SECOND AMENDMENT TO LOAN AGREEMENT
EXHIBIT 10.1
SECOND AMENDMENT TO LOAN AGREEMENT
This Second Amendment to Loan Agreement (this “Amendment”) is entered into as of
October 31, 2005 between GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation
(“Lender”), and WINSTON SPE II LLC, a Delaware limited liability company
(“Borrower”).
RECITALS
A. Lender and Borrower have previously entered into a certain Loan Agreement, dated as of
March 11, 2005, as amended by that certain First Amendment to Loan Agreement, dated as of June 8,
2005 (together, the “Agreement”). Terms used and not otherwise defined in this Amendment
shall have the meanings attributed to them in the Agreement, which is incorporated into this
Amendment by this reference as if fully set forth herein. As the context may require, section
references in this Amendment shall refer to the designated section of the Agreement.
B. Borrower has requested that Lender (i) increase the Commitment to $215,000,000, (ii) extend
the Maturity Date to October 31, 2010, (iii) add six (6) Additional Projects to the Collateral, and
(iv) modify the Agreement in certain other respects as hereinafter set forth; and Lender has agreed
to such modification upon the terms and conditions set forth below.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing Recitals and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Lender
hereby covenant and agree as follows:
1. Definitions.
| (a) Replaced Definitions. Section 1.1 is amended by inserting the following defined terms in lieu of the corresponding defined terms presently set forth in the Agreement: |
| (i) | “Borrowing Base” means, as of any date of determination by Lender, an amount equal to the lesser of (a) the Commitment or (b) the amount that results in a Cash on Cash Return of twelve and one-half percent (12.5%). | ||
| (ii) | “Budget Approval Period” means any Fiscal Year or portion thereof in which either (a) an Event of Default exists, (b) the Cash on Cash Return is less than twelve and one-half percent (12.5%), or (c) the Debt Service Coverage is less than 1.4 to 1.0. |
| (iii) | “Commitment” means the commitment of Lender to made Advances and/or incur Letter of Credit Obligations, which commitment shall be Two Hundred Fifteen Million Dollars ($215,000,000) on the First Additional Projects Closing Date, as such amount may be permanently reduced pursuant to Section 2.3(1). | ||
| (iv) | “Loan Year” means the period between the First Additional Projects Closing Date, and October 31, 2006 for the first Loan Year and the period between each succeeding November 1 and October 31 until the Maturity Date. | ||
| (v) | “Maturity Date” means the earlier of (a) October 31, 2010, or (b) any earlier date on which the entire Loan is required to be paid in full, by acceleration or otherwise, under this Agreement or any of the other Loan Documents. |
| (b) Amended Definitions. Section 1.1 is hereby amended by modifying the following definitions in the manner indicated: |
| (i) | “License Agreement” is amended by adding the following sentence to the end of such definition: “If any Licensor, including, without limitation, Marriott International, Inc. or any of its Affiliates, also manages a Hotel under a management agreement that governs both the licensing and management of the Hotel, ‘License Agreement’ shall also be deemed to include such management agreement.” | ||
| (ii) | “Standard Adjustments” is amended by deleting clause (a) and inserting the following in lieu thereof: “(a) an occupancy rate equal to the lesser of the Project’s actual occupancy rate or (i) an eighty percent (80%) occupancy rate for Extended Stay Hotels, or (ii) a seventy-five percent (75%) occupancy rate for all other Hotels.” |
| (c) New Definitions. Section 1.1 is amended by adding the following new definitions in the appropriate alphabetical sequence: |
| “Extended Stay Hotel” means a Hotel licensed under the brands currently known as “Homewood Suites,” “TownePlace Suites,” “Residence Inns” or any other similar brand mutually agreed to by Borrower and Lender. | |||
| “First Additional Projects” means the Hotels added to the Collateral as Additional Projects on the First Additional Projects Closing Date and listed as Hotels numbered 24 through 29 inclusive on Exhibit A, or any of them, as the context may require. | |||
| “First Additional Projects Closing Date” means October 31, 2005. |
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2. Note. The first sentence of Section 2.1(1)(b) is deleted and replaced by the
following:
| “To evidence the Commitment, Borrower has executed and delivered to Lender (i) a Promissory Note in the principal face amount of $136,600,000, dated as of Xxxxx 00, 0000, (xx) a Promissory Note in the principal amount of $18,400,000 dated as of March 11, 2005, which note (the ‘New York Note’) is an amendment and restatement of Borrower’s existing promissory note secured by the Hilton Garden Inn Albany Airport, and (iii) a Promissory Note in the principal face amount of $60,000,000, dated as of the First Additional Projects Closing Date (collectively, the ‘Note’).” |
3. Interest and Applicable Margin. In the fifth (5th) line of the grid
contained in Section 2.5(1), “13%” is changed to “12.5%”.
