EXHIBIT 10.12
UP TO U.S. $75,000,000
FIRST SUPPLEMENTAL
CREDIT AGREEMENT
Dated as of November 14, 1997
Between
HOSPITALITY PROPERTIES TRUST
as Borrower
and
DLJ MORTGAGE CAPITAL, INC.
as Lender
TABLE OF CONTENTS
----------------------
PAGE
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Defined Terms....................................................................1
SECTION 1.02. Computation of Time Periods.....................................................21
ARTICLE 2
AMOUNTS AND TERMS OF THE LOANS
SECTION 2.01. The Loans.......................................................................21
SECTION 2.02. Making the Loans................................................................21
SECTION 2.03. Intentionally Omitted...........................................................22
SECTION 2.04. Reduction and Termination of the Commitment.....................................22
SECTION 2.06. Prepayments.....................................................................22
SECTION 2.07. Continuation of Loans at the Eurodollar Rate....................................23
SECTION 2.09. Interest Rate Determination and Protection......................................24
SECTION 2.10. Increased Costs.................................................................24
SECTION 2.11. Illegality......................................................................25
SECTION 2.12. Capital Adequacy................................................................25
SECTION 2.13. Payments and Computations.......................................................26
SECTION 2.14. Taxes...........................................................................26
ARTICLE 3
PREPARATION OF MORTGAGE DOCUMENTS AND APPROVAL OF PROPOSED
HOTEL FACILITIES
SECTION 3.01. Recordation and Filing of Mortgage Documents, Etc...............................27
SECTION 3.02. Approval of Proposed Hotel Facilities...........................................28
ARTICLE 4
CONDITIONS OF LENDING
SECTION 4.01. Conditions Precedent to the Initial Loan........................................29
SECTION 4.02. Conditions Precedent to Each Loan...............................................32
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Existence; Compliance with Law..................................................34
SECTION 5.02. Power; Authorization; Enforceable Obligations...................................34
PAGE
SECTION 5.03. Taxes...........................................................................35
SECTION 5.04. Full Disclosure.................................................................36
SECTION 5.05. Financial Matters...............................................................36
SECTION 5.06. Litigation......................................................................37
SECTION 5.07. Margin Regulations..............................................................37
SECTION 5.08. Ownership of Borrower and HRPT Advisors; Subsidiaries...........................37
SECTION 5.09. ERISA...........................................................................38
SECTION 5.10. Liens...........................................................................39
SECTION 5.11. [Intentionally Omitted]..........................................................39
SECTION 5.12. No Burdensome Restrictions; No Defaults; Contractual
Obligations...........................................................................39
SECTION 5.13. No Investments..................................................................40
SECTION 5.14. Government Regulation...........................................................40
SECTION 5.15. Insurance.......................................................................40
SECTION 5.16. Employees.......................................................................40
SECTION 5.17. Force Majeure...................................................................41
SECTION 5.18. Use of Proceeds.................................................................41
SECTION 5.19. Environmental Protection........................................................41
SECTION 5.20. Contractual Obligations Concerning Assets.......................................43
SECTION 5.21. Status as REIT..................................................................43
SECTION 5.22. Real Property...................................................................43
SECTION 5.23. Operator and Advisor: Compliance with Law.......................................44
SECTION 5.24. Operating Leases, Limited Rent Guaranties, Management
Agreement and Advisory Agreement......................................................45
SECTION 5.25. FF&E Reserves...................................................................46
ARTICLE 6
FINANCIAL COVENANTS
SECTION 6.01. Limitation and Indebtedness.....................................................46
SECTION 6.02. Limitation on Secured Indebtedness..............................................46
SECTION 6.03. Interest Expense Coverage.......................................................46
SECTION 6.04. Maintenance of Tangible Net Worth...............................................47
SECTION 6.05. Maintenance of Loan to Value Requirement........................................47
ARTICLE 7
AFFIRMATIVE COVENANTS
SECTION 7.01. Compliance with Laws, Etc.......................................................47
SECTION 7.02. Conduct of Business.............................................................47
SECTION 7.03. Payment of Taxes, Etc...........................................................47
SECTION 7.04. Maintenance of Insurance........................................................48
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PAGE
SECTION 7.05. Preservation of Existence, Etc..................................................48
SECTION 7.06. Access..........................................................................48
SECTION 7.07. Keeping of Books................................................................49
SECTION 7.08. Maintenance of Properties, Etc..................................................49
SECTION 7.09. Performance and Compliance with Other Covenants.................................49
SECTION 7.10. Application of Proceeds.........................................................49
SECTION 7.11. Financial Statements............................................................49
SECTION 7.12. Reporting Requirements..........................................................51
SECTION 7.13. Leases and Operating Leases.....................................................54
SECTION 7.14. [Intentionally Omitted]..........................................................54
SECTION 7.15. Employee Plans..................................................................54
SECTION 7.16. [Intentionally Omitted]..........................................................55
SECTION 7.17. Fiscal Year.....................................................................55
SECTION 7.18. Environmental Matters...........................................................55
SECTION 7.19. [Intentionally Omitted]..........................................................55
SECTION 7.20. REIT Requirements...............................................................55
SECTION 7.21. Maintenance of FF&E Reserves....................................................56
SECTION 7.22. Further Assurances..............................................................56
ARTICLE 8
NEGATIVE COVENANTS
SECTION 8.01. Liens, Etc......................................................................56
SECTION 8.02. Indebtedness....................................................................58
SECTION 8.03. Lease Obligations...............................................................59
SECTION 8.04. [Intentionally Omitted]..........................................................59
SECTION 8.05. Mergers, Stock Issuances, Asset Sales, Etc......................................59
SECTION 8.06. Investments.....................................................................60
SECTION 8.07. Change in Nature of Business or Organizational
Documents.............................................................................61
SECTION 8.08. Modification of Material Agreements.............................................61
SECTION 8.09. Accounting Changes..............................................................61
SECTION 8.10. Transactions with Affiliates....................................................61
SECTION 8.11. Environmental Matters...........................................................62
ARTICLE 9
EVENTS OF DEFAULT
SECTION 9.01. Events of Default...............................................................62
SECTION 9.02. Remedies........................................................................65
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PAGE
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Amendments, Etc................................................................66
SECTION 10.02. Notices, Etc...................................................................66
SECTION 10.03. No Waiver; Remedies............................................................67
SECTION 10.04. Costs; Expenses; Indemnities...................................................67
SECTION 10.05. Right of Set-off...............................................................69
SECTION 10.06. Binding Effect.................................................................69
SECTION 10.07. Assignments and Participations.................................................69
SECTION 10.08. Governing Law; Severability....................................................70
SECTION 10.09. Submission of Jurisdiction; Service of Process.................................70
SECTION 10.10. Section Titles.................................................................71
SECTION 10.11. Execution in Counterparts......................................................71
SECTION 10.12. Entire Agreement...............................................................71
SECTION 10.13. Confidentiality................................................................71
SECTION 10.14. Waiver of Jury Trial...........................................................71
SECTION 10.15. NON-LIABILITY OF TRUSTEES......................................................72
SECTION 10.16. Refinancing and/or Securitization..............................................72
SECTION 10.17. Cooperation with Rating Agencies...............................................72
SECTION 10.18. Securitization Financials......................................................73
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SCHEDULES
Schedule 1.01 - List of Collateral Properties
Schedule 5.08(c) - List of Subsidiaries
Schedule 5.19 - Environmental Matters
Schedule 5.20 - Asset Purchase or Sale Commitments
Schedule 5.22(a) - Owned Real Estate
Schedule 5.22(b) - Leased Real Estate
Schedule 5.22(c) - Defects in Improvements
Schedule 8.01 - Existing Liens
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EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Negative Pledge Agreement
Exhibit D - Form of Opinion of Counsel for the Loan Parties
Exhibit E - Form of Mortgage
Exhibit F - Form of Assignment Agreement
Exhibit G - Form of Operating Lease
Exhibit H - Form of Security Agreement
Exhibit I - Form of Subordination Agreement
Exhibit J - Form of Subordination, Non-Disturbance and Attornment
Agreement
Exhibit K - Form of Subsidiary Guaranty
Exhibit L - Form of Stock Pledge Agreement
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FIRST SUPPLEMENTAL CREDIT AGREEMENT, dated as of the 14th day of
November, 1997 (this "Agreement"), between HOSPITALITY PROPERTIES TRUST, a
Maryland real estate investment trust (the "Borrower") and DLJ MORTGAGE CAPITAL,
INC. a Delaware corporation (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lender make advances of up
to $75,000,000 in aggregate principal amount outstanding at any one time, for
the purposes hereinafter specified; and
WHEREAS, the Lender is willing to make funds available for such
purposes upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Advisor" means HRPT Advisors or such other Person as shall act as an
advisor to the Borrower, whether pursuant to the Advisory Agreement, or an
agreement analogous to the Advisory Agreement, with the prior written consent of
the Lender.
"Advisory Agreement" means the Advisory Agreement, dated as of August
21, 1995, between the Borrower and the Advisor, as amended, supplemented or
modified from time to time in a manner not inconsistent with the terms hereof or
of the Subordination Agreement.
"Affiliate" means, as to any Person, any Subsidiary of such Person and
any other Person which, directly or indirectly, controls, is controlled by or is
under common control with such Person and includes each officer or director or
trustee or general partner of such Person, and each Person who is the beneficial
owner of 10% or more of any class of voting Stock of such Person. For the
purposes of this definition, "control" means the possession of the power to
direct or cause the direction of management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" means this First Supplemental Credit Agreement, together
with all Exhibits and Schedules hereto, as the same may be amended, supplemented
or otherwise modified from time to time.
"Approved Hotel Facility" means any Proposed Hotel Facility approved by
the Lender pursuant to Section 3.02.
"Asset Sale" means any sale, conveyance, transfer, assignment, lease or
other disposition (including, without limitation, by merger or consolidation and
whether by operation of law or otherwise) by the Borrower or any of its
Subsidiaries to any Person of any Stock of any of its Subsidiaries, any Stock
Equivalents of any of its Subsidiaries or any Mortgaged Property but excluding
Operating Leases.
"Asset Sale Proceeds" means payments received by the Borrower or any of
its Subsidiaries (including, without limitation, any payments received by way of
deferred payment of principal pursuant to a note or receivable or otherwise, but
only as and when received) from any Asset Sale (after repayment of any
Indebtedness other than the Loans secured by the Mortgaged Property subject of
such Asset Sale to the extent such Indebtedness is permitted hereunder), in each
case net of the amount of (i) brokers' and advisors' fees and commissions
payable other than to an Affiliate of the Borrower in connection with such Asset
Sale, (ii) all foreign, federal, state and local taxes payable as a direct
consequence of such Asset Sale, (iii) the reasonable fees and expenses
attributable to such Asset Sale, to the extent not included in clause (i),
except to the extent payable to any Affiliate of the Borrower, and (iv) any
amount required to be paid to any Person (other than the Borrower and any of its
Subsidiaries) owning a beneficial interest in the property or assets sold.
"Assignment Agreement" means, with respect to each Mortgaged Property
that is operated by a manager pursuant to a Management Agreement, an agreement
substantially in the form of Exhibit F, or such other form as the Lender shall
approve, such approval not to be unreasonably withheld, delayed or conditioned,
executed by the Borrower, the Lender and the Manager, assigning to the Lender,
the Management Agreement relating thereto.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall be
equal at all times to the higher of:
(1) the rate of interest announced publicly by Citibank, N.A. in New
York, New York, from time to time, as such bank's prime rate; and
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(2) the sum (adjusted to the nearest 1/4 of one percent or, if there
is no nearest 1/4 of one percent, to the next higher 1/4 of one percent) of (i)
one and one-half percent (1 1/2%) per annum plus (ii) the Federal Funds Rate.
"Base Rent" means, for any period, the base or fixed rent or percentage
rent during such period payable by an Operating Lessee pursuant to the terms of
an Operating Lease.
"Business Day" means a day of the year on which banks are not required
or authorized to close in New York City and a day on which dealings are also
carried on in the London interbank market.
"Capital Expenditures" means, for any Person for any period, the
aggregate of all expenditures by such Person and its consolidated Subsidiaries,
except interest capitalized during construction, during such period for
property, plant or equipment, including, without limitation, renewals,
improvements, replacements and capitalized repairs, that would be reflected as
additions to property, plant or equipment on a consolidated balance sheet of
such Person and its Subsidiaries prepared in conformity with GAAP. For the
purpose of this definition, the purchase price of equipment which is acquired
simultaneously with the trade-in of existing equipment owned by such Person or
any of its Subsidiaries or with insurance proceeds shall be included in Capital
Expenditures only to the extent of the gross amount of such purchase price less
the credit granted by the seller of such equipment being traded in at such time
or the amount of such proceeds, as the case may be.
"Capital Financing Indebtedness" means the principal amount of all
Indebtedness incurred or assumed in connection with any Capital Expenditures,
all Capitalized Lease Obligations and all other Indebtedness (including purchase
money Indebtedness) incurred solely for the purpose of financing or refinancing
the acquisition of assets or properties.
"Capitalized Lease" means, as to any Person, any lease of property by
such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in conformity with GAAP.
"Capitalized Lease Obligations" means, as to any Person, the
capitalized amount of all obligations of such Person or any of its Subsidiaries
under Capitalized Leases, as determined on a consolidated basis in conformity
with GAAP.
"Closing Date" means the date on which the first Loan is made pursuant
to this Credit Agreement.
3
"Code" means the Internal Revenue Code of 1986 (or any successor
legislation thereto), as amended from time to time.
"Collateral" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by any Loan Party in or upon which a
Lien is granted under any of the Collateral Documents.
"Collateral Documents" means, the Negative Pledge Agreements, the
Assignment Agreements, the Mortgage Documents, the Security Agreements, the
Subsidiary Guaranties and any other document now or hereafter executed and
delivered by a Loan Party granting a Lien on any of its property to secure
payment of the Obligations.
"Collateral Properties" means the Real Estate and Leases described on
Schedule 1.01.
"Commitment" has the meaning specified in Section 2.01.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
Indebtedness or Contractual Obligation of another Person, if the purpose or
intent of such Person in incurring the Contingent Obligation is to provide
assurance to the obligee of such Indebtedness or Contractual Obligation that
such Indebtedness or Contractual Obligation will be paid or discharged, or that
any agreement relating thereto will be complied with, or that any holder of such
Indebtedness or Contractual Obligation will be protected (in whole or in part)
against loss in respect thereof. Contingent Obligations of a Person include,
without limitation, (a) the direct or indirect guarantee, endorsement (other
than for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of an obligation
of another Person, and (b) any liability of such Person for an obligation of
another Person through any agreement (contingent or otherwise) (i) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of a loan, advance, stock purchase, capital contribution or otherwise),
(ii) to maintain the solvency or any balance sheet item, level of income or
financial condition of another Person, (iii) to make take-or-pay or similar
payments, if required, regardless of non-performance by any other party or
parties to an agreement, (iv) to purchase, sell or lease (as lessor or lessee)
property, or to purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such obligation or to assure the holder of such
obligation against loss, or (v) to supply funds to or in any other manner invest
in such other Person (including, without limitation, to pay for property or
services irrespective of whether such property is received or such services are
rendered), if in the case of any agreement described
4
under subclause (i), (ii), (iii), (iv) or (v) of this sentence the primary
purpose or intent thereof is as described in the preceding sentence. The amount
of any Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported.
"Contract" means any contract, agreement, undertaking, indenture, note,
bond, loan, instrument, lease, conditional sales contract, mortgage, deed of
trust, license, franchise, insurance policy, commitment or other arrangement or
agreement.
"Contractual Obligation" of any Person means any obligation, agreement,
undertaking or similar provision of any security issued by such Person or of any
Contract (excluding a Loan Document) to which such Person is a party or by which
it or any of its property is bound or to which any of its properties is subject.
"Default" means any event which with the passing of time or the giving
of notice or both would become an Event of Default.
"DOL" means the United States Department of Labor, or any successor
thereto.
"Dollars" and the sign "$" each mean the lawful money of the United
States of America.
"Environmental Claim" means any accusation, allegation, notice of
violation, action, claim, Environmental Lien, demand, abatement or other Order
or direction (conditional or otherwise) by any Governmental Authority or any
other Person for personal injury (including sickness, disease or death),
tangible or intangible property damage, damage to the environment, nuisance,
pollution, contamination or other adverse effects on the environment, or for
fines, penalties or restriction, resulting from or based upon (i) the existence,
or the continuation of the existence, of a Release (including, without
limitation, sudden or non-sudden accidental or non-accidental Releases) of, or
exposure to, any Hazardous Material or odor, audible noise or other nuisance, or
other Release in, into or onto the environment (including, without limitation,
the air, soil, surface water or groundwater) at, in, by, from or related to any
property owned, operated or leased by the Borrower or any of its Subsidiaries or
any activities or operations thereof; (ii) the environmental aspects of the
transportation, storage, treatment or disposal of Hazardous Materials in
connection with any property owned, operated or leased by the Borrower or any of
its Subsidiaries or their operations or facilities; or (iii) the violation, or
alleged violation, of any Environmental Laws, Orders or Environmental Permits of
or from any Governmental Authority relating to
5
environmental matters connected with any property owned, leased or operated by
the Borrower or any of its Subsidiaries.
"Environmental Laws" means any federal, state, local or foreign law
(including common law), statute, code, ordinance, rule, regulation or other
requirement relating in any way to the environment, natural resources, or public
or employee health and safety and includes, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"), 42 U.S.C. ss. 9601 et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801 et seq., the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. ss. 136 et seq., the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq., the Toxic Substances Control
Act, 15 U.S.C. ss. 2601 et seq., the Clean Air Act, 42 U.S.C. ss. 7401 et seq.,
the Clean Water Act, 33 U.S.C. ss. 1251 et seq., the Occupational Safety and
Health Act, 29 U.S.C. ss. 651 et seq., and the Oil Pollution Act of 1990, 33
U.S.C. ss. 2701 et seq., as such laws have been amended or supplemented, and the
regulations promulgated pursuant thereto, and all analogous state and local
statutes.
"Environmental Liabilities and Costs" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all fees, disbursements and expenses of counsel,
experts and consultants and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any
Environmental Claim.
"Environmental Lien" means any Lien in favor of any Governmental
Authority arising under any Environmental Law.
"Environmental Permit" means any Permit required under any applicable
Environmental Laws or Order and all supporting documents associated therewith.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control or treated as a single employer with any Loan
Party within the meaning of Section 414 (b), (c), (m) or (o) of the Code.
