SECOND AMENDED AND RESTATED LOAN AGREEMENT
SECOND
AMENDED AND RESTATED LOAN AGREEMENT
THIS
SECOND AMENDED AND RESTATED LOAN AGREEMENT ("Agreement") is entered into as of
August 15, 2010 by and between FIRST NATIONAL BANK OF OMAHA, a national banking
association ("First National") as a Lender, Administrative Agent and Collateral
Agent for the Lenders, Union Bank & Trust Company, a Nebraska State Banking
Corporation (“Union”) as a Lender, and the other Lenders a party hereto from
time to time, and SUMMIT HOTEL PROPERTIES, LLC ("Summit Hotel"), a South Dakota
limited liability company and SUMMIT HOSPITALITY V, LLC ("Summit Hospitality"),
a South Dakota limited liability company. First National, Union and
the other lenders a party hereto from time to time may be hereinafter
collectively referred to as the “Lenders” and individually as a
"Lender". Summit Hotel and Summit Hospitality may be collectively
referred to hereinafter as the "Borrowers" and individually as a
"Borrower". The Administrative Agent and the Collateral Agent for the
Lenders may be hereinafter collectively referred to as the "Agent".
WHEREAS, the Borrowers, the Agent, and
certain of the Lenders are parties to a Loan Agreement, dated as of July 20,
2004, as amended (as so amended and as in effect prior to the date of the
Current Credit Agreement defined below, the "Original Credit Agreement"),
pursuant to which the Lenders party thereto made loans available to the
Borrowers;
WHEREAS, the Original Credit Agreement
was amended and restated by that certain First Amended and Restated Loan
Agreement dated August 31, 2009 among Borrowers, the Agent and the Lenders (as
amended and as in effect prior to the date hereof, the "Current Credit
Agreement");
WHEREAS,
the Borrowers have requested that the Current Credit Agreement be amended and
restated on the terms and conditions set forth herein;
WHEREAS,
it is intended that the indebtedness of the Borrowers under this Agreement be a
continuation of the indebtedness of the Borrowers under the Original Credit
Agreement as amended by the Current Credit Agreement; and
WHEREAS,
under the terms and conditions of and subject to the limitations contained in
this Agreement, Lenders (with respect to the Flagstaff Term Loan) and First
National (with respect to the Jacksonville Loan and Letters of Credit in
addition to the Flagstaff Term Loan) have approved financial accommodations in
the maximum principal amount of $22,714,604.18 consisting of the Flagstaff Term
Loan, Jacksonville Loan and Letters of Credit defined in this
Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained in
this Agreement and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as
follows:
ARTICLE
I
Flagstaff Term
Loan
1.1. Definitions. Certain
capitalized terms not otherwise defined in the body of this Agreement shall have
the meanings given to such terms in Exhibit A attached hereto and incorporated
herein by reference.
1.2. Flagstaff Term
Loan. Subject to the terms of this Agreement, Lenders
severally agree to extend to Borrowers a term loan in the aggregate principal
amount of $8,645,000.00 (as it may be amended, modified, refinanced, replaced
and/or restated from time to time, the "Flagstaff Term Loan"). The
Flagstaff Term Loan will refinance and extend that certain Fifth Amended and
Restated Term Note dated July 24, 2010 in the principal amount of $8,645,000.00
executed and delivered by Borrowers in favor of the Agent.
1.3. Flagstaff Term
Notes. The Flagstaff Term Loan will be evidenced by an Amended
and Restated Flagstaff Term Note executed and delivered by Borrowers to Agent
and payable to each Lender as follows (collectively, the "Amended and Restated
Flagstaff Term Notes"):
(a). an
Amended and Restated Flagstaff Term Note payable to the order of First National
in the principal amount of $6,483,750.00; and
(b). an
Amended and Restated Flagstaff Term Note payable to the order of Union in the
principal amount of $2,161,250.00.
1.4.
Interest. The
interest rate on the Flagstaff Term Loan is subject to change from time to time
based on changes in an independent index which is the London Interbank Offered
Rate for U.S. Dollar deposits published in The Wall Street Journal as
the Three (3) Month LIBOR Rate (“LIBOR Rate”). The LIBOR Rate will be adjusted
and determined without notice to Borrowers as set forth herein, as of the date
of the Flagstaff Term Notes and on the first (1st) day of each calendar month
thereafter (“Interest Rate Change Date”) to the Three (3) Month LIBOR Rate which
is published in The Wall
Street Journal as the reported rate for the date that is two London
Banking Days prior to each Interest Rate Change Date. If the date of the
Flagstaff Term Notes is any day other than the first London Banking Day of a
month, the initial LIBOR Rate to be in effect until the beginning of the next
succeeding month shall be that Three (3) Month LIBOR Rate in effect on the date
that is two London Banking Days prior to the first day of the month in which the
Flagstaff Term Notes are dated. “London Banking Day” means any day other than a
Saturday or Sunday, on which commercial banking institutions in London, England
are generally open for business. If for any reason the LIBOR Rate published by
The Wall Street Journal
is no longer available and/or Agent is unable to determine the LIBOR Rate for
any Interest Rate Change Date, Agent may, in its sole discretion, select an
alternate source to determine the LIBOR Rate and will provide notice to
Borrowers and Lenders of the source selected. The LIBOR Rate determined as set
forth above shall be referred to herein as (the “Index”). The Index is not
necessarily the lowest rate charged by Lenders on their loans. If the Index
becomes unavailable during the term of the Flagstaff Term Loan, Agent may
designate a substitute index after notifying Borrowers and Lenders. Agent will
tell Borrowers the current Index rate upon Borrowers' request. The interest rate
change will not occur more often than each month on the first (1st) day of each
month. Borrowers understand that Lenders may make loans based on other rates as
well. The Index currently is .37625 % per annum. The interest rate to be applied
to the unpaid principal balance of the Flagstaff Term Loan will be calculated
using a rate of 4% over the Index, adjusted if necessary for any minimum and
maximum rate limitations described below, resulting in an initial rate of
4.37625% per annum based on a year of 360 days. Interest on the Flagstaff Term
Loan is computed on a 365/360 basis; that is, by applying the ratio of the
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding. All interest payable under the Flagstaff Term Loan is computed
using this method. NOTICE: Under no circumstances will the interest rate on the
Flagstaff Term Loan be less than 5.5% per annum or more than the maximum rate
allowed by applicable law. The principal balance of the Flagstaff Term Loan will
bear interest after maturity and after the occurrence and during the continuance
of an Event of Default at a variable per annum rate equal to rate determined as
above plus 4%, but not to exceed the maximum rate allowed by law. Borrowers will
jointly and severally pay interest monthly, in arrears, on the same dates that
principal installments are due. Accrued and unpaid interest must also be paid on
the Flagstaff Term Loan Termination Date, whether by acceleration or
otherwise.
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1.5. Repayment;
Maturity. The Flagstaff Term Loan will be payable in equal
monthly installments of principal and interest in the amount of $59,467.86
commencing on September 1, 2010 and continuing on the first day of each month
thereafter until July 24, 2011, when the outstanding principal balance, together
with accrued and unpaid interest, will be due and payable in
full. The monthly principal installments are calculated on a twenty
(20) year amortization schedule. All payments due on the Flagstaff
Term Loan under this Agreement and the other Loan Documents shall be made in
immediately available funds to the Agent at its office described in the notice
provision of this Agreement unless the Agent gives notice to the
contrary. Payments so received at or before 1:00 p.m. Omaha, Nebraska
time on any Business Day shall be deemed to have been received by the Agent on
that Business Day. Payments received after 1:00 p.m. Omaha, Nebraska
time on any Business Day shall be deemed to have been received on the next
Business Day, and interest, if payable in respect of such payment, shall accrue
thereon until such next Business Day. Agent will remit to each Lender
its Percentage of all payments of principal and interest on the Flagstaff Term
Loan received by Agent no later than the next Business Day after the Agent is
deemed to have received such payment.
1.6. Prepayment. Borrowers
may prepay the Flagstaff Term Loan in full or in part at any time without
penalty or premium. Any partial prepayments will be applied by Agent
to the monthly installments due on the partially prepaid Flagstaff Term Loan in
the inverse order of their maturities.
1.7. Fees. In
consideration for Lenders making the Flagstaff Term Loan available to Borrowers,
Borrowers will jointly and severally pay to the Agent for the pro rata account
of Lenders a commitment fee equal to $32,418.75 in full at the closing of this
Agreement. Each Lender will be entitled to a portion of such fee as
follows: (i) $24,314.06 payable to First National; and (ii) $8,104.69
payable to Union. In addition, Borrowers will jointly and severally
pay Agent for the account only of Agent an annual agency fee equal to $10,806.25
payable at the closing of this Agreement on each anniversary date of this
Agreement.
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ARTICLE
II
Jacksonville
Loan
2.1. Jacksonville
Loan. Subject to the terms of this Agreement, First National
only will extend to Borrowers a loan in the principal amount of $11,357,943.18
(as it may be amended, modified, refinanced, replaced and/or restated from time
to time, the "Jacksonville Loan"). The Jacksonville Loan will
refinance and extend that certain Construction Note dated June 8, 2009 in the
principal amount of $12,000,000.00 executed and delivered by Borrowers in favor
of the Agent, as such Construction Note has been amended from time to
time.
2.2. Jacksonville
Note. The Jacksonville Loan will be evidenced by a
Jacksonville Note executed and delivered by Borrowers to Agent and payable to
First National (as amended from time to time, the "Jacksonville
Note").
2.3. Interest. The
interest rate on the Jacksonville Loan is subject to change from time to time
based on changes in an independent index which is the London Interbank Offered
Rate for U.S. Dollar deposits published in The Wall Street Journal as
the Three (3) Month LIBOR Rate (“LIBOR Rate”). The LIBOR Rate will be
adjusted and determined without notice to Borrowers as set forth herein, as of
the date of the Jacksonville Note and on the first (1st) day of each calendar
month thereafter (“Interest Rate Change Date”) to the Three (3) Month LIBOR Rate
which is published in The Wall
Street Journal as the reported rate for the date that is two London
Banking Days prior to each Interest Rate Change Date. If the date of
the Jacksonville Note is any day other than the first London Banking Day of a
month, the initial LIBOR Rate to be in effect until the beginning of the next
succeeding month shall be that Three (3) Month LIBOR Rate in effect on the date
that is two London Banking Days prior to the first day of the month in which the
Jacksonville Note is dated. If for any reason the LIBOR Rate
published by The Wall Street
Journal is no longer available and/or Agent is unable to determine the
LIBOR Rate for any Interest Rate Change Date, Agent may, in its sole discretion,
select an alternate source to determine the LIBOR Rate and will provide notice
to Borrowers and First National of the source selected. The LIBOR
Rate determined as set forth above shall be referred to herein as (the
“Index”). The Index is not necessarily the lowest rate charged by
First National on its loans. If the Index becomes unavailable during
the term of the Jacksonville Loan, Agent may designate a substitute index after
notifying Borrowers and First National. Agent will tell Borrowers the
current Index rate upon Borrowers' request. The interest rate change
will not occur more often than each month on the first (1st) day of each
month. Borrowers understand that First National may make loans based
on other rates as well. The Index currently is .37625% per
annum. The interest rate to be applied to the unpaid principal
balance of the Jacksonville Loan will be calculated using a rate of 4% over the
Index, adjusted if necessary for any minimum and maximum rate limitations
described below, resulting in an initial rate of 4.37625% per annum based on a
year of 360 days. Interest on the Jacksonville Loan is computed on a
365/360 basis; that is, by applying the ratio of the interest rate over a year
of 360 days, multiplied by the outstanding principal balance, multiplied by the
actual number of days the principal balance is outstanding. All
interest payable under the Jacksonville Loan is computed using this
method. NOTICE: Under no circumstances will the interest rate on the
Jacksonville Loan be less than 5.5% per annum or more than the maximum rate
allowed by applicable law. The principal balance of the Jacksonville
Loan will bear interest after maturity and after the occurrence and during the
continuance of an Event of Default at a variable per annum rate equal to rate
determined as above plus 4%, but not to exceed the maximum rate allowed by
law. Borrowers will jointly and severally pay interest monthly, in
arrears, on the first day of each month. Accrued and unpaid interest
must also be paid on the maturity date of the Jacksonville Loan, whether by
acceleration or otherwise.
