EXHIBIT 10.16
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is entered into as of June 24, 2005 by
and between FIRST NATIONAL BANK OF OMAHA, N.A., a national banking association
("First National") as a Lender, Administrative Agent and Collateral Agent for
the Lenders, M & I Xxxxxxxx & Xxxxxx Bank, a national banking association ("M &
I"), Bank Midwest, N.A. ("Bank Midwest") and the other Lenders a party hereto
from time to time and SUMMIT HOTEL PROPERTIES, LLC ("Company"), a South Dakota
limited liability company. First National, M & I, Bank Midwest and the other
lenders a party hereto from time to time may be hereinafter collectively
referred to as "Lenders".
WHEREAS, under the terms and conditions of and subject to the limitations
contained in this Agreement, Lenders have approved financial accommodations in
the maximum principal amount of the lesser of (i) the aggregate Commitments from
Lenders or (ii) $50,000,000.00. The Loans shall be divided into Pool One Loans
and Pool Two Loans as provided for 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
LOANS
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. Pool One Loans. Subject to the terms of this Agreement and the maximum
amount available under the Pool One Loan Formula for Pool One Advances, Lenders
severally agree to lend Company, from time to time until the termination hereof,
such sums as Company may request, but which shall not exceed in the aggregate
principal amount at any time outstanding the lesser of (i) the aggregate
Commitments from Lenders and (ii) Fifty Million and No/100 Dollars
($50,000,000.00). In no event shall a Pool One Advance exceed the Pool One Loan
Formula or the aggregate Commitments from Lenders. Subject to the conditions and
limitations set forth in this Agreement, Pool One Advances will be made to
Company, from time to time during the period commencing on the date hereof to,
but not including, the Termination Date, unless renewed by written agreement
between Lenders and Company. In addition to the foregoing, availability for Pool
One Advances shall be deemed to automatically terminate if First National
accelerates any Pool One Note and/or Pool Two Note following the occurrence of
an Event of Default (as defined under Article VI hereof). Each Pool One Advance
made by Lenders shall be evidenced by a Pool One Note, which along with this
Agreement, the Pool Two Notes, Security Agreement, Mortgages and/or any other
loan document executed in connection with the Loans shall be hereinafter
collectively referred to as the "Loan Documents".
13. Pool Two Loans. Subject to the terms of this Agreement and the
satisfaction of the Conversion Requirements, Company may request from Lenders
Pool Two Loans as initial loans under this Agreement or as the conversion of a
Pool One Loan to a Pool Two Loan on or before the maturity date of a Pool One
Loan. Subject to the conditions and limitations set forth in this Agreement,
Pool Two Loans will be made to Company, from time to time during the period
commencing on the date hereof to, but not including, the Termination Date,
unless renewed by written agreement between Lenders and Company. In addition to
the foregoing, the obligation of Lenders to make Pool Two Loans shall be deemed
to automatically terminate if the occurrence of an Event of Default (as defined
under Article VI hereof) causes the Loans to become immediately due and payable.
Each Pool Two Loan made by Lenders shall be evidenced by a Pool Two Note.
Company may only convert a Pool One Loan to a Pool Two Loan and Lenders will
only make Pool Two Loans to Company as original loans if all of the following
requirements and conditions are met (the "Conversion Requirements"):
(a) The principal amount of a Pool Two Loan increased to the nearest
multiple of $100,000.00 shall not exceed sixty-five percent (65%) of the
lesser of (i) the Appraised Value of the Hotel acquired with the proceeds
of the Pool One Loan being converted to the Pool Two Loan or the Hotel
securing the Pool Two Loan if the Pool Two Loan is an initial loan under
this Agreement and (ii) the Project Costs of the Hotel acquired with the
proceeds of the Pool One Loan being converted to the Pool Two Loan or the
Project Costs of the Hotel securing the Pool Two Loan if the Pool Two Loan
is an initial loan under this Agreement, provided, however, that
notwithstanding the foregoing, without the prior written consent of the
Required Lenders, the amount of a Pool Two Loan shall not exceed one
hundred twenty percent (120%) of the purchase price of the Hotel acquired
with such Pool One Advance being converted to a Pool Two Loan or the Hotel
securing the Pool Two Loan if the Pool Two Loan is an initial loan under
this Agreement.
(b) The Hotel acquired with the proceeds of the Pool One Loan being
converted to the Pool Two Loan or the Hotel securing the Pool Two Loan
individually must have a Debt Service Coverage Ratio, based on a trailing
twelve (12) month cash flow of such Hotel, of not less than 1.25;
(c) No Event of Default has occurred and is continuing; and
(d) Company is in compliance with the financial covenants set forth
below, both before and after conversion of the Pool One Loan to a Pool Two
Loan or the making of the Pool Two Loan as an initial loan under this
Agreement, all as evidenced and detailed by a Pool Two Certificate
substantially in the form of Schedule 1.3 attached hereto and incorporated
herein by reference, which Company shall deliver to Lenders as part of a
request for a Pool Two Loan;
1.4. Notes. To evidence Pool One Loans, Company shall execute and deliver
to First National a Pool One Note substantially in the form of the Pool One Note
attached hereto as Exhibit B and incorporated herein by reference. Each Pool One
Note shall mature in two (2) years after the date of such Pool One Note. To
evidence Pool Two Loans, Company shall execute and deliver to
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First National a Pool Two Note substantially in the form of the Pool Two Note
attached hereto as Exhibit C and incorporated herein by reference. Each Pool Two
Note shall mature in five (5) years after the date of such Pool Two Note. First
National, as Administrative Agent for the Lenders, is authorized to record in a
manner satisfactory to First National, appropriate notations evidencing the date
and amount of each Pool One Loan and each Pool Two Loan, the interest rate
applicable thereto and the date and amount of each payment, which recording
shall constitute prime facie evidence of the accuracy of the information
recorded; provided, however, that the failure to make such recordings shall not
affect the obligations of Company under the Loans or this Agreement or affect
the validity of any Loan.
1.5. Repayment. The Loans shall be repaid as follows:
(a) Pool One Loans. Each Pool One Note shall be payable interest
only, paid monthly in arrears, and the outstanding principal balance
together with accrued and unpaid interest shall be due and payable in full
on the second anniversary date of such Pool One Note.
(b) Pool Two Loans. The principal balance of each Pool Two Note
shall be payable in fifty-nine (59) equal monthly installments, with the
amount of such monthly installments calculated on a twenty (20) year
amortization schedule, with the outstanding principal balance together with
accrued and unpaid interest due and payable in full on the fifth
anniversary date of such Pool Two Note. Interest on each Pool Two Note
shall be payable monthly, in arrears, on the same dates that principal
installments are due and at maturity.
1.6. Interest. The principal balance of each Pool One Note shall bear
interest at a variable per annum rate equal to 2.65% in excess of the LIBOR
Rate, fixed for interest periods of thirty (30) days. The principal balance of
each Pool Two Note shall bear interest at a per annum rate equal to the
Applicable Margin in excess of the LIBOR Rate, fixed for interest periods of
thirty (30) days.
Applicable Margin shall mean the following percentages per annum based upon
Company's Debt Service Coverage Ratio for the preceding fiscal year of Company:
DEBT SERVICE COVERAGE RATIO APPLICABLE MARGIN
--------------------------- -----------------
Equal to or greater than 2.00:1.00 2%
Equal to or greater than 1.75:1.00 but less than 1.99:1.00 2.25%
Equal to or greater than 1.5:1.00 but less than 1.74:1.00 2.5%
Reductions and increases in the Applicable Margin on Pool Two Notes, if
required, will be made on June 1 of each year a Pool Two Note is outstanding
based upon Company's Debt Service Coverage Ratio calculated for the preceding
fiscal year with reviewed or audited numbers. Interest
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on Pool Two Notes shall be payable monthly, in arrears, on the same dates the
principal installments are due.