"ERISA Event" means (i) an event described in Sections 4043(b)(1), (2),
(3), (5), (6), (8) or (9) of ERISA with respect to a Pension Plan; (ii) the
withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (iii) the complete or
partial
6
withdrawal of any Loan Party or any ERISA Affiliate from any Multiemployer Plan
or the insolvency of any Multiemployer Plan; (iv) the filing of a notice of
intent to terminate a Pension Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (v) the institution of proceedings by
the PBGC to terminate or appoint a trustee to administer a Pension Plan or
Multiemployer Plan; (vi) the failure to make any required contribution to a
Pension Plan; (vii) any other event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; (viii) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA; (ix) a prohibited transaction (as described in Code Section 4975 or ERISA
Section 406) shall occur with respect to any Plan; or (x) any Loan Party or
ERISA Affiliate shall request a minimum funding waiver from the IRS with respect
to any Pension Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Rate" means, for any Interest Period, an interest rate per
annum equal to the sum of (a) the rate per annum obtained by dividing (i) the
rate of interest determined by the Lender to be the average (rounded upward to
the nearest whole multiple of 1/16 of 1% per annum, if such average is not such
a multiple) of the rates for Dollar deposits which appear on the display
designated as page "LIBO" on the Reuter Monitor Money Rates Service (or such
other page as may replace such page or that service for the purpose of
displaying London interbank offered rates for major banks) (the "Reuters Page"),
as of 11:00 A.M. (London time) two Business Days before the first day of such
Interest Period in an amount substantially equal to the Loan during such
Interest Period and for a period equal to such Interest Period by (ii) a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such
Interest Period, plus (b) 1.25%. If the Lender is unable to ascertain the
interest rate referred to in (i) above from the Reuters Page, such rate shall be
determined from such financial reporting service or other information as shall
be reasonably determined by the Lender.
"Eurodollar Rate Reserve Percentage" for any Interest Period means the
reserve percentage applicable two Business Days before the first day of such
]Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve System in
New York City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of liabilities
which
7
includes deposits by reference to which the Eurodollar Rate is determined)
having a term equal to such Interest Period.
"Event of Default" has the meaning specified in Section 9.01.
"Existing Facility" means the revolving credit facility in the maximum
principal amount of up to $250,000,000 evidenced by that certain Revolving
Credit Agreement dated as of August 22, 1995, as amended and restated pursuant
to that certain Amended and Restated Revolving Credit Agreement dated as of
December 29, 1995, as further amended pursuant to that certain Amendment No. 1
to Amended and Restated Revolving Credit Agreement dated as of February 26,
1996, as further amended by those certain side letters dated February 29, 1996
and March 1997, as further amended by Amendment No. 2 to Amended and Restated
Revolving Credit Agreement dated as of October 10, 1997, as further amended by
Amendment No. 3 to Amended and Restated Credit Agreement dated as of the date
hereof, each by and between the Borrower and the Lender, as the same may
hereafter be amended, modified or supplemented.
"Fair Market Value" means with respect to any Hotel Facility at any
date, the value thereof reasonably determined by the Lender by dividing the Base
Rents from such Hotel Property by ten percent (10%).
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by it.
"FF&E Reserve" means any reserve fund established in respect of any
Hotel Facility.
"Final Borrowing Date" means December 31, 1997.
"Final Maturity Date" means December 31, 1998.
"Financial Officer's Certificate" has the meaning specified in Section
7.11(c).
"Fiscal Quarter" means each of the three month periods ending on March
31, June 30, September 30 and December 31.
8
"Fiscal Year" means the twelve month period ending on December 31.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination except that, for purposes of Article 6, GAAP shall be determined
on the basis of such principles in effect on the date hereof and consistent with
those used in the preparation of the audited financial statements referred to in
Section 5.05.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Hazardous Material" means any substance, material or waste which is
regulated by any Governmental Authority of the United States or other national
government, including, without limitation, any material, substance or waste
which is defined as a "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"contaminant," "toxic waste" or "toxic substance" under any provision of
Environmental Law, which includes, but is not limited to, petroleum, petroleum
products, asbestos, urea formaldehyde and polychlorinated biphenyls.
"Hotel Facility" means each of (a) the Collateral Properties, and (b)
the Approved Hotel Facilities.
"HRPT Advisors" means HRPT Advisors, Inc., a Delaware corporation.
"Improvements" has the meaning specified in Section 5.22(c).
"Indebtedness" of any Person means (i) all indebtedness of such Person
for borrowed money (including, without limitation, reimbursement and all other
obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured) or for the deferred purchase price of
property or services, (ii) all obligations of such Person evidenced by notes,
bonds, debentures or similar instruments, (iii) all indebtedness of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to
9
repossession or sale of such property), (iv) all Capitalized Lease Obligations
of such Person, (v) all Contingent Obligations of such Person, (vi) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any Stock or Stock Equivalents of such Person, valued, in the
case of redeemable preferred stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends, (vii) all
obligations of such Person under Interest Rate Contracts, and (viii) all
Indebtedness referred to in clause (i), (ii), (iii), (iv), (v), (vi) or (vii)
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and general intangibles) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, (ix) in the case of the Borrower, the Obligations, and (x)
all liabilities of such Person that would be shown on a balance sheet of such
Person prepared in conformity with GAAP.
"Indemnitees" has the meaning specified in Section 10.04.
"Interest Period" means, in the case of any Loan, (i) initially, the
period commencing on the date such Loan is made and ending one (1) month
thereafter, and (ii) thereafter, a period commencing on the last day of the
immediately preceding Interest Period therefor and ending one (1) month
thereafter; provided, however, that:
(a) if any Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless the result of such extension would be to extend such
Interest Period into another calendar month, in which event such Interest Period
shall end on the immediately preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and
(c) if the Borrower, by written notice to the Lender given no later
than two (2) Business Days prior to the expiration of an Interest Period for any
Loan, requests a one day interest period for such Loan, the Interest Period for
such Loan shall mean a period of one day (the "1 Day Interest Period"); provided
that in no event shall any Loan have a 1 Day Interest Period for a period in
excess of thirty (30) consecutive days (the "Limited Period"), and upon the
expiration of the Limited Period in respect of any Loan, such Loan shall
automatically be continued at the one (1) month Interest Period specified above.
10
"Interest Rate Contracts" means interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements, interest rate insurance,
and other agreements or arrangements designed to provide protection against
fluctuations in interest rates.
"Investments" has the meaning specified in Section 8.06.
"IRS" means the Internal Revenue Service, or any successor thereto.
"Leases" means, with respect to the Borrower or any of its
Subsidiaries, all of those leasehold estates in real property owned by the
Borrower or such Subsidiary, as lessee, as such may be amended, supplemented or
otherwise modified from time to time to the extent permitted by this Agreement.
"Legal Proceedings" means any judicial, administrative or arbitral
actions, suits, proceedings (public or private), claims or governmental
proceedings.
"Lending Office" means, with respect to the Lender, the office located
at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or such other office of the Lender
as the Lender may from time to time specify to the Borrower.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or other security agreement or
preferential arrange ment of any kind or nature whatsoever intended to secure
payment of any Indebtedness or other obligation, including, without limitation,
any conditional sale or other title retention agreement, the interest of a
lessor under a Capitalized Lease Obligation, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing,
under the Uniform Commercial Code or comparable law of any jurisdiction, of any
financing statement naming the owner of the asset to which such Lien relates as
debtor (excluding precautionary filings.
"Limited Rent Guaranty" means, with respect to any Real Estate or
Lease, a guaranty by a Tenant Guarantor of the obligations of the Operating
Lessee under the Operating Lease.
"Loan" or "Loans" means the loan or loans made or to be made by the
Lender to the Borrower pursuant to Article 2.
"Loan Documents" means, collectively, this Agreement, the Note, the
Collateral Documents and each certificate, agreement or document executed by a
Loan Party and delivered to the Lender in connection with or pursuant to any of
11
the foregoing, as such agreements, documents or instruments may be amended,
modified or supplemented from time to time.
"Loan Party" means the Borrower and each Subsidiary and Affiliate of
the Borrower which executes and delivers a Loan Document.
"Loan to Value Requirement" means the requirement that at any time the
aggregate principal amount of the Loans outstanding at such time shall not
exceed fifty percent (50%) of the aggregate of the Fair Market Values for all of
the Mortgaged Properties.
"Management Agreement" means an agreement, if any, relating to the
operation and/or management of a Hotel Facility between the Borrower and the
Manager, or between the Operating Lessee and Manager, in such form as shall be
approved by the Lender, which approval shall not be unreasonably withheld,
delayed or conditioned.
"Manager" means such manager as shall be approved by the Lender (which
approval shall not be unreasonably withheld, delayed or conditioned), as manager
under a Management Agreement.
"Material Adverse Change" means a material adverse change in any of (i)
the condition (financial or otherwise), business, performance, prospects,
operations or properties of (A) any Loan Party and its Subsidiaries taken as one
enterprise, (B) any Operating Lessee, (C) any Manager, or (D) the Advisor (ii)
the legality, validity or enforceability of any Loan Document or any Operating
Lease or any Limited Rent Guaranty, Management Agreement or Advisory Agreement
(iii) the perfection or priority of the Liens granted pursuant to the Collateral
Documents, (iv) the ability of the Borrower to repay the Obligations or of any
Loan Party to perform its material obligations under any Loan Document, (v) the
ability of any Operating Lessee to perform obligations under any Operating Lease
or of any Tenant Guarantor to perform its obligations under any Limited Rent
Guaranty, (vi) the ability of any Manager to perform its obligations under any
Management Agreement; (vii) the ability of the Advisor to perform its
obligations under the Advisory Agreement or (viii) the rights and remedies of
the Lender under the Loan Documents.
"Material Adverse Effect" means an effect that results in or causes, or
has a reasonable likelihood of resulting in or causing, a Material Adverse
Change.
"Mortgages" means the mortgages, deeds to secure debt or deeds of trust
securing, inter alia, the Obligations, made or required herein to be made by the
Borrower or any of its Subsidiaries in substantially the form of Exhibit E, as
such
12
Mortgages may be amended, supplemented or otherwise modified from time to time.
"Mortgage Documents" means with respect to any Hotel Facility, a
Mortgage, a Subordination, Nondisturbance and Attornment Agreement and the other
documents relating thereto, including financing statements on Form UCC-1,
subject to appropriate revisions for state or property specific requirements.
"Mortgaged Property" means any property subject to a Mortgage in favor
of the Lender.
"Multiemployer Plan" means, as of any applicable date, a multiemployer
plan, as defined in Section 4001(a)(3) of ERISA, and to which any Loan Party,
any of its Subsidiaries or any ERISA Affiliate is making, is obligated to make,
or within the six-year period ending at such date, has made or been obligated to
make, contributions on behalf of participants who are or were employed by any of
them.
"Negative Pledge Agreement" means, in respect of each Hotel Facility,
an agreement, in substantially the form of Exhibit C, executed by the Borrower
or the Subsidiary owning such Hotel Facility, as such agreement may be amended,
supplemented or otherwise modified from time to time.
"Net Income (Loss)" means, for any Person for any period, the aggregate
of net income (or loss) of such Person and its Subsidiaries for such period,
determined on a consolidated basis in conformity with GAAP.
"Net Interest Expense" means, for any Person for any period, gross
interest expense in respect of all Indebtedness of such Person and its
Subsidiaries for such period determined on a consolidated basis in conformity
with GAAP, less the following for such Person and its Subsidiaries determined on
a consolidated basis in conformity with GAAP: (a) the sum of (i) interest
capitalized during construction for such period, (ii) interest income for such
period, and (iii) gains for such period on Interest Rate Contracts (to the
extent not included in interest income above and to the extent not deducted in
the calculation of such gross interest expense), plus the following for such
Person and its Subsidiaries determined on a consolidated basis in conformity
with GAAP: (b) the sum of (i) losses for such period on Interest Rate Contracts
(to the extent not included in such gross interest expense), and (ii) the
amortization of upfront costs or fees for such period associated with Interest
Rate Contracts (to the extent not included in gross interest expense).
"Net Worth" of any Person means at any date the excess of (a) the total
assets of such Person and its Subsidiaries at such date determined on a
13
consolidated basis in conformity with GAAP over (b) all obligations which in
conformity with GAAP would be included in determining total liabilities as shown
on the liabilities side of a consolidated balance sheet of such Person and its
Subsidiaries at such date.
"Note" means a promissory note of the Borrower payable to the order of
the Lender in a principal amount equal to the amount of the Commitment as
originally in effect, in substantially the form of Exhibit A, evidencing the
aggregate Indebtedness of the Borrower to the Lender resulting from the Loans
made by the Lender.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
"Obligations" means the Loans and all other advances, debts,
liabilities, obligations, covenants and duties owing by the Borrower to the
Lender, any Affiliate of the Lender or any Indemnitee, of every type and
description, present or future, whether or not evidenced by any note, guaranty
or other instrument, arising under this Agreement or under any other Loan
Document, whether or not for the payment of money, loan, guaranty,
indemnification, foreign exchange transaction or Interest Rate Contract or in
any other manner, whether direct or indirect (including, without limitation,
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired. The term "Obligations"
includes, without limitation, all interest, charges, expenses, fees, attorneys'
fees and disbursements and any other sum chargeable to the Borrower under this
Agreement or any other Loan Document.
"Other Supplemental Facility" means the Second Supplemental Credit
Agreement dated as of the date hereof between the Borrower and the Lender in the
aggregate principal amount of up to $130,000,000, as the same may hereafter be
amended, supplemented or otherwise modified from time to time.
"Operating Lease" means a lease or sublease relating to any Real Estate
or Lease, between the Borrower or any of its Subsidiaries, as lessor, and the
Operating Lessee, as lessee, substantially in the form of the lease annexed as
Exhibit G hereto or such other form as shall be approved by the Lender, which
approval shall not be unreasonably withheld, delayed or conditioned.
"Operating Lessee" means with respect to any Hotel Facility any of CR14
Tenant Corporation, a Delaware corporation, CR9 Tenant Corporation, a Delaware
corporation, or another wholly-owned subsidiary of Marriott International, Inc.
or such other lessee as shall be approved by the Lender (which approval shall
not be unreasonably withheld, delayed or conditioned), as lessee under the
Operating Lease relating to such Hotel Facility.
14
"Operator" means the Operating Lessee and/or the Manager (as the case
may be) responsible for the operation and management of any Real Estate or
Lease.
"Order" means any order, injunction, judgment, decree, ruling,
assessment or arbitration award.
"Other Taxes" has the meaning specified in Section 2.14(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Pension Plan" means a plan, other than a Multiemployer Plan, which is
covered by Title IV of ERISA or Code Section 412 and which any Loan Party, any
of its Subsidiaries or any ERISA Affiliate maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were employed
by any of them.
"Perfection Event" means the earlier of November 1, 1998 and the
occurrence of an Event of Default.
"Permit" means any permit, approval, authorization, license, variance,
registration, permission or consent required from a Governmental Authority under
an applicable Requirement of Law.
"Permitted Lien" means any Lien permitted under Section 8.01.
"Person" means an individual, partnership, corporation (including,
without limitation, a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a Governmental
Authority.
"Plan" means an employee benefit plan, as defined in Section 3(3) of
ERISA, which any Loan Party or any of its Subsidiaries maintains, contributes to
or has an obligation to contribute to on behalf of participants who are or were
employed by any of them.
"Proposed Hotel Facility" means any Real Estate or Lease comprising an
operating facility offering hotel or other lodging services which the Borrower
proposes to include as collateral for the Loans.
"Proposed Hotel Facility Statement" means a certificate of a
Responsible Officer providing each of the following:
15
(i) details of the location of the Proposed Hotel Facility and
the real estate interest;
(ii) certification (based on information available to the
Borrower after diligent enquiry) as to the proposed annual Base Rent
under the proposed Operating Lease of the Proposed Hotel Facility;
(iii) audited balance sheets if available, or pro forma
balance sheets, of the owner or operator of the Proposed Hotel
Facility, and the related consolidated statements of income, retained
earnings and cash flows of such owner or operator for its previous
three (3) fiscal years;
(iv) audited balance sheets if available, or pro forma balance
sheets, in respect of the Proposed Hotel Facility and the related
consolidated statements of operations, changes in owner's equity
(deficit) and cash flows in respect of such Proposed Hotel Facility,
for the previous three (3) fiscal years;
(v) a written report of an investigation by an environmental
consultant, reasonably acceptable to the Lender, addressing any
significant environmental, health and safety violations, hazards or
liabilities to which the owner or operator of the Proposed Hotel
Facility may be subject, which report shall demonstrate, to the
reasonable satisfaction of the Lender, that the Proposed Hotel Facility
and the operations thereof are in compliance in all material respects
with all applicable Environmental Laws and are not subject to any
material Environmental Liabilities and Costs;
(vi) a copy of the proposed form of Operating Lease and, if
applicable, Management Agreement;
(vii) a copy of the proposed form of Limited Rent Guaranty, if
applicable;
(viii) the names of the proposed Operating Lessee and, if
applicable, Manager;
(ix) a copy of a recent market study in respect of the
Proposed Hotel Facility;
(x) a current title report and survey in respect of the
Proposed Hotel Facility, issued by a title company/surveyor reasonably
acceptable to the Lender; and
16
(xi) a written report of an investigation by an engineering
consultant reasonably acceptable to the Lender.
"Rating Agency" shall mean any nationally recognized statistical agency
selected by the Lender including, without limitation, Duff & Xxxxxx Rating Co.,
Fitch Investors Services, Inc., Xxxxx'x Investors Services, Inc., and/or
Standard and Poors Corporation, collectively, and any successor to any of them;
provided, however, that at any time during which the Loans are an asset of a
securitization, "Rating Agency" shall mean the rating agency or rating agencies
that from time to time rate the securities issued in connection with such
securitization.
"Real Estate" means all of those plots, pieces or parcels of land now
owned or hereafter acquired by the Borrower or any of its Subsidiaries (the
"Land"), including, without limitation, those listed on Schedule 5.22(a),
together with the right, title and interest of the Borrower or such Subsidiary,
if any, in and to the streets, the land lying in the bed of any streets, roads
or avenues, opened or proposed, in front of, adjoining or abutting the Land to
the center line thereof, the air space and development rights pertaining to the
Land and the right to use such air space and development rights, all rights of
way, privileges, liberties, tenements, hereditaments and appurtenances belonging
or in any way appertaining thereto, all fixtures, all easements now or hereafter
benefitting the Land and all royalties and rights appertaining to the use and
enjoyment of the Land, including, without limitation, all alley, vault,
drainage, mineral, water, oil and gas rights, together with all of the buildings
and other improvements now or hereafter erected on the Land, and any fixtures
appurtenant thereto.
