10000005742

US2008 1530791.
1
EXHIBIT I

Certificates of Limited Liability Company Interest for each of the Twenty Floating Rate Property
Level Borrowers

CERTIFICATE OF LIMITED LIABILITY COMPANY INTEREST
IN
KP A/GP VALENCIA LLC
NUMBER: 002 PERCENTAGE INTEREST: 100%
THIS CERTIFIES that GRAND PRIX MEZZ BORROWER 2 FLOATING LLC is the owner of a
100% limited liability company interest ("Interest") in K.P A/GP Valencia LLC, a Delaware
limited liability company (hereinafter the "Company"). The Interest evidenced hereby
constitutes an undivided interest in the Company and this Certificate and the Interest are subject
to all of the terms and conditions of the Certificate of Formation of the Company, the Limited
Liability Company Agreement of the Company (the "Agreement"), and applicable provisions of
the Delaware Limited Liability Company Act and all amendments thereto.
IN WITNESS WHEREOF, the Company has caused this Certificate to be executed as of
the 2..1 t ~ day of June, 2007.
KPA/GP VALENCIA LLC
By: Grand Prix Mezz Borrower 2 Floating
LLC, a Delaware limited liability company,
its member
THIS CERTIFICATE EVIDENCES AN INTEREST IN KPA/GP VALENCIA LLC AND SHALL BE A SECURITY FOR
PURPOSES OF ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF THE STATE OF DELAWARE, AND ARTICLE 8 OF THE
UNIFORM COMMERCIAL CODE OF ANY OTHER APPLICABLE JURISDICTION THAT NOW OR HEREAFTER
SUBSTANTIALLY INCLUDES THE 1994 REVISIONS TO ARTICLE 8 THEREOF AS ADOPTED BY THE AMERICAN LAW
INSTITUTE AND THE NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS AND APPROVED BY THE
AMERICAN BAR ASSOCIATION ON FEBRUARY 14, 1995.
THE TRANSFER OF THIS CERTIFICATE AND THE INTERESTS REPRESENTED HEREBY IS RESTRICTED As
DESCRIBED IN THE AGREEMENT.
1246004.04-New York Server 7A- MSW
IN
GRAND PRIX WEST PALM BEACH LLC
100% limited liability company interest ("Interest") in Grand Prix West Palm Beach LLC, a
Delaware limited liability company (hereinafter the "Company"). The Interest eVidenced hereby
to all of the terms and conditions of the Certificate ofFormation of the Company, the Limited
Irj WITNESS WHEREOF, the Company has caused this Certificate to be executed as of
the 21 tt\ day of June, 2007.
GRAND PRIX WEST PALM BEACH LLC,
a Delaware limited liability company,
LLC, its member
By:
Title:
THIS CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX WEST PALM BEACH LLC AND SHALL BE A
SECURITY FOR PURPOSES OF ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF THE STATE OF DELAWARE, AND
ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF ANY OTHER APPLICABLE JURISDICTION THAT NOW OR
HEREAFTER SUBSTANTIALLY INCLUDES THE 1994 REVISIONS To ARTICLE 8 THEREOF As ADOPTED BY THE AMERICAN
LAW INSTITUTE AND THE NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS AND APPROVED BY
THE AMERICAN BAR ASSOCIATION ON FEBRUARY 14, 1995.
THE TRANSFER OF THIS CERTIFICATE AND THE INTERESTS REPRESENTED HEREBY IS RESTRICTED AS
DESCRIBED IN THE AGREEMENT,
1244963.04-New York Server 7 A- MSW
IN
KP A/GP FT. WALTON BEACH LLC
NUMBER: 002 PERCENTAGE rNTEREST: 100%
100% limited liability company interest ("Interest") in KP NGP Ft. Walton Beach LLC, a
Delaware limited liability company (hereinafter the "Company"). The Interest evidenced hereby
the 2!1 +h day of June, 2007.
KPNGP FT. WALTON BEACH LLC,
its member
THIS CERTIFICATE EVIDENCES AN INTEREST IN KPA/GP FI'. WALTON BEACH LLC AND SHALL BE A
HEREAFTER SUBSTANTIALLY INCLUDES THE 1994 REVISIONS To ARTICLE 8 THEREOF AS ADOPTED BY THE AMERICAN
I 244972.04-New York Server 7 A- MSW
IN
GRAND PRIX FT. WAYNE LLC
100% limited liability company interest ("Interest") in Grand Prix Ft. Wayne LLC, a Delaware
limited liability company (hereinafter the "Company"). The Interest evidenced ~ e r e b y
the 2. "'tih day of June, 2007.
GRAND PRIX FT. WAYNE LLC,
its member
THIS CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX FT. WAYNE LLC AND SHALL BE A SECURITY
FOR PURPOSES OF ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF THE STATE OF DELAWARE, AND ARTICLE 8 OF
THE UNIFORM COMMERCIAL CODE OF ANY OTHER APPLICABLE JURISDICTION THAT NOW OR HEREAFTER
SUBSTANTIALLY INCLUDES THE 1994 REVISIONS To ARTICLE 8 THEREOF As ADOPTED BY THE AMERICAN LAW
THE TRANSFER OF THIS CERTIFICATE AND THE INTERESTS REPRESENTED HEREBY Is RESTRICTED As
IN
GRAND PRIX INDIANAPOLIS LLC
100% limited liability company interest ("Interest") in Grand Prix Indianapolis LLC, a Delaware
Liability Company Agreement of the Company (the "Agreement''), and applicable provisions of
the 2. ~ i ~ day of June, 2007.
GRAND PRIX INDIANAPOLIS LLC,
its member
THIS CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX INDIANAPOLIS LLC AND SHALL BE A
HEREAFTER SUBSTANTIALLY INCLUDES THE 1994 REVISIONS TO ARTICLE 8 THEREOF As ADOPTED BY THE AMERICAN
THE AMERICAN BAR ASSOCIATION ON FEBRUARY 14, 1995. .
THE TRANSFER OF Tms CERTIFICATE AND THE INTERESTS REPRESENTED HEREBY IS RESTRICTED As
1245138.04-New York Server 7 A - MSW
IN ,
KP A/GP LOUISVILLE (HI) LLC
100% limited liability company interest ("Interest") in KP A/GP Louisville (HI) LLC, a Delaware
to all of the terms and conditions of the Certificate of Formation ofthe Company, the Limited
IN\WITNESS WHEREOF, the Company has caused this Certificate to be executed as of
the 2. ~ t day of June, 2007.
KPA/GP LOUISVILLE (HI) LLC,
its member
THIS CERTIFICATE EVIDENCES AN INTEREST IN KPA/GP LOUISVILLE (HI) LLC AND SHALL BE A SECURITY
SUBSTANTIALLY INCLUDES THE 1994 REVISIONS TO ARTICLE 8 THEREOF As ADOPTED BY THE AMERICAN LAW
1244974.05-New York Server 7 A MSW
.IN
GRAND PRIX BULFINCH LLC
100% limited liability company interest ("Interest") in Grand Prix Bulfmch LLC, a Delaware
to all of the terms and conditions ofthe Certificate of Formation ofthe Company, the Limited
~ W I T N E S S WHEREOF, the Company has caused this Certificate to be executed as of
the 2 ~
1
day of June, 2007.
GRAND PRIX BULFINCH LLC,
its member
THIS CERTIFlCATE EVIDENCES AN INTEREST IN GRAND PRIX BULFINCH LLC AND SHALL BE A SECURITY
AMERICAN BAR ASSOCIATION ON FEBRUARY 14,1995.
1244976.04-NewYork Server7A- MSW
IN
GRAND PRIX WOBURN LLC
100% limited liability company interest ("Interest") in Grand Prix Woburn LLC, a Delaware
to all of the terms and conditions ofthe Certificate ofFormation ofthe Company, the Limited
the 2. ~ t"-. day of June, 2007. .
GRAND PRIX WOBURN LLC,
its member
THIS CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX WOBURN LLC AND SHALL BE A SECURITY
THE UNIFORM COMMERCIAL CODE OF ANY OTHER APPLICABLE JURISDICTION THAT Now OR HEREAFTER
IN
GRAND PRIX ROCKVILLE LLC
1 00% limited liability company interest ("Interest") in Grand Prix Rockville LLC, a Delaware
to all ofthe terms and conditions ofthe Certificate of Formation ofthe Company, the Limited
Liability Company Agreement of the Company (the "Agreement"}, and applicable provisions of
IN WI1NESS WHEREOF, the Company has caused this Certificate to be executed as of
the 2!\ th day of June, 2007.
GRAND PRIX ROCKVILLE LLC
By: GRAND PRIX MEZZ BORROWER 2
FLOATING LLC, a Delaware limited
liability company, its member
By:
THIS CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX ROCKVILLE LLC AND SHALL BE A SECURITY
IN
GRAND PRIX EAST LANSING LLC
100% limited liability company interest ("Interest") in Grand Prix East Lansing LLC, a Delaware
Liability Company Agreement of the Company (the "Agreement"), and provisions of
WHEREOF, the Company has caused this Certificate to be executed as of
the 2 Of t day of June, 2007.
GRAND PRIX EAST LANSING LLC,
its member

e: ,
Title:
THIS CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX EAST LANSING LLC AND SHALL BE A
HEREAFTER SUBSTANTIALLY INCLUDES THE 1994 REVISIONS To ARTICLE 8 THEREOF AS ADOPTED BY THE AMERICAN
THE TRANSFER OF THIS CERTIFICATE AND THE INTERESTS REPRESENTED HEREBY Is RESTRICTED AS
IN
GRAND PRIX GRAND RAPIDS LLC
I 00% limited liability company interest ("Interest") in Grand Prix Grand Rapids LLC, a
the 2. ~ ~ day of June, 2007.
GRAND PRIX GRAND RAPIDS LLC,
its member
B y : ~ / / < ?
Title:
THIS CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX GRAND RAPIDS LLC AND SHALL BE A
THE AMERICAN BAR AssOCIATION ON FEBRUARY 14, 1995.
THE TRANSFER OF THIS CERTIFICATE AND THE INTERESTS REPRESENTED HEREBY Is REsTRICTED AS
DESCRIBED IN THE AGREEMENT,
IN
GRANDPRIXTROY(CENTRAL)LLC
100% limited liability company interest ("Interest") in Grand Prix Troy (Central) LLC, a
WITNESS WHEREOF, the Company has caused this Certificate to be executed as of
the 2 day of June, 2007.
GRAND PRIX TROY (CENTRAL) LLC,
By: Grand Prix Mezz Borro)er 2 Floating
its member

e:
itle:
Tms CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX TROY (CENTRAL) LLC ANI> SHALL BE A
SECURITY FOR PURPOSES OF ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF THE STATE OF DELAWARE, ANI>
ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF ANY. OTHER APPLICABLE JURISDICTION THAT NOW OR
HEREAFTER SUBSTANTIALLY INCL1/DES THE 1994 REVISIONS To ARTICLE 8 THEREOF As ADOPTED BY THE AMERICAN
LAW INSTITUTE ANI> THE NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS ANI> APPROVED BY
THE TRANSFER OF THIS CERTIFICATE ANI> THE INTERESTS REPRESENTED HEREBY IS RESTRICTED As
1245103.04-New York Server 7A MSW
IN
GRAND PRIX TROY (SE) LLC
THIS CERTIFIES that GRAND PRIX MEzz BORROWER 2 FLOATING LLC is the owner of a
100% limited liability company interest ("Interest") in Grand Prix Troy (SE) LLC, a Delaware
the .2-1 ' t ~ day of June, 2007.
GRAND PRIX TROY (SE) LLC,
its member
THIS CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX TROY (SE) LLC AND SHALL BE A SECURITY
THE TRANSFER OF THIS CERTIFICATE AND THE INTERESTS REPRESENTED HEREBY Is REsTRICTED As
DESCRIBED IN T ~ AGREEMENT.
1245110.04-NewYork Server7A MSW
IN
GRAND PRIX ATLANTIC CITY LLC
100% limited liability company interest ("Interest") in Grand Prix Atlantic City LLC, a Delaware
the Delaware Limited Liabjlity Company Act and all amendments thereto.
the 21th day of June, 2007.
GRAND PRIX ATLANTIC CITY LLC,
By: Grand Prix Mezz B o r r o ~ e r 2 Floating
LLC, its member
THIS CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX ATLANTIC CITY LLC AND SHALL BE A
SECURITY FOR PURPOSES OF ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF THE STATE OF. DELAWARE, AND
IN
GRAND PRIX MONTVALE LLC
100% limited liability company interest ("Interest") in Grand Prix Montvale LLC, a Delaware
IN ~ I T N E S S WHEREOF, the Company has caused this Certificate to be executed as of
the 2-1 +"' day of June, 2007.
GRAND PRIX MONTVALE LLC,
its member
THIS CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX MONTVALE LLC AND SHALL BE A SECURITY
THE UNIFORM COMMERCIAL CODE OF ANY OTHER APPLICABLE JURISDICTION THAT Now OR HEREAFTER
SUBSTANTIALLY INCLUDES THE 1994 REVISIONS To ARTICLE 8 THEREOF AS ADOPTED BY THE AMERICAN LAW
IN
GRAND PRIX MORRISTOWN LLC
NUMBER: 001 PERCENTAGE INTEREST: I 00%
100% limited liability company interest ("Interest") in Grand Prix Morristown LLC, a Delaware
to all ofthe terms and conditions of the Certificate of Formation of the Company, the Limited
the 2 ~ t" day of June, 2007. .
GRAND PRIX MORRISTOWN LLC,
its member
THIS CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX MORRISTOWN LLC AND SHALL BE A
ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF ANY OTHER APPLICABLE JURISDicTION THAT NOW OR
HEREAFTER SUBSTANTIALLY INCLUDES THE 1994 REVISIONS TO ARTICLE 8 THEREOF AS ADOPTED BY THE AMERICAN
12450 17.04-New York Server 7 A - MSW
CERTIFICATE OF LIMITED LIABILITY COMPANYINTEREST
IN
GRAND PRIX ALBANY LLC
THIS CERTIFIES that GRAND PRIX MEZZ BORROWER 2 FLOATING LLC ~ s the owner of a
100% limited liability company interest ("Interest") in Grand Prix Albany LLC, a Delaware
IN WI1NESS WHEREOF, the Company has caused this Certificate to be executed as of
the .1.1 + ~ day of June, 2007.
GRAND PRIX ALBANY LLC,
its member
By:
Title:
THIS CERTIFICATE EVIDENCES AN INrEREST IN GRAND PRIX ALBANY LLC AND SHALL BE A SECURITY FOR
PURPOSES OF ARTICLE 8 OF mE UNIFOR)\1 COMMERCIAL CODE OF THE STATE OF DELAWARE, AND ARTICLE 8 OF THE
UNIFORM COMMERCIAL CoDE OF ANY OTHER APPLICABLE JURISDICTION THAT NOW OR HEREAFTER
SUBSTANTIALLY INCLUDES THE 1994 REVISIONS To ARTICLE 8 THEREOF As ADOPTED By THE AMERICAN LAW
THE TRANSFER OF THIS CERTIFICATE AND THE lNrERESTS REPRESENrED HEREBY Is RESTRICTED As
DESCRIBED IN THE AGREEMENr.
1245129.04-New York Server 7A MSW
IN
GRAND PRIX ADDISON (SS) LLC
TillS CERTIFIES that GRAND PRIX MEZZ BORROWER 2 FLOATING LLC is the owner of a
100% limited liability company interest ("Interest") in Grand Prix Addison (SS) LLC, a
Delaware limited liability company (hereinafter the "Company"). The Interest eVidenced hereby
the l.1"'" day of June, 2007.
GRAND PRIX ADDISON (SS) LLC,
its member
Tms CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX ADDISON (SS) LLC AND SHALL BE A
HEREAFrER SUBSTANTIALLY INCLUDES THE 1994 REVISIONS TO ARTICLE 8 THEREOF As ADOPTED BY THE AMERICAN
1245130.04-NewYork Server7A- MSW
.,.........
IN
GRAND PRIX HARRISBURG LLC
100% limited liability company interest ("Interest'') in Grand Prix Harrisburg LLC, a Delaware
limited liability company (hereinafter the "Company''). The Interest evidenced hereby
WHEREOF, the Company has caused this Certificate to be executed as of
the 2.. 4 t day of June, 2007.
GRAND PRIX HARRISBURG LLC,
its member

arne:
Tttle:
THIS CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX HARRISBURG LLC AND SHALL BE A SECURITY
IN
GRAND PRIX ONTARIO LLC
THIS CERTIFIES that GRAND PRIX MEzz BORROWER 2 FLOATING LLC is the owner of a
100% limited liability company interest ("Interest") in Grand Prix Ontario LLC, a Delaware
INhWITNESS WHEREOF, the Company has caused this Certificate to be executed as of
the 21t dayofJune,2007.
GRAND PRIX ONTARIO LLC,
its member
THIS CERTIFICATE EVIDENCES AN INTEREST IN GRAND PRIX ONTARIO LLC AND SHALL BE A SECURITY FOR
PURPOSES OF ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF THE STATE OF DELAWARE, AND ARTICLE 8 OF THE
UNIFORM COMMERCIAL CoDE OF ANY OTHER APPLICABLE JURISDICTION THAT Now OR HEREAFTER

US2008 1530791.1
EXHIBIT J

UCC Financing Statement Filed With the Delaware Department of State on June 29, 2007 and
Bearing Filing Number 2007 2491966 Between Grand Prix Mezz Borrower 2 Floating LLC as
Debtor and Lehman ALI Inc. as Secured Party in all assets

UCC FINANCING STATEMENT
FOLLOW INSTRUCTIONS (front and back) CAREFULLY
A. NAME & PHONE OF CONTACT AT FILER [optional]
B. SEND ACKNOWLEDGMENT TO (Name and Address)
~ m o t h y Pecci, Esq.
Dechert LLP
200 Clarendon Street. 27th Floor
Boston, MA 02116
L
_j
DELAWARE DEPARTMENT OF STATE
U.C.C. FILING SECTION
FILED 09:44 PM 06/29/2007
INITIAL FILING # 2007 2491966
SRV: 070771296
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
DEBTOR'S EXACT FULL LEGAL NAME 1nsertonlyone debtor name (1a or 1 b) do notabbrev,ate orcomb1ne names
1a ORGANIZATION'S NAME
GRAND PRIX MEZZ BORROWER 2 FLOATING LLC
OR
1b INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
1c MAILINGADDRESS CITY
STATE I POSTAL CODE
COUNTRY
c/o Apollo Investment Corporation, 9 West 57th Street New York NY 10019 USA
1d SEE!NSTRUCTIONS
I fDD'L INFO RE 1_1e. TYPE OF ORGANIZATION
1f JURISDICTION OF ORGANIZATION 1g ORGANIZATIONAL 10 #, If any
ORGANIZATION . . d r bT
1 Delaware
I
_O_NONE
DEBTOR _
1
11m1te 1a 1 1ty company
4364220
2 ADDITIONAL DEBTORS EXACT FULL LEGAL NAME msert only one deblor name (2a or 2b) do not abbrev1ate or combine names
OR
2b INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
2c MAILING ADDRESS WY STATE I POSTAL CODE COUNTRY
2d SEE INSTRUCTIONS
I fDD'L INFO RE 12e TYPE OF ORGANIZATION
2f JURISDICTION OF ORGANIZATION 2g ORGANIZATIONAL ID # If any
ORGANIZATION
nNONE
DEBTOR I
I I
0 m m
3 SECURED PARTY S NAME (orNAMEofTOTALASSIGNEE fASSIGNORSIP) sertonlyonesecuredpartyname (3 3b)
Lehman ALI Inc.
OR
3b_ INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
3c MAILING ADDRESS CITY
STATE IPOSTALCOOE
COUNTRY
399 Park A venue New York NY 10022 USA
4. Th1s FINANCING STATEMENT covers the followmg collateral
All assets of Debtor, whether now owned or hereafter acquired.
File with: Delaware Secretary of State
FILING OFFICE COPY- UCC FINANCING STATEMENT (FORM UCC1) (REV 05/22/02)
Doc. '\Jo. 13623772

US2008 1530791.1
EXHIBIT K

Master Participation Agreement Dated as of May 22, 2008 by and Among Lehman Brothers
Holdings Inc. and Lehman Commercial Paper Inc., as the Sellers and SASCO 2008-C2, LLC as
the Purchaser (the Master Participation Agreement)
11

