Mezzanine Loan Agreement - Merrill Lynch Capital and Ashford Mezz Borrower LLC
MEZZANINE LOAN AGREEMENT
Dated as of September 2, 2004
by and between
ASHFORD MEZZ BORROWER LLC,
a Delaware limited liability company
(as Borrower)
and
MERRILL LYNCH CAPITAL,
a Division of Merrill Lynch Business Financial Services, Inc.
(as Lender)
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TABLE OF CONTENTS
PAGE
ARTICLE 1. CERTAIN DEFINITIONS....................................................................... 1
Section 1.1. Definitions...................................................................... 1
ARTICLE 2. GENERAL TERMS............................................................................. 25
Section 2.1. Amount of the Loan............................................................... 25
Section 2.2. Use of Proceeds.................................................................. 25
Section 2.3. Security for the Loan............................................................ 25
Section 2.4. Borrower's Note.................................................................. 25
Section 2.5. Principal and Interest Payments.................................................. 25
Section 2.6. Prepayment....................................................................... 26
Section 2.7. Application of Payments.......................................................... 28
Section 2.8. Payment of Debt Service, Method and Place of Payment............................. 28
Section 2.9. Taxes; Funding Losses; Changes in Law............................................ 28
Section 2.10. Extension Options................................................................ 29
Section 2.11. Central Cash Management.......................................................... 30
Section 2.12. Security Agreement............................................................... 33
Section 2.13. Secondary Market Transactions.................................................... 35
Section 2.14. Interest Rate Cap Agreement...................................................... 37
Section 2.15. Partial Release.................................................................. 38
ARTICLE 3. CONDITIONS PRECEDENT...................................................................... 39
Section 3.1. Conditions Precedent to the Making of the Loan................................... 39
Section 3.2. Form of Loan Documents and Related Matters....................................... 44
ARTICLE 4. REPRESENTATIONS AND WARRANTIES............................................................ 44
Section 4.1. Representations and Warranties of Borrower....................................... 44
Section 4.2. Survival of Representations and Warranties....................................... 54
ARTICLE 5. AFFIRMATIVE COVENANTS..................................................................... 54
Section 5.1. Borrower Covenants............................................................... 54
ARTICLE 6. NEGATIVE COVENANTS........................................................................ 70
Section 6.1. Borrower Negative Covenants...................................................... 70
ARTICLE 7. DEFAULTS.................................................................................. 74
Section 7.1. Event of Default................................................................. 74
Section 7.2. Remedies......................................................................... 77
Section 7.3. Remedies Cumulative.............................................................. 78
Section 7.4. Lender's Right to Perform........................................................ 78
Section 7.5. Sale............................................................................. 79
Section 7.6. Partial Foreclosure.............................................................. 79
Section 7.7. Receiver......................................................................... 79
Section 7.8. UCC Remedies..................................................................... 79
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TABLE OF CONTENTS
(continued)
PAGE
Section 7.9. Exercise of Equity Interest Rights............................................... 80
Section 7.10. Power of Attorney................................................................ 80
ARTICLE 8. MISCELLANEOUS............................................................................. 80
Section 8.1. Survival......................................................................... 80
Section 8.2. Lender's Discretion.............................................................. 80
Section 8.3. Governing Law.................................................................... 81
Section 8.4. Modification, Waiver in Writing.................................................. 82
Section 8.5. Delay Not a Waiver............................................................... 82
Section 8.6. Notices.......................................................................... 82
Section 8.7. Trial By Jury.................................................................... 84
Section 8.8. Headings......................................................................... 84
Section 8.9. Assignment....................................................................... 84
Section 8.10. Severability..................................................................... 84
Section 8.11. Preferences...................................................................... 84
Section 8.12. Waiver of Notice................................................................. 85
Section 8.13. Remedies of Borrower............................................................. 85
Section 8.14. Exculpation...................................................................... 85
Section 8.15. Exhibits Incorporated............................................................ 87
Section 8.16. Offsets, Counterclaims and Defenses.............................................. 87
Section 8.17. No Joint Venture or Partnership.................................................. 87
Section 8.18. Waiver of Marshalling of Assets Defense.......................................... 87
Section 8.19. Waiver of Counterclaim........................................................... 88
Section 8.20. Conflict; Construction of Documents.............................................. 88
Section 8.21. Brokers and Financial Advisors................................................... 88
Section 8.22. Counterparts..................................................................... 88
Section 8.23. Estoppel Certificates............................................................ 88
Section 8.24. Payment of Expenses.............................................................. 89
Section 8.25. Bankruptcy Waiver................................................................ 89
Section 8.26. Entire Agreement................................................................. 89
Section 8.27. Dissemination of Information..................................................... 90
Section 8.28. Limitation of Interest........................................................... 90
Section 8.29. Indemnification.................................................................. 91
Section 8.30. Borrower Acknowledgments......................................................... 91
Section 8.31. Publicity........................................................................ 91
Section 8.32. ................................................................................. 92
Section 8.33. Final Agreement.................................................................. 92
Section 8.34. ................................................................................. 92
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Exhibit A Intentionally Omitted
Exhibit B Capital Improvements/Environmental Remediation
Exhibit C Interest Rate Cap Agreement Requirements
Exhibit D Allocated Mezzanine Loan Amounts
Exhibit F Managers
Exhibit G Franchisors
Schedule 1 Litigation
Schedule 2 Franchise Agreement Defaults
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MEZZANINE LOAN AGREEMENT
THIS MEZZANINE LOAN AGREEMENT, made as of September 2, 2004,
is by and between MERRILL LYNCH CAPITAL, a Division of Merrill Lynch Business
Financial Services, Inc., a Delaware corporation, (together, with its successors
and assigns, "Lender"), and ASHFORD MEZZ BORROWER LLC, a Delaware limited
liability company ("Borrower").
RECITALS
A. Borrower desires to obtain a loan (the "Loan") from Lender
in the principal amount of $25,000,000.
B. Lender is willing to make the Loan on the condition that
Borrower joins in the execution and delivery of this Agreement, which shall
establish the terms and conditions of the Loan.
NOW, THEREFORE, in consideration of the making of the Loan by
Lender, and the covenants, agreements, representations and warranties set forth
in this Agreement, the parties hereby covenant, agree, represent and warrant as
follows:
ARTICLE 1
CERTAIN DEFINITIONS
Section 1.1 Definitions.
For all purposes of this Agreement:
(a) the capitalized terms defined in this Article 1
have the meanings assigned to them in this Article 1, and include the plural as
well as the singular;
(b) all accounting terms have the meanings assigned
to them in accordance with GAAP;
(c) 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, or other subdivision; and
(d) the following terms have the following meanings:
"Acceptable Counterparty" means any counterparty to an
Interest Rate Cap Agreement that has and maintains (or whose obligations
thereunder are guaranteed in a manner and by a guarantor that is reasonably
acceptable to Lender, (a) (i) a long-term unsecured debt rating or counterparty
rating of "AA-" or higher from S&P, and (ii) a short-term unsecured debt rating
of not less than "A-1+" by S&P, and (b) a long-term unsecured debt rating of not
less than
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"Aa3" by Moody's, or any other counterparty to an Interest Rate Cap Agreement
with respect to which a Rating Agency Confirmation is received.
"Account Collateral" means the Deposit Account (including all
Sub-Accounts), all amounts deposited or held in such accounts, and all Proceeds
of any or all of the foregoing.
"Affiliate" of any specified Person means any other Person
controlling, controlled by or under common control with such specified Person.
For the purposes of this Agreement, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests, by contract or otherwise; and the
terms "controls", "controlling" and "controlled" have the meanings correlative
to the foregoing. For the avoidance of doubt, with respect to Borrower, any
Mortgage Borrower or Operating Lessee, the definition of "Affiliate" shall not
include Remington Manager.
"Agreement" means this Mezzanine Loan Agreement, as the same
may from time to time hereafter be modified, supplemented or amended.
"Allocated Mezzanine Loan Amount" means, with respect to each
Individual Property, the amount set forth on Exhibit D attached hereto, as such
amounts shall be adjusted from time to time as hereinafter set forth. Upon each
adjustment in the amount of Indebtedness due to the making of a prepayment of
the Loan in accordance with the terms hereof, each Allocated Mezzanine Loan
Amount shall be decreased by an amount equal to the product of (i) the amount of
such payment and (ii) a fraction, the numerator of which is the applicable
Allocated Mezzanine Loan Amount (prior to the adjustment in question) and the
denominator of which is the total of all Allocated Mezzanine Loan Amounts (prior
to the adjustment in question). Notwithstanding the foregoing sentence to the
contrary, when the Indebtedness is reduced as the result of Lender's receipt of
proceeds with respect to a Condemnation or Casualty affecting one hundred
percent (100%) of any Individual Property, the Allocated Mezzanine Loan Amount
for such Individual Property with respect to which the Insurance Proceeds or
Condemnation Proceeds were received shall, at Lender's sole discretion, be
reduced to zero (such Allocated Mezzanine Loan Amount prior to reduction being
referred to as the "Withdrawn Allocated Amount"), and each other Allocated
Mezzanine Loan Amount shall, if the Withdrawn Allocated Amount exceeds such
proceeds (such excess being referred to as the "Proceeds Deficiency"), be
increased by an amount equal to the product of (1) the Proceeds Deficiency and
(2) a fraction, the numerator of which is the applicable Allocated Mezzanine
Loan Amount (prior to the adjustment in question) and the denominator of which
is the aggregate of all of the Allocated Mezzanine Loan Amounts (prior to the
adjustment in question) other than the Withdrawn Allocated Amount.
"Appraisal" means an appraisal of any Individual Property
prepared in accordance with the requirements of FIRREA prepared by an
independent third party appraiser holding an MAI designation, who is state
licensed or state certified if required under the laws of the state where such
Individual Property is located, who meets the requirements of FIRREA and who is
otherwise reasonably satisfactory to Lender.
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"Approved Budget" has the meaning provided in Section
5.1(P)(x).
"Basic Carrying Costs" means the following costs with respect
to each Individual Property: (i) Impositions applicable to such Property; (ii)
insurance premiums for policies of insurance required or permitted to be
maintained by the applicable Mortgage Borrower pursuant to the Mortgage Loan
Documents; and (iii) all Monthly Assessments and Special Assessments (as such
terms are defined in the Declaration).
"Borrower" has the meaning provided in the preamble to this
Agreement.
"Business Day" means any day other than a Saturday, a Sunday
or a legal holiday on which national banks are not open for general business in
(i) the State of Kansas, (ii) the state where the corporate trust office of the
any trustee in connection with a Secondary Market Transaction is located, or
(iii) the state where the servicing offices of the any servicer in connection
with a Secondary Market Transactions are located.
"Cash Management Fee Sub-Account" means the Sub-Account of the
Deposit Account established and maintained pursuant to Section 2.11 relating to
the payment of fees payable to the Deposit Account Bank.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended,
and as it may be further amended from time to time, any successor statutes
thereto, together with applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"Collateral" has the meaning set forth in the Mortgage Loan
Agreement.
"Condemnation Proceeds" has the meaning provided in the
Mortgages.
"Contingent Obligation" means any obligation of Borrower
guaranteeing any indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of
Borrower, whether or not contingent; (i) to purchase any such primary
obligation, or any property constituting direct or indirect security therefor;
(ii) to advance or supply funds (x) for the purchase or payment of any such
primary obligation or (y) to maintain working capital or equity capital of the
primary obligor; (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner or obligee under any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation; or (iv) otherwise to assure or hold harmless the owner or obligee
under such primary obligation against loss in respect thereof. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
anticipated liability in respect thereof (assuming that Borrower is required to
perform thereunder) as determined by Lender in good faith.
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"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement, instrument
or undertaking to which such Person is a party or by which it or any of its
property is bound, or any provision of the foregoing.
"Current Interest Accrual Period" has the meaning provided in
Section 2.11(d).
"Debt Service" means, for any period, the aggregate of all
principal, interest payments, Default Rate interest, Late Charges and Prepayment
Premium that accrue or are due and payable in accordance with the Loan Documents
during such period.
"Debt Service Coverage Ratio" shall have the meaning set forth
in the Mortgage Loan Agreement.
"Declaration" shall have the meaning set forth in the Mortgage
Loan Agreement.
"Mezzanine Debt Service Payment Sub-Account" means the
Sub-Account of the Deposit Account established and maintained pursuant to
Section 2.11 relating to the payment of Debt Service.
"Default" means the occurrence of any event which, but for the
giving of notice or the passage of time, or both, would be an Event of Default.
"Default Collateral" has the meaning provided in Section 8.14.
"Default Prepayment" has the meaning provided in Section
2.6(g).
"Default Rate" means the per annum interest rate equal to the
lesser of (i) the Maximum Amount or (ii) the LIBOR Interest Rate plus five
percent (5%).
"Deposit Account" has the meaning provided in Section 2.11(b).
"Deposit Account Agreement" has the meaning provided in
Section 2.12(b).
"Deposit Account Bank" means the bank chosen by Lender to hold
the Deposit Account, or any successor bank hereafter selected by Lender in
accordance with the terms hereof.
"Eligible Account" means (i) an account maintained with a
federal or state chartered depository institution or trust company whose (x)
commercial paper, short-term debt obligations or other short-term deposits are
rated at least A-1 by S&P and the equivalent by each other Rating Agency if the
deposits in such account are to be held in such account for thirty (30) days or
less or (y) long-term unsecured debt obligations are rated at least A by S&P and
the equivalent by each other Rating Agency if the deposits in such account are
to be held in such account for more than thirty (30) days; or (ii) a segregated
trust account maintained with the trust department of a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which institution or trust company is subject to regulations regarding
fiduciary
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funds on deposit substantially similar to 12 C.F.R. Section 9.10(b); or (iii) an
account otherwise acceptable to each Rating Agency, as confirmed in writing that
such account would not, in and of itself, result in a downgrade, qualification
or withdrawal of the then current ratings assigned to any security issued in
connection with a Secondary Market Transaction.
"Embargoed Person" has the meaning provided in Section
4.1(LL).
"Engineer" means any reputable Independent engineer, properly
licensed in the relevant jurisdiction and approved by Lender in Lender's
reasonable discretion.
"Engineering Report(s)" means, with respect to each Individual
Property, the structural engineering report(s) with respect to such Individual
Property (i) prepared by an Engineer, (ii) addressed to or permitted by such
preparer to be relied upon by Lender, (iii) prepared based on a scope of work
determined by Lender in Lender's discretion, and (iv) in form and content
acceptable to Lender in Lender's discretion, together with any amendments or
supplements thereto.
"Entity" means (i), with respect to Borrower, a (a)
corporation, if Borrower is listed as a corporation in the preamble to this
Agreement, (b) limited partnership, if Borrower is listed as a limited
partnership in the preamble to this Agreement or (c) limited liability company,
if Borrower is listed as a limited liability company in the preamble to this
Agreement; and (ii) with respect to any Mortgage Borrower, (a) corporation, if
such Mortgage Borrower is a corporation, (b) limited partnership, if such
Mortgage Borrower is a limited partnership, or (c) limited liability company, if
such Mortgage Borrower is a limited liability company.
"Environmental Guaranty" means the Environmental Indemnity
Agreement in form and substance satisfactory to Lender dated as of the Closing
Date from Borrower to Lender relating to all Individual Properties, as the same
may thereafter be from time to time supplemented, amended, modified or extended
by one or more agreements supplemental thereto.
"Environmental Indemnified Parties" includes Lender, any
Person who is or will have been involved with the servicing of the Loan, Persons
who may hold or acquire or will have held a full or partial interest in the Loan
(including, but not limited to, Investors or prospective Investors, as well as
custodians, trustees and other fiduciaries who hold or have held a full or
partial interest in the Loan for the benefit of third parties) as well as the
respective directors, officers, shareholders, partners, employees, agents,
servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assigns of any and all of the
foregoing (including but not limited to any other Person who holds or acquires
or will have held a participation or other full or partial interest in the Loan
or the collateral therefor, whether during the term of the Loan or as a part of
or following a foreclosure of the collateral for the Loan and including, but not
limited to, any successors by merger, consolidation or acquisition of all or a
substantial portion of Lender's assets and business).
"Environmental Law" means any present and future federal,
state and local laws, statutes, ordinances, rules, regulations and the like, as
well as common law, relating to protection of human health or the environment,
relating to Hazardous Substances, relating to liability for or
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costs of other actual or threatened danger to human health or the environment,
including, without limitation, the following statutes, as amended, any successor
thereto, and any regulations promulgated pursuant thereto, and any state or
local statutes, ordinances, rules, regulations and the like addressing similar
issues: the Comprehensive Environmental Response, Compensation and Liability
Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous
Substances Transportation Act; the Resource Conservation and Recovery Act
(including but not limited to Subtitle I relating to underground storage tanks);
the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic
Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and
Health Act; the Federal Water Pollution Control Act; the Federal Insecticide,
Fungicide and Rodenticide Act; the Endangered Species Act; the National
Environmental Policy Act; and the River and Harbors Appropriation Act, and
including, without limitation, any present and future federal, state and local
laws, statutes ordinances, rules, regulations and the like, as well as common
law: requiring notification or disclosure of Releases of Hazardous Substances or
other environmental condition of any or all of the Individual Properties to any
Governmental Authority or other Person, whether or not in connection with
transfer of title to or interest in any or all of the Individual Properties.
"Environmental Liens" means, with respect to each Individual
Property, all liens and other encumbrances imposed on Borrower, any Mortgage
Borrower, the Pledged Collateral or any Individual Property pursuant to any
Environmental Law, whether due to any act or omission of Borrower, any Mortgage
Borrower or any other Person.
"Environmental Report(s)" means, with respect to each
Individual Property, environmental audit report(s) (i) prepared by a reputable
environmental Engineer approved by Lender in Lender's discretion, (ii) addressed
to or permitted by such environmental Engineer to be relied upon by Lender (iii)
prepared based on a scope of work determined by Lender in Lender's discretion,
and (iv) in form and content acceptable to Lender in Lender's discretion,
together with any amendments or supplements thereto delivered to Lender.
"Equity Interests" means all membership interests in Borrower.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated thereunder.
Section references to ERISA are to ERISA, as in effect at the date of this
Agreement and, as of the relevant date, any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means any corporation or trade or business
that is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code, of which Borrower, any Mortgage Borrower or Operating Lessee
is a member, and (ii) solely for purposes of potential liability under Section
302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created
under Section 302(f) of ERISA and Section 412(n) of the Code, described in
Section 414(m) or (o) of the Code, of which Borrower, any Mortgage Borrower or
Operating Lessee is a member.
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"Event of Default" has the meaning set forth in Section 7.1.
"Exchange Act" has the meaning set forth in Section 2.13.
"Extension Interest Rate Cap Agreement" means a confirmation
(together with the definitions, ISDA master agreement and schedules relating
thereto) between the applicable Acceptable Counterparty and Borrower, relating
to the applicable Extension Term, satisfying the requirements set forth in
Exhibit C.
"Extension Term" has the meaning set forth in Section 2.10.
"FIRREA" shall mean the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as the same may be amended from time to
time.
"First Extended Maturity Date" has the meaning set forth in
Section 2.10.
"First Extension Term" has the meaning set forth in Section
2.10.
"Fiscal Year" means the 12-month period ending on December 31
of each year or such other fiscal year of Borrower or other Person as Borrower,
or other Person, as applicable, may select from time to time with the prior
written consent of Lender, such consent not to be unreasonably withheld or
delayed.
"Franchise Agreement" shall mean, individually or
collectively, as the context may require, each franchise or similar agreement
entered into by and between the applicable Mortgage Borrower and/or Operating
Lessee and Franchisor pursuant to which the applicable Mortgage Borrower and/or
Operating Lessee is permitted to operate the applicable Individual Property
under the "flag" or other trade name that is the subject thereof, as the same
may be amended, restated, replaced, supplemented or otherwise modified in
accordance with the terms hereof.
"Franchisor" shall mean, individually or collectively, as the
context may require, each franchisor under a Franchise Agreement. As of the date
hereof, each Franchisor of each Individual Property is set forth on Exhibit G
attached hereto. No replacement or substitute Franchisor shall be selected,
approved or consented to by any Mortgage Borrower or Operating Lessee other than
in accordance with the terms hereof.
"Franchisor's Subordination" means, with respect to each
Individual Property, a Franchisor's Consent and Subordination Agreement, comfort
letter or similar agreement in form and substance satisfactory to Lender, dated
as of the Closing Date, executed by the relevant Franchisor and others as the
same may thereafter from time to time be supplemented, amended, modified or
extended by one or more written agreements supplemental thereto.
"Funding Losses" means, collectively, all losses, costs and
expenses incurred or sustained (or expected to be incurred or sustained) by
Lender in liquidating or re-employing
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funds from third parties to effect or maintain the Loan or any part thereof as a
consequence of (a) if the Loan, or any portion thereof, is repaid for any reason
whatsoever on any date other than a Payment Date (including, without limitation,
from Insurance Proceeds or Condemnation Proceeds); (b) any default in the
payment or prepayment of the Principal Indebtedness or any part thereof or
interest accrued thereon, as and when due and payable (at the date thereof or
otherwise, and whether by acceleration or otherwise); (c) intentionally omitted;
(d) any losses, expenses or increased costs incurred or sustained by Lender due
to the determination of the "LIBOR Rate" other than pursuant to the first
sentence of the definition thereof; (e) the reduction of any amounts received or
receivable from Borrower, in either case, due to the introduction of, or any
change in, law or applicable regulation or treaty (including the administration
or interpretation thereof), whether or not having the force of law, or due to
the compliance by Lender with any directive, whether or not having the force of
law, or request from any central bank or domestic or foreign governmental
authority, agency or instrumentality have jurisdiction; and/or (f) any other set
of circumstances not attributable to Lender's acts.
"GAAP" means generally accepted accounting principles
consistently applied in the United States of America as of the date of the
applicable financial report.
"Governmental Authority" means any foreign, national, federal,
state, regional or local government, or any other political subdivision of any
of the foregoing, in each case with jurisdiction over Borrower, Guarantor, SPE
Equity Owner, all or any portion of the Collateral, all or any portion of the
Pledged Collateral, any Mortgage Borrower, or any Person with jurisdiction over
Borrower, SPE Equity Owner, all or any portion of each Individual Property, all
or any portion of the Pledged Collateral or any Mortgage Borrower, exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Gross Revenue" shall have the meaning set forth in the
Mortgage Loan Agreement.
"Ground Lease" shall have the meaning set forth in the
Mortgage Loan Agreement.
"Ground Rent" shall have the meaning set forth in the Mortgage
Loan Agreement.
"Guarantor" shall mean Ashford Hospitality Limited
Partnership, a Delaware limited partnership.
"Hazardous Substance" means, without limitation, any and all
substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, toxic or hazardous wastes, toxic or hazardous
substances, toxic or hazardous materials, extremely hazardous wastes, or words
of similar meaning or regulatory effect under any present or future
Environmental Laws including but not limited to petroleum and petroleum
products, asbestos and asbestos-containing materials, polychlorinated biphenyls,
lead, radon, radioactive materials, flammables and explosives, but excluding
substances of kinds and in small amounts ordinarily
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and customarily used or stored in similar properties for the purposes of
cleaning or other maintenance or operations and otherwise in compliance with all
Environmental Laws.
"Impositions" has the meaning provided in the Mortgages.
"Indebtedness" means, at any given time, the Principal
Indebtedness, together with all accrued and unpaid interest thereon and all
other obligations and liabilities due or to become due to Lender pursuant
hereto, under the Note or in accordance with any of the other Loan Documents,
and all other amounts, sums and expenses paid by or payable to Lender hereunder
or pursuant to the Note or any of the other Loan Documents.
"Indemnified Party" shall have the meaning set forth in
Section 2.13.
"Independent" means, when used with respect to any Person, a
Person who: (i) does not have any direct financial interest or any material
indirect financial interest in Borrower, in any Mortgage Borrower or in any
Affiliate of Borrower (including, without limitation, in any SPE Equity Owner),
(ii) is not connected with Borrower, any Mortgage Borrower or any Affiliate of
Borrower (including, without limitation, in any SPE Equity Owner), as an
officer, employee, promoter, underwriter, trustee, partner, member, manager,
creditor, director or person performing similar functions (other than in his or
her capacity as Independent Director), and (iii) is not a member of the
immediate family of a Person defined in (i) or (ii) above.
"Independent Director" means a duly appointed member of the
board of directors (or with respect to a Single Member LLC, the board of
managers) of the relevant entity who shall not have been, at the time of such
appointment or at any time while serving as a director or manager of the
relevant entity and may not have been at any time in the preceding five years
(except in a capacity as an "Independent Director" for one or more Affiliates
otherwise satisfying the requirements of this definition), (a) a direct or
indirect legal or beneficial owner in such entity or any of its affiliates or
Borrower or any of its affiliates, (b) a creditor, supplier, employee, officer,
director (other than in its capacity as Independent Director), family member,
manager, or contractor of such entity or any of its affiliates or Borrower or
any of its affiliates, or (c) a Person who controls (directly, indirectly, or
otherwise) such entity or any of its affiliates or Borrower or any of its
affiliates or any creditor, supplier, employee, officer, director, family
member, manager, or contractor of such Person or any of its affiliates or
Borrower or any of its affiliates.
"Individual Properties" shall mean, collectively, each and
every Individual Property.
"Individual Property" shall have the meaning set forth in the
Mortgage Loan Agreement.
"Initial Interest Rate Cap Agreement" means a confirmation
(together with the definitions, ISDA master agreement and schedules relating
thereto) between the applicable
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Acceptable Counterparty and Borrower, relating to the initial term of the Loan,
satisfying the requirements set forth in Exhibit C.
"Initial Maturity Date" means September 29, 2006.
"Insurance Proceeds" has the meaning provided in the
Mortgages.
"Insurance Requirements" has the meaning provided in the
Mortgages.
"Interest Accrual Period" shall mean, with respect to any
Payment Date, a period commencing on the first (1st) Business Day of the
calendar month in which such Payment Date occurs and ending on the day
immediately prior to the first (1st) Business Day of the next calendar month.
The first Interest Accrual Period shall commence on the Closing Date and
continue through and including the day immediately prior to the first Business
Day of the calendar month following the month in which the Closing Date occurs.
"Interest Rate" means, for any Interest Accrual Period, the
LIBOR Interest Rate or the Default Rate, as and when applicable pursuant to this
Agreement.
"Interest Rate Adjustment Date" shall mean the second LIBOR
Business Day prior to the first day of an Interest Accrual Period; provided that
the Interest Rate Adjustment Date for the first Interest Accrual Period shall be
the Closing Date, or such other date selected by Lender. The LIBOR Rate set on
the Interest Rate Adjustment Date shall be in effect for the Interest Accrual
Period immediately following such Interest Rate Adjustment Date.
"Interest Rate Cap Agreement" means any Initial Interest Rate
Cap Agreement or Extension Interest Rate Cap Agreement.
"Investor" has the meaning provided in Section 8.27.
"Land" means, collectively, "Land" as defined in each
Mortgage.
"Late Charge" means the lesser of (i) five percent (5%) of any
unpaid amount and (ii) the maximum late charge permitted to be charged under the
laws of the State of New York.
"Leases" means, collectively, "Leases" as defined in each
Mortgage.
"Legal Requirements" means all statutes, laws, rules, orders,
regulations, ordinances, judgments, orders, decrees and injunctions of
Governmental Authorities affecting Borrower, Guarantor, any Mortgage Borrower,
the Loan Documents, the Pledged Collateral, the Collateral or any part thereof,
or the ownership, construction, use, alteration or operation thereof, or any
part thereof, enacted or entered and in force as of the relevant date, and all
Permits 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 force affecting the Collateral, the Pledged
Collateral, or any part thereof, including, without limitation,
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any which (i) may require repairs, modifications, or alterations in or to the
Collateral or any part thereof, or (ii) in any way limit the use and enjoyment
thereof, and further including, without limitation, all Environmental Laws and
the Americans with Disabilities Act, as they may be amended from time to time,
together with all regulations promulgated pursuant thereto or in connection
therewith.
"Lender" has the meaning provided in the preamble to this
Agreement.
"Liabilities" has the meaning set forth in Section 2.13.
"LIBOR Business Day" means any day on which banks are open for
dealing in foreign currency and exchange in London, England.
"LIBOR Interest Rate" means, for any Interest Accrual Period,
the Spread plus the LIBOR Rate for such Interest Accrual Period.
