<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 COMMISSION FILE NUMBER 34-0-23290
EQUITY INNS, INC.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TENNESSEE 62-1550848
- ------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER)
INCORPORATION OR ORGANIZATION IDENTIFICATION NO.)
4735 SPOTTSWOOD, SUITE 102, MEMPHIS, TN 38117
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
(901) 761-9651
- --------------------------------------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (I) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
X YES NO
--- ---
THE NUMBER OF SHARES OF COMMON STOCK, $.01 PAR VALUE, OUTSTANDING ON
APRIL 30, 1997 WAS 23,693,278.
1 OF 16
<PAGE> 2
EQUITY INNS, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - March 31, 1997 (unaudited)
and December 31, 1996 3
Condensed Consolidated Statements of Operations (unaudited) - For the
three months ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows (unaudited) - For the
three months ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosure About Market Risk 14
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 15
</TABLE>
2
<PAGE> 3
PART I. Financial Information
Item 1. Financial Statements
EQUITY INNS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------- -------------
(unaudited)
<S> <C> <C>
ASSETS
Investment in hotel properties, net $ 355,059,465 $ 309,201,932
Cash and cash equivalents 123,306 128,974
Due from Lessee 4,897,025 3,376,781
Deferred expenses, net 6,524,363 3,779,500
Deposits and other assets 10,557,408 1,393,250
------------- -------------
Total assets $ 377,161,567 $ 317,880,437
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt $ 138,641,027 $ 77,399,734
Accounts payable and accrued expenses 2,725,579 2,938,192
Distributions payable 6,901,439 6,864,126
Minority interest in Partnership 8,865,976 7,727,726
------------- -------------
Total liabilities 157,134,021 94,929,778
------------- -------------
Commitments and contingencies
Shareholders' equity:
Common Stock, $.01 par value, 50,000,000
shares authorized, 23,693,278 shares issued
and outstanding 236,933 236,933
Preferred Stock, $.01 par value, 10,000,000 shares
authorized, no shares issued and outstanding
Additional paid-in capital 239,268,386 238,747,049
Unearned directors' and officers' compensation (342,696) (365,767)
Predecessor basis assumed (1,263,887) (1,263,887)
Distributions in excess of net earnings (17,871,190) (14,403,669)
------------- -------------
Total shareholders' equity 220,027,546 222,950,659
------------- -------------
Total liabilities and shareholders' equity $ 377,161,567 $ 317,880,437
============= =============
</TABLE>
The accompanying notes are an integral
part of these condensed consolidated financial statements.
3
<PAGE> 4
EQUITY INNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
Revenue
Percentage lease revenues $11,777,863 $ 6,947,838
Other income 17,311 36,350
----------- -----------
Total revenue 11,795,174 6,984,188
----------- -----------
Expenses
Real estate and personal property taxes 1,309,842 771,071
Depreciation and amortization 3,846,120 2,327,763
Amortization of loan costs 188,969 341,159
Interest 2,145,324 1,590,537
General and administrative 1,019,135 594,016
----------- -----------
Total expenses 8,509,390 5,624,546
----------- -----------
Income before minority interest 3,285,784 1,359,642
Minority interest 119,187 47,587
----------- -----------
Net income applicable to common shareholders $ 3,166,597 $ 1,312,055
=========== ===========
Net income per common share $ .13 $ .09
=========== ===========
Weighted average number of common shares
outstanding 23,693,000 15,045,000
=========== ===========
</TABLE>
The accompanying notes are an integral
part of these condensed consolidated financial statements.
4
<PAGE> 5
EQUITY INNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,166,597 $ 1,312,055
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,846,120 2,327,763
Amortization of loan costs 188,969 341,159
Amortization of unearned directors' compensation 23,071 7,758
Minority interest 119,187 47,587
Changes in assets and liabilities:
Due from Lessee (1,520,244) (299,421)
Deferred expenses (6,466) (49,308)
Deposits and other assets 835,842 (190,616)
Accounts payable and accrued expenses (212,613) 689,588
------------ ------------
Net cash provided by operating activities 6,440,463 4,186,565
------------ ------------
Cash flows from investing activities:
Investment in hotel properties (44,742,279) (9,975,000)
Improvements and additions to hotel properties (3,092,294) (6,638,142)
Cash paid for franchise applications (356,800) (93,800)
Cash placed in escrow for acquisitions (10,000,000)
------------ ------------
Net cash used by investing activities (58,191,373) (16,706,942)
------------ ------------
Cash flows from financing activities:
Payment of offering expenses (138,075)
Distributions paid (6,864,126) (4,046,952)
Borrowings under revolving credit facility 68,040,395 19,300,000
Payments on revolving credit facility (94,631,395) (2,550,000)
Borrowings under CMBS credit facility 88,000,000
Payments on CMBS credit facility (167,293)
Cash paid for loan costs (2,631,925) (153,509)
Payments on capital lease obligations (414) (1,174)
------------ ------------
Net cash provided by financing activities 51,745,242 12,410,290
------------ ------------
Net decrease in cash and cash equivalents (5,668) (110,087)
Cash and cash equivalents at beginning of period 128,974 132,630
------------ ------------
Cash and cash equivalents at end of period $ 123,306 $ 22,543
============ ============
</TABLE>
Supplemental disclosure of noncash investing and financing activities:
At March 31, 1997, $6,901,439 in distributions to shareholders and limited
partners had been declared but not paid. The distributions are scheduled to be
paid on May 2, 1997. At December 31, 1996, $6,864,126 in distributions to
shareholders and limited partners had been declared but not paid.
During February and March 1997, 133,259 limited partnership units valued at
$1,807,721 were issued as part of the total acquisition cost of certain hotel
properties. Of this amount, $1,206,384 and $521,337 were allocated to minority
interest and additional paid-in capital, respectively.
At March 31, 1996, $4,365,257 in distributions to shareholders and limited
partners had been declared but not paid. The distributions were paid on April
26, 1996. At December 31, 1995, $4,046,952 in distributions to shareholders and
limited partners had been declared but not paid.
The accompanying notes are an integral
part of these condensed consolidated financial statements
5
<PAGE> 6
EQUITY INNS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Organization and Basis of Presentation
Equity Inns, Inc. (the "Company") was incorporated on November 24,
1993. The Company is a self-administered real estate investment trust
("REIT") for federal income tax purposes. The Company, through its
wholly-owned subsidiary, Equity Inns Trust (the "Trust"), is the sole
general partner of Equity Inns Partnership, L.P. (the "Partnership")
and at March 31, 1997 owned an approximate 96.1% interest in the
Partnership. The Company was formed to acquire equity interests in
hotel properties and at March 31, 1997 owned, through the Partnership,
55 hotel properties with a total of 6,545 rooms in 28 states.
The Company leased forty-eight of the hotels to Crossroads/Memphis
Company, L.L.C. and seven of the hotels to Crossroads/Memphis Future
Company, L.L.C. (referred to collectively as the "Lessee"), pursuant to
percentage lease agreements (the "Percentage Leases"). The sole general
partner of the Lessee is a wholly-owned subsidiary of Interstate Hotels
Company ("Interstate"), a publicly traded hotel management company. The
Percentage Leases provide for rent payments equal to the greater of (i)
a fixed base rent or (ii) percentage rent based on the revenues of the
hotels. All payments due under the Percentage Leases are guaranteed by
Interstate.
During the quarter ended March 31, 1997, the Company acquired the
following hotel properties:
<TABLE>
<CAPTION>
Date of # of Cost
Acquisition Property Rooms (in millions)
---------------- ---------------------------------------- ----- -------------
<S> <C> <C>
January 10, 1997 Residence Inn-Colorado Springs, Colorado 96 $ 9.7
January 10, 1997 Residence Inn-Oklahoma City, Oklahoma 135 8.6
January 10, 1997 Residence Inn-Tucson, Arizona 128 11.2
February 14, 1997 Hampton Inn-Savannah, Georgia 129 5.0
March 5, 1997 Hampton Inn-Norfolk, Virginia 119 5.6
March 11, 1997 Hampton Inn-Pickwick, Tennessee 50 2.1
March 11, 1997 Hampton Inn-Southaven (Memphis), Mississippi 86 4.3
--- -----
743 $46.5
=== =====
</TABLE>
6
<PAGE> 7
EQUITY INNS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
(unaudited)
1. Organization and Basis of Presentation, continued
On February 10, 1997, the Company issued $88 million of rated
Commercial Mortgage Bonds ("Bonds"), as follows:
<TABLE>
<CAPTION>
Initial
Principal Interest Stated
Class Amount Rate Maturity Rating
----- --------- -------- -------- ------
<S> <C> <C> <C> <C>
A $27.4 million 6.825% November 20, 2006 AA
B $50.6 million 7.370% December 20, 2015 A
C $10.0 million 7.580% February 20, 2017 BBB
</TABLE>
The combined interest rate for all three issues of Bonds is fixed at
7.22%. Proceeds from the issuance of the Bonds were used to repay
existing debt under the Company's $130 million line of credit (the
"Line of Credit") of approximately $85.6 million and expenses of
approximately $2.4 million. Principal payments are to be applied to
each class of Bonds in order of their respective maturities with no
principal payment on any Bond until all Bonds in a bond class with an
earlier stated maturity have been paid in full. The Company expects to
repay these bonds in full within 10 years. In connection with this
transaction, twenty-three of the Company's hotel properties with a
carrying value of approximately $136.5 collateralize the Bonds.
These unaudited condensed consolidated financial statements have been
prepared pursuant to the Securities and Exchange Commission ("SEC")
rules and regulations and should be read in conjunction with the
financial statements and notes thereto of the Company included in the
Company's 1996 Annual Report on Form 10-K. The following notes to the
condensed consolidated financial statements highlight significant
changes to the notes included in the Form 10-K and present interim
disclosures required by the SEC. The accompanying condensed
consolidated financial statements, reflect, in the opinion of
management, all adjustments necessary for a fair presentation of the
interim financial statements. All such adjustments are of a normal and
recurring nature.
2. Distributions
On March 15, 1997, the Company declared a $0.28 per share distribution
on each share of Common Stock and each Unit outstanding on March 31,
1997. The distribution will paid on May 2, 1997.
7
<PAGE> 8
EQUITY INNS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
(unaudited)
3. Shareholders' Equity
In connection with the purchase of the Hampton Inn, Savannah, Georgia
hotel on February 14, 1997 and the purchase of the Hampton Inn,
Southaven, Mississippi hotel on March 11, 1997, the Partnership issued
26,315 and 106,944 units of limited partnership interest, respectively,
in the Partnership.
4. Subsequent Events
On April 23, 1997, the Company acquired a 134-room Hampton Inn hotel in
Overland Park, Kansas for $7.1 million.
In March 1997, the Company announced that it entered into agreements to
acquire 28 Hampton Inn hotels with an aggregate of 3,487 rooms in 14
states from a series of partnerships controlled by Growth Hotel
Investors ("GHI") and Growth Hotel Investors II ("GHI II") for purchase
prices aggregating approximately $182 million which includes franchisor
required renovations and franchise fees. The GHI and GHI II hotels are
located principally in the southeastern and midwestern United States in
major urban and suburban markets. The GHI and GHI II agreements provide
for a due diligence period which expires on May 1, 1997, during which
time the Company may terminate the agreements for any reason. In
connection with this transaction, the Company has placed a $10 million
refundable security deposit with an escrow agent. The deposit is
refundable through May 1, 1997 if the Company chooses to terminate the
agreements. The purchase and sale of the hotels are subject to the
requisite approvals of the limited partners of GHI and GHI II, which
those partnerships must obtain through a proxy solicitation, as well as
customary real estate closing conditions.
5. Recently Issued Statement of Financial Accounting Standards
Statement of Financial Accounting Standards No. 128, "Earnings per
Share", was issued in February 1997 and established new standards for
compiling and presenting earnings per share. The Company is required to
adopt this statement beginning with the annual financial statements for
the year ended December 31, 1997; however, the impact is not expected
to be material.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
BACKGROUND
The Company commenced operations on March 1, 1994 upon completion of the
Company's initial public offering (the "IPO") and the simultaneous acquisition
of eight Hampton Inn hotel properties with 995 rooms. Since the IPO, the Company
has actively implemented its acquisition strategy. The following chart
summarizes information regarding the Company's hotels at March 31, 1997:
<TABLE>
<CAPTION>
Number of Number of
Franchise Affiliation Hotel Properties Rooms/Suites
--------------------- ---------------- ------------
<S> <C> <C>
Premium Limited Service Hotels:
Hampton Inn 36 4,318
Comfort Inn 2 182
Holiday Inn Express 1 101
-- -----
Sub-total 39 4,601
Premium Extended Stay Hotels:
Residence Inn 8 831
Homewood Suites 3 379
-- -----
Sub-total 11 1,210
-- -----
Full Service Hotels:
Holiday Inn 4 557
Comfort Inn 1 177
-- -----
Sub-total 5 734
-- -----
Total 55 6,545
== =====
</TABLE>
In order for the Company to qualify as a REIT, neither the Company nor the
Partnership can operate hotels. Therefore, the Partnership leases the Hotels to
the Lessee pursuant to the Percentage Leases. The Partnership's, and therefore
the Company's, principal source of revenue is lease payments by the Lessee under
the Percentage Leases. Percentage Rent is based primarily upon the Hotels' room
revenue, and to a lesser extent, when applicable, food and beverage revenue.
9
<PAGE> 10
Management's Discussion and Analysis of
Financial Condition and Results of Operations, Continued
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997 and 1996
For the three months ended March 31, 1997 and 1996, the Company had revenues of
$11,795,174, and $6,984,188, respectively, consisting of Percentage Lease
revenue of $11,777,863 and $6,947,838. The increase in Percentage Lease revenue
for the three months ended March 31, 1997 over the comparable period last year
is the result of (i) the number of hotels increasing from 39 at March 31, 1996
to 55 at March 31, 1997 and (ii) to a lesser extent, increased Percentage Lease
revenue for the Hotels owned throughout both periods. In addition, for hotels
which were in operation for the full quarter in both 1997 and 1996, revenue per
available room ("REVPAR") (on a pro forma basis) increased to $44.81 from
$42.21, an increase of 6.2%.
Real estate and personal property taxes and depreciation and amortization
increased over the comparable period in 1996 due to the increase in the number
of hotel properties owned by the Company, from 39 properties at March 31, 1996
to 55 properties at March 31, 1997.
General and administrative expenses increased primarily as a result of (i)
increased shareholder expenses related to listing the Company's Common Stock on
the New York Stock Exchange and a larger shareholder base as a result of the
Company's most recent stock offering; (ii) increase in the number of hotels
owned in 1997 over 1996; and (iii) increased corporate staff and related
expenses.
Interest expense increased $554,789 in the three months ended March 31, 1997
over the comparable period in 1996. The increase was due primarily to an
increase in the average outstanding balance under the line of credit from $82.5
million for the three months ended March 31, 1996 to $116.4 million for the
three months ended March 31, 1997.
Funds From Operations were $7,070,545 or $0.29 per share for the three months
ended March 31, 1997, compared to $3,665,063 or $0.24 per share for the three
months ended March 31, 1996. The Company considers Funds From Operations to be a
key measure of a REIT's performance and believes that Funds From Operations
should be considered along with, but not as an alternative to, net income and
cash flows as a measure of the Company's operating performance and liquidity.
10
<PAGE> 11
Management's Discussion and Analysis of
Financial Condition and Results of Operations, Continued
RESULTS OF OPERATIONS, Continued
The following is a reconciliation of income before minority interest to Funds
From Operations:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1997 1996
----------- -----------
<S> <C> <C>
Income before minority interest $ 3,285,784 $ 1,359,642
Add:
Depreciation of buildings, furniture
and equipment 3,784,761 2,305,421
----------- -----------
Funds From Operations $ 7,070,545 $ 3,665,063
=========== ===========
Weighted average number of outstanding shares of
Common Stock and Units of the Partnership 24,553,139 15,589,377
=========== ===========
Funds From Operations per Share and Unit $ .29 $ .24
=========== ===========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of cash to meet its cash requirements, including
distributions to shareholders, is its share of the Partnership's cash flow. The
Partnership's principal source of revenue is rent payments from the Lessee
pursuant to the Percentage Leases. The Lessee's obligations under the Percentage
Leases are guaranteed by Interstate Hotels Company ("Interstate"), a publicly
traded hotel management company. Interstate is the parent company of the general
partner of the Lessee, Interstate Hotels Corporation.
Cash and cash equivalents as of March 31, 1997 were $123,306, compared to
$128,974 at December 31, 1996. Additionally, all of the March 31, 1997
receivable due from the Lessee was received in April 1997. Net cash provided by
operating activities for the three months ended March 31, 1997 was $6,440,463.
The Company intends to make additional investments in hotel properties and may
incur, or cause the Partnership to incur, indebtedness to make such investments
or to meet distribution requirements imposed on a REIT under the Code to the
extent that working capital and cash flow from the Company's investments are
insufficient to make such distributions. The Company's Charter limits
11
<PAGE> 12
Management's Discussion and Analysis of
Financial Condition and Results of Operations, Continued
LIQUIDITY AND CAPITAL RESOURCES, Continued
aggregate indebtedness to 45% of the Company's investment in hotel properties,
at cost, after giving effect to the Company's use of proceeds from any
indebtedness. The Company's consolidated indebtedness is 36.2% of its investment
in hotels, at cost, at March 31, 1997. At March 31, 1997, the Company had
outstanding indebtedness of $138.6 million.
The Company's long-term debt at March 31, 1997 consists of (i) a Line of Credit
("Line of Credit") with a total commitment of $130 million and (ii) an issue of
Commercial Mortgage Bonds ("Bonds") in the original amount of $88 million.
The Line of Credit bears interest at 1.75% over the 30, 60, or 90-day LIBOR
(7.4% at March 31, 1997). At March 31, 1997, the Company had outstanding debt on
the Line of Credit of approximately $50.8 million, leaving approximately $79
million in the unused portion of the Line of Credit. The Line of Credit is
collateralized by a first mortgage on twenty-two of the fifty-five hotels owned
by the Partnership as of March 31, 1997 and will be collateralized by hotels
acquired in the future using proceeds from the Line of Credit. The Line of
Credit extends through November 1998 with an additional one-year renewal option.
The Bonds are payable in monthly installments of approximately $697,000,
including interest. The outstanding principal balance on the Bonds was
approximately $87.8 million at March 31, 1997. The Bonds are collateralized by a
first mortgage on twenty-three of the hotels owned by the Company.
The Company expects to repay these bonds in full within 10 years.
During the three months ended March 31, 1997, the Company invested approximately
$3.1 million to fund capital improvements to its properties, including
replacement of carpets, drapes, renovation of common areas and improvement of
hotel exteriors. Most of these capital improvements were required by the
franchisors on hotels that the Company purchased as part of the franchisors'
product improvement plan ("PIP"). The Company took the PIP into consideration
when negotiating the prices for these properties, and, as a result, purchased
them at substantially reduced prices. In addition, the Company has committed to
fund approximately $8 million during the remainder of 1997 for capital
improvements. The Company intends to fund such improvements out of future cash
from operations, present cash balances and borrowings under the Line of Credit.
Under the Line of Credit and the Bonds, the Partnership has agreed to fund a
minimum of 4% of room revenues per quarter on a cumulative basis, for the
ongoing replacement or refurbishment of furniture, fixtures and equipment at the
hotels. Management believes that these amounts will be sufficient to fund
required expenditures for the term of the Percentage Leases for the capital
improvements anticipated. Recurring repairs and maintenance are performed by
the Lessee.
12
<PAGE> 13
Management's Discussion and Analysis of
Financial Condition and Results of Operations, Continued
LIQUIDITY AND CAPITAL RESOURCES, Continued
During the three months ended March 31, 1997, the Partnership declared
distributions in the aggregate of $6,901,439 to its partners, including the
Trust, or $.28 per Unit, and the Company declared distributions in the aggregate
of $6,634,118, or $.28 per share to its shareholders.
The Company expects to meet its short-term liquidity requirements generally
through net cash provided by operations, existing cash balances and, if
necessary, short-term borrowings under its Line of Credit. The Company believes
that its net cash provided by operations will be adequate to fund both operating
requirements and payment of dividends by the Company in accordance with REIT
requirements.
The Company expects to meet its long-term liquidity requirements, such as
scheduled debt maturities and property acquisitions, through long-term secured
and unsecured borrowings, the issuance of additional equity securities of the
Company, or, in connection with acquisitions of hotel properties, issuance of
Units in the Partnership. Pursuant to the Partnership Agreement for the
Partnership, holders of Units have the right to require the Partnership to
redeem their Units. During the three months ended March 31, 1997, no Units were
tendered for redemption. Pursuant to the Partnership Agreement, the Company has
the option to redeem Units tendered for redemption on a one-for-one basis for
shares of Common Stock or for an equivalent amount of cash. The Company
anticipates that it will acquire any Units tendered for redemption in the
foreseeable future in exchange for shares of Common Stock.
INFLATION
Operators of hotels, including the Lessee and any third-party manager retained
by the Lessee, in general possess the ability to adjust room rates quickly.
However, competitive pressures have limited and may in the future limit the
ability of the Lessee and any third-party manager retained by the Lessee to
raise room rates in response to inflation.
SEASONALITY
The hotel industry is seasonal in nature. The Hotels' operations historically
reflect higher occupancy rates and ADR during the second and third quarters.
This seasonality can be expected to cause fluctuations in the Partnership's
quarterly revenue to the extent that it receives Percentage Rent. To the extent
that cash flow from operating activities from the Hotels for a quarter is
insufficient to generate Percentage Lease revenue necessary to fund all of the
distributions for such quarter, the Company may maintain the annual distribution
rate by funding seasonal-related shortfalls with available cash or borrowings
under the Line of Credit.
13
<PAGE> 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Pursuant to the General Instructions to Rule 305 of Regulation S-K, the
quantitative and qualitative disclosures called for by this Item 3 and by Rule
305 of Regulation S-K are inapplicable to the Company at this time.
14
<PAGE> 15
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits -- The following exhibits are filed in this Quarterly Report
on Form 10-Q.
10.1 Indenture dated as of February 6, 1997 among EQI Financing
Partnership I, L.P., as Issuer, LaSalle National Bank, as
Trustee, and ABN AMBRO Bank N.V., as Fiscal Agent.
10.2 Form of Deed of Trust dated as of February 6, 1997 by EQI
Financing Partnership I, L.P. in favor of LaSalle National
Bank, as Trustee.
10.3 Second Amendment to Master Agreement dated as of February 6,
1997 by Equity Inns, Inc., Equity Inns Partnership, L.P., EQI
Financing Partnership I, L.P., Interstate Hotels Corporation,
Crossroads/Memphis Partnership, L.P., Crossroads/Memphis
Financing Company, L.L.C., and Crossroads Future Company,
L.L.C.
27 Financial Data Schedule (filed only electronically with the
Securities and Exchange Commission)
(b) Reports on Form 8-K -- The Company did not file any Current Reports on
Form 8-K during the period covered by this Quarterly Report on Form
10-Q.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
Equity Inns, Inc.
April 30, 1997 By: /s/Howard A. Silver
- ----------------------- ----------------------------------------------------
Date Howard A. Silver
Vice President of Finance, Secretary, Treasurer, and
Chief Financial Officer (Principal Financial and
Accounting Officer)
16
<PAGE> 1
EXHIBIT 10.1
- -------------------------------------------------------------------------------
INDENTURE
among
EQI FINANCING PARTNERSHIP I, L.P.,
Issuer,
LASALLE NATIONAL BANK,
Indenture Trustee
and
ABN AMRO BANK N.V.,
Fiscal Agent
Dated as of February 6, 1997
- -------------------------------------------------------------------------------
Relating to
EQI FINANCING PARTNERSHIP I, L.P.
COMMERCIAL MORTGAGE BONDS, SERIES 1997-1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PRELIMINARY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GRANTING CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I.
DEFINITIONS
SECTION 1.01. General Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II.
THE BONDS
SECTION 2.01. Payments of Principal and Interest on the Bonds. . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.02. Denominations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.03. Execution, Authentication, Delivery and Dating. . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.04. Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Bonds. . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.06. Payments on the Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.07. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.08. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.09. Authentication and Delivery of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.10. Forms of Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.11. Termination of Book-Entry System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.12. General Restrictions on Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.13. Transfers of Bonds from One Form to Another. . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.14. No Obligation to Monitor Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III.
COVENANTS
SECTION 3.01. Payment of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.02. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.03. Money for Bond Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.04. Protection of Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
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ARTICLE IV.
SATISFACTION AND DISCHARGE
<S> <C> <C>
SECTION 4.01. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.02. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V.
DEFAULTS AND REMEDIES
SECTION 5.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.04. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.05. Optional Preservation of Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.06. Indenture Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.07. Indenture Trustee May Enforce Claims without
Possession of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.08. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.09. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.10. Unconditional Rights of Bondholders to Receive
Principal and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.11. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.12. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.13. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.14. Control by Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.15. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.16. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.17. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.18. Rights Upon a Nonrecoverable Advance Determination . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.19. Action on Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.20. No Recourse to Other Assets of the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.21. Franchise Agreements, Allocation Affidavits, Etc. . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VI.
THE INDENTURE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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SECTION 6.02. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.03. Rights of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.04. Not Responsible for Recitals or Issuance of Bonds . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.05. May Hold Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.06. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.07. Compensation, Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.08. Eligibility: Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.09. Indenture Trustee's Capital and Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.10. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.11. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.12. Merger or Consolidation of the Indenture Trustee and the Fiscal Agent . . . . . . . . . . . 42
SECTION 6.13. Co-Trustees and Separate Indenture Trustees . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.14. Servicing Agreement and Certain Documents . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.15 Review of Mortgage Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII.
BONDHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer to Furnish Indenture Trustee Names and
Addresses of Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.02. Preservation of Information: Communications to
Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.03. Reports by Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.04. Reports by Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VIII.
ACCOUNTS, PAYMENTS OF INTEREST AND
PRINCIPAL, AND RELEASES
SECTION 8.01. Collection of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.02. Collateral Proceeds Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.03. General Provisions Regarding the Collateral
Proceeds Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.04. Central Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.05. Reports by Indenture Trustee to Bondholders;
Access to Certain Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.06. Release of Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.07. Amendment to Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
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<S> <C> <C>
SECTION 8.08. Appointment of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.09. Termination of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.10. Appointment of Custodians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.11. The Fiscal Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE IX.
SUPPLEMENTAL INDENTURES AND
MODIFICATIONS OF OTHER LOAN DOCUMENTS
SECTION 9.01. Supplemental Indentures without Consent of
Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.02. Supplemental Indentures with Consent of Bondholders . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.03. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.04. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.05. Reference in Bonds to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.06. Amendments to Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.07. Amendments to Governing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE X.
MISCELLANEOUS
SECTION 10.01. Compliance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.02. Form of Documents Delivered to Indenture Trustee . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.03. Acts of Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.04. Notices to Indenture Trustee and Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.05. Notices and Reports to Bondholders; Waiver of Notices . . . . . . . . . . . . . . . . . . . 60
SECTION 10.06. Rules by Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.07. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.08. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.09. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.10. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.11. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.14. Issuer Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.15. Usury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.16 Streit Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.17 Use of Schedule C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
</TABLE>
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<TABLE>
<S> <C>
SCHEDULE A Schedule of Mortgaged Properties and Initial Allocated
Loan Amounts
SCHEDULE B Amortization Schedule
SCHEDULE C Schedule of Surveys, Property Condition Reports and
Environmental Reports
EXHIBIT A Form of Class A Bond
EXHIBIT B Form of Class B Bond
EXHIBIT C Form of Class C Bond
EXHIBIT D Regulation S Exchange Certificate (Bond Owner)
EXHIBIT E Regulation S Exchange Certificate (Euroclear or Cedel)
EXHIBIT F Letter Agreement (to the Depository Trust Company)
EXHIBIT G Transferee Agreement
EXHIBIT H Transfer Certificate
EXHIBIT I Rule 144A Certificate
EXHIBIT J Forms of Franchisor Comfort Letters
EXHIBIT K Form of Allocation Affidavit
ANNEX I Glossary
</TABLE>
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PARTIES
THIS INDENTURE, dated as of February 6, 1997 (as amended or
supplemented from time to time as permitted hereby, this "Indenture"), among
EQI FINANCING PARTNERSHIP I, L.P., a Tennessee limited partnership (together
with its permitted successors and assigns, the "Issuer"), LASALLE NATIONAL
BANK, a nationally chartered bank, as trustee (together with its permitted
successors in the trusts hereunder, the "Indenture Trustee"), and ABN AMRO BANK
N.V., a Netherlands banking corporation, as fiscal agent of the Indenture
Trustee (together with its permitted successors and assigns, the "Fiscal
Agent").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for its Commercial Mortgage Bonds, Series 1997-1, Class A,
Class B and Class C (the "Bonds"), issuable as provided in this Indenture. All
covenants and agreements made by the Issuer herein are for the benefit and
security of the Holders of the Bonds. The Issuer is entering into this
Indenture, and the Indenture Trustee is accepting the trusts created hereby,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged.
The Issuer is the owner of the parcels of real property listed on
Schedule A to this Indenture (the "Premises") and the Improvements and
Equipment and various rights related thereto (as more fully described in the
granting clauses of the Mortgages (as defined below), the "Mortgaged
Properties"). As of the date hereof, the Issuer has granted the Indenture
Trustee a mortgage, deed of trust, deed to secure debt or other security
instrument (each, a "Mortgage") on each of the Mortgaged Properties to secure
payment of the Bonds. This Indenture is intended to confirm the granting of
those Mortgages and, inter alia, to provide for the administration of the
Bonds.
All things necessary to make this Indenture a valid agreement of the
Issuer in accordance with its terms have been done.
GRANTING CLAUSE
The Issuer hereby confirms the Grants it gave in the Mortgages to the
Indenture Trustee, for the exclusive benefit of the Bondholders, of all of the
Issuer's right, title and interest in and to the Mortgaged Properties relating
to the Premises listed in Schedule A to this Indenture, including the related
Mortgage Files. The Issuer also hereby Grants to the Indenture Trustee, for
the exclusive benefit of the Bondholders, all of the Issuer's right, title and
interest in and to (a) all cash, instruments or other property held or required
to be deposited in the Loss Proceeds Account, the Central Account (including
the related Sub-Accounts) or the Collateral Proceeds Account, including any
income on funds deposited in, or investments made with funds deposited in, the
Loss Proceeds Account, the Central Account or the Collateral Proceeds Account,
(b) all Required Insurance Policies and (c) all proceeds of the conversion,
voluntary or involuntary, of
<PAGE> 8
any of the foregoing into cash or other liquid assets, including, without
limitation, all Insurance Proceeds, Condemnation Proceeds and Liquidation
Proceeds.
Such Grants are made, however, in trust to secure (i) the payment of
all amounts due on the Bonds in accordance with their terms, (ii) the payment
of all other sums payable under this Indenture and (iii) compliance with the
provisions of this Indenture, all as provided in this Indenture.
The Indenture Trustee acknowledges such Grant and the Grants given in
the Mortgages and confirmed herein, accepts the trusts hereunder in accordance
with the provisions of this Indenture and agrees to perform the duties herein
required to the end that the interests of the Bondholders may be adequately and
effectively protected.
ARTICLE I.
DEFINITIONS
SECTION 1.01. GENERAL DEFINITIONS
Except as otherwise specified or as the context may otherwise require,
capitalized terms used herein have the respective meanings set forth in the
Glossary attached hereto as Annex I for all purposes of this Indenture.
ARTICLE II.
THE BONDS
SECTION 2.01. PAYMENTS OF PRINCIPAL AND INTEREST ON THE BONDS.
(a) General Provisions with Respect to Principal and Interest
(i) The Bonds shall be designated generally as the
"Commercial Mortgage Bonds, Series 1997-1" of the Issuer.
(ii) The aggregate principal amount of Bonds that may be
authenticated and delivered under the Indenture is limited to
$88,000,000, except for the Bonds authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Bonds pursuant to Sections 2.04, 2.05 or 9.05 of this Indenture. The
Bonds shall consist of three Classes, having designations, initial
principal amounts, Class Interest Rates and Stated Maturities as
follows:
2
<PAGE> 9
<TABLE>
<CAPTION>
Initial
Principal Class Interest
Designation Amount Rate Stated Maturity
----------- ------- ------------- ----------------
<S> <C> <C> <C>
Series 1997-1, Class A $27,400,000 6.825% November 20, 2006
Series 1997-1, Class B $50,600,000 7.370% December 20, 2015
Series 1997-1, Class C $10,000,000 7.580% February 20, 2017
</TABLE>
(iii) The Bonds shall be issued in the form specified in
Section 2.10.
(iv) Subject to this Section 2.01, Section 3.01 and
Section 5.10, the principal of each Class of Bonds shall be payable in
installments as described herein ending no later than the Stated
Maturity for such Class, unless the principal balance of the Bonds
becomes due and payable at an earlier date by declaration of
acceleration or otherwise.
(v) Notwithstanding any provision in this Indenture to
the contrary, unless expressly stated otherwise, any reference herein
to accrued and unpaid interest shall not include accrued Excess
Interest or interest on accrued Excess Interest.
(b) Scheduled Payments. Except as otherwise provided herein, the
aggregate amount of principal and interest on the Bonds due and payable on each
Payment Date shall be equal to the Scheduled Payment for such Payment Date.
All Scheduled Payments made with respect to the Bonds shall be applied on each
Payment Date in accordance with this Section 2.01 first, to the payment of
accrued and unpaid interest on the Class A Bonds on such Payment Date and then
to principal due on the Class A Bonds, second, to the payment of accrued and
unpaid interest on the Class B Bonds and then to principal due on the Class B
Bonds, and third, to the payment of accrued and unpaid interest on the Class C
Bonds and then to principal due on the Class C Bonds. The Scheduled Payments
reflected on the original Amortization Schedule shall be (i) reduced to reflect
a Prepayment in full of a Class of Bonds and (ii) adjusted following a partial
Prepayment of a Class of Bonds to reflect the reamortization of such Class of
Bonds based on the remaining term of its amortization schedule and its reduced
principal balance, calculated by the Servicer pursuant to the Servicing
Agreement in the same manner as the original Amortization Schedule.
(c) Interest Payments.
(i) With respect to each Payment Date or Special Payment
Date, interest on each Class of Bonds shall accrue at its respective
Class Interest Rate from and including the previous Payment Date (or
the Closing Date in the case of the first Payment Date) through and
including the Accounting Date for the Payment Date or Special Payment
Date on which such interest shall be payable, such interest to accrue
on the principal balance of such Class of Bonds as of such Accounting
Date (or on the prepaid principal
3
<PAGE> 10
to be paid on such Class of Bonds on the Special Payment Date).
Interest on the Bonds will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(ii) If any Scheduled Payment is not paid in full by the
Issuer in immediately available funds within five days after the
related Payment Date, then, regardless of whether a P&I Advance is
made with respect to such Scheduled Payment, interest shall accrue at
the applicable Default Rate on such unpaid portion of the Scheduled
Payment due on the Class A, Class B or Class C Bonds, respectively,
during the period from and including such Payment Date through and
including the day preceding the date on which such amount is paid in
full by the Issuer. Holders of the Class A, Class B or Class C Bonds
are entitled to interest paid at the Default Rate only if the
Scheduled Payment due and payable on such Class was not paid or
advanced within five days after the related Payment Date. Interest
paid at the Default Rate may be deposited either in the Central
Account or the Collateral Proceeds Account and will be applied with
other amounts in such accounts in accordance with the priorities set
forth in the Servicing Agreement or this Indenture, respectively.
(iii) In addition to interest at the applicable Class
Interest Rate, in the event the Bonds have not been paid in full by
the Trigger Date, each Class of Bonds will bear Excess Interest from
and including such date on the principal balance of such Class of
Bonds. Such Excess Interest shall not be payable on a Class of Bonds
until the date on which all principal on all Classes of Bonds has been
paid in full. Accrued and unpaid Excess Interest on a Class of Bonds
shall bear interest at a rate per annum of 2% above the greater of (A)
the Class Interest Rate for such Class of Bonds and (B) the Treasury
Rate applicable to such Class of Bonds, and shall not be payable until
such time that Excess Interest is payable on the Bonds. Accrued and
unpaid Excess Interest and interest accrued thereon, when payable on
the Bonds, will be applied in sequential order to the Class A, Class B
and Class C Bonds until each Class has been paid such amounts in full.
Interest accrued and unpaid on Excess Interest on a Class of Bonds
shall be payable prior to accrued and unpaid Excess Interest on such
Class of Bonds.
(d) Principal Payments.
(i) On each Payment Date, the principal portion of each
Scheduled Payment shall be payable on the Class A, Class B and Class C
Bonds in the amount set forth on the Amortization Schedule or,
following the first Prepayment of the Bonds, in the amount reflecting
the adjustment in the Scheduled Payments from time to time pursuant to
Section 2.01(b). Principal payments (including Prepayments) on the
Bonds of each Class shall be made to the Holders of the Bonds of such
Class pro rata in the proportion that the principal balance of each
Outstanding Bond of such Class bears to the aggregate principal
balance of all Bonds of such Class.
4
<PAGE> 11
(ii) Beginning with the Trigger Date and continuing on each
Payment Date thereafter until the Bonds are paid in full, the Issuer
shall pay in addition to scheduled principal the Excess Principal
Payment for such Payment Date.
(iii) Subject to Sections 5.08 and 8.02, Excess Principal
Payments and Prepayments on the Bonds will be applied in sequential
order to the Class A, Class B and Class C Bonds until each such Class
has been paid in full.
(e) Prepayments and Yield Maintenance Premiums.
(i) On any Payment Date following the Lock-Out Period, the
Issuer may make voluntary Prepayments on the Bonds, in whole or in
part, provided that:
(A) no Event of Default shall have occurred and be
continuing (other than an Event of Default that will be cured
by such Prepayment);
(B) the Issuer shall have given no less than 10 days'
prior written notice to the Indenture Trustee and the
Servicer, such notice to specify the Class or Classes of Bonds
to be prepaid and the amount of such Prepayment;
(C) the Issuer pays with respect to the Bonds being
prepaid the applicable Yield Maintenance Premium, except that
no Yield Maintenance Premium will be required to be paid with
respect to such Prepayment to be applied on a Class of Bonds
during the Prepayment Window;
(D) if such Prepayment is being made in connection
with a Release of a Mortgaged Property, the conditions
precedent for a Release are satisfied; and
(E) all amounts required to be paid by the Issuer in
connection with such Prepayment are received by the Indenture
Trustee no later than the Remittance Date for the Payment Date
on which the Prepayment is to be applied, together with all
other amounts required to be paid by the Issuer on such
Payment Date.
Notwithstanding the foregoing, Prepayments made in connection
with Permitted Prepayment Events shall not be subject to the Lock-Out
Period or payment of the Yield Maintenance Premium.
(ii) Prepayment resulting from an Event of Loss shall be
payable on the related Special Payment Date and the portion of such
Prepayment allocable to interest shall equal the amount necessary to
pay accrued and unpaid interest on the portion of such Prepayment to
be allocable as principal at the applicable Class Interest Rate for
the Class of Bonds on which the prepaid principal will be applied.
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(iii) The Yield Maintenance Premium, to the extent required
to be paid pursuant hereto or the related Mortgage, will be applied as
excess interest for each Class of Bonds to which the prepaid principal
will be applied.
(f) Notwithstanding any of the foregoing provisions with respect
to payments of principal of and interest on the Bonds, if the Bonds have become
or been declared due and payable following an Event of Default and such
acceleration of maturity and its consequences have not been rescinded and
annulled, then payments of principal of and interest on the Bonds shall be made
in accordance with Section 5.08.
SECTION 2.02. DENOMINATIONS.
The Bonds shall be issuable only as registered Bonds in the minimum
denomination of $100,000 and integral multiples of $1,000 in excess thereof.
SECTION 2.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
(a) The Bonds shall be executed on behalf of the Issuer by the
President or one of the Vice Presidents of the Issuer's General Partner. The
signature of such officer on the Bonds may be manual or facsimile.
(b) Bonds bearing the manual or facsimile signature of an
individual who was at any time a proper officer of the General Partner shall
bind the Issuer, notwithstanding that such individual has ceased to hold such
office prior to the authentication and delivery of such Bonds or did not hold
such office at the date of such Bonds.
(c) At any time and from time to time after the execution and
delivery of this Indenture, the Issuer may deliver Bonds executed on behalf of
the Issuer to the Indenture Trustee for authentication; and the Indenture
Trustee shall authenticate and deliver such Bonds as in this Indenture provided
and not otherwise.
(d) The form of the Indenture Trustee's certificate of
authentication is as follows:
This is one of the Class ___ Bonds referred to in the
within-mentioned Indenture.
LaSalle National Bank,
as Indenture Trustee
By:
-----------------------
Authorized Signatory
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(e) Each Bond authenticated on the Closing Date shall be dated the
Closing Date. All other Bonds which are authenticated after the Closing Date
for any other purpose hereunder shall be dated the date of their
authentication.
(f) No Bond shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears on such Bond a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized officers or employees, and such certificate upon any Bond shall be
conclusive evidence, and the only evidence, that such Bond has been duly
authenticated and delivered hereunder.
SECTION 2.04. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Issuer shall cause to be kept a register (the "Bond
Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of Bonds and the
registration of transfers of Bonds. The Indenture Trustee is hereby initially
appointed "Bond Registrar" for the purpose of registering Bonds and transfers
of Bonds as herein provided. Upon any resignation of any Bond Registrar
appointed by the Issuer, the Issuer shall promptly appoint a successor or, in
the absence of such appointment, shall assume the duties of Bond Registrar.
(b) At any time the Indenture Trustee is not also the Bond
Registrar, the Indenture Trustee shall be a co-Bond Registrar. The Issuer
shall cause each co-Bond Registrar to furnish the Bond Registrar promptly after
each authentication of a Bond by it appropriate information with respect
thereto for entry by the Bond Registrar into the Bond Register. If the
Indenture Trustee shall at any time not be authorized to keep and maintain the
Bond Register, the Indenture Trustee shall have the right to inspect such Bond
Register at all reasonable times and to rely conclusively upon a certificate of
the Person in charge of the Bond Register as to the names and addresses of the
Holders of the Bonds and the principal amounts and numbers of such Bonds as
held.
(c) Upon surrender for registration of transfer of any Bond at the
office or agency of the Issuer to be maintained as provided in Section 3.02,
the Issuer shall execute, and the Indenture Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Bonds of any authorized denominations and of a like aggregate principal
amount.
(d) At the option of the Holder, Bonds may be exchanged for other
Bonds of any authorized denominations, and of a like aggregate initial
principal amount, upon surrender of the Bonds to be exchanged at such office or
agency. Whenever any Bonds are so surrendered for exchange, the Issuer shall
execute, and the Indenture Trustee shall authenticate and deliver, the Bonds
that the Bondholder making the exchange is entitled to receive.
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<PAGE> 14
(e) All Bonds issued upon any registration of transfer or exchange
of Bonds shall be the valid obligations of the Issuer, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Bonds
surrendered upon such registration of transfer or exchange.
(f) Every Bond presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by the Holder thereof or his attorney duly authorized in writing.
(g) No service charge shall be made for any registration of
transfer or exchange of Bonds, but the Issuer or the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge as may be imposed in connection with any registration of transfer or
exchange of Bonds.
SECTION 2.05. MUTILATED, DESTROYED, LOST OR STOLEN BONDS.
(a) If (1) any mutilated Bond is surrendered to the Indenture
Trustee or the Indenture Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Bond, and (2) there is delivered to the
Indenture Trustee such security or indemnity as may be required by the Issuer
and the Indenture Trustee to save each of the Issuer and the Indenture Trustee
harmless, then, in the absence of notice to the Issuer or the Indenture Trustee
that such Bond has been acquired by a bona fide purchaser, the Issuer shall
execute and upon its request the Indenture Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Bond, a new Bond or Bonds of the same tenor and aggregate initial
principal amount bearing a number not contemporaneously outstanding. If, after
the delivery of such new Bond, a bona fide purchaser of the original Bond in
lieu of which such new Bond was issued presents for payment such original Bond,
the Issuer and the Indenture Trustee shall be entitled to recover such new Bond
from the person to whom it was delivered or any person taking therefrom, except
a bona fide purchaser, and shall be entitled to recover upon the security or
indemnity, provided therefor to the extent of any loss, damage, cost or
expenses incurred by the Issuer or the Indenture Trustee in connection
therewith. If any such mutilated, destroyed, lost or stolen Bond shall have
become or shall be about to become due and payable, instead of issuing a new
Bond, the Issuer may pay such Bond without surrender thereof, except that any
mutilated Bond shall be surrendered.
(b) Upon the issuance of any new Bond under this Section, the
Issuer, the Indenture Trustee or the Bond Registrar may require the payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including the
fees and expenses of the Indenture Trustee or the Bond Registrar) connected
therewith.
(c) Every new Bond issued pursuant to this Section in lieu of any
destroyed, lost or stolen Bond shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Bond shall be at any time enforceable by anyone, and shall
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<PAGE> 15
be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Bonds duly issued hereunder.
(d) The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Bonds.
SECTION 2.06. PAYMENTS ON THE BONDS.
(a) Payments on Bonds issued as Global Bonds will be made by or on
behalf of the Indenture Trustee to DTC or its nominee. Payments on any IAI
Bonds or Definitive Bonds that are punctually paid or duly provided for by the
Issuer on the applicable Payment Date (or Special Payment Date) shall be paid
to the Person in whose name such Bond (or one or more Predecessor Bonds) is
registered at the close of business on the Record Date for such Payment Date
(or Special Payment Date) by wire transfer of immediately available funds to
the account of a Bondholder, unless such Bondholder has not either provided the
Indenture Trustee with wiring instructions in writing by five days prior to the
related Record Date or provided the Indenture Trustee with such instructions
for any previous Payment Date, in which case, payments on the Bonds will be
made by check mailed to such Person's address as it appears in the Bond
Register on such Record Date. Notwithstanding the above, the final installment
of principal payable with respect to such Bond shall be payable as provided in
subsection (c) below of this Section 2.06. A fee may be charged by the
Indenture Trustee to a Bondholder of Definitive Bonds (or IAI Bonds) for any
payment made by wire transfer. Any required payments on the Bonds not
punctually paid or duly provided for shall be payable as soon as funds are
available to the Indenture Trustee for payment thereof, or if Section 5.08
applies, pursuant to Section 5.08.
(b) All reductions in the principal amount of a Bond (or one or
more Predecessor Bonds) effected by payments of installments of principal made
on any Payment Date (or Special Payment Date) shall be binding upon all Holders
of such Bond and of any Bond issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof, whether or not such payment is
noted on such Bond.