Interest on the Loans shall be calculated on the number of days outstanding
based upon a year consisting of three hundred and sixty (360) days.
All Loans shall bear interest after their maturity date, whether by
acceleration or otherwise, at the variable per annum rate of four percent (4%)
in excess of the LIBOR Rate, but not to exceed the maximum rate allowed by law.
1.7. Notice of Borrowing/Disbursements. Company may request a Pool One
Advance or a Pool Two Loan which refinances an Acquisition Advance by delivering
a notice (a "Notice of Borrowing") to the Lenders no later man 1:00 p.m. central
time on the fifth Business Day prior to the date of the funding of the requested
Pool One Advance or a Pool Two Loan which refinances an Acquisition Advance.
Company may request a Pool One Advance or a Pool Two Loan which does not
refinance an Acquisition Advance by delivering a notice (a "Notice of
Borrowing") to the Lenders not less than thirty (30) Business Days prior to the
date of funding of such Pool Two Loan. Each Notice of Borrowing shall specify
the requested date of such Pool One Advance or Pool Two Loan (which shall be a
Business Day), the amount of such requested Pool One Advance and Pool Two Loan
and, with respect to a Notice of Borrowing for a Pool Two Loan, a completed Pool
Two Certificate for the Hotel securing such Pool Two Loan, and the Franchise and
address of the Hotel securing such Pool Two Loan.
The Lenders other than First National shall, before 1:00 p.m. central time
on the date of funding of such Pool One Advance or Pool Two Loan, make available
to the Administrative Agent at the Administrative Agent's address referred to in
this Agreement for notices in same day funds, such Lenders' percentage of such
Pool One Advance or Pool Two Loan. After the Administrative Agent's receipt of
such funds, the Administrative Agent will make such funds available to Company
as provided for in this Agreement Notwithstanding the foregoing, unless the
Administrative Agent shall have received notice from the other Lenders prior to
the date of funding of any Pool One Advance or Pool Two Loan that such Lenders
will not make available to the Administrative Agent such Lender's percentage of
such Pool One Advance or Pool Two Loan, the Administrative Agent may assume that
each other Lender has made such percentage available to the Administrative Agent
on the date of funding of such Pool One Advance or Pool Two Loan in accordance
with the first sentence of this paragraph, and the Administrative Agent may, in
reliance upon such assumption, make available to Company on such date a
corresponding amount.
First National will deposit the proceeds of any Pool One Advances to
Company's designated deposit account maintained at First National.
1.8. Conditions to Advances. In addition to the conditions precedent set
forth in Article VII below, each request for a Pool One Advance and request to
convert a Pool One Loan to a Pool Two Loan shall be deemed to constitute a
representation by Company at the time of the request that no Event of Default
(as defined in Article VI hereof) exists or is imminent and that the
representations and warranties of Company contained in this Agreement and the
other Loan
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Documents are true in all material respects on or as of the date of such request
for a Pool One Advance or conversion of a Pool One Loan to a Pool Two Loan.
1.9. Purpose. Company shall use the Pool One Advances to finance Company's
purchase of a Hotel. Company shall use the Pool Two Loans to refinance Pool One
Advances at or prior to the maturity of such Pool One Advances and to refinance
debt on existing Hotels.
1.10. Minimum Amounts. Each Pool One Advance and Pool Two Loan shall be in
a minimum aggregate principal amount of $100,000.00 and integral multiples of
$100,000.00 in excess thereof, subject to the maximum amount available for
borrowing on Pool One Advances and Pool Two Loans as provided for in this
Agreement, increased to the nearest $100,000.00 multiple.
1.11. Fees. In consideration for Lenders making the Loans available to
Company, Company shall pay to the Administrative Agent for the account of
Lenders (i) a commitment fee equal to one quarter of one percent (1/4%) of the
aggregate Commitments of the Lenders payable as follows: (a) one half(1/2) paid
at the closing of this Agreement and (b) one half (1/2) paid on the first
anniversary date of this Agreement and (ii) an unused fee on the unused
Commitments available during the period of determination in the amount of .15%
per annum, payable quarterly, in arrears. The foregoing fees shall be shared by
Lenders pro rata based upon the amount of each Lender's Commitment and the date
such Commitment becomes available to Company bears to the remaining term to the
Termination Date. In addition, Company shall pay Administrative Agent for the
account only of Administrative Agent an agency fee equal to one half of one
percent (1/2%) of the aggregate Commitments of the Lenders payable as follows:
(a) one half (1/2) paid at the closing of this Agreement and (b) one half (1/2)
paid on the first anniversary date of this Agreement.
Additional commitment fees and agency fees which arise due to the increase
in a Lender's Commitment or the adding of a Lender and such added Lender's
Commitment shall also be due at the time such increased Commitment or additional
Commitment becomes available to Company for borrowing and shall be prorated
based on the amount of the Commitment added by such Lender and the number of
days remaining until the Termination Date.
ARTICLE II
COLLATERAL; RESERVES
Payment of Company's obligations hereunder, under the Loans and under the
Loan Documents 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:
2.1. 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 Company hereby grants
to Collateral Agent as collateral agent for the Lenders, a security interest in
all of Company's assets associated with or located at a Hotel encumbered with a
mortgage or deed of trust to secure the Loans, including, but not limited to,
Company's goods and inventory, now owned as well as any and all thereof that may
hereafter be acquired by Company, and in and to all cash and non-cash proceeds
(including, without limitation, insurance proceeds),
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accessions, accessories and products thereof, and all of Company'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 a security agreement specific to Company's assets located at the
applicable Hotel in form and substance acceptable in all respects to Lenders
(the "Security Agreement"). Company agrees to authenticate to Collateral Agent
and hereby authorizes Collateral Agent to file in all filing Offices Collateral
Agent deems necessary, appropriate or desirable such financing statements,
continuations, assignments or other instruments as may be requested by
Collateral Agent at anytime and from time to time in order for Collateral Agent
to perfect its security interest in the aforementioned Collateral.
2.2. Real Property. Contemporaneously with the issuance of a Pool One Note
evidencing a Pool One Advance or a Pool Two Note, Company shall grant and
execute in favor of Collateral Agent as collateral agent for Lenders a first
priority deed of trust or mortgage and assignment of rents and leases on the
Hotel acquired with the Pool One Advance or financed or refinanced with the Pool
Two Note, with such deed of trust or mortgage in form and substance acceptable
to Lenders. Thereafter, such deed of trust or mortgage and assignment of rents
and leases shall secure the Loans.
2.3. Other Documents. Company agrees 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 Lenders
from time to time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Company represents and warrants to Lenders (which representations and
warranties will survive the delivery of the Notes and shall continue so long as
any sums remain outstanding under the Loans, this Agreement or any other Loan
Document) as follows:
3.1. Standing. Company is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of South
Dakota. Company 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. Company has the power and authority to
own its property and to carry on its business.
3.2. Authority. Company 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 Company in accordance with their terms.
No consent or approval of the members or manager of Company or any other person,
entity, 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 Company of its obligations under the Loan Documents 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,
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judgment, injunction, decree, permit, or license applicable to Company or any of
Company's property, or (ii) of Company's Articles of Organization, Operating
Agreement or any members' agreement or other governing or organizational
agreement of Company or Company's members.