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2.5. Repayment;
Maturity. The Jacksonville Loan will be paid interest only on
the first day of each month commencing on September 1, 2010 and continuing on
the first day of each month thereafter until June 8, 2011, when the outstanding
principal balance, together with accrued and unpaid interest, will be due and
payable in full.
All
payments due on the Jacksonville Loan under this Agreement and the other Loan
Documents shall be made in immediately available funds to the Agent at its
office described in the notice provision of this Agreement unless the Agent
gives notice to the contrary. Payments so received at or before 1:00
p.m. Omaha, Nebraska time on any Business Day shall be deemed to have been
received by the Agent on that Business Day. Payments received after
1:00 p.m. Omaha, Nebraska time on any Business Day shall be deemed to have been
received on the next Business Day, and interest, if payable in respect of such
payment, shall accrue thereon until such next Business Day. Agent
will remit to each First National all payments of principal and interest on the
Jacksonville Loan received by Agent no later than the next Business Day after
the Agent is deemed to have received such payment.
2.6. Prepayment. Borrowers
may prepay the Jacksonville Loan in full or in part at any time without penalty
or premium. On or before September 15, 2010, Agent will obtain an
appraisal of the Jacksonville Loft Hotel referenced below. If the
outstanding principal balance of the Jacksonville Loan at the time of such
appraisal exceeds 65% of the Appraised Value of such Jacksonville Loft Hotel,
then Borrowers jointly and severally shall make a mandatory prepayment on the
Jacksonville Note in an amount sufficient to reduce the outstanding principal
balance of the Jacksonville Note to a sum at or below 65% of the Appraised Value
of such Jacksonville Loft Hotel. Such prepayment will be made by
Borrowers within ten (10) days after such appraisal is delivered to Agent and
Agent notifies Borrowers of the deficiency.
2.7. Fees. In
consideration for First National making the Jacksonville Loan available to
Borrowers, Borrowers will jointly and severally pay to the Agent for the account
of First National only a commitment fee equal to thirty-seven and one half (37½)
basis points of the principal amount of the Jacksonville Loan payable in full at
the closing of this Agreement. In addition, Borrowers will jointly
and severally pay Agent for the account only of Agent an annual agency fee equal
to twelve and one half (12½) basis points of the principal amount of the
Jacksonville Loan payable at the closing of this Agreement on each anniversary
date of this Agreement.
ARTICLE
III
Letters
of Credit
3.1. Letter of
Credit. First National has issued, for the account of
Borrowers, the letters of credit described below, renewable as provided in the
Letter of Credit Documentation (as defined below):
(a). A
letter of credit issued for the benefit of the City of Bloomington, Minnesota in
the face amount of $5,000.00 expiring September 7, 2010;
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(b). A
letter of credit issued for the benefit of the Travelers Casualty and Surety in
the face amount of $706,661.00 expiring February 26, 2011; and
(c). A
letter of credit issued for the benefit of the General Electric Credit
Corporation in the face amount of $2,000,000.00 expiring March 4,
2011.
The
foregoing letters of credit, as they may be amended, extended or replaced from
time to time, are individually referred to as a "Letter of Credit" and
collectively as the "Letters of Credit".
3.2. Fees. In
consideration of First National’s issuance of the Letter of Credits, Borrowers
will jointly and severally pay to Agent the fees specified in the applicable
Letter of Credit Documentation, for the account of First National.
3.3. Repayment. Borrower
shall jointly and severally pay Agent the sum of any draws paid by First
National under any Letter of Credit on demand in accordance with the
reimbursement obligations contained in the application and documentation
evidencing and governing such Letter of Credit (the “Letter of Credit
Documentation”). Any draws paid by First National under a Letter of
Credit shall bear interest at the interest rate set forth in the Letter of
Credit Documentation.
ARTICLE
IV
Collateral;
Reserves
Payment
of Borrowers' obligations hereunder, under the Loans, under any deposit account
relationship and overdrafts with Agent, under the Loan Documents and under any
other indebtedness of Borrowers to Lenders, now existing or hereafter arising,
shall be secured and/or supported by the following (hereinafter collectively
referred to as the “Collateral”) until all such obligations are fully and
finally paid and performed in full:
4.1. Personal
Property. The Loans made pursuant to this Agreement and all
other indebtedness arising hereunder or in connection herewith shall be
collateralized and supported by a security interest, and each Borrower hereby
grants to the Agent, a security interest in all of each Borrower's respective
assets associated with or located at a Hotel encumbered with a mortgage or deed
of trust referenced in Section 4.2 below, including, but not limited to, each
Borrower's goods, equipment and inventory, now owned as well as any and all
thereof that may hereafter be acquired by such Borrower, and in and to all cash
and non-cash proceeds (including, without limitation, insurance proceeds),
accessions, accessories and products thereof, and all of such Borrower's
accounts receivable, general intangibles, payment intangibles, software, chattel
paper (whether tangible or electronic), deposit accounts, documents, investment
property and instruments now owned or hereafter arising or acquired and all cash
and non-cash proceeds thereof. Such security interest shall be
further evidenced by those certain Second Amended and Restated Security
Agreements (as amended, collectively, the "Security Agreement") executed and
delivered by each Borrower to the Agent. Each Borrower further agrees
to authenticate to the Agent and hereby authorizes the Agent to file in all
filing offices the Agent deems necessary, appropriate or desirable such
financing statements, continuations, assignments or other instruments as may be
requested by the Agent at any time and from time to time in order for the Agent
to perfect the security interest in the aforementioned
Collateral.
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4.2. Real
Property. The Loans made pursuant to this Agreement and all
other indebtedness arising hereunder or in connection herewith shall be
collateralized and supported by the mortgages or deeds of trust, as the case may
be, listed in Schedule 4.2 attached hereto and incorporated herein by reference
encumbering the Hotels described therein (as amended, collectively, the
"Mortgage"). Borrowers will execute such amendments and instruments
to the Mortgage as are required by Agent in order to create, attach and perfect
Lenders' mortgage on the Hotels encumbered by the Mortgage.
4.3. Other
Documents. Borrowers agree to furnish such information and to
execute such other documents or undertake any other acts as may be reasonably
necessary to attach, perfect and maintain the security interests and assignments
contemplated by this Agreement, or as otherwise reasonably requested by the
Agent from time to time.
4.4. Maintenance and Capital
Expenditure Reserve. For each Hotel, each month the applicable
Borrower which owns such Hotel will deposit, in a deposit account maintained
with the Agent, an amount not less than three percent (3%) of the gross revenues
for such Hotel for the prior month to be maintained as a cash reserve for
maintenance and capital expenditures (the "Maintenance and Capital Expenditure
Reserve"). Borrowers hereby grant the Agent a security interest in
the Maintenance and Capital Expenditure Reserve and will execute such documents
required by the Agent to create, grant, attach and perfect the Agent's Lien on
such Maintenance and Capital Expenditures Reserve. Borrowers will
submit requests for reimbursement or invoices for payment of capital
expenditures for Hotels, and the Agent will not unreasonably deny such
requests. Borrowers will be reimbursed from Maintenance and Capital
Expenditure Reserve funds within ten (10) days of request.
ARTICLE
V
Representations and
Warranties
Each
Borrower represents and warrants to Lenders (which representations and
warranties will survive the delivery of the Flagstaff Term Notes, Jacksonville
Note, Letters of Credit and shall continue so long as any sums remain
outstanding under the Loans, this Agreement or any other Loan Document as
follows:
5.1. Standing. Each
Borrower is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of South Dakota. Each
Borrower is duly qualified and is in good standing in every other jurisdiction
where such qualification and good standing is required in order to conduct
business in such jurisdiction. Each Borrower has the power and
authority to own its property and to carry on its business.
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5.2. Authority. Each
Borrower has the full power and authority to execute and deliver this Agreement
and the other Loan Documents, and the same constitute the binding and
enforceable obligations of Borrowers in accordance with their
terms. No consent or approval of the members or manager of either
Borrower or any other Person, creditor, governmental department, agency or body
are required as a condition to the effectiveness and validity of the Loan
Documents. The execution of and performance by each Borrower of its
obligations under the Loan Documents to which it is a party has been duly
authorized by all appropriate and required limited liability company proceedings
and action and will not violate, conflict with or contravene any provisions (i)
of law or any regulation, order, writ, judgment, injunction, decree, permit, or
license applicable to such Borrower or any of such Borrower's property, or (ii)
of such Borrower's Articles of Organization, Operating Agreement or any members’
agreement or other governing or organizational agreement of such Borrower or
such Borrower's members.
5.3. Litigation. There
are no actions, suits, arbitration proceedings or other proceedings of any
nature pending or, to the knowledge of either Borrower, threatened, or any basis
therefor, against or affecting either Borrower or any Collateral at law or in
equity, in any court or before any governmental department or agency or
arbitrator or arbitration panel, which may result in a Material Adverse
Effect.
5.4. Conflicting
Agreements. There are no provisions of any existing mortgage,
indenture, deed of trust, trust deed, lease, contract or agreement of any nature
binding on either Borrower or affecting the Collateral or either Borrower's
other property, which would conflict with or in any way prevent the execution,
delivery, or performance of the terms of this Agreement and/or the Loan
Documents. Neither Borrower is in default in any respect in the
performance, observance or fulfillment of any obligation, covenant or condition
contained in any agreement or instrument to which it is a party.
5.5. Title and
Liens. Each Borrower has good, valid and marketable title of
record to its real, mixed and personal property (including, without limitation,
the property constituting Collateral), all of which is owned free and clear of
all mortgages, Liens, pledges, charges, attachments and other security interests
and encumbrances of any nature, except for the Permitted Liens or as otherwise
provided for in this Agreement or disclosed to and approved by Lenders in
writing. In respect of leased property, the applicable Borrower has
valid and enforceable leasehold interests therein.
5.6. Taxes. Each
Borrower has filed all federal, state, local, and other tax and similar returns
and has paid or provided for the payment of all taxes assessments and other
governmental charges due thereunder through the date of this Agreement,
including without limitation, all withholding, FICA and franchise
taxes. No claims or Liens for unpaid taxes which are due have been
asserted, claimed or threatened against either Borrower.
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5.7. Financial
Statements. Borrowers' audited financial statements dated as
of December 31, 2009 and internally-prepared interim financial statement dated
June 30, 2010, copies of which have been furnished to Lenders, are complete and
correct and fairly and accurately present the financial condition of each
Borrower as of such date and the results of operations for the period covered by
such statements. Since June 30, 2010, there has been no Material
Adverse Effect or change with respect to either Borrower. Neither
Borrower has any material liabilities, direct or contingent, except those
disclosed in the foregoing financial statements or as otherwise disclosed to
Lenders in writing. No information, exhibit or report furnished by
either Borrower to Lenders or the Agent in connection with the Loans, this
Agreement or any other Loan Document contains any material misstatement of fact
or omits to state a material fact or any fact necessary to make the statement
contained therein incomplete or not materially misleading.
5.8. Other. All
statements by either Borrower contained in any certificate, statement, document
or other instrument or writing delivered by or on behalf of either Borrower at
any time pursuant to this Agreement or the other Loan Documents shall constitute
representations and warranties made by Borrowers hereunder. No
representation or warranty of either Borrower contained in this Agreement or any
other Loan Document, and no statement contained in any certificate, schedule,
list, financial statement or other instrument furnished to Lenders or the Agent
by or on behalf of Borrowers contains, or will contain, any untrue statement of
a material fact, or omits, or will omit, to state a material fact necessary to
make the statements contained herein or therein not misleading. To
the best of each Borrower's knowledge, all information material to the
transactions contemplated in this Agreement has been expressly disclosed to
Lenders in writing.
