EXHIBIT 10.23
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of October 24, 2003, by and between
WESTCOAST HOSPITALITY CORPORATION, a Washington corporation ("Borrower"), and
XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
Borrower has requested that Bank extend credit to Borrower as described
below, and Bank has agreed to provide such credit to Borrower on the terms and
conditions contained herein.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Bank and Borrower hereby agree as follows:
ARTICLE I
CREDIT TERMS
SECTION 1.1. LINE OF CREDIT A.
(a) Line of Credit. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including October 31, 2006, not to exceed at any time the aggregate
principal amount of Seven Million Dollars ($7,000,000.00) ("Line of Credit A"),
the proceeds of which shall be used for working capital. Borrower's obligation
to repay advances under Line of Credit A shall be evidenced by a promissory note
substantially in the form of EXHIBIT A attached hereto ("Line of Credit A
Note"), all terms of which are incorporated herein by this reference.
(b) Borrowing and Repayment. Borrower may from time to time during the
term of Line of Credit A borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit A Note; provided, however,
that the total outstanding borrowings under Line of Credit A shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above. Notwithstanding the foregoing, however: the outstanding balance of Line
of Credit A shall not at any time exceed the lesser of: (i) fifty-five percent
(55%) of the value of the Real Property Collateral (as defined in Section 1.6
hereof), as determined by Bank after receipt and review of appraisals prepared
by independent appraiser(s) utilizing methodology satisfactory to Bank in its
discretion; or (ii) the principal amount required to maintain Collateral Debt
Service (as defined in Section 4.9 (d) hereof) at not less than 1.50 to 1.00.
(c) Request for Replacement or Release of Real Property Collateral. At
any time during the term of Line of Credit A, so long as no Event of Default
exists, Borrower may request that Bank release certain Real Property Collateral
and/or replace certain Real Property Collateral with other real property held by
Borrower or its subsidiaries or affiliates. Such request shall be in writing and
shall be delivered to Bank in accordance with the provisions of Section 7.2
hereof. Bank agrees to timely consider such request upon receipt, however, any
determination to release and/or replace any Real Property Collateral shall be
made in Bank's
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sole and absolute discretion based upon such appraisals and other information as
Bank may deem appropriate to review. The inclusion of this Section 1.1(c) shall
in no way be deemed a commitment by Bank to honor all or any part of Borrower's
request.
(d) Decrease in Commitment. Notwithstanding anything to the contrary
herein or in any of the Loan Documents (as defined in Section 2.2 hereof), and
so long as no Event of Default exists, Borrower may decrease, but not increase,
the maximum principal amount available for borrowing under Line of Credit A (a
"Decreased Commitment-Line of Credit A"), subject to all terms, conditions and
limitations set forth herein and in Line of Credit Note A, upon ten (10) days
prior written notice to Bank in accordance with the provisions of Section 7.2
hereof, provided that: (i) a proportionate decrease has been requested to Line
of Credit B (as defined in Section 1.2(a) below) pursuant to the provisions of
Section 1.2(d) hereof, based upon the total commitments then outstanding under
Line of Credit A and Line of Credit B; and (ii) at the time that Borrower
requests the Decreased Commitment-Line of Credit A and at all times thereafter
until implementation of the decrease by Bank, the outstanding principal balance
of Line of Credit A is equal to or less than the Decreased Commitment. Borrower
agrees to execute and deliver any documents reasonably requested by Bank to
effectuate such Decreased Commitment.
(e) Termination of Commitment. Notwithstanding anything to the contrary
herein or in any of the Loan Documents, Borrower may terminate Line of Credit A
upon ten (10) days prior written notice to Bank in accordance with the
provisions of Section 7.2 hereof (a "Termination Request-Line of Credit A"),
provided that: (a) at the time that Bank receives the Termination Request-Line
of Credit A and at all times thereafter until termination of Line of Credit A by
Bank there is no principal outstanding under Line of Credit A; (b) all interest,
fees and charges outstanding under the Loan Documents have been paid in full
prior to termination; and (c) Line of Credit B has previously been terminated by
Borrower pursuant to the provisions of Section 1.2(d) hereof.
SECTION 1.2. LINE OF CREDIT B.
(a) Line of Credit. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including October 31, 2004, not to exceed at any time the aggregate
principal amount of Three Million Dollars ($3,000,000.00) ("Line of Credit B"),
the proceeds of which shall be used for working capital. Borrower's obligation
to repay advances under Line of Credit B shall be evidenced by a promissory note
substantially in the form of EXHIBIT B attached hereto ("Line of Credit B
Note"), all terms of which are incorporated herein by this reference.
(b) Borrowing and Repayment. Borrower may from time to time during the
term of Line of Credit B borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit B Note; provided, however,
that the total outstanding borrowings under Line of Credit B shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above. Notwithstanding the foregoing, however: (i) no advances shall be made
available to Borrower under Line of Credit B until such time as Line of Credit A
is fully advanced pursuant to the provisions of Section 1.1 (b) hereof; (ii)
repayments of principal made by Borrower shall be applied first to repay
advances made under Line of Credit B, then to advances made under Line of Credit
A; (iii) Borrower shall maintain a zero balance on advances under Line of Credit
B for a period of at least thirty (30) consecutive days during the term of the
commitment.
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(c) Decrease in Commitment. Notwithstanding anything to the contrary
herein or in any of the Loan Documents, and so long as no Event of Default
exists, Borrower may decrease, but not increase, the maximum principal amount
available for borrowing under Line of Credit B (a "Decreased Commitment-Line of
Credit B"), subject to all terms, conditions and limitations set forth herein
and in Line of Credit Note B, upon ten (10) days prior written notice to Bank in
accordance with the provisions of Section 7.2 hereof, provided that (i) a
proportionate decrease has been requested to Line of Credit A pursuant to the
provisions of Section 1.1(d) hereof, based upon the total commitments then
outstanding under Line of Credit A and Line of Credit B; and (ii) at the time
that Borrower requests the Decreased Commitment-Line of Credit B and at all
times thereafter until implementation of the decrease by Bank, the outstanding
principal balance of Line of Credit B is equal to or less than the Decreased
Commitment. Borrower agrees to execute and deliver any documents reasonably
requested by Bank to effectuate such Decreased Commitment.
