EXHIBIT 10.2
LOAN AGREEMENT
Dated as of November 25, 1996
By and Between
HPTRI CORPORATION, a Delaware corporation,
and
HPTWN CORPORATION, a Delaware corporation,
as Borrower
AND
COLUMN FINANCIAL, INC., a Delaware corporation,
as Lender
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of November 25, 1996, by and
among COLUMN FINANCIAL, INC., having an address at 0000 Xxxxxxxxx Xxxx, X.X.,
Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000-0000, together with its registered successors
and assigns, including, without limitation, the Loan Purchaser (as hereinafter
defined), as lender ("Lender"), and HPTRI CORPORATION, a Delaware corporation
("HPTRI"), and HPTWN CORPORATION, a Delaware corporation ("HPTWN"; HPTRI and
HPTWN being sometimes collectively referred to herein as "Borrower"), each
having an address at c/o Hospitality Properties Trust, 000 Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000.
All capitalized terms used herein shall have the respective
meanings set forth in Section 1 hereof.
W I T N E S S E T H :
WHEREAS, Borrower desires to obtain the Loan from Lender;
WHEREAS, Lender is willing to make the Loan to Borrower,
subject to and in accordance with the terms of this Agreement and the other Loan
Documents;
WHEREAS, Lender's interest in the Loan may be purchased by the
Loan Purchaser on or after the Closing Date; and
WHEREAS, Borrower consents to the transfer described in the
preceding Recital.
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth in this Agreement, and other good and
valuable consideration, the parties hereto hereby covenant, agree, represent and
warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions.
For all purposes of this Agreement, except as otherwise
expressly required or unless the context clearly indicates a contrary intent:
"Accounting Period" shall mean, with respect to the Properties
which are subject to HPTWN Lease Agreements, the calendar month, and, with
respect to the Properties which are subject to HPTRI Lease Agreements, the four
(4) (or in some cases five (5)) week period coinciding with HPTRI's Manager's
accounting period, as provided for in the HPTRI Management Agreements.
"Accounting Year" shall mean, with respect to the Properties
which are subject to HPTWN Lease Agreements, the most recent twelve (12)
Accounting Periods, and, with respect to the Properties which are subject to
HPTRI Lease Agreements, the most recent thirteen (13) Accounting Periods.
"Affected Property" shall have the meaning specified in
Section 2.2.2 hereof.
"Affiliate" shall mean, as to any Person, any other Person
that, directly or indirectly, is in control of, is controlled by or is under
common control with such Person or is a director or officer of such Person or of
an Affiliate of such Person.
"Agreement" shall mean this Loan Agreement, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Appraisal" shall mean a fair market value appraisal,
addressed to Lender or its designee and performed by an independent licensed MAI
appraiser having at least ten (10) years experience as an appraiser.
"Assignments of Leases" shall mean those certain first
priority Assignments of Leases and Rents, dated as of the date hereof, from
either HPTRI or HPTWN, as the case may be, as assignor, to Lender, as assignee,
with respect to the Properties, assigning to Lender all of HPTRI's or HPTWN's,
as the case may be, interest in and to, inter alia, the Lease Agreements and the
Rents of the respective Properties as security for the Loan, as such Assignments
of Leases may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
"Borrower" shall have the meaning specified in the first
Paragraph hereof. Any reference to "Borrower", "any Borrower" or "the applicable
Borrower", or any similar reference shall be deemed to refer to Borrower.
"Business Day" shall mean each day of the week (other than a
Saturday and Sunday) which is not a day on which banking or savings and loan
associations in New York, New York, Boston Massachusetts or Atlanta, Georgia,
are authorized or obligated by law to be closed.
"Certificate" shall mean any certificate evidencing interests
in the trust to be created pursuant to the Trust and Servicing Agreement.
"Closing Date" shall mean the date of the closing of the Loan.
"Collateral Security Documents" shall mean any right, document
or instrument given as security for the Note, including, without limitation, the
Mortgages and the Assignments of Leases, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"Cure Payment" shall have the meaning specified in Section
2.2.2 hereof.
"Debt Service" shall mean, for the applicable period, all
payments of principal or interest made by Borrower to Lender in accordance with
the terms of the Note with respect to such period.
"Debt Service Coverage Ratio" shall mean, with respect to any
DSCR Determination Date, the ratio of (a) the aggregate Net Operating Income for
all of the Properties then remaining encumbered by a Mortgage (except the
Property for which Borrower has requested a Release), determined on an accrual
basis for the applicable Accounting Year immediately preceding such DSCR
Determination Date to (b) the product of (1) 7.6925%, multiplied by (2) the
amount of principal remaining unpaid under the Note as of such DSCR
Determination Date.
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"Depositor" shall mean Hospitality Properties Mortgage
Acceptance Corp., as depositor under the Trust and Servicing Agreement.
"DSCR Determination Date" shall mean the date which is forty
five (45) days prior to the date of the occurrence of the non-monetary Event of
Default pursuant to which Borrower is attempting to effect a Release of an
Affected Property pursuant to Section 2.2.2 below.
"Engineering Reports" shall mean, as to all Properties, those
certain reports on the structural, electrical, mechanical and engineering
components of each of the Properties delivered to, or obtained by, Lender in
connection with the making of the Loan.
"Environmental Indemnity" shall mean the certain Hazardous
Materials Indemnity Agreement of even date herewith, by Borrower in favor of
Lender with respect to environmental conditions on the Properties, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.
"Environmental Reports" shall mean, as to all Properties,
those certain Phase I environmental site assessments of the Properties
previously delivered to, or obtained by, Lender, in connection with the making
of the Loan.
"Event of Default" shall have the meaning specified in Section
6.1 hereof.
"Excess" shall have the meaning specified in Section 2.2.3
hereof.
"Expenses" shall mean, with respect to each Property, all
ordinary and customary expenses payable by the Tenant or Manager of such
Property in the ordinary course of operating such Property as a hotel, as
determined on an accrual basis in accordance with GAAP consistently applied,
including, without limitation, payments made into the applicable FF&E Reserve,
but excluding, however, Management Fees (which are subordinated to payments of
the Minimum Rent under, and as defined in, the Lease Agreements), distributions
to stockholders of the Tenant or Manager of such Property, Rent paid by each
Tenant under their respective Lease Agreements, Debt Service, any corporate
general or administrative expenses of HPT, HPTRI, HPTWN, Tenants' or Managers'
or their affiliates which are allocated or charged to the applicable Property,
HPTRI's, HPTWN's, Tenants or Manager's income taxes, capitalized expenditures
for capital improvements and non-cash items such as depreciation.
"FF&E Reserves" shall mean, as to each HPTRI Lease Agreement
and each HPTRI Management Agreement, the reserve required to be established and
funded from time to time for furniture, fixture and equipment replacements as
provided for in such HPTRI Lease Agreement and HPTRI Management Agreement and,
as to each HPTWN Lease Agreement and each HPTWN Management Agreement, the
reserve required to be established and funded from time to time for furniture,
fixture and equipment replacements as provided for in such HPTWN Lease Agreement
and HPTWN Management Agreement.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as of the date of the applicable financial report.
"Governmental Authority" shall mean any court, board, agency,
commission, office or authority of any nature whatsoever for any governmental
xxxx (xxxxxxx, xxxxx, xxxxxx, xxxxxxxx, xxxxxxxxx, xxxx or otherwise) whether
now or hereafter in existence.
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"Ground Lease" shall mean those certain ground leases more
specifically identified on Schedule A annexed hereto.
"HPT" shall mean Hospitality Properties Trust, a real estate
investment trust organized under the laws of the State of Maryland.
"HPTRI" shall have the meaning specified in the first
Paragraph hereof.
"HPTRI Management Agreement SNDA" shall have the meaning
specified in Section 4.1 hereof.
"HPTWN" shall have the meaning specified in the first
Paragraph hereof.
"Improvements" shall have the meaning specified in the
Mortgages with respect to the Properties.