"Release" means any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching or migration on or into the indoor or outdoor environment or into or
out of any property.
"Remedial Action" means all actions including, without limitation, any
Capital Expenditures, required or voluntarily undertaken to (i) clean up,
remove, treat or in any other way address any Hazardous Material or other
substance in the indoor or outdoor environment, (ii) prevent the Release or
threat of Release, or minimize the further Release, of any Hazardous Material or
other substance so it does not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, (iii) perform
pre-remedial studies and investigations or post-remedial monitoring and care, or
(iv) bring facilities on any property owned, leased or operated by the Borrower
or any of its Subsidiaries into compliance with all Environmental Laws and
Environmental Permits.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
17
such Person, and all federal, state and local laws, rules and regulations,
including, without limitation, federal, state or local securities, antitrust and
licensing laws, all food, health and safety laws, and all applicable trade laws
and requirements, including, without limitation, all disclosure requirements of
Environmental Laws, ERISA and all orders, judgments, decrees or other
determinations of any Governmental Authority or arbitrator, applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
"Responsible Officer" means, with respect to any Person, any of the
principal executive officers or general partners of such Person.
"Secured Indebtedness" of any Person means any Indebtedness of such
Person for which the obligations thereunder are secured by a Lien on any assets
of such Person.
"Security Agreement" means, with respect to each Hotel Facility, an
agreement in substantially the form of Exhibit H or such other form as shall be
approved by the Lender (which approval shall not be unreasonably withheld,
delayed or conditioned), executed by the Borrower and the other parties thereto,
granting to the Lender a security interest in the Borrower's interest in the
FF&E Reserve.
"Solvent" means, with respect to any Person, that the value of the
assets of such Person (both at fair value and present fair saleable value) is,
on the date of determination, greater than the total amount of liabilities
(including, without limitation, contingent and unliquidated liabilities) of such
Person as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and does not have
unreasonably small capital. In computing the amount of contingent or
unliquidated liabilities at any time, such liabilities will be computed at the
amount which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Stock" means shares of capital stock, beneficial or partnership
interests, participations or other equivalents (regardless of how designated) of
or in a corporation or equivalent entity, whether voting or non-voting, and
includes, without limitation, common stock and preferred stock.
"Stock Equivalents" means all securities convertible into or
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any stock, whether or not presently convertible, exchangeable or
exercisable.
18
"Stock Pledge Agreement" means the Stock Pledge Agreement of a
Subsidiary of the Borrower formed for the purpose of acquiring Hotel Facilities,
substantially in the form of Exhibit L, as amended, supplemented or modified
from time to time in a manner or inconsistent with the terms thereof and hereof.
"Subordination Agreement" means an agreement among the Lender, the
Advisor and the Borrower, substantially in the form annexed as Exhibit I, as
amended, supplemented or modified from time to time in a manner not inconsistent
with the terms thereof and hereof.
"Subordination, Nondisturbance and Attornment Agreement" means with
respect to any Hotel Facility an agreement between the Lender and the relevant
Operating Lessee substantially in the form attached as Exhibit J and made a part
hereof or such other form as shall be approved by the Lender, as amended,
supplemented or modified from time to time in a manner not inconsistent with the
terms thereof and hereof.
"Subsidiary Guaranty" means the guaranty of a Subsidiary of the
Borrower formed for the purpose of acquiring Hotel Facilities, substantially in
the form of Exhibit K, as amended, supplemented or modified from time to time in
a manner not inconsistent with the terms thereof and hereof.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other business entity of which an aggregate of 50% or more of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors, managers, trustees or other controlling persons, is, at the time,
directly or indirectly, owned or controlled by such Person and/or one or more
Subsidiaries of such Person (irrespective of whether, at the time, Stock of any
other class or classes of such entity shall have or might have voting power by
reason of the happening of any contingency).
"Tangible Net Worth" of any Person means, at any date, the Net Worth of
such Person at such date, excluding, however, from the determination of the
total assets of such Person at such date, (i) all goodwill, organizational
expenses, research and development expenses, trademarks, trade names,
copyrights, patents, patent applications, licenses and rights in any thereof,
and other similar intangibles, (ii) all prepaid expenses, deferred charges or
unamortized debt discount and expense, (iii) all reserves carried and not
deducted from assets, (iv) treasury stock and capital stock, obligations or
other securities of, or capital contributions to, or investments in, any
Subsidiary of such Person, (v) securities which are not readily marketable, (vi)
cash held in a sinking or other analogous fund established for the purpose of
redemption, retirement, defeasance or prepayment of any Stock or Indebtedness,
(vii) any write-up in the book value of any asset resulting from a revaluation
thereof, and (viii) any items not included in
19
clauses (i) through (vii) above which are treated as intangibles in conformity
with GAAP.
"Tax Affiliate" means, as to any Person, (i) any Subsidiary of such
Person, and (ii) any Affiliate of such Person with which such Person files or is
eligible to file consolidated, combined or unitary tax returns.
"Tax Return" has the meaning specified in Section 5.03.
"Taxes" has the meaning specified in Section 2.14(a).
"Tenant Guarantor" of any Operating Lessee means the parent of such
Operating Lessee who executes and delivers a Limited Rent Guaranty.
"Title Insurance Policies" has the meaning specified in Section 3.02.
"Total Assets" of any Person means, at any date, the aggregate value of
all assets of such Person, determined on the basis of cost of each such asset to
such Person without reduction for depreciation or adjustments due to asset
reappraisals or otherwise.
"Total Base Rents" means, for any period, the aggregate sum of Base
Rents for such period payable under any Operating Leases in effect during such
period, determined on a consolidated basis.
"Unsecured Indebtedness" of any Person means any Indebtedness of such
Person for which the obligations thereunder are not secured by a pledge of or
other encumbrance on any assets of such Person.
SECTION 1.02. Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding" and the word "through" means "to and including".
SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in conformity with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in conformity with GAAP.
SECTION 1.04. Certain Terms. (a) The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole, and not to any particular Article, Section, subsection or clause in this
Agreement. References herein to an Exhibit, Schedule, Article, Section,
subsection or clause
20
refer to the appropriate Exhibit or Schedule to, or Article, Section, subsection
or clause in this Agreement.
(b) The term "Lender" includes its successors and each assignee of the
Lender who becomes a party hereto pursuant to Section 10.07.
ARTICLE 2
AMOUNTS AND TERMS OF THE LOANS
SECTION 2.01. The Loans. On the terms and subject to the conditions
contained in this Agreement, the Lender agrees to make loans (each a "Loan" and
collectively, the "Loans") to the Borrower from time to time on any Business Day
during the period from the date hereof to and including the Final Borrowing Date
in an aggregate outstanding amount not to exceed Seventy-Five Million Dollars
($75,000,000) (the "Commitment") at any time, to be used for the purposes
identified in Section 5.18. No portion of the Commitment may be borrowed after
the Final Borrowing Date. The Loans shall be evidenced by the Note. The Lender
is authorized to endorse, at any time, the date and amount of each Loan and the
date and amount of each payment of principal with respect to the Loans on the
schedule annexed to and constituting a part of the Note, which endorsement shall
constitute prima facie evidence of the accuracy of the information endorsed.
SECTION 2.02. Making the Loans. (a) Each Loan shall be made on notice,
given by the Borrower to the Lender not later than 12:00 noon (New York City
time) on the fifth (5th) Business Day prior to the date of the proposed Loan.
Each such notice (a "Notice of Borrowing") shall be in substantially the form of
Exhibit B, specifying therein (i) the date of such proposed Loan, (ii) the
amount of such proposed Loan, (iii) the account or accounts to which the Loan
should be made, and (iv) details of the Approved Hotel Facility for which the
proceeds of the proposed Loan shall be used.
(b) Upon fulfillment of the applicable conditions set forth in Article
4, the Lender shall on the date of the proposed Loan, make available to the
Borrower at the account or accounts specified in the Notice of Borrowing, in
immediately available federal funds, the Loan.
(c) The Borrower may not request more than one (1) Loan per calendar
month.
(d) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. The Borrower shall indemnify the Lender against any loss, cost or
21
expense incurred by the Lender as a result of any failure to fulfill on or
before the date specified in any Notice of Borrowing for a proposed Loan the
applicable conditions set forth in Article 4, including, without limitation, any
loss (including, without limitation, loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Lender to fund any Loan to be made by the Lender
when such Loan, as a result of such failure, is not made on such date.
SECTION 2.03. Intentionally Omitted.
SECTION 2.04. Reduction and Termination of the Commitment. The Borrower
may, upon at least three Business Days' prior notice to the Lender, terminate in
whole or reduce in part the unused portions of the Commitment without premium or
penalty; provided, however, that each partial reduction shall be in the
aggregate amount of not less than $10,000,000.
SECTION 2.05. Repayment. The Borrower shall repay the entire unpaid
principal amount of all and any Loans on the Final Maturity Date.
SECTION 2.06. Prepayments. (a) The Borrower may, upon at least ten (10)
Business Days' prior notice to the Lender, stating the proposed date and
aggregate principal amount of the prepayment, prepay the outstanding principal
amount of the Loans in whole or in part, together with accrued interest to the
date of such prepayment on the principal amount prepaid, without premium or
penalty; provided that the Loans under the Second Supplemental Facility shall
have been theretofore repaid in full; and provided, however, that any prepayment
of the Loans bearing interest at the Eurodollar Rate made other than on the last
day of an Interest Period for the Loans to be repaid shall be subject to payment
by the Borrower to the Lender of any costs, fees or expenses incurred by the
Lender in connection with such prepayment including, without limitation, any
costs to unwind any Eurodollar Rate contracts or Interest Rate Contracts. Upon
the giving of such notice of prepayment by the Borrower, the principal amount of
the Loans specified to be prepaid shall become due and payable on the date
specified for such prepayment.
(b) If at any time the aggregate principal amount of Loans outstanding
at such time exceeds the Commitment, the Borrower shall forthwith prepay the
Loans then outstanding in an amount equal to such excess, together with accrued
interest.
(c) The Borrower shall forthwith prepay the Loans upon receipt by the
Borrower or its Subsidiaries of Asset Sale Proceeds in connection with an Asset
Sale of a Mortgaged Property in an amount equal to such Asset Sale Proceeds,
22
together with accrued interest to the date of such prepayment on the principal
amount prepaid.
(d) Upon receipt by the Borrower or its Subsidiaries of proceeds of
any issuance of debt or equity securities, the Borrower shall forthwith prepay
the Loans and the Loans made under the Other Supplemental Facility and the
Existing Facility in the following order: First, to the repayment of the Loans
made under the Other Supplemental Facility, Second, to the repayment of the
Loans made under this Agreement, Third, to the Term Loan (as defined in the
Existing Facility) made under the Existing Facility, and Fourth, to the
Revolving Loans (as defined in the Existing Facility) made under the Existing
Facility.
SECTION 2.07. Continuation of Loans at the Eurodollar Rate. At the end
of any Interest Period with respect to the Loans, unless the Borrower has given
notice pursuant to Section 2.06(a), the Loans will automatically be continued
for an additional Interest Period at the Eurodollar Rate for such Interest
Period.
SECTION 2.08. Interest. The Borrower shall pay interest on the unpaid
principal amount of each Loan from the date thereof until the principal amount
thereof shall be paid in full at a rate per annum equal at all times during the
applicable Interest Period for each Loan to the Eurodollar Rate for such
Interest Period, payable on the last day of such Interest Period and on the
Final Maturity Date; provided, however, that during the continuance of an Event
of Default, all Loans shall bear interest, payable on demand, at a rate per
annum equal at all times to 2% above the Eurodollar Rate in effect until the
maturity of the Loans or the end of such Interest Period, whichever occurs
first, and thereafter at the greater of (x) 2% per annum above the Base Rate in
effect from time to time and (y) 2% per annum above the rate per annum required
to be paid on the Loans immediately prior to the date on which such Event of
Default occurred.
SECTION 2.09. Interest Rate Determination and Protection. (a) The
Eurodollar Rate for each Interest Period for Loans shall be determined by the
Lender two Business Days before the first day of such Interest Period.
(b) The Lender shall give prompt notice to the Borrower of the
applicable interest rate determined by the Lender for purposes of Section 2.09.
(c) If (i) the Lender determines, which determination shall be
conclusive in the absence of manifest error, that quotations of interest rates
for the relevant deposits referred to in the definition of "Eurodollar Rate" are
not being provided in the relevant amounts or for the relevant maturities for
purposes of determining the rates of interest for the Loans as provided herein,
or (ii) the Lender determines, which determination shall be conclusive in the
absence of manifest error, that the Eurodollar Rate for any Interest Period
therefor will not adequately
23
reflect the cost to the Lender of making the Loans or funding or maintaining the
Loans for such Interest Period, the Lender shall forthwith so notify the
Borrower, whereupon
(A) each Loan will automatically, on the last day of
the then existing Interest Period therefor, convert so as to
accrue interest at an interest rate per annum equal to the
Base Rate in effect from time to time; and
(B) the obligations of the Lender to make Loans at
the Eurodollar Rate shall be suspended until the Lender shall
notify the Borrower that the Lender has determined that the
circumstances causing such suspension no longer exist;
provided that, during the period of such suspension, the
obligations of the Lender to make Loans at the Eurodollar Rate
shall convert to obligations to make Loans at the Base Rate in
effect from time to time.
SECTION 2.10. Increased Costs. If, due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation (other
than any change by way of imposition or increase of reserve requirements
included in determining the Eurodollar Rate Reserve Percentage) or (ii)
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to the Lender of agreeing to make or making, funding or
maintaining any Loans at the Eurodollar Rate, then the Borrower shall from time
to time, upon demand by the Lender, pay to the Lender additional amounts
sufficient to compensate the Lender for such increased cost. A certificate as to
the amount of such increased cost, submitted to the Borrower by the Lender,
shall be conclusive and binding for all purposes, absent manifest error. If the
Borrower so notifies the Lender within five Business Days after the Lender
notifies the Borrower of any increased cost pursuant to the foregoing provisions
of this Section 2.10, the Borrower may either (A) prepay in full all Loans
bearing interest at the Eurodollar Rate then outstanding in accordance with
Section 2.10 and, additionally, reimburse the Lender for such increased cost in
accordance with this Section 2.10, or (B) require the Lender to, and the Lender
shall, convert all Loans bearing interest at the Eurodollar Rate into Loans
bearing interest at the Base Rate in effect from time to time, and additionally,
reimburse the Lender for such increased cost in accordance with this Section
2.10, provided that in the event that the election in (B) is made by the
Borrower, the Lender's obligations to make Loans hereunder shall thereafter be
deemed to be obligations to make Loans at the Base Rate in effect from time to
time.
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SECTION 2.11. Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for the Lender or its
Lending Office to make Loans at the Eurodollar Rate or to continue to fund or
maintain Loans at the Eurodollar Rate, then, on notice thereof and demand
therefor by the Lender to the Borrower (i) the obligation of the Lender to make
or to continue the Loans bearing interest at the Eurodollar Rate shall
terminate, (ii) the Borrower shall forthwith prepay in full all Loans then
outstanding, together with interest accrued thereon (and until paid in full, all
such Loans bearing interest at the Eurodollar Rate then outstanding shall accrue
interest at an interest rate per annum equal to the Base Rate in effect from
time to time); provided that the Borrower shall not be required to prepay such
Loans if the Borrower, within five Business Days of such notice and demand,
requires the Lender to convert such Loans to Loans bearing interest at the Base
Rate in effect from time to time.
SECTION 2.12. Capital Adequacy. If (i) the introduction of or any
change in or in the interpretation of any law or regulation, (ii) compliance
with any law or regulation, or (iii) compliance with any guideline or request
from any central bank or other Governmental Authority (whether or not having the
force of law) affects or would affect the amount of capital required or expected
to be maintained by the Lender or any corporation controlling the Lender and the
Lender reasonably determines that such amount is based upon the existence of the
Lender's Commitment and Loans and its other commitment and loans of this type,
then, upon demand by the Lender, the Borrower shall pay to the Lender, from time
to time as specified by the Lender, additional amounts sufficient to compensate
the Lender in the light of such circumstances, to the extent that the Lender
reasonably determines such increase in capital to be allocable to the existence
of the Lender's Commitment and Loans. A certificate as to such amounts submitted
to the Borrower by the Lender shall be conclusive and binding for all purposes
absent manifest error.
SECTION 2.13. Payments and Computations. (a) The Borrower shall make
each payment hereunder and under the Note not later than 12:00 noon (New York
City time) on the day when due, in U.S. Dollars, to the Lender at its address
referred to in Section 10.02 in immediately available funds without set-off or
counterclaim, to be applied in accordance with the terms of this Agreement.
Payment received by the Lender after 12:00 noon (New York City time) shall be
deemed to be received on the next Business Day.
(b) All computations of interest shall be made by the Lender on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest
is payable.
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Each determination by the Lender of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
(c) Whenever any payment hereunder or under the Note shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fee, as the case may be;
provided, however, that if such extension would cause payment of interest on or
principal of any Loan to be made in the next calendar month, such payment shall
be made on the next preceding Business Day.
SECTION 2.14. Taxes. (a) Any and all payments by the Borrower under
each Loan Document shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding taxes measured
by the Lender's net income, and franchise taxes imposed on the Lender, by the
jurisdiction under the laws of which the Lender is organized or any political
subdivision thereof and taxes measured by the Lender's net income, and franchise
taxes imposed on the Lender, by the jurisdiction of the Lender's Lending Office
or any political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to the Lender (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including, without limitation, deductions applicable to additional
sums payable under this Section 2.14) the Lender receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions, (iii) the Borrower shall pay the full amount
deducted to the relevant taxing authority or other authority in accordance with
applicable law, and (iv) the Borrower shall deliver to the Lender evidence of
such payment to the relevant taxation or other authority.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies of the United States or any political subdivision thereof or any
applicable foreign jurisdiction which arise from any payment made under any Loan
Document or from the execution, delivery or registration of, or otherwise with
respect to, any Loan Document (collectively, "Other Taxes").
(c) The Borrower will indemnify the Lender for the full amount of
Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.14) paid by
the Lender and any liability (including, without limitation, for penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such
26
Taxes or Other Taxes were correctly or legally asserted. This indemnification
shall be made within 30 days from the date the Lender makes written demand
therefor.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes, the Borrower will furnish to the Lender, at its address referred to in
Section 10.02, the original or a certified copy of a receipt evidencing payment
thereof.
(e) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.14 shall survive the payment in full of the Obligations.