(d) Termination of Commitment. Notwithstanding anything to the contrary
herein or in any of the Loan Documents, Borrower may terminate Line of Credit B
upon ten (10) days prior written notice to Bank in accordance with the
provisions of Section 7.2 hereof (a "Termination Request-Line of Credit B"),
provided that: (a) at the time that Bank receives the Termination Request-Line
of Credit B and at all times thereafter until termination of Line of Credit B by
Bank there is no principal outstanding under Line of Credit B; and (b) all
interest, fees and charges outstanding under the Loan Documents have been paid
in full prior to termination.
SECTION 1.3. TERM LOAN.
(a) Term Loan. Subject to the terms and conditions of this Agreement,
including, without limitation, the provisions of Section 3.2 hereof, Bank hereby
agrees to make a loan to Borrower in the principal amount of Four Million
Dollars ($4,000,000.00) ("Term Loan"), the proceeds of which shall be used to
purchase the Yakima Gateway Hotel (as defined in Section 1.6 hereof). Borrower's
obligation to repay the Term Loan shall be evidenced by a promissory note
substantially in the form of EXHIBIT C attached hereto ("Term Note"), all terms
of which are incorporated herein by this reference. Bank's commitment to grant
the Term Loan shall terminate on January 30, 2004.
(b) Repayment. The principal amount of the Term Loan shall be repaid in
accordance with the provisions of the Term Note.
(c) Voluntary Prepayment. Borrower may prepay principal on the Term
Loan solely in accordance with the provisions of the Term Note.
(d) Reappraisal, Remargining and Mandatory Prepayment of Principal.
(i) Reappraisal. On the third anniversary of disbursement of
the Term Loan, Bank shall have the right, in its sole discretion, to require a
reappraisal of the Yakima Gateway Hotel (the "Reappraisal"). The Reappraisal
shall be conducted by an appraiser acceptable to Bank, utilizing methodology
satisfactory to Bank in its discretion, showing the then-current value of the
Yakima Gateway Hotel (the "Reappraised Value").
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(ii) Remargining and Mandatory Prepayment. If, based on the
Reappraisal, the outstanding principal balance of the Term Loan at the time of
the Reappraisal (the "Outstanding Balance") divided by the Reappraised Value
results in a percentage that exceeds sixty-five percent (65%), Borrower shall,
on the next scheduled principal payment due date under the Term Note, make an
additional principal reduction on the Term Loan such that the Outstanding
Balance divided by the Reappraised Value would result in a percentage equal to
or less than sixty-five percent (65%). Any such principal reduction shall be
subject to applicable prepayment fees, if any, due to Bank under the terms of
the Term Note.
(iii) Costs. Without limiting the generality of any other
provision of this Agreement or any of the other Loan Documents (as such term is
defined in Section 2.2 hereof), Borrower agrees to reimburse Bank immediately
upon demand for all of Bank's costs and expenses expended or incurred by Bank in
connection with this Section 1.3 (d) (including, without limitation, the cost of
the Reappraisal).
SECTION 1.4. INTEREST/FEES.
(a) Interest. The outstanding principal balance of each credit subject
hereto shall bear interest at the rate of interest set forth in each promissory
note or other instrument or document executed in connection therewith.
(b) Prime Rate. The term "Prime Rate" shall mean at any time the rate
of interest most recently announced within Bank at its principal office as its
Prime Rate, with the understanding that the Prime Rate is one of Bank's base
rates and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto, and is evidenced by the
recording thereof in such internal publication or publications as Bank may
designate. Each change in the rate of interest shall become effective on the
date each Prime Rate change is announced within Bank.
(c) Computation and Payment. Interest shall be computed on the basis of
a 360-day year, actual days elapsed. Interest shall be payable at the times and
place set forth in each promissory note or other instrument or document required
hereby.
(d) Commitment Fees. Borrower shall pay the following non-refundable
commitment fees to Bank: (i) an annual fee for Line of Credit A equal to Five
Thousand Dollars ($5,000.00), payable upon execution of this Agreement and each
November 1 thereafter; (ii) a fee for Line of Credit B equal to Five Thousand
Dollars ($5,000.00), payable upon execution of this Agreement; and (iii) a fee
for the Term Loan equal to Forty Thousand Dollars ($40,000.00), payable upon
disbursement of the Term Loan.
(e) Unused Commitment Fee. Borrower shall pay to Bank at the end of
each calendar month an unused commitment fee equal to the percentage per annum
(computed on the basis of a 360-day year, actual days elapsed) of the aggregate
average daily unused amount of Line of Credit A and Line of Credit B, with such
percentage to be determined in accordance with the following matrix and based
upon the Funded Debt to EBITDA Ratio set forth in Section 4.9(b) hereof:
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Funded Debt to EBITDA Commitment Fee (Annualized)
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5.75 to 1.00 or greater .60%
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at least 5.00 to 1.00 but less than 5.75 to 1.00 .50%
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at least 4.00 to 1.00 but less than 5.00 to 1.00 .40%
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at least 3.00 to 1.00 but less than 4.00 to 1.00 .30%
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less than 3.00 to 1.00 .20%
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The foregoing unused commitment fee shall be calculated by Bank after receipt
and review of the calendar quarter-end financial statements delivered by
Borrower to Bank in accordance with the terms of Section 4.3 hereof; provided,
however, that if the Borrower has not timely delivered its financial statements
in accordance with the terms of Section 4.3 hereof, then the commitment fee of
..60% shall apply. Nothing herein shall be deemed to waive any rights, remedies
or claims that Bank may have under this Agreement or the other documents and
instruments executed in connection herewith as a result of Borrower's failure to
deliver such financial statements.
SECTION 1.5. COLLECTION OF PAYMENTS. Borrower authorizes Bank to
collect all principal, interest and fees due under each credit subject hereto by
charging Borrower's deposit account number 4050003334 with Bank for the full
amount thereof. Should there be insufficient funds in any such deposit account
to pay all such sums when due, the full amount of such deficiency shall be
immediately due and payable by Borrower.
SECTION 1.6. COLLATERAL. As security for all indebtedness of Borrower
to Bank under Line of Credit A, Borrower hereby grants to Bank a security
interest of first priority in Borrower's Real Property Collateral (as defined
below) and all products, profits, rents and proceeds of such Real Property
Collateral, and shall cause WestCoast Hospitality Limited Partnership (the
"Partnership"), Red Lion Hotels, Inc. ("RL Hotels, Inc.") and Red Lion
Properties, Inc. ("RL Properties, Inc.") each to grant to Bank a security
interest of first priority in all of their Real Property Collateral and all
products, profits, rents and proceeds of such Real Property Collateral.
