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Exhibit 10.20
Loan No.: 52920
Servicing No.: 3113776
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BANK OF AMERICA, N.A.
as Lender
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LOAN AGREEMENT
dated as of August 9, 2000
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RFS SPE2 2000 LLC,
as Borrower
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.1 Definitions.....................................................................1
Section 1.2 Other Definitional Provisions..................................................23
Section 1.3 Incorporation by Reference of Commitment.......................................23
ARTICLE II
THE LOAN
Section 2.1 Loan Terms.....................................................................23
Section 2.2 Interest.......................................................................24
Section 2.3 Term...........................................................................24
Section 2.4 Payments.......................................................................24
Section 2.5 Release of Properties..........................................................24
Section 2.6 Substitution of Properties.....................................................24
ARTICLE III
CONDITIONS PRECEDENT TO LOAN
Section 3.1 Loan Documents.................................................................33
Section 3.2 Brokerage Commissions..........................................................33
Section 3.3 Title Evidence.................................................................33
Section 3.4 Survey.........................................................................33
Section 3.5 Insurance......................................................................33
Section 3.6 Authority Documents............................................................33
Section 3.7 Financial Statements and Operating Statements..................................34
Section 3.8 Opinions.......................................................................34
Section 3.9 Compliance with Laws...........................................................34
Section 3.10 Agreements.....................................................................34
Section 3.11 Taxes..........................................................................34
Section 3.12 Utilities......................................................................35
Section 3.13 Reserve Accounts...............................................................35
Section 3.14 Engineering Report.............................................................35
Section 3.15 Certificate of Occupancy and Other Permits.....................................35
Section 3.16 Environmental Assessment and O&M Program.......................................35
Section 3.17 Appraisal......................................................................35
Section 3.18 Equity.........................................................................35
Section 3.19 Debt Service...................................................................35
Section 3.20 Loan to Value Ratio............................................................35
Section 3.21 Special Purpose Entity.........................................................36
Section 3.22 Miscellaneous..................................................................36
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Existence; Compliance with Law.................................................36
Section 4.2 Equity Interests...............................................................36
Section 4.3 Power; Authorization; Enforceable Obligations..................................36
Section 4.4 No Legal Bar...................................................................37
Section 4.5 No Litigation..................................................................37
Section 4.6 No Default.....................................................................37
Section 4.7 Solvency; Fraudulent Conveyance................................................37
Section 4.8 Special Purpose Entity.........................................................38
Section 4.9 Taxes..........................................................................38
Section 4.10 No Burdensome Restrictions.....................................................38
Section 4.11 Investment Company Act; Other Regulations......................................38
Section 4.12 Subsidiaries...................................................................39
Section 4.13 Title to Premises..............................................................39
Section 4.14 Ownership of Personalty........................................................39
Section 4.15 Financial Statements...........................................................39
Section 4.16 No Change......................................................................39
Section 4.17 Management Agreement...........................................................40
Section 4.18 Accuracy of Information........................................................40
Section 4.19 Principal Place of Business....................................................40
Section 4.20 Taxpayer Identification Number.................................................40
Section 4.21 Insurance......................................................................40
Section 4.22 Mechanic's Liens, etc..........................................................40
Section 4.23 No Violation...................................................................41
Section 4.24 ERISA..........................................................................41
Section 4.25 O&M Program....................................................................41
Section 4.26 No Organizational Document Amendment...........................................41
Section 4.27 Permitted Encumbrances.........................................................41
Section 4.28 Insolvency Opinion.............................................................41
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Affirmative Covenants of the Borrower..........................................42
Section 5.2 Negative Covenants of the Borrower.............................................48
Section 5.3 Environmental Covenants........................................................52
Section 5.4 Recourse Covenants.............................................................54
Section 5.5 Insurance......................................................................55
Section 5.6 Lockbox........................................................................56
ARTICLE VI
RESERVE ACCOUNTS
Section 6.1 Establishment of Reserve Accounts..............................................56
Section 6.2 Initial Reserve Deposits.......................................................57
Section 6.3 Monthly Reserve Deposits.......................................................57
Section 6.4 Replacement Reserve Account....................................................57
Section 6.5 Permitted Investments, Earnings, Charges and Annual Accounting.................57
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Section 6.6 Assignment to the Lender of Reserve Accounts and Rights and Claims.............58
Section 6.7 Application of Reserve Accounts Upon an Event of Default.......................59
Section 6.8 Disbursements from Tax and Insurance Reserve Account...........................59
Section 6.9 Disbursements from Repair Escrow Account and Replacement Reserve Account.......60
Section 6.10 Intentionally Deleted..........................................................62
Section 6.11 Indemnification................................................................62
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
Section 7.1 Events of Default..............................................................63
Section 7.2 Remedies.......................................................................65
ARTICLE VIII
CASUALTY LOSSES; EMINENT DOMAIN
Section 8.1 Repairs and Casualty Losses....................................................65
Section 8.2 Eminent Domain.................................................................66
Section 8.3 Application of Insurance Proceeds and Condemnation Awards......................67
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Remedies Cumulative; Waivers...................................................68
Section 9.2 Benefit........................................................................68
Section 9.3 Assignment and Assumption......................................................69
Section 9.4 Securitization Cooperation/Indemnification.....................................71
Section 9.5 Information....................................................................75
Section 9.6 Nonrecourse Loan; Exceptions...................................................75
Section 9.7 Amendments.....................................................................75
Section 9.8 Governing Law and Jurisdiction.................................................75
Section 9.9 Savings Clause.................................................................75
Section 9.10 Execution in Counterparts......................................................75
Section 9.11 Notices........................................................................76
Section 9.12 Right of Set-Off...............................................................76
Section 9.13 Written Agreement..............................................................76
Section 9.14 Waiver of Jury Trial...........................................................77
Section 9.15 Cross Default, Cross-Collateralization, Waiver of Marshalling of Assets........77
Section 9.16 Servicer.......................................................................79
ARTICLE X
SPECIAL PROVISIONS
Section 10.1 Termination of Manager.........................................................80
Section 10.2 Substitution of Operating Lessee...............................................81
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SCHEDULES
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SCHEDULE 1 Allocated Loan Amounts
SCHEDULE 2 Franchise Agreements
SCHEDULE 3 Operating Leases
SCHEDULE 4 Borrower's Disclosure of Non-Compliance with Requirements of Law
EXHIBITS
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EXHIBIT A Equity Interests
EXHIBIT B Immediate Repairs, Replacements and Reserve Amounts
EXHIBIT C Addresses for Notice
EXHIBIT D Program Rider
EXHIBIT E Form of Nondisturbance, Subordination and Attornment Agreement for Operating Leases
EXHIBIT F Form of Tenant Estoppel Certificate
EXHIBIT G Form of Nondisturbance, Subordination and Attornment Agreement for Property Specific Leases
EXHIBIT H Form of Hazardous Material Indemnity Agreement
EXHIBIT I Borrower's Non-Consolidation Opinion
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LOAN AGREEMENT
LOAN AGREEMENT, dated as of August 9, 2000 (together with all
exhibits, schedules, riders and addenda hereto, which are hereby incorporated
herein, the "Loan Agreement" or "Agreement"), by and between RFS SPE2 2000 LLC,
a Virginia limited liability company, (the "Borrower"), with its principal
place of business at c/o RFS Hotel Investors, Inc., 000 Xxxxx Xxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxxx 00000, RFS HOTEL INVESTORS, INC., a Tennessee
corporation (the "Borrower Principal", whether one or more); and BANK OF
AMERICA, N.A., a national banking association, with its principal offices in
Charlotte, North Carolina (together with its successors and assigns, the
"Lender").
RECITALS:
The Borrower has applied to the Lender for a loan in the
original principal amount of $25,484,000 (the "Loan") to be made by the Lender
pursuant to the terms hereof.
The Loan will be secured by, among other things, a first
priority lien on the Land, Improvements, Personalty and Rents and Profits.
The Lender is willing to make the Loan based on the terms and
conditions set forth in this Loan Agreement and subject to the execution and
delivery of each of the Loan Documents.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower, the
Borrower Principals and the Lender hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
As used in this Agreement, the other Loan Documents, or any
certificate or other document made or delivered pursuant hereto, the
capitalized terms used herein shall, unless otherwise defined herein or
therein, have the following meanings:
Additional Repair(s) or Replacement(s). Any repairs,
replacements or improvements (other than Immediate Repairs or Replacements) (i)
which are advisable to keep the Premises in good order and repair and in good
marketable condition, or to prevent material deterioration of the Premises, or
(ii) for an Immediate Repair or Replacement to the extent such Immediate Repair
or Replacement exceeds 125% of the estimated cost of such Immediate Repair or
Replacement as set forth in Exhibit B hereto.
Adjusted Release Amount. Shall mean, for any Individual
Property, 125% of the Allocated Loan Amount for such Individual Property.
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Affiliate(s). As to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person, including without limitation (i) any person who has a familial
relationship, by blood, marriage or otherwise with any member or employee of
Borrower, or any affiliate thereof and (ii) any Person which receives
compensation for administrative, legal or accounting services from the Borrower
or any affiliate. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" or
"controlled" have meanings correlative to the foregoing. Notwithstanding
anything to the contrary contained in this Loan Agreement, any two Persons
whose shares are both publicly traded shall not be deemed Affiliates regardless
of any common shareholders or directors.
Allocated Loan Amount. Shall mean the portion of the Loan
Amount allocated, solely for purposes of performing certain calculations
hereunder, to each Individual Property, as set forth in Schedule 1 hereto.
Appraisal. An appraisal of the Premises prepared at the
Borrower's expense by a qualified appraiser designated by and satisfactory to
the Lender, in accordance with written instructions from the Lender, dated as
of a date acceptable to the Lender and otherwise satisfactory in form and
substance to the Lender.
Approved Insurer. An insurer previously approved by the
Lender with an Standard and Poor's rating of AA or better, and which is
authorized to issue insurance in each state where an Individual Property is
located.
Bank. Shall have the meaning set forth in the Cash Management
Agreement.
Bankruptcy Code. Title 11 of the United States Code entitled
"Bankruptcy," as amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time promulgated
thereunder, and any comparable foreign laws relating to bankruptcy, insolvency
or creditor's rights.
Bankruptcy Event. As to any Person, the occurrence of any of
the following with respect to such Person: (i) a court or governmental agency
having jurisdiction over the Premises shall enter a decree or order for relief
in respect of such Person in an involuntary case under any applicable
bankruptcy, insolvency, reorganization, moratorium, sequestration, liquidation,
consolidation or other similar law now or hereafter in effect, or appoint a
receiver, liquidator, assignee, custodian, conservator, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its
property or order the winding up or liquidation of its affairs; (ii) an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect is commenced against a Person and such petition
remains unstayed and in effect for a period of sixty (60) consecutive days;
(iii) such Person shall commence a voluntary case under any applicable
bankruptcy, insolvency or similar law or make any general assignment for the
benefit of creditors; (iv) such Person shall admit in writing its inability to
pay its debts
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generally as they become due (otherwise than on a purely temporary basis), or
(v) such Person shall take any action in furtherance of any of the aforesaid
purposes.
Basic Carrying Costs. Shall mean, with respect to an
Individual Property, the sum of the following costs associated with such
Individual Property for the relevant calendar year or payment period: (i) taxes
and (ii) insurance premiums.
Borrower Party. Shall mean the Borrower Principal, any
guarantor, any general partner of Borrower if Borrower is a partnership or
limited partnership, any general partner in any partnership or limited
partnership that is a general partner of Borrower, any managing member of
Borrower if Borrower is a limited liability company, and any managing member in
any limited liability company that is a managing member of Borrower, any at any
level.
Business Day. Any day other than a Saturday, a Sunday, a
legal holiday in Charlotte, North Carolina, or a day on which banking
institutions located in Charlotte, North Carolina are authorized by law or
other governmental action to close.
Cash Management Agreement. The Cash Management Agreement,
dated as of even date herewith, executed by the Borrower, the Lender and the
Agent.
Certification. As to any specified report, Financial
Statement, Operating Statement, Rent Roll or other document, a written
certification by a Responsible Officer of the Person providing such report,
Financial Statement, Operating Statement, Rent Roll or other document that such
report, Financial Statement, Operating Statement, Rent Roll or other document,
as at the date thereof, (i) contains all of the information and statements
required to be set forth therein, (ii) that such information and statements are
true and correct in all material respects, (iii) that there is no untrue
statement of a material fact required to be stated therein, (iv) that there is
no failure to state therein any information or fact that is necessary to make
the information or statements contained therein, in light of the circumstances
under which they are made, not misleading, and (v) that there is no fact known
to such Responsible Officer that materially adversely affects any of the
information or statements set forth therein.
Closing Date. The date set forth in the first paragraph of
this Loan Agreement.
Code. Shall have the meaning set forth in the Note.
Commitment. The Lender's commitment letter with respect to
the Loan as accepted by the Borrower and the Borrower Principals in accordance
with the terms thereof.
Debt Service. Shall mean the installments of principal and
interest due and payable in accordance with the Note, the Defeased Note or the
Undefeased Note, as the case may be during any applicable period.
Debt Service Reserve Account. Shall mean an Eligible Account
established and maintained pursuant to the terms of this Loan Agreement.
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Debt Service Coverage Ratio Leases. Shall mean the ratio that
shall be applied by Lender, calculated as follows:
(a) With respect to the Leases for the Premises, the ratio
of the (i) Net Operating Income Leases for the Premises for the immediately
preceding twelve (12) calendar month period to (ii) the projected Debt Service
that would be due on the Loan with respect to the Premises for the twelve (12)
calendar month period immediately following such calculation; and
(b) With respect to any Leases for an Individual Property,
the ratio of (i) Net Operating Income Leases for the subject Individual
Property for the immediately preceding twelve (12) month period to (ii) the
projected Debt Service that would be due with respect to the Allocated Loan
Amount applicable to the subject Individual Property for the twelve (12) month
period immediately following such calculation.
Debt Service Coverage Ratio Premises. Shall mean the ratio
that shall be applied by Lender, calculated as follows:
(a) With respect to revenues of the Premises, the ratio of
(i) Net Operating Income Premises of the Premises for the immediately preceding
twelve (12) calendar month period to (ii) the projected Debt Service that would
be due on the Loan with respect to the Premises for the twelve (12) month
period immediately following such calculation; and
(b) with respect to the revenues of an Individual Property,
the ratio (i) Net Operating Income Premises for the subject Individual Property
for the immediately preceding twelve (12) month period to (ii) the projected
Debt Service that would be due with respect to the Allocated Loan Amount
applicable to the subject Individual Property for the twelve (12) month period
immediately following such calculation.
Default Condition. The occurrence or existence of an event or
condition which, upon the giving of notice or the passage of time, or both,
would constitute an Event of Default.
Defeased Note. Shall have the meaning set forth in Section
4(c) of the Note.
Eligible Account. An account that is either (i) maintained
with a federal or state-chartered depository institution or trust company whose
commercial or finance paper or other similar obligations are rated A-1 or
better by Standard & Poor's Rating Group, a division of McGraw Hill, Inc.,
("Standard & Poors"), P-1 or better by Xxxxx'x, Investors Services, Inc.,
("Moody's"), D-1 or better by Duff & Xxxxxx Credit Rating Co. ("Duff") and F-1
+ or better by Fitch IBCA, Inc. ("Fitch") (ii) an account or accounts
maintained with a depository institution with a minimum long-term unsecured
debt rating of AA or better by Standard & Poor's or Fitch and Duff, or Aaa or
better by Moody's provided that the deposits in such account or accounts are
fully insured by the Federal Deposit Insurance Corporation, (iii) a segregated
trust account maintained with the corporate trust department of an institution
with capital and surplus of not less than $50,000,000 and with a minimum
long-term unsecured debt rating of AA or better by Standard & Poor's or Fitch
and Duff, or Aaa or better by Moody's, or (iv) an account otherwise acceptable
to the Lender.
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Engineering Report. An engineering report of the Premises
from an engineer approved by the Lender and dated as of a date acceptable to
the Lender, which report shall, among other things, (a) conform to all
requirements of the Lender and (b) certify that the Premises is in material
compliance with all applicable requirements of the Americans with Disabilities
Act of 1990.
Environmental Assessment. A report (including all drafts
thereof) of an environmental assessment of the Premises of such scope
(including but not limited to the taking of soil borings and air and
groundwater samples and other above and below ground testing) as the Lender may
request, by a consulting firm acceptable to the Lender, which shall, among
other things, be dated as of a date acceptable to the Lender and conform to (i)
the current minimum standards for the American Society of Testing and
Materials, and (ii) the Lender's then current requirements.
Environmental Covenant(s). Each of the covenants, agreements
and/or indemnities set forth in Section 5.3 of this Loan Agreement.
Equity Interests. Any and all shares, interests,
participations and other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person not a
corporation (including, without limitation, general and limited partnership
interests in a limited partnership), and any and all warrants and options to
purchase any of the foregoing.
ERISA. The Employee Retirement Income Security Act of 1974.
Event of Default. The occurrence of any event or condition
specified in Section 7.1 of this Loan Agreement.
Financial Statement. As to any indicated Person, for any
specified period, financial statements of such Person, including, at a minimum,
a current balance sheet, a current income and expense statement, a statement
showing contingent liabilities and any other supporting schedules or
documentation that the Lender may from time to time require, and, in the case
of the Borrower, a detailed cash flow statement for each property and/or entity
in which the Borrower has an interest, prepared in accordance with Required
Accounting Standards. The cash flow statements provided shall include, as
applicable, the property and entity name, location, size (including the number
of rooms with respect to hotels), and the percentage of ownership therein, its
leasing and occupancy status, its Operating Income Premises (including the
sources of Operating Income Premises), its Operating Expenses Premises, its Net
Operating Income Premises, any loan balance currently outstanding, the amount
and beneficiary of any cash distributions by such Person, the amount invested
in and/or received from such property or entity; and detailed cash flow
projections for the next twelve (12) month period therefor. Each Financial
Statement shall include a Certification thereto. All required financial
statements shall list only the assets of the indicated Person, and in no event
shall the assets of the indicated Person include the assets of any other
Person. Each annual financial statement shall be accompanied by (i) a
comparison of the budgeted income and expenses and the actual income and
expenses for the prior fiscal year, (ii) a certificate executed by the chief
financial officer of
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the Person stating that each such annual financial statement presents fairly
the financial condition and the results of the operations of the Person and the
Property being reported upon and has been prepared in accordance with Required
Accounting Standards, (iii) an unqualified opinion of a "Big Five" accounting
firm or other independent certified public accountant reasonably acceptable to
Lender, (provided that an audit shall be required only for the Borrower and
Borrower Principal and, with respect to an Individual Property, there shall be
provided only a supplemental schedule of Operating Lease revenues on an
Individual Property by Individual Property basis) and (iv) a schedule audited
by such independent certified public accountant reconciling Operating Income
Leases to Net Operating Income Leases, which shall itemize all adjustments made
to Operating Income Leases to arrive at Net Operating Income Leases deemed
material by such independent certified public accountant.
Financing Statements. The UCC financing statements filed in
order to perfect the Lender's lien on certain personal property and fixtures as
more particularly described therein. The Financing Statements shall be on forms
approved for filing in the applicable state and local filing offices of the
applicable state in which any filings are necessary or, in the Lender's opinion
desirable, to be made to perfect the interests of the Lender granted under the
Loan Documents, together with the search results for such filing offices,
including copies of all reported financing statements.
Franchise Agreement. Means, with respect to any Individual
Property, that certain franchise agreement more specifically identified on
Schedule 2 attached hereto.
Fundamental Transaction. As defined in Section 5.2(e) hereof.
GAAP. Generally accepted accounting principles, as from
time-to-time in effect in the United States of America, consistently applied.
Governmental Action. The issuance or threatened issuance in
writing of any claim, citation, notice of any pending or threatened suit,
proceeding, order or governmental inquiry or opinion involving the Premises
that alleges the violation of any Requirement of Law or Hazardous Materials
Law.
Governmental Authorities. Any governmental (including health
and environmental) agency, office, officer or official whose consent or
approval is required as applicable under the circumstances as a prerequisite to
the commencement of the construction, renovation or expansion of the
Improvements or to the operation and occupancy of the Improvements or the
Premises or to the performance of any act or obligation or the observance of
any agreement, provision or condition of whatsoever nature herein contained.
Ground Lease. Each ground lease, if any, pursuant to which
the Borrower acquires an interest as ground lessee of any portion of the
Premises.
Hazardous Materials. Includes petroleum and petroleum
products, flammable explosives, radioactive materials (excluding radioactive
materials in smoke detectors), polychlorinated biphenyls, lead, asbestos or
asbestos containing materials in any form that is or could become friable,
hazardous waste, toxic or hazardous substances or other related materials
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whether in the form of a chemical, element, compound, solution, mixture or
otherwise including, but not limited to, those materials defined as "hazardous
substances," "extremely hazardous substances," "hazardous chemicals,"
"hazardous materials," "toxic substances," "solid waste," "toxic chemicals,"
"air pollutants," "toxic pollutants," "hazardous wastes," "extremely hazardous
waste," or "restricted hazardous waste" by Hazardous Materials Law or regulated
by Hazardous Materials Law in any manner whatsoever, and all other "Hazardous
Materials", if any, identified in the Program Rider.
Hazardous Materials Indemnity Agreement. Shall mean a
Hazardous Materials Indemnification Agreement substantially in the form
attached hereto as Exhibit H and to the extent a new agreement is specifically
required under this Loan Agreement, as such form may be amended by Lender
consistent with prudent underwriting standards.
Hazardous Materials Law. All federal, state, and local laws,
ordinances and regulations and standards, rules, policies and other
governmental requirements and any court judgments applicable to the Borrower or
to the Premises relating to industrial hygiene or to environmental or unsafe
conditions or to human health including, but not limited to, those relating to
the generation, manufacture, storage, handling, transportation, disposal,
release, emission or discharge of Hazardous Materials, those in connection with
the construction, fuel supply, power generation and transmission, waste
disposal or any other operations or processes relating to the Premises, and
those relating to the atmosphere, soil, surface and ground water, wetlands,
stream sediments and vegetation on, under, in or about the Premises. "Hazardous
Materials Law" also shall include, but not be limited to, the following laws,
as amended as set forth herein and as subsequently amended: (1) the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USCA
9601 et seq.; (2) the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid
Waste Amendments of 1984, 42 USCA 6901 et seq.; (3) the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 USCA 1251 et seq.;
(4) the Toxic Substances Control Act, 15 USCA 2601 et seq.; (5) the Emergency
Planning and Community Right-to-Know Act of 1986, 42 XXXX 00000 et seq.; (6)
the Clean Air Act, as amended by the Clean Air Act Amendments, 42 USCA 7401 et
seq.; (7) the National Environmental Policy Act of 1969, 42 USCA 4321 et seq.;
(8) the River and Harbor Act of 1899, 33 USCA 401 et seq.; (9) the Endangered
Species Act of 1973, 16 USCA 1531 et seq.; (10) the Occupational Safety and
Health Act of 1970, 29 USCA 651 et seq.; (11) the Safe Drinking Water Act, 42
USCA 300(f) et seq.; and (12) the Hazardous Materials Transportation Act, 49
USCA 1801 et seq., and all regulations from time to time adopted in respect to
the foregoing laws.
Immediate Repair(s). Those repairs, replacements and
improvements listed as "Immediate Repairs" on Exhibit B hereto.
Improvements. As defined in the Security Instrument.
Indebtedness. For any Person, without duplication: (a) all
indebtedness of such Person for borrowed money, for amounts drawn under a
letter of credit, or for the deferred
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purchase price of property for which such Person or its assets is liable, (b)
all unfunded amounts under a loan agreement, letter of credit, or other credit
facility for which such Person would be liable, if such amounts were advanced
under the credit facility, (c) all amounts required to be paid by such Person
as a guaranteed payment to partners or a preferred or special dividend,
including any mandatory redemption of shares or interests, (d) all indebtedness
guaranteed by such Person, directly or indirectly, (e) all obligations under
leases that constitute capital leases for which such Person is liable, and (f)
all obligations of such Person under interest rate caps, floors, collars and
other interest hedge agreements, in each case whether such Person is liable
contingently or otherwise, as obligor, guarantor or otherwise, or in respect of
which obligations such Person otherwise assures a creditor against loss.
Indemnitor. Shall mean the Borrower Principal.
Independent Appraiser: Shall mean an independent appraiser
which is a member of the American Institute of Real Estate Appraisers selected
by Borrower and having at least five (5) years of experience in the applicable
real estate market where the applicable Individual Property is located in the
valuation of properties of the type being appraised.
Individual Property. Shall mean each parcel of real property
and the Improvements thereon encumbered by a Security Instrument, together with
all rights pertaining to such property and improvements as more particularly
described in the granting clauses of the Security Instrument and referred to
therein as the Premises.
Initial Reserve Deposit(s). Any amount required to be
deposited into any Reserve Account on or before the Closing Date in accordance
with the terms of this Loan Agreement, including without limitation, any
initial deposit to any Reserve Account identified on Exhibit B hereto or in the
Program Rider.
Insurance. All of the following insurance coverages:
(i) Property Insurance. Insurance with respect to the
Improvements against any peril included within the classification "All
Risks of Physical Loss" with extended coverage in amounts at all times
sufficient to prevent it from becoming a co-insurer within the terms
of the applicable policies, but in any event such insurance shall be
maintained in an amount equal to the full insurable value of the
Premises and with deductibles acceptable to the Lender. The term "full
insurable value" as used herein shall mean the actual replacement cost
of the Premises (without taking into account any depreciation, and
exclusive of excavations, footings and foundations, landscaping and
paving, but in no event less than one hundred twenty-five percent
(125%) of the applicable Allocated Loan Amount) determined annually by
an insurer, a recognized independent insurance broker or an
Independent Appraiser selected and paid by Borrower and in no event
less than the coverage required pursuant to the terms of any Lease;
provided, however, if the terms of the applicable insurance policies
expressly provide for insurance to be provided in the amount of the
actual replacement cost of the Improvements and the Building Equipment
or such policies contain a replacement cost endorsement, no such
annual determination will be necessary.
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(ii) Liability Insurance. Comprehensive general liability
insurance, including bodily injury, death and property damage
liability, dram shop coverage and umbrella liability insurance against
any and all claims, including all legal liability to the extent
insurable imposed upon the Lender and all court costs and attorneys'
fees and expenses, arising out of or connected with the possession,
use, leasing, operation, maintenance or condition of the Premises in
such amounts as are generally required by institutional lenders for
properties comparable to the Premises in market areas comparable to
the market areas in which the Premises are located written on a per
occurrence limit of not less than $1,000,000.00 and with an aggregate
limit of not less than $3,000,000.00 per Individual Property. In the
event that any payment of proceeds is made under any umbrella
liability insurance policy, the Borrower shall immediately purchase
additional liability insurance coverage so that at all times there
shall be no less than a $1,000,000.00 minimum of liability insurance
coverage per occurrence with a $3,000,000.00 minimum general aggregate
limit.
(iii) Workers' Compensation Insurance. Statutory workers'
compensation insurance (to the extent the risks to be covered thereby
are not already covered by other policies of insurance maintained by
it), with respect to any work on, about or regarding the Premises.
(iv) Business Interruption. Business interruption
insurance and/or insurance for loss of income in an amount sufficient
to avoid any co-insurance penalty and to provide proceeds which will
cover a period of at least eighteen (18) months following the date of
casualty or such other period acceptable to the Lender and the Rating
Agencies. The amount of such business interruption insurance shall be
determined prior to the date hereof and at least once each year
thereafter based on Borrower's reasonable estimate of the gross income
from each Individual Property for the succeeding eighteen (18) month
period.
(v) Boiler and Machinery Insurance. Broad form boiler and
machinery insurance covering all boilers and other pressure vessels,
machinery and equipment located in, on or about the Premises and
insurance against loss of occupancy or use arising from any such
breakdown in an amount equal to one hundred percent (100%) of the
actual replacement cost of such machinery (without taking into account
any depreciation) and containing such deductibles as are acceptable to
the Lender.
(vi) Flood Insurance. If all or any portion of the
Premises is located within a federally designated flood hazard zone,
flood insurance as is generally available and in such amounts and with
such deductibles as the Lender may reasonably require.
(vii) Other Insurance. Such other insurance (including,
without limitation, earthquake insurance, sinkhole insurance, law and
ordinance insurance, environmental insurance and malpractice
insurance) with respect to the Premises against loss or damage of the
kinds from time to time reasonably required by the Lender in
connection with loans secured by properties comparable to the
Premises.
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Intangible Personalty. As defined in the Security Instrument.
Land. As defined in the Security Instrument.
Leases. As defined in the Cash Management Agreement.
Lessee. As defined in the Cash Management Agreement.
Lien. Any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
financing lease having substantially the same economic effect as any of the
foregoing).
Loan. Shall have the meaning set forth in the recitals
hereto.
Loan Amount. The original principal amount of the Note.
Loan Document(s). This Loan Agreement, the Commitment, the
Note, the Security Instrument, the Financing Statements, the Cash Management
Agreement and all other documents evidencing, securing or relating to the Loan.
Loan to Value Ratio. Shall mean the quotient of the then
outstanding principal amount of the Loan divided by the value of the Premises
remaining subject to the Lien of the Security Instrument, as determined by
Lender in its sole discretion pursuant to its review and approval of a new or
updated Appraisal obtained by Lender at Borrower's expense and taking into
account only approved Operating Leases in place with respect to the portion of
the Premises not being defeased, having remaining terms (not taking into
account extension rights or options) of not less than five (5) years from the
date of the applicable defeasance.
Lockbox Account. The account specified for deposits of Rents
and Profits and other receipts from the Premises.
Management Agreement. Shall mean, with respect to any
Individual Property, the written management agreement for the Premises, if any,
in form and substance satisfactory to the Lender, by and between the Borrower,
as owner, and a management company, as manager.
Manager. Shall mean the manager of the Premises, if any,
under the Management Agreement, and its successors and assigns.
Maturity Date. Shall have the meaning the forth in the Note.
Monthly Payment Amount. Shall have the meaning set forth in
the Note.
Monthly Reserve Deposits. Any monthly payment or deposit
required in connection with any Reserve Account, including without limitation,
any monthly payments or deposits to any Reserve Account identified in Exhibit B
hereto or in the Program Rider.
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Net Operating Income Leases. With respect to any specified
period, (i) Operating Income Leases, minus (ii) (A) Operating Expenses Leases
and (B) replacement reserves, including any capital expenditures (to the extent
such capital expenditures exceed any amounts held in the Replacement Reserve
Account) required in connection with (i) any franchise agreement; (ii) any
capital improvements budget with Operating Lessee; or (iii) any deposits to the
Replacement Reserve Account, each as calculated for such period.
Net Operating Income Premises. With respect to any specified
period, (i) Operating Income Premises, minus (ii) (A) Operating Expenses
Premises, (B) management fees (assuming a 4% management fee); and (C)
replacement reserves, including any capital expenditures (to the extent such
capital expenditures exceed any amounts held in the Replacement Reserve
Account) required in connection with (i) any franchise agreement; (ii) any
capital improvements budget with Operating Lessee; or (iii) any deposits to the
Replacement Reserve Account, each as calculated for such period.
New Manager. Shall mean Flagstone Hospitality Management LLC.
Non-Consolidation Opinion. Shall have the meaning set forth
in Section 4.28 hereof.
Nondisturbance Agreement. Shall mean, for each Individual
Property, that certain Nondisturbance, Subordination and Attornment Agreement
among Lender, Borrower and Operating Lessee, substantially in the form attached
hereto as Exhibit E (as such Nondisturbance Agreement may be amended (i) to
include any revisions required by Lender in the event a different form of
Operating Lease than those currently in existence is entered into by Operating
Lessee; or (ii) by Lender consistent with prudent underwriting standards).
Note. The promissory note or notes of the Borrower in
connection with the Loan in favor of the Lender, as acknowledged and agreed to
by the Borrower Principals, together with all prior notes amended, modified,
renewed, extended, restated, supplemented, replaced or substituted thereby.
Note Payment Amount. For any Payment Date, the total amount
due and owing under the Note on such Payment Date.
O&M Program. An operations and maintenance program (in form
and substance satisfactory to the Lender) relating to the use, handling and/or
abatement of one or more Hazardous Materials and which is accepted in writing
by the Borrower.
Obligations. As to any stated Person, the unpaid principal of
and interest on any promissory note or other indebtedness of such Person
(including, without limitation, interest accruing after the maturity of any
such promissory note or indebtedness and interest accruing thereon after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to such Person, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
and all other obligations and liabilities of such Person, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred, whether on account of principal, interest, reimbursement
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obligations, fees, indemnities, costs, expenses (including, without limitation,
all reasonable fees and disbursements of counsel) or otherwise.
Officer's Certificate. Shall mean a certificate delivered to
Lender and signed by an officer of the managing member of the Borrower.
Operating Expenses Leases. Any expense paid or to be paid by
the Borrower (or any of its agents or by the Lender on account or on behalf of
the Borrower) under the Operating Lease determined on an accrual basis, in
accordance with GAAP, including, without limitation, (i) all payments required
to be made pursuant to any franchise or other agreement, (ii) undistributed
expenses, including without limitation, general and administrative, marketing,
utilities, operations and maintenance, (iii) legal, accounting, appraisal and
other professional fees, costs and disbursements, including annual fees and
other amounts (including indemnity payments) payable annually or otherwise,
(iv) taxes, insurance premiums and impositions of any type, (v) any amount paid
in connection with any interest rate contract or similar hedge, cap, collar,
floor or currency swap, (vi) all items, if any, defined as an Operating Expense
herein. Notwithstanding the foregoing, Operating Expenses Leases will not
include (a) depreciation or amortization, (a) any expenses that in accordance
with GAAP should be capitalized (other than current charges for any such
expenses included in the preceding sentence) (C) the principal of and interest
on the Note and (D) any item of expense that would otherwise be considered
within Operating Expenses Leases pursuant to the provisions above but which is
required to be paid directly by the Operating Lessee under the Operating Lease.