11
By this same Master Participation Agreement LBHI and LCPI, as sellers, also sold and conveyed to SASCO, as
purchaser, among other things, a 100% participation interest in the Anaheim Mezzanine Loan.
EXECUTION VERSION
MASTER PARTICIPATION AGREEMENT
Dated as of May 22, 2008
by and among
LEHMAN BROTHERS HOLDINGS INC . .
and
LEHMAN COMMERCIAL PAPER INC.,
(as the Sellers)
SASCO 2008-C2, LLC
(as the Purchaser)
USActive 12824081.13
This Master Participation Agreement (this "Agreement") is entered into as of May 22,
2008, between (i) Lehman Brothers Holdings Inc. whose office is at 745 7th Avenue, New York,
New York 100 19; and (ii) Lehman Brothers Commercial Paper Inc., whose office is at whose
office is at 745 7th Avenue, New York, New York 10019 (each a "Seller" and together, the
"Sellers"); and (iii) SASCO 2008-C2, LLC (the "Purchaser").
RECITALS:
WHEREAS, each Seller owns interests (each a "Lehman Asset" and collectively, the
"Lehman Assets") in the loans and other securities and investments (each a "Loan" and
collectively, the "Loans") identified in Schedule A (as supplemented and amended from time to
time) belonging to it and consisting of loans, advances, as well as participations in the foregoing
pursuant to various credit agreements, indentures, note purchase agreements and other similar
documents, each between a borrower (each, a "Borrower" and collectively, the "Borrowers"), and
a lender or noteholder, or where applicable, an agent for the relevant lenders or noteholders (such
credit agreements, note purchase agreements and/or participation agreements, as amended,
supplemented, novated or otherwise modified from time to time, together with all guarantees,
security agreements, mortgages, deeds of trust, letters of credit, reimbursement agreements,
waivers and any other documents executed in connection therewith, hereinafter are referred to as
the "Underlying Instruments"); and
WHEREAS, each Seller desires to sell, assign and transfer to Purchaser, without recourse,
a participation interest in all or a specified portion of that Seller's Lehman Assets and Purchaser
desires to purchase and assume from each Seller, without recourse, a participation interest in such
portion of that Seller's Lehman Assets (each such participation interest, a "Transferred Interest"
and collectively, the "Transferred Interests").
AGREEMENT
NOW THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the each of the
Sellers and the Purchaser hereby agree as follows:
Section 1. Definitions. Capitalized terms used herein and not defined herein
shall have the respective meanings attributed to them in the Indenture. In addition, as used herein,
the following terms shall have the following respective meanings:
"A Note": A promissory note secured by a mortgage on commercial real estate
property that is not subordinate in right of payment to any separate promissory note
secured by a direct or beneficial interest in the same property.
"B Note": A promissory note secured by a mortgage on commercial real estate
property that is subordinate in right of payment to one or more separate promissory notes
secured by a direct or beneficial interest in the same property.
"CDO Servicing Agreement": That certain servicing agreement dated May 22,
2008, between the Purchaser, as Issuer, the Sellers, Wachovia Bank, National Association,
as CDO Servicer, and TriMont Real Estate Advisors, Inc., as CDO Special Servicer.
"CDO Special Servicer": TriMont Real Estate Advisors, Inc.
"CMBS Security": As defined in the Indenture
"Collateral File": Means the following, as applicable:
(a) With respect to each Transferred Interest as to which the related Lehman
Asset is a Mortgage Loan, a copy of the original promissory note, a copy of the mortgage,
a copy of the loan agreement and of the assignment of leases and rents (and any
intervening assignments thereof) and copies of all other documents and instruments in the
seller's possession evidencing or guaranteeing or otherwise materially affecting such
Mortgage Loan.
(b) With respect to each Transferred Interest as to which the related Lehman
Asset is a Mezzanine Loan, a copy of the original promissory note and a copy of the
security or pledge agreement, the loan agreement, the intercreditor agreement, the
assignment and assumption agreement and all other documents and instruments in the
Seller's possession evidencing or guaranteeing or otherwise materially affecting such
Mezzanine Loan.
(c) With respect to each Transferred Interest as to which the related Lehman
Asset is a REBL Term Loan or REBL Revolving Credit Facility, a copy of the credit
agreement or equivalent instrument (or senior and/or subordinate participations therein), a
copy of the guarantee (if any) and all other documents and instruments in the Seller's
possession evidencing or guaranteeing or otherwise materially affecting such interest.
(d) With respect to each Transferred Interest as to which the related Lehman
Asset is a Participation Interest, a copy of the participation certificate (if any) endorsed by
the most recent endorsee prior to the seller and a copy of the participation agreement, the
assignment and assumption agreement and a copy of all other documents and instruments
in the Seller's possession evidencing or guaranteeing or otherwise materially affecting
such interest.
(e) With respect to each Transferred Interest as to which the related Lehman
Asset is a B Note, a copy of the promissory note endorsed to the Seller or endorsed in
blank, a copy ofthe mortgage, the loan agreement, the assignment of leases and rents (and
any intervening assignments thereof) and a copy of all other documents and instruments in
the seller's possession evidencing or guaranteeing or otherwise materially affecting such
interest.
3
"Collections": All payments or distributions received by or on behalf of a Seller
from any Borrower in respect of the Lehman Assets (without any adjustments with respect
to any subsequent acquisitions or transfers by the applicable Seller of interests in the
applicable Loan or any subsequent funding of a Retained Future Advance Obligation) and
the proceeds of any collateral applied by a Seller to such Lehman Assets.
"CRE CDO Security": As defined in the Indenture.
"Delayed-Draw Loan": A loan with respect to which a Seller may, under the terms
of the relevant Underlying Instruments, be obligated to make or otherwise fund future
term-loan advances to a borrower; provided, that once such loan (or portion thereof) has
been funded, such loan (or portion thereof) shall cease to constitute a Delayed-Draw Loan.
"Document Defect": Any document or documents constituting a part of a
Collateral File which has not . be properly executed, has not been delivered or contains
information that does not conform in any material respect to the information on Schedule
A.
"Exception Schedule": The schedule identifying any exceptions to the
representations and warranties made with respect to the Transferred Interests conveyed
hereunder, which is attached hereto as Schedule C.
"Future Advance": With respect to any Future Advance Loan, Delayed-Draw Loan
or REBL Revolving Credit Facility, amounts to be advanced by a lender under the relevant
Underlying Instrument to provide additional funding on any future date to the relevant
Borrower.
"Future Advance Loan": As defined in the Indenture.
"Indenture": The indenture dated as of May 22, 2008 between the Purchaser as the
Issuer, Wachovia Bank, National Association as Advancing Agent and Wells Fargo Bank,
National Association as the Trustee, as amended or supplemented from time to time.
"Loan": As defined in the recitals hereto.
"Material Document Defect": (i) A Document Defect that materially and adversely
affects the' value of a Transferred Interest or the ownership interests of the Issuer or its
assignee therein, and (ii) with respect to the Transferred Interest identified on Schedule A
as "The Hotel Portfolio" a defect in the remaining documents to be provided by the Seller
to the Rating Agencies for their review that does not conform materially to such Rating
Agencies' criteria for the inclusion of such Transferred Interest in the Collateral Interests
(as defined in the Indenture).
"Mezzanine Loan": Any loan secured by one or more direct or indirect ownership
interests (which may be only partial ownership interests) in a company, partnership or
other entity owning, operating or controlling, directly or through subsidiaries or affiliates,
one or more commercial or multifamily properties, including a participation interest
therein.
4
"Mortgage": The mortgage, deed of trust, deed to secure debt or similar
instrument that secures a note and creates a lien on the fee or leasehold interest in
commercial or multi-family real property or properties.
"Mortgage Loan": Each loan (including, without limitation, an A Note) secured by
a Mortgage on commercial or multi-family real property or properties.
"Obligors": Collectively, the Borrowers and each guarantor, pledgor, subordinator
or other person or entity directly or indirectly obligated in respect of the Lehman Assets.
"Participation Interest": A participation interest in a Mortgage Loan, a Mezzanine
Loan, a B Note, a REBL Term Loan or a REBL Revolving Credit Facility.
"Rating Agencies" shall have the meaning specified in the Indenture.
"REBL Loan": A bank loan (or a participation interest therein) that is an
obligation (direct or by way of guarantee) of a corporation, partnership or other entity
organized under the laws of the United States (or any State thereof) that is engaged
primarily in the business of real estate, all or a portion of which may be unsecured, for
which the expected source of repayment is income from real estate assets.
"REBL Revolving Credit Facility": A REBL Loan that provides a borrower with a
line of credit against which one or more borrowings may be made up to the stated principal
amount of such facility and provides that such borrowed amount may be repaid and re-
borrowed from time to time.
"REBL Term Loan": A REBL Loan that requires the repayment of amounts due
thereunder at a specified maturity date.
"REIT Debt Securities": As defined in the Indenture.
"Retained Future Advance Obligation": The portion of a Future Advance Loan,
Delayed-Draw Loan or Revolving Credit Facility retained by the Seller (and not
transferred to the Purchaser hereunder) consisting of the obligation to provide Future
Advances to the relevant Borrower in accordance with the relevant Underlying Instrument.
"Transferred Interest": As defined in Section 2(a) herein.
"Transferred Percentage Interest": With respect to each Transferred Interest, as of
the Transfer Date, a fraction, expressed as a percentage, in which the numerator is the
outstanding principal balance of such Transferred Interest and the denominator is the
outstanding principal balance of the related Lehman Asset (without any adjustments with
respect to any subsequent acquisitions or transfers by the applicable Seller of interests in
the applicable Loan, or any subsequent funding of a Retained Future Advance Obligation).
"Transferred Interest Repurchase Price": An amount equal to the sum of the
following (in each case, without duplication) as of the date of such repurchase: (i) the
outstanding principal amount thereof, plus (ii) accrued and unpaid interest on such
Collateral Interest, plus (iii) any unreimbursed advances, plus (iv) accrued and unpaid
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interest on advances on the Collateral Interest, plus (v) any reasonable costs and expenses
(including, but not limited to, the cost of any enforcement action, incurred by the
Purchaser or the Trustee in connection with any such purchase by a Seller).
"Underlying Instruments": The indenture, loan agreement, note, mortgage,
intercreditor agreement, pooling and servicing agreement, participation agreement or other
agreement pursuant to which a Lehman Asset has been issued or created and each other
agreement that governs the terms of or secures the obligations represented by such
Lehman Asset.
"Underlying Mortgage Property": With respect to (i) a Loan (other than a
Participation or Mezzanine Loan), the commercial mortgage property or properties
securing the Loan, (ii) a Participation, the commercial mortgage property or properties
securing the related Mortgage Loan, or (iii) a Mezzanine Loan, the commercial mortgage
property or properties related to the Mezzanine Loan.
Section 2. Participations.
(a) Subject to the terms and conditions of this Agreement, each Seller hereby
sells, and Purchaser shall be entitled to, and by its acceptance hereof purchases, as of the Transfer
Date (as hereinafter defined), a pro rata participation interest in each of the Lehman Assets owned
by such Seller in an amount equal to the initial principal balance of the Transferred Interest as
indicated on Schedule A hereto (each, a "Transferred Interest" and, collectively, the "Transferred
Interests"), which shall entitle the Purchaser to receive:
(i) the Transferred Percentage Interest of all Collections (as hereinafter defined)
received in respect of the principal on such Lehman Assets;
(ii) the Transferred Percentage Interest of all Collections of interest, fees and
make-whole amounts, if any, on the Lehman Assets accruing from and after the Transfer
Date and with respect to Transferred Interests that are indicated on Schedule A as being
transferred with accrued interest, any Collections related to accrued interest purchased by
the Purchaser;
(iii)the Transferred Percentage Interest in the proceeds of all claims, suits,
causes of action and any other right of the Seller (in its capacity as a lender under the
Lehman Asset or purchaser under any participation interest), whether known or unknown,
against the Borrower, lender, any other Obligor or any of their respective affiliates, agents,
representatives, contractors, advisors or any other Person arising under or in connection
with the Underlying Instruments or that is in any way based on or related to any of the
foregoing or the loan transactions governed thereby, including the proceeds of any contract
claims, tort claims, malpractice claims, statutory claims and all other claims at law or in
equity related to the rights and obligations sold and purchased pursuant to this Agreement;
and
(iv) the Transferred Percentage Interest of any other amounts received by the
Seller on the Lehman Assets.
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(b) The parties hereto hereby acknowledge and agree that with respect to the
Transferred Interests set forth in Schedule A, the sale, transfer, assignment, grant and conveyance
of such Transferred Interests is being effected via the sale, transfer, grant and conveyance of a
participation interest in such Lehman Assets instead of an assignment of the Sellers' title to the
related Lehman Assets. The transfer of the Transferred Interests shall have the consequence that
the Seller holds only legal title but not any economic interest in such Transferred Interests and the
Purchaser shall hold all of the economic interests in such Transferred Interests. Each of the
Sellers hereby acknowledges and consents to the Issuer's assignment pursuant to Indenture of the
all of its right, title and interest in, to and under this Master Participation Agreement and agrees
that all of the representations and agreements made hereunder are also for the benefit of, and
enforceable by, the Trustee under the Indenture.
(c) From and after the date hereof, administration of the Transferred Interests
and the Lehman Assets shall be governed by this Agreement, the Indenture and (except with
respect to any Lehman Assets that are REBL Loans) the CDO Servicing Agreement.
(d) With respect to each Lehman Asset, each of the Purchaser and the related
Seller (or its successors and assigns) shall be entitled to vote and otherwise exercise any rights that
it may have with respect to any servicing or other matters under the related Underlying Instrument
or servicing agreements, in accordance with the respective outstanding principal amounts of their
beneficial interests in such Lehman Asset. With respect to the Lehman Assets serviced under the
CDO Servicing Agreement, the CDO Servicer will have the sole authority to service and
administer such Lehman Asset, except:
(i) with respect to (A) any extension of the maturity date of any Lehman Asset,
except as permitted by the Underlying Instruments without the lender's consent, (B) any
decrease of the interest rate of any Lehman Asset, (C) any increase in the principal amount
of any Lehman Asset, and (D) the substitution or release of material collateral securing a
Lehman Asset except as permitted by the Underlying Instruments without the lender's
consent, the CDO Special Servicer will be required to obtain the consent of 100% of the
beneficial interests of such Lehman Asset (based on the outstanding principal balances of
the beneficial interests of the Purchaser and the applicable Seller (or its successors and
assigns)), subject to the Servicing Standard Override (as defined in the CDO Servicing
Agreement);
(ii) with respect to (A) any proposal to release the Borrower or guarantor from
liability, including by acceptance of an assumption of the Lehman Asset by a successor
borrower and (B) an assumption of the guaranty by a replacement guarantor, the CDO
Special Servicer will be required to obtain the consent of 66-2/3% of the beneficial
interests of such Lehman Asset (based on the outstanding principal balances of the
beneficial interests of the Purchaser and the applicable Seller (or its successors and
assigns)), subject to the Servicing Standard Override (as defined in the CDO Servicing
Agreement);
(iii)with respect to all other Major Decisions (as defined in the CDO Servicing
Agreement), the CDO Special Servicer will be required to obtain the consent of a majority
of the beneficial owners of such Lehman Asset (based on the outstanding principal
balances of the beneficial interests of the Purchaser and the applicable Seller (or its
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successors and assigns)), subject to the Servicing Standard Override (as defined in the
CDO Servicing Agreement); provided that if a majority of such beneficial owners are
unable to agree on a particular course of action, the CDO Servicer will be required to
determine the course of action with respect to such Major Decision in accordance with the
CDO Servicing Agreement and Accepted Servicing Practices (as defined in the CDO
Servicing Agreement).
Section 3. Intention of the Parties. It is the intention of the parties hereto that
each sale of the Transferred Interests hereunder shall be absolute and irrevocable and will provide
the Purchaser with the full risks and benefits of ownership d the Transferred Interests so
purchased (such that the Transferred Interests would not constitute property of any Seller's estate
in the event of a Seller's bankruptcy) and shall constitute a "sale of accounts," as such term is
used in Article 9 of the UCC of the State of New York, to the extent applicable, and not a Joan
secured by such Transferred Interests. In the event that, contrary to the mutual intent of the
Sellers and the Purchaser, any purchase of Transferred Interests hereunder is not characterized as
a sale but rather as a collateral transfer for security (or the transactions contemplated hereby are
characterized as a financing transaction), it is the intent of the parties hereto that this Agreement
shall constitute a security agreement under applicable Jaw and that each purchase of the
Transferred Interests shall be deemed to be a secured loan made by the Purchaser to each Seller in
an amount equal to the aggregate of all amounts due and owing by such Seller to the Purchaser
hereunder, whether now or hereafter existing, due or to become due, direct or indirect or absolute
or contingent, which Joan shall be secured by a security interest in all of such Seller's right, title
and interest now or hereafter existing and hereafter arising in, to and under (i) all of its respective
Transferred Interests, (ii) all of its respective Collections (as defined herein) and (iii) all proceeds
of the foregoing (collectively, with regard to each Seller, its "Seller's Collateral"). In furtherance
of the foregoing, each Seller hereby grants (A) to the Purchaser in order to secure the repayment
of all amounts due and owing by such Seller to the Purchaser hereunder, whether now or hereafter
existing, due or to become due, direct or indirect, or absolute or contingent, and (B) to the Trustee
under the Indenture in order to secure the Purchaser's obligations under the Indenture, but only to
the extent an event of default under the Indenture shall have occurred as a result of the failure of
such Seller to perform any of its obligations hereunder, a security interest in all of such Seller's
right, title and interest now or hereafter existing in, to and under its Seller's Collateral.
Section 4. Transfer Date. With respect to each Transferred Interest, from and
after the date as indicated on Schedule A on which such Transferred Interest is purchased by the
Purchaser hereunder (such date of transfer, as applicable to each Transferred Interest, the
"Transfer Date"), the Transferred Interests purchased hereunder shall be for the account and risk
of the Purchaser, without any recourse to the Sellers, except as expressly provided herein. The
transfer of the Transferred Interests shall be deemed effective as of the Transfer Date. The
Purchaser hereby assumes full risk and responsibility with respect to repayment of the Transferred
Interests without recourse to the Sellers and, in the event of any failure by any Borrower to fulfill
any of its obligations under the terms of the related Underlying Instruments, none of the Sellers
shall be under any liability to the Purchaser for payment of principal, interest or fees other than as
provided in Section 5.
Section 5. Payments. Each Seller or the CDO Servicer, as applicable, shall
promptly remit or cause to be remitted to Purchaser, as received, all amounts received in respect
of its respective Transferred Interests described in clauses (i) through (iv) of Section 2(a) of this
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Agreement without set-off, counterclaim or deduction of any kind within one (1) business day
after receipt thereof from a Borrower, to the account specified by the Purchaser to such Seller in
writing. If the applicable payment is received by a Seller not later than 12:00 noon (New York
City time) on any day, the corresponding payment shall be made to the Purchaser not later than
5:00p.m. (New York City time) on such day, and otherwise not later than 5:00p.m. (New York
City time) on the immediately succeeding business day.
Section 6. Sharing of Liabilities and Expenses. each of the Sellers and the
Purchaser shall be responsible for their pro rata share of all liabilities, losses, out-of-pocket costs
and expenses (including reasonable attorneys' fees) (collectively, the "Liabilities") suffered or
incurred by such Seller or CDO Servicer (as applicable) from and after the Transfer Date in
administering and collecting on their respective Lehman Assets and Transferred Interests or which
otherwise arise in connection therewith or in connection with preserving any collateral security
therefor, except for such Liabilities as may be caused by the negligence or willful misconduct of
such Seller or CDO Servicer (as applicable) and except to the extent that such Seller or COO
Servicer (as applicable) has theretofore been reimbursed for such Liabilities by or on behalf of any
Borrower. Each of the Sellers and the Purchaser shall be entitled to any such amounts recovered
from, or on behalf of, any Borrower after such Seller or Purchaser has paid such Liabilities. Each
Seller and each COO Servicer shall promptly remit to the Purchaser an amount equal to any
payment received by that Seller or CDO Servicer (as applicable) on account of increased costs,
break funding payments or expenses incurred by the Purchaser in connection with the
Participation Interest.
Section 7. Information; No Recourse or Warranty; Responsibilities. Each
Seller represents that it, or a custodian acting on its behalf, holds in its possession for the benefit
of itself and the Purchaser true and complete originals of all of the documents in connection with
its respective Lehman Assets which constitute all documents that the Seller considers necessary in
deciding to enter into this Agreement and participate in the Lehman Assets as provided herein. It
is understood and agreed that none ofthe Sellers make any express or implied representations or
warranties of any kind or character with respect to the genuineness, validity, effectiveness,
enforceability, value, priority, perfection or collectability of the Lehman Assets, any collateral
security therefor or the Underlying Instruments, nor with respect to the solvency, financial
condition or financial statements of any of the Borrowers, and by its acceptance hereof, Purchaser
agrees that the Sellers shall be free of liability on account of Purchaser's Transferred Interests
herein with respect to anything a Seller may do or refrain from doing in good faith and
in the exercise of its judgment, provided, however, that each Seller agrees to use the same care in
protecting the interests of the Purchaser in the Lehman Assets as it uses for similar interests held
by it solely for its own account and each Seller agrees to account to Purchaser as herein set forth
for the share from time to time applicable to Purchaser's Transferred Percentage Interest in
Collections. Whenever the Seller or the COO Servicer, as applicable, receives a payment of
principal of, or interest, fees and make-whole amounts, if any, on the Transferred Interests, the
Seller or CDO Servicer, as applicable, will be instructed to accept such payment for the account
and sole benefit of, and as agent for, the Purchaser and promptly pay over to the Purchaser the
amount so received. In administering the Lehman Assets and the Underlying Instruments, the
CDO Servicer shall not be bound to ascertain or inquire as to the performance of any of the terms,
provisions or conditions of any thereof on the part of any Borrower or any other person, shall be
entitled to rely upon any statement or notice, however sent, believed by it to be genuine and
9
correct and believed by it to be sent by the proper person, may consult with counsel and shall be
fully protected in any action taken or omitted to be taken by it in accordance with the advice or
opinion of such counsel, may employ agents or attorneys-in-fact and shall not be liable for the
default or misconduct of any such person selected by it with due care, and shall not be responsible
for the performance of the payment or other obligations of the Borrowers or the value of any
collateral securing the same.
Section 8. Borrower Information. Upon request of Purchaser, a Seller shall
provide Purchaser with copies of any information in that Seller's possession which was received
pursuant to the provisions of any Underlying Instrument and, to the extent not otherwise available
to Purchaser, the relevant Seller shall use commercially reasonable efforts to provide Purchaser,
following Purchaser's written request therefor, such current factual information that Purchaser
specifically requests that is then in the Seller's possession and relating to the status of the Lehman
Assets or any Borrower's financial condition; provided that that Seller shall not be required to
provide Purchaser with any information in violation of any law or any contractual restriction set
forth in the Underlying Instruments on the disclosure thereof.
Section 9. Representations and Warranties.
(a) Each party hereby represents and warrants to the other party that (i) it is
duly organized or incorporated, as the case may be, and validly existing as an entity under the
Jaws of the jurisdiction in which it is incorporated, chartered or organized, (ii) it has the requisite
power and authority to enter into and perform this Agreement and (iii) this Agreement has been
duly authorized by all necessary action, has been duly executed by one or more duly authorized
officers and is the valid and binding agreement of such party enforceable against such party in
accordance with its terms.
(b) Each Seller further represents and warrants to the Purchaser, as of the
Transfer Date, as to the Transferred Interests being sold by such Seller, that:
(i) none of the execution, delivery or performance by such Seller of this
Agreement (x) conflicts with, results in any breach of or constitutes a default (or an event
which, with the giving of notice or passage of time, or both, would constitute a default)
under, any term or provision of the organizational documents of such Seller, or any
material indenture, agreement, order, decree or other material instrument to which such
Seller is party or by which such Seller is bound which materially adversely affects such
Seller's ability to perform its obligations hereunder or (y) violate any provision of any Jaw,
rule or regulation applicable to such Seller of any regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over such Seller or its properties
which has a material adverse effect;
(ii) no consent, license, approval or authorization from, or registration or
qualification with, any governmental body, agency or authority, nor any consent, approval,
waiver or notification of any creditor, lessor or any other Person is required in connection
with the execution, delivery and performance by such Seller of this Agreement the failure
of which to obtain would have a material adverse effect except such as have been obtained
and are in full force and effect; and
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(iii)such Seller shall use reasonable efforts to give proper notice under each
Underlying Instrument or servicing agreement, instructing any obligor, paying agent or
servicer, as applicable, responsible for forwarding or distributing payments to the holders
of the Transferred Interest, to make such payments to the COO Servicer or the Trustee and
shall promptly remit to the COO Servicer or Trustee any payment on the Transferred
Interests received on or after the Transfer Date.
(c) Each Seller further represents and warrants to the Purchaser as of the
Transfer Date with respect to the Transferred Interests being sold by that Seller, that:
(i) the sale of the initial Transferred Interests by such Seller to the Purchaser
and the Purchaser's Grant to the Trustee does not contravene the terms of the restrictions
relating to transfer of such Transferred Interests contained in the Underlying Instruments
with respect to such related Transferred Interests;
(ii) the information set forth with respect to the related Transferred Interests in
Schedule A hereto is true and correct; and
(iii)with respect to each Transferred Interest, except as set forth in the Exception
Schedule, the representations and warranties set forth in Schedule B(3) are true and
correct;
provided that with respect to representations and warranties made by a Seller with respect
to Transferred Interests sold by such Seller on an Transfer Date occurring after May 22,
2008, such representations and warranties may be subject to any modification, exception,
limitation or qualification as permitted pursuant to the terms of the Indenture.
(d) Each Seller further represents and warrants to the Purchaser as of the
Transfer Date with respect to the Transferred Interests being sold by that Seller, that:
(i) the Seller owns and has good and marketable title to such Transferred
Interest free and clear of any lien, claim or encumbrance of any Person (subject to the fees,
penalties and contingent interest payments retained by the Sellers herein);
(ii) in the case of each Transferred Interest, the Seller has acquired its ownership
in such Transferred Interest in good faith without notice of any adverse claim as defined in
Section 8-102(a)(l) ofthe UCC as in effect on the date hereof;
(iii)the Seller has not, pledged, assigned, sold, granted a security interest in, or
otherwise conveyed any of the Transferred Interests;
(iv) the Seller has not authorized the filing of and is not aware of any financing
statements against the Seller that include a description of collateral covering the
Transferred Interests other than that which has been terminated; the Seller is not aware of
any judgment or Pension Benefit Guarantee Corporation lien and tax lien filings against
the Seller; and
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(v) the Seller has received all consents and approvals required by the terms of
each Transferred Interest and the Underlying Instruments to grant to the Purchaser its
interest and rights in such Transferred Interest hereunder.
(e) Each Seller hereby acknowledges and consents to the collateral assignment
by the Purchaser of this Agreement and all right, title and interest thereto to the Purchaser and by
the Purchaser to the Trustee, for the benefit of the Secured Parties.
(f) Each Seller hereby covenants and agrees that all of the representations,
covenants and agreements made by or otherwise entered into by it in this Agreement shall also be
for the benefit of the Purchaser and the Trustee on behalf of the Secured Parties and agrees that
enforcement of any rights hereunder by the Trustee shall have the same force and effect as if the
right or remedy had been enforced or executed by the Purchaser but that such rights and remedies
shall not be any greater than the rights and remedies of the Purchaser as described herein.
(g) Each Seller has delivered a fully executed original of this Agreement to the
Trustee. For administrative purposes, each Seller agrees to use good faith efforts deliver a copy of
the Collateral File within 30 days of the Transfer Date to the Purchaser or, at the direction of the
Purchaser, to the Trustee, with respect to each Transferred Interest sold by such Seller to the
Purchaser hereunder. Each Seller further represents and warrants that the failure to deliver such
Collateral Files within 30 days of the Transfer Date will not have a material adverse effect on the
value of the Transferred Interests or the Purchaser's rights therein. Each Seller hereby covenants
and agrees that it shall deliver to the Trustee copies of all notices, statements, communications and
instruments delivered or required to be delivered to the Purchaser by each party pursuant to this
Agreement. For the avoidance of doubt, the only original document to be delivered t6 the Trustee
with respect to the Transferred Interests pursuant to this Agreement shall be this Agreement.
Section 10. Further Assurances. From and after the date hereof, Purchaser and
each Seller each covenants and agrees to execute and deliver all such agreements, instruments and
documents and to take all such further actions as the other party hereto may reasonably deem
necessary from time to time to carry out the intent and purposes of this Agreement and to
consummate the transactions contemplated hereby.
Section 11. Records. Each Seller will at it own expense in order to reflect the
purchase and sale transaction accurately on its books, prepare and execute (or cause to be
prepared) for filing a financing statement relating to the sale ofthe Transferred Interests set out in
Schedule A or amendments thereto (as permitted pursuant hereto).
Section 12. Other Business Activities. The Purchaser acknowledges that the
Sellers may make loans or otherwise extend credit to, and generally engage in any kind of
business with, any Borrower and its affiliates, and receive on such other loans or
extensions of credit to any Borrower and its affiliates and otherwise act with respect thereto freely
and without accountability in the same manner as if this Agreement and the transactions
contemplated hereby were not in effect.
Section 13. Amendments, Waivers, etc.
USActive 12824081.13 12
(a) Amendments of Underlying Instruments. None of the Sellers may enter
into any amendment or modification of, or waive compliance with the terms of, or vote in relation
to any event, matter or thing under any Underlying Instrument without the consent of Purchaser.
If a Seller shall at any time request in writing Purchaser's consent or direction to any such matter
for which Purchaser's consent or direction is required and shall not receive a response to such
request within seven (7) business days after Purchaser has received such request (or within such
earlier period as a Seller may notify to Purchaser in connection with a specific request), Purchaser
shall be conclusively deemed to have refused to give such consent and that Seller shall be entitled
to thereafter act on the basis that Purchaser has denied such consent.
(b) Amendments of this Agreement. The Purchaser and the Sellers shall not
enter into any agreement amending, modifying or terminating this Master Participation Agreement
(other than in respect of amendments or modifications to cure any inconsistency, ambiguity or
manifest error) without the satisfaction of the Rating Agency Condition.
Section 14. Savings Clause. Notwithstanding any other provision of this
Agreement, with respect to each Participation Interest: (i) this Agreement shall be deemed to
incorporate any provisions required by any Credit Document to be incorporated in order to
transfer the related Participation Interest hereunder; and (ii) this Agreement shall be deemed to
omit any provision which any Credit Document requires to be omitted in order to transfer the
related Participation Interest hereunder.
Section 15. Further Sale, Assignment and Repurchase.
(a) Transfer by the Purchaser. To the extent permitted under the related
Underlying Instruments, the Purchaser shall be only entitled to deal with the Transferred Interests
in the manner set out in the Indenture. Purchaser agrees that any sale or disposition of Purchaser's
Transferred Interest will be made in accordance with applicable securities laws.
(b) Transfer by the Seller. With respect to any Lehman Asset, none of the
Sellers may participate, sell, assign, transfer, mortgage, pledge, grant a lien on or otherwise deal
with or encumber any of its retained interest, if any, in or to such Lehman Assets if such transfer
would adversely affect the Transferred Interests or any other distributions or payments with
respect thereto or any of the Purchaser's rights or obligations under this Agreement or if such
transfer involves the transfer of title to the Lehman Asset, without the prior written consent of
Purchaser and the satisfaction of the Rating Agency Condition. None of the Sellers may sell,
assign, transfer pledge or grant a lien on any Retained Future Advance Obligation without
satisfaction ofthe Rating Agency Condition.
(c) Repurchase by the Seller. If any Seller receives written notice of (i) its
breach of a representation or a warranty made in Section 9(c) of this Agreement that materially
and adversely affects the ownership interests of the Purchaser in a Transferred Interest or the
value of a Transferred Interest, or (ii) a Material Document Defect, then such Seller shall not later
than 90 days from receipt of such notice cure such breach or Material Document Defect or, if such
breach or Material Document Defect cannot be cured in all material respects within such 90-day
period, repurchase the affected Transferred Interest not later than the end of such 90-day period at
the Transferred Interest Repurchase Price; provided, that if any such breach or Material Document
Defect, as the case may be, is capable of being cured in all material respects but not within the
13
initial 90-day period and such Seller has commenced and is diligently proceeding with the cure of
such breach or Material Document Defect, as the case may be, then such Seller shall have such
additional 90-day period to complete such cure or, failing such, to repurchase the affected
Transferred Interest. Such repurchase obligation by the related Seller shall be the Purchaser's sole
remedy for any Material Document Defect or the breach of any representation or warranty
pursuant to this Agreement with respect to any related Transferred Interest sold to the Purchaser
by such Seller; and provided, further, that, if any such Material Document Defect is still not cured
in all material respects after the initial 90-day period and any such additional 90-day period solely
due to the failure of such Seller to have received the recorded document, then such Seller shall be
entitled to continue to defer its cure and repurchase obligations in respect of such Material
Document Defect so long as such Seller certifies to the Trustee every 30 days thereafter that such
Material Document Defect is still in effect solely because of its failure to have received the
recorded document and that such Seller is diligently pursuing the cure of such defect (specifying
the actions being taken). Such repurchase obligation by the related Seller shall be the Purchaser's
sole remedy for any Material Document Defect or the breach of any representation or warranty
pursuant to this Agreement with respect to any related Transferred Interest sold to the Purchaser
by such Seller.
USActive 12824081 .13
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Section 16. Waivers. No delay or omission by any party to exercise any right
under this Agreement shall impair any such right, nor shall it be construed to be a waiver thereof.
No waiver of any single breach or default under this Agreement shall be deemed a waiver of any
other breach or default.
Section 17. Withholding Tax. Purchaser represents and warrants that payments
to it under this Agreement are not subject to U.S. withholding tax. Upon request from time to
time, Purchaser shall promptly provide to each Seller an appropriately executed Internal Revenue
Service form or such other evidence as shall be necessary to establish that payments made to
Purchaser hereunder are exempt from U.S. withholding tax. In addition to the foregoing, (a) each
Seller agrees that prior to the final maturity of each Lehman Asset in which it has sold a
participation (or for so long as Purchaser holds each such the Transferred Interest), the relevant
Seller will maintain a register with respect to each applicable Transferred Interest as to the
principal and interest of the Transferred Interest and the name and address of Purchaser and (b)
each Seller agrees that it will (i) notify each Borrower of the participation contemplated hereby
prior to the first date following the Transfer Date on which such Borrower is obligated to make a
payment in respect of the underlying Loan and (ii) provide each relevant paying agent or
withholding agent a copy of an IRS Form W-9 (or appropriate replacement IRS form) duly
completed by Purchaser prior to the Transfer Date, or, in the case the Purchaser ceases to be an
entity disregarded from its owner for U.S. federal tax purposes, or such owner is not a U.S. person
within the meaning of section 7701(a) (30) ofthe Internal Revenue Code, such other form as may
be appropriate for this purpose.
Section 18. Notices. Whenever this Agreement requires or permits any consent,
approval, notice, request, or demand from one party to another, the consent, approval, notice,
request, or demand must be in writing and shall be deemed effective when delivered, if sent by
courier or by registered or certified mail, or when receipt is confirmed, if sent by telecopy, each
case at the address or telecopy number set forth below the relevant party's signature hereto or at
such other address or telecopy number as may be provided by either party to the other party.
Section 19. Illegality; Construction; Governing Law. The illegality or
unenforceability of any provision of this Agreement shall not in any way affect or impair the
legality or enforceability of the remaining provisions of this Agreement. Paragraph headings used
in this Agreement are for convenience of reference only and shall not affect the construction of
this Agreement, The laws of the State of New York shall govern the rights and duties of the
parties hereto and the interpretation hereof (without regard to any conflicts of law provision that
would require the application of the law of any other jurisdiction).
Section 20. Future Advances.
(a) REBL Revolving Credit Facilities and Future Advance Loans.
(i) With respect to each Transferred Interest indicated on Schedule A as to
which the Seller assigned a Future Advance Obligation to the Purchaser and the Future
Funding Obligations Account or Variable Funding Account (as applicable) has been
funded in accordance with the Indenture with the required funds to all such Future
Advances, upon receipt of notice from a Borrower requesting a Future Advance on a
REBL Revolving Credit Facility or a Future Advance Loan, as applicable, and the
15
satisfaction of any conditions precedent to the funding of such Future Advance, each Seller
shall notify the Purchaser promptly in writing. Each notice shall specify the currency and
amount and date of such Future Advance and the relevant Seller's bank account details for
payment.
(ii) Not later than 2:00 p.m. (New York City time) on the date so specified for
such Future Advance, the Purchaser shall pay to the relevant Seller, by deposit to the
relevant Seller's account, in immediately available funds, without set-off, counterclaim or
deduction of any kind, the amount of such Future Advance. The effectiveness of the
payment of such Future Advance shall be subject to receipt by the Seller of said amount as
provided herein.
(iii)E xcept with respect to Future Advance Loans that are REBL Revolving
Credit Facilities, upon the funding of such Future Advance to a Borrower in accordance
with Section (a)(i), the principal balance of the Transferred Interest as indicated on
Schedule A shall be amended to include such funding.
(b) Retained Future Advance Obligations.
(i) With respect to each Lehman Asset indicated on Schedule A as having a
Retained Future Advance Obligation, the relevant Seller hereby agrees to remit to the
Borrower the Future Advances required to be made under the relevant Underlying
Instrument, it being the specific intent of the parties hereto that the Purchaser shall not be
liable for making the Future Advances. Each Seller shall remit the Future Advances on the
dates that such Future Advances are required to be made pursuant to the applicable
Underlying Instrument. The parties hereto agree that the determination of whether the
Borrower is entitled to receive the Future Advance shall rest solely with the applicable
Seller who shall be solely responsible for funding the Future Advance and conducting any
and all due diligence, loan documentation and pre-funding requirements in connection
therewith.
(ii) With respect to each Lehman Asset indicated on Schedule A as having a
Retained Future Advance Obligation, Lehman Brothers Holdings Inc., (the "Indemnifying
Party") shall indemnify and hold harmless the Purchaser, against any and all losses claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses ofwhatever
kind or nature, known or unknown, contingent or otherwise, whether incurred or imposed
within or outside the judicial process, including, without limitation, reasonable attorneys'
fees and disbursements imposed upon or incurred by or asserted against the Purchaser
arising from the failure of such party to fulfill its Retained Future Advance Obligation
under the related Underlying Instrument, including without limitation, (i) any claims made
by the Borrower or its affiliates or (ii) any failure of payment by the Borrower under the
relevant Lehman Asset, in each case as a result of a failure to make any Future Advance as
required under the relevant Underlying Instrument, except to the extent that it is finally
judicially determined that any losses, claims, damages, costs, expenses or liabilities
resulted primarily from the bad faith or willful misconduct of the Purchaser.
16
Section 21. Survival of Certain Provisions. All representations and warranties
made herein by the parties hereto and the provisions of Section 24 and 25 shall survive the
execution, delivery and performance ofthis Agreement.
Section 22. Relationship Between Sellers and Purchaser. The relationship
between the Sellers and Purchaser shall be that of sellers and buyer and not that of debtor and
creditor. Nothing contained in this Agreement shall establish any fiduciary, partnership, joint
venture or similar relationship between or among the parties hereto. This Agreement is intended
to, and upon execution hereof and satisfaction or waiver of the conditions precedent set forth
herein shall, effect a true sale of the Transferred Interests.
Section 23. Entire Agreement. This Agreement (a) embodies the entire
Agreement between the parties, supersedes all prior agreements and understandings between the
parties, if any, relating to the subject matter hereof, and may be amended, and any provision
hereof may be waived, only by an instrument in writing executed by each party hereto and with
the prior consent of each Rating Agency, and (b) may be executed in any number of identical
counterparts, each of which shall be deemed an original for all purposes and all of which shall
constitute, collectively, one Agreement. Transmission by facsimile of an executed counterpart of
this Agreement shall be deemed to constitute due and sufficient delivery of such counterpart.
Section 24. Assignment of the Participation Agreement. Each Seller
acknowledges that the Purchaser is assigning all of its right, title and interest in, to and under this
Agreement to the Trustee for the benefit of the Secured Parties named in the Indenture. Each
Seller consents to the provisions of such assignment.
Section 25. Limited Recourse. Notwithstanding any other provision of this
Agreement, each of the Sellers hereby agrees that the Purchaser's obligations hereunder are
limited in recourse to the proceeds of the collateral available for the payment thereof subject to the
security interest created therein by the Indenture. Upon the realization and distribution of the
proceeds of the collateral in accordance with the Indenture, the outstanding obligations of, and any
claims against the Purchaser shall be extinguished. The Purchaser agrees that no recourse shall be
had for the payment of principal or interest on a Loan against any Seller other than against a Seller
for failure to pay, in accordance with this Agreement, an amount actually and finally received by
such Seller and due to the Purchaser. Each of the Sellers and the Purchaser further agrees to not
take any action against any employee, director, shareholder, affiliate or administrator of a Seller or
the Purchaser, as applicable, in relation to this Agreement.
Section 26. Non-Petition. None of the Sellers shall cause or join in the filing of
a petition in bankruptcy against the other party hereto for any reason until the expiration of the
period which is the later of the applicable preference period then in effect or one year and one day
after the final payment of any debt securities or notes issued by the Purchaser, as applicable and
acknowledge that the Trustee is intended to be a third-party beneficiary hereunder.
Section 27. Guarantee. As further consideration for entering in to this
Agreement, Lehman Brothers Holdings Inc. has guaranteed the obligations of Lehman
Commercial Paper Inc. in favor of the Issuer. Lehman Brothers Holdings Inc. and Lehman
Commercial Paper Inc. hereby agree not to amend or modify the Guarantee (other than in respect
17
of amendments or modifications to cure any inconsistency, ambiguity or manifest error) without
the satisfaction of the Rating Agency Condition.
[THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK.]
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written by their respective duly authoriz officers.
Notice Address:
Company:
Department:
Address:
Telephone:
SELLER:
HOLDINGS INC.
By: _____ --f-1'-+-------
Name:
Title:
David ass
Authorized Signatory
Lehman Brothers
GREG Asset Management
399 Park Avenue, 8th Floor
New York, NY 10022
E-Mail Address:
212 526 1696 - Steve Fischler
sfischle@lehman.com
Notice Address:
Company:
Department:
Address:
Telephone:
SELLER:
LEHMAN
By:
Name: 'Yon Cho
Title:
Authorized Signatory
Lehman Brothers
New York, NY 10022
212 526 1696- Steve Fischler
E-Mail Address: sfischle@lehman.com
Notice Address:
RS HOLDINGS INC.
By: ___ -'L.-.\-+--------
Company:
Department:
Address:
Telephone:
E-Mail Address:
Name:
Title: Authorized Signatory
Lehman Brothers
New York, NY 10022
212 526 1696- Steve Fischler
sfischle@lehman.com
PURCHASER:
SASCO 2008-C2, LLC
By: LEHMAN COMMERCIAL PAPER INC.,
its Member
By:
Name: 17"\:: C
v Yon 'ho
Title:
&'\ 1 f h--...., C. ..
- vH '\-'! } .,;)JQfl'-z::liOry
Notice Address: Lehman Brothers Inc., as
Administrative Agent
Company: Lehman Brothers
Department: GREG Securitization
Address: 399 Park A venue, 8th Floor
New York, NY I 0022
Telephone: 212 526 8829- David Nass
EMail Address: david.nass@lehman.com
SASCO 2008-C2- Master Participation Agreement- Purchaser (Issuer)
SCHEDULE A
SASCO 2008-C2, LLC
Schedule A
Transferred Retained Future
Seller's Interest Percentage Principal Balance of Acquisition Advance Transfer of
Asset Name ($) Interest(%) Transferred Interest($) Price(%) Obligation($) Transfer Date Accrued Interest
The Multifamily Portfolio- Tem1 Loan B 1 ,425,490,891 43.84 625,000,000 98.90 5/22/2008 No
2 The Hotel Portfolio 625,871 ,420 55.92 350,000,000 89.71 5/22/2008 No
3 The Multifamily Portfolio- Tenn Loan A 548,127,838 59.29 325,000,000 98.53 5/22/2008 No
4 Ritz Carlton Kapalua 232,426,079 100.00 232,426,079 97.87 5/22/2008 No
5 237 Park Avenue Atrium Mczz 225,000,000 100.00 225,000,000 79.70 5/22/2008 No
6 Exhibition City*"' 179,592,772 100.00 179,592,772 91.85 57,749,323 5/22/2008 No
7 Commons Of Mclean 178,261,706 100.00 178,261 '706 87.29 5/22/2008 No
8 Innkeepers Floater- Mczz 116,380,091 100.00 116,380,091 95.40 5/22/2008 No
9 One Kansas City Place 87,774,333 100.00 87,774,333 74.05 5/22/2008 No
I 0 Brookdale Senior Living Revolver* 78,593,750 100.00 78,593,750 94.07 5/22/2008 No
11 Related Companies Revolver* 75,000.000 100.00 75,000.000 95.00 5/22/2008 No
12 Lehman Hotel Portfolio 70,500,000 100.00 70,500,000 87.76 5/22/2008 No
13 The Multifamily Portfolio- Pool 9 Mczz A 62,752,370 100.00 62,752,370 99.00 5/22/2008 No
14 Wintcrgamcs (lntra.wcst) Canadian Tcm1 Loan 48,642,455 100.00 48,642,455 96.00 5/22/2008 No
15 Tuxedo Tcnn Loan 48,000,000 100.00 48,000,000 95.00 5122/2008 No
16 The Multifamily Pmtfolio- SeiiCo Mezz A 46,166,723 100.00 46,166,723 99.00 5/22/2008 No
17 The Multifamily Portfolio- Pool 3 Mczz B 43,140,208 100.00 43,140,208 99.00 5/22/2008 No
IS The Multifamily Portfolio- Poo19 Mezz B 36,695,673 100.00 36,695,673 99.00 5/22/2008 No
19 The Multifamily Pmtfolio- Pool 7 Mczz B 33,709,695 100.00 33,709,695 99.00 5/22/2008 No
20 The Multifamily Portfolio- HoldCo Mezz A 32,964,415 100.00 32,964,415 99.00 5/22/2008 No
21 The Multifamily Portfolio- Pool 4 Mezz B 31,951,268 100.00 31,951,268 99.00 5/22/2008 No
23 The Multifamily Portfolio- Sei!Co Mezz B 30,890,935 100.00 30,890,935 99.00 5/22/2008 No
24 The Multifamily Portfolio- HoldCo Mczz B 30,033,556 100.00 30,033,556 99.00 5/22/2008 No
25 Liberty Square Mezz 24,800,000 100.00 24,800,000 91.98 5/22/2008 No
26 Sienna at Riverview Apartments Mczz 24,735,000 100.00 24,735,000 99.00 5/22/2008 No
27 The Multifamily Portfolio- Pool 2 Mezz B 24,164,642 100.00 24,164,642 99.00 5/22/2008 No
28 120 Howard Jr. Mczz 23,215,819 100.00 23,215,819 73.19 5/22/2008 No
29 Austin Centre Sr. Mczz 21,560,499 100.00 21,560,499 94.16 5/22/2008 No
30 Innkeepers Anaheim- Mczz 21,300,000 100.00 21,300,000 98.43 5/22/2008 No
31 301 Howa1d Street Jr. Mezz 19,890,000 100.00 19,890,000 89.32 5/22/2008 No
32 The Multifamily Portfolio- Pool 2 Mezz A 18,416,926 100.00 18,416,926 99.00 5/22/2008 No
33 Garrison Square Sr Mczz** 17,970,567 100.00 17,970,567 82.64 2,238,433 5/22/2008 No
34 Vcntana Inn and Spa Sr. Mczz 17,740,000 100.00 17,740,000 92.61 5/22/2008 No
35 The Multifamily Portfolio- Pool I Mczz B 16,361,907 100.00 16,361,907 99.00 5/2212008 No
36 La Reserve Mczz !6,271 ,293 100.00 16,271,293 98.46 5/22/2008 No
37 Strathallan Hotel 14,600,000 100.00 14,600,000 98.35 5/22/2008 No
38 Emerald Dunes Golf Club'' 12,907,241 100.00 12,907,241 98.96 342,759 5/22/2008 No
39 Storage Deluxe 21St Street 12,750,000 100.00 12,750,000 96.69 5/22/2008 No
41 The Point 12,500,000 100.00 12,500,000 100.00 5/22/2008 No
42 Muirlield 12,150,000 100.00 12,150,000 98.49 5/22/2008 No
43 Guilford Ctr- Greensboro** II ,977,641 100.00 11,977,641 87.03 538,461 5/22/2008 No
44 The Multifamily Portfolio- Poo14 Mezz A II ,204,339 100.00 II ,204,339 99.00 5/22/2008 No
45 Vcntana Inn and Spa Jr. Mczz !.I ,038,025 100.00 II ,038,025 87.72 5/22/2008 No
46 Montauk Yacht Club Mczz II ,025,000 100.00 II ,025,000 86.87 5/22/2008 No
47 Idlewood Apartments II ,022,503 100.00 II ,022,503 101.45 5/22/2008 No
48 Minnesota Industrial Portfolio Mczz 10,600,000 100.00 10,600,000 94.32 5/22/2008 No
49 Austin Centre Jr. Mczz 10,000,000 100.00 10,000,000 93.60 5/22/2008 No
50 Storage Deluxe Southern 8,500,000 100.00 8,500,000 96.69 5/22/2008 No
51 Garrison Square Jr Mczz 5,409,000 100.00 5,409,000 84.57 5/22/2008 No
*Transferred Interest is a 100% participation interest in a REBL Revolving CrcdirFacility, for which reserve amounts have been deposited in the
Variable Funding Account in accordance with the Indenture.
The Principal Balance of the Transfcncd Interest rcOccts the total commitment (whether funded or unrundcd) or such REBL Revolving Credit Facility.
**The Transferred Percentage Interest for this Lehman Asset rcOcets the funded principal balance of such Lehman Asset only, and docs not take into account the
Retained future Advance Obligation.
SCHEDULEB
REPRESENTATIONS AND WARRANTIES
SCHEDULE B(l)
REPRESENTATIONS AND WARRANTIES RE:
COLLATERAL INTERESTS CONSISTING OF MORTGAGE LOANS
With respect to each Mortgage Loan, the Seller hereby represents and warrants, as of the date
herein specified or, if no such date is specified, as of the Transfer Date, except as set forth on
Schedule C, that:
I. The information set forth in Schedule A as to the Mortgage Loan is complete, true and
correct in all material respects;
2. The Seller is the sole owner and holder of the Mortgage Loan and has good and
marketable title thereto, has full right, power and authority to sell and assign such
Mortgage Loan free and clear of any interest or claim of a third party, except for any
future funding advance and other retained items enumerated in Schedule A of the Master
Participation Agreement;
3. The Mortgage Loan has not been since the date of origination by its originator, and
currently is not, thirty or more days delinquent, and to the knowledge of the Seller, the
Borrower is not in default thereunder beyond any applicable grace period for the payment
of any obligation to pay principal and interest, taxes, insurance premiums and required
reserves;
4. The Seller has not advanced funds, or knowingly received any advance of funds from a
party other than the Borrower subject to the related Mortgage, directly or indirectly, for
the payment of any amount required by the Mortgage Loan;
5. (A) The Mortgage Loan documents have been duly and properly executed, and (B) the
Mortgage Loan documents are legal, valid and binding obligations of the Borrower, and
their terms are enforceable against the Borrower, subject only to bankruptcy, insolvency,
moratorium, fraudulent transfer, fraudulent conveyance and similar laws affecting rights
of creditors generally and to the application of general principles of equity and there is no
valid defense, counterclaim, or right of rescission or right of set-off or abatement
available to any Borrower under the Mortgage Loan documents, except in each case with
respect to the enforceability of any provisions requiring the payment of default interest,
late fees, additional interest, prepayment premiums or yield maintenance charges;
6. The lien of each Mortgage is insured by an ALTA lender's title insurance policy or its
equivalent as adopted in the applicable jurisdiction issued by one or more nationally
recognized title insurance companies, insuring the originator of the Mortgage Loan, its
successors and assigns freely assignable to and will inure to the benefit ofthe Trustee, as
to the first priority lien of the Mortgage in the original principal amount of the Mortgage
Loan after all advances of principal, subject only to (a) the lien of current real property
taxes, ground rents, water charges, sewer rents and assessments not yet due and payable,
(b) covenants, conditions and restrictions, rights of way, easements and other matters of
public record, none of which, individually or in the aggregate, in the reasonable judgment
of the Seller, materially interferes with the current use of the related Underlying
Mortgage Property or the security intended to be provided by such Mortgage or with the
Borrower's ability to pay its obligations when they become due or the value ofthe related
Underlying M011gage Property and (c) the exceptions (general and specific) set forth in
such policy, none of which, individually or in the aggregate, in the reasonable judgment
of the Seller, materially interferes with the current use of the related Underlying
Mortgage Property or security intended to be provided by such Mortgage, with the
Borrower's ability to pay its obligations when they become due or the value of the related
Underlying Mortgage Property (or if a title insurance policy has not yet been issued in
respect of the Mortgage Loan, a policy meeting the foregoing description is evidenced by
a commitment for title insurance "marked-up" at the closing of the Mortgage Loan) and
none of which relate to matters on the survey of the related Underlying Mortgage
Property which are material. To the actual knowledge of the Seller, no material claims
have been made under such title policy;
7. As of the date of origination of the Mortgage Loan there were no mechanics',
materialman's or other similar liens or claims which were filed for work, labor or
materials affecting the Underlying Mortgage Property which are or may be liens prior to,
or equal or coordinate with, the lien of the Mortgage, unless such lien is insured against
under the related title insurance policy;
8. (A) Except with respect to Mortgage Loans secured by unimproved land or properties
intended to be demolished and redeveloped, as of the origination date, and to the
knowledge of the Seller, as of the Transfer Date, each building or other improvement
located on any Underlying Mortgage Property is insured by a fire and extended perils
insurance policy, issued by an insurer or reinsured by an insurer meeting the requirements
of the Mortgage Loan Documents, in an amount not less than the replacement cost of the
Underlying Mortgage Property; except with respect to Mortgage Loans secured by
unimproved land or properties intended to be demolished and redeveloped, each
Underlying Mortgage Property was also covered by business interruption insurance for a
period of not less than twelve months (or in the case of hotel loans, for a period not less
than the period of restoration with a 30 day extended indemnity period); each Underlying
Mortgage Property was also covered by comprehensive general liability insurance in
amounts generally required by institutional lenders for similar properties; to the
knowledge ofthe Seller, all premiums on such insurance policies required to be paid as of
the date hereof have been paid; such insurance policies require prior notice to the insured
of termination or cancellation, and no such notice has been received; and (B) the loan
documents obligate the Borrower to maintain all such insurance and, at the Borrower's
failure to do so, authorize the mortgagee to maintain such insurance at the Borrower's
cost and expense and to seek reimbursement therefor from such Borrower;
9. As of the most recent date of inspection of each Underlying Mortgage Property by the
Seller in connection with the origination of the Mortgage Loan, except with respect to
Mortgage Loans secured by unimproved land or properties intended to be demolished and
USActive 12824081.13 -5-
redeveloped, based solely on the Seller's review of the report ("Engineering Report")
prepared by the engineer who inspected the structure, exterior walls, roofing, interior
construction, mechanical and electrical systems and general conditions of the site,
buildings and other improvements with respect to the Mortgage Loan (which report
indicated, where appropriate, a variety of deferred maintenance items and recommended
capital improvements with respect to such Underlying Mortgage Property, as well as the
estimated cost of such items and improvements) and the most recent visual inspection (as
described in (18) below) of the Underlying Mortgage Property by the Seller in connection
with the origination of the Mortgage Loan, no building or other improvement on any
Underlying Mortgage Property has been affected in any material manner or suffered any
material loss as a result of any fire, wind, explosion, accident, riot, war, or act of God or
the public enemy, and each Underlying Mortgage Property is free of any material damage
that would affect materially and adversely the value of the Underlying Mortgage Property
as security for the Mortgage Loan and is in good repair. The Seller has neither received
notice, nor is otherwise aware, of any proceedings pending for the total condemnation of
any Underlying Mortgage Property or a partial condemnation of any p01iion material to
the Borrower's ability to perform its obligations under its related Mortgage Loan;
I 0. To the Seller's best knowledge, after review of compliance confirmations from applicable
municipalities, surveys and/or title insurance endorsements or other evidence that a
prudent lender would accept, except with respect to Mortgage Loans secured by
unimproved land or properties intended to be demolished and redeveloped, none of the
improvements included for the purpose of determining the appraised value of each
Underlying Mortgage Property at the time of the origination of the Mortgage Loan lies
outside of the boundaries and building restriction lines of the Underlying Mortgage
Property, and no improvements on adjoining properties materially encroach upon the
Underlying Mortgage Property, in each case, except those which are insured against by
the title insurance policy (including endorsements thereto) issued in connection with the
Mortgage Loan and all improvements on the Underlying Mortgage Property comply with
the applicable zoning laws and/or set-back ordinances in force when improvements were
added;
11. Without taking into account provisions relating to Default Interest, Exit Fees and
Prepayment Charges, the Mortgage Loan does not violate applicable usury laws in effect
as of its date of origination;
12. Since the date of origination of the Mortgage Loan, to the knowledge of the Seller, the
terms of the Mortgage Loan have not been impaired, waived, altered, satisfied, canceled,
subordinated or modified in any respect and the Borrower (and the guarantor, if
applicable) has not been released from any material obligation under the Mortgage Loan
(except with respect to modifications the economic terms of which are reflected in
Schedule A and which are evidenced by documents in the Mortgage Loan file delivered
to the Trustee) and no portion of the Underlying Mortgage Property has been released
from the lien of the Mortgage in any manner, other than in accordance with the terms of
the related mortgage loan documents;
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13. All applicable mortgage recording taxes and other filing fees have been paid in full or
deposited with the issuer of the title insurance policy issued in connection with the
Mortgage Loan for payment upon recordation of the relevant documents;
14. Each assignment of leases and rents, if any, creates a first priority lien, a valid assignment
of, or a valid security interest in, certain rights under the related leases, subject only to a
license granted to the relevant Borrower to exercise certain rights and to perform certain
obligations of the lessor under such leases, including the right to operate the related
Underlying Mortgage Property, subject only to those exceptions described in clause (vi)
above. To the Seller's knowledge and without affirmative investigation, no person other
than the relevant Borrower owns any interest in any payments due under such leases that
is superior to or of equal priority with the mortgagee's interest therein, subject only to
those exceptions described in clause (6) above;
15. As of the origination date, and to the knowledge of the Seller, as of the Transfer Date,
each Mortgage, upon due recordation, is a valid and enforceable first lien on the related
Underlying Mortgage Property, subject only to those exceptions described in clause (6)
above. A UCC financing statement has been filed and/or recorded in all places necessary
to perfect a valid security interest in the personal property granted under the Mortgage
Loan to the extent that such lien can be created under the UCC by filing; any security
agreement, chattel mortgage or equivalent document related to and delivered in
connection with the Mortgage Loan establishes and creates a valid and enforceable first
lien and first priority security interest on the property described therein (except as
enforceability may be limited by bankruptcy or other laws affecting creditor's rights
generally or by the application of general principles of equity);
16. Except as otherwise identified in any exceptions to any other representation, the Seller
has not taken any action, nor has knowledge that the Borrower has taken any action, that
would cause the representations and warranties made by the Borrower in the Mortgage
Loan documents not to be true;
17. The proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances thereunder and the Seller covenants that it will not make
any future advances under the Mortgage Loan to the Borrower (except for (i) escrows
established at the origination of the Mortgage Loan and maintained by the related
servicer, (ii) future funding loans where the maximum future funding amount under the
terms of such asset have been deposited in an account with the Purchaser, and (iii) the
future funding loans identified ih Schedule A. Any Borrower requirements for on or off-
site improvements as to disbursement of any escrow funds therefor have been complied
with;
18. The Seller has inspected or caused to be inspected each Underlying Mortgage Property
within the twelve months preceding the date of origination thereof;
19. The Mortgage Loan does not have a shared appreciation feature, other contingent interest
feature or negative amortization;
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20. Each Mortgage Loan is a whole loan (except for Mortgage Loans which are B Notes or
participation interests in whole loans) and contains no equity participation by the lender
and is not convertible into an equity interest in the Borrower;
21. No fraudulent acts were committed by the Seller in connection with the origination
process ofthe Mortgage Loan;
22. All taxes and governmental assessments that prior to the date of origination of the
Mortgage Loan (and, to the knowledge of the Seller, prior to the Transfer Date) became
due and owing in respect of each Underlying Mortgage Property have been paid, or an
escrow of funds in an amount sufficient to cover such payments has been established or
are insured against by the title insurance policy issued in connection with the origination
ofthe Mortgage Loan;
23. To the extent required under applicable Jaw, the Seller was authorized to transact and do
business in each jurisdiction in which an Underlying Mortgage Property is located at all
times when it held the Mortgage Loan;
24. The Seller does not have any knowledge of a material default, breach, violation or event
of acceleration existing under any of the Mortgage Loan documents and the Seller does
not have any knowledge of any event (other than payments due but not yet delinquent)
which, with the passage of time or with notice and the expiration of any grace or cure
period, would and does constitute a material default, breach, violation or event of
acceleration; no waiver of the foregoing exists and no person other than the holder of the
Note may declare any of the foregoing provided, however, that this representation and
warranty does not address or otherwise cover any default, breach, violation or event of
acceleration that specifically pertains to any matter otherwise covered by any other
representation and warranty made by the Seller in this Schedule B( 1 );
25. Each Note and each Mortgage contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the realization against
each related Underlying Mortgage Property of the material benefits of the security,
including realization by judicial or, if applicable, non-judicial foreclosure, and there is no
exemption available to the Borrower which would materially interfere with such right to
foreclosure;
26. (A) With respect to each Underlying Mortgage Property, a Phase I environmental report
and, in certain cases, a Phase II environmental report or an update to such Phase I report
was conducted by a licensed qualified engineer in connection with the origination of the
Mortgage Loan (not longer than twelve months prior to the origination date). The Seller
has reviewed each such report and update. (B) The Seller, having made no independent
inquiry other than reviewing the environmental reports and updates referenced herein and
without other investigation or inquiry, has no knowledge of any material and adverse
environmental condition or circumstance affecting any Underlying Mortgage Property
that was not disclosed in the related report and/or update. The Seller has not received any
actual notice of a material violation of CERCLA or any applicable federal, state or local
environmental law with respect to any Underlying Mortgage Property that was not
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disclosed in the related report and/or update. (C) The Seller has not taken any actions
which would cause any Underlying Mortgage Property not to be in compliance with all
federal, state and local laws pertaining to environmental hazards;
27. The Mortgage Loan agreement contains provisions for the acceleration of the payment of
the unpaid principal balance of the Mortgage Loan if (A) the Borrower voluntarily
transfers or encumbers all or any portion of any related Underlying Mortgage Property, or
(B) any direct or indirect interest in Borrower is voluntarily transferred or assigned, other
than, in each case, as permitted under the terms and conditions of the Mortgage Loan
documents and, to the best of the Seller's knowledge, the Borrower is not a debtor in a
state or federal bankruptcy or insolvency proceeding;
28. To the Seller's knowledge and without affirmative investigation or inquiry, there is no
pending action, suit or proceeding, arbitration or governmental investigation against the
Borrower or any Underlying Mortgage Property an adverse outcome of which could
materially affect the Borrower's performance of its obligations under the Mortgage Loan
documents;
29. The servicing and collection practices used by the Seller, and to the Seller's knowledge,
the origination practices of the originator of the mortgage loan, have been in all respects
legal, proper and prudent and have met customary industry standards except to the extent
that, in connection with its origination, such standards were modified by the originator of
the Mortgage Loan in its reasonable discretion;
30. In connection with the assignment, transfer or conveyance of any individual Mortgage,
the Note and Mortgage contain no provision limiting the right or ability of the originator
of the Mortgage Loan to assign, transfer and convey the Mortgage to any other person or
entity;
31. If any Underlying Mortgage Property is subject to any leases (other than any ground lease
referred to in (35) below), to the best of the Seller's knowledge, the Borrower is the
owner and holder of the landlord's interest under such leases and the related Mortgage
and Assignment of Leases, Rents and Profits, if any, provides for the appointment of a
receiver for rents or allows the m01tgagee to enter into possession to collect rent or
provide for rents to be paid directly to mortgagee in the event of a default, subject to the
exceptions described in clause (6) hereof;
32. If a Mortgage is a deed of trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is named in the deed of
trust, and no fees or expenses are or will become payable to the trustee under the deed of
trust, except in connection with the sale or release of the Underlying Mortgage Property
following default or payment of the loan;
33. Except with respect to Mortgage Loans secured by unimproved land or properties
intended to be demolished and redeveloped, any insurance proceeds in respect of a
casualty loss or taking will be applied either to the repair or restoration of all or part of
the related Underlying Mortgage Property, with the mortgagee or a trustee appointed by it
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having the right to hold and disburse such proceeds (provided that such proceeds exceed
the threshold amount described in the loan documents) as the repair or restoration
progresses, or to the payment of the outstanding principal balance of the Mortgage Loan
together with any accrued interest thereon, except to the extent of any excess proceeds
after restoration;
34. Based on the Seller's review of the 1 00-year flood plain map provided by FEMA or the
related survey, with respect to the Mortgaged Properties with improvements located in a
special flood hazard area (Zone A) as defined by the Federal Insurance Administration,
flood insurance coverage has been obtained;
35. With respect to any Mortgage which is secured in whole or in part by the interest of a
Borrower as a lessee under a ground lease either (i) such Mortgage is also secured by the
fee interest in the entire Underlying Mortgage Property or (ii) based upon the terms of the
ground lease or an estoppel letter from the ground lessor the following apply to such
ground lease:
(A) The ground lease or a memorandum thereof has been duly recorded, the ground
lease permits the interest of the lessee thereunder to be encumbered by the related
Mortgage, does not restrict the use ofthe Underlying Mortgage Property by the lessee or
its successors and assigns in a manner that would adversely affect the security provided
by the related Mortgage, and there has not been a material change in the terms of the
ground lease since its recordation, with the exception of written instruments which are
part of the related Mortgage Loan documents delivered to the Trustee.
(B) As of the origination date, and, to the Seller's knowledge, as of the Transfer Date,
the ground lease was not subject to any liens or encumbrances superior to, or of equal
priority with, the related Mortgage, other than the related ground lessor's related fee
interest and any permitted encumbrances on such fee interest and any permitted
encumbrance with respect to such ground lease did not include any mortgage that is prior
to the interest of the ground lease.
(C) The Borrower's interest in the ground lease is assignable to the holder of the
Mortgage upon notice to, but without the consent of, the lessor thereunder and, in the
event that it is so assigned, it is further assignable by the trustee and its successors and
assigns upon notice to, but without a need to obtain the consent of, such lessor.
(D) As of the origination date of the Mortgage Loan, based on due diligence
customarily performed in the origination of comparable mortgage loans by the originator
of the Mortgage Loan, the ground lease was in full force and effect and, based solely on
an estoppel received from the ground lessor, the Seller does not have any knowledge that
any material default has occurred under the ground lease and there was no existing
condition which, but for the passage of time or the giving of notice, would result in a
default under the terms of the ground lease. No notice of default under the ground lease
has been received by the Seller.
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(E) The ground lease requires the lessor thereunder to give notice of any default by
the lessee to the mortgagee; and the ground lease, or an estoppel letter received by the
mortgagee from the lessor, further provides that notice of termination given under the
ground lease is not effective against the mortgagee unless a copy of the notice has been
delivered to the mortgagee in the manner described in such ground lease or estoppel
letter.
(F) The mortgagee is permitted a reasonable opportunity (including, where necessary,
sufficient time to gain possession of the interest of the lessee under the ground lease) to
cure any default under the ground lease which is curable after the receipt of notice of any
default, before the lessor thereunder may terminate the ground lease.
(G) The ground lease either (i) has a term which extends not less than 20 years
beyond the maturity date ofthe related Mortgage Loan or (ii) grants the lessee the option
(which may be exercised by the mortgagee)to extend the term of the lease for a period
(in the aggregate) which exceeds 20 years beyond the maturity date of the related
Mortgage Loan.
(H) The ground lease requires the lessor to enter into a new lease with the mortgagee
upon termination of the ground lease for any reason, including rejection of the ground
lease in a bankruptcy proceeding, provided the mortgagee cures the lessee's defaults to
the extent they are curable.
(I) Under the terms of the ground lease and the related Mortgage, taken together, any
related insurance proceeds will be applied either to the repair or restoration of all or part
of the related Underlying Mortgage Property, with the mortgagee or a trustee appointed
by it having the right to hold and disburse the proceeds as the repair or restoration
progresses, or to the payment of the outstanding principal balance of the Mortgage Loan
together with any accrued interest thereon.
(J) Such ground lease does not impose any material restrictions on subletting.
(K) Either the ground lease or the related Mortgage contains the Borrower's covenant
that such ground lease shall not be amended, canceled, or terminated without the prior
written consent of the mortgagee.
36. [Intentionally left blank.];
intended to be demolished and redeveloped, to the best knowledge of the Seller, all
required certificates of occupancy and building permits, as applicable, have been issued
with respect to the Underlying Mortgage Property and, to the best knowledge of the
Seller, are valid and in full force and effect;
38. Any escrow accounts for taxes or other reserves required to be funded on the date of
origination of the Mortgage Loan pursuant to the Mortgage Loan documents have been
funded and to the knowledge of the Seller, all such escrow accounts required to have
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been funded as of the Transfer Date (taking into account any applicable notice and grace
period) have been funded;
39. The related Assignment of Mortgage is in recordable form and constitutes a legal, valid
and binding assignment of such Mortgage to the Purchaser, and the related Assignment of
Assignment of Leases, Rents and Profits, if any, is in recordable form and constitutes a
legal, valid and binding assignment thereof to the Purchaser;
40. The related Note is not, and was not as of the date of origination of the Mortgage Loan,
and to the knowledge of the Seller, is not as of the Transfer Date, secured by any
collateral except the lien of the related Mortgage, any related Assignment of Leases,
Rents and Profits and any related letter of credit, security agreement and escrow
agreement, all of which are being conveyed to the Purchaser; the security for the
Mortgage Loan consists only of the related Underlying Mortgage Property or Properties,
any leases (including without limitation any credit leases) thereof, any related Jetter of
credit and any appurtenances, fixtures and other property located thereon; and such
Underlying Mortgage Property or Properties do not secure any mortgage Joan other than
the Mortgage Loan being transferred and assigned to the Purchaser hereunder (except for
Mortgage Loans, if any, which are cross-collateralized with other Mortgage Loans being
conveyed to the Purchaser or subsequent transferee hereunder and identified on the
Schedule A);
41. To the Seller's knowledge, based on due diligence that it customarily performs in the
origination of comparable mortgage loans, as of the date of origination of each Mortgage
Loan, the related Borrower was in possession of all material licenses, permits and
franchises required by applicable law for the ownership and operation of the related
Underlying Mortgage Property as it was then operated, except for such licenses, permits
and authorizations the failure of which to obtain would not materially adversely affect the
value of the Mortgage Loan;
42. To the Seller's knowledge, as of the origination date, the Borrower complied with all
legal requirements applicable to it and the Underlying Mortgage Property;
43. No Mortgage Loan is a loan in which the originator of the Mortgage Loan (in the case of
a Mortgage Loan not originated by the Seller, to the Seller's knowledge) paid the
Borrower a premium in exchange for a higher Interest Rate ("Buy-up Loan");
intended to be demolished and redeveloped, each Mortgage Loan requires the Borrower
to provide the holder of the Mortgage Loan with quarterly and annual operating
statements, rent rolls '(other than for hotel properties) and related information, which
annual financial statements shall be audited by an independent certified public accountant
upon request;
45. Each Underlying Mortgage Property constitutes one or more complete separate tax Jots or
is subject to an endorsement under the related title insurance policy;
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46. Except in cases where either (a) a release of a portion of the Underlying Mortgage
Property was contemplated at origination of the Mortgage Loan and such portion was not
considered material for purposes of underwriting the Mortgage Loan or (b) release is
conditioned upon the satisfaction of certain underwriting and legal requirements and
either written confirmation from each Rating Agency that such release will not result in
the withdrawal, qualification or downgrade of the securities or the payment of a release
price or the substitution of other real property collateral to the extent required under the
Mortgage Loan, the related Note or Mortgage does not require the holder thereof to
release all or any portion of the Underlying Mortgage Property from the lien of the
related Mortgage except upon payment in full of all amounts due under such Mortgage
Loan;
47. (A) The Borrower is an entity whose organizational documents provide that it is, and at
least so long as the related Mortgage Loan is outstanding will continue to be, a single-
purpose entity (for this purpose, "single-purpose entity" shall mean a person, other than
an individual, which is formed or organized solely for the purpose of owning and
operating the related Underlying Mortgage Property and does not engage in any business
unrelated to such property and its financing); (B) a non-consolidation opinion was
obtained for each Borrower; and (C) the organizational documents for each Borrower
require that the Borrower have one or two independent directors, as the case may be;
48. All terms of the related Mortgage pertaining to interest rate adjustments, payment
adjustments and principal balance adjustments are enforceable and will not affect the
priority ofthe lien ofthe related Mortgage.
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SCHEDULE B(2)
REPRESENTATIONS AND WARRANTIES RE: COLLATERAL INTERESTS CONSISTING
OF B NOTES
With respect to each B Note, the Seller hereby represents and warrants, as of the date herein
specified or, if no such date is specified, as ofthe Transfer Date, except as set forth on Schedule
C, that:
I. Accuracy of Information. The information pertaining to each B Note set forth in
Schedule A was true and correct in all material respects as of the Transfer Date.
2. Compliance with Law. On the date of its origination, and, in the case of B Notes that
were not originated by the Seller, to the Seller's knowledge, the B Note complied in all
material respects with, or was exempt from, all requirements of federal, state or local law
relating to the origination, funding and servicing ofthe B Note and the B Note complied
with, or is exempt from, applicable state or federal laws, regulations or other
requirements pertaining to usury.
3. Title to Asset; No Consents Required. Immediately prior to the sale, transfer and
assignment to the Purchaser, the Seller had good title to, and was the sole owner of, the B
Note, the Seller is transferring the B Note free and clear of any and all liens, pledges,
charges or security interests of any nature encumbering the B Note, and the transfer of the
B Note complies with all requirements and no consents, approvals or authorizations are
necessary under any related B Note documents and/or intercreditor agreements to transfer
the B Note to the Purchaser or any such consent which is required has been obtained.
4. Absence of Fraud. In the origination (or acquisition, if the B Note was not originated by
the Seller or any of its Affiliates) and servicing of the B Note, neither Seller nor, to
Seller's knowledge, any prior holder ofthe B Note participated in any fraud or intentional
material misrepresentation with respect to the B Note. To Seller's knowledge, no
Borrower or guarantor originated the B Note.
5. Secured by a First Lien. The B Note is performing and is secured by a first lien on the
Underlying Mortgage Property, subject to the exceptions set forth in paragraph (8) of
Schedule B(l) and the Title Exceptions.
6. Delivery of Documents. Seller has delivered to Purchaser or its designee the original
promissory note, certificate or other similar indicia of ownership of such B Note,
however denominated, together with an original assignment thereof, executed by Seller in
blank (or such other name as designated by the Purchaser).
7. Absence of Defaults re: Other Interests. To the knowledge of the Seller, no default or
event of default has occurred under any agreement pertaining to any lien or other interest
that ranks pari passu with or senior to the interests of the holder of such B Note in respect
of the related Underlying Mortgage Property and there is no provision in any such
agreement which would provide for any increase in the principal amount of any such lien
or other interest other than an increase in the principal amount of any such lien due to a
protective property advance made by the related servicer.
8. Absence of Defaults. There is no monetary event of default and, to the knowledge of the
Seller, no material non-monetary event of default existing under the B Note or any B
Note document and the Seller has no knowledge of any substantial and material event or
circumstance with respect to which the expiration of an applicable default grace period is
imminent that would result in a monetary or non-monetary event of default under the B
Note or the B Note documents; Seller has not waived any of the foregoing and to Seller's
knowledge no waiver of any of the foregoing exists and no person other than the holder
ofthe B Note, the holder ofthe A Note or Servicers acting on their respective behalf may
declare any of the foregoing.
9. Absence of Liabilities. Seller has not received written notice of any outstanding
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind for which the holder of such B Note is or may
become obligated.
10. Absence of Bankruptcy Debtors. To the knowledge ofthe Seller, as of the Transfer Date,
no issuer of such B Note was a debtor in any outstanding proceeding pursuant to the
federal bankruptcy code.
11. Absence of Amendments and Waivers. Except as set forth in the related Collateral File,
(a) no provision of the related intercreditor agreement, the related B Note documents or
any other document, agreement or instrument executed in connection with the B Note has
been waived, modified, altered, satisfied, canceled, subordinated or rescinded, and no
related collateral for the B Note has been released from the lien of the related documents
in any manner that materially interferes with the security intended to be provided by such
documents, and (b) neither the related B Note issuer nor any other party to the B Note
documents has been released from any material obligation thereunder.
12. Collateral File. The Seller has delivered to the Purchaser or its designee an accurate and
complete Collateral File.
13. Representations and Warranties with respect to Related Mortgage Loan. With respect to
each B Note, to Seller's knowledge, the representations and warranties set forth on
Schedule B(1), other than those contained in paragraphs 2 and 20 of Schedule B(l), are
true and correct with respect to the related Mortgage Loan as to which such B Note
evidences a portion thereof.
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SCHEDULE B(3)
OF PARTICIPATION INTERESTS
With respect to each participation interest in a mortgage loan or a mezzanine loan (for purposes
of this Schedule B(3), a "Participation Interest"), the Seller hereby represents and warrants, as of
the date herein specified or, if no such date is specified, as of the Transfer Date, except as set
forth on the Schedule C, that:
I. Accuracy of Information. The information pertaining to each Participation Interest set
forth in Schedule A was true and correct in all material respects as of the Transfer Date.
2. Compliance with Law. On the date of its origination (or acquisition if the Participation
Interest was not originated by the Seller or any of its Affiliates), and, in the case of
Participation Interests that were not originated by the Seller, to the Seller's knowledge,
the Participation Interest complied in all material respects with, or was exempt from, all
requirements of federal, state or local law relating to the origination, funding and
servicing of the Participation Interest and the Participation Interest complied with, or is
exempt from, applicable state or federal laws, regulations or other requirements
pertaining to usury.
3. Title to Asset; No Consents Required. Immediately prior to the sale, transfer and
assignment to the Purchaser, the Seller had good title to, and was the sole owner of, the
Participation Interest, the Seller is transferring the Participation Interest free and clear of
any and all liens, pledges, charges or security interests of any nature encumbering the
Participation Interest, and the transfer of the Participation Interest complies with all
requirements and no consents, approvals or authorizations are necessary under any
related Participation Interest documents and/or intercreditor agreements to transfer the
Participation Interest to the Purchaser or any such consent which is required has been
obtained.
4. Absence of Fraud. In the origination (or acquisition if the Participation Interest was not
originated by the Seller or any of its Affiliates) and servicing of the Participation Interest,
the Seller did not participate in any fraud or intentional material misrepresentation with
respect to the Participation Interest. To Seller's knowledge, no Borrower or guarantor
originated the Participation Interest.
5. Delivery of Documents. If such Participation Interest is certificated, Seller has delivered
to Purchaser or its designee the original certificate, however denominated, together with
an original assignment thereof, executed by Seller in blank.
6. Absence of Defaults re: Other Interests. To the knowledge of the Seller, no default or
event of default has occurred under any agreement pertaining to any lien or other interest
that ranks pari passu with or senior to the interests of the holder of such Participation
Interest in respect ofthe related Underlying Mortgage Property, and there is no provision
in any such agreement which would provide for any increase in the principal amount of
USActive 128.24081.13
any such lien or other interest that is senior to the interests of the holder of such
Participation Interest other than an increase in the principal amount of any such lien due
to a protective property advance made by the related servicer.
Seller, no material non-monetary event of default existing under the Participation Interest
or any Participation Interest document and the Seller has no knowledge of any substantial
and material event or circumstance with respect to which the expiration of an applicable
default grace period is imminent that would result in a monetary or non-monetary event
of default under the Participation Interest or the Participation Interest documents; Seller
has not waived any of the foregoing and to Seller's knowledge, no waiver of any of the
foregoing exists; and no person other than the holder of the Participation Interest may
declare any ofthe foregoing.
8. Absence of Liabilities. Seller has not received written notice of any outstanding
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind for which the holder of such Participation Interest
is or may become obligated.
9. Absence of Bankruptcy Debtors. To the actual knowledge of the Seller, as of the
Transfer Date, no issuer of such Participation Interest was a debtor in any outstanding
proceeding pursuant to the federal bankruptcy code.
I 0. Absence of Amendments or Waivers. Except as set forth in the related Collateral File,
(a) no provision of the related intercreditor agreement to which a Seller is a party, if any,
nor to Seller's knowledge, the related Participation Interest documents or any other
document, agreement or instrument executed in connection with the Participation Interest
has been waived, modified, altered, satisfied, canceled, subordinated or rescinded, and no
related collateral for the Participation Interest has been released from the lien of the
related documents in any manner that materially interferes with the security intended to
be provided by such documents, and (b) neither the related Participation Interest issuer
nor to Seller's knowledge, any other party to the Participation Interest documents has
been released from any material obligation thereunder.
11. Collateral File. The Seller has delivered to the Purchaser or its designee an accurate and
12. Representations and Warranties with respect to Related Mortgage Loan. With respect to
each Participation Interest that is an interest in a Mortgage Loan, to Seller's knowledge,
the representations and warranties set forth in Schedule B(l ), other than the
representations and warranties contained in Paragraphs 2, 20 and 39 of Schedule 1 (a), are
true and correct with respect to the related Mortgage Loan, as to which such Participation
Interest represents an interest therein.
13. Representations and Warranties with respect to Related Mezzanine Loan. With respect to
each Participation Interest that is an interest in a Mezzanine Loan, to the Seller's
knowledge the representations and warranties set forth in Schedule B(4), other than the
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representations and warranties contained in Paragraphs 2, 5, 7, I 0, 15, 24, 32 and 33 are
true and correct with respect to the related Mezzanine Loan as to which such
Participation Interest represents an interest therein.
14. Representations and Warranties with respect to Related REBL. With respect to each
Participation Interest that is an interest in a REBL, to the Seller's knowledge the
representations and warranties set forth in Schedule B(7), other than the representations
and warranties contained in Paragraph 3 are true and correct with respect to the related
REBL as to which such Participation Interest represents an interest therein.
USActive 12824081.13 -18-
SCHEDULE B(4)
OF MEZZANINE LOANS
With respect to each Mezzanine Loan, the Seller hereby represents and warrants, as of the date
herein specified or, if no such date is specified, as ofthe Transfer Date, except as set forth on the
Schedule C, that:
1. Accuracy of Information. The information pertaining to each Mezzanine Loan set forth
in Schedule A was true and correct in all material respects as of the Transfer Date.
2. Compliance with Law. On the date of its origination, , and, in the case of Mezzanine
Loans that were not originated by the Seller, to the Seller's knowledge, the Mezzanine
Loan complied in all material respects with, or was exempt from, all requirements of
federal, state or local law relating to the origination, funding and servicing of the
Mezzanine Loan, and the Mezzanine Loan complied with, or is exempt from, applicable
state or federal laws, regulations or other requirements pertaining to usury.
3. Absence of Amendments or Waivers. Except as set forth in the related Collateral File,
(a) no provision of the related intercreditor agreement, the related Mezzanine Loan
documents or any other document, agreement or instrument executed in connection with
the Mezzanine Loan has been waived, modified, altered, satisfied, canceled, subordinated
or rescinded, and no related collateral for the Mezzanine Loan has been released from the
lien of the related documents in any manner that materially interferes with the security
intended to be provided by such documents, and (b) neither related mezzanine borrower
nor any other party to the Mezzanine Loan documents has been released from any
material obligation thereunder.
4. Enforceability of Documents. The notes executed by the related mezzanine borrower in
connection with the related Mezzanine Loan and the pledge of the ownership interests
securing the related Mezzanine Loan are the legal, valid and binding obligations of the
related mezzanine borrower and the Seller, as applicable (subject to any non-recourse
provisions therein and any state anti-deficiency, one action, or market value limit
deficiency legislation), enforceable in accordance with its terms, except (i) that certain
provisions contained in such Mezzanine Loan documents are or may be unenforceable in
whole or in part under applicable state or federal laws, but neither the application of any
such laws to any such provision nor the inclusion of any such provisions renders any of
the Mezzanine Loan documents invalid as a whole and such Mezzanine Loan documents
taken as a whole are enforceable to the extent necessary and customary for the practical
realization of the rights and benefits customarily afforded institutional mortgage lenders
and (ii) as such enforcement may be limited by bankruptcy, insolvency, receivership,
reorganization, moratorium, redemption, liquidation or other laws affecting the
enforcement of creditors' rights generally, or by general principles of equity (regardless
of whether such enforcement is considered in a proceeding in equity or at law).
5. Title to Asset. Immediately prior to the sale, transfer and assignment to the Purchaser,
the Seller had good title to, and was the sole owner of, the Mezzanine Loan, the Seller is
transferring the Mezzanine Loan free and clear of any and all liens, pledges, charges or
security interests of any nature encumbering the Mezzanine Loan, and the transfer of the
Mezzanine Loan complies with all requirements in, and no consents, approvals or
authorizations are necessary under, any related Mezzanine Loan documents and/or
intercreditor agreements to transfer the Mezzanine Loan to the Purchaser or any such
consent which is required has been obtained.
6. Absence of Defenses. As of the date of its origination, there was no right of offset,
diminution or rescission or valid defense or counterclaim with respect to the mezzanine
note or the Mezzanine Loan documents and, to Seller's knowledge, as of the date such
Mezzanine Loan is acquired by the Purchaser, there is no right of offset, diminution or
rescission or valid defense or counterclaim with respect to such mezzanine note or
Mezzanine Loan documents.
7. Valid Assignment. The assignment ofthe Mezzanine Loan and the agreements executed
in connection therewith in favor of the Purchaser has been duly authorized, executed and
delivered by the Seller and constitutes the legal, valid and binding assignment of such
Mezzanine Loan to the Purchaser, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, liquidation, receivership, moratorium or other
laws relating to or affecting the enforcement of creditors' rights generally, or by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law). The Mezzanine Loan and the agreements executed in
connection therewith are freely assignable to any person or entity.
8. Security Interest. The pledge of the collateral for the Mezzanine Loan creates a legal,
valid and enforceable first priority perfected security interest in such collateral, except as
the enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
liquidation, receivership, moratorium or other laws relating to or affecting the
enforcement of creditors' rights generally, or by general principles of equity.
9. Escrows and Deposits. All escrow deposits and payments required pursuant to the
Mezzanine Loan documents are in the possession, or under the control, of the related
servicer of the Assets, and to the knowledge of the Seller there are no deficiencies in
connection therewith.
I 0. Absence of Fraud. In the origination (or acquisition, if the Mezzanine Loan was not
originated by the Seller or any of its Affiliates) and servicing of the Mezzanine Loan,
neither Seller nor, to Seller's knowledge, any prior holder of the Mezzanine Loan
participated in any fraud or intentional material misrepresentation with respect to the
Mezzanine Loan. To Seller's knowledge, no Borrower or guarantor originated the
Mezzanine Loan.
11. Full Disbursement of Proceeds. The proceeds of the Mezzanine Loan have been fully
disbursed and there is no requirement for future advances thereunder (except for (i)
escrows established at the origination of the Mezzanine Loan and maintained by the
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related servicer, (ii) Future Advanc.e Loans where the maximum Future Advance under
the terms of such asset have been deposited in an account with the Purchaser, and (iii) the
Retained Future Advance Obligations identified in Schedule A.
12. Source of Payments. The Seller has not (nor to Seller's knowledge, has any prior holder
of the Mezzanine Loan) advanced funds or induced, solicited or knowingly received
funds from a party other than the mezzanine borrower (or any manager or agent of
mezzanine borrower) for the payment of any amounts due in connection with the
Mezzanine Loan.
13. No Contingent Interest. The Mezzanine Loan does not have a shared appreciation feature
or other contingent interest features.
14. Absence of Negative Amortization. The Mezzanine Loan does not have a negative
amortization or deferred interest feature.
15. Outstanding Principal Amount. The total balance of each Mezzanine Loan is set forth on
Schedule 2 hereto, and no party other than the Seller holds an interest in the related
Mezzanine Loan.
Seller, no material non-monetary event of default existing under the Mezzanine Loan or
any Mezzanine Loan document and the Seller has no knowledge of any substantial and
material event or circumstance with respect to which the expiration of an applicable
default grace period is imminent that would result in a monetary or non-monetary event
of default under the Mezzanine Loan or the Mezzanine Loan documents; Seller has not
waived any ofthe foregoing and to Seller's knowledge, no waiver of any ofthe foregoing
exists; and no person other than the holder ofthe Mezzanine Loan may declare any of the
foregoing.
17. Absence of Delinquencies. The Mezzanine Loan is not, as of the Transfer Date, nor has
it been since origination, delinquent for 30 or more days.
18. Security for Mezzanine Loan. The Mezzanine Loan is secured solely by the collateral
described in the Mezzanine Loan documents (including, without limitation, the related
pledge agreements for such Mezzanine Loan).
19. Absence of Bankruptcy Debtors. To the knowledge of the Seller, as of the Transfer Date,
no mezzanine borrower was a debtor in any outstanding proceeding pursuant to the
federal bankruptcy code.
20. Pledged Equity. The Mezzanine Loan is secured by a pledge of 100% of the direct or
indirect equity interests in the related Underlying Property Owner. As ofthe origination
date, the Underlying Property Owner was duly organized and validly existing and in good
standing under the laws of its jurisdiction of organization, with requisite power and
authority to own its assets and to transact the business in which it was engaged as of the
origination date and the sole purpose of the Underlying Property Owner under its
organizational documents was to own, finance, sell or otherwise manage the related
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Underlying Mortgage Property and to engage in any all activities related or incidental
thereto.
21. UCC 9 Policies. If Seller's security interest in the Mezzanine Loan is covered by a UCC
9 insurance policy, with respect to the "UCC 9" policy relating to the Mezzanine Loan:
(i) such policy is assignable by the Seller to the Purchaser, and to the Seller's knowledge,
(ii) such policy is in full force and effect, (iii) all premiums thereon have been paid, (iv)
no claims have been made by or on behalf of Seller thereunder, and (v) no claims have
been paid thereunder.
22. Cross-Defaults. An event of default under the related Mortgage Loan will constitute an
event of default with respect to the related Mezzanine Loan.
23. Payment Procedure. If a cash management agreement is in place with respect to the
Mortgage Loan and Mezzanine Loan, except following the occurrence and during the
occurrence of a Mortgage Loan event of default or cash trap event, any funds remaining
in the related lockbox account for the Mortgage Loan after payment of all amounts due
under the Mortgage Loan documents are required (i) to be distributed to the holder of the
Mezzanine Loan or (ii) distributed by the holder or the servicer of the Mortgage Loan to
the holder of the Mezzanine Loan in accordance with and in the amount set forth in the
Mezzanine Loan documents.
24. Conditions to Transfer Mezzanine Loan. Pursuant to the terms of the Mezzanine Loan
documents, the Seller satisfied any transfer conditions or requirements (or such
conditions or requirements were validly waived by any requisite parties) in the
Mezzanine Loan documents with respect to the transfer of the Mezzanine Loan to the
Purchaser.
25. Insurance Proceeds. The Mezzanine Loan documents require that all insurance policies
procured by the Mortgage Loan borrower with respect to the property under the related
Mortgage Loan documents name the mezzanine lender and their respective successors
and assigns as the insured or additional insured, as their respective interests may appear.
26. Notice of Defaults. Pursuant to the terms of the Mezzanine Loan documents and
intercreditor agreements, the related senior lender is required to provide written notice of
defaults under a Mortgage Loan to the holder of the related Mezzanine Loan at the same
time such notices are delivered by the related senior lender to the related senior borrower.
27. Cure Rights. Pursuant to the terms of the related intercreditor agreements, if any, the
holder of the related Mortgage Loan is not permitted to exercise any rights it may have
under the related Mortgage Loan documents or applicable law with respect to a
foreclosure or other realization upon the collateral for the related Mortgage Loan without
providing prior notice and opportunity to cure to the related holder of the Mezzanine
Loan (subject to the rights of any subordinate mezzanine lenders).
28. Purchase Option. Pursuant to the terms of the related intercreditor agreement, if any, the
holder of the related Mezzanine Loan has the right to purchase the related Mortgage Loan
upon certain Mortgage Loan events of default and/or acceleration.
USActive 12824081.13 -22-
29. Property Insurance. (A) Except with respect to Mortgage Loans secured by unimproved
land or properties intended to be demolished and redeveloped, each building or other
improvement located on any Underlying Mortgage Property securing any related
Mortgage Loan is insured by a fire and extended perils insurance policy, issued by an
insurer or reinsured by an insurer meeting the requirements of the Mortgage Loan
Documents, in an amount not less than the replacement cost of the related Underlying
Mortgage Property; except with respect to Mortgage Loans secured by unimproved land
or properties intended to be demolished and redeveloped, each related Underlying
Mortgage Property was also covered by business interruption insurance for a period of
not less than twelve months (or in the case of hotel loans, for a period not less than the
period of restoration with a 30 day extended indemnity period); each related Underlying
Mortgage Property was also covered by comprehensive general liability insurance in
amounts generally required by institutional lenders for similar properties; all premiums
on such insurance policies required to be paid as of the date hereof have been paid; such
insurance policies require prior notice to the insured of termination or cancellation, and
no such notice has been received; and (B) the loan documents obligate the mortgagor to
maintain all such insurance and, at the mortgagor's failure to do so, authorize the
mortgagee to maintain such insurance at the mortgagor's cost and expense and to seek
reimbursement therefor from such mortgagor. Based on the Seller's review of the 100-
year flood plain map provided by FEMA or the related survey, except for the properties
set forth on Schedule 1 (h), with respect to the properties securing the related Mortgage
Loans with improvements located in a special flood hazard area (Zone A) as defined by
the Federal Insurance Administration, flood insurance coverage has been obtained;
30. Licenses and Permits. To the Seller's knowledge, based on due diligence that it
customarily performs in the origination of comparable mezzanine loans, as of the date of
origination of the related Mortgage Loan, the related mortgagor was in possession of all
material licenses, permits and franchises required by applicable law for the ownership
and operation of the related Underlying Mortgage Property as it was then operated,
except for such licenses, permits and authorizations the failure ofwhich to obtain would
not materially adversely affect the value of the Mezzanine Loan.
31. Absence of Litigation. To Seller's knowledge, there is no pending action, suit or
proceeding, arbitration or governmental investigation against the mezzanine borrower or
the collateral for the Mezzanine Loan, an adverse outcome of which would materially and
adversely affect the mezzanine borrower's performance under the Mezzanine Loan
documents or the collateral for the Mezzanine Loan.
32. Collateral File. The Seller has delivered to the Purchaser or its designee accurate and
complete copies of the related Collateral File. No material adverse modifications were
made to the Mezzanine Loan except as included in the Collateral File.
33. Record Ownership. Upon the transfer to the Purchaser, the Purchaser will be the owner of
the Mezzanine Loan and the related intercreditor agreements sufficient to ensure the
Purchaser has all rights to receive principal and interest payments with respect to the
Mezzanine Loan accrued after the Transfer Date.
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34. Taxes. All taxes and governmental assessments that prior to the date of origination of the
related Mortgage Loan (and, to the knowledge of the Seller, prior to the Transfer Date)
became due and owing in respect of each related Underlying Mortgage Property have
been paid, or an escrow of funds in an amount sufficient to cover such payments has been
established or are insured against by the title insurance policy issued in connection with
the origination of the related Mortgage Loan.
35. Zoning Compliance. To the Seller's best knowledge, after review of compliance
confirmations from applicable municipalities, surveys and/or title insurance
endorsements or other evidence that a prudent lender would accept, all improvements on
the Underlying Mortgage Property comply with the applicable zoning laws and/or set-
back ordinances in force when improvements were added.
36. Absence of Encroachments. To the Seller's best knowledge, after review of compliance
confirmations from applicable municipalities, surveys and/or title insurance
endorsements or other evidence that a prudent lender would accept, none of the
improvements included for the purpose of determining the appraised value of each
Underlying Mortgage Property at the time of the origination of the related Mortgage
Loan lies outside of the boundaries and building restriction lines of the Underlying
Mortgage Property, and no improvements on adjoining properties materially encroach
upon the Underlying Mortgage Property, in each case, except those which are insured
against by the title insurance policy (including endorsements thereto) issued in
connection with the related Mortgage Loan.
37. Environmental Conditions. (A) With respect to each Underlying Mortgage Property, a
Phase I environmental report and, in certain cases, a Phase II environmental report or an
update to such Phase I report was conducted by a licensed qualified engineer in
connection with the origination of the related Mortgage Loan (not longer than twelve
months prior to the origination date). The Seller has reviewed each such report and
update. (B) The Seller, having. made no independent inquiry other than reviewing the
environmental reports and updates referenced herein and without other investigation or
inquiry, has no knowledge of any material and adverse environmental condition or
circumstance affecting any Underlying Mortgage Property that was not disclosed in the
related report and/or update. The Seller has not received any actual notice of a material
violation of CERCLA or any applicable federal, state or local environmental law with
respect to any Underlying Mortgage Property that was not disclosed in the related report
and/or update. (C) The Seller has not taken any actions which would cause any
Underlying Mortgage Property not to be in compliance with all federal, state and local
laws pertaining to environmental hazards
38. No Material Default. The Seller does not have any knowledge of a material default,
breach, violation or event of acceleration existing under any of the related Mortgage Loan
documents and the Seller does not have any knowledge of any event (other than
payments due but not yet delinquent) which, with the passage of time or with notice and
the expiration of any grace or cure period, would and does constitute a material default,
breach, violation or event of acceleration; no waiver of the foregoing exists and no person
other than the holder of the Note may declare any of the foregoing; provided, however,
USActive 12824081.13 -24-
that this representation and warranty does not address or otherwise cover any default,
breach, violation or event of acceleration that specifically pertains to any matter
otherwise covered by any other representation and warranty made by the Seller in this
Schedule 1 (d).
USActive 12824081.13 -25-
SCHEDULE B(5)
OF CRE c;:Do SECURITIES, CMBS SECURITIES, RAKE BONDS AND SYNTHETIC
SECURITY (EACH, A "SECURITY")
With respect to each Security, the Seller hereby represents and warrants, as of the date herein
specified or, if no such date is specified, as of the Transfer Date, except as set forth on Schedule
C, that:
1. Accuracy of Information. All information contained in the related Collateral File (or as
otherwise provided to Purchaser) in respect of such Security is accurate and complete in
all material respects.
2. Title to Asset. Immediately prior to the sale, transfer and assignment to Purchaser, (i)
Seller had good and marketable title to, and was the sole owner and holder of, such
Security, (ii) Seller full right, power and authority to transfer, and is transferring, such
Security free and clear of any and all liens, pledges, encumbrances, charges, security
interests or any other ownership interests of any nature encumbering such Security, and
(iii) no consent, approval or authorization of any Person is required for any such transfer
or assignment by the holder of such Security.
3. Valid Assignment. Upon consummation ofthe purchase contemplated to occur in respect
of such Security on the Transfer Date, Seller will have validly and effectively conveyed
to Purchaser all legal and beneficial interest in and to such Security free and clear of any
and all liens, pledges, encumbrances, charges, security interests or any other ownership
interests of any nature.
4. Form of Security. With respect to any Security that is a certificated security, such
Security is a certificated security in registered form, or is in uncertificated form and held
through the facilities of (a) The Depository Trust Company in New York, New York, or
(b) such other clearing organization or book-entry system as is designated in writing by
the Purchaser.
5. Transfer Documents. With respect to any Security that is a certificated security, Seller
has delivered to Purchaser or its designee such certificated security, along with any and
all certificates, assignments, bond powers executed in blank, necessary to transfer such
certificated security under the issuing documents of such Security.
6. Absence of Adverse Events. Based on the most recently available trustee report, (i) no
interest shortfalls have occurred and no realized losses have been applied to any Security
and (ii) the Seller is not aware of any circumstances that could have a material adverse
effect on such Security.
SCHEDULE B(6)
OF A LOAN OR REPURCHASE FACILITY SECURED BY A LOAN
With respect to each loan or repurchase facility (a "Repurchase Facility") that is secured by any
of the instruments set forth in the definition of Loan (an "Underlying Asset"), the Seller hereby
represents and warrants, as ofthe date herein specified or, if no such date is specified, as ofthe
Transfer Date, except as set forth in Schedule C, that:
I. Accuracy of Information. The information pertaining to each Repurchase Facility set
forth in Schedule A was true and correct in all material respects as of the Transfer Date.
2. Title to Asset. Immediately prior to the sale, transfer and assignment to the Purchaser, (i)
the Seller had good and marketable title to, and was the sole owner and holder of, such
Repurchase Facility, (ii) the Seller had full right, power and authority to transfer, and is
transferring, such Repurchase Facility free and clear of any and all liens, pledges,
encumbrances, charges, security interests or any other ownership interests of any nature
encumbering such Repurchase Facility, and (iii) no consent, approval or authorization of
any Person is required for any such transfer or assignment by the holder of such
Repurchase Facility.
3. Valid Assignment. Upon consummation ofthe purchase contemplated to occur in respect
of such Repurchase Facility on the Transfer Date, the Seller will have validly and
effectively conveyed to the Purchaser all legal and beneficial interest in and to such
Repurchase Facility free and clear of any and all liens, pledges, encumbrances, charges,
security interests or any other ownership interests of any nature.
4. Underlying Assets. Any and all representations and warranties related to an Underlying
Asset set forth in the other Schedules B will be incorporated in this Schedule B(6) for
such Repurchase Facility and be applicable to such Repurchase Facility (except for those
that are factually inapplicable by virtue of the fact that the Seller does not own and is not
assigning ownership interests in the underlying asset).
USActive 12824081 .13
SCHEDULE B(7)
OF REAL ESTATE BANK LOAN
With respect to each Real Estate Bank Loan (a "REBL"), the Seller hereby represents and
warrants, as ofthe date herein specified or, if no such date is specified, as of the Transfer Date,
except as set forth on Schedule C, that:
1. Accuracy of Information. The information pertaining to each REBL in Schedule A was
true and correct in all material respects as ofthe Transfer Date.
2. Title to Asset. Immediately prior to the sale, transfer and assignment to Purchaser, (i)
Seller had good and marketable title to, and was the sole owner and holder of, such
REBL, (ii) Seller full right, power and authority to transfer, and is transferring, such
REBL free and clear of any and all liens, pledges, encumbrances, charges, security
interests or any other ownership interests of any nature encumbering such REBL, and (iii)
no consent, approval or authorization of any Person is required for any such transfer or
assignment by the holder of such REBL.
3. Valid Assignment. Upon consummation of the purchase contemplated to occur in respect
of such REBL on the Transfer Date, Seller will have validly and effectively conveyed to
Purchaser all legal and beneficial interest in and to such REBL free and clear of any and
all liens, pledges, encumbrances, charges, security interests or any other ownership
interests of any nature.
4. Compliance with Law. As of the date of its origination, such REBL complied in all
material respects with, or was exempt from, all requirements of federal, state or local Jaw
relating to the origination of such REBL.
5. Absence of Default. In the case of each REBL: (A) Other than payments due but not yet
30 days or more delinquent, there is no monetary default, breach, violation or event of
acceleration existing under the related Underlying Note or the related security agreement,
and to the Seller's knowledge no non-monetary default has occurred and no event has
occurred (other than payments due but not yet delinquent) which, with the passage of
time or with notice and the expiration of any grace or cure period, would constitute a
material default, breach, violation or event of acceleration under the related security
agreement or the related Underlying Note, provided, however, that this representation and
warranty does not address or otherwise cover any default, breach, violation or event of
acceleration that specifically pertains to any matter otherwise covered by any other
representation and warranty made by the Seller in any other paragraph of this Schedule
B(7), and (B) neither the Seller nor any servicer on its behalf has waived any material
default, breach, violation or event of acceleration under such security agreement or
Underlying Note, except for a written waiver contained in the related Collateral File
being delivered to the Purchaser or its designee, and no such waiver has been granted
since the date upon which the due diligence file related to the applicable Loan was
delivered to the Trustee, and pursuant to the terms of the related security agreement or the
related Underlying Note and other documents in the related Collateral File no Person or
party other than the holder (or any servicer or other party acting on behalf of holder) of
such Underlying Note may declare any event of default or accelerate the related
indebtedness under either of such security agreement or Underlying Note.
6. Absence of Delinquencies. As of the Transfer Date, each REBL, in the prior 12 months
(or since the date of origination if such REBL has been originated within the past 12
months), has not been, 30 days or more past due in respect of any scheduled payment.
7. Absence of Bankruptcy Debtors. As of the date of origination of each REBL, no
Borrower was a debtor in any state or federal bankruptcy or insolvency proceeding and to
Seller's knowledge, no Borrower is a debtor in any state or federal bankruptcy or
insolvency proceedings.
8. Absence of Litigation. In the case of each REBL as of the date of origination and, to the
Seller's knowledge, as of the Transfer Date, there was no pending action, suit or
proceeding, or governmental investigation, against the related Borrower the adverse
outcome of which could reasonably be expected to materially and adversely affect such
Borrower's ability to pay principal, interest or any other amounts due under such Loan or
the security intended to be provided by the REBL documents.
9. Usury. The REBL and the interest (exclusive of any default interest, late charges or
prepayment premiums) contracted for on such REBL complied as of the date of
origination with, or is exempt from, applicable state or federal laws, regulations and other
requirements pertaining to usury.
I 0. Collateral File. The Seller has delivered to the Purchaser or its designee an accurate and
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SCHEDULEC
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
USActive 12824081.13 C-1
SASCO 2008-C2 Exceptions to Representations and Warranties
Unless otherwise specified, all capitalized tenns undefined herein have the meaning specified in the Master
Participation Agreement.
Mortgage Loans
Representation numbers referred to below relate to the corresponding representations and warranties set forth in
Schedule B(l) to the Master Participation Agreement
Schedule A
Loan
Number# Collateral Interest Exception
Exception to Representation 8: Insurance.
9 One Kansas City Place The Underlying Instrument does not include the notification
regarding force-placed insurance required by RSMo. 427.120.
As a result, the Lender could not add the cost of insurance it
places on the collateral to the debt.
Exception to Representation 9: Engineering Re12orts.
9 One Kansas City Place The Seller purchased the Mortgage Loan from a third party and
Engineering Reports were not obtained or reviewed as of the
closing of such purchase.
Exception to Representation 10: Zoning Com12liance.
37 Strathallan Hotel Blacktop and parking areas on the Underlying Mortgage
Property encroach onto adjoining properties, which
encroachments are subject to easement agreements of record.
The Underlying Mortgage Property is also subject to
encroachments of blacktop from adjoining properties onto two
boundaries, each by no more than 1.5 inches.
41 The Point The site office building and utility building are legally non-
conforming as to set-back requirements. The boathouse and
dock are legaiiy non-conforming in that they exceed the height
and square footage limitations.
Exceptions to Representation 19: Contingent Interest.
9 One Kansas City Place The Borrower must pay Additional Interest in connection with
prepaying of the Joan, at maturity, or upon acceleration.
Exceptions to Representation 20: Eguitv Particif!ations/Interests.
USActive 12907150.7
Schedule A
Loan
7 Commons of Mclean The Mortgage Note provides the lender with a profit
participation of 56% of the first $19,000,000 generated by a
sale of the Underlying Mortgage Property and a 45% of the
amount in excess of $19,000,000.
43 Guilford Ctr- Greensboro The Mortgage Note provides the lender with a profit
participation of 50% of the net proceeds in the event of a sale
of the Underlying Property.
Exceptions to Representation 24: Acceleration uuon Transfer of Mortgage
Prouern:.
38 Emerald Dunes Golf Club A portion of the Underlying Mortgage Property, consisting of
an undeveloped parcel, may be transferred for consideration
without triggering the acceleration of the Mortgage Loan
subject to certain conditions contained in the Underlying
Instruments.
Exceptions to Representation 26: Environmental Reuorts.
9 One Kansas City Place The Seller purchased the Mortgage Loan from a third party and
Environmental Reports were not obtained or reviewed as of the
closing of such purchase.
Exceptions to Representation 35: Ground Leases.
50 Storage Deluxe Southern As to sub-clause (B), the ground lease may be subordinated to
a fee mortgage, but only if the fee mortgagee delivers a non-
disturbance agreement confim1ing that it will not disturb the
ground lessee, provided that there is no default under the
ground lease.
As to sub-clause (C), the ground lease is assignable to the
holder of the Mortgage without consent of the ground lessor,
provided the holder of the Mortgage delivers a copy of the
Mortgage, notice of such assignment and the name and address
of the assignee ..
As to sub-clause (1), any insurance proceeds equal to or less
than $375,000 are to be deposited with the ground lessee; all
proceeds over $375,000 are to be deposited with and held by
the most senior leasehold mortgagee or the fee mortgagee to be
disbursed in accordance with the tenns of the ground lease.
USActive 12907150.7
Schedule A
Loan
Exceptions to Representation 40: Other Collateral.
41 The Point The Mortgage Loan is also secured by (i) a Principal's
Agreement for non-recourse carveouts, and (ii) an
Environmental Indemnity Agreement, each made by Robert L.
Burch, Everlands Founders Company, L.P. and White Badge
LLC.
4 Ritz-Carlton Kapalua The Mortgage Loan is secured in part by a grant to the Seller of
a security interest in the Underlying Obligor's right, title and
interest in and to the FF&E Reserve (as defined in the Second
Amended and Restated Management Agreement, dated as of
the origination date, by and between the Underlying Obligor
and The Ritz-Carlton Hotel Company, L.L.C. (the
"Management Agreement")). Marriott International Capital
Corporation (the "FF&E Lender") separately made a loan to the
Underlying Obligor in the original principal amount of
$5,000,000 (the "FF&E Loan"). The FF&E Loan is secured by
a grant to the FF&E Lender of a security interest in the
Underlying Obligor's right, title and interest in and to the
FF&E Reserve. Pursuant to the terms of a Subordination and
Intercreditor Agreement, dated as of February 21,2008, by and
between the Seller and the FF&E Lender, the Seller, for itself
and each future holder of the Mortgage Loan, agreed in part
that during the period from February 21, 2008, to February 21,
2011 (the "Shared Collateral Period"), the Mortgage Loan
security interests held by the Seller in those funds that are
actually and properly deposited in the FF&E Reserve during
the Shared Collateral Period in accordance with the
Management Agreement (such funds, the "Shared Collateral")
will be subordinated and junior only to the FF&E Loan security
interests held by the FF&E Lender in the Shared Collateral. In
addition, the FF&E Lender stipulated and agreed in the
Subordination and Intercreditor Agreement that the FF&E
Lender has no legal or equitable interest in any other sums or
property owned or controlled by the Underlying Obligor.
Exceptions to Representation 44: OJ!erating Statements.
39 Storage Deluxe 21st Street The Mortgage Loan does not require that any financial
50 Storage Deluxe Southern statements be audited by an independent certified public
42 Muirfield Multifamily
accountant.
47 Idlewood Apartments The Mortgage Loan requires annual audited statements only.
USActive 12907150.7
Schedule A
Loan
4 Ritz-Carlton Kapalua
43 Guilford Ctr- Greensboro The Mortgage Loan does not require that the annual financial
statements be audited unless the Lender requests the Borrower
to do so.
Exceptions to Representation 47: Non-consolidation.
39 Storage Deluxe 21" Street A non-consolidation opinion has not been obtained with
50 Storage Deluxe Southern
respect to the Borrower and neither the Underlying Instruments
42 Muirfield Multifamily
nor the organizational documents of the Borrower require
independent directors.
7 Commons of Mclean A non-consolidation opinion has not been obtained with
38 Emerald Dunes Golf Club
respect to the Borrower.
Mezzanine Loans
Representation numbers referred to below relate to the corresponding representations and warranties set forth in
Schedule B(4) to the Master Participation Agreement
Schedule A
Loan
Exceptions to Representation 3: Amendments/Waivers.
30 Innkeepers Anaheim A Fourth Amendment to the Mezzanine Loan agreement was
executed by the Seller and the Borrower and has been
submitted to the applicable servicer of the Mortgage Loan for
consent, as required by the intercreditor agreement, but the
servicer has not yet provided its consent. The Fourth
Amendment to the Mezzanine Loan agreement, among other
things, increases the spread, extends the maturity date by one
year and adds a six-month extension option.
46 Montauk Yacht Club The Lender has granted 60 day grace period to Borrower to
deliver a complete copy of Borrower's annual financial
statements in accordance with the terms of the Mezzanine Loan
Agreement.
USActive 12907150.7 4
Schedule A
Loan
Number# Collateral Interest
Exceptions to Representation 14:
36
26
La Reserve
Sienna at Riverview
Exceptions to Representation 20:
17
21
19
18
24
Archstone Pool 3 Mezz B
Archstone Holdco Mezz B
USActive 12907150.7
Exception
Deferred Interest.
Pursuant to the Mezzanine Loan agreement, the Borrower is
required to pay a monthly installment of interest only, accruing
at the Applicable Interest Rate (generally, one month Libor
plus 3%), but capped at a rate not to exceed 7% ("Pay Rate"),
and the difference between the interest accruing on the Loan at
the Pay Rate and the Applicable Interest Rate, shall be deferred
and to the extent permitted by law, accrue interest at the
Applicable Interest Rate and shall be due and payable on the
Maturity Date.
Mezzanine Security.
With respect to the Mezzanine Loans defined on Exhibit A
hereto as: Archstone Pool 3 Mezz B, Archstone Pool 4 Mezz B,
Archstone Pool 7 Mezz B, Archstone Pool 9 Mezz B and
Archstone HoldCo Mezz B, such loans are not secured by a
pledge of the direct or indirect equity interests in the
Underlying Property Owners of the following Underlying
Mortgage Properties:
Pool 3 Mezz B:
I. Connecticut Heights, Washington, DC
2. Park Connecticut, Washington, DC
Pool 4 Mezz B:
1. Alban Towers (land and garage), Washington, DC
2. Alban Towers (building), Washington, DC
3. 2501 Porter Street; Washington, DC
4. Calvert Woodley, Washington, DC
5. Cleveland House, Washington, DC
Pool 7 Mezz B:
I. Corcoran House, Washington, DC
2. The Statesman, Washington, DC
3. The Consulate, Washington, DC
Pool 9 Mezz B:
1. The Albemarle, Washington, DC
2. Tunlaw Park, Washington, DC
3. Tunlaw Gardens, Washington, DC
4. Van Ness South, Washington, DC
HoldCo Mezz B:
1. The Flats at Dupont Circle, Washington, DC
Schedule A
Loan
Exceptions to Representation 25: Insurance Proceeds.
35 Archstone Pool 1 Mezz B The Underlying Instruments require that all insurance policies
32 Archstone Pool 2 Mezz A
name the mezzanine lender (but not its respective successors
27 Archstone Pool 2 Mezz B
and assigns) as the insured or additional insured, as their
interest may appear.
16 Archstone Sellco Mezz A
23 Archstone Sellco Mezz B
20 Archstone Holdco Mezz A
24 Archstone Holdco Mezz B
29 Austin Centre Sr. Mezz The related Underlying Instruments do not require that the
49 Austin Centre Jr. Mezz mezzanine lender and their respective successors and assigns
34 Ventana Inn Sr. Mezz
be named as the insured or additional insured, as their
45 Ventana Inn Jr. Mezz
respective interests may appear, in connection with certain
insurance, including, but not limited to: (I) blanket fidelity
bond coverage insuring against losses resulting from dishonest
or fraudulent acts committed by pennanent employees or
temporary contract employees and (2) such insurance as
required to be maintained pursuant to the related management
agreement or any franchise agreement, and to the extent that
such insurance is not duplicative of insurance otherwise
required by the Underlying Instruments.
Exceptions to Representation 26: Notice of Default.
35 Archstone Pool 1 Mezz B The lender of the related Mortgage Loan is not required to
provide written notice of all defaults to the holder( s) of the
related Mezzanine Loan( s ). However, the lender of the related
Mortgage Loan is required to provide written notice of any
defaults giving rise to a Mezzanine Lender's right to cure a
default on the Mortgage Loan.
16 Archstone Sellco Mezz A
23 Archstone Sellco Mezz B
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Schedule A
Loan
20 Archstone Holdco Mezz A
24 Archstone Holdco Mezz B
48 Minnesota Industrial Portfolio
29 Austin Centre Sr. Mezz
49 Austin Centre Jr. Mezz
46 Montauk Yacht Club
36 La Reserve Mezz
26 Sienna at Riverview
Exceptions to Representations 35 & 36: Zoning and Encroachments.
8 Innkeepers Floater Six of the underlying properties are legally non-confonning as
to zoning, with minor portions of the improvements
encroaching into building setback areas. The setbacks range
from Jess than one foot to a maximum of 22 feet.
Exceptions to Representation 37: Environmental Conditions.
34 Ventana Inn Sr. Mezz Seller has been advised of various notices received by the
45 Ventana Inn Jr. Mezz owner of the Underlying Property from the State of California
Regional Water Quality Control Board and the Monterey
County Department of Health and/or its representatives. Such
correspondence disclosed certain violations of applicable Jaws
related to the Underlying Property's wastewater treatment and
disposal system. SeHer has also been advised that the State of
California Regional Water Quality Control Board issued a
Cleanup and Abatement Order for the Underlying Property
requiring the implementation of a facility-wide wastewater
treatment and disposal system. To Seller's knowledge, the
owner of the Underlying Property is in compliance with such
Cleanup and Abatement Order, there is no current violation of
applicable laws related to the Underlying Property's
wastewater treatment, and there has been no material adverse
effect to the Underlying Property as a result of the original
violation and the issuance such Cleanup and Abatement Order.
31 301 Howard Street Jr. Mezz The SeHer received a Jetter from Environmental Resources
Management (ERM) on June 26, 2007 recommending further
steps to address elevated concentrations ofTPH-g and BTEX
in the ground water. In March 2007, ERM conducted a Phase I
Environmental Site Assessment at 195 Beale Street and 30 I
Howard Street in San Francisco, California. The results of the
Phase I ESA Subsequent to the Phase I Environmental Site
Assessment and Limited Compliance Review, ERM conducted
USActive 12907150.7
Schedule A
Loan
a limited Phase II investigation at the property at 195 Beale
Street in San Francisco, California. There was evidence of
TPH-g and BTEX impacts observed at the site, however no
strong evidence was observed during this investigation that
indicates the impacts are necessarily related to a release from a
UST at the site. The impacts observed appear to be related to
groundwater conditions.
The ERM made the following recommendations: (1) Present
the results of the Limited Phase II Investigation to the San
Francisco Department of Public Health's Environmental Health
Section. This agency will detennine if additional investigation
activities are necessary or if no further action status is
appropriate for the site; and (2) If the San Francisco
Environmental Health Section detennines that additional
investigation activities are needed for 195 Beale Street before a
no further action status can be issued, ERM recommends
installing 3 monitoring wells at the site. Ground water in the 3
wells would be monitored on a quarterly basis for one year for
TPH-g and BTEX to evaluate if the elevated TPH-g and BTEX
ground water concentrations resulted from an on-site source or
an off-site source.
The Borrower presented the results of the Limited Phase II in
July 2007. As of May 21, 2008, no response has been received
by Archon from the San Francisco Department of Public
Health's Environmental Health Section.
USActive 12907150.7

US2008 1530791.1
EXHIBIT L

Mezzanine Loan Agreement Dated as of June 29, 2007 Between Grand Prix Mezz Borrower
Term LLC as Borrower and Lehman ALI Inc. as Lender