ARTICLE 3
PREPARATION OF MORTGAGE DOCUMENTS AND APPROVAL OF PROPOSED HOTEL
FACILITIES
SECTION 3.01. Recordation and Filing of Mortgage Documents, Etc. (a)
The Lender shall hold and not record or file any of the Collateral Documents
executed by the Borrower and delivered to the Lender pursuant to Section 4.01 or
Section 3.02(b) unless and until a Perfection Event shall have occurred. On or
after the occurrence of a Perfection Event, the Lender may in its absolute
discretion cause one or more of such Collateral Documents to be recorded or
filed in the appropriate recording or filing office (to the extent recordable or
fileable). In addition, the Borrower shall promptly deliver to the Lender upon a
Perfection Event, the following with respect to each of the Hotel Facilities:
(i) a commitment for a title insurance policy (the "Title
Insurance Policy") issued by a title company acceptable to the Lender,
in such form and amounts as are reasonably acceptable to the Lender,
insuring that the Mortgage covering such property is a valid first
priority Lien on such property subject only to such exceptions to title
as shall be acceptable to the Lender in its reasonable discretion and
containing such endorsements and affirmative insurance as the Lender
may reasonably require and as are obtainable in the applicable
jurisdiction, and true copies of each document, instrument or
certificate required by the terms of each such policy or Mortgage to
be, or have been, filed, recorded, executed or delivered in connection
therewith;
(ii) a current ALTA survey and surveyor's certification as to
such Hotel Facility in form and substance reasonably satisfactory to
the Lender; and
27
(iii) copies of Requests for Information or Copies (Form UCC-
11), or equivalent reports, listing all effective financing statements
which name the Borrower or any Subsidiary of the Borrower (under its
present name or any previous name) as debtor and which are filed in the
jurisdictions referred to above, together with copies of such other
financing statements (none of which shall cover the Collateral
purported to be covered by the Security Agreement).
(b) The Borrower shall pay to the Lender, or as the Lender may direct,
(i) all title insurance premiums, documentary, stamp or intangible taxes,
recording fees and mortgage taxes payable in connection with the recording of
any of the Loan Documents or the issuance of the Title Insurance Policies, and
(ii) the reasonable fees and out of pocket expenses of counsel to the Lender and
local counsel connection with the preparation, execution, review and delivery of
the Mortgage Documents.
(c) The Borrower, on behalf of itself and each of its Subsidiaries,
hereby appoints the Lender its attorney-in-fact to execute, acknowledge and
deliver for and in the name of the Borrower or any of its Subsidiaries, as
applicable, any and all of the Mortgage Documents for the Collateral Properties
and/or the Proposed Hotel Facilities which the Borrower or any of its
Subsidiaries fails to execute, acknowledge and/or deliver in accordance with the
terms hereof, and this power, being coupled with an interest, shall be
irrevocable as long as any part of the Obligations remains unpaid.
SECTION 3.02. Approval of Proposed Hotel Facilities. (a) In the event
that the Borrower desires to provide to the Lender as collateral to secure the
Borrower's Obligations a Proposed Hotel Facility, the Borrower shall request in
writing the Lender's consent, which request shall be accompanied by a Proposed
Hotel Facility Statement (together with all documents referred to therein) in
respect of the Proposed Hotel Facility and such other information as the Lender
may reasonably require. The Lender's consent shall not be unreasonably withheld.
(b) Upon the approval of any Proposed Hotel Facility, the Lender shall
prepare Mortgage Documents for such Proposed Hotel Facility and the parties
shall cooperate in the preparation and delivery of such Mortgage Documents
(including, without limitation, ordering commitments for the title insurance
policies, ALTA surveys and UCC-searches, obtaining estoppel certificates and
retaining counsel, including local counsel for purposes of reviewing the
Mortgage Documents and rendering opinions with respect to such documents in form
and substance acceptable to the Lender as set forth in Section 4.01(p)). The
parties acknowledge and agree that Liens on certain of the Real Estate and
Leases may have been or hereafter be granted as collateral security for the
Existing Facility
28
and the Other Supplemental Facility pursuant to the terms thereof and that to
the extent mortgage documents are executed and delivered in respect of any such
Real Estate or Lease as security for the Existing Facility or the Other
Supplemental Facility, such Real Estate or Lease shall be deemed to not be
collateral for the Loans made pursuant to this Agreement. In addition, the
parties acknowledge that Liens on certain Real Estate and Leases have been
granted in connection with the issuance of $125,000,000 aggregate principal
amount of Hospitality Properties Mortgage Acceptance Corp. Commercial Mortgage
Pass-Through Certificates Series 1996-C1 and are therefore not available as
collateral to secure the repayment of the Loans hereunder or the loans made
under the Existing Facility or the Other Supplemental Facility.
ARTICLE 4
CONDITIONS OF LENDING
SECTION 4.01. Conditions Precedent to the Initial Loan. The obligation
of the Lender to make the initial Loan is subject to satisfaction of the
conditions precedent that the Lender shall have received, on the Closing Date,
the following, each dated the Closing Date unless otherwise indicated, in form
and substance reasonably satisfactory to the Lender:
(a) The Note to the order of the Lender.
(b) A certificate of the Secretary or an Assistant Secretary of each
Loan Party certifying (i) the resolutions of its Board of Trustees or Directors,
as appropriate, approving each Loan Document to which it is a party, (ii) all
documents evidencing other necessary trust or corporate action, as appropriate,
and required governmental and third party approvals, licenses and consents with
respect to each Loan Document to which it is a party and the transactions
contemplated thereby, (iii) a copy of its and each of its Subsidiaries'
declaration of trust, certificates of incorporation and By-Laws, as appropriate,
as of the Closing Date, and (iv) the names and true signatures of each of its
officers who has been authorized to execute and deliver any Loan Document or
other document required hereunder to be executed and delivered by or on behalf
of such Person.
(c) A copy of the declaration of trust or articles or certificate of
incorporation, as appropriate, of each Loan Party and of each of its
Subsidiaries (if any) which is not a Loan Party certified as of a recent date by
the Secretary of State of the state of formation of such Loan Party or
Subsidiary, together with certificates of such official attesting to the good
standing of each such Loan Party and Subsidiary.
29
(d) Favorable opinions of Xxxxxxxx & Worcester and Piper & Marbury,
counsel to the Loan Parties, in substantially the forms attached as Exhibit D,
and as to such other matters as the Lender may reasonably request.
(e) A Negative Pledge Agreement in respect of each of the Hotel
Facilities including, without limitation, each Collateral Property, duly
executed and acknowledged by the Borrower or its Subsidiary, as applicable.
(f) A copy of the Operating Lease and Management Agreement, if any, in
respect of each Hotel Facility, each certified by a Responsible Officer.
(g) Evidence that the insurance required by the terms of the
Collateral Documents and by Section 7.04 is in full force and effect.
(h) A written report of an investigation by an environmental
consultant, reasonably acceptable to the Lender, addressing any significant
environmental, health and safety violations, hazards or liabilities to which the
Borrower or any of its Subsidiaries may be subject, which report shall
demonstrate, to the reasonable satisfaction of the Lender, that the Borrower and
its Subsidiaries and their operations are in compliance in all material respects
with all applicable Environmental Laws and are not subject to any material
Environmental Liabilities and Costs.
(i) Such additional documents, information and materials as the Lender
may reasonably request.
(j) The Lender shall have received evidence satisfactory to it that
all costs and accrued and unpaid fees and expenses (including, without
limitation, legal fees and expenses) required to be paid to the Lender under
Section 10.04, to the extent then due and payable, have been paid.
(k) A certificate, signed by a Responsible Officer of the Borrower,
stating that the statements set forth in Section 4.02(a) and 4.02(b) are true
and correct on the Closing Date, after giving effect to the Loans being made on
the Closing Date.
(l) A copy of the Advisory Agreement certified by a Responsible
Officer.
(m) The Subordination Agreement duly executed and acknowledged by the
Borrower and the Advisor.
30
(n) A Mortgage duly executed and acknowledged by the Borrower or a
Subsidiary of the Borrower for each Collateral Property, in such amount as shall
be reasonably acceptable to the Lender, securing all of the Obligations.
(o) Financing Statements on form UCC-1 duly executed by the Borrower
under the applicable Uniform Commercial Code to be filed in connection with each
Mortgage, in form and substance reasonably satisfactory to the Lender, to
perfect the Lien on and security interest in the Mortgaged Property covered by
the Uniform Commercial Code.
(p) An opinion reasonably satisfactory to the Lender of counsel and/or
local counsel retained by the Borrower with respect to the due execution and
delivery, validity and enforceability of the Mortgage Documents and such other
matters as may be reasonably required by the Lender.
(q) (i) Duly executed and acknowledged landlord consents from all
lessors under all the Leases comprising Collateral Properties, in form and
substance reasonably satisfactory to the Lender, (ii) duly executed and
acknowledged non-disturbance and attornment agreements with the mortgagees,
ground lessors and sublessors of property subject to Leases comprising
Collateral Properties, in form and substance reasonably satisfactory to the
Lender, (iii) duly executed and acknowledged consents from all mortgagees,
ground lessors and sublessors of property subject to Leases comprising
Collateral Properties, in form and substance reasonably satisfactory to the
Lender, (iv) duly executed and acknowledged estoppel certificates, dated not
earlier than 30 days prior to the date of the Loan, from each landlord, ground
lessor, sublessor and lessee of a Collateral Property, in form and substance
reasonably satisfactory to the Lender, (v) duly executed and acknowledged,
non-disturbance and attornment agreements (in recordable form) from each lessee
(other than the Borrower or its Subsidiary) of a Collateral Property, unless
such lessee's lease, by its terms, is subject and subordinate to the Lien of the
applicable Mortgage provided that, notwithstanding the foregoing, a
subordination, non-disturbance and attornment agreement in the form attached as
Exhibit J and made a part hereof or such other form as shall be approved by the
Lender (which approval shall not be unreasonably withheld, delayed or
conditioned), duly executed and acknowledged by the Borrower or its Subsidiary
and the Operating Lessee shall be required in respect of each such Collateral
Property, and (vi) evidence satisfactory to the Lender that all such consents
and agreements, and a memorandum of each Lease comprising a Collateral Property,
have been filed or recorded in all appropriate public records or delivered to
the title company providing title insurance thereon, as the case may be.
31
(r) Assignment Agreement in respect of the Management Agreement for
Collateral Property, if any, duly executed by the Borrower or its Subsidiary, as
applicable, and the Manager.
(s) Security Agreement in respect of the FF&E Reserves for such
Collateral Property duly executed by the Borrower or its Subsidiary, as
applicable, the Operating Lessee and, if applicable, the Manager.
(t) Financing Statements on Form UCC-1 under the Uniform Commercial
Code of all jurisdictions as may be necessary or, in the reasonable opinion of
the Lender, desirable to perfect the security interest created by the Security
Agreement for such Collateral Property.
(u) Subsidiary Guaranty duly executed by each Subsidiary of the
Borrower owning a Collateral Property.
(v) Stock Pledge Agreements duly executed by each Subsidiary of the
Borrower owing a Collateral Property.
SECTION 4.02. Conditions Precedent to Each Loan. The obligation of the
Lender to make any Loan (including the Loan being made by the Lender on the
Closing Date) shall be subject to the further conditions precedent that:
(a) The following statements shall be true on the date of such Loan,
before and after giving effect thereto and to the application of the proceeds
therefrom (and the acceptance by the Borrower of the proceeds of such Loan shall
constitute a representation and warranty by the Borrower that on the date of
such Loan such statements are true):
(i) The representations and warranties of the Borrower
contained in Article 5 and of each Loan Party in the other Loan
Documents are correct on and as of such date as though made on and as
of such date;
(ii) No Default or Event of Default will result from the Loans
being made on such date; and
(iii) The Loan to Value Requirement is satisfied.
(b) The making of the Loans on such date does not violate any
Requirement of Law and is not enjoined, temporarily, preliminarily or
permanently.
32
(c) The Lender shall have received, on or before such date, in respect
of any Hotel Facility including, without limitation, any Approved Hotel
Facilities, for which the same have not been delivered pursuant to Section
4.01(e), 4.01(f), 4.01(g), 4.01(h), 4.01(i), 4.01(n), 4.01(o), 4.01(p), 4.01(q),
4.01(r), 4.01(s), 4.01(t), 4.01(u) and 4.01(v), the documents and other
materials described in such paragraphs.
(d) The Borrower shall have paid the reasonable fees and out of pocket
expenses of counsel to the Lender and local counsel, in connection with the
preparation, execution, review and delivery of the Loan Documents delivered
pursuant to this Agreement.
(e) The Lender shall have received such additional documents,
information and materials as the Lender may reasonably request.
(f) The Lender shall have received a fee equal to 0.50% of the amount
of the Loan.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, the Borrower
represents and warrants to the Lender that:
SECTION 5.01. Existence; Compliance with Law. Each Loan Party and each
of its Subsidiaries (i) is a real estate investment trust or a corporation, as
the case may be, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation; (ii) is duly qualified or licensed
and in good standing under the laws of each jurisdiction where such
qualification is necessary, except for failures which in the aggregate have no
Material Adverse Effect; (iii) has all requisite power and authority and the
legal right to own, pledge and mortgage its properties, to lease (as lessee) the
properties that it leases as lessee, to lease or sublease (as lessor) the
properties it owns and/or leases (as lessee) and to conduct its business as now
or currently proposed to be conducted; (iv) is in compliance with its
declaration of trust or certificate of incorporation and by-laws, as
appropriate; (v) is in compliance with all other applicable Requirements of Law
except for such non-compliances as in the aggregate have no Material Adverse
Effect; and (vi) has all necessary licenses, permits, consents or approvals from
or by, has made all necessary filings with, and has given all necessary notices
to, each Governmental Authority having jurisdiction, to the extent required for
such ownership, leasing and conduct, except for licenses, permits, consents or
approvals which can be obtained by the taking of ministerial action to
33
secure the grant or transfer thereof or failures which in the aggregate have no
Material Adverse Effect.
SECTION 5.02. Power; Authorization; Enforceable Obligations. (a) The
execution, delivery and performance by each Loan Party of the Loan Documents to
which it is a party and the consummation of the transactions contemplated
hereby:
(i) are within such Loan Party's corporate or trust powers, as
appropriate;
(ii) have been or, at the time of delivery thereof pursuant to
Article 3 or 4, will have been duly authorized by all necessary
corporate or trust action, as appropriate, including, without
limitation, the consent of any trustees or stockholders where required;
(iii) do not and will not (A) contravene any Loan Party's or
any of its Subsidiaries' respective declaration of trust, certificate
of incorporation or by-laws or other comparable governing documents,
(B) violate any other applicable Requirement of Law (including, without
limitation, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System), or any order or decree of any Governmental
Authority or arbitrator, (C) conflict with or result in the breach of,
or constitute a default under, or result in or permit the termination
or acceleration of, any material Contractual Obligation of any Loan
Party or any of its Subsidiaries, or (D) result in the creation or
imposition of any Lien upon any of the property of any Loan Party or
any of its Subsidiaries, other than those in favor of the Lender
pursuant to the Collateral Documents; and
(iv) do not require the consent of, authorization by, approval
of, notice to, or filing or registration with, any Governmental
Authority or any other Person, other than those which have been or will
be, prior to the Closing Date, obtained or made and copies of which
have been or will be delivered to the Lender pursuant to Section 4.01
and/or Article 3 hereof, and each of which on the Closing Date will be
in full force and effect, and any consents, authorizations, approvals
of, notices to or filings or registrations required to be delivered
under Article 3 or 4 hereof.
(b) This Agreement has been, and each of the other Loan Documents will
have been upon delivery thereof pursuant to Article 3 or 4 hereof, duly executed
and delivered by each Loan Party thereto. This Agreement is, and the other Loan
Documents will be, when delivered hereunder, the legal, valid and binding
obligation of each Loan Party thereto, enforceable against it in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
34
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
SECTION 5.03. Taxes. All federal, state, local and foreign tax returns,
reports and statements (collectively, the "Tax Returns") which, to the best
knowledge and belief of the Borrower, are required to be filed by the Borrower
or any of its Tax Affiliates have been filed with the appropriate governmental
agencies in all jurisdictions in which such Tax Returns, are required to be
filed, all such Tax Returns are true and correct in all material respects, and
all taxes, charges and other impositions due and payable have been timely paid
prior to the date on which any fine, penalty, interest, late charge or loss may
be added thereto for non-payment thereof, except where contested in good faith
and by appropriate proceedings if adequate reserves therefor have been
established on the books of the Borrower or such Tax Affiliate in conformity
with GAAP. If applicable, proper and accurate amounts have been withheld by the
Borrower and each of its respective Tax Affiliates from their respective
employees (if any) for all periods in full and complete compliance with the tax,
social security and unemployment withholding provisions of applicable federal,
state, local and foreign law and such withholdings have been timely paid to the
respective Governmental Authorities. None of the Borrower or any of its Tax
Affiliates has (i) executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any charges other than
those that in the aggregate would have no Material Adverse Effect; (ii) agreed
or been requested to make any adjustment under Section 481(a) of the Code by
reason of a change in accounting method or otherwise other than those that in
the aggregate would have no Material Adverse Effect; or (iii) any obligation
under any written tax sharing agreement.
SECTION 5.04. Full Disclosure. No written statement prepared or
furnished by or on behalf of any Loan Party or any of its Affiliates in
connection with any of the Loan Documents or the consummation of the
transactions contemplated thereby, and no financial statement delivered pursuant
hereto or thereto, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading. All facts known to the Borrower which are material to an
understanding of the financial condition, business, properties or prospects of
the Borrower and its Subsidiaries taken as one enterprise have been disclosed to
the Lender.
SECTION 5.05. Financial Matters. (a) The balance sheet of the Borrower
as of December 31, 1996, and the related statement of income, retained earnings
and cash flow of the Borrower for the period from January 1, 1995 to December
31, 1996, certified by Xxxxxx Xxxxxxxx, LLP, copies of which have been furnished
to the Lender, fairly present the financial condition of the Borrower as
35
of such date and the consolidated results of the operations of the Borrower for
the period ended on such date, all in conformity with GAAP.
(b) Since December 31, 1996, there has been no Material Adverse Change
and there have been no events or developments that in the aggregate have had a
Material Adverse Effect.
(c) Neither the Borrower nor any of its Subsidiaries had at December
31, 1996 any material obligation, contingent liability or liability for taxes,
long-term leases or unusual forward or long-term commitment which is not
reflected in the balance sheet at such date referred to in subsection (a) above
or in the notes thereto.
(d) The Borrower is, and on a consolidated basis the Borrower and its
Subsidiaries are, Solvent.
