Document:

ex10-57.htm

 

EXHIBIT 10.57

 

ASSIGNMENT OF MANAGEMENT AGREEMENT AND

SUBORDINATION OF MANAGEMENT FEES

 

THIS ASSIGNMENT OF MANAGEMENT AGREEMENT AND SUBORDINATION OF MANAGEMENT FEES (this “Assignment”) is made as of the 9th day of April, 2013, by MOODY NATIONAL HP G-TOWN HOLDING, LLC, a Delaware limited liability company, having an address at c/o Moody National REIT I, Inc., 6363 Woodway, Suite 110, Houston, Texas 77057, (together with its permitted successors and assigns, collectively “Borrower”) to LADDER CAPITAL FINANCE LLC, a Delaware limited liability company, having an address at 345 Park Avenue, 8th Floor, New York, New York 10154 (together with its successors and assigns, collectively, “Lender”), and is consented and agreed to by MOODY NATIONAL HOSPITALITY MANAGEMENT, LLC, a Texas limited liability company, having its principal place of business at c/o Moody National REIT I, Inc., 6363 Woodway, Suite 110, Houston, Texas 77057 (together with its permitted successors and assigns, collectively, “Manager”) and by MOODY NATIONAL HP G-TOWN MT, LLC, a Delaware limited liability company, having it principal place of business at c/o Moody National REIT I, Inc., 6363 Woodway, Suite 110, Houston, Texas 77057 (together with its permitted successors and assigns collectively, “Master Tenant”).

RECITALS:

 

A.           Borrower, by its Promissory Note of even date herewith given to Lender (together with all extensions, renewals, modifications, substitutions and amendments thereof, the “Note”) is indebted to Lender in the principal sum of Seven Million Eight Hundred Thousand and 00/100 ($7,800,000.00) advanced pursuant to the Loan Agreement of even date herewith between Borrower and Lender (together with all extensions, renewals, modifications, substitutions and amendments thereof, the “Loan Agreement”), in lawful money of the United States of America, with interest from the date thereof at the rates set forth in the Note (the indebtedness evidenced by the Note, together with such interest accrued thereon, shall collectively be referred to as the “Loan”), principal and interest to be payable in accordance with the terms and conditions provided in the Note.

 

B.           The Loan is secured by, among other things, a Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (the “Mortgage”), dated as of the date hereof, given by Borrower for the benefit of Lender, which grants Lender a first lien on the property encumbered thereby (the “Property”).  The Note, the Loan Agreement, the Mortgage, this Assignment and any of the other documents evidencing or securing the Loan, together with all extensions, renewals, modifications, substitution amendments of any thereof, are collectively referred to as the “Loan Documents”.

 

C.           Pursuant to a certain Master Lease, Borrower has master leased the Property to Master Tenant.

 

  

  

  

 

D.           Pursuant to a certain Management Agreement dated of even date herewith, between Master Tenant and Manager (as amended or modified from time to time, the “Management Agreement”) (a true and correct copy of which Management Agreement is attached hereto as Exhibit A), Master Tenant employed Manager exclusively to rent, lease, operate and manage the Property and Manager is entitled to certain management fees (the “Management Fees”) thereunder.

 

E.           Pursuant to the terms of that certain Assignment of Leases and Rents and Security Agreement, dated as of the date hereof and intended to be duly recorded, Master Tenant has assigned, inter alia, to Borrower as security for Master Tenant’s obligations under the Master Lease, all of Master Tenant’s right, title and interest in and to the Management Agreement.

 

F.           Lender requires as a condition to the making of the Loan that Borrower collaterally assign the Management Agreement to Lender and that Manager subordinate its interest in the Management Fees in lien and payment to the Mortgage as set forth below and Borrower and Manager each acknowledges that without this Assignment, Lender would not make the Loan and without such Loan, Borrower may be unable to finance the acquisition of the Property and, in such case, Master Tenant would be unable to operate the Property pursuant to the Master Lease and Manager would be unable to manage the Property pursuant to the Management Agreement.

 

AGREEMENT

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.           Assignment and Subordination of Management Agreement.  As additional collateral security for the Loan, Borrower hereby conditionally transfers, sets over and assigns to Lender all of Borrower’s right, title and interest in and to the Management Agreement, said transfer and assignment to automatically become a present, unconditional assignment, at Lender’s option, in the event of a default under the Note, the Loan Agreement, the Mortgage or any of the other Loan Documents, including but not limited to escrow agreements, and the failure of Borrower and/or Master Tenant to cure such default within any applicable grace period; and

 

2.           Subordination of Management Fees.  Manager hereby agrees that the Management Agreement, the Management Fees and any and all liens, rights and interests (whether choate or inchoate and including, without limitation, all mechanic’s and materialmen’s liens under applicable law) owed, claimed or held by Manager in and to the Property pursuant to the Management Agreement, are, and shall be in all respects, subordinate and inferior to the Liens and security interests created, or to be created, for the benefit of Lender, and securing the Obligations under the Loan Agreement and the other Loan Documents, and to any renewals, extensions, modifications, assignments, replacements or consolidations thereof, and to the rights, privileges and powers of Lender thereunder.

 

3.           Estoppel.  Each of Borrower and Manager represents and warrants that (a) the Management Agreement is in full force and effect and has not been modified, amended or assigned other than pursuant to this Assignment, (b) neither Manager nor Master Tenant is in default under 

 

  

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any of the terms, covenants or provisions of the Management Agreement and neither Borrower or Manager knows of any event which, but for the passage of time or the giving of notice or both, would constitute an event of default by either Master Tenant or Manager under the Management Agreement, (c) neither Manager nor Master Tenant has commenced any action or given or received any notice for the purpose of terminating the Management Agreement and (d) the Management Fees and all other sums due and payable to Manager under the Management Agreement have been paid in full, as of the date hereof.

 

4.           Agreement by Borrower and Manager.  Borrower and Manager hereby agree that in the event of a default (continuing beyond any applicable grace period) under the Note, the Mortgage, the Loan Agreement or any of the other Loan Documents (each, an “Event of Default”) during the term of this Assignment or upon the occurrence of any event which would entitle Lender to terminate (or cause Borrower or Master Tenant to terminate) the Management Agreement in accordance with Section 7.3 of the Loan Agreement, Lender may terminate (or cause Borrower or Master Tenant to terminate) the Management Agreement and require Manager to transfer its responsibility for the management of the Property to a management company selected by Lender in Lender’s sole discretion, effective as of the date set forth in Lender’s notice to Manager.  Manager shall apply all rents, security deposits, issues, proceeds and profits of the Property in accordance with Lender’s written directions to Manager.

 

5.           Lender’s Right to Replace Manager.  In addition to the foregoing, in the event that Lender, in Lender’s reasonable discretion, at any time during the term of this Assignment, determines that the Property is not being managed in accordance with generally accepted management practices for properties similar to the Property, Lender shall deliver written notice thereof to Borrower, Master Tenant and Manager, which notice shall specify with particularity the grounds for Lender’s determination.  If Lender reasonably determines that the conditions specified in Lender’s notice are not remedied to Lender’s reasonable satisfaction by Borrower, Master Ternant or Manager within thirty (30) days from receipt of such notice or that Borrower, Master Tenant or Manager have failed to diligently undertake correcting such conditions within such thirty (30)-day period, Lender may direct Borrower to terminate (or cause Master Tenant to terminate) Manager as manager of the Property and terminate the Management Agreement and to replace Manager with a management company acceptable to Lender in Lender’s sole discretion.

