Exhibit 10.29
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement") is
entered into as of February 1, 2006, by and between RED LION HOTELS CORPORATION,
a Washington corporation, formerly known as WESTCOAST HOSPITALITY CORPORATION, a
Washington corporation ("Borrower"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION
("Bank").
RECITALS
A. Borrower and Bank are party to that certain First Amended and Restated
Credit Agreement dated as of February 1, 2005 (as amended to the date hereof,
the "Existing Credit Agreement"), pursuant to which Bank has provided Borrower
with the following credit accommodations: (a) a line of credit in the maximum
principal amount of Four Million Dollars ($4,000,000.00) ("Existing Line of
Credit A"); and (b) a line of credit in the maximum principal amount of Sixteen
Million Dollars ($16,000,000.00) (collectively, the "Existing Facilities").
B. Borrower and Bank wish to amend and restate the Existing Credit
Agreement to, among other things, restructure the Existing Facilities.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Bank and Borrower hereby agree that the Existing
Credit Agreement shall be amended and restated as of the date hereof to read in
its entirety 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 January 3, 2008, not to exceed at any time the aggregate principal
amount of Six Million Dollars ($6,000,000.00) ("Line of Credit A"), the proceeds
of which shall be used first, to repay the outstanding principal balance of
Existing Line of Credit A and second, for working capital purposes. Borrower's
obligation to repay advances under Line of Credit A shall be evidenced by a
promissory note dated as of February 1, 2006 ("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 principal balance
of Line of Credit A shall not at any time exceed the sum of: (i) fifty percent
(50%) of the appraised value of the Xxxxxxx'x Red Lion Inn (Excess Land) (as
defined in Section 1.5 hereof), as determined by Bank after receipt and review
of appraisals prepared by independent appraiser(s) utilizing methodology
satisfactory to Bank in its discretion; plus (ii) the lesser of: (A) fifty-five
percent (55%) of the combined appraised value of the Pocatello Red Lion Inn and
the Xxxxxxx'x Red Lion Inn (Hotel) (as defined in Section 1.5 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 (B) the principal amount required to maintain the Collateral Debt
Service Ratio (as defined in Section 4.9 (e) hereof) at not less than 1.35 to
1.00.
(c) Letter of Credit Subfeature. As a subfeature under the Line of Credit,
Bank agrees from time to time during the term thereof to issue or cause an
affiliate to issue standby letters of credit for the account of Borrower to
finance Borrower's working capital requirements (each, a "Letter of Credit" and
collectively, "Letters of Credit");
provided, however, that the aggregate undrawn amount of all outstanding Letters
of Credit shall not at any time exceed Five Hundred Thousand Dollars
($500,000.00). The form and substance of each Letter of Credit shall be subject
to approval by Bank, in its sole discretion. Each Letter of Credit shall be
issued for a term not to exceed three hundred sixty-five (365) days, as
designated by Borrower; provided, however, that no Letter of Credit shall have
an expiration date subsequent to December 31, 2007. The undrawn amount of all
Letters of Credit shall be reserved under the Line of Credit and shall not be
available for borrowings thereunder. Each Letter of Credit shall be subject to
the additional terms and conditions of the Letter of Credit agreements,
applications and any related documents required by Bank in connection with the
issuance thereof. Each drawing paid under a Letter of Credit shall be deemed an
advance under the Line of Credit and shall be repaid by Borrower in accordance
with the terms and conditions of this Agreement applicable to such advances;
provided however, that if advances under the Line of Credit are not available,
for any reason, at the time any drawing is paid, then Borrower shall immediately
pay to Bank the full amount drawn, together with interest thereon from the date
such drawing is paid to the date such amount is fully repaid by Borrower, at the
rate of interest applicable to advances under the Line of Credit. In such event
Borrower agrees that Bank, in its sole discretion, may debit any account
maintained by Borrower with Bank for the amount of any such drawing.
(d) Reappraisal; Remargining. Borrower agrees that upon receipt and review
of the updated appraisals referred to in Section 3.1 (f) hereof and thereafter
on an annual basis commencing December 31, 2006, Bank shall have the option, at
Borrower's cost, to require a new appraisal of all of the Real Property
Collateral, which appraisals shall be issued by an appraiser or appraisers
acceptable to Bank and shall be in form, substance and reflecting values
satisfactory to Bank, in its discretion. If any such new appraisals reflect a
Loan to Value Ratio greater than fifty-five percent (55%) for all Real Property
Collateral, then Borrower shall either:
(i) within 30 calendar days following written demand from Bank, prepay
the outstanding principal balance of Line of Credit Note A in an
amount sufficient to meet said Loan to Value Ratio; or
(ii) pledge such additional real property collateral to Bank of a type
and pursuant to documentation in form and substance satisfactory to
Bank, as Bank shall require to provide collateral support for Line
of Credit A that, in Bank's determination, is substantially
equivalent to said Loan to Value Ratio.