13697377.6
MEZZANINE LOAN AGREEMENT
Dated as of June 29, 2007
Between
GRAND PRIX MEZZ BORROWER TERM LLC,
as Borrower
and
LEHMAN ALI INC.,
as Lender
Property: Hilton Suites Anaheim
Orange, California
(Anaheim)
TABLE OF CONTENTS
Page
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION ..................................................... 2
Section 1.1.
Section 1.2.
Definitions ............................................................................................ 2
Principles of Construction .................................................................. 23
II. GENERAL TERMS ......................................................................................................... 23
Section 2.1.
Section 2.2.
Section 2.3.
Section 2.4.
Section 2.5.
Loan Commitment; Disbursement to Borrower ................................. 23
Loan Payments; Interest Calculation; Late Payment Charge ............. 24
Prepayments ........................................................................................ 29
Interest Rate Cap Agreement.. ............................................................ 31
Release ofCollateral ........................................................................... 33
III. CASH MANAGEMENT .................................................................................................. 33
Section 3.1.
Section 3.2.
Section 3.3.
Section 3.4.
Section 3.5.
Section 3.6.
Section 3.7.
Section 3.8.
Section 3.9.
Section 3.10.
Deposits into the Mezzanine Deposit Account.. ................................. 33
Depositing Distributions ..................................................................... 33
Intentionally Omitted .......................................................................... 3 3
Transfers to and Disbursements from the Mezzanine Deposit
Account ....................................................... : ....................................... 33
Withdrawals from the Reserve Funds ................................................. 34
Eligible Account ................................................................................. 34
Sole Dominion and Control ............................................................... .34
Security Interest .................................................................................. 34
Financing Statement; Further Assurances .......................................... 34
Borrower's Obligations Not Affected ............................................... .34
IV. REPRESENTATIONS AND WARRANTIES ................................................................ 35
Section 4.1.
Section 4.2.
Borrower Representations .................................................................. 35
Survival of Representations ............................................................... .49
V. BORROWER COVENANTS ......................................................................................... .49
Section 5.1.
Section 5.2.
Affirmative Covenants ........................................................................ 49
Negative Covenants ............................................................................ 63
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS ................. 71
Section 6.1.
Section 6.2.
13697377.6
Insurance ............................................................................................. 71
Casualty ................................................................... : .......................... 72
-I-
Section 6.3.
TABLE OF CONTENTS
(continued)
Page
Condemnation ..................................................................................... 72
Section 6.4. Restoration .......................................................................................... 73
Section 6.5. Rights of Lender ................................................................................. 73
VII. RESERVE FUNDS .......................................................................................................... 73
Section 7 .1.
Section 7.2.
Section 7.3.
Section 7.4.
Section 7.5.
Section 7.6.
Section 7.7.
Section 7.8.
Required Repair Funds ....................................................................... 73
Tax and Insurance Escrow Fund ......................................................... 74
FF &E Reserve .................................................................................... 7 5
Required Capital Improvements Reserve ........................................... 76
Intentionally Omitted .......................................................................... 78
Debt Service Shortfall Reserve Fund ................................................. 78
Intentionally Deleted .......................................................................... 78
Reserve Funds, Generally ................................................................... 78
VIII. DEFAULTS ...................................................................................................................... 79
Section 8.1.
Section 8.2.
Section 8.3.
Event ofDefault .................................................................................. 79
Remedies ............................................................................................. 83
Remedies Cumulative; Waivers ......................................................... 84
IX. SPECIAL PROVISIONS .................................................................................................. 84
Section 9 .1.
Section 9.2.
Section 9.3.
Section 9.4.
Section 9.5.
Section 9.6.
Section 9. 7.
Section 9.8.
Sale ofNotes and Securitization ......................................................... 84
Securitization Indemnification ............................................................ 86
Servicer ............................................................................................... 88
Exculpation ......................................................................................... 88
[Reserved.] .......................................................................................... 90
[Intentionally omitted.] ....................................................................... 90
Syndication ......................................................................................... 90
Reallocation of Loan Amounts ........................................................... 95
Section 9.9. Intercreditor Agreements .................................................................... 95
Section 9.1 0. Independent Approval Rights ............................................................. 96
X. MISCELLANEOUS ......................................................................................................... 96
Section 1 0.1.
Section 1 0.2.
Survival ............................................................................................... 96
Lender's Discretion ............................................................................ 96
-11-
Section 10.3.
Section 1 0.4.
Section 1 0.5.
Section 1 0.6.
Section 10.7.
Section 1 0.8.
Section 10.9.
Section 10.10.
Section 1 0.11.
Section 10.12.
Section 1 O.I3.
Section 10.14.
Section I 0.15.
Section I0.16.
Section 1 0.17.
Section 1 0.18.
Section 1 O.I9.
Section I 0.20.
Section 1 0.21.
Section 1 0.22.
Section I 0.23.
Section 1 0.24.
Section 1 0.25.
Section 1 0.26.
Section 10.27.
Section 1 0.28.
Section 1 0.29.
Section I 0.30.
Section I 0.31.
TABLE OF CONTENTS
(continued)
Page
Governing Law ................................................................................... 96
Modification, Waiver in Writing ........................................................ 97
Delay Not a Waiver ............................................................................ 97
Notices ................................................................................................ 98
Trial by Jury ........................................................................................ 99
Headings ............................................................................................. 99
Severability ......................................................................................... 99
Preferences .......................................................................................... 99
Waiver ofNotice ............................................................................... lOO
Remedies of Borrower ...................................................................... 1 00
Expenses; Indemnity ......................................................................... 100
Schedules and Exhibits Incorporated ................................................ I 02
Offsets, Counterclaims and Defenses ............................................... 1 02
No Joint Venture or Partnership; No Third Party Beneficiaries ....... l02
Publicity ............................................................................................ 1 02
Waiver of Marshalling of Assets ..................................................... .1 03
Waiver of Counterclaim ................................................................... 103
Conflict; Construction of Documents; Reliance ............................... 1 03
Brokers and Financial Advisors ........................................................ 1 04
[Reserved.] ........................................................................................ 1 04
[Intentionally omitted.] ..................................................................... 1 04
Prior Agreements .............................................................................. 1 04
Intentionally Omitted ........................................................................ l04
Certain Additional Rights of Lender (VCOC) ................................. .l04
Direction of Mortgage Borrower or Operating Lessee or with
Respect to the Property .......................................................... : .......... 1 05
Compliance with Mortgage Loan Documents ................................. .1 05
Mortgage Loan Defaults ................................................................... 1 06
Mortgage Loan Estoppels ................................................................. 1 07
No Amendments to Mortgage Loan Documents .............................. ! 08
-lll-
TABLE OF CONTENTS
(continued)
Page
Section 1 0.32. Deed in Lieu of Foreclosure ............................................................. 108
SCHEDULES
Schedule I - Rent Roll/Leases
Schedule II - Required Repairs - Deadlines for Completion
Schedule III - Organizational Chart of Borrower
Schedule IV- Franchise Agreement/Franchisor
Schedule V - Required Capital Improvements
Schedule VI- Lessee Purchase Options
EXHIBITS
Exhibit A- Form of Assignment of Interest Rate Cap
Exhibit B- Form of Sponsor Completion Guaranty re. Alterations
-IV-
MEZZANINE LOAN AGREEMENT
THIS MEZZANINE LOAN AGREEMENT, dated as of June 29, 2007 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this "Agreement"),
between LEHMAN ALI INC., a Delaware corporation, having an address at 399 Park Avenue,
New York, New York 10022, ("Lender") and GRAND PRIX MEZZ BORROWER TERM
LLC, a Delaware limited liability company, having its principal place of business at c/o Apollo
Investment Corporation, 9 West 5ih Street, New York, New York 10019 (together with its
successors and assigns, "Borrower").
W I T N E S S E T H:
WHEREAS, GMAC Commercial Mortgage Bank, a Utah industrial bank, now known as
Capmark Bank, a Utah industrial bank ("Original Lender"), made a loan in the original
principal amount of Thirteen Million Seven Hundred Thousand and No/Dollars ($13,700,000.00)
(the "Mortgage Loan") to RLJ Anaheim Suites Hotel, L.P., a Delaware limited partnership
("Original Borrower"), pursuant to that certain Deed of Trust, Leasehold Deed of Trust,
Assignment of Leases and Profits, Security Agreement and Fixture Filing, dated as of June 14,
2005 (as amended, restated, replaced, supplemented or otherwise modified from time to time, the
"Security Instrument"), which Mortgage Loan is evidenced by that certain Deed of Trust Note,
dated as of June 14, 2005, made by Original Borrower to Original Lender (as amended, restated,
replaced, supplemented or otherwise modified from time to time, the "Mortgage Note");
WHEREAS, Original Lender assigned, sold and transferred its interest in the Mortgage
Loan to Wells Fargo Bank, N.A., as Trustee for the Registered Holders of Credit Suisse First
Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
2005-C5, having an address at c/o Capmark Finance Inc., 200 Witmer Road, Horsham,
Pennsylvania 19044 ("Mortgage Lender") pursuant to that certain Assignment of Deed of
Trust, Leasehold Deed of Trust, Assignment of Leases and Profits, Security Agreement and
Fixture Financing Statement and Assignment of Assignment of Leases and Rents recorded on
January 13, 2006 as Instrument No. 2006000028576 in the Official Records of Orange County,
California (the "Recorder's Office");
WHEREAS, KP A HS Anaheim LLC, a Delaware limited liability company ("Mortgage
Borrower") assumed the Mortgage Loan and the obligations of Original Borrower under the
Loan Documents (as defined in the Security Instrument) pursuant to that certain Loan
Assumption and Modification Agreement, dated as of October 4, 2006, and recorded on October
5, 2006 as Instrument No. 2006000661947 in the Recorder's Office;
WHEREAS, Borrower is the legal and beneficial owner of 1 00% of the ownership
interests in Mortgage Borrower;
WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from Lender;
and
13697377.6
WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents (as hereinafter
defined).
NOW THEREFORE, in consideration of the making of the Loan by Lender and the
covenants, agreements, representations and warranties set forth in this Agreement, the parties
hereto hereby covenant, agree, represent and warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1. Definitions.
For all purposes of this Agreement, except as otherwise expressly required or unless the
context clearly indicates a contrary intent:
"Acceptable Counterparty" means any Counterparty to the Interest Rate Cap
Agreement that has and shall maintain, until the expiration of the applicable Interest Rate Cap
Agreement, an unqualified long-term unsecured debt rating of not less than "AA-" by S&P and
Aa3 by Moody's.
"Account Collateral" shall mean: (i) the Accounts, and all Cash, checks, drafts,
certificates and instruments, if any, from time to time deposited or held in the Accounts from
time to time; (ii) any and all amounts. invested in Permitted Investments; (iii) all interest,
dividends, Cash, instruments and other property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any or all of the foregoing; and (iv) to the
extent not covered by clauses (i) - (iii) above, all "proceeds" (as defined under the UCC as in
effect in the State in which the Accounts are located) of any or all of the foregoing.
"Accounts" shall mean, collectively, the Mezzanine Deposit Account and any other
escrow accounts or reserve accounts established by the Loan Documents.
"Additional Indemnified Liabilities" shall have the meaning set forth m Section
1 0.13(b) hereof.
"Adjusted Prime Rate" shall mean an interest rate per annum equal to the Prime Rate in
effect from time to time plus five percent (5%) per annum.
"Affiliate" shall mean, as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by or is under common control with such Person or is a director or
officer of such Person or of an Affiliate of such Person. Such term shall include Guarantor and
Apollo unless otherwise specified or if the context may otherwise require.
"Affiliated Manager" shall mean any property manager which is an Affiliate of, or in
which Borrower, Mortgage Borrower, Principal, Guarantor or Apollo has, directly or indirectly,
any legal, beneficial or economic interest.
"Agent" shall have the meaning set forth in Section 9.7.2(d) hereof.
2
"Aggregate Debt Service Coverage Ratio" shall mean a ratio in which:
(a) the numerator is the Net Operating Income for the twelve (12) full calendar month
period preceding the date of calculation as set forth in the financial statements required
hereunder, without deduction for (i) actual franchise fees incurred in connection with the
operation of the Property or (ii) amounts paid to the Reserve Funds, less (A) management fees
equal to the greater of (1) assumed management fees of three percent (3.0%) of Gross Income
from Operations or (2) the actual management fees incurred, and (B) assumed FF&E Reserve
Fund contributions equal to 4% of Gross Income from Operations; and
(b) the denominator is the sum of (i) the aggregate amount of Debt Service which
would be due and payable under the Note for such twelve (12) full calendar month period
calculated at an interest rate equal to the Contract Rate and (ii) the aggregate amount of principal
and interest which would be due and payable with respect to the Mortgage Loan for such twelve
(12) full calendar month period calculated at an interest rate equal to the Mortgage Contract
Rate.
"Annual Budget" shall mean the operating budget, including all planned capital
expenditures, for the Property prepared by Mortgage Borrower for the applicable Fiscal Year or
other period.
"Apollo" shall mean Apollo Investment Corporation.
"Applicable Laws" shall mean all existing and future federal, state and local laws,
orders, ordinances, governmental rules and regulations and court orders.
"Applicable Interest Rate" shall (A) from and including the date of this Agreement
through July 14, 2007, an interest rate per annum equal to 7.37%; and (B) from and including
July 15, 2007, and for each successive Interest Period through and including the date on which
the Debt is paid in full, an interest rate per annum equal to (I) the Eurodollar Rate or (II) the
Adjusted Prime Rate, if the Loan begins bearing interest at the Adjusted Prime Rate in
accordance with the provisions of Section 2.2.3(a) hereof.
"Approved Accountant" shall mean a "Big Four" accounting firm or other independent
certified public accountant reasonably acceptable to Lender.
"Approved Annual Budget" shall have the meaning set forth m Section 5.1.1 0( d)
hereof.
"Assignment and Assumption" shall have the meaning set forth in Section 9.7.2 hereof.
"Assignment of Interest Rate Cap" shall mean that certain Assignment of Interest Rate
Cap Agreement and Security Agreement made by Borrower to Lender dated as of the date hereof
required by this Agreement as security for the Loan, consented to by the Counterparty, as the
same may be amended, restated, replaced, supplemented or otherwise modified from time to
time.
3
"Assignment of Management Agreement" shall mean, with respect to the Property that
certain Subordination of Management Agreement dated the date hereof among Lender,
Borrower, Mortgage Borrower, Operating Lessee and Manager, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Award" shall mean any compensation paid by any Governmental Authority m
connection with a Condemnation in respect of all or any part of the Property.
"Bankruptcy Code" shall mean Title 11 U.S.C. 101 et seq., and the regulations
adopted and promulgated pursuant thereto (as the same may be amended from time to time).
"Borrower" shall have the meaning set forth in the introductory paragraph hereto,
together with its successors and assigns.
"Breakage Costs" shall have the meaning set forth in Section 2.2.3(d) hereof.
"Business Day" shall mean any day other than a Saturday, Sunday or any other day on
which national banks in New York, New York are not open for business.
"Business Party" shall have the meaning set forth in Section 4.1.35(aa) hereof.
"Capital Expenditures" shall mean, for any period, the amount expended for items
capitalized under GAAP (including expenditures for building improvements or major repairs,
leasing commissions and tenant improvements).
"Cash" shall mean coin or currency of the United States of America or immediately
available federal funds, including such funds delivered by wire transfer.
"Casualty" shall mean the damage or destruction of the Property, in whole or in part, by
fire or other casualty.
"Closing Date" shall mean the date of the funding of the Loan.
"Closing Date NOI'' shall mean $1,711,698.
"Code" shall mean the Internal Revenue Code of 1986, as amended, as it may be further
amended from time to time, and any successor statutes thereto, and all applicable U.S.
Department of Treasury regulations issued pursuant thereto in temporary or final form.
"Co-Lender" shall have the meaning set forth in Section 9.7.2(a) hereof.
"Co-Lending Agreement" shall mean the co-lending agreement entered into between
Lender, individually as a Co-Lender and as Agent and the other Co-Lenders in the event of a
Syndication, as the same may be further supplemented modified, amended or restated.
"Collateral" shall have the meaning set forth in the Pledge Agreement.
"Completion Guaranty" shall mean that certain Required Capital Improvements
Guaranty dated as of even date herewith by Apollo for the benefit of Lender.
4
"Condemnation" shall mean a temporary or permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or
eminent domain, of all or any part of the Property, or any interest therein or right accruing
thereto, including any right of access thereto or any change of grade affecting such Property or
any part thereof.
"Contract Rate" shall mean, at the time of any calculation, an interest rate per annum
equal to the greater of (a) the Applicable Interest Rate then in effect and (b) eight and five-one
hundredths percent (8.05%).
"Control" (and the correlative terms "controlled by" and "controlling") shall mean the
possession, directly or indirectly, of the power to direct or cause the direction of management
and policies of the business and affairs of the entity in question by reason of the ownership of
beneficial interests, by contract or otherwise.
"Counterparty" shall mean the Person that 1s the 1ssuer of the Interest Rate Cap
Agreement.
"Creditors Rights Laws" shall mean with respect to any Person, any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization,
conservatorship, arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to its debts or debtors.
"Debt" shall mean the outstanding principal amount set forth in, and evidenced by, this
Agreement and the Note together with all interest accrued and unpaid thereon and all other sums
due to Lender in respect of the Loan under the Note, this Agreement, the Pledge Agreement or
any other Loan Document.
"Debt Service" shall mean, with respect to any particular period of time, interest
payments due under the Note for such period.
"Debt Service Shortfall" shall mean, as to each Payment Date, the excess, if any, of the
applicable Monthly Debt Service Payment Amount over the payment actually made to Lender on
such Payment Date in respect of such Monthly Debt Service Payment Amount.
"Debt Service Shortfall Guaranty" shall mean that certain Debt Service Shortfall
Guaranty dated as of even date herewith by Apollo for the benefit of Lender.
"Debt Service Shortfall Reserve Fund" shall have the meaning set forth in Section
7.6(a).
"Default" shall mean the occurrence of any event hereunder or under any other Loan
Document which, but for the giving of notice or passage of time, or both, would constitute an
Event of Default.
"Default Rate" shall mean, with respect to the Loan, a rate per annum equal to the lesser
of (a) the Maximum Legal Rate, or (b) four percent (4%) above the Applicable Interest Rate.
5
"Disclosure Document" shall have the meaning set forth in Section 9.2(a) hereof.
"Distributions" shall have the meaning set forth in Section 5.2.13 hereof.
"Eligible Account" shall mean a separate and identifiable account from all other funds
held by the holding institution that is either (a) an account or accounts maintained with a federal
or State-chartered depository institution or trust company which complies with the definition of
Eligible Institution or (b) a segregated trust account or accounts maintained with a federal or
State chartered depository institution or trust company acting in its fiduciary capacity which, in
the case of a State chartered depository institution or trust company, is subject to regulations
substantially similar to 12 C.F.R.9.10(b), having in either case a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal and State authority.
An Eligible Account will not be evidenced by a certificate of deposit, passbook or other
instrument.
"Eligible Institution" shall mean a depository institution or trust company, insured by
the Federal Deposit Insurance Corporation, (a) the short term unsecured debt obligations or
commercial paper of which are rated at least A-1 by S&P, P-1 by Moody's and F-1 by Fitch in
the case of accounts in which funds are held for thirty (30) days or less, or (b) the long term
unsecured debt obligations of which are rated at least "AA" by Fitch and S&P and "Aa2" by
Moody's in the case of accounts in which funds are held for more than thirty (30) days.
"Embargoed Person" shall have the meaning set forth in Section 4.1.43 hereof.
"Environmental Indemnity" shall mean that certain Environmental Indemnity
Agreement (Mezzanine Loan) executed by Borrower and Guarantor in connection with the Loan
for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Environmental Law" shall mean any federal, State and local laws, statutes, ordinances,
rules, regulations, standards, policies and other government directives or requirements, as well as
common law, that, at any time, apply to Mortgage Borrower or the Property and relate to
Hazardous Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act and the Resource Conservation and Recovery Act.
"Environmental Report" shall mean that certain Phase I environmental report delivered
to Lender by Borrower in connection with the origination of the Loan.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the same
may be amended from time to time.
"Eurodollar Rate" shall mean, with respect to any Interest Period, an interest rate per
annum equal to LIBOR plus the Spread.
"Event of Default" shall have the meaning set forth in Section 8.1(a) hereof.
"Exchange Act" shall have the meaning set forth in Section 9.2(a) hereof.
6
"Exchange Act Filing" shall have the meaning set forth in Section 9.2(a) hereof.
"FF &E" shall mean all fixtures, furniture, furnishings, equipment (including operating
equipment and fixtures attached to and forming part of the Improvements), apparatus and other
personal property used in, or held in storage for use in (or if the context so dictates, required in
connection with), or required for the operation of the Improvements, including, without
limitation, (i) office furnishings and equipment, (ii) specialized hotel equipment necessary or
desirable for the operation of the Improvements, including equipment for kitchens, laundries, dry
cleaning facilities, bars, restaurants, public rooms, commercial space, parking space, spa and
recreational facilities, and (iii) all other furnishings and equipment as Borrower deems necessary
or desirable for the operation of the Improvements in accordance with this Agreement.
"FF &E Expenditures" shall mean all renovations, refurbishing, replacements of, or
additions to, FF&E, and any special projects designed to maintain the Improvements in a
condition consistent with the condition thereof as of the Closing Date, including without
limitation, renovation of the guest room areas, public space, food and beverage facilities, spa or
recreational facilities, which projects will generally comprise replacements of, or additions to,
FF&E, but may include revisions and alterations in the Improvements. The term "FF&E
Expenditures" shall not include any program of capital improvements involving an addition to
the Improvements, or designed to substantially upgrade or change the nature or image of the
Improvements (as opposed to a renovation or refurbishing which might take place as part of the
normal or cyclical upkeep of the Improvements).
"FF &E Reserve Fund" shall have the meaning as set forth in Section 7.3 .1.
"FF&E Reserve Account" shall have the meaning as set forth in Section 7.3.1.
"Fiscal Year" shall mean each twelve (12) month period commencing on January 1 and
ending on December 31 during the term of the Loan.
"Fitch" shall mean Fitch, Inc.
"Force Majeure" shall mean the failure of Borrower or Operating Lessee, as the case
may be, to perform any obligation hereunder by reason of any act of God, enemy or hostile
government action, terrorist attacks, civil commotion, insurrection, sabotage, strikes or lockouts
or any other reason primarily due to cause or causes beyond the reasonable control of Borrower,
Operating Lessee or any Affiliate of Borrower or Operating Lessee, as the case may be.
"Franchise Agreement" shall mean that certain Franchise License Agreement, dated as
of the date hereof, between Operating Lessee and Franchisor.
"Franchisor" shall mean Hilton Inns, Inc., a Delaware corporation.
"GAAP" shall mean generally accepted accounting principles in the United States of
America as of the date of the applicable financial report.
"Governmental Authority" shall mean any court, board, agency, commission, office,
central bank or other authority of any nature whatsoever for any governmental unit (federal,
7
State, county, district, municipal, city, country or otherwise) or quasi-governmental unit whether
now or hereafter in existence.
"GP AT" shall mean Grand Prix Acquisition Trust, a Maryland real estate investment
trust.
"Gross Income from Operations" shall mean all income, computed in accordance with
GAAP, derived from the ownership and operation of the Property from whatever source,
including, but not limited to, the Rents, utility charges, escalations, service fees or charges,
license fees, parking fees, rent concessions or credits, and other required pass-throughs, but
excluding sales, use and occupancy or other taxes on receipts required to be accounted for by
Mortgage Borrower to any Governmental Authority, refunds and uncollectible accounts, sales of
furniture, fixtures and equipment, Insurance Proceeds (other than business interruption or other
loss of income insurance), Awards, interest on credit accounts, security deposits, utility and other
similar deposits, interest on the reserves held under the Mortgage Loan, and any disbursements
to Mortgage Borrower from the reserves held under the Mortgage Loan. Gross income shall not
be diminished as a result of the Security Instrument or the creation of any intervening estate or
interest in the Property or any part thereof.
"Guarantor" shall mean Grand Prix Holdings LLC, and any other entity guaranteeing
any payment or performance obligation of Borrower.
"Guaranty" shall mean that certain Guaranty (Mezzanine Loan) of Borrower, dated as of
the date hereof, from Guarantor to Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Hazardous Materials" shall mean petroleum and petroleum products and compounds
containing them, including gasoline, diesel fuel and oil; explosives; flammable materials;
radioactive materials; polychlorinated biphenyls and compounds containing them; lead and lead-
based paint; asbestos or asbestos-containing materials in any form that is or could become
friable; underground or above-ground storage tanks, whether empty or containing any substance;
toxic mold; any substance the presence of which on the Property is prohibited by any federal,
State or local authority; any substance that requires special handling; and any other material or
substance now or in the future defined as a "hazardous substance," "hazardous material,"
"hazardous waste," "toxic substance," "toxic pollutant," "contaminant," "pollutant" or other
words of similar import within the meaning of any Environmental Law.
"Immediate PIP Work" shall mean work required to be performed in the Property
Improvement Plan for the Property within two (2) years following the Closing Date.
"Improvements" shall have the meaning set forth in the Security Instrument.
"Indemnified Parties" shall mean Lender, any Affiliate of Lender who is or will have
been involved in the origination of the Loan, any Person who is or will have been involved in the
servicing of the Loan, any Co-Lender, Persons who may hold or acquire or will have held a full
or partial interest in the Loan, 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, members, employees, agents, servants,
8
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 any
Collateral, whether during the term of the Loan or as a part of or following a foreclosure of 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).
"Indemnified Taxes" shall mean any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority.
"Independent Director" shall have the meaning set forth in Section 4.1.35(aa) hereof.
"Information" shall have the meaning set forth in Section 9.7.3(b) hereof.
"Insurance Premiums" shall have the meaning set forth in the Security Instrument.
"Insurance Proceeds" shall mean all insurance proceeds received as a result of damage
or destruction of the Property, after deduction of its reasonable costs and expenses (including,
but not limited to, reasonable counsel fees), if any, in collecting same.
"Intercreditor Agreement" shall have the meaning set forth in Section 9.9(a) hereof.
"Interest Period" shall mean, in connection with the calculation of interest accrued with
respect to any specified Payment Date, the period from and including the fifteenth (15th) day of
the prior calendar month to and including the fourteenth (14th) day of the calendar month in
which the applicable Payment Date occurs; provided, however, that with respect to the Payment
Date occurring in July 2007, the Interest Period shall be the period commencing on the Closing
Date to and including July 14, 2007. Each Interest Period, except for the Interest Period ending
July 14, 2007, shall be a full month and shall not be shortened by reason of any payment of the
Loan prior to the expiration of such Interest Period.
"Interest Rate Cap Agreement" shall mean the Interest Rate Cap Agreement (together
with the confirmation and schedules relating thereto), between an Acceptable Counterparty and
Borrower obtained by Borrower and dated as of the date hereof. The Interest Rate Cap
Agreement shall be written on the then current standard ISDA documentation, and shall provide
for interest periods and calculations consistent with the payment terms of this Agreement. After
delivery of a Replacement Interest Rate Cap Agreement to Lender, the term "Interest Rate Cap
Agreement" shall be deemed to mean such Replacement Interest Rate Cap Agreement.
"Interest Shortfall" shall have the meaning set forth in Section 2.3.1 (b) hereof.
"Investment Grade" shall mean a rating of "BBB-" or its equivalent by the Rating
Agencies.
"Investor" shall have the meaning set forth in Section 5.1.1 O(g) hereof.
9
"Lease Termination Payments" shall mean all payments made to Mortgage Borrower in
connection with any termination, cancellation, surrender, sale or other disposition of any Lease.
"Leases" shall have the meaning set forth in the Security Instrument.
"Leasing Approval Period" shall have the meaning set forth in Section 5 .1.17 (f) hereof.
"Legal Requirements" shall mean, with respect to the Property, all federal, State,
county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions of Governmental Authorities affecting such Property or any
part thereof, or the zoning, construction, use, alteration, occupancy or operation thereof, or any
part thereof, whether now or hereafter enacted and in force, and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to Borrower or Mortgage
Borrower, at any time in force affecting such Property or any part thereof, including, without
limitation, any which may (a) require repairs, modifications or alterations in or to such Property
or any part thereof, or (b) in any way limit the use and enjoyment thereof.
"Lehman" shall have the meaning set forth in Section 9.2(b) hereof.
"Lehman Group" shall have the meaning set forth in Section 9.2(b) hereof.
"Lender" shall have the meaning set forth in the introductory paragraph hereto, together
with its successors and assigns.
"Liabilities" shall have the meaning set forth in Section 9.2(b) hereof.
"LIBOR" shall mean, for the first Interest Period 5.32% per annum. For each Interest
Period thereafter LIBOR shall mean the quoted offered rate for one-month United States dollar
deposits with leading banks in the London interbank market that appears as of 11 :00 a.m.
(London time) on the related LIBOR Determination Date on the display page designated as
Reuters Page LIBOR01 or 3750.
If, as of such time on any LIBOR Determination Date, no quotation is given on
Reuters Page LIBOR01 or 3750, then the Lender shall establish LIBOR on such LIBOR
Determination Date by requesting four Reference Banks meeting the criteria set forth herein to
provide the quotation offered by its principal London office for making one-month United States
dollar deposits with leading banks in the London interbank market as of 11 :00 a.m., London
time, on such LIBOR Determination Date.
( 1 )If two or more Reference Banks provide such offered quotations, then
LIBOR for the next Interest Period shall be the arithmetic mean of such offered
quotations (rounded upward if necessary to the nearest whole multiple of
111,000%).
(2)If only one or none of the Reference Banks provides such offered
quotations, then LIBOR for the next Interest Period shall be the Reserve Rate.
10
(3)If on any LIBOR Determination Date, Lender is required but is unable to
determine the LIBOR in the manner provided in paragraphs (i) and (ii) above,
LIBOR for the next Interest Period shall be LIBOR as determined on the preceding
LIBOR Determination Date.
The establishment of LIBOR on each LIBOR Determination Date by the Lender
shall be final and binding.
"LIBOR Business Day" shall mean a day upon which (i) United States dollar deposits
may be dealt in on the London interbank markets and (ii) commercial banks and foreign
exchange markets are open in London, England and in New York, New York, USA.
"LIBOR Determination Date" shall mean, with respect to any Interest Period, the date
that is two (2) LIBOR Business Days prior to the fifteenth (15th) calendar day of the month in
which such Interest Period commenced.
"Lien" shall mean, with respect to the Property or the Collateral, any mortgage, deed of
trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance,
charge or transfer of, on or affecting Borrower, Mortgage Borrower, the Collateral, the Property,
or any portion thereof or any interest therein, 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, and mechanic's,
materialmen's and other similar liens and encumbrances.
"Liquidation Event" shall have the meaning set forth in Section 2.3.2 hereof.
"Loan" shall mean the loan made by Lender to Borrower pursuant to this Agreement and
the other Loan Documents as the same may be amended or split pursuant to the terms hereof.
"Loan Documents" shall mean, collectively, this Agreement, the Note, the Pledge
Agreement, the Environmental Indemnity, the Assignment of Management Agreement, the
Assignment of Interest Rate Cap, the Guaranty, the Operating Lease Subordination, the
Completion Guaranty, the Debt Service Shortfall Guaranty, the Payment and Performance
Guaranty and all other documents executed and/or delivered in connection with the Loan.
"Losses" shall mean any and all claims, suits, liabilities, actions, proceedings,
obligations, debts, damages, losses, costs, expenses, fines, penalties, charges, fees, expenses,
judgments, awards, amounts paid in settlement of whatever kind or nature (including but not
limited to reasonable attorneys' fees and other costs of defense).
"Major Lease" shall mean (i) the Operating Lease, (ii) any Lease which together with all
other Leases to the same tenant and to all Affiliates of such tenant, (A) covers more than 10,000
net rentable square feet of total space at the Property, in the aggregate, (B) provides for a lease
term of more than ten (1 0) years including options to renew or (C) is with an Affiliate of
Borrower and (iii) any instrument guaranteeing or providing credit support for any Major Lease.
"Management Agreement" shall mean, with respect to the Property, the management
agreement entered into by and between Operating Lessee and Manager, pursuant to which the
11
Manager is to provide management and other services with respect to the Property, or, if the
context requires, the Replacement Management Agreement executed in accordance with the
terms and provisions of this Agreement.
"Manager" shall mean Island Hospitality Management, Inc., a Florida corporation, or, if
the context requires, a Qualified Manager who is managing the Property in accordance with the
terms and provisions of this Agreement.
"Maturity Date" shall mean January 15, 2008, or such other date on which the final
payment of the principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by declaration of acceleration, or otherwise.
"'Maximum Legal Rate" shall mean the maximum nonusurious interest rate, if any, that
at any time or from time to time may be contracted for, taken, reserved, charged or received on
the indebtedness evidenced by the Note and as provided for herein or in the other Loan
Documents, under the laws of such State or States whose laws are held by any court of
competent jurisdiction to govern the interest rate provisions of the Loan.
"Mezzanine Deposit Account" shall mean an account established by Lender to hold
funds deposited with it pursuant to Article III hereof.
"Mezzanine Deposit Bank" shall mean, with respect to the Property, Lender or an
Eligible Institution selected by Lender.
"Monthly Debt Service Payment Amount" shall mean, as to a specific Payment Date,
the amount of interest due and payable on such Payment Date pursuant to the Note and Section
2.2 hereof.
"Monthly Insurance Premium Deposit" shall have the meaning set forth in Section 7.2
hereof.
"Monthly Tax Deposit" shall have the meaning set forth in Section 7.2 hereof.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage Borrower" shall have the meaning set forth in the recitals to this Agreement.
"Mortgage Contract Rate" shall mean 5.41%.
"Mortgage Lender" shall have the meaning set forth in the recitals to this Agreement.
"Mortgage Loan" shall have the meaning set forth in the recitals to this Agreement.
"Mortgage Loan Debt Service" shall mean, with respect to any particular period of
time, principal and interest payments due under the Mortgage Note for such period.
"Mortgage Loan Event of Default" shall mean an "Event of Default" under the
Mortgage Loan Documents.
12
"Mortgage Loan Documents" shall mean all documents or instruments evidencing,
secunng or guaranteeing the Mortgage Loan, including without limitation, the Security
Instrument.
"Mortgage Note" shall have the meaning set forth in the recitals to this Agreement.
"Net Cash Flow" for any period shall mean the amount obtained by subtracting
Operating Expenses and Capital Expenditures for such period from Gross Income from
Operations for such period.
"Net Cash Flow Schedule" shall have the meaning set forth in Section 5.1.10(b) hereof.
"Net Liquidation Proceeds After Debt Service" shall mean, with respect to any
Liquidation Event, all amounts paid to or received by or on behalf of Mortgage Borrower in
connection with such Liquidation Event, including, without limitation, proceeds of any sale,
refinancing or other disposition or liquidation, less (a) Lender's and/or Mortgage Lender's
reasonable costs incurred in connection with the recovery thereof, (b) the costs incurred by
Mortgage Borrower in connection with a Restoration of all or any portion of the Property made
in accordance with the Mortgage Loan Documents, (c) amounts required or permitted to be
deducted therefrom and amounts paid pursuant to the Mortgage Loan Documents to Mortgage
Lender, (d) in the case of a foreclosure sale, disposition or Transfer of the Property in connection
with realization thereon following a Mortgage Loan Event of Default, such reasonable and
customary costs and expenses of sale or other disposition (including without limitation attorneys'
fees and brokerage commissions) not in duplication of the amounts deducted pursuant to (a), (e)
in the case of a foreclosure sale, such costs and expenses incurred by Mortgage Lender under the
Mortgage Loan Documents as Mortgage Lender shall be entitled to receive reimbursement for
under the terms of the Mortgage Loan Documents which are not in duplication ofthe items in (a)
or (d), (f) in the case of a refinancing of the Mortgage Loan, such costs and expenses (including
without limitation attorneys' fees) of such refinancing as shall be reasonably approved by Lender
not in duplication of the amounts deducted pursuant to (a), and (g) the amount of any
prepayments required pursuant to the Mortgage Loan Documents and/or the Loan Documents, in
connection with any such Liquidation Event.
"Net Operating Income" shall mean the amount obtained by subtracting Operating
Expenses from Gross Income from Operations, excluding any payments received under any
Interest Rate Cap Agreement.
"New Borrower" shall have the meaning set forth in Section 5.2.11(e) hereof.
"New Mortgage Borrower" shall have the meaning set forth in Section 5.2.11(c) hereof.
"Non-U.S. Entity" shall have the meaning set forth in Section 2.2.8(b) hereof.
"Note" shall mean that certain promissory note of even date herewith in the original
principal amount of TWENTY-ONE MILLION THREE HUNDRED THOUSAND AND
NO/DOLLARS ($21,300,000), made by Borrower in favor of Lender, as the same may be
amended, restated, replaced, extended, renewed, supplemented, severed, split, or otherwise
modified from time to time.
13
"Obligations" shall mean Borrower's obligation to pay the Debt and perform its
obligations under the Note, this Agreement and the other Loan Documents.
"Officer's Certificate" shall mean a certificate delivered to Lender by Borrower,
Mortgage Borrower or Operating Lessee which is signed by a Responsible Officer of Borrower,
Mortgage Borrower or Operating Lessee, as applicable.
"Operating Expenses" shall mean the total of all expenditures, computed in accordance
with GAAP, of whatever kind relating to the operation, maintenance and management of the
Property that are incurred on a regular monthly or other periodic basis, including without
limitation, utilities, ordinary repairs and maintenance, insurance premiums, license fees, property
taxes and assessments, advertising and marketing expenses, franchise fees, management fees,
payroll and related taxes, computer processing charges, operational equipment or other lease
payments as approved by Lender, and other similar costs, but excluding depreciation, Mortgage
Loan Debt Service, Capital Expenditures and contributions to the escrow accounts established
under the Mortgage Loan Documents.
"Operating Lease" shall mean that certain Operating Lease Agreement, dated as of the
date hereof, between Mortgage Borrower, as lessor, and Operating Lessee, as lessee, as the same
may be amended, restated, replaced, supplemented or modified from time to time.
"Operating Lease Subordination" shall mean that certain Subordination and
Attornment Agreement dated as of even date herewith between Lender and Operating Lessee, as
the same may be amended, restated, replaced, supplemented or modified from time to time.
"Operating Lessee" shall mean Grand Prix Anaheim Orange Lessee LLC, a Delaware
limited liability company, the current operating lessee of the Property, and an Affiliate of
Borrower.
"Other Charges" shall have the meaning set forth in the Security Instrument.
"Participant" shall have the meaning set forth in Section 9.7.2(i) hereof.
"Payment Date" shall mean the ninth (9t
11
) day of each calendar month during the term of
the Loan or, if such day is not a Business Day, the immediately preceding Business Day.
"Payment and Performance Guaranty" shall mean that certain Payment and
Performance Guaranty (Term Loan), dated as of the date hereof, from Guarantor to Lender, as
the same may be amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Permitted Encumbrances" shall mean, with respect to the Property, collectively, (a)
the Liens and security interests created by the Mortgage Loan Documents, (b) all Liens,
encumbrances and other matters disclosed in the Title Insurance Policy, Survey or Physical
Conditions Report relating to the Property or any part thereof, (c) Liens, if any, for Taxes
imposed by any Governmental Authority not yet delinquent, (d) such other title and survey
exceptions as Lender has approved or may approve in writing in Lender's reasonable discretion,
(e) Room License Agreements, and (f) the Operating Lease.
14
"Permitted Institutional Lender" shall mean: (i) Lehman ALI Inc., or any Affiliate
thereof; (ii) a Qualified Institution; or (iii) any other Person (a) reasonably approved by Lender
and (b) if a Securitization shall have occurred, regarding which Lender shall have received
written confirmation by the Rating Agencies that the contemplated transaction with such Person
will not, in and of itself, cause a downgrade, withdrawal or qualification of the then current
ratings of the Securities issued pursuant to the Securitization.
"Permitted Investments" shall mean any one or more of the following obligations or
securities acquired at a purchase price of not greater than par, including those issued by Servicer,
the trustee under any Securitization or any of their respective Affiliates, payable on demand or
having a maturity date not later than the Business Day immediately prior to the first Payment
Date following the date of acquiring such investment and meeting one of the appropriate
standards set forth below:
(i) obligations of, or obligations fully guaranteed as to payment of principal and
interest by, the United States or any agency or instrumentality thereof provided such obligations
are backed by the full faith and credit of the United States of America including, without
limitation, obligations of: the U.S. Treasury (all direct or fully guaranteed obligations), the
Farmers Home Administration (certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime Administration (guaranteed Title
XI financing), the Small Business Administration (guaranteed participation certificates and
guaranteed pool certificates), the U.S. Department of Housing and Urban Development (local
authority bonds) and the Washington Metropolitan Area Transit Authority (guaranteed transit
bonds); provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or change, (B) if rated by
S&P, must not have an "r" highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, such interest rate must be tied to a single interest rate index plus a fixed
spread (if any) and must move proportionately with that index, and (D) such investments must
not be subject to liquidation prior to their maturity;
(ii) Federal Housing Administration debentures;
(iii) obligations of the following United States government sponsored agencies:
Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit System (consolidated
systemwide bonds and notes), the Federal Home Loan Banks (consolidated debt obligations),
and the Federal National Mortgage Association (debt obligations); provided, however, that the
investments described in this clause must (A) have a predetetmined fixed dollar of principal due
at maturity that cannot vary or change, (B) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate of interest, such interest rate
must be tied to a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject to liquidation prior
to their maturity;
(iv) unsecured certificates of deposit and time deposits with maturities of not more
than 365 days of any bank, the short term obligations of which at all times are rated in the
highest short term rating category by each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency in the highest short term rating category and
15
otherwise acceptable to each other Rating Agency, as confirmed in writing that such investment
would not, in and of itself, result in a downgrade, qualification or withdrawal of the initial, or, if
higher, then current ratings assigned to the Securities); provided, however, that the investments
described in this clause must (A) have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (B) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest rate must be tied to a
single interest rate index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to their maturity;
(v) fully Federal Deposit Insurance Corporation insured demand and time deposits in,
or certificates of deposit of, with maturities of not more than 365 days and issued by, any bank or
trust company, savings and loan association or savings bank, the short term obligations of which
at all times are rated in the highest short term rating category by each Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency in the highest short term rating
category and otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade, qualification or withdrawal of
the initial, or, if higher, then current ratings assigned to the Securities); provided, however, that
the investments described in this clause must (A) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (B) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate of interest, such interest rate
must be tied to a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject to liquidation prior
to their maturity;
(vi) [intentionally omitted];
(vii) [intentionally omitted];
(viii) [intentionally omitted]; and;
(ix) any other security, obligation or investment which has been approved as a
Permitted Investment in writing by (a) Lender, (b) Borrower and (c) each Rating Agency, as
evidenced by a written confirmation that the designation of such security, obligation or
investment as a Permitted Investment will not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings assigned to the
Securities by such Rating Agency;
provided, however, that no obligation or security shall be a Permitted Investment
if (A) such obligation or security evidences a right to receive only interest payments or (B) the
right to receive principal and interest payments on such obligation or security are derived from
an underlying investment that provides a yield to maturity in excess of 120% of the yield to
maturity at par of such underlying investment.
"Permitted Owner" shall mean: (i) Apollo; or (ii) any other Person (a) reasonably
approved by Lender and (b) if a Securitization shall have occurred, regarding which Lender shall
have received written confirmation by the Rating Agencies that the transfer to such Person will
16
not, in and of itself, cause a downgrade, withdrawal or qualification of the then current ratings of
the Securities issued pursuant to the Securitization.
"Person" shall mean any individual, corporation, partnership, joint venture, limited
liability company, estate, trust, unincorporated association, any federal, State, county or
municipal government or any bureau, department or agency thereof and any fiduciary acting in
such capacity on behalf of any of the foregoing.
"Physical Conditions Report" shall mean, with respect to the Property, a structural
engineering report prepared by a company reasonably satisfactory to Lender regarding the
physical condition of such Property, satisfactory in form and substance to Lender in its
reasonable discretion, which report shall, among other things, (a) confirm that such Property and
its use complies, in all material respects, with all applicable Legal Requirements (including,
without limitation, zoning, subdivision and building laws) and (b) include a copy of a final
certificate of occupancy with respect to all Improvements on such Property (or, if a final
certificate of occupancy is not available in the applicable jurisdiction, a temporary certificate of
occupancy).
"Plan" shall mean an employee benefit plan (as defined in section 3(3) of ERISA)
whether or not subject to ERISA or a plan or other arrangement within the meaning of Section
4975 ofthe Code.
"Plan Assets" shall mean assets of a Plan within the meaning of section 29 C.F.R.
Section 2510.3-101 or similar law.
"Pledge Agreement" shall mean that certain Pledge and Security Agreement of even
date herewith made by Borrower in favor of Lender as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"Pledged Member Interests" shall mean all membership interests m Mortgage
Borrower.
"Policies" shall have the meaning set forth in the Security Instrument.
"Prepayment Date" shall have the meaning set forth in Section 2.3.1(a) hereof.
"Prime Rate" shall mean, on a particular date, a rate per annum equal to the rate of
interest published in The Wall Street Journal as the "prime rate", as in effect on such day, with
any change in the prime rate resulting from a change in said prime rate to be effective as of the
date of the relevant change in said prime rate; provided, however, that if more than one prime
rate is published in The Wall Street Journal for a day, the average of the prime rates shall be
used; provided, further, however, that the Prime Rate (or the average of the prime rates) will be
rounded to the nearest 1/100 of 1% or, if there is no nearest 1/100 of 1%, to the next higher Ill 00
of 1%. In the event that The Wall Street Journal should cease or temporarily interrupt
publication, then the Prime Rate shall mean the daily average prime rate published in another
business newspaper, or business section of a newspaper, of national standing chosen by Lender.
If The Wall Street Journal resumes publication, the substitute index will immediately be replaced
by the prime rate published in The Wall Street Journal. In the event that a prime rate is no
17
longer generally published or is limited, regulated or administered by a governmental or quasi-
governmental body, then Lender shall select a comparable interest rate index which is readily
available to Borrower and verifiable by Borrower but is beyond the control of Lender. Lender
shall give Borrower prompt written notice of its choice of a substitute index and when the change
became effective. Such substitute index will also be rounded to the nearest 1/100 of 1% or, if
there is no nearest 11100 of 1%, to the next higher 1/100 of 1%. The determination of the Prime
Rate by Lender shall be conclusive and binding absent manifest error.
"Principal" shall mean the general partner of Borrower if Borrower is a limited
partnership, or the managing member of Borrower, if Borrower is a limited liability company
that does not comply with the provisions of Sections 4.1.35(aa), (bb) and (cc) hereof, together
with its successors and assigns. Borrower and Lender acknowledge and agree that there is no
Principal required or in place on the Closing Date.
"Prohibited Person" shall mean any Person:
(a) listed in the Annex to, or otherwise subject to the provisions of, the Executive
Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism (the "Executive Order");
(b) that is owned or controlled by, or acting for or on behalf of, any person or entity
that is listed to the Annex to, or is otherwise subject to the provisions of, the Executive Order;
(c) with whom Lender is prohibited from dealing or otherwise engaging m any
transaction by any terrorism or money laundering law, including the Executive Order;
(d) who commits, threatens or conspires to commit or supports "terrorism" as defined
in the Executive Order;
(e) that is named as a "specially designated national and blocked person" on the most
current list published by the U.S. Treasury Department Office of Foreign Assets Control at its
official website, http://www.treas.gov.ofac/tllsdn.pdf or at any replacement website or other
replacement official publication of such list; or
(f) who is an Affiliate of or Affiliated with a Person listed above.
"Projections" shall have the meaning set forth in Section 9.7.3(b) hereof.
"Property" shall have the meaning set forth in the Security Instrument.
"Property Improvement Plan" has the meaning provided in Section 4.1.44.
"Provided Information" shall have the meaning set forth in Section 9.l(a) hereof.
"Qualified Institution" shall mean any one of the following Persons which has been
approved by Lender:
18
(i) a pension fund, pension trust or pension account that (a) has total real estate assets
of at least $1 Billion and (b) is managed by a Person who controls at least $1 Billion of real
estate equity assets; or
(ii) an msurance company which is subject to supervisiOn by the insurance
commissioner, or a similar official or agency, of a state or territory of the United States
(including the District of Columbia) (a) with a net worth, as of a date no more than six (6)
months prior to the date of the transfer, of at least $500 Million and (b) who, immediately prior
to such transfer, controls real estate equity assets of at least $1 Billion; or
(iii) a corporation organized under the banking laws of the United States or any state
or territory of the United States (including the District of Columbia) (a) with a combined capital
and surplus of at least $500 Million and (b) who, immediately prior to such transfer, controls real
estate equity assets of at least $1 Billion; or
(iv) any Person with a long-term unsecured debt rating from the Rating Agencies of at
least Investment Grade.
"Qualified Manager" shall mean a reputable and experienced professional management
organization (a) which manages, together with its Affiliates, a portfolio of properties of a type,
quality and size similar to the Property, and (b) prior to whose employment as manager of the
Property (i) such employment shall have been reasonably approved by Lender, and (ii) after the
occurrence of a Securitization, Lender shall have received written confirmation from the Rating
Agencies that the employment of such manager will not result in a downgrade, withdrawal or
qualification of the initial, or if higher, then current ratings of the Securities.
"Quality Assurance Reports" shall mean any quality assurance reports of inspection or
compliance from the Franchisor under the Franchise Agreement with respect to the Property.
"Rating Agencies" shall mean each of S&P, Moody's, and Fitch, and any other
nationally-recognized statistical rating agency which has been approved by Lender and has rated
the Securities.
"Reference Bank" shall mean a leading bank engaged in transactions in Eurodollar
deposits in the international Eurocurrency market that has an established place of business in
London. If any such Reference Bank should be removed from the Reuters Page LIBOROl or
3750 or in any other way fail to meet the qualifications of a Reference Bank, Lender may
designate alternative Reference Banks meeting the criteria specified above.
"Register" shall have the meaning set forth in Section 9.7.2(h) hereof.
"Registration Statement" shall have the meaning set forth in Section 9 .2(b) hereof.
"Release" of any Hazardous Materials shall mean any release, deposit, discharge,
emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Materials.
"Renewal Lease" shall have the meaning set forth in Section 5.1.17(a) hereof.
I
19
"Rents" shall have the meaning set forth in Article 1 of the Security Instrument with
respect to the Property.
"Replacement Interest Rate Cap Agreement" means an interest rate cap agreement
from an Acceptable Counterparty with terms which are substantially similar to the Interest Rate
Cap Agreement.
"Replacement Management Agreement" shall mean, collectively, (a) either (i) a
management agreement with a Qualified Manager substantially in the same form and substance
as the Management Agreement, or (ii) a management agreement with a Qualified Manager,
which management agreement shall be reasonably acceptable to Mortgage Lender and Lender in
form and substance, provided, with respect to this subclause (ii), Mortgage Lender, at its option,
may require that Mortgage Borrower obtain confirmation from the applicable Rating Agencies
that such management agreement will not result in a downgrade, withdrawal or qualification of
the initial, or if higher, then current rating of the Securities or any class thereof; and (b) a
conditional assignment of management agreement substantially in the form of the Assignment of
Management Agreement (or such other form acceptable to Lender), executed and delivered to
Lender by Mortgage Borrower and/or Operating Lessee aJ].d such Qualified Manager at
Borrower's expense.
"Replacement Reserve Account" shall have the meamng set forth m the Security
Instrument.
"Required Capital Improvements" shall mean, collectively, (a) certain work required to
be performed in the Property Improvement Plan for the Property delivered to Lender and (b) all
other capital improvements to the Property contemplated by and itemized on Schedule V hereto.
"Required Capital Improvements Fund" shall have the meaning set forth in Section
7.4.1 hereof.
"Required FF&E Reserve Amount" shall have the meamng as set forth m
Section 7.3.1.
"Required Repair Fund" shall have the meaning set forth in Section 7.1.1 hereof.
"Required Repairs" shall have the meaning set forth in Section 7.1.1 hereof.
"Reserve Fund Deposits" shall mean the amounts to be deposited into the Reserve
Funds for any given month or at any other time as provided in this Agreement or in the other
Loan Documents.
"Reserve Funds" shall mean the Tax and Insurance Escrow Fund, the Required Capital
Improvements Fund, the Required Repair Fund, the FF&E Reserve Fund or any other escrow or
reserve fund established by the Loan Documents.
"Reserve Rate" shall mean the rate per annum which Lender determines to be either (i)
the arithmetic mean (rounded upwards if necessary to the nearest whole multiple of 111 ,000%) of
the one-month United States dollar lending rates that at least three major New York City banks
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selected by Lender are quoting, at 11:00 a.m. (New York time) on the relevant LIBOR
Determination Date, to the principal London offices of at least two of the Reference Banks, or
(ii) in the event that at least two such rates are not obtained, the lowest one-month United States
dollar lending rate which New York City banks selected by Lender are quoting as of 11 :00 a.m.
(New York time) on such LIB OR Determination Date to leading European banks.
"Responsible Officer" shall mean with respect to a Person, the chairman of the board,
president, chief operating officer, chief financial officer, treasurer, vice president-finance or such
other authorized representative of such Person.
"Restoration" shall mean the repair and restoration of the Property after a Casualty or
Condemnation as nearly as possible to the condition the Property was in immediately prior to
such Casualty or Condemnation, with such alterations as may be approved by Lender.
"Restricted Party" shall mean Mortgage Borrower, Borrower, Principal, Guarantor,
Operating Lessee or any Affiliated Manager or any shareholder, partner, member or non-member
manager, or any direct or indirect legal or beneficial owner of, Mortgage Borrower, Borrower,
Principal, Guarantor, Operating Lessee any Affiliated Manager or any non-member manager;
provided, that neither Apollo nor any holders of a direct or indirect interest in Apollo shall be a
"Restricted Party."
"Reuters Page LIBOROl or 3750" means the display designated as page 3750 or page
LIBOR01 on the Reuters Service (or such other page as may replace page 3750 or LIBOROI on
that service or such other service as may be nominated by the British Bankers-Association as the
information vendor for the purposes of displaying British Bankers-Association Interest
Settlement Rates for U.S. dollar deposits).
"Room License Agreement" shall mean each license agreement for the use of hotel
rooms entered into with a hotel guest or guests in the ordinary course of operation of the
Property.
"S&P" shall mean Standard & Poor's Ratings Services, a division of McGraw-Hill, Inc.
"Sale or Pledge" shall mean a voluntary or involuntary sale, conveyance, transfer or
pledge of a direct or indirect legal or beneficial interest.
"Securities" shall have the meaning set forth in Section 9.1 hereof.
"Securities Act" shall have the meaning set forth in Section 9.2(a) hereof.
"Securitization" shall have the meaning set forth in Section 9.1 hereof.
"Security Deposits" shall mean any and all monies representing security deposits under
the Leases.
"Security Instrument" shall have the meaning set forth in the recitals to this Agreement.
"Servicer" shall have the meaning set forth in Section 9:3 hereof.
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"Servicing Agreement" shall have the meaning set forth in Section 9.3 hereof.
"Severed Loan Documents" shall have the meaning set forth in Section 8.2( c) hereof.
"Sponsor" shall mean Grand Prix Holdings LLC, together with its successors and
assigns.
"Sponsor Loan" shall mean a loan from a Permitted Institutional Lender to Sponsor (a)
that is (i) fully recourse to Sponsor or (ii) secured by a pledge of all or substantially all of
Sponsor's assets, and (b) the proceeds of which are used solely for working capital, renovations
and development with respect to the Property.
"Spread" shall mean 2.05%.
"State" shall mean the State of California.
"Strike Rate" shall mean 6.00%.
"Succeeding Interest Period" shall have the meamng set forth m Section 2.3.l(b)
hereof.
"Survey" shall mean, with respect to the Property, a survey prepared by a surveyor
licensed in the State of California and satisfactory to Mortgage Lender and Lender and the
company issuing the Title Insurance Policy, and containing a certification of such surveyor
satisfactory to Mortgage Lender and Lender.
"Syndication" shall have the meaning set forth in Section 9.7.2(a) hereof.
"Tax and Insurance Escrow Account" shall have the meaning set forth in the Security
Instrument.
"Tax and Insurance Escrow Fund" shall have the meaning set forth in Section 7.2
hereof.
"Taxes" shall mean all real estate and personal property taxes, assessments, water rates
or sewer rents, now or hereafter levied or assessed or imposed against the Property or part
thereof.
"Title Insurance Policy" shall mean, with respect to the Property, an ALTA mortgagee
title insurance policy in a form acceptable to Lender (or, if the Property is located in a State
which does not permit the issuance of such ALTA policy, such form as shall be permitted in such
State and acceptable to Lender) issued with respect to the Property and insuring the lien of the
security instrument encumbering the Property.
"Transfer" shall have the meaning set forth in Section 5.2.1 O(a) hereof.
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"Triggering Event" shall mean that, as of any calendar quarter, the Net Operating
Income of the Property is less than the Closing Date NOI or an Event of Default has occurred
and is continuing.
"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial Code as
in effect in the State of California.
"UCC Financing Statement" shall mean the UCC Financing Statement executed in
connection with the Pledge Agreement and the other Loan Documents and filed in the applicable
filing office.
"Underwriter Group" shall have the meaning set forth in Section 9.2(b) hereof.
"U.S. Obligations" shall mean non-redeemable securities evidencing an obligation to
timely pay principal and/or interest in a full and timely manner that are (a) obligations or
securities not subject to prepayment, call or early redemption which are direct obligations of, or
obligations fully guaranteed as to timely payment by, the United States of America or any
agency or instrumentality of the United States of America, which qualify under 1.860G-2(a)(8)
of the Treasury Regulations, or (b) other non-callable "government securities" as defined in
Treasury Regulations 1.860G-2(a)(8), as amended, which will not result in a reduction,
downgrade or withdrawal of the ratings for the Securities or any class thereof issued in
connection with a Securitization and which are then outstanding.
Section 1.2. Principles of Construction.
All references to sections and schedules are to sections and schedules in or to this
Agreement unless otherwise specified. All uses of the word "including" shall mean "including,
without limitation" unless the context shall indicate otherwise. Unless otherwise specified, the
words "hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be
equally applicable to both the singular and plural forms of the terms so defined. Terms used
herein and not otherwise defined herein (but defined in the Security Instrument) shall have the
meaning set forth in the Security Instrument, as of the Closing Date, notwithstanding any
subsequent amendment of the Security Instrument to such defined terms unless Lender shall
have consented to such amendment. With respect to any provisions incorporated by reference
herein from the Security Instrument, such provisions shall be deemed a part of this Agreement
notwithstanding the fact that the Mortgage Loan shall no longer be effective for any reason.
II. GENERAL TERMS
Section 2.1. Loan Commitment; Disbursement to Borrower.
2.1.1. Agreement to Lend and Borrow.
Subject to and upon the terms and conditions set forth herein, Lender hereby agrees to
make and Borrower hereby agrees to accept the Loan on the Closing Date.
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2.1.2. Single Disbursement to Borrower.
Borrower may request and receive only one borrowing hereunder in respect of the Loan
and any amount borrowed and repaid hereunder in respect of the Loan may not be reborrowed.
2.1.3. The Note, Pledge Agreement and Loan Documents.
The Loan shall be evidenced by the Note and secured by the Pledge Agreement and the
other Loan Documents.
2.1.4. Use of Proceeds.
Borrower shall use the proceeds of the Loan to (a) finance the Collateral, (b) pay costs
and expenses incurred in connection with the closing of the Loan, as reasonably approved by
Lender, (c) pay costs and expenses incurred in connection with the financing of the Collateral
and (d) make an equity contribution to Mortgage Borrower in order to cause the Mortgage
Borrower to use such amounts for any use permitted pursuant to the Security Instrument to the
extent necessary.
Section 2.2. Loan Payments; Interest Calculation; Late Payment Charge.
2.2.1. Payments.
(a) Interest on the outstanding principal balance of the Loan shall accrue from the
Closing Date to the end of the Interest Period in which the Maturity Date occurs at the
Applicable Interest Rate. Monthly installments of interest only shall be paid on each Payment
Date commencing on August 9, 2007 and on each subsequent Payment Date thereafter up to and
including the Maturity Date for the Interest Period in which such Payment Date or Maturity Date
occurs. Interest on the outstanding principal amount of the Loan for the period through and
including July 14, 2007 shall be paid by Borrower on the Closing Date. The outstanding
principal balance of the Loan together with all accrued and unpaid interest thereon shall be due
and payable on the Maturity Date (including, without limitation, all interest that would accrue on
the outstanding principal balance of the Loan through the end of the Interest Period during which
the Maturity Date occurs (even if such period extends beyond the Maturity Date)).
(b) All payments and other amounts due under the Note, this Agreement and the other
Loan Documents shall be made without any setoff, defense or irrespective of, and without
deduction for, counterclaims.
2.2.2. Interest Calculation.
Interest on the outstanding principal balance of the Loan shall be calculated by
multiplying (a) the actual number of days elapsed in the period for which the calculation is being
made by (b) a daily rate equal to the Applicable Interest Rate divided by three hundred sixty
(360) by (c) the outstanding principal balance.
2.2.3. Eurodollar Rate Unascertainable; Illegality; Increased Costs.
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(a) (i) In the event that Lender shall have determined (which determination shall be
conclusive and binding upon Borrower absent manifest error) that by reason of circumstances
affecting the interbank eurodollar market, adequate and reasonable means do not exist for
ascertaining LIBOR, then Lender shall forthwith give notice by telephone of such determination,
to Borrower at least one (I) Business Day prior to the last day of the related Interest Period, with
a written confirmation of such determination promptly thereafter. If such notice is given, the
Loan shall bear interest at the Adjusted Prime Rate beginning on the first day of the next
succeeding Interest Period.
(ii) If, pursuant to the terms of this Section 2.2.3, the Loan is bearing interest at
the Adjusted Prime Rate and Lender shall determine (which determination shall be conclusive
and binding upon Borrower absent manifest error) that the event(s) or circumstance(s) which
resulted in such conversion shall no longer be applicable, Lender shall give notice thereof to
Borrower by telephone of such determination, confirmed in writing, to Borrower as soon as
reasonably practical, but in no event later than one (I) Business Day prior to the last day of the
then current Interest Period. If such notice is given, the Loan shall bear interest at the Eurodollar
Rate beginning on the first day of the next succeeding Interest Period. Notwithstanding any
provision of this Agreement to the contrary, in no event shall Borrower have the right to elect to
have the Loan bear interest at either the Eurodollar Rate or the Adjusted Prime Rate.
(b) If any requirement of law or any change therein or in the interpretation or
application thereof, shall hereafter make it unlawful for Lender or any Co-Lender in good faith to
make or maintain the portion of the Loan bearing interest at the Eurodollar Rate, (I) the
obligation of Lender or such Co-Lender hereunder to make the Loan bearing interest at the
Eurodollar Rate shall be canceled forthwith and (II) the Loan shall automatically bear interest at
the Adjusted Prime Rate on the first day of the immediately succeeding Interest Period or within
such earlier period as required by Applicable Law. Borrower hereby agrees promptly to pay
Lender or any Co-Lender (within ten (10) days of Lender's or any Co-Lender's written demand
therefor), any additional amounts necessary to compensate Lender or any Co-Lender for any
reasonable costs incurred by Lender or such Co-Lender in making any conversion in accordance
with this Agreement, including, without limitation, any interest or fees payable by Lender or
such Co-Lender to lenders of funds obtained by it in order to make or maintain the Loan
hereunder. Upon written demand from Borrower, Lender or the applicable Co-Lender shall
demonstrate in reasonable detail the circumstances giving rise to Lender's or such Co-Lender's
determination and the calculation substantiating the Adjusted Prime Rate and any additional
costs incurred by Lender or such Co-Lender in making the conversion. Lender's or Co-Lender's
written notice of such costs, as certified to Borrower, shall be conclusive absent manifest error.
(c) In the event that any change in any requirement of any Applicable Law or in the
interpretation or application thereof, or compliance in good faith by Lender or any Co-Lender
with any request or directive (whether or not having the force of law) hereafter issued from any
Governmental Authority which is generally applicable to all Lenders subject to such
Governmental Authority's jurisdiction:
(a) shall hereafter impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or deposits or
other liabilities in or for the account of, advances or loans by, or other credit extended by,
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or any other acquisition of funds by, any office of Lender or any Co-Lender which is not
otherwise included in the determination of LIB OR hereunder;
(b) shall, if the Loan is then bearing interest at the Eurodollar Rate, hereafter
have the effect of reducing the rate of return on Lender's or any Co-Lender's capital as a
consequence of its obligations hereunder to a level below that which Lender or any Co-
Lender could have achieved but for such adoption, change or compliance (taking into
consideration Lender's or any Co-Lender's policies with respect to capital adequacy) by
any amount deemed by Lender or any Co-Lender to be material; or
(c) shall, if the Loan is then bearing interest at the Eurodollar Rate, hereafter
impose on Lender or any Co-Lender any other condition, the result of which is to
increase the cost to Lender or such Co-Lender of making, renewing or maintaining loans
or extensions of credit or to reduce any amount receivable hereunder;
then, in any such case, Borrower shall promptly pay Lender or such Co-Lender (within ten (10)
days of Lender's or such Co-Lender's written demand therefor), any additional amounts
necessary to compensate Lender or such Co-Lender for such additional cost or reduced amount
receivable which Lender or such Co-Lender deems to be material. If Lender or any Co-Lender
becomes entitled to claim any additional amounts pursuant to this Section 2.2.3( c), Lender and
such Co-Lender shall provide Borrower with written notice specifying in reasonable detail the
event or circumstance by reason of which it has become so entitled and the additional amount
required to fully compensate Lender and such Co-Lender for such additional cost or reduced
amount. A certificate as to any additional costs or amounts payable pursuant to the foregoing
sentence submitted by Lender or such Co-Lender to Borrower shall be conclusive absent
manifest error. This provision shall survive payment of the Note and the satisfaction of all other
obligations of Borrower under the Note, this Agreement and the other Loan Documents.
(d) Borrower agrees to indemnify Lender and the Co-Lenders and to hold Lender and
the Co-Lenders harmless from any loss or expense which Lender or any Co-Lender sustains or
incurs as a consequence of (I) any default by Borrower in payment of the principal of or interest
on the Loan while bearing interest at the Eurodollar Rate, including, without limitation, any such
loss or expense arising from interest or fees payable by Lender or any Co-Lenders to lenders of
funds obtained by it in order to maintain the Eurodollar Rate, (II) any prepayment (whether
voluntary or mandatory) of the Loan on a day that is not the day immediately following the last
day of an Interest Period with respect thereto, including, without limitation, such loss or expense
arising from interest or fees payable by Lender or any Co-Lender to lenders of funds obtained by
it in order to maintain the Eurodollar Rate hereunder and (III) the conversion (for any reason
whatsoever, whether voluntary or involuntary) of the Applicable Interest Rate from the
Eurodollar Rate to the Adjusted Prime Rate with respect to any portion of the outstanding
principal amount of the Loan then bearing interest at the Eurodollar Rate on a date other than the
day immediately following the last day of an Interest Period, including, without limitation, such
loss or expenses arising from interest or fees payable by Lender or any Co-Lender to lenders of
funds obtained by it in order to maintain the Eurodollar Rate hereunder (the amounts referred to
in clauses (I), (II) and (III) are herein referred to collectively as the "Breakage Costs"). This
provision shall survive payment of the Note and the satisfaction of all other obligations of
Borrower under this Agreement and the other Loan Documents.
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2.2.4. Payment on Maturity Date.
Borrower shall pay to Lender on the Maturity Date the outstanding principal balance, all
accrued and unpaid interest thereon, and all other amounts due hereunder and under the Note, the
Pledge Agreement and the other Loan Documents, including, without limitation, all interest that
would accrue on the outstanding principal balance of the Loan through and including the end of
the Interest Period in which the Maturity Date occurs (even if such Interest Period extends
beyond the Maturity Date).
2.2.5. Payments after Default.
Upon the occurrence and during the continuance of an Event of Default, interest on the
outstanding principal balance of the Loan and, to the extent permitted by Applicable Law,
overdue interest and other amounts due in respect of the Loan, shall accrue at the Default Rate,
calculated from the date such payment was due without regard to any grace or cure periods
contained herein. Interest at the Default Rate shall be computed from the occurrence of the
default until the actual receipt and collection of the Debt (or that portion thereof that is then due).
To the extent permitted by Applicable Law, interest at the Default Rate shall be added to the
Debt, shall itself accrue interest at the same rate as the Loan and shall be secured by the Pledge
Agreement. This paragraph shall not be construed as an agreement or privilege to extend the
date of the payment of the Debt, nor as a waiver of any other right or remedy accruing to Lender
by reason of the occurrence of any Event of Default.
2.2.6. Late Payment Charge.
If any principal, interest or any other sums due under the Loan Documents is not paid by
Borrower on the date on which it is due, Borrower shall pay to Lender upon demand an amount
equal to the lesser of five percent (5%) of such unpaid sum or the maximum amount permitted
by Applicable Law in order to defray the expense incurred by Lender in handling and processing
such delinquent payment and to compensate Lender for the loss of the use of such delinquent
payment; provided, that notwithstanding the foregoing, with respect to only one (1) late payment
by Borrower in any twelve (12) month period, the late payment charge referred to in this Section
shall not apply unless Borrower has failed to pay principal, interest or any other sums due under
the Loan Documents within two (2) Business Days after the date on which such amounts are due.
Any such amount shall be secured by the Pledge Agreement and the other Loan Documents to
the extent permitted by Applicable Law.
2.2.7. Usury Savings.
This Agreement and the Note are subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance ofthe Loan at a rate
which could subject Lender to either civil or criminal liability as a result of being in excess of the
Maximum Legal Rate. If, by the terms of this Agreement or the other Loan Documents,
Borrower is at any time required or obligated to pay interest on the principal balance due
hereunder at a rate in excess of the Maximum Legal Rate, the Applicable Interest Rate or the
Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum
Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to
27
have been payments in reduction of principal and not on account of the interest due hereunder.
All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the sums
due under the Loan, shall, to the extent permitted by Applicable Law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate of
interest from time to time in effect and applicable to the Loan for so long as the Loan is
outstanding.
2.2.8. Indemnified Taxes.
(a) All payments made by Borrower hereunder shall be made free and clear of, and
without reduction for or on account of, Indemnified Taxes, excluding (i) Indemnified Taxes
measured by Lender's or any Co-Lender's net income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which Lender or any Co-Lender is resident or organized, or any
political subdivision thereof, (ii) taxes measured by Lender's or any Co-Lender's overall net
income, and franchise taxes imposed on it, by the jurisdiction of Lender's or such Co-Lender's
applicable lending office or any political subdivision thereof or in which Lender or such Co-
Lender is resident or engaged in business, and (iii) withholding taxes imposed by the United
States of America, any state, commonwealth, protectorate territory or any political subdivision or
taxing authority thereof or therein as a result of the failure of Lender or any Co-Lender which is
a Non-U.S. Entity to comply with the terms of paragraph (b) below. If any non excluded
Indemnified Taxes are required to be withheld from any amounts payable to Lender or any Co-
Lender hereunder, the ainounts so payable to Lender or such Co-Lender shall be increased to the
extent necessary to yield to Lender or such Co-Lender (after payment of all non excluded
Indemnified Taxes) interest or any such other amounts payable hereunder at the rate or in the
amounts specified hereunder. Whenever any non excluded Indemnified Tax is payable pursuant
to Applicable Law by Borrower, Borrower shall send to Lender or the applicable Co-Lender an
original official receipt showing payment of such non excluded Indemnified Tax or other
evidence of payment reasonably satisfactory to Lender or the applicable Co-Lender. Borrower
hereby indemnifies Lender and each Co-Lender for any incremental taxes, interest or penalties
that may become payable by Lender or any Co-Lender which may result from any failure by
Borrower to pay any such non excluded Indemnified Tax when due to the appropriate taxing
authority or any failure by Borrower to remit to Lender or any Co-Lender the required receipts or
other required documentary evidence.
(b) In the event that Lender or any Co-Lender or any successor and/or assign of
Lender or any Co-Lender is not incorporated under the laws of the United States of America or a
state thereof (a "Non-U.S. Entity") Lender and such Co-Lender agree that, prior to the first date
on which any payment is due such entity hereunder, it will deliver to Borrower two duly
completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI or
successor applicable form, as the case may be, certifying in each case that such entity is entitled
to receive payments under the Note, without deduction or withholding of any United States
federal income taxes. Each entity required to deliver to Borrower a Form W-8BEN or W-8ECI
pursuant to the preceding sentence further undertakes to deliver to Borrower two further copies
of such forms, or successor applicable forms, or other manner of certification, as the case may
be, on or before the date that any such form expires (which, in the case of the Form W -8ECI, is
the last day of each U.S. taxable year of the Non-U.S. Entity) or becomes obsolete or after the
28
occurrence of any event requiring a change in the most recent form previously delivered by it to
Borrower, and such other extensions or renewals thereof as may reasonably be requested by
Borrower, certifying in the case of a Form W-8BEN or W-8ECI that such entity is entitled to
receive payments under the Note without deduction or withholding of any United States federal
income taxes, unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would prevent such
entity from duly completing and delivering any such form with respect to it and such entity
advises Borrower that it is not capable of receiving payments without any deduction or
withholding ofUnited States federal income tax.
Section 2.3. Prepayments.
2.3.1. Voluntary Prepayments.
On any Payment Date, Borrower may, at its option, prepay the Loan in whole or in part
upon satisfaction of the following conditions:
(a) Borrower shall provide prior written notice to Lender (which notice shall
be irrevocable) specifying the date (the "Prepayment Date") upon which the prepayment
is to be made, which notice shall be delivered to Lender not less than thirty (30) Business
Days prior to such payment; and
(b) Borrower shall pay to Lender, simultaneously with such prepayment, (i)
all accrued and unpaid interest calculated at the Applicable Interest Rate on the amount of
principal being prepaid through and including the Prepayment Date together with an
amount equal to the interest that would have accrued at the Applicable Interest Rate on
the amount of principal being prepaid through the end of the Interest Period in which
such prepayment occurs, notwithstanding that such Interest Period extends beyond the
date of prepayment, (ii) in addition to the payments required in clause (i) above, if such
prepayment is made during the period from and including the first day after a Payment
Date through and including the last day of the Interest Period in which such prepayment
occurs, all interest on the principal amount being prepaid which would have accrued from
the first day of the Interest Period immediately following the Interest Period in which the
prepayment occurs (the "Succeeding Interest Period") through and including the end of
the Succeeding Interest Period, calculated at (1) the Applicable Interest Rate if such
prepayment occurs on or after the LIBOR Determination Date for the Succeeding Interest
Period (2) the Assumed Note Rate if such prepayment occurs before the LIBOR
Determination Date for the Succeeding Interest Period (the "Interest Shortfall"), (iii)
Breakage Costs, if any, without duplication of any sums paid pursuant to the preceding
clauses (i) and (ii), and (iv) all other sums then due under this Agreement, the Note or the
other Loan Documents.
If the Interest Shortfall was calculated based upon the Assumed Note Rate; upon
determination of LIBOR on the LIBOR Dete1mination Date for the Succeeding Interest Period,
(i) if the Applicable Interest Rate for such Succeeding Interest Period is less than the Assumed
Note Rate, Lender shall promptly refund to Borrower the amount of the Interest Shortfall paid,
29
calculated at a rate equal to the difference between the Assumed Note Rate and the Applicable
Interest Rate, or (ii) if the Applicable Interest Rate is greater than the Assumed Note Rate,
Borrower shall promptly (and in no event later than the ninth (9th) day of the following month)
pay Lender the amount of such additional Interest Shortfall calculated at a rate equal to the
excess of the Applicable Interest Rate over the Assumed Note Rate.
If a notice of prepayment is given by Borrower to Lender pursuant to this Section 2.3.1,
the amount designated for prepayment and all other sums required under this Section 2.3.1 shall
be due and payable on the Prepayment Date.
2.3.2. Liquidation Event; Mandatory Prepayment.
(a) In the event of (i) any Casualty to all or any portion of the Property, (ii) any
Condemnation of all or any portion of the Property, (iii) any claims made by Mortgage Borrower
under the owner's title insurance policy, (iv) a Transfer of the Property in connection with
realization thereon by Mortgage Lender following an Event of Default under the Mortgage Loan,
(v) any refinancing of the Property or the Mortgage Loan (each, a "Liquidation Event"),
Borrower shall cause the related Net Liquidation Proceeds After Debt Service to be deposited
directly into the Mezzanine Deposit Account. On each date on which Lender actually receives a
distribution of Net Liquidation Proceeds After Debt Service, Borrower shall prepay the
outstanding principal balance of the Note in an amount equal to one hundred percent (100%) of
such Net Liquidation Proceeds After Debt Service. Any amounts of Net Liquidation Proceeds
After Debt Service in excess of the Debt shall be paid to Borrower. Any prepayment received by
Lender pursuant to this Section 2.3.2 on a date other than a monthly Payment Date shall be held
by Lender as collateral security for the Loan and shall be applied by Lender on the next monthly
Payment Date:
(b) Borrower shall immediately notify Lender of any Liquidation Event once
Borrower has knowledge of such event. Borrower shall be de.emed to have knowledge of (i) a
sale (other than a foreclosure sale) of the Property on the date on which a contract of sale for
such sale is entered into, and a foreclosure sale, on the date notice of such foreclosure sale is
given, and (ii) a refinancing of the Property, on the date on which a commitment for such
refinancing has been entered into. The provisions of this Section 2.3.2 shall not be construed to
contravene in any manner the restrictions and other provisions regarding refinancing of the
Mortgage Loan or Transfer of the Property set forth in this Agreement, the other Loan
Documents and the Mortgage Loan Documents.
(c) Notwithstanding anything to the contrary contained herein, in the event of a
Transfer, in one or a series of transactions, of more than 49% in the aggregate of the common
equity interests or voting rights in Sponsor to any Person other than Apollo or its Affiliates,
Borrower shall be required to pay the Loan in full and otherwise in accordance with Section
2.3.1 hereof.
2.3.3. Prepayments After Default.
If, following an Event of Default, Borrower tenders payment of all or any part of the
Debt, or if all or any portion of the Debt is recovered by Lender after such Event of Default, (i)
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all accrued and unpaid interest calculated at the Applicable Interest Rate on the amount of
principal being prepaid through and including the Prepayment Date together with an amount
equal to the interest that would have accrued at the Applicable Interest Rate on the amount of
principal being prepaid through the end of the Interest Period in which such prepayment occurs,
notwithstanding that such Interest Period extends beyond the date of prepayment, (ii) the Interest
Shortfall, if applicable, with respect to the amount prepaid, (iii) Breakage Costs, if any, without
duplication of any sums paid pursuant to the preceding clause (ii), and (iv) all other sums due
under this Agreement, the Note or the other Loan Documents in connection with a partial or total
prepayment.
2.3.4. Making of Payments.
Each payment by Borrower hereunder or under the Note shall be made in funds settled
through the New York Clearing House Interbank Payments System or other funds immediately
available to Lender by 2:00 p.m., New York City time, on or prior to the date such payment is
due, to Lender by deposit to such account as Lender may designate by written notice to
Borrower. Whenever any payment hereunder or under the Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the first Business Day
preceding such scheduled due date.
2.3.5. Application of Prepayments.
All prepayments received pursuant to this Section 2.3 and Section 2.5 shall be applied
first, to interest on the outstanding principal balance being prepaid that accrued through and
including the Prepayment Date, second, to interest on the outstanding principal balance being
prepaid that would have accrued through the end of the Interest Period in which the prepayment
occurred, and if applicable, through the end of the Succeeding Interest Period, notwithstanding
that such Interest Period or Succeeding Interest Period extends beyond the date of prepayment,
and third, to the payments of outstanding principal.
Section 2.4. Interest Rate Cap Agreement.
(a) Borrower shall obtain, or cause to be obtained, and shall thereafter maintain in
effect, an Interest Rate Cap Agreement with an Acceptable Counterparty, which shall be
coterminous with the Loan and have a notional amount which shall not at any time be less than
the outstanding principal balance of the Loan and which shall at all times have a strike rate equal
to the Strike Rate. The Counterparty shall be obligated under the Interest Rate Cap Agreement
to make monthly payments equal to the excess of one (I) month LIBOR over the Strike Rate,
calculated on the notional amount. The notional amount of the Interest Rate Cap Agreement
may be reduced from time to time in amounts equal to any prepayment of the principal of the
Loan in accordance with Sections Section 2.3 and Section 2.5 hereof.
(b) Borrower shall collaterally assign to Lender pursuant to an Assignment of Interest
Rate Cap Agreement substantially in the form annexed hereto as Exhibit A, all of its right, title
and interest to receive any and all payments under the Interest Rate Cap Agreement (and any
related guarantee, if any) and shall deliver to Lender an executed counterpart of such Interest
Rate Cap Agreement and notify the Counterparty of such collateral assignment (either in such
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Interest Rate Cap Agreement or by separate instrument). The Counterparty shall agree in writing
to make all payments it is required to make under the Interest Rate Cap Agreement during the
continuation of a Triggering Event directly to an account specified by Lender. At such time as
the Loan is repaid in full, all of Lender's right, title and interest in the Interest Rate Cap
Agreement shall terminate and Lender shall promptly execute and deliver at Borrower's sole cost
and expense, such documents as may be required to evidence Lender's release of the Interest
Rate Cap Agreement and to notify the Counterparty of such release.
(c) Borrower shall comply with all of its obligations under the terms and provisions
of the Interest Rate Cap Agreement. All amounts paid by the Counterparty under the Interest
Rate Cap Agreement shall during the continuance of a Triggering Event be deposited into such
account as specified by Lender. Borrower shall take all actions reasonably requested by Lender
to enforce Lender's rights under the Interest Rate Cap Agreement in the event of a default by the
Counterparty and shall ncit waive, amend or otherwise modify any of its rights thereunder.
(d) In the event of any downgrade, withdrawal or qualification of the rating of the
Counterparty below '"AA-" (or the equivalent) by the Rating Agencies and unless the
Counterparty complies with clause (f) below, Borrower shall replace the Interest Rate Cap
Agreement with a Replacement Interest Rate Cap Agreement with an Acceptable Counterparty
not later than ten (1 0) Business Days following receipt of notice from Lender or Servicer of such
downgrade, withdrawal or qualification.
(e) In the event that Borrower fails to purchase and deliver to Lender the Interest Rate
Cap Agreement or any Replacement Interest Cap Agreement as and when required hereunder,
Lender shall notify Borrower of the same and if Borrower fails to purchase and deliver the same
to Lender within five (5) Business Days following such notice from Lender, Lender may
thereafter purchase such Interest Rate Cap Agreement and the cost incurred by Lender in
purchasing such Interest Rate Cap Agreement shall be paid by Borrower to Lender with interest
thereon at the Default Rate from the date such cost was incurred by Lender until such cost is paid
by Borrower to Lender.
(f) The Interest Rate Cap Agreement shall contain the following language or its
equivalent: "In the event of any downgrade, withdrawal or qualification of the rating of the
Counterparty below '"AA-" (or the equivalent) by the Rating Agencies, the Counterparty must,
within 30 days, either (x) post collateral on terms acceptable to each Rating Agency or (y) find a
replacement Acceptable Counterparty, at the Counterparty's sole cost and expense, acceptable to
Lender and each Rating Agency (notwithstanding the foregoing, if the Counterparty's rating is
downgraded to "A" or lower, only the option described in clause (y) will be acceptable);
provided that, notwithstanding such a downgrade, withdrawal or qualification, unless and until
the Counterparty transfers the Interest Rate Cap Agreement to a replacement Acceptable
Counterparty pursuant to the foregoing clause (y), the Counterparty will continue to perform its
obligations under the Interest Rate Cap Agreement. Failure to satisfY the foregoing shall
constitute an Additional Termination Event as defined by the ISDA Master Agreement, with the
Counterparty as the Affected Party."
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(g) In connection with the Interest Rate Cap Agreement, Borrower shall obtain and
deliver to Lender an opinion of counsel from counsel for the Counterparty (upon which Lender
and its successors and assigns may rely) which shall be reasonably satisfactory to Lender.
Section 2.5. Release of Collateral.
Except as set forth in Section 2.3 hereof and this Section 2.5, no repayment or
prepayment of all or any portion of the Loan shall cause, give rise to a right to require, or
otherwise result in, the release of any Lien of the Pledge Agreement on the Collateral.
2.5.1. Intentionally Omitted.
2.5.2. Release on Payment in Full.
Lender shall, upon the written request and at the expense of Borrower, upon payment in
full of all principal and interest due on the Loan and all other amounts due and payable under the
Loan Documents in accordance with the terms and provisions of the Note and this Agreement,
release the Lien of the Pledge Agreement on the Collateral if not theretofore released and remit
any remaining Reserve Funds to Borrower.
III. CASH MANAGEMENT
Section 3.1. Deposits into the Mezzanine Deposit Account
During the continuance of a Triggering Event, Borrower shall cause Mortgage Borrower
to deposit all Rents and other sums collected by or on behalf of Mortgage Borrower from the
Property into the Mezzanine Deposit Account.
Section 3.2. Depositing Distributions.
Borrower shall direct or cause Mortgage Borrower to direct that all cash distributions due
to Borrower as the sole member of Mortgage Borrower (including the Net Liquidation Proceeds
After Debt Service) and to the extent provided or permitted under the Mortgage Loan Documents
be deposited into the Mezzanine Deposit Account.
Section 3.3. Intentionally Omitted.
Section 3.4. Transfers to and Disbursements from the Mezzanine Deposit Account.
Except during the continuance of an Event of Default, Lender hereby authorizes and
directs Mezzanine Deposit Bank to disburse the funds in the Mezzanine Deposit Account on
each Business Day in the following order of priority:
(a) First, funds sufficient to pay all amounts then due and payable to Lender pursuant
to the Loan Documents;
(b) Second, funds sufficient for deposit into the Reserve Funds, if any are then
required to be deposited therein pursuant to Article VII of this Agreement; and
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(c) Last, provided that no Event of Default shall have occurred and be continuing, all
amounts remaining in the Mezzanine Deposit Account after deposits for items (a) and (b) shall
be disbursed to Borrower.
Section 3.5. Withdrawals from the Reserve Funds.
Lender shall disburse funds on deposit in the Reserve Funds in accordance with the
provisions of Article VII hereof.
Section 3.6. Eligible Account.
The Mezzanine Deposit Account shall be maintained as an Eligible Account.
Section 3.7. Sole Dominion and Control.
Subject to the rights of the Mortgage Lender, Borrower acknowledges and agrees that the
Accounts are subject to the sole dominion, control and discretion of Lender, its authorized agents
or designees; and Borrower shall have no right of withdrawal with respect to any Account except
with the prior written consent of Lender or as otherwise provided herein.
Section 3.8. Security Interest.
Borrower hereby grants to Lender a first priority security interest in each of the Accounts
and the Account Collateral as additional security for the Debt. Without obtaining the prior
written consent of Lender, Borrower shall not permit or cause Mortgage Borrower to further
pledge, assign or grant any security interest in any Reserve Fund or the Mezzanine Deposit
Account or the monies deposited therein or permit any lien or encumbrance to attach thereto, or
any levy to be made thereon, or any UCC-1 financing statements, except those naming Mortgage
Lender as the secured party, to be filed with respect thereto and except for any right of the
depositary bank or securities intermediary to be paid ordinary fees and charges for such account,
for which there may be a setoff right.
Section 3.9. Financing Statement; Further Assurances.
Borrower hereby authorizes Lender to file, and upon Lender's request, shall execute and
deliver to Lender for filing, a financing statement or statements under the UCC in connection
with any of the Accounts and the Account Collateral with respect thereto in the form required to
properly perfect Lender's security interest therein. Borrower agrees that at any time and from
time to time, at the expense of Borrower, Borrower will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or desirable, or
that Lender may request, in order to perfect and protect any security interest granted or purported
to be granted hereby (including, without limitation, any security interest in and to any Permitted
Investments) or to enable Lender to exercise and enforce its rights and remedies hereunder with
respect to any Account or Account Collateral.
Section 3.10. Borrower's Obligations Not Affected.
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The insufficiency of funds on deposit in the Accounts shall not absolve Borrower of the
obligation to make any payments, as and when due pursuant to this Agreement and the other
Loan Documents, and such obligations shall be separate and independent and not conditioned on
any event or circumstance whatsoever.
IV. REPRESENTATIONS AND WARRANTIES
Section 4.1. Borrower Representations.
Borrower represents and warrants as of the Closing Date that:
4 .1.1. Organization.
It is duly organized and is validly existing and in good standing in the jurisdiction in
which it is organized, with requisite power and authority to own the Collateral and to transact the
businesses in which it is now engaged. Borrower is duly qualified to do business and is in good
standing in each jurisdiction where it is required to be so qualified in connection with the
Collateral, its businesses and operations. Borrower possesses all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own the Collateral and to
transact the businesses in which it is now engaged. Attached hereto as Schedule III is an
organizational chart of Borrower.
4.1.2. Proceedings.
Borrower has taken all necessary action to authorize the execution, delivery and
performance of this Agreement and the other Loan Documents. This Agreement and the other
Loan Documents have been duly executed and delivered by or on behalf of Borrower and
constitute legal, valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject only to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at
law).
4.1.3. No Conflicts.
The execution, delivery and performance of this Agreement and the other Loan
Documents by Borrower will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or imposition of any Lien,
charge or encumbrance (other than pursuant to the Loan Documents) upon any ofthe property or
assets of Borrower pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement, partnership agreement, management agreement, franchise agreement, or other
agreement or instrument to which Borrower is a party or by which any of Borrower's property or
assets is subject, nor will such action result in any violation of the provisions of any statute or
any order, rule or regulation of any court or governmental agency or body having jurisdiction
over Borrower or any of the Collateral or any of Borrower's other assets, or any license or other
approval required to operate the Collateral, and any consent, approval, authorization, order,
registration or qualification of or with any Governmental Authority required for the execution,
35
delivery and performance by Borrower of this Agreement or any other Loan Documents have
been obtained and is in full force and effect.
4.1.4. Litigation.
There are no actions, suits or proceedings at law or in equity by or before any
Governmental Authority or other agency now pending or to Borrower's knowledge threatened
against or affecting Borrower, Mortgage Borrower, Operating Lessee, the Property or the
Collateral, which actions, suits or proceedings, if determined against Borrower, Mortgage
Borrower, Operating Lessee, the Property or the Collateral, could reasonably be expected to have
a material adverse affect on the condition (financial or otherwise) or business of Borrower,
Mortgage Borrower, Operating Lessee or the condition or ownership of the Property or the
Collateral.
4.1.5. Agreements.
Other than as disclosed in the Title Insurance Policy, Borrower is not a party to any
agreement or instrument or subject to any restriction which could reasonably be expected to have
a material and adverse affect on Borrower, Mortgage Borrower, Operating Lessee, the Collateral
or the Property, or Borrower's, Mortgage Borrower's or Operating Lessee's business, properties
or assets, operations or condition, financial or otherwise. Borrower is not in default in any
material respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any material agreement or instrument to which it is a party
or by which Borrower, Mortgage Borrower, Operating Lessee, the Collateral or the Property is
bound. Borrower and has no material financial obligation under any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which Borrower, Mortgage
Borrower, or Operating Lessee is a party or by which Borrower, Mortgage Borrower, Operating
Lessee, the Collateral or the Property is otherwise bound, other than (a) obligations incurred in
the ordinary course of the operation of the Property and (b) obligations under the Loan
Documents and the Mortgage Loan Documents, as applicable.
4.1.6. Solvency.
Borrower (a) has not entered into the transaction or executed the Note, this Agreement or
any other Loan Documents with the actual intent to hinder, delay or defraud any creditor and (b)
has received reasonably equivalent value in exchange for its obligations under the Loan
Documents. Giving effect to the Loan, the fair saleable value of Borrower's assets exceeds and
will, immediately following the making of the Loan, exceed Borrower's total liabilities,
including, without limitation, subordinated, unliquidated, disputed and contingent liabilities. The
fair saleable value of Borrower's assets is and will, immediately following the making of the
Loan, be greater than Borrower's probable liabilities, including the maximum amount of its
contingent liabilities on its debts as such debts become absolute and matured. Borrower's and
assets do not and, immediately following the making of the Loan will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed to be conducted.
Borrower does not intend to incur debt and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debt and liabilities as they mature (taking into
account the timing and amounts of cash to be received by Borrower and the amounts to be
36
payable on or in respect of obligations of Borrower). No petition under the Bankruptcy Code or
similar state bankruptcy or insolvency law has been filed against Borrower, Mortgage Borrower,
Operating Lessee or any constituent Person in the last seven (7) years, and none of Borrower,
Mortgage Borrower, Operating Lessee or any constituent Person in the last seven (7) years has.
ever made an assignment for the benefit of creditors or taken advantage of any insolvency act for
the benefit of debtors. Neither Borrower, Mortgage Borrower, Operating Lessee nor any
constituent Person of the Borrower are contemplating either the filing of a petition by it under the
Bankruptcy Code or similar state bankruptcy or insolvency law or the liquidation of all or a
major portion of Borrower's, Mortgage Borrower's, or Operating Lessee's assets or property,
and Borrower has no knowledge of any Person contemplating the filing of any such petition
against it, Mortgage Borrower, Operating Lessee or such constituent Persons.
4.1. 7. Full and Accurate Disclosure.
No statement of fact made by Borrower in this Agreement or in any of the other 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 material
fact presently known to Borrower which has not been disclosed to Lender which materially and
adversely affects, or could reasonably be expected to materially and adversely affect, the
Collateral or the Property or the business, operations or condition (financial or otherwise) of
Borrower, Mortgage Borrower or Operating Lessee.
4.1.8. No Plan Assets.
Borrower is not a Plan and none of the assets of Borrower constitute or will constitute, by
virtue of the application of 29 C.F.R. 2510.3-101() as modified by section 3(42) of ERISA,
"Plan Assets" of one or more Plans. In addition, (a) Borrower is not a "governmental plan"
within the meaning of Section 3(32) of ERISA and (b) transactions by or with Borrower are not
subject to State statutes regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or Section 4975 of the
Code currently in effect, which prohibit or otherwise restrict the transactions contemplated by
this Agreement.
4.1.9. Compliance.
Except as expressly set forth in the Environmental Report, surveys, other documents
obtained by Lender in connection with the Loan or otherwise disclosed in writing by Borrower to
Lender, Borrower, Mortgage Borrower, Operating Lessee and the Property and the use thereof
comply in all material respects with all applicable Legal Requirements, including, without
limitation, building and zoning ordinances and codes. Neither Borrower, Mortgage Borrower,
nor Operating Lessee is in material default or violation of any written order, writ, injunction,
decree or demand of any Governmental Authority. There has not been committed by Borrower,
Mortgage Borrower, Operating Lessee or any other Person in occupancy of or involved with the
operation or use of the Property any act or omission affording the federal government or any
other Governmental Authority the right of forfeiture as against the Property or any part thereof or
any monies paid in performance of Borrower's, Mortgage Borrower's or Operating Lessee's
obligations under any of the Loan Documents.
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4.1.1 0. Financial Information ..
All financial data, including, without limitation, the statements of cash flow and income
and operating expense, that have been delivered to Lender in respect of Borrower, Mortgage
Borrower, Operating Lessee, the Collateral and the Property, to Borrower's knowledge, (i) are
true, complete and correct in all material respects, (ii) accurately represent the financial condition
of Borrower, Mortgage Borrower, Operating Lessee, the Collateral and the Property, as
applicable, as of the date of such reports, and (iii) have been prepared in accordance with GAAP
throughout the periods covered, except as disclosed therein. Except for Permitted
Encumbrances, Borrower does not have any contingent liabilities, liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to Borrower and reasonably likely to have a materially adverse
effect on the Collateral or the Property or the operation thereof as hotels except as referred to or
reflected in said financial statements. Since the date of such financial statements, there has been
no material adverse change in the financial condition, operations or business of Borrower,
Mortgage Borrower or Operating Lessee from that set forth in said financial statements.
4.1.11. Condemnation.
Except as disclosed to Lender in wntmg or in the Title Insurance Policy, no
Condemnation or other similar proceeding has been commenced or, to the best of Borrower's
knowledge, is threatened or contemplated with respect to all or any portion of any the Property
or for the relocation of roadways providing access to the Property.
4.1.12. Federal Reserve Regulations.
No part of the proceeds of the Loan will be used for the purpose of purchasing or
acquiring any "margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any purposes
prohibited by Legal Requirements or by the terms and conditions of this Agreement or the other
Loan Documents.
4.1.13. [Intentionally omitted.]
4.1.14. Not a Foreign Person.
Neither Borrower, Mortgage Borrower nor Operating Lessee is a "foreign person" within
the meaning of 1445(f)(3) of the Code.
4.1.17. Enforceability.
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The Loan Documents are not subject to any right of rescission, set-off, counterclaim or
defense by Borrower, including the defense of usury, and Borrower has not asserted any right of
rescission, set-off, counterclaim or defense with respect thereto.
4.1.18. No Prior Assignment.
There are no prior assignments of the Leases, the Room License Agreements or any
portion of the Rents due and payable or to become due and payable which are presently
outstanding, other than to the Operating Lessee pursuant to the Operating Lease. To the best of
Borrower's knowledge, there are no prior assignments of the Collateral which are presently
outstanding except in accordance with the Loan Documents.
4.1.19. Insurance.
Mortgage Borrower has obtained and Borrower has delivered to Lender certificates
evidencing all insurance policies reflecting the insurance coverages, amounts and other
requirements set forth in the Security Instrument. No Person, including Borrower, has done, by
act or omission, anything which would impair the coverage of any such policy.
4.1.25. Leases. The Property is not subject to any Leases other than the Leases described
in Schedule I attached hereto and made a part hereof. Mortgage Borrower and/or Operating
Lessee is the owner and lessor oflandlord's interest in the Leases. No Person has any possessory
interest in the Property or right to occupy the same except under and pursuant to the provisions
of the Leases. The current Leases are in full force and effect and, there are no defaults by
Mortgage Borrower or Operating Lessee, as applicable, or, to Borrower's knowledge, any tenant
under any Lease, and, to Borrower's knowledge, there are no conditions that, with the passage of
time or the giving of notice, or both, would constitute defaults under any Lease. To the
Borrower's knowledge, no Rent has been paid more than one (I) month in advance of its due
date. To the Borrower's knowledge, there are no offsets or defenses to the payment of any
portion of the Rents. To the Borrower's knowledge, all work to be perfonned by Mmigage
Borrower or Operating Lessee, as applicable, under each Lease has been performed as required
and has been accepted by the applicable tenant, and any payments, free rent, partial rent, rebate
of rent or other payments, credits, allowances or abatements required to be given by Mortgage
Borrower or Operating Lessee, as applicable, to any tenant has already been received by such
tenant. To the Borrower's knowledge, there has been no prior sale, transfer or assignment,
hypothecation or pledge of any Lease or of the Rents received therein which is still in effect.
Except as described on Schedule I, to Borrower's knowledge, no tenant under any Lease has
sublet all or any portion of the premises demised thereby, no such tenant holds its leased
39
premises under sublease, nor does anyone except such tenant and its employees occupy such
leased premises. No tenant under any Lease has a right or option pursuant to such Lease or
otherwise to purchase all or any part of the leased premises or the building of which the leased
premises are a part, except as set forth on Schedule VI hereto. No tenant under any Lease has
any right or option for additional space in the Improvements. To the Borrower's knowledge, no
Hazardous Materials have been disposed, stored or treated by any tenant under any Lease on or
about the leased premises nor does Borrower have any knowledge of any tenant's intention to
use its leased premises for any activity which, directly or indirectly, involves the use, generation,
treatment, storage, disposal or transportation of any Hazardous Materials, except those that are
both (i) in compliance with current Environmental Laws and with permits issued pursuant
thereto (if such permits are required), and (ii) either (A) in amounts not in excess of that
necessary to operate, clean, repair and maintain the Property or each tenant's respective business
at the Property as set forth in their respective Leases, (B) held by a tenant for sale to the public in
its ordinary course of business, or (C) fully disclosed to and approved by Lender in writing
pursuant to the Environmental Report.
4.1.28. Filing and Recording Taxes.
All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer
taxes required to be paid by any Person under applicable Legal Requirements currently in effect
in connection with the transfer of the Collateral to Borrower have been paid or will be paid at or
prior to the filing or recordation of the UCC Financing Statement or any Loan Document. All
stamp, intangible or other similar tax required to be paid by any Person under applicable Legal
Requirements currently in effect in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents, including, without
limitation, the Pledge Agreement, have been paid or will be paid at or prior to the filing or
recordation of the Pledge Agreement or any other Loan Document.
4.1.29. Franchise Agreement.
The Franchise Agreement is in full force and effect, all franchise fees, reservation fees,
royalties and other sums due thereunder have been paid in full to date or are current, and neither
Mortgage Borrower nor Operating Lessee nor to Borrower's knowledge the Franchisor is in
default thereunder beyond any applicable cure periods.
4.1.30. Management Agreement.
The Management Agreement is in full force and effect and there is no default thereunder
by any party thereto and to Borrower's knowledge no event has occurred that, with the passage
of time and/or the giving of notice would constitute a default thereunder.
4.1.31. Illegal Activity.
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No portion of the Property or the Collateral has been or will be purchased with proceeds
of any illegal activity.
4.1.32. No Change in Facts or Circumstances; Disclosure.
All material information submitted by Borrower to Lender and in all material financial
statements, rent rolls, reports, certificates and other documents submitted in connection with the
Loan or in satisfaction of the terms thereof and all statements of fact made by Borrower in this
Agreement or in any other Loan Document, are accurate, complete and correct in all material
respects. There has been no material adverse change in any condition, fact, circumstance or
event that would make any such information inaccurate, incomplete or otherwise misleading in
any material respect or that otherwise materially and adversely affects or could reasonably be
expected to materially and adversely affect the use, operation or value of the Collateral, the
Property or the business operations or the financial condition of Borrower, Mortgage Borrower
or Operating Lessee. Borrower has disclosed to Lender all material facts known to it and has not
failed to disclose any material fact known to it that could cause any Provided Information or
information described in this Section 4.1.32 or any representation or warranty made herein to be
materially misleading.
4.1.33. Investment Company Act.
Borrower is not (a) an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940, as
amended; (b) 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 (c) subject to any other federal or