 

6.           Receipt of Management Fees. (a) Subject to the terms of Paragraph 6(b) hereof, Manager shall not be obligated to return or refund to Lender any Management Fees or other fee, commission or other amount received by Manager prior to the occurrence of the Event of Default, and to which Manager was entitled under the Management Agreement.

 

  (b)          Manager’s Compensation.  Manager agrees that, notwithstanding anything to the contrary contained in the Management Agreement, Manager shall not be entitled to receive compensation for its services conducted in connection with the Property in excess of 3.0% of gross rent collected from the Property.

 

7.           Consent and Agreement by Manager.  Manager hereby acknowledges and consents to the terms and provisions of this Assignment and Section 7.3 of the Loan Agreement.  Manager agrees that it will act in conformity with the provisions of this Assignment and Lender’s rights hereunder or otherwise related to the Management Agreement.  In the event that the responsibility

 

  

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for the management of the Property is transferred from Manager in accordance with the provisions hereof, Manager shall fully cooperate in transferring its responsibility to a new management company and effectuate such transfer no later than thirty (30) days from the date the Management Agreement is terminated.  Further, Manager shall (a) not contest or impede the exercise by Lender of any right it has under or in connection with this Assignment; (b) in the manner provided for in this Assignment, give at least thirty (30) days prior written notice to Lender of its intention to terminate the Management Agreement or otherwise discontinue its management of the Property and (c) not amend any of the provisions or terms of the Management Agreement without the prior consent of Lender.

 

8.           Termination.  At such time as the Loan is paid in full and the Mortgage is released or assigned of record, this Assignment and all of Lender’s right, title and interest hereunder with respect to the Management Agreement shall terminate.

 

9.           Notices.  All notices or other communications hereunder shall be in writing and shall be given in accordance with Section 11.6 of the Loan Agreement.  Any notice or other communication to Manager shall be addressed as follows (or at such other address and person as shall be designated by Manager from time to time):

 

	 	      If to Manager:  	Moody National Hospitalty Management, LLC	 
	 	 	c/o Moody National REIT I, Inc.	 
	 	 	6363 Woodway, Suite 110	 
	 	 	Houston, Texas 77057	 
	 	 	Attention: Brett C. Moody	 

10.           No Oral Change.  This Assignment, 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 Borrower, Master Tenant, Lender or Manager, 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.

 

11.           Liability.  This Assignment shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and permitted assigns forever.  Lender shall have the right to assign or transfer its rights under this Assignment in connection with any assignment of the Loan and the Loan Documents.  Any assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Assignment.  Neither Borrower nor Manager shall have the right to assign or transfer its rights or obligations under this Assignment without the prior written consent of Lender, as provided in the Loan Agreement, and any attempted assignment without such consent shall be null and void.

 

12.           Inapplicable Provisions.  If any provision of this Assignment is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Assignment, such provision shall be fully severable and this Assignment shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Assignment, and the remaining provisions of this Assignment shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Assignment, 

 

  

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unless such continued effectiveness of this Assignment, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein..

 

13.           Governing Law.  (a) THIS ASSIGNMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY BORROWER, CONSENTED TO BY MASTER TENANT AND MANAGER AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS ASSIGNMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, 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 WITH RESPECT TO THE PROPERTY SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE 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 CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER.  TO THE FULLEST EXTENT PERMITTED BY LAW, MASTER TENANT, BORROWER AND MANAGER EACH HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS ASSIGNMENT, THE NOTE AND/OR THE OTHER LOAN DOCUMENTS AND THIS ASSIGNMENT, THE NOTE AND/OR THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

(b)          ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER, BORROWER OR MANAGER ARISING OUT OF OR RELATING TO THIS ASSIGNMENT MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND IN ANY FEDERAL OR STATE COURT OF THE STATE OF TENNESSEE, AND BORROWER AND MANAGER WAIVE ANY OBJECTIONS WHICH THEY MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND MASTER TENANT AND MANAGER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.

 

  

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NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST MASTER TENANT OR MANAGER IN ANY OTHER JURISDICTIONS.

 

14.           Headings, etc.  The headings and captions of the various paragraphs of this Assignment 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.

 

15.           Waiver Of Trial By Jury.  BORROWER AND MANAGER AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND FOREVER WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST, WITH REGARD TO THIS ASSIGNMENT, THE NOTE, THE MORTGAGE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND MANAGER 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 AND MANAGER.

 

16.           Duplicate Originals, Counterparts.  This Assignment may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original.  This Assignment may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Assignment.  The failure of any party hereto to execute this Assignment, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

 

17.           Number and Gender.  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.

 

18.           Secondary Market.  Lender may sell, transfer and deliver the Note and assign the Mortgage, this Assignment and the other Loan Documents to one or more investors in the secondary mortgage market (“Investors”).  In connection with such sale, Lender may retain or assign responsibility for servicing the Loan, including the Note, the Mortgage, this Assignment and the other Loan Documents, or may delegate some or all of such responsibility and/or obligations to a servicer including, but not limited to, any subservicer or master servicer, on behalf of the Investors.  All references to Lender herein shall refer to and include any such servicer to the extent applicable.

 

19.           Lender’s Reliance on Representations.  Manager has executed this Agreement in order to induce Lender to accept the Mortgage and the Loan Documents and with full knowledge that Lender shall rely upon the representations, warranties and agreements herein contained, and 

 

  

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that but for this Assignment and the representations, warranties and agreements herein contained, Lender would not take such actions.

 

20.           Miscellaneous.  (a) Wherever pursuant to this Assignment (i) Lender exercises any right given to it to approve or disapprove any matter, (ii) any arrangement or term is to be satisfactory to Lender, or (iii) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove such matter, all decisions that arrangements or terms are satisfactory or not satisfactory to Lender and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

 

(b)          Wherever pursuant to this Assignment it is provided that Borrower shall pay any costs and expenses, such costs and expenses shall include, but not be limited to, legal fees and disbursements of Lender, whether retained firms, the reimbursement for the expenses of in-house staff or otherwise.

 

21.           Cash Management.  Manager hereby agrees that, notwithstanding any provision to the contrary set forth herein or in the Management Agreement, (i) Manager shall comply, to the extent applicable, with the provisions of the Loan Agreement and the Cash Management Agreement, final copies of which Manager acknowledges receiving, and (ii) in the event of a conflict between the terms hereof and/or of the Management Agreement, on the one hand, and the terms of the Loan Agreement and/or the Cash Management Agreement, on the other hand, the terms of the Loan Agreement and/or the Cash Management Agreement shall govern.

 

22.           Inconsistencies.  In the event of any inconsistency between the terms and conditions hereof and the terms and conditions of the Management Agreement, the terms and conditions set forth in this Assignment shall govern.

