SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 4, 1996
HOSPITALITY PROPERTIES TRUST
(Exact name of registrant as specified in charter)
Maryland 1-11527 04-3262075
(State or other (Commission file (IRS employer
jurisdiction of number) identification no.)
incorporation)
400 Centre Street, Newton, Massachusetts 02158
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 617-964-8389
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Item 5. Other Events.
On November 25, 1996 the Company's wholly owned subsidiaries HPTRI
Corporation and HPTWN Corporation closed a $125,000,000 5-year mortgage loan
(the "Mortgage Loan"). The Mortgage Loan was a joint and several borrowing by
such subsidiaries and is secured by their properties. Interest on the Mortgage
Loan is calculated at a floating rate equal to one month LIBOR plus a spread.
Such subsidiaries transferred the net proceeds of the Mortgage Loan to the
Company as a dividend, and such proceeds were applied by the Company to repay
borrowings on its secured revolving credit facility and for general business
purposes. After giving effect to such application, no amounts were outstanding
under the revolving credit facility.
Concurrently with the origination of the Mortgage Loan, another wholly
owned subsidiary of the Company, Hospitality Properties Mortgage Acceptance
Corp. ("HPMAC"), acquired the Mortgage Loan from the originator thereof,
deposited the Mortgage Loan in a trust and sold certificates of beneficial
interest in such trust (commercial mortgage-backed securities) in a private
placement to institutional investors. The proceeds of such sale were applied by
HPMAC to pay the purchase price for the Mortgage Loan. The offer and sale of
such certificates were not registered under the Securities Act of 1933, as
amended, in reliance on an exemption from registration requirements thereunder,
and may not be offered or sold by a holder thereof absent registration or an
applicable exemption from such registration requirements.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits.
10.1 Promissory Note in the amount of $125,000,000 dated as of
November 25, 1996 from HPTRI Corporation and HPTWN Corporation
to Column Financial, Inc.
10.2 Loan Agreement dated as of November 25, 1996 by and between
HPTRI Corporation and HPTWN Corporation, as borrowers, and
Column Financial, Inc., as lender.
10.3 Form of Deed of Trust, Assignment of Leases and Rents and
Security Agreement from HPTRI Corporation, as Trustor, to
Chicago Title Insurance Company, as Trustee, for the benefit
of Column Financial, Inc.
10.4 Trust and Servicing Agreement dated as of November 25, 1996 by
and among Hospitality Properties Mortgage Acceptance Corp., as
Depositor, AMRESCO Management, Inc., as Servicer, and The
Chase Manhattan Bank, as Trustee.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOSPITALITY PROPERTIES TRUST
By: /s/ Thomas M. O'Brien
Thomas M. O'Brien, Treasurer and
Chief Financial Officer
Date: December 4, 1996
EXHIBIT 10.1
PROMISSORY NOTE
$125,000,000.00 New York, New York
November 25, 1996
FOR VALUE RECEIVED, HPTRI CORPORATION, a Delaware corporation ("HPTRI"), and
HPTWN CORPORATION, a Delaware corporation ("HPTWN"), each having its principal
place of business at c/o Hospitality Properties Trust, 400 Centre Street,
Newton, Massachusetts 02158 (HPTRI and HPTWN hereinafter being collectively
referred to as "Maker"), jointly and severally promise to pay to COLUMN
FINANCIAL, INC., a Delaware corporation ("Column"), at its principal place of
business at 3414 Peachtree Road, N.E., Suite 1140, Atlanta, Georgia 30326-1113,
or its registered assigns (Column and its successors and registered assigns who
become holders of this Note are hereinafter collectively referred to as
"Payee"), or at such place as the holder hereof may from time to time designate
in writing, the principal sum of $125,000,000.00 in lawful money of the United
States of America with interest thereon to be computed from the date of this
Note at the Interest Rate (hereinafter defined).
1. (a) As used herein:
"Business Day" shall mean each day of the week (other than
Saturday and Sunday) which is not a day on which banking or savings and loan
associations in New York, New York, Boston, Massachusetts, Atlanta, Georgia or
London, England, are authorized or obligated by law to be closed.
"Closing Date" shall mean November 25, 1996.
"Default Rate" shall mean the per annum interest rate equal to
the lesser of (i) the highest rate permitted by applicable law as of the date
hereof or such other applicable date, whichever is higher, to be charged on
commercial mortgage loans, or (ii) the greater of (a) the Prime Rate, as same
may increase or decrease from time to time, or (b) the applicable Interest Rate,
plus four percent (4%).
"Environmental Indemnity" shall mean that certain Hazardous
Substances Indemnity Agreement dated the date hereof and entered into by Maker
for the benefit of Payee.
"Interest Accrual Period" shall mean each calendar month
commencing with the calendar month of January, 1997.
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"Interest Determination Date" shall mean the second (2nd)
Business Day prior to a Payment Date. The Interest Rate set on the Interest
Determination Date shall be in effect for the Interest Accrual Period
immediately following such Interest Determination Date.
"Interest Rate" shall mean, for each Interest Accrual Period,
the applicable rate per annum (expressed as a percentage) equal to the LIBOR
Rate on the related Interest Determination Date plus the LIBOR Margin, and for
the period from the Closing Date to the last day of the month in which the
Closing Date occurs, for which the Interest Rate shall be 6.0675% per annum.
"LIBOR Margin" shall mean 69.25 basis points per annum.
"LIBOR Rate" shall mean the London interbank offering rate for
one-month United States deposits established by Payee in accordance with the
terms of this Note on each Interest Determination Date.
"Loan" shall mean the loan evidenced by this Note and secured
by the Mortgages, the Loan Agreement and the Other Security Documents (as those
terms are hereinafter defined).
"Loan Agreement" shall mean that certain Loan Agreement dated
the date hereof and entered into by and between Maker and Payee, as same may be
hereafter modified, amended or restated.
"Lockbox Security Agreement" shall mean that certain Lockbox
Pledge and Security Agreement dated the date hereof and entered into by and
between Maker and Payee, as same may be hereafter modified, amended or restated.
"Mortgaged Property" shall mean, as to each of the Mortgages,
all real property, improvements, furniture, fixtures, equipment and other rights
and interests encumbered thereby and serving as collateral for this Note.
"Mortgages" shall mean those certain mortgages, deeds of trust
and deeds to secure debt dated the date hereof and executed by HPTRI or HPTWN,
as the case may be, in favor of, or for the benefit of, Payee, said Mortgages
(a) covering certain real property, improvements, furniture, fixtures, equipment
and other rights and interests described therein, and (b) being more
particularly described on Schedule A annexed hereto, as any of same may be
hereafter modified, amended or restated.
"Note Register" means the written records to be maintained by
Payee or its designee evidencing the present holder or holders of this Note or
any interest therein.
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"Other Security Documents" shall mean all and any of the
documents other than this Note or the Mortgages now or hereafter executed by
Maker and/or others and by or in favor of Payee, which wholly or partially
secure or guarantee payment of this Note, as any of same may be hereafter
modified, amended or restated.
"Payment Date" shall mean, in each calendar month during the
term of this Note, beginning January 1, 1997, the first day of such month.
"Prime Rate" shall mean the "Prime Rate" of interest, as
published from time to time in the Money Rates section of the Wall Street
Journal.
"Principal Amount" shall mean the outstanding principal amount
of the Loan.
"Reimbursement Rate" shall mean the per annum interest rate
equal to the Prime Rate, as same may increase or decrease from time to time,
plus one percent (1%).
"Reuters Screen LIBO Page" shall mean the display page
designated as "LIBO" on the Reuters Monitor Money Rates Service.
"Telerate Page 3750" shall mean the British Bankers
Association interest settlement rate as fixed by the DJ Telerate Newsroom on
behalf of the British Bankers Association.
Whenever used, the singular number shall include the plural,
the plural the singular, and the words "Payee" and "Maker" shall include their
respective successors and assigns.
(b) Interest on the principal sum of this Note shall be
calculated at the Interest Rate, Reimbursement Rate or Default Rate, as
applicable, on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day).
2. (a) Payments under this Note, calculated in accordance with
the terms hereof, shall be due and payable as follows:
(i) Interest for the period from the Closing Date until the
first day of the first Interest Accrual Period, shall be due and payable on
January 1, 1997;
(ii) Interest shall be due and payable on the Payment Date
of each and every calendar month commencing in January, 1997, at the Interest
Rate in effect for the Interest Accrual Period ending the day preceding the
Payment Date; and
(iii) The entire outstanding Principal Amount, together with
all accrued and unpaid interest and any other charges due hereunder shall be due
and payable on December 1, 2001 (the "Maturity Date").
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(b) To the extent payments are or become due and payable under
this Note, the Mortgages, or any of the Other Security Documents on a day (the
"Due Date") which is not a Business Day, such payments are and shall be due and
payable on the first Business Day immediately following the Due Date for such
payments and, in such event, the interest which accrues on the Loan from such
Due Date to the first Business Day immediately following the Due Date shall not
be due and payable on such Due Date but shall be included in the payment due and
payable on the next Payment Date.
(c) All payments under this Note shall be paid by wire
transfer of immediately available funds to:
Bank: NationsBank of GA
City/State: Atlanta, Georgia
Account Name: AMRESCO Management, Inc. in trust for Chase
Manhattan Bank as Trustee for the Holders of the
Hospitality Properties Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates,
Series 1996-C1 Lockbox Account
Account No.: 3251023935
ABA No.: 061000052
Reference: Hospitality Properties
or to such other designated bank or place, or in such other manner, as Payee may
reasonably specify in writing from time to time.
(d) On each Interest Determination Date until all sums due
under this Note, the Mortgages, the Loan Agreement and the Other Security
Documents have been paid in full, the LIBOR Rate for the following Interest
Accrual Period shall be the rate (expressed as a percentage per annum) for
deposits in U.S. Dollars for a one (1) month period designated at Telerate Page
3750 as of 11:00 a.m., London time, on such Interest Determination Date to the
extent available (or such other page as may replace Telerate Page 3750 for the
purpose of displaying London interbank offered rates of major banks) (rounded
upward, if necessary, to the nearest whole multiple of 1/32%). If such rate does
not appear on Telerate Page 3750 as of 11:00 a.m., London time, on the
applicable Interest Determination Date, the LIBOR Rate for the following
Interest Accrual Period will be the arithmetic mean of the offered rates
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(expressed as a percentage per annum) for deposits in U.S. Dollars for a one (1)
month period that appear on the Reuters Screen LIBO Page as of 11:00 a.m.,
London time, on such Interest Determination Date, if at least two such offered
rates so appear. If fewer than two such offered rates appear on the Reuters
Screen LIBO Page as of 11:00 a.m., London time, on the applicable Interest
Determination Date, Payee will request the principal London office of any four
(4) major reference banks in the London interbank market selected by Payee in
its sole discretion to provide such bank's offered quotation (expressed as a
percentage per annum) to prime banks in the London interbank market for deposits
in U.S. Dollars for a one (1) month period as of 11:00 a.m., London time, on
such Interest Determination Date for an amount approximately equal to, but in no
event less than, the Principal Amount. If at least two such offered quotations
are so provided, the LIBOR Rate will be the arithmetic mean of such quotation.
If fewer than two such quotations are so provided, Payee will request any three
(3) major banks in New York City selected by Payee in its sole discretion to
provide such bank's rate (expressed as a percentage per annum) for loans in U.S.
Dollars to leading European banks for a one (1) month period as of approximately
11:00 a.m., New York City time, on the applicable Interest Determination Date
for an amount approximately equal to, but in no event less than, the Principal
Amount. If at least two such rates are so provided, the LIBOR Rate will be the
arithmetic mean of such rates (rounded upwards, if necessary, to the nearest
whole multiple of 1/32%). If fewer than two such rates are so provided, the
LIBOR Rate will be the LIBOR Rate in effect on the preceding Interest
Determination Date. The establishment of the LIBOR Rate on each Interest
Determination Date by Payee and Payee's calculation of the rate of interest
applicable to this Note shall (in the absence of manifest error) be final and
binding.
(e) In addition to Maker's other payment obligations provided
for herein, Maker, jointly and severally promises to pay to Payee, within ten
(10) Business Days following Maker's receipt of demand therefor from Payee, any
and all Disposition Fees and Modification Fees which may be payable from time to
time to the Servicer under, and as those terms are defined in, that certain
Trust and Servicing Agreement dated as of the date hereof by and among
Hospitality Properties Mortgage Acceptance Corp., AMRESCO Management, Inc. and
The Chase Manhattan Bank.
3. The whole of the principal sum of this Note, together with
all interest accrued and unpaid thereon and all other sums due hereunder and/or
under the Mortgages, the Loan Agreement and this Note (all such sums hereinafter
collectively referred to as the "Debt") shall without notice become immediately
due and payable at the option of Payee if any payment required in this Note is
not paid on the date when due or on the happening of any other default, after
the expiration of any applicable notice and grace periods, herein or under the
terms of the Mortgages or the Loan Agreement (hereinafter collectively an "Event
of Default"). All of the terms, covenants and conditions contained in the
Mortgages, the Loan Agreement and the Other Security Documents are hereby made
part of this Note to the same extent and with the same force as if they were
fully set forth herein. In the event that it should become necessary to employ
counsel to collect the Debt or to protect or foreclose the security hereof,
Maker also agrees to pay a reasonable attorney's fee for the services of such
counsel whether or not suit be brought.
4. Maker may, on any Payment Date, upon not less than fifteen
(15) days prior written notice to Payee, prepay the outstanding Principal Amount
of the Loan in whole or in part, by wire transfer as provided in Paragraph 2
above, of (A) the entire outstanding Principal Amount of the Loan, or such
portion thereof as is being prepaid, (B) interest accrued and unpaid on the
outstanding Principal Amount of the Loan, or such portion thereof as is being
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prepaid, to and including the date of such prepayment, and (C) any other amounts
which have accrued and are owing under this Note, the Mortgages, the Loan
Agreement and the Other Security Documents through the date of such prepayment.
Each notice of a voluntary prepayment of the outstanding Principal Amount of the
Loan, or such portion thereof as is being prepaid, shall specify (I) the
prepayment date, (II) the Principal Amount being prepaid, and (III) the amount
of interest thereon and other amounts to be delivered in connection therewith.
The amount of interest and other amounts payable in connection with any
prepayment shall be subject to confirmation by Payee.
5. Maker agrees that (a) if any amount payable under this
Note, the Mortgages, the Loan Agreement or any Other Security Document is not
paid when such payment is due, Maker shall pay interest at the Reimbursement
Rate with respect to such amount, upon demand from time to time, to the extent
permitted by applicable law, from the date such amount was due until such amount
has been paid by Maker, and (b) upon the occurrence of any Event of Default and
the earlier to occur of (i) the date which is ninety (90) days following the
occurrence of such Event of Default, or (ii) the date on which Payee accelerates
the whole of the principal sum of this Note, together with all interest accrued
and unpaid thereon and any other amounts owing hereunder, Maker shall pay
interest at the Default Rate with respect to the Principal Amount, upon demand
from time to time. Notwithstanding the foregoing, if the unpaid Principal Amount
or any other amount required to be paid on the Maturity Date or upon
acceleration of the Loan is not paid when due, then interest shall thereafter be
computed and paid at the Default Rate without notice to Maker. This charge shall
be added to the Debt, and shall be deemed secured by the Mortgages and the Loan
Agreement. This clause, however, shall not be construed as an agreement or
privilege to extend the date of the payment of the Debt, nor as a waiver of any
other right or remedy accruing to Payee by reason of the occurrence of any Event
of Default. In the event the Default Rate is above the maximum rate permitted by
applicable law, the Default Rate shall be the maximum rate permitted by
applicable law.
6. If any monthly interest payment payable under this Note is
not paid in full on or before ten (10) days following the date on which it is
due, Maker shall pay to Payee upon demand an amount equal to the lesser of (i)
five percent (5%) of such unpaid sum, or (ii) the maximum amount permitted by
applicable law (the "Late Charge"), to defray the expenses incurred by Payee in
handling and processing such delinquent payment and to compensate Payee for the
loss of the use of such delinquent payment and such amount shall be secured by
the Mortgages, the Loan Agreement and the Other Security Documents.
7. This Note is given to evidence the Loan by Payee to Maker
pursuant to the Loan Agreement and is secured by the Mortgages, the Loan
Agreement and the Other Security Documents.
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8. It is expressly stipulated and agreed to be the intent of
Maker and Payee at all times to comply with applicable state law or applicable
United States federal law (to the extent that it permits Payee to contract for,
charge, take, reserve, or receive a greater amount of interest than under state
law) and that this paragraph shall control every other covenant and agreement in
this Note, the Mortgages, the Loan Agreement and the Other Security Documents.
If the applicable law (state or federal) is ever judicially interpreted so as to
render usurious any amount called for under this Note, the Mortgages, the Loan
Agreement or under any of the Other Security Documents, or contracted for,
charged, taken, reserved, or received with respect to the Debt, or if Payee's
exercise of the option to accelerate the Maturity Date, or if any prepayment by
Maker results in Maker having paid any interest in excess of that permitted by
applicable law, then it is Payee's express intent that all excess amounts
theretofore collected by Payee shall be credited on the principal balance of
this Note and all other Debt and the provisions of this Note, the Mortgages, the
Loan Agreement and the Other Security Documents shall immediately be deemed
reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new documents, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder or thereunder. All sums paid or agreed to
be paid to Payee for the use, forbearance, or detention of the Debt shall, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of the Debt until payment in full so that
the rate or amount of interest on account of the Debt does not exceed the
maximum lawful rate from time to time in effect and applicable to the Debt for
so long as the Debt is outstanding. Notwithstanding anything to the contrary
contained herein, in the Mortgages, the Loan Agreement or in any of the Other
Security Documents, it is not the intention of Payee to accelerate the maturity
of any interest that has not accrued at the time of such acceleration or to
collect unearned interest at the time of such acceleration.
9. This Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Maker or Payee, 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.
10. If Maker consists of more than one person or party, the
obligations and liabilities of each such person or party shall be joint and
several.
11. Maker and all others who may become liable for the payment
of all or any part of the Debt do hereby severally waive presentment and demand
for payment, notice of dishonor, protest, notice of protest, and non-payment,
and notice of intent to accelerate the maturity hereof (and of such
acceleration). No release of any security for the Debt or extension of time for
payment of this Note or any installment hereof, and no alteration, amendment or
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waiver of any provision of this Note, the Mortgages, the Loan Agreement or the
Other Security Documents made by agreement between Payee and any other person or
party shall release, modify, amend, waive, extend, change, discharge, terminate
or affect the liability of Maker, and any other who may become liable for the
payment of all or any part of the Debt, under this Note, the Mortgages, the Loan
Agreement or the Other Security Documents.
12. Maker represents that Maker has full power, authority and
legal right to execute, deliver and perform its obligations pursuant to this
Note, the Mortgages, the Loan Agreement and the Other Security Documents and
that this Note, the Mortgages, the Loan Agreement and the Other Security
Documents constitute valid and binding obligations of Maker, except as same may
be limited by applicable bankruptcy, reorganization, insolvency, moratorium or
any other similar laws affecting generally the enforcement of creditor's rights
as from time to time are in effect.
13. This Note or any interest in this Note, the Mortgages and
the Other Security Documents may be hypothecated, transferred or assigned by
Payee without the prior consent of Maker. Maker is obligated to pay the
principal, interest and all other sums due hereunder only to the registered
owner of this Note as set forth in the Note Register, and only the person whose
name appears in the Note Register as the present holder of the Note shall be
entitled to payment of the obligations evidenced hereby. Maker hereby
irrevocably appoints Payee as its agent for purposes of maintaining the Note
Register. The transfer of this Note may be effected only by entry of such
transfer on the Note Register. Payee shall have no liability to Maker in
connection with the maintenance of the Note Register. Payee may delegate its
duties as registrar to any party to whom Payee transfers this Note or to any
party otherwise designated by Payee.
14. Time is of the essence of this Note.
15. In the event of the loss, theft or destruction of this
Note, upon Maker's receipt of a reasonably satisfactory indemnification
agreement executed in favor of Maker by Payee or in the event of the mutilation
of this Note, upon the surrender of the mutilated Note by Payee to Maker, Maker
shall execute and deliver to Payee a new note in form and content identical to
this Note in lieu of the lost, stolen, destroyed or mutilated Note.
16. All notices or other communications required or permitted
to be given pursuant hereto shall be given in the manner specified in the
Mortgages and directed to the parties at their respective addresses as provided
therein.
17. MAKER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO
THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS
NOTE OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH.
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THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY
MAKER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS
TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. PAYEE IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY MAKER.
18. Notwithstanding anything to the contrary contained herein,
any claim based on or in respect of any liability of Maker under this Note, the
Mortgages, the Loan Agreement or any Other Security Document shall be enforced
only against the Mortgaged Property and any other collateral now or hereafter
given to secure this Note and not against any other assets, properties or funds
of Maker; provided, however, that the liability of Maker for loss, costs or
damage arising out of the following matters shall not be limited solely to the
Mortgaged Property and other collateral now or hereafter given to secure this
Note but shall include all of the assets, properties and funds of Maker: (i) any
failure by Maker to apply the income, rents and profits of the Mortgaged
Property as required by this Note, the Mortgages, the Loan Agreement or any
Other Security Document, (ii) any misapplication by Maker of insurance proceeds,
condemnation awards, security deposits or trust funds in violation of applicable
law or the provisions of the Mortgages, the Loan Agreement or any Other Security
Document, (iii) any collection of rent for more than one month in advance of the
time when the same becomes due, and (iv) failure to pay all real estate taxes
and assessments prior to the date on which such payments become delinquent.
Nothing herein shall be deemed (w) to be a waiver of any right which Payee may
have under any bankruptcy law of the United States or the state in which any
Mortgaged Property is located to file a claim for the full amount of the Loan or
to require that all of the collateral securing the Loan shall continue to secure
all of the indebtedness due under the Note, the Mortgages, the Loan Agreement
and the Other Security Documents; (x) to impair the validity of the indebtedness
secured by the Mortgages; (y) to impair the right of Payee as mortgagee or
secured party to commence an action to foreclose any lien or security interest;
or (z) to modify, diminish or discharge the liability of any guarantor under any
guaranty. Nothing herein shall be deemed to be a waiver of any right which Payee
may have under Section 506(a), 506(b), 1111(b) or any other provisions of the
U.S. Bankruptcy Code to file a claim for the full amount of the indebtedness
secured by the Mortgages or to require that all collateral shall continue to
secure all of the indebtedness owing to Payee in accordance with this Note, the
Mortgages, the Loan Agreement and the Other Security Documents.
19. This Note shall be governed and construed in accordance
with the laws of the State of New York and the applicable laws of the United
States of America.
[Signature Page Follows]
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IN WITNESS WHEREOF, Maker has duly executed and delivered this
Note the day and year first above written.
MAKER:
HPTRI CORPORATION, a
Delaware corporation
By: /s/ Thomas M. O'Brien
Name: Thomas M. O'Brien
Title: Vice President
HPTWN CORPORATION, a
Delaware corporation
By: /s/ Thomas M. O'Brien
Name: Thomas M. O'Brien
Title: Vice President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 25th day of November, 1996, before me personally came Thomas M. O'Brien
to me known, who, being by me duly sworn did depose and say that he resides at
Cambridge, Massachusetts; that he is the Vice President of HPTRI Corporation and
HPTWN Corporation, the corporations described in and which executed the above
instrument; and that he signed his name thereto by authority of the Boards of
Directors of said corporations.
/s/ Cleopatra Pyatt
Notary Public
Pay to Hospitality Properties Mortgage Acceptance Corp., a Delaware corporation,
without recourse.
COLUMN FINANCIAL, INC., a Delaware corporation
By: /s/ John D. Pierandri
Name: John D. Pierandri
Title: Vice President
Pay to The Chase Manhattan Bank, as trustee, for the benefit of the holders of
the Hospitality Properties Mortgage Acceptance Corp., Commercial Mortgage
Pass-Through Certificates, Series 1996-C1, without recourse.
HOSPITALITY PROPERTIES MORTGAGE ACCEPTANCE CORP., a
Delaware corporation
By: /s/ Thomas M. O'Brien
Name: Thomas M. O'Brien
Title: Vice President
<PAGE>
SCHEDULE A
[List of Mortgages]
EXHIBIT 10.2
LOAN AGREEMENT
Dated as of November 25, 1996
By and Between
HPTRI CORPORATION, a Delaware corporation,
and
HPTWN CORPORATION, a Delaware corporation,
as Borrower
AND
COLUMN FINANCIAL, INC., a Delaware corporation,
as Lender
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of November 25, 1996, by and
among COLUMN FINANCIAL, INC., having an address at 3414 Peachtree Road, N.E.,
Suite 1140, Atlanta, Georgia 30326-1113, together with its registered successors
and assigns, including, without limitation, the Loan Purchaser (as hereinafter
defined), as lender ("Lender"), and HPTRI CORPORATION, a Delaware corporation
("HPTRI"), and HPTWN CORPORATION, a Delaware corporation ("HPTWN"; HPTRI and
HPTWN being sometimes collectively referred to herein as "Borrower"), each
having an address at c/o Hospitality Properties Trust, 400 Centre Street,
Newton, Massachusetts 02158.
All capitalized terms used herein shall have the respective
meanings set forth in Section 1 hereof.
W I T N E S S E T H :
WHEREAS, Borrower desires to obtain the Loan from Lender;
WHEREAS, Lender is willing to make the Loan to Borrower,
subject to and in accordance with the terms of this Agreement and the other Loan
Documents;
WHEREAS, Lender's interest in the Loan may be purchased by the
Loan Purchaser on or after the Closing Date; and
WHEREAS, Borrower consents to the transfer described in the
preceding Recital.
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth in this Agreement, and other good and
valuable consideration, the parties hereto hereby covenant, agree, represent and
warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions.
For all purposes of this Agreement, except as otherwise
expressly required or unless the context clearly indicates a contrary intent:
"Accounting Period" shall mean, with respect to the Properties
which are subject to HPTWN Lease Agreements, the calendar month, and, with
respect to the Properties which are subject to HPTRI Lease Agreements, the four
(4) (or in some cases five (5)) week period coinciding with HPTRI's Manager's
accounting period, as provided for in the HPTRI Management Agreements.
"Accounting Year" shall mean, with respect to the Properties
which are subject to HPTWN Lease Agreements, the most recent twelve (12)
Accounting Periods, and, with respect to the Properties which are subject to
HPTRI Lease Agreements, the most recent thirteen (13) Accounting Periods.
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"Affected Property" shall have the meaning specified in
Section 2.2.2 hereof.
"Affiliate" shall mean, as to any Person, any other Person
that, directly or indirectly, is in control of, is controlled by or is under
common control with such Person or is a director or officer of such Person or of
an Affiliate of such Person.
"Agreement" shall mean this Loan Agreement, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Appraisal" shall mean a fair market value appraisal,
addressed to Lender or its designee and performed by an independent licensed MAI
appraiser having at least ten (10) years experience as an appraiser.
"Assignments of Leases" shall mean those certain first
priority Assignments of Leases and Rents, dated as of the date hereof, from
either HPTRI or HPTWN, as the case may be, as assignor, to Lender, as assignee,
with respect to the Properties, assigning to Lender all of HPTRI's or HPTWN's,
as the case may be, interest in and to, inter alia, the Lease Agreements and the
Rents of the respective Properties as security for the Loan, as such Assignments
of Leases may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
"Borrower" shall have the meaning specified in the first
Paragraph hereof. Any reference to "Borrower", "any Borrower" or "the applicable
Borrower", or any similar reference shall be deemed to refer to Borrower.
"Business Day" shall mean each day of the week (other than a
Saturday and Sunday) which is not a day on which banking or savings and loan
associations in New York, New York, Boston Massachusetts or Atlanta, Georgia,
are authorized or obligated by law to be closed.
"Certificate" shall mean any certificate evidencing interests
in the trust to be created pursuant to the Trust and Servicing Agreement.
"Closing Date" shall mean the date of the closing of the Loan.
"Collateral Security Documents" shall mean any right, document
or instrument given as security for the Note, including, without limitation, the
Mortgages and the Assignments of Leases, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"Cure Payment" shall have the meaning specified in Section
2.2.2 hereof.
"Debt Service" shall mean, for the applicable period, all
payments of principal or interest made by Borrower to Lender in accordance with
the terms of the Note with respect to such period.
"Debt Service Coverage Ratio" shall mean, with respect to any
DSCR Determination Date, the ratio of (a) the aggregate Net Operating Income for
all of the Properties then remaining encumbered by a Mortgage (except the
Property for which Borrower has requested a Release), determined on an accrual
basis for the applicable Accounting Year immediately preceding such DSCR
Determination Date to (b) the product of (1) 7.6925%, multiplied by (2) the
amount of principal remaining unpaid under the Note as of such DSCR
Determination Date.
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"Depositor" shall mean Hospitality Properties Mortgage
Acceptance Corp., as depositor under the Trust and Servicing Agreement.
"DSCR Determination Date" shall mean the date which is forty
five (45) days prior to the date of the occurrence of the non-monetary Event of
Default pursuant to which Borrower is attempting to effect a Release of an
Affected Property pursuant to Section 2.2.2 below.
"Engineering Reports" shall mean, as to all Properties, those
certain reports on the structural, electrical, mechanical and engineering
components of each of the Properties delivered to, or obtained by, Lender in
connection with the making of the Loan.
"Environmental Indemnity" shall mean the certain Hazardous
Materials Indemnity Agreement of even date herewith, by Borrower in favor of
Lender with respect to environmental conditions on the Properties, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.
"Environmental Reports" shall mean, as to all Properties,
those certain Phase I environmental site assessments of the Properties
previously delivered to, or obtained by, Lender, in connection with the making
of the Loan.
"Event of Default" shall have the meaning specified in Section
6.1 hereof.
"Excess" shall have the meaning specified in Section 2.2.3
hereof.
"Expenses" shall mean, with respect to each Property, all
ordinary and customary expenses payable by the Tenant or Manager of such
Property in the ordinary course of operating such Property as a hotel, as
determined on an accrual basis in accordance with GAAP consistently applied,
including, without limitation, payments made into the applicable FF&E Reserve,
but excluding, however, Management Fees (which are subordinated to payments of
the Minimum Rent under, and as defined in, the Lease Agreements), distributions
to stockholders of the Tenant or Manager of such Property, Rent paid by each
Tenant under their respective Lease Agreements, Debt Service, any corporate
general or administrative expenses of HPT, HPTRI, HPTWN, Tenants' or Managers'
or their affiliates which are allocated or charged to the applicable Property,
HPTRI's, HPTWN's, Tenants or Manager's income taxes, capitalized expenditures
for capital improvements and non-cash items such as depreciation.
"FF&E Reserves" shall mean, as to each HPTRI Lease Agreement
and each HPTRI Management Agreement, the reserve required to be established and
funded from time to time for furniture, fixture and equipment replacements as
provided for in such HPTRI Lease Agreement and HPTRI Management Agreement and,
as to each HPTWN Lease Agreement and each HPTWN Management Agreement, the
reserve required to be established and funded from time to time for furniture,
fixture and equipment replacements as provided for in such HPTWN Lease Agreement
and HPTWN Management Agreement.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as of the date of the applicable financial report.
"Governmental Authority" shall mean any court, board, agency,
commission, office or authority of any nature whatsoever for any governmental
unit (federal, state, county, district, municipal, city or otherwise) whether
now or hereafter in existence.
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"Ground Lease" shall mean those certain ground leases more
specifically identified on Schedule A annexed hereto.
"HPT" shall mean Hospitality Properties Trust, a real estate
investment trust organized under the laws of the State of Maryland.
"HPTRI" shall have the meaning specified in the first
Paragraph hereof.
"HPTRI Management Agreement SNDA" shall have the meaning
specified in Section 4.1 hereof.
"HPTWN" shall have the meaning specified in the first
Paragraph hereof.
"Improvements" shall have the meaning specified in the
Mortgages with respect to the Properties.
"Indebtedness" shall mean the indebtedness in the original
principal amount set forth in, and evidenced by, the Note, together with all
other obligations and liabilities of Borrower due or to become due to Lender
pursuant to the Note, this Agreement or any other Loan Document, including,
without limitation, all interest thereon.
"Independent Director" shall have the meaning specified in
Section 3.1(iii)(q) hereof.
"Lease Agreements" shall mean, with respect to each Property
owned or ground leased by HPTRI, the Lease Agreement dated March 22, 1996 or
April 4, 1996, as the case may be, by and between HPTRI, as landlord, and HMH
HPT Residence Inn, Inc., as tenant, or any Substitute Lease Agreement entered
into pursuant to, and as that term is defined in, Section 5.2 hereof (as same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time, the "HPTRI Lease Agreements"), and as to each Property owned or ground
leased by HPTWN, the Lease Agreement dated May 2, 1996 or May 3, 1996, as the
case may be, by and between HPTWN, as landlord, and GHALP Corporation, as
successor tenant to Garden Hotel Associates Two LP, or any Substitute Lease
Agreement entered into pursuant to, and as that term is defined in, Section 5.2
hereof (as same may be amended, restated, replaced, supplemented or otherwise
modified from time to time, the "HPTWN Lease Agreements"). With respect to each
Lease Agreement, Lender, the applicable Tenant thereunder and HPTRI or HPTWN, as
the case may be, have entered into a Subordination, Non-Disturbance and
Attornment Agreement of even date herewith (each, a "Lease Agreement SNDA")
whereby Lender has agreed, subject to the terms of each such Lease Agreement
SNDA, to not disturb the rights of any Tenant under its Lease Agreement
notwithstanding the occurrence of a default under the Mortgage encumbering the
Property which is the subject of its Lease Agreement.
"Lease Assignment" shall have the meaning specified in Section
5.1 hereof.
"Legal Requirements" shall mean all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities to
which any Property or any part thereof or the construction, use, alteration or
operation thereof, or any part thereof, is subject, including, without
limitation, all zoning, land use, building, and environmental statutes, laws,
codes, resolutions and ordinances, whether now or hereafter enacted and in
force, and all permits, licenses, variances and authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments, either of record or known to Borrower, at any time
in
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force affecting any Property or any part thereof, including, without limitation,
any which may (i) require repairs, modifications or alterations in or to any
Property or any part thereof or (ii) in any way limit the use and enjoyment
thereof.
"Lender" shall have the meaning specified in the first
Paragraph hereof.
"Lien" shall mean any mortgage, deed of trust, deed to secure
debt or other such security agreement affecting any Property or any portion
thereof.
"Loan" shall mean the $125,000,000.00 loan, evidenced by the
Note, and secured by the Mortgages and the other Collateral Security Documents,
made by Lender to Borrower pursuant hereto and to the Note.
"Loan Allocation Amount" shall mean, with respect to each
Property, that portion of the Principal Amount allocated by Lender to such
Property, as set forth on Schedule B annexed hereto.
"Loan Documents" shall mean, collectively, this Agreement, the
Note, the Mortgages, the Assignments of Leases, the Environmental Indemnity and
the other Collateral Security Documents and any other document executed or
delivered by or on behalf of Borrower in connection with the Loan.
"Loan Purchaser" shall mean any purchaser of the Loan from the
Lender, such purchaser's designee, the respective successors and/or assigns of
such purchaser or designee and any subsequent holder of the Note.
"Lockbox Agreement" shall mean that certain Lockbox Pledge and
Security Agreement dated of even date herewith and entered into by and between
Borrower and Lender.
"Management Agreements" shall mean, as to all Properties owned
or ground leased by HPTRI, those certain Management Agreements dated September
25, 1993, as amended, by and between HPTRI (as successor in interest to HMH
Properties, Inc.) and Residence Inn by Marriott, Inc., or any Substitute
Management Agreement entered into pursuant to, and as that term is defined in,
Section 5.4 hereof (as same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, the "HPTRI Management Agreements"), and,
as to all Properties owned or ground leased by HPTWN, those certain Amended and
Restated Management Agreements dated May 3, 1996 by and between GHALP
Corporation and Wyndham Management Corporation, or any Substitute Management
Agreement entered into pursuant to, and as that term is defined in, Section 5.4
hereof (as same may be amended, restated, replaced, supplemented or otherwise
modified from time to time, the "HPTWN Management Agreements").
"Management Fees" shall mean the fees paid to the Managers
pursuant to the terms of their respective Management Agreements.
"Manager" shall mean, as applicable, Residence Inn by
Marriott, Inc. or Wyndham Management Corporation, or any Qualified Manager under
a Substitute Management Agreement pursuant to, and as those terms are defined
in, Section 5.4 hereof.
"Material Adverse Effect" shall have the meaning specified in
Section 3.1(i)(cc) hereof.
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"Maturity Date" shall mean December 1, 2001.
"Mortgages" shall mean those certain mortgages, deeds of trust
or deeds to secure debt dated the date hereof, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time, which
Mortgages have been executed by either HPTRI or HPTWN, as the case may be, in
favor of, or for the benefit of, Lender, each Mortgage encumbering the fee or
ground lessee's leasehold estate in the respective Property to which it applies,
as more specifically set forth therein.
"Net Operating Income" shall mean, with respect to each
Property and any period, the (a) Total Hotel Sales for such period less (b)(1)
the Expenses for the same period and (2) four percent (4%) of Total Hotel Sales
for such period (such four percent (4%) of Total Hotel Sales being included in
this calculation as representative of the proforma management fee utilized in
the underwriting the Loan).
"Note" shall mean that certain Promissory Note of even date
herewith, made by Borrower in favor of Lender or its registered assigns, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"Officer's Certificate" shall mean a certificate delivered to
Lender by Borrower which is signed by an officer who serves as Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer, Treasurer,
Controller, President or Vice President of HPTRI or HPTWN, as applicable.
"Permits" shall have the meaning specified in Section
3.1(i)(s) hereof.
"Permitted Exceptions" shall have the meaning specified in
Section 3.1(i)(a) hereof.
"Person" shall mean any individual, corporation, partnership,
joint venture, estate, trust, unincorporated association, any federal, state,
county or municipal government or any bureau, department or agency thereof and
any fiduciary acting in such capacity on behalf of any of the foregoing.
"Principal Amount" shall mean the outstanding principal
balance of the Loan.
"Private Placement Memorandum" shall mean that certain Private
Placement Memorandum dated November ___, 1996 prepared and issued in connection
with the issuance of those certain $125,000,000.00 Hospitality Properties
Mortgage Acceptance Corp. Commercial Mortgage Pass-Through Certificates, Series
1996-C1.
"Proceeds" shall have the meaning specified in Section 2.2.3
hereof.
"Property" or "Properties" shall mean the parcel or parcels,
as the case may be, of real property, and the Improvements thereon owned or
ground leased by HPTRI or HPTWN, as the case may be, and encumbered by the
Mortgages pertaining to same, together with all rights and property of HPTRI or
HPTWN, as the case may be, pertaining to such real property and Improvements, as
more particularly described in the granting clauses of the Mortgages and
referred to therein as the "Mortgaged Property" or the "Trust Property", as the
case may be.
"Property Agreements" shall have the meaning specified in
Section 3.1(i)(x) hereof.
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"Qualified Manager" shall have the meaning specified in
Section 5.4 hereof.
"Rating Agency" shall mean Standard & Poor's Ratings Services
and Fitch Investors Service, L.P.
"Release" shall have the meaning specified in Section 2.2.1
hereof.
"Release Payment" shall have the meaning specified in Section
2.2.1 hereof.
"Rents" shall mean, with respect to each Property, all rents,
income, issues, revenues and profits arising from the Lease Agreements and
renewals thereof.
"Servicer" shall mean the entity described as such in the
Trust and Servicing Agreement or its successor in interest, or if any successor
servicer is appointed pursuant to the Trust and Servicing Agreement, such
successor servicer.
"State" shall mean, with respect to a given Property, the
State or Commonwealth in which such Property or any part thereof is located.
"Substitute Lease Agreement" shall have the meaning specified
in Section 5.2 hereof.
"Substitute Management Agreement" shall have the meaning
specified in Section 5.4 hereof.
"Surveys" shall mean the ALTA surveys of the Properties
certified and delivered to Lender in connection with the Loan.
"Tenant" shall mean, as applicable, HMH HPT Residence Inn,
Inc., or GHALP Corporation, and their permitted successors and assigns, or, in
the event that a Substitute Lease Agreement is entered into by either Borrower
pursuant to Section 5.2 hereof, the tenant under such Substitute Lease Agreement
and such tenant's permitted successors and assigns.
"Title Policies" shall mean the title insurance policies
issued, or to be issued, to Lender by Chicago Title Insurance Company, insuring
the liens of the Mortgages.
"Total Hotel Sales" shall mean, with respect to each Property,
any and all sums derived from the operation of the Property as a hotel pursuant
to the applicable Lease Agreement, determined on an accrual basis after
deducting all allowances for rebates and adjustments, whether cash or credit,
derived directly or indirectly from any source including, without limitation,
(i) the amounts received as payment for the use and occupancy of all meeting
rooms, banquet function rooms, and public areas, (ii) all revenues derived from
the sale of food and other edibles in restaurants, lounges, meeting rooms,
banquet rooms, guest rooms and any other locations at the Property, (iii) all
revenues derived from the sale of liquor, beverages, and other potables in
restaurants, lounges, meeting rooms, banquet rooms, guest rooms and any other
locations at the Property, (iv) all revenues derived from the use of telephones
in guest rooms or in public areas and (v) all revenues derived from leases
(other than the Lease Agreements), subleases, concessions, vending, valet
services, banquet extras, movies or income of a similar or related nature, but
excluding any proceeds received as a result of a casualty or condemnation loss.
"Transferee" shall have the meaning specified in Section 2.3
hereof.
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"Trust and Servicing Agreement" shall mean that certain Trust
and Servicing Agreement dated as of November 25, 1996, pursuant to which the
Loan is being assigned to a trustee in trust and one or more classes of
Certificates are being issued representing beneficial ownership interests in
such trust.
Section 1.2 Principles of Construction.
All references to sections, schedules and exhibits are to
sections, schedules and exhibits in or to this Agreement unless otherwise
specified. Unless otherwise specified, the words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP, as modified herein.
II. GENERAL TERMS
Section 2.1 Loan Commitment; Disbursement to Borrower.
2.1.1 The Loan. Subject to and upon the terms and conditions
set forth herein, Lender hereby agrees to make the Loan to Borrower on the
Closing Date, in the original principal amount set forth in the Note, which Loan
shall mature on the Maturity Date. Borrower hereby agrees to accept the Loan on
the Closing Date, subject to and upon the terms and conditions set forth herein.
2.1.2 Disbursement to Borrower. Borrower may request and
receive only one borrowing in respect of the Loan and any amount borrowed and
repaid in respect of the Loan may not be reborrowed. Borrower shall, on the
Closing Date, receive the Loan, subject to the direction given by Borrower as to
the application of Loan proceeds.
2.1.3 The Note. The Loan shall be evidenced by the Note, in
the original principal amount of the Loan. The Note shall bear interest as
provided in the Note, and shall be subject to the payment of interest and the
repayment and prepayment of the Principal Amount as provided for in the Note.
The Note shall be entitled to the benefits of this Agreement and shall be
secured by the Mortgages, the Assignments of Leases and the other Collateral
Security Documents.
Section 2.2 Releases.
2.2.1 Permitted Releases. Except as otherwise permitted by
Section 2.2.2 and Section 2.2.3 hereof and, notwithstanding anything to the
contrary set forth in the Mortgages, Borrower may obtain the release of any
Property from the lien of the Mortgage encumbering such Property (a "Release")
upon the following terms and conditions:
(a) Borrower shall notify Lender in writing at least
fifteen (15) days prior to the date on which Borrower
would like to have the Release take place;
(b) Lender shall have received from Borrower a payment in
reduction of the Principal Amount (a "Release
Payment") equal to at least one hundred and twenty
five percent (125%) of the Loan Allocation Amount for
the applicable Property;
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(c) there shall exist, as of the applicable Release
date, no Event of Default under, and as that term
is defined in, the Mortgages; and
(d) Lender shall have received in writing evidence from
the Rating Agency to the effect that such Release
will not result in a downgrade, withdrawal or
qualification of the rating then in effect for the
Certificates, together with such legal opinions as
may be requested by the Rating Agency.
2.2.2 Releases Following a Non-Monetary Event of Default.
Notwithstanding anything to the contrary set forth in the Mortgages, Borrower
may obtain, following the occurrence of a non-monetary Event of Default under,
and as that term is defined in, the Mortgages, which is attributable to an
identifiable Property (an "Affected Property") the Release of any such Affected
Property from the lien of the Mortgage encumbering such Affected Property upon
the following terms and conditions:
(a) Borrower shall notify Lender in writing at least
fifteen (15) days prior to the date on which borrower
would like to have the Release take place, such
notification to include an Officer's Certificate from
the appropriate officer of HPTRI or HPTWN, as the
case may be, stating that, as determined on the DSCR
Determination Date with respect to the applicable
Release, the Debt Service Coverage Ratio, after
taking into consideration the proposed Release and
Release Payment, will remain at a level at least
equal to the Debt Service Coverage Ratio as of such
DSCR Determination Date without taking into
consideration the proposed Release and Release
Payment, such Officer's Certificate to have attached
thereto the unaudited operating statements for all
Properties with respect to each Tenant's Accounting
Year immediately preceding the applicable DSCR
Determination Date and the unaudited operating
statement for the Affected Property to be Released
with respect to the applicable Tenant's Accounting
Year immediately preceding the applicable DSCR
Determination Date;
(b) Lender shall have received from Borrower a Release
Payment equal to at least one hundred and twenty five
percent (125%) of the Loan Allocation Amount for the
applicable Affected Property;
(c) the Release of the Affected Property will effect a
cure of the applicable non- monetary Event of
Default;
(d) the Borrower shall be entitled to have no more than
two (2) Affected Properties Released pursuant to the
provisions of this Section 2.2.2; and
(e) Lender shall have been reimbursed for all reasonable
costs and expenses (including without limitation
reasonable legal fees) incurred by it in effecting
said Release, said costs and expenses to be paid by
borrower to Lender regardless of whether the Release
takes place.
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In addition to the foregoing, in the event that, following the
Release of two (2) Affected Properties pursuant to the terms of this Section
2.2.2, there shall occur a subsequent non-monetary Event of Default attributable
to an Affected Property, the Borrower may effect a cure of such non-monetary
Event of Default by delivering to Lender a payment in reduction of the Principal
Amount (a "Cure Payment") equal to at least one hundred and twenty five percent
(125%) of the Loan Allocation Amount for such Affected Property. The payment to
Lender of the Cure Payment shall in no way obligate Lender to Release the
applicable Affected Property from the lien of its Mortgage, such Affected
Property shall remain as collateral for the Loan and Borrower shall continue to
comply with, or cause the continued compliance with, as to such Affected
Property, the terms and conditions of the Lockbox Agreement, however, from and
after receipt of such payment, Lender shall forbear from exercising any rights
with respect to the applicable non-monetary default or Event of Default and any
other non-monetary default or Event of Default with respect to such Affected
Property, the Lender agreeing that it shall not accelerate the Loan or otherwise
pursue its remedies with respect thereto on account of such non-monetary default
or Event of Default with respect to such Affected Property; provided, however,
that the foregoing shall in no event limit Lender's rights with respect to any
default or Event of Default which is not attributable to such Affected Property.
Borrower agrees that, to the extent and so long as either
HPTRI or HPTWN, as the case may be, retains title to all or any portion of the
fee or ground lessee estate of a Property or Affected Property which is Released
as provided for in Section 2.2.1 or Section 2.2.2 above and such Property or
Affected Property remains subject to a Lease Agreement which is cross defaulted
(as to Tenant defaults) with any other Lease Agreement on any Property which is
encumbered by a Mortgage, HPTRI or HPTWN, as the case may be, shall not permit
such Property or Affected Property to be encumbered by any Lien. Borrower shall,
on each anniversary of the date hereof, certify in writing to Lender that
Borrower has at all times complied with the requirements of the immediately
preceding sentence.
2.2.3 Release of Property Following Casualty or Condemnation
Loss. With respect to any HPTRI Property as to which the applicable Lease
Agreement or Management Agreement is not in full force and effect or any HPTWN
Property as to which the applicable Lease Agreement is not in full force and
effect and (i) which has had fifty percent (50%) or more of the Improvements
located thereon taken in condemnation or destroyed by a casualty loss, and
Borrower is unable to, or has elected not to, restore or repair such applicable
Property, or (ii) which has had less than fifty percent (50%) of the
Improvements located thereon taken in condemnation or destroyed in a casualty
loss, and Borrower, after exercising good faith, diligent efforts has reasonably
determined that it will be unable to comply with the requirements set forth in
Section 3(e)(i) of the applicable Mortgage, Borrower shall, as provided for in
Section 3(e)(ii) of the Mortgages, deliver to Lender all casualty loss insurance
proceeds or condemnation proceeds paid to or received by Borrower with respect
to such casualty loss or condemnation (the "Proceeds"). In connection therewith,
Borrower may obtain a Release of such Property from the lien of the Mortgage
encumbering such Property provided that such Proceeds paid to Lender are at
least equal to the Loan Allocation Amount for the applicable Property. To the
extent that the Proceeds delivered to Lender exceed the Loan Allocation Amount,
such excess portion (the "Excess") shall be applied by Lender in reduction of
the Indebtedness and the Loan Allocation Amounts of each of the remaining
Properties shall be decreased by an amount equal to, as to each remaining
Property, the product of (1) the Excess, multiplied by (2) a fraction, the
numerator of which is the Loan Allocation Amount for such Property and the
denominator of which is the aggregate of all Loan Allocation Amounts of all
Properties (except the Property being released pursuant hereto. In the event
that the Proceeds paid to Lender are less than the Loan Allocation Amount for
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the applicable Property, Borrower may obtain a Release of such Property from the
lien of the Mortgage encumbering such Property if Lender shall have received
from Borrower a payment (in addition to the Proceeds) equal to the difference
between (i) the Loan Allocation Amount for the applicable Property less (ii) the
Proceeds previously delivered to Lender.
Section 2.3 Assumption of the Loan.
In connection with the sale by Borrower of all of its right,
title and interest in and to all of the Properties to a unrelated third-party
purchaser (the "Transferee"), Borrower shall have the right to request that
Lender approve (on a one time only basis) an assignment to, and assumption by,
Transferee of Borrower's obligations under the Note, the Mortgages and the Loan
Documents. Lender's consent to such transfer and assignment and assumption will
not be unreasonably withheld after consideration of all relevant factors,
provided that:
(a) no Event of Default or event which with the giving of
notice or the passage of time would constitute an
Event of Default shall have occurred and remain
uncured hereunder or under any of the Loan Documents;
(b) the Transferee shall be a reputable Person of good
character, creditworthy, with sufficient financial
worth considering the obligations assumed and
undertaken, as evidenced by financial statements and
other information reasonably requested by Lender;
(c) the Transferee shall have sufficient experience in
the ownership and management of properties similar to
the Properties, and Lender shall be provided with
reasonable evidence thereof;
(d) the Transferee must be in compliance with all
applicable Rating Agency requirements for
special-purpose bankruptcy remote entities;
(e) Lender shall have received in writing evidence from
the Rating Agency to the effect that such assignment
and assumption will not result in a downgrade,
withdrawal or qualification of the rating then in
effect for the Certificates, together with such legal
opinions as may be reasonably requested by the Rating
Agency;
(f) the transfer shall have been approved in writing by
the Servicer;
(g) the Transferee shall have executed and delivered to
Lender an assumption agreement in form and substance
reasonably acceptable to Lender evidencing such
Transferee's agreement to abide and be bound by the
terms of the Note, the Mortgages and the other Loan
Documents, together with such legal opinions and
title insurance endorsements as may be reasonably
requested by Lender;
(h) Lender shall have received evidence reasonably
satisfactory to Lender that all required approvals,
if any, to such sale or transfer shall have been
obtained, including, without limitation, any
approvals required under the Ground Lease; and
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(i) Lender shall have been reimbursed for all reasonable
costs and expenses (including without limitation
reasonable legal fees and Rating Agency fees)
incurred by it in considering, evaluating and, if
applicable, permitting said assignment and
assumption, said costs and expenses to be paid by
Borrower to Lender regardless of whether the
assignment and assumption takes place.
III. REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1 Borrower's Representations, Warranties and
Covenants.
(i) Each of HPTRI and HPTWN hereby represent and warrant, as
to itself and as to its Properties, that:
(a) except as to those Properties which are subject to Ground
Leases, as described on Exhibit B annexed hereto, Borrower has good and
marketable fee simple title to the Properties, subject only to those matters
expressly set forth in the Title Policies (the "Permitted Exceptions"), and has
full power and lawful authority to grant, bargain, sell, convey, assign,
transfer and mortgage its interest in the each of Properties in the manner and
form provided for in the applicable Mortgages. As to those Properties which are
subject to Ground Leases, Borrower has good title in and to the ground lessee's
leasehold estate created by such Ground Leases, subject only to the Permitted
Exceptions set forth in the Title Policies, and Borrower has full power and
lawful authority to grant, bargain, sell, convey, assign, transfer and mortgage
its interest in each of such Properties in the manner and form provided for in
the applicable Mortgages. Each Borrower will preserve its interest in and title
to each of the Properties and will forever warrant and defend the same to Lender
against any and all claims whatsoever and will forever warrant and defend the
validity and priority of the lien and security interest created herein against
the claims of all persons and parties whomsoever, subject to the Permitted
Exceptions. As to each Property, the Permitted Exceptions do not and will not
materially and adversely interfere with (i) the ability of Borrower to pay in
full the principal and interest on the Note in a timely manner, or (ii) the use
of the applicable Property for the use currently being made thereof, the
operation of the applicable Property as currently being operated or the value of
the applicable Property. The foregoing warranty of title is stated to survive
the foreclosure of the Mortgages and to inure to the benefit of and to be
enforceable by Lender in the event Lender acquires title to the applicable
Property pursuant to any foreclosure;
(b) all stock and/or shares or other interests in and to
Borrower are one hundred percent (100%) owned and held by HPT;
(c) the Private Placement Memorandum is true and correct in
all material respects as of the date thereof and the Private Placement
Memorandum does not omit to state any fact or circumstance necessary to make the
statements contained therein not misleading in any material respect as of the
date hereof or thereof;
(d) the execution, delivery and performance of this Agreement,
the Mortgages, the Note and all of the other Loan Documents have been duly
authorized by all necessary action to be, and are, binding and enforceable
against Borrower in accordance with the respective terms thereof (except as may
be limited by applicable bankruptcy, reorganization, insolvency, moratorium or
any other similar laws affecting generally the enforcement of creditor's rights
as from time to time are in effect) and do not contravene, result in a breach of
or constitute (with or without the giving of notice or the passage of time or
both) a default under the certificate of incorporation or other organizational
documents of Borrower or any contract or agreement of any nature to which
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Borrower is a party or by which Borrower or any of its property may be bound and
do not violate or contravene any law, order, decree, rule or regulation to which
Borrower is subject;
(e) Borrower is not required to obtain any consent, approval
or authorization from or to file any declaration or statement with, any
Governmental Authority or agency in connection with or as a condition to the
execution, delivery or performance of this Agreement, the Mortgages, the Note or
the other Loan Documents which has not been so obtained or filed;
(f) Borrower has obtained or made all necessary material (i)
consents, approvals and authorizations and registrations and filings of or with
all Governmental Authorities and (ii) consents, approvals, waivers and
notifications of partners, stockholders, creditors, lessors and other
non-governmental persons and/or entities, in each case, which are required to be
obtained or made by Borrower in connection with the execution and delivery of,
and the performance by Borrower of its obligations under, the Loan Documents and
the nonexistence of which would have a Material Adverse Effect;
(g) Borrower is not an "investment company", or company
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended;
(h) no part of the proceeds of the indebtedness secured hereby
will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent with
such Regulations G, T, U or X or any other Regulations of such Board of
Governors, or for any purpose prohibited by legal requirements or by the terms
and conditions of the Loan Documents;
(i) Borrower has filed all federal, state and local tax
returns required to be filed and has paid or made adequate provision for the
payment of all federal, state and local taxes, charges and assessments payable
by Borrower. To the best of Borrower's knowledge, its tax returns properly
reflect the income and taxes of Borrower for the periods covered thereby,
subject only to reasonable adjustments required by the Internal Revenue Service
or other applicable tax authority upon audit;
(j) Borrower is not an "employee benefit plan", as defined in
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to Title I of ERISA and the assets of Borrower do
not constitute "plan assets" of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101;
(k) there are no pending actions, suits or proceedings,
arbitrations or governmental investigations against any Property, an adverse
outcome of which would have a Material Adverse Effect;
(l) the Borrower (i) has not entered into the transaction
evidenced hereby or by any Loan Document with the actual intent to hinder,
delay, or defraud any creditor, and (ii) received reasonably equivalent value in
exchange for its obligations under the Loan Documents. Giving effect to the
transactions contemplated by the Loan Documents, the fair saleable value of the
Borrower's assets exceeds and will, immediately following the execution and
delivery of the Loan Documents, exceed the Borrower's total liabilities,
including, without limitation, subordinated, unliquidated, disputed or
contingent liabilities. The fair saleable value of the Borrower's assets is and
will, immediately following the execution and delivery of the Loan Documents, be
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greater than the Borrower's probable liabilities, including the maximum amount
of its contingent liabilities or its debts as such debts become absolute and
matured. The Borrower's assets do not and, immediately following the execution
and delivery of the Loan Documents will not, constitute unreasonably small
capital to carry out its business as conducted or as proposed to be conducted.
The Borrower does not intend to, and does not believe that it will, incur debts
and liabilities (including, without limitation, contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature (taking into
account the timing and amounts to be payable on or in respect of obligations of
the Borrower);
(m) the Properties and the current use thereof comply in all
material respects with all applicable restrictive covenants, zoning ordinances,
subdivision and building codes, flood disaster laws, applicable health and
environmental laws and regulations and all other ordinances, orders or
requirements issued by any state, federal or municipal authorities having or
claiming jurisdiction over the Properties, other than failures to comply with
the foregoing which would not have a Material Adverse Effect. None of the
Properties require any material rights over, or restrictions against, other
property in order to comply with any of the aforesaid governmental ordinances,
orders or requirements, except as disclosed in the Title Policies and the
Surveys;
(n) all utility services necessary and sufficient for the use,
occupancy, operation and disposition of each of the Properties for their
intended purposes are available to each of the Properties, including water,
storm sewer, sanitary sewer, gas, electric, cable and telephone facilities,
through public rights-of-way or perpetual private easements;
(o) except as disclosed in the Title Policies and the Surveys,
all streets, roads, highways, bridges and waterways necessary for access to and
full use, occupancy, operation and disposition of each of the Properties have
been completed, have been dedicated to and accepted by the appropriate municipal
authority and are open and available to each of the Properties without further
condition or cost to Borrower;
(p) to the best of Borrower's knowledge, all curb cuts,
driveways and traffic signals shown on the Surveys are existing and have been
fully approved by the appropriate governmental authority;
(q) Borrower has received no written notice of any judicial,
administrative, mediation or arbitration actions, suits or proceedings pending
or threatened against or affecting Borrower or the Properties which, if
adversely determined, would materially impair either any of the Properties or
Borrower's ability to perform the covenants or obligations required to be
performed under the Loan Documents;
(r) no part of any Property has been taken in condemnation,
eminent domain or like proceeding nor, to the best of Borrower's knowledge, is
any such proceeding pending, threatened or contemplated;
(s) Borrower possesses all material licenses and permits
(collectively, the "Permits") required for the conduct of its business
substantially as now conducted, all fees due and payable in connection with the
Permits have been paid and Borrower's business with respect to each Property
complies with the Permits in all material respects;
(t) except as indicated in the Surveys and Title Policies, to
the best of Borrower's knowledge, none of the Improvements lie outside the
boundaries and building restriction lines of the applicable Property. Except as
set forth in the Surveys and Title Policies, to the best of
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Borrower's knowledge, no improvements on adjoining properties encroach upon any
of the Properties in any material respect;
(u) Borrower has not entered into any security agreements or
financing statements affecting any of the Properties other than the security
agreements and financing statements created in favor of Lender;
(v) except as otherwise specifically set forth in the
Environmental Reports, to the best of Borrower's knowledge, there are no
actions, suits, proceedings or orders of record or of which Borrower has notice,
and, to the best of Borrower's knowledge, there are no inquiries or
investigations, pending or threatened, in any such case against, involving or
affecting any of the Properties, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, alleging the violation
of any federal, state or local law, statute, ordinance, rule or regulation
relating to Environmental Laws (as defined in the Environmental Indemnity).
Furthermore, Borrower has not received any claim or notice that the ownership or
operation of any of the Properties violates any federal, state or local law,
statute, ordinance, rule, regulation, decree, order, and/or permit relating to
Environmental Laws, and, except as otherwise specifically set forth in the
Environmental Reports, no valid basis for any proceeding, action or claim of
such nature exists;
(w) except as indicated in the Surveys, to the best of
Borrower's knowledge, none of the Improvements are located in a flood hazard
area as defined by the Federal Insurance Administration;
(x) except as disclosed in the Title Policies, no license or
occupancy agreement (exclusive of the Lease Agreements and the Management
Agreements) to which Borrower is a party and no easement, right-of-way, permit
or declaration (collectively, the "Property Agreements") provides any party with
the right to obtain a lien or encumbrance upon any Property superior to the lien
of the applicable Mortgage;
(y) no condition exists whereby Borrower or any future owner
of any Property may be required to purchase any other parcel of land which is
subject to any Property Agreement;
(z) except as previously disclosed to Lender in writing, there
are no brokerage fees or commissions payable by Borrower with respect to the
Lease Agreements;
(aa) except as previously disclosed in writing by Borrower to
Lender, or as set forth in the Property Agreements, the Lease Agreements or the
Management Agreements there are no outstanding options or rights of first
refusal to purchase all or any portion of any of the Properties or Borrower's
ownership thereof;
(bb) Borrower has delivered, or has directed Chicago Title
Insurance Company to deliver, to Lender true, correct and complete copies of all
Property Agreements and any and all amendments or modifications thereto;
(cc) no default exists or, to the best of Borrower's
knowledge, no event has occurred with the passing of time or the giving of
notice or both would exist, under any Property Agreement which would, in the
aggregate, have a material adverse effect on (a) any of the Properties, (b) the
business, prospects, profits, operations or condition (financial or otherwise)
of Borrower, (c) the enforceability, validity, perfection or priority of the
lien of any Loan Document or (d) the ability of Borrower to perform any material
obligations under any Loan Document (a "Material Adverse Effect");
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(dd) each of the Properties is taxed separately without regard
to any other real estate and, except as disclosed in the Title Policies and
Surveys, constitutes a legally subdivided lot under all applicable legal
requirements (or, if not subdivided, no subdivision or platting of any of the
Properties is required under applicable legal requirements), and for all
purposes may be mortgaged, conveyed or otherwise dealt with as an independent
parcel; and
(ee) to the best of Borrower's knowledge, the representations
and warranties contained in this Agreement, or the review and inquiry made on
behalf of the Borrower therefor, have all been made by persons having the
requisite expertise and knowledge to give such representations and warranties.
(ii) Each of HPTRI and HPTWN hereby covenant as of the date hereof and
until such time as the Loan is paid in full, that, as to itself and its
Properties, it shall enforce, in a timely and commercially reasonable matter,
all obligations of the Tenants under the Lease Agreements.
(iii) Each of HPTRI and HPTWN hereby represent, warrant and covenant as
of the date of hereof and until such time as the Loan is paid in full, that, as
to itself and its Properties, it:
(a) does not own and will not own any encumbered asset other
than (i) the Properties, and (ii) incidental personal property necessary for the
operation of, or associated with, the Properties;
(b) was organized solely for the purpose of owning, leasing
and operating the Properties and has not engaged in and will not engage in any
business other than the ownership, leasing and operation of the Properties;
(c) will not enter into any contract or agreement with any
shareholder or affiliate of Borrower except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arms-length basis with third parties other than an affiliate;
(d) has not incurred and will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than (i) the Indebtedness, (ii) payment obligations of Borrower under the Lease
Agreements, and (iii) trade payables or other current liabilities (excluding any
borrowings) incurred in the ordinary course of the business of owning, leasing
and operating the Properties and which are paid on customary trade terms and
otherwise within thirty (30) days of the date when due; and no other debt may be
secured (senior, subordinate or pari passu) by any of the Properties (other than
obligations arising from Permitted Exceptions which may result in a lien being
filed against a Property);
(e) has not made and will not make any loans or loan advances
to any third party (including any affiliate of Borrower), except for payments
required to be made by Borrower pursuant to the terms of any Lease Agreement;
(f) is and will remain solvent and pay its debts and
liabilities (including, without limitation, employment and overhead expenses)
from its assets as the same shall become due;
(g) has done or caused to be done and will do all things
necessary to observe corporate formalities and to preserve its existence, and
will not, nor will any shareholder thereof, amend, modify or otherwise change
its certificate of incorporation or by-laws in a manner which adversely affects
the Borrower's existence as a single purpose entity;
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(h) will conduct and operate its business in its own name and
as presently conducted and operated;
(i) will maintain books and records and bank accounts separate
from those of its affiliates or any other Person;
(j) will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any affiliate thereof) and not as a division or part of any other Person and
shall maintain and use separate stationery, invoices and checks;
(k) will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;
(l) will not, nor shall any shareholder, partner or affiliate,
seek the dissolution or winding up, in whole or in part, of the Borrower;
(m) will not enter into any transaction of merger or
consolidation, or acquire by purchase or otherwise all or substantially all of
the business or assets of, or any stock or beneficial ownership of, any entity;
(n) will not commingle the funds and other assets of the
Borrower with those of any shareholder, any affiliate or any other person;
(o) has and will maintain its assets in such a manner that it
is not costly or difficult to segregate, ascertain or identify its individual
assets from those of any affiliate or any other person;
(p) except as to the Loan, does not and will not hold itself
out to be responsible for the debts or obligations of any other person;
(q) has caused, and at all times shall cause, there to be at
least one duly appointed member of the board of directors (an "Independent
Director") of Borrower who has not been at the time of such individual's
appointment, may not have been at any time during the preceding five years, and
will not be during its or their service as Independent Director (A) a direct or
indirect stockholder of, or an officer, director (other than with respect to
such Independent Director's service as director of Borrower or the Depositor) or
employee, creditor, supplier, manager or contractor of, either Borrower or of
any affiliate thereof, (B) a person or other entity controlling any such
stockholder, creditor, supplier, manager or contractor, or (C) a member of the
immediate family of any such stockholder, officer, employee, creditor, supplier,
manager or contractor. As used in this subsection (q), the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities or other beneficial interests, by contract or otherwise;
(r) has not caused and shall not cause, the board of directors
of Borrower to take any action which, under the terms of any certificate of
incorporation, by-laws or any voting trust agreement with respect to Borrower's
common stock, requires the unanimous affirmative vote of one hundred percent
(100%) of the members of the board of directors, unless at the time of such
action there shall be at least one member who is an Independent Director;
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(s) will not, without the unanimous consent of all of its
directors, file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings with respect to itself or to any other entity in which it
has a direct or indirect legal or beneficial ownership interest;
(t) has maintained and will maintain its books, records,
resolutions and agreements as official records;
(u) has not and will not acquire obligations or securities of
its shareholders;
(v) has allocated and will allocate fairly and reasonably any
overhead for shared office space
(w) has not and will not pledge its assets for the benefit of
any other person or entity other than the holders of the Loan Documents;
(x) has not and will not identify its shareholders or any of
its affiliates as a division or part of such Borrower;
(y) has not failed and will not fail to correct any known
misunderstanding regarding its separate identity;
(z) shall comply with the provisions of its certificate of
incorporation; and
(aa) shall conduct itself and operate its business so that all
of the assumptions made in those certain legal opinions dated the date hereof by
Sullivan & Worcester LLP with respect to nonconsolidation issues shall be true
at all times.
Section 3.2 Survival of Representations, Warranties and
Covenants.
Borrower agrees that all of the representations, warranties
and covenants of Borrower set forth in Section 3.1 and elsewhere in this
Agreement and in the other Loan Documents shall survive for so long as any
amount remains owing to Lender under this Agreement or any of the other Loan
Documents. All representations, warranties, covenants and agreements made in
this Agreement or in the other Loan Documents by Borrower shall be deemed to
have been relied upon by Lender notwithstanding any investigation heretofore or
hereafter made by Lender or on its behalf.
IV. ASSIGNMENTS
Section 4.1 Assignment of Management Agreements.
As additional security for Borrower's performance of its
obligations under the Loan Documents, HPTRI hereby unconditionally and
irrevocably assigns to Lender all of its right, title and interest (but not
obligations) in and to the HPTRI Management Agreements. Promptly upon receipt of
request from Lender, HPTRI shall execute such other documents and instruments as
may be reasonably requested by Lender to evidence, effectuate and perfect the
assignment created hereby. With respect to the HPTRI Management Agreements,
Lender, the Manager thereunder and HPTRI have entered into a Subordination,
Non-Disturbance and Attornment Agreement of even date herewith (the "HPTRI
Management Agreement SNDA") whereby Lender has agreed, subject to the terms of
such HPTRI Management Agreement SNDA, to not disturb the rights of such Manager
under its HPTRI Management Agreement notwithstanding the occurrence of a default
under the Mortgage encumbering the Property which is the subject of its HPTRI
Management Agreement.
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Section 4.2 Assignment of FF&E Reserves.
As additional security for Borrower's performance of its
obligations under the Loan Documents, (i) HPTRI hereby unconditionally and
irrevocably collaterally assigns to Lender, subject to the terms of the HPTRI
Lease Agreements and the HPTRI Management Agreements, all of its right, title
and interest (but not obligations) in and to the HPTRI FF&E Reserves, and (ii)
HPTWN hereby unconditionally and irrevocably assigns to Lender, subject to the
terms of the HPTWN Lease Agreements and the HPTWN Management Agreements, all of
its residual right, title and interest (but not obligations) in and to the HPTWN
FF&E Reserves, as well as all of its right, title and interest in and to that
certain Assignment and Security Agreement dated as of May 3, 1996 by GHALP
Corporation for the benefit of HPTWN. Promptly upon receipt of request from
Lender, each of HPTRI and HPTWN shall execute such other documents and
instruments (including without limitation UCC-1 Financing Statements or
continuations) as may be reasonably requested by Lender to evidence, effectuate
and perfect the assignments created hereby.
Section 4.3 Assignment of Rights Under Security Agreements.
As additional security for Borrower's performance of its
obligations under the Loan Documents, (i) HPTRI hereby unconditionally and
irrevocably assigns to Lender all of its right, title and interest (but not
obligations) in and to that certain Security Agreement dated March 22, 1996 by
and between HMH HPT Residence Inn, Inc. and HPTRI, and (ii) HPTWN hereby
unconditionally and irrevocably assigns to Lender all of its right, title and
interest (but not obligations) in and to that certain Security Agreement dated
May 3, 1996 by and between GHALP Corporation and HPTWN. Promptly upon receipt of
request from Lender, each of HPTRI and HPTWN shall execute such other documents
and instruments (including without limitation UCC-1 Financing Statements or
continuations) as may be reasonably requested by Lender to evidence, effectuate
and perfect the assignments created hereby.
Section 4.4 Assignment of Stock Pledge and Security Agreement
for GHALP Corporation.
As additional security for Borrower's performance of its
obligations under the Loan Documents, HPTWN hereby unconditionally and
irrevocably assigns to Lender all of its right, title and interest (but not
obligations), if any, in and to that certain Stock Pledge and Security Agreement
dated May 3, 1996 by and between Wyndham Hotel Corporation, a Delaware
corporation for the benefit of HPTWN. Promptly upon receipt of request from
Lender, HPTWN shall execute such other documents and instruments as may be
reasonably requested by Lender to evidence, effectuate and perfect the
assignment created hereby.
V. LEASE AGREEMENTS AND MANAGEMENT AGREEMENTS
Section 5.1 Modification of Lease Agreements.
Borrower shall not (A) except as specifically permitted under
any Lease Agreement, allow any Tenant's interest under its Lease Agreement to be
assigned, mortgaged, pledged, hypothecated, encumbered, or otherwise transferred
or subleased (collectively, a "Lease Assignment"), or (B) alter, modify or
change any of the terms or provisions of any Lease Agreement to the extent that
(i) such alteration, modification or change would (a) decrease the amount of
Rent payable to Borrower under such Lease Agreement, (b) shorten the Fixed Term
under, and as that term is defined in, any such Lease Agreement, or (c) lessen
Tenant's obligations with respect to causing the Property, subject to the terms
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of the Lease Agreement, to remain free of Liens (as that term is defined any
such Lease Agreement), or (ii) such alteration, modification or change would
result (x) in a material increase in Borrower's obligations, as landlord under
such Lease Agreement, or (y) in a material reduction in the Tenant's obligations
under such Lease Agreement, unless Lender shall have consented in writing to
such Lease Assignment, alteration, modification or change and the Lender shall
have received in writing evidence from the Rating Agency that such Lease
Assignment, alteration, modification or change will not result in a downgrade,
withdrawal or qualification of the rating then in effect for the Certificates,
together with such legal opinions as may be requested by the Rating Agency (it
being expressly agreed that, without limiting the generality of Borrower's
authority pursuant to the foregoing, Borrower may, in its sole discretion, amend
and/or waive any Lease Agreement provisions pertaining to trade area
restrictions).
Section 5.2 Substitute Lease Agreement.
In the event that any Lease Agreement shall at any time or for
any reason be terminated or canceled, HPTRI or HPTWN, as the case may be, shall
have the right to enter into a substitute lease agreement with respect to the
applicable Property (a "Substitute Lease Agreement"), provided that (i) the
primary operator of such Property shall be a nationally recognized operator of
hotel/motel properties, and (ii) Lender shall have received in writing evidence
from the Rating Agency to the effect that such Substitute Lease Agreement will
not result in a downgrade, withdrawal or qualification of the rating which was
in effect for the Certificates immediately prior to the termination or
cancellation of such Lease Agreement, together with such legal opinions as may
be requested by the Rating Agency. In the event that either Borrower shall enter
into a Substitute Lease Agreement as provided for herein, Lender and such
borrower agree to enter into a nondisturbance and attornment agreement with the
tenant under such Substitute Lease Agreement provided that (i) such tenant has
also entered into said nondisturbance and attornment agreement, and (ii) any
such nondisturbance and attornment agreement is reasonably satisfactory to
Lender and Borrower in all respects.
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Section 5.3 Modification of the Management Agreements.
The HPTRI Borrower shall not alter, modify or change any of
the terms or provisions of any HPTRI Management Agreement to the extent that (A)
such alteration, modification or change would negatively impact on Borrower's
rights under such HPTRI Management Agreement with respect to (i) the Manager's
right to receive fees for its services thereunder, or (ii) the subordination of
such fees to sums payable by Borrower to Lender under the Note and the other
Loan Documents, or (B) such alteration, modification or change would result in a
material increase in Borrower's obligations, if any, under such HPTRI Management
Agreement or a material reduction in the Manager's obligations under such HPTRI
Management Agreement, unless Lender shall have received in writing evidence from
the Rating Agency that such alteration, modification or change will not result
in a downgrade, withdrawal or qualification of the rating then in effect for the
Certificates, together with such legal opinions as may be requested by the
Rating Agency (it being expressly agreed that, without limiting the generality
of the Borrower's authority pursuant to the foregoing, the HPTRI Borrower may,
in its sole discretion, amend and/or waive the provisions of Section 20.12 of
any HPTRI Management Agreement). The HPTWN Borrower shall not consent to any
amendment or modification of the provisions of the HPTWN Management Agreement
which provide (i) that, from and after the occurrence of any event of default
under any applicable HPTWN Lease Agreement, all amounts due from the applicable
HPTWN Tenant to the Manager shall be subordinate to all amounts due from the
applicable HPTWN Tenant to the HPTWN Borrower, (ii) for operation of the
applicable Property under the "Wyndham" and "Wyndham Garden" names, and (iii)
for termination thereof, at the HPTWN Borrower's option, without the prior
written consent of Lender.
Section 5.4 Substitute Management Agreements.
In the event that any HPTRI Management Agreement is, or any
HPTWN Management Agreement and the related HPTWN Lease Agreement are, at any
time and for any reason terminated or canceled, HPTRI or HPTWN, as the case may
be, shall use commercially reasonable efforts to promptly enter into a
replacement management agreement, or cause the applicable Tenant, if any, to
promptly enter into a replacement management agreement, with respect to the
applicable Property (the "Substitute Management Agreement") with a nationally
recognized hotel/motel franchise and management organization (a "Qualified
Manager") which Qualified Manager, in either case, as determined by the Rating
Agency, will not cause a downgrade, withdrawal or qualification of the rating
which was in effect for the Certificates immediately prior to the termination or
cancellation of the applicable Management Agreement. Moreover, in the event that
at any time the Management Agreements with respect to any HPTRI Properties whose
aggregated Loan Allocation Amounts equal or exceed twenty five percent (25%) of
the aggregated Loan Allocation Amounts for all Properties are no longer in full
force and effect, HPTRI hereby agrees that it shall, or shall cause the Tenant
to, not later than one (1) year from the date of such occurrence, enter into
Substitute Management Agreements with Qualified Managers with respect to such
HPTRI Properties. In the event that either Borrower shall enter into a
Substitute Management Agreement as provided for herein, Lender and such borrower
agree to enter into a nondisturbance and attornment agreement with the tenant
under such Substitute Management Agreement provided that (i) such tenant has
also entered into said nondisturbance and attornment agreement, and (ii) any
such nondisturbance and attornment agreement is reasonably satisfactory to
Lender and Borrower in all respects.
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VI. DEFAULTS
Section 6.1 Event of Default.
The occurrence of any Event of Default under, and as that term
is defined in, the Mortgages shall constitute an "Event of Default" hereunder.
Section 6.2 Remedies.
Upon the occurrence of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to Lender
against Borrower under this Agreement or any of the other Loan Documents or at
law or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Indebtedness shall be declared due and payable,
and whether or not Lender shall have commenced any foreclosure proceeding or
other action for the enforcement of its rights and remedies under any of the
Loan Documents with respect to the Property. Notwithstanding the fact that any
Mortgage may provide that it secures less than the entire Principal Amount, upon
the foreclosure by Lender of any such Mortgage, any foreclosure sale proceeds
which, pursuant to the terms of the applicable Mortgage, would be paid to the
applicable Borrower shall instead be paid to Lender and applied in reduction of
the Principal Amount of the Loan.
Section 6.3 Remedies Cumulative.
The rights, powers and remedies of Lender under this Agreement
shall be cumulative and not exclusive of any other right, power or remedy which
Lender may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one default or
Event of Default with respect to Borrower shall not be construed to be a waiver
with respect to any subsequent default or Event of Default by Borrower, or to
impair any remedy, right or power consequent thereon.
VII. MISCELLANEOUS
Section 7.1 Survival.
This Agreement and all covenants, agreements, representations
and warranties made herein and in the certificates delivered pursuant hereto
shall survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Indebtedness of Borrower is outstanding and unpaid. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All covenants,
promises and agreements contained in this Agreement shall be binding upon, and
shall inure to the benefit of, Lender, together with its successors and assigns,
and Borrower, together with its permitted successors and assigns.
Section 7.2 Lender's Discretion.
Whenever pursuant to this Agreement, Lender exercises any
right given to it to approve or disapprove, or any arrangement or term is to be
satisfactory to Lender, the decision of
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Lender to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
Section 7.3 Governing Law.
(a) The proceeds of the Note delivered pursuant hereto shall
be disbursed from the State of New York, which State the parties agree has a
substantial relationship to the parties and to the underlying transaction
embodied hereby, and in all respects, including, without limiting the generality
of the foregoing, matters of construction, validity and performance, this
Agreement and the obligations arising hereunder shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and performed in such State and any applicable law of the United
States of America, except that at all times the provisions for the creation,
perfection, and enforcement of the liens and security interests created pursuant
hereto and pursuant to the other Loan Documents shall be governed by and
construed according to the law of the State in which the applicable Property is
located, it being understood that, to the fullest extent permitted by the law of
such State, the law of the State of New York shall govern the validity and the
enforceability of all Loan Documents and all of the Indebtedness or obligations
arising hereunder or thereunder. To the fullest extent permitted by law,
Borrower hereby unconditionally and irrevocably waives any claim to assert that
the law of any other jurisdiction governs this Agreement and the Note, and this
Agreement and the Note shall be governed by and construed in accordance with the
laws of the State of New York pursuant to Section 5-1401 of the New York General
Obligations Law.
(b) Any suit, action or proceeding against Lender or Borrower
arising out of or relating to this Agreement shall be instituted in any federal
or state court in New York, New York, pursuant to Section 5-1402 of the New York
General Obligations Law, or, at Lender's discretion, in the State where the
applicable Property is located, and Borrower waives any objection which it may
now or hereafter have to the laying of venue of any such suit, action or
proceeding, and Borrower hereby irrevocably submits to the jurisdiction of any
such court in any suit, action or proceeding.
Section 7.4 Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination
or waiver of any provision of this Agreement, or of the Note, or of any other
Loan Document, nor consent to any departure by Borrower therefrom, shall in any
event be effective unless the same shall be in a writing signed by the party
against whom enforcement is sought, and then any such waiver or consent shall be
effective only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to, or demand on
Borrower, shall entitle Borrower to any other or future notice or demand in the
same, similar or other circumstances.
Section 7.5 Delay Not a Waiver.
Neither any failure nor any delay on the part of Lender in
insisting upon strict performance of any term, condition, covenant or agreement,
or exercising any right, power, remedy or privilege hereunder, under the Note or
under any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the date on
23
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which the same is due of any amount payable under this Agreement, the Note or
any other Loan Document, Lender shall not be deemed to have waived any right
either to require prompt payment when due of all other amounts due under this
Agreement, the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
Section 7.6 Notices.
All notices, consents, approvals and requests required or
permitted hereunder shall be given in the manner specified in the Mortgages and
directed to the parties at their respective addresses as provided therein.
Section 7.7 Trial by Jury.
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO
THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS
AGREEMENT OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
Section 7.8 Headings.
The Article and/or Section headings and the Table of Contents
in this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
Section 7.9 Successors and Assigns; Assignment.
This Agreement shall be binding upon and shall inure to the
benefit of each party hereto and their respective permitted successors and
assigns. Lender shall have the right to transfer, sell or assign this Agreement
and any of the other Loan Documents and the obligations hereunder to any Person
who purchases or otherwise acquires an interest in the Loan.
Section 7.10 Note Register.
The identity of the holder or holders of the Note from time to
time shall be entered in the Note Register (as that term is defined in the
Note), which Note Register shall be maintained by Lender or its designee. The
Borrower shall treat and recognize the Person or Persons in whose name the Note
is registered as the owner or owners thereof for the purpose of receiving all
payments thereon and for all other purposes.
Section 7.11 Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the
24
<PAGE>
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Section 7.12 Preferences.
Lender shall have the continuing and exclusive right to apply
or reverse and reapply any and all payments by Borrower to any portion of the
obligations of Borrower hereunder. To the extent Borrower makes a payment or
payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
Section 7.13 Waiver of Notice.
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which (a) this
Agreement or the other Loan Documents specifically and expressly provide for the
giving of notice by Lender to Borrower and (b) Borrower is not, pursuant to
applicable law, permitted to waive the giving of notice. To the extent permitted
by applicable law, Borrower hereby expressly waives the right to receive any
notice from Lender with respect to any matter for which this Agreement or the
other Loan Documents do not specifically and expressly provide for the giving of
notice by Lender to Borrower.
Section 7.14 Expenses; Indemnity.
Borrower covenants and agrees to reimburse Lender upon receipt
of written notice from Lender for all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by Lender in connection
with (i) the negotiation, preparation, execution, delivery and administration of
any consents, amendments, waivers or other modifications to this Agreement and
the other Loan Documents and any other documents or matters requested by
Borrower; (ii) the filing and recording fees and expenses, title insurance and
other similar expenses incurred in creating and perfecting the liens in favor of
Lender pursuant to this Agreement and the other Loan Documents; (iii) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting Borrower, this Agreement, the other Loan Documents,
the Properties, or any other security given for the Loan; and (iv) enforcing any
obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Property or in
connection with any refinancing or restructuring of the credit arrangement
provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceedings; provided, however, that Borrower shall not be liable
for the payment of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of any
of Lender.
Section 7.15 Exhibits Incorporated.
The Exhibits and Schedules annexed hereto are hereby
incorporated herein as a part of this Agreement with the same effect as if set
forth in the body hereof.
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Section 7.16 Offsets, Counterclaims and Defenses.
Any assignee of Lender's interest in and to this Agreement,
the Note and the other Loan Documents shall take the same free and clear of all
offsets, counterclaims or defenses which Borrower may have against any assignor
of such documents that are unrelated to the Loan, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.
Section 7.17 No Joint Venture or Partnership.
Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Property other than that of
mortgagee or lender.
Section 7.18 Conflict; Construction of Documents.
In the event of any conflict between the provisions of this
Agreement and any of the other Loan Documents, the provisions of this Agreement
shall control. The parties hereto acknowledge that they were represented by
counsel in connection with the negotiation and drafting of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same.
Section 7.19 Brokers and Financial Advisors.
Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement other than
Donaldson, Lufkin & Jenrette Securities Corporation, which Borrower will pay
pursuant to separate agreements. Borrower and Lender hereby agree to indemnify
and hold the other harmless from and against any and all claims, liabilities,
costs and expenses of any kind in any way relating to or arising from a claim by
any other Person that such Person acted on behalf of the indemnifying party in
connection with the transactions contemplated herein. The provisions of this
Section 7.18 shall survive the expiration and termination of this Agreement and
the repayment of the Indebtedness.
Section 7.20 Prior Agreements.
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, including, without limitation, are superseded
with respect to the Loan by the terms of this Agreement and the other Loan
Documents.
Section 7.21 Nonrecourse.
The provisions of Paragraph 18 of the Note are incorporated
herein by this reference to the fullest extent as if the text of such paragraph
were set forth in its entirety herein.
[Signature Page Follows]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.
LENDER:
COLUMN FINANCIAL, INC.,
a Delaware corporation
By: /s/ John D. Pierandri
Name: John D. Pierandri
Title: Vice President
BORROWER:
HPTRI CORPORATION,
a Delaware corporation
By: /s/ Thomas M. O'Brien
Name: Thomas M. O'Brien
Title: Vice President
HPTWN CORPORATION,
a Delaware corporation
By: /s/ Thomas M. O'Brien
Name: Thomas M. O'Brien
Title: Vice President
27
EXHBIT 10.3
FORM OF DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS
AND SECURITY AGREEMENT
Dated as of November 25, 1996
HPTRI CORPORATION
(Trustor)
TO
CHICAGO TITLE INSURANCE COMPANY
(Trustee)
FOR THE BENEFIT OF
COLUMN FINANCIAL, INC.
(Beneficiary)
LOCATION OF PROPERTY:
Record and Return To:
Cadwalader, Wickersham & Taft
1333 Hampshire Avenue, N.W.
Suite 700
Washington, D.C. 20036
Attention: Richard Madden, Esq.
<PAGE>
INDEX
Page
PART I - GENERAL PROVISIONS
1. Payment of Indebtedness and Incorporation of
Covenants, Conditions and Agreements.......................... 5
2. Warranty of Title............................................. 5
3. Insurance; Casualty........................................... 5
4. Payment of Taxes, Etc......................................... 12
5. Intentionally Omitted......................................... 13
6. Intentionally Omitted......................................... 13
7. Leases and Rents.............................................. 13
8. Maintenance and Use of Trust Property......................... 14
9. Transfer or Encumbrance of Trust Property..................... 16
10. Estoppel Certificates......................................... 16
11. No Cooperative or Condominium................................. 16
12. Changes in the Laws Regarding Taxation........................ 16
13. No Credits on Account of the Indebtedness..................... 17
14. Documentary Stamps............................................ 17
15. Right of Entry................................................ 17
16. Books and Records............................................. 17
17. Performance of Other Agreements............................... 18
18. Representations and Covenants Concerning Loan................. 18
19. Intentionally Omitted......................................... 19
20. Events of Default; Remedies................................... 19
21. Additional Remedies........................................... 22
22. Right to Cure Defaults........................................ 24
23. Late Payment Charge........................................... 25
24. Prepayment After Event of Default............................. 26
25. Prepayment.................................................... 26
26. Appointment of Receiver....................................... 26
27. Security Agreement............................................ 26
28. Authority..................................................... 28
29. Actions and Proceedings....................................... 28
30. Waiver of Jury Trial and Counterclaims........................ 28
31. Further Acts, Etc............................................. 28
32. Recording of Deed of Trust, Etc............................... 29
33. Usury laws.................................................... 29
34. Sole Discretion of Beneficiary................................ 30
35. Recovery of Sums Required To Be Paid.......................... 30
36. Marshalling and Other Matters................................. 30
<PAGE>
37. Waiver of Notice.............................................. 30
38. Remedies of Trustor........................................... 30
39. Intentionally Omitted......................................... 30
40. Intentionally Omitted......................................... 31
41. Intentionally Omitted......................................... 31
42. Bankruptcy or Insolvency...................................... 31
43. Intentionally Omitted......................................... 31
44. Assignments................................................... 31
45. Cooperation................................................... 31
46. Exculpation................................................... 32
47. Notices....................................................... 33
48. Non-Waiver.................................................... 34
49. Joint and Several Liability................................... 34
50. Severability.................................................. 34
51. Duplicate Originals........................................... 34
52. Indemnity and Beneficiary's Costs............................. 35
53. Certain Definitions........................................... 35
54. No Oral Change................................................ 35
55. Headings, Etc................................................. 35
56. Address of Real Property...................................... 36
57. Wire Transfer................................................. 36
58. Publicity..................................................... 36
59. Relationship.................................................. 36
60. Homestead..................................................... 36
61. No Third Party Agreements..................................... 36
62. Entire Agreement.............................................. 36
63. Servicer...................................................... 36
64. Governing Laws; Consent to Jurisdiction....................... 36
65. Certain Hotel Covenants....................................... 37
66. Title Acts by Trustee......................................... 38
67. Successor Trustee............................................. 38
68. Authorization Regarding Trustee............................... 38
PART II - STATE SPECIFIC PROVISIONS
SCHEDULE A - Legal Description of Land
ii
<PAGE>
THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND
SECURITY AGREEMENT (this "Deed of Trust"), made as of the ____ day of
__________, 1996, by HPTRI CORPORATION, Delaware corporation having offices at
c/o Hospitality Properties Trust, 400 Centre Street, Newton, Massachusetts 021 8
("Trustor"), to CHICAGO TITLE INSURANCE COMPANY ("Trustee") for the benefit of
COLUMN FINANCIAL, INC., a Delaware corporation having offices at 3414 Peachtree
Road, N.E., Suite 1140, Atlanta, Georgia 30326-1113 ("Beneficiary").
W I T N E S S E T H:
To secure the payment of an indebtedness in the principal sum
of ONE HUNDRED AND TWENTY FIVE MILLION DOLLARS ($125,000,000), lawful money of
the United States of America, to be paid with interest and all other sums and
fees payable according to a certain Promissory Note dated the date hereof made
by Trustor and HPTWN Corporation, a Delaware corporation ("HPTWN") to
Beneficiary (the promissory note together with all extensions, renewals or
modifications thereof being hereinafter collectively called the "Note", and the
loan evidenced by the Note being hereinafter referred to as the "Loan") and all
indebtedness, obligations, liabilities and expenses due hereunder and under any
other Loan Document (as hereinafter defined) (the indebtedness, interest, other
sums, fees, obligations and all other sums due under the Note and/or hereunder
and/or any other Loan Document being collectively called the "Indebtedness"),
Trustor hereby irrevocably grants, bargains, sells and conveys to Trustee IN
TRUST, WITH POWER OF SALE, and grants unto Trustee a security interest in, all
of Trustor's right, title and interest, if any, in the following property and
rights, whether now owned or held or hereafter acquired (collectively, the
"Trust Property"):
GRANTING CLAUSE ONE
All right, title and interest in and to the real property or
properties described on Schedule A hereto (collectively, the "Land").
GRANTING CLAUSE TWO
Any and all buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter located on the Land or any part thereof (collectively, the
"Improvements"; the Land and the Improvements hereinafter collectively referred
to as the "Real Property").
GRANTING CLAUSE THREE
All easements, rights-of-way, strips and gores of land,
streets, ways, alleys, passages, sewer rights, water, water courses, water
rights and powers, oil, gas and mineral rights, air rights and development
rights, zoning rights and all estates, rights, titles, interests, privileges,
liberties,
<PAGE>
tenements, hereditaments and appurtenances of any nature whatsoever in any way
belonging, relating or pertaining to the Real Property or any part thereof, and
the reversion and reversions, remainder and remainders, and all land lying in
the bed of any street, road or avenue, opened or proposed, in front of or
adjoining the Land or any part thereof to the center line thereof and all the
estates, rights, titles, interests, dower and rights of dower, curtesy and
rights of curtesy, property, possession, claim and demand whatsoever, both in
law and in equity, of Trustor of, in and to the Real Property and every part and
parcel thereof, with the appurtenances thereto.
GRANTING CLAUSE FOUR
All machinery, equipment, fixtures and other property of every
kind and nature whatsoever owned by Trustor, or in which Trustor has or shall
have an interest (to the extent of such interest), now or hereafter located upon
the Real Property, or appurtenant thereto, and usable in connection with the
present or future operation and occupancy of the Real Property and all building
equipment, materials and supplies of any nature whatsoever owned by Trustor or
in which Trustor has or shall have an interest (to the extent of such interest),
now or hereafter located upon the Real Property, or appurtenant thereto, or
usable in connection with the present or future operation and occupancy of the
Real Property, including but not limited to all beds, bureaus, chiffoniers,
chests, chairs, desks, lamps, mirrors, bookcases, tables, rugs, carpeting,
drapes, draperies, curtains, shades, venetian blinds, screens, paintings,
hangings, pictures, divans, couches, luggage carts, luggage racks, stools,
sofas, chinaware, linens, pillows, blankets, glassware, foodcarts, cookware, dry
cleaning facilities, dining room wagons, keys or other entry systems, bars, bar
fixtures, liquor and other drink dispensers, icemakers, radios, television sets,
intercom and paging equipment, electric and electronic equipment, dictating
equipment, private telephone systems, medical equipment, potted plants, heating,
lighting and plumbing fixtures, fire prevention and extinguishing apparatus,
cooling and air-conditioning systems, elevators, escalators, fittings, plants,
apparatus, stoves, ranges, refrigerators, laundry machines, tools, machinery,
engines, dynamos, motors, boilers, incinerators, switchboards, conduits,
compressors, vacuum cleaning systems, floor cleaning, waxing and polishing
equipment, call systems, brackets, electrical signs, bulbs, bells, ash and fuel,
conveyors, cabinets, lockers, shelving, spotlighting equipment, dishwashers,
garbage disposals, washers, dryers and other customary hotel equipment owned by
Trustor or in which Trustor shall have an interest pursuant to the Lease
Agreement (hereinafter defined) (hereinafter collectively called the
"Equipment"), and the right, title and interest of Trustor, if any, in and to
any of the Equipment which may be subject to any security agreements (as defined
in the Uniform Commercial Code of the State in which the Trust Property is
located (the "Uniform Commercial Code")) superior, inferior or pari passu in
lien to the lien of this Deed of Trust.
GRANTING CLAUSE FIVE
All awards or payments, including interest thereon, which may
heretofore and hereafter be made with respect to the Real 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
2
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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 Real Property.
GRANTING CLAUSE SIX
All leases and subleases (including, without limitation, that
certain Lease Agreement dated _______________, 1996, as amended, together with
any Substitute Lease Agreement entered into by Trustor pursuant to, and as that
term is defined in, the Loan Agreement, the "Lease Agreement") by and between
Trustor, as landlord, and HMH HPT Residence Inn, Inc., as tenant (together with
any tenant under any Substitute Lease Agreement entered into by Trustor pursuant
to the Loan Agreement, the "Tenant") and including, without limitation, all
guarantees of said leases and subleases) and other agreements affecting the use,
enjoyment and/or occupancy of the Real Property, or any part thereof, now or
hereafter entered into (including any use or occupancy arrangements created
pursuant to Section 365(h) of Title 11 of the United States Code (the
"Bankruptcy Code") or otherwise in connection with the commencement or
continuance of any bankruptcy, reorganization, arrangement, insolvency,
dissolution, receivership or similar proceedings, or any assignment for the
benefit of creditors, in respect of any tenant or occupant of any portion of the
Real Property) (the "Leases") and all cash or securities deposited to secure
performance by the Tenant and any other tenants, lessees, licensees or guests,
as applicable, of their obligations under any leases, licenses, concessions or
occupancy agreements, whether said cash or securities are to be held until the
expiration of the terms of said leases, licenses, concessions or occupancy
agreements or applied to one or more of the installments of rent coming due
prior to the expiration of said terms, and together with income, rents, issues,
profits, revenues and proceeds, including all oil and gas or other mineral
royalties and bonuses from the Real Property, including, without limitation, all
revenues and credit card receipts collected from guest rooms, restaurants, bars,
meeting rooms, banquet rooms and recreational facilities, all receivables,
customer obligations, installment payment obligations and other obligations now
existing or hereafter arising or created out of the sale, lease, sublease,
license, concession or other grant of the right of the use and occupancy of
property or rendering of services by Trustor or any operator or manager of the
hotel or the commercial space located in the Improvements or acquired from
others (including, without limitation, from the rental of any office space,
retail space, guest rooms or other space, halls, stores, and offices, and
deposits securing reservations of such space), license, lease, sublease and
concession fees and rentals, health club membership fees, food and beverage
wholesale and retail sales, service charges, vending machine sales and proceeds,
if any, from business interruption or other loss of income insurance (including
any payments received pursuant to Section 502(b) of the Bankruptcy Code or
otherwise in connection with the commencement or continuance of any bankruptcy,
reorganization, arrangement, insolvency, dissolution, receivership or similar
proceedings, or any assignment for the benefit of creditors, in respect of any
tenant or occupant of any portion of the Real Property and all claims as a
creditor in connection with any of the foregoing) (the "Rents") and all proceeds
from the sale, cancellation, surrender or other disposition of the Leases and
the right to receive and apply the Rents to the payment of the Indebtedness
including, but not limited to in accordance with the terms and provisions of (i)
that certain Lockbox Pledge and Security Agreement dated the date hereof (the
"Lockbox Security Agreement") by and among Trustor, HPTWN and Beneficiary, and
(ii) that certain Loan Agreement dated the date hereof (the "Loan Agreement") by
and among Trustor, HPTWN and Beneficiary.
3
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GRANTING CLAUSE SEVEN
All proceeds of and any unearned premiums on any insurance
policies covering the Real 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 Real Property,
or any part thereof.
GRANTING CLAUSE EIGHT
All tax refunds, including interest thereon, and tax
abatements, and the right to receive the same, which may be payable or available
with respect to the Real Property.
GRANTING CLAUSE NINE
The right, in the name and on behalf of Trustor, to appear in
and defend any action or proceeding brought with respect to the Real Property or
any part thereof and to commence any action or proceeding to protect the
interest of Beneficiary in the Real Property or any part thereof.
GRANTING CLAUSE TEN
All accounts receivable, utility or other deposits, contract
rights, interests, estate or other claims, both in law and in equity, which
Trustor or any one Trustor now has or may hereafter acquire in the Real Property
or any part thereof.
GRANTING CLAUSE ELEVEN
All rights which Trustor 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 to the Real Property or any part thereof.
GRANTING CLAUSE TWELVE
All plans and specifications, maps, surveys, studies, reports,
contracts, subcontracts, service contracts, management contracts (including,
without limitation, that certain Management Agreement dated ___________, 19___,
as amended, (together with any Substitute Management Agreement entered into by
Trustor pursuant to, and as that term is defined in, the Loan Agreement, the
"Management Agreement") between Trustor (as successor in interest to HMH
Properties, Inc.) and Residence Inn by Marriott, Inc. (together with any
Qualified Manager [as that term is defined in the Loan Agreement] under any
Substitute Management Agreement entered into by Trustor pursuant to the terms of
the Loan Agreement, the "Manager")), franchise agreements and other agreements,
franchises, trade
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names, trademarks, symbols, service marks, approvals, consents, permits, special
permits, licenses and rights, whether governmental or otherwise, respecting the
use, occupation, development, construction and/or operation of the Real Property
or any part thereof or the activities conducted thereon or therein, or otherwise
pertaining to the Real Property or any part thereof.
WITH RESPECT TO any portion of the Trust Property which is not
real property under the laws of the State in which the Real Property is located,
Trustor hereby grants, bargains, sells and conveys the same to Beneficiary for
the purposes set forth hereunder and the references above to Trustee shall be
deemed to be to Beneficiary with respect to such portion of the Trust Property
and Beneficiary shall be vested with all rights, powers and authority granted
hereunder or by law to Trustee with respect thereto.
TO HAVE AND TO HOLD the above granted and described Trust
Property unto and to the use and benefit of Beneficiary, and the successors and
assigns of Beneficiary, forever.
PROVIDED, HOWEVER, these presents are upon the express
condition, if Trustor shall well and truly pay to Beneficiary the Indebtedness
at the time and in the manner provided in the Note and this Deed of Trust and
shall well and truly abide by and comply with each and every covenant and
condition set forth herein, in the Note and the other Loan Documents, these
presents and the estate hereby granted shall cease, terminate and be void.
PART I - GENERAL PROVISIONS
AND Trustor represents to, covenants with and warrants to
Beneficiary that:
1. Payment of Indebtedness and Incorporation of Covenants,
Conditions and Agreements. Trustor shall pay the Indebtedness at the time and in
the manner provided in the Note, this Deed of Trust and the other Loan
Documents. All the covenants, conditions and agreements contained in the Note
and the other Loan Documents 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.
2. Warranty of Title. Trustor has good and marketable title to
the Real Property; Trustor has the right to mortgage, give, grant, bargain,
sell, alien, enfeoff, convey, confirm, pledge, lease, assign and hypothecate,
and grant a security interest in, the Real Property; Trustor possesses an
indefeasible fee estate in the Real Property; and Trustor owns the Real Property
free and clear of all liens, encumbrances and charges whatsoever except those
exceptions shown in the title insurance policy insuring the lien of this Deed of
Trust (this Deed of Trust and the liens, encumbrances and charges shown as
exceptions in such title policy, hereinafter collectively referred to as the
"Permitted Encumbrances"). Trustor shall forever warrant, defend and preserve
such title and the validity and priority of the lien of this Deed of Trust and
shall forever warrant and defend the same to Beneficiary and Trustee against the
claims of all persons whomsoever.
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3. Insurance; Casualty and Condemnation.
(a) Except during such time as the Lease Agreement and/or the
Management Agreement is in full force and effect and the Tenant or the Manager
is maintaining insurance in accordance with the terms of the Lease Agreement or
the Management Agreement, as the case may be, Trustor, at Trustor's expense,
shall maintain, or cause to be maintained, in force and effect on the Trust
Property at all times while this Deed of Trust continues in effect the following
insurance:
(i) "All-risk" coverage insurance against loss or damage to
the Trust Property from all- risk perils. The amount of such insurance shall be
not less than one hundred percent (100%) of the full replacement cost of the
Improvements, furniture, furnishings, fixtures, Equipment and other items
(whether personalty or fixtures) included in the Trust Property and owned by
Trustor from time to time, without reduction for depreciation. The determination
of the replacement cost amount shall be adjusted annually to comply with the
requirements of the insurer issuing such coverage or, at Beneficiary's election,
by reference to such indexes, appraisals or information as Beneficiary
reasonably determines. Full replacement cost, as used herein, means, with
respect to the Improvements, the cost of replacing the Improvements without
regard to deduction for depreciation, exclusive of the cost of excavations,
foundations and footings below the lowest basement floor, and means, with
respect to such furniture, furnishings, fixtures, Equipment and other items, the
cost of replacing the same. Each policy or policies shall contain a replacement
cost endorsement and either an agreed amount endorsement (to avoid the operation
of any co-insurance provisions) or a waiver of any co-insurance provisions, all
subject to Beneficiary's approval.