SECTION 5.06. Litigation. There are no pending or, to the knowledge of
the Borrower, threatened actions, investigations or proceedings affecting the
Borrower or, to the knowledge of the Borrower, any Operator or any of their
respective properties or revenues before any court, Governmental Authority or
arbitrator, other than those that in the aggregate, if adversely determined,
would have no Material Adverse Effect. The performance of any action by (a) any
Loan Party required or contemplated by any of the Loan Documents or (b) any
Operator required or contemplated by any Operating Lease or Management Agreement
is not (in the case of (b) only, to the knowledge of the Borrower) restrained or
enjoined (either temporarily, preliminarily or permanently), and no material
adverse condition has been imposed by any Governmental Authority or arbitrator
upon any of the foregoing transactions contemplated by the aforementioned
documents.
SECTION 5.07. Margin Regulations. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System), and no proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock.
SECTION 5.08. Ownership of Borrower and HRPT Advisors; Subsidiaries.
(a) The authorized capital stock of the Borrower consists of 100,000,000 common
shares of beneficial interest, $0.01 par value per share, of which approximately
26,872,000 shares are issued and outstanding on the date hereof, and 100,000,000
preferred shares of beneficial interest, without par value, none of which shares
are issued and outstanding on the date hereof. On the date hereof all of the
outstanding capital stock of the Borrower is validly issued, fully paid and
36
non-assessable and at least 250,000 shares of such stock is owned beneficially
and of record by HRPT Advisors. Other than as described in the Shelf
Registration Statement relating to future offerings of up to $500,000,000 of
common shares of beneficial interest in the Borrower (or in reports incorporated
by reference therein), no authorized but unissued shares, no treasury shares
and, to the best knowledge of the Borrower, no other outstanding shares of
capital stock of the Borrower are subject to any option, warrant, right of
conversion or purchase or any similar right. Other than as described in the
Shelf Registration Statement relating to future offerings of up to $500,000,000
of common shares of beneficial interest in the Borrower (or in reports
incorporated by reference therein), there are no agreements or understandings
with respect to the voting, sale or transfer of any shares of capital stock of
the Borrower, or to the best knowledge of the Borrower, any agreement
restricting the transfer or hypothecation of any such shares.
(b) The authorized capital stock of HRPT Advisors consists of 100,000
shares of common stock, $0.01 par value per share, of which 1,000 shares are
issued and outstanding as of the date hereof. All of the outstanding capital
stock of HRPT Advisors has been validly issued, is fully paid and non-assessable
and at least 51% of such stock is owned, in the aggregate, beneficially and of
record by Xxxxx X. Xxxxxxx and/or Xxxxxx X. Xxxxxx, free and clear of all Liens
as of the date of this Agreement. No authorized but unissued shares, no treasury
shares and, to the best knowledge of the Borrower, no other outstanding shares
of capital stock of HRPT Advisors are subject to any option, warrant, right of
conversion or purchase or any similar right. There are no agreements or
understandings with respect to the voting, sale or transfer of any shares of
capital stock of HRPT Advisors, or to the best knowledge of the Borrower, any
agreement restricting the transfer or hypothecation of any such shares.
(c) Set forth on Schedule 5.08(c) hereto is a complete and accurate
list showing, as of the date hereof, all Subsidiaries of the Borrower and, as to
each such Subsidiary, the jurisdiction of its incorporation, the number of
shares of each class of Stock authorized, the number outstanding on the date
hereof and the percentage of the outstanding shares of each such class owned
(directly or indirectly) by the Borrower. No Stock of any Subsidiary of the
Borrower is subject to any outstanding option, warrant, right of conversion or
purchase or any similar right. All of the outstanding capital Stock of each such
Subsidiary has been validly issued, is fully paid and non-assessable and is
owned by the Borrower, free and clear of all Liens. Neither the Borrower nor any
such Subsidiary is a party to, or has knowledge of, any agreement restricting
the transfer or hypothecation of any shares of Stock of any such Subsidiary,
other than the Loan Documents. As of the date hereof, the Borrower does not own
or hold, directly or indirectly, any capital stock or equity security of, or any
equity interest in, any Person other than such Subsidiaries.
37
SECTION 5.09. ERISA. (a) There are no Multiemployer Plans.
(b) Each Plan and any related trust intended to qualify under Code
Section 401 or 501 has been determined by the IRS to be so qualified and to the
best knowledge of the Borrower nothing has occurred which would cause the loss
of such qualification.
(c) None of the Borrower, any of its Subsidiaries or any ERISA
Affiliate, with respect to any Pension Plan, has failed to make any contribution
or pay any amount due as required by Section 412 of the Code or Section 302 of
ERISA or the terms of any such plan, and all required contributions and benefits
have been paid in accordance with the provisions of each such plan.
(d) There are no pending or, to the knowledge of the Borrower,
threatened claims, actions or proceedings (other than claims for benefits in the
normal course), relating to any Plan other than those that in the aggregate, if
adversely determined, would have no Material Adverse Effect.
(e) No Pension Plan has any unfunded accrued benefit liabilities, as
determined by using reasonable actuarial assumptions utilized by such plan's
actuary for funding purposes. Within the last five years none of the Borrower,
any of its Subsidiaries or any ERISA Affiliate has caused a Pension Plan with
any such liabilities to be transferred outside of its "controlled group" (within
the meaning of Section 4001(a)(14) of ERISA).
(f) No Plan provides for continuing health, disability, accident or
death benefits or coverage for any participant or his or her beneficiary after
such partici pant's termination of employment (except as may be required by
Section 4980B of the Code and at the sole expense of the participant or the
beneficiary) which would result in the aggregate under all Plans in a liability
in an amount which would have a Material Adverse Effect.
SECTION 5.10. Liens. There are no Liens of any nature whatsoever on any
Hotel Facilities of the Borrower or any of its Subsidiaries other than those
permitted by Section 8.01. The forms of the Collateral Documents attached hereto
are sufficient to grant to the Lender fully perfected first priority Liens in
and to the Collateral subject only to Permitted Liens.
SECTION 5.11. [Intentionally Omitted].
SECTION 5.12. No Burdensome Restrictions; No Defaults; Contractual
Obligations. (a) Neither the Borrower nor any of its Subsidiaries is in default
beyond the expiration of any applicable notice or grace period under or with
38
respect to any Contractual Obligation owed by it and, to the knowledge of the
Borrower, no other party is in default beyond the expiration of any applicable
notice or grace period under or with respect to any Contractual Obligation owed
to the Borrower or to any of its Subsidiaries, other than those defaults which
in the aggregate have no Material Adverse Effect.
(b) No Event of Default or Default has occurred and is continuing.
(c) There is no Requirement of Law that has not been complied with by
the Borrower, the compliance with which by the Borrower or any of its
Subsidiaries would have a Material Adverse Effect.
(d) No Subsidiary of the Borrower is subject to any Contractual
Obligation restricting or limiting its ability to transfer its assets to the
Borrower or to declare or make any dividend payment or other distribution on
account of any shares of any class of its Stock or its ability to purchase,
redeem, or otherwise acquire for value or make any payment in respect of any
such shares or any shareholder rights.
SECTION 5.13. No Investments. Except as permitted by Section 8.06, none
of the Borrower or any of its Subsidiaries is engaged in any joint venture or
partnership with any other Person or maintains any Investment.
SECTION 5.14. Government Regulation. Neither the Borrower nor any of
its Subsidiaries is an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended, or subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, or any other federal or state statute or
regulation such that its ability to incur Indebtedness is limited, or its
ability to consummate the transactions contemplated hereby or by any other Loan
Document, or the exercise by the Lender of rights and remedies hereunder or
thereunder, is impaired. The making of the Loans by the Lender, the application
of the proceeds and repayment thereof by the Borrower and the consummation of
the transactions contemplated by the Loan Documents will not violate any
provision of any of the foregoing or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder.
SECTION 5.15. Insurance. All policies of insurance of any kind or
nature owned by or issued to the Borrower or any of its Subsidiaries, or issued
in respect of any real property owned or leased by the Borrower or any of its
Subsidiaries including, without limitation, policies of life, fire, theft,
product liability, public liability, property damage, other casualty, employee
fidelity, workers' compensation and employee health and welfare insurance, are
in full force and
39
effect and are of a nature and provide such coverage (except earthquake
coverage) as is sufficient and as is customarily carried by companies of the
size and character of such Person. None of the Borrower or any of its
Subsidiaries has been refused insurance for which it applied or had any policy
of insurance terminated (other than at its request). Lender confirms and agrees
that the policies of insurance owned by or issued to the Operating Lessee in
respect of any Hotel Facility shall be sufficient for the purposes of this
representation provided that the same comply with the terms of the Operating
Lease relating thereto.
SECTION 5.16. Employees. Neither the Borrower nor any of its
Subsidiaries has any employees and none of them has ever engaged employees.
SECTION 5.17. Force Majeure. Neither the business nor the properties of
the Borrower or any of its Subsidiaries are currently suffering from the effects
of any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy or
other casualty (whether or not covered by insurance), other than those which in
the aggregate have no Material Adverse Effect.
SECTION 5.18. Use of Proceeds. The proceeds of the Loans are being used
by the Borrower or its Subsidiaries solely to pay the purchase price of Approved
Hotel Facilities and for the payment of related transaction costs, fees and
expenses.
SECTION 5.19. Environmental Protection. Except as disclosed on Schedule
5.19:
(a) all real property leased, owned or operated by the Borrower or any
of its Subsidiaries is free from contamination by any Hazardous Material which
could reasonably be expected to subject the Borrower or any of its Subsidiaries
to Environmental Liabilities and Costs that could in the aggregate have a
Material Adverse Effect;
(b) the operations of the Borrower and each of its Subsidiaries, and
the operations at any real property leased, owned or operated by the Borrower or
any of its Subsidiaries are in material compliance in all respects with all
applicable Environmental Laws;
(c) neither the Borrower nor any of its Subsidiaries have liabilities
with respect to Hazardous Materials, and no facts or circumstances exist which
could give rise to liabilities with respect to Hazardous Materials which could
reasonably be expected to subject the Borrower or any of its Subsidiaries to
Environmental Liabilities and Costs that could in the aggregate have a Material
Adverse Effect;
40
(d) (i) the Borrower and its Subsidiaries and, to the best knowledge
of the Borrower and its Subsidiaries, the Operators have obtained, currently
maintained and have all Environmental Permits necessary for their operations and
are in material compliance with such Environmental Permits, except to the extent
that the failure to obtain or maintain such Permits or to be in compliance
therewith would not, in the aggregate, have a Material Adverse Effect, (ii)
there are no Legal Proceedings pending nor, to the best knowledge of the
Borrower and its Subsidiaries, threatened to revoke, or alleging the violation
of, such Environmental Permits, other than Legal Proceedings which, if adversely
determined, would not, in the aggregate, have a Material Adverse Effect and
(iii) neither the Borrower nor any of its Subsidiaries or, to the best knowledge
of the Borrower and its Subsidiaries, the Operators have received any notice
from any Governmental Authority to the effect that there is lacking any
Environmental Permit required in connection with the current use or operation of
any property leased, owned or operated by the Borrower or any of its
Subsidiaries;
(e) neither the Borrower's nor any of its Subsidiaries' current
facilities and operations, nor, to the best knowledge of the Borrower and its
Subsidiaries, any Operator or predecessor of the Borrower or any of its
Subsidiaries, nor any of their past facilities and operations, nor any owner of
premises leased or operated by the Borrower and its Subsidiaries, are subject to
any outstanding written Order or Contract, including Environmental Liens, with
any Governmental Authority or other Person, or to any federal, state, local,
foreign or territorial investigation respecting (i) Environmental Laws, (ii)
Remedial Action, (iii) any Environmental Claim, or (iv) the Release or
threatened Release of any Hazardous Material, the compliance with which, in any
case, is reasonably likely to have a Material Adverse Effect;
(f) neither the Borrower, nor any of its Subsidiaries or, to the best
knowledge of the Borrower and its Subsidiaries, any of the Operators are subject
to any pending Legal Proceeding alleging the violation of any Environmental Law
which, if adversely determined is reasonably likely to have a Material Adverse
Effect, nor, to the best knowledge of the Borrower and its Subsidiaries, are any
such proceedings threatened;
(g) neither the Borrower nor any of its Subsidiaries nor, to the best
knowledge of the Borrower and its Subsidiaries, any Operators or predecessor of
the Borrower or any of its Subsidiaries, nor any owner of premises leased by the
Borrower or any of its Subsidiaries, have filed any notice under federal, state
or local, territorial or foreign law indicating past or present treatment,
storage, or disposal of or reporting a Release of Hazardous Material into the
environment, in the case of any Operator, with respect to Hotel Facilities only;
41
(h) none of the operations of the Borrower or any of its Subsidiaries
or, to the best knowledge of the Borrower and its Subsidiaries, of any Operators
or predecessor of the Borrower or any of its Subsidiaries, or of any owner of
premises leased by the Borrower or any of its Subsidiaries, involve or
previously involved the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 (in effect
as of the date of this Agreement) or any state, local, territorial or foreign
equivalent, in the case of any Operator, with respect to Hotel Facilities only;
and
(i) there is not now, nor has there been in the past, on, in or under
any real property leased or owned by the Borrower or any of its Subsidiaries (i)
any underground storage tanks or surface tanks, dikes or impoundments, (ii) any
asbestos-containing materials, (iii) any polychlorinated biphenyls, or (iv) any
radioactive substances, the existence of which, in any case, is reasonably
likely to have a Material Adverse Effect.
SECTION 5.20. Contractual Obligations Concerning Assets. Other than as
described on Schedule 5.20, as of the date hereof, neither the Borrower nor any
of its Subsidiaries owns or holds, or is obligated under or a party to, any
option, right of first refusal, or other contractual right to purchase or
acquire, or any Contractual Obligation to effect an Asset Sale of, any asset or
property owned or leased by the Borrower or any of its Subsidiaries.
SECTION 5.21. Status as REIT. The Borrower is organized in conformity
with the requirements for qualification as a real estate investment trust under
the Code. Borrower has met all of the requirements for qualification as a real
estate investment trust under the Code for its fiscal year ended December 31,
1996. The Borrower is in a position to qualify for its current fiscal year as a
real estate investment trust under the Code and its proposed methods of
operation will enable it to so qualify.
SECTION 5.22. Real Property. (a) The Borrower and its Subsidiaries own
good, clean and marketable fee simple absolute title to or valid leasehold
interests in, all of the Collateral Properties, which Collateral Properties are
at the date hereof described in Schedule 5.22 and none of such properties and
assets is subject to any Lien, except Liens granted to the Lender pursuant to
the Loan Documents or permitted hereunder or thereunder. The Borrower and its
Subsidiaries have received all deeds, assignments, waivers, consents,
non-disturbance and recognition or similar agreements, bills of sale and other
documents, and have duly effected all recordings, filings and other actions
reasonably necessary to establish, protect and perfect the Borrower's and its
Subsidiaries' right, title and interest in and to all such property.
42
(b) None of the Collateral Properties are leased at the date hereof by
the Borrower or any of its Subsidiaries.
(c) Except as disclosed on Schedule 5.22(c) and those which in the
aggregate have no Material Adverse Effect, (i) all components of all
improvements included within the Collateral Properties (collectively,
"Improvements"), including, without limitation, the roofs and structural
elements thereof and the heating, ventilation, air conditioning, plumbing,
electrical, mechanical, sewer, waste water, storm water, paving and parking
equipment, systems and facilities included therein, are in good working order
and repair; and (ii) all water, gas, electrical, steam, compressed air,
telecommunication, sanitary and storm sewage lines and systems and other similar
systems serving the Collateral Properties are installed and operating and are
sufficient to enable the Collateral Properties to continue to be used and
operated in the manner currently being used and operated, and none of the
Borrower or any of its Subsidiaries has any knowledge of any factor or condition
that could result in the termination or material impairment of the furnishing
thereof. No Improvement or portion thereof is dependent for its access,
operation or utility on any land, building or other Improvement not included in
the real property owned or leased by the Borrower or any of its Subsidiaries.
(d) All Permits required to have been issued or appropriate to enable
all Collateral Properties owned or leased by the Borrower or any of its
Subsidiaries to be lawfully occupied and used for all of the purposes for which
they are currently occupied and used have been lawfully issued and are in full
force and effect, other than those which in the aggregate have no Material
Adverse Effect.
(e) Neither the Borrower nor, to its knowledge, any Operator has
received any notice, or has any knowledge, of (i) any pending, threatened or
contemplated condemnation proceeding affecting any Collateral Properties owned
or leased by the Borrower or any of its Subsidiaries or any part thereof, or
(ii) any proposed termination or impairment of any parking at any such owned or
leased real property or (iii) any sale or other disposition of any Collateral
Properties owned or leased by the Borrower or any of its Subsidiaries or any
part thereof in lieu of condemnation, in each case, other than those which in
the aggregate have no Material Adverse Effect.
(f) No material portion of any Collateral Properties owned or leased
by the Borrower or any of its Subsidiaries has suffered any material damage by
fire or other casualty loss which has not heretofore been completely repaired
and restored to its original condition or which will not be completely repaired
or restored to its original condition within twelve (12) months from the date
hereof. No portion of any Collateral Properties, that is not covered by adequate
flood insurance, owned or leased by the Borrower or any of its Subsidiaries is
located in
43
a special flood hazard area as designated by any Federal Governmental
Authorities.
SECTION 5.23. Operator and Advisor: Compliance with Law. (a) To the
best knowledge of the Borrower and its Subsidiaries, each Operator (i) has full
power and authority and the legal right to own, lease (or sublease), manage and
operate (as applicable) the Hotel Facilities it operates and to conduct the
business in which it is currently engaged with respect to any real property
owned or leased by the Borrower or any of its Subsidiaries, (ii) is duly
qualified or licensed and is in good standing under the laws of each
jurisdiction where its ownership, lease (or sublease), management or operation
of any real property owned or leased by the Borrower or any of its Subsidiaries
requires such qualification, and (iii) is in compliance with all Requirements of
Law applicable to the real property owned or leased by the Borrower or any of
its Subsidiaries operated or managed by it, or applicable to the operation or
management thereof, except to the extent that the failure to comply therewith is
not reasonably likely to have, in the aggregate, a Material Adverse Effect.
(b) To the best knowledge of Borrower and its Subsidiaries, the
Advisor (i) has full power and authority and legal right to conduct the business
in which it is presently engaged and to perform its obligations under the
Advisory Agreement, (ii) is duly qualified or licensed and is in good standing
under the laws of each jurisdiction where the conduct of its business requires
such qualification, and (iii) is in compliance with all Requirements of Law
except to the extent that the failure to comply therewith is not reasonably
likely to have, in the aggregate, a Material Adverse Effect.