"LIBOR Rate" shall mean the London interbank offered rate for
thirty (30) day United States Dollar deposits in an amount of $1,000,000 or more
that appears on Telerate Page 3750 (or on such page as may replace Telerate Page
3750 on that service or such other service or services as may be nominated by
the British Bankers' Association for the purposes of displaying such rate all as
determined by Lender in its sole but good faith discretion) as of 11:00 a.m.,
London time, on the applicable Interest Rate Adjustment Date to the extent
available. If such rate does not appear on Telerate Page 3750 (or on such page
as may replace Telerate Page 3750 on that service or such other service or
services as may be nominated by the British Bankers' Association for the
purposes of displaying such rate all as determined by Lender in its sole but
good faith discretion) as of 11:00 a.m., London time, on the applicable Interest
Rate Adjustment Date, the LIBOR Rate will be the arithmetic mean of the offered
rates (expressed as a percentage per annum) for deposits in U.S. Dollars for a
one (1) month period that appear on the Reuters Screen LIBO Page as of 11:00
a.m., London time, on the applicable Interest Rate Adjustment Date, if at least
two such offered rates so appear. If fewer than two such offered rates appear on
the Reuters Screen LIBO Page as of 11:00 a.m., London time, on the applicable
Interest Rate Adjustment Date, Lender will request the principal London office
of any four (4) major reference banks in the London interbank market selected by
Lender in its sole discretion to provide such bank's offered quotation
(expressed as a percentage per annum) to prime banks in the London interbank
market for deposits in U.S. Dollars for one (1) month period as of approximately
11:00 a.m., London time, on such Interest Rate Adjustment Date for amounts of
not less than $1,000,000. If at least two such offered quotations are so
provided, the LIBOR Rate will be the arithmetic mean of such quotations. If
fewer than two such quotations are so provided, Lender will request any three
(3) major banks in New York City selected by Lender in its sole discretion to
provide such banks' rate (expressed as a percentage per annum) for loans in U.S.
Dollars to leading European banks for a one (1) month period as of approximately
11:00 a.m. New York City time, on the applicable Interest Rate Adjustment Date
for amounts of not less than $1,000,000. If at least two such rates are so
provided, the LIBOR Rate will be the arithmetic mean of such rates. If fewer
than two such rates are so provided, the then LIBOR Rate will be the LIBOR Rate
in effect on the preceding Interest Rate Adjustment Date. The LIBOR Rate for any
Interest Accrual Period shall be adjusted from time to time, by increasing the
rate thereof to compensate Lender for any aggregate reserve requirements
(including, without limitation, all basic, supplemental, marginal and other
reserve requirements and taking into account any transactional adjustments or
other scheduled changes in reserve requirements during any Interest Accrual
Period) which are required to be maintained by Lender with respect to
"Eurodollar liabilities" (as presently defined in Regulation D of the Board of
Governors of the Federal Reserve System) of the same term under said Regulation
D, or any other regulations of a Governmental Authority having jurisdiction over
Lender. The establishment of the LIBOR Rate on each Interest Rate Adjustment
Date by the Lender and the Lender's calculation of the rate
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of interest applicable to this Note shall (in the absence of manifest error) be
final and binding.
"Lien" means any mortgage, deed of trust, deed to secure debt,
lien (statutory or other), pledge, easement, restrictive covenant,
hypothecation, assignment, preference, priority, security interest, or any other
encumbrance or charge on or affecting any portion of the Collateral, the Pledged
Collateral, any or all of the Individual Properties, any Mortgage Borrower or
the Borrower, or any interest in any of the foregoing, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement or similar instrument under the
UCC or comparable law of any other jurisdiction, domestic or foreign, and
mechanic's, materialmen's and other similar liens and encumbrances.
"Loan" has the meaning provided in the Recitals hereto.
"Loan Amount" has the meaning provided in the Recitals hereto.
"Loan Documents" means, collectively, this Agreement, the
Note, the Recognition Agreement, the Pledge Agreement, the PIP Guaranty, the
Rate Cap Pledge Agreement, the Environmental Guaranty, the Deposit Account
Agreement, the Manager's Subordination, the Franchisor's Subordinations and all
other agreements, instruments, certificates and documents executed or delivered
by or on behalf of Borrower, Operating Lessee or any Affiliate of either of
them, or any other Person to evidence or secure the Loan or otherwise in
satisfaction of the requirements of this Agreement, the Pledge Agreement, the
TRS Pledge Agreement, the TRS Recognition Agreement, or the other documents
listed above.
"Losses" means any losses, actual damages, costs, fees,
expenses, claims, suits, judgments, awards, liabilities (including but not
limited to strict liabilities), obligations, debts, fines, penalties, charges,
costs of Remediation (whether or not performed voluntarily), amounts paid in
settlement, litigation costs, reasonable attorneys' fees, engineers' fees,
environmental consultants' fees, and investigation costs (including but not
limited to costs for sampling, testing and analysis of soil, water, air,
building materials, and other materials and substances whether solid, liquid or
gas), of whatever kind or nature, and whether or not incurred in connection with
any judicial or administrative proceedings, actions, claims, suits, judgments or
awards.
"Management Agreement" means the Management Agreement entered
into between Manager and each Mortgage Borrower or Operating Lessee pertaining
to the management of each Individual Property in the form attached to the
Manager's Subordinations.
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"Manager" means, individually or collectively, as the context
may require, each manager under a Management Agreement, or any successor or
assignee, provided that each successor or assignee shall be acceptable to Lender
in Lender's discretion. As of the date hereof, the Manager of each Individual
Property is set forth on Exhibit F attached hereto.
"Manager's Subordination" means, with respect to each
Individual Property, the Manager's Consent and Subordination of Management
Agreement in form and substance satisfactory to Lender, dated as of the Closing
Date, executed by the applicable Manager, Mezzanine Borrower, the applicable
Mortgage Borrower which owns the Individual Property, Operating Lessee and
Lender, as the same may thereafter from time to time be supplemented, amended,
modified or extended by one or more written agreements supplemental thereto.
"Material Adverse Effect" means a material adverse effect upon
(i) the business or the financial position or results of operation of Borrower,
(ii) the ability of Borrower to perform, or of Lender to enforce, any of the
Loan Documents, (iii) the business or the financial position or results of
operation of any Mortgage Borrower, (iv) the ability of any Mortgage Borrower to
perform, or of Mortgage Lender to enforce, any of the Mortgage Loan Documents,
or (v) the value of (x) the Collateral with respect to any Individual Property
taken as a whole, (y) any Individual Property, or (z) the Pledged Collateral.
"Maturity Date" means Initial Maturity Date or such earlier
date resulting from acceleration of the Indebtedness by Lender.
"Maximum Amount" means the maximum rate of interest designated
by applicable laws relating to payment of interest and usury.
"Mold" means any mold or fungus in violation of Legal
Requirements present at or in any Individual Property.
"Mortgage" has the meaning set forth in the Mortgage Loan
Agreement.
"Mortgage Borrower" means, individually and collectively as
the context may so require, each "Borrower" under the Mortgage Loan Agreement.
"Mortgage Debt Service" means Debt Service, as defined in the
Mortgage Loan Agreement.
"Mortgage Indebtedness" means Indebtedness, as defined in the
Mortgage Loan Agreement.
"Mortgage Lender" means (i) collectively, Merrill Lynch
Mortgage Lending, Inc. and Merrill Lynch Capital, a Division of Merrill Lynch
Business Financial Services, Inc., and (ii) the successors and assigns of either
or both of them.
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"Mortgage Loan Agreement" means that certain Loan Agreement
dated as of the date hereof by and between the Mortgage Borrowers and Mortgage
Lender, as the same may from time to time hereafter be modified, supplemented or
amended, to the extent permitted by this Agreement.
"Mortgage Loan Default" means Default, as defined in the
Mortgage Loan Agreement.
"Mortgage Loan Event of Default" means Event of Default, as
defined in the Mortgage Loan Agreement.
"Mortgage Loan Release Price" means Release Price, as defined
in the Mortgage Loan Agreement.
"Mortgage Loan Transfer" means Transfer, as defined in the
Mortgage Loan Agreement.
"Mortgage Notes" means the Notes, as defined in the Mortgage
Loan Agreement.
"Multiemployer Plan" means a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been made by
Borrower, any Mortgage Borrower or any ERISA Affiliate and which is covered by
Title IV of ERISA.
"Net Operating Income" shall have the meaning set forth in the
Mortgage Loan Agreement.
"Note" means and refers to that certain Mezzanine Promissory
Note, in form and substance satisfactory to Lender in Lender's discretion, dated
the Closing Date, made by Borrower to Lender pursuant to this Agreement as such
promissory note may be modified, amended, supplemented, extended or consolidated
in writing, and any note(s) issued in exchange therefor or in replacement
thereof.
"OFAC List" means the list of specially designated nationals
and blocked persons subject to financial sanctions that is maintained by the
U.S. Treasury Department, Office of Foreign Assets Control and any other similar
list maintained by the U.S. Treasury Department, Office of Foreign Assets
Control pursuant to any Legal Requirements (or if such list does not exist, the
similar list then being maintained by the United States) including, without
limitation, trade embargo, economic sanctions, or other prohibitions imposed by
Executive Order of the President of the United States. The OFAC List currently
is accessible through the internet website at www.treas.gov/ofac/t11sdn.pdf.
"Officer's Certificate" means a certificate of Borrower which
is signed by the managing equity owner of Borrower.
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"Operating Expenses" shall have the meaning set forth in the
Mortgage Loan Agreement.
"Operating Income" shall have the meaning set forth in the
Mortgage Loan Agreement.
"Operating Lease" shall mean, individually or collectively, as
the context may require, the operating lease or similar agreement entered into
by and between the applicable Mortgage Borrower and the Operating Lessee, which
governs the operation of one of more of the Individual Properties as the same
may be amended, restated, replaced, supplemented or modified from time to time,
in accordance with the terms hereof.
"Operating Lessee" shall mean, individually or collectively,
as the context may require, any operating lessee under an Operating Lease, which
is an Affiliate of the Mortgage Borrowers and which is a Special Purpose Entity,
provided that such operating lessee shall be selected in accordance with the
terms hereof. As of the date hereof, the term Operating Lessee is Ashford TRS
Lessee LLC, a Delaware limited liability company, the current operating lessee
of each Individual Property, and an Affiliate of the Mortgage Borrowers.
"Other Borrowings" means, without duplication (but not
including the Indebtedness or any Transaction Costs payable in connection with
the Transactions), (i) all indebtedness of Borrower for borrowed money or for
the deferred purchase price of property or services, (ii) all indebtedness of
Borrower evidenced by a note, bond, debenture or similar instrument, (iii) the
face amount of all letters of credit issued for the account of Borrower and,
without duplication, all unreimbursed amounts drawn thereunder, (iv) all
indebtedness of Borrower secured by a Lien on any property owned by Borrower
whether or not such indebtedness has been assumed, (v) all Contingent
Obligations of Borrower, and (vi) all payment obligations of Borrower under any
interest rate protection agreement (including, without limitation, any interest
rate swaps, caps, floors, collars or similar agreements) and similar agreements.
"Payment Date" shall mean the last Business Day of each month
commencing on October 29, 2004 and continuing to and including the Maturity Date
(or, if the Maturity Date is not on a Business Day, the immediately preceding
Business Day).
"PBGC" means the Pension Benefit PIP Guaranty Corporation
established under ERISA, or any successor thereto.
"Partial Release" shall have the meaning set forth in Section
2.15.
"Permits" has the meaning provided in the Mortgages.
"Permitted Encumbrances" shall have the meaning set forth in
the Mortgage Loan Agreement.
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"Permitted Investments" has the meaning provided in the
Deposit Account Agreement.
"Permitted Transfers" shall mean, with respect to each
Individual Property, each Mortgage Borrower, Borrower and the Pledged
Collateral, (i) provided that no Event of Default has occurred and is
continuing, Permitted Encumbrances (other than Permitted Encumbrances arising
prior to the occurrence of such Event of Default); (ii) provided that no Event
of Default has occurred and is continuing, all transfers of worn out or obsolete
furnishings, fixtures or equipment that are (if deemed necessary or advisable by
the applicable Mortgage Borrower or Operating Lessee) reasonably promptly
replaced with property of equivalent value and functionality in the ordinary
course of the Mortgage Borrowers' or Operating Lessee's operation of each
Individual Property; (iii) provided that no Event of Default has occurred and is
continuing, all Leases which are not Material Leases (other than Material Leases
entered into prior to the occurrence of such Event of Default); (iv) all
Material Leases which have been approved by Mortgage Lender in writing pursuant
to the terms of the Mortgage Loan Agreement and Mezzanine Lender pursuant to the
terms of this Agreement; (v) the pledge of the Pledged Collateral pursuant to
the terms of the Pledge Agreement or the TRS Pledge Agreement; (vi) transfers,
issuance, conversions, pledges and redemptions of stock in Ashford Hospitality
Trust, Inc., a Maryland corporation (or its successors), Ashford OP General
Partner LLC, a Delaware limited liability company, Ashford OP Limited Partner,
LLC, a Delaware limited liability company, or Ashford Hospitality Limited
Partnership, a Delaware limited partner, and (vii) the merger or consolidation
of Ashford Hospitality Trust, Inc. (or its successors).
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, estate, trust, unincorporated association,
or any other entity, 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.
"PIP Guaranty" means that certain Guaranty dated as of the
date hereof from Ashford Hospitality Limited Partnership to Lender.
"Plan" means an employee benefit or other plan established or
maintained by Borrower, any Mortgage Borrower or any ERISA Affiliate and that is
covered by Title IV of ERISA, other than a Multiemployer Plan.
"Pledge Agreement" means that certain Mezzanine Pledge and
Security Agreement dated as of the date hereof between Borrower and Lender.
"Pledged Collateral" means: (a) Borrower's right, title and
interest in and to the Pledged Equity, (b) all rights, privileges, general
intangibles, payments intangibles, voting rights, authority and power arising
from its interest in the Pledged Equity, (c) the capital of Borrower and any and
all profits, losses, distributions, and allocations attributable to the Pledged
Equity as well as the proceeds of any distribution thereof, whether arising
under the terms of any organizational document of any Mortgage Borrower or
otherwise, (d) all other payments, if any, due or to become due, to Borrower by
or from and all other present or future claims by Borrower
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against, any Mortgage Borrower, or in respect of the Pledged Equity, under or
arising out of (i) any organizational document of any Mortgage Borrower, (ii)
monies loaned or advanced, for services rendered or otherwise or (iii) any other
contractual obligations, commercial tort claims, supporting obligations,
damages, insurance proceeds, condemnation awards or other amounts due to
Borrower from any Mortgage Borrower or with respect to the Pledged Equity, (e)
Borrower's claims, rights, powers, privileges, authority, options, security
interests, liens and remedies, if any, under or arising out of the ownership of
the Pledged Equity, (f) to the extent permitted by applicable law, Borrower's
rights, if any, in any Mortgage Borrower pursuant to any organizational document
of any Mortgage Borrower, or at law, to exercise and enforce every right, power,
remedy, authority, option and privilege of Borrower relating to any Pledged
Equity, including without limitation, the right to (i) execute any instruments
and to take any and all other action on behalf of and in the name of Borrower in
respect of any Pledged Equity, (ii) exercise any and all voting, consent and
management rights of Borrower in or with respect to any Mortgage Borrower, (iii)
exercise any election (including, but not limited to, election of remedies) or
option or to give or receive any notice, consent, amendment, waiver or approval
with respect to any Mortgage Borrower, (iv) enforce or execute any checks, or
other instruments or orders of any Mortgage Borrower, and (v) file any claims
and to take any action in connection with any of the foregoing, together with
full power and authority to demand, receive, enforce or collect any of the
foregoing or any property of any Mortgage Borrower, (g) all Investment Property
(as such term is defined in Section 9-102 of the UCC) issued by or relating to
any Mortgage Borrower, or otherwise relating to the Pledged Equity, (h) all
equity interests or other property and assets now existing or hereafter acquired
by Borrower, including, without limitation, as a result of any mergers,
acquisitions, exchange offers, recapitalizations of any type, contributions to
capital, or the exercise of options or other rights relating to the Pledged
Equity, and (i) to the extent not otherwise included: all assets and personal
property of Borrower (1) in any way arising from, related to, or pertaining to
Borrower's right, title and interest in and to the Pledged Entity or any Pledged
Equity, and (2) in any way arising from, related to, or pertaining to Borrower's
right, title and interest in and to the Pledged Equity or any Pledged Entity;
and (ii) all proceeds of any or all of the foregoing (including, without
limitation, insurance proceeds and distributions on the Pledged Equity), as
applicable, (j) the Account Collateral and (k) the Initial Interest Rate Cap
Agreement, any Extension Interest Rate Cap Agreement, or any amendment,
replacements, modification thereto obtained by Borrower and assigned to Lender
pursuant to the terms of this Agreement, the Rate Cap Pledge Agreement, or any
of the other Loan Documents.
"Pledged Equity" means (i) 100% of Borrower's limited
partnership interests or membership interests, as applicable, in each Mortgage
Borrower, (ii) 100% of Borrower's membership interests in Ashford Senior General
Partner LLC, a Delaware limited liability company, (iii) 100% of Borrower's
membership interest in Bucks County Member LLC, a Delaware limited liability
company, and (iv) 100% of Ashford TRS Corporation's membership interests in
Operating Lessee, whether now existing or hereafter created.
"Prepayment Premium" means, with respect to any prepayment of
the Principal Indebtedness, or acceleration of the Loan, in either case, made
prior to or on September 1, 2006, an
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amount equal to one percent (1.00%) of the Principal Indebtedness being prepaid
(it being understood that Borrower shall not be permitted to voluntarily prepay
all or any part of the Loan prior to October 1, 2005).
"Principal Indebtedness" means the principal amount of the
entire Loan outstanding as the same may be increased or decreased, as a result
of prepayment or otherwise, from time to time.
"Proceeds" means all "proceeds," as such term is defined in
the UCC, and, to the extent not included in such definition, all proceeds
whether cash or non-cash, movable or immovable, tangible or intangible
(including all Insurance Proceeds, all Condemnation Proceeds and proceeds of
proceeds), from the Pledged Collateral, including, without limitation, those
from the sale, exchange, transfer, collection, loss, damage, disposition,
substitution or replacement of any of the Pledged Collateral and all income,
gain, credit, distributions and similar items from or with respect to the
Pledged Collateral.
"Property" has the meaning provided in the Mortgages.
"Rate Cap Pledge and Security Agreement" means that certain
form of Rate Cap Pledge and Security Agreement attached hereto as Exhibit I.
"Rating Agencies" means Fitch, Inc., Moody's Investors
Service, Inc., S&P, and Dominion Bond Rating Service Limited, or any successor
thereto, and any other nationally recognized statistical rating organization but
only to the extent that any of the foregoing have been or will be engaged by
Lender or its designees in connection with or in anticipation of a Secondary
Market Transaction (each, individually a "Rating Agency").
"Rating Agency Confirmation" means a written confirmation from
each of the Rating Agencies rating any securities issued in connection with a
Secondary Market Transaction that an action shall not result in a downgrade,
withdrawal or qualification of any securities issued in connection with a
Secondary Market Transaction.
"Recognition Agreement" means that certain Recognition
Agreement dated as of the date hereof among Borrower, Mortgage Borrower, SPE
Equity Owner and Lender.
"Release" with respect to any Hazardous Substance includes but
is not limited to any release, deposit, discharge, emission, leaking, leaching,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Substances.
"Release Price" shall have the meaning as set forth in Section
2.15(b)
"Remediation" (and its correlative terms) includes but is not
limited to any response, remedial, removal, or corrective action; any activity
to clean up, detoxify, decontaminate, contain or otherwise remediate any
Hazardous Substance; any actions to prevent,
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cure or mitigate any Release of any Hazardous Substance; any action to comply
with any Environmental Laws or with any permits issued pursuant thereto; any
inspection, investigation, study, monitoring, assessment, audit, sampling and
testing, laboratory or other analysis, or evaluation relating to any Hazardous
Substances or to anything referred to herein, including the preparation of any
plans, studies, reports or documents with respect thereto.
"REMIC" means a real estate mortgage investment conduit as
defined under Section 860D of the Code.
"Remington Manager" means Remington Lodging & Hospitality LP,
a Delaware limited partnership.
"Rents" means, collectively, "Rents" as defined in each
Mortgage.
"Required Debt Service Payment" means, on any Payment Date,
the Debt Service then due and payable by Borrower.
"Reuters Screen LIBO Page" means the display page designated
as "LIBO" on the Reuters Monitor Money Rates Service.
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw Hill Companies, Inc.
"Second Extended Maturity Date" has the meaning set forth in
Section 2.10.
"Second Extension Term" has the meaning set forth in Section
2.10.
"Secondary Market Transaction" shall have the meaning set
forth in Section 2.13.
"Secretary's Certificate" means, with respect to Borrower,
Operating Lessee, each Mortgage Borrower and Remington Manager, the certificate
in form and substance satisfactory to Lender in Lender's discretion dated as of
the Closing Date.
"Securities Act" has the meaning provided in Section 2.13.
"Single Member LLC" means a limited liability company that (i)
is either (a) a single member limited liability company or (b) a multiple member
limited liability company that does not have a Single-Purpose Entity that owns
at least one percent (1%) of the equity interests in such limited liability
company as its managing member, and (ii) is organized under the laws of the
State of Delaware.
"Single-Purpose Entity" means a corporation, limited
partnership, or limited liability company which, at all times since its
formation and thereafter (i) was and will be organized solely for the purpose of
(v) owning the Pledged Equity or (w) owning, leasing, operating, managing,
financing and maintaining any or all of the Individual Properties or (x) acting
as an operating lessee pursuant to the terms of an Operating Lease or (y) acting
as the
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managing member of the limited liability company which owns any or all of the
Individual Properties or (z) acting as the general partner of a limited
partnership which owns any or all of the Individual Property, (ii) has not and
will not engage in any business unrelated to (w) the ownership of the Pledged
Equity or (x) the ownership, leasing, operating, managing, financing and
maintaining of any or all of the Individual Properties or (y) acting as a member
of a limited liability company which owns any or all of the Individual
Properties or (z) acting as a general partner of a limited partnership which
owns any or all of the Individual Properties, (iii) has not and will not have
any assets other than (w) the Pledged Equity or (x) those related to any or all
of the Individual Properties or (y) its member interest in the limited liability
company which owns any or all of the Individual Properties or (z) its general
partnership interest in the limited partnership which owns any or all of the
Individual Properties, as applicable, (iv) has not and will not engage in, seek
or consent to any dissolution, winding up, liquidation, consolidation or merger,
and, except as otherwise expressly permitted by this Agreement, has not and will
not engage in, seek or consent to any asset sale, transfer of partnership or
membership or shareholder interests, or amendment of its limited partnership
agreement, articles of incorporation, articles of organization, certificate of
formation or operating agreement (as applicable), (v) if such entity is a
limited partnership, has and will have at all times while the Loan is
outstanding as its only general partners, general partners which are and will be
Single-Purpose Entities which are corporations or a Single Member LLC, (vi) if
such entity is a corporation or a Single Member LLC, at all relevant times while
the Loan is outstanding, has and will have at least two Independent Directors,
(vii) the board of directors of such entity (or if such entity is a Single
Member LLC, the entity, each member, each director, each manager, the board of
managers, if any, and all other Persons on behalf of such entity), has not taken
and will not take any action requiring the unanimous affirmative vote of one
hundred percent (100%) of the members and all directors and managers, as
applicable, unless all of the directors or managers, as applicable, including,
without limitation, all Independent Directors, shall have participated in such
vote, (viii) has not and will not fail to correct any known misunderstanding
regarding the separate identity of such entity, (ix) if such entity is a limited
liability company (other than a Single Member LLC), has and will have at least
one member that is and will be a Single-Purpose Entity which is and will be a
corporation, and such corporation is and will be the managing member of such
limited liability company, (x) without the unanimous consent of all of the
partners, directors or managers (including, without limitation, all Independent
Directors) or members, as applicable, has not and will not with respect to
itself or to any other entity in which it has a direct or indirect legal or
beneficial ownership interest (w) file a bankruptcy, insolvency or
reorganization petition or otherwise institute insolvency proceedings or
otherwise seek any relief under any laws relating to the relief from debts or
the protection of debtors generally; (x) seek or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar
official for such entity or such entity's properties; (y) make any assignment
for the benefit of such entity's creditors; or (z) take any action that might
cause such entity to become insolvent, (xi) has maintained and will maintain its
accounts, books and records separate from any other Person or entity, (xii) has
maintained and will maintain its books, records, resolutions and agreements as
official records, (xiii) has not commingled and will not commingle its funds or
assets with those of any other entity except as permitted by the Loan Documents,
(xiv) has held and will hold its assets in its own name, (xv) has conducted and
will conduct its business in its
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name and will not permit its name, identity or type of entity to be changed,
(xvi) has maintained and will maintain its financial statements, accounting
records and other entity documents separate from any other Person or entity,
except to the extent that such Person or entity is required to file consolidated
tax returns by law; provided, that any such consolidated financial statement
shall contain a footnote indicating that separate assets and liabilities are
neither available to pay the debts of the consolidated entity nor constitute
obligations of the consolidated entity, (xvii) has paid and will pay its own
liabilities out of its own funds and assets, (xviii) has observed and will
observe all partnership, corporate or limited liability company formalities as
applicable, (xix) has maintained and will maintain an arms-length relationship
with its Affiliates, (xx) if (x) such entity owns all of any portion of any or
all of the Individual Properties, has and will have no indebtedness other than
the Mortgage Loan, unsecured trade payables in the ordinary course of business
relating to the ownership and operation of such Individual Property which (1)
are not evidenced by a promissory note (2) when aggregated with the unsecured
trade payables of all other Mortgage Borrowers and Operating Lessee do not
exceed, at any time, a maximum amount of two and one-half percent (2-1/2%) of
the original amount of the Mortgage Loan and (3) are paid within 60 days of the
date incurred (unless same are being contested in accordance with the terms of
this Agreement), or other indebtedness that has been fully discharged on or
prior to the date hereof, or (x) if such entity owns all or any portion of the
Pledged Equity, has and will have no indebtedness other than unsecured trade
payables in the ordinary course of business relating to acting as the owner of
the Pledged Equity which (1) do not exceed, at any time, $10,000 and (2) are
paid within 60 days of the date incurred, or (y) if such entity acts as the
general partner of a limited partnership which owns such Individual Property,
has and will have no indebtedness other than unsecured trade payables in the
ordinary course of business relating to acting as general partner of the limited
partnership which owns such Individual Property which (1) do not exceed, at any
time, $10,000 and (2) are paid within 60 days of the date incurred, or (z) if
such entity acts as a managing member of a limited liability company which owns
such Individual Property, has and will have no indebtedness other than unsecured
trade payables in the ordinary course of business relating to acting as a member
of the limited liability company which owns such Individual Property which (1)
do not exceed, at any time, $10,000 and (2) are paid within 60 days of the date
incurred, (xxi) has not and will not assume or guarantee or become obligated for
the debts of any other entity or hold out its credit as being available to
satisfy the obligations of any other entity except for the Indebtedness, (xxii)
has not acquired and will not acquire obligations or securities of its partners,
members or shareholders, (xxiii) has allocated and will allocate fairly and
reasonably shared expenses, including, without limitation, shared office space
and use separate stationery, invoices and checks, (xxiv) except pursuant hereto,
has not and will not pledge its assets for the benefit of any other person or
entity, (xxv) has held and identified itself and will hold itself out and
identify itself as a separate and distinct entity under its own name and not as
a division or part of any other person or entity, (xxvi) has not made and will
not make loans to any person or entity, (xxvii) has not and will not identify
its partners, members or shareholders, or any affiliates of any of them as a
division or part of it, (xxviii) if such entity is a limited liability company
(other than a Single Member LLC), such entity shall dissolve only upon the
bankruptcy of the managing member, and such entity's articles of organization,
certificate of formation and/or operating agreement, as applicable, shall
contain such provision, (xxix) has not entered and will not enter
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into or be a party to, any transaction with its partners, members, shareholders
or its affiliates except in the ordinary course of its business and on terms
which are intrinsically fair and are no less favorable to it than would be
obtained in a comparable arms-length transaction with an unrelated third party
and which are fully disclosed to Lender in writing in advance, (xxx) has paid
and will pay the salaries of its own employees from its own funds, (xxxi) has
maintained and intends to maintain adequate capital in light of its contemplated
business operations, (xxxii) if such entity is a limited liability company
(other than a Single Member LLC) or limited partnership, and such entity has one
or more managing members or general partners, as applicable, then such entity
shall continue (and not dissolve) for so long as a solvent managing member or
general partner, as applicable, exists and such entity's organizational
documents shall contain such provision, (xxxiii) if such entity is a Single
Member LLC, its organizational documents shall provide that, as long as any
portion of the Indebtedness remains outstanding, upon the occurrence of any
event that causes the last remaining member of such Single Member LLC to cease
to be a member of such Single Member LLC (other than (y) upon an assignment by
such member of all of its limited liability company interest in such Single
Member LLC and the admission of the transferee, if permitted pursuant to the
organizational documents of such Single Member LLC and the Loan Documents, or
(z) the resignation of such member and the admission of an additional member of
such Single Member LLC, if permitted pursuant to the organizational documents of
such Single Member LLC and the Loan Documents), the individuals acting as the
Independent Directors of such Single Member LLC shall, without any action of any
Person and simultaneously with the last remaining member of the Single Member
LLC ceasing to be a member of the Single Member LLC, automatically be admitted
as non-economic members of the Single Member LLC (the "Special Member") and
shall preserve and continue the existence of the Single Member LLC without
dissolution, and (xxxiv) if such entity is a Single Member LLC, its
organizational documents shall provide that for so long as any portion of the
Indebtedness is outstanding, no Special Member may resign or transfer its rights
as Special Member unless (y) a successor Special Member has been admitted to
such Single Member LLC as a Special Member, and (z) such successor Special
Member has also accepted its appointment as the Independent Director.