 

23.           Master Lease.  Lender acknowledges that Master Tenant is the “owner” pursuant to the Management Agreement as of the Closing Date, and that as collateral security for Master Tenant’s obligations under the Master Lease, Master Tenant has granted to Borrower a security interest in and to all assets of Master Tenant, including, without limitation, the Management Agreement, which security interest has been collaterally assigned to Lender pursuant to the Collateral Assignment of Subleases.  This Assignment is supplemental to and not in lieu of such security interests contemplated by the Master Lease.

 

[NO FURTHER TEXT ON THIS PAGE]

 

  

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IN WITNESS WHEREOF the undersigned have executed this Assignment of Management Agreement and Subordination of Management Fees as of the date and year first written above.

 

	 	BORROWER:	 
	 	 	 	 
	 	MOODY NATIONAL HP G-TOWN HOLDING, LLC,	 
	 	a Delaware limited liability company	 
	 	 	 
	
 

	
By: 

	/s/ Brett C. Moody	 
	 	 	Name: Brett C. Moody	 
	 	 	Title: President 	 

 

	Consented and Agreed to by:	 
	 	 
	 MASTER TENANT :	 
	 	 
	MOODY NATIONAL HP G-TOWN MT, LLC,
	a Delaware limited liability company	 
	 	 
	
By: 

	/s/ Brett C. Moody	 
	 	Name: Brett C. Moody 	 
	 	Title: President	 

 

	
MANAGER:

	 
	 	 
	
MOODY NATIONAL HOSPITALITY MANAGEMENT, LLC,

	a Texas limited liability company	 
	 	 
	
By: 

	/s/ Brett C. Moody	 
	 	Name: Brett C. Moody 	 
	 	Title:   President	 

 

[Signature Page to Assignment of Management Agreement]

 

  

  

  

EXHIBIT A

MANAGEMENT AGREEMENT

(Attached hereto)

 

Exhibit A - 1ex10-58.htm

 

EXHIBIT 10.58

 

GUARANTY OF RECOURSE OBLIGATIONS

 

This GUARANTY OF RECOURSE OBLIGATIONS (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “Guaranty”) is executed as of April 9, 2013 by BRETT C. MOODY, a natural person, having an address at 5 Derham Parc, Houston, Texas 77024 (together with his permitted successors and assigns, “Guarantor”), for the benefit of LADDER CAPITAL FINANCE LLC, a Delaware limited liability company, having an address at 345 Park Avenue, 8th Floor, New York, New York 10154 (together with its successors and assigns, collectively, “Lender”).

 

W I T N E S S E T H:

 

A. Pursuant to that certain Promissory Note, dated of even date herewith, executed by Moody National HP G-Town Holding, LLC, a Delaware limited liability company (together with its permitted successors and assigns, collectively, “Borrower”) and payable to the order of Lender in the original principal amount of SEVEN MILLION EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($7,800,000.00) (together with all renewals, modifications, increases and extensions thereof, the “Note”), Borrower has become indebted, and may from time to time be further indebted, to Lender with respect to a loan (the “Loan”) which is made pursuant to that certain Loan Agreement, dated of even date herewith, between Borrower and Lender (as the same may be amended, modified, supplemented, replaced or otherwise modified from time to time, the “Loan Agreement”), which Loan is secured by that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing of even date herewith (as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Mortgage”), and further evidenced, secured or governed by other instruments and documents executed in connection with the Loan.  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

 

B. Lender is not willing to make the Loan, or otherwise extend credit, to Borrower unless Guarantor unconditionally guarantees payment and performance to Lender of the Guaranteed Obligations (as herein defined).

 

C. Guarantor is the owner of direct or indirect interests in Borrower, and, therefore, Guarantor will directly benefit from Lender making the loan to Borrower.

 

NOW, THEREFORE, as an inducement to Lender to make the Loan to Borrower and to extend such additional credit as Lender may from time to time agree to extend under the Loan Documents, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

 

  

  

  

 

ARTICLE 1

NATURE AND SCOPE OF GUARANTY

 

Section 1.1 Guaranty of Obligations.  Guarantor hereby irrevocably and unconditionally guarantees to Lender and its successors and assigns the payment and performance of the Guaranteed Obligations as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise.  Guarantor hereby irrevocably and unconditionally covenants and agrees that it is liable for the Guaranteed Obligations as a primary obligor.

 

Section 1.2 Definition of Guaranteed Obligations.

 

(a) Guarantor hereby assumes liability as a primary obligor for, hereby unconditionally guarantees payment to Lender of, hereby agrees to pay, protect, defend and save Lender harmless from and against, and hereby indemnifies Lender from and against, any and all liabilities, obligations, losses, damages (including those resulting from the diminution in value of the Property, to the extent of any deficiency in respect of the Guaranteed Obligations), costs and expenses (including, without limitation, attorneys’ fees and costs), causes of action, suits, claims, demands and judgments, of any nature or description whatsoever, which may at any time be imposed upon, incurred by or awarded against Lender as a result of any of the following:

 

(i) the breach of any representation, warranty, covenant or indemnification provision in the Environmental Indemnity, the Mortgage or any other Loan Document concerning environmental laws, hazardous substances and asbestos and any indemnification of Lender with respect thereto in any such document;

 

(ii) material physical waste or, after the occurrence and during the continuance of an Event of Default, the removal or disposal of any portion of the Property without replacement in accordance with the Loan Documents;

 

(iii) the misapplication, misappropriation or conversion by Borrower or Master Tenant of (A) any Insurance Proceeds paid by reason of any loss, damage or destruction to the Property, (B) any Awards or other amounts received in connection with the Condemnation of all or a portion of the Property, (C) any Gross Revenues (including, without limitation, lease termination payments and any security deposits, advance deposits or any other deposits collected with respect to the Property (including the failure to deliver any such deposits to Lender upon a foreclosure of the Property or an action in lieu thereof, except to the extent any such deposits were applied in accordance with the terms and conditions of the applicable Lease), or (D) Reserve Funds disbursed to Borrower in accordance with Section 6.11.3(b) of the Loan Agreement and not promptly remitted to the applicable Governmental Authorities;

 

(iv) the failure to pay charges for labor or materials or other charges that can create Liens on the Property, to the extent such Liens are not bonded over or discharged

 

  

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in accordance with the Loan Documents and to the extent that Gross Revenues of the Property net of all Cash Flow Requirements (as hereinafter defined) actually paid are sufficient to pay such amounts, provided that the foregoing shall not apply to the extent that during the continuance of a sweep of Excess Cash Flow pursuant to Section 6.9 of the Loan Agreement there are sufficient funds as aforesaid however Lender has not made such funds available to Borrower or Master Tenant to pay the charges described above.  As used in this clause (iv), Cash Flow Requirements, with respect to charges for labor or materials or other charges that can create Liens on the Property, such charges shall only be included in such definition if they are for normal, day-to-day and customary expenses of owning and operating the Property and not for Extraordinary Expenses or Capital Expenditures unless the same have been approved by Lender;

 

(v) the failure to pay Taxes, to the extent that the Master Tenant is not timely paying same and to the extent that Gross Revenues of the Property, net of all Cash Flow Requirements actually paid, are sufficient to pay such Taxes, provided that the foregoing shall not apply to the extent that Lender has not paid Taxes to the extent that Tax Funds are held in the Tax Account pursuant to Section 6.3 of the Loan Agreement and provided further that the foregoing shall not apply to the extent that (A) Guarantor would otherwise be liable under this subsection (v) and (B) during the continuance of a Cash Trap Period, Lender has not made funds available to Borrower to pay the Taxes described above;

