan Amount and $500 million;
provided, however, that such prepayment shall be accompanied by all accrued and
unpaid interest on such prepaid principal amount and any hedging and other costs
incurred by Lender resulting from such prepayment.
2.3.6 Mandatory Prepayment upon Title Defect or Survey Defect. In the
event of a Title Defect or a Survey Defect, Borrowers shall be required to
immediately prepay the Loan in the amount set forth in Sections 3.1(c)(ii) and
(iii).
Section 2.4 Release of the Property. Except as set forth in this
Section 2.4, no repayment, prepayment or Defeasance of all or any portion of any
Note shall cause, give rise to a right to require, or otherwise result in, the
release of the Lien of any Security Instrument on any of the Properties.
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2.4.1 Release of All the Properties. (a) If all Borrowers have elected
to defease all of the Notes in their entirety, and the requirements of Section
2.3.2 have been satisfied, all of the Properties shall be released from the
Liens of their respective Security Instruments and the U.S. Government
Securities, pledged pursuant to the Security Agreement, shall be the sole source
of collateral securing the Notes and the Borrowers and Nonrecourse Carveout
Indemnitors shall be released from their obligations under the Loan Documents
(other than (i) Article IV of this Agreement, (ii) Sections 12.3 through 12.13
and 12.15 through 12.26 of this Agreement, (iii) the Environmental Indemnity and
(iv) the Cooperation Agreement).
(b) In connection with the release of the Liens contemplated in
Section 2.4.1(a), Borrowers shall submit to Lender, not less than fifteen (15)
days prior to the Defeasance Date, a release of Liens (and related Loan
Documents) for each Property (for execution by Lender) in a form appropriate in
the applicable state and otherwise satisfactory to Lender in its reasonable
discretion and all other documentation Lender reasonably requires to be
delivered by Borrowers in connection with such release (collectively, "Release
Instruments"), together with an Officer's Certificate certifying that such
documentation (i) is in compliance with all Legal Requirements, and (ii) will
effect such releases in accordance with the terms of this Agreement. Lender
shall execute such Release Instruments on or prior to the Defeasance Date if all
of the conditions herein to such release of Liens have been satisfied.
2.4.2 Release of Individual Properties.
A. Releases upon Defeasance, Casualty or Condemnation. On one or more
occasions, any Borrower may obtain (i) the release of one or more Properties
owned by such Borrower from the Lien of the Security Instrument thereon (and
related Loan Documents) and (ii) the release of Borrowers' obligations under the
Loan Documents with respect to such Property or Properties (other than those
expressly stated to survive), upon satisfaction of each of the following
conditions:
(a) Borrowers shall (i) (on or after the Optional Defeasance Date),
defease the portion of such Note equal to the Release Amount of the Property
being released (together with all accrued and unpaid interest on the principal
amount being so defeased), and such defeasance shall be undertaken pursuant to
the terms and conditions of Section 2.3.2, and all of such terms and conditions
shall be satisfied, including clause (xv) thereof or (ii) make a prepayment in
connection with a Casualty or Condemnation of a Property, in each case, in an
amount equal to the Release Amount relating to the Property being released,
together with all accrued and unpaid interest thereon; provided, however, that
other than in connection with the release of the Westin Washington D.C., the
amount secured by the Security Instrument on such Property shall not be reduced
until such time as the aggregate principal balance of the Loan is less than or
equal to 125% of the Allocated Loan Amount of such Property (i.e., $29,600,000).
(b) The Borrowers shall submit to Lender, not less than twenty (20)
days prior to the date of such release, all the Release Instruments together
with an Officer's Certificate certifying that such documentation (i) is in
compliance with all Legal Requirements, (ii) will effect such release in
accordance with the terms of this Agreement, and (iii) will not impair or
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otherwise adversely affect the Liens, security interests and other rights of
Lender under the Loan Documents not being released (or as to the parties to the
Loan Documents and Properties subject to the Loan Documents not being released).
(c) With respect to any release of one or more Properties,
after giving effect to such release, the Debt Service Coverage Ratio for all of
the Properties then remaining subject to the Liens of the Security Instruments
shall be not less than the greater of (x) the Debt Service Coverage Ratio
immediately preceding the proposed release of the Individual Property (for
purposes of this calculation, the income derived from a Defeasance Deposit
delivered to Lender in connection with a partial Defeasance occurring prior to
the partial Defeasance in question shall be included in the numerator of the
Debt Service Coverage Ratio and the Defeased Note or Notes relating to a partial
Defeasance occurring prior to the partial Defeasance in question shall be
included in the denominator of the Debt Service Coverage Ratio), and (y) the
Origination Debt Service Coverage Ratio; provided, however, that (i) in order to
meet the test set forth in this clause (c), Borrowers shall be permitted to
defease that portion of the Loan in addition to the applicable Release Amount
sufficient to increase the Debt Service Coverage Ratio to the required level,
and (ii) this clause (c) shall not be applicable in connection with a prepayment
in connection with Section 8.1.2(d).
B. Releases upon Prepayments under Section 2.3.5. In the event of a
prepayment pursuant to Section 2.3.5 hereof, Borrowers may obtain (i) the
release of one or more Properties owned by Borrowers from the Lien of the
Security Instrument thereon (and related Loan Documents) and (ii) the release of
Borrowers' obligations under the Loan Documents with respect to such Property or
Properties (other than those expressly stated to survive), upon satisfaction of
each of the following conditions:
(a) Lender shall agree to such release, which agreement shall be in
Lender's sole reasonable discretion, and in no event shall Lender make such
election unless:
(i) Lender, in its sole discretion, selects which, if any, of
such Properties may be released from the Lien of the Security
Instrument thereon;
(ii) Lender has received confirmation from the Rating Agency, in
form and substance satisfactory to Lender in its sole reasonable
discretion, that the Loan, as secured by the remaining Properties,
would qualify for a "shadow rating" of no less than investment grade
(i.e., not less than BBB- by S&P and Baa3 by Xxxxx'x);
(iii) the Loan, as secured by the remaining pool of Properties,
would have the "Required Loan-to-Value Ratio"
(iv) the Loan, as secured by the remaining pool of Properties,
would have a Debt Service Coverage Ratio (assuming a loan constant
comprised of interest and amortization of 10.5%) of not less than
1.70x; and
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(v) Lender shall have received a Qualified Title Policy and a
Qualified Survey for each of the remaining Properties, and such
title policies and surveys shall be satisfactory to Lender in its
sole reasonable discretion.
In making such determination, Lender shall further take into
consideration such factors as whether the remaining pool of Properties contains
urban upscale and upscale resort hotels which are of the type, character,
quality, market performance and geographic concentration satisfactory to Lender
in its sole reasonable discretion.
(b) In the event that Lender agrees to such release pursuant to clause
(a) above, Borrowers shall submit to Lender, not less than ten Business Days
prior to the date of such release, all the Release Instruments together with an
Officer's Certificate certifying that such documentation (i) is in compliance
with all Legal Requirements, (ii) will effect such release in accordance with
the terms of this Agreement, and (iii) will not impair or otherwise adversely
affect the Liens, security interests and other rights of Lender under the Loan
Documents not being released (or as to the parties to the Loan Documents and
Properties subject to the Loan Documents not being released). Such release shall
take place reasonably promptly after Borrowers elect to make a prepayment under
Section 2.3.5 hereof.
C. Releases Upon Prepayments under Section 2.3.6.
In the event of a prepayment pursuant to Section 2.3.6 hereof,
Borrowers may obtain (i) the release of the Properties pursuant to which there
is a Title Defect or a Survey Defect from the Lien of the Security Instrument
thereon (and related Loan Documents) and (ii) the release of Borrowers'
obligations under the Loan Documents with respect to such Property or Properties
(other than those expressly stated to survive), upon satisfaction of each of the
following conditions: Borrowers shall submit to Lender, not less than five
Business Days prior to the date of such release, all the Release Instruments
together with an Officer's Certificate certifying that such documentation (i) is
in compliance with all Legal Requirements, (ii) will effect such release in
accordance with the terms of this Agreement, and (iii) will not impair or
otherwise adversely affect the Liens, security interests and other rights of
Lender under the Loan Documents not being released (or as to the parties to the
Loan Documents and Properties subject to the Loan Documents not being released).
2.4.3 Release on Payment in Full. Lender shall, upon the written
request and at the expense of Borrowers, upon payment in full of all of the Debt
in accordance with the terms of the Loan Documents, release the Liens of the
Security Instruments and other Loan Documents not theretofore released.
2.4.4 Further Assurances. To the extent any Release Instrument
executed and delivered under Section 2.4.1(b) or 2.4.2(b) is insufficient to
effect the release to be effected in accordance with the terms hereof, Lender
(and Servicer) shall remain obligated to execute and deliver, at Borrowers'
expense, such further Release Instruments as Borrowers may reasonably request
and submit to Lender, together with an Officer's Certificate covering the
matters to be covered in the Officer's Certificate described in Section 2.4.1(b)
or 2.4.2(b), as applicable.
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2.4.5 Partial Release of Westin Mission Hills. Notwithstanding Section
2.4, so long as no Specified Default or Event of Default has occurred and is
continuing, Lender will agree to release a portion of the Property known as the
Westin Mission Hills in accordance with that certain Lot Line Agreement, a copy
of which is attached hereto as Exhibit 2.5, without the requirement that
Borrower defease such Property or pay a release price; provided, however, that
such release will not cause a Material Adverse Effect.
Section 2.5 Payments and Computations.
2.5.1 Making of Payments. Each payment by Borrowers hereunder or under
the Notes shall be made in funds settled through the New York Clearing House
Interbank Payments System or other funds immediately available to Lender by
12:30 p.m. New York City time, on the date such payment is due, to Lender by
deposit to such account pursuant to such wiring instructions as provided by
Lender at least two (2) Business Days prior to the applicable Payment Date. Any
funds made available after such time shall, for all purposes hereof, be deemed
to have been paid on the next succeeding Business Day. Except as otherwise
provided herein, whenever any payment hereunder or under the Notes shall be
stated to be due on a day which is not a Business Day, such payment shall be
made on the first Business Day thereafter.
2.5.2 Computations. Interest, with respect to each Payment Date, will
be computed based on the actual number of days in the related Interest Accrual
Period and a 360-day year.
2.5.3 Loan Account and Computer Access to Collateral Accounts.
Obligors shall have the right and ability at all times to have informational
computer access to the Deposit Accounts and the other Collateral Accounts. In
addition, Lender shall maintain a loan account on its books in the name of
Borrowers in which will be recorded the Loan and all payments and prepayments of
principal of and interest on the Loan (provided, that any error in such loan
account shall not in any manner affect the obligations of Borrowers to repay the
Loan in accordance with the terms of this Agreement, the Notes and the other
Loan Documents). In addition to the Obligors' rights to have informational
computer access to the various Collateral Accounts, Lender shall, upon the
written request of Obligors, not more often than monthly, provide such
information as it has in its possession regarding the records maintained in
accordance with the second sentence hereof and information regarding funds on
deposit in the Collateral Accounts. In addition, Lender shall, or shall direct
Servicer, if any, to provide to Obligors, within five (5) Business Days of the
end of each month, monthly reports showing deposits into and disbursements,
transfers or credits, as the case may be, from each Collateral Account, and
setting forth, as of the end of each month, a schedule of the Permitted
Investments contained in each such account and schedules of all transactions
involving Permitted Investments during the month.
Section 2.6 Substitution of Properties. At any time during the first
nine years of the Term, subject to the terms and conditions set forth in this
Section 2.6, Borrowers may substitute up to three Properties (individually, a
"Substituted Property" and collectively, the "Substituted Properties"), other
than the Properties known as the Phoenician Hotel and the
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Sheraton San Diego Hotel and Marina, with one or more comparable properties
owned in fee simple by Borrowers (individually, a "Substitute Property" and
collectively, the "Substitute Properties"), provided that the following
conditions are satisfied:
(a) Substitution Limitation. In no event shall the substitution of any
Property pursuant to this Section 2.6 be permitted if the Allocated Loan Amount
of such Property, together with the aggregate Allocated Loan Amounts of all
Substituted Properties previously or currently substituted pursuant to this
Section 2.6, totals an amount equal to or greater than twenty-five percent (25%)
of the original principal amount of the Loan.
(b) Rating Agency Confirmation and Approval. Such substitution shall
require a Rating Confirmation.
(c) Substitution Debt Service Coverage Ratio. The Debt Service
Coverage Ratio with respect to all Properties immediately following such
substitution shall be equal to or greater than the greater of (A) 1.2 times the
Origination Debt Service Coverage Ratio and (B) the Debt Service Coverage Ratio
with respect to all Properties immediately prior to such substitution.
(d) Additional Requirements. All substitutions effectuated pursuant to
this Agreement must satisfy the following conditions, in addition to those set
forth in Sections 2.6(a)-(c).
(i) Lender shall have received a copy of a deed conveying all of the
applicable Borrower's right, title and interest in and to the Substituted
Property to an entity other than such Borrower and a letter from such
Borrower countersigned by a title insurance company acknowledging receipt
by such title insurance company of such deed or assignment and assumption,
as applicable, and agreeing to record such deed or assignment and
assumption, as applicable, in the real estate records for the county in
which the Substituted Property is located.
(ii) Lender shall have received an Appraisal of the Substitute
Property or Substitute Properties dated no more than sixty (60) days prior
to the substitution by an MAI appraiser acceptable to the Rating Agencies
and satisfying the minimum appraisal standards for national banks pursuant
to FIRREA, indicating (A) an appraised value of the subject Substitute
Property (or the subject Substitute Properties in the aggregate) that is
equal to or greater than the appraised value of the Substituted Property
set forth in the appraisal of the Substituted Property delivered to Lender
in connection with the Closing of the Loan and (B) a replacement cost with
respect to the Substitute Property that is equal to or greater than the
greater of (y) the replacement cost with respect to the Substituted
Property set forth in the appraisal of the Substituted Property delivered
to Lender in connection with the Closing of the Loan and (z) the
replacement
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cost with respect to the Substituted Property set forth in an appraisal of
the Substituted Property dated not more than sixty (60) days prior to the
substitution by an MAI appraiser acceptable to the Rating Agencies and
satisfying the minimum appraisal standards for national banks pursuant to
FIRREA.
(iii) The aggregate Net Operating Income for the subject Substitute
Property or Substitute Properties as of the date of substitution shall not
be less than the Net Operating Income for the Substituted Property during
the twelve (12) consecutive month period immediately prior to the date of
substitution.
(iv) No Specified Default or Event of Default shall have occurred and
be continuing and Obligors and Sponsors shall be in compliance in all
material respects with all of their obligations under this Agreement and
each of the other Loan Documents. Lender shall have received a certificate
from Obligors and Sponsors (a) confirming the foregoing, stating that each
of the representations and warranties of Obligors and Sponsors contained in
this Agreement and the other Loan Documents is true and correct in all
material respects on and as of the date of the substitution with respect to
Obligors, Sponsors and the Substitute Property or Substitute Properties and
(b) containing any other representations and warranties with respect to
Obligors, Sponsors, the Substitute Property or Substitute Properties or the
Loan as the Rating Agencies may require, such certificate to be in form and
substance satisfactory to the Rating Agencies.
(v) Borrowers shall have executed, acknowledged and delivered to
Lender (A) a Security Instrument, an Assignment of Leases and UCC financing
statements (in such quantity, form and substance as may be required for
recording or for filing in the state and county in which each Substitute
Property is located) with respect to each Substitute Property, together
with a letter from Borrowers countersigned by a title insurance company
acknowledging receipt by such title insurance company of such Security
Instrument, Assignment of Leases and UCC-1 financing statements and
agreeing to record or file, as applicable, such Security Instrument,
Assignment of Leases and Rents and one UCC-1 financing statement in the
real estate records for the county in which each Substitute Property is
located and to file one UCC-1 financing statement in the office of the
Secretary of State of the state in which each Substitute Property is
located and any other such UCC-1 financing statements as may be required by
any applicable jurisdiction so as to effectively create upon such recording
and filing valid and enforceable Liens upon each Substitute Property, of
the requisite priority, in favor of Lender (or such other trustee as may be
desired under local law), subject only to the Permitted
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Encumbrances and such other Liens as are permitted pursuant to the Loan
Documents and (B) an Environmental Indemnity with respect to each
Substitute Property. Each Security Instrument, Assignment of Leases, UCC-1
financing statements and Environmental Indemnity Agreement shall be the
same in form and substance as the counterparts of such documents executed
and delivered with respect to the related Substituted Property, subject to
modifications reflecting the applicable Substitute Property as the Property
that is the subject of such replacement documents and such modifications
reflecting the laws of the state in which the applicable Substitute
Property is located as shall be recommended by the counsel admitted to
practice in such state and delivering the opinion as to the enforceability
of such documents required pursuant to clause (xi) below. The Security
Instrument encumbering each Substitute Property shall secure all amounts
evidenced by the Notes, provided that in the event that the jurisdiction in
which the applicable Substitute Property is located imposes a mortgage
recording, intangibles or similar tax and does not permit the allocation of
indebtedness for the purpose of determining the amount of such tax payable,
the principal amount secured by such Security Instrument shall be equal to
one hundred twenty-five percent (125%) of the amount of the Loan allocated
to such Substitute Property. The amount of the Loan allocated to the
Substitute Property (such amount being hereinafter referred to as the
"Substitute Allocated Loan Amount") shall equal the Allocated Loan Amount
of the related Substituted Property. If more than one Substitute Property
is being substituted for a single Substituted Property, the Substitute
Allocated Loan Amount of each such Substitute Property shall be determined
by allocating the Allocated Loan Amount of the related Substituted Property
among each such Substitute Property in proportion to the Net Operating
Income or appraised value (or a combination thereof) of each such
Substitute Property for the twelve (12) consecutive month period ending on
the last day of the month immediately preceding the date of substitution.
(vi) Lender shall have received (A) any "tie-in" or similar endorsement to
each Qualified Title Policy insuring the Lien of an existing Security
Instrument as of the date of the substitution available with respect to
each Qualified Title Policy insuring the Lien of the Security Instrument
with respect to each Substitute Property and (B) a Qualified Title Policy
(or a marked, signed and redated commitment to issue such Qualified Title
Policy) insuring the Lien of the Security Instrument encumbering each
Substitute Property, issued by the title company that issued the Qualified
Title Policies insuring the Lien of the existing Security Instruments and
dated as of the date of the substitution, with reinsurance and direct
access agreements that replace such agreements issued in connection with
each Qualified Title Policy insuring the Lien of the Security Instrument
encumbering each Substituted Property. Each Qualified Title Policy
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issued with respect to each Substitute Property shall (1) provide coverage
in the amount of the applicable Substitute Allocated Loan Amount if the
"tie-in" or similar endorsement described above is available or, if such
endorsement is not available, in an amount equal to one hundred twenty-five
percent (125%) of the applicable Substitute Allocated Loan Amount, or such
other amount as may be required by the Rating Agencies, (2) insure Lender
that the relevant Security Instrument creates a valid first lien on the
Substitute Property encumbered thereby, free and clear of all exceptions
from coverage other than Permitted Encumbrances and standard exceptions and
exclusions from coverage (as modified by the terms of any endorsements),
(3) contain such endorsements and affirmative coverages as are contained in
the Qualified Title Insurance Policies insuring the Liens of the existing
Security Instruments (to the extent such endorsements and affirmative
coverages are available in the jurisdiction in which the Substitute
Property is located), and (4) name Lender as the insured. Lender also shall
have received copies of paid receipts showing that all premiums in respect
of such endorsements and title insurance policies have been paid.
(vii) Lender shall have received a current Qualified Survey for each
Substitute Property, certified to the applicable title company and Lender
and their successors and assigns, in the same form and having the same
content as the Qualified Survey prepared with respect to the Substituted
Property.
(viii) Lender shall have received (A) valid certificates of insurance
indicating that the requirements for the Policies required under Section
8.1 have been satisfied with respect to each Substitute Property and (B)
evidence of the payment of all premiums payable for the existing policy
period.
(ix) Lender shall have received an Environmental Report with respect
to each Substitute Property, and each such Environmental Report shall
conclude that the applicable Substitute Property (A) does not contain any
Hazardous Substance that (1) is in material violation of Environmental Law,
(2) is reasonably anticipated to give rise to Remedial Work (as defined in
the Environmental Indemnity Agreement) or (3) is reasonably anticipated to
cause diminution in value of the Substitute Property, and (B) is not
subject to any risk of material contamination from any off-site Hazardous
Substance. If a Phase II environmental report was prepared with respect to
any Substitute Property, Lender shall have received (A) written
confirmation that all remedial work recommended in such Phase II
environmental report has been completed as required by Environmental Laws,
which confirmation shall be issued by the Environmental Auditor or
Independent Engineer that conducted the
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remedial work, or the Environmental Auditor that prepared such Phase II
environmental report, and (B) if available, a no action letter from the
appropriate Governmental Authority with respect to such remediation.
(x) Obligors shall deliver or cause to be delivered to Lender (A)
updates certified by Obligors of all organizational documentation related
to Obligors and/or the formation, structure, existence, good standing
and/or qualification to do business issued by each Obligor's state of
formation and delivered to Lender in connection with making the Loan; (B)
with respect to the Borrower which will own an interest in or operate any
Substitute Property, good standing certificates, certificates of
qualification to do business in the jurisdiction in which each Substitute
Property is located (if required in such jurisdiction); and (C) resolutions
of the members of Borrowers authorizing the substitution and any actions
taken in connection with such substitution.
(xi) Lender shall have received the following opinions of Borrowers'
counsel: (A) an opinion or opinions of counsel admitted to practice under
the laws of the state in which each Substitute Property is located stating
that the Loan Documents delivered with respect to the applicable Substitute
Property pursuant to clause (v) above are valid and enforceable in
accordance with their terms, subject to the laws applicable to creditors'
rights and equitable principles, and that the applicable Borrower is
qualified to do business and is in good standing under the laws of the
jurisdiction where the applicable Substitute Property is located or that
such Borrower is not required by applicable law to qualify to do business
in such jurisdiction; (B) an opinion of Sponsors' "in-house" counsel, or
such other counsel acceptable to the Rating Agencies, stating that the Loan
Documents delivered with respect to each Substitute Property pursuant to
clause (v) above were duly authorized, executed and delivered by Borrowers
and that the execution and delivery of such Loan Documents and the
performance by Borrowers of their obligations thereunder will not cause a
breach of, or a default under, any material agreement, document or
instrument to which Borrowers are a party or to which they or their
properties are bound; (C) an opinion of counsel acceptable to the Rating
Agencies stating that subjecting each Substitute Property to the Lien of
the related Security Instrument and the execution and delivery of the
related Loan Documents does not and will not affect or impair the ability
of Lender to enforce its remedies under all of the Loan Documents or to
realize the benefits of the cross-collateralization provided for
thereunder; (D) an update of the non-consolidation opinion delivered
pursuant to Section 3.1(f) hereof (including such Substitute Borrower and
Substitute Property) indicating that the substitution does not affect the
opinions set forth therein; (E) if a Securitization has occurred, an
opinion of counsel acceptable to the Rating Agencies that the substitution
does not
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constitute a "significant modification" of the Loan under Section 1001 of
the Code or cause the REMIC Trust to fail to qualify as a REMIC or
otherwise cause a tax to be imposed on the REMIC Trust; and (F) an opinion
that the substitution will not adversely affect the continued availability
of any exemption relied upon in connection with the securitization from the
prohibited transaction rules of ERISA and section 4975 of the Code.
(xii) Borrowers shall have paid all accrued but unpaid Basic Carrying
Costs and Other Charges relating to each of the Properties and each
Substitute Property.
(xiii) Borrowers shall have paid or reimbursed Lender for all
reasonable costs and expenses incurred by Lender (including, without
limitation, reasonable attorneys fees and disbursements) in connection with
the substitution and Borrowers shall have paid all recording charges,
filing fees, taxes or other expenses (including, without limitation,
mortgage and intangibles taxes and documentary stamp taxes) payable in
connection with the substitution. Borrowers shall have paid all costs and
expenses of the Rating Agencies incurred in connection with the
substitution.
(xiv) Lender shall have received annual operating statements and
occupancy statements for each Substitute Property for the most current
completed fiscal year and a current operating statement and occupancy
statement for the Substituted Property, each certified to Lender as being
true and correct in all material respects and a certificate from Obligors
and Sponsors certifying that there has been no material adverse change in
the financial condition of each Substitute Property since the date of such
operating statements.
(xv) The applicable Borrower shall have delivered to Lender estoppel
certificates from any Major Tenants at each Substitute Property. All such
estoppel certificates shall be substantially in the form attached hereto as
Exhibit H and shall indicate that (1) the subject lease is a valid and
binding obligation of the tenant thereunder, (2) there are no defaults
under such lease on the part of the landlord or tenant thereunder, (3) the
tenant thereunder has no defense or offset to the payment of rent under
such leases, (4) no rent under such lease has been paid more than one (1)
month in advance, (5) the tenant thereunder has no option or right of first
refusal under such lease to purchase all or any portion of the applicable
Substitute Property and (6) all tenant improvement work required under such
lease has been completed and the tenant under such lease is in actual
occupancy of its leased premises. If an estoppel certificate indicates that
all tenant improvement work required under the subject lease has not yet
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been completed, Borrowers shall, if required by the Rating Agencies,
deliver to Lender financial statements indicating that Borrowers have
adequate funds to pay all costs related to such tenant improvement work as
required under such lease.
(xvi) Lender shall have received copies of all leases affecting each
Substitute Property certified by Obligors as being true and correct. Lender
shall have received a current rent roll of each Substitute Property
certified by Obligors as being true and correct.
(xvii) Lender shall have received subordination, nondisturbance and
attornment agreements in the form attached hereto as Exhibit E with respect
to all of the Leases with Major Tenants affecting each Substitute Property
other than such Leases that are, by their terms, subordinate to the
Security Instrument with respect to the applicable Substitute Property.
(xviii) Lender shall have received (A) an endorsement to the Qualified
Title Policy insuring the Lien of the Security Instrument encumbering each
Substitute Property insuring that such Substitute Property constitutes a
separate tax lot or, if such an endorsement is not available in the state
in which such Substitute Property is located, a letter from the title
insurance company issuing such Qualified Title Policy stating that such
Substitute Property constitutes a separate tax lot or (B) a letter from the
appropriate taxing authority stating that such Substitute Property
constitutes a separate tax lot.
(xix) Lender shall have received a final certificate of occupancy or a
temporary certificate of occupancy acceptable to Lender in its Discretion
(or the local equivalent thereof, if any) (provided, that Lender in
exercising its Discretion shall be permitted to take into account the
reason that only a temporary certificate of occupancy is available, and
provided, further, that Borrower shall be obligated to obtain and deliver
to Lender a final certificate of occupancy as soon as reasonably possible)
with respect to all improvements on each Substitute Property and an
engineering report with respect to each Substitute Property, stating that
such Substitute Property and its use comply in all material respects with
all applicable Legal Requirements (including, without limitation, zoning,
subdivision and building laws) and that such Substitute Property is in good
condition and repair and free of Waste or material damage. If the
engineering report and the certificate of occupancy (or the local
equivalent thereof, if any) do not evidence compliance with all applicable
Legal Requirements, such compliance shall be confirmed by delivery to
Lender of a certificate of an Independent Architect licensed in the state
in which the applicable Substitute Property is located, a letter from the
municipality in which the applicable Substitute Property is located, a
certificate of a
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surveyor that is licensed in the state in which the applicable Substitute
Property is located (with respect to zoning and subdivision laws), an ALTA
3.1 zoning endorsement to the Qualified Title Policy delivered pursuant to
clause (vi) above (with respect to zoning laws) or a subdivision
endorsement to the Qualified Title Policy delivered pursuant to clause (vi)
above (with respect to subdivision laws). If an engineering report
recommends that any repairs be made with respect to the subject Substitute
Property, such engineering report shall include an estimate of the cost of
such recommended repairs and Borrower shall deposit with Lender Eligible
Collateral in an amount equal to one hundred twenty five percent (125%) of
such estimated cost (the "Deposit Amount"), which deposit shall constitute
additional security for the Loan and shall be released to Borrowers on a
monthly basis, upon the delivery to Lender of paid receipts indicating the
costs of such repairs which have been paid by Borrowers and not yet
reimbursed by Lender, in an amount which is 90% of such costs. Upon Final
Completion, Lender shall release to Borrowers the balance of the Deposit
Amount which has not been previously released, provided that Lender shall
first receive (A) an update to such engineering report or a letter from the
engineer that prepared such engineering report indicating that the
recommended repairs were completed in good and workmanlike manner and (B)
paid receipts indicating that the costs of all such repairs have been paid
by Borrowers.
(xx) Lender shall have received a certified copy of an Operating Lease
(if applicable), a Property Management Agreement and a Franchise Agreement
relating to the Substitute Property or the Substitute Properties, as
applicable, and such Operating Lease, Property Management Agreement and
Franchise Agreement shall contain terms substantially similar to the terms
of the Operating Lease, Property Management Agreement and Franchise
Agreement of the Substituted Property or Properties, as applicable, and the
related Operating Lessee and Property Manager, as applicable, and the
related Licensor, shall have executed and delivered to Lender a
Subordination, Assignment and Attornment Agreement in substantially the
form of the Subordination, Assignment and Attornment Agreement applicable
to the Substituted Property or Properties.
(xxi) Lender shall have received such other and further approvals,
opinions, documents and information in connection with the substitution as
the Rating Agencies may have requested.
(xxii) Lender shall have received copies of all Material Agreements
and contracts relating to the leasing and operation of each Substitute
Property (other than the related Property Management Agreement) together
with a certification of Obligors attached to each such
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contract or agreement certifying that the attached copy is a true and
correct copy of such contract or agreement and all amendments thereto.
(xxiii) The type of each Substitute Property as of the date of
substitution shall be the same as that of the related Substituted Property
as of the date of substitution (i.e., for each Substituted Property, there
shall be a Substitute Property which is an upscale urban (or resort, if
such Substituted Property is a resort) hotel property of similar type,
general quality, physical condition and amenities as the Substituted
Property).
(xxiv) Borrowers shall submit to Lender, not less than twenty (20)
days prior to the date of such substitution, a release of lien (and related
Loan Documents) for the Substituted Property for execution by Lender. Such
release shall be in a form appropriate for the jurisdiction in which the
Substituted Property is located and reasonably satisfactory to Lender.
Obligor shall deliver an Officer's Certificate certifying that the
requirements set forth in this Section 2.6 have been satisfied.
(e) Release of Lien. Upon the satisfaction of the conditions precedent
set forth in Section 2.6(a)-(d), Lender will release its Lien from the
Substituted Property to be released and each related Substitute Property shall
be deemed to be Property for purposes of this Agreement and the Substitute
Allocated Loan Amount with respect to such Substitute Property shall be deemed
to be the Allocated Loan Amount with respect to the related Substitute Property
or the related Substitute Properties (as allocated pursuant to Section
2.6(d)(v)) for all purposes hereunder.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to the Loan.
A. The obligation of Lender to make the Loan is subject to the
fulfillment by Obligors or waiver by Lender of the following conditions
precedent no later than the Closing Date:
(a) Representation and Warranties; Compliance with Conditions. The
representations and warranties of Obligors contained in this Agreement or any
other Loan Document shall be true and correct in all material respects on and as
of the Closing Date with the same effect as if made and as of such date, and no
Default or Event of Default shall have occurred and be continuing; and Obligors
shall be in compliance with all terms and conditions set forth in this Agreement
and in each other Loan Document on its part to be observed or performed. The
materiality threshold in the preceding sentence shall not be applicable with
respect to any representation or warranty which itself contains a materiality
threshold.
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(b) Loan Agreement and Notes. Lender shall have received an original
of this Agreement and the Notes, in each case, duly executed and delivered on
behalf of Obligors.
(c) Delivery of Loan Documents; Title Insurance; Reports; Leases.
(i) Security Instruments, Assignments of Agreements. Lender shall have
received from Obligors, fully executed and acknowledged counterparts of the
Security Instruments, Assignment of Leases and the appropriate UCC
financing statements relating to each of the Properties, each in form
satisfactory for recording or filing in the appropriate public records, and
evidence that counterparts of the Security Instruments, Assignment of
Leases and UCC financing statements shall have been delivered to the title
company for recording or filing, so as to effectively create upon such
recording a valid and enforceable Lien upon each of the Properties, of
first lien priority, in favor of Lender (or a deed trustee if required or
desired under local law), subject only to the Permitted Encumbrances and
such other Liens as are permitted pursuant to the Loan Documents. Lender
shall have also received fully executed counterparts of the Environmental
Indemnity, the Cooperation Agreement and the other Loan Documents.
(ii) Title Insurance. Lender shall have received a Qualified Title
Policy for each of the Properties and evidence that all premiums in respect
thereof have been paid; provided, however, that if Lender does not receive
a Qualified Title Policy for one or more Properties with an aggregate
Allocated Loan Amount of an amount less than or equal to the difference
between the Loan Amount and $500,000,000 (less any amount by which
Borrowers elect to reduce the Loan Amount as set forth in the paragraph
entitled "Loan Amount" in the Term Sheet) (such number, as so reduced,
shall be referred to as the "Title Reduction Amount"), then Lender shall
have the option, in its sole discretion, which option it shall exercise in
writing, to (a) reduce the Loan Amount by the Title Reduction Amount, in
which case the affected Properties shall be deemed not to be Properties
hereunder and shall be removed from Schedule A hereto or (b) fund the Loan
in the Loan Amount, in which case Borrowers shall be obligated to deliver a
Qualified Title Insurance Policy for each affected Property no later than
February 15, 1999. If Borrowers fail to so deliver, such situation shall be
referred to as a "Title Defect" and Borrowers shall immediately be
obligated to prepay the Loan in the amount of the Title Reduction Amount,
together with all accrued and unpaid interest on such amount and any
hedging and other costs incurred by Lender resulting from such prepayment,
and upon such prepayment the affected Properties shall be released from the
lien of the Security Instrument thereon in accordance with Section 2.3.6
hereof.