5.9. Regulation
U. No part of the proceeds of the Loans will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any such margin stock or to reduce or retire any
indebtedness incurred for any such purpose. If requested by the
Agent, Borrowers will furnish to the Agent a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U to the
foregoing effect.
5.10
ERISA.
(a) Definitions. The
following terms shall have the following definitions:
(1) "Consolidated
Entity" shall mean any corporation or other entity which owns at least 50% of
the voting or control rights or interest or other ownership interest in either
Borrower directly or indirectly in any manner, or in which at least 50% of the
voting stock or other ownership interest in such corporation or other entity is
owned by either Borrower directly or indirectly in any manner. If
Borrowers have no Consolidated Entities, the provisions of this Agreement
relating to Consolidated Entities shall be inapplicable without affecting the
applicability of such provisions to Borrowers alone.
(2) "ERISA"
shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time.
(3) "Internal
Revenue Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
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(4) "Pension
Event" shall mean, with respect to any Pension Plan, the occurrence
of: (i) any prohibited transaction described in Section 406 of ERISA
or in Section 4975 of the Internal Revenue Code; (ii) any Reportable Event;
(iii) any complete or partial withdrawal, or proposed complete or partial
withdrawal, of Borrowers or any Consolidated Entity from such Pension Plan; (iv)
any complete or partial termination, or proposed complete or partial
termination, of such Pension Plan; or (v) any accumulated funding deficiency
(whether or not waived), as defined in Section 302 of ERISA or in Section 412 of
the Internal Revenue Code.
(5) "Pension
Plan" shall mean any pension plan, as defined in Section 3(2) of ERISA, which is
a multi-employer plan or a single employer plan, as defined in Section 4001 of
ERISA, and subject to Title IV of ERISA and which is (i) a plan maintained by
either Borrower or any Consolidated Entity for employees or former employees of
either Borrower or of any Consolidated Entity, (ii) a plan to which either
Borrower or any Consolidated Entity contributes or is required to contribute,
(iii) a plan to which either Borrower or any Consolidated Entity was required to
make contributions at any time during the five (5) calendar years preceding the
date of this Agreement or (iv) any other plan with respect to which either
Borrower or any Consolidated Entity has incurred or may incur liability,
including, without limitation, contingent liability, under Title IV of ERISA
either to such plan or to the Pension Benefit Guaranty
Corporation. For purposes of the definitions of the terms "Pension
Event" and "Pension Plan", each Borrower shall include any trade or business
(whether or not incorporated) which, together with such Borrower or any
Consolidated Entity, is deemed to be a single employer within the meaning of
Section 4001(b)(1) of ERISA.
(6) "Reportable
Event" shall mean any event described in Section 4043(b) of ERISA or in
regulations issued thereunder with regard to a Pension Plan.
(b) ERISA Representations and
Warranties. Each Borrower represents and warrants to Lenders
that:
(1) No
Pension Plan has been terminated, or partially terminated, or is insolvent, or
in reorganization, nor have any proceedings been instituted to terminate or
reorganize any Pension Plan;
(2) Neither
Borrower nor any Consolidated Entity has withdrawn from any Pension Plan in a
complete or partial withdrawal, nor has a condition occurred which, if
continued, would result in a complete or partial withdrawal;
(3) Neither
Borrower nor any Consolidated Entity has incurred any withdrawal liability,
including, without limitation, contingent withdrawal liability, to any Pension
Plan, pursuant to Title IV of ERISA;
(4) Neither
Borrower nor any Consolidated Entity has incurred any liability to the Pension
Benefit Guaranty Corporation other than for required insurance premiums which
have been paid when due;
(5) No
Reportable Event has occurred with regard to a Pension Plan;
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(6) No
Pension Plan or other "employee pension benefit plan", as defined in Section
3(2) of ERISA, to which either Borrower or any Consolidated Entity is a party
has an accumulated funding deficiency (whether or not waived), as defined in
Section 302 of ERISA or Section 412 of the Internal Revenue Code;
(7) The
present value of all benefits vested under any such Pension Plan does not exceed
the value of the assets of such Pension Plan allocable to such vested
benefits;
(8) Each
Pension Plan and each other employee benefit plan as defined in
Section 3(2) of ERISA, to which either Borrower or any Consolidated Entity
is a party has received a favorable determination by the Internal Revenue
Service with respect to qualification under Section 401(a) of the Internal
Revenue Code;
(9) Each
Pension Plan and each other employee benefit plan as defined in
Section 3(2) of ERISA, to which either Borrower or any Consolidated Entity
is a party is in substantial compliance with ERISA, and no such plan or any
administrator, trustee or fiduciary thereof has engaged in a prohibited
transaction defined or described in Section 406 of ERISA or in Section 4975 of
the Internal Revenue Code; and
(10) Neither
Borrower nor any Consolidated Entity has incurred any liability or a trustee or
trust established pursuant to Section 4049 of ERISA or to a trustee appointed
pursuant to Section 4042(b) or (c) of ERISA.
(c) ERISA
Indemnity. In addition to any other transfer prohibitions set
forth herein and in the other Loan Documents, and not in limitation thereof,
neither Borrower shall assign, sell, pledge, encumber, transfer, hypothecate or
otherwise dispose of its interest or rights in this Agreement or in the
Collateral, or attempt to do any of the foregoing or suffer any of the
foregoing, nor shall any shareholder or member of either Borrower assign, sell,
pledge, encumber, transfer, hypothecate or otherwise dispose of any of its
rights or interest in such Borrower, attempt to do any of the foregoing or
suffer any of the foregoing, if such action would cause the Loans or the
exercise of any of Lenders’ rights in connection therewith, to constitute a
prohibited transaction under ERISA or the Internal Revenue Code or otherwise
result in Lenders being deemed in violation of any applicable provision of
ERISA. Borrowers jointly and severally agree to indemnify and hold
Lenders free and harmless from and against all loss, costs (including attorneys'
fees and expenses), taxes, damages (including consequential damages), and
expenses Lenders may suffer by reason of the investigation, defense and
settlement of claims and in obtaining any prohibited transaction exemption under
ERISA necessary or desirable in the Agent's sole judgment or by reason of a
breach of the foregoing prohibitions. The foregoing indemnification
shall survive repayment of the Loans.
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5.11. Solvency. Each
Borrower is and, after consummation of the transactions contemplated by this
Agreement will be, Solvent. “Solvent” shall mean that, as of a
particular date, (i) such Borrower is able to realize upon its assets and pay
its debts and other liabilities, contingent obligations and other commitments as
they mature in the ordinary course of business; (ii) such Borrower is not
engaged in a business or a transaction, and is not about to engage in a business
or a transaction, for which such Borrower's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Borrower is engaged, (iii) the fair value
of the property of such Borrower is greater than the total amount of
liabilities, including, without limitation, contingent liabilities, of such
Borrower and (iv) the present fair salable value of the assets of such Borrower
is not less than the amount that will be required to pay the probable liability
of such Borrower on its debts as they become absolute and matured. In
computing the amount of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount which, in light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
5.12. Compliance With
Law. The business and operations of the Borrowers comply in
all respects with all applicable federal, state, regional, county and local
laws, including without limitation statutes, rules, regulations and ordinances
relating to public health, safety or the environment or disposals to air, water,
land or groundwater, to the withdrawal or use of groundwater, to the use,
handling or disposal of polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, its derivatives,
by-products or other hydrocarbons), to exposure to toxic, hazardous, or other
controlled, prohibited or regulated substances, to the transportation, storage,
disposal, management or release of gaseous or liquid substances, and any
regulation, order, injunction, judgment, declaration, notice or demand issued
thereunder, except where the failure to so comply (individually or in the
aggregate) would not reasonably be expected to have a Material Adverse
Effect.
ARTICLE
VI
Financial and Affirmative
Covenants
So long
as this Agreement remains in effect, or as long as there is any principal or
interest due under the Loans, unless the Agent shall otherwise consent in
writing, Borrowers will:
6.1. Financial
Covenants. Borrowers shall maintain and comply with the
following financial covenants:
(a). Debt Service Coverage
Ratio. Each Borrower shall maintain at all times, on a rolling
four-quarter average (for each Borrower’s four most recent fiscal quarters then
ended), a Debt Service Coverage Ratio of not less than 1.50:1.00. The
first quarterly calculation and measurement of the Debt Service Coverage Ratio
shall be September, 2010; and
(b). Total
Debt. The aggregate Total Debt outstanding at any one time of
Borrowers, The Summit Group, Inc. and any other affiliates or subsidiaries of
The Summit Group, Inc. and either Borrower shall not exceed
$450,000,000.00.
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6.2. Books and Records;
Inspections. Maintain proper books and records and account for
financial transactions in a manner consistent with the preparation of the
financial statements referenced is Section 5.7, and permit the Agent's officers
and/or authorized representatives or accountants to visit and inspect Borrowers'
respective properties, examine their books and records, conduct audits of the
Collateral and discuss their accounts and business with their respective
officers, accountants and auditors, all at reasonable times upon reasonable
notice. Borrowers will cooperate in arranging for such inspections
and audits. Without the prior written consent of the Agent, neither
Borrower will change in any material way the accounting principles upon which
the financial statements referenced in Section 5.7 were prepared and based
except for changes made as a result of changes in or to generally accepted
accounting principles.
6.3. Financial
Reporting. Deliver to the Agent financial information in such
form and detail and at such times as are satisfactory to the Agent, including,
without limitation:
(a) Each
Borrower's year end financial statements (to include, but not be limited to,
balance sheet, income statement, and net worth reconciliation, each setting
forth in comparative form figures for the preceding fiscal year of Borrowers),
audited by a certified public accounting firm selected and approved by the Audit
Committee of Summit Hotel as soon as available and in any event within one
hundred twenty (120) days after the end of each of Borrower's respective fiscal
years;
(b) Each
Borrower's interim quarterly financial statements (to include its unaudited
balance sheet as of the end of each such period and the related unaudited
statements of income, and statement of changes in financial position for such
period and the portion of the fiscal year through such date, setting forth in
each case in comparative form the figures for the previous year) as soon as
available, but in any event within twenty (20) days after the end of each
quarter, signed and certified correct by the Chief Financial Officer or
equivalent of Borrowers (subject to normal year-end adjustments);
(c) a
quarterly certificate of the chief financial officer of each Borrower
substantially in the form of Schedule 6.3(c) attached hereto and incorporated
herein by reference, (i) demonstrating compliance with the financial covenants
contained in Section 6.1 by calculation thereof as of the end of each such
fiscal period, (ii) stating that no Event of Default exists, or if any Event of
Default does exist, specifying the nature and extent thereof and what action
such Borrower proposes to take with respect thereto and (iii) certifying that
all of the representations and warranties made by such Borrower in this
Agreement and/or in any other Loan Document are true and correct in all material
respects on and as of such date as if made on and as of such date, within
twenty-five (25) days after the end of each quarter; and
(d) Such
other financial information concerning Borrowers as the Agent may require from
time to time.
All
financial statements required hereunder shall be complete and correct in all
respects and shall be prepared in reasonable detail (consistent with the
financial statements referred to in Subsection 5.7.) and applied consistently
throughout the periods reflected therein.
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6.4. Payment of Debts, Taxes and
Claims. Promptly pay and discharge prior to delinquency all
debts, accounts, liabilities, taxes, assessments and other governmental charges
or levies imposed upon, or due from, either Borrower, as well as all claims of
any kind (including claims for labor, materials and supplies) which, if unpaid,
might by law become a lien or charge upon any of a Borrower's property, except
that nothing herein contained shall be interpreted to require the payment of any
such debt, account, liability, tax, assessment or charge so long as its validity
is being contested in good faith by appropriate legal proceedings and against
which, if requested by the Agent or required by generally accepted accounting
principles, reserves satisfactory to and deposited with the Agent have been made
therefor. Any such reserves will constitute additional Collateral and
Borrowers hereby grant the Agent a first priority security interest in such
reserves.