(c) The final installment of principal of each Bond shall be
payable only upon presentation and surrender thereof on or after the Payment
Date (or Special Payment Date) therefor at the Indenture Trustee's Corporate
Trust Office or New York Presenting Office pursuant to Section 3.02. Whenever
the Indenture Trustee expects that the entire remaining unpaid principal
balance of any Bond will become due and payable on the next Payment Date (or
Special Payment Date), it shall, no later than one Business Day prior to such
Payment Date (or Special Payment Date), telecopy or hand deliver to each Person
in whose name a Bond to be so retired is registered at the close of business on
such otherwise applicable Record Date a notice to the effect that:
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(i) the Indenture Trustee expects that funds sufficient
to pay such final installment will be available in the Collateral
Proceeds Account on such Payment Date (or Special Payment Date); and
(ii) if such funds are available, (A) such final
installment will be payable on such Payment Date (or Special Payment
Date), but only upon presentation and surrender of such Bond at the
office or agency of the Indenture Trustee maintained for such purpose
pursuant to Section 3.02 (the address of which shall be set forth in
such notice) and (B) no interest shall accrue on such Bond after such
Payment Date (or Special Payment Date).
(d) Subject to the foregoing provisions of this Section, each Bond
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Bond shall carry the rights to unpaid principal and
interest and other amounts that were carried by such other Bond. Any checks
mailed pursuant to subsection (a) of this Section 2.06 and returned undelivered
shall be held in accordance with Section 3.03.
(e) Not later than each Payment Date, the Indenture Trustee shall
prepare a statement (a "Payment Date Statement") with respect to such Payment
Date setting forth:
(i) the amount of the related Scheduled Payment allocable
as interest and principal to the Class A Bonds, Class B Bonds and
Class C Bonds on such Payment Date;
(ii) the amount of interest actually paid to Class A
Bondholders, Class B Bondholders and Class C Bondholders on such
Payment Date;
(iii) the amount of Excess Principal Payments payable on
each Class of Bonds on such Payment Date and the aggregate amount of
scheduled principal actually paid to Class A Bondholders, Class B
Bondholders and Class C Bondholders on such Payment Date;
(iv) the aggregate amount of Prepayments, including
Release Price payments, made on each of the Class A, Class B and Class
C Bonds on such Payment Date and any other Prepayments made on a
Special Payment Date (and any interest thereon) to the extent not
previously reported and the principal balance of the Outstanding Class
A Bonds, Class B Bonds and Class C Bonds after giving effect to such
payments and any scheduled payments of principal on such Payment Date;
(v) the amount of any Yield Maintenance Premiums paid to
the Class A Bonds, Class B Bonds and Class C Bonds with respect to
such Payment Date;
(vi) the amount of Excess Interest accrued with respect to
each of the Class A, Class B and Class C Bonds as of such Payment Date
since the previous Payment Date
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<PAGE> 17
and the aggregate amount of accrued and unpaid Excess Interest on each
such Class as of such Payment Date, plus interest accrued and unpaid
on such Excess Interest, for each such Class as of such Payment Date
and the amount of such Excess Interest to be paid on each such Class
on such Payment Date;
(vii) the aggregate amount of P&I Advances included in the
payments described in clauses (ii) and (iii) and the aggregate amount
of unreimbursed P&I Advances and Property Protection Advances at the
close of business on the related Determination Date (as reported by
the Servicer to the Indenture Trustee);
(viii) the amount of Indenture Trustee Fees (including
co-trustee fees payable hereunder) and Servicing Fees (as reported by
the Servicer) payable with respect to such Payment Date and any such
fees accrued but unpaid as of the related Determination Date;
(ix) the amount, if any, withdrawn from the Central
Account (as reported by the Servicer) and the Collateral Proceeds
Account and paid to the Indenture Trustee, the Fiscal Agent or the
Servicer as reimbursement for Advances, plus Advance Interest paid
thereon on or prior to the related Determination Date, to the extent
not previously reported;
(x) as reported by the Servicer to the Indenture Trustee,
the amount of (A) any withdrawals from the FF&E Reserve Sub-Account on
or prior to the related Determination Date, to the extent not
previously reported, (B) any costs for FF&E Replacements submitted to
the Servicer for reimbursement by the Issuer but unreimbursed as of
the related Determination Date, and (C) funds remaining in the FF&E
Reserve Sub-Account as of the related Determination Date;
(xi) as reported by the Servicer to the Indenture Trustee,
the amount of (A) any funds released from the Loss Proceeds Account to
the Issuer on or prior to the related Determination Date for the
purpose of Restorations or otherwise (as indicated therein), to the
extent not previously reported, (B) funds remitted to the Collateral
Proceeds Account from the Loss Proceeds Account on or prior to the
related Determination Date, to the extent not previously reported,
and (C) funds, if any, in the Loss Proceeds Account as of the related
Determination Date; and
(xii) the amount, if any, released to the Issuer from the
Central Account on such Payment Date on or prior to the related
Determination Date, as reported by the Servicer to the Indenture
Trustee, to the extent not previously reported.
In the case of information furnished pursuant to clauses (i),
(ii) and (iii) above, the amounts may be expressed as a dollar amount per
$1,000 denomination of Bonds.
(f) On each Payment Date, the related Payment Date Statement will
be delivered by the Indenture Trustee as described below only in the event it
receives the related Servicer report
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in the form and by the time required under Section 3.06 of the Servicing
Agreement. On each Special Payment Date, the Indenture Trustee shall deliver a
statement (a "Special Payment Date Statement") setting forth the aggregate
amount of Prepayments, plus interest thereon, to be paid on such Special
Payment Date to Class A Bondholders, Class B Bondholders and Class C
Bondholders and the principal balance of the Outstanding Class A Bonds, Class B
Bonds, and Class C Bonds after giving effect to such Prepayments. On each
Payment Date and Special Payment Date, the related Payment Date Statement and
Special Payment Date Statement, respectively, shall be delivered by the
Indenture Trustee to the Issuer, DTC, the Initial Purchasers and the Rating
Agency and shall also be delivered to each Bondholder as the statement required
pursuant to Section 8.05. The Indenture Trustee shall have no responsibility
to recalculate, verify or recompute information contained in any such
Servicer's report.
(g) On the Payment Date following receipt by the Indenture
Trustee, the Indenture Trustee will deliver to each Bondholder who has provided
the Indenture Trustee with a one-time written request the financial statements
and reports required to be delivered by the Issuer to the Indenture Trustee
pursuant to Section 5.01(a) of the Mortgages. The Indenture Trustee shall
have no responsibility to recalculate, verify or recompute information
contained in any such financial statements or reports.
(h) Within a reasonable period of time after the end of each
calendar year, the Indenture Trustee will be required to furnish to each person
who at any time during the calendar year was a Bondholder a statement
containing certain information set forth in paragraph (e) above, aggregated for
such calendar year or the applicable portion thereof during which such person
was a Bondholder. Such obligation will be deemed to have been satisfied to the
extent that substantially comparable information is provided pursuant to any
requirements of the Code as are from time to time in force.
SECTION 2.07. PERSONS DEEMED OWNERS.
Prior to due presentment for registration of transfer of any Bond, the
Issuer, the Indenture Trustee, any Agent and any other agent of the Issuer or
the Indenture Trustee may treat the Person in whose name any Bond is registered
as the owner of such Bond (a) on the applicable Record Date for the purpose of
receiving required payments on such Bond and (b) on any other date for all
other purposes whatsoever, and neither the Issuer, the Indenture Trustee, any
Agent nor any other agent of the Issuer or the Indenture Trustee shall be
affected by notice to the contrary.
SECTION 2.08. CANCELLATION.
All Bonds surrendered for payment, registration of transfer or
exchange shall, if surrendered to any Person other than the Indenture Trustee,
be delivered to the Indenture Trustee and shall be promptly canceled by it.
The Issuer may at any time deliver to the Indenture Trustee for cancellation
any Bond previously authenticated and delivered hereunder which the Issuer may
have acquired in any manner whatsoever, and all Bonds so delivered shall be
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promptly canceled by the Indenture Trustee. No Bonds shall be authenticated in
lieu of or in exchange for any Bonds canceled as provided in this Section,
except as expressly permitted by this Indenture. All canceled Bonds held by
the Indenture Trustee shall be held by the Indenture Trustee in accordance with
its standard retention policy, unless the Issuer shall direct by an Issuer
Order that they be destroyed or returned to it.
SECTION 2.09. AUTHENTICATION AND DELIVERY OF BONDS.
The Bonds may be executed by the Issuer and delivered to the Indenture
Trustee for authentication, and thereupon the same shall be authenticated and
delivered by the Indenture Trustee, upon Issuer Request and upon receipt by the
Indenture Trustee of the following:
(a) an Officer's Certificate evidencing the authorization
of the execution and delivery of this Indenture and the execution,
authentication and delivery of the Bonds, and specifying the Stated
Maturity, the principal amount and the Class Interest Rate of each
Class of Bonds to be authenticated and delivered; and
(b) one or more Opinions of Counsel (upon which the
Indenture Trustee may rely) regarding conditions precedent relating to
the authentication and delivery of the Bonds, which Opinions of
Counsel shall be reasonably satisfactory in form and substance to the
Indenture Trustee.
In rendering the opinions set forth in paragraph (b) above,
such counsel may rely upon officer's certificates of the General
Partner, the Issuer, the Servicer, and the Indenture Trustee, without
independent confirmation or verification with respect to factual
matters relevant to such opinions.
(c) an Officers' Certificate complying with the
requirements of Section 10.01 and stating that:
(i) the Issuer is not in Default under this
Indenture and the issuance of the Bonds will not result in any
breach of any of the terms, conditions or provisions of, or
constitute a default under, the Issuer's Certificate of
Limited Partnership or Partnership Agreement or any indenture,
mortgage, deed of trust or other agreement or instrument to
which the Issuer is a party or by which it is bound, or any
order of any court or administrative agency entered in any
proceeding to which the Issuer is a party or by which it may
be bound or to which it may be subject, and that all
conditions precedent provided in this Indenture relating to
the authentication and delivery of the Bonds have been
complied with;
(ii) the information set forth in the schedule
attached as Schedule A to this Indenture is correct; and
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(iii) attached thereto is a true and correct copy
of a letter signed by the Rating Agency confirming that the
Class A Bonds have been rated "AA," the Class B Bonds have
been rated "A" and the Class C Bonds have been rated "BBB" by
such Rating Agency.
SECTION 2.10. FORMS OF BONDS.
(a) The Class A, Class B and Class C Bonds shall be in
substantially the form set forth in Exhibits A, B and C, respectively, attached
hereto with such insertions, omissions, substitutions and other variations as
are required or permitted hereunder, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon
as may be necessary or desirable as determined by the officers executing such
Bonds, as evidenced by their execution thereof. Only the Global Bonds will
contain the first paragraph of Exhibits A, B and C.
(b) Bonds sold within the United States to investors that are
Institutional Accredited Investors, but that are not QIBs, will be issued and
registered in certificated form as IAI Bonds. Upon the written request of a
QIB that is purchasing a Bond on the Closing Date, such purchaser may obtain a
Bond in definitive, certificated form (a "Definitive Bond") rather than through
the facilities of DTC. The Definitive Bonds and the IAI Bonds may be produced
in any manner determined by the officers executing such Bonds, as evidenced by
their execution thereof.
(c) Except as set forth in paragraph (b) above, Bonds of each
Class sold within the United States to QIBs will be represented initially by a
single Global Bond in definitive, fully registered form without interest
coupons (a "Rule 144A Global Bond") and will be registered in the name of DTC
or its nominee, and deposited with the Indenture Trustee as custodian for DTC.
The aggregate principal amount of the Rule 144A Global Bond may be increased or
decreased from time to time by adjustments made on the books and records of the
Indenture Trustee and DTC or its nominee, as hereinafter provided.
(d) Bonds of each Class sold in offshore transactions in reliance
on Regulation S initially will be represented by a single Global Bond in
definitive, fully registered form without interest coupons (each, a "Regulation
S Temporary Global Bond") and will be deposited on behalf of the subscribers
therefor with the Indenture Trustee as custodian for DTC. The Regulation S
Temporary Global Bond will be registered in the name of DTC or its nominee, for
credit to the subscribers' respective accounts at Euroclear or CEDEL.
Beneficial interests in the Regulation S Temporary Global Bond may be held only
through Euroclear or CEDEL. The aggregate principal amount of the Regulation S
Temporary Global Bond may be increased or decreased from time to time by
adjustments made on the books and records of the Indenture Trustee and DTC or
its nominee, as hereinafter provided.
Within a reasonable period of time after the expiration of the 40-day
restricted period referred to in Rule 903(c)(3) of Regulation S (the "40-day
restricted period"), the Regulation S Temporary Global Bond will be exchanged
for another Global Bond registered in the name of
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<PAGE> 21
DTC or its nominee, and deposited with the Indenture Trustee as custodian for
DTC (the "Regulation S Permanent Global Bond"), but only upon delivery of
certifications of compliance in the form of Exhibit D and Exhibit E (the
"Regulation S Exchange Certificates"). Investors that hold beneficial
interests in the Regulation S Permanent Global Bond may hold such interests
through CEDEL, Euroclear or other organizations that are participants in the
DTC system. The aggregate principal amount of the Regulation S Permanent
Global Bond may be increased or decreased from time to time by adjustments made
on the books and records of the Indenture Trustee and DTC or its nominee, as
hereinafter provided.
(e) The Indenture Trustee shall deal with DTC and Participants as
representatives of the Bond Owners of such Bonds for purposes of exercising the
rights of Bondholders hereunder. Each required payment on a Global Bond shall
be paid to DTC, which shall credit the amount of such payments to the account
of its Participants in accordance with its normal procedures. Each Participant
shall be responsible for disbursing such payments to the Bond Owners of the
Global Bonds that it represents and to each indirect participating brokerage
firm (a "brokerage firm" or "indirect participating firm") for which it acts as
agent. Each brokerage firm shall be responsible for disbursing funds to the
Bond Owners of the Global Bonds that it represents. All such credits and
disbursements are to be made by DTC and the Participants in accordance with the
provisions of the Bonds. None of the Indenture Trustee, the Bond Registrar, if
any, the Issuer, or any Agents shall have any responsibility therefore except
as otherwise provided by applicable law. Requests and directions from, and
votes of, such representatives shall not be deemed to be inconsistent if they
are made with respect to different Bond Owners.
SECTION 2.11. TERMINATION OF BOOK-ENTRY SYSTEM.
(a) The book-entry system through DTC with respect to the Global
Bonds may be terminated upon the happening of any of the following:
(i) DTC or the Issuer advises the Indenture Trustee that
DTC is no longer willing or able properly to discharge its
responsibilities under the Letter Agreement (attached as Exhibit F)
and the Issuer is unable to locate a qualified successor clearing
agency satisfactory to the Indenture Trustee and the Issuer;
(ii) The Issuer, in its sole discretion but with the
consent of the Indenture Trustee, elects to terminate the book-entry
system by notice to DTC and the Indenture Trustee; or
(iii) After the occurrence of an Event of Default when such
notice shall be given pursuant to Section 6.02 (at which time the
Indenture Trustee shall promptly notify DTC of such Event of Default),
the Bond Owners of a majority in principal balance of the Outstanding
Global Bonds advise the Indenture Trustee in writing, through the
related Participants and DTC, that the continuation of a book-entry
system through DTC to the exclusion of any Definitive Bonds being
issued to any person other than DTC or its nominee is no longer in the
best interests of the Bond Owners.
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(b) Upon the occurrence of any event described in subsection (a)
above, the Indenture Trustee shall notify DTC of the occurrence of such event
and of the availability of Definitive Bonds to Bond Owners requesting the same,
in an aggregate current principal balance of the Outstanding Bonds representing
the interest of each, making such adjustments and allowances as it may find
necessary or appropriate as to accrued interest. Definitive Bonds shall be
issued only upon surrender to the Indenture Trustee of the Global Bond(s) by
DTC, accompanied by registration instructions for the Definitive Bonds.
Neither the Issuer nor the Indenture Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon issuance of the Definitive
Bonds, all references herein to obligations imposed upon or to be performed by
DTC shall cease to be applicable and the provisions relating to Definitive
Bonds shall be applicable.
SECTION 2.12. GENERAL RESTRICTIONS ON TRANSFERS.
(a) The Bonds will not be registered under the 1933 Act, or any
state securities or "blue sky" laws, and none of the Indenture Trustee, the
Fiscal Agent, the Issuer, the Placement Agent nor the Servicer are under any
obligation to register or qualify the Bonds under the 1933 Act or any state
securities laws or to provide registration rights to any purchaser. No sale,
pledge or other transfer of any Bond or any beneficial interest therein may be
made by any person unless such sale, pledge or other transfer is made (i) to
the Issuer or the Initial Purchasers, (ii) pursuant to an effective
registration statement under the 1933 Act and effective registration or
qualification under applicable state securities laws, or (iii) (A) to QIBs in
transactions complying with the requirements of Rule 144A, (B) to Institutional
Accredited Investors who sign an agreement substantially in the form of Exhibit
G hereto (a "Transferee Agreement"), or (C) in transactions outside the United
States complying with the provisions of Regulation S.
(b) Each Person who becomes a Bondholder or a Bond Owner will be
deemed to have agreed to indemnify the Issuer, the Placement Agent, the
Indenture Trustee, the Fiscal Agent and the Servicer against any liability that
may result if such holder transfers such Bond or interest in a manner that is
not exempt or in accordance with applicable federal, state and foreign
securities laws. In addition, each Bondholder and Bond Owner that does not
execute a Transferee Agreement shall be deemed to have represented and
warranted as follows:
(i) It is purchasing the Bonds for its own account or an
account with respect to which it exercises sole investment discretion,
and it or the owner of such account is (A) a QIB, and, except with
respect to the Initial Purchaser, is aware that the sale to it is
being made in reliance on Rule 144A; (B) an Institutional Accredited
Investor, or (C) not a U.S. Person for purposes of the 1933 Act and is
acquiring the Bond pursuant to Regulation S; and in the case of each
of (A) and (B) above, it is not acquiring such Bonds with a view to
any resale or distribution thereof other than in accordance with the
restrictions set forth below.
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(ii) It acknowledges that the Bonds have not been and will
not be registered under the 1933 Act or any state securities law and
may not be reoffered, resold or otherwise transferred except as
permitted below.
(iii) Each holder of a Bond described in clause (i)(A) and
(i)(B) above agrees that (A) within three years after the later of the
original issuance of the Bonds or the sale thereof by an affiliate of
the Issuer (computed in accordance with paragraph (d) of Rule 144
under the 1933 Act) or if such holder was at the date of such
transfer or during the three months preceding such date of transfer an
affiliate of the Issuer, the Bonds may not be reoffered, resold,
pledged or otherwise transferred except in compliance with any
applicable securities laws of any state of the United States and only
(1) to the Issuer or the Initial Purchaser, (2) pursuant to Rule 144A,
to a person who the holder reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A under the 1933 Act
purchasing for its own account or the account of another qualified
institutional buyer to whom notice is given that the transfer is being
made in reliance on Rule 144A, (3) outside the United States in
compliance with Rule 903 or Rule 904 of Regulation S under the 1933
Act, or (4) to an Institutional Accredited Investor, but only if, in
connection with any transfer pursuant to clause (4) and certain other
transfers as specified in the Indenture, a Transferee Agreement is
delivered by the transferee to the Indenture Trustee, and (B) it will
give the transferee notice of these restrictions on resale of the
Bonds.
(iv) Each holder of a Bond described in clause (i)(A) and
(i)(B) above understands that each such Bond, unless the Issuer
determines otherwise consistent with applicable law, will bear a
legend to the following effect:
THIS BOND HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THE HOLDER
HEREOF, BY PURCHASING THIS BOND, AGREES FOR THE BENEFIT OF THE ISSUER
AND THE INDENTURE TRUSTEE THAT THIS BOND MAY NOT BE RESOLD, PLEDGED,
OR OTHERWISE TRANSFERRED (X) WITHIN THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE HEREOF OR THE SALE HEREOF BY AN AFFILIATE OF THE
ISSUER (COMPUTED IN ACCORDANCE WITH PARAGRAPH (d) OF RULE 144 UNDER
THE 1933 ACT) OR (Y) BY AN AFFILIATE OF THE ISSUER OR BY ANY HOLDER
THAT WAS AN AFFILIATE OF THE ISSUER AT ANY TIME DURING THE THREE
MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN
IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES AND ONLY (1) TO THE ISSUER OR THE INITIAL PURCHASER, (2)
PURSUANT TO RULE 144A, TO A PERSON WHO THE HOLDER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE 1933 ACT PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF
ANOTHER QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER
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IS BEING MADE IN RELIANCE ON RULE 144A, (3) OUTSIDE THE UNITED STATES
IN COMPLIANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE 1933
ACT OR (4) TO AN INSTITUTIONAL INVESTOR THAT IS AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE 1933 ACT; AND IN CONNECTION WITH ANY TRANSFER
PURSUANT TO CLAUSE (4) AND CERTAIN OTHER TRANSFERS AS SPECIFIED IN THE
INDENTURE, A TRANSFEREE AGREEMENT IN THE APPROPRIATE FORM PROVIDED IN
THE INDENTURE MUST BE DELIVERED TO THE INDENTURE TRUSTEE.
(v) Each holder of a Bond described in subclause (i)(C)
above understands that any offers, sales or deliveries of the Bonds
purchased by it in the United States or to U.S. persons prior to the
date that is 40 days after the later of the commencement of the
offering and the date of issuance of the Bonds may constitute a
violation of United States law.
(vi) Each holder of a Bond described in subclause (i)(C)
above understands that each such Bond, unless the Issuer determines
otherwise consistent with applicable law, will bear a legend to the
following effect:
THIS BOND HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933 (THE "1933 ACT") AND PRIOR TO THE
DATE THAT IS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE
OFFERING AND THE CLOSING DATE MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
1933 ACT.
(vii) It acknowledges that (A) it has been afforded an
opportunity to request from the Issuer and to review, and it has
received, all additional information considered by it to be necessary
to verify the accuracy of the information herein and (B) no person has
been authorized to give any information or to make any representation
concerning the Bonds other than those contained in this Memorandum
and, if given or made, such other information or representation should
not be relied upon as having been authorized by the Issuer.
(viii) It has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of purchasing the Bonds, and is, and the owner of any account for
which it is acting is, able to bear the economic risk of its
investment.
(ix) It understands that the Issuer, the Indenture
Trustee, the Initial Purchaser and others will rely upon the truth and
accuracy of the foregoing acknowledgments, representations and
agreements and agrees that if any of the acknowledgments,
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representations, or warranties deemed to have been made by it by its
purchase of the Bonds are no longer accurate, it shall promptly notify
the Issuer. If it is acquiring any Bonds as fiduciary or agent for
one or more investor accounts, it represents that it has sole
investment discretion with respect to each such account and that it
has full power to make the foregoing acknowledgments, representations
and agreements on behalf of such account.
SECTION 2.13. TRANSFERS OF BONDS FROM ONE FORM TO ANOTHER.
(a) Global to Definitive or IAI Bonds. If a Bond Owner who holds
a beneficial interest in a Rule 144A Global Bond or Regulation S Permanent
Global Bond proposes to transfer a Bond (i) within the United States otherwise
than pursuant to Rule 144A and the date of such proposed transfer is prior to
three years after the later of the date of original issuance of the Bonds (or
any predecessor of such Bond) or the sale of such Bond (or any predecessor of
such Bond) by the Issuer or an Affiliate of the Issuer, or (ii) the proposed
transferee wishes to hold such Bond in definitive, certificated form, then such
Bond Owner must obtain the consent of the Indenture Trustee to the transfer.
The Indenture Trustee shall consent to such transfer if the proposed transferor
provides a transfer certificate substantially in the form of Exhibit H hereto
and the transferee delivers an executed Transferee Agreement to the Indenture
Trustee no later than 30 days prior to the date on which the transfer is to be
effectuated and reflected in the Bond Register. After approval of the
transfer, the Issuer will cause the requested IAI Bonds (in the case of clause
(i) above) or Definitive Bonds (in the case of clause (ii) above), to be
prepared for execution and delivery, and the Indenture Trustee shall
authenticate such Bond in accordance with this Indenture. Subject to DTC's
customary procedures, the Bond Owner's interest in the Bonds held by DTC will
be reduced in an amount equal to the aggregate principal amount of the Bond
being transferred (and the Rule 144A Global Bond or the Regulation S Permanent
Global Bond, as applicable, held by DTC will be modified or substituted for
accordingly) and a Definitive Bond or IAI Bond in an equal aggregate principal
amount registered in the name of the transferee shall be delivered to such
transferee. Thereafter, such transferee shall be recognized as a Bondholder
under the Indenture. In all cases, Definitive Bonds or IAI Bonds delivered in
exchange for any beneficial interests therein will be registered in the names,
and issued in any approved denominations, requested by DTC.
Regulation S Temporary Global Bonds may not be exchanged for, or
transferred to a Person who takes delivery in the form of, IAI Bonds or
Definitive Bonds.
(b) Definitive or IAI to Global Bonds. If a Bondholder that holds
a Definitive Bond or an IAI Bond wishes to transfer such Bond pursuant to Rule
144A and the proposed transferee is a QIB that wishes to hold such Bond through
DTC, then, upon written request of such Bondholder 30 days in advance,
accompanied by a certificate in the form of Exhibit I hereto (the "Rule 144A
Certificate"), and subject to the rules and procedures of DTC, the Indenture
Trustee shall arrange for such Bond to be represented by a Rule 144A Global
Bond registered to DTC. If a Bondholder that holds a Definitive Bond or IAI
Bond wishes to transfer such Bond pursuant to Regulation S and the proposed
transferee is a Person other than a U.S. Person that wishes to
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hold such Bond through DTC, then, upon written request (by presentation of a
transfer certificate in the form of Exhibit H) of such Bondholder 30 days in
advance, subject to the rules and procedures of DTC and, if applicable,
Euroclear or CEDEL, the Indenture Trustee shall arrange for such Bond to be
represented by a Regulation S Permanent Global Bond (or, if the Regulation S
Temporary Global Bond has not been exchanged for the Regulation S Permanent
Global Bond, a Regulation S Temporary Global Bond) registered in the name of
DTC or a nominee thereof.
(c) Global to Another Global. A beneficial interest in a
Regulation S Permanent Global Bond may be transferred to a person who takes
delivery in the form of an interest in a Rule 144A Global Bond, subject to the
rules and procedures of DTC and Euroclear or CEDEL and upon receipt by the
Indenture Trustee of a transfer certificate in the form of Exhibit H from the
transferor. A beneficial interest in a Rule 144A Global Bond may be
transferred to a person who takes delivery in the form of an interest in a
Regulation S Temporary Global Bond or, after the 40-day restricted period
described in 903(c)(3) of Regulation S, Regulation S Permanent Global Bond,
subject to the rules and procedures of DTC and upon receipt by the Indenture
Trustee of a transfer certificate in the form of Exhibit H.
A beneficial interest in a Regulation S Temporary Global Bond may not
be transferred to a person who takes delivery in the form of an interest in a
Rule 144A Global Bond. A Regulation S Temporary Global Bond may be exchanged
for a Regulation S Permanent Bond in accordance with Section 2.10(d).
Any beneficial interest in one of the Global Bonds that is transferred
to a person who takes delivery in the form of an interest in another Global
Bond will, upon transfer, cease to be an interest in such Global Bond and
become an interest in the other Global Bond and, accordingly, will thereafter
be subject to all transfer restrictions and other procedures applicable to
beneficial interests in such other Global Bond for as long as it remains such
an interest.
SECTION 2.14. NO OBLIGATION TO MONITOR COMPLIANCE.
Neither the Indenture Trustee nor the Bond Registrar shall have any
obligation or duty to monitor, determine or inquire as to compliance with any
restriction on transfer or exchange of Bonds or any interest therein under this
Article II or under applicable law other than to require delivery of the
agreements, certificates and/or opinions described in this Article II. Other
than as with respect to the obligations set forth in the preceding sentence,
the Indenture Trustee and the Bond Registrar shall have no liability for
transfers of Bonds including transfers made through the book-entry facilities
of DTC or between or among any DTC participants or Bond Owners, made in
violation of applicable restrictions.
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ARTICLE III.
COVENANTS
SECTION 3.01. PAYMENT OF BONDS.
The Issuer shall pay or cause to be duly and punctually paid the
principal of, and interest and other amounts on, the Bonds in accordance with
the terms of the Bonds and this Indenture. The Bonds shall be non-recourse
obligations of the Issuer and shall be limited in right of payment to amounts
available from the Trust Estate as provided in this Indenture and neither the
Issuer nor any other Person shall otherwise be liable for payments on the Bonds
except as expressly provided under the Loan Documents. If any other provision
of this Indenture conflicts or is deemed to conflict with the provisions of
this Section 3.01, the provisions of this Section 3.01 shall control.
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY.
The Issuer shall cause the Indenture Trustee to maintain an office or
agency as a location where Bonds may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Bonds and this Indenture may be served. The Indenture Trustee
has appointed its Corporate Trust Office, or in the alternative, its New York
Presenting Office as the presenting agent for such purpose and for the purpose
of presentment or surrender for payment of the Bonds and such agency shall be
maintained at the Indenture Trustee's expense.
The Issuer may also from time to time at its own expense designate one
or more other offices or agencies (in or outside the City of New York) where
the Bonds may be presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however, that (i) no
such designation or rescission shall in any manner relieve the Issuer of its
obligation to maintain an office or agency in the Borough of Manhattan, the
City of New York, the State of New York, for the purposes set forth in the
preceding paragraph, (ii) presentations or surrenders of Bonds for payment may
be made only in the City of New York, the State of New York and (iii) any
designation of an office or agency for payment of Bonds shall be subject to
Section 3.03. The Issuer will give prompt written notice to the Indenture
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
SECTION 3.03. MONEY FOR BOND PAYMENTS TO BE HELD IN TRUST.
(a) All payments of amounts due and payable with respect to any
Bonds which are to be made from amounts withdrawn from the Collateral Proceeds
Account pursuant to Section 8.02(c) or 8.02(d) or Section 5.08 shall be made on
behalf of the Issuer by the Indenture Trustee or by a Paying Agent, and no
amounts so withdrawn from the Collateral Proceeds Account for
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payments of Bonds shall be paid over to the Issuer under any circumstances
except as provided in this Section 3.03 or in Section 5.08 or 8.02(e).
(b) If the Issuer shall have a Paying Agent that is not also the
Bond Registrar, it shall furnish, or cause the Bond Registrar to furnish, no
later than each Record Date, a list, in such form as such Paying Agent may
reasonably require, of the names and addresses of the Holders of Bonds and of
the Class and principal balance of the Bonds held by each such Holder.
(c) Whenever the Issuer shall have a Paying Agent other than the
Indenture Trustee, it will, on or before the Business Day next preceding each
Payment Date (or Special Payment Date) direct the Indenture Trustee to deposit
with such Paying Agent an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Collateral Proceeds Account), such sum to be held in trust for the benefit of
the Persons entitled thereto. Any moneys deposited with a Paying Agent in
excess of an amount sufficient to pay the amounts then becoming due on the
Bonds with respect to which such deposit was made shall, upon Issuer Order, be
paid over by such Paying Agent to the Indenture Trustee for application in
accordance with Article VIII.
(d) Any Paying Agent other than the Indenture Trustee shall be
appointed by Issuer Order and at the expense of the Issuer. The Issuer shall
not appoint any Paying Agent (other than the Indenture Trustee) which is not,
at the time of such appointment, a depository institution or trust company
whose obligations would be Permitted Investments pursuant to clause (b) of the
definition of the term "Permitted Investments." The Issuer will cause each
Paying Agent other than the Indenture Trustee to execute and deliver to the
Indenture Trustee an instrument in which such Paying Agent shall agree with the
Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section, that such Paying Agent
will:
(i) allocate all sums received for payment to the Holders
of Bonds on each Payment Date (and Special Payment Date) among such
Holders in the proportion specified in the applicable Payment Date
Statement, in each case to the extent permitted by applicable law;
(ii) hold all sums held by it for the payment of amounts
due with respect to the Bonds in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(iii) if such Paying Agent is not the Indenture Trustee,
immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of the
Bonds if at any time it ceases to meet the standards set forth above
required to be met by a Paying Agent at the time of its appointment;
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(iv) if such Paying Agent is not the Indenture Trustee, at
any time during the continuance of any Default by the Issuer, upon the
written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent; and
(v) comply with all requirements of the Code, and all
regulations thereunder, with respect to the withholding of taxes from
any payments made by it on any Bonds of any applicable withholding
taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith; provided, however, that with
respect to withholding and reporting requirements applicable to
original issue discount (if any) on any of the Bonds, the Issuer has
provided the calculations pertaining thereto to the Paying Agent.
(e) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or any other purpose, by Issuer
Order direct any Paying Agent, if other than the Indenture Trustee, to pay to
the Indenture Trustee all sums held in trust by such Paying Agent, such sums to
be held by the Indenture Trustee upon the same trusts as those upon which such
sums were held by such Paying Agent; and upon such payment by any Paying Agent
to the Indenture Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
(f) Any money held by the Indenture Trustee or any Paying Agent in
trust for the payment of any amount due with respect to any Bond and remaining
unclaimed for two and one-half years after such amount has become due and
payable to the Holder of such Bond (or if earlier, three months before the date
on which such amount would escheat to a governmental entity under applicable
law) shall be discharged from such trust and paid to the Issuer; and the Holder
of such Bond shall thereafter, as an unsecured general creditor, look only to
the Issuer for payment thereof (but only to the extent of the amounts so paid
to the Issuer), and all liability of the Indenture Trustee or such Paying Agent
with respect to such trust money shall thereupon cease. The Indenture Trustee
may adopt and employ, at the expense of the Issuer, any reasonable means of
notification of such repayment (including, but not limited to, mailing notice
of such repayment to Holders whose right to interest in moneys due and payable
but not claimed is determinable from the records of the Indenture Trustee or
any Agent, at the last address of record for each such Holder).
SECTION 3.04. PROTECTION OF TRUST ESTATE.
(a) The Issuer will from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other
instruments, and will take such other action as may be necessary or advisable
to:
(i) Grant more effectively all or any portion of the
Trust Estate;
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(ii) maintain or preserve the lien of this Indenture or
carry out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee, and of the Bondholders, in the
Mortgages and the other property held as part of the Trust Estate
against the claims of all Persons and parties.
The Issuer hereby designates the Indenture Trustee its agent
and attorney-in-fact to execute any financing statement, continuation statement
or other instrument required pursuant to this Section 3.04; provided, however,
that such designation shall not be deemed to create a duty in the Indenture
Trustee to monitor the compliance of the Issuer with the foregoing covenants;
and provided further, however, that the duty of the Indenture Trustee to
execute any instrument required pursuant to this Section 3.04 shall arise only
if the Indenture Trustee has knowledge pursuant to Section 6.01(d) of the
occurrence of a failure of the Issuer to comply with the provisions of this
Section 3.04.
(b) The Indenture Trustee shall not remove any portion of the
Trust Estate that consists of money or is evidenced by an instrument,
certificate or other writing from the jurisdiction in which it was held, or to
which it is intended to be removed, as described in the Opinion of Counsel
delivered at the Closing Date pursuant to Section 2.09(b), or cause or permit
ownership or the pledge of any portion of the Trust Estate that consists of
book-entry securities to be recorded on the books of a Person located in a
different jurisdiction from the jurisdiction in which such ownership or pledge
was recorded at such time unless the Indenture Trustee shall have first
received an Opinion of Counsel (at the Issuer's expense) to the effect that the
lien and security interest created by this Indenture with respect to such
property will continue to be maintained after giving effect to such action or
actions.
ARTICLE IV.
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE.
(a) This Indenture shall cease to be of further effect except as
to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Bonds, (iii) the rights of Bondholders to
receive payments of principal thereof and interest thereon, (iv) the rights,
obligations and immunities of the Indenture Trustee and the Fiscal Agent
hereunder and (v) the rights of Bondholders as beneficiaries hereof with
respect to the property so deposited with the Indenture Trustee and payable to
all or any of them, and the Indenture Trustee, on demand of and at the expense
of the Issuer, shall execute proper instruments
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acknowledging satisfaction and discharge of this Indenture whenever the
following conditions shall have been satisfied:
(i) either
(1) all Bonds theretofore authenticated and
delivered (other than (i) Bonds which have been destroyed,
lost or stolen and which have been replaced or paid as
provided in Section 2.05, and (ii) Bonds for whose payment
money has theretofore been deposited in trust and thereafter
repaid to the Issuer, as provided in Section 3.03) have been
delivered to the Indenture Trustee for cancellation; or
(2) all Bonds not theretofore delivered to the
Indenture Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable at the
Stated Maturity within one year,
and the Issuer, in the case of clauses (2)(A) or (2)(B) above, has
deposited or caused to be deposited with the Indenture Trustee, in
trust for such purpose, cash or government securities (as such term is
defined under Section 2(16) of the Investment Company Act of 1940, as
amended) sufficient to pay and discharge the entire indebtedness on
such Bonds not theretofore delivered to the Indenture Trustee for
cancellation, for principal and interest to the Maturity of the Bonds
and in the case of Bonds that were not paid at their Stated Maturity,
for all overdue principal and all interest payable on such Bonds to
the next succeeding Payment Date therefor; and
(ii) the Issuer has paid or caused to be paid all other
sums payable hereunder by the Issuer; and
(iii) the Issuer has delivered to the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel satisfactory in form
and substance to the Indenture Trustee each stating that all
conditions precedent herein providing for the satisfaction and
discharge of this Indenture have been complied with;
then this Indenture and the lien, rights and interests created hereby and
thereby shall cease to be of further effect, and the Indenture Trustee and each
co-trustee, if any, then acting as such hereunder shall, at the expense of the
Issuer, execute and deliver all such instruments as may be necessary to
acknowledge the satisfaction and discharge of this Indenture and shall pay, or
assign or transfer and deliver, to the Issuer or upon Issuer Order all cash,
securities and other property held by it as part of the Trust Estate remaining
after satisfaction of the conditions set forth in clauses (i), (ii) and (iii)
above.
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(b) Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Issuer under Section 6.07 and the obligations
of the Indenture Trustee to the Holders of Bonds under Section 4.02 shall
survive.
SECTION 4.02. APPLICATION OF TRUST MONEY.
All cash or government securities and proceeds therefrom deposited
with the Indenture Trustee pursuant to Sections 3.03 and 4.01 shall be held in
trust and applied by it, in accordance with the provisions of the Bonds and
this Indenture, to the payment, either directly or through any Paying Agent, as
the Indenture Trustee may determine, to the Persons entitled thereto, of the
principal and interest for whose payment such cash or government securities and
proceeds therefrom has been deposited with the Indenture Trustee.
ARTICLE V.
DEFAULTS AND REMEDIES
SECTION 5.01. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to Bonds issued
hereunder, shall have the meaning ascribed to the term in the Glossary attached
hereto as Annex I.
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
(a) If an Event of Default occurs and is continuing, then and in
every such case the Indenture Trustee or the Holders of Bonds representing not
less than 25% of the principal balance of the Outstanding Bonds may declare the
Bonds to be immediately due and payable by a notice in writing to the Issuer
(and to the Indenture Trustee if given by Bondholders), and upon any such
declaration, the Bonds, in an amount equal to the principal balance of the
Outstanding Bonds, together with accrued and unpaid interest and any other
amounts due thereon to the date of such acceleration, shall become immediately
due and payable.
(b) At any time after such a declaration of acceleration of
Maturity of the Bonds pursuant to paragraph (a) of this Section 5.02 has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article provided, the
Holders of Bonds representing more than 50% of the principal balance of the
Outstanding Bonds, by written notice to the Issuer and the Indenture Trustee,
may rescind and annul such declaration and its consequences if:
(i) (A) the Issuer has paid or deposited with the
Indenture Trustee a sum sufficient to pay:
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(1) all payments of principal of, and
interest (including any accrued and unpaid Excess
Interest and interest accrued thereon) on, all Bonds
and all other amounts that would then be due
hereunder or upon all Bonds if the Event of Default
giving rise to such acceleration had not occurred;
and
(2) all unreimbursed Advances by the
Fiscal Agent, the Indenture Trustee and the Servicer
under the Servicing Agreement (together with Advance
Interest thereon) and all amounts due the Indenture
Trustee pursuant to Section 6.07(a) and all amounts
due the Servicer under the Servicing Agreement; and
(B) all Events of Default, other than the
nonpayment of the principal of Bonds that have become due
solely by such acceleration, have been cured or waived as
provided in Section 5.15; or
(ii) an election is made to act in accordance with the
provisions of Section 5.05 with respect to the Event of Default that
gave rise to such declaration.
No such rescission shall affect any subsequent Default or impair any right
consequent thereon.
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY INDENTURE TRUSTEE.
Subject to the provisions of Section 3.01 and the following sentence,
if an Event of Default occurs and is continuing, the Indenture Trustee (or the
Servicer on its behalf) may in its discretion, subject to Section 5.05, proceed
to protect and enforce its rights and the rights of the Bondholders by any
Proceedings the Indenture Trustee (or the Servicer on its behalf) deems
appropriate to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or enforce any other proper remedy. Any
Proceedings brought by the Indenture Trustee (or the Servicer on its behalf) on
behalf of the Bondholders or any Bondholder against the Issuer shall be limited
to the preservation, enforcement and foreclosure of the liens, assignments,
rights and security interests under the Indenture and the Mortgages and the
other Loan Documents and no attachment, execution or other unit or process
shall be sought, issued or levied upon any assets, properties or funds of the
Issuer, other than the Trust Estate, except as otherwise expressly provided in
the Loan Documents. If there is a foreclosure of any such liens, assignments,
rights and security interests, by private power of sale or otherwise, no
judgment for any deficiency upon the indebtedness represented by the Bonds may
be sought or obtained by the Indenture Trustee or any Bondholder against the
Issuer, except as otherwise expressly provided in the Loan Documents. The
Indenture Trustee shall be entitled to recover the costs and expenses expended
by it pursuant to this Section 5.03, including reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee and the Servicer
and their respective agents and counsel.
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In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Bonds, and it shall not be necessary
to make any Holders of the Bonds parties to any such Proceedings.
SECTION 5.04. REMEDIES.
If an Event of Default shall have occurred and be continuing and the
Bonds have been declared due and payable and such declaration and its
consequences have not been rescinded and annulled, the Indenture Trustee (or
the Servicer on its behalf) may do one or more of the following:
(a) institute Proceedings for the collection of all
amounts then payable on the Bonds, or under this Indenture, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer moneys adjudged due, subject in all cases to the
provisions of Sections 3.01 and 5.03;
(b) subject to the rights of the Bondholders under this
Indenture, exercise such remedies under Section 6 of the Mortgages as
the Indenture Trustee deems advisable to protect and enforce its
rights against the Borrower and in and to the Mortgaged Property;
(c) take any actions pursuant to the Mortgages to cause
the foreclosure of one or more of the Mortgaged Properties, and effect
the sales of the related Foreclosed Properties called and conducted in
any manner permitted by law; and
(d) exercise any remedies of a secured party under the
Uniform Commercial Code and take any other appropriate action to
protect and enforce the rights and remedies of the Indenture Trustee
or the Holders of the Bonds hereunder.
SECTION 5.05. OPTIONAL PRESERVATION OF TRUST ESTATE.
If (i) an Event of Default shall have occurred and be continuing and
(ii) no Bonds have been declared due and payable or such declaration and its
consequences are to be annulled and rescinded pursuant to Section 5.02, the
Indenture Trustee may in conclusive reliance on the Servicer's determination
that it is in the best interests of such Holders, and upon request from the
Holders of more than 50% of the principal balance of the Outstanding Bonds
shall, elect (by giving written notice of such election to the Issuer) to
refrain from commencing foreclosure or other Proceedings to sell or liquidate
the Mortgaged Properties and retain the Trust Estate securing the Bonds intact,
collect or cause the collection of the proceeds thereof and make and apply all
payments and deposits and maintain all accounts in respect of such Bonds in
accordance with the provisions of Articles Two, Three and Eight. If the
Indenture Trustee is unable to give or is stayed from giving such notice to the
Issuer for any reason whatsoever, such election shall be effective as of the
time of such determination or request, as the case may be, notwithstanding any
failure to give such notice, and the Indenture Trustee shall give such notice
upon the
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removal or cure of such inability or stay (but shall have no obligation to
effect such removal or cure). Any such election may be rescinded with respect
to any portion of the Trust Estate securing the Bonds remaining at the time of
such rescission by written notice to the Indenture Trustee and the Issuer from
the Holders of more than 50% of the principal balance of the Outstanding Bonds.
SECTION 5.06. INDENTURE TRUSTEE MAY FILE PROOFS OF CLAIM.
(a) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, composition or other
judicial Proceeding relative to the Issuer or any other obligor upon any of the
Bonds or the property of the Issuer or of such other obligor or their
creditors, the Indenture Trustee (irrespective of whether the Bonds shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Indenture Trustee shall have made any demand on the
Issuer for the payment of any overdue principal or interest) shall be entitled
and empowered, by intervention in such Proceeding or otherwise to:
(i) file and prove a claim for the whole amount of
principal and interest (including accrued and unpaid Excess Interest
and interest accrued thereon) owing and unpaid in respect of the Bonds
and file such other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, the Fiscal Agent
and the Servicer, and their respective agents and counsel, in each
case to the extent such amounts are otherwise payable under this
Indenture or the Servicing Agreement) and of the Bondholders allowed
in such Proceeding, and
(ii) collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, or sequestrator (or
other similar official) in any such Proceeding is hereby authorized by
each Bondholder to make such payments to the Indenture Trustee and, in
the event that the Indenture Trustee shall consent to the making of
such payments directly to the Bondholders, to pay to the Indenture
Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, the
Fiscal Agent and the Servicer, and their respective agents and
counsel, in each case to the extent such amounts are otherwise payable
under this Indenture or the Servicing Agreement, and any other amounts
due the Indenture Trustee under Section 6.07 and due the Servicer
under Section 2.02 of the Servicing Agreement.
(b) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or accept or adopt on behalf of
any Bondholder any plan of reorganization, arrangement, adjustment or
composition affecting any of the Bonds or the rights of any Holder thereof, or
to authorize the Indenture Trustee to vote in respect of the claim of any
Bondholder in any such Proceeding.
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SECTION 5.07. INDENTURE TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF BONDS.