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(iii) Survey. Lender shall have received a Qualified Survey for each
of the Properties; provided, however, that if Lender does not receive a
Qualified Survey for one or more Properties with an aggregate Allocated
Loan Amount of an amount less than or equal to the Title Reduction Amount,
then Lender shall have the option, in its sole discretion, which option it
shall exercise in writing, to (a) reduce the Loan Amount by the Title
Reduction Amount, in which case the affected Properties shall be deemed not
to be Properties hereunder and shall be removed from Schedule A hereto or
(b) fund the Loan in the Loan Amount, in which case Borrowers shall be
obligated to deliver a Qualified Survey for each affected Property no later
than February 20, 1999. If Borrowers fail to so deliver, such situation
will be referred to as a Survey Defect and Borrowers shall immediately be
obligated to prepay the Loan in the amount of the Title Reduction Amount,
together with all accrued and unpaid interest on such amount and any
hedging and other costs incurred by Lender resulting from such prepayment,
and upon such prepayment the affected Properties shall be released from the
lien of the Security Instrument thereon in accordance with Section 2.3.6
hereof.
(iv) Insurance. Lender shall have received valid binders and
certificates of insurance for the policies of insurance required hereunder,
satisfactory to Lender in its reasonable discretion, and evidence of the
payment of all premiums then due and payable for the existing policy
period.
(v) Environmental Reports. Lender shall have received Environmental
Reports in respect of each Property that is satisfactory to Lender in its
Discretion.
(vi) Zoning. Lender shall have received, at Lender's option, letters
or other evidence with respect to each Property from the appropriate
authorities (or other Persons) concerning applicable zoning and building
laws, and zoning endorsements in the Qualified Title Policy, if available.
(vii) Encumbrances. Obligors shall have taken or caused to be taken
such actions in such a manner so that Lender has a valid and perfected
first priority Lien as of the Closing Date with respect to the Security
Instrument on each Property, subject only to the Permitted Encumbrances and
such other Liens as are permitted pursuant to the Loan Documents, and
evidence thereof satisfactory to Lender in its Discretion shall have been
received thereby.
(viii) Engineering Reports. Lender shall have received engineering
reports in respect of each Property satisfactory to Lender in its
Discretion, which reports shall include a report on compliance with
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building code and the Americans with Disabilities Act, as well as a
schedule of expected Capital Expenditures recommended over the twelve years
following Closing.
(ix) Material Agreements. Lender shall have received true and complete
copies of all Material Agreements, including, without limitation, the
Franchise Agreement, Property Management Agreement and Operating Lease
relating to each Property.
(x) Leases and Operating Agreements. Lender shall have received true
and complete copies of all Leases with Major Tenants executed and delivered
on or before the Rent Roll Date (and any such Leases executed and delivered
since such date shall be delivered promptly after the Closing). Lender
shall have received true and complete copies of all Operating Agreements
and any ground leases with respect to each Property.
(d) Related Documents. Each additional document not specifically
referenced herein, but relating to the transactions contemplated herein, shall
have been duly authorized, executed and delivered by all parties thereto and
Lender shall have received and approved (with such approval not to be
unreasonably withheld or delayed) certified copies thereof.
(e) Delivery of Organizational Documents. On or before the Closing
Date, each Obligor and Sponsor shall deliver or cause to be delivered to Lender
copies certified by an officer of the managing member of such Obligor or an
officer of Sponsors, as applicable, of all organizational documentation related
to such Obligor and Sponsor and/or the formation, structure, existence, good
standing and/or qualification to do business as Lender may request in its sole
discretion, including good standing certificates, qualifications to do business
in the appropriate jurisdictions, resolutions authorizing the entering into of
the Loan and, in the case of the Sponsors, those certain sections of the Loan
Agreement to which Sponsors are a party, incumbency certificates as may be
reasonably requested by Lender.
(f) Opinions of Obligors' Counsel. Lender shall have received legal
opinions of Obligors' counsel reasonably satisfactory to Lender (i) with respect
to the non-consolidation of each Obligor in the event of an insolvency
proceeding being brought against, or the bankruptcy of, certain Beneficial
owners of such Obligor and (ii) with respect to due execution, delivery,
authority, enforceability of the Loan Documents (with respect to both Obligors
and Sponsors), including opinions of local counsel, as necessary, with respect
to such matter, and such other matters as Lender may require, all such opinions
in form, scope and substance reasonably satisfactory to Lender and Lender's
counsel.
(g) Budgets. Obligors shall have delivered the Annual Budget for the
Properties for the balance of the current Fiscal Year.
(h) Completion of Proceedings. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated by this
Agreement and other Loan
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Documents and all documents incidental thereto shall be reasonably satisfactory
in form and substance to Lender, and Lender shall have received all such
counterpart originals or certified copies of such documents as Lender may
reasonably request.
(i) Estoppels. Lender shall have received estoppel letters satisfying
the Closing Estoppel Requirement.
(j) Photographs. If Lender shall have so requested, Lender shall have
received photographs of the interior and exterior of the Properties.
(k) No Material Adverse Change. Lender shall be satisfied that as of
the Closing Date, there shall have been no material adverse change or
development, since the date of the Term Sheet, in the financial condition,
business or operations of the Obligors, the Properties or the Property Managers,
and that there have been and are no circumstances or conditions with respect to
the Loan, any Property, any Obligor, any Sponsor, or any Tenant of any Property
that can reasonably be expected to cause the Loan to become delinquent,
materially adversely affect the value or marketability of the Loan or any
Property, or cause institutional investors to regard the Loan or any mortgage
security derived in whole or in part from the Loan as an unacceptable
investment. For purposes of clarification, Lender acknowledges that commercial
mortgage-backed securities market conditions such as market rate spreads on such
securities, affecting the value of the Loan, shall not constitute a basis under
which Lender is not obligated to fund the Loan. Further, Lender shall not be
obligated to disburse funds in the event of a war, outbreak of hostility
(provided that limited actions and engagements of the U.S. military taken to
enforce United Nations resolutions, such as the bombing of Iraq on December 16,
1998, shall not be considered an "outbreak of hostility" for this purpose), or
unscheduled closing of the New York Stock Exchange.
(l) Operating Agreement Estoppels. Lender shall have received an
executed estoppel letter from each party to an Operating Agreement which is
required to deliver an estoppel pursuant to such Operating Agreement, which
shall be in form and substance satisfactory to Lender in its Discretion.
(m) Appraisals. Lender shall have received an Appraisal for each
Property satisfactory to Lender in its Discretion evidencing that the Required
Loan-to-Value Ratio has been satisfied.
(n) Financial Statements. Sponsor shall provide, with respect to each
Property, (i) current results from operations, certified by the Executive Vice
President, Senior Vice President or Vice President (so long as such Person's
primary job responsibility is finance) of Sponsor and (ii) operating statements
together with an agreed-upon-procedures letter for each of the Properties (to
the extent available), for the years of 1996 and 1997. Such statements shall be
satisfactory to Lender and accompanied by an Officer's Certificate certifying
that such statements presents fairly the operating results of the Properties in
question and have been prepared in accordance with GAAP, as modified by the
Uniform System of Accounts for Hotels, current edition.
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(o) Certified Rent Rolls. Lender shall have received a rent roll for
each Property, dated as of the Rent Roll Date, accompanied by an Officer's
Certificate certifying that such rent roll is true, complete and correct as of
its date.
(p) Seismic Reports. Lender shall have received seismic reports
satisfactory to Lender, including a PML (Probable Maximum Loss) calculation of
not greater than 20%, in respect of each Property listed on Schedule 3.1(p)
hereto.
(q) Deposit Account Agreement. Lender shall have received the Deposit
Account Agreement duly executed by Obligors and the depository institutions
party thereto.
(r) Cooperation Agreement. Lender shall have received the Cooperation
Agreement duly executed by Obligors and Sponsor.
(s) Property Management Agreement and Franchise Agreement;
Subordination, Assignment and Attornment Agreement. Lender shall have received a
copy of the Property Management Agreement and Franchise Agreement with respect
to each Property, each duly executed by the related Borrower and Property
Manager or Franchisor, as applicable, and a Subordination, Assignment and
Attornment Agreement duly executed by each such Property Manager and Franchisor
which shall be in form and substance satisfactory to Lender.
(t) Subordination, Non-disturbance and Attornment Agreements. Obligor
shall have used good faith efforts to deliver to Lender, Subordination,
Non-disturbance and Attornment Agreements from each Tenant set forth on Schedule
3.1(u), in form and substance reasonably satisfactory to Lender.
(u) 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 Obligors, Property Managers, and
Sponsors, and the validity and enforceability, of the Loan Documents, and such
consents, licenses and approvals shall be in full force and effect.
(v) Closing Statement. Lender shall have received a detailed closing
statement from Borrowers in a form acceptable to Lender, which includes a
complete description of Borrowers' sources and uses of funds on the Closing
Date, together with a fully-executed counterpart of the Loan closing statement
prepared by Lender.
(w) 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 transactions contemplated hereby.
(x) Payments by Borrowers. Borrowers shall have paid all Lender
Expenses and the Commitment Fee.
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(y) Ground Lessor Estoppel. Lender shall have received an executed
estoppel letter from the lessor under each Ground Lease, which shall be in form
and substance satisfactory to Lender in its Discretion.
(z) Additional Information. Lender shall have received such other
information and documentation with respect to Obligors and their Affiliates,
Sponsors, the Properties and the transactions contemplated herein as Lender may
reasonably request, such information and documentation to be reasonably
satisfactory in form and substance to Lender.
(aa) Basic Carrying Costs. Borrowers shall have deposited with Lender
into an Eligible Account, all Basic Carrying Costs relating to each Property
which are in arrears, including (i) accrued but unpaid insurance premiums, (ii)
delinquent Taxes, if any, (iii) delinquent Other Charges, if any and (iv)
delinquent ground rents, if any, all of which amounts shall be funded with
proceeds of the Loan, and unless a Borrower shall be contesting the same in
accordance with the terms of Section 5.1(b) hereof, Lender shall have the right,
and Borrowers hereby authorize Lender, to apply or cause the application of such
amounts to the payment of such Basic Carrying Costs.
(bb) Subordination, Assignment and Attornment Agreement. Lender shall
have received an executed copy of the Subordination, Assignment and Attornment
Agreement in the form attached hereto as Exhibit F, dated as of the date hereof,
among Lender, Obligors and the managers of each Property.
(cc) Consent of Bank Group. Lender shall have received consent of the
Bank Group (in form and substance necessary to establish consent of all of the
Lenders in such Group) to the Loan and the other transactions contemplated
hereby and by the other Loan Documents and the Cooperation Agreement in form
reasonably satisfactory to Lender; provided, that (i) such consent shall state
explicitly that it is final and irrevocable and subject to no further review or
discussions about any of the terms of or documentation of the Loan, (ii) such
consent shall expressly acknowledge that the capital stock or membership
interests of each Obligor (including any mezzanine borrower) and such Obligor's
and mezzanine borrower's managing member, shall not be pledged to the Bank Group
and (iii) such consent shall include any amendments which are made to the Loan
Agreement pursuant to the Obligors' obligations under the Cooperation Agreement.
B. The obligation of Lender to make the Loan is further subject to
receipt by Lender no later than the Closing Date of half of the Loan Amount from
Xxxxxxx Xxxxx Mortgage Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 (a) Obligor Representations. Each Obligor represents and
warrants that, as of the Closing Date:
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(a) Organization. It has been duly organized and is validly existing
and in good standing with requisite limited liability company power and
authority to own its properties and to transact the businesses in which it is
now engaged. It is duly qualified to do business and is in good standing in each
jurisdiction where it is required to be so qualified in connection with its
properties, businesses and operations. It possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its properties and to transact the businesses in which it is now engaged,
and its sole business has been and is the ownership, management and operation of
the Properties owned by it. By its execution hereof as managing member of
Obligor, such member represents and warrants that, as of the Closing Date, such
managing member (i) is duly incorporated or organized, validly existing and in
good standing under the laws of the State of Delaware, (ii) has all limited
liability company power pursuant to proper authorization to enable it to act as
a member of Obligor, and to enter into the Loan Documents on Obligor's behalf,
and (iii) is duly qualified to do business and is in good standing in each other
jurisdiction where it is required to be qualified in order to act as a member of
Obligor.
(b) Proceedings. It has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and such other Loan Documents
have been duly executed and delivered by it and constitute legal, valid and
binding obligations of Obligor enforceable against Obligor in accordance with
their respective terms, subject to applicable bankruptcy, insolvency and similar
laws affecting rights of creditors generally and general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law) without offset, defense or counterclaim.
(c) No Conflicts. The execution, delivery and performance of this
Agreement and the other Loan Documents by it will not conflict with or result in
a material breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of its
properties or assets pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, partnership agreement or other material agreement to
which it is a party or to which any of its properties or assets is subject, nor
will such action result in any violation of the provisions of any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over it or any of its properties or assets, and any consent,
approval, authorization, order, registration or qualification of or with any
court or any such regulatory authority or other governmental agency or body
required for the execution, delivery and performance by it of this Agreement or
any other Loan Documents to which it is a party has been obtained and is in full
force and effect.
(d) Litigation. Except as set forth on Schedule 4.1(d), There are no
actions, suits or proceedings at law or in equity by or before any Governmental
Authority or other agency now pending and to the best of its knowledge there are
no such actions, suits or proceedings threatened against or affecting it or the
Properties, which actions, suits or proceedings, alone or in the aggregate, if
determined against it or the Properties in which such Obligor owns an interest
(for purposes of clarification, all references in this document to Properties in
which an Obligor
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"owns an interest" shall be deemed to include, without limitation, leasehold and
fee interests), are likely to have a Material Adverse Effect.
(e) Agreements. It is not a party to any agreement which is likely to
have a Material Adverse Effect on any of the Properties or materially adversely
affect it or its business, properties (other than the Properties) or assets,
operations or condition, financial or otherwise. It is not in default in any
material respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Permitted Encumbrance or
any other material agreement or instrument to which it is a party or by which it
or any of the Properties is bound. All agreements material to the operation of
the Property at the standard at which such Property is currently operated have
been properly assigned to Obligors as of the date hereof, such agreements are in
full force and effect, and, except as set forth on Schedule 4.1(e) hereto, no
consents are required from any party to such agreement to this Agreement or any
other Loan Documents.
(f) Title. With respect to each Property owned by such Borrower, it
has good, marketable and indefeasible title in fee to the real property
comprising part of such Property (except for the Ground Leased Property, as to
which Borrower has good and marketable title to the leasehold estate therein),
and good and marketable title to the balance of such Property, in each case free
and clear of all Liens whatsoever except the Permitted Encumbrances, such other
Liens as are permitted pursuant to the Loan Documents and the Liens created by
the Loan Documents. The Security Instrument, when properly recorded in the
appropriate records, together with the Assignment of Leases and any Uniform
Commercial Code financing statements required to be filed in connection
therewith, will create (i) a valid, perfected first priority lien on such
Property or its leasehold interest therein, as the case may be, subject only to
Permitted Encumbrances and the Liens created by the Loan Documents and (ii)
perfected security interests in and to, and perfected collateral assignments of,
all personalty (including the Leases), all in accordance with the terms thereof,
in each case subject only to any applicable Permitted Encumbrances, such other
Liens as are permitted pursuant to the Loan Documents and the Liens created or
permitted by the Loan Documents. The Permitted Encumbrances do not and will not
materially adversely affect or interfere with the value, or materially adversely
affect or interfere with the current use or operation, of such Property, or the
security intended to be provided by the Security Instrument or the ability of
Borrower to repay the Notes or any amount owing under any other Loan Document or
to perform its obligations thereunder in accordance with the terms of the Loan
Documents. Except as indicated in and insured over by a Qualified Title
Insurance Policy, there are no claims for payment for work, labor or materials
affecting the Property which are or may become a lien prior to, or of equal
priority with, the Liens created by the Loan Documents (other than mechanics' or
materialmen's liens for work or materials performed or supplied the costs for
which are not yet past due or which are being contested in accordance with
Section 5.1(b)(ii) hereof). Nothing in this paragraph may be relied on by the
title insurance company issuing a policy covering such Property. The Assignment
of Leases, when properly recorded in the appropriate records, creates a valid
first priority assignment of, or a valid first priority security interest in,
certain rights under the related Leases, subject only to a license granted to
Obligor to exercise certain rights and to perform certain obligations of the
lessor under such Leases, including the right to operate the Property. No Person
other than Obligor owns any
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interest in any payments due under such Leases that is superior to or of equal
priority with the Lender's interest therein.
(g) No Bankruptcy Filing. It is not contemplating either the filing of
a petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of its assets or property, and it has no knowledge of any Person
contemplating the filing of any such petition against it.
(h) Full and Accurate Disclosure. No information contained in this
Agreement, the other Loan Documents, or any written statement furnished by or on
behalf of the Obligor pursuant to the terms of this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading in light of
the circumstances under which they were made. There is no fact or circumstance
presently known to it which has not been disclosed to Lender and which causes or
is likely to cause a Material Adverse Affect.
(i) No Plan Assets. Each Obligor hereby represents and warrants to
Lender that, as of the date hereof and until such time as the Debt shall be paid
in full, Obligor is not an "employee benefit plan" subject to the fiduciary
responsibility provisions of ERISA, a "plan" within the meaning of Section
4975(e)(1) of the Code or any entity whose assets include the assets of any such
employee benefit plan or plan by reason of 29 C.F.R. 2510.3-101 or otherwise, or
by reason of any substantially similar Federal, state or local law.
(j) Compliance. It and the Properties owned or leased by it and the
use thereof comply in all material respects with all applicable Legal
Requirements, including building and zoning ordinances and codes. None of the
Properties is a non-conforming use or legal non-conforming use (except to the
extent that the same would not affect in any material respect the operation,
maintenance, value or use of the Property or the ability to reconstruct the
Property as presently constructed). It is not in default or violation of any
order, writ, injunction, decree or demand of any Governmental Authority, the
violation of which could cause a Material Adverse Effect. There has not been
committed by or on behalf of it or, to the best of its knowledge, any other
person in occupancy of or involved with the operation or use of such Property
any act or omission affording the federal government or any state or local
government the right of forfeiture as against the Property or any part thereof
or any monies paid in performance of its obligations under any of the Loan
Documents.
(k) Contracts. Except for the Permitted Encumbrances, the Property
Management Agreements, the Franchise Agreements, Operating Agreements, Liquor
License Agreements, Ground Leases and Operating Leases and except as set forth
on Schedule 4.1(k), there are no Material Agreements. Each Material Agreement
affecting any such Property has been entered into at arm's length in the
ordinary course of business by or on behalf of such Obligor and provides for the
payment of fees in amounts and upon terms not less favorable to such Obligor
than market rates and terms.
(l) Financial Information. All financial data, including the audited
financial statements for the Borrower audited by a Big Five accounting firm or
another independent
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certified public accounting firm acceptable to Lender, and financial statements
prepared in accordance with agreed-upon procedures for the Property, in each
case for the Historical Calendar Years and the unaudited operating statements
for the Year-to-Date Period prepared by or on behalf of Borrower and delivered
to Lender prior to the date hereof, (i) are true, complete and correct in all
material respects, (ii) accurately represent in all material respects the
financial condition or operating results, as applicable, of the Properties owned
by it as of the date of such reports, and (iii) have been prepared in accordance
with GAAP. It does not have any material contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments, that are known to it and reasonably
likely to have a materially adverse effect on any of the Properties or the
operation thereof, except as referred to or reflected in said financial
statements and operating statements. Except as set forth in the certified
information delivered to Lender pursuant to Section 3.1(o) and (p) hereof, since
the date of the 1997 audited financial statements, there has been no materially
adverse change in the financial condition, operations or business of Borrower
from that set forth in said financial statements.
(m) Condemnation. No Condemnation or other proceeding has been
commenced or, to its best knowledge, is contemplated with respect to all or any
portion of any Property or for the relocation of roadways providing access to
any Property.
(n) Federal Reserve Regulations. 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 or by the terms and conditions of this
Agreement or the other Loan Documents.
(o) Utilities and Public Access. Each of the Properties in which it
owns an interest has rights of access to dedicated public ways (and makes no
material use of any means of access or egress that is not pursuant to such
dedicated public ways or recorded, irrevocable rights-of-way or easements) and
is served by water, sewer, sanitary sewer and storm drain facilities adequate to
service such Property for its current uses. All public utilities necessary for
the full use and enjoyment of each of the Properties are located in the public
right-of-way such Properties or in or through a recorded irrevocable easement in
favor of such Properties, and all such utilities are connected so as to serve
such Properties without passing over other property, except to the extent that
such utilities are accessible to such Properties by virtue of a recorded
irrevocable easement or similar agreement or right. All roads necessary for the
use of such Properties for their current respective purposes have been completed
and are either part of such Properties (by way of deed, easement or ground
lease) or dedicated to public use and accepted by all Governmental Authorities.
(p) Not a Foreign Person. It is not a "foreign person" within the
meaning of Section 1445(f)(3) of the Code.
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(q) Separate Lots. Each Property in which it owns an interest is
comprised of one (1) or more parcels which constitute one or more separate tax
lots which do not include any property not a part of such Property.
(r) Basic Carrying Costs; Assessments. Except for Basic Carrying Costs
deposited with Lender in accordance with this Agreement, it has paid all Basic
Carrying Costs due and payable in connection with each Property as of the date
hereof. To the best of its knowledge there are no pending or proposed special or
other assessments for public improvements or other matters affecting any of the
Properties owned by it (except as shown in the financial statements described in
clause (l) above), nor, to the best of its knowledge, are there any contemplated
improvements to such Properties that are likely to result in such special or
other assessments.
(s) Enforceability. The Loan Documents are not subject to any right of
rescission, set-off, counterclaim or defense by Obligor, including the defense
of usury, nor would the operation of any of the terms of the Loan Documents, or
the exercise of any right thereunder, render the Loan Documents unenforceable,
subject to laws affecting the enforcement of the rights or remedies of creditors
generally and/or equitable principles of general application, and Obligor has
not asserted any right of rescission, set-off, counterclaim or defense with
respect thereto.
(t) No Prior Assignment. There are no prior assignments of the Leases
of any Property in which it owns an interest or any portion of the Rents due and
payable or to become due and payable which are presently outstanding, except in
connection with indebtedness to be repaid in full from the proceeds of the Loan
concurrently with the Closing Date.
(u) Insurance. It has obtained and has delivered to Lender insurance
policies of any of the Properties in which it owns an interest, reflecting the
insurance coverages, amounts and other requirements set forth in this Agreement.
All premiums on such insurance policies required to be paid as of the date
hereof have been paid for the current policy period. Except as set forth in
Schedule 4.1(u), no claims have been made under any such policy, and no Person,
including Obligor, has done, by act or omission, anything which would impair the
coverage of any such policy.
(v) Certificate of Occupancy; Licenses. All material certifications,
permits, licenses and approvals, including certificates of completion and
occupancy permits (or other local equivalent), required for the legal use,
occupancy and operation of any Property in which it owns an interest (except in
the case of the Property known as the Sheraton Xxxx Parsippany Hotel)
(collectively, the "Licenses"), have been obtained and are in full force and
effect in all material respects. Each such Property has a certificate of
occupancy or other local equivalent (where required by applicable Legal
Requirements), and the use being made of such Property is in conformity with
such certificate of occupancy.
(w) Flood Zone. None of the Improvements on any of the Properties in
which it owns an interest is located in an area as identified by the Federal
Emergency Management Agency or the Federal Insurance Administration as an area
having special flood
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hazards (Zone A), and, to the extent that any part of any such Property is
located in an area identified by the Federal Emergency Management Agency as an
area federally designated a "100 year flood plain," the Property is covered by
flood insurance meeting the requirements set forth in Section 8.1.1(b)(i)
hereof.
(x) Physical Condition. To its best knowledge, except as disclosed in
the engineering reports listed on Schedule 4.1(x)(i), each Property in which it
owns an interest, including all buildings, improvements, parking facilities,
sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire
protection systems, electrical systems, equipment, elevators, exterior sidings
and doors, landscaping, irrigation systems and all structural components, are in
good condition, order and repair in all respects material to the use, operation
or value of such Property. There exists no structural or other material defects
or damages in such Property, whether latent or otherwise which will do or will
materially impair the value of or the annual Net Operating Income from such
Property after taking into account in making such determination remedial efforts
being taken by Obligor to correct such defect or damages following discovery
thereof. It has not received written notice and is not otherwise aware from any
insurance company or bonding company of any defects or inadequacies in such
Property, or any part thereof, which would, alone or in the aggregate, adversely
affect the insurability of the same or cause the imposition of extraordinary
premiums or charges thereon or of any termination or threatened termination of
any policy of insurance or bond.
(y) Leases. No person has any possessory interest in any Property in
which it owns an interest or right to occupy the same except under and pursuant
to the provisions of the Leases or oral month to month Leases, and true and
complete copies of all Leases executed and delivered on or before the Rent Roll
Date have been delivered to Lender (and any Leases executed and delivered since
such date shall be delivered promptly after the Closing). The Leases are in full
force and effect and there are no material defaults thereunder by either party
thereto and to the best of its knowledge there are no conditions that, with the
passage of time or the giving of notice, or both, would constitute a material
default thereunder. As to all present Leases and (upon execution thereof) all
future Leases relating to such Property, Obligor will be the sole owner of the
lessor's interest. No Tenant has the right to terminate a Lease. As to all
present Leases:
(i) Obligor has no notice of any insolvency or bankruptcy proceeding
pending or threatened involving any Tenant;
(ii) with respect to all Leases with Major Tenants, there are no
outstanding landlord obligations with respect to tenant allowances or free
rent periods or tenant improvement work; except as set forth on Schedule
4.1(y)(ii) hereto, all of the obligations and duties of landlord under the
Leases that are due or are to be performed (as applicable) on or prior to
the date hereof have been fulfilled, and there are no pending claims
asserted by any Tenant for offsets or abatements against rent or any other
monetary claim;
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(iii) all of the Leases are free and clear of any right or interest of
any real estate broker or any other person (whether or not such brokers or
other persons have negotiated the Leases or have contracted with Obligor
for the collection of the rents thereunder), and, except as set forth on
Schedule 4.1(y)(iii) hereto, no brokerage or leasing commission or other
compensation is or will be due or payable to any person, firm, corporation
or other entity with respect to or on account of any of the Leases;
(iv) Schedule 4.1(y) sets forth all security deposits and letters of
credit held by or on behalf of the lessor under the Leases. All security
deposits have been held in accordance with law and the terms of the
applicable Leases, and no security deposits have been applied, or letters
of credit drawn upon, following a default by a Tenant still in possession.
(v) Obligor is the sole owner of the lessor's interest in all of the
Leases and Obligor has not given or suffered any other assignment, pledge
or encumbrance in respect of any of the Leases or its interests thereunder,
and Obligor has the sole right to collect rents and other amounts due under
the Leases;
(vi) Except as set forth on Schedule 4.1(y)(vi) hereto, no Tenant is
more than thirty (30) days in arrears on its rent or other amounts due to
the landlord under its Lease; and
(vii) None of the Leases contains any option to purchase, any right of
first refusal to purchase or, in the case of a Lease with a Major Tenant,
any right to terminate the lease term (except a right to terminate the
lease term in the event of the destruction of all or substantially all of
the related Property, to the extent such a termination right is customarily
included in leases of such type).
(z) Except for the Ground Leases referred to in clauses (i) and (ii)
below, there are no Ground Leases.
(i) Ground Leased Property. With respect to any Ground Leased Property
relating to the Property known as the Westin Cincinnati:
(i) any Ground Lease relating thereto or an abstract or memorandum
thereof has been duly recorded and a certified copy, including all
amendments thereto, has been delivered to Lender; such Ground Lease permits
the interest of the lessee thereunder to be encumbered by the Security
Instrument and does not restrict the use of the Property by such lessee,
its successors or assigns in a manner that would adversely affect the
security provided to Lender by the Security Instrument; and a true and
complete copy of the Ground Lease has been delivered to Lender;
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(ii) such Ground Lease may not be amended, modified, cancelled or
terminated without the prior written consent of Lender, as beneficiary;
(iii) such Ground Lease has a remaining term (or a remaining term plus
one or more optional renewal terms which have been previously exercised)
which extends not less than twenty-five (25) years beyond the Initial
Maturity Date; and the base rental under such Ground Lease is not subject
to increase;
(iv) such Ground Lease is not subject to any liens or encumbrances
superior to, or of equal priority with, the Security Instrument (other than
the related ground lessor's fee interest and the Permitted Encumbrances);
there is no deed of trust or Lien encumbering the related ground lessor's
fee interest (or if any such deed of trust or Lien exists, it is
subordinate to the Lien held by Lender under the Security Instrument);
(v) such Ground Lease is assignable by a holder of a deed of trust or
mortgage encumbering the lessee's interest therein upon a foreclosure of
such deed of trust or mortgage without the consent of the lessor
thereunder;
(vi) on the date hereof, such Ground Lease is in full force and effect
and no default has occurred and is continuing under such Ground Lease nor,
to the best of Obligor's knowledge after due inquiry and investigation, is
there any existing condition which, but for the passage of time or the
giving of notice or both, would result in a default under the terms of such
Ground Lease;
(vii) such Ground Lease requires the lessor thereunder to give notice
of any default by the lessee to a holder of a deed of trust or mortgage
encumbering the lessee's interest therein; and such Ground Lease further
provides that no notice of default given thereunder is effective against
such holder, unless a copy has been given to such holder in the manner
described in such Ground Lease; Lender constitutes a "mortgagee" as such
term is used in the Ground Lease;
(viii) a holder of a deed of trust or mortgage encumbering the
lessee's interest therein is permitted a period equal to that provided to
Borrower in addition to Borrower's applicable cure period to cure any
default under such Ground Lease which is curable after the receipt of
notice of any such default before the lessor thereunder may terminate such
Ground Lease (and, where necessary, is permitted the opportunity to gain
possession of the interest of the lessee under such Ground Lease through
legal proceedings or to take other action so long as such holder is
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proceeding diligently); upon any termination of the Ground Lease, in the
case of any such default which is not curable by a holder of a deed of
trust or mortgage encumbering the lessee's interest therein, or in the
event of the bankruptcy or insolvency of the lessee under such Ground
Lease, such holder has the right, following termination of the existing
Ground Lease or rejection thereof by a bankruptcy trustee or similar party,
to enter into a new ground lease with the lessor on the same terms as the
existing Ground Lease; and all rights of the lessee under such Ground Lease
may be exercised by or on behalf of such holder;
(ix) such Ground Lease does not require the lessor's consent for
subletting; and the lessor thereunder is not permitted to disturb the
possession, interest or quiet enjoyment of any subtenant of the lessee in
the relevant portion of the Property subject to such Ground Lease for any
reason (other than a default thereunder), or in any manner, which would
adversely affect the security provided to Lender by the Security Instrument
(except that, in the event of a default by lessee under the Lease, lessor
may require that the rent paid by such subtenant be adjusted so that it is
in an amount not less than fair market value).
(z)(ii) Leased Property. With respect to any Ground Leased Property
relating to the Property known as the Sheraton San Diego Hotel & Marina:
(i) any Ground Lease relating thereto or an abstract or memorandum
thereof has been duly recorded and a certified copy, including all
amendments thereto, has been delivered to Lender; such Ground Lease
permits, with the consent of the ground lessor thereunder, which consent
has been obtained as of the date hereof, the interest of the lessee
thereunder to be encumbered by the Security Instrument and does not
restrict the use of the Property by such lessee, its successors or assigns
in a manner that would adversely affect the security provided to Lender by
the Security Instrument; and a true and complete copy of the Ground Lease
has been delivered to Lender;
(ii) such Ground Lease may not be surrendered, cancelled or terminated
without the prior written consent of Lender, as beneficiary, and any such
action without such consent is void;
(iii) such Ground Lease has a remaining term which extends not less
than nineteen (19) years beyond the Initial Maturity Date and, together
with one or more optional renewal terms, such Ground Lease has a remaining
term which extends not less than twenty-five (25) years beyond the Initial
Maturity Date; and the base rental under such Ground Lease is not subject
to increase prior to January 1, 2009;
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(iv) such Ground Lease is not subject to any liens or encumbrances
superior to, or of equal priority with, the Security Instrument (other than
the related ground lessor's fee interest and the Permitted Encumbrances);
there is no deed of trust or Lien encumbering the related ground lessor's
fee interest (or if any such deed of trust or Lien exists, it is
subordinate to the Lien held by Lender under the Security Instrument), and
the Ground Lease shall remain prior to any deed of trust or other Lien upon
the related fee interest that may hereafter be granted;
(v) such Ground Lease is assignable by a holder of a deed of trust or
mortgage encumbering the lessee's interest therein upon a foreclosure of
such deed of trust or mortgage with the consent of the lessor thereunder,
which consent shall be granted provided that the assignee is financially
reliable, qualified to conduct the business for which the Ground Lease was
granted, and has a favorable business reputation;
(vi) on the date hereof, such Ground Lease is in full force and effect
and no default has occurred under such Ground Lease nor, to the best of
Obligor's knowledge after due inquiry and investigation, is there any
existing condition which, but for the passage of time or the giving of
notice or both, would result in a default under the terms of such Ground
Lease;
(vii) such Ground Lease requires the lessor thereunder to give notice
of any default by the lessee to a holder of a deed of trust or mortgage
encumbering the lessee's interest therein; and such Ground Lease further
provides that no notice given thereunder is effective against such holder,
until such holder has actually received such notice; Lender constitutes a
"leasehold mortgagee" as such term is used in the Ground Lease;
(viii) a holder of a deed of trust or mortgage encumbering the
lessee's interest therein is permitted at least thirty (30) days in
addition to Borrower's applicable cure period to cure any default under
such Ground Lease which is curable after the receipt of notice of any such
default before the lessor thereunder may terminate such Ground Lease (and,
where necessary, is permitted the opportunity to gain possession of the
interest of the lessee under such Ground Lease through legal proceedings or
to take other action so long as such holder is proceeding diligently); upon
any termination of the Ground Lease, including without limitation a
termination in the case of any such default which is not curable by a
holder of a deed of trust or mortgage encumbering the lessee's interest
therein, or in the event of the bankruptcy or insolvency of the lessee
under such Ground Lease, such holder has the right, following termination
of the existing Ground Lease or rejection thereof by a bankruptcy trustee
or
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similar party, to enter into a new ground lease with the lessor on the same
terms as the existing Ground Lease; and all rights of the lessee under such
Ground Lease may be exercised by or on behalf of such holder;
(ix) such Ground Lease permits the lessee to sublet subject to consent
of the lessor not to be unreasonably withheld; and the lessor thereunder is
not permitted to disturb the possession, interest or quiet enjoyment of any
subtenant of the lessee (which subtenant ground lessor has consented to) in
the relevant portion of the Property subject to such Ground Lease for any
reason, or in any manner, which would adversely affect the security
provided to Lender by the Security Instrument; and
(x) such Ground Lease does not permits Lender to exercise any renewal
options or purchase options held by the Lessee during the Term, but Ground
Lessor has separately consented as of the date hereof to the ability of
Lender to exercise any renewal options held by Lessee during the Term.