6.5. Insurance. Each
Borrower will purchase, pay for in advance, and at all times maintain insurance
including but not limited to: (i) fire, windstorm and other hazards,
casualties and contingencies covered by the "all-risk" form of insurance; (ii)
public liability; (iii) workers' compensation and (iv) property damage as is
customarily maintained by similar businesses and/or as the Agent from time to
time requires. In addition, if a Hotel is located in flood hazard
area, the applicable Borrower will obtain and maintain appropriate flood
insurance as is acceptable to the Agent. The amounts, limits, forms,
deductibles, contents and issuer of said policies shall be subject to the
Agent's reasonable approval. The Agent, as Collateral Agent for
Lenders, shall be named as an additional insured as its interest shall appear
and each of said policies covering the Collateral shall contain a loss payable
clause, and any proceeds of such insurance in excess of $100,000.00 shall be
either (in the discretion of the Agent) (i) payable to the Collateral Agent for
application to the Loans and any other sums owing under this Agreement or any
other Loan Document in a manner and priority to be determined by the Agent in
its sole discretion or (ii) if consented to by the Required Lenders, used for
restoration or repair with such proceeds disbursed by the Agent in accordance
with procedures established by the Agent. All such insurance shall
provide for noncancellation without at least thirty (30) days prior written
notice to the Agent and shall contain provisions protecting the Collateral
Agent's interests whether or not any acts by either Borrower or others should
result in loss of coverage under such policies. The originals,
certified copies or certificates of such policies, and renewals evidencing the
insurance required hereunder shall be delivered to the Agent, and such insurance
shall be maintained in full force and effect at all times during the period of
this Agreement and while any indebtedness under the Loans remains
outstanding.
In the
event either Borrower at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required above or to pay any premium
in whole or in part relating thereto, then the Lenders, without waiving or
releasing any obligation or default by Borrowers hereunder, may at any time or
times thereafter (but shall be under no obligation to do so) obtain and maintain
such policies of insurance and pay such premium and take any other action with
respect thereto which the Agent deems advisable. All sums so
disbursed by Lenders, including, without limitation, reasonable attorneys' fees,
court costs, expenses and other charges relating thereto, shall be part of
Borrowers' obligations and indebtedness hereunder, secured by the Collateral and
payable jointly and severally by Borrowers to the Agent on demand. UNLESS BORROWERS PROVIDE
EVIDENCE OF THE INSURANCE COVERAGE REQUIRED UNDER THIS AGREEMENT AND/OR ANY
OTHER LOAN DOCUMENT, LENDERS MAY PURCHASE INSURANCE AT THE BORROWERS' JOINT AND
SEVERAL EXPENSE TO PROTECT LENDERS’ INTEREST IN THE COLLATERAL. THIS
INSURANCE MAY, BUT NEED NOT, PROTECT BORROWERS' RESPECTIVE
INTERESTS. THE COVERAGE THAT LENDERS PURCHASE MAY NOT PAY ANY CLAIM
THAT A BORROWER MAY MAKE OR ANY CLAIM THAT IS MADE AGAINST A BORROWER IN
CONNECTION WITH THE COLLATERAL. BORROWERS MAY LATER CANCEL ANY
INSURANCE PURCHASED BY LENDERS, BUT ONLY AFTER PROVIDING EVIDENCE THAT BORROWERS
HAVE EACH OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT. IF LENDERS PURCHASE INSURANCE FOR THE COLLATERAL, BORROWERS
WILL BE JOINTLY AND SEVERALLY RESPONSIBLE FOR THE COSTS OF THAT INSURANCE,
INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES LENDERS MAY
IMPOSE IN CONNECTION WITH THE PLACEMENT OF INSURANCE, UNTIL THE EFFECTIVE DATE
OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF THE
INSURANCE MAY BE ADDED TO THE BORROWERS' OBLIGATIONS HEREUNDER AND SHALL BE
SECURED BY THE COLLATERAL. THE COSTS OF THE INSURANCE MAY BE MORE
THAN THE COST OF INSURANCE BORROWERS MAY BE ABLE TO OBTAIN ON THEIR
OWN.
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6.6. Property
Maintenance. Keep their respective properties in good repair,
working order, and condition and from time to time make any needful and proper
repairs, renewals, replacements, extensions, additions, and improvements thereto
so that the business of Borrowers will be conducted at all times in accordance
with prudent business management.
6.7. Existence; Compliance With
Laws. Take or cause to be taken such action as from time to
time may be necessary to preserve and maintain their respective existence in
their jurisdiction of organization and qualify and remain qualified as a foreign
entity in each jurisdiction in which such qualification is required and use due
diligence to comply with all statutes, laws, codes, rules, regulations and
orders applicable or pertaining to the business or property of Borrowers, or any
part thereof, and with all other lawful government requirements relating to
their respective business and property. Each Borrower will continue
to engage in the same lines of business in which it is presently
engaged.
6.8. Litigation; Adverse
Events. Promptly inform the Agent of the commencement of any
action, suit, proceeding, arbitration, mediation or investigation against either
Borrower, or the making of any counterclaim against either Borrower, which could
be reasonably expected to have a Material Adverse Effect, and promptly inform
the Agent of all Liens against any of either Borrower's property, other than
Permitted Liens, which could be reasonably expected to have a Material Adverse
Effect, and promptly advise the Agent in writing of any other condition, event
or act which comes to either of their attention that could be reasonably
expected to have a Material Adverse Effect or might materially prejudice
Lenders’ rights under this Agreement or the Loan Documents.
6.9. Notification. Notify
the Agent immediately if either of them becomes aware of the occurrence of any
Event of Default (as defined under Article VIII hereof) or of any fact,
condition, or event that, only with the giving of notice or passage of time or
both, would become an Event of Default, or if either of them becomes aware of a
material adverse change in the business prospects, financial condition
(including, without limitation, proceedings in bankruptcy, insolvency,
reorganization, or the appointment of a receiver or trustee), or results of
operations, or the failure of either Borrower to observe any of its undertakings
under the Loan Documents. Borrowers shall also notify the Agent in
writing of any default under any other indenture, agreement, contract, lease or
other instrument to which either Borrower is a party or under which either
Borrower is obligated, and of any acceleration of the maturity of any material
indebtedness of either Borrower which default or acceleration could be
reasonably expected to have a Material Adverse Effect, and Borrowers shall take
all steps necessary to remedy promptly any such default, to protect against any
such adverse claim, to defend any such proceeding and to resolve all such
controversies.
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6.10. Inspections. Each
Borrower shall allow the Agent, its employees, officers, agents and
representatives, at reasonable intervals and during normal business hours, to
inspect such Borrower's operations, books and records, financial books and
records (including the right to make copies thereof) and to discuss such
Borrower's affairs, finances and accounts with such Borrower's managers,
principal officers and independent public accountants. Each Borrower
shall permit the Agent, and will cooperate with the Agent in arranging for,
inspections at reasonable intervals of such Borrower's facilities and audits of
the Collateral. Each Borrower acknowledges that any reports and
inspections conducted or generated by the Agent or its agents or
representatives, shall be made for the sole benefit of Lenders and not for the
benefit of Borrowers or any third party, and Lenders do not assume any
liability, responsibility or obligation to Borrowers or any third party by
reason of such inspections or reports. The reasonable cost of any
audits or inspections made by Lenders shall be paid or reimbursed jointly and
severally by Borrowers.
6.11. Conduct of
Business. Continue to engage in an efficient and economical
manner in the business currently conducted by Borrowers on the date of this
Agreement.
6.12. Initial Public
Offering. Lenders acknowledge that Borrowers are in the
process of completing an initial public offering to convert Borrowers into a
real estate investment trust (the "Initial Public Offering"). Upon
consummation of the Initial Public Offering the Borrower's obtaining the
proceeds thereof, Borrower will, as a mandatory prepayment, repay in full the
outstanding principal balance, along with accrued and unpaid interest and fees,
on the Flagstaff Term Loan and Jacksonville Loan.
ARTICLE
VII
Negative
Covenants
So long
as this Agreement remains in effect, or as long as there is any principal or
interest due under the Loans, this Agreement or any of the other Loan Documents,
neither Borrower shall, without the prior written consent of the
Agent:
7.1. Liens. Create,
incur, assume or suffer to exist any Lien or other encumbrance upon any of its
respective personal properties or assets, whether now owned or hereafter
acquired, except such security interests, mortgages, pledges, liens or other
encumbrances (each, a "Permitted Lien):
(a) created
or granted by such Borrower under or pursuant to this Agreement or the other
Loan Documents;
(b) created
or granted by such Borrower to Lenders under the Original Loan Agreement and/or
Current Loan Agreement and securing indebtedness arising
thereunder;
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(c) securing
debt allowed in Section 7.4 below incurred in the ordinary course of such
Borrower's business, consistent with current practices;
(d) Liens
for taxes, assessments or governmental charges or levies to the extent not
delinquent or that are being diligently contested in good faith by appropriate
proceedings and for which such Borrower has set aside adequate reserves in
accordance with generally accepted accounting principles;
(e) cash
pledges or deposits to secure (A) obligations under workmen’s compensation laws
or similar legislation, (B) public or statutory obligations of such Borrower,
(C) bids, trade contracts, surety and appeal bonds, performance bonds, letters
of credit and other obligations of a similar nature incurred in or necessary to
the ordinary course of such Borrower's business;
(f) Liens
imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and
repairmen’s liens and other similar liens arising in the ordinary course of
business securing obligations which are not overdue by more than 60 days or
which have been fully bonded or are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves have been set aside in
accordance with generally accepted accounting principles;
(g) purchase
money Liens or purchase money security interests upon or in property acquired or
held by such Borrower in the ordinary course of business to secure the purchase
price of such property or to secure indebtedness incurred solely for the purpose
of financing the acquisition of any such property to be subject to such Liens or
security interests, or Liens or security interests existing on any such property
at the time of acquisition, or extensions, renewals or replacements of any of
the foregoing for the same or a lesser amount, provided that no such Lien or
security interest shall extend to or cover any property other than the property
being acquired and no such extension, renewal or replacement shall extend to or
cover property not theretofore subject to the Lien or security interest being
extended, renewed or replaced, and provided, further, that the
aggregate principal amount of indebtedness at any one time outstanding secured
by Liens permitted by this clause (g) shall not exceed $75,000.00 per
Hotel;
(h) easements,
rights-of-way, zoning and other similar restrictions and encumbrances, which do
not (individually or in the aggregate) materially detract from the use of the
property to which they attach by Borrowers;
(i) liens
disclosed in Schedule 5.5 attached to this Agreement and incorporated herein by
reference; and
(j)
mortgages or deeds of trust providing permanent
financing on Borrowers' Hotels which are not Collateral for the Loans, and
mortgages or deeds of trust encumbering Borrowers' raw land pursuant to that
certain Amended and Restated Loan Agreement dated April __, 2010 (the "Amended
Fortress Loan Agreement") among Drawbridge Special Opportunities Fund LP,
Fortress Credit Opportunities Fund I LP and Eton Park CLO Management 2 and
Summit Hotel.
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7.2. Fundamental
Changes. Wind up, liquidate, or dissolve; reorganize, merge or
consolidate with or into another entity, or sell, transfer, convey or lease all,
substantially all or any material part of its property, to another Person other
than sale of such Borrower's inventory in the ordinary course of business; sell
or assign any accounts receivable; purchase or otherwise acquire all or
substantially all of the assets of any corporation, partnership, limited
liability company or other entity, or any shares or similar equity interest in
any other entity if such entity is in a business unrelated to the business of
such Borrower.