All rights of action and claims under this Indenture or any of the
Bonds may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Bonds or the production thereof in any Proceeding
relating thereto, and any such Proceeding instituted by the Indenture Trustee
or its designee shall be brought in the name of the Indenture Trustee as
trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of reasonable compensation, expenses, disbursements
or advances of the Indenture Trustee, the Fiscal Agent and the Servicer and
their respective agents and counsel, in each case to the extent such amounts
are otherwise payable under this Indenture or the Servicing Agreement, be for
the benefit of the Holders of the Bonds in accordance with their rights under
this Indenture.
SECTION 5.08. APPLICATION OF MONEY COLLECTED.
If the Bonds have been declared due and payable following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, any Liquidation Proceeds (net of Liquidation Expenses) or other money
collected by the Indenture Trustee with respect to such Bonds pursuant to this
Article or otherwise and any other monies that may then be held or thereafter
received by the Indenture Trustee as security for such Bonds shall be applied
in the following order, at the date or dates fixed by the Indenture Trustee
and, in case of the distribution of the entire amount due on account of
principal of, and interest (including accrued and unpaid Excess Interest and
interest accrued thereon) on, such Bonds, plus any Yield Maintenance Premium
due thereon, upon presentation and surrender thereof:
First: To pay the Indenture Trustee, all accrued but
unpaid Indenture Trustee Fees and fees payable to any co-trustee, and
to the Servicer, all accrued but unpaid Servicing Fees (in that order
of priority), and to the extent of any remaining Liquidation Proceeds
(which proceeds shall be applied to pay the foregoing fees only after
any other amounts collected by the Indenture Trustee have been
applied), any accrued and unpaid Default Servicing Fees with interest
thereon at the Advance Rate and Disposition Fees payable therefrom to
the Servicer pursuant to the Servicing Agreement;
Second: To pay (or reimburse the Indenture Trustee or the
Servicer, in that order of priority) any Trust Estate Expenses;
Third: To pay the amount necessary to reimburse the
Fiscal Agent, the Indenture Trustee and the Servicer (in that order of
priority) first, for any Property Protection Advances (and Advance
Interest thereon) and second, any P&I Advances (and Advance Interest
thereon), to the extent not previously reimbursed;
Fourth: To the payment of amounts then due and unpaid
upon the Class A Bonds for scheduled interest on the principal balance
of the Outstanding Class A Bonds to the date on which payment is made
at the Class A Interest Rate;
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Fifth: To the payment of the Class A Bonds, the
principal balance of the Outstanding Class A Bonds;
Sixth: To the payment of amounts then due and unpaid
upon the Class B Bonds for scheduled interest on the principal balance
of the Outstanding Class B Bonds to the date on which payment is made
at the Class B Interest Rate;
Seventh: To the payment of the Class B Bonds, the
principal balance of the Outstanding Class B Bonds;
Eighth: To the payment of amounts then due and unpaid
upon the Class C Bonds for scheduled interest on the principal balance
of the Outstanding Class C Bonds to the date on which payment is made
at the Class C Interest Rate;
Ninth: To the payment of the Class C Bonds, the
principal balance of the Outstanding Class C Bonds;
Tenth: To the payment of accrued and unpaid Excess
Interest and interest accrued thereon, sequentially to the Class A,
Class B and Class C Bonds until each such Class has been paid such
amounts in full, with interest accrued on Excess Interest on a Class
of Bonds payable prior to the accrued and unpaid Excess Interest on
such Class of Bonds;
Eleventh: To pay an amount equal to the Yield Maintenance
Premium (unless such Event of Default shall have been declared during
the Prepayment Window) first with respect to the Class A Bonds, then
with respect to the Class B Bonds, and then with respect to the Class
C Bonds, based on the amount of principal being applied on such Class
of Bonds to the extent such principal is received prior to the date
such principal otherwise was scheduled to be received;
Twelfth: To the payment of any unpaid Default Servicing
Fees (with interest thereon at the Advance Rate) due the Servicer; and
Thirteenth: To the payment of the remainder, if any, to the
Issuer.
SECTION 5.09. LIMITATION ON SUITS.
(a) No Holder of a Bond shall have any right to institute any
Proceedings, judicial or otherwise, with respect to this Indenture or the
Servicing Agreement, or for the appointment of a receiver or trustee, or for
any other remedy hereunder, unless:
(i) such Holder has previously given written notice to
the Indenture Trustee of a continuing Event of Default;
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(ii) the Holders of Bonds representing not less than 25%
of the principal balance of the Outstanding Bonds shall have made
written request to the Indenture Trustee to institute Proceedings in
respect of such Event of Default in its own name as Indenture Trustee
hereunder;
(iii) such Holder or Holders have offered to the Indenture
Trustee indemnity acceptable to the Indenture Trustee in full against
the costs, expenses and liabilities to be incurred in compliance with
such request;
(iv) the Indenture Trustee for 60 days after its receipt
of such notice, request and offer of indemnity has failed to institute
any such Proceeding; and
(v) no direction inconsistent with such written request
has been given to the Indenture Trustee during such 60-day period by
the Holders of Bonds representing more than 50% of the principal
balance of the Outstanding Bonds;
it being understood and intended that no one or more Holders of Bonds shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Bonds or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all the
Holders of Bonds.
(b) In the event the Indenture Trustee shall receive conflicting
or inconsistent requests and indemnity from two or more groups of Holders of
Bonds, each representing less than 50% of the principal balance of the
Outstanding Bonds, the Indenture Trustee in its sole discretion may take such
action, if any, as otherwise permitted under this Indenture. In taking or
refraining from taking such action, the Indenture Trustee shall not be required
to take into account any such requests.
SECTION 5.10. UNCONDITIONAL RIGHTS OF BONDHOLDERS TO RECEIVE
PRINCIPAL AND INTEREST.
Subject to the provisions in this Indenture (including Sections 3.01
and 5.03) limiting the right to recover amounts due on a Bond to recovery from
amounts in the Trust Estate, and subject to Section 5.09, the Holder of any
Bond shall have the right, to the extent permitted by applicable law, which
right is absolute and unconditional, to receive payment of principal of and
interest on such Bond as such principal and interest becomes due and payable
and to institute suit for the enforcement of any such payment, and such right
shall not be impaired without the consent of such Holder.
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SECTION 5.11. RESTORATION OF RIGHTS AND REMEDIES.
If the Indenture Trustee or any Bondholder has instituted any
Proceeding to enforce any right or remedy under this Indenture and such
Proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Indenture Trustee or to such Bondholder, then and
in every such case the Issuer, the Indenture Trustee and the Bondholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Indenture Trustee and the Bondholders shall continue as though
no such Proceeding had been instituted.
SECTION 5.12. RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to the Indenture
Trustee or to the Bondholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 5.13. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Indenture Trustee or of any Holder of any
Bond to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Indenture Trustee or to the Bondholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee or by the Bondholders, as the case may be.
SECTION 5.14. CONTROL BY BONDHOLDERS.
The Holders of Bonds representing more than 50% of the principal
balance of the Outstanding Bonds on the applicable Record Date shall have the
right to direct the time, method and place of conducting any Proceeding for any
remedy available to the Indenture Trustee or exercising any trust or power
conferred on the Indenture Trustee under this Indenture or any of the Loan
Documents; provided that:
(a) such direction shall not be in conflict with any rule
of law or with this Indenture; and
(b) the Indenture Trustee may take any other action
deemed proper by the Indenture Trustee which is not inconsistent with
such direction; provided, however, that, subject to Section 6.01, the
Indenture Trustee need not take any action which it determines might
involve it in liability or be unjustly prejudicial to the Bondholders
not consenting.
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SECTION 5.15. WAIVER OF PAST DEFAULTS.
(a) Subject to Section 5.02(b), the Holders of Bonds representing
more than 50% of the principal balance of the Outstanding Bonds on the
applicable Record Date may on behalf of the Holders of all the Bonds waive any
past Default hereunder and its consequences, except a Default:
(i) in the payment of any installment of principal of, or
interest (including accrued and unpaid Excess Interest and interest
accrued thereon) on, any Bonds; or
(ii) in respect of a covenant or provision hereof which
under Section 9.02 cannot be modified or amended without the consent
of the Holder of each Outstanding Bond affected.
(b) Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
SECTION 5.16. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Bond by
his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Indenture Trustee for any
action taken, suffered or omitted by it as Indenture Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section shall not apply to any suit
instituted by the Indenture Trustee (or the Servicer on its behalf), to any
suit instituted by any Bondholder, or group of Bondholders, holding in the
aggregate Bonds representing more than 10% of the principal balance of the
Outstanding Bonds, or to any suit instituted by any Bondholder for the
enforcement of the payment of the principal of or the interest (including
accrued and unpaid Excess Interest and interest accrued thereon) due on any
Bond on or after the Stated Maturity thereof.
SECTION 5.17. WAIVER OF STAY OR EXTENSION LAWS.
The Issuer covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension of law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants in, or the performance of, this Indenture; and the Issuer (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to
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the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 5.18. RIGHTS UPON A NONRECOVERABLE ADVANCE DETERMINATION.
Notwithstanding anything herein to the contrary, if in connection with
any Event of Default the Servicer has recommended the commencement of
foreclosure or any Proceedings or actions which relate to the realization
against the Mortgaged Properties, or the Servicer has recommended the sale or
liquidation of any Foreclosed Property, and, in either case, the requisite
Bondholders have not approved such action pursuant to this Indenture, the
Servicer shall be entitled to commence such foreclosure, Proceedings or actions
and sell or liquidate such Foreclosed Property, as the case may be, in
accordance with Accepted Servicing Practices, upon any determination by the
Servicer or the Indenture Trustee that any previously made and unreimbursed
Advances with Advance Interest thereon constitute Nonrecoverable Advances.
SECTION 5.19. ACTION ON BONDS.
The Indenture Trustee's right to seek and recover judgment under this
Indenture shall not be affected by the seeking, obtaining or application of any
other relief under or with respect to this Indenture. Neither the lien of this
Indenture nor any rights or remedies of the Indenture Trustee or the Holders of
Bonds shall be impaired by the recovery of any judgment by the Indenture
Trustee against the Issuer or by the levy of any execution under such judgment
upon any portion of the Trust Estate.
SECTION 5.20. NO RECOURSE TO OTHER ASSETS OF THE ISSUER.
The Trust Estate Granted to the Indenture Trustee as security for the
Bonds serves as security only for the Bonds. Except as expressly provided in
the Loan Documents, Holders of the Bonds shall have no recourse against any
other assets of the Issuer and no judgment against the Issuer for any amount
due with respect to the Bonds may be enforced against any other assets of the
Issuer, nor may any prejudgment lien or other attachment be sought against any
other assets of the Issuer.
SECTION 5.21. FRANCHISE AGREEMENTS, ALLOCATION AFFIDAVITS, ETC..
On the Closing Date, the Indenture Trustee and/or the Servicer on
behalf of the Indenture Trustee shall be authorized to enter into one or more
comfort letters, letter agreements or similar agreements substantially in the
form attached as Exhibit J to this Indenture (each, a "Comfort Letter") with
the franchisors under Franchise Agreements relating to the Mortgaged Properties
for the purpose of establishing certain procedures in the event a franchisee
has been terminated due to a default under a Franchise Agreement.
Notwithstanding any rights the Indenture Trustee and/or the Servicer may have
under a Comfort Letter with respect to a Franchise Agreement relating to a
Mortgaged Property, so long as no Event of Default has occurred and is
continuing,
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neither the Indenture Trustee nor the Servicer shall exercise such rights and
shall subordinate and/or assign any such rights to the Issuer.
The Indenture Trustee shall be authorized to enter into an allocation
affidavit substantially in the form of Exhibit K to this Indenture with respect
to the Mortgaged Property located in Georgia.
ARTICLE VI.
THE INDENTURE TRUSTEE
SECTION 6.01. DUTIES OF INDENTURE TRUSTEE.
(a) Upon any Default, the Indenture Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree
of care and skill in their exercise, as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
(b) Subject to Section 6.01(a):
(i) The Indenture Trustee need perform only those duties
that are specifically set forth in this Indenture and no others and no
implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and
(ii) In the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture. The Indenture
Trustee shall, however, examine such certificates and opinions to
determine whether they conform on their face to the requirements of
this Indenture.
(c) The Indenture Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of
subsection (b) of this Section 6.01;
(ii) The Indenture Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer, unless
it is proved that the Indenture Trustee was negligent in ascertaining
the pertinent facts; and
(iii) The Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
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Section 5.14 or exercising any trust or power conferred upon the
Indenture Trustee under this Indenture.
(d) For all purposes under this Indenture, the Indenture Trustee
shall not be deemed to have notice or knowledge of any Default (other than an
Issuer Payment Default) unless a Responsible Officer of the Indenture Trustee
has actual knowledge thereof or unless written notice of any event which is in
fact such an Event of Default or Default is received by a Responsible Officer
of the Indenture Trustee at the Corporate Trust Office, and such notice
references the Bonds generally, the Issuer, the Trust Estate or this Indenture.
(e) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. In determining that such
repayment or indemnity is not reasonably assured to it, the Indenture Trustee
must consider not only the likelihood of repayment or indemnity by or on behalf
of the Issuer but also the likelihood of repayment or indemnity from amounts
payable to it from the Trust Estate pursuant to Sections 6.07 and 8.02(c).
(f) Every provision of this Indenture that in any way relates to
the Indenture Trustee is subject to the provisions of this Section.
(g) Notwithstanding any extinguishment of all right, title and
interest of the Issuer in and to the Trust Estate following an Event of Default
and a consequent declaration of acceleration of the Maturity of the Bonds,
whether such extinguishment occurs through foreclosures of the Mortgages, the
acquisition of the Mortgaged Properties by the Indenture Trustee or otherwise,
the rights, powers and duties of the Indenture Trustee with respect to the
Trust Estate (or the proceeds thereof) and the Bondholders and the rights of
Bondholders shall continue to be governed by the terms of this Indenture.
SECTION 6.02. NOTICE OF DEFAULT.
Within 90 days after the occurrence of any Default known to the
Indenture Trustee, the Indenture Trustee shall transmit by mail to all Holders
of Bonds notice of each such Default, unless such Default shall have been cured
or waived; provided, however, that, except in the case of an Issuer Payment
Default, the Indenture Trustee shall be protected in withholding such notice if
and so long as the Responsible Officers of the Indenture Trustee in good faith
determine that the withholding of such notice is in the interests of the
Holders of the Bonds. Concurrently with the mailing of any such notice to the
Holders of the Bonds, the Indenture Trustee shall transmit by mail a copy of
such notice to the Rating Agency.
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SECTION 6.03. RIGHTS OF INDENTURE TRUSTEE.
(a) The Indenture Trustee may rely on any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Indenture Trustee need not investigate any fact or matter stated in any such
document.
(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel (at the Issuer's
expense) reasonably satisfactory in form and substance to the Indenture
Trustee. The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on any such Certificate or Opinion.
(c) The Indenture Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers.
SECTION 6.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF BONDS.
The recitals contained herein and in the Bonds, except the
certificates of authentication on the Bonds, shall be taken as the statements
of the Issuer, and the Indenture Trustee assumes no responsibility for their
correctness. The Indenture Trustee makes no representations with respect to
the Trust Estate or as to the validity or sufficiency of this Indenture or of
the Bonds. The Indenture Trustee shall not be accountable for the use or
application by the Issuer of the Bonds or the proceeds thereof or any money
paid to the Issuer or upon Issuer Order pursuant to the provisions hereof.
SECTION 6.05. MAY HOLD BONDS.
The Indenture Trustee, the Fiscal Agent, any Agent, or any other agent
of the Issuer, in its individual or any other capacity, may become the owner or
pledgee of Bonds and may otherwise deal with the Issuer or any Affiliate of the
Issuer with the same rights it would have if it were not Indenture Trustee, the
Fiscal Agent, any Agent or such other agent.
SECTION 6.06. MONEY HELD IN TRUST.
Money held by the Indenture Trustee in trust hereunder need not be
segregated from other funds except to the extent required by this Indenture or
by law. The Indenture Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Issuer or
provided herein and except to the extent of income or other gain on investments
that are obligations of the Indenture Trustee, in its commercial capacity, and
income or other gain actually received by the Indenture Trustee on investments
that are obligations of others and that are not, as expressly provided herein,
for the account of the Indenture Trustee.
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SECTION 6.07. COMPENSATION, REIMBURSEMENT AND INDEMNIFICATION.
(a) The Issuer agrees:
(i) to pay to the Indenture Trustee the Indenture Trustee
Fee on a monthly basis, which Indenture Trustee Fee shall be payable
from amounts deposited in the Central Account pursuant to the
Servicing Agreement, for all services rendered by the Indenture
Trustee hereunder;
(ii) to pay to any co-trustee appointed hereunder its
reasonable and customary fee not to exceed the Indenture Trustee Fee,
which fee shall be payable from amounts deposited in the Central
Account pursuant to the Servicing Agreement;
(iii) except as otherwise expressly provided herein, to
reimburse the Indenture Trustee upon its request for all reasonable
expenses and disbursements incurred or made by the Indenture Trustee
in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to the negligence or bad faith of the Indenture
Trustee; and
(iv) to indemnify the Indenture Trustee, its directors,
officers, employees, agents and "control" persons within the meaning
of the 1933 Act for, and to hold them harmless against, any loss,
liability or expense (including reasonable attorney fees) incurred
without negligence or bad faith on their part, arising out of, or in
connection with, the acceptance or administration of this trust
(including action taken by the Indenture Trustee at the direction of
any Bondholders pursuant to this Indenture, at the direction of the
Servicer pursuant to Section 2.05(a) of the Servicing Agreement and
pursuant to the provisions of any Loan Document) including the costs
and expenses of defending themselves against any claim in connection
with the exercise or performance of any of their powers or duties
hereunder, provided that:
(1) with respect to any such claim, the Indenture
Trustee shall have given the Issuer written notice thereof
promptly after the Indenture Trustee shall have knowledge
thereof; provided that failure to give such notice shall not
affect the Indenture Trustee's right to indemnification
hereunder, unless the Issuer's defense of such claim is
materially prejudiced thereby;
(2) while maintaining absolute control over its
own defense, the Indenture Trustee shall cooperate and consult
fully with the Issuer in preparing such defense; and
(3) notwithstanding anything to the contrary in
this Section 6.07(a)(iv), the Issuer shall not be liable for
settlement of any such claim by the Indenture Trustee entered
into without the prior consent of the Issuer.
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(b) To the extent the fees and expenses itemized in Section
6.07(a) hereof are not otherwise paid, the Indenture Trustee may pay such fees
and expenses pursuant to Section 8.02(c)(ii) hereof from moneys on deposit in
the Collateral Proceeds Account.
(c) As security for the payment obligations of the Issuer pursuant
to the foregoing provisions of this Section 6.07, the Issuer hereby Grants to
the Indenture Trustee a lien ranking at all times senior to the lien of the
Bonds with respect to which any claim of the Indenture Trustee under this
Section arose and senior to all other liens, if any, upon all property and
funds held or collected as part of the Trust Estate for such Bonds by the
Indenture Trustee in its capacity as such. The Indenture Trustee shall not (i)
exercise or enforce such senior lien in any manner, or (ii) institute any
Proceeding against the Issuer for any payments, reimbursements, or
indemnifications to the Indenture Trustee or to enforce such lien, in either
case unless (i) the Bonds have been declared due and payable following an Event
of Default pursuant to Section 5.02, (ii) such acceleration of Maturity and its
consequences have not been rescinded and annulled, and (iii) moneys collected
by the Indenture Trustee are being applied in accordance with Section 5.08.
(d) Subject to the last sentence of Section 6.07(c), nothing in
this Section 6.07 shall be construed to limit (except as otherwise expressly
provided in subsection (c) of this Section 6.07) the exercise by the Indenture
Trustee of any right or remedy permitted under the Indenture or otherwise in
the event of the Issuer's failure to pay the amounts due the Indenture Trustee
pursuant to this Section 6.07.
SECTION 6.08. ELIGIBILITY: DISQUALIFICATION.
This Indenture shall always have an Indenture Trustee who (i) shall be
a corporation, national bank or national banking association organized and
doing business under the laws of the United States or of any state or territory
or the District of Columbia which (A) is authorized under such law to exercise
corporate trust powers and (B) is subject to supervision or examination by
federal, state, territorial or District of Columbia authority and (ii) shall
not be an affiliate of the Issuer. The Indenture Trustee shall always have a
combined capital and surplus as stated in Section 6.09.
SECTION 6.09. INDENTURE TRUSTEE'S CAPITAL AND SURPLUS.
The Indenture Trustee shall at all times have a combined capital and
surplus of at least $50,000,000 or shall be a member of a bank holding company
system, the aggregate combined capital and surplus of which is at least
$50,000,000; provided, however, that the Indenture Trustee's separate capital
and surplus shall at all times be at least $150,000. If at any time the
Indenture Trustee shall cease to be eligible in accordance with the provisions
of this Section 6.09, it shall resign immediately in the manner and with the
effect hereinafter specified in this Article.
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SECTION 6.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 6.11.
(b) The Indenture Trustee may resign at any time by giving written
notice thereof to the Issuer and the Servicer. If an instrument of acceptance
by a successor Indenture Trustee shall not have been delivered to the Indenture
Trustee within 30 days after the giving of such notice of resignation, the
resigning Indenture Trustee may petition any court of competent jurisdiction
for the appointment of a successor Indenture Trustee.
(c) The Indenture Trustee may be removed at any time by Act of the
Holders representing more than 50% of the principal balance of the Outstanding
Bonds delivered to the Indenture Trustee and to the Issuer.
(d) If at any time the Indenture Trustee shall cease to be
eligible under Section 6.09 or shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Indenture Trustee or of
its property shall be appointed, or any public officer shall take charge or
control of the Indenture Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then, in any such case, the
Issuer by an Issuer Order may remove the Indenture Trustee, and the Issuer
shall join with the Indenture Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint a
successor Indenture Trustee and to vest in such successor Indenture Trustee any
property, title, right or power deemed necessary or desirable, subject to the
other provisions of this Indenture; provided, however, if the Issuer does not
join in such appointment within fifteen (15) days after the receipt by it of a
request to do so, or in case an event of default has occurred and is
continuing, the Indenture Trustee may petition a court of competent
jurisdiction to make such appointment.
(e) If the Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Indenture
Trustee for any cause, the Issuer, by an Issuer Order shall promptly appoint a
successor Indenture Trustee. If within one year after such resignation,
removal or incapability or the occurrence of such vacancy a successor Indenture
Trustee shall be appointed by Act of the Holders of Bonds representing more
than 50% of the principal balance of the Outstanding Bonds delivered to the
Issuer and the retiring Indenture Trustee, the successor Indenture Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Indenture Trustee and supersede the successor Indenture Trustee
appointed by the Issuer. If no successor Indenture Trustee shall have been so
appointed by the Issuer or Bondholders and shall have accepted appointment in
the matter hereinafter provided, any Bondholder who has been a bona fide Holder
of a Bond for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
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(f) The Issuer shall give notice of each resignation and each
removal of the Indenture Trustee and each appointment of a successor Indenture
Trustee to the Holders of Bonds and the Servicer. Each notice shall include
the name of the successor Indenture Trustee and the address of its Corporate
Trust Office.
SECTION 6.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) Every successor Indenture Trustee and successor Fiscal Agent
appointed hereunder shall execute, acknowledge and deliver to the Issuer and
the retiring Indenture Trustee and retiring Fiscal Agent, respectively, an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Indenture Trustee and retiring Fiscal Agent, respectively,
shall become effective and such successor Indenture Trustee and successor
Fiscal Agent, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Indenture
Trustee and retiring Fiscal Agent, respectively. Notwithstanding the
foregoing, on request of the Issuer or the successor Indenture Trustee, such
retiring Indenture Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Indenture Trustee all the
rights, powers and trusts of the retiring Indenture Trustee, and shall duly
assign, transfer and deliver to such successor Indenture Trustee all property
and money held by such retiring Indenture Trustee hereunder subject
nevertheless to its lien, if any, provided for in Section 6.07. Upon request
of any such successor Indenture Trustee, the Issuer shall execute and deliver
any and all instruments for more fully and certainly vesting in and confirming
to such successor Indenture Trustee all such rights, powers and trusts.
(b) No successor Indenture Trustee shall accept its appointment
unless at the time of such acceptance such successor Indenture Trustee shall be
qualified and eligible under this Article.
SECTION 6.12. MERGER OR CONSOLIDATION OF THE INDENTURE TRUSTEE AND
THE FISCAL AGENT.
Any Person into which the Indenture Trustee or the Fiscal Agent, as
the case may be, may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Indenture Trustee or the Fiscal Agent shall be a
party, or any Person succeeding to the business of the Indenture Trustee or the
Fiscal Agent, shall be the successor of the Indenture Trustee or the Fiscal
Agent, respectively, hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding; provided that with respect to the Indenture
Trustee such Person shall be eligible under the provisions of Section 6.08 and
Section 6.09.
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SECTION 6.13. CO-TRUSTEES AND SEPARATE INDENTURE TRUSTEES.
(a) At any time or times, for the purpose of meeting the legal
requirements of any jurisdiction in which any of the Trust Estate may at the
time be located, the Issuer and the Indenture Trustee shall have power to
appoint one or more Persons to act as co-trustee, jointly with the Indenture
Trustee, of all or any part of the Trust Estate.
(b) The Issuer shall for such purpose join with the Indenture
Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to appoint such co-trustee. If the Issuer does
not join in such appointment within 15 days after the receipt by it of a
request to do so, or in case an Event of Default has occurred and is
continuing, the Indenture Trustee alone shall have power to make such
appointment. All fees and expenses of any co-trustee or separate trustee shall
be payable by the Issuer.
(c) Should any written instrument from the Issuer be required by
any co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate trustee such property, title, right or power, any
and all such instruments shall, on request, be executed, acknowledged and
delivered by the Issuer.
(d) Every co-trustee shall, to the extent permitted by law, but to
such extent only, be appointed subject to the following terms:
(i) The Bonds shall be authenticated and delivered and
all rights, powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Indenture Trustee
hereunder, shall be exercised, solely by the Indenture Trustee.
(ii) The rights, powers, duties and obligations hereby
conferred or imposed upon the Indenture Trustee in respect of any
property covered by such appointment shall be conferred or imposed
upon and exercised or performed by the Indenture Trustee and such
co-trustee jointly, as shall be provided in the instrument appointing
such co-trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the
Indenture Trustee shall be incompetent or unqualified to perform such
act, in which event such rights, powers, duties and obligations shall
be exercised and performed by such co-trustee.
(iii) The Indenture Trustee at any time, by an instrument
in writing executed by it, with the concurrence of the Issuer
evidenced by an Issuer Order, may accept the resignation of or remove
any co-trustee appointed under this Section, and, in case an Event of
Default has occurred and is continuing, the Indenture Trustee shall
have power to accept the resignation of, or remove, any such
co-trustee without the concurrence of the Issuer. Upon the written
request of the Indenture Trustee, the Issuer shall join with the
Indenture Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor
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to any co-trustee so resigned or removed may be appointed in the
manner provided in this Section.
(iv) No co-trustee hereunder shall be personally liable by
reason of any act or omission of the Indenture Trustee, or any other
such trustee hereunder. The Indenture Trustee shall not be liable by
reason of any act or omission of a co-trustee to the extent such
co-trustee is appointed in good faith and with due care.
(v) Except in the case of any conflicts between Classes,
any Act of Bondholders delivered to the Indenture Trustee shall be
deemed to have been delivered to each such co-trustee.
(vi) Any co-trustee must meet the eligibility requirements
of Section 6.08 hereof.
SECTION 6.14. SERVICING AGREEMENT AND CERTAIN DOCUMENTS.
(a) Each of the Indenture Trustee and the Fiscal Agent is hereby
authorized to execute and shall execute (i) the Servicing Agreement to provide
for the servicing of the Secured Obligations and such other matters provided
for therein and (ii) such other documents or agreements contemplated hereby and
by the Servicing Agreement; and the Indenture Trustee is hereby authorized to
execute and shall execute (i) the Subordination Agreement to provide for
certain matters relating to the Leases and the Lessee and such other matters
provided for therein and (ii) such other documents or agreements contemplated
by the Subordination Agreement. Each of the Indenture Trustee and Fiscal Agent
shall perform its duties and satisfy its obligations under the Servicing
Agreement, the Subordination Agreement (if applicable) and such other
documents, including its obligations to make Advances in certain circumstances
pursuant to Section 4.03 of the Servicing Agreement. The Indenture Trustee
shall take or cause to be taken such action as may be appropriate to enforce
its rights under the Servicing Agreement, the Subordination Agreement and such
other documents or agreements referred to above.
(b) Upon any termination of the Servicer's rights and powers
pursuant to the Servicing Agreement, the rights and powers of the Servicer with
respect thereto shall vest in the Indenture Trustee, and the Indenture Trustee
shall be the successor in all respects to the Servicer in its capacity as
Servicer under the Servicing Agreement until the Indenture Trustee shall have
appointed, with the consent of the Rating Agency, a new servicer to serve as
successor to the Servicer under the Servicing Agreement. Upon appointment of a
successor Servicer, the Indenture Trustee, the Fiscal Agent and such Servicer
shall enter into a new servicing agreement in a form substantially similar to
the Servicing Agreement. In connection with any such appointment, the
Indenture Trustee may make such arrangements for the compensation of such
successor as it and such successor shall agree, but in no event shall such
compensation of the successor Servicer (including the Indenture Trustee) be in
excess of that payable to the original Servicer under the Servicing Agreement
without confirmation from the Rating Agency that such
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compensation will not cause a qualification, withdrawal or downgrading of the
ratings then maintained by the Rating Agency with respect to the Bonds.
(c) Upon any termination of the Servicer's rights and powers
pursuant to the Servicing Agreement, the Indenture Trustee shall promptly
notify the Rating Agency. As soon as any successor Servicer is appointed, the
Indenture Trustee shall notify the Rating Agency, specifying in such notice the
name and address of such successor Servicer.
SECTION 6.15 REVIEW OF MORTGAGE FILES.
By execution and delivery of this Indenture, the Indenture Trustee
acknowledges receipt of the Mortgage Files in good faith and without actual
notice or knowledge of any adverse claim pertaining to the Mortgaged
Properties. The Indenture Trustee agrees, for the benefit of the Holders of
the Bonds, to review the Mortgage Files within 90 days after the Closing Date.
The Indenture Trustee's review shall be limited to a determination that all
documents referred to in the definition of the term Mortgage Files have been
delivered with respect to each such Mortgaged Property, that all such documents
have been executed, and that all such documents relate to the Mortgaged
Properties. In performing such review the Indenture Trustee may rely upon the
purported genuineness and due execution of any such document and on the
purported genuineness of any signature thereon. If the Indenture Trustee
discovers any defect or omission in the Mortgage Files or that any document
required to be delivered to it has not been delivered or that any document so
delivered does not relate to any of the Mortgaged Properties, it shall promptly
notify in writing the Issuer and the Servicer of such defect, omission or
error, and the Issuer shall cure or correct such defect, omission or error
within 90 days of receipt of such written notice.
ARTICLE VII.
BONDHOLDERS' LISTS AND REPORTS
SECTION 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND
ADDRESSES OF BONDHOLDERS.
(a) Upon the reasonable request of the Indenture Trustee, the
Issuer shall furnish or cause to be furnished to the Indenture Trustee a list,
in such form as the Indenture Trustee may reasonably require, of the names and
addresses of the Holders of Bonds as of a date not more than 10 days prior to
the time such list is furnished; provided, however, that so long as the
Indenture Trustee is the Bond Registrar, no such list shall be required to be
furnished.
(b) In addition to furnishing to the Indenture Trustee the
Bondholder lists, if any, required under subsection (a), the Issuer shall also
furnish all Bondholder lists, if any, required under Section 3.03 at the times
required by said Section 3.03.
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SECTION 7.02. PRESERVATION OF INFORMATION: COMMUNICATIONS TO
BONDHOLDERS.
(a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Holders of Bonds
contained in the most recent list, if any, furnished to the Indenture Trustee
as provided in Section 7.01 and the names and addresses of the Holders of Bonds
received by the Indenture Trustee in its capacity as Bond Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in Section
7.01 upon receipt of a new list so furnished.
(b) Three or more Bondholders (each of whom has owned a Bond for
at least six months) may, by written request to the Indenture Trustee, obtain
access to the list of all Bondholders maintained by the Indenture Trustee for
the purpose of communicating with other Bondholders with respect to their
rights under the Indenture. The Indenture Trustee may elect not to afford the
requesting Bondholders access to the list of Bondholders if it agrees to mail
the desired communication or proxy, on behalf of the requesting Bondholders, to
all Bondholders.
SECTION 7.03. REPORTS BY INDENTURE TRUSTEE.
Within a reasonable time after the first of each year after the
issuance of the Bonds the Indenture Trustee shall mail to all Holders a brief
report dated as of such date that, to the extent not set forth in the Payment
Date Statement pursuant to Section 2.06(e) or in the statement pursuant to
Section 2.06(h), sets forth the information required to be reported in Form
1099. In addition, the Indenture Trustee shall furnish to any Bondholder;
during the term of the Indenture, such information requested by the Bondholder
for purposes of preparing its tax returns or any other regulatory filings or
reports to the extent such information is in the possession of the Indenture
Trustee or is producible without undue effort or expense; provided, that the
Indenture Trustee shall be entitled to be reimbursed by such Bondholder for the
Indenture Trustee's actual expenses incurred in providing such information if
such information is not producible in the ordinary course of the Indenture
Trustee's business.
SECTION 7.04. REPORTS BY ISSUER.
For so long as the Bonds constitute "restricted securities" within the
meaning of Rule 144(a)(3) under the 1933 Act, the Issuer, upon the request of
any Bondholder, shall provide, or cause to be provided to, such Bondholder the
information required to be delivered pursuant to Rule 144A(d)(4) under the 1933
Act to permit resales of the Bonds in transactions meeting the requirements of
Rule 144A, as determined in the Issuer's sole discretion.
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ARTICLE VIII.
ACCOUNTS, PAYMENTS OF INTEREST AND
PRINCIPAL, AND RELEASES
SECTION 8.01. COLLECTION OF MONEYS.
(a) Except as otherwise expressly provided herein, the Indenture
Trustee may demand payment or delivery of, and shall receive and collect,
directly and without intervention or assistance of any intermediary, all money
and other property payable to or receivable by the Indenture Trustee pursuant
to this Indenture. The Indenture Trustee shall hold all such money and
property received by it as part of the Trust Estate and shall apply it as
provided in this Indenture. Except as otherwise expressly provided in this
Indenture, if a default occurs in the making of any payment or performance
required under the Servicing Agreement, any Required Insurance Policy or any
Loan Document, the Indenture Trustee may, and upon the request of the Holders
of Bonds representing more than 50% of the principal balance of the Outstanding
Bonds shall, take such action as may be appropriate to enforce such payment or
performance including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim
a Default or Event of Default under this Indenture and to proceed thereafter as
provided in Article V.
SECTION 8.02. COLLATERAL PROCEEDS ACCOUNT.
(a) On or before the Closing Date, the Indenture Trustee shall
open at the Corporate Trust Office one or more segregated accounts, each of
which must be an Eligible Account, and must be maintained in the name of
"LaSalle National Bank, as Indenture Trustee for Holders of EQI Financing
Partnership I, L.P., Commercial Mortgage Bonds, Series 1997-1 - Collateral
Proceeds Account." The Indenture Trustee shall promptly deposit in the
Collateral Proceeds Account (i) all Remittances received by it from the
Servicer pursuant to the Servicing Agreement, (ii) any P&I Advances paid
pursuant to the Servicing Agreement, (iii) all Prepayments and any related
Yield Maintenance Premiums thereon received from or on behalf of the Issuer,
and (iv) all other amounts received for deposit in the Collateral Proceeds
Account. All amounts that are deposited from time to time in the Collateral
Proceeds Account, and all Permitted Investments, if any, made with such moneys
shall be held by the Indenture Trustee in the Collateral Proceeds Account as
part of the Trust Estate as herein provided, subject to withdrawal by the
Indenture Trustee for the purposes set forth in subsections (c) and (d) of this
Section 8.02. All funds withdrawn from the Collateral Proceeds Account
pursuant to subsection (c) of this Section 8.02 for the purpose of making
payments to the Holders of Bonds shall be applied in accordance with Section
3.03.
(b) Amounts in the Collateral Proceeds Account may be invested
and reinvested by the Indenture Trustee in one or more Permitted Investments as
the Indenture Trustee may determine. Any and all income or other gain from
such investments shall be retained by the Indenture Trustee as additional
compensation. The Indenture Trustee shall not in any way be
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held liable by reason of any insufficiency in the Collateral Proceeds Account
resulting from any loss on any Permitted Investments other than any loss
resulting from the negligence or intentional misconduct by the Indenture
Trustee.
(c) Unless the Bonds have been declared due and payable pursuant
to Section 5.02 and moneys collected by the Indenture Trustee are being applied
in accordance with Section 5.08, on each Payment Date the Indenture Trustee
shall withdraw from the Collateral Proceeds Account, in the amounts required,
for application as follows:
(i) first, the amount necessary to pay all accrued but
unpaid Indenture Trustee Fees (and any fees payable to any co-trustee
appointed hereunder) and any accrued but unpaid Servicing Fees (in
that order of priority);
(ii) second, the amount necessary to pay (or reimburse the
Indenture Trustee or the Servicer, in that order of priority) any
Trust Estate Expenses;
(iii) third, the amount necessary to reimburse the Fiscal
Agent, the Indenture Trustee and the Servicer (in that order of
priority) for first, any Property Protection Advances (and Advance
Interest thereon) and second, any P&I Advances (and Advance Interest
thereon), previously made, to the extent not previously reimbursed,
and either shall retain or remit to the Fiscal Agent or the Servicer
such amounts as appropriate;
(iv) fourth, the amount necessary to pay Required Debt
Service Payments on the Bonds, to be paid as provided in Section 2.01;
(v) fifth, the amount necessary to pay Yield Maintenance
Premiums payable with respect to such Payment Date, to be paid on the
Bonds as provided in Section 2.01(e);
(vi) sixth, the amount necessary to pay any Prepayments
(including Excess Principal Payments) made with respect to such
Payment Date, to be paid as provided in Section 2.01;
(vii) seventh, the amount necessary to pay accrued and
unpaid Excess Interest on the Bonds, and interest accrued on such
Excess Interest, to the extent payable on the Bonds, to be paid as
provided in Section 2.01; and
(viii) eighth, the amount necessary to pay accrued but
unpaid Default Servicing Fees (with interest thereon at the Advance
Rate).
Each of the foregoing amounts shall be the amount set forth in the applicable
Payment Date Statement.
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(d) On each Special Payment Date, the Indenture Trustee shall
withdraw from the Collateral Proceeds Account all amounts deposited in the
Collateral Proceeds Account in connection with any Prepayments to be made on
such Special Payment Date and shall apply such amounts (i) first, to pay all
items set forth in clauses (i) through (iii) of Section 8.02(c); (ii) second,
to pay all accrued and unpaid interest with respect to the Prepayment, to be
paid as provided in Section 2.01; and (iii) third, to pay the Prepayment made
with respect to such Special Payment Date, to be paid as provided in Section
2.01(e).
(e) On or after each Payment Date, so long as the Indenture
Trustee shall have prepared a Payment Date Statement in respect of such Payment
Date and shall have made the payments required pursuant to Section 8.02(c) and
(d) and required to be made as indicated in such Payment Date Statement, any
amounts remaining in the Collateral Proceeds Account (other than Prepayments
(and related accrued interest) deposited therein and payable on a subsequent
Payment Date and any income or other gain from amounts in the Collateral
Proceeds Account invested in Permitted Investments) shall be withdrawn from the
Collateral Proceeds Account by the Indenture Trustee and remitted to the
Servicer for deposit in the Central Account for application in accordance with
the Servicing Agreement.
SECTION 8.03. GENERAL PROVISIONS REGARDING THE COLLATERAL
PROCEEDS ACCOUNT.
(a) The Collateral Proceeds Account shall relate solely to the
Bonds and to the Mortgaged Properties, Permitted Investments and other property
securing the Bonds. Funds and other property in the Collateral Proceeds
Account shall not be commingled with any other moneys or property of the Issuer
or any Affiliate thereof. Notwithstanding the foregoing, the Indenture Trustee
may hold any funds or other property received or held by it as part of the
Collateral Proceeds Account in collective accounts maintained by it in the
normal course of its business and containing funds or property held by it for
other Persons (which may include the Issuer or an Affiliate), provided that
such accounts are under the sole control of the Indenture Trustee and the
Indenture Trustee maintains adequate records indicating the ownership of all
such funds or property and the portions thereof held for credit to the
Collateral Proceeds Account.
(b) If any amounts are needed for disbursement from the Collateral
Proceeds Account and sufficient uninvested funds are not available therein to
make such disbursement, the Indenture Trustee shall cause to be sold or
otherwise converted to cash a sufficient amount of the investments in the
Collateral Proceeds Account.
(c) The Indenture Trustee shall, at all times while any Bonds are
Outstanding, maintain in its possession, or in the possession of an agent whose
actions with respect to such items are under the sole control of the Indenture
Trustee, all certificates or other instruments, if any, evidencing any
investment of funds in the Collateral Proceeds Account. The Indenture Trustee
shall relinquish possession of such items, or direct its agent to do so, only
for purposes of collecting the final payment receivable on such investment or
certificate or, in connection with
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the sale of any investment held in the Collateral Proceeds Account, against
delivery of the amount receivable in connection with any sale.
SECTION 8.04. CENTRAL ACCOUNT
(a) On or before each Payment Date occurring in a month in which
Percentage Rent is due under the Leases, the Issuer shall deposit, or cause to
be deposited, an amount equal to the FF&E Quarterly Installment into the
Central Account for allocation by the Servicer pursuant to the Servicing
Agreement to the FF&E Reserve Sub-Account.
(b) The Issuer shall cause the Lessee to deposit all Rents due and
owing after the Closing Date into the Central Account to be allocated by the
Servicer in accordance with the Servicing Agreement.
(c) The Issuer may direct the Servicer to invest and reinvest the
funds in the Central Account in one or more Permitted Investments in such
manner as the Issuer shall direct in writing from time to time, or if the
Issuer fails to give any such directions or upon an Event of Default that is
continuing, as the Servicer may determine pursuant to the Servicing Agreement.
Earnings on Permitted Investments of amounts in the Central Account shall be
applied or disbursed in accordance with the Servicing Agreement.
SECTION 8.05. REPORTS BY INDENTURE TRUSTEE TO BONDHOLDERS;
ACCESS TO CERTAIN INFORMATION.
(a) On each Payment Date and Special Payment Date, the Indenture
Trustee shall deliver the Payment Date Statement and Special Payment Date
Statement, respectively, in accordance with Section 2.06(e) and Section
2.06(f). Any Bondholder that does not receive information through DTC or a
Participant may request that Payment Date Statements, Special Payment Date
Statements and other Indenture Trustee reports required to be delivered under
this Indenture be mailed directly to it by written request to the Indenture
Trustee (accompanied by verification of such Bondholder's ownership interest)
at the Indenture Trustee's Corporate Trust Office.
(b) The Indenture Trustee shall make available at its Corporate
Trust Office, during normal business hours, for review by any Bondholder or any
person identified by the Issuer or a Bondholder to the Indenture Trustee as a
prospective Bondholder, originals or copies of the following items: (a) the
Indenture and any amendments thereto, (b) all Payment Date Statements and
Special Payment Date Statements delivered since the Closing Date, (c) any
Officers' Certificates and any Officers' Certificate of the Servicer delivered
to the Indenture Trustee since the Closing Date as described in the Indenture,
(d) any Accountants' reports delivered to the Indenture Trustee since the
Closing Date as required under the Servicing Agreement, (e) the most recent
property inspection report prepared by or on behalf of the Servicer in respect
of each Mortgaged Property and delivered to the Indenture Trustee, (f) the most
recent annual operating statement, if any, collected by or on behalf of the
Servicer and delivered to the
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Indenture Trustee with respect to each Mortgaged Property, (g) any and all
modifications, waivers and amendments of the terms of a Mortgage Loan entered
into by the Servicer and delivered to the Indenture Trustee, and (h) any and
all Officers' Certificates of the Servicer and other evidence delivered to the
Indenture Trustee to support the Servicer's determination that any Advance was
not or, if made, would not be recoverable. Copies of any and all of the
foregoing items will be available from the Indenture Trustee upon request;
however, the Indenture Trustee will be permitted to require payment of a sum
sufficient to cover the reasonable costs and expenses of providing such copies.
SECTION 8.06. RELEASE OF TRUST ESTATE.
(a) The Indenture Trustee may, and when required by the provisions
of this Indenture shall, execute such instruments or powers of attorney as are
prepared and delivered to it by the Servicer to release property from the lien
of this Indenture and the other Loan Documents, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances which are
not inconsistent with the provisions of this Indenture. No party relying upon
an instrument executed by the Indenture Trustee as provided in this Article
VIII shall be bound to ascertain the Indenture Trustee's authority, inquire
into the satisfaction of any conditions precedent or see to the application of
any moneys.
(b) The Indenture Trustee shall, at such time as there are no
Bonds Outstanding, release all of the Trust Estate to the Issuer (other than
any cash held for the payment of the Bonds pursuant to Section 3.03 or 4.02),
subject, however, to the payment and reimbursement of any unpaid or
unreimbursed Servicing Fees, Indenture Trustee Fees, Disposition Fees, Default
Servicing Fees (with interest thereon at the Advance Rate) and Advances with
Advance Interest thereon owed to the Servicer, the Indenture Trustee or the
Fiscal Agent.
SECTION 8.07. AMENDMENT TO SERVICING AGREEMENT.
The Indenture Trustee may, without the consent of any Holder, enter
into or consent to any amendment or supplement to the Servicing Agreement,
subject to the requirements therein.
SECTION 8.08. APPOINTMENT OF SERVICER.
In order to facilitate the servicing of the Bonds and the Collateral
therefor, the Servicer has been appointed by the Indenture Trustee to, among
other things, retain, in accordance with the provisions of the Servicing
Agreement and this Indenture, all Remittances prior to the time they are
deposited into the Collateral Proceeds Account.
SECTION 8.09. TERMINATION OF SERVICER.
If the Servicer materially breaches or fails to perform or observe any
obligations or conditions in the Servicing Agreement, the Indenture Trustee may
terminate the Servicer in accordance with the Servicing Agreement. If the
Indenture Trustee terminates the Servicer, the
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Indenture Trustee shall pursuant to Section 5.03 of the Servicing Agreement
assume the duties of the Servicer or appoint a successor servicer acceptable to
the Issuer and the Rating Agency and meeting the requirements set forth in the
Servicing Agreement.