For purposes hereof, the term "Loan to Value Ratio" shall mean, as of any date
of determination, the outstanding principal balance of the Line of Credit A Note
divided by the sum of the updated appraised values of the Real Property
Collateral.
(e) 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 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(e) shall in no way be deemed a commitment by Bank to honor all or
any part of Borrower's request.
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 January 3, 2007, not to exceed at any time the aggregate principal
amount of Four Million Dollars ($4,000,000.00) ("Line of Credit B"), the
proceeds of which shall be used for working capital purposes. Borrower's
obligation to repay advances under Line of Credit B shall be evidenced by a
promissory note dated as of February 1, 2006 ("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 within
the limitations set forth in Section 1.1 (b) hereof; (ii) if at any time an
outstanding balance exists under Line of Credit B and there is borrowing
availability under Line of Credit A within the limitations set forth in Section
1.1 (b) hereof (at each such time, a "Line of Credit A Availability Amount"),
then Bank shall immediately transfer an amount up to such Line of Credit A
Availability Amount from the outstanding principal balance of Line of Credit B
to the outstanding principal balance of Line of Credit A, and Borrower hereby
authorizes each such transfer; (iii) 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; and (iv) 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 Line of Credit B commitment.
SECTION 1.3. INTEREST/FEES.
(a) Interest. The outstanding principal balance of each credit subject
hereto shall bear interest, and the amount of each drawing paid under any Letter
of Credit 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 Six
Thousand Dollars ($6,000.00), payable on or before execution of this Agreement
and each January 1 thereafter; and (ii) a fee for Line of Credit B equal to Ten
Thousand Dollars ($10,000.00), payable upon execution of this Agreement.
(e) Unused Commitment Fee. Borrower shall pay to Bank at the end of each
calendar month an unused commitment fee equal to five tenths of one percent
(.50%) per annum (computed on the basis of a 360-day year, actual days elapsed)
on the sum of the following: (i) the average daily unused amount of Line of
Credit A plus (ii) the average daily unused amount of Line of Credit B. The
foregoing unused commitment fee shall be calculated on a monthly basis by Bank
and shall be due and payable by Borrower within ten (10) days after each billing
is sent by Bank.
(f) Letter of Credit Fees. Borrower shall pay to Bank fees upon the
issuance of each Letter of Credit, upon the payment or negotiation of each
drawing under any Letter of Credit and upon the occurrence of any other activity
with respect to any Letter of Credit (including without limitation, the
transfer, amendment or cancellation of any Letter of Credit) determined in
accordance with Bank's standard fees and charges then in effect for such
activity.
SECTION 1.4. COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect
all principal, interest and fees due under each credit subject hereto by
charging a deposit account of Borrower with Bank, designated in writing by
Borrower, 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 1.5. COLLATERAL. As security for all indebtedness of Borrower to
Bank under Line of Credit A, Borrower shall cause Red Lion Hotels Limited
Partnership (the "Partnership") to grant 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.
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, Red Lion Hotels Holdings, Inc. ("Red
Lion Holdings"), Red Lion Properties, Inc. ("Red Lion Properties"), Red Lion
Hotels Franchising, Inc. ("Red Lion Franchising") 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, 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 (Hotel)"); (b) that certain excess
land adjacent to Xxxxxxx'x Red Lion Inn (Hotel) owned by the Partnership
("Xxxxxxx'x Red Lion Inn (Excess Land)") (c) that certain real property owned by
the Partnership and located at 0000 Xxxxxxxxx Xxxxx Xxxx, Xxxxxxxxx, Xxxxx
("Pocatello Red Lion Inn") and (d) any property approved by Bank to replace any
of the foregoing under Section 1.1(e) 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 1.6. GUARANTIES. All indebtedness of Borrower to Bank hereunder
shall be guaranteed jointly and severally by the Partnership, Red Lion
Franchising, TW, Inc., Red Lion Holdings, and Red Lion Properties, as evidenced
by and subject to the terms of guaranties in form and substance satisfactory to
Bank.
SECTION 1.7. SUBORDINATION OF DEBT. All obligations of the Red Lion
Entities (as defined in Section 2.4 hereof) for the Trust Preferred Offering
shall at all times be subordinate in right of repayment to all obligations of
the Red Lion Entities to Bank. As used herein, "Trust Preferred Offering" shall
mean that certain issuance of trust preferred securities by Borrower through
WestCoast Hospitality Capital Trust in the aggregate amount of $46,000,000.00,
all terms of which have been publicly disclosed by Borrower in writing prior to
the date hereof.