(ii) Commercial general liability insurance for personal
injury, bodily injury, death and Trust Property damage liability in a combined
single limit amount of not less than $10,000,000.00 (inclusive of umbrella
coverage) or such lesser amount as Beneficiary, in Beneficiary's sole
discretion, may accept, for bodily injury, personal injury and Trust Property
damage. This policy must contain, but not be limited to, coverage for premises
and operations liability, products and completed operations liability,
contractual liability, hired and non-owned automobile liability, personal injury
liability and Trust Property damage liability. During any construction on the
Real Property, Trustor's general contractor for such construction shall also
provide the insurance required in this subparagraph (ii). Beneficiary hereby
retains the right to periodically review the amount of said liability insurance
being maintained by Trustor and to require an increase in the amount of said
liability insurance should Beneficiary deem an increase to be reasonably prudent
under then existing circumstances.
(iii) Insurance covering the major components of the central
heating, air conditioning and ventilating systems, boilers, other pressure
vessels, high pressure piping and machinery, elevators and escalators, if any,
and other similar equipment installed in the Improvements, in an amount equal to
one hundred percent (100%) of the full replacement cost of the Improvements
which policies shall insure against physical damage to and loss of occupancy and
use of the Improvements arising out of an accident or breakdown covered
thereunder.
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(iv) If the Real Property or any part thereof is identified by
the Secretary of Housing and Urban Development as being situated in an area now
or subsequently designated as having special flood hazards (including, without
limitation, those areas designated as Zone A or Zone V), flood insurance, if
available, in an amount equal to one hundred percent (100%) of the replacement
cost of the Improvements or the maximum amount of flood insurance available,
whichever is the lesser.
(v) During the period of any construction on the Real Property
or renovation or alteration of the Improvements, a so-called "Builder's All-Risk
Completed Value" or "Course of Construction" insurance policy in non-reporting
form for any Improvements under construction, renovation or alteration in an
amount approved by Beneficiary and Worker's Compensation Insurance covering all
persons engaged in such construction, renovation or alteration.
(vi) Business interruption insurance in amounts sufficient to
compensate Trustor for losses incurred due to cessation of the operation of the
Trust Property as a hotel during a period of not less than one year in which the
Trust Property may be damaged or destroyed.
(vii) Such other insurance (including, without limitation,
innkeeper's legal liability and liquor liability) on the Trust Property or on
any replacements or substitutions thereof or additions thereto as may from time
to time be reasonably required by Beneficiary against other insurable hazards or
casualties which at the time are commonly insured against in the case of Trust
Property similarly situated, due regard being given to the height and type of
buildings, their construction, location, use and occupancy.
(viii) Insurance proceeds and any additional funds deposited
by Trustor with Beneficiary shall constitute additional security for the
Indebtedness. Trustor shall execute, deliver, file and/or record, at its
expense, such documents and instruments as Beneficiary deems necessary or
advisable to grant to Beneficiary a perfected, first priority security interest
in the insurance proceeds and such additional funds.
All such insurance policies required pursuant to this Paragraph 3 shall
(i) be with insurers authorized to do business in the state within which the
Real Property is located and who have and maintain a claims-paying ability
rating of at least A, as determined by Standard & Poor's Ratings Services, (ii)
contain the complete address of the Real Property (or a complete legal
description), (iii) be for a term of at least one year, (iv) contain deductibles
no greater than $_________ or as otherwise required by Beneficiary, and (v) be
subject to the approval of Beneficiary as to insurance companies, amounts,
content, forms of policies, method by which premiums are paid and expiration
dates.
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The insurance policies provided by the Tenant pursuant to the terms of
the Lease Agreement and/or by Manager pursuant to the terms of the Management
Agreement and the insurance policies required pursuant to this Paragraph 3 shall
be collectively referred to herein as the "Policies".
Trustor shall as of the date hereof deliver to Beneficiary
evidence that said Policies have been paid current as of the date hereof and
copies of certificates of insurance evidencing such Policies. All such insurance
shall be renewed and certificates delivered to Beneficiary evidencing such
renewals before any such insurance shall expire. Subject to the terms of the
Lease Agreement and the Management Agreement, without limiting the required
endorsements to the Policies, Trustor further agrees that all such Policies
insuring the Trust Property shall provide that proceeds thereunder shall be
payable to Beneficiary, its successors and assigns, pursuant and subject to a
mortgagee endorsement (without contribution) of standard form attached to, or
otherwise made a part of, the applicable Policy and that Beneficiary, its
successors and assigns, shall be named as an additional insured under all
liability Policies. Subject to the terms of the Lease Agreement and the
Management Agreement, Trustor further agrees that all such Policies: (i) shall
provide for at least thirty (30) days' prior written notice to Beneficiary prior
to any cancellation or termination thereof and prior to any material
modification thereof which affects the interest of Beneficiary; (ii) shall
contain an endorsement or agreement by the insurer that any loss shall be
payable to Beneficiary in accordance with the terms of such policy
notwithstanding any act or negligence of Trustor which might otherwise result in
forfeiture of such insurance; and (iii) shall waive all rights of subrogation
against Beneficiary. The delivery to Beneficiary of the Policies or the
certificates of insurance as provided above shall constitute an assignment of
all proceeds payable under such insurance policies by Trustor to Beneficiary as
further security for the indebtedness secured hereby, subject to the rights of
Tenant and/or Manager with respect to same, as provided for in the Lease
Agreement or the Management Agreement, as the case may be. In the event of
foreclosure of this Deed of Trust, or other transfer of title to the Trust
Property in extinguishment in whole or in part of the secured indebtedness, all
right, title and interest of Trustor in and to all proceeds payable under such
Policies then in force concerning the Trust Property shall thereupon vest in the
purchaser at such foreclosure, or in Beneficiary or other transferee in the
event of such other transfer of title, subject to the rights of Tenant and/or
Manager with respect to same, as provided for in the Lease Agreement or the
Management Agreement, as the case may be. Approval of any insurance by
Beneficiary shall not be a representation of the solvency of any insurer or the
sufficiency of any amount of insurance. In the event Tenant, Manager or Trustor,
as the case may be, fails to provide, maintain, keep in force or deliver and
furnish to Beneficiary the policies of insurance required by the Lease
Agreement, the Management Agreement or, if applicable, this Deed of Trust or
evidence of their renewal as required herein, Beneficiary may, but shall not be
obligated to, procure such insurance and Trustor shall pay all amounts advanced
by Beneficiary, together with interest thereon at the Default Rate (as such term
is defined in the Note) from and after the date advanced by Beneficiary until
actually repaid by Trustor, promptly upon demand by Beneficiary. Any amounts so
advanced by Beneficiary, together with interest thereon, shall be secured by
this Deed of Trust and by all of the other Loan Documents securing all or any
part of the indebtedness evidenced by the Note. Beneficiary shall not be
responsible
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for nor incur any liability for the insolvency of the insurer or other failure
of the insurer to perform, even though Beneficiary has caused the insurance to
be placed with the insurer after failure of Trustor to furnish such insurance.
(b) Trustor shall give Beneficiary prompt written notice of the
occurrence of any casualty affecting, or the institution of any proceedings for
eminent domain or for the condemnation of, the Trust Property or any portion
thereof. All insurance proceeds on the Trust Property, and all causes of action,
claims, compensation, awards and recoveries for any damage, condemnation or
taking of all or any part of the Trust Property or for any damage or injury to
it for any loss or diminution in value of the Trust Property, are, subject to
the rights of Tenant and/or Manager with respect to same, as provided for in the
Lease Agreement or the Management Agreement, as the case may be, hereby assigned
to and shall be paid to Beneficiary. Subject to the rights of Tenant under the
Lease Agreement and/or Manager under the Management Agreement, Beneficiary may
participate in any suits or proceedings relating to any such proceeds, causes of
action, claims, compensation, awards or recoveries and Beneficiary is hereby
authorized, in its own name or in Trustor's name, to adjust any loss covered by
insurance or any condemnation claim or cause of action, and to settle or
compromise any claim or cause of action in connection therewith, and Trustor
shall from time to time deliver to Beneficiary any instruments required to
permit such participation; provided, however, that Beneficiary shall not have
the right to participate in the adjustment of any loss which is not in excess
$250,000.00. The Trustor shall not consent to any loss adjustments with respect
to casualty loss or condemnation proceeds in excess of $250,000.00 without the
prior written consent of Beneficiary.
(c) During such time as the Lease Agreement and/or the Management
Agreement is in full force and effect and the Tenant is maintaining insurance in
accordance with the terms of the Lease Agreement or the Manager is maintaining
insurance in accordance with the terms of the Management Agreement, the terms of
the Lease Agreement and/or the Management Agreement with respect to the
disbursement and application of casualty loss and condemnation proceeds shall
govern and control; provided, however, Trustor agrees that, unless it is
required pursuant to the terms of the Lease Agreement to utilize its own funds
to repair or restore any casualty or condemnation loss, Trustor will not do so
without Beneficiary's prior written consent (which consent shall not be
unreasonably withheld, delayed or conditioned) to the extent that the total
costs incurred by Trustor in repairing or restoring such casualty or
condemnation loss would, when aggregated with all other costs which have been or
will be incurred by Trustor or HPTWN, as the case may be, in contemporaneously
repairing or restoring any other casualty or condemnation loss on any other
property encumbered by any Other Mortgage (hereinafter defined), exceed
$12,500,000.00.
(d) Notwithstanding the provisions of Paragraph 3(c) above, to the
extent that any casualty loss or condemnation proceeds are to be delivered or
paid to Trustor, pursuant to the terms of the Lease Agreement or the Management
Agreement, such proceeds shall instead be delivered or paid to Beneficiary, and
Trustor hereby covenants to cause such casualty loss or condemnation proceeds to
be delivered or paid to Beneficiary or, if delivered or paid to Trustor, Tenant
or Manager, to deliver same, or cause same to be delivered, to Beneficiary
within one (1)
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Business Day (as that term is defined in the Loan Agreement) of Trustor's
receipt of such proceeds or five (5) Business Days after the date on which
Trustor shall have received notice that either Tenant or Manager has received
such proceeds. Any casualty loss or condemnation proceeds received by
Beneficiary shall be disbursed by Beneficiary pursuant to the terms of the Lease
Agreement and/or the Management Agreement, as if Beneficiary were the landlord
under the Lease Agreement or the owner under the Management Agreement, as the
case may be; provided, however, any proceeds not required, pursuant to the terms
of the Lease Agreement and/or the Management Agreement, to be delivered to the
Tenant or the Manager shall be retained by Beneficiary and applied by
Beneficiary for payment against the outstanding principal portion of the
Indebtedness and, upon such payment, the Loan Allocation Amount (as that term is
defined in the Loan Agreement) for the Trust Property shall be reduced by an
amount equal to the amount of such proceeds applied by Beneficiary against the
outstanding principal portion of the Indebtedness.
(e) In the event that at any time the Lease Agreement or the Management
Agreement are not in full force and effect, any and all casualty loss or
condemnation proceeds shall be applied by Beneficiary first to the payment of
all of its reasonable costs and expenses (including, but not limited to, legal
fees and disbursements) if any, incurred in obtaining those sums, and then, as
follows:
(i) In the event that less than fifty percent (50%) of the
Improvements located on the Land have been taken or destroyed, if:
(A) no default beyond the expiration of any
applicable notice or cure period is then continuing hereunder or under any of
the other Loan Documents and no event has occurred which, with the giving of
notice or the passage of time or both, would constitute a default hereunder or
under any of the other Loan Documents, and
(B) the Trust Property can, in Beneficiary's
reasonable judgment, with diligent restoration or repair, be returned to a
condition at least equal to the condition thereof that existed prior to the
casualty or partial taking causing the loss or damage within one (1) year of the
date of such casualty or partial taking and at least six (6) months prior to the
stated maturity date of the Note, and
(C) all necessary governmental approvals can be
obtained to allow the rebuilding and reoccupancy of the Trust Property as
described in Paragraph 3(e)(i)(B) above, and
(D) there are sufficient sums available (through
insurance proceeds or condemnation awards and contributions by Trustor, and
Trustor shall have deposited with Beneficiary the full amount thereof or shall
have provided Beneficiary with evidence reasonably satisfactory to Beneficiary
that such sums will be available to Trustor for such restoration or repair as
and when needed) for such restoration or repair (including, without limitation,
for any reasonable costs and expenses of Beneficiary to be incurred in
administering said restoration or repair) and for payment of principal and
interest to become due and payable under the Note during such restoration or
repair, and
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(E) the economic feasibility of the Improvements
after such restoration or repair will be such that income from their operation
is reasonably anticipated to be sufficient to pay operating expenses of the
Trust Property and, when combined with all other income from the operation of
the other properties encumbered by Other Mortgages, to pay debt service on the
Indebtedness with the same debt service coverage ratio that was in effect
immediately prior to such casualty or partial taking, and
(F) Trustor shall have delivered to Beneficiary, at
Trustor's sole cost and expense, an appraisal report in form and substance
reasonably satisfactory to Beneficiary appraising the value of the Trust
Property as so restored or repaired to be not less than the appraised value of
the Trust Property considered in making the Loan secured hereby, and
(G) Trustor so elects by written notice delivered to
Beneficiary within five (5) days after settlement of the aforesaid insurance or
condemnation claim,
Beneficiary shall, solely for the purposes of such restoration or repair,
advance so much of the remainder of such sums as may be required for such
restoration or repair, and any funds deposited by Trustor therefor, to Trustor
in the manner and upon such terms and conditions as would be required by a
prudent interim construction lender, including, but not limited to, the prior
approval by Beneficiary of plans and specifications, contractors and form of
construction contracts, requirements for retainage and the furnishing to
Beneficiary of permits, bonds, lien waivers, title insurance endorsements,
invoices, receipts and affidavits from contractors and subcontractors in form
and substance reasonably satisfactory to Beneficiary in its reasonable
discretion, with any remainder being applied by Beneficiary for payment against
the outstanding principal portion of the Indebtedness and, upon such payment,
the Loan Allocation Amount for the Trust Property shall be reduced by an amount
equal to the amount of such proceeds applied by Beneficiary against the
outstanding principal portion of the Indebtedness.
(ii) In all other cases, namely, in the event that fifty
percent (50%) or more of the Improvements located on the Real Property have been
taken or destroyed or Trustor does not elect to restore or repair the Trust
Property pursuant to clause (i) above, or otherwise fails to meet the
requirements of clause (i) above, then, in any of such events, Beneficiary shall
be entitled to retain any casualty loss or condemnation proceeds and, subject to
the terms of Section 2.2.2 of the Loan Agreement, apply same against the
outstanding principal portion of the Indebtedness. Any reduction in the
Indebtedness resulting from Beneficiary's application of any sums received by it
hereunder shall take effect only when Beneficiary actually receives such sums
and applies such sums to the Indebtedness and, in any event, the unpaid portion
of the Indebtedness shall remain in full force and effect and Trustor shall not
be excused in the payment thereof, except that, pursuant to Section 2.2.2 of the
Loan Agreement, Trustor shall, in the circumstances described in, and pursuant
to and in accordance with the terms of, said Section 2.2.2, be entitled to have
the Trust Property released from the lien of this Deed of Trust.
(iii) If Trustor elects to restore or repair the Trust
Property after the occurrence of a casualty or partial taking of the Trust
Property as provided for in Paragraph 3(e) i) above, Trustor shall promptly and
diligently, to the extent of the insurance proceeds or
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condemnation award, as appropriate, plus any additional amounts made available
by Trustor pursuant to Paragraph 3(e)(i)(D) above, restore, repair, replace and
rebuild the Trust Property as nearly as possible to its value, condition and
character immediately prior to such casualty or partial taking in accordance
with the foregoing provisions and Trustor shall pay to Beneficiary all
reasonable costs and expenses of Beneficiary incurred in administering said
rebuilding, restoration or repair, provided that Beneficiary makes such proceeds
or award available for such purpose. Trustor agrees to execute and deliver from
time to time such further instruments as may be requested by Beneficiary to
confirm the foregoing assignment to Beneficiary of any award, damage, insurance
proceeds, payment or other compensation. Beneficiary is hereby irrevocably
constituted and appointed the attorney-in-fact of Trustor (which power of
attorney shall be irrevocable so long as any indebtedness secured hereby is
outstanding, shall be deemed coupled with an interest, shall survive the
voluntary or involuntary dissolution of Trustor and shall not be affected by any
disability or incapacity suffered by Trustor subsequent to the date hereof),
with full power of substitution, subject to the terms of this Paragraph 3(e), to
settle for, collect and receive any such awards, damages, insurance proceeds,
payments or other compensation from the parties or authorities making the same,
to appear in and prosecute any proceedings therefor and to give receipts and
acquittance therefor.
4. Payment of Taxes, Etc.
(a) Pursuant to the Lease Agreement, Tenant is
obligated to pay all taxes, assessments, water rates and sewer rates, now of
hereafter levied or assessed or imposed against the Trust Property or any part
thereof (the "Taxes") and all ground rents, maintenance charges, other
governmental impositions, and other charges, including, without limitation,
vault charges and license fees for the use of vaults, chutes and similar areas
adjoining the Trust Property, as same become due and payable. In the event that
Tenant fails to pay said Taxes pursuant to the terms of the Lease Agreement and
such failure continues beyond the expiration of any applicable notice and cure
period provided for in the Lease Agreement, Trustor shall pay same, as same
become due and payable. Trustor will deliver to Beneficiary, promptly upon
Beneficiary's request, evidence reasonably satisfactory to Beneficiary that the
Taxes and said charges, fees and impositions have been so paid and are not then
delinquent. Trustor shall not suffer or permit any lien or charge (including,
without limitation, any mechanic's lien) against all or any part of the Trust
Property and Trustor shall promptly cause to be paid and discharged, or cause
Tenant or Manager, as the case may be, to pay and discharge in accordance with
the terms of the Lease Agreement or the Management Agreement, as applicable, any
lien or charge whatsoever which may be or become a lien or charge against the
Trust Property. Trustor shall promptly pay, or cause Tenant and/or Manager to
pay, for all utility services provided to the Trust Property. In addition,
Beneficiary may, at its option, retain the services of a firm to monitor the
payment of Taxes, the reasonable cost of which shall be borne by Trustor.
(b) Pursuant to the terms of the Lease Agreement
and/or the Management Agreement, Tenant or Manager, as the case may be, has
certain rights to contest the amount or validity of any such Taxes, liens or
charges referred to in subsection (a) above. In addition, in the event that the
Lease Agreement and/or the Management Agreement is no
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longer in full force and effect, Trustor shall have the right, notwithstanding
the provisions of subsection (a) above, to contest in good faith the amount or
validity of any such Taxes, liens or charges (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, Beneficiary, provided that (i) Trustor is not in
default under the Note, this Deed of Trust or any other Loan Document beyond the
expiration of any applicable notice or cure period, (ii) Trustor pays such
Taxes, liens or charges prior to the delinquency thereof, unless Trustor
delivers evidence satisfactory to Beneficiary that, as a result of Trustor's
contest, Trustor's obligation to pay such Taxes, liens or charges has been
deferred by the appropriate governmental authority, in which event, Trustor may
defer such payment of such Taxes, liens or charges until the date specified by
such governmental authority, (iii) such contest shall be promptly and diligently
prosecuted by and at the expense of Trustor, (iv) Beneficiary shall not thereby
suffer any civil penalty, or be subjected to any criminal penalties or
sanctions, (v) such contest shall be discontinued and such Tax, liens or charges
promptly paid if at any time all or any part of the Trust 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, (vi) Trustor shall have set aside adequate reserves
(in Beneficiary's reasonable judgment) for the payment of such Taxes, liens or
charges, together with all interest and penalties thereon and (vii) Trustor
shall have furnished security to Beneficiary (or to such other party as may be
required in such proceeding), in an amount as may be required in the proceeding,
but in no event less than an amount equal to 125% of the contested amount, to
insure the payment of any such Taxes, liens or charges, together with all
interest and penalties thereon.
5. Intentionally Omitted.
6. Intentionally Omitted.
7. Leases and Rents.
(a) Trustor doe hereby absolutely and unconditionally
assign to Beneficiary its right, title and interest in all current and future
Leases and Rents, it being intended by Trustor that this assignment constitutes
a present, absolute assignment and not an assignment for additional security
only. Except as otherwise specifically provided for in that certain
Subordination, Non-Disturbance and Attornment Agreement dated of even date
herewith by and among Trustor, Tenant and Beneficiary, such assignment to
Beneficiary shall not be construed to bind Beneficiary to the performance of any
of the covenants, conditions or provisions contained in any such Lease or
otherwise to impose any obligation upon Beneficiary. Trustor agrees to execute
and deliver to Beneficiary such additional instrument in form and reasonably
substance satisfactory to Beneficiary, as may hereafter be requested by
Beneficiary to further evidence and confirm such assignment. Nevertheless,
subject to the terms of this Paragraph 7 and the terms of the Lockbox Security
Agreement, Beneficiary grants to Trustor a revocable license to operate and
manage the Trust Property and to collect the Rents. Subject to the terms of the
Lockbox Security Agreement, Trustor shall hold the Rents, or a portion thereof
sufficient to discharge all current sums due on the Indebtedness, in
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trust for the benefit of Beneficiary for use in the payment of such sums. Upon
the occurrence of an Event of Default, the license granted to Trustor herein
shall be automatically revoked and Beneficiary shall immediately be entitled to
possession of all Rents, whether or not Beneficiary enters upon or takes control
of the Trust Property. Beneficiary is hereby granted and assigned by Trustor the
right, at its option, upon the revocation of the license granted herein to enter
upon the Trust Property in person, by agent or by court-appointed receiver to
collect the Rents. Any Rents collected after the revocation of the license
herein granted may be applied toward payment of the Indebtedness in such
priority and proportion as Beneficiary in its discretion shall deem proper. It
is further the intent of Trustor and Beneficiary that the Rents hereby
absolutely assigned are no longer, during the term of this Deed of Trust, Trust
Property of Trustor or Trust Property of any estate of Trustor as defined in
Section 541 of the Bankruptcy Code and shall not constitute collateral, cash or
otherwise, of Trustor. The term "Rents" as used herein shall mean the gross
rents without deduction or offsets of any kind.
(b) All Leases executed after the date of this Deed
of Trust shall provide that they are subordinate to this Deed of Trust and that
the lessee agrees to attorn to Beneficiary; provided, however, that nothing
herein shall affect Beneficiary's right to designate from time to time any one
or more Leases as being superior to this Deed of Trust and Trustor shall execute
and deliver to Beneficiary and shall cause to be executed and delivered to
Beneficiary from each tenant under such Lease any instrument or agreement as
Beneficiary may reasonably deem necessary to make such Lease superior to this
Deed of Trust. Upon request, Trustor shall promptly furnish Beneficiary with
executed copies of all Leases.
(c) With respect to each Lease, Trustor shall (i)
fulfill or perform each and every provision thereof on the lessor's part to be
fulfilled or performed, (ii) promptly send copies to Beneficiary of all notices
of default which Trustor shall send or receive thereunder and (iii) enforce all
of the terms, covenants and conditions contained in such Lease upon the lessee's
part to be performed, short of termination thereof.
8. Maintenance and Use of Trust Property. Pursuant to the
terms of the Lease Agreement and the Management Agreement, Tenant and/or Manager
is obligated to maintain the Trust Property in the manner provided for therein.
In the event that Tenant and/or Manager fails to maintain the Trust Property as
provided for in the Lease Agreement or the Management Agreement, as the case may
be, and such failure continues beyond the expiration of any applicable notice or
cure period provided for in the Lease Agreement or the Management Agreement, as
the case may be, Trustor shall, at its sole cost and expense, keep and maintain
the Trust Property, including, without limitation, parking lots and recreational
and landscaped portions thereof, if any, in good order and condition. Except as
otherwise specifically provided for in the Lease Agreement and the Management
Agreement, the Improvements and the Equipment shall not be diminished, removed,
demolished or materially altered (except for normal replacement of Equipment)
and Trustor shall not erect, or permit Tenant to erect, any new buildings,
structures or building additions on the Trust Property without the prior consent
of Beneficiary, which consent shall not be unreasonably withheld, delayed or
conditioned and which consent shall not be required unless Trustor reasonably
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expects that such action may have a material adverse effect on the Trust
Property; provided, however, (i) if the total cost of erecting any buildings,
structures or building additions on the Trust Property (the "Total Cost") will
exceed $____________________, or (ii) if any buildings, structures or building
additions are being erected on any property encumbered by any of the Other
Mortgages contemporaneously with the erection of any new buildings, structures
or building additions on the Trust Property and the aggregate of (a) the Total
Cost plus (b) cost of erecting any such new buildings, structures or building
additions on such other property encumbered by any of the Other Mortgages
exceeds $12,500,000.00, then Trustor shall deliver, or cause to be delivered, to
Beneficiary security in an amount equal to or greater than the Total Cost, to
insure the full payment of the Total Cost. Pursuant to the terms of the Lease
Agreement and the Management Agreement, Tenant and/or Manager is obligated to
comply with all laws, orders and ordinances affecting the Trust Property or the
use thereof. In the event that Tenant and/or Manager fails to comply with all
laws, orders and ordinances affecting the Trust Property or the use thereof as
provided for in the Lease Agreement or the Management Agreement, as the case may
be, and such failure continues beyond the expiration of any applicable notice or
cure period provided for in the Lease Agreement or the Management Agreement, as
the case may be, Trustor shall, at its sole cost and expense, cause the Trust
Property or the use thereof to comply with all laws, orders and ordinances
affecting the Trust Property or the use thereof; provided, however, that nothing
in the foregoing clause shall require Trustor to comply with any such law, order
or ordinance so long as Trustor, Tenant or Manager, as the case may be, shall in
good faith, after notice to, but without cost or expense to, Beneficiary,
contest the validity of such law, order or ordinance by appropriate legal
proceedings and in accordance with all applicable law, which proceedings must
operate to prevent (a) the enforcement thereof, (b) the payment of any fine,
charge or penalty, (c) the sale or forfeiture of the Trust Property or any part
thereof, (d) the lien of this Deed of Trust and the priority thereof from being
impaired, (e) the imposition of criminal liability on Beneficiary and (f) the
imposition, unless stayed, of civil liability on Beneficiary; provided that
during such contest Trustor, subject to any applicable provisions of the Lease
Agreement and/or the Management Agreement, shall, or shall cause Tenant or
Manager to, at the option of Beneficiary, provide cash, bonds or other security
satisfactory to Beneficiary, indemnifying and protecting Beneficiary against any
liability, loss or injury by reason of such non-compliance or contest, and
provided further, that such contest shall be promptly and diligently prosecuted
by and at the expense of Trustor, Tenant or Manager, as the case may be. Trustor
shall not commit, or permit Tenant or Manager to commit, any waste at the Trust
Property. Trustor shall not initiate, join in, acquiesce in, or consent to any
change in any private restrictive covenant, zoning law or other public or
private restriction, limiting or defining the uses which may be made of the
Trust Property or any part thereof to the extent that same would be inconsistent
with the continued use of the Trust Property as a hotel. If under applicable
zoning provisions the use of all or any portion of the Trust Property is or
shall become a nonconforming use, Trustor will not cause or permit such
nonconforming use to be discontinued or abandoned without the express consent of
Beneficiary. Trustor covenants and agrees that it shall cause the Trust Property
to be operated at all times in the manner provided for in the Lease Agreement.
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9. Transfer or Encumbrance of the Trust Property.
(a) Trustor acknowledges that Beneficiary has
examined and relied on the creditworthiness and experience of Trustor in owning
and operating properties such as the Trust Property in agreeing to make the
Loan, and that Beneficiary will continue to rely on Trustor's ownership of the
Trust Property as a means of maintaining the value of the Trust Property as
security for repayment of the Indebtedness. Trustor acknowledges that
Beneficiary has a valid interest in maintaining the value of the Trust Property
so as to ensure that, should Trustor default in the repayment of the
Indebtedness, Beneficiary can recover the Indebtedness by a sale of the Trust
Property. Except as is otherwise specifically provided for in Section 2.3 of the
Loan Agreement, Trustor shall not, without the prior consent of Beneficiary,
sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer the
Trust Property or any part thereof, or permit the Trust Property or any part
thereof to be sold, conveyed, alienated, mortgaged, encumbered, pledged or
otherwise transferred.
(b) A sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer within the meaning of this Paragraph 9 shall be
deemed to include (i) an installment sales agreement wherein Trustor agrees to
sell the Trust Property or any part thereof for a price to be paid in
installments, (ii) a sale, assignment or other transfer of, or the grant of a
security interest in, Trustor's right, title and interest in and to any Leases
or any Rents, (iii) if Trustor is a corporation, the voluntary or involuntary
sale, conveyance or transfer of Trustor's stock or the creation or issuance of
new stock in one or a series of transactions by which (A) an aggregate of more
than 10% of Trustor's stock shall be vested in a party or parties who are not
now stockholders, or (B) 49% or more of Trustor's stock shall be vested in a
party or parties who do not now own 49% or more of Trustor's stock and (iv) if
Trustor is a limited or general partnership, joint venture or limited liability
company, the change, removal, resignation or addition of a general partner,
managing partner, limited partner, joint venturer or member or the transfer of
the partnership interest of any general partner, managing partner or limited
partner or the transfer of the interest of any joint venturer or member.
(c) Beneficiary shall not be required to demonstrate
any actual impairment of its security or any increased risk of default hereunder
in order to declare the Indebtedness immediately due and payable upon Trustor's
sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Trust Property without Beneficiary's consent. This provision shall apply to
every sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of
the Trust Property regardless of whether voluntary or not, or whether or not
Beneficiary has consented to any previous sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Trust Property.
(d) Beneficiary's consent to one sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Trust Property
shall not be deemed to be a waiver of Beneficiary's right to require such
consent to any future occurrence of same. Any sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Trust Property made in
contravention of this paragraph shall be null and void and of no force and
effect.
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(e) Trustor agrees to bear and shall pay or reimburse
Beneficiary on demand for all reasonable expenses (including, without
limitation, reasonable attorneys' fees and disbursements, title search costs and
title insurance endorsement premiums) incurred by Beneficiary in connection with
the review, approval and documentation of any such sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer.
10. Estoppel Certificates.
(a) Trustor, within ten (10) Business Days after
request by Beneficiary, shall furnish Beneficiary from time to time with a
statement, duly acknowledged and certified, setting forth (i) the amount of the
original principal amount of the Note, (ii) the unpaid principal amount of the
Note, (iii) the rate of interest in the Note, (iv) the date through which all
installments of interest, commitment fees and/or principal have been paid, (v)
any offsets or defenses to the payment of the Indebtedness, if any, (vi) that
the Note and this Deed of Trust have not been modified or if modified, giving
particulars of such modification and (vii) such other information as shall be
requested by Beneficiary.
(b) Beneficiary, within ten (10) Business Days after
request by Trustor, shall furnish Trustor from time to time with a statement,
duly acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Note, (ii) the unpaid principal amount of the Note,
(iii) the rate of interest in the Note, (iv) the date through which all
installments of interest, commitment fees and/or principal have been paid, and
(v) that the Note and this Deed of Trust have not been modified or if modified,
giving particulars of such modification.
(c) Trustor, after request by Beneficiary, will
obtain and furnish (within the time periods, if any, provided in the applicable
Leases or if no time period is so specified, within ten (10) business days after
request) Beneficiary from time to time with estoppel certificates from any
tenants under then existing Leases, which certificates shall be in form and
substance as required by such Leases, or if not required, then in form and
substance reasonably satisfactory to Beneficiary.
11. No Cooperative or Condominium. Trustor shall not operate
the Trust Property, or permit the Trust Property to be operated as a cooperative
or condominium building or buildings in which the tenants or occupants
participate in the ownership, control or management of the Trust Property or any
part thereof, as tenant stockholders or otherwise.
12. 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 Indebtedness or any portion thereof from the value of the Trust Property for
the purpose of taxation or which imposes a tax, either directly or indirectly,
on the principal amount of the Note or Beneficiary's interest in the Trust
Property, Trustor will pay such tax, with interest and penalties thereon, if
any. In the event Beneficiary is advised by counsel chosen by it that the
payment of such tax or interest and penalties by Trustor would be unlawful or
taxable to Beneficiary or unenforceable or provide the basis for a defense of
usury, then in any such
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event, Beneficiary shall have the option, by notice of not less than thirty (30)
days, to declare the Indebtedness immediately due and payable.
13. No Credits on Account of the Indebtedness. Trustor will
not claim or demand or be entitled to any credit or credits on account of the
Indebtedness for any part of the Taxes assessed against the Trust Property or
any part thereof and no deduction shall otherwise be made or claimed from the
taxable value of the Trust Property, or any part thereof, by reason of this Deed
of Trust or the Indebtedness. In the event such claim, credit or deduction shall
be required by law, Beneficiary shall have the option, by notice of not less
than thirty (30) days, to declare the Indebtedness immediately due and payable.
14. 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 Note or this Deed of Trust, or
impose any other tax or charge on the same, Trustor will pay for the same, with
interest and penalties thereon, if any.
15. Right of Entry. Subject to the rights of Tenant under the
Lease Agreement and Manager under the Management Agreement, Beneficiary and its
agents shall have the right to enter and inspect the Trust Property at any time
during reasonable business hours upon twenty-four (24) hour notice to Trustor
except in the case of an emergency, in which event Beneficiary and its agents
may enter and inspect the Trust Property at any time.
16. Books and Records.
(a) Trustor will maintain full and accurate books of
accounts and other records reflecting the result of the operations of Trustor
and will furnish, or cause to be furnished, to Beneficiary and the Rating Agency
(as such term is defined in the Loan Agreement) on or before fifteen (15) days
following the required date by which Hospitality Properties Trust, a real estate
investment trust organized under the laws of the State of Maryland ("HPT") must
file its quarterly reports with the Securities and Exchange Commission ("SEC"),
accompanied by a certificate of the chief financial officer of Trustor stating
that such items are true, correct, accurate, and complete and fairly present the
financial condition and results of the operations of Trustor, quarterly
unaudited financial statements showing the combined operations of Trustor and
HPTWN, with footnotes presenting the consolidating financial statements of
Trustor and HPTWN, including Trustor's balance sheet and the related statements
of income and cash flows, all in reasonable detail, and prepared with respect to
such quarterly periods in accordance with generally accepted accounting
principles, consistently applied. In addition, Trustor will furnish, or cause to
be furnished, to Beneficiary and the Rating Agency on or before fifteen (15)
days following the required date by which HPT must file its annual reports with
the SEC, accompanied by a certificate of the chief financial officer of Trustor
stating that such items are true, correct, accurate, and complete and fairly
present the financial condition and results of the operations of Trustor, annual
audited financial statements showing the combined operations of Trustor and
HPTWN, with footnotes presenting the consolidating financial statements of
Trustor and HPTWN, including Trustor's balance sheet and the related statements
of income and cash flows, all in
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reasonable detail, and prepared with respect to such prior twelve (12) calendar
month period in accordance with generally accepted accounting principles,
consistently applied.
(b) Trustor shall furnish to Beneficiary and the
Rating Agency (i) within five (5) days of receipt from Tenant and with respect
to each Accounting Period (as that term is defined in the Loan Agreement) of
Tenant, unaudited operating statements with respect to Tenant's or Manager's
operation of the Trust Property as a hotel, such operating statements to be in
form and substance required by the terms of the Lease Agreement and/or the
Management Agreement, as the case may be, and to set forth the comparable
information for the same period within the Tenant's or Manager's, as applicable,
prior fiscal year, (ii) not later than one hundred twenty (120) days following
the end of each calendar year, annual audited statements of Tenant on a
consolidated basis with respect to the Trust Property and any other hotel
property leased by Tenant from Trustor (the "Other Hotel Properties"), showing
total hotel revenues derived by Tenant from the Trust Property and the Other
Hotel Properties for the immediately preceding fiscal year, (iii) not later than
fifteen (15) days following the filing by HPT of its annual statements with the
SEC, unaudited annual operating statements with respect to Tenant's or Manager's
operation of the Trust Property as a hotel, such annual statements to be in form
and substance required by the terms of the Lease Agreement and/or the Mangement
Agreement, as the case may be, and (iv) within five (5) days of receipt from
Tenant, all items and information delivered by Tenant to Trustor in accordance
with Section 17.2 of the Lease Agreement. Beneficiary agrees to treat the
information provided to it pursuant to clause (i) of the immediately preceding
sentence as confidential, as provided for in Section 3.1.2(d) of the Lease
Agreement and Section 20.04 of the Management Agreement.
(c) Beneficiary shall have the right, upon five (5)
days' prior notice to Trustor, to inspect and make copies of Trustor's books and
records and income tax returns.
17. Performance of Other Agreements. Trustor shall observe and
perform each and every term to be observed or performed by such Trustor pursuant
to the terms of any agreement or recorded instrument affecting or pertaining to
the Trust Property.
18. Representations and Covenants Concerning Loan. Trustor
represents, warrants and covenants as follows:
(a) The Note, this Deed of Trust and the other Loan
Documents are not subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, nor would the operation of any of the
terms of the Note, this Deed of Trust and the other Loan Documents, or the
exercise of any right thereunder, render this Deed of Trust unenforceable, in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury.
(b) To the best of Trustor's knowledge all material
certifications, permits, licenses and approvals, including, without limitation,
certificates of completion and occupancy permits required for the legal use and
occupancy of the Trust Property, have been obtained and are in full force and
effect. Trustor shall keep and maintain, or shall cause
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Tenant and/or Manager to keep and maintain, all material licenses necessary for
the operation of the Trust Property as a hotel as currently operated. The Trust
Property is free of material damage and is in good repair, and Trustor has
received no notice of any proceeding pending for the total or partial
condemnation of, or affecting, the Trust Property.
(c) Except as previously disclosed to Beneficiary in
writing, the Trust Property is not subject to any Leases other than the Lease
Agreement. No person has any possessory interest in the Trust Property or right
to occupy the same except hotel guests and except under and pursuant to the
provisions of the Lease Agreement and the Management Agreement.
(d) There has not been and shall never be committed
by Trustor any act or omission affording the federal government or any state or
local government the right of forfeiture as against the Trust Property or any
part thereof or any monies paid in performance of Trustor's obligations under
any of the Loan Documents. Trustor hereby covenants and agrees not to commit,
permit or suffer to exist any act or omission affording such right of
forfeiture.
(e) The Lease Agreement, between Trustor and Tenant,
is in full force and effect and, to the best of Trustor's knowledge, there is no
default, breach or violation existing thereunder by any party thereto and no
event has occurred (other than payments due but not yet delinquent) that, with
the passage of time or the giving of notice, or both, would constitute a
material default, breach or viola ion by any party thereunder.
(f) The Management Agreement is in full force and
effect and, to the best of Trustor's knowledge, there is no material default,
breach or violation existing thereunder by any party thereto and no event has
occurred (other than payments due but not yet delinquent) that, with the passage
of time or the giving of notice, or both, would constitute a default, breach or
violation by any party thereunder.
(g) Neither the execution and delivery of the Loan
Documents, the Trustor's performance thereunder, the recordation of this Deed of
Trust, nor the exercise of any remedies by Beneficiary, will adversely affect,
in any material respect, Trustor's rights under any of the licenses in effect
with respect to the Trust Property.
19. Intentionally Omitted.
20. Events of Default; Remedies. Each of the following events
shall constitute an "Event of Default" hereunder:
(a) if Trustor shall fail to pay any installment of
interest payable in respect of the outstanding principal balance of the Note on
or prior to the date on which such installment is due as provided in the Note or
shall fail to pay to Beneficiary the entire Indebtedness on or prior to the
Maturity Date (as that term is defined in the Note);
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(b) if Trustor shall fail to pay any other amount
required to be paid by Trustor hereunder or under the Note or any other Loan
Document, and such failure continues for a period of ten (10) days following
Trustor's receipt of written notice of such failure from the Beneficiary;
(c) if any material representation or warranty made
by Trustor herein or in any other Loan Document shall prove to be incorrect in
any material respect as of the date made; provided, however, that if the
consequences of such representation or warranty being incorrect are susceptible
of being remedied, Trustor shall have a period of thirty (30) days after the
Trustor has received written notice from Beneficiary making demand upon Trustor
to remedy such consequences, in which to remedy same; and further provided that
if such consequences are susceptible of being remedied, but are not susceptible
of being remedied within such thirty (30) day period and Trustor has commenced
the remedy thereof within such thirty (30) day period and thereafter diligently
pursues such remedy to completion, then such initial thirty (30) day period
shall be extended to a period of ninety (90) days following Trustor's receipt of
the aforesaid notice of demand or such longer period to which Beneficiary may
consent in writing (which consent shall not be unreasonably withheld);
(d) if Trustor shall fail duly to observe or perform
in any material respect any other of the covenants or agreements of Trustor set
forth in this Deed of Trust or any other Loan Document (except those
specifically set forth in Paragraphs 20(e) through (h) below, for which there is
no notice or cure period); provided, however, that if such failure by Trustor to
duly observe or perform in any material respect any such covenants or agreements
of Trustor is susceptible of being remedied, Trustor shall have a period of
thirty (30) days after Trustor has received written notice from Beneficiary
making demand upon Trustor to remedy such failure, in which to remedy same; and
further provided that if such failure is susceptible of being remedied, but is
not susceptible of being remedied within such thirty (30) day period and Trustor
has commenced the remedy thereof within such thirty (30) day period and
thereafter diligently pursues such remedy to completion, then such initial
thirty (30) day period shall be extended to a period of ninety (90) days
following Trustor's receipt of the aforesaid notice of demand or such longer
period to which Beneficiary may consent in writing (which consent shall not be
unreasonably withheld);
(e) if the Policies are not kept in full force and
effect, or if the Policies are not delivered to Beneficiary within ten (10)
Business Days after request by Beneficiary;
(f) if any of the events described in Paragraph 42
shall occur;
(g) if there shall occur any Event of Default under,
and as term is defined in, any of the Other Mortgages (hereinafter defined); or
(h) if Trustor fails to comply with the provisions of
Section 3.1(iii) or Section 5.4 of the Loan Agreement.
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Upon the occurrence of any Event of Default, the Indebtedness
shall immediately become due at the option of Beneficiary.
Trustor agrees that (a) if any amount payable under this Deed
of Trust, the Note or any other Loan Document is not paid when such payment is
due, whether by acceleration or otherwise, Trustor shall pay interest at the
Reimbursement Rate (as that term is defined in the Note) with respect to such
amount, upon demand from time to time, to the extent permitted by applicable
law, from the date such amount was due until such amount has been paid by
Trustor, and (b) upon the occurrence of any Event of Default and the
acceleration by Beneficiary of the whole of the principal sum of the Note,
together with all interest accrued and unpaid thereon, Trustor shall pay
interest at the Default Rate (as that term is defined in the Note) with respect
to the entire outstanding principal amount of the Note, upon demand from time to
time. Notwithstanding the foregoing, if the unpaid Indebtedness or any other
amount required to be paid on the Maturity Date (as that term is defined in the
Note) or upon acceleration of the Loan is not paid when due, then interest shall
thereafter be computed and paid at the Default Rate without notice to Trustor.
This charge shall be added to the Indebtedness, and shall be deemed secured by
this Deed of Trust. This clause, however, shall not be construed as an agreement
or privilege to extend the date of the payment of the Indebtedness, nor as a
waiver of any other right or remedy accruing to Beneficiary by reason of the
occurrence of any Event of Default. In the event the Reimbursement Rate or the
Default Rate is above the maximum rate permitted by applicable law, the
Reimbursement Rate or the Default Rate (as the case may be) shall be the maximum
rate permitted by applicable law.
Upon the occurrence of any Event of Default, Beneficiary may,
to the extent permitted under applicable law, elect to treat the fixtures
included in the Trust Property either as real Trust Property or as personal
Trust Property, or both, and proceed to exercise such rights as apply thereto.
With respect to any sale of real Trust Property included in the Trust Property
made under the powers of sale herein granted and conferred, Beneficiary may, to
the extent permitted by applicable law, include in such sale any fixtures
included in the Trust Property and relating to such real Trust Property. The
foregoing shall be subject to the rights of the Tenant under the Lease Agreement
and the Manager under the Management Agreement.
21. Additional Remedies.
(a) Upon the occurrence of any Event of Default,
Beneficiary may take such action, without notice or demand, as it shall deem
advisable to protect and enforce its rights against Trustor and in and to the
Trust 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 Beneficiary may determine, in its
sole discretion, without impairing or otherwise affecting the other rights and
remedies of Beneficiary or Trustee (i) enter into or upon the Trust Property,
either personally or by its agents, nominees or attorneys and dispossess Trustor
and its agents and servants therefrom, and thereupon Beneficiary may (A) use,
operate, manage, control, insure, maintain, repair, restore and otherwise deal
with all and every part of the Trust Property and conduct the
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business thereat, (B) complete any construction on the Trust Property in such
manner and form as Beneficiary deems advisable, (C) make alterations, additions,
renewals, replacements and improvements to or on the Trust Property, (D)
exercise all rights and powers of Trustor with respect to the Trust Property,
whether in the name of Trustor 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 Trust Property and every part thereof and (E)
apply the receipts from the Trust Property to the payment of the Indebtedness,
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 Trust Property, as well as just and reasonable compensation
for the services of Beneficiary and Trustee and their counsel, agents and
employees, or (ii) institute proceedings for the complete foreclosure of this
Deed of Trust in which case the Trust Property may be sold for cash or upon
credit in one or more parcels, or (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 Indebtedness then due and payable, subject to the continuing lien of this
Deed of Trust for the balance of the Indebtedness not then due, or (iv) sell for
cash or upon credit the Trust Property or any part thereof and all or any part
of any estate, claim, demand, right, title and interest of Trustor 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 permitted by law, and in the
event of a sale, by foreclosure or otherwise, of less than all of the Trust
Property, this Deed of Trust shall continue as a lien on the remaining portion
of or estate in the Trust Property, or (v) institute an action, suit or
proceeding in equity for the specific performance of any covenant, condition or
agreement contained herein or in the Note or any other Loan Document, or (vi)
recover judgment on the Note either before, during or after any proceedings for
the enforcement of this Deed of Trust or (vii) pursue such other remedies as
Beneficiary may have under applicable law.
(b) The purchase money proceeds or avails of any sale
made under or by virtue of this Paragraph, together with any other sums which
then may be held by Beneficiary under this Deed of Trust, whether under the
provisions of this Paragraph or otherwise, shall be applied as follows:
First: To the payment of the reasonable costs and expenses of
any such sale, including reasonable compensation to Beneficiary and Trustee,
their 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
Beneficiary or Trustee under this Deed of Trust, together with interest at the
applicable Interest Rate (as that term is defined in the Note) on all advances
made by Beneficiary or Trustee and all taxes or assessments, except any taxes,
assessments or other charges subject to which the Trust Property shall have been
sold.
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Second: To the payment of the whole amount then due, owing or
unpaid upon the Note for principal, together with interest at the applicable
Interest Rate, fees and late charges.
Third: To the payment of any other sums required to be paid by
Trustor pursuant to any provision of this Deed of Trust or of the Note.
Fourth: To the payment of additional interest amounts owing by
Trustor as a result of the Reimbursement Rate and/or the Default Rate, as the
case may be, having been imposed with respect to the Indebtedness pursuant to
the terms hereof or of the Note.
Fifth: To the payment of the surplus, if any, to whomsoever
may be lawfully entitled to receive the same.
Beneficiary and any receiver of the Trust Property, or any part thereof, shall
be liable to account for only those rents, issues and profits actually received
by it.
(c) Beneficiary or Trustee may adjourn from time to
time any sale by Beneficiary or Trustee to b 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, Beneficiary or Trustee, without further notice or
publication, may make such sale at the time and place to which the same shall be
so adjourned.
(d) Upon the completion of any sale or sales made by
Beneficiary or Trustee under or by virtue of this Paragraph, Beneficiary or
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 Trust Property
and rights sold. Beneficiary and Trustee are each hereby irrevocably appointed
the true and lawful attorney of Trustor, in its name and stead, to make all
necessary conveyances, assignments, transfers and deliveries of the Trust
Property and rights so sold and for that purpose Beneficiary and/or Trustee may
execute all necessary instruments of conveyance, assignment and transfer, and
may substitute one or more persons with like power, Trustor hereby ratifying and
confirming all that its said attorney or such substitute or substitutes shall
lawfully do by virtue hereof. Any such sale or sales made under or by virtue of
this Paragraph, 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 Trustor in and to the
properties and rights so sold, and shall be a perpetual bar both at law and in
equity against Trustor and against any and all persons claiming or who may claim
the same, or any part thereof from, through or under Trustor.
(e) In the event of any sale made under or by virtue
of this Paragraph (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
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Indebtedness, if not previously due and payable, immediately thereupon shall,
anything in the Note, this Deed of Trust, or any other Loan Document to the
contrary notwithstanding, become due and payable.
(f) Upon any sale made under or by virtue of this
Paragraph (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), Beneficiary may bid for and acquire the Trust Property or any part
thereof and in lieu of paying cash therefor may make settlement for the purchase
price by crediting upon the Indebtedness the net sales price after deducting
therefrom the expenses of the sale and the costs of the action and any other
sums which Beneficiary is authorized to deduct under this Deed of Trust.
(g) No recovery of any judgment by Beneficiary and no
levy of an execution under any judgment upon the Trust Property or upon any
other Trust Property of Trustor shall affect in any manner or to any extent, the
lien of this Deed of Trust upon the Trust Property or any part thereof, or any
liens, rights, powers or remedies of Beneficiary hereunder, but such liens,
rights, powers and remedies of Beneficiary shall continue unimpaired as before.
22. Right to Cure Defaults. Upon the occurrence of any Event
of Default or if Trustor fails to make any payment or to do any act as herein
provided, Beneficiary may, but without any obligation to do so and without
notice to or demand on Trustor and without releasing Trustor from any obligation
hereunder, make or do the same in such manner and to such extent as Beneficiary
may deem necessary to protect the security hereof. Without limiting the
foregoing, Beneficiary may enter upon the Trust Property for such purposes or
appear in, defend, or bring any action or proceeding to protect its interest in
the Trust Property, and the cost and expense thereof (including, without
limitation, attorneys' fees and disbursements to the extent permitted by law),
with interest as provided in this Paragraph, shall be immediately due and
payable to Beneficiary upon demand by Beneficiary therefor. All such costs and
expenses incurred by Beneficiary in remedying such Event of Default 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 Beneficiary. All such costs and
expenses, together with interest thereon at the Default Rate, shall be added to
the Indebtedness and shall be secured by this Deed of Trust. If the principal
sum of the Note or any other amount required to be paid on the Maturity Date
under the Note shall not be paid on the Maturity Date, interest shall thereafter
be computed and paid at the Default Rate.
(b) In order to facilitate Beneficiary's rights under
subparagraph (a) above, subject to the rights of Tenant under the Lease
Agreement and Manager under the Management Agreement, Trustor hereby further
grants to Beneficiary and any agents, employees, contractors, engineers,
architects, nominees, attorneys and other representatives of Beneficiary, an
easement on, over, through and under the Trust Property in order to exercise any
such rights. Such easement is self-effectuating and runs with the Land, and
shall be binding upon Trustor and all successors and assigns of Trustor. Trustor
shall cause the
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foregoing rights of Beneficiary and easement to be agreed to by and binding upon
all tenants of the Trust Property and all successors and assigns of such
tenants. Trustor shall promptly execute, and cause to be executed, any other
documents required by Beneficiary in order to confirm further the foregoing
rights of Beneficiary and easement. For the foregoing purposes, Trustor
constitutes and appoints Beneficiary its true and lawful attorney-in-fact with
full power of substitution to exercise any such rights in the name of Trustor.