 

(vi) the failure to obtain and maintain the fully paid for Policies in accordance with Section 5.1 of the Loan Agreement to the extent that the Master Tenant is not timely paying the Insurance Premiums when due or maintaining the same and to the extent that Gross Revenues of the Property, net of all Cash Flow Requirements actually paid, are sufficient to pay such Insurance Premiums when due, provided that the foregoing shall not apply to the extent that Lender has not paid Insurance Premiums to the extent that Insurance Funds are held in the Insurance Account pursuant to Section 6.4 of the Loan Agreement and provided further that the foregoing shall not apply to the extent that (A) Guarantor would otherwise be liable under this subsection (vi) and (B) during the continuance of a  Cash Trap Period, Lender has not made funds available to Borrower to pay the Insurance Premiums described above;

 

(vii) the commission of a criminal act by Borrower, Master Tenant, or any Guarantor;

 

(viii) any exercise by Master Tenant of any right of set-off or abatement with respect to Base Rent (as defined in the Master Lease) as a result of a default by Borrower over which Borrower has control under the Master Lease and to the extent that Gross Revenues of the Property, net of all Cash Flow Requirements actually paid, are sufficient to pay such amounts as would have been required to be paid by Borrower to avert such setoff or abatement provided that the foregoing shall not apply to the extent that (A) Guarantor would otherwise be liable under this subsection (viii) and (B) during the 

 

  

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continuance of a sweep of a Cash Trap Period, Lender has not made funds available to Borrower to pay the charges described above;

 

(ix) the amendment or modification of the Master Lease, in each case without Lender’s prior written consent;

 

(x) any intentional misrepresentation in the provisions of Section 3.1.45 of the Loan Agreement unless such misrepresentation can be cured by Borrower, Master Tenant, or Guarantor promptly without harm to Lender or the Collateral;

 

(xi) (A) Borrower fails to comply with any representation, warranty or covenant set forth in Sections 3.1.24 or 4.1.15 of the Loan Agreement (unless such breach results in the substantive consolidation of the Borrower in a bankruptcy, insolvency or similar proceeding of any Person as referred to in sub-paragraph 1.2(b)(iii)(A) below) or (B) Master Tenant fails to comply with any representation, warranty or covenant set forth in Section 12 of the Master Lease Subordination Agreement with regard to Master Tenant’s qualification as a Special Purpose Entity (unless such breach results in the substantive consolidation of Master Tenant in a bankruptcy, insolvency or similar proceeding of any Person as referred to in sub-paragraph 1.2(b)(iii)(B) below); or

 

(xii) Intentionally omitted;

 

(xiii) in connection with the Loan or the Property (including, without limitation, any Lease), Borrower, Master Tenant, any Guarantor, or any Affiliate of Borrower, Master Tenant, or of any Guarantor that is controlled by Guarantor, engages in any action constituting an intentional material misrepresentation or gross negligence; or

 

(xiv) the termination, surrender or cancellation of the Franchise Agreement by Master Tenant without Lender’s prior written consent or the termination or cancellation of the Franchise Agreement by Franchisor (as a result of the action or omission of Borrower or Master Tenant) prior to the expiration date of the Franchise Agreement unless such termination or cancellation is solely the result of Master Tenant’s failure to pay the franchise fees and other charges due under the Franchise Agreement and such failure to pay is solely the result of Gross Revenues of the Property, net of all Cash Flow Requirements actually paid, being insufficient to pay such amounts provided that the foregoing shall not apply to the extent that (A) Guarantor would otherwise be liable under this subsection (xiv) and (B) during the continuance of a Cash Trap Period, Lender has not made funds available to Borrower to pay the charges described above.

 

As used herein, the term “Cash Flow Requirements” shall collectively mean all Debt Service for a particular period and any other amounts payable to Lender hereunder or under the other Loan Documents for such period, or otherwise due and payable in respect of the ownership and operation of the Property during such period.

 

  

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Notwithstanding anything to the contrary contained herein, Guarantor shall have no personal liability for losses suffered as a result of (1) the failure to timely pay Taxes, (2) the failure to obtain and maintain fully paid for Policies in accordance with Section 5.1 of the Loan Agreement, (3) the failure to pay for labor or materials or other charges that actually create Liens on the Property or (4) the termination of the Franchise Agreement solely due to the Master Tenant’s failure to pay the franchise fees and other charges due under the Franchise Agreement so long as any such failure to pay arises during the continuance of a Cash Trap Period and Lender has not made funds available to Borrower or Master Tenant to pay the Taxes, Insurance Premiums, charges which result in Liens or franchise fees and other charges due under the Franchise Agreement, as the case may be.

 

(b) In addition to, and without limiting the generality of, the foregoing clause (a), and notwithstanding anything to the contrary set forth in this Guaranty or in any of the other Loan Documents, Guarantor hereby acknowledges and agrees that the Obligations shall be fully recourse to Guarantor in the event that:

 

(i) in connection with the Loan or the Property (including, without limitation, any Lease), Borrower, Master Tenant, any Guarantor or any Affiliate of Borrower, Master Tenant, or of any Guarantor that is controlled by any Guarantor, engages in any action constituting fraud or willful misconduct;

 

(ii) the first Monthly Debt Service Payment under the Note is not paid in full when due;

 

(iii) (A) Borrower fails to comply with any representation, warranty or covenant set forth in Sections 3.1.24 or 4.1.15 of the Loan Agreement and such failure results in the substantive consolidation of the Borrower in a bankruptcy, insolvency or similar proceeding of any Person or (B) Master Tenant fails to comply with any representation, warranty or covenant set forth in Section 12 of the Master Lease Subordination Agreement with regard to Master Tenant’s qualification as a Special Purpose Entity and such failure results in the substantive consolidation of Master Tenant in a bankruptcy, insolvency or similar proceeding of any Person;

 

(iv) Borrower or Master Tenant fails to obtain Lender’s prior consent to any voluntary Lien encumbering the Property or any portion thereof or interest therein, except to the extent expressly permitted by the Loan Documents;

 

(v) Borrower or Master Tenant fails to obtain Lender’s prior consent to any voluntary Transfer by Borrower or by any Restricted Party controlled by Borrower or Guarantor, except to the extent expressly permitted by the Loan Documents;

 

(vi) Borrower or Master Tenant files a voluntary petition under the Bankruptcy Code or any other federal, state, local or foreign bankruptcy or insolvency law;

 

  

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(vii) an Affiliate, officer, director or representative which controls, directly or indirectly, Borrower or Master Tenant files, or joins in the filing of, an involuntary petition against Borrower and/or Master Tenant under the Bankruptcy Code or any other federal, state, local or foreign bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors for any involuntary petition against Borrower and/or Master Tenant from any Person;

 

(viii) Borrower and/or Master Tenant files an answer consenting to, or otherwise acquiescing in, or joining in, any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other federal, state, local or foreign bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors for any involuntary petition from any Person;

 

(ix) any Affiliate, officer, director or representative which controls Borrower and/or Master Tenant consents to, or acquiesces in, or joins in, an application (other than by or on behalf of Lender) for the appointment of a custodian, receiver, trustee or examiner for Borrower, Master Tenant or any portion of the Property;

 

(x) Borrower or Master Tenant makes an assignment for the benefit of creditors; or

 

(xi) the termination, cancellation, or surrender of the Master Lease, in each case without Lender’s prior written consent; or

 

(xii) Borrower, Master Tenant, or any Guarantor (or any Person comprising Borrower, Master Tenant, or any Guarantor), or any Affiliate of any of the foregoing under the control of Borrower, Master Tenant, or Guarantor, in connection with any enforcement action or exercise or assertion of any right or remedy by or on behalf of Lender under or in connection with the Note, the Mortgage, the Guaranty or any other Loan Document, seeks a defense, judicial intervention or injunctive or other equitable relief of any kind or asserts in a pleading filed in connection with a judicial proceeding any defense against Lender or any right in connection with any security for the Loan, which is frivolous, brought in bad faith, or wholly without merit (in the case of a defense).