"Special Member" has the meaning provided in the definition of
"Single Purpose Entity."
"SPE Equity Owner" means, (a) with respect to each Mortgage
Borrower other than Ashford Bucks County LLC, Ashford Senior General Partner
LLC, a Delaware limited liability company and (b) with respect to Ashford Bucks
County LLC, (i) Borrower and (ii) Bucks County Member LLC, a Delaware limited
liability company.
"SPE Equity Owner's Certificate" means the SPE Equity Owner's
Certificate in form and substance satisfactory to Lender dated as of the Closing
Date.
"Spread" means 7.20%.
"Strike Rate" means 6% per annum.
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"Sub-Account" shall have the meaning provided in Section
2.11(c).
"Subordination, Attornment and Security Agreement" shall mean
for each Operating Lease, a Subordination, Attornment and Security Agreement or
other similar agreement among Lender, Borrower, the applicable Mortgage Borrower
and the Operating Lessee, in form and substance acceptable to Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified in
accordance with the terms hereof.
"Survey" means, with respect to each Individual Property, a
survey of such Individual Property satisfactory to Lender, (i) prepared by a
registered Independent surveyor satisfactory to Lender and Title Insurer and
containing a surveyor's certification satisfactory to Lender, (ii) together with
a metes and bounds or platted lot/block legal description of the land
corresponding with the survey, and (iii) prepared based on a scope of work
determined by Lender in Lender's discretion.
"Taking" has the meaning, with respect to each Individual
Property, provided in the Mortgages for such Individual Property.
"Tax Fair Market Value" means, with respect to the Pledged
Collateral, the fair market value of the Pledged Collateral.
"Third Extended Maturity Date" has the meaning set forth in
Section 2.10.
"Third Extension Term" has the meaning set forth in Section
2.10.
"Title Instruction Letter" means an instruction letter in form
and substance satisfactory to Lender in Lender's discretion.
"Title Insurance Policy" means, with respect to each
Individual Property, an owner's loan policy of title insurance for such
Individual Property naming Mortgage Lender as the insured party issued by Title
Insurer with respect to such Individual Property in an amount acceptable to
Mortgage Lender and containing a "mezzanine lender's rights" or similar
endorsement acceptable to Lender.
"Title Insurer" means Chicago Title Insurance Company and
First American Title Insurance Company, as co-insurers.
"Transaction Costs" means all fees, costs, expenses and
disbursements of Lender relating to the Transactions, including, without
limitation, all appraisal fees, legal fees, accounting fees and the costs and
expenses described in Section 8.24.
"Transactions" means the transactions contemplated by the Loan
Documents.
"Transfer" means any conveyance, transfer (including, without
limitation, any transfer of any direct or indirect legal or beneficial interest
(including, without limitation, any
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profit interest) in Borrower, any Mortgage Borrower, Operating Lessee or any SPE
Equity Owner, any sale, any Lease (including, without limitation, any amendment,
extension, modification, waiver or renewal thereof), or any sale, or Lien,
whether by law or otherwise, of, on or affecting any Pledged Collateral, any
Collateral, and Mortgage Borrower, Borrower, Operating Lessee or any SPE Equity
Owner, other than a Permitted Transfer.
"TRS Pledge Agreement" means that certain Pledge and Security
Agreement from Ashford TRS Corporation to Lender dated as of the date hereof.
"TRS Recognition Agreement" means that certain Recognition
Agreement among Ashford TRS Corporation, Lender and Operating Lessee.
"UCC" means, with respect to any Pledged Collateral, the
Uniform Commercial Code in effect in the jurisdiction in which the relevant
Pledged Collateral is located.
"UCC Searches" has the meaning provided in Section 3.1.
ARTICLE 2
GENERAL TERMS
Section 2.1 Amount of the Loan. Lender shall lend to Borrower a total
aggregate amount equal to the Loan Amount.
Section 2.2 Use of Proceeds. Proceeds of the Loan shall be used for the
following purposes: (a) to make an equity contribution to Mortgage Borrower in
order to cause Mortgage Borrower to use such amounts for any use permitted by
Section 2.2 of the Mortgage Loan Agreement, (b) to fund any upfront reserves or
escrow amounts required hereunder, and (c) to pay any Transaction Costs. Any
excess will be available to Borrower and may be used for any lawful purpose.
Section 2.3 Security for the Loan. The Note and Borrower's obligations
hereunder and under the other Loan Documents shall be secured by, and Borrower
hereby grants, pledges, hypothecates, transfers and assigns to Lender a first
priority and continuing lien on and first priority security in, all of
Borrower's right, title, ownership, equity or other interests in and to the
Pledged Collateral and the other security interests and Liens granted in this
Agreement and in the other Loan Documents.
Section 2.4 Borrower's Note.
(a) Borrower's obligation to pay the principal of and
interest on the Loan (including Late Charges, Default Rate interest, and the
Prepayment Premium, if any), shall be evidenced by this Agreement and by the
Note, duly executed and delivered by Borrower. The Note shall be payable as to
principal, interest, Late Charges, Default Rate interest and
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Prepayment Premium, if any, as specified in this Agreement, with a final
maturity on the Maturity Date. Borrower shall pay all outstanding Indebtedness
on the Maturity Date.
(b) Lender is hereby authorized, at its option, to
endorse on a schedule attached to the Note (or on a continuation of such
schedule attached to the Note and made a part thereof) an appropriate notation
evidencing the date and amount of each payment of principal, interest, Late
Charges, Default Rate interest and Prepayment Premium, if any, in respect
thereof, which schedule shall be made available to Borrower, at Borrower's sole
cost and expense on reasonable advance notice, for examination at Lender's
offices.
Section 2.5 Principal and Interest Payments.
(a) Accrual of Interest. Interest shall accrue on the
outstanding principal balance of the Note and all other amounts due to Lender
under the Loan Documents at the Interest Rate.
(b) Monthly Payments of Interest at the LIBOR
Interest Rate. On each Payment Date, Borrower shall pay to Lender interest on
the unpaid Principal Indebtedness calculated at the LIBOR Interest Rate which
has accrued and will accrue under such Note through the last day of the Interest
Accrual Period in which such Payment Date occurs.
(c) Payment Dates. All payments required to be made
pursuant to paragraph (b) above shall be made beginning on the first Payment
Date; provided, however, that Borrower shall pay interest for the first Interest
Accrual Period on the Closing Date.
(d) Calculation of Interest. Interest shall accrue on
the outstanding principal balance of the Loan and all other amounts due to
Lender under the Loan Documents commencing upon the Closing Date. Interest shall
be computed on the actual number of days elapsed, based on a 360-day year.
(e) Default Rate Interest. Upon the occurrence and
during the continuance of an Event of Default, and at the sole option of Lender
and without need for notice to the Borrower, the entire unpaid amount
outstanding hereunder and under the Note will bear interest at the Default Rate.
(f) Late Charge. If Borrower fails to make any
payment of any sums due under the Loan Documents on the date when the same is
due, Borrower shall pay a Late Charge.
(g) Maturity Date. On the Maturity Date, Borrower
shall pay to Lender all amounts owing under the Loan Documents including,
without limitation, interest, principal, Late Charges, Default Rate interest and
any Prepayment Premium.
(h) Prepayment Premium. Upon any repayment or
prepayment of the Principal Indebtedness, including, without limitation, in
connection with an acceleration of the
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Loan, but excluding a prepayment made in connection with Section 2.6(b) or (e)
hereof, Borrower shall pay to Lender on the date of such repayment, prepayment
or acceleration of the Loan the Prepayment Premium applicable thereto. All
Prepayment Premium payments hereunder shall be deemed earned by Lender upon the
funding of the Loan.
Section 2.6 Prepayment
(a) Provided that no Event of Default has occurred
and is continuing hereunder, Borrower may prepay the Indebtedness in full (or in
part solely in connection with the consummation of a Partial Release) at any
time after October 1, 2005, provided that (i) simultaneously therewith, the
applicable Mortgage Borrower shall make a prepayment of principal of the
Mortgage Loan pursuant to the terms of and in accordance with Section 2.6 of the
Mortgage Loan Agreement, (ii) such prepayment of Indebtedness shall bear the
same proportion to the Principal Amount of the Loan immediately prior to such
payment as the prepayment of the Mortgage Loan bears to the principal amount of
the Mortgage Loan prior to such prepayment, and (iii) in the event that such
prepayment is not on a Payment Date, simultaneously therewith, Borrower pays to
Lender all interest accrued on the amount of the Loan prepaid through the last
day of the Interest Accrual Period during which such prepayment occurs.
(b) At any time during the term of the Loan, if any
Mortgage Borrower is required by Mortgage Lender under the provisions of any
Mortgage to prepay the Mortgage Loan or any portion thereof in the event of
damage to or destruction of, or a Taking of any Individual Property, Borrower
shall cause such Mortgage Borrower to pay any Insurance Proceeds or Condemnation
Proceeds in the following manner and order of priority (i) first, to prepay the
Mortgage Loan to the full extent of the Insurance Proceeds or the Condemnation
Proceeds, as applicable, to the extent of the Allocated Loan Amount (as defined
in the Mortgage Loan Agreement) for the applicable Individual Property, (ii)
second, to prepay the Loan to the full extent of the Allocated Mezzanine Loan
Amount for the applicable Individual Property, (iii) third, to Lender and
Mortgage Lender pro rata to prepay the Loan and the Mortgage Loan to the extent
of the positive difference between the sum of the Release Price and the Mortgage
Loan Release Price for such Individual Property and the combined Allocated Loan
Amount for the Loan and the Mortgage Loan for such Individual Property, and (iv)
to Mortgage Borrowers.
(c) All prepayments of the Indebtedness made pursuant
to this Section shall be applied by Lender in accordance with the provisions of
Section 2.7.
(d) Borrower shall not be permitted at any time to
prepay all or any part of the Loan, except as expressly provided in this Section
2.6 and 2.15.
(e) Intentionally Omitted.
(f) Intentionally Omitted.
(g) Intentionally Omitted.
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(h) In the event that the Mortgage Loan is paid in
full at any time prior to the Maturity Date of the Loan, the Indebtedness shall
then be immediately due and payable regardless of the Maturity Date of the Loan.
Section 2.7 Application of Payments.
At all times, all proceeds of repayment, including without
limitation any payment or recovery on the Pledged Collateral and any prepayments
on the Loan, shall be applied to the Note and to such amounts payable by
Borrower under the Loan Documents in such order and in such manner as Lender
shall elect in Lender's discretion.
Section 2.8 Payment of Debt Service, Method and Place of Payment.
(a) Except as otherwise specifically provided herein,
all payments and prepayments under this Agreement and the Note shall be made to
Lender not later than 12:00 noon, New York City time, on the date when due, and
shall be made in lawful money of the United States of America in federal or
other immediately available funds to an account specified to Borrower by Lender
in writing, and any funds received by Lender after such time, for all purposes
hereof, shall be deemed to have been paid on the next succeeding Business Day.
(b) All payments made by Borrower hereunder or by
Borrower under the other Loan Documents, shall be made irrespective of, and
without any deduction for, any set-offs or counterclaims.
Section 2.9 Taxes; Funding Losses; Changes in Law.
(a) All payments made by Borrower under this
Agreement and under the other Loan Documents shall be made free and clear of,
and without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, and all liabilities with respect thereto, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority
(all such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions, withholdings and liabilities, collectively, "Applicable Taxes"). If
Borrower shall be required by law to deduct any Applicable Taxes from or in
respect of any sum payable hereunder to Lender, the following shall apply: (i)
Borrower shall make all such required deductions, (ii) the sum payable to Lender
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.9(a)), Lender receives an amount equal to the sum Lender would
have received had no such deductions been made and (iii) Borrower shall pay the
full amount deducted to the relevant taxing authority or other authority in
accordance with applicable law. Payments made pursuant to this Section 2.9(a)
shall be made within ten (10) Business Days after Lender makes written demand
therefor.
(b) Borrower shall pay to Lender all Funding Losses
incurred from time to time by Lender upon demand. Lender shall deliver to
Borrower a statement for any such sums to which Lender is entitled to receive
pursuant to this Section 2.9(b), which statement shall
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be binding and conclusive absent manifest error. Payment of Funding Losses
hereunder shall be in addition to any obligation to pay a Prepayment Premium in
circumstances where such Prepayment Premium would be due and owing.
Section 2.10 Extension Options. Borrower has the right to extend the
term of the Loan for three additional terms of twelve (12) months each (each, an
"Extension Term"), with the first additional term ("First Extension Term")
having a maturity date that is the date that is the twelfth Payment Date
following the Initial Maturity Date ("First Extended Maturity Date"), the second
additional term ("Second Extension Term") having a maturity date that is the
date that is the twelfth Payment Date following the First Extended Maturity Date
("Second Extended Maturity Date") and the third additional term ("Third
Extension Term") having a maturity date that is the date that is the twelfth
Payment Date following the Second Extended Maturity Date "(Third Extended
Maturity Date"). Borrower shall exercise the right to exercise any extension
option under this Section 2.10 by giving Lender notice of such election at least
ninety (90) days prior to (i) the Initial Maturity Date, in the case of
exercising the option to extend the term of the Loan to the First Extended
Maturity Date, (ii) the First Extended Maturity Date, in the case of exercising
the option to extend the term of the Loan to the Second Extended Maturity Date
and (ii) the Second Extended Maturity Date, in the case of the option to extend
the term of the Loan to the Third Extended Maturity Date. Upon receipt of any
such request by Borrower to extend the term of the Loan, Lender will notify
Borrower whether or not the term of the Loan will be so extended, which
extension shall be granted upon satisfaction of each of the following conditions
in Lender's sole discretion:
(a) No Event of Default exists as of the date of
Borrower's extension option election notice to Lender and as of the Initial
Maturity Date the First Extended Maturity Date or the Second Extended Maturity
Date, as applicable, and Borrower delivers Lender an Officer's Certificate
confirming same;
(b) No Mortgage Loan Event of Default exists as of
the date of Borrower's extension option election notice to Lender and as of the
Initial Maturity Date, the First Extended Maturity Date, or the Second Extended
Maturity Date, as applicable, and the Borrower delivers to Lender an Officer's
Certificate confirming same;
(c) On or prior to the Initial Maturity Date, the
First Extended Maturity Date, or the Second Extended Maturity Date, as
applicable, Borrower either (A) extends the term of the Initial Interest Rate
Cap Agreement to a date not earlier than the First Extended Maturity Date, the
Second Extended Maturity Date or the Third Extended Maturity Date , as
applicable, or (B) obtains an Extension Interest Rate Cap Agreement for the
applicable Extension Term with a LIBOR Rate strike price equal to the Strike
Price, and collaterally assigned such Extension Interest Rate Cap Agreement to
Lender pursuant to an assignment of interest rate cap agreement in the same form
as the Interest Rate Cap; and
(d) intentionally omitted;
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(e) in each case, the Maturity Date under, and as
defined in, the Mortgage Loan Agreement is contemporaneously extended to the
First Extended Maturity Date or the Second Extended Maturity Date, as
applicable, and Borrower shall provide Lender copies of any and all notice and
correspondence relating to Borrower's exercise of its extension options under
the Mortgage Loan Agreement;
If any of the foregoing conditions are not satisfied in
Lender's sole discretion, Lender shall have no obligation to extend the term of
the Loan. Upon Borrower's exercise of its rights under this Section 2.10 and
Lender's extension of the term of the Loan in connection therewith, the defined
term "Maturity Date" shall be deemed to be the First Extended Maturity Date, the
Second Extended Maturity Date or the Third Extended Maturity Date, as
applicable.
Section 2.11 Central Cash Management.
(a) Borrower shall cause Mortgage Borrower to comply
with Section 2.11 and Section 2.12 of the Mortgage Loan Agreement.
(b) On or before the Closing Date, Lender shall
establish and maintain with Deposit Account Bank a collection account (the
"Deposit Account"), which shall be an Eligible Account with a separate and
unique identification number and entitled "[_______________]". Subject to the
terms of Section 2.11(d)(vii) of the Mortgage Loan Agreement, an amount equal to
the scheduled monthly interest payment portion of Debt Service shall be
deposited into the Deposit Account and pursuant to Section 2.11(d)(x) of the
Mortgage Loan Agreement, all amounts then remaining in the Cash Collateral
Account shall be deposited into the Deposit Account. Borrower shall not have any
right to withdraw money from the Deposit Account, which shall be under the sole
dominion and the "control," within the meaning of Sections 9-104 and 9-106 of
the UCC, of Lender. Any such funds held by Borrower prior to deposit into the
Deposit Account shall be held in trust for the benefit of Lender.
(c) Establishment of Sub-Accounts. The Deposit
Account shall contain a Debt Service Payment Sub-Account and a Cash Management
Fee Sub-Account, each of which accounts (individually, a "Sub-Account" and
collectively, the "Sub-Accounts") shall be an Eligible Account to which certain
funds shall be allocated and from which disbursements shall be made pursuant to
the terms of this Agreement.
(d) Monthly Funding of Sub-Accounts. During each
Interest Accrual Period and, except as provided below, during the term of the
Loan commencing with the Interest Accrual Period in which the Closing Date
occurs (each, the "Current Interest Accrual Period"), Lender shall allocate all
funds then on deposit in the Deposit Account among the Sub-Accounts as follows
and in the following priority:
(i) first, to the Debt Service Payment
Sub-Account, until an amount equal to the Required Debt Service Payment
for the Payment Date immediately after the Current Interest Accrual
Period has been allocated to the Debt Service Payment Sub-Account; and
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(ii) second, funds sufficient to pay the
amounts then due Deposit Account Bank shall be deposited in the Cash
Management Fee Sub-Account; and
(iii) third, provided that (i) no Event of
Default has occurred and is continuing, and (ii) Lender has received
all financial information described in Section 5.1(P) for the most
recent periods for which the same are due, Lender agrees that in each
Current Interest Accrual Period any amounts deposited into or remaining
in the Deposit Account after the minimum amounts set forth in clauses
(i) and (ii), above have been satisfied with respect to the Current
Interest Accrual Period and any periods prior thereto shall be
disbursed by Lender on a weekly basis at Borrower's expense, to such
account that Borrower may request in writing. Lender and its agents
shall not be responsible for monitoring Borrower's use of any funds
disbursed from the Deposit Account or any of the Sub-Accounts. If an
Event of Default has occurred and is continuing, any amounts deposited
into or remaining in the Deposit Account shall be for the account of
Lender and may be withdrawn by Lender to be applied in any manner as
Lender may elect in Lender's discretion.
If an Event of Default has occurred and exists or if on any
Payment Date the balance in any Sub-Account is insufficient to make the required
payment due from such Sub-Account, Lender may, in its sole discretion, in
addition to any other rights and remedies available hereunder, withdraw funds
from any other Sub-Account to (a) pay such deficiency or (b) apply to payment of
the Indebtedness. If Lender elects to apply funds of any such Sub-Account to pay
any Required Debt Service Payment, Borrower shall, upon demand, repay to Lender
the amount of such withdrawn funds to replenish such Sub-Account, and if
Borrower shall fail to repay such amounts within five (5) days after notice of
such withdrawal, an Event of Default shall exist hereunder.
(e) Payment of Debt Service and Deposit Account Bank
Fees.
(i) Payment of Debt Service. At or before
12:00 noon, New York City time, on each Payment Date during the term of
the Loan, Lender shall transfer to Lender's own account from the Debt
Service Payment Sub-Account an amount equal to the Required Debt
Service Payment for the applicable Payment Date. Borrower shall be
deemed to have timely made the Required Debt Service Payment regardless
of the time Lender makes such transfer as long as sufficient funds are
on deposit in the Debt Service Payment Sub-Account at 12:00 noon, New
York City time on the applicable Payment Date. At all times after such
Payment Date Lender may, at its option, transfer amounts in the Debt
Service Payment Sub-Account to Lender's own account, provided that
Borrower shall receive credit against the Required Debt Service Payment
in the amounts so transferred to Lender such that in any given Current
Interest Accrual Period Borrower shall not be required to deposit into
the Debt Service Payment Sub-Account any amounts in excess of the
aggregate amount of the Required Debt Service Payment for such Current
Interest Accrual Period.
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(ii) Payment of Deposit Account Bank Fees.
Not more frequently than once each Interest Accrual Period, Lender
shall transfer to the Deposit Account Bank an amount equal to the
amount of the monthly fee payable to the Deposit Account Bank under the
Deposit Account Agreement.
(f) Permitted Investments. Upon the written request
of Borrower, which request may be made once per Interest Accrual Period, Lender
shall direct the Deposit Account Bank to invest and reinvest any balance in the
Deposit Account from time to time in Permitted Investments as instructed by
Borrower; provided, however, that: (i) if Borrower fails to so instruct Lender,
or if a Default or an Event of Default shall have occurred and is continuing,
Lender shall direct the Deposit Account Bank to invest and reinvest such balance
in Permitted Investments as Lender shall determine in Lender's discretion; (ii)
the maturities of the Permitted Investments on deposit in the Deposit Account
shall, to the extent such dates are ascertainable, be selected and coordinated
to become due not later than the day before any disbursements from the
Sub-Accounts must be made; (iii) all such Permitted Investments shall be held in
the name and be under the sole dominion and control of Lender; (iv) no Permitted
Investment shall be made unless Lender shall retain a first priority perfected
Lien in such Permitted Investment and all filings and other actions necessary to
ensure the validity, perfection, and priority of such Lien have been taken; (v)
Lender shall only be required to follow the written investment instructions
which were most recently received by Lender and Borrower shall be bound by such
last received investment instructions; and (vi) any request from Borrower
containing investment instructions shall contain an Officer's Certificate from
Borrower (which may conclusively relied upon by Lender and its agents) that any
such investments constitute Permitted Investments. It is the intention of the
parties hereto that all amounts deposited in the Deposit Account shall at all
times be invested in Permitted Investments. All funds in the Deposit Account
that are invested in a Permitted Investment are deemed to be held in such
Deposit Account for all purposes of this Agreement and the other Loan Documents.
Lender shall have no liability for any loss in investments of funds in the
Deposit Account that are invested in Permitted Investments (unless invested
contrary to Borrower's request other than after the occurrence of a Default or
an Event of Default) and no such loss shall affect Borrower's obligation to
fund, or liability for funding, the Deposit Account and each Sub-Account, as the
case may be. Borrower and Lender agree that Borrower shall include all such
earnings and losses (other than those for Lender's account in accordance with
the immediately preceding sentence) on the Deposit Account as income of Borrower
for federal and applicable state tax purposes. Borrower shall be responsible for
any and all fees, costs and expenses with respect to Permitted Investments.
(g) Interest on Accounts. All interest paid or other
earnings on the Permitted Investments made hereunder shall be income of the
Borrower and applied in the manner and priority set forth in Section 2.11(d)
hereof.
(h) Termination of Central Cash Management. The
obligations of Borrower under Section 2.11 and Section 2.12 to maintain and fund
the Deposit Account shall terminate in their entirety and be of no further force
or effect upon the satisfaction of each of the following conditions: (i) no
Default or Event of Default shall have occurred and be continuing;
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(ii) the release by Lender of its liens on the Pledged Collateral in accordance
with the provisions of this Agreement and the other Loan Documents; and (iii)
Borrower's receipt of Lender's written acknowledgment that the conditions
described in (i) and (ii) above have been satisfied to Lender's satisfaction.
(i) Senior Loan Accounts. Notwithstanding anything to
the contrary contained in this Agreement, if at any time and for any reason
(including, without limitation, the satisfaction of the Mortgage Loan), the
Mortgage Borrowers are no longer maintaining any of the accounts or Sub-Accounts
(as defined in the Mortgage Loan Agreement) that it is required to maintain
under and in accordance with the terms of the Mortgage Loan Documents, (i)
Borrower shall be required to promptly establish and maintain with Lender and
for the benefit of Lender reserves in replacement and substitution thereof,
which substitute reserves shall be subject to all of the same terms and
conditions applicable under the Mortgage Loan Documents with respect to the
accounts and Sub-Accounts (as defined in the Mortgage Loan Agreement) being
replaced and be otherwise reasonably satisfactory to Lender, and Borrower shall,
and shall cause each Mortgage Borrower to acknowledge and agree to the
amendments to this Agreement relating to such substitution to cash management
provided such amendments are substantially similar to those contained in the
Mortgage Loan Agreement; and (ii) to the extent agreed to by Mortgage Lender
under the Mortgage Loan Documents, Borrower shall or shall cause Mortgage Lender
to remit to Lender any funds from accounts or Sub-Accounts (as defined in the
Mortgage Loan Agreement) that were remaining in such reserves at the time of the
termination of such reserves for the purpose of funding the equivalent
substitute reserves.
Section 2.12. Security Agreement.
(a) Pledge of Accounts. To secure the full and
punctual payment and performance of all of the Indebtedness, Borrower hereby
sells, assigns, conveys, pledges and transfers to Lender and grants to Lender a
first priority and continuing Lien on and security interest in and to the
Account Collateral.
(b) Instructions and Agreements. On or before the
Closing Date, Borrower and the Deposit Account Bank will execute and deliver a
Deposit Account Agreement in form and substance satisfactory to Lender in
Lender's discretion (the "Deposit Account Agreement"). Borrower agrees that
prior to the payment in full of the Indebtedness, the Deposit Account Agreement
shall be irrevocable by Borrower without the prior written consent of Lender.
(c) Financing Statements; Further Assurances.
Borrower hereby authorizes Lender to file a financing statement or statements in
connection with the Account Collateral in the form required to properly perfect
Lender's security interest in the Account Collateral to the extent that it may
be perfected by such a filing. Borrower agrees that at any time and from time to
time, at the expense of Borrower, Borrower shall promptly execute and deliver
all further instruments, and take all further action, that Lender may reasonably
request, in order to perfect and protect the pledge, security interest and Lien
granted or purported to be
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granted hereby, or to enable Lender to exercise and enforce Lender's rights and
remedies hereunder with respect to, the Account Collateral.
(d) Transfers and Other Liens. Borrower agrees that
it will not sell or otherwise dispose of any of the Account Collateral other
than pursuant to the terms hereof and of the other Loan Documents, or create or
permit to exist any Lien upon or with respect to all or any of the Account
Collateral, except for the Lien granted to Lender under this Agreement.
(e) Lender's Reasonable Care. Beyond the exercise of
reasonable care in the custody thereof, Lender shall not have any duty as to any
Account Collateral or any income thereon in Lender's possession or control or in
the possession or control of any agents for, or of Lender, or the preservation
of rights against any Person or otherwise with respect thereto. Lender shall be
deemed to have exercised reasonable care in the custody of the Account
Collateral in Lender's possession if the Account Collateral is accorded
treatment substantially equal to that which Lender accords Lender's own
property, it being understood that Lender shall not be liable or responsible for
(i) any loss or damage to any of the Account Collateral, or for any diminution
in value thereof from a loss of, or delay in Lender's acknowledging receipt of,
any wire transfer from the Deposit Account Bank or (ii) any loss, damage or
diminution in value by reason of the act or omission of Lender, or Lender's
agents, employees or bailees, except for any loss, damage or diminution in value
resulting from the gross negligence, fraud or willful misconduct of Lender, its
agents or employees.