Operating Expenses Premises. Any expenses in connection with
the operation of the Premises, determined (as if there were no Operating Lease)
on an accrual basis, in accordance with GAAP, including, without limitation,
(i) all payments required to be made pursuant to any management, franchise or
other agreement, (ii) undistributed expenses, including without limitation,
general and administrative, marketing, utilities, operations and maintenance
and other expenses and deposits required to be made to the Reserve Accounts, as
appropriate, (iii) legal, accounting, appraisal and other professional fees,
costs and disbursements, including annual fees and other amounts (including
indemnity payments) payable annually or otherwise, (iv) taxes (real or
personal), insurance premiums and impositions of any type, (v) any amount paid
in connection with any interest rate contract or similar hedge, cap, collar,
floor or currency swap, (vi) all items, if any, defined as an Operating Expense
in the Program Rider, and (vii) the cost of goods sold. Notwithstanding the
foregoing, Operating Expenses Premises will not include (A) depreciation or
amortization, (B) any expenses that in accordance with GAAP should be
capitalized (other than current charges for any such expenses included in the
preceding sentence), (C) the principal of and interest on the Note and (D)
management fees.
Operating Income Leases. All rents (net of concessions),
charges, fees, expense recovery, revenues and other income (including interest
income) paid (other than security deposits from tenants or other Persons under
valid leases or other agreements and insurance, eminent domain or similar
proceeds and rewards paid directly to the Lender pursuant to the provisions of
this Loan Agreement and any disbursements to Borrower from any Reserve
Accounts) at any time to the Borrower (or to any of its agents other than the
Operating Lessee for the account of the Borrower) by any Person under the
Operating Lease or otherwise in
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connection with the operation of the Premises or under the Operating Leases, as
applicable, determined on an accrual basis, and all items, if any, defined as
Operating Income in the Program Rider.
Operating Income Premises. Shall mean, as if there were no
Operating Lease, all rents (net of concessions), charges, fees, expense
recovery, revenues and other income (including interest income) paid (other
than security deposits from tenants or other Persons under valid leases or
other agreements and insurance, eminent domain or similar proceeds and rewards
paid directly to the Lender pursuant to the provisions of this Loan Agreement
and any disbursements to Borrower from any Reserve Accounts) as if there were
no Operating Lease at any time to the Borrower (or to any of its agents for the
account of the Borrower) by the Person in connection with the operation of the
Premises or under the Operating Leases, as applicable, determined on an accrual
basis, and all items, if any, defined as Operating Income in the Program Rider.
Operating Lease. Shall mean, with respect to any Individual
Property, the lease agreement in effect between Borrower and the Operating
Lessee for the use and operation of each Individual Property and all
amendments, modifications, renewals, substitutions or replacements of such
lease. The initial Operating Leases in effect as of the date hereof are
identified on Schedule 3 hereto.
Operating Lessee. Shall mean (i) RFS, Inc. a Tennessee
corporation, or (ii) any Qualified Operating Lessee approved by Lender in
accordance with the provisions of this Loan Agreement.
[Operating Partnership. Shall mean RFS Partnership, L.P. a
Tennessee limited partnership, and any successor thereto.]
Operating Statement. As to the Premises and for each
Individual Property, for any period indicated, a statement of the Borrower, as
reflecting, truly and accurately, the items set forth therein as at the date
thereof, showing the Operating Income Premises and Operating Expenses Premises
for the indicated period and including a statement as to the amounts and
sources of rent or other income collected and any other information reasonably
required by the Lender. Each Operating Statement shall include a Certification.
Partial Defeasance Date. Shall have the meaning given in
Section 4(c) of the Note.
Payment Date. Each date any payment of principal or interest
on the Note is due and payable thereunder.
Permitted Encumbrances. As defined in the Security
Instrument, together with any Liens which have been bonded over (i) within
thirty (30) days after the date of filing thereof, (ii) with a bonding company
satisfactory to the Lender, (iii) in an amount satisfactory to the Lender, and
(iv) otherwise in form and substance satisfactory to the Lender, in each case,
in the Lender's reasonable discretion.
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Permitted Investments. Shall mean any one or more of the
following obligations or securities acquired at a purchase price of not greater
than par, including those issued by the servicer or the trustee under any
Securitization, as hereinafter defined, or any of their respective Affiliates,
payable on demand or having a maturity date not later than the Business Day
immediately prior to the first Monthly Payment Date following the date of
acquiring such investment and meeting one of the appropriate standards set
forth below:
(i) obligations of, or obligations fully guaranteed as
to payment of principal and interest by, the United States or any
agency or instrumentality thereof provided such obligations are backed
by the full faith and credit of the United States of America
including, without limitation, obligations of: the U.S. Treasury (all
direct or fully guaranteed obligations), the Farmers Home
Administration (certificates of beneficial ownership), the General
Services Administration (participation certificates), the U.S.
Maritime Administration (guaranteed Title XI financing), the Small
Business Administration (guaranteed participation certificates and
guaranteed pool certificates), the U.S. Department of Housing and
Urban Development (local authority bonds) and the Washington
Metropolitan Area Transit Authority (guaranteed transit bonds);
provided, however, that the investments described in this clause must
(A) have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (B) if rated by Standard and Poor's, must
not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must
be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such
investments must not be subject to liquidation prior to their
maturity;
(ii) Federal Housing Administration debentures;
(iii) obligations of the following United States
government sponsored agencies: Federal Home Loan Mortgage Corp. (debt
obligations), the Farm Credit System (consolidated systemwide bonds
and notes), the Federal Home Loan Banks (consolidated debt
obligations), the Federal National Mortgage Association (debt
obligations), the Student Loan Marketing Association (debt
obligations), the Financing Corp. (debt obligations), and the
Resolution Funding Corp. (debt obligations); provided, however, that
the investments described in this clause must (A) have a predetermined
fixed dollar of principal due at maturity that cannot vary or change,
(B) if rated by Standard and Poor's, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate
of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with
that index, and (D) such investments must not be subject to
liquidation prior to their maturity;
(iv) federal funds, unsecured certificates of deposit,
time deposits, bankers' acceptances and repurchase agreements with
maturities of not more than 365 days of any bank, the short term
obligations of which at all times are rated in the highest short term
rating category by each Rating Agency, as hereinafter defined, (or, if
not rated by all Rating Agencies, rated by at least one Rating Agency
in the highest short term rating category and otherwise acceptable to
each other Rating Agency, as confirmed in writing that such investment
would not, in and of itself, result in a downgrade, qualification or
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withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities); provided, however, that the investments
described in this clause must (A) have a predetermined fixed dollar of
principal due at maturity that cannot vary or change, (B) if rated by
Standard and Poor's, must not have an "r" highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index,
and (D) such investments must not be subject to liquidation prior to
their maturity;
(v) fully Federal Deposit Insurance Corporation-insured
demand and time deposits in, or certificates of deposit of, or
bankers' acceptances issued by, any bank or trust company, savings and
loan association or savings bank, the short term obligations of which
at all times are rated in the highest short term rating category by
each Rating Agency (or, if not rated by all Rating Agencies, rated by
at least one Rating Agency in the highest short term rating category
and otherwise acceptable to each other Rating Agency, as confirmed in
writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher,
then current ratings assigned to the Securities); provided, however,
that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot
vary or change, (B) if rated by Standard and Poor's, must not have an
"r" highlighter affixed to their rating, (C) if such investments have
a variable rate of interest, such interest rate must be tied to a
single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be
subject to liquidation prior to their maturity;
(vi) debt obligations with maturities of not more than
365 days and at all times rated by each Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency and
otherwise acceptable to each other Rating Agency, as confirmed in
writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher,
then current ratings assigned to the Securities) in its highest
long-term unsecured rating category; provided, however, that the
investments described in this clause must (A) have a predetermined
fixed dollar of principal due at maturity that cannot vary or change,
(B) if rated by Standard and Poor's, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate
of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with
that index, and (D) such investments must not be subject to
liquidation prior to their maturity;
(vii) commercial paper (including both
non-interest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than one
year after the date of issuance thereof) with maturities of not more
than 365 days and that at all times is rated by each Rating Agency
(or, if not rated by all Rating Agencies, rated by at least one Rating
Agency and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself,
result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities) in its
highest short-term unsecured debt rating;
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provided, however, that the investments described in this clause must
(A) have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (B) if rated by Standard and Poor's, must
not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must
be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such
investments must not be subject to liquidation prior to their
maturity;
(viii) units of taxable money market funds or mutual funds,
which funds are regulated investment companies, seek to maintain a
constant net asset value per share and invest solely in obligations
backed by the full faith and credit of the United States, which funds
have the highest rating available from each Rating Agency for taxable
money market funds or mutual funds (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency and otherwise acceptable
to each other Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) for money market funds or
mutual funds; and
(ix) any other security, obligation or investment which
has been approved as a Permitted Investment in writing by (a) Lender
and (b) each Rating Agency, as evidenced by a written confirmation
that the designation of such security, obligation or investment as a
Permitted Investment will not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher,
then current ratings assigned to the Securities by such Rating Agency;
provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments
on such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of one hundred twenty percent (120%) of
the yield to maturity at par of such underlying investment.
Person. An individual, a general or limited partnership, a
limited liability company, a limited liability partnership, a corporation, a
business trust, a joint stock company, a trust, an unincorporated association,
a joint venture, a Governmental Authority or other entity of whatever nature.
Personalty. The Tangible Personalty and the Intangible
Personalty.
Premises. The collective reference to the Land, the
Improvements and the Tangible Personalty for each of the five (5) Individual
Properties more particularly described in the Security Instrument.
Program Rider. The Program Rider attached as Exhibit D to
this Loan Agreement.
Property Release. Shall have the meaning set forth in
Section 2.5.
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Prohibited Activities or Conditions. Causing or permitting,
whether directly or indirectly, (i) the presence, use, generation, manufacture,
production, processing, installation, release, discharge, storage (including
storage in above ground and underground storage tanks for petroleum or
petroleum products), treatment, handling, or disposal of any Hazardous
Materials (excluding the safe and lawful use and storage of quantities of
Hazardous Materials or petroleum products, customarily used in the ordinary
operations of the Borrower or customarily used in the ordinary operations of
any tenant previously approved by the Lender) on or under the Premises, or in
any way affecting the Premises or its value or which may form the basis for any
present or future claim, demand or action seeking cleanup of the Premises, (ii)
the transportation of any Hazardous Materials to or from the Premises
(excluding the safe and lawful use and storage of quantities of Hazardous
Materials or petroleum products, customarily used in the ordinary operations of
the Borrower or customarily used in the ordinary operations of any tenant
previously approved by the Lender), or (iii) any occurrence or condition on the
Premises (or exacerbation of the same) that is or may be in violation of
Hazardous Materials Law.
Qualified Manager. Means a Manager that is (or is controlled
by, controlling or under common control with ) either (a) an entity owned or
controlled by the executive management or shareholders of the REIT immediately
prior to the applicable Fundamental Transaction, as hereinafter defined, or (b)
a professional management company which at the time of its engagement as
Manager shall be the property manager for at least ten (10) hotel properties
containing at least one thousand three hundred (1,300) rooms exclusive of the
Premises.
Qualified Operating Lessee. Means a Person that (a) is (or is
controlled by, controlling or under common control with) either (i) an entity
owned or controlled by the executive management or shareholders of the REIT
immediately prior to the applicable Fundamental Transaction, or (ii) a hotel
operating company which at the time of its engagement as Operating Lessee shall
be operating and controlling, as owner, manager or operating lessee, at least
twelve (12) hotel properties consisting of at least one thousand five hundred
(1,500) rooms exclusive of the Premises, (b) is a single purpose
bankruptcy-remote entity in accordance with the then-current standards of the
Rating Agencies, and (c) if the Qualified Operating Lessee is an Affiliate, it
must be a taxable REIT subsidiary as set forth in and in accordance with the
definition of Fundamental Transaction.
Qualified Resultant Owner. Means one or more Persons which,
individually or collectively, own at least fifty-one percent (51%) of the
beneficial interest in and control of the REIT or the Operating Partnership, as
applicable; and (1)(a) is or is controlled by either a pension fund, pension
fund advisor, and insurance company, a domestic bank (with total assets of at
least One Billion Dollars ($1,000,000,000)) or publicly or privately traded
real estate investment trust or other publicly traded or privately held
company, (b) has a then current net worth of at lease One Hundred Million
Dollars ($100,000,000) and total real estate assets of at least Two Hundred
Million Dollars ($200,000,000), in each case exclusive of the Premises (or in
the case of a pension fund advisor, controls at least Five Hundred Million
($500,000,000) in real estate assets), and (c) controls (exclusive of the
Premises) at least ten (10) hotel properties containing in the aggregate at
least one thousand three hundred (1,300) rooms and (2) if the Fundamental
Transaction occurs at any time that the Loan is not part of a Securitization,
(x) such
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Person(s) are not and have not been, within the previous ten (10)
years, subject to any material, uncured event of default which resulted in
litigation or an acceleration of any indebtedness under any agreement with
Lender, (y) such Person(s) are not subject to any bankruptcy action and (z) the
principals or entities which control such Person(s) have never been convicted
of a felony.
Rating Agencies. Shall mean, as applicable, each of Standard
& Poor's Ratings Group, a division of XxXxxx-Xxxx, Inc., Xxxxx'x Investors
Services, Inc., Duff & Xxxxxx Credit Rating Co. and Fitch IBCA, Inc., or any
other nationally-recognized statistical rating agency which has been approved
by Lender which rated the securities in connection with the Securitization (as
defined in ss.9.3 below).
Recourse Covenant(s). Each of those covenants and/or
agreements set forth in Section 5.4 of this Loan Agreement.
REIT. Shall mean RFS Hotel Investors, Inc., a Tennessee
corporation, and any successor thereto.
Release Parcel. Shall have the meaning set forth in Section
4(c) of the Note.
REMIC. Shall have the meaning set forth in the Note.
Rent Roll. As to the Premises, a rent schedule in a form
acceptable to the Lender, including a Certification thereof, showing the legal
and trade name of each tenant, and for each tenant, the gross and net square
feet occupied, the lease expiration date, the rent payable (both base rent and
additional rent), right of first refusal, options, rights to move tenants,
security deposits and any other information requested by the Lender and, as to
any annual Rent Roll, copies of paid tax receipts for the related fiscal year.
Rents and Profits. As defined in the Security Instrument.
Repair Escrow Account. An Eligible Account established and
maintained pursuant to the terms of this Loan Agreement.
Replacement Reserve Account. An Eligible Account established
and maintained pursuant to the terms of this Loan Agreement.
Replacements. Those repairs, replacements or improvements
listed as "Replacements" on Exhibit B hereto.
Required Accounting Standards. GAAP or such alternative
accounting standard as may be acceptable to the Lender, consistently applied.
Required DSCR. As defined in Section 7.1(m) of this
Agreement.
Requirement(s) of Law. As to any Person, the organizational
or governing documents of such Person, and any statute, law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority (including, without limitation, all
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requirements relating to zoning, parking, ingress and egress, building
setbacks, or use of the Premises, all Hazardous Materials Laws, the
Architectural Barriers Act of 1968, the Rehabilitation Act of 1973, the
Americans with Disabilities Act of 1990, erosion control ordinances, storm
drainage control laws and doing business and/or licensing laws), in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
Reserve Account(s). The Repair Escrow Account, the Tax and
Insurance Reserve Account, the Replacement Reserve Account, the Debt Service
Reserve Account, and all other reserve and/or escrow accounts established or
required pursuant to the provisions of the Loan Documents, including, without
limitation, pursuant to the Program Rider.
Responsible Officer. As to any Person, the general partner
(if the general partner is not an individual, then the chief executive officer,
the chief financial officer or the president or similar individual of the
general partner), the managing member, the chief executive officer, the chief
financial officer or the president or similar individual of such Person.
Securities. Any certificates, notes or other securities
issued in connection with a Securitization of the Loan.
Securitization. Shall have the meaning set forth in Section
9.3 herein.
Security Instrument. The deeds of trust, mortgages, or other
instrument, dated as of even date herewith, executed by the Borrower granting
to the Lender a first priority lien or title priority on the Premises, the
Intangible Personalty and the Rents and Profits to secure the obligations of
the Borrower under the Loan Documents, together with all prior instruments
amended, modified, renewed, extended, restated, supplemented, replaced or
substituted thereby.
Special Purpose Entity. An entity whose structure and
organizational and governing documents are in form and substance acceptable to
the Lender and which satisfies all of the following requirements:
(i) Its purpose shall be limited solely to, as
applicable, (a) entering into this Loan Agreement with the Lender, (b)
owning, holding, selling, leasing, transferring, exchanging, operating
and managing the Premises and (c) transacting any and all lawful
business for which it may be organized under its constitutive law that
is incident, necessary and appropriate to accomplish the foregoing.
(ii) It does not own and will not own any asset or
property other than (a) the Premises, and/or (b) incidental Personalty
necessary for and used or to be used in connection with the ownership
or operation of the Premises.
(iii) It will not engage in any business other than the
ownership, management and operation of the Premises.
(iv) It will not enter into any contract or agreement
with any Affiliate, any constituent party of itself, any of its
owners, any guarantors of its obligations, or any
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Affiliate of any constituent party, owner or guarantor (collectively,
the "Related Parties") of itself, except upon terms and conditions
that are intrinsically fair, commercially reasonable and substantially
similar to those that would be available on an arms-length basis with
third parties not so affiliated with itself or such related parties.
(v) It has not incurred and will not incur any
indebtedness other than, as applicable, (a) the Loan, (b) trade and
operational debt incurred in the ordinary course of business with
trade creditors in amounts not to exceed One Hundred Thousand Dollars
($100,000.00), provided such debt is not evidenced by a note and is
not in excess of sixty (60) days past due. No other indebtedness may
be secured (senior, subordinate or pari passu) by the Premises.
(vi) It has not made and will not make any loans or
advances to any Person and shall not acquire obligations or securities
of any Related Party other than the Additional Loan.
(vii) It is and will remain solvent and it will pay its
debts and liabilities (including, as applicable, shared personnel and
overhead expenses) from its assets as the same shall become due.
(viii) It has done or caused to be done and will do all
things necessary to observe organizational formalities and preserve
its existence, and it will not, nor will it permit any related party
to, amend, modify or otherwise change the partnership certificate,
partnership agreement, articles of incorporation and bylaws, operating
agreement, trust or other organizational documents of Borrower or such
related party without the prior written consent of Lender.
(ix) It will maintain all of its books, records,
financial statements and bank accounts separate from those of any
other Person and its assets will not be listed as assets on the
financial statement of any other Person. It will file its own tax
returns and will not file a consolidated federal income tax return
with any other Person. It shall maintain its books, records,
resolutions and agreements as official records.
(x) It will be, and at all times will hold itself out to
the public as, a legal entity separate and distinct from any other
Person (including any Affiliate or other related party), shall correct
any known misunderstanding regarding its status as a separate entity,
shall conduct business in its own name, shall not identify itself or
any of its Affiliates as a division or part of the other and shall
maintain and utilize a separate telephone number and separate
stationery, invoices and checks.
(xi) It will maintain from its own assets (and without
contribution by other Persons) adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations.
(xii) Neither it nor any related party will seek its own
dissolution, winding up, liquidation, consolidation or merger in whole
or in part, or the sale of its material assets.
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(xiii) It will not commingle its assets with those of any
other Person and will hold all of its assets in its own name.
(xiv) Except as provided in Section 9.15 hereof, it will
not guarantee or become obligated for the debts of any other Person
and does not and will not hold itself out as being responsible for the
debts or obligations of any other Person.
(xv) If it is a limited partnership or a limited
liability company, at least one general partner or member, or if it is
a general partnership at least two general partners (each, an "SPC
Party") shall be a corporation whose sole asset is the interest in
Special Purpose Entity and each such SPC Party will at all times
comply, and will cause it to comply, with each of the representations,
warranties, and covenants contained in this definition of Special
Purpose Entity as if such representation, warranty or covenant was
made directly by such SPC Party. Upon the withdrawal or the
disassociation of the SPC Party from the Special Purpose Entity, the
Special Purpose Entity shall immediately appoint a new member whose
articles of incorporation are substantially similar to those of the
SPC Party and deliver a new Insolvency Opinion to the Rating Agency or
Rating Agencies, as applicable, with respect to the new SPC Party and
its equity owners.
(xvi) It shall at all times have (if a corporation) or
cause there to be at least two duly appointed members of the board of
directors (each an "Independent Director") of each SPC Party (if
Borrower is a limited partnership or a limited liability company)
reasonably satisfactory to Lender who is not at the time of initial
appointment and has not been at any time during the preceding five (5)
years: (i) a stockholder, director, officer, employee, partner,
attorney or counsel of Borrower or such SPC Party or any Affiliate of
either of them; (ii) a customer, supplier or other Person who derives
any of its purchases or revenues (other than any payments made in
connection with such service as Independent Director) from its
activities with Borrower or such SPC Party or any Affiliate of either
of them; (iii) a Person controlling or under common control with any
such stockholder, partner, customer, supplier or other Person; or (iv)
a member of the immediate family of any such stockholder, director,
officer, employee, partner, customer, supplier or other Person. (As
used herein, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of
management, policies or activities of a Person, whether through
ownership of voting securities, by contract or otherwise).
(xvii) It shall not cause or permit the board of directors
of an SPC Party to take any action which, under the terms of any
certificate of incorporation, by-laws or any voting trust agreement
with respect to any common stock, requires the vote of any SPC Party
unless at the time of such action there shall be at least one member
who is an Independent Director.
(xviii) It shall allocate fairly and reasonably any overhead
expenses that are shared with an Affiliate, including paying for
office space and services performed by any employee of an Affiliate or
related party.
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(xix) It shall not pledge its assets for the benefit of
any other Person other than with respect to the Loan.
(xx) It shall maintain a sufficient number of employees
in light of its contemplated business operations and pay the salaries
of its own employees from its own funds.
(xxi) It shall conduct its business so that the
assumptions made with respect to Borrower in the Insolvency Opinion
shall be true and correct in all respects.
Subordination Agreement. A subordination, non-disturbance and
attornment agreement by and among Lender, Borrower and any Lessee substantially
in the form attached hereto as Exhibit G and to the extent a new Subordination
Agreement is specifically required under the terms of this Loan Agreement, as
such form may be amended by Lender consistent with prudent underwriting
standards.
Substitute Property. Shall have the meaning set forth in
Section 2.6.
Substitute Release Amounts. Shall have the meaning set forth
in Section 2.6 (xiv).
Substituted Property. Shall have the meaning set forth in
Section 2.6.
Survey. A survey of the Land and Improvements (as-built) made
by a civil engineer or surveyor, duly licensed or registered in the State where
the applicable property is located, dated as of a date acceptable to the
Lender, containing a surveyor's certification acceptable to the Lender for the
benefit of the Borrower and the Lender (which certification shall, among other
things, indicate whether or not any of the Land or Improvements are located
within an area identified as having "special flood hazards" as such term is
used in the Flood Disaster Protection Act of 1973), together with its
successors and assigns, as their interests may appear, and otherwise in form
and substance reasonably acceptable to the Lender.
Tangible Personalty. As defined in the Security Instrument.
Tax and Insurance Reserve Account. An Eligible Account
established and maintained pursuant to the terms of this Loan Agreement.
Tenant Estoppel Certificate. A tenant estoppel certificate
substantially in the form attached hereto as Exhibit F, as such form may be
amended by Lender consistent with prudent underwriting standards.
Title Insurance Policy. Shall mean, with respect to each
Individual Property, a title insurance policy in a form acceptable to Lender in
its sole discretion, including all amendments and endorsements thereto.
Undefeased Note. Shall have the meaning set forth in Section
4(c) of the Note.
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U.S. Obligations. Any direct obligations of the United States
Government, including, without limitation, treasury bills, notes and bonds.
Section 1.2 Other Definitional Provisions.
(a) 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 word "including" when used in this Agreement is
intended to be illustrative and not exclusive. Section, subsection,
paragraph, clause, exhibit, schedule, addendum and rider references
contained in this Agreement are references to sections, subsections,
paragraphs, clauses, exhibits, schedules, addenda and riders in or to
this Agreement unless otherwise specified. The captions herein are
inserted only as a matter of convenience and for reference and in no
way define, limit or describe the scope of this Loan Agreement nor the
intent of any provision hereof. The terms set forth herein are
applicable to the singular as well as the plural forms of such terms
and to the masculine as well as the feminine and neuter genders of
such terms.
(b) All references in this Loan Agreement or any other
Loan Document to any Loan Document, agreement, contract, license,
document or instrument shall mean such Loan Document, agreement,
contract, license, document or instrument as amended, modified,
renewed, extended, restated, supplemented, reissued, and/or
substituted from time to time.
(c) All references or citations in this Loan Agreement
or any other Loan Document to any statute, law, treaty, rule,
regulation or other Requirement of Law shall mean such statute, law,
treaty, rule, regulation or other Requirement of Law as amended,
modified, supplemented, replaced or substituted from time to time.
Section 1.3 Incorporation by Reference of Commitment.
All of the terms and conditions of the Commitment are hereby
incorporated herein by reference, as if such terms and conditions were set
forth herein in their entirety, but in the event of any conflict or discrepancy
between the terms and/or conditions of this Loan Agreement and those of the
Commitment, the terms and conditions of this Loan Agreement shall control.
ARTICLE II
THE LOAN
Section 2.1 Loan Terms.
Subject to the terms and conditions of this Loan Agreement
and the other Loan Documents, the Lender agrees to make the Loan to the
Borrower in the principal sum of the Loan Amount, such borrowing to be
evidenced by the Note and the other Loan Documents.
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Section 2.2 Interest.
The outstanding principal balance of the Loan shall bear
interest, and principal and interest shall be repayable, in accordance with the
terms of the Note.
Section 2.3 Term.
The Loan shall be due and payable in full, unless accelerated
sooner pursuant to the terms of this Loan Agreement, on the Maturity Date.
Section 2.4 Payments.
All payments by the Borrower under the Loan shall be made in
accordance with the terms of the Note.
Section 2.5 Release of Properties.
Except as set forth in this Section 2.5, no repayment or
prepayment of all or any portion of the Note shall cause, give rise to a right
to require, or otherwise result in, the release of the Lien of the Security
Instrument on the Premises or any portion thereof.
Release on Payment in Full. If Borrower shall pay or cause to
be paid, the principal of and interest on the Note in full at maturity or as
permitted in accordance with the terms thereof and all other Indebtedness
payable to Lender hereunder by Borrower or secured by the Security Instrument or
by the other Loan Documents and all of the payment Obligations shall have been
performed, then the Security Instrument and all the other Loan Documents shall
be discharged and satisfied or assigned (to Borrower or to any other Person at
Borrower's direction and without representation or warranty by, or recourse to,
Lender), at Borrower's option, without warranty (except that Lender shall be
deemed to have represented that such release and termination or reassignment has
been duly authorized and that it has not assigned or encumbered the Security
Instrument or the other Loan Documents), at the expense of Borrower upon its
written request. Concurrently with such release and satisfaction or assignment
of any Security Instrument and all the other Loan Documents, Lender will return
to Borrower (or in the case of an assignment, the assignee) the Note and all
insurance policies relating to the Premises which may be held by Lender, any
amounts held in escrow pursuant to the Security Instrument or the Cash
Management Agreement, if applicable, or otherwise, and any part of the Premises
or other Collateral that may be in its possession and, on the written request
and at the expense of Borrower, will execute and deliver such instruments of
conveyance, assignment and release (including appropriate UCC-3 termination
statements) prepared by Borrower and as may reasonably be requested by Borrower
to evidence and to assure the effectiveness of such release and satisfaction, or
assignment, and any such instrument, when duly executed by Lender and, if
appropriate, duly recorded by Borrower in the places where the Security
Instrument and each other Loan Document is recorded, shall conclusively evidence
the release and satisfaction or assignment of the Security Instrument and the
other Loan Documents.
Section 2.6 Substitution of Properties. Subject to the
terms and conditions set forth in this Section 2.6, Borrower may obtain a
release of the Lien of a Security Instrument (and
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the related Loan Documents) encumbering an Individual Property (a "Substituted
Property") by substituting therefor its fee interest in one or more hotel
properties of like kind and quality acquired by Borrower (individually, a
"Substitute Property" and collectively, the "Substitute Properties"), provided
that no such substitution may occur after the Maturity Date. In addition, any
such substitution shall be subject, in each case, to the satisfaction of the
following conditions precedent:
(i) The Substitute Property must be a property as to
which Borrower will hold indefeasible fee or ground leasehold title
free and clear of any lien or other encumbrance except for Permitted
Encumbrances, Leases and easements, restrictive covenants and other
title exceptions which do not have a material adverse effect on the
utility or value of such property for its current use.
(ii) Lender and Rating Agencies shall have received (A) a
copy of a deed conveying all of Borrower's right, title and interest
in and to the Substituted Property (x) to an entity other than
Borrower or its general partner or managing member (as applicable) in
an arms' length transaction or (y) to the REIT or the Operating
Partnership and (B) a letter from Borrower countersigned by a title
insurance company acknowledging receipt of such deed and agreeing to
record such deed in the real estate records for the county in which
the Substituted Property is located. In the event the Substituted
Property is to be conveyed to the REIT or the Operating Partnership,
Lender shall also have received (a) a copy of a fully executed
contract of sale between the REIT or the Operating Partnership, as
applicable, and an entity other than Borrower or a Borrower Party for
the sale of the Substituted Property in an arms' length transaction,
which contract of sale (i) at the time of substitution, is not subject
to any contingencies, except for the payment of the purchase price by
the purchaser and the delivery of title by the REIT or the Operating
Partnership, as applicable and (ii) contains a closing date which is
not more than thirty (30) days following the date of the proposed
substitution and (b) evidence that any good-faith deposit required
under such contract of sale has been deposited into escrow.
(iii) Lender and the applicable Rating Agencies shall have
received an MAI appraisal of the Substitute Property dated no more
than forty-five (45) days prior to the substitution by an appraiser
acceptable to such Rating Agencies, indicating an appraised value of
the Substitute Property that is at least equal to the greater of the
appraised value of the Substituted Property determined by Lender as of
the date hereof or determined by an Independent Appraiser as of the
date immediately preceding the encumbrance of the Substitute Property
by the related Security Instrument.
(iv) The Debt Service Coverage Ratio Premises for the
Substitute Property shall be a minimum of 2.3x, as determined by
Lender in its sole and absolute discretion.
(v) The Net Operating Income Premises for the Substitute
Property either (A) does not show a successive decrease over the three
(3) years immediately prior to the date of substitution, or (B) if the
Substitute Property has been substantially renovated
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within such three (3) year period, the Net Operating Income Premises
shall not show a successive decrease for such lesser period of no less
than twelve (12) months.
(vi) The Net Operating Income Leases for the Substitute
Property either (A) does not show a successive decrease over the three
(3) years immediately prior to the date of substitution, or (B) if the
Substitute Property has been substantially renovated within such three
(3) year period, the Net Operating Income Leases shall not show a
successive decrease for such lesser period of no less than twelve (12)
months
(vii) The Net Operating Income Premises for the twelve
(12) month period immediately preceding the substitution for the
Substitute Property is at least one hundred five percent (105%) the
Net Operating Income Premises for the twelve (12) month period
immediately preceding the substitution for the Substituted Property.
(viii) The Net Operating Income Leases for the twelve (12)
month period immediately preceding the substitution for the Substitute
Property is at least one hundred five percent (105%) the Net Operating
Income Leases for the twelve (12) month period immediately preceding
the substitution for the Substituted Property.
(ix) The Debt Service Coverage Ratio Premises after any
proposed substitution, based on the remaining collateral properties,
including the Substitute Property shall be at least equal to the
greater of (i) the Debt Service Coverage Ratio Premises on the date
hereof; or (ii) the Debt Service Coverage Ratio Premises immediately
prior to such substitution.
(x) The Debt Service Coverage Ratio Leases after any
proposed substitution, based on the remaining collateral properties,
including the Substitute property shall be at least equal to the
greater of (i) the Debt Service Coverage Ratio Leases on the date
hereof; or (ii) the Debt Service Coverage Ratio Leases immediately
prior to such substitution.
(xi) The Person transferring the Substitute Property is
solvent and the Substitute Property was transferred to Borrower in an
arm's length transaction.
(xii) If the Loan is part of a Securitization, Lender
shall have received evidence in writing from the Rating Agencies to
the effect that such substitution will not result in a withdrawal,
qualification or downgrade of the respective ratings in effect
immediately prior to such substitution for the Securities issued in
connection with the Securitization that are then outstanding.
(xiii) No Event of Default shall have occurred and be
continuing. Lender and the Rating Agencies shall have received a
certificate from Borrower confirming the foregoing.
(xiv) Borrower shall have executed, acknowledged and
delivered to Lender (A) a Security Instrument, and two UCC Financing
Statements with respect to the Substitute Property, together with a
letter from Borrower countersigned by a title
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insurance company acknowledging receipt of such Security Instrument
and UCC-1 Financing Statements and agreeing to record or file, as
applicable, such Security Instrument and one of the UCC-1 Financing
Statements in the real estate records for the county in which the
Substitute Property is located and to file one of the UCC-1 Financing
Statement in the office of the Secretary of State of the state in
which the Substitute Property is located, so as to effectively create
upon such recording and filing valid and enforceable liens upon the
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 Encumbrances and such other liens as are permitted
pursuant to the Loan Documents, (B) an Hazardous Materials Indemnity
Agreement with respect to the Substitute Property, (C) a
Nondisturbance Agreement for the Substitute Property and (D) written
confirmation from each Indemnitor and all Borrower Principals
regarding such substitution. The Security Instrument, UCC-1 Financing
Statements and Hazardous Materials 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 Substitute Property
as the Individual Property that is the subject of such documents and
such modifications reflecting the laws of the state in which the
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 (xiv)
below. The Security Instrument encumbering the Substitute Property
shall secure all amounts evidenced by the Note, provided that in the
event that the jurisdiction in which the 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 the
Substitute Property. The amount of the Loan allocated to the
Substitute Property (such amount being hereinafter referred to as the
"Substitute Release Amount") shall equal the Adjusted Release Amount
of the related Substituted Property.