 

As used in this Section 1.2, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.

 

(c) The obligations of Guarantor set forth in clauses (a), (b) and (c) of this Section 1.2, as and to the extent set forth in said clauses (a), (b) and (c) of this Section 1.2, are hereinafter collectively referred to as the “Guaranteed Obligations”.

 

  

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(d) Notwithstanding anything to the contrary in this Guaranty or in any of the other Loan Documents, Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Obligations or to require that all collateral shall continue to secure all of the Obligations owing to Lender in accordance with the Loan Documents.

 

Section 1.3 Nature of Guaranty.  This Guaranty is an irrevocable, absolute, continuing guaranty of payment and performance and not a guaranty of collection.  This Guaranty may not be revoked by Guarantor and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by Guarantor and after (if Guarantor is a natural person) Guarantor’s death (in which event this Guaranty shall be binding upon Guarantor’s estate and Guarantor’s legal representatives and heirs).  The fact that at any time or from time to time the Guaranteed Obligations may be increased or reduced shall not release or discharge the obligation of Guarantor to Lender with respect to the Guaranteed Obligations.  This Guaranty may be enforced by Lender and any subsequent holder of the Note and shall not be discharged by the assignment, sale, pledge, transfer, participation or negotiation of all or part of the Note.

 

Section 1.4 Guaranteed Obligations Not Reduced by Offset.  The Guaranteed Obligations and the liabilities and obligations of Guarantor to Lender hereunder shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense of Borrower or any other party against Lender or against payment of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

 

Section 1.5 Payment By Guarantor.  If all or any part of the Guaranteed Obligations shall not be paid when due, whether at demand, maturity, acceleration or otherwise, Guarantor shall, immediately upon demand by Lender and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity or any other notice whatsoever, all such notices being hereby waived by Guarantor, pay in lawful money of the United States of America, the amount due in respect of the Guaranteed Obligations to Lender at Lender’s address as set forth herein.  Such demand(s) may be made at any time coincident with or after the time for payment of all or part of the Guaranteed Obligations and may be made from time to time with respect to the same or different items of Guaranteed Obligations.  Such demand shall be deemed made, given and received in accordance with the notice provisions hereof.

 

Section 1.6 No Duty To Pursue Others.  It shall not be necessary for Lender (and Guarantor hereby waives any rights which Guarantor may have to require Lender), in order to enforce the obligations of Guarantor hereunder, first to (i) institute suit or exhaust its remedies against Borrower or others liable on the Loan or the Guaranteed Obligations or any other Person, (ii) enforce Lender’s rights against any collateral which shall ever have been given to secure the Loan, (iii) enforce Lender’s rights against any other guarantors of the Guaranteed Obligations, 

 

  

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(iv) join Borrower or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty, (v) exhaust any remedies available to Lender against any collateral which shall ever have been given to secure the Loan, or (vi) resort to any other means of obtaining payment of the Guaranteed Obligations.  Lender shall not be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations.

 

Section 1.7 Waivers.  Guarantor agrees to the provisions of the Loan Documents and hereby waives notice of (i) any loans or advances made by Lender to Borrower, (ii) acceptance of this Guaranty, (iii) any amendment or extension of the Note, the Mortgage, the Loan Agreement or any other Loan Document, (iv) the execution and delivery by Borrower and Lender of any other loan or credit agreement or of Borrower’s execution and delivery of any promissory note or other document arising under the Loan Documents or in connection with the Property, (v) the occurrence of (A) any breach by Borrower of any of the terms or conditions of the Loan Agreement or any of the other Loan Documents, or (B) an Event of Default, (vi) Lender’s transfer, sale, assignment, pledge, participation or disposition of the Guaranteed Obligations, or any part thereof, (vii) the sale or foreclosure (or posting or advertising for sale or foreclosure) of any collateral for the Guaranteed Obligations, (viii) protest, proof of non-payment or default by Borrower, or (ix) any other action at any time taken or omitted by Lender and, generally, except as expressly provided herein or in another Loan Document, all demands and notices of every kind in connection with this Guaranty, the Loan Documents, any documents or agreements evidencing, securing or relating to any of the Guaranteed Obligations and/or the obligations hereby guaranteed.

 

Section 1.8 Payment of Expenses.  In the event that Guarantor should breach or fail to timely perform any provisions of this Guaranty, Guarantor shall, immediately upon demand by Lender, pay Lender all costs and expenses (including court costs and attorneys’ fees) incurred by Lender in the enforcement hereof or the preservation of Lender’s rights hereunder, together with interest thereon at the Default Rate from the date requested by Lender until the date of payment to Lender.  The covenant contained in this Section shall survive the payment and performance of the Guaranteed Obligations.

 

Section 1.9 Effect of Bankruptcy.  In the event that pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law or any judgment, order or decision thereunder, Lender must rescind or restore any payment or any part thereof received by Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Guaranty given to Guarantor by Lender shall be without effect and this Guaranty shall remain (or shall be reinstated to be) in full force and effect.  It is the intention of Borrower and Guarantor that Guarantor’s obligations hereunder shall not be discharged except by Guarantor’s performance of such obligations and then only to the extent of such performance.

 

Section 1.10 Waiver of Subrogation, Reimbursement and Contribution.  Notwithstanding anything to the contrary contained in this Guaranty, Guarantor hereby 

 

  

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unconditionally and irrevocably waives, releases and abrogates, until such time as the Obligations have been satisfied in full, any and all rights it may now or hereafter have under any agreement, at law or in equity (including, without limitation, any law subrogating the Guarantor to the rights of Lender), to assert any claim against or seek contribution, indemnification or any other form of reimbursement from Borrower or any other party liable for payment of any or all of the Guaranteed Obligations for any payment made by Guarantor under or in connection with this Guaranty or otherwise.

 

Section 1.11 Borrower.  The term “Borrower” as used herein shall include any new or successor corporation, association, partnership (general or limited), limited liability company joint venture, trust or other individual or organization formed as a result of any merger, reorganization, sale, transfer, devise, gift or bequest of Borrower or any interest in Borrower, as permitted under the Loan Agreement.