State law or regulation which purports to restrict or regulate its ability to borrow money.
4.1.34. Principal Place of Business; State of Organization.
Borrower's principal place of business as of the date hereof is the address set forth in the
introductory paragraph of this Agreement. Borrower is organized under the laws of the State of
Delaware and its organizational identification number is 4364256.
4.1.35. Single Purpose Entity.
Borrower represents and warrants that it has not, and that Principal, if any, has not, and
covenants and agrees that Borrower's organizational documents shall provide that Borrower
shall not, and that the organizational documents ofPrincipal, if any, shall provide that Principal
shall not:
(a) with respect to Borrower, engage in any business or activity other than the
acquisition, ownership, managing and maintenance of the Collateral, and entering into the Loan,
and activities incidental thereto and with respect to Principal, engage in any business or activity
other than the ownership of its interest in Borrower and activities incidental thereto;
41
(b) with respect to Borrower, acquire or own any material assets other than (i) the
Collateral, and with respect to Principal, acquire or own any material asset other than its interest
in Borrower;
(c) merge into or consolidate with any person or entity or dissolve, terminate or
liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets
or change its legal structure;
(d) (i) fail to observe its organizational formalities or preserve its existence as an
entity duly organized, validly existing and in good standing (if applicable) under the laws of the
jurisdiction of its organization or formation, and qualification to do business in the State where
the Collateral is located, if applicable, or (ii) without the prior written consent of Lender, amend,
modify, terminate or fail to comply with the provisions of Borrower's Partnership Agreement,
Articles of Organization or similar organizational documents, as the case may be, or of
Principal's Certificate of Incorporation, Articles of Organization or similar organizational
documents, as the case may be, whichever is applicable;
(e) other than Borrower's direct ownership interest in Mortgage Borrower, and other
than Principal's ownership interest in Borrower, own any subsidiary or make any investment in,
any Person without the prior written consent of Lender;
(f) commingle its assets with the assets of any of its members, general partners,
Affiliates, principals or of any other Person or entity, participate in a cash management system
with any other entity or Person, or fail to use its own separate stationery, telephone number,
invoices and checks;
(g) incur any debt, secured or unsecured, direct or contingent (including guaranteeing
any obligation), other than the Debt, except for trade payables in the ordinary course of its
business of owning the Collateral, provided that such debt (i) is not evidenced by a note, (ii) is
paid within sixty (60) days of the date incurred, (iii) does not exceed, in the aggregate, five
percent (5%) of the outstanding principal balance of the Note and (iv) is payable to trade
creditors and in amounts as are normal and reasonable under the circumstances, and with respect
to Principal, incur any debt secured or unsecured, direct or contingent (including guaranteeing
any obligations);
(h) become insolvent and fail to pay its debts and liabilities (including, as applicable,
shared personnel and overhead expenses) from its assets as the same shall become due;
(i) (i) fail to maintain its records (including financial statements), books of account
and bank accounts separate and apart from those of the members, general partners, principals and
Affiliates of Borrower or of Principal, as the case may be, the Affiliates of a member, general
partner or principal of Borrower or of Principal, as the case may be, and any other Person (except
where consolidated financial statements are permitted or required by Applicable Law or GAAP,
provided that such consolidated statements shall reflect that such entities are separate legal
entities and indicate that the Borrower's or Principal's, as applicable, assets and liabilities are not
available to satisfy the debts and other obljgations of such Affiliate or any other Person, other
than as expressly provided in the Loan Documents), (ii) permit its assets or liabilities to be listed
42
as assets or liabilities on the financial statement of any other Person (except where consolidated
financial statements are permitted or required by Applicable Law or GAAP, provided that such
consolidated statements shall reflect that such entities are separate legal entities and indicate that
the Borrower's or Principal's, as applicable, assets and liabilities are not available to satisfy the
debts and other obligations of such Affiliate or any other Person, other than as expressly
provided in the Loan Documents) or (iii) include the assets or liabilities of any other Person on
its financial statements (except where consolidated financial statements are permitted or required
by Applicable Law or GAAP, provided that such consolidated statements shall reflect that such
entities are separate legal entities and indicate that the Borrower's or Principal's, as applicable,
assets and liabilities are not available to satisfy the debts and other obligations of such Affiliate
or any other Person, other than as expressly provided in the Loan Documents);
(j) enter into any contract or agreement with any member, general partner, principal
or Affiliate of Borrower or of Principal, as the case may be, Guarantor, Apollo or any member,
general partner, principal or Affiliate thereof (other than a business management services
agreement with an Affiliate of Borrower, provided that (i) such agreement is acceptable to
Lender, (ii) the manager, or equivalent thereof, under such agreement holds itself out as an agent
of Borrower and (iii) the agreement meets the standards set forth in this subsection (j) following
this parenthetical), except upon terms and conditions that are commercially reasonable,
intrinsically fair and substantially similar to those that would be available on an arms-length
basis with third parties other than any member, general partner, principal or Affiliate of
Borrower or of Principal, as the case may be, Guarantor, Apollo or any member, general partner,
principal or Affiliate thereof;
(k) seek the dissolution or winding up m whole, or m part, of Borrower or of
Principal, as the case may be;
(l) fail to correct any known misunderstandings regarding the separate identity of
Borrower or of Principal, as the case may be, or any member, general partner, principal or
Affiliate thereof or any other Person;
(m) guarantee or become obligated for the debts of any other Person or hold itself out
to be responsible for the debts of another Person;
(n) make any loans or advances to any third party, including any member, general
partner, principal or Affiliate of Borrower or of Principal, as the case may be, or any member,
general partner, principal or Affiliate thereof, and shall not acquire obligations or securities of
any member, general partner, principal or Affiliate of Borrower or of Operating Lessee or
Principal, as the case may be, or any member, general partner, or Affiliate thereof;
( o) fail to file its own tax returns or be included on the tax returns of any other
Person, except that the tax returns of Borrower may be consolidated with the tax returns of their
parent if permitted or required by Applicable Law, provided that such consolidated tax returns
shall reflect that such entities are separate legal entities and indicate that the Borrower's assets
and liabilities are not available to satisfy the debts and other obligations of such parent or any
other Person, other than as expressly provided in the Loan Documents);
43
(p) fail either to hold itself out to the public as a legal entity separate and distinct
from any other Person or to conduct its business solely in its own name or a name franchised or
licensed to it by an entity other than an Affiliate of Borrower or of Principal, as the case may be,
and not as a division or part of any other entity in order not (i) to mislead others as to the identity
with which such other party is transacting business, or (ii) to suggest that Borrower or Principal,
as the case may be, is responsible for the debts of any third party (including any member, general
partner, principal or Affiliate of Borrower or of Principal, as the case may be, or any member,
general partner, principal or Affiliate thereof);
(q) fail to maintain adequate capital for the normal obligations reasonably foreseeable
in a business of its size and character and in light of its contemplated business operations;
(r) [intentionally omitted];
(s) fail to allocate fairly and reasonably any overhead expenses that are shared with
an Affiliate, including paying for office space and services performed by any employee of an
Affiliate;
(t) pledge its assets for the benefit of any other Person, and with respect to Borrower,
other than with respect to the Loan;
(u) fail to maintain a sufficient number of employees in light of its contemplated
business operations;
(v) fail to provide in its (i) Articles of Organization, Certificate of Formation and/or
Operating Agreement, as applicable, if it is a limited liability company, (ii) Limited Partnership
Agreement, if it is a limited partnership or (iii) Certificate of Incorporation, if it is a corporation,
that for so long as the Loan is outstanding pursuant to the Note, this Agreement and the other
Loan Documents, it shall not file or consent to the filing of any petition, either voluntary or
involuntary, to take advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or make an assignment for the benefit of creditors without the affirmative
vote of each of the Independent Directors and of all other general partners/managing
members/ directors;
(w) fail to hold its assets in its own name;
(x) if Borrower or Principal is a corporation, fail to consider the interests of its
creditors in connection with all corporate actions to the extent permitted by Applicable Law;
(y) have any of its obligations guaranteed by an Affiliate except (i) Guarantor and/or
Apollo in connection with the Loan and (ii) any guaranties provided to Franchisor under the
Franchise Agreement;
(z) intentionally omitted;
( aa) with respect to Principal or Borrower, if either of them is a single member limited
liability company that complies with the requirements of Section 4.1.35( ee) below, fail at any
time to have at least two (2) independent directors (each, an "Independent Director") each of
44
whom is not and has not been for at least five (5) years: (a) a stockholder, director, officer,
employee, partner, member, attorney or counsel of Borrower or of Principal or any Affiliate of
either of them; (b) a customer, supplier or other Person who derives its purchases or revenues
(other than any fee paid to such director as compensation for such director to serve as an
Independent Director) from its activities with Borrower, Principal or any Affiliate of either of
them (a "Business Party"); (c) a person or other entity controlling or under common control
with any such stockholder, partner, member, director, officer, attorney, counsel or Business
Party; or (d) a member of the immediate family of any such stockholder, director, officer,'
employee, partner, member, attorney, counsel or Business Party;
(bb) with respect to Principal or Borrower, if either of them is a single member limited
liability company that complies with the requirements of Section 4.1.35(ee) below, permit its
board of directors to take any action which, under the terms of any certificate of incorporation,
by-laws, voting trust agreement with respect to any common stock or other applicable
organizational documents, requires the unanimous vote of one hundred percent (100%) of the
members of the board without the vote of each Independent Director;
( cc) fail to maintain its assets in such a manner that it will not be costly or difficult to
segregate, ascertain or identify its individual assets from those of any other Person; or
( dd) fail to cause Mortgage Borrower to comply with the special purpose provisions of
the limited liability company agreement of Mortgage Borrower.
( ee) In the event Borrower is a Delaware limited liability company that does not have
a managing member which complies with the requirements for a Principal under this Section
4.1.35, the limited liability company agreement of Borrower (the "LLC Agreement") shall
provide that (A) upon the occurrence of any event that causes the last remaining member of
Borrower ("Member") to cease to be the member of Borrower (other than (1) upon an
assignment by Member of all of its limited liability company interest in Borrower and the
admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or
(2) the resignation of Member and the admission of an additional member of Borrower in
accordance with the terms of the Loan Documents and the LLC Agreement), any person acting
as Independent Director of Borrower shall, without any action of any other Person and
simultaneously with the Member ceasing to be the member of Borrower, automatically be
admitted to Borrower ("Special Member") and shall continue Borrower without dissolution and
(B) Special Member may not resign from Borrower or transfer its rights as Special Member
unless ( 1) a successor Special Member has been admitted to Borrower as Special Member in
accordance with requirements of Delaware law and (2) such successor Special Member has also
accepted its appointment as an Independent Director. The LLC Agreement shall further provide
that (v) Special Member shall automatically cease to be a member of Borrower upon the
admission to Borrower of a substitute Member, (w) Special Member shall be a member of
Borrower that has no interest in the profits, losses and capital of Borrower and has no right to
receive any distributions of Borrower assets, (x) pursuant to Section 18-301 of the Delaware
Limited Liability Company Act (the "Act"), Special Member shall not be required to make any
capital contributions to Bonower and shall not receive a limited liability company interest in
Borrower, (y) Special Member, in its capacity as Special Member, may not bind Borrower and
(z) except as required by any mandatory provision of the Act, Special Member, in its capacity as
45
Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or
matter relating to, Borrower, including, without limitation, the merger, consolidation or
conversion of Borrower; provided, however, such prohibition shall not limit the obligations of
Special Member, in its capacity as Independent Director, to vote on such matters required by the
LLC Agreement. In order to implement the admission to Borrower of Special Member, Special
Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower
as Special Member, Special Member shall not be a member of Borrower.
Upon the occurrence of any event that causes the Member to cease to be a member of
Borrower to the fullest extent permitted by law, the personal representative of Member shall,
within ninety (90) days after the occurrence of the event that terminated the continued
membership of Member in Borrower, agree in writing (A) to continue Borrower and (B) to the
admission of the personal representative or its nominee or designee, as the case may be, as a
substitute member of Borrower, effective as of the occurrence of the event that terminated the
continued membership of Member in Borrower. Any action initiated by or brought against
Member or Special Member under any Creditors Rights Laws shall not cause Member or Special
Member to cease to be a member of Borrower and upon the occurrence of such an event, the
business of Borrower shall continue without dissolution. The LLC Agreement shall provide that
each of Member and Special Member waives any right it might have to agree in writing to
dissolve Borrower upon the occurrence of any action initiated by or brought against Member or
Special Member under any Creditors Rights Laws, or the occurrence of an event that causes
Member or Special Member to cease to be a member of Borrower.
(ff) In the event that Borrower is a Delaware limited partnership that has a general
partner which directly owns a zero percent (0%) economic interest in Borrower, the limited
partnership agreement of Borrower (the "LP Agreement") shall provide that (A) upon the
occurrence of any event that causes the last remaining limited partner of Borrower ("Partner")
to cease to be the limited partner of Borrower (other than (1) upon an assignment by Partner of
all of its partnership interest in Borrower and the admission of the transferee in accordance with
the Loan Documents and the LP Agreement, or (2) the resignation of Partner and the admission
of an additional limited partner of Borrower in accordance with the terms of the Loan
Documents and the LP Agreement), any person acting as or any person that meets the definition
of Independent Director of Borrower shall, without any action of any other Person and
simultaneously with the Partner ceasing to be the Partner of Borrower, automatically be admitted
to Borrower ("Special Limited Partner") and shall continue Borrower without dissolution and
(B) Special Limited Partner may not resign from Borrower or transfer its rights as Special
Limited Partner unless a successor Special Limited Partner has been admitted to Borrower as
Special Limited Partner in accordance with the LP Agreement. The LP Agreement shall further
provide that (v) Special Limited Partner shall automatically cease to be a limited partner of
Borrower upon the admission to Borrower of a substitute Partner, (w) Special Limited Partner
shall be a Partner of Borrower that has no interest in the profits, losses and capital of Borrower
and has ~ o right to receive any distributions or assets of Borrower, (x) pursuant to the Delaware
Revised Uniform Limited Partnership Act (the "LP Act"), Special Limited Partner shall not be
required to make any capital contributions to Borrower and shall not receive a limited
partnership interest in Borrower, (y) Special Limited Partner, in its capacity as Special Limited
Partner, may not bind Borrower, and (z) except as required by any mandatory provision of the
LP Act, Special Limited Partner, in its capacity as Special Limited Partner, shall have no right to
46
vote on, approve or otherwise consent to any action by, or matter relating to, Borrower including,
without limitation, the merger, consolidation or conversion of Borrower. In order to implement
the admission to Borrower of Special Limited Partner, Special Limited Partner shall execute a
counterpart of the LP Agreement.
Upon the occurrence of any event that causes the Partner to cease to be a limited partner
of Borrower to the fullest extent permitted by law, the personal representative of Partner shall,
within ninety (90) days after the occurrence of the event that terminated the continued limited
partnership of Partner in Borrower, agree in writing (A) to continue Borrower and (B) to the
admission of the personal representative or its nominee or designee, as the case may be, as a
substitute limited partner of Borrower, effective as of the occurrence of the event that terminated
the continued limited partnership of Partner of Borrower. Any action initiated by or brought
against Partner or Special Limited Partner under any Creditors Rights Laws shall not cause
Partner or Special Limited Partner to cease to be a limited partner of Borrower, and upon the
occurrence of such an event, the business of Borrower shall continue without dissolution. The
LP Agreement shall provide that each of Partner and Special Limited Partner waives any right it
may have to agree in writing to dissolve Borrower upon the occurrence of any action initiated by
or brought against Partner or Special Limited Partner under any Creditors Rights Laws, or the
occurrence of an event that causes Partner or Special Limited Partner to cease to be a limited
partner of Borrower.
4.1.36. Business Purposes.
The Loan is solely for the business purpose of Borrower, and is not for personal, family,
household, or agricultural purposes.
4.1.37. Taxes.
To Borrower's knowledge, Borrower has filed all federal, State, county, municipal, and
city income and other tax returns required to have been filed by it and has paid all taxes and
related liabilities which have become due pursuant to such returns or pursuant to any assessments
received by it. Borrower knows of no basis for any additional assessment in respect of any such
taxes and related liabilities for prior years.
4.1.38. Forfeiture.
Neither Borrower nor any other Person in occupancy of or involved with the operation or
use of any of the Collateral has committed any act or omission affording the federal government
or any State or local government the right of forfeiture as against any of the Collateral or any part
thereof or any monies paid in performance of Borrower's obligations under the Note, this
Agreement or the other Loan Documents. Borrower hereby covenants and agrees not to commit,
permit or suffer to exist any act or omission affording such right of forfeiture.
4.1.39. [Intentionally omitted].
4.1.40. Taxpayer Identification Number.
Borrower's United States taxpayer identification number is 30-0424285.
47
4.1.41. OF AC.
Borrower represents and warrants that neither Borrower, Mortgage Borrower, Operating
Lessee, Guarantor, Apollo, or, to their knowledge, any of their respective Affiliates is a
Prohibited Person, and Borrower, Mortgage Borrower, Operating Lessee, Guarantor, Apollo and,
to their knowledge, their respective Affiliates are in full compliance with all applicable orders,
rules, regulations and recommendations of The Office of Foreign Assets Control of the U.S.
Department of the Treasury.
4.1.43. Embargoed Person.
As of the date hereof and at all times throughout the term of the Loan, including after
giving effect to any Transfers permitted pursuant to the Loan Documents, (a) none of the funds
or other assets of Borrower, Mortgage Borrower, Operating Lessee, Principal and Guarantor
constitute property of, or, to their knowledge, are beneficially owned, directly or indirectly, by
any person, entity or government subject to trade restrictions under U.S. law, including but not
limited to, the International Emergency Economic Powers Act, 50 U.S.C. 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 the investment in Borrower, Mortgage Borrower,
Operating Lessee, Principal or Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or 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, Mortgage
Borrower, Operating Lessee, Principal or Guarantor, as applicable, with the result that the
investment in Borrower, Mortgage Borrower, Operating Lessee, Principal or Guarantor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of law;
and (c) none of the funds of Borrower, Mortgage Borrower, Operating Lessee, Principal, Apollo
or Guarantor, as applicable, have been derived from any unlawful activity with the result that the
investment in Borrower, Mortgage Borrower, Operating Lessee, Principal, Apollo or Guarantor,
as applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of
law.
4.1.44. Property Improvement Plan. A true, complete and correct copy description ofthe
property improvement plan or similar agreements affecting the Property (the "Property
Improvement Plan") and (b) a true, complete and correct description of the estimated amounts
to be expended and estimated time frames for required expenditure and completion pursuant to
the Property Improvement Plan have been delivered to Lender.
4.1.45. Affiliates. Borrower does not own any equity interests in any other Person other
than the Pledged Member Interests.
4.1.46. Mortgage Loan Representations. All of the representations and warranties by
Mortgage Borrower and Operating Lessee contained in the Mortgage Loan Documents are true
and correct in all material respects as of the date made thereunder, without regard to any
amendment, waiver or termination of the Mortgage Loan Documents.
48
Section 4.2. Survival of Representations.
Borrower agrees that all of the representations and warranties of Borrower set forth in
Section 4.1 and elsewhere in this Agreement and in the other Loan Documents shall survive for
so long as any amount remains owing to Lender under this Agreement or any of the other Loan
Documents by Borrower. All representations, warranties, covenants and agreements made in
this Agreement or in the other Loan Documents by Borrower shall be deemed to have been relied
upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.
V. BORROWER COVENANTS
Section 5.1. Affirmative Covenants.
From the date hereof and until payment and performance in full of all obligations of
Borrower under the Loan Documents or the earlier release of the Lien of the Pledge Agreement
encumbering the Collateral (and all related obligations) in accordance with the terms of this
Agreement and the other Loan Documents, Borrower hereby covenants and agrees with Lender
that:
5.1.1. Existence; Compliance with Legal Requirements.
(a) Borrower shall do or cause to be done all things necessary to preserve, renew and
keep in full force and effect its existence, rights, licenses, permits and franchises, and comply, or
cause Mortgage Borrower and/or Operating Lessee to comply, in all material respects, with all
Legal Requirements applicable to it, Mortgage Borrower, Operating Lessee, the Collateral and
the Property. There shall never be committed by Borrower, and Borrower shall not permit or
cause Mortgage Borrower, Operating Lessee or any other Person in occupancy of or involved
with the operation or use of the Property to commit, any act or omission affording the federal
government or any State or local government the right of forfeiture against the Collateral, the
Property or any part thereof or any monies paid in performance of Borrower's obligations under
any of the Loan Documents. Borrower hereby covenants and agrees not to commit, permit or
suffer to exist any act or omission affording such right of forfeiture. Borrower shall at all times
cause Mortgage Borrower and Operating Lessee to maintain, preserve and protect all franchises
and trade names and preserve all the remainder of its property used or useful in the conduct of its
business and shall keep the Property in good working order and repair, and from time to time
make all reasonably necessary repairs, renewals, replacements, betterments and improvements
thereto, all as more fully provided in the Loan Documents and the Mortgage Loan Documents.
Borrower shall keep or shall cause Mortgage Borrower to keep the Property insured at all times
by financially sound and reputable insurers, to such extent and against such risks, and maintain
liability and such other insurance, as is more fully provided in the Security Instrument.
(b) After prior written notice to Lender, Borrower, at its own expense, may contest or
cause Mortgage Borrower or Operating Lessee to contest by appropriate legal proceeding
promptly initiated and conducted in good faith and with due diligence, the validity of any Legal
Requirement, the applicability of any Legal Requirement to Borrower, Mortgage Borrower,
Operating Lessee, the Collateral or the Property or any alleged violation of any Legal
49
Requirement, provided that (i) no Default or Event of Default has occurred and remains uncured;
(ii) such proceeding shall be permitted under and be conducted in accordance with the provisions
of any instrument to which Borrower, Mortgage Borrower or Operating Lessee is subject and
shall not constitute a default thereunder and such proceeding shall be conducted in accordance
with all Applicable Laws; (iii) neither the Collateral nor the Property nor any part thereof or
interest therein will be in imminent danger of being sold, forfeited, terminated, cancelled or lost;
(iv) Borrower shall promptly upon final non-appealable determination thereof comply with any
such Legal Requirement determined to be valid or applicable or cure any violation of any Legal
Requirement; (v) such proceeding shall suspend the enforcement of the contested Legal
Requirement against Borrower, Mortgage Borrower, Operating Lessee or the Property; and (vi)
Borrower shall furnish or shall cause Mortgage Borrower or Operating Lessee to furnish such
security as may be required in the proceeding, or, if requested by Lender, an amount equal to one
hundred ten percent ( 11 0%) of the potential liability being contested, including all interest and
penalties payable in connection therewith. Lender may apply any such security or part thereof,
as necessary to cause compliance with such Legal Requirement at any time when, in the
reasonable judgment of Lender, the validity, applicability or violation of such Legal Requirement
is finally established or the Collateral or the Property (or any part thereof or interest therein) shall
be in danger of being sold, forfeited, terminated, cancelled or lost.
5.1.2. Taxes and Other Charges.
Borrower shall pay, or shall cause Mortgage Borrower and/or Operating Lessee to pay,
all Taxes and Other Charges now or hereafter levied or assessed or imposed against the Property
or any part thereof as the same become due and payable. Borrower shall furnish, or shall cause
Mortgage Borrower and/or Operating Lessee to furnish, to Lender receipts, or other evidence of
the payment of the Taxes and the Other Charges prior to the date the same shall become
delinquent. Borrower shall not suffer, and shall not permit Mortgage Borrower or Operating
Lessee to suffer, and shall promptly cause to be paid and discharged any Lien or charge
whatsoever which may be or become a Lien or charge against the Property, and shall promptly
pay or cause Mortgage Borrower or Operating Lessee to pay for all utility services provided to
the Property. After prior written notice to Lender, Borrower, at its own expense, may contest, or
may cause Mortgage Borrower and/or Operating Lessee to contest, by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or
validity or application in whole or in part of any Taxes or Other Charges, provided that (i) no
Default or Event of Default has occurred and remains uncured; (ii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any other instrument to
which Borrower, Mortgage Borrower and Operating Lessee are subject and shall not constitute a
default thereunder and such proceeding shall be conducted in accordance with all Applicable
Laws; (iii) neither the Collateral nor the Property nor any part thereof or interest therein will be
in danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall, or shall
cause Mortgage Borrower or Operating Lessee to, promptly upon final determination thereof pay
the amount of any such Taxes or Other Charges, together with all costs, interest and penalties
which may be payable in connection therewith; (v) such proceeding shall suspend the collection
of such contested Taxes or Other Charges from the Property; and (vi) Borrower shall furnish
such security as may be required in the proceeding, or, if requested by Lender, an amount equal
to one hundred ten percent (11 0%) of the potential liability being contested, including all interest
and penalties payable in connection therewith. Lender may apply such security or part thereof
50
held by Lender at any time when, in the reasonable judgment of Lender, the validity or
applicability of such Taxes or Other Charges are established or the Collateral or the Property (or
part thereof or interest therein) shall be in danger of being sold, forfeited, terminated, cancelled
or lost or there shall be any danger of the Lien of the Pledge Agreement or any Security
Instrument being primed by any related Lien.
5.1.3. Litigation.
Upon acquiring knowledge thereof, Borrower shall give prompt written notice to Lender
of any litigation or governmental proceedings pending or threatened in writing against Borrower,
Mortgage Borrower or Operating Lessee which, if resulting in an adverse determination to either
Borrower, Mortgage Borrower or Operating Lessee, could reasonably be expected materially
adversely affect Borrower's, Mortgage Borrower's or Operating Lessee's condition (financial or
otherwise) or business or the Property.
5.1.4. Access to Property.
Borrower shall cause Mortgage Borrower and Operating Lessee to permit agents,
representatives and employees of Lender to inspect the Property or any part thereof during
business hours upon reasonable advance notice.
5.1.5. Notice ofDefault.
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 of which Borrower has knowledge.
5.1.6. Cooperate in Legal Proceedings.
Borrower shall cooperate, and shall cause Mortgage Borrower and Operating Lessee to
cooperate, fully with Lender with respect to any proceedings before any court, board or other
Governmental Authority which could reasonably be expected to adversely affect the rights of
Lender hereunder or any rights obtained by Lender under any of the other Loan Documents and,
in connection therewith, permit Lender, at its election, to participate in any such proceedings.
5.1.7. Award and Insurance Benefits.
Borrower shall cooperate, and shall cause Mortgage Borrower and Operating Lessee to
cooperate, with Lender in obtaining for Lender the benefits of any Awards or Insurance
Proceeds, subject to Sections 4(f) and 8 of Security Instrument, lawfully or equitably payable in
connection with the Property, and Lender shall be reimbursed for any reasonable expenses
incurred in connection therewith (including reasonable attorneys' fees and disbursements, and
the payment by Borrower of the expense of an appraisal on behalf of Lender in case of Casualty
or Condemnation affecting the Property or any part thereof) out of such Award or Insurance
Proceeds.
5.1.8. Further Assurances.
51
Borrower shall, and shall cause Mortgage Borrower and Operating Lessee to, at
Borrower's sole cost and expense:
(a) furnish to Lender all instruments, documents, boundary surveys, footing or
foundation surveys, certificates, plans and specifications, appraisals, title and other insurance
reports and agreements, and each and every other document, certificate, agreement and
instrument required to be furnished by Borrower pursuant to the terms of the Loan Documents or
reasonably requested by Lender in connection therewith;
(b) execute and deliver to Lender such documents, instruments, certificates,
assignments and other writings, and do such other acts necessary or desirable, to evidence,
preserve and/or protect the collateral at any time securing or intended to secure the obligations of
Borrower under the Loan Documents, as Lender may reasonably require; and
(c) do and execute all and such further lawful and reasonable acts, conveyances and
assurances for the better and more effective carrying out of the intents and purposes of this
Agreement and the other Loan Documents, as Lender shall reasonably require from time to time.
Borrower hereby authorizes Lender to file Uniform Commercial Code financing
statements in each jurisdiction and with such filing offices that Lender deems necessary or
desirable in order to perfect the security interests in all or any portion of the property granted by
Borrower to Lender pursuant to the Pledge Agreement or other security agreement, document or
instrument. With respect to Borrower, such financing statements may indicate or describe the
collateral in any manner the Lender so chooses in its sole discretion, including, without
limitation, describing such collateral as "all assets of debtor, whether now owned or hereafter
acquired", "all personal property of debtor, whether now owned or hereafter acquired" or words
of similar import.
5.1.9. Mortgage and Intangible Taxes.
Borrower shall pay all State, county and municipal recording, mortgage, intangible, and
all other taxes imposed upon the execution and recordation or filing of the UCC Financing
Statement and/or upon the execution and delivery of the Note.
5.1.10. Financial Reporting.
(a) Borrower will keep and maintain or will cause Mortgage Borrower or Operating
Lessee to keep and maintain on a Fiscal Year basis, in accordance with GAAP (or such other
accounting basis acceptable to Lender), proper and accurate books, records and accounts
reflecting all of the financial affairs of Borrower, Mortgage Borrower and Operating Lessee and
all items of income and expense in connection with the operation on an individual basis of the
Property. Lender shall have the right from time to time at all times during normal business hours
upon reasonable notice to examine such books, records and accounts at the office of Borrower,
Mortgage Borrower, Operating Lessee or any 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 Borrower's, Mortgage Borrower's and Operating Lessee's, respectively, accounting
52
records with respect to the Property, as Lender shall determine to be necessary or appropriate in
the protection of Lender's interest.
(b) Borrower will furnish to Lender annually, within ninety (90) days following the
end of each Fiscal Year a complete copy of GP AT's consolidated annual financial statements
audited by the Approved Accountant and containing an unqualified opinion in accordance with
GAAP (or such other accounting basis acceptable to Lender). These financial statements will
include a supplemental consolidating schedule or note to the financial statements presenting a
combined income statement and balance sheet for such Fiscal Year for the Property for the
Mortgage Borrower and a combined income statement and balance sheet for all other properties
and non-property specific items directly or indirectly owned by GP AT. The Approved
Accountant is not required to issue an opinion on the financial information included in the
combined income statement and the balance sheet for the Property or Mortgage Borrower.
GPA T's consolidated annual financial statements shall indicate that the Borrower and Mortgage
Borrower are each separate legal entities from their respective parent and Affiliates and indicate
that the Borrower's and Mortgage Borrower's assets and liabilities are not available to satisfy the
debts and other obligations of such Affiliates or any other Person, other than as expressly
provided in the Loan Documents. In addition to providing GPA T's consolidated annual financial
statements to Lender, Borrower shall simultaneously provide to Lender the following unaudited
items: (i) a comparison of the budgeted income and expenses and the actual income and
expenses for the prior Fiscal Year; (ii) a certificate executed by a Responsible Officer or other
appropriate officer of GP AT stating that each such consolidated annual financial statement
presents fairly the financial condition and the results of operations of GP AT, Mortgage
Borrower, Borrower and the Property being reported upon and has been prepared in accordance
with GAAP; (iii) a list of tenants, if any, occupying more than twenty (20%) percent of the total
floor area of the Improvements at the Property; (iv) an annual occupancy report for such year,
including the average daily room rate for such year for the Property; and (v) a schedule certified
by a Responsible Officer which includes amounts representing annual Net Cash Flow, Net
Operating Income, Gross Income from Operations and Operating Expenses, in addition to a
schedule reconciling Net Operating Income to Net Cash Flow (the "Net Cash Flow Schedule"),
which shall itemize all adjustments made to Net Operating Income to arrive at Net Cash Flow.
Together with GPA T's annual financial statements, Borrower shall furnish to Lender an
Officer's Certificate certifYing as of the date thereof whether there exists an event or
circumstance which constitutes a Default or Event of Default under the Loan Documents
executed and delivered by, or applicable to, Borrower, and if such Default or Event of Default
exists, the nature thereof, the period of time it has existed and the action then being taken to
remedy the same.
(c) Borrower will furnish, or cause to be furnished, to Lender on or before thirty (30)
days after the end of each calendar quarter the following items, accompanied by a certificate of a
Responsible Officer or other appropriate officer of Borrower, Mortgage Borrower or Principal,
as applicable, stating that such items are true, correct, accurate, and complete and fairly present
the financial condition and results of the operations of Borrower, Mortgage Borrower and the
Property (subject to normal year-end adjustments): (i) a report of occupancy for the subject
quarter including an average daily rate, and any and all franchise inspection reports received by
Borrower during the subject quarter accompanied by an Officer's Certificate with respect
thereto; (ii) quarterly and year-to-date operating statements (including Capital Expenditures)
53
prepared for each calendar quarter, noting Net Operating Income, Gross Income from
Operations, and Operating Expenses, and other information necessary and sufficient to fairly
represent the financial position and results of operation of the Property during such calendar
quarter, and containing a comparison of budgeted income and expenses and the actual income
and expenses together with a detailed explanation of any variances of ten percent ( 1 0%) or more
between budgeted and actual amounts for such periods, all in form satisfactory to Lender; (iii) a
calculation reflecting the annual Aggregate Debt Service Coverage Ratio for the immediately
preceding twelve (12) month period as of the last day of such quarter accompanied by an
Officer's Certificate with respect thereto; (iv) a Net Cash Flow Schedule; (v) Quality Assurance
Reports and guest satisfaction reports for the Property; (vi) Smith Travel STAR Reports for the
Property for the applicable calendar quarter; and (vii) any other statements or reports required to
be delivered to Borrower during such calendar quarter pursuant to the Management Agreement.
In addition, such certificate shall also be accompanied by a certificate of a Responsible Officer or
other appropriate officer of Borrower stating that the representations and warranties of Borrower
set forth in Section 4.1.35 are true and correct as of the date of such certificate and that there are
no trade payables outstanding for more than sixty (60) days.
(d) For the partial year period commencing on the date hereof, and for each Fiscal
Year thereafter, Borrower shall submit or shall cause Mortgage Borrower to submit to Lender an
Annual Budget for the Property not later than thirty (30) days prior to the commencement of
such period or Fiscal Year in form reasonably satisfactory to Lender, and shall be subject to
Lender's written approval, not to be unreasonably withheld (each such Annual Budget after it
has been approved in writing by Lender shall be hereinafter referred to as an "Approved Annual
Budget"). In the event that Lender objects to a proposed Annual Budget submitted by Borrower,
Lender shall advise Borrower of such objections within fifteen (15) days after receipt thereof
(and deliver to Borrower a reasonably detailed description of such objections) and Borrower
shall promptly revise such Annual Budget and resubmit the same to Lender. Lender shall advise
Borrower of any objections to such revised Annual Budget within ten (I 0) days after receipt
thereof (and deliver to Borrower a reasonably detailed description of such objections) and
Borrower shall promptly revise the same in accordance with the process described in this
subsection until Lender approves the Annual Budget. Until such time that Lender approves a
proposed Annual Budget, the most recently Approved Annual Budget shall apply; provided that,
such Approved Annual Budget shall be adjusted to reflect actual increases in Taxes,_ Insurance
Premiums and utilities expenses.
(e) Borrower shall furnish to Lender, or shall cause Mortgage Borrower to furnish to
Lender, within ten (10) Business Days after request such further detailed information with
respect to the operation of the Property and the financial affairs of Bo1Tower and Mortgage
Borrower as may be reasonably requested by Lender, including, without limitation, an annual
operating budget for the Property. Borrower shall furnish to Lender, or shall cause Mortgage
Borrower to furnish to Lender, all materials furnished by Mortgage Borrower to Mortgage
Lender pursuant to Sections 7(a) and 19 of the Security Instrument at the same times such
materials are furnished to Mortgage Lender under the Security Instrument.
(f) Any reports, statements or other information required to be delivered under this
Agreement shall be delivered (i) in paper form and (ii) if requested by Lender and within the
capabilities of Borrower's, Mortgage Borrower's data systems without change or modification
54
thereto, in electronic form and prepared using a Microsoft Word for Windows or WordPerfect
for Windows files (which files may be prepared using a spreadsheet program and saved as word
processing files).
(g) Borrower agrees that Lender may forward to each purchaser, transferee, assignee,
servicer, participant, Co-Lender or investor in all or any portion of the Loan or any Securities
(collectively, the "Investor") or any Rating Agency rating such participations and/or Securities
and each prospective Investor, and any organization maintaining databases on the underwriting
and performance of commercial mortgage loans, all documents and information which Lender
now has or may hereafter acquire relating to the Debt and to Borrower, Mortgage Borrower,
Operating Lessee, Guarantor, Apollo, the Collateral and the Property, whether furnished by
Borrower, Mortgage Borrower, Operating Lessee, Guarantor, Apollo or otherwise, as Lender
determines necessary or desirable.
5.1.11. Business and Operations.
Borrower will cause Mortgage Borrower and Operating Lessee to continue to engage in
the businesses presently conducted by it as and to the extent the same are necessary for the
ownership, maintenance, management and operation of the Property. Borrower will cause
Mortgage Borrower and Operating Lessee to each remain in good standing under the laws of
each jurisdiction to the extent required for the ownership, maintenance, management and
operation of the Property.
5 .1.12. Costs of Enforcement.
In the event (a) that the Pledge Agreement is foreclosed in whole or in part or that the
Pledge Agreement is put into the hands of an attorney for collection, suit, action or foreclosure,
(b) of the foreclosure of any security agreement prior to or subsequent to Pledge Agreement in
which proceeding Lender is made a party, or (c) of the bankruptcy, insolvency, rehabilitation or
other similar proceeding in respect of Borrower, Mortgage Borrower or Operating Lessee or any
of their constituent Persons or an assignment by Borrower, Mortgage Borrower or Operating
Lessee or any of their constituent Persons for the benefit of its creditors, Borrower, and its
successors or assigns, shall be chargeable with and agrees to pay all costs of collection and
defense, including attorneys' fees and costs, incurred by Lender or Borrower in connection
therewith and in connection with any appellate proceeding or post-judgment action involved
therein, together with all required service or use taxes.
5.1.13. Estoppel Statement.
(a) After request by Lender, Borrower shall within fifteen ( 15) days furnish Lender
with a statement, duly acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Note, (ii) the unpaid principal amount of the Note, (iii) the Applicable
Interest Rate of the Note, (iv) the date installments of interest and/or principal were last paid, (v)
any offsets or defenses to the payment of the Debt of which Borrower has knowledge, and (vi)
that the Note, this Agreement, the Pledge Agreement and the other Loan Documents are valid,
legal and binding obligations and have not been modified or if modified, giving particulars of
such modification.
55
(b) Borrower shall use commercially reasonable efforts to cause Mortgage Borrower
and Operating Lessee to deliver to Lender upon request, tenant estoppel certificates from each
commercial tenant leasing space at the Property in form and substance reasonably satisfactory to
Lender.
(c) Subject to all estoppel terms (if any) within the Franchise Agreement, Borrower
shall, promptly upon request of Lender, use commercially reasonable efforts to cause Mortgage
Borrower or Operating Lessee to deliver an estoppel certificate from Franchisor stating that, to
Franchisor's knowledge, (i) the Franchise Agreement is in full force and effect and has not been
modified, amended or assigned, (ii) neither Franchisor nor Operating Lessee is in default under
any of the terms, covenants or provisions of the Franchise Agreement and Franchisor knows of
no event which, but for the passage of time or the giving of notice or both, would constitute an
event of default under the Franchise Agreement, (iii) neither Franchisor nor Operating Lessee
has commenced any action or given or received any notice for the purpose of terminating the
Franchise Agreement and (iv) all sums due and payable to Franchisor under the Franchise
Agreement have been paid in full to the extent then due.
5.1.14. Loan Proceeds.
Borrower shall use the proceeds of the Loan received by it on the Closing Date only for
the purposes set forth in Section 2.1.4 hereof.
5.1.15. Performance by Borrower.
(a) Borrower shall in a timely manner observe, perform and fulfill each and every
covenant, term and provision of each Loan Document executed and delivered by, or applicable
to, Borrower and shall not enter into or otherwise suffer or permit any amendment, waiver,
supplement, termination or other modification of any Loan Document executed and delivered by,
or applicable to, Borrower without the prior written consent of Lender.
(b) Borrower shall not cause or permit Mortgage Borrower to enter into or otherwise
suffer or permit any amendment, waiver, supplement, termination or other modification of any
Mortgage Loan Document executed and delivered by, or applicable to, Mortgage Borrower as of
the date hereof without the prior written consent of Lender (other than ministerial or de minimis
modifications which do not affect any of the economic terms therein or change any rights or
obligations of the parties thereunder). Borrower shall provide, or cause Mortgage Borrower to
provide, Lender with a copy of any amendment, waiver, supplement, termination or other
modification to the Mortgage Loan Documents within five (5) days after the execution thereof.
Borrower shall not, and shall not permit Mortgage Borrower, to, amend or modify the
Organizational Documents of Mortgage Borrower, in any respect which would (i) limit
distributions to be made to Borrower, (ii) limit cure rights of Borrower, (iii) modify the special
purpose entity requirements set forth therein or (iv) would in any other respect have any material
adverse effect on Lender without Lender's consent.
5 .1.16. Confirmation of Representations.
Borrower shall deliver, in connection with any Securitization or Syndication, (a) one or
more Officer's Certificates certifying to the knowledge of the Responsible Officer providing the
56
certificate as to the accuracy of all representations made by Borrower in the Loan Documents as
of the date of the closing of such Securitization or Syndication in all relevant jurisdictions, or
listing in detail any exceptions to such representations that are no longer accurate, and (b)
certificates of the relevant Governmental Authorities in all relevant jurisdictions indicating the
good standing and qualification of Borrower, Mortgage Borrower, Operating Lessee and
Principal as of the date of the closing of such Securitization or Syndication.
5 .1.17. Leasing Matters.
(a) Borrower may allow Operating Lessee to enter into a proposed Lease (including
the renewal or extension of an existing Lease (a "Renewal Lease")) without the prior written
consent of Lender, provided such proposed Lease or Renewal Lease (i) provides for rental rates
and terms comparable to existing local market rates and terms (taking into account the type and
quality of the tenant) as of the date such Lease is executed by Operating Lessee (unless, in the
case of a Renewal Lease, the rent payable during such renewal, or a formula or other method to
compute such rent, is provided for in the original Lease), and does not have rent credits, free
rents or similar terms in excess of market conditions, (ii) is an arms-length transaction with a
bona fide, independent third party tenant, (iii) does not have a material adverse effect on the
value or quality of the Property, (iv) is subject and subordinate to the related Security Instrument
and the lessee thereunder agrees to attorn to Mortgage Lender, (v) [intentionally omitted], (vi)
does not option, offer or grant a similar right of the tenant thereunder to acquire any portion of
the Property, and (vii) is not a Major Lease. All proposed Leases which do not satisfy the
requirements set forth in this Section 5.1.17(a) shall be subject to the prior approval of Lender,
which approval shall not be unreasonably withheld, conditioned or delayed. At Lender's request,
Borrower shall cause Mortgage Borrower and/or Operating Lessee to promptly deliver to Lender
copies of all Leases which are entered into pursuant to this Subsection together with Operating
Lessee's certification that it has satisfied all of the conditions of this Section.
(b) Borrower shall cause Operating Lessee to (i) observe and perform all the
obligations imposed upon the lessor under the Leases and shall not do or permit to be done
anything to impair the value of any of the Leases as security for the Debt; (ii) promptly send
copies to Lender of all notices of default or other material matters which Operating Lessee shall
send or receive with respect to the Leases; (iii) enforce all of the material terms, covenants and
conditions contained in the Leases upon the part of the tenant thereunder to be observed or
performed (except for termination of a Major Lease which shall require Lender's prior written
approval); (iv) not collect any of the Rents more than one (1) month in advance (except Security
Deposits shall not be deemed Rents collected in advance); (v) not execute any other assignment
of the lessor's interest in any of the Leases or the Rents; and (vi) not consent to any assignment
of or subletting under any Leases not in accordance with their terms, without the prior written
consent of Lender, such consent not to be unreasonably withheld, conditioned or delayed.
(c) Borrower may, without the consent of Lender, permit Operating Lessee to amend,
modify or waive the provisions of any Lease or terminate, reduce rents under, accept a surrender
of space under, or shorten the term of, any Lease (including any guaranty, letter of credit or other
credit support with respect thereto) provided that such Lease is not a Major Lease and that such
action (taking into account, in the case of a termination, reduction in rent, surrender of space or
shortening of term, the planned alternative use of the affected space) does not have a material
57
adverse effect on the value of the Property taken as a whole, and provided that such Lease, as
amended, modified or waived, is otherwise in compliance with the requirements of this
Agreement and any lease subordination agreement binding upon Mortgage Lender with respect
to such Lease. A termination of a Lease (other than a Major Lease) with a tenant who is in
default beyond applicable notice and grace periods shall not be considered an action which has a
material adverse effect on the value of the Property taken as a whole. Any amendment,
modification, waiver, termination, rent reduction, space surrender or term shortening which does
not satisfy the requirements set forth in this Subsection shall be subject to the prior written
approval of Lender which .consent shall not be unreasonably withheld, conditioned or delayed.
At Lender's request, Borrower shall cause Mortgage Borrower and/or Operating Lessee to
promptly deliver to Lender copies of all Leases, amendments, modifications and waivers which
are entered into pursuant to this Section 5 .1.17 (c) together with Operating Lessee's certification
that it has satisfied all of the conditions of this Section 5.1.17(c).
(d) Notwithstanding anything contained herein to the contrary, Borrower shall not
permit Operating Lessee to, without the prior written consent of Lender, which consent shall not
be unreasonably withheld, conditioned or delayed, enter into, renew, extend, amend, modify,
waive any provisions of, terminate, reduce rents under, accept a surrender of space under, or
shorten the term of, any Major Lease or any instrument guaranteeing or providing credit support
for any Major Lease.
(e) [Intentionally omitted].
(f) Notwithstanding the provisions above, to the extent, if any, that Lender's prior
written approval is required pursuant to this Section 5 .1.17, such request for approval shall be
deemed approved if Lender shall have failed to notify Borrower of its approval or disapproval (i)
within ten (10) Business Days following Lender's receipt of Borrower's or Operating Lessee's
written request together with (if applicable) a copy of the proposed Lease, Renewal Lease,
modification or other instrument requiring approval (and, if a Lease or a restatement of an
existing Lease, a blacklined copy thereof showing changes to Operating Lessee's standard form)
and (ii) if Lender fails to respond within such ten (10) Business Day period, five (5} Business
Days following Lender's receipt of Borrower's or Operating Lessee's second written request
together with the materials described in clause (i) above (such fifteen (15) Business Day period,
the "Leasing Approval Period"). Upon Lender's request, Borrower shall be required to cause
Operating Lessee provide Lender with such material information and documentation as may be
reasonably required by Lender, in its reasonable discretion, including without limitation, lease
comparables and other market information as reasonably required by Lender to reach a decision.
In order to be effective for the purposes of triggering the time periods set forth above for Lender
to respond, all requests by Borrower or Operating Lessee for approval pursuant to this Section
5.1.17(f) must contain the following in bold, capital letters in the request and on the envelope or
wrapper enclosing such request: "THIS IS A REQUEST FOR APPROVAL PURSUANT TO
SECTION 5.1.17(f) OF THE LOAN AGREEMENT BETWEEN LENDER AND
BORROWER. FAILURE BY LENDER TO RESPOND WITHIN TIME PERIODS
REFERENCED IN SAID SECTION 5.1.17(f) MAY RESULT IN APPROVAL OF THE
MATTERS REFERRED TO HEREIN."
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(g) At all times when the Operating Lease is in effect with respect to the Property,
Operating Lessee (and not Mortgage Borrower) shall be the sole party entitled to lease all or any
portion of the Property, and Borrower shall cause Operating Lessee to comply with the terms of
this Section 5 .1.17 with respect to such Property. In the event that the Operating Lease is not in
effect with respect to the Property, Mortgage Bqrrower shall be the sole party entitled to lease all
or any portion of the Property and Borrower shall cause Mortgage Borrower to comply with all
obligations of Operating Lessee under this Section 5 .1.1 7 with respect to such Property.
5 .1.18. Management Agreement.
(a) The Improvements on the Property are operated under the terms and conditions of
the Management Agreement. In no event shall the base management fees under the Management
Agreement exceed three percent (3.0%) of the gross income derived from the Property. All base
management fees and any performance-based incentive management fees under the Management
Agreement shall be subordinated to the Loan and all payments to be made in connection with the
Loan. Borrower shall cause Operating Lessee to (i) diligently perform and observe all of the
material terms, covenants and conditions of the Management Agreement, on the part of
Operating Lessee to be performed and observed and (ii) promptly notify Lender of the giving of
any notice by Manager to Operating Lessee of any default by Operating Lessee in the
performance or observance of any of the material terms, covenants or conditions of the
Management Agreement on the part of Operating Lessee to be performed and observed and
deliver to Lender a true copy of each such notice. Borrower shall not cause or permit Operating
Lessee to surrender the Management Agreement, consent to the assignment by the Manager of
its interest under the Management Agreement, or terminate or cancel the Management
Agreement, or modify, change, supplement, alter or amend the Management Agreement, in any
material respect, either orally or in writing in each case without the consent of Lender which
consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that
immaterial modifications of the Management Agreement may be made without consent of
Lender; and provided further, that Operating Lessee may renew the term of the Management
Agreement without consent of Lender. Subject to the rights of Mortgage Lender, Borrower
hereby assigns to Lender as further security for the payment of the Debt and for the performance
and observance of the terms, covenants and conditions of this Agreement, all the rights,
privileges and prerogatives of Borrower to cause Operating Lessee to surrender the Management
Agreement, or to terminate, cancel, modify, change, supplement, alter or amend the Management
Agreement, in any material respect, and any such surrender of the Management Agreement, or
termination, cancellation, modification, change, supplement, alteration or amendment of the
Management Agreement, without the prior consent of Lender shall be void and of no force and
effect. Subject to the rights of Mortgage Lender, if Operating Lessee shall default in the
performance or observance of any material term, covenant or condition of the Management
Agreement on the part of Operating Lessee to be performed or observed, then, without limiting
the generality of the other provisions of this Agreement, and without waiving or releasing
Borrower from any of its obligations hereunder, Lender shall have the right, but shall be under
no obligation, to pay any sums and to perform any act or take any action as may be appropriate
to cause all the terms, covenants and conditions of the Management Agreement on the part of
Operating Lessee to be performed or observed to bepromptly performed or observed on behalf
of Operating Lessee. Lender and any Person designated by Lender shall have, and are hereby
granted, the right to enter upon the Property at any time and from time to time for the purpose of
59
taking any such action. If the Manager shall deliver to Lender a copy of any notice sent to
Operating Lessee of default under the Management Agreement, such notice shall constitute full
protection to Lender for any action taken or omitted to be taken by Lender in good faith, in
reliance thereon. Borrower shall cause Operating Lessee to not, and to not permit the Manager
to, sub-contract any or all of its management responsibilities under the Management Agreement
to a third-party without the prior written consent of Lender, which consent shall not be
unreasonably withheld, conditioned or delayed. Borrower shall cause Operating Lessee to, from
time to time, obtain from the Manager such certificates of estoppel with respect to compliance by
Operating Lessee with the terms of the Management Agreement as may be requested by Lender.
Any sums expended by Lender pursuant to this paragraph (i) shall bear interest at the Default
Rate from the date such cost is incurred to the date of payment to Lender, (ii) shall be deemed to
constitute a portion of the Debt, (iii) shall be secured by the lien of the Pledge Agreement and the
other Loan Documents and (iv) shall be immediately due and payable upon demand by Lender
therefor.
(b) Without limitation of the foregoing, Borrower, upon the request of Lender, shall
cause Operating Lessee to terminate the Management Agreement and replace Manager, without
penalty or fee, if at any time during the Loan: (a) Manager shall become insolvent or a debtor in
any bankruptcy or insolvency proceeding, (b) there exists an Event of Default or (c) there exists
a default by Manager under the Management Agreement that continues beyond any applicable
notice and cure periods thereunder. At such time as the Manager may be removed, a Qualified
Manager shall assume management of the Property pursuant to a Replacement Management
Agreement.
(c) At all times when Operating Lessee is a party to the Management Agreement with
respect to the Property, Borrower shall cause Operating Lessee to comply with the terms ofthis
Section 5.1.18 with respect to the Property. In the event that Mortgage Borrower is a party to the
Management Agreement with respect to the Property, Borrower shall cause Mortgage Borrower
to comply with all obligations of Operating Lessee under this Section 5.1.18 with respect to such
Property.
5.1.20. Alterations.
Borrower shall cause Mortgage Borrower to obtain Lender's prior written consent to any
alterations to any Improvements, which consent shall not be unreasonably withheld except with
respect to alterations that may have a material adverse effect on Borrower's or Mortgage
Borrower's financial condition, the value of the Property or the Net Operating Income.
Notwithstanding the foregoing, Lender's consent shall not be required in connection with any
alterations that (a) will not have a material adverse effect on the value of the Property or the Net
Operating Income, (b) will not violate the terms of the Franchise Agreement or other material
agreement affecting the Property, and (c) will not materially disrupt the ongoing business at the
Property. If the total unpaid amounts with respect to alterations to the Improvements shall at any
time exceed Two Million and 001100 Dollars ($2,000,000) with respect to the Property or two
percent (2%) of the then outstanding principal amount of the Loan with respect to the Property,
in the aggregate (the "Threshold Amount"), Borrower shall promptly deliver (or shall cause
60
Mortgage Borrower to promptly deliver) to Lender as security for the payment of such amounts
and as additional security for Borrower's obligations under the Loan Documents any of the
following: (A) a completion guaranty from Sponsor, in the form attached hereto as Exhibit B,
(B) Cash, (C) U.S. Obligations, (D) other securities having a rating acceptable to Lender and that
the applicable Rating Agencies have confirmed in writing will not, in and of itself, result in a
downgrade, withdrawal or qualification of the initial, or, if higher, then current ratings assigned
in connection with any Securitization, or (E) a completion bond or letter of credit issued by a
financial institution having a rating by the Rating Agencies of not less than "A+". Such security
shall be in an amount equal to the excess of the total unpaid amounts with respect to alterations
to the Improvements on the Property (other than such amounts to be paid or reimbursed by
tenants under the Leases) over the Threshold Amount and applied from time to time at the option
of Lender to pay for such alterations or to terminate any of the alterations and restore the
Property to the extent necessary to prevent any material adverse effect on the value of the
Property. Borrower shall not be required to deliver to Lender the security described in this
Section if Mortgage Borrower has delivered to Mortgage Lender security under the comparable
section of the Mortgage Loan Documents.
5.1.21. Required Capital Improvements. Borrower shall cause Mortgage Borrower to
complete all Required Capital Improvements (a) with respect to work required to be performed
in the Property Improvement Plan for the Property, on or prior to the deadline for each item of
required by the Property Improvement Plan, as such dates may be extended by agreement of
Franchisor and (b) with respect to all other Required Capital Improvements, by the date for
completion specified on Schedule V hereto, in each case subject to Force Majeure delays. It
shall be an Event of Default under this Agreement if Borrower fails to cause Mortgage Borrower
to complete the Required Capital Improvements at the Property by the required deadline for each
repair as set forth in this Section 5 .1.21.
5.1.22. Operating Lease.
(a) Borrower shall cause Operating Lessee to (i) promptly perform and observe all of
the material covenants required to be performed and observed by it under the Operating Lease
and do all things necessary to preserve and to keep unimpaired its material rights thereunder; (ii)
promptly notify Lender of any material default under the Operating Lease of which it is aware;
(iii) promptly Jdiver to LenJer a copy of any notice of default or other material notice under the
Operating Lease delivered to Operating Lessee by Borrower or to Borrower by Operating
Lessee; (iv) promptly give notice to Lender of any notice or information that Mortgage Borrower
receives which indicates that Operating Lessee is terminating its Operating Lease or that
Operating Lessee is otherwise discontinuing its operation of the Property; and (v) promptly
enforce the performance and observance of all of the material covenants required to be
performed and observed by the Operating Lessee and Borrower under the applicable Operating
Lease.
(b) If at any time, (i) Operating Lessee shall become insolvent or a debtor in a
bankruptcy proceeding or (ii) Mortgage Lender or its designee has taken title to the Property by
foreclosure or deed in lieu of foreclosure, has become a mortgagee-in-possession, has appointed
a receiver with respect to the Property or has otherwise taken title to such Property, subject to
Mortgage Lender's rights under the Mortgage Loan Documents, Lender shall have the absolute
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right to (and Borrower shall cause Mortgage Borrower and Operating Lessee to reasonably
cooperate and not in any way hinder, delay or otherwise interfere with Lender's right to),
immediately terminate the applicable Operating Lease under and in accordance with the terms of
the applicable Security Instrument.
(c) Borrower shall not permit or cause Borrower or Operating Lessee to, without the
prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned
or delayed: (i) surrender, terminate or cancel the Operating Lease or otherwise replace Operating
Lessee or enter into any other operating lease with respect to the Property, provided, however, at
the end of the term of the Operating Lease, the applicable Borrower may renew such Operating
Lease or enter into a replacement Operating Lease with Operating Lessee on substantially the
same terms as the expiring Operating Lease except that Lender shall have the right to approve
any material change thereto; (ii) reduce or consent to the reduction of the term of the Operating
Lease; or (iii) enter into, renew, amend, modify, waive any provisions of, reduce Rents under, or
shorten the term of the Operating Lease.
5.1.23. Franchise Agreement.
(a) The Improvements on the Property shall be operated under the terms and
conditions of the Franchise Agreement. Borrower shall cause Operating Lessee to (i) pay all
sums required to be paid by Operating Lessee under the Franchise Agreement, (ii) diligently
perform, observe and enforce all of the material terms, covenants and conditions of the Franchise
Agreement on the part of Operating Lessee to be performed, observed and enforced, (iii)
promptly notify Lender of the giving of any notice to Operating Lessee of any default by
Operating Lessee in the performance or observance of any of the material terms, covenants or
conditions of the Franchise Agreement on the part of Operating Lessee to be performed and
observed and deliver to Lender a true copy of each such notice, and (iv) promptly deliver to
Lender a copy of each financial statement, business plan, capital expenditure plan and estimate
received by it under the Franchise Agreement. Borrower shall not permit or cause Operating
Lessee to, without the prior consent of Lender which consent shall not be unreasonably withheld,
conditioned or delayed, surrender the Franchise Agreement or terminate or cancel the Franchise
Agreement or modify, change, supplement, alter or amend the Franchise Agreement, in any
material respect, either orally or in writing; provided, however, that immaterial modifications of
the Franchise Agreement may be made without consent of Lender. Borrower hereby assigns to
Lender as further security for the payment of the Debt and for the performance and observance
of the terms, covenants and conditions of this Agreement, all the rights, privileges and
prerogatives of Borrower to cause Operating Lessee either to surrender the Franchise Agreement
or to terminate, cancel, materially modify, change, supplement, alter or amend the Franchise
Agreement in any respect, and any such surrender of the Franchise Agreement or termination,
cancellation, material modification, change, supplement, alteration or amendment of the
Franchise Agreement without the prior consent of Lender shall be void and of no force and
effect. If Operating Lessee or Mortgage Borrower shall default in the performance or
observance of any material term, covenant or condition of the Franchise Agreement on the part
of Operating Lessee to be performed or observed, then, without limiting the generality of the
other provisions of this Agreement, and without waiving or releasing Borrower from any of its
obligations hereunder, Lender shall have the right, but shall be under no obligation, to pay any
sums and to perform any act or take any action as may be appropriate to cause all the terms,
62
covenants and conditions of the Franchise Agreement on the part of Operating Lessee to be
performed or observed to be promptly performed or observed on behalf of Operating Lessee.
Lender and any Person designated by Lender shall have, and are hereby granted, the right to
enter upon the Property at any time and from time to time for the purpose of taking any such
action. If Franchisor shall deliver to Lender a copy of any notice sent to Operating Lessee or
Borrower of default under a Franchise Agreement, such notice shall constitute full protection to
Lender for any action taken or omitted to be taken by Lender in good faith, in reliance thereon.
Borrower shall cause Operating Lessee to, from time to time, use its best efforts to obtain from
Franchisor such certificates of estoppel with respect to compliance by Operating Lessee with the
terms of the applicable Franchise Agreement as may be requested by Lender. Any sums
expended by Lender pursuant to this paragraph shall bear interest at the Default Rate from the
date such cost is incurred to the date of payment to Lender, shall be deemed to constitute a
portion of the Debt, shall be secured by the lien of the Pledge Agreement and the other Loan
Documents and shall be immediately due and payable upon demand by Lender therefor.
(b) At all times when Operating Lessee is the party entitled to the benefits of (and is
primarily responsible for the performance of the obligations under) the Franchise Agreement,
Borrower shall cause Operating Lessee to comply with the terms of this Section 5.1.23 with
respect to such Franchise Agreement. In the event that Mortgage Borrower is a party to the
Franchise Agreement (or obligated under any related agreement), Borrower shall cause Mortgage
Borrower to comply with all obligations of Operating Lessee under this Section 5.1.23 with
respect to such Franchise Agreement as if Mortgage Borrower were Operating Lessee.
5.1.25. OFAC.
At all times throughout the term of the Loan, Borrower, Mortgage Borrower, Operating
Lessee, Guarantor, Apollo and their respective Affiliates shall be in full compliance with all
applicable orders, rules, regulations and recommendations of The Office of Foreign Assets
Control ofthe U.S. Department ofthe Treasury.
5.1.27. Mortgage Loan Covenants.
Borrower covenants and agrees to cause Mortgage Borrower to (a) fully comply with all
covenants and agreements set forth in the Security Instrument, and (b) cause Operating Lessee to
fully comply with all covenants and agreements set forth in the Security Instrument applicable to
Operating Lessee.
Section 5.2. Negative Covenants.
From the date hereof until payment and performance in full of all obligations of Borrower
under the Loan Documents or the earlier release of the Liens of the Pledge Agreement on the
Collateral in accordance with the terms of this Agreement and the other Loan Documents,
Borrower covenants and agrees with Lender that it will not do, directly or indirectly, any of the
following:
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5.2.1. Liens.
Borrower shall not and shall not permit or cause Borrower or Operating Lessee to create,
incur, assume or suffer to exist any Lien on any portion of the Property or permit any such action
to be taken, except for the Permitted Encumbrances.
5.2.2. Dissolution.
Borrower shall not (a) engage in any dissolution, liquidation or consolidation or merger
with or into any other business entity, (b) transfer, lease or sell, in one transaction or any
combination of transactions, the assets or all or substantially all of the properties or assets of
Borrower except to the extent expressly permitted by the Loan Documents, (c) except as
expressly permitted under the Loan Documents, modify, amend, waive or terminate its
organizational documents or its qualification and good standing in any jurisdiction or (d) cause
the Principal to (i) dissolve, wind up or liquidate or take any action, or omit to take an action, as
a result of which the Principal would be dissolved, wound up or liquidated in whole or in part, or
(ii) except as expressly permitted under the Loan Documents, amend, modify, waive or terminate
the certificate of incorporation, bylaws or similar organizational documents of the Principal, in
each case, without obtaining the prior written consent of Lender.
5.2.3. Change In Business.
Borrower shall not enter into any line of business 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. Borrower shall not permit or cause
Mortgage Borrower or Operating Lessee to enter into any line of business other than the
ownership, acquisition, development, operation, leasing and management of the Property
(including providing services in connection therewith), 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.
5.2.4. Debt Cancellation.
Borrower shall not cancel or otherwise forgive or release any material claim or debt
(other than termination of Leases in accordance herewith) owed to Borrower by any Person,
except for adequate consideration and in the ordinary course of Borrower's business. In
addition, Borrower shall not permit or cause Mortgage Borrower or Operating Lessee to cancel
or otherwise forgive or release any claim or debt other than termination of Leases in accordance
with the Security Instrument owed to Mortgage Borrower or Operating Lessee by any Person,
except for adequate consideration and in the ordinary course of Mortgage Borrower's or
Operating Lessee's, as the case may be, business.
5.2.5. Zoning.
Borrower shall not allow Mortgage Bonower or Operating Lessee to initiate or consent to
any zoning reclassification of any portion of the Property or seek any variance under any existing
zoning ordinance or use or permit the use of any portion of the Property in any manner that could
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result in such use becoming a non-conforming use under any zoning ordinance or any other
Applicable Law, without the prior written consent of Lender.
5.2.6. No Joint Assessment.
Borrower shall not allow Mortgage Borrower or Operating Lessee to suffer, permit or
initiate the joint assessment of the Property with (a) any other real property constituting a tax lot
separate from the Property, or (b) any portion of the Property which may be deemed to constitute
personal property, or any other procedure whereby the Lien of any taxes which may be levied
against such personal property shall be assessed or levied or charged to the Property.
5.2.7. Name, Identity, Structure, or Principal Place of Business.
Borrower shall not change its name, identity (including its trade name or names), or
principal place of business, as set forth in the introductory paragraph of this Agreement, without,
in each case, first giving Lender thirty (30) days prior written notice. Borrower shall not change
its corporate, partnership or other structure, or the place of its organization as set forth in Section
4.1.34, without, in each case, the consent of Lender. Upon Lender's request, Borrower shall
execute and deliver additional financing statements, security agreements and other instruments
which may be necessary to effectively evidence or perfect Lender's security interest in the
Collateral as a result of such change of principal place of business or place of organization.
5.2.8. ERISA.
(a) During the term of the Loan or of any obligation or right hereunder, neither
Borrower, Mortgage Borrower nor Operating Lessee shall be a Plan and none of the assets of
Borrower, Mortgage Borrower or Operating Lessee shall constitute Plan Assets.
(b) Borrower further covenants and agrees to deliver to Lender such certifications or
other evidence from time to time throughout the term of the Loan, as requested by Lender in its
sole discretion, and represents and covenants that (A) Borrower is not and does not maintain an
"employee benefit plan" as defined in Section 3(3) of ERISA, which is subject to Title I of
ERISA, or a "governmental plan" within the meaning of Section 3(32) of ERISA; (B) Borrower
is not subject to State statutes regulating investments and fiduciary obligations with respect to
governmental plans; 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 of29 C.F.R. 2510.3-10l(b)(2);
(ii) None of the assets of Borrower, Mortgage Borrower or Operating Lessee
are, by virtue of the application of 29 C.F.R. 251 0.3 I 01 (f) as modified by section 3( 42)
of ERISA, regarded as assets of any Plan; or
(iii) Borrower, Mortgage Borrower and Operating Lessee each qualifies as an
"operating company" or a "real estate operating company" within the meaning of 29
C.F.R. 2510.3-lOl(c) or (e).
5.2.9. Affiliate Transactions.
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Borrower shall not enter into, or be a party to, any transaction with an Affiliate of
Borrower, Principal or any of the partners or members of Borrower or Principal 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.
5.2.1 0. Transfers.
(a) Borrower shall not, and shall not permit Mortgage Borrower to, sell, convey,
mortgage, grant, bargain, encumber, pledge, assign, grant options with respect to, or otherwise
transfer or dispose of (directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, and whether or not for consideration or of record) the Property or any part thereof or
any legal or beneficial interest therein or permit a Sale or Pledge of an interest in any Restricted
Party (collectively, a "Transfer"), other than pursuant to Leases of space in the Improvements to
tenants in accordance with the provisions of Section 5 .1.17 hereof or a release of the Property in
accordance with the provisions of Section 2.5 hereof, without (i) the prior written consent of
Lender and (ii) if a Securitization has occurred, delivery to Lender of written confirmation from
the Rating Agencies that the Transfer will not result in the downgrade, withdrawal or
qualification of the then current ratings assigned to any Securities or the proposed rating of any
Securities.
(b) A Transfer shall include, but not be limited to: (i) an installment sales agreement
wherein Mortgage Borrower agrees to sell the Property or any part thereof for a price to be paid
in installments or wherein Borrower agrees to sell the Collateral or any part thereof for a price to
be paid in installments; (ii) an agreement by Mortgage Borrower leasing all or a substantial part
of the Property for other than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in, M011gage Borrower's right,
title and interest in and to any Leases or any Rents; (iii) if a Restricted Party is a corporation, any
merger, consolidation or Sale or Pledge of such corporation's stock or the creation or issuance of
new stock; (iv) if a Restricted Party is a limited or general partnership or joint venture, any
merger or consolidation or the change, removal, resignation or addition of a general partner or
the Sale or Pledge of the partnership interest of any general partner or any profits or proceeds
relating to such general partnership interest, or the Sale or Pledge of limited partnership interests
or any profits or proceeds relating to such limited pm1nership interests or the creation or issuance
of new limited partnership interests; (v) if a Restricted Party is a limited liability company, any
merger or consolidation or the change, removal, resignation or addition of a managing member
or non-member manager (or if no managing member, any member) or the Sale or Pledge of the
membership interest of a managing member (or if no managing member, any member) or any
profits or proceeds relating to such membership interest, or the Sale or Pledge of non-managing
membership interests or the creation or issuance of new non-managing membership interests;
(vi) if a Restricted Party is a trust or nominee trust, any merger, consolidation or the Sale or
Pledge of the legal or beneficial interest in a Restricted Party or the creation or issuance of new
legal or beneficial interests; or (vii) the removal or the resignation of the managing agent
(including, without limitation, an Affiliated Manager) other than in accordance with Section
5.1.18 hereof.
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(c) Notwithstanding the prov1s1ons of Sections 5.2.10(a) and (b), the following
transfers shall not be deemed to be a Transfer: (i) a transfer by devise or descent or by operation
of law upon the death of a member, partner or shareholder of a Restricted Party or a Restricted
Party itself; (ii) the Sale or Pledge, in one or a series of transactions, of not more than forty-nine
percent (49%) of the stock in a Restricted Party; provided, however, no such transfers shall result
in the change of voting control in the Restricted Party, and as a condition to each such transfer,
Lender shall receive not less than ten (10) days prior written notice of such proposed transfer,
(iii) the Sale or Pledge, in one or a series of transactions, of not more than forty-nine percent
(49%) of the limited partnership interests or non-managing membership interests (as the case
may be) in a Restricted Party; provided, however, no such transfers shall result in the change of
voting control in the Restricted Party, and as a condition to each such transfer, Lender shall
receive not less than ten (10) days prior written notice of such proposed transfer, (iv) the sale or
transfer of direct or indirect interests in Apollo, or (v) the pledge of equity interests in Borrower
as security for a Sponsor Loan. Further, notwithstanding anything to the contrary herein, a
termination of the Operating Lease shall not be deemed to be a Transfer, provided that (w) such
termination does not in any way impair Lender's security for the Loan, (x) following such
termination (1) the Property continues to be operated under the same hotel franchise flag that it
operated under immediately prior to such termination pursuant to a franchise agreement
acceptable to Lender in its reasonable discretion, (2) the Property is managed by Manager or a
Qualified Manager pursuant to the Management Agreement or a Replacement Management
Agreement, and (3) each Major Lease at the Property shall continue according to its terms as a
direct lease between Mortgage Borrower, as landlord, and the lessee thereunder, as tenant, (y)
Lender has received such documents, agreements and opinions of counsel as Lender may
reasonably require (including, without limitation, to the extent required by the Rating Agencies,
a REMIC opinion), and (z) if a Securitization has occurred, Borrower shall deliver to Lender
written confirmation from each of the Rating Agencies that such termination shall not result in a
downgrade, withdrawal or qualification of the ratings then assigned to the Securities.
(d) Notwithstanding anything to the contrary contained in this Section 5.2.1 0, Apollo
must continue to control Borrower, Mortgage Borrower, Guarantor and Operating Lessee and
own, directly or indirectly, at least a 51% of the common equity interests and voting rights in
Borrower, in Mortgage Borrower, in Guarantor and in Operating Lessee. At all times following a
transfer of the Property in accordance with the terms and provisions of Section 5 .2.11 hereof, the
Permitted Owner that wholly owns and controls "Transferee" referenced in such Section 5.2.11
must continue to control Borrower, Mortgage Borrower, Guarantor and Operating Lessee and
own, directly or indirectly, at least a 51% interest in Borrower, in Mortgage Borrower, in
Guarantor and in Operating Lessee.
(e) Lender shall not be required to demonstrate any actual impairment of its security
or any increased risk of default hereunder in order to declare the Debt immediately due and
payable upon a Transfer in violation of this Section 5.2.1 0. This provision shall apply to every
Transfer regardless of whether voluntary or not, or whether or not Lender has consented to any
previous Transfer. Notwithstanding anything to the contrary contained in this Section 5.2.10, (a)
no transfer (whether or not such transfer shall constitute a Transfer) shall be made to any
Prohibited Person, and (b) in the event any transfer (whether or not such transfer shall constitute
a Transfer) results in any Person and its Affiliates owning in excess of ten percent (1 0%) of the
ownership interest in a Restricted Party Borrower shall provide to Lender, not less than thirty
67
(30) days prior to such transfer, the name and identity of each proposed transferee, together with
the names of its controlling principals, the social security number or employee identification
number of such transferee and controlling principals, and such transferee's and controlling
principal's home address or principal place of business, and home or business telephone number.
Within ten (1 0) days after request, Borrower shall deliver to Lender an updated organizational
chart in the form of the organizational chart attached hereto as Schedule III.
5.2.11. Permitted Transfer.
Borrower shall not permit a sale, assignment or other Transfer of the Collateral or of the
Property by Mortgage Borrower without the prior written consent of Lender. Notwithstanding
the foregoing, in the event Borrower requests permission of Lender to a sale or conveyance of
the Property by Mortgage Borrower pursuant to Section 13 of the Security Instrument, unless the
Loan is paid in full in connection with such sale or other Transfer (to which Lender's consent
shall not be required) Lender shall not unreasonably withhold, condition or delay its consent to a
one-time sale or conveyance of the Property in accordance with such Section 13 of the Security
Instrument provided that each of the following conditions have been satisfied:
(a) such sale or conveyance has. been approved or deemed approved or is permitted
under the Mortgage Loan Documents and all conditions set forth in the Mortgage Loan
Documents relating thereto have been satisfied;
(b) no Event of Default shall have occurred and be continuing;
(c) the entity to which the Property is sold or conveyed (the "New Mortgage
Borrower"} shall assume (i) the Mortgage Loan and the Mortgage L o ~ n Documents and (ii) all
the agreements of Mortgage Borrower under the Mortgage Loan Documents;
(d) New Mortgage Borrower shall (i) be a bankruptcy-remote special purpose entity
which satisfies all of the conditions of Section 11 of the Security Instrument, (ii) be a single
member Delaware limited liability company or other entity, the sole owner of the 100% of the
direct equity ownership interests of which is New Borrower (as hereinafter defined) and (iii)
have organizational documents substantially similar to the organizational documents of
Mortgage Borrower on the date hereof;
(e) the sole member (and 100% equity owner) ofNew Mortgage Borrower (the "New
Borrower") shall (i) be a single member Delaware limited liability company, (ii) assume the
Loan and all the agreements of Borrower under the Loan Documents, (iii) be a bankruptcy-
remote special purpose entity which satisfies all of the conditions of Section 4.1.35 of this
Agreement and (iv) have organizational documents substantially similar to the organizational
documents of Borrower on the date hereof;
(f) after giving effect to the sale or conveyance, one or inore Permitted Owners own,
directly or indirectly, in the aggregate, not less than 51% of the equity interests in Borrower and
control, directly or indirectly, Borrower and Lender shall have consented to such sale or
conveyance, which consent shall not be unreasonably withheld;
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(g) after giving effect to the proposed sale or conveyance, Lender shall have a first
priority perfected security interest in 100% of the membership interest owned by New Borrower
in New Mortgage Borrower and Borrower shall deliver, at its sole cost and expense, a new UCC
title insurance policy, insuring the new pledge referred to in clause (e) above, as a valid first lien
on the Collateral and naming the New Borrower as owner of the Collateral, which new UCC title
insurance policy shall insure that, as of the date of the Transfer, the Collateral shall not be
subject to any additional exceptions or liens other than those contained in the relevant UCC title
insurance policy issued on the Closing Date;
(h) Lender shall have received a "non consolidation" opinion which may be relied
upon by Lender, the Rating Agencies and their respective counsel, successors and assigns, with
respect to the sale or conveyance, which opinion shall be reasonably acceptable to Lender and,
after a Securitization, the Rating Agencies;
(i) if following such sale or conveyance, Manager will not be the property manager
of the Property, then the property manager of the Property shall be a Qualified Manager;
(j) Borrower shall give written notice to Lender of the proposed sale or conveyance
not later than thirty (30) days prior thereto, which notice shall set forth the name of the proposed
transferee, identify the owners of such direct and indirect interests of the proposed transferee and
set forth the date the sale or conveyance is expected to be effective;
(k) such sale or conveyance shall not result in a violation of Section 4.1.43 hereof;
(I) if following such sale or conveyance, Guarantor will not be the guarantor under
the Loan Documents or the Mortgage Loan Documents, the obligations of Guarantor under the
Loan Documents or Mortgage Loan Documents, as applicable, shall be assumed by a
replacement guarantor acceptable to Lender in its reasonable discretion;
(m) Borrower shall deliver or cause to be delivered such original membership
certificate evidencing the ownership by New Borrower of 100% of the membership interest in
New Mortgage Borrower and membership certificate powers (which membership certificate
power shall be executed in blank) together with such opinions and other information as
reasonably required by Lender (it being agreed that if Lender required such information in
connection with the closing of the Loan, it shall be reasonable for Lender to request the same in
connection with the sale or conveyance described herein);
(n) New Mortgage Borrower shall receive an owner's title msurance policy and
mezzanine endorsement acceptable to Lender in all respects; and
( o) Borrower shall cause New Borrower to execute and deliver such other
replacement loan and closing documents in substantially the same forms as the Loan Documents
and such other closing documents as reasonably requested by Lender.
A consent by Lender with respect to a transfer of the Property in its entirety to, and the
related assumption of the Loan by, a New Mortgage Borrower pursuant to this Section 5.2.11
shall not be construed to be a waiver of the right of Lender to consent to any subsequent transfer
of the Property. Except as otherwise specifically set forth herein, immediately upon a transfer of
69
the Property to the New Mortgage Borrower and the satisfaction of all of the above requirements,
the named Borrower herein and any then existing Guarantor shall be released from all liability
under the Loan Documents accruing after such transfer and which are not the result of any act or
omission of Borrower, Guarantor and/or any of its Affiliates. Notwithstanding anything
contained herein to the contrary, (i) Guarantor shall not be released from its liability under the
Guaranty or the Payment and Performance Guaranty in connection with any such transfer unless
a replacement guarantor acceptable to Lender in its reasonable discretion shall assume all
liability of Guarantor thereunder in a manner acceptable to Lender and (ii) Apollo shall not be
released from its liability under the Completion Guaranty or the Debt Service Shortfall Guaranty
in connection with any such transfer unless a replacement guarantor acceptable to Lender in its
reasonable discretion shall assume all liability of Apollo thereunder in a manner acceptable to
Lender.
5.2.12. Limitation on Securities Issuances.
Borrower shall not issue any membership interests or other securities evidencing
an interest in Mortgage Borrower other than those that have been issued as of the date hereof.
5 .2.13. Distributions.
Any and all dividends, including capital dividends, stock or liquidating dividends,
distributions of property, redemptions or other distributions made by Mortgage Borrower on or
in respect of any interests in Mortgage Borrower, and any and all cash and other property
received in payment of the principal of or in redemption of or in exchange for any such interests
(collectively, the "Distributions"), shall become part of the Collateral. Notwithstanding the
foregoing, Lender expressly agrees that Borrower shall be permitted to distribute to its members
any Distributions Borrower receives only upon the express condition that no Event of Default
has occurred and is continuing under the Loan. If any Distributions shall be received by
Borrower or any Affiliate of Borrower after the occurrence and during the continuance of an
Event of Default, Borrower shall hold, or shall cause the same to be held, in trust for the benefit
of Lender. Any Distributions in cash during the continuance of an Event of Default shall be
deposited in the Mezzanine Deposit Account.
5.2.14. Refinancing or Prepayment ofthe Mortgage Loan.
Notwithstanding anything in this Agreement to the contrary, neither Borrower nor
Mortgage Borrower shall be required to obtain the consent of Lender to refinance the Mortgage
Loan, provided that the Loan shall have been (or shall simultaneously be) paid in full (including
any prepayment premiums and other amounts due and payable to Lender under the Loan
Documents) to the extent permitted by this Agreement. Borrower shall cause Mortgage
Borrower to obtain the prior written consent of Lender to enter into any other refinancing of the
Mortgage Loan.
5.2.15. Acquisition ofthe Mortgage Loan.
(a) Neither Borrower nor Guarantor nor any Affiliate of any of them or any
Person acting at any such Borrower's, Guarantor's or such Affiliate's request or direction, shall
acquire or agree to acquire the Mortgage Lender's interest in the Mortgage Loan, or any portion
70
thereof or any interest therein, or any direct or indirect controlling ownership interest in the
holder of the Mortgage Loan, via purchase, transfer, exchange or otherwise, and any breach of
this provision shall constitute an Event of Default hereunder. If, solely by operation of
applicable subrogation law, Borrower shall have failed to comply with the foregoing, then
Borrower: (i) shall immediately notify Lender of such failure; (ii) shall cause any and all such
prohibited parties acquiring any interest in the Mortgage Loan Documents: (A) not to enforce the
Mortgage Loan Documents; and (B) upon the request of Lender, to the extent any of such
prohibited parties has or have the power or authority to do so, to promptly: (1) cancel the
promissory note evidencing the Mortgage Loan, (2) reconvey and release the Lien securing the
Mortgage Loan and any other collateral under the Mortgage Loan Documents, and (3)
discontinue and terminate any enforcement proceeding(s) under the Mortgage Loan Documents.
(b) Lender shall have the right at any time to acquire all or any portion of the
Mortgage Loan or any interest in any holder of, or participant in, the Mortgage Loan without
notice or consent of Borrower, Guarantor or any other Person, in which event Lender shall have
and may exercise all rights of Mortgage Lender thereunder (to the extent of its interest),
including the right (i) to declare that the Mortgage Loan is in default, in accordance with the
terms thereof and (ii) to accelerate the Mortgage Loan indebtedness, in accordance with the
terms thereof and (iii) to pursue all remedies against any obligor under the Mortgage Loan
Documents, in accordance with the terms thereof. In addition, Borrower hereby expressly agrees
that any claims, counterclaims, defenses, offsets, deductions or reductions of any kind which
Mortgage Borrower or any other Person may have against Mortgage Lender relating to or arising
out of the Mortgage Loan shall be the personal obligation of Mortgage Lender, and iri no event
shall Mortgage Borrower be entitled to bring, pursue or raise any such claims, counterclaims,
defenses, offsets, deductions or reductions against Lender or any Affiliate of Lender or any other
Person as the successor holder of the Mortgage Loan or any interest therein, provided that.
Mortgage Borrower may seek specific performance of its contractual rights under the Mortgage
Loan Documents.
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
Section 6.1. Insurance.
(a) Borrower shall cause Mortgage Borrower to obtain and maintain at all times
during the term of the Loan the Policies required under Section 4 of the Security Instrument,
including, without limitation, meeting all insurer requirements thereunder. In addition, Borrower
shall cause Lender to be named as an additional insured under each of the Policies described and
required in Section 4 of the Security Instrument. Subject to the provisions of Section 6.4,
Borrower shall provide Lender with evidence of all such insurance required hereunder
simultaneously with Mortgage Borrower's provision of such evidence to Mortgage Lender.
(b) If at any time Lender is not in receipt of written evidence that all insurance
required hereunder is in full force and effect, Lender shall notify Borrower in writing that it has
not received such evidence, and if Borrower thereafter fails to provide such evidence to Lender
within one (1) Business Day, Lender shall have the right, without further notice to Borrower to
take such action as Lender deems necessary to protect its interest in the Property and the
Collateral, including, without limitation, the obtaining of such insurance coverage as Lender
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deems appropriate, and all expenses, provided, however, that Lender shall not obtain insurance
to the extent that such insurance is duplicative of insurance obtained by Mortgage Lender
pursuant to the Mortgage Loan Documents. All premiums incurred by Lender in connection
with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower
to Lender upon demand and until paid shall be secured by the Loan Documents and shall bear
interest at the Default Rate.
(c) For purposes of this Agreement, Lender shall have the same approval rights over
the insurance referred to above (including, without limitation, the insurers, deductibles and
coverages thereunder, as well as the right to require other reasonable insurance pursuant to
Section 4( c )(xii) of the Security Instrument) as are provided in favor of the Mortgage Lender in
the Security Instrument. All liability insurance provided for in the Security Instrument shall
provide insurance with respect to the liabilities of both Mortgage Borrower and Borrower. The
insurance policies delivered pursuant to the Security Instrument shall include endorsements of
the type described in Section 4( e) thereof, but pursuant to which Lender shall have the same
rights as the Mortgage Lender as referred to in such Section 4( e).
Section 6.2. Casualty.
If the Property shall be damaged or destroyed, in whole or in part, by fire or other
casualty (a "Casualty"), and such Casualty has caused damage to the Property which, in
Borrower's reasonable estimation, is in excess of$100,000, Borrower shall give prompt notice of
such damage to Lender and shall promptly commence and diligently prosecute the completion of
the Restoration of the Property as nearly as possible to the condition the Property was in
immediately prior to such Casualty, with such alterations as may be reasonably approved by
Mortgage Lender and otherwise in accordance with Section 4(f) of the Security Instrument.
Borrower shall cause Mortgage Borrower to pay all costs of such Restoration whether or not
such costs are covered by insurance. Subject to the rights of Mortgage Lender, Lender may, but
shall not be obligated to make proof of loss if not made promptly by Mortgage Borrower.
Section 6.3. Condemnation.
Borrower shall or shall cause Mortgage Borrower to promptly give Lender notice of the
actual or threatened commencement of any proceeding for the Condemnation of all or any part of
the Property and shall cause Mortgage Borrower to deliver to Lender copies of any and all papers
served in connection with such proceedings. Lender may, subject to the rights of Mortgage
Lender, pmiicipate in any such proceedings, and Borrower shall from time to time deliver to
Lender all instruments requested by it to permit such participation. Borrower shall cause
Mortgage Borrower to, at Borrower's or Mortgage Borrower's expense, diligently prosecute any
such proceedings, and shall cause Mortgage Borrower to consult with Lender, its attorneys and
experts, and cause Mortgage Borrower to cooperate with them in the carrying on or defense of
any such proceedings. Notwithstanding any taking by any public or quasi-public authority
through Condemnation or otherwise (including, but not limited to, any transfer made in lieu of or
in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at the
time and in the manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Net Liquidation Proceeds After Debt Service shall have been
actually received and applied by Lender, after the deduction of expenses of collection, to the
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reduction or discharge of the Debt. If the Property or any portion thereof is taken by a
condemning authority, Borrower shall cause Mortgage Borrower to promptly commence and
diligently prosecute the Restoration of the Property and otherwise comply with the provisions of
Section 8 of the Security Instrument. If the Property is sold, through foreclosure or otherwise,
prior to the receipt by Lender of the Award, Lender shall have the right, whether or not a
deficiency judgment on the Note shall have been sought, recovered or denied, to receive the
Award, and to apply to Award to payment of the Debt applicable to the Property.
Section 6.4. Restoration.
Borrower shall, or shall cause Mortgage Borrower to, deliver to Lender all reports, plans,
specifications, documents and other materials that are delivered to Mortgage Lender under the
Mortgage Loan Documents in connection with the Restoration of the Property after a Casualty or
Condemnation.
Section 6.5. Rights of Lender.
For purposes of this Article 6, Borrower shall obtain the approval of Lender for each
matter requiring the approval of Mortgage Lender under the provisions of Sections 4 and 8 of the
Security Instrument (but only to the same extent that Mortgage Lender has approval rights under
such section), with each reference in any such provisions to the "Loan" to include the Mortgage
Loan and the Loan, and the reference in any such provisions to the "Maturity Date" to mean the
Maturity Date, as defined herein.
VII. RESERVE FUNDS
Section 7.1. Required Repair Funds.
7 .1.1. Deposits.
On the Closing Date, Borrower shall deposit with Lender $10,275.00 to perform the
Required Repairs for the Property. Amounts so deposited with Lender shall be held by Lender in
accordance with Section 7.8 hereof. Amounts so deposited shall hereinafter be referred to as
Borrower's "Required Repair Fund." Borrower shall perform or cause Mortgage Borrower to
perform the repairs at the Property, as more particularly set forth on Schedule II hereto (such
repairs hereinafter referred to as "Required Repairs"). Borrower shall complete or shall cause
Mortgage Borrower to complete the Required Repairs on or before the required deadline for each
repair as set forth on Schedule II. It shall be an Event of Default under this Agreement if (a)
Borrower or Mortgage Borrower does not complete the Required Repairs at the Property by the
required deadline for each repair as set forth on Schedule II, or (b) Borrower does not satisfy
each condition contained in Section 7.1.1 hereof. Upon the occurrence of an Event of Default,
Lender, at its option, may withdraw all Required Repair Funds from the Required Repair
Account and Lender may apply such funds either to completion of the Required Repairs at the
Property or toward payment of the Debt in such order, proportion and priority as Lender may
determine in its sole discretion. Lender's right to withdraw and apply Required Repair Funds
shall be in addition to all other rights and remedies provided to Lender under this Agreement and
the other Loan Documents.
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7 .1.2. Release of Required Repair Funds.
Lender shall disburse to Borrower the Required Repair Funds from the Required Repair
Account from time to time upon satisfaction by Borrower of each of the following conditions:
(a) Borrower shall submit a written request for payment to Lender at least thirty (30) days prior
to the date on which Borrower requests such payment be made and specifies the Required
Repairs to be paid, (b) on the date such request is received by Lender and on the date such
payment is to be made, no Default or Event of Default shall exist and remain uncured, (c) Lender
shall have received an Officers' Certificate (i) stating that all Required Repairs at the Property to
be funded by the requested disbursement have been completed in good and workmanlike manner
and, to the best of Borrower's knowledge, in accordance with all Legal Requirements and
Environmental Laws, such certificate to be accompanied by a copy of any license, permit or
other approval by any Governmental Authority required to commence and/or complete the
Required Repairs, (ii) identifying each Person that supplied materials or labor in connection with
the Required Repairs performed at the Property with respect to the reimbursement to be funded
by the requested disbursement, and (iii) stating that each such Person has been paid in full upon
such disbursement, such Officers' Certificate to be accompanied by lien waivers or other
evidence of payment satisfactory to Lender, and (d) Lender shall have received such other
evidence as Lender shall reasonably request that the Required Repairs at the Property to be
funded by the requested disbursement have been completed and are paid for upon such
disbursement to Borrower. Lender shall not be required to make disbursements from the
Required Repair Account with respect to the Property unless such requested disbursement is in
an amount greater than $25,000 (or a lesser amount if the total amount in the Required Repair
Account is less than $25,000, in which case only one disbursement of the amount remaining in
the account shall be made). Upon the earlier of (1) Borrower's or Mortgage Borrower's
completion of all Required Repairs to the satisfaction of Lender (provided Borrower has supplied
Lender with evidence satisfactory to Lender of payment of all Required Repairs applicable to the
Property and, if requested by Lender, waivers of liens and/or, in the case of Required Repairs
greater than $250,000.00, a title search of the Property or an endorsement to the mortgagee's title
insurance policy), (2) payment in full by Borrower of all sums evidenced by the Note and
secured by the Pledge Agreement, or (3) release of the Property in accordance with the
provisions of Section 2.5 hereof, Lender shall disburse to Borrower all remaining Required
Repair Funds.
7.1.3. Waiver ofReguired Repair Funds.
Borrower shall be relieved of its obligation to make deposits of Required Repair Funds
and Lender shall not be entitled to demand that Borrower establish such reserves with Lender,
provided that (a) Mortgage Borrower is required to and has made or has caused to be made a
deposit to a required repairs account pursuant to the Security Instrument and (b) Lender receives
evidence reasonably acceptable to it of the making of such deposit (it being agreed that evidence
provided by the servicer of the Mortgage Loan shall be deemed reasonably acceptable).
Section 7.2. Tax and Insurance Escrow Fund.
During the continuance of a Triggering Event, Borrower shall pay to Lender on each
Payment Date (a) one-twelfth of the Taxes (the "Monthly Tax Deposit") that Lender estimates
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will be payable during the next ensuing twelve (12) months in order to accumulate with Lender
sufficient funds to pay all such Taxes at least thirty (30) days prior to their respective due dates;
and (b) one-twelfth of the Insurance Premiums (the "Monthly Insurance Premium Deposit")
that Lender estimates will be payable for the renewal of the coverage afforded by the Policies
upon the expiration thereof in order to accumulate with Lender sufficient funds to pay all such
Insurance Premiums at least thirty (30) days prior to the expiration of the Policies (said amounts
in (a) and (b) above hereinafter called the "Tax and Insurance Escrow Fund"). In the event
Lender shall elect to collect payments in escrow for Insurance Premiums pursuant to clause (b)
above, Borrower shall pay to Lender an initial deposit to be determined by Lender, in its sole
discretion, to increase the amounts in the Tax and Insurance Escrow Fund to an amount which,
together with anticipated Monthly Insurance Premium Deposits, shall be sufficient to pay all
Insurance Premiums as they become due. The Tax and Insurance Escrow Fund and the
payments of interest or principal or both, payable pursuant to the Note and this Agreement, shall
be added together and shall be paid as an aggregate sum by Borrower to Lender. Lender will
apply the Tax and Insurance Escrow Fund to payments of Taxes and Insurance Premiums
required to be made by Borrower pursuant to Sections 5.1.2 and 6.1 hereof, respectively. In
making any payment relating to the Tax and Insurance Escrow Fund, Lender may do so
according to any bill, statement or estimate procured from the appropriate public office (with
respect to Taxes) or insurer or agent (with respect to Insurance Premiums), without inquiry into
the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax and Insurance Escrow Fund
shall exceed the amounts due for Taxes and Insurance Premiums pursuant to Sections 5.1.2 and
6.1 hereof, respectively, Lender shall, in its sole discretion, return any excess to Borrower or
credit such excess against future payments to be made to the Tax and Insurance Escrow Fund.
Any amount remaining in the Tax and Insurance Escrow Fund after the Debt has been paid in
full shall be returned to Borrower. If at any time during the continuance of a Triggering Event
Lender reasonably determines that the Tax and Insurance Escrow Fund is not or will not be
sufficient to pay Taxes and Insurance Premiums by the dates set forth in (a) and (b) above,
Lender shall notify Borrower of such determination and Borrower shall increase its monthly
payments to Lender by the amount that Lender estimates is sufficient to make up the deficiency
at least thirty (30) days prior to delinquency of the Taxes and/or thirty (30) days prior to
expiration of the Policies, as the case may be. Notwithstanding the foregoing, Borrower shall be
relieved of its obligation to make deposits of Taxes and Insurance Escrow Funds and Lender
shall not be entitled to demand that Borrower establish such reserves with Lender, provided that
(x) Mortgage Borrower is required to and does make or cause to be made monthly deposits to a
taxes and insurance escrow fund pursuant to Section 6 of the Security Instrument and (y) Lender
receives evidence reasonably acceptable to it of the making of such deposits (it being agreed that
evidence provided by the servicer of the Mortgage Loan shall be deemed reasonably acceptable).
Section 7.3. FF&E Reserve.
7.3.1. Deposits. On each Payment Date, Borrower shall pay to Lender an amount equal
to one-twelfth (1112) of four percent (4%) of the Gross Income from Operations for the
applicable year (or such greater amount if required by the Management Agreement or the
Franchise Agreement) (the "Required FF&E Reserve Amount"). Amounts so deposited shall
hereinafter be referred to as the "FF &E Reserve Fund" and the account in which such amount
is held shall hereinafter be referred to as the "FF &E Reserve Account". Lender may reassess
75
its estimate of the amount necessary for the FF&E Reserve Fund from time to time, and may
increase the monthly amounts required to be deposited into the FF&E Reserve Fund upon thirty
(30) days notice to Borrower if Lender determines in its reasonable discretion that an increase is
necessary to maintain the proper maintenance and operation of the Property. Notwithstanding
anything herein to the contrary, Borrower shall be required to make payments of FF&E Reserve
Funds as described above only during the continuance of a Triggering Event, provided that,
within thirty (30) days of the end of each calendar quarter, (a) Borrower delivers to Lender a
report of FF&E Expenditures made at the Property during such calendar quarter (which report
shows the type of FF&E and amount of FF&E Expenditures made with respect to the Property),
(b) Borrower delivers to Lender evidence reasonably satisfactory to Lender that Borrower has
caused Mortgage Borrower to make FF &E Expenditures with respect to the Property in an
amount equal to or greater than the Required FF &E Reserve Amount during the preceding
twelve (12) month period (or such shorter period during which Borrower owned the Property)
and (c) in the event that Borrower has not caused Mortgage Borrower to make FF&E
Expenditures with respect to the Property at least equal to the Required FF &E Reserve Amount
during the preceding twelve (12) month period (or such shorter period during which Mortgage
Borrower owned the Property), Borrower pays to Lender for deposit into the FF&E Reserve
Account an amount equal to the difference between (i) the Required FF&E Reserve Amount and
(ii) the amount of FF&E Expenditures with respect to the Property actually made by Mortgage
Borrower during the preceding twelve (12) month period (or such shorter period during which
Mortgage Borrower owned the Property) .
. 7.3.2. Disbursements from FF&E Reserve Account. Lender shall make disbursements
from the FF &E Reserve Account as requested by Borrower to pay FF &E Expenditures
consistent with the Annual Budget or Approved Annual Budget, as applicable, no more
frequently than once in any thirty (30) day period of no less than $5,000 upon delivery by
Borrower of Lender's standard form of draw request accompanied by copies of paid invoices for
the amounts requested and, if required by Lender for requests in excess of $50,000 for a single
item, lien waivers and releases (for the work invoiced for) from all parties furnishing materials
and/or services in connection with the requested payment. Lender may require an inspection of
the Property at Borrower's expense prior to making a monthly disbursement in order to verify
completion of replacements and repairs of items in excess of $250,000 in the aggregate for which
reimbursement is sought. Any amounts remaining in the FF &E Reserve Account after the Debt
has been paid in full shall be returned to Borrower.
7.3.3. Waiver of FF&E Reserve Funds. Notwithstanding the foregoing, Borrower shall
be relieved of its obligation to make deposits of FF &E Reserve Funds and Lender shall not be
entitled to demand that Borrower establish such reserves with Lender, provided that (x)
Mortgage Borrower is required to and does make or cause to be made monthly deposits to a
FF&E reserve fund pursuant to the Security Instrument and (y) Lender receives evidence
reasonably acceptable to it of the making of such deposit (it being agreed that evidence provided
by the servicer ofthe Mortgage Loan shall be deemed reasonably acceptable).
Section 7.4. Required Capital Improvements Reserve.
7.4.1. On the Closing Date, Borrower shall deposit with Lender $0 to perform the
Required Capital Improvements for the Property, provided that the Completion Guaranty is
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delivered to Lender. Amounts so deposited with Lender shall be held by Lender in accordance
with Section 7.8 hereof. Amounts so deposited shall hereinafter be referred to as Borrower's
"Required Capital Improvements Fund." Lender may reassess its estimate of the amount
necessary for the Required Capital Improvements Fund from time to time and may increase the
amounts required to be deposited into the Required Capital Improvements Fund if Lender
determines in its reasonable discretion that an increase is necessary to fund the Required Capital
Improvements. In such event Borrower shall, upon thirty (30) days notice, deposit such
additional amounts with Lender. Borrower shall perform the Required Capital Improvements at
the Property, as more particularly set forth on Schedule V hereto. Upon the occurrence of an
Event of Default, Lender, at its option, may withdraw all Required Capital Improvements Funds
from the Required Capital Improvements Account and Lender may apply such funds either to
completion of the Required Capital Improvements at the Property or toward payment of the Debt
in such order, proportion and priority as Lender may determine in its sole discretion. Lender's
right to withdraw and apply Required Capital Improvements Funds shall be in addition to all
other rights and remedies provided to Lender under this Agreement and the other Loan
Documents.
7.4.2. Lender shall disburse to Borrower the Required Capital Improvements Funds
from the Required Capital Improvements Account from time to time upon satisfaction by
Borrower of each of the following conditions: (a) Borrower shall submit a written request for
payment to Lender at least thirty (30) days prior to the date on which Borrower requests such
payment be made and specifies the Required Capital Improvements to be paid, (b) on the date
such request is received by Lender and on the date such payment is to be made, no Default or
Event of Default shall exist and remain uncured, (c) Lender shall have received an Officers'
Certificate (i) stating that all Required Capital Improvements at the Property to be funded by the
requested disbursement have been completed in good and workmanlike manner and, to the best
of Borrower's knowledge, in accordance with all Legal Requirements and Environmental Laws,
such certificate to be accompanied by a copy of any license, permit or other approval by any
Governmental Authority required to commence and/or complete the Required Capital
Improvements, (ii) identifying each Person that supplied materials or labor in connection with
the Required Capital Improvements performed at the Property with respect to the reimbursement
to be funded by the requested disbursement, and (iii) stating that each such Person has been paid
in full upon such disbursement, such Officers' Certificate to be accompanied by lien waivers or
other evidence of payment satisfactory to Lender, and (d) Lender shall have received such other
evidence as Lender shall reasonably request that the Required Capital Improvements at the
Property to be funded by the requested disbursement have been completed and are paid for upon
such disbursement to Borrower. Lender shall not be required to make disbursements from the
Required Capital Improvements Account with respect to the Property unless such requested
disbursement is in an amount greater than $25,000 (or a lesser amount if the total amount in the
Required Capital Improvements Account is less than $25,000, in which case only one
disbursement of the amount remaining in the account shall be made). Upon the earlier of (1)
Borrower's or Mortgage Borrower's completion of all Required Capital Improvements to the
satisfaction of Lender (provided Borrower has supplied Lender with evidence satisfactory to
Lender of payment of all Required Capital Improvements applicable to the Property and, if
requested by Lender, waivers of liens and/or, in the case of Required Capital Improvements
greater than $250,000.00, a title search of the Property or an endorsement to the mortgagee's title
insurance policy), (2) payment in full by Borrower of all sums evidenced by the Note and
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secured by the Pledge Agreement and release by Mortgage Lender of the lien of the Security
Instrument, or (3) release of the Property in accordance with the provisions of Section 2.5 hereof,
Lender shall disburse to Borrower all remaining Required Capital Improvements.
7.4.3. The insufficiency of any balance in the Required Capital Improvements Account
shall not relieve Borrower from its obligation to fulfill all preservation and maintenance
covenants in the Loan Documents.
7.4.4. Notwithstanding anything herein to the contrary, with respect to all Required
Capital Improvements other than Immediate PIP Work, on the Closing Date Apollo has delivered
to Lender the Completion Guaranty in lieu of Borrower making deposits to the Capital
Improvements Reserve Fund pursuant to Section 7.4.1; provided, that the obligations guaranteed
under the Completion Guaranty will be limited as set forth in Section 10.25, and any amounts
required to be deposited to the Capital Improvements Reserve Fund pursuant to Section 7.4.1