"Indebtedness" shall mean the indebtedness in the original
principal amount set forth in, and evidenced by, the Note, together with all
other obligations and liabilities of Borrower due or to become due to Lender
pursuant to the Note, this Agreement or any other Loan Document, including,
without limitation, all interest thereon.
"Independent Director" shall have the meaning specified in
Section 3.1(iii)(q) hereof.
"Lease Agreements" shall mean, with respect to each Property
owned or ground leased by HPTRI, the Lease Agreement dated March 22, 1996 or
April 4, 1996, as the case may be, by and between HPTRI, as landlord, and HMH
HPT Residence Inn, Inc., as tenant, or any Substitute Lease Agreement entered
into pursuant to, and as that term is defined in, Section 5.2 hereof (as same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time, the "HPTRI Lease Agreements"), and as to each Property owned or ground
leased by HPTWN, the Lease Agreement dated May 2, 1996 or May 3, 1996, as the
case may be, by and between HPTWN, as landlord, and GHALP Corporation, as
successor tenant to Garden Hotel Associates Two LP, or any Substitute Lease
Agreement entered into pursuant to, and as that term is defined in, Section 5.2
hereof (as same may be amended, restated, replaced, supplemented or otherwise
modified from time to time, the "HPTWN Lease Agreements"). With respect to each
Lease Agreement, Lender, the applicable Tenant thereunder and HPTRI or HPTWN, as
the case may be, have entered into a Subordination, Non-Disturbance and
Attornment Agreement of even date herewith (each, a "Lease Agreement SNDA")
whereby Lender has agreed, subject to the terms of each such Lease Agreement
SNDA, to not disturb the rights of any Tenant under its Lease Agreement
notwithstanding the occurrence of a default under the Mortgage encumbering the
Property which is the subject of its Lease Agreement.
"Lease Assignment" shall have the meaning specified in Section
5.1 hereof.
"Legal Requirements" shall mean all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities to
which any Property or any part thereof or the construction, use, alteration or
operation thereof, or any part thereof, is subject, including, without
limitation, all zoning, land use, building, and environmental statutes, laws,
codes, resolutions and ordinances, whether now or hereafter enacted and in
force, and all permits, licenses, variances and authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments, either of record or known to Borrower, at any time
in
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force affecting any Property or any part thereof, including, without limitation,
any which may (i) require repairs, modifications or alterations in or to any
Property or any part thereof or (ii) in any way limit the use and enjoyment
thereof.
"Lender" shall have the meaning specified in the first
Paragraph hereof.
"Lien" shall mean any mortgage, deed of trust, deed to secure
debt or other such security agreement affecting any Property or any portion
thereof.
"Loan" shall mean the $125,000,000.00 loan, evidenced by the
Note, and secured by the Mortgages and the other Collateral Security Documents,
made by Lender to Borrower pursuant hereto and to the Note.
"Loan Allocation Amount" shall mean, with respect to each
Property, that portion of the Principal Amount allocated by Lender to such
Property, as set forth on Schedule B annexed hereto.
"Loan Documents" shall mean, collectively, this Agreement, the
Note, the Mortgages, the Assignments of Leases, the Environmental Indemnity and
the other Collateral Security Documents and any other document executed or
delivered by or on behalf of Borrower in connection with the Loan.
"Loan Purchaser" shall mean any purchaser of the Loan from the
Lender, such purchaser's designee, the respective successors and/or assigns of
such purchaser or designee and any subsequent holder of the Note.
"Lockbox Agreement" shall mean that certain Lockbox Pledge and
Security Agreement dated of even date herewith and entered into by and between
Borrower and Lender.
"Management Agreements" shall mean, as to all Properties owned
or ground leased by HPTRI, those certain Management Agreements dated September
25, 1993, as amended, by and between HPTRI (as successor in interest to HMH
Properties, Inc.) and Residence Inn by Marriott, Inc., or any Substitute
Management Agreement entered into pursuant to, and as that term is defined in,
Section 5.4 hereof (as same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, the "HPTRI Management Agreements"), and,
as to all Properties owned or ground leased by HPTWN, those certain Amended and
Restated Management Agreements dated May 3, 1996 by and between GHALP
Corporation and Wyndham Management Corporation, or any Substitute Management
Agreement entered into pursuant to, and as that term is defined in, Section 5.4
hereof (as same may be amended, restated, replaced, supplemented or otherwise
modified from time to time, the "HPTWN Management Agreements").
"Management Fees" shall mean the fees paid to the Managers
pursuant to the terms of their respective Management Agreements.
"Manager" shall mean, as applicable, Residence Inn by
Marriott, Inc. or Wyndham Management Corporation, or any Qualified Manager under
a Substitute Management Agreement pursuant to, and as those terms are defined
in, Section 5.4 hereof.
"Material Adverse Effect" shall have the meaning specified in
Section 3.1(i)(cc) hereof.
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"Maturity Date" shall mean December 1, 2001.
"Mortgages" shall mean those certain mortgages, deeds of trust
or deeds to secure debt dated the date hereof, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time, which
Mortgages have been executed by either HPTRI or HPTWN, as the case may be, in
favor of, or for the benefit of, Lender, each Mortgage encumbering the fee or
ground lessee's leasehold estate in the respective Property to which it applies,
as more specifically set forth therein.
"Net Operating Income" shall mean, with respect to each
Property and any period, the (a) Total Hotel Sales for such period less (b)(1)
the Expenses for the same period and (2) four percent (4%) of Total Hotel Sales
for such period (such four percent (4%) of Total Hotel Sales being included in
this calculation as representative of the proforma management fee utilized in
the underwriting the Loan).
"Note" shall mean that certain Promissory Note of even date
herewith, made by Borrower in favor of Lender or its registered assigns, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"Officer's Certificate" shall mean a certificate delivered to
Lender by Borrower which is signed by an officer who serves as Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer, Treasurer,
Controller, President or Vice President of HPTRI or HPTWN, as applicable.
"Permits" shall have the meaning specified in Section
3.1(i)(s) hereof.
"Permitted Exceptions" shall have the meaning specified in
Section 3.1(i)(a) hereof.
"Person" shall mean any individual, corporation, partnership,
joint venture, estate, trust, unincorporated association, any federal, state,
county or municipal government or any bureau, department or agency thereof and
any fiduciary acting in such capacity on behalf of any of the foregoing.
"Principal Amount" shall mean the outstanding principal
balance of the Loan.
"Private Placement Memorandum" shall mean that certain Private
Placement Memorandum dated November ___, 1996 prepared and issued in connection
with the issuance of those certain $125,000,000.00 Hospitality Properties
Mortgage Acceptance Corp. Commercial Mortgage Pass-Through Certificates, Series
1996-C1.
"Proceeds" shall have the meaning specified in Section 2.2.3
hereof.
"Property" or "Properties" shall mean the parcel or parcels,
as the case may be, of real property, and the Improvements thereon owned or
ground leased by HPTRI or HPTWN, as the case may be, and encumbered by the
Mortgages pertaining to same, together with all rights and property of HPTRI or
HPTWN, as the case may be, pertaining to such real property and Improvements, as
more particularly described in the granting clauses of the Mortgages and
referred to therein as the "Mortgaged Property" or the "Trust Property", as the
case may be.
"Property Agreements" shall have the meaning specified in
Section 3.1(i)(x) hereof.
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"Qualified Manager" shall have the meaning specified in
Section 5.4 hereof.
"Rating Agency" shall mean Standard & Poor's Ratings Services
and Fitch Investors Service, L.P.
"Release" shall have the meaning specified in Section 2.2.1
hereof.
"Release Payment" shall have the meaning specified in Section
2.2.1 hereof.
"Rents" shall mean, with respect to each Property, all rents,
income, issues, revenues and profits arising from the Lease Agreements and
renewals thereof.
"Servicer" shall mean the entity described as such in the
Trust and Servicing Agreement or its successor in interest, or if any successor
servicer is appointed pursuant to the Trust and Servicing Agreement, such
successor servicer.
"State" shall mean, with respect to a given Property, the
State or Commonwealth in which such Property or any part thereof is located.