 

ARTICLE 2

EVENTS AND CIRCUMSTANCES NOT REDUCING

OR DISCHARGING GUARANTOR’S OBLIGATIONS

 

Guarantor hereby consents and agrees to each of the following and agrees that Guarantor’s obligations under this Guaranty shall not be released, diminished, impaired, reduced or adversely affected by any of the following and waives any common law, equitable, statutory or other rights (including without limitation rights to notice) which Guarantor might otherwise have as a result of or in connection with any of the following:

 

Section 2.1 Modifications/Sales.  Any renewal, extension, increase, modification, alteration or rearrangement of all or any part of the Guaranteed Obligations, the Note, the Mortgage, the Loan Agreement, the other Loan Documents or any other document, instrument, contract or understanding between Borrower and Lender or any other parties pertaining to the Guaranteed Obligations, or any sale, assignment or foreclosure of the Note, the Loan Agreement, the Mortgage, or any other Loan Documents or any sale or transfer of the Property, or any failure of Lender to notify Guarantor of any such action.

 

Section 2.2 Adjustment.  Any adjustment, indulgence, forbearance or compromise that might be granted or given by Lender to Borrower or any Guarantor.

 

Section 2.3 Condition of Borrower or Guarantor.  The insolvency, bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of Borrower, Guarantor or any other Person at any time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of Borrower or Guarantor or any sale, lease or transfer of any or all of the assets of Borrower or Guarantor or any changes in the shareholders, partners or members, as applicable, of Borrower or Guarantor; or any reorganization of Borrower or Guarantor.

 

  

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Section 2.4 Invalidity of Guaranteed Obligations.  The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations or any document or agreement executed in connection with the Guaranteed Obligations for any reason whatsoever, including without limitation the fact that (i) the Guaranteed Obligations or any part thereof exceeds the amount permitted by Legal Requirements, (ii) the act of creating the Guaranteed Obligations or any part thereof is ultra vires, (iii) the officers or representatives executing the Note, the Mortgage, the Loan Agreement or the other Loan Documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (iv) the Guaranteed Obligations violate applicable usury laws, (v) the Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Guaranteed Obligations wholly or partially uncollectible from Borrower, (vi) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations or given to secure the repayment of the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or (vii) the Note, the Mortgage, the Loan Agreement or any of the other Loan Documents have been forged or otherwise are irregular or not genuine or authentic, it being agreed that Guarantor shall remain liable hereon regardless of whether Borrower or any other Person be found not liable on the Guaranteed Obligations or any part thereof for any reason.

 

Section 2.5 Release of Obligors.  Any full or partial release of the liability of Borrower for the Guaranteed Obligations or any part thereof, or of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Guaranteed Obligations, or any part thereof, it being recognized, acknowledged and agreed by Guarantor that Guarantor may be required to pay the Guaranteed Obligations in full without assistance or support from any other Person, and Guarantor has not been induced to enter into this Guaranty on the basis of a contemplation, belief, understanding or agreement that other Persons (including Borrower) will be liable to pay or perform the Guaranteed Obligations, or that Lender will look to other Persons (including Borrower) to pay or perform the Guaranteed Obligations.

 

Section 2.6 Other Collateral.  The taking or accepting of any other security, collateral or guaranty, or other assurance of payment, for all or any part of the Guaranteed Obligations.

 

Section 2.7 Release of Collateral.  Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including, without limitation, negligent, willful, unreasonable or unjustifiable impairment) of any collateral, property or security at any time existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed Obligations.

 

Section 2.8 Care and Diligence.  The failure of Lender or any other party to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of any collateral, property or security, including, but not limited to, 

 

  

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any neglect, delay, omission, failure or refusal of Lender (i) to take or prosecute any action for the collection of any of the Guaranteed Obligations, or (ii) to foreclose, or initiate any action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any security therefor, or (iii) to take or prosecute any action in connection with any instrument or agreement evidencing or securing all or any part of the Guaranteed Obligations.

 

Section 2.9 Unenforceability.  The fact that any collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized and agreed by Guarantor that Guarantor is not entering into this Guaranty in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectibility or value of any of the collateral for the Guaranteed Obligations.

 

Section 2.10 Representation.  The accuracy or inaccuracy of the representations and warranties made by Guarantor herein or by Borrower in any of the Loan Documents.

 

Section 2.11 Offset.  The Note, the Guaranteed Obligations and the liabilities and obligations of the Guarantor to Lender hereunder shall not be reduced, discharged or released because of or by reason of any existing or future right of offset, claim or defense of Borrower against Lender, or any other party, or against payment of the Guaranteed Obligations, whether such right of offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

 

Section 2.12 Merger.  The reorganization, merger or consolidation of Borrower or Guarantor into or with any other Person.

 

Section 2.13 Preference.  Any payment by Borrower to Lender is held to constitute a preference under bankruptcy laws or for any reason Lender is required to refund such payment or pay such amount to Borrower or to any other Person.

 

Section 2.14 Other Actions Taken or Omitted.  Any other action taken or omitted to be taken with respect to the Loan Documents, the Guaranteed Obligations, or the security and collateral therefor, whether or not such action or omission prejudices Guarantor or increases the likelihood that Guarantor will be required to pay the Guaranteed Obligations pursuant to the terms hereof, it being the unambiguous and unequivocal intention of Guarantor that Guarantor shall be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, which obligation shall be deemed satisfied only upon the full and final payment and satisfaction of the Guaranteed Obligations.

 

  

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES

 

To induce Lender to enter into the Loan Documents and to extend credit to Borrower, Guarantor represents and warrants to Lender as follows:

 

Section 3.1 Benefit.  Guarantor is the owner of a direct or indirect interest in Borrower, and has received, or will receive, direct or indirect benefit from the making of this Guaranty with respect to the Guaranteed Obligations.

 

Section 3.2 Familiarity and Reliance.  Guarantor is familiar with, and has independently reviewed books and records regarding, the financial condition of the Borrower and is familiar with the value of any and all collateral intended to be created as security for the payment of the Note or Guaranteed Obligations; however, Guarantor is not relying on such financial condition or the collateral as an inducement to enter into this Guaranty.

 

Section 3.3 No Representation By Lender.  Neither Lender nor any other party has made any representation, warranty or statement to Guarantor, except as expressly set forth herein,  in order to induce the Guarantor to execute this Guaranty.

 

Section 3.4 Guarantor’s Financial Condition.  As of the date hereof, and after giving effect to this Guaranty and the contingent obligation evidenced hereby, Guarantor is and will be solvent and has and will have assets which, fairly valued, exceed its obligations, liabilities (including probable liability on contingent liabilities) and debts, and has and will have property and assets sufficient to satisfy and repay its obligations and liabilities, including the Guaranteed Obligations.

 

Section 3.5 Legality.  The execution, delivery and performance by Guarantor of this Guaranty and the consummation of the transactions contemplated hereunder do not and will not contravene or conflict with any law, statute or regulation whatsoever to which Guarantor is subject or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, or result in the breach of, any indenture, mortgage, charge, lien, or any contract, agreement or other instrument to which Guarantor is a party or which may be applicable to Guarantor.  This Guaranty is a legal and binding obligation of Guarantor and is enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights.

 

Section 3.6 Survival.  All representations and warranties made by Guarantor herein shall survive the execution hereof.