As security for all indebtedness of Borrower to Bank under Line of
Credit A and Line of Credit B, Borrower hereby grants to Bank a security
interest in all of Borrower's personal property and the proceeds thereof,
including, but not limited to, accounts receivable, notes receivable , chattel
paper (including electronic chattel paper), deposit accounts, documents,
equipment, financial assets, general intangibles (including payment
intangibles), goods, health-care insurance receivables, instruments, inventory,
investment property, letter of credit rights, supporting obligations, trademarks
and vehicles. As security for all indebtedness of Borrower to Bank under Line of
Credit A and Line of Credit B, Borrower shall cause the Partnership, RL Hotels,
Inc., RL Properties, Inc., WestCoast Hotels, Inc. ("WC Hotels, Inc.") and
Xxxxxxxxxxx.xxx, Inc. ("TW, Inc.") each to grant to Bank a security interest of
first priority in all of their personal property and the proceeds thereof,
including, but not limited to, accounts receivable, chattel paper (including
electronic chattel paper), deposit accounts, documents,
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equipment, financial assets, general intangibles (including payment
intangibles), goods, health-care insurance receivables, instruments, inventory,
investment property, letter of credit rights, supporting obligations, trademarks
and vehicles.
As security for all indebtedness of Borrower to Bank under the Term
Loan, Borrower shall grant or cause to be granted at time of acquisition a
security interest of first priority in that certain real property located at 0
Xxxxx Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx, commonly known as the "Yakima Gateway
Hotel," and all personal property related thereto and the proceeds thereof,
including, but not limited to, accounts receivable, chattel paper (including
electronic chattel paper), deposit accounts, documents, equipment, financial
assets, general intangibles (including payment intangibles, goods, health-care
insurance receivables, instruments, inventory, investment property, letter of
credit rights, supporting obligations, trademarks and vehicles.
As used herein, "Real Property Collateral" shall mean, collectively:
(a) that certain real property owned by the Partnership and located at 000 X.
Xxxxx, Xxxx Xxxxx, Xxxxx ("Templin's Red Lion Inn"); (b) that certain real
property owned by the Partnership and located at 0000 Xxxxxxxxx Xxxxx Xxxx,
Xxxxxxxxx, Xxxxx ("Pocatello Red Lion Inn"); (c) that certain real property
owned by RL Hotels, Inc. located at 000 X. Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx
("Aberdeen Red Lion Inn"); (d) that certain real property owned by RL Hotels,
Inc. and located at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx ("Klamath Red
Lion Inn"); (e) that certain real property owned by RL Properties, Inc. and
located 0000 XX Xxxxxxx 0 Xxxx, Xxxxxxxxx, Xxxxxxx ("Kalispell Red Lion Inn");
and (f) any property approved by Bank to replace any of the foregoing under
Section 1.1(c) hereof.
All of the foregoing shall be evidenced by and subject to the terms of
such security agreements, financing statements, deeds of trust and other
documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank. Borrower shall reimburse Bank immediately upon demand for
all costs and expenses incurred by Bank in connection with any of the foregoing
security, including without limitation, filing and recording fees and costs of
appraisals, audits and title insurance.
SECTION 1.7. GUARANTIES. All indebtedness of Borrower to Bank hereunder
shall be guaranteed jointly and severally by the Partnership, WC Hotels, Inc.,
TW, Inc., RL Hotels, Inc., and RL Properties, Inc. in the principal amount of
Fourteen Million Dollars ($14,000,000.00) each, as evidenced by and subject to
the terms of guaranties in form and substance satisfactory to Bank.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Bank,
which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and final
payment, and satisfaction and discharge, of all obligations of Borrower to Bank
subject to this Agreement.
SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized
and existing and in good standing under the laws of the State of Washington, and
is qualified or licensed to do business (and is in good standing as a foreign
corporation, if applicable) in all
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jurisdictions in which such qualification or licensing is required or in which
the failure to so qualify or to be so licensed could have a material adverse
effect on Borrower.
SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each
promissory note, contract, instrument and other document required hereby or at
any time hereafter delivered to Bank in connection herewith (collectively, the
"Loan Documents") have been duly authorized, and upon their execution and
delivery in accordance with the provisions hereof will constitute legal, valid
and binding agreements and obligations of Borrower or the party which executes
the same, enforceable in accordance with their respective terms.
SECTION 2.3. NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any law
or regulation, or contravene any provision of the Articles of Incorporation or
By-Laws of Borrower, or result in any breach of or default under any contract,
obligation, indenture or other instrument to which Borrower is a party or by
which Borrower may be bound.
SECTION 2.4. LITIGATION. There are no pending, or to the best of
Borrower's knowledge threatened, actions, claims, investigations, suits or
proceedings by or before any governmental authority, arbitrator, court or
administrative agency which could have a material adverse effect on the
financial condition or operation of Borrower or any subsidiaries or affiliates
of Borrower shown as consolidated with Borrower on Borrower's financial
statements (Borrower, together with such subsidiaries or affiliates, shall be
referred to individually herein as a "WestCoast Entity" and collectively herein
as the "WestCoast Entities") other than those disclosed by Borrower to Bank in
writing prior to the date hereof.
SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The consolidated
financial statement of the WestCoast Entities, dated June 30, 2003, a true copy
of which has been delivered by Borrower to Bank prior to the date hereof, (a) is
complete and correct and presents fairly the financial condition of the
WestCoast Entities, (b) discloses all liabilities of the WestCoast Entities that
are required to be reflected or reserved against under generally accepted
accounting principles, whether liquidated or unliquidated, fixed or contingent,
and (c) has been prepared in accordance with generally accepted accounting
principles consistently applied. Since the date of such financial statement
there has been no material adverse change in the financial condition of the
WestCoast Entities, nor have any of the WestCoast Entities mortgaged, pledged,
granted a security interest in or otherwise encumbered any of its assets or
properties except in favor of Bank or as otherwise disclosed to and permitted by
Bank in writing.
SECTION 2.6. INCOME TAX RETURNS. Borrower has no knowledge of any
pending assessments or adjustments of its income tax payable with respect to any
year, nor any knowledge of any pending adjustments of income tax payable by any
other WestCoast Entity with respect to any year.
SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture,
contract or instrument to which Borrower is a party or by which Borrower may be
bound that requires the subordination in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of Borrower.