(f) Lender Appointed Attorney-In-Fact. Borrower
hereby irrevocably constitutes and appoints Lender as Borrower's true and lawful
attorney-in-fact, with full power of substitution, at any time after the
occurrence and during the continuance of an Event of Default to execute,
acknowledge and deliver any instruments and to exercise and enforce every right,
power, remedy, option and privilege of Borrower with respect to the Account
Collateral, and do in the name, place and stead of Borrower, all such acts,
things and deeds for and on behalf of and in the name of Borrower with respect
to the Account Collateral, which Borrower could or might do or which Lender may
deem necessary or desirable to more fully vest in Lender the rights and remedies
provided for herein with respect to the Account Collateral and to accomplish the
purposes of this Agreement. The foregoing powers of attorney are irrevocable and
coupled with an interest.
(g) Continuing Security Interest; Termination. This
Section shall create a continuing pledge of, Lien on and security interest in
the Account Collateral and shall remain in full force and effect until payment
in full of the Indebtedness. Upon payment in full of the Indebtedness, Borrower
shall be entitled to the return, upon Borrower's written request and at
Borrower's expense, of such of the Account Collateral as shall not have been
sold or otherwise applied pursuant to the terms hereof, and Lender shall execute
such instruments and documents as may be reasonably requested by Borrower in
writing to evidence such termination and the release of the pledge and Lien
hereof, provided, however, that Borrower shall pay on demand all of Lender's
expenses in connection therewith.
Section 2.13. Secondary Market Transactions.
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(a) Borrower hereby acknowledges that Lender may in
one or more transactions (i) sell or securitize the Loan or portions thereof in
one or more transactions through the issuance of securities, which securities
may be rated by one or more of the Rating Agencies, (ii) sell or otherwise
transfer the Loan or any portion thereof one or more times, (iii) sell
participation interests (including without limitation, senior and subordinate
participation interests) in the Loan one or more times, (iv) re-securitize the
securities issued in connection with any securitization, or (v) further divide
the Loan into more separate notes or components, or change the principal
balances (but not increase the aggregate principal balance) or interest rates of
such notes (including, without limitation, senior and subordinate notes or
components) (the transactions referred to in clauses (i) through (v), each a
"Secondary Market Transaction" and collectively "Secondary Market
Transactions").
(b) With respect to any Secondary Market Transaction
described in Section 2.13(a)(v) above, such notes or note components may be
assigned different interest rates, so long as, at such time the weighted average
of the relevant interest rates equals the LIBOR Interest Rate; provided, that
after an Event of Default Borrower recognizes that, in the case of prepayments,
the weighted average interest rate of the Loan may increase because Lender shall
have the right to apply principal payments to one or more notes or components
with lower rates of interest before applying principal payments to one or more
notes or components with higher rates of interest and provided, further, that
the principal balance of the Note shall not change. Lender shall have the same
rights to sell or otherwise transfer, participate or securitize one or more of
the divided, amended, modified or otherwise changed notes or components,
individually or collectively, as Lender has with respect to the Loan.
(c) Borrower agrees that it shall cooperate with
Lender and use Borrower's commercially reasonable efforts to facilitate the
consummation of each Secondary Market Transaction including, without limitation,
by: (i) amending or causing the amendment of this Agreement and the other Loan
Documents, and executing such additional documents, instruments and agreements
including amendments to Borrower's organizational documents and preparing
financial statements as requested by the Rating Agencies to conform the terms of
the Loan to the terms of similar loans underlying completed or pending secondary
market transactions having or seeking ratings similar to those then being sought
in connection with the relevant Secondary Market Transaction; (ii) promptly and
reasonably providing such information (including, without limitation, financial
information) as may be requested in connection with the preparation of a private
placement memorandum, prospectus or a registration statement required to
privately place or publicly distribute the securities in a manner which does not
conflict with federal or state securities laws; (iii) providing in connection
with each of (A) a preliminary and a final private placement memorandum or other
offering documents or (B) a preliminary and final prospectus, as applicable, an
indemnification certificate (x) certifying that Borrower has carefully examined
such private placement memorandum, prospectus, registration statement or other
offering document, as applicable, including, without limitation, the sections
entitled "Special Considerations," "Description of the Mortgage Loan," "The
Underlying Mortgaged Property," "The Manager," "Borrower" and "Certain Legal
Aspects of the Mortgage Loan," and such sections (and any other sections
requested) insofar as they relate to Borrower, its Affiliates,
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the Loan or any Individual Property does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading; provided, however, that Borrower shall not be required to
indemnify Lender for any losses relating to untrue statements or omissions which
Borrower identified to Lender in writing at the time of Borrower's examination
of such memorandum or prospectus, as applicable, and (y) indemnifying (i) Lender
and each of its affiliates and their respective successors and assigns
(including their respective officers, directors, partners, employees, attorneys,
accountants, professionals and agents and each other person, if any, controlling
Lender or any of its affiliates within the meaning of either Section 15 of the
Securities Act of 1933, as amended (the "Securities Act"), or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (each,
including Lender, an "Indemnified Party") and the (ii) party that has filed the
registration statement relating to the Secondary Market Transaction (the
"Registration Statement"), each of its directors and officers who have signed
the Registration Statement and each Person that controls such Party within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
(collective, the "Underwriter Group"), for any losses, claims, damages, costs,
expenses or liabilities (including, without limitation, all liabilities under
all applicable federal and state securities laws) (collectively, the
"Liabilities") to which any of them may become subject (a) insofar as the
Liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact relating to Borrower, its Affiliates, the
Loan, any Individual Property, any Manager, the Mortgage Borrowers, the Mortgage
Loan and Operating Lessee contained in such sections or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated in such sections or necessary in order to make the
statements in such sections, in light of the circumstances under which they were
made, not misleading or (b) as a result of any untrue statement of material fact
in any of the financial statements of Borrower incorporated into any placement
memorandum, prospectus, registration statement or other document connected with
the issuance of securities or the failure to include in such financial
statements or in any placement memorandum, prospectus, registration statement or
other document connected with the issuance of securities any material fact
relating to Borrower, its Affiliates, any Individual Property, the Loan, any
Manager, the Mortgage Borrowers, the Mortgage Loan and the Operating Lessee
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; and (z) agreeing to reimburse the
Indemnified Party and the Underwriter Group for any legal or other expenses
reasonably incurred by the Indemnified Party and the Underwriter Group in
connection with investigating or defending the Liabilities; (iv) causing to be
rendered such customary opinion letters as shall be requested by the Rating
Agencies for other secondary market or transactions having or seeking ratings
comparable to that then being sought for the relevant Secondary Market
Transaction; (v) making such representations, warranties and covenants, as may
be reasonably requested by the Rating Agencies and comparable to those required
in other secondary market transactions having or seeking the same rating as is
then being sought for the Secondary Market Transaction; (vi) providing such
information regarding the Collateral or the Pledged Collateral as may be
reasonably requested by the Rating Agencies or otherwise required in connection
with the formation of a REMIC; and (vii) providing any other information and
materials required in the Secondary Market Transaction.
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(d) Borrower agrees to participate and cooperate in
any meetings with the Rating Agencies or Investors, and providing any other
information and materials reasonably required in the Secondary Market
Transaction to make the certificates offered in such Secondary Market
Transaction saleable in the secondary market and to obtain ratings from two or
more rating agencies;
(e) Borrower acknowledges and agrees that the Lender
may, at any time on or after the Closing Date, assign its duties, rights or
obligations hereunder or under any Loan Document in whole, or in part, to a
servicer and/or a trustee in Lender's discretion. Nothing herein shall in any
way limit Lender's right to sell all or a portion of the Loan in a transaction
which is not a Secondary Market Transaction.
(f) Lender shall reimburse Borrower for all
reasonable out-of-pocket costs incurred by the Borrower in connection with
complying with their obligations set forth in this Section 2.13, provided,
however that the Borrower shall remain responsible for all of Borrower's
reasonable and customary legal and accounting fees not to exceed $10,000 and all
indemnity and related obligations incurred by Borrower or its Affiliates.
(g) Notwithstanding anything to the contrary
contained herein or in any other Loan Document, Lender reserves the right to
increase, decrease, or otherwise re-allocate the outstanding principal balances
of any and all of the Mortgage Notes and the Note, and Borrower covenants and
agrees to, and to cause the Mortgage Borrowers to execute amendments to the
Note, this Agreement, and the other Loan Documents, the Mortgage Notes, the
Mortgage Loan Documents and the Borrower's organizational documents reasonably
requested by Lender or Mortgage Lender in connection with any such
re-allocation, provided that such modification shall not (a) increase the
aggregate outstanding principal balance of the Mortgage Notes and the Mezzanine
Note, (b) increase the weighted average interest rate of the Loan and the
Mortgage Loan existing on the date of such modification, (c) change the stated
maturity date of the Loan as set forth herein, or (d) modify or amend any other
economic or other term of the Loan.
Section 2.14. Interest Rate Cap Agreement.
(a) On the Closing Date, Borrower shall obtain, and
thereafter maintain in effect, the Initial Interest Rate Cap Agreement, which
shall be coterminous with the Initial Maturity Date and have a notional amount
equal to the Loan Amount. The Initial Interest Rate Cap Agreement shall have a
LIBOR strike rate equal to or less than the Strike Rate.
(b) If Borrower exercises any option to extend the
term of the Loan pursuant to Section 2.10, then on or prior to the commencement
of the applicable Extension Term, Borrower shall obtain an Extension Interest
Rate Cap Agreement having (x) a term coterminous with such Extension Term, (y) a
notional amount at least equal to the Principal Indebtedness as of the first day
of such Extension Term, and (z) a LIBOR strike rate equal to or less than the
Strike Rate.
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(c) Borrower shall collaterally assign to Lender
pursuant to the Rate Cap Pledge and Security Agreement all of its right, title
and interest in any and all payments under each Interest Rate Cap Agreement and
shall deliver to Lender an executed counterpart of such Rate Cap Pledge and
Security Agreement and obtain the consent of the Acceptable Counterparty to such
collateral assignment (as evidenced by the Acceptable Counterparty's execution
of a separate acknowledgment to such Rate Cap Pledge and Security Agreement).
(d) Borrower shall comply with all of its obligations
under the terms and provisions of each Interest Rate Cap Agreement. All amounts
paid under an Interest Rate Cap Agreement shall be deposited directly into the
Deposit Account. Borrower shall take all actions reasonably requested by Lender
to enforce Lender's rights under the Rate Cap Pledge and Security Agreement in
the event of a default by the counterparty thereunder and shall not waive, amend
or otherwise modify any of its rights thereunder without Lender's reasonable
consent (which consent may be conditioned on receipt of a Rating Agency
Confirmation).
Section 2.15. Partial Release. Provided that no Event of Default has
occurred and is continuing under any of the Loan Documents, at any time after
October 1, 2005, Borrower may cause each Mortgage Borrower to obtain the release
of such Individual Property (a "Partial Release") from the lien of the
applicable Mortgage (and other Loan Documents) and the release of such Mortgage
Borrower's and Operating Lessee's ongoing obligations under the Mortgage Loan
Documents with respect to such Individual Property (other than those expressly
stated to survive) so long as all of the following conditions shall have been
satisfied:
(a) Borrower has provided Lender with no less than
thirty (30) days, but no more than ninety (90) days, prior written notice of the
applicable Mortgage Borrower's request to obtain a release of the applicable
Individual Property;
(b) Lender shall have received a prepayment of the
Loan in an amount equal to the greater of (a) in the event that the Partial
Release will result in an aggregate prepayment of five million, nine hundred
fifty-two thousand, three hundred eighty dollars ($5,952,380) or less, 100% of
the Allocated Mezzanine Loan Amount of the Individual Property sold or (b) in
the event that the Partial Release will result in an aggregate prepayment of
greater than five million, nine hundred fifty-two thousand, three hundred eighty
dollars ($5,952,380), 115% of the Allocated Mezzanine Loan Amount for the
Individual Property sold (either (a), or (b) the "Release Price"), which
prepayment shall be accompanied by (i) all accrued and unpaid interest allocable
to the portion of the Principal Indebtedness being prepaid as of the date of
such prepayment, (ii) if such prepayment is not made on a Payment Date, the
interest which would have accrued thereon to the next monthly Payment Date with
respect to the amount prepaid, (iii) the applicable Yield Maintenance Premium on
the Principal Indebtedness being prepaid pursuant to such Partial Release, and
(iv) any and all other sums due under the Loan Documents in connection with a
partial prepayment of the Loan;
(c) Mortgage Lender shall have received a prepayment
of the Mortgage Loan simultaneously with the prepayment described in the
immediately preceding subsection (b) equal to the Mortgage Loan Release Price;
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(d) the applicable Mortgage Borrower shall have
complied with all of the terms and provisions regarding such Partial Release set
forth in the Mortgage Loan Agreement, the applicable Mortgage and the other
Mortgage Loan Documents;
(e) the requirements of Section 2.15(f) of the
Mortgage Loan Agreement with respect to the required Debt Service Coverage Ratio
for the remaining Individual Properties shall be satisfied, and Borrower shall
deliver to Lender an Officer's Certificate confirming same;
(f) Borrower shall execute (i) amendments to the Loan
Documents to the extent necessary (as determined by Lender in its reasonable
discretion to document and reflect the Partial Release);
(g) Lender shall have received reimbursement in full
of all of Lender's fees, costs and expenses, including without limitation,
reasonable legal counsel fees and disbursements incurred in connection with the
Partial Release, and the review and approval of all documents and information
required to be delivered in connection therewith; and
In the event that Borrower shall cause any Mortgage Borrower to obtain
a Partial Release of its applicable Individual Property pursuant to the terms
and conditions of this Section 2.15, Borrower may, upon its request, obtain a
release of the lien upon the portion of the Pledged Equity applicable to such
Mortgage Borrower, and Lender shall, upon Borrower's request and at Borrower's
sole cost and expense, (a) execute such releases and other documentation as may
be reasonably necessary to effect such release, and (b) promptly return to
Borrower the Certificates applicable to such Mortgage Borrower.
ARTICLE 3.
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to the Making of the Loan.
(a) As a condition precedent to the making of the
Loan, Borrower shall have satisfied the following conditions (unless waived by
Lender in accordance with Section 8.4) on or before the Closing Date:
(A) Loan Documents.
(i) Loan Agreement. Borrower shall
have executed and delivered this Agreement to Lender.
(ii) Note. Borrower shall have
executed and delivered to Lender the Note.
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(iii) Interest Rate Cap Agreement.
Borrower shall have delivered to Lender the Interest Rate Cap Agreement
in a form acceptable to Lender form an Acceptable Counterparty.
(iv) Mezzanine Loan Documents.
Borrower and Guarantor, as applicable, shall have executed and
delivered to Lender the Pledge Agreement, the Environmental Guaranty,
the PIP Guaranty, the Manager's Subordination Agreement and all other
Loan Documents.
(v) Financing Statements. Borrower
and its partners or members (and their shareholders), as applicable,
shall have authorized Lender to file all financing statements required
by Lender and such financing statements shall have been irrevocably
delivered to an authorized title agent for the Title Company in the
appropriate filing offices in each of the appropriate jurisdictions.
(vi) Manager's Subordination. Each
Manager and Borrower shall have executed and delivered to Lender the
Manager's Subordinations.
(vii) Franchisor Subordinations.
The Borrower shall have delivered to Lender (1) certified copies of
each Franchise Agreement and (2) the Franchisor's Subordinations.
(viii) Subordination, Attornment
and Security Agreement. Operating Lessee and each applicable Borrower
shall have executed and delivered to Lender (1) a certified copy of
each Operating Lease, and (2) each applicable Subordination, Attornment
and Security Agreement.
(ix) Environmental Guaranty.
Borrower shall have executed and delivered to Lender the Environmental
Guaranty.
(x) PIP Guaranty. Guarantor shall
have executed the PIP Guaranty.
(xi) Deposit Account Agreement.
Borrower and Deposit Account Bank shall have executed and delivered the
Deposit Account Agreement and shall have delivered an executed copy of
such Deposit to Lender.
(xii) REA Estoppels. Borrower shall
have delivered to Lender an executed REA estoppel letter, which shall
be in form and substance satisfactory to Lender, from each party to any
REA required by Lender with respect to any Individual Property.
(xiii) Ashford TRS Corporation
shall have executed and delivered to Lender the TRS Pledge Agreement;
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(xiv) Borrower, Ashford TRS
Corporation and Operating Lessee shall have executed and delivered the
TRS Recognition Agreement.
(B) Opinions of Counsel. Lender shall have
received from counsel satisfactory to Lender, legal opinions in form and
substance satisfactory to Lender in Lender's discretion (including, without
limitation, a bankruptcy opinion). All such legal opinions will be addressed to
Lender and the Rating Agencies, dated as of the Closing Date, and in form and
substance satisfactory to Lender, the Rating Agencies and their counsel.
Borrower hereby instructs any of the foregoing counsel, to the extent that such
counsel represents Borrower, to deliver to Lender such opinions addressed to
Lender and the Rating Agencies.
(C) Secretary's Certificates and SPE Equity
Owner's Certificate. Lender shall have received a Secretary's Certificate
acceptable to Lender with respect to Borrower's managing equity owner and each
Remington Manager and the SPE Equity Owner's Certificate with respect to
Borrower.
(D) Insurance. Lender shall have received
certificates of insurance demonstrating insurance coverage in respect of each
Individual Property as required by and in accordance with the Mortgages.
(E) Lien Search Reports. Lender shall have
received satisfactory reports of UCC (collectively, the "UCC Searches"), federal
tax lien, bankruptcy, state tax lien, judgment and pending litigation searches
conducted by a search firm reasonably acceptable to Lender. Such searches shall
have been received in relation to Borrower, each Mortgage Borrower, the
Operating Lessee, and each Manager. Such searches shall have been conducted in
each of the locations designated by Lender in Lender's reasonable discretion and
shall have been dated not more than fifteen (15) days prior to the Closing Date.
(F) Title Insurance Policy. Lender shall
have received (i) a Title Insurance Policy for each Individual Property or a
marked-up commitment (in form and substance satisfactory to Lender) from Title
Insurer to issue a Title Insurance Policy, for each Individual Property and (ii)
a fully executed copy of the Title Instruction Letter from the Title Insurer and
(iii) an "Eagle 9" or such similar UCC title insurance policy insuring the
perfection of the pledge of the Pledged Collateral in form and substance
acceptable to Lender.
(G) Environmental Matters. Lender shall have
received the Environmental Report with respect to each Individual Property.
(H) Consents, Licenses, Approvals. Lender
shall have received copies of all consents, licenses and approvals, if any,
required in connection with the execution, delivery and performance by Borrower
under, and the validity and enforceability of, the Loan Documents, and such
consents, licenses and approvals shall be in full force and effect.
(I) Additional Matters. Lender shall have
received such other Permits, certificates (including certificates of occupancy
reflecting the permitted uses of the
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Individual Properties as of the Closing Date), opinions, documents and
instruments (including, without limitation, written proof from the appropriate
Governmental Authority regarding the zoning of each Individual Property in form
and substance satisfactory to Lender in Lender's discretion) relating to the
Loan as may be required by Lender and all other documents and all legal matters
in connection with the Loan shall be satisfactory in form and substance to
Lender. Borrower shall provide Lender with information reasonably satisfactory
to Lender regarding the Basic Carrying Costs on or before the Closing Date.
(J) Representations and Warranties. The
representations and warranties herein and in the other Loan Documents shall be
true and correct in all material respects.
(K) No Injunction. No law or regulation
shall have been adopted, no order, judgment or decree of any Governmental
Authority shall have been issued or entered, and no litigation shall be pending
or threatened, which in the judgment of Lender would have a Material Adverse
Effect.
(L) Survey. Lender shall have received a
Survey for each Individual Property.
(M) Engineering Report. Lender shall have
received an Engineering Report for each Individual Property.
(N) Appraisal. Lender shall have received an
Appraisal satisfactory to Lender with respect to each Individual Property which
shall be (i) prepared by an Appraiser approved by Lender in Lender's reasonable
discretion, (ii) prepared based on a scope of work determined by Lender in
Lender's reasonable discretion and (iii) in form and content acceptable to
Lender in Lender's reasonable discretion.
(O) Security Deposits. Each Mortgage
Borrower shall be in compliance with all applicable Legal Requirements relating
to all security deposits held for any Leases.
(P) Service Contracts and Permits. Borrower
shall have delivered to Lender true, correct and complete copies of all material
contracts and Permits relating to each Individual Property.
(Q) Site Inspection. Unless waived by Lender
in accordance with Section 8.4, Lender shall have performed, or caused to be
performed on its behalf, an on-site due diligence review of each Individual
Property to be acquired or refinanced with the Mortgage Loan, the results of
which shall be satisfactory to Lender in Lender's discretion.
(R) Use. Each Individual Property shall be
operating and operated only as a hotel of the same class and in a similar manner
as each such Individual Property is operated on the Closing Date.
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(S) Financial Information. Lender shall have
received all financial information (which financial information shall be
satisfactory to Lender in Lender's discretion) relating to each Individual
Property including, without limitation, audited financial statements of
Borrower, each Mortgage Borrower and Operating Lessee for the calendar year
ending December 31, 2003 and other financial reports requested by Lender in
Lender's reasonable discretion. Such financial information shall be (i) prepared
by an accounting firm approved by Lender in Lender's reasonable discretion, (ii)
prepared based on a scope of work determined by Lender in Lender's reasonable
discretion and (iii) in form and content acceptable to Lender in Lender's
reasonable discretion.
(T) Management Agreement. Lender shall have
received each Management Agreement.
(U) Leases; Tenant Estoppels; Subordination,
Nondisturbance and Attornment Agreements. With respect to each Individual
Property, Borrower shall have delivered a true, complete and correct rent roll
and a copy of each of the Leases identified in such rent roll, and each Lease
shall be satisfactory to Lender in Lender's reasonable discretion.
(V) Subdivision. Evidence satisfactory to
Lender (including title endorsements) that the Land relating to each Individual
Property constitutes a separate lot for conveyance and real estate tax
assessment purposes.
(W) Transaction Costs. Borrower shall have
paid or caused to be paid all Transaction Costs.
(X) Ground Lease. Borrower shall have
delivered to Lender (1) certified copy of the Ground Lease, and (2) an executed
estoppel certificate in form and substance acceptable to Lender from the lessor
under the Ground Lease.
(b) Lender shall not be obligated to make the Loan
unless and until each of the applicable conditions precedent set forth in this
Section 3.1 is satisfied and until Borrower provides any other information
reasonably required by Lender.
(c) In connection with the Loan, Borrower shall
execute and/or deliver to Lender all additions, amendments, modifications and
supplements to the items set forth in this Article III, including, without
limitation, amendments, modifications and supplements to the Note, the Pledge
Agreement, the TRS Pledge Agreement and the Manager's Subordinations if
reasonably requested by Lender to effectuate the provisions hereof, and to
provide Lender with the full benefit of the security intended to be provided
under the Loan Documents. Without in any way limiting the foregoing, such
additions, modifications and supplements shall include those deemed reasonably
desirable by Lender's counsel in the jurisdiction in which the applicable
Individual Property is located.
(d) The making of the Loan shall constitute, without
the necessity of specifically containing a written statement to such effect, a
confirmation, representation and
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warranty by Borrower to Lender that all of the applicable conditions to be
satisfied in connection with the making of the Loan have been satisfied (unless
waived by Lender in accordance with Section 8.4, or otherwise made known to
Lender by Borrower) and that all of the representations and warranties of
Borrower set forth in the Loan Documents are true and correct as of the date of
the making of the Loan.
Section 3.2. Form of Loan Documents and Related Matters.
The Loan Documents and all of the certificates, agreements,
legal opinions and other documents and papers referred to in this Article III,
unless otherwise specified, shall be delivered to Lender, and shall be in form
and substance satisfactory to Lender.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of Borrower. Borrower
represents, warrants and covenants as follows as to Borrower, each Mortgage
Borrower, Guarantor, Operating Lessee, the Pledged Collateral and all Individual
Properties, as applicable:
(A) Organization. Each of Borrower, each
Mortgage Borrower and Operating Lessee (i) is a duly organized and validly
existing Entity in good standing under the laws of the State of its formation,
(ii) is duly qualified as a foreign Entity in each jurisdiction in which the
nature of its business, the applicable Individual Properties or any of the
Collateral or the Pledged Collateral, as applicable, makes such qualification
necessary or desirable, (iii) has the requisite Entity power and authority to
carry on its business as now being conducted, and (iv) has the requisite Entity
power to execute and deliver, and perform its obligations under, the Loan
Documents, as applicable.
(B) Authorization. The execution and
delivery by Borrower, Guarantor, Ashford TRS Corporation, and the Operating
Lessee of the Loan Documents to which it is a party, Borrower's, Guarantor's,
Ashford TRS Corporation's and Operating Lessee's performance of its obligations
thereunder and the creation of the security interests and Liens provided for in
the Loan Documents (i) have been duly authorized by all requisite Entity action
on the part of Borrower, Guarantor, Ashford TRS Corporation and Operating
Lessee, (ii) will not violate any provision of any applicable Legal
Requirements, any order, writ, decree, injunction or demand of any court or
other Governmental Authority, any organizational document of Borrower,
Guarantor, Ashford TRS Corporation or Operating Lessee or any indenture or
agreement or other instrument to which Borrower or Operating Lessee is a party
or by which Borrower, Guarantor, Ashford TRS Corporation or Operating Lessee is
bound except, with respect to violations of any such indentures, agreements or
other instruments, where such violation would not have a Material Adverse
Effect, (iii) will not be in conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under, or result in the
creation or imposition of any Lien of any nature whatsoever upon any of the
property or assets of Borrower, Guarantor, Ashford TRS Corporation or Operating
Lessee pursuant to, any indenture
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or agreement or instrument, and (iv) have been duly executed and delivered by
Borrower, Guarantor, Ashford TRS Corporation or Operating Lessee, as applicable.
Except for those obtained or filed on or prior to the Closing Date, none of
Borrower, Guarantor, Ashford TRS Corporation or Operating Lessee is required to
obtain any consent, approval or authorization from, or to file any declaration
or statement with, any Governmental Authority or other agency in connection with
or as a condition to the execution, delivery or performance of the Loan
Documents. The Loan Documents to which Borrower, , Guarantor, Ashford TRS
Corporation Operating Lessee or any Manager is a party have been executed and
delivered by such parties.
(C) Single-Purpose Entity.
(i) Borrower has been, and will
continue to be, a duly formed and existing Entity, and a Single-Purpose
Entity.
(ii) Each SPE Equity Owner at all
times since its formation has been, and will continue to be, a duly
formed and existing limited liability company or limited partnership,
as applicable, in good standing under the laws of the jurisdiction of
its formation and a Single-Purpose Entity, is duly qualified as a
foreign entity in each other jurisdiction in which the nature of its
business or any of the Collateral or the Pledged Collateral makes such
qualification necessary or desirable, and Borrower will take no action
to cause any SPE Equity Owner not to be a duly formed and existing
limited liability company in good standing under the laws of the
jurisdiction of its formation and a Single-Purpose Entity
(iii) Borrower, each Mortgage
Borrower, each SPE Equity Owner and Operating Lessee has been, and will
continue to be, a duly formed and existing Entity, and a Single-Purpose
Entity provided that certain of the Mortgage Borrowers identified on
Schedule I (the "Pre-Existing Borrowers") were organized prior to the
transactions contemplated herein, and they did not originally have
covenants or undertakings with respect to the Special Purpose Entity
criteria in their organizational documents and did not have Independent
Directors. However, each Pre-Existing Borrower has certified that since
organization it has never owned any property other than its current
respective Individual Property, that it has engaged in no business
other than the ownership and operation of its respective Individual
Property, that it has timely paid all taxes, and that it has complied
in all material respects with the Single-Purpose Entity criteria;
except that certain of the Pre-Existing Borrowers had indebtedness
secured by their respective Individual Property or allowed their
Individual Property to secure obligations of an affiliate, but the
related lender has executed a release, which includes an
acknowledgement that such Pre-Existing Borrower's obligation to lender
has been terminated and discharged in full, and that lender may not
look to the Pre-Existing Borrower or its assets for satisfaction of the
obligations of any affiliate of Ashford Hospitality Limited Partnership
under the related credit facility.
(iv) Each SPE Equity Owner at all
times since its formation has been, and will continue to be, a duly
formed and existing limited liability
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company or a limited partnership in good standing under the laws of the
jurisdiction of its formation and a Single-Purpose Entity, is duly
qualified as a foreign entity in each other jurisdiction in which the
nature of its business or any of the Collateral makes such
qualification necessary or desirable, and Borrower will take no action
to cause any SPE Equity Owner not to be a duly formed and existing
limited liability company in good standing under the laws of the
jurisdiction of its formation and a Single-Purpose Entity.