 

  

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ARTICLE 4

SUBORDINATION OF CERTAIN INDEBTEDNESS

 

Section 4.1 Subordination of All Guarantor Claims.  As used herein, the term “Guarantor Claims” shall mean all debts and liabilities of Borrower to Guarantor, whether such debts and liabilities now exist or are hereafter incurred or arise, and whether the obligations of Borrower thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by Guarantor.  The Guarantor Claims shall include, without limitation, all rights and claims of Guarantor against Borrower (arising as a result of subrogation or otherwise) as a result of Guarantor’s payment of all or a portion of the Guaranteed Obligations.  So long as any portion of the Obligations or the Guaranteed Obligations remain outstanding, Guarantor shall not receive or collect, directly or indirectly, from Borrower or any other Person any amount upon the Guarantor Claims.

 

Section 4.2 Claims in Bankruptcy.  In the event of any receivership, bankruptcy, reorganization, arrangement, debtor’s relief, or other insolvency proceeding involving Guarantor as a debtor, Lender shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and receive directly from the receiver, trustee or other court custodian dividends and payments which would otherwise be payable upon Guarantor Claims.  Guarantor hereby assigns such dividends and payments to Lender.  Should Lender receive, for application against the Guaranteed Obligations, any dividend or payment which is otherwise payable to Guarantor and which, as between Borrower and Guarantor, shall constitute a credit against the Guarantor Claims, then, upon payment to Lender in full of the Guaranteed Obligations, Guarantor shall become subrogated to the rights of Lender to the extent that such payments to Lender on the Guarantor Claims have contributed toward the liquidation of the Guaranteed Obligations, and such subrogation shall be with respect to that proportion of the Guaranteed Obligations which would have been unpaid if Lender had not received dividends or payments upon the Guarantor Claims.

 

Section 4.3 Payments Held in Trust.  Notwithstanding anything to the contrary in this Guaranty, in the event that Guarantor should receive any funds, payments, claims or distributions which are prohibited by this Guaranty, Guarantor agrees to hold in trust for Lender an amount equal to the amount of all funds, payments, claims or distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims and/or distributions so received except to pay them promptly to Lender, and Guarantor covenants promptly to pay the same to Lender.

 

Section 4.4 Liens Subordinate.  Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon Borrower’s assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests, 

 

  

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judgment liens, charges or other encumbrances upon Borrower’s assets securing payment of the Guaranteed Obligations, regardless of whether such encumbrances in favor of Guarantor or Lender presently exist or are hereafter created or attach.  Without the prior written consent of Lender, Guarantor shall not (i) exercise or enforce any creditor’s rights it may have against Borrower, or (ii) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings (judicial or otherwise, including without limitation the commencement of, or the joinder in, any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security interests, collateral rights, judgments or other encumbrances on assets of Borrower held by Guarantor.  The foregoing shall in no manner vitiate or amend, nor be deemed to vitiate or amend, any prohibition in the Loan Documents against Borrower or Guarantor transferring any of its assets to any Person other than Lender.

 

ARTICLE 5

COVENANTS

 

Section 5.1 Definitions.  As used in this Article 5, the following terms shall have the respective meanings set forth below:

 

(a) “Liquid Assets” shall mean assets in the form of cash, cash equivalents, obligations of (or fully guaranteed as to principal and interest by) the United States or any agency or instrumentality thereof (provided the full faith and credit of the United States supports such obligation or guarantee), certificates of deposit issued by a commercial bank having net assets of not less than $500 million, securities listed and traded on a recognized stock exchange or traded over the counter and listed in the National Association of Securities Dealers Automatic Quotations, or liquid debt instruments that have a readily ascertainable value and are regularly traded in a recognized financial market.

 

(b) “Net Worth” shall mean, as of a given date, (x) the total assets of Guarantor as of such date less (y) Guarantor’s total liabilities as of such date, determined in accordance with the accounting principles used in the preparation of Guarantor’s annual financial statements in accordance with Section 5.2.

 

Section 5.2 Covenants.  Until all of the Obligations and the Guaranteed Obligations have been paid in full, Guarantor shall (i) except for fair value and except for gifts having a value not material to Guarantor’s ability to perform Guarantor’s obligations hereunder, not sell, pledge, mortgage or otherwise transfer any of its assets, or any interest therein, (ii) deliver to Lender within ninety (90) days of each Fiscal Year, Guarantor’s annual financial statements prepared in accordance with tax basis accounting and otherwise in form and substance reasonably acceptable to Lender, and certified by Guarantor as being correct and complete and fairly presenting the financial condition of Guarantor, and (iii) deliver to Lender within ninety (90) days of each Fiscal Year, a certificate of such Guarantor, setting forth in reasonable detail Guarantor’s Net Worth and Liquid Assets.

 

  

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Section 5.3 Prohibited Transactions.  Guarantor shall not, at any time while a default in the payment of the Guaranteed Obligations has occurred and is continuing, either (i) enter into or effectuate any transaction with any Affiliate which would reduce the Net Worth of Guarantor, including the payment of any dividend or distribution to a shareholder, or the redemption, retirement, purchase or other acquisition for consideration of any stock in Guarantor or (ii) except for fair value and except for gifts having a value not material to Guarantor’s ability to perform Guarantor’s obligations hereunder, sell, pledge, mortgage or otherwise transfer to any Person any of Guarantor’s assets, or any interest therein.

 

ARTICLE 6

MISCELLANEOUS

 

Section 6.1 Waiver.  No failure to exercise, and no delay in exercising, on the part of Lender, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right.  The rights of Lender hereunder shall be in addition to all other rights provided by law.  No modification or waiver of any provision of this Guaranty, nor any consent to any departure therefrom, shall be effective unless in writing and no such consent or waiver shall extend beyond the particular case and purpose involved.  No notice or demand given in any case shall constitute a waiver of the right to take other action in the same, similar or other instances without such notice or demand.

 

Section 6.2 Notices.  All notices, demands, requests, consents, approvals or other communications (any of the foregoing, a “Notice”) required, permitted or desired to be given hereunder shall be in writing and shall be sent by registered or certified mail, postage prepaid, return receipt requested, or delivered by hand or by reputable overnight courier, addressed to the party to be so notified at its address hereinafter set forth, or to such other addresses as such party may hereafter specify in accordance with the provisions of this Section 6.2.  Any Notice shall be deemed to have been received: (a) three (3) days after the date such Notice is mailed, (b) on the date of delivery by hand if delivered during business hours on a Business Day (otherwise on the next Business Day), and (c) on the next Business Day if sent by an overnight commercial courier, in each case addressed to the parties as follows:

 

If to Lender:                          Ladder Capital Finance LLC

345 Park Avenue, 8th Floor

New York, New York 10154

Attention:  Pamela McCormack

 

with a copy to:                     Winston & Strawn, LLP

200 Park Avenue

New York, New York 10166

Attention: Corey A. Tessler, Esq.

 

  

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And with a copy to:            Wells Fargo Bank National Association

Commercial Mortgage Servicing

MAC D1100-090

201 South College Street, 9th Floor

Charlotte, North Carolina 28244-1075

Fax: 704-715-0473

Attention: Domeica White

 

If to Guarantor:                     Brett C. Moody

5 Derham Parc

Houston, Texas  77024

 

With a copy to:                    Brett C. Moody

c/o Moody National REIT I, Inc.