4. Fees. Section 2.6 is amended as follows:
| (a) The following sentence is added at the end of Section 2.6(1): “On the First Additional Projects Closing Date, Borrower shall pay to Lender an additional commitment fee in the amount of $300,000.” | |||
| (b) The following sentence is added at the end of Section 2.6(2): “In determining the Unused Commitment Fee for the Fiscal Quarter beginning October 1, 2005, the Commitment shall be deemed to be $155,000,000 through the day immediately preceding the First Additional Projects Closing Date and $215,000,000 thereafter.” | |||
| (c) In the first and last lines of Section 2.6(3), “Closing Date” is changed to “First Additional Projects Closing Date”. In the sixth (6th) line of Section 2.6(3), ”$775,000” is changed to “$1,075,000”. |
5. References to Cash on Cash Return. In Sections 2.15(1)(d), 2.17(1)(c) and
3.2(2)(d), “thirteen percent (13%)” is changed to “twelve and one-half percent (12.5%)”.
6. Houston Vacant Parcel. The following new subsection (2) is added to Section 2.15:
| (2) Houston Vacant Parcel. No Partial Release of that certain parcel of unimproved land located at 00000 Xxxxxxx Xxxx 00, Xxxxxxx, Xxxxx (the “Houston Vacant Parcel”) shall be permitted except in connection with the Partial Release of both the adjoining Courtyard by Marriott and the adjoining Marriott TownePlace Suites (or the Partial Release of the latter of such Hotels to be released). |
7. Birmingham Marriott TownePlace Suites. The following new Section 2.18 is added to
the end of Article 2:
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| Section 2.18 Birmingham Marriott TownePlace Suites. Notwithstanding any other provisions of this Agreement to the contrary, (i) Lender shall recognize only seventy-five percent (75%) of the Underwritten NOI from the Birmingham Marriott TownePlace Suites (“Birmingham TownePlace”) in determining Cash on Cash Return, (ii) if any Person seeks to enforce the Parking Requirements (as hereinafter defined) against Birmingham TownePlace, Lender shall not be obligated to recognize any Underwritten NOI from such Project in determining Cash on Cash Return, and (iii) Birmingham TownePlace shall not be counted against the minimum number of fifteen (15) Projects required to be secured by the Loan Documents pursuant to Section 2.15(f). The foregoing provisions of this Section 2.18 shall cease to apply upon the execution and recordation of an amendment to that certain Declaration of Easements, Covenants, Conditions and Restrictions dated April 30, 1997 and recorded as Instrument Number 9705-4626 in the real property records of Jefferson County, Alabama, terminating (a) the obligations of Birmingham TownePlace to provide a stated ratio of parking spaces to building floor area, and (b) the cross-parking easement between Birmingham TownePlace and the adjacent property currently owned by Xxxx’x Home Centers, Inc. (together, the “Parking Requirements”). |
8. Assumption/Transfer. In Sections 8.1(2)(b)(ii) and (xiii), “Closing Date” is
changed to “First Additional Projects Closing Date”.
9. Limitation on Other Debt. The following new sentence is added to the end of
Section 8.8: “Lender hereby consents to Borrower’s guaranty of the obligations of Operating Lessee
under the License Agreements for any Projects that constitute a portion of the Collateral at any
time.