7.3. Conduct of
Business. Materially alter the character in which it conducts
its business or the nature of such business conducted at the date
hereof.
7.4. Debt. Create,
incur, assume or suffer to exist any direct or indirect indebtedness, except the
following ("Permitted Debt"):
(a) Indebtedness
under or pursuant to this Agreement or the other Loan Documents;
(b) Accounts
payable to trade creditors for goods or services which are not aged more than
the later of (i) ninety (90) days from the billing date, or (ii) ten (10) days
from the due date, or (iii) the "special payment date" offered to such Borrower
from time to time by a particular trade creditors, and current operating
liabilities (other than for borrowed money) which are not more than thirty (30)
days past due, in each case incurred in the ordinary course of business, as
presently conducted, and paid within the specified time, unless contested in
good faith and by appropriate proceedings;
(c) Indebtedness
to First National under that certain First Amended and Restated Loan Agreement
dated August 31, 2009, as such First Amended and Restated Loan Agreement may be
amended or restated;
(d) Indebtedness
to the Lenders party to the Current Loan Agreement;
(e) Indebtedness
under the Amended Fortress Loan Agreement in an amount not to exceed
$99,700,000.00 (the "Fortress Debt"); and
(f) The
indebtedness disclosed in Borrowers' or Borrowers parent's quarterly filings
with the Securities Exchange Commission so long as such indebtedness does not
exceed the Total Debt.
7.5. Investments. Acquire
for investment purposes, investments that would not qualify as "customary and
prudent investments", consistent with the current investment practices of such
Borrower.
7.6. Loans. Directly
or indirectly loan amounts to or guarantee or otherwise become contingently
liable for the debts of any Person, including, but not limited to an affiliate
(other than a wholly owned affiliate), subsidiary, parent of such Borrower, or
any shareholder, officer or employee thereof; or of any officer, employee,
manager or member of such Borrower or to any entity controlled by any such
entity, officer, manager, member, shareholder or employee, provided, however,
that Summit Hotel may make loans to Summit Hotel's employees in an amount not to
exceed $50,000 in the aggregate at any time outstanding.
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7.7. Executive
Management. Unless the Agent otherwise consents in writing,
Xxxxx X. Xxxxxxxxxxx shall remain each Borrower's operations manager and the
President of The Summit Group, Inc., and The Summit Group, Inc. shall be the
property manager of each Hotel pursuant to each Borrower's Operating
Agreement.
7.8 Transactions With
Affiliates. Enter into, or cause, suffer or permit to exist,
any arrangement or contract with any of its affiliates or subsidiaries, in each
case unless such arrangement or contract (i) is otherwise permitted by this
Agreement, (ii) is in the ordinary course of business of such Borrower or such
affiliate or subsidiary, as the case may be, and (iii) is on terms no less
favorable to such Borrower or such affiliate or subsidiary than if such
arrangement or contract had been negotiated in good faith on an arm’s-length
basis with a Person that is not an affiliate or subsidiary of such
Borrower.
7.9. Refinance of
Loans. Neither Borrower shall refinance any Property where the
principal amount of the debt exceeds seventy percent (70%) of the Appraised
Value of such Property.
ARTICLE
VIII
Events of
Default
8.1. Events of
Default. The occurrence of any one or more of the following
events shall constitute a default by Borrowers under this Agreement ("Event of
Default"):
(a) The
non-payment, when due, whether by demand, acceleration or otherwise, of any
principal and/or interest payment, fee, expense or other obligation for the
payment of money under the Loans or under any other Loan Document and the same
remains unpaid for a period of ten (10) days after written notice from the Agent
to Borrowers of such failure; or
(b) A
breach by either Borrower or the occurrence of an event of default under any
loan agreement, promissory note, security agreement or other agreement, lease,
contract or document to which such Borrower is a party or under which it is
bound, including, but not limited to, the Fortress Debt and the indebtedness
under the Loan Agreement referenced in Section 6.4(c) above, directly or
contingently, beyond any applicable grace or notice and cure period unless such
Borrower is contesting such failure in good faith through appropriate
proceedings, and if requested by the Agent or required by generally accepted
accounting principles, such Borrower has bonded, reserved or otherwise provided
for payment of such indebtedness; or
(c) A
breach by either Borrower in the performance or observance of any term, covenant
or provision contained in Sections 6.1, 6.4, 6.5, 6.7, 6.9, 6.12, 7.1, 7.2, 7.3,
7.4, 7.7 or 7.9 of this Agreement and the same remains unperformed or is not
cured within a period of ten (10) days after written notice from the Agent to
Borrowers of such failure; or
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(d) A
breach by either Borrower in the performance or observance of any agreement,
term, covenant or condition contained in this Agreement (other than (a) or (c)
above) or in the other Loan Documents and such failure shall not have been
remedied within a period of thirty (30) days after written notice is given by
the Agent to Borrowers; or
(e) Any
information, representation or warranty made herein, in the Loan Documents or in
any other writing furnished to Lenders in connection with the Loans, this
Agreement or any other Loan Document both before and after the execution hereof,
shall be or become incomplete, misleading or false in any material respect, or
if any certificate, statement, representation, warranty or audit furnished by or
on behalf of the Borrowers in connection with this Agreement or any other Loan
Document, including those contained or in or attached to this Agreement or any
other Loan Document, or as an inducement by the Borrowers to enter into, modify,
extend, or renew this Agreement, shall prove to be false in any material
respect, or if the Borrowers shall have omitted the listing of a substantial
contingent or unliquidated liability or claim against either Borrower or, if on
the date of execution of this Agreement there shall have been any materially
adverse change in any of the facts disclosed by any such certificate, statement,
representation, warranty or audit, which change shall not have been disclosed by
the Borrowers to the Lenders prior to the time of execution;
or
(f) Either
Borrower shall (i) fail to pay any indebtedness for borrowed money, including
but not limited to the Fortress Debt and the First Amended and Restated Loan
Agreement with First National August 31, 2009 as such Loan Agreement may be
amended or restated, or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
such failure shall continue after any applicable grace or notice and cure
period, unless such Borrower is contesting such failure in good faith through
appropriate proceedings, and if requested by the Agent or required by generally
accepted accounting principles, such Borrower has bonded, reserved or otherwise
provided for payment of such indebtedness; or (ii) fail to perform or observe
any term, covenant, or condition on its part to be performed or observed under
any agreement or instrument relating to any such indebtedness, when required to
be performed or observed, if the effect of such failure is to permit the
acceleration of the maturity of such indebtedness;
(g) Either
Borrower shall (i) generally not pay, or be unable to pay, or admit in writing
its inability to pay its debts as such debts become due; or (ii) makes an
assignment for the benefit of creditors, or petitions or applies to any tribunal
for the appointment of a custodian, receiver, or trustee for it, any Collateral
or for a substantial part of its assets; or (iii) commences any proceeding under
any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution,
or liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (iv) has any such bankruptcy, reorganization, dissolution,
composition or readjustment of debt petition or application filed or any such
proceeding commenced against it which is not discharged within thirty (30) days;
or (v) takes any action indicating consent to, approval of, or acquiescence in
any such proceeding, or order for relief, or the appointment of a custodian,
receiver, or trustee for all or any substantial part of its assets and
properties; or (vi) suffers any judgment, writ of attachment, execution or
similar process to be issued or levied against all or a substantial part of its
property or assets which is not released, stayed or bonded within thirty (30)
days and which would be reasonably expected to have a Material Adverse Effect;
or
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(h) This
Agreement or any of the Loan Documents shall cease for any reason to be in full
force and effect, or either Borrower shall so assert in writing, or the security
interests created by the Loan Documents shall cease to be enforceable or shall
not have the priority purported to be created thereby or either Borrower shall
so assert in writing; or
(i)
There shall occur the loss, theft, substantial
damage to or destruction of any portion of the Collateral not fully covered by
insurance, which by itself or with other such losses, thefts, damage or
destruction of Collateral, has a Material Adverse Effect or there shall occur
the exercise of the right of condemnation or eminent domain for any portion of
the Collateral which by itself or with other such exercises of the right of
condemnation or eminent domain has a Material Adverse Effect; or
(j)
Either Borrower transfers, sells, assigns, or conveys
all or such part of its assets or property which could be reasonably expected to
have a Material Adverse Effect other than in the ordinary course of such
Borrower’s business consistent with past practices without the prior written
consent of the Agent; or
(k) Any
license, permit or other approval required in the operation of either Borrower’s
business is terminated, suspended or revoked for any reason or expires;
or
(l)
Borrowers fail to obtain all necessary corporate
and limited liability company approvals, consents and actions required or
necessary for the initiation and consummation of Borrowers Initial Public
Offering on or before November 8, 2010; or
(m)
Borrowers have not consummated and completed the
Initial Public Offering, and obtained the proceeds thereof, on or before
February 15, 2011; or
(n) The
occurrence of any default or event of default under the Letter of Credit
Documentation beyond any applicable grace or notice and cure
period.
8.2. Remedies. Upon
the occurrence of an Event of Default beyond any applicable notice and cure
period, the sums payable under the Loans (as well as any other indebtedness of
either Borrower to Lenders) then outstanding, shall become forthwith due and
payable in full, together with interest thereon. The Agent may resort
to any and all Collateral, security and to any remedy existing at law or in
equity for the collection of all outstanding indebtedness and the enforcement of
the covenants and provisions of the Loan Documents against the
Borrowers. The Agent’s resort to any remedy or Collateral shall not
prevent the concurrent and/or subsequent employment of any joint or several
remedy or claim against either Borrower. The Agent may rescind any
acceleration of the Loans without in any way waiving or affecting its right to
accelerate the Loans in the future. Acceptance of partial payment or
partial performance shall not in any way affect or rescind any acceleration of
the Loans made by the Agent. Any collections on the Mortgage or
Security Agreement encumbering the Flagstaff Hotel or payments made on the
Flagstaff Term Loan after the Agent commences collection efforts shall, after
payment of all expenses relating thereto, be applied (i) first to interest and
principal on the Flagstaff Term Loan, (ii) next to any indebtedness outstanding
on the Loans other than the Flagstaff Term Loan and (iii) next to any
indebtedness owing to the Agent under any cash management or deposit account
relationships with the Borrower, in each case as described in clause (i) above
all shared by the Lenders ratably. Any collections on the Collateral
other than the Mortgage or Security Agreement encumbering the Flagstaff Hotel or
payments made on the Jacksonville Loan or any reimbursement of any draw on any
Letter of Credit after the Agent commences collection efforts shall, after
payment of all expenses relating thereto, be applied (i) first to interest and
principal on the Jacksonville Loan and any draws on the Letters of Credit, (ii)
next to any indebtedness owing to the Agent under any cash management or deposit
account relationships with the Borrower and (iii) next to any indebtedness owing
on the Flagstaff Term Loan, in the case as described in clauses (iii) above
shared by the Lenders ratably.
21
8.3. Waiver. Any
waiver of an Event of Default by the Required Lenders shall not extend to or
affect any subsequent Event of Default, whether it be the same Event of Default
or not, or impair any right consequent thereon. No failure or delay
or discontinuance on the part of the Agent or the Lenders in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power preclude any other or further
exercise thereof or the exercise of any other right or power thereunder or be
deemed an election of remedies or a waiver of any other right, power, privilege,
option or remedy. All remedies herein and by law afforded will be
cumulative and will be available to the Agent and the Lenders until the debt of
the Borrowers hereunder is fully and indefeasibly paid.
