LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made and entered into as of the 13th
day of January, 2005, by and between XXXXXXXX HOSPITALITY TRUST, INC., a
Virginia corporation (the "Borrower"), whose address for purposes of this
Agreement is 000 Xxxxx 0xx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (Attn: Xxx Xxxxxx),
and GREAT WESTERN BANK, a Nebraska corporation (the "Bank"), whose address for
purposes of this Agreement is 0000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx, Xxxxxxxx
00000 (Attn: Xxxxxxx Xxxxxx).
RECITALS
WHEREAS, Bank has agreed to make a Loan (as defined herein) to Borrower to
be evidenced by the Loan Documents (as defined herein), which Loan is to be
secured by those certain hotels described on Exhibit "A" attached hereto and
incorporated herein by this reference (the "Hotels" or individually, the
"Hotel") (the term "Hotels" also includes any additional or substitute Hotels
given to Bank as security for the Loan), along with all tangible and intangible
personal property used in connection with the operation of said Hotels; and
WHEREAS, Borrower owns 100% of the capital stock of E&P REIT Trust, a
Maryland real estate investment trust ("E&P Trust"), and Xxxxxxxx Hospitality
REIT Trust, a Maryland real estate investment trust ("Xxxxxxxx Trust"), which
are the general partners of E&P Financing Limited Partnership, a Maryland
limited partnership ("E&P"), and Xxxxxxxx Hospitality Limited Partnership, a
Virginia limited partnership ("HHLP"), respectively. Xxxxxxxx Trust owns 100% of
the capital stock of TRS Leasing, Inc., a Virginia corporation ("TRS Leasing").
E&P and HHLP (E&P and HHLP, and any other future owner of any of the Hotels, or
any Hotel given as additional Collateral or substituted for an existing Hotel,
are collectively referred to as the "Hotel Owners") are the respective fee
owners of the Hotels, as set forth on Exhibit "A". The Hotel Owners lease the
Hotels to TRS Leasing pursuant to that certain First Amended and Restated Master
Lease Agreement dated as of November 26, 2002 (the "Lease"). The Borrower, the
Hotel Owners and TRS Leasing are referred to in this Agreement on a consolidated
basis as the "Xxxxxxxx Entities."
WHEREAS, in connection with its obligations as lessee of the Hotels, TRS
Leasing is the franchisee under those certain franchise agreements with Super 8
Motels, Inc. and Choice Hotels International, Inc., which are described on
Exhibit "B" attached hereto and incorporated herein by this reference
(collectively, the "Franchise Agreements"); and
WHEREAS, the Loan is subject to the terms and conditions set forth in this
Agreement and in the other Loan Documents and Borrower knows and acknowledges
that Bank is relying on this Agreement, and the other Loan Documents, in making
the Loan.
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Borrower and the Bank hereby agree as follows:
AGREEMENT
ARTICLE I
AMOUNT AND TERM OF THE LOAN
1.01. The Loan. The Bank agrees, on the terms and conditions hereinafter
set forth, to loan to the Borrower, by means of one or more advances made from
time to time during the period of time from the date hereof, to and including
the earlier of January 13, 2007 (the "Maturity Date"), or the date of the
occurrence of an Event of Default (as hereinafter defined), not to exceed the
lesser of the Borrowing Base (as hereinafter defined) or the principal sum of
Twenty-Two Million and no/100ths Dollars ($22,000,000) (the "Initial Loan Limit
Amount"), which Initial Loan Limit Amount will be reduced to Twenty Million and
no/100ths Dollars ($20,000,000) (the "Step-Down Loan Limit Amount") on the first
day of the thirteenth full month after the date hereof (the "Step-Down Effective
Date") (the lesser of the Borrowing Base, the Initial Loan Limit Amount or the
Step-Down Loan Limit Amount, as applicable, is collectively referred to as the
"Loan"). The books and records of the Bank shall, in the absence of manifest
error, be prima facie evidence in any court or other proceeding brought to
enforce the Note (as hereinafter defined) as to the principal balance of the
Loan outstanding at any time and the amount of accrued interest.
1.02. The Note. The Loan made by Bank shall be evidenced by a promissory
note (the "Note") of even date herewith payable to the order of Bank in the
original principal amount set forth in Section 1.01 above.
1.03. Use and Application of Loan Proceeds. The entire proceeds of the Loan
shall be used for the following purposes:
(A) Pay-off at closing of existing indebtedness owed to U.S. Bank
National Association, a national banking association ("US Bank"), through a
revolving credit facility and term loan.
(B) Provide operating funds for Borrower.
(C) Provide interim funding for the acquisition of hotel properties by
Borrower.
Borrower agrees that the proceeds of the Loan shall be used as described in this
Section 1.03 and shall not be used for any other purpose.
1.04. Advance of Funds.
(A) Manner of Making Advances. If the Borrower is eligible for
advances upon the Note and if, at the time of the advance, all conditions
to making an advance of funds have been satisfied, funds will be advanced
as provided in this Section 1.04(A) or as the Borrower and Bank may
otherwise agree from time to time.
(1) Advances will be made from time to time to the Borrower's
Operating Account (as defined in Section 4.01(E)) as necessary so that
the Operating Account will, at all times, have an account balance of
$100,000 in collected funds. In the event the balance in the Operating
Account exceeds $100,000 at the close of business on any Business Day
(as defined in Section 1.10), the excess amount over $100,000 in such
Operating Account shall be withdrawn from the Operating Account by
Bank and applied toward payment of the principal amount due on the
Loan.
(2) Advances will also be made from time to time upon the written
request for an advance by Borrower to Bank.
(B) Limitations on Advances. Notwithstanding anything in this
Agreement to the contrary, no advance shall be made or permitted hereunder
which would result in the unpaid principal balance of the Note, including
any advances made under the Security Documents hereunder, exceeding in the
aggregate at any one time the lesser of: (i) the Borrowing Base, or (ii)
the Initial Loan Limit Amount or the Step-Down Loan Limit Amount, as
applicable. No advance shall be made upon the occurrence and continuance of
any Event of Default described in Section 5.01 below. Any recordation of an
advance by the Bank on the Note, the reverse side of the Note, or on
supplemental sheets attached to the Note, or otherwise on the Bank's
records, made pursuant to this Agreement shall be prima facie evidence in
any court or other proceeding brought to enforce the Note that the Borrower
has authorized the Bank to make such advances and that the Bank has
effected such advances. The advance will be deemed to be at the request of
and for the benefit of Borrower when credited to Borrower's account with
Bank or when advanced in accordance with the instructions of an authorized
representative of Borrower. Bank may establish a cut-off time for
requesting advances, with requests made after that time being treated as
made the next Business Day of Bank.
1.05. Repayment and Interest.
(A) Interest Rate. The unpaid principal balance of the Loan will bear
interest from the date of execution of the Note at the national prime rate
of interest as published in the Wall Street Journal (base rate on corporate
loans posted by at least 75% of the nation's thirty (30) largest banks),
which rate of interest shall be adjusted daily as said national prime rate
of interest changes. (As applicable to the interest rate during such
period, the "Interest Rate"). Such adjustment in the Interest Rate will
occur without prior notice to Borrower. Changes in the Interest Rate shall
be effective from the date of the changes and shall be applied to amounts
outstanding on the Loan.
(B) Repayment. Borrower shall repay the aggregate unpaid principal
amount of the Loan plus interest accrued thereon as follows:
(1) Borrower shall pay interest only on the unpaid principal
balance from time to time outstanding, with such payments beginning on
the first Business Day of the calendar month following the month in
which closing occurs and continuing on the first Business Day of each
month thereafter until such time as the entire principal amount of the
Loan has been paid in full.
(2) Borrower shall pay, on the Step-Down Effective Date,
sufficient principal to reduce the outstanding unpaid principal amount
of the Loan to the Step-Down Loan Limit Amount if the outstanding
unpaid principal balance exceeds the Step-Down Loan Limit Amount on
the Step-Down Effective Date.
(3) If at any time the unpaid principal balance on the Note shall
exceed the maximum principal amount allowed under the Loan and this
Agreement, Borrower shall pay to Bank, upon oral or written demand by
Bank, an amount equal to the difference between the then outstanding
principal balance of the Loan and the maximum principal amount allowed
under the Loan.
(4) Payments of the unpaid principal shall be made from the
Borrower's Operating Account as provided in Section 1.04(A)(1).
(5) Borrower shall pay all remaining unpaid principal, all
accrued and unpaid interest, any unpaid Non-Usage Fee (as defined in
Section 1.06), and all other unpaid fees and charges due under the
Loan Documents on or before the Maturity Date.