"Substitute Lease Agreement" shall have the meaning specified
in Section 5.2 hereof.
"Substitute Management Agreement" shall have the meaning
specified in Section 5.4 hereof.
"Surveys" shall mean the ALTA surveys of the Properties
certified and delivered to Lender in connection with the Loan.
"Tenant" shall mean, as applicable, HMH HPT Residence Inn,
Inc., or GHALP Corporation, and their permitted successors and assigns, or, in
the event that a Substitute Lease Agreement is entered into by either Borrower
pursuant to Section 5.2 hereof, the tenant under such Substitute Lease Agreement
and such tenant's permitted successors and assigns.
"Title Policies" shall mean the title insurance policies
issued, or to be issued, to Lender by Chicago Title Insurance Company, insuring
the liens of the Mortgages.
"Total Hotel Sales" shall mean, with respect to each Property,
any and all sums derived from the operation of the Property as a hotel pursuant
to the applicable Lease Agreement, determined on an accrual basis after
deducting all allowances for rebates and adjustments, whether cash or credit,
derived directly or indirectly from any source including, without limitation,
(i) the amounts received as payment for the use and occupancy of all meeting
rooms, banquet function rooms, and public areas, (ii) all revenues derived from
the sale of food and other edibles in restaurants, lounges, meeting rooms,
banquet rooms, guest rooms and any other locations at the Property, (iii) all
revenues derived from the sale of liquor, beverages, and other potables in
restaurants, lounges, meeting rooms, banquet rooms, guest rooms and any other
locations at the Property, (iv) all revenues derived from the use of telephones
in guest rooms or in public areas and (v) all revenues derived from leases
(other than the Lease Agreements), subleases, concessions, vending, valet
services, banquet extras, movies or income of a similar or related nature, but
excluding any proceeds received as a result of a casualty or condemnation loss.
"Transferee" shall have the meaning specified in Section 2.3
hereof.
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"Trust and Servicing Agreement" shall mean that certain Trust
and Servicing Agreement dated as of November 25, 1996, pursuant to which the
Loan is being assigned to a trustee in trust and one or more classes of
Certificates are being issued representing beneficial ownership interests in
such trust.
Section 1.2 Principles of Construction.
All references to sections, schedules and exhibits are to
sections, schedules and exhibits in or to this Agreement unless otherwise
specified. Unless otherwise specified, the words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP, as modified herein.
II. GENERAL TERMS
Section 2.1 Loan Commitment; Disbursement to Borrower.
2.1.1 The Loan. Subject to and upon the terms and conditions
set forth herein, Lender hereby agrees to make the Loan to Borrower on the
Closing Date, in the original principal amount set forth in the Note, which Loan
shall mature on the Maturity Date. Borrower hereby agrees to accept the Loan on
the Closing Date, subject to and upon the terms and conditions set forth herein.
2.1.2 Disbursement to Borrower. Borrower may request and
receive only one borrowing in respect of the Loan and any amount borrowed and
repaid in respect of the Loan may not be reborrowed. Borrower shall, on the
Closing Date, receive the Loan, subject to the direction given by Borrower as to
the application of Loan proceeds.
2.1.3 The Note. The Loan shall be evidenced by the Note, in
the original principal amount of the Loan. The Note shall bear interest as
provided in the Note, and shall be subject to the payment of interest and the
repayment and prepayment of the Principal Amount as provided for in the Note.
The Note shall be entitled to the benefits of this Agreement and shall be
secured by the Mortgages, the Assignments of Leases and the other Collateral
Security Documents.
Section 2.2 Releases.
2.2.1 Permitted Releases. Except as otherwise permitted by
Section 2.2.2 and Section 2.2.3 hereof and, notwithstanding anything to the
contrary set forth in the Mortgages, Borrower may obtain the release of any
Property from the lien of the Mortgage encumbering such Property (a "Release")
upon the following terms and conditions:
(a) Borrower shall notify Lender in writing at least
fifteen (15) days prior to the date on which Borrower
would like to have the Release take place;
(b) Lender shall have received from Borrower a payment in
reduction of the Principal Amount (a "Release
Payment") equal to at least one hundred and twenty
five percent (125%) of the Loan Allocation Amount for
the applicable Property;
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(c) there shall exist, as of the applicable Release
date, no Event of Default under, and as that term
is defined in, the Mortgages; and
(d) Lender shall have received in writing evidence from
the Rating Agency to the effect that such Release
will not result in a downgrade, withdrawal or
qualification of the rating then in effect for the
Certificates, together with such legal opinions as
may be requested by the Rating Agency.
2.2.2 Releases Following a Non-Monetary Event of Default.
Notwithstanding anything to the contrary set forth in the Mortgages, Borrower
may obtain, following the occurrence of a non-monetary Event of Default under,
and as that term is defined in, the Mortgages, which is attributable to an
identifiable Property (an "Affected Property") the Release of any such Affected
Property from the lien of the Mortgage encumbering such Affected Property upon
the following terms and conditions:
(a) Borrower shall notify Lender in writing at least
fifteen (15) days prior to the date on which borrower
would like to have the Release take place, such
notification to include an Officer's Certificate from
the appropriate officer of HPTRI or HPTWN, as the
case may be, stating that, as determined on the DSCR
Determination Date with respect to the applicable
Release, the Debt Service Coverage Ratio, after
taking into consideration the proposed Release and
Release Payment, will remain at a level at least
equal to the Debt Service Coverage Ratio as of such
DSCR Determination Date without taking into
consideration the proposed Release and Release
Payment, such Officer's Certificate to have attached
thereto the unaudited operating statements for all
Properties with respect to each Tenant's Accounting
Year immediately preceding the applicable DSCR
Determination Date and the unaudited operating
statement for the Affected Property to be Released
with respect to the applicable Tenant's Accounting
Year immediately preceding the applicable DSCR
Determination Date;
(b) Lender shall have received from Borrower a Release
Payment equal to at least one hundred and twenty five
percent (125%) of the Loan Allocation Amount for the
applicable Affected Property;
(c) the Release of the Affected Property will effect a
cure of the applicable non- monetary Event of
Default;
(d) the Borrower shall be entitled to have no more than
two (2) Affected Properties Released pursuant to the
provisions of this Section 2.2.2; and
(e) Lender shall have been reimbursed for all reasonable
costs and expenses (including without limitation
reasonable legal fees) incurred by it in effecting
said Release, said costs and expenses to be paid by
borrower to Lender regardless of whether the Release
takes place.
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In addition to the foregoing, in the event that, following the
Release of two (2) Affected Properties pursuant to the terms of this Section
2.2.2, there shall occur a subsequent non-monetary Event of Default attributable
to an Affected Property, the Borrower may effect a cure of such non-monetary
Event of Default by delivering to Lender a payment in reduction of the Principal
Amount (a "Cure Payment") equal to at least one hundred and twenty five percent
(125%) of the Loan Allocation Amount for such Affected Property. The payment to
Lender of the Cure Payment shall in no way obligate Lender to Release the
applicable Affected Property from the lien of its Mortgage, such Affected
Property shall remain as collateral for the Loan and Borrower shall continue to
comply with, or cause the continued compliance with, as to such Affected
Property, the terms and conditions of the Lockbox Agreement, however, from and
after receipt of such payment, Lender shall forbear from exercising any rights
with respect to the applicable non-monetary default or Event of Default and any
other non-monetary default or Event of Default with respect to such Affected
Property, the Lender agreeing that it shall not accelerate the Loan or otherwise
pursue its remedies with respect thereto on account of such non-monetary default
or Event of Default with respect to such Affected Property; provided, however,
that the foregoing shall in no event limit Lender's rights with respect to any
default or Event of Default which is not attributable to such Affected Property.