Trustor empowers said attorney-in-fact to do any and every act which Trustor
might do in its own behalf to fulfill the terms of this Deed of Trust. It is
further understood and agreed that the foregoing power of attorney, which shall
be deemed to be a power coupled with an interest, cannot be revoked. Trustor
specifically agrees that all powers granted to Beneficiary under this Deed of
Trust may be assigned by Beneficiary to its successors or assigns as holder of
the Note.
(c) Trustor specifically admits and acknowledges that a prima
facie showing of the occurrence of any Event of Default also constitutes a
showing (i) of irreparable injury to Beneficiary, for which Beneficiary may have
no adequate remedy at law, and (ii) that the balance of hardships weighs in
favor of Beneficiary. Immediately upon learning of any such Event of Default, in
addition to any other rights or remedies available under this Deed of Trust or
at law or in equity, Beneficiary shall have the right to, but shall not be
obligated to, (i) institute an action, suit or proceeding in equity for the
specific performance of any such term, provision or condition; (ii) institute an
action, suit or proceeding against Trustor for damages resulting from such Event
of Default; and/or (iii) commence an action against Trustor for injunctive
relief, and may move, ex parte and without notice to Trustor, for a temporary
restraining order or preliminary injunction, prohibitory and/or mandatory as the
circumstances require, restraining and prohibiting any such threatened breach,
anticipatory breach or breach. Trustor expressly waives any requirement that
Beneficiary posts a bond or undertaking for any such temporary restraining order
or preliminary injunction described in clause (iii) above.
23. Late Payment Charge. If any monthly interest payment is
not paid in full on or before ten (10) days following the date on which it is
due, Trustor shall pay to Beneficiary upon demand an amount equal to the Late
Charge (as that term is defined in the Note). Such Late Charge shall be paid to
defray the expenses incurred by Beneficiary in handling and processing such
delinquent payment, and to compensate Beneficiary for the loss of the use of
such delinquent payment, and such amount shall be secured by this Deed of Trust
and the other Loan Documents. Such Late Charge shall be in addition to interest
at the Default Rate and all other rights and remedies available to Beneficiary
upon the occurrence of an Event of Default or a default under the Loan
Documents.
24. Prepayment After Event of Default. If following the
occurrence of any Event of Default, Trustor shall tender payment of an amount
sufficient to satisfy the Indebtedness at any time prior to a sale of the Trust
Property either through foreclosure or the exercise of other remedies available
to Beneficiary under this Deed of Trust, such tender by Trustor shall be deemed
to be a voluntary prepayment under the Note and this Deed of Trust in the amount
tendered and any applicable prepayment consideration specified in the Note shall
apply.
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25. Prepayment. The Indebtedness may be prepaid only in
accordance with the terms of the Note.
26. Appointment of Receiver. Beneficiary, upon the occurrence
of an Event of Default or in any action to foreclose this Deed of Trust, shall
be entitled to the appointment of a receiver without notice and without regard
to the value of the Trust Property as security for the Indebtedness or the
solvency or insolvency of any person liable for the payment of the Indebtedness.
27. Security Agreement. 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 Trust Property includes both real and personal
property and all other rights and interests, whether tangible or intangible in
nature, of Trustor, if any, in the Trust Property. Trustor, by executing and
delivering this Deed of Trust grants to Beneficiary, as security for the
Indebtedness, a security interest in the Trust Property to the full extent that
the Trust Property may be subject to the Uniform Commercial Code (such portion
of the Trust Property so subject to the Uniform Commercial Code being called in
this Paragraph the "Collateral"). Trustor shall execute and deliver to
Beneficiary, in form and substance reasonably satisfactory to Beneficiary, such
financing statements and further assurances as Beneficiary may from time to
time, reasonably request in order to create, perfect, and preserve the security
interest(s) herein granted. This Deed of Trust shall also constitute a "fixture
filing" for the purposes of the Uniform Commercial Code and shall cover all
items of the Collateral that are or are to become fixtures. Information
concerning the security interest(s) herein granted may be obtained from
Beneficiary upon request.
If an Event of Default shall occur, 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, but subject to the rights of Tenant
under the Lease Agreement and the Manager under the Management Agreement, the
right to take possession of the Collateral or any part thereof, and to take such
other measures as Beneficiary may deem necessary for the care, protection and
preservation of the Collateral. Upon request or demand of Beneficiary, Trustor
shall at its expense assemble the Collateral and make it available to
Beneficiary at a convenient place acceptable to Beneficiary. Trustor shall pay
to Beneficiary on demand any and all reasonable expenses, including reasonable
legal expenses and attorneys' fees and disbursements, incurred or paid by
Beneficiary in protecting its interest in the Collateral and in enforcing its
rights hereunder with respect to the Collateral. Any notice of sale, disposition
or other intended action by Beneficiary or Trustee with respect to the
Collateral sent to Trustor in accordance with the provisions hereof at least
five (5) days prior to such action, shall constitute reasonable notice to
Trustor. The proceeds of any disposition of the Collateral, or any part thereof,
may be applied by Beneficiary to the payment of the Indebtedness in such
priority and proportions as Beneficiary in its discretion shall deem proper.
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Trustor shall notify Beneficiary and Trustee of any change
in name, identity or structure of Trustor and shall promptly execute, file and
record, at its sole cost and expense, such Uniform Commercial Code forms as are
necessary to maintain the priority of the lien of Beneficiary and Trustee upon
and security interest in the Collateral. In addition, Trustor shall promptly
execute, file and record such additional Uniform Commercial Code forms or
continuation statements as Beneficiary or Trustee shall reasonably deem
necessary and shall pay all expenses and fees in connection with the filing and
recording thereof, provided that no such additional documents shall increase the
obligations of Trustor under the Note, this Deed of Trust or the other Loan
Documents. Trustor hereby grants to Beneficiary and Trustee an irrevocable power
of attorney, coupled with an interest, to file with the appropriate public
office on its behalf any financing or other statements signed only by
Beneficiary or Trustee, as secured party, in connection with the Collateral
covered by this Deed of Trust.
28. Authority.
(a) Trustor has full power, authority and legal right
to execute this Deed of Trust, and to mortgage, give, grant, bargain, sell,
alien, enfeoff, convey, confirm, pledge, hypothecate and assign, and grant a
security interest in the Trust Property pursuant to the terms hereof and to keep
and observe all of the terms of this Deed of Trust on Trustor's part to be
performed.
(b) Trustor represents and warrants to Beneficiary
that Trustor is not a "foreign person" and covenants with Beneficiary that
Trustor will not, throughout the term of the Note, become a "foreign person"
within the meaning of ss.1445 and ss.7701 of the Internal Revenue Code of 1986,
(26 USC ss.ss.1445, 7701) and the related Treasury Department regulations,
including, without limitation, temporary regulations (hereinafter collectively
the "Code"); that is, such Trustor is not a non-resident alien, foreign
corporation, foreign partnership, foreign trust or foreign estate as those terms
are defined in the Code.
29. Actions and Proceedings. Beneficiary and Trustee shall
have the right to appear in and defend any action or proceeding brought with
respect to the Trust Property and to bring any action or proceeding, in the name
and on behalf of Trustor, which Beneficiary or Trustee, in their discretion,
shall decide should be brought to protect their interest(s) in the Trust
Property.
30. Waiver of Jury Trial and Counterclaims. TRUSTOR HEREBY
WAIVES THE RIGHT TO ASSERT A COUNTERCLAIM, OTHER THAN A COMPULSORY COUNTERCLAIM,
IN ANY ACTION OR PROCEEDING BROUGHT AGAINST IT BY BENEFICIARY OR TRUSTEE AND,
TO THE EXTENT PERMITTED BY LAW, WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER, OR IN ANY COUNTERCLAIM ASSERTED
BY BENEFICIARY OR TRUSTEE AGAINST TRUSTOR OR IN ANY MATTERS WHATSOEVER ARISING
OUT OF OR IN ANY
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WAY CONNECTED WITH THIS DEED OF TRUST, THE NOTE, ANY OTHER LOAN DOCUMENT OR THE
INDEBTEDNESS.
31. Further Acts, Etc. Trustor will, at the sole cost of
Trustor, and without expense to Beneficiary or Trustee, do, execute, acknowledge
and deliver all and every such further acts, deeds, conveyances, mortgages,
assignments, notices of assignments, transfers and assurances as Beneficiary or
Trustee shall, from time to time reasonably require, for the better assuring,
conveying, assigning, transferring, and confirming unto Beneficiary and Trustee
the Trust Property and rights hereby mortgaged, given, granted, bargained, sold,
aliened, enfeoffed, conveyed, confirmed, pledged, assigned and hypothecated or
intended now or hereafter so to be, or which Trustor may be or may hereafter
become bound to convey or assign to Beneficiary and Trustee, 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 Beneficiary
or Trustee, and if Trustor fails to so deliver, hereby authorizes Beneficiary
and Trustee thereafter to execute in the name of Trustor without the signature
of Trustor to the extent Beneficiary and Trustee may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments, to
evidence more effectively the lien hereof upon the Trust Property. Trustor
grants to Beneficiary and Trustee an irrevocable power of attorney coupled with
an interest for the purpose of exercising and perfecting any and all rights and
remedies available to Beneficiary and Trustee at law and in equity, including
without limitation such rights and remedies available to Beneficiary and Trustee
pursuant to this Paragraph 31.
32. Recording of Deed of Trust, Etc. Trustor 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 Trust Property, to be filed, registered or recorded,
and thereafter from time to time, each such other instrument of further
assurance to b 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(s) of Beneficiary and Trustee in, the Trust Property. Trustor will
pay all filing, registration or recording fees, and all expenses incident to the
preparation, execution and acknowledgment of this Deed of Trust, any mortgage
supplemental hereto, any security instrument with respect to the Trust Property
and any instrument of further assurance, and all federal, state, county and
municipal, taxes, duties, imposts, assessments and charges arising out of or in
connection with the making, execution, delivery and/or recording of this Deed of
Trust, any mortgage supplemental hereto, any security instrument with respect to
the Trust Property or any instrument of further assurance, except where
prohibited by law so to do. Trustor shall hold harmless and indemnify
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 Trust Property or any instrument of further
assurance.
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33. Usury Laws. This Deed of Trust and the Note are subject to
the express condition that at no time shall Trustor be obligated or required to
pay interest on the principal balance due under the Note at a rate which could
subject the holder of the Note to either civil or criminal liability as a result
of being in excess of the maximum interest rate which Trustor is permitted by
law to contract or agree to pay. If by the terms of this Deed of Trust or the
Note, Trustor is at any time required or obligated to pay interest on the
principal balance due under the Note at a rate in excess of such maximum rate,
the rate of interest under the Note shall be deemed to be immediately reduced to
such maximum rate and the interest payable shall be computed at such maximum
rate and all prior interest payments 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 Note and the principal balance of the Note shall be reduced by
such amount in the inverse order of maturity.
34. Sole Discretion of Beneficiary. Wherever pursuant to this
Deed of Trust, Beneficiary exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Beneficiary, the
decision of Beneficiary to approve or disapprove or to decide that arrangements
or terms are satisfactory or not satisfactory shall be in the sole discretion of
Beneficiary and shall be final and conclusive, except as may be otherwise
specifically provided herein.
35. Recovery of Sums Required To Be Paid. Beneficiary shall
have the right from time to time to take action to recover any sum or sums which
constitute a part of the Indebtedness as the same become due, without regard to
whether or not the balance of the Indebtedness shall be due, and without
prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Trustor existing
at the time such earlier action was commenced.
36. Marshalling and Other Matters. Trustor waives, to the
extent permitted by law, the benefit of all appraisement, valuation, stay,
extension, reinstatement and redemption laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Trust Property
or any part thereof or any interest therein. Further, Trustor expressly waives
any and all rights of redemption from sale under any order or decree of
foreclosure of this Deed of Trust on behalf of Trustor, and on behalf of each
and every person acquiring any interest in or title to the Trust Property
subsequent to the date of this Deed of Trust and on behalf of all persons to the
extent permitted by applicable law.
37. Waiver of Notice. Trustor shall not be entitled to any
notices of any nature whatsoever from Beneficiary except with respect to matters
for which this Deed of Trust or the other Loan Documents specifically and
expressly provides for the giving of notice by Beneficiary to Trustor and except
with respect to matters for which Beneficiary is required by applicable law to
give notice, and Trustor hereby expressly waives the right to receive any notice
from Beneficiary with respect to any matter for which this Deed of Trust does
not specifically and expressly provide for the giving of notice by Beneficiary
to Trustor.
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38. Remedies of Trustor. In the event that a claim or
adjudication is made that Beneficiary has acted unreasonably or unreasonably
delayed acting in any case where by law or under the Note, this Deed of Trust or
the other Loan Documents, it has an obligation to act reasonably or promptly,
Beneficiary shall not be liable for any monetary damages, and Trustor's remedies
shall be limited to injunctive relief or declaratory judgment.
39. Intentionally Omitted.
40. Intentionally Omitted.
41. Intentionally Omitted.
42. Bankruptcy or Insolvency. In the event that Trustor (a)
admits in writing its inability to pay its debts generally as they become due,
or does not pay its debts generally as they become due, (b) commences as debtor
any case or proceeding under any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar law, or seeks or consents to the appointment
of a receiver, conservator, trustee, custodian, manager, liquidator or similar
official for it or the whole or any substantial part of its property, (c) has a
receiver, conservator, trustee, custodian, manager, liquidator, or similar
official appointed for it or the whole or any substantial part of its property,
by any governmental authority with jurisdiction to do so, (d) makes a proposal
or any assignment for the benefit of its creditors, or enters into an
arrangement or composition or similar plan or scheme with or for the benefit of
creditors generally occurring in circumstances in which such entity is unable to
meet its obligations as they become due or (e) has filed against it any case or
proceeding under any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar law which (i) is consented to or not timely contested by
such entity, (ii) results in the entry of an order for relief, appointment of a
receiver, conservator, trustee, custodian, manager, liquidator or similar
official for such entity or the whole or any substantial part of its property or
(iii) is not dismissed within sixty (60) days, an Event of Default shall have
occurred and as a result, the entire principal balance of the Note shall become
immediately due and payable at the option of Beneficiary without notice to
Trustor and Beneficiary may exercise any remedies available to it hereunder,
under any other Loan Document, at law or in equity.
43. Intentionally Omitted.
44. Assignments. Beneficiary shall have the right to assign or
transfer its rights under this Deed of Trust without limitation. Any assignee or
transferee shall be entitled to all the benefits afforded Beneficiary under this
Deed of Trust.
45. Cooperation. Trustor shall, at Beneficiary's expense,
provide such non-proprietary information and documents readily available to
Trustor, which are not subject to any confidentiality agreement on the part of
Trustor and which relate to Trustor, the Trust Property, the Lease Agreement or
the Tenant, as Beneficiary may reasonably request in connection with a sale of
the Loan or an interest therein to an investor. Beneficiary shall have the right
to provide to prospective investors any nonconfidential information in its
possession, including, without limitation, financial statements relating to
Trustor and the Trust Property.
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46. Exculpation. Notwithstanding anything to the contrary
contained herein, any claim based on or in respect of any liability of Trustor
under the Note or under this Deed of Trust or any other Loan Document shall be
enforced only against the Trust Property and an other collateral now or
hereafter given to secure the Loan and not against any other assets, properties
or funds of Trustor; provided, however, that the liability of Trustor for loss,
costs or damage arising out of the following matters shall not be limited solely
to the Trust Property and other collateral now or hereafter given to secure the
Loan but shall include all of the assets, properties and funds of Trustor (i)
any failure by Trustor to apply the income, rents and profits of the Trust
Property as required by the Note, this Deed of Trust or any other Loan Document,
(ii) any misapplication by Trustor of insurance proceeds, condemnation awards,
security deposits or trust funds in violation of applicable law or the
provisions of this Deed of Trust or any other Loan Document, (iii) any
collection of rent for more than one month in advance of the time when the same
becomes due, and (iv) failure to pay all real estate taxes and assessments prior
to the date on which such payments become delinquent. Nothing herein shall be
deemed (w) to be a waiver of any right which Beneficiary may have under any
bankruptcy law of the United States or the State in which the Trust Property is
located to file a claim for the full amount of the Loan or to require that all
of the collateral securing the Loan shall continue to secure all of the
indebtedness due under the Note, this Deed of Trust and the other Loan
Documents; (x) to impair the validity of the indebtedness secured by this Deed
of Trust; (y) to impair the right of Beneficiary as Beneficiary or secured party
to commence an action to foreclose any lien or security interest; or (z) to
modify, diminish or discharge the liability of any guarantor under any guaranty.
Nothing herein shall be deemed to be a waiver of any right which Beneficiary may
have under Section 506(a), 506(b), 1111(b) or any other provisions of the U.S.
Bankruptcy Code to file a claim for the full amount of the indebtedness secured
by this Deed of Trust or to require that all collateral shall continue to secure
all of the indebtedness owing to Beneficiary in accordance with the Loan
Documents.
47. 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 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 Beneficiary:
The Chase Manhattan Bank
c/o AMRESCO Management, Inc.
235 Peachtree Street, N.E.
Suite 900
Atlanta, GA 30303
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and with a copy concurrently to:
Cadwalader, Wickersham & Taft
1333 New Hampshire Avenue, N.W.
Suite 700
Washington, D.C. 20036
Attention: Richard Madden
To Trustor:
c/o Hospitality Properties Trust
400 Centre Street
Newton, Massachusetts 02158
Attention: Mr. Thomas M. O'Brien
and with a copy concurrently to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Alexander A. Notopoulos, Jr., Esq.
To Trustee:
Chicago Title Insurance Company
_______________________________
_______________________________
_______________________________
Attention: ___________________
Unless otherwise specified, notices shall be deemed given upon receipt or
refusal thereof.
48. Non-Waiver. The failure of 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. Trustor shall not be relieved of Trustor's
obligations hereunder by reason of (a) failure of Beneficiary to comply with any
request of Trustor to take any action to foreclose this Deed of Trust or
otherwise enforce any of the provisions hereof or of the Note or the other Loan
Documents, (b) the release, regardless of consideration, of the whole or any
part of the Trust Property, or of any person liable for the Indebtedness or
portion thereof or (c) any agreement or stipulation by Beneficiary extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Deed of Trust or the other Loan Documents. Beneficiary may resort for the
payment of the Indebtedness to any other security held by Beneficiary in such
order and manner as Beneficiary, in its discretion, may elect. Beneficiary may
take action to recover the Indebtedness, or any portion thereof, or to enforce
any covenant hereof without prejudice to the right of Beneficiary thereafter to
foreclose this Deed of Trust. The rights of Beneficiary under this Deed of Trust
shall be separate, distinct and cumulative and
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none shall be given effect to the exclusion of the others. No act of Beneficiary
shall be construed as an election to proceed under any one provision herein to
the exclusion of any other provision. Beneficiary shall not be limited
exclusively to the rights and remedies herein stated but shall be entitled to
every right and remedy now or hereafter afforded by law.
49. Joint and Several Liability. If there is more than one
party comprising Trustor, then the obligations and liabilities of each party
under this Deed of Trust shall be joint and several.
50. Severability. If any term, covenant or condition of the
Note or this Deed of Trust is held to be invalid, illegal or unenforceable in
any respect, the Note and this Deed of Trust shall be construed without such
provision.
51. 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.
52. Indemnity and Beneficiary's Costs. Trustor agrees to pay
all reasonable costs, including, without limitation, reasonable attorneys' fees
and expenses, incurred by Beneficiary or Trustee in enforcing the terms hereof
and/or the terms of any of the other Loan Documents or the Note, or 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 hereunder. Trustor
agrees to indemnify and hold Beneficiary and Trustee harmless from any and all
liability, loss, damage or expense (including, without limitation, attorneys'
fees and disbursements) that Beneficiary or Trustee may or might incur hereunder
or in connection with the enforcement of any of their rights or remedies
hereunder, any action taken by Beneficiary or Trustee hereunder, or by reason or
in defense of any and all claims and demands whatsoever that may be asserted
against Beneficiary or Trustee arising out of the Trust Property; and should
Beneficiary or Trustee incur any such liability, loss, damage or expense, the
amount thereof with interest thereon at the Default Rate shall be payable by
Trustor immediately without demand, shall be secured by this Deed of Trust, and
shall be a part of the Indebtedness.
53. Certain Definitions. Unless the context clearly indicates
a contrary intent or unless otherwise specifically provided herein, words used
in this Deed of Trust shall be used interchangeably in singular or plural form.
The word "Trustor" shall mean Trustor and/or any subsequent owner or owners of
the Trust Property or any part thereof or interest therein. The word
"Beneficiary" shall mean Beneficiary or any subsequent holder of the Note. The
word "Trustee" shall mean Trustee and any successor or substitute Trustee. The
word "Note" shall mean the Note or any other evidence of indebtedness secured by
this Deed of Trust. The words "Loan Documents" shall mean the Note, this Deed of
Trust, the Loan Agreement, the Lockbox Security Agreement, the security
agreement, if any, between Trustor and Beneficiary, the assignment of leases and
rents made by Trustor to Beneficiary, the assignment of contracts, if any, made
by Trustor to Beneficiary, all other mortgages, deeds of trust, and deeds to
secure debt securing the Note and entered into by Trustor or HPTWN in
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favor of, or for the benefit of, Beneficiary (collectively, the "Other
Mortgages"), and any other agreement, instrument, affidavit or document executed
by Trustor and delivered to Beneficiary in connection with the Loan. The word
"person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, or other entity.
The words "Trust Property" shall include any portion of the Trust Property or
interest therein. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa.
54. No Oral Change. 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 Trustor or any
one Trustor or 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.
55. 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.
56. Address of Trust Property. The street address of the
Property is as follows: _____________________________________.
57. Wire Transfer. All payments of principal and interest and
other amounts d e under this Deed of Trust shall be paid to Beneficiary by wire
transfer of immediately available funds to such bank or place, or in such
manner, as Beneficiary may from time to time designate.
58. Publicity. Trustor agrees that Beneficiary, at its
expense, may publicize the financing of the Trust Property in trade and similar
publications.
59. Relationship. The relationship of Beneficiary to Trustor
under this Deed of Trust is strictly and solely that of lender and borrower and
nothing contained in this Deed of Trust or any other Loan Document is intended
to create, or shall in any event or under any circumstance be construed to
create, a partnership, joint venture, tenancy-in-common, joint tenancy or other
relationship of any nature whatsoever between Beneficiary and Trustor other than
that of lender and borrower.
60. Homestead. Trustor hereby waives and renounces all
homestead and exemption rights provided by the constitution and the laws of the
United States and of any state, in and to the Land as against the collection of
the Indebtedness, or any part hereof.
61. No Third Party Beneficiaries. Nothing contained herein is
intended or shall be deemed to create or confer any rights upon any third person
not a party hereto, whether as a third- party beneficiary or otherwise, except
as expressly provided herein.
35
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62. Entire Agreement. This Deed of Trust, the Note and the
other Loan Documents constitute the entire agreement among Trustor and
Beneficiary with respect to the subject matter hereof and all understandings,
oral representations and agreements heretofore or simultaneously had among the
parties are merged in, and are contained in, such documents and instruments.
63. Servicer. Beneficiary may from time to time appoint a
servicer (the "Servicer") to administer the Loan, which Servicer shall have the
power and authority to exercise all of the rights and remedies of Beneficiary
and to act as agent of Beneficiary hereunder and under the other Loan Documents.
64. Governing Law; Consent to Jurisdiction. THIS DEED OF TRUST
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE IN
WHICH THE TRUST PROPERTY IS LOCATED WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF. TRUSTOR HEREBY SUBMITS TO PERSONAL JURISDICTION IN SAID STATE AND THE
FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN SAID STATE (AND ANY
APPELLATE COURTS TAKING APPEALS THEREFROM) FOR THE ENFORCEMENT OF TRUSTOR'S
OBLIGATIONS HEREUNDER AND UNDER THE NOTE AND THE OTHER LOAN DOCUMENTS, 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 TRUSTOR. TRUSTOR 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, THE NOTE OR ANY OTHER LOAN DOCUMENT, (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, THE NOTE AND/OR ANY OF THE OTHER LOAN DOCUMENTS MAY NOT BE
ENFORCED IN OR BY THOSE COURTS OR THAT IT IS EXEMPT OR IMMUNE FROM EXECUTION,
(B) THAT THE ACTION, SUIT OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR
(C) THAT THE VENUE OF THE ACTION, SUIT OR PROCEEDING IS IMPROPER. IN THE EVENT
ANY SUCH ACTION, SUIT, PROCEEDING OR LITIGATION IS COMMENCED, TRUSTOR AGREES
THAT SERVICE OF PROCESS MAY BE MADE, AND PERSONAL JURISDICTION OVER TRUSTOR
OBTAINED, BY SERVICE OF A COPY OF THE SUMMONS, COMPLAINT AND OTHER PLEADINGS
REQUIRED TO COMMENCE SUCH LITIGATION UPON TRUSTOR AT TRUSTOR'S ADDRESS FOR
NOTICES.
65. Certain Hotel Covenants. Trustor fur her covenants and
agrees with Beneficiary as follows:
(a) Trustor shall enforce, in a timely and commercially
reasonable manner, its rights under the Lease Agreement and the Management
Agreement and
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(b) Trustor shall promptly provide Beneficiary with a copy of
all notices (i) provided by Trustor to Tenant, or by Tenant to Trustor, pursuant
to and in compliance with the "notices" provision of the Lease Agreement, and
(ii) provided by Trustor to Manager, or by Manager to Trustor, pursuant to and
in compliance with the "notices" provision of the Management Agreement.
66. Title Acts by Trustee. At any time upon written request of
Beneficiary, payment of its fees and presentation of this Deed of Trust and the
Note for endorsement (in case of full reconveyance, for cancellation and
retention), without affecting the liability of any person for the payment of the
Indebtedness, Trustee shall (a) consent to the making of any map or plat of the
Trust Property, (b) join in granting any easement or creating any restriction
thereon, (c) join in any subordination or other agreement affecting this Deed of
Trust or the lien or charge thereof or (d) reconvey, without warranty, all or
any part of the Trust Property. The Trustee in any reconveyance may be described
as the "person or persons legally entitled thereto," and the recitals therein of
any matters or facts shall be conclusive proof of the truthfulness thereof.
Trustor agrees to pay a reasonable Trustee's fee for full or partial
reconveyance, together with a recording fee if Trustee, at its option, elects to
record said reconveyance.
67. Successor Trustee. At the option of Beneficiary, with or
without any reason, a successor or substitute trustee may be appointed by
Beneficiary without any formality other than a designation in writing of a
successor or substitute trustee, who shall thereupon become vested with an
succeed to all the powers and duties given to Trustee herein named, the same as
if the successor or substitute trustee had been named original Trustee herein;
and such right to appoint a successor or substitute trustee shall exist as often
and whenever Beneficiary desires.
68. Authorization Regarding Trustee. Trustee (and any
successor or substitute trustee) may act hereunder and may sell and convey the
Trust Property, or any part thereof, although the Trustee (or successor or
substitute trustee) has been, may now be, or is hereafter the attorney or agent
of Beneficiary with respect to the Loan, or with respect to any other matter or
business whatsoever.
PART II - STATE SPECIFIC PROVISIONS
In the event of any inconsistencies between the terms and conditions of
Part I and Part II of this Deed of Trust, the terms of Part II shall control and
be binding.
[Signature Page Follows]
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IN WITNESS WHEREOF, Trustor has duly executed and delivered
this Deed of Trust as of the day and year first above written.
TRUSTOR:
HPTRI CORPORATION, a Delaware corporation
By:
Name: Thomas M. O'Brien
Title: Vice President
38
HOSPITALITY PROPERTIES MORTGAGE ACCEPTANCE CORP.,
DEPOSITOR
and
AMRESCO MANAGEMENT, INC.,
SERVICER
and
THE CHASE MANHATTAN BANK,
TRUSTEE
TRUST AND SERVICING AGREEMENT
Dated as of November 25, 1996
Hospitality Properties Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1996-C1
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.01. Defined Terms..........................................................................2
SECTION 1.02. Certain Calculations..................................................................17
SECTION 1.03. Statement of Intent...................................................................18
<CAPTION>
ARTICLE II
CONVEYANCE OF THE MORTGAGE LOAN;
ORIGINAL ISSUANCE OF CERTIFICATES
<S> <C> <C>
SECTION 2.01. Conveyance of the Mortgage Loan.......................................................19
SECTION 2.02. Acceptance by Trustee.................................................................22
SECTION 2.03. Representations, Warranties and Covenants of the Trustee..............................23
SECTION 2.04. Representations, Warranties and Covenants of the Servicer.............................24
SECTION 2.05. Representations, Warranties and Covenants of the Depositor............................26
SECTION 2.06. Servicer Mortgage File................................................................35
SECTION 2.07. Certain Representations, Warranties and Covenants of Depositor........................35
<CAPTION>
ARTICLE III
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOAN
<S> <C> <C>
SECTION 3.01. Servicer to Service Mortgage Loan; Administration of the
Mortgage Loan.........................................................................39
SECTION 3.02. Liability of the Servicer.............................................................41
SECTION 3.03. Collection of the Mortgage Loan and Lease Payments; Property
Protection Advances...................................................................42
<CAPTION>
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Page
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SECTION 3.04. Payment of Insurance, Taxes, Assessments and Similar Items............................43
SECTION 3.05. Lockbox Account.......................................................................44
SECTION 3.06. Permitted Withdrawals from the Lockbox Account........................................45
SECTION 3.07. Collection Account....................................................................46
SECTION 3.08. Permitted Withdrawals from the Collection Account.....................................47
SECTION 3.09. Certificate Account...................................................................48
SECTION 3.10. Permitted Withdrawals from the Certificate Account....................................49
SECTION 3.11. Maintenance of Insurance Policies and Errors and Omissions and
Fidelity Coverage.....................................................................49
SECTION 3.12. Assumption Agreements; Enforcement of Due-On-Sale and Due-
On-Encumbrance Clause.................................................................52
SECTION 3.13. Realization Upon Mortgage Loan Default................................................53
SECTION 3.14. Trustee to Cooperate; Release of the Mortgage File....................................56
SECTION 3.15. Compensation of the Servicer..........................................................57
SECTION 3.16. Annual Statement as to Compliance.....................................................58
SECTION 3.17. Reports by Independent Public Accountants.............................................58
SECTION 3.18. Access to Certain Documentation.......................................................59
SECTION 3.19. Title and Management of the Mortgaged Property as REO
Property or Held as Debtor-in-Possession..............................................59
SECTION 3.20. Sale of Mortgage Loan and Mortgaged Properties Held as REO
Properties............................................................................61
SECTION 3.21. Inspections...........................................................................63
SECTION 3.22. Exercise of Discretion; Modifications, Waivers, Amendments and
Consents..............................................................................63
<CAPTION>
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Page
<S> <C> <C>
SECTION 3.23. Cap Agreement Administration..........................................................64
SECTION 3.24. Reports to the Trustee; Collection Account Statements.................................65
<CAPTION>
ARTICLE IV
DISTRIBUTIONS TO CERTIFICATEHOLDERS
<S> <C> <C>
SECTION 4.01. Distributions.........................................................................67
SECTION 4.02. Statements to Certificateholders......................................................67
SECTION 4.03. Monthly Advances......................................................................68
SECTION 4.04. Compliance with Withholding Requirements..............................................69
<CAPTION>
ARTICLE V
THE CERTIFICATES
<S> <C> <C>
SECTION 5.01. The Certificates......................................................................70
SECTION 5.02. Registration of Transfer and Exchange of Certificates.................................71
SECTION 5.03. Book-Entry Certificates...............................................................72
SECTION 5.04. Mutilated, Destroyed, Lost or Stolen Certificates.....................................75
SECTION 5.05. Persons Deemed Owners.................................................................75
SECTION 5.06. Access to Certificateholders' Names and Addresses.....................................76
SECTION 5.07. Actions of Certificateholders.........................................................76
SECTION 5.08. Certificate Legend....................................................................77
SECTION 5.09. Offer, Sale, Pledge or Other Transfer; Rule 144A Information..........................77
<CAPTION>
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Page
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
<S> <C> <C>
SECTION 6.01. Liability of the Depositor and the Servicer...........................................80
SECTION 6.02. Merger or Consolidation of the Servicer...............................................80
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and Others....................80
SECTION 6.04. Limitation on Resignation of the Servicer.............................................81
SECTION 6.05. Rights of the Depositor and the Trustee in Respect of the Servicer...................81
<CAPTION>
ARTICLE VII
DEFAULT
<S> <C> <C>
SECTION 7.01. Events of Default.....................................................................83
SECTION 7.02. Trustee to Act; Appointment of Successor..............................................85
SECTION 7.03. Notification to Certificateholders....................................................85
SECTION 7.04. Other Remedies of Trustee.............................................................86
SECTION 7.05. Waiver of Past Events of Default; Termination.........................................86
<CAPTION>
ARTICLE VIII
CONCERNING THE TRUSTEE
<S> <C> <C>
SECTION 8.01. Duties of Trustee.....................................................................87
SECTION 8.02. Certain Matters Affecting the Trustee.................................................88
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loan..................................90
<CAPTION>
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Page
<S> <C> <C>
SECTION 8.04. Trustee May Own Certificates..........................................................91
SECTION 8.05. Payment of Trustee's Fees and Expenses................................................91
SECTION 8.06. Eligibility Requirements for Trustee..................................................93
SECTION 8.07. Resignation and Removal of the Trustee................................................93
SECTION 8.08. Successor Trustee.....................................................................94
SECTION 8.09. Merger or Consolidation of Trustee....................................................94
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.........................................95
<CAPTION>
ARTICLE IX
TERMINATION
<S> <C> <C>
SECTION 9.01. Termination...........................................................................97
<CAPTION>
ARTICLE X
MISCELLANEOUS PROVISIONS
<S> <C> <C>
SECTION 10.01. Counterparts.........................................................................100
SECTION 10.02. Limitation on Rights of Certificateholders...........................................100
SECTION 10.03. Governing Law........................................................................101
SECTION 10.04. Notices..............................................................................101
SECTION 10.05. Severability of Provisions...........................................................102
SECTION 10.06. Notice to Rating Agencies............................................................102
SECTION 10.07. Amendment............................................................................103
SECTION 10.08. No Petition in Bankruptcy............................................................104
SECTION 10.09. Confidentiality......................................................................104
</TABLE>
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<PAGE>
EXHIBITS
Exhibit A - Form of Certificate
Exhibit B - Form of Request for Release
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<PAGE>
This Trust and Servicing Agreement, dated and effective as of
November 25, 1996, between HOSPITALITY PROPERTIES MORTGAGE ACCEPTANCE CORP., a
Delaware corporation, as depositor (the "Depositor"), AMRESCO MANAGEMENT, INC.,
a Texas corporation, as servicer (the "Servicer"), and The Chase Manhattan Bank,
a New York banking corporation, not in its individual capacity but solely as
trustee, (the "Trustee").
PRELIMINARY STATEMENT:
(Terms used but not defined in this Preliminary
Statement shall have the meanings specified in
Article I hereof)
The Depositor intends to sell the Hospitality Properties
Mortgage Acceptance Corp., Commercial Mortgage Pass-Through Certificates Series
1996-C1 in an initial Certificate Principal Balance of $125,000,000
(collectively, the "Certificates"), to be issued hereunder by the Hospitality
Properties Mortgage Acceptance Corp. in a single class which will evidence the
entire beneficial ownership interest in the mortgage loan (the "Mortgage Loan")
to be secured by mortgages, deeds of trust, or deeds to secure debt on 29 hotel
properties (collectively, the "Mortgaged Properties"), assignments of leases and
rents with respect to the Mortgaged Properties and a pledge agreement with
respect to, among other things, interest rate cap agreements, and by certain
other assets.
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<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article I.
"1933 Act": The Securities Act of 1933, as amended, and as it
may be amended from time to time.
"1934 Act": The Securities Exchange Act of 1934, as amended
and as it may be amended from time to time.
"Advance Rate": A per annum rate equal to 1% in excess of the
"Prime Rate" of interest, as published from time to time in the Money Rates
section of the Wall Street Journal.
"Affected Property": As defined in Section 3.05.
"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. The Trustee may obtain
and conclusively rely on an Officer's Certificate of the Depositor or the
Servicer to determine whether any Person is an Affiliate of such specified
Person.
"Agent": As defined in Section 8.02(a)(vi).
"Agreement": This Trust and Servicing Agreement, and all
amendments hereof and supplements hereto.
"Anticipated Termination Date": The Distribution Date,
occurring at least 30 days after the date of the Notice of Termination, on which
it is anticipated that the Trust will be terminated pursuant to Section 9.01.
"Applicant": As defined in Section 5.06(a).
"Assignment of Contracts": The Omnibus Assignment executed by
the Originator dated as of the Closing Date assigning the Originator's interest
in the following documents to the Trustee: the Lockbox Agreement; each
Subordination Agreement; the Assignments of Interest Rate Cap Agreement; the
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Contribution Agreement; the Hazardous Substances Indemnity Agreement; and
various other agreements related to the Mortgage Loan.
"Assignment of Interest Rate Cap Agreement": Each Assignment
of Interest Rate Cap Agreement executed by a Borrower and assigning to the
Originator the Borrower's rights under such Cap Agreement.
"Assignment of Leases and Rents": Any of the Assignments of
Leases and Rents, each relating to one of the Mortgaged Properties, executed by
the related Borrower as of the Closing Date and assigning all of the income,
rents and profits derived from the ownership, operation, leasing or disposition
of the related Mortgaged Property, and certain other assets, as amended,
modified, renewed or extended from time to time hereafter.
"Assignment of Mortgages": Each of the assignments of Mortgage
executed by the Originator dated as of the Closing Date assigning the
Originator's interest in the related Mortgage to the Trustee.
"Assumed Interest Accrual Amount": As defined in Section 4.03.
"Beneficial Owner": With respect to any Certificate, the
Person who is the owner of such Certificate as reflected on the books of the
Certificate Registrar.
"Book-Entry Certificate": Any Certificate registered in the
name of the Depository or its nominee.
"Borrowers": HPTRI Corporation, a Delaware corporation, and
HPTWN Corporation, a Delaware corporation or their respective successors and
assigns.
"Business Day": Any day other than (i) a Saturday or a Sunday
or (ii) a day on which banking or savings and loan institutions in Atlanta,
Georgia, Boston, Massachusetts or New York, New York are authorized or obligated
by law to be closed.
"Cap Agreement": Each Interest Rate Cap Agreement between a
Borrower and the Cap Counterparty, which was pledged by such Borrower to the
Originator to secure the Mortgage Loan pursuant to the related Assignment of
Interest Rate Cap Agreement.
"Cap Counterparty": Dresdner Bank AG, a banking corporation
organized under the laws of the Federal Republic of Germany.
"Cap Counterparty Default": An "Event of Default" or
"Termination Event" with respect to the Cap Counterparty, as such terms are
defined in each Cap Agreement.
"Certificate": Any Certificate substantially in the form of
Exhibit A hereto which is duly and properly issued, authenticated and delivered
hereunder.
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"Certificate Account": As defined in Section 3.09.
"Certificate of Non-Compliance": As defined in Section 3.21.
"Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.
"Certificate Principal Balance": With respect to any
Certificate, (i) on or prior to the first Distribution Date, an amount equal to
the initial Certificate Principal Balance as specified in the Preliminary
Statement hereto, and (ii) as of any date after the first Distribution Date, the
initial Certificate Principal Balance after giving effect to any distributions
in reduction of principal made thereon, and in the case of both (i) and (ii)
above such amount to be multiplied by the ownership interest in the Trust,
expressed as a percentage, evidenced by such Certificate.
"Certificate Register" and "Certificate Registrar": The
register maintained and the registrar appointed pursuant to Section 5.02.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that, (i) solely
for the purpose of giving any consent or taking any action pursuant to this
Agreement, any Certificate registered in the name of a Borrower or an Affiliate
of any thereof shall, and (ii) solely for the purpose of giving any consent to a
modification or amendment of any Lease, any Certificate registered in the name
of the Lessee or an Affiliate of any thereof shall, be deemed not to be
outstanding and the voting rights to which it is entitled shall not be taken
into account in determining whether the requisite percentage of voting rights
necessary to effect any such consent or take any such action has been obtained.
All references herein to "Holders" or "Certificateholders" shall reflect the
rights of Certificate Owners as they may indirectly exercise such rights through
the Depository and the Depository Participants, except as otherwise specified
herein; provided, however, that the parties hereto shall be required to
recognize as a "Holder" or "Certificateholder" only the Person in whose name a
Certificate is registered in the Certificate Register.
"Closing Date": November 25, 1996.
"Code": The Internal Revenue Code of 1986, as amended from
time to time, any successor statute thereto, and any temporary or final
regulations of the United States Department of the Treasury promulgated pursuant
thereto.
"Collection Account": The trust account established pursuant
to Section 3.07. The Collection Account shall be an Eligible Account.
"Contribution Agreement": The Contribution Agreement entered
into among the Borrowers and the Originator and dated as of the Closing Date.
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"Corporate Trust Office": The corporate trust office of the
Trustee at which at any particular time its corporate trust business relating to
the Certificates shall be administered, which office at the date of the
execution of this Agreement is located at 450 West 33rd Street, 15th floor, New
York, New York 10001, Attention: Structured Finance Services (MBS).
"Curtailment Payment": As defined in Section 3.06.
"Default Interest": The excess of interest accrued at the
Default Rate on the unpaid principal balance of the Mortgage Loan over interest
thereon at the Mortgage Interest Rate thereof.
"Default Rate": The rate at which Default Interest accrues on
the Mortgage Loan pursuant to the Note.
"Definitive Certificate": A registered, definitive physical
certificate substantially in the form attached hereto as Exhibit A (without
bracketed language).
"Denomination": As defined in Section 5.01(a).
"Depositor": Hospitality Properties Mortgage Acceptance Corp.,
a Delaware corporation.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates is Cede
& Co. The Depository shall at all times be a "clearing corporation" as defined
in Section 8-102(3) of the Uniform Commercial Code of the State of New York and
a "clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended.
"Depository Participant": A broker, dealer, bank or other
financial institution or other Person for whom from time to time the Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Disposition Fee": As defined in Section 3.15.
"Distribution Date": The sixth day of each month, or if such
day is not a Business Day, the following Business Day beginning in December
1996.
"Due Date": The day of each month on which payments on the
Mortgage Loan are due as provided in the Note, which day is the first day of
each month, or if such day is not a Business Day, the following Business Day.
"Eligible Account": Either (i) an account or accounts
maintained with a depository institution or trust company whose long-term
unsecured debt obligations are rated at least A (or its equivalent rating) by
each of the Rating Agencies and whose short-term unsecured debt obligations
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are rated A-1 (or its equivalent rating) by each of the Rating Agencies at the
time of any deposit therein, or (ii) a trust account or accounts maintained with
a federal depository institution, a state chartered depository institution or a
trust company acting in its fiduciary capacity, which may be an account
maintained with the Trustee, provided any such institution is subject to
regulations regarding fiduciary funds on deposit substantially similar to 12
C.F.R. Section 9.10 (b). Eligible Accounts may bear interest.
"Environmental Assessment": A "Phase I assessment" meeting the
criteria of the American Society for Testing and Materials.
"Environmental Condition": Any Environmental Matter on a
Mortgaged Property that is reasonably likely (i) to cause an imminent and
substantial endangerment to the environment or public health or safety; (ii) to
create an obligation under any Environmental Laws to conduct or take any
assessment, investigation, removal, remediation or other action; or (iii) to
constitute a violation of, or noncompliance with, any Environmental Laws or to
give rise to a fine, charge, penalty, liability, lien, or other claim or demand
under any Environmental Laws.
"Environmental Laws": Without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. ss.ss. 9601
et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. ss.ss. 11001 et seq.; the Resource Conservation and Recovery Act, 42
U.S.C. ss.ss. 6901 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss.ss.
2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C.
ss.ss. 136 et seq.; the Clean Air Act, 42 U.S.C. ss.ss. 7401 et seq.; the
Federal Water Pollution Control Act, 33 U.S.C. ss.ss. 1251 et seq.; the Safe
Drinking Water Act, 42 U.S.C. ss.ss. 300f et seq.; and the Hazardous Materials
Transportation Act, 49 U.S.C. ss.ss. 1801 et seq.; all rules, regulations,
orders, decrees or judgments promulgated or issued pursuant to any of the
foregoing statutes; and any other federal, state or local law, statute, rule,
regulation, order, decree or judgment governing Environmental Matters, as any of
the foregoing have been or may be amended from time to time.
"Environmental Matters": Any matter, condition or circumstance
arising out of, relating to, or resulting from (i) pollution, (ii)
contamination, (iii) protection of the environment, (iv) public health or
safety, (v) the emission, discharge, dissemination, release or threatened
releases, of Hazardous Materials into, onto, at, on or from, the air, surface
water, ground water, soil, land surface, or subsurface, building or facility or
(vi) the manufacture, processing, generation, distribution, use, treatment,
storage, disposal, transport, or any other handling of Hazardous Materials.
"Estoppel Letter": An estoppel letter from the related Lessee
with respect to each Lease.
"Event of Default": As defined in Section 7.01.
"FDIC": The Federal Deposit Insurance Corporation, or any
successor thereto.
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"FHLMC": The Federal Home Loan Mortgage Corporation, or any
successor thereto.
"Final Recovery Determination": A determination, made by the
Servicer, that the Trust has received the full amount of all Insurance Proceeds,
Liquidation Proceeds and other payments (including proceeds of the final sale of
the REO Property) which the Servicer, in its reasonable judgment as evidenced by
a certificate of a Servicing Officer delivered to the Trustee expects to be
finally recoverable, without regard to any obligation of the Servicer to make
payments from its own funds pursuant to Section 3.11(a) or 3.11(b). The Servicer
shall maintain records of any Final Recovery Determination until three years
following the termination of the Trust.
"Fitch": Fitch Investors Service, L.P., a nationally
recognized statistical rating agency.
"FNMA": The Federal National Mortgage Association, or any
successor thereto.
"Ground Lease": The ground lease related to any Mortgaged
Property that consists of a leasehold estate.
"Hazardous Materials": Any pollutants, contaminants,
substances, material, or wastes that are regulated under, or form the basis of
liability under, any Environmental Laws, including, without limitation,
petroleum, asbestos, asbestos-containing material, polychlorinated biphenyls
("PCBs"), PCB-containing equipment, carcinogenic agents, pesticides, corrosives
and urea formaldehyde foam insulation.
"Hazardous Substances Indemnity Agreement": The Hazardous
Substances and Indemnity Agreement, dated the Closing Date, among the Originator
and each Borrower, pursuant to which the Borrowers agree to indemnify the
Originator against any loss or expense caused by an Environmental Condition
relating to a Mortgaged Property.
"Independent": When used with respect to any specified Person,
any such Person who (i) does not have any direct financial interest, or any
material indirect financial interest, in any of the Depositor, the Trustee, the
Servicer, a Borrower, a Lessee or any Affiliate thereof, and (ii) is not
connected with the Depositor, the Trustee, the Servicer or any Affiliate thereof
as an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions; provided, however, that a Person shall not
fail to be Independent of the Depositor, the Trustee, the Servicer, a Borrower,
a Lessee or any Affiliate thereof merely because such Person is the beneficial
owner of 1% or less of any class of securities issued by the Depositor, the
Trustee, the Servicer, a Borrower, a Lessee or any Affiliate thereof, as the
case may be.
"Insurance Proceeds": Proceeds of any fire and hazard
insurance policy, title policy or other insurance policy relating to the
Mortgage Loan (including payments by a Lessee or its affiliates in lieu of
proceeds of any insurance policy pursuant to the terms of the Mortgage Loan
Documents), to the extent such proceeds are not to be applied to the restoration
of the Mortgaged Property or released to the Borrower in accordance with the
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express requirements of the Mortgage or Note or other documents included in the
Mortgage File or in accordance with prudent and customary servicing practices.
"Interested Person": As of any date, the Servicer, or any
Person known to a Responsible Officer of the Trustee to be an Affiliate of the
Servicer.
"Lease": Any of the leases between a Lessee and a Borrower
related to one of the Mortgaged Properties.
"Lessee": HMH HPT Residence Inn, Inc., a Delaware corporation
and a subsidiary of Host Marriott, and GHALP Corporation, a Delaware corporation
and a subsidiary of Wyndham Hotel Corporation, or any successor as Lessee of any
Mortgaged Property.
"Liquidation Expenses": Expenses incurred by the Servicer in
connection with any liquidation of the Mortgage Loan or property acquired in
respect thereof (including, without limitation, legal fees and expenses,
committee or referee fees, and, if applicable, brokerage commissions and
conveyance taxes) and any Property Protection Advances (together with interest
thereon) incurred with respect to the Mortgage Loan or such property not
previously reimbursed from collections or other proceeds therefrom.
"Liquidation Proceeds": The amount of cash (other than
Insurance Proceeds) received in connection with (i) the taking of all or any
part of the Mortgaged Property by exercise of the power of eminent domain or
condemnation, to the extent such proceeds are not to be applied to the
restoration of the Mortgaged Property or released to the Borrower in accordance
with the express requirements of the Mortgage or Note or other documents
included in the Mortgage File or in accordance with prudent and customary
servicing practices, (ii) the liquidation of the Mortgage Loan through a
foreclosure sale or comparable conversion of ownership or (iii) a sale of the
Mortgage Loan or the Mortgaged Property in accordance with Section 3.20 or
Section 9.01, including payments made by a Lessee in connection with any
termination of a Lease as permitted thereunder.
"Loan Agreement": The loan agreement, dated the Closing Date,
between the Originator and the Borrowers, pursuant to which such Mortgage Loan
was made.
"Loan Allocation Amount": As defined in the Loan Agreement.
"Lockbox Account": The account established pursuant to the
Lockbox Agreement and administered by the Servicer pursuant to Section 3.05.
"Lockbox Agreement": The lockbox pledge and security agreement
between the Originator and the Borrowers, dated the Closing Date.
"Majority Certificateholders": Certificateholders holding in
excess of 50% of the beneficial interest in the Trust.
"Maturity Date": December 1, 2001, being the date on which the
last payment is due and payable under the Note without giving effect to (i) any
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acceleration of the principal of the Mortgage Loan, (ii) any grace period
permitted by the Note or any other document in the Mortgage File or (iii) any
modification, waiver or amendment of Mortgage Loan granted or agreed to pursuant
to Section 3.22.
"Maturity Date Payment": The final scheduled payment of
principal and interest on the Mortgage Loan.
"Modification Fee": As defined in Section 3.15.
"Monthly Advance": Any advance of a Monthly Payment required
to be made by the Servicer pursuant to Section 4.03.
"Monthly Payment": The scheduled monthly payment of interest
(at the then- applicable interest rate on the Note), excluding the Maturity Date
Payment, on the Mortgage Loan which is payable by the Borrowers under the Note.
"Moody's": Moody's Investors Service, a nationally recognized
statistical rating agency.
"Mortgage": Any of the mortgages, deeds of trust or deeds to
secure debt between a Borrower and the Originator dated the Closing Date which
mortgage, deed of trust or deed to secure debt creates a first lien on a
Mortgaged Property, together with any rider, addendum or amendment thereto, as
amended from time to time.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to the Mortgage Loan and any additional documents required to be
added to such Mortgage File pursuant to this Agreement.
"Mortgage Interest Rate": The annual rate at which interest
accrues on the Mortgage Loan in the absence of default as indicated in the Note.