Bank shall be authorized to withdraw funds from Borrower's Operating
Account to make any of the payments referred to above, but the failure or
refusal of Bank to do so shall not excuse or extend the due date for any
such payment. Bank agrees that on each annual anniversary date of the date
of this Agreement during the term of this Loan, it will review the Loan to
determine if the Bank will extend the Maturity Date for an additional
twelve (12) month period, which decision will be made at the Bank's sole
discretion. If the Bank so elects, Bank will notify Borrower in writing
that Bank has made such election, stating in such notice the new Maturity
Date for repayment of all principal and interest. If Bank does not elect to
extend such dates, then the Maturity Date will remain as provided in this
Agreement or as previously extended by Bank, as applicable. Failure of the
Bank to give notice of any extension as provided herein shall mean that an
extension of the Maturity Date has not been granted.
(C) Prepayment. If Borrower repays this Loan in full prior to January
13, 2007 and requests a release of all, or substantially all, of the
Collateral given to secure the Loan, Borrower shall pay to Bank a
prepayment fee of $100,000 (the "Prepayment Fee"), which will be added to
the then unpaid principal balance as of the payoff date. Other than
Borrower's obligation to pay any Non-Usage Fee and the Prepayment Fee,
Borrower may pay all or a portion of the amount owed earlier than it is due
without premium or penalty. Early payments will not, unless agreed to by
Bank in writing, relieve Borrower of Borrower's obligation to continue to
make payments as required in this Agreement. Borrower agrees not to send
Bank payments marked "paid in full," "without recourse," or similar
language. If Borrower sends such a payment, Bank may accept it without
losing any of Bank's rights under the Note or this Agreement, and Borrower
will remain obligated to pay any further amount owed to Bank.
(D) Default Rate. On any overdue principal amount of the Loan,
Borrower shall pay to the Bank interest on demand at the Default Rate from
the date such amount becomes due to the date such amount is paid in full,
but in no event shall the Default Rate exceed the highest rate permitted by
applicable law. The "Default Rate" is a rate equal to four percent (4%)
over the Interest Rate then in effect.
(E) Usury. It is the intention of the Bank and the Borrower hereof
that the Note and this Agreement and all provisions hereof and of all
documents securing the Note conform in all respects to applicable law so
that no payment of interest or other sum construed to be interest shall
exceed the highest lawful rate permissible. In determining the rate of
interest paid or payable under this Agreement and the Note or any documents
securing the same, all funds paid or to be paid as interest or construed to
be interest shall be prorated, allocated, or spread as permitted under
applicable law. If, through any circumstances, the contract of the Borrower
and the Bank would result in exceeding the highest lawful interest rate
applicable to this transaction, or if the Borrower pays any sum as interest
or construed to be interest in excess of such rate, then, ipso facto, (i)
the amount contracted for shall be automatically reduced to the highest
lawful rate authorized for this transaction, and (ii) the amount of excess
interest paid shall be applied to the reduction of the principal balance of
the Note, if any, and if the principal balance has been fully paid, the
excess interest shall be refunded to the Borrower and Borrower agrees to
accept such refund. Thereupon, the Bank shall not be subject to any penalty
provided for the contracting for, charging, or receiving of interest in
excess of such highest lawful rate, regardless of when or the circumstances
under which such refund or application was made.
1.06 Non-Usage Fee. Beginning on January 14, 2006 and continuing to and
including the Maturity Date, Borrower will incur a fee at the rate of .25% per
annum computed on the average of the unused portion of the Loan for the
preceding three (3) months (the "Non-Usage Fee"). The Non-Usage Fee shall be
paid on April 1, 2006, on the first Business Day of each calendar quarter
thereafter and on the Maturity Date.
1.07 Borrowing Base. At no time shall the unpaid principal balance of the
Note exceed the lesser of: (i) an amount equal to 60% of the total appraised
value of the Hotels, or (ii) an amount that would result in a Revolving Loan
Debt Service Coverage Ratio (as defined in Section 4.01(G)) of less than 1.5 to
1 (the "Borrowing Base"). For purposes of determining the Borrowing Base, the
Bank shall utilize the appraisals prepared in connection with this Loan, or such
appraisals as may be obtained by Bank from time to time during the term of this
Loan. If, at any time, the then outstanding principal balance of the Note
exceeds the Borrowing Base, Borrower will pay to Bank the amount of such excess
upon demand by the Bank.
1.08. Costs of Loan. Borrower shall pay to Bank all costs of recording any
of the Security Documents herein mentioned, all title insurance policy premiums,
the reasonable attorney's fees Bank has incurred in connection with the Loan,
the cost of obtaining any appraisal, survey, assessment, report, statement,
legal opinion or other document required to be furnished by Borrower pursuant to
this Agreement, and all other reasonable and ordinary expenses associated with
this Loan.
1.09. Payments and Computations. Borrower shall make each payment hereunder
and under the Note not later than 1:00 p.m. (Central time) on the Business Day
when due in lawful money of the United States of America to the Bank at its
address set forth above in same day funds. Borrower hereby authorizes the Bank,
if and to the extent payment is not made when due hereunder and under the Note,
to charge any amount so due from time to time against any account of the
Borrower with the Bank. All computations of interest hereunder and under the
Note shall be made by the Bank on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last day) elapsed.
1.10. Payment on Non-Business Days. Whenever any payment to be made
hereunder or under the Note shall be stated to be due on a Saturday, Sunday or a
public or bank holiday in Omaha, Nebraska (any other day being a "Business
Day"), such payment may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of interest.
1.11 Substitution and Addition to Collateral. Subject to the prior written
approval of the Bank, which approval shall not be unreasonably withheld,
Borrower may substitute Hotels, obtain the release of Hotels, and add Hotels to
maintain compliance with, or cure any noncompliance with, any of the covenants
set forth in Article IV of this Agreement. At the time of making any request for
approval, the Borrower shall satisfy the conditions precedent in Article II with
respect to any substituted or added Hotels. In the event the proposed added or
substituted Hotel was acquired more than two years before the date of the
proposed addition or substitution, Borrower will provide to Bank, at the time
Borrower requests the addition or substitution, an appraisal of the Hotel,
prepared by a duly licensed appraiser reasonably acceptable to Bank and which is
not more than two (2) years old, showing the fair market value of the Hotel
proposed for addition or substitution. The Bank shall have thirty (30) days
after the request for approval by the Borrower to determine if the Hotel
proposed to be substituted or added is of appropriate character, quality and
value. Any request to add Hotels to cure any noncompliance with any covenants
set forth in Article IV shall be made within the thirty (30) day period provided
herein to cure any noncompliance with this Agreement. Once Bank approves any
substituted or added Hotel, Borrower shall have thirty (30) days thereafter to
comply with the requirements of Article IV with respect thereto. Any proposed
substituted or added Hotel shall not be included in the Borrowing Base
computation or used in determining compliance with the covenants in Article IV
until such time as Bank agrees to accept such Hotel as additional or substituted
Collateral. The time limits stated herein for adding or substituting Hotels as
Collateral shall not extend the time for cure of Events of Default by Borrower.
ARTICLE II
CONDITIONS PRECEDENT
2.01. Condition Precedent to Advances Under the Loan. The obligation of the
Bank to close this Loan and to make any advance under the Loan is subject to the
Bank having received all of the following, in form satisfactory to Bank and the
following conditions precedent being performed to the reasonable satisfaction of
Bank, at the time of closing and at the time Borrower requests each advance, as
applicable:
(A) Borrower shall have duly executed and delivered to Bank the Note
evidencing the Loan payable to the order of the Bank.
(B) Deeds of trust, mortgages, and assignments of rents, duly executed
and acknowledged, from the respective Hotel Owners as set forth on Exhibit
"A" to and in favor of Bank, which encumber each of the Hotels and secure
the Note together with all other obligations of Borrower to Bank pursuant
to the terms of this Agreement. Said deeds of trust and mortgages shall
create first liens and encumbrances on the Hotels, subject only to current
non-delinquent real estate taxes as to each Hotel. Such deeds of trust and
mortgages shall include any easement rights in favor of the Hotel Owners.
Bank shall determine, in its discretion, as to whether a deed of trust or
mortgage will be utilized as to any Hotel.
(C) Security agreements and UCC-1 financing statements, including,
where required by Bank, fixture filings for each Hotel, duly executed by
Borrower, TRS Leasing and by each Hotel Owner of record, granting to Bank
under the Uniform Commercial Code (the "UCC"), a first security interest in
all tangible and intangible personal property and fixtures of Borrower, TRS
Leasing and the Hotel Owners located at the Hotels or used exclusively in
connection therewith, including but not limited to, inventory, equipment,
fixtures, accounts and general intangibles of Borrower, TRS Leasing and the
Hotel Owners, and in the Operating Account, whether now owned or hereafter
acquired, and in the proceeds of the same (all such property and the Hotels
are collectively referred to as the "Collateral"). Such financing
statements shall be prepared in a manner that allows recording in the
appropriate governmental recording offices to create such first security
interest in the Collateral.