(xv) Lender shall have received (A) any "tie-in" or
similar endorsement to each Title Insurance Policy insuring the lien
of an existing Security Instrument as of the date of the substitution
available with respect to the Title Insurance Policy insuring the lien
of the Security Instrument with respect to the Substitute Property and
(B) a Title Insurance Policy (or a marked, signed and redated
commitment to issue such Title Insurance Policy) insuring the lien of
the Security Instrument encumbering the Substitute Property, issued by
the title company that issued the Title Insurance Policies insuring
the lien of the existing Security Instrument and dated as of the date
of the substitution, with reinsurance and direct access agreements
that replace such agreements issued in connection with the Title
Insurance Policy insuring the lien of the Security Instrument
encumbering the Substituted Property, to the extent such agreements
are available in the jurisdiction in which the Substitute Property is
located. The Title Insurance Policy issued with respect to the
Substitute Property shall (1) provide coverage in the amount of the
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
Allocated Loan Amount, (2) insure Lender that the relevant
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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 Title Insurance Policies insuring the liens of
the existing Security Instrument, to the extent 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.
(xvi) Lender shall have received a current title survey
for each Substitute Property, certified to the title company and
Lender and their successors and assigns, in the same form and having
the same content as the certification of the Survey of the Substituted
Property prepared by a professional land surveyor licensed in the
state in which the Substitute Property is located and acceptable to
the Rating Agencies in accordance with the 1997 Minimum Standard
Detail Requirements for ALTA/ACSM Land Title Surveys, including items
1, (if readily available) 2, 3, 4, 6, 7 (a) (b) (c) , 8, 9, 10, 11 and
13 from Table A. Such survey shall reflect the same legal description
contained in the Title Insurance Policy relating to such Substitute
Property and shall include, among other things, a metes and bounds
description of the real property comprising part of such Substitute
Property. The surveyor's seal shall be affixed to each survey and each
survey shall certify that the surveyed property is not located in a
"one-hundred-year flood hazard area."
(xvii) Lender shall have received valid certificates of
insurance indicating that the requirements for the policies of
insurance required for an Individual Property hereunder have been
satisfied with respect to the Substitute Property and evidence of the
payment of all premiums payable for the existing policy period.
(xviii) Lender shall have received a Phase I environmental
report and, if recommended under the Phase I environmental report, a
Phase II environmental report from a nationally recognized
environmental consultant approved by the Rating Agencies (if
applicable), not less than forty-five (45) days prior to such release
and substitution, which conclude that the Substitute Property does not
contain any Hazardous Materials (except for cleaning and other
products used in connection with the routine maintenance or repair of
the Substitute Property or the operation thereof as a hotel, in full
compliance with Hazardous Materials Laws) and is not subject to any
risk of contamination from any off-site Hazardous Materials. If any
such report discloses the presence of any Hazardous Materials (except
for cleaning and other products used in connection with the routine
maintenance or repair of the Substitute Property or the operation
thereof as a hotel, in full compliance with Hazardous Materials Laws)
or the risk of contamination from any off-site Hazardous Materials,
such report shall include an estimate of the cost of any related
remediation and Borrower shall deposit with Lender an amount equal to
one hundred twenty-five percent (125%) of such estimated cost, which
deposit shall constitute additional security for the Loan and shall be
released to Borrower upon the delivery to Lender of (A) an update to
such report indicating that there is no longer any
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Hazardous Materials (except for cleaning and other products used in
connection with the routine maintenance or repair of the Substitute
Property or the operation thereof as a hotel, in full compliance with
Hazardous Materials Laws) on the Substitute Property or any danger of
contamination from any off-site Hazardous Materials that has not been
fully remediated in accordance with all applicable laws and (B) paid
receipts indicating that the costs of all such remediation work have
been paid. Such report shall also state the amount of time that will
be necessary to complete such remediation, as may be required by law.
Borrower covenants to undertake any repairs, cleanup or remediation
indicated.
(xix) Borrower shall deliver or cause to be delivered to
Lender (A) updates certified by Borrower of all organizational
documentation related to Borrower and/or the formation, structure,
existence, good standing and/or qualification to do business delivered
to Lender in connection with the Closing Date; (B) good standing
certificates, certificates of qualification to do business in the
jurisdiction in which the Substitute Property is located (if required
in such jurisdiction) and (C) resolutions of the managing member of
Borrower authorizing the substitution and any actions taken in
connection with such substitution.
(xx) Lender shall have received the following opinions of
Borrower's counsel (which opinions, with respect to the opinions set
forth in clauses (A), (B) and (C) below, shall be in form similar to
the corresponding opinions delivered in connection with the closing of
the Loan): (A) an opinion or opinions of counsel admitted to practice
under the laws of the state in which the Substitute Property is
located stating that the Loan Documents delivered with respect to the
Substitute Property pursuant to clause (viii) above are valid and
enforceable in accordance with their terms, subject to the laws
applicable to creditors' rights and equitable principles, and that
Borrower is qualified to do business and in good standing under the
laws of the jurisdiction where the Substitute Property is located or
that Borrower is not required by applicable law to qualify to do
business in such jurisdiction; (B) an opinion of counsel stating that
the Loan Documents delivered with respect to the Substitute Property
pursuant to clause (viii) above were duly authorized, executed and
delivered by Borrower and that, to the best of Borrower's counsel's
knowledge, the execution and delivery of such Loan Documents and the
performance by Borrower of its obligations thereunder will not cause a
breach of, or a default under, any agreement, document or instrument
to which Borrower is a party or to which it or its properties are
bound; (C) an opinion of counsel stating that subjecting the
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 indicating that the substitution does
not affect the opinions set forth therein; (E) an opinion of counsel
acceptable to the applicable Rating Agencies stating that the
substitution and the related transactions do not constitute a
fraudulent conveyance under applicable bankruptcy and insolvency laws
and (F) an opinion of counsel acceptable to the applicable Rating
Agencies that the substitution does not constitute a "significant
modification" of the Loan
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under Section 1001 of the Code or otherwise cause a tax to be imposed
on a "prohibited transaction" by any REMIC.
(xxi) Borrower shall have paid or caused to be paid all
Basic Carrying Costs relating to each of the Individual Properties and
the Substitute Property, including, without limitation, (i) accrued
but unpaid insurance premiums relating to each of the Individual
Properties and the Substitute Property, (ii) currently due taxes
(including any in arrears) relating to each of the Individual
Properties and the Substitute Property and (iii) any other charges
relating to each of the Individual Properties and Substitute Property
which are currently due.
(xxii) Borrower shall have paid or reimbursed Lender for
all third party out-of-pocket costs and expenses incurred by Lender
(including, without limitation, reasonable attorneys fees and
disbursements) in connection with the substitution and Borrower 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.
Borrower shall have paid all costs and expenses of the Rating Agencies
incurred in connection with the substitution.
(xxiii) Lender shall have received annual operating
statements and occupancy statements for the Substitute Property for
the three (3) most recently completed fiscal years and a current
operating statement for the Substituted Property or, if information is
not available for a three (3) year period or if the Substituted
Property has been substantially renovated within such three (3) year
period, such lesser period as is available, but in no event less than
twelve (12) months. Each of the statements required under this clause
(xvii) shall be certified to Lender as being true and correct and a
certificate from Borrower certifying that there has been no adverse
change in the financial condition of the Substitute Property since the
date of such operating statements.
(xxiv) Borrower shall have delivered to Lender estoppel
certificates from any Operating Lessees and other tenants of the
Substitute Property. All such estoppel certificates shall be in the
form attached hereto as Exhibit F and shall indicate, among other
things, 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 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 been completed, Borrower shall, if
required by the Rating Agencies, deliver to Lender financial
statements indicating that Borrower has adequate funds to pay all
costs related to such tenant improvement work as required under such
lease.
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(xxv) Lender shall have received copies of all tenant
leases affecting the Substitute Property certified by Borrower as
being true and correct. Lender shall have received a current Rent Roll
of the Substitute Property certified by Borrower as being true and
correct.
(xxvi) Lender shall have received a Nondisturbance
Agreement with respect to all Operating Leases and Subordination
Agreements with respect to any other leases which are not subordinate
by their terms to the Security Instrument with respect to the
Substitute Property.
(xxvii) Lender shall have received (A) an endorsement to the
Title Insurance Policy insuring the lien of the Security Instrument
encumbering the Substitute Property insuring that the Substitute
Property constitutes a separate tax lot or, if such an endorsement is
not available in the state in which the Substitute Property is
located, a letter from the title insurance company issuing such Title
Insurance Policy stating that the Substitute Property constitutes a
separate tax lot or (B) a letter from the appropriate taxing authority
stating that the Substitute Property constitutes a separate tax lot.
(xxviii) Lender shall have received a physical conditions
report with respect to the Substitute Property from a nationally
recognized structural consultant approved by the Rating Agencies (if
applicable) in a form recognized and approved by such Rating Agencies
not less than forty-five (45) days prior to such release and
substitution stating that the Substitute Property and its use comply
in all material respects with all applicable Requirements of Law
(including, without limitation, zoning, subdivision and building laws)
and that the Substitute Property is in good condition and repair and
free of damage or waste. If compliance with any Requirements of Law
are not addressed by the physical conditions report, such compliance
shall be confirmed by delivery to Lender of a certificate of an
architect licensed in the state in which the Substitute Property is
located, a letter from the municipality in which such Substitute
Property is located, a certificate of a surveyor that is licensed in
the state in which the Substitute Property is located (with respect to
zoning and subdivision laws), an ALTA 3.1 zoning endorsement to the
Title Insurance Policy delivered pursuant to clause (xii) above (with
respect to zoning laws) or a subdivision endorsement to the Title
Insurance Policy delivered pursuant to clause (xii) above (with
respect to subdivision laws) to the extent such endorsements are
available in the jurisdiction in which the Substitute Property is
located. If the physical conditions report recommends that any repairs
be made with respect to the Substitute Property, such physical
conditions report shall either (A) include an estimate of the cost of
such recommended repairs (in which case Borrower shall deposit into
the Repair Escrow Account an amount equal to one hundred twenty-five
percent (125%) of such estimated cost), or (B) state the specific
amounts that need to be reserved over time in order to meet the
requirements of such replacements, but in no event less than five
percent (5%) of gross revenues (in which case Borrower shall deposit
such reserves into the Replacement Reserve Account on a monthly
basis). Any such deposits shall constitute additional security for the
Loan pursuant to Section 6.6 and shall be released to Borrower
pursuant to Section 6.9. Borrower covenants to undertake any repairs,
cleanup
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or remediation indicated in the physical conditions report before the
earlier of (i) the time required by applicable law or (ii) the time
recommended in the physical conditions report.
(xxix) Lender shall have received and approved each
Operating Lease, Franchise Agreement and Management Agreement, if any,
relating to the Substitute Property, and Borrower shall have
demonstrated that such agreements are substantially similar to the
agreements then in place at the Substituted Property.
(xxx) 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.
(xxxi) Lender shall have received copies of all contracts
and agreements relating to the leasing and operation of the Substitute
Property together with a certification of Borrower attached to each
such contract or agreement certifying that the attached copy is a true
and correct copy of such contract or agreement and all amendments
thereto.
(xxxii) Borrower shall submit to Lender, not less than
thirty (30) 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.
Borrower shall deliver an Officer's Certificate certifying that the
requirements set forth in this Section 2.6 have been satisfied.
(xxxiii) The total Allocated Loan Amount, in the aggregate,
for all prior Substituted Properties (including the current
Substituted Property) is less than twenty percent (20%) of the
Original Principal Amount of the Loan.
(xxxiv) The Substitute Property shall be subject to the lien
of the related Security Instrument and subject to the
cross-collateralization and cross-default provisions of this Loan
Agreement and the Security Instrument.
(xxxv) With respect to the Substitute Property, Borrower
shall deliver to Lender (i) copies of all franchisor inspection
reports and performance improvement programs with respect to the
Substitute Property for the two (2) year period prior to the
substitution or if such information is not available for such two (2)
year period, such lesser period as is available and (ii) an Officer's
Certificate certifying that the items delivered in (i) above indicate
that Borrower is in compliance with the franchisor's requirements.
Upon the satisfaction of the foregoing conditions precedent, Lender will
release its lien from the Substituted Property to be released and the
Substitute Property shall be deemed to be an Individual Property for purposes
of this Loan Agreement and the Substitute Release Amount with respect to such
Substitute Property shall be deemed to be the Allocated Loan Amount with
respect to such Substitute Property for all purposes hereunder.
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ARTICLE III
CONDITIONS PRECEDENT TO LOAN
The obligation of the Lender to make the Loan is subject to
the Lender's waiver or satisfaction, by proper evidence, execution and/or
delivery to the Lender of each of the following items, each in form and
substance satisfactory to the Lender and the Lender's counsel:
Section 3.1 Loan Documents.
Each of the Loan Documents.
Section 3.2 Brokerage Commissions.
All brokerage commissions, finder's fees or similar
compensation in connection with the purchase of the Premises (if all or any
portion of the Premises is being purchased with Loan proceeds), the making of
the Loan, or the transactions contemplated by the Loan Documents have been paid
in full.
Section 3.3 Title Evidence.
An original signed title commitment in form and substance
satisfactory to the Lender, for a standard ALTA mortgagee policy as to the
Premises from a company or from companies approved by the Lender (including any
reinsurance agreements and endorsements required by the Lender), providing
coverage for the full principal amount of the Loan, containing such coverages
and endorsements as may be required by the Lender, together with copies of all
recorded documents creating exceptions to such policy.
Section 3.4 Survey.
Two (2) originals of the Survey.
Section 3.5 Insurance.
Each policy of insurance required by this Loan Agreement is
in full force and effect on the Closing Date.
Section 3.6 Authority Documents.
(a) Organizational Documents. As applicable, a certified
copy of each limited partnership agreement, limited partnership certificate,
partnership agreement, articles of incorporation, bylaws, shareholder
agreements, articles of organization and operating agreement of the Borrower
and each Borrower Principal (when not an individual), and each general partner,
member or shareholder of the Borrower, with all amendments, modifications,
supplements and restatements thereto.
(b) Assumed Name Certificate. A certified copy of each
assumed name certificate, if any, of the Borrower and each Borrower Principal
(when not an individual).
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(c) Good Standing Certificates. Good standing
certificates, or their equivalent, issued by the Secretary of State and all
other appropriate offices of the state of organization of the Borrower and each
Borrower Principal (when not an individual) and evidence satisfactory to the
Lender of the Borrower's and each such Borrower Principal's authorization to do
business in each state where an Individual Property is located if the state of
the Borrower's and each such Borrower Principal's organization is other than
the state where such Individual Property is located.
(d) Resolutions and Consents. Certified resolutions
and/or consents authorizing the Borrower and each Borrower Principal (when not
an individual) to enter into the Loan Documents.
Section 3.7 Financial Statements and Operating
Statements.
Financial Statements of the Borrower and each Borrower
Principal as of the end of the most recent fiscal year, together with Operating
Statements for the period from the beginning of the current fiscal year and
ending on a date not more than sixty (60) days prior to the Closing Date.
Section 3.8 Opinions.
Opinions of independent counsel to the Borrower in form and
substance acceptable to the Lender, dated as of the Closing Date including,
without limitation, an opinion with respect to the due execution and
enforceability of the Loan Documents and an opinion that in the event of a
bankruptcy proceeding involving an Affiliate of Borrower the assets of Borrower
including the Premises shall not be substantively consolidated with the assets
of the Affiliate.
Section 3.9 Compliance with Laws.
The Premises and the Intangible Personalty, and the intended
uses thereof, comply in all material respect with all Requirements of Law.
Section 3.10 Agreements.
Copies of all operating agreements, service contracts, labor
contracts, license agreements and equipment leases, if any, relating to the
Borrower's ownership and operation of the Premises executed by or binding
against Borrower. Copies, of any and all franchise agreements, purchase
contracts, comfort letters, Subordination Agreements and Nondisturbance
Agreements, relating to the Premises.
Section 3.11 Taxes.
The Land and the Improvements are separately assessed for tax
purposes, together with tax parcel identification numbers, tax rates, estimated
tax values and the identities of the taxing authorities.
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Section 3.12 Utilities.
The availability and suitability of the water, storm water,
electric, oil, natural gas, sewer and telephone utilities needed to properly
service the Premises in its intended use.
Section 3.13 Reserve Accounts.
The establishment of each Reserve Account with balances equal
to any Initial Reserve Deposit thereto required by this Loan Agreement
(including the Program Rider) or any of the other Loan Documents.
Section 3.14 Engineering Report.
An Engineering Report.
Section 3.15 Certificate of Occupancy and Other Permits.
Such certificates of occupancy, permits and licenses as the
Lender may require to evidence that the Premises is suitable for occupancy and
use.
Section 3.16 Environmental Assessment and O&M Program.
An Environmental Assessment of the Premises. The Borrower
shall furnish and adopt an O&M Program, to the extent recommended by an
Environmental Assessment with respect to all Hazardous Materials, if any,
identified in such Environmental Assessment or as otherwise reasonably required
by the Lender.
Section 3.17 Appraisal.
An Appraisal.
Section 3.18 Equity.
The Borrower's equity as of the Closing Date is acceptable to
the Lender.
Section 3.19 Debt Service.
As of the Closing Date, the Borrower's: (a) Debt Service
Coverage Ratio Premises shall be a minimum of 2.30x and; (b) Debt Service
Coverage Ratio Leases shall be a minimum of 2.05x.
Section 3.20 Loan to Value Ratio.
The loan to value ratio as calculated for the Premises by
Lender in its sole discretion is less than 50%.
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Section 3.21 Special Purpose Entity.
The Borrower is a Special Purpose Entity.
Section 3.22 Miscellaneous.
All other documents or items set forth in the Commitment
(including all supplement and special conditions included in the Commitment) or
otherwise required by the Lender.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make
the Loan, the Borrower hereby represents and warrants and, where specifically
indicated, each Borrower Principal hereby represents and warrants (but only for
purposes of each Borrower Principal's obligations under the recourse provisions
of Section 8 of the Note), to the Lender (for itself, but not otherwise) on the
Closing Date as follows:
Section 4.1 Existence; Compliance with Law.
The Borrower and each Borrower Principal (when not an
individual) (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the power and
authority, and the legal right, to own and operate its property, to lease the
property it operates as lessor and to conduct the business in which it is
currently engaged, (c) is duly qualified to do business in and is in good
standing under the laws of each jurisdiction where an Individual Property is
located and where its ownership, lease or operation of property or the conduct
of its business requires such qualification and (d) is in compliance with all
Requirements of Law.
Section 4.2 Equity Interests.
The owners (beneficial and otherwise) of all of the Equity
Interests in the Borrower are as set forth in Exhibit A and have been duly
authorized, are validly issued and outstanding, fully paid and non-assessable.
There are no outstanding options or other rights pertaining to the Equity
Interests in the Borrower, and no voting trust or similar agreement affecting
either ownership of or the right to vote such Equity Interests (except for
those items detailed in the Borrower's operating agreement or certificate of
incorporation).
Section 4.3 Power; Authorization; Enforceable
Obligations.
The Borrower and each Borrower Principal (when not an
individual) has all requisite legal power and authority, and the legal right,
to make, deliver and perform each Loan Document to which it is, or is to be, a
party and to borrow hereunder, and has taken all necessary corporate,
partnership or company action (as the case may be) to authorize the execution,
delivery and performance of each Loan Document to which it is, or is to be, a
party and to
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authorize the borrowings on the terms and conditions of this Agreement and the
Note. No consent or authorization of, filing with, notice to or other act by or
in respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of any Loan Document, except to the
extent specified in any such Loan Document. Each Loan Document has been (or
will be) duly executed by, and delivered on behalf of the Borrower and the
Borrower Principals, as the case may be. Each Loan Document constitutes (or
when executed and delivered will constitute) the legal, valid and binding
obligation, enforceable against the Borrower and the Borrower Principals, as
the case may be, in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
sequestration, liquidation, consolidation or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
Section 4.4 No Legal Bar.
The execution, delivery and performance of the Loan Documents
will not violate any Requirement of Law applicable to the Borrower and the
Borrower Principals or any contractual obligation, security, agreement,
instrument, license or other undertaking by which the Borrower or the Borrower
Principal is bound and will not result in, or require, the creation or
imposition of any Lien (other than under the Loan Documents) on any of their
properties or revenues pursuant to any such Requirement of Law or contractual
obligation, security, agreement, instrument, license or other undertaking.
Section 4.5 No Litigation.
No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of the
Borrower and the Borrower Principals, threatened against any of them or any of
their properties or revenues, or with respect to any Loan Document or any of
the transactions contemplated thereby, which would have a material adverse
effect on Borrower or Borrower Principal, and the Borrower is not a surety on
any bond through which a Lien might be created superior to the Security
Instrument.
Section 4.6 No Default.
The Borrower is not in default under, or with respect to, any
contractual obligation, security, agreement, instrument, license or other
undertaking by which the Borrower is bound which is in excess of $100,000.00.
The Borrower Principal is not in default under, or with respect to, any
contractual obligation, security, agreement, instrument, license or undertaking
by which the Borrower Principal is bound which would materially affect the
Borrower Principal's obligations under the Note. No Default Condition or Event
of Default has occurred and is continuing.
Section 4.7 Solvency; Fraudulent Conveyance.
The Borrower and each Borrower Principal is solvent and will
not be rendered insolvent by the transactions contemplated hereby and, after
giving effect to such transactions,
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will not be left with an unreasonably small amount of capital with which to
engage in its business. Neither the Borrower nor the Borrower Principal intends
to incur, or believes that it has incurred, debts beyond its ability to pay
such debts as they mature. Neither the Borrower nor the Borrower Principal has
commenced or filed nor contemplates the commencement or filing of any
bankruptcy, insolvency, reorganization, moratorium, sequestration, liquidation,
consolidation or similar proceedings or the appointment of a receiver,
liquidator, assignee, conservator, trustee, sequestrator or similar official in
respect of it or any of its assets. The amount of the Loan constitutes
reasonably equivalent value and fair consideration for the transfer to the
Lender of the interest in the Premises represented by the Security Instrument.
Neither the Borrower nor the Borrower Principal is transferring any interest in
the Premises with any intent to hinder, delay or defraud any of its creditors.
Section 4.8 Special Purpose Entity.
The Borrower is a Special Purpose Entity.
Section 4.9 Taxes.
The Borrower and each Borrower Principal, respectively, has
filed or caused to be filed all tax returns which are required to be filed and
has paid all taxes shown to be due and payable on said returns and on any
assessments made against it and any of its property and, to its knowledge, all
other taxes, fees and other charges imposed on it and any of its property by
any Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with Required Accounting Standards have
been provided on its books). No tax Lien has been filed with respect to any
such tax, fee or other charge. To its knowledge, no claim is being asserted
with respect to any such tax, fee or other charge which, in either case, could
reasonably be expected to have a material adverse change with respect to the
Borrower or the Premises.
Section 4.10 No Burdensome Restrictions.
Neither the Borrower nor the Borrower Principal is a party to
or subject to any contractual obligation, security, agreement, instrument,
license or other undertaking by which the Borrower or such Borrower Principal
is bound (other than the Loan Documents) which has had or could reasonably be
expected to have a material adverse effect on the business, properties, assets,
operations or condition, financial or otherwise, of it, or on the ability of it
to carry out its obligations hereunder or under the other Loan Documents.
Notwithstanding anything contained herein to the contrary, Lender has consented
to that certain Revolving Line of Credit entered into by Borrower Principal
under which Lender serves as Agent.
Section 4.11 Investment Company Act; Other Regulations.
Neither the Borrower nor the Borrower Principal is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. Neither
the Borrower nor the Borrower Principal is subject
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to regulation under any Requirement of Law which limits its ability to incur
Obligations, other than as set forth herein or in the other Loan Documents.
Section 4.12 Subsidiaries.
The Borrower has no Subsidiaries.
Section 4.13 Title to Premises.
The Borrower is seized of the Land and Improvements (and any
fixtures) in fee, or is the owner of a leasehold interest in the Land and
Improvements (and any fixtures) pursuant to a Ground Lease, and has marketable
title to any appurtenant easements and has the right to convey the same, that
title to such property is free and clear of all encumbrances except for the
Permitted Encumbrances, and that it will warrant and defend the title to such
property (except for the Permitted Encumbrances) against the claims of all
Persons. As to the balance of the Premises, the Rents and Profits and the
Intangible Personalty, the Borrower represents and warrants that it has
marketable title to such property, that it has the right to convey such
property and that it will warrant and defend such property against the claims
of all persons or parties.
Section 4.14 Ownership of Personalty.
The Borrower owns, subject to no Lien other than the Lien of
the Security Instrument and the other Loan Documents, as appropriate, all of
the Personalty.
Section 4.15 Financial Statements.
As of the date of the most recent Financial Statement
furnished to the Lender, neither the Borrower nor the Borrower Principal had
any material (a) indebtedness for borrowed money or for the deferred purchase
price of property or services, as evidenced by bonds, notes or other similar
instruments or agreements, (b) obligations as a lessee under leases which shall
have been or should be, in accordance with Required Accounting Standards,
recorded as capital leases, (c) obligations under direct or indirect guaranties
in respect of, or any obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or any obligations of another of the kind referred to in
clause (a) or (b) above, (d) contingent liability or liability for taxes, or
(e) long-term lease or unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction, which is not, to the extent required by Required Accounting
Standards, reflected in the foregoing statements or in the notes thereto. No
sale, transfer or other disposition by the Borrower or the Borrower Principal
of any material part of its business or property has occurred since the date of
such party's most recent Financial Statement furnished to the Lender.
Section 4.16 No Change.
There has been no development or event which has had or could
reasonably be expected to have a material adverse change (a) with respect to
the Borrower or the Borrower Principal since the date of such party's most
recent Financial Statement furnished to the Lender,
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or (b) with respect to the Premises or any portion of the Intangible Personalty
since the date of the most recent Operating Statements furnished to the Lender.
Section 4.17 Management Agreement.
As of the date hereof, there are no Management Agreements,
other than the Operating Lease, in place on any Individual Property.
Section 4.18 Accuracy of Information.
(a) Each exhibit, Financial Statement, Operating
Statement, Rent Roll, document, book, record, report and other item of
written information furnished by the Borrower or the Borrower
Principals, as the case may be, to the Lender in connection with the
Loan Documents is accurate as of its date and as of the date so
furnished and (b) all financial projections contained therein are
based on reasonable and stated assumptions, and no such document
contains any material misstatement of fact or omits to state a
material fact.
Section 4.19 Principal Place of Business.
The Borrower's principal place of business and chief
executive office is at the location set forth in the first paragraph of this
Loan Agreement and it has not operated under any name other than its own name
at any time from the date of its formation.
Section 4.20 Taxpayer Identification Number.
The Borrower's taxpayer identification number is as set forth
in the Note.
Section 4.21 Insurance.
The Borrower does not know of and has not received any
written notice of any violation of any insurance policy term that remains
uncured and, to its best knowledge, it and the Premises and the use thereof
materially comply with all insurance policy terms.
Section 4.22 Mechanic's Liens, etc.
Except as have been paid for in full by the Borrower on or
before the Closing Date or as shall be paid prior to delinquency in the
ordinary course of the Borrower's business, no improvements or repairs have
been made to the Premises during the one hundred twenty (120) days preceding
the date hereof; there are no contracts not fully performed, and no outstanding
bills incurred, for labor or materials used in making improvements or repairs
on the Premises, or for services of architects, surveyors or engineers incurred
in connection therewith. The Borrower has made no contract or arrangement of
any kind whatsoever, the performance of which by the other party thereto could
give rise to a Lien on the Premises superior to that of the Security
Instrument.
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Section 4.23 No Violation.
Except as disclosed to Lender, the Borrower has not received
any notice of, and, to the best of its knowledge is not in violation of any
Requirement of Law, any Hazardous Materials Law or any Governmental Action. To
the best of Borrower's knowledge, the Premises are in material compliance with
all Requirements of Law.
Section 4.24 ERISA.
(a) The Borrower is not an "employee benefit plan" as
defined in Section 3(3) of ERISA, which is subject to Title I of
ERISA, (b) the assets of the Borrower do not constitute "plan assets"
of one or more such plans within the meaning of 29 C.F.R.
ss.2510.3-101, (c) neither the Borrower nor any of its general
partners, members or shareholders, as the case may be, have any trust
or custodial relationship with the Lender or any affiliate of the
Lender with respect to any ERISA plan, and (d) neither the Borrower
nor any general partner, member or shareholder of the Borrower is a
participant in any governmental plan that has a trust or custodial
relationship with the Lender or any affiliate of the Lender. The
Borrower (i) is not a "governmental plan" within the meaning of
Section 3(32) of ERISA and (ii) transactions by or with the Borrower
are not subject to Requirements of Law regulating investments of and
fiduciary obligations with respect to government plans.
Section 4.25 O&M Program.
The Borrower has adopted an O&M Program with respect to all
Hazardous Materials, if any, identified in the Environmental Assessment
furnished to the Lender prior to the Closing Date or as otherwise required by
the Lender.
Section 4.26 No Organizational Document Amendment.
At no time after the date hereof while the Loan is
outstanding shall the Borrower, nor any member or general partner of the
Borrower, amend or modify their respective organizational documents without the
prior written consent of Lender.
Section 4.27 Permitted Encumbrances.
The Permitted Encumbrances as set forth in the Security
Instrument do not materially or adversely affect the Lender's lien on the
Premises created by the Security Instrument, and do not materially or adversely
affect the use, operation or value of the Premises.
Section 4.28 Insolvency Opinion.
All of the assumptions made in that certain substantive
non-consolidation opinion letter dated the date hereof, delivered by Borrower's
counsel in connection with the Loan and any subsequent non-consolidation
opinion delivered in accordance with the terms and conditions of this Agreement
(the "Non-consolidation Opinion"), including, but not limited to, any exhibits
attached thereto, are true and correct in all respects.
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ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Affirmative Covenants of the Borrower.
During any period in which the Loan is outstanding, the
Borrower agrees that it will:
(a) Use of Loan Funds. Cause all Loan proceeds to be
used for the purposes set forth in a loan closing statement approved
by the Lender and use all excess Loan proceeds disbursed to the
Borrower only for lawful business purposes permitted under the
Borrower's organizational documents. No part of the proceeds of the
Loan will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the Federal Reserve System
as now and from time to time hereafter in effect or for any purpose
which violates the provisions of the Regulations of such Board of
Governors. If requested by the Lender, the Borrower will furnish to
the Lender a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 referred to in said Regulation U. No part
of the proceeds of the Loan has been used in any manner that could
result in a violation of Regulations G, T, V or X of the Board of
Governors of the Federal Reserve System.
(b) Payment. Pay when due all sums owing to the Lender
and others in accordance with the terms of the Loan Documents.
(c) Fees, Costs and Expenses. Pay when due all fees,
costs and expenses required to be paid by the Borrower pursuant to the
terms of the Commitment or any of the other Loan Documents, including
without limitation, reasonable attorneys fees and other fees, costs
and expenses of the Lender in connection with the enforcement of the
Lender's rights under the Loan Documents. Any such amounts payable by
or reimbursable to the Lender shall be due and payable within ten (10)
days after written demand.
(d) Condition of Premises. Keep and maintain the
Premises in good order, condition and repair and shall make, as and
when the same shall become necessary, all repairs and maintenance
necessary or appropriate in order to keep the Premises from
deteriorating.
(e) Compliance. Comply in all material respect with all
(i) building, zoning, fire, health, environmental, disability and use
laws (including, but not limited, to all state and local handicapped
access laws, the Architectural Barriers Act of 1968, the Fair Housing
Amendments Act of 1988, the Rehabilitation Act of 1973, the Americans
with Disabilities Act of 1990 and similar laws and ordinances), codes,
ordinances, rules and regulations, to the extent required by
applicable Governmental Authorities, (ii) covenants and restrictions
of record and (iii) easements which are in any way applicable to the
Premises or any part thereof and the use or enjoyment thereof.
(f) Inspection. Subject to the rights of any tenants of
the Premises under their leases, permit the Lender and/or its
authorized agents to enter upon the Premises during normal working
hours and as often as the Lender desires, for the purpose of
inspecting the
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Improvements specifically and the condition and operation of the
Premises generally. In connection therewith, the Borrower shall permit
the Lender and the Lender's representatives (including an independent
Person such as an engineer, architect, or inspector) or third parties
making Immediate Repairs, Replacements or Additional Repairs or
Replacements to enter onto the Premises during normal business hours
(subject to the rights of any tenants of the Premises under their
leases) to inspect the progress of any Immediate Repairs, Replacements
or Additional Repairs or Replacements and all materials being used in
connection therewith, to examine all plans, specifications and shop
drawings relating to such Immediate Repairs, Replacements or
Additional Repairs or Replacements which are or may be kept at the
Premises, and to complete any Immediate Repairs, Replacements or
Additional Repairs or Replacements. The Borrower agrees to cause all
contractors, subcontractors, agents, architects and inspectors
reasonably to cooperate with the Lender and the Lender's
representatives or such other Persons described above in connection
with inspections or the completion of Immediate Repairs, Replacements
or Additional Repairs or Replacements.
(g) Reimbursement. The Borrower agrees that if it shall
fail to pay when due any tax, assessment or charge levied or assessed
against the Premises (other than the amount or validity of which are
currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with Required Accounting
Standards have been provided on its books) or any utility charge,
whether public or private, or any insurance premium or if it shall
fail to procure the Insurance required hereunder and cause the
delivery of the insurance certificates as required herein, or if it
shall fail to pay any other charge or fee described herein, then the
Lender, at its option, may pay, procure or cause the delivery of the
same. The Borrower will reimburse the Lender upon demand for any sums
of money paid by the Lender pursuant to this Section, together with
interest on each such payment at the default rate set forth in the
Note and all such sums and interest thereon shall be secured hereby.