(D) Litigation. Except as disclosed on
Schedule 1 attached hereto, there are no actions, suits or proceedings at law or
in equity by or before any Governmental Authority or other agency now pending
and served or, to the knowledge of Borrower, threatened against Borrower,
Guarantor, Ashford TRS Corporation, any SPE Equity Owner, Mortgage Borrower,
Operating Lessee, any Manager, the Pledged Collateral or any Individual Property
which, if determined against Borrower, Guarantor, Ashford TRS Corporation, SPE
Equity Owner, Mortgage Borrower, Operating Lessee, Manager, the Pledged
Collateral, or Individual Property could reasonably be expected to have a
Material Adverse Effect.
(E) Agreements. Neither Borrower, Guarantor,
Ashford TRS Corporation, nor any Mortgage Borrower or Operating Lessee is a
party to any agreement or instrument or subject to any restriction which is
likely to have a Material Adverse Effect. No such party is in default in any
material respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any indenture, agreement or
instrument to which it is a party or by which such party or the applicable
Pledged Collateral or Individual Property is bound which could reasonably be
expected to have a Material Adverse Effect.
(F) No Bankruptcy Filing. Neither Borrower,
nor Borrower on behalf of any Mortgage Borrower, Guarantor, Ashford TRS
Corporation, or Operating Lessee is contemplating either the filing of a
petition under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of such party's assets or property, and
Borrower has no knowledge of any Person contemplating the filing of any such
petition against such party.
(G) Full and Accurate Disclosure. No
statement of fact made by or on behalf of Borrower in the Loan Documents
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained herein or therein not misleading.
There is no fact presently known to Borrower which has not been disclosed to
Lender which materially adversely affects, nor as far as Borrower can foresee,
might materially adversely affect the business, operations or condition
(financial or otherwise) of Borrower.
(H) Management Agreements. Each Management
Agreement is valid, binding and enforceable and in full force and effect and has
not been modified and there are no material defaults under any of them and nor
has any event occurred that with the passage of time, the giving of notice or
both would result to Borrower's knowledge (a) in such a material default under
the terms of each Management Agreement with any Manager other than Remington
Manager, and (b) with respect to any Management Agreement with Remington
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Manager, has any event occurred that with the passage of time, the giving of
notice or both would result in such a material default under the terms of such
Management Agreement.
(I) Compliance. Except as expressly
disclosed in the Engineering Reports, the Environmental Reports, the PZR zoning
reports or the Surveys delivered to Lender by Borrower, each Individual Property
and each of Mortgage Borrowers', each Manager's and each Operating Lessee's use
thereof as a hotel and operations thereat comply in all material respects with
all applicable Legal Requirements and all Insurance Requirements. Neither
Borrower nor Mortgage Borrower is in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the violation of
which is reasonably likely to have a Material Adverse Effect.
(J) Other Debt and Obligations. Neither
Borrower nor Mortgage Borrower or Operating Lessee has any financial obligation
under any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which such party is a party, or by which such party or each
Individual Property or the Pledged Collateral is bound, other than (a) unsecured
trade payables incurred in the ordinary course of business relating to the
ownership and operation of each Individual Property or the Pledged Collateral
which are not evidenced by a promissory note and (1) with respect to Mortgage
Borrower when aggregated with the unsecured trade payables of all Mortgage
Borrowers and Operating Lessee, do not exceed a maximum amount of two and
one-half percent (2.5%) of the Mortgage Indebtedness and are paid within sixty
(60) days of the date incurred and (2) with respect to Borrower and Bucks County
Member LLC, do not exceed $10,000 and are paid within sixty (60) days of the
date incurred, (unless same are being contested in accordance with the terms of
this Agreement) and (c) obligations under the Mortgage Loan Documents and the
Loan Documents, as applicable. Except for the Loan and the Mortgage Loan,
neither Borrower nor Mortgage Borrower or Operating Lessee has borrowed or
received other debt financing that has not been heretofore repaid in full and
Borrower has no known material contingent liabilities.
(K) ERISA. (a) Each Plan and, to the
knowledge of Borrower, each Multiemployer Plan, is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, its terms and the applicable provisions of ERISA, the Code and any other
federal or state law, and no event or condition has occurred as to which
Borrower would be under an obligation to furnish a report to Lender under
Section 5.1(S).
(a) As of the date hereof
and throughout the term of the Loan (a) none of Borrower, Mortgage Borrower or
Operating Lessee is or will be an "employee benefit plan," as defined in Section
3(3) of ERISA, subject to Title I of ERISA, or a "plan," as defined in Section
4975(e)(1) of the Code, subject to Code Section 4975, (b) neither Borrower nor
Mortgage Borrower or Operating Lessee is or will be a "governmental plan" within
the meaning of Section 3(32) of ERISA, (c) none of the assets of Borrower,
Mortgage Borrower or Operating Lessee constitutes or will constitute "plan
assets" of one or more of any such plans under 29 C.F.R. Section 2510.3-101 or
otherwise, and (d) transactions by or with
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Borrower, Mortgage Borrower or Operating Lessee do not and will not violate
state statutes regulating investment of, and fiduciary obligations with respect
to, governmental plans and such state statutes do not in any manner affect the
ability of the Borrower, Mortgage Borrower or Operating Lessee to perform its
obligations under the Loan Documents or the Mortgage Loan Documents, as
applicable, or the ability of Lender or Mortgage Lender to enforce any and all
of its rights under the this Agreement or the Mortgage Loan Agreement, as
applicable.
(L) Solvency. Borrower (i) has not entered
into this Agreement or any Loan Document with the actual intent to hinder,
delay, or defraud any creditor, and (ii) has received reasonably equivalent
value in exchange for its obligations under the Loan Documents. Giving effect to
the transactions contemplated hereby and the agreements set forth herein, the
fair saleable value of Borrower's assets exceeds and will, immediately following
the execution and delivery of this Agreement, exceed Borrower's total
liabilities, including, without limitation, subordinated, unliquidated, or
disputed liabilities or Contingent Obligations. The fair saleable value of
Borrower's assets is and will, immediately following the execution and delivery
of this Agreement, be greater than Borrower's probable liabilities, including
the maximum amount of its Contingent Obligations or its debts as such debts
become absolute and matured. Borrower's assets do not and, immediately following
the execution and delivery of this Agreement, will not, constitute unreasonably
small capital to carry out its business as conducted or as proposed to be
conducted. Borrower does not intend to, and does not believe that it will, incur
debts and liabilities (including, without limitation, Contingent Obligations 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 Borrower).
(M) Not Foreign Person. Borrower is not a
"foreign person" within the meaning of Section 1445(f)(3) of the Code.
(N) Investment Company Act; Public Utility
Holding Company Act. Borrower is not (i) an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of either a "holding company"
or a "subsidiary company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or (iii) subject to any other federal or state
law or regulation which purports to restrict or regulate its ability to borrow
money.
(O) No Defaults. No Event of Default, or to
Borrower's knowledge, Default, exists under or with respect to any Loan
Document.
(P) Labor Matters. Borrower is not a party
to any collective bargaining agreements.
(Q) Title to each Individual Property and
the Pledged Collateral. Each Mortgage Borrower owns good, indefeasible,
marketable and insurable fee simple or leasehold title to the applicable
Individual Property which it owns, free and clear of all Liens, other than the
Permitted Encumbrances applicable to such Individual Property. There are
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no outstanding options to purchase or rights of are not likely to first refusal
affecting any Individual Property. The Permitted Encumbrances do not and are not
likely to materially and adversely affect (i) the ability of Mortgage Borrower
to pay in full all sums due under the Mortgage Notes or any of its other
obligations in a timely manner or (ii) the use of any Individual Property for
the use currently being made thereof, the operation of such Individual Property
as currently being operated or the value of any Individual Property. Borrower
and Ashford TRS Corporation each owns the Pledged Collateral represented to be
owned by it, free and clear of all Liens, except for the liens created under the
Loan Documents. No Person other than Borrower or SPE Equity Owner owns any
equity interests in Mortgage Borrower and no Person other than Borrower owns any
membership interest in Bucks County Member LLC.
(R) Use of Proceeds; Margin Regulations.
Borrower will use the proceeds of the Loan for the purposes described in Section
2.2. No part of the proceeds of the Loan will be used for the purpose of
purchasing or acquiring any "margin stock" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System or for any other purpose
which would be inconsistent with such Regulation U or any other Regulations of
such Board of Governors, or for any purposes prohibited by applicable Legal
Requirements.
(S) Financial Information. All historical
financial data concerning Borrower, Mortgage Borrower, Operating Lessee, the
Pledged Collateral and any Individual Property (including, without limitation
all rent rolls and operating statements) that has been delivered by Borrower to
Lender is true, complete and correct in all material respects. Since the
delivery of such data, except as otherwise disclosed in writing to Lender, there
has been no material adverse change in the financial position of Borrower,
Mortgage Borrower, Operating Lessee, the Pledged Collateral or any Individual
Property, or in the results of operations of Borrower, Mortgage Borrower or
Operating Lessee. Neither Borrower, Mortgage Borrower nor Operating Lessee, has
incurred any obligation or liability, contingent or otherwise, not reflected in
such financial data which might materially adversely affect its business
operations, the Pledged Collateral or any Individual Property.
(T) Condemnation. No Taking has been
commenced or, to Borrower's knowledge, is contemplated with respect to all or
any portion of any Individual Property or for the relocation of roadways
providing access to any Individual Property.
(U) Utilities and Public Access. Each
Individual Property has adequate rights of access to public ways and is served
by adequate water, sewer, sanitary sewer and storm drain facilities as are
adequate for full utilization of such Individual Property for its current
purpose. Except as otherwise disclosed by the Surveys, all public utilities
necessary to the continued use and enjoyment of each Individual Property as
presently used and enjoyed are located in the public right-of-way abutting the
premises, and all such utilities are connected so as to serve each Individual
Property either (i) without passing over other property or, (ii) if such
utilities pass over other property, pursuant to valid easements. All roads
necessary for the full utilization of each Individual Property for its current
purpose have been completed and dedicated
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to public use and accepted by all Governmental Authorities or are the subject of
access easements for the benefit of any Individual Property.
(V) Environmental Compliance. Except as
disclosed in the Environmental Reports, Borrower represents, warrants and
covenants, as to itself, Mortgage Borrower, Operating Lessee and its applicable
Individual Property: (a) there are no Hazardous Substances or underground
storage tanks in, on, or under such Individual Property, except those that are
both (i) in compliance with all Environmental Laws and with permits issued
pursuant thereto and (ii) which do not require Remediation; (b) there are no
past, present or threatened Releases of Hazardous Substances in, on, under, from
or affecting any Individual Property which have not been fully Remediated in
accordance with Environmental Law; (c) there is no Release or threat of any
Release of Hazardous Substances which has or is migrating to any Individual
Property; (d) there is no past or present non-compliance with Environmental
Laws, or with permits issued pursuant thereto, in connection with any Individual
Property which has not been fully Remediated in accordance with Environmental
Law; (e) Borrower does not know of, and neither Borrower, Mortgage Borrower or
Operating Lessee has received, any written or oral notice or other communication
from any Person (including but not limited to a governmental entity) relating to
Hazardous Substances or the Remediation thereof, of possible liability of any
Person pursuant to any Environmental Law, other environmental conditions in
connection with any Individual Property, or any actual or potential
administrative or judicial proceedings in connection with any of the foregoing;
and (f) Borrower has truthfully and fully provided to Lender, in writing, any
and all information relating to conditions in, on, under or from each Individual
Property that is known to Borrower, Mortgage Borrower or Operating Lessee and
that is contained in files and records of Borrower, Mortgage Borrower or
Operating Lessee, including but not limited to any reports relating to Hazardous
Substances in, on, under or from such Individual Property and/or to the
environmental condition of each Individual Property.
(W) No Joint Assessment; Separate Lots.
Mortgage Borrower has not and shall not suffer, permit or initiate the joint
assessment of any applicable Individual Property (i) with any other real
property constituting a separate tax lot, and (ii) with any portion of any
Individual Property which may be deemed to constitute personal property, or any
other procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to any Individual
Property as a single lien. Each Individual Property is comprised of one or more
parcels, each of which constitutes a separate tax lot and none of which
constitutes a portion of any other tax lot.
(X) Assessments. Except as disclosed in the
Title Insurance Policy, there are no pending or, to the knowledge of Borrower,
Mortgage proposed special or other assessments for public improvements or
otherwise affecting any Individual Property, nor, to the knowledge of Borrower,
Mortgage Borrower or Operating Lessee, are there any contemplated improvements
to any Individual Property that may result in such special or other assessments.
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(Y) Pledged Collateral. The Pledge Agreement
and the TRS Pledge Agreement each creates a valid and enforceable first priority
Lien on the Pledged Collateral described therein, as security for the repayment
of the Indebtedness. This Agreement creates a valid and enforceable first
priority Lien on all Account Collateral. All Pledged Collateral in which a
security interest can be perfected by the filing of a financing statement is
subject to a UCC financing statement filed and/or recorded, as appropriate (or
irrevocably delivered to an agent for such recordation or filing) in all places
necessary to perfect a valid first priority Lien with respect to the rights and
property that are the subject of the Pledge Agreement or this Agreement to the
extent governed by the UCC.
(Z) Enforceability. The Loan Documents
executed by Borrower, Ashford TRS Corporation and Guarantor in connection with
the Loan are the legal, valid and binding obligations of each such Entity,
enforceable against each of Borrower, Ashford TRS Corporation and Guarantor in
accordance with their terms, subject only to bankruptcy, insolvency and other
limitations on creditors' rights generally and to equitable principles. Such
Loan Documents are, as of the Closing Date, not subject to any right of
rescission, set-off, counterclaim or defense by Borrower, including the defense
of usury.
(AA) No Liabilities; No Contractual
Obligations. Borrower has no liabilities or obligations including, without
limitation, Contingent Obligations (and including, without limitation,
liabilities or obligations in tort, in contract, at law, in equity, pursuant to
a statute or regulation, or otherwise) other than those liabilities and
obligations expressly permitted by this Agreement.
(BB) No Prior Assignment. As of the Closing
Date, (i) Lender is the pledgee of Borrower's interest in the Pledged Collateral
and (ii) there are no prior assignments of the Pledged Collateral.
(CC) Certificate of Occupancy. Mortgage
Borrower and Operating Lessee have obtained (in their own name) all Permits
necessary to use and operate the Individual Property for the use described in
Section 3.1(R), and all such Permits are in full force and effect. The use being
made of each Individual Property is in conformity in all material respects with
the certificate of occupancy and/or Permits for each such Individual Property
and any other restrictions, covenants or conditions affecting each such
Individual Property. Each such Individual Property contains all equipment
necessary to use and operate each such Individual Property in a first-class
manner.
(DD) Flood Zone. Except as shown on a
Survey, no Individual Property is located in a flood hazard area as designated
by the Federal Emergency Management Agency.
(EE) Physical Condition. Except as disclosed
in an Engineering Report, each Individual Property is free of material
structural defects and all building systems contained therein are in good
working order in all material respects subject to ordinary wear and tear.
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(FF) Intellectual Property. All trademarks,
trade names and service marks owned by Borrower, Mortgage Borrower or Operating
Lessee, or that are pending, or under which Borrower, Mortgage Borrower or
Operating Lessee is licensed, are in good standing and uncontested. There is no
right under any trademark, trade name or service mark necessary to the business
of Borrower, Mortgage Borrower or Operating Lessee as presently conducted or as
Borrower, Mortgage Borrower or Operating Lessee contemplates conducting its
business. Neither Borrower, Mortgage Borrower or Operating Lessee has infringed,
is infringing, or has received notice of infringement with respect to asserted
trademarks, trade names and service marks of others. To Borrower's knowledge,
there is no infringement by others of trademarks, trade names and service marks
of Borrower, Mortgage Borrower or Operating Lessee.
(GG) Intentionally Omitted.
(HH) Title Insurance. Each Individual
Property is covered by either an American Land Title Association (ALTA) owner's
title insurance policy, naming Lender as the insured party, or a commitment to
issue such a title insurance policy, insuring fee or leasehold ownership of each
Individual Property, which is in full force and effect and will inure to the
benefit of Lender and any successor or assignee of Lender, including but not
limited to the trustee in a securitization of the Loan, subject only to the
Permitted Encumbrances.
(II) Intentionally Omitted.
(JJ) Leases. (a) Mortgage Borrower or
Operating Lessee is the sole owner of the entire lessor's interest in the
Leases; (b) the Leases are the valid, binding and enforceable obligations of the
applicable Mortgage Borrower or Operating Lessee and the applicable tenant or
lessee thereunder; (c) the terms of all alterations, modifications and
amendments to the Leases are reflected in the certified rent roll statement
delivered to and approved by Lender; (d) no Rents reserved in any Leases have
been assigned or otherwise pledged or hypothecated; (e) no Rents have been
collected for more than one (1) month in advance; (f) the premises demised under
the Leases have been completed and the tenants under the Leases have accepted
the same and have taken possession of the same on a rent-paying basis; (g) there
exists no offset or defense to the payment of any portion of the Rents; (h) no
Lease contains an option to purchase, right of first refusal to purchase,
expansion right, or any other similar provision; and (i) no Person has any
possessory interest in, or right to occupy, any Individual Property except under
and pursuant to a Lease.
(KK) Bank Holding Company. Borrower is not a
"bank holding company" or a direct or indirect subsidiary of a "bank holding
company" as defined in the Bank Holding Company Act of 1956, as amended, and
Regulation Y thereunder of the Board of Governors of the Federal Reserve System.
(LL) Embargoed Person. None of the funds or
other assets of Borrower, SPE Equity Owner, Mortgage Borrower or Operating
Lessee constitute property of, or are beneficially owned, directly or
indirectly, by any person, entity or government subject to
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trade restrictions under federal law, including, without limitation, the
International Emergency Economic Powers Act, 50 U.S.C. Sections 1701 et seq.,
The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq. , and any executive
orders or regulations promulgated thereunder, with the result that (i) the
investment in Borrower, SPE Equity Owner, Mortgage Borrower or Operating Lessee,
as applicable (whether directly or indirectly), is prohibited by law or (ii) the
Loan made by the Lender is in violation of law ("Embargoed Person"); (b) no
Embargoed Person has any interest of any nature whatsoever in Borrower, SPE
Equity Owner, Mortgage Borrower or Operating Lessee, as applicable (whether
directly or indirectly), with the result that (i) the investment in Borrower,
SPE Equity Owner, Mortgage Borrower or Operating Lessee, as applicable (whether
directly or indirectly) is prohibited by law or (ii) the Loan is in violation of
law; and (c) none of the funds of Borrower, SPE Equity Owner, Mortgage Borrower
or Operating Lessee, as applicable, have been derived from any unlawful activity
with the result that (i) the investment in Borrower, SPE Equity Owner, Mortgage
Borrower or Operating Lessee, as applicable (whether directly or indirectly) is
prohibited by law or (ii) the Loan is in violation of law.
(MM) Illegal Activity. No portion of any of
each Individual Property has been or will be purchased, improved, equipped or
furnished with proceeds of any illegal activity.
(NN) Compliance. No Borrower, Guarantor,
Operating Lessee, or Mortgage Borrower and, to the best of Borrower's knowledge
after due and diligent inquiry, neither (a) any Person owning an interest in
Borrower, SPE Equity Owner, Operating Lessee or Mortgage Borrower nor (b) each
Manager or (c) any tenant at each Individual Property: (i) is currently
identified on the OFAC List ("OFAC List"), and (ii) is a Person with whom a
citizen of the United States is prohibited to engage in transactions by any
trade embargo, economic sanction, or other prohibition of any Legal Requirement
(including the September 24, 2001, Executive Order Blocking Property and
Prohibiting Transactions With Person Who Commit, Threaten to Commit, or Support
Terrorism), and (iii) is not in violation of the U.S. Federal Bank Secrecy Act,
as amended, and its implementing regulations (31 C.F.R. part 103), the Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001, Public Law 107-56 and the regulations
promulgated thereunder, any order issued with respect to anti-money laundering
by the U.S. Department of the Treasury's Office of Foreign Assets Control, or
any other anti-money laundering law. Each of Borrower, Mortgage Borrower and
Operating Lessee has implemented procedures, and will consistently apply those
procedures throughout the term of the Loan, to ensure the foregoing
representations and warranties remain true and correct during the term of the
Loan.
(OO) Intentionally Omitted.
(PP) Subsidiaries. Effective as of the
consummation of the transaction contemplated by this Agreement and the other
Loan Documents, 100% of the membership interests in Borrower is owned by Ashford
Hospitality Limited Partnership free and clear of all Liens (other than the
Liens created by the Loan Documents) Borrower does not have
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any subsidiaries except Mortgage Borrower and SPE Equity Owner. Borrower does
not own any equity interests other than the Pledged Collateral.
(QQ) Franchise Agreements. Each Franchise
Agreement is in full force and effect, there is no material default thereunder
by any party thereto and to the best of Borrower's and Operating Lessee's
knowledge and except as set forth on Schedule 2 hereof, no event has occurred
that, with the passage of time and/or the giving of notice would constitute a
default thereunder, and no fees under any Franchise Agreement are accrued and
unpaid.
(RR) Intentionally Omitted.
(SS) Operating Budget. Attached hereto as
Exhibit H is a true, complete and correct copy of the operating budget for each
Mortgage Borrower's or Operating Lessee's Individual Property for the period
between the Closing Date and December 31, 2004, which Operating Budget has been
approved by Lender pursuant to the terms of this Agreement.
(TT) Property Improvement Plans. Attached
hereto as Exhibit I is (a) a true, complete and correct list of all property
improvement plans or similar agreements affecting each Individual Property
(each, a "Property Improvement Plan"), and (b) a true, complete and correct
description of the amounts to be expended and time frames for required
expenditure pursuant to each Property Improvement Plan.
(UU) Organizational Chart. Attached hereto
as Exhibit L is a true, complete and correct copy of the Borrower's
organizational chart.
Section 4.2. Survival of Representations and Warranties.
Borrower agrees that (i) all of the representations and
warranties of Borrower set forth in this Agreement and in the other Loan
Documents delivered on the Closing Date are made as of the Closing Date (except
as expressly otherwise provided) and (ii) all representations and warranties
made by Borrower shall survive the delivery of the Note and continue for so long
as any amount remains owing to Lender under this Agreement, the Note or any of
the other Loan Documents; provided, however, that the representations,
warranties and covenants set forth in Section 4.1(V), Section 4.1(LL), Section
4.1(NN) and Sections 5.1(D) through 5.1(G), inclusive, shall survive in
perpetuity and shall not be subject to the exculpation provisions of Section
8.14. All representations, warranties, covenants and agreements made in this
Agreement or in the other Loan Documents shall be deemed to have been relied
upon by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf. Without limiting any other provision of this Agreement,
with respect to each Secondary Market Transaction, within 3 days of receipt of
Lender's request, Borrower shall deliver to Lender a certification (a) remaking
all of the representations and warranties contained in this Agreement as of the
date of such Secondary Market Transaction, or (y) otherwise specifying any
changes in or qualifications to such representations and warranties as of such
date as may be necessary to make such representations consistent with the facts
as they exist on such date.
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ARTICLE 5.
AFFIRMATIVE COVENANTS
Section 5.1. Borrower Covenants.
Borrower covenants and agrees that, from the date hereof and
until payment in full of the Indebtedness:
(A) Existence; Compliance with Legal
Requirements; Insurance. Borrower shall, and shall cause Mortgage Borrower to,
do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its Entity existence, rights, licenses, Permits and franchises
necessary for the conduct of its business and comply in all material respects
with all applicable Legal Requirements and Insurance Requirements applicable to
such party, the Pledged Collateral and each Individual Property. Borrower shall
notify Lender promptly of any written notice or order that Borrower, Mortgage
Borrower or Operating Lessee receives from any Governmental Authority relating
to Borrower's, Mortgage Borrower's or Operating Lessee's failure to comply with
such applicable Legal Requirements relating to the Pledged Collateral or each
Individual Property and promptly take any and all actions necessary to bring
operations at each Individual Property into compliance with such applicable
Legal Requirements (and shall fully comply with the requirements of such Legal
Requirements that at any time are applicable to operations at each Individual
Property) provided, that Borrower at its expense may, after prior notice to the
Lender, contest, or cause Mortgage Borrower or Operating Lessee to contest, by
appropriate legal, administrative or other proceedings conducted in good faith
and with due diligence, the validity or application, in whole or in part, of any
such applicable Legal Requirements as long as (i) neither the applicable
Collateral nor the Pledged Collateral or any part thereof or any interest
therein, will be sold, forfeited or lost if Borrower, Mortgage Borrower or
Operating Lessee pays the amount or satisfies the condition being contested, and
Borrower, Mortgage Borrower or Operating Lessee would have the opportunity to do
so, in the event of Borrower's, Mortgage Borrower's or Operating Lessee's
failure to prevail in the contest, (ii) Lender would not, by virtue of such
permitted contest, be exposed to any risk of any civil liability or criminal
liability, and (iii) Borrower shall have furnished to the Lender additional
security in respect of the claim being contested or the loss or damage that may
result from Borrower's, Mortgage Borrower's or Operating Lessee's failure to
prevail in such contest in such amount as may be reasonably requested by Lender
but in no event less than one hundred twenty-five percent (125%) of the amount
of such claim (reduced by the dollar amount of additional security furnished to
the Mortgage Lender under the counterpart to this Section of the Mortgage Loan
Agreement). Borrower shall at all times maintain, or cause Mortgage Borrower or
Operating Lessee to maintain, preserve and protect all franchises and trade
names and preserve all the remainder of its property necessary for the continued
conduct of its business and keep the applicable Individual Properties in good
repair, working order and condition, except for reasonable wear and use, and
from time to time make, or cause to be made, all necessary repairs, renewals,
replacements, betterments and improvements thereto as more fully provided in the
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Mortgages. Borrower shall cause Mortgage Borrower or Operating Lessee to keep
their Individual Properties insured at all times, as provided in the Mortgages.
(B) Impositions and Other Claims. Subject to
Section 2.11(e)(i)(x) of the Mortgage Loan Agreement, Borrower shall cause
Mortgage Borrower or Operating Lessee to pay and discharge or cause to be paid
and discharged all Impositions, as well as all lawful claims for labor,
materials and supplies or otherwise, which could become a Lien on the
Collateral, all as more fully provided in, and subject to any rights to contest
contained in, the Mortgages. Borrower shall pay and discharge or cause to be
paid and discharged any and all amounts which could become a Lien on the Pledged
Collateral unless being contested in good faith in a manner reasonably
acceptable to Lender.
(C) Litigation; Notices. Borrower shall give
prompt written notice to Lender of any litigation, arbitration or other
proceedings or governmental investigation pending or threatened against
Borrower, Mortgage Borrower or Operating Lessee which is reasonably likely to
have a Material Adverse Effect.
(D) Environmental.