Borrower agrees that, to the extent and so long as either
HPTRI or HPTWN, as the case may be, retains title to all or any portion of the
fee or ground lessee estate of a Property or Affected Property which is Released
as provided for in Section 2.2.1 or Section 2.2.2 above and such Property or
Affected Property remains subject to a Lease Agreement which is cross defaulted
(as to Tenant defaults) with any other Lease Agreement on any Property which is
encumbered by a Mortgage, HPTRI or HPTWN, as the case may be, shall not permit
such Property or Affected Property to be encumbered by any Lien. Borrower shall,
on each anniversary of the date hereof, certify in writing to Lender that
Borrower has at all times complied with the requirements of the immediately
preceding sentence.
2.2.3 Release of Property Following Casualty or Condemnation
Loss. With respect to any HPTRI Property as to which the applicable Lease
Agreement or Management Agreement is not in full force and effect or any HPTWN
Property as to which the applicable Lease Agreement is not in full force and
effect and (i) which has had fifty percent (50%) or more of the Improvements
located thereon taken in condemnation or destroyed by a casualty loss, and
Borrower is unable to, or has elected not to, restore or repair such applicable
Property, or (ii) which has had less than fifty percent (50%) of the
Improvements located thereon taken in condemnation or destroyed in a casualty
loss, and Borrower, after exercising good faith, diligent efforts has reasonably
determined that it will be unable to comply with the requirements set forth in
Section 3(e)(i) of the applicable Mortgage, Borrower shall, as provided for in
Section 3(e)(ii) of the Mortgages, deliver to Lender all casualty loss insurance
proceeds or condemnation proceeds paid to or received by Borrower with respect
to such casualty loss or condemnation (the "Proceeds"). In connection therewith,
Borrower may obtain a Release of such Property from the lien of the Mortgage
encumbering such Property provided that such Proceeds paid to Lender are at
least equal to the Loan Allocation Amount for the applicable Property. To the
extent that the Proceeds delivered to Lender exceed the Loan Allocation Amount,
such excess portion (the "Excess") shall be applied by Lender in reduction of
the Indebtedness and the Loan Allocation Amounts of each of the remaining
Properties shall be decreased by an amount equal to, as to each remaining
Property, the product of (1) the Excess, multiplied by (2) a fraction, the
numerator of which is the Loan Allocation Amount for such Property and the
denominator of which is the aggregate of all Loan Allocation Amounts of all
Properties (except the Property being released pursuant hereto. In the event
that the Proceeds paid to Lender are less than the Loan Allocation Amount for
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the applicable Property, Borrower may obtain a Release of such Property from the
lien of the Mortgage encumbering such Property if Lender shall have received
from Borrower a payment (in addition to the Proceeds) equal to the difference
between (i) the Loan Allocation Amount for the applicable Property less (ii) the
Proceeds previously delivered to Lender.
Section 2.3 Assumption of the Loan.
In connection with the sale by Borrower of all of its right,
title and interest in and to all of the Properties to a unrelated third-party
purchaser (the "Transferee"), Borrower shall have the right to request that
Lender approve (on a one time only basis) an assignment to, and assumption by,
Transferee of Borrower's obligations under the Note, the Mortgages and the Loan
Documents. Lender's consent to such transfer and assignment and assumption will
not be unreasonably withheld after consideration of all relevant factors,
provided that:
(a) no Event of Default or event which with the giving of
notice or the passage of time would constitute an
Event of Default shall have occurred and remain
uncured hereunder or under any of the Loan Documents;
(b) the Transferee shall be a reputable Person of good
character, creditworthy, with sufficient financial
worth considering the obligations assumed and
undertaken, as evidenced by financial statements and
other information reasonably requested by Lender;
(c) the Transferee shall have sufficient experience in
the ownership and management of properties similar to
the Properties, and Lender shall be provided with
reasonable evidence thereof;
(d) the Transferee must be in compliance with all
applicable Rating Agency requirements for
special-purpose bankruptcy remote entities;
(e) Lender shall have received in writing evidence from
the Rating Agency to the effect that such assignment
and assumption will not result in a downgrade,
withdrawal or qualification of the rating then in
effect for the Certificates, together with such legal
opinions as may be reasonably requested by the Rating
Agency;
(f) the transfer shall have been approved in writing by
the Servicer;
(g) the Transferee shall have executed and delivered to
Lender an assumption agreement in form and substance
reasonably acceptable to Lender evidencing such
Transferee's agreement to abide and be bound by the
terms of the Note, the Mortgages and the other Loan
Documents, together with such legal opinions and
title insurance endorsements as may be reasonably
requested by Lender;
(h) Lender shall have received evidence reasonably
satisfactory to Lender that all required approvals,
if any, to such sale or transfer shall have been
obtained, including, without limitation, any
approvals required under the Ground Lease; and
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(i) Lender shall have been reimbursed for all reasonable
costs and expenses (including without limitation
reasonable legal fees and Rating Agency fees)
incurred by it in considering, evaluating and, if
applicable, permitting said assignment and
assumption, said costs and expenses to be paid by
Borrower to Lender regardless of whether the
assignment and assumption takes place.
III. REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1 Borrower's Representations, Warranties and
Covenants.
(i) Each of HPTRI and HPTWN hereby represent and warrant, as
to itself and as to its Properties, that:
(a) except as to those Properties which are subject to Ground
Leases, as described on Exhibit B annexed hereto, Borrower has good and
marketable fee simple title to the Properties, subject only to those matters
expressly set forth in the Title Policies (the "Permitted Exceptions"), and has
full power and lawful authority to grant, bargain, sell, convey, assign,
transfer and mortgage its interest in the each of Properties in the manner and
form provided for in the applicable Mortgages. As to those Properties which are
subject to Ground Leases, Borrower has good title in and to the ground lessee's
leasehold estate created by such Ground Leases, subject only to the Permitted
Exceptions set forth in the Title Policies, and Borrower has full power and
lawful authority to grant, bargain, sell, convey, assign, transfer and mortgage
its interest in each of such Properties in the manner and form provided for in
the applicable Mortgages. Each Borrower will preserve its interest in and title
to each of the Properties and will forever warrant and defend the same to Lender
against any and all claims whatsoever and will forever warrant and defend the
validity and priority of the lien and security interest created herein against
the claims of all persons and parties whomsoever, subject to the Permitted
Exceptions. As to each Property, the Permitted Exceptions do not and will not
materially and adversely interfere with (i) the ability of Borrower to pay in
full the principal and interest on the Note in a timely manner, or (ii) the use
of the applicable Property for the use currently being made thereof, the
operation of the applicable Property as currently being operated or the value of
the applicable Property. The foregoing warranty of title is stated to survive
the foreclosure of the Mortgages and to inure to the benefit of and to be
enforceable by Lender in the event Lender acquires title to the applicable
Property pursuant to any foreclosure;
(b) all stock and/or shares or other interests in and to
Borrower are one hundred percent (100%) owned and held by HPT;
(c) the Private Placement Memorandum is true and correct in
all material respects as of the date thereof and the Private Placement
Memorandum does not omit to state any fact or circumstance necessary to make the
statements contained therein not misleading in any material respect as of the
date hereof or thereof;
(d) the execution, delivery and performance of this Agreement,
the Mortgages, the Note and all of the other Loan Documents have been duly
authorized by all necessary action to be, and are, binding and enforceable
against Borrower in accordance with the respective terms thereof (except as may
be limited by applicable bankruptcy, reorganization, insolvency, moratorium or
any other similar laws affecting generally the enforcement of creditor's rights
as from time to time are in effect) and do not contravene, result in a breach of
or constitute (with or without the giving of notice or the passage of time or
both) a default under the certificate of incorporation or other organizational
documents of Borrower or any contract or agreement of any nature to which
12
Borrower is a party or by which Borrower or any of its property may be bound and
do not violate or contravene any law, order, decree, rule or regulation to which
Borrower is subject;
(e) Borrower is not required to obtain any consent, approval
or authorization from or to file any declaration or statement with, any
Governmental Authority or agency in connection with or as a condition to the
execution, delivery or performance of this Agreement, the Mortgages, the Note or
the other Loan Documents which has not been so obtained or filed;
(f) Borrower has obtained or made all necessary material (i)
consents, approvals and authorizations and registrations and filings of or with
all Governmental Authorities and (ii) consents, approvals, waivers and
notifications of partners, stockholders, creditors, lessors and other
non-governmental persons and/or entities, in each case, which are required to be
obtained or made by Borrower in connection with the execution and delivery of,
and the performance by Borrower of its obligations under, the Loan Documents and
the nonexistence of which would have a Material Adverse Effect;
(g) Borrower is not an "investment company", or company
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended;
(h) no part of the proceeds of the indebtedness secured hereby
will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent with
such Regulations G, T, U or X or any other Regulations of such Board of
Governors, or for any purpose prohibited by legal requirements or by the terms
and conditions of the Loan Documents;
(i) Borrower has filed all federal, state and local tax
returns required to be filed and has paid or made adequate provision for the
payment of all federal, state and local taxes, charges and assessments payable
by Borrower. To the best of Borrower's knowledge, its tax returns properly
reflect the income and taxes of Borrower for the periods covered thereby,
subject only to reasonable adjustments required by the Internal Revenue Service
or other applicable tax authority upon audit;
(j) Borrower is not an "employee benefit plan", as defined in
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to Title I of ERISA and the assets of Borrower do
not constitute "plan assets" of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101;
(k) there are no pending actions, suits or proceedings,
arbitrations or governmental investigations against any Property, an adverse
outcome of which would have a Material Adverse Effect;
(l) the Borrower (i) has not entered into the transaction
evidenced hereby or by any Loan Document with the actual intent to hinder,
delay, or defraud any creditor, and (ii) received reasonably equivalent value in
exchange for its obligations under the Loan Documents. Giving effect to the
transactions contemplated by the Loan Documents, the fair saleable value of the
Borrower's assets exceeds and will, immediately following the execution and
delivery of the Loan Documents, exceed the Borrower's total liabilities,
including, without limitation, subordinated, unliquidated, disputed or
contingent liabilities. The fair saleable value of the Borrower's assets is and
will, immediately following the execution and delivery of the Loan Documents, be
13
greater than the Borrower's probable liabilities, including the maximum amount
of its contingent liabilities or its debts as such debts become absolute and
matured. The Borrower's assets do not and, immediately following the execution
and delivery of the Loan Documents will not, constitute unreasonably small
capital to carry out its business as conducted or as proposed to be conducted.