SECTION 8.10. APPOINTMENT OF CUSTODIANS.
The Indenture Trustee may, at no additional cost to the Issuer, with
the consent of the Issuer, appoint one or more Custodians to hold all or a
portion of the Mortgage Files as agent for the Indenture Trustee. Each
Custodian shall (i) be a financial institution supervised and regulated by the
Comptroller of the Currency, the Board of Governors of the Federal Reserve
System, the Office of Thrift Supervision, or the Federal Deposit Insurance
Corporation; (ii) have combined capital and surplus of at least $10,000,000;
(iii) be equipped with secure, fireproof storage facilities, and, have adequate
controls on access to assure the safety and security of the Mortgage Files;
(iv) utilize in its custodial function employees who are knowledgeable in the
handling of mortgage documents and of the functions of a mortgage document
custodian; and (v) satisfy any other reasonable requirements that the Indenture
Trustee may from time to time deem necessary to protect the interests of
Bondholders in the Mortgage Files. Each Custodian shall be subject to the same
obligations and standard of care as would be imposed on the Indenture Trustee
hereunder assuming the Indenture Trustee retained the Mortgage Files directly.
The appointment of one or more Custodians shall not relieve the Indenture
Trustee from any of its obligations hereunder, and the Indenture Trustee shall
remain responsible for all acts and omissions of any Custodian. If the
Servicer is appointed as a Custodian in accordance with this Section 8.11, it
shall fulfill its servicing and custodial duties and obligations through
separate departments and, if it maintains a trust department, shall fulfill its
custodial duties and obligations through such trust department.
SECTION 8.11. THE FISCAL AGENT.
(a) All fees and expenses of the Fiscal Agent (other than interest
owed to the Fiscal Agent in respect of unreimbursed Advances or deposits)
incurred by the Fiscal Agent in connection with the transactions contemplated
by this Indenture or the Servicing Agreement shall be borne by the Indenture
Trustee and neither the Indenture Trustee nor the Fiscal Agent shall be
entitled to reimbursement therefor from any of the Trust Estate or the Issuer.
(b) The obligations of the Fiscal Agent set forth herein and in
the Servicing Agreement shall exist for so long as the initial Indenture
Trustee shall act as Indenture Trustee hereunder. The obligations of the
Fiscal Agent set forth herein and in the Servicing Agreement shall cease to
exist to the extent that the initial Indenture Trustee is no longer acting as
Indenture Trustee hereunder.
(c) Any notice to the Indenture Trustee shall be deemed a notice
to the Fiscal Agent.
(d) The Fiscal Agent shall be entitled to be indemnified to the
same extent provided herein with respect to the Indenture Trustee.
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ARTICLE IX.
SUPPLEMENTAL INDENTURES AND
MODIFICATIONS OF OTHER LOAN DOCUMENTS
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
BONDHOLDERS.
Without the consent of the Holders of any Bonds, the parties hereto at
any time and from time to time, may enter into one or more indentures
supplemental hereto, or modification or amendment to any other Loan Document,
in form satisfactory to the Indenture Trustee, for any of the following
purposes:
(a) to correct or amplify the description of any property
at any time subject to the lien of this Indenture and the related
Mortgage, or better to assure, convey and confirm unto the Indenture
Trustee any property subject or required to be subjected to the lien
of this Indenture and the related Mortgage, or to subject to the lien
of this Indenture additional property;
(b) to add to the conditions, limitations and
restrictions on the authorized amount, terms and purposes of the
issuance, authentication and delivery of any Bonds, as herein set
forth, additional conditions, limitations and restrictions thereafter
to be observed;
(c) to evidence the succession of another Person to the
Issuer to the extent expressly permitted under the Loan Documents and
the Partnership Agreement or Certificate of Limited Partnership of the
Issuer, and the assumption by any such successor of the covenants of
the Issuer herein and in the Bonds contained;
(d) to add to the covenants of the Issuer, for the
benefit of the Holders of all Bonds or to surrender any right or power
herein conferred upon the Issuer; and
(e) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to amend any other provisions with respect to
matters or questions arising under this Indenture, which shall not be
inconsistent with the provisions of this Indenture provided that such
action shall not adversely affect in any material respect the
interests of the Holders of the Bonds, as evidenced by a letter from
the Rating Agency that the amendment will not cause a qualification,
withdrawal or downgrading of the ratings then maintained by the Rating
Agency with respect to the Bonds.
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SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF BONDHOLDERS.
(a) With the consent of the Holders of Bonds representing not less
than 66 2/3% of the principal balance of the Outstanding Bonds by Act of said
Holders delivered to the Issuer and the Indenture Trustee, the parties hereto
may enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to, or changing in any manner or eliminating any of
the provisions of, this Indenture or of modifying in any manner the rights of
the Holders of the Bonds under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Bond affected thereby:
(i) change the Stated Maturity of the Bonds or the
installment of interest on the Bonds, reduce the principal amount of
the Bonds, the Class Interest Rate on the Bonds, Excess Interest that
may accrue or be payable on the Bonds or the Yield Maintenance Premium
payable with respect to certain Prepayments on the Bonds or change the
terms under which such Yield Maintenance Premiums are required to be
paid, or change any place of payment where, or the coin or currency in
which, any Bond or any interest thereon is payable, or impair the
right to institute suit for the enforcement of the payment of the
principal of or interest on any Bond on or after the Stated Maturity
thereof;
(ii) reduce the percentage of the principal balance of the
Outstanding Bonds, the consent of the Holders of which is required for
any such supplemental indenture, or the consent of the Holders of
which is required for any waiver of compliance with provisions of this
Indenture or Defaults hereunder and their consequences provided for in
this Indenture;
(iii) modify any of the provisions of this Section or
Section 5.14, except to increase any percentage specified therein or
to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Bond affected thereby;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) permit the creation of any lien other than the lien
of this Indenture with respect to any part of the Trust Estate (except
for Permitted Liens) or terminate the lien of this Indenture on any
property at any time subject hereto or deprive the Holder of any Bond
of the security afforded by the lien of this Indenture; or
(vi) modify any of the provisions of this Indenture in
such manner as to affect the calculation of the Scheduled Payment for
any Payment Date (including the calculation of any of the individual
components of such Scheduled Payment).
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(b) The Indenture Trustee may determine whether or not any Bonds
would be affected by any supplemental indenture in reliance upon an Opinion of
Counsel or confirmation from the Rating Agency that such supplemental indenture
will not cause a qualification, withdrawal or downgrading of the ratings then
maintained by the Rating Agency with respect to the Bonds and any such
determination shall be conclusive upon the Holders of all Bonds, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
(c) It shall not be necessary for any Act of Bondholders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
(d) Promptly after the execution by the Issuer and the Indenture
Trustee of any supplemental indenture pursuant to this Section, the Indenture
Trustee shall mail to the Holders of the Bonds to which such supplemental
indenture relates a notice prepared by the Issuer setting forth in general
terms the substance of such supplemental indenture. Any failure of the
Indenture Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Indenture Trustee shall be
entitled to receive, and (subject to Section 6.01) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties
or immunities under this Indenture or otherwise.
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture far all purposes; and every
Holder of Bonds to which such supplemental indenture relates which have
theretofore been or thereafter are authenticated and delivered hereunder shall
be bound thereby.
Notwithstanding any provision of this Article IX to the contrary, any
modification, amendment or supplement to this Indenture that is adverse to the
interests of the Servicer in any material respect shall not be binding upon the
Servicer without the Servicer's prior written consent.
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SECTION 9.05. REFERENCE IN BONDS TO SUPPLEMENTAL INDENTURES .
Bonds authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such supplemental indenture. If the
Issuer shall so determine, new Bonds so modified as to conform, in the opinion
of Indenture Trustee and the Issuer, to any such supplemental indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Bonds.
SECTION 9.06. AMENDMENTS TO LOAN DOCUMENTS.
(a) With the consent of the Issuer and the Holders of Bonds
representing at least 66 2/3% of the principal balance of the Outstanding Bonds
by Act of said Holders delivered to the Issuer and the Indenture Trustee, the
Issuer and the Indenture Trustee may enter into a modification of any Loan
Document (other than the Indenture or the Bonds) for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, such Loan Document or of modifying in any manner the rights of the Holders
of the Bonds under such Loan Document; provided, however, that no such
modification shall, without the consent of the Holder of each Outstanding Bond
affected thereby, have any of the results enumerated in Section 9.02(a) (i)
through (vi).
(b) The Indenture Trustee may determine whether or not any Bonds
would be affected by any modification of a Loan Document in reliance upon an
Opinion of Counsel or confirmation from the Rating Agency that the modification
will not cause a qualification, withdrawal or downgrading of the ratings then
maintained by the Rating Agency with respect to the Bonds and any such
determination shall be conclusive upon the Holders of all Bonds, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith. The
Indenture Trustee may, but shall not be obligated to, enter into any such
modification of a Loan Document that affects the Indenture Trustee's own
rights, duties or immunities under this Indenture or otherwise.
(c) It shall not be necessary for any Act of Bondholders under
this Section to approve the particular form of any proposed modification, but
it shall be sufficient if such Act shall approve the substance thereof.
(d) The Indenture Trustee shall deposit in the related Mortgage
File an original counterpart of the agreement relating to such modification,
waiver or amendment promptly following the execution thereof, except to the
extent such documents have been submitted to the applicable recording office,
in which event the Indenture Trustee shall place a copy of such document in the
related Mortgage File and shall place an original counterpart therein when the
original is returned from the recording office.
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SECTION 9.07. AMENDMENTS TO GOVERNING DOCUMENTS.
(a) The Indenture Trustee shall, upon Issuer Request,
consent to any proposed amendment to the Issuer's or the General Partner's
governing documents, or an amendment to or waiver of any provision of any other
document relating to the Issuer's or General Partner's governing documents,
such consent to be given without the necessity of obtaining the consent of the
Holders of any Bonds upon receipt by the Indenture Trustee of:
(i) an Opinion of Counsel to the effect that such
amendment or waiver will not adversely affect the interests of the
Holders of the Bonds and that all conditions precedent to such consent
specified in this Section 9.07 have been satisfied;
(ii) an Officers' Certificate, to which such proposed
amendment or waiver shall be attached, stating that such attached copy
is a true copy of the proposed amendment or waiver and that all
conditions precedent to such consent specified in this Section 9.07
have been satisfied; and
(iii) written confirmation from the Rating Agency that the
implementation of the proposed amendment or waiver will not cause a
qualification, withdrawal or downgrading of the ratings then
maintained by the Rating Agency with respect to the Bonds.
(b) Notwithstanding the foregoing, the Indenture Trustee may
decline to consent to a proposed waiver or amendment that adversely affects its
own rights, duties or immunities under this Indenture or otherwise.
(c) Nothing in this Section 9.07 shall be construed to require
that any Person obtain the consent of the Indenture Trustee to any amendment or
waiver or any provision of any document where the making of such amendment or
the giving of such waiver without obtaining the consent of the Indenture
Trustee is not prohibited by this Indenture or by the terms of the document
that is the subject of the proposed amendment or waiver.
ARTICLE X.
MISCELLANEOUS
SECTION 10.01. COMPLIANCE CERTIFICATES.
Upon any application or request by the Issuer to the Indenture Trustee
to take any action under any provision of this Indenture, the Issuer shall
furnish to the Indenture Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by
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any provision of this Indenture relating to such particular application or
request, no additional certificate need be furnished.
SECTION 10.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE.
(a) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of the Issuer may be based, insofar
as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any Opinion of Counsel may be based on the written opinion of other
counsel, in which event such Opinion of Counsel shall be accompanied by a copy
of such other counsel's opinion and shall include a statement to the effect
that such counsel believes that such counsel and the Indenture Trustee may
reasonably rely upon the opinion of such other counsel.
(c) Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
(d) Wherever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof, it
is intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case
be conditions precedent to the right of the Issuer to have such application
granted or to the sufficiency of such certificate or report. The foregoing
shall not, however, be construed to affect the Indenture Trustee's right to
rely upon the truth and accuracy of any statement or opinion contained in any
such document as provided in Section 6.01(b)(2).
(e) Whenever in this Indenture it is provided that the absence of
the occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Indenture Trustee at the request
or direction of the Issuer, then, notwithstanding that the satisfaction of such
condition is a condition precedent to the Issuer's right to make such request
or direction, the Indenture Trustee shall be protected in acting in accordance
with such request or direction if it does not have knowledge of the occurrence
and continuation of such Default or Event of Default as provided in Section
6.01(d).
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SECTION 10.03. ACTS OF BONDHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Bondholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Bondholders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Bondholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided
in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the execution
thereof. Whenever such execution is by an officer of a corporation or a member
of a partnership on behalf of such corporation or partnership, such certificate
or affidavit shall also constitute sufficient proof of his authority.
(c) The ownership of Bonds shall be proved by the Bond Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Bonds shall bind the
Holder of every Bond issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Indenture Trustee or the Issuer in reliance thereon,
whether or not, notation of such action is made upon such Bonds.
SECTION 10.04. NOTICES TO INDENTURE TRUSTEE AND ISSUER.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Bondholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a) the Indenture Trustee by any Bondholder or by the
Issuer shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with and received by the Indenture
Trustee at its Corporate Trust Office; or
(b) the Issuer by the Indenture Trustee or by any
Bondholder shall be sufficient for every purpose hereunder (except for
certain Events of Default as provided in the definition of Event of
Default) if in writing and mailed, first-class postage prepaid, to the
Issuer addressed to it at 4735 Spottswood, Suite 102, Memphis, Shelby
County,
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Tennessee 38117, or at any other address previously furnished in
writing to the Indenture Trustee by the Issuer.
SECTION 10.05. NOTICES AND REPORTS TO BONDHOLDERS; WAIVER OF
NOTICES.
(a) Where this Indenture provides for notice to Bondholders of any
event or the mailing of any report to Bondholders, such notice or report shall
be sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Bondholder affected by such event or to
whom such report is required to be mailed, at the address of such Bondholder as
it appears on the Bond Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice or the
mailing of such report. In any case where a notice or report to Bondholders is
mailed in the manner provided above, neither the failure to mail such notice or
report, nor any defect in any notice or report so mailed, to any particular
Bondholder shall affect the sufficiency of such notice or report with respect
to other Bondholders, and any notice or report which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given or
provided.
(b) Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Bondholders shall be filed with the
Indenture Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
(c) In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Bondholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
SECTION 10.06. RULES BY INDENTURE TRUSTEE.
The Indenture Trustee may make reasonable rules for any meeting of Bondholders.
SECTION 10.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 10.08. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Issuer shall
bind its successors and assigns, whether so expressed or not.
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SECTION 10.09. SEPARABILITY.
In case any provision in this Indenture or in the Bonds shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.10. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Bonds, expressed or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, any separate trustee or co-trustee appointed under Section 6.14, the
Servicer and the Bondholders, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 10.11. LEGAL HOLIDAYS.
Except as otherwise provided herein or in the Glossary, in any case
where the date of any Payment Date, Special Payment Date or any other date on
which principal of or interest on any Bond is proposed to be paid shall not be
a Business Day, then (notwithstanding any other provision of the Bonds or this
Indenture) payment need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
nominal date of any such Payment Date, Special Payment Date or other date for
the payment of principal of or interest on any Bond and no interest shall
accrue for the period from and after any such nominal date, provided such
payment is made in full on such next succeeding Business Day.
SECTION 10.12. GOVERNING LAW.
IN VIEW OF THE FACT THAT BONDHOLDERS MAY RESIDE IN MANY STATES AND
OUTSIDE THE UNITED STATES AND THE DESIRE TO ESTABLISH WITH CERTAINTY THAT THIS
INDENTURE WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAW OF A STATE HAVING A WELL-DEVELOPED BODY OF COMMERCIAL AND FINANCIAL LAW
RELEVANT TO TRANSACTIONS OF THE TYPE CONTEMPLATED HEREIN, THIS INDENTURE AND
EACH BOND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
SECTION 10.13. COUNTERPARTS.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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SECTION 10.14. ISSUER OBLIGATION.
Except as expressly provided in the Loan Documents, no recourse may be
taken, directly or indirectly, against any organizer, General Partner or the
Indenture Trustee or of any predecessor or successor of the Issuer or the
Indenture Trustee with respect to the Issuer's obligations with respect to the
Bonds or the obligations of the Issuer or the Indenture Trustee under this
Indenture or any certificate or other writing delivered in connection herewith
or therewith.
SECTION 10.15. USURY.
The amount of interest payable or paid on any Bond under the terms of
this Indenture shall be limited to the Highest Lawful Amount. In the event any
payment of interest on any Bond exceeds the Highest Lawful Amount, the Issuer
stipulates that such excess amount will be deemed to have been paid as a result
of an error on the part of both the Indenture Trustee, acting on behalf of the
Holder of such Bond, and the Issuer, and the Holder receiving such excess
payment shall promptly, upon discovery of such error or upon notice thereof
from the Issuer or the Indenture Trustee, refund the amount of such excess or,
at the option of the Indenture Trustee, apply the excess to the payment of
principal of such Bond, if any, remaining unpaid. In addition, all sums paid
or agreed to be paid to the Indenture Trustee for the benefit of Holders of
Bonds for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Bonds.
SECTION 10.16 STREIT ACT.
Any provisions required to be contained in this Indenture by Section
126 and Section 130-k of Article 4-A of the New York Real Property Law are
hereby incorporated, and such provisions shall be in addition to those
conferred or imposed by this Indenture, provided, however, that to the extent
that such Section 126 or Section 130-k shall not apply to this Indenture, said
Section 126 or Section 130-k should at any time be repealed or cease to apply
to this Indenture, or be construed by judicial decision to be inapplicable,
said Section 126 or Section 130-k as the case may be shall cease to have any
further effect upon the provisions of this Indenture. In case of a conflict
between the provisions of this Indenture and any mandatory provisions of
Article 4-A of the New York Real Property Law, such mandatory provisions of
said Article 4-A shall prevail, provided that if said Article 4-A shall not
apply to this Indenture, should at any time be repealed, or cease to apply to
this Indenture, or be construed by judicial decision to be inapplicable, such
mandatory provisions of such Article 4-A shall cease to have any further effect
upon the provisions of this Indenture.
SECTION 10.17 USE OF SCHEDULE C.
Schedule C has been attached hereto for certain purposes set forth in
the Mortgages.
62
<PAGE> 69
*****
[SIGNATURES TO FOLLOW]
63
<PAGE> 70
IN WITNESS WHEREOF, the Issuer, acting through its duly authorized
general partner, the Indenture Trustee and the Fiscal Agent have caused this
Indenture to be duly executed by officers thereunto duly authorized, all as of
the day and year first above written.
EQI FINANCING PARTNERSHIP I, L.P.,
a Tennessee limited partnership
By: EQI FINANCING CORPORATION,
a Tennessee corporation,
its duly authorized general partner
By:
------------------------------------------
LASALLE NATIONAL BANK,
as Indenture Trustee
By:
------------------------------------------
ABN AMRO BANK N.V.,
as Fiscal Agent
By:
-------------------------------------------
<PAGE> 71
SCHEDULE A
MORTGAGED PROPERTIES AND INITIAL ALLOCATED LOAN AMOUNTS
<TABLE>
<CAPTION>
MORTGAGED INITIAL ALLOCATED
PROPERTY LOAN AMOUNTS
----------- -----------------
<S> <C>
Hampton Inn $3,026,413
10 Bee Street
Meriden, Connecticut
Hampton Inn 4,650,885
129 Plains Road
Milford, Connecticut
Hampton Inn 3,167,496
6135 Youngerman Circle
Jacksonville, Florida
Hampton Inn 3,102,815
5000 North Tamiami Trail
Sarasota, Florida
Hampton Inn 3,781,071
5585 Whitesville Road
Columbus, Georgia
Hampton Inn 3,560,486
5550 Grand Avenue
Gurnee, Illinois
Hampton Inn 4,418,818
1087 Diehl Road
Naperville, Illinois
Hampton Inn 4,769,033
6817 East 82nd Street
Indianapolis, Indiana
Hampton Inn 4,060,556
1902 Embassy Square Boulevard
Louisville, Kentucky
Hampton Inn 4,291,658
925 Victors Way
Ann Arbor, Michigan
Hampton Inn 3,443,491
1922 Cedar Creek Road
Fayetteville, North Carolina
</TABLE>
S-1
<PAGE> 72
<TABLE>
<S> <C>
Hampton Inn 4,421,997
1859 Remount Road
Gastonia, North Carolina
Hampton Inn 3,581,889
29690 Detroit Road
Cleveland, Ohio
Hampton Inn 2,972,370
148 International Avenue
Knoxville (Alcoa), Tennessee
Hampton Inn 4,863,879
7619 IH-35N
Austin, Texas
Hampton Inn 3,703,488
320 Texas Avenue South
College Station, Texas
Hampton Inn 3,735,332
12670 East NW Highway
Dallas (Garland), Texas
Hampton Inn 2,905,519
2700 Cherry Lane
Fort Worth, Texas
Holiday Inn 3,337,956
2008 Hawthorne Road
Winston-Salem, North Carolina
Holiday Inn 5,786,610
250 Johnny Dodds Boulevard
Charleston (Mt. Pleasant), South Carolina
Residence Inn 2,396,017
6990 Dodge Street
Omaha, Nebraska
Residence Inn 2,522,541
501 D'Onofrio Drive
Madison, Wisconsin
Comfort Inn 5,499,680
1515 North First Street
Jacksonville Beach, Florida
</TABLE>
S-2
<PAGE> 73
SCHEDULE B
AMORTIZATION SCHEDULE
[To be provided by Smith Barney upon pricing]
S-3
<PAGE> 74
SCHEDULE C
SCHEDULE OF SURVEYS, PROPERTY CONDITION REPORTS
AND ENVIRONMENTAL REPORTS
SCHEDULE OF SURVEYS
<TABLE>
<S> <C> <C>
1. Hampton Inn 4. Hampton Inn
129 Plains Road 5000 N. Tamiami Trail
MILFORD, CT 06460 SARASOTA, FL 34234
NOWAKOWSKI, O'BYMACHOW & KANE MOSBY ENGINEERING ASSOCIATES INC.
55 Bridgeport Avenue 3859 Bee Ridge Road
Shelton, Connecticut 06484 Sarasota, Florida 34233
Attn: Mr. Allan Shepard Attn: Mr. Fred Lewis
Telephone: 203/924-7745 Telephone: (813) 924-1101
Telecopier: 203/924-2660 Telecopier: (813) 924-7130
SURVEY DATE: 8/17/94 SURVEY DATE: 2/24/94
2. Hampton Inn 5. Hampton Inn (Knoxville)
10 Bee Street 148 International Drive
MERIDEN, CT 06450 ALCOA, TN 37701
CONKLIN & SOROKA BENCHMARK SURVEYING CO.
1484 Highland Avenue 8200 Kingston Pike, Suite C
Cheshire, Connecticut 06410 Knoxville, Tennessee 37919
Attn: Mr. John Wagenblatt Attn: Benny Moorman
Telephone: 203/272-1135 Telephone: 423/694-9406
Telecopier: 203/272-0316 Telecopier: 423/
SURVEY DATE: 9/16/94 SURVEY DATE: 2/16/96
3. Hampton Inn 6. Hampton Inn
6135 Youngerman Circle 5585 Whitesville Road
JACKSONVILLE, FL 32244 COLUMBUS, GA 31904
SUNSHINE STATE SURVEYORS, INC. JORDAN, JONES AND GOULDING, INC.
3131 St. Johns Bluff Road Engineers and Planners
Jacksonville, FL 32216 6001 River Road, #408
Attn: Arthur Mastronicola, Columbus, Georgia 31904
Vice President Attn: Mr. Terry D. Hogg
Telephone: (904) 642-8550 Telecopier: 706-324-3213
Telecopier: (904) 646-9485
SURVEY DATE: 1/11/94
SURVEY DATE: 8/11/95
</TABLE>
S-4
<PAGE> 75
<TABLE>
<S> <C> <C> <C>
7. Hampton Inn 11. Hampton Inn
29690 Detroit Road 5550 Grand Avenue
WESTLAKE, OH 44145 GURNEE, IL 60031
ZWICK ASSOCIATES, INC. MANHARD CONSULTING, LTD.
Consulting Engineers 900 Woodlands Parkway
1344 West Bagley Road Vernon Hills, Illinois 60061
Berea, Ohio 44017 Attn: Mr. Dale A. Gray
Telephone: 216/891-1492 Telephone: 708/634-5550
Telecopier: 708/634-0095
SURVEY DATE: 2/21/94 SURVEY DATE: 5/16/94
8. Hampton Inn 12. Hampton Inn
1859 Remount Road 1087 Diehl Road
GASTONIA, NC 28054 NAPERVILLE, IL 60563
TRIAD ENGINEERING MID AMERICA SURVEY COMPANY
219 Hartman Run Road 460 South County Farm Road
Morgantown, WV 26505 Wheaton, Illinois 60189-0937
Attn: Mr. Scott Krabill or Attn: Ms. Laura Tess or
Onas Aliff Dave Bronstadt
Telephone: 304/296-2562 Telephone: 708/690-3733
Telecopier: 304/296-8739 Telecopier: 708/690-3735
SURVEY DATE: 11/15/94 SURVEY DATE: 12/7/94
9. Hampton Inn 13. Hampton Inn
1922 Cedar Creek Road 925 Victor's Way
FAYETTEVILLE, NC 28301 ANN ARBOR, MI
MOORMAN, KIZER & REITZEL Washtinaw Engineering
Post Office Box 53774 3250 West Liberty Road
115 Broadfoot Avenue Ann Arbor, MI 48106
Fayetteville, NC 28305 Telephone: 313/761-8800
Attn: Mr. Jeffrey Reitzel
Telephone: 910/484-5191 SURVEY DATE: 3/30/94
Telecopier: 910/484-0388
14. Hampton Inn
SURVEY DATE 8/95 7619 IH-35 North
AUSTIN, TX 78752
10. Hampton Inn
1902 Embassy Square Blvd. DOUG SELIG LAND SURVEYORS, P.C.
LOUISVILLE, KY 40299 3802 Manchaca Road
Austin, Texas 78704
JAMES-WINSTEAD & ASSOCIATES Attn: Mr. Doug Selig, R.P.L.S.
2300 Meadow Drive, Suite 200 Telephone:
Louisville, Kentucky 40218 Telecopier:
Attn: Mr. C. Melvin Winstead
Telephone: 502/456-2110 SURVEY DATE: 12/19/95
SURVEY DATE: 3/29/94
</TABLE>
S-5
<PAGE> 76
<TABLE>
<S> <C> <C> <C>
15. Hampton Inn 19. Holiday Inn (Mt. Pleasant)
12670 E. Northwest Highway 250 Johnnie Dodds Blvd.
DALLAS, TX 75228 CHARLESTON, SC 29464
CARTER AND BURGESS TRICO Environmetrics, Inc.
7950 Elmbrook Drive, Suite 250 Suite 201
Dallas, Texas 75247 4055 Faber Place Drive
Attn: Mr. Mark Viktorin, R.P.L.S. N. Charleston, SC 29405
Telephone: 214/263-2019 Telephone: (803) 871-6500
Telecopier: (804) 740-7707
SURVEY DATE 6/29/95
SURVEY DATE 8/15/95
16. Hampton Inn
2700 Cherry Road 20. Holiday Inn
FT. WORTH, TX 76116 2008 Hawthorne Road
WINSTON-SALEM, NC 27103
KADLECK & ASSOCIATES
5336 Alpha Road, Ste. 5 International Land Services, Inc.
Dallas, Texas 75240 611 24th Avenue S.W., Suite C
Attn: Lynn Kadleck Norman, Oklahoma 73069
Telephone: 214/702-0771 Telephone: 405/364-9352
Telecopier: 214/702-9832 Telecopier: 405/321-2438
SURVEY DATE: 2/20/94 21. Residence Inn
501 D'Onofrio Drive
17. Hampton Inn MADISON, WI 53719
6817 East 82nd Street
INDIANAPOLIS, IN 46250 ARNOLD & O'SHERIDAN
815 Forward Drive
MSE CORPORATION Madison, Wisconsin 53711
941 North Meridian Street Attn: Mr. Donald Paulson
Indianapolis, IN 46204 Telephone: 608/271-9651
Attn: Terry L. Kriebel Telecopier: 608/271-7284
Telephone: 314/634-1000
Telecopier: 317/634-3576 SURVEY DATE
SURVEY DATE: 8/17/95 22. Residence Inn
6990 Dodge Street
18. Hampton Inn OMAHA, NE 68132
320 Texas Avenue South
COLLEGE STATION, TX 77840
KLING ENGINEERING & SURVEYING LAMP, RYNEARSON & ASSOCIATES
S. M. Kling, R.P.L.S. 14747 California Street
4103 Texas Avenue Omaha, Nebraska 68154
P.O. Box 4234 Attn: Mr. Robert Proett
Bryan, Texas 77802 Telephone: 402/496-2498
Telephone: (409)846-6212 Telecopier: 402/496-2730
SURVEY DATE: 3/1/94 SURVEY DATE: 11/11/95
</TABLE>
S-6
<PAGE> 77
<TABLE>
<S> <C>
23. Comfort Inn
1515 North First Street
JACKSONVILLE BEACH, FL 32250
CLARSON AND ASSOC.
1643 Naldo Avenue
Jacksonville, FL 32207
Attn: Mr. Richard P. Clarson
Telephone: 904/
Telecopier: 904/346-2625
SURVEY DATE: 10/10/95
</TABLE>
S-7
<PAGE> 78
<TABLE>
<CAPTION>
SCHEDULE OF ENVIRONMENTAL AND PROPERTY CONDITION REPORTS
Environmental and Prepared By Date
Franchise Location Property Condition
Reports
<S> <C> <C> <C> <C>
i. Hampton Inn Meriden, CT Phase I Environmental Site EMG 9/26/95
Assessment
Property Condition EMG 9/22/95
Executive Summary
ii. Hampton Inn Milford, CT Phase I Environmental Site EMG 9/26/95
Assessment
Property Condition EMG 9/23/95
Executive Summary
iii. Hampton Inn Jacksonville, FL Phase I Environmental Site EMG 11/7/95
Assessment
Property Condition EMG 10/24/95
Executive Summary
iv. Hampton Inn Sarasota, FL Phase I Environmental Site EMG 9/26/95
Assessment
Property Condition EMG 9/27/95
Executive Summary
</TABLE>
S-8
<PAGE> 79
<TABLE>
<CAPTION>
SCHEDULE OF ENVIRONMENTAL AND PROPERTY CONDITION REPORTS
Environmental and Prepared By Date
Franchise Location Property Condition
Reports
<S> <C> <C> <C> <C> <C>
v. Hampton Inn Columbus, GA Phase I Environmental Site EMG 9/26/95
Assessment
Property Condition EMG 9/26/95
Executive Summary
vi. Hampton Inn Chicago, IL (Gurnee) Phase I Environmental Site EMG 9/26/95
Assessment
Property Condition EMG 9/26/95
Executive Summary
vii. Hampton Inn Chicago, IL (Naperville) Phase I Environmental Site EMG 9/26/95
Assessment
Property Condition EMG 9/26/95
Executive Summary
viii. Hampton Inn Indianapolis, IN Phase I Environmental Site EMG 11/8/95
Assessment
Property Condition EMG 10/24/95
Executive Summary
ix. Hampton Inn Louisville, KY Phase I Environmental Site EMG 9/26/95
Assessment
Property Condition EMG 9/26/95
Executive Summary
</TABLE>
S-9
<PAGE> 80
<TABLE>
<CAPTION>
SCHEDULE OF ENVIRONMENTAL AND PROPERTY CONDITION REPORTS
Environmental and Prepared By Date
Franchise Location Property Condition
Reports
<S> <C> <C> <C> <C> <C>
x. Hampton Inn Ann Arbor, MI Phase I Environmental Site EMG 9/26/95
Assessment
Property Condition EMG 9/26/95
Executive Summary
xi. Hampton Inn Fayetteville, NC Phase I Environmental Site EMG 11/7/95
Assessment
Property Condition EMG 10/24/95
Executive Summary
xii. Hampton Inn Gastonia, NC Phase I Environmental Site EMG 9/26/95
Assessment
Property Condition EMG 9/22/95
Executive Summary
xiii. Hampton Inn Cleveland, OH (Westlake) Phase I Environmental Site EMG 9/26/95
Assessment
Property Condition EMG 9/26/95
Executive Summary
xiv. Hampton Inn Knoxville, TN Phase I Environmental Site EMG 9/23/96
Assessment
Property Condition Survey EMG 9/24/96
</TABLE>
S-10
<PAGE> 81
<TABLE>
<CAPTION>
SCHEDULE OF ENVIRONMENTAL AND PROPERTY CONDITION REPORTS
Environmental and Prepared By Date
Franchise Location Property Condition
Reports
<S> <C> <C> <C> <C> <C>
xv. Hampton Inn Austin, TX Phase I Environmental Site O'Brien & Gere Engineers 12/95
Assessment
Property Condition Survey EMG 1/29/96
xvi. Hampton Inn College Station, TX Phase I Environmental Site EMG 9/26/95
Assessment
Property Condition EMG 9/26/95
Executive Summary
xvii. Hampton Inn Dallas, TX (Garland) Phase I Environmental Site O'Brien & Gere Engineers 2/96
Assessment
Property Condition Survey EMG 2/6/96
xviii. Hampton Inn Fort Worth, TX Phase I Environmental Site EMG 9/26/95
Assessment
Property Condition EMG 9/26/95
Executive Summary
xix. Holiday Inn Winston-Salem, NC Phase I Environmental Site IVI Environmental 8/9/96
Assessment
Property Condition IVI International 8/13/96
Assessment
</TABLE>
S-11
<PAGE> 82
<TABLE>
<CAPTION>
SCHEDULE OF ENVIRONMENTAL AND PROPERTY CONDITION REPORTS
Environmental and Prepared By Date
Franchise Location Property Condition
Reports
<S> <C> <C> <C> <C> <C>
xx. Holiday Inn Charleston, SC (Mt. Pleasant) Phase I Environmental Site EMG 11/7/95
Assessment
Property Condition EMG 10/30/95
Executive Summary
xxi. Residence Inn Omaha, NE Environmental Site EMG 5/11/95
(Alcoa) Assessment
Property Condition Survey EMG 2/12/96
xxii. Residence Inn Madison, WI Phase I Environmental Site EMG 9/24/96
Assessment
Property Condition Survey EMG 9/26/96
xxiii. Comfort Inn Jacksonville Beach, FL Environmental Site Apex Environmental 2/22/96
Assessment
Property Condition Survey EMG 2/12/96
</TABLE>
S-12
<PAGE> 83
EXHIBIT A
FORM OF CLASS A BOND
[copy to come]
A-1
<PAGE> 84
EXHIBIT B
FORM OF CLASS B BOND
[copy to come]
B-1
<PAGE> 85
EXHIBIT C
FORM OF CLASS C BOND
[copy to come]
C-1
<PAGE> 86
EXHIBIT D
REQUEST FOR EXCHANGE OF
REGULATION S TEMPORARY GLOBAL BOND
FOR REGULATION S PERMANENT GLOBAL BOND
(Bond Owner)
EQI FINANCING PARTNERSHIP I, L.P.
COMMERCIAL MORTGAGE BONDS, SERIES 1997-1, CLASS _
_______________
(DATE)
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE AS
OPERATOR OF THE EUROCLEAR SYSTEM]
[CEDEL BANK, SOCIETE ANONYME]
LaSalle National Bank
135 South LaSalle Street, 17th Floor
Chicago, Illinois 60674-4107
Attention: Asset-Backed Securities Trust Services Group
EQI Financing Partnership I, L.P.
4735 Spottswood, Suite 102
Memphis, Shelby County, Tennessee 38117
Attention: Howard A. Silver
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of January __, 1997
(the "Indenture") among EQI Financing Partnership I, L.P., as Issuer, LaSalle
National Bank, as Indenture Trustee and ABN AMRO Bank, N.V., as Fiscal Agent.
Capitalized terms used but not defined herein shall have the meanings given
them in the "Glossary" attached as Annex I to the Indenture.
This certificate relates to U.S. $_____________________ aggregate
principal amount of Class _ Bonds (the "Bonds") which are held in the form of
the Regulation S Temporary Global Bond (CINS No. _________) with the Depositary
in the name of ___________________ [name of transferor] (the "Transferor") to
effect the transfer of the beneficial interest in such Regulation
D-1
<PAGE> 87
S Temporary Global Bond for a beneficial interest in an equivalent aggregate
principal amount in the Regulation S Permanent Global Bond.
In connection with such request, and in respect of such Bonds the
Transferor confirms that:
1. It is either not a U.S. person (as defined below) or
it has purchased its beneficial interest in the above referenced
Regulation S Temporary Global Bond in a transaction that is exempt
from the registration requirements under the 1933 Act.
2. It is delivering this certificate in connection with
obtaining a beneficial interest in the Regulation S Permanent Global
Bond in exchange for its beneficial interest in the Regulation S
Temporary Global Bond.
For purposes of this certificate, "U.S. person" means (i) any
individual resident in the United States, (ii) any partnership or corporation
organized or incorporated under the laws of the United States, (iii) any estate
of which an executor or administrator is a U.S. person (other than an estate
governed by foreign law and of which at least one executor or administrator is
a non-U.S. person who has sole or shared investment discretion with respect to
it assets), (iv) any trust of which any trustee is a U.S. person (other than a
trust of which at least one trustee is a non-U.S. person who has sole or
shared investment discretion with respect to its assets and no beneficiary of
the trust (and no settlor if the trust is revocable) is a U.S. person), (v) any
agency or branch of a foreign entity located in the United States, (vi) any
non-discretionary or similar account (other than an estate or trust) held by a
dealer or other fiduciary for the benefit or account of a U.S. person, (vii)
any discretionary or similar account (other than an estate or trust) held by a
dealer or other fiduciary organized, incorporated or (if an individual)
resident in the United States (other than such an account held for the benefit
or account of a non-U.S. person), (viii) any partnership or corporation
organized or incorporated under the laws of a foreign jurisdiction and formed
by a U.S. person principally for the purpose of investing in securities not
registered under the 1933 Act (unless it is organized or incorporated, and
owned, by accredited investors within the meaning of Rule 501(a) under the 1933
Act who are not natural persons, estates or trusts); provided, however, that
the term "U.S. person" shall not include (A) a branch or agency of a U.S.
person that is located and operating outside the United States for valid
business purposes as a locally regulated branch or agency engaged in the
banking or insurance business, (B) any employee benefit plan established and
administered in accordance with the law, customary practices and documentation
of a foreign country and (C) the international organizations set forth in
Section 902(o)(7) of Regulation S under the 1933 Act and any other similar
international organizations, and their agencies, affiliates and pension plans.
D-2
<PAGE> 88
The undersigned Transferor irrevocably authorizes you to produce this
certificate or a copy hereof to any interested party in any administrative or
other proceedings with respect to the matters covered by this certificate.
Very truly yours,
[TRANSFEROR]
Dated: By:
-------------------------------
Name:
Title:
To be completed by the account holder as, or as agent for, the
beneficial owner(s) of the Bonds to which this certificate relates.
D-3
<PAGE> 89
EXHIBIT E
REQUEST FOR EXCHANGE OF
REGULATION S TEMPORARY GLOBAL BOND
FOR REGULATION S PERMANENT GLOBAL BOND
(Euroclear or Cedel)
EQI FINANCING PARTNERSHIP I, L.P.
COMMERCIAL MORTGAGE BONDS, SERIES 1997-1, CLASS _
_______________
(DATE)
LaSalle National Bank
135 South LaSalle Street, 17th Floor
Chicago, Illinois 60674-4107
Attention: Asset-Backed Securities Trust Services Group
EQI Financing Partnership I, L.P.
4735 Spottswood, Suite 102
Memphis, Shelby County, Tennessee 38117
Attention: Howard A. Silver
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of February 6, 1997
(the "Indenture") among EQI Financing Partnership I, L.P., as Issuer, LaSalle
National Bank, as Indenture Trustee and ABN AMRO Bank, N.V., as Fiscal Agent.
Capitalized terms used but not defined herein shall have the meanings given
them in the "Glossary" attached as Annex I to the Indenture.
This certificate relates to U.S. $____________________ aggregate
principal amount of Class _ Bonds (the "Bonds") which are held in the form of
the Regulation S Temporary Global Bond (CINS No. ______________) with the
Depositary to effect the transfer of the beneficial interest in such Regulation
S Temporary Global Bond for a beneficial interest in an equivalent aggregate
principal amount of the Regulation S Permanent Global Bond.
In connection with such request, this is to certify that, based solely
on certificates we have received in writing, by tested telex or by electronic
transmission from member organizations appearing in our records as persons
being entitled to a portion of the principal amount of the Regulation S
Temporary Global Bond set forth above (our "Member Organizations")
substantially to the effect set forth in the Indenture, U.S.
$__________________ aggregate principal amount of the Bonds is owned by persons
that are not citizens or residents
E-1
<PAGE> 90
of the United States, domestic partnerships, domestic corporations or any
estate or trust the income of which is subject to United States federal income
taxation regardless of its source or any other person deemed a "U.S. person"
under Regulation S under the Securities Act of 1933, as amended.
We further certify (i) that we are not making available herewith for
exercise (or if relevant, exercise of any rights of collection of any interest)
any portion of the Regulation S Global Bond excepted in such certificates and
(ii) that, as of the date hereof, we have not received any notification from
any of our Member Organizations to the effect that the statements made by such
Member Organizations with respect to any portion of the part submitted herewith
for exchange (or, if relevant, exercise or any rights of collection of any
interest) are no longer true and cannot be relied upon as of the date hereof.
We understand that this certificate is required in connection with
certain laws, and, if applicable, certain securities laws of the United States.
In connection therewith, if administrative or legal proceedings are commenced
or threatened in connection with which this certificate is or would be
relevant, we irrevocably authorize you to produce this certification to any
interested party in such proceedings.
Very truly yours,
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE AS
OPERATOR OF THE EUROCLEAR SYSTEM]
[CEDEL BANK, SOCIETE ANONYME]
By:
-------------------------------------
Name:
Title:
E-2
<PAGE> 91
EXHIBIT F
LETTER AGREEMENT
(TO THE DEPOSITORY TRUST COMPANY)
F-1
<PAGE> 92
EXHIBIT G
FORM OF TRANSFEREE AGREEMENT
EQI FINANCING PARTNERSHIP I, L.P.
COMMERCIAL MORTGAGE BONDS, SERIES 1997-1, CLASS _
--------------------
[Name of Transferee]
---------------
(DATE)
LaSalle National Bank
135 South LaSalle Street, 17th Floor
Chicago, Illinois 60674-4107
Attention: Asset-Backed Securities Trust Services Group
EQI Financing Partnership I, L.P.
4735 Spottswood, Suite 102
Memphis, Shelby County, Tennessee 38117
Attention: Howard A. Silver
Ladies and Gentlemen:
The undersigned (the "Transferee") proposes to purchase all or some of
the Class ___ Bonds (the "Bonds"), issued by EQI Financing Partnership I, L.P.
pursuant to an Indenture dated as of February 6, 1997 (the "Indenture"), among
EQI Financing Partnership I, L.P., as Issuer, LaSalle National Bank, as
Indenture Trustee and ABN AMRO Bank, N.V., as Fiscal Agent. Capitalized terms
used but not defined herein shall have the meanings given them in the
"Glossary" attached as Annex I to the Indenture.
1. Representations and Warranties. The Transferee represents and
warrants:
(a) It is purchasing the Bonds for its own account or an
account with respect to which it exercises sole investment discretion,
and it or the owner is an Institutional Accredited Investor, and it is
acquiring such Bonds for investment and not with a view to, or for
offer and sale in connection with, any distribution (within the
meaning of the 1933 Act) or fractionalization thereof or with any
intention of reselling the Bonds or any part thereof, subject to any
requirement of law that the disposition of its property or the
property of such investor account or accounts be at all times within
its or their control and subject to its or their ability to resell
such Bonds pursuant to Rule 144A, Regulation S, or other exemption
from registration available under the 1933 Act.
G-1
<PAGE> 93
(b) It understands that each Bond, unless the Issuer
determines otherwise consistent with applicable law, will bear a
legend to the following effect:
THIS BOND HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THE HOLDER
HEREOF, BY PURCHASING THIS BOND, AGREES FOR THE BENEFIT OF THE ISSUER
AND THE INDENTURE TRUSTEE THAT THIS BOND MAY NOT BE RESOLD, PLEDGED,
OR OTHERWISE TRANSFERRED (X) WITHIN THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE HEREOF OR THE SALE HEREOF BY AN AFFILIATE OF THE
ISSUER (COMPUTED IN ACCORDANCE WITH PARAGRAPH (D) OF RULE 144 UNDER
THE 1933 ACT) OR (Y) BY AN AFFILIATE OF THE ISSUER OR BY ANY HOLDER
THAT WAS AN AFFILIATE OF THE ISSUER AT ANY TIME DURING THE THREE
MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN
IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES AND ONLY (1) TO THE ISSUER OR THE INITIAL PURCHASER, (2)
PURSUANT TO RULE 144A, TO A PERSON WHO THE HOLDER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE 1933 ACT PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF
ANOTHER QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 903 OR RULE 904 OF REGULATION S
UNDER THE 1933 ACT OR (4) TO AN INSTITUTIONAL INVESTOR THAT IS AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3)
OR (7) OF REGULATION D UNDER THE 1933 ACT; AND IN CONNECTION WITH ANY
TRANSFER PURSUANT TO CLAUSE (4) AND CERTAIN OTHER TRANSFERS AS
SPECIFIED IN THE INDENTURE, A TRANSFEREE AGREEMENT IN THE APPROPRIATE
FORM PROVIDED IN THE INDENTURE MUST BE DELIVERED TO THE INDENTURE
TRUSTEE.
(c) It acknowledges that (i) it has been afforded an
opportunity to request from the Issuer and to review, and it has
received, all additional information considered by it to be necessary
to verify the accuracy of the information herein and (ii) no person
has been authorized to give any information or to make any
representation concerning the Bonds other than those contained in this
Memorandum and, if given or made, such other information or
representation should not be relied upon as having been authorized by
the Issuer.
(d) It has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of purchasing the Bonds and is, and any account or which it is acting
is, able to bear the economic risk of its investment.
(e) It understands that the Issuer, the Indenture
Trustee, the Initial Purchaser and others will rely upon the truth and
accuracy of the foregoing acknowledgments, representations and
agreements and agrees that if any of the acknowledgments,
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<PAGE> 94
representations, or warranties deemed to have been made by it by its
purchase of the Bonds are no longer accurate, it shall promptly notify
the Issuer. If it is acquiring any Bonds as fiduciary or agent for
one or more investor accounts, it represents that it has sole
investment discretion with respect to each such account and that it
has full power to make the foregoing acknowledgments, representations
and agreements on behalf of such account.