(i) Borrower covenants and agrees
that: (a) all uses and operations on or of each Individual Property,
whether by Borrower, Mortgage Borrower or Operating Lessee or any other
Person, shall be in compliance with all Environmental Laws and permits
issued pursuant thereto; (b) there shall be no Releases of Hazardous
Substances in, on, under or from any Individual Property; (c) there
shall be no Hazardous Substances used, present or Released in, on,
under or from any Individual Property, except those that are (i) in
compliance in all material respects with all Environmental Laws and
with permits issued pursuant thereto; (ii) fully disclosed to Lender in
writing; and (iii) which do not require Remediation, (d) Borrower shall
cause Mortgage Borrower or Operating Lessee to keep each Individual
Property free and clear of all Environmental Liens; (e) Borrower shall
cause Mortgage Borrower or Operating Lessee to, at Mortgage Borrower's
or Operating Lessee's sole cost and expense, fully and expeditiously
cooperate in all activities pursuant to Section 5.1(E) of this
Agreement, including but not limited to providing all --------------
relevant information and making knowledgeable Persons available for
interviews; (f) intentionally omitted; (g) Borrower shall cause
Mortgage Borrower or Operating Lessee to, at Mortgage Borrower's or
Operating Lessee's sole cost and expense, (i) effectuate Remediation of
any condition (including but not limited to a Release of a Hazardous
Substance or violation of Environmental Laws) in, on, under or from
each Individual Property for which Remediation is legally required;
(ii) comply with all Environmental Laws; (iii) comply with any
directive from any governmental authority; and (iv) take any other
reasonable action necessary or appropriate for protection of human
health or the environment; (h) Borrower shall not permit Mortgage
Borrower or Operating Lessee to do or allow any tenant or other user of
any Individual Property to do any act that materially increases the
dangers to human health or the environment, poses an unreasonable risk
of harm to any Person (whether on or off any
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Individual Property), impairs or may impair the value or marketability
of any Individual Property, is contrary to any requirement of any
insurer, constitutes a public or private nuisance, constitutes waste,
or violates any covenant, condition, agreement or easement applicable
to any Individual Property; (i) Borrower shall immediately notify
Lender in writing of (A) any unlawful presence or Releases or
threatened Releases of Hazardous Substances in, on, under, from or
migrating towards any Individual Property; (B) any material
non-compliance with any Environmental Laws related in any way to any
Individual Property; (C) any actual or potential Environmental Lien;
(D) any required Remediation of environmental conditions relating to
any Individual Property required by Environmental Laws; and (E) any
written notice or other communication of which Borrower, Mortgage
Borrower or Operating Lessee becomes aware from any source whatsoever
(including but not limited to a governmental entity) relating in any
way to Release, presence, or Release or threatened Release of Hazardous
Substances in violation of Environmental Laws or the Remediation
thereof, Law, other environmental conditions in connection with any
Individual Property, or any actual or potential administrative or
judicial proceedings in connection with anything referred to in this
Agreement; and (j) without limiting the foregoing, upon becoming aware
of the presence of or potential for Mold in violation of applicable
Environmental Laws on any Individual Property, at its sole cost and
expense Borrower shall cause Mortgage Borrower or Operating Lessee to
(i) undertake or cause an investigation to identify the source(s) of
such Mold, including any water intrusion, and develop and implement a
plan for the Remediation of any Mold required under applicable
Environmental Laws; (ii) perform, or cause to be performed, all acts
required under applicable Environmental Laws for the Remediation of the
Mold in a timely manner given the circumstances; (iii) properly dispose
in accordance with all applicable Environmental Laws of any materials
generated as a result of or in connection with the foregoing items (i)
and (ii); and (iv) provide Lender with evidence of Mortgage Borrower's
or Operating Lessee's compliance with the requirements of each of the
foregoing to Lender's reasonable satisfaction.
(E) Environmental Cooperation and Access. In
the event the Environmental Indemnified Parties have reason to believe that an
environmental condition exists on any Individual Property that, in the
discretion of the Lender, could endanger any tenants or other occupants of any
Individual Property or their guests or the general public or materially and
adversely affects the value of any Individual Property, upon reasonable notice
from the Lender, Borrower shall cause Mortgage Borrower or Operating Lessee to
at Mortgage Borrower's or Operating Lessee's sole cost and expense, promptly
cause an engineer or consultant satisfactory to the Lender to conduct any
environmental assessment or audit (the scope of which shall be determined in the
sole and absolute discretion of Lender) and take any samples of soil,
groundwater or other water, air, or building materials or any other invasive
testing reasonably requested by Lender and promptly deliver the results of any
such assessment, audit, sampling or other testing; provided, further, that
Borrower, Mortgage Borrower, Operating Lessee, the Environmental Indemnified
Parties and any other Person designated by the Environmental Indemnified
Parties, including but not limited to any receiver, any representative of a
governmental entity, and any environmental consultant, shall have the right, but
not the
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obligation, to enter upon such Individual Property at all reasonable times
(without materially interfering with the business conducted at the Individual
Property) to assess any and all aspects of the environmental condition of each
Individual Property and its use, including but not limited to conducting any
environmental assessment or audit (the scope of which shall be determined in the
reasonable discretion of Lender) and taking samples of soil, groundwater or
other water, air, or building materials, and reasonably conducting other
invasive testing (which shall be at Borrower's sole cost and expense if Borrower
fails to conduct or deliver, or to be conducted or delivered, an assessment or
audit as required pursuant to this Section), Borrower shall cooperate with and
provide, and cause Mortgage Borrower and Operating Lessee to cooperate with and
provide, the Environmental Indemnified Parties and any such Person designated by
the Environmental Indemnified Parties with access to each Individual Property.
(F) Environmental Indemnity. Borrower
covenants and agrees, at its sole cost and expense, to protect, defend,
indemnify, release and hold Environmental Indemnified Parties harmless from and
against any and all Losses imposed upon or incurred by or asserted against any
Environmental Indemnified Parties and directly or indirectly arising out of or
in any way relating to any one or more of the following (other than Losses
imposed upon or incurred by or asserted against any Environmental Indemnified
Parties to the extent that the Borrowers can prove that (a) such Losses were
caused exclusively by the actions of Lender (or its successors in interest to
the Pledged Collateral) occurring entirely after the date that Lender actually
acquired title to the Pledged Collateral and (b) such Losses were not caused or
occasioned by the actions or inactions of Borrower, any Mortgage Borrower, or
any agent, employee, contractor of any of the foregoing prior to the time Lender
acquires title to the Pledged Collateral, or Borrower, Manager or Operating
Lessee or any agent, employee, contractor or Affiliate of any of the foregoing:
(a) any presence or use of any Hazardous Substances in, on, above, under, from
or affecting any Individual Property; (b) any past, present or threatened
Release of Hazardous Substances in, on, above, under, from or affecting any
Individual Property; (c) any activity by Borrower, Mortgage Borrower, Operating
Lessee, any Person affiliated with Borrower, Mortgage Borrower or Operating
Lessee or and any tenant or other user of such Individual Property in connection
with any actual, proposed or threatened use, treatment, storage, holding,
existence, disposition or other Release, generation, production, manufacturing,
processing, refining, control, management, abatement, removal, handling,
transfer or transportation to or from such Individual Property of or exposure to
any Hazardous Substances at any time located in, under, on or above such
Individual Property; (d) any activity by Borrower, Mortgage Borrower, Operating
Lessee any Person affiliated with Borrower, Mortgage Borrower or Operating
Lessee, and any tenant or other user of such Individual Property in connection
with any actual or proposed Remediation of any Hazardous Substances at any time
located in, under, on, above or affecting such Individual Property, whether or
not such Remediation is voluntary or pursuant to court or administrative order,
including but not limited to any removal, remedial or corrective action; (e) any
past, present or threatened non-compliance or violations of any Environmental
Laws (or permits issued pursuant to any Environmental Law) in connection with
such Individual Property or operations thereon, including but not limited to any
failure by Borrower, Mortgage Borrower, Operating Lessee, any Person affiliated
with Borrower, Mortgage Borrower, or Operating Lessee and any tenant or other
user of such
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Individual Property to comply with any order of any governmental authority in
connection with any Environmental Laws; (f) the imposition, recording or filing
or the threatened imposition, recording or filing of any Environmental Lien
encumbering any Individual Property; (g) any administrative processes or
proceedings or judicial proceedings in any way connected with any matter
addressed in this Agreement; (h) any past, present or threatened injury to,
destruction of or loss of natural resources in any way connected with any
Individual Property, including but not limited to costs to investigate and
assess such injury, destruction or loss; (i) any acts of Borrower, Mortgage
Borrower, Operating Lessee or any Person affiliated with Borrower, Mortgage
Borrower or Operating Lessee, and any tenant or other user of such Individual
Property in arranging for disposal or treatment, or arranging with a transporter
for transport for disposal or treatment, of Hazardous Substances at any facility
or incineration vessel containing such or similar Hazardous Substances; (j) any
acts of Borrower, Mortgage Borrower, Operating Lessee, any Person affiliated
with any Borrower, Mortgage Borrower, or Operating Lessee and any tenant or
other user of such Individual Property in accepting any Hazardous Substances for
transport to disposal or treatment facilities, incineration vessels or sites
from which there is a Release, or a threatened Release of any Hazardous
Substance which causes the incurrence of costs for Remediation; (k) any personal
injury, wrongful death, or property or other damage arising under any statutory
or common law or tort law theory, including but not limited to damages assessed
for private or public nuisance or for the conducting of an abnormally dangerous
activity on or near such Individual Property; and (l) any misrepresentation or
inaccuracy in any representation or warranty or material breach or failure to
perform any covenants or other obligations pursuant to this Agreement or any
other Loan Document. IT IS EXPRESSLY ACKNOWLEDGED AND AGREED BY BORROWER THAT
THE INDEMNITY (AND/OR THE RELEASE) CONTAINED IN THIS SECTION 5.1(F) PROTECTS
LENDER FROM THE CONSEQUENCES OF LENDER'S ACTS OR OMISSIONS, INCLUDING WITHOUT
LIMITATION, THE NEGLIGENT ACTS OR OMISSIONS OF LENDER TO THE EXTENT PERMITTED BY
LAW; PROVIDED, HOWEVER, THAT NOTHING CONTAINED HEREIN SHALL BE DEEMED TO RELIEVE
THE LENDER FROM LIABILITY DUE TO ITS GROSS NEGLIGENCE.
(G) Duty to Defend. Upon written request by
any Environmental Indemnified Party, Borrower shall defend same (if requested by
any Environmental Indemnified Party, in the name of the Environmental
Indemnified Party) by attorneys and other professionals reasonably approved by
the Environmental Indemnified Parties. Borrower shall, within five Business Days
of receipt thereof by Borrower, Mortgage Borrower or Operating Lessee, give
written notice to Lender of (i) any notice, advice or other communication from
any governmental entity or any source whatsoever with respect to Hazardous
Substances on, from or affecting any Individual Property, and (ii) any legal
action brought against any party or related to any Individual Property, with
respect to which Borrower may have liability under this Agreement. Such notice
shall comply with the provisions of Section 8.6 hereof.
(H) PIP Performance. Borrower shall cause
the Mortgage Borrowers to comply with Section 5.1(w) of the Mortgage Loan
Agreement.
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(I) Access to Property. Borrower shall, and
shall cause Mortgage Borrower and Operating Lessee to, permit agents,
representatives and employees of Lender to inspect their Individual Properties
or any part thereof at such reasonable times as may be requested by Lender upon
reasonable advance written notice and without materially interfering with the
business conducted at the Individual Property.
(J) Notice of Default. Borrower shall
promptly advise Lender of any material adverse change in Borrower's, Mortgage
Borrower's or Operating Lessee's condition, financial or otherwise, or of the
occurrence of any Default or Event of Default.
(K) Cooperate in Legal Proceedings. Except
with respect to any claim by Borrower against Lender, Borrower shall cooperate
with Lender with respect to any proceedings before any Governmental Authority
which may in any way affect the rights of Lender hereunder or any rights
obtained by Lender under any of the Loan Documents and, in connection therewith,
not prohibit Lender, at its election, from participating in any such
proceedings.
(L) Perform Loan Documents. Borrower shall
observe, perform and satisfy all the terms, provisions, covenants and conditions
required to be observed, performed or satisfied by it, and shall pay when due
all costs, fees and expenses required to be paid by it, under the Loan Documents
executed and delivered by Borrower.
(M) Insurance Benefits; Condemnation Claims.
(i) Generally. Borrower shall
promptly notify Lender, in writing, of any actual or threatened Taking
or of any casualty that damages or renders unusable any Individual
Property or any part thereof and, except as otherwise provided below,
shall cause the applicable Mortgage Borrower and Operating Lessee to
promptly and diligently pursue Mortgage Borrower's or Operating
Lessee's claim for Condemnation Proceeds or Insurance Proceeds, as
applicable. Borrower shall not and shall not permit any Mortgage
Borrower or Operating Lessee to make any agreement in lieu of Taking or
accept any Condemnation Proceeds without Lender's prior written
consent. Borrower shall not and shall not permit any Mortgage Borrower
or Operating Lessee to accept any settlement of Insurance Proceeds with
respect to a casualty without Lender's prior written consent. If
requested by Lender, Borrower agrees to provide copies to Lender of all
notices or filings made or received by Borrower or the applicable
Mortgage Borrower or Operating Lessee in connection with the casualty
or Taking or with respect to collection of the Insurance Proceeds or
Condemnation Proceeds, as applicable. Notwithstanding that a casualty
or Taking has occurred, or that rights to Condemnation Proceeds or
Insurance Proceeds are pending, Borrower shall continue to pay the Loan
at the time and in the manner provided in this Agreement.
(ii) Lender's Consent Required.
Without the prior written consent of Lender, Borrower shall not make,
nor shall Borrower permit any
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Mortgage Borrower or Operating Lessee to make, any determination to
replace or restore any Individual Property after a casualty or
condemnation.
(iii) Certain Lender Rights. In
addition to and without in any way limiting any of its other rights
hereunder, in connection with any casualty or Taking and with respect
to all Insurance Proceeds and Condemnation Proceeds and damages and
claims with respect thereto, Lender shall have all of the same rights
that Mortgage Lender has under the Mortgage Loan Documents as if such
rights were set forth in full herein with only such changes as are
necessary to reflect Lender's position as a mezzanine lender rather
than a mortgage lender; provided that Lender shall not exercise any
such right (x) at a time when any corresponding right is being
exercised by Mortgage Lender, unless Lender's exercise of its right
contemporaneously would not in any way impair Mortgage Lender's
exercise of its rights or be inconsistent therewith or (y) in any
manner inconsistent with Mortgage Lender's rights under the Mortgage
Loan Documents.
(iv) Borrower shall, or shall cause
each Mortgage Borrower to, deliver to Lender all reports, plans,
specification, documents and other materials that are delivered to
Mortgage Lender under the Mortgage Loan Agreement in connection with
the restoration and/or repair of any Individual Property after a
casualty or a Taking.
(N) Further Assurances. Borrower shall, at
Borrower's sole cost and expense:
(i) upon Lender's request therefor
given from time to time after the occurrence of any Event of Default
pay for (a) reports of UCC, federal tax lien, state tax lien, judgment
and pending litigation searches with respect to Borrower or any
Mortgage Borrower and (b) searches of title to the Pledged Collateral
or any Individual Property, each such search to be conducted by search
firms reasonably designated by Lender in each of the locations
reasonably designated by Lender.
(ii) furnish to Lender all
instruments, documents, boundary surveys, footing or foundation
surveys, certificates, plans and specifications, appraisals, title and
other insurance reports and agreements, and each and every other
document, certificate, agreement and instrument required to be
furnished pursuant to the terms of the Loan Documents;
(iii) execute and deliver to Lender
such documents, instruments, certificates, assignments and other
writings, and do such other acts necessary, to evidence, preserve
and/or protect the Collateral or the Pledged Collateral at any time
securing or intended to secure the Note, as Lender may require in
Lender's discretion; and
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(iv) do and execute all and such
further lawful acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of this Agreement
and the other Loan Documents, as Lender shall require from time to time
in its discretion.
(O) Management of Property. Each Individual
Property will be managed at all times by a Manager pursuant to a Management
Agreement unless terminated as herein provided. Borrower shall cause the
Management Agreement to be terminated by Mortgage Borrower or Operating Lessee,
at Lender's request, upon thirty (30) days prior written notice to Borrower and
the applicable Mortgage Borrower, Operating Lessee and Manager (i) upon the
occurrence of an Event of Default, (ii) if the applicable Manager commits any
act which would permit termination by any Mortgage Borrower or Operating Lessee
under the Management Agreement, or (iii) if the applicable Manager commits any
act which constitutes an act of fraud, material misrepresentation, intentional
misrepresentation, gross negligence, willful misconduct, misappropriation of
funds, or physical waste of any Individual Property. If a manager is terminated
pursuant hereto, Borrower shall cause Mortgage Borrower or Operating Lessee to
immediately seek to appoint a replacement manager acceptable to Lender in
Lender's discretion, and Borrower's failure to cause Mortgage Borrower or
Operating Lessee to appoint an acceptable manager within thirty (30) days after
Lender's request of Borrower to terminate the Management Agreement shall
constitute an immediate Event of Default. Mortgage Borrower or Operating Lessee
may from time to time appoint a successor manager to manage any Individual
Property, which successor manager shall be approved in writing by Lender in
Lender's discretion. Notwithstanding the foregoing, any successor manager
selected hereunder by Lender, any Mortgage Borrower or Operating Lessee to serve
as Manager (i) shall be either (A) the Remington Manager provided, that the
Remington Manager shall manage the applicable Individual Property pursuant to
the terms of the master management agreement by and among the Borrowers and the
Remington Manager, or (B) a reputable management company having at least seven
(7) years' experience in the management of commercial properties with similar
uses as the Individual Properties and in the jurisdiction in which the
Individual Properties are located and (ii) shall not be paid management fees in
excess of fees which are market fees for comparable managers of comparable
properties in the same geographic area.
(P) Financial Reporting.
(i) Borrower shall keep and
maintain or shall cause to be kept and maintained, on a Fiscal Year
basis, in accordance with GAAP, books, records and accounts reflecting
in reasonable detail all of the financial affairs of Borrower, Mortgage
Borrower or Operating Lessee, as applicable, and all items of income
and expense in connection with the operation of the Pledged Collateral
and the applicable Individual Properties and in connection with any
services, equipment or furnishings provided in connection with the
operation of such Individual Property. Lender, at Lender's cost and
expense, whether such income or expense may be realized by Borrower or
by any other Person whatsoever, shall have the right from time to time
and at all times during normal business hours upon reasonable prior
written notice to
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Borrower to examine such books, records and accounts at the office of
Borrower, Mortgage Borrower, Operating Lessee or other Person
maintaining such books, records and accounts and to make such copies or
extracts thereof as Lender shall desire. After the occurrence of an
Event of Default, Borrower shall pay any costs and expenses incurred by
Lender to examine any and all of Borrower's, Mortgage Borrower's or
Operating Lessee's books, records and accounts as Lender shall
determine in Lender's discretion to be necessary or appropriate in the
protection of Lender's interest.
(ii) Borrower shall furnish to
Lender annually within ninety (90) days following the end of each
party's Fiscal Year, a true, complete, correct and accurate copy of the
consolidated financials of Ashford Hospitality Trust, Inc., audited by
a "Big Four" accounting firm or other firm reasonably acceptable to
Lender, accompanied by an unqualified opinion from an Independent
certified public accountant acceptable to Lender in Lender's
discretion, and each Mortgage Borrower and Operating Lessee shall
furnish financial statements and all such financial statements above
shall (a) be in form and substance reasonably acceptable to Lender, (b)
be prepared in accordance with GAAP, (c) include or be accompanied by
without limitation, a statement of operations (profit and loss), a
statement of cash flows, a calculation of Net Operating Income for all
applicable Individual Properties, a balance sheet, an aged accounts
receivable report and such other information or reports as shall be
requested by Lender or any applicable Rating Agency, (d) be accompanied
by an Officer's Certificate from a senior executive of Borrower
certifying as of the date thereof (x) that such statement is true,
correct, complete and accurate, and fairly reflects the results of
operations and financial condition of Borrower, Mortgage Borrower, or
Operating Lessee, as applicable, for the relevant period, and (y)
notice of whether there exists an Event of Default or Default, and if
such Event of Default or Default exists, the nature thereof, the period
of time it has existed and the action then being taken to remedy same.
(iii) Intentionally Omitted.
(iv) Borrower shall furnish to
Lender within twenty (20) days following the end of each calendar month
of Borrower and of Mortgage Borrower and Operating Lessee, a true,
correct, complete and accurate monthly unaudited financial statement
which shall (a) be in form and substance reasonably acceptable to
Lender, (b) be prepared in accordance with GAAP, (c) include, without
limitation, a statement of operations (profit and loss), a statement of
cash flows, a calculation of Net Operating Income for all applicable
Individual Properties, a consolidated balance sheet, an aged accounts
receivable report and such other information or reports as shall be
requested by Lender or any applicable Rating Agency and (d) be
accompanied by an Officer's Certificate from a senior executive of such
entity certifying as of the date thereof (x) that such statement is
true, correct, complete and accurate and fairly reflects the results of
operations and financial condition of Borrower, Mortgage Borrower or
Operating Lessee, as applicable, for the relevant period, and (y)
notice of whether there exists an Event of
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Default or Default, and if such Event of Default or Default exists, the
nature thereof, the period of time it has existed and the action then
being taken to remedy same.
(v) Borrower shall furnish to
Lender, within twenty (20) days following the end of each calendar
month, (1) a true, complete and accurate rent roll and occupancy report
and such other occupancy and rate statistics as Lender shall reasonably
request; (2) operating statements for each Individual Property, in
"Microsoft Excel" format and in form and substance substantially
similar to the form set forth on Exhibit J, (a) containing monthly,
year-to-date and trailing-twelve-month results compared to the results
for the prior year for the same periods for each Individual Property,
and (b) containing monthly, year-to-date and trailing-twelve-month
results compared to the results for the prior year for the same periods
for the Individual Properties on a consolidated basis; (3) Smith Travel
Star Reports for the applicable month for each Individual Property in
"Microsoft Excel" format (if available); (4) updated quality scores for
the applicable month for each Individual Property, including detailed
criteria and thresholds (if any); (5) summary reports to franchise
terminations, defaults, reflagging efforts and conversions for each
Individual Property (if applicable). Each such document shall (a) be
delivered to Lender in electronic form and in form and substance
reasonably acceptable to Lender, and (b) be accompanied by an Officer's
Certificate from a senior executive of Borrower, as applicable,
certifying as of the date thereof (x) that such statement is true,
correct, complete and accurate and (y) notice of whether there exists
an Event of Default or Default, and if such Event of Default or Default
exists, the nature thereof, the period of time it has existed and the
action then being taken to remedy same.
(vi) Borrower shall furnish to
Lender, within twenty (20) days after request, such further information
with respect to the operation of all applicable Individual Properties
and the financial affairs of Borrower or such Mortgage Borrower or
Operating Lessee as may be reasonably requested by Lender including,
without limitation, all business plans prepared for Borrower, Mortgage
Borrower or Operating Lessee and for the operation of all such
Individual Properties.
(vii) Borrower shall furnish to
Lender, within twenty (20) days after request, such further information
regarding any Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA as may be requested by
Lender.
(viii) Borrower shall, concurrently
with Borrower's delivery to Lender, provide a copy of the items
required to be delivered to Lender under this Section 5.1(Q) to the
Rating Agencies, the trustee, and any servicer and/or special servicer
that may be retained in conjunction with the Loan or any Secondary
Market Transaction. Borrower shall furnish to Lender written notice,
within two (2) Business Days after receipt by Mortgage Borrower
Operating Lessee, of any Rents or other items of Gross Revenue that
Mortgage Borrower or Operating Lessee is not required by the
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Mortgage Loan Documents to deposit in the Collection Account or Cash
Collateral Account (each as defined in the Mortgage Loan Documents)
together with such other documents and materials relating to such Rents
or other items of Gross Revenue as Lender reasonably requests.
(ix) Borrower shall provide Lender
with updated information (reasonably satisfactory to Lender) concerning
the Basic Carrying Costs for the next succeeding Fiscal Year prior to
the termination of each Fiscal Year.
(x) Borrower shall cause each
Mortgage Borrower and Operating Lessee to furnish to Lender annually no
less than thirty (30) days prior to the beginning of each Fiscal Year,
a true, complete, correct and accurate copy of such Mortgage Borrower's
or Operating Lessee's draft annual capital and operating budget for
each such Mortgage Borrower's or Operating Lessee's Individual Property
(each, an "Approved Budget"), which Approved Budgets shall be subject
to Lender's prior review and approval, which may be granted or withheld
in Lender's sole and absolute discretion. Each Mortgage Borrower and
Operating Lessee shall promptly revise and resubmit to Lender, for
Lender's review and approval, any draft annual capital and operating
budget to which Lender has objected and requested revisions. Until such
time that Lender approves or is deemed to have approved an Approved
Budget, the most recently approved Approved Budget shall apply;
provided that such approved Approved Budget shall be adjusted to
reflect (x) matters in the proposed Approved Budget approved by Lender,
(y) as to matters in the proposed Approved Budget not yet approved by
Lender (i) increases for expenses actually incurred which vary in
relation to gross revenues to the extent of increases in such gross
revenues ("Variable Expenses"), and (ii) expenditures actually incurred
which are beyond the reasonable control of the applicable Mortgage
Borrower or Operating Lessee such as taxes, utilities and insurance
("Uncontrollable Expenses"). Notwithstanding anything contained in the
Loan Documents to the contrary, expenditures shall be deemed in
compliance with and made pursuant to the Approved Budget even though
such expenditures exceed the amount budgeted therefore in the Approved
Budget if such expenditures are for Variable Expenses or Uncontrollable
Expenses.
(xi) Borrower shall furnish to
Lender such other financial information with respect to Borrower,
Mortgage Borrower, Operating Lessee or the applicable Manager as Lender
may, from time to time reasonably request.
(Q) Conduct of Business. Borrower shall
cause Mortgage Borrower and Operating Lessee to cause the operation of the
Individual Properties to be conducted at all times in a manner consistent with
the following:
(i) to maintain or cause to be
maintained the standard of operations at each Individual Property at
all times at a level necessary to insure a level of quality for each
such Individual Property consistent with similar facilities in the same
competitive market;
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(ii) to operate or cause to be
operated each Individual Property in a prudent manner in compliance in
all material respects with applicable Legal Requirements and Insurance
Requirements relating thereto and cause all licenses, Permits, and any
other agreements necessary for the continued use and operation of each
Individual Property to remain in effect except to the extent the
failure thereof would not have a Material Adverse Affect; and
(iii) to maintain or cause to be
maintained sufficient inventory and equipment of types and quantities
at each Individual Property to enable Mortgage Borrower, Operating
Lessee or the applicable Manager to operate the Individual Properties.
(R) ERISA.
(a) Borrower shall
deliver to Lender as soon as possible, and in any event within ten (10) days
after Borrower knows or has reason to believe that any of the events or
conditions specified below with respect to any Plan or Multiemployer Plan has
occurred or exists, a statement signed by a senior financial officer of Borrower
setting forth details respecting such event or condition and the action, if any,
that Borrower, Mortgage Borrower, Operating Lessee or an ERISA Affiliate
proposes to take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC by Borrower, Mortgage Borrower,
Operating Lessee or an ERISA Affiliate with respect to such event or condition):
(i) any reportable event, as
defined in Section 4043(b) of ERISA and the regulations issued
thereunder, with respect to a Plan, as to which PBGC has not by
regulation waived the requirement of Section 4043(a) of ERISA that it
be notified within 30 days of the occurrence of such event (provided
that a failure to meet the minimum funding standard of Section 412 of
the Code or Section 302 of ERISA, including, without limitation, the
failure to make on or before its due date a required installment under
Section 412(m) of the Code or Section 302(e) of ERISA, shall be a
reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code); and any request for a
waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section
4041 of ERISA of a notice of intent to terminate any Plan or any action
taken by Borrower, Mortgage Borrower, Operating Lessee or an ERISA
Affiliate to terminate any Plan;
(iii) the institution by PBGC of
proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the receipt by
Borrower, Mortgage Borrower, Operating Lessee or any ERISA Affiliate of
a notice from a Multiemployer Plan that such action has been taken by
PBGC with respect to such Multiemployer Plan;
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(iv) the complete or partial
withdrawal from a Multiemployer Plan by Borrower, Mortgage Borrower,
Operating Lessee or any ERISA Affiliate that results in liability under
Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt
by Borrower, Mortgage Borrower, Operating Lessee or any ERISA Affiliate
of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends
to terminate or has terminated under Section 4041A of ERISA;
(v) the institution of a proceeding
by a fiduciary of any Multiemployer Plan against Borrower, Mortgage
Borrower, Operating Lessee or any ERISA Affiliate to enforce Section
515 of ERISA, which proceeding is not dismissed within thirty (30)
days;
(vi) the adoption of an amendment
to any Plan that, pursuant to Section 401(a)(29) of the Code or Section
307 of ERISA, would result in the loss of tax-exempt status of the
trust of which such Plan is a part if Borrower, Mortgage Borrower,
Operating Lessee or an ERISA Affiliate fails to timely provide security
to the Plan in accordance with the provisions of said Sections; and
(vii) the imposition of a lien or a
security interest in connection with a Plan.