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 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 "Red Lion Entity" and collectively herein
as the "Red Lion 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 Red Lion Entities, dated September 30, 2005, 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
Red Lion Entities, (b) discloses all liabilities of the Red Lion 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 Red
Lion Entities, nor have any of the Red Lion 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
Red Lion 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 Red Lion
Entities possesses, and will hereafter possess, all permits, consents,
approvals, franchises and 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 Red Lion 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 Red Lion 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 Red
Lion 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 Red Lion Entity; Borrower and each Red Lion 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 Red
Lion 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 Red Lion 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
Red Lion 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:
(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 and which are or may be prior to or equal to the lien
thereon in favor of Bank.
(c) None of the improvements which were included for purpose of
determining the appraised value of any of the Real Property Collateral 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.
(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, and all such Real Property
Collateral 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. The obligation of
Bank to extend credit under Line of Credit A 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 by Bank shall be satisfactory to Bank's counsel.
(b) Loan and Security 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) Third Party Security Agreements (5).
(iv) Continuing Guaranties (5).
(v) Corporate Resolution: Borrowing and Certificate of Incumbency for
Borrower.
(vi) Corporate Resolution: Continuing Guaranty (4).
(vii) Corporate Resolution: Third Party Collateral (4).
(viii) Certificates of Incumbency (4).
(ix) Partnership, Joint Venture or Association Certificate: Third Party
Collateral.
(x) Partnership, Joint Venture or Association Certificate: Guaranty.
(xi) Such other documents as Bank may require under any other Section of
this Agreement.
(c) Real Property Documentation. Bank shall have received, in form and
substance satisfactory to Bank, two Modifications to Deed of Trust pertaining to
the Real Property Collateral, duly executed.
(d) 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 Red Lion 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 Red Lion Entity.
(e) Insurance. Borrower shall have delivered to Bank evidence of insurance
coverage on all real and personal property collateral required under Section 1.5
hereof, 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 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.
(f) 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 (Hotel) $ 4,900,000.00
Xxxxxxx'x Red Lion Inn (Excess Land) $ 1,100,000.00
Pocatello Red Lion Inn $ 2,100,000.00
As of the date of this Agreement, Bank has ordered updated appraisals, at
Borrower's cost, of all of the Real Property Collateral, which, upon receipt and
review by Bank, shall be utilized to determine the amount available under Line
of Credit A pursuant to the provisions of Section 1.1 (b) hereof.
(g) 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 1.5 hereof, subject only to such exceptions as
Bank shall approve in its discretion, with all costs thereof to be paid by
Borrower.
(h) 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.
(i) Environmental Reports. Bank shall have obtained, at Borrower's cost,
environmental reports relating to the Real Property Collateral required by Bank,
issued by consultants acceptable to Bank and in form and substance satisfactory
to Bank.
SECTION 3.2. 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 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 unless as otherwise provided
herein, 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 Red Lion
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 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 and unqualified financial statement of the Red Lion
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
Red Lion 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 Red Lion 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, 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; (ii) copies of all
financial statements and reports that the Borrower 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 Red Lion Entity may make
to or file with the Securities Exchange Commission.
SECTION 4.4. COMPLIANCE. Preserve and maintain, and cause all other Red
Lion 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 Red Lion 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
Red Lion 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 Red Lion 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 Red Lion 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 Red Lion
Entity may in good faith contest or as to which a bona fide dispute may arise,
and (b) for which Borrower or such Red Lion Entity has made provision, to Bank's
satisfaction, for eventual payment thereof in the event Borrower or such Red
Lion 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 Red Lion 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
Red Lion 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 Red Lion Entities
for the period ending December 31, 2005:
(a) Tangible Net Worth. Tangible Net Worth not at any time less than
$120,000,000.00, with "Tangible Net Worth" defined as the aggregate of total
stockholders' equity plus subordinated debt (including the Trust Preferred
Offering), less any intangible assets.
(b) Total Liabilities to Tangible Net Worth Ratio. Total Liabilities
divided by Tangible Net Worth not at any time greater than 2.00 to 1.0, with
"Total Liabilities" defined as the aggregate of current liabilities and
non-current liabilities less subordinated debt, and with "Tangible Net Worth" as
defined above.
(c) Funded Debt to EBITDA Ratio. Funded Debt divided by EBITDA not greater
than (i) 5.75 to 1.00 as of December 31, 2005 and at the end of each fiscal
quarter thereafter through September 30, 2006, for the four fiscal quarters then
ended and (ii) 5.25 to 1.00 as of the end of the fiscal quarter ending December
31, 2006 and at the end of each fiscal quarter thereafter, for the four fiscal
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 Trust Preferred
Offering) plus all capital lease obligations of the Red Lion Entities.
(d) EBITDA Coverage Ratio. EBITDA divided by Debt Service not less than
1.25 to 1.00 as of December 31, 2005 and at the end of each fiscal quarter
thereafter, 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 but excluding indebtedness outstanding
under Line of Credit A and Line of Credit B) 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.