(aa) Survey. All of the improvements relating to each such Property
lie wholly within the boundaries and building restriction lines of such
Property, and no improvements on adjoining properties encroach upon the
Property, and no easements or other encumbrances upon each such Property
encroach upon any of the improvements, so as, in either case, to materially
adversely affect the value or marketability of such Property except those which
are insured against by a Qualified Title Insurance Policy.
(bb) Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements currently in effect in
connection with the transfer of any of the Properties to Borrower have been paid
in full or deposited with the issuer of a Qualified Title Insurance Policy for
payment upon recordation of the deeds effecting such transfer. All mortgage,
mortgage recording, stamp, intangible or other similar tax required to be paid
by any Person under applicable Legal Requirements currently in effect in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents, including the Security
Instruments, and the Liens intended to be created thereby, have been paid or
deposited with a title company for payment upon recordation of each of the
Security Instruments.
(cc) Single-Purpose. Obligor hereby represents and warrants to, and
covenants with, Lender that, as of the date hereof and until such time as the
Debt shall be paid in full:
(i) It has not owned and will not own any property or any other assets
other than (A) the Properties currently owned or leased by it, and (B)
incidental personal and intangible property relating to the ownership or
operation of the Properties;
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(ii) It has not engaged and will not engage in any business other than
the ownership, management, financing and operation of the Properties owned
by it;
(iii) It has not entered and will not enter into any contract or
agreement with any of its Affiliates, any of its constituent parties or any
Affiliate of any constituent party, except upon terms and conditions that
are substantially similar to those that would be available on an
arm's-length basis with third parties;
(iv) It has not incurred and will not incur any indebtedness, secured
or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than the Permitted Indebtedness. Except
as set forth in the immediately preceding sentence, no indebtedness other
than the Debt may be secured (subordinate or pari passu) by the Property;
(v) It has not made and will not make any loans or advances to any
other Person (including any Affiliate or constituent party or any Affiliate
of any constituent party), and shall not acquire obligations or securities
of any Affiliate or constituent party or any Affiliate of any constituent
party;
(vi) It is and will remain solvent and it will pay its debts and
liabilities (including employment and overhead expenses) from its assets as
the same shall become due;
(vii) It has done or caused to be done and will do all things
necessary to observe corporate, partnership or limited liability company
formalities, as the case may be, and preserve its existence, and it will
not, nor will it permit or suffer any constituent party to amend, modify or
otherwise change its partnership certificate, partnership agreement,
operating agreement, articles of incorporation and bylaws, trust or other
organizational documents or those of such constituent party in a manner
which would adversely affect its existence as a Single Purpose Entity;
(viii) It will maintain books and records and bank accounts separate
from those of its Affiliates and any constituent party and it will file its
own tax returns (except to the extent consolidation is required under GAAP
or as a matter of law);
(ix) It will be, and at all times will hold itself out to the public
as, a legal entity separate and distinct from any other entity (including
any of its Affiliates, any of its constituent parties or any Affiliate of
any constituent party), shall conduct business in its own name and shall
maintain and utilize separate stationery, invoices and checks and it will
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pay to any Affiliate that incurs costs for office space and administrative
services that it uses, the amount of such costs allocable to its use of
such office space and administrative services;
(x) It will 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;
(xi) Neither it nor any constituent party will seek its dissolution or
winding up, in whole or in part;
(xii) Except as required by the terms of the Loan Documents, it will
not commingle its funds and other assets with those of any Affiliate or
constituent party or any Affiliate of any constituent party or any other
Person;
(xiii) It has and will maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or constituent party or any
Affiliate of any constituent party or any other Person;
(xiv) It has not held and will not hold itself out to be responsible
for the debts or obligations of any other Person;
(xv) If it is a single-member limited liability company, it shall have
two Independent Directors as its duly appointed members of its board of
directors;
(xvi) It shall not cause or permit its board of directors to take any
action which, under applicable law or the terms of any certificate of
incorporation, operating agreement, by-laws or any voting trust agreement
with respect to any common stock, requires the vote of its board of
directors unless at the time of such action there shall be at least two
members who are Independent Directors; provided, however, that subject to
any applicable Legal Requirements, it may, at its discretion, cause or
permit its board of directors to take any action without regard to the
preceding clause of this sentence other than the following actions, and the
following actions shall not be taken while the Debt is outstanding: (A)
dissolve or liquidate, in whole or in part; (B) consolidate or merge with
or into any other entity or convey or transfer all or substantially all of
its properties and assets to any entity; (C) engage in any business other
than the ownership, maintenance and operation of the Properties in which
such Obligor owns an interest or, with respect to such managing member,
acting as the managing member of Obligor (D) institute any proceeding to be
adjudicated as bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition or
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answer or consent seeking reorganization or relief under the Bankruptcy
Code or consent to the filing of any such petition or to the appointment of
a receiver, rehabilitator, conservator, liquidator, assignee, trustee or
sequestrator (or other similar official) of such managing member or Obligor
or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, or make an assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally as
they become due, or take any action in furtherance of any of the foregoing;
(E) amend such managing member's certificate of incorporation or the
operating agreement of Obligor (except that such amendment shall be
permitted with the consent of Lender and the Rating Agency, in each case in
the sole discretion of the applicable party); (F) enter into any
transaction with an Affiliate not in the ordinary course of Obligor's
business; or (G) withdraw as the managing member of Obligor;
(xvii) It has no liabilities, contingent or otherwise, other than
those normal and incidental to the ownership, operation and leasing of the
Properties in which it owns an interest;
(xviii) Obligor shall conduct its business so that the assumptions
made with respect to Obligor in that certain opinion letter dated the date
hereof delivered by Sidley & Austin addressing substantive
non-consolidation and other matters in connection with the Loan shall be
true and correct in all respects;
(xix) Obligor will not permit any Affiliate or constituent party
independent access to its bank accounts;
(xx) Obligor shall pay the salaries of its own employees and maintain
a sufficient number of employees in light of its contemplated business
operations; and
(xxi) Obligor shall compensate each of its consultants and agents from
its funds for services provided to it and pay from its own assets all
obligations of any kind incurred. Upon the withdrawal or the disassociation
of the two Independent Directors from any constituent entity of Obligor,
Obligor shall immediately appoint new directors or cause such entity to
appoint new directors that satisfy the requirements of an Independent
Director under this Agreement.
(xxii) Obligor and the members of Obligor shall at all times comply
with the terms of the operating agreement applicable to Obligor.
(xxiii) Obligor (i) is not under any obligation to advance or
contribute property to any Affiliate by way of capital contribution, (ii)
shall not make any advance or contribute property to an Affiliate by way
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of capital contribution, (iii) except pursuant to the Contribution
Agreement, has not accepted and shall not accept any such advance or
contribution from any Affiliate, (iv) has not accepted or caused to be made
and shall not accept or cause to be made any transfer or distribution of
any Affiliate's assets, and (v) does not anticipate making any capital
contribution to any Affiliate.
(dd) Investment Company Act. It 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; or (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. Its sole business is the
ownership, operation, maintenance, repair, financing, refinancing and
disposition of the Properties in which it owns an interest and such matters as
are incidental to the foregoing.
(ee) Fraudulent Transfer. It (i) has not entered into the Loan or any
Loan Document with the actual intent to hinder, delay, or defraud any creditor
and (ii) has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of its assets
exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed its total liabilities, including subordinated, unliquidated,
disputed or contingent liabilities. The fair saleable value of its assets is and
will, immediately following the execution and delivery of the Loan Documents, be
greater than its probable liabilities, including the maximum amount of its
contingent liabilities or its debts as such debts become absolute and matured.
Its assets do not and, immediately following the execution and delivery of the
Loan Documents will not, constitute unreasonably small capital to carry out its
business as conducted or as proposed to be conducted. It does not intend to, and
does not believe that it will, incur debts and liabilities (including 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 its obligations).
(ff) Material and Management Agreements. Each of the Material
Agreements and the Property Management Agreements to which it is a party is in
full force and effect and is valid and enforceable in all material respects,
subject in each case to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles; there are no
defaults, breaches or violations thereunder by Obligor or, to the best of
Obligor's knowledge, any other party thereto, and to the best of Obligor's
knowledge, there are no conditions (other than payments that are due but not yet
delinquent and other non-delinquent executory obligations) that, with the
passage of time or the giving of notice, or both, would constitute a default by
any party thereunder, where with respect to any such Agreement the effect of one
or more of any such defaults would have a Material Adverse Effect. Neither the
execution and delivery of the Loan Documents, Obligor's performance thereunder,
the recordation of the Security Instruments, nor the exercise of any remedies by
Lender, will adversely affect Obligor's rights under any of the Material
Agreements or Property Management Agreements to which it is a party.
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(gg) Compliance with ERISA. Schedule 4.1 sets forth each Plan,
Multiemployer Plan and Multiple Employer Plan. As to all current Plans,
Multiemployer Plans and Multiple Employer Plans:
(i) Each Plan (and each related trust, insurance contract or fund) is
in compliance with its terms and all applicable laws, including without
limitation ERISA and the Code. Each Plan (and each related trust, if any)
which is intended to be qualified under Section 401(a) of the Code has
received or is in the process of seeking a determination letter from the
Internal Revenue Service to the effect that it meets the requirements of
Sections 401(a) and 501(a) of the Code.
(ii) No ERISA Event has occurred during the last 3 years.
(iii) No Obligor nor any ERISA Affiliate has incurred any unsatisfied,
or is reasonably expected to incur any, material Withdrawal Liability to
any Multiemployer Plan. No Obligor nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is insolvent, in reorganization or
has been terminated, within the meaning of Title IV of ERISA, if such event
could reasonable be expected to result in a material liability to the
Obligor. Using actuarial assumptions and computation methods consistent
with Part I of subtitle E of Title IV of ERISA, the aggregate liabilities
of the Obligors and their ERISA Affiliates to all Multiemployer Plans in
the event of a complete withdrawal therefrom, as of the close of the most
recent fiscal year of each such Multiemployer Plan ended prior to the date
of the most recent Loan made to the Obligors, would not exceed an amount
which would have a Material Adverse Effect.
(iv) No Plan has incurred any "accumulated funding deficiency" within
the meaning of Section 302 of ERISA or Section 412 of the Code, or has
applied for or received a waiver of an accumulated funding deficiency or an
extension of any amortization period, within the meaning of Section 412 of
the Code or Section 303 or 304 of ERISA. All contributions required to be
made with respect to any Plan by the Obligors or any ERISA Affiliates have
been timely made.
(v) No Obligor nor any ERISA Affiliate has incurred any liability
(including any indirect, contingent or secondary liability) to or on
account of a Plan pursuant to Section 409, 502(i) or 502(1) of ERISA or
Section 401(a)(29), 4971 or 4975 of the Code or expects to incur any such
liability arising under any of the foregoing sections with respect to any
Plan which could reasonably be expected to result in a Material Adverse
Effect. No condition exists which presents a risk to any Obligor or any
ERISA Affiliate of incurring a liability to or on account of a Plan
pursuant
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to the foregoing provisions of ERISA and the Code, which could reasonably
be expected to result in a Material Adverse Effect.
(vi) Except as would not result in any material liability, no action,
suit, proceeding, hearing, audit or investigation with respect to the
administration, operation or the investment of the assets of any Plan
(other than routine claims for benefits) is pending, expected or
threatened.
(vii) Except as would not result in any material liability, each group
health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2)
of the Code) which covers or has covered employees or former employees of
any Obligor or any ERISA Affiliate has at all times been operated in
compliance with the provisions of Part 6 of subtitle B of Title I of ERISA
and Section 4980B of the Code.
(viii) No lien imposed under the Code or ERISA on the assets of any
Obligor or any ERISA Affiliate exists or is likely to arise on account of
any Plan.
(ix) No Obligor maintains or contributes to any employee welfare
benefit plan (as defined in Section 3(1) of ERISA) which provides benefits
to retired employees or other former employees (other than as required by
Section 601 of ERISA) or any Plan the obligations with respect to which
could reasonably be expected to have a Material Adverse Effect.
(x) Except as would not result in any material liability, each Foreign
Pension Plan has been maintained in compliance with its terms and with the
requirements of any and all applicable laws, statutes, rules, regulations
and orders and has been maintained, where required, in good standing with
applicable regulatory authorities. All contributions required to be made
with respect to any Foreign Pension Plan have been timely made. Except as
would not result in any material liability, no Obligor has incurred any
obligation in connection with the termination of or withdrawal from any
Foreign Pension Plan. The present value of the accrued benefit liabilities
(whether or not vested) under each Foreign Pension Plan, determined as of
the end of the most recently ended fiscal year of the Obligor on the basis
of actuarial assumptions, each of which is reasonable, did not exceed the
current value of the assets of such Foreign Pension Plan allocable to such
benefit liabilities to an extent which could reasonably be expected to have
a Material Adverse Effect.
Notwithstanding the foregoing, with respect to any Multiemployer Plans and Plans
that are not currently maintained by the Obligors or any ERISA Affiliates, the
representations and warranties in this Section 4.1(gg) are made to the best
knowledge of the Obligors.
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(hh) Rent Roll. Except for such leases as have terminated in
accordance with their terms between the Rent Roll Date and the Closing Date (i)
the Leases with Major Tenants identified on the rent rolls dated as of the Rent
Roll Date and previously delivered to Lender are in full force and effect, and
are valid and enforceable in all material respects, subject in each case to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles; (ii) there are no material defaults thereunder
by Obligor or, to the best of Obligor's knowledge, the other party thereto, and
to the best of Obligor's knowledge, there are no conditions (other than payments
that are due but not yet delinquent and other non-delinquent executory
obligations) that, with the passage of time or the giving of notice, or both,
would constitute a material event of default thereunder; (iii) no Person has any
possessory interest in or right to occupy the any Property except under and
pursuant to a Lease; and (iv) except as set forth on Schedule 4.1(hh), Obligor
has not accepted Rent under any Lease or Operating Agreement for more than one
month in advance, except for security deposits, which on the Closing Date have
been deposited with the Lender in accordance with the provisions hereof relating
to security deposits received from and after the date hereof.
(ii) Legal Compliance. To its best knowledge, except as set forth on
Schedule 4.1(ii), neither any Property in which it owns an interest, nor any
portion thereof, is on the date hereof in violation of any Legal Requirement or
any Insurance Requirement (including, without, limitation all Legal Requirements
relating to all security deposits with respect to the Property), in a manner
that is likely to have a Material Adverse Effect.
(jj) No Change in Facts or Circumstances; Disclosure. All information
submitted by Obligor to Lender and in all financial statements, rent rolls,
reports, certificates and other documents submitted in connection with the Loan
or in satisfaction of the terms thereof and all statements of fact made by
Obligor in this Agreement or in any other Loan Document, are accurate, complete
and correct in all material respects. There has been no material adverse change
in any condition, fact, circumstance or event that would make any such
information inaccurate, incomplete or otherwise misleading in any material
respect or that otherwise materially and adversely affects the business
operations or the financial condition of Obligor or the Properties in which it
owns an interest. Obligor has disclosed to Lender all material facts to which
the Obligor has knowledge and has not failed to disclose any material fact of
which Obligor has knowledge that would cause any representation or warranty made
herein to be materially misleading.
(kk) Illegal Activity. Obligor has not purchased any portion of the
Properties with proceeds of any illegal activity.
(ll) Loans to Related Parties. There are no loans payable by Obligor
(a) to any member of Obligor or to any other lender which is an affiliate or
subsidiary entity of Obligor or of any such member of Obligor; (b) to any
stockholder, officer, director, member, or general or limited partner of any
member of Obligor or to any other lender which is an affiliate or subsidiary
entity of any such stockholder, officer, director, member, or general or limited
partner of any member of Obligor; (c) to any stockholder, officer, director,
member, or general or limited
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partner of any member of any member of Obligor or to any other lender which is
an affiliate or subsidiary entity of any such stockholder, officer, director,
member, or general or limited partner of any member of any member of Obligor; or
(d) to any stockholder, officer, director, member, or general or limited partner
of any stockholder, officer or director of any member of any member of Obligor
or to any other lender which is an affiliate or subsidiary entity of any such
stockholder, officer, director, member, or general or limited partner of any
stockholder, officer or director of any member of any member of Obligor.
(mm) Parking. With respect to each Property in which Obligor owns an
interest, there are parking spaces adequate for compliance of such Property with
applicable zoning requirements and other Legal Requirements are located on the
Property.
(nn) Breach by Affiliate. The breach by an Affiliate of any agreement
to which Obligor and Affiliate are parties shall not affect the enforceability
of the terms hereof or of any Loan Document against Borrower.
(oo) Hotel Rooms. All of the rooms of each Property are in service
except for rooms (not to exceed 2% of all rooms at any single Property (except
in the case of the Sheraton Needham, in which case the applicable percentage of
rooms out of service is 12%)) that are temporarily out of service for routine
maintenance and repair.
(pp) Ground Lease (San Diego). There are no remaining or outstanding
rights of Lessor which have not been exercised or duties and obligations of
Lessee which have not been fully performed under the Lease Agreement made and
entered into on the 30th day of July, 1969, between Lessor and Lessee.
(qq) Labor Relations. No Obligor is engaged in any unfair labor
practices that could reasonably be expected to have a Material Adverse Effect.
There is (i) no unfair labor practice pending against any Obligor or, to the
best knowledge of each Obligor, threatened against any of them, before the
National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against any Obligor, or, to the best knowledge of each Obligor, threatened
against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending
against any Obligor, or, to the best knowledge of each Obligor, threatened
against any Obligor and (iii) to the best knowledge of each Obligor, no union
representation question existing with respect to the employees of any Obligor
and, to the best knowledge of each Obligor, no union organizing activities are
taking place, except (with respect to any matter specified in clause (i), (ii)
or (iii) above, either individually or in the aggregate) such as could not
reasonably be expected to have a Material Adverse Effect.
(rr) Phoenician Subleases. Obligors represent and warrant the
following regarding the Phoenician Subleases: (1) The Phoenician Subleases are
in full force and effect and are binding upon and enforceable against the
Sublessees thereunder; (2) to its best knowledge all rent under such Subleases
has been paid through January 1, 1999; (3) neither Sublessor nor to the best of
Obligor's knowledge, any Sublessee, is in breach of, or in default under, the
Subleases; (4) all alterations, improvements and work to be performed by
Sublessor, if any, have been completed in accordance with the terms of the
Subleases; (5) neither Sublessor
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nor any Sublessee has commenced any action, or received any notice with respect
to the termination of any of the Subleases; and (6) Sublessees do not have any
purchase or other options or rights of first refusal with respect to the
premises covered by the Subleases.
(ss) Sheraton Colony Square. Obligors have not violated in a manner
which would cause a Material Adverse Effect any of the requirements of the
Reciprocal Easement Agreement relating to the Property known as the Sheraton
Colony Square, including payment of all assessments and other amounts due
thereunder prior to December 31, 1998.
(tt) Westin Atlanta North. Obligors have not violated in a manner
which would cause a Material Adverse Effect any of the requirements of the
Reciprocal Easement Agreement relating to the Property known as the Westin
Atlanta North, including payment of all assessments and other amounts due
thereunder prior to December 31, 1998.
Section 4.2 Nonrecourse Carveout Indemnitor Representations. Each
Nonrecourse Carveout Indemnitor represents and warrants that, as of the Closing
Date:
(a) Organization. It has been duly organized and is validly existing
and in good standing with requisite corporate or trust (as applicable) power and
authority to transact the businesses in which it is now engaged, and to enter
into this Agreement and the other Loan Documents to which it is a party. It is
duly qualified to do business and is in good standing in each jurisdiction where
it is required to be so qualified in connection with its properties, businesses
and operations. It possesses all material rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own its
properties and to transact the businesses in which it is now engaged.
(b) Proceedings. It has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and such other Loan Documents
have been duly executed and delivered by it and constitute legal, valid and
binding obligations of it enforceable against it in accordance with their
respective terms, subject to applicable bankruptcy, insolvency and similar laws
affecting rights of creditors generally and general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law) without offset, defense or counterclaim.
(c) No Conflicts. The execution, delivery and performance of this
Agreement and the other Loan Documents by it will not conflict with or result in
a material breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of its
properties or assets pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, partnership agreement or other Material Agreement to
which it is a party or to which any of its properties or assets is subject, nor
will such action result in any violation of the provisions of any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over it or any of its properties or assets, and any consent,
approval, authorization, order, registration or qualification of or with any
court or any such regulatory authority or other governmental agency or body
required for the execution, delivery and
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performance by it of this Agreement or any other Loan Documents to which it is a
party has been obtained and is in full force and effect.
(d) Litigation. There are no actions, suits or proceedings at law or
in equity by or before any Governmental Authority or other agency now pending
and to the best of its knowledge there are no such actions, suits or proceedings
threatened against or affecting it, which actions, suits or proceedings, alone
or in the aggregate, if determined against it, are likely to materially
adversely affect its condition (financial or otherwise) or business or
performance of its obligations under this Agreement or the other Loan Documents.
(e) Agreements. It is not a party to any agreement which is likely to
materially adversely affect it or its business, properties or assets, operations
or condition, financial or otherwise. It is not in default in any material
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Material Agreement or material
instrument to which it is a party or by which it is bound.
(f) Single-Purpose. On behalf of itself and its Affiliates, it hereby
represents and warrants to, and covenants with, Lender that, as of the date
hereof and until such time as the Debt shall be paid in full:
(i) It has not entered and will not enter into any contract or
agreement with Obligor or any Member, except upon terms and conditions that
are substantially similar to those that would be available on an
arm's-length basis with third parties;
(ii) It has not made and will not make any loans or advances to
Obligor (other than the Starwood Intercompany Debt) and shall not acquire
obligations or securities of Obligor or any Member;
(iii) It will maintain books and records and bank accounts separate
from those of Obligor and any Member and it will file tax returns separate
from Obligor (except to the extent consolidation is required under GAAP or
as a matter of law);
(iv) It will be, and at all times will hold itself out to the public
as, a legal entity separate and distinct from Obligor (including its
Member), shall conduct business in its own name separate from Obligor and
shall maintain and utilize separate stationery, invoices and checks from
Obligor and it will not share with Obligor any costs for office space and
administrative services that it uses;
(v) It will not commingle its funds and other assets with those of
Obligor or any Member;
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(vi) It has and will maintain its assets in such a manner that it will
not be costly or difficult to segregate, ascertain or identify its
individual assets from those of Obligor or any Member;
(vii) It has not held and will not hold itself out to be responsible
for the debts or obligations of Obligor or any Member, other than in
connection with the Loan Documents (including title insurance obtained in
connection therewith);
(viii) It shall conduct its business so that the assumptions made with
respect to Nonrecourse Carveout Indemnitor in that certain opinion letter
dated the date hereof delivered by Sidley & Austin addressing substantive
non-consolidation and other matters in connection with the Loan shall be
true and correct in all material respects;
(ix) It will not permit Obligor or any Member independent access to
its bank accounts;
(x) It shall not compensate any of Obligor's consultants and agents or
pay for obligations of any kind incurred by Obligor except in connection
with the origination of the Loan.
(xi) It (i) is not under any obligation to advance or contribute
property to any Obligor by way of capital contribution, (ii) shall not make
any advance or contribute property to an Obligor by way of capital
contribution, (iii) has not accepted and shall not accept any such advance
or contribution from any Obligor, (iv) has not accepted or caused to be
made and shall not accept or cause to be made any transfer or distribution
of any Obligor's assets, and (v) does not anticipate making any capital
contribution to any Obligor.
Section 4.3 Member Representations. Each Member represents and
warrants that, as of the Closing Date:
(a) Operating Agreement. It hereby represents and warrants to, and
covenants with, Lender that, as of the date hereof and until such time as the
Debt shall be paid in full:
(i) It will not dissolve the Limited Liability Company.
(ii) It will not assign or transfer its membership interest in
the Limited Liability Company.
(iii) It shall cause the Limited Liability Company at all times
to have at least two Independent Directors.
(iv) It shall not resign as a member of the Limited Liability
Company.
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(v) It shall comply with all of the terms of the Operating
Agreement of the Limited Liability Company.
(vi) It shall not remove any Independent Director unless such
removed Independent Director is immediately replaced by another Independent
Director.
(b) Single-Purpose. Member hereby represents and warrants to, and
covenants with, Lender that, as of the date hereof and until such time as the
Debt shall be paid in full:
(i) It has not owned and will not own any property or any other assets
other than (A) its membership interest in a Borrower, and (B) incidental
personal and intangible property relating to the ownership of such
membership interest;
(ii) It has not engaged and will not engage in any business other than
the ownership of a membership interest in a Borrower;
(iii) It has not entered and will not enter into any contract or
agreement with any of its Affiliates, any of its constituent parties or any
Affiliate of any constituent party, except upon terms and conditions that
are substantially similar to those that would be available on an
arm's-length basis with third parties;
(iv) It has not incurred and will not incur any indebtedness, secured
or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation);
(v) It has not made and will not make any loans or advances to any
other Person (including any Affiliate or member or any Affiliate of any
member), and shall not acquire obligations or securities of any Affiliate
or member or any Affiliate of any member;
(vi) It is and will remain solvent and it will pay its debts and
liabilities (including employment and overhead expenses) from its assets as
the same shall become due;
(vii) It has done or caused to be done and will do all things
necessary to observe corporate, partnership or limited liability company
formalities, as the case may be, and preserve its existence, and it will
not, nor will it permit or suffer any constituent party to amend, modify or
otherwise change its partnership certificate, partnership agreement,
operating agreement, articles of incorporation and bylaws, trust or other
organizational documents or those of such constituent party in a manner
which would adversely affect its existence as a Single Purpose Entity;
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(viii) It will maintain books and records and bank accounts separate
from those of its Affiliates and any member and it will file its own tax
returns (except to the extent consolidation is required under GAAP or as a
matter of law);
(ix) It will be, and at all times will hold itself out to the public
as, a legal entity separate and distinct from any other entity (including
any of its Affiliates, any of its constituent parties or any Affiliate of
any member), shall conduct business in its own name and shall maintain and
utilize separate stationery, invoices and checks and it will pay to any
Affiliate that incurs costs for office space and administrative services
that it uses, the amount of such costs allocable to its use of such office
space and administrative services;
(x) It will 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;
(xi) Neither it nor any constituent party will seek its dissolution or
winding up, in whole or in part;
(xii) Except as required by the terms of the Loan Documents, it will
not commingle its funds and other assets with those of any Affiliate or
member or any Affiliate of any member or any other Person;
(xiii) It has and will maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or member or any Affiliate of
any member or any other Person;
(xiv) It has not held and will not hold itself out to be responsible
for the debts or obligations of any other Person;
(xv) If it is a single-member limited liability company, it shall have
two Independent Directors as its duly appointed members of its board of
directors;
(xvi) It shall not cause or permit its board of directors to take any
action which, under applicable law or the terms of any certificate of
incorporation, by-laws or any voting trust agreement with respect to any
common stock, requires the vote of its board of directors unless at the
time of such action there shall be at least two members who are Independent
Directors; provided, however, that subject to any applicable Legal
Requirement, it may, at its discretion, cause or permit its board of
directors to take any action without regard to the preceding clause of this
sentence other than the following actions, and the following action shall
not be
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taken while the Debt is outstanding: (A) dissolve or liquidate, in whole or
in part; (B) consolidate or merge with or into any other entity or convey
or transfer all or substantially all of its properties and assets to any
entity; (C) engage in any business other than the ownership of the
membership interest in a Borrower (D) institute any proceeding to be
adjudicated as bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition or
answer or consent seeking reorganization or relief under the Bankruptcy
Code or consent to the filing of any such petition or to the appointment of
a receiver, rehabilitator, conservator, liquidator, assignee, trustee or
sequestrator (or other similar official) of it or of any substantial part
of its property, or ordering the winding up or liquidation of its affairs,
or make an assignment for the benefit of creditors, or admit in writing its
inability to pay its debts generally as they become due, or take any action
in furtherance of any of the foregoing; (E) amend its operating agreement
(except that such amendment shall be permitted with the consent of Lender
and, if applicable, the Rating Agency, in each case in the sole discretion
of the applicable party); or (F) enter into any transaction with an
Affiliate not in the ordinary course of its business.
(xvii) It has no liabilities, contingent or otherwise, other than
those normal and incidental to the ownership of a membership interest in a
Borrower;
(xviii) It shall conduct its business so that the assumptions made
with respect to it in that certain opinion letter dated the date hereof
delivered by Sidley & Austin addressing substantive non-consolidation and
other matters in connection with the Loan shall be true and correct in all
respects;
(xix) It will not permit any Affiliate or constituent party
independent access to its bank accounts;
(xx) It shall pay the salaries of its own employees and maintain a
sufficient number of employees in light of its contemplated business
operations; and
(xxi) It shall compensate each of its consultants and agents from its
funds for services provided to it and pay from its own assets all
obligations of any kind incurred. Upon the withdrawal of the two
Independent Directors, it shall immediately appoint new directors that
satisfy the requirements of an Independent Director under this Agreement.
(xxii) It shall at all times comply with the terms of the operating
agreement applicable to it.
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(xxiii) It (i) is not under any obligation to advance or contribute
property to any Affiliate by way of capital contribution, (ii) shall not
make any advance or contribute property to an Affiliate by way of capital
contribution, (iii) has not accepted and shall not accept any such advance
or contribution from any Affiliate, (iv) has not accepted or caused to be
made and shall not accept or cause to be made any transfer or distribution
of any Affiliate's assets, and (v) does not anticipate making any capital
contribution to any Affiliate.
Section 4.4 Second-Tier Member Representations. Each Second-Tier
Member represents and warrants that, as of the Closing Date:
(a) Operating Agreement. It hereby represents and warrants to, and
covenants with, Lender that, as of the date hereof and until such time as the
Debt shall be paid in full:
(i) It will not dissolve the Member.
(ii) It will not assign or transfer its membership interest in
the Member in violation of the terms of the limited liability company
agreement of the Member.
(iii) It shall cause the Member at all times to have at least two
Independent Directors.
(iv) It shall not resign as a member of the Member.
(v) It shall comply with all of the terms of the Operating
Agreement of the Member.
(vi) It shall not remove any Independent Director of Member
unless such removed Independent Director is immediately replaced by another
Independent Director.
Section 4.5 Survival of Representations. Each Obligor agrees that all
of the representations and warranties of such Obligor set forth in Section 4.1
hereof and elsewhere in this Agreement and in the other Loan Documents, each
Nonrecourse Carveout Indemnitor agrees that all of the representations and
warranties of such Indemnitor set forth in Section 4.2 and elsewhere in this
Agreement and in the other Loan Documents, each Member agrees that all of the
representations and warranties of such Member set forth in Section 4.3 hereof
and elsewhere in this Agreement and in the other Loan Documents and each
Second-Tier Member agrees that all of the representations and warranties of such
Second-Tier Member set forth in Section 4.4 hereof and elsewhere in this
Agreement and in the other Loan Documents shall survive for so long as any
portion of the Debt is outstanding (it being acknowledged by Lender that such
representations and warranties have been made as of the Closing Date). All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents
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by each Obligor, each Nonrecourse Carveout Indemnitor and Operator shall be
deemed to have been relied upon by Lender notwithstanding any investigation
heretofore or hereafter made by Lender or on its behalf.
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1 Obligor Covenants. Each Obligor hereby covenants and
agrees with Lender that:
(a) Existence; Compliance with Legal Requirements; Insurance. Obligor
shall do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its existence, and all material rights, licenses, permits
and franchises necessary for the use and operation of the Properties in which it
owns an interest and comply in all respects with all Legal Requirements
applicable to it and the Properties in which it owns an interest. Obligor shall
at all times maintain and preserve each such Property and shall keep such
Property in good working order and repair, reasonable wear and tear excepted,
and from time to time make, or cause to be made, all reasonably necessary and
desirable repairs, renewals, replacements, betterments and improvements thereto.