(b) Borrower shall not,
and shall not allow Mortgage Borrower or Operating Lessee to, engage in any
transaction which would cause any obligation, or action taken or to be taken,
hereunder (or the exercise by (i) Lender of any of its rights under the Note,
this Agreement or the other Loan Documents or (ii) Mortgage Lender of any of its
rights under the Mortgage Loan Documents) to be a non-exempt (under a statutory
or administrative class exemption) prohibited transaction under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(c) Borrower hereby
certifies and shall deliver to Lender such certifications or other evidence from
time to time throughout the term of the Loan, as requested by Lender in its
discretion, that (A) neither Borrower nor Mortgage Borrower or Operating Lessee
is an "employee benefit plan" as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, a "plan" as defined in Section 4975 of the Code,
which is subject to Section 4975 of the Code, or a "governmental plan" within
the meaning of Section 3(32) of ERISA; (B) neither Borrower nor Mortgage
Borrower or Operating Lessee is subject to state statutes regulating investments
and fiduciary obligations with respect to governmental plans or, if Borrower,
Mortgage Borrower or Operating Lessee is subject to such statutes, such statutes
do not in any manner affect the ability of the Borrower, Mortgage Borrower or
Operating Lessee to perform its obligations under the Loan Documents or the
ability of Lender to enforce any and all of its rights under this Agreement; and
(C) one or more of the following circumstances is true: (i) equity interests in
Borrower, Mortgage Borrower or Operating Lessee are publicly offered securities,
within the meaning of 29 C.F.R. Section 2510.3-101(b)(2); (ii) less than
twenty-five percent
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of each outstanding class of equity interests in Borrower, Mortgage Borrower or
Operating Lessee are held by "benefit plan investors" within the meaning of 29
C.F.R. Section 2510.3-101(f)(2); or (iii) Borrower, Mortgage Borrower or
Operating Lessee qualifies as an "operating company" within the meaning of 29
C.F.R. Section 2510.3-101(c).
(d) If an investor or
equity owner in Borrower, Mortgage Borrower or Operating Lessee is (directly or
indirectly) a plan that is not subject to Title I of ERISA or Section 4975 of
the Code, but is subject to the provisions of any federal, state, local,
non-U.S. or other laws or regulations that are similar to those portions of
ERISA or the Code (collectively, "Other Plan Laws"), the assets of Borrower,
Mortgage Borrower or Operating Lessee shall not constitute the assets of such
plan under such Other Plan Laws.
(T) Single Purpose
Entity. Borrower, Mortgage Borrower and Operating Lessee shall at all times be a
Single-Purpose Entity.
(U) Trade Indebtedness. Borrower will pay
its trade payables within sixty (60) days of the date incurred, unless Borrower
is in good faith contesting Borrower's obligation to pay such trade payables in
a manner reasonably satisfactory to Lender (which may include Lender's
requirement that Borrower post security with respect to the contested trade
payable).
(V) Capital Improvements and Environmental
Remediation. Borrower shall cause Mortgage Borrower, within the time periods set
forth on Exhibit B hereto, to perform the repairs and environmental remediation
to the Individual Properties itemized on Exhibit B hereto. Furthermore, Borrower
shall cause Mortgage Borrower to diligently perform, or cause to be performed,
in a timely and workmanlike manner, all repairs, maintenance and capital
improvements contemplated by and itemized in the Approved Budget.
(W) Intentionally Omitted.
(X) Compliance with Anti-Terrorism, Embargo,
Sanctions and Anti-Money Laundering Laws. Borrower shall comply, and shall cause
Mortgage Borrower and Operating Lessee to comply, with all Legal Requirements
relating to money laundering, anti-terrorism, trade embargoes and economic
sanctions, now or hereafter in effect. Upon Lender's request from time to time
during the term of the Loan, Borrower shall certify in writing to Lender that
Borrower's representations, warranties and obligations under Section 4.1(NN) and
this Section remain true and correct and have not been breached. Borrower shall
immediately notify Lender in writing if any of such representations, warranties
or covenants are no longer true or have been breached or if Borrower has a
reasonable basis to believe that they may no longer be true or have been
breached. In connection with such an event, Borrower shall, and shall cause
Mortgage Borrower and Operating Lessee to, comply with all Legal Requirements
and directives of Governmental Authorities and, at Lender's request, provide to
Lender copies of all notices, reports and other communications exchanged with,
or received from, Governmental Authorities relating to such an event. Borrower
shall also promptly reimburse to Lender any and all costs and expenses incurred
by Lender in evaluating the effect of such an event on the Loan and
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Lender's interest in the collateral for the Loan, in obtaining any necessary
license from Governmental Authorities as may be necessary for Lender to enforce
its rights under the Loan Documents, and in complying with all Legal
Requirements applicable to Lender as the result of the existence of such an
event and for any penalties or fines imposed upon Lender as a result thereof.
(Y) The Mortgage Loan. Except as set forth
in Section 8.35 hereof, notwithstanding anything in this Agreement to the
contrary, and without limiting any provision that benefits Lender contained in
this Agreement, Borrower shall cause each Mortgage Borrower and Operating Lessee
to (i) at all times observe, perform and satisfy all of the terms, provisions,
covenants, negative covenants and conditions required to be observed, performed
or satisfied by each Mortgage Borrower or Operating Lessee, or both under all of
the Mortgage Loan Documents, (ii) to at all times enforce all of Mortgage
Borrowers' and Operating Lessee's rights and privileges under all of the
Mortgage Loan Documents in a manner which is in accordance with the Mortgage
Loan Documents (it being understood that no obligation of Borrower set forth in
this Agreement shall constitute a guarantee of any monetary obligation of
Mortgage Borrower to Mortgage Lender), and (iii) to refrain from taking any
action(s) which would constitute or cause an Event of Default under, and as
defined in, the Mortgage Loan Documents and to take all actions required of each
Mortgage Borrower and Operating Lessee so that an Event of Default under, and as
defined in, the Mortgage Loan Documents does not occur.
(Z) Modification of Mortgage Loan Documents.
Borrower shall not consent or agree to, or permit each Mortgage Borrower and
Operating Lessee to consent or agree to, any amendment, modification, waiver, or
restatement of any of the Mortgage Loan Documents or any of the organizational
documents of each Mortgage Borrower and Operating Lessee, without Lender's prior
written consent not to be unreasonably withheld.
(AA) Refinancing/Transfer. Borrower hereby
agrees that it will not permit to occur: (a) any Transfer or Mortgage Loan
Transfer or any creation or issuance of any new, membership, economic,
percentage or other equity interest of any type in Borrower, any Mortgage
Borrower, SPE Equity Owner or Operating Lessee, unless in each case the prior
written consent of Lender is obtained, which consent may be withheld in Lender's
sole and absolute discretion or (b) any refinancing of the Mortgage Loan other
than as permitted hereunder. (BB) Release of Pledged Collateral. In connection
with the release of the Lien of the Pledge Agreement and all other collateral,
Borrower shall submit to Lender, not less than ten (10) days prior to the
Payment Date on which Borrower intends to pay the Loan in full, a release of
Lien (and related Loan Documents) for the Pledged Collateral and all other
collateral for the Loan, for execution by Lender. Such release shall be in a
form appropriate in each jurisdiction in which such collateral is located and
that would be reasonably satisfactory to a prudent lender.
(CC) Mortgage Borrower Distributions. On
each date on which amounts are required to be disbursed to the Deposit Account
pursuant to the terms of the Deposit
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Account Agreement or are required to be paid to Lender under any of the Loan
Documents, Borrower shall exercise its rights under each Mortgage Borrower's
organizational documents to cause each Mortgage Borrower to make to Borrower a
distribution of its funds in an aggregate amount such that Lender shall receive
the amount required to be disbursed to the Deposit Account or otherwise paid to
Lender on such date.
(DD) Curing. Lender shall have the right,
but shall not have the obligation, to exercise Borrower's rights under each of
the Mortgage Borrower's organizational documents (a) to cure a Default or Event
of Default under, and as each are defined in, the Mortgage Loan Agreement and
(b) to satisfy any Liens, claims or judgments against each Individual Property
(except for Liens permitted by the Mortgage Loan Documents), in the case of
either (a) or (b), unless Borrower or the applicable Mortgage Borrower shall be
diligently pursuing remedies to cure to Lender's satisfaction. Borrower shall
reimburse Lender on demand for any and all costs incurred by Lender in
connection with curing any such Default or Event of Default or satisfying any
Liens, claims or judgments against each Individual Property.
(EE) Business and Operations. Borrower will
qualify to do business and will remain in good standing under the laws of each
state as and to the extent the same are required for the ownership, maintenance,
management and operation of the Pledged Collateral and/or any other collateral
pledged by it as security for the Loan. Borrower shall not enter into any line
of business other than the ownership of such collateral, or make any material
change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the continuance
of its present business.
(FF) Notices. Borrower shall give notice, or
cause notice to be given to Lender promptly upon the occurrence and during the
continuance of an Event of Default and upon any and all the following:
(a) any Default, Mortgage Loan Default or Mortgage
Loan Event of Default;
(b) any default or event of default under any
Contractual Obligation of Borrower, or, to the knowledge of Borrower, any
Mortgage Borrower, any Manager or Operating Lessee, that could reasonably be
expected to have a material adverse effect on Borrower, the ability of Borrower
to perform under the Loan Documents or the rights and remedies of Lender under
the Loan Documents;
(c) any litigation or proceeding affecting Borrower,
or, to the knowledge of Borrower, affecting any of any Mortgage Borrower, any
Manager or Operating Lessee, in which the amount involved in each case is
$100,000 or more and not fully covered by insurance, or in which injunctive or
similar relief is sought;
(d) a change in the business, operations, property or
financial or other condition or prospects of Borrower, or, to the knowledge of
Borrower, each Mortgage Borrower, each Manager or Operating Lessee, which could
reasonably be expected to have a material
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adverse effect on Borrower, the ability of Borrower to perform under the Loan
Documents or the rights and remedies of Lender under the Loan Documents.
ARTICLE 6.
NEGATIVE COVENANTS
Section 6.1. Borrower Negative Covenants.
Borrower covenants and agrees that, until payment in full of the
Indebtedness, it will not, and, where applicable, will not permit Mortgage
Borrower or Operating Lessee to, do, directly or indirectly, any of the
following unless Lender consents thereto in writing:
(A) Liens on the Individual Property. Incur,
create, assume, become or be liable in any manner with respect to, or permit to
exist, any Lien with respect to the Pledged Collateral or each Individual
Property or any portion thereof, except: (i) Liens in favor of Lender or
Mortgage Lender, as applicable, and (ii) the Permitted Encumbrances.
(B) Transfer. Except as expressly permitted
by or pursuant to this Agreement or the other Loan Documents (except as
otherwise approved by Lender in writing in Lender's discretion) allow any
Transfer or Mortgage Loan Transfer to occur, or modify, change, supplement,
alter, amend, fail to comply with or terminate the Management Agreement or any
Operating Lease, or enter into a new Management Agreement or Operating Lease
with respect to any Individual Property except as permitted under this
Agreement.
(C) Other Borrowings. Incur, unsecured trade
payables (not evidenced by a promissory note) incurred in the ordinary course of
business relating to the ownership and operation of the Pledged Collateral that
do not exceed, at any time, a maximum amount of (1) with respect to Mortgage
Borrower and Operating Lessee, (aggregated) two and one-half percent (2.5%) of
the Indebtedness and are paid within sixty (60) days of the date incurred, and
(2) as to Borrower, $10,000 and are paid within sixty (60) days of the date
incurred, create, assume, become or be liable in any manner with respect to
Other Borrowings.
(D) Change In Business. Cease to be a
Single-Purpose Entity or make any material change in the scope or nature of its
business objectives, purposes or operations, or undertake or participate in
activities other than the continuance of its present business.
(E) Debt Cancellation. Cancel or otherwise
forgive or release any material claim or debt owed to Borrower or Mortgage
Borrower, as applicable, by any Person, except for adequate consideration or in
the ordinary course of Borrower's or Mortgage Borrower's, as applicable,
business or otherwise if such cancellation, release or forgiveness is prudent
and commercially reasonable.
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(F) Affiliate Transactions. Except as
otherwise permitted under or contemplated by the Loan Documents, enter into, or
be a party to, any transaction with an Affiliate of Borrower, Mortgage Borrower
or Operating Lessee, except in the ordinary course of business and on terms
which are no less favorable to Borrower or such Affiliate than would be obtained
in a comparable arm's length transaction with an unrelated third party, and, if
the amount to be paid to the Affiliate pursuant to the transaction or series of
related transactions is greater than Fifty Thousand Dollars ($50,000.00)
(determined annually on an aggregate basis) fully disclosed to Lender in
advance.
(G) Creation of Easements. Create, or permit
any Individual Property or any part thereof to become subject to, any easement,
license or restrictive covenant, other than a Permitted Encumbrance. Without
limiting the generality of the immediately preceding sentence, neither Borrower
nor Mortgage Borrower or Operating Lessee shall enter into, consent to, grant,
amend, modify, restate or supplement any document, instrument or agreement
affecting, related to or impacting upon any Individual Property, the title
thereto or any portion or aspect thereof, including, without limitation, any
easement, reciprocal easement agreement, or any declaration of easements or
covenants other than a Permitted Encumbrance.
(H) Certain Restrictions. Enter into any
agreement which expressly restricts the ability of Borrower, Mortgage Borrower
or Operating Lessee to enter into amendments, modifications or waivers of any of
the Loan Documents or the Mortgage Loan Documents.
(I) Issuance of Equity Interests. Issue or
allow to be created any stocks or shares or shareholder, partnership or
membership interests, as applicable, or other ownership interests other than the
stocks, shares, shareholder, partnership or membership interests and other
ownership interests which are outstanding or exist on the Closing Date or any
security or other instrument which by its terms is convertible into or
exercisable or exchangeable for stock, shares, shareholder, partnership or
membership interests or other ownership interests in Borrower, Mortgage Borrower
or Operating Lessee. Borrower shall not allow to be issued or created any stock
in Borrower's general partner or managing member, as applicable, other than the
stock which is outstanding or existing on the Closing Date or any security or
other instrument which by its terms is convertible into or exercisable or
exchangeable for any stock in Borrower's general partner or managing member, as
applicable.
(J) Assignment of Licenses and Permits.
Assign or transfer any of its interest in any Permits pertaining to any
Individual Property, or assign, transfer or remove or permit any other Person to
assign, transfer or remove any records pertaining to any Individual Property
without Lender's prior written consent which consent may be granted or refused
in Lender's discretion.
(K) Place of Business. Change its chief
executive office, its principal place of business or place where its books and
records are kept without giving Lender at least thirty (30) days' prior written
notice thereof and promptly providing Lender such information as Lender may
reasonably request in connection therewith.
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(L) Refinancing. Borrower shall not consent
to or permit a refinancing of the Mortgage Loan unless it obtains the prior
consent of Lender, or in connection with such refinancing, the Loan is repaid in
full pursuant to and in accordance with the terms of this Agreement.
(M) Other Limitations. Prior to the payment
in full of the Indebtedness, except as otherwise permitted in this agreement
including in connection with a Partial Release, neither Borrower nor any of its
subsidiaries or Operating Lessee shall, without the prior written consent of
Lender (which may be furnished or withheld at its sole and absolute discretion),
give its consent or approval to any of the following actions or items:
(1) (i) any refinance of the
Mortgage Loan, (ii) any prepayment of the Mortgage Loan, (iii) any Transfer of
any Individual Property or any portion thereof or (iv) any action in connection
with or in furtherance of the foregoing;
(2) approve the terms of any budget
of or related to any Individual Property;
(3) the distribution to the
partners, members or shareholders of Mortgage Borrower or Operating Lessee of
property other than cash;
(4) except as set forth in an
Approved Budget, any (i) improvement, renovation or refurbishment of all or any
part of each Individual Property to a materially higher standard or level than
that of comparable properties in the same market segment and in the same
geographical area as any Individual Property, (ii) removal, demolition or
material alteration of the improvements or equipment on each Individual Property
or (iii) material increase in the square footage or gross leasable area of the
improvements on any Individual Property if a material portion of any of the
expenses in connection therewith are paid or incurred by Mortgage Borrower or
Operating Lessee;
(5) any material change in the
method of conduct of the business of Borrower or any of its subsidiaries or
Operating Lessee, such consent to be given in the sole discretion of Lender;
(6) the settlement of any claim
against Borrower or any of its subsidiaries or Operating Lessee, other than a
fully insured third party claim, in any amount greater than $500,000 (in the
case of Borrower) or $500,000 (in the case of Mortgage Borrower or Operating
Lessee), such consent to be given in the sole discretion of Lender; or
(7) except as required by the
Mortgage Loan Documents, any determination to restore any Individual Property
after a casualty or a Taking.
(N) Limitations on Distributions. Following
the occurrence and during the continuance of an Event of Default, Borrower shall
not make any distributions to its member.
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(O) Extra Funds. Following the occurrence
and during the continuance of an Event of Default, Borrower shall not permit any
Mortgage Borrower to make a request to receive any "Extra Funds" (as defined in
the Mortgage Loan Agreement) pursuant to the terms of the Mortgage Loan
Agreement.
ARTICLE 7.
DEFAULTS
Section 7.1. Event of Default.
The occurrence of one or more of the following events shall be
an "Event of Default" hereunder:
(i) if on any Payment Date the funds in the
Debt Service Payment Sub-Account are insufficient to pay the Required
Debt Service Payment due on such Payment Date and Borrower fails to pay
such insufficiency on such Payment Date; provided that Borrower shall
have an additional two (2) Business Days past the related Payment Date
to make such payment, but only once during any twelve-month period;
(ii) if Operating Lessee shall materially
breach any of its representations, warranties or covenants set forth in
the Mortgage Loan Agreement; provided, however that Operating Lessee
shall be deemed to have the same right to cure any such breach (if any)
set forth for such breach in the Mortgage Loan Agreement;
(iii) if Borrower fails to pay the
outstanding Indebtedness on the Maturity Date;
(iv) if on any Payment Date Borrower fails
to pay the Deposit Account Bank Fees due on such Payment Date;
(v) the occurrence of the events identified
elsewhere in the Loan Documents as constituting an "Event of Default";
(vi) any breach of Section 2.11(a), 2.11(b),
2.11(e), (2.11(h), Section 2.14, Section 5.1(T), Section 5.1(X), or
Section 6.1(B);
(vii) if any default or event of default
shall occur with respect to Ashford Bucks County LLC's obligations
under the Declaration;
(viii) if Borrower fails to pay any other
amount payable pursuant to this Agreement or any other Loan Document
within two (2) Business Days of the date when due and payable in
accordance with the provisions hereof or thereof, as the case may be;
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(ix) if any representation or warranty made
herein by Borrower or Operating Lessee or in any other Loan Document,
or in any report, certificate, financial statement or other Instrument,
agreement or document furnished by Borrower in connection with this
Agreement, the Note or any other Loan Document executed and delivered
by Borrower, shall be false in any material respect as of the date such
representation or warranty was made or remade;
(x) if Borrower, any of Borrower's partners
or members, as applicable, or any SPE Equity Owner, Mortgage Borrower
or Operating Lessee makes an assignment for the benefit of creditors;
(xi) if a receiver, liquidator or trustee
shall be appointed for Borrower, any of Borrower's partners, members or
shareholders, as applicable, or any SPE Equity Owner, Mortgage Borrower
or Operating Lessee or if Borrower, any of Borrower's partners, members
or shareholders, as applicable, or any SPE Equity Owner, Mortgage
Borrower or Operating Lessee shall be adjudicated as bankrupt or
insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal
or state law, shall be filed by or against, consented to, or acquiesced
in by Borrower, any of Borrower's partners, members or shareholders, as
applicable, or any SPE Equity Owner, Mortgage Borrower or Operating
Lessee or if any proceeding for the dissolution or liquidation of
Borrower, any of Borrower's partners, members or shareholders, as
applicable, or any SPE Equity Owner, Mortgage Borrower or Operating
Lessee shall be instituted; provided, however, that if such
appointment, adjudication, petition or proceeding was involuntary and
not consented to by Borrower, any of Borrower's partners, members or
shareholders, as applicable, or any SPE Equity Owner, Mortgage Borrower
or Operating Lessee as the case may be, upon the same not being
discharged, stayed or dismissed within ninety (90) days; or if
Borrower, any of Borrower's partners, members or shareholders, as
applicable, or any SPE Equity Owner, Mortgage Borrower or Operating
Lessee shall generally not be paying its debts as they become due;
(xii) if Borrower attempts to delegate its
obligations or assign its rights under this Agreement, any of the other
Loan Documents or any interest herein or therein;
(xiii) if any provision of any
organizational document of Borrower, any SPE Equity Owner, Mortgage
Borrower or Operating Lessee is amended or modified in any respect, or
if Borrower, any SPE Equity Owner, Mortgage Borrower, Operating Lessee
or any of their respective partners, members, or shareholders as
applicable, fails to perform or enforce the provisions of such
organizational documents or attempts to dissolve Borrower, any SPE
Equity Owner, Operating Lessee or Mortgage Borrower; or if Borrower,
any SPE Equity Owner, any Operating Lessee or any Mortgage Borrower or
any of their respective partners, members or shareholders, as
applicable, breaches any of the covenants set forth in Sections 5.1(T),
or 6.1(D);
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(xiv) if Borrower, any Mortgage Borrower,
Operating Lessee or any SPE Equity Owner enters into any interest rate
cap protection agreement, interest rate swap, interest rate hedge
agreement or any similar agreement other than the Interest Rate Cap
Agreement or unless consented to by Lender in its sole discretion;
(xv) if an event or condition specified in
Section 5.1(S) shall occur or exist with respect to any Plan,
Multiemployer Plan or plan and, as a result of such event or condition,
together with all other such events or conditions, Borrower, Mortgage
Borrower, Operating Lessee or any ERISA Affiliate or any affiliate
shall incur or in the opinion of Lender shall be reasonably likely to
incur a liability to a Plan, a Multiemployer Plan, PBGC or plan (or any
combination of the foregoing) which would constitute, in the
determination of Lender, a Material Adverse Effect;
(xvi) if without Lender's prior written
consent (A) any Manager resigns or is removed or is replaced, (B)
intentionally omitted, (C) any Management Agreement is entered into for
any Individual Property or (D) there is any change in or termination of
any Management Agreement for any Individual Property;
(xvii) if, without Lender's prior written
consent (A) any Franchisor resigns or is removed or is replaced, (B)
any Franchise Agreement is entered into for any individual property, or
(C) there is any material change in or termination of any Franchise
Agreement for any Individual Property;
(xviii) if without Lender's prior written
consent (A) any Operating Lessee resigns or is removed or is replaced,
(B) any Operating Lease is entered into for any Individual Property or
(C) there is a change in or termination of any Operating Lease;
(xix) if any Operating Lessee is in default
in any material respect beyond any applicable notice or cure period
under the applicable Operating Lease;
(xx) if any of the assumptions set forth in
that certain non-consolidation opinion from Borrower's counsel to
Lender dated as of the date hereof shall be untrue in any material
respect;
(xxi) if Borrower shall be in default under
any of the other obligations, agreements, undertakings, terms,
covenants, provisions or conditions of this Agreement, the Note, or the
other Loan Documents, not otherwise referred to in this Section 7.1,
for ten (10) days after written notice to Borrower from Lender or its
successors or assigns, in the case of any default which can be cured by
the payment of a sum of money or for thirty (30) days after written
notice from Lender or its successors or assigns, in the case of any
other default (unless otherwise provided herein or in such other Loan
Document); provided, however, that if such non-monetary default under
this subparagraph is susceptible of cure but cannot reasonably be cured
within such thirty (30) day period and provided further that Borrower
shall have commenced to cure such default within such thirty (30) day
period and thereafter diligently and expeditiously
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proceeds to cure the same, such thirty (30) day period shall be
extended for such time as is reasonably necessary for Borrower in the
exercise of due diligence to cure such default, but in no event shall
such period exceed ninety (90) days after the original notice from
Lender;
(xxii) the occurrence of an Event of Default
as such term is defined in any Mortgage Loan Document;
(xxiii) if the Liens created pursuant to any
Loan Documents shall cease to be a fully perfected enforceable first
priority security interest or any portion of the Pledged Collateral or
any other collateral securing the Loan is Transferred without Lender's
prior written consent;
(xxiv) if any of the assumptions contained
in any opinion relating to issues of substantive consolidation
delivered to Lender in connection with the Loan, or in any other
opinion relating to substantive consolidation delivered subsequent to
the closing of the Loan, is or shall become untrue in any material
respect; or
(xxv) if any of Borrower or its subsidiaries
shall breach any of the terms of:
(A) Section 2.6 (d);
(B) Section 6.1(A);
(C) Section 6.1(I);
(D) Section 6.1(L); or
(E) Section 6.1(M).
Section 7.2. Remedies.
(a) Upon the occurrence and during the continuance of
an Event of Default, all or any one or more of the rights, powers and other
remedies available to Lender against Borrower under this Agreement, the Note,
the Pledge 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 (including, without
limitation, the right to accelerate and declare the outstanding principal
amount, unpaid interest, Default Rate interest, Late Charges, Prepayment Premium
and any other amounts owing by Borrower to be immediately due and payable),
without notice or demand, whether or not all or any portion 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 all or any
portion of the Pledged Collateral. Any such actions taken by Lender shall be
cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at
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such time and in such order as Lender may determine in its discretion, to the
fullest extent permitted by law, without impairing or otherwise affecting the
other rights and remedies of Lender permitted by law, equity or contract or as
set forth herein or in the other Loan Documents. Notwithstanding anything
contained to the contrary herein, the outstanding principal amount, unpaid
interest, Default Rate interest, Late Charges, Prepayment Premium and any other
amounts owing by Borrower shall be accelerated and immediately due and payable,
without any election by Lender upon the occurrence of an Event of Default
described in Section 7.1(x) or Section 7.1(xi). Notwithstanding that this
Agreement may refer to a continuing Event of Default, and without limiting
Borrower's right to cure a Default which may, with the passage of time, become
an Event of Default, Borrower shall have no right pursuant to this Agreement to
cure any Event of Default unless permitted by Lender in writing.
Section 7.3. 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 or any other Person pursuant to this Agreement
or the other Loan Documents executed by or with respect to Borrower or any other
Person, 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 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 any Default or
Event of Default shall not be construed to be a waiver of any subsequent Default
or Event of Default or to impair any remedy, right or power consequent thereon.
Any and all of Lender's rights with respect to the Pledged Collateral shall
continue unimpaired, and Borrower shall be and remain obligated in accordance
with the terms hereof, notwithstanding (i) the release or substitution of the
Pledged Collateral at any time, or of any rights or interest therein or (ii) any
delay, extension of time, renewal, compromise or other indulgence granted by
Lender in the event of any Default or Event of Default with respect to the
Pledged Collateral or otherwise hereunder. Notwithstanding any other provision
of this Agreement, but subject to Section 8.14 hereof, Lender reserves the right
to seek a deficiency judgment or preserve a deficiency claim, in connection with
the foreclosure on the Pledged Collateral, to the extent necessary to foreclose
on other parts of the Pledged Collateral.
Section 7.4. Lender's Right to Perform.
If Borrower fails to perform any covenant or obligation
contained herein and such failure shall continue for a period of (5) five
Business Days after Borrower's receipt of written notice thereof from Lender,
without in any way limiting Section 7.1 hereof, Lender may, but shall have no
obligation to, itself perform, or cause performance of, such covenant or
obligation, and the expenses of Lender incurred in connection therewith shall be
payable by Borrower to Lender upon demand. Notwithstanding the foregoing, Lender
shall have no obligation to send notice to Borrower of any such failure for
purposes of this Section 7.4.
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Section 7.5. Sale. Without limiting any other right or remedy of
Lender, during the existence of an Event of Default, Lender may institute
proceedings, judicial or otherwise, for the complete or partial sale, public or,
to the extent now or hereafter permitted by law, private, of any or all of the
Pledged Collateral under the UCC or any other applicable provision of law. In
connection with any such proceeding, Lender may sell the Pledged Collateral as
an entirety or in blocks or units and at such times and places (at one or more
sales) and upon such terms as it may deem expedient unless prohibited by law
from so acting.
Section 7.6. Partial Foreclosure. Without limiting any other right or
remedy of Lender, during the existence of an Event of Default, Lender shall have
the right from time to time to partially foreclose upon the Pledged Collateral
in any manner and for any amounts secured by the Pledge Agreement or any other
Loan Document then due and payable as determined by Lender in its sole
discretion including, without limitation, the following circumstances: (i) in
the event Borrower defaults beyond any applicable grace period in the payment of
one or more scheduled payments of principal and interest, Lender may foreclose
upon the Pledged Collateral to recover such delinquent payments or (ii) in the
event Lender elects to accelerate less than the entire Indebtedness, Lender may
foreclose upon the Pledged Collateral to recover so much of the Indebtedness as
Lender may accelerate and such other sums secured by the Pledged Collateral as
Lender may elect. Notwithstanding one or more partial foreclosures, the
remaining Pledged Collateral shall remain subject to the Pledge Agreement and
the other Loan Documents to secure payment of sums secured by the Loan Documents
and not previously recovered.