(D) Agreements concerning the Franchise Agreements with estoppel
certifications, described on Exhibit "B", duly executed by TRS Leasing and
the franchisor of each Hotel, to and in favor of Bank, among other things
assigning to Bank all of TRS Leasing's right, title and interest in and to
the Franchise Agreements.
(E) Letter Agreement among Royal Host Management, Inc., Bank and TRS
Leasing pertaining to the Management Agreement between Royal Host
Management, Inc. and TRS Leasing, dated August 1, 2004, ("Management
Agreement") granting to Bank certain rights regarding the Management
Agreement, and containing estoppel certifications.
(F) Environmental indemnity agreement duly executed by Bank, TRS
Leasing and by each Hotel Owner, in form and substance satisfactory to
Bank, agreeing to indemnify Bank from any loss or damage arising out of the
environmental conditions specified in such agreement.
(G) Subordination, nondisturbance and attornment agreement duly
executed by TRS Leasing, Borrower and each Hotel Owner in form and
substance satisfactory to Bank.
(H) Estoppel certificate duly executed by TRS Leasing, in form and
substance satisfactory to Bank, pertaining to the Lease.
(I) Non-foreign mortgager (FIRPTA) certificate for Borrower, E&P,
HHLP, and TRS Leasing.
(J) Duly certified corporate resolutions, consents, authorizations and
powers of attorney of Borrower evidencing the authority of the officers of
Borrower to execute and deliver on behalf of Borrower this Agreement, the
Note, any of the Security Documents and other Loan Documents to be executed
by Borrower and to execute and deliver any of the other documents required
to be executed by Borrower under this Agreement or otherwise as a part of
this Loan.
(K) Duly certified resolutions, consents, authorizations and powers of
attorney or other showing of authority satisfactory to Bank, evidencing the
authority of the officers of each Hotel Owner to execute and deliver on
behalf of the Hotel Owners any of the Security Documents and other Loan
Documents to be executed by such Hotel Owners, and to execute and deliver
any of the other documents required to be executed by such Hotel Owners
under this Agreement or otherwise as a part of this Loan.
(L) Duly certified resolutions, consents, authorizations and powers of
attorney or other showing of authority satisfactory to Bank evidencing the
authority of the officers of TRS Leasing to execute and deliver on behalf
of TRS Leasing any of the Security Documents to be executed by TRS Leasing,
and to execute and deliver any of the other documents to be executed by TRS
Leasing under this Agreement or otherwise as a part of this Loan.
(M) Certified articles of incorporation and bylaws of Borrower and
certificate of good standing (issued within two months of the date of this
Agreement) from the State of Virginia.
(N) Certified certificate of limited partnership and limited
partnership agreement for HHLP and certificate of good standing (issued
within two months of the date of this Agreement) from the State of
Virginia.
(O) Certified certificate of limited partnership and limited
partnership agreement for E&P and certificate of good standing (issued
within two months of the date of this Agreement) from the State of
Maryland.
(P) Certified articles of incorporation and bylaws of TRS Leasing and
certificate of good standing (issued within two months of the date of this
Agreement) from the State of Virginia.
(Q) Organizational documents of any other subsidiary or affiliate of
Borrower and/or consents, resolutions, authorizations and powers of
attorney of such subsidiaries or affiliates showing the authority of
officers, general partners, limited partners or members (as the case may
be) to execute and deliver any of the Loan Documents on behalf of such
entity, as required by the Bank to properly authorize the Loan transaction
described herein or as required by any title company in connection with the
title insurance policies contemplated herein.
(R) Complete copies of Phase I Environmental Assessments
("Assessments") for each Hotel, prepared by environmental assessment firms
satisfactory to Bank, together with a letter from each environmental
assessment firm preparing such Assessment stating that Bank can rely upon
such Assessment in connection with the Loan. Bank may obtain environmental
data reports ("EDR") updating such Assessments to the current date. Such
Assessments and EDRs shall show that none of the Hotels contains any
hazardous materials, underground storage tanks or other conditions or
operations that may create future environmental liability.
(S) An ALTA survey of the real property for each Hotel, satisfactory
to Bank, prepared by a registered land surveyor, certified to Bank and the
title company issuing the title insurance for the Hotel (the "Title
Company"), or for which Bank and the Title Company has received a letter
from the surveyor preparing the survey or, if such original surveyor is no
longer in business, another registered land surveyor reasonably
satisfactory to Bank, that entitles the Bank and the Title Company to rely
thereon. Such survey shall verify all legal descriptions of the Hotels,
show all lot lines, set-back lines, all improvements, all utility lines and
facilities, all easements, all adjacent public rights of way and access
thereto, current property zoning, and any other restrictions or physical
matters on the site or reflected in the public records with respect to the
Hotels. In the event Bank elects to rely on an existing survey of a Hotel,
Borrower shall obtain a letter from each surveying firm that prepared such
survey, or another registered land surveyor reasonably satisfactory to
Bank, stating that Bank can rely upon such Survey in connection with the
Loan, and shall provide to Bank and the Title Company a Borrower's
certificate that no material changes have occurred to the real property or
improvements constituting the Hotel in question since the survey was
prepared.
(T) One or more ALTA lender's policies of title insurance for all of
the Hotels, with Bank as the insured, insuring the liens of Bank's deeds of
trust and mortgages as being first liens on each Hotel, subject only to the
lien of any unpaid current real estate taxes. All standard exceptions to
such policies shall be deleted, and the policies shall contain the
following endorsements: Comp 100; Zoning 3.1; Access; Survey; Location;
Contiguity (if multiple lots or parcels); Subdivision Control Act and
Creditor's Rights. At Closing, Bank will receive a "xxxx-up" of the title
insurance commitment for such insurance showing that (i) all requirements
for issuance of the policies have been satisfied; (ii) the Bank's deeds of
trust and mortgages are first liens on each Hotel; (iii) the standard
exceptions to coverage will be deleted from the final policies; and (iv)
the final policy will contain the requested endorsements.
(U) Independent written appraisals of the value of each Hotel in form
and substance satisfactory to Bank, prepared by qualified and licensed real
estate appraisers.
(V) Satisfactory evidence of hazard insurance coverage on each of the
Hotels as required by the deeds of trust and mortgages, and satisfactory
evidence of maintenance of general liability, auto liability, workers
compensation insurance, and other insurance as may be required by any of
the Loan Documents.
(W) Current certificates of occupancy for each Hotel issued by the
governmental jurisdiction with authority to issue such certificates for the
Hotels, or, if the Hotel is in a jurisdiction that does not issue
certificates of occupancy, a Borrower's certificate signed by an authorized
officer of the Borrower to that effect. If the certificate of occupancy is
lost or misplaced, Borrower shall obtain a copy thereof from the issuing
authority.
(X) Certified copies of requests for information or copies (Form
UCC-11) or equivalent reports, of all effective financing statements which
name Borrower or any Hotel Owner or TRS Leasing as debtor and which are
filed in the respective States of organization of such entities together
with copies of such financing statements (none of which shall cover the
property purported to be covered by the Loan Documents), together with
releases and/or termination of any security interest in the Collateral
reflected in such request for information.
(Y) The Company shall have paid to the Bank the documentation fee
previously agreed upon by the parties in the commitment letter for the Loan
and shall have reimbursed Bank for all third party costs incurred by Bank
in connection with this Loan as provided in Section 6.05 hereof.
(Z) The favorable opinion of Borrower's counsel, or local counsel, as
applicable, in form satisfactory to Bank and such counsel, dated as of the
date of closing, that, subject to customary assumptions, qualifications and
exceptions, (i) this Agreement, the Note and all other Loan Documents
executed by Borrower have been duly executed and delivered by the Borrower
and constitute the legal, valid and binding obligation of the Borrower,
enforceable in accordance with their respective terms, (ii) the Security
Documents (as defined in this Section 2.01), when duly executed and
delivered by the entities obligated to execute such documents (other than
Borrower), will constitute the legal, valid and binding obligations of such
parties thereto, enforceable in accordance with their respective terms,
(iii) no approval or other action by any other person, entity or court
shall be required for the due and proper execution and delivery of the Loan
Agreement, the Note, the Security Documents and the other Loan Documents,
(iv) that the deeds of trust, mortgages and other Security Documents are in
proper form for recording in appropriate public offices, (v) that the Loan
is not usurious under applicable law, and (vi) the priority of future
advances.
(AA) Such documents, duly executed by one or more of the appropriate
Xxxxxxxx Entities, as are necessary to establish the Operating Account, the
sweep authorization from the local bank accounts for each Hotel and the
advances to, and repayments from, the Operating Account of Borrower as
provided in Section 1.04(A)(1) and 4.01(E) hereof.
(AB) Such other certificates, approvals, opinions or documents as the
Bank or the Title Company may reasonably require.