SECTION 5.24. Operating Leases, Limited Rent Guaranties, Management
Agreement and Advisory Agreement. Each of the Operating Leases, Limited Rent
Guaranties and Management Agreements, if any, in respect of the Hotel Facilities
and the Advisory Agreement is in full force and effect and is a legally valid
and binding obligation of the Borrower or its Subsidiaries and the other parties
thereto, subject to such exceptions which are not reasonably likely to have, in
the aggregate, a Material Adverse Effect. Neither the Borrower nor any of its
Subsidiaries has mortgaged, pledged or otherwise encumbered any of the Operating
Leases, Management Agreements or Advisory Agreements or its rights thereunder
including, without limitation, its right to obtain rental, interest or other
payments under the Operating Leases, other than by way of such mortgages,
pledges or encumbrances in favor of the Lender. Neither the Borrower nor any of
its Subsidiaries has collected any rents becoming due under any Operating Lease
more than 30 days in advance. All rent and other sums and charges payable by any
Operating Lessee under each Operating Lease to which it is a party are current,
no notice of default or termination under any such Operating Lease is
outstanding, to the knowledge of the Borrower no termination event or condition
44
or uncured default on the part of the Operating Lessee exists under any
Operating Lease, and to the knowledge of the Borrower no event of default has
occurred which, with the giving of notice or the lapse of time or both, would
constitute such a default or termination event or condition or uncured default
on the part of the Borrower or its Subsidiaries or the Operators (as the case
may be), subject to such exceptions which are not reasonably likely to have, in
the aggregate, a Material Adverse Effect. As to all of the Leases, the Borrower
and each of its Subsidiaries has performed all of its repair and maintenance
obligations (if any) and, to the best knowledge and belief of the Borrower, each
Operating Lessee under each Operating Lease to which it is a party has performed
all of its repair and maintenance obligations, subject to such exceptions which
are not reasonably likely to have, in the aggregate, a Material Adverse Effect.
SECTION 5.25. FF&E Reserves. An FF&E Reserve has been established in
respect of each Collateral Property and is currently funded as required by the
terms of the Operating Lease and/or the Management Agreement relating thereto.
An FF&E Reserve shall be established in respect of each Approved Hotel Facility
from and after the date of the acquisition thereof, which FF&E Reserve shall be
currently funded as required by the terms of the Operating Lease and/or the
Management Agreement relating thereto.
ARTICLE 6
FINANCIAL COVENANTS
As long as any of the Obligations or Commitment remain outstanding,
unless the Lender otherwise consents in writing the Borrower agrees with the
Lender that:
SECTION 6.01. Limitation and Indebtedness. The Borrower shall maintain
during each Fiscal Quarter on a consolidated basis, a ratio, expressed as a
percentage, of (a) the total Indebtedness for borrowed money (including, without
limitation, the Obligations and all Capitalized Lease Obligations) of the
Borrower and its Subsidiaries to (b) Total Assets of the Borrower and its
Subsidiaries not in excess of fifty-six percent (56%).
SECTION 6.02. Limitation on Secured Indebtedness. The Borrower shall
maintain during each Fiscal Quarter on a consolidated basis a ratio, expressed
as a percentage, of (a) total Secured Indebtedness (including, without
limitation, Obligations and all Capitalized Lease Obligations) of the Borrower
and its Subsidiaries to (b) Total Assets of the Borrower and its Subsidiaries
not in excess of fifty-six percent (56%).
45
SECTION 6.03. Interest Expense Coverage. The Borrower shall maintain at
the end of each Fiscal Quarter, commencing with the Fiscal Quarter ending on
March 31, 1998, a ratio of (a) Total Base Rents for such Fiscal Quarter to (b)
Net Interest Expense for such Fiscal Quarter, of not less than 2:1.
SECTION 6.04. Maintenance of Tangible Net Worth. The Borrower shall
maintain during each Fiscal Quarter a Tangible Net Worth of not less than
$200,000,000.
SECTION 6.05. Maintenance of Loan to Value Requirement. The Borrower
shall maintain during each Fiscal Quarter the Loan to Value Requirement.
ARTICLE 7
AFFIRMATIVE COVENANTS
As long as any of the Obligations or the Commitment remain outstanding,
unless the Lender otherwise consents in writing, the Borrower agrees with the
Lender that:
SECTION 7.01. Compliance with Laws, Etc. The Borrower shall comply, and
shall cause each of its Subsidiaries and, with respect to Hotel Facilities only,
each Operator to comply, in all material respects with all Requirements of Law,
Contractual Obligations, commitments, instruments, licenses, permits and
franchises, including, without limitation, all Permits; provided, however, that
the Borrower shall not be deemed in default of this Section 7.01 if all such
non-compliances in the aggregate have no Material Adverse Effect.
SECTION 7.02. Conduct of Business. The Borrower shall (a) conduct, and
shall cause each of its Subsidiaries to conduct, its business in the ordinary
course, such business being to acquire, own and lease hotels to unaffiliated
tenants; and (b) perform and observe, and cause each of its Subsidiaries to
perform and observe, all the terms, covenants and conditions required to be
performed and observed by it under its Contractual Obligations (including,
without limitation, to pay all rent and other charges payable under any lease
and all debts and other obligations as the same become due), and do, and cause
its Subsidiaries to do, all things necessary to preserve and to keep unimpaired
its rights under such Contractual Obligations; provided, however, that, in the
case of each of clauses(a) and (b), the Borrower shall not be deemed in default
of this Section 7.02 if all such failures in the aggregate have no Material
Adverse Effect.
46
SECTION 7.03. Payment of Taxes, Etc. The Borrower shall pay and
discharge, and shall cause each of its Subsidiaries to pay and discharge, before
the same shall become delinquent, all lawful governmental claims, taxes,
assessments, charges and levies, except where contested in good faith, by proper
proceedings, if adequate reserves therefor have been established on the books of
the Borrower or the appropriate Subsidiary in conformity with GAAP; provided,
however, that the Borrower shall not be deemed in default of this Section 7.03
if all such uncontested non-payments in the aggregate have no Material Adverse
Effect and, with respect to any Mortgaged Property, the Borrower and each such
Subsidiary otherwise complies with the provisions of the Mortgage in respect
thereof.
SECTION 7.04. Maintenance of Insurance. The Borrower shall maintain, or
shall cause the Operators to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
is usually carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower or such Subsidiary
operates and as otherwise satisfactory to the Lender, in its sole judgment
exercised reasonably, and, in any event, all insurance required by any
Collateral Document. All such insurance shall name the Lender as additional
insured or loss payee, as the Lender shall determine. The Borrower will furnish
to the Lender from time to time such information as may be reasonably requested
as to such insurance. The Lender acknowledges that (i) no earthquake insurance
has been obtained with respect to any Hotel Facilities in California and (ii)
insurance maintained by the Operating Lessee in respect of any Hotel Facility
shall be sufficient for the purposes of this covenant provided that such
insurance complies with the terms of the Operating Lease relating thereto.
SECTION 7.05. Preservation of Existence, Etc. The Borrower shall
preserve and maintain, and shall cause each of its Subsidiaries to preserve and
maintain, its existence (except as permitted under Section 8.05) and its rights
(charter and statutory) and franchises, except to the extent that the failure to
preserve and maintain such rights and/or franchises would not have a Material
Adverse Effect.
SECTION 7.06. Access. The Borrower shall upon reasonable advance
notice, at any reasonable time and from time to time, permit the Lender, or any
agents or representatives of the Lender, to (a) examine and make copies of and
abstracts from the records and books of account of the Borrower and each of its
Subsidiaries, (b) visit the properties of the Borrower and each of its
Subsidiaries, (c) discuss the affairs, finances and accounts of the Borrower and
each of its Subsidiaries with any of their respective officers or directors, and
(d) communicate directly with the Borrower's independent certified public
accountants. The Borrower shall authorize its independent certified public
47
accountants to disclose to the Lender any and all financial statements and other
information of any kind, including, without limitation, copies of any management
letter, or the substance of any oral information that such accountants may have
with respect to the business, financial condition, results of operations or
other affairs of the Borrower or any of its Subsidiaries.
SECTION 7.07. Keeping of Books. The Borrower shall keep, and shall
cause each of its Subsidiaries to keep, proper books of record and account, in
accordance with GAAP, in which full and correct entries shall be made of all
financial transactions and the assets and business of the Borrower and each such
Subsidiary.
SECTION 7.08. Maintenance of Properties, Etc. The Borrower shall
maintain and preserve, and shall cause each of its Subsidiaries and each
Operator to maintain and preserve, (i) all of its Hotel Facilities in good
working order and condition, and (ii) all rights, permits, licenses, approvals
and privileges (including, without limitation, all Permits) which are used or
useful or necessary in the conduct of its business, in the case of an Operator,
with respect to Hotel Facilities only; provided, however, that the Borrower
shall not be deemed in default of this Section 7.08 if all such failures in the
aggregate have no Material Adverse Effect.
SECTION 7.09. Performance and Compliance with Other Covenants. The
Borrower shall perform and comply with, and shall cause each of its Subsidiaries
to perform and comply with, each of the covenants and agreements set forth in
any Contractual Obligation to which it or any of its Subsidiaries is a party;
provided, however, that the Borrower shall not be deemed in default of this
Section 7.09 if all such failures in the aggregate have no Material Adverse
Effect.
SECTION 7.10. Application of Proceeds. The Borrower shall use the
entire amount of the proceeds of the Loans as provided in Section 5.18.
SECTION 7.11. Financial Statements. The Borrower shall furnish to the
Lender:
(a) as soon as available and in any event within 45 days after the end
of each Fiscal Quarter of each Fiscal Year (other than the last Fiscal Quarter
of such Fiscal Year), consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such quarter and consolidated statements of
income, retained earnings and cash flow of the Borrower and its Subsidiaries for
the period commencing at the end of the previous Fiscal Year and ending with the
end of such Fiscal Quarter, all prepared in conformity with GAAP and certified
by the chief financial officer of the Borrower as fairly presenting the
financial condition and results of operations of the Borrower and its
Subsidiaries at such date and for
48
such period, subject to normal year-end audit adjustments, together with (i) a
certificate of said officer stating that no Default or Event of Default has
occurred and is continuing or, if a Default or an Event of Default has occurred
and is continuing, a statement as to the nature thereof and the action which the
Borrower proposes to take with respect thereto, (ii) a schedule in form
reasonably satisfactory to the Lender of the computations used by the Borrower
in determining compliance with all financial covenants contained herein, and
(iii) a written discussion and analysis by the management of the Borrower of the
financial statements furnished in respect of such Fiscal Quarter;
(b) as soon as available and in any event within 90 days after the end
of each Fiscal Year, consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such year and consolidated statements of income,
retained earnings and cash flow of the Borrower and its Subsidiaries for such
Fiscal Year, all prepared in conformity with GAAP and certified, in the case of
such consolidated financial statements, without qualification as to the scope of
the audit or as to the Borrower being a going concern by Xxxxxx Xxxxxxxx LLP or
other independent public accountants of recognized national standing, together
with (i) a certificate of such accounting firm stating that in the course of the
regular audit of the business of the Borrower and its Subsidiaries, which audit
was conducted by such accounting firm in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge that a
Default or Event of Default has occurred and is continuing, or, if in the
opinion of such accounting firm, a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof, (ii) a schedule in form
reasonably satisfactory to the Lender of the computations used by such
accountants in determining, as of the end of such Fiscal Year, the Borrower's
compliance with all financial covenants contained herein, and (iii) a written
discussion and analysis by the management of the Borrower of the financial
statements furnished in respect of such Fiscal Year;
(c) as soon as available and in any event within 60 days after the end
of each fiscal quarter of each fiscal year, in each case of any Operating Lessee
(other than the last fiscal quarter of such fiscal year) consolidated balance
sheets and statements of income and cash flow in respect of such Operating
Lessee and the Tenant Guarantor, if any, for such fiscal quarter, all prepared
in conformity with GAAP and certified by the chief financial officer or chief
accounting officer (or such officer's authorized designee) of the Operating
Lessee or the Tenant Guarantor, duly authorized, as fairly presenting the
consolidated financial conditions and results of operations of such Operating
Lessee and Tenant Guarantor at such date and for such period, subject to normal
year-end adjustments, together with a certificate of said officer stating that
no Default or Event of Default has occurred and is continuing under the relevant
Operating Lease(s) (said certification, the "Financial Officer's Certificate")
49
(d) as soon as available, and in any event within 105 days after the
end of each fiscal year of any Operating Lessee, consolidated balance sheets and
statements of income, retained earnings and cash flow in respect of such
Operating Lessee and the Tenant Guarantor for such fiscal year, all prepared in
conformity with GAAP and certified without qualification as to the scope of the
audit by independent public accountants of recognized national standing,
together with a Financial Officer's Certificate;
(e) within thirty (30) days after the end of each Accounting Period
(as defined in the Management Agreement) or if there is no Management Agreement,
within thirty (30) days after the end of each calendar month, an unaudited
operating statement in respect of each Hotel Facility, including occupancy
percentages and average rate, accompanied by a Financial Officer's Certificate;
(f) promptly after the same are received by the Borrower, a copy of
each management letter provided to the Borrower by its independent certified
public accountants which refers in whole or in part to any inadequacy, defect,
problem, qualification or other lack of fully satisfactory accounting controls
utilized by the Borrower or any of its Subsidiaries or any Operating Lessee.
SECTION 7.12. Reporting Requirements. The Borrower shall furnish to
the Lender:
(a) prior to any Asset Sale, a notice (i) describing the assets being
sold and (ii) stating the estimated Asset Sales Proceeds in respect of such
Asset Sale;
(b) as soon as available and in any event within 30 days prior to the
end of each Fiscal Year, an annual budget of the Borrower and its Subsidiaries
for the succeeding Fiscal Year, displaying on a quarterly basis anticipated
balance sheets, forecasted Capital Expenditures, working capital requirements,
rent revenues, contributions by Operating Lessees to any FF&E Reserves, interest
income, net income, cash flow and sales, all on a consolidated basis;
(c) promptly and in any event within 30 days after the Borrower, any
of its Subsidiaries or any ERISA Affiliate knows or has reason to know that any
ERISA Event has occurred, a written statement of the chief financial officer or
other appropriate officer of the Borrower describing such ERISA Event or waiver
request and the action, if any, which the Borrower, its Subsidiaries and ERISA
Affiliates propose to take with respect thereto and a copy of any notice filed
by or with the PBGC or the IRS pertaining thereto;
(d) promptly and in any event within 10 days after receipt thereof, a
copy of any adverse notice, determination letter, ruling or opinion the
Borrower,
50
any of its Subsidiaries or any ERISA Affiliate receives from the PBGC, DOL or
IRS with respect to any Plan, other than those which, in the aggregate, do not
have any reasonable likelihood of resulting in a Material Adverse Change;
(e) promptly after the commencement thereof, notice of all actions,
suits and proceedings before any domestic or foreign Governmental Authority or
arbitrator, affecting the Borrower, any of its Subsidiaries, any Operator or any
Tenant Guarantor (subject to the Borrower having received notice or knowledge
thereof), except those which in the aggregate, if adversely determined, would
have no Material Adverse Effect;
(f) promptly and in any event within five (5) Business Days after the
Borrower becomes aware of the existence of (i) any Default or Event of Default,
(ii) any breach or non-performance of, or any default under any Operating Lease,
Management Agreement, Advisory Agreement or any Contractual Obligation which is
material to the business, prospects, operations or financial condition of the
Borrower and its Subsidiaries taken as one enterprise, or (iii) any Material
Adverse Change or any event, development or other circumstance which has
reasonable likelihood of causing or resulting in a Material Adverse Change,
telephonic or telecopied notice in reasonable detail specifying the nature of
such Default, Event of Default, breach, non-performance, default, event,
development or circumstance, including, without limitation, the anticipated
effect thereof, which notice (if by telephone) shall be promptly confirmed in
writing within five days;
(g) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to its security holders generally, and copies
of all reports and registration statements which the Borrower or any of its
Subsidiaries files with the Securities and Exchange Commission or any national
securities exchange or the National Association of Securities Dealers, Inc.;
(h) upon the request of the Lender copies of all federal, state and
local tax returns and reports filed by the Borrower or any of its Subsidiaries
in respect of taxes measured by income (excluding sales, use and like taxes);
(i) promptly and in any event within five days of the Borrower or any
Subsidiary learning of any of the following, written notice to the Lender of any
of the following:
(i) the Release or threatened Release of any Hazardous
Material on or from any property owned, operated or leased by the
Borrower of any of its Subsidiaries and any written order, notice,
permit, application or other written communication or report received
by the Borrower, any of its Subsidiaries or any Operator in connection
with or relating to any such
51
Release or threatened Release, unless such Release or threatened
Release is not reasonably likely to have a Material Adverse Effect;
(ii) any notice or claim to the effect that the Borrower, any
of its Subsidiaries or any Operator is or may be liable to any Person
as a result of the Release or threatened Release of any Hazardous
Material into the environment that could reasonably be expected to have
a Material Adverse Effect;
(iii) receipt by the Borrower, any of its Subsidiaries or any
Operator of notification that any real or personal property of the
Borrower or any of its Subsidiaries is subject to an Environmental Lien
that could reasonably be expected to have a Material Adverse Effect;
(iv) any Remedial Action taken by the Borrower, any of its
Subsidiaries or (if known to the Borrower) any Operator or any other
Person in response to any Hazardous Material on, under or about any
real property owned, operated or leased by the Borrower or any of its
Subsidiaries, unless such Remedial Action is not reasonably likely to
have a Material Adverse Effect;
(v) receipt by the Borrower, any of its Subsidiaries or any
Operator of any notice of violation of, or knowledge by the Borrower,
any of its Subsidiaries or any Operator that there exists a condition
which may result in a violation by the Borrower, any of its
Subsidiaries or any Operator of, any Environmental Law, unless such
violation is not reasonably likely to have a Material Adverse Effect;
(vi) the commencement of any judicial or administrative
proceeding or investigation alleging a violation of any Environmental
Law; or
(vii) any proposed acquisition of stock, assets or real
property, or any proposed leasing of property by the Borrower or any of
its Subsidiaries, unless such action is not reasonably likely to have a
Material Adverse Effect;
(j) upon written request by the Lender, a report providing an update
of the status of any Environmental Claim, Remedial Action or any other issue
identified in any notice or report required pursuant to this Section 7.12;
(k) promptly, such additional financial and other information
respecting the financial or other condition of any Operators, the Advisor or the
Borrower or any of its Subsidiaries or the status or condition of any real
property owned or
52
leased by the Borrower or its Subsidiaries, or the operation thereof which the
Borrower is entitled to or can otherwise reasonably obtain, as the Lender from
time to time reasonably request; and
(l) such other information respecting the business, properties,
condition, financial or otherwise, or operations of the Borrower, any of its
Subsidiaries or any Operators as the Lender may from time to time reasonably
request.