(e) Collateral Debt Service Ratio. Collateral Debt Service Ratio not less
than 1.35 to 1.00, determined at each fiscal quarter end for the four fiscal
quarters then ended, defined as EBITDA contributed by the Real Property
Collateral divided by 10% of the outstanding aggregate principal balance of Line
of Credit A. Notwithstanding the foregoing, however, Borrower shall not be in
violation of this Section 4.9 (e) if, within forty-five (45) days following the
end of any fiscal quarter for which the Collateral Debt Service Ratio is less
than 1.35 to 1.00, Borrower prepays the outstanding principal balance of Line of
Credit A in an amount sufficient to bring the Collateral Debt Service Ratio to
not less than 1.35 to 1.00.
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 Red Lion
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 Red Lion 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
Red Lion 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 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. INVESTMENTS/CAPITAL EXPENDITURES. Make any investments in or
acquisitions of new properties (either directly or indirectly through ownership
interests in any corporation, partnership, limited liability company or other
entity making such investment), nor permit any other Red Lion Entity to make any
investments in or acquisitions of new properties (either directly or indirectly
through ownership interests in any corporation, partnership, limited liability
company or other entity making such investment), in excess of $15,000,000.00 in
the aggregate for all Red Lion Entities combined during any fiscal year.
SECTION 5.3. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist,
or permit any other Red Lion 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, (b) any other
liabilities of Borrower existing as of, and disclosed to Bank prior to, the date
hereof, and (c) other indebtedness for capital expenditures, leases and
investments permitted under Section 5.2 hereof.
SECTION 5.4. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any other entity; nor permit any other Red Lion Entity to merge
into or consolidate with any other entity (other than internal mergers or
consolidations of one or more Red Lion Entities which do not result in any
change in the beneficial ownership of such Red Lion 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 Red Lion Entity to make any change in the nature of such Red Lion Entity's
business as conducted as of the date hereof that would materially adversely
affect the operations of the Red Lion Entities on a consolidated basis; acquire
all or substantially all of the assets of any other entity, nor permit any other
Red Lion 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 Red Lion 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 Red Lion Entities on a consolidated,
book value basis, except: (a) in the ordinary course of business; (b) in
connection with internal reorganizations that do not result in any change in
beneficial ownership of such assets by Borrower; and (c) any other proposed
sales, leases, transfers or dispositions by any Red Lion Entity publicly
disclosed prior to the date hereof or disclosed to Bank in writing prior to the
date hereof.
SECTION 5.5. GUARANTIES. Guarantee or become liable in any way, nor permit
any other Red Lion 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 Red Lion 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 Red Lion
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 Red Lion 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); (b) loans or advances by
Borrower and/or the other Red Lion Entities not at any time to exceed
$5,000,000.00 in the aggregate; and (c) loans or advances by any of the Red Lion
Entities to any other Red Lion Entity that are consolidated for tax and
accounting purposes.
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 Red Lion 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 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, 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, by Borrower or any other Red Lion Entity 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 Red Lion 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
Red Lion Entity; or the recording of any abstract of judgment against Borrower
or any other Red Lion Entity in any county in which Borrower or such Red Lion
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 Red Lion Entity; or the entry of a judgment
against Borrower or any Red Lion Entity; provided, however, that such judgments,
liens, levies, writs, executions and other process involve debts of or claims
against Borrower or any other Red Lion 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 Red Lion 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 Red Lion 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 Red Lion 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 Red Lion
Entity, or Borrower or any other Red Lion Entity shall file an answer admitting
the jurisdiction of the court and the material allegations of any involuntary
petition; or Borrower or any other Red Lion Entity shall be adjudicated a
bankrupt, or an order for relief shall be entered against Borrower or any other
Red Lion 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 Red Lion
Entity, unless previously approved by Bank in writing; or Borrower or any other
Red Lion Entity, or any of their respective directors, stockholders or members,
shall take action reasonably likely to effect the dissolution or liquidation of
Borrower or such Red Lion 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 1.5 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 RED LION HOTELS CORPORATION
AND ANY OTHER 000 X. Xxxxx Xxxxx Xxxxx
XXX XXXX Xxxxxxx, Xxxxxxxxxx 00000
ENTITY:
BANK: XXXXX FARGO BANK, NATIONAL ASSOCIATION
000 Xxxx 0xx Xxxxxx, 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.
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.
(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 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.
RED LION HOTELS CORPORATION XXXXX FARGO BANK, NATIONAL ASSOCIATION
By: By:
---------------------------------- ----------------------------------
Xxxxxx Xxxxxxx Xxxxx Xxxxxxxx
Executive Vice President, Senior Relationship Manager
Chief Investment Officer and
Chief Financial Officer