(f) If it proposes that the Bonds being purchased by it
are to be registered in the name of a nominee on its behalf, it has
identified such nominee below, and has caused such nominee to complete
the Nominee Acknowledgment set forth below.
2. Transfer of the Bonds.
(a) The Transferee acknowledges that the Bonds have not
been and will not be registered under the 1933 Act or any state
securities law and may not be offered, resold or otherwise transferred
except as permitted above.
(b) It agrees that (i) within three years after the later
of the original issuance of the Bonds or the sale thereof by an
affiliate of the Issuer (computed in accordance with paragraph (d) of
Rule 144 under the 1933 Act) or if such holder was at the date of such
transfer or during the three months preceding such date of transfer an
affiliate of the Issuer, the Bonds may not be resold, pledged or
otherwise transferred except in compliance with any applicable
securities laws of any state of the United States and only (A) to the
Issuer or the Initial Purchaser, (B) pursuant to Rule 144A, to a
person who the holder reasonably believes is a qualified institutional
buyer within the meaning of Rule 144A under the 1933 Act purchasing
for its own account or the account of another qualified institutional
buyer to whom notice is given that the transfer is being made in
reliance on Rule 144A, (C) outside the United States in compliance
with Rule 903 or Rule 904 of Regulation S under the 1933 Act, or (D)
to an Institutional Accredited Investor, but only if, in connection
with any transfer pursuant to clause (D) and certain other transfers
as specified in the Indenture, a Transfer Certificate in the
appropriate form attached as an exhibit to the Indenture is delivered
by the transferee to the Indenture Trustee, and (ii) it will give the
transferee notice of these restrictions on resale of the Bonds.
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Name of Nominee (if any):
Very truly yours,
[TRANSFEREE]
By:
---------------------------
Name:
Nominee Acknowledgement
The undersigned hereby acknowledges and agrees that all Bonds being
registered in its name pursuant to the foregoing Transferee Agreement are and
shall be held by the undersigned as nominee for the Transferee identified above
and for no other person.
By:
-----------------------------
Duly Authorized
G-4
<PAGE> 96
EXHIBIT H
TRANSFER CERTIFICATE
EQI FINANCING PARTNERSHIP I, L.P.
COMMERCIAL MORTGAGE BONDS, SERIES 1997-1, CLASS _
_______________, 1997
(DATE)
LaSalle National Bank
135 South LaSalle Street, 17th Floor
Chicago, Illinois 60674-4107
Attention: Asset-Backed Securities Trust Services Group
EQI Financing Partnership I, L.P.
4735 Spottswood, Suite 102
Memphis, Shelby County, Tennessee 38117
Attention: Howard A. Silver
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of February 6, 1997
(the "Indenture") between EQI Financing Partnership I, L.P., as Issuer, LaSalle
National Bank, as Indenture Trustee and ABN AMRO Bank, N.V., as Fiscal Agent.
Capitalized terms used but not defined herein shall have the meanings given
them in the "Glossary" attached as Annex I to the Indenture.
This letter relates to U.S. $____________________ aggregate principal
amount of Class ____ Bonds (the "Bonds"), which are held in the form of the
following (check one):
[ ] the Regulation S Permanent Global Bond with the Depositary (CINS
No. _____________);
[ ] the Rule 144A Global Bond (CUSIP No. ________________) with the
Depositary;
[ ] Definitive Bond (CUSIP No. __________); or
[ ] IAI Bond (CUSIP No. __________).
Such Bonds are held in the name of _____________________ [name of transferor]
(the "Transferor"), who intends to effect the transfer of such Bonds in
exchange for an equivalent aggregate principal amount in the form of the
following (check one):
[ ] the Regulation S Temporary Global Bond (CINS No. ________);
[ ] the Regulation S Permanent Global Bond (CINS No. ________);
[ ] Rule 144A Global Bond (CUSIP No. ________);
[ ] Definitive Bond (CUSIP No. _______); or
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<PAGE> 97
[ ] IAI Bond (CUSIP No. _______).
In connection with such request, the Transferor does hereby certify
that such transfer has been effected in accordance with (i) the transfer
restrictions set forth in the Indenture and (ii) in accordance with applicable
securities laws of any state of the United States or any other jurisdiction.
With respect to transfers made otherwise than pursuant to Rule 144A,
the Transferor further certifies that the Bonds are being transferred to a
transferee that the Transferor reasonably believes is an institutional
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act of 1933) and is acquiring at least
$100,000 principal amount of Bonds for its own account or for one or more
accounts as to which the transferee exercises sole investment discretion, and a
Transferee Agreement, signed by such transferee, is attached hereto.
With respect to transfers made in reliance on Rule 144A, the
Transferor further certifies that the Bonds are being transferred to a
transferee that the Transferor reasonably believes is purchasing the Bonds for
its own account or an account with respect to which the transferee exercises
sole investment discretion and the transferee and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in a
transaction meeting the requirements of Rule 144A and in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction. A Rule 144A Certificate, signed by the transferee, is attached
hereto.
With respect to transfers made in reliance on Regulation S, the
Transferor does certify that:
(i) the offer of the Bonds was not made to a person in
the United States;
(ii) either (i) at the time that the buy order was
originated, the buyer was outside the United States, or the seller and
any person acting on the seller's behalf believed that the buyer was
outside the United States, or (ii) the transaction was executed in, on
or through the facilities of a designated offshore securities market
and neither the Transferor nor any person acting on its behalf knows
that the transaction was pre-arranged with a buyer in the United
States;
(iii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable; and
(iv) the transaction is not part of a plan or scheme to
evade the registration requirements of the United States Securities
Act of 1933 (the "1933 Act");
If the sale is being made in reliance on Regulation S during the
40-day restricted period specified in Rule 903(c)(3) of Regulation S, then the
undersigned believes that the purchaser is not a U.S. person. For purposes of
this certificate, "U.S. person" means (i) any individual resident in the United
States, (ii) any partnership or corporation organized or incorporated under the
laws of the United States, (iii) any estate or which an executor or
administrator is a U.S. person (other than an estate governed by foreign law
and of which at least one executor or
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<PAGE> 98
administrator is a non-U.S. person who has sole or shared investment discretion
with respect to its assets), (iv) any trust of which any trustee is a U.S.
person (other than a trust of which at least one trustee is a non-U.S. person
who has sole or shared investment discretion with respect to its assets and no
beneficiary of the trust (and no settlor if the trust is revocable) is a U.S.
person), (v) any agency or branch of a foreign entity located in the United
States, (vi) any non-discretionary or similar account (other than an estate or
trust) held by a dealer or other fiduciary for the benefit or account of a U.S.
person, (vii) any discretionary or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated or (if an
individual) resident in the United States (other than such an account held for
the benefit or account of a non-U.S. person), (viii) any partnership or
corporation organized or incorporated under the laws of a foreign jurisdiction
and formed by a U.S. person principally for the purpose of investing in
securities not registered under the 1933 Act (unless it is organized or
incorporated, and owned, by accredited investors within the meaning of Rule
501(a) under the 1933 Act who are not natural persons, estates or trusts);
provided, however, that the term "U.S. person" shall not include (A) a branch
or agency of a U.S. person that is located and operating outside the United
States for valid business purposes as a locally regulated branch or agency
engaged in the banking or insurance business, (B) any employee benefit plan
established and administered in accordance with the law, customary practices
and documentation of a foreign country and (C) the international organizations
set forth in Section 902(o)(7) of Regulation S under the 1933 Act and any other
similar international organizations, and their agencies, affiliates and pension
plans.
In addition, if the sale is being made pursuant to Regulation S during
a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of
Regulation S are applicable thereto, we confirm that such sale has been made in
accordance with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1),
as the case may be.
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<PAGE> 99
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.
[Name of Transferor]
By:
----------------------------
Name:
Title:
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<PAGE> 100
RULE 144A CERTIFICATE EXHIBIT I
EQI FINANCING PARTNERSHIP I, L.P.
COMMERCIAL MORTGAGE BONDS, SERIES 1997-1, CLASS _
_______________, 1997
(DATE)
To: LaSalle National Bank, as Indenture Trustee
135 South LaSalle Street, 17th Floor
Chicago, Illinois 60674-4107
Ladies and Gentlemen:
In connection with our acquisition, pursuant to Rule 144A under the
Securities Act of 1933 (the "Act"), of the Series 1997-1, Class _ Commercial
Mortgage Bonds (the "Bonds") issued by EQI Financing Partnership I, L.P. , we
certify that we are a qualified institutional buyer in that we satisfy the
requirements of one or more of paragraphs (i) through (v) hereof (check
applicable boxes).
[ ] (i) We are an entity referred to in sub-paragraphs (A) through (G)
hereof and in the aggregate owned and invested on a discretionary
basis, for our own account and the accounts of other qualified
institutional buyers, at least the amount of securities specified
below (not less than $100 million), calculated as provided in Rule
144A, as of the date specified below:
[ ] (A) Corporation, etc. A corporation (other than a bank
savings and loan or similar institution referred to in (ii)
below), partnership, Massachusetts or similar business trust,
organization described in Section 501(c)(3) of the Internal
Revenue Code, small business investment company licensed by
the U.S. Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958, or business
development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940; or
[ ] (B) Insurance Company. An insurance company as defined in
Section 2(13) of the Act; or
[ ] (C) ERISA Plan. An employee benefit plan within the meaning
of Title I of the Employee Retirement Income Security Act of
1974; or
I-1
<PAGE> 101
[ ] (D) State or Local Plan. A plan established and maintained
by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for
the benefit of its employees; or
[ ] (E) Trust Fund. A trust fund, whose trustee is a bank or
trust, whose participants are exclusively plans specified in
sub-paragraph (C) or (D) above (but not including trust funds
having IRAs or Keogh plans as participants); or
[ ] (F) Investment Company. An investment company registered
under the Investment Company Act of 1940 or any business
development company as defined in Section 2(a)(48) of that
Act; or
[ ] (G) Investment Advisor. An investment adviser registered
under the investment Advisers Act of 1940.
[ ] (ii) Bank or Savings and Loan. We are a bank as defined in Section
3(a)(2) of the Act, a savings and loan association or other
institution referenced in Section 3(a)(5)(A) of the Act, or a foreign
bank or savings and loan association or equivalent institution that in
the aggregate owned and invested on a discretionary basis, for our own
account and the accounts of other persons, at least the amount of
securities specified below (not less than $100 million), calculated as
provided in Rule 144A, as of the date specified below and had an
audited net worth of at least $25 million as of the end of our most
recent fiscal year. (This paragraph does not include bank commingled
funds, except as noted in (i)(E) above.)
[ ] (iii) One of a Family of Investment Companies. We are an investment
company registered under the Investment Company Act of 1940 that is
part of a "family of investment companies", as defined in Rule 144A,
that owned in the aggregate at least the amount of securities
specified below (not less than $100 million), calculated as provided
in Rule 144A, as of the date specified below.
[ ] (iv) We are a dealer registered under Section 15 of the Securities
Exchange Act of 1934, and we are one of the following.
[ ] (A) Dealer/QIB. We owned or invested on a discretionary
basis, for our own account and the accounts of other qualified
investment buyers, at least the amount of securities specified
below (not less than $10 million), calculated as provided in
Rule 144A, as of the date specified below.
[ ] (B) Dealer/Riskless Principal or Agent. We are acting either
on a riskless principal basis for simultaneous resale to a
qualified institutional buyer or as agent for one or more
qualified institutional buyers.
I-2
<PAGE> 102
[ ] (v) Entity Owned By Qualified Buyers. We are an entity, all of the
equity owners of which are qualified institutional buyers (each
satisfying one or more of (i) through (iv) above including, as
applicable, the $100 million test).
In calculating the amount of securities owned or invested by an entity
as provided in Rule 144A: (a) repurchase agreements, securities owned but
subject to repurchase agreements, currency, interest rate and commodity swaps,
bank deposit instruments, loan participations, securities of affiliates and
dealers' unsold allotments are excluded; and (b) securities are valued at cost,
except that they may be valued at market if they are reported in financial
statements at market and no current cost information is published.
Each entity, including a parent or subsidiary, must separately meet
the requirements to be a qualified institutional buyer under Rule 144A.
Securities owned by any subsidiary are included as owned or invested by its
parent entity for purposes of Rule 144A only if (1) the subsidiary is
consolidated in the parent entity's financial statements and (2) the
subsidiary's investments are managed under the parent entity's direction
(except that a subsidiary's securities are not included if the parent entity is
itself a majority-owned consolidated subsidiary of another enterprise and is
not a reporting company under the Securities Exchange Act of 1934).
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<PAGE> 103
We further certify that we will purchase Bonds only for our own
account or for the account of another entity that is a qualified institutional
buyer including, if we are an insurance company, our separate accounts. We
will not purchase Bonds for another entity under Rule 144A unless it satisfies
one or more of paragraphs (i) through (v) above including, as applicable, the
$100 million test. We agree to notify you of any change in the certifications
herein, and each purchase by us of Bonds under Rule 144A from or through you
will constitute a reaffirmation of the certifications herein (as modified by
any such notice) as of the time of such purchase.
<TABLE>
<S> <C>
--------------------------------------------------------------
[Name of Entity (Print or Type)]
Amount of Securities $ By:
---------------------------- ----------------------------------------------------------
(specific amount owned/invested - may be
approximate, but not range or minimum) Name:
--------------------------------------------------------
(Print or Type)
Most Recent Fiscal Year-End: Title:
--------------------- -------------------------------------------------------
(Print or Type)
Date Owned/Invested: Address of Entity:
----------------- -------------------------------------------
(Complete only if this date is after most (Print or Type)
recent fiscal year-end)
</TABLE>
Complete blanks as indicated
I-4
<PAGE> 104
ANNEX I
GLOSSARY
ANNEX-1
<PAGE> 1
EXHIBIT 10.2
================================================================================
Prepared by, recording RECORDER'S STAMP
requested by, and
when recorded return to:
Hunton & Williams
One NationsBank Plaza, Suite 2650
101 South Tryon Street
Charlotte, North Carolina 28280
Attention: Michael Nedzbala, Esq.
================================================================================
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT
FROM
EQI FINANCING PARTNERSHIP I, L.P.,
the Borrower,
TO
,
-------------------------------------
Trustee
FOR THE BENEFIT OF
LASALLE NATIONAL BANK,
AS INDENTURE TRUSTEE,
the Beneficiary
Relating to Premises in:
City/Town:
County:
State:
Dated as of: February 6, 1997
- --------------------------------------------------------------------------------
[THE INDEBTEDNESS SECURED BY THIS DEED OF TRUST IS ALSO SECURED BY OTHER
MORTGAGES AND DEEDS OF TRUST ENCUMBERING OTHER PROPERTY LYING OUTSIDE OF THE
STATE OF ________________. PURSUANT TO SECTION __________ OF THE CODE OF
_____________, AS AMENDED, RECORDATION TAX SHALL BE BASED UPON $_____________,
BEING THE ALLOCATED LOAN AMOUNT, THAT IS, THE PROPORTION THAT THE VALUE OF THE
REAL PROPERTY ENCUMBERED BY THIS DEED OF TRUST BEARS TO THE ENTIRE AMOUNT
CONVEYED BY ALL SUCH MORTGAGES AND DEEDS OF TRUST.]
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GRANTING CLAUSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1. GENERAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.01. The Borrower's Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.02. Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.03. Release of the Mortgaged Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2. PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.01. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.02. Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3. REPRESENTATIONS AND WARRANTIES CONCERNING THE
BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.01. Partnership Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.02. No Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.03. No Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.04. Partnership Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.05. Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.06. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.07. Impositions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.08. Investment Company Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.09. General Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.10. Restricted Activities of Borrower and General Partner. . . . . . . . . . . . . . . . . . . 10
Section 3.11. Other Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.12. Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.13. Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.14. No Foreign Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4. THE BORROWER'S REPRESENTATIONS AND WARRANTIES CONCERNING MORTGAGED PROPERTY . . . . . . . . . . . . 13
Section 4.01. Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.02. Casualty; Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.03. Zoning and Other Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.04. Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.05. Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.06. Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.07. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page No.
<S> <C>
Section 4.08. Hazardous Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.09. Warranty of Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.10 Flood Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.11 Condition of Mortgaged Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5. COVENANTS OF THE BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.01. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.02. Litigation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.03. Partnership Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.04. Prohibition of Fundamental Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.05. Neither a Foreign Person nor an Investment Company . . . . . . . . . . . . . . . . . . . . 18
Section 5.06. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.07. Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.08. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.09. Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.10. Dividend Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.11. Partnership Activities; Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.12. Payment for Labor and Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.13. Modifications of Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.14. [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.15. Performance of Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.16. Operation of the Mortgaged Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.17. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.18. Insurance; Casualty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.19. Payment of Impositions, Liens and Utilities. . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.20. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.21. Leases and Rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.22. Maintenance of Mortgaged Property; Waste. . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.23. Alterations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.24. Compliance with Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.25. Transfer or Encumbrance of the Mortgaged Property . . . . . . . . . . . . . . . . . . . . . 31
Section 5.26. Estoppel Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.27. Operating of Hotel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.28. Changes in the Laws Regarding Taxation. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.29. No Credits on Account of the Secured Obligation. . . . . . . . . . . . . . . . . . . . . . 32
Section 5.30. Documentary Stamps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.31. Right of Entry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.32. Performance of Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
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SECTION 6. RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.01. Appraisals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.02. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.03. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.04. Right to Cure Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.05. Appointment of Receiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7. WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.01. Waiver of Counterclaim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.02. Sole Discretion of the Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.03. Waiver of Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.04. Other Mortgages; No Election of Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.05. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.06. Non-Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8. SECURITY AGREEMENT RECORDATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.01. Security Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.02. Recording of Deed of Trust, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9. RIGHTS OF THE BENEFICIARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.01. Further Acts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.02. Recovery of Sums Required To Be Paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.03. Costs of Defending and Upholding the Lien. . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.04. Additional Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.05. Additional Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10. APPLICABLE LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.01. Usury Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.02. Governing Law; Jurisdiction; Waiver of Trial by Jury. . . . . . . . . . . . . . . . . . . . 45
SECTION 11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.01. Exculpation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.02. Duplicate Originals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.03. Indemnity and the Beneficiary's Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.04. Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.05. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.06. Headings, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.07. Addresses of Mortgaged Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 11.08. Wire Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 11.09. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
</TABLE>
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<TABLE>
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Section 11.10. Covenants To Run with the Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 11.11. Trustee's Duties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 11.12. Business Days. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 11.13. Relationship. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 11.14. No Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
LIST OF SCHEDULES AND EXHIBITS
Schedule A Description of Premises
Schedule B Street Address of Mortgaged Property and Other Mortgaged Property
Annex I Local Law Provisions
</TABLE>
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<PAGE> 6
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FIXTURE FINANCING STATEMENT
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FIXTURE FINANCING STATEMENT ("Deed of Trust") dated as of February 6, 1997,
made by EQI FINANCING PARTNERSHIP I, L.P. (the "Borrower"), a Tennessee limited
partnership, having an address at 4735 Spottswood, Suite 102, Memphis, Shelby
County, Tennessee 38117, as borrower, assignor and debtor, in favor of
________________________, as trustee, and his or its successors in trust hereby
created (the "Trustee") as trustee for the benefit of LASALLE NATIONAL BANK, as
indenture trustee under an indenture (the "Indenture") dated of even date
herewith, among the Borrower, ABN AMRO Bank N.V. as fiscal agent (the "Fiscal
Agent") and such indenture trustee, (together with its successors and assigns,
the "Beneficiary"), having an address at 135 South LaSalle Street, 17th Floor,
Chicago, Illinois 60674-4107, as beneficiary, assignee and secured party.
RECITALS:
A. Except as otherwise specified or as the context may otherwise
require, capitalized terms used herein shall have the meanings assigned to
those terms in the "Glossary" attached as Annex I to the Indenture.
B. The Borrower, the Beneficiary and the Fiscal Agent are
executing the Indenture, pursuant to which certain bonds, dated as of the date
hereof in the aggregate principal amount of EIGHTY-EIGHT MILLION Dollars
($88,000,000) (the "Bonds"), will be issued in three classes: Class A, Class B
and Class C.
C. The Borrower is the owner of the real property described on
Schedule A annexed hereto, together with all buildings, structures and
improvements located thereon.
D. A condition to the issuance of the Bonds is that the Borrower
execute and deliver this Deed of Trust and the Other Mortgages.
E. The Stated Maturity of the Class A Bonds is November 20, 2006.
The Stated Maturity of the Class B Bonds is December 20, 2015. The Stated
Maturity of the Class C Bonds is February 20, 2017.
F. The Beneficiary will hold its interest in and to, inter alia,
this Deed of Trust as indenture trustee for the benefit of all Bondholders who
hold Bonds issued pursuant to the Indenture.
G. This Deed of Trust is given by the Borrower in favor of the
Beneficiary to secure the payment and performance in full when due, whether at
Stated Maturity, by acceleration or otherwise (including, without limitation,
the payment of interest and other amounts which would accrue and become due but
for the filing of a petition in bankruptcy (whether or not a claim is allowed
against the Borrower for such interest or other amounts in any such bankruptcy
<PAGE> 7
proceeding) or the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. Section 362(a)), of (i) all payment, performance and
other obligations of the Borrower now existing or hereafter arising under or in
respect of the Indenture, the Bonds and the other Loan Documents (including,
without limitation, the obligation to pay principal, interest and all other
charges, fees, expenses, indemnities and other payments related to or in
respect of the obligations contained in the Bonds and the other Loan
Documents), and (ii) without duplication of the obligations described in clause
(i), all payment, performance and other obligations of the Borrower now
existing or hereafter arising under or in respect of this Deed of Trust,
including, without limitation, with respect to all charges, fees, expenses,
indemnities and other payments related to or in respect of the obligations
contained in this Deed of Trust (the obligations described in clauses (i) and
(ii), collectively, the "Secured Obligations").
H. The obligations of the Borrower are limited recourse
obligations as more particularly described in Section 11.01 hereof.
GRANTING CLAUSES:
For and in consideration of the sum of Ten Dollars ($10.00) and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to secure the Secured Obligations, the Borrower hereby
grants, transfers, bargains, sells, assigns and conveys to Trustee in trust,
with power of sale and right of entry and possession, and hereby grants to the
Beneficiary, a security interest in and upon, in and to the following property
and rights, whether now owned or held or hereafter acquired (collectively, the
"Mortgaged Property"):
GRANTING CLAUSE ONE
All right, title and interest in and to the real property described on
Schedule A hereto (the "Premises").
GRANTING CLAUSE TWO
TOGETHER WITH any and all buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter located on the Premises or any part thereof (collectively, the
"Improvements").
GRANTING CLAUSE THREE
TOGETHER WITH all easements, rights-of-way, strips and gores of land,
streets, ways, alleys, sidewalks, passages, sewer rights, water, water courses,
water rights and powers, air rights and development rights, zoning rights and
all estates, rights, titles, interests, privileges, liberties, tenements,
hereditaments and appurtenances of any nature whatsoever in any way belonging,
relating or pertaining to the Premises or any part thereof, and the reversion
and reversions, remainder and remainders, and all land lying in the bed of any
street, road or
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<PAGE> 8
avenue, opened or proposed, in front of or adjoining the Premises or any part
thereof to the center line thereof and all the estates, rights, titles,
interests, dower and rights of dower, courtesy and rights of courtesy,
property, possession, claim and demand whatsoever, both in law and in equity,
of the Borrower of, in and to the Mortgaged Property and every part and parcel
thereof, with the appurtenances thereto.
GRANTING CLAUSE FOUR
TOGETHER WITH all machinery, equipment, fixtures (including but not
limited to all heating, ventilating, air conditioning, plumbing, lighting,
communications and elevator fixtures), appliances, machinery and other property
of every kind and nature whatsoever owned by the Borrower, or in which the
Borrower has or shall have an interest (to the extent of such interest), now or
hereafter located upon the Mortgaged Property, or appurtenant thereto, and
usable in connection with the present or future operation and occupancy of the
Mortgaged Property and all building equipment, materials and supplies of any
nature whatsoever owned by the Borrower, or in which the Borrower has or shall
have an interest (to the extent of such interest), now or hereafter located
upon the Mortgaged Property, or appurtenant thereto, or usable in connection
with the present or future operation and occupancy of the Mortgaged Property
(hereinafter collectively called the "Equipment"), and the right, title and
interest of the Borrower in and to any of the Equipment which may be subject to
any security agreements (as defined in the Uniform Commercial Code) superior in
lien to the lien of this Deed of Trust. In connection with Equipment which is
leased to the Borrower or which is subject to a lien or security interest which
is superior to the lien of this Deed of Trust, this Deed of Trust shall also
cover all right, title and interest of the Borrower in and to all deposits, and
the benefit of all payments now or hereafter made, with respect to such
Equipment.
GRANTING CLAUSE FIVE
TOGETHER WITH all awards or payments, including interest thereon,
which may heretofore and hereafter be made with respect to the Mortgaged
Property, or any part thereof, whether from the exercise of the right of
eminent domain (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of said right), or for a change of grade, or for
any other injury to or decrease in the value of the Mortgaged Property.
GRANTING CLAUSE SIX
TOGETHER WITH all leases and subleases (including, without limitation,
all guarantees thereof, including, without limitation, the Lease Guaranty) and
other agreements affecting the use, enjoyment and/or occupancy of the Mortgaged
Property, or any part thereof, now or hereafter entered into, including,
without limitation, the Lease (collectively, the "Leases") and all oil and gas
or other mineral royalties, bonuses and rents, fees, charges, accounts, credit
card slips and other payments for the use or occupancy of rooms and other
public facilities in the Mortgaged Property (including, without limitation, all
guaranties, letters of credit, bonds or cash security deposited thereunder to
secure performance by the tenants or subtenants thereunder to
3
<PAGE> 9
the extent not prohibited by law), profits and proceeds from the Mortgaged
Property (collectively, the "Rents") and all proceeds from the sale or other
disposition of the Leases and the right to receive and apply the Rents to the
payment of the Secured Obligations.
GRANTING CLAUSE SEVEN
TOGETHER WITH all proceeds of and any unearned premiums on any
insurance policies covering the Mortgaged Property, or any part thereof,
including, without limitation, the right to receive and apply the proceeds of
any insurance, judgments, or settlements made in lieu thereof, for damage to
the Mortgaged Property, or any part thereof.
GRANTING CLAUSE EIGHT
TOGETHER WITH the right, in the name and on behalf of the Borrower to
appear in and defend any action or proceeding brought with respect to the
Mortgaged Property or any part thereof and, while an Event of Default remains
uncured, to commence any action or proceeding to protect the interest of the
Beneficiary in the Mortgaged Property or any part thereof.
GRANTING CLAUSE NINE
TOGETHER WITH all accounts and accounts receivable, contract rights,
interests, estate or other claims, both in law and in equity, which the
Borrower now has or may hereafter acquire in the Mortgaged Property or any part
thereof.
GRANTING CLAUSE TEN
TOGETHER WITH all rights which the Borrower now has or may hereafter
acquire, to be indemnified and/or held harmless from any liability, loss,
damage, cost or expense (including, without limitation, attorneys' fees and
disbursements) relating specifically to the Mortgaged Property or any part
thereof.
GRANTING CLAUSE ELEVEN
TOGETHER WITH all right, title and interest of the Borrower in and to
all extensions, improvements, betterments, renewals, substitutes and
replacements of, and all additions and appurtenances to, the Mortgaged
Property, hereafter acquired by, or released to the Borrower or constructed,
assembled or placed by the Borrower on the Mortgaged Property, and all
conversions of the security constituted thereby, immediately upon such
acquisition, release, construction, assembling, placement or conversion, as the
case may be, and in each such case, without any further mortgage, grant,
conveyance, assignment or other act by the Borrower, shall become subject to
the lien of this Deed of Trust as fully and completely and with the same
effect, as though now owned by the Borrower and specifically described herein.
4
<PAGE> 10
GRANTING CLAUSE TWELVE
TOGETHER WITH all transferable occupancy certificates, plans and
specifications, franchise agreements, license agreements, consents, management
agreements, service contracts and other licenses (including liquor licenses
that the Borrower presently holds, if any, or may hold at any time in the
future), certificates, permits, authorizations, agreements and contracts
necessary or desirable for the use, occupation, development, construction and
operation of the Premises or other portions of the Mortgaged Property or any
part thereof, including all renewals, extensions and replacements thereof,
whether issued in the name of the Borrower or in the name of any predecessor in
title.
GRANTING CLAUSE THIRTEEN
TOGETHER WITH all of the Borrower's right, title and interest, if any,
in all surveys, title insurance policies, drawings, plans, specifications, file
materials, operating and maintenance records, catalogues, tenant lists,
correspondence, advertising materials, operating manuals, warranties,
guaranties, appraisals, studies, trade names, good will, books and records and
data relating to the Premises or the Equipment.
GRANTING CLAUSE FOURTEEN
TOGETHER WITH all refunds, rebates or credits in connection with a
reduction in real estate taxes and assessments charged against the Mortgaged
Property as a result of tax certiorari or any applications or proceedings for
reduction.
GRANTING CLAUSE FIFTEEN
TOGETHER WITH all right, title and interest in and to all tangible
personal property owned by the Borrower (the "Personal Property"), and now or
at any time hereafter located on or at the Premises or used in connection
therewith, including, but not limited to: all goods, machinery, tools,
insurance proceeds and refunds of insurance premiums, equipment (including fire
sprinklers and alarm systems; office air conditioning; heating; refrigerating;
electronic monitoring; entertainment; recreational; window or structural
cleaning rigs; maintenance equipment; equipment for the exclusion of vermin or
insects; removal of dust; refuse or garbage and all other equipment of every
kind), lobby and all other indoor and outdoor furniture (including tables,
chairs, planters, desks, sofas, shelves, lockers and cabinets), wall beds, wall
safes, furnishings, appliances (including ice boxes, freezers, refrigerators,
fans, heaters, stoves, water heaters and incinerators), inventory, rugs,
carpets and other floor coverings, draperies and drapery rods and brackets,
awnings, window shades, venetian blinds, curtains, lamps, chandeliers and other
lighting fixtures and office maintenance and other supplies;
TO HAVE AND TO HOLD the above granted and described Mortgaged Property
unto and to the use and benefit of Trustee, and its successors in trust,
forever.
5
<PAGE> 11
PROVIDED, HOWEVER, these presents are upon the express condition, if
the Borrower shall well and truly pay to the Beneficiary the Secured
Obligations at the time and in the manner provided in the Bonds, the other Loan
Documents and this Deed of Trust and shall well and truly abide by and comply
with each and every covenant and condition set forth herein and in the Bonds
and the other Loan Documents, the Beneficiary shall reconvey the Mortgaged
Property to the person or persons legally entitled thereto and shall, if
requested by the Borrower, duly execute and deliver to the Borrower a
satisfaction of this Deed of Trust in recordable form.
AND the Borrower represents to, covenants with and warrants to the
Beneficiary that:
SECTION 1. GENERAL TERMS.
SECTION 1.01. THE BORROWER'S BONDS. The three Classes of Bonds
shall be executed and delivered by the Borrower pursuant to the Indenture, and
each Class shall be payable as to principal and interest as specified in the
Indenture, with a final maturity for each Class on the applicable Stated
Maturity.
SECTION 1.02. PREPAYMENT.
The Bonds may be prepaid in whole or in part in accordance with, and
subject to the terms of, Section 2.01 of the Indenture.
SECTION 1.03. RELEASE OF THE MORTGAGED PROPERTY.
(a) The Borrower may obtain a release of the Mortgaged Property
from the lien of this Deed of Trust (and the Indenture) by giving not less than
30 nor more than 90 days' prior written notice thereof to the Servicer, upon
which the Beneficiary shall promptly execute, acknowledge and deliver to the
Borrower a release from the lien of this Deed of Trust (a "Release") in
recordable form with respect to the Mortgaged Property, provided that all of
the following terms and conditions are satisfied:
(i) no Event of Default has occurred and is continuing or
would not be cured upon release of the Mortgaged Property in
accordance with this Section 1.03;
(ii) such Release, other than a Release to be made in
connection with a Permitted Prepayment Event, shall occur on a Payment
Date following the Lock-Out Period;
(iii) the Borrower shall pay to the Beneficiary no later
than the Remittance Date (A) an amount (the "Release Price") equal to
125% of the current Allocated Loan Amount for such Mortgaged Property,
plus accrued interest thereon through the related Accounting Date,
which Release Price will be applied to the repayment of the Bonds in
accordance with the Indenture and (B) the Yield Maintenance Premium
payable with respect to such Release Price, which will be paid on the
Bonds in accordance with the
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<PAGE> 12
Indenture, except that no Yield Maintenance Premium will be required
for a Release made during the Prepayment Window or in connection with
a Permitted Prepayment Event;
(iv) either (x) the Lease Debt Service Coverage Ratio for
the 12 full months immediately preceding such Release with respect to
the Mortgaged Properties that would remain after such Release is not
less than the Lease Debt Service Coverage Ratio for such periods with
respect to all the Mortgaged Properties immediately prior to such
Release, or (y) the Lease Debt Service Coverage Ratio with respect to
the Mortgaged Properties that would remain after such release is not
less than the Initial Lease Debt Service Coverage Ratio as of the
Closing Date with respect to all of the Mortgaged Properties; and
(v) the Beneficiary shall have received written
confirmation from the Rating Agency that such Release shall not
adversely affect the then current ratings on the Bonds.
(b) Notwithstanding Section 1.03(a), in connection with the sale
of the Mortgaged Property following an Event of Loss, the Release Price shall
equal the greater of (i) the sum of (A) all Insurance Proceeds and Condemnation
Proceeds with respect to the Mortgaged Property (to the extent not previously
applied in accordance with this Deed of Trust) and (B) the sales proceeds of
any sale of the Mortgaged Property, such sum not to exceed 125% of the then
current Allocated Loan Amount for such Mortgaged Property, plus accrued and
unpaid interest thereon through the related Accounting Date at the Class
Interest Rate of the Class of Bonds to be prepaid and (ii) an amount equal to
the Allocated Loan Amount for such Mortgaged Property, plus accrued and unpaid
interest thereon through the related Accounting Date at the Class Interest Rate
of the Class of Bonds to be prepaid.
Notwithstanding Section 1.03(a), in connection with the sale of the
Mortgaged Property following a Default arising from a title, environmental or
change in law event with respect to such Mortgaged Property, the Release Price
shall equal the greater of (i) the sales proceeds of any sale of the Mortgaged
Property not in excess of 125% of the then current Allocated Loan Amount for
such Mortgaged Property, plus accrued interest thereon through the related
Accounting Date at the Class Interest Rate on the Class of Bonds to be prepaid
and (ii) an amount equal to the Allocated Loan Amount for such Mortgaged
Property, plus accrued and unpaid interest thereon through the related
Accounting Date at the Class Interest Rate on the Class of Bonds to be prepaid;
provided, however, (1) such Permitted Prepayment Event was not caused by the
Borrower, (2) such event was not known to the Borrower on or prior to the
Closing Date, and (3) any related sale of the Mortgaged Property is to a bona
fide third party or on bona fide third party terms. Satisfactory evidence of
these requirements contained in the foregoing clauses (1)-(3) shall be
delivered to the Rating Agency, the Beneficiary and the Servicer or its
designated nominee.
Notwithstanding Section 1.03(a), in connection with a sale of a
Mortgaged Property following a Permitted Prepayment Event as described in the
preceding two paragraphs, the
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<PAGE> 13
condition set forth in Section 1.03(a)(iv) need not be satisfied and no Yield
Maintenance Premium shall be due.
(c) Upon repayment of the Bonds and all other amounts due
hereunder and under the Loan Documents in full in accordance with the terms
hereof and thereof, the Beneficiary shall, promptly after such payment, release
its Liens with respect to all Mortgaged Properties.
SECTION 2. PAYMENTS.
SECTION 2.01. PAYMENTS.
(a) The Borrower will pay the Secured Obligations at the time and
in the manner provided in the Bonds, the Indenture, this Deed of Trust and the
other Loan Documents. This Deed of Trust shall be subject to the covenants,
conditions and agreements contained in the Bonds and the Indenture.
(b) All payments made by the Borrower under this Agreement shall
be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority
(other than taxes imposed on the income of the Beneficiary).
SECTION 2.02. SETOFF. The Borrower agrees that, in addition to
(and without limitation of) any right of set-off or counterclaim the
Beneficiary may otherwise have, the Beneficiary shall be entitled, at its
option, to offset balances held by it or any of its Affiliates for account of
the Borrower (or amounts due from it to the Borrower) at any of its offices, in
Dollars or in any other currency, against any principal of or interest on the
Bonds, or any other amount payable to the Beneficiary hereunder, which is not
paid when due (regardless of whether such balances are then due to the
Borrower), in which case it shall promptly notify the Borrower thereof,
provided that the Beneficiary's failure to give such notice shall not affect
the validity thereof.
SECTION 3. REPRESENTATIONS AND WARRANTIES CONCERNING THE
BORROWER. The Borrower represents and warrants to the Beneficiary that:
SECTION 3.01. PARTNERSHIP EXISTENCE. The Borrower: (a) is a
limited partnership duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization; (b) has all requisite power,
and has all material governmental licenses, authorizations, consents and
approvals necessary to own its assets and carry on its business as now being or
as proposed to be conducted; and (c) is qualified to do business and in good
standing in the state in which the Mortgaged Property is located.
SECTION 3.02. NO LITIGATION. Except as disclosed in the
Memorandum, there are no legal or arbitral proceedings or any proceedings by or
before any governmental or regulatory
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authority or agency, now pending or (to the knowledge of the Borrower)
threatened against the Borrower which, if adversely determined, could have a
Material Adverse Effect.
SECTION 3.03. NO BREACH. None of the execution and delivery of
this Deed of Trust or any other Loan Document to which the Borrower is a party,
the consummation of the transactions herein and therein contemplated and
compliance with the terms and provisions hereof and thereof will conflict with
or result in a breach of, or require any consent (except such consents as have
been obtained) under the charter or by-laws, the Partnership Agreement or the
other organizational documents, as the case may be, of the Borrower or the
General Partner, or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency, or any
agreement or instrument to which the Borrower or the General Partner is a party
or by which any of them is bound or to which any of them is subject, or
constitute a default under any such agreement or instrument, or (except for the
Lien arising under the Loan Documents or any Permitted Liens) result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Borrower or the General Partner pursuant to the terms of any such agreement or
instrument.
SECTION 3.04. PARTNERSHIP ACTION. The Borrower has all necessary
partnership power and authority to execute, deliver and perform its obligations
under this Deed of Trust and the other Loan Documents to which it is a party
and to mortgage, give, grant, bargain, sell, alien, enfeoff, convey, confirm,
pledge, assign and hypothecate, and grant a security interest in, the Mortgaged
Property pursuant to the terms hereof and to keep and observe all of the terms
of this Deed of Trust on the Borrower's part to be performed; the execution,
delivery and performance by the Borrower of this Deed of Trust and the other
Loan Documents to which it is a party have been duly authorized by all
necessary partnership action on its part; and each of this Deed of Trust and
the other Loan Documents to which the Borrower is a party has been duly and
validly executed and delivered by the Borrower and constitutes, and the Bonds
when executed and delivered for value will constitute, its legal, valid and
binding obligation, enforceable in accordance with its terms.
SECTION 3.05. APPROVALS. No authorizations, approvals or consents
of, and no filings or registrations with, any governmental or regulatory
authority or agency are necessary for the execution, delivery or performance by
the Borrower of this Deed of Trust and the other Loan Documents to which it is
a party or for the validity or enforceability thereof.
SECTION 3.06. ERISA.
(a) As of the date hereof and throughout the term of this Deed of
Trust, (i) the Borrower is not and will not be an "employee benefit plan" as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, and
(ii) the assets of the Borrower do not and will not constitute "plan assets" of
one or more such plans for purposes of Title I of ERISA; and
(b) As of the date hereof and throughout the term of this Deed of
Trust, (i) the Borrower is not and will not be a "government plan" within the
meaning of Section 3(3) of
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ERISA, and (ii) transactions by or with the Borrower are not and will not be
subject to state statutes applicable to the Borrower regulating investments of
and fiduciary obligations with respect to governmental plans.
SECTION 3.07. IMPOSITIONS. The Borrower has filed all United
States Federal income tax returns and all other material tax returns which are
required to be filed by the Borrower and has paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Borrower; except
such taxes which are being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained in accordance with
Section 5.19 herein. The charges, accruals and reserves on the books of the
Borrower in respect of Impositions are, in the opinion of the Borrower,
adequate.
SECTION 3.08. INVESTMENT COMPANY ACT. The Borrower is not an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
SECTION 3.09. GENERAL PARTNER. The sole general partner of the
Borrower is the General Partner. Equity Inns Trust, a Maryland real estate
investment trust, is the owner of all of the issued and outstanding capital
stock of the General Partner, all of which capital stock has been validly
issued, is fully paid and nonassessable and is owned by Equity Inns Trust free
and clear of all mortgages, assignments, pledges and security interests and
free and clear of all warrants, options and rights to purchase. The Borrower
has no obligation to any Person to purchase, repurchase or issue any ownership
interest in it.
SECTION 3.10. RESTRICTED ACTIVITIES OF BORROWER AND GENERAL
PARTNER. Each of the Certificate of Limited Partnership and the Partnership
Agreement of the Borrower provides that the Borrower may not engage in any
business activity unrelated to the Mortgaged Properties. The charter of the
General Partner provides that the General Partner may not engage in any
activity other than acting as general partner of the Borrower and activities
incidental to that purpose.
SECTION 3.11. OTHER ACTIVITIES.
(a) The charter of the General Partner requires, until the Bonds
are paid in full and the Mortgaged Properties released from the lien of the
Indenture and the Mortgages, the General Partner shall not, without (a) the
affirmative vote of 100% of the members of its board of directors, and (b)
except with respect to subparagraph (vii), the consent of the Indenture
Trustee, do any of the following:
(i) take, or cause the Borrower to take, any action or
suffer to exist any circumstance that would constitute an "Event of
Default" or a default under any Loan Document evidencing or securing
the obligations secured by the Mortgages;
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(ii) amend, alter, change or repeal (A) the provisions in
the charter relating to the need for a unanimous vote of the board of
directors, (B) the provision in the charter relating to the
subordination of the Borrower's indemnification obligations to its
officers and directors or (C) the Partnership Agreement or the
Certificate of Limited Partnership of the Borrower;
(iii) (A) dissolve, wind up or liquidate, in whole or in
part, consolidate or merge with or into any other entity, or convey,
sell or transfer its properties and assets substantially as an
entirety to any entity; provided, however, that the General Partner
may transfer assets to another special purpose entity, the
organizational documents of which contain substantially the same
provisions as the charter of the General Partner, unless such transfer
of assets would cause a qualification, withdrawal or downgrading of
the then current rating assigned to the Bonds by any nationally
recognized statistical rating organization that rated the Bonds at the
request of the Borrower or an Affiliate, or (B) cause the Borrower to
dissolve or liquidate, in whole or in part, or merge with or into any
other entity, or convey, sell or transfer its properties and assets
substantially as an entirety to any entity except as otherwise may be
permitted by the Partnership Agreement and the Certificate of Limited
Partnership of the Borrower;
(iv) engage in any business or activity other than as
permitted by the General Partner's charter, or cause the Borrower to
engage in any business or activity other than as set forth in the
Partnership Agreement (or any successor provision thereto, however
designated);
(v) own any assets other than those related to, or
derived from, the Mortgaged Properties;
(vi) incur, assume or guaranty any indebtedness other than
(A) indebtedness not secured by the Mortgaged Properties consisting of
trade accounts payable (other than for borrowed money) incurred in the
ordinary course of business and (B) debt expressly permitted by the
Loan Documents;
(vii) file, or cause the Borrower to file, a voluntary or
involuntary petition or otherwise initiate, or cause the
Borrower to initiate, proceedings for the General Partner or the
Borrower to be adjudicated insolvent or seeking an order for relief as
a debtor under any chapter of the United States Bankruptcy Code, as
amended (11 U.S.C. Section Section 101 of, or cause the Borrower to
file or cause the filing of, any petition seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar
relief for the General Partner or the Borrower under the present or any
future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to
bankruptcy, insolvency or other relief for debtors; or seek or cause
the Borrower to seek, the appointment of any trustee, receiver,
conservator, assignee, sequestrator, custodian, liquidator (or other
similar official) of the General Partner or the Borrower or of all or
any substantial part of the properties and
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assets of the General Partner or the Borrower, or make or cause the
Borrower to make, any general assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts
generally as they become due, or declare or effect a moratorium on its
debt or take any corporate action in furtherance of any such action,
or consent to or acquiesce in any of the foregoing actions; or
(viii) sell, transfer, exchange, convey, encumber or
otherwise dispose of any or all of the General Partner's right, title
or interest as a general partner of the Borrower, except that the
General Partner may withdraw as the general partner if it finds a
replacement general partner that is a special purpose corporation, the
charter of which contains substantially the same provisions as the
General Partner's charter.
(b) The charter of the General Partner also contains provisions
that, until the Bonds are paid in full and the Mortgaged Properties released
from the lien of the Indenture and the Mortgages, requires the General Partner
to take, and cause the Borrower to take, the following actions:
(i) maintain its own books, records and accounts separate
from any other Person;
(ii) cause its financial statements to be prepared in
accordance with generally accepted accounting principles in a manner
that shows its assets and liabilities separate and apart from those of
any other Person;
(iii) pay all its liabilities and expenses only out of its
own funds;
(iv) pay the salaries of its own employees, if any, and
maintain a sufficient number of employees in light of its contemplated
business operations, but no more than necessary to perform authorized
activities;
(v) allocate fairly and reasonably any overhead for
expenses that are shared with an affiliate, including paying for the
office space and services performed by any employee of any affiliate;
(vi) maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character in
light of its contemplated business operations;
(vii) maintain arm's length relationships with all
affiliates and enter into transactions with affiliates only on
commercially reasonable bases;
(viii) in all dealings with the public, identify itself
under its own name and as a separate and distinct entity;
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(ix) independently make decisions with respect to its
business and daily operations;
(x) not commingle its funds or other assets with those of
any other Person and hold all of its assets in its own name;
(xi) not assume or guarantee the liabilities of any other
Person or hold out its credit as being available to satisfy the
obligations of any other Person;
(xii) not acquire obligations or securities of, pledge its
assets for the benefit of, or make loans or advances to, any
affiliates;
(xiii) observe all applicable or customary organizational
formalities;
(xiv) promptly correct any known misunderstanding regarding
its separate identity;
(xv) not identify itself as a division of any other
Person;
(xvi) use separate stationery, invoices and checks bearing
its own name; and
(xvii) not own any property, real or personal, other than
(a) the Mortgaged Properties (in the case of the Borrower) and General
Partner's interest in the Borrower (in the case of the General
Partner) and (b) the minimum amount of property necessary to perform
authorized activities.