All of the documents referred to above and all other documents to be
delivered by the Borrower to the Bank pursuant to this Agreement are
hereinafter collectively referred to as the "Loan Documents". The documents
referred to in subparagraphs (B), (C), (D) and (E) of this Section 2.01 are
collectively referred to as the "Security Documents".
2.02. Closing. It is contemplated by the parties that closing of this Loan
shall occur on or before January 13, 2005.
2.03 Post-Closing Advances. Any advance made to or for the benefit of
Borrower shall be deemed a reaffirmation by the Borrower at the time of the
advance, that (i) the representations and warranties of the Borrower contained
in this Agreement are correct as of such date, (ii) Borrower, each Hotel Owner
and TRS Leasing are in compliance with the covenants contained in this Agreement
as of such date and (iii) no event has occurred and is continuing, or would
occur as a result of such advance, which constitutes an Event of Default (as
defined herein) or would constitute an Event of Default but for any requirement
that notice be given or time elapse or both.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01. Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:
(A) Existence and Good Standing of Borrower. The Borrower is a
corporation duly organized and existing under the laws of the State of
Virginia and is in good standing as of the date hereof. Borrower has
corporate power and authority to own, lease and operate its properties and
carry on its business as now conducted. The Borrower is duly qualified and
authorized to execute this Agreement and the other Loan Documents and to
perform the obligations thereof. Borrower's principal office is located in
Nebraska.
(B) Existence and Good Standing of TRS Leasing. TRS Leasing is a
corporation duly organized and existing under the laws of the State of
Virginia and is in good standing as of the date hereof. TRS Leasing has
corporate power and authority to own, lease and operate its properties and
carry on its business as now conducted. TRS Leasing's principal office is
located in Nebraska.
(C) Existence and Good Standing of E & P. E & P is a limited
partnership duly organized and existing under the laws of the State of
Maryland and is in good standing as of the date hereof. E&P Trust is the
general partner of E & P and is a real estate investment trust duly
organized and existing under the laws of the State of Maryland, and is in
good standing as of the date hereof. E & P has limited partnership power
and authority to own, lease and operate its properties and carry on its
business as now conducted. E & P's principal office is located in Nebraska.
(D) Existence and Good Standing of HHLP. HHLP is a limited partnership
duly organized and existing under the laws of the State of Virginia.
Xxxxxxxx Trust is the general partner of HHLP and is a real estate
investment trust duly organized and existing under the laws of the State of
Maryland, and is in good standing as of the date hereof. HHLP has limited
partnership power and authority to own, lease and operate its properties
and carry on its business as now conducted. HHLP's principal office is
located in Nebraska.
(E) No Conflict for Borrower. The execution, delivery and performance
by Borrower of this Agreement, the other Loan Documents and all other
documents, to which Borrower is a party, and the consummation of the
transactions contemplated thereby are within the powers of Borrower and
have been duly authorized by all necessary action, does not and will not
contravene (i) the articles, bylaws or other organizational documents of
Borrower; or (ii) any law, rule, regulation, order, writ, judgment,
injunction, decree or any contractual provision restriction binding on or
affecting the Borrower; or (iii) result in or require the creation or
imposition of any lien, security interest or other charge or encumbrance
(other than pursuant hereto) upon or with respect to any of the properties
of the Borrower.
(F) No Conflict for Hotel Owners. The execution, delivery and
performance by Hotel Owners of the Loan Documents and all other documents,
to which Hotel Owners are a party, and the consummation of the transactions
contemplated thereby are within the powers of Hotel Owners and have been
duly authorized by all necessary action, does not and will not contravene
(i) the limited partnership agreement or other organizational documents of
any of the Hotel Owners; or (ii) any law, rule, regulation, order, writ,
judgment, injunction, decree or any contractual provision restriction
binding on or affecting the Hotel Owners; or (iii) result in or require the
creation or imposition of any lien, security interest or other charge or
encumbrance (other than pursuant hereto) upon or with respect to any of the
properties of the Hotel Owners.
(G) No Conflict for TRS Leasing. The execution, delivery and
performance by TRS Leasing of the Loan Documents and all other documents,
to which TRS Leasing is a party, and the consummation of the transactions
contemplated thereby are within the powers of TRS Leasing and have been
duly authorized by all necessary action, does not and will not contravene
(i) the articles, bylaws or other organizational documents of TRS Leasing;
or (ii) any law, rule, regulation, order, writ, judgment, injunction,
decree or any contractual provision restriction binding on or affecting TRS
Leasing; or (iii) result in or require the creation or imposition of any
lien, security interest or other charge or encumbrance (other than pursuant
hereto) upon or with respect to any of the properties of TRS Leasing.
(H) No Authorization, Etc., for Borrower. No authorization, consent,
approval, license, or other action by, and no notice to, registration or
filing with, any governmental authority or regulatory body is or will be
required or necessary for the due execution, delivery and performance by
the Borrower of any Loan Document, or any obligation thereunder.
(I) No Authorization, Etc., for Hotel Owners. No authorization,
consent, approval, license, or other action by, and no notice to,
registration or filing with, any governmental authority or regulatory body
is or will be required or necessary for the due execution, delivery and
performance by the Hotel Owners of any Loan Document, or any obligation
thereunder.
(J) No Authorization, Etc., for TRS Leasing. No authorization,
consent, approval, license, or other action by, and no notice to,
registration or filing with, any governmental authority or regulatory body
is or will be required or necessary for the due execution, delivery and
performance by TRS Leasing of any Loan Document, or any obligation
thereunder.
(K) Enforceability as to Borrower. This Agreement is, and each other
Loan Document to which the Borrower is or will be a party when delivered
hereunder will be legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms,
except as such enforcement may be qualified or limited by general
principles of equity or bankruptcy, insolvency, or other similar laws
affecting creditor's rights in general.
(L) Enforceability as to Hotel Owners. Each Loan Document to which the
Hotel Owners are or will be a party when delivered hereunder will be legal,
valid and binding obligations of the Hotel Owners enforceable against the
Hotel Owners in accordance with their respective terms, except as such
enforcement may be qualified or limited by general principles of equity or
bankruptcy, insolvency, or other similar laws affecting creditor's rights
in general.
(M) Enforceability as to TRS Leasing. Each Loan Document to which TRS
Leasing is or will be a party when delivered hereunder will be legal, valid
and binding obligations of TRS Leasing enforceable against TRS Leasing in
accordance with their respective terms, except as such enforcement may be
qualified or limited by general principles of equity or bankruptcy,
insolvency, or other similar laws affecting creditor's rights in general.
(N) Financial Information. All financial information provided to the
Bank by or on behalf of the Xxxxxxxx Entities fairly presents in all
material respects the financial condition of the Xxxxxxxx Entities at such
date and the results of the operations of the Xxxxxxxx Entities for the
periods indicated therein, all in accordance with generally accepted
accounting principles consistently applied, and since the date of delivery
of such information there has been no material adverse change in such
condition or operations.
(O) No Litigation. Except as previously disclosed to Bank at the time
this Agreement was executed, there is no pending or, to the best of
Borrower's knowledge threatened, suit, action (including any derivative
action), investigation or proceeding affecting the Xxxxxxxx Entities before
any court, governmental agency, commission or authority, or arbitrator,
domestic or foreign, which would, either in any one case or in the
aggregate, have a material adverse effect on the financial condition or
operations of the Xxxxxxxx Entities or the ability of the Xxxxxxxx Entities
to pay and perform their obligations under the Loan Documents.
(P) Franchise Agreements. All Franchise Agreements for the Hotels have
been duly executed by all parties thereto and are the legal, valid and
binding obligation of the parties thereto. Such Franchise Agreements are in
full force and effect and are not in default.
(Q) Management Agreement. The management agreement for the Hotels has
been duly executed by all parties thereto, and is the legal, valid and
binding obligation of the parties thereto. Such management agreement is in
full force and effect and is not in default.
(R) Lease. The Lease between TRS Leasing and the Hotel Owners for the
Hotels has been duly executed by all parties thereto, and is the legal,
valid and binding obligation of the parties thereto. Such Lease is in full
force and effect and is not in default.
(S) Unpaid Bills. There are no overdue unpaid bills in excess of
$10,000 (other than those bills being contested in good faith) owed to any
person or entity for labor or materials furnished for any Hotel that could
give rise to a construction lien, mechanics lien or other lien or
encumbrance upon any Hotel. In the event TRS or any Hotel Owner wishes to
contest in good faith any mechanics lien or construction lien that may be
filed against any Hotel, TRS or such Hotel Owner as applicable shall, if
requested by Bank, obtain the release of record of such lien against such
Hotel by filing the appropriate bond or deposit as required by law.
(T) Margin Stock. Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System), and no proceeds of any Loan will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
(U) Other Obligations. Neither Borrower, any Hotel Owner, nor TRS
Leasing is in default on any obligation for borrowed money in excess of
$100,000, any purchase money obligation in excess of $100,000 or any other
material lease, commitment, contract, instrument or obligation in excess of
$100,000.