3.3. Litigation. There are no actions, suits, arbitration proceedings or
other proceedings of any nature pending or, to the knowledge of Company,
threatened, or any basis therefor, against or affecting Company or the
Collateral at law or in equity, in any court or before any governmental
department or agency, which may result in any material adverse change in the
properties, assets, business or condition, financial or otherwise, of Company or
the ability of Company to perform its obligations under this Agreement and/or
the other Loan Documents.
3.4. 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 Company or affecting the Collateral or Company's other
property, which would conflict with or in any way prevent the execution,
delivery, or carrying out of the terms of this Agreement and/or the Loan
Documents. Company is not 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.
3.5. Title and Liens. Company has good, valid and marketable title of
record to its real 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, as provided in
Schedule 3.5 attached to this Agreement or as otherwise provided for in this
Agreement or disclosed to and approved by Lenders in writing.
3.6. Taxes. Company 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.
3.7. Financial Statements. Company's reviewed financial statements dated as
of December 31, 2004 and internally-prepared interim financial statement dated
April 30, 2005, copies of which have been furnished to Lenders, are complete and
correct and fairly and accurately present the financial condition of Company as
of such date and the results of its operations for the period covert by such
statements. Since April 30, 2005, there has been no material adverse change in
the condition (financial or otherwise), business or operations of Company
subsequent thereto. Company has no 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
Company to Lenders 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.
3.8. Other. All statements by Company contained in any certificate,
statement, document or other instrument or writing delivered by or on behalf of
Company at any time pursuant to this Agreement or the other Loan Documents shall
constitute representations and warranties made by
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Company hereunder. No representation or warranty of Company 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 by or on behalf of Company 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 Company's knowledge, all information material to the transactions
contemplated in this Agreement has been expressly disclosed to Lenders in
writing.
3.9. 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 Administrative
Agent, Company will furnish to Lenders a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U to the
foregoing effect.
3.10 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 Company 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
Company directly or indirectly in any manner. If Company has no
Consolidated Entities, the provisions of this Agreement relating to
Consolidated Entities shall be inapplicable without affecting the
applicability of such provisions to Company 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.
(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; (in) any complete or partial withdrawal, or proposed
complete or partial withdrawal, of Company or any Consolidated Entity
from such Pension Plan; (iv) any complete or partial termination, or
proposed complete or partial termination, of such pension Plan; of (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 Company or any
Consolidated Entity for employees or former
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employees of Company or of any Consolidated Entity, (ii) a plan to
which Company or any Consolidated Entity contributes or is required to
contribute, (iii) a plan to which Company 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 Company 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", Company
shall include any trade or business (whether or not incorporated)
which, together with Company or any Consolidated Entity, is deemed to
be a single employer within the meaning of Section 4001(b)(l) 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. Company 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 Company 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 Company 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 Company 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;
(6) No Pension Plan or other "employee pension benefit plan", as
defined in Section 3(2) of ERISA, to which Company 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;
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(8) Each Pension Plan and each other employee benefit plan as defined
in Section 3(2) of ERISA, to which Company 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 Company 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 Company 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,
Company shall not 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 of Company assign, sell, pledge, encumber,
transfer, hypothecate or otherwise dispose of any of its rights or interest in
Company, 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. Company agrees 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 First National's sole judgment or by reason of a
breach of the foregoing prohibitions. The foregoing indemnification shall
survive repayment of the Loans.
3.11. Solvency. Company is and, after consummation of the transactions
contemplated by this Agreement, will be Solvent. "Solvent" shall mean that, as
of a particular date, (i) Company 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) Company is not engaged in a
business or a transaction, and is not about to engage in a business or a
transaction, for which Company's property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the
industry in which Company is engaged, (iii) the fair value of the property of
Company is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of Company and (iv) the present fair salable
value of the assets of Company is not less than the amount that will be required
to pay the probable liability of Company 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.
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ARTICLE IV
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 Required Lenders shall
otherwise consent in writing, Company shall:
4.1. Financial Covenants. Company shall maintain and comply with the
following financial covenants:
(a). Debt Service Coverage Ratio. Company shall maintain at all times,
on a rolling four-quarter average (for Company'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 30, 2005.
(b). Liquidity Covenant. Company shall establish and maintain at all
times while any Loan remains outstanding unencumbered cash balances in an
amount not less than $4,000,000.00, reserving for, but not limited to, the
following: costs and expenses incurred in connection with capital
improvements, repairs, replacements and capital expenditures to Hotels.
4.2. 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 3.7, and permit Lenders'
officers and/or its authorized representatives or accountants to visit and
inspect Company's properties, examine its books and records, and discuss its
accounts and business with its respective officers, accountants and auditors,
all at reasonable times upon reasonable notice. Without the prior written
consent of the Required Lenders, Company shall not change in any material way
the accounting principles upon which the financial statements referenced in
Section 3.7 were prepared and based.
4.3. Financial Reporting. Deliver to First National financial information
in such form and detail and at such times as are satisfactory to Lenders,
including, without limitation:
(a) Company'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 Company), reviewed by a Certified public accounting firm selected
and approved by the Audit Committee as soon as available and in any event
within one hundred twenty (120) days after the end of each of Company's
fiscal years;
(b) Company's interim monthly 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 thirty (30)
days after the end
11
of each month, signed and certified correct by the Chief Financial Officer
or equivalent of Company (subject to normal year-end adjustments);
(c) At the time of delivery of the financial statements provided for
in subsections (a) and (b) above (with respect to each month which is the
last month of a fiscal quarter of Borrower), a certificate of the chief
financial officer of Company substantially in the form of Schedule 4.3(f)
attached hereto and incorporated herein by reference, (i) demonstrating
compliance with the financial covenants contained in Section 4.1 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 Company proposes
to take with respect thereto and (iii) certifying that all of the
representations and warranties made by Company 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; and
(d) Such other financial information concerning Company as Lenders 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 3.7.) and applied consistently
throughout the periods reflected therein.
4.4. 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, Company, 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 its 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 First National or required by generally accepted
accounting principles, reserves satisfactory to and deposited with First
National have been made therefor.
4.5. Insurance. Company 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 Lenders from
time to time require. The amounts, limits, forms, deductibles, contents and
issuer of said policies shall be subject to Lenders' reasonable approval. First
National, 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 payable to First National, as
Collateral Agent for Lenders, 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 Lenders in their sole discretion. All such insurance shall
provide for noncancellation without at least thirty (30) days prior written
notice to Lenders and shall contain provisions protecting Lenders' interests
whether or not any acts by Company or others should result in loss of coverage
under such policies. The originals, certified
12
copies or certificates of such policies, and renewals evidencing the insurance
required hereunder shall be delivered to First National, as Collateral Agent for
Lenders, 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 Company 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 Lenders, without waiving or releasing
any obligation or default by Company 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 Lenders deem advisable. All sums so disbursed by Lenders,
including, without limitation, reasonable attorney's fees, court costs,
expenses and other charges relating thereto, shall be part of Company
obligations and indebtedness hereunder, secured by the Collateral and payable by
Company to Lenders on demand. UNLESS COMPANY PROVIDES EVIDENCE OF THE INSURANCE
COVERAGE REQUIRED UNDER THIS AGREEMENT AND/OR ANY OTHER LOAN DOCUMENT, LENDERS
MAY PURCHASE INSURANCE AT COMPANY'S EXPENSE TO PROTECT LENDERS' INTEREST IN THE
COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT COMPANY'S INTERESTS. THE
COVERAGE THAT LENDERS PURCHASE MAY NOT PAY ANY CLAIM THAT COMPANY MAY MAKE OR
ANY CLAIM THAT IS MADE AGAINST COMPANY IN CONNECTION WITH THE COLLATERAL.