SECTION 3.12. EMPLOYEES. The Borrower has no employees.
SECTION 3.13. SOLVENCY. None of the transactions contemplated by
the Loan Documents will be or have been made with an actual intent to hinder,
delay or defraud any present or future creditors of the Borrower, and the
Borrower is not and will not be rendered insolvent by such transactions or will
have received fair and reasonably equivalent value in good faith for the grant
of the Liens created by the Loan Documents. The Borrower is able to pay its
debts as they become due, including contingent obligations reasonably likely to
become due.
SECTION 3.14. NO FOREIGN PERSON. The Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code
of 1986, as amended, and the related Treasury Department regulations, including
temporary regulations.
SECTION 4. THE BORROWER'S REPRESENTATIONS AND WARRANTIES
CONCERNING MORTGAGED PROPERTY.
SECTION 4.01. IMPROVEMENTS. Except as disclosed in the survey
related to the Mortgaged Property and identified on Schedule C to the Indenture
or the title policy delivered
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to the Beneficiary hereunder, all Improvements comprising a portion of the
Mortgaged Property lie wholly within the boundary and building restriction
lines of the Mortgaged Property, and no Improvements on adjoining properties
encroach upon the Mortgaged Property in any material respect.
SECTION 4.02. CASUALTY; CONDEMNATION. The Mortgaged Property is
free of material damage and waste and there is no proceeding pending or, to the
best of the Borrower's knowledge, threatened, for the total or partial taking
by condemnation or eminent domain of the Mortgaged Property and no Event of
Loss has occurred with respect to the Mortgaged Property.
SECTION 4.03. ZONING AND OTHER LAWS. The Mortgaged Property and
the use and operation thereof, separate and apart from any other properties,
constitutes a legal use under applicable zoning regulations and complies in all
material respects with all building codes, land use and environmental laws and
other applicable requirements of law and all applicable insurance requirements.
SECTION 4.04. LEASE. The Borrower has made available to the
Beneficiary a correct and complete copy of the Lease and all amendments
thereto. As of the Closing Date the Lease is unmodified and in full force and
effect and the Borrower is not, and, to the Borrower's knowledge, the Lessee is
not in default under the Lease.
SECTION 4.05. PERMITS. There has been issued in respect of the
Mortgaged Property all certificates, licenses, permits and governmental
approvals necessary or required to own, operate, use and occupy the Mortgaged
Property in the manner currently operated, including any required permits
relating to zoning, building code, land use and Hazardous Materials. Each such
permit is in full force and effect and the Borrower has not received any notice
of violation or revocation thereof.
SECTION 4.06. UTILITIES. The Mortgaged Property is served by all
utilities required for the current or contemplated use thereof. All public
roads and streets necessary for service of and access to the Mortgaged Property
for the current use thereof have been completed and are open for use. The
Mortgaged Property is served by public water and sewer systems. The Borrower
has not received any notice of actual or threatened reduction or curtailment of
any utility service now supplied to the Mortgaged Property.
SECTION 4.07. [RESERVED]
SECTION 4.08. HAZARDOUS MATERIALS. The Borrower and the Lessee
have obtained all permits, licenses and other authorizations which it is
required to obtain with respect to the Mortgaged Properties under all
Environmental Laws, except to the extent failure to have any such permit,
license or authorization would not have a Material Adverse Effect. The
Borrower and the Lessee are in compliance with the terms and conditions of all
such permits, licenses and authorizations, and are also in compliance in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
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timetables applicable to the Mortgaged Properties contained in any applicable
Environmental Law or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply would not have a Material
Adverse Effect.
In addition, except as set forth in the environmental reports relating
to the Mortgaged Property and described in Schedule C to the Indenture:
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or, to the
best of the Borrower's knowledge, threatened by any governmental or other
entity with respect to any alleged failure by the Borrower or the Lessee to
have any permit, license or authorization required in connection with the
conduct of the business of the Borrower or the Lessee relating to the Mortgaged
Properties with respect to any generation, treatment, storage, recycling,
transportation, release or disposal, or any release as defined in 42 U.S.C.
Section 9601(22), of any substance regulated under Environmental Laws
("Hazardous Materials") generated by the Borrower or the Lessee.
(b) No Hazardous Materials have been released at, on or under the
Mortgaged Property to an extent that it has, or may reasonably be expected to
have, a Material Adverse Effect.
(c) There are no Liens arising under or pursuant to any
Environmental Laws on any of the Mortgaged Properties or properties, and no
government actions have been taken or, to the Borrower's knowledge, are in
process which could subject any of such properties to such Liens and the
Borrower would not be required to place any notice or restriction relating to
the presence of Hazardous Materials at any Mortgaged Property in any deed to
such property.
SECTION 4.09. WARRANTY OF TITLE. The Borrower has good and
marketable fee title to the Mortgaged Property subject only to the Permitted
Liens; the Borrower has the right to grant, bargain, sell, convey and grant a
security interest in, the Mortgaged Property; and the Borrower owns the
Mortgaged Property free and clear of all liens, encumbrances and charges
whatsoever except the lien of this Deed of Trust and Permitted Liens. The
Borrower shall forever warrant, defend and preserve such title, subject to the
Permitted Liens, and the validity and priority of the lien of this Deed of
Trust and shall forever warrant and defend the same to the Beneficiary against
the claims of all persons whomsoever.
SECTION 4.10 FLOOD INSURANCE. No portion of the Improvements is
located in an area identified by the Secretary of Housing and Urban Development
or any successor thereto as an area having special flood hazards pursuant to
the National Flood Insurance Act of 1968 or the Flood Disaster Protection Act
of 1973, or the National Flood Insurance Reform Act of 1994, as each may be
amended, or any successor law, or, if any portion of the Improvements is now or
at any time in the future located within any such area, the Borrower has
obtained and will maintain the insurance prescribed in Section 5.18 hereof.
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SECTION 4.11 CONDITION OF MORTGAGED PROPERTY. Except as set forth
in the property condition report or similar report relating to the Mortgaged
Property and described in Schedule C, the buildings, structures and
improvements included on or within the Mortgaged Property are structurally
sound and in good repair, and all mechanical, electrical, heating, air
conditioning, drainage, sewer, water and plumbing systems are in proper working
order.
SECTION 5. COVENANTS OF THE BORROWER. The Borrower agrees that
until payment in full of the Bonds, all interest thereon and all other amounts
payable by the Borrower hereunder:
SECTION 5.01. FINANCIAL STATEMENTS. The Borrower shall deliver or
cause to be delivered to the Beneficiary, the Servicer, the Rating Agency and
the Initial Purchasers:
(a) (i) not later than 45 days after the end of each of the first
three calendar quarters, a quarterly unaudited statement of revenue and certain
expenses for each of the Mortgaged Properties individually and for the Lessee
on a consolidated basis, along with a statement of the Occupancy, ADR and
REVPAR for each Mortgaged Property for such calendar quarter and the Lease Debt
Service Coverage Ratio and Property Debt Service Coverage Ratio for the 12
month period ending at the end of such calendar quarter and (ii) not later than
120 days after the end of each calendar year, (A) annual financial statements
of the Lessee audited by a nationally recognized independent accounting firm
prepared in accordance with GAAP, which will include a consolidated balance
sheet for the Lessee and a statement of revenue and certain expenses for each
of the Mortgaged Properties individually and for the Lessee on a consolidated
basis (including property taxes which are payable by the Issuer), along with a
statement of the Occupancy, ADR and REVPAR for each Mortgaged Property for such
calendar year, and the Lease Debt Service Coverage Ratio for the 12 month
period ending at the end of such calendar year and (B) the unaudited
consolidated balance sheet and statement of income and expenses of the Borrower
for such year, which shall be accompanied by a certificate of a senior
financial officer of the General Partner, which certificate shall state (i)
that such consolidated financial statements fairly present the consolidated
financial condition and results of operations of the Borrower as at the end of,
and for, such Fiscal Year and (ii) that no Default has occurred and is
continuing (or, if any Default has occurred and is continuing, describing the
same in reasonable detail and describing the action that the Borrower has taken
and proposes to take with respect thereto);
(b) promptly upon receipt thereof, copies of all written reports,
budgets or plans delivered by the Lessee under the Leases not duplicative of
the information provided under paragraph (a) above;
(c) copies of all written reports, budgets or plans delivered by
the Borrower under the Leases not duplicative of the information provided in
paragraph (a) above; and
(d) promptly after the Borrower knows or has reason to know that
any Default has occurred, a written notice of such Default describing the same
in reasonable detail and, together
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with such notice or as soon thereafter as possible, a description of the action
that the Borrower has taken and proposes to take with respect thereto.
SECTION 5.02. LITIGATION, ETC. The Borrower will promptly give to
the Beneficiary notice of (a) all legal or arbitral proceedings, and of all
proceedings by or before any governmental or regulatory authority or agency,
and any material development in respect to such legal or other proceeding
affecting the Borrower, except proceedings which if adversely determined, would
not have a Material Adverse Effect and (b) of any proposal by any public
authority to acquire any Mortgaged Property of the Borrower or any portion
thereof.
SECTION 5.03. PARTNERSHIP EXISTENCE, ETC. The Borrower will
preserve and maintain its partnership existence and all of its material rights,
privileges and franchises; comply with the requirements of all applicable laws,
rules, regulations and orders of governmental or regulatory authorities if
failure to comply with such requirements would have a Material Adverse Effect;
pay and discharge all taxes, assessments and governmental charges or levies
imposed on it or on its income or profits or on any of its property prior to
the date on which penalties attach thereto, except for any such tax,
assessment, charge or levy the payment of which is being contested in good
faith and by proper proceedings and against which adequate reserves are being
maintained; maintain all of its properties used or useful in its business in
good working order and condition, ordinary wear and tear excepted; and permit
representatives of the Beneficiary (including its agents and contractors),
during normal business hours and upon reasonable prior notice, to examine, copy
and make extracts from its books and records, to inspect its properties, and to
discuss its business and affairs with its officers, all to the extent
reasonably requested by the Beneficiary.
SECTION 5.04. PROHIBITION OF FUNDAMENTAL CHANGES. Except as
expressly provided in the Partnership Agreement and the Certificate of Limited
Partnership of the Borrower, the Borrower will not (i) enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution) or (ii) acquire
any business or assets from, or capital stock of, or be a party to any
acquisition of, any Person except for (a) the purchases of FF&E, inventory and
other assets to be sold or used in the ordinary course of business, (b)
purchase of the Mortgaged Property, and (c) Investments permitted under Section
5.09. Except as permitted hereunder or under the other Loan Documents in
connection with a Release or otherwise, the Borrower will not convey, sell,
transfer or otherwise dispose of the Mortgaged Property without the prior
written consent of the Beneficiary (which consent shall be given upon written
confirmation from the Rating Agency that such action would not result in a
qualification, downgrading or withdrawal of the then current ratings on the
Bonds). Except as expressly provided in the Partnership Agreement and the
Certificate of Limited Partnership of the Borrower, the Borrower will not
convey, sell, lease, transfer or otherwise dispose of, in one transaction or a
series of transactions, all or a substantial part of its business or assets,
whether now owned or hereafter acquired (including receivables and leasehold
interests, but excluding (i) any inventory or other assets sold or disposed of
in the ordinary course of business, or (ii) obsolete or worn-out FF&E or other
property no longer used or useful in its business). The Borrower will not
replace or permit the replacement of the
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General Partner without the prior written consent of the Beneficiary; provided,
that transfers aggregating more than 49% of the partnership interests in the
Borrower shall require written confirmation from the Rating Agency that such
transfers will not cause a qualification, withdrawal or downgrading of the
ratings then maintained by the Rating Agency with respect to the Bonds. The
Borrower shall not become a Person other than a limited partnership and shall
not become a general or limited partner in any general or limited partnership.
The Borrower shall not permit the General Partner to pledge or encumber its
partnership interest in the Borrower without the prior written consent of the
Beneficiary.
SECTION 5.05. NEITHER A FOREIGN PERSON NOR AN INVESTMENT COMPANY.
The Borrower will not, throughout the term of the Bonds, become a "foreign
person" within the meaning of Sections 1445 and 7701 of the Code (26 USC
Section Section 1445, 7701) and the related Treasury Department regulations,
including, without limitation, temporary regulations. The Borrower will
conduct its operations at all times so as not to be subject to, or shall comply
with, the Investment Company Act.
SECTION 5.06. ERISA.
(a) The Borrower shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the
exercise by the Beneficiary of any of its rights under the Bonds, this Deed of
Trust and the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(b) The Borrower further covenants and agrees to deliver to the
Beneficiary such certifications or other evidence from time to time throughout
the term of the Deed of Trust, as requested by the Beneficiary in its sole
discretion, that (i) the Borrower is not 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(3) of ERISA; and (ii) the
Borrower is not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans.
SECTION 5.07. LIMITATION ON LIENS. The Borrower will not create,
incur, assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except Permitted Liens. The
Borrower shall discharge, by payment, by procurement of a surety bond or
otherwise as approved by the Servicer, any Lien that is not a Permitted Lien
within 30 days after the Borrower receives written notice of the filing of such
Lien (subject to the Borrower's right to contest certain Liens as provided in
Section 5.19(b) hereof).
SECTION 5.08. INDEBTEDNESS. The Borrower will not create, incur or
suffer to exist any Indebtedness except:
(a) Indebtedness to the Beneficiary under the Loan Documents;
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(b) Indebtedness not secured by the Mortgaged Properties
consisting of trade accounts payable (other than for borrowed money) incurred
in the ordinary course of business, including purchase money Indebtedness and
capitalized lease obligations for the purchase of FF&E Replacements;
(c) Indebtedness secured by Permitted Liens;
(d) the pledge or assignment of funds released to the Issuer from
the lien of the Indenture; and
(e) other Indebtedness, with the written consent of the
Beneficiary, which consent shall not be withheld if (i) such Indebtedness is
expressly subordinated to the Bonds, (ii) the term of such Indebtedness exceeds
the latest Stated Maturity of the Bonds, (iii) such Indebtedness provides that
no remedies for defaults with respect to such Indebtedness may be exercised
until the Bonds are no longer outstanding, (iv) no Event of Default has
occurred and is continuing and (v) written confirmation is received from the
Rating Agency that such Indebtedness will not cause a qualification, withdrawal
or downgrading of the ratings then maintained by the Rating Agency with respect
to the Bonds.
SECTION 5.09. INVESTMENTS. The Borrower will not make or permit to
remain outstanding any Investments other than operating deposit accounts with
banks and Permitted Investments.
SECTION 5.10. DIVIDEND PAYMENTS. The Borrower will not declare or
make any Dividend Payment at any time that an Event of Default shall have
occurred and be continuing.
SECTION 5.11. PARTNERSHIP ACTIVITIES; BOOKS AND RECORDS.
(a) The Borrower shall not purchase any real properties other than
the Mortgaged Properties, conduct any business other than that permitted under
the Partnership Agreement or charter and by-laws of the General Partner, have
any assets or liabilities other than assets or liabilities derived from or
related to the Mortgaged Properties or otherwise related to a business that is
permitted under the Partnership Agreement, violate any of the provisions of the
Partnership Agreement, nor shall the Borrower amend the Partnership Agreement
without confirmation from the Rating Agency that such amendment will not cause
a qualification, withdrawal or downgrading of the ratings then maintained by
the Rating Agency with respect to the Bonds.
(b) The Borrower shall comply with the "separateness provisions"
set forth in Section 1.5 of the Partnership Agreement.
SECTION 5.12. PAYMENT FOR LABOR AND MATERIALS. The Borrower will
pay promptly or cause to be paid when due all bills and costs for labor,
materials, and specifically fabricated materials incurred in connection with
the Mortgaged Property and never permit to exist beyond
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the due date thereof in respect of the Mortgaged Property or any part thereof
any lien or security interest, even though inferior to the liens and the
security interests hereof, and in any event never permit to be created or exist
in respect of the Mortgaged Property or any part thereof any other or
additional lien or security interest other than the liens or security interests
hereof, except for the Permitted Liens.
SECTION 5.13. MODIFICATIONS OF LEASE. The Borrower will not
consent to any modification, supplement or waiver of the provisions of the
Lease or terminate the Lease (except a termination in connection with a Lease
Event of Default or a termination otherwise expressly permitted under the
Lease) without the prior written consent of the Beneficiary, which consent
shall be granted if the Rating Agency confirms in writing that such action will
not cause a qualification, withdrawal or downgrading of the ratings then
maintained by the Rating Agency with respect to the Bonds. The Borrower will
not consent to any modification, supplement or waiver of any provision of a
service contract that would have a Material Adverse Effect on the value,
utility, operation or legality of the Mortgaged Property or terminate any
service contract if such termination would have a Material Adverse Effect on
the value, utility, operation or legality of the Mortgaged Property, without
the consent of the Beneficiary, which consent shall be granted if the Rating
Agency confirms in writing that such action will not cause a qualification,
withdrawal or downgrading of the ratings then maintained by the Rating Agency
with respect to the Bonds.
SECTION 5.14. [RESERVED].
SECTION 5.15. PERFORMANCE OF OTHER AGREEMENTS. The Borrower shall
observe and perform each and every term to be observed or performed by the
Borrower pursuant to the terms of any agreement or recorded instrument
affecting or pertaining to the Mortgaged Property.
SECTION 5.16. OPERATION OF THE MORTGAGED PROPERTIES. The Borrower
shall comply in all material respects with the terms of the Lease. The Lessee
shall be permitted to employ a manager for the Mortgaged Property pursuant to
the terms of the Lease. In the event that a Lease Event of Default shall have
occurred under a Lease and continues beyond the applicable cure periods, the
Borrower may (i) terminate the Lease with respect to any or all of the
Mortgaged Properties and (ii) cause the Lessee to terminate the management
agreement with respect to such Mortgaged Properties, and may designate either a
replacement lessee or a property manager, as the case may be, reasonably
acceptable to the Beneficiary and willing to operate such Mortgaged Properties
pursuant to terms and conditions and pursuant to a Lease or property management
agreement approved by the Beneficiary. In the event the Lease or a replacement
lease is not in effect, the revenues (net of operating expenses with respect to
the Mortgaged Property) received by the Borrower for the operation of the
Mortgaged Property shall be remitted to the Servicer for deposit into the
Central Account on a monthly basis in a manner adequate for timely payments to
be made on the Bonds. Notwithstanding the foregoing, the Borrower shall not
enter into any lease or property management agreement (or consent to any
appointment of a manager of the Mortgaged Property by the Lessee or to the form
of the related Management Agreement to the extent such appointment or form
requests the consent or approval
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of the Borrower under the Lease) in respect of the Mortgaged Property unless
the following conditions are met:
(a) the Borrower obtains the Beneficiary's prior written consent,
which consent shall be granted if the Rating Agency confirms in writing that
such action will not cause a qualification, withdrawal or downgrading of the
ratings then maintained by the Rating Agency with respect to the Bonds; and
(b) such replacement lessee or manager executes an agreement
substantially similar to the Subordination Agreement.
SECTION 5.17. ENVIRONMENTAL MATTERS.
(a) The Borrower shall, at its sole cost and expense, comply in
all material respects with and shall cause the Lessee of the Mortgaged Property
to comply in all material respects with all Environmental Laws applicable to
the Mortgaged Property and shall ensure that all operations, businesses and
activities conducted thereon are in material compliance with all Environmental
Laws.
(b) If the Borrower shall receive any notice or other
communication relating to the Mortgaged Property from any governmental
authority concerning any actual, alleged, suspected or threatened violation of
or liability under any Environmental Laws or any Environmental Condition, or
that any representation or warranty herein relating to Hazardous Materials is
not or is no longer accurate in any material respect, including any notice or
other communication from any governmental authority concerning any actual or
threatened Environmental Claim, then the Borrower shall deliver to the
Beneficiary, within ten (10) days after receipt of such notice or
communication, a written description of such violation, liability, or actual or
threatened event or condition. Receipt of such notice shall not be deemed to
create any obligation on the part of the Beneficiary to defend or otherwise
respond to such notification. The Borrower shall promptly take all actions
necessary to defend such notification of Environmental Claim or clean up or
remedy such Environmental Condition in compliance with all Environmental Laws.
(c) Upon the Beneficiary's or the Servicer's reasonable request,
the Borrower shall, at its sole cost and expense, take all actions or cause the
Lessee to take all actions necessary to ensure that there is no Hazardous
Material at, on or under the Mortgaged Property in quantities or concentrations
other than those permitted by applicable Environmental Laws; provided that the
Borrower shall not be required to obtain environmental site assessments or
audit reports or updates thereto more often than once per year. The Borrower
shall reasonably promptly provide to the Beneficiary copies of all
environmental site assessments or environmental audit reports, or updates of
such assessments or reports that are generated in connection with the above
activities.
(d) Following and during the continuance of an Event of Default,
the Borrower shall permit the Beneficiary to enter upon the Mortgaged Property
at any reasonable time to conduct,
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at the Borrower's sole cost and expense, a reasonable inspection of Mortgaged
Property, to determine compliance with all applicable Environmental Laws and to
take any and all other actions required by any governmental agency, including
the removal or cleanup of any Hazardous Materials in quantities or
concentrations which violate applicable Environmental Laws at, on or under the
Mortgaged Property. During the continuance of an Event of Default, the
Borrower grants the Beneficiary and its employees, contractors and agents an
irrevocable and nonexclusive license to enter upon the Mortgaged Property and
to perform such tests on the Mortgaged Property necessary to conduct such
reviews and investigations in accordance with the preceding sentence. All
reasonable costs and expenses incurred by the Beneficiary (including the costs
of its agents and contractors) under this subsection shall be due and payable
by the Borrower on demand.
SECTION 5.18. INSURANCE; CASUALTY.
(a) The Borrower will keep or cause to be kept, without cost to
the Beneficiary, the Mortgaged Property insured during the entire term of this
Deed of Trust for the mutual benefit of the Borrower, the Beneficiary and the
Servicer against loss or damage by fire and against loss or damage by other
risks embraced on the "Special Form" or "All Risk Form" in an amount sufficient
to prevent the Borrower or the Beneficiary from becoming a co-insurer, but in
any case in an amount not less than the then full replacement value of the
Improvements and Equipment, covering physical loss or damage to such
Improvements and Equipment, without considering depreciation and exclusive of
excavations and foundations. The policy of insurance carried in accordance
with this Section shall contain a "Replacement Cost Endorsement" or other
comparable provision.
(b) The Borrower will obtain and maintain, or cause to be obtained
and maintained, without cost to the Beneficiary, during the entire term of this
Deed of Trust for the mutual benefit of the Borrower and the Beneficiary, the
following policies of insurance:
(1) Flood insurance if any part of the Mortgaged Property
is located in an area identified by the Secretary of Housing and Urban
Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance
Act of 1968 or the Flood Disaster Protection Act of 1973, or the
National Flood Insurance Reform Act of 1994, as each may be amended
(and any successor act thereto), in an amount at least equal to the
value of the Mortgaged Property as reasonably determined by the
Beneficiary from time to time or the maximum limit of coverage
available with respect to the Improvements and Equipment under said
Act, whichever is less.
(2) Comprehensive general liability insurance with the
coverages and in the amounts required under the Lease (as in effect on
the date hereof).
(3) Loss of income insurance with the coverages and in
the amounts required under the Lease (as in effect on the date
hereof).
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(4) Insurance for loss or damage (direct and indirect)
from steam boilers, pressure vessels or similar apparatus now or
hereafter installed in the Improvements with the coverages and in the
amounts required under the Lease (as in effect on the date hereof).
(5) During the course of any construction or repair of
Improvements on the Mortgaged Property, builder's completed value risk
insurance against "all risks of physical loss," during such
construction with a deductible not to exceed $10,000, in non-reporting
form, covering the total value of work performed and equipment,
supplies and materials furnished.
(6) Worker's compensation and other statutory coverages,
as applicable.
(7) Such other insurance (other than earthquake
insurance) as may from time to time be reasonably required by the
Beneficiary or the Servicer in order to protect the Beneficiary's
interests, to the extent that such insurance is generally available on
commercial reasonable terms and is generally required by institutional
lenders on loans secured by similar properties.
(c) All policies of insurance (the "Required Insurance Policies")
required pursuant to this Section 5.18 (i) shall be issued by an insurer whose
claims-paying ability (or qualitative financial condition and operating
performance) is then rated "A-" or better by the Rating Agency, if rated by the
Rating Agency, or, if not rated by the Rating Agency, an equivalent rating from
any other nationally recognized statistical rating organization or a rating of
at least A:VIII from A. M. Best, or is otherwise acceptable to the Rating
Agency, (ii) shall contain the standard New York (or local equivalent)
non-contribution clause naming the Beneficiary as the person to which all
payments over $100,000 made by such insurance company shall be paid, (iii)
shall be maintained throughout the term of this Deed of Trust without cost to
the Beneficiary, (iv) shall contain such provisions as the Beneficiary or the
Servicer deems reasonably necessary or desirable to protect the Beneficiary's
interest including, without limitation, endorsements providing that neither the
Borrower, the Beneficiary nor any other party shall be a co-insurer under said
Policies and that the Beneficiary shall receive at least thirty (30) days prior
written notice of any modification or cancellation and (v) shall list the
Beneficiary and the Servicer, where applicable, as loss payees or additional
insureds. Notwithstanding the foregoing, workers' compensation insurance may
be provided by any state approved and regulated employer's self-insurance fund
and need not name the Beneficiary or the Servicer as additional insureds or
loss payees. The Borrower shall deliver duplicate counterparts or specimen
copies of each of the Required Insurance Policies to the Servicer. Not later
than fifteen (15) days prior to the expiration date of each of the Required
Insurance Policies, the Borrower will deliver to the Servicer satisfactory
evidence of the renewal of each of the Required Insurance Policies.
(d) The Required Insurance Policies with respect to the Mortgaged
Property may, at the option of the Borrower, be effected by blanket or umbrella
policies issued to the Borrower and its affiliates (including, without
limitation, the direct and indirect partners in the Borrower)
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covering the Mortgaged Properties and properties owned by such affiliates,
provided that the policies otherwise comply with the provisions of this Deed of
Trust and specifically allocate to the Mortgaged Property the coverages
required hereby, without possibility of reduction or coinsurance by reason of,
or damage to, another premises named therein, and if the insurance required by
this Deed of Trust shall be effected by any such blanket or umbrella policies,
the Borrower shall furnish to the Servicer copies of such policies in place of
the originals, and in addition, within thirty (30) days after the filing
thereof with any insurance ratemaking body, copies of the schedule of all
improvements affected by any such blanket or umbrella policy of insurance.
(e) If the Mortgaged Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty, the Borrower shall give prompt
written notice thereof to the Beneficiary and the Servicer prior to the making
of any repairs thereto; provided, however, that if the loss or damage is
$100,000 or less and no Event of Default shall have occurred and be continuing,
the Borrower shall have no obligation to provide notice. Following the
occurrence of fire or other casualty, the Borrower, regardless of whether
insurance proceeds are payable under the Required Insurance Policies, shall
proceed promptly with the repair, alteration, restoration, replacement or
rebuilding of the same as near as possible to their value, utility, condition
and character prior to such damage or destruction (the "Restoration"), provided
that if the Borrower and the Servicer determine that (i) the Mortgaged Property
cannot be restored to substantially the same condition as existed before the
casualty, or (ii) restoration cannot reasonably be expected to be completed
within one year from the date of casualty, the Borrower may choose, in its sole
discretion, not to proceed with Restoration but to prepay the Bonds in
accordance with the Indenture in an amount equal to the lesser of (x) the
Insurance Proceeds or (y) the Allocated Loan Amount, plus accrued interest
through the related Accounting Date for the Special Payment Date on which such
Prepayment is applied on the Bonds in accordance with the Loan Documents, in
each case without payment of a Yield Maintenance Premium. In that event, any
excess of the Insurance Proceeds over the Allocated Loan Amount shall be
deposited into the Central Account for application (or release to the Borrower)
in accordance with the Servicing Agreement. In the event that the Borrower
proceeds with the Restoration, and the Insurance Proceeds exceed the costs of
Restoration, such excess proceeds shall be deposited into the Central Account
for application (or release to the Borrower) in accordance with the Servicing
Agreement. The Restoration shall be performed in accordance with the following
provisions:
(1) The Borrower shall procure and pay for, and shall
furnish to the Servicer true copies of, all required governmental
permits, certificates and approvals with respect to the Restoration.
(2) The Borrower shall furnish the Servicer, within
thirty (30) days of the casualty, evidence reasonably satisfactory to
the Servicer of the cost to complete the Restoration.
(3) If the Restoration involves structural work or the
estimated cost to complete the Restoration exceeds $250,000, the
Restoration shall be conducted under the
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supervision of an architect (the "Architect") selected by the Borrower
and approved by the Servicer (which approval shall not be unreasonably
withheld or delayed), and no such Restoration shall be made except in
accordance with detailed plans and specifications, detailed cost
estimates and detailed work schedules approved in writing by the
Servicer (which approval shall not be unreasonably withheld or
delayed).
(4) The Restoration shall be prosecuted to completion
with all due diligence and in an expeditious and good and workmanlike
manner and in compliance with all laws and other governmental
requirements, all permits, certificates and approvals, all
requirements of fire underwriters and all insurance policies then in
force with respect to the Mortgaged Property. The Restoration shall
be performed under a general contract or construction management
agreement approved by the Servicer, with all construction contracts
and architect's agreements assigned to the Beneficiary.
(5) At all times when any work is in progress, the
Borrower shall maintain all insurance then required by law or
customary with respect to such work, and, prior to the commencement of
any work, shall furnish to the Servicer duplicate originals or
certificates of the policies therefor.
(6) Upon completion of the Restoration, the Borrower
shall obtain (A) any occupancy permit which may be required for the
Improvements and (B) all other governmental permits, certificates and
approvals and all permits, certificates and approvals of fire
underwriters which are required for or with respect to the
Restoration, and shall furnish true copies thereof to the Servicer.
(7) An Event of Default shall be deemed to have occurred
under this Deed of Trust if the Borrower, after having commenced
demolition or construction of any Improvements, shall abandon such
demolition or the construction work or shall fail to complete such
demolition and construction within a reasonable time after the
commencement thereof (subject to events beyond the reasonable control
of the Borrower).
(f) The Borrower and the Servicer shall jointly adjust and settle
all insurance claims of $100,000 or more and, provided no Event of Default
shall exist and be continuing, the Borrower shall adjust and settle all
insurance claims less than $100,000. In the event any insured loss with
respect to which the insurance proceeds exceed $100,000 (other than proceeds
under public liability or workers' compensation insurance), the payment for
such loss shall be made directly to a segregated account maintained by the
Servicer (the "Loss Proceeds Account").
(g) If money in the Loss Proceeds Account is to be used for the
Restoration, then such money shall be disbursed in accordance with the
following provisions:
(1) Each request for an advance of Insurance Proceeds
shall be made on at least five days' prior notice to the Servicer and
shall be accompanied by a certificate of
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the Architect, if required under Section 5.18(e)(3) above,
otherwise by an executive officer or managing general partner of the
Borrower, stating (A) that all work completed to date has been
performed in compliance with the approved plans and specifications, if
any, and in accordance with all provisions of law; (B) the sum
requested is properly required to reimburse the Borrower for payments
by the Borrower to, or is properly due to, the contractor,
subcontractors, materialmen, laborers, engineers, architects or other
persons rendering services or materials for the Restoration (giving a
brief description of such services and materials), and that when added
to all sums, if any, previously disbursed by the Servicer does not
exceed the value of the work done to the date of such certificate; and
(c) that the amount of such proceeds remaining in the hands of the
Beneficiary or the Servicer will be sufficient on completion of the
work to pay the same in full (giving in such reasonable detail as the
Servicer may require an estimate of the cost of such completion);
(2) Each request for an advance of Insurance Proceeds
shall be accompanied by, if the estimated cost to complete the
Restoration exceeds $250,000, or if otherwise requested by the
Servicer, waivers of liens satisfactory to the Servicer covering that
part of the Restoration previously paid for, if any;
(3) No advance of Insurance Proceeds shall be made if
there is an Event of Default or other material default continuing on
the part of the Borrower (or any of its affiliates) under this Deed of
Trust or any other Loan Document;
(4) The request for an advance of Insurance Proceeds
after the Restoration has been completed shall be accompanied by a
copy of any certificate or certificates required by law for occupancy
of the Mortgaged Property that have not theretofore been delivered to
the Beneficiary or the Servicer; and
(5) If the Servicer reasonably believes at any time that
the cost of the Restoration at any time shall exceed the amount of the
Insurance Proceeds available therefor, Insurance Proceeds shall not be
advanced until the Borrower shall deposit the full amount of the
deficiency with the Servicer (or make or provide other arrangements or
assurances reasonably satisfactory to the Servicer) and any amount so
deposited shall first be applied toward the cost of the Restoration
before any portion of the Insurance Proceeds is disbursed for such
purpose.
Upon notice to the Beneficiary by the Servicer of the failure on the
part of the Borrower promptly to commence or diligently to continue the
Restoration, or at any time upon request by the Borrower, the Beneficiary shall
apply the amount of any such proceeds then or thereafter in the hands of the
Beneficiary or the Servicer to the payment of the Secured Obligations by
prepaying the Bonds; provided, however, that notwithstanding anything herein
contained, the Beneficiary shall first apply such proceeds to the curing of any
default that has not been cured within the applicable cure period under this
Deed of Trust or any other Loan Document.
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(h) Insurance Proceeds and any additional funds deposited by the
Borrower with the Beneficiary or Servicer shall constitute additional security
for the Secured Obligations. The Borrower shall execute, deliver, file and/or
record, at its own expense, such documents and instruments as the Beneficiary
or Servicer deems necessary or advisable to grant to the Beneficiary a
perfected, first priority security interest in the Insurance Proceeds and such
additional funds. If the Borrower elects to have the Insurance Proceeds
applied to Restoration, (i) the Insurance Proceeds shall be, at the Servicer's
election, disbursed in installments by the Servicer, and (ii) the Borrower
shall upon demand by the Servicer from time to time deposit with the Servicer,
in a mutually acceptable interest-bearing account, the amount of any deductible
under such insurance coverage and such amounts as reasonably determined by the
Servicer in excess of the amount from time to time on deposit as may be
necessary to complete the Restoration.
SECTION 5.19. PAYMENT OF IMPOSITIONS, LIENS AND UTILITIES.
(a) The Borrower shall pay or cause to be paid all Impositions as
they become due and payable. The Borrower will deliver to the Servicer an
Officer's Certificate certifying that the real estate taxes, assessments and
similar items with respect to the Mortgaged Property have been so paid and are
not then delinquent, which delivery shall occur promptly following such payment
and, at the request of the Servicer, the Borrower will deliver evidence
satisfactory to the Servicer with respect to the payment of such real estate
taxes or any other Impositions. The Borrower shall not suffer or permit any
lien or charge (including without limitation any mechanic's lien) against all
or any part of the Mortgaged Property (other than inchoate liens for real
estate taxes and other assessments not yet due and payable) and the Borrower
shall promptly cause to be paid and discharged any lien or charge whatsoever
which may be or become a lien or charge against the Mortgaged Property. The
Borrower shall promptly pay or cause to be paid all bills for utility services
provided to the Mortgaged Property.
(b) Notwithstanding the provisions of subsection (a) of this
Section 5.19, the Borrower shall have the right to contest in good faith the
amount or validity of any such lien or charge (including, without limitation,
tax liens and mechanics' liens) referred to in subsection (a) above by
appropriate legal proceedings and in accordance with all applicable law, after
notice to, but without cost or expense to, the Beneficiary or Servicer,
provided that: (i) the Borrower pays all Impositions as same become due and
payable, unless the Borrower delivers evidence satisfactory to the Servicer
that, as a result of the Borrower's contest, the Borrower's obligation to pay
such Impositions has been deferred by the appropriate governmental authority,
in which event the Borrower may defer such payment of such Impositions until
the date specified by such governmental authority; (ii) such contest shall be
promptly and diligently prosecuted by and at the expense of the Borrower; (iii)
the Beneficiary shall not thereby suffer any civil penalty, or be subjected to
any criminal penalties or sanctions; (iv) such contest shall be discontinued
and such lien or charge promptly paid if at any time all or any part of the
Mortgaged Property shall be in imminent danger of being foreclosed, sold,
forfeited, or otherwise lost or if the lien of this Deed of Trust or the
priority thereof shall be in imminent danger of being impaired; and (v) during
such contest the Borrower shall indemnify and protect the Beneficiary against
any
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liability, loss or injury by reason of such contest, and shall post a deposit
with the Servicer representing 125% of the contested amount.
SECTION 5.20. CONDEMNATION. The Borrower shall promptly give the
Beneficiary and the Servicer written notice of the actual or (to the Borrower's
knowledge) threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to the Servicer copies of any and all papers
served in connection with such proceedings. The Servicer may participate in
any such proceeding and the Borrower will deliver to the Servicer all
instruments requested by the Servicer to permit such participation.
Notwithstanding any taking by any public or quasi-public authority
through eminent domain or otherwise (including but not limited to any transfer
made in lieu of or in anticipation of the exercise of such taking), the
Borrower shall continue to pay the Secured Obligations at the time and in the
manner provided for in the Indenture, in this Deed of Trust and the other Loan
Documents, and the Secured Obligations shall not be otherwise reduced, until
any award or payment therefor shall have been actually received and applied by
the Beneficiary or Servicer (after expenses of collection) to the discharge of
the Secured Obligations. The Beneficiary shall not be limited to the interest
paid on the award by the condemning authority but shall be entitled to receive
out of the award interest on the Secured Obligations at the rate or rates
provided in the Loan Documents.
If there exists no Event of Default, the Borrower will be entitled to
receive payment of Condemnation Proceeds up to $100,000 to be applied to the
Restoration of such Mortgaged Property, if Restoration is required.
Condemnation Proceeds of more than $100,000 will be deposited into the Loss
Proceeds Account maintained by the Servicer. Once Condemnation Proceeds are
received, the Borrower shall proceed promptly with the Restoration of the
Mortgaged Property; provided that if a condemnation or eminent domain
proceeding of any Mortgaged Property is of such a nature that the Borrower and
the Servicer determine that (i) the Mortgaged Property can no longer be
operated on an economically feasible basis, or (ii) restoration cannot
reasonably be expected to be completed within a period of one year from the
date of the condemnation, then the Borrower may, in its sole discretion, choose
not to proceed with Restoration, and prepay the Bonds in accordance with the
Indenture in an amount equal to the lesser of (x) the amount of the
Condemnation Proceeds and (y) the Allocated Loan Amount, plus accrued interest
through the Accounting Date for the Special Payment Date on which such
Prepayment is applied on the Bonds in accordance with the Loan Documents, in
each case without a Yield Maintenance Premium. In that event, any excess of
the Condemnation Proceeds over the Allocated Loan Amount shall be deposited
into the Central Account for application (or release to the Borrower) in
accordance with the Servicing Agreement. In the event that the Borrower
proceeds with the Restoration, and the Condemnation Proceeds exceed the costs
of Restoration, such excess proceeds shall be deposited into the Central
Account for application (or release to the Borrower) in accordance with the
Servicing Agreement. If the Borrower elects to proceed with Restoration, then
the net proceeds of such award or payment shall be treated for purposes of this
Section 5.20 as Insurance Proceeds resulting from damage to the Mortgaged
Property and shall be made available to the Borrower to construct such
additional improvements
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subject to the terms and conditions of Sections 5.18(e), (f), (g) and (h). If
the Mortgaged Property is sold, through foreclosure or otherwise, prior to the
receipt by the Beneficiary or the Servicer of such award or payment, the
Beneficiary shall have the right, whether or not a deficiency judgment on the
Bonds shall have been sought, recovered or denied, to receive such award or
payment, or a portion thereof sufficient to pay the Secured Obligations (by
prepaying the Bonds in such manner and order of priority as set forth in the
Indenture).
SECTION 5.21. LEASES AND RENTS.
(a) The Beneficiary acknowledges that the Borrower is a party to a
lease agreement (the "Lease") with Lessee, pursuant to which the entire
Mortgaged Property has been leased to the Lessee, and this Deed of Trust is
subject to the terms of that Lease, which, inter alia, requires the Beneficiary
to (i) give the Lessee the same notice, if any, given to the Borrower of any
Default or acceleration of the Bonds or any foreclosure sale hereunder, (ii)
permit the Lessee to cure Defaults during applicable cure periods on the
Borrower's behalf and (iii) permit the Lessee to appear by its representative
and to bid at any foreclosure sale. The Borrower represents and warrants that
it has not entered into any lease or occupancy agreement of any kind or nature
with respect to the Mortgaged Property other than the Lease. The Borrower
shall not amend or modify the Lease or cancel or terminate the Lease (except in
connection with a Lease Event of Default or a termination otherwise expressly
permitted under the Lease) without the prior written consent of the
Beneficiary, which consent will be given upon confirmation from the Rating
Agency that such action will not cause a qualification, withdrawal or
downgrading of the ratings then maintained by the Rating Agency with respect to
the Bonds. To the extent any obligation of the Borrower hereunder is an
obligation to be performed by the Lessee under the Lease, the Borrower shall
fulfill such obligation by causing the Lessee to perform such obligation.
(b) The Borrower hereby grants and assigns to the Beneficiary all
the Rents from the Mortgaged Property and the right to enter the Mortgaged
Property for the purpose of enforcing its interest in the Lease and the Rents,
this Deed of Trust constituting a present, absolute assignment thereof. The
Beneficiary grants to the Borrower a revocable license to operate and manage
the Mortgaged Property and to collect the Rents; provided, however, the
Beneficiary may revoke such license upon and during the continuation of an
Event of Default.
(c) Any future lease on the Mortgaged Property shall be
subordinate to this Deed of Trust, subject to non- disturbance provisions
similar to those in the Subordination Agreement.
(d) Without the prior written consent of the Beneficiary, which
shall be given upon confirmation from the Rating Agency that the action will
not cause a qualification, withdrawal or downgrading of the ratings then
maintained by the Rating Agency with respect to the Bonds, the Borrower shall
not (i) lease all or any part of the Mortgaged Property other than to the
Lessee pursuant to the Lease (or a lease substantially similar to the Lease),
(ii) consent to any assignment of the Lease or a sublet of all or part of the
Mortgaged Property (other than a sublet
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of any retail or restaurant portion of such Mortgaged Property in accordance
with the Lease) or (iii) further assign the whole or any part of the Lease or
the Rents.
(e) With respect to the Lease, the Borrower shall (i) timely
fulfill or perform in all material respects each and every provision thereof on
the Borrower's part to be fulfilled or performed, (ii) promptly send copies to
the Servicer of all notices of default that the Borrower (and/or any person in
possession under the Borrower) shall send or receive thereunder, and (iii)
diligently enforce all of the terms, covenants and conditions contained in such
Lease upon the lessee's part to be performed. Upon the occurrence of any Event
of Default under this Deed of Trust, the Borrower (and/or any person in
possession under the Borrower other than the Lessee) shall pay monthly in
advance to the Beneficiary, or any receiver appointed to collect the Rents, the
fair and reasonable rental value for the use and occupation of the Mortgaged
Property or part of the Mortgaged Property as may be occupied by the Borrower
(or such person) and upon default in any such payment the Borrower (or such
person) shall vacate and surrender possession of the Mortgaged Property to the
Beneficiary or to such receiver and, in default thereof, the Borrower (or such
person) may be evicted by summary proceedings or otherwise.
(f) Neither this assignment nor any action taken pursuant hereto
shall operate to place any obligations or liability for the control, care,
management or repair of the Mortgaged Property upon the Beneficiary or
Servicer, or for the carrying out of any of the terms and conditions of the
Lease; nor shall either operate to make the Beneficiary or Servicer responsible
or liable for any waste committed on the Mortgaged Property by the tenants or
any other parties, or for any dangerous or defective condition of the Mortgaged
Property, or for any negligence in the management, upkeep, repair or control of
the Mortgaged Property resulting in loss or injury or death to any tenant,
licensee, employee or stranger; nor shall it make the Beneficiary a "mortgagee
in possession."
SECTION 5.22. MAINTENANCE OF MORTGAGED PROPERTY; WASTE. The
Borrower shall maintain the Mortgaged Property in good and clean order and
condition such that the utility and operation of the Mortgaged Property will
not be affected in any materially adverse way, subject to ordinary wear and
tear and casualty. Subject to the provisions herein regarding casualty and
condemnation, the Borrower shall make or cause to be made all necessary or
appropriate repairs, replacements and renewals to the Mortgaged Properties.
The Borrower shall not commit or suffer any waste of the Mortgaged Property or
make any change in the use of the Mortgaged Property that will in any way
materially increase the risk of fire or other hazard arising out of the
operation of the Mortgaged Property, or take any action that might invalidate
or give cause for cancellation of any Required Insurance Policy, or do or
permit to be done thereon anything that may in any way impair the value of the
Mortgaged Property or the security of this Deed of Trust.
SECTION 5.23. ALTERATIONS. The Borrower shall not make or permit
to be made any Alterations to the Mortgaged Property unless such Alterations
could not reasonably be expected to decrease the value of the Mortgaged
Property or to affect adversely the ability of the Borrower to make payments
under the Loan Documents when due.
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SECTION 5.24. COMPLIANCE WITH APPLICABLE LAW.
(a) The Borrower shall promptly comply with all existing and
future federal, state and local laws, orders, ordinances, governmental rules
and regulations or court orders affecting the Mortgaged Property, or the use
thereof ("Applicable Law").
(b) Notwithstanding any provisions set forth herein or in any
document regarding the approval of Alterations of the Mortgaged Property by the
Beneficiary or the Servicer, the Borrower shall not alter the Mortgaged
Property in any manner which would materially increase the Borrower's
responsibilities for compliance with Applicable Laws without the prior written
approval of the Servicer. The Servicer's approval of the plans,
specifications, or working drawings for alterations of the Mortgaged Property
shall create no responsibility or liability on behalf of the Servicer for their
completeness, design, sufficiency or their compliance with Applicable Laws.
The Servicer may condition any such approval upon receipt of a certificate of
compliance with Applicable Laws from an independent architect, engineer, or
other Person acceptable to the Servicer.
(c) The Borrower shall give prompt notice to the Servicer of the
receipt by the Borrower of any notice related to a violation of any Applicable
Laws and of the commencement of any proceedings or investigations that relate
to compliance with Applicable Laws.