8.4. Setoff. In
addition to any rights now or hereafter granted under applicable law and not by
way of limitation of any such rights, upon the occurrence of any Event of
Default, each Lender and each subsequent holder of any Flagstaff Term Note,
Jacksonville Note or any Letter of Credit Documentation is hereby authorized by
the Borrowers at any time or from time to time, without notice to the Borrowers
or to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and to apply any and all deposits (general or special,
including, but not limited to, indebtedness evidenced by certificates of
deposit, whether matured or unmatured, but not including trust accounts, and in
whatever currency denominated) relating or attributable to or associated with a
Hotel and any other indebtedness at any time held or owing by the Lender or that
subsequent holder to or for the credit or the account of either Borrower whether
or not matured, against and on account of the obligations and liabilities of the
Borrowers to that Lender or that subsequent holder under the Loan Documents,
including, but not limited to, all claims of any nature of description arising
out of or connected with the Loan Documents, irrespective of whether or not (a)
that Lender or that subsequent holder shall have made any demand hereunder or
(b) the principal of or the interest on the Loans and other amounts due
hereunder shall have become due and payable pursuant to Section 8.2 and although
said obligations and liabilities, or any of them, may be contingent or
unmatured. The Agent agrees to notify Borrowers in writing after any such
set-off and application made by Lenders; provided, however, that the failure to
give such notice shall not affect the validity of such set-off and
application.
22
ARTICLE
IX
Conditions
Precedent
9.1. Conditions Precedent to
Closing. As a condition precedent to Closing, Borrowers shall
have delivered to the Agent the following documents (collectively, the "Loan
Documents"):
(a) This
Agreement, the Flagstaff Term Notes, and the Jacksonville Note duly executed by
the authorized manager(s) of Borrowers;
(b) The
Security Agreement duly executed by authorized manager(s) of
Borrowers;
(c) Amendments
of the Mortgages in form and substance acceptable to Agent;
(d) A
Secretary's Certificate or equivalent with certified copies of the Articles of
Organization and Operating Agreement of each Borrower and an appropriate
resolution or authority of each Borrower duly authorizing the execution and
delivery of the Loan Documents and Borrowers' performance hereunder and
thereunder;
(e) Each
Borrower shall have delivered to the Agent a certificate of good standing dated
not more than thirty (30) days prior to the date of this Agreement from the
South Dakota Secretary of State;
(f) Any
other documents, instruments and reports as the Agent shall reasonably request;
and
(g) The
payment by Borrowers of all the Agent's fees and expenses relating to the
underwriting, approving, due diligence, documenting, securing, negotiating and
closing the Loans, including, but not limited to, the payment of the Agent's
reasonable attorneys’ fees and costs, appraisal fees, title fees and other fees,
costs and expenses of Agent.
ARTICLE
X
Miscellaneous
10.1. Amendments. Any
provision of this Agreement and/or the other Loan Documents may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
(i) the Borrowers (ii) the Required Lenders, and (iii) the Agent; provided
that:
(a) no
reduction in the rate of interest or fees on the Flagstaff Term Loan will be
made without the written consent of each Lender;
(b) no
postponement of the scheduled date of payment of the principal or interest
amount of the Flagstaff Term Loan, or any fees payable thereunder, or reduction
of the amount of, waiver or excuse of any such payment, will be made without the
written consent of each Lender;
23
(c) no
change any of the provisions of this Section or the percentage in the definition
of the term “Required Lenders” or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights
hereunder or make any determination or grant any consent hereunder, may be made
without the written consent of each Lender; or
(d) no
release of any Collateral for the Flagstaff Term Loan prior to the time the
Flagstaff Term Loan is indefeasibly paid in full may be made without the written
consent of each Lender.
10.2. Expenses. The
Borrowers jointly and severally agree to pay the reasonable attorneys fees and
disbursements of the Agent in connection with the preparation and execution of
the Loan Documents, and any amendments, waivers or consents related thereto,
whether or not the transactions contemplated herein are consummated, and all
reasonable recording, filing, title insurance or other fees, costs and taxes
incident to perfecting a Lien upon the Collateral. The Borrowers
further jointly and severally agree to pay the reasonable attorney's fees and
disbursements of the Agent in connection with the enforcement of the Loan
Documents and to indemnify each Lender and the Agent and any security trustee
and their respective directors, officers and employees, against all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
without limitation, all expenses of litigation or preparation therefor, whether
or not the indemnified Person is a party thereto) which any of them may pay or
incur arising out of or relating to any Loan Document or any of the transactions
contemplated thereby or the direct or indirect application or proposed
application of the proceeds of any Loan except as may arise from the gross
negligence or willful misconduct of the party claiming
indemnification. The Borrowers upon demand by the Agent, at any time
shall reimburse each such indemnified party for any legal or other expenses
incurred in connection with investigating or defending against any of the
foregoing except if the same is directly due to the gross negligence or willful
misconduct of such indemnified party. Sums due by the Borrowers under
this Section shall bear interest at the highest rate of interest provided for
under this Agreement.
10.3. Delay;
Waiver. Any waiver of an Event of Default by the Agent or
Required Lenders shall not extend to or affect any subsequent default, whether
it be the same Event of Default or not, nor impair any right consequent
thereon. No failure or delay on the part of the Agent in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. No waiver of any provision of this
Agreement or of any instrument executed hereunder or pursuant hereto or consent
to any departure by Borrowers therefrom shall be effective unless the same shall
be in writing, signed by an officer of the Agent and each Required Lender, and
then only to the extent specified. All rights and remedies of Lenders
herein and by law afforded will be cumulative and will be available to Lenders
until the indebtedness of Borrower under the Loan Documents is indefeasibly paid
in full and no Commitments remain outstanding.
24
10.4. Notices. Any
notice, request, authorization, approval or consent made hereunder shall be in
writing and shall be personally delivered or sent by registered or certified
mail, and shall be deemed given when delivered or postmarked and mailed postage
prepaid to the following addresses or when sent by facsimile which confirms
receipt to the following facsimile numbers:
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If
to the Agent:
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First
National Bank of Omaha
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|
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1620
Dodge Street
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|
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Stop
1050
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|
|
Xxxxx,
Xxxxxxxx 00000
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|
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Attn: Xxxx
X. Xxxxxx
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|
|
Facsimile: (000)
000-0000
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|
With
a copy to:
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Xxxxxxx
Xxxxxxxx Xxxxxx LLP
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|
|
0000
Xxxxxx Xxxxxx
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|
|
Xxxxx
0000
|
|
|
Xxxxx,
Xxxxxxxx 00000
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|
|
Attn: Xxxxx
X. Xxxxxxx
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|
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Facsimile: (000)
000-0000
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If to
Borrowers:
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|
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0000
Xxxxx Xxxxxxxxx Xxxxxx
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|
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Xxxxx
0
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|
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Xxxxx
Xxxxx, Xxxxx
Xxxxxx 00000
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|
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Attn: Xxxx
Xxxxx
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|
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Facsimile: (000)
000-0000
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The Agent
and Borrowers may designate a change of address by notice given in accordance
with the provisions of this Subsection at least five (5) days before such change
is to become effective.
10.5. Transfer or
Assignment. This Agreement shall extend to and be binding upon
the successors and assigns of the parties hereto; provided, however, that
neither Borrower may assign or transfer its rights or obligations hereunder
without the prior written consent of the Required Lenders, and any such
assignment or transfer without such consent shall be void. Lenders
may assign interests or sell participations in the Loans with the prior written
consent of the Agent but without notice to Borrowers. In addition,
the Agent may at any time in its discretion, but shall not be obligated to,
purchase any or all of any Lender's Flagstaff Term Note at the then outstanding
principal balance along with accrued and unpaid interest on the applicable
Flagstaff Term Note payable to such Lender.
10.6. Construction of
Agreement. The titles and headings of the Subsections and
paragraphs of this Agreement have been inserted for convenience of reference
only and are not intended to summarize or otherwise describe the subject matter
of such Subsections and paragraphs and shall not be given any consideration in
the construction of this Agreement.
25
10.7. Applicable Law; Waiver of
Jury Trial. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Nebraska, exclusive of its choice
of laws rules. Any legal action or proceeding with respect to this Agreement or
any other Loan Document may be brought in the courts of the State of Nebraska in
Xxxxxxx County, or of the United States for the District of Nebraska, and, by
execution and delivery of this Agreement, Borrowers hereby irrevocably accept
for themselves and in respect of their property, generally and unconditionally,
the nonexclusive jurisdiction of such courts. Borrowers further
irrevocably consent to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at the address set out for
notices pursuant to Section 8.4, such service to become effective three (3) days
after such mailing. Nothing herein shall affect the right of the
Agent to serve process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against Borrowers in any other
jurisdiction. Borrowers hereby irrevocably waive any objection which
they may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement or
any other Loan Document brought in the courts referred to above and hereby
further irrevocably waive and agree not to plead or claim in any such court that
any such action or proceeding brought in any such court has been brought in an
inconvenient forum. THE AGENT, LENDERS AND BORROWERS
HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.8. Sharing of
Setoffs. If any Lender shall, by exercising any right of
setoff or otherwise, obtain payment in respect of any principal of or interest
on any of the Loans resulting in such Lender receiving payment of a proportion
of the aggregate amount of its Percentage and accrued interest thereon greater
than its pro rata share thereof as provided in this Agreement, then the Lender
receiving such greater proportion shall (A) notify the Agent of such fact, and
(B) purchase (for cash at face value) participations in the Loans of the other
Lenders, or make such other adjustments as shall be equitable, so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with their respective Percentages, provided that, if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without
interest. Borrowers consent to the foregoing and agree, to the extent
they may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against
Borrowers rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of Borrowers in the amount of
such participation.
10.9. Entire
Agreement. The Loan Documents constitute the entire
understanding of the parties thereto with respect to the subject matter thereof
and any prior or contemporaneous agreements, whether written or oral, with
respect thereto are superseded hereby. All of the terms of the other
Loan Documents are incorporated in and made part of this Agreement by reference;
provided, however, that to the extent of any direct conflict between this
Agreement and such other Loan Documents, this Agreement shall prevail and
govern.
10.10. Execution in Counterparts;
Faxes. This Agreement may be executed in any number of
counterparts, and by the different parties on different counterparts, each of
which when executed shall be deemed an original but all such counterparts taken
together shall constitute one and the same instrument. This Agreement
and any of the other Loan Documents may be validly executed and delivered by fax
or other electronic means and by use of multiple counterpart signature
pages.
26
10.11. Amended and Restated Credit
Facility; Liens Unimpaired. This Agreement amends, restates
and replaces the Current Credit Agreement in its entirety. It is the
intention and understanding of the parties that (a) this Agreement shall act as
a refinancing of the debt and other obligations evidenced by the Current Credit
Agreement and that this Agreement shall not act as a novation of such debt and
other obligations, (b) all Liens securing the obligations evidenced by the
Current Credit Agreement shall remain in full force and effect and shall secure
the Loans and all other obligations of the Borrowers to the Lenders now or
hereafter evidenced by or incurred under this Agreement or any of the other Loan
Documents, and (c) the priority of all Liens securing the obligations evidenced
by the Current Credit Agreement (including, without limitation, all such Liens
granted to or for the benefit of the Collateral Agent referred to in the Current
Credit Agreement and/or any of the Lenders thereunder who are Lenders under this
Agreement) shall not be impaired by the execution, delivery or performance of
this Agreement or the other Loan Documents. Without limiting the
foregoing, the parties agree that all security documents pursuant to which the
Agent (including, without limitation, the Collateral Agent referred to in the
Current Credit Agreement) has been granted a Lien on any existing or future
property of the Borrowers, and all other Loan Documents referred to in the
Current Credit Agreement, shall in each case remain in full force and effect
except as amended hereby or by any of the other Loan Documents referred to in
this Agreement.
10.12. Exclusion of Consequential
and Special Damages. Notwithstanding anything to the contrary
in this Agreement, neither the Agent nor any Lender will be liable for, nor will
any measure of damages against them include, under any theory of liability
(whether legal, strict or equitable), any indirect, consequential, incidental,
special or punitive damages or amounts for business interruption, loss of
income, revenue, profits or savings arising out of or relating to their
performance or non-performance under this Agreement or any Loan Document, and
the Borrowers hereby waive any right to pursue or recover any of the foregoing
damages.