COMPANY MAY LATER CANCEL ANY INSURANCE PURCHASED BY LENDERS, BUT ONLY AFTER
PROVIDING EVIDENCE THAT COMPANY HAS OBTAINED INSURANCE AS REQUIRED BY THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT. IF LENDERS PURCHASE INSURANCE FOR THE
COLLATERAL, COMPANY WILL BE 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 COMPANY'S OBLIGATIONS HEREUNDER AND SHALL BE SECURED BY THE
COLLATERAL, THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE
COMPANY MAY BE ABLE TO OBTAIN ON ITS OWN.
4.6. Property Maintenance. Keep its 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 Company will be conducted at all times accordance with
prudent business management.
4.7. Existence; Compliance With Laws. Take or cause to be taken such action
as from time to time may be necessary to preserve and maintain its corporate
existence in its 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 laws pertaining to the business or
property of Company, or any part thereof, and with all other lawful government
requirements relating to its business and property.
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4.8. Litigation; Adverse Events. Promptly inform Lenders of the
commencement of any material action, suit, proceeding, arbitration, mediation or
investigation against Company, or the making of any counterclaim against Company
and of all material liens against any of the Company's property and promptly
advise Lenders in writing of any other condition, event or act which comes to
its attention that would or might materially prejudice Lenders' rights under
this Agreement or the Loan Documents.
4.9. Notification. Notify Lenders immediately if it becomes aware of the
occurrence of any Event of Default (as defined under Article VI 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 it 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 of Company, or the failure of Company to observe any of its
undertakings under the Loan Documents. Company shall also notify Lenders in
writing of any default under any other indenture, agreement, contract, lease or
other instrument to which Company is a party or under which Company is
obligated, and of any acceleration of the maturity of any material indebtedness
of Company which default or acceleration could have a material adverse effect on
Company or Company's business, and Company 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.
4.10. Inspections. Company shall allow Lenders, their employees, officers,
agents and representatives, at reasonable intervals and during normal business
hours, to inspect Company's operations, corporate books and records, financial
books and records (including the right to make copies thereof) and to discuss
Company's affairs, finances and accounts with Company's principal officers and
independent public accountants. Company shall permit, and will cooperate with
Lenders in arranging for, inspections at reasonable intervals of Company's
facilities and audits of the Collateral. Company acknowledges that any reports
and inspections conducted or generated by Lenders or their agents or
representatives, shall be made for the sole benefit of Lenders and not for the
benefit of Company or any third party, and Lenders do not assume any liability,
responsibility or obligation to Company 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 by Company.
4.11. Conduct of Business. Continue to engage in an efficient and
economical manner in the business currently conducted by Company on the date of
this Agreement.
ARTICLE V
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, Company shall not, without the prior written consent of the
Required Lenders:
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5.1. Liens. Create, incur, assume or suffer to exist any security interest,
mortgage, pledge, lien or other encumbrance upon any of its personal properties
or assets, whether now owned or hereafter acquired, except such security
interests, mortgages, pledges, liens or other encumbrances:
(a) created or granted by Company under or pursuant to this Agreement;
(b) securing debt allowed in Section 5.4 below incurred in the ordinary
course of Company's business, consistent with current practices;
(c) liens for taxes, assessments or governmental charges or levies to the
extent not delinquent of that are being diligently contested in good faith by
appropriate proceedings and for which Company has set aside adequate reserves in
accordance with generally accepted accounting principles;
(d) cash pledges or deposits to secure (A) obligations under workmen's
compensation laws or similar legislation, (B) public or statutory obligations of
Company, (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 Company's business;
(e) 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;
(f) purchase money liens or purchase money security interests upon or in
property acquired or held by Company 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 (f) shall not
exceed $75,0OO.0O per Hotel;
(g) 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 Company;
(h) liens disclosed in Schedule 3.5 attached to this Agreement and
incorporated herein by reference; and
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(i) mortgages or deeds of trust providing permanent financing on Company's
Hotels which are not collateral for the Loans.
5.2. 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 or entity other than sale of Company's inventory in the ordinary course
of business; sell or assist 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 Company,
5.3. Conduct of Business. Materially alter the character in which it
conducts its business or the nature of such business conducted at the date
hereof.
5.4. Debt. Create, incur, assume or suffer to exist any direct or indirect
indebtedness, except the following:
(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 me 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 Company 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 Loan Agreement
dated July 20,2004 in the maximum principal amount of $25,000,000.00; and
(d) The indebtedness described in Schedule 3.5 attached hereto and
incorporated herein by reference.
5.5. Investments. Acquire for investment purposes, investments that would
not qualify as "customary and prudent investments", consistent with the current
investment practices of Company,
5.6. Loans. Directly or indirectly loan amounts to or guarantee the debts
of any person or entity including, but not limited to an affiliate, subsidiary,
parent of Company, or any shareholder, officer or employee thereof; or of any
officer, employee or shareholder of Company or to any entity controlled by any
such entity, officer, shareholder or employee, provided, however, that Company
may make loans to Company's employees in an amount not to exceed $50,000 in the
aggregate at any time outstanding.
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5.7. Executive Management. Unless Lenders' otherwise consent in writing,
Xxxxx X. Xxxxxxxxxxx shall remain Company'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 Company's Operating Agreement.
5.8 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 Company or such
affiliate or subsidiary, as the case may be, and (iii) is on terms no less
favorable to Company 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 or entity that is not an affiliate or subsidiary of Company.
5.9. Refinance/Special Loans. Company shall not refinance any Property
where the principal amount of the debt exceeds seventy percent (70%) of the
Appraised Value of such Property. Any loan proceeds from the refinancing of debt
on Property in excess of the payoff balance of such debt ("Takeout Equity")
shall not be distributed to Company's members, officers, investors, affiliates
or any other related entity if before or after giving effect to such
distribution all such distributions of Takeout Equity in the aggregate in any
fiscal year of Company exceeds fifteen percent (15%) of Company's tangible net
worth (with tangible net worth calculated in accordance with generally accepted
accounting principles and measured at the time of such distribution), In
addition, without the prior written consent of the Required Lenders, there shall
not be Special Loans outstanding at any time in the aggregate principal amount
in excess of 25% Of the aggregate Commitments. The term Special Loans shall mean
a Loan where the original principal amount Of such Loan exceeded 100% of the
purchase price of the Hotel securing such Loan.
ARTICLE VI
EVENTS OF DEFAULT
6.1. Events of Default. The occurrence of any one or more of the following
events shall constitute a default by Company 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 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 First National to Company of such failure; or
(b) A breach by Company or the occurrence of an Event of Default under
any loan agreement, promissory note, security agreement or other agreement,
contract or document beyond any applicable grace or notice and cure period
unless Company is contesting such failure in good faith through appropriate
proceedings, and if requested by Lenders or required by generally accepted
accounting principles, Company has bonded, reserved or otherwise provided
for payment of such indebtedness; or
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(c) A breach by Company in the performance or observance of any term,
covenant or provision contained in Sections 4.1, 4.4, 4.5, 4.7, 4.9, 5.1, 5.2,
5.3, 5.4, 5.7 or 5.9 of this Agreement and the same remains unperformed or is
not cured within a period of ten (10) days after written notice from First
National to Company of such failure; or
(d) A breach by Company in the performance or observance of any agreement,
term, Covenant or condition contained herein (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 to the defaulting
party; 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
(f) Company shall (i) fail to pay any indebtedness for borrowed money, 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 Company is
contesting such failure in good faith through appropriate proceedings, and if
requested by Lenders or required by generally accepted accounting principles,
Company 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) Company 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; Or
(h) Company transfers, sells, assigns, or conveys all or any material part
of its assets or property without the prior written consent of the Required
Lenders.