10. FF&E Expenditures. The following new sentence is added after the first sentence
of Section 8.18: “FF&E reserve funds deposited with and expended by any Licensor for FF&E shall be
credited toward the Minimum Replacement Amount.”
11. List of Hotels. Exhibit A is deleted and replaced by Exhibit A
attached to this Amendment.
12. Other Exhibits and Schedules. Exhibit B and Schedules 2.16 and
8.20(2) to this Amendment are added to the Agreement as part of the correspondingly
numbered exhibits and schedules thereto.
13. Conforming Changes. In the subject line of Exhibit C, Schedule
2.3(1) and Schedule 2.5(5), “$155,000,000” is changed to “$215,000,000”.
14. Interest Rate Protection Agreement. Borrower has obtained the Rate Cap
Transaction attached hereto as Schedule 2.16 – Supplemental Interest Rate Protection
Agreement from SMBC Derivative Products Limited in the “notional amount” of $215,000,000 and
having a term ending January 1, 2007 and a rate cap of 6.14% (the “Supplemental Interest Rate
Protection Agreement”). The Supplemental Interest Rate Protection Agreement shall be a part of
and included within the Interest Rate Protection Agreement for all purposes of the Agreement.
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15. Borrower’s Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
| (a) there are no offsets, counterclaims or defenses of any kind or nature whatsoever existing against the indebtedness evidenced by the Note or the Agreement, or otherwise relating to any of the Obligations, and that it has no claim for or right to reimbursement from Lender of any sums heretofore paid to Lender on account of the Loan, whether by way of interest payments, principal payments, commitment fees or for any other reason; and | |||
| (b) all of the representations and warranties made by it under any of the Loan Documents to which it is a party (i) are true, complete and correct in all material respects on the date hereof, (ii) are hereby expressly restated by it and incorporated herein by this reference, and (iii) are made with respect to the Loan Documents as the same have been amended by this Amendment and by all additional amendments, modifications, renewals, substitutions and replacements of the Loan Documents and all new Loan Documents executed by Borrower in connection herewith. |
16. Release of Lender. Borrower acknowledges that it is executing this Amendment as
its own voluntary act and upon and with advice of counsel. Borrower hereby unconditionally and
irrevocably forever releases, acquits, and discharges Lender and its employees, officers,
directors, agents, servants and counsel (collectively, the “Related Parties”) from any and
all claims, demands, actions, causes or actions, suits, debts, costs, dues, sums of money,
accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, expenses and liabilities whatsoever, known or unknown, at law or in
equity, irrespective of whether such claims arise out of contract, tort, violation of laws or
regulations or otherwise, which Borrower ever had, now has or hereafter can, shall or may have
against Lender or any of the Related Parties or any of them for, upon or by reason of any matter,
cause or thing whatsoever from the beginning of the world to and including the date hereof arising
out of, in connection with, or related in any manner to the Loan, the Note, the Agreement, this
Amendment, and/or any of the other Loan Documents.
17. Confirmation and Ratification. Borrower covenants to pay the Loan and perform the
other Obligations as provided in the Agreement and other Loan Documents. Except as expressly
modified pursuant to the terms and conditions of this Amendment or of any of the other Loan
Documents or amendments thereto executed in connection herewith, all of the terms, covenants and
conditions of the Note, the Agreement and all of the other Loan Documents shall continue unamended
and in full force and effect, and Borrower hereby confirms, ratifies and reaffirms all of such
terms, covenants and conditions.
18. Severability. In case any one or more of the provisions of this Amendment shall
be invalid, illegal or unenforceable in any respect, the validity of the remaining provisions shall
be in no way affected, prejudiced or disturbed thereby.
19. Counterparts. This Amendment may be executed in any number of counterparts, each
of which shall be an original but all together shall constitute one Amendment.