SECTION 2.8. PERMITS, FRANCHISES. Borrower and each of the other
WestCoast Entities possesses, and will hereafter possess, all permits, consents,
approvals, franchises and
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licenses required and rights to all trademarks, trade names, patents, and
fictitious names, if any, necessary to enable it to conduct the business in
which it is now engaged in compliance with applicable law.
SECTION 2.9. ERISA. Borrower and each of the other WestCoast Entities
is in compliance in all material respects with all applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended or recodified from
time to time ("ERISA"); neither Borrower nor any of the other WestCoast Entities
has violated any provision of any defined employee pension benefit plan (as
defined in ERISA) maintained or contributed to by Borrower or such other
WestCoast Entity (each, a "Plan"); no Reportable Event as defined in ERISA has
occurred and is continuing with respect to any Plan initiated by Borrower or any
other WestCoast Entity; Borrower and each WestCoast Entity has met its minimum
funding requirements under ERISA with respect to each Plan; and each Plan will
be able to fulfill its benefit obligations as they come due in accordance with
the Plan documents and under generally accepted accounting principles.
SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.
SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to
Bank in writing prior to the date hereof, Borrower and each of the other
WestCoast Entities is in compliance in all material respects with all applicable
federal or state environmental, hazardous waste, health and safety statutes, and
any rules or regulations adopted pursuant thereto, which govern or affect any of
Borrower's or such WestCoast Entity's operations and/or properties, including
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986,
the Federal Resource Conservation and Recovery Act of 1976, and the Federal
Toxic Substances Control Act, as any of the same may be amended, modified or
supplemented from time to time. None of the operations of Borrower or any other
WestCoast Entity is the subject of any federal or state investigation evaluating
whether any remedial action involving a material expenditure is needed to
respond to a release of any toxic or hazardous waste or substance into the
environment. Borrower has no material contingent liability in connection with
any release of any toxic or hazardous waste or substance into the environment.
SECTION 2.12. REAL PROPERTY COLLATERAL. Except as disclosed by Borrower
to Bank in writing prior to the date hereof, with respect to the Real Property
Collateral and the Yakima Gateway Hotel:
(a) All taxes, governmental assessments, insurance premiums, and water,
sewer and municipal charges, and rents (if any) which previously became due and
owing in respect thereof have been paid as of the date hereof.
(b) There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that under law
could give rise to any such lien) which affect all or any interest in any Real
Property Collateral or the Yakima Gateway Hotel and which are or may be prior to
or equal to the lien thereon in favor of Bank.
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(c) None of the improvements which were included for purpose of
determining the appraised value of any of the Real Property Collateral or the
Yakima Gateway Hotel lies outside of the boundaries and/or building restriction
lines thereof, and no improvements on adjoining properties materially encroach
upon any such Real Property Collateral or the Yakima Gateway Hotel.
(d) There is no pending, or to the best of Borrower's knowledge
threatened, proceeding for the total or partial condemnation of all or any
portion of any of the Real Property Collateral or the Yakima Gateway Hotel, and
all such Real Property Collateral or the Yakima Gateway Hotel is in good repair
and free and clear of any damage that would materially and adversely affect the
value thereof as security and/or the intended use thereof.
ARTICLE III
CONDITIONS
SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT FOR LINE OF
CREDIT A AND LINE OF CREDIT B. The obligation of Bank to extend Line of Credit A
and Line of Credit B is subject to the fulfillment to Bank's satisfaction of all
of the following conditions:
(a) Approval of Bank Counsel. All legal matters incidental to the
extension of Line of Credit A and Line of Credit B by Bank shall be satisfactory
to Bank's counsel.
(b) Documentation. Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed:
(i) This Agreement, the Line of Credit A Note and the Line of
Credit B Note.
(ii) Security Agreement.
(iii) (5) Third Party Security Agreements.
(iv) (5) Continuing Guaranties.
(v) (5) Deeds of Trust.
(vi) Corporate Resolution: Borrowing and Certificate of Incumbency
for Borrower.
(vii) Corporate Resolution: Continuing Guaranty (4).
(viii) Corporate Resolution: Third Party Collateral (4).
(ix) Certificates of Incumbency (4).
(x) Partnership, Joint Venture or Association Certificate: Third
Party Collateral.
(xi) Partnership, Joint Venture or Association Certificate:
Guaranty.
(xii) Such other documents as Bank may require under any other
Section of this Agreement.
(c) Financial Condition. There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower or any other WestCoast Entity, nor any material decline, as determined
by Bank, in the market value of any collateral required hereunder or a
substantial or material portion of the assets of Borrower or any such WestCoast
Entity.
(d) Insurance. Borrower shall have delivered to Bank evidence of
insurance coverage on all real and personal property collateral required under
Section 1.6 hereof, in form,
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substance, amounts, covering risks and issued by companies satisfactory to Bank,
and where required by Bank, with loss payable endorsements in favor of Bank,
including, without limitation, policies of fire and extended coverage insurance
covering all Real Property Collateral required hereby, with replacement cost and
mortgagee loss payable endorsements, and such policies of insurance against
specific hazards affecting any such real property as may be required by
governmental regulation or Bank.
(e) Appraisals. Bank has obtained, at Borrower's cost, appraisals of
the Real Property Collateral and all improvements thereon, issued by an
appraiser acceptable to Bank and in form, substance and reflecting values
satisfactory to Bank.. The appraisals show values for the following properties
comprising the Real Property Collateral as set forth below:
Xxxxxxx'x Red Lion Inn $4,800,000.00
Kalispell Red Lion Inn $1,100,000.00
Pocatello Red Lion Inn $2,100,000.00
Klamath Lion Inn $2,200,000.00
Aberdeen Red Lion Inn $2,200,000.00
(f) Title Insurance. Bank shall have received an ALTA Policy of Title
Insurance, with such endorsements as Bank may require, issued by a company and
in form and substance satisfactory to Bank, in such amount as Bank shall
require, insuring Bank's lien on the Real Property Collateral to be of the
priority set forth in Section 1.6. hereof, subject only to such exceptions as
Bank shall approve in its discretion, with all costs thereof to be paid by
Borrower.
(g) Payment of Taxes. Borrower shall have delivered to Bank all
evidence required by Bank to establish the current payment in full of all real
property taxes relating to the Real Property Collateral, and, if required by
Bank, evidence that Borrower has established adequate means for payment of
future real property taxes relating to the Real Property Collateral, including,
without limitation, tax service contracts.
SECTION 3.2. CONDITIONS OF INITIAL EXTENSION OF CREDIT FOR TERM LOAN.