(h) Environmental Assessment. Provide to the Lender from
time-to-time, at the Borrower's sole fee, cost and expense, if the
Lender shall ever have reason to believe that any Hazardous Material
adversely affects the Premises, or if any Governmental Action is made
or threatened, or if an Event of Default shall have occurred, an
Environmental Assessment, which Environmental Assessment shall have
been ordered by the Borrower within ten (10) days after the Lender's
request and which shall be delivered to the Lender promptly after the
date of the Lender's request. At all other times, the Lender may
request an Environmental Assessment to be provided by the Borrower at
the Lender's expense. The Borrower will cooperate with each consulting
firm making any Environmental Assessment and will promptly supply to
the consulting firm, from time to time upon request, all information
available to the Borrower to facilitate the completion of the
Environmental Assessment. If the Borrower fails to furnish the Lender
within ten (10) days after the Lender's request with a copy of an
agreement with an acceptable environmental consulting firm to provide
such Environmental Assessment, or if the Borrower fails to order such
Environmental Assessment within ten (10) days after the Lender's
request, the Lender may cause any such Environmental Assessment to be
made at the Borrower's fee, cost, expense and risk. The Lender may
disclose to interested parties any information the Lender ever has
about the environmental condition or compliance of the Premises, but
shall be under no duty to disclose any such information except as may
be required by law. The Lender shall be under no duty to make any
Environmental Assessment of the Premises, and in no event
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shall any such Environmental Assessment by the Lender be or give rise
to a representation that any Hazardous Material is or is not present
on the Premises, or that there has been or shall be compliance with
any Hazardous Materials Law, nor shall the Borrower or any other
Person be entitled to rely on any Environmental Assessment made by the
Lender or at the Lender's request. The Lender owes no duty of care to
protect the Borrower or any other Person against, or to inform them
of, any Hazardous Material or other adverse condition affecting the
Premises.
(i) Appraisal. At all times during the term of the Loan,
cooperate with the Lender and use its best efforts to assist the
Lender in obtaining an Appraisal of the Premises, and will promptly
supply to the Lender, from time to time upon request, all information
available to the Borrower to facilitate the completion of the
Appraisal. If any Event of Default occurs, or if a casualty loss or
governmental taking occurs and results in insurance or eminent domain
proceeds in excess of $50,000.00 for an Individual Property, the
Lender may, in its reasonable discretion, choose the appraiser, but
the Borrower shall be responsible for reasonable fees payable to said
appraiser in connection with an Appraisal of the Premises. Under all
other circumstances, the appraiser performing any such Appraisal shall
be engaged by the Lender, and the Lender shall be responsible for any
fees payable to said appraiser in connection with an Appraisal of the
Premises.
(j) Surveys. Following any material, structural change
in the exterior configuration of the Premises or any rezoning
affecting the Premises, provide the Lender with such additional
Surveys as reasonably requested by the Lender.
(k) Other Tests. Promptly submit to the Lender copies of
reports of all physical tests at any time made on the Land, the
Improvements or the materials to be incorporated into the Improvements
and shall, at the Borrower's expense, cause to be made such additional
tests from time to time as the Lender may reasonably require after any
change in the Premises or receipt by the Lender of any such report.
(l) Taxes and Fees. Except as otherwise provided herein,
pay or cause to be paid as they become due all taxes, general and
special assessments (other than the amount or validity of which are
currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with Required Accounting
Standards have been provided on its books), permit fees, inspection
fees, license fees, water and sewer charges, franchise fees and
equipment rents against it or the Premises, and the Borrower, upon
request of the Lender, will submit to the Lender receipts evidencing
said payments.
(m) Financial Statements and Operating Statements.
Furnish, or cause to be furnished to the Lender, annual Financial
Statements for Borrower and Borrower Principal. Monthly Operating
Statements for the Premises shall be submitted to the Lender when
requested by the Lender and for any period during which any Event of
Default is continuing. Operating Statements for the Premises shall be
delivered to the Lender within forty-five (45) days of the end of each
of the Borrower's fiscal quarters, and an annual Financial Statements
shall be submitted to the Lender within ninety (90) days (or one
hundred twenty (120) days if such annual Financial Statements are
audited) of the Borrower's fiscal year end in lieu of an Operating
Statement for the Borrower's fourth fiscal quarter. Borrower Principal
shall furnish
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Lender, on a quarterly basis, such financial information as Borrower
Principal is required to file under any Requirements of Law. Without
limiting any other rights available to the Lender under this Loan
Agreement or any of the other Loan Documents, in the event the
Borrower shall fail to timely furnish the Lender any Financial
Statement in accordance with this subsection, the Borrower shall
promptly pay to the Lender a penalty in the amount of $1,000.00 for
each such failure. Notwithstanding anything to the contrary contained
herein, Borrower shall cause to be provided to Lender copies of all
financial information required to be provided to Borrower by the
Operating Lessee pursuant to the Operating Lease.
(n) Books and Records. Keep and maintain or cause to be
kept and maintained at all times at the Premises, at the Borrower's
address set forth herein, or at such other place as the Lender may
approve in writing, complete and accurate books of accounts and
records adequate to reflect correctly the results of the operation of
the Premises and copies of all written contracts, leases and other
instruments which affect the Premises (including, but not limited to,
all bills, invoices and contracts for utilities, waste management
service, telephone service and management services, rent registrations
and all materials filed with any Governmental Authority where
applicable). Such books, records, contracts, leases and other
instruments shall be subject to examination and inspection at any time
by the Lender upon reasonable prior notice.
(o) Further Assurances. The Borrower shall furnish or
cause to be furnished such further documentation or information
(including without limitation, amendments, replacements, corrections,
deletions or additions to the Loan Documents or any other materials
furnished to the Lender in connection with the Loan) which is (i)
reasonably required to enable the Lender to sell the Loan, or (ii)
reasonably deemed necessary or appropriate by the Lender in the
exercise of its rights under any of the Loan Documents or to perfect,
protect, maintain, preserve, continue and/or extend any Lien granted
to the Lender under the Security Instrument or any other Loan
Document, provided, however, that the Borrower shall not be required
to do anything that (A) has the effect of (I) changing the essential
economic terms of the Loan set forth in the Loan Documents or (II)
imposing greater liability under the Loan Documents, or (B) results in
any substantial fee, cost or expense to the Borrower. In addition, the
Borrower shall furnish or cause to be furnished such further
documentation and information (including without limitation,
amendments, replacements, corrections, deletions and additions to the
Loan Documents and other materials furnished to the Lender in
connection with the Loan) reasonably deemed necessary or appropriate
by the Lender to correct patent mistakes in the Loan Documents,
materials relating to title insurance policies and other insurance
required hereunder, and the funding of the Loan, provided that any
such further documentation or information shall be at the sole fee,
cost and expense of the Lender.
(p) Payment of Operating Expenses Premises and Operating
Expenses Leases. Pay all Operating Expenses Premises and Operating
Expenses Leases, except to the extent that: (i) the Lender is
obligated to pay any Operating Expense on behalf of the Borrower from
the Tax and Insurance Reserve Account, the Replacement Reserve
Account, the Repair Escrow Account or other Reserve Accounts
established pursuant to the Loan Documents or (ii) the Operating
Lessee is obligated to pay any Operating Expense under the Operating
Lease.
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(q) Payment of Recurring Capital Expenditures. Pay all
expenditures with respect to the Premises, to the extent so required
under the Operating Lease, Franchise Agreements or otherwise, related
to capital repairs, replacements and improvements (other than
Replacements) performed from time to time, except to the extent that
Lender is required to pay such expenditures from any Reserve Account.
(r) ERISA. Deliver to the Lender such certifications or
other evidence from time to time throughout the term of the Loan, as
requested by the Lender in its reasonable discretion, that (i) the
Borrower is not an "employee benefit plan," a "governmental plan"
and/or subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (ii) one or more
of the following circumstances is true:
(A) Less than twenty-five percent (25%) of all
Equity Interests in the Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R.
ss.2510.3-101(f)(2); and/or
(B) The Borrower qualifies as an "operating
company" or a "real estate operating company" within the
meaning of 29 C.F.R. ss.2510.3-101(c) or (e).
(s) Actions and Proceedings. Promptly notify the Lender
in writing of any action or proceeding relating to any condemnation or
other taking, whether direct or indirect, of the Premises or any
portion thereof, or purporting to affect the Premises, any Loan
Document or any right of the Lender hereunder or thereunder. In each
such action or proceeding, the Borrower shall, unless otherwise
directed by the Lender in writing, appear in and prosecute or defend
any such action or proceeding. The Borrower hereby further authorizes
the Lender to participate and appear in (at the Borrower's expense,
including without limitation, the Lender's reasonable attorney's fees)
any action or proceeding relating to any condemnation or other taking
of the Premises, whether direct or indirect, and, following an Event
of Default, to settle or compromise any claim in connection with such
condemnation or other taking.
(t) Completion of Immediate Repairs, Replacements and
Additional Repairs or Replacements.
(i) The Borrower shall commence the Immediate
Repairs immediately following the execution of this Agreement
(or as soon thereafter as weather reasonably shall permit)
and shall at all times thereafter diligently pursue the
completion of all Immediate Repairs. The Borrower shall
complete all Immediate Repairs no later than twelve (12)
months after the date of this Agreement. The Borrower
covenants and agrees that each of the Immediate Repairs,
Replacements and Additional Repairs or Replacements and all
materials, equipment, fixtures, and any other item comprising
a part of any Immediate Repair, Replacement or Additional
Repair or Replacement shall be constructed, installed or
completed, as applicable, free and clear of all mechanic's,
materialman's or other liens (except for those liens existing
on the date of this Agreement which have been approved in
writing by the Lender).
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(ii) If the Lender determines, in its reasonable
discretion, that Additional Repairs or Replacements are
advisable in order to keep the Premises in good order and
repair, the Lender may send the Borrower written notice of
the need for making such Additional Repairs or Replacements.
The Borrower shall promptly commence making such Additional
Repairs or Replacements. If the Borrower fails to commence
such Additional Repairs or Replacements within thirty (30)
days after such notice and diligently pursue completion of
such Additional Repairs or Replacements, such failure shall
be an Event of Default under this Loan Agreement, and, in
addition to all other rights the Lender may have under the
Loan Documents upon an Event of Default, the Lender may
contract with third parties to make such Additional Repairs
or Replacements and may in its sole discretion (A) apply the
funds in the Repair Escrow Account and/or Replacement Reserve
Account toward the labor and materials necessary to complete
such Additional Repairs or Replacements, and/or (B) demand
payment for such Additional Repairs or Replacements from the
Borrower.
(iii) In the event the Lender determines in its
reasonable discretion that any Immediate Repair, Replacement
or Additional Repair or Replacement has not been completed in
a workmanlike and timely manner, the Lender shall have the
option to withhold disbursement from the Reserve Accounts for
such unsatisfactory Immediate Repair, Replacement or
Additional Repair or Replacement and to proceed under
existing contracts or to contract with third parties to
complete such Immediate Repair, Replacement or Additional
Repair or Replacement and to apply the Repair Escrow Account
or the Replacement Reserve Account toward the labor and
materials necessary to complete such Immediate Repair,
Replacement or Additional Repair or Replacement to the
reasonable satisfaction of the Lender, without providing any
prior notice to the Borrower.
(iv) In order to facilitate the Lender's
completion or making of the Immediate Repairs, Replacements
or Additional Repairs or Replacements, the Lender is granted
the irrevocable right to enter onto the Premises and perform
any and all work and labor necessary to complete or make the
Immediate Repairs, Replacements or Additional Repairs or
Replacements and employ watchmen to protect the Premises from
damage, loss and/or theft. All sums so expended by the Lender
shall be deemed to have been advanced to the Borrower and
secured by the Security Instrument and the other Loan
Documents.
(v) All Immediate Repairs, Replacements and
Additional Repairs or Replacements shall comply with all
Requirements of Law and applicable insurance requirements
including, without limitation, applicable building codes,
special use permits, environmental regulations, and
requirements of insurance underwriters.
(u) Assumptions in Non-consolidation Opinion. Borrower
has complied and will comply with all of the assumptions made with
respect to it in the Non-consolidation Opinion including, without
limitation those set forth in that certain Non-consolidation Opinion,
dated the date hereof, given by Hunton & Xxxxxxxx, attached as Exhibit
I hereto and made a part hereof.
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Each entity other than the Borrower with respect to which an
assumption is made in the Non-consolidation Opinion has complied and
will comply with all of the assumptions made with respect to it in the
Non-consolidation Opinion, including without limitation those set
forth in that certain Non-consolidation Opinion, dated the date
hereof, given by Hunton & Xxxxxxxx, attached as Exhibit I hereto and
made a part hereof.
(v) Program Rider. Comply with all covenants and
agreements set forth in the Program Rider.
(w) Operating Lease. Comply with all covenants,
obligations and agreements contained in the Operating Lease. Borrower
will exercise any and all cure rights under the Operating Lease in
order to cure any breach by Borrower or any Affiliate of Borrower as
Lessor thereunder.
(x) Franchise Agreements. Borrower shall, at all times
during the term of the Loan maintain or cause to be maintained
Franchise Agreements for each of the Individual Properties.
(y) REIT Status. Borrower Principal shall, at all times
during the term of the Loan maintain its status as a Real Estate
Investment Trust, unless otherwise consented to by Lender.
Section 5.2 Negative Covenants of the Borrower.
During any period in which the Loan is outstanding, the
Borrower agrees that it will not:
(a) Sale or Encumbrance of Personalty. Sell, encumber or
otherwise dispose of any of the Personalty except (i) to incorporate
Tangible Personalty into the Improvements or replace Tangible
Personalty with goods of quality and value at least equal to that
replaced, or (ii) for the sale, disposal or use of inventory, if any,
in the ordinary course of the Borrower's business at the Premises;
provided, however, in the event the Borrower sells or otherwise
disposes of any of the Personalty, the Lender's security interest in
the proceeds of the Personalty shall continue pursuant to the Security
Instrument and the other Loan Documents, as appropriate.
(b) Construction. Construct or permit the construction
of any material, structural improvements on the Premises other than
Immediate Repairs or Replacements or as otherwise required hereunder
or previously consented to in writing by the Lender, which consent
shall not be unreasonably withheld, conditioned or delayed.
(c) Change in Ownership; Identity of the Borrower.
Subject to Section 5.2(d) hereof, permit any sale, transfer,
assignment or other disposition of, or grant or create any Lien on
(each a "Transfer"), any of the following interests in the Borrower
except that:
(1) Holders of membership/partnership interests
in Borrower and beneficiaries of holders of interests of
Borrower as of the date of this
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Agreement (the "Interest Holders") shall have the right to
Transfer their interest in Borrower (or any entity directly
or indirectly holding a membership interest in Borrower)
without Lender's consent; provided, however, that (i) after
taking into account any prior Transfers pursuant to this
section, whether to the proposed transferee or otherwise, no
such Transfer (or series of Transfers) shall result in (x)
the proposed transferee, or any affiliates thereof, owning in
the aggregate (directly, indirectly or beneficially) forty
nine percent (49%) or more of the interests in Borrower (or
any entity directly or indirectly holding a membership
interest in Borrower), or (y) a Transfer in the aggregate of
forty nine percent (49%) or more of the interests in Borrower
as of the date hereof, (ii) no such Transfer of interest
shall result in a change of control of Borrower or the day to
day operations of the secured Premises, (iii) Borrower shall
give Lender notice of such Transfer together with copies of
all instruments effecting such Transfer not less than fifteen
(15) business days prior to the date of such Transfer; (iv)
no Event of Default has occurred and remains uncured; and (v)
the legal and financial structure of Borrower after such
Transfer and its shareholders, partners or members, as
applicable, and the Special Purpose Entity nature of Borrower
satisfies Lender's and the Rating Agency's then current
applicable underwriting criteria and requirements including,
without limitation, the requirement at the request of Lender,
to deliver evidence reasonably satisfactory to Lender that
the Special Purpose Entity nature of Borrower following such
Transfer is in accordance with the standards of the Rating
Agencies or, if a Securitization has occurred, the Rating
Agencies rating the Securities in the Securitization
(including, in such event written confirmations from such
Rating Agencies that such Transfer or series of Transfers
will not result in a requalification, reduction or withdrawal
of the ratings then applicable to such Securities), and
Opinions of Counsel (including a Non-consolidation Opinion)
as may be reasonably requested by Lender and the Rating
Agencies. Notwithstanding anything to the contrary contained
herein, the managing member of Borrower shall not have the
right to Transfer any interest in Borrower without Lender's
consent.
(2) Transfers by any of the Interest Holders of
their direct or indirect interests in Borrower (or any entity
that directly or indirectly holds a membership interest in
Borrower) which result in (x) the proposed transferee, or any
affiliates thereof, owning in the aggregate (directly,
indirectly or beneficially) forty nine percent (49%) or more
of the interests in Borrower (or any entity directly or
indirectly holding a membership interest in Borrower), or (y)
a Transfer in the aggregate of forty nine percent (49%) or
more of the interests in Borrower as of the date hereof, or
(z) which are Transfers by the managing member of Borrower
shall be permitted only with the Lender's prior written
consent, which shall not be unreasonably withheld; provided
that such Transfer must comply with the
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provisions of clauses (iii), (iv) and (v) of subparagraph (1)
above, and clauses (A) through (D) below:
(A) The Interest Holder shall pay to
the Lender all reasonable and customary expenses
incurred by the Lender in connection with any such
Transfer and a processing fee in an amount equal to
the 1% of the outstanding principal amount of the
Loan as of the date the Borrower requests the Lender
to consent to such Transfer.
(B) With respect to any Transfer
requested or occurring prior to the sale of the Loan
by the Lender in the secondary market, the
consideration paid or to be paid by the assignee or
purchaser in connection with the Transfer shall not
be less than the appraised value of the Premises
used by the Lender in underwriting the Loan, as
determined by the Lender in its reasonable judgment,
multiplied by the percentage of interests (direct or
indirect) being transferred in the Borrower. The
Borrower shall furnish the Lender at the Borrower's
sole cost and expense such information as the Lender
shall request in connection with any Transfer,
including without limitation, an Appraisal or other
evidence satisfactory to the Lender in its
reasonable discretion of the value of the Premises
as of the date of the Transfer.
(C) The assignee or purchaser must
meet Lender's reasonable underwriting standards
concerning, including without limitation, its net
worth and operating history, as determined by Lender
in its sole reasonable discretion.
(D) No Transfer shall relieve the
Borrower of its Obligations under this Loan
Agreement or any of the other Loan Documents.
(d) Notwithstanding anything to the contrary contained
in this Loan Agreement, the Security Instrument or any other Loan
Documents, Lender's consent shall not be required for any of the
following sales, transfers, assignments, pledges, conveyances or
encumbrances, provided that Lender has received payment in full of all
its actual expenses incurred in connection therewith:
(i) with respect to the REIT and any holders of
interests therein, directly or indirectly, (A) Transfer of
all or any portion of any shares of beneficial interests of
the REIT for so long as the shares of the REIT continue to be
publicly traded on a national stock exchange and (B) the
issuance of additional shares of the REIT;
(ii) with respect to the Operating Partnership
and any holders of interests therein, (A) any Transfer
(direct or indirect) of limited partnership interests in the
Operating Partnership and (B) the issuance of additional
limited partnership units or other securities, even if such
issuance results in a reduction of the partnership interest
of the REIT in the Operating Partnership, provided that,
after giving effect to such transfer or
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series of transfers described in (A) or (B), the REIT owns
more than fifty-one percent (51%) of the partnership
interests of the Operating Partnership or continues to be the
sole general partner of the Operating Partnership; or
(iii) a Fundamental Transaction relating to the
REIT or the Operating Partnership.
(e) As used herein , the term "Fundamental Transaction"
shall mean any acquisition by, merger with or consolidation with or
into, or sale of substantially all of its assets to, an entity (the
"Successor") in which the following conditions have been satisfied as
of the consummation of the transaction:
(i) the Successor owns, directly or indirectly,
substantially all the assets which the Operating Partnership
owned immediately prior to the effective date of such merger,
consolidation or sale;
(ii) the Successor agrees in writing to assume
all obligations of the Operating Partnership under the Loan
Documents to which the Operating Partnership is a party;
(iii) upon the consummation of such transaction,
Successor shall either be owned by a Qualified Resultant
Owner or the Successor shall be owned by the executive
management of the REIT immediately prior to such transfer;
(iv) Lender shall have confirmations in writing
from the Rating Agencies to the effect that such transfer
will not result in a re-qualification, reduction or
withdrawal of any rating then assigned to any Securities in a
Securitization;
(v) with respect to any Individual Property
that is the subject of a Management Agreement, the Manager
shall be either the Manager immediately prior to such
transfer or a Qualified Manager, and any new Management
Agreement shall be reasonably satisfactory to Lender;
(vi) with respect to any Individual Property
that is the subject of an Operating Lease, the Operating
Lessee shall be either the Operating Lessee immediately prior
to such transfer or a Qualified Operating Lessee, and any new
Operating Lease shall be reasonably satisfactory to Lender;
(vii) the Premises will be owned by one or more
special purpose bankruptcy remote entities and a
non-consolidation opinion acceptable to Lender and the Rating
Agencies has been delivered with respect to any Successor;
and
(viii) Lender has received no less than forty-five
(45) days' prior written notice of such transfer.
The Borrower hereby acknowledges to the Lender that (i) the identity
of the Borrower and the expertise available to the Borrower were and
continue to be material circumstances upon which the Lender has relied
in connection with, and which constitute valuable consideration to the
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Lender for, the extending to the Borrower of the indebtedness
evidenced by the Note and (ii) any change in such identity or
expertise could materially impair or jeopardize the security for the
payment of the Note granted to the Lender by the Security Instrument
and the other Loan Documents, as appropriate.
(f) Prepayment of Rent. Accept any prepayment of rent or
installments of rent for more than two (2) months in advance without
the prior written consent of the Lender.
(g) No Other Name. Change its name or operate under any
name other than its name as set forth herein.
(h) No Restricted Payments. Without Lender's prior
written consent, make any payment or take any other action
constituting (i) any direct or indirect purchase or other acquisition
by the Borrower of Equity Interests of any other Person, or any direct
or indirect loan, advance (other than advances to employees for moving
and travel expenses, drawing accounts and expenditures in the ordinary
course of business) or capital contribution by the Borrower to any
other Person, including all debt and any Obligation of any sort,
and/or (ii) a payment or prepayment on account of, or the setting
apart of assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of
subordinated debt, either directly or indirectly, whether in cash or
in property or in obligations of any Person.
(i) No Waste or Abandonment. Suffer, permit or commit
affirmative waste, permit impairment or deterioration of, or abandon,
the Premises or any portion thereof. The Borrower will not itself, or
permit any tenant or other Person to, remove, demolish or alter any
improvement now existing or hereafter erected on the Premises or any
fixture, equipment or machinery in or on the Premises except in
connection with any Repair or Replacement.
(j) Use of Premises. Except as required by applicable
law, or as otherwise permitted in writing by the Lender, allow any
change in the business use of all or any portion of Premises from the
use thereof as of the Closing Date.
(k) Franchise Agreements. Borrower shall not amend or
terminate any Franchise Agreement or permit Operating Lessee to
terminate any Franchise Agreement.
Section 5.3 Environmental Covenants.
The Borrower hereby consents to:
(a) Not cause, permit or exacerbate any Prohibited
Activities or Conditions. The Borrower represents and warrants that it
has not at any time caused or permitted any Prohibited Activities or
Conditions except as set forth in the Environmental Assessment and
that to its knowledge, no Prohibited Activities or Conditions exist or
have existed on or under the Premises. The Borrower shall take all
appropriate steps to prevent its employees, agents, and contractors,
and any tenants from causing, permitting, or exacerbating any
Prohibited Activities or Conditions. The Borrower shall not lease or
allow the sublease or use of all or any portion of the Premises to any
tenant, subtenant or user that, in the ordinary course of its
business, would
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cause, permit, or exacerbate any Prohibited Activities or Conditions,
and all leases, subleases and use agreements relating to the Premises
shall contain provisions sufficient to ensure that tenants, subtenants
and users shall not cause, permit or exacerbate any Prohibited
Activities or Conditions.
(b) Comply in a timely manner with, and cause all
employees, agents, and contractors of the Borrower and any other
persons present on the Premises to so comply with, (i) any O&M Program
now or hereafter in effect during the term of the Loan, and (ii)
Hazardous Materials Law, so as to minimize any economic loss to the
Premises and the Loan. The Borrower shall adopt an O&M Program with
respect to any Hazardous Materials as required in any Environmental
Assessment or any Governmental Action relating to the Premises, or as
otherwise reasonably required by the Lender with respect to the
Premises. Any O&M Program shall be performed by qualified contractors
under the supervision of a consulting engineer hired by the Borrower
with the prior written approval of the Lender which approval shall not
be unreasonably withheld, conditioned or delayed. All costs and
expenses of any O&M Program shall be paid by the Borrower, including
without limitation the charges of such contractors and consulting
engineer and the Lender's reasonable fees, costs and expenses incurred
in connection with the monitoring and review of the O&M Program and
the Borrower's performance thereunder.
(c) Promptly notify the Lender in writing of: (i) any
Governmental Action it becomes aware of, (ii) any claim made or known
by Borrower to be threatened by any third party against the Borrower,
the Lender, or the Premises relating to loss or injury resulting from
any occurrence or condition on the Premises or any other real property
that could require the removal from the Premises of any Hazardous
Materials or cause any restrictions on the ownership, occupancy,
transferability or use of the Premises under Hazardous Materials Law,
or (iii) the occurrence of any Prohibited Activities or Conditions.
The Borrower shall cooperate with any governmental inquiry, and shall
comply with any governmental or judicial order, request or directive
which arises from any alleged Prohibited Activities or Conditions;
provided that with respect to governmental requests or directives
only, the Borrower may contest or object to a good faith dispute
regarding said request or directive if the Borrower notifies the
Lender in advance of said contest or objection and as long as said
contest or objection does not result in a violation of law or fines
assessed against the Premises unless such fines are bonded by Borrower
in a manner acceptable to Lender in its sole discretion.
(d) Pay promptly all reasonable costs and expenses
incurred by the Lender in connection with any Governmental Action,
including but not limited to costs of any environmental audits,
studies, investigations or remedial activities including but not
limited to the removal of any Hazardous Materials from the Premises.
The Borrower also shall pay promptly the costs of any environmental
audits, studies, investigations or the removal of any Hazardous
Materials from the Premises required by the Lender as a condition of
its consent to any sale or transfer of all or any part of the Premises
or any interest therein or required by the Lender following a
reasonable determination by the Lender that there may be Prohibited
Activities or Conditions on or under the Premises. Any such reasonable
costs or expenses incurred by the Lender (including but not limited to
reasonable fees and expenses of attorneys and consultants, whether
incurred in connection with any judicial or administrative process or
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otherwise) which the Borrower fails to pay promptly shall become
additional indebtedness secured by the Security Instrument.
(e) EXCEPT TO THE EXTENT ANY OF THE FOLLOWING IS THE
RESULT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LENDER, HOLD
HARMLESS, DEFEND AND INDEMNIFY THE LENDER AND ITS OFFICERS, DIRECTORS,
TRUSTEES, EMPLOYEES, AGENTS, AFFILIATES (INCLUDING ANY PARENT
CORPORATION), SUCCESSORS AND ASSIGNS, FROM AND AGAINST ALL
PROCEEDINGS, CLAIMS, DAMAGES, PENALTIES, FEES, COSTS AND EXPENSES
(INCLUDING WITHOUT LIMITATION REASONABLE FEES AND EXPENSES OF
ATTORNEYS AND EXPERT WITNESSES, INVESTIGATORY FEES, AND CLEANUP AND
REMEDIATION EXPENSES, WHETHER INCURRED IN CONNECTION WITH ANY JUDICIAL
OR ADMINISTRATIVE PROCESS OR OTHERWISE), ARISING DIRECTLY OR
INDIRECTLY FROM (i) ANY BREACH OF ANY REPRESENTATION, WARRANTY, OR
OBLIGATION OF THE BORROWER CONTAINED IN THIS SECTION 5.3 OR (ii) THE
PRESENCE OF HAZARDOUS MATERIALS ON OR UNDER THE PREMISES OR ANY
PROPERTY PROXIMATE TO THE PREMISES OR ANY GOVERNMENTAL ACTION ALLEGING
ANY SUCH PRESENCE, EXCEPT TO THE EXTENT THAT THE BORROWER CAN
CONCLUSIVELY PROVE BOTH THAT SUCH PRESENCE OR GOVERNMENTAL ACTION
ALLEGING SUCH PRESENCE WAS CAUSED SOLELY BY ACTIONS, CONDITIONS, OR
EVENTS THAT OCCURRED AFTER THE DATE THAT THE LENDER (OR ANY PURCHASER
AT A FORECLOSURE SALE) ACTUALLY ACQUIRED TITLE OR TOOK POSSESSION TO
THE PREMISES AND THAT SUCH PRESENCE OR GOVERNMENTAL ACTION ALLEGING
SUCH PRESENCE WAS NOT CAUSED BY THE DIRECT OR INDIRECT ACTIONS OF THE
BORROWER OR THE BORROWER PRINCIPAL, OR ANY PARTNER, MEMBER, PRINCIPAL,
OFFICER, DIRECTOR, TRUSTEE OR MANAGER OF THE BORROWER OR ANY EMPLOYEE,
AGENT, CONTRACTOR OR AFFILIATE OF THE BORROWER OR THE BORROWER
PRINCIPAL. THE OBLIGATIONS AND LIABILITIES OF THE BORROWER UNDER THIS
SECTION 5.3(e) SHALL SURVIVE ANY TERMINATION, SATISFACTION,
ASSIGNMENT, ENTRY OF A JUDGMENT OF FORECLOSURE OR DELIVERY OF A DEED
IN LIEU OF FORECLOSURE OF THE SECURITY INSTRUMENT.
Section 5.4 Recourse Covenants.
Except as otherwise expressly permitted by the Loan
Documents, during any period in which the Loan is outstanding, the Borrower
agrees that it will not, without the prior written consent of the Lender:
(a) Sale, Transfer, Conveyance or Disposal. Permit any
sale, transfer, conveyance or other disposal of the Premises, the
Rents and Profits or the Intangible Personalty.
(b) Other Financing and Liens. Engage in any other
financing with respect to the Borrower (except payables incurred with
trade creditors in amounts not to exceed $100,000.00, provided such
debt is not evidenced by a note and is not in excess of sixty days
past due in the ordinary course of business and paid prior to
delinquency), the Premises, the
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Rents and Profits or the Intangible Personalty or grant any consensual
Liens against the Premises, the Rents and Profits or the Intangible
Personalty. Nor shall Borrower or any member or partner of Borrower
pledge any interest in Borrower without the prior written consent of
Lender and without written confirmation from applicable Rating
Agencies that such pledge will not result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities by such Rating Agency.
(c) Special Purpose Entity. Fail to be a Special Purpose
Entity.
Section 5.5 Insurance.
(a) Maintenance of Insurance. The Borrower shall, or
shall cause, at no cost or expense to Lender, keep in full force and
effect all Insurance. If the Borrower fails to maintain, or cause to
be maintained, any Insurance required by this Agreement, the Lender
may, at its option, procure such Insurance, and the Borrower shall
reimburse the Lender for the amount of all premiums paid by the Lender
thereon promptly upon demand by the Lender, with interest thereon at
the rate then provided by the Note from the date paid by the Lender to
the date of repayment, and such sum shall be a part of the
indebtedness secured by the Security Instrument. The Lender shall not
by the fact of approving, disapproving, accepting, preventing,
obtaining or failing to obtain any Insurance, incur any liability for
or with respect to the amount of Insurance carried, the form or legal
sufficiency of insurance contracts, solvency of insurance companies,
or payment or defense of lawsuits, and the Borrower, for itself,
hereby expressly assumes full responsibility therefor and all
liability, if any, with respect thereto.
(b) Insurance with Respect to Immediate Repairs,
Replacements and Additional Repairs or Replacements. In addition to
and to the extent not covered by any Insurance required under the Loan
Documents, the Borrower shall provide or cause to be provided worker's
compensation insurance, builder's risk, and public liability insurance
and other insurance to the extent required under applicable law in
connection with a particular Immediate Repair, Replacement or
Additional Repair or Replacement reasonably required by the Lender.
(c) Approved Insurers. Each of the Borrower's insurers
shall be an Approved Insurer. If any of the Borrower's insurers shall
at any time cease to be an Approved Insurer, then within thirty (30)
days after notice from the Lender to the Borrower, the Borrower will
obtain replacement Insurance or additional Insurance issued by one or
more other Approved Insurers.