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20. Conflicting Provisions. This Amendment is intended to supplement the Agreement,
and the provisions of this Amendment shall be construed to the maximum extent possible in the
manner necessary to avoid any conflict among their respective terms and conditions. In the event
of any irreconcilable conflict between this Amendment and the terms of the Agreement, the terms of
this Amendment shall govern and control.
21. Headings. The headings of the Sections of this Amendment are for convenience and
reference only and shall not be considered a part hereof nor shall they be deemed to limit or
otherwise affect any of the terms or provisions thereto.
22. Obligations of the Company. The Company hereby consents to the foregoing
provisions of this Amendment and executes this Amendment solely for the purposes of indicating such
consent and affirming its obligations under the Loan Documents previously executed by the Company
in connection with the Loan, including, without limitation, the Joinder to the Loan Agreement, the
Indemnification Agreement, and the Reimbursement Agreement, all dated as of March 11, 2005.
[SIGNATURES FOLLOW]
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EXECUTED as of the date first written above.
| LENDER: |
||
| GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation |
||
| /s/ Xxxxx X. Xxxxxxx | ||
| Name: Xxxxx X. Xxxxxxx Title: Senior Operations Manager GE Real Estate — Specialized Industries |
||
| BORROWER: WINSTON SPE II LLC, a Delaware limited liability company |
||
| /s/ Xxxxx X. Xxxxxxx | ||
| Name : Xxxxx X. Xxxxxxx Title: Vice President and Director of Finance |
||
| COMPANY (Solely as to Paragraph 22): | ||
| WINSTON HOTELS, INC., a North Carolina corporation |
||
| /s/ Xxxxx X. Xxxxxxx | ||
| Name : Xxxxx X. Xxxxxxx Title: Vice President and Director of Finance |
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EXHIBIT A
LIST OF HOTELS
| Hotel | Street Address | County | |||||||||
1.
|
Homewood Suites Phoenix | 0000 Xxxx Xxxxx Xxxxxx Xxxxxxx, XX 00000 |
Maricopa County | ||||||||
2.
|
Holiday Inn Express Clearwater | 00000 Xxxx Xxxx. Xxxxxxxxxx, XX 00000 |
Pinellas County | ||||||||
3.
|
Homewood Suites Alpharetta | 00000 Xxxxx Xxxxx Xxxxxxxxxx, XX 00000 |
Xxxxxx County | ||||||||
4.
|
Homewood Suites Xxxx Xxxx | 000 Xxxxxxxx Xxxxxx Xxxx Xxxx, XX 00000 |
Seminole County | ||||||||
5.
|
Hampton Inn Brunswick | 000 Xxxxxxx Xxxxx Xxxxxxxxx, XX 00000 |
Xxxxx County | ||||||||
6.
|
Hampton Inn Southlake | 0000 Xxxxxxxxx Xxxx. Xxxxxx, XX 00000 |
Xxxxxxx County | ||||||||
7.
|
Hilton Garden Inn Atlanta Xxxxxxx | 0000 Xxxxxxxx Xxxxx Xxxxxxxxxx, XX 00000 |
Xxxxxx County | ||||||||
8.
|
Fairfield Inn Xxx Arbor | 0000 Xxxxxxxxx Xxx Xxxxx, XX 00000 |
Washetenaw County | ||||||||
9.
|
Holiday Inn at Tinton Falls | 000 Xxxx Xxxx Xxxxxx Xxxxx, XX 00000 |
Monmouth County | ||||||||
10.
|
Hilton Garden Inn Albany Airport | 000 Xxxxxx-Xxxxxx Xxxx Xxxxxx XX 00000 |
Albany County | ||||||||
11.
|
Hampton Inn Xxxxx | 0000 Xxxxxxx 000 Xxxxx, XX 00000 |
Watauga County | ||||||||
12.
|
Hampton Inn Xxxx | 000 Xxxxxxxx Xxxxxx Xxxx, XX 00000 |
Xxxx Xxxxxx | ||||||||
13.