(d) After prior written notice to the Servicer, the Borrower, at
its own expense, may contest by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, the Applicable
Laws affecting the Mortgaged Property, provided that (i) no Event of Default
has occurred and is continuing under the Loan Documents; (ii) the Borrower is
permitted to do so under the provisions of any other mortgage, deed of trust or
deed to secure debt affecting the Mortgaged Property; (iii) such proceeding
shall be permitted under and be conducted in accordance with the provisions of
any other instrument to which the Borrower is subject and shall not constitute
a default thereunder; (iv) neither the Mortgaged Property nor any part thereof
or interest therein nor any of the tenants or occupants thereof shall be
affected in any material adverse way as a result of such proceeding; and (v)
the Borrower shall have furnished to the Servicer all other items reasonably
requested by the Servicer.
SECTION 5.25. TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY.
Except for the Permitted Liens and the granting of customary easements and
similar rights in the ordinary course of business and except as otherwise
expressly provided in the Loan Documents, the Borrower, without the prior
written consent of the Servicer, shall not sell, convey, alienate, mortgage,
encumber or otherwise transfer the Mortgaged Property or any part thereof or
any interest therein, nor incur any additional indebtedness, nor permit or
suffer the divestiture of its title or any interest therein, nor permit or
suffer any merger, consolidation or dissolution or syndication affecting the
Borrower, nor permit or suffer the pledge, assignment, encumbrance or transfer
of any partnership interest in the Borrower.
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SECTION 5.26. ESTOPPEL CERTIFICATES. The Borrower, within ten (10)
Business Days after written request by the Servicer, shall furnish the Servicer
from time to time with a statement, setting forth (i) the then unpaid principal
amount of the Secured Obligations, (ii) the rate of interest then payable on
the Secured Obligations, (iii) the date through which all installments of
interest, principal and other amounts secured by this Deed of Trust have been
paid, (iv) any offsets or defenses to the payment of the Secured Obligations,
and (v) that no default or Event of Default has occurred on the part of the
Borrower or, to the Borrower's knowledge, the Beneficiary under this Deed of
Trust, the Bonds or any other Loan Document which is then continuing, or if any
such default or Event of Default has occurred, giving the particulars thereof.
SECTION 5.27. OPERATING OF HOTEL. The Borrower shall operate (or
cause to be operated) the Mortgaged Property as a hotel and may permit related
uses.
SECTION 5.28. CHANGES IN THE LAWS REGARDING TAXATION. If any law
is enacted or adopted or amended after the date of this Deed of Trust which
deducts the Secured Obligations or any portion thereof from the value of the
Mortgaged Property for the purpose of taxation and which imposes a tax, either
directly or indirectly, on the principal amount of the Bonds or the
Beneficiary's interest in the Mortgaged Property, the Borrower will pay such
tax, with interest and penalties thereon, if any. In the event the Beneficiary
is advised by counsel chosen by it that the payment of such tax or interest and
penalties by the Borrower would be unlawful or taxable to the Beneficiary or
unenforceable or provide the basis for a defense of usury, then in any such
event, the Beneficiary shall have the option, by written notice of not less
than thirty days, to require the Borrower to prepay immediately thereafter all
principal and accrued interest then due and payable under the Bonds.
SECTION 5.29. NO CREDITS ON ACCOUNT OF THE SECURED OBLIGATION. The
Borrower will not claim or demand or be entitled to any credit or credits on
account of the Secured Obligations for any part of the Impositions assessed
against the Mortgaged Property or any part thereof and no deduction shall
otherwise be made or claimed from the taxable value of the Mortgaged Property,
or any part thereof, by reason of this Deed of Trust or the Secured
Obligations. In the event such claim, credit or deduction shall be required by
law, the Beneficiary shall have the option, by written notice of not less than
thirty days, to require the Borrower to prepay immediately thereafter all
principal and accrued interest then due and payable under the Bonds.
SECTION 5.30. DOCUMENTARY STAMPS. If at any time the United States
of America, any State thereof or any subdivision of any such State shall
require revenue or other stamps to be affixed to the Bonds or this Deed of
Trust, or impose any other tax or charge on the same, the Borrower will pay for
the same, with interest and penalties thereon, if any.
SECTION 5.31. RIGHT OF ENTRY. Subject to the rights of the Lessee
under the Lease and any other requirements of the Lease, the Beneficiary and
its agents shall have the right to enter and inspect the Mortgaged Property at
any time during regular business hours upon reasonable advance notice to the
Borrower.
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SECTION 5.32. PERFORMANCE OF OTHER AGREEMENTS. The Borrower shall
observe and perform each and every term to be observed or performed by the
Borrower pursuant to the terms of any agreement or recorded instrument
affecting or pertaining to the Mortgaged Property, which the failure of the
Borrower to perform or observe would have a Material Adverse Effect on the
Borrower's operation of the Mortgaged Property or the Borrower's ability to
perform its obligations under the Loan Documents.
SECTION 6. RIGHTS AND REMEDIES.
SECTION 6.01. APPRAISALS. If an Event of Default occurs and is
continuing, the Servicer shall be entitled at any time to request an appraisal
to be performed by an appraiser satisfactory to the Servicer and/or a market
study to be performed by an MAI satisfactory to the Servicer with respect to
the Mortgaged Property or all the Mortgaged Properties. The Borrower shall
pay all reasonable fees for any appraisals and market studies performed
pursuant to this Section 6.01.
SECTION 6.02. EVENTS OF DEFAULT.
Upon the occurrence of any Event of Default, the Secured Obligations,
upon notice to the Borrower, shall immediately become due at the option of the
Beneficiary (or certain Bondholders as provided in the Indenture) and the
provisions of Section 6.03 shall apply.
SECTION 6.03. REMEDIES.
(a) The Beneficiary may, to the extent permitted under applicable
law, elect to treat the fixtures included in the Mortgaged Property either as
real property or as personal property, or both, and proceed to exercise such
rights as apply thereto. With respect to any sale of real property included in
the Mortgaged Property made under the powers of sale herein granted and
conferred, the Beneficiary may, to the extent permitted by applicable law,
include in such sale any fixtures included in the Mortgaged Property and
relating to such real property.
(b) Upon the occurrence of any Event of Default, the Beneficiary
may take such action, without notice or demand, as it deems advisable to
protect and enforce its rights against the Borrower and in and to the Mortgaged
Property or any part thereof or interest therein, including, but not limited
to, the following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as the Beneficiary may determine, in
its sole discretion, without impairing or otherwise affecting the other rights
and remedies of the Beneficiary: (i) enter into or upon the Premises, either
personally or by its agents, nominees or attorneys, and dispossess the Borrower
and its agents and servants therefrom, and thereupon the Beneficiary may (A)
use, operate, manage, lease, control, insure, maintain, repair, restore and
otherwise deal with all and every part of the Mortgaged Property and conduct
the business thereat; (B) complete any construction on the Mortgaged Property
in such manner and form as the Beneficiary deems advisable; (C) make
alterations, additions, renewals, replacements and improvements to or on the
Mortgaged Property; (D) exercise all rights and powers of the
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Borrower with respect to the Mortgaged Property, whether in the name of the
Borrower or otherwise, including, without limitation, the right to make,
cancel, enforce or modify leases, obtain and evict tenants, and demand, sue
for, collect and receive all earnings, revenues, rents, issues, profits and
other income of the Mortgaged Property and every part thereof; and (E) apply
the receipts from the Mortgaged Property to the payment of the Secured
Obligations (in such manner and order of priority as the Beneficiary shall
elect in its sole and absolute discretion), after deducting therefrom all
expenses (including reasonable attorneys' fees and expenses) incurred in
connection with the aforesaid operations and all amounts necessary to pay the
taxes, assessments, insurance and other charges in connection with the
Mortgaged Property, as well as just and reasonable compensation for the
services of the Beneficiary, its counsel, agents and employees in connection
with the aforesaid operations; (ii) institute proceedings for the complete
foreclosure of this Deed of Trust, in which case the Mortgaged Property may be
sold for cash or upon credit in one or more parcels; (iii) with or without
entry, to the extent permitted and pursuant to the procedures provided by
applicable law, institute proceedings for the partial foreclosure of this Deed
of Trust for the portion of the Secured Obligations then due and payable,
subject to the continuing lien of this Deed of Trust for the balance of the
Secured Obligations not then due; (iv) sell for cash or upon credit the
Mortgaged Property or any part thereof and all or any part of any estate,
claim, demand, right, title and interest of the Borrower therein and rights of
redemption thereof, pursuant to power of sale or otherwise, at one or more
sales, as an entity or in parcels, at such time and place, upon such terms and
after such notice thereof as may be required or pertained by law, and in the
event of a sale, by foreclosure or otherwise, of less than all of the Mortgaged
Property, this Deed of Trust shall continue as a lien on the remaining portion
of or estate in the Mortgaged Property; (v) institute an action, suit or
proceeding in equity for the specific performance of any covenant, condition or
agreement contained herein or any other Loan Document or for mandatory or
prohibitory injunctive relief, or other equitable relief requiring the Borrower
to cure or refrain from repeating any default; (vi) recover judgment on the
Bonds or any other Loan Document either before, during or after any proceedings
for the enforcement of this Deed of Trust; (vii) apply for the appointment of a
trustee, receiver, liquidator or conservator of the Mortgaged Property upon ex
parte application to any court of competent jurisdiction, without regard for
the adequacy of the security for the Secured Obligations and without regard for
the solvency of the Borrower or of any person, firm or other entity liable for
the payment of the Secured Obligations; (viii) with or without accelerating the
maturity of the Secured Obligations, the Beneficiary may sue from time to time
for any payment due under any Loan Documents; and/or (ix) pursue such other
remedies as the Beneficiary may have under applicable law, in equity or under
this Deed of Trust or any other Loan Document.
(c) The purchase money proceeds or avails of any sale made under
or by virtue of this Section 6.03, together with any other sums which then may
be held by the Beneficiary under this Deed of Trust, whether under the
provisions of this Section 6.03 or otherwise, shall be applied as follows:
First: To the payment of the costs and expenses of any such
sale, including cost of evidence of title in connection with the sale
and reasonable compensation to the
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Trustee, its agents and counsel, and of any judicial proceedings
wherein the same may be made, and of all expenses, liabilities and
advances made or incurred by the Trustee under this Deed of Trust,
together with interest as provided herein on all advances made by the
Trustee and all taxes or assessments, except any taxes, assessments or
other charges subject to which the Mortgaged Property shall have been
sold.
Second: To the payment of the whole amount of the Secured
Obligations then due, owing or unpaid together with any and all
applicable interest, fees and late charges, in such manner and order
of priority as provided in the Indenture.
Third: To the payment of any other sums required to be paid
by the Borrower pursuant to any provision of this Deed of Trust, the
Bonds or any other Loan Document.
Fourth: To the payment of the surplus, if any, to whomsoever
may be lawfully entitled to receive the same.
The Beneficiary and any receiver of the Mortgaged Property, or any
part thereof, shall be liable to account for only those proceeds of sale,
rents, issues and profits actually received by it.
In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts of the Secured Obligations to
which the Beneficiary is legally entitled, the Borrower shall be liable for the
deficiency (subject to Section 11.01), together with interest thereon at the
Default Rate until such amounts are paid in full, together with the costs of
collection and the reasonable fees and disbursements of any attorneys employed
by the Beneficiary to collect such deficiency.
(d) Any receiver appointed after an Event of Default and his
agents shall be empowered (i) to take possession of the Mortgaged Property and
any of the Borrower's business assets used in connection therewith, (ii) to
exclude the Borrower and the Borrower's agents, servants, and employees from
the Premises, (iii) to collect the Rents, (iv) to complete any construction
which may be in progress, (v) to do such maintenance and make such repairs and
alterations as the receiver deems necessary, (vi) to use all stores of
materials, supplies, and maintenance equipment on the Mortgaged Property and
replace such items at the expense of the receivership estate, (vii) to pay all
taxes and assessments against the Mortgaged Property, all premiums for
insurance thereon, all utility and other operating expenses, and all sums due
under any prior or subsequent encumbrance, and (viii) generally to do anything
which the Borrower could legally do if the Borrower were in possession of the
Mortgaged Property. All reasonable expenses incurred by the receiver or his
agents shall constitute a part of the Secured Obligations. Any revenues
collected by the receiver shall be applied first to the expenses of the
receivership, including reasonable attorneys' fees and disbursements incurred
by the receiver and the Beneficiary, together with interest thereon at the
Default Rate from the date incurred until repaid, then to the payment of the
whole amount of the Secured Obligations then due, owing or unpaid, together
with any and all applicable interest, fees and late charges (in such manner and
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order of priority as the Beneficiary shall elect in its sole and absolute
discretion), and the balance to the payment of any other sums required to be
paid by the Borrower pursuant to any provision of this Deed of Trust, the Bonds
or the other Loan Documents or in such other manner as the court may direct.
Unless sooner terminated with the express consent of the Beneficiary, any such
receivership will continue until the Secured Obligations have been discharged
in full, or until title to the Mortgaged Property has passed after foreclosure
sale and all applicable periods of redemption have expired.
(e) In the case of a foreclosure under this Deed of Trust, the
said Mortgaged Property, real, personal and mixed, may be sold in one parcel or
more than one parcel to the extent permitted by law.
(f) At the Beneficiary's request, Trustee may adjourn from time to
time any sale to be made under or by virtue of this Deed of Trust by
announcement at the time and place appointed for such sale or for such
adjourned sale or sales; and, except as otherwise provided by any applicable
provision of law, Trustee, at the Beneficiary's request, without further notice
or publication, may make such sale at the time and place to which the same
shall be so adjourned.
(g) Upon the completion of any sale or sales under or by virtue of
this Section 6.03, and the period of redemption (if any), the Trustee or an
officer of any court empowered to do so, shall execute and deliver to the
accepted purchaser or purchasers a good and sufficient instrument, or good and
sufficient instruments, conveying, assigning and transferring all estate,
right, title and interest in and to the property and rights sold. The Trustee
is hereby irrevocably appointed the true and lawful attorney of the Borrower,
in its name and stead, to make all necessary conveyances, assignments,
transfers and deliveries of the Mortgaged Property and rights so sold and for
that purpose the Trustee may execute all necessary instruments of conveyance,
assignment and transfer, and may substitute one or more persons with like
power, the Borrower hereby ratifying and confirming all that its said attorney
or such substitute or substitutes shall lawfully do by virtue hereof, it being
agreed that such power of attorney shall be coupled with an interest. Any such
sale or sales made under or by virtue of this Section 6.03, whether made under
the power of sale herein granted or under or by virtue of judicial proceedings
or of a judgment or decree of foreclosure and sale, shall operate to divest all
the estate, right, title, interest, claim and demand whatsoever, whether at law
or in equity, of the Borrower in and to the properties and rights so sold, and
shall be a perpetual bar both at law and in equity against the Borrower and
against any and all persons claiming or who may claim the same, or any part
thereof from, through or under the Borrower.
(h) In the event of any sale made under or by virtue of this
Section 6.03 (whether made under the power of sale herein granted or under or
by virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale) the entire Secured Obligations, if not previously due and payable,
immediately thereupon shall, anything in the Bonds, this Deed of Trust or the
other Loan Documents to the contrary notwithstanding, become due and payable.
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(i) Upon any sale made under or by virtue of this Section 6.03
(whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale), the
Beneficiary may bid for and acquire the Mortgaged Property or any part thereof
and in lieu of paying cash therefor may make settlement for the purchase price
by crediting upon the Secured Obligations the net sales price after deducting
therefrom the expenses of the sale and the costs of the action and any other
sums which the Beneficiary is authorized to deduct under this Deed of Trust.
(j) No recovery of any judgment by the Beneficiary and no levy of
an execution under any judgment upon the Mortgaged Property or upon any other
property of the Borrower shall affect in any manner or to any extent, the lien
of this Deed of Trust upon the Mortgaged Property or any part thereof, or any
liens, rights, powers or remedies of the Beneficiary hereunder, but such liens,
rights, powers and remedies of the Beneficiary shall continue unimpaired as
before.
(k) So long as the Secured Obligations, or any part thereof,
remain unpaid, the Borrower agrees that possession of the Mortgaged Property by
the Borrower, or any person claiming under the Borrower, shall be as tenant,
and, in case of a sale under power or upon foreclosure as provided in this Deed
of Trust, the Borrower and any person in possession under the Borrower, as to
whose interest such sale was not made subject, shall, at the option of the
purchaser at such sale, then become and be tenants holding over, and shall
forthwith deliver possession to such purchaser, or be summarily dispossessed in
accordance with the laws applicable to tenants holding over. If the Borrower
(or such person) is permitted to remain or otherwise remains in possession, the
possession shall be as a month-to-month tenant of the Beneficiary and, on
demand, the Borrower (or such person) will pay to the Beneficiary (or any
receiver of the Mortgaged Property) monthly, in advance, the fair and
reasonable rental value for the space so occupied and in default thereof the
Borrower (or such person) may be dispossessed by the usual summary proceedings
or otherwise.
(l) No remedy conferred upon or reserved to the Beneficiary by
this Deed of Trust is intended to be exclusive of any other remedy or remedies
available to the Beneficiary under the Loan Documents, at law, in equity or
otherwise, and each and every such remedy hereunder and/or under any other Loan
Documents, at law or in equity, shall be cumulative and shall be in addition to
every other remedy given under this Deed of Trust and/or under any other Loan
Document or now or hereafter existing at law or in equity. Any delay or
omission of the Beneficiary to exercise any right or power accruing upon the
occurrence of any Event of Default shall not impair any such right or power and
shall not be construed to be a waiver of or acquiescence in any such Event of
Default. Every power and remedy given by this Deed of Trust and/or under any
other Loan Document and/or at law or in equity may be exercised from time to
time concurrently or independently, when and as often as may be deemed
expedient by the Beneficiary in such order and manner as the Beneficiary, in
its sole and absolute discretion, may elect. If the Beneficiary accepts any
moneys required to be paid by the Borrower under this Deed of Trust after the
same become due, such acceptance shall not constitute a waiver of the right
either to require prompt payment, when due, of all other sums secured by this
Deed
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of Trust or to declare an Event of Default with regard to subsequent
defaults. If the Beneficiary accepts any moneys required to be paid by the
Borrower under this Deed of Trust in an amount less than the sum then due, such
acceptance shall be deemed an acceptance on account only and on the condition
that it shall not constitute a waiver of the obligation of the Borrower to pay
the entire sum then due, and the Borrower's failure to pay the entire sum then
due shall be and continue to be a default hereunder notwithstanding acceptance
of such amount on account.
(m) The state-specific provisions of Annex I are hereby
incorporated by reference herein as though set forth in full herein.
SECTION 6.04. RIGHT TO CURE DEFAULTS. Upon the occurrence of any
Event of Default or if the Borrower fails to make any payment or to do any act
as herein provided, the Beneficiary may, but without any obligation to do so
and without notice to (except as otherwise provided herein) or demand on the
Borrower and without releasing the Borrower from any obligation hereunder, make
or do the same in such manner and to such extent as the Beneficiary may
reasonably deem necessary to protect the security hereof. The Beneficiary is
authorized to enter upon the Mortgaged Property for such purposes, or appear
in, defend, or bring any action or proceeding to protect its interest in the
Mortgaged Property or to foreclose this Deed of Trust or collect the Secured
Obligations, and the cost and expense thereof (including, without limitation,
reasonable attorneys' fees and disbursements to the extent permitted by law),
with interest as provided in this Section 6.04, shall be immediately due and
payable to the Beneficiary upon demand by the Beneficiary therefor. All such
costs and expenses incurred by the Beneficiary in remedying such Event of
Default or failure of the Borrower or in appearing in, defending, or bringing
any such action or proceeding shall bear interest at the Default Rate, for the
period from the date that such cost or expense was incurred to the date of
payment to the Beneficiary, and such costs, expenses and interest shall be
added to the Secured Obligations and shall be secured by this Deed of Trust.
SECTION 6.05. APPOINTMENT OF RECEIVER. The Beneficiary, upon the
occurrence of an Event of Default or in any action to foreclose this Deed of
Trust or upon the actual or threatened waste to any part of the Mortgaged
Property, shall be entitled forthwith as a matter of right, concurrently or
independently of any other right or remedy hereunder, either before or after
declaring the Secured Obligations (or any part thereof) to be due and payable,
to the appointment of a receiver or other custodian ex parte and without notice
and without regard to the value of the Mortgaged Property as security for the
Secured Obligations, or the solvency or insolvency of any person liable for the
payment of the Secured Obligations, and whether or not foreclosure proceedings
have been commenced.
SECTION 7. WAIVER.
SECTION 7.01. WAIVER OF COUNTERCLAIM. To the fullest extent
permitted by applicable law, the Borrower hereby waives the right to assert a
claim or counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by the Beneficiary with respect to any Event of
Default.
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SECTION 7.02. SOLE DISCRETION OF THE BENEFICIARY. Wherever
pursuant to this Deed of Trust, the Beneficiary or its agents exercise any
right given to them to approve or disapprove, or any arrangement or term is to
be satisfactory to the Beneficiary or its agents, the decision of the
Beneficiary or its agents to approve or disapprove or to decide that such
arrangements or terms are satisfactory or not satisfactory shall be in the sole
discretion of the Beneficiary or its agents and shall be final and conclusive,
except as may be otherwise specifically provided herein.
SECTION 7.03. WAIVER OF NOTICE. The Borrower shall not be entitled
to any notices of any nature whatsoever from the Beneficiary except with
respect to matters for which this Deed of Trust or the other Loan Documents
specifically and expressly provide for the giving of notice by the Beneficiary
to the Borrower and except with respect to matters for which the Beneficiary is
required by applicable law to give notice, and the Borrower hereby expressly
waives the right to receive any notice from the Beneficiary with respect to any
matter for which this Deed of Trust or other Loan Documents do not specifically
and expressly provide for the giving of notice by the Beneficiary to the
Borrower.
SECTION 7.04. OTHER MORTGAGES; NO ELECTION OF REMEDIES.
(a) This Deed of Trust is made contemporaneously with other
Mortgages of even date herewith (the "Other Mortgages") given by the Borrower
to or for the benefit of the Beneficiary and that cover other property (the
"Other Mortgaged Properties"). The Other Mortgages secure the Secured
Obligations and the performance of the other covenants and agreements of the
Borrower set forth in the Loan Documents. Upon the occurrence of an Event of
Default, the Beneficiary may proceed under this Deed of Trust and/or the Other
Mortgages against any of the Mortgaged Property and/or the Other Mortgaged
Properties in one or more parcels and in such manner and order as the
Beneficiary shall elect. The Borrower hereby irrevocably waives and releases,
to the extent permitted by law, and whether now or hereafter in force, any
right to have the Mortgaged Property and/or the Other Mortgaged Properties
marshalled upon any foreclosure of this Deed of Trust or the Other Mortgages.
(b) Without limiting the generality of the foregoing, and without
limitation as to any other right or remedy provided to the Beneficiary in this
Deed of Trust or the other Loan Documents, and to the extent permitted by law,
in the case of an Event of Default (i) the Beneficiary shall have the right to
pursue all of its rights and remedies under this Deed of Trust and the Loan
Documents, at law and/or in equity, in one proceeding, or separately and
independently in separate proceedings from time to time, as the Beneficiary, in
its sole and absolute discretion, shall determine from time to time, (ii) the
Beneficiary shall not be required to either marshall assets, sell Mortgaged
Property and/or Other Mortgaged Properties in any particular order of
alienation (and may sell the same simultaneously and together or separately),
or be subject to any "one action" or "election of remedies" law or rule with
respect to the Mortgaged Property and the Other Mortgaged Properties, (iii) the
exercise by the Beneficiary of any remedies against any one item of Mortgaged
Property and/or Other Mortgaged Properties will not impede the Beneficiary from
subsequently or simultaneously exercising remedies against
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any other item of Mortgaged Property and/or Other Mortgaged Properties, (iv)
all liens and other rights, remedies or privileges provided to the Beneficiary
herein shall remain in full force and effect until the Beneficiary has
exhausted all of its remedies against the Mortgaged Property and all Mortgaged
Properties have been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Secured Obligations, and (v) the Beneficiary may resort for
the payment of the Secured Obligations to any security held by the Beneficiary
in such order and manner as the Beneficiary, in its discretion, may elect and
the Beneficiary may take action to recover the Secured Obligations, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of the Beneficiary thereafter to foreclose this Deed of Trust.
(c) Without notice to or consent of the Borrower and without
impairment of the lien and rights created by this Deed of Trust, the
Beneficiary may, at any time (in its sole and absolute discretion, but the
Beneficiary shall have no obligation to), execute and deliver to the Borrower a
written instrument releasing all or a portion of the lien of this Deed of Trust
as security for any or all of the obligations of the Borrower now existing or
hereafter arising under or in respect of the Indenture and each of the other
Loan Documents, whereupon following the execution and delivery by the
Beneficiary to the Borrower of any such written instrument of release, this
Deed of Trust shall no longer secure such obligations of the Borrower so
released.
SECTION 7.05. NOTICES. Any notice, demand, statement, request or
consent made hereunder shall be effective and valid only if in writing,
referring to this Deed of Trust, signed by the party giving such notice, and
delivered either personally to such other party, or sent by telecopy, by
nationally recognized overnight courier delivery service or by certified mail
of the United States Postal Service, postage prepaid, return receipt requested,
addressed to the other party, as follows (or to such other address or person as
either party or person entitled to notice may by notice to the other party
specify):
To the Beneficiary:
LaSalle National Bank,
as Indenture Trustee
135 South LaSalle Street, 17th Floor,
Chicago, Illinois 60674-4107,
Attention: Asset-Backed Securities Trust Services
Group
Reference: EQI Financing Partnership I, L.P.,
Commercial Mortgage Bonds, Series 1997-1
Telecopy No.: (312) 904-2084
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and a copy concurrently to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, NY 10022
Attention: Mark Michigan, Esq.
Telecopy No.: (212) 751-4864
To the Servicer:
Midland Loan Services, L.P.
210 West Tenth Street
Kansas City, MO 64105
Attention: Lawrence D. Ashley
Telecopy No.: (816) 435-2326
To the Borrower:
EQI Financing Partnership I, L.P.
4735 Spottswood, Suite 102
Memphis, Shelby County, Tennessee 38117
Attention: Howard A. Silver
Telecopy No.: (901) 761-1485
and with a copy concurrently to:
Hunton & Williams
2000 Riverview Tower
900 South Gay Street
Knoxville, Tennessee 37902
Attention: David C. Wright, Esq.
Telecopy No. (423) 549-7704
Unless otherwise specified, notices shall be deemed given as follows:
(i) if delivered personally, when delivered, (ii) if delivered by telecopy,
when transmitted and receipt confirmed, (iii) if delivered by nationally
recognized overnight courier delivery service, on the day following the day
such material is sent, or (iv) if delivered by certified mail, on the third day
after the same is deposited with the United States Postal Service as provided
above.
SECTION 7.06. NON-WAIVER. The failure of the Beneficiary to insist
upon strict performance of any term hereof shall not be deemed to be a waiver
of any term of this Deed of Trust. The Borrower shall not be relieved of the
Borrower's obligations hereunder by reason of (a) failure of the Beneficiary to
comply with any request of the Borrower to take any action to foreclose this
Deed of Trust or otherwise enforce any of the provisions hereof or the other
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Loan Documents, (b) the release, regardless of consideration, of the whole or
any part of the Mortgaged Property, or of any person liable for the Secured
Obligations or portion thereof, or (c) any agreement or stipulation by the
Beneficiary extending the time of payment or otherwise modifying or
supplementing the terms of this Deed of Trust or the other Loan Documents.
SECTION 8. SECURITY AGREEMENT RECORDATION.
SECTION 8.01. SECURITY AGREEMENT.
(a) This Deed of Trust is both a real property Deed of Trust and a
"security agreement" within the meaning of the Uniform Commercial Code. The
Mortgaged Property includes both real and personal property and all other
rights and interests, whether tangible or intangible in nature, of the Borrower
in the Mortgaged Property. The Borrower, by executing and delivering this Deed
of Trust, has granted to the Beneficiary, as security for the Secured
Obligations, a security interest in the Mortgaged Property to the full extent
that the Mortgaged Property may be subject to the Uniform Commercial Code of
the State in which the Mortgaged Property is located (said portion of the
Mortgaged Property so subject to the Uniform Commercial Code being called in
this Section 8.01 the "UCC Collateral"). If an Event of Default shall occur,
the Beneficiary, in addition to any other rights and remedies which it may
have, shall have and may exercise immediately and without demand, any and all
rights and remedies granted to a secured party upon default under the Uniform
Commercial Code, including, without limiting the generality of the foregoing,
the right to take possession of the UCC Collateral or any part thereof, and to
take such other measures as the Beneficiary may deem necessary for the care,
protection and preservation of the UCC Collateral. Upon request or demand of
the Beneficiary, the Borrower shall at its expense assemble the UCC Collateral
and make it available to the Beneficiary at a convenient place acceptable to
the Beneficiary. The Borrower shall pay to the Beneficiary on demand any and
all expenses, including legal expenses and attorneys' fees and disbursements,
incurred or paid by the Beneficiary in protecting its interest in the UCC
Collateral and in enforcing its rights hereunder with respect to the UCC
Collateral. Any notice of sale, disposition or other intended action by the
Beneficiary with respect to the UCC Collateral sent to the Borrower in
accordance with the provisions hereof at least ten (10) days prior to such
action, shall constitute reasonable notice to the Borrower. The proceeds of
any disposition of the UCC Collateral, or any part thereof, may be applied by
the Beneficiary to the payment of the Secured Obligations in such priority and
proportions as the Beneficiary in its sole and absolute discretion shall deem
proper.
(b) Except as provided for in the Lease, that portion of the
Mortgaged Property consisting of personal property and equipment shall be owned
by the Borrower and shall not be the subject matter of any lease or other
transaction whereby the ownership or any beneficial interest in any of such
property is held by any person or entity other than the Borrower nor shall the
Borrower create or suffer to be created any security interest covering any such
property as it may from time to time be replaced, other than the security
interest created herein and as set forth in the Permitted Liens.
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SECTION 8.02. RECORDING OF DEED OF TRUST, ETC. The Borrower
forthwith, upon the execution and delivery of this Deed of Trust, will cause
this Deed of Trust, and any security instrument creating a lien or security
interest or evidencing the lien hereof upon the Mortgaged Property (including
any assignment of leases and rents), to be filed, registered or recorded, and
thereafter from time to time, each such other instrument of further assurance
to be filed, registered or recorded, all in such manner and in such places as
may be required by any present or future law in order to publish notice of and
fully to protect the lien or security interest hereof upon, and the interest of
the Beneficiary in, the Mortgaged Property. The Borrower will pay (a) all
filing, registration and recording fees and taxes (including, without
limitation, mortgage recording taxes, intangible taxes and documentary stamps),
and all other expenses (including, without limitation, attorneys' fees and
disbursements), incident to or arising in connection with the Secured
Obligations and/or the preparation, execution, acknowledgment, enforcement,
delivery and/or recording of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property
(including, without limitation, any assignment of leases and rents) and any
instrument of further assurance (including, without limitation, any fees and
taxes due in connection with any future advances, re-advances or re-loans under
the Bonds), and (b) all federal, state, county and municipal, taxes, duties,
imposts, assessments and charges arising out of or in connection with the
Secured Obligations and/or the making, execution, enforcement, delivery and/or
recording of this Deed of Trust, any mortgage supplemental hereto, any security
instrument with respect to the Mortgaged Property (including any assignment of
leases and rents), and/or any instrument of further assurance (including,
without limitation, any such fees and taxes due in connection with any future
advances, re-advances or re-loans under the Bonds), except where prohibited by
law so to do. In default thereof, the Beneficiary may advance the same and the
amount so advanced shall be payable by the Borrower to the Beneficiary within
ten (10) days after demand therefor, together with interest thereon at the
Default Rate from the date of the advance thereof until such amount(s) are
repaid in full. The Borrower shall hold harmless and indemnify the
Beneficiary, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making, execution, delivery and/or
recording of this Deed of Trust, any mortgage supplemental hereto, any security
instrument with respect to the Mortgaged Property or any instrument of further
assurance.
SECTION 9. RIGHTS OF THE BENEFICIARY.
SECTION 9.01. FURTHER ACTS, ETC. The Borrower will, at the sole
cost of the Borrower, and without expense to the Beneficiary, do, execute,
acknowledge and deliver all and every such further acts, deeds, conveyances,
deeds of trust, assignments, notices of assignments, transfers and assurances
as the Servicer shall, from time to time, reasonably require, for the better
assuring, conveying, assigning, transferring, and confirming unto the
Beneficiary the property and rights hereby granted, bargained, sold, and
conveyed or intended now or hereafter so to be, or which the Borrower may be or
may hereafter become bound to grant, convey, bargain or sell or assign to the
Beneficiary, or for carrying out the intention or facilitating the performance
of the terms of this Deed of Trust or for filing, registering or recording this
Deed of Trust and, on demand, will execute and deliver within five (5) business
days after request of the Servicer,
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and if the Borrower fails to so deliver, hereby authorizes the Servicer
thereafter to execute in the name of the Borrower or without the signature of
the Borrower to the extent the Servicer may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments, to
evidence more effectively the lien hereof upon the Mortgaged Property. The
Borrower grants to the Servicer an irrevocable power of attorney coupled with
an interest for the purpose of exercising and perfecting any and all rights and
remedies available to the Beneficiary at law and in equity, including, without
limitation, such rights and remedies available to the Beneficiary pursuant to
this Section 9.01.
SECTION 9.02. RECOVERY OF SUMS REQUIRED TO BE PAID. The
Beneficiary shall have the right from time to time to take action to recover
any sum or sums which constitute a part of the Secured Obligations as the same
become due, without regard to whether or not the balance of the Secured
Obligations shall be due, and without prejudice to the right of the Beneficiary
thereafter to bring an action of foreclosure, or any other action, for a
default or defaults by the Borrower existing at the time such earlier action
was commenced.
SECTION 9.03. COSTS OF DEFENDING AND UPHOLDING THE LIEN. In
addition to, and not in limitation of, Sections 9.04 and 11.03, if any action
or proceeding is commenced to which action or proceeding the Beneficiary is
made a party or in which it becomes necessary to defend or uphold the lien of
this Deed of Trust or the Beneficiary's rights under any assignment of leases
and rents, the Borrower shall, on demand, reimburse the Beneficiary for all
expenses (including, without limitation, reasonable attorneys' fees and
reasonable appellate attorneys' fees) incurred by the Beneficiary in any such
action or proceeding, together with interest at the Default Rate, and all such
amounts shall be secured hereby and be a part of the Secured Obligations. In
any action or proceeding to foreclose this Deed of Trust or to recover or
collect the Secured Obligations, the provisions of law relating to the
recovering of costs, disbursements and allowances shall prevail unaffected by
this covenant.
SECTION 9.04. ADDITIONAL ACTIONS. In addition to, and not in
limitation of, the provisions of Sections 9.03 and 11.03, the Beneficiary shall
have the right to appear in and defend any action or proceeding, in the name
and on behalf of the Borrower, which the Beneficiary in its discretion, feels
may adversely affect the Mortgaged Property or this Deed of Trust, and the
Beneficiary shall also have the right to institute any action or proceeding
which the Beneficiary, in its discretion, feels should be brought to protect
its interest in the Mortgaged Property or its rights hereunder or the
Beneficiary's rights under any assignment of leases and rents. All costs and
expenses incurred by the Beneficiary in connection with such actions or
proceedings, including, without limitation, reasonable attorneys' fees, and
appellate attorneys' fees, together with interest at the Default Rate, shall be
paid by the Borrower, on demand, and shall be secured hereby and shall be a
part of the Secured Obligations.
SECTION 9.05. ADDITIONAL SECURITY. Without notice to or consent of
the Borrower and without impairment of the lien and rights created by this Deed
of Trust, the Beneficiary may accept (but the Borrower shall not be obligated
to furnish except as otherwise provided in the Loan Documents) from the
Borrower or from any other person or persons, additional security
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for the Secured Obligations. Neither the giving of this Deed of Trust nor the
acceptance of any such additional security shall prevent the Beneficiary from
resorting, first, to such additional security, and, second, to the security
created by this Deed of Trust and the other Loan Documents without affecting
the Beneficiary's lien and rights under this Deed of Trust.
SECTION 10. APPLICABLE LAWS.
SECTION 10.01. USURY LAWS. This Deed of Trust and the other Loan
Documents are subject to the express condition that at no time shall the
Borrower be obligated or required to pay interest (inclusive of fees and
charges which are or could be in the nature of interest) on the Secured
Obligations at a rate which could subject the Beneficiary to either civil or
criminal liability as a result of being in excess of the maximum interest rate
which the Borrower is permitted by law to contract or agree to pay. If by the
terms of this Deed of Trust or the other Loan Documents, the Borrower is at any
time required or obligated to pay interest (inclusive of any such fees and
charges) on the Secured Obligations at a rate in excess of such maximum rate,
the rate of interest (inclusive of any such fees and charges) on the Secured
Obligations shall be deemed to be immediately reduced to such maximum rate and
the interest (inclusive of any such fees and charges) payable shall be computed
at such maximum rate and all prior interest payments (inclusive of any such
fees and charges) in excess of such maximum rate shall be applied and shall be
deemed to have been payments in reduction of the principal balance of the
Secured Obligations and the principal balance of the Secured Obligations shall
be reduced by such amount in such manner and order of priority as the
Beneficiary shall elect in its sole and absolute discretion.
SECTION 10.02. GOVERNING LAW; JURISDICTION; WAIVER OF TRIAL BY JURY.
THIS DEED OF TRUST SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED WITHOUT REGARD TO
CONFLICT OF LAW PROVISIONS THEREOF. EACH BORROWER AND EACH ENDORSER HEREBY
SUBMITS TO PERSONAL JURISDICTION IN SAID STATE AND IN THE STATE OF NEW YORK AND
THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN SAID STATE AND IN
THE STATE OF NEW YORK (AND ANY APPELLATE COURTS TAKING APPEALS THEREFROM) FOR
THE ENFORCEMENT OF SUCH BORROWER'S OBLIGATIONS HEREUNDER AND WAIVES ANY AND ALL
PERSONAL RIGHTS UNDER THE LAW OF ANY OTHER STATE TO OBJECT TO JURISDICTION
WITHIN SUCH STATE FOR THE PURPOSES OF SUCH ACTION, SUIT, PROCEEDING OR
LITIGATION TO ENFORCE SUCH OBLIGATIONS OF SUCH BORROWER OR ENDORSER. EACH
BORROWER AND EACH ENDORSER HEREBY WAIVES AND AGREES NOT TO ASSERT, AS A DEFENSE
IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS DEED OF
TRUST (A) THAT IT IS NOT SUBJECT TO SUCH JURISDICTION OR THAT SUCH ACTION, SUIT
OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN THOSE COURTS OR THAT
THIS DEED OF TRUST 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
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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, THE BORROWER AND ENDORSER AGREE THAT SERVICE OF PROCESS MAY BE MADE,
AND PERSONAL JURISDICTION OVER SUCH BORROWER OR ENDORSER OBTAINED, BY SERVICE
OF A COPY OF THE SUMMONS, COMPLAINT AND OTHER PLEADINGS REQUIRED TO COMMENCE
SUCH LITIGATION BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED UPON SUCH BORROWER
OR ENDORSER AT EQI FINANCING PARTNERSHIP I, L.P., 4735 SPOTTSWOOD, SUITE 102,
MEMPHIS, SHELBY COUNTY, TENNESSEE 38117, ATTENTION: HOWARD A. SILVER.
THE BORROWER HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING RELATED TO THE ENFORCEMENT OF THIS DEED OF TRUST.
SECTION 11. MISCELLANEOUS.
SECTION 11.01. EXCULPATION. Notwithstanding anything herein or in
any other Loan Document to the contrary, except as otherwise set forth in this
Section 11.01 to the contrary, the Beneficiary shall not enforce the liability
and obligation of the Borrower to perform and observe the obligations contained
in this Deed of Trust, the Bonds or any of the other Loan Documents executed
and delivered by the Borrower by any action or proceeding wherein a money
judgment shall be sought against the Borrower or its partners. The provisions
of this Section 11.01 shall not, however, (a) impair the validity of the
Indebtedness evidenced by the Bonds or in any way affect or impair the Liens of
the Mortgages or any of the other Loan Documents or the right of the
Beneficiary to foreclose the Mortgages following an Event of Default; (b)
impair the right of the Beneficiary to name the Borrower as a party defendant
in any action or suit for judicial foreclosure and sale under any of the
Mortgages; (c) affect the validity or enforceability of the Bonds or the other
Loan Documents; (d) impair the right of the Beneficiary to obtain the
appointment of a receiver; (e) impair the right of the Beneficiary to bring
suit for actual damages, losses and costs resulting from fraud or intentional
misrepresentation by the Borrower in connection with this Deed of Trust, the
Bonds or the other Loan Documents; (f) impair the right of the Beneficiary to
bring suit with respect to the Borrower's misappropriation of Rents collected
more than one month in advance; (g) impair the right of the Beneficiary to
obtain Insurance Proceeds or Condemnation Proceeds due to the Beneficiary
pursuant to the Mortgages; (h) impair the right of the Beneficiary to enforce
Section 5.17 (the environmental covenants) of this Deed of Trust even after
repayment in full of the Indebtedness; (i) prevent or in any way hinder the
Beneficiary from exercising, or constitute a defense, or counterclaim, or other
basis for relief in respect of the exercise of, any other remedy against any or
all of the collateral securing the Bonds as provided in the Loan Documents; or
(j) impair the right of the Beneficiary to bring suit with respect to any
misapplication of any funds. Notwithstanding the foregoing, in the event a
Mortgaged Property is released from the lien created by the Mortgages, the
Borrower shall be released in all respects from any further liability with
respect to the Bonds other than any further liability for breaches of Section
5.17.
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SECTION 11.02. DUPLICATE ORIGINALS. This Deed of Trust may be
executed in any number of duplicate originals and each such duplicate original
shall be deemed to constitute but one and the same instrument.
SECTION 11.03. INDEMNITY AND THE BENEFICIARY'S COSTS. The Borrower
agrees to pay all costs, including, without limitation, reasonable attorneys'
fees and expenses, incurred by the Beneficiary in enforcing the terms hereof or
of any assignment of leases and rents whether or not suit is filed and waives
to the full extent permitted by law all right to plead any statute of
limitations as a defense to any action under this Deed of Trust or any
assignment of leases and rents. The Borrower agrees to indemnify and hold the
Beneficiary, its directors, officers, employees, agents and "control" persons
(within the meaning of the Securities Act of 1933, as amended) harmless from
any and all liability, loss, damage or expense (including, without limitation,
attorneys' fees and disbursements) that it may or might incur under this Deed
of Trust or any assignment of leases and rents or in connection with the
enforcement of any of the Beneficiary's rights or remedies under this Deed of
Trust or any assignment of leases and rents, any action taken by the
Beneficiary under this Deed of Trust or any assignment of leases and rents, or
by reason or in defense of any and all claims and demands whatsoever that may
be asserted against the Beneficiary arising out of the Mortgaged Property
(except to the extent that such liability, loss, damage or expense is the
result of the gross negligence or the intentional misconduct of the
Beneficiary, the Indenture Trustee or the Servicer) and should the Beneficiary
incur any such liability, loss, damage or expense, the amount thereof with
interest thereon at the Default Rate shall be payable by the Borrower
immediately without demand, shall be secured by this Deed of Trust, and shall
be a part of the Secured Obligations.
The Borrower agrees to pay or reimburse the Beneficiary for paying:
(a) all reasonable costs and expenses of the Beneficiary and the Servicer
(including reasonable counsel fees and expenses) in connection with any Default
and any enforcement or collection proceedings resulting therefrom including in
connection with any bankruptcy, insolvency, liquidation, reorganization,
moratorium or other similar proceedings involving the Borrower; (b) all
transfer, stamp, documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect of this Deed of
Trust, the other Loan Documents or any other document referred to herein or
therein and all costs, expenses, taxes, assessments and other charges incurred
in connection with any filing, registration, recording or perfection of any
security interest contemplated by this Deed of Trust the other Loan Documents
or any document referred to therein; and (c) all taxes and assessments,
recording fees, registration taxes, title insurance premiums, appraisal fees,
costs of surveys, fees of third-party consultants and all other fees and
expenses reasonably incurred by the Beneficiary and the Servicer in connection
with any Mortgaged Properties (including all Servicing Fees).
The Borrower hereby agrees to indemnify the Beneficiary and the
Servicer and their respective directors, officers, employees, agents and
"control" persons (including the general partner of the Servicer and such
general partner's directors, officers, employees and agents) from, and hold
each of them harmless against, any and all losses, liabilities, claims, damages
or expenses incurred by any of them arising out of or by reason of any claim of
any Person
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relating to or arising out of any Loan Document or resulting from the ownership
or financing of any Mortgaged Property or any investigation or litigation or
other proceedings (including any threatened investigation or litigation or
other proceedings) relating to any actual or proposed use by the Borrower of
the proceeds of the Bonds, including the reasonable fees and disbursements of
counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims, damages
or expenses incurred by reason of the gross negligence or willful misconduct of
the Beneficiary or any other Person to be indemnified).
SECTION 11.04. INCORPORATION BY REFERENCE. All of the covenants,
conditions and agreements contained in all and any of the Loan Documents now or
hereafter executed by the Borrower and/or others and by or in favor of the
Beneficiary are hereby made a part of this Deed of Trust to the same extent and
with the same force as if fully set forth herein.
SECTION 11.05. AMENDMENTS.
(a) This Deed of Trust, and any provisions hereof, may not be
modified, amended, waived, extended, changed, discharged or terminated orally
or by any act or failure to act on the part of the Borrower or the Beneficiary,
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.
(b) Moreover, this Deed of Trust may not be modified, amended,
waived, extended, changed, discharged or terminated unless (i) the Beneficiary
has obtained the written consent of Bondholders who hold at least 66 2/3% of
the principal balance of the Bonds or (ii) the amendment is designed (A) to
correct or clarify the description of any property subject to the lien of the
Deed of Trust, (B) to pledge additional property to the Beneficiary, (C) to add
other covenants and agreements thereafter to be observed by the Borrower or to
surrender any right or power reserved to or conferred on the Borrower by the
Deed of Trust or other Loan Documents, (D) to cure any ambiguity, or to cure,
correct or otherwise supplement any defective or inconsistent provision
contained herein or in any other Loan Document (other than the Indenture),
provided that such change does not adversely affect the interests of any
Bondholder in any material respect, which shall be deemed to be the case upon
receipt of written confirmation from the Rating Agency that such change will
not adversely affect the then current ratings on the Bonds, (E) to evidence any
succession and the assumption by any such successor of the respective covenants
herein, or (F) in connection with any amendment of the Indenture or Servicing
Agreement that is approved as provided therein. No amendment may be made that
would impair the Servicer's, the Trustee's or the Beneficiary's rights
hereunder without the consent of such party.