The obligation of Bank to extend the Term Loan is subject to the fulfillment to
Bank's satisfaction of all of the following conditions:
(a) Approval of Bank Counsel. All legal matters incidental to the
extension of the Term Loan by Bank shall be satisfactory to Bank's counsel.
(b) Documentation. Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed:
(i) This Agreement and the Term Note.
(ii) Deed of Trust.
(iii) Such other documents as Bank may require under any other
Section of this Agreement.
(c) Financial Condition. There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower or any other WestCoast Entity, nor any material decline, as determined
by Bank, in the market value of the Yakima
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Gateway Hotel or a substantial or material portion of the assets of Borrower or
any such WestCoast Entity.
(d) Insurance. Borrower shall have delivered to Bank evidence of
insurance coverage on the Yakima Gateway Hotel, in form, substance, amounts,
covering risks and issued by companies satisfactory to Bank, and where required
by Bank, with loss payable endorsements in favor of Bank, including, without
limitation, policies of fire and extended coverage insurance covering the Yakima
Gateway Hotel, with replacement cost and mortgagee loss payable endorsements,
and such policies of insurance against specific hazards affecting any such real
property as may be required by governmental regulation or Bank.
(e) Appraisals. Bank shall have obtained, at Borrower's cost, an
appraisal of the Yakima Gateway Hotel and all improvements thereon, issued by an
appraiser acceptable to Bank and in form, substance and reflecting a minimum
loan to value percentage of sixty-five percent (65%), as determined by Bank in
its sole discretion.
(f) Title Insurance. Bank shall have received an ALTA Policy of Title
Insurance, with such endorsements as Bank may require, issued by a company and
in form and substance satisfactory to Bank, in such amount as Bank shall
require, insuring Bank's lien on the Yakima Gateway Hotel to be of first
priority, subject only to such exceptions as Bank shall approve in its
discretion, with all costs thereof to be paid by Borrower.
(g) Payment of Taxes. Borrower shall have delivered to Bank all
evidence required by Bank to establish the current payment in full of all real
property taxes relating to the Yakima Gateway Hotel, and, if required by Bank,
evidence that Borrower has established adequate means for payment of future real
property taxes relating to the Yakima Gateway Hotel, including, without
limitation, tax service contracts.
SECTION 3.3. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of
Bank to make each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Bank's satisfaction of each of the following
conditions:
(a) Compliance. The representations and warranties contained herein and
in each of the other Loan Documents shall be true on and as of the date of the
signing of this Agreement and on the date of each extension of credit by Bank
pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no
Event of Default as defined herein, and no condition, event or act which with
the giving of notice or the passage of time or both would constitute such an
Event of Default, shall have occurred and be continuing or shall exist.
(b) Documentation. Bank shall have received all additional documents
which it may reasonably require in connection with such extension of credit.
ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of
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Borrower to Bank under any of the Loan Documents remain outstanding, and until
payment in full of all obligations of Borrower subject hereto, Borrower shall,
unless Bank otherwise consents in writing:
SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest,
fees or other liabilities due under any of the Loan Documents at the times and
place and in the manner specified therein, and immediately upon demand by Bank,
the amount by which the outstanding principal balance of any credit subject
hereto exceeds any limitation on borrowings applicable thereto.
SECTION 4.2. ACCOUNTING RECORDS. Maintain, and cause each of the
WestCoast Entities to maintain, adequate books and records in accordance with
generally accepted accounting principles consistently applied, and permit any
representative of Bank, at any reasonable time, to inspect, audit and examine
such books and records, to make copies of the same, and to inspect the Real
Property Collateral, the Yakima Gateway Hotel and any other property securing
the obligations hereunder.
SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the
following, in form and detail satisfactory to Bank:
(a) not later than 90 days after and as of the end of each fiscal year,
a consolidated audited financial statement of the WestCoast Entities, prepared
by a certified public accountant acceptable to Bank, to include a Balance Sheet,
an Income Statement, a Statement of Cash Flow, an Auditor's Report and all
supporting schedules and footnotes; provided that for purposes of this Section
4.3, and as of the date of this Agreement, Bank has approved BDO Xxxxxxx, LLP as
a certified public accountant acceptable to Bank, but reserves the right to
require a change in such certified public accountant should circumstances so
warrant;
(b) not later than 45 days after and as of the end of each of the
first, second and third calendar quarters, a consolidated financial statement of
the WestCoast Entities, prepared by Borrower, to include a Balance Sheet, an
Income Statement, and a Statement of Cash Flow;
(c) contemporaneously with each annual and quarterly financial
statement of the WestCoast Entities required hereby, a certificate of compliance
certified by a senior financial officer of Borrower that said financial
statements are accurate and that there exists no Event of Default nor any
condition, act or event which with the giving of notice or the passage of time
or both would constitute an Event of Default;
(d) not later than 45 days after and as of the end of each calendar
quarter for such quarter and for the four quarters then ended, an operating
statement for each parcel of Real Property Collateral and the Yakima Gateway
Hotel, prepared by Borrower;
(e) from time to time such other information as Bank may reasonably
request, including, without limitation: (i) copies of rent rolls and other
information with respect to the Real Property Collateral and the Yakima Gateway
Hotel; (ii) copies of all financial statements and reports that the Borrower or
WestCoast Hospitality Corporation sends to its shareholders; and (iii) copies of
all financial statements and regular, periodical or special reports (including
Forms 10-K, 10-Q and 8-K) that any WestCoast Entity may make to or file with the
Securities Exchange Commission.
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SECTION 4.4. COMPLIANCE. Preserve and maintain, and cause all other
WestCoast Entities to preserve and maintain, all licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
respective business; and comply, and cause all other WestCoast Entities to
comply, with the provisions of all documents pursuant to which such entity is
organized and/or which govern such entity's continued existence and with the
requirements of all laws, rules, regulations and orders of any governmental
authority applicable to such entity and/or its business.
SECTION 4.5. INSURANCE. Maintain and keep in force, and cause all other
WestCoast Entities to maintain and keep in force, insurance of the types and in
amounts customarily carried in lines of business similar to that of such entity,
including but not limited to fire, extended coverage, public liability, flood,
property damage and workers' compensation, with all such insurance carried with
companies and in amounts satisfactory to Bank, and deliver to Bank from time to
time at Bank's request schedules setting forth all insurance then in effect.