|
Homewood Suites Raleigh | 0000 Xxxxxxxx Xxxxx Xxxx. Xxxxxxx, XX 00000 |
Wake County | ||||||||
14.
|
Comfort Inn Durham | 0000 Xx. Xxxxxx Xxxx Xxxxxx, XX 00000 |
Xxxxxx Xxxxxx | ||||||||
00.
|
Xxxxxxx Xxx Xxxxxx | 0000 Xxxxxxxxxx Xxxx Xxxxxx, XX 00000 |
Xxxxxx Xxxxxx | ||||||||
16.
|
Homewood Suites Chapel Hill/Durham | 0000 Xx. Xxxxxx Xxxx Xxxxxx, XX 00000 |
Durham County | ||||||||
17.
|
Comfort Inn Fayetteville | 0000 Xxxxx Xxxx Xxxxxxxxxxxx, XX 00000 |
Cumberland County | ||||||||
18.
|
Hampton Inn Jacksonville | 000 Xxxxxxx Xxxx. Xxxxxxxxxxxx, XX 00000 |
Onslow County | ||||||||
19.
|
Hilton Garden Inn at RDU Airport | 0000 XXX Xxxxxx Xxxxx Xxxxxxxxxxx, XX 00000 |
Wake County | ||||||||
20.
|
Comfort Inn Wilmington | 000 Xxxxx Xxxxxxx Xxxx Xxxxxxxxxx, XX 00000 |
New Hanover County | ||||||||
21.
|
Courtyard by Marriott Winston Salem | 0000 Xxxxxxxxx Xxxxx Xxxxx Xxxxxxx Xxxxx, XX 00000 |
Forysth County | ||||||||
22.
|
Courtyard by Marriott Houston | 00000 Xxxx Xxxxxxx Xxxxxxx, XX 00000 |
Xxxxxx County | ||||||||
23.
|
Holiday Inn Express Abingdon | 000 Xxxx Xxxx Xxxxxx Xxxxxxxx, XX 00000 |
Xxxxxxxxxx Xxxxxx | ||||||||
24.
|
Marriott TownePlace Suites – Austin | 00000
Xxxxx Xxxxxxx xx Xxxxx Xxxxxxx Xxxxxx, Xxxxx |
Xxxxxx County | ||||||||
25.
|
Marriott TownePlace Suites – College Station | 0000
Xxxxxxxxxx Xxxxx Xxxx Xxxxxxx Xxxxxxx, Xxxxx |
Brazos County | ||||||||
26.
|
Courtyard by Marriott – Houston | 00000 Xxxxxxx Xxxx 000 Xxxxxxx, Xxxxx |
Xxxxxx Xxxxxx | ||||||||
27.
|
Marriott TownePlace Suites – Clear Lake | 0000
Xxx Xxxx Xxxx. 00, Xxxxxxx, Xxxxx |
Xxxxxx County | ||||||||
28.
|
Marriott TownePlace Suites - Houston | 00000 Xxxxxxx Xxxx 000, Xxxxxxx, Xxxxx |
Xxxxxx Xxxxxx | ||||||||
29.
|
Marriott TownePlace Suites – Birmingham | 000 Xxxxxxxx Xxxxx Xxxxxx Xxxxxx, Xxxxxxx |
Xxxxxxxxx Xxxxxx | ||||||||
SCHEDULE 8.20(2)
OTHER POST-CLOSING REQUIREMENTS
for
FIRST ADDITIONAL PROJECTS
1. Houston Courtyard by Marriott (00000 Xxxxxxx Xxxx). In connection with groundwater
monitoring well placed on the Project by the adjacent property owner, contact the TCEQ and request
notification of the closure date; and ensure that the adjacent property owner or other responsible
party removes or abandons the well in accordance with the requirements of applicable Environmental
Laws and the recommendation of Section 1.0 (Executive Summary) of the Site Assessment, dated May
20, 2005, prepared by IVI International, Inc.
Exhibit
B and Schedule 2.16 to this Second Amendment have been omitted and
will be furnished supplementally to the Securities and Exchange
Commission upon request.