Obligor will operate, maintain, repair and improve each such Property in
compliance with all Legal Requirements, and will not cause or allow any Waste
with respect to such Property. It hereby covenants and agrees not to commit, and
to use all reasonable efforts not to permit or suffer to exist any act or
omission which would afford the federal government or any state or local
government the right of forfeiture as against the Properties in which it owns an
interest or any part thereof or any monies paid in performance of its
obligations under any of the Loan Documents.
(b) Taxes and Other Charges; Contest for Taxes and Other Charges,
Legal Requirements and Liens.
(i) Subject to the provisions of Section 5.1(b)(ii) hereof, Obligor
shall pay all Taxes and Other Charges now or hereafter levied or assessed
or imposed against each Property in which it owns an interest or any part
thereof prior to the date on which such sums become delinquent. Obligor
will deliver to Lender, upon request, receipts for payment or other
evidence satisfactory to Lender that the Taxes and Other Charges have been
so paid (provided, however, Obligor is not required to furnish such
receipts for payment of Taxes in the event that such Taxes have been paid
by Lender pursuant to Section 9.4.1 hereof). Subject to the provisions of
Section 5.1(b)(ii) hereof and other than Permitted Encumbrances, Obligor
shall not suffer and shall promptly cause to be paid and discharged any
lien or charge whatsoever which may be or become a lien or charge against
each such Property, and shall promptly pay for all utility services
provided to the Property. Subject to Section 5.1(b)(ii) hereof, Obligor
shall pay, bond or otherwise discharge, from time to time when the same
shall become due, all claims and demands of mechanics, materialmen,
laborers
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and others that, if unpaid, might result in, or permit the creation of, a
lien or encumbrance on each Property (as defined in the Security
Instrument), or on the Rents arising therefrom.
(ii) Notwithstanding the foregoing, after prior written notice to
Lender, Obligor, at its own expense, may contest by appropriate legal,
administrative or other proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any Taxes or Other Charges or Lien therefor or any
Legal Requirement or Insurance Requirement or the application of any
instrument of record affecting any Property in which it owns an interest or
any part thereof (other than the Loan Documents) or any claims or judgments
of mechanics, materialmen, suppliers, vendors or other Persons or any Lien
therefor, and may withhold payment of the same pending such proceedings if
permitted by law; provided that (A) no Specified Default or Event of
Default has occurred and remains uncured, except for, prior to
acceleration, a Default caused by the matter being contested, (B) such
proceeding shall suspend any collection of the contested Taxes, Other
Charges or Liens from such Property, Obligor or Lender, (C) such proceeding
shall be permitted under and be conducted in accordance with the provisions
of any other instrument to which Obligor is subject and shall not
constitute a default thereunder, (D) neither such Property nor any part
thereof or interest therein will be in danger of being sold, forfeited,
terminated, canceled or lost, (E) to the extent not already reserved with
Lender under Section 9.4 hereof or bonded or otherwise deposited or paid in
connection with such proceedings, Borrower shall have furnished Lender with
security (in an amount reasonably approved by Lender which in no event
shall be less than 110% of the amount in question) to insure the payment of
any such Taxes or Other Charges, or the cost of the contested Legal
Requirement or Insurance Requirement or the removal of the Lien, in each
case together with all reasonably anticipated interest and penalties
thereon, (F) in the case of an Insurance Requirement, the failure of
Obligor to comply therewith shall not impair the validity of any insurance
required to be maintained by the Obligor hereunder or the right to full
payment of any claims thereunder, (G) in the case of any essential or
significant service with respect to such Property, any contest or failure
to pay will not result in a discontinuance of any such service, (H) in the
case of any instrument of record affecting such Property or any part
thereof, the contest or failure to perform under any such instrument shall
not result in the placing of any Lien on such Property or any part thereof
(except if such Lien would be removed upon completion of such proceedings
and the compliance by the parties with the terms of the resulting order,
decision or determination and the removal costs for such Lien have been
escrowed with Lender or in the proceeding or bonded or otherwise deposited
or paid in connection with such proceedings), (I)
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except to the extent the Obligor has provided sufficient Eligible
Collateral therefor or bonded or otherwise deposited or paid in connection
with such proceedings, neither the failure to pay or perform any obligation
which the Obligor is permitted to contest under this Section nor an adverse
determination of any such contest shall result in a Material Adverse
Effect, and (J) Obligor shall promptly upon final determination thereof pay
the amount of any such Taxes, Other Charges or Liens, together with all
costs, interest and penalties which may be payable in connection therewith.
Lender may pay over any such cash deposit or part thereof held by Lender to
the claimant entitled thereto at any time when, in the judgment of Lender,
the entitlement of such claimant is finally established, and Lender shall
otherwise remit any remaining such amounts to the Obligor. Lender shall
give Obligor written notice of any such payments promptly following the
making thereof. Subject to the foregoing, at Obligor's timely request,
Lender shall not pay from the Tax, Insurance and Ground Rents Account the
contested Taxes or Other Charges being contested.
(c) Litigation. Obligor shall give prompt written notice to Lender of
any litigation or governmental proceedings pending or threatened in writing
against Obligor or against or affecting any Property in which it owns an
interest which, if determined adversely to Obligor or such Property, might be
expected to cause a Material Adverse Effect.
(d) Inspection. Obligor shall permit agents, representatives and
employees of Lender (including Servicer and Special Servicer) to inspect the
Properties in which it owns an interest on any Business Day at reasonable hours
upon reasonable advance notice.
(e) Notice of Default. Obligor shall promptly advise Lender of any
change in Obligor's condition (financial or otherwise) that could reasonably be
expected to cause a Material Adverse Effect, or of the occurrence of any Default
or Event of Default of which Obligor has knowledge.
(f) Cooperate in Legal Proceedings. Subject to its rights to pursue a
good faith challenge to any allegations of a violation of a Legal Requirement,
Obligor shall cooperate fully with Lender with respect to any proceedings before
any court, board or other Governmental Authority which may in any way affect the
rights of Lender hereunder or any rights obtained by Lender under any of the
other Loan Documents and, in connection therewith, permit Lender, at its
election, to participate in any such proceedings.
(g) Perform Loan Documents. Obligor shall observe, perform and satisfy
or cause the Operator, Property Managers and/or Franchisors with which it has
entered into an agreement to observe, perform and satisfy all the terms,
provisions, covenants and conditions required to be observed, performed or
satisfied by it, such Property Managers, Operator or, if applicable, the
Franchisors, shall pay when due all costs, fees and expenses required to be paid
by it, such Manager or, if applicable, the Franchisor, under the Loan Documents
and under the
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Property Management Agreement and Franchise Agreement, subject to any applicable
cure periods provided therein.
(h) Insurance Benefits. Obligor shall cooperate with Lender in
obtaining for Lender the benefits of any insurance proceeds lawfully or
equitably payable in connection with the Properties in which it owns an
interest, and Lender shall be reimbursed for any out-of-pocket expenses
reasonably incurred in connection therewith (including reasonable attorneys'
fees and disbursements, and, if reasonably necessary to collect such proceeds,
the expense of an appraisal on behalf of Lender in case of a fire or other
casualty affecting the Property or any part thereof) out of such insurance
proceeds.
(i) Further Assurances. Obligor shall, at Obligor's sole cost and
expense:
(i) furnish to Lender all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and
every other document, certificate, agreement and instrument required to be
furnished by Obligor pursuant to the terms of the Loan Documents or,
without additional material expense to Obligor, reasonably requested by
Lender in connection therewith;
(ii) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts
necessary or desirable, to evidence, preserve and/or protect the Lien of
the Lender at any time securing or intended to secure the obligations of
Obligor under the Loan Documents, as Lender may reasonably require;
(iii) be responsible for, and shall pay on demand, all Lender
Expenses, including all origination costs and all reasonable out-of-pocket
expenses and costs incurred by Lender (or any of its affiliates) after the
Closing in connection with any Securitization; 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.
(j) Financial Reporting and Other Information.
(i) Obligor will keep and maintain or will cause to be kept and
maintained on a Fiscal Year basis, in accordance with GAAP, to the extent
applicable (and as modified by the Uniform System of Accounts for Hotels,
current edition), proper and accurate books, records and accounts
reflecting all of its financial affairs and all items of Operating Income,
Operating Expenses and Capital Expenditures for each Property in which it
owns an interest. Lender shall have the right from time to time at all
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times during normal business hours upon reasonable notice to examine such
books, records and accounts at the office of Obligor or other Person
maintaining such books, records and accounts and to make such copies or
extracts thereof, as Lender shall desire. After the occurrence of an Event
of Default, Obligor shall pay any costs and expenses incurred by Lender to
examine its accounting records with respect to the Properties in which it
owns an interest, as Lender shall determine to be necessary or appropriate.
(ii) Obligor shall furnish to Lender, in form and substance
satisfactory to Lender in all respects and in Lender's sole discretion, (a)
on or before March 1, 1999, audited financial statements for the fiscal
year 1998 with respect to each Property in which Obligor owns an interest
and (b) on or before February 1, 1999, except as set forth on Schedule N,
operating statements and an agreed-upon procedures letter for each Property
in which Obligor owns an interest, in each case for the years of 1996, 1997
and 1998, certified by a "Big Five" accounting firm, in accordance with
GAAP (as modified by the Uniform System of Accounts for Hotels, current
edition) and in such detail as Lender may reasonably request and, in the
case of the statements to be delivered pursuant to clause (a), containing a
balance sheet for such Property and statements of profit and loss. If there
is a significant discrepancy between the audited financial statements
described in clause (a) and the agreed-upon procedures letter for fiscal
year 1998 as described in clause (b), the applicable Borrower will be
required to deliver a letter from such accounting firm verifying current
expenses and revenue of such Property. All such statements shall set forth
the financial condition and the income and expenses for each such Property
for the Fiscal Year in question, including statements of annual Net
Operating Income.
(iii) Obligor shall furnish to Lender within one hundred five (105)
days following the end of each Fiscal Year, with respect to each Property
in which it owns an interest, a complete copy of its annual financial
statements, audited by a "Big Five" accounting firm or another independent
certified public accounting firm acceptable to Lender, in accordance with
GAAP (and as modified by the Uniform System of Accounts for Hotels, current
edition), for such Fiscal Year and containing a balance sheet for such
Property and statements of profit and loss, all in such detail as Lender
may reasonably request. All such statements shall set forth the financial
condition and the income and expenses for each such Property for the
immediately preceding Fiscal Year, including statements of annual Net
Operating Income. Obligor's annual financial statements shall be
accompanied by (i) an Officer's Certificate certifying that each such
annual financial statement presents fairly, in all material respects, the
financial condition and results of operation of the Properties being
reported upon and has been prepared in accordance with GAAP and (ii) a
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management letter, in form and substance reasonably satisfactory to Lender,
illustrating the numerical discrepancies between the financial statements
for such Fiscal Year and the most recent Annual Budget, including, if a Low
NOI Period exists, (a) a detailed explanation of any variances of five
percent (5%) or more between budgeted and actual expense amounts in the
aggregate for such Fiscal Year and (b) a detailed explanation of any
variances of ten percent (10%) or more between budgeted and actual expense
amounts on a line-item basis for such Fiscal Year. Together with Obligor's
annual financial statements, Obligor shall furnish to Lender (A) an
Officer's Certificate certifying as of the date thereof whether, to
Obligor's knowledge, there exists a Default or Event of Default, and if
such Default or Event of Default exists, the nature thereof, the period of
time it has existed and the action then being taken to remedy the same; and
(B) an annual report, for the most recently completed fiscal year,
containing:
(1) Capital Expenditures made in respect of the
Properties owned or leased by such Obligor, including
separate line items with respect to any project costing in
excess of $500,000 per Property, and a budget of Capital
Expenditures for the following fiscal year; and
(2) occupancy levels at any Property owned or leased by
Obligor for such period, including average daily room rates,
revenue per available room and any franchise inspection
reports received by Obligor for such Property.
(iv) Obligor will furnish, or cause to be furnished, to Lender on or
before the thirtieth (30th) day after the end of each calendar month
(unless otherwise indicated), the following items, each to be presented on
a monthly basis (unless otherwise indicated) and on a trailing twelve month
basis, accompanied by an Officer's Certificate, certifying that such items
are true, correct, accurate, and complete and fairly present, in all
material respects, the financial condition and results of the operations of
Obligor and the Properties in which it owns an interest in accordance with
GAAP (as modified by the Uniform System of Accounts for Hotels, current
edition, and subject to normal year end adjustments), to the extent
applicable:
(A) monthly and year to date and trailing twelve month financial
statements prepared for such month with respect to such Property,
including a balance sheet and a summary profit and loss statement, and
noting Operating Income, Operating Expenses and Net Operating Income
and other information necessary and sufficient under GAAP (as modified
by the Uniform System of
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Accounts for Hotels, current edition), to the extent applicable, to
fairly represent the financial position and results of operations of
the Property during such calendar month, year to date period and
trailing twelve month period, all in form reasonably satisfactory to
Lender (notwithstanding the foregoing, the balance sheet may be
provided on a quarterly basis);
(B) on a quarterly basis, a comparison of the budgeted income and
expenses and the actual income and expenses for such quarter and
trailing twelve month period for each Property owned by it, together
with a detailed explanation of any variances of five percent (5%) or
more between budgeted and actual expense amounts in the aggregate and
any such variances of ten percent (10%) or more on a line-item basis
for such periods (except during a Low NOI Period, during which time
Obligor shall provide such detailed explanation in the event of a
variance of five percent (5%) or more on a line-item basis for such
periods);
(C) a statement of the actual Capital Expenditures made in
respect of the Property during such month and trailing twelve month
period, including separate line items with respect to any project
costing in excess of $500,000 per Property;
(D) occupancy levels at each such Property for such month and
trailing twelve month period, including average daily room rates and
any franchise inspection reports received by Borrower;
(E) rent rolls for each such Property for each quarter and
trailing twelve month period;
(F) the Xxxxx Travel Research Reports most recently available to
Obligor reflecting market penetration and the competitive set for each
Property;
(G) a statement that the representations and warranties of
Obligors set forth in Section 4.1(cc)(iv) are true and correct as of
the date of such certificate; and
(G) a statement indicating, for the next succeeding month, the
amount payable in respect of Management Fees to any Property Managers
or Franchisors which are not Affiliates of the Sponsors.
(v) Obligor shall furnish to Lender, within ten (10) Business Days
after request, such further detailed information with respect to the
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operation of each such Property and the financial affairs of Obligor as may
be reasonably requested by Lender or as requested by the Rating Agencies.
(vi) Obligor shall furnish to Lender, promptly after receipt, a copy
of any notice received by or on behalf of Obligor from any Governmental
Authority having jurisdiction over any of the Properties in which it owns
an interest with respect to a condition existing or alleged to exist or
emanate therefrom or thereat.
(vii) Obligor will, at any and all times, within a reasonable time
after written request by Lender, furnish or cause to be furnished to
Lender, in such manner and in such detail as may be requested by Lender,
such information as may be necessary to permit Lender to comply with any
request for information made by an investor or prospective investor in the
Certificates and to be furnished under Rule 144A(d) under the Securities
Act.
(viii) It shall deliver to Lender a copy of any written notice from
the franchisor under any Franchise Agreement or the Property Manager under
any Property Management Agreement to which it is a party, including any
notices that it has not complied with any of its obligations under such
Franchise Agreement or Property Management Agreement or altering in any
material respect the rules, standards and requirements of such Franchisor
or Property Manager.
(ix) If Obligor fails to provide to Lender or its designee any of the
financial statements, certificates, reports or information (the "Required
Records") required by this Section 5.1(j) within thirty (30) days after the
date upon which such Required Record is due, the same shall be an Event of
Default; provided that Lender shall have given to Obligor at least five (5)
days' prior written notice (with respect to any of the foregoing
specifically identified herein) or twenty (20) days' prior written notice
(with respect to any of the foregoing not specifically identified herein)
of such failure by Obligor to timely submit the applicable Required Record.
(x) Lender shall have the right at any time and from time to time to
audit the financial information provided by Obligor pursuant to the terms
of this Agreement in accordance with the then customary audit policies and
procedures of Lender. Lender shall pay the cost and expenses of such
audits, except during a Low NOI Period, during which time Obligor shall pay
such costs and expenses.
(xi) All reports furnished to Lender pursuant to this clause (j) shall
be presented as a hard copy together with (to the extent available) an
electronic format.
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(k) Business and Operations; Material Agreements. Obligor will
continue to engage in the businesses currently conducted by it as and to the
extent the same are necessary for the ownership, maintenance, management and
operation of the Properties in which it owns an interest. Obligor will qualify
to do business and will remain in good standing under the laws of each
jurisdiction as and to the extent the same are required for the ownership,
maintenance, management and operation of such Properties. Obligor shall at all
times (i) maintain such Properties or cause such Properties to be maintained at
a standard at least equal to the prevailing standard held as of the date hereof
by prudent managers of similar facilities or land in the region where such
Properties are located; (ii) maintain or cause to be maintained sufficient
inventory and Equipment of types and quantities at such Properties to enable the
operation of such Properties; (iii) maintain such licenses and permits, or
arrangements in connection therewith so as to permit such Properties to be
maintained at a standard at least equal to that maintained by prudent managers
of similar facilities located near such Properties; (iv) promptly perform and/or
observe all of the covenants and agreements required to be performed and
observed by it under the related Property Management Agreements and any other
Material Agreement, and do all things necessary to preserve and to keep
unimpaired its rights thereunder; (v) promptly notify Lender in writing of the
giving of any notice of any default by any party under any Material Agreement of
which it is aware, including, without limitation, the Property Management
Agreements and Franchise Agreement; and (vi) promptly enforce the performance
and observance of all of the material covenants and agreements required to be
performed and/or observed by the other party under each Material Agreement,
including, without limitation, the Property Management Agreements and Franchise
Agreement.
(l) Title to the Properties. Obligor will warrant and defend against
the claims of all Persons whomsoever with respect to (i) its title to the
Properties in which it owns an interest and every part thereof and (ii) the
validity and priority of the Lien of the related Security Instruments in any
Property in which Obligor owns an interest, subject only in each case to Liens
permitted under the Loan Documents (including Permitted Encumbrances).
(m) Costs of Enforcement. With respect to each Property in which it
owns an interest, in the event (i) that any Security Instrument is foreclosed in
whole or in part or any Note, any Loan Document, including the Security
Instrument, is put into the hands of an attorney for collection, suit, action or
foreclosure, (ii) of the foreclosure of any Lien or mortgage prior to or
subsequent to the Security Instrument in which proceeding Lender is made a
party, (iii) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of Obligor or an assignment by Obligor for the benefit of
its creditors, or (iv) Lender shall attempt to remedy any Event of Default
hereunder, Obligor, its successors or assigns, shall be chargeable with and
agrees to pay all costs incurred by Lender as a result thereof, including costs
of collection and defense (including reasonable attorneys', experts',
consultants' and witnesses' fees and disbursements) in connection therewith and
in connection with any appellate proceeding or post-judgment action involved
therein, which shall be due and payable together with all required service or
use taxes.
(n) Estoppel Statement. (i) After written request by Lender, Obligor
shall within fifteen (15) Business Days furnish Lender with a statement, duly
acknowledged and
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certified, setting forth (A) the unpaid principal amount of each Note, (B) the
Interest Rate, (C) the date installments of interest and/or principal were last
paid, (D) any offsets or defenses to the payment of the Debt, (E) that the
Notes, this Agreement, the Security Instruments and the other Loan Documents are
valid, legal and binding obligations and have not been modified or if modified,
giving particulars of such modification, and (F) such other matters as Lender
may reasonably request. Any prospective purchaser of any interest in the Loan
shall be permitted to rely on such certificate.
(ii) Obligor shall request and use all reasonable efforts to obtain
for Lender, upon request, Tenant estoppel certificates from each Major Tenant
and each ground lessor under a Ground Lease on forms reasonably satisfactory to
Lender; provided that Obligor shall not be required to deliver such certificates
more frequently than once in any calendar year (including estoppel certificates
obtained in connection with the origination of the Loan); provided, however,
that there shall be no limit on the number of times Obligor may be required to
obtain such certificates if a Default hereunder or under any of the Loan
Documents has occurred and is continuing.
(o) Loan Proceeds. Borrower shall use the proceeds of the Loan
received by it on the Closing Date only for the purposes set forth in Section
2.1.2 hereof.
(p) Performance by Obligor. Obligor shall in a timely manner observe,
perform and fulfill each and every covenant, term and provision of each Loan
Document executed and delivered by Obligor, and shall not enter into or
otherwise suffer or permit any amendment, waiver, supplement, termination or
other modification of any Loan Document executed and delivered by Obligor
without the prior written consent of Lender. Without limiting the foregoing,
Obligor shall cure the Deferred Maintenance Conditions and remediate
Environmental Conditions in a diligent manner and shall complete the same not
later than the time period set forth in Schedule E hereto.
(q) Annual Budget. (i) Borrower shall prepare and deliver to Lender,
on or before December 31 of each year, for informational purposes only, an
Annual Budget, prepared on a preliminary basis, for the ensuing year in respect
of the Properties in which it owns an interest. Borrower shall prepare and
deliver to Lender, on or before February 15 of each year, for informational
purposes only, a final Annual Budget for the ensuing year in respect of such
Properties. As of the first Payment Date following the Anticipated Repayment
Date or during a Low NOI Period, and as of each anniversary of the commencement
of such Low NOI Period until such Low NOI Period terminates, the Annual Budget
shall be subject to Lender's approval which shall not be unreasonably withheld
or delayed. Within ten (10) days after the commencement of a Low NOI Period or
the Anticipated Repayment Date, Borrower shall submit an Annual Budget for
Lender's approval in accordance with the procedures specified in this Section
5.1(q). Once approved, such Annual Budget shall be complied with, subject to a
variance of five percent (5%) or more between budgeted and actual amounts in the
aggregate and on a line-item basis for such period and year to date. Cost
savings from one line item in such budget may be reallocated to other line items
in such budget, provided that without the consent of Lender, no such
reallocation shall cause an overall variance in the budget of more than 5%. In
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the event of a variance which exceeds the levels set forth in the foregoing
sentences, such variance shall not trigger an Event of Default pursuant to the
terms of Section 10.1(a)(xii) if (a) such variance occurs with respect to no
more than three Interest Accrual Periods per year, and (b) the Reserve Account
contains funds sufficient to correct such variance, in which event such funds
shall be promptly withdrawn by Lender or, if the Reserve Account does not
contain such funds, Sponsor pays to Lender funds sufficient to correct such
variance, it being understood and agreed that Sponsor shall have no obligation
to correct such variance or pay any funds to correct such variance. In all other
cases, such variance shall trigger an Event of Default pursuant to the terms of
Section 10.1(a)(xii). In addition, Borrower shall have the right to submit
proposed modifications to the approved budget, if necessitated by unforeseeable
events, which modifications shall be subject to Lender's approval (not to be
unreasonably withheld or delayed). Lender's approval of the Annual Budget shall
be deemed given if not disapproved by Lender within thirty (30) days after
Lender's receipt thereof and a written request for approval captioned on the
first page of such request with the following legend in bold face type:
"WARNING: FAILURE TO RESPOND TO THIS COMMUNICATION WITHIN THIRTY (30) BUSINESS
DAYS OF THE DATE OF RECEIPT OF THIS NOTICE WILL BE DEEMED CONSENT TO THE ACTIONS
FOR WHICH YOUR CONSENT IS REQUESTED HEREIN." If Lender disapproves the Annual
Budget, then the Annual Budget for the previous year shall apply until such time
as a new Annual Budget has been approved.
(r) No Joint Assessment. Obligor shall not suffer, permit or initiate
the joint assessment of any Property in which it owns an interest (i) with any
other real property constituting a tax lot separate from the Property, and (ii)
unless required by applicable law, with any portion of such Property which may
be deemed to constitute personal property, or any other procedure whereby the
lien of any taxes which may be levied against such personal property shall be
assessed or levied or charged to the Property.
(s) Leasing Matters. In addition to the terms of Section 7.2 hereof
and only with respect to each Lease with a Major Tenant:
(i) Obligor shall furnish Lender with an executed copy of each Lease
within thirty (30) days after execution thereof.
(ii) All new Leases entered into from and after the date hereof shall
be the result of arms'-length negotiations, shall provide for "market"
rental rates and other market terms and shall not contain any terms which
would materially adversely affect Lender's rights under the Loan Documents
(provided that the rent payable under a new Lease may be below market rate
if (x) the lessee is a managing and/or leasing agent for Obligor and the
space leased under the new Lease is to be used solely in connection with
the managing and leasing of the Property and is of a size reasonably
required for an office for such agent for such purposes, or (y) the rents
from the space leased under the new Lease were, immediately prior to the
entry into that Lease, below market rate and such new Lease was given in
exchange for the surrender of the prior Lease).
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(iii) All Leases shall provide that they are subordinate to the
related Security Instrument and that the lessee agrees to attorn to Lender
at Lender's request (subject to the terms of Section 7.2(b) hereof).
(iv) Obligor (A) shall observe and perform the obligations imposed
upon the lessor under the Leases in a commercially reasonable manner; (B)
shall enforce the terms, covenants and conditions contained in the Leases
on the part of the lessee thereunder to be observed or performed in a
commercially reasonable manner; (C) shall not collect any of the base or
minimum rents more than one (1) month in advance (other than security
deposits); (D) shall not execute any assignment of lessor's interest in the
Leases or the Rents (except for the Assignment of Leases); and (E) shall
not alter, modify or change the terms of any Lease with a Major Tenant in a
manner inconsistent with the provisions of the Loan Documents and shall not
terminate Leases (except to exercise its remedies following an event of
default thereunder); provided that Lender's prior consent shall be required
prior to the termination of a Lease with a Major Tenant.
(v) Any Lease with a Major Tenant shall be subject to Lender's prior
written consent (which shall not be unreasonably withheld or delayed). Any
Lease under which it, the Property Manager or an Affiliate of any of the
Obligors is the lessee for space to be used solely in connection with the
managing and operation of the Property shall not be subject to approval by
Lender provided that the space is of a size reasonably required for such
purposes. Any Lease submitted to Lender for Lender's approval, which shall
be accompanied by a summary of the material terms of such Lease (including
the economic terms and any termination options) shall be deemed approved if
Lender shall have not notified it in writing of its disapproval (together
with a statement of the grounds of such disapproval) within five (5)
Business Days after it has given Lender written notice that at least ten
(10) Business Days have elapsed since such submission, which notice shall
be captioned on its first page with the following legend in bold face type:
"WARNING: TEN BUSINESS DAYS HAVE ELAPSED SINCE THE UNDERSIGNED FIRST
SUBMITTED THE ATTACHED LEASE FOR YOUR APPROVAL. FAILURE TO DISAPPROVE THE
ATTACHED LEASE WITHIN FIVE (5) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE
WILL BE DEEMED APPROVAL OF THE ATTACHED LEASE."
(vi) Obligor shall furnish to Lender a copy of any notice received
from a Tenant under a Lease with a Major Tenant threatening non-payment of
rent or other default, alleging or acknowledging a default by landlord,
requesting a termination or modification of a Lease or notifying Obligor of
the exercise or non-exercise of any option provided
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for in such Tenant's Lease, or any other similar material correspondence
received by Obligor from Tenants during the subject month.
(t) Security Deposits. Obligor shall immediately upon receipt deliver
(and with respect to security deposits, letters of credit or other collateral
already paid or delivered to Obligor or its predecessor in interest, Obligor is
concurrently herewith delivering) to Lender all security deposits, letters of
credit or other collateral that it receives (or has received) from time to time
from any Tenant as security for the performance by such Tenant of its
obligations under its Lease. Lender shall deposit (or shall direct Obligor to
deposit directly) any cash to be delivered by Obligor pursuant to the preceding
sentence in an escrow account in the name of Lender and, except to the extent
required by law or the applicable Lease, such account shall be maintained in
accordance with the terms of Section 12.2 hereof. Lender shall make such
security available to Obligor or the applicable Tenant on or prior to the tenth
(10th) Business Day after notice from Obligor to the extent required to comply
with obligations owed to such Tenant under the terms of its Lease or to Obligor,
in the event of such Tenant's default under its Lease, subject to Lender's
approval, which approval shall not be unreasonably withheld (based on, among
other things, the intended use of such deposit and whether a replacement Lease
has been executed). Lender may commingle funds deposited hereunder and Lender
shall not be obligated to segregate, designate or separately account for any
specific security deposit, except to the extent that Obligor notifies Lender in
writing at or prior to the time of any deposit that such deposit is required to
be segregated by the applicable Lease or under applicable law.
(u) ERISA Compliance. As long as there are any Notes outstanding, as
soon as reasonably practicable and, in any event, within 15 days after the
Obligor or any ERISA Affiliate knows or has reason to know of the occurrence of
any of the following, the Obligor will deliver, or cause to be delivered, to the
Lender a certificate of the chief financial officer of the Obligor setting forth
the reasonable details as to such occurrence and the action, if any, that such
Obligor or ERISA Affiliate is required or proposes to take, together with any
notices required or proposed to be given or filed by such Obligor or such ERISA
Affiliate to or with the PBGC or any other government agency or any Plan
participant, and any notices received by such Obligor or ERISA Affiliate from
the PBGC or any other government agency, or a Plan participant with respect
thereto:
(i) that an ERISA Event with respect to any Plan has occurred;
(ii) that a contributing sponsor (as defined in Section 4001(a)(13) of
ERISA) of a Plan subject to Title IV of ERISA is subject to the advance
reporting requirement of PBGC Regulation Section 4043.61 (without regard to
subparagraph (b)(1) thereof), and an event described in subsection .62,
.63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is
reasonably expected to occur with respect to such Plan within the following
30 days;
(iii) that an "accumulated funding deficiency" within the meaning of
Section 412 of the Code or Section 302 of ERISA, has been
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incurred or an application may reasonably be expected to be or has been
made for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code or Section 303 or 304 of
ERISA with respect to a Plan;
(iv) that any contribution with respect to a Plan or Foreign Pension
Plan has not been timely made or that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution to a
Plan, provided that at the time notice is given or required to be given to
the PBGC under Section 302(f)(4)(A) of ERISA or Section 412(n)(4)(A) of the
Code of the failure to make timely payments to a Plan, Obligor shall
provide to Lender a copy of any such notice filed and a statement of the
chief financial officer of the Obligor setting forth (A) sufficient
information necessary to determine the amount of the lien under Section
302(f)(3) or Section 412(n)(3) of the Code, (B) the reason for the failure
to make the required payments and (C) the action, if any, which the
Obligor, its Subsidiary or its ERISA Affiliate proposes to take with
respect thereto;
(v) that a Plan has been or may be terminated, reorganized,
partitioned or declared insolvent under Title IV of ERISA;
(vi) that Obligor or any ERISA Affiliate will or could reasonably be
expected to incur any material increase in liability (including any
indirect, contingent or secondary liability) to or on account of the (A)
the imposition of Withdrawal Liability by a Multiemployer Plan, (B) the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (C) the termination
of a Multiemployer Plan within the meaning of Title IV of ERISA; or
(vii) that Obligor or any ERISA Affiliate will or could reasonably be
expected to incur any material increase in liability with respect to a
group health plan as defined in Section 607(l) of ERISA or Section
4980B(g)(2) of the Code) under Section 4980B of the Code or any Plan, or
that the Obligor or any ERISA Affiliate could reasonably be expected to
incur any material increase in liability pursuant to an employee welfare
benefit plan (as defined in Section 3(1) of ERISA) that provides benefits
to retired employees or other former employees (other than as required by
Section 601 of ERISA) or any Plan or Foreign Pension Plan.
Each Obligor will deliver promptly, upon request of Lender, a complete copy of
the annual report (on Internal Revenue Service Form 5500 Series) of each Plan
(including, to the extent
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required, the related financial and actuarial statements and opinions and other
supporting statements, certifications, schedules and information) required to be
filed with the Internal Revenue Service and copies of any records, documents or
other information that must be furnished to the PBGC or any other governmental
agency with respect to any Plan pursuant to Section 4010 of ERISA. Obligor will
provide such other information with respect to the condition or operations,
financial or otherwise, of Obligor as Lender may from time to time reasonably
request.
In addition to any certificates or notices delivered to the Lender
pursuant to this section 5.1(u)(i) through (vii), copies of any records,
documents or other information required to be furnished to the PBGC or any other
governmental agency, and any material notices received by any Obligor or any
ERISA Affiliate with respect to any Plan, Multiemployer Plan or by any Obligor
with respect to any Foreign Pension Plan shall be delivered to the Lender no
later than fifteen (15) days after the date such records, documents, and/or
information has been furnished to the PBGC or any other governmental agency or
such notice has been received by the Obligor or any ERISA Affiliate, as
applicable. Notwithstanding the foregoing, no statement or notice described in
this Section 5.1(u)(i) through (vii) shall be required to be provided unless the
event or events to which such statement or notice described in this section
5.1(u)(i) through (vii) could individually or in the aggregate be expected to
result in liabilities to the Obligors or their ERISA Affiliates in excess of
$75,000.
(v) Plan Assets. Obligor will do, or cause to be done, all things
necessary to ensure that it is not deemed an "employee benefit plan" subject to
the fiduciary responsibility provisions of ERISA, a "plan" within the meaning of
Section 4975(e)(1) of the Code or any entity whose assets include the assets of
any such employee benefit plan or plan by reason of 29 C.F.R. 2510.3-101 or
otherwise, or by reason of any substantially similar Federal, state or local
law. If requested by Lender, Obligor shall deliver to Lender within thirty (30)
days after the request, an opinion of counsel stating that Obligor is in
compliance with the first sentence of this section 5.1(v).