The Borrower does not intend to, and does not believe that it will, incur debts
and liabilities (including, without limitation, contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature (taking into
account the timing and amounts to be payable on or in respect of obligations of
the Borrower);
(m) the Properties and the current use thereof comply in all
material respects with all applicable restrictive covenants, zoning ordinances,
subdivision and building codes, flood disaster laws, applicable health and
environmental laws and regulations and all other ordinances, orders or
requirements issued by any state, federal or municipal authorities having or
claiming jurisdiction over the Properties, other than failures to comply with
the foregoing which would not have a Material Adverse Effect. None of the
Properties require any material rights over, or restrictions against, other
property in order to comply with any of the aforesaid governmental ordinances,
orders or requirements, except as disclosed in the Title Policies and the
Surveys;
(n) all utility services necessary and sufficient for the use,
occupancy, operation and disposition of each of the Properties for their
intended purposes are available to each of the Properties, including water,
storm sewer, sanitary sewer, gas, electric, cable and telephone facilities,
through public rights-of-way or perpetual private easements;
(o) except as disclosed in the Title Policies and the Surveys,
all streets, roads, highways, bridges and waterways necessary for access to and
full use, occupancy, operation and disposition of each of the Properties have
been completed, have been dedicated to and accepted by the appropriate municipal
authority and are open and available to each of the Properties without further
condition or cost to Borrower;
(p) to the best of Borrower's knowledge, all curb cuts,
driveways and traffic signals shown on the Surveys are existing and have been
fully approved by the appropriate governmental authority;
(q) Borrower has received no written notice of any judicial,
administrative, mediation or arbitration actions, suits or proceedings pending
or threatened against or affecting Borrower or the Properties which, if
adversely determined, would materially impair either any of the Properties or
Borrower's ability to perform the covenants or obligations required to be
performed under the Loan Documents;
(r) no part of any Property has been taken in condemnation,
eminent domain or like proceeding nor, to the best of Borrower's knowledge, is
any such proceeding pending, threatened or contemplated;
(s) Borrower possesses all material licenses and permits
(collectively, the "Permits") required for the conduct of its business
substantially as now conducted, all fees due and payable in connection with the
Permits have been paid and Borrower's business with respect to each Property
complies with the Permits in all material respects;
(t) except as indicated in the Surveys and Title Policies, to
the best of Borrower's knowledge, none of the Improvements lie outside the
boundaries and building restriction lines of the applicable Property. Except as
set forth in the Surveys and Title Policies, to the best of
14
Borrower's knowledge, no improvements on adjoining properties encroach upon any
of the Properties in any material respect;
(u) Borrower has not entered into any security agreements or
financing statements affecting any of the Properties other than the security
agreements and financing statements created in favor of Lender;
(v) except as otherwise specifically set forth in the
Environmental Reports, to the best of Borrower's knowledge, there are no
actions, suits, proceedings or orders of record or of which Borrower has notice,
and, to the best of Borrower's knowledge, there are no inquiries or
investigations, pending or threatened, in any such case against, involving or
affecting any of the Properties, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, alleging the violation
of any federal, state or local law, statute, ordinance, rule or regulation
relating to Environmental Laws (as defined in the Environmental Indemnity).
Furthermore, Borrower has not received any claim or notice that the ownership or
operation of any of the Properties violates any federal, state or local law,
statute, ordinance, rule, regulation, decree, order, and/or permit relating to
Environmental Laws, and, except as otherwise specifically set forth in the
Environmental Reports, no valid basis for any proceeding, action or claim of
such nature exists;
(w) except as indicated in the Surveys, to the best of
Borrower's knowledge, none of the Improvements are located in a flood hazard
area as defined by the Federal Insurance Administration;
(x) except as disclosed in the Title Policies, no license or
occupancy agreement (exclusive of the Lease Agreements and the Management
Agreements) to which Borrower is a party and no easement, right-of-way, permit
or declaration (collectively, the "Property Agreements") provides any party with
the right to obtain a lien or encumbrance upon any Property superior to the lien
of the applicable Mortgage;
(y) no condition exists whereby Borrower or any future owner
of any Property may be required to purchase any other parcel of land which is
subject to any Property Agreement;
(z) except as previously disclosed to Lender in writing, there
are no brokerage fees or commissions payable by Borrower with respect to the
Lease Agreements;
(aa) except as previously disclosed in writing by Borrower to
Lender, or as set forth in the Property Agreements, the Lease Agreements or the
Management Agreements there are no outstanding options or rights of first
refusal to purchase all or any portion of any of the Properties or Borrower's
ownership thereof;
(bb) Borrower has delivered, or has directed Chicago Title
Insurance Company to deliver, to Lender true, correct and complete copies of all
Property Agreements and any and all amendments or modifications thereto;
(cc) no default exists or, to the best of Borrower's
knowledge, no event has occurred with the passing of time or the giving of
notice or both would exist, under any Property Agreement which would, in the
aggregate, have a material adverse effect on (a) any of the Properties, (b) the
business, prospects, profits, operations or condition (financial or otherwise)
of Borrower, (c) the enforceability, validity, perfection or priority of the
lien of any Loan Document or (d) the ability of Borrower to perform any material
obligations under any Loan Document (a "Material Adverse Effect");
15
(dd) each of the Properties is taxed separately without regard
to any other real estate and, except as disclosed in the Title Policies and
Surveys, constitutes a legally subdivided lot under all applicable legal
requirements (or, if not subdivided, no subdivision or platting of any of the
Properties is required under applicable legal requirements), and for all
purposes may be mortgaged, conveyed or otherwise dealt with as an independent
parcel; and
(ee) to the best of Borrower's knowledge, the representations
and warranties contained in this Agreement, or the review and inquiry made on
behalf of the Borrower therefor, have all been made by persons having the
requisite expertise and knowledge to give such representations and warranties.