6363 Woodway, Suite 110

Houston, Texas  77057

 

Any party may change the address to which any such Notice is to be delivered by furnishing ten (10) days’ written notice of such change to the other parties in accordance with the provisions of this Section 6.2.  Notices shall be deemed to have been given on the date set forth above, even if there is an inability to actually deliver any Notice because of a changed address of which no Notice was given or there is a rejection or refusal to accept any Notice offered for delivery.  Notice for any party may be given by its respective counsel.  Additionally, Notice from Lender may also be given by Servicer.

 

Section 6.3 Governing Law; Submission to Jurisdiction.  (a) THIS GUARANTY WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY GUARANTOR AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION RELATED HERETO, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA.  TO THE FULLEST EXTENT PERMITTED BY LAW, GUARANTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS GUARANTY AND/OR THE OTHER LOAN DOCUMENTS, AND THIS GUARANTY AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW 

 

  

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YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY MAY, AT LENDER’S OPTION, BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW OR IN ANY STATE OR FEDERAL COURT IN THE STATE OF TENNESSEE AND GUARANTOR WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING, GUARANTOR DOES HEREBY AGREE  THAT SERVICE OF PROCESS UPON GUARANTOR AT ITS NOTICE ADDRESS AS SET FORTH IN SECTION 6.2 HEREOF (OR SUCH OTHER NEW NOTICE ADDRESS ESTABLISHED BY GUARANTOR PURSUANT TO SECTION 6.2 HEREOF) BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON GUARANTOR IN ANY SUCH SUIT, ACTION OR PROCEEDING AT THE TIME RECEIVED OR REFUSED BY GUARANTOR.  NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST GUARANTOR IN ANY OTHER JURISDICTIONS.

 

Section 6.4 Invalid Provisions.  If any provision of this Guaranty is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Guaranty, such provision shall be fully severable and this Guaranty shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Guaranty, and the remaining provisions of this Guaranty shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Guaranty, unless such continued effectiveness of this Guaranty, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

 

Section 6.5 Amendments.  This Guaranty may be amended only by an instrument in writing executed by the party against whom such amendment is sought to be enforced.

 

Section 6.6 Parties Bound; Assignment; Joint and Several.  This Guaranty shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, permitted assigns, heirs and legal representatives.  Lender may sell, assign, pledge, participate, transfer or delegate, as applicable to one or more Persons all or a portion of its rights and obligations under this Guaranty in connection with any assignment, sale, pledge, participation or transfer of the Loan and the Loan Documents.  Any assignee or transferee of Lender shall be 

 

  

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entitled to all the benefits afforded to Lender under this Guaranty.  Guarantor shall not have the right to delegate, assign or transfer its rights or obligations under this Assignment without the prior written consent of Lender, and any attempted assignment, delegation or transfer without such consent shall be null and void.  If Guarantor consists of more than one Person or party, the obligations of each such Person or party shall be joint and several.

 

Section 6.7 Headings.  Section headings are for convenience of reference only and shall in no way affect the interpretation of this Guaranty.

 

Section 6.8 Recitals.  The recitals and introductory paragraphs hereof are a part hereof, form a basis for this Guaranty and shall be considered prima facie evidence of the facts and documents referred to therein.

 

Section 6.9 Counterparts.  To facilitate execution, this Guaranty may be executed in as many counterparts as may be convenient or required.  It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart.  All counterparts shall collectively constitute a single instrument.  It shall not be necessary in making proof of this Guaranty to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto.  Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

 

Section 6.10 Rights and Remedies.  If Guarantor becomes liable for any indebtedness owing by Borrower to Lender, by endorsement or otherwise, other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby and the rights of Lender hereunder shall be cumulative of any and all other rights that Lender may ever have against Guarantor.  The exercise by Lender of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.

 

Section 6.11 Entirety.  THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR’S GUARANTY OF THE GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF.  THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, 

 

  

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VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY.  THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.

 

Section 6.12 Waiver of Right To Trial By Jury.  LENDER AND GUARANTOR HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE NOTE, THE MORTGAGE, THE LOAN AGREEMENT, OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.  EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

 

Section 6.13 Cooperation.  Guarantor acknowledges that Lender and its successors and assigns may (i) sell this Guaranty, the Note and the other Loan Documents to one or more investors as a whole loan, (ii) participate the Loan secured by this Guaranty to one or more investors, (iii) deposit this Guaranty, the Note and the other Loan Documents with a trust, which trust may sell certificates to investors evidencing an ownership interest in the trust assets, or (iv) otherwise sell the Loan or one or more interests therein to investors (the transactions referred to in clauses (i) through (iv) are hereinafter each referred to as “Secondary Market Transaction”).  Guarantor shall cooperate with Lender (provided that any out of pocket expenses actually incurred by Guarantor in connection therewith shall be paid by Lender) in effecting any such Secondary Market Transaction and shall cooperate to implement all requirements imposed by any Rating Agencies involved in any Secondary Market Transaction.  Guarantor shall use commercially reasonable efforts to provide, or cause Borrower to provide, such information and documents relating to Guarantor, Borrower, the Property and any tenants of the Property as Lender may reasonably request in connection with such Secondary Market Transaction.  In addition, Guarantor shall make available to Lender all information concerning its business and operations that Lender may reasonably request.  Lender shall be permitted to share all such information with the investment banking firms, Rating Agencies, accounting firms, law firms and other third-party advisory firms involved with the Loan and the Loan Documents or the applicable Secondary Market Transaction.  It is understood that the information provided by Guarantor to Lender including any and all financial statements provided to Lender pursuant to Section 5.2 hereof may ultimately be incorporated into the offering documents for the Secondary Market Transaction and thus various investors or potential investors may also see some or all of the information.  Lender and all of the aforesaid third-party advisors and professional firms shall be entitled to rely on the information supplied by, or on behalf of, Guarantor in the form as provided by Guarantor.  Lender may publicize the existence

 

  

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of the Loan in connection with its marketing for a Secondary Market Transaction or otherwise as part of its business development.

 

Section 6.14 Reinstatement in Certain Circumstances.  If at any time any payment of the principal of or interest under the Note or any other amount payable by the Borrower under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, the Guarantor’s obligations hereunder with respect to such payment shall be reinstated as though such payment had been due but not made at such time.

 

Section 6.15 Gender; Number; General Definitions.  Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, (a) words used in this Guaranty may be used interchangeably in the singular or plural form, (b) any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, (c) the word “Borrower” shall mean “each Borrower and any subsequent owner or owners of a fee interest in the Property or any part thereof”, (d) the word “Lender” shall mean “Lender and any subsequent holder of the Note”, (e) the word “Note” shall mean “the Note and any other evidence of indebtedness secured by the Loan Agreement, as amended, restated or otherwise modified”, (f) the word “Property” shall include any portion of the Property and any interest therein, and (g) the phrases “attorneys’ fees”, “legal fees” and “counsel fees” shall include any and all attorneys’, paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels, incurred or paid by Lender in protecting its interest in the Property, the Leases and/or the Rents and/or in enforcing its rights hereunder.

 

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IN WITNESS WHEREOF, Guarantor has executed this Guaranty of Recourse Obligations as of the day and year first above written.

 

	
 

	/s/ Brett C. Moody	 
	 	BRETT C. MOODY, a natural person	 

 

 

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