with respect to all Required Capital Improvements other than Immediate PIP Work in excess of
such limitation will be so deposited by Borrower.
Section 7.6. Debt Service Shortfall Reserve Fund.
(a) On the Closing Date, Borrower shall deposit with Lender the amount of$500,000
for payment to Lender of Debt Service Shortfalls (the "Debt Service Shortfall Reserve Fund").
Provided that an Event of Default shall not have occurred and be continuing, Lender . shall
advance portions of the Debt Service Shortfall Reserve Fund and apply same to the Monthly
Debt Service Payment Amounts upon written request of Borrower.
(b) Notwithstanding anything herein to the contrary, on the Closing Date Apollo has
delivered to Lender the Debt Service Shortfall Guaranty in lieu of Borrower making the deposit
to the Debt Service Shortfall Reserve Fund pursuant to Section 7.6(a).
Section 7.7. Intentionally Deleted.
Section 7.8. Reserve Funds, Generally.
(a) Borrower grants to Lender a first-priority perfected security interest in each of the
Reserve Funds established solely hereunder and not under Security Instrument and the related
Accounts and any and all monies now or hereafter deposited in each Reserve Fund and related
Account as additional security for payment of the Debt. Until expended or applied in accordance
herewith, the Reserve Funds and the related Accounts shall constitute additional security for the
Debt.
(b) Upon the occurrence of an Event of Default, Lender may, in addition to any and
all other rights and remedies available to Lender, apply any sums then present in any or all of the
Reserve Funds to the payment of the Debt in any order in its sole discretion.
(c) The Reserve Funds shall not constitute trust funds and may be commingled with
other monies held by Lender.
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(d) The Reserve Funds shall be held in interest bearing accounts and all earnings or
interest on a Reserve Fund shall be added to and become a part of such Reserve Fund and shall
be disbursed in the same manner as other monies deposited in such Reserve Fund.
(e) Borrower shall not (and shall not permit Mortgage Borrower to), without
obtaining the prior written consent of Lender, further pledge, assign or grant any security interest
in any Reserve Fund or related Account or the monies deposited therein or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1 Financing
Statements, except those naming Lender as the secured party, to be filed with respect thereto.
(f) Borrower shall indemnifY Lender and the Indemnified Parties and hold Lender
and the Indemnified Parties harmless from and against any and all actions, suits, claims,
demands, liabilities, losses, damages, obligations and costs <1nci expenses (induciine litie;<1tion
costs and reasonable attorneys fees and expenses) arising from or in any way connected with the
Reserve Funds or the related Accounts or the performance of the obligations for which the
Reserve Funds or the related Accounts were established, except to the extent arising from the
gross negligence or willful misconduct of Lender, its agents or employees. Borrower shall
assign to Lender all rights and claims Borrower may have against all Persons supplying labor,
materials or other services which are to be paid from or secured by the Reserve Funds or the
related Accounts; provided, however, that Lender may not pursue any such right or claim unless
an Event of Default has occurred and remains uncured.
VIII. DEFAULTS
Section 8.1. Event of Default.
(a) Each of the following events shall constitute an event of default hereunder (an
"Event of Default"):
(i) if any portion of the Debt is not paid on or before the date the same is due
and payable;
(ii) if any of the Taxes or Other Charges are not paid on or before the date
such Taxes become delinquent (after expiration of any applicable grace periods allowed
under Applicable Laws);
(iii) if the Policies are not kept in full force and effect or if adequate evidence
of insurance is not delivered to Lender on request as per Section 6.1 (b) hereof;
(iv) if any portion of the Property is transferred or encumbered in violation of
the provisions of Section 5.2.1 0 hereof or of the Pledge Agreement;
(v) if any representation or warranty made by Bonower, Mortgage Borrower,
Operating Lessee, Principal, Apollo or Guarantor herein or in any other Loan Document,
or in any report, certificate, financial statement or other instrument, agreement or
document furnished to Lender shall have been false or misleading in any material respect
as of the date the representation or wananty was made;
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(vi) if Borrower, Mortgage Borrower, Operating Lessee, Principal, Apollo,
Guarantor or any other guarantor under any guaranty issued in connection with the Loan
shall make an assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for Borrower,
Mortgage Borrower, Operating Lessee, Principal, Apollo, Guarantor or any other
guarantor under any guarantee issued in connection with the Loan or the Mortgage Loan
or if Borrower, Mortgage Borrower, Operating Lessee, Principal, Apollo, Guarantor or
such other guarantor shall be adjudicated a ballkrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to the Bankruptcy Code, or any
similar federal or State law, shall be filed by or against, consented to, or acquiesced in by,
Borrower, Mortgage Borrower, Operating Lessee, Principal, Apollo, Guarantor or such
other guarantor, or if any proceeding for the dissolution or liquidation of Borrower,
Mortgage Borrower, Operating Lessee, Principal, Apollo, Guarantor or such other
guarantor shall be instituted; provided, however, if such appointment, adjudication,
petition or proceeding was involuntary and not consented to by Borrower, Mortgage
Borrower, Operating Lessee, Principal, Apollo, Guarantor or such other guarantor, upon
the same not being discharged, stayed or dismissed within ninety (90) days;
(viii) if Borrower assigns its rights under this Agreement or any of the other
Loan Documents or any interest herein or therein in contravention of the Loan
Documents;
(ix) if Borrower breaches any of its negative covenants contained in Section
5.2 hereof; provided, that if, in Lender's reasonable discretion, such breach is capable of
being cured within thirty (30) days of the occurrence thereof, and if Borrower, after
providing immediate written notice to Lender, diligently and expeditiously proceeds to
cure the same, then upon Borrower's failure to cure such breach to Lender's reasonable
satisfaction within thirty (30) days of the occurrence thereof;
(x) [intentionally omitted];
(xi) if a default has occurred and continues beyond any applicable cure period
under the Management Agreement (or any Replacement Management Agreement) if such
default permits the Manager thereunder to terminate or cancel the Management
Agreement (or any Replacement Management Agreement), and the Manager and
Management Agreement are not replaced by a Qualified Manager under a Replacement
Management Agreement within thirty (30) days after such default and the expiration of
any applicable cure periods under the Management Agreement;
(xii) if Borrower or Principal violates or does not comply m any material
respect with any of the provisions of Section 4 .1.3 5 hereof;
(xiii) if the Property becomes subject to any mechanic's, materialman's or other
Lien other than a Lien for local real estate taxes and assessments not then due and
payable and the Lien shall remain undischarged of record (by payment, bonding or
otherwise) for a period of thirty (30) days following notice from Lender to Borrower;
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(xiv) subject to Borrower's right to contest pursuant to Section 5.1.2, if any
federal tax Lien or state or local income tax Lien is filed against Borrower, Mortgage
Borrower, Operating Lessee, Principal, Guarantor or the Property and same is not
discharged of record within thirty (30) days following notice from Lender to Borrower;
(xv) (A) Borrower fails to timely provide Lender with the written certification
and evidence referred to in Section 5.2.8 hereof, (B) Borrower is a Plan or its assets
constitute Plan Asset; or (C) Borrower consummates a transaction which would cause the
Pledge Agreement or Lender's exercise of its rights under the Pledge Agreement, the
Note, this Agreement or the other Loan Documents to constitute a nonexempt prohibited
transaction under ERISA or result in a violation of a State statute regulating
governmental plans, subjecting Lender to liability for a violation of ERISA, the Code, a
State statute or other similar law;
(xvi) [intentionally omitted];
(xvii) [intentionally omitted];
(xviii) if Borrower shall be in default beyond applicable notice and grace periods
under any other pledge agreement or other security agreement covering any part of any
Collateral whether it be superior or junior in lien to the Pledge Agreement;
(xix) [intentionally omitted];
(xx) [intentionally omitted];
(xxi) [intentionally omitted];
(xxii) if any of the assumptions contained in any "non-consolidation" delivered
subsequent to the closing of the Loan, is or shall become untrue in any material respect;
(xxiii) if a material default has occurred and continues beyond any applicable
cure period under the Franchise Agreement, and such default permits a party to terminate
or cancel the Franchise Agreement;
(xxiv) if Mortgage Borrower ceases to operate a hotel on the Property or
terminates such business for any reason whatsoever (other than temporary cessation in
connection with any renovations to the Property or restoration of the Property after
Casualty or Condemnation);
(xxv) if Operating Lessee is in material default beyond any applicable notice or
-cure period under the applicable Operating Lease;
(xxvi) if Borrower allows Mortgage Borrower or Operating Lessee to terminate
or cancel or allow to expire the Franchise Agreement or operate the Property under the
name of any hotel chain or system other than the hotel chain or system under which the
Property is operated as of the Closing Date (as indicated on Schedule IV), without
Lender's prior written consent;
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(xxvii) if (i) the Interest Rate Cap Agreement is terminated for any reason by
Borrower or the Counterparty, or (ii) the Counterparty defaults in the performance of its
monetary obligations under the Interest Rate Cap Agreement or (iii) the rating of the
Counterparty is subject to any downgrade, withdrawal or qualification by an Rating
Agency, and Borrower does not within ten (1 0) days following notice from Lender (A)
replace the Interest Rate Cap Agreement with a Replacement Interest Rate Cap
Agreement in accordance with Section 2.4 hereof, and (B) deliver to Lender, in form and
substance reasonably satisfactory to Lender (x) an Assignment of Interest Rate Cap (y) a
recognition letter from the Counterparty thereto acknowledging the assignment of the
Replacement Interest Rate Cap Agreement and (z) any other opinions or documents
required pursuant to Section 2.4 hereof;
(xxviii)if there shall be a default under the Pledge Agreement or any of the other
Loan Documents beyond any applicable notice and cure periods contained in such
documents, whether as to Borrower, Mortgage Borrower, Operating Lessee, Guarantor,
Apollo, the Collateral or the Property, or if any other such event shall occur or condition
shall exist, if the effect of such event or condition is to accelerate the maturity of any
portion of the Debt or to permit Lender to accelerate the maturity of all or any portion of
the Debt;
(xxix) if Borrower shall continue to be in Default under any of the other terms,
covenants or conditions of this Agreement not specified in subsections (i) to (xxvii)
above, for ten (1 0) days after notice to Borrower from Lender, in the case of any Default
which can be cured by the payment of a sum of money, or for thirty (30) days after notice
from Lender in the case of any other Default; provided, however, that if such
non-monetary Default 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 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, such
additional period not to exceed ninety (90) days;
(xxx) if a Mortgage Loan Event of Default shall have occurred and be
continuing or if Mortgage Borrower enters into or otherwise suffers or permits any
amendment, waiver, supplement, termination, extension, renewal, replacement or other
modification of any Mortgage Loan Document without the prior written consent of
Lender except to the extent permitted by this Agreement, to the extent that such consent
was required to be obtained hereunder; or
(xxxi) the Liens created pursuant to any Loan Document shall cease to be a fully
enforceable first priority security interest due to any act or omission of Borrower (unless
such unenforceability results solely from an act or omission of Lender).
(b) Upon the occurrence of an Event of Default (other than an Event of Default
described in clauses (vi) or (vii) above) and at any time thereafter, in addition to any other rights
or remedies available to it pursuant to this Agreement and the other Loan Documents or at law or
in equity, Lender may take such action, without notice or demand, that Lender deems advisable
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to protect and enforce its rights against Borrower and in and to all or the Property or the
Collateral, including, without limitation, declaring the Debt to be immediately due and payable,
and Lender may enforce or avail itself of any or all rights or remedies provided in the Loan
Documents against Borrower and the Property or the Collateral, including, without limitation, all
rights or remedies available at law or in equity; and upon any Event of Default described in
clauses (vi) or (vii) above, the Debt and all other obligations of Borrower hereunder and under
the other Loan Documents shall immediately and automatically become due and payable,
without notice or demand, and Borrower hereby expressly waives any such notice or demand,
anything contained herein or in any other Loan Document to the contrary notwithstanding.
Section 8.2. Remedies.
(a) Upon the occurrence and during the continuance of an Event of Default, all or any
one or more of the rights, powers, privileges and other remedies a v ~ i l a b l e to Lender against
Borrower under this Agreement or any of the other Loan Documents executed and delivered by,
or applicable to, Borrower or at law or in equity may be exercised by Lender at any time and
from time to time, whether or not all or any of the Debt shall be declared due and payable, and
whether or not Lender shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with respect to all or
any part of the Collateral. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singly, successively, together or otherwise, at such time and
in such order as Lender may determine in its sole discretion, to the fullest extent permitted by
Applicable Law, without impairing or otherwise affecting the other rights and remedies of
Lender permitted by Applicable Law, equity or contract or as set forth herein or in the other
Loan Documents. Without limiting the generality of the foregoing, Borrower agrees that if an
Event of Default is continuing (i) Lender is not subject to any "one action" or "election of
remedies" law or rule, and (ii) all Liens and other rights, remedies or privileges provided to
Lender shall remain in full force and effect until Lender has exhausted all of its remedies against
the Collateral and the Collateral has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.
(b) Lender shall have the right from time to time to partially foreclose the Pledge
Agreement in any manner and for any amounts secured by the Pledge Agreement 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 the Pledge Agreement to recover such delinquent payments, or (ii) in the event Lender
elects to accelerate less than the entire outstanding principal balance of the Loan, Lender may
foreclose the Pledge Agreement to recover so much of the principal balance of the Loan as
Lender may accelerate and such other sums secured by the Pledge Agreement as Lender may
elect. Notwithstanding one or more partial foreclosures, the Collateral shall remain subject to the
Pledge Agreement to secure payment of sums secured by the Pledge Agreement and not
previously recovered.
(c) Upon the occurrence and during the continuance of an Event of Default, Lender
shall have the right, from time to time, to sever the Note and the other Loan Documents into one
or more separate notes, mortgages and other security documents (the "Severed Loan
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Documents") in such denominations as Lender shall determine in its sole discretion for purposes
of evidencing and enforcing its rights and remedies provided hereunder. Borrower shall execute
and deliver to Lender from time to time, promptly after the request of Lender, a severance
agreement and such other documents as Lender shall request in order to effect the severance
described in the preceding sentence, all in form and substance reasonably satisfactory to Lender.
Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney,
coupled with an interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its said attorney shall do by
virtue thereof; provided, however, Lender shall not make or execute any such documents under
such power until three (3) days after notice has been given to Borrower by Lender of Lender's
intent to exercise its rights under such power. The Severed Loan Documents shall not contain
any representations, warranties or covenants not contained in the Loan Documents and any such
representations and warranties contained in the Severed Loan Documents will be given by
Borrower only as of the Closing Date.
Section 8.3. Remedies Cumulative; Waivers.
The rights, powers and remedies of Lender under this Agreement shall be cumulative and
not exclusive of any other right, power or remedy which Lender may have against Borrower
pursuant to this Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. Lender's rights, powers and remedies may be pursued singularly, concurrently or
otherwise, at such time and in such order as Lender may determine in Lender's sole discretion.
No delay or omission to exercise any remedy, right or power accruing upon an Event of Default
shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any
such remedy, right or power may be exercised from time to time and as often as may be deemed
expedient. A waiver of one or more Defaults or Events of Default with respect to Borrower shall
not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or to
impair any remedy, right or power consequent thereon.
IX. SPECIAL PROVISIONS
Section 9.1. Sale ofNotes and Securitization.
Lender may, at any time, sell, transfer or assign the Note, this Agreement, the Pledge
Agreement and the other Loan Documents, and any or all servicing rights with respect thereto, or
grant participations therein or issue mortgage pass-through certificates or other securities (the
"Securities") evidencing a beneficial interest in a rated or unrated public offering or private
placement (a "Securitization"). At the request of the holder of the Note and, to the extent not
already required to be provided by Borrower under this Agreement, Borrower and Sponsor, at
Borrower's and Sponsor's expense to the extent set forth herein, shall use reasonable efforts to
provide information not in the possession of the holder of the Note or to satisfy the market
standards to which the holder of the Note customarily adheres or which may be reasonably
required in the marketplace or by the Rating Agencies in connection with a Securitization or the
sale of the Note or the participations or Securities, including, without limitation, to:
(a) (i) provide such financial and other information with respect to the Property,
the Collateral, Borrower, Mortgage Borrower, Operating Lessee, Sponsor, Guarantor, Apollo and
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Manager, (ii) provide budgets relating to the Property and (iii) to perform or permit or cause to
be performed or permitted such site inspection, appraisals, market studies, environmental
reviews and reports (Phase I's and, if appropriate, Phase II's), engineering reports and other due
diligence investigations of the Property, as may be reasonably requested by the holder of the
Note or the Rating Agencies or as may be necessary or appropriate in connection with the
Securitization (the "Provided Information"), together, if customary, with appropriate
verification and/or consents of the Provided Information through letters of auditors or opinions
of counsel of independent attorneys acceptable to Lender and the Rating Agencies;
(b) if required by the Rating Agencies, deliver (i) revised opinions of counsel as to
due execution and enforceability with respect to the Property, the Collateral, Borrower,
Guarantor, Apollo, Principal and their respective Affiliates and the Loan Documents, and (ii)
revised organizational documents for Borrower, Guarantor, Apollo and Principal and their
respective Affiliates (including, without limitation, such revisions as are necessary to comply
with the provisions of Section 4.1.35 hereof), which counsel, opinions and organizational
documents shall be reasonably satisfactory to Lender and the Rating Agencies;
(c) if required by the Rating Agencies, deliver such additional tenant estoppel letters,
subordination agreements or other agreements from parties to agreements that affect the
Property, which estoppel letters, subordination agreements or other agreements shall be
reasonably satisfactory to Lender and the Rating Agencies;
(d) execute such amendments to the Loan Documents as may be requested by the
holder of the Note or the Rating Agencies or otherwise to effect the Securitization; provided,
however, that Borrower shall not be required to modify or amend any Loan Document if such
modification or amendment would (except for modifications and amendments required to be
made pursuant to Section (e) below,) (i) change the interest rate, the stated maturity or the
amortization of principal set forth in the Note, or (ii) modify or amend any other economic term
of the Loan or (iii) reduce any of Borrower's rights hereunder or increase of any of Borrower's
obligations or liabilities;
(e) if Lender elects, in its sole discretion and at Lender's sole cost and expense, prior
to or upon a Securitization, to split the Loan into two or more parts, or the Note into multiple
component notes or tranches which may have different interest rates, amortization payments,
principal amounts, payment priorities and maturities, Borrower, Operating Lessee and Sponsor
agree to cooperate with Lender in connection with the foregoing and to execute the required
modifications and amendments to the Note, this Agreement and the Loan Documents and to
provide opinions necessary to effectuate the same. Such Notes or components may be assigned
different interest rates, so long as the initial weighted average of such interest rates does not
exceed the Applicable Interest Rate;
(f) execute modifications to the Loan Documents changing the interest rate and/or
the amortization payments for the Loan and the Mortgage Loan, provided that the initial
weighted average of the interest rate spreads for the Loan and the Mortgage Loan after such
modification shall not exceed the weighted average of the interest rate spreads for the Loan and
the Mortgage Loan immediately prior to such modification. The Borrower shall also provide
opinions and title insurance reasonably necessary to effectuate the same;
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(g) make such representations and warranties as of the closing date of the
Securitization with respect to the Collateral, the Property, Borrower, Mortgage Borrower,
Operating Lessee, Sponsor, Guarantor, Apollo and the Loan Documents as are customarily
provided in securitization transactions and as may be reasonably requested by the holder of the
Note or the Rating Agencies and consistent with the facts covered by such representations and
warranties as they exist on the date thereof, including the representations and warranties made in
the Loan Documents; and
(h) supply to Lender such documentation, financial statements and reports in form
and substance required for Lender to comply with Regulations S-X and AB of the federal
securities law, if applicable.
Borrower and Sponsor shall each be responsible for payment of its legal fees incurred in
connection with its compliance with the requests made under this Section 9 .1. All other
reasonable third party costs and expenses incurred by Borrower or Sponsor in connection with
Borrower's or Sponsor's complying with requests made under this Section 9.1 shall be paid by
Lender. The costs and expenses incurred by Lender in connection with a Securitization shall be
paid by Lender.
Section 9.2. Securitization Indemnification.
(a) Borrower and Sponsor understand that certain of the Provided Information may
be included in disclosure documents in connection with the Securitization, including, without
limitation, a prospectus supplement, private placement memorandum, offering circular or other
offering document (each a "Disclosure Document") and may also be included in filings (an
"Exchange Act Filing") with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities and Exchange Act
of 1934, as amended (the "Exchange Act"), or provided or made available to Investors or
prospective Investors in the Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the Disclosure Document is required to be revised prior to the
sale of all Securities, Borrower and Sponsor will cooperate with the holder of the Note in
updating the Disclosure Document by providing all current information necessary to keep the
portions of the Disclosure Document relating to the Provided Information accurate and complete
in all material respects.
(b) Borrower and Sponsor agree to provide in connection with each of (i) a
preliminary and a final private placement memorandum or (ii) a preliminary and final prospectus
or prospectus supplement, as applicable, or (iii) collateral and structured term sheets or similar
materials, an indemnification certificate (A) certifying that Borrower has carefully examined
specified sections relating to Borrower, Mortgage Borrower, Operating Lessee, Manager,
Sponsor, Apollo or any constituent of any of them, or to the Franchise Agreement, the Operating
Lease, the Management Agreement, the Collateral or the Property (the "Specified Sections") and
that such Specified Sections do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading, (B) indemnifying Lender (and for
purposes of this Section 9.2, Lender hereunder shall include its officers and directors), the
Affiliate of Lehman Brothers Inc. ("Lehman") that has filed the registration statement relating to
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the Securitization (the "Registration Statement"), each of its directors, each of its officers who
have signed the Registration Statement and each Person who controls the Affiliate within the
meaning of Section 15 ofthe Securities Act or Section 20 of the Exchange Act (collectively, the
"Lehman Group"), and Lehman, each of its directors and each Person who controls Lehman
within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act
(collectively, the "Underwriter Group") for any losses, claims, damages or liabilities
(collectively, the "Liabilities") to which Lender, the Lehman Group or the Underwriter Group
may become subject insofar as the Liabilities arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in such Specified 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 Specified Sections or necessary in order to make the statements in such
Specified Sections or in light of the circumstances under which they were made, not misleading
and (C) agreeing to reimburse Lender, the Lehman Group and the Underwriter Group for any
legal or other expenses reasonably incurred by Lender the Lehman Group and the Underwriter
Group in connection with investigating or defending the Liabilities; provided, however, that
Borrower will be liable in any such case under clauses (B) or (C) above only to the extent that
any such Liability arises out of or is based upon any such untrue statement or omission made
therein in reliance upon and in conformity with information furnished to Lender by or on behalf
of Borrower in connection with the preparation of the memorandum or prospectus or in
connection with the underwriting of the debt, including, without limitation, financial statements
of Borrower, operating statements, rent rolls, environmental site assessment reports and property
condition reports with respect to the Property. This indemnification will be in addition to any
liability which Borrower may otherwise have.
(c) In connection with filings under the Exchange Act, Borrower and Sponsor agree
to indemnify (i) Lender, the Lehman Group and the Underwriter Group for Liabilities to which
Lender, the Lehman Group or the Underwriter Group may become subject insofar as the
Liabilities arise out of or are based upon the omission or alleged omission to state in the
Provided Information a material fact required to be stated in the Provided Information in order to
make the statements in the Provided Information, in light of the circumstances under which they
were made not misleading and (ii) reimburse Lender, the Lehman Group or the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the Lehman Group or the
. Underwriter Group in connection with defending the Liabilities.
(d) Promptly after receipt by an indemnified party under this Section 9.2 of notice of
the commencement of any action, such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 9.2, notify the indemnifying party in
writing of the commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying party may have to
any indemnified party hereunder except to the extent that failure to notify causes prejudice to the
indemnifying party. In the event that any action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense thereof with counsel
satisfactory to such indemnified party. After notice from the indemnifying party to such
indemnified party under this Section 9.2 the indemnifying party shall not be responsible for any
87
legal or other expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however, if the defendants
in any such action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there are any legal defenses available to
it and/or other indemnified parties that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to select separate
counsel to assert such legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. The indemnifying party shall not be liable for the
expenses of more than one such separate counsel unless an indemnified party shall have
reasonably concluded that there may be legal defenses available to it that are different from or
additional to those available to another indemnified party.
(e) In order to provide for just and equitable contribution in circumstances in which
the indemnifications provided for in Section 9.2(b) or (c) is or are for any reason held to be
unenforceable by an indemnified party in respect of any Liabilities (or action in respect thereof)
referred to therein which would otherwise be indemnifiable under Section 9.2(b) or (c), the
indemnifying party shall contribute to the amount paid or payable by the indemnified party as a
result of such Liabilities (or action in respect thereof); provided, however, that no Person guilty
of fraudulent misrepresentation (within the meaning of Section 11 (f) of the Securities Act) shall
be entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. In determining the amount of contribution to which the respective parties are
entitled, the following factors shall be considered: (i) Lehman's and Borrower's relative
knowledge and access to information concerning the matter with respect to which claim was
asserted; (ii) the opportunity to correct and prevent any statement or omission; and (iii) any other
equitable considerations appropriate in the circumstances. Lender, Borrower, and Sponsor
hereby agree that it would not be equitable if the amount of such contribution were determined
solely by pro rata or per capita allocation.
(f) The liabilities and obligations of Borrower, Sponsor and Lender under this
Section 9.2 shall survive the termination of this Agreement and the satisfaction and discharge of
the Debt until the later to occur of (i) the date that is one year after the Loan is paid in full in
accordance with the terms and provisions of this Agreement, and (ii) the date that is one year
after the date on which any claim made under the indemnifications provided in this Section 9.2 is
resolved with finality, whether by payment, settlement, compromise, written release, withdrawal,
waiver or by final non-appealable order of a court of competent jurisdiction.
Section 9.3. Servicer.
At the option of Lender or Agent, the Loan may be serviced by a servicer/trustee (the
"Servicer") selected by Lender or Agent and Lender or Agent may delegate all or any portion of
its responsibilities under this Agreement and the other Loan Documents to the Servicer pursuant
to a servicing agreement (the "Servicing Agreement") between Lender or Agent and Servicer.
Lender shall be responsible for the regular monthly or periodic servicing fee relating to or arising
under the Servicing Agreement and Borrower shall only be responsible for any special or
extraordinary servicing fees due to the Servicer if the Loan becomes a "specially serviced" loan.
Section 9.4. Exculpation.
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(a) Except as otherwise provided herein, in the Pledge Agreement or in the other
Loan Documents, Lender shall not enforce the liability and obligation of Borrower to perform
and observe the obligations contained in this Agreement, the Note or the Pledge Agreement by
any action or proceeding wherein a money judgment shall be sought against Borrower, except
that Lender may bring a foreclosure action, action for specific performance or other appropriate
action or proceeding to enable Lender to enforce and realize upon this Agreement, the Note, the
Pledge Agreement, the other Loan Documents, and the interest in the Collateral and any other
collateral given to Lender created by this Agreement, the Note, the Pledge Agreement and the
other Loan Documents; provided, however, that any judgment in any such action or proceeding
shall be enforceable against Borrower only to the extent of Borrower's interests in the Collateral
and in any other collateral given to Lender. Lender, by accepting this Agreement, the Note and
the Pledge Agreement, agrees that it shall not, except as otherwise provided herein or in the
Pledge Agreement, sue for, seek or demand any deficiency judgment against Borrower in any
such action or proceeding, under or by reason of or under or in connection with this Agreement,
the Note, the Pledge Agreement or the other Loan Documents. The provisions of this Section
shall not, however, (i) constitute a waiver, release or impairment of any obligation evidenced or
secured by this Agreement, the Note, the Pledge Agreement or the other Loan Documents; (ii)
impair the right of Lender to name Borrower as a party defendant in any action or suit for
judicial foreclosure and sale under the Pledge Agreement; (iii) affect the validity or
enforceability of any indemnity (including, without limitation, the Environmental Indemnity),
guaranty (including, without limitation, the Guaranty, the Debt Service Shortfall Guaranty, the
Completion Guaranty and the Payment and Performance Guaranty), master lease or similar
instrument made in connection with this Agreement, the Note, the Pledge Agreement, or the
other Loan Documents; (iv) impair the right of Lender to obtain the appointment of a receiver;
(v) [intentionally omitted]; (vi) impair the right of Lender to enforce the provisions of the Pledge
Agreement or Sections 4.1.8, 4.1.28, 5.1.9 and 5.2.8 hereof; or (vii) impair the right of Lender to
obtain a deficiency judgment or other judgment on the Note against Borrower if necessary to (A)
preserve or enforce its rights and remedies against any Collateral or (B) obtain any Insurance
Proceeds or Awards to which Lender would otherwise be entitled under the terms of this
Agreement or the Pledge Agreement; provided however, Lender shall only enforce such
judgment to the extent ofthe Insurance Proceeds and/or Awards.
(b) Notwithstanding the provisions of this Section 9.4 to the contrary, Borrower shall
be personally liable . to Lender for the Losses it incurs due to: (i) fraud or intentional
misrepresentation in connection with the execution and the delivery of this Agreement, the Note,
the Pledge Agreement, or the other Loan Documents; (ii) Borrower's or Mortgage Borrower's
misapplication or misappropriation of Rents received by Borrower or Mortgage Borrower after
the occurrence of a Default or Event of Default; (iii) Borrower's or Mortgage Borrower's
misapplication or misappropriation of Security Deposits or Rents collected more than thirty (30)
days in advance; (iv) Borrower's or Mortgage Borrower's misapplication or the misappropriation
of Insurance Proceeds or Awards or Net Liquidation Proceeds After Debt Service; (v)
Borrower's or Mortgage Borrower's failure to pay Taxes, Other Charges (except to the extent
that sums sufficient to pay such amounts have been deposited in escrow with Lender pursuant to
the terms of Section 6 of the Security Instrument or Section 7.2 hereof, and except to the extent
that such failure to pay is due solely to the failure of the Property to generate sufficient revenue
to make such payments), charges for labor or materials or other charges that result in Liens on
the Property; (vi) [intentionally omitted]; (vii) any act of intentional waste or arson by Borrower,
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Mortgage Borrower, Operating Lessee, or Principal or any Affiliate thereof or by Apollo or
Guarantor; or (viii) any fees or commissions paid by Borrower to Principal or any Affiliate of
Borrower, Mortgage Borrower, Operating Lessee, Principal, Apollo or Guarantor in violation of
the terms of this Agreement, the Note, the Pledge Agreement or the other Loan Documents.
(c) Notwithstanding the foregoing, the agreement of Lender not to pursue recourse
liability as set forth in Subsection (a) above SHALL BECOME NULL AND VOID and shall be
of no further force and effect (i) in the event of Borrower's default under Sections 4.1.35 or
5 .2.1 0 hereof or Mortgage Borrower's default under Section 11 of the Security Instrument, or in
the event of Principal's default under Section 4.1.35 hereof, or (ii) ifthe Property, the Collateral
or any part thereof shall become an asset in (A) a voluntary bankruptcy or insolvency proceeding
or (B) an involuntary bankruptcy or insolvency proceeding commenced by any Person (other
than Lender) and Borrower or Mortgage Borrower consents to such proceedings or in which
Borrower (or any Person acting at the direction or request of Borrower) colludes, conspires or
otherwise acts in concert with its creditors (other than Mortgage Lender or Lender) in the filing
of such involuntary bankruptcy or insolvency proceeding.
(d) Nothing herein shall be deemed to be a waiver of any right which Lender may
have under Section 506(a), 506(b), 1111(b) or any other provision of the Bankruptcy Code to file
a claim for the full amount of the indebtedness secured by the Pledge Agreement or to require
that all collateral shall continue to secure all of the indebtedness owing to Lender in accordance
with this Agreement, the Note, the Pledge Agreement and the other Loan Documents.
Section 9.5. [Reserved.]
Section 9.6. [Intentionally omitted.]
Section 9.7. Syndication.
9.7.1. Syndication.
The provisions of this Section 9.7 shall only apply in the event that the Loan IS
syndicated in accordance with the provisions ofthis Section 9.7 set forth below.
9. 7 .2. Sale of Loan, Co-Lenders, Participations and Servicing.
(a) Lender and any Co-Lender may, at their option, without Borrower's consent (but
with notice to Borrower), sell with novation all or any part of their right, title and interest in, and
to, and under the Loan (the "Syndication"), to one or more additional lenders (each a "Co-
Lender"). Each additional Co-Lender shall enter into an assignment and assumption agreement
(the "Assignment and Assumption") assigning a portion of Lender's or Co-Lender's rights and
obligations under the Loan, and pursuant to which the additional Co-Lender accepts such
assignment and assumes the assigned obligations. From and after the effective date specified in
the Assignment and Assumption (i) each Co-Lender shall be a party hereto and to each Loan
Document to the extent of the applicable percentage or percentages set forth in the Assignment
and Assumption and, except as specified otherwise herein, shall succeed to the rights and
obligations of Lender and the Co-Lenders hereunder and thereunder in respect of the Loan, and
(ii) Lender, as lender and each Co-Lender, as applicable, shall, to the extent such rights and
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obligations have been assigned by it pursuant to such Assignment and Assumption, relinquish its
rights and be released from its obligations hereunder and under the Loan Documents.
(b) The liabilities of Lender and each of the Co-Lenders shall be several and not joint,
and Lender's and each Co-Lender's obligations to Borrower under this Agreement shall be
reduced by the amount of each such Assignment and Assumption. Neither Lender nor any Co-
Lender shall be responsible for the obligations of any other Co-Lender. Lender and each Co-
Lender shall be liable to Borrower only for their respective proportionate shares of the Loan. If
for any reason any of the Co-Lenders shall fail or refuse to abide by their obligations under this
Agreement, Lender and the other Co-Lenders shall not be relieved of their obligations, if any,
hereunder; notwithstanding the foregoing, Lender and the Co-Lenders shall have the right, but
not the obligation, at their sole option, to make the defaulting Co- Lender's pro rata share of such
advance pursuant to the Co-Lending Agreement.
(c) Borrower agrees that it shall, in connection with any sale of all or any portion of
the Loan, whether in whole or to an additional Co-Lender or Participant, within ten (10)
Business Days after requested by Agent, furnish Agent with the certificates required under
Sections 5.1.1 0 and 5.1.13 hereof and such other information as reasonably requested by any
additional Co-Lender or Participant in performing its due diligence in connection with its
purchase of an interest in the Loan.
(d) Lender (or an Affiliate of Lender) shall act as administrative agent for itself and
the Co-Lenders (together with any successor administrative agent, the "Agent") pursuant to this
Section 9.7. Borrower acknowledges that Lender, as Agent, shall have the sole and exclusive
authority to execute and perform this Agreement and each Loan Document on behalf of itself, as
Lender and as agent for itself and the Co-Lenders subject to the terms of the Co-Lending
Agreement. Lender acknowledges that Lender, as Agent, shall retain the exclusive right to grant
approvals and give consents with respect to all matters requiring consent hereunder. Except as
otherwise provided herein, Borrower shall have no obligation to recognize or deal directly with
any Co-Lender, and no Co-Lender shall have any right to deal directly with Borrower with
respect to the rights, benefits and obligations of Borrower under this Agreement, the Loan
Documents or any one or more documents or instruments in respect thereof. Borrower may rely
conclusively on the actions of Lender as Agent to bind Lender and the Co-Lenders,
notwithstanding that the particular action in question may, pursuant to this Agreement or the Co-
Lending Agreement be subject to the consent or direction of some or all of the Co-Lenders.
Lender may resign as Agent of the Co-Lenders, in its sole discretion, or if required to by the Co-
Lenders in accordance with the term of the Co-Lending Agreement, in each case without the
consent of but upon notice to Borrower. Upon any such resignation, a successor Agent shall be
determined pursuant to the terms of the Co-Lending Agreement. The term Agent shall mean any
successor Agent.
(e) Notwithstanding any provision to the contrary in this Agreement, the Agent shall
not have any duties or responsibilities except those expressly set forth herein (and in the Co-
Lending Agreement) and no covenants, functions, responsibilities, duties, obligations or
liabilities of Agent shall be implied by or inferred from this Agreement, the Co-Lending
Agreement, or any other Loan Document, or otherwise exist against Agent.
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(f) Except to the extent its obligations hereunder and its interest in the Loan have
been assigned pursuant to one or more Assignments and Assumption, Lender, as Agent, shall
have the same rights and powers under this Agreement as any other Co-Lender and may exercise
the same as though it were not Agent, respectively. The term "Co-Lender" or "Co-Lenders"
shall, unless otherwise expressly indicated, include Lender in its individual capacity. Lender and
the other Co-Lenders and their respective Affiliates may accept deposits from, lend money to, act
as trustee under indentures of, and generally engage in any kind of business with, Borrower, or
any Affiliate of Borrower and any Person who may do business with or own securities of
Borrower or any Affiliate of Borrower, all as if they were not serving in such capacities
hereunder and without any duty to account therefor to each other.
(g) If required by any Co-Lender, Borrower hereby agrees to execute supplemental
notes in the principal amount of such Co-Lender's pro rata share of the Loan substantially in the
form of the Note, and such supplemental note shall (i) be payable to order of such Co-Lender,
(ii) be dated as of the Closing Date, and (iii) mature on the Maturity Date. Such supplemental
note shall provide that it evidences a portion of the existing indebtedness hereunder and under
the Note and not any new or additional indebtedness of Borrower. The term "Note" as used in
this Agreement and in all the other Loan Documents shall include all such supplemental notes.
(h) Lender, as Agent, shall maintain at its domestic lending office or at such other
location as Lender, as Agent, shall designate in writing to each Co-Lender and Borrower a copy
of each Assignment and Assumption delivered to and accepted by it and a register for the
recordation of the names and addresses of the Co-Lenders, the amount of each Co-Lender's
proportionate share of the Loan and the name and address of each Co-Lender's agent for service
of process (the "Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and Borrower, Lender, as Agent, and the Co-Lenders may treat
each person or entity whose name is recorded in the Registeras a Co-Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection and copying by
Borrower or any Co-Lender during normal business hours upon reasonable prior notice to the
Agent. A Co-Lender may change its address and its agent for service of process upon written
notice to Lender, as Agent, which notice shall only be effective upon actual receipt by Lender, as
Agent, which receipt will be acknowledged by Lender, as Agent, upon request.
(i) Notwithstanding anything herein to the contrary, any financial institution or other
entity may be sold a participation interest in the Loan by Lender or any Co-Lender without
Borrower's consent (such financial institution or entity, a "Participant") (x) if such sale is
without novation and (y) if the other conditions set forth in this paragraph are met. No
Participant shall be considered a Co-Lender hereunder or under the Note or the Loan Documents.
No Participant shall have any rights under this Agreement, the Note or any of the Loan
Documents and the Participant's rights in respect of such participation shall be solely against
Lender or Co-Lender, as the case may be, as set forth in the participation agreement executed by
and between Lender or Co-Lender, as the case may be, and such Participant. No participation
shall relieve Lender or Co-Lender, as the case may be, from its obligations hereunder or under
the Note or the Loan Documents and Lender or Co- Lender, as the case may be, shall remain
solely responsible for the performance of its obligations hereunder.
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(j) Notwithstanding any other provision set forth in this Agreement, Lender or any
Co-Lender may at any time create a security interest in all or any portion of its rights under this
Agreement (including, without limitation, amounts owing to it in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve
System), provided that no such security interest or the exercise by the secured party of any of its
rights thereunder shall release Lender or Co-Lender from its funding obligations hereunder.
9.7.3. Cooperation in Syndication.
(a) Borrower and Sponsor agree to assist Lender in completing a Syndication
satisfactory to Lender. Such assistance shall include (i) direct contact between senior
management and advisors of Borrower and the proposed Co-Lenders, (ii) assistance in the
preparation of a confidential information memorandum and other marketing materials to be used
in connection with the Syndication, (iii) the hosting, with Lender, of one or more meetings of
prospective Co-Lenders or with the Rating Agencies, (iv) the delivery of appraisals satisfactory
to Lender if required, and (v) working with Lender to procure a rating for the Loan by the Rating
Agencies.
(b) Lender shall manage all aspects of the Syndication of the Loan, including
decisions as to the selection of institutions to be approached and when they will be approached,
when their commitments will be accepted, which institutions will participate, the allocations of
the commitments among the Co-Lenders and the amount and distribution of fees among the Co-
Lenders. To assist Lender in its Syndication efforts, Borrower and Sponsor agree promptly to
prepare and provide to Lender all information with respect to Borrower, Mortgage Borrower,
Operating Lessee, Manager, Sponsor, Guarantor, Apollo, the Collateral and the Property
contemplated hereby, including all financial information and projections (the "Projections"), as
Lender may reasonably request in connection with the Syndication of the Loan. Borrower
hereby represents and covenants that (i) all information other than the Projections (the
"Information") that has been or will be made available to Lender by Borrower or any of their
representatives is or will be, when furnished, complete and correct in all material respects and
does not or will not, when furnished, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements are made and (ii) the
Projections that have been or will be made available to Lender by Borrower or any of their
representatives have been or will be prepared in good faith based upon reasonable assumptions.
Borrower understands that in arranging and syndicating the Loan, Lender, the Co-Lenders and, if
applicable, the Rating Agencies, may use and rely on the Information and Projections without
independent verification thereof.
(c) If required in connection with the Syndication, Borrower and Sponsor hereby
agree to:
(i) amend the Loan Documents to give Lender the right, at Lender's sole cost
and expense, to have the Property reappraised on an annual basis;
(ii) deliver updated financial and operating statements and other information
reasonably required by Lender to facilitate the Syndication;
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(iii) deliver reliance letters reasonably satisfactory to Lender with respect to
the environmental assessments and reports delivered to Lender prior to the Closing Date,
which will run to Lender and its successors and assigns;
(iv) execute modifications to the Loan Documents required by the Co-
Lenders, provided that such modification will not (except as set forth in clause (v)
below), change any material or economic terms of the Loan Documents, or otherwise
materially increase the obligations or materially decrease the rights of Borrower pursuant
to the Loan Documents;
(v) if Lender elects, in its sole discretion, prior to or upon a Syndication, to
split the Loan into two or more parts, or the Note into multiple component notes or
tranches which may have different interest rates, principal amounts, payment priorities
and maturities, Borrower agrees to cooperate with Lender in connection with the
foregoing and to execute the required modifications and amendments to the Note, this
Agreement and the Loan Documents and to provide opinions necessary to effectuate the
same. Such Notes or components may be assigned different interest rates, so long as the
initial weighted average of such interest rates does not exceed the Applicable Interest
Rate; and
(vi) execute modifications to the Loan Documents changing the interest rate
for the Loan and the Mortgage Loan, provided that the initial weighted average of the
interest rate spreads for the Loan and the Mortgage Loan after such modification shall not
exceed the weighted average of the interest rate spreads for the Loan and the Mortgage
Loan immediately prior to such modification. The Borrower shall also provide opinions
and title insurance reasonably necessary to effectuate the same.
Borrower and Sponsor shall each be responsible for payment of its legal fees incurred in
connection with its compliance with the requests made under this Section 9.7.3. All other
reasonable third party costs and expenses incurred by Borrower or Sponsor in connection with
Borrower's or Sponsor's complying with requests made under this Section 9.7.3 shall be paid by
Lender. The costs and expenses incurred by Lender in connection with a Syndication shall be
paid by Lender.
9.7.4. [Intentionally omitted].
9.7.5. Limitation of Liability.
No claim may be made by Borrower, or any other Person against Agent, or any Co-
Lenders or the Affiliates, directors, officers, employees, attorneys or agent of any of such
Persons for any special, indirect, consequential or punitive damages in respect of any claim for
breach of contract or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement or any act, omission or event occurring in connection therewith;
and Borrower hereby waives, releases and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist in its favor.
9.7.6. No Joint Venture.
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Notwithstanding anything to the contrary herein contained, neither Agent, nor any Co-
Lender by entering into this Agreement or by taking any action pursuant hereto, will be deemed
a partner or joint venturer with Borrower.
9.7.7. Voting Rights of Co-Lenders.
Borrower acknowledges that the Co-Lending Agreement may contain provisions which
require that amendments, waivers, extensions, modifications, and other decisions with respect to
the Loan Documents shall require the approval of all or a number of the Co-Lenders holding in
the aggregate a specified percentage of the Loan or any one or more Co-Lenders that are
specifically affected by such amendment, waiver, extension, modification or other decision.
Section 9.8. Reallocation of Loan Amounts.
Lender, without in any way limiting its other rights hereunder, in its sole and absolute
discretion, shall have the right, at any time prior to a Securitization or a Syndication, to reallocate
the amount of the Loan and the Mortgage Loan and/or adjust the interest rates thereon provided
that (i) the aggregate principal amount of the Loan and the Mortgage Loan immediately
following such reallocation shall equal the outstanding principal balance of the Loan and the
Mortgage Loan immediately prior to such reallocation and (ii) the initial weighted average
interest rate of the Note and the Mortgage Note immediately following such reallocation shall
equal the weighted average interest rate which was applicable to the Note and the Mortgage Note
immediately prior to such reallocation. Borrower shall cooperate at Lender's cost (except that
Borrower shall be responsible for the payment of its own legal fees) with all reasonable requests
of Lender in order to reallocate the amount of the Loan and the Mortgage Loan and shall execute
and deliver such documents as shall reasonably be required by Lender in connection therewith,
including, without limitation, amendments to the Loan Documents and the Mortgage Loan
Documents, and endorsements to the Title Policy and the UCC title insurance policy, all in form
and substance reasonably satisfactory to Lender.
Section 9.9. lntercreditor Agreements.
(a) Lender and Mortgage Lender are parties to a certain intercreditor agreement dated
as of the date hereof (the "Intercreditor Agreement") memorializing their relative rights and
obligations with respect to the Loan, the Mortgage Loan, Borrower, Mortgage Borrower, the
Collateral and the Property. Borrower hereby acknowledges and agrees that (i) such
Intercreditor Agreement is intended solely for the benefit of Lender and Mortgage Lender and
(ii) Borrower and Mortgage Borrower are not intended third-party beneficiaries of any of the
provisions therein and shall not be entitled to rely on any of the provisions contained therein.
Lender and Mortgage Lender shall have no obligation to disclose to Borrower the contents of the
Intercreditor Agreement. Borrower's obligations hereunder are independent of such Intercreditor
Agreement and remain unmodified by the terms and provisions thereof.
(b) In the event Lender is required pursuant to the terms of the Intercreditor
Agreement to pay over any payment or distribution of assets, whether in cash, property or
securities which is applied to the Debt, including, without limitation, any proceeds of the
Property previously received by Lender on account of the Loan to Mortgage Lender to be
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applied to the "Debt" under and as defined in the Security Instrument, then any amount so paid
shall continue to be owing pursuant to the Loan Documents as part of the Debt notwithstanding
the prior receipt of such payment by Lender and Lender shall provide notice to Borrower of any
such payment by Lender as soon reasonably practicable after such payment is made by Lender.
Section 9.10. Independent Approval Rights.
If any action, proposed action or other decision is consented to or approved by Mortgage
Lender, such consent or approval shall not, except as and to the extent herein provided otherwise,
be binding or controlling on Lender. Borrower hereby acknowledges and agrees that (i) the risks
of Mortgage Lender in making the Mortgage Loan are different from the risks of Lender in
making the Loan, (ii) in determining whether to grant, deny, withhold or condition any requested
consent or approval Mortgage Lender and Lender may reasonably reach different conclusions,
and (iii) except as and to the extent herein provided otherwise, Lender has an absolute
independent right to grant, deny, withhold or condition any requested consent or approval based
on its own point of view. Further, the denial by Lender of a requested consent or approval shall
not create any liability or other obligation of Lender if the denial of such consent or approval
results directly or indirectly in a default under the Mortgage Loan, and Borrower hereby waives
any claim of liability against Lender arising from any such denial.
X. MISCELLANEOUS
Section 10.1. Survival.
This Agreement and all covenants, agreements, representations and warranties made
herein and in the certificates delivered pursuant hereto shall survive the making by Lender of the
Loan and the execution and delivery to Lender of the Note, and shall continue in full force and
effect so long as all or any of the Debt is outstanding and unpaid unless a longer period is
expressly set forth herein or in the other Loan Documents. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the legal
representatives, successors and assigns of such party. All covenants, promises and agreements in
this Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal
representatives, successors and assigns of Lender.
Section 10.2. Lender's Discretion.
Whenever pursuant to this Agreement, Lender exercises any right given to it to approve
or disapprove, or any arrangement or term is to be satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide whether arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in the sole discretion of
Lender and shall be final and conclusive.
Section 10.3. Governing Law.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED
INTO PURSUANT TO THE LAWS OF THE STATE OF NEW YORK AND SHALL IN ALL
RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD
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TO PRINCIPLES OF CONFLICTS OF LAWS), PROVIDED HOWEVER, THAT WITH
RESPECT TO THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE
LIENS AND SECURITY INTERESTS CREATED BY THIS AGREEMENT, THE PLEDGE
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND THE DETERMINATION OF
DEFICIENCY JUDGMENTS, THE LAWS OF THE STATE OF CALIFORNIA SHALL
APPLY.
(b) WITH RESPECT TO ANY CLAIM OR ACTION ARISING HEREUNDER OR
UNDER THIS AGREEMENT, THE NOTE, OR THE OTHER LOAN DOCUMENTS,
BORROWER (A) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK,
NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF, AND (B)
IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO
THE LAYING ON VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN
DOCUMENTS BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS
AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS INSTRUMENT WILL
BE DEEMED TO PRECLUDE LENDER FROM BRINGING AN ACTION OR
PROCEEDING WITH RESPECT HERETO IN ANY OTHER JURISDICTION.
Section 10.4. Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement, the Note, or of any other Loan Document, nor consent to any
departure by Borrower therefrom, shall in any event be effective unless the same shall be in a
writing signed by the party against whom enforcement is sought, and then 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 10.5. 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 under any other Loan Document, or any
other instrument given as security therefor, shall operate as or constitute a waiver thereof, nor
shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any
other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting
payment after the 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.
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Section 10.6. Notices.
All notices or other written communications hereunder shall be deemed to have been
properly given (i) upon delivery, if delivered in person or by facsimile transmission with receipt
acknowledged by the recipient thereof and confirmed by telephone by sender, (ii) one (1)
Business Day after having been deposited for overnight delivery with any reputable overnight
courier service, or (iii) three (3) Business Days after having been deposited in any post office or
mail depository regularly maintained by the U.S. Postal Service and sent by registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
If to Borrower:
With a copy to:
With a copy to:
With a copy to:
If to Lender I Agent:
With a copy to:
Grand Prix Mezz Borrower Term LLC
c/o Apollo Investment Corporation
9 West 5ih Street
New York, New York 10019
Attention: Aaron N. Sack
Facsimile No.: (212) 515-3443
9 West 5ih Street
Attention: Justin M. Korval
Facsimile No.: (212) 515-3442
Innkeepers USA
340 Royal Poinciana Way
Suite 306
Palm Beach, Florida 33480
Attention: Dennis Craven and Mark Murphy
Facsimile No.: (561) 650-0958
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036-6522
Attention: Neil L. Rock, Esq.
Facsimile No.: (917) 777-3787
Lehman ALI Inc.
399 Park Avenue
Attention: Michael E. Lascher
Facsimile No.: (646) 758-2744
Lehman ALI Inc.
399 Park Avenue
Attention: Charlene Thomas
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Facsimile No.: (646) 758-4544
and
Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, Pennsylvania 19103
Attention: David Forti, Esq.
Facsimile No.: (215) 994-2222
or addressed as such party may from time to time designate by written notice to the other parties.
Either party by notice to the other may designate additional or different addresses
for subsequent notices or communications.
Section 10.7. Trial by Jury.
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY
FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY
BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY
WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY
OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER BY BORROWER.
Section 10.8. Headings.
The Article and/or Section headings and the Table of Contents in this Agreement are
included herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 10.9. Severability.
Wherever possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under Applicable Law, but if any provision of this Agreement shall
be prohibited by or invalid under Applicable Law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement.
Section 10.10. Preferences.
Lender shall have the continuing and exclusive right to apply or reverse and reapply any
and all payments by Borrower to any portion of the obligations of Borrower hereunder. To the
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extent Borrower makes a payment or payments to Lender, which payment or proceeds or any
part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or
required to be repaid to a trustee, receiver or any other party under any bankruptcy law, State or
federal law, common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment or proceeds had not been received by
Lender.
Section 10.11. Waiver ofNotice.
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 do not specifically and expressly provide for the giving of notice by Lender to
Borrower.
Section 10.12. Remedies of Borrower.
In the event that a claim or adjudication is made that Lender or its agents have acted
unreasonably or unreasonably delayed acting in any case where by law or under this Agreement
or the other Loan Documents, Lender or such agent, as the case may be, has an obligation to act
reasonably or promptly, 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 10.13. Expenses; Indemnity.
(a) Borrower covenants and agrees to pay or, if Borrower fails to pay, to reimburse,
Lender within ten (1 0) days of receipt of written notice from Lender for all reasonable costs and
expenses (including reasonable attorneys' fees and disbursements) incurred by Lender in
connection with (i) the preparation, negotiation, execution and delivery of this Agreement and
the other Loan Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower (including without
limitation any opinions requested by Lender as to any legal matters arising under this Agreement
or the other Loan Documents with respect to the Property); (ii) Borrower's ongoing performance
of and compliance with Borrower's respective agreements and covenants contained in this
Agreement and the other Loan Documents on its part to be performed or complied with after the
Closing Date, including, without limitation, confirming compliance with environmental and
insurance requirements; (iii) [intentionally omitted]; (iv) the negotiation, preparation, execution,
delivery and administration of any consents, amendments, waivers or other modifications to this
Agreement and the other Loan Documents and any other documents or matters requested by
Lender; (v) securing Borrower's compliance with any requests made pursuant to the provisions
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of this Agreement; (vi) the filing and recording fees and expenses, title insurance and reasonable
fees and expenses of counsel for providing to Lender all required legal opinions, and other
similar expenses incurred in creating and perfecting the Liens in favor of Lender pursuant to this
Agreement and the other Loan Documents; (vii) enforcing or preserving any rights, in response
to third party claims or the prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting Borrower, Mortgage Borrower, this
Agreement, the other Loan Documents, the Collateral, the Property, or any other security given
for the Loan; and (viii) enforcing any obligations of or collecting any payments due from
Borrower under this Agreement, the other Loan Documents, or with respect to the Collateral or
with respect to the Property or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceedings; provided, however, that Borrower shall not be liable for the payment
of any such costs and expenses to the extent the same arise by reason of the gross negligence,
illegal acts, fraud or willful misconduct of Lender. Any cost and expenses due and payable to
Lender may be paid from any amounts in the Mezzanine Deposit Account.
(b) Borrower shall indemnify, defend and hold harmless Lender and the Indemnified
Parties from and against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for
Lender and the Indemnified Parties in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not Lender or the Indemnified Parties
shall be designated a party thereto), that may be imposed on, incurred by, or asserted against
Lender or the Indemnified Parties in any manner relating to or arising out of (i) any breach by
Borrower of its obligations under, or any material misrepresentation by Borrower contained in,
this Agreement or the other Loan Documents, or (ii) the use or intended use of the proceeds of
the Loan (collectively, the "Additional Indemnified Liabilities"); provided, however, that
Borrower shall not have any obligation to Lender or the Indemnified Parties hereunder to the
extent that such Liabilities arise from the gross negligence, illegal acts, fraud or willful
misconduct of Lender or the Indemnified Parties. To the extent that the undertaking to
indemnify, defend and hold harmless set forth in the preceding sentence may be unenforceable
because it violates any law or public policy, Borrower shall pay the maximum portion that it is
permitted to pay and satisfy under Applicable Law to the payment and satisfaction of all
Additional Indemnified Liabilities incurred by Lender or the Indemnified Parties.
(c) Borrower shall, at its sole cost and expense, protect, defend, indemnify, release
and hold harmless Lender and the Indemnified Parties from and against any and all losses
(including, without limitation, reasonable attorneys' fees and costs incurred in the investigation,
defense, and settlement of losses incurred in correcting any prohibited transaction or in the sale
of a prohibited loan, and in obtaining any individual prohibited transaction exemption under
ERISA, the Code, any State statute or other similar law that may be required, in Lender's sole
discretion) that Lender or the Indemnified Parties may incur, directly or indirectly, as a result of
a default under Sections 4.1.8 or 5.2.8 hereof.
(d) Borrower covenants and agrees to pay for or, if Borrower fails to pay, to
reimburse Lender for any consent, approval, waiver or confirmation obtained from such Rating
Agency pursuant to the terms and conditions of this Agreement or any other Loan Document and
101
Lender shall be entitled to require payment of such fees and expenses as a condition precedent to
the obtaining of any such consent, approval, waiver or confirmation.
Section 10.14. Schedules and Exhibits Incorporated.
The Schedules and Exhibits annexed hereto are hereby incorporated herein as a part of
this Agreement with the same effect as if set forth in the body hereof.
Section 10.15. 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 such documents which Borrower may otherwise have against any assignor of such
documents, and no such unrelated counterclaim or defense shall be interposed or asserted by
Borrower in any action or proceeding brought by any such assignee upon such documents and
any such right to interpose or assert any such unrelated offset, counterclaim or defense in any
such action or proceeding is hereby expressly waived by Borrower.
Section 10.16. No Joint Venture or Partnership; No Third Party Beneficiaries.
(a) Borrower and Lender intend that the relationships created hereunder and under
the other Loan Documents be solely that of borrower and lender. Nothing herein or therein is
intended to create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship
between Borrower and Lender.
(b) This Agreement and the other Loan Documents are solely for the benefit of
Lender and Borrower and nothing contained in this Agreement or the other Loan Documents
shall be deemed to confer upon anyone other than Lender and Borrower any right to insist upon
or to enforce the performance or observance of any of the obligations contained herein or therein.
All conditions to the obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to assume that
Lender will refuse to make the Loan in the absence of strict compliance with any or all thereof
and no other Person shall under any circumstances be deemed to be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in part by Lender if, m
Lender's sole discretion, Lender deems it advisable or desirable to do so.
Section 10.17. Publicity.
(a) 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 Lender, Lehman, or any of their Affiliates shall
be subject to the prior written approval of Lender, which shall not be unreasonably withheld,
conditioned or delayed. Notwithstanding the foregoing, disclosure required by any federal or
State securities laws, rules or regulations, as determined by Borrower's counsel, shall not be
subject to the prior written approval of Lender.
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(b) All news releases, publicity or advertising issued directly by Lender or its
Affiliates through any media intended to reach the general public which refers to any non-public
information with respect to Apollo shall be subject to the prior written approval of Borrower,
which shall not be unreasonably withheld, conditioned or delayed; provided, however, that prior
written approval of Borrower shall not be required if such approval or the obtaining of such
approval could reasonably be expected to hinder, delay or otherwise interfere with any
Securitization or Syndication.
Section 10.18. Waiver of Marshalling of Assets.
To the fullest extent permitted by Applicable Law, Borrower, for itself and its successors
and assigns, waives all rights to a marshalling ofthe assets of Borrower, Borrower's partners and
others with interests in Borrower, and of the Collateral, or to a sale in inverse order of alienation
in the event of foreclosure of all or any part of the Pledge Agreement, 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 Collateral for the collection of the Debt without any prior or different resort for collection or
of the right of Lender to the payment of the Debt out of the net proceeds of the Collateral in
preference to every other claimant whatsoever. In addition, Borrower, for itself and its
successors and assigns, waives in the event of foreclosure of any or any part of the Pledge
Agreement, any equitable right otherwise available to Borrower which would require the
separate sale of the Collateral or require Lender to exhaust its remedies against any part of the
Collateral or any combination thereof before proceeding against any part of the Collateral or
combination thereof; and further in the event of such foreclosure Borrower does hereby
expressly consents to and authorizes, at the option of Lender, the foreclosure and sale either
separately or together of any combination of the Collateral.
Section 10.19. Waiver of Counterclaim.
Borrower hereby waives the right to assert a counterclaim, other than a compulsory
counterclaim, in any action or proceeding brought against it by Lender or its agents.
Section 1 0.20. Conflict; Construction of Documents; Reliance.
In the event of any conflict between the provisions ofthis Agreement and any ofthe other
Loan Documents, the provisions of this Agreement shall control. The parties hereto
acknowledge that they were represented by competent counsel in connection with the
negotiation, drafting and execution of the Loan Documents and that such Loan Documents shall
not be subject to the principle of construing their meaning against the party which drafted same.
Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on its own
judgment and advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent, subsidiary or Affiliate
of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of any rights
or remedies available to it under any of the Loan Documents or any other agreements or
instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Lender of any equity interest any of them may acquire in Borrower, and Borrower
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hereby irrevocably waives the right to raise any defense or take any action on the basis of the
foregoing with respect to Lender's exercise of any such rights or remedies. Borrower
acknowledges that Lender engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive with the
business of Borrower or its Affiliates.
Section 10.21.Brokers and Financial Advisors.
Borrower hereby represents that it has dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the transactions
contemplated by this Agreement. Borrower hereby agrees to indemnify, defend and hold Lender
harmless from and against any and all claims, liabilities, costs and expenses of any kind
(including Lender's attorneys' fees and expenses) in any way relating to or arising from a claim
by any Person that such Person acted on behalf of Borrower or Lender in connection with the
transactions contemplated herein. The provisions of this Section 10.21 shall survive the
expiration and termination of this Agreement and the payment of the Debt.
Section 10.22. [Reserved.]
Section 10.23. [Intentionally omitted.]
Section 10.24. Prior Agreements.
This Agreement and the other Loan Documents contain the entire agreement of the
parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all
prior agreements among or between such parties, whether oral or written, between Borrower
and/or its Affiliates and Lender are superseded by the terms of this Agreement and the other
Loan Documents.
Section 10.26. Certain Additional Rights of Lender (VCOC).
Notwithstanding anything which may be contained in this Agreement to the contrary,
Lender shall have:
(a) the right to routinely consult with Borrower's management regarding the
significant business activities and business and financial developments of Borrower.
Consultation meetings should occur at Lender's request on a regular basis (no more frequently
than quarterly) with Lender having the right to call special meetings at any reasonable times and
upon reasonable advance notice;
(b) the right, in accordance with the terms of this Agreement, to examine the books
and records of Borrower at any time upon reasonable notice;
(c) the right, without restricting any other rights of Lender under this Agreement
(including any similar right), to approve any acquisition by Borrower of any assets other than the
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Collateral and other than such assets as shall be used solely in connection with the management
and operation of the Collateral; and
(d) the right, in accordance with the terms of this Agreement, to receive monthly,
quarterly and year end financial reports, including balance sheets, statements of income,
shareholder's equity and cash flow, a management report and schedules of outstanding
indebtedness.
The rights described above may be exercised by any entity which owns and controls,
directly or indirectly, substantially all of the interests in Lender.
Section 10.27.Direction of Mortgage Borrower or Operating Lessee or with Respect to
the Property.
(a) Borrower and Lender hereby acknowledge and agree that, as to any clauses or
provisions contained in this Agreement or any of the other Loan Documents to the effect that (i)
Borrower shall cause Mortgage Borrower to act or to refrain from acting in any manner or (ii)
Borrower shall cause to occur or not to occur, or otherwise be obligated in any manner with
respect to, any matters pertaining to Mortgage Borrower or the Property, or (iii) other similar
effect, such clause or provision, in each case, is intended to mean, and shall be construed as
meaning that Borrower has undertaken to act and is obligated to act only in Borrower's capacity
as the sole member of Mortgage Borrower (which Mortgage Borrower, in turn, is the fee owner
of the Property), but not directly with respect to Mortgage Borrower or the Property or in any
other manner which would violate any of the covenants contained in Section 4.1.35 hereof or
other similar covenants contained in Borrower's or Mortgage Borrower's Organizational
Documents.
(b) Borrower and Lender hereby acknowledge and agree that, as to any clauses or
provisions contained in this Agreement or any of the other Loan Documents to the effect that (i)
Borrower shall cause Operating Lessee to act or to refrain from acting in any manner or (ii)
Borrower shall cause to occur or not to occur, or otherwise be obligated in any manner with
respect to, any matters pertaining to Operating Lessee or the Property, or (iii) other similar effect,
such clause or provision, in each case, is intended to mean, and shall be construed as meaning,
that Borrower has undertaken to act and is obligated to act only in Borrower's capacity as the
sole member of Mortgage Borrower (which Mortgage Borrower, in tum, is the fee owner of the
Property and the lessor under the Operating Lease) in causing Operating Lessee (which
Operating Lessee, in turn, is the lessee under the Operating Lease and the operator of the
Property) to act or refrain from acting, but not directly with respect to Operating Lessee or the
Property or in any other manner which would violate any of the covenants contained in Section
4.1.35 hereof or other similar covenants contained in Borrower's or Operating Lessee's
Organizational Documents.
Section 1 0.28. Compliance with Mortgage Loan Documents.
Borrower shall (or shall cause Mortgage Borrower to): (a) pay all principal, interest and
other sums required to be paid by Mortgage Borrower under and pursuant to the provisions of the
Mortgage Loan Documents; (b) diligently perform and observe all of the terms, covenants and
105
conditions of the Mortgage Loan Documents on the part of Mortgage Borrower to be performed
and observed, unless such performance or observance shall be waived in writing by Mortgage
Lender; (c) promptly notifY Lender of the giving of any notice by Mortgage Lender to Mortgage
Borrower of any default by Mortgage Borrower in the performance or observance of any of the
terms, covenants or conditions of the Mortgage Loan Documents on the part of Mortgage
Borrower to be performed or observed and deliver to Lender a true copy of each such notice; (d)
deliver a true, correct and complete copy of all material notices, demands, requests or material
correspondence (including electronically transmitted items) given or received by Mortgage
Borrower or Guarantor to or from Mortgage Lender or its agent; and (e) not enter into or be
bound by any amendments to any Mortgage Loan Documents that are not approved by Lender or
otherwise permitted hereunder, which approval shall not be unreasonably withheld or delayed.
Without limiting the foregoing, Borrower shall cause Mortgage Borrower to fund all reserves
required to be funded pursuant to the Mortgage Loan Documents. In the event of a refinancing
of the Mortgage Loan permitted by the terms of this Agreement, Borrower will cause all reserves
on deposit with the Mortgage Lender to be utilized by Mortgage Borrower to reduce the amount
due and payable to the Mortgage Lender or alternatively shall be remitted to Lender as a
mandatory prepayment of the Loan.
Section 10.29. Mortgage Loan Defaults.
(a) Without limiting the generality of the other provisions of this Agreement, and
without waiving or releasing Borrower from any of its obligations hereunder, if there shall occur
any "Event of Default" under any of the Mortgage Loan Documents, which, in Lender's
reasonable judgment requires immediate action in order to protect its interest in the Collateral
(after taking into consideration any cure periods available pursuant to the terms of any
Intercreditor Agreement) or in order to protect its rights to effect a cure of such "Event of
Default" within the cure period provided Lender under the Intercreditor Agreement, Borrower
hereby expressly agrees that Lender shall have the immediate right, without prior notice to
Borrower, but shall be under no obligation: (i) to pay all or any part of the Mortgage Loan and
any other sums that are then due and payable, and to perform any act or take any action on behalf
of Borrower or Mortgage Borrower, to cause all of the terms, covenants and conditions of the
applicable Mortgage Loan Documents on the part of Mortgage Borrower to be performed or
observed thereunder to be promptly performed or observed; and (ii) to pay any other amounts
and take any other action as Lender, in its sole and absolute discretion, shall deem advisable to
protect or preserve the rights and interests of Lender in the Loan and/or the Collateral. All sums
so paid and the costs and expenses incurred by Lender in exercising rights under this Section
(including reasonable attorneys' fees) (i) shall constitute additional advances of the Loan to
Borrower, (ii) shall increase the then unpaid principal amount of the Loan, (iii) shall bear interest
at the Default Rate for the period from the date that such costs or expenses were incurred to the
date of payment to Lender, (iv) shall constitute a portion of the Debt, and (v) shall be secured by
the Pledge Agreement.
(b) Borrower hereby indemnifies Lender from and against all liabilities, obligations,
losses, damages, penalties, assessments, actions, or causes of action, judgments, suits, claims,
demands, costs, expenses (including reasonable attorneys' and other professional fees, whether
or not suit is brought, and settlement costs) and disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against Lender as a result of the foregoing
106
actions. Lender shall have no obligation to Borrower or Mortgage Borrower or any other Person
to make any such payment or performance. Borrower shall not impede, interfere with, hinder or
delay, and shall not permit Mortgage Borrower to impede, interfere with, hinder or delay, any
effort or action on the part of Lender to cure any "Event of Default" under the Mortgage Loan
Documents or any other default of the nature described in subsection (a) above that gives Lender
the right to cure the same, or to otherwise protect or preserve Lender's interests in the Loan and
the Collateral following any "Event of Default" under the Mortgage Loan Documents or any
other default of the nature described in subsection (a) above that gives Lender the right to cure
the same.
(c) During the continuance of any "Event of Default" by Mortgage Borrower under
the Mortgage Loan Documents, such "Event of Default" shall constitute an Event of Default
hereunder, without regard to any subsequent payment or performance of any such obligations by
Lender (unless the Mortgage Lender has waived such Event of Default). Mortgage Borrower
hereby grants Lender and any person designated by Lender the right to enter upon the related
Property at any time following the occurrence and during the continuance of any "Event of
Default" under the applicable Mortgage Loan Documents or any other default of the nature
. described in subsection (a) above that gives Lender the right to cure the same, for the purpose of
taking any such action or to appear in, defend or bring any action or proceeding to protect
Borrower's or Mortgage Borrower's and/or Lender's interest. Lender may take such action as
Lender deems reasonably necessary or desirable to carry out the intents and purposes of this
subsection (including communicating with Mortgage Lender with respect to any Mortgage Loan
Event of Default), without prior notice to, or consent from, Borrower. Lender shall have no
obligation to complete any cure or attempted cure undertaken or commenced by Lender.
(d) If Lender shall receive a copy of any notice of default under any of the Mortgage
Loan Documents sent by a Mortgage Lender to Mortgage Borrower, such notice shall constitute
full protection to Lender for any action taken or omitted to be taken by Lender, in good faith, in
reliance thereon. As a material inducement to Lender's making the Loan, Borrower hereby
absolutely and unconditionally releases and waives all claims against Lender arising out of
Lender's exercise of its rights and remedies provided in this Section, except for Lender's gross
negligence or willful misconduct. In the event that Lender makes any payment in respect of a
Mortgage Loan, Lender shall be subrogated to all of the rights of Mortgage Lender under the
applicable Mortgage Loan Documents against the Property, in addition to all other rights it may
have under the Loan Documents.
Section 10.30. Mortgage Loan Estoppels.
Borrower shall (or shall cause Mortgage Borrower to), from time to time, use reasonable
effmts to obtain from Mortgage Lender such certificates of estoppel with respect to compliance
by Mortgage Borrower with the terms of the Mortgage Loan Documents as may be reasonably
requested by Lender. In the event or to the extent that Mortgage Lender is not legally obligated
to deliver such certificates of estoppel and is unwilling to deliver the same, or is legally obligated
to deliver such certificates of estoppel but breaches such obligation, then Borrower shall not be
in breach of this provision so long as Borrower furnish to Lender an estoppel executed by
Borrower and Mortgage Borrower expressly representing to Lender the information requested by
Lender regarding compliance by Mortgage Borrower with the terms of the Mortgage Loan
107
Documents. Borrower hereby indemnifies Lender from and against all liabilities, obligations,
losses, damages, penalties, assessments, actions, or causes of action, judgments, suits, claims,
demands, costs, expenses (including reasonably attorneys' and other professional fees, whether
or not suit is brought and settlement costs) and disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against Lender based in whole or in part upon
any fact, event, condition, or circumstances relating to the Mortgage Loan which was
intentionally misrepresented in any material respect in, or which warrants disclosure and was
intentionally omitted from such estoppel executed by Borrower and Mortgage Borrower.
Section 10.31.No Amendments to Mortgage Loan Documents.
Without obtaining the prior written consent of Lender (not to be unreasonably withheld
or delayed), Borrower shall not cause or permit Mortgage Borrower to enter into any amendment
or modification of any of the Mortgage Loan Documents (other than ministerial or de minimis
modifications, which do not affect any of the economic terms therein or change any rights or
obligations of the parties thereunder). Borrower shall cause Mortgage Borrower to provide
Lender with a copy of any amendment or modification to the Mortgage Loan Documents within
five (5) Business Days after the execution thereof
Section 1 0.32. Deed in Lieu ofF oreclosure.
Without the express prior written consent of Lender, Borrower shall not, and Borrower
shall not cause, suffer or permit Mortgage Borrower to, enter into any deed-in-lieu or consensual
foreclosure with or for the benefit of Mortgage Lender or any of its Affiliates. Without the
express prior written consent of Lender, Borrower shall not, and Borrower shall not cause, suffer
or permit Mortgage Borrower to, enter into any consensual sale or other transaction in
connection with the Mortgage Loan which could diminish, modify, terminate, impair or
otherwise adversely affect the interests of Lender or Borrower, the Collateral or any portion
thereof or any interest therein or of Mortgage Borrower in any Property or portion thereof or any
interest therein.
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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.
13697377.6
BORROWER:
a Delaware limited liability company
By: __________________________ __
Name:
Title:
LENDER:
LEHMAN ALI INC.,
a Delaware corporation
By: ______________________________ __
Name:
Title:
WITH RESPECT TO SECTIONS 9.1, 9.2, and 9.7
ONLY:
SPONSOR:
GRAND PRIX HOLDINGS, LLC,
By: ______________________________ _
Name:
Title:
SCHEDULE I
Rent Roll I Leases
Property Lessor Lessee Date of Lease
Hilton Suites Anaheim, Lease: Grand Prix Anaheim 10/4/06
Orange, CA KP A HS Anaheim Orange Lessee LLC
LLC
As assignee from:
KP A Anaheim Orange
Lessee LLC
13697377.6
SCHEDULE II
Required Repairs- Deadlines For Completion
13697377.6
SCHEDULE III
Organizational Chart Of Borrower
Attached following this page.
13697377.6
SCHEDULE IV
Franchise Agreement I Franchisor
Property Description of Franchise Franchisor
Agreement
Hilton Suites Anaheim, Amended and Restated Hilton Inns, Inc.
Orange, CA Franchise License Agreement
dated as of June 29, 2007 by
and between Hilton Inns, Inc.
and Grand Prix Anaheim
Orange Lessee LLC
13697377.6
SCHEDULEV
Required Capital Improvements
13697377.6
SCHEDULE VI
Lessee Purchase Options
None.
13697377.6
EXHIBIT A
Form of Assignment of Interest Rate Cap
Attached following this page.
13697377.6
EXHIBIT B
Form of Sponsor Completion Guaranty re. Alterations
GUARANTY OF COMPLETION
THIS GUARANTY (this "Guaranty") is executed as of this day of
___ , 20_ by GRAND PRIX HOLDINGS, LLC, having an address at c/o Apollo
Investment Corporation, 9 West 5ih Street, New York, New York 10019 ("Guarantor"), for the
benefit of LEHMAN ALI INC., having an address at 399 Park Avenue, New York, New York
10022 ("Lender").
W I T N E S S E T H:
WHEREAS, Grand Prix Mezz Borrower Term LLC, a Delaware limited liability
company (together with each if its successors and assigns, "Borrower") is indebted to Lender
for the loan made to Borrower (the "Loan") pursuant to a Mezzanine Loan Agreement dated as
of June 29, 2007 (as amended or modified from time to time, the "Loan Agreement");
WHEREAS, pursuant to Section 5.1.20 of the Loan Agreement, Borrower is
obligated to deliver to Lender this Guaranty as a condition to permitting Borrower to cause
Mortgage Borrower to undertake the alterations described on Schedule I attached hereto (the
"Alterations") with respect to the Property known as Hilton Suites Anaheim (the "Subject
Property"); and
WHEREAS, Borrower is the owner of a direct or indirect interest in Mortgage
Borrower, Guarantor is the owner of a direct or indirect interest in Borrower, and Guarantor has
directly benefited from Lender's making the Loan to Borrower and will directly benefit from
Mortgage Borrower undertaking the Alterations.
NOW, THEREFORE, for good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:
ARTICLE I.
NATURE AND SCOPE OF GUARANTY
1.1. Guaranty of Obligation. Guarantor hereby irrevocably and
unconditionally guarantees to Lender and its successors and assigns the payment and
performance of the Guaranteed Obligations as and when the same shall be due and payable,
whether by lapse of time, by acceleration of maturity or otherwise. Guarantor hereby irrevocably
and unconditionally covenants and agrees that it is liable for the Guaranteed Obligations as a
primary obligor.
13697377.6
1.2. Definition of Guaranteed Obligations. As used herein, the term
"Guaranteed Obligations" means all obligations and liabilities of Borrower to Lender under the
Loan Agreement (a) to complete (or to cause the Mortgage Borrower to complete) the
Alterations in a timely manner in accordance with the terms and requirements of the Loan
Agreement, (b) to keep (or to cause the Mortgage Borrower to keep) the Subject Property free
from all Liens arising from or relating to the Alterations and (c) to pay (or to cause the Mortgage
Borrower to pay) for all hard costs, soft costs and other costs and expenses incurred or required
to be incurred, and for all obligations and liabilities incurred or assumed, in connection with the
completion ofthe Alterations.
1.3. Nature of Guaranty. This Guaranty is an irrevocable, absolute,
continuing guaranty of payment and performance and not a guaranty of collection. This Guaranty
may not be revoked by Guarantor and shall continue to be effective with respect to any
Guaranteed Obligations arising or created after any attempted revocation by Guarantor and after
(if Guarantor is a natural person) Guarantor's death (in which event this Guaranty shall be
binding upon Guarantor's estate and Guarantor's legal representatives and heirs). The fact that
at any time or from time to time the Guaranteed Obligations may be increased or reduced shall
not release or discharge the obligation of Guarantor to Lender with respect to the Guaranteed
Obligations. This Guaranty may be enforced by Lender and any subsequent holder of the Note
and shall not be discharged by the assignment or negotiation of all or part of the Note.
1.4. Guaranteed Obligations Not Reduced by Offset. The Guaranteed
Obligations and the liabilities and obligations of Guarantor to Lender hereunder shall not be
reduced, discharged or released because or by reason of any existing or future offset, claim or
defense of Borrower or any other Person against Lender or against payment of the Guaranteed
Obligations, whether such offset, claim or defense arises in connection with the Guaranteed
Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.
1.5. Payment By Guarantor. If all or any part of the Guaranteed Obligations
shall not be punctually paid and performed when due, whether at demand, maturity, acceleration
or otherwise, Guarantor shall, within five (5) Business Days of demand by Lender and without
presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate
the maturity, notice of acceleration of the maturity or any other notice whatsoever, pay in lawful
money of the United States of America, the amount due on the Guaranteed Obligations to Lender
at Lender's address as set forth herein. Such demand(s) may be made at any time coincident
with or after the time for payment and performance of all or part of the Guaranteed Obligations
and may be made from time to time with respect to the same or different items of Guaranteed
Obligations. Such demand shall be deemed made, given and received in accordance with the
notice provisions hereof.
1.6. No Duty To Pursue Others. It shall not be necessary for Lender (and
Guarantor hereby waives any rights which Guarantor may have to require Lender), in order to
enforce the obligations of Guarantor hereunder, first to (i) institute suit or exhaust its remedies
against Borrower or others liable on the Loan or the Guaranteed Obligations or any other person,
(ii) enforce Lender's rights against any collateral which shall ever have been given to secure the
Loan, (iii) enforce Lender's rights against any other guarantors of the Guaranteed Obligations,
(iv) join Borrower or any others liable on the Guaranteed Obligations in any action seeking to
enforce this Guaranty, (v) exhaust any remedies available to Lender against any collateral which
shall ever have been given to secure the Loan, or (vi) resort to any other means of obtaining
payment of the Guaranteed Obligations. Lender shall not be required to mitigate damages or take
any other action to reduce, collect or enforce the Guaranteed Obligations.
1.7. Waivers. Guarantor agrees to the provisions of the Loan Documents and
hereby waives notice of (i) any loans or advances made by Lender to Borrower, (ii) acceptance
of this Guaranty, (iii) any amendment or extension of the Note, Pledge Agreement, the Loan
Agreement or of any other Loan Documents, (iv) the execution and delivery by Borrower and
Lender of any other loan or credit agreement or of Borrower's execution and delivery of any
promissory notes or other documents arising under the Loan Documents or in connection with
the Property, (v) the occurrence of any breach by Borrower or an Event of Default, (vi) Lender's
transfer or disposition of the Guaranteed Obligations, or any part thereof, (vii) sale or foreclosure
(or posting or advertising for sale or foreclosure) of any collateral for the Guaranteed
Obligations, (viii) protest, proof of non-payment or default by Borrower, or (ix) any other action
at any time taken or omitted by Lender and, generally, all demands and notices of every kind in
connection with this Guaranty, the Loan Documents, any documents or agreements evidencing,
securing or relating to any of the Guaranteed Obligations and the obligations hereby guaranteed.
1.8. Payment of Expenses. In the event that Guarantor should breach or fail to
timely perform any provisions of this Guaranty, Guarantor shall, within five (5) Business Days
of demand by Lender, pay Lender all costs and expenses (including court costs and reasonable
attorneys' fees) actually incurred by Lender in the enforcement hereof or the preservation of
Lender's rights hereunder. The covenant contained in this Section shall survive the payment and
performance of the Guaranteed Obligations.
1.9. Effect of Bankruptcy. In the event that pursuant to any insolvency,
bankruptcy, reorganization, receivership or other debtor relief law or any judgment, order or
decision thereunder, Lender must rescind or restore any payment or any part thereof received by
Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or
discharge from the terms of this Guaranty given to Guarantor by Lender shall be without effect
and this Guaranty shall remain in full force and effect. It is the intention of Borrower and
Guarantor that Guarantor's obligations hereunder shall not be discharged except by Guarantor's
performance of such obligations and then only to the extent of such performance.
1.10. Waiver of Subrogation, Reimbursement and Contribution.
Notwithstanding anything to the contrary contained in this Guaranty, until the Debt is paid in
full, Guarantor hereby unconditionally and irrevocably waives, releases and abrogates any and
all rights it may now or hereafter have under any agreement, at law or in equity (including,
without limitation, any law subrogating Guarantor to the rights of Lender), to assert any claim
against or seek contribution, indemnification or any other form of reimbursement from Borrower
or any other party liable for payment of any or all of the Guaranteed Obligations for any payment
made by Guarantor under or in connection with this Guaranty or otherwise.
1.11. Termination. This Guaranty and the obligations of Guarantor hereunder
shall terminate upon the payment in full of the Loan.
1.12. Completion of Work. Guarantor shall be in default of this Guaranty if, in
Lender's judgment, Guarantor fails to pursue completion of the Alterations diligently. In any
such event, Lender may (in addition to all other remedies available to Lender), upon written
notice to Guarantor, take any action Lender believes necessary to complete the Alterations (but
Lender shall not be obligated to do so and may suspend or terminate any such actions at any
time, without completion). No such actions by Lender shall release or limit the liability of
Guarantor and Guarantor agrees to pay Lender all sums expended by Lender in undertaking to
complete such Alterations, whether or not such Alterations are actually completed.
ARTICLE II.
EVENTS AND CIRCUMSTANCES NOT REDUCING
OR DISCHARGING GUARANTOR'S OBLIGATIONS
Guarantor hereby consents and agrees to each of the following and agrees that
Guarantor's obligations under this Guaranty shall not be released, diminished, impaired, reduced
or adversely affected by any of the following and waives any common law, equitable, statutory
or other rights (including without limitation rights to notice) relating to Guarantor's obligations
hereunder which Guarantor might otherwise have as a result of or in connection with any of the
following:
2.1. Modifications. Any renewal, extension, increase, modification, alteration
or rearrangement of all or any part of the Guaranteed Obligations, the Loan Agreement, the other
Loan Documents or any other document, instrument, contract or understanding between
Borrower and Lender or any other parties pertaining to the Guaranteed Obligations or any failure
of Lender to notify Guarantor of any such action.
2.2. Adjustment. Any adjustment, indulgence, forbearance or compromise
that might be granted or given by Lender to Borrower or any Guarantor.
2.3. Condition of Borrower or Guarantor. The insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of
Borrower, Guarantor or any other party at any time liable for the payment of all or part of the
Guaranteed Obligations; or any dissolution of Borrower or Guarantor or any sale, lease or
transfer of any or all of the assets of Borrower or Guarantor or any changes in the shareholders,
partners or members of Borrower or Guarantor, or any reorganization of Borrower or Guarantor.
2.4. Invalidity of Guaranteed Obligations. The invalidity, illegality or
unenforceability of all or any part of the Guaranteed Obligations or any document or agreement
executed in connection with the Guaranteed Obligations for any reason whatsoever, including
without limitation the fact that (i) the Guaranteed Obligations or any part thereof exceeds the
amount permitted by law, (ii) the act of creating the Guaranteed Obligations or any part thereof
is ultra vires, (iii) the officers or representatives executing the Note, the Security Instrument, the
Loan Agreement or the other Loan Documents or otherwise creating the Guaranteed Obligations
acted in excess of their authority, (iv) the Guaranteed Obligations violate applicable usury laws,
(v) Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement)
which render the Guaranteed Obligations wholly or partially uncollectible from Borrower, (vi)
the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery
and performance of any document or instrument representing part of the Guaranteed Obligations
or executed in connection with the Guaranteed Obligations or given to secure the repayment of
the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or (vii) the Note, the
Pledge Agreement, the Loan Agreement or any of the other Loan Documents have been forged
or otherwise are irregular or not genuine or authentic, it being agreed that Guarantor shall remain
liable hereon regardless of whether Borrower or any other person be found not liable on the
Guaranteed Obligations or any part thereof for any reason.
2.5. Release of Obligors. Any full or partial release of the liability of
Borrower on the Guaranteed Obligations or any part thereof, or of any co-guarantors, or any
other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly
and severally, to pay, perform; guarantee or assure the payment of the Guaranteed Obligations,
or any part thereof (except for the express release in writing by Lender of any or all of
Guarantor's obligations under this Guaranty), it being recognized, acknowledged and agreed by
Guarantor that Guarantor may be required to pay the Guaranteed Obligations in full without
assistance or support of any other party, and Guarantor has not been induced to enter into this
Guaranty on the basis of a contemplation, belief, understanding or agreement that other parties
will be liable to pay or perform the Guaranteed Obligations, or that Lender will look to other
parties to pay or perform the Guaranteed Obligations.
2.6. Other Collateral. The taking or accepting of any other security, collateral
or guaranty, or other assurance of payment, for all or any part ofthe Guaranteed Obligations.
2.7. Release of Collateral. Any release, surrender, exchange, subordination,
deterioration, waste, loss or impairment (including without limitation negligent, willful,
unreasonable or unjustifiable impairment) of any collateral, property or security at any time
existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed
Obligations.
2.8. Care and Diligence. The failure of Lender or any other party to exercise
diligence or reasonable care in the preservation, protection, enforcement, sale or other handling
or treatment of all or any part of any collateral, property or security, including but not limited to
any neglect, delay, omission, failure or refusal of Lender (i) to take or, prosecute any action for
the collection of any of the Guaranteed Obligations or (ii) to foreclose, or initiate any action to
foreclose, or, once commenced, prosecute to completion any action to foreclose upon any
security therefor, or (iii) to take or prosecute any action in connection with any instrument or
agreement evidencing or securing all or any part of the Guaranteed Obligations.
2.9. Unenforceability. The fact that any collateral, security, security interest or
lien contemplated or intended to be given, created or granted as security for the repayment of the
Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall
prove to be unenforceable or subordinate to any other security interest or lien, it being
recognized and agreed by Guarantor that Guarantor is not entering into this Guaranty in reliance
on, or in contemplation of the benefits of, the validity, enforceability, collectibility or value of
any of the collateral for the Guaranteed Obligations.
2.1 0. Offset. The Note, the Guaranteed Obligations and the liabilities and
obligations of Guarantor to Lender hereunder shall not be reduced, discharged or released
because of or by reason of any existing or future right of offset, claim or defense of Borrower
against Lender, or any other party, or against payment of the Guaranteed Obligations, whether
such right of offset, claim or defense arises in connection with the Guaranteed Obligations (or
the transactions creating the Guaranteed Obligations) or otherwise.
2.11. Merger. The reorganization, merger or consolidation of Borrower into or
with any other Person.
2.12. Preference. Any payment by Borrower to Lender is held to constitute a
preference under bankruptcy laws or for any reason Lender is required to refund such payment or
pay such amount to Borrower or someone else.
2.13. Other Actions Taken or Omitted. Any other action taken or omitted to
be taken with respect to the Loan Documents, the Guaranteed Obligations, or the security and
collateral therefor, whether or not such action or omission prejudices Guarantor or increases the
likelihood that Guarantor will be required to pay the Guaranteed Obligations pursuant to the
terms hereof, it is the unambiguous and unequivocal intention of Guarantor that Guarantor shall
be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence,
circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated,
and whether or not otherwise or particularly described herein, which obligation shall be deemed
satisfied only upon the full and final payment and satisfaction of the Guaranteed Obligations.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into the Loan Documents and extend credit to
Borrower, Guarantor represents and warrants to Lender as follows:
3.1. Benefit. Guarantor is an Affiliate of Borrower, is the owner of a direct or
indirect interest in Borrower, and has received, or will receive, direct or indirect benefit from the
making of this Guaranty with respect to the Guaranteed Obligations.
3.2. Familiarity and Reliance. Guarantor is familiar with, and has
independently reviewed books and records regarding, the financial condition of the Borrower
and is familiar with the value of any and all collateral intended to be created as security for the
payment of the Note or Guaranteed Obligations; however, Guarantor is not relying on such
financial condition or the collateral as an inducement to enter into this Guaranty.
3.3. No Representation By Lender. Neither Lender nor any other party has
made any representation, warranty or statement to Guarantor in order to induce Guarantor to
execute this Guaranty.
3.4. Guarantor's Financial Condition. As ofthe date hereof, and after giving
effect to this Guaranty and the contingent obligation evidenced hereby, Guarantor is and will be
solvent and has and will have assets which, fairly valued, exceed its obligations, liabilities
(including contingent liabilities) and debts, and has and will have property and assets sufficient
to satisfy and repay its obligations and liabilities.
3.5. Legality. The execution, delivery and performance by Guarantor of this
Guaranty and the consummation of the transactions contemplated hereunder do not and will not
contravene or conflict with any law, statute or regulation whatsoever to which Guarantor is
subject or constitute a default (or an event which with notice or lapse of time or both would
constitute a default) under, or result in the breach of, any indenture, mortgage, charge, lien, or
any contract, agreement or other instrument to which Guarantor is a party or which may be
applicable to Guarantor. This Guaranty is a legal and binding obligation of Guarantor and is
enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other
laws of general application relating to the enforcement of creditors' rights.
3.6. Survival. All representations and warranties made by Guarantor herein
shall survive the execution hereof.
ARTICLE IV.
SUBORDINATION OF CERTAIN INDEBTEDNESS
4.1. Subordination of All Guarantor Claims. As used herein, the term
"Guarantor Claims" shall mean all debts and liabilities of Borrower to Guarantor, whether such
debts and liabilities now exist or are hereafter incurred or arise, or whether the obligations of
Borrower thereon be direct, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract,
open account, or otherwise, and irrespective of the person or persons in whose favor such debts
or liabilities may, at their inception, have been, or may hereafter be created, or the manner in
which they have been or may hereafter be acquired by Guarantor. The Guarantor Claims shall
include without limitation all rights and claims of Guarantor against Borrower (arising as a result
of subrogation or otherwise) as a result of Guarantor's payment of all or a portion of the
Guaranteed Obligations. After the occurrence of an Event of Default or the occurrence of an
event which would, with the giving of notice or the passage of time, or both, constitute an Event
of Default, Guarantor shall not receive or collect, directly or indirectly, from Borrower or any
other party any amount upon the Guarantor Claims.
4.2. Claims in Bankruptcy. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor's relief, or other insolvency proceedings involving
Guarantor as debtor, Lender shall have the right to prove its claim in any such proceeding so as
to establish its rights hereunder and receive directly from the receiver, trustee or other court
custodian dividends and payments which would otherwise be payable upon Guarantor Claims.
Guarantor hereby assigns such dividends and payments to Lender. Should Lender receive, for
application against the Guaranteed Obligations, any dividend or payment which is otherwise
payable to Guarantor and which, as between Borrower and Guarantor, shall constitute a credit
against the Guarantor Claims, then, upon payment to Lender in full of the Guaranteed
Obligations, Guarantor shall become subrogated to .the rights of Lender to the extent that such
payments to Lender on the Guarantor Claims have contributed toward the liquidation of the
Guaranteed Obligations, and such subrogation shall be with respect to that proportion of the
Guaranteed Obligations which would have been unpaid if Lender had not received dividends or
payments upon the Guarantor Claims.
4.3. Payments Held in Trust. In the event that, notwithstanding anything to
the contrary in this Guaranty, Guarantor should receive any funds, payment, claim or distribution
which is prohibited by this Guaranty, Guarantor agrees to hold in trust for Lender an amount
equal to the amount of all funds, payments, claims or distributions so received, and agrees that it
shall have absolutely no dominion over the amount of such funds, payments, claims or
distributions so received except to pay them promptly to Lender, and Guarantor covenants
promptly to pay the sane to Lender.
4.4. Liens Subordinate. Guarantor agrees that any liens, security interests,
judgment liens, charges or other encumbrances upon Borrower's assets securing payment of the
Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests,
judgment liens, charges or other encumbrances upon Borrower's assets securing payment of the
Guaranteed Obligations, regardless of whether such encumbrances in favor of Guarantor or
Lender presently exist or are hereafter created or attach. Without the prior written consent of
Lender, Guarantor shall not (i) exercise or enforce any creditor's right it may have against
Borrower, or (ii) foreclose, repossess, sequester or otherwise take steps or institute any action or
proceedings Gudicial or otherwise, including without limitation the commencement of, or joinder
in, any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to
enforce any liens, mortgage, deeds of trust, security interests, collateral rights, judgments or
other encumbrances on assets of Borrower held by Guarantor.
ARTICLE V.
MISCELLANEOUS
5.1. Waiver. No failure to exercise, and no delay in exercising, on the part of
Lender, any right hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise of any other right.
The rights of Lender hereunder shall be in addition to all other rights provided by law. No
modification or waiver of any provision of this Guaranty, nor consent to departure therefrom,
shall be effective unless in writing and no such consent or waiver shall extend beyond the
particular case and purpose involved. No notice or demand given in any case shall constitute a
waiver of the right to take other action in the same, similar or other instances without such notice
or demand.
5.2. Notices. All notices, consents, approvals and requests required or
permitted hereunder shall be given in writing and shall be effective for all purposes if hand
delivered or sent by (a) certified or registered United States mail, postage prepaid, return receipt
requested or (b) expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, and by telecopier (with answer back acknowledged),
addressed as follows (or at such other address and Person as shall be designated from time to
time by any party hereto, as the case may be, in a written notice to the other parties hereto in the
manner provided for in this Section):
If to Guarantor:
With a copy to:
With a copy to:
With a copy to:
Grand Prix Holdings LLC
9 West 5ih Street
Attention: Aaron N. Sack
Facsimile No.: (212) 515-3443
Grand Prix Holdings LLC
9 West 5ih Street
Attention: Justin M. Korval
Facsimile No.: (212) 515-3442
Innkeepers USA
340 Royal Poinciana Way
Suite 306
Palm Beach, Florida 33480
Attention: Dennis Craven and Mark Murphy
Facsimile No.: (561) 650-0958
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036-6522
Attention: Neil L. Rock, Esq.
Facsimile No.: (917) 777-3787
Ifto Lender:
With a copy to:
Lehman ALI Inc.
399 Park Avenue
Attention: Michael E. Lascher
Facsimile No.: (646) 758-2744
Lehman ALI Inc.
399 Park Avenue
Attention: Charlene Thomas
Facsimile No.: (646) 758-4544
and
Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, Pennsylvania 19103
Attention: David Forti, Esq.
Facsimile No.: (215) 994-2222
5.3. Governing Law. THIS GUARANTY WAS NEGOTIATED IN THE
STATE OF NEW YORK, AND MADE BY GUARANTOR AND ACCEPTED. BY
LENDER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN
WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL
RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
THIS GUARANTY 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 (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS)
AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE
FULLEST EXTENT PERMITTED BY LAW, GUARANTOR HEREBY
UNCONDITIONALLY AND IRREVOCABLY W AlVES ANY CLAIM TO ASSERT
THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS GUARANTY,
AND THIS GUARANTY 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.
ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY MAY AT
LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE
CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402
OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND GUARANTOR WAIVES
ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON
VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
5.4. Invalid Provisions. If any provision of this Guaranty is held to be illegal,
invalid, or unenforceable under present or future laws effective during the term of this Guaranty,
such provision shall be fully severable and this Guaranty shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part of this Guaranty, and
the remaining provisions of this Guaranty shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance from this Guaranty,
unless such continued effectiveness of this Guaranty, as modified, would be contrary to the basic
understandings and intentions of the parties as expressed herein.
5.5. Amendments. This Guaranty may be amended only by an instrument in
writing executed by the party or an authorized representative of the party against whom such
amendment is sought to be enforced.
5.6. Parties Bound; Assignment; Joint and Several. This Guaranty shall be
binding upon and inure to the benefit of the parties hereto and their respective successors, assigns
and legal representatives; provided, however, that Guarantor may not, without the prior written
consent of Lender, assign any of its rights, powers, duties or obligations hereunder. If Guarantor
consists of more than one person or party, the obligations and liabilities of each such person or
party shall be joint and several.
5.7. Headings. Section headings are for convenience of reference only and
shall in no way affect the interpretation of this Guaranty.
5.8. Recitals. The recital and introductory paragraphs hereof are a part hereof,
form a basis for this Guaranty and shall be considered prima facie evidence of the facts and
documents referred to therein.
5.9. Counterparts. To facilitate execution, this Guaranty may be executed in
as many counterparts as may be convenient or required. It shall not be necessary that the
signature of, or on behalf of, each party, or that the signature of all persons required to bind any
party, appear on each counterpart. All counterparts shall collectively constitute a single
instrument. It shall not be necessary in making proof of this Guaranty to produce or account for
more than a single counterpart containing the respective signatures of, or on behalf of, each of
the parties hereto. Any signature page to any counterpart may be detached from such counterpart
without impairing the legal effect of the signatures thereon and thereafter attached to another
counterpart identical thereto except having attached to it additional signature pages.
5.10. Rights and Remedies. If Guarantor becomes liable for any indebtedness
owing by Borrower to Lender, by endorsement or otherwise, other than under this Guaranty,
such liability shall not be in any manner impaired or affected hereby and the rights of Lender
hereunder shall be cumulative of any and all other rights that Lender may ever have against
Guarantor. The exercise by Lender of any right or remedy hereunder or under any other
instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any
other right or remedy.
5 .11. Other Defined Terms. Any capitalized term utilized herein shall have the
meaning as specified in the Loan Agreement, unless such term is otherwise specifically defined
herein.
5.12. Entirety. THIS GUARANTY EMBODIES THE FINAL, ENTIRE
AGREEMENT OF GUARANTOR AND LENDER WITH RESPECT TO
GUARANTOR'S GUARANTY OF THE GUARANTEED OBLIGATIONS AND
SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED
BY GUARANTOR AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF
THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN
GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE
PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC
EVIDENCE OF ANY NATURE SHALL. BE USED TO CONTRADICT, VARY,
SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY AGREEMENT.
THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.
5.13. Waiver of Right To Trial By Jury. GUARANTOR HEREBY
AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT
BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THIS GUARANTY OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION HEREWITH. THIS WAIVER OF RIGHT TO
TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY GUARANTOR,
AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND
EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. LENDER IS AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER.
5.14. [Intentionally Omitted].
5.15. Financial Reports. Guarantor shall provide or cause to be provided to
Lender the following:
(i) Updated audited annual financial statements of Guarantor in form and
content comparable to the financial statements provided to Lender by or on behalf
of Guarantor prior to date hereof, for each fiscal year of Guarantor, as soon as
reasonably practicable and in any event within one hundred twenty (120) calendar
days after the close of each such fiscal year;
(ii) Copies of Guarantor's federal and state income tax returns for each taxable
year, as filed with the appropriate governmental authority, within thirty (30) days
after filing of same;
(iii) Within thirty (30) days after the end of each of the first three quarters of
each fiscal year of Guarantor, Guarantor shall deliver to Lender a copy of
Guarantor's unaudited balance sheet, income statement and statement of changes
in financial position for the period from the beginning of such fiscal year to the
end of such quarter in form and content comparable to the financial statements
provided to Lender by or on behalf of Guarantor prior to date hereof. Each such
quarterly report shall be accompanied by a certification by Guarantor to Lender
that such report presents fairly the financial condition of Guarantor as of the
respective dates thereof; and
(iv) From time to time promptly after Lender's reasonable request, such
additional information, reports and statements regarding the business operations
and financial condition Guarantor as Lender may reasonably request.
13697377.6
EXECUTED as of the day and year first above written.
GUARANTOR:
GRAND PRIX HOLDINGS LLC
By: __________________________ __
Name:
Title:
13697377.6
Schedule I to Completion Guaranty
Alterations