(d) Form of Insurance Policies; Endorsements. All
policies for Insurance shall be in such form and with such
endorsements as are comparable to the forms of and endorsements to the
Borrower's, or if applicable, its tenant's, insurance policies in
effect on the date hereof or otherwise in accordance with commercially
reasonable standards applied by prudent owners of similar businesses
in the general vicinity of the Premises and generally acceptable to
institutional lenders for comparable properties and risks. All such
policies shall name the Lender, and its successors and assigns, as
additional insureds, mortgagees and/or loss payees, as deemed
appropriate by the Lender, and shall provide that all proceeds are
payable to the Lender (except for any "non-property" insurance
policies maintained by the Operating
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Lessee) and shall contain: (i) a standard "non-contributory mortgagee"
endorsement or its equivalent relating, inter alia, to recovery by the
Lender notwithstanding the negligent or willful acts or omissions of
the named Borrower; (ii) to the extent available at commercially
reasonable rates, a waiver of subrogation endorsement as to the
Lender; (iii) an endorsement providing that no policy shall be
impaired or invalidated by virtue of any act, failure to act,
negligence of, or violation of declarations, warranties or conditions
contained in such policy by the Borrower, any tenant at the Premises,
the Lender or any other named insured, additional insured, mortgagee
or loss payee, except for the willful misconduct of the Lender
knowingly in violation of the conditions of such policy; (iv) an
endorsement providing for a deductible per loss of an amount not more
than that which is customarily maintained by prudent owners of similar
businesses in the general vicinity of the Premises; (v) a provision
that such policies shall not be canceled or amended, including,
without limitation, any amendment reducing the scope or limits of
coverage, without at least thirty (30) days prior written notice to
the Lender in each instance, and (vi) effective waivers by the insurer
of all claims for insurance premiums against any loss payees,
additional insureds, mortgagees and named insureds (other than the
Borrower). Any insurance coverage relating to the Premises that is
carried by the Borrower or, if applicable, its tenant's, in excess of
the Insurance required hereunder shall name the Lender, and its
successors and assigns, as additional insureds, mortgagees and/or loss
payees, as appropriate, as provided herein. A certificate executed by
the Borrower's insurance consultant and other evidence of Insurance
required by the Lender shall be delivered to the Lender not less than
ten (10) days prior to the expiration date of any of the policies for
Insurance required to be maintained hereunder which certificate and
other evidence shall certify payment of applicable premiums for
renewal and replacement policies. The Borrower may effect any
Insurance required hereunder through blanket insurance policies. The
Borrower shall deliver to the Lender certified copies of all policies
for Insurance which shall be taken out upon the Premises while any
part of the Loan shall remain unpaid.
(e) Compliance with Insurance Policy Terms. The Borrower
shall comply with all terms of policies for Insurance and shall not
bring or keep or permit to be brought or kept any article upon the
Premises or cause or permit any condition to exist thereon which would
be prohibited by or could invalidate any Insurance required hereunder.
Section 5.6 Lockbox.
The Borrower has established as of the date hereof the
Lockbox Account, which Lockbox Account shall, in all respects, be governed by
the Cash Management Agreement.
ARTICLE VI
RESERVE ACCOUNTS
Section 6.1 Establishment of Reserve Accounts.
On or before the Closing Date, the Lender shall establish
each Reserve Account. Each Reserve Account shall be under the sole dominion and
control of the Lender.
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Section 6.2 Initial Reserve Deposits.
On the Closing Date, the Borrower shall pay to the Lender for
deposit into each Reserve Account any Initial Reserve Deposit applicable to
such Reserve Account.
Section 6.3 Monthly Reserve Deposits.
On each Payment Date, the Borrower shall pay to the Lender
for deposit into each Reserve Account any Monthly Reserve Deposit applicable to
such Reserve Account. The Lender may, upon written request from the Borrower,
waive any requirement for the payment of a Monthly Reserve Deposit, provided
however, that any such waiver by the Lender of a requirement that the Borrower
pay such Monthly Reserve Deposit may be revoked by the Lender, in the Lender's
sole discretion, at any time upon notice in writing to the Borrower.
Section 6.4 Replacement Reserve Account.
The Lender may, in the Lender's reasonable discretion, adjust
the Monthly Reserve Deposit to the Replacement Reserve Account from time to
time to an amount sufficient, in the Lender's reasonable judgment, to maintain
adequate balances necessary for Replacements, including, without limitation,
Additional Repairs or Replacements made pursuant to the terms of the Loan
Agreement and consistent with the requirements of the applicable Franchise
Agreement and Operating Lease. Notwithstanding the foregoing, in the event the
Lender shall at any time increase the Monthly Reserve Deposit to the
Replacement Reserve Account over the Monthly Reserve Deposit to the Replacement
Reserve Account then required pursuant to Exhibit B hereto, the Borrower, may
at its election, request that the Lender obtain, at the sole cost, fee and
expense of the Borrower, an engineering report from an engineer to be selected
by the Lender in its reasonable discretion, in which case the Monthly Reserve
Deposit to the Replacement Reserve Account shall be adjusted by the Lender
based on such engineering report, provided that in no event shall the Monthly
Reserve Deposit to the Replacement Reserve Account be decreased below the
applicable amount set forth on Exhibit B hereto. Following any defeasance of
any permitted portion of the Premises, or substitution of properties pursuant
to Section 2.6 hereof, and upon written request from Borrower, Lender will, at
Borrower's expense, commission an updated engineering report (from an engineer
selected by Lender) of the remaining portion of the Premises and, subject to
Lender's review and approval, the amount of the Monthly Deposit to the
Replacement Reserve Account shall be adjusted to reflect that the defeased
portion of the Premises no longer serves as collateral for the Loan.
Section 6.5 Permitted Investments, Earnings, Charges and
Annual Accounting.
(a) Permitted Investments. The Lender may invest and
reinvest, or cause to be invested or reinvested, all or any portion of
any funds on deposit in any Reserve Account in Permitted Investments.
The maturities of the Permitted Investments on deposit in any Reserve
Account shall be selected and coordinated to become due not later than
the day before any disbursements from any Reserve Account must be
made. All such Permitted Investments shall be held in the name and be
under the sole dominion and control of the Lender, to the extent
permitted by applicable laws, and no Permitted Investment shall be
made unless the Lender shall
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perfect its first priority Lien in such Permitted Investment and, to
the extent permitted by applicable laws, the Lender shall have sole
possession and control over each such Permitted Investment and the
income thereon, and any certificate or other instrument or document
evidencing any such investment shall be delivered directly to the
Lender, together with any document of transfer necessary to transfer
title to such investment to the Lender. The Lender shall not have any
liability (other than for the Lender's gross negligence or willful
misconduct) for any loss in investments of funds in any Reserve
Account that are invested in Permitted Investments and no such loss
shall affect the Borrower's obligation to (i) make any payment
hereunder, under the Security Instrument, the Note or any other Loan
Document, or (ii) fund, or have liability for funding, any Reserve
Account. The Borrower agrees that it shall include all interest,
earnings or profits on Permitted Investments of funds on deposit in
any Reserve Account as its income (and, if the Borrower is a
partnership or other pass-through entity, the partners, members or
beneficiaries of the Borrower, as the case may be), and shall be the
owner of such accounts for federal and applicable state and local tax
purposes, except to the extent the Lender retains such interest,
earnings or profits for its own account in accordance with the
provisions of Section 6.5(b) of this Loan Agreement. The Borrower
shall have no right whatsoever to direct the investment of the
proceeds in any Reserve Account.
(b) Earnings. All interest, earnings or profits on the
Permitted Investments of funds in any of the Reserve Accounts shall be
deposited into the applicable Reserve Account, provided that the
Lender may, at its election, retain for its own account any such
interest, earnings or profits (i) on the Tax and Insurance Reserve
Account, and (ii) on any or all of the Reserve Accounts during the
occurrence and continuance of an Event of Default.
(c) Charges. Except as prohibited by applicable laws,
the Lender may charge the Borrower for holding, maintaining and
applying funds in any of the Reserve Accounts to the extent funds on
deposit in such Reserve Account are invested or reinvested in
Permitted Investments and the Lender does not retain for its own
account any interest, earnings or profits on such Reserve Account in
accordance with the provisions of Section 6.5(b) of this Loan
Agreement.
(d) Annual Accounting. The Lender shall furnish or cause
to be furnished to the Borrower, without charge, an annual accounting
of each Reserve Account in the normal format of the Lender or its
agent, showing credits and debits to such Reserve Account and the
purpose for which each debit to such Reserve Account was made.
Section 6.6 Assignment to the Lender of Reserve
Accounts and Rights and Claims.
(a) The Borrower hereby assigns to the Lender the
Reserve Accounts as additional security for all of the Borrower's
Obligations to the Lender, under the Note and under the other Loan
Documents; provided, however, the Lender shall make disbursements from
the Reserve Accounts in accordance with the terms of this Agreement,
including without limitation, the Program Rider.
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(b) The Borrower assigns to the Lender all rights and
claims the Borrower may have against (i) all persons or entities
claiming amounts due for taxes, utilities, rent or insurance, or (ii)
all persons or entities supplying labor or materials in connection
with the Immediate Repairs, Replacements or Additional Repairs or
Replacements; provided, however, that the Lender may not pursue any
such right or claim unless an Event of Default exists under this
Agreement or the Loan Documents.
Section 6.7 Application of Reserve Accounts Upon an
Event of Default.
If any Event of Default occurs, then the Borrower shall
immediately lose all of its rights to receive disbursements from the Reserve
Accounts unless and until the earlier to occur of or concurrently with (a) the
date on which such Event of Default is fully cured, and (b) the date on which
all amounts secured by the Security Instrument and the other Loan Documents
have been paid in full and the lien of the Security Instrument and the other
Loan Documents, as appropriate, have been released by the Lender. Upon any
Event of Default, the Lender may in its sole discretion, use the Reserve
Accounts (or any portion thereof) for any purpose, including but not limited to
(i) repayment of any indebtedness secured by the Security Instrument and the
other Loan Documents, including but not limited to principal prepayments and
the prepayment premium applicable to such full or partial prepayment (as
applicable); provided, however, that such application of funds shall not cure
or be deemed to cure any Event of Default, (ii) reimbursement of the Lender for
all losses, fees, costs and expenses (including, without limitation, reasonable
legal fees) suffered or incurred by the Lender as a result of such Event of
Default, (iii) payment of any amount expended in exercising all rights and
remedies available to the Lender at law or in equity or under this Agreement or
under any of the other Loan Documents, or (iv) to the payment of any item for
which payment is required or permitted from any of the Reserve Accounts
pursuant to the terms of this Loan Agreement. Nothing in this Loan Agreement
shall obligate the Lender to apply all or any portion of the Reserve Accounts
on account of any Event of Default by the Borrower or to pay the indebtedness
secured by the Security Instrument or any of the other Loan Documents or in any
specific order of priority.
Section 6.8 Disbursements from Tax and Insurance
Reserve Account.
(a) The Lender shall disburse, to the extent of amounts
on deposit in the Tax and Insurance Reserve Account, directly to each
Person owed any portion of the water and sewer assessments and
frontage charges, taxes, assessments and insurance premiums, the total
sum owed to such Person. Such disbursements shall be made by the
Lender (i) so as to coincide in frequency with the regular billing
cycle of such Person, and (ii) on or before the date that each such
payment is due.
(b) The Lender may require the Borrower to pay to the
Lender in advance, additional amounts for taxes, charges, premiums,
assessments, and impositions in connection with the Borrower or the
Premises which the Lender shall reasonably deem necessary. Unless
otherwise provided by applicable law, the Lender may require payments
for such other amounts to be paid by the Borrower in a lump sum or
periodic installments, at the Lender's option.
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(c) If the amount held in the Tax and Insurance Reserve
Account at the time of the annual accounting thereof shall exceed the
amount deemed necessary by the Lender to provide for the payment of
water and sewer assessments and frontage charges, taxes, assessments,
impositions and insurance premiums, as they fall due, such excess
shall be credited against future Monthly Reserve Deposits to the Tax
and Insurance Reserve Account. If at any time the amount held in the
Tax and Insurance Reserve Account shall be less than the amount deemed
necessary by the Lender to pay water and sewer assessments and
frontage charges, taxes, assessments, impositions and insurance
premiums, the Borrower shall pay to the Lender any amount necessary to
make up the deficiency within thirty (30) days after notice from the
Lender to the Borrower requesting payment thereof.
(d) Upon payment in full of all amounts owed by the
Borrower under or otherwise secured by any of the Loan Documents, all
remaining amounts on deposit, if any, in the Tax and Insurance Reserve
Account shall be distributed to the Borrower.
Section 6.9 Disbursements from Repair Escrow Account and
Replacement Reserve Account.
(a) Upon written request from the Borrower and
satisfaction of the requirements set forth in this Loan Agreement, the
Lender shall disburse to the Borrower amounts from the Repair Escrow
Account necessary to reimburse the Borrower for the actual costs of
Immediate Repairs and shall disburse amounts from the Replacement
Reserve Account necessary to reimburse the Borrower for the actual
costs of Replacements (but, as to any Immediate Repair or Replacement,
such amount shall not exceed one hundred twenty-five percent (125%) of
the original estimated cost of such Immediate Repair and/or
Replacement set forth on Exhibit B to this Loan Agreement, unless the
Lender agrees to such reimbursement).
(b) Upon written request from the Borrower, the Lender
may, in its discretion, disburse amounts from the Repair Escrow
Account and/or Replacement Reserve Account to reimburse the Borrower
for the actual cost of labor and materials associated with an
Additional Repair or Replacement. Each such request from the Borrower
shall include a statement regarding why such disbursement should be
made. If the Lender determines that (i) such Additional Repair or
Replacement is of the type intended to be covered by this Agreement,
(ii) the costs for such Additional Repair or Replacement are
reasonable, (iii) the amount of funds in the Repair Escrow Account
and/or the Replacement Reserve Account, as applicable, is sufficient
to pay the Additional Repair or Replacement and one hundred
twenty-five percent (125%) of the then current estimated cost of
completing all remaining Immediate Repairs and Replacements, as
applicable, and (iv) all other conditions for disbursement under this
Loan Agreement have been met, then the Lender shall disburse funds
from the Repair Escrow Account and/or the Replacement Reserve Account,
as applicable, for such Additional Repair or Replacement in accordance
with the requirements of this Loan Agreement for Immediate Repairs
and/or Replacements.
(c) Each request for disbursement from the Repair Escrow
Account or Replacement Reserve Account shall be in a form specified or
approved by the Lender and shall set forth (i) the specific Immediate
Repairs, Replacements or Additional Repair or Replacement,
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as the case may be, for which the disbursement is requested, (ii) the
quantity and price of each item purchased, if the Immediate Repair,
Replacement or Additional Repair or Replacement, as the case may be,
includes the purchase or replacement of specific items, (iii) the
price of all materials (grouped by type or category) used in any
Immediate Repair, Replacement or Additional Repair or Replacement, as
the case may be, other than the purchase or replacement of specific
items, and (iv) the cost of all contracted labor or other services
applicable to each Immediate Repair, Replacement or Additional Repair
or Replacement, as the case may be, for which such request for
disbursement is made. With each request the Borrower shall certify
that all Immediate Repairs, Replacements or Additional Repairs or
Replacements, as the case may be, have been made in accordance with
the requirements of this Loan Agreement and all Requirements of Laws.
Each request for disbursement shall include (A) copies of invoices for
all items or materials purchased and all contracted labor or services
provided, and (B) for disbursements in excess of $25,000, such
acknowledgments of payment, lien waivers and/or releases with respect
to the Immediate Repairs, Replacements and Additional Repairs or
Replacements for which disbursement is requested as the Lender may
require. In connection with each disbursement from the Repair Escrow
Account or the Replacement Reserve Account, as the case may be, the
Lender may require the Borrower to provide the Lender with an
endorsement to the Lender's title insurance policy showing that no
Liens have been placed against the Premises since the date of
recordation of the Security Instrument (other than Permitted
Encumbrances and any other Liens previously approved in writing by the
Lender, if any).
(d) Except as provided in the following sentence, each
request for disbursement from the Repair Escrow Account or the
Replacement Reserve Account shall be made only after completion (as
reasonably determined by the Lender) of the Immediate Repair,
Replacement or Additional Repair or Replacement for which disbursement
is requested. If (i) the cost of the Immediate Repair, Replacement or
Additional Repair or Replacement exceeds the lesser of (A) one percent
(1%) of the original Loan Amount, or (B) $50,000.00 per Individual
Property, (ii) the written contract with respect to such Immediate
Repair, Replacement or Additional Repair or Replacement requires
periodic payment for such work pursuant to the terms thereof, and
(iii) the Lender has approved in writing in advance such periodic
payments, then a request for reimbursement from the Repair Escrow
Account and/or Replacement Reserve Account may be made after
completion of a portion of the work under such contract, provided (1)
the materials for which the request is made are on site at the
Premises and are properly secured or have been installed in the
Premises, (2) all other conditions in this Loan Agreement for
disbursement have been satisfied, and (3) funds remaining in the
Repair Escrow Account or the Replacement Reserve Account, as the case
may be, are, in the Lender's reasonable judgment, sufficient to
complete such Immediate Repair, Replacement or Additional Repair or
Replacement and all the other Immediate Repairs and/or Replacements
when required. The Lender, at its option, may issue joint checks,
payable to the Borrower and the supplier, materialman, mechanic,
contractor, subcontractor or other party to whom payment is due in
connection with any such periodic payment for an Immediate Repair,
Replacement or Additional Repair or Replacement to be paid from the
Repair Escrow Account or Replacement Reserve Account, as the case may
be.
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(e) The Lender shall have no obligation to make any
disbursement from the Repair Escrow Account or the Replacement Reserve
Account more frequently than once in any month and (except in
connection with the final disbursement) in any amount less than the
lesser of (i) one percent (1%) of the original Loan Amount, or (ii)
$5,000.00.
(f) Prior to any disbursement from the Repair Escrow
Account or the Replacement Reserve Account, the Lender may, at the
Borrower's expense, require an inspection by an appropriate
independent qualified professional reasonably selected by the Lender
and a copy of a certificate of completion by an independent qualified
professional reasonably acceptable to the Lender prior to the
disbursement of any amounts from the Repair Escrow Account or the
Replacement Reserve Account exceeding $25,000.00. The Borrower shall
pay the Lender a reasonable inspection fee not exceeding $1,000.00 for
each such inspection.
(g) The Lender shall not be obligated to make
disbursements from the Repair Escrow Account or the Replacement
Reserve Account to reimburse the Borrower for the costs of routine
maintenance to the Premises, tenant improvements or leasing
commissions.
(h) Upon the earlier to occur of (i) the timely
completion of all Immediate Repairs in accordance with the
requirements of this Loan Agreement, as verified by the Lender in its
reasonable discretion, or (ii) the payment in full of all amounts owed
by the Borrower under or otherwise secured by any of the Loan
Documents, all amounts remaining on deposit, if any, in the Repair
Escrow Account shall be distributed to the Borrower.
(i) Upon payment in full of all amounts owed by the
Borrower under or otherwise secured by any of the Loan Documents, all
amounts remaining on deposit, if any, in the Replacement Reserve
Account shall be distributed to the Borrower.
Section 6.10 Intentionally Deleted.
Section 6.11 Indemnification.
The Borrower agrees to indemnify the Lender and to hold the
Lender harmless from and against any and all actions, suits, claims, demands,
counterclaims, cross-claims, liabilities, losses, damages, obligations, fees
and costs and expenses (including litigation costs, reasonable attorneys' fees
and expenses) arising from or in any way connected with (a) the performance of
the Immediate Repairs, Replacements or Additional Repairs or Replacements, (b)
unpaid taxes, utility bills, rent or insurance premiums owed by the Borrower,
and/or (c) the holding or investment of the Reserve Accounts, except to the
extent any of the foregoing is the direct result of the gross negligence or
willful misconduct of the Lender.
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ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
Section 7.1 Events of Default.
An Event of Default shall occur if any of the following has
occurred and is continuing beyond any applicable cure or grace period:
(a) Payments. The Borrower fails to make any payment
hereunder, under the Note or under any other Loan Document, when due
and payable, and such payment is not received prior to the tenth
(10th) day after the same is due (or such greater period, if any,
required by applicable law).
(b) Bankruptcy, etc. The occurrence of any Bankruptcy
Event with respect to the Borrower Principal, Borrower or any general
partner or managing member of Borrower.
(c) Judgments. One or more judgments or decrees
exceeding, in the aggregate, $100,000.00 per Individual Property shall
be entered against the Borrower (not paid or fully covered by
insurance provided by a carrier who has acknowledged coverage) and any
such judgments or decrees shall not have been paid, vacated,
discharged, stayed or bonded (through appeal or otherwise) within
thirty (30) calendar days from the entry thereof.
(d) Recourse Covenants. The Borrower violates any of the
Recourse Covenants.
(e) Compliance with Sections 5.1(o) and (p). The
Borrower fails to comply with any or all of the provisions of either
Section 5.1(o), or 5.1(p) and such failure continues for a period of
thirty (30) calendar days following (i) in the case of Section 5.1(o),
the date demand by the Lender is made upon the Borrower for the
execution of any agreement or document in accordance with the
provisions of Section 5.1(o), or (ii) in the case of Section 5.1(p),
the date on which any Operating Expense becomes due and payable in
accordance with the terms thereof, without regard to any extension,
modification or waiver relating thereto; provided that if any
Operating Expense is the subject of a bona fide dispute and is less
than one percent (1%) of the outstanding balance of the Loan as of the
date on which the particular Operating Expense in dispute became due
and payable, then the Borrower shall have ninety (90) days from the
date the same becomes due and payable to pay such Operating Expense or
to furnish the Lender a bond or other collateral acceptable to the
Lender in the Lender's reasonable discretion.
(f) Representations and Warranties. Any representation,
warranty, acknowledgment or statement made by the Borrower or the
Borrower Principal herein, in any other Loan Document or in any
written statement or certificate delivered or required to be delivered
pursuant hereto shall prove untrue in any material respect on the date
as of which it was deemed to have been made or any representation,
warranty acknowledgment or statement submitted to the Lender
concerning the financial condition or credit standing of the Borrower,
any general partner or member thereof or the Borrower Principal proves
to be false or misleading in any material respect.
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(g) Compliance with Covenants and Agreements. The
Borrower shall fail to comply with, observe or perform any covenant or
agreement made by it herein, in the Program Rider, or in any other
Loan Document, which failure continues for thirty (30) days following
written notice thereof to the Borrower; provided that if such failure
is of a type which can not feasibly be cured within such thirty (30)
day period and the Borrower is diligently and in good faith pursuing
such cure, then the Borrower shall have a reasonable period of time
(but in no event more than ninety (90) days following such written
notice) to cure such failure without the same becoming an Event of
Default hereunder. Borrower shall have no right to cure a default
under Section 7.1(l) hereof. Nothing in this Section 7.1(g) shall be
deemed or construed to entitle the Borrower to any notice and
opportunity to cure with respect to any failure to comply with,
observe or perform any covenant or agreement which constitutes an
Event of Default under any other subsection of this Section 7.1 or to
extend any notice and/or opportunity to cure otherwise provided for in
any other subsection of this Section 7.1.
(h) No Encumbrances. The Borrower fails to keep the
Premises free and clear of all encumbrances, liens, deeds of trust,
security interests and subordinate financing, except for Permitted
Encumbrances and as may be permitted by the Loan Documents or
otherwise approved in writing by the Lender in its sole discretion.
(i) No Transfer. Except as permitted in Section 5.2
hereof, the Borrower permits any sale, transfer, conveyance or other
disposition of engages in any subordinate financing with respect to,
or grants any consensual liens against, the Premises, the Rents and
Profits or the Intangible Personalty without the consent of Lender.
(j) Special Purpose Entity. The Borrower fails to be a
Special Purpose Entity at any time while the Loan is outstanding.
(k) Events of Default under the Program Rider or other
Loan Documents. The occurrence of any Event of Default or similar
event under any of the Program Rider or the other Loan Documents,
after giving effect to any period of time provided for the cure of any
such event or occurrence in the Program Rider or any such Loan
Document.
(l) Non-Consolidation Assumptions. If any of the
assumptions contained in the Non-consolidation Opinion, or in any
other "non-consolidation" opinion delivered to Lender in connection
with the Loan, or in any other "non-consolidation" opinion delivered
subsequent to the Loan, is or shall become untrue in any material
respect. Any cure period or right to cure granted to Borrower in this
Loan Agreement or the other Loan Documents shall not apply to this
Section 7.1(l).
(m) Intentionally deleted.
(n) Operating Lease. If Borrower, Operating Partnership
or any Affiliate thereof fails to comply with, observe or perform any
covenant or agreement made by Borrower, Operating Partnership or any
Affiliate thereof under the Operating Lease, and such failure
continues (i) beyond any applicable grace or cure period provided
under the Operating Lease and (ii) for thirty (30) days following
written notice thereof to the Borrower.
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(o) Franchise Agreement. If any Franchise Agreement is
amended, modified or terminated without Lender's prior written
consent.
Section 7.2 Remedies.
Upon the occurrence of an Event of Default, the Lender may,
at its option:
(a) Acceleration. Accelerate the entire unpaid principal
balance of the Loan and all accrued interest thereon without advance
notice to the Borrower, the same becoming immediately due and payable.
In addition, upon acceleration, any and all other Obligations of the
Borrower to the Lender shall be immediately due and payable.
(b) Replacement of Property Manager. Upon written notice
to the Borrower, require the replacement of any property manager or
managing agent for the Premises, if any, with a property manager or
managing agent acceptable to the Lender.
(c) Other Remedies. Invoke any other remedies set forth
herein or in any of the other Loan Documents, including without
limitation, foreclosure of the Lien granted in the Security Instrument
and enforcement of the assignment to the Lender of the Rents and
Profits in accordance with the terms of the Security Instrument.
ARTICLE VIII
CASUALTY LOSSES; EMINENT DOMAIN
Section 8.1 Repairs and Casualty Losses.
(a) Restoration of Premises. Except as otherwise
provided in this Section 8.1, the Borrower shall, at its expense,
promptly repair, restore, replace or rebuild any part of the Premises
which is damaged or destroyed by any casualty or as the result of any
taking under the power of eminent domain, provided the Lender has made
available insurance proceeds or eminent domain proceeds or awards
available to the Borrower for such repair, restoration, replacement or
rebuilding. The Borrower shall (i) substitute a Substitute Property
(pursuant to the terms of Section 2.6 hereof) for each damaged or
destroyed Individual Property; or (ii) cause all repairs, rebuilding,
replacements or restorations to be (in the reasonable opinion of the
Lender) of substantially equivalent quality to the Premises as of the
date hereof, ordinary wear and tear excepted.
(b) Proof of Loss; Claims Settlement. In the event of
loss, the Borrower shall give prompt written notice thereof to the
insurance carrier and the Lender, and the Lender may make proof of
loss if not made promptly by the Borrower. During the existence of any
Event of Default, the Lender is hereby authorized, in its reasonable
discretion, to adjust, compromise and collect the proceeds of any
insurance claims.
(c) Application of Insurance Proceeds. The Borrower
hereby assigns the proceeds of any such insurance policies to the
Lender and hereby directs and authorizes each insurance company to
make payment for such loss directly to the Lender. The proceeds of any
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insurance or any part thereof shall be applied by the Lender in
accordance with the provisions of Section 8.3 of this Loan Agreement.
Section 8.2 Eminent Domain.
(a) Participation in Proceedings. The Borrower shall
promptly notify the Lender of any actual or threatened initiation of
any eminent domain proceeding or other taking for public use as to the
whole or any part of the Premises and/or any rights incident or
appurtenant thereto and shall deliver to the Lender copies of any and
all papers served or received in connection with such proceedings, and
the Lender shall have the right, at its option, to participate in such
proceedings at the expense of the Borrower (including, without
limitation, the Lender's reasonable attorneys' fees) and the Borrower
will execute such documents and take such other steps as required to
permit such participation.
(b) Right to Settle Claims. During the existence of any
Event of Default, the Lender is hereby authorized to adjust,
compromise and collect the proceeds of any eminent domain or similar
award or settle a claim for damages and to apply the same (or any part
thereof) to the then outstanding balance of the Loan.
(c) Use of Proceeds. The Borrower assigns to the Lender
any proceeds or awards which may become due by reason of any
condemnation or other taking for public use of the whole or any part
of the Premises and any rights incident or appurtenant thereto. The
proceeds of any such condemnation award or proceeds of any part
thereof shall be applied by the Lender in accordance with the
provisions of Section 8.3 of this Loan Agreement.
(d) Further Assignments; Acceleration. The Borrower
agrees to execute such further assignments and agreements as may be
reasonably required by the Lender to assure the effectiveness of this
Section 8.2. In the event any governmental agency or authority shall
require or commence any proceedings for the seizing or demolishing of
any part of the Premises, or shall commence any proceedings to condemn
or otherwise take pursuant to the power of eminent domain (or other
power) a material portion of the Premises and such portion of the
Premises has not been substituted pursuant to the terms of Section 2.6
hereof, the Lender may, at its option, declare the Loan to be
immediately due and payable in full and apply all or any portion of
the eminent domain (or similar) awards or proceeds to the then
outstanding balance of the Loan.
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Section 8.3 Application of Insurance Proceeds and
Condemnation Awards.
(a) Unless a Substitute Property has been substituted
pursuant to the terms of Section 2.6 hereof for each Individual
Property affected, all proceeds of insurance assigned to the Lender
pursuant to Section 8.1 of this Loan Agreement, and all proceeds or
awards which may become due by reason of any condemnation or other
taking for public use of the whole or any part of the Premises or any
rights incident or appurtenant thereto and that have been assigned to
the Lender pursuant to Section 8.2 of this Loan Agreement shall be
eligible to be applied by the Lender in its sole discretion to the
repayment of the Loan; provided, however, that subject to the
provisions of this Section 8.3, such proceeds shall be held in an
Eligible Account and applied to the repair or restoration of the
Premises if all of the following conditions are met:
(i) there exists no Default Condition or Event
of Default;
(ii) the Borrower presents sufficient evidence
to the Lender that (A) with respect to any casualty loss,
there are sufficient funds from the insurance proceeds and
from equity funds, if needed, to completely restore or repair
the damaged Premises, or (B) with respect to any condemnation
award, there are sufficient funds from the condemnation award
or proceeds and from equity funds, if needed, to completely
restore the Premises to an architectural whole and to pay
Operating Expenses Premises or Operating Expenses Leases, as
applicable, and (C) the insurance proceeds or condemnation
award is less than twenty percent (20%) of the original Loan
Amount;
(iii) the Operating Lessee agrees in a manner
reasonably satisfactory to the Lender that it will continue
or extend its interests and arrangements for the contract
terms then in effect following the repair, restoration,
replacement or rebuilding;
(iv) all parties having material operating,
management and/or franchise interests in, and arrangements
concerning, the Premises agree that they will continue their
interests and arrangements for the contract terms then in
effect following the repair, restoration, replacement or
rebuilding;
(v) the Borrower presents sufficient evidence
to the Lender that the Premises will be repaired or restored
to an architectural whole prior to the expiration of the
insurance coverage referenced in clause (iv) of the
definition of Insurance set forth above and, in any event,
two (2) years prior to the Maturity Date;
(vi) the Lender will not incur any liability to
any other Person as a result of such use or release of
proceeds; and
(vii) (a) as to any casualty loss, the insurance
proceeds shall be held by the Lender and disbursed as repair,
restoration, replacement or rebuilding progresses
substantially in accordance with the procedures set forth in
this Loan Agreement for disbursement from the Replacement
Reserve Account; provided, however that insurance proceeds of
$150,000 for any Individual Property or less will be
disbursed directly to the Borrower for repair, restoration,
replacement or rebuilding and (B) as to any condemnation
award, the condemnation award or proceeds shall be held by
the Lender
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and disbursed as repair, restoration, replacement or
rebuilding progresses substantially in accordance with the
procedures set forth in this Loan Agreement for disbursement
from the Replacement Reserve Account.
(b) If the above-stated conditions are not satisfied
within ninety (90) days of loss, then the Lender may, at its option,
apply any proceeds in repayment of the amount then outstanding under
the Note.
(c) Upon the completion of any repair, restoration,
replacement or rebuilding any remaining proceeds shall be paid to the
Lender in repayment of the amount then outstanding under the Note in
accordance with the provisions of the Note.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Remedies Cumulative; Waivers.
All remedies of the Lender provided for herein and/or in the
other Loan Documents are cumulative and shall be in addition to any and all
other rights and remedies provided for or available under the other Loan
Documents, at law and/or in equity. The exercise of any right or remedy by the
Lender hereunder shall not in any way constitute a cure or waiver of any
Default Condition or Event of Default hereunder or under any other Loan
Document, or invalidate any act done pursuant to any notice of the occurrence
of any Default Condition or Event of Default, or prejudice the Lender in the
exercise of any of its rights hereunder or under or any other Loan Document,
unless, in the exercise of said rights, the Lender realizes all amounts owed to
it under the Loan Documents. No waiver of any Default Condition or Event of
Default hereunder shall be implied from any delay or omission by the Lender to
take action on account of such Default Condition or Event of Default, and no
express waiver shall affect any Default Condition or Event of Default other
than the Default Condition or Event of Default specified in the waiver and it
shall be operative only for the time and to the extent therein stated. Waivers
of any covenants, terms or conditions contained herein must be in writing and
shall not be construed as a waiver of any subsequent failure to observe or
comply with the same covenant, term or condition. The consent or approval by
the Lender to or of any act by the Borrower requiring further consent or
approval shall not be deemed to waive or render unnecessary the consent or
approval to or of any subsequent or similar act.
Section 9.2 Benefit.
This Loan Agreement is made and entered into for the sole
protection and benefit of the Lender and the Borrower, their successors and
permitted assigns, and no other Person or Persons shall have any right to
action hereon or rights to the Loan proceeds at any time, nor shall the Lender
owe any duty whatsoever to any claimant for labor performed or material
furnished in connection with the construction of the Improvements, or to apply
any undisbursed portion of the Loan to the payment of any such claim, or to
exercise any right or power of the Lender hereunder or arising from any Default
Condition or Event of Default by the Borrower.
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Section 9.3 Assignment and Assumption.
(a) The terms hereof shall be binding upon and inure to
the benefit of the heirs, successors, assigns, and personal
representatives of the parties hereto.