(ii) Each of HPTRI and HPTWN hereby covenant as of the date hereof and
until such time as the Loan is paid in full, that, as to itself and its
Properties, it shall enforce, in a timely and commercially reasonable matter,
all obligations of the Tenants under the Lease Agreements.
(iii) Each of HPTRI and HPTWN hereby represent, warrant and covenant as
of the date of hereof and until such time as the Loan is paid in full, that, as
to itself and its Properties, it:
(a) does not own and will not own any encumbered asset other
than (i) the Properties, and (ii) incidental personal property necessary for the
operation of, or associated with, the Properties;
(b) was organized solely for the purpose of owning, leasing
and operating the Properties and has not engaged in and will not engage in any
business other than the ownership, leasing and operation of the Properties;
(c) will not enter into any contract or agreement with any
shareholder or affiliate of Borrower except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arms-length basis with third parties other than an affiliate;
(d) has not incurred and will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than (i) the Indebtedness, (ii) payment obligations of Borrower under the Lease
Agreements, and (iii) trade payables or other current liabilities (excluding any
borrowings) incurred in the ordinary course of the business of owning, leasing
and operating the Properties and which are paid on customary trade terms and
otherwise within thirty (30) days of the date when due; and no other debt may be
secured (senior, subordinate or pari passu) by any of the Properties (other than
obligations arising from Permitted Exceptions which may result in a lien being
filed against a Property);
(e) has not made and will not make any loans or loan advances
to any third party (including any affiliate of Borrower), except for payments
required to be made by Borrower pursuant to the terms of any Lease Agreement;
(f) is and will remain solvent and pay its debts and
liabilities (including, without limitation, employment and overhead expenses)
from its assets as the same shall become due;
(g) has done or caused to be done and will do all things
necessary to observe corporate formalities and to preserve its existence, and
will not, nor will any shareholder thereof, amend, modify or otherwise change
its certificate of incorporation or by-laws in a manner which adversely affects
the Borrower's existence as a single purpose entity;
16
(h) will conduct and operate its business in its own name and
as presently conducted and operated;
(i) will maintain books and records and bank accounts separate
from those of its affiliates or any other Person;
(j) will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any affiliate thereof) and not as a division or part of any other Person and
shall maintain and use separate stationery, invoices and checks;
(k) will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;
(l) will not, nor shall any shareholder, partner or affiliate,
seek the dissolution or winding up, in whole or in part, of the Borrower;
(m) will not enter into any transaction of merger or
consolidation, or acquire by purchase or otherwise all or substantially all of
the business or assets of, or any stock or beneficial ownership of, any entity;
(n) will not commingle the funds and other assets of the
Borrower with those of any shareholder, any affiliate or any other person;
(o) has and will maintain its assets in such a manner that it
is not costly or difficult to segregate, ascertain or identify its individual
assets from those of any affiliate or any other person;
(p) except as to the Loan, does not and will not hold itself
out to be responsible for the debts or obligations of any other person;
(q) has caused, and at all times shall cause, there to be at
least one duly appointed member of the board of directors (an "Independent
Director") of Borrower who has not been at the time of such individual's
appointment, may not have been at any time during the preceding five years, and
will not be during its or their service as Independent Director (A) a direct or
indirect stockholder of, or an officer, director (other than with respect to
such Independent Director's service as director of Borrower or the Depositor) or
employee, creditor, supplier, manager or contractor of, either Borrower or of
any affiliate thereof, (B) a person or other entity controlling any such
stockholder, creditor, supplier, manager or contractor, or (C) a member of the
immediate family of any such stockholder, officer, employee, creditor, supplier,
manager or contractor. As used in this subsection (q), the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities or other beneficial interests, by contract or otherwise;
(r) has not caused and shall not cause, the board of directors
of Borrower to take any action which, under the terms of any certificate of
incorporation, by-laws or any voting trust agreement with respect to Borrower's
common stock, requires the unanimous affirmative vote of one hundred percent
(100%) of the members of the board of directors, unless at the time of such
action there shall be at least one member who is an Independent Director;
17
(s) will not, without the unanimous consent of all of its
directors, file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings with respect to itself or to any other entity in which it
has a direct or indirect legal or beneficial ownership interest;
(t) has maintained and will maintain its books, records,
resolutions and agreements as official records;
(u) has not and will not acquire obligations or securities of
its shareholders;
(v) has allocated and will allocate fairly and reasonably any
overhead for shared office space
(w) has not and will not pledge its assets for the benefit of
any other person or entity other than the holders of the Loan Documents;
(x) has not and will not identify its shareholders or any of
its affiliates as a division or part of such Borrower;
(y) has not failed and will not fail to correct any known
misunderstanding regarding its separate identity;
(z) shall comply with the provisions of its certificate of
incorporation; and
(aa) shall conduct itself and operate its business so that all
of the assumptions made in those certain legal opinions dated the date hereof by
Xxxxxxxx & Worcester LLP with respect to nonconsolidation issues shall be true
at all times.
Section 3.2 Survival of Representations, Warranties and
Covenants.
Borrower agrees that all of the representations, warranties
and covenants of Borrower set forth in Section 3.1 and elsewhere in this
Agreement and in the other Loan Documents shall survive for so long as any
amount remains owing to Lender under this Agreement or any of the other Loan
Documents. All representations, warranties, covenants and agreements made in
this Agreement or in the other Loan Documents by Borrower shall be deemed to
have been relied upon by Lender notwithstanding any investigation heretofore or
hereafter made by Lender or on its behalf.
IV. ASSIGNMENTS
Section 4.1 Assignment of Management Agreements.
As additional security for Borrower's performance of its
obligations under the Loan Documents, HPTRI hereby unconditionally and
irrevocably assigns to Lender all of its right, title and interest (but not
obligations) in and to the HPTRI Management Agreements. Promptly upon receipt of
request from Lender, HPTRI shall execute such other documents and instruments as
may be reasonably requested by Lender to evidence, effectuate and perfect the
assignment created hereby. With respect to the HPTRI Management Agreements,
Lender, the Manager thereunder and HPTRI have entered into a Subordination,
Non-Disturbance and Attornment Agreement of even date herewith (the "HPTRI
Management Agreement SNDA") whereby Lender has agreed, subject to the terms of
such HPTRI Management Agreement SNDA, to not disturb the rights of such Manager
under its HPTRI Management Agreement notwithstanding the occurrence of a default
under the Mortgage encumbering the Property which is the subject of its HPTRI
Management Agreement.
18
Section 4.2 Assignment of FF&E Reserves.
As additional security for Borrower's performance of its
obligations under the Loan Documents, (i) HPTRI hereby unconditionally and
irrevocably collaterally assigns to Lender, subject to the terms of the HPTRI
Lease Agreements and the HPTRI Management Agreements, all of its right, title
and interest (but not obligations) in and to the HPTRI FF&E Reserves, and (ii)
HPTWN hereby unconditionally and irrevocably assigns to Lender, subject to the
terms of the HPTWN Lease Agreements and the HPTWN Management Agreements, all of
its residual right, title and interest (but not obligations) in and to the HPTWN
FF&E Reserves, as well as all of its right, title and interest in and to that
certain Assignment and Security Agreement dated as of May 3, 1996 by GHALP
Corporation for the benefit of HPTWN. Promptly upon receipt of request from
Lender, each of HPTRI and HPTWN shall execute such other documents and
instruments (including without limitation UCC-1 Financing Statements or
continuations) as may be reasonably requested by Lender to evidence, effectuate
and perfect the assignments created hereby.
Section 4.3 Assignment of Rights Under Security Agreements.