10.13. USA Patriot Act
Notice. Each Lender and the Agent (for itself and not on
behalf of any Lender) hereby notifies the Borrowers that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed into
law October 26, 2001) (the “Act”), it is required to obtain, verify and record
information that identifies the Borrowers, which information includes the name
and address of the Borrowers and other information that will allow such Lender
or the Agent, as applicable, to identify the Borrowers in accordance with the
Act.
27
ARTICLE
XI
Agent
11.1 Authorization and
Action.
(a) The
Lenders from time to time a party hereto hereby irrevocably appoint First
National as the Agent and authorize the Agent to take such actions on their
behalf and to exercise such powers as are delegated to the Agent by the terms of
the Loan Documents, together with such actions and powers as are reasonably
incidental thereto.
(b) The
Agent shall have the same rights and powers in its capacity as a Lender as the
other Lenders and may exercise the same as though it were not the Agent, and the
Agent and the Agent's affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Borrowers or any of their
subsidiaries or affiliate as if it were not the Agent hereunder. The term
"Lender" as used in this Agreement and the other Loan Documents, unless the
context otherwise clearly requires, includes the Agent in its individual
capacity as a Lender.
(c) The
Agent shall not have any duties or obligations except those expressly set forth
in this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, (i) the Agent shall not be subject to any fiduciary
or other implied duties, regardless of whether an Event of Default has occurred
and is continuing, (ii) the Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Loan Documents that the Agent is
required to exercise in writing by the Required Lenders, and (iii) except as
expressly set forth in the Loan Documents, the Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to Borrowers or any of Borrowers' subsidiaries or affiliates that is
communicated to or obtained by the Agent or any of the Agent's affiliates in any
capacity. The Agent shall not be liable for any action taken or not
taken by it with the consent or at the request of the Required
Lenders or in the absence of the Agent's own gross negligence or
willful misconduct. The Agent will not be deemed to have knowledge of
any Event of Default unless and until written notice thereof is given to the
Agent by Borrowers or the other Lenders. Upon the occurrence of an
Event of Default, the Agent shall take such action with respect to the
enforcement of the Liens on the Collateral under the Loan Documents and the
preservation and protection thereof as it shall be directed to take by the
Required Lenders, but unless and until the Required Lenders have given such
direction the Agent shall take or refrain from taking such actions as it
reasonably deems appropriate. In no event, however, shall the Agent
be required to take any action in violation of applicable law or of any
provision of any Loan Document, and the Agent shall in all cases be fully
justified in failing or refusing to act hereunder or under any other Loan
Document unless it shall be first indemnified to its reasonable satisfaction by
the Lenders (other than the Agent in its capacity as a Lender) against any and
all costs, expense, and liability which may be incurred by it by reason of
taking or continuing to take any such action. In all cases in which
this Agreement and the other Loan Documents do not require the Agent to take
certain actions, the Agent shall be fully justified in using its discretion in
failing to take or in taking any action hereunder and thereunder. The
Agent will not be responsible for or have any duty to ascertain or inquire into
(A) any statement, warranty or representation made in or in connection with any
Loan Document, (B) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (C) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (D) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or document,
or (E) the satisfaction of any condition set forth in Article VIII or elsewhere
in any Loan Document, other than to confirm receipt of items expressly required
to be delivered to the Agent.
28
(d) The
Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper person. The Agent also may rely upon any
statement made to it orally or by telephone and believed by it to be made by the
proper person, and shall not incur any liability for relying
thereon. The Agent may consult with legal counsel (who may be counsel
for Borrowers), independent accountants and other experts selected by it, and
shall not be liable for any action taken or not taken by it in accordance with
the advice of any such counsel, accountants or experts.
(e) The
Agent may perform any and all its duties and exercise its rights and powers by
or through one or more sub-agents appointed by the Agent. The Agent
and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective affiliates and
subsidiaries. The exculpatory provisions of the preceding subsections
of this Section 12.1 shall apply to any such sub-agent and to the affiliates and
subsidiaries of the Agent and any such sub-agent, and shall apply to their
respective activities in connection with the administration of the credit
facilities provided for herein as well as activities as the Agent.
(f) Subject
to the appointment and acceptance of a successor Agent as provided in this
subsection (f), the Agent may resign at any time as Agent by notifying the other
Lenders and Borrowers. Upon any such resignation, Lenders shall have
the right to appoint a successor. If no successor shall have been so
appointed by the Lenders other than the Agent and such successor shall not have
accepted such appointment within 30 days after the Agent gives notice of its
resignation, then the Agent may, on behalf of the Lenders, appoint a successor
Agent which shall be a Lender or an affiliate of a Lender. Upon the
appointment of a successor Agent as the Agent hereunder, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and such retiring Agent shall be discharged from its
duties and obligations hereunder. The fees payable by Borrowers to a successor
Agent shall be the same as those payable to its predecessor unless otherwise
agreed between Borrowers and such successor. After the Agent’s
resignation hereunder, the provisions of this Article shall continue in effect
for the benefit of such retiring Agent, its sub-agents and their respective
affiliates and subsidiaries in respect of any actions taken or omitted to be
taken by any of them while it was acting as the Agent.
(g) Each
Lender acknowledges that it has independently and without reliance upon the
Agent or First National and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon First National or the Agent and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or any related agreement or any
document furnished hereunder or thereunder. It is the responsibility
of each Lender to keep itself informed as the creditworthiness of the Borrowers
and the value of the Collateral, and the Agent shall have no liability to any
Lender with respect thereto.
29
(h) Each
Lender agrees to reimburse the Agent for all out-of-pocket costs and expenses
suffered or incurred by the Agent or any security trustee in performing its
duties under this Agreement and under the other Loan Documents or in the
exercise of any right or power imposed or conferred upon the Agent hereby or
thereby (except to the extent that such costs and expenses arise out of the
Agent's or such security trustee's gross negligence or willful misconduct), to
the extent that the Agent is not promptly reimbursed for the same by the
Borrowers, or out of the Collateral, all such costs and expenses shall be borne
by the Lenders ratably in accordance with their respective
Percentages.
11.2. Indemnification. Each
Lender other than the Agent agrees to indemnify the Agent (to the extent not
reimbursed by Borrowers), ratably according to the respective Percentage of the
Loans, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted by the Agent under this
Agreement or any other Loan Document, provided that each Lender
shall not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent’s gross negligence or willful misconduct in connection
with the Agent's acts or omissions with respect to this Agreement and the Loan
Documents. Without limitation of the foregoing, each Lender other
than the Agent agrees to reimburse the Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel fees) incurred by
the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement or any other Loan Document to
the extent that the Agent is not reimbursed for such expenses by
Borrowers.
ARTICLE
XII
Yield
Protection
12.1. Yield Protection.
(a) Increased
Costs. If, due to either (i) the introduction of or any
change in or in the interpretation of any law or regulation after the date
hereof, or (ii) the compliance with any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) issued or made after the date hereof (any such introduction, change,
guideline or request being referred to herein as a “Regulatory
Change”), there shall be reasonably incurred any increase in the cost to
any Lender of agreeing to make or making, funding or maintaining Advances
accruing interest at the LIBOR Rate, then Borrowers shall from time to time,
upon demand by the Agent, jointly and severally pay to the Agent for the account
of such Lenders, additional amounts sufficient to compensate such Lenders for
such increased cost. A certificate as to the amount of such increased
cost and giving a reasonable explanation thereof, submitted to Borrowers shall
constitute such demand and shall be conclusive and binding for all purposes,
absent manifest error.
30
(b) Capital. If any Lender
determines that (i) as a result of a Regulatory Change, compliance with any
law or regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender, whether directly, or indirectly as a result of commitments of any
corporation controlling such Lender (but without duplication), and (ii) the
amount of such capital is increased by or based upon (A) the existence of
such Lender’s commitment to lend hereunder, or (B) the participation in or
issuance or maintenance of any Advance and (C) other similar such
commitments, then, upon demand by such Lender, Borrowers shall immediately and
jointly and severally pay to the Agent for the account of such Lender from time
to time as specified by such Lender additional amounts sufficient to compensate
such Lender in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the
transactions contemplated hereby. A certificate as to such amounts
and giving a reasonable explanation thereof (to the extent permitted by law),
submitted to Borrowers and the Agent by such Lender, shall be conclusive and
binding for all purposes, absent manifest error.
(c) Notices. Each
Lender hereby agrees to use commercially reasonable efforts (including the
giving of a notice in accordance with Section 9.4 above) to notify Borrowers of
the occurrence of any event referred to in subsection (a) or (b) of this Section
12.1 promptly after becoming aware of the occurrence thereof. The
failure of either Lender to provide such notice or to make demand for payment
under said subsection shall not constitute a waiver of such Lender’s rights
hereunder.
(d) Survival of
Obligations. Borrowers' obligations under this Section 12.1
shall survive the repayment of all other amounts owing to the Lenders and the
Agent under the Loan Documents and the termination of the Loans. If
and to the extent that the obligations of Borrowers under this Section 12.1 are
unenforceable for any reason, Borrowers agree to make the maximum contribution
to the payment and satisfaction thereof which is permissible under applicable
law.
12.2. Taxes. (a) All
payments by Borrowers hereunder and under the other Loan Documents shall be made
free and clear of and without deduction for all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in
the case of any Lender, taxes imposed on its net income, and franchise taxes
imposed on it by the jurisdiction under the laws of which such Lender is
organized or any political subdivision thereof and, in the case of any Lender,
taxes imposed on its net income, and franchise taxes imposed on it by the
jurisdiction of such Lender’s applicable lending office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as “Taxes”). If
either Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under any other Loan Document to any Lender,
(i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 12.2) such Lender receives an amount equal to
the sum it would have received had no such deductions been made, (ii) such
Borrower shall make such deductions and (iii) such Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
31
(b) In
addition, each Borrower jointly and severally agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or under any other
Loan Document or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or any other Loan Document (hereinafter referred
to as “Other
Taxes”).
(c) Each
Borrower jointly and severally agrees to indemnify each Lender for the full
amount of Taxes and Other Taxes (including any Taxes and any Other Taxes imposed
by any jurisdiction on amounts payable under this Section 12.2) paid by such
Lender and any liability (including penalties, interest and expenses, except for
any penalties, interest and expenses caused by the gross negligence or willful
misconduct of such Lender) arising therefrom or with respect thereto, whether or
not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within 30 days from the
date such Lender makes written demand therefor, which demand shall be
accompanied by a statement providing an explanation of the facts and
calculations that form the basis of such demand.
(d) Within
30 days after the date of any payment of Taxes, Borrowers will furnish to the
Agent the original or a certified copy of a receipt evidencing payment thereof
or, if a receipt is unavailable, such other evidence reasonably satisfactory to
the Agent.
(e) Without prejudice to the survival of
any other agreement of Borrowers hereunder, the agreements and joint and several
obligations of Borrowers contained in this Section 12.2 shall survive the
repayment of all other amounts owing to the Lenders and the Agent under the Loan
Documents and the termination of the Loans. If and to the extent that
the obligations of Borrowers under this Section 12.2 are unenforceable for any
reason, each Borrower agrees to make the maximum contribution to the payment and
satisfaction thereof which is permissible under applicable law.
A
CREDIT AGREEMENT MUST BE IN WRITING TO BE ENFORCEABLE UNDER NEBRASKA
LAW. TO PROTECT YOU (BORROWER) AND US (LENDER) FROM ANY
MISUNDERSTANDINGS OR DISAPPOINTMENTS, ANY CONTRACT, PROMISE, UNDERTAKING, OR
OFFER TO FOREBEAR REPAYMENT OF MONEY OR TO MAKE ANY OTHER FINANCIAL
ACCOMMODATION IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF
CREDIT, OR ANY AMENDMENT OF, CANCELLATION OF, WAIVER OF, OR SUBSTITUTION FOR ANY
OR ALL OF THE TERMS OR PROVISIONS OF ANY INSTRUMENT OR DOCUMENT EXECUTED IN
CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF CREDIT, MUST BE IN
WRITING TO BE EFFECTIVE.