(b) Subject to the provisions of Sections 2.5, 2.6, 5.2
and 10.1(c) hereof, neither Borrower nor any other Person having
beneficial or ownership interest in Borrower shall assign or permit
any assumption of this Loan Agreement, any of the other Loan
Documents, the Loan or any of its rights, interests, duties or
obligations hereunder or thereunder or any Loan proceeds or other sums
to be advanced hereunder in whole or in part without the prior written
consent of the Lender. Lender shall consent, no more than once, to
such assignment and/or assumption to a qualified borrower acceptable
to Lender at its sole discretion upon the payment to the Lender of all
reasonable and customary expenses incurred by the Lender in connection
with any such assignment and/or assumption and of a processing fee in
an amount equal to one percent (1%) of the outstanding principal
amount of the Loan as of the date the Borrower requests the Lender to
consent to such assignment or assumption. Any assignment or assumption
(whether voluntary or by operation of law) without said consent shall
be void. Without in any way limiting the foregoing, in no event shall
the Lender consent to any assignment or assumption requested or
occurring prior to the sale of the Loan by the Lender in the secondary
market if the consideration paid or to be paid by the assignee or
purchaser of the Premises in connection therewith, as determined by
the Lender in its reasonable judgment, is less than the appraised
value of the Premises used by the Lender in underwriting the Loan. The
Borrower shall furnish the Lender at the Borrower's sole cost and
expense such information as the Lender shall request in connection
with any assignment or assumption, including without limitation: (i)
an Appraisal or other evidence satisfactory to the Lender in its
reasonable discretion of the value of the Premises as of the date of
the assignment and/or assumption; (ii) confirmation from the Rating
Agencies that the credit ratings of Securities immediately prior to
assignment and/or assumption will not be qualified, downgraded or
withdrawn as a result of such assignment and/or assumption, which
affirmation may be granted or withheld in the Rating Agencies sole and
absolute discretion; (iii) evidence that the assignee is a Special
Purpose Entity satisfying Lender's and Rating Agency's then current
applicable underwriting criteria and requirements; and (iv) delivery
of a "non-consolidation" opinion in form and substance satisfactory to
Lender that, in the event of a bankruptcy proceeding involving any
Affiliate of Borrower, the assets of the Borrower, including the
Premises, shall not be substantively consolidated with the assets of
the Affiliate. Lender further reserves the right to condition the
consent to any assignment or assumption upon (i) payment of all of
Lender's reasonable expenses incurred in connection with such
transfer; (ii) the confirmation in writing by the applicable Rating
Agencies that the proposed transfer will not, in and of itself, result
in a downgrade, qualification or withdrawal of the initial, or, if
higher, then current respective ratings in effect immediately prior to
such assignment or assumption for the Securities issued in connection
with a securitization; (iii) the delivery of a non-consolidation
opinion reflecting the proposed transfer satisfactory in form and
substance satisfactory to Lender that, in the event of a bankruptcy
proceeding involving any Affiliate of Borrower, the assets of the
Borrower, including the Premises, shall not be substantively
consolidated with the assets of the Affiliate to Lender in its sole
discretion; and (iv) the delivery to Lender of such additional
documents, certificates and legal opinions as it may reasonably
request. In addition, the assignee or purchaser of the
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Premises shall be required to assume the Borrower's duties and
obligations under this Loan Agreement and shall be required to execute
and deliver to the Lender such documents, opinions, certificates and
information as the Lender reasonably requires to effectuate such
assumption of duties and obligations. No sale, assignment or
assumption shall relieve the Borrower of its Obligations under this
Loan Agreement or any of the other Loan Documents, unless the Borrower
has obtained the prior written consent of the Lender, which consent
shall not be unreasonably withheld or delayed.
(c) Lender shall have the right to sell, assign or
otherwise transfer the Loan or any portion thereof or interest therein
held by Lender without the consent of Borrower or Owner or the
satisfaction of any other requirement with respect to Borrower or
Owner. At the request of the holder of the Note and, to the extent not
already required to be provided by Borrower or Owner under this
agreement or the Security Instrument, Borrower and Owner shall use
reasonable efforts to satisfy the market standards to which the holder
of the Note customarily adheres or which may be reasonably required in
the marketplace or by the Rating Agencies of the Note or participation
therein or the first successful public or private securitization (such
sale and/or securitization, the "Securitization") of rated single or
multi-class Securities secured by or evidencing ownership interests in
the Note and the Security Instrument, including, without limitation,
to:
1. (i) provide such financial and other
information with respect to the Premises, the Borrower and
the Owner, (ii) provide budgets relating to the Premises and
(iii) to permit to be performed or permitted such site
inspection, appraisals, market studies, environmental reviews
and reports (Phase I reports and, if appropriate, Phase II
reports), engineering reports and other due diligence
investigations of the Premises, as may be reasonably
requested by the holder of the Note or the Rating Agencies or
as may be reasonably necessary or appropriate in connection
with the Securitization (the "Provided Information"),
together, if customary, with appropriate verification of
and/or consents to the use of the Provided Information
through letters of auditors or opinions of counsel of
independent attorneys reasonably acceptable to the Lender and
acceptable to the Rating Agencies; provided, however, that
Phase II reports and other invasive testing may not be
performed at the Premises until Borrower has received
reasonably appropriate and evidence of insurance from any
Person preparing such report or performing such testing;
2. cause counsel to render opinions as to
non-consolidation, fraudulent conveyance, and true sale or
any other opinion customary in securitization transactions
with respect to the Premises, the Borrower, the Owner and
their Affiliates, which counsel and opinions shall be
reasonably satisfactory to the holder of the Note and the
Rating Agencies;
3. make such representations and warranties as
of the closing date of the Securitization with respect to the
Premises, the Borrower, the Owner and the Loan Documents as
are customarily provided in securitization transactions and
as may be reasonably requested by the holder of the Note or
the Rating Agencies and consistent with the facts covered by
such representations and warranties as they exist on the date
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thereof to the extent such representations and warranties are
true as of the closing date of the Securitization, including
the representations and warranties made in the Loan Documents
to the extent such representations and warranties are true as
of the closing date of the Securitization; and
4. execute such agreements and amendments to
the Loan Documents and organizational documents and enter
into a lockbox or similar arrangement with respect to the
rents from the Premises as may be reasonably requested by the
holder of the Note or as may be requested by the Rating
Agencies or as may be otherwise necessary to effect the
Securitization; provided, however, that the Borrower shall
not be required to modify or amend any Loan Document if such
modification or amendment would (i) change the interest rate,
the stated maturity or the amortization of principal set
forth in the Note, or (ii) modify or amend any other material
economic term of the Loan or materially increase Borrower's
or Owner's obligations or liabilities under the Loan
Documents.
All third party costs and expenses incurred by Lender in
connection with the Securitization or other sale or transfer of the Loan and
all reasonable third party costs and expenses incurred by Borrower or Owner in
connection with the Securitization or other sale or transfer of the Loan shall
be paid by Lender.
Section 9.4 Securitization Cooperation/Indemnification.
(a) Borrower understands that certain of the Provided
Information and the books and records delivered to Lender pursuant to
Section 5.1(n) hereof, (the "Required Records") may be included in
disclosure documents in connection with the Securitization, including,
without limitation, a prospectus or private placement memorandum
(each, a "Disclosure Document") and may also be included in filings
with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), or the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), or provided or
made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the Disclosure Document is required
to be revised prior to the sale of all Securities, the Borrower will
cooperate with the holder of the Note in updating the Disclosure
Document by providing all current information necessary to keep the
Disclosure Document accurate and complete in all material respects.
(b) Borrower agrees to provide in connection with each
of (i) a preliminary and a private placement memorandum or (ii) a
preliminary and final prospectus, as applicable, an indemnification
certificate (A) certifying that Borrower has carefully examined such
memorandum or prospectus, as applicable but only as such memorandum or
prospectus, relates to the Premises, the Borrower, the Borrower
Principal or their Affiliates, including without limitation, the
sections entitled "Special Considerations," "Description of the
Security Instruments," "Description of the Loans and Properties," "The
Manager," "The Borrower" and "Certain Legal Aspects of the Loan," and
such sections (and any other sections reasonably requested) do not,
and with respect to any portions of such sections prepared in reliance
upon the reports of third parties, to Borrower's knowledge do not,
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in
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the light of the circumstances under which they were made, not
misleading, (B) indemnifying Lender, subject to Section 9.5 (and for
purposes of this Section 9.4, Lender hereunder shall include its
officers, directors and employees), the Affiliate of such Lender
entity (the "Lender Entity") that has filed the registration statement
relating to the securitization (the "Registration Statement"), each of
its directors, each of its officers who have signed the Registration
Statement and each person or entity who controls the Affiliate within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively, the "Lender Group"), and Lender Entity,
each of its directors and each person who controls Lender Entity
within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act (collectively, the "Underwriter Group") for any
losses, claims, damages or liabilities (the "Liabilities") to which
Lender, the Lender Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of any untrue statement or
alleged untrue statement of any material fact contained in such
sections (other than any such statement made in reliance upon the
reports of third parties that do not, to Borrower's knowledge, contain
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading) or arise out
of the omission or alleged omission to state therein a material fact
known to Borrower and required to be stated in such sections or
necessary in order to make the statements in such sections or in light
of the circumstances under which they were made, not misleading and
(C) agreeing to reimburse Lender, the Lender Group and the Underwriter
Group for any legal or other expenses reasonably incurred by Lender
and Lender Group in connection with investigating or defending the
Liabilities; provided, however, that Borrower will be liable in any
such case under clauses (B) or (C) above only to the extent that any
such loss claim, damage, liability or expense arises out of any such
untrue statement or omission made therein in reliance upon and in
conformity with written information furnished to Lender by or on
behalf of Borrower expressly for use in the Disclosure Document; and
provided further, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of
any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written
information furnished to the Borrower by Lender, any member of the
Lender Group or any member of the Underwriter Group expressly for use
in the Disclosure Document. The foregoing indemnity with respect to
any untrue statement contained in or omission from a preliminary
private placement memorandum or preliminary prospectus shall not inure
to the benefit of any member of the Underwriting Group (or any person
controlling such member of the Underwriting Group) from whom the
Person asserting any such loss, liability, claim, damage or expense
purchased any of the Securities which are the subject thereof if the
Borrower shall sustain the burden of proving that any such loss,
liability, claim, damage or expense resulted from the fact that such
Person was not sent or given a copy of the final private placement
memorandum or final prospectus at or prior to the written confirmation
of the sale of such Security to such Person and the loss, liability,
claim, damage or expense resulted from an untrue statement contained
in or omission from such preliminary private placement memorandum or
preliminary prospectus that was corrected in the final private
placement memorandum or final prospectus.
(c) In connection with filings under the Exchange Act,
Borrower agrees to indemnify (i) Lender, the Lender Group and the
Underwriter Group for Liabilities to which Lender, the Lender Group or
the Underwriter Group may become subject insofar as the
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Liabilities arise out of or are based upon the omission or alleged
omission to state in the Provided Information or Required Records a
material fact required to be stated in the Provided Information or
Required Records in order to make the statements in the Provided
Information or Required Records, in light of the circumstances under
which they were made not misleading and (ii) reimburse Lender, the
Lender Group or the Underwriter Group for any legal or other expenses
reasonably incurred by Lender, the Lender Group or the Underwriter
Group in connection with defending or investigating the Liabilities
provided, however, that Borrower will be liable in any such case under
clauses (i) or (ii) above only to the extent that any such loss claim,
damage, liability or expense arises out of any such untrue statement
or omission made therein in reliance upon and in conformity with
written information furnished to Lender by or on behalf of Borrower
expressly for use in the Disclosure Document; and provided further,
that this indemnity agreement shall not apply to any loss, liability,
claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to
the Borrower by Lender, any member of the Lender Group or any member
of the Underwriter Group expressly for use in the Disclosure Document.
(d) Lender Entity agrees to indemnify and hold harmless
Borrower, each of its directors and each person who controls Borrower
within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act (the "Borrower Group") against any and all losses,
claims, damages or liabilities, joint or several, to which such group
may become subject, under the Securities Act or otherwise, and will
reimburse such group for any legal or other expenses reasonably
incurred by such group in connection with investigating or defending
any such loss, claim, damage, liability or action, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in a Disclosure Document or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, but only to
the extent that such untrue statement or alleged untrue statement or
omission or alleged omission relates to information that does not
accurately reflect Provided Information.
(e) Promptly after receipt by an indemnified party under
this Section 9.4 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 9.4, notify the
indemnifying party in writing of the commencement thereof, but the
omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability which the indemnifying party may
have to any indemnified party hereunder except to the extent that
failure to notify causes prejudice to the indemnifying party. In the
event that any action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled, jointly with any other
indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel
satisfactory to such indemnified party, provided that no compromise or
settlement shall be entered without the consent of such indemnified
party, which consent shall not be unreasonably withheld. After notice
from the indemnifying party to such
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indemnified party under the immediately preceding sentence of this
Section 9.4 and except as otherwise explicitly provided herein, the
indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof; provided, however, if the defendants in any
such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that
there are any legal defenses available to it and/or other indemnified
parties that are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and
to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. The indemnifying party shall not be
liable for the expenses of more than one separate counsel unless an
indemnified party shall have reasonably concluded that there may be
legal defenses available to it that are different from or additional
to those available to another indemnified party. In no event shall an
indemnifying party be liable to an indemnified party under this
Section 9.4 for any losses, claims, damages or liabilities to which
such indemnified party may become subject to the extent the same arise
by reason of the gross negligence, illegal acts, fraud or willful
misconduct of such indemnified party.
(f) In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement
provided for in this Section 9.4 is for any reason held to be
unenforceable by an indemnified party in respect of any losses,
claims, damages or liabilities (or action in respect thereof) referred
to therein which would otherwise be indemnifiable under Section 9.4,
the indemnifying party shall contribute to the amount paid or payable
by the indemnified party as a result of such losses, claims, damages
or liabilities (or action in respect thereof); provided, however, that
no person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation; and provided further, that Borrower will be liable
under this Section 9.4 only to the extent that any such loss, claim,
damage or liability (or action in respect thereof) arises out of any
untrue statement or omission made therein in reliance upon and in
conformity with written information furnished to Lender by Borrower
expressly for use in the Disclosure Document or any failure to state
any material fact known to Borrower and required to be stated in such
written information in order to make such written information in light
of the circumstances under which they were made not misleading. In
determining the amount of contribution to which the respective parties
are entitled, the following factors shall be considered: (i) Lender
Entity and Borrower's relative knowledge and access to information
concerning the matter with respect to which claim was asserted; (ii)
the opportunity to correct and prevent any statement or omission; and
(iii) any other equitable considerations appropriate in the
circumstances. Lender Entity and Borrower hereby agree that it would
not be equitable if the amount of such contribution were determined by
pro rata or per capita allocation.
(g) The liabilities and obligations of both Borrower and
Lender under this Section 9.4 shall survive the termination of the
Security Instrument and the satisfaction and discharge of the
Indebtedness for such period of time under any applicable statute of
limitations that (i) any third party may bring any claim against
Lender or Borrower, or (ii) Lender or Borrower may bring may bring any
claim against each other, whether based on indemnification for a third
party claim or otherwise.
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Section 9.5 Information.
The Borrower hereby gives permission to the Lender to release
publicity articles concerning the existence, structure and the terms of the
Loan and the Borrower and principals involved in the financing of the Premises.
It is also expressly recognized and agreed that the Lender may share any
information pertaining to the Loan Documents, the transactions contemplated
thereby and the records maintained by the Lender in connection therewith with
Bank of America Corporation or Bank of America, including its bank subsidiaries
and Banc of America Securities LLC and any of the other Affiliates of the
foregoing and any other Persons which require such information in connection
with the sale of the Loan in the secondary mortgage market.
Section 9.6 Nonrecourse Loan; Exceptions.
The Note provides that the Loan is nonrecourse to the
Borrower and each Borrower Principal, except for (a) the lien of the Security
Instrument and the other Loan Documents and (b) the exceptions provided for in
the Note.
Section 9.7 Amendments.
This Loan Agreement shall not be amended except by a written
instrument signed by all parties hereto.
Section 9.8 Governing Law and Jurisdiction.
This Loan Agreement and the other Loan Documents and all
matters relating thereto shall be governed by and construed and interpreted in
accordance with the laws of the State of North Carolina except that the
Security Instruments shall be governed by and construed and interpreted in
accordance with the laws of the state in which the applicable Individual
Property is located. The Borrower and all of its general partners/members and
each Borrower Principal hereby submit to the jurisdiction of the state and
federal courts located in the State of North Carolina and agree that the Lender
may, at its option, enforce its rights under the Loan Documents in such courts.
Section 9.9 Savings Clause.
Invalidation of any one or more of the provisions of this
Loan Agreement shall in no way affect any of the other provisions hereof, which
shall remain in full force and effect.
Section 9.10 Execution in Counterparts.
This Loan Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument, and in making proof of this Loan
Agreement, it shall not be necessary to produce or account for more than one
such counterpart.
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Section 9.11 Notices.
All notices and other communications shall have been duly
given and shall be effective (a) when delivered, (b) when transmitted via
telecopy (or other facsimile device) to the number set forth in Exhibit C
hereto, (c) the day following the day on which the same has been delivered
prepaid to a reputable national overnight air courier service, or (d) the third
Business Day following the day on which the same is sent by certified or
registered mail, postage prepaid, in each case to the respective party at the
address set forth in Exhibit C hereto, or at such other address as such party
may specify by written notice to the other party hereto. No notice of change of
address shall be effective except upon actual receipt. This Section 9.10 shall
not be construed in any way to affect or impair any waiver of notice or demand
provided in any Loan Document or to require giving of notice or demand to or
upon any Person in any situation or for any reason. In addition to the
foregoing, the Lender and Borrower may, from time to time, specify to the other
party additional notice parties by providing to the other party written notice
of the name, address, telephone number and telecopy number of any such
additional notice party. Each such additional notice party shall be entitled to
receive and/or give any notice required or permitted to be given under this
Loan Agreement or any other Loan Document.
Section 9.12 Right of Set-Off.
In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any such rights,
upon the occurrence of and during the continuance of any Event of Default, the
Lender is authorized at any time and from time to time, without presentment,
demand, protest or other notice of any kind (all of which rights being hereby
expressly waived), to set-off and to appropriate and apply any and all deposits
(general or special) and any other indebtedness at any time held by or owing to
the Lender (including, without limitation branches, agencies or Affiliates of
the Lender wherever located) to or for the credit or the account of the
Borrower against the obligations and liabilities of the Borrower to the Lender
hereunder, under the Note or otherwise, irrespective of whether the Lender
shall have made any demand hereunder and although such obligations, liabilities
or claims, or any of them, may be contingent or unmatured, and any such set-off
shall be deemed to have been made immediately upon the occurrence of an Event
of Default even though such charge is made or entered on the books of the
Lender subsequent thereto. The Lender agrees to notify the Borrower subsequent
to any such set-off or application.
Section 9.13 Written Agreement.
(a) THE RIGHTS AND OBLIGATIONS OF THE BORROWER, EACH
BORROWER PRINCIPAL AND THE LENDER, AS APPROPRIATE, SHALL BE DETERMINED
SOLELY FROM THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS,
AND ANY PRIOR OR CONTEMPORANEOUS ORAL OR WRITTEN AGREEMENTS BETWEEN
THE LENDER, THE BORROWER AND EACH BORROWER PRINCIPAL CONCERNING THE
SUBJECT MATTER HEREOF AND OF THE OTHER LOAN DOCUMENTS ARE SUPERSEDED
BY AND MERGED INTO THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS.
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(b) THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY
NOT BE VARIED BY ANY ORAL AGREEMENTS OR DISCUSSIONS THAT OCCUR BEFORE,
CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO THE EXECUTION OF THIS LOAN
AGREEMENT OR THE OTHER LOAN DOCUMENTS.
(c) THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 9.14 Waiver of Jury Trial.
THE LENDER, THE BORROWER AND EACH BORROWER PRINCIPAL HEREBY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT
MATTER OF THIS LOAN AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY THE LENDER, THE BORROWER AND EACH BORROWER PRINCIPAL, AND
THE LENDER, THE BORROWER AND EACH BORROWER PRINCIPAL ACKNOWLEDGE THAT NO PERSON
ACTING ON BEHALF OF ANOTHER PARTY TO THIS LOAN AGREEMENT HAS MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. THE LENDER, THE BORROWER AND EACH BORROWER
PRINCIPAL FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE
OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS LOAN AGREEMENT AND IN THE
MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE
WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH
COUNSEL.
Section 9.15 Cross Default, Cross-Collateralization,
Waiver of Marshalling of Assets.
(a) Borrower acknowledges that Lender has made the Loan
to Borrower upon the security of its collective interest in the
Individual Properties and in reliance upon the aggregate of the
Individual Properties taken together being of greater value as
collateral security than the sum of the Individual Properties taken
separately. Borrower agrees that the Security Instruments are and will
be cross-collateralized and cross-defaulted with each other so that
(i) an Event of Default under any of the Security Instrument shall
constitute an Event of Default under each of the other Security
Instrument which secure the Note; (ii) an Event of Default under the
Note or this Loan Agreement shall constitute an Event of Default under
each Security Instrument; and (iii) each Security Instrument shall
constitute security for the Note as if a single blanket lien were
placed on all of the Individual Properties as security for the Note.
(b) In addition to the Loan, the Security Instrument
shall also secure the following described additional loan (the
"Additional Loan"), including without limitation, the indebtedness
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evidenced by such Promissory Notes (the "Additional Note") described
below, and the payment and performance of all other indebtedness and
obligations (including any additional advances) under the Additional
Note and all agreements, instruments and other documents evidencing,
securing or relating to the Additional Loan (each an "Additional Loan
Document" and, collectively, the "Additional Loan Documents"),
including without limitation, the loan agreement relating to the
Additional Loan (the "Additional Loan Agreement", together with any
and all amendments, renewals, replacements, extensions or other
modifications to any of the foregoing:
Loan in the principal amount of $26,716,000 evidenced by a
Promissory Note executed by RFS SPE 2000 LLC and payable to
the Lender dated of even date herewith, in such principal
amount, secured by the following properties: Residence Inn,
Jacksonville, Florida; Residence Inn, Torrance, California;
Hampton Inn, Houston, Texas; and Hampton Inn, Jacksonville,
Florida.
The holder of any such Additional Note shall be entitled to
the benefits of the Security Instrument to the same extent as
the holder of the Note. Accordingly, all references in the
Security Instrument to the Loan, the Note, the Loan Agreement
or the Loan Documents shall be construed to include,
respectively, the Additional Loan, the Additional Note, the
Additional Loan Agreement and the Additional Loan Documents.
Notwithstanding anything to the contrary in the Loan
Documents, the fact that the Security Instrument shall also secure the
Additional Loan and the fact that the Borrower will enter into the
Contribution Agreement shall not result in a default under any of the
Loan Documents.
(c) Any default or event of default under any Additional
Loan Documents shall constitute an Event of Default under this Loan
Agreement, the Security Instrument and the other Loan Documents,
including without limitation, the Note. Any Event of Default hereunder
or under any of the other Loan Documents shall constitute a default or
event of default under the Additional Loan Documents, including
without limitation, the Additional Note.
(d) The Lender may, from time to time, at its election,
release the Loan and/or the Additional Loan from the
cross-collateralization and cross-default provisions set forth above.
In the event the Loan is paid in full or the Loan is assumed in
accordance with the provisions of this Agreement, the Lender may, in
its sole and absolute discretion, at the request of the Borrower or
any such assuming party, release the cross-collateralization and
cross-default provisions set forth above, upon (i) Lender's approval,
in its sole and absolute discretion, of the new Special Purpose Entity
borrower, (ii) the affirmation of the Rating Agencies that such
release will not result in a downgrade, qualification, or withdrawal
in the ratings for any Securities, (iii) Borrower's providing of
additional collateral in the form of Permitted Investments in an
amount equal to twenty-five percent (25%) of the Allocated Loan Amount
being released, (iv) the Debt Service Coverage Ratio Leases and Debt
Service Coverage Ratio Premises on the remaining Individual Properties
remaining equal to the greater of (A) such ratios at the Closing Date
or (B) such ratios
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immediately prior to such release, and (iv) payment to the Lender of
an amount equal to twenty-five percent (25%) of the outstanding
principal balance of the Loan immediately preceding such payment of
the Loan in full or on the date of such assumption (to be applied on a
pro-rata basis against the Additional Loan in such manner as the
Lender may elect in its sole and absolute discretion) and satisfaction
of all other requirements of the Lender for such release. Any release
of such cross-collateralization and cross-default provisions may be
made by instruments executed solely by the Lender, without any need
for joinder by the Borrower or any other Person. Upon the execution of
any such release by the Lender, all other Loan Documents and
Additional Loan Documents shall be deemed amended thereby so as to
conform to such release. In no event shall any such release of the
cross-collateralization and cross-default provisions be deemed or
construed so as to release, satisfy or otherwise amend the Note, the
Security Instrument or any of the other Loan Documents.
(e) To the fullest extent permitted by law, Borrower,
for itself and its successors and assigns, waives all rights to a
marshalling of the assets of Borrower, Borrower's partners and others
with interests in Borrower, and of the Individual Properties, or to a
sale in inverse order of alienation in the event of foreclosure of all
or any of the Security Instrument, 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 Individual Properties for the collection of the Loan
without any prior or different resort for collection or of the right
of Lender to the payment of the Loan out of the net proceeds of the
Individual Properties in preference to every other claimant
whatsoever. In addition, Borrower, for itself and its successors and
assigns, waives in the event of foreclosure of any or all of the
Security Instrument, any equitable right otherwise available to
Borrower which would require the separate sale of the Individual
Properties or require Lender to exhaust its remedies against any
Individual Property or any combination of the Individual Properties
before proceeding against any other Individual Property or combination
of Individual Properties; and further in the event of such foreclosure
Borrower does hereby expressly consents to and authorizes, at the
option of Lender, the foreclosure and sale either separately or
together of any combination of the Individual Properties.
Section 9.16 Servicer.
At the option of Lender, the Loan may be serviced by a
servicer (the "Servicer") selected by Lender and Lender may delegate all or any
portion of its responsibilities under this Agreement and the other Loan
Documents to the Servicer pursuant to a servicing agreement (the "Servicing
Agreement") between Lender and Servicer. Until Lender may elect otherwise, the
Servicer shall be Bank of America.
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ARTICLE X
SPECIAL PROVISIONS
Section 10.1 Termination of Manager.
(a) To the extent Borrower enters into any Management
Agreement, such Management Agreement shall include provisions that if
any of the following conditions occur during the term of the Loan: (a)
at any time, the Debt Service Coverage Ratio Premises for the
immediately preceding twelve (12) month period is less than 1.3x or
(b) the amounts evidenced by the Note have been accelerated; or (c)
the Manager shall become insolvent, the Borrower shall, at the request
of Lender, terminate the Management Agreement and replace the Manager
with a manager approved by Lender on terms and conditions satisfactory
to Lender, it being understood and agreed that the management fee for
such replacement manager shall not exceed then prevailing market
rates. Notwithstanding the foregoing, if the reason for termination of
the Manager is subsection (a) above, the Borrower may elect from time
to time to provide additional collateral for a portion of the Loan
such that, if the outstanding principal balance of the Loan were equal
to such principal balance less the lower of (as determined by Lender)
the face amount or fair market value of the additional collateral, the
Debt Service Coverage Ratio Premises (after adjusting the Debt Service
accordingly to reflect same) would equal or exceed 1.3x, in which case
no termination would be effective. Any such additional collateral
would not be released until Borrower has demonstrated a Debt Service
Coverage Ratio Premises in excess of 1.3x without taking into account
the additional collateral. All additional collateral must be U.S.
Obligations and must be accompanied by such additional security
agreements, financing statements and other documents or instruments,
including opinions of Borrower's counsel, which in the reasonable
opinion of Lender and its counsel would be necessary or advisable to
create in Lender a first perfected security interest in the additional
collateral. In addition and as a condition to the posting of such
additional collateral, Lender shall have received written affirmation
from the Rating Agencies that the credit ratings of the Securities
immediately prior to such posting will not be qualified, downgraded or
withdrawn as a result of such posting, which affirmation may be
granted or withheld in the Rating Agencies' sole and absolute
discretion.
(b) If at any time during the term of the Loan, any
Manager under any Management Agreement is an Affiliate of Borrower,
Borrower shall have delivered a Non-Consolidation opinion, as
acceptable to Lender in its sole discretion with respect to Manager
and its equity owners.
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Section 10.2 Substitution of Operating Lessee.
Notwithstanding anything to the contrary contained herein,
Lender may consent to the termination of the Operating Lease and substitution
of a new operating lease or if applicable a management agreement entered into
pursuant to the formation of the taxable REIT subsidiary (the "New Operating
Lease") in its sole discretion. Such consent shall not be required, provided
that Lender has received payment in full of any and all actual expenses
incurred in connection therewith and the following conditions have been
satisfied as of the consummation of the transaction:
(i) the operating lessee under the New Operating Lease
(x) is a Qualified Operating Lessee; or (y) is a public company whose
shares were initially distributed to the shareholders and unitholders
of the REIT and Operating Partnership at the time the new Operating
lease is executed;
(ii) the terms of the New Operating Lease, including
without limitation, economic provisions, are substantially similar or
more preferential to Lender than the Operating Lease;
(iii) the New Operating Lease contains a provision that
if, at any time, the Debt Service Coverage Ratio Leases for the
immediately preceding twelve (12) month period is less than 1.30x, the
Borrower shall, at the request of Lender, terminate the New Operating
Lease and replace the Operating Lessee or if applicable the New
Manager with a new operating lessee or a new manager approved by
Lender, on terms and conditions satisfactory to Lender;
(iv) Lender has received no less than forty-five (45)
days' prior written notice of such transfer;
(v) if Qualified Operating Lessee is an Affiliate of
Borrower: (x) Qualified Operating Lessee has fully subordinated all of
its rights under the New Operating Lease to the Lien of the Security
Instrument including but not limited to all provisions regarding
insurance, condemnation and any purchase option exercisable by
Qualified Operating Lessee; and (y) Borrower shall have delivered a
Non-Consolidation Opinion, as acceptable to Lender in its sole
discretion with respect to Qualified Operating Lessee and its equity
owners;
(vi) Lender shall have confirmations from any franchisors
under any Franchise Agreements that such Franchise Agreements shall
remain in full force and effect after the consummation of such New
Operating Lease; and
(vii) Lender shall have confirmations in writing from any
applicable Rating Agencies to the effect that such new Operating Lease
will not result in a re-qualification, reduction or withdrawal of any
rating then assigned to any securities in a securitization.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Borrower, each Borrower Principal and
the Lender have executed this Loan Agreement under Seal as of the above-written
date.
BORROWER:
RFS SPE2 2000 LLC, a Virginia limited
liability company
By: RFS MM2 2000 CORPORATION,
a Virginia corporation,
its managing member
By: (SEAL)
----------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
BORROWER PRINCIPALS:
RFS HOTEL INVESTORS, INC.,
a Tennessee corporation
By: (SEAL)
----------------------------
Name: Xxxxx Xxxxxxxx
Title: Executive Vice President
LENDER:
BANK OF AMERICA, N.A., a national
banking association
By: (SEAL)
----------------------------
Name:
----------------------------
Title:
----------------------------
88
SCHEDULE 1
Allocated Loan Amount
Residence Inn, Atlanta, Georgia $ 4,189,000.00
Holiday Inn Express, Downers Grove, Illinois $ 4,938,000.00
Holiday Inn, Flint, Michigan $ 9,999,000.00
Sheraton, Clayton, Missouri $ 6,358,000.00
89
SCHEDULE 2
Franchise Agreements
Residence Inn, Atlanta, Georgia- By and Between Marriott International, Inc. as
Franchisor and RFS, Inc. as Franchisee, dated October 2, 1995.
Holiday Inn, Downers Grove, Illinois - By and Between Holiday Inns Franchising,
Inc., as Licensor and RFS, Inc. as Licensee, dated February 27, 1996.
Holiday Inn, Flint, Michigan- By and Between Holiday Inns Franchising, Inc., as
Licensor and RFS, Inc. as Licensee, dated February 27, 1996.
Sheraton, Clayton, Missouri- By and Between ITT Sheraton, as Licensor and RFS,
Inc. as Licensee, dated June 18, 1999.
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SCHEDULE 3
Operating Leases
Residence Inn, Atlanta, Georgia, Holiday Inn Express, Downers Grove, Illinois,
Holiday Inn, Flint, Michigan and Sheraton, Clayton, Missouri - By and between
RFS, Inc. and RFS Partnership, L.P. as amended and consolidated on November 21,
1996.
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EXHIBIT A
---------
EQUITY INTERESTS
Borrower:
--------
RFS MM2 2000 Corporation 1%
RFS Hotel Investors, Inc. 99%
Each Borrower Principal which is not an Individual:
---------------------------------------------------
N/A
92
EXHIBIT B
---------
IMMEDIATE REPAIRS, REPLACEMENTS, INITIAL RESERVE DEPOSITS
AND MONTHLY RESERVE DEPOSITS
IMMEDIATE
IMMEDIATE REPAIRS DETAIL REPAIRS ESCROW
Clayton, MO
HVAC Units $116,000.00
Food Service equipment $ 18,800.00
Swimming pool $ 4,900.00
Hallways: carpet and wallcover $ 71,000.00
Other/Miscellaneous $ 3,900.00
------------------- -----------
TOTAL: $214,600.00
Replacements Estimated Cost
------------ --------------
All items required to be capitalized under GAAP, including, but not
limited to, all furniture, furnishings, fixtures, hotel equipment, hotel
systems, wall coverings, floor coverings and soft goods of Borrower.
Initial Reserve Deposits
------------------------
Initial Reserve Deposit to the Repair Escrow Account (125% of the
aggregate estimated cost of Immediate Repairs, as calculated above): $268,250.00
Initial Reserve Deposit to the Replacement Reserve Account: $0.00
Initial Reserve Deposit to the Tax and Insurance Reserve Account: $509,136.74
Initial Reserve Deposit to the Debt Service Reserve Account: $0.00
Initial Deposit to the COR Account: $0.00
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Monthly Reserve Deposits
------------------------
In the first year of the Loan, Monthly Reserve Deposits to the
Replacement Reserve Account shall be in an amount equal to $89,890.92.