"Mortgage Loan": The mortgage loan made to the Borrowers by
the Originator on the Closing Date in the principal amount specified in the
Preliminary Statement to this Agreement. Such term shall also include such
mortgage loan after acquisition of the Mortgaged Properties by foreclosure, deed
in lieu of foreclosure or comparable conversion of ownership, treated as though
such event of acquisition had not occurred.
"Mortgage Loan Accrual Period": The period beginning on the
first day of a calendar month preceding the month in which a Due Date occurs
(or, in the case of the first Mortgage Loan Accrual Period, the period beginning
with the Closing Date) and ending on the last day of such preceding calendar
month.
"Mortgage Loan Default": As defined in Section 3.13(a).
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"Mortgage Loan Documents": The Note, the Loan Agreement, the
Mortgages, the Assignments of Leases and Rents, the Lockbox Agreement, the
Assignments of Interest Rate Cap Agreement and UCC financing statements and all
other documents executed and delivered in connection with the Mortgage Loan.
"Mortgage Loan Event of Default": As defined in Section
3.13(a).
"Mortgage Loan Purchase and Sale Agreement": The Mortgage Loan
Purchase and Sale Agreement, dated the Closing Date, between the Originator and
the Depositor, pursuant to which the Depositor purchased the Mortgage Loan from
the Originator.
"Mortgaged Property": Any of the underlying properties that
secure the Mortgage Loan, including, without limitation, the related Borrower's
fee simple or leasehold interest in a parcel of land improved by a commercial
property, together with any personal property, fixtures, leases and other
property or rights pertaining thereto, and the related Borrower's interest in
all of the foregoing.
"Net Liquidation Proceeds": The excess of Liquidation Proceeds
received with respect to the Mortgage Loan over the amount of Liquidation
Expenses incurred with respect thereto.
"Net REO Proceeds": With respect to a Mortgaged Property where
it is held as REO Property, and any Due Date, any amount withdrawn from the REO
Account and deposited into the Collection Account pursuant to Section 3.19(c)
with respect to the related Distribution Date.
"Nonrecoverable Advance": Any portion of a Monthly Advance or
Property Protection Advance proposed to be made or previously made which has not
been previously reimbursed to the Servicer and which the Servicer has
determined, in its good faith judgment, will not or, in the case of a proposed
advance, would not, be ultimately recoverable by the Servicer from the sum of
late payments, Insurance Proceeds, Net Liquidation Proceeds, Net REO Proceeds
and other collections on or in respect of the Mortgage Loan (including without
limitation all amounts payable under any Lease). The determination by the
Servicer that it has made a Nonrecoverable Advance or that any proposed
Servicing Advance, if made, would constitute a Nonrecoverable Advance, shall be
evidenced by an Officer's Certificate delivered to the Trustee and the
Depositor. Such Officer's Certificate shall set forth such determination of
nonrecoverability and the considerations of the Servicer forming the basis of
such determination (which shall include but shall not be limited to information,
to the extent available, such as related income and expense statements, rent
rolls, occupancy status and property inspections, and shall include Summary
Appraisal Reports (meeting the requirements for such reports in the Uniform
Standards of Professional Appraisal Practice published by the Appraisal
Standards Board) delivered by a Member of the Appraisal Institute with respect
to each Mortgaged Property, the cost of which appraisal shall be an expense of
the Trust).
"Note": The note evidencing the indebtedness of the Borrowers
under the Mortgage Loan, including any amendments or modifications thereof, or
any renewal or substitution notes therefor.
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"Notice of Termination": Any notice given to the Trustee by
the Majority Certificateholders pursuant to Section 9.01(b).
"Officers' Certificate": A certificate signed by a Chairman of
the Board, a Vice Chairman of the Board, the President, any Vice President or
Managing Director or an Assistant Vice President (each however denominated), any
Trust Officer or other officer of the Trustee, the Depositor or the Servicer, as
the case may be, customarily performing functions similar to those performed by
any of the above designated officers and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject, or an
authorized officer of the Trustee, such certificate delivered to the Trustee,
the Depositor, or the Servicer, as the case may be.
"Opinion of Counsel": A written opinion of counsel, who may
without limitation be counsel for the Depositor or the Servicer, as the case may
be, acceptable to the Trustee, except that any opinion of counsel relating to
(a) qualification of the Trust as a fixed investment trust or (b) a resignation
of the Servicer pursuant to Section 6.04 must be, in each of the cases described
in clause (a) or (b) hereof, an opinion of counsel who is Independent of the
Depositor and the Servicer. Notwithstanding the foregoing, Sullivan & Worcester
LLP shall be deemed to be counsel who is Independent of the Depositor.
"Originator": Column Financial, Inc., a Delaware corporation.
"OTS": The Office of Thrift Supervision of the Department of
Treasury of the United States, or any successor thereto.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate as the Holder thereof and any other
interest therein, whether direct or indirect, legal or beneficial, as owner or
as pledgee.
"Percentage Interest": With respect to each Certificate at any
time, the ownership interest in the Trust evidenced by such Certificate,
expressed as a percentage (carried to eight decimal places, if necessary), the
numerator of which is the initial Certificate Principal Balance represented
thereby as shown on the face thereof and the denominator of which is the
aggregate initial Certificate Principal Balance of all of the Certificates.
"Periodic Rent": Payments of Minimum Rent and Additional Rent
(as each such terms are defined in each Lease) required to be made by a Lessee
pursuant to the related Lease.
"Permitted Investments": Any one or more of the following
obligations or securities, regardless of whether issued by the Servicer, the
Trustee or any of their respective Affiliates and having at all times, the
required ratings of S&P and Fitch, if any, provided for in this definition (in
the event that any of the following obligations or securities are not rated by
Fitch, such obligation or security shall be a Permitted Investment if such
obligation or security is equally rated by S&P and Moody's) and, with respect to
the investment of funds in any account specified herein, maturing on
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a date not later than the day on which such funds must be remitted from such
account in accordance with this Agreement:
(i) direct obligations of, or guaranteed as to timely
payment of principal and interest by, the United States or any
agency or instrumentality thereof provided that such
obligations are backed by the full faith and credit of the
United States;
(ii) direct obligations of, or guaranteed as to timely
payment of principal and interest by, FHLMC, FNMA or the
Federal Farm Credit System, provided that any such obligation,
at all times, is qualified by each of the Rating Agencies as
an investment of funds backing securities rated not lower than
A (or its equivalents) by each of the Rating Agencies;
(iii) demand time deposits in or certificates of
deposit of, money market deposit account of, or bankers'
acceptances issued by, any bank or trust company, savings and
loan association or savings bank, provided that, in the case
of obligations that are not fully FDIC-insured deposits, the
commercial paper and/or long-term unsecured debt obligations
of such depository institution or trust company (or in the
case of the principal depository institution in a holding
company system, the commercial paper or long-term unsecured
debt obligations of such holding company) have the three
highest ratings available for such securities by each of the
Rating Agencies (in the case of commercial paper) or have
received one of the three highest ratings available for such
securities by each of the Rating Agencies (in the case of
long-term unsecured debt obligations), or such lower rating as
will not result in the downgrading, withdrawal or
qualification of the rating or ratings then assigned to the
Certificates by either of the Rating Agencies;
(iv) general obligations of, or obligations guaranteed
by, any state of the United States or the District of Columbia
receiving one of the three highest long-term debt ratings
available for such securities by each of the Rating Agencies,
or such lower rating as will not result in the downgrading,
withdrawal or qualification of the rating or ratings then
assigned to the Certificates by either of the Rating Agencies;
(v) commercial or finance company paper (including
both non-interest-bearing discount obligations and
interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of
issuance thereof) that is rated by each of the Rating Agencies
in its highest short-term unsecured rating category at all
times, or such lower rating as will not result in the
downgrading, withdrawal or qualification of the rating or
ratings then assigned to the Certificates by either of the
Rating Agencies;
(vi) guaranteed reinvestment agreements issued by any
bank, insurance company or other corporation rated in one of
the three highest rating level available
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to such issuers by each of the Rating Agencies at all times,
provided that any such agreement must by its terms provide
that it is terminable by the purchaser without penalty in the
event any such rating is at any time lower than such level;
(vii) repurchase obligations with respect to any
security described in clause (i) or (ii) above entered into
with a depository institution or trust company (acting as
principal) meeting the rating standards described in clause
(iii) above;
(viii) securities bearing interest or sold at a discount
that are issued by any corporation incorporated under the laws
of the United States or any state thereof and rated by each of
the Rating Agencies in one of its three highest long-term
unsecured rating categories at all times; provided, however,
that securities issued by any such corporation will not be
Permitted Investments to the extent that investment therein
would cause the then outstanding principal amount of
securities issued by such corporation that are then held as
part of any Eligible Account to exceed 20% of the aggregate
principal amount of all Permitted Investments then held in
such Eligible Account;
(ix) units of money market funds rated AAAm or AAAm-G
by S&P, which funds are regulated investment companies, seek
to maintain a constant net asset value per share and invest
solely in obligations backed by the full faith and credit of
the United States;
(x) if previously confirmed in writing to the
Trustee, any other demand, money market or time deposit, or
any other obligation, security or investment, as may be
acceptable to each of the Rating Agencies as a permitted
investment of funds backing securities having ratings
equivalent to its initial rating of the Certificates; and
(xi) such other obligations as are acceptable as
Permitted Investments to each of the Rating Agencies;
provided, however, that no obligation or security shall be a Permitted
Investment if such obligation or security evidences (i) a right to receive only
interest payments or (ii) the right to receive principal and interest payments
derived from any underlying instrument that provides a yield in excess of 120%
of the stated interest rate at par of such underlying instrument.
"Person": Any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Principal Prepayment": Any payment of principal on the
Mortgage Loan (including, without limitation, where it is held as REO Property)
which is received in advance of the Maturity Date, including, without
limitation, the principal component of any Net REO Proceeds, Insurance Proceeds
and Liquidation Proceeds received with respect to the Mortgage Loan (including,
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without limitation, after the Mortgaged Property has been acquired as REO
Property) whether or not a Final Recovery Determination has been made with
respect thereto and any amount received from the Borrowers as an optional
prepayment in accordance with the Note or a mandatory prepayment in connection
with the breach of a representation or warranty contained in the Loan Agreement.
"Property Protection Advance": As defined in Section 3.03(b).
"Property Protection Expenses": Any costs and expenses for
which the Servicer is required to make a Property Protection Advance pursuant to
Sections 3.04 (payment of taxes, insurance and assessments), 3.11(a) (fire,
hazard, and public liability insurance), 3.13(b) (foreclosure costs), 3.13(d)
(environmental assessment costs), 3.13(e) (environmental clean-up notice),
3.19(b) (expenses in connection with Mortgaged Property as REO Property) all
such advances being subject to Section 3.03(b) and costs incurred in connection
with enforcing the terms of the Mortgage Loan.
"Purchase Price": As defined in Section 3.20(a).
"Qualified Insurer": An insurance company or security or
bonding company qualified to write the related insurance policy in the relevant
jurisdiction which shall have a "Claims Paying Rating" of A or better (or its
equivalent) from each of the Rating Agencies (or if such company is not rated by
Fitch, then by each of S&P and Moody's).
"Rating Agencies": S&P and Fitch. If such Rating Agencies or
the successors thereto are no longer in existence, "Rating Agencies" shall be
such nationally recognized statistical rating agencies or other comparable
Persons designated by the Trustee, notice of which designation shall be given to
the Certificateholders and the Servicer.
"Re-Assignment of Leases and Rents": Each of the
re-assignments of Assignment of Leases and Rents executed by the Originator
dated the Closing Date assigning the Originator's interest in the related
Assignment of Leases and Rents to the Trustee.
"Recommended Action": As defined in Section 3.12(b).
"Record Date": With respect to any Distribution Date, the
close of business on the last Business Day of the month preceding such
Distribution Date.
"Registrar Office": As defined in Section 5.02(a).
"Reimbursement Interest": Interest that accrues at the
Reimbursement Rate on overdue amounts under the Note prior to the period when
overdue amounts under the Note begin to accrue at the Default Rate.
"Reimbursement Rate": A per annum rate equal to 1% in excess
of the "Prime Rate" of interest, as published from time to time in the Money
Rates section of the Wall Street Journal.
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"Release Payment": As defined in the Loan Agreement.
"Remittance Date": The fifth day of each month, or, if such
date is not a Business Day, the preceding Business Day.
"REO Account": As defined in Section 3.19(a).
"REO Property": A Mortgaged Property, if title thereto has
been acquired by the Trustee through foreclosure, deed in lieu of foreclosure or
comparable conversion of ownership.
"Repurchase Price": As defined in Section 2.05(e).
"Request for Release": A request for release in substantially
the form attached as Exhibit B hereto.
"Responsible Officer": Any officer of the Trustee, Servicer or
Certificate Registrar, if applicable, with direct responsibility for the
administration of this Agreement and also, with respect to a particular matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"S&P": Standard & Poor's Rating Services, a nationally
recognized statistical rating agency.
"Servicer": AMRESCO Management, Inc., a Texas corporation, or
its successor in interest, or any successor Servicer appointed as herein
provided.
"Servicer Mortgage File": All documents, information and
records relating to the Mortgage Loan that are necessary to enable the Servicer
to perform its duties and service the Mortgage Loan in compliance with the terms
of this Agreement, and any additional documents or information related thereto
maintained or created by the Servicer.
"Servicer Remittance Report": A report prepared by the
Servicer in such media as may be agreed upon by the Servicer and the Trustee
containing such information regarding the Mortgage Loan as will permit the
Trustee to calculate the amounts to be distributed pursuant to Section 4.01 and
to furnish statements to Certificateholders pursuant to Section 4.02 and
containing such additional information as the Servicer and the Trustee may from
time to time agree.
"Servicing Advance": A Monthly Advance or Property Protection
Advance.
"Servicing Fee": With respect to any Distribution Date, an
amount for the preceding Mortgage Loan Accrual Period equal to the product of
(i) the product of (x) a fraction equal to the number of days elapsed in such
preceding Mortgage Loan Accrual Period divided by 360 and (y) the Servicing Fee
Rate and (ii) the principal balance of the Mortgage Loan on which interest
accrued during such previous Mortgage Loan Accrual Period.
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"Servicing Fee Rate": A per annum rate of 0.035%.
"Servicing Officer": Any officer or employee of the Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loan.
"Servicing Standards": As defined in Section 3.01(a).
"Settlement Amount": Any amount payable by the Cap
Counterparty as a result of a Cap Counterparty Default under a Cap Agreement.
"Special Servicing Fee": For any Mortgage Loan Accrual Period
during which the Mortgage Loan is a Specially Serviced Mortgage Loan, an amount
equal to the product of (i) the product of (x) a fraction equal to the number of
days elapsed in such preceding Mortgage Loan Accrual Period divided by 360 and
(y) 0.50% and (ii) the Mortgage Loan Principal Balance on which interest accrued
during the previous Mortgage Loan Accrual Period.
"Specially Serviced Mortgage Loan": The Mortgage Loan during
any Mortgage Loan Accrual Period which begins on or after a date 90 days
following the occurrence of a Mortgage Loan Event of Default and prior to the
date on which any such Mortgage Loan Event of Default is remedied.
"Subordination Agreement": Either of the Subordination,
Nondisturbance and Attornment Agreements or other similar agreement entered into
by a Lessee and the Originator and assigned to the Depositor which will provide,
among other things, that (i) the applicable Lease is subordinated to the lien of
the related Mortgage, (ii) in the event of foreclosure and to the extent such
Lessee is not in default, beyond applicable grace periods, under such Lease, the
holder of such Mortgage will allow such Lessee to remain in possession under the
terms of such Lease and such Lessee will abide by the terms of such Lease and
(iii) such Lessee will attorn to the new mortgagee.
"Termination Date": The Distribution Date, occurring no more
than 90 days after the date of the first Notice of Termination delivered to the
Trustee pursuant to Section 9.01(b), on which the Trust is terminated pursuant
to Section 9.01.
"Termination Price": As defined in Section 9.01(b).
"Transferee Certificate": As defined in Section 5.09(a)(iii).
"Treasury Regulations": Temporary or final regulations of the
United States Department of the Treasury.
"Trust": The trust created pursuant to this Agreement.
"Trust Fund": The assets of the Trust, including, without
limitation, (i) the Mortgage Loan (including without limitation the Trustee's
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rights in the Mortgaged Property), (ii) all payments on or collection in respect
of the Mortgage Loan as provided in this Agreement, (iii) property that secured
the Mortgage Loan and which has been acquired by foreclosure or deed in lieu of
foreclosure or any comparable conversion and all revenues received with respect
thereto, (iv) all rights of the Trustee under all insurance policies required to
be maintained with respect to the Mortgage Loan, (v) such assets as are
deposited in the Collection Account (to the extent provided in this Agreement)
and the REO Account.
"Trustee": The Chase Manhattan Bank, a New York banking
corporation, in its capacity as trustee hereunder, or its successor in interest,
or any successor trustee appointed as herein provided.
"Trustee Fee": With respect to any Distribution Date, an
amount for the preceding Mortgage Loan Accrual Period equal to the product of
(i) the product of (x) a fraction equal to the number of days elapsed in such
preceding Mortgage Loan Accrual Period divided by 360 and (y) the Trustee Fee
Rate and (ii) the principal balance of the Mortgage Loan on which interest
accrued during such previous Mortgage Loan Accrual Period.
"Trustee Fee Rate": A rate equal to 0.0075% per annum.
"Trustee Mortgage File": The Mortgage Loan Documents listed in
Section 2.01(i) through (x) and any additional documents required to be
deposited with the Trustee pursuant to the express provisions of this Agreement
and any other documents contained in the Mortgage File that are not part of the
Servicer Mortgage File.
"UCC": The Uniform Commercial Code, as enacted in each
applicable state.
SECTION 1.02. Certain Calculations.
Unless otherwise specified herein, the following conventions
shall apply:
(i) All calculations of interest provided for herein
shall be made on the basis of a 360-day year and actual number
of days elapsed.
(ii) The portion of any Net REO Proceeds, Insurance
Proceeds and Net Liquidation Proceeds in respect of the
Mortgage Loan allocable to principal shall equal the total
amount of such proceeds minus (a) any portion thereof payable
to the Servicer or the Trustee pursuant to the provisions of
this Agreement and (b) any portion thereof equal to interest
on the unpaid principal balance of the Mortgage Loan at the
Mortgage Interest Rate from the Due Date as to which interest
was last paid by the Borrowers up to but not including the
date on which such proceeds are received.
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(iii) Any Mortgage Loan payment is deemed to be
received on the date such payment is actually received by the
Trustee or the Servicer; provided, however, that for purposes
of calculating distributions on the Certificates, Principal
Prepayments with respect to the Mortgage Loan are deemed to be
received on the date they are applied in accordance with
customary servicing practices consistent with the terms of the
Note and Mortgage or, if applicable, Section 3.01(b), to
reduce the outstanding principal balance of the Mortgage Loan
on which interest accrues.
(iv) Notwithstanding any acquisition of title to a
Mortgaged Property by or on behalf of the Trust or
cancellation of the Mortgage Loan, the Mortgage Loan shall,
for all purposes hereunder, be considered to remain in
existence and be held in the Trust until such time as the
Mortgaged Property is sold by the Trust.
SECTION 1.03. Statement of Intent.
The Trust is intended to qualify as a fixed investment trust
within the meaning of Treasury Regulations Section 301.7701-4(c), and it is
neither the purpose nor the intent of the parties hereto to create a
partnership, joint venture, or association taxable as a corporation between or
among any or all of the Certificateholders, the Trustee and/or the Servicer. In
furtherance of the foregoing, the purpose of the Trust shall be to protect and
conserve the assets of the Trust, and the Trust shall not at any time engage in
or carry on any kind of business or any kind of investment activity, except as
otherwise contemplated by this Agreement. In no event shall the Trustee or any
other person have any power to vary the investment of the Certificateholders in
the Certificates or to substitute new investments or reinvest so as to enable
the Trust to take advantage of variations in the market to improve the
investment of the Certificateholders in the Certificates.
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ARTICLE II
CONVEYANCE OF THE MORTGAGE LOAN;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of the Mortgage Loan.
The Depositor, concurrently with the execution and delivery of
this Agreement and the issuance of the Certificates by the Trust, does hereby
convey to the Trust without recourse all right, title and interest of the
Depositor in and to (i) the Mortgage Loan including all principal, interest and
other amounts received on or with respect to the Mortgage Loan on or after the
Closing Date, which Mortgage Loan is secured by, among other things, the
Mortgages, the Assignments of Leases and Rents and the Assignment of Interest
Rate Cap Agreements and (ii) the Mortgage Loan Purchase and Sale Agreement. The
Trustee acknowledges the issuance of the Certificates in authorized
denominations registered in such name as the Depositor shall so direct the
Trustee on or prior to the Closing Date and duly authenticated by the Trustee
evidencing ownership of the entire Trust. On the Closing Date, the Borrowers
shall make a cash deposit into the Lockbox Account in an amount equal to the
Monthly Payment due on the Due Date in December 1996.
In connection with the ownership by the Trust of the Mortgage
Loan, the Trustee shall hold and maintain (except for those documents set forth
in clauses (viii) and (xxiv) of this Section 2.01, which documents shall be held
and maintained by the Servicer instead) the following documents subject to
Section 3.14 (which allows delivery to the Servicer):
(i) the original of the Note endorsed by the
Depositor without recourse to the Trustee in the following
form: "Pay to The Chase Manhattan Bank, as trustee, for the
benefit of the holders of the Hospitality Properties Mortgage
Acceptance Corp., Commercial Mortgage Pass- Through
Certificates, Series 1996-C1, without recourse" and which Note
and all endorsements thereof shall show a complete chain of
endorsement from the Originator to the Depositor, and
(following endorsement to the Depositor) from the Depositor to
the Trustee;
(ii) an original counterpart of each Mortgage showing
the Originator as mortgagee or beneficiary;
(iii) an original counterpart of each Assignment of
Mortgage, in suitable form for recordation in the
jurisdictions in which the real property securing the
applicable Mortgage is located, from the Originator to "The
Chase Manhattan Bank, as trustee, for the benefit of the
holders of the Hospitality Properties Mortgage Acceptance
Corp., Commercial Mortgage Pass-Through Certificates, Series
1996-C1";
(iv) an original counterpart of the Assignment of
Contracts from the Originator to "The Chase Manhattan Bank, as
trustee, for the benefit of the holders of the Hospitality
Properties Mortgage Acceptance Corp., Commercial Mortgage
Pass-Through Certificates, Series 1996- C1";
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<PAGE>
(v) an original counterpart of each Assignment of
Interest Rate Cap Agreement;
(vi) a copy of the UCC-1 financing statements
executed by the Borrower in connection with the Mortgage Loan,
together with original executed form UCC-3s, in a form
suitable for filing, disclosing the assignment from the
Originator to the Trustee of the security interest in the
personal property constituting security for repayment of the
Mortgage Loan;
(vii) an original of each final lender's title
insurance policy issued with respect to the Mortgage Loan,
together with all endorsements thereto;
(viii) an copy of each Lease, including all
modifications and amendments thereto;
(ix) the original executed counterpart of each
Assignment of Leases and Rents, together with each
Re-assignment of Assignments of Leases and Rents in suitable
form for recordation in the jurisdictions in which the
Mortgaged Properties are located from the Originator to the
Trustee (which re-assignment, however, may be included in the
Assignment of Mortgages and need not be a separate
instrument);
(x) an original counterpart of the Loan Agreement;
(xi) copies of certificates of casualty and general
liability insurance of each Lessee;
(xii) an original counterpart of the Mortgage Loan
Purchase and Sale Agreement;
(xiii) the original Hazardous Substances Indemnity
Agreement;
(xiv) an original counterpart of each Subordination
Agreement, which, among other things, provides that each
Lessee shall (i) remit all Periodic Rent and (ii) send notice
of Borrower default to the Servicer on behalf of the Trustee
or such other Person as the Trustee shall designate prior to
such Lessee exercising its rights to terminate the applicable
Lease or reduce or offset the rental payments due thereunder;
(xv) an original counterpart of each Estoppel Letter;
(xvi) an original counterpart of the Lockbox
Agreement;
(xvii) an original counterpart of the Contribution
Agreement;
(xviii) copies of the original Environmental
Assessments with respect to each Mortgaged Property made in
connection with acquisition of the Mortgaged Properties by the
Borrowers;
(xix) original executed opinion letter(s) of counsel
to the Borrower with respect to the due execution and
enforceability of the Mortgage Loan Documents;
(xx) original executed opinion letter(s) of counsel
to the Borrower with respect to non-consolidation;
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<PAGE>
(xxi) an original survey of each Mortgaged Property;
(xxii) copies of the certification or other evidence,
if any, such as affirmative coverage of zoning under the Title
Insurance Policy, that each Mortgaged Property complies with
all zoning laws;
(xxiii) copies of licenses, permits and approvals
required for the use and operation of each Mortgaged Property,
if any;
(xxiv) copies of all management agreements relating
to each Mortgaged Property; and
(xxv) copies of any and all amendments, modifications
and supplements to, and waivers related to, any of the
foregoing.
On the Closing Date and following the delivery of the documents included in the
Mortgage File (except for the final lender's title insurance policies referred
to in (vii) above, each of which shall immediately be delivered to the Trustee
upon its availability) from the Depositor to the Trustee, the Depositor shall
deliver to the title company (1) for recordation, the Mortgages, the Assignment
of Mortgages, the Assignments of Leases and Rents and the Re-Assignment of
Leases and Rents and (2) for filing, the UCC-1 and UCC-3 financing statements
referred to in Section 2.01(vi). In the event that any such document is lost or
returned unrecorded because of a defect therein, the Depositor shall promptly
prepare a substitute document, and thereafter deliver such document to the
Trustee which shall cause each such document to be duly recorded.
Notwithstanding anything to the contrary contained in this Section 2.01, if the
public recording office retains the applicable Mortgage Loan Documents after
each has been recorded, the obligations hereunder of the Trustee shall be deemed
to have been satisfied upon receipt of a copy of such Assignment of Mortgages
certified by the public recording office to be a true and complete copy of the
recorded original thereof. Once the documents referred to above which are
submitted for recording are all returned or copies of such recorded documents
are certified by the appropriate public recording office the documents shall be
added to the Mortgage File. If the Depositor cannot deliver any original
document described in this Section 2.01 on the Closing Date, the Depositor shall
use its best efforts, promptly upon receipt thereof and in any case not later 45
days from the Closing Date, to deliver such original or certified recorded
documents to the Trustee (unless the Depositor is delayed in making such
delivery by reason of the fact that such documents shall not have been returned
by the appropriate recording office in which case it shall notify the Trustee in
writing of such delay and shall deliver such documents to the Trustee promptly
upon the Depositor's receipt thereof). The Depositor shall deliver to the
Servicer, at the Depositor's expense, a copy of all documents in the Mortgage
File.
Although it is intended that the conveyance of the Depositor's
rights, title and interest in and to the Mortgage Loan pursuant to this
Agreement shall constitute a purchase and sale and not a loan, in the event that
such conveyance is deemed to be a loan, the Depositor shall be deemed to have
granted, and the Depositor does hereby grant to the Trustee, a first priority
perfected security interest in all of the Depositor's rights, title and interest
in, to and under the Mortgage Loan, all payments of principal and interest on
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<PAGE>
the Mortgage Loan, and all proceeds of any thereof, and this Agreement shall
constitute a security agreement under applicable law.
Although it is intended that the conveyance by any
Certificateholder of its rights, title and interest in and to the Mortgage Loan
by sale of its Certificates pursuant to this Agreement shall constitute a
purchase and sale and not a loan, in the event that such conveyance is deemed to
be a loan, the selling Certificateholder shall be deemed to have granted to the
Trustee a first priority perfected security interest in all of such
Certificateholder's rights, title and interest in, to and under the Mortgage
Loan, all payments of principal of or interest on such Mortgage Loan, and all
proceeds of any thereof, and this Agreement shall constitute a security
agreement under applicable law.
SECTION 2.02. Acceptance by Trustee.
By its execution and delivery of this Agreement, the Trustee
acknowledges the assignment to it of the Mortgage Loan in good faith without
notice of adverse claims and declares that it holds and will hold such documents
and all others delivered to it constituting the Mortgage File in trust, upon the
conditions herein set forth, for the use and benefit of all present and future
Certificateholders. The Trustee agrees, for the benefit of the
Certificateholders, to review the Mortgage File within 60 days after its
execution and delivery of this Agreement, to ascertain that all documents
referred to in Section 2.01 above (other than the documents referred to in
clauses (viii), (xix), (xx), (xxii), (xxiii) and (xxiv) of Section 2.01) and any
original recorded documents referred to in the first sentence of this Section
included in the delivery of a Mortgage File (other than those noted on a
Trustee's exception report) have been received, have been executed, appear to be
what they purport to be, purport to be recorded or filed (as applicable) and
have not been torn, mutilated or otherwise defaced, and that such documents
relate to the Mortgage Loan. The Trustee shall not be responsible for any loss,
cost, damage or expense to the Trust Fund resulting from any failure to receive
any document constituting a portion of a Mortgage File noted on a Trustee's
exception report or for any failure by the Depositor to use its best efforts to
deliver any such document.
The Trustee shall have no responsibility for reviewing the
Mortgage File except as expressly provided above and in Section 2.01 hereof.
Without limiting the effect of the preceding sentence, in reviewing any Mortgage
File pursuant to the preceding paragraph or Section 2.01, the Trustee shall have
no responsibility for determining whether any document or opinion is valid and
binding, whether the text of any deed, assignment or endorsement is in proper or
in recordable form (except, if applicable, to determine if the Trustee is the
grantee, assignee or endorsee), whether any document has been recorded in
accordance with the requirements of any applicable jurisdiction or is in form
suitable for filing, whether a blanket assignment is permitted in any applicable
jurisdiction, or whether any Person executing any document or rendering any
opinion is authorized to do so or whether any signature thereon is genuine.
The Trustee shall hold the Trustee Mortgage File in the State
of New York, and, except as otherwise specifically provided in this Agreement,
shall not remove such instruments from the State of New York unless it receives
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an Opinion of Counsel (obtained and delivered at the expense of the Person
requesting the removal of such instruments from the State of New York) that in
the event the transfer of the Mortgage Loans to the Trustee is deemed not to be
a sale, after such removal, the Trustee will possess a first priority perfected
security interest in such instruments.
SECTION 2.03. Representations, Warranties and Covenants of the Trustee.
(a) The Trustee hereby represents, warrants and covenants that
as of the Closing Date:
(i) The Trustee (1) is a banking corporation duly
organized, validly existing and in good standing under the
laws of the State of New York, (2) is qualified to act in a
fiduciary capacity in the State of New York and (3) is and
will remain in compliance with the laws of the State of New
York to the extent such compliance is necessary to perform its
obligations in accordance with the terms of this Agreement;
(ii) The execution and delivery of this Agreement by
the Trustee and its performance and compliance with the terms
of this Agreement will not violate the Trustee's charter or
by-laws or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract,
agreement or other instrument to which the Trustee is a party
or which may be applicable to the Trustee or any of its
assets;
(iii) This Agreement, assuming due authorization,
execution and delivery by the Depositor and the Servicer,
constitutes a legal, valid and binding obligation of the
Trustee, enforceable against it in accordance with the terms
of this Agreement, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, receivership,
moratorium or other laws relating to or affecting the rights
of creditors generally or the rights of creditors of banks and
by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at
law);
(iv) The Trustee is not in violation of, and the
execution and delivery of this Agreement by the Trustee and
its performance and compliance with the terms of this
Agreement will not constitute a violation with respect to, any
order or decree of any court or any order, law or regulation
of any federal, state, municipal or governmental agency of the
United States of America or the State of New York having
jurisdiction, which violation would have consequences that
would materially and adversely affect the condition (financial
or other) or operations of the Trustee or its properties or
might have consequences that would materially affect the
performance of its duties hereunder; and
(v) No litigation is pending or, to the best of the
Trustee's knowledge,
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<PAGE>
threatened against the Trustee which would prohibit its
entering into or materially and adversely affect the ability
to perform its obligations under this Agreement.
(b) It is understood and agreed that the representations and
warranties set forth in this Section shall survive the Closing Date and they
shall continue until the termination of this Agreement, and shall inure to the
benefit of the Depositor and the Certificateholders. Upon discovery by any party
hereto (or upon written notice thereof from any Certificateholder) of a breach
of any of the representations and warranties of the Trustee set forth in
subsection (a) of this Section 2.03, the party discovering such breach shall
give prompt written notice to the other parties.
SECTION 2.04. Representations, Warranties and Covenants of the Servicer.
(a) The Servicer hereby represents, warrants and covenants
that as of the Closing Date:
(i) The Servicer (1) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas, and
(2) is and will remain qualified to do business and otherwise in
compliance with the laws of each state in which a Mortgaged Property is
located to the extent such qualification or other compliance is
necessary to perform its obligations in accordance with the terms of
this Agreement;
(ii) The execution and delivery of this Agreement by the
Servicer and its performance and compliance with the terms of this
Agreement will not violate the Servicer's charter or by-laws or
constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in the breach of,
any material contract, agreement or other instrument to which the
Servicer is a party or which may be applicable to the Servicer or any
of its assets;
(iii) This Agreement, assuming due authorization, execution
and delivery by the Depositor and the Trustee, constitutes a legal,
valid and binding obligation of the Servicer, enforceable against it in
accordance with the terms of this Agreement, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium or other laws relating to or affecting the rights of
creditors generally and by general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at
law);
(iv) The Servicer is not in violation of, and the execution
and delivery of this Agreement by the Servicer and its performance and
compliance with the terms of this Agreement will not constitute a
violation with respect to, any order or decree of any court or any
order, law or regulation of any federal, state, municipal or
governmental agency of the United States of America or the State of
Texas having jurisdiction, which violation would have consequences that
would materially and adversely affect the condition (financial or
other) or operations of the Servicer or its properties or might have
consequences that would materially affect the performance of its duties
hereunder;
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<PAGE>
(v) No litigation is pending or, to the best of the Servicer's
knowledge, threatened against the Servicer which would prohibit its
entering into or materially and adversely affect the ability to perform
its obligations under this Agreement;
(vi) The Servicer maintains errors and omissions insurance
coverage for all Persons involved with the performance of its duties
under the Mortgage Loan Documents;
(vii) The Servicer is in good standing as an approved FNMA or
FHLMC servicer;
(viii) The Servicer acknowledges and agrees that the Servicing
Fee represents reasonable compensation and that the entire Servicing
Fee shall be treated for accounting and tax purposes as compensation
for the servicing and administration of the Mortgage Loan; and
(ix) The Servicer will examine each future subservicing
agreement and will be familiar with the terms thereof and the terms of
such agreements will not be materially inconsistent with the provisions
of this Agreement.
(b) It is understood and agreed that the representations and
warranties set forth in this Section shall survive the Closing Date and they
shall continue until the termination of this Agreement, and shall inure to the
benefit of the Depositor and the Certificateholders. Upon discovery by any party
hereto (or upon written notice thereof from any Certificateholder) of a breach
of any of the representations and warranties of the Servicer set forth in
subsection (a) of this Section 2.04, the party discovering such breach shall
give prompt written notice to the other parties.
SECTION 2.05. Representations, Warranties and Covenants of the Depositor.
(a) The Depositor hereby assigns to the Trustee for the
benefit of the Certificateholders all of its rights (including, without
limitation, its rights regarding breaches of the representations and warranties
made therein) with respect to (A) the representations and warranties made to the
Originator by the Borrower in the Loan Agreement and (B) the representations and
warranties made by the Originator to the Depositor in the Mortgage Loan Purchase
and Sale Agreement (including, without limitation, all of the Depositor's rights
regarding breaches thereof).
The Depositor hereby represents, warrants and covenants that
as of the Closing Date:
(i) the Depositor is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware.
(ii) the execution and delivery of this Agreement by
the Depositor and its performance and compliance with the
terms of this Agreement will not violate the Depositor's
charter or by-laws or constitute a default (or an event which,
with notice
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<PAGE>
or lapse of time, or both, would constitute a default) under,
or result in the breach of, any material contract, agreement
or other instrument to which the Depositor is a party or which
may be applicable to the Depositor or any of its assets;
(iii) this Agreement, assuming due authorization,
execution and delivery by the Trustee and the Servicer,
constitutes a legal, valid and binding obligation of the
Depositor, enforceable against it in accordance with the terms
of this Agreement, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, receivership,
moratorium or other laws relating to or affecting the rights
of creditors generally and by general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(iv) the Depositor is not in violation of, and the
execution and delivery of this Agreement by the Depositor and
its performance and compliance with the terms of this
Agreement will not constitute a violation with respect to, any
order or decree of any court or any order, law or regulation
of any federal, state, municipal or governmental agency of the
United States of America or the State of Delaware having
jurisdiction, which violation would have consequences that
would materially and adversely affect the condition (financial
or other) or operations of the Depositor or its properties or
might have consequences that would materially affect the
performance of its duties hereunder;
(v) no litigation is pending or, to the best of the
Depositor's knowledge, threatened against the Depositor which
would prohibit its entering into or materially and adversely
affect the ability to perform its obligations under this
Agreement; and
(vi) (A) the Depositor is an entity whose organization
documents provide that it is, and at least so long as the
Mortgage Loan is outstanding will continue to be, a
single-purpose entity. (For this purpose, "single-purpose
entity" shall mean a person, other than an individual, which
is formed or organized solely for the purpose of acting as
Depositor under this Agreement, does not engage in any
business unrelated to this Agreement, does not have any assets
other than those related to this Agreement, or any
indebtedness other than that related to this Agreement, has
its own books and records and accounts separate and apart from
any other person, and holds itself out as being a legal
entity, separate and apart from any other person); and
(B) the board of directors of the Depositor
has an independent director.
(b) The Depositor hereby represents and warrants with respect
to the Mortgage Loan that as of the date specified below or, if no such date is
specified, as of the Closing Date:
(i) Immediately prior to the sale, transfer and
assignment to the Trust, the Note and each related
Mortgage were not subject to an assignment or pledge
(other
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<PAGE>
than to the Depositor and the Trustee), and the
Depositor had good and marketable title to, and was
the sole owner of, the Mortgage Loan;
(ii) The Depositor has full right and authority to sell,
assign and transfer the Mortgage Loan and the
assignment to the Trust constitutes a legal, valid
and binding assignment of each Mortgage;
(iii) The Depositor is transferring the Mortgage Loan free
and clear of any and all liens, pledges, charges or
security interests of any nature encumbering the
Mortgage Loan subject to the matters described in
clause (c)(iv) below;
(iv) The Assignment of Mortgages and the Reassignment of
Assignment of Leases and Rents, Assignment of
Contracts and all other agreements executed in
connection with the Mortgage Loan, from the Depositor
to the Trust constitute the legal, valid and binding
assignment from the Depositor to the Trust, except as
such enforcement may be limited by bankruptcy,
insolvency, reorganization, liquidation,
receivership, moratorium or other laws relating to or
affecting creditors' rights generally, or by general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in
equity or at law);
(v) Since origination, and except as set forth in the
Mortgage File, the Mortgage Loan has not been
modified, altered, satisfied, canceled, subordinated
or rescinded and, each related Mortgaged Property has
not been released from the lien of the related
Mortgage in any manner which materially interferes
with the security intended to be provided by each
Mortgage, nor has any instrument been executed that
would effect any such satisfaction, cancellation,
rescission, subordination or release; and
(vi) The Depositor has not taken any action that would
cause the representations and warranties made by each
Borrower in the Mortgage Loan not to be true.
(c) The Depositor hereby further represents and warrants with
respect to the Mortgage Loan that as of the date specified below or, if no such
date is specified, as of the Closing Date:
(i) The Note and each related Mortgage and Assignment of
Leases and Rents and other agreement executed in
connection with the Mortgage Loan are legal, valid
and binding obligations of the related Borrower,
enforceable in accordance with their terms, except as
such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors rights
generally, or by general principles of equity
(regardless of whether such enforceability is
considered in a proceeding in
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<PAGE>
equity or at law) and to the best of the Depositor's
knowledge, there is no valid defense, counterclaim,
or right of rescission available to the related
Borrower with respect to the Note, each Mortgage and
other agreements;
(ii) Each Assignment of Leases and Rents creates a valid,
collateral or first priority assignment of, or a
valid first priority security interest in, certain
rights under the related lease, including the right
to receive all rents payable thereunder, subject only
to a license granted to the related Borrower to
exercise certain rights and to perform certain
obligations of the lessor under such lease, including
the right to operate the related Mortgaged Property;
no person other than the related Borrower owns any
interest in any payments due under such lease that is
superior to or of equal priority with the mortgagee's
interest therein;
(iii) Each Mortgage is a valid and enforceable first lien
on the related Mortgaged Property (subject to the
matters described in clause (iv) below), and such
Mortgaged Property is free and clear of any
mechanics' and materialmen's liens which are prior to
or equal with the lien of the related Mortgage,
except those which are insured against by a lender's
title insurance policy (as described below); a Form
UCC-1 financing statement has been filed and/or
recorded in all places necessary to perfect a valid
security interest in the personal property, if any,
granted under each Mortgage to the extent perfection
is obtained by filing;
(iv) The lien of each Mortgage as a first priority lien in
the original principal amount of the Mortgage Loan or
allocated loan amount of the portions of the
Mortgaged Property covered thereby (as set forth on
Exhibit A to the Loan Agreement) after all advances
of principal, is insured by an ALTA lender's title
insurance policy (or a binding commitment therefor),
or its equivalent as adopted in the applicable
jurisdiction, insuring the Trustee, as successor to
the Originator and the Depositor, its successors and
assigns, subject only to matters identified therein;
no claims have been made under such policy and the
Depositor has not done anything, by act or omission,
and the Depositor has no knowledge of any matter,
which would impair or diminish the coverage of such
policy;
(v) The proceeds of the Mortgage Loan have been fully
disbursed and there is no requirement for future
advances thereunder;
(vi) Each Mortgaged Property is free of any material
damage that would affect materially and adversely the
value of such Mortgaged Property as security for the
Mortgage Loan and the Depositor has received no
notice of any proceeding pending, or threatened, for
the total or partial condemnation of such Mortgaged
Property;
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<PAGE>
(vii) Each Borrower is in possession of all material
licenses, permits and other authorizations necessary
and required by all applicable laws for the conduct
of its business and all such licenses, permits and
authorizations are valid and in full force and
effect;
(viii) To Depositor's knowledge, each Mortgaged Property is
insured in accordance with the requirements of the
related Lease;
(ix) There is no default, breach, violation or event of
acceleration existing under each Mortgage or the Note
and, to the Depositor's knowledge, no event (other
than payments due but not yet delinquent) which, with
the passage of time or with notice and the expiration
of any grace or cure period, would and does
constitute a default, breach, violation or event of
acceleration;
(x) To Depositor's knowledge, no Borrower is a debtor in
a state or federal bankruptcy or insolvency
proceeding;
(xi) To Depositor's knowledge, each Mortgaged Property is
in material compliance with all applicable laws,
zoning ordinances, rules, covenants and restrictions
affecting the construction, occupancy, use and
operation of such Mortgaged Property. To Depositor's
knowledge, all material inspections, licenses and
certificates required, including certificates of
occupancy, whether by law, ordinance, regulation or
insurance standards to be made or issued with regard
to the Mortgaged Property, have been obtained and are
in full force and effect;
(xii) (A) Each Borrower is an entity whose
organization documents provide that it is,
and at least so long as the Mortgage Loan is
outstanding will continue to be, a
single-purpose entity. (For this purpose,
"single- purpose entity" shall mean a
person, other than an individual, which is
formed or organized solely for the purpose
of owning and operating the Mortgage
Properties that it owns, does not engage in
any business unrelated to such property and
its financing, does not have any assets
other than those related to its interest in
the property or its financing, or any
indebtedness other than as permitted by the
related Mortgage or the other Mortgage Loan
Documents, has its own books and records and
accounts separate and apart from any other
person, and holds itself out as being a
legal entity, separate and apart from any
other person); and
(B) The board of directors of each Borrower has
an independent director;
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<PAGE>
(xiii) With respect to each Mortgage constituting a valid
first lien on an unencumbered interest of the
Borrower as lessee under a ground lease underlying
the related Mortgaged Property, but not by the
related fee interest in such Mortgaged Property, the
Depositor represents and warrants that:
(A) The ground lease or a memorandum regarding
it has been duly recorded. The ground lease
permits the interest of the lessee to be
encumbered by the related Mortgage and does
not restrict the use of the related
Mortgaged Property by such lessee, its
successors or assigns in a manner that would
adversely affect the security provided by
the related Mortgage. To Depositor's
knowledge, there has been no material change
in the terms of such ground lease since its
recordation except by written instruments,
all of which are included in the related
Mortgage File;
(B) The lessor under the ground lease relating
to the Mortgaged Property located in East
Syracuse, New York, has agreed in writing
(which writing is included in the Mortgage
File) that such ground lease may not be
amended, modified, canceled or terminated
without the prior written consent of the
mortgagee and that any such action without
such consent is not binding on the
mortgagee, its successors or assigns;
(C) The ground lease has an original term (or an
original term plus one or more optional
renewal terms, which, under all
circumstances, may be exercised, and will be
enforceable, by the mortgagee) that extends
not less than 10 years beyond the stated
maturity of the related Mortgage Loan;
(D) Except as disclosed in the related title
insurance policy, the ground lease is not
subject to any liens or encumbrances
superior to, or of equal priority with, the
related Mortgage. The ground lease is prior
to any mortgage or other lien upon the
related fee interest and includes no
obligation on the part of the lessee
thereunder to subordinate its leasehold
interest to any fee mortgagee;
(E) The ground lease is assignable to the
mortgagee under the leasehold estate and its
assigns without the consent of the lessor
thereunder or any required consents have
been obtained;
(F) As of the date of execution and delivery,
the ground lease is in full force and effect
and no default has occurred, nor is there
any existing condition which, but for the
passage of time or giving of notice, would
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<PAGE>
result in a default under the terms of the
ground lease;
(G) Each ground lease requires the lessor
thereunder to give notice of any default by
the lessee to the mortgagee; or each ground
lease, or an estoppel letter received by the
mortgagee from the lessor further provides
that notice of termination given under such
ground lease is not effective against the
mortgagee unless a copy of the notice has
been delivered to the mortgagee in the
manner described in such ground lease;
(H) The mortgagee is permitted a reasonable
opportunity (including, where necessary,
sufficient time to gain possession of the
interest of the lessee under the ground
lease) to cure any default under a ground
lease, which is curable after the receipt of
notice of any the default before the lessor
thereunder may terminate the ground lease;
(I) Each ground lease requires the lessor to
enter into a new lease upon termination of
such ground lease for any reason, including
rejection of the ground lease in a
bankruptcy proceeding;
(J) No ground lease imposes restrictions on
subletting (other than the restriction which
requires the related Mortgage Properties to
be used for purposes related to the
operation of a hotel);
(xiv) Each Mortgaged Property is on a separate tax parcel,
assessed for real estate tax purposes separate and
apart from any other property owned by the related
Borrower or any other Person;
(xv) Any subleases entered into by the Lessee will be
subject and subordinate to the Lease and will not
relieve the Lessee of its obligations under the
Lease; in the event that the Trustee acquires title
to a Mortgaged Property by foreclosure or otherwise,
the lessor's interest under the related Lease is
freely assignable by the Trustee and its successors
and assigns to any person without the consent of the
Lessee, and, in the event the lessor's interest is so
assigned, the Lessee will be obligated to recognize
the assignee as lessor under such Lease;
(xvi) Each Lease has an original term ending on or after
the Maturity Date;
(xvii) Each remaining payment of rent due under each Lease
is sufficient to pay the allocable portion of (based
on Loan Allocation Amount) each Monthly Payment due
under the Mortgage Loan in full on or prior to the
Due Date thereof without giving effect to any
applicable grace periods;
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(xviii) No sale of any Mortgaged Property is pending or
contemplated by either Borrower and, to the best of
the Depositor's knowledge, there is no assignment of
any Lease by any Lessee contemplated or pending;
(xix) The Lessee has delivered an Estoppel Letter and to
the extent required to make the Lease subordinate to
the Mortgage, a Subordination Agreement with respect
to each Lease;
(xx) The Depositor has no knowledge that the
representations and warranties made by each Borrower
in the Mortgage Loan Documents are not true in any
material respect;
(xxi) The Mortgage Loan is not a participation interest in
a mortgage loan, but is a whole loan;
(xxii) The Originator does not own and is not entitled to
own any equity participations in the respective
Borrowers;
(xxiii) The Mortgage Loan does not contain terms providing
for contingent interest;
(xxiv) The Permitted Exceptions (as defined in the Loan
Agreement) do not and will not materially and
adversely interfere with (1) the ability of the
Borrowers timely to pay in full the interest on the
Mortgage Loan or (2) the use of the related Mortgaged
Properties for the use currently being made thereof,
the operation of such Mortgaged Properties as
currently being operated or the value of such
Mortgaged Properties;
(xxv) There has been no waiver, modification, alteration,
satisfaction, cancellation, subordination, or release
of any Mortgaged Property or Borrowers or the lien on
the Mortgaged Properties, in whole or in part or
execution of any instrument that would cause or
result in the foregoing;
(xxvi) No scheduled payment under the Mortgage Loan
Documents is 30 days or more past due;
(xxvii) No delinquent taxes, assessments, fees, water, sewer
or other governmental charges against any Mortgaged
Property exist as of the Closing Date;
(xxviii) No advance of funds has been made, directly or
indirectly, by the Originator to the Borrowers and no
funds have been received from any person other than
the Borrower for or on account of payments due on the
Note;
(xxix) The Mortgage Loan complied with all applicable usury,
truth-in-lending, real estate settlement, equal
credit opportunity and disclosure laws as of the
Closing Date;
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(xxx) To the extent required under applicable law, each
holder of the Note was authorized to transact and do
business in the jurisdiction where the Mortgaged
Properties are located while each was holder;
(xxxi) All terms of the Mortgages pertaining to interest
rate adjustments, payment adjustments and principal
balance adjustments are enforceable and will not
affect the priority of the mortgage lien;
(xxxii) The Note and the Mortgages contain enforceable
provisions for realization against the Mortgaged
Properties of the benefits of the security, including
realization by judicial, or if applicable,
nonjudicial foreclosure;
(xxxiii) The Note and the Mortgages contain no provision
limiting the right or ability of Depositor to assign,
transfer and convey the Note or the Mortgage to any
other Person or entity;
(xxxiv) If any Mortgage is a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has
been properly designated and currently so serves and
is named in the deed of trust, and no fees or
expenses are or will become payable to the trustee
under the deed of trust, except in connection with
the sale or release of the related Mortgaged Property
following default or payment of the Mortgage Loan;
and
(xxxv) The Note is not secured by any collateral that is not
included in the Trust Fund.
(d) It is understood and agreed that the representations and
warranties set forth in this Section 2.05 shall survive the Closing Date and
they shall continue until the termination of this Agreement, and shall inure to
the benefit of the Certificateholders. Upon discovery by any party hereto (or
upon written notice thereof from any Certificateholder) of a breach of any of
the representations and warranties of the Depositor set forth in this Section
2.05, the party discovering such breach shall give prompt written notice to the
other parties.