(V) Taxes. Other than matters being contested in good faith and
disclosed to Bank, Borrower, each Hotel Owner and TRS Leasing have: (i)
filed all tax returns (federal, state and local) required to be filed and
have paid all taxes shown thereon to be due, including interest and
penalties, or have provided adequate reserves for the payment thereof, and
(ii) paid, prior to delinquency, all taxes, assessments and governmental
charges of any nature levied or assessed upon any of the Collateral.
Borrower is not aware of any proposed assessment or adjustment for any
taxes (or any basis for any such assessment) which would be material to the
Xxxxxxxx Entities, except as have been disclosed in writing to the Bank.
(W) Compliance with Laws. To the best of Borrower's knowledge,
Borrower, the Hotel Owners and TRS Leasing have complied with and are in
compliance with all federal, state and local laws, ordinances, regulations
and codes applicable to their business and their properties, the
noncompliance with which would, either in any one case or the aggregate,
have a material adverse effect on the financial condition or operations of
any of the Xxxxxxxx Entities. There are no pending or, to the best of
Borrower's knowledge, threatened citations, sanctions, actions or
proceedings of any nature for any claimed violation of any building code,
life safety code, accessibly requirements or any other governmental law,
ordinance, regulation or code governing the Hotels or the use thereof,
which would, either in any one case or the aggregate, have a material
adverse effect on the financial condition or operations of the Xxxxxxxx
Entities..
(X) Title to Collateral. The Hotel Owners have good and marketable
title to all of the Hotels, free and clear of all encumbrances, except (i)
liens in favor of the Bank, (ii) liens in favor of U.S. Bank securing the
existing indebtedness to be paid at closing from Loan proceeds and released
following closing, and (iii) the current portion of unpaid real estate
taxes or such taxes being contested in good faith as permitted by this
Agreement. Borrower, the Hotel Owners and TRS Leasing each have good and
marketable title to all of the other Collateral, free and clear of all
encumbrances, except (i) liens in favor of the Bank, (ii) liens in favor of
U.S. Bank securing the existing indebtedness to be paid at closing from
Loan proceeds and released following closing, and (iii) purchase money
liens incurred for the purchase of the personal property that is given as
security for such purchase money lien, in an original amount not exceeding
the sale price of the property.
(Y) Securities Compliance. Borrower has filed all required filings
with the United States Securities and Exchange Commission ("SEC") and is in
compliance with all federal and state securities laws applicable to it,
including, but not limited to, the requirements of the Xxxxxxxx-Xxxxx Act,
the noncompliance with which would, either in any one case or the
aggregate, have a material adverse effect on the financial condition or
operations of any of the Xxxxxxxx Entities. All outstanding stock and
securities of Borrower are duly authorized, validly issued, fully paid and
non-assessable. All stock and securities of Borrower have been offered and
sold in compliance with all federal and state securities laws and
regulations and with other requirements of federal and state laws and
regulations applicable thereto, the noncompliance with which would, either
in any one case or the aggregate, have a material adverse effect on the
financial condition or operations of any of the Xxxxxxxx Entities.
(Z) Hazardous Substances. There has not been, during the period of
ownership of the Collateral by Borrower, the Hotel Owners or TRS Leasing,
nor is there now, any material use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any Hazardous
Substances by any person or entity on, under or about the Hotels or any
other Collateral. Borrower has no knowledge of, or reason to believe, that
there has been: (i) a breach or violation of any Environmental Laws with
respect to any of the Collateral or with respect to Borrower, the Hotel
Owners or TRS Leasing, the breach or violation of which would, either in
any one case or the aggregate, have a material adverse effect on the
financial condition or operations of any of the Xxxxxxxx Entities; (ii) any
material use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any Hazardous Substances by any prior
owner under or about the Hotels or any other Collateral; or (iii) any
actual or threatened litigation, claim, assessment or administrative
proceeding of any nature relating to such matters. As used in this
Agreement, the term "Hazardous Substances" shall mean materials that,
because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential hazard
to human health or the environment when improperly used, treated, disposed
of, generated, manufactured, transported or otherwise handled, and
includes, without limitation, any and all hazardous or toxic substances or
materials, as defined or listed under any of the Environmental Laws, and
includes petroleum and its by-products. As used in this Agreement, the term
"Environmental Laws" means any and all federal, state and local laws,
regulations, ordinances and codes relating to the protection of human
health and the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq., ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499
("XXXX"), the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., or other applicable federal or state law, regulation
or rule.
(AA) Solvency. Each of Borrower, the Hotel Owners and TRS Leasing are
able to pay their respective debts as they become due, and after the
execution and delivery of the Loan Documents and consummation of the
transaction contemplated thereby, will remain solvent.
(AB) No Condemnation. There is no proceeding pending or, to the best
of Borrower's knowledge, threatened for the total or partial condemnation
of any Hotel.
ARTICLE IV
COVENANTS
4.01. Affirmative Covenants of Borrower. Unless the Bank shall otherwise
consent in writing, which such consent shall not be unreasonably withheld, so
long as any amounts payable hereunder or under the Note shall remain unpaid, the
Borrower, the Hotel Owners and TRS Leasing (except where any of the covenants
specifically requires compliance by only one, or less than all of the Xxxxxxxx
Entities, then only as to the specified entity) will each:
(A) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders, such compliance to
include, without limitation of the generality of the foregoing: (i) paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property, except to the extent
contested in good faith, and (ii) compliance with Environmental Laws.
(B) Records. Keep adequate records and books of account in which
complete entries will be made in accordance with generally accepted
accounting principles consistently applied, reflecting all financial
transactions of the Borrower, each Hotel Owner and TRS Leasing. Separate
books and records shall be maintained for each of the Hotels.
(C) Inspection Rights. At any reasonable time and from time to time
during regular business hours of Borrower, permit the Bank, or any
officers, employees, agents or representatives thereof, to examine and make
copies of, or abstracts from, the records and books of account of, and to
visit the Hotels, at the cost and expense of the Borrower.
(D) Reporting Requirements. Furnish to the Bank:
(1) as soon as reasonably possible after the filing thereof and
no later than forty-five (45) days after the end of each fiscal
quarter, each Form 10-Q filed by the Borrower with the SEC and an
operating statement for each Hotel for the applicable quarter.
(2) as soon as reasonably possible after the receipt thereof and
no later than one hundred twenty (120) days after the end of each
fiscal year, the audited annual consolidated financial statements of
the Xxxxxxxx Entities for such fiscal year, including balance sheets
and statements of income and retained earnings for such fiscal year,
prepared by an independent certified public accountant reasonably
acceptable to Bank and an operating statement for each Hotel for the
applicable year;
(3) not later than 45 days after submission to the Internal
Revenue Service, a full and complete copy of Borrower's federal income
tax return for each tax year for Borrower.
(4) promptly after the filing or receipt thereof, copies of all
documents reflecting any material claims or litigation affecting the
Xxxxxxxx Entities or any of the Hotels which, either alone or in the
aggregate, would reasonably be expected to have a material adverse
effect on the Borrower, its operations or any of the Hotels;
(5) promptly, upon the occurrence of an Event of Default or an
event that but for the passage of time or the giving of notice or both
would constitute an Event of Default, notice of such Event of Default
or event; and
(6) as soon as possible and in any event within 45 days after the
end of each fiscal quarter of Borrower, the capital expenditures
report referred to in Section 4.01(F).
(7) such other information respecting the condition or
operations, financial or otherwise, of the Xxxxxxxx Entities as the
Bank may from time to time reasonably request.
All financial reports to be delivered to Bank shall be prepared in
accordance with generally accepted accounting principles which are
consistently applied.
(E) Deposit Relationship. Borrower shall at all times maintain a
deposit account with Bank to be used for Hotel operations during the term
of the Loan (the "Operating Account"). The funds deposited into local bank
accounts for each Hotel shall be swept into the Operating Account at the
Bank a minimum of two (2) times per week; provided, however, that such
local bank accounts shall maintain funds sufficient to satisfy minimum
deposit requirements not in excess of $1,000 per account. Upon the
occurrence and continuance of an Event of Default, the Bank is authorized
to immediately sweep the funds located in local bank accounts for each
Hotel into the Operating Account at the Bank.