Beginning at the end of the first year of the Loan Term, Borrower
shall make monthly deposits in an amount equal to the greater of (i)
5% of Operating Income based on the Operating Statements provided by
the Borrower, or (ii) $92,138.17 per month, the greater of (i) 5% of
Operating Income based on the Operating Statements provided by the
Borrower, or (ii) $94,441.67 per month beginning at the end of the
second year of the Loan Term, the greater of (i) 5% of Operating
Income based on the Operating Statements provided by the Borrower, or
(ii) $96,802.67 per month beginning at the end of the third year of
the Loan Term, the greater of (i) 5% of Operating Income based on the
Operating Statements provided by the Borrower, or (ii) $99,222.75 per
month beginning at the end of the fourth year of the Loan Term, the
greater of (i) 5% of Operating Income based on the Operating
Statements provided by the Borrower, or (ii) $101,703.33 per month
beginning at the end of the fifth year of the Loan Term, the greater
of (i) 5% of Operating Income based on the Operating Statements
provided by the Borrower, or (ii) $104,245.91 per month beginning at
the end of the sixth year of the Loan Term, the greater of (i) 5% of
Operating Income based on the Operating Statements provided by the
Borrower, or (ii) $106,852.08 per month beginning at the end of the
seventh year of the Loan Term, the greater of (i) 5% of Operating
Income based on the Operating Statements provided by the Borrower, or
(ii) $109,523.33 per month beginning at the end of the eighth year of
the Loan Term, and the greater of (i) 5% of Operating Income based on
the Operating Statements provided by the Borrower, or (ii) $112,261.41
per month beginning at the end of the ninth year of the Loan Term (the
"Monthly Deposit to the Replacement Reserve Account"). The Lender may,
in its reasonable discretion, adjust such monthly amount from time to
time to an amount sufficient, in the Lender's reasonable judgment, to
maintain adequate balances necessary for repair and/or replacement
costs as they may arise. Notwithstanding the foregoing, in the event
the Lender shall at any time increase the Monthly Deposit to the
Replacement Reserve Account over the monthly amount then required, the
Borrower may, at its election, request that the Lender obtain, at the
sole cost, fee and expense of the Borrower, an engineer's report from
an engineer to be selected by the Lender in its reasonable discretion,
in which case the Monthly Deposit to the Replacement Reserve Account
shall be adjusted by the Lender based on such engineer's report,
provided that in no event shall the Monthly Deposit to the Replacement
Reserve Account be decreased below the amount then required.
Monthly Reserve Deposits to the Tax and Insurance Reserve Account
shall be in an amount equal to (a) the sum of (i) the aggregate
anticipated annual premiums for all insurance policies required to be
maintained pursuant to this Loan Agreement due in the coming year,
(ii) the sum of the anticipated annual real property taxes, personal
property taxes, intangibles taxes and assessment for the Premises due
in the coming year, (iii) the sum of anticipated annual water and
sewer assessments and frontage charges for the Premises due in the
coming year, and (iv) the sum of all other anticipated assessments and
charges against the Premises due in the coming year, divided by (b)
twelve (12).
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EXHIBIT C
---------
ADDRESSES FOR NOTICE
if to the Borrower: RFS SPE2 2000 LLC
c/o RFS Hotel Investors Inc.
000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Hunton & Xxxxxxxx
0000 X Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Lender: Bank of America, N.A.
c/o Capital Markets Servicing Group
000 Xxxxx Xxxxxxx, 00xx Xxxxx
XX0-000-00-00
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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EXHIBIT D
---------
PROGRAM RIDER
(Hotel)
1. Definitions. The capitalized terms used in this Program Rider
and not defined below shall have the meanings set forth in the Loan Agreement.
Operating Expense. Shall mean any operating expense relating
to the Premises, whether it be an Operating Expense Premises or an Operating
Expense Leases.
Operating Income. Shall mean any operating income relating to
the Premises, whether it be from Operating Income Premises or Operating Income
Leases.
2. Conditions Precedent. The obligation of the Lender to make
the Loan provided for in this Loan Agreement is subject to the satisfaction, by
proper evidence, execution and/or delivery to the Lender of each of the
following items, each in form and substance satisfactory to the Lender and the
Lender's counsel:
(a) Leases. Copies (including a Certification) of all
leases, assignments of lease, subleases and any lease amendments and
other agreements (hereinafter "Leases") affecting any part of the
Premises. The leases shall be subordinate to the Security Instrument.
(b) Tenant Estoppel Certificates. Current Tenant
Estoppel Certificates from all tenants and other users (hereinafter
"Tenants") of any portion of the Premises.
(c) Subordination Agreements. Subordination Agreements
with any Lessee.
(d) Nondisturbance Agreement. Nondisturbance Agreement
with Operating Lessee.
(e) Franchise Agreement. A copy of the Franchise
Agreement.
(f) Comfort Letter from Franchisor. A comfort letter or
other agreement from the franchisor under the Franchise Agreement,
which letter shall, at the election of the Lender, (i) be addressed to
the Lender, (ii) verify that the Franchise Agreement is in full force
and effect, (iii) verify that there are no defaults, breaches or
violations under the Franchise Agreement and that no conditions exist
which with the passage of time or the giving of notice or both could
constitute a default, breach or violation thereunder, (iv) provide
that notice of any default, breach or violation under the Franchise
Agreement and right to cure same be given to the Lender, (v) provide
that the Lender shall have the right to assign the letter or other
agreement, (vi) permit the Lender to preserve the Franchise Agreement
and operate the franchise in accordance with the terms thereof in
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the event the Borrower suffers a Bankruptcy Event or in the event the
Lender or any Affiliate of the Lender acquires the Premises at any
foreclosure sale or by deed in lieu of foreclosure, which right to
preserve and operate shall continue until dismissal of such Bankruptcy
Event or any subsequent sale of the Premises to a party which is not
the Lender or any Affiliate of the Lender, as applicable, and (vii)
consent to the Loan and the assignment of and grant of a security
interest in the Franchise Agreement in favor of the Lender as security
for the Loan and the obligations evidenced and secured by the Loan
Documents.
(g) Franchise Inspection Reports. Copies of such
franchise inspection reports relating to the Premises as the Lender
may request.
(h) Licenses. Copies (including a Certification) of all
material licenses, permits, certificates and/or privileges necessary
or desirable for the ownership or operation of the Premises as
currently constructed and operated.
3. Representations and Warranties of the Borrower. To induce the
Lender to enter into this Loan Agreement and to make the Loan, the Borrower
hereby represents and warrants to the Lender on the Closing Date as follows:
(a) Franchise Agreement. The Franchise Agreement is in
full force and effect and has not been terminated, rescinded,
withdrawn or cancelled, or (except as disclosed in writing by the
Borrower prior to the Closing Date) altered, amended or modified. To
the best of Borrower's knowledge, there is no default under or breach
or violation of the terms of the Franchise Agreement by any party
thereto.
(b) The Premises. All guest rooms, facilities and
amenities relating to the operation of the hotel as presently
constructed and operated are located on the Premises.
(c) Licenses. To the best of Borrower's knowledge, all
licenses, permits, certificates and/or privileges necessary or
desirable for the ownership or operation of the Premises as presently
constructed and operated have been obtained and are in good standing.
(d) Operating Lease. The Operating Lease is in full
force and effect and has not been terminated, rescinded, withdrawn or
canceled, or (except as disclosed in writing by the Borrower prior to
the Closing Date) altered, amended or modified. There is no default
under or between or violation of the terms of the Operating Lease by
any party thereto.
4. Affirmative Covenants of the Borrower. During any period in
which the Loan is outstanding, the Borrower agrees that it will:
(a) Franchise Inspection Reports. Furnish the Lender
with a copy of each franchise inspection report relating to the
Premises within fifteen (15) days after the Borrower's receipt
thereof.
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(b) Lessee Information. Submit to the Lender when
requested by the Lender, all information on all tenant leases
otherwise required to be included in a Rent Roll, which information
shall include a Certification thereof.
(c) Rent Rolls. Furnish, or cause to be furnished, Rent
Rolls to the Lender when requested by the Lender.
(d) Tenant Estoppel Certificates. Furnish to the Lender
when requested by the Lender, Tenant Estoppel Certificates from such
tenants of any portion of the Premises as the Lender may require.
(e) Subordination Agreements. Furnish to the Lender
when requested by the Lender, Subordination Agreements with such
tenants of any portion of the Premises as the Lender may require.
(f) Licenses. Maintain in full force and effect all
material licenses, permits, certificates and/or privileges necessary
or desirable for the ownership or operation of the Premises as
currently or hereafter constructed and operated.
5. Negative Covenants of the Borrower. During any period in
which the Loan is outstanding, the Borrower agrees that it will not:
(a) Franchise Agreement and Other Agreements, Licenses
and Permits. Consent to any default under or a breach, withdrawal,
cancellation, revocation, rescission, termination, alteration,
amendment, extension or modification of the Franchise Agreement, or
any lease, including without limitation property specific leases,
rental agreement, sales contract, management contract, construction
contract, technical service agreement or other contract or agreement,
or any license, permit, certificate or privilege affecting the
ownership or operation of the Premises.
(b) Leases. The Borrower shall not enter into, default
under, breach, withdraw, cancel, rescind, terminate, alter or modify
any lease of, or other agreement regarding, any portion of the
Premises without the Lender's prior written approval, unless such
lease or other agreement (i) is on a form previously approved by the
Lender, (ii) provides for terms in conformity with local conditions,
(iii) together with the tenant's proposed use of the space leased,
conforms with applicable laws and all recorded restrictive covenants
affecting the Premises, if any, and with the covenants and agreements
set forth in the Loan Documents, including but not limited to those
relating to Hazardous Materials and specifically references such
covenants relating to Hazardous Materials, and (iv) does not provide
for any purchase option, right of first offer or refusal or similar
right relating to all or any portion of the Premises.
6. Adjustments to Monthly Reserve Deposit to the Replacement
Reserve Account. The Monthly Reserve Deposit to the Replacement Reserve Account
shall be adjusted pursuant to the provisions of Exhibit B hereof.
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7. Debt Service Reserve. Borrower shall establish on the date
hereof a debt service reserve account (the "Debt Service Reserve Account")
which shall be under the sole dominion and control of Lender. On a quarterly
basis, based on trailing twelve (12) months certified operating statements,
Lender will determine the aggregate Debt Service Coverage Ratio Premises for
the Premises (the "Aggregate DSCR"). In the event the Aggregate DCSR is below
1.70x, funds sufficient to pay three (3) months debt service for the Loan shall
be deposited directly into the Debt Service Reserve Account. The Debt Service
Reserve shall be interest bearing for the benefit of the Borrower and will
remain in place for the remainder of the Loan. If at any time after the Debt
Service Reserve Account is established, the balance of such account is less
than an amount sufficient to pay three (3) months debt service, Borrower shall,
within ten (10) days, replenish the Debt Service Reserve Account with
additional funds necessary to maintain such amount.
8. Event of Default. In addition to any Events of Default set
forth in the Loan Agreement or any of the other Loan Documents, any default
under, breach of or failure by the Borrower to perform its obligations under
the Franchise Agreement or any withdrawal, cancellation, revocation,
rescission, termination, alteration, amendment or modification of the Franchise
Agreement (except as set forth on Schedule 4 hereto or to the extent consented
to in writing by the Lender) shall be an Event of Default under the Loan
Agreement and the other Loan Documents.
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EXHIBIT E
---------
Form of Nondisturbance, Subordination and Attornment Agreement for
Operating Leases
This instrument was prepared Cadwalader, Xxxxxxxxxx & Xxxx
by and after recording return to: 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
NON-DISTURBANCE, SUBORDINATION AND ATTORNMENT AGREEMENT
THIS AGREEMENT, made as of this ____ day of ______________,
2000 between ___________________________, and _________________________, each a
________________________, (collectively, the "Borrower"), RFS, Inc., a
Tennessee corporation (the "Lessee") and BANK OF AMERICA, N.A., a national
banking association (the "Lender").
RECITALS
1. The Lender has extended [two loans] to the Borrower
in the aggregate amount of up to $___________________ (collectively, the
"Loan") pursuant to certain loan agreements dated the date hereof between the
Borrower and the Lender (collectively, the "Loan Agreement") and evidenced by
promissory notes executed by the Borrower and payable to the Lender (such
notes, together with any extensions, renewals, and amendments thereto, and
hereinafter referred to as the "Note") and secured by deeds of trust, and
mortgages, (individually, a "Security Instrument" collectively, the "Security
Instruments") on certain parcels of land and improvements thereon
(individually, a "Property", collectively, the "Properties") owned by Borrower
as set forth in Schedule 1 attached hereto and incorporated herein by
reference. The Note, the Loan Agreement, the Security Instruments and any and
all other loan documents now or hereafter either securing or evidencing the
Loan evidenced by the Loan Agreement and the Note and all modifications,
extensions, consolidations, replacements and renewals of such loan documents
are referred to collectively as the "Loan Documents."
2. The Lessee is the tenant under the lease agreements
for the Properties between [RFS Partnership, L.P., a Tennessee limited
partnership, ("RFS, L.P.")], and the Lessee, being more particularly described
in Schedule 2 attached hereto and incorporated herein by reference
(hereinafter, together with any amendments or modifications consented to by the
Lender, are referred to as the "Leases"). The Leases have been amended by an
Amendment to Third Consolidated Lease Amendment and Lease Agreements dated as
of the date hereof (the "Amendment"), whereby RFS, L.P. and Lessee have set
forth their agreements regarding certain matters that have been addressed in
this Agreement. The interests of RFS, L.P. under the Leases, as amended, have
been assigned to Borrower pursuant to two Assignment of Leases Agreements, each
dated as of the date hereof (collectively the "Assignment of Leases") and the
Properties subject to the Leases have been conveyed to Borrower.
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3. In connection with the credit being extended
pursuant to the terms of the Loan Agreement, the Lender has requested the
Lessee and the Borrower to execute this Agreement, and in order to induce the
Lender to make the Loan, the Lessee and the Borrower have agreed to the terms
set out herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
FIRST: Each Lease shall be subject and subordinate to the
Security Instruments and to all renewals, modifications or extensions thereof.
SECOND: With respect to each Lease, so long as Lessee is not
in default (beyond any period in such Lease given Lessee to cure such default)
in the payment of rent (specifically including but not limited to percentage
rent and base rent of every kind and character) or additional rent or in the
performance of any of the terms, covenants or conditions of the Lease on
Lessee's part to be performed, and except as expressly set forth herein,
Lessee's possession of the premises described in the Lease and Lessee's rights
and privileges under the Lease, or any extensions or renewals thereof which may
be effected in accordance with any option therefor in the Lease, shall not be
disturbed, diminished or interfered with by any suit, action or proceeding upon
any Security Instrument or the obligations secured thereby, or the foreclosure
of the Security Instruments or the enforcement of any rights thereunder or
under any other Loan Document or otherwise by Lender.
THIRD: If the interests of Borrower shall be transferred to
and owned by Lender by reason of foreclosure, deed in lieu of foreclosure, or
other proceedings brought by it or by any other manner, and Lender succeeds to
the interest of the Borrower under any Lease, Lessee shall be bound to Lender
under all of the terms, covenants and conditions of such Lease for the balance
of the term thereof remaining and any extensions or renewals thereof which may
be effected in accordance with any option thereof in such Lease, with the same
force and effect as if Lender were the lessor under the Lease, and Lessee does
hereby attorn to Lender as its lessor, said attornment to be effective and
self-operative without the execution of any further instruments on the part of
either of the parties hereto immediately upon Lender succeeding to the interest
of the lessor under such Lease. The respective rights and obligations of Lessee
and Lender upon said attornment, to the extent of the then remaining balance of
the term of such Lease and any such extensions and renewals, shall be and are
the same as now set forth therein, subject to the terms and provisions of this
Agreement; it being the intention of the parties hereto for this purpose to
incorporate the Leases in this Agreement by reference with the same force and
effect as if set forth at length herein, subject to the terms and provisions of
this Agreement.
FOURTH: Lessee certifies that: (a) each Lease is presently in
full force and effect; (b) no rent under any Lease has been paid more than
thirty (30) days in advance of its due date, other than any overpayments of
percentage rent that may be adjusted as provided in such Lease; (c) Lessee has
not filed any claim of offset and, to the best knowledge of Lessee, Lessee,
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as of this date, has no charge, lien or claim of offset under any Lease, or
otherwise, against the rents or other amounts due or to become due thereunder;
(d) the Lessee is owner of the "Tenant's" or "Lessee's" interest in the Lease
and has not transferred or assigned any Lease or sublet the premises demised
thereby; and (e) to the best knowledge of the Lessee, neither the Lessee nor
the Lessor is in any way in default under any Lease and Lessee, to the best of
its knowledge, knows of no event which but for the passage of time or the
giving of notice or both would constitute an event of default or breach by
Lessee or Borrower under any Lease. Lessee shall up to twice a calendar year
(and at such additional times as Lender shall reasonably request), within ten
(10) days after request by Lender, execute, acknowledge and deliver a statement
by Lessee certifying the items listed in subsections (a)-(e) above with such
exceptions as shall be necessary to cause such statement to be factually
correct.
FIFTH: If Lender shall succeed to the interest of Borrower
under any Lease, Lender shall be bound to Lessee under all terms, covenants and
conditions of such Lease, and Lessee shall, from and after Lender's succession
to the interest of Borrower under such Lease, have the same remedies against
Lender for the breach of an agreement contained in the Lease that Lessee might
have had under such Lease against Borrower if Lender had not succeeded to the
interest of Borrower; provided further, however, that Lender shall not be:
(a) liable for any act or omission of any prior landlord
(including the Borrower) except that Lender shall be liable for such
act or omission only from and after the date on which Lender so
succeeds to the interest of Borrower under such Lease if such act or
omission constitutes a default of Borrower under such Lease and
continues to exist after such date; or
(b) subject to any offsets or defenses which the Lessee
might have against any prior landlord (including the Borrower) except
for offsets expressly provided for in such Lease arising from Lessor
defaults under such Lease with respect to which Lessee has notified
Lender pursuant to clause SEVENTH hereof (such notice to set forth a
quantification of the potential offset amount to the extent possible);
or
(c) liable for the return of any security deposits not
delivered to Lender; or
(d) bound by any rent or additional rent which Lessee
might have paid for more than thirty (30) days in advance of its due
date to any prior landlord (including Borrower), other than any
overpayments of percentage rent that may be adjusted as provided in
the Lease; or
(e) bound by any amendment or modification of the Lease
including, but not limited to, any reduction in rent, made without
Lender's consent; or
(f) obligated to construct or finish the construction or
to renovate or finish the renovation of the premises described in any
Lease, except as required under such Lease.
SIXTH: Each Lease now is, and shall at all times continue to
be, subject and subordinate in each and every respect, to the Security
Instruments and to any and all renewals, modifications and extensions thereof,
but any and all such renewals, modifications and extensions shall nevertheless
be subject to and entitled to the benefits of the terms of this
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Agreement. Lessee acknowledges and agrees that in the event of any conflict
between the provisions of any Lease and the provisions of this Agreement, this
Agreement shall control.
SEVENTH: Lessee will notify Lender or its successors or
assigns, by reputable overnight courier delivery, of any default of Borrower
which would entitle Lessee to cancel any Lease or xxxxx the rent payable
thereunder, and agrees that notwithstanding any provision of such Lease, no
notice of cancellation thereof, nor any abatement shall be effective unless
Lender has received the notice aforesaid and has failed within thirty (30) days
of the date thereof to cure such default or, if the default cannot be cured
within thirty (30) days, has failed to commence and to diligently prosecute the
cure of Borrower's default which gave rise to such right of cancellation or
abatement. The address of the Lender for notice is Bank of America, N.A., CMLS
#1777, X.X. Xxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attn: Servicing Manager.
Lender will notify Lessee or its successors or assigns in writing of any
default of Borrower under the Loan Documents that would entitle Lender to
enforce its rights or remedies thereunder, and agrees that it will not enforce
its rights or remedies thereunder unless Lessee has received a written notice
for a time period equivalent to the time period afforded to Borrower under the
Loan Documents and Lessee has failed to cure such default within such
time-period. The address of the Lessee for notice is RFS, Inc., c/o Promus
Hotel Corporation, 000 Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxx 00000-0000, Attn:
Xxxxx Xxxxxx.
EIGHTH: No Lease may be assigned or sublet by the Lessee
without the Lender's prior written consent, except as the Lessee may be
permitted to do so without the consent of the Borrower under the terms of such
Lease. A franchisor of any hotel owned by the Borrower on the premises demised
under any Lease may not be replaced by the Lessee without the Lender's prior
written consent. Lessee hereby consents and agrees to the lien of the Security
Instruments and the other Loan Documents for each of the Properties, including
any subsequent transfers or assignments thereof made by the Lender and the
financing of a direct purchaser from Lender, provided that such financing is
substantially similar to the Loan in all material respects including, but not
limited to, its financial terms, loan to value ratio and its effect on Lessee.
NINTH: Lessee acknowledges that all of the interest of
Borrower in and to the Leases has been assigned to Lender pursuant to the
Security Instruments and that pursuant to the terms of that certain Cash
Management Agreement of even date herewith between Lender and Borrower (the
"Cash Management Agreement"), all rent and other payments due under the Lease
shall be deposited in an account (the "Account") established in accordance with
the provisions contained in the Cash Management Agreement. Lessee hereby
agrees, without further notice, to so pay all such rent and other payments
under the Lease directly to the Account as and when same are due and payable
under the Lease. Lessee further acknowledges and agrees that this Agreement
shall serve as notice required pursuant to Section 3.1 of the Lease. Borrower
hereby authorizes Lessee to pay all rent and other payments to Lender and
acknowledges that all rent and other payments so paid to Lender shall be deemed
paid under the Lease.
TENTH: This Agreement may not be modified except by an
agreement in writing signed by the parties hereto.
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ELEVENTH: Lessee hereby agrees not to exercise its rights
under Section 34.3 of any Lease with respect to any Property against Borrower,
Lender or any direct successor of Lender prior to the earlier of (i) the
payment in full, prepayment or defeasance of the Loan as to the Property, or
(ii) transfer of the Property to Lender or a third-party through foreclosure,
deed-in-lieu of foreclosure or otherwise.
TWELFTH: In no event shall Lender or any direct successor or
assignee of Lender (collectively, the "Subsequent Landlord") have any personal
liability for the obligations of Borrower under any Lease and should the
Subsequent Landlord succeed to the interests of the Borrower under such Lease,
Lessee shall look only to the estate and property of any such Subsequent
Landlord in the related Property for the satisfaction of Lessee's remedies for
the collection of a judgment (or other judicial process) requiring the payment
of money in the event of any default by any Subsequent Landlord as landlord
under the Lease, and no other property or assets of any Subsequent Landlord
shall be subject to levy, execution or other enforcement procedure for the
satisfaction of Lessee's remedies under or with respect to the Lease; provided,
however, that the Lessee may exercise any other right or remedy provided
thereby or by law in the event of any failure by Subsequent Landlord to perform
any such obligation.
THIRTEENTH: [Sections 15.3, 15.4 and 15.5 of each of the
Leases shall be amended so that any Award with respect to the Property shall be
subject and subordinate to the Lender's prior claim to one hundred twenty-five
percent (125%) of the amount set forth on Schedule 3 for such Property, as
reduced by any amortization, prepayment or defeasance amount on the Loan
applicable to such Property. Lessee acknowledges that Lessee has no claim to
any insurance proceeds payable to Lender or Lessor with respect to any Property
in the event of any loss or damage to the Property, or any portion thereof,
insured under the policies of insurance required by Article XIII of the
Leases.]
FOURTEENTH: As to each Lease, the law of the state in which
the applicable Property subject to such Lease is located shall govern the
interpretation of this Agreement.
FIFTEENTH Borrower represents and warrants that the
Assignment of Leases was duly executed by Borrower and all consents,
resolutions or other approvals required for Borrower to execute the Assignment
of Leases were obtained. Lessee represents and warrants that the Leases were
duly executed by Lessee and all consents, resolutions or other approvals
required for Lessee to execute the Leases were obtained.
SIXTEENTH: Lessee represents and warrants that it has made no
assignment of Lessee's rights or interest pursuant to any portion of the Lease
including without limitation Section 4(b) of the Master Agreement dated as of
_______________________.
SEVENTEENTH: Lender hereby consents to the amendment of the
Lease terms as set forth in the Amendment. Lessee hereby consents to the
assignment of the interest of RFS, L.P. under the Lease to Borrower pursuant to
the Assignment of Leases.
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EIGHTEENTH: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute and be construed as one and the same instrument.
NINETEENTH: All remedies which Lender may have against
Borrower provided herein, if any, are cumulative and shall be in addition to
any and all other rights and remedies provided by law and by other agreements
between Lender and Borrower or others. If any party consists of multiple
individuals or entities, each of same shall be jointly and severally liable for
the obligations of such party hereunder.
TWENTIETH: This Agreement is binding upon, and inures to the
benefit of the parties hereto and any successors and assigns to the parties
hereto. There are no other agreements, either written or oral, with respect to
the matters described herein.
TWENTY-FIRST: This Agreement shall apply to all properties
substituted for any Property under the terms of the Loan Documents, and such
substituted properties shall be thereafter known as a Property. Any Property,
and the Lease therefor, for which there has been a substitution under the terms
of the Loan Documents shall thereafter be released from the terms of this
Agreement.
TWENTY-SECOND: The terms of this Agreement shall expire and
be of no further effect, except to the extent of any then existing unsatisfied
obligations arising under this Agreement as to a Lease for a property upon the
earlier of: (i) a release by Lender of the property as security for the Loan,
or (ii) a foreclosure or conveyance by deed-in-lieu of foreclosure of such
property.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed under Seal in manner and form sufficient to bind
them, as of the day and year first above written.
BORROWER:
__________________, a __________________
By: ________________ CORPORATION,
a _____________ corporation,
its _________________
By: (SEAL)
---------------------------
Xxxxx Xxxxxxxx
Secretary
______________________, a ______________
By: ________________ CORPORATION,
a _____________ corporation,
its _________________
By: (SEAL)
---------------------------
Xxxxx Xxxxxxxx
Secretary
LESSEE:
RFS, Inc., a Tennessee corporation
By: (SEAL)
-------------------------------
Xxxxx Xxxxxx
Vice President
LENDER:
BANK OF AMERICA, N.A.
By: (SEAL)
-------------------------------
Name:
------------------------------
Title:
------------------------------
106
Schedule I
107
Schedule II
108
EXHIBIT F
---------
Form of Tenant Estoppel Certificate
TO: BANK OF AMERICA, N.A.
Bank of America Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Conduit Program Manager
RE: ____________________________
The undersigned, as tenant under that certain lease (the
"Lease") dated ____________________, 20___, made with ________________________,
(the "Landlord"), covering approximately _________ square feet of space at
Landlord's property generally described as ____________________________________
in _____________ County, _______________, hereby certifies as follows:
(1) That the tenant has entered into occupancy of the
premises described in the Lease.
(2) That the Lease is in full force and effect and has
not been assigned, modified, supplemented or amended in any way, except as
follows:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(3) That the Lease, as amended as indicated in paragraph
2 hereof, represents the entire agreement between the parties as to said
leasing.
(4) That the commencement date of the term of the Lease
is _________________.
(5) That the expiration date of the term of the Lease is
_______________________. The tenant has no rights to renew or extend the term
of the Lease except as follows:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(6) That all conditions of the Lease to be performed by
the landlord and necessary to the enforceability of the Lease have been
satisfied.
(7) That there are no defaults by either the tenant or
the landlord thereunder, and no event has occurred or situation exists which
would, with the passage of time, constitute a default under the Lease. All
improvements or work required under the Lease to be made by the landlord to
date, if any, have been completed to the satisfaction of the tenant. Charges
for all labor and materials used or furnished in connection with improvements
and/or alterations made for the account of the tenant at the premises and
common areas have been paid in full.
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(8) That monthly rent in the amount of
$_________________ is payable on the _____ day of each month during the Lease
term. That no rents have been prepaid more than two (2) months in advance and
full rental, including basic minimum rent, if any, has commenced to accrue.
(9) That on this date there are no existing defenses,
offsets, claims or credits which the tenant has against the enforcement of the
Lease by the landlord except for prepaid rent through __________________ (not
to exceed two months).
(10) The tenant has paid to the landlord a security
deposit in the amount of $________________.
(11) The tenant has all governmental permits, licenses
and consents required for the activities and operations being conducted or to
be conducted by it in or around the premises.
(12) That as of the date hereof, there are no actions,
whether voluntary or otherwise, pending against the tenant under the bankruptcy
or insolvency laws of the United States or any state thereof.
(13) That it understands that Bank of America, N.A., (the
"Lender") will make a mortgage loan to ___________________ (or its successor
and/or assign) as holder of fee simple title in the premises encumbered by the
Lease) in reliance upon, among other things, this certificate.
(14) That tenant will pay to Lender all payments due
under the Lease from and after the date Lender sends written notice to the
tenant requesting such payments to be made directly to Lender.
EXECUTED this _____ day of ____________________, 20__.
TENANT:
By: (SEAL)
----------------------------
Name:
---------------------------
Title:
---------------------------
ATTEST/WITNESS:
-----------------------------------
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110
EXHIBIT G
BANK OF AMERICA, N.A.
(Lender)
- and -
--------------------------
(Tenant)
-------------------------------------------------
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
-------------------------------------------------
Dated:
Location:
Section:
Block:
Lot:
County:
PREPARED BY AND UPON
RECORDATION RETURN TO:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
File No.:
Title No.:
111
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
(the "Agreement") is made as of the ___ day of _____________, 2000 by and
between BANK OF AMERICA, N.A., a national banking association, having an
address at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 successors
and assigns ("Lender") and ___________________________________________________
having an address at
____________________________________________________________________("Tenant").
RECITALS:
A. Lender is the present owner and holder of a certain
deed of trust and security agreement (the "Security Instrument") dated
___________, 2000, given by Landlord (defined below) to Lender which encumbers
the fee estate of Landlord in certain premises described in Exhibit A attached
hereto known as the _____________________ (the "Property") and which secures
the payment of certain indebtedness owed by Landlord to Lender evidenced by a
certain promissory note dated ____________, 2000, given by Landlord to Lender
(the "Note);
B. Tenant is the holder of a leasehold estate in a
portion of the Property under and pursuant to the provisions of a certain lease
dated ________________, ____ between ______________, as landlord ("Landlord")
and Tenant, as tenant (the "Lease"); and
C. Tenant has agreed to subordinate the Lease to the
Security Instrument and the lien thereof and Lender has agreed to grant
non-disturbance to Tenant under the Lease on the terms and conditions
hereinafter set forth.
AGREEMENT:
For good and valuable consideration, Tenant and Lender agree
as follows:
1. Subordination. The Lease and all of the terms,
covenants and provisions thereof and all rights, remedies and options of Tenant
thereunder are and shall at all times continue to be subject and subordinate in
all respects to the terms, covenants and provisions of the Security Instrument
and to the lien thereof, including without limitation, all renewals, increases,
modifications, spreaders, consolidations, replacements and extensions thereof
and to all sums secured thereby and advances made thereunder with the same
force and effect as if the Security Instrument had been executed, delivered and
recorded prior to the execution and the delivery of the Lease.
2. Non-Disturbance. If any action or proceeding is
commenced by Lender for the foreclosure of the Security Instrument or the sale
of the Property, Tenant shall not be named as a party therein unless such
joinder shall be required by law, provided, however, such joinder shall not
result in the termination of the Lease or disturb the Tenant's possession or
use of the premises thereunder, and the sale of the Property in any such action
or proceeding and the exercise by Lender of any of its other rights under the
Note or the Security Instrument shall be made subject to all rights of Tenant
under the Lease, provided that at the time of the
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commencement of any such action or proceeding or at the time of any such sale
or exercise of any such other rights, Tenant shall not be in default beyond any
applicable cure period under any of the terms, covenants or conditions of the
Lease or of this Agreement on Tenant's part to be observed or performed.
3. Attornment. If Lender or any other subsequent
purchaser of the Property shall become the owner of the Property by reason of
the foreclosure of the Security Instrument or the acceptance of a deed or
assignment in lieu of foreclosure or by reason of any other enforcement of the
Security Instrument (Lender or such other purchaser being hereinafter referred
as "Purchaser"), and the conditions set forth in Section 2 above have been met
at the time Purchaser becomes owner of the Property, the Lease shall not be
terminated or affected thereby but shall continue in full force and effect as a
direct Lease between Purchaser and Tenant upon all of the terms, covenants and
conditions set forth in the Lease and in that event, Tenant agrees to attorn to
Purchaser and Purchaser by virtue of such acquisition of the Property shall be
deemed to have agreed to accept such attornment, provided, however, that
Purchaser shall not be (a) liable for the failure of any prior landlord (any
such prior landlord, including Landlord and any successor landlord, being
hereinafter referred to as a "Prior Landlord") to perform any of its
obligations under the Lease except that Lender shall be liable for such failure
only from and after the date on which Lender so succeeds to the interest of
such Prior Landlord, provided that the foregoing shall not limit Purchaser's
obligations under the Lease to correct any conditions that (i) existed as of
the date Purchaser shall become the owner of the Property and (ii) violate
Purchaser's obligations as landlord under the Lease; provided further however,
that Purchaser shall have received written notice of such omissions, conditions
or violations and has had a reasonable opportunity to cure the same, all
pursuant to the terms and conditions of the Lease, (b) subject to any offsets,
defenses, abatements or counterclaims which shall have accrued in favor of
Tenant against any Prior Landlord prior to the date upon which Purchaser shall
become the owner of the Property except for offsets expressly provided for in
the Lease arising from Landlord defaults under the Lease with respect to which
Tenant has notified Purchaser (such notice to set forth a quantification of the
potential offset amount to the extent possible), (c) liable for the return of
rental security deposits, if any, paid by Tenant to any Prior Landlord in
accordance with the Lease unless such sums are actually received by Purchaser,
or (d) bound by any payment of rents, additional rents or other sums which
Tenant may have paid more than one (1) month in advance to any Prior Landlord
unless (i) such sums are actually received by Purchaser or (ii) such prepayment
shall have been expressly approved of by Purchaser. In the event that any
liability of Purchaser does arise pursuant to this Agreement, such liability
shall be limited and restricted to Purchaser's interest in the Property and
shall in no event exceed such interest.