Section 7.7. Receiver. Without limiting any other right or remedy of
Lender, during the existence of an Event of Default, Lender may apply for the
appointment of a receiver, trustee, liquidator or conservator of the Pledged
Collateral, without regard for the adequacy of the security for the Indebtedness
or a showing of insolvency, fraud or mismanagement on the part of Borrower. Any
receiver or other party so appointed has all powers permitted by law which may
be necessary or usual in such cases for the protection, possession, control,
management and operation of the Pledged Collateral. Borrower hereby consents, to
the extent permitted under applicable law, to the appointment of a receiver or
trustee of the Pledged Collateral upon Lender's request if an Event of Default
has occurred. At Lender's option, such receiver or trustee shall serve without
any requirement of posting a bond.
Section 7.8. UCC Remedies. Without limiting any other right or remedy
of Lender, during the existence of an Event of Default, Lender may exercise with
respect to the Pledged Collateral, each right, power or remedy granted to a
secured party under the UCC, including, without limitation: (i) the right to
take possession of the Pledged Collateral and to take such other measures as
Lender deems necessary for the care, protection and preservation of the Pledged
Collateral, (ii) the right to require that Borrower, at its expense, assemble
the Pledged Collateral and make it available to Lender at a convenient place
acceptable to Lender, and (iii) the right to retain any Pledged Collateral in
Lender's possession. Any notice of sale, disposition or other intended action by
Lender with respect to the Pledged Collateral sent to Borrower in accordance
with the provisions hereof at least ten (10) days prior to such action shall
constitute reasonable
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notice to Borrower. Lender shall not have any obligation to clean-up or
otherwise prepare the Pledged Collateral for sale.
Section 7.9. Exercise of Equity Interest Rights. Without limiting any
other right or remedy of Lender, during the existence of an Event of Default,
with or without taking title to or retaining possession of the Pledged
Collateral, Lender may, and Borrower hereby grants to Lender the right (but
Lender shall have no obligation) to exercise any and all of Borrower's
managerial, voting and other rights under the organizational documents of
Mortgage Borrower and otherwise, and may exercise any and all of Lender's other
rights under the Pledge Agreement or in, to or with respect to the Pledged
Collateral in the name of Borrower or otherwise.
Section 7.10. Power of Attorney. For the purpose of carrying out the
provisions and exercising the rights, powers and privileges granted in this
Article 7, Borrower hereby irrevocably and unconditionally constitutes and
appoints Lender its true and lawful attorney-in-fact to execute, acknowledge and
deliver any instruments and do and perform any acts such as are referred to in
this subsection in the name and on behalf of Borrower, such power of attorney to
be exercisable during the existence of an Event of Default. This power of
attorney is a power coupled with an interest and cannot be revoked.
ARTICLE 8.
MISCELLANEOUS
Section 8.1. Survival.
Subject to Section 4.2, this Agreement and all covenants,
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the execution and delivery of this
Agreement and the execution and delivery by Borrower to Lender of the Note, and
shall continue in full force and effect so long as any portion of the
Indebtedness 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 in
this Agreement contained, by or on behalf of Borrower, shall inure to the
benefit of the respective successors and assigns of Lender. Nothing in this
Agreement or in any other Loan Document, express or implied, shall give to any
Person other than the parties and the holder(s) of the Note and the other Loan
Documents, and their legal representatives, successors and assigns, any benefit
or any legal or equitable right, remedy or claim hereunder.
Section 8.2. Lender's Discretion.
Whenever pursuant to this Agreement or any other Loan
Document, Lender exercises any right, option or election given to Lender to
approve or disapprove, or consent or withhold consent, or any arrangement or
term is to be satisfactory to Lender or is to be in Lender's discretion, the
decision of Lender to approve or disapprove, consent or withhold
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consent, or to decide whether arrangements or terms are satisfactory or not
satisfactory or acceptable or not acceptable to Lender in Lender's discretion,
shall (except as is otherwise specifically herein provided) be in the sole and
absolute discretion of Lender. Whenever pursuant to this Agreement or any other
Loan Document (a) the Rating Agencies are given any right to approve or
disapprove, (b) confirmation is required from the Rating Agencies that an action
will not result in a downgrade or withdrawal of the ratings in a Secondary
Market Transaction or (c) any arrangement or term is to be satisfactory to the
Rating Agencies, the approval of Lender shall be substituted therefore prior to
the date that all or any portion of the Loan is included in a REMIC, and may be
based upon, among other things, Lender's reasonable determination of Rating
Agency criteria.
Section 8.3. Governing Law.
(a) The proceeds of the Note delivered pursuant
hereto were disbursed from 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 limitation, 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. 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 LEGAL SUIT, ACTION OR PROCEEDING AGAINST
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 IN ANY FEDERAL OR STATE COURT IN THE
JURISDICTION IN WHICH THE PLEDGED COLLATERAL 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. BORROWER DOES
HEREBY DESIGNATE AND APPOINT CSC NETWORKS, 500 CENTRAL AVENUE, ALBANY, NEW YORK,
12206-2290, AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF
SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN ANY FEDERAL OR STATE COURT AND AGREES THAT SERVICE OF PROCESS UPON
SAID AGENT AT SAID ADDRESS (OR AT SUCH OTHER OFFICE AS MAY BE DESIGNATED BY
BORROWER FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS HEREOF) WITH A COPY TO
BORROWER AT ITS PRINCIPAL EXECUTIVE OFFICES, ATTENTION: GENERAL COUNSEL AND
WRITTEN NOTICE OF SAID SERVICE OF BORROWER MAILED OR DELIVERED TO BORROWER IN
THE MANNER
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PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING. BORROWER (I) SHALL GIVE
PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT
HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF
PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED
AGENT CEASES TO HAVE AN OFFICE OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 8.4. Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination
or waiver of any provision of this Agreement, the Note or any other Loan
Document, or 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 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 8.5. Delay Not a Waiver.
Neither any failure nor any delay on the part of Lender in
insisting upon strict performance of any term, condition, covenant or agreement,
or exercising any right, power, remedy or privilege hereunder, or under the
Note, or of any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, 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 8.6. Notices.
All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document shall be given in writing
and shall be effective for all purposes if hand delivered or sent by (a) hand
delivery, with proof of attempted delivery, (b) certified or registered United
States mail, postage prepaid, (c) expedited prepaid delivery service, either
commercial or United States Postal Service, with proof of attempted delivery, or
(d) by telecopier (with answerback acknowledged) provided that such telecopied
notice must also be delivered by one of the means set forth in (a), (b) or (c)
above, addressed to the parties as follows:
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If to Lender: Merrill Lynch Capital, a Division of Merrill
Lynch Business Financial
Services, Inc.
222 North LaSalle Street
16th Floor
Chicago, IL 60601
Attn: Vice President,
Real Estate Portfolio Manager
Telecopier: 312-499-3026
with a copy to: Merrill Lynch Capital, a Division of Merrill
Lynch Business Financial
Services, Inc.
222 North LaSalle Street
16th Floor
Chicago, IL 60601
Attn: Real Estate Legal
Telecopier: 312-499-3026
with a copy to: Dechert LLP
One Market Street,
Spear Tower,
Suite 1600
San Francisco, CA 94105
Attn: Joseph B. Heil, Esquire
Telecopier: 415-262-4555
If to Borrower: Ashford Mezz Borrower LLC
c/o Ashford Hospitality Trust
14185 Dallas Parkway
Suite 1100
Dallas, TX 75254
Attn: David Brooks, Esquire
Telecopier: (972) 490-9605
with a copy to:
Andrews Kurth LLP
1717 Main Street, Suite 3700
Dallas, Texas 75201
Attn: David Barbour, Esquire
Telecopier: (214) 659-4764
A party receiving a notice which does not comply with the
technical requirements for notice under this Section 8.6 may elect to waive any
deficiencies and treat the notice as having been properly given. A notice shall
be deemed to have been given: (a) in the case of hand
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delivery, at the time of delivery; (b) in the case of registered or certified
mail, when delivered or the first attempted delivery on a Business Day; (c) in
the case of expedited prepaid delivery upon the first attempted delivery on a
Business Day; or (d) in the case of telecopier, upon receipt of answerback
confirmation, provided that such telecopied notice was also delivered as
required in this Section 8.6.
Section 8.7. Trial By Jury.
BORROWER AND LENDER, TO THE FULLEST EXTENT THAT THEY MAY
LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH
RESPECT TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS.
Section 8.8. Headings.
The Article and Section headings 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 8.9. Assignment.
Lender shall have the right to assign in whole or in part this
Agreement and/or any of the other Loan Documents and the obligations hereunder
or thereunder to any Person and to participate all or any portion of the Loan
evidenced hereby, including without limitation, any servicer or trustee in
connection with a Secondary Market Transaction. Lender shall provide Borrower
with written notice of any such assignment; provided, however, that such notice
shall not be a condition of Lender's right to assign this Agreement and/or any
of the Loan Documents and the failure to deliver such notice shall not
constitute a default under this Agreement. At the option of Lender, the Loan may
be serviced by a servicer and\or trustee selected by Lender and Lender may
delegate all or any portion of its responsibilities under this Agreement and the
other Loan Documents to such servicer and\or trustee pursuant to a servicing
agreement between Lender and such servicer and\or trustee.
Section 8.10. Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
Section 8.11. Preferences.
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Lender shall have no obligation to marshal any assets in favor
of Borrower or any other party or against or in payment of any or all of the
obligations of Borrower pursuant to this Agreement, the Note or any other Loan
Document. 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 for Borrower's benefit, 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 8.12. Waiver of Notice.
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which this Agreement
or the other Loan Documents specifically and expressly provide for the giving of
notice by Lender to Borrower and except with respect to matters for which
Borrower is not, pursuant to applicable Legal Requirements, permitted to waive
the giving of notice. 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 does not specifically and expressly provide for the giving
of notice by Lender to Borrower.
Section 8.13. Remedies of Borrower.
In the event that a claim or adjudication is made that Lender
or its agents, has acted unreasonably or unreasonably delayed acting in any case
where by law or under this Agreement, the Note or the other Loan Documents,
Lender or such agent, as the case may be, has an obligation to act reasonably or
promptly, Borrower agrees that neither Lender nor its agents, shall be liable
for any monetary damages, and Borrower's sole remedies shall be limited to
commencing an action seeking injunctive relief or declaratory judgment. The
parties hereto agree that any action or proceeding to determine whether Lender
has acted reasonably shall be determined by an action seeking declaratory
judgment.
Section 8.14. Exculpation.
Except as otherwise set forth in this Section 8.14 and Section 4.2 to the
contrary, Lender shall not enforce the liability and obligation of Borrower to
perform and observe the obligations contained in this Agreement, the Note, or
any of the other Loan Documents executed and delivered by Borrower except that
Lender may pursue any power of sale, bring a foreclosure action, action for
specific performance, action for money judgment, or other appropriate action or
proceeding (including, without limitation, to obtain a deficiency judgment)
against Borrower or any other Person solely for the purpose of enabling Lender
to realize upon (a) the Pledged Collateral and (b) any other collateral given to
Lender under the Loan Documents ((a) and (b) collectively, the "Default
Collateral"); provided, however, that any judgment in any such action
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or proceeding shall be enforceable only to the extent of any such Default
Collateral. The provisions of this Section 8.14 shall not, however, (a) impair
the validity of the Indebtedness evidenced by the Loan Documents or in any way
affect or impair the Liens of any of the Loan Documents or the right of Lender
to foreclose on the Pledged Collateral following an Event of Default; (b) impair
the right of Lender to name any Person as a party defendant in any action or
suit for judicial foreclosure and sale of the Pledged Collateral; (c) affect the
validity or enforceability of the Note or the other Loan Documents; (d) impair
the right of Lender to obtain the appointment of a receiver; (e) impair the
right of Lender to bring suit for and recover against any Person any damages,
losses, expenses, liabilities or costs resulting from fraud, willful
misrepresentation, waste of all or any portion of any Individual Property, the
Pledged Collateral, or wrongful removal or disposal of all or any portion of any
Individual Property or the Pledged Collateral by any Person in connection with
this Agreement, the Note or the other Loan Documents; (f) impair the right of
Lender to enforce the provisions of Sections 4.1(V) or 5.1(D) through 5.1(G),
inclusive of this Agreement or the Environmental Guaranty even after repayment
in full by Borrower of the Indebtedness; (g) prevent or in any way hinder Lender
from exercising, or constitute a defense, or counterclaim, or other basis for
relief in respect of the exercise of, any other remedy against any or all of the
Pledged Collateral securing the Note as provided in the Loan Documents; (h)
impair the right of Lender to bring suit for and recover against any Person with
respect to any misapplication of any funds (including, without limitation,
Insurance Proceeds and Condemnation Proceeds); (i) impair the right of Lender to
sue for, seek or demand a deficiency judgment against any Person solely for the
purpose of foreclosing on the Pledged Collateral or any part thereof, or
realizing upon the Default Collateral; provided, however, that any such
deficiency judgment referred to in this clause (i) shall be enforceable only to
the extent of any of the Default Collateral; or (j) impair the right of Lender
to obtain Insurance Proceeds or Condemnation Proceeds due to Lender pursuant to
any Loan Document. The preceding provisions of this Section shall be
inapplicable to any Person if (i) any petition for bankruptcy, reorganization or
arrangement pursuant to federal or state law against any Borrower, any Mortgage
Borrower or Operating Lessee shall be filed by Borrower, any Mortgage Borrower,
Operating Lessee, or any Affiliate of Borrower, any Mortgage Borrower or
Operating Lessee, (ii) if an involuntary bankruptcy or other insolvency
proceeding is commenced against Borrower, any Mortgage Borrower, or Operating
Lessee (by a party other than Lender) but only if such Borrower, Mortgage
Borrower, or Operating Lessee has consented or acquiesced to such proceeding or
if Borrower, any Mortgage Borrower, Guarantor, Operating Lessee or any Affiliate
of Borrower, any Mortgage Borrower, or Operating Lessee has acted in concert
with, colluded or conspired with the party to cause the filing thereof or has
consented to or acquiesced thereto, (iii) if Borrower, Operating Lessee any
Mortgage Borrower shall institute any proceeding for the dissolution or
liquidation of Borrower, or any Mortgage Borrower, (iv) if Borrower, or any
Mortgage Borrower shall make an assignment for the benefit of creditors, (v) if
Borrower, any Mortgage Borrower or Operating Lessee shall breach any
representation, warranty or covenant in Section 2.14, Section 4.1(C), (such that
such breach was considered by a court as a factor in the court's finding for a
consolidation of the assets of Borrower, Mortgage Borrower or Operating Lessee
with the assets of another person or entity or as a result thereof Lender
suffers any material damage, cost, liability or expense; provided, however, that
in the absence of an actual consolidation, recourse may be had against Borrower
only to the extent of
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losses for such breach), 4.1, (v) 4.1(AA), 5.T(T) such that such breach was
considered by a court as a factor in the court's finding for a consolidation of
the assets of Borrower, Mortgage Borrower or Operating Lessee with the assets of
another person or entity or as a result thereof Lender suffers any material
damage, cost, liability or expense; provided, however, that in the absence of an
actual consolidation, recourse may be had against Borrower only to the extent of
losses for such breach) (v) if Borrower, Mortgage Borrower or Operating Lessee
allows any Transfer or Mortgage Loan Transfer to occur in violation of Section
6.1(B) hereof or otherwise fails to obtain Lender's prior written consent to any
Transfer or Mortgage Loan Transfer to the extent such consent is required in
this Agreement, (vi) Borrower interferes with Lender's exercise of any of its
rights or remedies hereunder, or (vii) if Borrower breaches any representation
or warranty contained in Section 4.1(S).
Section 8.15. Exhibits Incorporated.
The information set forth on the cover, heading and recitals
hereof, and the Exhibits attached hereto, are hereby incorporated herein as a
part of this Agreement with the same effect as if set forth in the body hereof.
Section 8.16. 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 are unrelated to the Loan, this
Agreement, the Note and the other Loan Documents which Borrower may otherwise
have against any assignor, 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 this Agreement, the Note, and other Loan 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 8.17. No Joint Venture or Partnership.
Borrower and Lender intend that the relationship created
hereunder be solely that of borrower and lender. Nothing herein 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
Pledged Collateral other than that of lender.
Section 8.18. Waiver of Marshalling of Assets Defense.
To the fullest extent that Borrower may legally do so,
Borrower waives all rights to a marshalling of the assets of Borrower, and
others with interests in Borrower, and of the Pledged Collateral, or to a sale
in inverse order of alienation in the event of foreclosure of the interests
hereby created, and agrees not to assert any right under any laws pertaining to
the marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the Loan
Documents to a sale of the Pledged Collateral for the
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collection of the Indebtedness without any prior or different resort for
collection, or the right of Lender to the payment of the Indebtedness in
preference to every other claimant whatsoever.
Section 8.19. Waiver of Counterclaim.
Borrower hereby waives the right to assert a counterclaim,
other than compulsory counterclaim, in any action or proceeding brought against
Borrower by Lender or Lender's agents.
Section 8.20. Conflict; Construction of Documents.
In the event of any conflict between the provisions of this
Agreement and the provisions of the Note or any of the other Loan Documents, the
provisions of this Agreement shall prevail. The parties hereto acknowledge that
they were represented by counsel in connection with the negotiation and drafting
of the Loan Documents and that the Loan Documents shall not be subject to the
principle of construing their meaning against the party which drafted same.
Section 8.21. Brokers and Financial Advisors.
Borrower and Lender hereby represent that they have dealt with
no financial advisors, brokers, underwriters, placement agents, agents or
finders in connection with the transactions contemplated by this Agreement.
Borrower hereby agrees to indemnify and hold Lender harmless from and against
any and all claims, liabilities, costs and expenses of any kind in any way
relating to or arising from a claim by any Person, that such Person acted on
behalf of Borrower in connection with the transactions contemplated herein. The
provisions of this Section shall survive the expiration and termination of this
Agreement and the repayment of the Indebtedness.
Section 8.22. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
Section 8.23. Estoppel Certificates.
Borrower and Lender each hereby agree at any time and from
time to time upon not less than fifteen (15) days prior written notice by
Borrower or Lender (but no more than four (4) times per year unless (i) an Event
of Default has occurred and is continuing or (ii) such request is occasioned in
connection with a Secondary Market Transaction) to execute, acknowledge and
deliver to the party specified in such notice, a statement, in writing,
certifying that this Agreement is unmodified and in full force and effect (or if
there have been modifications, that the same, as modified, is in full force and
effect and stating the modifications hereto), and stating whether or not, to the
knowledge of such certifying party, any Default or
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Event of Default has occurred, and, if so, specifying each such Default or Event
of Default; provided, however, that it shall be a condition precedent to
Lender's obligation to deliver the statement pursuant to this Section, that
Lender shall have received, together with Borrower's request for such statement,
an Officer's Certificate stating that no Default or Event of Default exists as
of the date of such certificate (or specifying such Default or Event of
Default).
Section 8.24. Payment of Expenses.
Borrower shall, whether or not the Transactions are
consummated, pay all Transaction Costs, which shall include, without limitation,
reasonable out-of-pocket fees, costs, expenses, and disbursements of Lender and
its attorneys, local counsel, accountants and other contractors in connection
with (i) the negotiation, preparation, execution and delivery of the Loan
Documents and the documents and instruments referred to therein, (ii) the
creation, perfection or protection of Lender's Liens in the Pledged Collateral
(including, without limitation, fees and expenses for title and lien searches
and filing and recording fees, intangibles taxes, personal property taxes,
mortgage recording taxes, due diligence expenses, travel expenses, accounting
firm fees, costs of the Appraisals, Environmental Reports (and an environmental
consultant), Surveys and the Engineering Reports), (iii) the negotiation,
preparation, execution and delivery of any amendment, waiver or consent relating
to any of the Loan Documents, (iv) the review and approval of each replacement
Rate Protection Agreement required hereunder, and (v) the preservation of rights
under and enforcement of the Loan Documents and the documents and instruments
referred to therein, including any restructuring or rescheduling of the
Indebtedness, to the extent expressly required hereunder.
Section 8.25. Bankruptcy Waiver.
Borrower hereby agrees that, in consideration of the recitals
and mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, if
Borrower (i) files with any bankruptcy court of competent jurisdiction or be the
subject of any petition under Title 11 of the U.S. Code, as amended, (ii) is the
subject of any order for relief issued under Title 11 of the U.S. Code, as
amended, (iii) files or is the subject of any petition seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or law relating to bankruptcy, insolvency or
other relief of debtors, (iv) has sought or consents to or acquiesces in the
appointment of any trustee, receiver, conservator or liquidator or (v) is the
subject of any order, judgment or decree entered by any court of competent
jurisdiction approving a petition filed against such party for any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future federal or state act or law
relating to bankruptcy, insolvency or other relief for debtors, the automatic
stay provided by the Federal Bankruptcy Code shall be modified and annulled as
to Lender, so as to permit Lender to exercise any and all of its rights and
remedies, upon request of Lender made on notice to Borrower and any other party
in interest but without the need of further proof or hearing. Neither Borrower
nor any Affiliate of Borrower shall contest the enforceability of this Section.
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Section 8.26. Entire Agreement.
This Agreement, together with the Exhibits hereto and the
other Loan Documents constitutes the entire agreement among the parties hereto
with respect to the subject matter contained in this Agreement, the Exhibits
hereto and the other Loan Documents and supersedes all prior agreements,
understandings and negotiations between the parties.
Section 8.27. Dissemination of Information.
If Lender determines at any time to participate in a Secondary
Market Transaction, Lender may forward to each purchaser, transferee, assignee,
servicer, participant or investor in such securities (collectively, the
"Investor"), any Rating Agency rating such securities, any organization
maintaining databases on the underwriting and performance of commercial loans,
trustee, counsel, accountant, and each prospective Investor, all documents and
information which Lender now has or may hereafter acquire relating to the Loan,
Borrower, Mortgage Borrower, Operating Lessee, any direct or indirect equity
owner of Borrower, any guarantor, any indemnitor, the Pledged Collateral and
each Individual Property, which shall have been furnished by Borrower any
Affiliate of Borrower, Operating Lessee, any guarantor, any indemnitor, or any
party to any Loan Document, or otherwise furnished in connection with the Loan,
as Lender in its discretion determines necessary or desirable.
Section 8.28. Limitation of Interest.
It is the intention of Borrower and Lender to conform strictly
to applicable usury laws. Accordingly, if the transactions contemplated hereby
would be usurious under applicable law, then, in that event, notwithstanding
anything to the contrary in any Loan Document, it is agreed as follows: (i) the
aggregate of all consideration which constitutes interest under applicable law
that is taken, reserved, contracted for, charged or received under any Loan
Document or otherwise in connection with the Loan shall under no circumstances
exceed the maximum amount of interest allowed by applicable law, and any excess
shall be credited to principal by Lender (or if the Loan shall have been paid in
full, refunded to Borrower); and (ii) in the event that maturity of the Loan is
accelerated by reason of an election by Lender resulting from any default
hereunder or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest may never include more than
the maximum amount of interest allowed by applicable law, and any interest in
excess of the maximum amount of interest allowed by applicable law, if any,
provided for in the Loan Documents or otherwise shall be cancelled automatically
as of the date of such acceleration or prepayment and, if theretofore prepaid,
shall be credited to principal (or if the principal portion of the Loan and any
other amounts not constituting interest shall have been paid in full, refunded
to Borrower.)
In determining whether or not the interest paid or payable
under any specific contingency exceeds the maximum amount allowed by applicable
law, Lender shall, to the maximum extent permitted under applicable law (a)
exclude voluntary prepayments and the effects thereof, and (b) amortize,
prorate, allocate and spread, in equal parts, the total amount of
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interest throughout the entire contemplated term of the Loan so that the
interest rate is uniform throughout the entire term of the Loan; provided, that
if the Loan is paid and performed in full prior to the end of the full
contemplated term hereof, and if the interest received for the actual period of
existence thereof exceeds the maximum amount allowed by applicable law, Lender
shall refund to Borrower the amount of such excess, and in such event, Lender
shall not be subject to any penalties provided by any laws for contracting for,
charging or receiving interest in excess of the maximum amount allowed by
applicable law.
Section 8.29. Indemnification.
Borrower shall indemnify and hold Lender and each of its
affiliates and their respective successors and assigns (including their
respective officers, directors, partners, employees, attorneys, accountants,
professionals and agents and each other person, if any, controlling Lender or
any of its affiliates within the meaning of either Section 15 of the Securities
Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934,
as amended) (each, including Lender, an "Indemnified Party") harmless against
any and all losses, claims, damages, costs, expenses (including the fees and
disbursements of outside counsel retained by any such person) or liabilities in
connection with, arising out of or as a result of the transactions and matters
referred to or contemplated by this Agreement, except to the extent that it is
finally judicially determined that any such loss, claim, damage, cost, expense
or liability resulted directly and solely from the gross negligence, fraud or
willful misconduct of such Indemnified Party. If any Indemnified Party becomes
involved in any action, proceeding or investigation in connection with any
transaction or matter referred to or contemplated in this Agreement, Borrower
shall periodically reimburse any Indemnified Party upon demand therefor in an
amount equal to its reasonable legal and other expenses (including the costs of
any investigation and preparation) incurred in connection therewith to the
extent such legal or other expenses are the subject of indemnification
hereunder. IT IS EXPRESSLY ACKNOWLEDGED AND AGREED BY BORROWER THAT THE
INDEMNITY (AND/OR THE RELEASE) CONTAINED IN THIS SECTION 8.29 PROTECTS LENDER
FROM THE CONSEQUENCES OF LENDER'S ACTS OR OMISSIONS, INCLUDING WITHOUT
LIMITATION, THE NEGLIGENT ACTS OR OMISSIONS OF LENDER TO THE EXTENT PERMITTED BY
LAW; PROVIDED, HOWEVER, THAT NOTHING CONTAINED HEREIN SHALL BE DEEMED TO RELIEVE
THE LENDER FROM LIABILITY DUE TO ITS GROSS NEGLIGENCE.
Section 8.30. Borrower Acknowledgments.
Borrower hereby acknowledges to and agrees with Lender that
(i) the scope of Lender's business is wide and includes, but is not limited to,
financing, real estate financing, mezzanine financing, investment in real estate
and other real estate transactions which may be viewed as adverse to or
competitive with the business of Borrower or its Affiliates and (ii) Borrower
has been represented by competent legal counsel and Borrower has consulted with
such counsel prior to executing this Agreement and of the other Loan Documents.
Section 8.31. Publicity.
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Lender shall have the right to issue press releases,
advertisements and other promotional materials describing Lender's participation
in the origination of the Loan or the Loan's inclusion in any Secondary Market
Transaction effectuated or to be effectuated by Lender. All news releases,
publicity or advertising by Borrower or their affiliates through any media
intended to reach the general public which refers to the Loan Documents or the
financing evidenced by the Loan Documents, to the Lender, Merrill Lynch or any
of their affiliates shall be subject to the prior written approval of Lender and
Merrill Lynch Mortgage Lending, Inc., except for disclosures required by law
which shall not require Lender approval but which shall require prior written
notice to Lender.
Section 8.32. .Borrower and Lender agree that time is of the essence
with regard to all obligations under this Agreement and the other Loan
Documents.
Section 8.33. Final Agreement. THE WRITTEN LOAN DOCUMENT TO WHICH THIS
NOTICE RELATES REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 8.34. .Borrower hereby waives, to the fullest extent permitted
by law, any and all rights under Sections 51.003 and 51.004 of the Texas
Property Code.
Section 8.35. Notwithstanding any of the provisions of this Agreement,
whenever any covenant or other provision contained herein or any other Loan
Document requires Borrower to "cause" any Mortgage Borrower or other Person to
perform or undertake any action (or language of similar import), such provision
shall apply only with respect to Borrower in its capacity as an equity holder of
the Mortgage Borrower, it being understood that no covenant or other obligation
of Borrower set forth in this Agreement shall constitute a guaranty or other
assurance of payment or performance of any monetary obligation of any Mortgage
Borrower or any other Person to Lender.
[Signatures on the following pages]
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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:
MERRILL LYNCH CAPITAL, a Division of Merrill
Lynch Business Financial Services, Inc., a
Delaware corporation
By: /s/ CYNTHIA M. LOZANO
---------------------
Name: Cynthia M. Lozano
Title: Assistant Vice President
[signatures continued on following page]
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BORROWER:
ASHFORD MEZZ BORROWER LLC, a Delaware
limited liability company
By: /s/ DAVID A. BROOKS
-------------------
David A. Brooks, Vice President