(e) Within 90 days after the receipt of the notice (provided
for in (d)) of a breach by the Depositor of a representation or warranty set
forth in Section 2.05(b), the Depositor shall either (i) repurchase the Mortgage
Loan at the Repurchase Price or (ii) promptly cure such breach in all material
respects; provided, however, that in the event that such breach is capable of
being cured but not within such 90-day period and the Depositor has commenced
and is diligently proceeding with the cure of such breach within such 90-day
period, the Depositor shall have an additional 90 days to complete such cure,
provided, further, that with respect to such additional 90-day period the
Depositor shall have delivered an officer's certificate to the Trustee setting
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forth the reason such breach is not capable of being cured within the initial
90-day period and what actions the Depositor is pursuing in connection with the
cure thereof and stating that the Depositor anticipates that such breach will be
cured within the additional 90-day period. Upon the repurchase of the Mortgage
Loan by the Depositor, the Trustee shall execute and deliver such instruments of
transfer or assignment presented to it by the Depositor, in each case without
recourse, as shall be necessary to vest in the Depositor the legal and
beneficial ownership of the Mortgage Loan (including any property acquired in
respect thereof or proceeds of any insurance policy with respect thereto), and
shall deliver the Mortgage File to the Depositor or its designee after receipt
of the Repurchase Price. "Repurchase Price" shall mean an amount equal to: (i)
the unpaid principal balance of the Mortgage Loan as of the Due Date as to which
a payment was last made by the Borrower; plus (ii) unpaid accrued interest from
the Due Date as to which interest was last paid by the Borrower up to the first
Due Date which occurs on or immediately after the repurchase date at a rate
equal to the then-current mortgage interest rate on the unpaid principal balance
of the Mortgage Loan; plus (iii) any unreimbursed interest on any Monthly
Advances made by the Servicer at the Advance Rate; plus (iv) fees and expenses
payable to the Trustee and the Servicer through such Due Date (including all
Servicer's compensation) (without duplication); plus (v) all Property Protection
Advances with interest at the Advance Rate. The remedy provided for in this
Section 2.05(e) shall be the sole remedy available against the Depositor in the
event of a breach by the Depositor of any representation or warranty set for in
Section 2.05(b).
SECTION 2.06. Servicer Mortgage File.
All original documents relating to the Mortgage Loan and
Leases which are part of the Servicer Mortgage File are and shall be held by the
Servicer, in trust for the benefit of the Trustee on behalf of
Certificateholders. The legal ownership of all records and documents with
respect to the Mortgage Loan and Lease prepared by or which come into the
possession of the Servicer shall immediately vest in the Trustee, in trust for
the benefit of Certificateholders.
SECTION 2.07. Certain Representations, Warranties and Covenants of Depositor.
The Depositor hereby represents, warrants and covenants until
such time as the this agreement is terminated in accordance with Section 9.01,
that, it:
(a) has not and will not own any asset other than (i) the
Mortgage Loan and the Mortgage Loan Documents, and (ii) incidental personal
property necessary for the operation of, or associated with, the Mortgaged
Properties;
(b) was organized solely for the purpose of acquiring the
Mortgage Loan from the Originator, establishing the Trust Fund and conveying the
Mortgage Loan to the Trust Fund in consideration of the issuance and delivery by
the Trust Fund to the Depositor of the Certificates and consummating the
offering of the Certificates and is not engaged and will not engage in any other
business;
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(c) has not and will not enter into any contract or agreement
with any shareholder or Affiliate of the Depositor except upon terms and
conditions that are intrinsically fair and substantially similar to those that
would be available on an arms-length basis with third parties other than an
Affiliate;
(d) has not and will not incur any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation);
(e) has not and will not make any loans or loan advances to
any third party (including any Affiliate of the Depositor);
(f) is and will remain solvent and pay its debts and
liabilities (including, without limitation, employment and overhead expenses)
from its assets as the same shall become due;
(g) has done or caused to be done and will do all things
necessary to observe corporate formalities and to preserve its existence, and
will not, nor will any shareholder thereof, amend, modify or otherwise change
its certificate of incorporation or by-laws in a manner which adversely affects
the Depositor's existence as a single purpose entity;
(h) has conducted and operated and will conduct and operate
its business in its own name and as presently conducted and operated;
(i) has maintained and will maintain books and records and
bank accounts separate from those of its Affiliates or any other Person;
(j) has been and will be, and at all times will hold itself
out to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate thereof) and not as a division or part of any other
Person and shall maintain and use separate stationery, invoices and checks;
(k) has maintained and will maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;
(l) has not and will not, nor shall any shareholder, partner
or affiliate, seek the dissolution or winding up, in whole or in part, of the
Depositor;
(m) has not and will not enter into any transaction of merger
or consolidation, or acquire by purchase or otherwise all or substantially all
of the business or assets of, or any stock or beneficial ownership of, any
entity;
(n) has not and will not commingle the funds and other assets
of the Depositor with those of any shareholder, any affiliate or any other
person;
(o) has maintained and will maintain its assets in such a
manner that it is not costly or difficult to segregate, ascertain or identify
its individual assets from those of any affiliate or any other person;
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(p) has not and will not hold itself out to be responsible for
the debts or obligations of any other person;
(q) at all times shall cause there to be at least one duly
appointed member of the board of directors (an "Independent Director") of the
Depositor who is not at the time of such individual's appointment, has not been
at any time during the preceding five years, and will not be during its or their
service as Independent Director (A) a direct or indirect stockholder of, or an
officer, director (other than with respect to such Independent Director's
service as director of the Depositor) or employee, creditor, supplier, manager
or contractor of, the Depositor or any of its Affiliates, (B) a person or other
entity controlling any such stockholder, creditor, supplier, manager or
contractor, or (C) a member of the immediate family of any such stockholder,
officer, employee, creditor, supplier, manager or contractor. As used in this
subsection (q), the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through ownership of voting securities or other beneficial
interests, by contract or otherwise;
(r) has not and shall not cause the board of directors of the
Depositor to take any action which, under the terms of any certificate of
incorporation, by-laws or any voting trust agreement with respect to the
Depositor's common stock, requires the unanimous affirmative vote of one hundred
percent (100%) of the members of the board of directors, unless at the time of
such action there shall be at least one member who is an Independent Director;
(s) has not and will not, without the unanimous consent of all
of its directors, file a bankruptcy or insolvency petition or otherwise
institute insolvency proceedings with respect to itself or to any other entity
in which it has a direct or indirect legal or beneficial ownership interest;
(t) has maintained and will maintain its books, records,
resolutions and agreements as official records;
(u) has not and will not acquire obligations or securities of
its shareholders;
(v) has allocated and will allocate fairly and reasonably any
overhead for shared office space
(w) has not and will not pledge its assets for the benefit of
any other person or entity;
(x) has not and will not identify its shareholders or any
Affiliates of the Depositor as a division or part of the Depositor;
(y) has complied and shall comply with the provisions of its
certificate of incorporation;
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(z) has conducted and shall conduct itself and operate its
business so that all of the assumptions made in those certain legal opinions
dated the date hereof by Sullivan & Worcester LLP with respect to
nonconsolidation issues shall be true at all times;
(aa) will maintain its corporate existence and good standing
under the laws of its state of incorporation;
(bb) has not entered into the transactions described herein
with the intent to hinder, defraud or delay any creditors;
(cc) has allocated and will allocate fairly and reasonably the
cost of the services of any shared employee, consultant or agent;
(dd) will make all oral and written communications solely in
its own name and will not permit any other entity to make communications in the
name of the Depositor; and
(ee) will prepare its financial statements separately from
those of any other person or entity, which statements may be consolidated with
financial statements of Hospitality Properties Trust for certain reporting
purposes provided such financial statements contain notations clearly noting (i)
the separate corporate existence and separate financial condition of the
Depositor and (ii) that the assets of the Depositor will be available only to
satisfy the claims of the Depositor's creditors.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOAN
SECTION 3.01. Servicer to Service Mortgage Loan;
Administration of the Mortgage Loan.
(a) The Servicer shall diligently service and administer the
Mortgage Loan pursuant to this Agreement on behalf of the Trustee and in the
best interests of and for the benefit of the Certificateholders (as determined
by the Servicer in its good faith, reasonable judgment) in accordance with
applicable law, the terms of this Agreement and the terms of the Mortgage Loan
and, to the extent consistent with the foregoing, in accordance with the higher
of the following standards of care: (1) the same manner in which, and with the
same care, skill, prudence and diligence with which the Servicer services and
administers similar mortgage loans for other third-party portfolios, and (2) the
same care, skill, prudence and diligence with which the Servicer services and
administers mortgage loans owned by the Servicer, exercising reasonable business
judgment and acting in accordance with applicable law, the terms of this
Agreement, the Mortgage Loan and with a view to the maximization of timely
recovery of principal and interest on the Mortgage Loan and the best interests
of the Trust Fund and the Certificateholders, as determined by the Servicer, in
its reasonable judgment, in each case, without regard to:
(i) any relationship that the Servicer or any
Affiliate of the Servicer may have with either Borrower,
either Lessee or any Affiliate of a Borrower or Lessee; or
(ii) the ownership of any Certificate by the Servicer
or any Affiliate of the Servicer; or
(iii) the Servicer's right to receive compensation
for its services hereunder or with respect to any particular
transaction; or
(iv) the obligation of the Servicer to make Monthly
Advances or Property Protection Advances under this Agreement;
or
(v) the ownership, or servicing or management for
others, by the Servicer of any other mortgage loans or real
properties (the foregoing, collectively referred to as the
"Servicing Standards").
In the event that the Servicer believes that it is unable to
comply with the requirements of this Section 3.01(a) with respect to the
Mortgage Loan as a result of one or more of the factors described in the
foregoing clauses (i) through (v), it may enter into a sub-servicing agreement
with a sub-servicer pursuant to Section 3.01(b) pursuant to which such
sub-servicer shall perform its duties with respect to the Mortgage Loan. In such
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event, so long as such sub-servicer performs such duties on behalf of the
Servicer in accordance with the requirements of this Section 3.01(a), then the
Servicer shall be deemed to be in compliance herewith.
To the extent consistent with, and subject to any express
limitations set forth in, this Agreement, the Servicer shall seek to maximize
the timely and complete recovery of principal and interest on the Note;
provided, however, that nothing herein contained shall be construed as an
express or implied guarantee by the Servicer of the collectibility of the
Mortgage Loan. Subject only to the above-described servicing standards and the
terms of this Agreement and of the Mortgage Loan, the Servicer shall have full
power and authority, acting alone or through sub-servicers (subject to Sections
3.01(b) and 3.02), to do or cause to be done any and all things in connection
with such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer shall, and is
hereby authorized and empowered to, execute and deliver, on behalf of the
Certificateholders: (1) any and all financing statements, continuation
statements and other documents or instruments necessary to maintain the lien on
the Mortgaged Property and related collateral; (2) subject to Section 3.22, any
and all modifications, waivers, consents or amendments with respect to any
documents contained in the Mortgage File; (3) any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge
(including the release, upon satisfaction of the conditions therefor set forth
in the Loan Agreement, of any of the Mortgaged Properties from the lien of the
related Mortgage); (4) all other comparable instruments with respect to the
Mortgage Loan and the Mortgaged Property, and (5) pleadings to initiate or
defend legal proceedings, including judicial and non-judicial foreclosures and
actions to capture rents, if, in any of the cases described in sub-clauses (1)
through (5) hereof, in its reasonable judgment such action is in the best
interests of the Certificateholders in accordance with, or is required by, this
Agreement or any Mortgage Loan Document and subject in each case to any
obligations hereunder to give any required notice to, or to obtain any required
consent of, Certificateholders. In order to assist the Servicer in satisfying
the requirements of title companies, courts and other Persons with a need to be
satisfied of the authority of the Servicer to act on behalf of the Trustee in
accordance with the terms of this Agreement, the Trustee shall from time to time
provide executed, recordable powers of attorney to the Servicer (the preparation
and delivery of which shall be an expense of the Trust) as may be reasonably
requested by the Servicer. The Servicer shall service and administer the
Mortgage Loan in accordance with applicable law and shall provide to the
Borrowers any reports required to be provided to them under the Mortgage Loan
Documents. Subject to Section 3.14, the Trustee shall, upon the receipt of a
written request of a Servicing Officer, execute and deliver to the Servicer any
powers of attorney and other documents prepared by the Servicer and necessary or
appropriate (as certified in such written request) to enable the Servicer to
carry out its servicing and administrative duties hereunder, and the Trustee
shall not be held responsible for any actions by the Servicer in its use of such
powers of attorney.
(b) (i) Subject to subparagraph (ii) of this Section 3.01(b)
and Section 3.02, after the Closing Date, the Servicer may enter into
sub-servicing agreements with third parties with respect to any of its
obligations hereunder, provided that (A) any such agreement shall be consistent
with the provisions of this Agreement; (B) the sub-servicer may not make
important servicing decisions (such as modifications of the Mortgage Loan or the
decision to foreclose) without the involvement of the Servicer; (C) the Trustee
or any successor servicer may terminate the sub-servicing agreement without
cause and without cost or further obligation to the Trust Fund or the
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Certificateholders only in the event that the Servicer is terminated or if the
subservicer has breached the subservicing agreement; and (D) neither the Trustee
nor the Certificateholders shall have any direct obligations or liabilities
(including, without limitation, indemnification obligations) with respect to any
sub-servicer on account of a sub-servicing agreement or otherwise.
(ii) Any sub-servicing agreement entered into by the
Servicer with a third party shall provide that the
sub-servicer shall remit to the Collection Account any
payments or other receipts that it receives in respect of the
Mortgage Loan or any Lease within one Business Day of its
receipt. Any sub-servicing agreement entered into pursuant to
this Section 3.01(b) shall permit assignment thereof to any
successor to the Servicer hereunder and shall provide for the
termination thereof without cause, and without payment by the
Trust or any such successor of any termination fee, at the
option of the Servicer (or any successor thereto).
(c) If any successor Servicer assumes the obligations of the
Servicer in accordance with Section 7.02, such successor, to the extent
necessary to permit such successor to carry out the provisions of Section 7.02,
shall, without act or deed on the part of the Servicer or such successor,
succeed to all of the rights and obligations of the Servicer under any
sub-servicing agreement entered into pursuant to Section 3.01(b). In such event,
the successor Servicer shall be deemed to have assumed all of the Servicer's
interest therein and to have replaced the Servicer as a party to such
sub-servicing agreement to the same extent as if such sub-servicing agreement
had been assigned to such successor Servicer except that the Servicer resigning
or being removed shall not have any liability or obligation under such
sub-servicing agreement in respect of events that occur after such succession
unless so provided in such sub-servicing agreement or unless such events arise
out of actions or events that occurred prior to such succession.
SECTION 3.02. Liability of the Servicer.
(a) Notwithstanding any sub-servicing agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer (but subject to the last sentence of Section 3.01(c)) and any Person
acting as sub-servicer (or its agents or subcontractors) or any reference to
actions taken through any Person acting as sub-servicer or otherwise, the
Servicer shall remain obligated and primarily liable to the Certificateholders
for the servicing and administering of the Mortgage Loan in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability by
virtue of any sub-servicing agreement or arrangement, or by virtue of
indemnification from any Person acting as sub-servicer (or its agents or
subcontractors) to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Mortgage Loan. The
Servicer shall be entitled to enter into an agreement with any sub-servicer
providing for indemnification of the Servicer by such sub-servicer, and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification, but no such agreement for indemnification shall be deemed to
limit or modify this Agreement.
(b) Without limiting the generality of paragraph (a) of this
Section 3.02, any sub-servicing agreement and any other transactions or services
relating to the Mortgage Loan involving a sub-servicer shall be deemed to be
between the Servicer and such sub-servicer alone, and the Certificateholders
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shall not be deemed parties thereto and shall have no contractual claims,
rights, obligations, duties or liabilities with respect to the sub-servicer. Any
such sub-servicer shall not have any direct rights of indemnification against,
or that may be satisfied out of the assets of, the Trust Fund. Any such
sub-servicer shall have recourse only against the Servicer.
SECTION 3.03. Collection of the Mortgage Loan and Lease
Payments; Property Protection Advances.
(a) The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loan
Documents and shall undertake such collection procedures in accordance with the
Servicing Standard. Notwithstanding the foregoing, the Servicer shall be
entitled to waive any late payment or assumption or modification charge or
penalty interest in connection with any delinquent Monthly Payment or delinquent
Maturity Date Payment, only to the extent, in the reasonable judgment of the
Servicer, that such waiver would be in the best interests of the
Certificateholders. The Servicer shall have no liability to the
Certificateholders or any other Person if its analysis and determination with
respect to the waiver of such late payment or assumption or modification charge
or penalty interest that, in its reasonable judgment, such waiver would be in
the best interests of the Certificateholders proves to be wrong or incorrect, so
long as the analysis and determination were made in good faith by the Servicer.
(b) The Servicer shall make cash advances (each such advance,
a "Property Protection Advance") with respect to the Mortgage Loan in an amount
equal to all such funds as are necessary for the purpose of effecting the
payment of Property Protection Expenses; provided, however, that the Servicer
shall not be obligated to make any Property Protection Advance (other than in
respect of taxes and insurance) unless the Servicer makes a determination that,
in its reasonable judgment, the aggregate proceeds of the Mortgage Loan, after
giving effect to such Property Protection Advance, would exceed, on a present
value basis, the aggregate proceeds of the Mortgage Loan if the Property
Protection Advance were not made by the Servicer; and provided, further, that
the Servicer shall not be obligated to make any Property Protection Advance that
it determines, if made, would be a Nonrecoverable Advance. The Servicer shall
have no liability to the Trust, the Certificateholders or any other Person if
its analysis and determination that, in its reasonable judgment, the aggregate
recovery from the Mortgage Loan, after giving effect to all Property Protection
Advances in respect thereof, would exceed, on a present value basis, the
aggregate recovery from the Mortgage Loan if such Property Protection Advance
were not made proves to be incorrect, so long as such analysis and determination
was made in good faith by the Servicer and the Servicer was not negligent in
obtaining the underlying facts. No costs incurred by the Servicer in effecting
the payment of real estate taxes or assessments, insurance premiums and
assessments on a Mortgaged Property or in making any other Property Protection
Advance shall, for the purpose of calculating distributions to
Certificateholders, be added to the amount owing under the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan may so permit.
All Property Protection Advances made by the Servicer pursuant
to this Agreement shall bear interest under this Agreement at the Advance Rate
for the period from and including the date on which such Property Protection
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Advance was made to, but not including, the date the Servicer is reimbursed for
such Property Protection Advance. Any reimbursement of such Property Protection
Advances shall be first applied to accrued and unpaid interest on the funds
advanced by the Servicer and then to the principal amount of the funds so
advanced.
SECTION 3.04. Payment of Insurance, Taxes, Assessments and Similar Items.
Each Lessee is obligated to make all payments with respect to
insurance and real estate taxes and assessments with respect to the related
Mortgaged Properties. The Servicer shall monitor (to the extent required by this
Section 3.04) the compliance by each Lessee with the terms of the related Lease
relating to the payment by such Lessee of insurance premiums and real estate
taxes and assessments, and shall take appropriate action upon the failure by
such Lessee to pay such amounts. In particular, the Servicer shall require
delivery of evidence of payment of taxes owed with respect to each of the
Mortgaged Properties, as required by the Mortgage Loan Documents. If the
Servicer determines based upon the foregoing that real estate taxes or
assessments have not been paid when due, or receives notification of
cancellation of insurance for failure to pay premiums or otherwise, the Servicer
shall give notice to the Trustee and the related Borrower of such event, and
shall make demand upon such Borrower to cause the related Lessee to pay such
amounts or to pay the required amounts itself under the terms of the related
Lease. In the event such Borrower does not make or cause to be made the required
payment with respect to insurance or real estate taxes or assessments, the
Servicer shall, to the extent that it deems it necessary or advisable in
accordance with Section 3.01(a) and Section 3.03(b) to make a Property
Protection Advance, make a Property Protection Advance with respect to such
amount due with respect to insurance and taxes and assessments.
In the case that a Mortgaged Property becomes REO, the amount
of any real estate taxes or assessments or insurance premiums that the Servicer
deems to require immediate payment consistent with the Servicing Standards shall
be payable from amounts on deposit in the REO Account. To the extent that the
amounts on deposit in the REO Account are insufficient to make such payment, the
Servicer shall promptly make a Property Protection Advance with respect thereto,
subject to Section 3.03(b).
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SECTION 3.05. Lockbox Account.
The Servicer shall, pursuant to the Lockbox Agreement,
establish and maintain the Lockbox Account, which shall be an Eligible Account,
entitled "AMRESCO Management, Inc., in Trust for The Chase Manhattan Bank, as
trustee, in trust for the holders of the Hospitality Properties Mortgage
Acceptance Corp., Commercial Mortgage Pass-Through Certificates, Series 1996-C1,
Lockbox Account." The assets of the Lockbox Account shall, subject to the
Lockbox Agreement, be owned by the Borrowers and shall be, pursuant to the
Assignments of Leases and Rents and the Assignment of Interest Rate Cap
Agreements, pledged to the Trustee for the benefit of the Certificateholders as
collateral securing the Mortgage Loan. Prior to realization upon such account
following an event of default under the Mortgage Loan Documents, the assets of
the Lockbox Account shall be treated as the property of the Borrowers for
federal, state and local income tax purposes. The Servicer shall deposit or
cause to be deposited in the Lockbox Account, as and when received, the
following payments:
(i) all payments of Periodic Rent received by it
pursuant to the Assignments of Leases and Rents;
(ii) all payments under the Cap Agreements received
by it pursuant to the Assignments of Interest Rate Cap
Agreement (other than any Settlement Amount);
(iii) the Settlement Amount, to the extent that
payment of such amount to a substitute cap counterparty is
pending;
(iv) any amount by which any Settlement Amount exceeds
the amount required as an up-front payment under a substitute
cap agreement having substantially the same terms as the
related Cap Agreement with a substitute cap counterparty
having the same ratings as the Cap Counterparty; and
(v) in the event a Lease or any substitute lease, as
applicable, related to a Mortgaged Property is no longer in
effect, the revenues (net of certain expenses in connection
with the operation of the related Mortgaged Property) received
by the applicable Borrower for the operation of the related
Mortgaged Property.
If a Mortgage Loan Event of Default occurs, the Servicer shall
hold any amounts then or thereafter on deposit in the Lockbox Account as
additional security for the Borrowers' obligations under the Mortgage Loan or
will apply such funds in payment of any sums due under the Mortgage Loan
Documents. Upon the occurrence of a non-monetary Mortgage Loan Event of Default
which is attributable to an identifiable Mortgaged Property (each, an "Affected
Property"), provided that the removal of such Affected Property from the
collateral securing the Borrowers' obligations to repay the Mortgage Loan would
effect a cure of such Mortgage Loan Event of Default, the Servicer, at its
option, may apply the amount withdrawn from the Lockbox Account, which would
otherwise be remitted to the Borrowers, in repayment of the Mortgage Loan
Principal Balance until such time as the Mortgage Loan has been repaid in an
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amount equal to 125% of the Loan Allocation Amount of the Affected Property, at
which time the Affected Property will be released by the Servicer on behalf of
the Trust from the lien of the applicable Mortgage.
In the event that deposits are made to the Lockbox Account
that are not required to be deposited therein, the Servicer shall promptly upon
notice thereof withdraw such amounts from the Lockbox Account and apply such
funds as appropriate under this Agreement, any provision herein to the contrary
notwithstanding, but subject to the terms of the Assignments of Leases and
Rents.
The Servicer shall invest the amount at any time credited to
the Lockbox Account, at the direction of the Borrowers, in Permitted Investments
that mature, or are subject to withdrawal or redemption, on or before the
succeeding Due Date. The income from Permitted Investments of funds in the
Lockbox Account shall be deposited in the Lockbox Account for distribution in
accordance with the provisions of Section 3.06. Any losses on the investment of
funds in the Lockbox Account will be required to be deposited by the Borrowers
in the Lockbox Account, to the extent such amounts are necessary to make
required deposits into the Collection Account or to pay the Servicing Fee or
Trustee Fee, on or before the succeeding Due Date.
SECTION 3.06. Permitted Withdrawals from the Lockbox Account.
The Servicer shall, subject to the following paragraphs of
this Section 3.06, withdraw amounts deposited in the Lockbox Account pursuant to
the terms hereof in the following order of priority:
(a) to deposit in the Collection Account on each Due Date an
amount equal to the Monthly Payment, the Maturity Date Payment (if then due) and
any late payments (together with interest at the Reimbursement Rate), the amount
of any Disposition Fee or Modification Fee due to the Servicer and other similar
amounts due under the Note, the Loan Agreement or any Mortgage on such Due Date;
(b) to remit to a substitute cap counterparty the Settlement
Amount, to the extent that such amount was deposited pursuant to Section
3.05(iii);
(c) to remit to each Rating Agency its annual surveillance fee
(in the case of each, not to exceed $10,000, and in the case of Fitch, not to
accrue in any year prior to 1998) if then due; and
(d) to remit the remainder to the Borrowers to the extent
provided by and in accordance with the terms of the Lockbox Agreement.
In the event that the Borrowers have not delivered to the
Servicer a binding commitment of a financial institution or other lender meeting
the requirements set forth in the Lockbox Agreement to refinance the full
outstanding principal amount of the Note upon the maturity thereof and otherwise
meeting the requirements of the Lockbox Agreement (a "Commitment") by the date
which is six months prior to the Maturity Date or in the event of the extension
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of the Maturity Date pursuant to Section 3.22(c), the Servicer shall not make
any remittance to the Borrowers that would otherwise be required pursuant to
Section 3.06(c), but, instead, shall deposit into the Collection Account on each
Due Date the amount withdrawn from the Lockbox Account which would otherwise
have been remitted to the Borrowers pursuant to Section 3.06(c) during the
preceding calendar month (each, a "Curtailment Payment"), which amount shall be
applied in reduction of the principal balance of the Note.
The Servicer shall act for the Trust in connection with all
other rights and obligations of the Trust under the Lockbox Agreement, and in
particular it (i) shall promptly remit to the Trustee copies of any Mortgage
Loan Documents and notices required be provided to the Certificateholders and
(ii) shall execute or cause to be executed such consents, agreements and other
instruments as shall be appropriate pursuant thereto.
SECTION 3.07. Collection Account.
The Servicer shall establish and maintain the Collection
Account, which shall be an Eligible Account, entitled "AMRESCO Management, Inc.,
in Trust for The Chase Manhattan Bank, as trustee, in trust for the holders of
the Hospitality Properties Mortgage Acceptance Corp., Commercial Mortgage
Pass-Through Certificates, Series 1996-C1, Collection Account", which account
and the assets of such account shall be owned by the Trustee for the benefit of
the Certificateholders. The Servicer shall deposit or cause to be deposited on,
or before, each Remittance Date, in the Collection Account the following
payments:
(i) the amount withdrawn from the Lockbox Account
pursuant to Section 3.06(a);
(ii) all Insurance Proceeds and Net Liquidation
Proceeds;
(iii) any amounts required to be deposited pursuant
to Section 3.19 in connection with a Mortgaged Property;
(iv) any amounts received from a Borrower or a Lessee
which represent recoveries of Property Protection Advances
(together with interest thereon at the Reimbursement Rate);
(v) all Principal Prepayments;
(vi) any Repurchase Price paid pursuant to Section
2.05(e) hereof, any Termination Price paid pursuant to Section
9.01(b) hereof and any Repurchase Price payable under Section
3 of the Mortgage Loan Purchase and Sale Agreement; and
(vii) the Curtailment Payment, if any.
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In the event that deposits are made into the Collection
Account that are not required to be deposited therein, the Servicer may at any
time withdraw such amounts from the Collection Account and apply such funds as
appropriate under this Agreement, any provision herein to the contrary
notwithstanding.
The Servicer may invest the amount at any time credited to the
Collection Account in Permitted Investments that mature, or are subject to
withdrawal or redemption, on or before the succeeding Remittance Date. The
income from Permitted Investments of funds in the Collection Account shall be
for the benefit of the Servicer. Any losses on the investment of funds in the
Collection Account will be required to be deposited by the Servicer in the
Collection Account as incurred and the Servicer shall not be entitled to be
reimbursed therefor.
SECTION 3.08. Permitted Withdrawals from the Collection Account.
The Servicer shall withdraw amounts deposited in the
Collection Account pursuant to the terms hereof in the following order of
priority:
(a) to pay itself the Servicing Fee and, if
applicable, the Special Servicing Fee (which Special Servicing
Fee may accrue in accordance with Section 3.15), the
Disposition Fee and the Modification Fee pursuant to Section
3.15 on each Remittance Date;
(b) to deposit into the Certificate
Account the Trustee Fee and any expenses of the Trustee
reimbursable pursuant to Section 8.05 on each Remittance Date;
(c) to reimburse itself on each Remittance
Date for any unreimbursed Property Protection Advances or
Monthly Advances that the Servicer has deemed since the
previous Remittance Date to be Nonrecoverable Advances,
together with interest at the Advance Rate thereon from the
date on which such Property Protection Advance or Monthly
Advance was made;
(d) to reimburse itself for any unreimbursed
Property Protection Advances, together with interest at the
Advance Rate, as to which funds were deposited in the
Collection Account pursuant to Section 3.07(iv), on the date
on which such funds were so deposited in the amount described
in such Section 3.07(iv);
(e) to reimburse itself on each Remittance
Date for any unreimbursed Monthly Advances, together with
interest at the Advance Rate, as to which the amount so
advanced was subsequently received or applied as a late
payment pursuant to the Note and which amount was transferred
from the Lockbox Account to the Collection Account on the
related Due Date;
(f) to remit to the Servicer the amount of
any net interest or net investment income earned on the
Collection Account since the related Due Date;
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(g) to remit the balance on deposit in the Collection
Account on each Remittance Date to the Certificate Account for
distribution by the Trustee to Certificateholders on the
following Distribution Date pursuant to Section 4.01; and
(h) to clear and terminate the Collection Account
upon termination of the Trust Fund pursuant to Section 9.01.
The Trustee and the Servicer shall in all cases have a right
prior to the Certificateholders to any funds deposited in the Collection Account
from time to time for the payment of, in the case of the Trustee, the Trustee's
Fee currently payable therefrom or, in the case of the Servicer, the Servicing
Fee, the Special Servicing Fee, the Disposition Fee, the Modification Fee, any
interest at the Advance Rate, unreimbursed Property Protection Advances and
unreimbursed Monthly Advances, in each case, currently payable therefrom, and in
the case of the Trustee, for the reimbursement of its respective expenses
hereunder to the extent such expenses are to be reimbursed from amounts on
deposit in the Collection Account pursuant to this Agreement (and to have such
amounts paid directly to third party contractors for any invoices properly
presented).
SECTION 3.09. Certificate Account.
The Trustee shall establish and maintain the Certificate
Account, which shall be an Eligible Account, entitled "The Chase Manhattan Bank,
as trustee, in trust for the holders of the Hospitality Properties Mortgage
Acceptance Corp., Commercial Mortgage Pass-Through Certificates, Series 1996-C1,
Certificate Account", which account and the assets of such account shall be
owned by the Trustee for the benefit of the Certificateholders. The Trustee
shall deposit or cause to be deposited in the Certificate Account, on each
Remittance Date, all amounts transferred to it from the Collection Account.
The Servicer shall deposit any Monthly Advances that it is
required to make pursuant to Section 4.03 in the Certificate Account.
In the event that deposits are made into the Certificate
Account that are not required to be deposited therein, the Trustee may at any
time withdraw such amounts from the Certificate Account and apply such funds as
appropriate under this Agreement, any provision herein to the contrary
notwithstanding.
The Trustee may invest the amount at any time credited to the
Certificate Account in Permitted Investments that mature, or are subject to
withdrawal or redemption, on or before the succeeding Distribution Date. The
income from Permitted Investments of funds in the Certificate Account shall be
for the benefit of the Trustee. Any losses on the investment of funds in the
Certificate Account will be required to be deposited by the Trustee in the
Certificate Account as incurred and the Trustee shall not be entitled to be
reimbursed therefor.
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SECTION 3.10. Permitted Withdrawals from the Certificate Account.
The Trustee shall withdraw amounts deposited in the
Certificate Account pursuant to the terms hereof in the following order of
priority:
(a) to pay itself the Trustee Fee and any expenses of
the Trustee reimbursable pursuant to Section 8.05 on each
Distribution Date;
(b) to pay itself on each Distribution Date the
amount of any net interest or net investment income earned on
the Certificate Account since the related Remittance Date;
(c) to make payments on each Distribution Date to
Certificateholders pursuant to Section 4.01; and
(d) to clear and terminate the Certificate Account
pursuant to Section 9.01.
SECTION 3.11. Maintenance of Insurance Policies and
Errors and Omissions and Fidelity Coverage.
(a) (i) The Servicer shall, in accordance with Section 3.04,
monitor compliance by the Lessees with their requirements under the Leases to
maintain fire and hazard insurance, public liability and other insurance
required by the Leases. If the Servicer determines that insurance is not being
maintained in accordance with the terms of any Lease, the Servicer shall notify
the Borrower and shall make a demand upon the related Borrower to cause to be
maintained insurance in accordance with the related Lease or if such Lease is no
longer in full force and effect, then in accordance with the related Mortgage.
In the event that the Servicer deems it necessary or advisable in accordance
with the Servicing Standards, the Servicer shall obtain such insurance required
to be maintained under the applicable Lease or Mortgage, as the case may be,
advancing its own funds if necessary as a Property Protection Advance.
(ii) The Servicer, on behalf of the Trustee, shall maintain or
cause to be maintained fire and hazard insurance with extended coverage with a
Qualified Insurer on each Mortgaged Property whenever it is REO in an amount
which is at least equal to the greater of (x) an amount not less than is
necessary to avoid the application of any co-insurance clause contained in the
related fire and hazard insurance policy and (y) the replacement cost of the
improvements which are a part of such Mortgaged Property. In such event, the
Servicer, on behalf of the Trustee, shall also maintain or cause to be
maintained with respect to such Mortgaged Property (A) public liability
insurance with a Qualified Insurer providing such coverage against such risks as
is required under the terms of the related Mortgage and (B) such other insurance
as shall be consistent with the obligations of the Servicer under Section
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3.01(a). The cost of any such insurance with respect to each Mortgaged Property
shall be an expense of the Trust payable out of the REO Account or to the extent
such funds are not sufficient, shall be a Property Protection Advance.
(iii)Any Insurance Proceeds with respect to a Mortgaged
Property received by the Servicer shall be deposited into the Collection Account
pursuant to Section 3.07. Any cost incurred by the Servicer in maintaining any
insurance pursuant to this Section 3.11 shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
principal balance of the Mortgage Loan, notwithstanding that the terms of the
Mortgage Loan so permit.
(iv) If any loss occurs which is of a type which is or which
would have been covered under any fire and hazard insurance required to be
maintained by the Servicer under clauses (i) and (ii) of Section 3.11(a), but
was not covered because the Servicer improperly failed to make a Property
Protection Advance required to be made hereunder to pay such insurance premium
or otherwise failed to perform its obligations with respect to such insurance
hereunder, the Servicer will deposit in the Collection Account from its own
funds an amount equal to the lesser of: (1) such loss and (2) if any recovery
has been obtained under such insurance, the amount equal to any reduction in
recovery under a fire and hazard insurance policy required to be maintained
under the first sentence of Section 3.11(a)(i) (regardless of when the reduction
in recovery occurred); provided (x) such reduction in recovery results from the
application of a co-insurance clause in such insurance policy, and (y) if the
proceeds of such insurance policy were applied to the restoration and repair of
a Mortgaged Property, such Mortgaged Property was not restored to its condition
as of the date of this Agreement, reasonable wear and tear excepted, because of
such reduction in recovery.
(v) The Servicer agrees to prepare and present, on behalf of
itself, the Trustee and Certificateholders, claims under each related insurance
policy maintained by it pursuant to this Section 3.11(a) in a timely fashion in
accordance with the terms of such policy and to take such reasonable steps as
are necessary to receive payment or to permit recovery thereunder. In addition,
the Servicer shall take such steps to cause a Lessee or a Borrower to make
timely claims on insurance policies maintained by them (or to obtain payment
from them under the terms of the Mortgage Loan Documents in lieu of insurance
payments) to the extent it has actual knowledge of an event which would give
rise to such claim or obligation and deems such steps necessary or appropriate
subject to the servicing standards of Section 3.01(a).
(vi) All fire and hazard insurance policies required to be
maintained hereunder shall name the Trustee as loss payee.
(b) (i) The Servicer shall maintain a fidelity bond in the
form and amount that would meet the servicing requirements of prudent
institutional commercial mortgage lenders and loan servicers. The Servicer shall
be deemed to have complied with the provision set forth in the immediately
preceding sentence if one of its respective Affiliates has such fidelity bond
coverage and, by the terms of such fidelity bond, the coverage afforded
thereunder extends to the Servicer. Any such fidelity bond shall provide that
such bond may not be canceled by the provider thereof without thirty days' prior
written notice to the Trustee. So long as the long-term debt or deposit
obligations of the Servicer or a parent of the Servicer are rated at least "A"
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(or an equivalent Rating) by each of the Rating Agencies (or if the Servicer or
parent of the Servicer is not rated by Fitch, then if equally rated by each of
S&P and Moody's), the Servicer shall be allowed to provide self-insurance with
respect to a fidelity insurance policy so long as such long-term debt or deposit
rating with respect to it is maintained. In the event that there shall not have
been maintained a fidelity policy and there shall have been a loss to the Trust
which would have been covered by such policy, the Servicer shall deposit in the
Collection Account the amount that otherwise would have been payable under the
policy. If the Servicer's long-term debt or deposit rating falls below such
standards, the Servicer will be required to obtain and maintain a fidelity
insurance policy pursuant to the foregoing requirements.
(ii) In addition to the Servicer's obligations set forth in
paragraph (i) of this Section 3.11(b), the Servicer shall keep in force during
the term of this Agreement a policy or policies of insurance covering loss
occasioned by the errors and omissions of its officers, employees and agents in
connection with its obligations to service the Mortgage Loan hereunder. Only for
so long as the long-term debt or deposit obligations of the Servicer or a parent
of the Servicer are rated at least "A" (or an equivalent rating) by each of the
Rating Agencies (or if such obligations of the Servicer are not rated by Fitch,
then if equally rated by each of S&P and Moody's) the Servicer shall be allowed
to provide self-insurance with respect to an errors and omissions insurance
policy. In the event that there shall not have been maintained an errors and
omissions policy and there shall have been a loss to the Trust which would have
been covered by such policy, the Servicer shall deposit in the Collection
Account the amount that otherwise would have been payable under the policy. If
the Servicer's long-term debt or deposit rating falls below such standards, the
Servicer will be required to obtain and maintain an errors and omissions
insurance policy pursuant to the foregoing requirements.
(iii)Each sub-servicing agreement entered into by the Servicer
will require that the sub-servicer engaged pursuant to such sub-servicing
agreement maintain at all times a policy of insurance covering errors and
omissions and a fidelity bond which would meet the requirements set forth in
paragraphs (i) and (ii) of this Section 3.11(b), and the Servicer will not agree
or consent to any modification or waiver of any such sub-servicing agreement
which is inconsistent with the terms of this subparagraph (iii).
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SECTION 3.12. Assumption Agreements; Enforcement of
Due-On-Sale and Due-On-Encumbrance Clause.
(a) If a Borrower seeks to sell, convey, pledge, or otherwise
transfer or encumber a Mortgaged Property in a manner that is permitted by the
Mortgage Loan Documents, the Servicer shall enter into an assumption agreement
from or with the Person to whom such Mortgaged Property has been or is about to
be conveyed, or release the original related Borrower from liability upon the
Mortgage Loan and substitute the new Borrower as obligor thereon. The Servicer
shall notify the Trustee that any such assumption or substitution agreement
executed by it has been completed by forwarding the original of such agreement
to the Trustee. The original of any such agreement executed by the Servicer
shall be added by the Trustee to the Mortgage File and shall, for all purposes,
be considered a part of the Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. In connection with any
such assumption or substitution agreement, the Mortgage Interest Rate, the
principal amount and the other material payment terms of the Mortgage Loan
pursuant to the Note shall not be changed, except as otherwise permitted by
Section 3.22(b). Any fee collected by the Servicer for entering into an
assumption or substitution agreement shall be retained by the Servicer as
compensation for processing such assumption.
(b) If a Borrower seeks to sell, convey, pledge, or otherwise
transfer or encumber a Mortgaged Property, other than as permitted by the
Mortgage Loan Documents, or take any action in violation of, or if such Borrower
requests a waiver of, Paragraph 9 of the related Mortgage, the Servicer shall
promptly, after it obtains actual knowledge thereof, (i) formulate a recommended
course of action in accordance with the Servicing Standards (the "Recommended
Action"); (ii) request the Rating Agencies to confirm in writing that the
Recommended Action will not result in the reduction, withdrawal or qualification
of the ratings of the Certificates then in effect (any fees to be charged by the
Rating Agencies in considering such request, in the event that the Recommended
Action is in response to any request of the Borrowers, to be paid by the
Borrowers) and take such Recommended Action only to the extent that it receives
such written confirmation; and (iii) (if written confirmation has been received
by the Rating Agencies as required in (ii) above) send notice of the
circumstances relating to the Recommended Action, together with sufficient
background information to permit the evaluation of the Recommended Action, to
the Trustee for distribution to the Certificateholders, together with a request
that the Majority Certificateholders respond to such notice, and shall take such
action with respect thereto as shall be directed by the Majority
Certificateholders; provided that the failure of the Majority Certificateholders
to respond to such notice within 15 Business Days of the date such notice is
sent by the Trustee shall be deemed to be the direction by the Majority
Certificateholders to the Servicer to undertake the Recommended Action. Any such
notice pursuant to the preceding sentence shall include a prominent statement to
the effect that failure of the Majority Certificateholders to respond within 15
Business Days of the date such notice is sent by the Trustee shall be deemed to
be the direction by the Majority Certificateholders to the Servicer to undertake
the Recommended Action. In connection with any such sale, conveyance, pledge or
other transfer that the Servicer determines to permit in accordance with the
foregoing, the Servicer shall enter into an assumption agreement from or with
the Person to whom such Mortgaged Property has been or is about to be conveyed,
or release the original related Borrower from liability upon the Mortgage Loan
and substitute the new Borrower as obligor thereon. The Servicer shall notify
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the Trustee that any such assumption or substitution agreement executed by it
has been completed by forwarding the original of such agreement to the Trustee.
The original of any such agreement executed by the Servicer shall be added by
the Trustee to the Mortgage File and shall, for all purposes, be considered a
part of the Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. In connection with any such assumption
or substitution agreement, the Mortgage Interest Rate, the principal amount and
the other material payment terms of the Mortgage Loan pursuant to the Note shall
not be changed, except as otherwise permitted by Section 3.22(b). Any fee
collected by the Servicer for entering into an assumption or substitution
agreement shall be retained by the Servicer as compensation for processing such
assumption. However, any such amount paid by the Borrowers and so retained by
the Servicer shall be netted from any Disposition Fee or Modification Fee
payable in connection with such assumption or substitution.
(c) Nothing in this Section 3.12 shall constitute a waiver of
the Trustee's right, as the mortgagee of record, to receive notice of any
assumption of the Mortgage Loan, any sale or other transfer of a Mortgaged
Property or the creation of any lien or other encumbrance with respect to such
Mortgaged Property.
(d) Except as otherwise permitted by Section 3.22, in
connection with the taking of, or the failure to take, any action pursuant to
this Section 3.12, the Trustee and the Servicer shall not agree to modify, waive
or amend any term of the Mortgage Loan or the Note.
SECTION 3.13. Realization Upon Mortgage Loan Default.
(a) In the event that the Trustee or the Servicer receives
notice, or otherwise obtains actual knowledge, of an event of default (as
defined therein) under any Mortgage (a "Mortgage Loan Event of Default") or of a
default (including without limitation an event which, with the giving of notice
and/or passage of time may become an event of default under any Mortgage) under
any Mortgage (a "Mortgage Loan Default"), such party shall give notice of such
Mortgage Loan Event of Default or Mortgage Loan Default to the other party and
the Servicer shall give notice of such Mortgage Loan Default or Mortgage Loan
Event of Default to the Borrowers and each Rating Agency.
(b) Subject to Section 3.20(a), the Servicer shall foreclose
upon the lien of each Mortgage or otherwise comparably convert the ownership of
each Mortgaged Property (or so many of such Mortgage Properties as is necessary
to generate proceeds sufficient to satisfy all amounts owed by the Borrowers
under the Mortgage Loan Documents) and other collateral securing the Mortgage
Loan when there occurs a monetary Mortgage Loan Event of Default and no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.03(a) or 3.20, consistent with the Servicing Standards.
The Servicer shall promptly make a Property Protection Advance with respect to
the costs of any foreclosure or other proceeding or action undertaken for such
purpose, subject to Section 3.03(b).
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(c) Notwithstanding any provision to the contrary contained in
this Agreement, the Servicer shall not, on behalf of the Trust, obtain title to
a Mortgaged Property as a result of, or in lieu of, foreclosure or otherwise,
and shall not otherwise acquire possession of, or take any other action with
respect to, such Mortgaged Property if, as a result of any such action, the
Trustee, for the Trust or the Certificateholders, would be considered to hold
title to, to be a "mortgagee-in- possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of any Environmental
Laws, unless the Servicer has previously determined in accordance with the
Servicing Standards, based on an Environmental Assessment report prepared by an
Independent Person satisfying the requirements set forth in the first sentence
of Section 3.13(d), which report indicates that:
(i) such Mortgaged Property is in compliance with
applicable Environmental Laws (in the reasonable judgment of
such Independent Person based upon all available information)
or, if not in compliance, that taking such actions as are
necessary to bring the Mortgaged Property in compliance
therewith is reasonably likely to produce a greater recovery
on a present value basis than not taking such actions; and
(ii) there are no Environmental Conditions (in the
reasonable judgment of such Independent Person based upon all
available information) or, if such circumstances or conditions
are present for which any such action could be required, that
taking such actions with respect to such Mortgaged Property is
reasonably likely to produce a greater recovery on a present
value basis than not taking such actions; provided, however,
that in the event that the Servicer is not required to make a
Property Protection Advance pursuant to Section 3.13(e), the
Servicer shall not, on behalf of the Trust, obtain title to a
Mortgaged Property and shall not otherwise acquire possession
of, or take any other action with respect to, such Mortgaged
Property.
In the event that the Environmental Assessment first obtained
by the Servicer with respect to a Mortgaged Property indicates that such
Mortgaged Property may not be in compliance with applicable Environmental Laws
or that Hazardous Materials may be present but does not definitively establish
such fact or quantify, the potential liability, or remediation costs with
respect thereto, the Servicer shall cause such further environmental tests to be
conducted by an Independent Person who regularly conducts such tests as the
Servicer shall deem prudent to protect its interests and the interests of
Certificateholders. Any such further tests shall be deemed part of the
Environmental Assessment obtained by the Servicer for purposes of this Section
3.13(c).
(d) The Environmental Assessment contemplated by Section
3.13(c) shall be prepared by any Independent Person who regularly conducts
environmental audits for purchasers of commercial property, as determined by the
Servicer in a manner consistent with the Servicing Standards. The Servicer shall
promptly make a Property Protection Advance to pay the costs of such
Environmental Assessment with respect thereto, subject to Section 3.03(b).
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(e) If the Majority Certificateholders have not determined
that the Environmental Assessment contemplated by Section 3.13(c) indicates that
(i) a Mortgaged Property is in compliance with applicable Environmental Laws,
but 100% of Certificateholders determine (as evidenced by written notice to the
Trustee and the Servicer) that it is in the best economic interest of the Trust
to take such actions as are necessary to bring such Mortgaged Property in
compliance therewith, or (ii) there are no circumstances present at such
Mortgaged Property relating to the use, management or disposal of any Hazardous
Materials for which investigation, testing, monitoring, containment, cleanup or
remediation could be required under any currently effective federal, state or
local law or regulation (in the reasonable judgment of such Independent Person
based upon all available information), but 100% of the Certificateholders
determine (as evidenced by written notice to the Trustee and the Servicer) that
it is in the best economic interest of the Trust to take such action with
respect to the containment, cleanup or remediation of Hazardous Materials
affecting such Mortgaged Property as is required by law or regulation, the
Servicer shall take such action as it deems to be in the best economic interest
of the Trust, but only if the Trustee has mailed notice (prepared by the
Servicer and including a copy of the Environmental Assessment) to
Certificateholders of such proposed action (setting forth in reasonable detail
the basis for the Servicer's determination pursuant to this Section 3.13(e) and
the estimated cost to the Trust of such proposed action), which notice shall be
prepared by the Servicer, and has not received, within 30 days of such
notification, instructions from any Certificateholder directing the Servicer not
to take such action. The Servicer shall be entitled to reimbursement of its
reasonable expenses from the Lockbox Account or, to the extent funds in the
Lockbox Account are insufficient, the Collection Account in connection with the
preparation and delivery of such notice. The Servicer shall promptly make a
Property Protection Advance to pay the costs and expenses of such notice,
subject to Section 3.03(b).
(f) The Servicer shall report to the Internal Revenue Service
and to the Borrower, in the manner required by applicable law, the information
required to be reported regarding a Mortgaged Property should it become
abandoned or foreclosed. The Servicer shall concurrently deliver a copy of any
such report to the Trustee for distribution to the Certificateholders.
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SECTION 3.14. Trustee to Cooperate; Release of the Mortgage File.
(a) Upon the payment in full of the Mortgage Loan,
satisfaction or discharge in full of the Mortgage Loan or the receipt by the
Trustee or the Servicer, as the case may be, of a notification that payment in
full of the Mortgage Loan (or such payment, if any, in connection with the
satisfaction and discharge in full of the Mortgage Loan) or payment of the
Release Payment for any Mortgaged Property has been made or has been escrowed in
a manner customary for such purposes, the Trustee shall release such portions of
the Mortgage File as the Servicer shall specify to or upon the direction of the
Servicer upon the request of the Servicer accompanied by a certification of a
Servicing Officer (which certification shall include a statement to the effect
that all amounts received or to be received in connection with such payment
which are required to be deposited in the Lockbox Account or Collection Account
pursuant to Sections 3.05 and 3.07, respectively, have been or will be so
deposited). If the Servicer or the Trustee incurs any expenses in connection
with any instrument of satisfaction or deed of reconveyance and is unable, after
reasonable attempts, to obtain repayment for such expenses from a Borrower, the
Trustee or the Servicer, as the case may be, shall be entitled to reimbursement
for such expenses from the Trust.
(b) From time to time upon request of the Servicer and
delivery to the Trustee of a Request for Release, the Trustee shall promptly
release the Mortgage File (or any portion thereof) designated in such Request
for Release to the Servicer. Upon (i) return of such Mortgage File (or portion
thereof) from the Servicer to the Trustee or (ii) in the event of a liquidation
of the Mortgage Loan or the Mortgaged Properties becoming REO Property, the
delivery to the Trustee of a certificate of a Servicer Officer stating that the
Mortgage Loan was liquidated and that all amounts received or to be received in
connection with such liquidation which are required to be deposited into the
Collection Account have been deposited or that the Mortgage Loan has become REO
Property, the Trustee shall release a true and correct copy of the Request for
Release to the Servicer with a notation thereon acknowledging receipt of the
Mortgage File or the certificate of the Servicer specified in clause (ii) above.
(c) Upon written request of the Servicer, the Trustee shall
furnish to the Servicer (within 10 Business Days after receipt of such written
request) copies of any documents in the Mortgage File in the Trustee's
possession.
(d) Upon written certification of a Servicer Officer, the
Trustee shall, at the expense of the Trust, execute and deliver to the Servicer,
or the Servicer may, pursuant to its powers and obligations hereunder, execute
and file, any court pleadings or other documents prepared by the Servicer, its
agents or attorneys, necessary to the foreclosure in respect of the Mortgaged
Properties or to any legal action brought to obtain judgment against a Borrower
on the Note or the Mortgages or to obtain a deficiency judgment, or to enforce
any other remedies or rights provided by the Note or such Mortgages or otherwise
available at law or in equity. Each such certification shall include a request
that such pleadings or documents be executed by the Trustee and a statement as
to the reason such documents or pleadings are required, and that the execution
and delivery thereof by the Trustee will not invalidate or otherwise affect the
lien of such Mortgages, except for the termination of such a lien upon
completion of the foreclosure.
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SECTION 3.15. Compensation of the Servicer.