(w) Consents. No consent, approval, authorization or order of, or
qualification with, any court or Governmental Authority is required in
connection with the execution, delivery or performance by Obligor of this
Agreement or the other Loan Documents.
(x) Environmental Matters. Except for matters set forth in the
Environmental Reports delivered to Lender prior to the date hereof:
(i) each Property in which Obligor owns an interest is in compliance
with all applicable Environmental Laws (which compliance includes, but is
not limited to, the possession by Obligor, the related Property Manager or
other appropriate Person of all Permits required in connection with the
ownership and operation of such Property under all Environmental Laws)
except where the failure to comply with such laws is not reasonably likely
to result in a Material Adverse Effect.
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(ii) There is no Environmental Claim pending or, to the actual
knowledge of Obligor, threatened, except as is not reasonably likely to
result in a Material Adverse Effect.
(iii) There have not been and are no past or present Releases of any
Hazardous Substance that are reasonably likely to form the basis of any
Environmental Claim except as is not reasonably likely to result in a
Material Adverse Effect.
(iv) Without limiting the generality of the foregoing, there is not
present at, on, in or under any such property, PCB-containing equipment,
asbestos or asbestos containing materials, underground storage tanks or
surface impoundments for Hazardous Substances, lead in drinking water
(except in concentrations that comply with all Environmental Laws), or
lead-based paint, except as is not reasonably likely to result in a
Material Adverse Effect.
(v) No Liens are presently recorded with the appropriate land records
under or pursuant to any Environmental Law with respect to any such
Property and, to Obligor's actual knowledge, no Governmental Authority has
been taking or is in the process of taking any action to subject such
Property to Liens under any Environmental Law.
(vi) There have been no material environmental investigations,
studies, audits, reviews or other analyses conducted by or that are in the
possession of Obligor in relation to the Property which have not been made
available to Lender.
(y) Assignment or Participation of Notes. In the event that Lender
notifies Obligor that a sale of any of the Notes or any interest in any thereof
(an "Assignment") (including, without limitation, a sale or transfer of any of
the Notes held by Lender to a trust, partnership, business trust or other
issuance vehicle accompanied by the simultaneous issuance by such vehicle of a
security backed by or representing an interest in such Notes, either alone or
together with other assets transferred by Lender or other parties), or a sale of
a participation interest in any of the Notes (a "Participation"), to another
party is desirable, then Obligor agrees reasonably to cooperate with Lender in
order to effectuate such Assignment or Participation, including in connection
with the Participation to be purchased by Xxxxxxx Xxxxx Mortgage Company or its
designee on the Closing Date; provided, however, that Obligor shall not be
required to incur any out-of-pocket cost or pay any amount under the Loan
Documents in connection with the origination of an Assignment or Participation,
other than the Participation to be sold to GSMC or its designee on the Closing
Date.
(z) Standards for Hotels. It shall perform such work as is necessary
to maintain standards at least as high as those standards that currently apply
to each Property and otherwise are in compliance with the standards of the
applicable Franchisor under the applicable Franchise Agreement or, if there is
no Franchise Agreement, then in the franchise agreement
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which is standard for such Franchisor. Any work to be completed in accordance
with this provision shall be completed despite the unavailability or
insufficiency, if any, of funds in the Deferred Maintenance and Environmental
Conditions Reserve Account or any reserve account maintained by such Borrower to
complete such work.
(aa) Hotel Open for Business. It shall operate (or cause the Property
Manager to operate) each Property owned directly or indirectly by it as a hotel
open for business under the applicable Franchise Agreement, or, if there is no
Franchise Agreement, under the brand name in place as of the date hereof.
(bb) Cause Performance by Other Parties. It shall use its best efforts
to cause the applicable Property Managers to perform their obligations under the
applicable Property Management Agreements.
(cc) Physical Condition. With respect to each Property in which it
owns an interest, it shall repair and restore such Property, including all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components (the "Improvements"), to the
extent that such Property and such Improvements are not in good condition, order
and repair in all respects material to the use, operation or value of such
Property.
(dd) Conflicts. It acknowledges that in the event of a conflict
between the provisions of the Operating Leases and the Loan Documents
(including, without limitation, provisions relating to reports and records,
financial plans, capital expenditures by the lessor under the Operating Leases,
liquor licenses, and destruction and eminent domain (including any termination
rights of any party in connection therewith)), the provisions of the Loan
Documents shall govern.
(ee) Deferred Maintenance and Environmental Remediation. Obligors
shall substantially complete the remediation of all Deferred Maintenance
Conditions and Environmental Conditions described on Schedule E hereto on or
before the dates set forth on such Schedule; provided that for purposes hereof,
substantial completion shall mean completion of the items in question other than
immaterial punch list items without regard to the $50,000 amount set forth in
the definition of "Substantial Completion."
(ff) Westin Mission Hills Closure Report. With respect to the Property
known as the Westin Mission Hills, Borrowers shall deliver to Lender as soon as
possible after the Closing a closure report from the relevant governmental
authority relating to the underground diesel storage tanks recently removed by
Borrowers from such Property.
Section 5.2 Operator Covenants. Each Operator covenants and agrees
with Lender that:
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(a) Operating Lease Payments. With respect to each Operating Lease, it
will make all Operating Lease Payments to the Clearing Account relating to the
Property which is the subject of such Operating Lease.
(b) Conflicts between Operating Leases and Loan Documents.
Notwithstanding the terms and provisions of the Operating Leases, in the event
of a conflict between the Operating Leases and the Loan Documents, such Operator
shall act in accordance with the terms of the Loan Documents.
ARTICLE VI
NEGATIVE COVENANTS
Section 6.1 Obligor's Negative Covenants. Each Obligor covenants and
agrees with Lender that it will not, directly or indirectly, violate or permit
the direct or indirect violation of any of the following:
(a) Operation of Property. Obligor shall not, without Lender's prior
consent (except as elsewhere herein expressly provided): (i) surrender or
terminate any Material Agreements which are service agreements or retail tenant
leases (unless the other party thereto is in material default and the
termination of such agreement would be commercially reasonable), (ii) surrender
or terminate any Property Management Agreements, or permit or suffer any
significant delegation or contracting of any Property Manager's duties (unless
the Property Manager is in material default and the termination of such
agreement would be commercially reasonable or unless the Property Manager is
being replaced with an Acceptable Property Manager pursuant to a commercially
reasonable property management agreement), (iii) increase or consent to the
increase of the amount of any charges under any Material Agreement, except as
provided therein or on an arms'-length basis and commercially reasonable terms;
(iv) otherwise modify, change, supplement, alter or amend, or waive or release
any of its rights and remedies under any Material Agreement in any material
respect, except on an arms'-length basis and commercially reasonable terms, or
(v) (1) surrender or terminate any Franchise Agreement to which it is a party or
permit any surrender or termination thereof or (2) amend, modify or alter the
terms of such Franchise Agreement in any material respect; provided, however,
that it may cancel, release, terminate or surrender any such Franchise Agreement
in connection with the substitution of an Acceptable Franchisor (such
cancellation, release, termination or surrender to be referred to as a
"Reflagging") only if (a) it shall deliver to Lender no later than thirty (30)
days prior to the proposed Reflagging an Officer's Certificate stating that it
shall cause the Property in which it owns an interest to come under a new
Franchise Agreement with an Acceptable Franchisor of equal or better class and
of the same type, (b) it shall deliver to Lender no later than thirty (30) days
prior to the proposed Reflagging a copy of such new Franchise Agreement
(including a Franchisor Letter) to Lender for its consideration, and such new
Franchise Agreement and Franchisor Letter shall be in form and substance
satisfactory to Lender in its sole discretion and with terms as favorable to
such Obligor as the Franchise Agreement in effect on the date hereof, (c) it
shall deliver to Lender no later than thirty (30) days prior to the proposed
Reflagging an Officer's Certificate stating the costs, nature, scope and timing
of the work or
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changes associated with such Reflagging, and Lender shall determine that any
Alteration, Expansion or other work or changes associated with such Reflagging
shall be reasonably likely to be completed no later than three years prior to
the Maturity Date, (d) with respect to all of the Properties, there shall be no
more than one such Reflagging each year, (e) Borrowers shall have received a
Rating Confirmation with respect to such Reflagging, and (f) in the event that
the costs associated with such Reflagging involve costs for any Alteration or
Expansion or any other construction, reserves or improvements which Lender
reasonably estimates to be greater than the Threshold Amount applicable to such
Property, Obligor shall deposit Eligible Collateral in an amount equal to such
unpaid costs into an escrow account which Eligible Collateral, in the case of an
Alteration, Expansion, construction or other improvement, shall be deposited and
released in accordance with Section 7.1(j) hereto, and in all other cases shall
be deposited in an escrow account and ultimately released to Borrower upon
delivery to Lender of (a) an Officer's Certificate stating that (i) to the
knowledge of the certifying person, no Event of Default has occurred and is
continuing and (ii) such unpaid costs have been paid and (b) copies of receipts
evidencing the same. Such escrow accounts shall be in the name of Lender and,
except to the extent required by law, such accounts shall be maintained in
accordance with the terms of Section 12.2 hereof. Notwithstanding anything
herein to the contrary, in no event shall a Reflagging take place during the
three years prior to the Maturity Date.
(b) Liens. Subject to Section 5.1(b)(ii) hereof, Obligor shall not,
without the prior written consent of Lender, create, incur, assume, permit or
suffer to exist any Lien on any portion of any Property in which it owns an
interest, except (i) Permitted Encumbrances, (ii) Liens created by or permitted
pursuant to the Loan Documents and (iii) Liens for Taxes or Other Charges not
yet delinquent.
(c) Dissolution. Obligor shall not dissolve, terminate, liquidate,
merge with or consolidate into another Person. Except as expressly permitted in
Section 6.1(h)(ii), Obligor shall not, and shall not permit or suffer any
Affiliate, directly or indirectly, to (i) transfer, lease or sell, in one
transaction or any combination of transactions, the assets or all or
substantially all of the properties or assets of Obligor, or (ii) cause the
managing member of Obligor, or any other member of Obligor to (A) dissolve, wind
up or liquidate or take any action, or omit to take any action, as a result of
which the Obligor or its managing member would be dissolved, wound up or
liquidated in whole or in part, (B) amend, modify, waive or terminate the
articles of incorporation or by-laws of the managing member of Obligor, or (C)
amend, modify, waive or terminate the operating agreement of Obligor, without,
in each instance, obtaining the prior written consent of Lender or Lender's
designee.
(d) Change in Business. Obligor shall not enter into any line of
business other than the ownership, maintenance, financing, refinancing and
operation of the Properties in which it owns an interest, (in each case subject
to the terms hereof), or make any material change in the scope or nature of its
business objectives or purposes, or undertake or participate in activities other
than the continuance of its present business.
(e) Debt Cancellation. Obligor shall not cancel or otherwise forgive
or release any claim or debt owed to Obligor by any Person, including any
arising under any of the Leases
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and Material Agreements except (i) with respect to the Leases and Material
Agreements, in accordance with and subject to the terms of this Agreement and
(ii) with respect to other matters, for adequate consideration in the ordinary
course of Obligor's business and on commercially reasonable terms, subject to
other restrictions contained herein or in any other Loan Document.
(f) Affiliate Transactions. Obligor shall not enter into, or be a
party to, any transaction with an Affiliate of Obligor or any of the members of
Obligor except in the ordinary course of business and on terms which are fully
disclosed to Lender in advance and are no less favorable to Obligor or such
Affiliate than would be obtained in a comparable arms'-length transaction with
an unrelated third party.
(g) Zoning and Uses. Obligor shall not, with respect to any Property
in which it owns an interest, (i) initiate or support any limiting change in the
permitted uses of the Property (or to the extent applicable, zoning
reclassification of the Property) or any portion thereof, seek any variance
under existing land use restrictions, laws, rules or regulations (or, to the
extent applicable, zoning ordinances) applicable to the Property or use or
permit the use of the Property in a manner that would result in such use
becoming a non-conforming use under applicable land-use restrictions (and, if
any, zoning ordinances) or that would violate the terms of any Lease, Operating
Agreement, Legal Requirements or any Permitted Encumbrance, (ii) modify, amend
or supplement any of the terms of any Permitted Encumbrance in a manner adverse
to the interests of Lender, (iii) modify, amend or supplement any of the terms
of any other Permitted Encumbrance in a manner adverse to the interest of
Lender, (iv) impose or permit or suffer the imposition of any restrictive
covenants, easements or encumbrances upon the Property in any manner that
adversely affects in any material respect the value or utility of the Property,
(v) execute or file any subdivision plat affecting the Property, institute, or
permit the institution of, proceedings to alter any tax lot comprising the
Property or (vi) permit or suffer the Property to be used by the public or any
Person in such manner as might make possible a claim of adverse usage or
possession or of any implied dedication or easement.
(h) Debt. Other than the Permitted Indebtedness, Obligor shall not
create, incur or assume any of the following: (i) indebtedness for borrowed
money or for the deferred purchase price of property or services; (ii)
indebtedness evidenced by a note, bond, debenture or similar instrument; (iii)
any letter or letters of credit issued for the account of Obligor to the extent
there are unreimbursed amounts drawn thereunder; (iv) indebtedness secured by a
Lien on any property owned by Obligor (whether or not such indebtedness has been
assumed) except obligations for impositions which are not yet due and payable;
(v) any obligation of Obligor directly or indirectly guaranteeing any
indebtedness or other obligation of any other Person in any manner; (vi) any
payment obligations of Obligor under any interest rate protection agreement
(including, without limitation, any interest rate swaps, caps, floors, collars
or similar agreements) and similar agreements; or (vii) any contractual
indemnity obligations of Obligor.
(i) Transfers.
(i) General Limitation. Unless such action is permitted by the
subsequent provisions of this Section 6.1(i) or by the terms of Section
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5.1(s) hereof and except for Permitted Encumbrances and Permitted
Indebtedness, Obligor will not, without Lender's prior written consent and
a Rating Confirmation with respect to the transfer or other matter in
question, (A) sell, assign, convey, transfer or otherwise dispose of or
encumber (except as otherwise provided herein) legal, Beneficial or
equitable interests in all or any part of any Property owned by it, the
Obligor or its managing member, (B) permit or suffer any owner, directly or
indirectly, of a legal, Beneficial or equitable interest in any Property
owned by it, the Obligor or its managing member to transfer such interest,
whether by transfer of stock or other Beneficial interest in any entity or
otherwise, (C) mortgage, hypothecate or otherwise encumber or grant a
security interest in all or any part the legal, Beneficial or equitable
interests in all or any part of any Property owned by it, the Obligor or
managing member, or (D) file a declaration of condominium with respect to
any Property owned by it.
(ii) Sale of the Property. Except as may be set forth elsewhere in
this Section 6.1(i), Borrowers shall have the one-time right with respect
to each Property, subject to a Rating Confirmation with respect to such
transaction (and subject to the consent in writing of one hundred percent
(100%) of the holders of the Certificates, in the case of a sale of the
Properties known as the Phoenician and the Sheraton San Diego resulting in
less than 51% of the direct or indirect legal, Beneficial and equitable
interests in the applicable Borrowers and such Properties being owned by
Sponsors) (or Lender's consent, in its sole discretion, if prior to a
Securitization), to sell, assign, convey, transfer or otherwise dispose of
legal or equitable title to or any interest in such Property, subject to
the Loan and at any time prior to the Anticipated Repayment Date if:
(A) after giving effect to the proposed transaction:
(1) the Property will be owned by a Single Purpose
Entity (the "Permitted Transferee") which will be in
compliance with the representations, warranties and
covenants contained in Section 4.1(cc) hereof (as if the
Permitted Transferee shall have remade all of such
representations, warranties and covenants as of, and after
giving effect to, the proposed transaction), and which shall
have executed and delivered to Lender an assumption
agreement in form and substance acceptable to Lender,
evidencing the proposed transferee's agreement to act as the
Borrower and to abide and be bound by all the terms,
covenants and conditions set forth in this Agreement, the
Notes, the Security Instrument and the other Loan Documents,
together with such legal opinions and title
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insurance endorsements as may be reasonably requested by
Lender;
(2) an Acceptable Property Manager shall continue to
act as Property Manager;
(3) no Event of Default shall have occurred and be
continuing;
(4) at least 51% (or, in the case of the Properties
known as the Phoenician and the Sheraton San Diego Hotel &
Marina, 10%) of the direct or indirect legal, Beneficial and
equitable interests in Borrower (i.e., the Permitted
Transferee) and such Property shall be owned by Sponsors,
and all of such interests which are not held by Sponsors
shall be held by one or more Approved Transferees;
(5) Sponsor shall continue to possess Management
Control of such Property and the Borrower owning such
Property; and
(B) prior to any such transaction, the proposed transferee shall
deliver to Lender an Officer's Certificate stating that either (x) such
transferee is an employee pension plan or other retirement arrangement or
account that is subject to Title I of ERISA or is a Plan and the
obligations under this Agreement are not, and the exercise of rights under
this Agreement will not, constitute a non-exempt prohibited transaction; or
(y) the transferee is a "governmental plan" (as defined in Section 3(32) of
ERISA), and the obligations under this Agreement, and the exercise of
rights under this Agreement, do not and will not violate any applicable
state statutes regulating investments by or fiduciary obligations with
respect to governmental plans; or (z) the proposed transferee is not an
Employee Benefit Plan or a "governmental plan" or a Plan, and (i) such
proposed transferee is not subject to state statutes regulating investments
by or fiduciary obligations with respect to "governmental plans" and (ii)
the underlying assets of the proposed transferee do not, for purposes of
ERISA, constitute assets of the Employee Benefit Plans holding an equity
interest in such proposed transferee; and
(C) Lender shall have received payment of, or reimbursement for, all
reasonable costs and expenses incurred by Lender (and the Servicer) in
connection therewith (including, without limitation, reasonable attorneys'
fees and disbursements).
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(iii) Transfers of Interests in Borrower. If no Event of Default shall
have occurred and be continuing, the holder of any direct or indirect
interest in Borrower may transfer such interest to any Person if after
giving effect to such transfer:
(A) the Properties in which Borrower owns an interest, will be
directly owned by a Single Purpose Entity in compliance with the
representations, warranties and covenants in Section 4.1(cc) hereof
(as if Borrower shall have remade all of such representations,
warranties and covenants as of, and after giving effect to, the
transfer);
(B) Sponsor directly or indirectly owns at least fifty-one
percent (51%) of the legal, Beneficial and equity interests in
Borrower and the remaining interests in such Borrower are owned by one
or more Approved Transferees and each such proposed transfer has been
affirmed by a Rating Confirmation; provided that, after giving effect
to any transfer described in the immediately preceding clause, in no
event shall any Person other than Sponsor exercise Management Control
over the Borrower or any Property owned by such Borrower;
(C) if there has been a transfer of any portion of any managing
member's interest in Borrower, Borrower shall have first delivered to
Lender an Officer's Certificate and legal opinion of the types
described in clause 6.1(i)(iv) below; and
(D) if there has been a transfer of any direct interest in the
managing member of Borrower which managing member is the requisite
Single Purpose Entity, such transfer will require an Officer's
Certificate and legal opinion of the types described in clause
6.1(i)(iv) below.
(iv) Notice Required. Not less than five (5) Business Days prior to
the closing of any transaction permitted under the provisions of this
Section 6.1(i), Borrower shall deliver or cause to be delivered to Lender
(A) an Officer's Certificate describing the proposed transaction and
stating that such transaction is permitted hereunder and under the other
Loan Documents, together with any documents upon which such Officer's
Certificate is based, and (B) a legal opinion of counsel to Borrower or the
transferee selected by either of them (to the extent approved by Lender and
the Rating Agencies), in form and substance consistent with similar
opinions then being required by the Rating Agencies, confirming, among
other things, that the assets of the Borrower, and of its managing member,
will not be substantively consolidated with
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the assets of such owners of Borrower as Lender or the Rating Agencies may
specify, in the event of a bankruptcy or similar proceeding involving such
owners.
(v) Sale of Equipment. Notwithstanding the above provisions of this
Section 6.1(i), Obligor may transfer or dispose of Equipment that is either
being replaced or that is no longer necessary in connection with the
operation of any owned by Obligor, free from the interest of Lender under
this Agreement or any other Loan Document, provided such transfer or
disposal (when compared to the non-transfer or non-disposal of such
Equipment) will not materially adversely affect the value of the related
Property, will not impair the utility thereof and will not result in a
reduction or abatement of, or right of offset against, the rentals or other
amounts payable under any Lease or any Operating Agreement, in either case
as a result thereof, provided that any new Equipment acquired by Obligor
(and not so disposed of) shall be subject to the interest of Lender under
this Agreement and the other Loan Documents unless leased to Obligor (in
which event, Lender shall be made a collateral assignee of Obligor's
interest in such lease (but, unless expressly subsequently assumed by
Lender, Lender shall have no obligations under Obligor's interest
therein)).
(j) Nonexempt ERISA Transactions. Obligor shall not engage in a
nonexempt prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code, as such sections relate to Obligor, or in any transaction that
would cause any obligation or action taken or to be taken hereunder (or the
exercise by Lender of any of its rights under the Notes, this Agreement, the
Security Instruments or any other Loan Document) to be a non-exempt prohibited
transaction under ERISA.
The Obligor shall not, and it shall not permit any ERISA Affiliate to,
(i) permit any Plan to incur any "accumulated funding deficiency" (within the
meaning of Section 302 of ERISA or Section 412 of the Code), whether or not
waived, or (ii) permit the Underfunding with respect to all Plans which have any
Underfunding to give rise to a Material Adverse Effect.
(k) Misapplication of Funds. Obligor shall not distribute any
Operating Income from any Property in which it owns an interest or any Proceeds
in violation of the provisions of this Agreement, fail to remit amounts to the
Deposit Account or any of the Collateral Accounts as required under this
Agreement, or misappropriate any security deposits or portion thereof.
(l) Assignment of Licenses and Permits. Except in connection with a
transfer permitted under Section 6.1(i) hereof, or otherwise required by law,
Obligor shall not assign or transfer any of its interest in any Permits
pertaining to any Property in which it owns an interest, or assign, transfer or
remove or permit any other Person to assign, transfer or remove any records
pertaining to such Property.
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(m) Place of Business. Obligor shall not change its chief executive
office or its principal place of business without giving Lender at least 30
days' prior written notice thereof and promptly providing Lender such
information as Lender may reasonably request in connection therewith.
(n) Modifications and Waivers. Obligor shall not:
(i) Amend, modify or surrender any material rights or remedies under
any of the Leases with Major Tenants without the approval of the Lender;
(ii) Enter into any Lease which does not provide that it is subject
and subordinate to the lien of the Security Instrument and under which the
Tenant agrees to attorn to Lender;
(iii) amend, modify or surrender any material rights under or
terminate any Material Agreement without the consent of Lender in its
Discretion;
(iv) amend, modify or terminate the operating agreement of Obligor in
any manner that would reasonably be expected to have a Material Adverse
Effect; or
(v) amend, modify or surrender or waive any material rights or
remedies under, or enter into or exercise an option to terminate, any other
agreement material to the value or operation of the Properties unless, in
the case of any such termination, Obligor replaces the terminated agreement
within a commercially reasonable period with another agreement which
provides substantially equivalent benefits to Obligor, on terms and
conditions no worse to Obligor, than the corresponding benefits, terms and
conditions which applied under the agreement replaced.
(o) The Obligors owning an interest in the Property known as the
Westin Mission Hills shall not grant any easement or other encumbrance on
such Property or otherwise transfer, sell or hypothecate any portion of
such Property to the property developers known as the Toll Brothers or to
any other property developers of adjacent properties, unless such easement
or encumbrance is limited to the perimeter of such Property (provided,
however, that such Obligors may grant an easement or encumbrance for an
access road and may construct a golf cart tunnel over which such access
road may run) but only if, in each such case, the granting of such easement
has no impact on the use, operation or value of the Property, as evidenced
by the delivery by such Obligors of an appraisal and a determination by
Lender in its Discretion that the construction and use of such road shall
not interrupt hotel services, facilities or amenities and shall not
encroach on any of the improvements situated on the
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Property, including, without limitation, buildings, parking lots, golf
courses, swimming pools and other amenities. Lender in its Discretion may
additionally require a Qualified Survey to confirm that such road shall not
encroach on improvements located on such Property. In the event that
Borrowers comply with each of the conditions set forth in this paragraph
and grant only the easements which conform thereto and do not grant any
other easement with respect to such Property, then Lender agrees to
subordinate its Security Instruments relating to such Property to such
easements.
(p) Obligors shall not take more than 2% of all rooms at any single
Property out of service in connection with Material Alterations or
Expansions during periods which in the applicable location have
historically been "peak seasons."
(q) None of the real or personal property currently owned by Borrowers
or Operator shall be transferred to or otherwise owned by Operator II. If
at any time Operator II comes to own such real or personal property,
Borrowers and Operator II shall promptly so notify Lender and Operator II
shall execute a security agreement and/or mortgage, as applicable, in
respect of such real or personal property, which agreement or mortgage
shall constitute additional collateral for the Loan.
Section 6.2 Operator's Negative Covenants. Each Operator covenants and
agrees with Lender that it will not, directly or indirectly, assign, transfer,
or encumber any interest in the Operating Lease to which it is a party or permit
or agree to any supplement, modification, amendment, renewal, extension or
subordination of such Operating Lease, or accept any waiver from the lessor
thereunder.
ARTICLE VII
ALTERATIONS AND EXPANSIONS; LEASING
Section 7.1 Alterations and Expansions. No Obligor shall perform or
undertake any Alteration or Expansion, except in accordance with the following
terms and conditions:
(a) The Alteration or Expansion shall be undertaken in accordance with
the applicable provisions of this Agreement, the other Loan Documents, the
Operating Agreements and the Leases, and all Legal Requirements.
(b) No Event of Default shall have occurred and be continuing or shall
occur as a result of such action.
(c) A Material Alteration or Material Expansion shall not be commenced
unless Obligors have obtained the prior approval of Lender (which approval shall
not be
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unreasonably withheld or delayed). Any request for approval of a Material
Alteration or Material Expansion shall be in writing and accompanied by a
reasonably detailed description of such Material Alteration or Material
Expansion.
(d) A Material Alteration or Material Expansion shall be conducted
under the supervision of an Independent Architect or Engineer and shall not be
commenced by or on behalf of any Obligor at any Property unless (i) the
applicable Obligor shall have caused to be delivered to Lender detailed plans
and specifications and cost estimates therefor, which plans, specifications and
estimates shall have been prepared and approved in writing by the Independent
Architect, and (ii) Lender shall have approved such plans, specifications and
estimates in writing, which approval (A) shall be deemed given with respect to
cost estimates for each Material Alteration and Material Expansion described in
the Approved Budget, and (B) shall otherwise not be unreasonably withheld or
delayed by Lender.
(e) Any approval of Lender required in clause (c) or (d) above
accompanied by the items referred to in clause (c) or (d) above shall be deemed
given if Lender shall not have notified the relevant Obligor in writing of its
disapproval within fifteen (15) Business Days after such Obligor has given
Lender written notice that at least fifteen (15) Business Days have elapsed
since such first written request was given and which is captioned on the first
page of such request with the following legend in bold face type: "WARNING:
FAILURE TO RESPOND TO THIS COMMUNICATION WITHIN FIFTEEN (15) BUSINESS DAYS OF
THE DATE OF RECEIPT OF THIS NOTICE WILL BE DEEMED CONSENT TO THE ACTIONS FOR
WHICH YOUR CONSENT IS REQUESTED HEREIN."
(f) Other than in connection with any Restoration, the Alteration or
Expansion may not in and of itself, either during the Alteration or Expansion or
upon completion, adversely affect the fair market value of the relevant Property
or the annual Net Operating Income, taking into account the required escrows (or
completion bond) provided under Section 7.1(j)(i) below; provided that if, as
reasonably determined by the Lender, such Alteration or Expansion would
adversely affect the annual Net Operating Income, then in order to proceed with
the Alteration or Expansion, the Lender may, in its sole discretion, as a
condition to granting the consent to the Alteration or Expansion, require the
Obligor to deliver to Lender Eligible Collateral in the total amount of the
estimated reduction in Net Operating Income resulting from the Alteration or
Expansion as additional security for the Debt, which Eligible Collateral shall
be returned to Obligor after completion of the Alteration or Expansion if the
reduction in Net Operating Income has been restored and no Event of Default has
occurred and is continuing.
(g) All work done in connection with any Alteration or Expansion shall
be performed with due diligence to Final Completion in a good and workmanlike
manner, all materials used in connection with any Alteration or Expansion shall
be not less than the standard of quality of the materials generally used at such
Property as of the date hereof (or, if greater, the then-current customary
quality in the submarket in which such Property is located) and all work shall
be performed and all materials used in accordance with all applicable Legal
Requirements and Insurance Requirements.
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(h) The cost of any Alteration or Expansion shall be promptly and
fully paid for by Obligor, subject to the next succeeding sentence. No payment
made to any contractor, subcontractor, materialman, supplier, engineer,
architect, project manager or other Person who renders services or furnishes
materials in connection with an Alteration, Expansion or Restoration shall
exceed ninety percent (90%) of the first 50% of the value of such work performed
from time to time and materials furnished and incorporated into the
Improvements.
(i) Other than in connection with any Restoration, the Alteration or
Expansion will not, (i) under any then existing Lease with a Major Tenant,
entitle one or more Major Tenants to terminate their respective Leases or any
operating covenant under any Material Agreements or xxxxx rent or otherwise give
rise to any other rights of lessees or such other parties that would have a
Material Adverse Effect on the value of such Property.
(j) With respect to any Material Alteration or Material Expansion:
(i) Obligor shall have delivered to Lender Eligible Collateral in an
amount equal to at least the total estimated remaining unpaid costs of such
Material Alteration or Material Expansion which Eligible Collateral shall
be held by Lender as security for the Debt and released to the applicable
Obligor as such work progresses in accordance with Section 7.1(j)(iii)
hereof; provided, however, in the event that any Material Alteration or
Material Expansion shall be made in conjunction with any Restoration with
respect to which Obligor shall be entitled to withdraw Proceeds pursuant to
Section 8.1.2(b) hereof (including any Proceeds remaining after completion
of such Restoration), the amount of the Eligible Collateral to be furnished
pursuant hereto need not exceed the aggregate cost of such Restoration and
such Material Alteration or Material Expansion (in either case, as
estimated by the Independent Architect) less the sum of the amount of any
Proceeds which Obligor is entitled to withdraw pursuant to Section 8.1
hereof;
(ii) Prior to commencement of construction of such Material Alteration
or Material Expansion, Obligor shall deliver to Lender a schedule (which
shall be concurred in by the Independent Architect) setting forth the
projected stages of completion of such Alteration or Expansion and the
corresponding amounts expected to be due and payable by or on behalf of
Obligor in connection with such completion, such schedule to be updated
quarterly by Obligor (and concurred with by an Independent Architect)
during the performance of such Alteration or Expansion.
(iii) Any Eligible Collateral that Obligor delivers to Lender pursuant
hereto (and the proceeds of any such Eligible Collateral) shall be invested
(to the extent such Eligible Collateral can be invested) by Lender as
directed by Obligor in Permitted Investments for a period of time
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consistent with the date on which Obligor notifies Lender that Obligor
expects to request a release of such Eligible Collateral in accordance with
the next succeeding sentence. From time to time as the Alteration or
Expansion progresses, the amount of any Eligible Collateral so furnished
may, upon the written request of Obligor to Lender, be withdrawn by Obligor
and paid or otherwise applied by or returned to Obligor in an amount equal
to the amount Obligor would be entitled to so withdraw if Section 8.1.2(e)
hereof were applicable, and any Eligible Collateral so furnished which is a
Credit Facility may be reduced by Obligor in an amount equal to the amount
Obligor would be entitled to so reduce if Section 8.1.2(e) hereof were
applicable, subject, in each case, to the satisfaction of the conditions
precedent to withdrawal of funds or reduction of the Credit Facility set
forth in Section 8.1.2(e) hereof. In connection with the above-described
quarterly update of the projected stages of completion of the Material
Alteration or Material Expansion (as concurred with by an Independent
Architect), Obligor shall increase (or be permitted to decrease, as
applicable) the Eligible Collateral then deposited with Lender as necessary
to comply with Section 7.1(j)(i) hereof.
(iv) At any time after Final Completion of such Alterations or
Expansions, the whole balance of any Cash deposited with Lender pursuant to
Section 7.1(j) hereof then remaining on deposit may be withdrawn by Obligor and
shall be paid by Lender to Obligor, and any Eligible Collateral so deposited
shall, to the extent it has not been called upon, reduced or theretofore
released, be released by Lender to Obligor, within ten (10) days after receipt
by Lender of an application for such withdrawal and/or release together with an
Officer's Certificate, and as to the following clauses (A) and (B) of this
clause also a certificate of the Independent Architect, setting forth in
substance as follows:
(A) that such Alteration(s) or Expansions has been completed in
accordance with any plans and specifications therefor previously filed
with Lender under Section 7.1(c) hereof;
(B) that to the knowledge of the certifying Person, (x) such
Alteration(s) or Expansion(s) has been completed in compliance with
all Legal Requirements, and (y) to the extent required for the legal
use or occupancy of the portion of the Property affected by such
Alteration(s) or Expansion(s), Obligor has obtained a temporary or
permanent certificate of occupancy (or similar certificate) or, if no
such certificate is required, a statement to that effect;
(C) that to the knowledge of the certifying Person, all amounts
that Obligor is or may become liable to pay in respect of
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such Alteration(s) or Expansion(s) through the date of the
certification have been paid in full or adequately provided for and,
to the extent that such are customary and reasonably obtainable by
prudent property owners in the area where the Property are located,
that Lien waivers have been obtained from the general contractor and
subcontractors performing such Alteration or Expansion or at its sole
cost and expense, Obligor shall cause a nationally recognized title
insurance company to deliver to Lender an endorsement or title update,
as applicable, to the Qualified Title Policy, updating such policy and
insuring over such Liens without further exceptions to such policy
other than Permitted Encumbrances, or shall, at its sole cost and
expense, cause a reputable title insurance company to deliver a
lender's title insurance policy, in such form, in such amounts and
with such endorsements as the Qualified Title Policy, which policy
shall be dated the date of completion of the Material Alteration and
shall contain no exceptions other than Permitted Encumbrances;
provided, however, that if, for any reason, Obligor is unable to
deliver the certification required by this clause (C) with respect to
any costs or expenses relating to the Alteration or Expansion, then,
assuming Obligor is able to satisfy each of the other requirements set
forth in clauses (A) and (B) above, Obligor shall be entitled to the
release of the difference between the whole balance of such Eligible
Collateral and the total of all costs and expenses to which Obligor is
unable to certify; and
(D) that to the knowledge of the certifying Person, no Event of
Default has occurred and is continuing.