SECTION 7.13. Leases and Operating Leases. The Borrower shall provide
the Lender with a copy of each lease of any Collateral Property to which the
Borrower or any Subsidiary of the Borrower is then a party, whether as lessor or
lessee. The Borrower shall, and shall cause each of its Subsidiaries to, (i)
comply in all material respects with all of their respective obligations under
all of their respective Leases and Operating Leases now or hereafter held
respectively by them with respect to real property, including, without
limitation, the Leases set forth in Schedule 5.22(b); (ii) not modify, amend,
cancel, extend or otherwise change in any materially adverse manner any of the
terms, covenants or conditions of any such Leases or Operating Leases; (iii)
provide the Lender with a copy of each notice of default under any Lease or
Operating Leases received by the Borrower or any Subsidiary of the Borrower
immediately upon receipt thereof and deliver to the Lender a copy of each notice
of default sent by the Borrower or any Subsidiary of the Borrower under any
Operating Lease or Lease simultaneously with its delivery of such notice under
such Operating Lease or Lease; (iv) notify the Lender, not later than 30 days
prior to the date of the expiration of the term of any Lease, of the Borrower's
or any Subsidiary of the Borrower's intention either to renew or to not renew
any such Lease, and, if the Borrower or any Subsidiary of the Borrower intends
to renew such Lease, the terms and conditions of such renewal; and (v) maintain
each Operating Lease in full force and effect in all material respects and
enforce the material obligations of the Operating Lessee thereunder, in a timely
manner.
SECTION 7.14. [Intentionally Omitted].
SECTION 7.15. Employee Plans. For each Plan and any related trust
hereafter adopted or maintained by a Loan Party or any of its ERISA Affiliates
intended to qualify under Code Section 125, 401 or 501, the Borrower shall (i)
seek, and cause such of its ERISA Affiliates to seek, and receive determination
letters from the IRS to the effect that such plan is so qualified; and (ii)
cause such plan to be so qualified.
SECTION 7.16. [Intentionally Omitted].
SECTION 7.17. Fiscal Year. The Borrower shall maintain as its Fiscal
Year the twelve month period ending on December 31 of each year.
53
SECTION 7.18. Environmental Matters. (a) The Borrower shall comply and
shall cause each of its Subsidiaries and, with respect to Hotel Facilities only,
each Operator to comply in all material respects with all applicable
Environmental Laws currently or hereafter in effect.
(b) If the Lender at any time has a reasonable basis to believe that
there may be a material violation of any Environmental Law by Borrower any of
its Subsidiaries or any Operator related to any Hotel Facility, or real property
adjacent thereto, then Borrower agrees, upon request from the Lender, to provide
the Lender, at Borrower's expense, with such reports, certificates, engineering
studies or other written material or data as the Lender may reasonably require
so as to reasonably satisfy the Lender that Borrower or such Subsidiary or
Operator is in material compliance with all applicable Environmental Laws.
Furthermore, the Lender shall have the right upon prior notice (except in the
case of an emergency) to inspect during normal business hours any real property
owned, operated or leased by Borrower or any of its Subsidiaries if at any time
the Lender has a reasonable basis to believe that there may be such a material
violation of Environmental Law.
(c) The Borrower shall, and shall cause each of its Subsidiaries and,
with respect to Hotel Facilities only, each Operator to, take such Remedial
Action or other action as required by Environmental Laws, as any Governmental
Authority requires, except to the extent contested in good faith and by proper
proceedings, or as is appropriate and consistent with good business practice.
SECTION 7.19. [Intentionally Omitted].
SECTION 7.20. REIT Requirements. The Borrower shall operate its
business at all times so as to satisfy all requirements necessary to qualify as
a real estate investment trust under Section 856 through 860 of the Code. The
Borrower will maintain adequate records so as to comply with all record-keeping
requirements relating to the qualification of the Borrower as a real estate
investment trust as required by the Code and applicable regulations of the
Department of the Treasury promulgated thereunder and will properly prepare and
timely file with the IRS all returns and reports required thereby. The Borrower
will request from its shareholders all shareholder information required by the
Code and applicable regulations of the Department of Treasury promulgated
thereunder.
SECTION 7.21. Maintenance of FF&E Reserves. The Borrower shall cause
the Operator to maintain FF&E Reserves in respect of each Hotel Facility,
pursuant to the terms of the Operating Lease and/or Management Agreement
relating thereto and shall direct the Operator to deliver to the Lender
simultaneously with delivery to the Borrower or its Subsidiaries, copies of any
54
reports, statements or other information required to be supplied to the Borrower
or its Subsidiary under any Operating Lease or Management Agreement for any
Hotel Facility. The Borrower shall not commingle, or permit the commingling of,
other funds with the funds in the FF&E Reserves except to the extent permitted
by the Management Agreement or Operating Lease, as applicable.
SECTION 7.22. Further Assurances. At any time upon the request of the
Lender, the Borrower will, promptly and at its expense, execute, acknowledge and
deliver such further documents and do such other acts and things as the Lender
may reasonably request to provide for payment of the Loans made hereunder and
interest thereon in accordance with the terms of this Agreement.
ARTICLE 8
NEGATIVE COVENANTS
As long as any of the Obligations or Commitment remain outstanding,
without the written consent of the Lender, the Borrower agrees with the Lender
that:
SECTION 8.01. Liens, Etc. The Borrower shall not create or suffer to
exist, and shall not permit any of its Subsidiaries to create or suffer to
exist, any Lien upon or with respect to any of its or such Subsidiary's
properties, whether now owned or hereafter acquired, or assign, or permit any of
its Subsidiaries to assign, any right to receive income therefrom, except for
the following and the Lender hereby consents to the following liens
notwithstanding the provisions of any Negative Pledge Agreement:
(a) Liens created pursuant to the Loan Documents;
(b) Liens arising by operation of law in favor of materialmen,
mechanics, warehousemen, carriers, lessors or other similar Persons incurred by
the Borrower or any of its Subsidiaries in the ordinary course of business which
secure its obligations to such Person; provided, however, that (i) the Borrower
or such Subsidiary is not in default with respect to such payment obligation to
such Person, (ii) the Borrower or such Subsidiary is in good faith and by
appropriate proceedings diligently contesting such obligation and adequate
provision is made for the payment thereof, or (iii) all such failures in the
aggregate have no Material Adverse Effect;
(c) Liens (excluding Environmental Liens) securing taxes, assessments
or governmental charges or levies; provided, however, that (i) neither the
Borrower nor any of its Subsidiaries is in default in respect of any payment
55
obligation with respect thereto unless the Borrower or such Subsidiary is in
good faith and by appropriate proceedings diligently contesting such obligation
and adequate provision is made for the payment thereof, and (ii) all such
failures in the aggregate have no Material Adverse Effect;
(d) Zoning restrictions, easements, licenses, reservations,
restrictions on the use of real property or minor irregularities incident
thereto which do not in the aggregate materially detract from the value or use
of the property or assets of the Borrower or any of its Subsidiaries or impair,
in any material manner, the use of such property for the purposes for which such
property is held by the Borrower or any such Subsidiary;
(e) Liens in favor of landlords securing operating leases permitted by
Section 8.03;
(f) Liens existing on the date of this Agreement and disclosed on
Schedule 8.01, and Liens permitted by the Existing Facility or the Other
Supplemental Facility, or the Loan Documents thereunder;
(g) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts, trade
contracts, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(h) Any attachment or judgment Lien not constituting an Event of
Default under Section 9.01(f);
(i) Any (i) interest or title of a lessor or sublessor under any
Capitalized Lease or any operating lease not prohibited by this Agreement, (ii)
restriction or encumbrance that the interest or title of such lessor or
sublessor may be subject to, or (iii) subordination of the interest of the
lessee or sublessee under such lease to any restriction or encumbrance referred
to in the preceding clause (ii);
(j) Liens arising from filing UCC financing statements relating solely
to leases permitted by this Agreement;
(k) Deposits in the ordinary course of business to secure liabilities
to insurance carriers, lessors, utilities and other service providers;
(l) Purchase money security interests (including mortgages,
conditional sales, Capitalized Leases and any other title retention or deferred
purchase devices) in personal property of the Borrower or any of its
Subsidiaries in an
56
amount not exceeding $200,000 in respect of each Hotel Facility, existing or
created at the time of acquisition thereof or within 60 days thereafter.
(m) Any Lien securing the renewal, extension or refunding of any
Indebtedness or other Obligation secured by any Lien permitted by this Section
8.01 provided that such renewal, extension or refunding is otherwise permitted
by this Agreement and the amount of such Indebtedness or other Obligation
secured by such Lien and the assets subject to such Lien are not increased.
(n) Any Lien securing Indebtedness permitted pursuant to Sections
8.02(a)(v), 8.02(a)(vi) and 8.02(a)(vii).
SECTION 8.02. Indebtedness. (a) The Borrower shall not create, incur or
suffer to exist, or permit any of its Subsidiaries to create, incur or suffer to
exist, any Indebtedness, or incur, assume, endorse, be or become liable for, or
guarantee, directly or indirectly, or permit or suffer to exist, any Contingent
Obligation, except:
(i) Indebtedness and Contingent Obligations in respect of the
Obligations or evidenced by a Loan Document;
(ii) current liabilities in respect of taxes, assessments and
governmental charges or levies incurred, or claims for labor,
materials, inventory, services, supplies and rentals incurred, or for
goods or services purchased, in the ordinary course of business
consistent with the past practice of the Borrower and its Subsidiaries;
(iii) Indebtedness of the Borrower consisting of fees and
expenses referred to in Section 4.01(j) and 4.02(d);
(iv) Indebtedness of the Borrower or any of its Subsidiaries
under Capital Financing Indebtedness in respect of each Hotel Facility
in an aggregate amount for such Hotel Facility not exceeding
$200,000.00 at any one time outstanding; and
(v) Indebtedness of the Borrower or any of its Subsidiaries
comprising pre-existing Indebtedness secured by Real Estate and any
personal property located thereon, which the Borrower or any of its
Subsidiaries assumes in connection with the acquisition of such Real
Estate, in an aggregate amount not exceeding $25,000,000.
(vi) Indebtedness of the Borrower or any of its Subsidiaries
arising pursuant to the Existing Facility or the Other Supplemental
Facility.
57
(vii) The mortgage loan made November 25, 1996 in the
aggregate principal amount of $125,000,000 by Column Financial, Inc.,
as originator, to HPTRI Corporation and HPTWN Corporation.
(viii) Indebtedness between the Borrower and any of its
wholly-owned Subsidiaries.
(b) The Borrower shall not cancel, or permit any of its Subsidiaries
to cancel, any claim or Indebtedness owed to it except for adequate
consideration and in the ordinary course of business.
SECTION 8.03. Lease Obligations. The Borrower shall not, and shall not
permit any of its Subsidiaries to, become or remain liable as lessee or
guarantor or other surety with respect to any lease, whether an operating lease
or a Capitalized Lease, of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, which (i) the Borrower or any of its
Subsidiaries has sold or transferred or is to sell or transfer to any other
Person, or (ii) the Borrower or any of its Subsidiaries intends to use for
substantially the same purposes as any other property which has been or is to be
sold or transferred by that entity to any other Person in connection with such
lease.
SECTION 8.04. [Intentionally Omitted].
SECTION 8.05. Mergers, Stock Issuances, Asset Sales, Etc. (a) The
Borrower shall not sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its assets or properties, and shall not, and shall not
permit any of its Subsidiaries to, (i) merge with any Person, or (ii)
consolidate with any Person other than (A) the merger of a Subsidiary of the
Borrower into a wholly-owned Subsidiary of the Borrower that is a Loan Party, or
(B) the merger of a wholly-owned Subsidiary of the Borrower into the Borrower.
(b) The Borrower shall not transfer, or permit any of its Subsidiaries
to issue or transfer, any Stock or Stock Equivalents of any Subsidiary other
than any such issuance or transfer (i) by a Subsidiary of the Borrower to a
wholly-owned Subsidiary of the Borrower that is a Loan Party or (ii) by a
wholly-owned Subsidiary of the Borrower to the Borrower, without the prepayment
of the Loans or the prepayment of the loans made under the Other Supplemental
Facility and the Existing Facility, as described in Section 2.06(d).
(c) The Borrower shall not and shall not permit any of its
Subsidiaries to effect, enter into, consummate or suffer to exist any Asset Sale
(other than an Asset Sale with respect to Mortgaged Properties as to which
subsection (d) below
58
shall apply) without the prior written consent of the Lender, such consent not
to be unreasonably withheld or delayed.
(d) The Borrower shall not and shall not permit any of its
Subsidiaries to effect, enter into, consummate or suffer to exist any Asset Sale
with respect to any Mortgaged Property without (y) the prior written consent of
the Lender, such consent not to be unreasonably withheld or delayed, and (z)
prepayment of the Loans pursuant to Section 2.06(c).
In the event that an Asset Sale of a Mortgaged Property is entered into
in violation of any of the provisions of this Section 8.05(d), in addition to
the other rights and remedies of the Lender hereunder, the Borrower shall
forthwith prepay the Loans upon receipt by the Borrower of its Subsidiaries of
the Asset Sale Proceeds relating thereto, in an amount equal to such Asset Sale
Proceeds, together with accrued interest to the date of such prepayment on the
principal amount prepaid.
SECTION 8.06. Investments. The Borrower shall not, directly or
indirectly, make or maintain, or permit any of its Subsidiaries to make or
maintain, any loan or advance to any Person or own, purchase or otherwise
acquire, or permit any of its Subsidiaries to own, purchase or otherwise
acquire, any Stock, Stock Equivalents, other equity interest, obligations or
other securities of, or all or substantially all of the assets of, any Person or
all or substantially all of the assets constituting the business of a division,
branch or other unit operation of any Person, or enter into any joint venture or
partnership with, or make or maintain, or permit any of its Subsidiaries to make
or maintain, any capital contribution to, or otherwise invest in, any Person or
incorporate or organize any Subsidiary which was not in existence on the Closing
Date (any such transaction being an "Investment"), except Investments consisting
of (a) the Stock of wholly-owned Subsidiaries of the Borrower, (b) cash
equivalent securities in the ordinary course of business or (c) the purchase of
the Approved Hotel Facilities.
SECTION 8.07. Change in Nature of Business or Organizational Documents.
(a) The Borrower shall not make, and shall not permit any of its Subsidiaries to
make, any material change in the nature or conduct of its business as carried on
at the date hereof.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries to, amend its declaration of trust, certificate of incorporation or
by-laws other than for amendments which in the aggregate have no Material
Adverse Effect.
SECTION 8.08. Modification of Material Agreements. The Borrower shall
not, and shall not permit any of its Subsidiaries to, (i) alter, rescind,
terminate, amend, supplement, waive or otherwise modify any provision of or
permit any
59
breach or default to exist under the Advisory Agreement without the prior
written consent of the Lender; or (ii) alter, amend, modify, rescind, terminate,
supplement or waive any of their respective rights under, or fail to comply in
all material respects with, any of its material obligations arising under any
Operating Lease or Management Agreement; provided, however, that, with respect
to any such failure to comply with any such obligations, the Borrower shall not
be deemed in default of this Section 8.08 if all such failures in the aggregate
would have no Material Adverse Effect; and provided, further, that in the event
of any material breach or event of default by a Person other than the Borrower
or any of its Subsidiaries, the Borrower shall promptly notify the Lender of any
such breach or event of default and take all such action as may be reasonably
necessary in order to endeavor to avoid having such breach or event of default
have a Material Adverse Effect.
SECTION 8.09. Accounting Changes. The Borrower shall not make, nor
permit any of its Subsidiaries to make, any change in accounting treatment and
reporting practices or tax reporting treatment, except as required by GAAP or
law and disclosed to the Lender.
SECTION 8.10. Transactions with Affiliates. The Borrower shall not, and
shall not permit any of its Subsidiaries, to enter into any transaction directly
or indirectly with or for the benefit of any Affiliate of the Borrower
(including, without limitation, employment contracts or contracts involving the
payment of management or consulting fees, guaranties and assumptions of
obligations of any such Affiliate) except for (A) transactions in the ordinary
course of business on a basis no less favorable to the Borrower or such
Subsidiary as would be obtained in a comparable arm's length transaction with a
Person not an Affiliate, and (B) salaries and other employee compensation and
benefits to officers or directors of the Borrower or any of its Subsidiaries
commensurate with current compensation and benefit levels.
SECTION 8.11. Environmental Matters. (a) The Borrower shall not, and
shall not permit any of its Subsidiaries or any Operator, or, to the extent
practicable, any other Person to dispose of any Hazardous Material by placing it
in or on the ground or waters of any property owned, operated or leased by the
Borrower or any of its Subsidiaries, except as in compliance with all applicable
Environmental Laws currently and hereinafter in effect; provided, however, that
the Borrower shall not be deemed in default of this provision if all such
disposals in the aggregate would have no Material Adverse Effect.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries or any Operator, or, to the extent practicable, any other Person
to, dispose or to arrange for the disposal of any Hazardous Material on any
property owned, operated or leased by any other Person, except as in compliance
with all
60
applicable Environmental Laws currently and hereinafter in effect; provided,
however, that the Borrower shall not be deemed in default of this provision if
all such disposals in the aggregate would have no Material Adverse Effect.