US2008 1530791.1
EXHIBIT M

First Amendment to Mezzanine Loan Agreement Dated as of January 11, 2008 Between Grand
Prix Mezz Borrower Term LLC as Borrower, and Lehman ALI Inc., as Lender and
Acknowledged and Agreed to by Grand Prix Holdings, LLC as Guarantor and Apollo Investment
Corporation, as Guarantor

14081764.1
FIRST AMENDMENT TO ME7..ZANINE I.OAN AGREEMENT
Dated as of January 11,2008
Between
as Borrower
and
LEHMAN AU INC.,
as Lender
and acknowledged and agreed to by
as Guarantor
and
APOLLO INVESTMENT CORPORATION,
as Guarantor
Orange, California
FIRST AMENDMENT TO MEZZANINE LOAN AGREEMENT
THIS FIRST AMENDMENT TO MEZZANINE LOAN AGREEMENT (this
.. Agreement'} is entered into as ofthis 11m day of January, 2008 between GRAND PRIX MEZZ
BORROWER TERM LLC, a Delaware limited liability company ("Borrower"), having its
principal place of business at c/o Apollo Investment Corporation, 9 West sJ'h Street, New York,
New York 10019, and LEHMAN ALI TNC., a Delaware corporation (together with its successors
and assigns. "Lender"), having an address at 399 Park A venue, New York, New York I 0022,
and acknowledged and agreed to by GRAND PRIX HOLDINGS, LLC, a Delaware limited
liability company ("Grand Prix"), and APOLLO TNVESTMENT CORPORATION. a Maryland
corporation ("Apollo"; each of Grand Prix and ApoJlo is referred to herein as "Guarantor", and
collectively as Guarantors"; and each of Borrower and Guarantors is referred to herein as a
"Borrower Party", and collectively as "Borrower Parties").
RECITALS
WHEREAS, Borrower and Lender entered into a certain Mezzanine Loan
Agreement, dated as of June 29, 2007 (the .. Original Loan Agreement") pursuant to which
Lender made a mezzanine loan ("Loan") to Borrower in the original principal amount of
$21,300,000, which Loan is evidenced by Borrower's promissory note to Lender dated June 29,
2007 in the original principal amount of $44,000,000 (the ''Note"). Unless otherwise defined
herein, capitalized terms used in this Agreement shaH have the meanings set forth in the Original
Loan Agreement.
WHEREAS, as a condition of Lender making the Loan to Borrower, Apollo
executed that certain Required Capital Improvements Guaranty and that certain Debt Service
Shortfall Guaranty, each dated as of June 29, 2007, whereby Apollo guaranteed to Lender certain
obligations and liabilities of Borrower pursuant to the Loan.
WHEREAS, as a condition of Lender making the Loan to Borrower, Grand Prix
executed that certain Payment and Performance Guaranty (Term Loan) dated as of June 29,
2007, whereby Grand Prix guaranteed to Lender certain obligations and liabilities of Borrower
pursuant to the Loan.
WHEREAS, by the terms of the Original Loan Agreement, the Loan matures on
January 15, 2008.
WHEREAS, Borrower has requested that Lender agree to extend the maturity
date of the Loan until February 15,2008.
WHEREAS, Borrower and Lender desire to, in accordance with the terms and
conditions hereof, amend the Original Loan Agreement in order to set forth their agreement as to
the forgoing by entering into this Agreement (the Original Loan Agreement, as amended by this
Agreement, the "Loan Agreement").
-2-
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and for other valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, hereto agree as follows:
I. Amendment to the Loan Agreement. The defined term .. Maturity Date"
appearing in Section 1.1 of the Original Loan Agreement is hereby modified and amended by
deleting such defined term in its entirety and replacing it with the foiJowing:
.. Maturity Date" shall mean February 15, 2008, or such earlier date on
which the final payment of the principal of the Note becomes due and payable as
therein or herein provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise.
2. Amendment to Other Loan Documents. Each of the Loan Documents
(other than the Loan Agreement) is hereby amended such that all references therein to the ''Loan
Agreement" shall be deemed to refer to the Original Loan Agreement as amended by this
Agreement, and as the same may be subsequently further amended, modified, supplemented,
extended, consolidated, replaced, exchanged or otherwise changed.
3. No Offsets or Defenses. Each Borrower Party hereby acknowledges,
confirms and warrants to Lender that as of the date hereof, to each Borrower Party's knowledge,
without independent investigation, no Borrower Party has any claims or any offset, defense,
claim, right of set-off or counterclaim against Lender under, arising out of or in connection with
this Agreement, the Loan Agreement, the Note, or any of the other Loan Documents to which
any such Borrower Party is a party, including without limitation, the Guaranty and the
Environmental Indemnity Agreement.
4. Enforceabilitv. Each Borrower Party represents and warrants that, this
Agreement constitutes the legal, valid and binding obligation of such Borrower Party,
enforceable against such Borrower Party in accordance with its tenns, subject to bankruptcy,
insolvency and other limitations on creditors' rights generally and to equitable principles.
5. Organization. Each Borrower Party (other than a Borrower Party that is
an it1dividual) represents and warrants that as of the date hereof: such Borrower Party (a) is a
duly organized and validly existing limited liability company. corporation or other corporate
entity, as the case may be, in good standing under the Jaws of the State of its fonnation, (b) has
the requisite power and authority to carry on its business as now being conducted, (c) is duly
qualified to do business in each jurisdiction in which the nature of its business makes such
qualification necessary or desirable, and (d) has the requisite power to execute and deliver, and
perform its obligations (if any) under, this Agreement.
6. Authorization of Borrower Parties. Each Borrower Party represents and
warrants that as of the date hereof, the execution and delivery by such Borrower Party of this
-3-
Agreement and such Borrower Party's performance of its obligations hereunder (a) have been
duly authorized by all requisite action on the part of such Borrower Party, (b) will not violate any
provision of any applicable legal requirements, decree, injunction or demand of any court or
other governmental authority, any organizational document of such Borrower Party or any
indenture or agreement or other instrument known to such Borrower Party to which such
Borrower Party is a party or by which such Borrower Party is bound, (c) 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 such Borrower Party pursuant to, any such indenture or agreement or
instrument and (d) have been duly executed and delivered by such Borrower Party. Except for
those obtained or filed on or prior to the date hereof, no Borrower Party 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 this Agreement. This Agreement has been duly authorized, executed
and delivered by each Borrower Party.
7. Reaffirmation of Loan Documents. In connection with this Agreement,
Borrower hereby (a) unconditionally ratifies and confirms, renews and reaffirms all of
Borrower's obligations under the Loan Documents to which it is a party, as specifically modified
by this Agreement, (b) acknowledges and agrees that such obligations remain in full force and
effect, binding on and enforceable against Borrower in accordance with the terms, covenants and
conditions of the Loan Documents to which it is a party, as specifically modified by this
Agreement, without impairment, and Borrower remains unconditionally liable to Lender in
accordance with the terms, covenants and conditions of the Loan Documents to which it is a
party, as specifically modified by this Agreement, {c) ratifies and confirms, renews and reaffirms
in all respects and without condition, all of the terms, covenants and conditions set forth in the
Loan Documents to which it is a party, as specifically modified by this Agreement, and (d)
represents and warrants that all representations and warranties contained in the Loan Documents
to which it is a party, are true and correct in all material respects as if made on the date hereof
and are not limited in any way by the representations and warranties set forth in this Agreement
This Agreement constitutes a Loan Document as defined herein.
8. Reaffirmation of Guarantors. In connection with this Agreement, each
Guarantor hereby (a) unconditionaUy ratifies and confirms, renews and reaffinns an of such
Guarantor's obligations under the Loan Documents, as specifically modified by this Agreement,
(b) acknowledges and agrees that such obligations remain in full force and effect, binding on and
enforceable against such Guarantor in accordance with the terms, covenants and conditions of
the Loan Documents, as applicable, as specifica1ly modified by this Agreement, without
impairment, and such Guarantor remains unconditionally liable to Lender in accordance with the
terms, covenants and conditions of the Loan Documents, as specifically modified by this
Agreement, (c) ratifies and confirms, renews and reaffirms in aU respects and without condition,
all of the terms, covenants and conditions set forth in the Loan Documents, as specifically
modified by this Agreement, and (d) represents and warrants that aJI representations and
-4-
warranties made by such Guarantor contained in the Loan Documents arc true and correct in all
material respects as if made on the date hereof.
9. Survival of Representations and Warranties. Without in any way limiting
any provision of any Loan Document which provides for a longer period of survival, each
Borrower Party hcreby agrees that (a) aU representations and warranties made by such Borrower
Party in this Agreement shall continue for so long as any amount remains owing to Lender under
the Note or any of the other Loan Documents, and (b) all representations, warranties, covenants
and agreements made in this Agreement shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf.
10. Modifications. This Agreement may not be amended, modified or
otherwise changed in any manner except by a writing executed by all of the parties hereto.
ll. Severability. Each Borrower Party shall execute and deliver such further
instruments and perform such further acts as may be requested by Lender from time to time to
confirm the provisions ofthis Agreement and the Loan Documents, to carry out more effectively
the purposes of this Agreement and the Loan Documents, or to confirm the priority of any lien
created by any of the Loan Documents.
I 2. Further Assurances. Borrower shall execute and deliver such further
instruments and perform such further acts as may be requested by Lender from time to time to
confirm the provisions of this Agreement and the Loan Documents, to carry out more effectively
the purposes of this Agreement and the Loan Documents, or to confirm the priority of any lien
created by any of the Loan Documents.
13. Successors and Assigns. This Agreement applies to, inures to the benefit
of, and binds all parties hereof, their heirs, legatees. devisees, administrators, executors, and
permitted successors and assigns.
14. Governing Law. This Agreement 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.
15. Entire Agreement. This Agreement constitutes a1J of the agreements
among the parties relating to the matters set forth herein and supersedes all other prior or
concurrent oral or written letters, agreements and understandings with respect to the matters set
forth herein.
16. Full Force and Effect. The Loan Documents remain in full force and
effect. None of the representations, warranties or covenants contained herein shall in any way
limit any representation, warranty or covenant contained in any Loan Document.
-5-
17. Counterparts. This Agreement may be signed in any number of
counterparts by the parties hereto, all of which taken together shall constitute one and the same
instrument.
[No further text on this page. S.ignatures follow on next pagc.J
-6-
IN WI1NESS WHEREOF, the parties hereto have executed this First
Amendment to Mezzanine Loan Agreement as of the date first written above.
14081764.2
BORROWER:
GRAND PRIX MEZZ BORROWER TERM
LLC,

By:
Name: t)<?,.),..)":J CrovQ....}
Title: f\,.li:VC ;c:,' ......
LENDER:
LEHMAN ALI INC.,
By:
Name:
Title:
[Signatures continued on following page]
IN WITNESS WHEREOF, the parties hereto have executed this First
1408171>4.1
BORROWER:
LLC,
By:
Name:
Title:
LENDER:
LEHMAN ALI INC.,
Acknowledged and agreed to as of the date first
written above.
GUARANTORS:
a Maryland corporation

Title:
I
[First Amendment to Mezzanine Loan Agreement]

US2008 1530791.1
EXHIBIT N

Second Amendment to Mezzanine Loan Agreement Dated as of March 14, 2008 Between Grand
Prix Mezz Borrower Term LLC, as Borrower and Lehman ALI Inc., as Lender and

14174850.2
SECOND AMENDMENT TO MEZZANINE LOAN AGREEMENT
Dated as ofMarch 14,2008
Between
as Borrower
and
LEHMAN ALI INC.,
as Lender
as Guarantor
and
as Guarantor
Orange, California
SECOND AMENDMENT TO MEZZANINE LOAN AGREEMENT
THIS SECOND AMENDMENT TO MEZZANINE LOAN AGREEMENT (this
"Agreement") is entered into as of this 14th day ofMarch, 2008 between GRAND PRIX MEZZ
principal place ofbusiness at c/o Apollo Investment Corporation, 9 West 57th Street, New York,
New York I 0019, and LEHMAN ALI INC., a Delaware corporation (together with its successors
and assigns, "Lender''), having an address at 399 Park Avenue, New York, New York 10022,
liability company ("Grand Prix"), and APOLLO INVESTMENT CORPORATION, a Maryland
corporation ("Apollo"; each of Grand Prix and Apollo is referred to herein as "Guarantor'', and
collectively as "Guarantors"; and each of Borrower and Guarantors is referred to herein as a
"Borrower Party'', and collectively as "Borrower Parties").
RECITALS
WHEREAS, ;Borrower and Lender entered into a certain Mezzanine Loan
Agreement, dated as of June 29, 2007 (the "Mezzanine Loan Agreement"), which was amended
by that certain First Amendment to Mezzanine Loan Agreement dated as of January 11, 2008
(such amendment together with the Mezzanine Loan Agreement, collectively, the "Original Loan
Agreement''), pursuant to which Lender made a mezzanine loan ("Loan") to Borrower in the
original principal amount of $21,300,000, which Loan is evidenced by Borrower's promissory
note to Lender dated June 29, 2007 in the original principal amount of $21,300,000 (the
"Note"). Unless otherwise defined herein, capitalized terms used in this Agreement shall have the
meanings set forth in the Original Loan Agreement.
March 15, 2008.
date ofthe Loan until Aprill5, 2008.
WfiEREAS, Borrower and Lender desire to, in accordance with the terms and
-2-
. the forgoing by entering into this Agreement (the Original Loan Agreement, as amended by this
AGREEMENT
1. Amendment to the Loan Agreement. The defined term "Maturity Date"
deleting such defined term in its entirety and replacing it with the following:
"Maturity Date" shall mean Apri115, 2008, or such earlier date on which
the final payment of the principal of the Note becomes due and payable as therein
or herein provided, whether at such stated maturity date, by declaration of
(other than the Loan Agreement) is hereby amended such that all references therein to the "Loan
Agreement'' shall be deemed to refer to the Original Loan Agreement as amended by this
4. Enforceabilitv. Each Borrower Party represents and warrants that, this
enforceable against such Borrower Party in accordance with its terms, subject to bankruptcy,
an individual) represents and warrants that as of the date hereof, such Borrower Party (a) is a
duly organized and validly existing limited liability company, corporation or other corporate
entity, as the case may be, in good standing under the laws of the_ State of its formation, (b) has
-3-
with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under,
party, as specifically modified by this Agreement, (c) ratifies and confirms, renews and reaffirms
and are not limited in any way by the representations and warranties set forth in this Agreement.
Guarantor hereby (a) unconditionally ratifies and confmns, renews and reaffirms all of such
the Loan Documents, as applicable, as specifically modified by this Agreement, without
Agreement, (c) ratifies and confirms, renews and reaffirms in all respects and without condition,
-4-
modified by this Agreement, and (d) represents and warrants that all representations and
warranties made by such Guarantor contained in the Loan Documents are true and correct in all
Borrower Party hereby agrees that (a) all representations and warranties made by such Borrower
and agreements made in this Agreement shan be deemed to have been relied upon by Lender
11. Further Assurances. Each Borrower Party shall execute and deliver such
further instruments and perform such further acts as may be requested by Lender from time to
time to confirm the provisions of this Agreement and the Loan Documents, to carry out more
effectively the purposes of this Agreement and the Loan Documents, or to confirm the priority of
any lien created by any of the Loan Documents.
12. Severability. If any term or provisions of this Agreement shall be held to
be illegal, invalid or unenforceable in any respect, then such term or provision shall be fully
severable from this Agreement; this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable term or provision had never been a part of this Agreement and the
remaining terms and provisions of this Agreement shall remain in full force and effect and shall
not be affected by such illegal, invalid or unenforceable term or provision or by its severance
from this Agreement.
of, and binds all parties hereof, their heirs, legatees, devisees, administrators, executors, and
accordance with, the laws of the State ofNew York pursuant to Section 5-1401 of the New York
15. Entire Agreement. This Agreement constitutes all of the agreements
forth herein.
-5-
instrument.
[No further text on this page. Signatures follow on next page.]
-6-
IN WITNESS WHEREOF, the parties hereto have executed this Second
14174850.2
BORROWER:
GRAND PIUX MEZZ BORROWER TERM
LLC,
aDelaw
By:
LENDER:
LEHMAN ALI INC.,
By:
Name:
Title:
mwitNESS Wlffi:REbif_,.the patties fieteta:have:executedhis Second
AJ11endinentt9 Nlt!zz.anineJ .. ..
14174&50.2
BORROWER:
GRAND PRlX MEZZ-B.()RROWERTERM
t:LC,

Title:
LENJJER:
...
. . t ..... ' .. \_ .
[SignatUres continued on following page]
written above.
GUARANTORS;
GRAND FRIX HOLDINGS, LLC,
a Delaware limited liabUity company
By: __________________ ~
Name:
Title:
[Second Amendment to Mezzan1ne Loan Agreement]
Acknowledged and agreed to as of tl}e date first
written above.
GUARANTORS:
By: __________________ __
Name:
Title:
[Second Amendment to Mezzanine Loan Agreement]

US2008 1530791.1
EXHIBIT O

Third Amendment to Mezzanine Loan Agreement Dated as of April 15, 2008 Between Grand

14174850.2
TIDRD AMENDMENT TO MEZZANINE LOAN AGREEMENT
Dated as of April 15, 2008
Between
as Borrower
and
LEHMAN ALI INC.,
as Lender
as Guarantor
and
as Guarantor
Orange, California
TIDRD AMENDMENT TO MEZZANINE LOAN AGREEMENT
THIS THIRD AMENDMENT TO MEZZANINE LOAN AGREEMENT (this
"Agreement") is entered into as of this 15th day of April, 2008 between GRAND PRIX MEZZ
BORROWER TERM LLC, a Delaware limited liabi1ity company ("Borrower"), having its
principal place of business at c/o Apollo Investment Corporation, 9 West 57th Street, New York,
New York 10019, and LEHMAN ALI INC., a Delaware corporation (together with its successors
and assigns, "Lender"), having an address at 399 Park Avenue, New York, New York 10022,
corporation ("Apollo"; each of Grand Prix and Apollo is referred to herein as "Guarantor", and
"Borrower Party", and collectively as "Borrower Parties").
RECITALS
by that certain First Amendment to Mezzanine Loan Agreement dated as of January 11, 2008,
and that certain Second Amendment to Mezzanine Loan Agreement dated as of March 14,2008
(such amendments together with the Mezzanine Loan Agreement, collectively, the "Original
Loan Agreement"), pursuant to which Lender made a mezzanine loan ("Loan") to Borrower in
the original principal amount of $21,300,000, which Loan is evidenced by Borrower's
promissory note to Lender dated June 29,2007 in the original principal amount of$21,300,000
(the "Note").Unless otherwise defined herein, capitalized terms used in this Agreement shall
have the meanings set forth in the Original Loan Agreement.
April 15, 2008.
date of the Loan until April 22, 2008.
-2-
AGREEMENT
1. Amendment to the Loan Agreement. The defined term "Maturity Date"
deleting such defined term in its entirety and replacing it with the following:
"Maturity Date" shall mean April 22, 2008, or such earlier date on which
the final payment of the principal of the Note becomes due and payable as therein
or herein provided, whether at such stated maturity date, by declaration of
4. Enforceability. Each Borrower Party represents and warrants that, this
an individual) represents and warrants that as of the date hereof, such Borrower Party (a) is a
duly organized and validly existing limited liability company, corporation or other corporate
entity, as the case may be, in good standing under the laws of the State of its formation, (b) has
-3-
Agreement, without impairment, and Borrower remains unconditionally liable to 'Lender in
party,as specifically modified by this Agreement, (c) ratifies and confmns, renews and reaffirms
Guarantor hereby (a) unconditionally ratifies and confirms, renews and reaffirms all of such
. Guarantor's obligations under the Loan Documents, as specifically modified by this Agreement,
terms; covenants and conditions of the Loan Documents, as specifically modified by this
-4-
modified by this Agreement, and (d) represents and warrants that all representations and
warranties made by such Guarantor contained in the Loan Documents are true and correct in all
further instruments and perform such further acts as may be requested by Lender from time to
time to collfirm the provisions of this Agreement and the Loan Documents, to carry out more
severable from this Agreement; this Agreement shall be construed and enforced as if such illegal,
remaining terms and provisions of this Agreement shall remaiJJ in full force and effect and shall
accordance with, the laws of the State ofNew York pursuant to Section 5-1401 ofthe New York
forth herein.
-5-
instrument.
-6-
IN WITNESS WHEREOF, the parties hereto have executed this Third
14174850.2
BORROWER:
LLC,
By:
Title: \J t' .
LENDER:
LEHMAN ALI INC.,
By:
Name:
Title:
lN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment to .Mezzanine l ,oan Agreement as of the date first written above.