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6.2. 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 Company to Lenders) then outstanding, shall become
forthwith due and payable in full, together with interest thereon, and Lenders
shall have no obligation to make any further Pool One Advances or Pool Two
Loans. First National, as Collateral Agent for the Lenders, may resort to any
and all 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 Company. First National's resort to
any remedy, shall not prevent the concurrent and subsequent employment of any
remedy or claim against Company,
6.3. Waiver. Any waiver of an Event of Default by Lenders shall not extend
to or affect any subsequent Event of Default. No failure or delay by Lenders in
exercising any right hereunder shall operate as a waiver, nor shall any single
or partial exercise of any right preclude any other right hereunder.
6.4. Setoff. Upon the occurrence and during the continuance of any Event of
Default, Lenders are hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) relating or
attributable to or associated with a Hotel, against the Loans. Lenders agree to
notify Company 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. The rights of Lenders under
this Section 6.4 are in addition to other rights and remedies that any Lender
may have.
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions Precedent to Closing. As a condition precedent to Closing,
Company shall have delivered to the Administrative Agent the following
documents:
(a) This Agreement duly executed by the authorized managers) of
Company;
(b) Certified copies of the Articles of Organization and Operating
Agreement of Company and an appropriate resolution or authority of Company
duly authorizing the execution and delivery of the Loan Documents and
Company's performance hereunder and thereunder;
(c) Company shall have delivered to First National 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;
(d) Any other documents, instruments and reports as Lenders shall
reasonably request; and
19
(e) The payment by Company of all Lenders' 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 each Lender's reasonable attorneys' fees and costs.
7.2. Conditions Precedent to a Pool One Advance or an initial Pool Two
Loan. Lenders shall have no obligation to fund a Pool One Advance or make an
initial Pool Two Loan (or a Pool Two Loan other than a Pool Two Loan converted
from a Pool One Advance) until Company provides Lenders with or satisfies all of
the following requirements and Lenders approve such requirements:
(a) Company identifies to Lenders the Hotel being acquired by Company
by Franchise and address;
(b) Company notifies Lenders of the Project Costs of the Hotel being
acquired;
(c) Company provides Lenders with an MAI Appraisal Report of the Hotel
being acquired meeting FIRREA guidelines and otherwise in form acceptable
to Lenders which establishes the fair market value of the Hotel being
acquired;
(d) Company shall deliver to Lenders a lender's title policy in form
and substance satisfactory to Lenders and issued by a title company
acceptable to Lenders. Such title policy shall insure in the amount of the
Pool One Advance that the deed of trust or mortgage is a valid and
subsisting first priority lien on the Property acquired with the Pool One
Advance, subject only to exceptions acceptable to Lenders, and containing
such endorsements required by Lenders;
(e) a duly certified ALTA/ACSM urban class survey showing the
boundaries of the Hotel being acquired with the Pool One Advance and all
improvements thereon, with flood zone and wet lands certification and
showing the location of all encroachments, easements and other matters
affecting such Property required to be shown in an XXXX xxxxx class survey,
with such survey in form and substance satisfactory to Lenders;
(f) A Phase I environmental site assessment of the Hotel
being acquired with the Pool One Advance meeting current ASTM Standards
and otherwise in form and scope satisfactory to Lenders and such other or
further reports or studies of such Hotel as may be reasonably required by
Lenders, performed by an environmental consultant or engineer acceptable to
Lenders, which establishes the environmental condition of such Property as
satisfactory to Lenders;
(g) Evidence satisfactory to Lenders that all installments of general
real estate taxes, special assessments and other levies against the Hotel
being acquired with the Pool One Advance have been paid in full;
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(h) Along with the Pool One Note evidencing such Pool One Advance or
Pool Two Note evidencing such Pool Two Loan, Company shall execute in favor
of and deliver to Collateral Agent a deed of trust or mortgage and
assignment of rents and leases encumbering the Hotel and constituting a
valid and perfected first lien on the Hotel and a certificate of insurance
naming Lenders as loss payee on the casualty insurance policy covering such
Hotel under a standard mortgagee clause;
(i) A Security Agreement duly executed by an authorized officer(s) of
Company, together with (i) originals of the financing statements for filing
under the Uniform Commercial Code in all jurisdictions necessary or, in the
opinion of First National, desirable to perfect the Security interests of
First National, as Collateral Agent for Lenders, in the Personal Property
Collateral described in Article II above on the specific Hotel created by
the Security Agreement; and (ii) originals of termination statements
relating to any prior financing statements of record, for filing under the
Uniform Commercial Code in all jurisdictions where such prior financing
statements are filed of record;
(j) a certificate of good standing from the Secretary Of State in
which the applicable Hotel is located evidencing Company's authority to
conduct business in such state; and
(k) Such other matters and requirements as Lenders may reasonably
require in Connection with its due diligence and underwriting of a
particular Hotel being acquired with a Pool One Advance or Hotel being
refinanced with the Pool Two Loan.
ARTICLE VIII
MISCELLANEOUS
8.1. Amendments. This Agreement may be amended or modified in whole or in
part at any time provided that such amendment or modification be in writing and
signed by the parties hereto.
8.2. Expenses. All costs, expenses and liabilities incurred by Lenders in
the collection, or in attempting to collect, any indebtedness arising under the
Loan Documents, and all reasonable attorneys' and paralegals' fees, costs and
expenses incurred in connection with such matters, Shall constitute a demand
obligation owing by Company and shall bear interest at the highest rate of
interest provided for under this Agreement. In addition, Company shall pay or
reimburse Lenders on demand for all reasonable costs and expenses incurred by
Lenders in connection with the due diligence and documenting of the Loans,
including, but not limited to, Lenders' reasonable attorneys' fees in connection
therewith, and the attachment and recordation of Lenders' security interest in
the Collateral.
8.3. Delay; Waiver. Any waiver of an Event of Default by 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 First National in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any
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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 Company therefrom shall be effective unless the same
shall be in writing, signed by an officer of First National, 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 Company under the Loan Documents is paid in full.
8.4. 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:
If to First National: First National Bank of Omaha
One First National Center
Stop 1050
Xxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxx Xxxxxx & Xxxxxxx LLP
0000 Xxxx Xxxxx Xxxx
Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
If to Company: Summit Hotel Properties, LLC
0000 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxx 0
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Attn: Xxxxx Xxxx
Facsimile: (000) 000-0000
Lenders and Company 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.
8.5. Transfer or Assignment. This Agreement shall extend to and be binding
upon the successors and assigns of the parties hereto; provided, however, that
Company shall not assign or transfer its rights or obligations hereunder without
the prior written consent of Lenders, and any such assignment or transfer
without such consent shall be void. Lenders may sell participations in the Loans
without notice to Company.
8.6. 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
22
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.
8.7. 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,
Company hereby irrevocably accepts for it self and in respect of its property,
generally and unconditionally, the nonexclusive jurisdiction of such courts.
Company further irrevocably consents 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
First National to serve process in any other manner permitted by law or to
commence legal proceedings or to otherwise proceed against Company in any other
jurisdiction. Company hereby irrevocably waives any objection which it 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 waives and agrees 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. FIRST NATIONAL AND COMPANY 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.
ARTICLE IX
ADMINISTRATIVE AGENT
9.1 Authorization and Action.
(a) Company shall approve any Lender added as a party to this Agreement
from time to time as well as the amount of such Lender's Commitment.