SECTION 4.6. FACILITIES. Keep, and cause all other WestCoast Entities
to keep, all properties useful or necessary to such entity's business in good
repair and condition, and from time to time make necessary repairs, renewals and
replacements thereto so that such properties shall be fully and efficiently
preserved and maintained.
SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due,
and cause all other WestCoast Entities to pay and discharge when due, any and
all indebtedness, obligations, assessments and taxes, both real or personal,
including, without limitation federal and state income taxes and state and local
property taxes and assessments, except such (a) as Borrower or such WestCoast
Entity may in good faith contest or as to which a bona fide dispute may arise,
and (b) for which Borrower or such WestCoast Entity has made provision, to
Bank's satisfaction, for eventual payment thereof in the event Borrower or such
WestCoast Entity is obligated to make such payment.
SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower or any other WestCoast Entity
with a claim in excess of $2,000,000.00 if not fully covered by insurance, and
in excess of $10,000,000.00 if fully covered by insurance.
SECTION 4.9. FINANCIAL CONDITION. Maintain the financial condition of
the WestCoast Entities as follows, using generally accepted accounting
principles consistently applied and used consistently with prior practices
(except to the extent modified by the definitions herein), with compliance
determined commencing with the consolidated financial statements of the
WestCoast Entities for the period ending September 30, 2003:
(a) Tangible Net Worth. Tangible Net Worth not at any time less than
$105,000,000.00, with "Tangible Net Worth" defined as the aggregate of total
stockholders' equity plus subordinated debt (including the Preferred Trust
Offering, as such term is defined in Section 5.3 herein) less any intangible
assets.
(b) Funded Debt to EBITDA Ratio. Funded Debt divided by EBITDA not
greater than: (i) 5.95 to 1.00 as of the end of the fiscal quarter ending
September 30, 2003, for the four quarters then ended; and (ii) 5.75 to 1.00 as
of the end of the fiscal quarter ending December
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31, 2003, for the four fiscal quarters then ended, and each fiscal quarter
thereafter for the four quarters then ended to and including the fiscal quarter
ending September 30, 2004; and (iii) 5.50 to 1.00 as of the end of the fiscal
quarter ending December 31, 2004, and thereafter for the four quarters then
ended. As used herein, "EBITDA" shall be defined as net profit before tax, less
gains on asset sales, plus losses on asset sales, plus interest expense (net of
capitalized interest), plus depreciation and amortization expense, plus
non-capitalized conversion and rebranding expense, plus other non-cash expenses,
less other non-cash income. In the event of an acquisition, the EBITDA shall
include the most recent four quarter EBITDA (as defined herein) of the acquired
property. As used herein, "Funded Debt" shall be defined as the sum of all
obligations for borrowed money (excluding the Preferred Trust Offering, as such
term is defined in Section 5.3 herein) plus all capital lease obligations of the
WestCoast Entities.
(c) EBITDA Coverage Ratio: EBITDA divided by Debt Service not less than
1.50 to 1.00, determined at each fiscal quarter end for the four fiscal quarters
then ended. As used herein, "Debt Service" shall be defined as total interest
expense and dividends on preferred stock for the most recent four quarters
ended, plus the current maturity of long-term debt ("CMLTD"), which shall be
based on the CMLTD (including subordinated debt and capital leases) within the
Balance Sheet dated 12-months prior to the most recent quarter ended, less that
portion of balloon payments within CMLTD that exceeds normally scheduled
payments. In the event of an acquisition, Debt Service shall include the Debt
Service (as defined herein) of the acquired property.
(d) Collateral Debt Service. Collateral Debt Service not less than 1.50
to 1.00, determined at each fiscal quarter end for the four fiscal quarters then
ended, defined as EBITDA contributed by Real Property Collateral divided by 10%
of the outstanding aggregate balance of Line of Credit A.
SECTION 4.10. NOTICE TO BANK. Promptly (but in no event more than five
(5) business days after the occurrence of each such event or matter) give
written notice to Bank in reasonable detail of: (a) the occurrence of any Event
of Default, or any condition, event or act which with the giving of notice or
the passage of time or both would constitute an Event of Default; (b) any change
in the name or the organizational structure of Borrower or any other WestCoast
Entity; (c) the occurrence and nature of any Reportable Event or Prohibited
Transaction, each as defined in ERISA, or any funding deficiency with respect to
any Plan; or (d) any termination or cancellation of any insurance policy which
Borrower or any other WestCoast Entity is required to maintain, or any uninsured
or partially uninsured loss through liability or property damage, or through
fire, theft or any other cause affecting Borrower's or any other West Coast
Entity's property.
SECTION 4.11. PRIMARY DEPOSITORY RELATIONSHIPS. It is the intention of
the WestCoast Entities to maintain their primary depository relationships with
Bank, provided that such depository banking relationships are subject to
reasonable and customary terms and conditions for relationships of that type.
ARTICLE V
NEGATIVE COVENANTS
Borrower further covenants that so long as Bank remains committed to
extend credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or
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unliquidated) of Borrower to Bank under any of the Loan Documents remain
outstanding, and until payment in full of all obligations of Borrower subject
hereto, Borrower will not without Bank's prior written consent:
SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any credit
extended hereunder except for the purposes stated in Article I hereof, or for
acquisitions.
SECTION 5.2. CAPITAL EXPENDITURES/LEASES/INVESTMENTS. Make any
additional investments, acquire fixed assets or incur operating lease expense in
any fiscal year in excess of an aggregate of $15,000,000.00 for all WestCoast
Entities (excluding the exercise of purchase options on the Yakima Gateway Hotel
and any others existing as of, and disclosed to Bank prior to, the date hereof,
and normal repairs, maintenance and improvements to existing hotels).