As additional security for Borrower's performance of its
obligations under the Loan Documents, (i) HPTRI hereby unconditionally and
irrevocably assigns to Lender all of its right, title and interest (but not
obligations) in and to that certain Security Agreement dated March 22, 1996 by
and between HMH HPT Residence Inn, Inc. and HPTRI, and (ii) HPTWN hereby
unconditionally and irrevocably assigns to Lender all of its right, title and
interest (but not obligations) in and to that certain Security Agreement dated
May 3, 1996 by and between GHALP Corporation and HPTWN. Promptly upon receipt of
request from Lender, each of HPTRI and HPTWN shall execute such other documents
and instruments (including without limitation UCC-1 Financing Statements or
continuations) as may be reasonably requested by Lender to evidence, effectuate
and perfect the assignments created hereby.
Section 4.4 Assignment of Stock Pledge and Security Agreement
for GHALP Corporation.
As additional security for Borrower's performance of its
obligations under the Loan Documents, HPTWN hereby unconditionally and
irrevocably assigns to Lender all of its right, title and interest (but not
obligations), if any, in and to that certain Stock Pledge and Security Agreement
dated May 3, 1996 by and between Wyndham Hotel Corporation, a Delaware
corporation for the benefit of HPTWN. Promptly upon receipt of request from
Lender, HPTWN shall execute such other documents and instruments as may be
reasonably requested by Lender to evidence, effectuate and perfect the
assignment created hereby.
V. LEASE AGREEMENTS AND MANAGEMENT AGREEMENTS
Section 5.1 Modification of Lease Agreements.
Borrower shall not (A) except as specifically permitted under
any Lease Agreement, allow any Tenant's interest under its Lease Agreement to be
assigned, mortgaged, pledged, hypothecated, encumbered, or otherwise transferred
or subleased (collectively, a "Lease Assignment"), or (B) alter, modify or
change any of the terms or provisions of any Lease Agreement to the extent that
(i) such alteration, modification or change would (a) decrease the amount of
Rent payable to Borrower under such Lease Agreement, (b) shorten the Fixed Term
under, and as that term is defined in, any such Lease Agreement, or (c) lessen
Tenant's obligations with respect to causing the Property, subject to the terms
19
of the Lease Agreement, to remain free of Liens (as that term is defined any
such Lease Agreement), or (ii) such alteration, modification or change would
result (x) in a material increase in Borrower's obligations, as landlord under
such Lease Agreement, or (y) in a material reduction in the Tenant's obligations
under such Lease Agreement, unless Lender shall have consented in writing to
such Lease Assignment, alteration, modification or change and the Lender shall
have received in writing evidence from the Rating Agency that such Lease
Assignment, alteration, modification or change will not result in a downgrade,
withdrawal or qualification of the rating then in effect for the Certificates,
together with such legal opinions as may be requested by the Rating Agency (it
being expressly agreed that, without limiting the generality of Borrower's
authority pursuant to the foregoing, Borrower may, in its sole discretion, amend
and/or waive any Lease Agreement provisions pertaining to trade area
restrictions).
Section 5.2 Substitute Lease Agreement.
In the event that any Lease Agreement shall at any time or for
any reason be terminated or canceled, HPTRI or HPTWN, as the case may be, shall
have the right to enter into a substitute lease agreement with respect to the
applicable Property (a "Substitute Lease Agreement"), provided that (i) the
primary operator of such Property shall be a nationally recognized operator of
hotel/motel properties, and (ii) Lender shall have received in writing evidence
from the Rating Agency to the effect that such Substitute Lease Agreement will
not result in a downgrade, withdrawal or qualification of the rating which was
in effect for the Certificates immediately prior to the termination or
cancellation of such Lease Agreement, together with such legal opinions as may
be requested by the Rating Agency. In the event that either Borrower shall enter
into a Substitute Lease Agreement as provided for herein, Lender and such
borrower agree to enter into a nondisturbance and attornment agreement with the
tenant under such Substitute Lease Agreement provided that (i) such tenant has
also entered into said nondisturbance and attornment agreement, and (ii) any
such nondisturbance and attornment agreement is reasonably satisfactory to
Lender and Borrower in all respects.
20
Section 5.3 Modification of the Management Agreements.
The HPTRI Borrower shall not alter, modify or change any of
the terms or provisions of any HPTRI Management Agreement to the extent that (A)
such alteration, modification or change would negatively impact on Borrower's
rights under such HPTRI Management Agreement with respect to (i) the Manager's
right to receive fees for its services thereunder, or (ii) the subordination of
such fees to sums payable by Borrower to Lender under the Note and the other
Loan Documents, or (B) such alteration, modification or change would result in a
material increase in Borrower's obligations, if any, under such HPTRI Management
Agreement or a material reduction in the Manager's obligations under such HPTRI
Management Agreement, unless Lender shall have received in writing evidence from
the Rating Agency that such alteration, modification or change will not result
in a downgrade, withdrawal or qualification of the rating then in effect for the
Certificates, together with such legal opinions as may be requested by the
Rating Agency (it being expressly agreed that, without limiting the generality
of the Borrower's authority pursuant to the foregoing, the HPTRI Borrower may,
in its sole discretion, amend and/or waive the provisions of Section 20.12 of
any HPTRI Management Agreement). The HPTWN Borrower shall not consent to any
amendment or modification of the provisions of the HPTWN Management Agreement
which provide (i) that, from and after the occurrence of any event of default
under any applicable HPTWN Lease Agreement, all amounts due from the applicable
HPTWN Tenant to the Manager shall be subordinate to all amounts due from the
applicable HPTWN Tenant to the HPTWN Borrower, (ii) for operation of the
applicable Property under the "Wyndham" and "Wyndham Garden" names, and (iii)
for termination thereof, at the HPTWN Borrower's option, without the prior
written consent of Lender.
Section 5.4 Substitute Management Agreements.
In the event that any HPTRI Management Agreement is, or any
HPTWN Management Agreement and the related HPTWN Lease Agreement are, at any
time and for any reason terminated or canceled, HPTRI or HPTWN, as the case may
be, shall use commercially reasonable efforts to promptly enter into a
replacement management agreement, or cause the applicable Tenant, if any, to
promptly enter into a replacement management agreement, with respect to the
applicable Property (the "Substitute Management Agreement") with a nationally
recognized hotel/motel franchise and management organization (a "Qualified
Manager") which Qualified Manager, in either case, as determined by the Rating
Agency, will not cause a downgrade, withdrawal or qualification of the rating
which was in effect for the Certificates immediately prior to the termination or
cancellation of the applicable Management Agreement. Moreover, in the event that
at any time the Management Agreements with respect to any HPTRI Properties whose
aggregated Loan Allocation Amounts equal or exceed twenty five percent (25%) of
the aggregated Loan Allocation Amounts for all Properties are no longer in full
force and effect, HPTRI hereby agrees that it shall, or shall cause the Tenant
to, not later than one (1) year from the date of such occurrence, enter into
Substitute Management Agreements with Qualified Managers with respect to such
HPTRI Properties. In the event that either Borrower shall enter into a
Substitute Management Agreement as provided for herein, Lender and such borrower
agree to enter into a nondisturbance and attornment agreement with the tenant
under such Substitute Management Agreement provided that (i) such tenant has
also entered into said nondisturbance and attornment agreement, and (ii) any
such nondisturbance and attornment agreement is reasonably satisfactory to
Lender and Borrower in all respects.
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VI. DEFAULTS
Section 6.1 Event of Default.
The occurrence of any Event of Default under, and as that term
is defined in, the Mortgages shall constitute an "Event of Default" hereunder.
Section 6.2 Remedies.
Upon the occurrence of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to Lender
against Borrower under this Agreement or any of the other Loan Documents or at
law or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Indebtedness shall be declared due and payable,
and whether or not Lender shall have commenced any foreclosure proceeding or
other action for the enforcement of its rights and remedies under any of the
Loan Documents with respect to the Property. Notwithstanding the fact that any
Mortgage may provide that it secures less than the entire Principal Amount, upon
the foreclosure by Lender of any such Mortgage, any foreclosure sale proceeds
which, pursuant to the terms of the applicable Mortgage, would be paid to the
applicable Borrower shall instead be paid to Lender and applied in reduction of
the Principal Amount of the Loan.
Section 6.3 Remedies Cumulative.