(F) Capital Expenditure Account. Spend four percent (4%) of the total
revenue generated from the Hotels each year for the purpose of maintaining
and repairing the Hotels and funding capital expenditures relating to the
Hotels. Borrower shall submit quarterly reports to Bank, which explain with
reasonable detail the capital expenditures made for the Hotels during that
quarter. On an annual basis beginning with the first anniversary date of
this Loan, the Bank will review the aggregate amount spent on such capital
expenditures during the previous four (4) quarters. In the event that
Borrower has not spent the four percent (4%) requirement at the time of
such review, the Borrower shall establish and maintain a separate capital
expenditure reserve account (the "CapEx Account") with Bank and the
deficiency for the previous four (4) quarters will be deposited into the
CapEx Account. Upon the opening of the CapEx Account, the Bank will
establish the procedures for the Borrower's use of the funds in the CapEx
Account. In determining whether the 4% amount has been expended in any one
year period, Bank will include in the expenditure amount for such year any
amounts which, at the end of the one year period, Borrower, the Hotel
Owners or TRS Leasing are committed to spend under enforceable contracts or
purchase orders entered into or issued prior to the end of such year, and
which have not been expended through no fault of any of the Xxxxxxxx
Entities. To the extent so included, the amount will not be included in
such calculation for the year such funds are actually expended.
(G) Revolving Loan Debt Service Coverage Ratio. Borrower shall, at all
times, maintain a "Revolving Loan Debt Service Coverage Ratio" (Adjusted
Net Operating Income divided by Imputed Debt Service) of at least 1.5 to 1,
which shall be tested beginning on April 1, 2005, and quarterly thereafter.
"Adjusted Net Operating Income" is defined as the remainder of net
operating income of Borrower, for the preceding twelve (12) month period,
after reducing net operating income by (a) an amount equal to four percent
(4%) of gross room revenues from the Hotels for furniture, fixtures and
equipment reserve and (b) an amount equal to four percent (4%) of gross
room revenues from the Hotels for management fees and expenses. "Imputed
Debt Service " is defined as the annual principal and interest payments
required to fully amortize the total maximum amount that can be advanced to
Borrower under the Loan Documents, regardless of the amount of the Loan
that has been advanced to Borrower, based on a twenty (20) year
amortization with an assumed interest rate of the yield on the U.S.
Treasury securities having a ten (10) year maturity at the time of
determination, plus 2.75%. If the Revolving Loan Debt Service Coverage
Ratio falls below 1.5 to 1, the Borrowing Base shall be decreased so that
the Revolving Loan Debt Service Coverage Ratio meets a ratio of 1.5 to 1,
and any principal advanced in excess of the Borrowing Base amount will be
immediately due and payable. Borrower shall be in default under the Loan
Documents if the Revolving Loan Debt Service Coverage Ratio at any time
falls below 1.3 to 1. Borrower may request approval from Bank, which Bank
may approve or disapprove at its discretion, to pledge additional real
estate as Collateral for the Loan to maintain compliance with the covenants
and conditions of the Loan Documents or to cure any non-compliance with any
of the affirmative covenants in this Agreement. The request for approval to
add additional Collateral shall not be deemed to affect in any manner the
Bank's rights under this Loan Agreement or the other Loan Documents for the
failure of Borrower to comply with the requirements of this Loan Agreement.
With respect to each parcel that will be substituted as Collateral for the
Loan, the requirements of Section 2.01 of this Agreement must be met to the
Bank's satisfaction as to such parcel prior to such parcel being added as
Collateral.
(H) Consolidated Debt Service Coverage Ratio. Borrower shall, at all
times, maintain a "Consolidated Debt Service Coverage Ratio" (Adjusted Net
Operating Income divided by Imputed Consolidated Debt Service) of at least
1.5 to 1, which shall be tested beginning on April 1, 2005, and quarterly
thereafter. Adjusted Net Operating Income shall be determined as provided
in Section 4.01(G). "Imputed Consolidated Debt Service" shall be the total
of the Imputed Debt Service (determined as provided in Section 4.01(G))
plus the annual principal payments required to fully amortize the maximum
amount that can be advanced to Borrower under all of the other loan
obligations of Borrower, regardless of the amounts of such other loan
obligations that have actually been advanced to Borrower, calculated in the
same manner as the Imputed Debt Service. As used in this Section 4.01(H),
the term "Borrower" shall include all entities included in Borrower's
consolidated financial statements.
(I) Revolving Loan to Value Ratio. Borrower shall, at all times,
maintain a "Revolving Loan to Value Ratio" (unpaid principal balance of
Loan divided by value of Hotels) of no greater than 60%, which shall be
tested annually on the anniversary date of this Agreement. The value of the
Hotels shall be based on the appraised values of the Hotels obtained by the
Bank in connection with the Loan. Should the Borrower be allowed by Bank to
substitute or add other hotels as Collateral during the term of the Loan,
the Revolving Loan to Value Ratio shall be calculated at the time of each
such substitution or addition using as the value of each substituted or
added Hotel the lower of the appraised value of each new Hotel, provided
that the appraisals are less than two (2) years old, or the acquisition
cost of the Hotel, if acquired within the last two (2) years. In the event
the appraisal date or purchase date is more than two years prior to the
date of the proposed substitution or addition, Borrower will furnish to
Bank a current appraisal of the Hotel and the value shown by such appraisal
will be used in determining the Revolving Loan to Value Ratio.
(J) Consolidated Loan to Value Ratio. Borrower shall, at all times,
maintain a "Consolidated Loan to Value Ratio" (principal balance of all
loan obligations of Borrower divided by the value of all of Borrower's
owned real estate) of no greater than 60%, which shall be tested annually
on the anniversary date of this Agreement. For purposes of calculating the
Consolidated Loan to Value Ratio, the unpaid balance of all loan
obligations of Borrower (including this Loan) shall be utilized. The value
of all of the Borrower's owned real estate assets shall be equal to the sum
of the Adjusted Net Operating Income (as defined in Section 4.01(G)) for
the trailing one (1) year period from all of the Borrower's real estate
assets owned during the entire one (1) year period capitalized at ten
percent (10%) plus the lesser of (a) the acquisition cost or (b) the
appraised value (based on appraisals that are less than two (2) years old)
of any of the Borrower's real estate assets acquired within the preceding
twelve (12) months. As used in this Section 4.01(J), the term "Borrower"
shall include all entities included in Borrower's consolidated financial
statements.
(K) Lease. Keep the Lease with TRS Leasing in full force and effect
and immediately cure any default by such Hotel Owner thereunder.
(L) Franchise Agreements. Keep the Franchise Agreement for each Hotel
in full force and effect, pay all fees incurred in connection therewith and
immediately cure any default by it thereunder.
(M) Management Agreement. Keep the Management Agreement for each Hotel
in full force and effect, pay all fees incurred in connection therewith and
immediately cure any default by it thereunder.
(N) Collateral Records. Maintain complete and accurate records of all
Collateral, which shall be made available to Bank for inspection and
copying at any reasonable time.
(O) Notification. Promptly notify Bank in writing of: (i) any material
adverse change in the financial condition of any of the Xxxxxxxx Entities;
(ii) any material damage to any Hotel; (iii) any condemnation proceedings
instituted or threatened against any Hotel; and (iv) any existing or
threatened litigation, claim, assessment, investigation or administrative
proceeding or similar action which would materially adversely affect the
financial condition of any of the Xxxxxxxx Entities.
(P) Insurance. Maintain casualty insurance, public liability
insurance, workers compensation insurance and such other insurance as Bank
may require with respect to the operations of Borrower, the Hotel Owners
and TRS Leasing and with respect to the Hotels and other Collateral, in
form, amounts and coverages and with insurance companies acceptable to
Bank. Borrower will, upon request of Bank, deliver to Bank from time to
time the policies of insurance, or at Banks' election, certificates of
insurance, in form satisfactory to Bank. The policies of insurance shall
provide that they may not be cancelled or diminished without at least
thirty (30) days prior notice to Bank. Each insurance policy shall contain
an endorsement providing that coverage in favor of Bank will not be
impaired in any way by any act, omission or default by Borrower, or by any
other person. For those policies of insurance covering any of the
Collateral, Borrower will provide Bank with such loss payable endorsements
or other endorsement as Bank may require. Bank may require that Borrower
obtain an independent appraisal of the Collateral to determine the actual
cash value or replacement cost of the Collateral for insurance purposes.
(Q) Executive Personnel. Maintain executive and management personnel
with substantially the same qualifications and experience as the present
executive and management personnel of Borrower. Borrower shall notify Bank
of any change in executive or management personnel.
(R) General Business Operations. (i) preserve and maintain its
organizational (corporate, partnership, limited liability company, as
applicable) existence and all rights, privileges and franchises reasonably
necessary to the conduct of its business; (ii) conduct its business
activities and maintain the Collateral in substantially the same manner as
it is being conducted and maintained at the date of this Agreement and in
compliance with all applicable requirements of law and contractual
obligations applicable thereto; and (iii) keep all property useful and
necessary in its business in good working order and condition, ordinary
wear and tear excepted.
(S) Additional Assurances. Make, execute and deliver to Bank such
notes, deeds of trust, mortgages, security agreements, assignments,
financing statements and other documents as the Bank or its attorneys may
reasonably request to evidence and secure the Loan as contemplated by this
Agreement and to perfect any security interest in the Collateral.