ARTICLE 9
EVENTS OF DEFAULT
SECTION 9.01. Events of Default. Each of the following events shall be
an Event of Default:
(a) The Borrower shall fail to pay any principal (including, without
limitation, mandatory prepayments of principal) of, or interest on, any Loan,
any fee, any other amount due hereunder or under the other Loan Documents or
other of the Obligations when the same becomes due and payable; or
(b) Any representation or warranty made or deemed made by any Loan
Party in any Loan Document or by any Loan Party (or any of its officers) in
writing in connection with any Loan Document shall prove to have been incorrect
in any material respect when made or deemed made; or
(c) Any Loan Party shall fail to perform or observe (i) any term,
covenant or agreement contained in Articles 4 or 8 or in any Collateral
Document, or (ii) any other term, covenant or agreement contained in this
Agreement or in any other Loan Document if such failure under this clause (ii)
shall remain unremedied for fifteen (15) days after the date on which written
notice thereof shall have been given to the Borrower by the Lender; or
(d) Any Loan Party or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on any Indebtedness of such Loan Party or
Subsidiary (excluding Indebtedness evidenced by the Note) beyond the period of
grace (not to exceed 30 days), if any, with respect thereto (whether the same
becomes due and payable by scheduled maturity, required prepayment,
acceleration, demand or otherwise); or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Indebtedness,
if the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such Indebtedness
shall become or be declared to be due and payable, or any Loan Party or any of
its Subsidiaries shall be required to repurchase or offer to repurchase such
Indebtedness, prior to the stated maturity thereof; or
(e) Any Loan Party or any of its Subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its inability to
pay its
61
debts generally, or shall make a general assignment for the benefit of
creditors, or any proceeding shall be instituted by or against any Loan Party or
any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a custodian, receiver,
trustee or other similar official for it or for any substantial part of its
property and, in the case of any such proceedings instituted against any Loan
Party or any of its Subsidiaries (but not instituted by it), either such
proceedings shall remain undismissed or unstayed for a period of sixty (60) days
or any of the actions sought in such proceedings shall occur; or any Loan Party
or any of its Subsidiaries shall take any corporate action to authorize any of
the actions set forth above in this Section 9.01(e); or
(f) One or more judgments or orders for the payment of money in an
aggregate amount in excess of $100,000 to the extent not fully covered by
insurance shall be rendered against any Loan Party or any of its Subsidiaries
and either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order, or (ii) there shall be any period of 30 consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
(g) An ERISA Event shall occur which, in the reasonable determination
of the Lender, is reasonably likely to have a Material Adverse Effect; or
(h) The Borrower or any of its Subsidiaries shall have entered into
any consent or settlement decree or agreement or similar arrangement with an
Governmental Authority or any judgment, order, decree or similar action shall
have been entered against the Borrower or any of its Subsidiaries or any
Operator, in any case based on or arising from the violation of or pursuant to
any Environmental Law, or the generation, storage, transportation, treatment,
disposal or Release of any Hazardous Material and such judgment, order, decree
or similar action is reasonably likely to have a Material Adverse Effect; or
(i) Any material provision of any Collateral Document after delivery
thereof under Article 4 shall for any reason cease to be valid and binding on
any Loan Party thereto, or any Loan Party shall so state in writing; or
(j) Any Collateral Document after delivery thereof pursuant to Article
4 shall, for any reason, cease to create a valid Lien on any of the Collateral
purported to be covered thereby or such Lien shall cease to be a perfected and
first priority Lien, or any Loan Party shall so state in writing; or
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(k) There shall occur a Material Adverse Change or an event which is
reasonable likely to have a Material Adverse Effect; or
(l) The Lender shall have determined in good faith, and shall have so
given notice to the Borrower, that the Borrower has at any time ceased to be in
a position to qualify, or has not qualified, as a real estate investment trust
for any of the purposes of the provisions of the Code applicable to real estate
investment trusts; provided that no Event of Default under this subsection shall
be deemed to have occurred and be continuing if, within 10 days after notice of
any such determination is given to the Borrower, the Borrower shall have
furnished the Lender with an opinion of the Borrower's tax counsel (who shall be
reasonably satisfactory to the Lender) to the effect that the Borrower is then
in a position to so qualify, or has so qualified, as the case may be, which
opinion shall not contain any material qualification unsatisfactory to the
Lender; or
(m) HRPT Advisors shall cease at any time to (A) hold beneficially and
of record at least 250,000 of the issued and outstanding common shares and each
other class of equity securities of the Borrower (adjusted for any division,
reclassification or stock dividend in respect of Common Shares), or (B) hold the
power to direct or cause the direction of the management and policies of the
Borrower; or
(n) Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx shall cease at any time to
(A) hold beneficially and of record, in the aggregate, at least 51% of the
issued and outstanding common shares and each other class of equity securities
of HRPT Advisors (adjusted for any division, reclassification or stock dividend
in respect of Common Shares), or (B) hold the power to direct or cause the
direction of the management and policies of HRPT Advisors; or
(o) HRPT Advisors shall cease to be the sole Advisor to Borrower
pursuant to and in accordance with the Advisory Agreement, without the Lender's
prior written consent or the Advisory Agreement shall be materially amended,
supplemented or modified without the Lender's prior written consent; or
(p) Advisor shall default in the observance or performance of any
material provision of the Subordination Agreement; or
(q) Any Manager shall default in the observance or performance of any
material provision of a Management Agreement and such defaults, in the
aggregate, are reasonably likely to have a Material Adverse Effect; or
(r) Any Operating Lessee shall default in the observance or
performance of any material provision of an Operating Lease and such defaults,
in the aggregate, are reasonably likely to have a Material Adverse Effect.
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SECTION 9.02. Remedies. If there shall occur and be continuing any
Event of Default, the Lender (i) by notice to the Borrower, may declare the
obligation of the Lender to make Loans to be terminated, whereupon the same
shall forthwith terminate, and (ii) may by notice to the Borrower, declare the
Loans, all interest thereon and all other amounts and Obligations payable under
this Agreement to be forthwith due and payable, whereupon the Note, all such
interest and all such amounts and Obligations (to the extent permitted by
applicable law), shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, however, that upon the
occurrence of the Event of Default specified in Section 9.01(e), (A) the
obligation of the Lender to make Loans shall automatically be terminated and (B)
the Loans, all such interest and all such amounts and Obligations shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower. In addition to the remedies set forth above, the Lender may
exercise any remedies provided for by the Collateral Documents in accordance
with the terms thereof or any other remedies provided by applicable law.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Amendments, Etc. No amendment or waiver of any provision
of this Agreement nor consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be in writing and signed by the
Lender, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 10.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including, without limitation,
telegraphic, telex, telecopy or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered by hand.
If to the Borrower, at its address at:
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
(telecopy number: 617-332-2261)
(telephone number: 000-000-0000)
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with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxxx, Esq.
(telecopy number: 617-338-2800)
(telephone number: 000-000-0000)
If to the Lender, at its address at
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Managing Director
(telecopy number: 212-892-4096)
(telephone number: 000-000-0000)
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx Xxxx, Xx., Esq.
(telecopy number: 212-450-4800)
(telephone number: 000-000-0000)
or, as to the Borrower or the Lender, at such other address as shall be
designated by such party in a written notice to the other party. All such
notices and communications shall, when mailed, telegraphed, telexed, telecopied,
cabled or delivered, be effective three (3) Business Days after being deposited
in the mails, delivered to the telegraph company, confirmed by telex answerback,
telecopied with confirmation of receipt, delivered to the cable company or
delivered by hand to the addressee, respectively, except that notices and
communications to the Lender pursuant to Article 2 shall not be effective until
received by the Lender.
SECTION 10.03. No Waiver; Remedies. No failure on the part of the
Lender to exercise, and no delay in exercising, any right hereunder or under any
Note shall operate as a waiver thereof; nor shall any single or partial exercise
of any such right preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
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SECTION 10.04. Costs; Expenses; Indemnities. (a) The Borrower agrees to
pay to the Lender or as the Lender may direct, on demand, all costs and expenses
of the Lender (including, without limitation, the fees and out-of-pocket
expenses of counsel, retained by the Lender) in connection with the
modification, amendment or enforcement (whether through negotiation, legal
proceedings or otherwise) of this Agreement and the other Loan Documents.
(b) The Borrower agrees to indemnify and hold harmless the Lender and
its Affiliates, and the directors, officers, employees, agents, attorneys,
consultants and advisors of or to any of the foregoing (including, without
limitation, those retained in connection with the satisfaction or attempted
satisfaction of any of the conditions set forth in Article 4) (each of the
foregoing being an "Indemnitee") from and against any and all claims, damages,
liabilities, obligations, losses, penalties, actions, judgments, suits, costs,
disbursements and expenses of any kind or nature (including, without limitation,
fees and disbursements of counsel to any such Indemnitee and experts, engineers
and consultants and the costs of investigation and feasibility studies) which
may be imposed on, incurred by or asserted against any such Indemnitee in
connection with or arising out of any investigation, litigation or proceeding,
whether or not any such Indemnitee is a party thereto, whether direct, indirect,
or consequential and whether based on any federal, state or local law or other
statutory regulation, securities or commercial law or regulation, or under
common law or in equity, or on contract, tort or otherwise, in any manner
relating to or arising out of or based upon or attributable to this Agreement,
any other Loan Document, any document delivered hereunder or thereunder, any
Obligation, or any act, event or transaction related or attendant to any
thereof, including, without limitation, (i) arising from any misrepresentation
or breach of warranty under Section 5.19 or any Environmental Claim or any
Environmental Lien or any Remedial Action arising out of or based upon anything
relating to real property owned, leased or operated by the Borrower or any of
its Subsidiaries and the facilities or operations (collectively, the
"Indemnified Matters"); provided, however, that the Borrower shall not have any
obligation under this Section 10.04(b) to an Indemnitee with respect to any
Indemnified Matter caused by or resulting from the gross negligence or willful
misconduct of that Indemnitee, as determined by a court of competent
jurisdiction in a final non-appealable judgment or order.
(c) If the Lender receives any payment of principal of any Loan other
than on the last day of an Interest Period relating to such Loan, as a result of
any payment made by the Borrower or acceleration of the maturity of the Note
pursuant to Section 9.02 or for any other reason, the Borrower shall, upon
demand by the Lender, pay to the Lender all amounts required to compensate the
Lender for any additional losses, costs or expenses which it may reasonably
incur as a result of such payment, including, without limitation, any loss
(including, without limitation, loss of anticipated profits), cost or expense
incurred by reason of the
66
liquidation or reemployment of deposits or other funds acquired by the Lender to
fund or maintain such Loan.
(d) The Borrower shall indemnify the Lender for, and hold the Lender
harmless from and against, any and all claims for brokerage commissions, fees
and other compensation made against the Lender for any broker, finder or
consultant with respect to any agreement, arrangement or understanding made by
or on behalf of any Loan Party or any of its Subsidiaries in connection with the
transactions contemplated by this Agreement.
(e) The Borrower agrees that any indemnification or other protection
provided to any Indemnitee pursuant to this Agreement (including, without
limitation, pursuant to this Section 10.04) or any other Loan Document shall (i)
survive payment of the Obligations and (ii) inure to the benefit of any Person
who was at any time an Indemnitee under this Agreement or any other Loan
Document.
(f) The provisions of this Section 10.04 shall survive any termination
of this Agreement.
SECTION 10.05. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default the Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Lender
to or for the credit or the account of the Borrower against any and all of the
Obligations now or hereafter existing whether or not the Lender shall have made
any demand under this Agreement or any Note or any other Loan Document and
although such Obligations may be unmatured. The Lender agrees promptly to notify
the Borrower after any such set-off and application made by the Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Lender under this
Section are in addition to the other rights and remedies (including, without
limitation, other rights of set-off) which the Lender may have.
SECTION 10.06. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Lender and thereafter
shall be binding upon and inure to the benefit of the Borrower and the Lender
and their respective successors and assigns, except that the Borrower shall not
have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lender.
SECTION 10.07. Assignments and Participations. (a) The Lender may sell,
transfer, negotiate or assign to one or more other financial institutions all or
a
67
portion of its Commitment, the Loans owing to it and an interest in the Note
held by it and a commensurate portion of its rights and obligations hereunder
and under the other Loan Documents subject to the proviso to subparagraph (c)
below.
(b) The Lender may sell participations to one or more banks or other
Persons in or to all or a portion of its rights and obligations under the Loan
Documents (including, without limitation, all or a portion of the Commitment,
the Loans owing to it and the Note held by it). In the event of the sale of any
participation by the Lender, (i) the Lender's obligations under the Loan
Documents (including, without limitation, the Commitment) shall remain
unchanged, (ii) the Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the Lender shall remain
the holder of such Note and Obligations for all purposes of this Agreement, and
(iv) the Borrower shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under this Agreement.
(c) Each participant shall be entitled to the benefits of Sections
2.10, 2.12 and 2.14 as if it were a Lender; provided, however, that anything
herein to the contrary notwithstanding, the Borrower shall not, at any time, be
obligated to pay to any participant of any interest of the Lender, under Section
2.10, 2.12 or 2.14, any sum in excess of the sum which the Borrower would have
been obligated to pay Lender in respect of such interest had such assignment not
been effected or had such participation not been sold.
(d) The Borrower shall cooperate with Lender, at no cost or expense to
the Borrower, and any other party to whom the Lender may assign or sell
participations (or negotiate for such assignment or sale) in all or a portion of
the Commitment, the Loans owing to it and an interest in the Note. Such
cooperation of the part of the Borrower shall include but shall not be limited
to the execution and delivery of (i) amendments, modifications and/or
supplements to one or more Loan Documents, in form and substance as may be
required by Lender, and (ii) the execution and delivery of one or more
additional promissory notes, at no cost or expense to the Borrower; provided
however, that such promissory notes, amendments, modifications and/or
supplements do not materially increase the obligations of the Borrower or
materially diminish the rights of the Borrower under the Loan Documents.
SECTION 10.08. Governing Law; Severability. This Agreement and the Note
and the rights and obligations of the parties hereto and thereto shall be
governed by, and construed and interpreted in accordance with, the law of the
State of New York. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this agreement shall be prohibited by or invalid under
applicable
68
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
SECTION 10.09. Submission of Jurisdiction; Service of Process. (a) Any
legal action or proceeding with respect to this Agreement or the Note or any
document related thereto may be brought in the courts of the State of New York
or of the United States of America for the Southern District of New York, and,
by execution and delivery of this Agreement, the Borrower hereby accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably
waive any objection, including, without limitation, any objection to the laying
of venue or based on the grounds of forum non conveniens, which any of them may
now or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(b) The Borrower irrevocably consents to the service of process of any
of the aforesaid courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the borrower
at its address provided herein.
(c) Nothing contained in this Section 10.09 shall affect the right of
the Lender or any holder of the Note to serve process in any other manner
permitted by law or commence legal proceedings or otherwise proceed against the
Borrower in any other jurisdiction.
SECTION 10.10. Section Titles. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
SECTION 10.11. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 10.12. Entire Agreement. This Agreement, together with all of
the other Loan Documents and all certificates and documents delivered hereunder
or thereunder embody the entire agreement of the parties and supersedes all
prior agreements and understandings relating to the subject matter hereof.
SECTION 10.13. Confidentiality. The Lender agrees to keep information
obtained by it pursuant hereto and the other Loan Documents confidential in
accordance with the Lender's customary practices and agrees that it will only
use such information in connection with the transactions contemplated by this
Agreement and not disclose any of such information other than (i) to the
Lender's
69
employees, representatives and agents who are or are expected to be involved in
the evaluation of such information in connection with the transactions
contemplated by this Agreement and who are advised of the confidential nature of
such information, (ii) to the extent such information presently is or hereafter
becomes available to the Lender, as the case may be, on a non-confidential basis
from a source other than the Borrower, (iii) to the extent disclosure is
required by law, regulation or judicial order or requested or required by bank
regulators or auditors, or (iv) to assignees or participants or potential
assignees or participants who agree to be bound by the provisions of this
sentence.
SECTION 10.14. Waiver of Jury Trial. Each of the parties hereto waives
any right it may have to trial by jury in respect of any litigation based on, or
arising out of, under or in connection with this Agreement or any other Loan
Document, or any course of conduct, course of dealing, verbal or written
statement or action of any party hereto.
SECTION 10.15. NON-LIABILITY OF TRUSTEES. THE DECLARATION OF TRUST OF
THE BORROWER, DATED MAY 12, 1995, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS
THERETO ("THE DECLARATION"), IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF
ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME
"HOSPITALITY PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE BORROWER SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, THE BORROWER. ALL PERSONS DEALING WITH THE BORROWER, IN ANY WAY, SHALL
LOOK ONLY TO THE ASSETS OF THE BORROWER FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.
SECTION 10.16. Refinancing and/or Securitization. The Borrower shall
engage the Lender as book running lead manager on any equity or debt offering so
long as the Indebtedness evidenced by this Agreement or the Other Supplemental
Facility is outstanding. In the event the Loans become the subject of a
securitization underwritten by the Lender or any of its Affiliates, the Borrower
and the Lender shall amend this Agreement to provide that the Obligations are
non-recourse to the Borrower or its Subsidiaries. Furthermore, the Borrower
shall, provided it receives at least fifteen (15) Business Days written notice
of the Lender's request therefor, deliver a 10(b)(5) opinion and a
nonconsolidation opinion, each at the Borrower's sole cost and expense, in form
and substance and delivered by counsel acceptable to the Lender and the Rating
Agency, as may be required by the Lender and/or the Rating Agency in
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connection with such securitization. The Borrower shall undertake all actions
(including structural reorganization including, without limitation, transferring
assets to a special/single purpose and bankruptcy remote entity, if appropriate)
necessary to enable its counsel to issue the opinion. The Borrower's failure to
deliver the opinions required hereby or otherwise comply with the provisions of
this Section 10.16 and the following Sections 10.17 through 10.18, shall
constitute an "Event of Default" hereunder.
SECTION 10.17. Cooperation with Rating Agencies. The Borrower covenants
and agrees that in the event the Lender decides to include the Loans as an asset
of a securitization, the Borrower shall upon the Lender's written request (a)
proceed to establish a cash management system and escrow accounts as required by
the Rating Agencies or the Lender, whereby all revenues shall be deposited
directly into an account in the name of the Lender to pay real estate taxes,
insurance premiums, monthly debt service and capital improvement reserves, with
the excess being available to the Borrower for its use, (b) gather any
environmental or engineering information required by the Rating Agency in
connection with such a securitization, (c) at the Lender's request, meet with
representatives of the Rating Agency to discuss the business and operations of
the Mortgaged Properties, and (d) cooperate with the requests of the Lender or
the Rating Agency in connection with all of the foregoing.
SECTION 10.18. Securitization Financials. The Borrower covenants and
agrees that, upon the Lender's written request therefor in connection with a
securitization, in which the Loans are to be included as an asset, the Borrower
shall promptly deliver audited financial statements and related documentation
prepared by an independent certified public accountant that satisfy securities
laws and requirements for use in a public registration statement (which may
include up to three (3) years of historical audited financial statements).
Notwithstanding anything to the contrary in Sections 10.16, 10.17 and this
Section 10.18, the Lender agrees that the Loans shall not be included as an
asset of a securitization which is effective on or before the Final Maturity
Date.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
HOSPITALITY PROPERTIES TRUST
By:/s/ Xxxxxx X'Xxxxx
Name: Xxxxxx X'Xxxxx
Title: Treasurer and
Chief Financial Officer
DLJ MORTGAGE CAPITAL, INC.
By:/s/ N. Xxxxx XxXxxxx
Name: N. Dank XxXxxxx
Title: Senior Vice President