BORROWER:
LLC,
By:
Name:
Title:
LENDER:
[Signatures continued on Jollowing page}
written above.
GUARANTORS:
a Maryland corporation .
By:Ndllt&-
Title: C( ~ ft ,c:_ _
[Third Amendment to Mezzanine Loan Agreement)

US2008 1530791.1
EXHIBIT P

Fourth Amendment to Mezzanine Loan Agreement Dated as of April 22, 2008 Between Grand

14308409.11
FOURTH AMENDMENT TO MEZZANINE LOAN AGREEMENT
Dated as of April 22, 2008
Between
as Borrower
and
LEHMAN ALI INC.,
as Lender
as Guarantor
and
as Guarantor
Orange, California
FOURTH AMENDMENT TO MEZZANINE LOAN AGREEMENT
THIS FOURTH AMENDMENT TO MEZZANINE LOAN AGREEMENT (this
"Agreement") is entered into as of this 22nd day of April, 2008 between GRAND PRIX MEZZ
principal place ofbusiness at c/o Apollo Investment Corporation, 9 West 57th Street, New York,
New York 10019, and LEHMAN ALI INC., a Delaware corporation (together with its successors
and assigns, "Lender"), having an address at 399 Park Avenue, New York, New York 10022,
corporation ("Apollo"; each of Grand Prix and Apollo is referred to herein as "Guarantor", and
"Borrower Party'', an4 collectively as "Borrower Parties").
RECITALS
Agreement, dated as of June 29, 2007 (the "Mezzanine Loan Agreement''), which was amended
and that certain Second Amendment to Mezzanine Loan Agreement dated as of March 14, 2008
and that certain Third Amendment to Mezzanine Loan Agreement dated as of April 15, 2008
Loan Agreement"}, pur_suant to which Lender made a mezzanine loan ("Loan") to Borrower in
promissory note to Lender dated June 29, 2007 in the original principal amount of $21,300,000
(the "Note"). Unless otherwise defined herein, capitalized terms used in this Agreement shall
Shortfall Guaranty, each dated as of June 29,2007, whereby Apollo guaranteed to Lender certain
executed that certain Environmental Indemnity Agreement (Mezzanine Loan), that certain
Guaranty (Mezzanine Loan) and that certain Payment and Performance Guaranty (Term Loan),
each dated as of June 29, 2007, whereby Grand Prix guaranteed to Lender certain obligations and
liabilities of Borrower pursuant to the Loan and agreed to indemnify and defend Lender against
certain liabilities with respect to the Property.
April 22, 2008.
-2-
date of the Loan until April 15, 2009, and to further amend certain terms and provisions of the
Loan Documents.
AGREEMENT
1. Amendments to the Loan Agreement.
(a) The Original Loan Agreement is hereby amended and modified by adding the following
defmed terms to Section 1.1 in the appropriate alphabetical order: ,
"Assumed Aggregate Debt Service Coverage Ratio" shall mean a ratio
determined by Lender as of the Initial Maturity Date in which:
(i) the numerator is one-half of the Net Operating Income for the
twelve (12) full calendar month period preceding the date of
calculation as set forth in the financial statements required
hereunder, without deduction for (i) actual management fees
incurred in connection with the operation of the Property or (ii)
amounts paid to the Reserve Funds, less (A) management fees
equal to the greater of (1) assumed management fees of three
percent (3.0%) of Gross Income from Operations or (2) the actual
management fees incurred, and (B) assumed FF&E Reserve Fund
contributions equal to 4% of Gross fucome from Operations, plus
the amount of the Debt Service Shortfall Reserve Fund and the
Debt Service Shortfall Guaranty available to pay any anticipated
Debt Service Shortfalls for the Extension Period; and
(ii) the denominator is the sum of (a) the aggregate amount of the
anticipated Mortgage Loan Debt Service for the Extension Period
and (b) the aggregate amount of scheduled interest due and payable
on the Loan for such period based on an assumed interest rate per
annum equal to the Strike Rate applicable to the Extension Period
plus the Spread applicable to the Extension Period.
-3-
"Debt Yield" shall mean a fraction, expressed as a percentage, equal to (i)
(a) if the Margin at the time of determination of Debt Yield is equal to or less than
29.6%, Net Operating calculated on a trailing twelve (12) month basis or
(b) if the Margin at the time of determination of Debt Yield is greater than 29.6%,
an assumed amount of Net Operating fu.come for the trailing twelve (12) months
derived by multiplying Gross Income from Operations by 29.6% divided by (ii)
the then-current aggregate outstanding principal balance of the Loan and the
Mortgage Loan.
"Extended Maturity Date" shall have the meaning set forth in Section
2.6hereof.
"Extension Fee" shall mean one-half of one percent (0.50%) of the
outstanding principal amount of the Loan.
"Extension Option" shall have the meaning set forth in Section 2.6
hereof
"Extension Period" shall have the meaning set forth in Section 2.6
hereof.
"Initial Maturity Date" shall mean Aprill5, 2009.
"Margin" shall mean a fraction, expressed as a percentage, equal to (i)
Net Operating Income calculated on a trailing twelve (12) month basis divided by
(ii) Gross Income from Operations calculated on a trailing twelve (12) month
basis.
(b) The word "franchise" in clause (a) of the defined term "Aggregate Debt Service
Coverage Ratio" appearing in Section 1.1 of the Original Loan Agreement is hereby changed to
the word "management".
(c) The defined term "Maturity Date" appearing in Section 1.1 of the Original Loan
Agreement is hereby modified and amended by deleting such defined term in its entirety and
replacing it with the following:
"Maturity Date" shall mean the Initial Maturity Date, or, in the event that
Borrower has exercised the Extension Option as set forth the Extended
Maturity Date, or such other date on which the final payment of the principal of
the Note becomes due and payable as therein or herein provided, whether at such
stated maturity date, by declaration of acceleration, or otherwise.
(d) The defined term "Spread" appearing in Section 1.1 of the Original Loan Agreement is
hereby modified and amended by deleting such defined term in its entirety and replacing it with
the following:
-4-
"Spread" shall mean (a) at all times prior to April 15, 2008, 2.05% and
(b) as of April15, 2008 and at all times thereafter, 6.00%.
(e) The defined term "Strike.Rate" appearing in Section 1.1 of the Original Loan Agreement is
hereby modified and amended by deleting such defined term in its entirety and replacing it with
the following:
"Strike Rate" shall mean (a) at all times prior to April 22, 2008, 6.00%,
(b) as of April 22, 2008 and at all times thereafter during the initial term of the
Loan, 3.50% and (c) with respect to the Extension Period, a percentage per annum
determined at Borrower's discretion, not to exceed 5.00%.
(f) The Original Loan Agreement is hereby amended and modified by adding the following
Section 2.6:
Section 2.6. Extension of the Maturity Date. Borrower shall have the option to extend
the term of the Loan beyond the Initial Maturity Date for one (1) term (the "Extension
Option") of six (6) months (the "Extension Period") to the Payment Date occurring in
October 2009 (the "Extended Maturity Date") upon satisfaction of the following terms and
conditions:
(a) no Event of Default shall have occurred and be continuing at the time the
Extension Period is commenced;
(b) Borrower shall notify Lender of its election to extend the Maturity Date as
aforesaid not earlier than one hundred twenty {120) days and no later than thirty (30} days
prior to the Initial Maturity Date; provided that Borrower shall have the right to revoke its
election to extend the Maturity Date upon written notice to Lender and upon payment to
Lender of all out-of-pocket costs and expenses, actually incurred by Lender in good faith in
connection with such revocation, which written notice is received by Lender not later than
ten (1 0} days prior to the Initial Maturity Date and which payment is received by Lender not
later than three (3) Business Days prior to the Initial Maturity Date;
(c) The Debt Yield as ofthe Initial Maturity Date shall be equal to or greater
than 9.43%; provided, that if the Debt Yield as of the Initial Maturity Date is less than
9.43%, Borrower may satisfy the condition to exercise of the Extension Option set forth in
this subparagraph (iii) by paying to Lender on the Initial Maturity Date a portion of the
principal balance of the Loan sufficient to cause the Debt Yield to be at least 9.43%;
(d) Borrower shall obtain and deliver to Lender prior to commencement of the
Exte1,1sion Period, one or more Replacement Interest Rate Cap Agreements, each with a
strike rate equal to the Strike Rate, which Replacement Interest Rate Cap Agreements shall
be effective commencing on the first day of the Extension Option and shall have a maturity
date not earlier than the Extended Maturity Date;
-5-
(e) Borrower shall deposit with Lender an amount determined by Lender in its
reasonable discretion which, when added to the Debt Service Shortfall Reserve Fund on
deposit as of the Initial Maturity Date, will cause the Assumed Aggregate Debt Service
Coverage Ratio to equal 1.05:1.00; provided, that in lieu of making such deposit, Borrower
may, on the Initial Maturity Date, cause Apollo to deliver to Lender an amendment to the
Debt Service Shortfall Guaranty increasing the amount of such guaranty by the amount
otherwise required to be deposited by Borrower pursuant to this subparagraph (e);
(f) Borrower shall have completed all Immediate PIP Work in good and
workmanlike manner and, to the best of Borrower's knowledge, in accordance with all
Legal Requirements and Environmental Laws and the terms of the Franchise Agreement;
(g) in connection with the Extension Option, Borrower shall have delivered to
Lender as of the commencement of the Extension Option, an Officer's Certificate in form
reasonably acceptable to the Lender certifying tHat each of the representations and
warranties of Borrower contained in the Loan Documents is true, complete and correct in all
material respects as of the date of such Officer's Certificate except to the extent such
representations and warranties are matters which by their nature can no longer be true and
correct as a result of the passage of time; and
(h) Borrower shall have paid to Lender the Extension Fee, which shall be due
and payable on the first day of the Extension Period.
All references in this Agreement and in the other Loan Documents to the Maturity Date
shall mean the Extended Maturity Date in the event the Extension Option is exercised.
(g) The Original Loan Agreement is hereby amended and modified by adding the following as
Section 4.1.48:
4.1.48. Immediate PIP Work. The sum of amounts on deposit in the Required Capital
Improvements Fund plus the amount of capital expenditure reserves for the Property on
deposit with the Mortgage Lender plus the amount guaranteed by Apollo under the
Completion Guaranty are sufficient to complete and pay for in full all Immediate PIP Work
and all Required Capital Improvements. Upon completion of the Immediate PIP Work in
good and workmanlike manner and in accordance . with all Legal Requirements and
Environmental Laws, the Property will be in compliance with all property condition
requirements set forth in the Franchise Agreement.
2. Conditions to Effectiveness of this Agreement. The effectiveness of this
Agreement shall be conditioned on:
(a) the delivery to Lender of a Replacement Interest Rate Cap
Agreement, with a strike rate equal to the Strike Rate, applicable to the period
from date of this Agreement through the Initial Maturity Date;
-6-
(b) Borrower depositing with Lender $1,136,367 for deposit to the
Debt Service Shortfall Reserve Fund;
(c) Borrower depositing with Lender $1,091,459.18 for deposit to the
Required Capital Improvements Fund which amount represents Lender's estimate
of $2,196,392 for the Required Capital Improvements less the amount of
$1,104,932.82 (which amount Borrower represents is currently held as a reserve
by the Mortgage Lender and available to the Mortgage Borrower to pay for
Required Capital Improvements);
(d) Borrower shall have obtained the written consent of Mortgage
Lender to this Agreement; and
(e) Borrower paying to Lender all of Lender's out-of-pocket costs and
expenses relating to this Agreement and the prior amendments.
Agreement, and as the same may be subsequently. further amended, modified, supplemented,
5. Enforceability. Each Borrower Party represents and warrants that, this
6. Organization. Each Borrower Party represents and warrants that as of the
date hereof, such Borrower Party (a) is a duly organized and validly existing limited liability
company, corporation or other corporate entity, as the case may be, in good standing under the
laws of the State of its formation, (b) has the requisite power and authority to carry on its
business as now being conducted, (c) is duly qualified to do business in each jurisdiction in
which the nature of its business makes such qualification necessary or desirable, and (d) has the
requisite power to execute and deliver, and perform its obligations (if any) under, this
Agreement.
-7-
party, as specifically modified by this Agreement, (c) ratifies and confirms, renews and reaffirms
Guarantor hereby (a) unconditionally ratifies and confirms, renews and reaffirms all of such
-8-
modified by this Agreement, (d) represents and warrants that all representations and warranties
made by such Guarantor contained in the Loan Documents are true and correct in all material
respects as if made on the date hereof, and (e) agrees and acknowledges that as of the date hereof
that the amount remaining guaranteed pursuant to the Debt Service Shortfall Guaranty is
$57,000.
10. Reaffirmation of Operating Lessee. In connection with this Agreement,
Operating Lessee hereby (a) unconditionally ratifies and confirms, renews and reaffirms all of
Operating Lessee's obligations under the Assignment of Management Agreement and the
Operating Lease Subordination, as specifically modified by this Agreement, (b) acknowledges
and agrees that such obligations remain in full force and effect, binding on and enforceable
against Operating Lessee in accordance with the terms, covenants and conditions of the
Assignment of Management Agreement and the Operating Lease Subordination, as applicable, as
specifically modified by this Agreement, without impairment, and such Operating Lessee
remains unconditionally liable to Lender in accordance with the terms, covenants and conditions
of the Assignment of Management Agreement and the Operating Lease Subordination, as
specifically modified by this Agreement, (c) ratifies and confirms, renews and reaffirms in all
respects and without condition, all of the terms, covenants and conditions set forth in the
Assignment of Management Agreement and the Operating Lease Subordination, as specifically
modified by this Agreement, (d) represents and warrants that all representations and warranties
made by such Operating Lessee contained in the Assignment of Management Agreement and the
Operating Lease Subordination are true and correct in all material respects as if made on the date
hereof, and (e) consents to this Agreement.
notwithstanding any investigation heretofore or hereafter made by Lender or on its behal
otherwise changed in any manner except by a writing executed by Lender and Borrower.
further instruments and perform such further acts as may be requested by Lender :from time to
time to confirm the provisions of this Agreement and the Loan Documents, to carry out more
severable :from this Agreement; this Agreement shall be construed and enforced as if such illegal,
-9-
remaining terms and provisions of this Agreement shall remain in full force and effect and shall
accordance with, the laws of the State ofNew York pursuant to Section 5-1401 of the New York
forth herein.
19. Countemarts. This Agreement may be signed in any number of
instrument.
-10-
IN WI1NESS WHEREOF, the parties hereto have executed this Fourth
14308409.11
BORROWER:
LLC,
By:
LENDER:
LEHMAN ALI INC.,
By:
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have executed this Fourth
Amendment to Mezzanine Loan Agreement as of the date first written abow.
14308409.1 1
BORROWER:
LLC,
By:
Name:
Title:
LENDER:
LEHMAN Afti INC.,
a Delaware cqiporation
I
/
By:
YO. KRAVETZ
RIZED SIGNATORY
written above.
GUARANTORS:
B y : ~
Title: r;:vf
14308409.11
The undersigned Operating Lessee hereby agrees to
Section 10 of the foregoing Agreement as of the
date first written above.
OPERATING LESSEE:
GRAND PRIX ANAHEIM ORANGE LESSEE
LLC, a Delaware limited liability company
[Fourth Amendment to Mezzanine Loan Agreement]

US2008 1530791.1
EXHIBIT Q

Fifth Amendment to Mezzanine Loan Agreement and Other Loan Documents Dated as of July
31 2009 and Made Effective as of April 15, 2009 Between Grand Prix Mezz Borrower Term
LLC, as Borrower and Lehman ALI Inc., as Lender and Acknowledged and Agreed to by Grand
Prix Holdings, LLC as Guarantor and Grand Prix Anaheim Orange Lessee LLC, as Operating
Lessee

(Anaheim)
FIFTH AMENDMENT TO MEZZANINE LOAN AGREEMENT AND OTHER LOAN
DOCUMENTS
15009443.22
Dated as ofJuly 31, 2009 and Made Effective as of Aprill5, 2009
Between
as Borrower
and
LEHMAN ALI INC.,
as Lender
as Guarantor
and
GRAND PRIX ANAHEIM ORANGE LESSEE LLC,
as Operating Lessee
Orange, California
FIFTH AMENDMENT TO MEZZANINE LOAN AGREEMENT AND OTHER LOAN
DOCUMENTS
TillS FIFfH AMENDMENT TO MEZZANINE LOAN AGREEMENT AND
OTHER LOAN DOCUMENTS (this "Agreement") is dated as of the 31st day of July, 2009 and
made effective as of the 15th day of April, 2009 between GRAND PRIX MEZZ BORROWER
TERM LLC, a Delaware limited liability company ("Borrower"), having its principal place of
bl.lsiness at c/o ACI Investment Corporation, 9 West 57th Street, New York, New York 10019,
and LEHMAN ALI INC., a Delaware corporation (together with its successors and assigns,
"Lender"), having an address at 1271 Avenue of the Americas, 46th Floor, New York, New York
10020, and acknowledged and agreed to by GRAND PRIX HOLDINGS, LLC, a Delaware
limited liability company ("Guarantor") and GRAND PRIX ANAHEIM ORANGE LESSEE
LLC, a Delaware limited liability company ("Operating Lessee"; and each of Borrower,
Guarantor and Operating Lessee is referred to herein as a "Borrower Party'', and collectively as
"Borrower Parties").
RECITALS
and that certain Second Amendment to Mezzanine Loan Agreement dated as of March 14, 2008
and that certain Third Amendment to Mezzanine Loan Agreement dated as of April 15, 2008,
and that certain Fourth Amendment to Mezzanine Loan Agreement dated as of April 22, 2008
Loan Agreement"), pursuant to which Lender made a mezzanine loan ("Loan") to Borrower in
promissory note to Lender dated June 29, 2007 in the original principal amount of $21,300,000
(the ''Note"). Unless otherwise defined herein, capitalized terms used in this Agreement shall
WHEREAS, as a condition of Lender making the Loan to Borrower, Guarantor
executed that certain Environmental Indemnity Agreement (Mezzanine Loan), that certain
Guaranty (Mezzanine Loan) and that certain Payment and Performance Guaranty (Term Loan),
each dated as of June 29, 2007, whereby Guarantor guaranteed to Lender certain obligations and
liabilities of Borrower pursuant to the Loan and agreed to indemnify and defend Lender against
certain liabilities with respect to the Property.
April15, 2009.
date of the Loan until July 1, 2010, and to further amend certain terms and provisions of the
Loan Documents.
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AGREEMENT
1. Amendments to the Original Loan Agreement.
(a) Deletion of Defined Terms. The defined terms "Acceptable Counterparty,"
"Assignment of Interest Rate Cap," "Assumed Aggregate Debt Service Coverage Ratio,"
"Completion Guaranty," "Counterparty," "Debt Service Shortfall Guaranty," "Debt Yield,"
"Extended Maturity Date," "Extension Fee," "Extension Option," "Extension Period," "Initial
Maturity Date," "Interest Rate Cap Agreement," "Interest Shortfall," "Replacement Interest Rate
Cap Agreement," "Succeeding Interest Period," and "Strike Rate" set forth in Section 1.1 of the
Original Loan Agreement are hereby deleted in their entirety. In the event any such deleted
defined terms are still present in the Original Loan Agreement, they shall be deemed deleted in
their entirety.
(b) Modification to Defined Terms. The defined terms "Accounts," "Applicable
Interest Rate," "Contract Rate," "FF&E Reserve Account," "Interest Period," "Loan
Documents," "Maturity Date," "Mezzanine Deposit Account," ''Net Operating Income",
"Required Capital Improvements" and ''Triggering Event" set forth in Section 1.1 of the Original
Loan Agreement are hereby deleted in their entirety and shall be replaced with the following:
"Accounts" shall mean, collectively, the Mezzanine Deposit Account, the Tax
Account, the Insurance Premium Account, the Debt Service Account, the
Required Capital Improvements Account, the Required Repair Accolint, the
FF&E Reserve Account, the Debt Service Shortfall Reserve Account and any
other escrow accounts or reserve accounts established by the Loan Documents.
"Applicable Interest Rate" shall mean (A) from and including the Closing Date
through July 14, 2007, an interest rate per annum equal to 7.37%; and (B) from
and including July 15, 2007 through June 14, 2009, an interest rate per annum
equal to (I) the Eurodollar Rate or (II) the Adjusted Prime Rate, if the Loan begins
bearing interest at the Adjusted Prime Rate in accordance with the provisions of
Section 2.2.3(a) hereof; and (C) from and including June 15, 2009 and for each
successive Interest Period through and including the date on which the Debt is
paid in full, an interest rate per annum equal to ten percent ( 1 0% ).
-3-
"Contract Rate" shall mean, at the time of any calculation, (A) with respect to
the period from the Closing Date to and including June 14, 2009, an interest rate
per annum equal to the greater of (a) the Applicable Interest Rate then in effect
and (b) eight and five-one hundredths percent (8.05%), and (B) with respect to the
period from and after June 15, 2009, an interest rate per annum equal to ten
percent (10%).
"FF&E Reserve Account" shall have the meaning set forth in Section 3.3 hereof.
"Interest Period" shall mean, in connection with the .calculation of interest
accrued with respect to any specified Payment Date, (1) with respect to each
Payment Date prior to the Payment Date occurring in August, 2009, the period
from and including the fifteenth (15th) day of the prior calendar month to and
including the fourteenth (14th) day of the calendar month in which the applicable
Payment Date occurs; provided, however, that with respect to the Payment Date
occurring in July 2007, the Interest Period shall be the period commencing on the
Closing Date to and including July 14, 2007, (2) with respect to the Payment Date
occurring in August 2009, the Interest Period shall be the period from and
including July 15, 2009 to and including August 8, 2009, and (3) with respect to
the Payment Date occurring in September, 2009 and each successive Payment
Date thereafter, the period from and including the ninth (9th) day of the prior
calendar month to and including the eighth ( 8 ~ day of the calendar month in
which the applicable Payment Date occurs, provided, however, that with respect
to the Interest Period immediately preceding the stated Maturity Date (i.e., July 1,
2010), the Interest Period shall be the period from and including June 9, 2010 to
and including June 30, 2010. Each Interest Period, except for (x) the Interest
Period ending July 14, 2007, (y) the Interest Period ending August 8, 2009 and (z)
the Interest Period ending June 30, 2010, shall be a full month and shall not be
shortened by reason of any payment of the Loan prior to the expiration of such
Interest Period.
"Loan Documents" shall mean, collectively, this Agreement, the Note, the
Pledge Agreement, the Environmental Indemnity, the Assignment of Management
Agreement, the Guaranty, the Operating Lease Subordination, the Payment and
Performance Guaranty, the Cash Management Agreement, the Lockbox
Agreement and all other documents executed and! or delivered in connection with
the Loan.
"Maturity Date" shall mean July I, 2010, or such other date on which the fmal
payment of the principal of the Note becomes due and payable as therein or herein
provided, whether at such stated maturity date, by declaration of acceleration, or
otherwise.
-4-
"Mezzanine Deposit Account" shall have the meaning set forth in Section 3.3
hereof.
"Net Operating Income" shall mean (a) from the Closing Date up to June 15,
2009, the amount obtained by subtracting Operating Expenses from Gross Income
from Operations, excluding any payments received under any Interest Rate Cap
Agreement and (b) from and after June 15, 2009, the amount obtained by
subtracting (i) Operating Expenses and (ii) to the extent n.ot an Operating
Expense, an amount equal to the portion of the total "G&A" expenses of
Innkeepers USA Limited Partnership and Innkeepers USA Trust (f7k/a Grand Prix
Acquisition Trust) allocable to the Property (based on the EBITDA Ratio) from
(iii) Gross Income from Operations.
"Required Capital Improvements" shall mean the Franchisor Required PIP
Work.
"Triggering Event" shall mean an Event of Default has occurred and IS
continuing.
(c) Additional Defined Terms. Section 1.1 of the Original Loan Agreement shall be
amended to add in the appropriate alphabetical order the following defmed terms:
"Cash Management Agreement" shall mean that certain Cash Management
Agreement, dated as of April 15, 2009, by and among Borrower, Operating
Lessee, Manager, Cash Management Bank and Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Cash Management Bank" shall mean Wells Fargo Bank, N.A. or another
Eligible Institution selected by Lender.
"Credit Card Lockbox Account" shall have the meaning set forth in Section 3.2
hereof
"Credit Card Lockbox Agreement" shall mean that certain Lockbox Account
Agreement (Soft Lockbox), dated as of July 31, 2009 and made effective as of
April 15, 2009, by and among Borrower, Lender, Manager and Credit Card
Lockbox Bank.
"Credit Card Lockbox Bank" shall mean Wells Fargo Bank, N.A. or another
Eligible Institution reasonably acceptable to Lender.
"Debt Service Account" shall have the meaning set forth in Section 3.3 hereof
-5-
"Debt Service Shortfall Reserve Account" shall have the meaning set forth in
Section 3.3 hereof.
"EBITDA" shall have the meaning set forth in Section 8.1(a)(xxvii) hereof.
"EBITDA Ratio" shall have the meaning set forth in Section 8.1 (a)(xxvii) hereof.
"Excess Cash Flow" shall have the meaning set forth in Section 3.5 hereof
"Fifth Amendment to Loan Agreement" shall mean that certain Fifth
Amendment to Mezzanine Loan Agreement and Other Loan Documents, dated as
of July 31, 2009 and made effective as of April 15, 2009, by and between
Borrower and Lender
"Franchisor Required PIP Work" shall mean the Franchisor required Property
Improvement Plan work and other capital improvements work at the Property
contemplated by and itemized on Schedule V hereto and as modified from time to
time by the mutual agreement of the Franchisor and franchisee, subject to
Lender's prior written consent to any such modification; provided, however, that
the Franchisor and franchisee may agree to extend the deadline for any line item
set forth on Schedule V hereto, in each case such to Force Majeure delays,
without Lender's prior written consent so long as: (i) to the extent such agreement
is in writing, Borrower has provided Lender a true, correct and complete copy of
such written agreement to extend the deadline for such line item within five (5)
Business Days of the execution thereof and (ii) the extension of the deadline for
such line item shall not, in Lender's reasonable discretion, have a material adverse
effect on the use, value, operation or financial performance of the Property;
provided, further, that the scope of the Franchisor Required PIP Work set forth on
Schedule V hereto for the Property may be adjusted by the agreement of the
Franchisor and franchisee without Lender's prior written consent, provided that
(i) to the extent such agreement is in writing, Borrower has provided Lender a
true, correct and complete copy of such written agreement within five (5)
Business Days of the execution thereof and (ii) the cost of such adjustment does
not exceed an amount, when added to the total amount of any prior or
contemporaneous adjustments to the scope of other line items for the Property, if
any, from July 31, 2009 to the date of such agreement of the Franchisor and
franchisee, in the aggregate, equal to ten percent (10%) of the amount of the total
Franchisor Required PIP Work for the Property as set forth on Schedule V hereto.
"Insurance Premium Account" shall have the meaning set forth in Section 3.3
hereof
"Lockbox Account" shall have the meaning set forth in Section 3.2 hereof
-6-
"Lockbox Agreement" shall mean individually or collectively as the context
requires, the Credit Card Lockbox Agreement and the Non-Credit Card Revenue
Lockbox Agreement.
"Lockbox Bank" shall mean individually or collectively as the context requires,
Credit Card Lockbox Bank and the Non-Credit Card Revenue Lockbox Bank.
"Mortgage Loan Payment Date" shall have the meaning ascribed to the defined
term "Monthly Payment Date" in the Mortgage Loan Documents, which, as of
July 31, 2009, is the first (1st) day of each calendar month.
''Non-Credit Card Revenue Lockbox Account" shall have the meaning set forth
in Section 3.2 hereof
''Non-Credit Card Revenue Lockbox Agreement" shall mean that certain
.Lockbox Account Agreement (Soft Lockbox), dated as of July 31, 2009 and made
effective as of April 15, 2009, by and among Borrower, Lender, Manager and
Non-Credit Card Revenue Lockbox Bank.
''Non-Credit Card Revenue Lockbox Bank" shall mean Wells Fargo Bank,
N.A. or another Eligible Institution reasonably acceptable to Lender.
"Required Capital Improvements Account" shall have the meaning set forth in
Section 3.3 hereof.
"Required Repair Account" shall have the meaning set forth in Section 3.3
hereof.
"Sales and Occupancy Taxes" shall mean any sales, use or occupancy or other
taxes on charges for use of guest rooms at the Property required to be paid to any
Governmental Authority.
"Tax Account" shall have the meaning set forth in Section 3.3 hereof.
(d) Modification to Section 2.2.1(a). Section 2.2.1(a) of the Original Loan
Agreement is hereby deleted in its entirety and shall be replaced with the following:
"(a) Interest on the outstanding principal balance of the Loan shall accrue from
the Closing Date to the end of the Interest Period in which the Maturity Date
occurs at the Applicable Interest Rate. Monthly installments of interest only shall
be paid on each Payment Date commencing on August 9, 2007 and on each
subsequent Payment Date thereafter up to and including the Maturity Date for the
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Interest Period in which such Payment Date or Maturity Date occurs.
Notwithstanding anything to the contrary contained herein, if Borrower has
demonstrated through delivery to Lender of an Officer's Certificate reasonably
acceptable to Lender that, after (1) payment of all amounts due on the Mortgage
Loan Payment Date pursuant to the Mortgage Loan Documents occurring in the
same calendar month as such Payment Date, (2) payment or accrual of Operating
Expenses (including so-called "G&A" expenses) reasonably approved by Lender
or as provided in the Approved Annual Budget for the calendar month in which
such Payment Date occurs and (3) payment of any and all reserves required to be
paid to Lender pursuant to the terms and conditions of the Loan Documents, there
is not sufficient Net Operating Income plus amounts on deposit in the Debt
Service Shortfall Reserve Account to pay the applicable Monthly Debt Service
Payment Amount in full, Borrower shall not be required to pay the applicable
Monthly Debt Service Payment Amount in full. The portion of such Monthly
Debt Service Payment Amount which is not paid by Borrower on such Payment
Date shall be deferred and shall not accrue interest at the Default Rate or be
subject to a Late Charge but instead shall be added to the principal balance of the
Loan and interest on such amount shall accrue at the Applicable Interest Rate
until paid. Interest on the outstanding principal amount of the Loan for the period
through and including July 14, 2007 was paid by Borrower on the Closing Date.
The outstanding principal balance of the Loan together with all accrued and
unpaid interest thereon and all deferred interest shall be due and payable on the
Maturity Date (including, without limitation, all interest that would accrue on the
outstanding principal balance of the Loan through the end of the Interest Period
during which the Maturity Date occurs)."
(e) Deletion of Section 2.2.3. Section 2.2.3 of the Original Loan Agreement is
hereby deleted in its entirety and shall be replaced with the following:
"[Intentionally Omitted]."
(f) Modification of Section 2.3.1. Section.2.3.1 of the Original Loan Agreement is
"On any Payment Date, Borrower may, at its option, prepay the Loan in whole or
in part upon satisfaction of the following conditions:
(a) Borrower shall provide prior written notice to Lender (which notice shall
be irrevocable) specifying the date (the "Prepayment Date") upon which the
prepayment is to be made, which notice shall be delivered to Lender not less than
thirty (30) Business Days prior to such payment; and
(b) Borrower shall pay to Lender, simultaneously with such prepayment, all
accrued and unpaid interest calculated at the Applicable Interest Rate on the
amount of principal being prepaid through and including the Prepayment Date
-8-
together with an amount equal to the interest that would have accrued at the
Applicable Interest Rate on the amount of principal being prepaid through the end
of the Interest Period in which such prepayment occurs.
If a notice of prepayment is given by Borrower to Lender pursuant to this Section
2.3.1, the amount designated for prepayment and all other sums required under
this Section 2.3 .1 shall be due and payable on the Prepayment Date."
(g) Modification of Section 2.3.3. Section 2.3.3 of the Original Loan Agreement is
"If, following an Event of Default, Borrower tenders payment of all or any part of
the Debt, or if all or any portion of the Debt is recovered by Lender after such
Event of Default, Borrower shall pay in addition to such payment or partial
payment of the Debt (i) all accrued and unpaid interest calculated at the
Applicable Interest Rate on the amount of principal being prepaid through and
including the date of prepayment together with an amount equal to the interest
that would have accrued at the Applicable Interest Rate on the amount of
principal being prepaid through the end of the Interest Period in which such
prepayment occurs and (ii) all other sums due under this Agreement, the Note or
the other Loan Documents in connection with a partial or total prepayment."
(h) Modification of Section 2.3.5. Section 2.3.5 of the Original Loan Agreement is
"All prepayments received pursuant to Section 2.3 and Section 2.5 shall be
applied first, to interest on the outstanding principal balance being prepaid that
accrued through and including the Prepayment Date, second, to intereSt on the
outstanding principal balance being prepaid that would have accrued through the
end of the Interest Period in which the prepayment occurred, and third, to the
payments of outstanding principal."
(i) Deletion of Section 2.4. Section 2.4 of the Original Loan Agreement is hereby
deleted in its entirety and shall be replaced with the following:
"[Intentionally OmittedJ ."
G) Deletion of Section 2.6. Section 2.6 of the Original Loan Agreement is hereby
-9-
(k) Modification of Article III. Article III of the Original Loan Agreement is hereby
"III. CASH MANAGEMENT
Section 3.1. Compliance with Mortgage Loan Documents. Borrower shall
cause Mortgage Borrower to comply with Section 2( a) of the Security Instrument.
Section 3.2. Lockbox Account.
(a) Borrower shall, on or prior to the date hereof establish and
maintain a segregated Eligible Account with respect to credit card revenues from
the Property (the "Credit Card Lockbox Account") with the Credit Card
Lockbox Bank in trust for the benefit of Lender, which Credit Card Lockbox
Account shall be under the sole dominion and control of Lender. The Credit Card
Lockbox Account shall be entitled "Island Hospitality Management, Inc. as agent
for Grand Prix Mezz Borrower Term LLC for the benefit of Lehman ALI Inc. -
Lockbox Account." Borrower shall, on or prior to the date hereof establish and
maintain a segregated Eligible Account with respect to all non-credit card
revenues from the Property (the "Non-Credit Card Revenue Lockbox Account"
and together with the Credit Card Lockbox Account, individually and collectively
as the context requires, the "Lockbox Account") with the Non-Credit Card
Revenue Lockbox Bank in trust for the benefit of Lender, which Non-Credit Card
Revenue Lockbox Account shall be under the sole dominion and control of
Lender. The Non-Credit Card Revenue Lockbox Account shall be entitled
"Island Hospitality Management, Inc. as agent for Grand Prix Mezz Borrower
Term LLC for the benefit of Lehman ALI Inc.- Lockbox Account." Borrower
hereby grants to Lender a first priority security interest in each Lockbox Account
and, subject to the Lien of the Mortgage Loan held by Mortgage Lender, all
deposits at any time contained therein and the proceeds thereof and will take all
actions necessary to maintain in favor of Lender a perfected first priority security
interest in each Lockbox Account, including, without limitation, filing UCC
Financing Statements and continuations thereof to th? extent applicable. Each
Lockbox Agreement shall provide that, among other things, funds in each
Lock box Account shall be released on each Thursday (or if such day is not a
Business Day, on the next preceding Business Day) to Borrower except during the
continuance of a Triggering Event, Lender shall have the sole right to make
withdrawals from each Lockbox Account and all costs and expenses for
establishing and maintaining each Lockbox Account shall be paid by Borrower.
(b) Borrower represents, warrants and covenants that (i) Borrower and
Operating Lessee shall, or shall cause each Manager to, immediately deposit all
Gross Income from Operations (other than Gross Income from Operations
generated by credit card revenues) and forfeited Security Deposits into the Non-
-10-
Credit Card Revenue Lockbox Account; (ii) Borrower shall send a notice,
substantially in the form of Exhibit C, to all tenants now or hereafter occupying
space at the Property directing them to pay all Rents and other sums due under the
Lease to which they are a party into the Non-Credit Card Revenue Lockbox
Account; (iii) Borrower or the Manager shall deliver a notice substantially in the
form of Exhibit D hereto to all credit card companies to pay all accounts
receivable directly into the Credit Card Lockbox Account; (iv) other than the
Accounts, there shall be no other accounts maintained by Borrower, Operating
Lessee or any other Person into which revenues from the ownership and operation
of the Property are deposited, other than accounts maintained under the Mortgage
Loan Agreement; and (v) neither Borrower nor Operating Lessee nor any other
Person shall open any other such account with respect to the deposit of income in
connection with the Property, other than accounts maintained under the Mortgage
Loan Agreement. Until deposited into the Non-Credit Card Revenue Lockbox
Account, any Gross Income from Operations from the Property and forfeited
Security Deposits held by Borrower or Operating Lessee shall be deemed to be
Collateral, subject to the Lien of the Mortgage Loan held by Mortgage Lender,
and shall be held in trust by it for the benefit, and as the property, of Lender and
,shall not be commingled with any other funds or property of Borrower or
Operating Lessee.
(c) Borrower shall obtain from each Lockbox Bank its agreement
pursuant to the applicable Lockbox Agreement to transfer to the Mezzanine
Deposit Account in immediately available funds by federal wire transfer all
amounts on deposit in each Lockbox Account once every Business Day
throughout the term of the Loan during the continuance of a Triggering Event. At
any time other than during a Triggering Event, all amounts on deposit in each
Lock box Account shall be transferred on each Thursday (or if such day is not a
Business Day, the next preceding Business Day) to Borrower or at its direction.
(d) On each Payment Date other than any Payment Date occurring
during the continuance of a Triggering Event, Borrower shall pay to Lender for
deposit into the Mezzanine.Deposit Account in immediately available funds the
amounts set forth in clauses (a) through (i) of Section 3.5 for such Payment Date,
to the extent such amounts are required hereunder.
Section 3.3. Mezzanine Deposit Account.
(a) Lender shall cause to be established and maintained a segregated
Eligible Account (the "Mezzanine Deposit Account") with Cash Management
Bank in trust for the benefit of Lender, which Mezzanine Deposit Account shall
be under the sole dominion and control of Lender. The Mezzanine Deposit
Account shall be entitled "Lehman ALI Inc., as Lender, pursuant to Mezzanine
Loan Agreement with Grand Prix Mezz Borrower Term LLC, as Borrower, dated
-11-
as of June 29, 2007- Mezzanine Deposit Account." Borrower hereby grants to
Lender a first priority security interest in the Mezzanine Deposit Account and all
deposits at any time contained therein and the proceeds thereof (subject to the
rights of the Mortgage Lender pursuant to the Mortgage Loan Documents) and
will take all actions necessary to maintain in favor of Lender a perfected first
priority security interest in the Mezzanine Deposit Account, including, without
limitation, filing UCC Financing Statements and continuations thereof to the
extent applicable. Borrower will not in any way alter or modify the Mezzanine
Deposit Account and will notify Lender of the account number thereof Lender
shall have the sole right to make withdrawals from the Mezzanine Deposit
Account and all reasonable costs and expenses for establishing and maintaining
the Mezzanine Deposit Account shall be paid by Borrower.
(b) The Mezzanine Deposit Account shall consist of the following
Accounts (which may be book entry sub-accounts) into which amounts in the
Mezzanine Deposit Account shall be deposited or allocated:
(i) An account into which Borrower shall deposit, or cause to be
deposited, the Monthly Tax Deposit (the "Tax Account");
(ii) An account into which Borrower shall deposit, or cause to be
deposited, the Monthly Insurance Premium Deposit (the "Insurance
Premium Account");
(iii) An account into which Borrower shall deposit, or cause to be
deposited, the Monthly Debt Service Payment Amount (the "Debt Service
Account");
(iv) An account into which Borrower shall deposit, or cause to be
deposited, amounts relating to Required Capital Improvements pursuant to
Section 7.4 (the "Required Capital Improvements Account");
(v) An account into which Borrower shall deposit, or cause to be
deposited, the Required Repair Fund (the "Required Repair Account");
(vi) An account into which Borrower shall deposit, or cause to be
deposited, the FF&E Reserve Fund (the "FF&E Reserve Account"); and
(vii) An account into which Borrower shall deposit, or cause to be
deposited the Debt Service Shortfall Reserve Fund (the "Debt Service
Shortfall Reserve Account");
Section 3.4. Permitted Investments.
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Sums on deposit in any Account other than each Lockbox Account may be
invested in Permitted Investments provided (i) such investments are then regularly
offered by Cash Management Bank for accounts of this size, category and type,
(ii) such investments are permitted by Applicable Law, (iii) the maturity date of
the Permitted Investment is not later than the date on which sums in the applicable
Account are anticipated by Lender to be required for payment of an obligation for
which such Account was created, and (iv) no Event of Default shall have occurred
and be continuing. Except as may be provided otherwise in Article 7 hereof, all
income earned from Permitted Investments shall be the property of Borrower.
Borrower hereby irrevocably authorizes and directs Cash Management Bank, to
hold any income earned from Permitted Investments as part of the Accounts.
Borrower shall be responsible for payment of any federal, State or local income or
other tax applicable to income earned from Permitted Investments. No other
investments of the sums on deposit in the Accounts shall be permitted except as
set forth in this Section 3.4. Lender shall not be liable for any loss sustained on
the investment of any funds constituting the Reserve Funds or of any funds
deposited in the related Accounts.
Section 3.5. Application of Funds in the Mezzanine Deposit Account.
Provided no Event of Default shall have occurred and be continuing, on each
Payment Date, all funds on deposit in the Mezzanine Deposit Account shall be
applied by Lender to the payment of, or disbursed for, the following items in the
order indicated:
(a) First, if not previously paid or reserved by Mortgage Borrower
pursuant to the Mortgage Loan Documents, to Borrower in an amount sufficient
to pay all amounts required to be paid or reserved by Mortgage Borrower on the
Mortgage Loan Payment Date occurring in the same calendar month as such
Payment Date;
(b) Second, funds sufficient to pay the Monthly Tax Deposit, if any,
shall be deposited in the Tax Account, if required under and in accordance with
Section 7.2 of this Agreement;
(c) Third, funds sufficient to pay the Monthly Insurance Premium
Deposit, if any, shall be deposited in the Insurance Premium Account, if required
under and in accordance with Section 7.2 of this Agreement;
(d) Fourth, funds sufficient to pay the Required FF&E Reserve
Amount applicable to such Payment Date shall be deposited in the FF&E Reserve
Account, if required under and in accordance with Section 7.3 .1 of this
Agreement;
(e) Fifth, funds sufficient to pay (i) the Monthly Debt Service Payment
Amount shall be deposited into the Debt Service Account to be applied to the
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payment of accrued and unpaid interest computed at the Applicable Interest Rate
and (ii) any Net Liquidation Proceeds After Debt Service;
(f) Sixth, funds sufficient to pay any interest accruing at the Default
Rate, and late payment charges, if any, shall be deposited in the Debt Service
Account;
(g) Seventh, to the payment of Cash Management Bank for fees and
expenses incurred in connection with this Agreement and the accounts established
hereunder;
(h) Eighth, to the payment of the servicing fee to the Servicer (if such
servicing fee is due); and
(i) Ninth, all amounts remaining in the Mezzanine Deposit Account
after (i) the deposits for items (b) through (h) for the current month and all prior
months have been made, (ii) payment of all amounts for item (a) due pursuant to
the terms and conditions of the Mortgage Loan Documents on the Mortgage Loan
Payment Date occurring in the same calendar month as such Payment Date, and
(iii) payment or accrual of Operating Expenses (including so-called "G&A"
expenses) reasonably approved by Lender or as provided in the Approved Annual
Budget for the calendar month in which such Payment Date occurs, which amount
remaining in the Mezzanine Deposit Account pursuant to this Section 3.5(i} shall
be calculated by Borrower and shall be subject to Lender's reasonable approval
(such remaining amount, the "Excess Cash Flow"), shall be deposited into the
Debt Service Shortfall Reserve Account for application to any future shortfalls in
the Monthly Debt Service Payment Amount in accordance with the terms and
conditions of Section 7.6 hereof
Section 3.6. Withdrawals From the Tax Account and the Insurance Premium
Account.
Lender shall disburse funds on deposit in the Tax Account and the Insurance
Premium Account in accordance with the provisions of Section 7.2 hereof
Section 3. 7. Withdrawals from the Required Capital Improvements Account.
Lender shall disburse funds on deposit in the Required Capital Improvements
Account in accordance with the provisions of Section 7.4 hereof.
Section 3.8. Withdrawals from the Required Repair Account.
Lender shall disburse funds on deposit in the Required Repair Account m
accordance with the provisions of Section 7.1 hereof.
Section 3.9. Withdrawals from the Debt Service Account.
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Lender shall have the right to withdraw funds from the Debt Service Account to
pay the Monthly Debt Service Payment Amount on or after the date when due,
together with any deferred interest, late payment charges or interest accruing at
the Default Rate.
Section 3.1 0. Withdrawals from the Debt Service Shortfall Reserve Account.
Lender shall have the right to withdraw funds from the Debt Service Shortfall
Reserve Account in accordance with Section 7.6 hereof.
Section 3.11. Withdrawals from the FF&E Reserve Account.
Lender shall disburse funds on deposit in the FF&E Reserve Account m
accordance with the provisions of Section 7.3 hereof.
Section 3.12. Sole Dominion and Control
Borrower acknowledges and agrees that the Accounts are subject to the sole
dominion, control and discretion of Lender, its authorized agents or designees,
including Lockbox Bank and Cash Management Bank, subject to the terms hereof
and the terms of the Cash Management Agreement; and Borrower shall have no
right of withdrawal with respect to any Account except with the prior written
consent of Lender or as otherwise provided herein.
Section 3.13. Security Interest.
Borrower hereby grants to Lender a first priority security interest in each of the
Accounts and the Account Collateral (subject to the Lien of Mortgage Lender
pursuant to the Mortgage Loan Documents) as additional security for the Debt.
Section 3.14. Rights on Default.
Notwithstanding anything to the contrary in this Article 3, upon the occurrence of
an Event of Default, Lender shall promptly notifY Lockbox Bank and Cash
Management Bank in writing of such Event of Default and, without notice from
Lockbox Bank, Cash Management Bank or Lender, (a) Borrower shall have no
further right in respect of (including, without limitation, the right to instruct Cash
Management Bank and/or Lockbox Bank to transfer from) the Accounts, (b)
subject to the rights of the Mortgage Lender pursuant to the Mortgage Loan
Documents, Lender may direct Cash Management Bank to liquidate and transfer
any amounts then invested in Permitted Investments to the Accounts or reinvest
such amounts in other Permitted Investments as Lender may reasonably determine
is necessary to perfect or protect any security interest granted or purported to be
granted hereby or pursuant to the other Loan Documents or to enable Cash
Management Bank, as agent for Lender, or Lender to exercise and enforce
Lender's rights and remedies hereunder or under any other Loan Document with
respect to any Account or any Account Collateral, and (c) subject to the rights of
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the Mortgage Lender pursuant to the Mortgage Loan Documents, Lender shall
have all rights and remedies with respect to the Accounts and the amounts on
deposit therein and the Account Collateral as described in this Agreement and in
the Pledge Agreement, in addition to all of the rights and remedies available to a
secured party under the UCC, and, notwithstanding anything to the contrary
contained in this Agreement or in the Pledge Agreement, subject to the rights of
the Mortgage Lender pursuant to the Mortgage Loan Docuinents, Lender may
apply the amounts of such Accounts as Lender determines in its sole discretion
including, but not limited to, payment of the Debt; provided, that if Borrower
provides to Lender evidence reasonably satisfactory to Lender of Sales and
Occupancy Taxes for the then current month due and owing, Lender will, at
Lender's option, either (x) apply funds to payment of such Sales and Occupancy
Taxes to the appropriate Governmental Authorities, or (y) release to Borrower
funds for payment of such Sales and Occupancy Taxes, so long as Borrower has
certified to Lender that such funds will be used to make payments of such Sales
and Occupancy Taxes. In making any payment relating to Sales and Occupancy
Taxes to any Governmental Authority, Lender may do so according to any bill,
statement or estimate procured from the appropriate Governmental Authority,
without any inquiry into the accuracy or such bill, statement or estimate or into
the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof.
Section 3.15. Financing Statement; Further Assurances.
Borrower hereby authorizes Lender to file, and upon Lender's request, shall
deliver to Lender for'filing, a financing statement or statements under the UCC in
connection with any of the Accounts and the Account Collateral with respect
thereto in the form required to properly perfect Lender's security interest therein.
Borrower agrees that at any time and from time to time, at the expense of
Borrower, Borrower will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or that
Lender may request, in order to perfect and protect any security interest granted or
purported to be granted hereby (including, without limitation, any security interest
in and to any Permitted Investments) or to enable Cash Management Bank or
Lender to exercise and enforce its rights and remedies hereunder with respect to
any Account or Account Collateral (subject to the rights of Mortgage Lender
under the Mortgage Loan Documents).
Section 3.16. Borrower's Obligation Not Affected.
The insufficiency of funds on deposit in the Accounts shall not absolve Borrower
of the obligation to make any payments, as and when due pursuant to this
Agreement and the other Loan Documents, and such obligations shall be separate
and independent, and not conditioned on any event or circumstance whatsoever.
Section 3.17. Payments Received Under this Agreement.
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Notwithstanding anything to the contrary contained in this Agreement or the other
Loan Documents, and provided no Event of Default has occurred and is
continuing, Borrower's obligations with respect to the monthly payment of Debt
Service and amounts due for the Tax and Insurance Escrow Fund, FF&E Reserve
Fund and any other payment reserves established pursuant to this Agreement or
any other Loan Document shall (provided Lender is not prohibited from
withdrawing or applying any funds in the Accounts by Applicable Law or
otherwise) be deemed satisfied to the extent sufficient amounts are deposited in
the Mezzanine Deposit Account established pursuant to this Agreement to satisfy
such obligations on the dates each such payment is required, regardless of
whether any of such amounts are so applied by Lender.
Section 3.18. Dcmosit Accounts.
(a) This Agreement creates valid and continuing security interests (as
defined in the UCC) in each Lockbox Account and the Mezzanine Deposit
Account in favor of Lender, which security interests are prior to all other Liens
(subject to the Lien of the Mortgage Loan held by the Mortgage Lender) and are
enforceable as such against creditors of and purchasers from Borrower;
(b) Borrower and Lender agree that each Lockbox Account is and
shall be maintained (i) as a "deposit account" (as such term is defined in Section
9-102(a)(29) of the UCC), (ii) in such a manner that Lender shall have control
(within the meaning of Section 9-104(a)(2) of the UCC) over each Lockbox
Account and (iii) such that neither Borrower nor any Manager shall have any right
of withdrawal from any Lockbox Account and no Account Collateral shall be
released to Borrower or any Manager from any Lockbox Account except as
provided herein prior to a Triggering Event. Without limiting Borrower's
obligations under the immediately preceding sentence, Borrower shall only
establish and maintain each Lockbox Account with the applicable Lockbox Bank
pursuant to the applicable Lockbox Agreement.
(c) Borrower and Lender agree that each Account other than each
Lockbox Account is and shall be maintained (i) as a "securities account" (as such
term is defined in Section 8-501(a) of the UCC), (ii) in such a manner that Lender
shall have control (within the meaning of Section 8-106( d)(2) of the UCC) over
each such Account, (iii) such that neither Borrower nor any Manager shall have
any right of withdrawal from such Accounts and, except as provided herein, no
Account Collateral shall be released to Borrower from such Accounts, (iv) in such
a manner that the Cash Management Bank shall agree to treat all property credited
to such Account as "fmancial assets" and (v) such that all securities or other
property underlying any financial assets credited to such Accounts shall be
registered in the name of Cash Management Bank, indorsed to Cash Management
Bank or in blank or credited to another securities account maintained in the name
of Cash Management Bank and in no case will any fmancial asset credited to any
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such Accounts be registered in the name of Borrower, payable to the order of
Borrower or specially indorsed to Borrower except to the extent the foregoing
have been specially indorsed to Cash Management Bank or in blank;
(d) Borrower owns and has good and marketable title to each Lockbox
Account and the Mezzanine Deposit Account free and clear of any Lien or claim
of any Person, other than the security interest granted to Lender pursuant to this
Agreement;
(e) Borrower has delivered to Lender fully executed agreements
pursuant to which the banks maintaining each Lockbox Account and the
Mezzanine Deposit Account have agreed to comply with all instructions
originated by Lender directing disposition of the funds in such accounts without
further consent by Borrower;
(f) Other than the security interest granted to Lender pursuant to this
Agreement, Borrower has not pledged, assigned, or sold, granted a security
interest in, or otherwise conveyed any of each Lockbox Account or the
Mezzanine Deposit Account; and
(g) Each Lockbox Account and the Mezzanine Deposit Account are
not in the name of any Person other than Borrower or Lender. Borrower has not
granted to the banks maintaining the Mezzanine Deposit Account or each
Lockbox Account permission or authorization to comply with instructions of any
Person other than Lender."
(1) Addition of Section 5 .1.1 O(h). Section 5 .1.1 0 of the Original Loan Agreement is
hereby amended to add the following as Section 5 .1.1 O(h):
"(h) On a monthly basis, Borrower shall meet in person or by telephone with
Lender, and provide Lender with an update on the current status of any ongoing
discussions with any Franchisor with respect to (i) any contemplated or proposed
adjustments to the scope of the Franchisor Required PIP Work and (ii) any
contemplated or proposed extension to any line item of the Franchisor Required
PIP Work, provided, that if any such monthly meeting does not occur because of
Borrower's unavailability, Borrower shall provide Lender with such update as
otherwise reasonably requested by Lender."
(m) Modification of Section 5.1.21. The first sentence of Section 5.1.21 of the
Original Loan Agreement is hereby deleted in its entirety and shall be replaced with:
"Borrower shall complete all Required Capital Improvements by the date for
completion specified on Schedule V hereto, . provided, however, that the
Franchisor and franchisee may agree to extend the deadline for any line item set
forth on Schedule V hereto, in each case subject to Force Majeure delays, without
Lender's prior written consent so long as: (i) to the extent such agreement is in
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writing, Borrower has provided Lender with a true, correct and complete copy of
such written agreement to extend the deadline for such line item within five (5)
Business Days of the execution thereof and (ii) the extension of the deadline for
such line item shall not, in Lender's reasonable discretion, have a material adverse
effect on the use, value, operation or financial performance of the Property."
(n) Modification to Section 5 .2.11. Section 5 .2.11 of the Original Loan Agreement is
hereby modified by deleting the last sentence of the last paragraph thereof and replacing it with
the following:
''Notwithstanding anything contained herein to the contrary, Guarantor shall not
be released from its liability under the Guaranty or the Payment and Performance
Guaranty in connection with such Transfer unless a replacement guarantor
acceptable to Lender in its reasonable discretion shall assume all liability of
Guarantor thereunder in a manner acceptable to Lender."
( o) Modification to Section 7 .1.2. Section 7 .1.2 of the Original Loan Agreement is
"Lender shall disburse to Borrower the Required Repair Funds from the Required
Repair Account from time to time upon satisfaction by Borrower of each of the
following conditions: (a) Borrower shall submit a written request for payment to
Lender at least thirty (30) days prior to the date on which Borrower requests such
payment be made and specifies the Required Repairs to be paid, (b) on the date
such request is received by Lender and on the date such payment is to be made,
no Default or Event of Default shall exist and remain uncured, (c) Lender shall
have received an Officers' Certificate (i) stating that all Required Repairs at the
Property to be funded by the requested disbursement have been completed in
good and workmanlike manner and, to the best of Borrower's knowledge, in
accordance with all Legal Requirements and Environmental Laws, such certificate
to be accompanied by a copy of any license, permit or other approval by any
Governmental Authority required to commence and/or complete the Required
Repairs, (ii) identifying each Person that supplied materials or labor in connection
with the Required Repairs performed at the Property with respect to the
reimbursement to be funded by the requested disbursement, and (iii) stating that
each such Person has been paid in full for amounts then owing upon such
disbursement or shall be paid within five (5) Business Days after such
disbursement (provided that Borrower hereby agrees to submit to Lender evidence
acceptable to Lender in its reasonable discretion that each such Person has been
paid in full for amounts then owing within such five (5) Business Day period and
if Borrower fails to make such payment, then Borrower hereby agrees to return
such disbursement amount to Lender, together with any interest earned thereon,
on the Business Day immediately succeeding such five (5) Business Day period
for deposit into the Required Repair Fund, and if Borrower fails to provide such
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evidence of payment or fails to return such disbursement amount as stated above,
then such failure, in either case, shall at Lender's option, constitute an immediate
Event of Default), such Officers' Certificate to be accompanied by lien waivers or
other evidence of payment satisfactory to Lender, (d) Lender shall have received
such other evidence as Lender shall reasonably request that the Required Repairs
at the Property to be funded by the requested disbursement have been completed
or partially completed to the extent of the disbursement made and will be paid in
accordance with the terms hereof and (e) if requested by Lender, a satisfactory
inspection of the Property by Lender or Lender's consultant at Borrower's
expense to verify the completion of the Required Repairs in accordance with this
Agreement. Lender shall not be required to make disbursements from the
Required Repair Account with respect to the Property unless such requested
disbursement is in an amount greater than $25,000 (or a lesser amount if the total
amount in the Required Repair Account is less than $25,000, in which case only
one disbursement of the amount remaining in the account shall be made). Lender
shall not be obligated to make disbursements from the Required Repair Account
with respect to the Property in excess of the amount allocated for the Property as
set forth on Schedule II hereof. If Borrower completes any one or more
individual line items ofRequired Repairs for the Property as set forth on Schedule
II hereto, and delivers to Lender an Officer's Certificate stating, and describing in
reasonable detail, that there has been a savings as a result of the completion any
one or more individual line items, then Borrower shall have the right, without the
approval of Lender, but with prompt written notice to Lender, to reallocate such
savings to another line item of Required Repairs for the Property set forth on
Schedule II hereto. Upon Borrower's completion of all Required Repairs to the
satisfaction of Lender (provided Borrower has supplied Lender with evidence
satisfactory to Lender of payment of all Required Repairs applicable to the
Property and, if requested by Lender, waivers of liens and/or, in the case of
Required Repairs greater than $250,000.00, a title search of the Property or an
endorsement to the mortgagee's title insurance policy), any funds then remaining
in the Required Repair Account shall be deposited by Lender into the Debt
Service Shortfall Reserve Account. Upon (1) the payment in full by Borrower of
all sums evidenced by the Note and secured by the Pledge Agreement, or (2)
release of the Property in accordance with the provisions of Section 2.5 hereof,
then in either such case, Lender shall disburse to Borrower all remaining Required
Repair Funds."
(p) Modification to Section 7 .2. Section 7.2 of the Original Loan Agreement is
"Borrower shall pay to Lender on each Payment Date (a) one-twelfth of the Taxes
(the "Monthly Tax Deposit") that Lender reasonably estimates will be payable
during the next ensuing twelve (12) months in order to accumulate with Lender
sufficient funds to pay all Taxes at least thirty (30) days prior to their respective
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due dates; and (b) one-twelfth of the Insurance Premiums (the "Monthly
Insurance Premium Deposit") that Lender reasonably estimates will be payable
for the renewal of the coverage afforded by the Policies upon the expiration
thereof in order to accumulate with Lender sufficient funds to pay all such
Insurance Premiums at least thirty (30) days prior to the expiration of the Policies;
provided, however, that Borrower shall not be required to pay the Monthly
Insurance Premium Deposit for so long as Borrower provides Lender with
evidence that Borrower has made its required monthly insurance payments
directly to the party entitled thereto (said amounts in (a) and (b) above hereinafter
called the "Tax and Insurance Escrow Fund"). In the event Lender shall elect to
collect payments in escrow for Insurance Premiums pursuant to clause (b) above,
Borrower shall pay to Lender an initial deposit to be determined by Lender, in its
sole discretion, to increase the amounts in the Tax and Insurance Escrow Fund to
an amount which, together with anticipated Monthly Insurance Premium
Deposits, shall be sufficient to pay all Insurance Premiums as they become due.
The Tax and Insurance Escrow Fund and the payments of interest or principal or
both, payable pursuant to the Note and this Agreement, shall be added together
and shall be paid as an aggregate sum by Borrower to Lender. Lender will apply
the Tax and Insurance Escrow Fund to payments of Taxes and Insurance
Premiums required to be made by Borrower pursuant to Sections 5.1.2 and Q.J_
hereof, respectively. Lender shall have the right to, and subject to the foregoing
requirements, shall withdraw funds from the Tax Account to pay Taxes on or
before the date Taxes are due and payable. Lender shall have the right to, and
subject to the foregoing requirements, shall withdraw funds from the Insurance
Premium Account to pay Insurance Premiums on or before the date Insurance
Premiums are due and payable. So long as no Event of Default is then
continuing, Lender shall disburse funds from the Tax Account to pay Taxes and
the Insurance Premium Account to pay Insurance Premiums in accordance with
Borrower's written request therefore on the Business Day following Lender's
receipt of such request. In making any payment relating to the Tax and Insurance
Escrow Fund, Lender may do so according to any bill, statement or estimate
procured froni the appropriate public office (with respect to Taxes) or insurer or
agent (with respect to Insurance Premiums), without inquiry into the accuracy of
such bill, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof If the amount of the Tax and
Insurance Escrow Fund shall exceed the amounts due for Taxes and Insurance
Premiums pursuant to Sections 5 .1.2 and ti hereof, respectively, Lender shall, in
its sole discretion, return any excess to Borrower or credit such excess against
future payments to be made to the Tax and Insurance Escrow Fund. Any amount
remaining in the Tax and Insurance Escrow Fund after the Debt has been paid in
full shall be returned to Borrower. If at any time Lender reasonably determines
that the Tax and Insurance Escrow Fund is not or will not be sufficient to pay
Taxes and Insurance Premiums by the dates set forth in (a) and (b) above, Lender
shall notifY Borrower of such determination and Borrower shall increase its
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monthly payments to Lender by the amount that Lender estimates is sufficient to
make up the deficiency at least thirty (30) days prior to delinquency of the Taxes
and/or thirty (30) days prior to expiration of the Policies, as the case may be.
Notwithstanding the foregoing, Borrower shall be relieved of its obligation to
make deposits of Taxes and Insurance Escrow Funds under this Agreement and
Lender shall not be entitled to demand that Borrower establish such reserves with
Lender, provided that (x) Mortgage Borrower is required to and does make or
cause to be made monthly deposits to a taxes and insurance escrow fund pursuant
to Section 6 of the Security Instrument and (y) Lender receives evidence
reasonably acceptable to it of the making of such deposits (it being agreed that
such evidence provided by the servicer of the Mortgage Loan shall be deemed
reasonably acceptable)."
( q) Modification to Section 7.3 .1. Section 7.3 .1 of the Original Loan Agreement is
"On each Payment Date, Borrower shall pay to Lender an amount equal to the
greater of (a) four percent (4%) of the Gross Income from Operations for the
penultimate calendar month (i.e. if the Payment Date is in July, Borrower would
use Gross Income from Operations in May) and (b) the amount required by the
Management Agreement or the Franchise Agreement (the "Required FF&E
Reserve Amount"). Amounts so deposited shall hereinafter be referred to as the
"FF&E Reserve Fund." Notwithstanding the foregoing, Borrower shall pay to
Lender (i) on July 31, 2009, an amount equal to $0.00, representing the Required
FF&E Reserve Amount due on the Payment Date in June, 2009 and (ii) on the
Payment Date occurring in August, 2009, the Required FF&E Reserve Amount
that was required under this Section to be paid on the Payment Date occurring in
July, 2009. Notwithstanding the foregoing, Borrower shall be relieved of its
obligation to make deposits of FF&E Reserve Funds under this Agreement and
Lender shall not be entitled to demand that Borrower establish such reserves with
Lender, provided that (x) Mortgage Borrower is required to and does make or
cause to be made monthly deposits to a replacement reserve fund pursuant to
Section 2(a) of the Security Instrument and (y) Lender receives evidence
reasonably acceptable to it of the making of such deposits (it being agreed that
such evidence provided by the servicer of the Mortgage Loan shall be deemed
reasonably acceptable)."
(r) Modification of Section 7.3.2. Section 7.3.2 of the Original Loan Agreement is
"Lender shall make disbursements from the FF&E Reserve Account as requested
by Borrower to pay FF&E Expenditures consistent with the Annual Budget or
Approved Annual Budget, as applicable, no more frequently than once in any
thirty (30) day period of no less than $5,000 upon delivery by Borrower of
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Lender's standard form of draw request accompanied by copies of paid invoices
for the amounts requested and, if required by Lender for requests in excess of
$50,000 for a single item, lien waivers and releases (for the work invoiced for)
from all parties furnishing materials and/ or services in connection with the
requested payment; provided, however, that Borrower may submit unpaid
invoices (rather than paid invoices) with Borrower's request for disbursement
from the FF&E Reserve Account pursuant to this Section 7.3.2 provided that
Borrower hereby agrees to submit to Lender, within five (5) Business Days after
such disbursement, evidence acceptable to Lender in its reasonable discretion that
such invoice has been paid in full within such five (5) Business Day period and if
Borrower fails to make such payment within such period, then Borrower hereby
agrees to return such disbursement amount to Lender, together with any interest
earned thereon, on the Business Day immediately succeeding such five (5)
Business Day period for deposit into the FF &E Reserve Account, and if Borrower
fails to provide such evidence of payment or fails to return such disbursement
amount as stated above, then such failure, in either case, shall, at Lender's option,
constitute an immediate Event of Default. Lender may require an inspection of
the Property at Borrower's expense prior to making a monthly disbursement in
order to verify completion of replacements and repairs of items in excess of
$250,000 in the aggregate for which reimbursement is sought. Any amounts
remaining in the FF&E Reserve Account after the Debt has been paid in full shall
be returned to Borrower."
(s) Modification of Section 7.4.1. Section 7.4.1 of the Original Loan Agreement is
"Amounts deposited with Lender to perform the Required Capital Improvements
for the Property shall be held by Lender in accordance with Section 7.8 hereof
Amounts so deposited shall hereinafter be referred to as Borrower's "Required
Capital Improvements Fund." Borrower shall perform the Required Capital
Improvements at the Properties, as more particularly set forth on Schedule V
hereto. Upon the occurrence of an Event of Default, Lender, at its option, may
withdraw all Required Capital Improvements Funds from the Required Capital
Improvements Account and Lender may apply such funds either to completion of
the Required Capital Improvements at the Property or toward payment of the Debt
in such order, proportion and priority as Lender may determine in its sole
discretion. Lender's right to withdraw and apply Required Capital Improvements
Funds shall be in addition to all other rights and remedies provided to Lender
under this Agreement and the other Loan Documents."
(t) Modification of Section 7.4.2. Section 7.4.2 of the Original Loan Agreement is
"Lender shall disburse to Borrower the Required Capital Improvements Funds
from the Required Capital Improvements Account from time to time upon
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satisfaction by Borrower of each of the following conditions: (a) Borrower shall
submit a written request for payment to Lender at least thirty (30) days prior to
the date on which Borrower requests such payment be made and specifies the
Required Capital Improvements to be paid, (b) on the date such request is
received by Lender and on the date such payment is to be made, no Default or
Event of Default shall exist and remain uncured, (c) Lender shall have received an
Officers' Certificate (i) stating that all Required Capital Improvements at the
Property to be funded by the requested disbursement have been completed in
good and workmanlike manner and, to the best of Borrower's knowledge, in
accordance with all Legal Requirements and Environmental Laws, such certificate
to be accompanied by a copy of any license, permit or other approval by any
Governmental Authority required to commence and/or complete the Required
Capital Improvements, (ii) identifYing each Person that supplied materials or
labor in connection with the Required Capital Improvements performed at the
Property with respect to the reimbursement to be funded by the requested
disbursement, and (iii) stating that each such Person has been paid in full for
amounts then owing upon such disbursement or shall be paid within five (5)
Business Days after such disbursement (provided that Borrower hereby agrees to
submit to Lender evidence acceptable to Lender in its reasonable discretion that
each such Person has been paid in full for amounts then owing and if Borrower
fails to make such payment, then Borrower hereby agrees to return such
disbursement, together with any interest earned thereon, on the Business Day
immediately succeeding such five (5) Business Day period for deposit into the
Required Capital Improvement Fund, and if Borrower fails to provide such
evidence of payment or fails to return such disbursement amount as stated above,
then such failure, in either case, shall, at Lender's option, constitute an immediate
Event of Default), such Officers' Certificate to be accompanied by lien waivers or
other evidence of payment satisfactory to Lender, (d) Lender shall have received
such other evidence as Lender shall reasonably request that the Required Capital
Improvements at the Property to be funded by the requested disbursement have
been completed or partially completed to the extent of the disbursement made and
will be paid for in accordance with the terms hereof and (e) if requested by
Lender, a satisfactory inspection of the Property by Lender or Lender's consultant
at Borrower's expense to verify completion of the Required Capital
Improvements in accordance with this Agreement. Lender shall not be required
to make disbursements from the Required Capital Improvements Account with
respect to the Property unless such requested disbursement is in an amount greater
than $25,000 (or a lesser amount if the total amount in the Required Capital
Improvements Account is less than $25,000, in which case only one disbursement
of the amount remaining in the account shall be made). Lender shall not be
obligated to make disbursements from the Required Capital Improvements
Account with respect to the Property in excess of the amount allocated for the
Property as set forth on Schedule V hereof If Borrower completes any one or
more individual line items of Franchisor Required PIP Work for the Property as
-24-
set forth on Schedule V hereto, and delivers to Lender an Officer's Certificate
stating, and describing in reasonable detail, that there has been a savings as a
result of the completion of any one or more individual line items, then Borrower
shall have the right, without the approval of Lender, to reallocate such savings to
another line item of Franchisor Required PIP Work for the Property set forth on
Schedule V hereto so long as the total amount of funds used for all Franchisor
Required PIP Work for the Property, in the aggregate, does not exceed the total
cost of all Franchisor Required PIP Work for the Property set forth on Schedule V
hereto. Upon Borrower's or Mortgage Borrower's completion of all Required
Capital Improvements to the satisfaction of Lender (provided Borrower has
supplied Lender with evidence satisfactory to Lender of payment of all Required
Capital Improvements applicable to the Property and, if requested by Lender,
waivers of liens and/or, in the case of Required Capital Improvements greater
than $250,000.00, a title search of the Property or an endorsement to mortgagee's
title insurance policy), any funds held in the Required Capital Improvements
Account shall be deposited into the Debt Service Shortfall Reserve Account.
Upon the earlier of (1) payment in full by Borrower of all sums evidenced by the
Note and secured by the Pledge Agreement and release by Mortgage Lender of
the lien of the Security Instrument, or (2) release of the Property in accordance
with the provisions of Section 2.5 hereof, then in either such case, Lender shall
disburse to Borrower all remaining Required Capital Improvements Funds."
(u) Deletion of Section 7.4.4. Section 7.4.4 of the Original Loan Agreement is
[Intentionally Omitted].
(v) Modification of Section 7.6. Section 7.6 of the Original Loan Agreement is
"Debt Service Shortfall Reserve Fund. Amounts shall be deposited into the Debt
Service Shortfall Reserve Account pursuant to Section 3.2{d) hereof, Section
3.5{i) hereof, Section 7.1.2 hereof, Section 7.4.2 hereof, Section 8.l(a)(xxvii)
hereof and Section 26 of the Fifth Amendment to Loan Agreement. Any and all
amounts deposited into the Debt Service Shortfall Reserve Account are referred to
herein collectively as the "Debt Service Shortfall Reserve Fund." Provided that
an Event of Default shall not have occurred and be continuing, Lender shall
advance portions of the Debt Service Shortfall Reserve Fund and apply the same
to the Monthly Debt Service Payment Amounts upon written request of
Borrower."
(w) Modification of Section 8.l(a)(i). Section 8.1(a)(i) of the Original Loan
-25-
"if any portion of the Debt is not paid on or before the date the same is due and
payable, except as set forth in Section 2.2.1(a) hereof;"
(x) Modification ofSection 8.1(a)(xxvii). Section 8.1(a)(xxvii) of the Original Loan
"if, in Lender's reasonable determination, based on Lender's review of the
"G&A" report prepared by Borrower and required to be delivered to Lender
hereunder (which "G&A" report shall include all "G&A" expenses of Innkeepers
USA Limited Partnership and Innkeepers USA Trust (fi'k/a Grand Prix
Acquisition Trust) and the amount thereof allocated to the Property), the "G&A"
expenses allocated to the Property exceeds the ratio of the earning before interest,
taxes, depreciation and amortization ("EBITDA") for the Property to the total
EBITDA for Innkeepers USA Trust and all of its subsidiaries (such ratio, the
"EBITDA Ratio"), and by the earlier of four (4) Business Days after (i) receipt
by Borrower of notice from Lender of such determination and (ii) the date on
which Borrower should have reasonably known that such expenses allocated to
the Property exceeded such ratio, Borrower fails to pay, or cause to be paid, from
funds generated by assets or properties other than the Property, an amount equal
to the Excess Cash Flow that would have been payable pursuant to the Section
3.5(i) herein if the allocation of "G&A" expenses allocated to the Property was
equal to or less than the EBITDA Ratio, but was not paid due to an over-
allocation of "G&A" expenses to the Property, which amount shall be paid to
Lender for deposit into the Debt Service Shortfall Reserve Account;"
(y) Modification of Section 1 0.26. Section 10.26 of the Original Loan Agreement is
"Notwithstanding anything which may be contained in this Agreement to the
contrary, Lender shall have:
(a) the right to routinely consult with Borrower's management regarding the
significant business activities and business and fmancial developments of
Borrower. Consultation meetings should occur at Lender's request on a regular
basis (no more frequently than quarterly) with Lender having the right to call
special meetings at any reasonable times and upon reasonable advance notice;
(b) the right, in accordance with the terms of this Agreement, to examine the
books and records of Borrower at any time upon reasonable notice;
(c) the right, without restricting any other rights of Lender under this
Agreement (including any similar right), to approve any acquisition by Borrower
of any assets other than the Collateral and other than such assets as shall be used
solely in connection with the management and operation of the Collateral;
-26-
(d) the right, in accordance with the terms of this Agreement, to receive
monthly, quarterly and year end fmancial reports, including balance sheets,
statements of income, shareholder's equity and cash flow, a management report
and schedules of outstanding indebtedness;
(e) the right to have monthly meetings with the Borrower's management, the
Manager and the Operating Lessee; provided, however, that with respect to
Manager's attendance at such monthly meetings, Borrower shall request that
Manager attend such meetings with the Lender, it being agreed that the failure of
Manager to attend such meetings shall not be deemed a default under the Loan so
long as Borrower requested that Manager attend such meeting; provided, further
that if Borrower reasonably determines that it is not appropriate for Manager to
attend any such meeting with Lender, Borrower shall have no obligation to
request that Manager attend such meeting provided that in such case Borrower
shall promptly notify Lender of Borrower's rationale for such determination in
reasonable detail; and
(f) the right to receive certain additional fmancial reports and information
determined by Lender to be necessary or desirable for Lender to understand the
fmancial condition of the Property.
The rights described above may be exercised by any entity which owns and
controls, directly or indirectly, substantially all of the interests in Lender."
(z) Deletion of Exhibit A and B. Exhibit A and B to the Original Loan Agreement
are hereby deleted in their entirety and shall be replaced with the following:
(aa) Addition of Exhibit C. The Original Loan Agreement shall be amended to add as
Exhibit C to the Original Loan Agreement Exhibit C attached hereto.
(bb) Addition of Exhibit D. The Original Loan Agreement shall be amended to add as
Exhibit D to the Original Loan Agreement Exhibit D attached hereto.
(cc) Modification of Table of Contents. The Original Loan Agreement shall be
amended to add to the Table of Contents the following:
"Exhibit C- Tenant Direction Letter
Exhibit D - Credit Card Direction Letter"
(dd) Replacement of Schedule II. Schedule II to the Original Loan Agreement entitled
"Required Repairs - Deadlines for Completion" shall be deleted in its entirety and shall be
replaced with the new Schedule II attached hereto as Exhibit E.
2. Deposit to FF&E Reserve Account. Notwithstanding anything in the Loan Documents to
the contrary, on July 31, 2009, Borrower shall pay to Lender $0.00 for deposit into the FF&E
-27-
Reserve Account. Borrower and Lender hereby acknowledge and agree that such deposit
represents the "true-up" amount required to be paid by Borrower for deposit into the FF&E
Reserve Account for the third and fourth calendar quarters of 2008 in accordance with Section
7.3 .1 of the Original Loan Agreement (before giving effect to the amendment to Section 7.3 .1 of
the Original Loan Agreement pursuant to Section 1(q) of this Agreement). Notwithstanding the
foregoing, Borrower shall be relieved of its obligation to make such deposit to the FF&E Reserve
Account if Borrower has provided Lender with evidence reasonably satisfactory to Lender that
Mortgage Borrower has made such deposit to a replacement reserve fund held by Mortgage
Lender pursuant to the Mortgage Loan Documents (it being agreed that such evidence provided
by the servicer of the Mortgage Loan shall be deemed reasonably acceptable).
3. Determination of January 2009 through April2009 Dtmosit to FF&E Reserve Account.
Notwithstanding anything in the Loan Documents to the contrary, Borrower hereby covenants
and agrees that Borrower has provided to Lender on or prior to July 31, 2009 (a) a report of
FF&E Expenditures made at the Property during the period commencing on January 1, 2009 and
ending on and including April 30, 2009 (which report shows the type of FF&E and amount of
FF&E Expenditures made with respect to the Property) and (b) evidence reasonably satisfactory
to Lender that Borrower has caused Mortgage Borrower to make FF&E Expenditures with
respect to the Property in an amount equal to or greater than the Required FF&E Reserve
Amount (before giving effect to the amendment to Section 7.3.1 of the Original Loan Agreement
pursuant to Section l(q) of this Agreement) during the period commencing on April 1, 2008 and
ending on and including April 30, 2009. In the event that Borrower has not caused Mortgage
Borrower to make FF&E Expenditures with respect to the Property at least equal to such
Required FF&E Reserve Amount during the period commencing on April 1, 2008 and ending on
and including April30, 2009, Borrower hereby covenants and agrees that Borrower shall pay to
Lender for deposit into the FF&E Reserve Account the payment amount for the period
commencing on January 1, 2009 and ending on and including April 30, 2009 equal to the
difference between (i) such Required FF&E Reserve Amount and (ii) the amount of FF&E
Expenditures with respect to the Property actually made by Mortgage Borrower during the
period commencing on April 1, 2008 and ending on and including April 30, 2009 no later than
five (5) calendar days after Lender has determined such amount and notified Borrower of the
same in writing; it is acknowledged and agreed by the parties hereto that Borrower has paid the
"true-up" amount required to be paid by Borrower for deposit into the FF&E Reserve Account
for the third and fourth calendar quarters of 2008 pursuant to Section 2 of this Agreement and
that the payment required to be made by Borrower pursuant to this Section 3 represents the "true-
up" amount for the first calendar quarter of2009 and April2009. Borrower's failure to satisfy
the requirements of this Section shall, at Lender's option, constitute an immediate Event of
Default. Notwithstanding the foregoing, Borrower shall be relieved of its obligation to make
such deposit to the FF&E Reserve Account if Borrower has provided Lender with evidence
reasonably satisfactory to Lender that Mortgage Borrower has made such deposit to a
replacement reserve fund held by Mortgage Lender pursuant to the Mortgage Loan Documents
(it being agreed that such evidence provided by the servicer of the Mortgage Loan shall be
deemed reasonably acceptable).
-28-
4. Liens. Borrower represents and warrants that to Borrower's knowledge after due inquiry
with the general manager of the Property, (a) no Liens are currently filed against the Property,
(b) there is no litigation (other than litigation covered by insurance) concerning the Property or
any part thereof that would, if adversely determined, have a material adverse effect on the
condition (financial or otherwise) or business of Borrower, Mortgage Borrower, Operating
Lessee or the condition or ownership of the Property or the Collateral and (c) there are no
material claims or disputes concerning the Property or any part thereof (other than material
claims or disputes covered in full by insurance).
5. [Intentionally Omitted].
6. Transfers. Notwithstanding anything in the Loan Documents to the contrary, Borrower
covenants and agrees that, at all times that the Loan is outstanding, unless otherwise consented to
by Lender in Lender's sole and absolute discretion, Apollo shall (a) own, directly or indirectly, at
least fifty-one percent (51%) of the common equity interests and voting rights in Borrower,
Guarantor and Operating Lessee and (b) control Borrower, Guarantor and Operating Lessee.
7. Conditions to Effectiveness of this Agreement. The effectiveness of this Agreement shall
be conditioned on:
(a) Borrower having obtained the written consent of Mortgage Lender to this
Agreement and Lender covenants to use commercially reasonable efforts, at Borrower's
sole cost and expense, to obtain such consent and Borrower agrees to cooperate with
Lender in all such efforts; and
(b) Borrower paying to Lender all of Lender's reasonable out-of-pocket costs and
expenses relating to this Agreement and the prior amendments.
8. Amendment to Other Loan Documents. Each of the Loan Documents (other than the
Loan Agreement) is hereby amended such that all references therein to the "Loan Agreement"
shall be deemed to refer to the Original Loan Agreement as amended by this Agreement, and as
the same may be subsequently further amended, modified, supplemented, extended,
consolidated, replaced, exchanged or otherwise changed.
9. No Offsets or Defenses. Each Borrower Party hereby acknowledges, confirms and
warrants to Lender that as of the date hereof, to each Borrower Party's knowledge, without
independent investigation, no Borrower Party has any claims or any offset, defense, claim, right
of set-off or counterclaim against Lender under, arising out of or in connection with this
Agreement, the Loan Agreement, the Note, or any of the other Loan Documents to which any
such Borrower Party is a party, including without limitation, the Guaranty, the Payment and
Performance Guaranty and the Environmental Indemnity Agreement.
10. Enforceability. Each Borrower Party represents and warrants that, this Agreement
constitutes the legal, valid and binding obligation of such Borrower Party, enforceable against
-29-
such Borrower Party in accordance with its terms, subject to bankruptcy, insolvency and other
limitations on creditors' rights generally and to equitable principles.
11. Organization. Each Borrower Party represents and warrants that as of the date hereof,
such Borrower Party (a) is a duly organized and validly existing limited liability company,
corporation or other corporate entity, as the case may be, in good standing under the laws of the
State of its formation, (b) has the requisite power and authority to carry on its business as now
being conducted, (c) is duly qualified to do business in each jurisdiction in which the nature of its
business makes such qualification necessary or desirable, and (d) has the requisite power to
execute and deliver, and perform its obligations (if any) under, this Agreement.
12. Authorization of Borrower Parties. Each Borrower Party represents and warrants that as
of the date hereof, the execution and delivery by such Borrower Party of this Agreement and
such Borrower Party's performance of its obligations hereunder (a) have been duly authorized by
all requisite action on the part of such Borrower Party, (b) will not violate any provision of any
applicable legal requirements, decree, injunction or demand of any court or other governmental
authority, any organizational document of such Borrower Party or any indenture or agreement or
other instrument known to such Borrower Party to which such Borrower Party is a party or by
which such Borrower Party is bound, (c) 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 such
Borrower Party pursuant to, any such indenture or agreement or instrument and (d) have been
duly executed and delivered by such Borrower Party. Except for those obtained or filed on or
prior to the date hereof, no Borrower Party 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
this Agreement. This Agreement has been duly authorized, executed and delivered by each
Borrower Party.
13. Reaffrrmation of Loan Documents. In connection with this Agreement; Borrower hereby
(a) unconditionally ratifies and confirms, renews and reaffrrms all of Borrower's obligations
under the Loan Documents to which it is a party, as specifically modified by this Agreement, (b)
acknowledges and agrees that such obligations remain in full force and effect, binding on and
enforceable against Borrower in accordance with the terms, covenants and conditions of the
Loan Documents to which it is a party, as specifically modified by this Agreement, without
impairment, and Borrower remains unconditionally liable to Lender in accordance with the
terms, covenants and conditions of the Loan Documents to which it is a party, as specifically
modified by this Agreement, (c) ratifies and confrrms, renews and reaffrrms in all respects and
without condition, all of the terms, covenants and conditions set forth in the Loan Documents to
which it is a party, as specifically modified by this Agreement, and (d) represents and warrants
that all representations and warranties contained in the Loan Documents to which it is a party,
are true and correct in all material respects as if made on the date hereof and are not limited in
any way by the representations and warranties set forth in this Agreement. This Agreement
constitutes a Loan Document as defined herein.
-30-
14. Reaffirmation of Guarantor. In connection with this Agreement, Guarantor hereby (a)
unconditionally ratifies and confirms, renews and reaffirms all of Guarantor's obligations under
the Loan Documents to which it is a party (the "Guarantor Documents"), as specifically
modified by this Agreement, (b) acknowledges and agrees that such obligations remain in full
force and effect, binding on and enforceable against Guarantor in accordance with the terms,
covenants and conditions of such Guarantor Documents, as applicable, as specifically modified
by this Agreement, without impairment, and Guarantor remains unconditionally liable to Lender
in accordance with the terms, covenants and conditions of such Guarantor Documents, as
specifically modified by this Agreement, (c) ratifies and confirms, renews and reaffirms in all
respects and without condition, all of the terms, covenants and conditions set forth in the
Guarantor Documents, as specifically modified by this Agreement and (d) represents and
warrants that all representations and warranties made by Guarantor contained in the Guarantor
Documents are true and correct in all material respects as if made on the date hereof.
15. Reaffirmation of Operating Lessee. In connection with this Agreement, Operating
Lessee hereby (a) unconditionally ratifies and confirms, renews and reaffrrms all of Operating
Lessee's obligations under the Assignment of Management Agreement and the Operating Lease
Subordination, as specifically modified by this Agreement, (b) acknowledges and agrees that
such obligations remain in full force and effect, binding on and enforceable against Operating
Lessee in accordance with the terms, covenants and conditions of the Assignment of
Management Agreement and the Operating Lease Subordination, as applicable, as specifically
modified by this Agreement, without impairment, and such Operating Lessee remains
unconditionally liable to Lender in accordance with the terms, covenants and conditions of the
Assignment of Management Agreement and the Operating Lease Subordination, as specifically
modified by this Agreement, (c) ratifies and confirms, renews and reaffirms in all respects and
without condition, all of the terms, covenants and conditions set forth in the Assignment of
Management Agreement and the Operating Lease Subordination, as specifically modified by this
Agreement, (d) represents and warrants that all representations and warranties made by such
Operating Lessee contained in the Assignment of Management Agreement and the Operating
Lease Subordination are true and correct in all material respects as if made on the date hereof,
and (e) consents to this Agreement.
16. Survival of Representations and Warranties. Without in any way limiting any provision
of any Loan Document which provides for a longer period of survival, each Borrower Party
hereby agrees that (a) all representations and warranties made by such Borrower Party in this
Agreement shall continue for so long as any amount remains owing to Lender under the Note or
any of the other Loan Documents to which it is a party, and (b) all representations, warranties,
covenants and agreements made in this Agreement shall be deemed to have been relied upon by
Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its
behalf.
17. Modifications. This Agreement may not be amended, modified or otherwise changed in
any manner except by a writing executed by Lender and Borrower.
-31-
18. Further Assurances. Each Borrower Party shall execute and deliver such further
instruments and perform such further acts as may be reasonably requested by Lender from time
to time to confirm the provisions of this Agreement and the Loan Documents, to carry out more
19. Severability. If any term or provision of this Agreement shall be held to be illegal,
invalid or unenforceable in any respect, then such term or provision shall be fully severable from
this Agreement; this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable term or provision had never been a part of this Agreement and the remaining
terms and provisions of this Agreement shall remain in full force and effect and shall not be
affected by such illegal, invalid or unenforceable term or provision or by its severance from this
Agreement.
20. Successors and Assigns. This Agreement applies to, inures to the benefit of, and binds all
parties hereof, their heirs, legatees, devisees, administrators, executors, and permitted successors
and assigns.
21. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State ofNew York pursuant to Section 5-1401 ofthe New York General
Obligations Law.
22. Entire Agreement. This Agreement constitutes all of the agreements among the parties
relating to the matters set forth herein and supersedes all other prior or concurrent oral or written
letters, agreements and understandings with respect to the matters set forth herein.
23. Full Force and Effect. The Loan Documents remain in full force and effect. None ofthe
representations, warranties or covenants contained herein shall in any way limit any
representation, warranty or covenant contained in any other Loan Document.
24. Counterparts. This Agreement may be signed in any number of counterparts by the
parties hereto, all of which taken together shall constitute one and the same instrument.
25. Interest Rate Cap. Lender hereby acknowledges and agrees that the Assignment of
Interest Rate Cap shall be terminated as of June 15, 2009 and as of June 15, 2009 shall be of no
further force and effect, and that following such termination of the Assignment of Interest Rate
Cap, Lender shall arrange for the Interest Rate Cap to be promptly returned to Borrower.
26. Excess Cash Flow Shortfalls. If Lender shall determine in its reasonable discretion
(based on, among other things, Lender's review of the fmancial reports delivered by Borrower
pursuant to Section 27 herein), that Borrower has failed to deposit with Lender the full amount of
Excess Cash Flow required to be deposited with Lender pursuant to Section 3.5(i) of the Loan
Agreement for any reason other than the circumstances described in Section 8.1(a)(xxvii) of the
Loan Agreement, then within two (2) Business Days of receipt of notice from Lender of such
failure, Borrower shall pay to Lender the shortfall amount for deposit into the Debt Service
-32-
Shortfall Reserve Account. Borrower's failure to satisfy the requirements of this Section shall, at
Lender's option, constitute an immediate Event ofDefault.
27. Excess Cash Flow Reports. Borrower hereby covenants and agrees that Borrower shall,
within thirty (30) days after the end of each calendar month, deliver to Lender a written
calculation of the Excess Cash Flow together with a monthly reconciliation of the actual versus
budgeted Gross Income from Operations and Operating Expenses, a variance analysis report, an
aged payables report, a so called "G&A" report (which "G&A" report shall include all "G&A"
expenses of Innkeepers USA Limited Partnership and Innkeepers USA Trust (fi'k/a Grand Prix
Acquisition Trust) and the amount thereof allocated to the Property, which amount allocated to
the Property shall not exceed the ratio of the EBITDA for the Property to the total EBITDA for
Innkeepers USA Trust and all of its subsidiaries) and other supporting materials reasonably
requested by Lender, each in form and substance reasonably acceptable to Lender. Borrower's
failure to satisfY the requirements of this Section shall, at Lender's option, constitute an
immediate Event of Default subject to Borrower's right to cure any such failure within four (4)
Business Days of receipt of notice from Lender of such failure, provided that Borrower shall
only be entitled to two (2) cure rights for each twelve (12) consecutive calendar month period
commencing on the date hereof.
28. Consent to First Amendment to Management Agreement. Lender hereby consents to that
certain Amendment to Hotel Management Agreement, dated as of May 1, 2008, by and between
Operating Lessee and Island Hospitality Management, Inc., a Florida corporation (the
"Management Agreement Amendment"). Each Borrower Party and Lender hereby
acknowledge and agree that Lender's consent to the Management Agreement Amendment is a
one-time consent restricted to the Management Agreement Amendment pursuant to the terms
and conditions of this Agreement. Such consent is limited to the Management Agreement
Amendment as described herein and shall not constitute a consent or waiver of any right, remedy
or power to Lender pursuant to the Loan Agreement, any of the other Loan Documents, or
otherwise.
-33-
lN WITNESS WHEltEOF, the parties heretO have executed this Fifth
Amendment to Mr:z:z.anine Loan .Agreemem and Other Loan Documents as of the date first .
writtc:n above.
BORROWER:
GRAND PRIX MEZZBORROWER TERM
U.C, a Delaware limited liability company
Sr.
Name: binrii
Title: oJ.aie:P
LENDER:
LEHMAN ALI INC.,
By:
Name:
Titk..
[Signatures contimled on following page]
[Sigrulture Page to Flfih.Amendment to Mczranine Loan Agreement and Other Loan Documents
(ADaheim)]
TN WITNESS WHEREOF, the parties hereto have executed this Fifth
Amendment to Mezzanine Loan Agreement and Other Loan Documents as of the date first
written above.
BORROWER:
By:
Name:
Title:
LENDER:
LEHMAN ALI INC.,
(Signature Page to Fifth Amendment to Mezzanine Loan Agreement and Other Loan Documents
(Anaheim)]
i
The undermgned Guarantor hereby agrees to
Sections 5, 9, 10, 11, 12, 14, 16, 18 and 28 ofthe
foregoing Agreernent to as of the date first written
above_
GUARANTOR:
[Signj Page tc J'ifth Amendment tc M_..U,e L o a n ~ and Other LoanDoOUDICills
--- -, (Anabeim)J
' -
I
The undersigned Operating Lessee hereby agrees to
Sections 5, 9, 10, 11, 12, 15, 16, 18 and 28 ofthe
foregoing Agreement as of the date first written
above.
OPERATING LESSEE:
[Fifth Amendment to Mezzanine Loan Agreement]
[Signature Page to Fifth Amendment to Mezzanine Loan Agreement and Other Loan Documents
(Anaheim)]
fAddressee]
Exhibit C
Tenant Notice Letter
TENANT DIRECTION LETTER
July 31, 2009
Re: Payment Direction Letter for Hilton Suites Anaheim, Orange, California
(the "Property")
Dear ._I _ _.l:
GRAND PRIX MEZZ BORROWER TERM LLC, a Delaware limited liability company
("Borrower"), the owner of 100% of the equity interests in the Property, has granted a first
priority security interest in such equity interests to LEHMAN ALI INC., a Delaware
corporation (together with its successors and assigns, "Lender") and has agreed that all rents due
for the Property will be paid directly to a bank selected by Borrower and approved by Lender.
Therefore, from and after the date hereof, all rent to be paid by you under the Lease between
Borrower and you (the "Lease") should be sent directly to the following address:
By wire transfer only to:
Ban1c Wells Fargo Bank, N.A.
ABA No.: 121 000 248
Account No.: 4944935063
Account Name: GRAND PRIX MEZZ BORROWER TERM LLC FBO
LEHMAN ALI INC.
These payment instructions cannot be withdrawn or modified without the prior written consent
of Lender or its agent ("Servicer"), or pursuant to a joint written instruction from Borrower and
Lender or Servicer.
If you have any questions concerning this letter, please contact Marc Beilinson of Borrower at
(310) 990-2990 or Michael Lascher of Lender at (646) 333-8714. We appreciate your
cooperation in this matter.
By:
Name:
Title:
EXIDBITD
Credit Card Company Notice Letter
July 31, 2009
[ADDRESSEE)
Re: Payment Direction Letter for Hilton Suites Anaheim Orange, California (the "Property")
[VISNMASTERCARD/ AMERICAN EXPRESS/ DISCOVER Account No:
To Whom it May Concern:
A new cash management system has been adopted in connection with our loan from Lehman
ALI Inc., a Delaware corporation, its successors and/or assigns ("Lender"). Consequently, from
and after the date of this letter, all payments due the undersigned should be delivered as follows:
(a) Ifby check, money order, or its equivalent, please mail such items to:
Attention:
-------
(b) If by wire transfer to:
Payee:
ABA Routing #:
For Accornit: Account #:
Bank Contact:
This payment direction may not be rescinded or altered, except by a written direction signed by
Lender or its agent.
We appreciate your cooperation.
Very truly yours,
By:
Name:
Title: -
EXHIBITE
ScheduleD
[See Attached]
Property Category Immediate Repairs ltomo Repair Cost@ Repair Coat@ Timing
100% 125%
Hilton Suites Anaheim Immediate Repalro ADA Accessibility Provide required number of $8,220 $10,275 Complete at the earlier of 180 days from the date of the
accessible, roll-In, guestroom showero ($6,000, Flf\h Amendment to the Loan Agreement. as required by
3 showers), adequate number of designated regulatory authorlUes or as required by the PIP (If
parking stalls and slgnage for vans ($220), applicable)
modify front desk for accesslbllty ($t,OOO) and
add strobe light In women's and men's lavatory
room ($1,000).
'-------