(b) The Lenders from time to time a party hereto hereby irrevocably
appoints First National as its agent and authorizes First National to take such
actions on their behalf and to exercise such powers as are delegated to First
National by the terms of the Loan Documents, together with such actions and
powers as are reasonably incidental thereto, subject to the limitations set
forth in the Participation Agreement(s) between Lenders and First National (the
"Participation Agreements").
(c) First National 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 Administrative Agent, and First National and First National's affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with Company or any of its subsidiaries or affiliate as if it were not the
Administrative Agent hereunder.
23
(d) First National shall not have any duties or obligations except those
expressly set forth in the Loan Documents and the Participation Agreements.
Without limiting the generality of the foregoing, (i) First National shall not
be subject to any fiduciary or other implied duties, regardless of whether an
Event of Default has occurred and is continuing, (ii) First National 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 First National is required to exercise in writing by the
Required Lenders, and (iii) except as expressly set forth in the Loan Documents,
First National shall not have any duty to disclose, and shall not be liable for
the failure to disclose, any information relating to Company or any of its
subsidiaries or affiliates that is communicated to or obtained by First National
serving as Administrative Agent or any of First National's affiliates in any
capacity, except as set forth in the Participation Agreements. First National
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 its own gross
negligence or willful misconduct. First National shall be deemed not to have
knowledge of any Event of Default unless and until written notice thereof is
given to First National by Company or the other Lenders. First National shall
not be responsible for or have any duty to ascertain or inquire into (A) any
statement, warranty of 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 VII or elsewhere
in any Loan Document, other than to confirm receipt of items expressly required
to be delivered to First National and except as set forth in the Participation
Agreements.
(e) First National 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. First National 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. First National may consult with legal counsel (who may be counsel for
Company), 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.
(f) First National may perform any and all its duties and exercise its
rights and powers by or through one or more sub-agents appointed by First
National. First National 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 9.1 shall apply to any such sub-agent and to the affiliates and
subsidiaries of First National 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 Administrative Agent.
(g) Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this subsection (g), First National may resign at any time
as Administrative Agent by notifying the other Lenders and Company. 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 First
24
National and such successor shall not have accepted such appointment within 30
days after First National gives notice of its resignation, then First National
may, on behalf of the Lenders, appoint a successor Administrative Agent which
shall be a Lender or an affiliate of a Lender. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and First National shall be
discharged from its duties and obligations hereunder. The fees payable by
Company to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between Company and such successor.
After the Administrative Agent's resignation hereunder, the provisions of this
Article shall continue in effect for the benefit of such retiring Administrative
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 Administrative Agent.
(h) Each Lender acknowledges that it has independently and without reliance
upon 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 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.
9.2. Indemnification. Each Lender other than First National agrees to
indemnify First National (to the extent not reimbursed by Company), ratably
according to the respective percentage of the Lenders, 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 First National acting as
Administrative Agent in any way relating to or arising out of this Agreement or
any other Loan Document or any action taken or omitted by First National acting
as the Administrative 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 First National's gross
negligence or willful misconduct in connection with First National acting as
Administrative Agent. Without limitation of the foregoing, each Lender other
than First National agrees to reimburse First National promptly upon demand for
its ratable share of any out-of-pocket expenses (including counsel fees)
incurred by First National 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 First National is not reimbursed for such expenses
by Company.
ARTICLE X
YIELD PROTECTION
10.1. 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
25
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 Company shall from time to
time, upon demand by First National as Administrative Agent for the Lenders, pay
to the Administrative 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 Company shall constitute such demand and shall be
conclusive and binding for all purposes, absent manifest error.
(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, Company shall immediately
pay to the Administrative 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
Company and the Administrative 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 8.4 above)
to notify Company of the occurrence of any event referred to in subsection (a)
or (b) of this Section 10.1 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. Company's obligations under this Section 10.1
shall survive the repayment of all other amounts owing to the Lenders and the
Administrative Agent under the Loan Documents and the termination of the Loans.
If and to the extent that the obligations of Company under this Section 10.1 are
unenforceable for any reason, Company agrees to make the maximum contribution to
the payment and satisfaction thereof which is permissible under applicable law.
10.2. Taxes. (a) All payments by Company 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
26
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 Company 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 10.2) such Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) Company shall make such
deductions and (iii) Company shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance With applicable law
(b) In addition, Company 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) Company 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 10.2) 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, Company will
furnish to the Administrative Agent die original or a certified copy of a
receipt evidencing payment thereof or, if a receipt is unavailable, such other
evidence reasonably satisfactory to the Administrative Agent.
(e) Without prejudice to the survival of any other agreement of Company
hereunder, the agreements and obligations of Company contained in this Section
10.2 shall survive the repayment of all other amounts owing to die Lenders and
the Administrative Agent under the Loan Documents and the termination of the
Loans. If and to the extent that the obligations of Company under this Section
10.2 are unenforceable for any reason, Company agrees to make die 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.
27
IN WITNESS WHEREOF, the parties hereto have cased this Agreement to be
executed by their duly authorized officers on the day and year first above
written,
SUMMIT HOTEL PROPERTIES, LLC, BY THE
SUMMIT GROUP, INC., ITS COMPANY MANAGER
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxxxx, President
FIRST NATIONAL BANK OF OMAHA
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Title: Commercial Loan Officer
28
M & I XXXXXXXX & ILSLEY BANK
By: /s/ Xxxxxxx Xxxxx
------------------------------------
Title: Assistant Vice President
29
BANK MIDWEST, N.A.
By: /s/ Xxxx Xxxxx
------------------------------------
Title: Vice President
30
EXHIBIT A
(DEFINITIONS)
"Acquisition Advance" shall mean an advance under that certain Loan Agreement
dated July 20, 2004 between First National Bank of Omaha and Company used by
Company to finance Company's purchase of a limited service hotel(s).
"Administrative Agent" shall mean First National Bank of Omaha and its
successors, assigns and replacements,
"Appraised Value" shall mean the "as stabilized" value of a Hotel, determined in
accordance with Section 7.2(c) of this Agreement.
"Audit Committee" shall mean Company's Audit Committee established pursuant to
Company's Operating Agreement, which Audit Committee shall contain independent
members.
"Business Day" shall mean any day other than a Saturday, Sunday or other day on
which commercial banks in Omaha, Nebraska or Milwaukee, Wisconsin 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" shall mean First National Bank of Omaha and its successors,
assigns and replacements.
"Commitments" means the dollar amount each Lender has committed to lend to
Company hereunder, which commitments shall be the principal amount indicated in
Schedule 1.1 attached hereto and incorporated herein by reference.
"Debt Service Coverage Ratio" shall be calculated consistent with the principles
used in the preparation of the financial statements referenced in Section 3.7 of
this Agreement as 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 four (4) quarters. Expenses of Company funded with loan
proceeds from the refinance of a Hotel(s} owned by Company 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.
"Hotel" means a limited service hotel securing the Loans.
"LIBOR Rate" shall mean, for 30 day interest periods, the London Interbank
Offered Rate for U.S. Dollars for such interest period as quoted in the Money
Rates section of The Wall Street Journal, the Xxxxxx-Xxxxxx News Service or such
other comparable service used by First National from time to time.
the foregoing, without the prior written consent of the Required Lenders, the
amount of a Pool One Advance shall not exceed one hundred twenty percent (120%)
of the purchase price of the Hotel acquired with such Pool One Advance. In no
event shall Pool One Advances in the aggregate at any time exceed the lesser of
(i) the aggregate Commitments of the Lenders minus the amount of Loans
outstanding at the time of a request for a Pool One Advance and (ii)
$50,000,000.00 minus the amount of Loans outstanding at the time of a Pool One
Advance.