SECTION 5.3. OTHER INDEBTEDNESS. Create, incur, assume or permit to
exist, or permit any other WestCoast Entity to create, incur, assume or permit
to exist, any indebtedness or liabilities resulting from borrowings, loans or
advances, whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to Bank,
and (b) any other liabilities of Borrower existing as of, and disclosed to Bank
prior to, the date hereof, (c) the issuance by one or more of the WestCoast
Entities of up to $46,000,000.00 in the aggregate for the Preferred Trust
Offering to third parties; and (d) other indebtedness for capital expenditures,
leases and investments permitted under Section 5.2 hereof. As used herein,
"Preferred Trust Offering" means any preferred securities issued by a financing
entity (i.e., partnership, trust, limited liability company, etc.) used
exclusively to raise capital for one or more of the WestCoast Entities having
the following structural characteristics: (i) the financing entity is
capitalized through preferred securities issued by the financing entity; (ii)
the financing entity lends the proceeds from the issuance of preferred
securities to such WestCoast Entity in exchange for subordinated debt securities
(which debt securities are subordinated in all respects to the Funded Debt of
the WestCoast Entities, except for Funded Debt which by its terms is expressly
subordinated to or pari passu with such debt securities); (iii) such WestCoast
Entity makes periodic interest payments associated with the subordinated debt
securities to the financing entity which in turn are used to make corresponding
payments to holders of the preferred securities of the financing entity; (iv)
the subordinated debt securities issued by such WestCoast Entity and
corresponding preferred securities issued by the financing entity have a
maturity of at least 30 years; (v) interest payments on the subordinated debt
securities may be deferred at such WestCoast Entity's discretion for one or more
consecutive periods of up to five years, which would result in a corresponding
deferral of payments to holders of the preferred securities, plus accrual of
interest thereon; and (vi) the subordinated debt securities and corresponding
preferred securities may not be redeemed for a period of five years from the
date of issuance other than as a result of a tax or other special event.
SECTION 5.4. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any other entity; nor permit any other WestCoast Entity to
merge into or consolidate with any other entity (other than internal mergers or
consolidations of one or more WestCoast Entities which do not result in any
change in the beneficial ownership of such WestCoast Entities by Borrower); make
any change in the nature of Borrower's business as conducted as of the date
hereof that would materially adversely affect Borrower's operations, nor permit
any other WestCoast Entity to make any change in the nature of such WestCoast
Entity's business as conducted as of the date hereof that would materially
adversely affect the
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operations of the WestCoast Entities on a consolidated basis; acquire all or
substantially all of the assets of any other entity, nor permit any WestCoast
Entity to acquire all or substantially all of the assets of another entity
except as permitted under Section 5.2 hereof; nor sell, lease, transfer or
otherwise dispose of, nor permit any other WestCoast Entity to sell, lease,
transfer or otherwise dispose of, assets having value in excess of ten percent
(10%) of total assets of Borrower and the WestCoast Entities on a consolidated,
book value basis, except: (a) in the ordinary course of business; and (b) in
connection with internal reorganizations that do not result in any change in
beneficial ownership of such assets by Borrower.
SECTION 5.5. GUARANTIES. Guarantee or become liable in any way, nor
permit any other WestCoast Entity to guarantee or become liable in any way, as
surety, endorser (other than as endorser of negotiable instruments for deposit
or collection in the ordinary course of business), accommodation endorser or
otherwise for, any liabilities or obligations of any other person or entity,
except: (a) any of the foregoing in favor of Bank; (b) guarantees or other
liabilities entered into in connection with the Trust Preferred Offering; (c)
guarantees of obligations of WestCoast Entities that are consolidated for tax
and accounting purposes; and (d) guarantees of third party debt, so long as the
liability under such guarantees does not at any time exceed $2,500,000.00 in the
aggregate, nor pledge or hypothecate any assets of Borrower or any WestCoast
Entity with a consolidated book value at any time in excess of $2,500,000.00 in
the aggregate as security for, any liabilities or obligations of any other
person or entity.
SECTION 5.6. LOANS, ADVANCES. Make any loans or advances to any person
or entity, nor permit any WestCoast Entity to make any loans or advances to any
person or entity, except: (a) any of the foregoing existing as of, and disclosed
to Bank prior to, the date hereof (including those contained in the financial
statements delivered to Bank prior to the date hereof); and (b) loans or
advances by Borrower and/or the WestCoast Entities not at any time to exceed
$5,000,000.00 in the aggregate.
SECTION 5.7. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to
exist in favor of any other creditor a security interest in, or lien upon, all
or any portion of Borrower's or any other WestCoast Entity's assets that
constitute the collateral of Bank.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:
(a) Borrower shall fail to pay within three (3) business days after the
date due any principal, interest, fees or other amounts payable under any of the
Loan Documents.
(b) Any financial statement or certificate furnished to Bank in
connection with, or any representation or warranty made by Borrower or any other
party under this Agreement or any other Loan Document shall prove to be
incorrect, false or misleading in any material respect when furnished or made.
(c) Any default in the performance of or compliance with any
obligation, agreement or other provision contained herein or in any other Loan
Document (other than those referred to in
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subsections (a) and (b) above), and with respect to any such default which by
its nature can be cured, such default shall continue for a period of thirty (30)
days from its occurrence; provided, however, if such default which by its nature
can be cured relates specifically to restoration or repair obligations for the
Real Property Collateral and/or the Yakima Gateway Hotel, such default shall
continue for a period of ninety (90) days from its occurrence;
(d) Any default in the payment or performance of any obligation, or any
defined event of default, under the terms of any contract or instrument
involving obligations in excess of $5,000,000.00, individually or in the
aggregate (other than any of the Loan Documents) pursuant to which Borrower or
any WestCoast Entity has incurred any debt or other liability to any person or
entity, including Bank.
(e) The filing of a notice of judgment lien against Borrower or any
other WestCoast Entity; or the recording of any abstract of judgment against
Borrower or any other WestCoast Entity in any county in which Borrower or such
WestCoast Entity has an interest in real property; or the service of a notice of
levy and/or of a writ of attachment or execution, or other like process, against
the assets of Borrower or any other WestCoast Entity; or the entry of a judgment
against Borrower or any WestCoast Entity; provided, however, that such
judgments, liens, levies, writs, executions and other process involve debts of
or claims against Borrower or any other WestCoast Entity in excess of
$5,000,000.00, individually or in the aggregate for all such judgments, liens,
levies, writs, executions and other process against Borrower and any other
WestCoast Entity combined, and within twenty (20) days after the creation
thereof, or at least ten (10) days prior to the date on which any assets could
be lawfully sold in satisfaction thereof, such debt or claim is not satisfied or
stayed pending appeal and insured against in a manner satisfactory to Bank;.