SECTION 11.06. HEADINGS, ETC. The headings and captions of various
paragraphs of this Deed of Trust are for convenience of reference only and are
not to be construed as defining or limiting, in any way, the scope or intent of
the provisions hereof.
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<PAGE> 54
SECTION 11.07. ADDRESSES OF MORTGAGED PROPERTIES. The street
addresses of the Mortgaged Properties are as set forth on Schedule B hereto.
SECTION 11.08. WIRE TRANSFER. All payments of principal and interest
and other amounts due under this Deed of Trust shall be paid to the Beneficiary
by wire transfer of immediately available funds to such bank or place, or in
such manner, as the Beneficiary may from time to time designate.
SECTION 11.09. SEVERABILITY. In the event any one or more of the
provisions contained in this Deed of Trust shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision of this Deed of Trust,
but this Deed of Trust shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein or therein. The
invalidity of any provision of this Deed of Trust in any one jurisdiction shall
not affect or impair in any manner the validity of such provision in any other
jurisdiction.
SECTION 11.10. COVENANTS TO RUN WITH THE LAND. All of the grants,
covenants, terms, provisions and conditions in this Deed of Trust shall run
with the Mortgaged Property and shall apply to, and bind the successors and
assigns of the Borrower. Without limiting the generality of the foregoing, the
Beneficiary may, at any time and from time to time without the consent of the
Borrower, sell, assign, syndicate or otherwise transfer and/or dispose of all
or any portion of its rights and remedies under this Deed of Trust and any
other security instrument or document affecting the Mortgaged Property
(including, without limitation, any assignment of leases and rents) to any
other person or entity, either separately or together with other property of
the Beneficiary for such purposes and on such terms as the Beneficiary shall
elect, and such other person or entity shall thereupon become vested with all
of the rights and obligations in respect thereof granted to the Beneficiary
herein, therein or otherwise. Each representation and agreement made by the
Borrower in this Deed of Trust and any other security instrument or document
affecting the Mortgaged Property (including, without limitation, any assignment
of leases and rents) shall be deemed to run to the Beneficiary and all of its
successors and assigns. None of the rights or obligations of the Borrower
hereunder may be assigned or otherwise transferred without the prior written
consent of the Beneficiary.
SECTION 11.11. TRUSTEE'S DUTIES. Trustee shall not be liable for any
error of judgment or act done by Trustee, or be otherwise responsible or
accountable under any circumstances whatsoever, except if the result of
Trustee's gross negligence or willful misconduct. Trustee shall not be
personally liable in case of entry by him or anyone acting by virtue of the
powers herein granted him upon the Mortgaged Property for debts contracted or
liability or damages or damages incurred in the management or operation of the
Mortgaged Property. Trustee shall have the right to rely on any instrument,
document or signature authorizing or supporting any action taken or proposed to
be taken by him hereunder or believed by him to be genuine. Trustee shall be
entitled to reimbursement for actual expenses incurred by him in the
performance of his duties hereunder and to reasonable compensation for such of
his services hereunder as shall be rendered. The Borrower will, from time to
time, reimburse Trustee for
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<PAGE> 55
and save and hold him harmless from and against any and all loss, cost,
liability, damage and expense whatsoever incurred by him in the performance of
his duties. All monies received by Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were
received, but need not be segregated in any manner from any other monies
(except to the extent required by law) and Trustee shall be under no liability
for interest on any monies received by him hereunder. Trustee may resign by
giving of notice of such resignation in writing to the Beneficiary. If Trustee
shall die, resign or become disqualified from acting in the execution of this
trust or shall fail or refuse to exercise the same when requested by the
Beneficiary or if for any or no reason and without cause the Beneficiary shall
prefer to appoint a substitute trustee to act instead of the original Trustee
named herein, or any prior successor or substitute trustee, the Beneficiary
shall, without any formality or notice to the Borrower or any other person,
have full power to appoint a substitute trustee and, if the Beneficiary so
elects, several substitute trustees in succession who shall succeed to all the
estate, rights, powers and duties of the aforenamed Trustee. Any new Trustee
appointed pursuant to any of the provisions hereof shall, without any further
act, deed or conveyance, become vested with all the estates, properties,
rights, powers and trusts of its or his predecessor in the rights hereunder
with like effect as if originally named as Trustee herein; but, nevertheless,
upon the written request of the Beneficiary or his successor trustee, Trustee
ceasing to act shall execute and deliver an instrument transferring to such
successor trustee, upon the trust herein expressed, all the estates,
properties, rights, powers and trusts of Trustee so ceasing to act, and shall
duly assign, transfer and deliver any of the property and monies held by
Trustee to the successor trustee so appointed in its or his place. Trustee may
authorize one or more parties to act on his behalf to perform the ministerial
functions required of him hereunder, including without limitation, the
transmittal and posting of any notices.
SECTION 11.12. BUSINESS DAYS. In the event any time period or any
date provided in this Deed of Trust ends or falls on a day other than a
Business Day, then such time period shall be deemed to end and such date shall
be deemed to fall on the next succeeding Business Day, and performance herein
may be made on such Business Day, with the same force and effect as if made on
such other day.
SECTION 11.13. RELATIONSHIP. The relationship of the Beneficiary to
the Borrower hereunder is strictly and solely that of the Borrower and the
Beneficiary and nothing contained in the Bonds, this Deed of Trust or any other
Loan Document is intended to create, or shall in any event or under any
circumstance be construed as creating, a partnership, joint venture,
tenancy-in-common, joint tenancy or other relationship of any nature whatsoever
between the Beneficiary and the Borrower other than as mortgagor and the
Beneficiary.
SECTION 11.14. NO MERGER. The rights and estate created by this Deed
of Trust shall not, under any circumstances, be held to have merged into any
other estate or interest now owned or hereafter acquired by the Beneficiary
unless the Beneficiary shall have consented to such merger in writing.
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<PAGE> 56
IN WITNESS WHEREOF, the Borrower has duly executed this Deed of Trust
as of the day and year first above written.
EQI FINANCING PARTNERSHIP I, L.P.,
a Tennessee limited partnership
By: EQI FINANCING CORPORATION,
a Tennessee corporation, its duly
authorized general partner
Signed and acknowledged in
the presence of:
By:
----------------------------
Name: Phillip H. McNeill
- ------------------------------ Title: President
Name:
[SEAL]
Post Office Address of Individual
Signatory:
---------------------------------
---------------------------------
---------------------------------
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<PAGE> 57
STATE OF )
----------------- ) ss.:
COUNTY OF )
---------------
On this ______ day of ___________________, before me
________________________, a Notary Public in and for said County and State,
personally appeared ______________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in
his capacity, and that by his signature on the instrument he, or the entity
upon behalf of which he acted, executed the instrument.
-------------------------------------
Notary Public
My Commission expires:
------------------
52
<PAGE> 58
LIST OF SCHEDULE AND EXHIBITS
Schedule A Description of Premises
Schedule B Street Address of Mortgaged Properties
Annex I Local Law Provisions
53
<PAGE> 59
SCHEDULE A
DESCRIPTION OF PREMISES
[LEGAL DESCRIPTION]
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<PAGE> 60
SCHEDULE B
STREET ADDRESSES OF THE MORTGAGED PROPERTIES
1. Hampton Inn, 10 Bee Street, Meriden, Connecticut
2. Hampton Inn, 129 Plains Road, Milford, Connecticut
3. Hampton Inn, 6135 Youngerman Circle, Jacksonville, Florida
4. Hampton Inn, 5000 North Tamiami Trail, Sarasota, Florida
5. Hampton Inn, 5585 Whitesville Road, Columbus, Georgia
6. Hampton Inn, 5550 Grand Avenue, Gurnee, Illinois
7. Hampton Inn, 1087 Diehl Road, Naperville, Illinois
8. Hampton Inn, 6817 East 82nd Street, Indianapolis, Indiana
9. Hampton Inn, 1902 Embassy Square Boulevard, Louisville, Kentucky
10. Hampton Inn, 925 Victors Way, Ann Arbor, Michigan
11. Hampton Inn, 1922 Cedar Creek Road, Fayetteville, North Carolina
12. Hampton Inn, 1859 Remount Road, Gastonia, North Carolina
13. Hampton Inn, 29690 Detroit Road, Cleveland (Westlake), Ohio
14. Hampton Inn, 148 International Avenue, Knoxville (Alcoa), Tennessee
15. Hampton Inn, 7619 IH-35N, Austin, Texas
16. Hampton Inn, 320 Texas Avenue South, College Station, Texas
17. Hampton Inn, 12670 East NW Highway, Dallas (Garland), Texas
18. Hampton Inn, 2700 Cherry Lane, Fort Worth, Texas
19. Holiday Inn, 2008 Hawthorne Road, Winston-Salem, North Carolina
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20. Holiday Inn, 250 Johnny Dodds Boulevard, Charleston (Mt.
Pleasant), South Carolina
21. Residence Inn, 6990 Dodge Street, Omaha, Nebraska
22. Residence Inn, 501 D'Onofrio Drive, Madison, Wisconsin
23. Comfort Inn, 1515 North First Street, Jacksonville Beach,
Florida
56
<PAGE> 62
ANNEX I
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CH AS
T:\EQUITY\LoanDocs\D-Trust.5
04/30/97
58
<PAGE> 1
EXHIBIT 10.3
SECOND AMENDMENT TO MASTER AGREEMENT
THIS SECOND AMENDMENT TO MASTER AGREEMENT ("Second Amendment") is made
as of the 6th day of February, 1997, among Interstate Hotels Corporation, a
Pennsylvania corporation ("IHC"), Crossroads/Memphis Partnership, L.P., a
Delaware limited partnership (the "Partnership"), Crossroads/Memphis Financing
Company, L.L.C., a Delaware limited liability company (the "Additional
Lessee"), Equity Inns, Inc., a Tennessee corporation ("ENNS"), Equity Inns
Partnership, L.P., a Tennessee limited partnership ("EIP"), EQI Financing
Partnership I, L.P., a Tennessee limited partnership (the "Additional Lessor")
and Crossroads Future Company, L.L.C. (the "New Lessee").
RECITALS
A. EIP and the Partnership are parties to that certain
Consolidated Lease Amendment dated as of November 15, 1996 (the "Existing
Lease"), which Existing Lease represents (as of the date hereof) forty-eight
(48) separate leases (the "Existing Leases").
B. EIP currently owns, directly or indirectly, forty-eight (48)
hotel properties described in Exhibit A to this Second Amendment that are
leased under the Existing Lease to the Partnership.
C. EIP is transferring to the Additional Lessor as of the date
hereof its fee interest in 23 of the hotel properties (the "Transfer Hotels")
identified on Exhibit A to this Second Amendment as Transfer Hotels, and in
connection with such transfer EIP desires to assign to the Additional Lessor
all of its rights under the 23 leases represented by the Existing Lease
relating to all of the Transfer Hotels (the "23 Existing Leases").
<PAGE> 2
D. In connection with the transfer of the Transfer Hotels to the
Additional Lessor, at the request of EIP and the Additional Lessor, the
Partnership has agreed to assign to the Additional Lessee all of its rights
under the 23 Existing Leases.
E. The Additional Lessor and the Additional Lessee desire to
amend certain provisions of the 23 Existing Leases.
F. EIP and the Partnership desire to amend certain provisions of
the Existing Lease relating to the 25 hotel properties (the "Remaining Hotels")
identified on Exhibit A as Remaining Hotels.
G. The parties hereto desire to amend the Master Agreement dated
as of November 4, 1996 (as amended by the First Amendment to Master Agreement
dated November 15, 1996, the "Original Master Agreement") among IHC, the
Partnership, ENNS, EIP, and New Lessee to make certain amendments and other
agreements with respect to the foregoing and the Original Master Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used but not defined
herein shall have the meanings assigned to them in the Original Master
Agreement.
2. ASSIGNMENT AND ASSUMPTION OF THE 23 EXISTING LEASES.
a. By EIP and the Additional Lessor:
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<PAGE> 3
(i) EIP hereby (A) assigns to the Additional
Lessor all of its right, title and interest in and to the 23
Existing Leases and (B) conveys, transfers and assigns to the
Additional Lessor all of its interest in and to any fixtures,
equipment and other personal property used in connection with
the Transfer Hotels.
(ii) The Additional Lessor hereby (A) accepts the
assignments, conveyances and transfers in paragraph (i) above
and (B) assumes all of the obligations of the "Lessor" under
the 23 Existing Leases accruing from and after the date
hereof.
(iii) EIP hereby agrees to hold the Additional
Lessor harmless from the obligations and liabilities of the
"Lessor" under the 23 Existing Leases arising from or relating
to events or circumstances occurring prior to the date hereof.
The Additional Lessor hereby agrees to hold EIP harmless from
the obligations and liabilities of the "Lessor" under the 23
Existing Leases arising from or relating to events or
circumstances occurring on or after the date hereof.
b. By the Partnership and the Additional Lessee:
(i) The Partnership hereby (A) assigns to the
Additional Lessee all of its right, title and interest in and
to the 23 Existing Leases and (B) conveys, transfers and
assigns to the Additional Lessee all of its interest in and to
any fixtures, equipment and other personal property used in
connection with the Transfer Hotels.
3
<PAGE> 4
(ii) The Additional Lessee hereby (A) accepts the
assignments, conveyances and transfers in paragraph (i) above
and (B) assumes all of the obligations of the "Lessee" under
the 23 Existing Leases accruing from and after the date
hereof.
(iii) The Partnership hereby agrees to hold the
Additional Lessee harmless from the obligations and
liabilities of the "Lessee" under the 23 Existing Leases
arising from or relating to events or circumstances occurring
prior to the date hereof. The Additional Lessee hereby agrees
to hold harmless the Partnership from the obligations and
liabilities of the "Lessee" under the 23 Existing Leases
arising from or relating to events or circumstances occurring
on or after the date hereof.
c. EIP agrees to look solely to the Partnership and the
IHC Guarantees with respect to the obligations of the "Lessee" under
the 23 Existing Leases accruing, or arising from or relating to events
or circumstances occurring, prior to the date hereof; and the
Additional Lessor agrees that it will have no rights or claims with
respect thereto. Except as provided in Section 2.e below, the
Additional Lessor agrees to look solely to the Additional Lessee and
the IHC Guarantees with respect to the obligations of the "Lessee"
under the 23 Existing Leases accruing, or arising from or relating to
events or circumstances occurring, from and after the date hereof; and
EIP agrees that it will have no rights or claims with respect thereto.
d. The Partnership agrees to look solely to EIP with
respect to the obligations of the "Lessor" under the 23 Existing
Leases accruing, or arising from or relating to
4
<PAGE> 5
events or circumstances occurring, prior to the date hereof; and the
Additional Lessee agrees that it will have no rights or claims with
respect thereto. Except as provided in Section 2.e below, the
Additional Lessee agrees to look solely to the Additional Lessor with
respect to the obligations of "Lessor" under the 23 Existing Leases
accruing, or arising from or relating to events or circumstances
occurring, from and after the date hereof; and the Partnership agrees
that it will have no rights or claims with respect thereto.
e. Notwithstanding Sections 2.c and 2.d above, (i) the
Additional Lessor may also look to the Partnership to the extent of
the Partnership's guaranty of the indemnification obligations of the
"Lessee" contained in the Successor Consolidated Lease Amendment
described in Section 3.a below and (ii) the Additional Lessee may also
look to EIP to the extent of EIP's guaranty of the indemnification
obligations of the "Lessor" contained in such Successor Consolidated
Lease Amendment.
3. MODIFICATION AND AMENDMENT OF THE EXISTING LEASE.
a. Contemporaneously with the execution of this
Agreement, the Additional Lessor and the Additional Lessee shall
execute the Successor Consolidated Lease Amendment pursuant to which
the 23 Existing Leases shall be restated and amended, effective as of
the date hereof.
b. Contemporaneously with the execution of this
Agreement, EIP and the Partnership shall execute the First Amendment
to Consolidated Lease Amendment pursuant to which the 25 leases
represented by the Existing Lease relating to the Remaining Hotels
shall be amended, effective as of the date hereof.
5
<PAGE> 6
4. AMENDMENTS TO THE ORIGINAL MASTER AGREEMENT. The following
amendments to the Original Master Agreement shall be effective as of the date
hereof:
a. Section 1.3(a) of the Original Master Agreement shall
be amended by inserting after each use of the words, "New Lessee" the
words ", Additional Lessee."
b. Section 1.3(b) of the Original Master Agreement shall
be deleted in its entirety and the following substituted therefor:
(b) For the purposes of this Agreement, the
following shall constitute the "REIT Requirements":
(i) The average of the adjusted tax
bases of EIP's or Additional Lessor's personal
property that is leased to the Partnership,
Additional Lessee, or New Lessee under each Lease at
the beginning and end of a calendar year cannot
exceed 15% of the average of the aggregate adjusted
tax bases of all of EIP's or Additional Lessor's
property that is leased to the Partnership,
Additional Lessee or New Lessee under such Lease at
the beginning and end of such calendar year.
(ii) None of the Partnership, Additional
Lessee or New Lessee can sublet the property that is
leased to it by EIP or Additional Lessor, or enter
into any similar arrangement, on any basis such that
the rental or other amounts paid by the sublessee
thereunder would be based, in whole or in part, on
either (x) the net income or profits derived by the
business activities of the
6
<PAGE> 7
sublessee or (y) any other formula such that any
portion of the rent paid by the Partnership,
Additional Lessee or New Lessee to EIP or Additional
Lessor would fail to qualify as "rents from real
property" within the meaning of Section 856(d) of the
Code.
(iii) None of the Partnership, Additional
Lessee or the New Lessee can sublease the property
leased to it by EIP or Additional Lessor to, or enter
into any similar arrangement with, any person in
which ENNS owns, directly or indirectly, a 10% or
more interest, within the meaning of Section
856(d)(2)(B) of the Code.
(iv) ENNS cannot own, directly or
indirectly, a 10% or more interest in IHC, the
Partnership, Additional Lessee or New Lessee, within
the meaning of Section 856(d)(2)(B) of the Code.
(v) No person can own, directly or
indirectly, capital stock of ENNS that exceeds the
"Limit" (as defined in ENNS's Charter, as amended and
restated).
c. Section 1.3(c) of the Original Master Agreement shall
be deleted in its entirety and the following substituted therefor:
(c) IHC, the Partnership, Additional Lessee and
New Lessee agree that during the period beginning on the
Closing and ending on the earlier to occur of (x) the date no
Lease remains in effect, and (y) ENNS ceases to be qualified
as a real estate investment trust under the Code (the
7
<PAGE> 8
"Notice Period"), to notify ENNS, and to use their reasonable
efforts to permit the REIT Requirements to be satisfied,
including but not limited to, providing ENNS with information
regarding the ownership of IHC, the Partnership, Additional
Lessee, New Lessee and their direct or indirect wholly owned
Subsidiaries, if and to the extent the satisfaction of the
REIT requirements is within the reasonable control of IHC, the
Partnership, Additional Lessee and New Lessee, all at the
expense of ENNS. Upon request by ENNS made during the Notice
Period and at the expense of ENNS, IHC, the Partnership,
Additional Lessee and New Lessee agree to cooperate with ENNS
and agree to take reasonable steps requested by ENNS necessary
to maintain the REIT Requirements. Notwithstanding the
foregoing, none of IHC, the Partnership, Additional Lessee, or
New Lessee shall be obligated to take any action which could
reasonably be expected to materially adversely affect IHC, the
Partnership, Additional Lessee or New Lessee. Notwithstanding
anything to the contrary contained in this Agreement, in no
event shall IHC, the Partnership, Additional Lessee or New
Lessee be liable to ENNS, EIP or Additional Lessor for any
consequential damages relating to, resulting from or arising
out of a breach or alleged breach of this Section 1.3.
d. Section 1.4 of the Original Master Agreement shall be
deleted in its entirety and the following substituted therefor:
1.4 Financial Reports
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<PAGE> 9
(a) During the period beginning on the
Closing and ending on the date no Lease remains in
effect, IHC, New Lessee, the Partnership and
Additional Lessee agree to provide to ENNS, EIP and
Additional Lessor the following financial reports and
information within the specified time periods at the
Partnership's, Additional Lessee's or New Lessee's
expense (so as to permit ENNS to file its required
1934 Act reports and file and have declared effective
its 1933 Act registration statements):
(i) Not more than 30 days following
the end of each of the first three calendar
quarters of each year, quarterly unaudited
financial statements, including balance
sheet, statement of operations, statement of
shareholders' equity, statement of cash flows
and related schedules for the Partnership,
Additional Lessee and New Lessee for the most
recently ended calendar quarter, calendar
year to date and comparable prior year
periods prepared in conformity with GAAP;
(ii) Not more than 60 days following
the end of each calendar year, audited annual
financial statements and schedules for the
Partnership, Additional Lessee and New Lessee
for the most recently ended calendar year
prepared
9
<PAGE> 10
in accordance with GAAP, audited by a
national accounting firm.
(iii) During the time periods set
forth in (i) and (ii) above, any historical
financial information necessary to re-state
historical financial information of the
Partnership, Additional Lessee or New Lessee
to conform to the presentation of each of the
Partnership's, Additional Lessee's or New
Lessee's audited and unaudited financial
statements at any future time; and
(iv) on a timely basis, at EIP's,
ENNS' or Additional Lessor's expense, any
other information with respect to the
Partnership, Additional Lessee or New Lessee
or the Leased Hotels necessary to permit ENNS
to file on a timely basis its audited annual
(calendar fiscal year) and unaudited
quarterly financial statements and schedules
for EIP and Additional Lessor (but not
separate financial statements for the Leased
Hotels) with the Securities and Exchange
Commission.
(b) If requested by ENNS, and at EIP's,
ENNS' or Additional Lessor's expense, IHC, New
Lessee, the Partnership, and Additional Lessee will
permit ENNS, EIP and Additional Lessor and their
independent public accountants, counsel, financial
advisors, underwriters,
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<PAGE> 11
underwriter's counsel, rating agencies and lenders to
continue to have access (during normal business hours
and upon three business days notice) to review (i)
the financial records of the Leased Hotels and
perform generally accepted auditing procedures with
respect to the Partnership, Additional Lessee, New
Lessee and the Leased Hotels and (ii) such other
records and documents with respect to each Leased
Hotel as ENNS, EIP or Additional Lessor may
reasonably request.
(c) The Partnership, Additional Lessee and
New Lessee shall use their reasonable best efforts to
cause the independent public accountants preparing
audits of the Partnership, Additional Lessee and New
Lessee to provide ENNS, Additional Lessor and the
Partnership with all consents of such accountants
required for ENNS', EIP's or Additional Lessor's
filings with the SEC under the 1933 Act and the 1934
Act or to have ENNS', EIP's or the Additional
Lessor's registration statements declared effective
by the SEC under the 1933 Act.
(d) IHC, the Partnership, Additional Lessee
and New Lessee shall continue to provide EIP, ENNS
and the Additional Lessor true and accurate daily
operating and financial reports in the form set forth
on Schedule 1.4 with respect to each Leased Hotel.
e. Section 1.8(a)(ii) of the Original Master Agreement
shall be deleted in its entirety and the following substituted
therefor:
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<PAGE> 12
(ii) in the event of a Default by the
Partnership, Additional Lessee or New Lessee
hereunder or under the Leases; or
f. Section 1.8(b) of the Original Master Agreement shall
be deleted in its entirety and the following substituted therefor:
(b) The purchase option and right of first
offer granted pursuant to Sections 1.6 and 1.7 hereof
may be terminated by the Partnership, Additional
Lessee or New Lessee in the event of a Default by
EIP, ENNS or Additional Lessor hereunder or under the
Leases.
g. Section 1.11 of the Original Master Agreement shall
be amended by deleting the clause "EIP or ENNS, on the one hand, or
IHC, the Partnership or New Lessee" and substituting therefor the
clause "EIP, ENNS or Additional Lessor, on the one hand, or IHC, the
Partnership, New Lessee or Additional Lessee".
h. Section 2.1 of the Original Master Agreement shall be
deleted in its entirety (except as otherwise provided below) and the
following substituted therefor:
2.1 Representations and Warranties of EIP, ENNS
and Additional Lessor. As used herein, the terms "to the
knowledge of" or similar phrase, shall mean actual knowledge
of an executive officer of ENNS or the general partner of EIP
or Additional Lessor based solely on a written notice or
notification to ENNS, EIP or Additional Lessor from a third
party and does not include any knowledge any such officer may
have obtained in any other capacity. EIP, ENNS and Additional
Lessor each hereby represents and warrants to the Partnership,
New Lessee, IHC and Additional Lessee as follows:
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<PAGE> 13
2.1.1 Organizational Matters. (a) Each of
EIP and Additional Lessor is a limited partnership
duly organized, validly existing and in good standing
under the laws of the State of Tennessee and has the
requisite partnership power and authority to own,
lease or otherwise hold the assets owned, leased or
otherwise held by it and to carry on its business as
presently conducted by it. Each of EIP and
Additional Lessee is duly qualified to do business as
a foreign limited partnership under the laws of the
jurisdictions where such qualification is necessary
or required to operate its assets and/or conduct its
business.
(b) [Unchanged from Original Master
Agreement]
(c) EQI Financing Corporation ("EQI
GP"), a wholly owned subsidiary of General Partner
and the general partner of the Additional Lessor, is
a corporation duly organized, validly existing and in
good standing under the laws of the State of
Tennessee and has the requisite corporate power to
own, lease or otherwise hold the assets owned, leased
or otherwise held by it and to carry on its business
as presently conducted by it. EQI GP is duly
qualified to do business as a foreign corporation
under the laws of the jurisdictions where such
qualification is necessary or required to operate its
assets and/or conduct its business.
2.1.2 Authorization and Effect of Agreement.
Each of ENNS, EIP and Additional Lessor has the
requisite corporate or partnership power and
authority to execute and deliver this Agreement, and
each of
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<PAGE> 14
EIP and Additional Lessor has the requisite
partnership power to execute and deliver the
Consolidated Lease Amendment, the First Amendment to
Consolidated Lease Amendment and the Successor
Consolidated Lease Amendment (collectively,
"Consolidated Leases") to which it is a party and
each Lease to which it is a party and to perform the
transactions contemplated hereby and thereby to be
performed by each of them. The execution and
delivery by EIP, Additional Lessor and ENNS of this
Agreement and the execution and delivery by each of
EIP and Additional Lessor of the Consolidated Leases
to which it is a party and the performance by EIP,
Additional Lessor and ENNS of the transactions
contemplated hereby and thereby to be performed by it
have been duly authorized by all necessary action on
the part of EIP, Additional Lessor and ENNS. This
Agreement has been duly executed and delivered by
EIP, Additional Lessor and ENNS, and the Consolidated
Leases have been duly executed and delivered by EIP
or Additional Lessor, as the case may be, and,
assuming the due execution and delivery of this
Agreement and the Consolidated Leases by the
Partnership, New Lessee, Additional Lessee and/or
IHC, as the case may be, constitute valid and binding
agreements of EIP, Additional Lessor and ENNS
enforceable in accordance with their respective
terms.
2.1.3 No Restrictions. The execution and
delivery of this Agreement by EIP, Additional Lessor
and ENNS and execution and
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<PAGE> 15
delivery of the Consolidated Leases by EIP or
Additional Lessor, as the case may be, and the
performance by EIP, Additional Lessor and ENNS of the
transactions contemplated hereby and thereby to be
performed by each of them will not violate any law,
rule, regulation, judgment, order or decree
applicable to EIP, Additional Lessor or ENNS or
conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse
of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any
obligation or to the loss of a material benefit
under, any provision of the partnership agreement of
EIP or Additional Lessor or the charter or bylaws of
ENNS or any material agreement, contract, lease, or
other instrument or obligation to which EIP,
Additional Lessor or ENNS is a party or by which its
assets are bound (subject to obtaining the consents
described on Schedule 2.1.3). Except as set forth on
Schedule 2.1.3, no material consent, approval, order
or authorization of, notice to or registration,
declaration or filing with, any Governmental
Authority or other entity, domestic or foreign or
other third party is required to be obtained or made
by or with respect to EIP, Additional Lessor or ENNS
in connection with the execution and delivery of this
Agreement or the Consolidated Leases by EIP or
Additional Lessor, as the case may be, or the
performance by EIP, Additional Lessor or ENNS of the
transactions contemplated hereby or thereby to be
performed by it.
15
<PAGE> 16
2.1.4 No Brokerage or Finder's Fees. None
of EIP, Additional Lessor or ENNS has incurred any
liability to any broker, finder or agent for any
brokerage fees, finder's fees or commissions with
respect to the transactions contemplated by this
Agreement.
2.1.5 Litigation; Decrees. To the knowledge
of EIP, Additional Lessor and ENNS, there are no
lawsuits, claims, administrative or other proceedings
pending or threatened which seek to enjoin or
otherwise affect the transactions contemplated by
this Agreement, or the Consolidated Leases or relate
to the conduct of the Current Hotels or against or
affecting EIP, Additional Lessor or ENNS or the
Current Hotels which, if determined adversely, would
have a material adverse effect on the Current Hotels.
None of EIP, Additional Lessor or ENNS is in default
under any judgment, order or decree of any
Governmental Authority applicable to the ownership of
the Current Hotels.
2.1.6 Existing Leases. Each Existing Lease
is a valid and binding obligation of EIP and
Additional Lessor and is in full force and effect.
EIP has performed all obligations required to be
performed by it under the Existing Leases and is not
(with or without the lapse of time or the giving of
notice, or both) in breach or default in any respect
thereunder. Each of EIP and Additional Lessor has
made available to IHC true, correct and complete
copies of each Existing Lease.
16
<PAGE> 17
i. Section 2.2 of the Original Master Agreement shall be
deleted in its entirety (except as otherwise provided below) and the
following shall be substituted therefor:
2.2 Representations and Warranties of IHC, New
Lessee, Partnership and Additional Lessee. IHC, New Lessee,
the Partnership and Additional Lessee hereby represent and
warrant to EIP, Additional Lessor and ENNS as follows:
2.2.1 Organization. (a) [Unchanged from Original
Master Agreement, except insert the following at the end of
Section 2.2.1(a):] Additional Lessee is a limited liability
company, duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has the requisite
company power and authority to own, lease or otherwise hold
its properties and assets and to carry on its business as
presently conducted and as proposed to be conducted under the
Successor Consolidated Lease Amendment.
(b) [Unchanged from Original Master Agreement except
insert the following at the end of Section 2.2.1(b):]
Partnership owns all of the outstanding equity interests of
the Additional Lessee.
2.2.2 Authorization and Effect of Agreement. IHC,
New Lessee, Additional Lessee and the Partnership have the
requisite corporate, company or partnership power, as
applicable, and authority to execute and deliver this
Agreement, each of the Partnership and Additional Lessee has
the requisite partnership or company power, as applicable, to
execute and deliver the Consolidated Leases to which it is a
party and New Lessee has the requisite
17
<PAGE> 18
company power to execute and deliver the Leases to which it is
a party and to perform the transactions contemplated hereby
and thereby to be performed by each of them. The execution
and delivery by IHC, New Lessee, Additional Lessee and the
Partnership of this Agreement and the execution and delivery
by the Partnership or Additional Lessee, as the case may be,
and of the Consolidated Leases, as the case may be, and the
performance by IHC, New Lessee, Additional Lessee and the
Partnership of the transactions contemplated hereby and
thereby to be performed by it have been duly authorized by all
necessary action on the part of IHC, New Lessee, Additional
Lessee and the Partnership. This Agreement has been duly
executed and delivered by IHC, New Lessee, Additional Lessee
and the Partnership and the Consolidated Leases have been duly
executed and delivered by the Partnership or Additional
Lessee, as the case may be, and, assuming the due execution
and delivery of this Agreement and the Consolidated Leases by
ENNS, EIP and/or Additional Lessor, as the case may be,
constitute valid and binding agreements of IHC, New Lessee,
Additional Lessee and the Partnership, enforceable in
accordance with their respective terms.
2.2.3 No Restrictions. The execution and delivery
of this Agreement and the Consolidated Leases by IHC, New
Lessee, Additional Lessee and the Partnership and the
performance by IHC, New Lessee, Additional Lessee and the
Partnership of the transactions contemplated hereby to be
performed by each of them will not violate any law, rule,
regulation, judgment, order or decree applicable to IHC, New
Lessee, Additional Lessee or Partnership or conflict with,
18
<PAGE> 19
or result in any violation of, or constitute a default (with
or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration
of any obligation or to the loss of a material benefit under,
any provision of the articles of incorporation or bylaws of
Company or IHC, the certificate of limited partnership and
partnership agreement of the Partnership or the certificate of
formation or the limited liability company agreement of the
Additional Lessee or any material agreement, contract, lease
or other instrument to which Company, IHC, New Lessee,
Additional Lessee or the Partnership is a party or by which
any of their assets are bound. Except as set forth on
Schedule 2.2.3, no material consent, approval, order or
authorization of, or registration, declaration or filing with,
any Governmental Authority or other entity domestic or foreign
or other third party is required to be obtained or made by or
with respect to IHC, New Lessee, Additional Lessee or the
Partnership in connection with the execution and delivery of
this Agreement or the Consolidated Leases by IHC, New Lessee,
Additional Lessee or the Partnership or the performance by
IHC, New Lessee, Additional Lessee or the Partnership of the
transactions contemplated hereby or thereby to be performed by
each of them.
2.2.4 No Brokerage or Finder's Fees. None of IHC,
the Partnership, Additional Lessee, or New Lessee has incurred
any liability to any broker, finder or agent for any brokerage
fees, finder's fees or commissions with respect to the
transactions contemplated by this Agreement.
19
<PAGE> 20
2.2.5 Leases. The execution and delivery of the
Consolidated Leases and the performance by the Partnership and
Additional Lessee of the transactions contemplated thereby to
be performed by the Partnership and Additional Lessee have
been duly authorized by all necessary action on the part of
the Partnership and Additional Lessee. Upon execution and
delivery of the Consolidated Leases by the Partnership or
Additional Lessee, as the case may be, and EIP or Additional
Lessor, as the case may be, the Consolidated Leases will
constitute a valid and binding obligation of the Partnership
or Additional Lessee, as the case may be, enforceable in
accordance with its terms.
2.2.6 IHC Guarantees. [Unchanged from Original
Master Agreement]
2.2.7 Real Property. IHC, the Partnership,
Additional Lessee and New Lessee have had access to such
deeds, title policies, environmental reports, structural or
other engineering reports and surveys with respect to the
Current Hotels as IHC, the Partnership, Additional Lessee or
New Lessee has deemed necessary to its review.
2.2.8 Litigation; Decrees. To the knowledge of IHC,
New Lessee, Additional Lessee or the Partnership, there are no
lawsuits, claims, administrative or other proceedings pending
or threatened which seek to enjoin or otherwise affect the
transactions contemplated by this Agreement, the Contribution
Agreement or the Consolidated Leases.
j. Section 5.2 of the Original Master Agreement shall be
deleted in its entirety and the following substituted therefor:
20
<PAGE> 21
5.2 Indemnification. (a) Subject to Section 5.1,
ENNS, EIP, and Additional Lessor will indemnify, defend and
hold harmless the Partnership, Additional Lessee, New Lessee,
IHC and its respective directors, officers, partners,
employees, agents and representatives from and against any and
all Indemnifiable Losses relating to, resulting from or
arising out of:
(i) Any breach by EIP, Additional Lessor, or
ENNS of any of the representations or warranties of
EIP, Additional Lessor, or ENNS contained in this
Agreement or in any Sales Agreement;
(ii) Any breach by EIP, Additional Lessee,
or ENNS of any covenant of EIP, Additional Lessor or
ENNS contained in this Agreement;
(iii) Any Third Party Claim relating to or
arising out of the ownership (but not the operation
or management) of the Current Hotels on or prior to
the Closing Date;
(iv) The 1934 Act reports or the 1933 Act
registration statements of ENNS, EIP, or the
Additional Lessor, other than Indemnifiable Losses
arising out of inaccurate information provided to
EIP, Additional Lessor or ENNS by the Partnership,
Additional Lessee, or New Lessee; and/or
(v) Any and all violations of the ADA other
than those caused by the Partnership's, Additional
Lessee's, New Lessee's or IHC's negligence or willful
misconduct.
Notwithstanding the foregoing provisions of this Section
5.2(a) to the contrary, Additional Lessor's obligations to indemnify,
defend or hold harmless shall be limited
21
<PAGE> 22
to those instances in which Additional Lessor itself was in breach or
otherwise at fault as described above.
(b) Subject to Section 5.1, the Partnership,
Additional Lessee, New Lessee and IHC will indemnify, defend
and hold harmless EIP, Additional Lessor, ENNS and their
respective Affiliates, directors, officers, partners,
employees, agents and representatives from and against any and
all Indemnifiable Losses relating to, resulting from or
arising out of any of the following:
(i) Any breach by the Partnership,
Additional Lessee, New Lessee or IHC of any of the
representations or warranties of Partnership,
Additional Lessee, New Lessee or IHC contained in
this Agreement or in any Sales Agreement; and/or
(ii) Any breach by Partnership, Additional
Lessee, New Lessee or IHC of any covenant of
Partnership, Additional Lessee, New Lessee or IHC
contained in this Agreement.
Notwithstanding the foregoing provisions of this
Section 5.2(b) to the contrary, Additional Lessee's
obligations to indemnify, defend or hold harmless shall be
limited to those instances in which Additional Lessee itself
was in breach or otherwise at fault as described above.
k. Section 6.1 of the Original Master Agreement shall be
amended such that notices made to the Additional Lessee shall be made
in the same manner in which notices are required to be made to the
Partnership and notices made to the Additional Lessor shall be made in
the same manner in which notices are required to be made to EIP.
22
<PAGE> 23
l. Section 6.2 of the Original Master Agreement shall be
deleted in its entirety and the following substituted therefor:
6.2 Successors and Assigns. This Agreement will
be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. This
Agreement may not be assigned by IHC, New Lessee, the
Partnership or Additional Lessee and the Leases may not be
assigned by New Lessee, the Partnership or Additional Lessee
without the prior written consent of EIP, Additional Lessor
and ENNS (except to an entity under the control of (i) IHC or
Company, (ii) the then senior management of IHC, or (iii)
Crossroads Hospitality Company, L.L.C., provided that in
connection with any such transaction, any transferee,
assignee, successor in interest to IHC, New Lessee, the
Partnership or Additional Lessee agrees in writing with EIP,
Additional Lessor and ENNS to assume all of IHC's, New
Lessee's, the Partnership's, and Additional Lessee's
obligations hereunder). During the term of the Leases, IHC,
New Lessee, the Partnership and Additional Lessee agree that
there will be no change in control of New Lessee, Additional
Lessee or the Partnership (except to an entity under the
control of (i) IHC or Company, (ii) the then senior management
of IHC, or (iii) Crossroads Hospitality Company L.L.C.) and
any such change in control shall be deemed an assignment of
the Leases and this Agreement and which shall require the
prior written consent of EIP, Additional Lessor and ENNS. In
no event shall a change in control, merger, consolidation
23
<PAGE> 24
or sale of all or substantially all of the assets of IHC or
Company or any successor be deemed to be an assignment
hereunder or under the Leases.
m. Section 6.3 of the Original Master Agreement shall be
deleted in its entirety and the following substituted therefor:
6.3 Waiver. IHC, New Lessee, the Partnership and
Additional Lessee, on the one hand, and ENNS, EIP and
Additional Lessor on the other hand, by written notice to the
other may (a) extend the time for performance of any of the
obligations or other actions of the other under this
Agreement, (b) waive any inaccuracies in the representations
or warranties of the other contained in this Agreement, (c)
waive compliance with any of the conditions or covenants of
the other contained in this Agreement, or (d) waive or modify
performance of any of the obligations of the other under this
Agreement; provided, however, that no such party may, without
the prior written consent of such other party, make or grant
such extension of time, waiver of inaccuracies or compliance
or waiver or modification of performance with respect to its
(or any of its Affiliates') representations, warranties,
conditions or covenants hereunder. Except as provided in the
immediately preceding sentence, no action taken pursuant to
this Agreement will be deemed to constitute a waiver of
compliance with any representations, warranties or covenants
contained in this Agreement and will not operate or be
construed as a waiver of any subsequent breach, whether of a
similar or dissimilar nature.
24
<PAGE> 25
n. Section 6.9 of the Original Master Agreement shall be
deleted in its entirety and the following substituted therefor:
6.9 Applicable Law. This Agreement and the legal
relations among the parties hereto will be governed by and
construed in accordance with the substantive Laws of the
Commonwealth of Pennsylvania, without giving effect to the
principles of conflict of laws thereof. Any action arising
out of this Agreement may be brought in the state or federal
courts of Pennsylvania or Tennessee. The parties hereby
irrevocably submit to the exclusive jurisdiction of the
appropriate state or federal court in Pennsylvania for the
purpose of any suit, action, proceeding or judgement relating
to or arising out of this Agreement. Each of the Partnership,
IHC, New Lessee, Additional Lessee, ENNS, Additional Lessor
and EIP further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's
respective address set forth above shall be effective service
of process for any action, suit or proceeding in Pennsylvania
with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately preceding
sentence. Each of the Partnership, New Lessee, IHC,
Additional Lessee, ENNS, Additional Lessor and EIP irrevocably
and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in (a) the
Supreme Court of the Commonwealth of Pennsylvania or the State
of Tennessee, or (b) the United States District Court for the
Western District of Pennsylvania or Tennessee, and hereby
further irrevocably
25
<PAGE> 26
and unconditionally waives and agrees not to plead or claim in
any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient
forum. The parties hereto unconditionally waive any right to
a jury trial for any action, suit or proceeding arising out of
this Agreement or the transactions contemplated hereby.
o. Section VII of the Original Master Agreement shall be
amended hereby as follows:
(a) the definition of "Leases" shall be deleted
in its entirety and the following substituted therefor:
"Leases" shall mean the Consolidated Lease
Amendment (as amended), the Successor Consolidated
Lease Amendment and/or any lease of a hotel or motel
entered into by and between EIP or an Affiliate of
EIP and Partnership or New Lessee or an Affiliate of
IHC.
(b) the term "Transfer Hotels" shall be added and
defined as follows:
"Transfer Hotels" shall mean those 23 Current
Hotels transferred from EIP to the Additional Lessor
and identified as "Transfer Hotels" on Exhibit A to
the Second Amendment.
(c) the term "Remaining Hotels" shall be added
and defined as follows:
"Remaining Hotels" shall mean those 25
Current Hotels not transferred by EIP to the
Additional Lessor and identified as "Remaining
Hotels" on Exhibit A to the Second Amendment.
26
<PAGE> 27
* * *
As amended hereby, the Original Master Agreement is ratified,
confirmed and approved.
27
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EQUITY INNS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
EQUITY INNS PARTNERSHIP, L.P.
By: Equity Inns Trust
general partner
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
EQI FINANCING PARTNERSHIP I, L.P.
By: EQI Financing Corporation,
general partner
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SIGNATURES CONTINUED ON NEXT PAGE
28
<PAGE> 29
INTERSTATE HOTELS CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
CROSSROADS/MEMPHIS PARTNERSHIP, L.P.
By: Crossroads/Memphis Company, L.L.C.,
General Partner
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
CROSSROADS/MEMPHIS FINANCING
COMPANY, L.L.C.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
CROSSROADS FUTURE COMPANY, L.L.C.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SIGNATURES CONTINUED ON NEXT PAGE
29
<PAGE> 30
EQUITY INNS/WEST VIRGINIA
PARTNERSHIP, L.P.
By: Equity Inns Services, Inc.,
General Partner
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
30
<PAGE> 31
EXHIBIT A
EXISTING LEASE
CURRENT HOTELS
<TABLE>
<CAPTION>
Franchise and City/ Transfer Remaining
State Location Hotel Hotel
- --------------------- ------- ---------
<S> <C> <C>
HAMPTON INN HOTELS
Albany, NY X
College Station, TX X
Louisville, KY X
Columbus, GA X
Cleveland, OH X
Sarasota, FL X
Fort Worth, TX X
Little Rock, AR X
Ann Arbor, MI X
Traverse City, MI X
Chicago (Gurnee), IL X
Dallas (Arlington), TX X
Milford, CT X
Meriden, CT X
Beckley, WV X
Gastonia, NC X
Morgantown, WV X
Shelby, NC X
Chicago (Naperville), IL X
State College, PA X
Cleveland, TN X
Scranton, PA X
Jacksonville, FL X
Fayetteville, NC X
Indianapolis, IN X
Austin, TX X
Dallas (Garland), TX X
Knoxville (Alcoa), TN X
Baltimore (Glen Burnie), MD X
Detroit (Northville), MI X
Scottsdale, AZ X
Chattanooga, TN X
</TABLE>
31
<PAGE> 32
<TABLE>
<CAPTION>
Franchise and City/ Transfer Remaining
State Location Hotel Hotel
- --------------------- ------- ---------
<S> <C> <C>
RESIDENCE INN HOTELS
Minneapolis (Eagan), MN X
Tinton Falls, NJ X
Omaha, NE X
Burlington, VT X
Madison, WI X
HOLIDAY INN HOTELS
Bluefield, WV X
Oak Hill, WV X
Charleston (Mt. Pleasant), SC X
Winston-Salem, NC X
HOLIDAY INN EXPRESS HOTELS
Wilkesboro, NC X
COMFORT INN HOTELS
Enterprise, AL X
Rutland, VT X
Jacksonville Beach, FL X
HOMEWOOD SUITES HOTEL
Hartford (Windsor Locks), CT X
San Antonio, TX X
Phoenix (Camelback), AZ X
</TABLE>
32
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF EQUITY INNS, INC. FOR THE 3 MONTH PERIOD ENDED MARCH
31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 123,306
<SECURITIES> 0
<RECEIVABLES> 4,897,025
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 355,059,465
<DEPRECIATION> 0
<TOTAL-ASSETS> 377,161,567
<CURRENT-LIABILITIES> 0
<BONDS> 138,641,027
0
0
<COMMON> 236,933
<OTHER-SE> 219,790,613
<TOTAL-LIABILITY-AND-EQUITY> 377,161,567
<SALES> 11,777,863
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,492,079
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,145,324
<INCOME-PRETAX> 3,285,784
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,166,597
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