4.02. Negative Covenants of Borrower. Without the prior express written
consent of the Bank, which consent shall not be unreasonably withheld, so long
as any amounts payable hereunder or under the Note shall remain unpaid,
Borrower, the Hotel Owners and TRS Leasing each will not:
(A) Liens, Etc. Create or suffer to exist any lien, security interest
or other charge or encumbrance, or any other type of preferential
arrangement (each a "Lien") upon or with respect to any of the Collateral,
except (i) Liens for taxes in the ordinary course of business which are
being contested in good faith, provided that enforcement of such Liens is
stayed pending such contest, (ii) Liens in connection with workers'
compensation, unemployment insurance or other social security obligations
(but not ERISA), (iii) deposits or pledges to secure bids, tenders,
contracts (other than contracts for the payment of indebtedness), leases,
statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the ordinary course of business, (iv) zoning
ordinances, easements, rights of way, minor defects, irregularities, and
other similar restrictions affecting the Collateral which do not materially
and adversely affect the value of such Collateral or materially impair its
use for the operation of the business of the Borrower, (v) Liens arising by
operation of law, such as mechanics' or materialmen's liens, incurred in
the ordinary course of business which are being contested in good faith,
provided that, at the request of Bank, such liens are released of record by
the filing of a bond or making of a deposit as required by law, (vi) Liens
arising out of judgments or decrees which are being contested in good
faith, provided that enforcement of such Liens is stayed pending such
contest, (vii) purchase money Liens, (viii) Liens granted to the Bank and
(ix) Liens consented to in writing by the Bank.
(B) Unauthorized Use of Proceeds. Use any proceeds of the Loan for
purposes not expressly permitted hereby.
(C) Guaranty of Obligations. Guaranty, assume or become obligated in
any manner upon any obligations of any other person or entity (except by
the endorsement of negotiable instruments for deposit or collection in the
ordinary course of business), other than as disclosed to the Bank prior to
the date of this Agreement or consented to in writing by Bank prior to
incurring such guaranty, assumption or obligation liability, provided,
however, that this restriction shall not apply to any guaranty, assumption
or obligation liability that is included in the loan obligations of
Borrower for purposes of determining Borrower's compliance with the
Affirmative Covenants in Sections 4.01(H) and 4.01(J) and provided that
such loan obligations do not cause Borrower to violate such covenants.
(D) Preserve and Protect the Collateral. Fail to take those actions
reasonably necessary or appropriate to preserve and protect the value of
the Collateral.
(E) Sale or Transfer of Property. Borrower, the Hotel Owners and TRS
Leasing shall not transfer, lease, convey, encumber or grant any interest
of any nature in any Collateral now owned or hereafter acquired, except
for: (i) inventory sold or consumed in the ordinary course of business,
(ii) obsolete or damaged equipment that is replaced with equipment of equal
or greater value that is free from encumbrance, or (iii) purchase money
liens incurred for the purchase of the personal property that is security
for such purchase money lien, in an original amount not exceeding the sale
price of the personal property. Borrower may request approval from Bank to
obtain a release of any of the Hotels and substitute a new Hotel as
Collateral as provided in Section 1.11 hereof. Bank agrees that it will not
unreasonably withhold its approval of any such substitution.
(F) Dividends and Distributions. Issue any dividends or other
distributions: (i) in excess of 75% of Borrower's "Funds From Operations"
(as that term is defined by the National Association of Real Estate
Investment Trusts) per year, or in excess of such higher amounts as may be
required to maintain its status as a real estate investment trust or (ii)
at any time there exists an Event of Default that remains uncured for more
than sixty (60) days without the prior written consent of Bank, which shall
not be unreasonably withheld.
(G) Management Agreement. Materially amend, modify or terminate the
Management Agreement for any of the Hotels without the Bank's prior written
approval of such amendment or termination, which approval shall not be
unreasonably withheld by Bank.
(H) Franchise Agreement. Materially amend, modify or terminate any
Franchise Agreement for any of the Hotels without the Bank's prior written
approval of such amendment or termination, which approval shall not be
unreasonably withheld by Bank.
(I) Leases. Materially amend, modify or terminate the Lease without
the Bank's prior written approval of such amendment or termination, which
approval shall not be unreasonably withheld by Bank.
(J) Continuity of Operations. (i) engage in any business activities
substantially different than those in which Borrower is presently engaged
and other business activities related or incidental thereto; (ii) cease
operations, liquidate, or dissolve; (iii) merge, acquire or consolidate
with any other entity, or acquire substantially all of the assets of any
entity where the total acquisition price in the event of an acquisition, or
the total assets of such entity in the event of merger or consolidation,
exceed ten percent (10%) of the Borrower's then total assets, or (iv) sell
or transfer any of the Collateral.
(K) Transactions with Affiliates. Enter into any transaction with an
affiliate, unless such transaction is entered into upon terms and
conditions as favorable to Borrower as an arms' length transaction on
commercially reasonable terms with an independent third party, provided,
however, that this restriction shall not apply to affiliates that are
included in the consolidated financial statements of Borrower for the
fiscal year in which the transaction occurs.
(L) Accounting Changes. Change its fiscal year from that it currently
maintains or change its accounting practices except as may be required by
generally accepted accounting principles.
ARTICLE V
EVENTS OF DEFAULT
5.01. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:
(A) Borrower shall fail to pay any installment of interest, principal
or other amount payable hereunder or under the Note when due and such
failure continues for a period of five (5) or more days after written
notice thereof from Bank to Borrower; or
(B) Borrower shall fail to perform or observe, or shall violate, any
other term, covenant or agreement contained in this Agreement, or contained
in any of the other Loan Documents, on its part to be performed or observed
and any such failure or violation shall remain unremedied for thirty (30)
days or more after written notice from the Bank to the Borrower specifying
the nature of the default; provided, however, that if such default is of a
nature that it cannot be cured within such thirty (30) days, then the
Borrower shall not be in default if the Borrower shall have commenced
curing of said default within a reasonable time, and shall be diligently
prosecuting completion of the same, and within a reasonable time, not to
exceed sixty (60) days after the date of the original written notice
completes the cure of such default; or
(C) The Revolving Loan Debt Service Coverage Ratio, as determined in
Section 4.01(G), shall fall below 1.3 to 1; or
(D) Any representation or warranty stated in this Agreement or made by
the Borrower, the Hotel Owners or TRS Leasing under or in connection with
any other Loan Document shall prove to have been incorrect in any material
respect when made; or
(E) The Borrower, any Hotel Owner or TRS Leasing shall fail to pay any
principal or interest upon any other indebtedness in excess of $100,000
(excluding for purposes of this Section 5.01(E) indebtedness evidenced by
the Note), when due (whether by scheduled maturity, required repayment,
acceleration, demand or otherwise) and such failure shall continue after
the applicable grace period, if any, specified in the agreement or
instrument relating to such indebtedness; or any other default under any
agreement or instrument relating to any such indebtedness, or any other
event, shall occur and shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the effect of such
default or event is to accelerate, or to permit the acceleration of, the
maturity of such indebtedness; or any such indebtedness shall be declared
to be due and payable, or required to be prepaid (other than by a regularly
scheduled required repayment), prior to the stated maturity thereof unless
such indebtedness is being contested in good faith; or
(F) Borrower, any Hotel Owner or TRS Leasing shall generally not pay
their respective debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against Borrower, any Hotel Owner or TRS Leasing seeking
to adjudicate any one of them a debtor or insolvent, or seeking a
reorganization, arrangement, adjustment, protection, relief, or composition
of its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official
for him or for any substantial part of his property, and, in the case of
any such proceeding instituted against him either such proceeding shall
remain undismissed or unstayed for a period of thirty (30) days or any of
the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against Borrower or the appointment of a
receiver, trustee, custodian or other similar official for any one of them
or for any substantial part of their property) shall occur which is not
dismissed or stayed within thirty (30) days; or
(G) Any judgment or order for the payment of money in excess of
$100,000 shall be rendered against Borrower, any Hotel Owner or TRS Leasing
and either: (1) execution proceedings shall have been commenced by any
creditor upon such judgment or order, or (2) there shall be any period of
10 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
or
(H) The Loan Documents after delivery thereof shall for any reason,
except to the extent permitted by the terms thereof, cease to create a
valid and perfected first priority lien and security interest in any of the
Collateral; or
(I) Either of the Hotel Owners or TRS Leasing shall fail to perform or
observe, or shall violate, any other term, covenant or agreement contained
in any of the Loan Documents, on its part to be performed or observed, and
any such failure or violation shall remain unremedied for thirty (30) days
or more after written notice from the Bank to the defaulting party
specifying the nature of the default; provided, however, that if such
default is of a nature that it cannot be cured within such thirty (30)
days, then the defaulting party shall not be in default if the defaulting
party shall have commenced curing of said default within a reasonable time,
and shall be diligently prosecuting completion of the same, and within a
reasonable time, not to exceed sixty (60) days after the date of the
original written notice completes the cure of such default, provided
further, however that the thirty (30) day time period provided herein for
the cure of such default shall not apply to any failure to pay any amount
due under the Loan Documents, which cure period for failure to pay shall be
governed by the provisions of Section 5.01(A) hereof; or
(J) Any Franchise Agreement for any Hotel is terminated without the
prior written consent of Bank or such Franchise Agreement expires and is
not replaced with a substitute franchise agreement within sixty (60) days
thereafter; or
(K) Any event of default occurs under the Lease between TRS Leasing
and the Hotel Owners and such default is not cured within applicable cure
periods allowed under such Lease, or
(L) Any proceedings are threatened or initiated to foreclose any lien
or security interest in any of the Hotels, or a deed in lieu of such
foreclosure is given for any Hotel.