As compensation for its activities hereunder, during any
Mortgage Loan Accrual Period in which the Mortgage Loan is not a Specially
Serviced Mortgage Loan, the Servicer shall be entitled to the Servicing Fee. The
Servicing Fee shall be an obligation of the Trust payable from amounts on
deposit in the Collection Account. The Servicer's rights to the Servicing Fee
may not be transferred in whole or in part except in connection with the
permitted transfer of all of the Servicer's responsibilities and obligations
under this Agreement.
Instead of the Servicing Fee, for any Mortgage Loan Accrual
Period during which the Mortgage Loan is a Specially Serviced Mortgage Loan, the
Servicer will be entitled to the Special Servicing Fee. Special Servicing Fees
shall not be payable from funds advanced by the Servicer. To the extent that
while the Mortgage Loan is a Specially Serviced Mortgaged Loan, funds are not
available from the Lockbox Account or otherwise (other than from Monthly
Advances) to make full Monthly Payments and to pay the Special Servicing Fee,
the Special Servicing Fee shall accrue and shall be payable to the Servicer only
upon the cure of the Mortgage Loan Event of Default that caused the Mortgage
Loan to become a Specially Serviced Mortgage Loan or from the Liquidation
Proceeds derived from such Mortgage Loan. Such accrued Special Servicing Fee
shall begin to accrue interest at the Advance Rate from and after the date which
is six months following the date on which such Mortgage Loan became a Specially
Serviced Mortgage Loan until paid.
In addition, if the Mortgage Loan becomes a Specially Serviced
Mortgage Loan the Servicer will be entitled to a "Disposition Fee" equal to
1.00% of the Liquidation Proceeds resulting from (i) a foreclosure of any
Mortgaged Properties (net of expenses of the Servicer incurred in such
foreclosure which were otherwise reimbursed to the Servicer) or (ii) a sale of
the Specially Serviced Mortgage Loan to any person other than a
Certificateholder. In addition, if the Mortgage Loan becomes a Specially
Serviced Mortgage Loan and the Mortgage Loan Event of Default that caused the
Mortgage Loan to become a Specially Serviced Loan is subsequently cured by
virtue of a modification of the Mortgage Loan Documents, the Servicer will be
entitled to a "Modification Fee" equal to 0.25% of the then-current Mortgage
Loan Principal Balance.
The Servicer shall be entitled to receive, as additional
compensation, any late payment charges, substitution or assumption fees,
modification fees or similar items with respect to the Mortgage Loan, and such
amounts shall not be required to be deposited by the Servicer in the Lockbox
Account or Collection Account. The Servicer shall also be entitled to receive,
as additional compensation, any net interest earned on the Collection Account.
The Servicer shall not be entitled to receive any default rate interest with
respect to the Mortgage Loan (other than as a payment of interest on Advances),
and such amounts shall be deposited by the Servicer in the Collection Account
pursuant to Section 3.06(a).
The Trustee and the Servicer shall each be entitled to be
reimbursed from the Collection Account for all fees and expenses of third
parties incurred by it in accordance with Section 3.08, subject to Section 6.03.
The Servicer shall deposit such amounts to be reimbursed to the Trustee in the
Certificate Account.
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SECTION 3.16. Annual Statement as to Compliance.
The Servicer shall deliver to the Rating Agencies and to the
Trustee for distribution to the Certificateholders, on or before April 30 of
each year, beginning with April 30, 1997, an Officers' Certificate stating, as
to each signatory thereof, (i) that a review of the activities of the Servicer
during the preceding calendar year (or such shorter period from the Closing Date
to the end of the related calendar year) and of its performance under this
Agreement has been made under such officer's supervision, (ii) that, to the best
of such officer's knowledge, based on such review, it has fulfilled all of its
obligations under this Agreement throughout such year (or such shorter period)
in all material respects, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer, the
nature and status thereof and what action it proposes to take with respect
thereto, and (iii) to the extent any servicing of the Mortgage Loan is being
conducted by a sub-servicer that, to the best of such officer's knowledge, each
such sub-servicer has fulfilled its obligations under its sub-servicing
agreement in all material respects, or, if there has been a default in the
fulfillment of such obligations, specifying each such default known to such
officer and the nature and status thereof.
SECTION 3.17. Reports by Independent Public Accountants.
The Servicer at its own expense shall cause a nationally
recognized firm of independent certified public accountants to furnish to the
Servicer, the Trustee and each Rating Agency, on or before April 30 of each
year, commencing with April 30, 1997, a report stating that (i) it has obtained
from the Servicer a letter of representation regarding certain matters from the
management of the Servicer which includes an assertion that the Servicer has
maintained an effective internal control system with respect to the servicing of
all commercial mortgage loans serviced by the Servicer, including the Mortgage
Loan and has complied with certain minimum mortgage loan servicing standards (to
the extent applicable to commercial loans), identified in the Uniform Single
Attestation Program for Mortgage Bankers established by the Mortgage Bankers
Association of America, with respect to the Servicer's servicing of commercial
mortgage loans during the most recently completed calendar year and (ii) on the
basis of an examination conducted by such firm in accordance with standards
established by the American Institute of Certified Public Accountants, such
assertion is fairly stated in all material respects, subject to such exceptions
and other qualifications that, in the opinion of such firm, such standards
require it to report. In rendering its report such firm may rely, as to the
matters relating to the direct servicing of commercial mortgage loans by
sub-servicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such statement) with respect to
those sub-servicers.
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SECTION 3.18. Access to Certain Documentation.
Each of the Trustee and the Servicer shall provide to any
Certificateholders that are federally insured financial institutions, the
Federal Reserve Board, the FDIC and the OTS and the supervisory agents and
examiners of such boards and such corporations, and any other governmental or
regulatory body to the jurisdiction of which any Certificateholder is subject,
access to the documentation regarding the Mortgage Loans required by applicable
regulations of the Federal Reserve Board, FDIC, OTS or any such governmental or
regulatory body, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Trustee or the Servicer, as the case may be. Nothing in this Section 3.18 shall
detract from the obligation of the Trustee and the Servicer to observe any
applicable law prohibiting disclosure of information with respect to the
Borrowers, and the failure of the Trustee or the Servicer to provide access as
provided in this Section 3.18 as a result of such obligation shall not
constitute a breach of this Section 3.18.
SECTION 3.19. Title and Management of the Mortgaged Property
as REO Property or Held as Debtor-in-Possession.
(a) The Servicer shall segregate and hold all funds collected
and received in connection with the operation of Mortgaged Properties in the
event they (or, in the event of a partial foreclosure or other action with
respect to less than all Mortgaged Properties, any such Mortgaged Properties)
become REO Properties separate and apart from its own funds and general assets
and shall establish and maintain with respect to such REO Properties an account
held in trust for the benefit of the Certificateholders in the name of "AMRESCO
Management, Inc., in Trust for The Chase Manhattan Bank, as trustee, in trust
for the holders of the Hospitality Properties Mortgage Acceptance Corp.,
Commercial Mortgage Pass-Through Certificates, Series 1996-C1, REO Account" (the
"REO Account"), which account shall be an Eligible Account and shall constitute
a part of the Trust Fund, and will account separately for funds received or
expended with respect to such REO Properties. All funds in the REO Account may
only be invested in Permitted Investments. The income from such Permitted
Investments shall be deposited in the REO Account. The Servicer shall not be
liable for any losses that result from investing funds in the REO Account in
Permitted Investments. The Servicer shall notify the Trustee in writing of the
location and account number of the REO Account and shall notify the Trustee
prior to any subsequent change thereof.
(b) The Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with REO Properties as are consistent with the
Servicing Standards; provided, that the primary purpose of the Servicer in
holding such REO Properties shall be the accomplishment of the sale of such REO
Properties and the distribution of the proceeds therefrom to the
Certificateholders, and not the conduct of a profit-making business, and all of
its activities shall be reasonably necessary thereto and consistent therewith.
In connection therewith, the Servicer shall deposit or cause to be deposited on
a daily basis in the REO Account all revenues received by it with respect to
such REO Properties, and shall withdraw therefrom funds necessary for the proper
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operation, management and maintenance of such REO Properties and for other
Property Protection Expenses, including but not limited to:
(i) all insurance premiums due and payable in respect
of such REO Properties;
(ii) all real estate taxes and assessments in respect
of such REO Properties that may result in the imposition of a
lien thereon; and
(iii) all costs and expenses necessary to maintain,
manage or operate such REO Properties.
To the extent that amounts on deposit in the applicable REO
Account are insufficient for the purposes set forth in clauses (i) through (iii)
above, the Servicer shall promptly make a Property Protection Advance with
respect thereto, subject to Section 3.03(b).
The Servicer may contract with one or more independent
contractors for the operation and management of REO Properties, provided that:
(A) the terms and conditions of any such contract
shall not be inconsistent herewith;
(B) any such contract shall require, or shall be
administered to require, that the independent contractor pay
all costs and expenses incurred in connection with the
operation and management of such REO Properties, including
those listed in clauses (i) through (iii) above, and remit all
related revenues (net of such costs and expenses) to the
Servicer as soon as practicable, but in no event later than
thirty days following the receipt thereof by such independent
contractor;
(C) none of the provisions of this Section 3.19(b)
relating to any such contract or to actions taken through any
such independent contractor shall be deemed to relieve the
Servicer of any of its duties and obligations to the Trust or
the Trustee on behalf of the Certificateholders with respect
to the operation and management of such REO Properties; and
(D) the Servicer shall be obligated with respect
thereto to the same extent as if it alone were performing all
duties and obligations in connection with the operation and
management of such REO Properties.
The Servicer shall be entitled to enter into any agreement
with any independent contractor performing services for it related to its duties
and obligations pursuant to this Section 3.19 for indemnification of the
Servicer by such independent contractor, and nothing in this Agreement shall be
deemed to limit or modify such indemnification. Fees owed by the Servicer to any
independent contractor other than the Servicer shall be payable from amounts on
deposit in the REO Account. To the extent that the Servicer makes a
determination that amounts on deposit in the REO Account are insufficient to pay
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fees owed by the Servicer to such independent contractor, the Servicer shall
promptly make a Property Protection Advance with respect thereto, subject to
Section 3.03(b).
(c) On or before each Due Date during which any Mortgaged
Property is held as REO Property, the Servicer shall withdraw from the REO
Account and deposit into the Collection Account the proceeds and collections
received or collected since and including the preceding Due Date to but not
including such current Due Date, and reinvestment income thereon, net of
expenses; provided, however, the Servicer may retain in the REO Account such
portion of such proceeds and collections as may be necessary to maintain in the
REO Account sufficient funds for the proper operation, management and
maintenance of the Mortgaged Properties, including, without limitation, the
creation of reasonable reserves for repairs, replacements and necessary capital
improvements and other related expenses. The Servicer shall notify the Trustee
of all such deposits made into the Collection Account in the Servicer Remittance
Report.
(d) Promptly following any acquisition by the Trust of REO
Properties, the Servicer may, to the extent it deems it advisable subject to the
Servicing Standards, obtain appraisals thereof conducted by an independent
appraiser familiar with the area in which such REO Properties are located, at
the expense of the Trust, in order to determine the fair market value of such
REO Properties and, in the event such appraisals are obtained, shall notify the
other parties hereto of the results of such appraisal.
(e) To the extent the Servicer takes possession of a Mortgaged
Property before it becomes REO Property, the Servicer shall treat the Mortgage
Loan as though such Mortgaged Property had become REO Property for purposes of
collections and remittances. Without limiting the foregoing, payments of rent or
other amounts received with respect to the Mortgage Loan shall be deposited in
the REO Account to the same extent as would be the case under the Agreement if
such Mortgaged Property had already become REO Property.
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SECTION 3.20. Sale of Mortgage Loan and Mortgaged Properties Held as REO
Properties.
(a) Subject to Section 3.20(e), the Servicer may purchase the
Mortgage Loan (if a Mortgage Loan Event of Default exists) or the REO
Properties, at a purchase price permitted pursuant to this Section 3.20
(hereinafter, the "Purchase Price"), and may offer to sell to any Person the
defaulted Mortgage Loan or REO Properties, if and when the Servicer determines,
consistent with the Servicing Standards, that such a sale would be in the best
economic interests of the Trust, but shall, in any event, so sell such REO
Properties in as expeditious a manner as possible consistent with the primary
purpose of liquidating the assets of the Trust so as to preserve, to the extent
possible, the capital of Certificateholders and not with a view to the
maximization of profit from the operation and management or sale of such REO
Properties. The Servicer shall give the Trustee, who shall notify the
Certificateholders not less than five days' prior written notice of the
Servicer's intention to (i) purchase the defaulted Mortgage Loan or such REO
Properties at the Purchase Price or (ii) sell the defaulted Mortgage Loan or
such REO Properties, in which case the Servicer shall accept the highest bid
received from any Person therefor in an amount at least equal to the Purchase
Price.
In the absence of any such bid but subject to Section 3.20(e),
the Servicer shall accept the highest bid received from any Person that is
determined by the Servicer to be at least a fair price for the defaulted
Mortgage Loan or REO Properties, if the highest bidder is a Person other than an
Interested Person, or is determined to be such a fair price by the Trustee, if
the highest bidder is an Interested Person. Neither the Trustee, in its
individual capacity, nor any of its Affiliates may bid for or purchase the
defaulted Mortgage Loan or REO Properties pursuant hereto. Notwithstanding
anything to the contrary herein, the Servicer shall accept any bid (including
any bid by the Trustee, in its individual capacity, or its Affiliates) if so
directed by Majority Certificateholders.
Unless otherwise directed by Majority Certificateholders, the
Servicer shall not be obligated by either of the foregoing paragraphs or
otherwise (other than pursuant to the direction of Majority Certificateholders)
to accept the highest bid if the Servicer determines, in accordance with the
Servicing Standard, that rejection of such bid would be in the best interests of
the Certificateholders. In addition, the Servicer may accept a lower bid if it
determines, in accordance with the Servicing Standards, that acceptance of such
bid would be in the best interests of the Certificateholders (for example, if
the prospective buyer making the lower bid is more likely to perform its
obligations, or the terms offered by the prospective buyer making the lower bid
are more favorable).
(b) In determining whether any bid received from an Interested
Person represents a fair price for the defaulted Mortgage Loan or REO
Properties, the Servicer or the Trustee may conclusively rely on the opinion of
an Independent appraiser or other expert in real estate matters retained by the
Servicer or the Trustee, as applicable, at the expense of the Trust. In
determining whether any bid constitutes a fair price for the defaulted Mortgage
Loan or such REO Properties, the Servicer (or, if applicable, such appraiser)
shall take into account, and any appraiser or other expert in real estate
matters shall be instructed to take into account, as applicable, among other
factors, such period and amount of any delinquency on the defaulted Mortgage
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Loan, the physical condition of the Mortgaged Properties securing the defaulted
Mortgage Loan or the REO Properties, the state of the local economy and the
Trust's obligation to dispose of any REO Property in a manner consistent with
the standard in the first paragraph of Section 3.20(a).
(c) Subject to the provisions of Section 3.19, the Servicer
shall act on behalf of the Trust in negotiating and taking any other action
necessary or appropriate in connection with the sale of the defaulted Mortgage
Loan or REO Properties, including the collection of all amounts payable in
connection therewith. Any sale of the defaulted Mortgage Loan or such REO
Properties shall be without recourse to, or representation or warranty by, the
Trustee, the Depositor, the Servicer or the Trust (except that any contract of
sale and assignment and conveyance documents may contain customary warranties of
title, so long as the only recourse for breach thereof is to the Trust), and, if
consummated in accordance with the terms of this Agreement, none of the
Servicer, the Depositor or the Trustee shall have any liability to the Trust or
any Certificateholder with respect to the purchase price therefor accepted by
the Servicer or the Trustee.
(d) The proceeds of any sale after deduction of the expenses
of such sale incurred in connection therewith shall be promptly deposited in the
Collection Account in accordance with Section 3.07 for distribution to the
Certificateholders in accordance with Article IV herein.
(e) Prior to taking any action against the Borrower or any
Mortgaged Property or before selling or entering into a contract of sale with
respect to the defaulted Mortgage Loan or such Mortgaged Properties, pursuant to
this Section 3.20, the Servicer shall give written notice of such intended
action to the Trustee for distribution to all Certificateholders, but shall take
no such action except (i) pursuant to the consent or direction of Majority
Certificateholders (which consent or direction may be general in terms and may
provide the Servicer with discretion in reaching a satisfactory price or
settlement or otherwise), (ii) in the event Majority Certificateholders shall
not have objected within 30 days of receipt of such notice or (iii) in the event
the Servicer deems immediate action to be necessary to protect the interests of
Certificateholders.
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SECTION 3.21. Inspections.
The Servicer is required, at its own expense, to inspect or
cause the Mortgaged Properties to be inspected on an annual basis. Subject to
the Borrowers' rights under the Leases and the rights of the "Owners" (as such
term is defined in the Management Agreement) under the Management Agreement,
such inspections shall occur only upon 24 hours' prior notice to the Borrower
and during normal business hours. The Servicer shall provide to the Trustee and
the Depositor, an inspection report following each inspection of a Mortgaged
Property disclosing such information as is ordinarily disclosed by commercial
mortgage loan servicers and such inspection report shall, in the event any
Mortgaged Property is in material noncompliance with the Mortgage Loan
Documents, be accompanied by a certificate ("Certificate of Non-Compliance")
informing the Trustee of such non-compliance. In the event that the inspection
report indicates a condition materially adverse to the interests of the
Certificateholders (as evidenced by, and based solely on, a Certificate of
Non-Compliance), the Trustee shall provide the Certificateholders with a copy of
such Certificate of Non-Compliance. All inspection reports shall be sent to the
Certificateholders by the Trustee upon written request therefor.
SECTION 3.22. Exercise of Discretion; Modifications,
Waivers, Amendments and Consents.
(a) In the event that the Servicer, in exercising the rights
and performing the responsibilities of the Trustee as successor to the
Originator under the Mortgage Loan Documents, is required to exercise discretion
in determining a course of action under any section of any Mortgage Loan
Document, the Servicer shall: (i) to the extent that any such discretion
concerns either non-material matters or ministerial matters (in the nature of
verifying any information provided by the Borrowers, determining whether the
form of any document delivered by the Borrowers is acceptable or other similar
matters), the Servicer shall exercise its own discretion in accordance with the
Servicing Standards; and (ii) to the extent that such discretion concerns
matters not meeting the description in clause (i) above, the Servicer shall
formulate a Recommended Action in accordance with the Servicing Standards and
request the Rating Agencies to confirm in writing that the Recommended Action
will not result in the reduction, withdrawal or qualification of the ratings of
the Certificates then in effect (any fees to be charged by the Rating Agencies
in considering such request, in the event that the Recommended Action is in
response to any request of the Borrowers, to be paid by the Borrowers) and take
such Recommended Action only to the extent that it receives such written
confirmation. The Servicer shall have no liability to the Trust Fund, the
Certificateholders or any other Person for errors in judgment in the
determination of a course of action in accordance with the procedures outlined
in this Section 3.22, so long as such determination was made in good faith.
(b) Unless the Mortgage Loan is in default or default with
respect thereto is reasonably foreseeable, the Servicer shall not approve or
consent to any modification or amendment to, or waiver or consent under, any
Mortgage Loan Document (other than a ministerial matter described in Section
3.22(a)(i)) unless the requesting party shall have provided, at its expense, an
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Opinion of Counsel (a copy of which shall be furnished to the Trustee and to
Certificateholders) to the effect that such modification, waiver or amendment
would not be a "significant modification" of the Mortgage Loan under Section
1001 of the Code and Section 1.1001-3 of the Treasury Regulations.
(c) The Servicer shall not, without the consent of
Certificateholders holding 100% of the beneficial interest in the Trust, permit
the Trustee to enter into any modification of the Mortgage Loan Documents
resulting in the extension of the Maturity Date by more than six months. It is a
condition to such extension that all funds that would otherwise be remitted to
the Borrowers from the Lockbox Account pursuant to Section 3.06(b) hereof shall
be instead applied in reduction of the principal balance of the Note.
SECTION 3.23. Cap Agreement Administration.
(a) The Servicer shall monitor compliance with all obligations
of the Borrowers, and seek the enforcement of all of the Borrowers' rights,
under each Cap Agreement. The Servicer shall, pursuant to the Assignment of
Interest Rate Cap Agreement, collect all payments due under each Cap Agreement
and shall deposit such payments in the Lockbox Account.
(b) If the Cap Counterparty Default occurs under a Cap
Agreement, or any substitute cap agreement then in place, and as a result
thereof the Cap Counterparty, or substitute cap counterparty, as applicable, is
obligated to pay any Settlement Amount to the Borrowers thereunder, the Servicer
shall collect such Settlement Amount pursuant to the applicable Assignment of
Interest Rate Cap Agreement. The Servicer shall request that the Borrowers enter
into a substitute cap agreement having substantially the same terms as the Cap
Agreement with a substitute cap counterparty having the same ratings as the Cap
Counterparty and shall apply the Settlement Amount as an up-front payment, as
and if necessary, required to be made to the substitute cap counterparty in
connection with the execution of such agreement. To the extent that the Servicer
receives the Settlement Amount prior to the date on which it is required to pay
such Settlement Amount to a substitute cap counterparty, the Servicer shall
deposit such Settlement Amount into the Lockbox Account, pending payment of such
amount to the substitute cap counterparty. If any Settlement Amount so paid by
the Cap Counterparty, or substitute cap counterparty, as applicable, exceeds the
amount of up-front payment payable to the substitute cap counterparty under the
substitute cap agreement, then the excess shall be deposited into the Lockbox
Account. If the Settlement Amount so paid by the Cap Counterparty or substitute
cap counterparty, as applicable, is not sufficient to pay the amount of the
up-front payment payable with respect to a substitute cap agreement having
substantially the same terms as the Cap Agreement with a substitute cap
counterparty having the same ratings as the Cap Counterparty, the Servicer shall
identify the substitute cap agreement, if any, which, while having terms
materially different from the related Cap Agreement or being with a substitute
cap counterparty having ratings below those of the Cap Counterparty, in its good
faith judgment in accordance with the Servicing Standards, provides the best
security for the repayment of the Mortgage Loan of all substitute cap agreements
available that do not require an up-front payment in excess of the amount of the
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Settlement Amount. The Servicer shall send notice to the Trustee for
distribution to the Certificateholders, with a copy to the Rating Agencies,
either recommending the purchase of such substitute cap agreement or
recommending that the Settlement Amount be applied in reduction of the principal
balance of the Note, together with sufficient background information to permit
the evaluation of the such action, by the Certificateholders, together with a
request that the Majority Certificateholders respond to such notice, and shall
take such action with respect thereto as shall be directed by the Majority
Certificateholders; provided that the failure of the Majority Certificateholders
to respond to such notice within 15 Business Days of the date such notice is
sent by the Trustee shall be deemed to be the direction by the Majority
Certificateholders to the Servicer to undertake such recommended action. Any
such notice pursuant to the preceding sentence shall include a prominent
statement to the effect that failure of the Majority Certificateholders to
respond within 15 Business Days of the date such notice is sent by the Trustee
shall be deemed to be the direction by the Majority Certificateholders to the
Servicer to undertake such recommended action.
SECTION 3.24. Reports to the Trustee; Collection Account Statements.
(a) The Servicer shall deliver to the Trustee no later than
12:00 noon New York time on each Remittance Date, the Servicer Remittance Report
with respect to the related Distribution Date, including a written statement of
anticipated Monthly Advances for the related Distribution Date.
(b) For so long as the Servicer makes deposits into and
withdrawals from the Collection Account, not later than fifteen days after each
Remittance Date, the Servicer shall forward to the Trustee a statement prepared
by the Servicer setting forth the status of the Collection Account as of the
close of business on such Remittance Date and showing the aggregate amount of
deposits into and withdrawals from the Collection Account of each category of
deposit specified in Section 3.07 and each category of withdrawal specified in
Section 3.08 since the Remittance Date prior to such Remittance Date. The
Trustee and its agents and attorneys may at any time during normal business
hours, upon reasonable notice, inspect and copy the books, records and accounts
of the Servicer solely relating to the Mortgage Loan and the performance of its
duties hereunder.
(c) The Trustee shall be entitled to rely conclusively on and
shall not be responsible for the content or accuracy of any information provided
to it by the Servicer pursuant to this Agreement.
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ARTICLE IV
DISTRIBUTIONS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a) On each Distribution Date the Trustee shall distribute to
each Certificateholder of record on the immediately preceding Record Date such
Certificateholder's pro rata share of all amounts remaining in the Certificate
Account after permitted withdrawals therefrom pursuant to Sections 3.10 (a) and
(b). Any amounts remaining on deposit in the Certificate Account, after
permitted withdrawals therefrom pursuant to Sections 3.10 (a) and (b), in the
nature of interest paid on the Mortgage Loan shall be distributed to
Certificateholders as interest on the Certificates and any such amounts in the
nature of principal on the Mortgage Loan (or other amounts applied to the
reduction of the principal balance of the Mortgage Loan in accordance with the
Mortgage Loan Documents) shall be applied in reduction of the Certificate
Principal Balance of the Certificates.
(b) With the exception of the final distribution in respect of
a Certificate, distributions pursuant to this Section 4.01 will be made by the
Trustee, without the presentation or surrender of such Certificate or the making
of any notation thereon, by (i) wire transfer of immediately available funds to
an account of such Certificateholder maintained in the United States at any bank
or other entity having appropriate facilities for receiving such a wire
transfer, provided (A) such Certificateholder has provided the Trustee with wire
instructions in writing at least five Business Days before the related Record
Date and (B) such Certificateholder shall be the holder of not less than 5% of
the aggregate Certificate Principal Balance of the Certificates, or (ii) check
mailed by first class mail to such Certificateholder at the address set forth in
the Certificate Register. The final distribution on a Certificate will be made
after notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of such Certificate at the Corporate Trust Office or
such other location specified in such notice.
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SECTION 4.02. Statements to Certificateholders.
(a) On each Distribution Date the Trustee shall prepare and
forward by mail to each Certificateholder, with copies to the Servicer, a
statement as to distributions made to Certificateholders after the preceding
Distribution Date and on or before such current Distribution Date setting forth
(i) the amount of such distributions allocable to the reduction of the
Certificate Principal Balance; (ii) the Certificate Principal Balance after
giving effect to (i) above; (iii) the amount of such distributions allocable to
interest; (iv) the amount of the Servicing Fee, Special Servicing Fee,
Modification Fee and Disposition Fee paid (or, in the case of Special Servicing
Fees, accrued) to the Servicer with respect to such Distribution Date; (v) the
amount of the Trustee Fee received by the Trustee with respect to such
Distribution Date; (vi) the amount of any Monthly Advance made by the Servicer
on the Remittance Date; (vii) the amount of any Property Protection Advance made
by the Servicer since the prior Distribution Date; (viii) the amount of any
Nonrecoverable Advances (together with interest thereon at the Advance Rate)
reimbursed to the Servicer on such Distribution Date; and (ix) the nature and
amount of any other distributions and such other customary information as the
Trustee deems necessary or desirable to enable Certificateholders to prepare
their tax returns or as may be required by the Code and applicable Treasury
regulations. The Trustee shall file with the Internal Revenue Service and
furnish to Certificateholders such of the foregoing information as may be
required by the Code at the time or times and in the manner required thereby.
(b) The Trustee will cause to be furnished, within a
reasonable time after the end of each calendar year (or more frequently if
reasonably requested), to each Certificateholder at any time during such year,
information regarding the amount of Trustee Fees and servicing compensation
received by the Trustee and the Servicer, respectively, or other expenses, if
any, that are paid by the Trust, and such other customary information as the
Trustee deems necessary or desirable to enable Certificateholders to prepare
their federal income tax returns or as may be required by the Code and
applicable Treasury regulations. The obligations of the Trustee in the
immediately preceding sentence shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Trustee pursuant to any requirements of the Code.
(c) Subject to Section 10.09, the Servicer shall use
reasonable efforts to cause the Borrowers to deliver the financial reports
required by Sections 16(a) and 16(b) of each Mortgage and shall forward copies
of all such reports to the Trustee. The Trustee shall deliver copies of all such
reports to the Rating Agencies, and the reports required pursuant to Sections
16(a) and 16(b)(ii) and (iii) of each Mortgage to Certificateholders, within 3
Business Days following its receipt thereof.
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SECTION 4.03. Monthly Advances.
(a) On each Remittance Date on or prior to the Maturity Date,
the Servicer shall make a Monthly Advance, by deposit into the Certificate
Account, equal to the Monthly Payment due on the Mortgage Loan on the related
Due Date, to the extent that the amount transferred from the Lockbox Account to
the Collection Account pursuant to Section 3.06(a) is less than the amount of
such Monthly Payment (net of an amount equal to the product of (i) the product
of (x) a fraction equal to the number of days elapsed in such preceding Mortgage
Loan Accrual Period divided by 360 and (y) the Servicing Fee Rate and (ii) the
principal balance of the Mortgage Loan on which interest accrued during such
previous Mortgage Loan Accrual Period). On each Remittance Date on or following
the Maturity Date (through liquidation of the Mortgage Loan), if the Maturity
Date Payment has not been received by the Servicer, the Servicer shall make a
Monthly Advance in the amount by which (i) the interest which would have accrued
at the Mortgage Interest Rate on the outstanding principal balance of the
Mortgage Loan under the terms of the Note since the Due Date prior to the
related Due Date, assuming the Maturity Date had not occurred and assuming a
Mortgage Interest Rate calculated pursuant to the Note based on the then-current
level of the LIBOR Rate (as defined in the Note) (the "Assumed Interest Accrual
Amount") exceeds (ii) the amount transferred from the Lockbox Account to the
Collection Account pursuant to Section 3.06(a).
(b) Any amount advanced by the Servicer pursuant to Section
4.03(a) shall constitute a Monthly Advance for all purposes of this Agreement
and the Servicer shall be entitled to reimbursement thereof from the Collection
Account pursuant to Section 3.08(e), or if such Monthly Advance is deemed to be
a Nonrecoverable Advance, pursuant to Section 3.08(c), in either case, together
with interest thereon at the Advance Rate.
(c) The Servicer shall not be obligated to make a Monthly
Advance on any date on which a Monthly Advance is otherwise required to be made
by this Section 4.03 if the Servicer determines that such advance will be a
Nonrecoverable Advance. The Trustee shall be entitled to rely, conclusively, on
any determination by the Servicer that a Monthly Advance, if made, would be a
Nonrecoverable Advance. The Trustee, as successor Servicer, in determining
whether or not a Monthly Advance previously made is, or a proposed Monthly
Advance, if made, would be, a Nonrecoverable Advance shall be subject to the
standards applicable to the Servicer hereunder.
SECTION 4.04. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements with respect to
payments to Certificateholders of interest or original issue discount that the
Trustee reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for any such withholding.
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates will be substantially in the form annexed
hereto as Exhibit A. The Certificates will be issuable in registered form only;
provided, however, that in accordance with Section 5.03 beneficial ownership
interests in the Certificates shall initially be held and transferred through
the book-entry facilities of the Depository. The Certificates will be issuable
only in minimum Denominations of authorized initial Certificate Principal
Balance of not less than $10,000, and in integral multiples of $1,000 in excess
thereof. With respect to any Certificate or any beneficial interest in a
Certificate, the "Denomination" thereof shall be (i) the amount (a) set forth on
the face thereof or (b) set forth on a schedule attached thereto or, (c) in the
case of any beneficial interest in a Book-Entry Certificate, the interest of the
related Certificate Owner in the Certificates as reflected on the books and
records of the Depository or related Depository Participants, as applicable,
(ii) expressed in terms of initial Certificate Principal Balance, and (iii) be
in an authorized denomination, as set forth above. The Book-Entry Certificates
will be issued as one or more certificates registered in the name of a nominee
designated by the Depository, and Certificate Owners will hold interests in the
Book-Entry Certificates through the book-entry facilities of the Depository in
the minimum Denominations and aggregate Denominations as set forth above. No
Certificate Owner of a Book-Entry Certificate will be entitled to receive a
Definitive Certificate representing its interest the Certificates, except as
provided in Section 5.03 herein. Unless and until Definitive Certificates are
issued in respect of the Book-Entry Certificates, beneficial ownership interests
in such Certificates will be maintained and transferred on the book-entry
records of the Depository and Depository Participants, and all references to
actions by Holders of such Certificates will refer to action taken by the
Depository upon instructions received from the related registered Holders of
Certificates through the Depository Participants in accordance with the
Depository's procedures and, except as otherwise set forth herein, all
references herein to payments, notices, reports and statements to Holders of
such Certificates will refer to payments, notices, reports and statements to the
Depository or its nominee as the registered Holder thereof, for distribution to
the related registered Holders of Certificates through the Depository
Participants in accordance with the Depository's procedures.
(b) The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer. Certificates
bearing the manual or facsimile signatures of individuals who were at any time
the authorized officers of the Trustee shall be entitled to all benefits under
this Agreement, subject to the following sentence, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, however, unless there appears
on such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate of authentication upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly authenticated and
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delivered hereunder. All Certificates shall be dated the date of their
authentication. The Chase Manhattan Bank, 450 West 33rd Street, New York, New
York 10001, is hereby initially appointed Certificate Registrar with power to
act on the Trustee's behalf in the authentication and delivery of the
Certificates in connection with transfers and exchanges as herein provided. If
The Chase Manhattan Bank resigns or is removed as Trustee in accordance with the
terms hereof, The Chase Manhattan Bank shall be entitled to immediately resign
as Certificate Registrar by giving written notice thereof to the Trustee and the
Servicer.
SECTION 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall keep a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
it shall provide for the registration of transfers and exchanges of Certificates
as herein provided. The names and addresses of all Certificateholders and the
names and addresses of the transferees of any Certificates shall be registered
in the Certificate Register; provided, however, in no event shall the
Certificate Registrar be required to maintain in the Certificate Register the
names of Certificate Owners. The Person in whose name any Certificate is so
registered shall be deemed and treated as the sole owner and Holder thereof for
all purposes of this Agreement and the Certificate Registrar, the Servicer, the
Trustee and any agent of any of them shall not be affected by any notice or
knowledge to the contrary. A Definitive Certificate is transferable or
exchangeable only upon the surrender of such Certificate to the Certificate
Registrar at its Corporate Trust Office, if the Trustee is the Certificate
Registrar (the "Registrar Office") together with an assignment and transfer
(executed by the Holder or his duly authorized attorney). Subject to the
requirements of Sections 5.02(b), the Trustee shall execute and the Certificate
Registrar shall duly authenticate in the name of the designated transferee or
transferees, one or more new Certificates in Denominations of a like aggregate
Denomination as the Definitive Certificate being surrendered. Such Certificates
shall be delivered by the Certificate Registrar in accordance with Section
5.02(e). Each Certificate surrendered for registration of transfer shall be
canceled, and the Certificate Registrar shall hold such canceled Certificates in
accordance with its standard procedures.
(b) Subject to compliance with the provisions regarding the
sale, transfer or assignment of any Certificate under Section 5.09(a), upon
surrender for registration of transfer of any Certificate (and, with respect to
any transfer, upon compliance with any provisions of this Agreement relating to
such Transfer) held in physical certificate form at the office of the
Certificate Registrar or at the office of its agent in the City of New York, the
Trustee shall execute, and the Certificate Registrar shall deliver and
authenticate, in the name of the designated transferee or transferees, one or
more new Certificates of authorized denominations of a like aggregate Percentage
Interest and dated the date of authentication by the Certificate Registrar.
(c) Subject to the restrictions on transfer and exchange set
forth in this Section 5.02 and Section 5.09, the Holder of any Definitive
Certificate may transfer or exchange the same in whole or in part (with a
Denomination equal to any authorized denomination) by surrendering such
Certificate at the Registrar Office or at the office of any successor
Certificate Registrar or transfer agent appointed by the Certificate Registrar,
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together with an instrument of assignment or transfer (executed by the Holder or
its duly authorized attorney), in the case of transfer, and a written request
for exchange in the case of exchange. Following a proper request for transfer or
exchange, within five Business Days of such request if made at such Registrar
Office, or within ten Business Days if made at the office of a transfer agent
(other than the Certificate Registrar), the Trustee shall execute and the
Certificate Registrar shall deliver at such Registrar Office or at the office of
such transfer agent, as the case may be, to the transferee (in the case of
transfer) or Holder (in the case of exchange) or send by first class mail (at
the risk of the transferee in the case of transfer or Holder in the case of
exchange) to such address as the transferee or Holder, as applicable, may
request, a Definitive Certificate or Certificates, as the case may require, for
a like aggregate Denomination and in such Denomination or Denominations as may
be requested. The presentation for transfer or exchange of any Definitive
Certificate shall not be valid unless made at the Registrar Office or at the
office of a transfer agent by the registered Holder in person, or by a duly
authorized attorney-in-fact. The Certificate Registrar may decline to accept any
request for an exchange or registration of transfer of any Definitive
Certificate during the period of 15 days preceding any Distribution Date.
(d) The Certificate Registrar shall provide the Servicer and
the Depositor with an updated copy of the Certificate Register upon request.
(e) No service charge shall be made to a Certificateholder for
any registration of transfer or exchange of Certificates, but the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Certificates.
(f) The Certificate Registrar shall cancel and retain or
destroy, in accordance with the Trustee's retention policy then in effect, all
Certificates surrendered for registration of transfer or exchange and shall upon
written request certify to the Trustee or the Depositor as to such retention or
destruction.
SECTION 5.03. Book-Entry Certificates.
(a) The Certificates shall initially be issued as one or more
Certificates registered in the name of the Depository or its nominee and, except
as provided in subsection (c) below, transfer of such Certificates may not be
registered by the Certificate Registrar unless such transfer is to a successor
Depository that agrees to hold such Certificates for the respective Certificate
Owners with Ownership Interests therein. Such Certificate Owners shall hold and
transfer their respective Ownership Interests in and to such Certificates
through the book-entry facilities of the Depository and, except as provided in
Section 5.02(c) above or subsection (c) below, shall not be entitled to
Definitive Certificates in respect of such Ownership Interests. All transfers by
Certificate Owners of their respective Ownership Interests in the Book-Entry
Certificates shall be made in accordance with the procedures established by the
Depository Participant or brokerage firm representing such Certificate Owner.
Each Depository Participant shall only transfer the Ownership Interests in the
Book-Entry Certificates of Certificate Owners it represents or of brokerage
firms for which it acts as agent in accordance with the Depository's normal
procedures.
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(b) The Trustee, the Servicer, the Depositor and the
Certificate Registrar may for all purposes, including the making of payments due
on the Book-Entry Certificates, deal with the Depository as the authorized
representative of the Certificate Owners with respect to such Certificates for
the purposes of exercising the rights of Certificateholders hereunder. The
rights of Certificate Owners with respect to the Book-Entry Certificates shall
be limited to those established by law and agreements between such Certificate
Owners and the Depository Participants and brokerage firms representing such
Certificate Owners. Multiple requests and directions from, and votes of, the
Depository as Holder of the Book-Entry Certificates with respect to any
particular matter shall not be deemed inconsistent if they are made with respect
to different Certificate Owners. The Trustee may establish a reasonable record
date in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
(c) If (i)(A) the Depositor advises the Trustee and the
Certificate Registrar in writing that the Depository is no longer willing or
able to properly discharge its responsibilities with respect to the Book-Entry
Certificates, and (B) the Depositor is unable to locate a qualified successor,
(ii) the Depositor at its option advises the Trustee and the Certificate
Registrar in writing that it elects to terminate the book-entry system through
the Depository, or (iii) the Trustee determines that Definitive Certificates are
required in accordance with the provisions of Section 5.03(e), the Certificate
Registrar shall notify the affected Certificate Owners, through the Depository
with respect to all or any portion of the Certificates, of the occurrence of any
such event and of the availability of Definitive Certificates to Certificate
Owners requesting the same. Upon surrender to the Certificate Registrar of the
Book-Entry Certificates by the Depository or any custodian acting on behalf of
the Depository, accompanied by registration instructions from the Depository for
registration of transfer, the Trustee shall execute, and the Certificate
Registrar shall authenticate and deliver, within five Business Days of such
request if made at the Registrar Office, or within ten Business Days if made at
the office of a transfer agent (other than the Certificate Registrar), the
Definitive Certificates to the Certificate Owners identified in such
instructions. None of the Depositor, the Servicer, the Trustee and the
Certificate Registrar 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 the issuance of Definitive Certificates for purposes of
evidencing ownership of any of the Certificates, the registered holders of such
Definitive Certificates shall be recognized as Certificateholders hereunder and,
accordingly, shall be entitled directly to receive payments on, to exercise
voting rights with respect to, and to transfer and exchange such Definitive
Certificates.
(d) The Book-Entry Certificates (i) shall be delivered by the
Certificate Registrar to the Depository, or pursuant to the Depository's
instructions, and shall be registered in the name of Cede & Co., and (ii) shall
bear a legend substantially to the following effect:
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Certificate Registrar for
registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co.
or to
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such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.
The Book-Entry Certificates may be deposited with such other
Depository as the Certificate Registrar may from time to time designate, and
shall bear such legend as may be appropriate.
(e) If the Trustee has instituted or has been directed to
institute any judicial proceeding in a court to enforce the rights of the
Certificateholders under the Certificates, and the Trustee has been advised by
counsel that in connection with such proceeding it is necessary or appropriate
for the Trustee to obtain possession of all or any portion of the Certificates
evidenced by Book-Entry Certificates, the Trustee may in its sole discretion
determine that such Certificates shall no longer be represented by such
Book-Entry Certificates. In such event, the Trustee will execute and the
Certificate Registrar will authenticate and deliver, in exchange for such
Book-Entry Certificates, Definitive Certificates in a Denomination equal to the
aggregate Denomination of such Book-Entry Certificates to the party so
requesting such Definitive Certificates. In such event, the Trustee shall notify
the affected Certificate Owners and make appropriate arrangements for the
effectuation of the purpose of this clause.
(f) Upon acceptance for exchange or transfer of a beneficial
interest in a Book- Entry Certificate for a Definitive Certificate, as provided
herein, the Certificate Registrar shall endorse on a schedule affixed to the
related Book-Entry Certificate (or on a continuation of such schedule affixed to
such Book-Entry Certificate and made a part thereof) an appropriate notation
evidencing the date of such exchange or transfer and a decrease in the
Denomination of such Book- Entry Certificate equal to the Denomination of such
Definitive Certificate issued in exchange therefor or upon transfer thereof.
(g) If a Holder of a Definitive Certificate wishes at any time
to transfer such Certificate to a Person who wishes to take delivery thereof in
the form of a beneficial interest in the Book-Entry Certificate, such transfer
may be effected only in accordance with this Section 5.03(g). Upon receipt by
the Certificate Registrar at the Registrar Office of (i) the Definitive
Certificate to be transferred with an assignment and transfer pursuant to
Section 5.02(a), (ii) written instructions directing the Certificate Registrar
to credit or cause to be credited to another account a beneficial interest in
the related Book-Entry Certificate, in an amount equal to the Denomination of
the Definitive Certificate to be so transferred, (iii) a written order
containing information regarding the account to be credited with such beneficial
interest, and (iv) a Transferee Certificate, the Certificate Registrar shall
cancel such Definitive Certificate, the Trustee shall execute and the
Certificate Registrar authenticate and deliver a new Definitive Certificate for
the Denomination of the Definitive Certificate not so transferred, registered in
the name of the Holder or the Holder's transferee (as instructed by the Holder),
and the Certificate Registrar shall instruct the Depository or the custodian
holding such Book-Entry Certificate on behalf of the Depository to increase the
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Denomination of the related Book-Entry Certificate by the Denomination of the
Definitive Certificate to be so transferred, and to credit or cause to be
credited to the account of the Person specified in such instructions a
corresponding Denomination of such Book-Entry Certificate.
SECTION 5.04. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee
or the Certificate Registrar, or the Trustee and the Certificate Registrar
receive evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee and the Certificate
Registrar such security or indemnity as may be reasonably required by them to
save each of them harmless (the unsecured agreement to indemnify the Depositor
or of any successor Certificateholder which is an institutional investor being
sufficient for such purpose), then, in the absence of actual knowledge by a
Responsible Officer of the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and authenticate and the Certificate Registrar shall deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and Percentage Interest. Upon the
issuance of any new Certificate under this Section 5.04, the Trustee may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto. Any replacement Certificate issued
pursuant to this Section shall constitute complete and indefeasible evidence of
ownership of the corresponding interest in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
SECTION 5.05. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of
transfer, the Trustee, the Certificate Registrar, and any agent of any of them
may treat the Person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
4.01 and for all other purposes whatsoever, except as and to the extent provided
in the definition of "Certificateholder", and neither the Trustee, the
Certificate Registrar, nor any agent of any of them shall be affected by notice
to the contrary.
SECTION 5.06. Access to Certificateholders' Names and Addresses.
(a) If any Certificateholder (an "Applicant") applies in
writing to the Trustee, and such application states that the Applicant desires
to communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates and is accompanied by a copy of the
communication which such Applicant proposes to transmit, then the Trustee shall,
at the expense of such Applicant, within ten Business Days after the receipt of
such application, furnish or cause to be furnished to such Applicant a list of
the names and addresses of the Certificateholders as of the most recent
Distribution Date.
(b) Every Certificateholder, by receiving and holding such
list, agrees with the Trustee that the Trustee and the Certificate Registrar
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shall not be held accountable in any way by reason of the disclosure of any
information as to the names and addresses of the Certificateholders hereunder,
regardless of the source from which such information was derived.
SECTION 5.07. Actions of Certificateholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by Certificateholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Certificateholders in
person or by 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 Trustee and, when required, to the Servicer.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Agreement and conclusive in
favor of the Trustee and the Depositor, if made in the manner provided in this
Section 5.07.
(b) The fact and date of the execution by any
Certificateholder of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other action by a Certificateholder shall bind every Holder
of every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, or omitted to
be done, by the Trustee or the Depositor in reliance thereon, whether or not
notation of such action is made upon such Certificate.
(d) The Trustee may require such additional proof of any
matter referred to in this Section 5.07 as it shall deem necessary.
SECTION 5.08. Certificate Legend.
Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the 1933 Act or
applicable state securities laws, each Certificate will also bear the following
legend:
THIS CERTIFICATE WAS SOLD IN A PRIVATE PLACEMENT, WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE 1933 ACT MAY ONLY BE
MADE IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTIONS 5.03 AND 5.09 OF THE TRUST AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOAN
IS INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
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CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR
ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR ANY
INSURER.
In addition to the legend required under this Section 5.08,
each Certificate may also bear a legend describing additional transfer
restrictions.
SECTION 5.09. Offer, Sale, Pledge or Other Transfer; Rule 144A Information.
(a) (i) No offer, sale, pledge or other transfer by any Holder
of any Certificates shall be made unless the registration requirements of the
1933 Act, and any applicable state securities laws are complied with, or such
offer, sale, pledge or other transfer is exempt from the registration
requirements under the 1933 Act and such applicable state securities laws.
(ii) Any Holder of a Certificate may offer, sell, pledge or
otherwise transfer such Certificate only (A) to a person that it reasonably
believes is a "Qualified Institutional Buyer" (as such term is defined under
Rule 144A of the 1933 Act) that purchases such Certificate for its own account
or for the account of a Qualified Institutional Buyer to whom notice is given
that the offer, sale, pledge or other transfer is being made in reliance upon
Rule 144A of the 1933 Act, (B) to an institution that is an "Accredited
Investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the 1933 Act that
is acquiring such Certificate for investment purposes and not for distribution
or (C) pursuant to an exemption from registration under the 1933 Act provided by
Rule 144 thereunder or pursuant to any other available exemption from the
registration requirements of the 1933 Act, in each case in accordance with any
applicable securities laws of any state of the United States.
(iii) If a transfer of any Definitive Certificate is to be
made without registration under the 1933 Act, then the Certificate Registrar
shall refuse to register such transfer unless it receives (and upon receipt, may
conclusively rely upon) in the case of clauses (A) and (B) of Section
5.09(a)(ii) above, from the transferee or a U.S. registered broker-dealer on the
transferee's behalf, a transferee certificate (a "Transferee Certificate") in
the form attached to each Certificate and (2) in the case of a transfer pursuant
to clause (C) of Section 5.09(a)(ii) above, the Trustee shall require delivery
of an unqualified Opinion of Counsel satisfactory in form and substance to the
Trustee, to the effect that the transfer of the Certificate is exempt from the
registration requirements of the 1933 Act and shall not subject the Trust Fund
to registration under the Investment Company Act of 1940, as amended, together
with such Officers' Certificates as shall be reasonably required in connection
with such Opinion of Counsel. The expense of any such Opinion of Counsel shall
be an expense of the seller or purchaser of the Certificate, and shall not be an
expense of the Trust Fund, the Trustee, the Servicer, either Borrower or the
Depositor.
(iv) If a transfer of any Book-Entry Certificate is to be
made without registration under the 1933 Act, a Certificate Owner desiring to
effect a transfer is required to obtain from such prospective transferee (x) in
the case of transfers described in clause (A) and (B) of Section 5.09(a)(ii)
above, a Transferee Certificate, or (y) in the case of transfers described in
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clause (C) of Section 5.09(a)(ii) above, an unqualified Opinion of Counsel
satisfactory to such Certificate Owner to the effect that such transfer may be
made without registration under the 1933 Act and shall not subject the Trust
Fund to registration under the Investment Company Act of 1940, as amended,
together with such Officers' Certificates as shall be reasonably required in
connection with such Opinion of Counsel. The expense of any such Opinion of
Counsel shall be an expense of the seller or purchaser of the Certificate, and
shall not be an expense of the Trust Fund, the Trustee, the Servicer or the
Depositor. In the case of any purported transfer of an interest in a Book-Entry
Certificate in connection with which such Certificate Owner shall not have been
provided the requisite Transferee Certificates or Opinions of Counsel, the
transferee will nonetheless be deemed to have made the representations and
warranties set forth in the Transferee Certificate.
(b) The Holder of any Certificates desiring to effect such
offer, sale, pledge or other transfer shall, and does hereby agree to, indemnify
the Trust, the Trustee, the Certificate Registrar, the Depositor, the Servicer,
the Borrower, the Lessee or an Affiliate or any of the foregoing and any agent
acting on behalf of the Trustee against any liability that may result if such
offer, sale, pledge or other transfer is not so exempt or is not made in
accordance with such federal and state laws. Neither the Depositor nor the
Trustee nor the Certificate Registrar is under any obligation to register any
Certificates under the 1933 Act or any other securities law.
(c) So long as any of the Certificates remain outstanding, the
Trustee will make available, or cause to be made available, upon request, to any
registered Holder and any Qualified Institutional Buyer to whom such Certificate
may be offered or sold by such Holder, information with respect to the Trustee,
the Servicer, the Certificates or the Mortgage Loan required to allow the offer,
sale, pledge or other transfer of such Certificate pursuant to Rule 144A under
the 1933 Act.
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ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Liability of the Depositor and the Servicer.
The Depositor and the Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement.
SECTION 6.02. Merger or Consolidation of the Servicer.
(a) Subject to subsection (b) of this Section 6.02, the
Servicer will keep in full effect its existence, rights and good standing as a
corporation under the laws of the state of its formation and will be in
compliance with the laws of the State of Texas to the extent such compliance is
necessary to perform its obligations in accordance with the terms of this
Agreement.
(b) The Servicer may be merged or consolidated with or into
any Person, or transfer all or substantially all of its assets to any Person, in
which case any Person resulting from any merger or consolidation to which it
shall be a party, or any Person succeeding to its business, shall be the
successor of the Servicer hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto.
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SECTION 6.03. Limitation on Liability of the
Depositor, the Servicer and Others.