(f) Borrower or any other WestCoast Entity shall become insolvent, or
shall suffer or consent to or apply for the appointment of a receiver, trustee,
custodian or liquidator of itself or any of its property, or shall generally
fail to pay its debts as they become due, or shall make a general assignment for
the benefit of creditors; Borrower or any other WestCoast Entity shall file a
voluntary petition in bankruptcy, or seeking reorganization, in order to effect
a plan or other arrangement with creditors or any other relief under the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended or
recodified from time to time ("Bankruptcy Code"), or under any state or federal
law granting relief to debtors, whether now or hereafter in effect; or any
involuntary petition or proceeding pursuant to the Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy, reorganization or other
relief for debtors is filed or commenced against Borrower or any other WestCoast
Entity, or Borrower or any other WestCoast Entity shall file an answer admitting
the jurisdiction of the court and the material allegations of any involuntary
petition; or Borrower or any other WestCoast Entity shall be adjudicated a
bankrupt, or an order for relief shall be entered against Borrower or any other
WestCoast Entity by any court of competent jurisdiction under the Bankruptcy
Code or any other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors.
(g) There shall exist or occur any event or condition which Bank
reasonably and in good faith believes materially impairs, or is substantially
likely to materially impair, the prospect of payment or performance by Borrower
of its obligations under any of the Loan Documents.
(h) The dissolution or liquidation of Borrower or any other WestCoast
Entity , unless previously approved by Bank in writing; or Borrower or any other
WestCoast Entity , or any of
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their respective directors, stockholders or members, shall take action
reasonably likely to effect the dissolution or liquidation of Borrower or such
WestCoast Entity without the prior written approval of Bank.
(i) The sale, transfer, hypothecation, assignment or encumbrance,
whether voluntary, involuntary or by operation of law, without Bank's prior
written consent, of all or any part of or interest in the Real Property
Collateral, except for leases to third parties of portions of the Real Property
Collateral in the ordinary course of business.
(j) Bank, reasonably and in good faith, believes all or a material
portion of the collateral described in Section 1.6 hereof to be in substantial
danger of misuse, dissipation, commingling, loss, theft, damage or destruction
or otherwise in substantial jeopardy.
SECTION 6.2. REMEDIES. Upon the occurrence of any Event of Default: (a)
all indebtedness of Borrower under each of the Loan Documents, any term thereof
to the contrary notwithstanding, shall at Bank's option and without notice
become immediately due and payable without presentment, demand, protest or
notice of dishonor, all of which are hereby expressly waived by each Borrower;
(b) the obligation, if any, of Bank to extend any further credit under any of
the Loan Documents shall immediately cease and terminate; and (c) Bank shall
have all rights, powers and remedies available under each of the Loan Documents,
or accorded by law, including without limitation the right to resort to any or
all security for any credit subject hereto and to exercise any or all of the
rights of a beneficiary or secured party pursuant to applicable law. All rights,
powers and remedies of Bank may be exercised at any time by Bank and from time
to time after the occurrence of an Event of Default, are cumulative and not
exclusive, and shall be in addition to any other rights, powers or remedies
provided by law or equity.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.
SECTION 7.2. NOTICES. All notices, requests and demands which any party
is required or may desire to give to any other party under any provision of this
Agreement or the other Loan Documents must be in writing delivered to each party
at the following address:
BORROWER WestCoast Hospitality Corporation
AND ANY OTHER 000 X. Xxxxx Xxxxx Xxxxx
XXXXXXXXX Xxxxxxx, Xxxxxxxxxx 00000
ENTITY:
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BANK: XXXXX FARGO BANK, NATIONAL ASSOCIATION
000 X. Xxxx Xx., Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.
SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all reasonable allocated costs of Bank's in-house counsel),
expended or incurred by Bank in connection with (a) the negotiation and
preparation of this Agreement and the other Loan Documents, Bank's continued
administration hereof and thereof, and the preparation of any amendments and
waivers hereto and thereto, (b) the enforcement of Bank's rights and/or the
collection of any amounts which become due to Bank under any of the Loan
Documents, and (c) the prosecution or defense of any action in any way related
to any of the Loan Documents, including without limitation, any action for
declaratory relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing incurred
in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to any Borrower or any other person or entity.
SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interest hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in, Bank's rights
and benefits under each of the Loan Documents. In connection therewith, Bank may
disclose all documents and information which Bank now has or may hereafter
acquire relating to any credit subject hereto, Borrower or its business, any
guarantor hereunder or the business of such guarantor, or any collateral
required hereunder.
SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
Loan Documents constitute the entire agreement between Borrower and Bank with
respect to each credit subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or modified only in writing signed by each
party hereto.
SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.
SECTION 7.7. TIME. Time is of the essence of each and every provision
of this Agreement and each other of the Loan Documents.
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SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or any remaining provisions
of this Agreement.
SECTION 7.9. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed to be
an original, and all of which when taken together shall constitute one and the
same Agreement.
SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington.
SECTION 7.11. ARBITRATION.
(a) Arbitration. The parties hereto agree, upon demand by any party, to
submit to binding arbitration all claims, disputes and controversies between or
among them (and their respective employees, officers, directors, attorneys, and
other agents), whether in tort, contract or otherwise arising out of or relating
to in any way (i) the loan and related Loan Documents which are the subject of
this Agreement and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (ii) requests for additional
credit.
(b) Governing Rules. Any arbitration proceeding will (i) proceed in a
location in Washington selected by the American Arbitration Association ("AAA");
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA's optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to, as applicable, as the "Rules"). If there
is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. Section 91 or
any similar applicable state law.
(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.
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(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in
which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of Washington or a neutral retired judge of the
state or federal judiciary of Washington, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions, which are similar to motions to dismiss for failure to
state a claim or motions for summary adjudication. The arbitrator shall resolve
all disputes in accordance with the substantive law of Washington and may grant
any remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Washington Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.
(e) Discovery. In any arbitration proceeding discovery will be
permitted in accordance with the Rules. All discovery shall be expressly limited
to matters directly relevant to the dispute being arbitrated and must be
completed no later than 20 days before the hearing date and within 180 days of
the filing of the dispute with the AAA. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is available.
(f) Class Proceedings and Consolidations. The resolution of any dispute
arising pursuant to the terms of this Agreement shall be determined by a
separate arbitration proceeding and such dispute shall not be consolidated with
other disputes or included in any class proceeding.
(g) Payment Of Arbitration Costs And Fees. The arbitrator shall award
all costs and expenses of the arbitration proceeding.
(h) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the
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dispute shall control. This arbitration provision shall survive termination,
amendment or expiration of any of the Loan Documents or any relationship between
the parties.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
WESTCOAST HOSPITALITY, XXXXX FARGO BANK,
CORPORATION NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxxx
-------------------- ----------------------------------
Xxxxxx X. Xxxxxx Xxxxx Xxxxxxxx
President and Chief Senior Relationship Manager
Executive Officer
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