"Pool Two Certificate" shall mean a certificate substantially in the form of the
certificate attached as Schedule 1.3 hereto completed by Company and delivered
to Lenders at the time of the giving of a Notice of Borrowing for a Pool Two
Loan.
"Project Costs" shall mean the total amount of the purchase price, franchise
fees, franchise required expenditures including, but not limited to, capital
improvements, signage and computer systems, architectural expenses, permits and
fees, initial working capital and financing and closing costs relating to a
Hotel.
"Required Lenders" shall mean Lenders holding fifty-one percent (51%) or more of
the aggregate Commitments.
"Termination Date" shall mean the earlier to occur of (i) June 24, 2007 or (ii)
the date of the Administrative Agent accelerates the Loans after the occurrence
of an Event of Default.
2
EXHIBIT B
(POOL ONE NOTE FORM)
POOL ONE NOTE
$____________________ ________________, 200__
FOR VALUE RECEIVED, the undersigned, Summit Hotel Properties, LLC
("Borrower"), a South Dakota limited liability company, hereby promises to pay
to the order of First National Bank of Omaha ("Lender") as Administrative Agent
for the Lenders, at its offices in Omaha, Nebraska or at such other place as the
owner and holder of this Pool One Note ("Note") may direct, and in lawful money
of the United States of America and to immediately available funds, the
principal sum of $________________, plus accrued interest. This Note evidences a
Pool One Advance under and is issued pursuant to the terms and conditions
contained in that certain Loan Agreement ("Loan Agreement") dated of even date
herewith between Borrower, Lender and the other Lenders a party thereto, as it
may be from time to time amended or restated, and the terms, conditions and
provisions of the Loan Agreement, including, without limitation, the provisions
relating to collateral securing and limitations on borrowing under this Note,
are incorporated herein by reference. Capitalized terms not otherwise defined in
this Note shall have the meaning given to such terms in the Loan Agreement.
This Note shall bear interest at a variable per annum rate equal to 2.65%
in excess of the LIBOR Rate, fixed for interest periods of thirty (30) days.
Interest shall be calculated on the actual number of days outstanding on the
basis of a year consisting of 360 days, and shall be payable monthly, in
arrears, commencing on ____________________, 200____ and continuing on the
____________ day of each month thereafter until the earlier to occur of (i)
____________, 200__ and (ii) the date Administrative Agent accelerates this Note
due to an Event of Default (the "Maturity Date") when the outstanding principal
balance together with accrued and unpaid interest shall be due and payable in
full. The principal balance of this Note shall bear interest after maturity,
whether by acceleration or otherwise, at a variable per annum rate equal to four
percent (4%) in excess of the LIBOR Rate, but not to exceed the maximum rate
allowed by law.
The principal balance outstanding this Note together with accrued and
unpaid interest shall be due and payable in full on the Maturity Date. Borrower
may, at any time, make principal prepayments as provided for in the Loan
Agreement. All payments shall be first applied to any expenses, fees, protective
advances or other sums due or to be reimbursed to Administrative Agent or
Collateral Agent under the Loan Agreement or any other Loan Document, then to
accrued interest and last to principal.
The aggregate unpaid principal amount plus interest shall become due and
payable without demand or further action on the part of Lender upon the
occurrence of an Event of Default and subsequent to all applicable grace or
notice and cure periods as set forth under the Loan Agreement. If the maturity
date of this Note is accelerated as a consequence of an Event of Default, then
Lenders shall have all the rights and remedies provided for in the Loan
Agreement, the other Loan Documents, or otherwise available at law or in equity.
The rights, powers, privileges, options and remedies of Lenders provided in the
Loan Agreement, the Other Loan Documents or otherwise available at law or in
equity shall be cumulative and concurrent, and may be pursued singly,
successively or together at the sole discretion of Lenders, and may be exercised
as often as occasion therefor shall occur. No delay or discontinuance in the
exercise of any right, power, privilege, option or remedy shall be deemed a
waiver of such right, power, privilege, option or remedy, nor shall the
exercise of any right, power, privilege, option or remedy be deemed an election
of remedies or a waiver of any other right, power, privilege, option or remedy.
Without limiting the generality of the foregoing. Lender's failure after the
occurrence of an Event of Default to declare this Note immediately due and
payable in full shall not constitute a waiver of such right in connection with
any future Event of Default. Lender may rescind any acceleration of this Note
without in any way waiving or affecting its right to accelerate this Note in the
future. Lender's acceptance of partial payment or partial performance shall not
in any way affect or rescind any acceleration of this Note made by Lender.
Unless prohibited by law. Borrower will pay on demand all costs of
collection, legal expenses and attorneys' fees incurred or paid in collecting
and/or enforcing this Note.
If any installment of this Note shall become due and payable on a day which
is not a business day of Lender, payment shall be made on the next succeeding
business day of Lender and, with respect to payments of principal, interest
shall be payable thereon at the applicable rate during such extension.
Borrower and all endorsers, sureties, guarantors and other persons liable
hereon or who may become liable for the payment hereof, severally waive demand,
presentment, notice of dishonor or nonpayment, notice of protest and any and all
lack of diligence in the enforcement hereof and hereby assent to each and any
extension or postponement of the time of payment, at or after maturity, or
other indulgence or modification and hereby waive any and all notice thereof.
This Note is secured by the Collateral defined in the Loan Agreement and by
those certain [Deed Of Trust/Mortgage] and Security Agreement, each of even date
herewith on the property encumbered thereunder.
This Note shall be governed by, and construed in accordance with, the laws
of the State of Nebraska, exclusive of its choice of laws principles.
IN WITNESS WHEREOF, the undersigned have duly caused this Note to be
executed in favor of and delivered to Lender as of the date first written above.
SUMMIT HOTEL PROPERTIES, LLC, a South
Dakota limited liability company, by THE
SUMMIT GROUP, INC., its Company Manager
By:
------------------------------------
Xxxxx X. Xxxxxxxxxxx, President
2
EXHIBIT C
(POOL TWO NOTE FORM)
POOL TWO NOTE
$____________________ ________________, 200_
FOR VALUE RECEIVED, the undersigned, Summit Hotel Properties, LLC
("Borrower"), a South Dakota limited liability company, hereby promises to pay
to the order of First National Bank of Omaha ("Lender") as Administrative Agent
for the Lenders, at its offices in Omaha, Nebraska or at such other place as the
owner and holder of this Pool Two Note ("Note") may direct, and in lawful money
of the United States of America and in immediately available funds, the
principal sum of $______________________, plus accrued interest. This Note
evidences a Pool Two Loan under and is issued pursuant to the terms and
conditions contained in that certain Loan Agreement ("Loan Agreement") dated of
even date herewith between Borrower, Lender and the other Lenders a party
thereto, as it may be from time to time amended or restated, and the terms,
conditions and provisions of the Loan Agreement, including, without limitation,
the provisions relating to collateral securing and limitations on borrowing
under this Note, are incorporated herein by reference, Capitalized terms not
otherwise defined in this Note shall have the meaning given to such terms in the
Loan Agreement.
This Note shall bear interest at a variable per annum rate equal to the
Applicable Margin in excess of the LIBOR Rate, fixed for interest periods of
thirty (30) days. Interest shall be calculated on the actual number of days
outstanding on the basis of a year consisting of 360 days, and shall be payable
monthly, in arrears, on the same dates that principal installments under this
Note are due and on the date Administrative Agent accelerates this Note due to
an Event of Default. The principal balance of this Note shall bear interest
after maturity, whether by acceleration or otherwise, at a variable per annum
rate equal to four percent (4%) in excess of the LIBOR Rate, but not to exceed
the maximum rate allowed by law.