[SIGNATURE
PAGES FOLLOW]
32
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
their duly authorized officers on the day and year first above
written.
|
SUMMIT
HOTEL PROPERTIES, LLC, a South
Dakota
limited liability company, by
its Company
Manager,
THE SUMMIT GROUP, INC.
|
||
|
By:
|
/s/ Xxxxx X. Xxxxxxxxxxx
|
|
|
Xxxxx
X. Xxxxxxxxxxx, Chief Executive Officer
|
||
|
SUMMIT
HOSPITALITY V, LLC, a South Dakota
limited
liability company, by its sole member,
SUMMIT
HOTEL PROPERTIES, LLC, by its
Company
Manager, SUMMIT GROUP, INC.
|
||
|
By:
|
/s/ Xxxxx X. Xxxxxxxxxxx
|
|
|
Xxxxx
X. Xxxxxxxxxxx, Chief Executive
Officer
|
||
33
|
FIRST
NATIONAL BANK OF OMAHA,
as
a Lender and as Agent
|
||
|
By:
|
/s/ Xxxx X. Xxxxxx
|
|
|
Title: Vice
President
|
||
34
|
UNION
BANK & TRUST COMPANY, as a
Lender
|
||
|
By:
|
/s/ Xxx Xxxxxxxx
|
|
|
Title: Vice
President
|
||
35
EXHIBIT
A
(Definitions)
“Administrative
Agent” means First National Bank of Omaha and its successors, assigns and
replacements.
“Appraised
Value” means the “as stabilized” value of a Hotel, determined by appraisals of
such Hotel obtained by Agent.
"Agent"
means the Administrative Agent and the Collateral Agent,
collectively.
“Audit
Committee” means each Borrower’s respective Audit Committee established pursuant
to such Borrower’s Operating Agreement, which Audit Committee shall contain
independent members.
“Business
Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in Omaha, Nebraska or New York, New York are authorized or
required to close or any day on which dealings between banks are not carried on
in U.S. dollar deposits in London, England.
“Collateral
Agent” means First National Bank of Omaha and its successors, assigns and
replacements.
"Debt"
means with respect to any Person, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Debt of others
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Debt secured thereby has been
assumed, (g) all guarantees by such Person of Debt of others, (h) all capital
lease obligations (as determined in accordance with generally accepted
accounting principles) of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers’ acceptances. The Debt of any
Person shall include the Debt of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such Debt
provide that such Person is not liable therefor.
“Debt
Service Coverage Ratio” shall be calculated consistent with the principles used
in the preparation of the financial statements referenced in Section 4.7 of this
Agreement as EBITDA during the trailing four (4) quarters divided by principal
and interest payments on the aggregate first mortgage term debt scheduled and
paid during the trailing four (4) quarters. Expenses of Borrowers
funded with loan proceeds from the refinance of a Hotel(s) owned by a Borrower
where such loan proceeds are used for repair and maintenance of such Hotel(s)
shall be excluded from the determination of the Debt Service Coverage Ratio for
such Borrower.
"Defaulting
Lender" means any Lender that (a) has failed to advance to the Agent any portion
of the Loans required to be funded by such Lender pursuant to this Agreement on
the date required to be funded by such Lender pursuant to this Agreement and
such failure is continuing on the date of determination, (b) has otherwise
failed to pay over to the Agent any other amount required to be paid by such
Lender under this Agreement or under any Loan Document within one (1) Business
Day of the date when due, unless the subject of a good faith dispute and such
failure is continuing on the date of determination, or (c) has been deemed
insolvent, become the subject of a bankruptcy or insolvency proceeding or had
its assets and/or control frozen or seized by the applicable banking regulators
or other governmental agency.
"EBITDA"
means, for either Borrower for any period, the net income of such Borrower
before provision for income taxes, interest expense (including implicit interest
expense on capitalized leases), depreciation expense, amortization expense and
non-recurring renovation/remodel expenses funded with the proceeds of a Loan or
other non-operating sources and other non-cash expenses or charges, excluding
(to the extent included): (a) non-operating gains (including
extraordinary or nonrecurring gains, gains from discontinuance of operations and
gains arising from the sale of assets other than the sale of inventory in the
ordinary course of such Borrower’s business) during the relevant period; and (b)
similar non-operating losses during such period.
"Flagstaff
Hotel" means the Hotel encumbered by that certain Deed of Trust dated October
27, 2008 recorded in the Official Records of Coconino County, Arizona on
November 6, 2008 as Instrument #3505240, as amended by that certain First
Amendment of Deed of Trust of even date with this Agreement, executed by Summit
Hospitality in favor of the Agent in connection with the Flagstaff Term
Loan.
“Hotel”
means a limited service hotel owned by a Borrower securing the
Loans.
"Lien"
means, with respect to any asset, any mortgage, lien, pledge, charge,
assignment, security interest or other encumbrance of any kind in respect of
such asset.
“Loans”
means collectively, the Flagstaff Term Loan, Jacksonville Loan and the Letters
of Credit.
"Material
Adverse Effect" means, with respect to any event, act, condition or occurrence
of whatever nature (including any adverse determination in any litigation,
arbitration, or governmental investigation or proceeding), whether singularly or
in conjunction with any other event or events, act or acts, condition or
conditions, occurrence or occurrences whether or not related, a material adverse
change in, or a material adverse effect on, (i) the business, operations,
results of operations, financial condition, assets, Collateral or liabilities,
of either Borrower, (ii) the ability of either Borrower to perform any of its
obligations under the Loan Documents to which it is a party, (iii) the rights
and remedies of Lenders under any of the Loan Documents or (iv) the legality,
validity or enforceability of any of the Loan Documents.
2
"Percentage"
means, with respect to each Lender, the percentage set forth in the table below
for each Lender in the Flagstaff Term Loan:
|
LENDER
|
PERCENTAGE
|
|
|
First
National
|
75%
|
|
|
Union
|
25%
|
|
|
Total
|
100%
|
"Person"
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, governmental department or authority
or other entity.
“Required
Lenders” means Lenders holding fifty-one percent (51%) or more of the aggregate
outstanding principal balance of the Loans at the relevant time.
"Total
Debt" shall mean on the date of any determination thereof the aggregate of the
Debt outstanding on the (i) Fortress Debt, plus (ii) any Debt of Borrowers, The
Summit Group, Inc. and any affiliate or subsidiary of either Borrower or The
Summit Group, Inc., to the extent of Borrowers ownership interest in such
affiliate or subsidiary, secured by a mortgage, deed of trust or similar
instrument on real property owned or leased by such Borrower, The Summit Group,
Inc. or any such affiliate or subsidiary, including, without limitation, and
Loan under this Agreement, the Current Loan Agreement or under the Loan
Agreement with First National described in Section 7.4(c), plus (iii) any
unsecured Debt owed by either Borrower, The Summit Group, Inc., or any affiliate
or subsidiary of either Borrower or The Summit Group, Inc., to First
National.
All
accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles, as in effect in the
United States. "Including” (and with correlative meaning “include”)
means including without limiting the generality of any description preceding
such term. This Agreement and the other Loan Documents shall be
construed without regard to any presumption or rule requiring construction
against the party causing any such document or any portion thereof to be
drafted. The Section and other headings in this Agreement and any
index in this Agreement are for convenience of reference only and shall not
limit or otherwise affect any of the terms of this
Agreement. Similarly, any page footers or headers or similar word
processing, document or page identification numbers in this Agreement or any
index or exhibit are for convenience of reference only and shall not limit or
otherwise affect any of the terms of this Agreement, nor shall there be any
requirement that any such footers or other numbers be consistent from page to
page. Unless the context clearly requires otherwise, any reference to
a Section of this Agreement refers to all Sections and Subsections
thereunder. Any pronoun used herein shall be deemed to cover all
genders. Defined terms used in this Agreement may be set forth in
this Exhibit or other Sections of this Agreement, and all such definitions
defined in the singular shall have a corresponding meaning when used in the
plural and vice versa.
3
SCHEDULE
4.2
(Mortgages)
|
1.
|
Mortgage
dated June 8, 2009 between Summit Hospitality and Agent recorded in the
Office of the Circuit Court Clerk of Xxxxx County, Florida real estate
records as Document #2009151305, as amended by that certain First
Amendment of Mortgage of even date with this Agreement, executed by Summit
Hospitality in favor of the Agent in connection with the Jacksonville
Loan.
|
|
2.
|
Deed
of Trust dated October 27, 2008 recorded in the Official Records of
Coconino County, Arizona on November 6, 2008 as Instrument #3505240, as
amended by that certain First Amendment of Deed of Trust of even date with
this Agreement, executed by Summit Hospitality in favor of the Agent in
connection with the Flagstaff Term
Loan.
|
SCHEDULE
5.5
(Permitted
Liens)
None
SCHEDULE
6.3(c)
(Compliance
Certificate)
COMPLIANCE
CERTIFICATE
The
undersigned certifies that he/she currently is the ___________________ of Summit
Hotel Properties, LLC and Summit Hospitality V, LLC (collectively, “Company”),
each a South Dakota limited liability company, and that he/she has individually
reviewed the provisions of the Second Amended and Restated Loan Agreement
between Company, Agent and the Lenders a party thereto dated August ____, 2010
(as it may be amended from time to time, the “Loan Agreement”) and that a review
of the activities of the Company since the most recent Compliance Certificate
was delivered to Lenders has been made by him/her or under his/her supervision,
with a view to determining whether Company has fulfilled all their respective
obligations under the Loan Agreement, including, but not limited to, the
Affirmative, Financial and Negative Covenants contained in the Loan
Agreement. Company hereby certifies to Lenders that Company has
observed and performed each undertaking contained in the Loan Agreement and that
no Event of Default has occurred or is existing under the Loan Agreement or any
other Loan Document. Set forth below are financial covenant
measurements for the periods covered by this Compliance Certificate as required
by the Loan Agreement. Also attached hereto are all relevant facts in
reasonable detail to evidence the computations of the financial covenants, which
were computed in accordance with the terms of the Loan Agreement.
For the
period between _________________, 200__ and _________________,
200__.
I. Debt
Service Coverage Ratio
Company’s
Debt Service Coverage Ratio as of the end of the period covered by
Certificate:
__________________________
Required
Debt Service Coverage
Ratio: 1.5:1.0
Calculation
of Debt Service Coverage Ratio:
Earnings
______________________ before
Interest
_______________,
Income
taxes __________,
Depreciation
___________,
Amortization
___________ and
Non-recurring
renovation/remodel expenses funded with the proceeds of a Loan or other
non-operating sources ___________________, divided by
Principal
and interest payments on the aggregate first mortgage term debt scheduled and
paid during the trailing 4 quarters ______________
Equals
_______________.
|
II.
|
Total
Debt Covenant
|
Total
Debt outstanding as of the end of the period covered by this Certificate
equals: $______________
Required
Total Debt: Not in excess of $450,000,000.00.
|
III.
|
Defaults
|
The
undersigned hereby certifies that the above reported information is correct, and
that
[ ] No
event of default has occurred; or
[ ] An
event of default has occurred under the following circumstances:
(Insert
detail or attach description)
|
IV.
|
Maintenance
and Capital Expenditure Reserve
|
Gross
Revenues for each Hotel as of the end of the period covered by this
Certificate:
Maintenance
and Capital Expenditure Reserves deposited as of the end of the period covered
by this Certificate for each Hotel:
Required
Maintenance and Capital Expenditure Reserves:
3% of
gross revenues for each Hotel.
|
By:
|
Date:
|
|||
|
Title:
|
2