Then, and in any such event, the Bank may, without notice to Borrower, declare
the Note, all interest thereon and all other amounts payable under this
Agreement and the other Loan Documents to be forthwith due and payable,
whereupon the Note, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
and Bank may exercise all rights and remedies provided in any Loan Document
and/or by applicable law, provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Borrower under the
Federal Bankruptcy Code, (x) the obligation of the Bank to make any Loan shall
automatically be terminated and (y) the Note, all such interest and all such
amounts shall automatically become due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower. In the event of any conflict between this Agreement and any other
Loan Document regarding whether a notice to Borrower to cure any Event of
Default is required, the provisions of this Agreement shall control.
ARTICLE VI
MISCELLANEOUS
6.01. Amendments, etc. No amendment or waiver of any provision of any Loan
Document, nor consent to any departure by the Borrower, any Hotel Owner or TRS
Leasing therefrom, shall in any event be effective unless the same shall be in
writing and signed by the respective parties thereto and the Bank and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
6.02. Notices, etc. All notices and other communications provided for under
any Loan Document shall be in writing (including facsimile communication),
mailed, faxed or delivered, to the Borrower or the Bank at their respective
addresses and facsimile numbers set forth on the first page of this Agreement,
or such other addresses and/or facsimile numbers as may be hereafter designated
by either party to the other in a written notice to the other party. A copy of
all notices to Borrower shall also be sent to Xxxxx Xxxxxx, Suite 3700 First
National Tower, 0000 Xxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000, and a copy of all
notices to Bank shall be sent to P. Xxxxx Xxx, 0000 Xxxxxxx Xxxxx, Xxxxx,
Xxxxxxxx 00000. All such notices and communications shall, when mailed or faxed,
be effective when deposited in the mails, postage prepaid, or when the fax has
been electronically confirmed, respectively.
6.03. No Waiver; Remedies. No failure on the part of the Bank to exercise,
and no delay in exercising, any right under any Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any right under any
Loan Document preclude any other or further exercise thereof or the exercise of
any other right. The remedies provided in the Loan Documents are cumulative and
not exclusive of any remedies provided by law.
6.04. Accounting Terms. All accounting and financial terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistently applied, except as otherwise stated herein.
6.05. Costs, Expenses and Taxes. The Company shall pay on demand:
(A) All costs and expenses in connection with the preparation,
execution, delivery, filing, recording and administration of the Loan
Documents, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Bank. In addition, the Borrower
shall pay any and all stamp and other taxes (excluding income taxes) and
fees payable or determined to be payable in connection with the execution,
delivery, filing and recording of the Loan Documents and the other
documents to be delivered under the Loan Documents, and agrees to save the
Bank harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees;
(B) To the extent permitted by law, all costs and expenses (including
reasonable counsel fees and expenses) in connection with the enforcement of
the Loan Documents and the other documents to be delivered in connection
with the Loan Documents, including without limitation all such reasonable
costs and expenses related directly or indirectly to any enforcement, sale,
collection or disposition of Collateral or incurred directly or indirectly
with respect to any litigation or bankruptcy proceeding.
6.06. Right of Set-off. The Bank is hereby authorized at any time and from
time to time, to the fullest extent permitted by law and without prior notice,
to set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Bank to or for the credit or the account of the Borrower, any Hotel Owner
or TRS Leasing against any and all of the obligations of the Borrower now or
hereafter existing under any Loan Document, irrespective of whether or not the
Bank shall have made any demand under such Loan Document and although deposits,
indebtedness or such obligations may be unmatured or contingent, and although
the amount of such deposits may be in excess of the Borrower's obligations to
the Bank. The Bank agrees to notify the Borrower after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Bank under this
Section 6.06 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Bank may have.
6.07. Severability of Provisions. Any provision of this Agreement or of any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
thereof or affecting the validity or unenforceability of such provision in any
other jurisdiction.
6.08. Participations. The Bank may, at its option, sell all or any of its
interests in the Note and the other Loan Documents to other financial
institutions (the "Participants") and in connection with such sale (and
thereafter) may disclose any financial information the Bank may have concerning
the Borrower to any such Participant or potential Participant and Borrower
waives any right of privacy with respect thereto. Borrower waives any notice of
sale or repurchase of any participation interests. Borrower further waives any
right of set-off or counterclaim that it may now or later have against Bank or
any Participant.
6.09. Waiver of Jury Trial. BORROWER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENT TO WHICH IT IS A PARTY OR ANY INSTRUMENT OR
DOCUMENT DELIVERED IN CONNECTION THEREWITH.
6.10. Binding Effect; Governing Law. This Agreement shall be binding upon
and inure to the benefit of the Borrower and the Bank and their respective
heirs, personal representatives, successors and assigns, except that the
Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Bank. This Agreement, the Note
and the other Loan Documents shall be governed by, and construed in accordance
with, the laws of the State of Nebraska, without reference to principles of
conflicts of law.
6.11. Indemnification. Borrower hereby indemnifies and agrees to hold the
Bank harmless from and against, and shall reimburse the Bank with respect to any
and all claims, demands, causes of action, loss, damage, liabilities, costs and
expenses (including reasonable attorney's fees and court costs) of any and every
kind or character, known or unknown, fixed or contingent, asserted against the
Bank at any time and from time to time by reason of or arising out of (i) the
Borrower's, any Hotel Owner's or TRS Leasing's ownership of any of the
Collateral, (ii) the breach of any representation or warranty of the Borrower,
any Hotel Owner or TRS Leasing as set forth in this Agreement or any other Loan
Document to which the Borrower, such Hotel Owner or TRS Leasing is a party, and
(iii) the failure of the Borrower to perform any obligation in this Agreement or
the failure of Borrower, any Hotel Owner or TRS Leasing to perform any
obligation in any other Loan Document to which the Borrower, any Hotel Owner or
TRS Leasing is a party, required to be performed by such parties; provided,
however, that such indemnification obligations shall not apply to claims,
demands, causes of action, loss, damage, liabilities, costs and expenses arising
solely out of Bank's negligence or willful misconduct. The indemnification
obligations set forth in this Section 6.11 shall survive the repayment of the
Loan or the earlier termination of this Agreement.
6.12. Survival of Representations and Warranties. Borrower understands and
agrees that in extending advances under this Loan, Bank is relying in all
representations, warranties and covenants made by Borrower in this Agreement or
in any certificate or other instrument delivered by Borrower to Bank in
connection with the Loan Documents. Borrower further agrees that regardless of
any investigation made by Bank, all such representations, warranties and
covenants will survive the extension of any advance under the Loan, shall be
continuing in nature, shall be deemed made and remade by Borrower at the time
each Loan advance is made and shall remain in full force and effect until such
time as Borrower's indebtedness to Bank under the Loan Documents shall be paid
in full.
6.13. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute but one and the
same agreement.
6.14. Time is of the Essence. Time is of the essence in the performance of
this Agreement.
6.15. Further Assurances. Borrower hereby covenants and agrees to execute
and deliver such other instruments and documents and take such other actions of
any kind or nature whatsoever as Bank may reasonably request in order to assist
Bank in obtaining and perfecting the liens and security interests to secure the
Loan as provided in the Loan Documents, and to otherwise perform the obligations
of Borrower hereunder.
6.16. Final Agreement. The Loan Documents represent the final agreement
between the Bank and Borrower as to the subject matter hereof and may not be
contradicted by evidence of claimed prior, contemporaneous or subsequent oral
agreements of the parties and there are no unwritten oral agreements between the
parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
XXXXXXXX HOSPITALITY TRUST, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Its: Chief Financial Officer, Treasurer & Secretary
BANK:
GREAT WESTERN BANK
By: /s/ Xxxxxxx Xxxxxx
--------------------------------------------
Its: Authorized Officer
--------------------------------------------