The principal balance of this Note shall be payable in fifty-nine (59)
equal monthly installments of $_____________________, with the amount of such
monthly installments calculated on a twenty (20) year amortization schedule,
commencing on _________________________ and continuing on the same day of each
month thereafter until ____________________ when the outstanding principal
balance together with accrued and unpaid interest shall be due and payable in
full. Borrower may, at any time, make principal prepayments as provided for in
the Loan Agreement. All payments shall be first applied to any expenses, fees,
protective advances or other sums due or to be reimbursed to Administrative
Agent or Collateral Agent under the Loan Agreement or any other Loan Document,
then to accrued interest and last to principal.
The aggregate unpaid principal amount plus interest shall become due and
payable without demand or further action on the part of Lender upon the
occurrence of an Event of Default and subsequent to all applicable grace or
notice and cure periods as set forth under the Loan Agreement. If the maturity
date of this Note is accelerated as a consequence of an Event of Default, then
Lenders shall have all the rights and remedies provided for in the Loan
Agreement, the other Loan Documents, or otherwise available at law or in equity.
The rights, powers, privileges, options and remedies of Lenders provided in the
Loan Agreement the other Loan Documents or otherwise available at law or in
equity shall be cumulative and concurrent, and may be pursued singly,
successively or together at the sole discretion of Lenders, and may be exercised
as often as occasion therefor shall occur. No delay or discontinuance in the
exercise of any right, power, privilege, option or remedy shall be deemed a
waiver of such right, power, privilege, option or remedy, nor shall the exercise
any right, power, privilege, option or remedy be deemed an election of remedies
or a waiver of any other right, power, privilege, option or remedy. Without
limiting the generality of the foregoing, Lender's failure after the
occurrence of an Event of Default to declare this Note immediately due and
payable in foil shall not constitute a waiver of such right in connection with
any future Event of Default. Lender may rescind any acceleration of this Note
without in any way waiving or affecting its right to accelerate this Note to the
future. Leader's acceptance of partial payment or partial performance shall not
in any way affect or rescind any acceleration of this Note made by Lender.
Unless prohibited by law, Borrower will pay on demand all costs of
collection, legal expenses and attorneys' fees incurred or paid in collecting
and/or enforcing this Note.
If any installment of this Note shall become due and payable on a day which
is not a business day of Lender, payment shall be made on the next succeeding
business day of Lender and, with respect to payments of principal, interest
Shall be payable thereon at the applicable rate during such extension.
Borrower and all endorsers, sureties, guarantors and other persons liable
hereon or who may become liable for the payment hereof, severally waive demand,
presentment, notice of dishonor or nonpayment, notice of protest and any and all
lack of diligence in the enforcement hereof and hereby assent to each and any
extension or postponement of the time of payment, at or after maturity, or other
indulgence or modification and hereby waive any and all notice thereof.
This Note is secured by the Collateral defined in the Loan Agreement and by
those certain [Deed of Trust/Mortgage] and Security Agreement, each of even
date herewith on the property encumbered thereunder.
This Note shall be governed by, and construed in accordance with, the laws
of the State Of Nebraska, exclusive of its choice of laws principles.
IN WITNESS WHEREOF, the undersigned have duly caused this Note to be
executed in favor of and delivered to Lender as of the date first written above.
SUMMIT HOTEL PROPERTIES, LLC, a South
Dakota limited liability company, by THE
SUMMIT GROUP, INC., its Company Manager
By:
------------------------------------
Xxxxx X. Xxxxxxxxxxx, President
2
SCHEDULE 1.1
(COMMITMENTS)
First National Bank of Omaha: $ 5,000,000,00
M & I Xxxxxxxx & Ilsley Bank $10,000,000.00
Bank Midwest, N.A. $15,000,000.00
SCHEDULE 1.3
(POOL TWO CERTIFICATE)
POOL TWO CERTIFICATE
The undersigned certifies that he/she currently is the ________________ of
Summit Hotel Properties, LLC ("Company"), a South Dakota limited liability
company, and that he/she is submitting this Pool Two Certificate in connection
with a Notice of Borrowing for a Pool Two Loan under that certain Loan Agreement
between Company, First National Bank of Omaha and the other Lenders a party
thereto (First National Bank of Omaha and such other Lenders are hereinafter
collectively referred to as the "Lenders") dated June __, 2005 ("Loan
Agreement"). This Pool Two Certificate relates to the Hotel identified below
which will secure the Pool Two Loan requested in connection with this Pool Two
Certificate. The undersigned is submitting this Pool Two Certificate to
demonstrate compliance with the Conversion Requirements provided for in 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.
I. HOTEL INFORMATION
Name: __________________________________
Franchise: _____________________________
Address: _______________________________
_______________________________
_______________________________
Pool Two Loan
Amount Requested _______________________
II. APPRAISED VALUE/PROJECT COST OF THE HOTEL
The Pool Two Loan cannot exceed 65% of the lesser of the
Appraised Value of the Hotel ________________________ or
Project Cost of the Hotel ________________________.
65% of the lesser of the Appraised Value and the Project Costs of the
Hotel is ________________________.
Purchase Price (if applicable): ________________________ (Pool Two Loan amount
cannot exceed 120% of the purchase price without the prior written consent of
the Required Lenders, notwithstanding the Appraised Value/Project Cost
determined above).
III. DEBT SERVICE COVERAGE RATIO
The Debt Service Coverage Ratio for the Hotel covered by this Pool Two
Certificate: ________________________
Required Debt Service Coverage Ratio: 1.25:1.0
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 ______________________.
IV. FINANCIAL COVENANT COMPLIANCE
DEBT SERVICE COVERAGE RATIO
Company's Debt Service Coverage Ratio at the time of this Pool Two Certificate
(based upon the latest available calculation date):
________________________
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
2
$________________________
Required Liquidity Covenant $4,000,000.00
V. 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)
By: Date:
--------------------------------- ----------------------------------
Title:
------------------------------
3
SCHEDULE 3.5
(PERMITTED LIENS)
CREDITOR AMOUNT
-------- ------
SCHEDULE 4.3(F)
(COMPLIANCE CERTIFICATE)
COMPLIANCE CERTIFICATE
The undersigned certifies that he/she currently is the _______________ of
Summit Hotel Properties, LLC ("Company"), a South Dakota limited liability
company, and that he/she has individually reviewed the provisions of the Loan
Agreement between Company, First National Bank of Omaha and the other Lenders a
party thereto (First National Bank of Omaha and such other Lenders are
hereinafter collectively referred to as the "Lenders") dated June _______, 2005
("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 its 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-payment sources _______________, divided by
Principal interest payments on the aggregate first mortgage term debt scheduled
and paid during the trailing 4 quarters _____________
Equals ____________________________.
II. LIQUIDITY COVENANT
Unecumbered cash balances as of the end of the period by this Certificate:
$__________________________________
Required Liquidity Covenant $4,000,000.00
III. APPLICABLE MARGIN (CALCULATED AT FISCAL YEAR END)
Debt Service Coverage Ratio: __________
Applicable Margin: __________
LIBOR Rate: __________
Applicable Margin plus LIBOR Rate: __________
IV. SPECIAL LOANS
Aggregate Special Loans Outstanding: _________
25% of the aggregate Commitments: _________
V. 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)
By: Date:
--------------------------------- ----------------------------------
Title:
------------------------------
2