4. Notice to Tenant. After notice is given to Tenant by
Lender that the Landlord is in default under the Note and the Security
Instrument and that the rentals under the Lease should be paid to Lender
pursuant to the terms of the assignment of leases and rents executed and
delivered by Landlord to Lender in connection therewith, Tenant shall
thereafter pay to Lender or as directed by the Lender, all rentals and all
other monies due or to become due to Landlord under the Lease and Landlord
hereby expressly authorizes Tenant to make such payments to Lender and hereby
releases and discharges Tenant from any liability to Landlord on account of any
such payments.
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5. Notice to Lender and Right to Cure. Tenant shall
notify Lender of any default by Landlord under the Lease and agrees that,
notwithstanding any provisions of the Lease to the contrary, no notice of
cancellation thereof or of an abatement shall be effective unless Lender shall
have received notice of default giving rise to such cancellation or abatement
and shall have failed within sixty (60) days, or within thirty (30) days if
such default materially interferes with the operation of the Premises as a
restaurant, (or such longer period for cure as specified in the Lease) after
receipt of such notice to cure such default, or if such default cannot be cured
within sixty (60) days (or such longer period for cure as specified in the
Lease), shall have failed within sixty (60) days (or such longer period for
cure as specified in the Lease) after receipt of such notice to commence and
thereafter diligently pursue any action necessary to cure such default.
Notwithstanding the foregoing, Lender shall have no obligation to cure any such
default.
6. Notices. All notices or other written communications
hereunder shall be deemed to have been properly given (i) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged by
the recipient thereof and confirmed by telephone by sender, (ii) one (1)
Business Day (hereinafter defined) after having been deposited for overnight
delivery with any reputable overnight courier service, or (iii) three (3)
Business Days after having been deposited in any post office or mail depository
regularly maintained by the U.S. Postal Service and sent by registered or
certified mail, postage prepaid, return receipt required, addressed as follows:
If to Tenant:
-----------------------------
-----------------------------
-----------------------------
Attention:
-------------------
Facsimile No.
----------------
If to Lender:
Bank of America, N.A.
Bank of America Corporate Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention:
-------------------
Facsimile No.
----------------
or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this Section 6, the term "Business Day"
shall mean a day on which commercial banks are not authorized or required by
law to close in the state where the Property is located. Either party by notice
to the other may designate additional or different addresses for subsequent
notices or communications.
7. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of Lender, Tenant and Purchaser and their
respective successors and assigns.
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8. Governing Law. This Agreement shall be deemed to be
a contract entered into pursuant to the laws of the State where the Property is
located and shall in all respects be governed, construed, applied and enforced
in accordance with the laws of the State where the Property is located.
9. Miscellaneous. This Agreement may not be modified in
any manner or terminated except by an instrument in writing executed by the
parties hereto. If any term, covenant or condition of this Agreement is held to
be invalid, illegal or unenforceable in any respect, this Agreement shall be
construed without such provision. This Agreement may be executed in any number
of duplicate originals and each duplicate original shall be deemed to be an
original. This Agreement may be executed in several counterparts, each of which
counterparts shall be deemed an original instrument and all of which together
shall constitute a single Agreement. The failure of any party hereto to execute
this Agreement, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder. Whenever the context may require,
any pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
[NO FURTHER TEXT ON THIS PAGE]
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IN WITNESS WHEREOF, Lender and Tenant have duly executed this
Agreement as of the date first above written.
LENDER:
BANK OF AMERICA, N.A.,
a national banking association
By:
-----------------------------------
Name:
Title:
TENANT:
--------------------------------------,
a
------------------------------------
By:
-----------------------------------
Name:
Title:
The undersigned accepts and agrees to the provisions of Section 4 hereof:
LANDLORD:
----------------------------------,
a
--------------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
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ACKNOWLEDGMENTS
(To be attached)
117
EXHIBIT A
(Description of Property)
118
EXHIBIT H
Form of Hazardous Material Indemnity Agreement
Loan No.: ________
Servicing No.: ________
HAZARDOUS MATERIALS INDEMNIFICATION AGREEMENT
THIS HAZARDOUS MATERIALS INDEMNIFICATION AGREEMENT
("Agreement") is made as of the ______ day of _____________, 2000, by
_____________________ a ____________________________, having an office at c/o
RFS Hotel Investors Inc., 000 Xxxxx Xxxx Xxxx., Xxxxx 000, Xxxxxxx, Xxxxxxxxx
00000 (the "Borrower"); rfs hotel investors, inc. (the "Principal"), the
Borrower and the Principal are hereinafter referred to, individually and
collectively, as the context requires as the Indemnitor (the "Indemnitor"), to
and for the benefit of BANK OF AMERICA, N.A., a national banking association,
having an office in Charlotte, North Carolina (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower is the owner and holder of certain fee
and other interests, in respect of that certain real property located in the
Counties and States of:
_________________________________________________________________ and more
particularly described in Exhibit A attached hereto and the improvements
located thereon, as more particularly described in the Security Instrument (as
hereinafter defined) (such real property, together with all improvements now or
hereafter located thereon, are collectively, the "Premises");
WHEREAS, the Borrower has applied to the Lender for a loan
(the "Loan") of up to the maximum principal amount of
$___________________________, pursuant to and in accordance with that certain
Loan Agreement, dated as of the date hereof by and between the Borrower and the
Lender (as the same may hereafter be modified, supplemented, extended or
renewed and in effect from time to time, the "Loan Agreement"), and which Loan
shall be evidenced by a Promissory Note of even date herewith given by the
Borrower to, and in favor of, the Lender (the "Note") and shall be secured by,
among other things, a [Deed of Trust/Mortgage], Assignment of Leases and Rents,
and Security Agreement dated the date hereof given by the Borrower to, and in
favor of, the Lender (the "Security Instrument");
WHEREAS, as a condition to making the Loan, the Lender
requires the Borrower to make certain covenants, representations, warranties
and agreements with respect to the Premises; and
WHEREAS, as an inducement to the Lender to make the Loan to
the Borrower, the Indemnitor has agreed to enter into this Agreement. Borrower
has delivered to Lender
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certain environmental assessment reports for cash Individual Property dated
November 13, 1998, prepared by EMG entitled Environmental Site Assessment (the
"Environmental Report").
NOW THEREFORE, in consideration of the Premises and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Indemnitor hereby agrees to and for the benefit of the
Lender as follows:
ARTICLE I
REPRESENTATIONS, WARRANTIES,
COVENANTS AND INDEMNITIES
Section 1.1. The Indemnitor hereby represents and
warrants to the Lender that, except as noted in the Environmental Report, to
the best of the Indemnitor's knowledge, after due inquiry and investigation:
(i) the Premises is not in direct or indirect violation of any federal, state,
or local laws, ordinances, regulations, standards, rules, policies or other
governmental requirements or any court judgments applicable to the Indemnitor
or to the Premises relating to industrial hygiene or to environmental or unsafe
conditions or to human health including, but not limited to, those relating to
the generation, manufacture, storage, handling, transportation, disposal,
release, emission or discharge of Hazardous Materials (as defined below), those
in connection with the construction, fuel supply, power generation and
transmission, waste disposal or any other operations or processes relating to
the Premises, and those relating to the atmosphere, soil, surface and ground
water, wetlands, stream sediments and vegetation on, under, in or about the
Premises, including but not limited to, the following laws, as amended as set
forth herein and as subsequently amended: (1) the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 USCA 9601 et seq.; (2) the Solid
Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of
1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 USCA
6901 et seq.; (3) the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, 33 USCA 1251 et seq.; (4) the Toxic Substances Control
Act, 15 USCA 2601 et seq.; (5) the Emergency Planning and Community
Right-to-Know Act of 1986, 42 XXXX 00000 et seq.; (6) the Clean Air Act, as
amended by the Clean Air Act Amendments, 42 USCA 7401 et seq.; (7) the National
Environmental Policy Act of 1969, 42 USCA 4321 et seq.; (8) the River and
Harbor Act of 1899, 33 USCA 401 et seq.; (9) the Endangered Species Act of
1973, 16 USCA 1531 et seq.; (10) the Occupational Safety and Health Act of
1970, 29 USCA 651 et seq.; (11) the Safe Drinking Water Act, 42 USCA 300(f) et
seq.; and (12) the Hazardous Materials Transportation Act, 49 USCA 1801 et
seq., and all regulations from time to time adopted in respect to the foregoing
laws (collectively, "Hazardous Materials Laws"); (ii) the Premises are not
subject to any private or governmental lien or judicial or administrative
notice or action relating to petroleum and petroleum products, flammable
explosives, radioactive materials (excluding radioactive materials in smoke
detectors), polychlorinated biphenyls, lead, asbestos or asbestos containing
materials in any form that is or could become friable, hazardous waste, toxic
or hazardous substances or other related materials whether in the form of a
chemical, element, compound, solution, mixture or otherwise including, but not
limited to, those materials defined as "hazardous substances," "extremely
hazardous substances," "hazardous chemicals," "hazardous materials," "toxic
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substances," "solid waste," "toxic chemicals," "air pollutants," "toxic
pollutants," "hazardous wastes," "extremely hazardous waste," or "restricted
hazardous waste" by Hazardous Materials Law or regulated by Hazardous Materials
Law in any manner whatsoever (collectively, "Hazardous Materials"); (iii) no
Hazardous Materials are or have been, prior to the Indemnitor's acquisition of
the Premises, discharged, generated, treated, disposed of or stored on,
incorporated in, or removed or transported from the Premises otherwise than in
compliance with all Hazardous Material Laws; (iv) no property adjoining the
Premises are being used or has ever been used at any previous time, for the
disposal, storage, treatment, processing or other handling of Hazardous
Materials; (v) no underground storage tanks exist on any of the Premises except
as those disclosed in writing to the Lender and which comply with applicable
Hazardous Material Laws; and (vi) it has not received any notice or has any
knowledge of any claim with respect to Hazardous Materials on the Premises or
any completed, pending or threatened investigation or inquiry concerning the
presence or release of any Hazardous Materials on the Premises or any adjacent
property or concerning whether any condition, use or activity on the Premises
or any adjacent property is in violation of any Hazardous Material Laws.
Section 1.2. So long as the Indemnitor owns or is in
possession of the Premises, the Indemnitor shall:
(a) Not cause, permit or exacerbate any Prohibited
Activities or Conditions (as defined below). The Indemnitor represents
and warrants that it has not at any time caused or permitted any
Prohibited Activities or Conditions except as set forth in the
Environmental Assessment (as defined below) and that, except as noted
in the Environmental Report, no Prohibited Activities or Conditions
exist or have existed on or under the Premises. The Indemnitor shall
take all appropriate steps to prevent its employees, agents, and
contractors, and any tenants from causing, permitting, or exacerbating
any Prohibited Activities or Conditions. The Indemnitor shall not
lease or allow the sublease or use of all or any portion of the
Premises to any tenant, subtenant or user that, in the ordinary course
of its business, would cause, permit, or exacerbate any Prohibited
Activities or Conditions, and all leases, subleases and use agreements
relating to the Premises shall contain provisions sufficient to ensure
that tenants, subtenants and users shall not cause, permit or
exacerbate any Prohibited Activities or Conditions.
(b) Comply in a timely manner with, and cause all
employees, agents, and contractors or the Indemnitor and any other
persons present on the Premises to so comply with, (i) any O&M Program
(as defined below) now or hereafter in effect during the term of the
Loan, and (ii) Hazardous Materials Law, so as to minimize any economic
loss to the Premises and the Loan. The Indemnitor shall adopt an O&M
Program with respect to any Hazardous Materials identified in any
Environmental Assessment or any Governmental Action (as defined below)
relating to the Premises, or as otherwise required by the Lender with
respect to the Premises. Any O&M Program shall be performed by
qualified contractors under the supervision of a consulting engineer
hired by the Indemnitor with the prior written approval of the Lender
which approval shall not be unreasonably withheld, conditioned or
delayed. All costs and expenses of any O&M Program shall be paid by
the Indemnitor, including without limitation the charges of such
contractors and consulting engineer and the Lender's fees, costs and
expenses incurred in
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connection with the monitoring and review of the O&M Program and the
Indemnitor's performance thereunder.
(c) Promptly notify the Lender in writing of: (i) any
Governmental Action it becomes aware of (ii) any claim made or
threatened by any third party against the Indemnitor, the Lender, or
the Premises relating to loss or injury resulting from any occurrence
or condition on the Premises or any other real property that could
require the removal from the Premises of any Hazardous Materials or
cause any restrictions on the ownership, occupancy, transferability or
use of the Premises under Hazardous Materials Law or (iii) the
occurrence of any Prohibited Activities or Conditions. The Indemnitor
shall cooperate with any governmental inquiry, and shall comply with
any governmental or judicial order, request or directive which arises
from any alleged Prohibited Activities or Conditions; provided that
with respect to governmental requests or directives only, the
Indemnitor may contest or object to a good faith dispute regarding
said request or directive if the Indemnitor notifies the Lender in
advance of said contest or objection and as long as said contest or
objection does not result in a violation of law or fines assessed
against the Premises.
(d) Pay promptly or cause to be paid all costs and
expenses incurred by the Lender in connection with any Governmental
Action, including but not limited to costs of any environmental
audits, studies, investigations or remedial activities including but
not limited to the removal of any Hazardous Materials from the
Premises. The Borrower also shall pay promptly or cause to be paid the
costs of any environmental audits, studies, investigations or the
removal of any Hazardous Materials from the Premises required by the
Lender as a condition of its consent to any sale or transfer of all or
any part of the Premises or any interest therein or required by the
Lender following a reasonable determination by the Lender that there
may be Prohibited Activities or Conditions on or under the Premises.
Any such costs or expenses incurred by the Lender (including but not
limited to reasonable fees and expenses of attorneys and consultants,
whether incurred in connection with any judicial or administrative
process or otherwise) which the Borrower fails to pay promptly shall
become additional indebtedness secured by the Security Instrument.
Section 1.3. Upon the Lender's reasonable request, at any
time after a prohibited activity occurs and from time to time while the
Security Instrument is in effect, the Indemnitor shall provide at the
Indemnitor's sole expense, an inspection or audit of the Premises prepared by a
licensed hydrogeologist or licensed environmental engineer approved by the
Lender indicating the presence or absence of Hazardous Materials on the
Premises. If the Indemnitor fails to provide such inspection or audit within
thirty (30) days after such request the Lender may order same, and the
Indemnitor hereby grants to the Lender and their employees and agents access to
the Premises and a license to undertake such inspection or audit. The cost of
such inspection or audit shall be added to the principal balance of the sums
due under the Note (as defined in the Security Instrument) and the Security
Instrument and shall bear interest thereafter until paid at the default rate
thereunder.
Section 1.4. The Indemnitor represents and warrants that,
except as noted in the Environmental Report to the best of the Indemnitor's
knowledge, after due inquiry and investigation, no asbestos or any substance
containing asbestos ("Asbestos") is located on the
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Premises except as may have been disclosed in an environmental report delivered
to the Lender prior to the date of this Agreement. The Indemnitor shall not
install in the Premises, nor permit to be installed in the Premises, Asbestos
and shall remove or cause to be removed any Asbestos promptly upon discovery to
the satisfaction of the Lender, or take all action necessary to ensure that
such Asbestos is abated or managed in a manner which complies with all
applicable federal, state and local laws, ordinances, rules and regulations
with respect to Asbestos. The Indemnitor shall in all instances comply with,
and ensure compliance by all occupants of the Premises with, all applicable
federal, state and local laws, ordinances, rules and regulations with respect
to Asbestos, and shall keep the Premises free and clear of any liens imposed
pursuant to such laws, ordinances, rules or regulations. In the event that the
Indemnitor receives any notice or advice from any governmental agency or any
source whatsoever with respect to Asbestos on, affecting or installed on the
Premises, the Indemnitor shall immediately notify the Lender. Upon the Lender's
reasonable request, at any time and from time to time while the Security
Instrument is in effect, the Indemnitor shall provide, at the Indemnitor's sole
expense, an inspection or audit of the Premises prepared by an engineering or
consulting firm approved by the Lender, indicating the presence or absence of
Asbestos on the Premises. If the Indemnitor fails to provide such inspection or
audit within thirty (30) days after such request, the Lender may order same,
and the Indemnitor hereby grants to the Lender and its employees and agents
access to the Premises and a license to undertake such inspection or audit. The
cost of such inspection or audit shall be added to the principal balance of the
sums due under the Note and the Security Instrument and shall bear interest
thereafter until paid at the default rate thereunder.
Section 1.5. In the event that any investigation,
site monitoring, containment cleanup, removal, restoration or other work of any
kind is reasonably necessary or desirable under an applicable Hazardous
Material Law (the "Remedial Work"), the Indemnitor shall commence or cause to
be commenced and thereafter diligently prosecute to completion all such
Remedial Work within thirty (30) days after written demand by the Lender for
performance thereof (or such shorter period of time as may be required under
applicable law). All Remedial Work shall be performed by contractors approved
in advance by the Lender, and under the supervision of a consulting engineer
approved by the Lender. All costs and expenses of such Remedial Work shall be
paid by the Indemnitor including, without limitation, the Lender's reasonable
attorneys' fees and disbursements incurred in connection with monitoring or
review of such Remedial Work. In the event the Indemnitor shall fail to timely
commence, or cause to be commenced, or fail to diligently prosecute to
completion, or pay for, such Remedial Work, the Lender may, but shall not be
required to, cause such Remedial Work to be performed or paid for, and all
costs and expenses thereof, or incurred in connection therewith, may be added
to the sums due under the Note and the Security Instrument and shall bear
interest thereafter until paid at the default rate thereunder.
Section 1.6. THE INDEMNITOR SHALL HOLD HARMLESS, DEFEND
AND INDEMNIFY THE LENDER AND ITS OFFICERS, DIRECTORS, TRUSTEES, EMPLOYEES,
AGENTS, AFFILIATES (INCLUDING ANY PARENT CORPORATION), SUCCESSORS AND ASSIGNS,
FROM AND AGAINST ALL PROCEEDINGS, CLAIMS, DAMAGES, PENALTIES, FEES, COSTS AND
EXPENSES (INCLUDING WITHOUT LIMITATION REASONABLE FEES AND EXPENSES OF
ATTORNEYS AND EXPERT WITNESSES, INVESTIGATORY FEES, AND CLEANUP AND REMEDIATION
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EXPENSES, WHETHER INCURRED IN CONNECTION WITH ANY JUDICIAL OR ADMINISTRATIVE
PROCESS OR OTHERWISE), ARISING DIRECTLY OR INDIRECTLY FROM (i) ANY BREACH OF
ANY REPRESENTATION, WARRANTY, OR OBLIGATION OF THE BORROWER CONTAINED IN THIS
AGREEMENT OR (ii) THE PRESENCE OF HAZARDOUS MATERIALS ON OR UNDER THE PREMISES
OR ANY PROPERTY PROXIMATE TO THE PREMISES OR ANY GOVERNMENTAL ACTION ALLEGING
ANY SUCH PRESENCE, EXCEPT TO THE EXTENT THAT THE BORROWER CAN CONCLUSIVELY
PROVE BOTH THAT SUCH PRESENCE OR GOVERNMENTAL ACTION ALLEGING SUCH PRESENCE WAS
CAUSED SOLELY BY ACTIONS, CONDITIONS, OR EVENTS THAT OCCURRED AFTER THE DATE
THAT THE LENDER (OR ANY PURCHASER AT A FORECLOSURE SALE) ACTUALLY ACQUIRED
TITLE TO THE PREMISES AND THAT SUCH PRESENCE OR GOVERNMENTAL ACTION ALLEGING
SUCH PRESENCE WAS NOT CAUSED BY THE DIRECT OR INDIRECT ACTIONS OF THE BORROWER
OR THE BORROWER PRINCIPAL, OR ANY PARTNER, MEMBER, PRINCIPAL, OFFICER,
DIRECTOR, TRUSTEE OR MANAGER OF THE BORROWER OR ANY EMPLOYEE, AGENT, CONTRACTOR
OR AFFILIATE OF THE BORROWER OR THE BORROWER PRINCIPAL. THE OBLIGATIONS AND
LIABILITIES OF THE BORROWER UNDER THIS AGREEMENT SHALL SURVIVE ANY TERMINATION,
SATISFACTION, ASSIGNMENT, ENTRY OF A JUDGMENT OF FORECLOSURE OR DELIVERY OF A
DEED IN LIEU OF FORECLOSURE OF THE SECURITY INSTRUMENT. THE INDEMNITY SET FORTH
HEREIN IS AN ABSOLUTE, UNCONDITIONAL, PRESENT INDEMNITY AND IS IN NO WAY
CONDITIONED OR CONTINGENT UPON ANY ATTEMPT TO ENFORCE THE LENDER'S RIGHTS
AGAINST THE INDEMNITOR UNDER THE SECURITY INSTRUMENT, THE NOTE OR ANY OF THE
OTHER LOAN DOCUMENTS (AS DEFINED IN THE LOAN AGREEMENT) OR AGAINST ANY OTHER
PARTY OR TO COLLECT FROM THE INDEMNITOR UNDER THE SECURITY INSTRUMENT, THE NOTE
OR ANY OF THE OTHER LOAN DOCUMENTS OR FROM ANY OTHER PARTY OR UPON ANY OTHER
CONDITION OR CONTINGENCY; ACCORDINGLY, THE LENDER SHALL HAVE THE RIGHT TO
PROCEED AGAINST THE UNDERSIGNED IMMEDIATELY UPON ANY DEFAULT HEREUNDER WITHOUT
TAKING ANY PRIOR ACTION TO ENFORCE THE OBLIGATIONS OF THE INDEMNITOR UNDER THE
SECURITY INSTRUMENT, THE NOTE OR ANY OF THE OTHER LOAN DOCUMENTS.
Section 1.7. To the best of Indemnitor's knowledge, no
representation or warranty by the Indemnitor contained herein, nor any
schedule, certificate, or other document furnished by the Indemnitor to the
Lender in connection with this Agreement contains any misstatement of fact or
omits to state any fact necessary to make the statements contained therein not
misleading.
Section 1.8. The obligations and liabilities of the
Indemnitor to the Lender under this Article I shall survive any termination,
satisfaction, or assignment of the Security Instrument, including, without
limitation, any sale of the Loan and the exercise by the Lender of any of its
rights or remedies hereunder, including but not limited to, the acquisition of
the Premises by foreclosure or a conveyance in lieu of foreclosure. This
Agreement is not intended
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to be, nor shall it be, secured by the Security Instrument and it is not
intended to secure payment of the Note.
Section 1.9. As used in this Agreement:
(a) "Environmental Assessment" shall mean a report
(including all drafts thereof) of an environmental assessment of the
Premises of such scope (including but not limited to the taking of
soil borings and air and groundwater samples and other above and below
ground testing) as the Lender may request, by a consulting firm
acceptable to the Lender, which shall, among other things, be dated as
of a date acceptable to the Lender and conform to (i) the current
minimum standards for the American Society of Testing and Materials,
and (ii) the Lender's then current requirements.
(b) "Governmental Action" shall mean the issuance or
threatened issuance of any claim, citation, notice of any pending or
threatened suit, proceeding, order or governmental inquiry or opinion
involving the Premises that alleges the violation of any Hazardous
Materials Law.
(c) "O&M Program" shall mean an operations and
maintenance program (in form and substance satisfactory to the Lender)
relating to the use, handling and/or abatement of one or more
Hazardous Materials and which is accepted in writing by the
Indemnitor.
(d) "Prohibited Activities or Conditions" shall mean
causing or permitting, whether directly or indirectly, (i) the
presence, use, generation, manufacture, production, processing,
installation, release, discharge, storage (including storage in above
ground and underground storage tanks for petroleum or petroleum
products), treatment, handling, or disposal of any Hazardous Materials
(excluding the safe and lawful use and storage of quantities of
Hazardous Materials or petroleum products, customarily used in the
ordinary operations of the Indemnitor or customarily used in the
ordinary operations of any tenant previously approved by the Lender)
on or under the Premises, or in any way affecting the Premises or its
value or which may form the basis for any present or future claim,
demand or action seeking cleanup of the Premises, (ii) the
transportation of any Hazardous Materials to or from the Premises
(excluding the safe and lawful use and storage of quantities of
Hazardous Materials or petroleum products, customarily used in the
ordinary operations of the Indemnitor or customarily used in the
ordinary operations of any tenant previously approved by the Lender),
or (iii) any occurrence or condition on the Premises (or exacerbation
of the same) that is or may be in violation of Hazardous Materials
Law.
ARTICLE II
MISCELLANEOUS
Section 2.1. The Indemnitor's liability hereunder shall
not be affected (a) by (i) any amendment or modification of the Loan Documents;
(ii) any extensions of time for performance under the Loan Documents whether
prior to or after maturity; or (iii) the release of any collateral for the Loan
or the release of the Indemnitor from performance or observance of
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any of the agreements, covenants, terms or conditions contained in any of the
Loan Documents by operation of law or otherwise (whether such amendments,
modifications, extensions or releases are made with or without notice to the
undersigned); (b) by the fact that the Indemnitor may or may not be personally
liable, in whole or in part, under the terms of the Loan Documents; (c) by the
failure to give the Indemnitor any notices of default under the Loan Documents
or otherwise; (d) by any other indemnity or guaranty now or hereafter executed
in connection with the Loan; (e) by any rights, powers or privileges the Lender
may now or hereafter have against any person, entity or collateral or (f) by
reason of any bankruptcy or similar proceeding instituted by or against the
Indemnitor. The Indemnitor will not take or fail to take action of any kind the
taking of which or the failure to take which might be the basis for a claim
that the Indemnitor has any defense to the Indemnitor's obligations hereunder.
The Indemnitor waives any right or claim of right to cause a marshaling of the
Indemnitor's assets or to cause the Lender to proceed against the Indemnitor
under the Security Instrument or under any other Loan Document, and/or any
collateral held by the Lender at any time or in any particular order and the
Indemnitor agrees that any payments required to be made by the Indemnitor
hereunder shall become due on demand in accordance with the terms hereof and
the Indemnitor expressly waives and relinquishes all rights and remedies
accorded by applicable law to the Indemnitors, including, without limitation,
any extension of time conferred by any law now or hereafter in effect and any
requirement of notice to which the Indemnitor may now or hereafter be entitled.
The Indemnitor waives (i) notice of acceptance of this Agreement by the Lender
and any and all notices and demands of every kind which may be required to be
given by any statute, rule or law, (ii) any defense, right of set-off or other
claim which the Indemnitor may have against the Lender or the holder of the
Security Instrument, (iii) any failure by the Lender to inform the Indemnitor
of any facts the Lender may now or hereafter know about the Indemnitor, the
Premises, the Loan or the transactions contemplated by the Loan Documents, it
being understood and agreed that the Lender has no duty so to inform, and (iv)
all rights of redemption, homestead, dower, and other rights or exemptions of
every kind, whether under common law or by statute.
Section 2.2. No delay on the Lender's part in exercising
any right, power or privilege under any of the Loan Documents, this Agreement
or any other document executed by the Indemnitor in connection with the Loan
shall operate as a waiver of any such right, power or privilege.
Section 2.3. The Lender shall have the right to join the
Indemnitor in any action or proceeding commenced by the Lender pursuant to the
rights, powers and privileges the Lender now or hereafter may possess under
this Agreement or, at the Lender's option, the Lender may commence any action
or proceeding based upon this Agreement directly against the Indemnitor without
making the Indemnitor under the Security Instrument or under any other Loan
Document or anyone else a party defendant in such action or proceeding. In the
event any action or proceeding arising on, under, out of or by reason of or
relating in any way to this Agreement or the interpretation, breach or
enforcement thereof is brought against the Indemnitor, service of process may
be made on the Indemnitor by certified mail, return receipt requested, at the
address set forth below or such other address as the Lender is notified of by
notice sent in accordance herewith.
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Section 2.4. If: (i) this Agreement is placed in the
hands of an attorney for collection of any payment due hereunder or is
collected through any legal proceeding; (ii) an attorney is retained to
represent the Lender in any bankruptcy, reorganization, receivership, or other
proceedings affecting creditors' rights and involving a claim under this
Agreement; or (iii) an attorney is retained to represent the Lender in any
other proceedings whatsoever in connection with this Agreement or to provide
advice or other representation with respect to this Agreement, then the
Indemnitor shall pay expenses, including, without limitation, court costs,
filing fees, recording costs, and all other costs and expenses reasonably
incurred in connection therewith, in addition to all other amounts due
hereunder, regardless of whether all or a portion of such enforcement costs are
in a single proceeding brought to enforce this Agreement as well as the other
Loan Documents.
Section 2.5. This Agreement contains the sole and entire
understanding and agreement of the Lender and the Indemnitor with respect to
its entire subject matter, and all prior negotiations, discussions,
representations, agreements and understandings heretofore had between the
Lender and the Indemnitor with respect thereto are merged herein.
Section 2.6. THE INDEMNITOR HEREBY WAIVES TRIAL BY JURY
AND THE RIGHT THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND ARISING ON,
UNDER, OUT OF, BY REASON OF OR RELATING IN ANY WAY TO THIS AGREEMENT, OR THE
INTERPRETATION, BREACH OR ENFORCEMENT THEREOF.
Section 2.7. All stipulations, obligations, liabilities
and undertakings hereunder shall be binding upon the Indemnitor and the
successors and permitted assigns of the Indemnitor and shall inure to the
Lender's benefit and to the benefit of the Lender's successors and assigns and
to the benefit of each and every holder of any of the Loan Documents and to the
benefit of anyone claiming title to the collateral sold by the Lender pursuant
to the Lender's rights, powers and privileges under the Loan Documents.
Section 2.8. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA WITHOUT
REGARD TO CONFLICT OF LAW PROVISIONS THEREOF. THE INDEMNITOR HEREBY SUBMITS TO
PERSONAL JURISDICTION IN SAID STATE AND THE FEDERAL COURTS OF THE UNITED STATES
OF AMERICA (AND ANY APPELLATE COURTS TAKING APPEALS THEREFROM) LOCATED IN SAID
STATE FOR THE ENFORCEMENT OF THE INDEMNITOR'S OBLIGATIONS HEREUNDER AND WAIVES
ANY AND ALL PERSONAL RIGHTS UNDER THE LAW OF ANY OTHER STATE TO OBJECT TO
JURISDICTION WITHIN SUCH STATE FOR THE PURPOSES OF ANY ACTION, SUIT, PROCEEDING
OR LITIGATION TO ENFORCE SUCH OBLIGATIONS OF THE INDEMNITOR. THE INDEMNITOR
HEREBY WAIVES AND AGREES NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT,
PROCEEDING OR LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT, (A) THAT
IT IS NOT SUBJECT TO SUCH JURISDICTION OR THAT SUCH ACTION, SUIT, PROCEEDING OR
LITIGATION MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN THOSE COURTS OR THAT
THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY THOSE COURTS OR THAT THE INDEMNITOR
IS EXEMPT OR IMMUNE FROM
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EXECUTION, (B) THAT THE ACTION, SUIT, PROCEEDING OR LITIGATION IS BROUGHT IN AN
INCONVENIENT FORUM, OR (C) THAT THE VENUE OF THE ACTION, SUIT, PROCEEDING OR
LITIGATION IS IMPROPER.
Section 2.9. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same instrument.
Section 2.10. Any and all notices, elections, demands,
request and responses thereto permitted or required to be given under this
Agreement shall be in writing, signed by or on behalf of the party giving the
same, and shall be deemed to have been properly given or served and shall be
effective upon being personally delivered to three (3) Business Days (as
defined in the Loan Agreement) after being deposited in the United States mail,
postage prepaid, certified with return receipt requested, or one day after
delivery to a nationally recognized overnight courier, to the other party at
the address of such other party set forth below or at such other address as
such other party may designate by notice specifically designated as a notice of
change of address and given in accordance herewith; provided, however, that no
notice of change of address shall be effective until the date of receipt
thereof. Personal delivery to a party or to an officer, partner, agent or
employee of such party at said address shall constitute receipt. Rejection or
other refusal to accept or inability to deliver because of change of address of
which no notice has been received shall also constitute receipt. Any such
notice, election, demand, request or response given to the parties herein shall
be addressed as follows:
if to the Indemnitor/Borrower: RFS SPE2 2000, LLC
c/o RFS Hotel Investors Inc.
000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Indemnitor/Principal: RFS Hotel Investors Inc.
000 Xxxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Hunton & Xxxxxxxx
0000 X Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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if to the Lender: Bank of America, N.A.
CMLS #1777
X.X. Xxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Servicing Manager
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with copies to: Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Section 2.11. The execution, delivery, and performance by
the Indemnitor of this Agreement do not and will not contravene or conflict
with (i) organizational documents of the Indemnitor, (ii) any law, order, rule,
regulation, writ, injunction, or decree now in effect of any government,
governmental instrumentality or court having jurisdiction over the Indemnitor,
or (iii) any contractual restriction binding on or affecting the Indemnitor or
any of the Indemnitor's property or assets which may adversely affect any of
the Indemnitor's ability to fulfill the Indemnitor's obligations under this
Agreement.
Section 2.12. No termination, modification or waiver of
any provisions of this Agreement shall be binding upon the Lender except as
expressly set forth in a writing duly signed and delivered by the Lender.
Section 2.13. If the Indemnitor consists of more than one
person or entity, the obligations and liabilities of each such person hereunder
are joint and several.
[signature page immediately follows]
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INDEMNITOR/BORROWER:
_____________________________________,
a ___________________________________
By: _____________________ Corporation,
a ____________________ corporation,
its ______________________________
By:
---------------------------------
Xxxxx Xxxxxxxx
Secretary
INDEMNITOR/BORROWER PRINCIPAL:
RFS HOTEL INVESTORS, INC.,
a Tennessee corporation
By:
---------------------------------
Xxxxx Xxxxxxxx
Executive Vice President
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EXHIBIT A
Legal Description