Neither the Depositor, the Servicer nor any of the directors,
officers, employees or agents of the Depositor or the Servicer shall be under
any liability to the Trust or the Certificateholders for any action taken, or
for refraining from the taking of any action, in good faith pursuant to this
Agreement (at the direction of the Majority Certificateholders or otherwise), or
for errors in judgment; provided, however, that this provision shall not protect
the Depositor or the Servicer or any such Person against any breach of
warranties or representations made herein, or against any specific liability
imposed on the Servicer pursuant to Section 3.01 or any other Section hereof, or
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties or by reason
of reckless disregard of obligations or duties hereunder. The Depositor, the
Servicer and any director, officer, employee or agent of the Depositor or the
Servicer may rely in good faith on any document of any kind which, prima facie,
is properly executed and submitted by any appropriate Person respecting any
matters arising hereunder. The Depositor, the Servicer and any director,
officer, employee or agent of the Depositor or the Servicer shall be indemnified
and held harmless by the Trust from and against any loss, liability or expense
incurred in connection with any legal action (including the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) relating to this Agreement or the
Certificates (at the direction of the Majority Certificateholders or otherwise),
other than any loss, liability or expense: (i) incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties or by reason
of reckless disregard of obligations or duties hereunder; or (ii) incurred in
connection with any violation by it of any state or federal securities law.
Neither the Depositor nor the Servicer shall be under any obligation to appear
in, prosecute or defend any legal action unless such action is related to its
respective duties under this Agreement and in its opinion does not expose it to
any expense or liability; provided, however, that the Depositor or the Servicer
may in its discretion undertake any action related to its obligations hereunder
which it may deem necessary or desirable with respect to this Agreement and the
rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom (except any action or
liability related to the Servicer's obligations under Section 3.01(a)) shall be
expenses, costs and liabilities of the Trust, and the Depositor and the Servicer
shall be entitled to be reimbursed therefor from the Collection Account pursuant
to Section 3.08; provided, however, that the Trustee shall be under no duty to
recalculate or otherwise verify the amount of such reimbursement.
Notwithstanding anything herein to the contrary, this Section 6.03 shall survive
the termination or maturity of this Agreement.
SECTION 6.04. Limitation on Resignation of the Servicer.
The Servicer may not assign its rights and delegate its duties
and obligations under this Agreement (other than pursuant to Section 3.01(b)).
The Servicer shall not resign from its obligations and duties
hereby imposed on it without the approval of the Majority Certificateholders,
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which approval shall not be unreasonably withheld, provided that no such
resignation shall become effective until a successor Servicer which is an
established mortgage loan servicing institution that is rated "A" or higher by
the Rating Agencies or is otherwise included on the list of approved servicers
maintained by S&P and acceptable to Fitch (as evidenced by written confirmation
from Fitch that the appointment of such successor Servicer will not result in a
withdrawal, downgrade or qualification of the then-current ratings of the
Certificates) and having a net worth of not less than $25,000,000 shall have
assumed the Servicer's responsibilities, duties, liabilities and obligations
hereunder.
SECTION 6.05. Rights of the Depositor and the
Trustee in Respect of the Servicer.
The Servicer shall afford the Depositor and the Trustee, upon
reasonable notice and upon reimbursement of its reasonable out-of-pocket
expenses, during normal business hours access to all records maintained by it in
respect of its rights and obligations hereunder and access to its officers
responsible for such obligations. Upon request by the Depositor or the Trustee,
the Servicer shall furnish to the Depositor and the Trustee the most recent
financial statements of its ultimate parent AMRESCO, INC., which have been made
public. The Depositor may, but is not obligated to, enforce the obligations of
the Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of such Person hereunder or
exercise its rights hereunder, provided that the Servicer shall not be relieved
of any of its obligations hereunder by virtue of such performance by the
Depositor or its designee. The Depositor shall not have any responsibility or
liability for any action or failure to act by the Servicer (except to the extent
it is itself the Servicer) and is not obligated to supervise the performance of
the Servicer under this Agreement or otherwise.
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ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events:
(i) (a) any failure by the Servicer to deposit into
the Certificate Account on the Remittance Date any amount
required to be so remitted by the Servicer from the Collection
Account, (b) any failure by the Servicer to deposit into the
Collection Account the amounts required to be deposited
therein at the time deposit thereof is required and the
failure of the Servicer to remit excess amounts to the
Borrowers from the Lockbox Account as required under the
Lockbox Agreement, or (c) any failure by the Servicer to make
a Servicing Advance in the amount and at the time required
under this Agreement; or
(ii) any failure on the part of the Servicer to duly
observe or perform in any material respect any other of the
covenants or agreements on the part of the Servicer contained
in this Agreement which continues unremedied for a period of
45 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been
given to the Servicer by the Depositor, the Trustee or the
Majority Certificateholders; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in
an involuntary case under any present or future federal or
state bankruptcy, insolvency or similar law for the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against
the Servicer and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 days; or
(iv) the Servicer shall consent to the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of, or relating to, the Servicer, as the
case may be, or of, or relating to, all or substantially all
of its property; or
(v) the Servicer shall admit in writing its
inability to pay its debts generally as they become due, file
a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of
its creditors, or voluntarily suspend payment of its
obligations; or
(vi) any representation or warranty made by the
Servicer in this Agreement proves to have been incorrect in
any material respect when made and (i) the consequences of
such representation or warranty being incorrect are
susceptible of
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remedy in all respects, but such consequences are not so
remedied within 30 days after the Servicer first becomes aware
or is advised that such representation or warranty was
incorrect in a material respect or (ii) the consequences of
such representation or warranty being incorrect are not
susceptible of remedy in all respects; or
(vii) the Trustee shall have received written notice
from either Rating Agency that the continuation of the
Servicer as Servicer would result in a withdrawal, downgrade
or qualification by such Rating Agency of its then-current
rating of the Certificates; or
(viii) S&P shall remove the Servicer from its list of
approved servicers;
then, so long as an Event of Default shall not have been remedied, the Trustee
may, and at the written direction of the Majority Certificateholders the Trustee
shall, by notice in writing to the Servicer, terminate all of the Servicer's
rights and obligations under this Agreement and in and to the Mortgage Loan and
the proceeds thereof, other than any rights it may have hereunder as a
Certificateholder and any rights or obligations that accrued prior to the date
of such termination (including the right to receive all amounts accrued or owing
to it under this Agreement on or prior to the date of such termination and the
right to the benefits of Section 6.03 notwithstanding any such termination). On
or after the receipt by the Servicer of such written notice, all of its
authority and power under this Agreement, whether with respect to the
Certificates or the Mortgage Loan or otherwise, shall pass to and be vested in
the Trustee pursuant to and under this Section, and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
and at the expense of the defaulting Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loan and related documents, or otherwise. The Servicer agrees in
the event it is terminated pursuant to this Section 7.01 to promptly (and in any
event no later than ten Business Days subsequent to such notice) provide, at its
own expense, the Trustee with all documents and records reasonably requested by
the Trustee to enable the Trustee to assume its functions hereunder, and to
cooperate with the Trustee and the successor to its responsibilities hereunder
in effecting the termination of its responsibilities and rights hereunder,
including, without limitation, the transfer to the Trustee for administration by
it of all cash amounts which shall at the time be or should have been credited
by the Servicer to the REO Account or thereafter be received with respect to the
Mortgage Loan. All reasonable costs and expenses of the successor Servicer
incurred in connection with transferring the Mortgage File to the successor
Servicer shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs and expenses.
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SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of
termination pursuant to Section 7.01, the Trustee shall be its successor in all
respects in its capacity as Servicer under this Agreement and the transactions
set forth or provided for herein (including without limitation its right to
receive interest on advances) and shall be subject to all the responsibilities,
duties, limitations on liability and liabilities relating thereto and arising
thereafter placed on the Servicer by the terms and provisions hereof; provided,
however, that the Trustee shall be under an affirmative obligation to appoint a
successor Servicer and shall use its reasonable best efforts to accomplish that
objective, and further provided, however, that any failure to perform such
duties or responsibilities caused by the terminated party's failure to provide
information or monies required by Section 7.01 shall not be considered a default
by such successor hereunder. The appointment of a successor Servicer shall not
affect any liability of the predecessor Servicer which may have arisen prior to
its termination as Servicer. The Trustee shall not be liable for any of the
representations and warranties of the Servicer, herein or in any related
document or agreement or for any acts or omissions of the predecessor Servicer
hereunder. As compensation therefor, the Trustee as successor to the Servicer
shall be entitled to the Servicer Fee to which the Servicer would have been
entitled if the Servicer had continued to act hereunder. Notwithstanding the
above, the Trustee may, if it shall be unwilling to so act, or shall, if it is
unable to so act or if the Majority Certificateholders so request in writing to
the Trustee, promptly appoint, or petition a court of competent jurisdiction to
appoint, any established mortgage loan servicing institution that is rated "A"
or higher by the Rating Agencies or is otherwise included on the list of
approved servicers maintained by S&P and having a net worth of not less than
$25,000,000 as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or liabilities of the Servicer
hereunder. No appointment of a successor to the Servicer hereunder shall be
effective until the assumption by the successor to the Servicer of all its
responsibilities, duties and liabilities hereunder. Pending appointment of a
successor to the Servicer hereunder, unless the Trustee shall be prohibited by
law from so acting, the Trustee shall act in such capacity as herein above
provided. In connection with such appointment and assumption described herein,
the Trustee may make such arrangements for the compensation of such successor
out of payments on the Mortgage Loan as it and such successor shall agree;
provided, however, that no such compensation shall be in excess of that
permitted the terminated party hereunder. The Trustee or the Servicer (whichever
is not the terminated party) and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The appointment of the Trustee as Servicer or of a successor
servicer will not be effective until each Rating Agency has provided written
confirmation that such appointment will not result in a downgrade, withdrawal or
qualification of the then-current ratings of the Certificates.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of the Servicer pursuant to Section
7.01 above or appointment of a successor to the Servicer, the Trustee shall give
prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register, at the expense of the Trust.
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(b) Upon any termination of the Trustee pursuant to Sections
7.01 and 8.07 or appointment of a successor to the Trustee, the Servicer shall
give prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register, at the expense of the Trust.
(c) Within 60 days after the occurrence of any Event of
Default known to a Responsible Officer of the Trustee, the Trustee shall
transmit by mail to all Holders of Certificates notice of such Event of Default,
unless such Event of Default shall have been cured or waived.
SECTION 7.04. Other Remedies of Trustee.
During the continuance of any Event of Default of the
Servicer, so long as such Event of Default shall not have been remedied, the
Trustee, in addition to the rights specified in Section 7.01, shall have the
right, in its own name as trustee of an express trust, to take all actions now
or hereafter existing at law, in equity or by statute to enforce its rights and
remedies and to protect the interests, and enforce the rights and remedies, of
the Certificateholders (including the institution and prosecution of all
judicial, administrative and other proceedings and the filing of proofs of claim
and debt in connection therewith). Except as otherwise expressly provided in
this Agreement, no remedy provided for by this Agreement shall be exclusive of
any other remedy, and each and every remedy shall be cumulative and in addition
to any other remedy and no delay or omission to exercise any right or remedy
shall impair any such right or remedy or shall be deemed to be a waiver of any
Event of Default.
SECTION 7.05. Waiver of Past Events of Default; Termination.
The Majority Certificateholders may, on behalf of all Holders
of Certificates, waive any default by the Trustee or the Servicer in the
performance of its obligations hereunder and its consequences, except a default
in making any required deposits to or payments from the Collection Account in
the case of the Servicer or in making any required deposits to or payments from
the REO Account in the case of the Servicer, or in remitting payments as
received to the Trustee by the Servicer, in each case in accordance with this
Agreement. Upon any such waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default
and after the curing or waiver of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. During the continuance of an Event of Default of which
a Responsible Officer of the Trustee has knowledge, the Trustee shall exercise
such of the rights and powers vested in it by this Agreement, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of such person's own affairs.
The Trustee, upon receipt of any resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they are on
their face in the form required by this Agreement (it being understood and
agreed that the Trustee shall be required only to determine whether such
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments are on their face in the form required by this Agreement and
shall not be responsible for the accuracy or content of the information
contained in any such resolution, certificate, statement, opinion, report,
document, order or other instrument). If any such instrument is found on its
face not to conform to the requirements of this Agreement in a material manner,
the Trustee shall take action as it deems appropriate to have the instrument
corrected.
The Trustee shall not be under any liability to the Trust Fund
or the Certificateholders for any action taken or for refraining from the taking
of any action in good faith pursuant to this Agreement, or for errors in
judgment. Subject to Section 8.02, no provision of this Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, its own bad faith or its own willful
misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default,
and after the curing or waiver of all such Events of Default
which may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants
or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates, reports or opinions furnished
to the Trustee that conform to the requirements of this
Agreement;
(ii) the Trustee shall not be personally liable
for an error of judgment made
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in good faith by a Responsible Officer or Responsible
Officers, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Trustee shall have the right to contact the
Certificateholders for the purpose of requesting directions
concerning any of its duties hereunder and shall not be
personally liable with respect to any action taken, suffered
or omitted to be taken by it in good faith in accordance with
the direction of the Majority Certificateholders, relating to
the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Agreement; and
(iv) the Trustee shall not be charged with knowledge
of any failure by the Servicer to comply with the obligations
of the Servicer referred to in clause (i) or clause (ii) of
Section 7.01, or of any breach referred to in clause (vi) of
Section 7.01, unless a Responsible Officer of the Trustee
obtains actual knowledge of such failure or breach.
The Trustee will, in its individual capacity and at its own
cost and expense, promptly take such action as may be necessary to discharge any
mortgage, pledge, lien, charge, security interest or other encumbrance on any
part of the Trust or the Trust Fund arising as a result of (i) claims against
the Trustee in its individual capacity in any case not related to this Agreement
or any Mortgage Loan Document or the transactions contemplated hereby or
thereby, (ii) acts of the Trustee in its individual capacity not contemplated or
permitted by this Agreement or any Mortgage Loan Document or (iii) taxes
relating to or arising out of fees or other amounts payable to the Trustee in
its individual capacity hereunder.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and conclusively rely
upon and shall be protected in acting or refraining from
acting upon any resolution, Officers' Certificate, certificate
of auditors or any other certificate, statement, instrument,
opinion, written advice of counsel, report, notice, request,
consent, order, appraisal, bond or other paper or document
reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any
written advice or Opinion of Counsel shall be full and
complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and
in accordance with such written advice or Opinion of Counsel;
(iii) The Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this
Agreement or to institute, conduct or defend any
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litigation hereunder or in relation hereto at the request,
order or direction of any of the Certificateholders pursuant
to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby; the
right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty,
and the Trustee shall not be answerable for other than its
negligence, bad faith or willful misconduct in the performance
of any such act; nothing contained herein shall, however,
relieve the Trustee of the obligations, upon the occurrence of
an Event of Default by the Servicer of which a Responsible
Officer of the Trustee has actual knowledge (which has not
been cured or waived), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same
degree of care and skill in their exercise, as a prudent
person would exercise or use under the circumstances in the
conduct of such person's own affairs;
(iv) Neither the Trustee nor any of its directors,
officers, employees, Affiliates or agents shall be personally
liable for any action taken, suffered or omitted by the
Trustee in good faith and reasonably believed by the Trustee
to be authorized or within the discretion or rights or powers
conferred upon the Trustee by this Agreement;
(v) Prior to the occurrence of an Event of Default
by the Servicer hereunder and after the curing or waiver of
all Events of Default by the Servicer which may have occurred,
the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or any other paper or document
presented to it by the Servicer, unless requested in writing
to do so by the Majority Certificateholders; provided,
however, that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee
by the security afforded to it by the terms of this Agreement,
the Trustee may require reasonable indemnity against such
expense or liability as a condition to taking any such action;
and the reasonable expense of every such investigation shall
be paid by the Servicer if an Event of Default shall have
occurred and be continuing relating to the Servicer, and
otherwise by the Certificate holders requesting the
investigation;
(vi) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys (individually,
an "Agent" or collectively, "Agents"); and the Trustee shall
not be liable or responsible for the bad faith, willful
misconduct or negligence of any of the Agents appointed with
due care by the Trustee hereunder (other than any Agent
engaged to perform servicing duties hereunder); provided,
however, that any Agent so appointed by the Trustee shall in
no event be the Depositor, the Servicer, or any person known
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to a Responsible Officer of the Trustee to be an Affiliate of
any of them. The Trustee may conclusively rely on an Officer's
Certificate of the Servicer or the Depositor which states that
a prospective Agent is not an Affiliate of the Depositor or
the Servicer. Upon appointing an Agent, the Trustee shall send
notice to the Servicer of the name of the Agent and the
Trustee's duties hereunder which have been assigned to such
Agent; and
(vii) The Trustee shall not be required to provide
any surety or bond of any kind in connection with the
execution or performance of its duties hereunder.
(b) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, except as
expressly required under this Agreement, without any right of reimbursement
pursuant to its compensation arrangement contemplated by Section 8.05, if in the
Trustee's opinion the repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it, and none of the provisions
contained in this Agreement shall in any event require the Trustee to perform,
or be responsible for the manner of performance of, any of the obligations of
the Servicer under this Agreement, except during such time, if any, as the
Trustee shall be the successor to, and be vested with the rights, duties, powers
and privileges of, the Servicer in accordance with the terms of this Agreement.
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SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loan.
The recitals contained herein and in the Certificates (other
than the representations and warranties of the Trustee and the signature and
authentication of the Trustee on the Certificates) and the information contained
in any offering document for the Certificates, except to the extent provided by
the Trustee, shall not be taken as the statements of the Trustee acting in its
individual capacity, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations or warranties as to the
validity or sufficiency of this Agreement or of the Certificates or of the
Mortgage Loan or related Mortgage Documents. The Trustee shall at no time have
any responsibility or liability for or with respect to the legality, validity
and enforceability of the Mortgages or the Mortgage Loan, or the perfection and
priority of the Mortgages or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Trust or the Trust
Fund or its ability to generate the payments to be distributed to
Certificateholders, under this Agreement (other than in its failure to perform
its duties in accordance with the terms of this Agreement), including, without
limitation: the existence, condition and ownership of the Mortgaged Properties;
the existence of any hazard or other insurance thereon; the existence of the
Mortgage Loan; the compliance by the Servicer with any warranty or
representation made by it under this Agreement or in any related document or the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any non-compliance therewith or any breach
thereof; the acts or omissions of any of the Depositor, the Servicer (other than
if the Trustee shall assume the duties of the Servicer pursuant to Section
7.02), or the Borrower; any action of the Servicer (other than if the Trustee
shall assume the duties of the Servicer pursuant to Section 7.02) taken in the
name of the Trustee, except to the extent such action is taken at the express
written direction of the Trustee; the failure of the Servicer to act or perform
any duties required of it as agent of the Trustee hereunder; or any action by
the Trustee taken at the instruction of the Servicer (other than if the Trustee
shall assume the duties of the Servicer pursuant to Section 7.02) unless the
taking of such action is not permitted by the express terms of this Agreement;
provided, however, that the foregoing shall not relieve the Trustee of its
obligation to perform its express duties under this Agreement. The Trustee shall
not be accountable for the use by the initial purchasers of any of the
Certificates or of the proceeds of such Certificates. The Trustee shall not have
any responsibility for filing any financing or continuation statement in any
public office at any time or to otherwise perfect or maintain the perfection of
any security interest or lien granted to it hereunder (unless the Trustee shall
have become the successor Servicer hereunder) or to record this Agreement.
The Trustee may request, and conclusively rely upon, an
Officer's Certificate of the Servicer, as to whether any breach of a
representation and warranty of the Servicer in Section 2.04 is susceptible to
cure in all material respects.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual capacity or any other capacity
may become the owner or pledgee of Certificates, and may deal with the Depositor
and the Servicer in banking transactions, with the same rights it would have if
it were not Trustee.
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SECTION 8.05. Payment of Trustee's Fees and Expenses.
(a) For performance of its services hereunder, the Trustee
shall be entitled on each Distribution Date to the Trustee Fee. The fees and
expenses of the Trustee shall be payable from funds on deposit in the
Certificate Account pursuant to Section 3.10. Except as otherwise provided
herein, none of the fees and expenses of the Trustee or any successor trustee
(including, without limitation, the Trustee's Fee) shall be an obligation or
expense of the Depositor, the Servicer, the Borrowers or any other Person other
than the Trust.
(b) The Trustee (from amounts deposited by the Servicer in the
Certificate Account) pursuant to and subject to the limits of Section 3.08(b),
upon its request, shall be reimbursed for all reasonable expenses, disbursements
and advances (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
incurred or made by the Trustee in accordance with any of the provisions of this
Agreement, but only (i) to the extent such expenses, disbursements and advances
are expressly stated to be reimbursable from the Trust under this Agreement and
are for the account of the Trust or Trust Fund under this Agreement, (ii) to the
extent, with respect to any expense which may exceed $10,000, the Trustee shall
have notified the Certificateholders and shall have received the approval of
Majority Certificateholders and (iii) except any such expense, or disbursement
or advance as may arise from its negligence, bad faith or willful misconduct.
(c) In the event the Trustee or any director, officer, agent,
employee or affiliate of the Trustee suffers or incurs any losses, liabilities,
damages, claims or related expenses arising in respect of this Agreement, the
Mortgage Loan or the Certificates in connection with any legal action or
threatened legal action other than those resulting from the negligence, bad
faith or willful misconduct of the Trustee, the Trustee or any director,
officer, agent, employee or affiliate of the Trustee, as applicable, shall have
a right of recovery against the Trust and the Trust Fund for reimbursement of
such losses, liabilities, damages, claims and expenses (including reasonable
attorney fees), which right shall be senior to the rights of all
Certificateholders.
(d) The Servicer agrees to indemnify the Trustee and its
directors, officers, agents, employees and Affiliates from, and hold each of
them harmless against, any and all losses, liabilities, damages, claims or
expenses (including reasonable attorneys' fees) arising in respect of the
Servicer's acts or omissions in connection with this Agreement, the Mortgage
Loan or the Certificates except to the extent the Trustee's own bad faith,
willful misconduct or negligence contributes to the loss, liability, damage,
claim or expense, in which case, the Servicer shall only be liable for that
percentage of fault attributable to it, or to the extent such act or omission
was at the direction of the Majority Certificateholders, in which case, the
Servicer shall only be liable for that percentage of fault attributable to it
for improperly carrying out such direction.
(e) Notwithstanding anything herein to the contrary, this
Section 8.05 shall survive the termination or maturity of this Agreement or the
resignation or removal of the Trustee as regards rights accrued prior to such
resignation or removal.
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(f) This Section 8.05 shall be expressly construed to include,
but not be limited to, such indemnities, compensation, expenses, disbursements,
losses, liabilities, damages and the like, as may pertain or relate to any
Environmental Laws or Environmental Matters.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or
association organized and doing business under the laws of any state or the
United States of America, authorized under such laws to exercise corporate trust
powers and to accept the trust conferred under this Agreement, having a combined
capital and surplus of at least $50,000,000 with a long-term unsecured debt
rating of not lower than A (or an equivalent rating) by the Rating Agencies and
subject to supervision or examination by federal or state authority and shall
not be an Affiliate of the Servicer (except during any period when the Trustee
has assumed the duties of the Servicer pursuant to Section 7.02 or in such case
as the Trustee has appointed itself Servicer). If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 8.07.
SECTION 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Majority
Certificateholders and the Servicer, which resignation shall be effective upon
the acceptance of appointment by a successor trustee as set forth below. Upon
receiving such notice of resignation, the Depositor shall, at the expense of the
Trust, promptly appoint a successor trustee acceptable to the Majority
Certificateholders by written instrument, in triplicate, which instrument shall
be delivered to the resigning Trustee, the Servicer and the successor trustee.
If no successor trustee shall have been so appointed and have accepted
appointment within 90 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Servicer or Majority Certificateholders, or if
at any time the Trustee shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, or an Event of Default with respect to the Trustee under Section
7.01 shall otherwise have occurred and be continuing, then the Servicer may
remove the Trustee. If the Servicer removes the Trustee under the authority of
the immediately preceding sentence, the Servicer shall promptly notify the
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Majority Certificateholders, who shall, at the expense of the Trust, promptly
appoint a successor trustee by written instrument, in triplicate, which
instrument shall be delivered to the Trustee so removed, to the Depositor, the
Servicer and to the successor trustee.
The Majority Certificateholders may, at any time, remove the
Trustee and appoint a successor trustee by written instrument or instruments, in
four originals, signed by such Holders or their attorneys-in-fact duly
authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Servicer, one complete set to the Trustee so
removed, and one complete set to the successor so appointed.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08, until all amounts due to the Trustee hereunder and
under any other Mortgage Loan Documents have been paid to the Trustee and until
each Rating Agency delivers written confirmation that such resignation or
removal and appointment of a successor trustee will not result in a downgrade,
withdrawal or qualification of then-current ratings of the Certificates.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor, the Servicer, the
Majority Certificateholders and to its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
the like effect as if originally named as trustee herein. The predecessor
trustee shall deliver to the successor trustee the Mortgage File and statements
held by it hereunder, and the Depositor and the predecessor trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for more fully and certainly vesting and confirming in the successor
trustee all such rights, powers, duties and obligations. No successor trustee
shall accept appointment as provided in this Section 8.08 unless at the time of
such acceptance such successor trustee shall be eligible under the provisions of
Section 8.06.
Upon acceptance of appointment by a successor trustee as
provided in this Section 8.08, the successor trustee shall mail notice of the
succession of such trustee hereunder to all Holders of Certificates at their
addresses as shown in the Certificate Register.
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SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such successor corporation shall be eligible under the provisions
of Section 8.06, 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.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust or property securing the same may at the time be located, the
Trustee shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust, and to vest in such Person or Persons, in such
capacity, such title to the Trust, or any part thereof, and, subject to the
other provisions of this Section 8.10, such powers, duties, obligations, rights
and trusts as the Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 8.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or as
successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee solely at the direction of the Trustee.
The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Every such instrument shall be filed with
the Trustee. Each separate trustee and co-trustee, upon its acceptance of the
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trusts conferred, shall be vested with the estates or property specified in its
instrument of appointment, either jointly with the Trustee or separately, as may
be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination.
(a) Except as set forth in the last sentence of Section 6.03,
the respective obligations and responsibilities of the Depositor, the Servicer
and the Trustee created hereby with respect to the Certificates (other than the
obligation to make certain payments and to send certain notices to
Certificateholders as hereinafter set forth) shall terminate immediately
following the distribution to the Certificateholders of all funds collected or
to be collected under the Mortgage Loan Documents and the performance by the
Trustee and the Servicer of all actions required to be taken under this
Agreement; provided, however, that in no event shall the trust created hereby
continue beyond the expiration of twenty-one years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late ambassador of the
United States to the United Kingdom, living on the date hereof.
(b) The Majority Certificateholders may at their option, upon
not less than 30 days' prior notice given to the Trustee, following a Mortgage
Loan Event of Default, purchase the Mortgage Loan and all REO Properties
acquired in respect of the Mortgage Loan, at a purchase price (the "Termination
Price"), payable in cash, equal to the sum of:
(i) 100% of the unpaid principal balance of the
Mortgage Loan;
(ii) all unpaid interest accrued on such unpaid
principal balance of the Mortgage Loan to the date of
purchase;
(iii) the fair market value of all other property
included in the Trust Fund as of the date of purchase;
(iv) all fees and expenses payable to the Trustee and
the Servicer (including all Servicer's compensation) pursuant
to the terms of this Agreement through the date of purchase
(without duplication); and
(v) all unreimbursed Property Protection Advances and
interest at the Advance Rate through the date of purchase on
all outstanding Servicing Advances.
Any Certificateholder which holds 100% of the Percentage Interests in the Trust
shall not be required to deposit funds in the Trust Fund (other than as required
to pay the outstanding liabilities and expenses to the Trust (including without
limitation outstanding fees and reimbursable expenses of the Trustee and the
Servicer and outstanding Property Protection Advances, and interest on all
Servicing Advances)), but shall be entitled upon deposit of sufficient funds to
pay such liabilities and expenses simply to direct the Trustee to pay such
liabilities and expenses, to dissolve the Trust and to transfer ownership of
remaining assets in the Trust Fund to such Certificateholder.
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All costs and expenses incurred by any party to this Agreement
or by the Trust in connection with the purchase of the Mortgage Loan and other
assets of the Trust pursuant to this Section 9.01(b) shall be borne by the party
exercising its purchase rights hereunder.
(c) Notice of any termination of the Trust pursuant to this
Section 9.01 shall be mailed by the Trustee to affected Certificateholders at
their addresses shown in the Certificate Register as soon as practicable after
the Trustee shall have received, given or been deemed to have received a Notice
of Termination but in any event not more than thirty days, and not less than ten
days, prior to the Anticipated Termination Date. The notice mailed by the
Trustee to affected Certificateholders shall:
(i) specify the Anticipated Termination Date on which
the final distribution is anticipated to be made to Holders of
Certificates specified therein;
(ii) specify the amount of any such final
distribution, if known; and
(iii) state that the final distribution to
Certificateholders will be made only upon presentation and
surrender of Certificates at the office of the Trustee therein
specified.
If the Trust is not terminated on any Anticipated Termination
Date for any reason, the Trustee shall promptly mail notice thereof to each
affected Certificateholder.
(d) Any funds not distributed on the Termination Date because
of the failure of any Certificateholders to tender their Certificates shall be
set aside and held in trust for the account of the appropriate non-tendering
Certificateholders, whereupon the Trust shall terminate. If any Certificates as
to which notice of the Termination Date has been given pursuant to this Section
9.01 shall not have been surrendered for cancellation within six months after
the time specified in such notice, the Trustee shall mail a second notice to the
remaining Certificateholders, at their last addresses shown in the Certificate
Register, to surrender their Certificates for cancellation in order to receive,
from such funds held, the final distribution with respect thereto. If within one
year after the second notice any Certificate shall not have been surrendered for
cancellation, the Trustee may, directly or through an agent, take appropriate
steps to contact the remaining Certificateholders concerning surrender of their
Certificates. The costs and expenses of maintaining such funds and of contacting
Certificateholders shall be paid out of the assets which remain held. If after
the second notice any Certificates shall not have been surrendered for
cancellation, the Trustee shall continue to hold such amounts for the benefit of
such Holders. No interest shall accrue or be payable to any Certificateholder on
any amount held as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section 9.01.
Such funds held by the Trustee may be invested in Permitted Investments and all
income and gain realized from investment of such funds shall be for the benefit
of the Trustee. The Trustee shall indemnify the related Certificateholders
against any loss incurred in respect of any such Permitted Investment
immediately upon realization of such loss.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
SECTION 10.02. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) Except as expressly provided for herein, no
Certificateholder shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to constitute the Certificateholders
from time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as herein before provided, and unless also the
Majority Certificateholders shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 15 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding. It is understood and intended, and expressly
covenanted by each Certificateholder with every other Certificateholder and the
Trustee, that no one or more Holders of Certificates shall have any right in any
manner whatever by virtue of any provision of this Agreement to affect, disturb
or prejudice the rights of the Holders of any other of such Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all Holders of
Certificates. For the protection and enforcement of the provisions of this
Section, each and every Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
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SECTION 10.03. Governing Law.
This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
SECTION 10.04. Notices.
All demands, notices and communications hereunder shall be in
writing, shall be deemed to have been given upon receipt (except that notices to
any Holder of any Class of Certificates (solely in its capacity as such) shall
be deemed to have been given upon being sent by first class mail, postage
prepaid) as follows:
If to the Trustee, to:
THE CHASE MANHATTAN BANK
450 West 33rd Street, 15th floor
New York, New York 10001
Attn: Structured Finance Services
(MBS)-HPT 1996-C1
If to the Depositor, to:
HOSPITALITY PROPERTIES
MORTGAGE ACCEPTANCE CORP.
400 Centre Street
Newton, MA 02158
Telecopy No.: (617) 969-5730
Attn: Tom O'Brien
With a copy to:
SULLIVAN & WORCESTER LLP
One Post Office Square
Boston, MA 02109
Telecopy Number: (617) 338-2880
Attn: Alexander A. Notopoulos, Jr., Esq.
If to the Servicer, to:
AMRESCO MANAGEMENT, INC.
235 Peachtree Street, Suite 900
Atlanta, Georgia 30303
Attn: Legal Counsel
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With a copy to:
WEIL, GOTSHAL & MANGES
767 Fifth Avenue
New York, New York 10153
Attn: Paul T. Cohn, Esq.
If to any Certificateholder, to:
the address set forth in the
Certificate Register,
or to such other address as any of the parties to this Agreement shall specify
by written notice to the other parties hereto.
SECTION 10.05. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then,
to the extent permitted by applicable law, such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect the
validity or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
SECTION 10.06. Notice to Rating Agencies.
(a) The Trustee shall use its best efforts to promptly provide
notice to the Rating Agencies with respect to each of the following of which a
Responsible Officer of the Trustee has actual knowledge:
(i) any material change or amendment to this
Agreement;
(ii) the occurrence of any Event of Default that has
not been cured;
(iii) the resignation or termination of the Trustee
or the Servicer;
(iv) the final payment to the Certificateholders; and
(v) any event that would result in the voluntary or
involuntary termination of any insurance of the accounts of
the Trustee.
In addition, the Trustee shall promptly furnish to the Rating
Agencies copies of each report to Certificateholders described in Section 4.02.
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(b) The Servicer shall promptly furnish to the Rating Agencies
copies of its annual statements as to compliance described in Section 3.16.
(c) Notices to the Rating Agencies shall be addressed as
follows:
Standard and Poor's Rating Services
Commercial Mortgage Surveillance Group
26 Broadway, 15th Floor
New York, New York 10004
Fitch Investors Service, L.P.
Commercial Mortgage Surveillance Group
One State Street Plaza, 33rd Floor
New York, New York 10004
SECTION 10.07. Amendment.
(a) This Agreement may be amended from time to time by the
Depositor, the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity or mistake, to correct or supplement
any provisions herein or therein that may be inconsistent with any other
provisions herein or as required to maintain the rating or ratings assigned to
the Certificates by the Rating Agencies. This Agreement may also be amended from
time to time by the Depositor, the Servicer and the Trustee without the consent
of any Certificateholders to make any other provisions with respect to matters
or questions arising under this Agreement which shall not be inconsistent with
the provisions of this Agreement; provided, however, that such action shall not
adversely affect in any material respect the interests of any Certificateholder,
as evidenced by an Opinion of Counsel reasonably satisfactory to the Trustee
(which shall be at the expense of the party requesting such amendment rating
issued by it or requested by the Trustee in order to clarify any ambiguity or
resolve any), or adversely affect the status of the Trust as a grantor trust
under Subpart E, Part I of Subchapter J of the Code. This Agreement may also be
amended from time to time by the Depositor, the Servicer and the Trustee with
the consent of the Majority Certificateholders for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay
the timing of, payments received on the Mortgage Loan which
are required to be distributed on any Certificate without the
consent of each affected Certificateholder;
(ii) reduce the aforesaid percentage of
Certificates, the Holders of which are required to consent to
any such amendment, without the consent of the Holders of all
Certificates then outstanding;
(iii) alter the Servicing Standards; or
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(iv) adversely affect the status of the Trust as a
grantor trust under Subpart E, Part I of Subchapter J of the
Code.
(b) It shall not be necessary for the consent of
Certificateholders under this Section 10.07 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
(c) Prior to the execution of any amendment to this Agreement,
the Trustee shall be entitled to receive and rely upon an Opinion of Counsel, at
the expense of the party requesting such amendment (or, if such amendment is
required by the Rating Agencies to maintain the rating issued by it or requested
by the Trustee in order to clarify any ambiguity or resolve any inconsistency,
then at the expense of the Trust) stating that the execution of such amendment
is authorized or permitted by this Agreement. The Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Trustee's own
rights, duties or immunities under this Agreement.
SECTION 10.08. No Petition in Bankruptcy.
The Servicer covenants and agrees that prior to the date which
is one year and a day after all Certificates are repaid in full, it will not
institute against or join any other Person in instituting against either
Borrower or the Depositor any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceeding under the laws
of the United States or any State of the United States.
SECTION 10.09. Confidentiality.
Except as may be required by law, the SEC or any securities
and exchange commission, neither the Servicer nor the Trustee shall disclose any
information in violation of the provisions of Sections 3.1.2(d) of the Leases
and Section 20.04 of those certain Management Agreements by and between HPTRI
(as successor in interest to HMH Properties, Inc.) and Residence Inn by
Marriott, Inc. (as amended by that certain First Amendment to Management by and
between HPTRI and Residence Inn by Marriott, Inc. and Section 13.20 of those
certain Amended and Restated Management Agreements dated May 3, 1996 by and
between GHALP Corporation and Wyndham Management Corporation.
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IN WITNESS WHEREOF, the Depositor and the Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized all as of the day and year first above written.
HOSPITALITY PROPERTIES MORTGAGE
ACCEPTANCE CORP., as Depositor
By: /s/ Thomas M. O'Brien
Thomas M. O'Brien
Vice President
THE CHASE MANHATTAN BANK, as Trustee
By: /s/ Ronald Feldman
Name: Ronald Feldman
Title: Vice President
AMRESCO MANAGEMENT, INC., as Servicer
By: /s/ Daniel B. Kirby
Name: David B. Kirby
Title: Senior Vice President
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 25th day of November, 1996, before me, a notary
public in and for the State of New York, personally appeared Thomas M. O'Brien,
known to me who, being by me duly sworn, did depose and say that he resides in
Cambridge, Massachusetts; that he is the Vice President of HOSPITALITY
PROPERTIES MORTGAGE ACCEPTANCE CORP., a Delaware corporation, one of the parties
that executed the foregoing instrument; and that he signed his name thereto by
order of the Board of Directors of said corporation.
/s/ Cleopatra Pyatt
Notary Public
(NOTARIAL SEAL)
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 25th day of November, 1996, before me, a notary public
in and for the State of New York, personally appeared Ronald Feldman, known to
me who, being by me duly sworn, did depose and say that (s)he resides at
Bronxville, New York; that (s)he is the Vice President of THE CHASE MANHATTAN
BANK, a New York banking corporation, one of the parties that executed the
foregoing instrument; and that (s)he signed his name thereto by order of the
Board of Directors of said company.
/s/ Cleopatra Pyatt
Notary Public
(NOTARIAL SEAL)
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 25th day of November, 1996, before me, a notary public
in and for the State of New York, personally appeared Daniel Kirby, known to me
who, being by me duly sworn, did depose and say that (s)he resides at Atlanta,
Georgia; that (s)he is the Senior Vice President of AMRESCO MANAGEMENT, INC., a
Texas corporation, one of the parties that executed the foregoing instrument;
and that (s)he signed his name thereto by order of the Board of Directors of
said company.
/s/ Emily McGrath
Notary Public
(NOTARIAL SEAL)
<PAGE>
EXHIBIT A
[FORM OF CERTIFICATE]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE CERTIFICATE REGISTRAR FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
HOSPITALITY PROPERTIES MORTGAGE ACCEPTANCE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1996-C1
evidencing a non-assessable, fully paid
percentage interest in a trust fund
which includes a commercial mortgage loan
HOSPITALITY PROPERTIES MORTGAGE ACCEPTANCE CORP.,
a Delaware corporation
THIS CERTIFICATE WAS SOLD IN A PRIVATE PLACEMENT, WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). ANY
RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT REGISTRATION THEREOF UNDER THE
1933 ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT AND IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS
5.03 AND 5.09 OF THE TRUST AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN, OR
OBLIGATION OF, THE DEPOSITOR, THE SERVICER, THE TRUSTEE, ANY OF THEIR RESPECTIVE
AFFILIATES OR ANY OTHER PERSON. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOAN IS INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY GOVERNMENTAL
AGENCY OR INSTRUMENTALITY OR ANY INSURER.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL AMOUNT
OF THIS CERTIFICATE WILL BE MADE IN THE MANNER DESCRIBED IN THE
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TRUST AND SERVICING AGREEMENT. ACCORDINGLY, THE OUTSTANDING CERTIFICATE
PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE INITIAL
CERTIFICATE PRINCIPAL AMOUNT REPRESENTED HEREBY.
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Certificate No. _____
Denomination (Initial First Distribution Date:
Certificate Principal December 6, 1996
Balance evidenced by this
Certificate): $__________
Initial Certificate Principal Final Scheduled
Balance of all Certificates: Distribution Date:
$125,000,000 December 6, 2001
CUSIP No. 44106 TAA5
This Certificate is issued pursuant to, and in accordance
with, the terms of a Trust and Servicing Agreement dated as of November 25, 1996
(the "Agreement"), among HOSPITALITY PROPERTIES MORTGAGE ACCEPTANCE CORP. (the
"Depositor"), AMRESCO MANAGEMENT, INC., as servicer (the "Servicer"), and THE
CHASE MANHATTAN BANK, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which are set forth herein. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound. To the extent not defined
herein, capitalized terms used herein shall have the meanings assigned thereto
in the Agreement.
This certifies that _________________ is the registered owner
of the Percentage Interest evidenced by this Certificate in the distributions to
be made with respect to the Certificates. The Trust Fund, described more fully
below, consists primarily of the Mortgage Loan held in the trust by the Trustee
and serviced by the Trustee or the Servicer, as set forth in the Agreement. The
Trust was created, and the Mortgage Loan is to be serviced, pursuant to the
Agreement.
The Trustee and the Certificate Registrar make no
representation or warranty as to any of the statements contained herein or the
validity or sufficiency of this Certificate or the Mortgage Loan. The Trustee
has executed this Certificate in its limited capacity as Trustee under the
Agreement, and the Certificate Registrar has authenticated this Certificate in
its limited capacity as Certificate Registrar under the Agreement.
Pursuant to the terms of the Agreement, the Trustee will make
distributions at such times as provided in the Agreement, to the Person in whose
name this Certificate is registered as of the related Record Date, in an amount
equal to such Person's pro rata share (based on the Percentage Interest
represented by this Certificate) of that portion of the aggregate amount of
principal and interest then distributable, all as more fully described in the
Agreement.
With the exception of the final distribution in respect of
this Certificate, distributions on this Certificate will be made by the Trustee,
without the presentation or surrender of this Certificate or the making of any
notation hereon, by (i) wire transfer of immediately available funds to an
account of such Certificateholder maintained in the United States at any bank or
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other entity having appropriate facilities for receiving such a wire transfer,
provided (A) such Certificateholder has provided the Trustee with wire
instructions in writing at least five Business Days before the related Record
Date and (B) such Certificateholder shall be the holder of not less than 5% of
the aggregate Certificate Principal Balance of the Certificates, or (ii) check
mailed by first class mail to such Certificateholder the address set forth
therefor in the Certificate Register. The final distribution on this Certificate
will be made after notice by the Trustee of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the Corporate
Trust Office or such other location specified in such notice.
This Certificate is one of a duly authorized issue of
Certificates designated as Hospitality Properties Mortgage Acceptance Corp.,
Commercial Mortgage Pass-Through Certificates, Series 1996-C1 and representing a
fractional undivided interest in a Trust Fund consisting of the assets of the
Trust, including (i) the Mortgage Loan, (ii) all payments on or collections in
respect of the Mortgage Loan as provided in the Agreement, (iii) property that
secured the Mortgage Loan and which has been acquired by foreclosure or deed in
lieu of foreclosure and all revenues received with respect thereto, (iv) all
rights of the Trustee under all insurance policies required to be maintained
with respect to the Mortgage Loan, (v) such assets as are deposited in the
Collection Account (to the extent provided in the Agreement), the Certificate
Account and the REO Account and (vi) such other assets as provided in the
Agreement.
This Certificate is limited in right of payment to, among
other things, certain collections and recoveries respecting the Mortgage Loan,
all as more specifically set forth herein and in the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby and the rights,
duties and immunities of the Trustee.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register only upon surrender of this Certificate for
registration of transfer at the office of the Certificate Registrar or at the
Corporate Trust Office and satisfaction of the conditions set forth in Sections
5.02 and 5.09 of the Agreement. This Certificate must be accompanied by a
written instrument of assignment and transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing. Thereupon one or more new
Certificates of a like aggregate Denomination will be executed by the Trustee
and authenticated and delivered by the Certificate Registrar to the designated
transferee or transferees.
Prior to due presentation of this Certificate for registration
of transfer, the Servicer, the Trustee, the Certificate Registrar, and any agent
of any of them, may treat the Person in whose name this Certificate is
registered as the owner hereof for the purpose of receiving distributions and
for all other purposes whatsoever, and none of the Trustee, the Certificate
Registrar, the Servicer and any agent of any of them shall be affected by notice
to the contrary.
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<PAGE>
As provided in the Agreement and subject to certain
limitations herein set forth, this Certificate is exchangeable for other
Certificates of like aggregate Denominations, as requested by the Holder
surrendering the same.
No service charge will be made to a Certificateholder for any
such registration of transfer or exchange, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Agreement permits, with certain exceptions therein
provided, the amendment of the Agreement and the modification of the rights of
the Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the consent of the Majority Certificateholders.
Any such consent by the Holder of this Certificate shall be conclusive and
binding on such Holder and upon all future Holders of this Certificate and of
any Certificates issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof in certain
circumstances without the consent of the Holders of any of the Certificates,
provided that such amendment would not adversely affect in any material respect
the interests of any Certificateholder.
The obligations created by the Agreement shall terminate upon:
(i) the purchase of the Mortgage Loan by the Majority Certificateholder pursuant
to the terms of Section 9.01 of the Agreement, and the remittance to
Certificateholders of all funds due under the Agreement; or (ii) the later of
(a) the distribution to Certificateholders of final payment or other liquidation
with respect to the Mortgage Loan or (b) the disposition of all Mortgaged
Property acquired upon foreclosure or deed in lieu of foreclosure with respect
to the Mortgage Loan and the remittance to all Certificateholders of all funds
due under the Agreement; or (iii) the mutual consent of the parties and all
Certificateholders in writing. In no event, however, will the trust created by
this Agreement or any successor trust continue beyond the expiration of 21 years
from the death of the last surviving descendant of a certain individual named in
the Agreement living on the date thereof.
Unless the Certificate of Authentication on this Certificate
has been executed by or on behalf of the Certificate Registrar, by manual
signature, this Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
THE CHASE MANHATTAN BANK,
not in its individual capacity
but solely as Trustee
-----------------------------------
Authorized Officer
This is one of the Certificates referred to in the within-referenced Agreement.
Date:
THE CHASE MANHATTAN BANK,
not in its individual capacity
but solely as Certificate Registrar
- -----------------------------------
Authorized Officer
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<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned ("Assignor(s)") hereby sell(s), assign(s)
and transfer(s) unto __________________________________________________________
________________________________________________________________________________
(Please print or typewrite name(s) and address(es), including postal zip code of
assignee(s) ("Assignee(s)")) the entire Percentage Interest represented by the
within Certificate and hereby authorize(s) the transfer of registration of
transfer of such interest to Assignee(s) on the Certificate Register of the
Trust.
I (we) further direct the Certificate Registrar to issue a new Certificate of
the entire Percentage Interest represented by the within Certificate to the
above-named Assignee(s) and deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Date:__________________ ___________________________
Signature by or on behalf
of Assignor(s)
---------------------------
Taxpayer Identification Number
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DISTRIBUTION INSTRUCTIONS
The Assignee(s) should include the following for purposes of distribution:
Distributions shall be made by wire transfer in immediately available funds to
______________________________________________________________________ for the
account of ____________________________________________________ account number
________________.
This information is provided by ________________________________, the Assignees
named above, or __________________________________ as its (their) agent.
By:________________________________
________________________________
[Please print or type name(s)]
________________________________
Title
________________________________
Taxpayer Identification Number
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<PAGE>
[FORM OF TRANSFEREE CERTIFICATE]
[Letterhead of Prospective Purchaser
or U.S. Registered Broker-Dealer]
Date:
Dear Sirs:
I. In connection with our purchase of $__________ aggregate
principal amount of Hospitality Properties Mortgage Acceptance Corp., Commercial
Mortgage Pass-Through Certificates, Series 1996-C1 (the "Certificates") from
__________________________ the undersigned hereby represents and confirms that:
[Check One]
[ ] each new beneficial owner is an institutional investor and
an "accredited investor" (as defined in Rule 501(a)(1), (2),
(3) or (7) under the 1933 Act); it is acquiring the
Certificates purchased by it for its own account or for one or
more accounts as to each of which it exercises sole investment
discretion.
[ ] each new beneficial owner is a "Qualified Institutional
Buyer" (as such term is defined under Rule 144A under the 1933
Act) that is acquiring the Certificate for its own account or
for the account of a Qualified Institutional Buyer; and
that is acquiring the Certificates for investment purposes and not for
distribution; it has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of its investment in
the Certificates, and it and any accounts for which it is acting are each able
to bear the economic risk of its investment; and, if it is a Qualified
Institutional Buyer acquiring the Certificates from a party other than
Hospitality Properties Mortgage Acceptance Corp., it has been advised that the
offer, sale, pledge or transfer of such Certificates to such beneficial owner is
being made in reliance upon Rule 144A of the 1933 Act.
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<PAGE>
If this letter is being filled out by a prospective purchaser,
the undersigned purchaser confirms that the Certificates will only be
transferred in accordance with (i) the provisions of Article V of the Trust and
Servicing Agreement, dated as of November 25, 1996 (the "Trust and Servicing
Agreement") among HOSPITALITY PROPERTIES MORTGAGE ACCEPTANCE CORP., as
depositor, AMRESCO MANAGEMENT, INC. as servicer, and THE CHASE MANHATTAN BANK,
as trustee, a copy of which has been previously delivered to it, and (ii) the
legend on the Certificates.
II. If this letter is being completed by a U.S. registered
broker-dealer on behalf of the transferee, the undersigned broker-dealer
confirms that (a) it has delivered to the transferee a copy of the Trust and
Servicing Agreement, or a notice regarding the restrictions on transfer of the
Certificates by such transferee as set forth in the legend on the Certificates
and (b) to the best of its knowledge, the information provided herein about the
transferee is true and correct.
You are entitled to rely upon this letter and you are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
[Name of Prospective Purchaser or U.S. Registered
Broker-Dealer]
By:________________________________
Title:
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<PAGE>
EXHIBIT B
[FORM OF REQUEST FOR RELEASE]
[Letterhead of Servicer]
Request for Release
Date________________________
To: The Chase Manhattan Bank
2 Chase Manhattan Plaza
20th Floor
New York, NY 10081
Attn: Structured Finance Services (MBS) - HPT 1996-C1
Re: Hospitality Properties Mortgage Acceptance Corp., Commercial Mortgage
Pass-Through Certificates, Series 1996-C1
- ---------------
______ Release papers (copies of which are enclosed herewith) are
requested subject to collection of amount due
______ Release papers (copies of which are enclosed herewith) are
requested in connection with repayment received on: _________
______ Papers (copies of which are enclosed herewith) are requested
for assignment to:
____________________ in connection with repayment received on
____________
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<PAGE>
______ Papers (copies of which are enclosed herewith) are requested
for preparation of partial release of Mortgaged Property
described as:
Mortgage loan documents (copies of which are enclosed
herewith) are requested in connection with:
______ Loan has been liquidated
______ Mortgaged Property transferred to REO
______ Other (specify reason):
Mortgage loan documents indicated (copies of which are
enclosed herewith) are requested in connection with the
foreclosure of the loan:
______ Note
______ Mortgage
______ Other:_________________________________________________
Documents requested (copies of which are enclosed herewith):
______ are to be executed by the Trustee
______ are not to be executed by the Trustee
Funds in payment of the amounts due which are required to be
deposited in the Lockbox Account pursuant to Section 3.05 of
the Trust and Servicing Agreement:
______ have been deposited in the Lockbox Account
______ will be deposited in the Lockbox Account
----------------------------------
[Servicer Officer]
Please forward the above requested documents or papers to the
following address:
[Complete Mailing Address] [No P.O. Box, please]
Attn:____________________________________________
- ------------------------------------------------------------------------------
PLEASE DO NOT WRITE BELOW THIS LINE (FOR TRUSTEE'S USE)
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