US2008 1530791.1
EXHIBIT R

Promissory Note (Mezzanine Loan) in the Amount of $21,300,000 Dated June 29, 2007 Between
Grand Prix Mezz Borrower Term LLC, as Borrower and Lehman ALI Inc., as Lender

$21,300,000
PROMISSORY NOTE
(MEZZANINE LOAN)
(Anaheim)
New York, New York
June 29,2007
FOR VALUE RECEIVED, GRAND PRIX MEZZ BORROWER TERM LLC, a
Delaware limited liability company, having its principal place of business at c/o Apollo
Investment Corporation, 9 West 57th Street, New York, New York 10019, as maker
(''Borrower"), hereby unconditionally promise to pay to the order of LEHMAN ALI INC., a
_Delaware corporation, having an address at 399 Park Avenue, New York, New York 10022, as
payee (''Lender"), or at such other place as the holder hereof may from time to time designate in
writing, the principal sum of TWENTY -ONE MILLION THREE HUNDRED THOUSAND
AND 00/100 DOLLARS ($21,300,000), in lawful money of the United States of America with
interest thereon to be computed from the date of this Note at the Applicable. Interest Rate and to
be paid in accordance with the terms of this Note and that certain Mezzanine Loan Agreement,
dated the date hereof, between Borrower and Lender (such Mezzanine Loan Agreement, as same
may be amended, supplemented, restated or otherwise modified from time to time, is hereinafter
referred to as the "Loan Agreement"). All capitalized terms not defined herein shall have the
respective meanings set forth in the Loan Agreement.
ARTICLE 1- PAYMENT TERMS
Borrower agrees to pay the principal sum of this Note and interest on the unpaid principal
sum of this Note from time to time outstanding at the rates and at the times specified in the Loan
Agreement and the outstanding balance of the principal sum of this Note and all accrued and
unpaid interest thereon shall be due and payable on the Maturity Date.
ARTICLE 2 - DEFAULT AND ACCELERATION
The Debt shall without notice become immediately due and payable at the option of
Lender if any payment required in this Note is not paid on or prior to the date when due or if not
paid on the Maturity Date or on the happening of any other Event of Default and in addition,
Lender shall be entitled to receive interest on the entire unpaid principal sum at the Default Rate
pursuant to the terms of the Loan Agreement. This Article 2, however, shall not be construed as
an agreement or privilege to extend the date of the payment of the Debt, nor as a waiver of any
other right or remedy accruing to Lender by reason of the occurrence of any Event of Default.
ARTICLE 3 - LOAN DOCUMENTS
This Note is secured by the Pledge Agreement and the other Loan Documents. All of the
terms, covenants and conditions contained in the Loan Agreement, the Pledge Agreement and
the other Loan Documents are hereby made part of this Note to the same extent and with the
13697296.3.BUSINESS
(Anaheim)
same force as if they were fully set forth herein. In the event of a conflict or inconsistency
between the terms of this Note and the Loan Agreement, the terms and provisions of the Loan
Agreement shall govern.
ARTICLE 4 - SAVINGS CLAUSE
This Note and the Loan Agreement are subject to the express condition that at no time
shall Borrower be obligated or required to pay interest on the principal balance of the Loan at a
rate which could subject Lender to either civil or criminal liability as a result ofbeing in excess
of the Maximum Legal Rate. If; by the terms of this Note, the Loan Agreement or the other
Loan Documents, Borrower is at any time required or obligated to pay interest on the principal
balance due hereunder at a rate in excess of the Maximum Legal Rate, the Applicable Interest
Rate or the Default Rate,. as the case may be,. shall be deemed to be immediately reduced to the
Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be
deemed to have been payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of
the sums due under the Loan, shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the Loan until payment in full
so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal
Rate of interest from time to time in effect and applicable to the Loan for so long as theLoan is
outstanding.
ARTICLE 5 - NO ORAL CHANGE
This Note may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an
agreement in writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
ARTICLE 6 - WAIVERS
Borrower and all others who may become liable for the payment of all or any part of the
Debt do hereby severally waive presentment and demand for payment, notice of dishonor, notice
of intention to accelerate, notice of acceleration, protest and notice of protest and non-payment
and all other notices of any kind. No release of any security for the Debt or extension of time for
payment of this Note or any installment hereof, and no alteration, amendment or waiver of any
provision of this Note, the Loan Agreement or the other Loan Documents made by agreement
between Lender or any other Person shall release, modify, amend, waive, extend, change,
discharge, terminate or affect the liability of Borrower, and any other Person who may become
liable for the payment of all or any part of the Debt, under this Note, the Loan Agreement or the
other Loan Documents. No notice to or demand on Borrower shall be deemed to be a waiver of
the obligation of the Borrower or of the right of Lender to take further action without further
notice or demand as provided for in this Note, the Loan Agreement or the other Loan
Documents. If the Borrower is a partnership, the agreements herein contained shall remain in
force and be applicable, notwithstanding any changes in the individuals or entities comprising
-2-
13697296.3 .BUSINESS
the partnership, and the term "Borrower," as used herein, shall include any alternate or successor
partnership, but any predecessor partnership and their partners shall not thereby be released from
any liability. If the Borrower is a corporation, the agreements contained herein shall remain in
full force and be applicable notwithstanding any changes in the shareholders comprising, or the
officers and directors relating to, the corporation, and the term "Borrower'' as used herein, shall
include any alternate or successor corporation, but. any predecessor corporation shall not be
relieved of liability hereunder. If the Borrower is a limited liability company, the agreements
herein contained shall remain in force and be applicable, notwithstanding any changes in the
members comprising the limited liability company, and the term "Borrower' as used herein,
shall include any alternate or successor limited liability company, but any predecessor limited
liability company and their members shall not thereby be released from any liability. (Nothing in
the foregoing sentence shall be construed as a consent to, or a waiver of, any prohibition or
restriction on transfers of interests in such partnership, corporation or limited liability company
which may be set forth in the Loan Agreement, the Pledge Agreement or any other Loan
Document.) IfBorrower consists of more than one person or party, the obligations and liabilities
of each such person or party shall be joint and several.
ARTICLE 7 - TRANSFER
Upon the transfer of this Note, Borrower hereby waiving notice of any such transfer,
Lender may deliver all the collateral mortgaged, granted, pledged or assigned pursuant to the
Loan Documents, or any part thereof, to the transferee who shall thereupon become vested with
all the rights herein or under applicable law given to Lender with respect thereto, and Lender
shall thereafter forever be relieved and fully discharged from any liability or responsibility in the
matter; but Lender shall retain all rights hereby given to it with respect to any liabilities and the
collateral not so transferred.
ARTICLE 8 - EXCULPATION
Notwithstanding anything to the contrary contained in this Note, the liability of Borrower
to pay the Debt and for the performance of the other agreements, covenants and obligations
contained herein and in the Pledge Agreement, the Loan Agreement and the other Loan
Documents shall be limited as set forth in Section 9.4 of the Loan Agreement.
ARTICLE 9 - GOVERNING LAW
This Note shall be governed in accordance with the terms and provisions of Section 10.3
of the Loan Agreement.
ARTICLE 10 - NOTICES
All notices or other written communications hereunder shall be delivered in accordance
with Section 10.6 of the Loan Agreement.
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IN WITNESS WHEREOF, Borrower has duly executed this Promissory Note as
of the day and year first above written.
BORROWER:
[Signature Page to Anaheim Promissory Note]

US2008 1530791.1
EXHIBIT S

Pledge and Security Agreement dated as of June 29, 2007 Between Grand Prix Mezz Borrower
Term LLC as Borrower and Lehman ALI, Inc. as Lender (the Pledge and Security
Agreement)
12

12
As set forth in greater detail in the Pledge and Security Agreement, the Limited Liability Company Interest held
by Grand Prix Mezz Borrower Term LLC in KPA HS Anaheim, LLC is uncertificated.
(Anaheim)
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of June 29,2007, made
by GRAND PRIX MEZZ BORROWER TERM LLC, a Delaware limited liability company,
having an office at c/o Apollo Investment Corporation, 9 West 57th Street, New York, New York
10019 ("Pledgor" or "Borrower"), in favor of LEHMAN ALI, INC., a Delaware corporation,
having an address at 399 Park Avenue, New York, New York 10022 (collectively, with its
successors and assigns "Lender").
RECITALS:
WHEREAS, Capmark Bank, as mortgage lender (together with its successors and
assigns, "Mortgage Lender"), is the holder of a loan in the original aggregate principal ammmt
of $13,700,000 (as amended, the "Mortgage Loan") to KPA HS Anaheim LLC, a Delaware
limited liability company ("Mortgage Borrower"), as evidenced by that certain Deed of Trust
Note dated as of June 14, 2005 in favor of Mortgage Lender;
WHEREAS, Pledgor has requested that Lender make a loan to Pledgor in the
original principal amount of $21,300,000.00 (the "Loan") evidenced by that certain Note (as
defined in the Loan Agreement (as defined herein));
WHEREAS, Pledgor is the legal and beneficial owner of 1 00% of the limited
liability company membership interests in the Mortgage Borrower;
WHEREAS, it is a condition precedent to the obligation of Lender to make the
Loan to Pledgor, as borrower under the Loan Agreement, that Pledgor shall have executed and
delivered this Agreement to Lender.
NOW, THEREFORE, in consideration of the premises and to induce Lender to
make the Loan under the Loan Agreement, Pledgor hereby agrees with Lender as follows:
1. Delmed Terms; Rules of Construction.
(a) Terms used herein but not otherwise defined herein shall have the
respective meanings ascribed to them in the Loan Agreement.
(i) The words "hereof', "herein" and ''hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection, schedule and
exhibit references are to this Agreement unless otherwise specified.
(ii) The word "including" when used in this Agreement shall be
deemed to be followed by the words "but not limited to."
(b) As used in this Agreement, the following terms have the meanings set
forth in or incorporated by reference below:
13697508.2
"Agreement" means this Pledge and Security Agreement, as amended,
supplemented or otherwise modified from time to time.
''Borrower" has the meaning ascribed to such term in the Preamble.
"Code" means the Uniform Commercial Code from time to time in effect in the
State ofNew York.
"Collateral" means the Pledged Company Interests and all other items described
in Section 2 hereof.
"Lender" has the meaning ascribed to such term in the Preamble.
"Lien" shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance or charge on the Property, or any portion
thereof or any interest in Mortgage Borrower or Borrower, 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 (unless
otherwise permitted under the Loan Documents), and mechanic's, materialmen's and other
similar liens and encumbrances.
;
"Loan" has the meaning ascribed to such term in the Recitals.
''Loan Agreement" means the Mezzanine Loan Agreement of even date herewith
between Pledgor and Lender, as the same may be amended, restated, replaced, increased,
extended, supplemented or otherwise modified from time to time.
"Loan Documents" means the Note, the Loan Agreement, this Agreement and
the other documents and instruments evidencing, securing or otherwise executed and delivered in
connection with the Loan.
"Mortgage Borrower" has the meaning ascribed to such term in the Recitals.
"Mortgage Borrower Company Agreement" means the operating agreement or
limited liability company agreement ofMortgage Borrower, in effect as of the date hereof, as the
same may be amended or otherwise modified.
"Mortgage Lender" has the meaning ascribed to such term in the Recitals.
"Mortgage Loan" has the meaning ascribed to such term in the Recitals.
"Note" has the meaning ascribed to such term in the Loan Agreement.
"Pledged Company Interests" means all membership interests of Pledgor in
Mortgage Borrower listed on Schedule 1 hereto, together with any and all membership interest
certificates, options or rights of any nature whatsoever which may now exist or may hereafter be
issued or granted by Mortgage Borrower to Pledgor while this Agreement is in effect and
-2-
including, without limitation: (i) all right, title and interest of Pledgor, whether now existing or
hereafter arising, now owned or hereafter acquired, and wherever located in, to and under any
and all organizational documents of. Mortgage Borrower {including, without limitation, the
Mortgage Borrower Company Agreement); (ii) all rights of Pledgor as a member of Mortgage
Borrower or arising from its ownership of membership interests in Mortgage Borrower
(including, without limitation, Pledgor's rights to (A) vote Mortgage Borrower matters, (B) sell,
mortgage or otherwise deal with the Collateral, (C) to make determinations for or on behalf of
Mortgage Borrower, (D) exercise any election or option available to Mortgage Borrower, (E) file
any petition for reorganization or dissolution of Mortgage Borrower and/ or to exercise Mortgage
Borrower's rights as debtor-in-possession in the event Mortgage Borrower files a petition under
Title 11 of the United States Code, and (F) give or receive any notice, consent, amendment,
waiver or approval; together with full power and authority to demand, receive, enforce, execute,
endorse or cash any checks or other payments, or other instruments or orders, to file any claims
and to take any action that in the reasonable judgment of Lender may be necessary or advisable
in connection with any of the foregoing); and (iii) Pledgor's rights, now existing or hereafter
arising or acquired, in the capital of Mortgage Borrower in respect of Pledgor's membership
interests therein and to receive from time to time Pledgor's share of profits, losses, income
surplus, return of capital, and distributions from Mortgage Borrower in respect of Pledgor's
membership interests therein and all other payments, if any, due or to become due to Pledgor in
respect of Pledgor's membership interests in Mortgage Borrower, whether as contractual
obligations, damages, insurance proceeds or otherwise.
"Pledgor" has the meaning ascribed to such term in the Preamble.
"Proceeds" means all "proceeds" as such term is defined in Section 9-102{a)(64)
of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in
any event, shall include, without limitation, all dividends or other income from the Pledged
Company Interests, collections thereon or distributions with respect thereto.
2. Pledge; Grant of Security Interest. Pledgor hereby pledges and grants
to Lender, as collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the Debt, a first priority
security interest in all ofPledgor's right, title and interest in and to the following:
(i) all Pledged Company hiterests;
(ii) all securities, moneys or property representing dividends or interest
on any of the Pledged Company Interests, or representing a distribution in respect of the
Pledged Company Interests, or resulting from a split-up, revision, reclassification or other
like change of the Pledged Company Interests or otherwise received in exchange therefor,
and any subscription warrants, rights or options issued to the holders of, or otherwise in
respect of, the Pledged Company Interests;
(iii) any policy of insurance payable by reason of loss or damage to the
Pledged Company Interests and any other Collateral,
-3-
(iv) all "accounts .. , "general intangibles", "instruments" and
"investment propei-ty" (in each case as defined in the Code) constituting the Collateral
described in the foregoing clauses (i), (ii) and (iii); and
(v) all Proceeds of any of the Collateral described in foregoing clauses
(i), (ii), (iii) and (iv) (including, without limitation, any proceeds of insurance thereon).
3. Representations and Warranties. Pledgor represents and warrants as of
the date hereof that:
(a) no authorization, consent of or notice to any other Person (including,
without limitation, any member, partner or creditor of Pledgor or Mortgage Borrower) that has
not been obtained and is not in full force and effect, is required in connection with the execution,
delivery, performance, validity or enforceability of this. Agreement including, without limitation,
the assignment and transfer by Pledgor of any of the Collateral to Lender or the subsequent
transfer thereof by Lender pursuant to the terms hereof;
(b) the Pledged Company Interests listed on Schedule 1 hereto have been duly
and validly issued and are fully paid and non-assessable and constitute all the issued and
outstanding membership interests in Mortgage Borrower;
(c) Pledgor is the record and beneficial owner of, and has good and
marketable title to, the Pledged Company Interests listed on Schedule 1 hereto free of any and all
Liens or options in favor of, or claims of, any other Person, except the Lien created by this
Agreement and such Pledged Company Interests have not been previously assigned, sold,
transferred or encumbered (except pursuant to this Agreement);
(d) upon the filing of the UCC financing statements referred to in Section 11,
the security interest granted pursuant to this Agreement will constitute a valid, perfected first
priority security interest on the Pledged Company Interests and related Proceeds, enforceable as
such against all creditors of Pledgor and any Persons purporting to purchase any Pledged
Company Interests and related Proceeds from Pledgor, free from any adverse claim;
(e) the principal place of business and chief executive office of Pledgor is c/o
Apollo Investment Corporation, 9 West 57th Street, New York, New York 10019;
(f) the exact name of Pledgor is GRAND PRIX MEZZ BORROWER TERM
LLC;
(g) Pledgor is organized under the laws of the State of Delaware; and
(h) Mortgage Borrower has not elected to "opt in" to Article 8 of the Code
and there currently exist no certificates, instruments or writings representing the Pledged
Company Interests; and
-4-
(j) the Pledged Company Interests (i) are "financial assets" (within the
meaning of Section 8-102(a)(9) of the Code) and (ii) are not credited to a "securities account"
(within the meaning of Section 8-501(a) of the Code).
4. Covenants. Without limiting the provisions of Section 17(1) hereof,
Pledgor covenants and agrees with Lender that, from and after the date of this Agreement until
the Debt (exclusive of any indemnification or other obligations which are expressly stated in any
of the Loan Documents to survive the payment in full of the Note) is paid and performed in full:
(a) If Pledgor shall, as a result of its ownership of the Pledged Company
Interests, become entitled to receive or shall receive any membership certificate or limited
liability company certificate (including, without limitation, any . certificate representing a
dividend or a distribution in connection with any reclassification, increase or reduction of capital
or any certificate issued in connection with any reorganization), option or rights, whether in
addition to, in substitution of, as a conversion of, or in exchange for any of the Pledged Company
Interests, or otherwise in respect thereof, Pledgor shall accept the same as Lender's agent, hold
the same in trust for Lender and deliver the same forthwith to Lender in the exact form received,
duly endorsed by Pledgor to Lender, if required, together with an undated membership interest
power covering such certificate duly executed in blank and with, if Lender so requests, signature
guaranteed, to be held by Lender hereunder as additional security for the Debt. Any sums paid
upon or in respect of the Pledged Company Interests upon the liquidation or dissolution of
Mortgage Borrower shall be paid over to Lender to be held by it hereunder as additional security
for the Debt, and in case any distribution of capital shall be made on or in respect of the Pledged
Company Interests or any property shall be distributed upon or with respect to the Pledged
Company Interests pursuant to the recapitalization or reclassification of the capital of the
Mortgage Borrower or pursuant to the reorganization thereof, the property or capital so
distributed shall be delivered to Lender to be held by it, subject to the terms hereof, as additional
security for the Debt. If any sums of money or property so paid or distributed in respect of the
Pledged Company Interests shall be received by Pledgor, Pledgor shall, until such money or
property is paid or delivered to Lender, hold such money or property in trust for Lender,
segregated from other funds of Pledgor, as additional security for the Debt.
(b) Without the prior written consent of Lender, Pledgor shall not, directly or
indirectly (i) vote to enable, or take any other action to permit, Mortgage Borrower to issue any
membership interests or to issue any other securities convertible into or granting the right to
purchase or exchange for any membership interests in the Mortgage Borrower, or (ii) except as
permitted by the Loan Documents, sell, assign, transfer, exchange or otherwise dispose of, or
grant any option with respect to, the Collateral, or (iii) create, incur, authorize or permit to exist
any Lien or option in favor of, or any claim of any Person with respect to, any of the Collateral,
or any interest therein, except for the Lien provided for by this Agreement. Pledgor shall defend
the right, title and interest of Lender in and to the Collateral against the claims and demands of
all Persons whomsoever and shall take all such other action as is necessary to remove any Lien
or claim on or to the Collateral other than those created hereby.
(c) At any time and from time to time, upon the written request of Lender, and
at the sole expense of Pledgor, Pledgor shall promptly and duly execute, deliver, file and/or
-5-
record such further instruments and documents and take such further actions as Lender may
reasonably request for the purposes of obtaining, creating, perfecting,. validating or preserving
the full benefits of this Agreement and of the rights and powers herein granted including without
limitation filing UCC financing, amendment or continuation statements, provided that the Debt
shall not be increased thereby. Pledgor hereby authorizes Lender to file any such financing
statement, or amendment or continuation statement, without the signature of Pledgor to the
extent permitted by law. If any amount payable under or in connection with any of the Collateral
shall be or become evidenced by any promissory note, instrument or chattel paper, such note,
instrument or chattel paper shall be promptly delivered to Lender, duly endorsed in a manner
satisfactory to Lender, to be held as Collateral pursuant to this Agreement.
(d) Concurrently with the execution of this Agreement, Pledgor shall deliver
to the Pledged Entity written instructions substantially in the form of Exhibit B-1, and shall cause
Mortgage Borrower to deliver to Lender an Initial Transaction Statement in the form of
Exhibit B-2, confirming that Mortgage Borrower has noted the pledge effected by this
Agreement on its books. Pledgor will furnish to Lender from time to time statements and
schedules further identifying and describing the Pledged Company Interests (and such other
reports in connection with the Pledged Company Interests) as Lender may reasonably request, all
in reasonable detail.
(e) Pledgor will not, unless (i) it shall have given ten (10) days' prior written
notice to such effect to Lender and (ii) all action necessary or advisable, in Lender's reasonable
opinion, to protect, perfect and confirm the Liens and security interests intended to be created
hereunder with respect to the Pledged Company Interests (including, without limitation, the
delivery of such opinions of counsel as may reasonably be required by Lender) shall have been
taken at Pledgor's sole cost and expense, (A) change the location of its chief executive office or
principal place ofbusiness from that specified in Section 3(e), or (B) change its name, identity or
structure or (c) reorganize under the laws of another jurisdiction.
(f) Pledgor shall pay, and save Lender harmless from, any and all liabilities
with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of the Collateral or
in connection with any of the transactions contemplated by this Agreement but expressly
excluding any income taxes, franchise taxes or other similar taxes based upon Lender's income.
(h) The Pledged Company Interests (i) will continue to be ''financial assets"
(within the meaning of Section 8-1 02(a)(9) of the Code) and (ii) will not be credited to a
"securities account" (within the meaning of Section 8-501(a) of the Code).
5. Certain Understandings of Parties; Registration of Pledge; Control of
Pledged Collateral, Etc.
(a) The parties acknowledge and agree that (i) none of the Pledged Company
Interests (A) have been "certificated", (B) are represented by a "security certificate", or (C) are
"securities" governed by Article 8 of the Code, (ii) the Pledged Company Interests are not and
will not be dealt in or traded on securities exchanges or securities markets, and (iii) during the
-6-
term of this Agreement, the Pledged Company Interests are and will be deemed general
intangibles under Article 9 of the Code and Pledgor will not permit Mortgage Borrower to "opt
in" to Article 8 of the Code and certificate the interests of its members without the prior written
consent of Lender.
(b) Notwithstanding the foregoing, to better assure the perfection of the
security interest of Lender in the Pledged Company Interests, concurrently with the execution
and delivery of this Agreement and from time to time thereafter if requested by Lender in
connection with any pledge or transfer of all or any part of the Loan or if otherwise reasonably
requested by Lender, at Pledgor's sole cost and expense, Pledgor shall cause Mortgage Borrower
to deliver to Lender the Acknowledgement and Consent in the form of Exhibit A hereto.
6. Cash Dividends; Voting Rights. Subject to the application of
distributions to pay the Loan as required by the applicable terms of this Agreement, the Loan
Agreement and any cash management agreement entered into in connection with either loan and
unless a Mortgage Loan Event of Default or Event of Default shall have occurred and be
continuing, Pledgor shall be permitted to receive all membership interest distributions or cash
dividends paid in the normal course of business ofMortgage Borrower and to exercise all voting
and any and all rights in respect of membership interests with respect to the Pledged Company
Interests, provided that no vote shall be cast or right exercised or other action taken that may
reasonably be expected to impair the Collateral or which would be inconsistent with or result in
any violation of any provision of the Loan Agreement, the Note, this Agreement or any other
Loan Documents.
7. Rights of Lender.
(a) If an Event of Default shall occur and be continuing, Lender shall have the
right to receive any and all income, cash dividends, distributions, proceeds or other property
received or paid in respect of the Pledged Company Interests and the other Collateral and make
application thereof to the Debt, in such order as Lender, in its sole discretion, may elect, in
accordance with the Loan Documents. If an Event of Default shall occur and be continuing,
Lender or its nominee may, during the continuance of the Event of Default, exercise (i) all
voting, and all membership and other rights pertaining to the Pledged Company Interests and (ii)
any and all rights of conversion, exchange, and subscription and any other rights, privileges or
options pertaining to such Pledged Company Interests as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any and all of the Pledged
Company Interests upon the merger, consolidation, reorganization, recapitalization or other
fundamental change in the organizational structure of Mortgage Borrower or upon the exercise
by Pledgor or Lender of any right, privilege or option pertaining to such Pledged Company
Interests, and in connection therewith, the right to deposit and deliver any and all of the Pledged
Company Interests with any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as it may determine), all without liability except to
account for property actually received by it, but Lender shall have no duty to exercise any such
right, privilege or option and shall not be responsible for any failure to do so or delay in so
doing.
-7-
(b) The rights of Lender under this Agreement shall not be conditioned or
contingent upon the pursuit by Lender of any right or remedy against Pledgor or against any
other Person which may be or become liable in respect of all or any part of the Debt or against
any other security therefor, guarantee thereof or right of offset with respect thereto. Lender shall
not be liable.for any failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so, nor shall it be under any obligation to sell or otherwise dispose of any
Collateral upon the request of Pledgor or any other Person or to take any other action whatsoever
with regard to the Collateral or any part thereof.
(c) Upon payment in full of the Debt and all amounts owed on the Note and
the payment and performance of all other Debt, (exclusive of any indemnification or other
obligations which are expressly stated in any of the Loan Documents to survive satisfaction of
the Note), Lender's rights under this Agreement shall terminate and Lender shall, at Pledgor's
expense, deliver to Pledgor the certificates and stock powers executed by Pledgor in connection
herewith and Lender shall deliver to Pledgor UCC termination statements or similar documents
and agreements requested by Pledgor to terminate all of Lender's rights under this Agreement
and all other Loan Documents.
(d) Pledgor also authorizes Lender, at any time and from time to time, to
execute, in connection with the sale provided for in Sections 8 or 9 hereof, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the Collateral.
(e) The powers conferred on Lender hereunder are solely to protect Lender's
interest in the Collateral and shall not impose any duty upon Lender to exercise any such powers.
Lender shall be accountable only for amounts that it actually receives as a result of the exercise
of such powers, and neither it nor any of its partners, members, shareholders, officers, directors,
employees or agents shall be responsible to Pledgor for any act or failure to act hereunder, except
for its or their gross negligence or willful misconduct.
(f) If Pledgor fails to perform or comply with any of its agreements contained
herein and such failure continues beyond all applicable grace and cure periods, and Lender, as .
provided for by the terms of this Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of Lender incurred in connection
with such performance or compliance, together with interest at the Default Rate if such expenses
are not paid on written demand, shall be payable by Pledgor to Lender within five (5) Business
Days of such written demand and shall constitute obligations secured hereby.
8. Remedies. If an Event of Default shall occur and be continuing, in
addition to all other rights and remedies granted in this Agreement and in any other Loan
Document: t ..
(a) Lender may exercise with respect to the Collateral all rights and remedies
of a secured party under the Code (whether or not the Code is in effect in the jurisdiction where
.the rights and remedies are asserted) and such additional rights and remedies to which a secured
party is entitled under the laws in effect in any jurisdiction where any rights and remedies
hereunder may be asserted, including, without limitation, the right, to the maximum extent
- 8 -
permitted by law, to exercise all voting, consensual and other powers of ownership pertaining to
the Collateral as if Lender were the sole and absolute owner thereof (and Pledgor agrees to take
all such action as may be appropriate to give effect to such right};
(b) Lender may make any reasonable compromise or settlement deemed
desirable with respect to any of the Collateral and may extend the time of payment, arrange for
payment in installments, or otherwise modifY the terms of, any of the Collateral;
(c) Lender in its discretion may, in its name or in the name of Pledgor or
otherwise, demand, sue for, collect, direct payment of or receive any money or property at any
time payable or receivable on account of or in exchange for any of the Collateral, but shall be
under no obligation to do so.
Without limiting the generality of the foregoing, Lender, during the continuance
of an Event of Default, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law or otherwise required
hereby) to or upon Pledgor, Mortgage Borrower or any other Person (all and each of which
demands, presentments, protests, advertisements and notices, or other defenses, are hereby
waived to the extent permitted under applicable law), may in such circumstances forthwith
collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, give option or options to purchase or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing}, in one or more parcels at
public or private sale or sales, in the over-the-counter market, at any exchange, broker's board or
office of Lender or elsewhere upon such terms and conditions as it may deem advisable and at
such prices as it may deem best in its sole discretion, for cash or on credit or for future delivery
without assumption of any credit risk. Lender shall have the right, without notice or publication,
to adjourn any public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for such sale, and any such sale may be made at any
time or place to which the same may be adjourned without further notice. Lender shall have the
right upon any such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption of Pledgor, which right or equity of redemption is hereby waived or
released. Lender shall apply any Proceeds from time to time held by it and the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to the care or
safekeeping of any of the Collateral or in connection with the exercise of the rights of Lender
hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the
payment in whole or in part of the Debt, in such order as Lender may elect, and only after such
application and after the payment by Lender of any other amount required by any provision of
law, including, without limitation, Sections 9-610 and 9-615 of the Code, need Lender account
for the surplus, if any, to Pledgor. To the extent permitted by applicable law, Pledgor waives all
claims, damages and demands it may acquire against Lender arising out of the exercise by
Lender of any of its rights hereunder, except for any claims, damages and demands it may have
against Lender arising from the willful misconduct or gross negligence of Lender or its affiliates,
or any agents or employees of the foregoing. If any notice of a proposed sale or other disposition
-9-
of Collateral shall be required by law, such notice shall be deemed reasonable and proper if
given at least ten (1 0) Business Days before such sale or other disposition.
(d) Notwithstanding anything else herein to the contrary, Lender shall be
entitled (i) to register the Pledged Company Interests in the name of Lender or its nominee (if
not already so registered) and/or (ii) under Section 8 hereof to collect, receive, appropriate and
realize upon the Collateral only upon the expiration of a period of ten (1 0) Business Days
commencing on the date on which notice of such intention to exercise any of such rights shall
have been given by Lender to Pledgor in accordance with Section 17(e) hereof, which notice
may, at Lender's option, be included within any notice furnished by Lender to Pledgor under
Section 10.6 the Loan Agreement.
(e) The rights, powers, privileges and remedies of Lender under this
Agreement are cmnulative and shall be in addition to all rights, powers, privileges and remedies
available to Lender at law or in equity. All such rights, powers and remedies shall be cumulative
and may be exercised successively or concurrently without impairing the rights of Lender
hereunder.
9. Private Sales.
(a) Pledgor recognizes that Lender may be unable to effect a public sale of
any or all of the Pledged Company Interests, by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group of purchasers which
will be obliged to agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less favorable to Lender
than if such sale were a public sale and, notwithstanding such circmnstances, agrees that any
such private sale shall not be deemed to have been made in a coinmercially unreasonable manner
solely by virtue of being a private sale. Lender shall be under no obligation to delay a sale of
any of the Pledged Company Interests for the period of time necessary to permit Mortgage
Borrower or Pledgor to register such interests for public sale under the Securities Act of 1933, as
amended, or under applicable state securities laws, even if Mortgage Borrower or Pledgor would
agree to do so.
(b) Pledgor further shall use its best efforts to do or cause to be done all such
other acts as may be reasonably necessary to make any sale or sales of all or any portion of the
Pledged Company Interests pursuant to this Section 9 valid and binding and in compliance with
any and all other requirements of applicable law. Pledgor further agrees that a breach of any of
the covenants contained in this Section 9 will cause irreparable injury to Lender, that Lender has
no adequate remedy at law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section 9 shall be specifically enforceable against Pledgor, and
Pledgor hereby waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has occurred and is
continuing under the Loan Agreement or any of the other Loan Docmnents or, if having
occurred, has been cured and such cure has been accepted by Lender.
-10-
(c) Lender shall not incur any liability as a result of the sale of any Collateral,
or any part thereof, at any private sale conducted in a commercially reasonable manner, it being
agreed that some or all of the Collateral is or may be of one or more types that threaten to decline
speedily in value and that are not customarily sold in a recognized market. Pledgor hereby
waives any claims against Lender arising by reason of the fact that the price at which any of the
Collateral may haye been sold at such a private sale was less than the price which might have
been obtained at a public sale or was less than the aggregate amount of the Debt, even if Lender
accepts the first offer received and does not offer any Collateral to more than one offeree,
provided that Lender has acted in a commercially reasonable manner in conducting such private
sale.
10. Limitation on Duties Regarding Collateral. Lender's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Code or otherwise, shall be to deal with it in the same manner as
Lender deals with similar securities and property for its own account. Neither Lender nor any of
its partners, members, shareholders, directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of
Pledgor or otherwise.
11. Financing Statements; Other Documents. Pledgor hereby irrevocably
authorizes Lender at any time and from time to time to file in any filing office in any jurisdiction
one or more financing or continuation statements and amendments thereto, relative to all or any
part of the Collateral without the signature ofPledgor where permitted by law. Pledgor agrees to
furnish Lender, promptly upon request, with any information that is reasonably requested by
Lender in order to complete such financing or continuation statements. Pursuant to Section 9-
509(b) of the Code, Pledgor also ratifies its authorization for Lender to have filed in any
jurisdiction any initial financing statements or amendments thereto with respect to the Collateral
pledged hereunder if filed prior to the date hereof Pledgor acknowledges that it is not
authorized to file any financing statement or amendment or termination statement with respect to
any financing statement without the prior written consent of Lender and agrees that it will not do
so without the prior written consent of Lender, subject to Pledgor's rights under Section 9-
509( d)(2) of the Code. Where any of the Collateral is in the possession of a third party, Pledgor
will join with Lender in notifying the third party of Lender's security interest and obtaining an
acknowledgment from the third party that it is holding such Collateral for the benefit of Lender.
Pledgor will cooperate with Lender in obtaining control with respect to any Collateral consisting
of investment property. Without limiting the generality of the foregoing, Pledgor agrees to
deliver any other document or instrument which Lender may reasonably request with respect to
the Collateral for the purposes of obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted.
12. Attorney-in-Fact. Without limiting any rights or powers granted by this
Agreement to Lender, Lender is hereby appointed, which appointment as attorney-in-fact is
irrevocable and coupled with an interest, the attorney-in-fact of Pledgor for the purpose of
carrying out the provisions of this Agreement and taking any action and executing any
instruments which Lender may deem necessary or advisable to accomplish the purposes hereof,
- 11 -
in each case after the occurrence and during the continuance of an Event of Default, and
including, without limitation:
(a) to ask, demand, collect, sue for, recover, compromise, receive and give
acceptance and receipts for moneys due and to become due under or in respect of any of the
Collateral;
(b) to receive, endorse and collect any drafts or other instruments, documents
and chattel paper in connection with clause (a) above;
(c) to file any claims or take any action or institute any proceedings that the
Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to
enforce the rights of Lender, with respect to any of the Collateral; and
(d) to execute, in connection with the sale provided for in Section 8 or 9, any
endorsement, assignments, or other instruments of conveyance or transfer with respect to the
Collateral.
If so requested by Lender, Pledgor shall ratify and confirm any such sale or
transfer by executing and delivering to Lender at Pledgor's expense all proper deeds, bills of
sale, instruments of assignment, conveyance of transfer and releases as may be designated in any
such request. The power of attorney granted hereby shall terminate upon payment and
performance in full of the Debt (exclusive of any indemnification or other obligations herewith
are expressly stated in any of the Loan Documents to survive satisfaction of the Note).
13. Additional Covenants of Pledgor Relating to Affirmative Covenants of
the Mortgage Borrower. Pledgor covenants and agrees with Lender that, from and after the
date of this Agreement until the Debt (exclusive of any indemnification or other obligatipns
which are expressly stated in any of the Loan Documents to survive satisfaction of the Note) is
paid in full, Pledgor shall take and/or shall cause the Mortgage Borrower (i) to take any and all
actions either reasonably necessary or reasonably requested by Lender to ensure complete
compliance with Section 5.1 of the Loan Agreement, (ii) to take such actions as are required by
or to comply with the terms of the Mortgage Loan Documents, in each case, applicable to it, and
not take any actions that violate any such documents and (iii) not to apply amounts disbursed to
the Mortgage Borrower pursuant to the requirements of the Mortgage Loan in a manner contrary
to the requirements of the Mortgage Loan Documents.
14. Additional Covenants of Pledgor Relating to Negative Covenants of
the Mortgage Borrower. Pledgor covenants and agrees with Lender that, from and after the
date of this Agreement until the Debt (exclusive of any indemnification or other obligations
which are expressly stated in any of the Loan Documents to survive satisfaction of the Note) is
paid in full, Pledgor shall take and shall cause Mortgage Borrower to take any action reasonably
necessary to ensure compliance with Section 5.2 of the Loan Agreement.
15. Recourse. The extent of the personal liability of Pledgor hereunder and in
respect hereof shall be as set forth in Section 9.4 of the Loan Agreement.
- 12-
16. Indemnity. Pledgor agrees to indemnify Lender from and against any and
all claims, losses and liabilities growing out of or resulting from enforcement of this Agreement
(including without limitation enforcement of this Agreement), except claims, losses or liabilities
resulting from Lender's gross negligence or willful misconduct.
17. Miscellaneous.
(a) Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(b) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction hereof or be taken into consideration in the
interpretation hereof
(c) No Waiver; Cumulative Remedies. Lender shall not by any act (except by
a written instrument pursuant to Section 17(d)), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any default or in
any breach of any of the terms and conditions hereof No failure to exercise, nor any delay in
exercising, on the part of Lender, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by Lender of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which Lender would otherwise have on any future
occasion. The rights, remedies, powers and privileges herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights, remedies, powers or
privileges provided by law.
(d) Waivers and Amendments; Successors and Assigns; Governing Law.
None of the terms or provisions of this Agreement may be waived, amended, or otherwise
modified except by a written instrument executed by the party against which enforcement of
such waiver, amendment, or modification is sought. This Agreement shall be binding upon and
shall inure to the benefit of Pledgor and the successors and assigns of Pledgor and shall inure to
the benefit of Lender and its successors and assigns; provided Pledgor shall not have any right to
assign its rights hereunder except to the extent permitted under the Loan Agreement. The rights
of Lender under this Agreement shall automatically be transferred to any successor Lender under
the Loan Agreement. This Agreement shall be governed by, and construed and interpreted in
acc.ordance with, the laws of the State of New York.
(e) Notices. Notices by Lender to Pledgor or Mortgage Borrower to be
effective shall be in writing (including by facsimile transmission), addressed or transmitted to
Pledgor or Mortgage Borrower, as the case may be, at the address or facsimile number of
Pledgor set forth in the Loan Agreement, and shall be deemed to have been duly given in the
manner set forth in the Loan Agreement. Any communications by Pledgor to Lender may be
-13-
given in any manner set forth in the immediately preceding sentence to the address or
transmission number set forth in the Loan Agreement.
(f) Agents. Lender may employ agents and attorneys-in-fact in connection
herewith and shall not be responsible for their actions except for the gross negligence or willful
misconduct of any such agents or attorneys-in-fact.
(g) Irrevocable Authorization and Instruction to the Mortgage Borrower.
Pledgor hereby authorizes and instructs Mortgage Borrower and any servicer of the Loan to
comply with any instruction received by it from Lender in writing that (i) states that an Event of
Default has occurred and is continuing and (ii) is otherwise in accordance with the terms of this
. Agreement, without any other or further instructions from Pledgor, and Pledgor agrees that the
Mortgage Borrower and any servicer shall be fully protected in so complying.
(h) Counterparts. 1bis Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to constitute one and the
same instrument.
(i) Submission To Jurisdiction; Waivers. To the extent permitted by
applicable law, Pledgor hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or proceeding
relating to this Agreement, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York,
the courts of the United States of America for the Southern District of New York, and
appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the venue of
any such action or proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the same; and
(iii) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in any other
jurisdiction.
G) WAIVER OF JURY TRIAL, DAMAGES. PLEDGOR AND LENDER
EACH HEREBY AGREES TO WAIVE ITS RIGHTS TO A JURY TRIAL ON ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT,
OR ANY DEALINGS BETWEEN PLEDGOR AND LENDER. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. PLEDGOR AND LENDER
- 14-
EACH ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
LENDER TO ENTER INTO A BUSINESS RELATIONSHIP WITH PLEDGOR. EACH
OF LENDER AND PLEDGOR REPRESENTS AND WARRANTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH
WAIVER IS KNOWINGLY AND VOLUNTARILY GIVEN FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. TIDS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED, EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, REPLACEMENTS, REAFFIRMATIONS, SUPPLEMENTS OR
MODIFICATIONS TO TIDS AGREEMENT, OR ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
WITH RESPECT TO ANY ACTION ARISING OUT OF OR RELATING
TO THIS AGREEMENT, PLEDGOR SHALL AND HEREBY DOES SUBMIT TO THE
NON EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA
LOCATED IN THE STATE OF NEW YORK (AND ANY APPELLATE COURTS
TAKING APPEALS THEREFROM). PLEDGOR HEREBY WAIVES AND AGREES
NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, (A) THAT IT IS NOT
SUBJECT TO SUCH JURISDICTION OR THAT SUCH ACTION, SUIT OR
PROCEEDING MAY NOT BE BROUG:HT OR IS NOT MAINTAINABLE IN THOSE
COURTS OR THAT THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS MAY NOT BE ENFORCED IN OR BY THOSE COURTS OR THAT IT
IS EXEMPT OR IMMUNE FROM EXECUTION, (B) THAT THE ACTION, SUIT OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR (C) THAT THE
VENUE OF THE ACTION, SUIT OR PROCEEDING IS IMPROPER. IN THE EVENT
ANY SUCH ACTION, SUIT, PROCEEDING OR LITIGATION IS COMMENCED,
PLEDGOR AGREES THAT SERVICE OF PROCESS MAY BE MADE, AND
PERSONAL JURISDICTION OVER PLEDGOR OBTAINED, BY SERVICE OF A
COPY OF THE SUMMONS, COMPLAINT AND OTHER PLEADINGS REQUIRED TO
COMMENCE SUCH LITIGATION UPON PLEDGOR AT THE ADDRESS OF
PLEDGOR AND TO THE ATTENTION OF SUCH PERSON AS SET FORTH IN THIS
SECTION 15.
No claim may be made by Pledgor against Lender, its affiliates and its partners,
members, shareholders, directors, officers, employees, or attorneys for any special, indirect or
consequential damages ("Special Damages") in respect of any breach or wrongful conduct
(whether the claim therefor is based on contract, tort or duty imposed by law) in connection with,
arising out of, or in any way related to the transactions contemplated or relationship established
by this Agreement, or any act, omission or event occurring in connection herewith or therewith;
and to the fullest extent permitted by law Pledgor and, by its acceptance hereof, Lender, hereby
waive, release and agree not to sue upon any such claim for Special Damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
- 15-
(k) Joint and Several Liability. If Pledgor consists of more than one person or
party, the obligations and liabilities of each such person or party hereunder shall be joint and
several.
(1) Irrevocable Proxy. Solely with respect to Article 8 Matters (as defined
hereinafter), Pledgor hereby irrevocably grants and appoints Lender, from the date of this
Agreement until the termination of this Agreement in accordance with its terms, as Pledgor's
true and lawful proxy, for and in Pledgor's name, place and stead to vote the Pledged Company
Interests, whether directly or indirectly, beneficially or of record, now owned or hereafter
acquired, with respect to such Article 8 Matters. The proxy granted and appointed in this Section
17(1) shall include the right to sign Pledgor's name (as a member of Mortgage Borrower) to any
consent, certificate or other document relating to an Article 8 Matter and the Pledged Company
Interests that applicable law may permit or require to cause the Pledged Company Interests to be
voted in accordance with the preceding sentence. Pledgor hereby represents and warrants that
there are no other proxies and powers of attorney with respect to an Article 8 Matter that Pledgor
has granted or appointed. Pledgor will not give a subsequent proxy or power of attorney or enter
into any other voting agreement with respect to the Pledged Company Interests with respect to
any Article 8 Matter and any attempt to do so with respect to an Article 8 Matter shall be void
and of no effect. The proxies and powers granted by the Pledgor pursuant to this Agreement are
coupled with an interest and are given to secure the performance of the Pledgor's obligations.
As used herein, "Article 8 Matter" means any action, decision, determination or election by
Mortgage Borrower or its member(s) prior to the termination of this Agreement that Mortgage
Borrower's membership interests or other equity interests, or any of them, be or cease to be, a
"security" as defined in and governed by Article 8 of the Uniform Commercial Code, and all
other matters related to any such action, decision, determination or election.
[SIGNATURES COMMENCE ON THE FOLLOWING PAGE]
- 16-
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date set forth above.
y
[SIGNATURES. CONTINUE ON FOLLOWING PAGE]
[Signature Page to Anaheim Pledge and Security Agreement]
LENDER:
CHARLENE THOMAS
AUTHORIZED SIGNATORY
[Signature Page to Anaheim Pledge and Security Agreement]
SCHEDULE 1
To Pledge Agreement
DESCRIPTION OF PLEDGED MEMBERSHIP INTERESTS
Mortgage Borrower
KP A HS Anaheim LLC
13697508.2
Owner
Pledgor
Class of
Membership
Interest
Member
Percentage of
Membership
Interests
100%
EXHIBIT A
FORM OF ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of that certain Pledge and
Security Agreement, dated as of June 29, 2007 {the "Pledge Agreement''), by GRAND PRIX
MEZZ BORROWER TERM LLC, a Delaware limited liability company {"Pledgor") and agrees
that Pledgor is bound thereby. The undersigned agrees to notify Lender promptly in writing of
the occurrence of any of the events described in Section 4{a) of the Pledge Agreement.
Dated: June 29,2007
12562559.2.BUSINESS
KP A HS ANAHEIM LLC, a Delaware limited
liability company
By: _______________ _
Name:
Title:
June 29,2007
EXHIDITB-1
FORM OF INSTRUCTIONS TO REGISTER PLEDGE
GRAND PRIX MEZZ BORROWER TERM LLC
To: KP A HS Anaheim LLC
c/o Apollo fuvestment Corporation
9 West 57th Street
You are hereby instructed to make a notation of the pledge of the following equity
interest as follows:
Grand Prix Mezz Borrower Term .LLC, as pledgor, has pledged all of its membership
interests, now owned or hereafter acquired, in KP A HS Anaheim LLC (constituting 100% of the
equity interests in KP A HS Anaheim LLC) to Lehman ALI Inc. and its successors and assigns,
as pledgee.
The name address of the pledgor is:
9 West 57ili Street
The name and address of the pledgee is:
Lehman ALI Inc.
399 Park A venue
NewYork,NewYork 10122
Attention: Michael Lascher
Very truly yours,
GRAND PRIX MEZZ BORROWER TERM LLC, a
Delaware limited liability company
By:
Name:
Title:
Initial Transaction Statement
TO: Lehman ALI Inc.
399 Park A venue
EXHIBITB-2
June 29,2007
This statement is to advise you that a notation of the pledge of the following
equity interest has been made in the name of Lehman ALI Inc., together with its successors and
assigns, as follows:
Equity Interest:
Registered Owner:
Registered Lender:
The equity interests now owned or hereafter acquired by Grand Prix Mezz
Borrower Term LLC in the undersigned Delaware limited liability
company.
9 West 57th Street
Taxpayer Identification Number: _____ _
Lehman ALI Inc.
399 Park A venue
Taxpayer Identification Number: _____ _
There are no liens or restrictions of the undersigned entity and no adverse claims known to the
undersigned entity to which such equity interest is or may be subject except for restrictions on
transfer set forth in the formation documents of such entity.
The pledge was registered on June 29, 2007.
[Remainder of Page Intentionally Left Blank]
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEES AS
OF THE TIME OF ITS ISSUANCE. DELNERY OF THIS STATEMENT, OF ITSELF,
CONFERS NO RIGHTS ON THE RECIPIENT. THIS STATEMENT IS NEITHER A
NEGOTIABLE INSTRUMENT NOR A SECURITY.
12562559.2.BUSINESS
Very truly yours,
liability company
By:
Name:
--------------------
Title: -------------

US2008 1530791.1
EXHIBIT T

Control Agreement Dated as of June 29, 2007 Between Grand Prix Mezz Borrower Term LLC as
Pledgor and Lehman ALI, Inc. as Lender

(Anaheim)
CONTROL AGREEMENT
This CONTROL AGREEMENT, dated as of June 29, 2007, made by GRAND
PRIX MEZZ BORROWER TERM LLC, a Delaware limited liability company, having an
office at c/o Apollo fuvestment Corporation, 9 West 57th Street, New York, New York 10019
("Pledgor"), in favor of LEHMAN ALI, INC., a Delaware corporation, having an address at
399 Park Avenue, New York, New York 10022 (collectively, with its successors and assigns
"Lender").
RECITALS:
WHEREAS, Capmark Bank, as mortgage lender (together with its successors and
assigns, "Mortgage Lender"), is the holder of a loan in the original aggregate principal amount
of $13,700,000 (as amended, the "Mortgage Loan") to KPA HS Anaheim LLC, a Delaware
limited liability company ("Mortgage Borrower"), as evidenced by that certain Deed of Trust
Note dated as of June 14, 2005 in favor of Mortgage Lender;
WHEREAS, Pledgor has requested that Lender make a loan to Pledgor in the
original principal amount of $21,300,000.00 (the "Loan") evidenced by that certain Note (as
defined in the Mezzanine Loan Agreement of even date herewith between Pledgor and Lender,
as the same may be amended, restated, replaced, increased, extended, supplemented or otherwise
modified from time to time (the "Loan Agreement"));
WHEREAS, the obligations of Pledgor to Lender under the Loan are secured by
a pledge to Lender of Pledgor's 100% membership interest in Mortgage Borrower (such interest
being referred to herein as the "Pledged Collateral" pursuant to a Pledge and Security
Agreement of even date herewith, executed by Pledgor in favor of Lender (the "Pledge
Agreement"); and
WHEREAS, the parties hereto wish to acknowledge such security interest and
pledge and Lender's control over the Pledged Collateral for purposes of the provisions of Article
8 and Article 9 of the Uniform Commercial Code as enacted and in effect in the State of New
York (the "Code").
AGREEMENT:
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms; Rules of Construction. Terms used herein but not
otherwise defined herein shall have the respective meanings ascribed to them in the Loan
Agreement
2. Acknowledgment of Security Interest. Mortgage Borrower hereby
acknowledges and agrees that pursuant to the Pledge Agreement, Lender has been granted and
continues to hold a security interest in and to the Pledged Collateral as collateral security for the
obligations of Pledgor under the Loan.
l3709075.2.BUSINESS
3. Agreement to Follow Instructions; Agreement Not to Register
Transfer. Mortgage Borrower, as issuer of the Pledged Collateral, hereby agrees to comply with
any "instructions" (as defined in Section 8102(a)(12) of the Code) originated by Lender without
further consent of the Pledgor, including without limitation, instructions regarding the transfer,
redemption or other disposition of the Pledged Collateral or the proceeds thereof, including any
distributions with respect thereto. Pledgor agrees that it shall not register any transfer of the
Pledged Collateral to any person without the prior written consent of Lender.
4. Intent of the Parties. By executing and delivering this Agreement, the
parties hereto intend to establish Lender's control over the Pledged Collateral for the purposes of
Section 8106(c)(2) ofthe Code.
5. Consent. Pledgor hereby consents to the execution and delivery of this
Agreement by Mortgage Borrower to Lender.
6. Choice of Law. This Agreement shall be construed and enforced under
the laws of the State ofNew York without regard to the conflict of law principles thereof.
7. Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately constitute one agreement.
8. Amendments. No amendment, waiver, termination or other modification
to this Agreement shall be effective unless the same is in writing and is signed by each of the
parties hereto.
[Signature Page Follows]
-2-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as ofthe date set forth above.
PLEDGOR:
any
[Signatures continue on following page]
[Signature Page to Anaheim Control Agreement]
MORTGAGE BORROWER:
liability c

: 0 "'s.ftn Kvcc.l
1tle: ViQ... PrL&idtnf-
[Signatures continue on following page]
LENDER:
LEHMAN ALI INC.,
aDelaw
Title:
CHARLENE THOMAS
A U T ~ OR/ZED SIGNATORY

US2008 1530791.1
EXHIBIT U

UCC Financing Statement Filed With the Delaware Department of State on June 29, 2007 and
Bearing Filing Number 2007 2491958 Between Grand Prix Mezz Borrower Term LLC as Debtor
and Lehman ALI Inc. as Secured Party
UCC FINANCING STATEMENT
FOLLOW INSTRUCTIONS (front and back) CAREFULLY
A NAME & PHONE OF CONTACT AT FILER [optional]
B. SEND ACKNOWLEDGMENT TO: (Name and Address)
Pecci, Esq.
Dechert LLP
200 Clarendon Street, 27th Floor
Boston. MA 02116
L
_j
DELAWARE DEPARTMENT OF STATE
U.C.C. FILING SECTION
FILED 09:41 PM 06/29/2007
INITIAL FILING # 2007 2491958
SRV: 070771295
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
DEBTOR'S EXACT FULL LEGAL NAME debtor name (1aor 1 b) donotabbrev1ate or comb1ne names
GRAND PRIX MEZZ BORROWER TERM LLC
OR
1 b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME
1c MAILINGADORESS CITY
STATE IPOSTALCODE
c/o Apollo Investment Corporation, 9 West 57th Street New York NY 10019
1d SEE INSTRUCTIONS
I fDD'L INFO RE 1,1e TYPE OF ORGANIZATION
11 JURISDICTION OF ORGANIZATION 1g ORGANIZATIONAL ID #_ I any
limited liability company
1 Delaware
I
4364256
2 ADDITIONAL DEBTORS EXACT FULL LEGAL NAME 1nsert only name (2a or 2b) do not abbrevale or combme names
OR
2b INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME
2c MAILING ADDRESS CITY
STATE I POSTAL CODE
2d SEE INSTRUCTIONS
I fDD"L INFO RE 12e TYPE OF ORGANIZATION
21 JURISDICTION OF ORGANIZATION 2g ORGANIZATIONAL ID #. 1f any
ORGANIZATION
DEBTOR I
I I
3 SECURE 0 PARTY S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR SIP) 1nsertonly party name (3a or 3b)
3a_ ORGANIZATION'S NAME
Lehman ALI Inc.
OR
3b INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME
,,
MAILING ADDRESS CITY STATE
IPOSTAL CODE
399 Pnrk Avenue New York NY 10022
4. Th1s FINANCING STATEMENT covers the follow1ng collateral
All assets of Debtor, whether now owned or hereafter acquired.
6
8
File with: Delaware Secretary of State
BAILEE/BAILOR SELLER/BUYER
7. Check to REQUEST SEARCH REPORT(S) on Oebtor(s)
o l1onal
SUFFIX
COUNTRY
USA
DNONE
SUFFIX
COUNTRY
nNONE
SUFFIX
COUNTRY
USA
NON-UCC FILING
Debtor 2
FILING OFFICE COPY- UCC FINANCING STATEMENT (FORM UCC1) (REV. 05/22/02)
Doc. No. 13623772

10000005742

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US2008 1530791.

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