The rights, powers and remedies of Lender under this Agreement
shall be cumulative and not exclusive of any other right, power or remedy which
Lender may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one default or
Event of Default with respect to Borrower shall not be construed to be a waiver
with respect to any subsequent default or Event of Default by Borrower, or to
impair any remedy, right or power consequent thereon.
VII. MISCELLANEOUS
Section 7.1 Survival.
This Agreement and all covenants, agreements, representations
and warranties made herein and in the certificates delivered pursuant hereto
shall survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Indebtedness of Borrower is outstanding and unpaid. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All covenants,
promises and agreements contained in this Agreement shall be binding upon, and
shall inure to the benefit of, Lender, together with its successors and assigns,
and Borrower, together with its permitted successors and assigns.
Section 7.2 Lender's Discretion.
Whenever pursuant to this Agreement, Lender exercises any
right given to it to approve or disapprove, or any arrangement or term is to be
satisfactory to Lender, the decision of
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Lender to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
Section 7.3 Governing Law.
(a) The proceeds of the Note delivered pursuant hereto shall
be disbursed from the State of New York, which State the parties agree has a
substantial relationship to the parties and to the underlying transaction
embodied hereby, and in all respects, including, without limiting the generality
of the foregoing, matters of construction, validity and performance, this
Agreement and the obligations arising hereunder shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and performed in such State and any applicable law of the United
States of America, except that at all times the provisions for the creation,
perfection, and enforcement of the liens and security interests created pursuant
hereto and pursuant to the other Loan Documents shall be governed by and
construed according to the law of the State in which the applicable Property is
located, it being understood that, to the fullest extent permitted by the law of
such State, the law of the State of New York shall govern the validity and the
enforceability of all Loan Documents and all of the Indebtedness or obligations
arising hereunder or thereunder. To the fullest extent permitted by law,
Borrower hereby unconditionally and irrevocably waives any claim to assert that
the law of any other jurisdiction governs this Agreement and the Note, and this
Agreement and the Note shall be governed by and construed in accordance with the
laws of the State of New York pursuant to Section 5-1401 of the New York General
Obligations Law.
(b) Any suit, action or proceeding against Lender or Borrower
arising out of or relating to this Agreement shall be instituted in any federal
or state court in New York, New York, pursuant to Section 5-1402 of the New York
General Obligations Law, or, at Lender's discretion, in the State where the
applicable Property is located, and Borrower waives any objection which it may
now or hereafter have to the laying of venue of any such suit, action or
proceeding, and Borrower hereby irrevocably submits to the jurisdiction of any
such court in any suit, action or proceeding.
Section 7.4 Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination
or waiver of any provision of this Agreement, or of the Note, or of any other
Loan Document, nor consent to any departure by Borrower therefrom, shall in any
event be effective unless the same shall be in a writing signed by the party
against whom enforcement is sought, and then any such waiver or consent shall be
effective only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to, or demand on
Borrower, shall entitle Borrower to any other or future notice or demand in the
same, similar or other circumstances.
Section 7.5 Delay Not a Waiver.
Neither any failure nor any delay on the part of Lender in
insisting upon strict performance of any term, condition, covenant or agreement,
or exercising any right, power, remedy or privilege hereunder, under the Note or
under any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the date on
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which the same is due of any amount payable under this Agreement, the Note or
any other Loan Document, Lender shall not be deemed to have waived any right
either to require prompt payment when due of all other amounts due under this
Agreement, the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
Section 7.6 Notices.
All notices, consents, approvals and requests required or
permitted hereunder shall be given in the manner specified in the Mortgages and
directed to the parties at their respective addresses as provided therein.
Section 7.7 Trial by Jury.
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO
THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS
AGREEMENT OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
Section 7.8 Headings.
The Article and/or Section headings and the Table of Contents
in this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
Section 7.9 Successors and Assigns; Assignment.
This Agreement shall be binding upon and shall inure to the
benefit of each party hereto and their respective permitted successors and
assigns. Lender shall have the right to transfer, sell or assign this Agreement
and any of the other Loan Documents and the obligations hereunder to any Person
who purchases or otherwise acquires an interest in the Loan.
Section 7.10 Note Register.
The identity of the holder or holders of the Note from time to
time shall be entered in the Note Register (as that term is defined in the
Note), which Note Register shall be maintained by Lender or its designee. The
Borrower shall treat and recognize the Person or Persons in whose name the Note
is registered as the owner or owners thereof for the purpose of receiving all
payments thereon and for all other purposes.
Section 7.11 Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the
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extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Section 7.12 Preferences.
Lender shall have the continuing and exclusive right to apply
or reverse and reapply any and all payments by Borrower to any portion of the
obligations of Borrower hereunder. To the extent Borrower makes a payment or
payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
Section 7.13 Waiver of Notice.
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which (a) this
Agreement or the other Loan Documents specifically and expressly provide for the
giving of notice by Lender to Borrower and (b) Borrower is not, pursuant to
applicable law, permitted to waive the giving of notice. To the extent permitted
by applicable law, Borrower hereby expressly waives the right to receive any
notice from Lender with respect to any matter for which this Agreement or the
other Loan Documents do not specifically and expressly provide for the giving of
notice by Lender to Borrower.
Section 7.14 Expenses; Indemnity.
Borrower covenants and agrees to reimburse Lender upon receipt
of written notice from Lender for all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by Lender in connection
with (i) the negotiation, preparation, execution, delivery and administration of
any consents, amendments, waivers or other modifications to this Agreement and
the other Loan Documents and any other documents or matters requested by
Borrower; (ii) the filing and recording fees and expenses, title insurance and
other similar expenses incurred in creating and perfecting the liens in favor of
Lender pursuant to this Agreement and the other Loan Documents; (iii) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting Borrower, this Agreement, the other Loan Documents,
the Properties, or any other security given for the Loan; and (iv) enforcing any
obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Property or in
connection with any refinancing or restructuring of the credit arrangement
provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceedings; provided, however, that Borrower shall not be liable
for the payment of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of any
of Lender.
Section 7.15 Exhibits Incorporated.
The Exhibits and Schedules annexed hereto are hereby
incorporated herein as a part of this Agreement with the same effect as if set
forth in the body hereof.
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Section 7.16 Offsets, Counterclaims and Defenses.
Any assignee of Lender's interest in and to this Agreement,
the Note and the other Loan Documents shall take the same free and clear of all
offsets, counterclaims or defenses which Borrower may have against any assignor
of such documents that are unrelated to the Loan, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.
Section 7.17 No Joint Venture or Partnership.
Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Property other than that of
mortgagee or lender.
Section 7.18 Conflict; Construction of Documents.
In the event of any conflict between the provisions of this
Agreement and any of the other Loan Documents, the provisions of this Agreement
shall control. The parties hereto acknowledge that they were represented by
counsel in connection with the negotiation and drafting of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same.
Section 7.19 Brokers and Financial Advisors.
Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement other than
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, which Borrower will pay
pursuant to separate agreements. Borrower and Lender hereby agree to indemnify
and hold the other harmless from and against any and all claims, liabilities,
costs and expenses of any kind in any way relating to or arising from a claim by
any other Person that such Person acted on behalf of the indemnifying party in
connection with the transactions contemplated herein. The provisions of this
Section 7.18 shall survive the expiration and termination of this Agreement and
the repayment of the Indebtedness.
Section 7.20 Prior Agreements.
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, including, without limitation, are superseded
with respect to the Loan by the terms of this Agreement and the other Loan
Documents.
Section 7.21 Nonrecourse.
The provisions of Paragraph 18 of the Note are incorporated
herein by this reference to the fullest extent as if the text of such paragraph
were set forth in its entirety herein.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.
LENDER:
COLUMN FINANCIAL, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
BORROWER:
HPTRI CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X. X'Xxxxx
Name: Xxxxxx X. X'Xxxxx
Title: Vice President
HPTWN CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X. X'Xxxxx
Name: Xxxxxx X. X'Xxxxx
Title: Vice President
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