(v) At any time prior to Final Completion but after Substantial
Completion of such Alterations or Expansions, the whole balance of any Cash
(less 110% of the amount of the Remaining Work, as such amount is reasonably
estimated in writing by an Independent Architect) (the "Cash Holdback Amount")
but in no event less than zero, deposited with Lender pursuant to Section 7.1(j)
hereof then remaining on deposit, may be withdrawn by Obligor and shall be paid
by Lender to Obligor, and any Eligible Collateral so deposited (less an amount
of Eligible Collateral totalling the difference between the Cash Holdback Amount
and the balance of any Cash deposited with Lender pursuant to Section 7.1(j)
hereof then remaining on deposit) (the "Collateral Holdback Amount") shall, to
the extent it has not been called upon, reduced or theretofore released, be
released by Lender to Obligor, in each case within ten (10) days after receipt
by Lender of an application for such withdrawal and/or release together with an
Officer's Certificate, and as to the following
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clauses (A) and (B) of this clause also a certificate of the Independent
Architect, setting forth in substance as follows:
(A) that such Alteration(s) or Expansions has been completed in
accordance with any plans and specifications therefor previously filed
with Lender under Section 7.1(c) hereof (other than the Remaining
Work);
(B) that to the knowledge of the certifying Person, (x) such
Alteration(s) or Expansion(s) has been completed in compliance with
all Legal Requirements, and (y) to the extent required for the legal
use or occupancy of the portion of the Property affected by such
Alteration(s) or Expansion(s), Obligor has obtained a temporary or
permanent certificate of occupancy (or similar certificate) or, if no
such certificate is required, a statement to that effect;
(C) that to the knowledge of the certifying Person, all amounts
that Obligor is or may become liable to pay in respect of such
Alteration(s) or Expansion(s) through the date of the certification
have been paid in full or adequately provided for and, to the extent
that such are customary and reasonably obtainable by prudent property
owners in the area where the Property are located, that Lien waivers
have been obtained from the general contractor and subcontractors
performing such Alteration or Expansion or at its sole cost and
expense, Obligor shall cause a nationally recognized title insurance
company to deliver to Lender an endorsement or title update, as
applicable, to the Qualified Title Policy, updating such policy and
insuring over such Liens without further exceptions to such policy
other than Permitted Encumbrances, or shall, at its sole cost and
expense, cause a reputable title insurance company to deliver a
lender's title insurance policy, in such form, in such amounts and
with such endorsements as the Qualified Title Policy, which policy
shall be dated the date of Substantial Completion of the Material
Alteration and shall contain no exceptions other than Permitted
Encumbrances; provided, however, that if, for any reason, Obligor is
unable to deliver the certification required by this clause (C) with
respect to any costs or expenses relating to the Alteration or
Expansion, then, assuming Obligor is able to satisfy each of the other
requirements set forth in clauses (A) and (B) above, Obligor shall be
entitled to the release of the difference between the whole balance of
such Eligible Collateral and the total of all costs and expenses to
which Obligor is unable to certify; and
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(D) that to the knowledge of the certifying Person, no Event of
Default has occurred and is continuing.
Upon completion of the Remaining Work, Lender shall release to Obligor
the Cash Holdback Amount and the Collateral Holdback Amount within ten (10)
days after receipt by it of an application for such withdrawal and/or
release together with an Officer's Certificate setting forth in substance
as follows (provided, that Lender shall be entitled to keep the Cash
Holdback Amount and the Collateral Holdback Amount until the following
documents are received by it):
(A) that the Remaining Work has been completed in accordance with
any plans and specifications therefor previously filed with Lender
under Section 7.1(c) hereof;
(B) that to the knowledge of the certifying Person, the Remaining
Work has been completed in compliance with all Legal Requirements;
(C) that to the knowledge of the certifying Person, all amounts
that Obligor is or may become liable to pay in respect of the
Remaining Work through the date of the certification have been paid in
full or adequately provided for and, to the extent that such are
customary and reasonably obtainable by prudent property owners in the
area where the Property are located, that Lien waivers have been
obtained from the general contractor and subcontractors performing
such Remaining Work or, in the alternative, at its sole cost and
expense, Obligor shall cause a nationally recognized title insurance
company to deliver to Lender an endorsement or title update, as
applicable, to the Qualified Title Policy, updating such policy and
insuring over such Liens without further exceptions to such policy
other than Permitted Encumbrances, or shall, at its sole cost and
expense, cause a reputable title insurance company to deliver a
lender's title insurance policy, in such form, in such amounts and
with such endorsements as the Qualified Title Policy, which policy
shall be dated the date of completion of the Remaining Work and shall
contain no exceptions other than Permitted Encumbrances; and
(D) that to the knowledge of the certifying Person, no Event of
Default has occurred and is continuing.
(k) Notwithstanding anything in the foregoing to the contrary, any
expansion or alteration contemplated by the approved capital budget attached
hereto as Schedule 9.2 shall not (during the first five years after Closing) be
considered a Material Alteration or Expansion for which Lender's consent is
required. In addition, during the first two years after Closing, any
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Alteration or Expansion shall be exempt from the requirement to deposit Eligible
Collateral, as set forth in Section 7.1(j). Except as set forth in the preceding
two sentences, any other Material Alteration or Material Expansion shall require
the consent of Lender and the deposit of Eligible Collateral pursuant to the
terms of Section 7.1(j) hereof.
Section 7.2 Inspections; Undertaking of Work. (a) (i) Obligors shall
permit Lender and Lender's agents and representatives (including Servicer,
Lender's engineer, architect or inspector) to enter onto each Property during
normal business hours after reasonable notice to inspect the progress of any
work being performed by or on behalf of any Obligor, including any Alterations
or Expansions, and all materials being used in connection therewith, to examine
all plans and shop drawings relating thereto and, following an Event of Default,
to undertake and complete any work required to be undertaken in accordance with
the terms hereof. Obligors shall cause all contractors and subcontractors to
cooperate with Lender or Lender's representatives or such other persons
described above in connection with inspections described in this Section 7.2 or
the undertaking or completion of work pursuant to this Section 7.2.
(ii) Lender may inspect any Property in connection with any work
undertaken by or on behalf of a Obligor at any Property (subject to the
limitations set forth in Section 7.2(a) above) prior to disbursing funds from
any reserve account or otherwise, for such work. For any work (or series of
related items of work) at any Property costing in excess of the Threshold Amount
for such Property, Lender, at the applicable Obligor's expense, may require that
such inspection be conducted by an appropriate independent qualified
professional selected by Lender and/or may require a copy of a certificate of
completion by an independent qualified professional acceptable to Lender prior
to the disbursement of any amounts therefor. The applicable Obligor shall pay a
reasonable inspection fee for each inspection, conducted by an independent
qualified professional.
(b) Each Obligor shall collaterally assign to Lender, as additional
security for the Loan, all rights and claims such Obligor may have against all
Persons supplying labor or materials in connection with any Alterations or
Expansions; provided, however, Lender may not pursue any such right or claim
unless an Event of Default has occurred and remains uncured.
Section 7.3 Leasing.
(a) Obligor shall observe the covenants set forth in Section 5.1(s)
hereof.
(b) At Obligor's request, Lender shall execute and deliver a
Subordination, Non-disturbance and Attornment Agreement, among Lender, Obligor
and any Tenant under a Lease permitted under Section 5.1(s) hereof, provided
that such Tenant also executes and delivers such agreement in favor of Lender.
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ARTICLE VIII
CASUALTY AND CONDEMNATION
Section 8.1 Insurance; Casualty and Condemnation.
8.1.1 Insurance.
(a) Each Borrower, at its sole cost and expense, for the mutual
benefit of such Borrower and Lender, shall keep each Property in which it owns
an interest insured and obtain and maintain policies of insurance insuring
against loss or damage by standard perils included within the classification
"All Risks of Physical Loss" including earthquake damage. Such insurance (i)
shall be in an aggregate amount equal to the then full replacement cost of each
such Property and the Equipment (without deduction for physical depreciation)
and (ii) shall have deductibles no greater than $100,000 (with deductibles for
wind and earthquake coverage of no greater than 5% of replacement cost). The
policies of insurance carried in accordance with this paragraph shall be paid
annually in advance and shall contain a "Replacement Cost Endorsement" with a
waiver of depreciation.
(b) Such Borrower, at its sole cost and expense, for the mutual
benefit of such Borrower and Lender, shall also obtain and maintain the
following policies of insurance:
(i) Flood insurance if any part of each such Property is located in an
area identified by the Federal Emergency Management Agency as an area
federally designated a "100 year flood plain" and (A) flood insurance is
generally available at reasonable premiums and in such amount as generally
required by institutional lenders for similar properties or (B) if not so
available from a private carrier, from the federal government at
commercially reasonable premiums to the extent available. In either case,
the flood insurance shall be in an amount at least equal to the Loan Amount
or the maximum limit of coverage available with respect to such Property
under said program, whichever is less;
(ii) Comprehensive general liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and containing minimum limits per occurrence
of $2,000,000 with a $4,000,000 general aggregate for any policy year. In
addition, at least $100,000,000 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 related court costs and
attorneys' fees and disbursements;
(iii) Rental loss and/or business interruption insurance in an amount
sufficient to avoid any co-insurance penalty and equal to the greater of
(A) the estimated gross revenues from the operation of such Property
(including (x) the total payable under the Leases and (y) the total
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amount of all other amounts to be received by Borrower or third parties
that are the legal obligation of the Tenants), net of nonrecurring
expenses, for a period of up to the next succeeding eighteen (18) months,
or (B) the projected Operating Expenses (including debt service) for the
maintenance and operation of the Property for a period of up to the next
succeeding eighteen (18) months as the same may be reduced or increased
from time to time due to changes in such Operating Expenses. The amount of
such insurance shall be increased from time to time as and when the Rents
increase or the estimate of (or the actual) gross revenue, as may be
applicable, increases or decreases to the extent Rents or the estimates of
gross revenue decrease;
(iv) Insurance against loss or damage from (A) leakage of sprinkler
systems and (B) explosion of steam boilers, air conditioning equipment,
high pressure piping, machinery and equipment, pressure vessels or similar
apparatus now or hereafter installed in any of the Improvements (without
exclusion for explosions) and insurance against loss of occupancy or use
arising from any breakdown, in such amounts as are generally available at
reasonable premiums and are generally required by institutional lenders for
properties comparable to each such Property;
(v) Worker's compensation insurance with respect to all employees of
Borrower as and to the extent required by any Governmental Authority or
Legal Requirement and employer's liability coverage of at least $2,000,000
which is scheduled to the excess and/or umbrella liability insurance as
referenced in clause (ii) above;
(vi) 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
such Property against such risks (including fire and extended coverage and
collapse of the Improvements to agreed limits) as Lender may reasonably
request, in form and substance reasonably acceptable to Lender;
(vii) Coverage to compensate for the cost of demolition and the
increased cost of construction for each such Property in an amount
reasonably satisfactory to Lender;
(viii) If required by Lender, earthquake insurance in an amount equal
to the probable maximum loss (as determined by Lender in its sole
discretion) of such Property, provided, that any credit enhancement
proposed to be provided by or on behalf of Borrower in connection with the
deductible on such earthquake insurance shall be subject to the prior
approval of the Rating Agencies (or Lender's approval, prior to a
Securitization); and
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(ix) Such other insurance as may from time to time be reasonably
required by Lender in order to protect its interests, including, without
limitation, law and ordinance coverage with respect to the Property.
(c) All policies of insurance (the "Policies") required pursuant to
this Section 8.1.1 shall be issued by companies approved by Lender and licensed
to do business in the state where the Property is located. Further, unless
otherwise approved by Lender and the Rating Agencies in writing, the issuer(s)
of the Policies required under this Section 8.1.1 shall have a claims paying
ability rating of "AA" or better by the Rating Agencies and an A.M. Best rating
of A/X or better, except that the issuer(s) of the Policies required under
Section 8.1.1(b)(viii) hereof shall have a claims paying ability rating of "A"
or better by the Rating Agencies and an A.M. Best rating of A/X or better. The
Policies (i) shall name Lender and its successors and/or assigns as their
interest may appear as an additional insured or as a loss payee (except that in
the case of general liability insurance, Lender shall be named an additional
insured and not a loss payee); (ii) shall contain a Non-Contributory Standard
Lender Clause and, except with respect to general liability insurance, a
Lender's Loss Payable Endorsement, or their equivalents, naming Lender as the
person to which all payments made by such insurance company shall be paid; (iii)
shall include effective waivers by the insurer of all claims for insurance
premiums against all loss payees, additional insureds and named insureds (other
than such Borrower) and all rights of subrogation against any loss payee,
additional insured or named insured; (iv) shall be assigned to Lender; (v)
except as otherwise provided above, shall be subject to a deductible, if any,
not greater in any material respect, in proportion to the coverage maintained,
than the deductible for such coverage on the date hereof; (vi) shall contain
such provisions as Lender deems reasonably necessary or desirable to protect its
interest including endorsements providing that neither Borrower, Lender nor any
other party shall be a co-insurer under said Policies and that no modification,
reduction, cancellation or termination in amount of, or material change (other
than an increase) in, coverage of any of the Policies shall be effective until
at least ten (10) days after receipt by each named insured, additional insured
and loss payee of written notice thereof or ten (10) days after receipt of such
notice with respect to nonpayment of premium (provided, however, any insurance
policies existing prior to and which are in full force and effect as of Closing
may have a notice period of no less than ten (10) days only until such time as
such policies are renewed, at which time such notice periods shall be no less
than thirty (30) days); (vii) shall permit Lender to pay the premiums and
continue any insurance upon failure of Borrower to pay premiums when due, upon
the insolvency of Borrower or through foreclosure or other transfer of title to
the Property (it being understood that Borrower's rights to coverage under such
policies may not be assignable without the consent of the insurer); (viii) shall
provide that any proceeds shall be payable to Lender and that the insurance
shall not be impaired or invalidated by virtue of (A) any act, failure to act,
negligence of, or violation of declarations, warranties or conditions contained
in such policy by Borrower, Lender or any other named insured, additional
insured or loss payee, except for the willful misconduct of Lender knowingly in
violation of the conditions of such policy, (B) the occupation, use, operation
or maintenance of the Property for purposes more hazardous than permitted by the
terms of the Policy, (C) any foreclosure or other proceeding or notice of sale
relating to the related Property or (D) any change in the possession of the
related Property without a change in the identity of the
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holder of actual title to such Property (provided that with respect to items (C)
and (D), any notice requirements of the applicable Policies are satisfied); and
(ix) shall contain ordinance and law coverage.
(d) Insurance Premiums; Certificates of Insurance.
(i) Each Borrower shall pay the premiums for such Policies (the
"Insurance Premiums" ) as the same become due and payable and shall furnish
to Lender the receipts for the payment of the Insurance Premiums or other
evidence of such payment reasonably satisfactory to Lender (provided,
however, that such Borrower is not required to furnish such evidence of
payment to Lender if such Insurance Premiums are to be paid by Lender
pursuant to the terms of this Agreement). Within thirty (30) days after
request by Lender, such Borrower shall obtain such increases in the amounts
of coverage required hereunder as may be requested by Lender or as may be
requested by the Rating Agencies, taking into consideration changes in
liability laws, changes in prudent customs and practices, and the like. In
the event such Borrower satisfies the requirements under this Section 8.1.1
through the use of a Policy covering properties in addition to the Property
owned by such Borrower, then (unless such policy is provided in
substantially the same manner as it is as of the date hereof), Borrower
shall provide evidence satisfactory to Lender that the Insurance Premiums
for such Property are separately allocated under such Policy to the
Property and that payment of such allocated amount (A) shall maintain the
effectiveness of such Policy as to the Property and (B) shall otherwise
provide the same protection as would a separate policy that complies with
the terms of this Agreement as to the Property, notwithstanding the failure
of payment of any other portion of the insurance premiums. If no such
allocation is available, Lender shall have the right to increase the amount
required to be deposited into the Tax, Insurance and Ground Rents Escrow
Account in an amount sufficient to purchase a non-blanket Policy covering
such Property from insurance companies which qualify under this Agreement.
(ii) Borrower shall deliver to Lender on or prior to the Closing Date
certificates setting forth in reasonable detail the material terms
(including any applicable notice requirements) of all Policies from the
respective insurance companies (or their authorized agents) that issued the
Policies, including that such Policies may not be canceled or modified
without thirty (30) days' prior notice to Lender, or thirty (30) days'
notice with respect to nonpayment of premium. Borrower shall deliver to
Lender, concurrently with each change in any Policy, a binder with respect
to such changed Policy certified by the insurance company issuing that
Policy who is an agent of such insurance company with power to bind such
company, in substantially the same form and containing substantially
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the same information as the certificates required to be delivered by
Borrower pursuant to the first sentence of this clause (d)(ii) and stating
that all premiums then due thereon have been paid to the applicable
insurers and that the same are in full force and effect (or if such
certificate and report shall not be obtainable by Borrower, Borrower may
deliver an Officer's Certificate to such effect in lieu thereof).
(e) Renewal and Replacement of Policies.
(i) Not less than fifteen (15) Business Days prior to the expiration,
termination or cancellation of any Policy, Borrowers shall renew such
policy or obtain a replacement policy or policies (or a binding commitment
for such replacement policy or policies), which shall be effective no later
than the date of the expiration, termination or cancellation of the
previous policy, and shall deliver to Lender a binder and certificate in
respect of such policy or policies (A) containing the same information as
the certificates required to be delivered by Borrowers pursuant to clause
(d)(ii) above, or a copy of the binding commitment for such policy or
policies and (B) confirming that such policy complies with all requirements
hereof.
(ii) If Borrowers do not furnish to Lender the certificates as
required under clause (e)(i) above, Lender may procure, but shall not be
obligated to procure, such replacement policy or policies and pay the
Insurance Premiums therefor, and Borrowers agree to reimburse Lender for
the cost of such Insurance Premiums promptly on demand.
(iii) Concurrently with the delivery of each replacement policy or a
binding commitment for the same pursuant to this clause (e), Borrowers
shall deliver to Lender a report from a reputable and experienced insurance
broker or from the insurer, setting forth the particulars as to all
insurance obtained by Borrower pursuant to this Section 8.1.1 and then in
effect and stating that all Insurance Premiums then due thereon have been
paid in full to the applicable insurers, that such insurance policies are
in full force and effect and that, in the opinion of such insurance broker
or insurer, such insurance otherwise complies with the requirements of this
Section 8.1.1 (or if such report shall not be available after Borrowers
shall have used their reasonable efforts to provide the same, Borrowers
will deliver to Lender an Officer's Certificate containing the information
to be provided in such report).
(f) Separate Insurance. Borrowers will not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained pursuant to this Section 8.1.1 unless such insurance complies with
clause (c) above. In addition, the Borrower who is the owner of the Property
known as the Sheraton Colony Square shall at all
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times maintain separate insurance covering boiler, machinery and other matters
in connection with the central plant required by the Reciprocal Easement
Agreement (Colony Square).
(g) In the event of a Securitization, Borrower shall name any trustee,
Servicer or Special Servicer designated by Lender as a loss payee, and any
trustee, Servicer and Special Servicer as additional insureds, with respect to
any Policy for which Lender is to be so named hereunder.
8.1.2 Casualty; Application of Proceeds.
(a) Right to Adjust.
(i) If a Property is damaged or destroyed, in whole or in part, by a
Casualty, the Borrower owning an interest in such Property shall give
prompt written notice thereof to Lender, generally describing the nature
and extent of such Casualty. Following the occurrence of a Casualty, such
Borrower, regardless of whether proceeds are available, shall in a
reasonably prompt manner proceed to restore, repair, replace or rebuild the
affected Property to the extent practicable to be of at least equal value
and of substantially the same character as prior to the Casualty, all in
accordance with the terms hereof applicable to Alterations.
(ii) Subject to clause (v) below, in the event of a Casualty with
respect to a Property where the loss does not exceed $1 million (in the
case of the hotels known as the Phoenician and the Sheraton San Diego) and
$500,000 (in the case of all other Properties) for such Property, such
Borrower may settle and adjust such claim; provided that such adjustment is
carried out in a competent and timely manner. In such case, Borrower is
hereby authorized to collect and receipt for Lender any Proceeds.
(iii) Subject to clause (v) below, in the event of a Casualty with
respect to a Property where the loss exceeds $1 million (in the case of the
hotels known as the Phoenician and the Sheraton San Diego) and $500,000 (in
the case of all other Properties) for such Property, such Borrower may
settle and adjust such claim only with the consent of Lender (which consent
shall not be unreasonably withheld or delayed) and Lender shall have the
opportunity to participate, at such Borrower's cost, in any such
adjustments.
(iv) The proceeds of any Policy shall be due and payable solely to
Lender and held and applied in accordance with the terms hereof (or, if
mistakenly paid to such Borrower, shall be held in trust by such Borrower
for the benefit of Lender and shall be paid over to Lender by Borrower
within one Business Day of receipt).
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(v) Notwithstanding the terms of clauses (ii) and (iii) above, Lender
shall have the sole authority to adjust any claim with respect to a
Casualty and to collect all Proceeds if an Event of Default shall have
occurred and is continuing.
(b) Borrower's Right to Apply to Restoration. In the event of (i) a
Casualty that does not constitute a Material Casualty, or (ii) a Condemnation
that does not constitute a Material Condemnation, Lender shall permit the
application of the Proceeds (after reimbursement of any expenses incurred by
Lender) to reimburse the applicable Borrower for the cost of restoring,
repairing, replacing or rebuilding the related Property (the "Restoration"), in
the manner required hereby, provided and on the condition that, no Event of
Default shall have occurred and be then continuing and, in the reasonable
judgment of Lender:
(i) such Property can be restored to an economic unit not less
valuable (taking into account the effect of the termination of any Leases
or Material Agreements and the proceeds of any rental loss or business
interruption insurance which such Borrower receives or is entitled to
receive, in each case, due to such Casualty or Condemnation) and not
materially less useful than the same was prior to the Casualty or
Condemnation,
(ii) such Property together with all the other Properties after such
restoration will adequately secure the outstanding balance of the Loan,
(iii) the Restoration can be completed by the earliest to occur of:
(A) the 365th day following the receipt of the Proceeds (or if
earlier, the 365th day after the Casualty or Condemnation, as
applicable), or, with Rating Confirmation, such longer period as may
reasonably be required,
(B) the 365th day prior to the Maturity Date, and
(C) with respect to a Casualty, the expiration of the payment
period on the business interruption insurance coverage in respect of
such Casualty, and
(iv) after receiving reasonably satisfactory evidence to such effect,
during the period of the Restoration, the sum of (A) income derived from
such Property, plus (B) proceeds of rent loss insurance or business
interruption insurance, if any, payable together with such other monies as
the applicable Borrower may irrevocably make available for the restoration,
will equal or exceed 105% of the sum of (1) Operating Expenses and (2) the
Debt Service.
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Notwithstanding the foregoing, if any of the conditions set forth in the proviso
in this clause (b) is not satisfied, then, notwithstanding anything herein to
the contrary, unless Lender shall otherwise elect, at its sole option, the
Proceeds shall be applied to the prepayment of the Loan in accordance with the
terms of Section 8.1.2(d) hereof.
(c) Lender's Right to Apply to Repayment. In the event of a Material
Casualty or a Material Condemnation, then Lender shall have the option, subject
to the terms of the Reciprocal Easement Agreement on the Mortgaged Property
known as the Sheraton Colony Square with respect to the central plant, which is
required to be covered by separate insurance maintained by the related Obligors,
(to be exercised by notice to Lender given not later than the thirtieth (30th)
day after the receipt of the Proceeds) to apply the net Proceeds to the
prepayment of the Debt in accordance with Section 8.1.2(d) hereof (and Borrower
shall be entitled to receive a release of the Lien affecting such Property in
accordance with the terms of Section 2.4.2 hereof, in which event such Proceeds
shall be applied against the Release Amount for such Property) or, provided the
conditions set forth in the proviso in Section 8.1.2(b) hereof are complied
with, to have such Proceeds applied to reimburse Borrower for the cost of any
Restoration in the manner set forth below in Section 8.1.2(e) hereof (and Lender
shall be deemed to have elected prepayment if it shall fail to have given such
notice within said 30-day period); provided, however, that if (x) in the
reasonable judgment of Lender, the Property can be restored within twelve (12)
months and prior to the Maturity Date to an economic unit not less valuable and
not less useful than the same was prior to the Casualty or Condemnation and,
after such restoration, will adequately secure the outstanding balance of the
Loan, and (y) no Event of Default has occurred and is continuing, Lender shall
be obligated to make such Proceeds available for the Restoration of such
Property; provided further, however, that if such Casualty or Condemnation
occurs during the six (6) months prior to the Maturity Date, Lender shall have
no obligation to make such Proceeds available for the Restoration of the
Property.
(d) Application of Prepayment. Any application of Proceeds to the Debt
pursuant to Section 8.1.2(b) or (c) above or 8.1.3(b) below shall be without any
applicable prepayment premium except that if an Event of Default has occurred
and is continuing, then Borrower shall pay to Lender an additional amount equal
to the Yield Maintenance Payments, if any, that would be required in respect of
the principal being prepaid assuming Section 2.3.3 hereof were applicable. Any
such application to the Debt shall be applied to those payments of principal and
interest last due under the Notes and shall not postpone or reduce any payments
otherwise required pursuant to the Notes other than such last due payments;
provided, however, that other than in connection with the release of the Westin
Washington D.C., the amount secured by the Security Instrument on such Property
shall not be reduced until such time as the aggregate principal balance of the
Loan is less than or equal to 125% of the Allocated Loan Amount of such Property
(i.e., $29,600,000).
(e) Manner of Restoration and Reimbursement. If the applicable
Borrower is entitled pursuant to Section 8.1.2(b) or (c) above to reimbursement
out of Proceeds (and the conditions specified therein shall have been
satisfied), such Proceeds shall be disbursed on a monthly basis upon Lender
being furnished with (i) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such
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other evidences of cost, payment and performance as Lender may reasonably
require and approve, and (ii) all plans and specifications for such Restoration,
such plans and specifications to be approved by Lender prior to commencement of
any work (such approval not to be unreasonably withheld or delayed). In
addition, no payment made in connection with the Restoration shall exceed ninety
percent (90%) of the first fifty percent (50%) of the value of the work
performed from time to time; funds other than 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 satisfaction of Lender by or on
behalf of such 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, free and clear of all Liens or claims for Lien. Prior to any
disbursement, Lender shall have received evidence reasonably satisfactory to it
of the estimated cost of completion of the Restoration (such estimate to be made
by Borrower's architect or contractor and approved by Lender in its reasonable
discretion), and Borrower shall have deposited with Lender Eligible Collateral
in an amount equal to the excess (if any) of such estimated cost of completion
over the net Proceeds. Any surplus which may remain out of Proceeds received
pursuant to a Casualty shall be paid to Borrower after payment of such costs of
Restoration. Any surplus which may remain out of Proceeds received pursuant to a
Condemnation shall be delivered to Lender for deposit into the Capital Reserve
Account to be held and disbursed in accordance with the terms of this Agreement.
8.1.3 Condemnation.
(a) Each Obligor shall promptly give Lender written notice of the
actual or threatened commencement of any Condemnation affecting a Property in
which it owns an interest and shall deliver to Lender copies of any and all
papers served in connection with such Condemnation. Following the occurrence of
a Condemnation, such Borrower, regardless of whether Proceeds are available,
shall promptly proceed to restore, repair, replace or rebuild the same to the
extent practicable to be of at least equal value and of substantially the same
character as prior to such Condemnation, all to be effected in accordance with
the terms hereof applicable to Alterations.
(b) Lender is hereby irrevocably appointed as Borrower's
attorney-in-fact, coupled with an interest, with exclusive power to collect,
receive and retain any Proceeds in respect of a Condemnation and to make any
compromise or settlement in connection with such Condemnation, subject to the
provisions of this Section. Provided no Event of Default has occurred and is
continuing, (x) in the event of a Condemnation where the loss does not exceed
$500,000, Borrower may settle and compromise such Proceeds; provided that the
same is effected in a competent and timely manner, and (y) in the event a
Condemnation, where the loss exceeds $500,000, Borrower may settle and
compromise the Proceeds only with the consent of Lender (which consent shall not
be unreasonably withheld or delayed) and Lender shall have the opportunity to
participate, at Borrower's cost, in any litigation and settlement discussions in
respect thereof. Notwithstanding any Condemnation by any public or quasi-public
authority (including any transfer made in lieu of or in anticipation of such a
Condemnation), such Borrower shall continue to pay the Debt at the time and in
the manner provided for in the Notes,
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this Agreement and the other Loan Documents, and the Debt shall not be reduced
unless and until any Proceeds shall have been actually received and applied by
Lender to expenses of collecting such Proceeds and to discharge of the Debt.
Lender shall not be limited to the interest paid on the Proceeds by the
condemning authority but shall be entitled to receive out of the Proceeds
interest at the rate or rates provided in the Notes. Each Borrower shall cause
any Proceeds that are payable to such Borrower to be paid directly to Lender to
be held and applied in accordance with the terms hereof.
ARTICLE IX
ACCOUNTS AND RESERVES
9.1 Clearing Accounts.
(a) Obligors shall establish and maintain with respect to each
Property, with one or more depository institutions reasonably satisfactory to
Lender, an account for the receipt of Rents, including without limitation credit
card receivables (each, a "Clearing Account"). Each Clearing Account shall be an
Eligible Account in the name of Obligors as debtor and Lender as secured party.
Obligors shall cause such depository institutions to forward monthly statements
of such accounts to Lender. Funds in the Clearing Accounts shall not be
commingled with any other monies at any time.
(b) Obligors hereby covenant to cause all Rents (including, without
limitation, proceeds of business interruption insurance and credit card
receivables) and all other moneys, cash, rights to deposit or savings accounts
or other items of legal tender obtained from or for use in connection with the
ownership or operation of the Properties to be deposited in the respective
Clearing Accounts within 24 hours of receipt by the applicable Property Manager.
(c) Obligors shall make no withdrawals from the Clearing Accounts, and
Obligors shall not permit disbursement of any funds therefrom; provided, that on
a daily basis, Obligors shall be required under the Clearing Account Agreement
to cause the balance of such Clearing Accounts to be remitted into the Deposit
Account.
(d) On or prior to the Closing Date, Obligors shall execute and
deliver to Lender, and cause each bank in which a Clearing Account is located to
execute and deliver to Lender, a Clearing Account Agreement. In the event any
bank in which a Clearing Account is located fails to comply therewith, Obligors
will promptly move such Clearing Account to a bank which satisfies the
applicable requirements set forth in the definition of Eligible Account and
which will promptly execute and deliver to Lender such a Clearing Account
Agreement.
9.2 Deposit Account.
(a) On or prior to the Closing Date, Obligors shall establish and
thereafter maintain with a financial institution selected by Lender (as such
financial institution may be changed from time to time by Lender in accordance
with Section 9.2(d), the "Deposit Account Bank") an operating account (the
"Deposit Account"), which shall be an Eligible Account in the
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name of Lender as secured party and under the sole dominion and control of
Lender. For purposes of the foregoing sentence, the definition of Eligible
Account shall include an account which is approved by the applicable Rating
Agencies rating the Certificates, and the definition of Eligible Institution
shall include an institution whose ratings are approved by the applicable Rating
Agencies rating the Certificates. Obligors shall have no right to make
withdrawals from the Deposit Account. The Deposit Account Bank and Obligors
shall execute and deliver to Lender on the Closing Date a Deposit Account
Agreement which provides, inter alia, that no party other than Lender and the
Servicer shall have the right to withdraw funds from the Deposit Account.
(b) On each Payment Date (or on such prior date as the Deposit Account
contains the sum applicable to such month of the amounts set forth in Section
9.2(b)(i) through (xiv)) (any such prior date, an "Early Payment Date"),
provided no Event of Default has occurred and is continuing, the Servicer or
Lender shall transfer from the Deposit Account, to the extent available therein,
the following payments in the following order of priority (the "Waterfall
Payments"); and provided, further, that any sums on deposit in the Deposit
Account from the Early Payment Date up to but not including the next succeeding
Payment Date, after the Waterfall Payments are made, shall be distributed on a
daily basis to Borrowers, provided no Event of Default has occurred and is
continuing and provided no Low NOI Period has occurred and is occurring (in
which case such amounts shall be distributed to the Reserve Account):
(i) to the Tax, Insurance and Ground Rents Escrow Account, the amounts
then required to be reserved pursuant to Section 9.4 hereof;
(ii) to Lender, the Monthly Debt Service Payment Amount;
(iii) during the pendency of a monetary or other Specified Default, a
Low NOI Period or after the Anticipated Repayment Date (if applicable), to
Borrowers, an amount equal to the operating expenditures approved by Lender
in the applicable Annual Budget (the "Budget Operating Amount") for the
month immediately prior to the month in which such Payment Date occurs,
exclusive of any Management Fees and Franchise Fees payable to Affiliates
of the Sponsors, but inclusive of amounts necessary to reimburse actual
third-party costs of such Property Managers (including salaries and costs
for centralized services of the type described in Exhibit B to the
Management Contracts, even if payable to Affiliates of Sponsors), provided
that (a) no claims are then outstanding against any Obligor for the payment
of money which are delinquent for more than 60 days (except for claims such
Obligor is both contesting in good faith and as to which such Obligor has
escrowed 125% of the amount thereof with Lender) (in the event that such
claims are outstanding, Lender shall not be obligated to disburse to
Obligors the Budget Operating Amount), and (b) the amounts disbursed to a
Obligor pursuant to this clause (iii) shall be used by such Obligor solely
to pay operating expenses properly allocable to such month (the receipt by
a Obligor on a Payment
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Date of funds pursuant to this clause (iii) shall constitute a
representation and covenant by Obligors that the foregoing subclauses (a)
and (b) are accurate, unless Obligors shall have notified Lender of any
inaccuracy therein prior to such Payment Date). Cost savings from one line
item in such budget may be reallocated to other line items in such budget,
provided that without the consent of Lender, no such reallocation shall
cause an overall variance in the budget of more than 5%;
(iv) during the pendency of a monetary or other Specified Default, a
Low NOI Period or after an Anticipated Repayment Date (if applicable), to
Borrower, an amount equal to the Capital Expenditures approved by Lender in
the Annual Budget for the month immediately prior to the month in which
such Payment Date occurs (the "Budget Capital Amount"), to the extent that
such Capital Expenditures exceed amounts required then to be on deposit in
the FF&E Reserve Account pursuant to Section 9.6 hereof, provided that (a)
no claims are then outstanding against a Obligor for the payment of money
which are delinquent for more than 60 days (except for claims such Obligor
is both contesting in good faith and as to which such Obligor has escrowed
125% of the amount thereof with Lender) (in the event that such claims are
outstanding, Lender shall not be obligated to disburse to Obligors the
Budget Capital Amount), and (b) the amounts disbursed to a Obligor pursuant
to this clause (iv) shall be used by such Obligor solely to pay Capital
Expenditures properly allocable to such month (the receipt by such Obligor
on a Payment Date of funds pursuant to this clause (iv) shall constitute a
representation and covenant by Obligors that the foregoing subclauses (a)
and (b) are accurate, unless Obligors shall have notified Lender of any
inaccuracy therein prior to such Payment Date). Cost savings from one line
item in such budget may be reallocated to other line items in such budget,
provided that without the consent of Lender, no such reallocation shall
cause an overall variance in the budget of more than 5%;
(v) to the FF&E Reserve Account, the amount described in Section 9.5;
(vi) following the occurrence of any earthquake with respect to any
Property or Properties for which earthquake insurance is carried pursuant
to Article VIII hereof, to the Earthquake Deductible Account, an amount
equal to the deductible on such insurance policies applicable to such
Property or Properties;
(vii) to Lender, an amount equal to all interest, costs, expenses,
fees and other amounts then due and payable under the Loan Documents, other
than amounts paid to Lender pursuant to clause (ii);
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(viii) to any Property Managers which are not Affiliates of the
Sponsors, in an amount equal to the Management Fee then payable to each
such Manager;
(ix) during the continuance of a Low NOI Period, to the Reserve
Account;
(x) after the Anticipated Repayment Date (if applicable), to Lender to
prepay the outstanding principal amount of the Notes (pro rata based on the
then outstanding principal amount of each of the Notes) until such
principal is paid in full;
(xi) after the Anticipated Repayment Date (if applicable), to Lender
to be applied to payment of Accrued Additional Interest (pro rata based
upon the Accrued Additional Interest accrued on each of such Notes);
(xii) to Lender, an amount equal to interest accrued and unpaid under
the Notes at the excess of the Default Rate over the Interest Rate;
(xiv) Prior to the Anticipated Repayment Date, if no Low NOI Period is
then continuing, to a single account of Obligor as Obligor may direct, from
which account Obligor shall first make payments to any Property Managers
which are Affiliates of the Sponsors (including Operator), in an amount
equal to the Management Fee then payable to each such Property Manager and
to any Franchisors which are Affiliates of the Sponsors (including
Operator), in an amount equal to the Franchise Fee then payable to each
such Franchisor.
Notwithstanding anything herein to the contrary, the failure of
Obligors to make all of the payments required under clauses (i) through (x)
above in full on each Payment Date shall constitute an Event of Default.
However, the failure of Obligors to pay any amounts required to be paid under
clauses (xi) through (xv) above (subject to, in the case of clause (xi), the
agreement of such Property Managers to waive their fees) shall not in itself
constitute a Default or Event of Default hereunder.
(c) Obligation to Fund; Deemed Payment. In the event that on any
Payment Date the amount in the Deposit Account shall be insufficient to make all
of the transfers described in Section 9.2(b)(i) through (x), Obligors shall
deposit into the Deposit Account on such Payment Date the amount of such
deficiency (without the need for any notice or demand from Lender), and if
Obligors shall fail to make such deposit, the same shall constitute an Event of
Default and, in addition to all other rights and remedies provided for under the
Loan Documents, Lender may disburse and apply the amounts in the Deposit Account
in such manner as Lender may determine. If on any Payment Date the amount in the
Deposit Account shall be sufficient to make all of the transfers described in
Section 9.2(b)(i) through (x), Obligor shall be deemed to have paid the such
amounts on such Payment Date unless Lender is legally
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constrained from transferring such amounts in accordance with such Section by
reason of any insolvency related to Obligor or any other event.
(d) Lender shall have the right to replace the Deposit Account Bank
with any other financial institution reasonably satisfactory to Borrowers which
will promptly execute and deliver to Lender a Deposit Account Agreement (and
Obligors shall cooperate with Lender in connection with such transfer) in the
event that (i) at any time the short-term debt obligations of the Deposit
Account Bank are rated below "A-1" (or the equivalent) by any of the Rating
Agencies or the long-term debt obligations of the Deposit Account Bank are rated
below "AA" by any of the Rating Agencies, (ii) Lender reasonably determines that
use of another financial institution as the Deposit Account Bank would be
advisable or convenient in connection with a Securitization, or (iii) the
Deposit Account Bank fails to execute and deliver, or to comply with, the
Deposit Account Agreement.
9.3 Reserve Account.
(a) On or prior to the Closing Date, Obligors shall establish and
thereafter maintain with the Deposit Account Bank an account (the "Reserve
Account") which shall be an Eligible Account in the name of Lender as secured
party and under the sole dominion and control of Lender for the deposit of
amounts required to be deposited therein in accordance herewith. Obligor shall
have no right to make withdrawals from the Reserve Account. Funds in the Reserve
Account shall not be commingled with any other monies at any time. Funds in the
Reserve Account may be used, following the occurrence of an Event of Default,
for, among other things, the payment of mortgage recording tax and other costs
and expenses incurred in increasing the amount of the Loan secured by the
Mortgages encumbering the Mortgaged Property known as the Westin Washington D.C.
to an amount equal to 110% of the appraised value of such Mortgaged Property set
forth in the related Appraisal.
(b) Lender shall release to the Deposit Account all amounts contained
in the Reserve Account on the first Payment Date after Obligor delivers to
Lender evidence reasonably satisfactory to Lender establishing that a Low NOI
Period has ended.
9.4 Tax, Insurance and Ground Rents Escrow Account.
(a) On or prior to the Closing Date, Obligors shall establish and
thereafter maintain with the Deposit Account Bank an account (the "Tax and
Ground Rents Escrow Account") which shall be an Eligible Account in the name of
Lender as secured party and which shall be under the sole dominion and control
of Lender. Obligor shall have no right to make withdrawals from the Tax and
Ground Rents Escrow Account. Funds in the Tax and Ground Rents Escrow Account
shall not be commingled with any other monies at any time.
(b) On each Payment Date Obligors shall deposit or monies shall be
transferred in accordance with Section 9.2(b)(1) hereof from the Deposit Account
into the Tax, Insurance and Ground Rents Escrow Account:
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(i) one-twelfth (1/12) of the Taxes and Other Charges that Lender
reasonably estimates will be payable during the next ensuing twelve
(12) months in order to accumulate with Lender sufficient funds to pay
all such Taxes and Other Charges at least thirty (30) days prior to
their respective past due dates;
(ii) one-twelfth (1/12) of the Insurance Premiums that Lender
estimates will be payable for the renewal (or maintenance, if
applicable) of the coverage afforded by the Policies upon the
expiration thereof in order to accumulate with Lender sufficient funds
to pay all such Insurance Premiums at least thirty (30) days prior to
the expiration of the Policies; and
(iii) one-twelfth (1/12) of the ground rents that Lender
estimates will be payable with respect to the Ground Leased Property
during the next ensuing twelve (12) months in order to accumulate with
Lender sufficient funds to pay all such rents at least thirty (30)
days prior to the due date.
(c) On the Closing Date, Obligors shall deposit to the Tax, Insurance
and Ground Rents Escrow Account an amount equal to (i) the product of the next
installment of Taxes and Other Charges times a fraction, the numerator of which
is the number of months in the installment period for such Taxes and Other
Charges elapsed as of the Closing Date (rounded up to the nearest integer) and
the denominator of which is the number of months in such installment period,
(ii) the product of the next scheduled payment of ground rents times a fraction,
the numerator of which is the number of months in the installment period for
such ground rents elapsed as of the Closing Date and the denominator of which is
the number of months in such installment period, and (iii) the product of the
next installment of Insurance Premiums payable times a fraction, the numerator
of which is the number of months in the installment period for such premiums
elapsed as of the Closing Date (rounded up to the nearest integer) and the
denominator of which is the number of months in such installment period;
provided that if Obligor has a blanket Policy that covers properties in addition
to the Properties, Lender shall have the right to increase the amount required
to be deposited into the Tax, Insurance and Ground Rents Escrow Account in an
amount sufficient to purchase a non-blanket Policy in accordance with the terms
of Section 8.1(d)(i) hereof. Amounts in the Tax, Insurance and Ground Rents
Escrow Account shall be invested in Permitted Investments selected by Obligor
and Borrower shall be entitled to the income earned therefrom.
9.4.1 Application Generally. Lender will apply amounts in the Tax,
Insurance and Ground Rents Escrow Account either: (x) to pay Taxes and Other
Charges, Insurance Premiums and rents payable pursuant to the Ground Leases
required to be made by Obligor hereunder (and so long as the Tax, Insurance and
Ground Rents Escrow Account shall have a balance at least equal to the
then-payable Taxes, Other Charges, Insurance Premiums and ground rents, Obligors
shall not be in default hereunder if Lender shall have not so applied such
balance to the payment of such Taxes, Other Charges, Insurance Premiums and
ground rents, unless
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Lender shall have not so applied such balance at the request of Obligor) or (y)
to pay such amounts or to reimburse Obligors for such amounts upon presentation
of evidence of payment and an Officer's Certificate in form and substance
reasonably satisfactory to Lender, subject, however, to Obligors' right to
contest Taxes and Other Charges in accordance with the terms hereof. In making
any payment from or to the Tax, Insurance and Ground Rents Escrow Account,
Lender may do so according to any xxxx, statement or estimate procured from the
appropriate public office (with respect to Taxes and Other Charges) or insurer
or agent (with respect to Insurance Premiums) or ground lessor (with respect to
ground rents), without inquiry into the accuracy of such xxxx, statement or
estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien
or title or claim thereof unless given written notice by Obligor of such
inaccuracy, invalidity or other contest, in each case in accordance with Section
5.1(b)(ii) hereof. If Obligors reasonably determine that amounts contained in
the Tax, Insurance and Ground Rents Escrow Account exceed the amounts required
to be contained therein, due to a decrease in tax or insurance rates in the
applicable jurisdiction or for the applicable Property or as caused by another
similar event, Obligors may submit once during each fiscal year to Lender
evidence of the existence of such excess, and Lender shall have a period of one
month to consider such evidence. Provided no Event of Default is then
continuing, there is no pendency of a Low NOI Period and Lender reasonably
determines that such excess exists, Lender shall remit such excess amounts to
Obligors on the first Payment Date (not to exceed one Payment Date per fiscal
year) following such one-month period. Provided no Event of Default has occurred
and is continuing, Obligors shall have the right to have Lender apply amounts
deposited in the Tax, Insurance and Ground Rents Escrow Account on account of
Taxes and Other Charges toward the payment of such Taxes and Other Charges prior
to their delinquent dates for the purpose of achieving a discount on such Taxes
and Other Charges obligation. If at any time Lender reasonably determines that
the amount in the Tax, Insurance and Ground Rents Escrow Account is not or will
not be sufficient to pay the items set forth in Sections 9.4(a), 9.4(b) and
9.4(c) above, Lender shall notify Obligors of such determination and the amounts
paid for these items shall be increased by the amount that Lender reasonably
estimates is sufficient to make up the deficiency at least thirty (30) days
prior to delinquency of the Taxes and Other Charges and/or expiration of the
Policies and/or delinquency of the ground rent payments, as the case may be.
9.5 FF&E Reserve Account.
(a) Obligors shall establish and thereafter maintain with the Deposit
Account Bank an account (the "FF&E Reserve Account") which shall be an Eligible
Account in the name of Lender as secured party and under the sole dominion and
control of Lender and into which Obligors shall deposit on the Closing Date,
from the proceeds of the Loan, an amount equal to the FF&E Required Reserve
Amount at Closing. In no event shall the amount on deposit in the FF&E Reserve
Account be less than the then applicable FF&E Required Reserve Amount at any
time during the term of the Loan.
(b) (i) During each Interest Accrual Period, Obligors shall be
required to (i) make FF&E Expenditures in an amount equal to the then applicable
FF&E Required Reserve Amount less the aggregate FF&E Credit Amount from prior
Interest Accrual Periods and (ii) deliver an Officer's Certificate to Lender no
later than the last day of such Interest Accrual
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Period certifying as to (a) the amount of FF&E Expenditures (with copies of
invoices and receipts attached to such certification) actually paid during such
Interest Accrual Period and (b) the extent of any FF&E Credit Amount or any FF&E
Shortfall Amount, as applicable, relating to such Interest Accrual Period.
(ii) To the extent there is an FF&E Shortfall Amount with respect to
an Interest Accrual Period, then, beginning on the Payment Date immediately
following such Interest Accrual Period, Obligors shall deposit into the FF&E
Reserve Account an amount equal to such FF&E Shortfall Amount in accordance with
the priorities set forth in Section 9.2.
(c) The FF&E Required Reserve Amount shall be reset on each Reference
Date. Beginning on each Reference Date, Obligors shall, to the extent the amount
on deposit in the FF&E Reserve Account (without taking into account the
aggregate FF&E Shortfall Amounts) is less than the then applicable FF&E Required
Reserve Amount, deposit into the FF&E Reserve Account an amount equal to the
positive difference between the then applicable FF&E Required Reserve Amount and
the FF&E Required Reserve Amount relating to the prior Reference Date. To the
extent the amount on deposit in the FF&E Reserve Account plus the aggregate FF&E
Shortfall Amounts then held in the FF&E Reserve Account through such date
exceeds the then applicable FF&E Required Reserve Amount, such excess shall be
advanced to Obligors to pay the costs of FF&E Expenditures for subsequent
Interest Accrual Periods, upon delivery by Obligors to Lender of an Officer's
Certificate certifying as to the amount of FF&E Expenditures (with copies of
invoices and receipts attached to such certification) actually paid during the
relevant Interest Accrual Period or Periods.
(d) (i) During each Quarterly Period, Obligors shall be required to
(i) make FF&E Expenditures in respect of the work generally described in the
capital budget applicable to the calendar year containing such Quarterly Period
(as attached hereto as Schedule 9.2) in an amount equal to the then applicable
Quarterly FF&E Reserve Amount less the aggregate FF&E Credit Amount from prior
Interest Accrual Periods and (ii) deliver an Officer's Certificate to Lender no
later than the last day of such Quarterly Period certifying as to (a) the amount
of FF&E Expenditures (with copies of invoices and receipts attached to such
certification) actually paid during such Quarterly Period and (b) the extent not
already taken into account of any Quarterly FF&E Credit Amount or any Quarterly
FF&E Shortfall Amount, as applicable, relating to such Quarterly Period.
(ii) To the extent there is a Quarterly Shortfall Amount with respect
to a Quarterly Period, then, beginning on the Payment Date immediately following
such Quarterly Period, Obligors shall deposit into the FF&E Reserve Account an
amount equal to such Quarterly Shortfall Amount (less the amount of any FF&E
Shortfall deposited pursuant to Section 9.5(b) and then held on deposit in the
FF&E Reserve Account) in accordance with the priorities set forth in Section
9.2.
(e) The Quarterly FF&E Reserve Amount shall be reset on January 1,
2000. Beginning on the Quarterly Reference Date, Obligors shall, to the extent
the amount on deposit in the FF&E Reserve Account (without taking into account
the aggregate Quarterly Shortfall
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Amounts) is less than the then applicable Quarterly FF&E Reserve Amount, deposit
into the FF&E Reserve Account an amount equal to the positive difference between
the then applicable Quarterly FF&E Reserve Amount and the Quarterly FF&E Reserve
Amount relating to the calendar year. To the extent the amount on deposit in the
FF&E Reserve Account plus the aggregate Quarterly Shortfall Amounts currently on
deposit through such date exceeds the then applicable Quarterly FF&E Reserve
Amount, such excess shall be advanced to Obligors to pay the costs of FF&E
Expenditures for subsequent Interest Accrual Periods, upon delivery by Obligors
to Lender of an Officer's Certificate certifying as to the amount of FF&E
Expenditures (with copies of invoices and receipts attached to such
certification) actually paid during the relevant Interest Accrual Period or
Periods.
(f) Obligors shall have no right to make withdrawals from the FF&E
Reserve Account. Funds in the FF&E Reserve Account shall not be commingled with
any other monies at any time.
(g) (i) During each of the calendar years 1999 and 2000, Obligors
shall be required to (i) make FF&E Expenditures in respect of the work generally
described in the capital budget applicable to such calendar year (as attached
hereto as Schedule 9.2) in an amount equal to the then applicable Annual FF&E
Amount and (ii) deliver an Officer's Certificate to Lender no later than the
last day of such calendar year certifying as to (a) the amount of FF&E
Expenditures (with copies of invoices and receipts, to the extent not previously
delivered as a part of previously submitted Officer's Certificates) attached to
such certification) actually paid during such calendar year and (b) the extent
of any Annual FF&E Credit Amount or any Annual FF&E Shortfall Amount, as
applicable, relating to such calendar year.
(ii) To the extent there is an Annual Shortfall Amount with respect to
a calendar year, then, beginning on the Payment Date immediately following such
calendar year, Obligors shall deposit into the FF&E Reserve Account an amount
equal to such Annual Shortfall Amount (less the amount of any FF&E Shortfall
deposited pursuant to Section 9.5(b) and then held on deposit in the FF&E
Reserve Account) in accordance with the priorities set forth in Section 9.2.
(h) The failure of Obligors to fulfill the covenants set forth in
paragraphs (b)(i) and (d)(i) of this Section 9.5 shall not constitute an Event
of Default hereunder if Obligors deposit the shortfall amounts set forth in
paragraphs (b)(ii) and (d)(ii) of this Section 9.5.
"Annual Credit Amount" means, with respect to any Annual Period, the
amount by which (a) the FF&E Expenditures during such Annual Period exceeds (b)
the Annual FF&E Amount.
"Annual FF&E Amount" means, for calendar years 1999 and 2000,
$35,000,000 and $25,000,000, respectively, provided that such $35,000,000 amount
for calendar year 1999 shall be reduced by the amount of FF&E Expenditures made
in calendar year 1999 prior to the Closing Date, as evidenced by an Officer's
Certificate delivered to Lender certifying as to the amount of FF&E Expenditures
made during such period (with copies of invoices and receipts
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attached to such certification) but shall in no event include amounts spent in
respect of Deferred Maintenance and Environmental Remediation Conditions.
"Annual Shortfall Amount" means, with respect to any Annual Period,
the amount by which (a) the Annual FF&E Amount exceeds (b) the FF&E Expenditures
during such Annual Period plus any FF&E Credit Amount applicable to such period.
"FF&E Credit Amount" means, with respect to any Interest Accrual
Period, the amount by which (a) the FF&E Expenditures during such Interest
Accrual Period exceeds (b) the FF&E Required Reserve Amount applicable to such
Interest Accrual Period.
"FF&E Deposit Amount" shall have the meaning given thereto in Section
9.5(a).
"FF&E Expenditures" means, with respect to any period, the amounts
spent by Obligors in respect of FF&E for the Properties but shall in no event
include amounts spent in respect of Deferred Maintenance and Environmental
Remediation Conditions.
"FF&E Required Reserve Amount" means, for any Interest Accrual Period,
an amount equal to the product of (x) one twelfth (1/12) and (y) four percent
(4%) and (z) Rents for all the Properties during the twelve-month period
immediately preceding the Reference Date immediately preceding such Interest
Accrual Period.
"FF&E Shortfall Amount" means, with respect to any Interest Accrual
Period, the amount by which (a) the FF&E Required Reserve Amount applicable to
such Interest Accrual Period exceeds (b) the FF&E Expenditures during such
Interest Accrual Period plus any FF&E Credit Amount applicable to such period.
"Quarterly Credit Amount" means, with respect to any Quarterly Period,
the amount by which (a) the amount of FF&E Expenditures during such Quarterly
Period exceeds (b) the Quarterly FF&E Reserve Amount applicable to such
Quarterly Period.
"Quarterly FF&E Reserve Amount" means, for calendar years 1999 and
2000 the amounts set forth on Schedule 9.6 hereto.
"Quarterly Payment Date" means the first Payment Date occurring after
the Payment Date marking the end of a Quarterly Period.
"Quarterly Period" means, for each of calendar years 1999 and 2000,
each successive three Interest Accrual Periods beginning on (and including) the
Interest Accrual Period commencing on January 1, 1999.
"Quarterly Reference Date" means January 1, 2000.
"Quarterly Reference Payment Date" means the first Payment Date
immediately succeeding the Closing Date, and each successive Payment Date
occurring in three month intervals thereafter through the end of 2000.
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"Quarterly Shortfall Amount" means, with respect to any Quarterly
Period, the amount by which (a) the Quarterly FF&E Reserve Amount applicable to
such Quarterly Period exceeds (b) the amount of FF&E Expenditures during such
Quarterly Period plus any Quarterly Credit Amount applicable to such period.
Section 9.6 Deferred Maintenance and Environmental Remediation Reserve
Account.
(a) Obligors shall establish and thereafter maintain with the Deposit
Account Bank an account (the "Deferred Maintenance Account") which shall be an
Eligible Account in the name of Lender as secured party and under the sole
dominion and control of Lender and into which Obligors shall deposit on the
Closing Date, from the proceeds of the Loan, an amount equal to the Deferred
Maintenance and Environmental Conditions Amount. Obligor shall have no right to
make withdrawals from the Deferred Maintenance Account. Funds in such Account
shall not be commingled with any other monies at any time.
(b) Obligors shall have the right to obtain disbursements from time to
time from the Deferred Maintenance Account, to reimburse Obligors for or to pay
expenses incurred by any Obligor in remediating any Deferred Maintenance
Condition or Environmental Condition in accordance with the terms hereof, in
each case on the following terms and conditions:
(i) disbursements shall be made only to pay to contractors or vendors
or to other parties to which funds are owing in connection with such work
or to reimburse Obligors in respect of any actual costs of the work, which
costs were approved by Lender (such approval not to be unreasonably
withheld or delayed) or made in accordance with Section 7.1;
(ii) each request for disbursement from the Deferred Maintenance
Account shall be substantially in a form attached hereto as Exhibit G,
shall specify the work for which the disbursement is requested and shall
include an Officer's Certificate certifying that (i) all funds previously
disbursed from the Deferred Maintenance Account have been applied by the
applicable Obligors toward the expenses for which they were disbursed and
the Obligors have paid their remaining share of all such expenses, and (ii)
the funds being requested will be applied to pay or reimburse for materials
or work permitted hereunder and done in accordance herewith and copies of
invoices for all items or materials purchased and all contracted labor or
services provided;
(iii) Lender shall have received from the applicable Obligor or
Obligors evidence reasonably satisfactory to Lender that such Obligors have
incurred such expenses and that the materials for which the request is made
are on site at the applicable Property and are properly secured or have
been installed in the Property; and funds remaining in the Deferred
Maintenance Account after such disbursements will be, in Lender's
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reasonable judgment, sufficient to pay the balance of the items
contemplated to be funded therefrom when required to be so paid, and Lender
shall receive copies of partial lien releases and waivers from contractors,
subcontractors and others with respect to amounts for which Obligors have
previously received disbursements under this Section 9.6(b)(iii);
(iv) Lender shall disburse from the Deferred Maintenance Account, or
authorize such disbursement, within five (5) Business Days after the
receipt of any Obligor's request for such disbursement and the satisfaction
of the other conditions set forth above in this Section, the amount
requested by any Obligor for such expenses.
Section 9.7 Earthquake Deductible Account.
Obligors shall establish and thereafter maintain with the Deposit
Account Bank an account (the "Earthquake Deductible Account") which shall be an
Eligible Account in the name of Lender and under the sole dominion and control
of Lender and into which shall be deposited, following the occurrence of any
earthquake with respect to any Property or Properties for which earthquake
insurance is carried pursuant to Article VIII hereof (an "Earthquake Insurance
Property"), amounts pursuant to 9.2(b) above equal to the deductible on such
insurance policies applicable to such Property or Properties. Obligors shall
have no right to make withdrawals from the Earthquake Deductible Account. Funds
in the Earthquake Deductible Account shall not be commingled with any other
monies at any time.
At any time that an earthquake occurs with respect to an Earthquake
Insurance Property, Lender shall be entitled to withdraw and apply the amounts
in the Earthquake Deductible Account toward the cost of any deductibles payable
on the earthquake insurance policy for such Property or Properties with respect
to which earthquake damage has occurred.
Section 9.8. Account Collateral.
(a) Obligors hereby grant a perfected first-priority security interest
in favor of Lender in and to the Account Collateral as security for the Debt,
together with all rights of a secured party with respect thereto. Obligors shall
execute any additional documents that Lender in its reasonable discretion may
require and shall provide all other evidence reasonably requested by Lender to
evidence or perfect its first-priority security interest in the Account
Collateral.
(b) So long as no Event of Default shall be continuing, Borrowers
shall be permitted to direct the investment of the funds from time to time held
in the Collateral Accounts in Permitted Investments and to sell and reinvest
proceeds from the sale or liquidation of Permitted Investments in other
Permitted Investments, with all such proceeds and reinvestments to be held in
the applicable Collateral Account; provided, however, that the maturity of an
adequate portion of the Permitted Investments on deposit in the Collateral
Accounts shall be no later than the Business Day immediately preceding the date
on which such funds are required to be withdrawn therefrom pursuant to this
Agreement. All income and gains from the investment
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of funds in the Collateral Accounts shall be credited to the Collateral Accounts
from which they were derived. As between Borrowers and Lender, Borrowers shall
treat all income, gains and losses from the investment of amounts in the
Collateral Accounts as its income or loss for federal, state and local income
tax purposes and Borrower shall receive all benefit from such income.
(c) After the Loans and all other Debt have been paid in full, the
Collateral Accounts shall be closed and the balances, if any, therein shall be
disbursed to Borrowers.
Section 9.9 Remedies. In addition to other rights and remedies
provided Lender elsewhere in this Agreement and the other Loan Documents, upon
the occurrence and during the continuance of an Event of Default, Lender may, in
its sole discretion, without notice or liability to Obligor, apply any or all
Account Collateral for any of the following purposes relating to the Properties,
the Loan or Obligors' obligations hereunder or under any other Loan Document, in
the following or any other order:
First: reimbursement of Lender for all losses and expenses (including
reasonable legal fees) actually suffered or incurred by such persons as a
result of such Event of Default;
Second: payment of any amount expended in exercising rights and
remedies available to Lender at law or in equity or under this Agreement or
under any of the other Loan Documents;
Third: payment of any other portion or portions of the Debt other than
principal and interest;
Fourth: payment of interest then due and payable on the Loans; and
Fifth: prepayment of the unpaid principal amount of the Loans and
payment of interest accrued thereon and any applicable Yield Maintenance
Payments.
Notwithstanding the foregoing, after the occurrence and during the continuation
of an Event of Default, Lender may, in its sole discretion, cause all or a
portion of the Account Collateral to be applied toward payment of operating
expenses and/or Capital Expenditures.
Section 9.10 Special Reserve Account. Obligors shall establish and
thereafter maintain with the Deposit Account Bank or such other Bank as is
satisfactory to Lender, an account (the "Special Reserve Account") which shall
be an Eligible Account in the name of Lender (or in the name of any Trustee or
custodian for the benefit of Lender) and under the sole dominion and control of
Lender and into which shall be deposited at Closing $42,000,000. Obligors shall
have no right to make withdrawals from the Special Reserve Account and
disbursements from such account prior to an Event of Default hereunder shall be
determined by
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Lender in accordance with the Cooperation Agreement. Funds in the Special
Reserve Account shall not be commingled with any other monies at any time.
ARTICLE X
DEFAULTS
Section 10.1 Event of Default.
(a) Each of the following events shall constitute an event of default
hereunder (each, an "Event of Default"):
(i) Payment. If any portion of the Debt is not paid when due;
(ii) Taxes and Other Charges. If any of the Taxes or Other Charges are
not paid prior to the date when the same become delinquent, subject to
Obligors' right to contest Taxes in accordance with Section 5.1(b)(ii)
hereof;
(iii) Insurance Policies. If the Policies are not kept in full force
and effect, or if the Policies are not delivered to Lender upon request,
and in either case, such Default is not cured within ten (10) days after
written notice thereof from Lender;
(iv) Transfers. If (A) Obligors transfer or encumber all or any
portion of the Properties, or (B) any direct or indirect interest in any
Obligor is transferred or assigned, other than, in each case, for Permitted
Encumbrances or as is permitted in Section 6.1(i) hereof;
(v) Representations. If any representation or warranty made by any
Obligor herein or in any other Loan Document shall be false in any material
respect as of the date the representation or warranty was made;
(vi) Inability to Pay Debts. If any Obligor shall make an assignment
for the benefit of creditors, or if any Obligor shall generally not be
paying its debts as they become due or has admitted in writing its
inability to pay its debts;
(vii) Bankruptcy. If a receiver, liquidator or trustee shall be
appointed for any Obligor or if any Obligor 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 Obligor, or if any proceeding for the dissolution or liquidation of any
Obligor shall be instituted; provided, however, if such appointment,
adjudication, petition or proceeding was involuntary and not consented to
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by such Obligor, upon the same not being discharged, stayed or dismissed
within sixty (60) days;
(viii) Prohibited Assignment. If any Obligor attempts to assign its
respective rights under this Agreement or under any other Loan Document or
any interest herein or therein in contravention of this Agreement or any of
the Loan Documents;
(ix) Breach of Covenant. If any Obligor breaches the negative covenant
contained in Section 4.1(cc) hereof and, if the same is susceptible of
cure, the same is not cured within ten (10) days after written notice
thereof from Lender; provided, that no cure of a breach of any covenant
contained in Section 4.1(cc) hereof shall be effective unless such Obligor
causes to be delivered to Lender an opinion as to non-consolidation in form
and substance and from counsel reasonably satisfactory to Lender, which
opinion takes into account such breach;
(x) Default under Other Loan Documents. If an Event of Default as
defined or described in any of the other Loan Documents occurs, or a
default under the Cooperation Agreement occurs prior to Securitization, or
if any other such event shall occur or condition shall exist, if the effect
of such event or condition is to accelerate the maturity of any portion of
the Debt or to permit Lender to accelerate the maturity of all or any
portion of the Debt in accordance with the terms of any such Loan Document
or the Cooperation Agreement;
(xi) Failure to Deposit Account Payments. If there shall be an Event
of Default as set forth in the final paragraph of Section 9.2(b);
(xii) Covenant Defaults. If any Obligor shall continue to be in
default under any of the other terms, covenants or conditions of this
Agreement not specified in subsections (i) to (xi) above, for ten (10) days
after notice to such Obligor from Lender, in the case of any Default which
can be cured by the payment of a sum of money, or for thirty (30) days
after notice from Lender in the case of any other Default; provided,
however, that if such nonmonetary Default is susceptible of cure but cannot
reasonably be cured within such 30-day period and provided further that
such Obligor shall have commenced to cure such default within such 30-day
period and thereafter diligently and expeditiously proceeds to cure the
same, such 30-day period shall be extended for an additional period of time
as is reasonably necessary for Obligor in the exercise of due diligence to
cure such Default, but the aggregate cure period under this subsection
(xii) shall not exceed 120 days; or
(xiv) Ground Lease Default. If such Borrower shall fail, beyond any
applicable notice and grace period permitted to Borrower under any
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Ground Lease, to pay any rent, additional rent or other charge mentioned in
or made payable pursuant to any Ground Lease when such rent, additional
rent or other charge is due and payable; or if the leasehold estate created
by any Ground Lease shall be surrendered or any Ground Lease shall be
terminated or cancelled for any reason or under any circumstances
whatsoever.
(xv) ERISA Defaults. (A) If any of the following events occurs:
(1) any Plan shall fail to satisfy the minimum funding standards
required for any Plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or an application may reasonably be
expected to be or has been made for a waiver of modification of the
minimum funding standard (including any required installment payments)
or an extension of any amortization period under Section 412 of the
Code or Section 303 or 304 of ERISA with respect to a Plan or Section
303 or 304 of ERISA with respect to a Plan,
(2) an ERISA Event with respect to any Plan has occurred,
(3) a contributing sponsor (as defined in Section 4001(a)(13) of
ERISA) of a Plan subject to Title IV of ERISA is subject to the
advance reporting requirement of PBGC Regulation Section 4043.61
(without regard to subparagraph (b)(1) thereof), and an event
described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC
Regulation Section 4043 is reasonably expected to occur with respect
to such Plan within the following 30 days,
(4) a Plan has been or may be terminated, reorganized, partitioned or
declared insolvent under Title IV of ERISA,
(5) any Obligor or any ERISA Affiliate has incurred or is likely to
incur any liability to or on account of an employee benefit plan under
Section 409 of ERISA,
(6) any Obligor or any ERISA Affiliate has incurred or is reasonably
likely to incur any material increase in liability (including any
indirect, contingent or secondary liability) to or on account of the
imposition of Withdrawal Liability by a Multiemployer Plan, the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, or the
termination of a Multiemployer Plan with the meaning of Title IV of
ERISA,
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(7) any contribution with respect to a Plan or Foreign Pension Plan
has not been timely made, or
(8) any Obligor or any ERISA Affiliate has incurred or is reasonably
expected to incur any material increase in liability with respect to a
group health plan as defined in Section 607(l) of ERISA or Section
4980B(g)(2) of the Code) under Section 4980B of the Code or any Plan,
or that the Obligor or any ERISA Affiliate could reasonably be
expected to incur any material increase in liability pursuant to an
employee welfare benefit plan (as defined in Section 3(1) of ERISA)
that provides benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or Plan or Foreign
Pension Plan; and
(B) there shall result from the occurrence of any such event or events described
in section 10.1(a)(xv)(A) the imposition of a lien, granting of a security
interest or a liability or material risk of incurring a liability and (C) such
lien, security interest or liability individually, and/or in the aggregate has
had, or could reasonably be expected to have, a Material Adverse Effect.
(xv) If Obligors fail to spend the Annual FF&E Amount within six
months of the end of the applicable Annual Period.
(b) Upon the occurrence of an Event of Default and at any time
thereafter, Lender may, in addition to any other rights or remedies available to
it pursuant to this Agreement or any other Loan Document, or at law or in
equity, take such action, without notice or demand, that Lender deems advisable
to protect and enforce its rights against Obligor and in and to all or any of
the Properties, including declaring the Debt to be immediately due and payable
(provided, however, with respect to an Event of Default described in clauses
(vi), (vii) or (viii) above, the Debt and all other obligations of Obligors
hereunder and under the other Loan Documents shall immediately and automatically
become due and payable, without notice or demand, and Obligors hereby expressly
waive any such notice or demand, anything contained herein or in any other Loan
Document to the contrary notwithstanding), and Lender may enforce or avail
itself of any or all rights or remedies provided in the Loan Documents against
Obligors and all or any portion of the Properties, including all rights or
remedies available at law or in equity.
(c) Upon the occurrence of any Event of Default, Lender may, but
without any obligation to do so and without notice to or demand on Obligors and
without releasing Obligors from any obligation hereunder, take any action to
cure such Event of Default. Lender may enter upon any of the Properties upon
reasonable notice to the applicable Obligor for such purposes or appear in,
defend, or bring any action or proceeding to protect their interests and the
interests of Lender in the Properties or to foreclose the Security Instruments
or collect the Debt. The costs and expenses incurred by Lender in exercising
rights under this paragraph (including reasonable attorneys' fees to the extent
permitted by law), with interest at the Default Rate for the period after notice
from the relevant Lender that such costs or expenses were incurred to the date
of payment to Lender, shall constitute a portion of the Debt, shall be secured
by the Security
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Instrument and the other Loan Documents and shall be due and payable to Lender
upon demand therefor.
Section 10.2 Remedies. Upon the occurrence of an Event of Default, all
or any one or more of the rights, powers, privileges and other remedies
available to Lender against Obligors under this Agreement or any of the other
Loan Documents executed and delivered by, or applicable to, Obligors or at law
(including, without limitation, an action for collection) or in equity may be
exercised by Lender at any time and from time to time, whether or not all or any
of the Debt 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 any of the Properties. 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 sole 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. Without limiting the generality of the foregoing, and to the extent
enforceable under applicable law, Obligors agree that if an Event of Default is
continuing (i) Lender is not subject to any "one action" or "election of
remedies" law or rule, and (ii) all liens and other rights, remedies or
privileges provided to Lender shall remain in full force and effect until Lender
has exhausted all of its remedies against each of the Properties and each
Security Instrument has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.
Section 10.3 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 Obligors pursuant to this
Agreement or the other Loan Documents, 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 in Lender's sole discretion. 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 one Default or Event of Default with respect to
Obligors shall not be construed to be a waiver of any subsequent Default or
Event of Default with respect to Obligors or to impair any remedy, right or
power consequent thereon.
ARTICLE XI
PROPERTY MANAGEMENT
Section 11.1 Termination of Property Managers. Each Borrower
represents, warrants and covenants that the Subordination, Assignment and
Attornment Agreement provides, with respect to each of the Properties in which
it owns an interest, and each Property Management Agreement hereafter entered
into shall provide, Lender with the right to terminate such Property Management
Agreement with respect to the applicable Property, without any
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penalty or fee (other than accrued and unpaid fees thereunder) on thirty (30)
days' notice, if there exists (i) a monetary Event of Default under this
Agreement which has been uncured, or (ii) a default by such Manager under such
Property Management Agreement.
Borrowers represent, warrant and covenant that each Property shall at
all times be managed by an Acceptable Property Manager and shall be operated
pursuant to a Franchise Agreement with an Acceptable Franchisor. Each Property
Management Agreement entered into by Borrowers shall be in form and substance
satisfactory to Lender in its Discretion and shall be collaterally assigned to
Lender and such new Property Manager shall agree to attorn to Lender and
Lender's assigns, including a purchaser upon foreclosure. If such agreement is
with an Affiliate of any Borrower or any Sponsor, such agreement shall be
assigned to Lender as additional security for the Loan pursuant to an agreement
substantially similar to the Subordination, Assignment and Attornment Agreement.
Lender hereby approves the Management Contracts. Each Franchise Agreement
entered into by any Borrower after the date hereof shall be in form and
substance satisfactory to Lender in its Discretion and, if such agreement is
with an Affiliate of any Borrower or any Sponsor, shall be assigned to Lender as
additional security for the Loan pursuant to an agreement substantially similar
to the Subordination, Assignment and Attornment Agreement and, in any event,
shall be accompanied with a Franchisor Letter which shall be satisfactory to
Lender in its Discretion.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Notes, and shall continue in full force and effect
so long as all or any of the Debt of Borrower is outstanding and unpaid.
Whenever in this Agreement any Person is referred to, such reference shall be
deemed to include the legal representatives, successors and assigns of such
Person (provided that the foregoing shall not be deemed to permit any transfer
of any ownership interest that is otherwise prohibited hereunder). All
covenants, promises and agreements in this Agreement contained, by or on behalf
of Obligors, shall inure to the benefit of the respective legal representatives,
successors and assigns of Lender.
Section 12.2 Permitted Investments; Eligible Accounts; Eligible
Institutions. Lender shall invest any amounts to be held by Lender in accordance
with the terms of this Agreement or any other Loan Document (other than amounts
held in the Deposit Account, which may be an interest bearing account), pending
the application of such amounts to the purposes herein or therein provided, in
one of the Permitted Investments as directed by Borrowers from time to time
(provided no Event of Default has occurred and is continuing); or Lender from
time to time (if any Event of Default has occurred and is continuing). Lender
shall not be responsible for its inability to invest funds received after 1:30
p.m. New York City time, but shall invest such sums on the following Business
Day. After application to the purposes for which any amounts invested pursuant
to this Section 12.2 are held and so long as no Event of Default has occurred
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and is continuing hereunder, any investment income earned from such investments
shall be paid to Borrowers, subject to the provisions of the Deposit Account
Agreement. All accounts maintained hereunder shall, at Lender's election, be
Eligible Accounts. No Eligible Account shall be evidenced by a certificate of
deposit, passbook or other instrument. Each Eligible Account (A) shall be a
separate and identifiable account from all other funds held by the holding
institution, (B) shall be established and maintained in the name of the Lender
as secured party (and subsequent to any Securitization, shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit of
the holders of the Certificates), (C) shall be under the sole dominion and
control of Lender, and should contain only funds held for its benefit. Following
a rating downgrade, withdrawal, qualification or suspension of an Eligible
Institution which maintains an Eligible Account each such Eligible Account must
promptly (and in any case within not more than thirty (30) calendar days) be
moved to a qualifying Eligible Institution. The out-of-pocket costs reasonably
incurred in establishing and maintaining any account or reserve held by Lender
pursuant to this Agreement or any other Loan Document shall be borne by
Borrowers.
Section 12.3 Governing Law; Consent to Jurisdiction.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE
BY LENDER AND ACCEPTED BY BORROWERS AND NONRECOURSE CARVEOUT INDEMNITORS IN THE
STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE
DISBURSED FROM THE STATE OF 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 MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, 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 HERETO AND PURSUANT TO THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE
IN WHICH THE APPLICABLE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE
FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF ALL LOAN DOCUMENTS AND
ALL OF THE INDEBTEDNESS OR OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE
FULLEST EXTENT PERMITTED BY LAW, EACH BORROWER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION
GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
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(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER, BORROWERS OR
NONRECOURSE CARVEOUT INDEMNITORS ARISING OUT OF OR RELATING TO THIS AGREEMENT
SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK,
PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND
BORROWERS AND NONRECOURSE CARVEOUT INDEMNITORS WAIVE ANY OBJECTION WHICH THEY
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWERS AND NONRECOURSE CARVEOUT INDEMNITORS HEREBY
IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR
PROCEEDING. BORROWERS AND NONRECOURSE CARVEOUT INDEMNITORS DO HEREBY DESIGNATE
AND APPOINT STARWOOD HOTELS AND RESORTS, GENERAL COUNSEL, WITH OFFICES AT 000
XXXXXXXXXXX XXXXXX, XXXXX XXXXX, XX, 00000, OR AT SUCH OTHER OFFICE IN NEW YORK,
NEW YORK, AS THEIR AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON THEIR 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 AGREE THAT
SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID
SERVICE OF BORROWERS AND NONRECOURSE CARVEOUT INDEMNITORS MAILED OR DELIVERED TO
BORROWERS AND NONRECOURSE CARVEOUT INDEMNITORS IN THE MANNER PROVIDED HEREIN
SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWERS AND
NONRECOURSE CARVEOUT INDEMNITOR, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE
STATE OF NEW YORK. BORROWERS AND NONRECOURSE CARVEOUT INDEMNITORS(I) SHALL GIVE
PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF THEIR 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 THEIR AUTHORIZED AGENT CEASES TO HAVE AN OFFICE
IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 12.4 Modification, Waiver in Writing. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, or of any of the Notes, or of any other Loan Document, nor consent to
any departure by Obligors 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 Obligors, shall entitle Obligors to
any other or future notice or demand in the same, similar or other
circumstances.
Section 12.5 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 of the Notes or under
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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, any of the Notes 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 any of the Notes or the other Loan
Documents, or to declare a default for failure to effect prompt payment of any
such other amount.
Section 12.6 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 hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, or (b)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, addressed as follows (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 manner provided for in this Section):
If to Lender:
Xxxxxx Brothers Holdings Inc.
000 Xxxxx Xxxxxx
3 World Financial Center
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
with copies to:
Xxxxxxx Sachs Mortgage Company
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx
Phone: 000-000-0000
Fax: 000-000-0000
for such time as Xxxxx Fargo Bank, N.A. is acting as Servicer,
with copies to:
Xxxxx Fargo Bank, N.A.
000 Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx XxXxxxx
with copies to:
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Xxxxxx X. Xxxxxxx, Esq.
Xxxxx Fargo Bank, N.A.
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
and
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx, Esq.
If to Borrower:
Starwood Hotels and Resorts
000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: General Counsel
with a copy to:
Starwood Hotels & Resorts Worldwide, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
#000
Xxxxxxx, Xxxxxxx 00000
Attn: Treasurer
and
Sidley & Austin
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000000
Attn: Xxxx Xxxx, Esq.
If to Operator:
Starwood Hotels and Resorts
000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: General Counsel
with a copy to:
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Starwood Hotels & Resorts Worldwide, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
#000
Xxxxxxx, Xxxxxxx 00000
Attn: Treasurer
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 the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery, upon the first attempted delivery on a Business Day.
Section 12.7 Trial by Jury. LENDER, BORROWERS AND EACH
NONRECOURSE CARVEOUT INDEMNITOR EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY
OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY
FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD
TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY EACH OF LENDER, BORROWERS AND EACH NONRECOURSE CARVEOUT
INDEMNITOR AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER
AND BORROWERS AND EACH NONRECOURSE CARVEOUT INDEMNITOR ARE HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER.
Section 12.8 Headings. The Article and/or Section headings and
the Table of Contents 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 12.9 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 12.10 Preferences. Subject to Article IX hereof,
Lender shall have the continuing and exclusive right to apply or reverse and
reapply any and all payments by Borrowers to any portion of the obligations of
Borrowers hereunder. To the extent Borrowers make a payment or payments to
Lender, 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
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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 12.11 Waiver of Notice. Obligors shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Obligors and except with respect
to matters for which Obligors are not, pursuant to applicable Legal
Requirements, permitted to waive the giving of notice. Obligors hereby expressly
waive the right to receive any notice from Lender with respect to any matter for
which this Agreement or the other Loan Documents do not specifically and
expressly provide for the giving of notice by Lender to Obligor.
Section 12.12 Remedies of Obligor. In the event that a claim or
adjudication is made that Lender or its agents, including Servicer or Special
Servicer, have acted unreasonably or unreasonably delayed (or refrained from),
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, Obligors agree that neither Lender nor its agents,
including Servicer and Special Servicer, shall be liable for any monetary
damages, and Obligors' sole remedies shall be limited to commencing an action
seeking injunctive relief or declaratory judgment, except in any instance in
which it has been finally determined that Lender's action, delay or inaction has
constituted gross negligence, fraud, willful misconduct or an illegal act. The
parties hereto agree that any action or proceeding to determine whether Lender
has acted reasonably shall be determined by an action seeking declaratory
judgment.
Section 12.13 Expenses; Indemnity. (a) Borrowers covenant and agree to
reimburse Lender upon receipt of written notice from Lender for all (i) Lender
Expenses, including all origination costs and all reasonable out-of-pocket
expenses and costs incurred by Lender (or any of its affiliates) after the
Closing in connection with any Securitization; (ii) costs and expenses
reasonably incurred by Lender in connection with (A) Borrower's ongoing
performance of and compliance with Borrower's respective agreements and
covenants contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date, including confirming
compliance with environmental and insurance requirements; (B) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters requested by Borrowers or by Lender; (C)
filing and recording fees and expenses, title insurance and reasonable fees and
disbursements of counsel for providing to Lender all required legal opinions,
and other similar expenses incurred in creating and perfecting the Liens in
favor of Lender pursuant to this Agreement and the other Loan Documents; (D)
enforcing or preserving any rights, in response to third party claims or the
prosecuting or defending of any action or proceeding or other litigation, in
each case against, under or affecting Borrowers, this Agreement, the other Loan
Documents or any other security given for the Loan or the Properties; (E)
enforcing any obligations of or collecting any payments due from Borrowers under
this Agreement, the other Loan Documents or with respect to the Properties or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy
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proceedings; and (F) any brokers or finders fees in connection with the Loan;
provided, however, Borrowers shall not be liable for the payment of any such
costs and expenses to the extent the same arise by reason of the gross
negligence, illegal acts, fraud or willful misconduct of Lender. Any costs and
expenses due and payable to Lender hereunder which are not paid by Borrowers
within ten (10) days after demand may be paid from any amounts in the Deposit
Account, with notice thereof to Borrowers.
(b) Subject to the provisions of Section 12.24 hereof, Borrowers shall
indemnify and hold harmless Lender from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Lender in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not Lender shall be designated a party
thereto), that may be imposed on, incurred by, or asserted against Lender in any
manner relating to or arising out of any breach by Borrowers of their
obligations under, or any misrepresentation by Borrowers contained in this
Agreement or the other Loan Documents; provided, however, Borrowers shall not be
liable for the payment of any such costs and expenses to the extent the same
arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender. Any costs and expenses due and payable to Lender hereunder
which are not paid by Borrower within ten (10) days after demand may be paid
from any amounts in the Deposit Account, with notice thereof to Borrowers.
(c) For purposes of this Section 12.13 only, Borrowers hereby
acknowledge and agree that the defined term Lender shall be deemed to include
Xxxxxxx Xxxxx Mortgage Company, a New York limited partnership.
Section 12.14 Exhibits and Schedules Incorporated. The Exhibits and
Schedules annexed hereto are hereby incorporated herein as a part of this
Agreement with the same effect as if set forth in the body hereof.
Section 12.15 Offsets, Counterclaims and Defenses. Any assignee of
Lender's interest in and to this Agreement, the Notes and the other Loan
Documents shall take the same free and clear of all offsets, counterclaims or
defenses which are unrelated to such documents which Borrowers may otherwise
have against any assignor of such documents, and no such unrelated counterclaim
or defense shall be interposed or asserted by Borrowers in any action or
proceeding brought by any such assignee upon such documents and 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 Borrowers.
Section 12.16 No Joint Venture or Partnership. Obligors and Lender
intend that the relationships created hereunder and under the other Loan
Documents be solely that of borrower and lender. Nothing herein or therein is
intended to create a joint venture, partnership, tenancy-in-common, or joint
tenancy relationship between Obligors and Lender nor to grant Lender any
interest in the Properties other than that of mortgagee or lender.
Section 12.17 Publicity. All news releases, publicity or advertising
by Obligors or their Affiliates through any media intended to reach the general
public which refers to the
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Loan Documents or the financing evidenced by the Loan Documents, to Lender, the
Loan purchaser, the Servicer or the trustee in a Securitization (except for
filings required by the Securities and Exchange Commission) shall be subject to
the prior written approval of Lender (with such consent not to be unreasonably
withheld or delayed).
Section 12.18 Waiver of Marshalling of Assets. To the fullest extent
Obligors may legally do so, Obligors waive all rights to a marshalling of the
assets of Obligors, Obligors' partners, if any, and others with interests in
Obligors, and of the Properties, 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 the Properties
for the collection of the related Debt without any prior or different resort for
collection, of the right of Lender or any deed of trust trustee to the payment
of the related Debt out of the net proceeds of the Properties in preference to
every other claimant whatsoever. In addition, Obligors, for themselves and their
successors and assigns, waive in the event of foreclosure of any or all of the
Security Instruments, any equitable right otherwise available to the Obligors
which would require the separate sale of portions of any of the Properties.
Section 12.19 Waiver of Counterclaim. Obligors hereby waive the right
to assert a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents, including Servicer and
Special Servicer.
Section 12.20 Conflict; Construction of Documents. In the event of any
conflict between the provisions of this Agreement and any of the other Loan
Documents, the provisions of this Agreement shall control. The parties hereto
acknowledge that they were represented by counsel in connection with the
negotiation and drafting of the Loan Documents and that such Loan Documents
shall not be subject to the principle of construing their meaning against the
party which drafted same.
Section 12.21 Brokers and Financial Advisors. Each of Obligors and
Lender hereby represent that they have dealt with no financial advisors,
brokers, underwriters, placement agents, agents or finders (other than Xxxxxxxx
Xxxxxxxx Xxxxxx, X.X.) in connection with the transactions contemplated by this
Agreement. Each Borrower hereby indemnifies Lender and holds 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 such Obligor in connection with the transactions contemplated
herein. Lender hereby indemnifies Borrowers and holds Borrowers 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 Lender in connection with the transactions contemplated herein. The
provisions of this Section 12.21 shall survive the expiration and termination of
this Agreement and the repayment of the Debt.
Section 12.22 No Third Party Beneficiaries. This Agreement and the
other Loan Documents are solely for the benefit of Lender and the Obligors, and
nothing contained in this
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Agreement or the other Loan Documents shall be deemed to confer upon anyone
other than Lender and Obligors any right to insist upon or to enforce the
performance or observance of any of the obligations contained herein or therein.
All conditions to the obligations of Lender to make the Loan hereunder are
imposed solely and exclusively for the benefit of Lender, and no other Person
shall have standing to require satisfaction of such conditions in accordance
with their terms or be entitled to assume that Lender will refuse to make the
Loan in the absence of strict compliance with any or all thereof and no other
Person shall under any circumstances be deemed to be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in part by
Lender if, in Lender's sole discretion, Lender deems it advisable or desirable
to do so.
Section 12.23 Prior Agreements. This Agreement and the other Loan
Documents contain the entire agreement of the parties hereto and thereto in
respect of the transactions contemplated hereby and thereby, and all prior
agreements among or between such parties, whether oral or written, between
Obligor and Lender are superseded by the terms of this Agreement and the other
Loan Documents.
Section 12.24 Recourse. Anything contained herein, in the Notes or in
any other Loan Document to the contrary notwithstanding (except as set forth in
the balance of this Section or in the Environmental Indemnity), no recourse
shall be had for the payment of the principal or interest on the Notes or for
any other portion of the Debt hereunder or under the other Loan Documents
against (i) any Affiliate, parent company, trustee or advisor of each Obligor,
any member in such Obligor, or any member therein; (ii) any legal
representative, heir, estate, successor or assign of any thereof; (iii) any
corporation (or any officer, director, employee or shareholder thereof),
individual or entity to which any ownership interest in Obligor shall have been
transferred; (iv) any purchaser of any asset of Obligors; or (v) any other
Person (except Obligors), for any deficiency or other sum owing with respect to
the Notes or the Debt; provided, however, that the foregoing shall not (a)
prevent recourse to Obligors or the assets of Obligors, or enforcement of any
Security Instrument or other instrument or document by which Obligors are bound
pursuant to the Loan Documents, or (b) be applicable with respect to any
Nonrecourse Carveout Indemnitor to the extent of actual Damages to Lender
resulting from any of the following (collectively, the "Indemnified
Liabilities"):
(i) Any Waste with respect to the Properties committed or permitted by
an Obligor, any Nonrecourse Carveout Indemnitor or any of their respective
Affiliates.
(ii) Any fraud or intentional misrepresentation committed by an
Obligor, any Nonrecourse Carveout Indemnitor or any of their respective
Affiliates.
(iii) The misappropriation or misapplication of any funds from the
Properties by an Obligor, any Nonrecourse Carveout Indemnitor or any of
their respective Affiliates (whether occurring prior to or from and after
the occurrence of and during the continuation of an Event of Default),
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including of any Rents, security deposits or other similar sums paid to or
held by a Obligor or any of their respective Affiliates in connection with
the Properties (provided, however, that, so long as no Default or Event of
Default has occurred and remains uncured and so long as all of Borrowers'
Obligations hereunder then due and payable have been paid, any
distributions by Borrowers to its Affiliates of any funds received by
Borrowers pursuant to Section 9.2(b) shall not constitute a misapplication
of funds).
(iv) (A) The misappropriation by an Obligor, any Nonrecourse Carveout
Indemnitor or any of their respective Affiliates of any Proceeds, or (B)
any Proceeds shall not be applied as required under any Loan Document due
to the acts or omissions of an Obligor, any Nonrecourse Carveout Indemnitor
or any of their respective Affiliates (other than as a result of an
involuntary bankruptcy of an Obligor).
(v) Any transfers or encumbrances by an Obligor of the Properties in
violation of the Loan Agreement.
(vi) The filing by an Obligor or any Member of such Obligor of any
petition or the commencement of any proceeding (a "Proceeding") seeking
relief from creditors under any Federal or State bankruptcy, insolvency,
reorganization, dissolution, adjustment of debt or similar law (or the
commencement by any Affiliate of such Obligor, as a creditor of Obligor, of
any such Proceeding in respect of Obligor or any member of Obligor, or the
conspiracy of Obligor or any such Affiliate with a third-party creditor in
connection with such third-party's commencement of a Proceeding in respect
of Obligor or any member thereof).
(vii) Any failure by Borrowers to make the prepayments required
pursuant to Sections 2.3.6 and 3.1(c)(ii) and (iii) hereof in the event of
a Title Defect or a Survey Defect.
(b) Each Nonrecourse Carveout Indemnitor agrees, as evidenced by his
or her signature below, that he or she shall, jointly and severally, indemnify
and hold harmless Lender from and against any and all actual Damages to Lender
resulting from or arising out of the Indemnified Liabilities (including, without
limitation, the legal and other expenses of enforcing the obligations of the
Nonrecourse Carveout Indemnitors under this Section 12.24). The liability of
each Nonrecourse Carveout Indemnitor under this Agreement shall be direct and
immediate and not conditional or contingent upon the pursuit of any remedies
against an Obligor or any other Person, nor against the Collateral, and shall
not be impaired or limited by any of the following events, whether occurring
with or without notice to the Nonrecourse Carveout Indemnitors or with or
without consideration:
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(i) any extensions of time for performance required by any of the Loan
Documents or otherwise granted by Lender or extension or renewal of the
Notes;
(ii) any sale, assignment or foreclosure of the Notes, the Mortgage or
any of the other Loan Documents or any sale or transfer of any Property
pursuant to the Loan Documents;
(iii) any change in the composition of an Obligor, including, without
limitation, the withdrawal or removal of one or both of the Nonrecourse
Carveout Indemnitors from any current or future position of ownership,
management or control of Obligors;
(iv) the accuracy or inaccuracy of the representations and warranties
made by Obligors in any of the Loan Documents;
(v) the release of Obligors or of any other Person or entity from
performance or observance of any of the agreements, covenants, terms or
conditions contained in any of the Loan Documents by operation of law,
Lender's voluntary act or otherwise; or
(vi) the modification of the terms of any one or more of the Loan
Documents.
Each Nonrecourse Carveout Indemnitor hereby acknowledges that the
Lender would not make the Loan but for the personal liability undertaken by such
Nonrecourse Carveout Indemnitor as expressly set forth and limited above. Each
Nonrecourse Carveout Indemnitor agrees that it shall not demand or accept any
payment from Obligors in respect of any amounts owing or paid by such
Nonrecourse Carveout Indemnitor hereunder until such time as the Debt has been
paid in full.
Notwithstanding anything to the contrary in this Agreement or any of
the Loan Documents, Lender shall not be deemed to have waived 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 Debt secured
by the Security Instruments or to require that all collateral shall continue to
secure all of the Debt owing to Lender in accordance with the Loan Documents;
provided, however, that the foregoing sentence shall not create any additional
liability for the Nonrecourse Carveout Indemnitors other than that set forth
elsewhere in this Agreement.
Section 12.25 Loan Assignability. The Loan, and all of Lender's
rights, remedies and privileges hereunder and the other Loan Documents, shall be
assignable by Lender at any time and from time to time. Obligors may not sell,
assign or transfer any interest in the Loan Documents or any portion thereof
(including, without limitation, Obligors' rights, title, interests, remedies,
powers and duties hereunder and thereunder).
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Section 12.26 Exculpation of Lender. Lender neither undertakes nor
assumes any responsibility or duty to Obligors or any other party to select,
review, inspect, examine, supervise, pass judgment upon or inform Obligors or
any third party of (a) the existence, quality, adequacy or suitability of
appraisals of the Properties or any other collateral, (b) any environmental
report, or (c) any other matters or items, including, but not limited to,
engineering, soils and seismic reports which are contemplated in the Loan
Documents. Any such selection, review, inspection, examination and the like, and
any other due diligence conducted by Lender, is solely for the purpose of
protecting Lender's rights under the Loan Documents, and shall not render Lender
liable to Obligors or any third party for the existence, sufficiency, accuracy,
completeness or legality thereof.
Section 12.27 Exculpation of REIT Trustee. Lender acknowledges and
agrees that the name "Starwood Hotels & Resorts" (as noted in the defined term
"Sponsor") is a designation of a REIT and its Trustees (as Trustees but not
personally) under a Declaration of Trust dated August 25, 1969, as amended and
restated as of June 6, 1988, as further amended on February 1, 1995 as further
amended on June 19, 1995 and as further amended and restated on January 6, 1999
and as the same may be further amended from time to time, and all persons
dealing with the REIT shall look solely to the REIT's assets for the enforcement
of any claims against the REIT, as the Trustees, officers, agents and security
holders of the REIT assume no personal liability for obligations entered into on
behalf of the REIT, and their respective individual assets shall not be subject
to the claims of any person relating to such obligations. The foregoing shall
govern all direct and indirect obligations of the REIT under this Agreement and
the Loan Documents.
ARTICLE XIII
RETENTION OF SERVICER
Section 13.1 Retention of Servicer. Notwithstanding Section 12.22
hereof, Lender reserves the right to retain a Servicer (as well as a Special
Servicer) (other than the Bank of New York) to act as its agent with respect to
the Loan and the Loan Documents with such powers as are specifically delegated
to the Servicer (or such Special Servicer) by Lender, whether pursuant to this
Agreement, the Servicing Agreement, the Deposit Account Agreement or otherwise,
together with such other powers as are reasonably incidental thereto. Borrowers
shall not be responsible for the payment of the Servicer's fees for master
servicing or subservicing, provided upon the occurrence and during the
continuance of an Event of Default, Borrowers shall pay any fee for any special
servicing Lender reasonably deems to be required and further provided that
Borrowers shall pay any reasonable fees and expenses of the Servicer in
connection with a release of any Property, substitution of a Property, partial
or total defeasance of the Loan, satisfaction of a Security Instrument,
assumption of the Loan, modification of the Loan made at Borrower's request, any
requests by a Borrower for waivers or consents, any costs and expenses
associated with the transfer of any interest in Borrowers pursuant to Section
6.1 hereof or with the approval by Lender of a Material Alteration or Expansion
pursuant to Section 7.1(c) hereof, and the enforcement of the Loan Documents.
Borrowers shall have the right to
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rely on any notices given by any Servicer with the same force and effect as if
such notices had been given by Lender.
Upon appointment of a Servicer or Special Servicer, each Borrower,
Operator, Operator II and Property Manager shall also deliver all notices,
reports, documents, financial statements, insurance, tax and any other
instrument, statement or document which it is required to deliver to Lender
hereunder or under any related Loan Document to such Servicer or Special
Servicer as if such Servicer or Special Servicer was Lender hereunder. In
addition, each Borrower, Operator, Operator II and Property Manager hereby
acknowledges that any Servicer or Special Servicer appointed by Lender pursuant
to this Section shall have all the rights and powers granted hereunder or under
applicable law to Lender (except as reserved in writing by Lender) as if such
Servicer or Special Servicer was Lender hereunder, including the right to make
inspections, hold the Collateral Accounts, collect fees, receive reimbursement
of expenses and indemnification from Borrowers and otherwise monitor compliance
with the provisions of this Agreement and any other Loan Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their duly authorized representatives, all as of the day
and year first above written.
LENDER:
XXXXXX BROTHERS HOLDINGS INC.
D/B/A XXXXXX CAPITAL, A DIVISION
OF XXXXXX BROTHERS HOLDINGS
INC., a Delaware corporation
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Authorized Signatory
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BORROWERS:
STARWOOD REALTY CMBS I LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD WALTHAM CMBS I LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD XXXXXXX CMBS I LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
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STARWOOD MISSION HILLS CMBS I LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD CMBS I LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD SHERATON SAN DIEGO CMBS I
LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
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STARWOOD PHOENICIAN CMBS I LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD CINCINNATI CMBS I LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
OPERATOR:
STARWOOD OPERATOR I LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
OPERATOR II:
STARWOOD OPERATOR II LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
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NONRECOURSE CARVEOUT INDEMNITORS
(for purposes of Sections 12.24, 4.2 and 4.5)
STARWOOD HOTELS AND RESORTS
WORLDWIDE, INC.,
A MARYLAND CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD HOTELS AND RESORTS,
A MARYLAND REAL ESTATE INVESTMENT
TRUST
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
171
MEMBERS:
(for purposes of Sections 4.3 and 4.5)
STARWOOD REALTY CMBS II LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD WALTHAM CMBS II LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD XXXXXXX CMBS II LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
172
STARWOOD MISSION HILLS CMBS II LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD CMBS II LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD SHERATON SAN DIEGO CMBS II
LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
173
STARWOOD PHOENICIAN CMBS II LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD CINCINNATI CMBS II LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD OPERATOR II LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
174
SECOND-TIER MEMBERS:
(for purposes of Sections 4.4 and 4.5)
SLT REALTY LIMITED PARTNERSHIP,
A DELAWARE LIMITED PARTNERSHIP
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD WALTHAM L.L.C.,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD XXXXXXX L.L.C.,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
000
XXXXXXXX XXXXXXX XXXXX L.L.C.,
A DELAWARE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
SLT FINANCING PARTNERSHIP,
A DELAWARE GENERAL PARTNERSHIP
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
HARBOR - CAL, S.D.,
A CALIFORNIA JOINT VENTURE
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
176
SHERATON PHOENICIAN CORPORATION,
A DELAWARE CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD HOTELS AND RESORTS,
A MARYLAND REAL ESTATE INVESTMENT
TRUST
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
STARWOOD HOTELS AND RESORTS
WORLDWIDE, INC.,
A MARYLAND CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Authorized Signatory
